UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-7704
Schwab Capital Trust
(Exact name of registrant as specified in charter)
211 Main Street, San Francisco, California 94105
(Address of principal executive offices) (Zip code)
Marie Chandoha
Schwab Capital Trust
211 Main Street, San Francisco, California 94105
(Name and address of agent for service)
Registrant’s telephone number, including area code: (415) 636-7000
Date of fiscal year end: October 31
Date of reporting period: October 31, 2015
Item 1: Report(s) to Shareholders.
Annual report dated October 31, 2015, enclosed.
Schwab Equity Index Funds
Schwab® S&P 500 Index Fund
Schwab 1000 Index® Fund
Schwab Small-Cap Index Fund®
Schwab Total Stock Market
Index Fund®
Schwab International
Index Fund®
Go paperless today.
Simplify your financial life
by viewing these documents online.
Sign up at schwab.com/paperless
This wrapper is not part of the shareholder report.
Schwab Equity Index Funds
Annual Report
October 31, 2015
Schwab S&P 500 Index Fund
Schwab 1000 Index Fund
Schwab Small-Cap Index Fund
Schwab Total Stock Market
Index Fund
Schwab International
Index Fund
This page is intentionally left blank.
Five cost-efficient ways to tap into the power of the stock market for long-term growth potential.
Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).
Distributor: Charles Schwab & Co., Inc. (Schwab)
The Sector/Industry classifications in this report use the Global Industry Classification Standard (GICS), which was developed by, and is the exclusive property of, MSCI and Standard & Poor’s (S&P). GICS is a service mark of MSCI and S&P and has been licensed for use by Schwab. The Industry classifications used in the schedules of Portfolio Holdings are sub-categories of Sector classifications.
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
| Total Return for the 12 Months Ended October 31, 2015 |
| Schwab S&P 500 Index Fund (Ticker Symbol: SWPPX) | 5.10% |
| S&P 500® Index | 5.20% |
| Fund Category: Morningstar Large Blend | 2.79% |
| Performance Details | pages 6-7 |
| |
| Schwab 1000 Index Fund (Ticker Symbol: SNXFX) | 4.66% |
| Schwab 1000 Index® | 4.96% |
| Fund Category: Morningstar Large Blend | 2.79% |
| Performance Details | pages 8-9 |
| |
| Schwab Small-Cap Index Fund (Ticker Symbol: SWSSX) | 0.36% |
| Russell 2000® Index | 0.34% |
| Fund Category: Morningstar Small Blend | -0.45% |
| Performance Details | pages 10-11 |
| |
| Schwab Total Stock Market Index Fund (Ticker Symbol: SWTSX) | 4.36% |
| Dow Jones U.S. Total Stock Market IndexSM | 4.40% |
| Fund Category: Morningstar Large Blend | 2.79% |
| Performance Details | pages 12-13 |
| |
| Schwab International Index Fund1 (Ticker Symbol: SWISX) | -1.53% |
| MSCI EAFE® Index (Net)2 | -0.07% |
| Fund Category: Morningstar Foreign Large Blend | -1.58% |
| Performance Details | pages 14-15 |
| |
| Minimum Initial Investment3 | $100 |
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, a fund’s total return would have been lower. Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date.
| 1 | The fund’s performance relative to the index may be affected by fair-value pricing and timing differences in foreign exchange calculations. See financial note 2 for more information. |
| 2 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
| 3 | Please see the funds' prospectus for further detail and eligibility requirements. |
2Schwab Equity Index Funds
Marie Chandoha is President and CEO of Charles Schwab Investment Management, Inc. and the funds covered in this report.
Dear Shareholder,
At Charles Schwab Investment Management, our goal is to provide foundational products with consistent performance that enable investors to build well-diversified portfolios. The Schwab Equity Index Funds track the performance of stock market indexes constructed by industry-leading index providers.
For the 12-month reporting period ended October 31, 2015, the funds generated returns that were closely aligned with their respective indexes and, in most cases, reflected moderately positive performances by U.S. stocks. For the Schwab International Index Fund, the depreciation of many foreign currencies versus the U.S. dollar contributed to a negative return.
Despite market volatility later in the period which was stimulated by concerns about global growth and speculation that the Fed might raise interest rates, the S&P 500 Index returned 5.2% for the period. Large-cap stocks outperformed small-cap stocks, while growth stocks outperformed value stocks. Reflecting these conditions, the small-cap Russell 2000 Index returned approximately 0.3%.
Outside the U.S., turbulence in Greece, China, and select emerging markets translated into challenges for overseas equities. In addition, lackluster global economic growth weighed on international markets, bringing about aggressive stimulus policies by several central banks across the globe. This caused many foreign currencies to depreciate versus the U.S. dollar, thereby
Asset Class Performance Comparison % returns during the 12 months ended 10/31/2015
Index figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Past performance is not an indication of future results.
For index definitions, please see the Glossary.
Data source: Index provider websites and CSIM.
Nothing in this report represents a recommendation of a security by the investment adviser.
Management views and portfolio holdings may have changed since the report date.
Schwab Equity Index Funds3
From the President continued
For the 12-month reporting period ended October 31, 2015, the funds generated returns that were closely aligned with their respective indexes and, in most cases, reflected moderately positive performances by U.S. stocks.
reducing returns on overseas investments in U.S. dollar terms. As a result, the MSCI EAFE Index (Net), which broadly represents the performance of international stocks, returned approximately -0.1%.1
For more information about the Schwab Equity Index Funds, please continue reading this report. In addition, you can find further details about these funds by visiting our website at www.csimfunds.com. We are also happy to hear from you at 1-800-435-4000.
Sincerely,
| 1 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
4Schwab Equity Index Funds
 | Agnes Hong, CFA, Vice President and Head of Passive Equities, leads the portfolio management teams of Schwab's passive equity funds and ETFs, which comprise the Schwab Equity Index Funds, the Schwab Fundamental Index Funds, and the Schwab Equity ETFs. She also has overall responsibility for all aspects of the management of the funds. Prior to joining CSIM in 2009, Ms. Hong spent five years as a portfolio manager at Barclays Global Investors (subsequently acquired by BlackRock), where she managed institutional index funds and quantitative active funds. Prior to that, Ms. Hong worked in management consulting and product management, servicing global financial services clients. |
 | Ferian Juwono, CFA, Managing Director and Senior Portfolio Manager, is responsible for the day-to-day co-management of the funds. Prior to joining CSIM in 2010, Mr. Juwono worked at BlackRock (formerly Barclays Global Investors), where he spent over three years as a portfolio manager, managing equity index funds for institutional clients, and nearly two years as a senior business analyst. Prior to that, Mr. Juwono worked for over four years as a senior financial analyst with Union Bank of California. |
 | David Rios, Portfolio Manager, is responsible for the day-to-day co-management of the Schwab S&P 500 Index Fund, Schwab 1000 Index Fund, and Schwab Small-Cap Index Fund. He joined CSIM in 2008 and became a Portfolio Manager in September 2014. Prior to this role, Mr. Rios served as an Associate Portfolio Manager on the Passive Equities team for four years. His first role with CSIM was as a trade operation specialist. He also previously worked as a senior fund accountant at Investors Bank & Trust (subsequently acquired by State Street Corporation). |
Schwab Equity Index Funds5
Schwab S&P 500 Index Fund
The Schwab S&P 500 Index Fund’s (the fund) goal is to track the total return of the S&P 500 Index (the index), which includes the stocks of 500 leading U.S. publicly traded companies from a broad range of industries. To pursue its goal, the fund uses a replication investment approach and generally gives the same weight to a given stock as does the index. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. U.S. stocks posted modest gains for the 12-month reporting period, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest-rate hike. Slowing growth in China weighed on global markets, as did declining energy and metals prices.
Performance. The fund returned 5.10% for the 12-month reporting period ended October 31, 2015, compared with the index, which returned 5.20%. Differences between the return of the fund and the return of the index may be attributable to, among other things, the operational and transactional costs incurred by the fund and not the index.
Contributors and Detractors. Because the fund closely tracked the index for the reporting period, the contributors and detractors to the fund were consistent with those in the index. From a sector standpoint, the Consumer Discretionary sector contributed the most to the fund’s return. Representing an average weight of 12.5% of the fund, the sector returned 20.8% for the reporting period. Within the sector, the fund’s strongest contributors to performance were Amazon.com and The Walt Disney Company, which returned approximately 105% and 27%, respectively.
The fund’s holdings in the Information Technology sector also added value. Representing an average weight of almost 20% of the fund, the sector returned roughly 11% for the period. Within the sector, the strongest contributors to fund performance were Apple Inc. and Facebook, Inc. (Class A shares), which returned approximately 12% and 36%, respectively.
The Energy sector detracted the most from fund performance. While representing only roughly 8% of the fund, the sector returned -19.3% for the period. With oil prices falling sharply during much of 2015—recovering only marginally toward the end of the period—oil companies were among the largest drags on performance. Among the fund’s Energy sector holdings, Chevron Corporation and Exxon Mobil Corporation were particularly detrimental, with those positions down more than 21% and 11%, respectively.
The fund’s holdings in the Materials sector also dampened performance, as global commodity prices declined significantly during the period. Constituting an average weight of just over 3% of the fund, the sector fell roughly 4.4% for the period. Like the Energy sector, the Materials sector rebounded somewhat during the final month of the reporting period. Within the sector, Freeport-McMoRan Inc., a large global producer of copper and gold, was the fund’s largest detractor, down more than 57%. Monsanto Company, a multinational agrochemical and agricultural biotechnology company, was also a drag on performance, down more than 17% for the period.
As of 10/31/15:
| Statistics |
| Number of Holdings | 505 |
| Weighted Average Market Cap (millions) | $141,576 |
| Price/Earnings Ratio (P/E) | 22.9 |
| Price/Book Ratio (P/B) | 2.6 |
| Portfolio Turnover Rate | 2% |
| Sector Weightings % of Investments |
| Information Technology | 20.7% |
| Financials | 16.1% |
| Health Care | 14.5% |
| Consumer Discretionary | 13.1% |
| Industrials | 10.1% |
| Consumer Staples | 9.6% |
| Energy | 7.1% |
| Materials | 2.9% |
| Utilities | 2.9% |
| Telecommunication Services | 2.3% |
| Other | 0.7% |
| Total | 100.0% |
| Top Equity Holdings % of Net Assets1 |
| Apple, Inc. | 3.7% |
| Microsoft Corp. | 2.3% |
| Exxon Mobil Corp. | 1.9% |
| General Electric Co. | 1.6% |
| Johnson & Johnson | 1.5% |
| Berkshire Hathaway, Inc., Class B | 1.4% |
| Wells Fargo & Co. | 1.4% |
| Amazon.com, Inc. | 1.3% |
| JPMorgan Chase & Co. | 1.3% |
| Facebook, Inc., Class A | 1.3% |
| Total | 17.7% |
Management views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S&P and MSCI.
| 1 | This list is not a recommendation of any security by the investment adviser. |
6Schwab Equity Index Funds
Schwab S&P 500 Index Fund
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1,2
Average Annual Total Returns1,2,3
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab S&P 500 Index Fund (5/19/97) | 5.10% | 14.22% | 7.81% |
| S&P 500® Index | 5.20% | 14.33% | 7.85% |
| Fund Category: Morningstar Large Blend | 2.79% | 12.51% | 6.99% |
Fund Expense Ratios4: 0.09%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
Index ownership – Standard & Poor’s® S&P®, S&P 500®, Standard & Poor’s 500® and 500® are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by the Schwab S&P 500 Index Fund. The Schwab S&P 500 Index Fund is not sponsored, endorsed, sold or promoted by Standard & Poor’s, and Standard & Poor’s makes no representation regarding the advisability of investing in the fund.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | On September 9, 2009, the Investor Share class, Select Share class and e.Shares class were combined into a single class of shares of the fund. The performance history of the fund prior to September 9, 2009 is that of the fund’s former Select Shares. On September 9, 2009, the Schwab Institutional Select S&P 500 Fund merged into the fund. |
| 3 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 4 | As stated in the prospectus. Reflects the total annual fund operating expenses without contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Equity Index Funds7
Schwab 1000 Index Fund
The Schwab 1000 Index Fund’s (the fund) goal is to match the total return of the Schwab 1000 Index (the index), which includes the stocks of the largest 1,000 publicly traded companies in the U.S., with size being determined by market capitalization (total market value of all shares outstanding). To pursue its goal, the fund uses a replication investment approach and generally gives the same weight to a given stock as does the index. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. U.S. stocks posted modest gains for the 12-month reporting period, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest-rate hike. Slowing growth in China weighed on global markets, as did declining energy and metals prices.
Performance. The fund returned 4.66% for the 12-month period ended October 31, 2015, compared with the index, which returned 4.96%. Differences between the return of the fund and the return of the index may be attributable to, among other things, the operational and transactional costs incurred by the fund and not the index.
Contributors and Detractors. Because the fund closely tracked the index for the reporting period, the contributors and detractors to the fund were consistent with those of the index. From a sector standpoint, the Consumer Discretionary sector contributed the most to the fund’s return. Representing an average weight of roughly 13% of the fund, the sector returned just over 18% for the reporting period. Within the sector, the fund’s strongest contributors to performance were Amazon.com and The Walt Disney Company, which returned approximately 105% and 27%, respectively.
The fund’s holdings in the Information Technology sector also added value. Representing an average weight of more than 19% of the fund, the sector returned approximately 11% for the reporting period. Within the sector, the strongest contributors to fund performance were Apple Inc. and Facebook, Inc. (Class A shares), which returned approximately 12% and 36%, respectively.
The Energy sector detracted the most from fund performance. While representing only roughly 8% of the fund, the sector returned –20.1% for the period. With oil prices falling sharply during much of 2015—recovering only marginally toward the end of the period—oil companies were among the largest drags on performance. Among the fund’s Energy sector holdings, Chevron Corporation and Exxon Mobil Corporation were particularly detrimental, with those positions down more than 21% and 11%, respectively.
The fund’s holdings in the Materials sector also dampened performance, as global commodity prices declined significantly during the period. Constituting an average weight of just over 3% of the fund, the sector fell roughly 4.6% for the period. Like the Energy sector, the Materials sector rebounded somewhat during the final month of the reporting period. Within the sector, Freeport-McMoRan Inc., a large global producer of copper and gold, was the fund’s largest detractor, down more than 57%. Monsanto Company, a multinational agrochemical and agricultural biotechnology company, was also a drag on performance, down more than 17% for the period.
As of 10/31/15:
| Statistics |
| Number of Holdings | 983 |
| Weighted Average Market Cap (millions) | $125,954 |
| Price/Earnings Ratio (P/E) | 24.0 |
| Price/Book Ratio (P/B) | 2.6 |
| Portfolio Turnover Rate | 4% |
| Sector Weightings % of Investments |
| Information Technology | 20.2% |
| Financials | 17.0% |
| Health Care | 14.1% |
| Consumer Discretionary | 13.6% |
| Industrials | 10.4% |
| Consumer Staples | 8.9% |
| Energy | 6.7% |
| Materials | 3.2% |
| Utilities | 3.0% |
| Telecommunication Services | 2.2% |
| Other | 0.7% |
| Total | 100.0% |
| Top Equity Holdings % of Net Assets1 |
| Apple, Inc. | 3.3% |
| Microsoft Corp. | 2.0% |
| Exxon Mobil Corp. | 1.7% |
| General Electric Co. | 1.4% |
| Johnson & Johnson | 1.3% |
| Berkshire Hathaway, Inc., Class B | 1.2% |
| Wells Fargo & Co. | 1.2% |
| Amazon.com, Inc. | 1.1% |
| JPMorgan Chase & Co. | 1.1% |
| Facebook, Inc., Class A | 1.1% |
| Total | 15.4% |
Management views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S&P and MSCI.
| 1 | This list is not a recommendation of any security by the investment adviser. |
8Schwab Equity Index Funds
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1,2
Average Annual Total Returns1,2,3
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab 1000 Index Fund (4/2/91) | 4.66% | 13.89% | 7.74% |
| Schwab 1000 Index® | 4.96% | 14.20% | 8.06% |
| S&P 500® Index | 5.20% | 14.33% | 7.85% |
| Fund Category: Morningstar Large Blend | 2.79% | 12.51% | 6.99% |
Fund Expense Ratios4: Net 0.29%; Gross 0.33%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | On September 18, 2009, the Investor Share class and Select Share class were combined into a single class of shares of the fund. The performance history of the fund prior to September 18, 2009 is that of the fund’s former Investor Shares. |
| 3 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 4 | As stated in the prospectus. The expense information shown in the table has been restated to reflect the removal of expenses incurred indirectly by the fund through its investment in business development companies (BDCs). The fund’s benchmark index no longer includes BDCs. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Equity Index Funds9
Schwab Small-Cap Index Fund
The Schwab Small-Cap Index Fund’s (the fund) goal is to track the performance of the Russell 2000 Index (the index), which is designed to measure the performance of the small-cap sector of the U.S. equity market. To pursue its goal, the fund uses a replication investment approach and generally gives the same weight to a given stock as does the index. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. U.S. small-cap stocks significantly underperformed large-cap stocks for the reporting period. In comparison with the 0.34% return of the fund’s small-cap index, U.S. large-cap stocks, represented by the S&P 500 Index, returned 5.2% for the period. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest-rate hike. Slowing growth in China weighed on global markets, as did declining energy and metals prices.
Performance. The fund returned 0.36% for the 12-month period ended October 31, 2015, compared with the index, which returned 0.34%. The fund engaged in securities lending, which positively contributed to the fund’s performance versus the index.
Contributors and Detractors. Because the fund closely tracked the index for the reporting period, the contributors and detractors to the fund were consistent with those of the index. From a sector standpoint, the Information Technology sector contributed the most to the fund’s return. Representing an average weight of 17.6% of the fund, the sector returned 10% for the reporting period. Within the sector, the fund’s strongest contributors to performance were Qorvo, Inc., a leading provider of core technologies and RF (radio frequency) solutions for mobile, infrastructure and aerospace/defense applications; and Manhattan Associates, Inc., which develops commerce-ready supply chains for the omni-channel marketplace. For the reporting period, the two companies returned more than 54% and 81%, respectively.
The fund’s holdings in the Health Care sector also added value. Representing an average weight of 15.6% of the fund, the sector returned 8.6% for the reporting period. Within the sector, the strongest contributors to fund performance were Synageva BioPharma Corp., a biopharmaceutical company that was acquired by Alexion Pharmaceuticals in May, and bluebird bio, Inc., a clinical-stage biotechnology company focused on gene therapy for patients with severe genetic and orphan diseases, up more than 211% and 294%, respectively.
The Energy sector detracted the most from fund performance. While representing an average weight of just 3.4% of the fund, the sector was down 43% for the period. With oil prices falling sharply during much of 2015—recovering only marginally toward the end of the period—companies serving the oil industry were among the largest drags on performance. Among the fund’s holdings, the two weakest were Helix Energy Solutions Group, which provides subsea technologies to offshore energy producers, and Bonanza Creek Energy, Inc., which is engaged in the acquisition, exploration, development and production of onshore oil and gas in the central U.S. Those two positions were down more than 78% and 87%, respectively.
The fund’s holdings in the Industrials sector also dampened performance. Constituting an average weight of roughly 13% of the fund, the sector fell more than 7% for the period. Within the sector, the two largest detractors from fund performance were Esterline Technologies Corporation, a specialized manufacturing company principally serving aerospace and defense markets, and Rexnord Corporation, a leading worldwide industrial company focusing on Process and Motion Control and Water Management. For the reporting period, the two companies were down more than 34% and 37%, respectively.
As of 10/31/15:
| Statistics |
| Number of Holdings | 1,987 |
| Weighted Average Market Cap (millions) | $1,880 |
| Price/Earnings Ratio (P/E) | 74.4 |
| Price/Book Ratio (P/B) | 1.9 |
| Portfolio Turnover Rate | 17% |
| Sector Weightings % of Investments |
| Financials | 24.1% |
| Information Technology | 16.6% |
| Health Care | 14.2% |
| Consumer Discretionary | 13.2% |
| Industrials | 11.6% |
| Materials | 3.5% |
| Utilities | 3.5% |
| Consumer Staples | 3.2% |
| Energy | 2.9% |
| Telecommunication Services | 0.8% |
| Other | 6.4% |
| Total | 100.0% |
| Top Equity Holdings % of Net Assets1 |
| STERIS Corp. | 0.4% |
| Tyler Technologies, Inc. | 0.3% |
| Manhattan Associates, Inc. | 0.3% |
| Anacor Pharmaceuticals, Inc. | 0.3% |
| CubeSmart | 0.3% |
| Piedmont Natural Gas Co., Inc. | 0.3% |
| MAXIMUS, Inc. | 0.3% |
| Investors Bancorp, Inc. | 0.3% |
| Neurocrine Biosciences, Inc. | 0.3% |
| West Pharmaceutical Services, Inc. | 0.2% |
| Total | 3.0% |
Management views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S&P and MSCI.
Small-company stocks are subject to greater volatility than many other asset classes.
| 1 | This list is not a recommendation of any security by the investment adviser. |
10Schwab Equity Index Funds
Schwab Small-Cap Index Fund
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1,2
Average Annual Total Returns1,2,3
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Small-Cap Index Fund (5/19/97) | 0.36% | 12.38% | 8.23% |
| Russell 2000® Index | 0.34% | 12.06% | 7.47% |
| Small-Cap Spliced Index | 0.34% | 12.36% | 8.31% |
| Fund Category: Morningstar Small Blend | -0.45% | 11.37% | 7.04% |
Fund Expense Ratios4: Net 0.17%; Gross 0.21%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
Index ownership – “Russell 2000®” is a registered mark of the Frank Russell Company (Russell) and has been licensed for use by the Schwab Small-Cap Index Fund. The Schwab Small-Cap Index Fund is not sponsored, endorsed, sold or promoted by Russell and Russell makes no representation regarding the advisability of investing in the fund.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | On August 21, 2009, the Investor Share class and Select Share class were combined into a single class of shares of the fund. The performance history of the fund prior to August 21, 2009 is that of the fund’s former Select Shares. |
| 3 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 4 | As stated in the prospectus. The expense information shown in the table has been restated to reflect the removal of expenses incurred indirectly by the fund through its investment in business development companies (BDCs). The fund’s benchmark index no longer includes BDCs. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Equity Index Funds11
Schwab Total Stock Market Index Fund
The Schwab Total Stock Market Index Fund’s (the fund) goal is to track the total return of the entire U.S. stock market, as measured by the Dow Jones U.S. Total Stock Market Index (the index), which includes the stocks of all publicly traded companies headquartered in the U.S. for which pricing information is readily available. To pursue its investment objective, the fund uses a sampling investment approach that involves investing in a representative sample of stocks with similar risk and return characteristics as the index, and maintains a tight allocation across all sectors, market capitalizations, and valuation measures compared with the index. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. U.S. stocks posted modest gains for the 12-month reporting period, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest-rate hike. Slowing growth in China weighed on global markets, as did declining energy and metals prices.
Performance. The fund returned 4.36% for the 12-month period ended October 31, 2015, compared with the index, which returned 4.40%. Differences between the return of the fund and the return of the index may be attributable to, among other things, the operational and transactional costs incurred by the fund and not the index.
Contributors and Detractors. Because the fund closely tracked the index for the reporting period, the contributors and detractors to the fund were consistent with those of the index. From a sector standpoint, the Information Technology sector contributed the most to the fund’s return. Representing an average weight of just over 19% of the fund, the sector returned 10.5% for the reporting period. Within the sector, the strongest contributors to fund performance were Apple Inc. and Facebook, Inc. (Class A shares), which returned approximately 12% and 36%, respectively.
The Consumer Discretionary sector also added value. Representing an average weight of roughly 13% of the fund, the sector returned 16.2% for the reporting period. Within the sector, the fund’s strongest contributors were Amazon.com and The Walt Disney Company, which returned roughly 105% and 27%, respectively.
The Energy sector detracted the most from fund performance. While representing only roughly 7% of the fund, the sector fell 21.5% for the period. With oil prices falling sharply during much of 2015—recovering only marginally toward the end of the period—oil companies were among the largest drags on performance. Among the fund’s Energy sector holdings, Chevron Corporation and Exxon Mobil Corporation were particularly detrimental, with those positions down more than 21% and 11%, respectively.
The fund’s holdings in the Materials sector also dampened performance, as global commodity prices declined significantly during the period. Constituting an average weight of 3.5% of the fund, the sector fell 6.4% for the period. Like the Energy sector, the Materials sector rebounded somewhat during the final month of the reporting period. Within the sector, Freeport-McMoRan Inc., a large global producer of copper and gold, was the fund’s largest detractor, down more than 57%. Alcoa, a multinational company involved in lightweight metals technology, engineering and manufacturing, was also a drag on performance, down more than 46% for the period.
As of 10/31/15:
| Statistics |
| Number of Holdings | 2,496 |
| Weighted Average Market Cap (millions) | $115,848 |
| Price/Earnings Ratio (P/E) | 25.5 |
| Price/Book Ratio (P/B) | 2.5 |
| Portfolio Turnover Rate | 2% |
| Sector Weightings % of Investments |
| Information Technology | 19.5% |
| Financials | 17.5% |
| Health Care | 13.9% |
| Consumer Discretionary | 13.3% |
| Industrials | 10.5% |
| Consumer Staples | 8.3% |
| Energy | 6.4% |
| Materials | 3.2% |
| Utilities | 3.0% |
| Telecommunication Services | 2.1% |
| Other | 2.3% |
| Total | 100.0% |
| Top Equity Holdings % of Net Assets1 |
| Apple, Inc. | 3.0% |
| Microsoft Corp. | 1.8% |
| Exxon Mobil Corp. | 1.5% |
| General Electric Co. | 1.3% |
| Johnson & Johnson | 1.2% |
| Berkshire Hathaway, Inc., Class B | 1.1% |
| Wells Fargo & Co. | 1.1% |
| Amazon.com, Inc. | 1.0% |
| JPMorgan Chase & Co. | 1.0% |
| Facebook, Inc., Class A | 1.0% |
| Total | 14.0% |
Management views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S&P and MSCI.
| 1 | This list is not a recommendation of any security by the investment adviser. |
12Schwab Equity Index Funds
Schwab Total Stock Market Index Fund
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1,2
Average Annual Total Returns1,2,3
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Total Stock Market Index Fund (6/1/99) | 4.36% | 14.08% | 8.08% |
| Dow Jones U.S. Total Stock Market IndexSM | 4.40% | 14.11% | 8.07% |
| Fund Category: Morningstar Large Blend | 2.79% | 12.51% | 6.99% |
Fund Expense Ratios4: Net 0.09%; Gross 0.10%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
Index ownership – “Dow Jones” and “The Dow Jones U.S. Total Stock Market Index” are service marks of Dow Jones & Company, Inc. and have been licensed for certain purposes by CSIM. The Schwab Total Stock Market Index Fund, based on The Dow Jones U.S. Total Stock Market Index, is not sponsored, endorsed, sold or promoted by Dow Jones and Dow Jones makes no representation regarding the advisability of investing in such a product.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | On September 18, 2009, the Investor Share class and Select Share class were combined into a single class of shares of the fund. The performance history of the fund prior to September 18, 2009 is that of the fund’s former Select Shares. |
| 3 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 4 | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Equity Index Funds13
Schwab International Index Fund
The Schwab International Index Fund’s (the fund) goal is to track the performance of the MSCI EAFE Index (Net) (the index), which measures the total return of large, publicly traded non-U.S. companies from countries with developed equity markets outside of the U.S. To pursue its goal, the fund uses a replication investment approach and generally gives the same weight to a given stock as does the index. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. Slowing growth in China, along with declining energy and metals prices, weighed on global markets over the 12-month reporting period. Stocks in developed international markets produced just slightly negative overall returns, with the MSCI EAFE Index (Net) returning -0.1%. Emerging markets were particularly hard hit over the period, with the MSCI Emerging Markets Index (Net) returning -14.5%. The U.S. dollar remained strong against many foreign currencies, generally reducing returns of international investments in U.S. dollar terms.
Performance. The fund returned -1.53% for the 12-month period ended October 31, 2015, compared with the index, which returned -0.07%. Differences between the return of the fund and the return of the index may be attributable to, among other things, the operational and transactional costs incurred by the fund and not the index. Additionally, timing differences in foreign exchange calculations and fair valuation of the fund’s holdings contributed to the fund’s relative underperformance.1
Contributors and Detractors. Because the fund closely tracked the index for the reporting period, the contributors and detractors to the fund were consistent with those of the index. From a country perspective, stocks from Japan contributed the most to the fund’s return. Representing an average weight of 22% of the fund, Japanese stocks returned roughly 9% in U.S. dollar terms for the period. Among the fund’s Japanese stocks, the strongest contributors to fund performance were Toyota Motor Corp. and Sony Corporation, which returned more than 9% and 56%, respectively. Stocks from France also contributed notably to fund performance. Representing an average weight of 9.8%, French stocks returned 4.7% in U.S. dollar terms for the period. Among them, the most beneficial were Sanofi, a large multinational pharmaceutical company, and LVMH Moet Hennessy Louis Vuitton SE, a multinational luxury goods conglomerate. The two companies returned more than 12% and 22%, respectively.
Stocks from Australia detracted the most from the fund’s total return. Representing an average weight of 7%, the fund’s Australian stocks returned -20.8% for the period. Among the fund’s Australian holdings, two of weakest were BHP Billiton Limited, one of the world’s largest mining, metals and petroleum companies; and Australia and New Zealand Banking Group Limited (ANZ), down more than 37% and 30%, respectively. Stocks from the United Kingdom also dampened fund returns. Representing an average weight of roughly 20%, the fund’s British stocks returned -3.5% in U.S. dollar terms for the period. Among them, two of the largest drags on performance were HSBC Holdings plc, a large multinational banking and financial services company, and Glencore plc, an Anglo-Swiss commodity trading and mining company, down more than 19% and 63%, respectively.
As of 10/31/15:
| Statistics |
| Number of Holdings | 924 |
| Weighted Average Market Cap (millions) | $58,071 |
| Price/Earnings Ratio (P/E) | 19.2 |
| Price/Book Ratio (P/B) | 1.6 |
| Portfolio Turnover Rate | 7% |
| Sector Weightings % of Investments |
| Financials | 26.2% |
| Consumer Discretionary | 13.0% |
| Industrials | 12.4% |
| Consumer Staples | 11.8% |
| Health Care | 11.4% |
| Materials | 6.6% |
| Telecommunication Services | 4.9% |
| Energy | 4.8% |
| Information Technology | 4.8% |
| Utilities | 3.7% |
| Other | 0.4% |
| Total | 100.0% |
| Top Equity Holdings % of Net Assets2 |
| Nestle S.A. – Reg'd | 1.9% |
| Novartis AG – Reg'd | 1.6% |
| Roche Holding AG | 1.5% |
| Toyota Motor Corp. | 1.3% |
| HSBC Holdings plc | 1.2% |
| Sanofi | 0.9% |
| British American Tobacco plc | 0.9% |
| Bayer AG – Reg'd | 0.9% |
| BP plc | 0.8% |
| GlaxoSmithKline plc | 0.8% |
| Total | 11.8% |
Management views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S&P and MSCI.
International investments are subject to additional risks such as currency fluctuation, geopolitical risk and the potential for illiquid markets.
| 1 | Typically, the securities in the index are valued using foreign exchange rates obtained at the close of the London foreign currency exchange (11:00 AM EST). Securities in the fund, however, are valued using foreign exchange rates obtained at the close of the New York foreign currency exchange (4:00 PM EST). This difference in closing times can result in different foreign currency exchange rates between the two exchanges, and thus different foreign currency exchange rates used in the valuation of the index’s and fund’s securities. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
14Schwab Equity Index Funds
Schwab International Index Fund
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1,2
Average Annual Total Returns1,2,3
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab International Index Fund (5/19/97) | -1.53% | 4.69% | 4.00% |
| MSCI EAFE® Index (Net)4 | -0.07% | 4.81% | 4.05% |
| International Spliced Index | -0.07% | 4.96% | 4.25% |
| Fund Category: Morningstar Foreign Large Blend | -1.58% | 3.81% | 3.89% |
Fund Expense Ratios5: Net 0.19%; Gross 0.23%
Country Weightings % of Investments
| Japan | 22.6% |
| United Kingdom | 19.9% |
| France | 10.0% |
| Switzerland | 9.3% |
| Germany | 8.9% |
| Australia | 6.2% |
| Spain | 3.4% |
| Hong Kong | 3.0% |
| Sweden | 2.8% |
| Netherlands | 2.8% |
| Other Countries | 11.1% |
| Total | 100.0% |
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
The fund’s performance relative to the index may be affected by fair-value pricing, see financial note 2 for more information.
Index ownership — “MSCI EAFE” is a registered mark of MSCI and has been licensed for use by the Schwab International Index Fund. The Schwab International Index Fund is not sponsored, endorsed, sold or promoted by MSCI and MSCI bears no liability with respect to the fund. The Statement of Additional Information contains a more detailed description of the limited relationship MSCI has with the fund.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | On August 21, 2009, the Investor Share class and Select Share class were combined into a single class of shares of the fund. The performance history of the fund prior to August 21, 2009 is that of the fund’s former Select Shares. |
| 3 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 4 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
| 5 | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Equity Index Funds15
Fund Expenses (Unaudited)
Examples for a $1,000 Investment
As a fund shareholder, you may incur two types of costs: (1) transaction costs, such as redemption fees; and (2) ongoing costs, including management fees, transfer agent and shareholder services fees, and other fund expenses.
The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six months beginning May 1, 2015 and held through October 31, 2015.
Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number given for your fund under the heading entitled “Expenses Paid During Period.”
Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in a fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. Therefore, the hypothetical return lines of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | Expense Ratio1
(Annualized) | Beginning
Account Value
at 5/1/15 | Ending
Account Value
(Net of Expenses)
at 10/31/15 | Expenses Paid
During Period2
5/1/15–10/31/15 |
| Schwab S&P 500 Index Fund | | | | |
| Actual Return | 0.09% | $1,000.00 | $ 1,007.30 | $0.46 |
| Hypothetical 5% Return | 0.09% | $1,000.00 | $ 1,024.75 | $0.46 |
| Schwab 1000 Index Fund | | | | |
| Actual Return | 0.29% | $1,000.00 | $1,001.10 | $1.46 |
| Hypothetical 5% Return | 0.29% | $1,000.00 | $ 1,023.74 | $1.48 |
| Schwab Small-Cap Index Fund | | | | |
| Actual Return | 0.17% | $1,000.00 | $ 959.10 | $ 0.84 |
| Hypothetical 5% Return | 0.17% | $1,000.00 | $1,024.34 | $ 0.87 |
| Schwab Total Stock Market Index Fund | | | | |
| Actual Return | 0.09% | $1,000.00 | $ 997.10 | $ 0.45 |
| Hypothetical 5% Return | 0.09% | $1,000.00 | $ 1,024.75 | $0.46 |
| Schwab International Index Fund | | | | |
| Actual Return | 0.19% | $1,000.00 | $ 932.90 | $ 0.93 |
| Hypothetical 5% Return | 0.19% | $1,000.00 | $1,024.24 | $ 0.97 |
| 1 | Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights which covers a 12-month period. |
| 2 | Expenses for each fund are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 184 days of the period, and divided by the 365 days of the fiscal year. |
16Schwab Equity Index Funds
Schwab S&P 500 Index Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $31.99 | $27.78 | $22.35 | $19.82 | $18.70 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.67 1 | 0.56 | 0.52 | 0.44 | 0.39 | |
| Net realized and unrealized gains (losses) | 0.92 | 4.13 | 5.40 | 2.49 | 1.09 | |
| Total from investment operations | 1.59 | 4.69 | 5.92 | 2.93 | 1.48 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.58) | (0.48) | (0.49) | (0.40) | (0.36) | |
| Net asset value at end of period | $33.00 | $31.99 | $27.78 | $22.35 | $19.82 | |
| Total return | 5.10% | 17.16% | 27.06% | 15.09% | 7.97% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 0.09% | 0.09% | 0.09% | 0.09% | 0.09% | |
| Gross operating expenses | 0.09% | 0.09% | 0.09% | 0.10% | 0.10% | |
| Net investment income (loss) | 2.07% | 1.89% | 2.10% | 2.09% | 1.96% | |
| Portfolio turnover rate | 2% | 2% | 1% | 2% | 3% | |
| Net assets, end of period (x 1,000,000) | $21,587 | $20,473 | $17,121 | $12,687 | $10,909 | |
| |
1
Calculated based on the average shares outstanding during the period.
Schwab S&P 500 Index Fund
Condensed Portfolio Holdings as of October 31, 2015
This section shows the fund's 50 largest portfolio holdings in unaffiliated issuers, and any holdings exceeding 1% of the fund's net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-800-435-4000. This complete schedule, filed on the fund's Form N-CSR, is also available on the SEC's website at www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15-20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 99.3% | Common Stock | 12,296,413,364 | 21,436,762,073 |
| 0.1% | Other Investment Company | 22,609,285 | 22,609,285 |
| 0.6% | Short-Term Investment | 120,801,912 | 120,801,912 |
| 100.0% | Total Investments | 12,439,824,561 | 21,580,173,270 |
| 0.0% | Other Assets and Liabilities, Net | | 6,331,869 |
| 100.0% | Net Assets | | 21,586,505,139 |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Common Stock 99.3% of net assets | |
| Automobiles & Components 1.0% | |
| Other Securities | | 1.0 | 221,756,094 | |
| Banks 5.8% | |
| Bank of America Corp. | 12,227,811 | 0.9 | 205,182,669 | |
| Citigroup, Inc. | 3,519,347 | 0.8 | 187,123,680 | |
| JPMorgan Chase & Co. | 4,331,031 | 1.3 | 278,268,742 | |
| Wells Fargo & Co. | 5,453,509 | 1.4 | 295,252,977 | |
| Other Securities | | 1.4 | 296,500,247 | |
| | | 5.8 | 1,262,328,315 | |
| Capital Goods 7.2% | |
| 3M Co. | 732,719 | 0.5 | 115,190,754 | |
| General Electric Co. | 11,824,352 | 1.6 | 341,960,260 | |
| The Boeing Co. | 745,254 | 0.5 | 110,349,760 | |
| Other Securities | | 4.6 | 991,934,073 | |
| | | 7.2 | 1,559,434,847 | |
| Commercial & Professional Supplies 0.7% | |
| Other Securities | | 0.7 | 153,572,084 | |
| Consumer Durables & Apparel 1.5% | |
| Other Securities | | 1.5 | 315,037,047 | |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Consumer Services 1.9% | |
| McDonald's Corp. | 1,102,438 | 0.6 | 123,748,666 | |
| Starbucks Corp. | 1,740,024 | 0.5 | 108,873,302 | |
| Other Securities | | 0.8 | 178,858,010 | |
| | | 1.9 | 411,479,978 | |
| Diversified Financials 4.9% | |
| Berkshire Hathaway, Inc., Class B * | 2,187,130 | 1.4 | 297,493,423 | |
| The Charles Schwab Corp. (a) | 1,402,481 | 0.2 | 42,803,720 | |
| Other Securities | | 3.3 | 706,486,165 | |
| | | 4.9 | 1,046,783,308 | |
| Energy 7.1% | |
| Chevron Corp. | 2,205,834 | 0.9 | 200,466,194 | |
| Exxon Mobil Corp. | 4,871,741 | 1.9 | 403,087,850 | |
| Schlumberger Ltd. | 1,475,715 | 0.5 | 115,341,884 | |
| Other Securities | | 3.8 | 806,158,747 | |
| | | 7.1 | 1,525,054,675 | |
| Food & Staples Retailing 2.2% | |
| CVS Health Corp. | 1,302,751 | 0.6 | 128,685,744 | |
| Wal-Mart Stores, Inc. | 1,845,802 | 0.5 | 105,653,707 | |
| Other Securities | | 1.1 | 250,406,464 | |
| | | 2.2 | 484,745,915 | |
| Food, Beverage & Tobacco 5.5% | |
| Altria Group, Inc. | 2,296,091 | 0.7 | 138,844,623 | |
| PepsiCo, Inc. | 1,721,163 | 0.8 | 175,885,647 | |
| Philip Morris International, Inc. | 1,807,546 | 0.7 | 159,787,066 | |
| The Coca-Cola Co. | 4,587,756 | 0.9 | 194,291,467 | |
| Other Securities | | 2.4 | 520,432,332 | |
| | | 5.5 | 1,189,241,135 | |
| Health Care Equipment & Services 4.8% | |
| Medtronic plc | 1,656,176 | 0.6 | 122,424,530 | |
| UnitedHealth Group, Inc. | 1,116,010 | 0.6 | 131,443,658 | |
| Other Securities | | 3.6 | 778,800,218 | |
| | | 4.8 | 1,032,668,406 | |
| Household & Personal Products 1.9% | |
| The Procter & Gamble Co. | 3,167,690 | 1.1 | 241,948,162 | |
| Other Securities | | 0.8 | 160,144,951 | |
| | | 1.9 | 402,093,113 | |
| Insurance 2.7% | |
| Other Securities | | 2.7 | 589,769,423 | |
| Materials 2.9% | |
| Other Securities | | 2.9 | 629,631,287 | |
| Media 3.3% | |
| Comcast Corp., Class A | 2,900,664 | 0.8 | 181,639,580 | |
| The Walt Disney Co. | 1,815,683 | 1.0 | 206,515,784 | |
| Other Securities | | 1.5 | 315,110,236 | |
| | | 3.3 | 703,265,600 | |
Schwab S&P 500 Index Fund
Condensed Portfolio Holdings continued
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Pharmaceuticals, Biotechnology & Life Sciences 9.7% | |
| AbbVie, Inc. | 1,937,286 | 0.5 | 115,365,381 | |
| Allergan plc * | 461,268 | 0.7 | 142,287,340 | |
| Amgen, Inc. | 888,459 | 0.7 | 140,536,445 | |
| Bristol-Myers Squibb Co. | 1,947,464 | 0.6 | 128,435,251 | |
| Celgene Corp. * | 922,626 | 0.5 | 113,215,436 | |
| Gilead Sciences, Inc. | 1,718,450 | 0.9 | 185,815,999 | |
| Johnson & Johnson | 3,234,925 | 1.5 | 326,824,473 | |
| Merck & Co., Inc. | 3,295,514 | 0.8 | 180,132,795 | |
| Pfizer, Inc. | 7,215,333 | 1.1 | 244,022,562 | |
| Other Securities | | 2.4 | 513,096,655 | |
| | | 9.7 | 2,089,732,337 | |
| Real Estate 2.6% | |
| Other Securities | | 2.6 | 571,681,022 | |
| Retailing 5.4% | |
| Amazon.com, Inc. * | 448,780 | 1.3 | 280,891,402 | |
| The Home Depot, Inc. | 1,502,950 | 0.9 | 185,824,738 | |
| Other Securities | | 3.2 | 701,029,801 | |
| | | 5.4 | 1,167,745,941 | |
| Semiconductors & Semiconductor Equipment 2.4% | |
| Intel Corp. | 5,564,705 | 0.9 | 188,420,911 | |
| Other Securities | | 1.5 | 337,435,313 | |
| | | 2.4 | 525,856,224 | |
| Software & Services 11.9% | |
| Alphabet, Inc., Class A * | 336,212 | 1.1 | 247,919,367 | |
| Alphabet, Inc., Class C * | 349,175 | 1.2 | 248,197,082 | |
| Facebook, Inc., Class A * | 2,644,800 | 1.3 | 269,690,256 | |
| International Business Machines Corp. | 1,053,390 | 0.7 | 147,558,871 | |
| MasterCard, Inc., Class A | 1,167,690 | 0.5 | 115,589,633 | |
| Microsoft Corp. | 9,356,331 | 2.3 | 492,517,264 | |
| Oracle Corp. | 3,803,386 | 0.7 | 147,723,512 | |
| Visa, Inc., Class A | 2,282,600 | 0.8 | 177,084,108 | |
| Other Securities | | 3.3 | 715,115,004 | |
| | | 11.9 | 2,561,395,097 | |
| Technology Hardware & Equipment 6.4% | |
| Apple, Inc. | 6,669,715 | 3.7 | 797,030,943 | |
| Cisco Systems, Inc. | 5,965,928 | 0.8 | 172,117,023 | |
| QUALCOMM, Inc. | 1,836,165 | 0.5 | 109,104,924 | |
| Other Securities | | 1.4 | 304,877,739 | |
| | | 6.4 | 1,383,130,629 | |
| Telecommunication Services 2.4% | |
| AT&T, Inc. | 7,206,802 | 1.1 | 241,499,935 | |
| Verizon Communications, Inc. | 4,763,278 | 1.1 | 223,302,473 | |
| Other Securities | | 0.2 | 42,196,682 | |
| | | 2.4 | 506,999,090 | |
| Transportation 2.2% | |
| Other Securities | | 2.2 | 474,344,065 | |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Utilities 2.9% | |
| Other Securities | | 2.9 | 629,016,441 | |
| Total Common Stock |
| (Cost $12,296,413,364) | | | 21,436,762,073 | |
|
| Other Investment Company 0.1% of net assets | |
| Securities Lending Collateral 0.1% | |
| Other Securities | | 0.1 | 22,609,285 | |
| Total Other Investment Company |
| (Cost $22,609,285) | | | 22,609,285 | |
Security
Rate, Maturity Date | Face
Amount
($) | % of Net
Assets | Value
($) | |
| Short-Term Investment 0.6% of net assets | |
| Time Deposit 0.6% | |
JPMorgan Chase Bank
0.03%, 11/02/15 | 120,801,912 | 0.6 | 120,801,912 | |
| Total Short-Term Investment |
| (Cost $120,801,912) | | | 120,801,912 | |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $12,472,604,206 and the unrealized appreciation and depreciation were $9,712,924,583 and ($605,355,519), respectively, with a net unrealized appreciation of $9,107,569,064.
For the following notes, please refer to the complete schedule of portfolio holdings.
| * | Non-income producing security. |
| (a) | Issuer is affiliated with the fund's investment adviser. |
| (b) | All or a portion of this security is on loan. Securities on loan were valued at $22,505,104. |
| (c) | The rate shown is the 7-day yield. |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| S&P 500 Index, e-mini, Long, expires 12/18/15 | 1,200 | 124,422,000 | 5,465,100 |
Schwab S&P 500 Index Fund
Condensed Portfolio Holdings continued
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Common Stock1 | | $21,436,762,073 | | $— | | $— | | $21,436,762,073 | |
| Other Investment Company1 | | 22,609,285 | | — | | — | | 22,609,285 | |
| Short-Term Investment1 | | — | | 120,801,912 | | — | | 120,801,912 | |
| Total | | $21,459,371,358 | | $120,801,912 | | $— | | $21,580,173,270 | |
| Other Financial Instruments | | | | | | | | | |
| Futures Contracts2 | | $5,465,100 | | $— | | $— | | $5,465,100 | |
| 1 | As categorized in the complete schedule of portfolio holdings. |
| 2 | Futures contracts are not included in Investments in the schedule of condensed portfolio holdings and are valued at unrealized appreciation or depreciation. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Schwab S&P 500 Index Fund
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investment in affiliated issuer, at value (cost $20,397,564) | | $42,803,720 |
| Investments in unaffiliated issuers, at value (cost $12,396,817,712) including securities on loan of $22,505,104 | | 21,514,760,265 |
| Collateral invested for securities on loan, at value (cost $22,609,285) | + | 22,609,285 |
| Total investments, at value (cost $12,439,824,561) | | 21,580,173,270 |
| Cash | | 9,738 |
| Deposit with broker for futures contracts | | 7,820,000 |
| Receivables: | | |
| Investments sold | | 4,067,345 |
| Dividends | | 24,633,673 |
| Fund shares sold | | 23,643,908 |
| Income from securities on loan | | 73,745 |
| Interest | | 201 |
| Prepaid expenses | + | 174,881 |
| Total assets | | 21,640,596,761 |
| Liabilities |
| Collateral held for securities on loan | | 22,609,285 |
| Payables: | | |
| Investment adviser and administrator fees | | 200,555 |
| Shareholder service fees | | 72,856 |
| Fund shares redeemed | | 30,112,769 |
| Variation margin on futures contracts | | 558,000 |
| Accrued expenses | + | 538,157 |
| Total liabilities | | 54,091,622 |
| Net Assets |
| Total assets | | 21,640,596,761 |
| Total liabilities | – | 54,091,622 |
| Net assets | | $21,586,505,139 |
| Net Assets by Source | | |
| Capital received from investors | | 11,908,325,877 |
| Net investment income not yet distributed | | 357,061,921 |
| Net realized capital gains | | 175,303,532 |
| Net unrealized capital appreciation | | 9,145,813,809 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $21,586,505,139 | | 654,187,686 | | $33.00 |
| | | | | |
Schwab S&P 500 Index Fund
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends received from affiliated issuer | | $316,939 |
| Dividends received from unaffiliated issuers (net of foreign withholding taxes of $28,190) | | 458,778,460 |
| Interest | | 62,792 |
| Securities on loan | + | 888,386 |
| Total investment income | | 460,046,577 |
| Expenses |
| Investment adviser and administrator fees | | 12,750,221 |
| Shareholder service fees | | 4,026,750 |
| Shareholder reports | | 459,620 |
| Portfolio accounting fees | | 421,293 |
| Transfer agent fees | | 421,178 |
| Custodian fees | | 371,552 |
| Registration fees | | 315,262 |
| Professional fees | | 128,685 |
| Independent trustees' fees | | 108,343 |
| Proxy fees | | 79,479 |
| Index fees | | 77,648 |
| Interest expense | | 1,112 |
| Other expenses | + | 489,351 |
| Total expenses | | 19,650,494 |
| Expense reduction by CSIM and its affiliates | – | 446,076 |
| Net expenses | – | 19,204,418 |
| Net investment income | | 440,842,159 |
| Realized and Unrealized Gains (Losses) |
| Net realized gains on unaffiliated issuers | | 373,843,871 |
| Net realized gains on futures contracts | + | 34,626,831 |
| Net realized gains | | 408,470,702 |
| Net change in unrealized appreciation (depreciation) on affiliated issuer | | 2,552,369 |
| Net change in unrealized appreciation (depreciation) on unaffiliated issuers | | 208,142,819 |
| Net change in unrealized appreciation (depreciation) on futures contracts | + | (6,901,375) |
| Net change in unrealized appreciation (depreciation) | + | 203,793,813 |
| Net realized and unrealized gains | | 612,264,515 |
| Increase in net assets resulting from operations | | $1,053,106,674 |
Schwab S&P 500 Index Fund
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $440,842,159 | $356,205,063 |
| Net realized gains | | 408,470,702 | 93,310,110 |
| Net change in unrealized appreciation (depreciation) | + | 203,793,813 | 2,525,286,191 |
| Increase in net assets from operations | | 1,053,106,674 | 2,974,801,364 |
| Distributions to Shareholders | |
| Distributions from net investment income | | ($369,772,138) | ($297,103,536) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 141,493,107 | $4,563,459,195 | 139,516,160 | $4,137,951,788 |
| Shares reinvested | | 10,513,082 | 323,697,799 | 9,293,269 | 257,330,630 |
| Shares redeemed | + | (137,893,672) | (4,457,275,751) | (125,148,250) | (3,720,729,510) |
| Net transactions in fund shares | | 14,112,517 | $429,881,243 | 23,661,179 | $674,552,908 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 640,075,169 | $20,473,289,360 | 616,413,990 | $17,121,038,624 |
| Total increase | + | 14,112,517 | 1,113,215,779 | 23,661,179 | 3,352,250,736 |
| End of period | | 654,187,686 | $21,586,505,139 | 640,075,169 | $20,473,289,360 |
| Net investment income not yet distributed | | | $357,061,921 | | $289,403,265 |
Schwab 1000 Index Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $53.63 | $48.31 | $40.23 | $37.44 | $35.79 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.94 | 0.83 | 0.81 | 0.71 | 0.62 | |
| Net realized and unrealized gains (losses) | 1.40 | 6.74 | 9.74 | 4.32 | 2.07 | |
| Total from investment operations | 2.34 | 7.57 | 10.55 | 5.03 | 2.69 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.86) | (0.75) | (0.81) | (0.72) | (0.57) | |
| Distributions from net realized gains | (1.44) | (1.50) | (1.66) | (1.52) | (0.47) | |
| Total distributions | (2.30) | (2.25) | (2.47) | (2.24) | (1.04) | |
| Net asset value at end of period | $53.67 | $53.63 | $48.31 | $40.23 | $37.44 | |
| Total return | 4.66% | 16.36% | 27.85% | 14.38% | 7.60% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 0.29% | 0.29% | 0.29% | 0.29% | 0.29% | |
| Gross operating expenses | 0.33% | 0.33% | 0.34% | 0.34% | 0.34% | |
| Net investment income (loss) | 1.77% | 1.64% | 1.87% | 1.85% | 1.64% | |
| Portfolio turnover rate | 4% | 4% | 4% | 4% | 5% | |
| Net assets, end of period (x 1,000,000) | $6,550 | $6,586 | $5,887 | $4,848 | $4,552 | |
| |
1
Calculated based on the average shares outstanding during the period.
Condensed Portfolio Holdings as of October 31, 2015
This section shows the fund's 50 largest portfolio holdings in unaffiliated issuers, and any holdings exceeding 1% of the fund's net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-800-435-4000. This complete schedule, filed on the fund's Form N-CSR, is also available on the SEC's website at www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15-20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 99.4% | Common Stock | 2,065,086,022 | 6,513,773,763 |
| 0.7% | Other Investment Companies | 45,418,794 | 45,418,794 |
| 100.1% | Total Investments | 2,110,504,816 | 6,559,192,557 |
| (0.1%) | Other Assets and Liabilities, Net | | (9,269,301) |
| 100.0% | Net Assets | | 6,549,923,256 |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Common Stock 99.4% of net assets | |
| Automobiles & Components 1.2% | |
| Other Securities | | 1.2 | 76,105,709 | |
| Banks 5.5% | |
| Bank of America Corp. | 3,277,241 | 0.8 | 54,992,104 | |
| Citigroup, Inc. | 945,456 | 0.8 | 50,269,896 | |
| JPMorgan Chase & Co. | 1,160,878 | 1.1 | 74,586,412 | |
| Wells Fargo & Co. | 1,466,996 | 1.2 | 79,423,163 | |
| Other Securities | | 1.6 | 103,167,402 | |
| | | 5.5 | 362,438,977 | |
| Capital Goods 7.4% | |
| 3M Co. | 193,754 | 0.5 | 30,460,066 | |
| General Electric Co. | 3,162,802 | 1.4 | 91,468,234 | |
| The Boeing Co. | 200,889 | 0.4 | 29,745,634 | |
| Other Securities | | 5.1 | 332,175,496 | |
| | | 7.4 | 483,849,430 | |
| Commercial & Professional Supplies 0.8% | |
| Other Securities | | 0.8 | 54,687,801 | |
| Consumer Durables & Apparel 1.5% | |
| NIKE, Inc., Class B | 211,456 | 0.4 | 27,707,080 | |
| Other Securities | | 1.1 | 73,329,957 | |
| | | 1.5 | 101,037,037 | |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Consumer Services 2.3% | |
| McDonald's Corp. | 293,636 | 0.5 | 32,960,641 | |
| Starbucks Corp. | 468,254 | 0.5 | 29,298,653 | |
| Other Securities | | 1.3 | 85,629,819 | |
| | | 2.3 | 147,889,113 | |
| Diversified Financials 4.7% | |
| Berkshire Hathaway, Inc., Class B * | 588,012 | 1.2 | 79,981,392 | |
| The Charles Schwab Corp. (a) | 375,265 | 0.2 | 11,453,088 | |
| Other Securities | | 3.3 | 218,082,234 | |
| | | 4.7 | 309,516,714 | |
| Energy 6.7% | |
| Chevron Corp. | 588,837 | 0.8 | 53,513,507 | |
| Exxon Mobil Corp. | 1,309,563 | 1.7 | 108,353,243 | |
| Schlumberger Ltd. | 397,547 | 0.5 | 31,072,273 | |
| Other Securities | | 3.7 | 244,156,899 | |
| | | 6.7 | 437,095,922 | |
| Food & Staples Retailing 2.1% | |
| CVS Health Corp. | 350,211 | 0.5 | 34,593,843 | |
| Wal-Mart Stores, Inc. | 494,027 | 0.5 | 28,278,105 | |
| Other Securities | | 1.1 | 72,412,344 | |
| | | 2.1 | 135,284,292 | |
| Food, Beverage & Tobacco 5.1% | |
| Altria Group, Inc. | 617,605 | 0.6 | 37,346,574 | |
| PepsiCo, Inc. | 463,285 | 0.7 | 47,343,094 | |
| Philip Morris International, Inc. | 484,265 | 0.7 | 42,809,026 | |
| The Coca-Cola Co. | 1,232,948 | 0.8 | 52,215,348 | |
| Other Securities | | 2.3 | 153,718,228 | |
| | | 5.1 | 333,432,270 | |
| Health Care Equipment & Services 4.9% | |
| Medtronic plc | 444,022 | 0.5 | 32,822,106 | |
| UnitedHealth Group, Inc. | 300,492 | 0.6 | 35,391,948 | |
| Other Securities | | 3.8 | 249,387,164 | |
| | | 4.9 | 317,601,218 | |
| Household & Personal Products 1.8% | |
| The Procter & Gamble Co. | 846,819 | 1.0 | 64,680,035 | |
| Other Securities | | 0.8 | 51,479,193 | |
| | | 1.8 | 116,159,228 | |
| Insurance 3.0% | |
| Other Securities | | 3.0 | 199,138,282 | |
| Materials 3.2% | |
| Other Securities | | 3.2 | 207,035,591 | |
| Media 3.4% | |
| Comcast Corp., Class A | 781,623 | 0.8 | 48,945,232 | |
| The Walt Disney Co. | 487,560 | 0.8 | 55,455,075 | |
| Other Securities | | 1.8 | 120,370,143 | |
| | | 3.4 | 224,770,450 | |
Condensed Portfolio Holdings continued
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Pharmaceuticals, Biotechnology & Life Sciences 9.3% | |
| AbbVie, Inc. | 519,726 | 0.5 | 30,949,683 | |
| Allergan plc * | 123,677 | 0.6 | 38,150,644 | |
| Amgen, Inc. | 238,802 | 0.6 | 37,773,700 | |
| Bristol-Myers Squibb Co. | 519,939 | 0.5 | 34,289,977 | |
| Celgene Corp. * | 248,040 | 0.5 | 30,436,988 | |
| Gilead Sciences, Inc. | 459,344 | 0.8 | 49,668,867 | |
| Johnson & Johnson | 869,187 | 1.3 | 87,813,963 | |
| Merck & Co., Inc. | 884,118 | 0.7 | 48,325,890 | |
| Pfizer, Inc. | 1,936,551 | 1.0 | 65,494,155 | |
| Other Securities | | 2.8 | 186,289,099 | |
| | | 9.3 | 609,192,966 | |
| Real Estate 3.7% | |
| Other Securities | | 3.7 | 243,787,721 | |
| Retailing 5.2% | |
| Amazon.com, Inc. * | 120,241 | 1.1 | 75,258,842 | |
| The Home Depot, Inc. | 402,135 | 0.8 | 49,719,971 | |
| Other Securities | | 3.3 | 217,186,017 | |
| | | 5.2 | 342,164,830 | |
| Semiconductors & Semiconductor Equipment 2.3% | |
| Intel Corp. | 1,493,680 | 0.8 | 50,576,005 | |
| Other Securities | | 1.5 | 102,427,744 | |
| | | 2.3 | 153,003,749 | |
| Software & Services 11.8% | |
| Alphabet, Inc., Class A * | 89,988 | 1.0 | 66,356,251 | |
| Alphabet, Inc., Class C * | 93,732 | 1.0 | 66,625,643 | |
| Facebook, Inc., Class A * | 708,500 | 1.1 | 72,245,745 | |
| International Business Machines Corp. | 282,040 | 0.6 | 39,508,163 | |
| MasterCard, Inc., Class A | 312,010 | 0.5 | 30,885,870 | |
| Microsoft Corp. | 2,507,338 | 2.0 | 131,986,272 | |
| Oracle Corp. | 1,018,410 | 0.6 | 39,555,044 | |
| Visa, Inc., Class A | 611,200 | 0.7 | 47,416,896 | |
| Other Securities | | 4.3 | 279,285,079 | |
| | | 11.8 | 773,864,963 | |
| Technology Hardware & Equipment 6.1% | |
| Apple, Inc. | 1,788,174 | 3.3 | 213,686,793 | |
| Cisco Systems, Inc. | 1,599,015 | 0.7 | 46,131,583 | |
| QUALCOMM, Inc. | 492,478 | 0.4 | 29,263,043 | |
| Other Securities | | 1.7 | 110,916,054 | |
| | | 6.1 | 399,997,473 | |
| Telecommunication Services 2.2% | |
| AT&T, Inc. | 1,926,241 | 1.0 | 64,548,336 | |
| Verizon Communications, Inc. | 1,272,057 | 0.9 | 59,634,032 | |
| Other Securities | | 0.3 | 21,151,982 | |
| | | 2.2 | 145,334,350 | |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Transportation 2.2% | |
| Other Securities | | 2.2 | 141,970,234 | |
| Utilities 3.0% | |
| Other Securities | | 3.0 | 198,415,443 | |
| Total Common Stock |
| (Cost $2,065,086,022) | | | 6,513,773,763 | |
|
| Other Investment Companies 0.7% of net assets | |
| Money Market Fund 0.4% | |
| Other Securities | | 0.4 | 24,392,194 | |
| Securities Lending Collateral 0.3% | |
| Other Securities | | 0.3 | 21,026,600 | |
| Total Other Investment Companies |
| (Cost $45,418,794) | | | 45,418,794 | |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $2,085,831,624 and the unrealized appreciation and depreciation were $4,556,700,963 and ($83,340,030), respectively, with a net unrealized appreciation of $4,473,360,933.
For the following notes, please refer to the complete schedule of portfolio holdings.
| * | Non-income producing security. |
| (a) | Issuer is affiliated with the fund's investment adviser. |
| (b) | All or a portion of this security is on loan. Securities on loan were valued at $20,468,476. |
| (c) | The rate shown is the 7-day yield. |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| S&P 500 Index, e-mini, Long, expires 12/18/15 | 225 | 23,329,125 | 1,436,202 |
Condensed Portfolio Holdings continued
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Common Stock1 | | $6,513,773,763 | | $— | | $— | | $6,513,773,763 | |
| Other Investment Companies1 | | 45,418,794 | | — | | — | | 45,418,794 | |
| Total | | $6,559,192,557 | | $— | | $— | | $6,559,192,557 | |
| Other Financial Instruments | | | | | | | | | |
| Futures Contracts2 | | $1,436,202 | | $— | | $— | | $1,436,202 | |
| 1 | As categorized in the complete schedule of portfolio holdings. |
| 2 | Futures contracts are not included in Investments in the schedule of condensed portfolio holdings and are valued at unrealized appreciation or depreciation. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investment in affiliated issuer, at value (cost $2,209,352) | | $11,453,088 |
| Investments in unaffiliated issuers, at value (cost $2,087,268,864) including securities on loan of $20,468,476 | | 6,526,712,869 |
| Collateral invested for securities on loan, at value (cost $21,026,600) | + | 21,026,600 |
| Total investments, at value (cost $2,110,504,816) | | 6,559,192,557 |
| Deposit with broker for futures contracts | | 2,645,000 |
| Receivables: | | |
| Investments sold | | 2,555,020 |
| Dividends | | 6,944,993 |
| Fund shares sold | | 1,861,039 |
| Income from securities on loan | | 7,149 |
| Prepaid expenses | + | 51,551 |
| Total assets | | 6,573,257,309 |
| Liabilities |
| Collateral held for securities on loan | | 21,026,600 |
| Payables: | | |
| Investment adviser and administrator fees | | 191,023 |
| Shareholder service fees | | 104,540 |
| Fund shares redeemed | | 1,713,160 |
| Variation margin on futures contracts | | 104,625 |
| Accrued expenses | + | 194,105 |
| Total liabilities | | 23,334,053 |
| Net Assets |
| Total assets | | 6,573,257,309 |
| Total liabilities | – | 23,334,053 |
| Net assets | | $6,549,923,256 |
| Net Assets by Source | | |
| Capital received from investors | | 1,719,572,429 |
| Net investment income not yet distributed | | 92,741,182 |
| Net realized capital gains | | 287,485,702 |
| Net unrealized capital appreciation | | 4,450,123,943 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $6,549,923,256 | | 122,043,407 | | $53.67 |
| | | | | |
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends received from affiliated issuer | | $86,800 |
| Dividends received from unaffiliated issuers (net of foreign withholding taxes of $15,174) | | 135,824,860 |
| Interest | | 452 |
| Securities on loan | + | 566,702 |
| Total investment income | | 136,478,814 |
| Expenses |
| Investment adviser and administrator fees | | 14,623,547 |
| Shareholder service fees | | 6,378,884 |
| Shareholder reports | | 207,471 |
| Portfolio accounting fees | | 165,519 |
| Custodian fees | | 112,441 |
| Transfer agent fees | | 91,713 |
| Professional fees | | 70,963 |
| Independent trustees' fees | | 57,273 |
| Registration fees | | 37,894 |
| Proxy fees | | 32,215 |
| Interest expense | | 296 |
| Other expenses | + | 197,505 |
| Total expenses | | 21,975,721 |
| Expense reduction by CSIM and its affiliates | – | 2,770,669 |
| Net expenses | – | 19,205,052 |
| Net investment income | | 117,273,762 |
| Realized and Unrealized Gains (Losses) |
| Net realized gains on affiliated issuer | | 197,850 |
| Net realized gains on unaffiliated issuers | | 262,649,898 |
| Net realized gains on futures contracts | + | 1,030,367 |
| Net realized gains | | 263,878,115 |
| Net change in unrealized appreciation (depreciation) on affiliated issuer | | 523,211 |
| Net change in unrealized appreciation (depreciation) on unaffiliated issuers | | (79,848,109) |
| Net change in unrealized appreciation (depreciation) on futures contracts | + | 635,351 |
| Net change in unrealized appreciation (depreciation) | + | (78,689,547) |
| Net realized and unrealized gains | | 185,188,568 |
| Increase in net assets resulting from operations | | $302,462,330 |
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $117,273,762 | $102,452,866 |
| Net realized gains | | 263,878,115 | 177,941,436 |
| Net change in unrealized appreciation (depreciation) | + | (78,689,547) | 660,921,380 |
| Increase in net assets from operations | | 302,462,330 | 941,315,682 |
| Distributions to Shareholders | |
| Distributions from net investment income | | (105,608,703) | (91,043,881) |
| Distributions from net realized gains | + | (176,669,683) | (182,379,726) |
| Total distributions | | ($282,278,386) | ($273,423,607) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 8,572,420 | $453,508,106 | 8,474,992 | $424,679,163 |
| Shares reinvested | | 4,867,270 | 244,385,619 | 5,073,441 | 236,878,978 |
| Shares redeemed | + | (14,211,205) | (754,521,955) | (12,594,623) | (630,314,274) |
| Net transactions in fund shares | | (771,515) | ($56,628,230) | 953,810 | $31,243,867 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 122,814,922 | $6,586,367,542 | 121,861,112 | $5,887,231,600 |
| Total increase or decrease | + | (771,515) | (36,444,286) | 953,810 | 699,135,942 |
| End of period | | 122,043,407 | $6,549,923,256 | 122,814,922 | $6,586,367,542 |
| Net investment income not yet distributed | | | $92,741,182 | | $82,633,843 |
Schwab Small-Cap Index Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $28.13 | $27.62 | $21.26 | $20.55 | $19.18 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.38 | 0.35 | 0.42 | 0.33 | 0.25 | |
| Net realized and unrealized gains (losses) | (0.34) | 1.76 | 6.94 | 1.89 | 1.37 | |
| Total from investment operations | 0.04 | 2.11 | 7.36 | 2.22 | 1.62 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.34) | (0.31) | (0.50) | (0.35) | (0.20) | |
| Distributions from net realized gains | (1.54) | (1.29) | (0.50) | (1.16) | (0.05) | |
| Total distributions | (1.88) | (1.60) | (1.00) | (1.51) | (0.25) | |
| Net asset value at end of period | $26.29 | $28.13 | $27.62 | $21.26 | $20.55 | |
| Total return | 0.36% | 8.08% | 36.23% | 11.87% | 8.45% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 0.17% | 0.17% | 0.17% | 0.17% | 0.19% | |
| Gross operating expenses | 0.20% | 0.21% | 0.20% | 0.21% | 0.19% | |
| Net investment income (loss) | 1.37% | 1.27% | 1.76% | 1.63% | 1.18% | |
| Portfolio turnover rate | 17% | 12% | 11% | 41% 2 | 26% | |
| Net assets, end of period (x 1,000,000) | $2,607 | $2,567 | $2,351 | $1,675 | $1,502 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Portfolio turnover rate increase was mainly the result of trading activities in connection with the change in primary benchmark index effective December 14, 2011.
Schwab Small-Cap Index Fund
Condensed Portfolio Holdings as of October 31, 2015
This section shows the fund's 50 largest portfolio holdings in unaffiliated issuers, and any holdings exceeding 1% of the fund's net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-800-435-4000. This complete schedule, filed on the fund's Form N-CSR, is also available on the SEC's website at www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15-20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 99.4% | Common Stock | 1,996,193,500 | 2,590,361,425 |
| 0.0% | Rights | 320,914 | 320,914 |
| 0.0% | Warrants | — | — |
| 6.4% | Other Investment Company | 166,858,920 | 166,858,920 |
| 0.4% | Short-Term Investment | 10,766,144 | 10,766,144 |
| 106.2% | Total Investments | 2,174,139,478 | 2,768,307,403 |
| (6.2%) | Other Assets and Liabilities, Net | | (161,052,176) |
| 100.0% | Net Assets | | 2,607,255,227 |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Common Stock 99.4% of net assets | |
| Automobiles & Components 1.2% | |
| Tenneco, Inc. * | 91,428 | 0.2 | 5,173,911 | |
| Other Securities | | 1.0 | 26,951,806 | |
| | | 1.2 | 32,125,717 | |
| Banks 11.2% | |
| Bank of the Ozarks, Inc. | 116,159 | 0.2 | 5,810,273 | |
| Investors Bancorp, Inc. | 528,352 | 0.3 | 6,609,683 | |
| PrivateBancorp, Inc. | 118,776 | 0.2 | 4,968,400 | |
| Prosperity Bancshares, Inc. | 104,295 | 0.2 | 5,358,677 | |
| Umpqua Holdings Corp. | 331,688 | 0.2 | 5,539,190 | |
| Webster Financial Corp. | 136,127 | 0.2 | 5,050,312 | |
| Other Securities | | 9.9 | 257,811,194 | |
| | | 11.2 | 291,147,729 | |
| Capital Goods 7.2% | |
| Curtiss-Wright Corp. | 71,640 | 0.2 | 4,983,278 | |
| Other Securities | | 7.0 | 181,918,115 | |
| | | 7.2 | 186,901,393 | |
| Commercial & Professional Supplies 3.6% | |
| Other Securities | | 3.6 | 93,016,620 | |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Consumer Durables & Apparel 2.5% | |
| Other Securities | | 2.5 | 64,598,468 | |
| Consumer Services 4.4% | |
| Vail Resorts, Inc. | 54,771 | 0.2 | 6,253,205 | |
| Other Securities | | 4.2 | 108,138,991 | |
| | | 4.4 | 114,392,196 | |
| Diversified Financials 2.2% | |
| MarketAxess Holdings, Inc. | 55,422 | 0.2 | 5,614,803 | |
| Other Securities | | 2.0 | 51,075,328 | |
| | | 2.2 | 56,690,131 | |
| Energy 3.0% | |
| Other Securities | | 3.0 | 79,416,926 | |
| Food & Staples Retailing 0.9% | |
| Casey's General Stores, Inc. | 57,506 | 0.2 | 6,108,287 | |
| Other Securities | | 0.7 | 16,953,170 | |
| | | 0.9 | 23,061,457 | |
| Food, Beverage & Tobacco 2.1% | |
| Post Holdings, Inc. * | 92,699 | 0.2 | 5,957,765 | |
| TreeHouse Foods, Inc. * | 63,252 | 0.2 | 5,416,901 | |
| Other Securities | | 1.7 | 44,017,196 | |
| | | 2.1 | 55,391,862 | |
| Health Care Equipment & Services 6.7% | |
| Amsurg Corp. * | 72,053 | 0.2 | 5,050,195 | |
| STERIS Corp. (c) | 126,127 | 0.4 | 9,453,219 | |
| Team Health Holdings, Inc. * | 106,058 | 0.2 | 6,328,481 | |
| WellCare Health Plans, Inc. * | 65,906 | 0.2 | 5,839,272 | |
| West Pharmaceutical Services, Inc. | 108,532 | 0.2 | 6,513,005 | |
| Other Securities | | 5.5 | 142,750,917 | |
| | | 6.7 | 175,935,089 | |
| Household & Personal Products 0.4% | |
| Other Securities | | 0.4 | 9,962,853 | |
| Insurance 2.6% | |
| CNO Financial Group, Inc. | 296,168 | 0.2 | 5,689,387 | |
| First American Financial Corp. | 162,900 | 0.3 | 6,211,377 | |
| Other Securities | | 2.1 | 55,487,923 | |
| | | 2.6 | 67,388,687 | |
| Materials 3.8% | |
| Berry Plastics Group, Inc. * | 180,257 | 0.2 | 6,038,609 | |
| Other Securities | | 3.6 | 92,302,355 | |
| | | 3.8 | 98,340,964 | |
| Media 1.6% | |
| Other Securities | | 1.6 | 41,322,125 | |
Schwab Small-Cap Index Fund
Condensed Portfolio Holdings continued
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Pharmaceuticals, Biotechnology & Life Sciences 8.3% | |
| Anacor Pharmaceuticals, Inc. * | 62,396 | 0.3 | 7,013,934 | |
| Dyax Corp. * | 221,213 | 0.2 | 6,089,994 | |
| Neurocrine Biosciences, Inc. * | 129,903 | 0.3 | 6,376,938 | |
| PAREXEL International Corp. * | 82,880 | 0.2 | 5,231,386 | |
| Ultragenyx Pharmaceutical, Inc. * | 57,341 | 0.2 | 5,696,828 | |
| Other Securities | | 7.1 | 185,537,036 | |
| | | 8.3 | 215,946,116 | |
| Real Estate 9.6% | |
| CubeSmart | 247,243 | 0.3 | 6,878,300 | |
| DCT Industrial Trust, Inc. | 133,626 | 0.2 | 4,960,197 | |
| Highwoods Properties, Inc. | 138,207 | 0.2 | 6,005,094 | |
| LaSalle Hotel Properties | 168,379 | 0.2 | 4,952,026 | |
| Sovran Self Storage, Inc. | 53,417 | 0.2 | 5,334,756 | |
| Strategic Hotels & Resorts, Inc. * | 407,984 | 0.2 | 5,752,574 | |
| Other Securities | | 8.3 | 217,627,491 | |
| | | 9.6 | 251,510,438 | |
| Retailing 4.3% | |
| Burlington Stores, Inc. * | 113,791 | 0.2 | 5,471,071 | |
| Pool Corp. | 65,028 | 0.2 | 5,302,383 | |
| Restoration Hardware Holdings, Inc. * | 49,241 | 0.2 | 5,076,255 | |
| Other Securities | | 3.7 | 96,812,260 | |
| | | 4.3 | 112,661,969 | |
| Semiconductors & Semiconductor Equipment 3.3% | |
| Cavium, Inc. * | 82,300 | 0.2 | 5,839,185 | |
| Integrated Device Technology, Inc. * | 220,089 | 0.2 | 5,612,269 | |
| Microsemi Corp. * | 141,981 | 0.2 | 5,112,736 | |
| Other Securities | | 2.7 | 68,765,210 | |
| | | 3.3 | 85,329,400 | |
| Software & Services 9.4% | |
| Aspen Technology, Inc. * | 128,199 | 0.2 | 5,306,157 | |
| EPAM Systems, Inc. * | 72,383 | 0.2 | 5,598,825 | |
| Euronet Worldwide, Inc. * | 76,982 | 0.2 | 6,177,036 | |
| Guidewire Software, Inc. * | 103,927 | 0.2 | 6,051,669 | |
| j2 Global, Inc. | 71,228 | 0.2 | 5,523,731 | |
| Manhattan Associates, Inc. * | 111,088 | 0.3 | 8,092,761 | |
| MAXIMUS, Inc. | 98,817 | 0.3 | 6,739,319 | |
| Tyler Technologies, Inc. * | 49,952 | 0.3 | 8,509,823 | |
| Other Securities | | 7.5 | 194,065,371 | |
| | | 9.4 | 246,064,692 | |
| Technology Hardware & Equipment 4.9% | |
| Other Securities | | 4.9 | 127,971,040 | |
| Telecommunication Services 0.9% | |
| Other Securities | | 0.9 | 22,811,868 | |
| Transportation 1.5% | |
| Other Securities | | 1.5 | 40,418,673 | |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Utilities 3.8% | |
| IDACORP, Inc. | 76,243 | 0.2 | 5,096,845 | |
| Piedmont Natural Gas Co., Inc. | 117,906 | 0.3 | 6,757,193 | |
| Other Securities | | 3.3 | 86,100,974 | |
| | | 3.8 | 97,955,012 | |
| Total Common Stock |
| (Cost $1,996,193,500) | | | 2,590,361,425 | |
|
| Rights 0.0% of net assets | |
| Automobiles & Components 0.0% | |
| Other Securities | | 0.0 | 107,470 | |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% | |
| Other Securities | | 0.0 | — | |
| Telecommunication Services 0.0% | |
| Other Securities | | 0.0 | 213,444 | |
| Total Rights |
| (Cost $320,914) | | | 320,914 | |
|
| Warrants 0.0% of net assets | |
| Energy 0.0% | |
| Other Securities | | 0.0 | — | |
| Total Warrants |
| (Cost $—) | | | — | |
|
| Other Investment Company 6.4% of net assets | |
| Securities Lending Collateral 6.4% | |
| Wells Fargo Advantage Government Money Market Fund, Institutional Class 0.01% (d) | 166,858,920 | 6.4 | 166,858,920 | |
| Total Other Investment Company |
| (Cost $166,858,920) | | | 166,858,920 | |
Security
Rate, Maturity Date | Face
Amount
($) | % of Net
Assets | Value
($) | |
| Short-Term Investment 0.4% of net assets | |
| Time Deposit 0.4% | |
Sumitomo Mitsui Banking Corp.
0.03%, 11/02/15 | 10,766,144 | 0.4 | 10,766,144 | |
| Total Short-Term Investment |
| (Cost $10,766,144) | | | 10,766,144 | |
End of Investments.
Schwab Small-Cap Index Fund
Condensed Portfolio Holdings continued
At 10/31/15, the tax basis cost of the fund's investments was $2,184,722,405 and the unrealized appreciation and depreciation were $844,629,291 and ($261,044,293), respectively, with a net unrealized appreciation of $583,584,998.
For the following notes, please refer to the complete schedule of portfolio holdings.
| * | Non-income producing security. |
| (a) | Illiquid security. At the period end, the value of these amounted to $320,914 or 0.0% of net assets. |
| (b) | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| (c) | All or a portion of this security is on loan. Securities on loan were valued at $161,902,253. |
| (d) | The rate shown is the 7-day yield. |
| | |
| CVR — | Contingent Value Rights |
| REIT — | Real Estate Investment Trust |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| Russell 2000 Index, mini, Long, expires 12/18/15 | 106 | 12,277,980 | 45,208 |
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Common Stock1 | | $2,344,296,733 | | $— | | $— | | $2,344,296,733 | |
| Software & Services | | 246,011,670 | | — | | 53,022 | | 246,064,692 | |
| Rights 1 | | — | | — | | 320,914 | | 320,914 | |
| Warrants 1 | | — | | — | | — | | — | |
| Other Investment Company1 | | 166,858,920 | | — | | — | | 166,858,920 | |
| Short-Term Investment1 | | — | | 10,766,144 | | — | | 10,766,144 | |
| Total | | $2,757,167,323 | | $10,766,144 | | $373,936 | | $2,768,307,403 | |
| Other Financial Instruments | | | | | | | | | |
| Futures Contracts2 | | $45,208 | | $— | | $— | | $45,208 | |
| 1 | As categorized in the complete schedule of portfolio holdings. |
| 2 | Futures contracts are not included in Investments in the schedule of condensed portfolio holdings and are valued at unrealized appreciation or depreciation. |
The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
| Investments in Securities | | Balance
as of
October 31,
2014 | | Realized
Gains
(Losses) | | Change in
Unrealized
Appreciation
(Depreciation) | | Gross
Purchases | | Gross
Sales | | Gross
Transfers
in | | Gross
Transfers
out | | Balance
as of
October 31,
2015 |
| Common Stock | | $— | | $— | | ($111,917) | | $164,939 | | $— | | $— | | $— | | $53,022 |
| Rights | | 320,914 | | — | | — | | — | | — | | — | | — | | 320,914 |
| Total | | $320,914 | | $— | | ($111,917) | | $164,939 | | $— | | $— | | $— | | $373,936 |
All net realized and change in unrealized gains (losses) in the table above are reflected on the accompanying Statement of Operations. The net change in unrealized appreciation (depreciation) for Level 3 investments held by the fund at October 31, 2015 was ($111,917).
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Schwab Small-Cap Index Fund
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments, at value (cost $2,007,280,558) including securities on loan of $161,902,253 | | $2,601,448,483 |
| Collateral invested for securities on loan, at value (cost $166,858,920) | + | 166,858,920 |
| Total investments, at value (cost $2,174,139,478) | | 2,768,307,403 |
| Deposit with broker for futures contracts | | 1,759,500 |
| Receivables: | | |
| Investments sold | | 4,080,558 |
| Fund shares sold | | 3,309,059 |
| Dividends | | 972,705 |
| Income from securities on loan | | 557,406 |
| Receivable from investment adviser | | 623 |
| Interest | | 17 |
| Prepaid expenses | + | 33,217 |
| Total assets | | 2,779,020,488 |
| Liabilities |
| Collateral held for securities on loan | | 166,858,920 |
| Payables: | | |
| Investment adviser and administrator fees | | 47,709 |
| Shareholder service fees | | 8,569 |
| Fund shares redeemed | | 4,549,845 |
| Variation margin on futures contracts | | 31,647 |
| Accrued expenses | + | 268,571 |
| Total liabilities | | 171,765,261 |
| Net Assets |
| Total assets | | 2,779,020,488 |
| Total liabilities | – | 171,765,261 |
| Net assets | | $2,607,255,227 |
| Net Assets by Source | | |
| Capital received from investors | | 1,863,086,383 |
| Net investment income not yet distributed | | 26,542,110 |
| Net realized capital gains | | 123,413,601 |
| Net unrealized capital appreciation | | 594,213,133 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $2,607,255,227 | | 99,169,772 | | $26.29 |
| | | | | |
Schwab Small-Cap Index Fund
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends (net of foreign withholding tax of $16,606) | | $35,118,776 |
| Interest | | 8,733 |
| Securities on loan | + | 5,782,041 |
| Total investment income | | 40,909,550 |
| Expenses |
| Investment adviser and administrator fees | | 3,971,644 |
| Shareholder service fees | | 506,320 |
| Index fees | | 343,832 |
| Shareholder reports | | 117,626 |
| Portfolio accounting fees | | 111,528 |
| Transfer agent fees | | 63,024 |
| Registration fees | | 60,922 |
| Custodian fees | | 60,767 |
| Professional fees | | 49,359 |
| Proxy fees | | 21,763 |
| Independent trustees' fees | | 19,364 |
| Interest expense | | 1,215 |
| Other expenses | + | 71,681 |
| Total expenses | | 5,399,045 |
| Expense reduction by CSIM and its affiliates | – | 875,132 |
| Net expenses | – | 4,523,913 |
| Net investment income | | 36,385,637 |
| Realized and Unrealized Gains (Losses) |
| Net realized gains on investments | | 127,593,996 |
| Net realized gains on futures contracts | | 1,816,045 |
| Net realized losses on foreign currency transactions | + | (237) |
| Net realized gains | | 129,409,804 |
| Net change in unrealized appreciation (depreciation) on investments | | (161,730,493) |
| Net change in unrealized appreciation (depreciation) on futures contracts | + | (157,690) |
| Net change in unrealized appreciation (depreciation) | + | (161,888,183) |
| Net realized and unrealized losses | | (32,478,379) |
| Increase in net assets resulting from operations | | $3,907,258 |
Schwab Small-Cap Index Fund
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $36,385,637 | $31,769,876 |
| Net realized gains | | 129,409,804 | 144,072,375 |
| Net change in unrealized appreciation (depreciation) | + | (161,888,183) | 15,102,446 |
| Increase in net assets from operations | | 3,907,258 | 190,944,697 |
| Distributions to Shareholders | |
| Distributions from net investment income | | (31,478,925) | (26,168,327) |
| Distributions from net realized gains | + | (140,885,597) | (110,361,333) |
| Total distributions | | ($172,364,522) | ($136,529,660) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 22,816,080 | $620,636,969 | 19,513,159 | $532,426,174 |
| Shares reinvested | | 6,143,892 | 156,607,812 | 4,820,637 | 125,963,244 |
| Shares redeemed | + | (21,022,054) | (568,337,329) | (18,247,583) | (497,352,580) |
| Net transactions in fund shares | | 7,937,918 | $208,907,452 | 6,086,213 | $161,036,838 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 91,231,854 | $2,566,805,039 | 85,145,641 | $2,351,353,164 |
| Total increase | + | 7,937,918 | 40,450,188 | 6,086,213 | 215,451,875 |
| End of period | | 99,169,772 | $2,607,255,227 | 91,231,854 | $2,566,805,039 |
| Net investment income not yet distributed | | | $26,542,110 | | $22,176,318 |
Schwab Total Stock Market Index Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $36.96 | $32.53 | $25.80 | $22.92 | $21.57 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.72 1 | 0.60 | 0.57 | 0.47 | 0.41 | |
| Net realized and unrealized gains (losses) | 0.83 | 4.49 | 6.70 | 2.83 | 1.33 | |
| Total from investment operations | 1.55 | 5.09 | 7.27 | 3.30 | 1.74 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.61) | (0.51) | (0.54) | (0.42) | (0.39) | |
| Distributions from net realized gains | (0.21) | (0.15) | — | — | — | |
| Total distributions | (0.82) | (0.66) | (0.54) | (0.42) | (0.39) | |
| Net asset value at end of period | $37.69 | $36.96 | $32.53 | $25.80 | $22.92 | |
| Total return | 4.36% | 15.93% | 28.76% | 14.71% | 8.14% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 0.09% | 0.09% | 0.09% | 0.09% | 0.09% | |
| Gross operating expenses | 0.11% | 0.10% | 0.10% | 0.10% | 0.11% | |
| Net investment income (loss) | 1.92% | 1.79% | 2.02% | 2.02% | 1.79% | |
| Portfolio turnover rate | 2% | 1% | 2% | 3% | 1% | |
| Net assets, end of period (x 1,000,000) | $4,477 | $4,049 | $3,183 | $2,240 | $1,747 | |
| |
1
Calculated based on the average shares outstanding during the period.
Schwab Total Stock Market Index Fund
Condensed Portfolio Holdings as of October 31, 2015
This section shows the fund's 50 largest portfolio holdings in unaffiliated issuers, and any holdings exceeding 1% of the fund's net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-800-435-4000. This complete schedule, filed on the fund's Form N-CSR, is also available on the SEC's website at www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15-20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 99.2% | Common Stock | 2,804,713,777 | 4,440,133,759 |
| 0.0% | Rights | 32,982 | 32,760 |
| 0.0% | Warrants | — | — |
| 0.8% | Other Investment Company | 36,468,372 | 36,468,372 |
| 1.5% | Short-Term Investments | 67,205,632 | 67,205,632 |
| 101.5% | Total Investments | 2,908,420,763 | 4,543,840,523 |
| (1.5%) | Other Assets and Liabilities, Net | | (66,982,719) |
| 100.0% | Net Assets | | 4,476,857,804 |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Common Stock 99.2% of net assets | |
| Automobiles & Components 1.2% | |
| Other Securities | | 1.2 | 51,751,144 | |
| Banks 6.0% | |
| Bank of America Corp. | 2,052,101 | 0.8 | 34,434,255 | |
| Citigroup, Inc. | 591,989 | 0.7 | 31,476,055 | |
| JPMorgan Chase & Co. | 727,563 | 1.0 | 46,745,923 | |
| Wells Fargo & Co. | 918,113 | 1.1 | 49,706,638 | |
| Other Securities | | 2.4 | 107,999,194 | |
| | | 6.0 | 270,362,065 | |
| Capital Goods 7.4% | |
| 3M Co. | 122,357 | 0.4 | 19,235,744 | |
| General Electric Co. | 1,978,012 | 1.3 | 57,204,107 | |
| The Boeing Co. | 125,636 | 0.4 | 18,602,923 | |
| Other Securities | | 5.3 | 236,513,979 | |
| | | 7.4 | 331,556,753 | |
| Commercial & Professional Supplies 1.1% | |
| Other Securities | | 1.1 | 48,329,463 | |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Consumer Durables & Apparel 1.6% | |
| Other Securities | | 1.6 | 73,744,458 | |
| Consumer Services 2.3% | |
| McDonald's Corp. | 183,940 | 0.5 | 20,647,265 | |
| Other Securities | | 1.8 | 82,952,324 | |
| | | 2.3 | 103,599,589 | |
| Diversified Financials 4.6% | |
| Berkshire Hathaway, Inc., Class B * | 368,002 | 1.1 | 50,055,632 | |
| The Charles Schwab Corp. (a) | 240,126 | 0.2 | 7,328,646 | |
| Other Securities | | 3.3 | 146,609,159 | |
| | | 4.6 | 203,993,437 | |
| Energy 6.5% | |
| Chevron Corp. | 369,023 | 0.8 | 33,536,810 | |
| Exxon Mobil Corp. | 819,399 | 1.5 | 67,797,073 | |
| Schlumberger Ltd. | 246,103 | 0.4 | 19,235,411 | |
| Other Securities | | 3.8 | 168,602,393 | |
| | | 6.5 | 289,171,687 | |
| Food & Staples Retailing 1.9% | |
| CVS Health Corp. | 218,937 | 0.5 | 21,626,597 | |
| Other Securities | | 1.4 | 65,015,889 | |
| | | 1.9 | 86,642,486 | |
| Food, Beverage & Tobacco 4.8% | |
| Altria Group, Inc. | 381,823 | 0.5 | 23,088,837 | |
| PepsiCo, Inc. | 287,358 | 0.7 | 29,365,114 | |
| Philip Morris International, Inc. | 304,009 | 0.6 | 26,874,396 | |
| The Coca-Cola Co. | 764,614 | 0.7 | 32,381,403 | |
| Other Securities | | 2.3 | 104,276,201 | |
| | | 4.8 | 215,985,951 | |
| Health Care Equipment & Services 4.9% | |
| Medtronic plc | 275,688 | 0.4 | 20,378,857 | |
| UnitedHealth Group, Inc. | 186,481 | 0.5 | 21,963,732 | |
| Other Securities | | 4.0 | 178,000,544 | |
| | | 4.9 | 220,343,133 | |
| Household & Personal Products 1.7% | |
| The Procter & Gamble Co. | 533,724 | 0.9 | 40,765,839 | |
| Other Securities | | 0.8 | 34,670,956 | |
| | | 1.7 | 75,436,795 | |
| Insurance 3.1% | |
| Other Securities | | 3.1 | 136,996,720 | |
| Materials 3.2% | |
| Other Securities | | 3.2 | 145,020,545 | |
Schwab Total Stock Market Index Fund
Condensed Portfolio Holdings continued
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Media 3.3% | |
| Comcast Corp., Class A | 481,860 | 0.7 | 30,174,073 | |
| The Walt Disney Co. | 302,439 | 0.8 | 34,399,412 | |
| Other Securities | | 1.8 | 83,307,417 | |
| | | 3.3 | 147,880,902 | |
| Pharmaceuticals, Biotechnology & Life Sciences 9.2% | |
| AbbVie, Inc. | 322,096 | 0.4 | 19,180,817 | |
| Allergan plc * | 77,087 | 0.5 | 23,779,027 | |
| Amgen, Inc. | 150,989 | 0.6 | 23,883,440 | |
| Bristol-Myers Squibb Co. | 326,953 | 0.5 | 21,562,550 | |
| Celgene Corp. * | 155,562 | 0.4 | 19,089,013 | |
| Gilead Sciences, Inc. | 289,192 | 0.7 | 31,270,331 | |
| Johnson & Johnson | 544,109 | 1.2 | 54,971,332 | |
| Merck & Co., Inc. | 556,516 | 0.7 | 30,419,165 | |
| Pfizer, Inc. | 1,213,725 | 0.9 | 41,048,179 | |
| Other Securities | | 3.3 | 146,409,528 | |
| | | 9.2 | 411,613,382 | |
| Real Estate 4.2% | |
| Other Securities | | 4.2 | 185,706,820 | |
| Retailing 5.1% | |
| Amazon.com, Inc. * | 75,225 | 1.0 | 47,083,327 | |
| The Home Depot, Inc. | 251,963 | 0.7 | 31,152,705 | |
| Other Securities | | 3.4 | 150,623,627 | |
| | | 5.1 | 228,859,659 | |
| Semiconductors & Semiconductor Equipment 2.4% | |
| Intel Corp. | 931,897 | 0.7 | 31,554,032 | |
| Other Securities | | 1.7 | 75,354,173 | |
| | | 2.4 | 106,908,205 | |
| Software & Services 11.5% | |
| Alphabet, Inc., Class A * | 57,076 | 0.9 | 42,087,272 | |
| Alphabet, Inc., Class C * | 58,027 | 0.9 | 41,246,172 | |
| Facebook, Inc., Class A * | 444,207 | 1.0 | 45,295,788 | |
| International Business Machines Corp. | 176,151 | 0.6 | 24,675,232 | |
| MasterCard, Inc., Class A | 195,156 | 0.4 | 19,318,492 | |
| Microsoft Corp. | 1,569,518 | 1.8 | 82,619,428 | |
| Oracle Corp. | 636,313 | 0.6 | 24,714,397 | |
| Visa, Inc., Class A | 381,804 | 0.7 | 29,620,354 | |
| Other Securities | | 4.6 | 203,872,224 | |
| | | 11.5 | 513,449,359 | |
| Technology Hardware & Equipment 6.0% | |
| Apple, Inc. | 1,122,262 | 3.0 | 134,110,309 | |
| Cisco Systems, Inc. | 992,840 | 0.7 | 28,643,434 | |
| QUALCOMM, Inc. | 305,839 | 0.4 | 18,172,953 | |
| Other Securities | | 1.9 | 86,777,322 | |
| | | 6.0 | 267,704,018 | |
| Telecommunication Services 2.1% | |
| AT&T, Inc. | 1,200,507 | 0.9 | 40,228,990 | |
| Verizon Communications, Inc. | 795,069 | 0.8 | 37,272,835 | |
| Other Securities | | 0.4 | 17,633,916 | |
| | | 2.1 | 95,135,741 | |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Transportation 2.1% | |
| Other Securities | | 2.1 | 95,507,598 | |
| Utilities 3.0% | |
| Other Securities | | 3.0 | 134,433,849 | |
| Total Common Stock |
| (Cost $2,804,713,777) | | | 4,440,133,759 | |
|
| Rights 0.0% of net assets | |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% | |
| Other Securities | | 0.0 | — | |
| Technology Hardware & Equipment 0.0% | |
| Other Securities | | 0.0 | — | |
| Telecommunication Services 0.0% | |
| Other Securities | | 0.0 | 32,760 | |
| Total Rights |
| (Cost $32,982) | | | 32,760 | |
|
| Warrants 0.0% of net assets | |
| Energy 0.0% | |
| Other Securities | | 0.0 | — | |
| Total Warrants |
| (Cost $—) | | | — | |
|
| Other Investment Company 0.8% of net assets | |
| Securities Lending Collateral 0.8% | |
| Wells Fargo Advantage Government Money Market Fund, Institutional Class 0.01% (d) | 36,468,372 | 0.8 | 36,468,372 | |
| Total Other Investment Company |
| (Cost $36,468,372) | | | 36,468,372 | |
Security
Rate, Maturity Date | Face
Amount
($) | % of Net
Assets | Value
($) | |
| Short-Term Investments 1.5% of net assets | |
| Time Deposits 1.5% | |
Australia & New Zealand Banking Group Ltd.
0.03%, 11/02/15 | 44,948,979 | 1.0 | 44,948,979 | |
Wells Fargo
0.03%, 11/02/15 | 22,256,653 | 0.5 | 22,256,653 | |
| Total Short-Term Investments |
| (Cost $67,205,632) | | | 67,205,632 | |
End of Investments.
Schwab Total Stock Market Index Fund
Condensed Portfolio Holdings continued
At 10/31/15, the tax basis cost of the fund's investments was $2,925,724,612 and the unrealized appreciation and depreciation were $1,756,538,810 and ($138,422,899), respectively, with a net unrealized appreciation of $1,618,115,911.
For the following notes, please refer to the complete schedule of portfolio holdings.
| * | Non-income producing security. |
| (a) | Issuer is affiliated with the fund's investment adviser. |
| (b) | Illiquid security. At the period end, the value of these amounted to $32,760 or 0.0% of net assets. |
| (c) | All or a portion of this security is on loan. Securities on loan were valued at $35,642,649. |
| (d) | The rate shown is the 7-day yield. |
| (e) | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| | |
| CVR — | Contingent Value Rights |
| REIT — | Real Estate Investment Trust |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| Russell 2000 Index, mini, Long, expires 12/18/15 | 35 | 4,054,050 | 52,723 |
| S&P 500 Index, e-mini, Long, expires 12/18/15 | 230 | 23,847,550 | 1,048,233 |
| Net Unrealized Appreciation | 1,100,956 |
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Common Stock1 | | $4,440,133,759 | | $— | | $— | | $4,440,133,759 | |
| Rights 1 | | — | | — | | 32,760 | | 32,760 | |
| Warrants 1 | | — | | — | | — | | — | |
| Other Investment Company1 | | 36,468,372 | | — | | — | | 36,468,372 | |
| Short-Term Investments1 | | — | | 67,205,632 | | — | | 67,205,632 | |
| Total | | $4,476,602,131 | | $67,205,632 | | $32,760 | | $4,543,840,523 | |
| Other Financial Instruments | | | | | | | | | |
| Futures Contracts2 | | $1,100,956 | | $— | | $— | | $1,100,956 | |
| 1 | As categorized in the complete schedule of portfolio holdings. |
| 2 | Futures contracts are not included in Investments in the schedule of condensed portfolio holdings and are valued at unrealized appreciation or depreciation. |
The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
| Investments in Securities | | Balance
as of
October 31,
2014 | | Realized
Gains
(Losses) | | Change in
Unrealized
Appreciation
(Depreciation) | | Gross
Purchases | | Gross
Sales | | Gross
Transfers
in | | Gross
Transfers
out | | Balance
as of
October 31,
2015 |
| Common Stock | | $— | | ($22,235) | | $22,235 | | $— | | $— | | $— | | $— | | $— |
| Rights | | 32,760 | | — | | — | | — | | — | | — | | — | | 32,760 |
| Total | | $32,760 | | ($22,235) | | $22,235 | | $— | | $— | | $— | | $— | | $32,760 |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Schwab Total Stock Market Index Fund
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investment in affiliated issuer, at value (cost $5,067,611) | | $7,328,646 |
| Investments in unaffiliated issuers, at value (cost $2,866,884,780) including securities on loan of $35,642,649 | | 4,500,043,505 |
| Collateral invested for securities on loan, at value (cost $36,468,372) | + | 36,468,372 |
| Total investments, at value (cost $2,908,420,763) | | 4,543,840,523 |
| Deposit with broker for futures contracts | | 2,732,000 |
| Receivables: | | |
| Investments sold | | 1,456,939 |
| Fund shares sold | | 4,883,608 |
| Dividends | | 4,416,446 |
| Income from securities on loan | | 95,875 |
| Interest | | 112 |
| Prepaid expenses | + | 49,491 |
| Total assets | | 4,557,474,994 |
| Liabilities |
| Collateral held for securities on loan | | 36,468,372 |
| Payables: | | |
| Investments bought | | 41,436,263 |
| Investment adviser and administrator fees | | 22,420 |
| Shareholder service fees | | 14,194 |
| Fund shares redeemed | | 2,139,246 |
| Variation margin on futures contracts | | 116,050 |
| Accrued expenses | + | 420,645 |
| Total liabilities | | 80,617,190 |
| Net Assets |
| Total assets | | 4,557,474,994 |
| Total liabilities | – | 80,617,190 |
| Net assets | | $4,476,857,804 |
| Net Assets by Source | | |
| Capital received from investors | | 2,754,963,316 |
| Net investment income not yet distributed | | 69,554,519 |
| Net realized capital gains | | 15,819,253 |
| Net unrealized capital appreciation | | 1,636,520,716 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $4,476,857,804 | | 118,777,377 | | $37.69 |
| | | | | |
Schwab Total Stock Market Index Fund
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends received from affiliated issuer | | $52,290 |
| Dividends received from unaffiliated issuers (net of foreign withholding taxes of $11,101) | | 86,854,870 |
| Interest | | 15,040 |
| Securities on loan | + | 999,589 |
| Total investment income | | 87,921,789 |
| Expenses |
| Investment adviser and administrator fees | | 2,624,219 |
| Shareholder service fees | | 836,426 |
| Index fees | | 787,602 |
| Portfolio accounting fees | | 149,016 |
| Shareholder reports | | 114,250 |
| Transfer agent fees | | 113,965 |
| Registration fees | | 113,810 |
| Custodian fees | | 85,047 |
| Professional fees | | 56,063 |
| Independent trustees' fees | | 27,638 |
| Proxy fees | | 23,358 |
| Interest expense | | 649 |
| Other expenses | + | 94,608 |
| Total expenses | | 5,026,651 |
| Expense reduction by CSIM and its affiliates | – | 1,066,591 |
| Net expenses | – | 3,960,060 |
| Net investment income | | 83,961,729 |
| Realized and Unrealized Gains (Losses) |
| Net realized gains on unaffiliated issuers | | 32,945,196 |
| Net realized gains on futures contracts | + | 4,857,320 |
| Net realized gains | | 37,802,516 |
| Net change in unrealized appreciation (depreciation) on affiliated issuer | | 380,230 |
| Net change in unrealized appreciation (depreciation) on unaffiliated issuers | | 57,260,087 |
| Net change in unrealized appreciation (depreciation) on futures contracts | + | (1,132,385) |
| Net change in unrealized appreciation (depreciation) | + | 56,507,932 |
| Net realized and unrealized gains | | 94,310,448 |
| Increase in net assets resulting from operations | | $178,272,177 |
Schwab Total Stock Market Index Fund
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $83,961,729 | $64,653,328 |
| Net realized gains | | 37,802,516 | 17,885,455 |
| Net change in unrealized appreciation (depreciation) | + | 56,507,932 | 449,857,647 |
| Increase in net assets from operations | | 178,272,177 | 532,396,430 |
| Distributions to Shareholders | |
| Distributions from net investment income | | (68,099,121) | (50,022,427) |
| Distributions from net realized gains | + | (23,418,312) | (14,754,888) |
| Total distributions | | ($91,517,433) | ($64,777,315) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 24,753,855 | $920,238,549 | 24,674,667 | $847,448,914 |
| Shares reinvested | | 2,076,130 | 73,370,427 | 1,621,857 | 52,337,326 |
| Shares redeemed | + | (17,609,468) | (652,741,483) | (14,599,314) | (501,556,679) |
| Net transactions in fund shares | | 9,220,517 | $340,867,493 | 11,697,210 | $398,229,561 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 109,556,860 | $4,049,235,567 | 97,859,650 | $3,183,386,891 |
| Total increase | + | 9,220,517 | 427,622,237 | 11,697,210 | 865,848,676 |
| End of period | | 118,777,377 | $4,476,857,804 | 109,556,860 | $4,049,235,567 |
| Net investment income not yet distributed | | | $69,554,519 | | $53,845,311 |
Schwab International Index Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $19.42 | $19.92 | $16.32 | $16.02 | $17.31 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.54 1 | 0.64 | 0.49 | 0.57 | 0.57 | |
| Net realized and unrealized gains (losses) | (0.86) | (0.63) | 3.69 | 0.33 | (1.38) | |
| Total from investment operations | (0.32) | 0.01 | 4.18 | 0.90 | (0.81) | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.61) | (0.51) | (0.58) | (0.60) | (0.48) | |
| Net asset value at end of period | $18.49 | $19.42 | $19.92 | $16.32 | $16.02 | |
| Total return | (1.53%) | 0.09% | 26.40% | 6.07% | (4.83%) | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 0.19% | 0.19% | 0.19% | 0.19% | 0.19% | |
| Gross operating expenses | 0.23% | 0.23% | 0.23% | 0.23% | 0.21% | |
| Net investment income (loss) | 2.82% | 3.42% | 2.88% | 3.66% | 3.26% | |
| Portfolio turnover rate | 7% | 2% | 5% | 31% 2 | 10% | |
| Net assets, end of period (x 1,000,000) | $2,844 | $2,699 | $2,205 | $1,415 | $1,375 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Portfolio turnover rate increase was mainly the result of trading activities in connection with the change in primary benchmark index effective December 20, 2011.
Schwab International Index Fund
Condensed Portfolio Holdings as of October 31, 2015
This section shows the fund's 50 largest portfolio holdings in unaffiliated issuers, and any holdings exceeding 1% of the fund's net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-800-435-4000. This complete schedule, filed on the fund's Form N-CSR, is also available on the SEC's website at www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15-20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 97.8% | Common Stock | 2,378,291,644 | 2,781,955,810 |
| 0.5% | Preferred Stock | 15,443,474 | 14,364,962 |
| 0.4% | Other Investment Company | 12,250,477 | 12,250,477 |
| 1.2% | Short-Term Investments | 32,604,445 | 32,604,445 |
| 99.9% | Total Investments | 2,438,590,040 | 2,841,175,694 |
| 0.1% | Other Assets and Liabilities, Net | | 3,157,769 |
| 100.0% | Net Assets | | 2,844,333,463 |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Common Stock 97.8% of net assets | |
| Australia 6.2% | |
| Australia & New Zealand Banking Group Ltd. | 618,955 | 0.4 | 11,970,769 | |
| Commonwealth Bank of Australia | 379,463 | 0.7 | 20,604,067 | |
| National Australia Bank Ltd. | 585,298 | 0.5 | 12,498,831 | |
| Westpac Banking Corp. | 685,727 | 0.5 | 15,273,888 | |
| Other Securities | | 4.1 | 115,450,893 | |
| | | 6.2 | 175,798,448 | |
| Austria 0.2% | |
| Other Securities | | 0.2 | 4,791,333 | |
| Belgium 1.3% | |
| Anheuser-Busch InBev N.V. | 179,808 | 0.7 | 21,455,518 | |
| Other Securities | | 0.6 | 16,401,624 | |
| | | 1.3 | 37,857,142 | |
| Denmark 1.7% | |
| Novo Nordisk A/S, Class B | 436,977 | 0.8 | 23,204,996 | |
| Other Securities | | 0.9 | 24,466,910 | |
| | | 1.7 | 47,671,906 | |
| Finland 0.9% | |
| Other Securities | | 0.9 | 24,783,650 | |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| France 9.9% | |
| BNP Paribas S.A. | 236,121 | 0.5 | 14,308,271 | |
| Sanofi | 262,431 | 0.9 | 26,472,942 | |
| Total S.A. | 481,485 | 0.8 | 23,284,046 | |
| Other Securities | | 7.7 | 218,755,735 | |
| | | 9.9 | 282,820,994 | |
| Germany 8.5% | |
| Allianz SE - Reg'd | 101,698 | 0.6 | 17,804,037 | |
| BASF SE | 205,226 | 0.6 | 16,812,899 | |
| Bayer AG - Reg'd | 184,438 | 0.9 | 24,592,116 | |
| Daimler AG - Reg'd | 214,576 | 0.6 | 18,606,685 | |
| Deutsche Telekom AG - Reg'd | 708,212 | 0.5 | 13,265,934 | |
| SAP SE | 219,158 | 0.6 | 17,277,334 | |
| Siemens AG - Reg'd | 176,926 | 0.6 | 17,771,179 | |
| Other Securities | | 4.1 | 116,137,458 | |
| | | 8.5 | 242,267,642 | |
| Hong Kong 3.0% | |
| AIA Group Ltd. | 2,700,400 | 0.6 | 15,833,335 | |
| Other Securities | | 2.4 | 69,441,284 | |
| | | 3.0 | 85,274,619 | |
| Ireland 0.4% | |
| Other Securities | | 0.4 | 12,041,687 | |
| Israel 0.6% | |
| Other Securities | | 0.6 | 17,004,718 | |
| Italy 2.4% | |
| Other Securities | | 2.4 | 66,872,882 | |
| Japan 22.6% | |
| Honda Motor Co., Ltd. | 362,839 | 0.4 | 12,002,872 | |
| Mitsubishi UFJ Financial Group, Inc. | 2,836,309 | 0.7 | 18,343,913 | |
| SoftBank Group Corp. | 214,200 | 0.4 | 12,001,178 | |
| Toyota Motor Corp. | 608,803 | 1.3 | 37,297,969 | |
| Other Securities | | 19.8 | 561,927,905 | |
| | | 22.6 | 641,573,837 | |
| Netherlands 2.8% | |
| ING Groep N.V. CVA | 863,791 | 0.4 | 12,571,503 | |
| Unilever N.V. CVA | 363,881 | 0.6 | 16,453,833 | |
| Other Securities | | 1.8 | 50,166,383 | |
| | | 2.8 | 79,191,719 | |
| New Zealand 0.1% | |
| Other Securities | | 0.1 | 4,073,576 | |
| Norway 0.6% | |
| Other Securities | | 0.6 | 16,098,084 | |
| Portugal 0.1% | |
| Other Securities | | 0.1 | 4,112,409 | |
Schwab International Index Fund
Condensed Portfolio Holdings continued
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Singapore 1.3% | |
| Other Securities | | 1.3 | 36,239,515 | |
| Spain 3.4% | |
| Banco Bilbao Vizcaya Argentaria S.A. | 1,420,594 | 0.4 | 12,222,237 | |
| Banco Santander S.A. | 3,197,315 | 0.6 | 17,860,836 | |
| Telefonica S.A. | 992,492 | 0.5 | 13,094,284 | |
| Other Securities | | 1.9 | 52,739,545 | |
| | | 3.4 | 95,916,902 | |
| Sweden 2.8% | |
| Other Securities | | 2.8 | 80,088,107 | |
| Switzerland 9.2% | |
| Nestle S.A. - Reg'd | 719,332 | 1.9 | 54,938,215 | |
| Novartis AG - Reg'd | 507,583 | 1.6 | 45,981,260 | |
| Roche Holding AG | 156,706 | 1.5 | 42,545,501 | |
| UBS Group AG - Reg’d | 815,237 | 0.6 | 16,282,261 | |
| Other Securities | | 3.6 | 103,170,897 | |
| | | 9.2 | 262,918,134 | |
| United Kingdom 19.8% | |
| AstraZeneca plc | 281,870 | 0.6 | 17,964,278 | |
| Barclays plc | 3,738,239 | 0.5 | 13,318,521 | |
| BG Group plc | 763,918 | 0.4 | 12,068,771 | |
| BP plc | 4,078,629 | 0.8 | 24,239,233 | |
| British American Tobacco plc | 416,025 | 0.9 | 24,715,858 | |
| BT Group plc | 1,866,458 | 0.5 | 13,329,330 | |
| Diageo plc | 562,011 | 0.6 | 16,202,737 | |
| GlaxoSmithKline plc | 1,085,292 | 0.8 | 23,405,087 | |
| HSBC Holdings plc | 4,354,714 | 1.2 | 34,023,230 | |
| Lloyds Banking Group plc | 12,728,817 | 0.5 | 14,447,337 | |
| National Grid plc | 835,111 | 0.4 | 11,896,053 | |
| Prudential plc | 573,911 | 0.5 | 13,404,539 | |
| Reckitt Benckiser Group plc | 143,178 | 0.5 | 13,972,806 | |
| Royal Dutch Shell plc, A Shares | 862,532 | 0.8 | 22,518,423 | |
| Royal Dutch Shell plc, B Shares | 538,661 | 0.5 | 14,104,777 | |
| SABMiller plc | 216,502 | 0.4 | 13,298,284 | |
| Unilever plc | 286,445 | 0.4 | 12,754,964 | |
| Vodafone Group plc | 5,916,316 | 0.7 | 19,470,195 | |
| Other Securities | | 8.8 | 249,424,083 | |
| | | 19.8 | 564,558,506 | |
| Total Common Stock |
| (Cost $2,378,291,644) | | | 2,781,955,810 | |
|
| Preferred Stock 0.5% of net assets | |
| Germany 0.4% | |
| Other Securities | | 0.4 | 12,106,157 | |
| Ireland 0.0% | |
| Other Securities | | 0.0 | 14,460 | |
| Italy 0.1% | |
| Other Securities | | 0.1 | 2,185,383 | |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| United Kingdom 0.0% | |
| Other Securities | | 0.0 | 58,962 | |
| Total Preferred Stock |
| (Cost $15,443,474) | | | 14,364,962 | |
|
| Other Investment Company 0.4% of net assets | |
| United States 0.4% | |
| Securities Lending Collateral 0.4% | |
| Wells Fargo Advantage Government Money Market Fund, Institutional Class 0.01% (c) | 12,250,477 | 0.4 | 12,250,477 | |
| Total Other Investment Company |
| (Cost $12,250,477) | | | 12,250,477 | |
Security
Rate, Maturity Date | Face
Amount
($) | % of Net
Assets | Value
($) | |
| Short-Term Investments 1.2% of net assets | |
| Time Deposits 1.2% | |
Nordea Bank
0.03%, 11/02/15 | 28,414,324 | 1.0 | 28,414,324 | |
| Other Securities | | 0.2 | 4,190,121 | |
| | | 1.2 | | |
| Total Short-Term Investments |
| (Cost $32,604,445) | | | 32,604,445 | |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $2,465,117,613 and the unrealized appreciation and depreciation were $585,873,657 and ($209,815,576), respectively, with a net unrealized appreciation of $376,058,081.
At 10/31/15, the values of certain foreign securities held by the fund aggregating $2,760,088,581 were adjusted from their closing market values in accordance with international fair valuation procedures approved by the fund's Board of Trustees. (See financial note 2(a) for additional information).
For the following notes, please refer to the complete schedule of portfolio holdings.
| * | Non-income producing security. |
| (a) | All or a portion of this security is on loan. Securities on loan were valued at $11,696,492. |
| (b) | Illiquid security. At the period end, the value of these amounted to $0 or 0.0% of net assets. |
| (c) | The rate shown is the 7-day yield. |
| (d) | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| | |
Schwab International Index Fund
Condensed Portfolio Holdings continued
| CDI — | CHESS Depositary Interest |
| CVA — | Dutch Certificate |
| Reg'd — | Registered |
| REIT — | Real Estate Investment Trust |
| RSP — | Risparmio (Convertible Savings Shares) |
| SDR — | Swedish Depositary Receipt |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| MSCI EAFE, e-mini, Long, expires 12/18/15 | 400 | 35,142,000 | 266,130 |
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Common Stock1 | | $— | | $1,788,075,500 | | $— | | $1,788,075,500 | |
| Australia | | 923,799 | | 173,361,097 | | 1,513,552 | | 175,798,448 | |
| Hong Kong | | 642,459 | | 84,632,160 | | — | | 85,274,619 | |
| Ireland | | 646,957 | | 11,394,730 | | — | | 12,041,687 | |
| Japan | | 1,539,770 | | 640,034,067 | | — | | 641,573,837 | |
| Netherlands | | 30,892,232 | | 48,299,487 | | — | | 79,191,719 | |
| Preferred Stock1 | | — | | 14,291,540 | | — | | 14,291,540 | |
| Ireland | | — | | — | | 14,460 | | 14,460 | |
| United Kingdom | | — | | — | | 58,962 | | 58,962 | |
| Other Investment Company1 | | 12,250,477 | | — | | — | | 12,250,477 | |
| Short-Term Investments1 | | — | | 32,604,445 | | — | | 32,604,445 | |
| Total | | $46,895,694 | | $2,792,693,026 | | $1,586,974 | | $2,841,175,694 | |
| Other Financial Instruments | | | | | | | | | |
| Futures Contracts2 | | $266,130 | | $— | | $— | | $266,130 | |
| 1 | As categorized in the complete schedule of portfolio holdings. |
| 2 | Futures contracts are not included in Investments in the schedule of condensed portfolio holdings and are valued at unrealized appreciation or depreciation. |
Schwab International Index Fund
Condensed Portfolio Holdings continued
The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
| Investments in Securities | | Balance
as of
October 31,
2014 | | Realized
Gains
(Losses) | | Change in
Unrealized
Appreciation
(Depreciation) | | Gross
Purchases | | Gross
Sales | | Gross
Transfers
in | | Gross
Transfers
out | | Balance
as of
October 31,
2015 |
| Common Stock | | | | | | | | | | | | | | | | |
| Australia | | $— | | ($5,018) | | ($184,871) | | $1,075,438 | | ($98,645) | | $726,648 | | $— | | $1,513,552 |
| Preferred Stock | | | | | | | | | | | | | | | | |
| Ireland | | — | | — | | (61) | | 14,521 | | — | | — | | — | | 14,460 |
| United Kingdom | | 54,362 | | — | | 174 | | 58,972 | | (54,546) | | — | | — | | 58,962 |
| Total | | $54,362 | | ($5,018) | | ($184,758) | | $1,148,931 | | ($153,191) | | $726,648 | | $— | | $1,586,974 |
All net realized and change in unrealized gains (losses) in the table above are reflected on the accompanying Statement of Operations. The net change in unrealized appreciation (depreciation) for Level 3 investments held by the fund at October 31, 2015 was ($245,984).
The fund’s policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were security transfers in the amount of $15,239,330 and $25,033,151 from Level 1 to Level 2 and from Level 2 to Level 1, respectively, for the period ended October 31, 2015. The transfers between Level 1 and Level 2 were primarily due to the use of international fair valuation by the fund. The transfers into Level 3 from Level 1 or Level 2 were due to the result of fair valued securities for which no quoted value was available.
Schwab International Index Fund
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments, at value (cost $2,426,339,563) including securities on loan of $11,696,492 | | $2,828,925,217 |
| Collateral invested for securities on loan, at value (cost $12,250,477) | + | 12,250,477 |
| Total investments, at value (cost $2,438,590,040) | | 2,841,175,694 |
| Foreign currency, at value (cost $296) | | 296 |
| Deposit with broker for futures contracts | | 2,906,250 |
| Receivables: | | |
| Dividends | | 5,741,925 |
| Fund shares sold | | 5,289,677 |
| Foreign tax reclaims | | 3,088,379 |
| Income from securities on loan | | 45,250 |
| Interest | | 53 |
| Prepaid expenses | + | 37,397 |
| Total assets | | 2,858,284,921 |
| Liabilities |
| Collateral held for securities on loan | | 12,250,477 |
| Payables: | | |
| Investments bought | | 58,962 |
| Investment adviser and administrator fees | | 55,301 |
| Shareholder service fees | | 9,587 |
| Fund shares redeemed | | 1,002,919 |
| Variation margin on futures contracts | | 66,999 |
| Accrued expenses | + | 507,213 |
| Total liabilities | | 13,951,458 |
| Net Assets |
| Total assets | | 2,858,284,921 |
| Total liabilities | – | 13,951,458 |
| Net assets | | $2,844,333,463 |
| Net Assets by Source | | |
| Capital received from investors | | 2,473,378,730 |
| Net investment income not yet distributed | | 53,167,370 |
| Net realized capital losses | | (84,862,391) |
| Net unrealized capital appreciation | | 402,649,754 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $2,844,333,463 | | 153,799,932 | | $18.49 |
| | | | | |
Schwab International Index Fund
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends (net of foreign withholding tax of $7,152,128) | | $81,417,874 |
| Interest | | 21,435 |
| Securities on loan | + | 1,224,253 |
| Total investment income | | 82,663,562 |
| Expenses |
| Investment adviser and administrator fees | | 4,117,720 |
| Shareholder service fees | | 522,015 |
| Custodian fees | | 499,487 |
| Index fees | | 492,230 |
| Portfolio accounting fees | | 124,477 |
| Shareholder reports | | 116,365 |
| Registration fees | | 87,425 |
| Transfer agent fees | | 66,500 |
| Professional fees | | 58,059 |
| Proxy fees | | 21,046 |
| Independent trustees' fees | | 19,912 |
| Interest expense | | 2,867 |
| Other expenses | + | 115,906 |
| Total expenses | | 6,244,009 |
| Expense reduction by CSIM and its affiliates | – | 1,004,356 |
| Net expenses | – | 5,239,653 |
| Net investment income | | 77,423,909 |
| Realized and Unrealized Gains (Losses) |
| Net realized losses on investments | | (55,422,925) |
| Net realized losses on futures contracts | | (3,870,346) |
| Net realized losses on foreign currency transactions | + | (951,814) |
| Net realized losses | | (60,245,085) |
| Net change in unrealized appreciation (depreciation) on investments | | (75,150,637) |
| Net change in unrealized appreciation (depreciation) on futures contracts | | (3,346,459) |
| Net change in unrealized appreciation (depreciation) on foreign currency translations | + | 47,896 |
| Net change in unrealized appreciation (depreciation) | + | (78,449,200) |
| Net realized and unrealized losses | | (138,694,285) |
| Decrease in net assets resulting from operations | | ($61,270,376) |
Schwab International Index Fund
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $77,423,909 | $84,259,509 |
| Net realized gains (losses) | | (60,245,085) | 4,104,131 |
| Net change in unrealized appreciation (depreciation) | + | (78,449,200) | (94,041,773) |
| Decrease in net assets from operations | | (61,270,376) | (5,678,133) |
| Distributions to Shareholders | |
| Distributions from net investment income | | ($87,032,492) | ($56,954,638) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 59,133,426 | $1,111,348,958 | 42,892,587 | $850,934,554 |
| Shares reinvested | | 4,061,536 | 72,539,032 | 2,686,474 | 50,828,092 |
| Shares redeemed | + | (48,379,691) | (890,397,689) | (17,254,418) | (344,646,661) |
| Net transactions in fund shares | | 14,815,271 | $293,490,301 | 28,324,643 | $557,115,985 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 138,984,661 | $2,699,146,030 | 110,660,018 | $2,204,662,816 |
| Total increase | + | 14,815,271 | 145,187,433 | 28,324,643 | 494,483,214 |
| End of period | | 153,799,932 | $2,844,333,463 | 138,984,661 | $2,699,146,030 |
| Net investment income not yet distributed | | | $53,167,370 | | $62,675,606 |
Schwab Equity Index Funds
1. Business Structure of the Funds:
Each of the funds in this report is a series of Schwab Capital Trust, except Schwab 1000 Index Fund, which is a series of Schwab Investments. Both Schwab Capital Trust and Schwab Investments (the trusts) are no-load, open-end management investment companies. Each trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the 1940 Act). The list below shows all the funds in the trusts as of the end of the period, including the funds discussed in this report, which are highlighted:
| Schwab Capital Trust (organized May 7, 1993) | Schwab Target 2035 Fund |
| Schwab S&P 500 Index Fund | Schwab Target 2040 Fund |
| Schwab Small-Cap Index Fund | Schwab Target 2045 Fund |
| Schwab Total Stock Market Index Fund | Schwab Target 2050 Fund |
| Schwab International Index Fund | Schwab Target 2055 Fund |
| Schwab MarketTrack All Equity Portfolio™ | Schwab Fundamental US Large Company Index Fund |
| Schwab MarketTrack Growth Portfolio™ | Schwab Fundamental US Small Company Index Fund |
| Schwab MarketTrack Balanced Portfolio™ | Schwab Fundamental International Large Company Index Fund |
| Schwab MarketTrack Conservative Portfolio™ | Schwab Fundamental International Small Company Index Fund |
| Laudus Small-Cap MarketMasters Fund™ | Schwab Fundamental Emerging Markets Large Company Index Fund |
| Laudus International MarketMasters Fund™ | Schwab Fundamental Global Real Estate Index Fund |
| Schwab Balanced Fund™ | Schwab ® Monthly Income Fund – Moderate Payout |
| Schwab Core Equity Fund™ | Schwab ® Monthly Income Fund – Enhanced Payout |
| Schwab Dividend Equity Fund™ | Schwab ® Monthly Income Fund – Maximum Payout |
| Schwab Large-Cap Growth Fund™ | |
| Schwab Small-Cap Equity Fund™ | Schwab Investments (organized October 26, 1990) |
| Schwab Hedged Equity Fund™ | Schwab 1000 Index Fund |
| Schwab Financial Services Fund™ | Schwab Short-Term Bond Market Fund™ |
| Schwab Health Care Fund™ | Schwab Intermediate-Term Bond Fund™ |
| Schwab ® International Core Equity Fund | Schwab Total Bond Market Fund™ |
| Schwab Target 2010 Fund | Schwab GNMA Fund™ |
| Schwab Target 2015 Fund | Schwab ® Treasury Inflation Protected Securities Index Fund |
| Schwab Target 2020 Fund | Schwab Tax-Free Bond Fund™ |
| Schwab Target 2025 Fund | Schwab California Tax-Free Bond Fund™ |
| Schwab Target 2030 Fund | Schwab Global Real Estate Fund™ |
Each fund in this report offers one share class. Shares are bought and sold (subject to a redemption fee, see financial note 9) at closing net asset value per share (NAV), which is the price for all outstanding shares of a fund. Each share has a par value of 1/1,000 of a cent, and the funds' Board of Trustees (the Board) may authorize the issuance of as many shares as necessary.
Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, each fund may also keep certain assets in segregated accounts, as required by securities law.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies the funds use in their preparation of financial statements. The funds follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 Financial Services — Investment Companies. The accounting policies are in conformity with accounting principles generally accepted in the United States of America (GAAP).
The funds invest in certain other investment companies (underlying funds). For specific investments in underlying funds, please refer to the complete schedule of portfolio holdings on Form N-CSR for this reporting period, which is filed with the U.S. Securities and Exchange Commission (SEC). For more information about the underlying funds’ operations and policies, please refer to those funds’ semiannual and annual reports, which are filed with the SEC.
(a) Security Valuation:
Under procedures approved by the Board, the investment adviser has formed a Pricing Committee to administer the pricing and valuation of portfolio securities and other assets and to ensure that prices used for internal purposes or provided by third parties reasonably reflect fair market value. Among other things, these procedures allow the funds to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.
Schwab Equity Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
The funds value the securities in their portfolios every business day. The funds use the following policies to value various types of securities:
• Securities traded on an exchange or over-the-counter: Traded securities are valued at the closing value for the day, or, on days when no closing value has been reported, at halfway between the most recent bid and ask quotes. Securities that are primarily traded on foreign exchanges are valued at the official closing price or the last sales price on the exchange where the securities are principally traded with these values then translated into U.S. dollars at the current exchange rate, unless these securities are fair valued as discussed below.
• Securities for which no quoted value is available: The Board has adopted procedures to fair value each fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the funds pursuant to the valuation procedures.
• Foreign equity security fair valuation: The Board has adopted procedures to fair value foreign equity securities that are traded in markets that close prior to the funds valuing their holdings. By fair valuing securities whose prices may have been affected by events occurring after the close of trading, each fund seeks to establish prices that investors might expect to realize upon the current sales of these securities. This methodology is designed to deter “arbitrage” market timers, who seek to exploit delays between the change in the value of a fund’s portfolio holdings and the NAV of the fund’s shares, and seeks to help ensure that the prices at which the fund’s shares are purchased and redeemed are fair and do not result in dilution of shareholder interest or other harm to shareholders. When fair value pricing is used at the open or close of a reporting period, it may cause a temporary divergence between the return of a fund and that of its comparative index or benchmark. The Board regularly reviews fair value determinations made by the funds pursuant to these procedures.
• Futures contracts: Futures contracts are valued at their settlement prices as of the close of their exchanges.
• Short-term securities (60 days or less to maturity): A short-term security may be valued at its amortized cost when it approximates the security's market value.
• Underlying funds: Mutual funds are valued at their respective NAVs. Exchange traded funds (ETFs) traded on a recognized securities exchange are valued at the last reported sale price that day or the official closing price, if applicable.
In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the funds disclose the fair value of their investments in a hierarchy that prioritizes the significant inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). If inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the valuation. If the funds determine that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
The three levels of the fair value hierarchy are as follows:
• Level 1—quoted prices in active markets for identical securities—Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities, ETFs and futures contracts. Investments in mutual funds are valued daily at their NAVs, and investments in ETFs are valued daily at the last reported sale price or the official closing price, which are classified as Level 1 prices, without consideration to the classification level of the specific investments held by an underlying fund.
Schwab Equity Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
• Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)—Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. In addition, international securities whose markets close hours before the funds value their holdings may require fair valuations due to significant movement in the U.S. markets occurring after the daily close of the foreign markets. The Board has approved a vendor that calculates fair valuations of international equity securities based on a number of factors that appear to correlate to the movements in the U.S. markets.
• Level 3—significant unobservable inputs (including the funds' own assumptions in determining the fair value of investments)—Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the funds use one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the funds in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the funds in the absence of market information. Assumptions used by the funds due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds' results of operations.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The levels associated with valuing the funds' investments as of October 31, 2015 are disclosed in the Condensed Portfolio Holdings.
(b) Accounting Policies for certain Portfolio Investments (if held):
Futures Contracts: Futures contracts are instruments that represent an agreement between two parties that obligates one party to buy, and the other party to sell, specific instruments at an agreed upon price on a stipulated future date. A fund must give the broker a deposit of cash and/or securities (initial margin) whenever it enters into a futures contract. The amount of the deposit may vary from one contract to another. Subsequent payments (variation margin) are made or received by a fund depending on the daily fluctuations in the value of the futures contract and are accounted for as unrealized appreciation or depreciation until the contract is closed, at which time the gains or losses are realized. Futures contracts are traded publicly on exchanges, and their market value may change daily.
Securities Lending: Under the trusts’ Securities Lending Program, a fund (lender) may make short-term loans of its securities to another party (borrower) to generate additional revenue for the fund. The borrower pledges collateral in the form of cash, securities issued or fully guaranteed by the U.S. government or foreign governments, or letters of credit issued by a bank. Collateral at the individual loan level is required to be maintained on a daily marked-to-market basis in an amount at least equal to the current value of the securities loaned. The lending agent provides a fund with indemnification against borrower default (the borrower fails to return the security on loan) reducing the risk of loss as a result of default. The cash collateral of securities loaned is currently invested in money market portfolios operating under Rule 2a-7 of the 1940 Act. Each fund bears the risk of loss with respect to the investment of cash collateral. The terms of the securities lending agreement allows the funds to terminate any loans at any given time. Securities lending income, as disclosed in each fund’s Statement of Operations, if applicable, represents the income earned from the investment of the cash collateral plus any fees paid by borrowers, less the fees paid to the lending agent and broker rebates which are subject to adjustments pursuant to the securities lending agreement. On loans not collateralized by cash, a fee is received from the borrower, and is allocated between a fund and the lending agent. A fund retains the right to recall a security on loan. The aggregate market value of securities loaned will not at any time exceed one-third of the total assets of a fund, including collateral received from the loan (at market value computed at the time of the loan). Total costs and expenses, including lending agent fees associated with securities lending activities under the trust’s Securities Lending Program paid to the unaffiliated lending agents were approximately 15% of gross lending revenues through October 2, 2015. For the subsequent period through November 30, 2015, the total costs and expenses to be
Schwab Equity Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
paid to the unaffiliated lending agents range from 10% to 15%, with subsequent breakpoints to a low of 7.5%, of gross lending revenue. After December 1, 2015, the total costs and expenses to be paid to the unaffiliated lending agents start at 10% of gross lending revenue, with subsequent breakpoints to a low of 7.5%.
The value of the securities on loan and the related collateral as of October 31, 2015, if any, are disclosed in each fund's Condensed Portfolio Holdings. The value of the securities on loan and the investment of cash collateral are also disclosed in each fund's Statement of Assets and Liabilities.
(c) Security Transactions:
Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.
Assets and liabilities denominated in foreign currencies are reported in U.S. dollars. For assets and liabilities held on a given date, the dollar value is based on market exchange rates in effect on that date. Transactions involving foreign currencies, including purchases, sales, income receipts and expense payments, are calculated using exchange rates in effect on the transaction date. Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the differences between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange appreciation or depreciation arises from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period. These realized and unrealized foreign exchange gains or losses are reported in foreign currency transactions or translations in the Statement of Operations. The funds do not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.
Gains realized by the funds on the sale of securities in certain foreign countries may be subject to non-U.S. taxes. In those instances, the funds record a liability based on unrealized appreciation to provide for potential non-U.S. taxes payable upon the sale of these securities.
When a fund closes out a futures contract position, it calculates the difference between the value of the position at the beginning and at the end of the contract, and records a realized gain or loss accordingly.
(d) Investment Income:
Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying funds are recorded on the date they are effective (the ex-dividend date), although the funds record certain foreign security dividends on the day they learn of the ex-dividend date. Any distributions from underlying funds are recorded in accordance with the character of the distributions as designated by the underlying funds.
Income received from foreign sources may result in withholding tax. Withholding taxes are accrued at the same time as the related income if the tax rate is fixed and known, unless a tax withheld is reclaimable from the local tax authorities in which case it is recorded as receivable. If the tax rate is not known or estimable, such expense or reclaim receivable is recorded when the net proceeds are received.
(e) Expenses:
Expenses that are specific to a fund are charged directly to the fund. Expenses that are common to all funds within a trust generally are allocated among the funds in proportion to their average daily net assets.
(f) Distributions to Shareholders:
The funds make distributions from net investment income and net realized capital gains, if any, once a year.
(g) Custody Credit:
Certain funds have an arrangement with their custodian bank, State Street Bank and Trust Company (State Street), under which the funds may receive a credit for their uninvested cash balance to offset their custody fees and accounting fees. The credit amounts, if any, are disclosed in the Statement of Operations as a reduction to a fund's operating expenses.
Schwab Equity Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
(h) Accounting Estimates:
The accounting policies described in this report conform to GAAP. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It’s possible that once the results are known, they may turn out to be different from these estimates and these differences may be material.
(i) Federal Income Taxes:
The funds intend to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the funds distribute substantially all of their net investment income and net realized capital gains, if any, to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.
(j) Foreign Taxes:
The funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, corporate events, foreign currency exchanges and capital gains on investments. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in foreign markets in which the funds invest. These foreign taxes, if any, are paid by the funds and are disclosed in the Statement of Operations. Foreign taxes payable as of October 31, 2015, if any, are reflected in each fund's Statement of Assets and Liabilities.
(k) Indemnification:
Under the funds’ organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business the funds enter into contracts with their vendors and others that provide general indemnifications. The funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. However, based on experience, the funds expect the risk of loss attributable to these arrangements to be remote.
(l) New Accounting Pronouncements:
In June 2014, Accounting Standards Update (ASU) No. 2014-11, Topic 860 Transfers and Servicing — Repurchase-to-Maturity Transactions, Repurchase Financings and Disclosures, was issued and is effective for interim periods beginning after March 15, 2015 and annual periods beginning after December 15, 2014. The ASU modifies accounting guidance and enhances disclosure requirements for repurchase agreement and securities lending transactions. Management is currently evaluating the impact the adoption of ASU 2014-11 may have on the funds’ financial statement disclosures.
3. Risk Factors:
Investing in the funds may involve certain risks, as discussed in the funds' prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
Market Risk. Equity markets rise and fall daily. As with any investment whose performance is tied to these markets, the value of the investment in a fund will fluctuate, which means that investors could lose money.
Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time.
Tracking Error Risk. As an index fund, each fund seeks to track the performance of its comparative index, although it may not be successful in doing so. The divergence between the performance of a fund and its index, positive or negative, is called “tracking error.” Tracking error can be caused by many factors and it may be significant. For example, a fund may not invest in certain securities in the index, or match the securities’ weightings to the index, due to regulatory, operational, custodial or liquidity constraints; corporate transactions; asset valuations; transaction costs and timing; tax considerations; and index rebalancing, which may result in tracking error.
Investment Style Risk. Each fund invests in companies measured by its respective index. It follows these stocks during upturns as well as downturns. Because of its indexing strategy, a fund does not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of a fund’s expenses, a fund’s performance may be below that of the index.
Schwab Equity Index Funds
Financial Notes (continued)
3. Risk Factors (continued):
A significant percentage of an index may be composed of securities in a single industry or sector of the economy. If a fund is focused in an industry or sector, it may present more risks than if it were broadly diversified over numerous industries and sectors of the economy.
Sampling Index Tracking Risk. If a fund uses a sampling method, the fund will not fully replicate its comparative index and may hold securities not included in the index. As a result, the fund will be subject to the risk that the investment adviser’s investment strategy, the implementation of which is subject to a number of constraints, may not produce the intended results. If a fund utilizes a sampling approach, it may not track the return of the index as well as it would if the fund purchased all of the securities in the index.
Concentration Risk. To the extent that a fund’s or an index’s portfolio is concentrated in the securities of issuers in a particular market, industry, group of industries, sector, country, or asset class, the fund may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more susceptible to adverse economic, market, political or regulatory occurrences affecting that market, industry, group of industries, sector, country, or asset class.
Small-Cap Risk. Historically, small-cap stocks have been riskier than large- and mid-cap stocks. Stock prices of smaller companies may be based in substantial part on future expectations rather than current achievements and may move sharply, especially during market upturns and downturns. Small-cap companies themselves may be more vulnerable to adverse business or economic events than larger, more established companies. During a period when small-cap stocks fall behind other types of investments—bonds or large-cap stocks, for instance—a fund’s performance also will lag those investments.
Large- and Mid-Cap Risk. Both large- and mid-cap stocks tend to go in and out of favor based on market and economic conditions. However, stocks of mid-cap companies tend to be more volatile than those of large-cap companies because mid-cap companies tend to be more susceptible to adverse business or economic events than larger more established companies. During a period when large- and mid-cap U.S. stocks fall behind other types of investments—bonds or small-cap stocks, for instance—a fund’s performance also will lag those investments.
Foreign Investment Risk. A fund's investments in securities of foreign issuers may involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges); the imposition of economic sanctions or other government restrictions; differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. These risks may negatively impact the value or liquidity of a fund's investments, and could impair the fund's ability to meet its investment objective or invest in accordance with its investment strategies.
Geographic Risk. To the extent a fund’s investments in a single country or a limited number of countries represent a higher percentage of the fund’s assets, the fund assumes the risk that economic, political and social conditions in those countries will have a significant impact on its investment performance and it may be subject to increased price volatility.
Derivatives Risk. A fund’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Certain of these risks, such as liquidity risk and market risk, are discussed elsewhere in this section. A fund’s use of derivatives is also subject to lack of availability risk, credit risk, leverage risk, valuation risk, correlation risk and tax risk. Lack of availability risk is the risk that suitable derivative transactions may not be available in all circumstances for risk management or other purposes. Credit risk is the risk that the counterparty to a derivatives transaction may not fulfill its obligations. Leverage risk is the risk that a small percentage of assets invested in derivatives can have a disproportionately large impact on a fund. Valuation risk is the risk that a particular derivative may be valued incorrectly. Correlation risk is the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index. Tax risk is the risk that the use of derivatives may cause a fund to realize higher amounts of short-term capital gain. A fund's use of derivatives could reduce the fund's performance, increase its volatility, and could cause the fund to lose more than the initial amount invested.
Liquidity Risk. A particular investment may be difficult to purchase or sell. A fund may be unable to sell illiquid securities at an advantageous time or price.
Securities Lending Risk. Securities lending involves the risk of loss of rights in the collateral or delay in recovery of the collateral if the borrower fails to return the security loaned or becomes insolvent.
Schwab Equity Index Funds
Financial Notes (continued)
3. Risk Factors (continued):
Please refer to the funds’ prospectus for a more complete description of the principal risks of investing in the funds.
4. Affiliates and Affiliated Transactions:
Charles Schwab Investment Management, Inc. (CSIM or the investment adviser), a wholly owned subsidiary of The Charles Schwab Corporation, serves as each fund's investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement between CSIM and each trust.
For its advisory and administrative services to the Schwab 1000 Index Fund, CSIM is entitled to receive an annual fee, payable monthly, based on a percentage of the fund’s average daily net assets as follows:
| % of Average Daily Net Assets | | Schwab
1000
Index Fund |
| First $500 million | | 0.30% |
| $500 million to $5 billion | | 0.22% |
| $5 billion to $10 billion | | 0.20% |
| Over $10 billion | | 0.18% |
For its advisory and administrative services to the other funds discussed in this report, CSIM is entitled to receive an annual fee, payable monthly, based on a percentage of each fund’s average daily net assets as follows:
Schwab
S&P 500
Index Fund | | Schwab
Small-Cap
Index Fund | | Schwab
Total Stock
Market
Index Fund | | Schwab
International
Index Fund |
| 0.06% | | 0.15% | | 0.06% | | 0.15% |
The Board has adopted a Shareholder Servicing Plan (the Plan) on behalf of the funds. The Plan enables each fund to bear expenses relating to the provision by service providers, including Charles Schwab & Co., Inc. (a broker-dealer affiliate of CSIM, Schwab), of certain account maintenance, customer liaison and shareholder services to the current shareholders of the funds. Schwab serves as the funds’ paying agent under the Plan for making payments of the shareholder service fee due to the service providers (other than Schwab) under the Plan. All shareholder service fees paid by the funds to Schwab in its capacity as the funds’ paying agent will be passed through to the service providers, and Schwab will not retain any portion of such fees.
Pursuant to the Plan, each fund’s shares are subject to an annual shareholder servicing fee up to the amount set forth in the table below. The shareholder servicing fee paid to a particular service provider is made pursuant to its written agreement with Schwab (or, in the case of payments made to Schwab, pursuant to Schwab’s written agreement with the funds). Payments under the Plan are made as described above regardless of Schwab’s or the service provider’s actual cost of providing the services. If the cost of providing the services under the Plan is less than the payments received, the unexpended portion of the fees may be retained as profit by Schwab or the service provider.
Schwab
S&P 500
Index Fund | | Schwab
1000
Index Fund | | Schwab
Small-Cap
Index Fund | | Schwab
Total Stock
Market
Index Fund | | Schwab
International
Index Fund |
| 0.02% | | 0.10% | | 0.02% | | 0.02% | | 0.02% |
Schwab Equity Index Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Although these agreements specify certain fees for these services, CSIM and its affiliates have made an additional agreement with the funds, for so long as CSIM serves as the investment adviser to the funds, which may only be amended or terminated with the approval of the Board, to limit the total annual fund operating expenses charged, excluding interest, taxes and certain non-routine expenses (expense limitation). The expense limitation as a percentage of average daily net assets is as follows:
Schwab
S&P 500
Index Fund | | Schwab
1000
Index Fund | | Schwab
Small-Cap
Index Fund | | Schwab
Total Stock
Market
Index Fund | | Schwab
International
Index Fund |
| 0.09% | | 0.29% | | 0.17% | | 0.09% | | 0.19% |
The funds may engage in certain transactions involving affiliates. For instance, a fund may own shares of The Charles Schwab Corporation if that company is included in its index. The table below shows funds with investment activities involving The Charles Schwab Corporation shares during the report period:
| Fund | | Balance
of Shares
Held at
10/31/14 | | Gross
Purchases | | Gross
Sales | | Balance
of Shares
Held at
10/31/15 | | Market
Value at
10/31/15 | | Realized
Gains (Losses)
11/01/14
to 10/31/15 | | Dividends
Received
11/01/14
to 10/31/15 |
| Schwab S&P 500 Index Fund | | 1,302,581 | | 99,900 | | — | | 1,402,481 | | $42,803,720 | | $— | | $316,939 |
| Schwab 1000 Index Fund | | 367,065 | | 19,000 | | (10,800) | | 375,265 | | 11,453,088 | | 197,850 | | 86,800 |
| Schwab Total Stock Market Index Fund | | 211,426 | | 28,700 | | — | | 240,126 | | 7,328,646 | | — | | 52,290 |
Certain Schwab Funds may own shares of other Schwab Funds. The table below reflects the percentages of shares of each fund in this report that are owned by other Schwab Funds as of October 31, 2015, as applicable:
| | Underlying Funds |
| | Schwab
S&P 500
Index Fund | | Schwab
1000
Index Fund | | Schwab
Small-Cap
Index Fund | | Schwab
Total Stock
Market
Index Fund | | Schwab
International
Index Fund |
| Schwab MarketTrack All Equity Portfolio | 0.9% | | —% | | 3.8% | | —% | | 2.8% |
| Schwab MarketTrack Growth Portfolio | 0.9% | | —% | | 3.9% | | —% | | 2.4% |
| Schwab MarketTrack Balanced Portfolio | 0.5% | | —% | | 2.1% | | —% | | 1.3% |
| Schwab MarketTrack Conservative Portfolio | 0.1% | | —% | | 0.6% | | —% | | 0.4% |
| Schwab MarketTrack Growth Portfolio II | 0.0%* | | 0.0%* | | 0.2% | | —% | | 0.2% |
| Schwab Target 2010 Fund | 0.0%* | | —% | | —% | | —% | | —% |
| Schwab Target 2015 Fund | 0.0%* | | —% | | —% | | —% | | —% |
| Schwab Target 2020 Fund | 0.2% | | —% | | —% | | —% | | —% |
| Schwab Target 2025 Fund | 0.2% | | —% | | —% | | —% | | —% |
| Schwab Target 2030 Fund | 0.4% | | —% | | —% | | —% | | —% |
| Schwab Target 2035 Fund | 0.2% | | —% | | —% | | —% | | —% |
| Schwab Target 2040 Fund | 0.4% | | —% | | —% | | —% | | —% |
| Schwab Target 2045 Fund | 0.0%* | | —% | | —% | | —% | | —% |
| Schwab Target 2050 Fund | 0.0%* | | —% | | —% | | —% | | —% |
| Schwab Target 2055 Fund | 0.0%* | | —% | | —% | | —% | | —% |
Certain other related parties may own shares of the funds in this report. As of October 31, 2015, the shares owned by Schwab Charitable Giving Trust (an affiliate of Schwab) as a percentage of the total shares of the Schwab Small Cap Index Fund, Schwab Total Stock Market Index Fund and Schwab International Index Fund were 2.9%, 7.1% and 3.6%, respectively.
Schwab Equity Index Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions with other funds in the Fund Complex (for definition refer to Trustees and Officers section). All loans are for temporary or emergency purposes and the interest rate to be charged will be the average of the overnight repurchase agreement rate and the short-term bank loan rate. All loans are subject to numerous conditions designed to ensure fair and equitable treatment of all participating funds/portfolios. The interfund lending facility is subject to the oversight and periodic review by the Board. The funds had no interfund borrowing or lending activity during the period.
The funds may engage in direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and/or officers. For the period ended October 31, 2015, each fund’s total aggregate security transactions with other Schwab Funds were as follows:
| Schwab S&P 500 Index Fund | $25,289,140 |
| Schwab 1000 Index Fund | 15,442,624 |
| Schwab Small-Cap Index Fund | 6,586,610 |
| Schwab Total Stock Market Index Fund | 11,119,112 |
| Schwab International Index Fund | 53,288,040 |
During the period, the Schwab S&P 500 Index Fund, Schwab Small-Cap Index Fund, Schwab Total Stock Market Index Fund and Schwab International Index Fund received a reimbursement payment of $7,233, $8,746, $8,816 and $6,008, respectively, related to state filing fees resulting from revised calculation methodologies being applied on sales of the funds' shares in prior periods.
During the periods under which the expense was incurred, the funds were operating above their expense limitation and waived fees including these state filing fees. As this amount was previously waived as part of an expense reduction by CSIM and its affiliates, it was reimbursed to the investment adviser. Each fund's net expense ratio was not impacted during the periods the expense was incurred or during the current period.
5. Board of Trustees:
The Board may include people who are officers and/or directors of CSIM or its affiliates. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trusts were in compliance with these limitations throughout the report period. The trusts did not pay any of these interested persons for their services as trustees, but they did pay non-interested persons (independent trustees), as noted on each fund’s Statement of Operations. For information regarding the trustees, please refer to the Trustees and Officers table at the end of this report.
6. Borrowing from Banks:
During the period prior to October 8, 2015, the funds had access to a committed line of credit of $150 million with State Street, an uncommitted line of credit of $100 million with Bank of America, N.A., and an uncommitted line of credit of $50 million with Brown Brothers Harriman & Co. The funds paid an annual fee to State Street for the committed line of credit. Effective October 8, 2015, the previous lines of credit were terminated and the funds became participants with other U.S. registered investment companies managed by CSIM in a joint, syndicated, committed $530 million line of credit (the Credit Facility), with State Street as agent, which matures on October 6, 2016. Under the terms of the Credit Facility, in addition to the interest charged on any borrowings by a fund, each fund pays a commitment fee of 0.125% per annum on its proportionate share of the unused portion of the Credit Facility. There were no borrowings from any of the lines of credit during the period.
The funds also have access to custodian overdraft facilities. A fund may have utilized the overdraft facility and incurred an interest expense, which is disclosed on the fund’s Statement of Operations, if any. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.
Schwab Equity Index Funds
Financial Notes (continued)
7. Derivatives:
Certain funds entered into equity index futures contracts during the report period. The funds invested in futures contracts to equitize available cash. The fair value and variation margin for futures contracts held at October 31, 2015 are presented on the Condensed Portfolio Holdings and Statement of Assets and Liabilities, respectively. The net realized and change in unrealized gains (losses) on futures contracts are presented on the Statement of Operations. Refer to financial note 2(b) for the funds' accounting policies with respect to futures contracts and financial note 3 for disclosures concerning the risks of investing in futures contracts. During the period ended October 31, 2015, the month-end average contract values of futures contracts held by the funds and the month-end average number of contracts held were as follows:
| | Contract Values | | Number of Contracts |
| Schwab S&P 500 Index Fund | $193,895,942 | | 1,891 |
| Schwab 1000 Index Fund | 27,125,073 | | 267 |
| Schwab Small-Cap Index Fund | 25,802,248 | | 217 |
| Schwab Total Stock Market Index Fund | 47,209,196 | | 451 |
| Schwab International Index Fund | 61,572,329 | | 685 |
8. Purchases and Sales/Maturities of Investment Securities:
For the period ended October 31, 2015, purchases and sales/maturities of securities (excluding short-term obligations) were as follows:
| | Purchases of Securities | | Sales/Maturities of Securities |
| Schwab S&P 500 Index Fund | $1,540,712,705 | | $503,963,362 |
| Schwab 1000 Index Fund | 242,550,205 | | 384,176,671 |
| Schwab Small-Cap Index Fund | 572,961,402 | | 430,472,320 |
| Schwab Total Stock Market Index Fund | 498,718,515 | | 98,055,163 |
| Schwab International Index Fund | 550,647,598 | | 199,465,116 |
9. Redemption Fee:
The funds charge a 2.00% redemption fee on shares sold or exchanged within 30 days of the original purchase date. Such amounts are netted against redemption proceeds on the Statement of Changes in Net Assets. The redemption fees charged during the current and prior periods are:
| | Current Period
(11/1/14-10/31/15) | | Prior Period
(11/1/13-10/31/14) |
| Schwab S&P 500 Index Fund | $266,905 | | $284,628 |
| Schwab 1000 Index Fund | 44,069 | | 27,406 |
| Schwab Small-Cap Index Fund | 34,586 | | 29,424 |
| Schwab Total Stock Market Index Fund | 50,564 | | 75,062 |
| Schwab International Index Fund | 27,617 | | 24,510 |
Schwab Equity Index Funds
Financial Notes (continued)
10. Federal Income Taxes:
As of October 31, 2015, the components of distributable earnings on a tax-basis were as follows:
| | Schwab
S&P 500
Index Fund | | Schwab
1000
Index Fund | | Schwab
Small-Cap
Index Fund | | Schwab
Total Stock
Market
Index Fund | | Schwab
International
Index Fund |
| Undistributed ordinary income | $357,061,921 | | $92,556,905 | | $37,022,765 | | $67,894,710 | | $70,180,852 |
| Undistributed long-term capital gains | 213,548,277 | | 264,432,988 | | 123,561,081 | | 35,883,867 | | — |
| Unrealized appreciation on investments | 9,712,924,583 | | 4,556,700,963 | | 844,629,291 | | 1,756,538,810 | | 585,873,657 |
| Unrealized depreciation on investments | (605,355,519) | | (83,340,030) | | (261,044,293) | | (138,422,899) | | (209,815,576) |
| Other unrealized appreciation (depreciation) | — | | 1 | | — | | — | | (202,030) |
| Net unrealized appreciation (depreciation) | $9,107,569,064 | | $4,473,360,934 | | $583,584,998 | | $1,618,115,911 | | $375,856,051 |
The primary differences between book-basis and tax-basis unrealized appreciation or unrealized depreciation of investments are the tax deferral of losses on wash sales, Passive Foreign Investment Companies (PFIC), partnership investments, non-taxable dividends and futures mark to market.
Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2015, the funds had capital loss carryforwards available to offset future net capital gains before the expiration dates as follows:
| Expiration Date | | Schwab
S&P 500
Index Fund | | Schwab
1000
Index Fund | | Schwab
Small-Cap
Index Fund | | Schwab
Total Stock
Market
Index Fund | | Schwab
International
Index Fund |
| October 31, 2017 | | $— | | $— | | $— | | $— | | $13,252,761 |
| No expiration* | | — | | — | | — | | — | | 61,829,409 |
| Total | | $— | | $— | | $— | | $— | | $75,082,170 |
| * | As a result of the passage of the Regulated Investment Company Modernization Act of 2010, capital losses incurred after December 31, 2010 may now be carried forward indefinitely, but must retain the character of the original loss. |
For the year ended October 31, 2015, the funds had capital loss carryforwards utilized as follows:
| | Schwab
S&P 500
Index Fund | | Schwab
1000
Index Fund | | Schwab
Small-Cap
Index Fund | | Schwab
Total Stock
Market
Index Fund | | Schwab
International
Index Fund |
| Capital loss carryforwards utilized | $187,573,938 | | $— | | $— | | $— | | $— |
Schwab Equity Index Funds
Financial Notes (continued)
10. Federal Income Taxes (continued):
The tax-basis components of distributions paid during the current and prior fiscal years were as follows:
| | Schwab
S&P 500
Index Fund | | Schwab
1000
Index Fund | | Schwab
Small-Cap
Index Fund | | Schwab
Total Stock
Market
Index Fund | | Schwab
International
Index Fund |
| Current period distributions | | | | | | | | | |
| Ordinary income | $369,772,138 | | $110,332,491 | | $41,501,610 | | $75,210,034 | | $87,032,492 |
| Long-term capital gains | — | | 171,945,895 | | 130,862,912 | | 16,307,399 | | — |
| Return of capital | — | | — | | — | | — | | — |
| Prior period distributions | | | | | | | | | |
| Ordinary income | $297,103,536 | | $92,284,725 | | $38,782,759 | | $50,259,453 | | $56,954,638 |
| Long-term capital gains | — | | 181,138,882 | | 97,746,901 | | 14,517,862 | | — |
| Return of capital | — | | — | | — | | — | | — |
Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
Permanent book and tax basis differences may result in reclassifications between components of net assets as required. The adjustments will have no impact on net assets or the results of operations. As of October 31, 2015, the funds made the following reclassifications:
| | Schwab
S&P 500
Index Fund | | Schwab
1000
Index Fund | | Schwab
Small-Cap
Index Fund | | Schwab
Total Stock
Market
Index Fund | | Schwab
International
Index Fund |
| Capital shares | $— | | $— | | ($18) | | ($2) | | $— |
| Undistributed net investment income | (3,411,365) | | (1,557,720) | | (540,920) | | (153,400) | | 100,347 |
| Net realized capital gains (losses) | 3,411,365 | | 1,557,720 | | 540,938 | | 153,402 | | (100,347) |
As of October 31, 2015, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and for state purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the funds’ financial statements. The funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period ended October 31, 2015, the funds did not incur any interest or penalties.
11. Subsequent Events:
At a Special Meeting of Shareholders on December 11, 2015, twelve individuals were elected to serve as trustees of all trusts constituting the Schwab Funds, Laudus Funds and Schwab ETFs effective January 1, 2016. The twelve individuals elected to the Boards of Trustees consist of current Schwab Funds and Laudus Funds trustees, current Schwab ETFs trustees and three new nominees. The trustees believe that combining the composition of the Boards of Trustees and adding the new nominees will further align oversight of the Schwab Funds, Laudus Funds and Schwab ETFs, among other benefits. Other than this election of trustees, management has determined there are no subsequent events or transactions through the date the financial statements were issued that would have materially impacted the financial statements as presented.
Report of Independent Registered Public Accounting Firm
To the Boards of Trustees and Shareholders of:
Schwab S&P 500 Index Fund
Schwab 1000 Index Fund
Schwab Small-Cap Index Fund
Schwab Total Stock Market Index Fund
Schwab International Index Fund
In our opinion, the accompanying statements of assets and liabilities, including the condensed portfolio holdings, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Schwab 1000 Index Fund (one of the funds constituting Schwab Investments), Schwab S&P 500 Index Fund, Schwab Small-Cap Index Fund, Schwab Total Stock Market Index Fund and Schwab International Index Fund (four of the funds constituting Schwab Capital Trust) (hereafter collectively referred to as the “Funds”) at October 31, 2015, and the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds' management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2015 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
December 16, 2015
Other Federal Tax Information (unaudited)
Schwab International Index Fund may elect to pass on the benefits of the foreign tax credit of $5,998,315 to its shareholders for the year ended October 31, 2015. The respective foreign source income on the fund is $88,570,002.
For corporate shareholders, the following percentage of the funds dividend distributions paid during the fiscal year ended October 31, 2015, qualify for the corporate dividends received deduction:
| | Percentage |
| Schwab S&P 500 Index Fund | 97.17 |
| Schwab 1000 Index Fund | 100.00 |
| Schwab Small-Cap Index Fund | 50.23 |
| Schwab Total Stock Market Index Fund | 85.33 |
| Schwab International Index Fund | — |
For the fiscal year ended October 31, 2015, the funds designate the following amounts of the dividend distributions as qualified dividends for the purpose of the maximum rate under section 1(h)(11) of the Internal Revenue Code. Shareholders will be notified in January 2016 via IRS form 1099 of the amounts for use in preparing their 2015 income tax return.
| Schwab S&P 500 Index Fund | $369,772,138 |
| Schwab 1000 Index Fund | 110,332,491 |
| Schwab Small-Cap Index Fund | 22,237,809 |
| Schwab Total Stock Market Index Fund | 67,348,891 |
| Schwab International Index Fund | 73,293,934 |
Under Section 852 (b)(3)(C) of the Internal Revenue Code, certain funds hereby designate the following amounts as long-term capital gain dividends for the fiscal year ended October 31, 2015:
| Schwab S&P 500 Index Fund | $— |
| Schwab 1000 Index Fund | 171,945,895 |
| Schwab Small-Cap Index Fund | 130,862,912 |
| Schwab Total Stock Market Index Fund | 16,307,399 |
| Schwab International Index Fund | — |
Investment Advisory Agreement Approval
The Investment Company Act of 1940 (the 1940 Act) requires that initial approval of, as well as the continuation of, a fund’s investment advisory agreement must be specifically approved (1) by the vote of the trustees or by a vote of the shareholders of the fund, and (2) by the vote of a majority of the trustees who are not parties to the investment advisory agreement or “interested persons” of any party (the Independent Trustees), cast in person at a meeting called for the purpose of voting on such approval. In connection with such approvals, the fund’s trustees must request and evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms of the investment advisory agreement.
The Board of Trustees (the Board or the Trustees, as appropriate) calls and holds one or more meetings each year that are dedicated, in whole or in part, to considering whether to renew the investment advisory agreements between Schwab Capital Trust and Schwab Investments (collectively, the Trusts) and Charles Schwab Investment Management, Inc. (CSIM) (the Agreements) with respect to the existing funds in the Trusts, including Schwab S&P 500 Index Fund, Schwab 1000 Index Fund, Schwab Small-Cap Index Fund, Schwab Total Stock Market Index Fund and Schwab International Index Fund (the Funds), and to review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting(s), the Board requests and reviews a wide variety of materials provided by CSIM, including information about CSIM’s affiliates, personnel and operations. As part of the renewal process, Independent Trustees’ legal counsel sends an information request letter to CSIM seeking certain relevant information. The responses by CSIM are provided to the Trustees for their review prior to their meeting, and the Trustees are provided with the opportunity to request any additional materials. The Board also receives extensive data provided by third parties. This information is in addition to the detailed information about the Funds that the Board reviews during the course of each year, including information that relates to Fund operations and Fund performance. The Independent Trustees receive advice from independent counsel to the Independent Trustees, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees meet in executive session outside the presence of Fund management and participate in question and answer sessions with representatives of CSIM.
The Board, including a majority of the Independent Trustees, considered information specifically relating to its consideration of the continuance of the Agreements with respect to the Funds at meetings held on April 29, 2015, and
June 1, 2015, and approved the renewal of the Agreements with respect to the Funds for an additional one-year term at the meeting held on June 1, 2015. The Board’s approval of the Agreements with respect to the Funds was based on consideration and evaluation of a variety of specific factors discussed at these meetings and at prior meetings, including:
| 1. | the nature, extent and quality of the services provided to the Funds under the Agreements, including the resources of CSIM and its affiliates dedicated to the Funds; |
| 2. | each Fund’s investment performance and how it compared to that of certain other comparable mutual funds; |
| 3. | each Fund’s expenses and how those expenses compared to those of certain other comparable mutual funds, exchange-traded funds and other accounts; |
| 4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to each Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
| 5. | the extent to which economies of scale would be realized as the Funds grow and whether fee levels in the Agreements reflect those economies of scale for the benefit of Fund investors. |
Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds. In this regard, the Trustees evaluated, among other things, CSIM’s personnel, experience, track record and compliance program. The Trustees also considered information provided by CSIM relating to each Fund’s portfolio management team, portfolio strategy and risk oversight structure, and internal investment guidelines. The Trustees also considered investments in CSIM’s mutual fund infrastructure, Schwab’s wide range of products, services, and channel alternatives such as investment and research tools, internet access, and an array of account features that benefit the Funds and certain of their shareholders. The Trustees also considered Schwab’s excellent reputation as a full service brokerage firm and its overall financial condition. Finally, the Trustees considered that the vast majority of the Funds’ shareholders are also brokerage clients of Schwab. Following such evaluation, the Board concluded, within the context of its full deliberations, that the nature, extent and quality of services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds supported renewal of the Agreements with respect to the Funds.
Fund Performance. The Board considered Fund performance in determining whether to renew the Agreements with respect to the Funds. Specifically, the Trustees considered each Fund’s performance relative to a peer category of other mutual funds and appropriate indices/ benchmarks, in light of total return, and market trends. As part of this review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the third party who prepared the peer category analysis. In evaluating the performance of each Fund, the Trustees considered both risk and shareholder risk expectations for such Fund and the appropriateness of the benchmark used to compare the performance of each Fund. The Trustees further considered the level of Fund performance in the context of their review of Fund expenses and adviser profitability discussed below. Following such evaluation the Board concluded, within the context of its full deliberations, that the performance of the Funds supported renewal of the Agreements with respect to the Funds.
Fund Expenses. With respect to the Funds’ expenses, the Trustees considered the rate of compensation called for by the Agreements, and each Fund’s net operating expense ratio, in each case, in comparison to those of a peer group of mutual funds, such peer groups and comparisons having been selected and calculated by an independent third party. The Trustees considered the effects of CSIM’s and Schwab’s historical practice of voluntarily waiving management and other fees to prevent total Fund expenses from exceeding a specified cap. The Trustees also considered CSIM’s contractual commitment to keep each Fund’s expense cap for so long as CSIM serves as the adviser to such Fund. The Trustees also considered fees charged by CSIM to other mutual funds and to other types of accounts, such as exchange-traded funds and separately managed accounts, but, with respect to such other types of accounts, accorded less weight to such comparisons due to the different legal, regulatory, compliance and operating features of mutual funds as compared to these other types of accounts. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expenses of the Funds are reasonable and supported renewal of the Agreements with respect to the Funds.
Profitability. With regard to profitability, the Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly. In this connection, the Trustees reviewed management’s profitability analyses, together with certain commentary thereon from an
independent accounting firm. The Trustees also considered any other benefits derived by CSIM from its relationship with the Funds, such as whether, by virtue of its management of the Funds, CSIM obtains investment information or other research resources that aid it in providing advisory services to other clients. The Trustees considered whether the varied levels of compensation and profitability under the Agreements and other service agreements were reasonable and justified in light of the quality of all services rendered to each Fund by CSIM and its affiliates. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM is reasonable and supported renewal of the Agreements with respect to the Funds.
Economies of Scale. The Trustees considered the existence of any economies of scale and whether those are passed along to a Fund’s shareholders through a graduated investment advisory fee schedule or other means, including any fee waivers by CSIM and its affiliates. In this regard, and consistent with their consideration of Fund expenses, the Trustees considered that CSIM and Schwab have committed resources to minimize the effects on shareholders of diseconomies of scale during periods when fund assets were relatively small through their contractual expense waivers. For example, such diseconomies of scale may particularly affect newer funds or funds with investment strategies that are from time to time out of favor, but shareholders may benefit from the continued availability of such funds at subsidized expense levels. The Trustees also considered the existing contractual investment advisory fee schedules relating to Schwab 1000 Index Fund that include lower fees at higher graduated asset levels. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the Funds obtain reasonable benefit from economies of scale.
In the course of their deliberations, the Trustees did not identify any particular information or factor that was all important or controlling. Based on the Trustees’ deliberation and their evaluation of the information described above, the Board, including all of the Independent Trustees, approved the continuation of the Agreements with respect to the Funds and concluded that the compensation under the Agreements with respect to the Funds is fair and reasonable in light of such services and expenses and such other matters as the Trustees have considered to be relevant in the exercise of their reasonable judgment.
Trustees and Officers
The tables below give information about the trustees and officers of Schwab Capital Trust and Schwab Investments prior to January 1, 2016, which includes the funds covered in this report. The “Fund Complex” includes The Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust, Laudus Trust and Laudus Institutional Trust. The Fund Complex includes 95 funds.
The address for all trustees and officers is 211 Main Street, San Francisco, CA 94105. You can find more information about the trustees and officers in the funds’ Statement of Additional Information, which is available free by calling 1-800-435-4000.
| Independent Trustees |
Name, Year of Birth,
and Position(s) with
the trust (Terms 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 |
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 (Oct. 1979 – present); Senior Fellow Stanford Institute for Economic Policy Research (2000 – present); Professor of Public Policy, Stanford University (1994 – 2015). | 74 | Director, Gilead Sciences, Inc. (2005 – present)
|
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. | 74 | 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) (Dec. 2008 – Sept. 2013) | 74 | Director, KLA-Tencor Corporation (2008 – present) |
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) (Jan. 2015 – present); Partner, Kudu Advisors, LLC (financial services) (June 2008 – Jan. 2015); Advisor, Asset International, Inc. (publisher of financial services information) (Aug. 2008 – Jan. 2015). | 95 | None |
| Independent Trustees (continued) |
Name, Year of Birth,
and Position(s) with
the trust (Terms 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 |
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) | Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (Mar. 1990 – present). | 74 | Director, Eaton (2012 – present)
Director and Chairman 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) (Jan. 2008 – present); Partner, Colgin Partners, LLC (vineyards) (Feb. 1998 – present). | 74 | Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 – present)
Lead Independent Director and Chair of Audit Committee, OUTFRONT Media Inc. (2014 – present) |
| Interested Trustees |
Name, Year of Birth,
and Position(s) with
the trust (Terms 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 |
Charles R. Schwab2
1937
Chairman and Trustee
(Chairman and Trustee of The Charles Schwab Family of Funds since 1989; Schwab Investments since 1991; Schwab Capital Trust since 1993; Schwab Annuity Portfolios since 1994; Laudus Trust and Laudus Institutional Trust since 2010) | Chairman and Director, The Charles Schwab Corporation (1986 – present); Chairman and Director of Charles Schwab & Co., Inc. (1971 – present); Chairman and Director of Charles Schwab Investment Management, Inc. (1989 – present); Chairman and Director of Charles Schwab Bank (2003 – present); Chairman and Chief Executive Officer of Schwab (SIS) Holdings Inc. I and Schwab International Holdings, Inc. (1996 – present); and Director, Chairman and Chief Executive Officer, Schwab Holdings, Inc. (1979 – present). | 74 | Chairman and Director, The Charles Schwab Corporation (1986 – present)
Director, Yahoo! Inc. (2014 – present) |
Walter W. Bettinger II2
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 and Charles Schwab & Co., Inc. (2008 – present); Director, Charles Schwab Bank (2006 – present); and Director, Schwab Holdings, Inc. (2008 – present). | 95 | Director, The Charles Schwab Corporation (2008 – present) |
| Officers of the Trust |
Name, Year of Birth, and Position(s)
with the trust (Terms of office, and
length of Time Served3) | Principal Occupations During the Past Five Years |
Marie Chandoha
1961
President and Chief Executive Officer
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2010) | Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer (Sept. 2010 – Oct. 2011), Charles Schwab Investment Management, Inc.; President, Chief Executive Officer (Dec. 2010 – present), and Chief Investment Officer (Sept. 2010 – Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Director, Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited (Jan. 2011 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (Mar. 2007 – Aug. 2010). |
George Pereira
1964
Treasurer and Principal Financial Officer, Schwab Funds
Treasurer and Chief Financial Officer, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2004; Laudus Trust and Laudus Institutional Trust since 2006) | Senior Vice President and Chief Financial Officer (Nov. 2004 – present), Chief Operating Officer (Jan. 2011 – present), Charles Schwab Investment Management, Inc.; Treasurer and Chief Financial Officer, Laudus Funds (June 2006 – present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – present) and Schwab ETFs (Oct. 2009 – present); Director, Charles Schwab Worldwide 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 Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust 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 – Jan. 2009). |
Brett Wander
1961
Senior Vice President and Chief Investment Officer – Fixed Income
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust 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 (Jan. 2008 – Oct. 2010); Director of Alpha Strategies Loomis, Sayles & Company (April 2006 – Jan. 2008). |
David Lekich
1964
Chief Legal Officer and Secretary, Schwab Funds
Vice President and Assistant Clerk, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2011) | Senior Vice President (Sept. 2011 – present), Vice President (Mar. 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present), Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (April 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; Vice President and Assistant Clerk, Laudus Funds (April 2011 – present); Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs. |
Catherine MacGregor
1964
Vice President and Assistant Secretary, Schwab Funds
Chief Legal Officer, Vice President and Clerk, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2005) | Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 – present); Vice President (Dec. 2005 – present), Chief Legal Officer and Clerk (Mar. 2007 – present), Laudus Funds; Vice President (Nov. 2005 – present) and Assistant Secretary (June 2007 – present), Schwab Funds; Vice President and Assistant Secretary, Schwab ETFs (Oct. 2009 – present). |
| 1 | Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab and Laudus Funds’ retirement policy 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 Schwab Funds or Laudus Funds to retire from all Boards upon their required retirement date from either Board. |
| 2 | Mr. Schwab and Mr. Bettinger are Interested Trustees because they own stock of The Charles Schwab Corporation, the parent company of the investment adviser. |
| 3 | The President, Treasurer and Secretary/Clerk 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 Boards. |
Glossary
asset allocation The practice of dividing a portfolio among different asset classes, with each asset class assigned a particular percentage.
asset class A group of securities with similar structure and basic characteristics. Stocks, bonds and cash are the three main examples of asset classes.
Barclays U.S. Aggregate Bond Index A broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid ARM pass-throughs), asset-backed securities, and commercial mortgage-backed securities.
Barclays U.S. Treasury Bills 1 – 3 Months Index An index that includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months and more than 1 month, are rated investment grade, and have $250 million or more of outstanding face value.
bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the coupon rate) until a specified date (the maturity date), at which time the issuer returns the money borrowed (principal or face value) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.”
An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.
bond fund A bond fund is subject to the same credit, interest rate, and inflation risks as bonds. In addition, a bond fund incurs ongoing fees and expenses. A bond fund’s net asset value will fluctuate with the price of the underlying bonds and the portfolio turnover activity; return of principal is not guaranteed.
cap, capitalization See “market cap.”
capital gain, capital loss the difference between the amount paid for an investment and its value at a later time. If the investment has been sold, the capital gain or loss is considered a realized gain or loss. If the investment is still held, the capital gain or loss is considered unrealized appreciation or depreciation.
Dow Jones U.S. Total Stock Market Index An index that measures all U.S. equity securities with readily available prices.
expense ratio The amount that is taken from a mutual fund’s assets each year to cover the fund’s operating expenses. An expense ratio of 0.50% means that a fund’s expenses amount to half of one percent of its average net assets a year.
market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.
MSCI EAFE (Europe, Australasia, Far East) Index A free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. & Canada. The Net version of the index
reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes; returns are calculated applying dividend withholding rates applicable to non-resident persons who do not benefit from double taxation treaties.
MSCI Emerging Markets Index A free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.
net asset value (NAV) The value of one share of a mutual fund. NAV is calculated by taking the fund’s total assets, subtracting liabilities, and dividing by the number of shares outstanding.
outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.
price-to-book ratio (P/B) The market price of a company’s stock compared with its “book value.” A mutual fund’s P/B is the weighted average of the P/B of all stocks in the fund’s portfolio.
price-to-earnings ratio (P/E) The market price of a company’s stock compared with earnings over the past year. A mutual fund’s P/E is the weighted average of the P/E of all stocks in the fund’s portfolio.
restricted and illiquid securities Restricted securities are securities that are subject to legal restrictions on their sale. Restricted securities generally can be sold in privately negotiated transactions, pursuant to an exemption from registration under the Securities Act of 1933 (the “1933 Act”), or in a registered public offering. Certain restricted securities, such as Section 4(a)(2) commercial paper and Rule 144A securities under the 1933 Act, may be considered to be liquid if they meet the criteria for liquidity established by the Board. Illiquid securities generally are any securities that cannot be disposed of promptly and in the ordinary course of business at approximately the amount at which a fund has valued the instruments. The liquidity of a fund’s investments is monitored under the supervision and direction of the Board. Investments currently not considered liquid include repurchase agreements not maturing within seven days and certain restricted securities.
return on equity (ROE) The average yearly rate of return for each dollar of investors’ money, measured over the past five years.
Russell 2000 Index An index that measures the performance of the small-cap segment of the U.S. equity universe. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.
S&P 500 Index A market capitalization index that is designed to measure the performance of 500 leading publicly held companies in leading industries of the U.S. economy.
Schwab 1000 Index An index that represents the performance of the largest 1,000 publicly traded companies in the United States.
Small-Cap Spliced Index An internally calculated index, comprised of the Schwab Small-Cap Index (the fund’s former comparative index) from inception of the fund until the close of business on December 14, 2011, and the Russell 2000 Index from December 15, 2011 forward.
stock A share of ownership, or equity, in the issuing company.
total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.
weighted average For mutual funds, an average that gives the same weight to each security as the security represents in the fund’s portfolio.
yield The income paid out by an investment, expressed as a percentage of the investment’s market value.
PRIVACY NOTICE
THIS IS NOT PART OF THE SHAREHOLDER REPORT
A Commitment to Your Privacy
Your Privacy Is Not for Sale
We do not and will not sell your personal information to anyone, for any reason.
We are committed to protecting the privacy of information we maintain about you. Below are details about our commitment, including the types of information we collect and how we use and share that information. This Privacy Notice applies to you only if you are an individual who invests directly in the funds by placing orders through the funds’ transfer agent. If you place orders through your brokerage account at Charles Schwab & Co., Inc. or an account with another broker-dealer, investment advisor, 401(k) plan, employee benefit plan, administrator, bank or other financial intermediary, you are covered by the privacy policies of that financial institution and should consult those policies.
How We Collect Information About You
We collect personal information about you in a number of ways.
• APPLICATION AND REGISTRATION
INFORMATION.
We collect personal information from you when you open an account or utilize one of our services. We may also collect information about you from third parties such as consumer reporting agencies to verify your identity. The information we collect may include personal information, including your Social Security number, as well as details about your interests, investments and investment experience.
• TRANSACTION AND EXPERIENCE
INFORMATION.
Once your account has been opened, we collect and maintain personal information about your account activity, including your transactions, balances, positions and history. This information allows us to administer your account and provide the services you have requested.
• WEBSITE USAGE.
When you visit our websites, we may use devices known as “cookies,” graphic interchange format files (GIFs), or other similar web tools to enhance your web experience. These
tools help us to recognize you, maintain your web session, and provide a more personalized experience. To learn more, please go to www.schwab.com/privacy.
How We Share and Use Your Information
We provide access to information about you to our affiliated companies, outside companies and other third parties in certain limited circumstances, including:
• to help us process transactions for your account;
• when we use other companies to provide services for us, such as printing and mailing your account statements;
• when we believe that disclosure is required or permitted under law (for example, to cooperate with regulators or law enforcement, resolve consumer disputes, perform credit/authentication checks, or for risk control).
State Laws
We will comply with state laws that apply to the disclosure or use of information about you.
Safeguarding Your Information — Security Is a
Partnership
We take precautions to ensure the information we collect about you is protected and is accessed only by authorized individuals or organizations.
Companies we use to provide support services are not allowed to use information about our shareholders for their own purposes and are contractually obligated to maintain strict confidentiality. We limit their use of information to the performance of the specific services we have requested.
We restrict access to personal information by our employees and agents. Our employees are trained about privacy and are required to safeguard personal information.
We maintain physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
Contact Us
To provide us with updated information, report suspected fraud or identity theft, or for any other questions, please call the number below.
Schwab Funds® direct investors: 1-800-407-0256
© 2015 Schwab Funds. All rights reserved.
Schwab Funds® offers you an extensive family of mutual funds, each one based on a clearly defined investment approach and using disciplined management strategies. The list at right shows all currently available Schwab Funds.
Whether you are an experienced investor or just starting out, Schwab Funds can help you achieve your financial goals. An investor should consider a fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information can be found in the fund’s prospectus. Please call 1-800-435-4000 for a prospectus and brochure for any Schwab Fund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus.
Proxy Voting Policies, Procedures and Results
A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting the Schwab Funds’ website at www.csimfunds.com/schwabfunds_prospectus, the SEC’s website at www.sec.gov, or by contacting Schwab Funds at 1-800-435-4000.
Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting the fund’s website at www.csimfunds.com/schwabfunds_prospectus or the SEC’s website at www.sec.gov.
The Schwab Funds Family®
Stock Funds
Schwab Core Equity Fund™
Schwab Dividend Equity Fund™
Schwab Large-Cap Growth Fund™
Schwab Small-Cap Equity Fund™
Schwab Hedged Equity Fund™
Schwab Financial Services Fund™
Schwab Health Care Fund™
Schwab® International Core Equity Fund
Schwab Fundamental US Large Company Index Fund
Schwab Fundamental US Small Company Index Fund
Schwab Fundamental International Large Company Index Fund
Schwab Fundamental International Small Company Index Fund
Schwab Fundamental Emerging Markets Large Company Index Fund
Schwab Fundamental Global Real Estate Index Fund
Schwab Global Real Estate Fund™
Schwab® S&P 500 Index Fund
Schwab 1000 Index® Fund
Schwab Small-Cap Index Fund®
Schwab Total Stock Market Index Fund®
Schwab International Index Fund®
Asset Allocation Funds
Schwab Balanced Fund™
Schwab MarketTrack All Equity Portfolio™
Schwab MarketTrack Growth Portfolio™
Schwab MarketTrack Balanced Portfolio™
Schwab MarketTrack Conservative Portfolio™
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab 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
Bond Funds
Schwab Short-Term Bond Market Fund™
Schwab Intermediate-Term Bond Fund™
Schwab Total Bond Market Fund™
Schwab GNMA Fund™
Schwab® Treasury Inflation Protected Securities Index Fund
Schwab Tax-Free Bond Fund™
Schwab California Tax-Free Bond Fund™
Schwab Money Funds
Schwab offers an array of money market funds1. Choose from taxable or tax-advantaged alternatives. Many can be linked to your eligible Schwab account to “sweep” cash balances automatically, subject to availability, when you’re between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments®.
| 1 | Investments in money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency and, although they seek to preserve the value of your investment at $1 per share, it is possible to lose money. |
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
Funds
Schwab Funds®
1-800-435-4000
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
© 2015 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC®
Printed on recycled paper.
MFR13810-18
00156958
Annual report dated October 31, 2015, enclosed.
Schwab Active Equity Funds
Schwab Core Equity Fund™
Schwab Dividend Equity Fund™
Schwab Large-Cap Growth Fund™
Schwab Small-Cap Equity Fund™
Schwab Hedged Equity Fund™
Schwab Financial Services Fund™
Schwab Health Care Fund™
Schwab® International Core
Equity Fund
Go paperless today.
Simplify your financial life
by viewing these documents online.
Sign up at schwab.com/paperless
This wrapper is not part of the shareholder report.
Schwab Active Equity Funds
Annual Report
October 31, 2015
Schwab Core Equity Fund
Schwab Dividend Equity Fund
Schwab Large-Cap Growth Fund
Schwab Small-Cap Equity Fund
Schwab Hedged Equity Fund
Schwab Financial Services Fund
Schwab Health Care Fund
Schwab International Core
Equity Fund
This page is intentionally left blank.
Schwab Active Equity Funds
Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).
Distributor: Charles Schwab & Co., Inc. (Schwab)
The Sector/Industry classifications in this report use the Global Industry Classification Standard (GICS), which was developed by, and is the exclusive property of, MSCI and Standard & Poor’s (S&P). GICS is a service mark of MSCI and S&P and has been licensed for use by Schwab. The Industry classifications used in the schedules of Portfolio Holdings are sub-categories of Sector classifications.
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
| Total Return for the 12 Months Ended October 31, 2015 |
Schwab Core Equity Fund
(Ticker Symbol: SWANX) | 5.61% |
| S&P 500® Index | 5.20% |
| Fund Category: Morningstar Large Blend | 2.79% |
| Performance Details | pages 6-7 |
| |
Schwab Dividend Equity Fund
(Ticker Symbol: SWDSX) | 0.12% |
| Russell 1000 Value Index | 0.53% |
| Fund Category: Morningstar Large Value | 0.37% |
| Performance Details | pages 8-9 |
| |
Schwab Large-Cap Growth Fund
(Ticker Symbol: SWLSX) | 7.00% |
| Russell 1000 Growth Index | 9.18% |
| Fund Category: Morningstar Large Growth | 6.59% |
| Performance Details | pages 10-11 |
| |
Schwab Small-Cap Equity Fund
(Ticker Symbol: SWSCX) | 3.01% |
| Russell 2000® Index | 0.34% |
| Fund Category: Morningstar Small Blend | -0.45% |
| Performance Details | pages 12-13 |
| |
Schwab Hedged Equity Fund
(Ticker Symbol: SWHEX) | 4.84% |
| S&P 500® Index | 5.20% |
| Fund Category: Morningstar Long/Short Equity | -0.14% |
| Performance Details | pages 14-15 |
| Total Return for the 12 Months Ended October 31, 2015 |
Schwab Financial Services Fund
(Ticker Symbol: SWFFX) | 2.70% |
| S&P 1500 SuperComposite Financial Sector Index | 3.62% |
| Fund Category: Morningstar Financial | 1.59% |
| Performance Details | pages 16-17 |
| |
Schwab Health Care Fund1
(Ticker Symbol: SWHFX) | 7.26% |
| Dow Jones Global Health Care Index | 6.57% |
| Fund Category: Morningstar Health | 8.77% |
| Performance Details | pages 18-19 |
| |
Schwab International Core Equity Fund1
(Ticker Symbol: SICNX) | 2.05% |
| MSCI EAFE® Index (Net)2 | -0.07% |
| Fund Category: Morningstar Foreign Large Blend | -1.58% |
| Performance Details | pages 20-21 |
| Minimum Initial Investment3 | $100 |
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, a fund’s total return would have been lower. Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date.
| 1 | The fund’s performance relative to the index may be affected by fair-value pricing and timing differences in foreign exchange calculations. See financial note 2 for more information. |
| 2 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
| 3 | Please see the funds' prospectus for further detail and eligibility requirements. |
2Schwab Active Equity Funds
Marie Chandoha is President and CEO of Charles Schwab Investment Management, Inc. and the funds covered in this report.
Dear Shareholder,
At Charles Schwab Investment Management, our goal is to provide foundational products with consistent performance that enable investors to build well-diversified portfolios. The Schwab Active Equity Funds employ a disciplined investment process that involves quantitative and qualitative research. To aid in each fund’s stock selection process, the experienced investment team utilizes Schwab Equity Ratings® and Schwab’s proprietary international stock research. The funds use a bottom-up stock selection process, focusing on selecting stocks based on a company’s individual attributes.
For the 12-month reporting period ended October 31, 2015, the Schwab Active Equity Funds generated returns that in most cases reflected positive returns for U.S. stocks and flat returns for broad international equity indexes amid market volatility. For funds that invested overseas, the depreciation of foreign currencies versus the U.S. dollar reduced returns.
Despite market volatility later in the period which was stimulated by concerns about global growth and speculation that the Fed might raise interest rates, the S&P 500 Index returned 5.2% for the period. The lackluster global economic growth weighed on international markets, bringing about aggressive stimulus policies by several central banks across the globe. This caused many foreign currencies to depreciate versus the U.S. dollar. Reflecting these conditions, the MSCI EAFE Index (Net), which broadly represents the performance of international stocks, returned approximately -0.1%.1
Asset Class Performance Comparison % returns during the 12 months ended 10/31/2015
Index figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Past performance is not an indication of future results.
For index definitions, please see the Glossary.
Data source: Index provider websites and CSIM.
Nothing in this report represents a recommendation of a security by the investment adviser.
Management views and portfolio holdings may have changed since the report date.
Schwab Active Equity Funds3
From the President continued
For the 12-month reporting period ended October 31, 2015, the Schwab Active Equity Funds generated returns that in most cases reflected positive returns for U.S. stocks and flat returns for broad international equity indexes amid market volatility.
Compared to their respective indexes, the Schwab International Core Equity Fund and the Schwab Small-Cap Equity Fund performed particularly well, while the Schwab Large-Cap Growth Fund and the Schwab Dividend Equity Fund were relative underperformers. For the period, large-cap stocks outperformed small-cap stocks, as the small-cap Russell 2000 Index returned approximately 0.3%, and growth stocks outperformed value stocks.
For more information about the Schwab Active Equity Funds, please continue reading this report. In addition, you can find further details about these funds by visiting our website at www.csimfunds.com. We are also happy to hear from you at 1-800-435-4000.
Sincerely,
| 1 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
4Schwab Active Equity Funds
 | Jonas Svallin, CFA Vice President and Head of Active Equity Products, has overall responsibility for all aspects of the management of the funds and leads the Active Equity portfolio management and research team. Prior to joining CSIM in 2012, Mr. Svallin spent nearly three years as a partner and a director of quantitative analytics and research at Fiduciary Research & Consulting, where he provided oversight of quantitative analytics and risk management efforts. From 2003 until 2009, Mr. Svallin was a principal and head portfolio manager at Algert Global (formerly, Algert Coldiron Investors). Prior to joining Algert Global, Mr. Svallin worked as a quantitative research associate at RCM Capital Management and a senior consultant at FactSet Research Systems. |
 | Wei Li, Ph.D., CFA Managing Director and Senior Portfolio Manager, is responsible for the day-to-day co-management of the funds. Prior to joining CSIM in 2012, Ms. Li spent more than ten years at BlackRock, Inc. (formerly Barclays Global Investors), where she held a number of positions. From 2001 to 2009, she worked in various roles in the Global Advanced Active group, including portfolio management and quantitative research for both U.S. and international equity markets. After 2009, she worked in the defined contribution research and product development area for almost two years. |
 | Iain Clayton, CFA, FRM, Managing Director and Senior Portfolio Manager, is responsible for the day-to-day co-management of the Schwab Core Equity Fund, Schwab International Core Equity Fund and Schwab Health Care Fund. Prior to joining CSIM in 2013, Mr. Clayton spent more than five years at SSI Investment Management, where he was a portfolio manager and director of quantitative research. In these roles, Mr. Clayton co-managed multiple investment strategies and developed quantitative models and valuation approaches. From 2004 to 2008, he worked as a portfolio manager and director at Allianz Global Investors (formerly RCM Capital Management) and helped manage various equity portfolios and developed fundamental-based stock selection models. Prior to that, he was a vice president at Eureka Investment Advisors for almost three years and also served as a senior quantitative analyst/assistant portfolio manager. He has also worked as a quantitative research analyst at Allianz Global Investors. |
Schwab Active Equity Funds5
Schwab Core Equity Fund
The Schwab Core Equity Fund (the fund) seeks long-term capital growth. To pursue its investment objective, the fund invests primarily in U.S. stocks. The fund expects to hold the common stocks of U.S companies that have market capitalizations of approximately $500 million or more. To aid its stock selection, the fund uses Schwab Equity Ratings®. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. U.S. stocks posted modest gains for the 12-month reporting period on mixed economic data, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest-rate hike. Slowing growth in China weighed on global markets, driving down energy and metals prices due to excess supply. Among the S&P 500 Index’s (the index) market sectors, the Consumer Discretionary sector was the strongest performer for the reporting period, followed by Information Technology. Energy and Materials were the weakest.
Performance. The fund returned 5.61% for the 12-month reporting period ended October 31, 2015, outperforming the index, which the fund uses for performance comparisons. The index returned 5.20% for the reporting period.
Positioning and Strategies. Effective stock selection was the largest overall contributor to the fund’s relative performance. Its allocation across market sectors as compared with the index also contributed to the fund’s outperformance.
From a market sector standpoint, Consumer Discretionary was the strongest performer and contributor to the fund’s total return, driven by an improving economy in the U.S., rising employment, continued low interest rates, and lower oil and gas prices. Constituting an average weight of 11.2% of the fund, the sector returned 21.9% for the fund. Within the sector, the fund’s position in Expedia, Inc., the U.S.–based parent company to multiple global online travel brands, contributed the most, returning 57.7% for the reporting period on strong bookings growth and higher conversion rates as well as its acquisition of Travelocity early in the year. An underweight of the sector as compared to the index, however, detracted from relative performance. The Information Technology sector, constituting an average weight of 19.4% of the fund, also boosted the fund’s total return, with the fund’s holdings in the sector up 9.5% for the period.
The Energy sector, the index’s weakest sector by a large margin, detracted from the fund’s total return but enhanced the fund’s relative performance. This was primarily due to strong stock selection, but the fund’s underweight of the sector as compared to the index also contributed. Constituting an average weight of just under 7% of the fund, the fund’s Energy holdings fell 5.4% versus the Energy holdings of the index, which fell 19.3%. With oil prices falling sharply during much of 2015—recovering only marginally toward the end of the reporting period—oil companies were among the largest drags on performance. Among the fund’s Energy sector holdings, ConocoPhillips detracted the most from total return, down more than 22% for the period. The fund’s holdings in the Utilities and Financial sectors detracted from both total return and relative performance, as the fund’s holdings in those sectors underperformed those of the index.
At the security level, irrespective of sector, the fund’s single strongest contributor to total return was retail grocery giant The Kroger Co. Kroger’s 37.2% gain for the period was driven by strong sales growth, higher traffic, improved margins, and multiple store expansions.
As of 10/31/15:
| Statistics |
| Number of Holdings | 117 |
| Weighted Average Market Cap (millions) | $113,328 |
| Price/Earnings Ratio (P/E) | 19.3 |
| Price/Book Ratio (P/B) | 2.6 |
| Portfolio Turnover Rate | 81% |
| Sector Weightings % of Investments |
| Information Technology | 18.6% |
| Financials | 16.6% |
| Health Care | 15.1% |
| Consumer Discretionary | 13.4% |
| Industrials | 11.2% |
| Consumer Staples | 10.3% |
| Energy | 7.0% |
| Utilities | 3.5% |
| Materials | 1.8% |
| Telecommunication Services | 1.8% |
| Other | 0.7% |
| Total | 100.0% |
| Top Equity Holdings % of Net Assets1 |
| Apple, Inc. | 6.0% |
| Citigroup, Inc. | 3.0% |
| Amgen, Inc. | 2.9% |
| PepsiCo, Inc. | 2.7% |
| Lowe's Cos., Inc. | 2.6% |
| Stanley Black & Decker, Inc. | 2.3% |
| Computer Sciences Corp. | 2.2% |
| Pfizer, Inc. | 2.2% |
| Comcast Corp., Class A | 2.2% |
| Gilead Sciences, Inc. | 2.0% |
| Total | 28.1% |
Management views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S&P and MSCI.
| 1 | This list is not a recommendation of any security by the investment adviser. |
6Schwab Active Equity Funds
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1,2
Average Annual Total Returns1,2,3
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Core Equity Fund (7/1/96) | 5.61% | 13.96% | 7.45% |
| S&P 500® Index | 5.20% | 14.33% | 7.85% |
| Fund Category: Morningstar Large Blend | 2.79% | 12.51% | 6.99% |
Fund Expense Ratio4: 0.72%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | On May 21, 2009 and September 7, 2012, respectively, the Laudus U.S. MarketMasters Fund and the Schwab Premier Equity Fund merged into the fund. |
| 3 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 4 | As stated in the prospectus. Reflects the total annual fund operating expenses without contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Active Equity Funds7
Schwab Dividend Equity Fund
The Schwab Dividend Equity Fund (the fund) seeks current income and capital appreciation. Under normal circumstances, the fund invests at least 80% of its net assets in dividend-paying common and preferred stocks. To aid its stock selection, the fund uses Schwab Equity Ratings®. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. U.S. stocks posted modest gains for the 12-month reporting period on mixed economic data. Despite some signs of continued economic recovery, growth was weaker than expected, however, and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest-rate hike. Slowing growth in China weighed on global markets, driving down energy and metals prices due to excess supply. Against this backdrop, dividend-paying stocks underperformed the broader market, driven by anticipation of a rate hike coupled with weak performance among energy companies. Among the Russell 1000 Value Index’s (the index) sectors, Health Care and Consumer Discretionary were the strongest performers for the reporting period; the Energy and Materials sectors were the weakest.
Performance. The fund returned 0.12% for the 12-month reporting period ended October 31, 2015, underperforming the index, which the fund uses for performance comparisons. The index returned 0.53% for the reporting period. Effective February 27, 2015, for purposes of performance calculation, the fund changed its comparative index from the S&P 500 Index to the Russell 1000 Value Index, which better aligns with the fund’s strategy.
As of October 31, 2015, the fund’s dividend yield was 2.51%, slightly lower than the 2.53% dividend yield of the index. As of October 31, 2015, the fund’s 30-Day SEC yield was 1.60%.
Positioning and Strategies. The fund’s allocation across market sectors as compared to the index detracted from the fund’s performance, while effective stock selection relative to the index contributed to performance.
From a market sector standpoint, the Industrials sector was the strongest contributor to the fund’s total return, and strong stock selection helped the fund outperform the index’s holdings in the sector. Constituting an average weight of 10.4% of the fund, the Industrials sector returned 10.6% for the fund. Within the sector, the fund’s overweight position in Stanley Black & Decker, Inc., a leading provider of tools and storage, commercial electronic security and engineered fastening systems, contributed the most, returning 16% for the reporting period on a robust housing market and strong organic growth. The Information Technology sector, constituting an average weight of 10.5% of the fund, also boosted the fund’s total return, with the fund’s holdings in the sector up 7.2% for the period on strong stock selection.
The Energy sector, the index’s weakest sector by a large margin, detracted from the fund’s total return but enhanced the fund’s relative performance. This was primarily due to strong stock selection, but the fund’s underweight of the sector as compared to the index also contributed. Constituting an average weight of 11.4% of the fund, the fund’s Energy holdings fell 16.3% versus the index’s decline of 20.3%. With oil prices falling sharply during much of 2015—recovering only marginally toward the end of the period—oil companies were among the largest drags on performance. Among the fund’s Energy sector holdings, ConocoPhillips detracted the most from total return, down more than 22% for the period. The fund’s holdings in the Health Care and Materials sectors detracted from relative performance, as the fund’s holdings in those sectors underperformed those of the index.
At the security level, irrespective of sector, the fund’s single strongest contributor to total return was large multinational pharmaceutical company Pfizer, Inc. Pfizer’s 17% gain for the period was driven by the company’s stable performance of core products combined with new product opportunities.
As of 10/31/15:
| Statistics |
| Number of Holdings | 121 |
| Weighted Average Market Cap (millions) | $89,714 |
| Price/Earnings Ratio (P/E) | 20.2 |
| Price/Book Ratio (P/B) | 1.9 |
| Portfolio Turnover Rate | 73% |
| Sector Weightings % of Investments |
| Financials | 27.0% |
| Energy | 13.5% |
| Information Technology | 11.5% |
| Industrials | 10.9% |
| Health Care | 10.9% |
| Consumer Discretionary | 8.2% |
| Utilities | 6.9% |
| Consumer Staples | 6.7% |
| Materials | 2.9% |
| Telecommunication Services | 1.1% |
| Other | 0.4% |
| Total | 100.0% |
| Top Equity Holdings % of Net Assets1 |
| JPMorgan Chase & Co. | 4.3% |
| Pfizer, Inc. | 3.5% |
| Citigroup, Inc. | 3.3% |
| Valero Energy Corp. | 2.4% |
| Stanley Black & Decker, Inc. | 2.2% |
| Computer Sciences Corp. | 2.2% |
| MetLife, Inc. | 2.1% |
| Exxon Mobil Corp. | 2.1% |
| Apple, Inc. | 2.1% |
| Reinsurance Group of America, Inc. | 2.1% |
| Total | 26.3% |
Management views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S&P and MSCI.
| 1 | This list is not a recommendation of any security by the investment adviser. |
8Schwab Active Equity Funds
Schwab Dividend Equity Fund
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1,2
Average Annual Total Returns1,2,3
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Dividend Equity Fund (9/2/03) | 0.12% | 12.80% | 7.12% |
| Russell 1000 Value Index | 0.53% | 13.26% | 6.75% |
| Dividend Equity Spliced Index | 2.21% | 13.67% | 7.54% |
| S&P 500® Index | 5.20% | 14.33% | 7.85% |
| Fund Category: Morningstar Large Value | 0.37% | 11.70% | 6.24% |
Fund Expense Ratio4: 0.89%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | On October 7, 2009, the Investor Share class and Select Share class were combined into a single class of shares of the fund. The performance history of the fund prior to October 7, 2009 is that of the fund’s former Select Shares. |
| 3 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 4 | As stated in the prospectus. Reflects the total annual fund operating expenses without contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Active Equity Funds9
Schwab Large-Cap Growth Fund
The Schwab Large-Cap Growth Fund (the fund) seeks long-term capital growth. To pursue its investment objective, the fund invests primarily in U.S. common stocks. Under normal circumstances, the fund invests at least 80% of its net assets in large-cap stocks of U.S. companies. To aid its stock selection, the fund uses Schwab Equity Ratings®. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. U.S. large-cap stocks significantly outperformed small-cap stocks for the reporting period. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest-rate hike. Slowing growth in China weighed on global markets, as did declining energy and metals prices. Among the Russell 1000 Growth Index’s (the index) market sectors, the Consumer Discretionary sector was the strongest performer for the reporting period, followed by Consumer Staples and Information Technology. The Energy and Utilities sectors were the weakest.
Performance. The fund returned 7.00% for the 12-month reporting period ended October 31, 2015, underperforming the index, which the fund uses for performance comparisons. The index returned 9.18% for the reporting period.
Positioning and Strategies. The fund’s allocation across market sectors as compared with the index detracted from the fund’s relative performance, although strong stock selection within several sectors helped mitigate some of the downside.
From a market sector standpoint, Information Technology was the strongest contributor to the fund’s total return, although the fund’s holdings in the sector underperformed those of the index, and the fund’s stock selection further dampened relative performance. Constituting an average weight of 26.4% of the fund, the sector returned 12.3% for the fund. Within the sector, the fund’s overweight position in technology giant Apple, Inc. was the single strongest contributor for the period. Apple’s 12.5% gain for the period was driven by strong sales of the company’s iPhones and Mac, its Apple Watch launch, and record performance of its App Store. During the period, the fund increased its position in Apple on its strong fundamentals. The Industrials sector, constituting an average weight of 12.5% of the fund, also boosted both total return and relative performance, with the fund’s holdings in the sector up 17.3% for the period on strong stock selection.
The Financials sector was the largest detractor from both total return and relative performance, primarily the result of stock selection. Constituting an average weight of 7.5% of the fund, the fund’s Financials holdings fell 6.6% versus a gain of 4.2% for the index’s stocks in the sector. Among the fund’s Financials sector holdings, Genworth Financial, Inc., a large insurance holding company involved in a wide range of insurance markets, products and services, detracted the most from total return, down more than 45% for the period. The fund’s overweight of the Utilities sector also detracted from both total return and relative performance, as did its stock selection within the Health Care sector.
As of 10/31/15:
| Statistics |
| Number of Holdings | 102 |
| Weighted Average Market Cap (millions) | $133,560 |
| Price/Earnings Ratio (P/E) | 18.8 |
| Price/Book Ratio (P/B) | 3.4 |
| Portfolio Turnover Rate | 90% |
| Sector Weightings % of Investments |
| Information Technology | 27.6% |
| Consumer Discretionary | 18.7% |
| Health Care | 17.8% |
| Industrials | 12.4% |
| Consumer Staples | 9.2% |
| Financials | 7.2% |
| Energy | 2.7% |
| Materials | 2.0% |
| Utilities | 1.0% |
| Telecommunication Services | 0.7% |
| Other | 0.7% |
| Total | 100.0% |
| Top Equity Holdings % of Net Assets1 |
| Apple, Inc. | 8.7% |
| Alphabet, Inc., Class A | 3.6% |
| Gilead Sciences, Inc. | 3.3% |
| Amgen, Inc. | 3.1% |
| Comcast Corp., Class A | 3.0% |
| Lowe's Cos., Inc. | 2.7% |
| PepsiCo, Inc. | 2.6% |
| Delta Air Lines, Inc. | 2.4% |
| Huntington Ingalls Industries, Inc. | 2.4% |
| Amazon.com, Inc. | 2.3% |
| Total | 34.1% |
Management views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S&P and MSCI.
| 1 | This list is not a recommendation of any security by the investment adviser. |
10Schwab Active Equity Funds
Schwab Large-Cap Growth Fund
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1,2
Average Annual Total Returns1,2,3
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Large-Cap Growth Fund (10/3/05) | 7.00% | 14.02% | 7.78% |
| Russell 1000 Growth Index | 9.18% | 15.30% | 9.09% |
| Fund Category: Morningstar Large Growth | 6.59% | 13.36% | 7.92% |
Fund Expense Ratios4: Net 0.99%; Gross 1.04%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | On October 7, 2009, the Investor Share class and Select Share class were combined into a single class of shares of the fund. The performance history of the fund prior to October 7, 2009 is that of the fund’s former Select Shares. |
| 3 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 4 | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Active Equity Funds11
Schwab Small-Cap Equity Fund
The Schwab Small-Cap Equity Fund (the fund) seeks long-term capital growth. Under normal circumstances, the fund invests at least 80% of its net assets in small-cap equity securities. To aid its stock selection, the fund uses Schwab Equity Ratings®. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. U.S. small-cap stocks significantly underperformed large-cap stocks for the reporting period. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest-rate hike. Slowing growth in China weighed on global markets, as did declining energy and metals prices. Among the Russell 2000 Index’s (the index) market sectors, the Information Technology and Health Care sectors were the strongest performers for the reporting period. The Energy sector was the weakest by a large margin, down more than 43%. Materials and Industrials also posted negative returns for the period.
Performance. The fund returned 3.01% for the 12-month reporting period ended October 31, 2015, outperforming the index, which the fund uses for performance comparisons. The index returned 0.34% for the reporting period.
Positioning and Strategies. Effective stock selection was the largest contributor to the fund’s outperformance of the index. Its allocation across market sectors as compared with the index also contributed to the fund’s outperformance.
From a market sector standpoint, the Financials sector was the strongest performer and contributor to both total return and relative performance, driven by an improving economy and continued low interest rates. Constituting an average weight of 21.3% of the fund, the sector returned 10.2% for the fund on strong stock selection. Within the sector, the fund’s position in Cash American International, Inc., the country’s largest provider of secured non-recourse loans (commonly known as pawn loans), contributed the most, returning 50.6% for the reporting period on persistent positive earnings surprises and a lower degree of sensitivity to the specter of rising interest rates than many other stocks in the sector. The fund’s strong stock selection in the Health Care and Industrials sectors, along with an overweight in Health Care, also contributed notably both to total return and relative performance.
The Energy sector, the index’s weakest sector by a large margin, was the largest detractor from the fund’s total return as well as relative performance, primarily due to the fund’s underweight of the sector as compared to the index. Constituting an average weight of 4.4% of the fund, the fund’s Energy holdings fell 42%. With oil prices falling sharply during much of 2015—recovering only marginally toward the end of the period—companies serving the oil industry were among the largest drags on performance. Among the fund’s Energy sector holdings, Pioneer Energy Services Corp., which provides land contract drilling and production services to the oil and gas industry, detracted the most from total return, down nearly 75% for the period. The fund’s stock selection within the Information Technology sector also detracted from relative performance.
At the security level, irrespective of sector, the fund’s single strongest contributor to total return was Hawaiian Holdings, Inc., parent company of Hawaiian Airlines. Hawaiian Holdings’ gain of 100% for the period was driven primarily by low fuel prices and strong demand.
As of 10/31/15:
| Statistics |
| Number of Holdings | 316 |
| Weighted Average Market Cap (millions) | $1,507 |
| Price/Earnings Ratio (P/E) | 33.5 |
| Price/Book Ratio (P/B) | 1.9 |
| Portfolio Turnover Rate | 95% |
| Sector Weightings % of Investments |
| Financials | 22.7% |
| Information Technology | 17.7% |
| Health Care | 15.6% |
| Industrials | 14.2% |
| Consumer Discretionary | 13.3% |
| Consumer Staples | 5.4% |
| Energy | 2.2% |
| Materials | 1.9% |
| Telecommunication Services | 1.1% |
| Utilities | 1.1% |
| Other | 4.8% |
| Total | 100.0% |
| Top Equity Holdings % of Net Assets1 |
| First Industrial Realty Trust, Inc. | 1.4% |
| CoreSite Realty Corp. | 1.3% |
| Dean Foods Co. | 1.3% |
| Empire State Realty Trust, Inc., Class A | 1.2% |
| Hawaiian Holdings, Inc. | 1.2% |
| Tenneco, Inc. | 1.2% |
| American Axle & Manufacturing Holdings, Inc. | 1.2% |
| Emergent Biosolutions, Inc. | 1.2% |
| Wabash National Corp. | 1.2% |
| Prestige Brands Holdings, Inc. | 1.1% |
| Total | 12.3% |
Management views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S&P and MSCI.
Small-company stocks are subject to greater volatility than other many asset classes.
| 1 | This list is not a recommendation of any security by the investment adviser. |
12Schwab Active Equity Funds
Schwab Small-Cap Equity Fund
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1,2
Average Annual Total Returns1,2,3
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Small-Cap Equity Fund (7/1/03) | 3.01% | 15.57% | 7.24% |
| Russell 2000® Index | 0.34% | 12.06% | 7.47% |
| Fund Category: Morningstar Small Blend | -0.45% | 11.37% | 7.04% |
Fund Expense Ratio4: 1.10%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | On September 28, 2009, the Investor Share class and Select Share class were combined into a single class of shares of the fund. The performance history of the fund prior to September 28, 2009 is that of the fund’s former Select Shares. |
| 3 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 4 | As stated in the prospectus. Reflects the total annual fund operating expenses without contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Active Equity Funds13
Schwab Hedged Equity Fund
The Schwab Hedged Equity Fund (the fund) seeks long-term capital appreciation over market cycles with lower volatility than the broad equity market. To pursue its investment objective, the fund establishes long and short positions in equity securities issued by U.S. companies. When the fund takes a long position, it purchases a stock outright. When the fund takes a short position, on the other hand, it sells a stock that it has borrowed in anticipation of a decline in the stock’s price, at which time the fund can buy the shares at a lower price, resulting in a gain. If, however, the price of the stock rises after the short sale, the fund’s cost to replace the stock will be higher than the price at which it initially sold the stock, resulting in a loss. The fund typically purchases or sells short stocks of companies that have market capitalizations of $1 billion or more at the time the stock is purchased or sold short. To aid its stock selection, the fund uses Schwab Equity Ratings®. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. U.S. stocks posted modest gains for the 12-month reporting period on mixed economic data, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest-rate hike. Slowing growth in China weighed on global markets, driving down energy and metals prices due to excess supply. Among the S&P 500 Index’s (the index) market sectors, the Consumer Discretionary sector was the strongest performer for the reporting period, followed by Information Technology. Energy and Materials were the weakest.
Performance. The fund returned 4.84% for the 12-month reporting period ended October 31, 2015, underperforming the index, which returned 5.20% for the reporting period.
Positioning and Strategies. With short positions constituting a weighted average of 38.5% of fund holdings, the fund generated strong total return from both its long and short positions over the 12-month reporting period. Effective stock selection was the largest overall contributor to the fund’s relative performance. Its allocation across market sectors as compared with the index detracted.
From a market sector standpoint, the Information Technology sector contributed the most to both the fund’s total return and its relative performance. The fund’s long positions within the sector returned 12.3%, and its short positions fell 13.7%, further boosting the fund’s return. The fund’s underweight of the sector as compared to the index also contributed positively. Within the sector, the fund’s long position in Electronic Arts, a global leader in digital interactive entertainment, contributed the most, returning more than 75% for the reporting period on strong sales and earnings. The Industrials sector also contributed to the fund’s total and relative returns, a result of effective stock selection. The fund’s short positions within the sector were particularly helpful—as a group, down more than 17%—as the Industrials sector was generally weak for the period. The fund’s significant underweight in the Energy sector, the index’s weakest sector for the period by a large margin, also contributed notably to the fund’s relative performance. Although the fund’s long Energy positions resulted in negative returns, its short positions were down by more than 28%, contributing positively to total return and nearly mitigating the negative impact of its long positions.
The Materials sector detracted the most from both total and relative performance, primarily due to stock selection. With China’s slowing growth resulting in a massive global supply glut, the fund’s long positions in the Materials sector posted negative returns, significantly underperforming the index, and its short positions posted a slight positive return, further dampening the fund’s total return. An underweight of the sector, however, contributed somewhat to relative performance. Within the sector, United States Steel Corporation, an integrated steel producer with major production operations in the United States, Canada and Central Europe, was the largest detractor, down more than 48% for the period. As of the end of the second quarter of 2015, the fund had eliminated its entire position of US Steel. The fund’s holdings in the Utilities sector also detracted from both total return and relative performance. The fund’s long positions in the Utilities sector fell more than 21% and its short positions were down just marginally.
As of 10/31/15:
| Statistics |
| Number of Holdings | |
| Long Holdings | 125 |
| Short Holdings | 68 |
| Weighted Average Market Cap (millions) | |
| Long Holdings | $64,996 |
| Short Holdings | $9,857 |
| Price/Earnings Ratio (P/E) | |
| Long Holdings | 20.1 |
| Short Holdings | 120.2 |
| Price/Book Ratio (P/B) | |
| Long Holdings | 2.1 |
| Short Holdings | 2.9 |
| Portfolio Turnover Rate | 146% |
| Portfolio Turnover Rate excluding short sales | 103% |
Top Equity Long Holdings
% of Net Assets1 |
| Apple, Inc. | 4.2% |
| Amazon.com, Inc. | 2.9% |
| Citigroup, Inc. | 2.6% |
| Valero Energy Corp. | 2.1% |
| Amgen, Inc. | 2.0% |
| Total | 13.8% |
Top Equity Short Holdings
% of Net Assets1 |
| Louisiana-Pacific Corp. | 1.4% |
| Diamondback Energy, Inc. | 1.3% |
| Under Armour, Inc., Class A | 1.3% |
| Ulta Salon, Cosmetics & Fragrance, Inc. | 1.2% |
| SunPower Corp. | 1.2% |
| Total | 6.4% |
Management views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S&P and MSCI.
| 1 | This list is not a recommendation of any security by the investment adviser. |
14Schwab Active Equity Funds
Schwab Hedged Equity Fund
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1,2
Average Annual Total Returns1,2,3
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Hedged Equity Fund (9/3/02) | 4.84% | 7.95% | 4.52% |
| S&P 500® Index | 5.20% | 14.33% | 7.85% |
| Fund Category: Morningstar Long/Short Equity | -0.14% | 5.78% | 4.93% |
Fund Expense Ratios4: Net 1.99%; Gross 2.02%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
The Schwab Hedged Equity Fund’s long positions can decline in value at the same time the value of its shorted stocks increases, thereby increasing the potential for loss. The potential loss associated with short positions is much greater than the original value of the securities sold. The use of borrowing and short sales may cause the fund to have higher expenses than those of equity funds that do not use such techniques.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | On September 28, 2009, the Investor Share class and Select Share class were combined into a single class of shares of the fund. The performance history of the fund prior to September 28, 2009 is that of the fund’s former Select Shares. |
| 3 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 4 | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Active Equity Funds15
Schwab Financial Services Fund
The Schwab Financial Services Fund (the fund) seeks long-term capital growth. To pursue its goal, the fund primarily invests in equity securities issued by companies in the financial services sector. To aid its stock selection, the fund uses Schwab Equity Ratings®. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. U.S. stocks posted modest gains for the 12-month reporting period on mixed economic data, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest-rate hike. Slowing growth in China weighed on global markets, driving down energy and metals prices due to excess supply. Among market sectors, Consumer Discretionary and Information Technology were the strongest performers; Energy and Materials were the weakest. The Financials sector was also relatively weak for the period, primarily as a result of continued unmet expectations of a Federal Reserve rate hike during the period, which kept stocks in the sector in check.
Performance. The fund returned 2.70% for the 12-month reporting period ended October 31, 2015, underperforming the S&P 1500 SuperComposite Financials Sector Index (the index), which the fund uses for performance comparisons. The index returned 3.62% for the reporting period.
Positioning and Strategies. The fund’s allocation across industries within the Financials sector as compared with the index detracted from the fund’s relative performance, although strong stock selection within several of those industries helped mitigate some of the downside.
The fund’s positions in the Property & Casualty Insurance and the Life & Health Insurance industries provided the greatest contribution to fund performance, both on a total return and a relative basis, as a result of effective stock selection. Among Property & Casualty Insurance stocks, the fund’s overweight position in Assured Guaranty, Ltd., a Bermuda-based holding company with subsidiaries providing credit enhancement products to public finance, infrastructure and structured finance markets worldwide, was the fund’s single strongest contributor to total return, mostly on strong income over the period. The fund’s position in AmTrust Financial Services, Inc., also boosted both total and relative performance.
The fund’s Reinsurance and Residential REIT holdings also boosted both total return and performance relative to the index.
The fund’s positions in the Multi-line Insurance industry provided the largest drag on both total return and relative performance, with the fund’s positions in the industry down nearly 23% for the reporting period. The fund’s underweight to the industry further dampened relative performance. The fund’s stock selection within Asset Management & Custody Banks as well as Thrifts & Mortgage Finance also dampened both total return and relative performance, with the fund’s positions in these industries underperforming those of the index.
At the security level, the fund’s single strongest contributor to total return was Symetra Financial Corporation, a U.S.–based family of companies that provide retirement plans, employee benefits, annuities and life insurance. Symetra’s strength was driven by the announcement in August of Sumitomo Life Insurance’s intention to acquire the company, along with the company’s strong cash flows and low volatility. Following the merger announcement, the fund eliminated its position.
Genworth Financial, Inc., a large insurance holding company involved in a wide range of insurance markets, products and services, detracted the most among individual holdings for the period. The company reported a loss for the third quarter of 2014 after taking a charge for its long-term care business, which is proving to be a significant drag on company performance due to higher-than-expected costs, longer lives of policyholders, and persistent low interest rates. Following the negative earnings announcement, the fund eliminated its entire position of the company.
As of 10/31/15:
| Statistics |
| Number of Holdings | 74 |
| Weighted Average Market Cap (millions) | $81,362 |
| Price/Earnings Ratio (P/E) | 13.1 |
| Price/Book Ratio (P/B) | 1.2 |
| Portfolio Turnover Rate | 53% |
| Industry Weightings % of Investments |
| Diversified Financials | 37.8% |
| Real Estate | 22.1% |
| Insurance | 20.4% |
| Banks | 18.7% |
| Other | 1.0% |
| Total | 100.0% |
| Top Equity Holdings % of Net Assets1 |
| Wells Fargo & Co. | 5.8% |
| JPMorgan Chase & Co. | 5.7% |
| Berkshire Hathaway, Inc., Class B | 5.5% |
| Bank of America Corp. | 5.3% |
| Citigroup, Inc. | 5.1% |
| Simon Property Group, Inc. | 4.1% |
| MetLife, Inc. | 3.8% |
| Reinsurance Group of America, Inc. | 2.5% |
| Equity LifeStyle Properties, Inc. | 2.3% |
| The PNC Financial Services Group, Inc. | 2.2% |
| Total | 42.3% |
Management views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S&P and MSCI.
| 1 | This list is not a recommendation of any security by the investment adviser. |
16Schwab Active Equity Funds
Schwab Financial Services Fund
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1
Average Annual Total Returns1,2
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Financial Services Fund (7/3/00) | 2.70% | 11.36% | 2.61% |
| S&P 1500 SuperComposite Financial Sector Index | 3.62% | 12.70% | 0.52% |
| S&P 500® Index | 5.20% | 14.33% | 7.85% |
| Fund Category: Morningstar Financial | 1.59% | 10.36% | 2.47% |
Fund Expense Ratios3: 0.90%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
Since the Financial Services Fund focuses its investments on companies involved in specific sectors, this fund may involve a greater degree of risk than an investment in mutual funds that do not concentrate their investments.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | As stated in the prospectus. Reflects the total annual fund operating expenses without contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Active Equity Funds17
Schwab Health Care Fund
The Schwab Health Care Fund (the fund) seeks long-term capital growth. To pursue its goal, the fund primarily invests in equity securities issued by companies in the Health Care sector. The fund uses Schwab Equity Ratings® to aid its U.S. stock selection and Schwab’s proprietary international stock research to aid its international stock selection. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. U.S. stocks posted modest gains for the 12-month reporting period on mixed economic data, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest-rate hike. Slowing growth in China weighed on global markets, driving down energy and metals prices due to excess supply. Among market sectors, Consumer Discretionary and Information Technology were the strongest performers; Energy and Materials were the weakest. The Health Care sector was relatively strong for the period, driven by new drug launches, merger and acquisition (M&A) activity, and strong investor sentiment.
Performance. The fund returned 7.26% for the 12-month reporting period ended October 31, 2015, outperforming the Dow Jones Global Health Care Index (the index), which the fund uses for performance comparisons. The index returned 6.57% for the reporting period.
Positioning and Strategies. Effective stock selection was the largest contributor to the fund’s outperformance of the index. Its allocation across industries as compared with the index also contributed modestly to the fund’s outperformance.
The fund’s positions in the Pharmaceuticals industry, the fund’s largest industry exposure, provided the greatest contribution—by a significant margin—to both total return and relative performance, primarily the result of effective stock selection, but further boosted by a strategic underweight of the industry. Pharmaceuticals benefitted from the same drivers as the broader Health Care sector—new drug launches, anticipated M&A activity, and investor sentiment. Constituting an average weight of roughly 40% of the fund, the fund’s Pharmaceutical holdings returned 10.9% for the period. Among the fund’s Pharmaceutical holdings, its position in Pfizer, Inc. was its strongest single contributor. Pfizer’s 17% gain for the period was driven by the company’s stable performance of core products combined with new product opportunities. Over the period, the fund reduced its overweight position in Pfizer to more closely reflect the index. The fund’s holdings in Health Care Equipment and Managed Health Care also boosted both total return and performance relative to the index, primarily due to strategic stock selection.
The fund’s positions among Health Care Facilities provided the largest drag on the fund’s total return, with the fund’s positions down nearly 23% for the reporting period. The fund’s positions within the Health Care Distributors industry also dampened total return, as they significantly underperformed those of the index. A large overweight to the industry, however, added value and mitigated some of the down side of those positions. The fund’s overweight to Biotechnology stocks, along with weak performance among its holdings, also dampened relative performance.
At the security level, the fund’s single largest drag on total return was its overweight of AMAG Pharmaceuticals, a U.S.–based company that develops products that treat iron deficiency anemia in adults. AMAG’s 41% decline in the fund was driven by concerns relating to competition and pricing of orphan drugs—drugs for rare diseases or conditions faced with limited profit potential—in the U.S.
As of 10/31/15:
| Statistics |
| Number of Holdings | 90 |
| Weighted Average Market Cap (millions) | $85,546 |
| Price/Earnings Ratio (P/E) | 24.0 |
| Price/Book Ratio (P/B) | 4.3 |
| Portfolio Turnover Rate | 75% |
| Industry Weightings % of Investments |
| Pharmaceuticals, Biotechnology & Life Sciences | 72.0% |
| Healthcare – Services | 22.4% |
| Materials | 2.5% |
| Technology Hardware & Equipment | 1.6% |
| Household & Personal Products | 0.9% |
| Software & Services | 0.2% |
| Other Investment Company | 0.1% |
| Other | 0.3% |
| Total | 100.0% |
| Top Equity Holdings % of Net Assets1 |
| Gilead Sciences, Inc. | 7.3% |
| Amgen, Inc. | 6.2% |
| Johnson & Johnson | 5.7% |
| Pfizer, Inc. | 5.2% |
| Celgene Corp. | 5.0% |
| Novo Nordisk A/S, Class B | 3.5% |
| Shire plc | 2.7% |
| Express Scripts Holding Co. | 2.7% |
| Charles River Laboratories International, Inc. | 2.7% |
| Merck & Co., Inc. | 2.7% |
| Total | 43.7% |
Management views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S&P and MSCI.
| 1 | This list is not a recommendation of any security by the investment adviser. |
18Schwab Active Equity Funds
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1
Average Annual Total Returns1,2
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Health Care Fund (7/3/00) | 7.26% | 20.16% | 11.08% |
| Dow Jones Global Health Care Index | 6.57% | 17.28% | 10.19% |
| S&P 500® Index | 5.20% | 14.33% | 7.85% |
| Fund Category: Morningstar Health | 8.77% | 21.41% | 12.19% |
Fund Expense Ratios3: 0.80%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
The fund’s performance relative to the index may be affected by fair-value pricing, see financial note 2 for more information.
Since the Health Care Fund focuses its investments on companies involved in specific sectors, this fund may involve a greater degree of risk than an investment in mutual funds that do not concentrate their investments.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | As stated in the prospectus. Reflects the total annual fund operating expenses without contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Active Equity Funds19
Schwab International Core Equity Fund
The Schwab International Core Equity Fund (the fund) seeks long-term capital growth. To pursue its investment objective, the fund invests primarily in the stocks of publicly traded companies located in developed countries, excluding the U.S. To aid its stock selection, the fund uses Schwab’s proprietary international stock research. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. Slowing growth in China, along with declining energy and metals prices, weighed on global markets over the 12-month reporting period. Stocks in developed international markets produced just slightly positive overall returns, with the MSCI EAFE Index (Net) (the index) returning -0.07%. Emerging markets were particularly hard hit over the period, with the MSCI Emerging Markets Index (Net) falling 14.5%. The U.S. dollar remained strong against many foreign currencies, generally reducing returns of international investments in U.S. dollar terms.
Performance. The fund returned 2.05% for the 12-month reporting period ended October 31, 2015, outperforming the index, which the fund uses for performance comparisons. The index returned -0.07% for the reporting period.
Positioning and Strategies. Effective stock selection contributed significantly to the fund’s outperformance of the index. Its allocation across market sectors as compared with the index also contributed modestly to the fund’s outperformance.
From a market sector standpoint, Consumer Discretionary was the fund’s strongest performer and contributor to both total return and relative performance, driven primarily by strong stock selection. The fund’s overweight to the sector further boosted relative performance. Within the sector, the fund’s strongest single contributor to total return was its position in ProSiebenSat.1 Media SE, a German mass media company that operates commercial television, premium pay channels, radio stations and related print businesses. The company’s strength—up nearly 40% over the period—came from expansions on multiple fronts, improving earnings, higher margins and a strong domestic economy. The fund’s holdings in the Consumer Staples sector also contributed positively to both total return and relative performance, as did its overweight to the sector as compared to the index. The fund’s Information Technology stocks also outperformed those of the index, further boosting both total and relative returns.
The Energy sector, the weakest sector by a large margin, detracted from both the fund’s total and relative performance, due to a combination of an overweight to the sector as compared to the index and weak performance among the fund’s Energy stocks.
From a geographic standpoint, Japanese stocks provided the greatest contribution to the fund’s total return. Over the period, the yen fell to its lowest level in recent years against the U.S. dollar, increasing the competitiveness of many large Japanese exporters. Among the fund’s Japanese holdings, Haseko Corporation, a developer of upscale Hawaiian commercial and residential projects, provided the biggest boost, up more than 44% for the period. Its performance was driven by strong orders for new condominiums and improved earnings. The fund’s holdings in Germany, the Netherlands and Sweden also outperformed those of the index, contributing positively to both total and relative returns.
The fund’s Australian stocks detracted the most from total return. Constituting 6.2% of the fund, the fund’s Australian holdings fell more than 22% for the period on slumping commodity prices. The fund’s underweight of the country’s stock as compared to the index, however, added value and helped mitigate some of the downside. Among the fund’s Australian stocks, Australia and New Zealand Banking Group Limited (ANZ) detracted the most from total return, down more than 30% for the period on slowing revenue growth, an unanticipated increase in capital requirements, and growing concerns over Australia’s economic dependence on China. The fund’s holdings in China also detracted from both total return and relative performance, as the index has no exposure to China. The fund’s holdings in Israel also performed poorly for the period, further dampening both total and relative returns.
As of 10/31/15:
| Statistics |
| Number of Holdings | 195 |
| Weighted Average Market Cap (millions) | $46,399 |
| Price/Earnings Ratio (P/E) | 15.3 |
| Price/Book Ratio (P/B) | 1.8 |
| Portfolio Turnover Rate | 87% |
| Sector Weightings % of Investments |
| Financials | 24.2% |
| Consumer Discretionary | 14.7% |
| Consumer Staples | 12.6% |
| Industrials | 11.8% |
| Health Care | 11.6% |
| Energy | 6.5% |
| Information Technology | 6.3% |
| Materials | 5.5% |
| Telecommunication Services | 3.9% |
| Utilities | 2.3% |
| Other | 0.6% |
| Total | 100.0% |
| Top Equity Holdings % of Net Assets1 |
| Sanofi | 2.8% |
| Royal Dutch Shell plc, B Shares | 2.4% |
| Imperial Tobacco Group plc | 2.4% |
| Nestle S.A. – Reg'd | 2.4% |
| ProSiebenSat.1 Media SE | 2.0% |
| Australia & New Zealand Banking Group Ltd. | 2.0% |
| Allianz SE – Reg'd | 1.9% |
| Resona Holdings, Inc. | 1.7% |
| Unilever N.V. CVA | 1.6% |
| Unilever plc | 1.5% |
| Total | 20.7% |
Management views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S&P and MSCI.
International investments are subject to additional risks such as currency fluctuation, geopolitical risk and the potential for illiquid markets.
| 1 | This list is not a recommendation of any security by the investment adviser. |
20Schwab Active Equity Funds
Schwab International Core Equity Fund
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
May 30, 2008 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1,2
Average Annual Total Returns1,2,3
| Fund and Inception Date | 1 Year | 5 Years | Since Inception |
| Fund: Schwab International Core Equity Fund (5/30/08) | 2.05% | 7.31% | 1.95% |
| MSCI EAFE® Index (Net)4 | -0.07% | 4.81% | 0.33% |
| MSCI EAFE® Index (Gross) | 0.37% | 5.28% | 0.78% |
| Fund Category: Morningstar Foreign Large Blend | -1.58% | 3.81% | -0.06% |
Fund Expense Ratios5: Net 0.86%; Gross 0.98%
Country Weightings % of Investments
| Japan | 21.3% |
| United Kingdom | 18.7% |
| France | 11.0% |
| Switzerland | 9.1% |
| Germany | 7.2% |
| Australia | 5.1% |
| Netherlands | 4.0% |
| Hong Kong | 3.5% |
| Denmark | 3.3% |
| Other Countries | 16.8% |
| Total | 100.0% |
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
The fund’s performance relative to the index may be affected by fair-value pricing, see financial note 2 for more information.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | On October 7, 2009, the Investor Share class, Select Share class and Institutional Share class were combined into a single class of shares of the fund. The performance history of the fund prior to October 7, 2009 is that of the fund’s former Institutional Shares. On December 3, 2009, the Laudus Rosenberg International Equity Fund merged into the fund. |
| 3 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 4 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
| 5 | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Active Equity Funds21
Fund Expenses (Unaudited)
Examples for a $1,000 Investment
As a fund shareholder, you may incur two types of costs: (1) transaction costs, such as redemption fees; and (2) ongoing costs, including management fees, transfer agent and shareholder services fees, and other fund expenses.
The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six months beginning May 1, 2015 and held through October 31, 2015.
Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number given for your fund under the heading entitled “Expenses Paid During Period.”
Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in a fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. Therefore, the hypothetical return lines of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | Expense Ratio1
(Annualized) | Beginning
Account Value
at 5/1/15 | Ending
Account Value
(Net of Expenses)
at 10/31/15 | Expenses Paid
During Period2
5/1/15–10/31/15 |
| Schwab Core Equity Fund | | | | |
| Actual Return | 0.74% | $1,000.00 | $ 1,007.90 | $ 3.75 |
| Hypothetical 5% Return | 0.74% | $1,000.00 | $ 1,021.47 | $ 3.77 |
| Schwab Dividend Equity Fund | | | | |
| Actual Return | 0.88% | $1,000.00 | $ 969.70 | $ 4.37 |
| Hypothetical 5% Return | 0.88% | $1,000.00 | $ 1,020.76 | $4.48 |
| Schwab Large-Cap Growth Fund | | | | |
| Actual Return | 1.00% | $1,000.00 | $ 1,005.10 | $ 5.05 |
| Hypothetical 5% Return | 1.00% | $1,000.00 | $ 1,020.16 | $5.09 |
| Schwab Small-Cap Equity Fund | | | | |
| Actual Return | 1.09% | $1,000.00 | $ 980.60 | $ 5.44 |
| Hypothetical 5% Return | 1.09% | $1,000.00 | $ 1,019.71 | $ 5.55 |
| Schwab Hedged Equity Fund | | | | |
| Actual Return | 1.80% | $1,000.00 | $ 1,021.10 | $ 9.17 |
| Hypothetical 5% Return | 1.80% | $1,000.00 | $ 1,016.13 | $ 9.15 |
| Schwab Financial Services Fund | | | | |
| Actual Return | 0.90% | $1,000.00 | $ 1,001.20 | $ 4.54 |
| Hypothetical 5% Return | 0.90% | $1,000.00 | $1,020.66 | $ 4.58 |
| Schwab Health Care Fund | | | | |
| Actual Return | 0.79% | $1,000.00 | $ 986.30 | $3.96 |
| Hypothetical 5% Return | 0.79% | $1,000.00 | $ 1,021.22 | $ 4.02 |
| Schwab International Core Equity Fund | | | | |
| Actual Return | 0.86% | $1,000.00 | $ 953.40 | $ 4.23 |
| Hypothetical 5% Return | 0.86% | $1,000.00 | $1,020.86 | $4.38 |
| 1 | Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights which covers a 12-month period. |
| 2 | Expenses for each fund are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 184 days of the period, and divided by the 365 days of the fiscal year. |
22Schwab Active Equity Funds
Schwab Core Equity Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $25.48 | $23.46 | $18.80 | $16.81 | $15.78 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.30 1 | 0.30 | 0.32 | 0.26 | 0.19 | |
| Net realized and unrealized gains (losses) | 1.05 | 3.60 | 4.51 | 2.07 | 1.01 | |
| Total from investment operations | 1.35 | 3.90 | 4.83 | 2.33 | 1.20 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.33) | (0.22) | (0.17) | (0.34) | (0.17) | |
| Distributions from net realized gains | (3.40) | (1.66) | — | — | — | |
| Total distributions | (3.73) | (1.88) | (0.17) | (0.34) | (0.17) | |
| Net asset value at end of period | $23.10 | $25.48 | $23.46 | $18.80 | $16.81 | |
| Total return | 5.61% | 17.88% | 25.89% | 13.99% | 7.60% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 0.74% | 0.72% | 0.72% | 0.72% | 0.73% | |
| Gross operating expenses | 0.74% | 0.72% | 0.73% | 0.73% | 0.73% | |
| Net investment income (loss) | 1.29% | 1.19% | 1.51% | 1.37% | 1.06% | |
| Portfolio turnover rate | 81% | 63% | 80% | 45% 2 | 35% | |
| Net assets, end of period (x 1,000,000) | $2,363 | $2,317 | $2,247 | $1,880 | $1,719 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Portfolio turnover excludes the impact of investment activities from mergers with other funds.
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 99.3% | Common Stock | 2,061,357,618 | 2,345,796,296 |
| 0.7% | Other Investment Companies | 18,010,632 | 18,010,632 |
| 100.0% | Total Investments | 2,079,368,250 | 2,363,806,928 |
| (0.0%) | Other Assets and Liabilities, Net | | (929,907) |
| 100.0% | Net Assets | | 2,362,877,021 |
| Security | Number
of Shares | Value
($) |
| Common Stock 99.3% of net assets |
| Automobiles & Components 2.3% |
| Delphi Automotive plc | 200,376 | 16,669,279 |
| Lear Corp. | 301,565 | 37,713,719 |
| | | 54,382,998 |
| Banks 6.3% |
| Bank of America Corp. | 356,363 | 5,979,771 |
| Citigroup, Inc. | 1,331,403 | 70,790,697 |
| Fifth Third Bancorp | 241,274 | 4,596,270 |
| JPMorgan Chase & Co. | 499,014 | 32,061,649 |
| MGIC Investment Corp. * | 699,480 | 6,575,112 |
| Radian Group, Inc. | 2,000,029 | 28,940,420 |
| | | 148,943,919 |
| Capital Goods 6.5% |
| Allison Transmission Holdings, Inc. | 255,468 | 7,331,932 |
| General Dynamics Corp. | 126,207 | 18,751,836 |
| Huntington Ingalls Industries, Inc. | 250,141 | 30,001,911 |
| Owens Corning | 52,859 | 2,406,670 |
| Spirit AeroSystems Holdings, Inc., Class A * | 787,862 | 41,551,842 |
| Stanley Black & Decker, Inc. | 504,822 | 53,501,036 |
| | | 153,545,227 |
| Commercial & Professional Supplies 1.0% |
| R.R. Donnelley & Sons Co. | 1,436,729 | 24,237,618 |
| Security | Number
of Shares | Value
($) |
| Consumer Durables & Apparel 0.6% |
| NIKE, Inc., Class B | 58,246 | 7,631,973 |
| Wolverine World Wide, Inc. | 321,421 | 5,968,788 |
| | | 13,600,761 |
| Consumer Services 1.4% |
| Darden Restaurants, Inc. | 385,840 | 23,879,638 |
| Vail Resorts, Inc. | 89,849 | 10,258,060 |
| | | 34,137,698 |
| Diversified Financials 3.3% |
| Affiliated Managers Group, Inc. * | 38,132 | 6,873,674 |
| Lazard Ltd., Class A | 563,967 | 26,122,952 |
| Voya Financial, Inc. | 1,128,409 | 45,779,553 |
| | | 78,776,179 |
| Energy 7.0% |
| ConocoPhillips | 338,883 | 18,079,408 |
| CVR Energy, Inc. | 272,268 | 12,105,035 |
| Devon Energy Corp. | 379,988 | 15,932,897 |
| Exxon Mobil Corp. | 106,252 | 8,791,291 |
| Marathon Petroleum Corp. | 829,766 | 42,981,879 |
| Superior Energy Services, Inc. | 276,808 | 3,919,601 |
| Tesoro Corp. | 70,508 | 7,539,420 |
| Transocean Ltd. (a) | 218,481 | 3,458,554 |
| Valero Energy Corp. | 603,568 | 39,787,203 |
| Western Refining, Inc. | 300,153 | 12,492,368 |
| | | 165,087,656 |
| Food & Staples Retailing 2.9% |
| Costco Wholesale Corp. | 128,019 | 20,242,364 |
| The Kroger Co. | 1,099,807 | 41,572,705 |
| Wal-Mart Stores, Inc. | 135,055 | 7,730,548 |
| | | 69,545,617 |
| Food, Beverage & Tobacco 5.8% |
| Archer-Daniels-Midland Co. | 654,960 | 29,905,474 |
| Bunge Ltd. | 114,799 | 8,375,735 |
| Dr Pepper Snapple Group, Inc. | 311,006 | 27,794,606 |
| Ingredion, Inc. | 57,826 | 5,496,940 |
| PepsiCo, Inc. | 632,966 | 64,682,795 |
| | | 136,255,550 |
| Health Care Equipment & Services 5.4% |
| AmerisourceBergen Corp. | 320,725 | 30,953,170 |
| C.R. Bard, Inc. | 119,029 | 22,181,054 |
| Cardinal Health, Inc. | 222,915 | 18,323,613 |
| Centene Corp. * | 137,961 | 8,205,920 |
| Community Health Systems, Inc. * | 52,638 | 1,475,970 |
| Hologic, Inc. * | 182,944 | 7,109,204 |
| Humana, Inc. | 18,304 | 3,269,643 |
| LifePoint Health, Inc. * | 31,715 | 2,184,529 |
| McKesson Corp. | 136,086 | 24,332,177 |
| Molina Healthcare, Inc. * | 142,104 | 8,810,448 |
| | | 126,845,728 |
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Household & Personal Products 1.6% |
| Spectrum Brands Holdings, Inc. | 286,109 | 27,423,548 |
| The Clorox Co. | 90,526 | 11,038,740 |
| | | 38,462,288 |
| Insurance 3.4% |
| American Financial Group, Inc. | 132,554 | 9,569,073 |
| Everest Re Group Ltd. | 12,824 | 2,282,287 |
| MetLife, Inc. | 602,199 | 30,338,786 |
| Reinsurance Group of America, Inc. | 371,354 | 33,510,985 |
| The Travelers Cos., Inc. | 32,387 | 3,656,169 |
| | | 79,357,300 |
| Materials 1.8% |
| Graphic Packaging Holding Co. | 407,253 | 5,766,703 |
| International Paper Co. | 249,883 | 10,667,505 |
| LyondellBasell Industries N.V., Class A | 119,030 | 11,059,077 |
| PolyOne Corp. | 191,260 | 6,395,734 |
| Steel Dynamics, Inc. | 528,097 | 9,753,952 |
| | | 43,642,971 |
| Media 2.2% |
| Comcast Corp., Class A | 812,820 | 50,898,788 |
| Pharmaceuticals, Biotechnology & Life Sciences 9.7% |
| AbbVie, Inc. | 367,456 | 21,882,005 |
| Amgen, Inc. | 426,342 | 67,438,778 |
| Catalent, Inc. * | 97,924 | 2,602,820 |
| Celgene Corp. * | 121,381 | 14,894,662 |
| Gilead Sciences, Inc. | 425,255 | 45,982,823 |
| Johnson & Johnson | 235,949 | 23,837,927 |
| Pfizer, Inc. | 1,560,340 | 52,770,699 |
| | | 229,409,714 |
| Real Estate 3.6% |
| Equity LifeStyle Properties, Inc. | 56,136 | 3,395,105 |
| Simon Property Group, Inc. | 201,107 | 40,515,016 |
| SL Green Realty Corp. | 343,691 | 40,768,627 |
| | | 84,678,748 |
| Retailing 6.9% |
| Amazon.com, Inc. * | 54,510 | 34,117,809 |
| American Eagle Outfitters, Inc. | 285,264 | 4,358,834 |
| Best Buy Co., Inc. | 277,312 | 9,714,239 |
| Expedia, Inc. | 58,621 | 7,990,042 |
| Lowe's Cos., Inc. | 843,184 | 62,252,275 |
| Target Corp. | 184,248 | 14,220,261 |
| The Gap, Inc. | 344,689 | 9,382,435 |
| The Home Depot, Inc. | 168,913 | 20,884,403 |
| | | 162,920,298 |
| Semiconductors & Semiconductor Equipment 1.4% |
| Intel Corp. | 350,808 | 11,878,359 |
| Microsemi Corp. * | 266,423 | 9,593,892 |
| Security | Number
of Shares | Value
($) |
| ON Semiconductor Corp. * | 680,892 | 7,489,812 |
| Teradyne, Inc. | 156,476 | 3,054,412 |
| | | 32,016,475 |
| Software & Services 9.0% |
| Accenture plc, Class A | 26,910 | 2,884,752 |
| Alphabet, Inc., Class A * | 27,632 | 20,375,560 |
| Alphabet, Inc., Class C * | 16,745 | 11,902,513 |
| Broadridge Financial Solutions, Inc. | 134,533 | 8,015,476 |
| Computer Sciences Corp. | 793,062 | 52,809,999 |
| eBay, Inc. * | 315,285 | 8,796,452 |
| Global Payments, Inc. | 41,131 | 5,610,680 |
| j2 Global, Inc. | 32,493 | 2,519,832 |
| Leidos Holdings, Inc. | 390,346 | 20,520,489 |
| Microsoft Corp. | 756,800 | 39,837,952 |
| Nuance Communications, Inc. * | 334,034 | 5,668,557 |
| Rackspace Hosting, Inc. * | 244,132 | 6,310,812 |
| Synopsys, Inc. * | 322,962 | 16,141,641 |
| Xerox Corp. | 1,170,725 | 10,993,108 |
| | | 212,387,823 |
| Technology Hardware & Equipment 8.3% |
| Apple, Inc. | 1,189,817 | 142,183,131 |
| Ciena Corp. * | 658,078 | 15,886,003 |
| Cisco Systems, Inc. | 297,491 | 8,582,615 |
| F5 Networks, Inc. * | 55,380 | 6,102,876 |
| Ingram Micro, Inc., Class A | 121,425 | 3,616,037 |
| Jabil Circuit, Inc. | 713,518 | 16,396,644 |
| Juniper Networks, Inc. | 83,847 | 2,631,957 |
| | | 195,399,263 |
| Telecommunication Services 1.8% |
| Verizon Communications, Inc. | 915,661 | 42,926,188 |
| Transportation 3.6% |
| Delta Air Lines, Inc. | 848,007 | 43,112,676 |
| FedEx Corp. | 108,449 | 16,923,467 |
| United Parcel Service, Inc., Class B | 253,313 | 26,096,305 |
| | | 86,132,448 |
| Utilities 3.5% |
| Edison International | 38,034 | 2,301,818 |
| Entergy Corp. | 391,556 | 26,688,457 |
| NRG Energy, Inc. | 291,226 | 3,753,903 |
| Public Service Enterprise Group, Inc. | 115,709 | 4,777,625 |
| UGI Corp. | 1,218,523 | 44,683,238 |
| | | 82,205,041 |
| Total Common Stock |
| (Cost $2,061,357,618) | | 2,345,796,296 |
|
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Other Investment Companies 0.7% of net assets |
| Money Market Fund 0.6% |
| State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (b) | 14,742,507 | 14,742,507 |
| Securities Lending Collateral 0.1% |
| Wells Fargo Advantage Government Money Market Fund, Institutional Class 0.01% (b) | 3,268,125 | 3,268,125 |
| Total Other Investment Companies |
| (Cost $18,010,632) | | 18,010,632 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $2,079,755,362 and the unrealized appreciation and depreciation were $350,191,830 and ($66,140,264), respectively, with a net unrealized appreciation of $284,051,566.
| * | Non-income producing security. |
| (a) | All or a portion of this security is on loan. Securities on loan were valued at $3,284,725. |
| (b) | The rate shown is the 7-day yield. |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| S&P 500 Index, e-mini, Long, expires 12/18/15 | 114 | 11,820,090 | 704,063 |
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Common Stock1 | | $2,345,796,296 | | $— | | $— | | $2,345,796,296 | |
| Other Investment Companies1 | | 18,010,632 | | — | | — | | 18,010,632 | |
| Total | | $2,363,806,928 | | $— | | $— | | $2,363,806,928 | |
| Other Financial Instruments | | | | | | | | | |
| Futures Contracts2 | | $704,063 | | $— | | $— | | $704,063 | |
| 1 | As categorized in Portfolio Holdings. |
| 2 | Futures contracts are not included in Investments in the schedule of portfolio holdings and are valued at unrealized appreciation or depreciation. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments, at value (cost $2,076,100,125) including securities on loan of $3,284,725 | | $2,360,538,803 |
| Collateral invested for securities on loan, at value (cost $3,268,125) | + | 3,268,125 |
| Total investments, at value (cost $2,079,368,250) | | 2,363,806,928 |
| Deposit with broker for futures contracts | | 1,329,400 |
| Receivables: | | |
| Investments sold | | 3,824,528 |
| Dividends | | 2,336,961 |
| Fund shares sold | | 309,687 |
| Income from securities on loan | | 1,450 |
| Prepaid expenses | + | 21,985 |
| Total assets | | 2,371,630,939 |
| Liabilities |
| Collateral held for securities on loan | | 3,268,125 |
| Payables: | | |
| Investment adviser and administrator fees | | 182,816 |
| Shareholder service fees | | 109,237 |
| Fund shares redeemed | | 4,996,910 |
| Variation margin on futures contracts | | 53,010 |
| Accrued expenses | + | 143,820 |
| Total liabilities | | 8,753,918 |
| Net Assets |
| Total assets | | 2,371,630,939 |
| Total liabilities | – | 8,753,918 |
| Net assets | | $2,362,877,021 |
| Net Assets by Source | | |
| Capital received from investors | | 1,767,787,523 |
| Net investment income not yet distributed | | 22,957,023 |
| Net realized capital gains | | 286,989,734 |
| Net unrealized capital appreciation | | 285,142,741 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $2,362,877,021 | | 102,293,901 | | $23.10 |
| | | | | |
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends | | $47,211,292 |
| Interest | | 650 |
| Securities on loan | + | 489,863 |
| Total investment income | | 47,701,805 |
| Expenses |
| Investment adviser and administrator fees | | 11,070,162 |
| Shareholder service fees | | 5,850,139 |
| Portfolio accounting fees | | 78,515 |
| Shareholder reports | | 67,937 |
| Registration fees | | 61,177 |
| Transfer agent fees | | 60,901 |
| Custodian fees | | 46,124 |
| Professional fees | | 36,718 |
| Proxy fees | | 18,445 |
| Independent trustees' fees | | 18,119 |
| Interest expense | | 370 |
| Other expenses | + | 73,654 |
| Total expenses | | 17,382,261 |
| Expense reduction by CSIM and its affiliates | – | 60,901 |
| Net expenses | – | 17,321,360 |
| Net investment income | | 30,380,445 |
| Realized and Unrealized Gains (Losses) |
| Net realized gains on investments | | 308,307,082 |
| Net realized losses on futures contracts | + | (1,052,042) |
| Net realized gains | | 307,255,040 |
| Net change in unrealized appreciation (depreciation) on investments | | (207,803,255) |
| Net change in unrealized appreciation (depreciation) on futures contracts | + | 422,818 |
| Net change in unrealized appreciation (depreciation) | + | (207,380,437) |
| Net realized and unrealized gains | | 99,874,603 |
| Increase in net assets resulting from operations | | $130,255,048 |
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $30,380,445 | $27,282,370 |
| Net realized gains | | 307,255,040 | 321,767,221 |
| Net change in unrealized appreciation (depreciation) | + | (207,380,437) | 32,031,539 |
| Increase in net assets from operations | | 130,255,048 | 381,081,130 |
| Distributions to Shareholders | |
| Distributions from net investment income | | (30,311,016) | (21,200,511) |
| Distributions from net realized gains | + | (308,068,333) | (157,596,466) |
| Total distributions | | ($338,379,349) | ($178,796,977) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 12,845,696 | $293,750,932 | 10,594,267 | $247,389,415 |
| Shares reinvested | | 10,461,915 | 236,857,753 | 4,044,873 | 89,432,146 |
| Shares redeemed | + | (11,947,882) | (276,936,418) | (19,480,472) | (468,899,959) |
| Net transactions in fund shares | | 11,359,729 | $253,672,267 | (4,841,332) | ($132,078,398) |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 90,934,172 | $2,317,329,055 | 95,775,504 | $2,247,123,300 |
| Total increase or decrease | + | 11,359,729 | 45,547,966 | (4,841,332) | 70,205,755 |
| End of period | | 102,293,901 | $2,362,877,021 | 90,934,172 | $2,317,329,055 |
| Net investment income not yet distributed | | | $22,957,023 | | $24,336,689 |
Schwab Dividend Equity Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $19.17 | $18.22 | $14.52 | $13.15 | $12.08 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.29 1 | 0.27 | 0.32 | 0.27 | 0.23 | |
| Net realized and unrealized gains (losses) | (0.21) | 2.16 | 3.70 | 1.38 | 1.06 | |
| Total from investment operations | 0.08 | 2.43 | 4.02 | 1.65 | 1.29 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.27) | (0.29) | (0.32) | (0.28) | (0.22) | |
| Distributions from net realized gains | (2.55) | (1.19) | — | — | — | |
| Total distributions | (2.82) | (1.48) | (0.32) | (0.28) | (0.22) | |
| Net asset value at end of period | $16.43 | $19.17 | $18.22 | $14.52 | $13.15 | |
| Total return | 0.12% | 14.26% | 27.99% | 12.65% | 10.73% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 0.88% | 0.89% | 0.89% | 0.89% | 0.89% | |
| Gross operating expenses | 0.88% | 0.89% | 0.89% | 0.89% | 0.89% | |
| Net investment income (loss) | 1.71% | 1.47% | 1.97% | 1.89% | 1.77% | |
| Portfolio turnover rate | 73% | 72% | 64% | 55% | 31% | |
| Net assets, end of period (x 1,000,000) | $1,872 | $2,053 | $1,804 | $1,390 | $1,325 | |
| |
1
Calculated based on the average shares outstanding during the period.
Schwab Dividend Equity Fund
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 99.4% | Common Stock | 1,739,386,992 | 1,859,801,705 |
| 0.4% | Short-Term Investment | 7,616,449 | 7,616,449 |
| 99.8% | Total Investments | 1,747,003,441 | 1,867,418,154 |
| 0.2% | Other Assets and Liabilities, Net | | 4,464,710 |
| 100.0% | Net Assets | | 1,871,882,864 |
| Security | Number
of Shares | Value
($) |
| Common Stock 99.4% of net assets |
| Automobiles & Components 2.1% |
| Ford Motor Co. | 753,605 | 11,160,890 |
| General Motors Co. | 448,497 | 15,657,030 |
| Lear Corp. | 95,717 | 11,970,368 |
| | | 38,788,288 |
| Banks 11.4% |
| Citigroup, Inc. | 1,168,794 | 62,144,777 |
| Citizens Financial Group, Inc. | 167,138 | 4,061,453 |
| Fifth Third Bancorp | 464,700 | 8,852,535 |
| First Niagara Financial Group, Inc. | 387,000 | 4,005,450 |
| Huntington Bancshares, Inc. | 430,000 | 4,717,100 |
| JPMorgan Chase & Co. | 1,245,094 | 79,997,290 |
| MGIC Investment Corp. * | 564,698 | 5,308,161 |
| Radian Group, Inc. | 763,543 | 11,048,467 |
| Regions Financial Corp. | 376,400 | 3,519,340 |
| Wells Fargo & Co. | 544,051 | 29,454,921 |
| | | 213,109,494 |
| Capital Goods 6.7% |
| Allison Transmission Holdings, Inc. | 190,831 | 5,476,850 |
| BWX Technologies, Inc. | 255,909 | 7,242,225 |
| General Dynamics Corp. | 60,436 | 8,979,581 |
| General Electric Co. | 462,800 | 13,384,176 |
| Huntington Ingalls Industries, Inc. | 134,780 | 16,165,513 |
| Jacobs Engineering Group, Inc. * | 72,872 | 2,925,082 |
| Kennametal, Inc. | 40,445 | 1,137,313 |
| Spirit AeroSystems Holdings, Inc., Class A * | 520,518 | 27,452,119 |
| Stanley Black & Decker, Inc. | 397,707 | 42,148,988 |
| | | 124,911,847 |
| Security | Number
of Shares | Value
($) |
| Commercial & Professional Supplies 1.9% |
| Clean Harbors, Inc. * | 21,060 | 979,080 |
| Pitney Bowes, Inc. | 292,563 | 6,041,426 |
| R.R. Donnelley & Sons Co. | 1,426,028 | 24,057,092 |
| Waste Management, Inc. | 73,507 | 3,951,736 |
| | | 35,029,334 |
| Consumer Durables & Apparel 0.3% |
| Wolverine World Wide, Inc. | 288,673 | 5,360,658 |
| Consumer Services 2.9% |
| Darden Restaurants, Inc. | 534,207 | 33,062,071 |
| Six Flags Entertainment Corp. | 120,760 | 6,284,351 |
| Vail Resorts, Inc. | 132,864 | 15,169,083 |
| | | 54,515,505 |
| Diversified Financials 4.5% |
| Ally Financial, Inc. * | 82,583 | 1,645,053 |
| Janus Capital Group, Inc. | 304,748 | 4,732,736 |
| Lazard Ltd., Class A | 454,575 | 21,055,914 |
| Navient Corp. | 352,899 | 4,654,738 |
| The Goldman Sachs Group, Inc. | 80,269 | 15,050,438 |
| Voya Financial, Inc. | 898,634 | 36,457,581 |
| | | 83,596,460 |
| Energy 13.4% |
| Chevron Corp. | 376,315 | 34,199,507 |
| ConocoPhillips | 703,270 | 37,519,454 |
| CVR Energy, Inc. | 247,347 | 10,997,048 |
| Devon Energy Corp. | 311,024 | 13,041,236 |
| Exxon Mobil Corp. | 471,144 | 38,982,455 |
| Marathon Oil Corp. | 81,648 | 1,500,690 |
| Marathon Petroleum Corp. | 319,205 | 16,534,819 |
| Murphy Oil Corp. | 359,063 | 10,208,161 |
| Occidental Petroleum Corp. | 88,750 | 6,615,425 |
| Superior Energy Services, Inc. | 901,577 | 12,766,330 |
| Teekay Corp. | 54,059 | 1,736,916 |
| Tesoro Corp. | 139,413 | 14,907,432 |
| Valero Energy Corp. | 684,401 | 45,115,714 |
| Western Refining, Inc. | 180,316 | 7,504,752 |
| | | 251,629,939 |
| Food & Staples Retailing 2.0% |
| The Kroger Co. | 483,564 | 18,278,719 |
| Wal-Mart Stores, Inc. | 331,489 | 18,974,431 |
| | | 37,253,150 |
| Food, Beverage & Tobacco 4.5% |
| Archer-Daniels-Midland Co. | 460,343 | 21,019,261 |
| Bunge Ltd. | 229,058 | 16,712,072 |
| ConAgra Foods, Inc. | 232,492 | 9,427,551 |
| Dr Pepper Snapple Group, Inc. | 197,905 | 17,686,770 |
| PepsiCo, Inc. | 196,344 | 20,064,393 |
| | | 84,910,047 |
Schwab Dividend Equity Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Health Care Equipment & Services 4.1% |
| AmerisourceBergen Corp. | 251,024 | 24,226,326 |
| Cardinal Health, Inc. | 446,694 | 36,718,247 |
| Community Health Systems, Inc. * | 38,658 | 1,083,970 |
| McKesson Corp. | 21,910 | 3,917,508 |
| Molina Healthcare, Inc. * | 167,276 | 10,371,112 |
| | | 76,317,163 |
| Household & Personal Products 0.1% |
| Spectrum Brands Holdings, Inc. | 24,760 | 2,373,246 |
| Insurance 6.2% |
| Assured Guaranty Ltd. | 250,413 | 6,871,333 |
| Everest Re Group Ltd. | 10,792 | 1,920,652 |
| MetLife, Inc. | 783,980 | 39,496,912 |
| Reinsurance Group of America, Inc. | 429,882 | 38,792,552 |
| The Travelers Cos., Inc. | 254,328 | 28,711,088 |
| | | 115,792,537 |
| Materials 2.9% |
| International Paper Co. | 411,654 | 17,573,509 |
| LyondellBasell Industries N.V., Class A | 172,412 | 16,018,799 |
| PolyOne Corp. | 163,956 | 5,482,689 |
| Steel Dynamics, Inc. | 820,706 | 15,158,440 |
| | | 54,233,437 |
| Pharmaceuticals, Biotechnology & Life Sciences 6.8% |
| Amgen, Inc. | 238,463 | 37,720,077 |
| Gilead Sciences, Inc. | 149,523 | 16,167,922 |
| Johnson & Johnson | 78,228 | 7,903,375 |
| Merck & Co., Inc. | 11,053 | 604,157 |
| Pfizer, Inc. | 1,912,372 | 64,676,421 |
| | | 127,071,952 |
| Real Estate 4.9% |
| CBL & Associates Properties, Inc. | 157,146 | 2,291,189 |
| Duke Realty Corp. | 1,207,643 | 24,998,210 |
| Equity LifeStyle Properties, Inc. | 175,148 | 10,592,951 |
| Equity Residential | 37,897 | 2,930,196 |
| Retail Properties of America, Inc., Class A | 505,926 | 7,573,712 |
| RLJ Lodging Trust | 142,000 | 3,562,780 |
| Simon Property Group, Inc. | 68,893 | 13,879,184 |
| SL Green Realty Corp. | 193,705 | 22,977,287 |
| UDR, Inc. | 102,692 | 3,538,766 |
| | | 92,344,275 |
| Retailing 2.9% |
| American Eagle Outfitters, Inc. | 255,832 | 3,909,113 |
| Best Buy Co., Inc. | 333,863 | 11,695,221 |
| Chico's FAS, Inc. | 211,921 | 2,928,748 |
| Lowe's Cos., Inc. | 385,849 | 28,487,232 |
| The Gap, Inc. | 113,929 | 3,101,147 |
| The Home Depot, Inc. | 34,114 | 4,217,855 |
| | | 54,339,316 |
| Security | Number
of Shares | Value
($) |
| Semiconductors & Semiconductor Equipment 2.1% |
| Intel Corp. | 1,070,970 | 36,263,044 |
| Teradyne, Inc. | 140,305 | 2,738,754 |
| | | 39,001,798 |
| Software & Services 5.0% |
| Accenture plc, Class A | 36,522 | 3,915,158 |
| Computer Sciences Corp. | 616,018 | 41,020,639 |
| Global Payments, Inc. | 10,228 | 1,395,201 |
| Leidos Holdings, Inc. | 321,465 | 16,899,415 |
| Microsoft Corp. | 386,090 | 20,323,778 |
| Rackspace Hosting, Inc. * | 289,026 | 7,471,322 |
| Xerox Corp. | 258,734 | 2,429,512 |
| | | 93,455,025 |
| Technology Hardware & Equipment 4.4% |
| Apple, Inc. | 325,866 | 38,940,987 |
| Cisco Systems, Inc. | 682,211 | 19,681,788 |
| F5 Networks, Inc. * | 48,271 | 5,319,464 |
| Hewlett-Packard Co. | 497,396 | 13,409,796 |
| Ingram Micro, Inc., Class A | 146,613 | 4,366,135 |
| SYNNEX Corp. | 8,209 | 726,004 |
| | | 82,444,174 |
| Telecommunication Services 1.1% |
| AT&T, Inc. | 147,631 | 4,947,115 |
| Verizon Communications, Inc. | 337,843 | 15,838,080 |
| | | 20,785,195 |
| Transportation 2.3% |
| Delta Air Lines, Inc. | 283,629 | 14,419,698 |
| United Parcel Service, Inc., Class B | 288,069 | 29,676,869 |
| | | 44,096,567 |
| Utilities 6.9% |
| AES Corp. | 854,365 | 9,355,297 |
| American Electric Power Co., Inc. | 490,867 | 27,807,616 |
| CenterPoint Energy, Inc. | 39,099 | 725,287 |
| Edison International | 60,295 | 3,649,053 |
| Entergy Corp. | 487,549 | 33,231,340 |
| Exelon Corp. | 374,238 | 10,448,725 |
| NRG Energy, Inc. | 555,778 | 7,163,978 |
| UGI Corp. | 947,745 | 34,753,809 |
| Xcel Energy, Inc. | 36,688 | 1,307,193 |
| | | 128,442,298 |
| Total Common Stock |
| (Cost $1,739,386,992) | | 1,859,801,705 |
Schwab Dividend Equity Fund
Portfolio Holdings continued
Security
Rate, Maturity Date | Face
Amount
($) | Value
($) |
| Short-Term Investment 0.4% of net assets |
| Time Deposit 0.4% |
| Bank of Tokyo - Mitsubishi UFJ |
| 0.03%, 11/02/15 | 7,616,449 | 7,616,449 |
| Total Short-Term Investment |
| (Cost $7,616,449) | | 7,616,449 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $1,745,871,821 and the unrealized appreciation and depreciation were $207,248,267 and ($85,701,934), respectively, with a net unrealized appreciation of $121,546,333.
| * | Non-income producing security. |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| S&P 500 Index, e-mini, Long, expires 12/18/15 | 78 | 8,087,430 | 481,727 |
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Common Stock1 | | $1,859,801,705 | | $— | | $— | | $1,859,801,705 | |
| Short-Term Investment1 | | — | | 7,616,449 | | — | | 7,616,449 | |
| Total | | $1,859,801,705 | | $7,616,449 | | $— | | $1,867,418,154 | |
| Other Financial Instruments | | | | | | | | | |
| Futures Contracts2 | | $481,727 | | $— | | $— | | $481,727 | |
| 1 | As categorized in Portfolio Holdings. |
| 2 | Futures contracts are not included in Investments in the schedule of portfolio holdings and are valued at unrealized appreciation or depreciation. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Schwab Dividend Equity Fund
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments, at value (cost $1,747,003,441) | | $1,867,418,154 |
| Deposit with broker for futures contracts | | 450,800 |
| Receivables: | | |
| Investments sold | | 4,248,133 |
| Dividends | | 2,609,395 |
| Fund shares sold | | 210,206 |
| Interest | | 13 |
| Prepaid expenses | + | 26,825 |
| Total assets | | 1,874,963,526 |
| Liabilities |
| Payables: | | |
| Investment adviser and administrator fees | | 191,947 |
| Shareholder service fees | | 76,188 |
| Fund shares redeemed | | 2,647,936 |
| Variation margin on futures contracts | | 36,270 |
| Accrued expenses | + | 128,321 |
| Total liabilities | | 3,080,662 |
| Net Assets |
| Total assets | | 1,874,963,526 |
| Total liabilities | – | 3,080,662 |
| Net assets | | $1,871,882,864 |
| Net Assets by Source | | |
| Capital received from investors | | 1,554,190,137 |
| Net investment income not yet distributed | | 587,212 |
| Net realized capital gains | | 196,209,075 |
| Net unrealized capital appreciation | | 120,896,440 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $1,871,882,864 | | 113,914,626 | | $16.43 |
| | | | | |
Schwab Dividend Equity Fund
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends | | $51,435,325 |
| Interest | + | 5,177 |
| Total investment income | | 51,440,502 |
| Expenses |
| Investment adviser and administrator fees | | 12,324,201 |
| Shareholder service fees | | 4,849,426 |
| Portfolio accounting fees | | 75,673 |
| Shareholder reports | | 56,363 |
| Registration fees | | 45,416 |
| Custodian fees | | 41,562 |
| Professional fees | | 41,406 |
| Transfer agent fees | | 40,971 |
| Proxy fees | | 17,320 |
| Independent trustees' fees | | 16,446 |
| Other expenses | + | 61,203 |
| Total expenses | | 17,569,987 |
| Expense reduction by CSIM and its affiliates | – | 40,971 |
| Net expenses | – | 17,529,016 |
| Net investment income | | 33,911,486 |
| Realized and Unrealized Gains (Losses) |
| Net realized gains on investments | | 194,362,889 |
| Net realized losses on futures contracts | + | (346,514) |
| Net realized gains | | 194,016,375 |
| Net change in unrealized appreciation (depreciation) on investments | | (221,375,402) |
| Net change in unrealized appreciation (depreciation) on futures contracts | + | 278,319 |
| Net change in unrealized appreciation (depreciation) | + | (221,097,083) |
| Net realized and unrealized losses | | (27,080,708) |
| Increase in net assets resulting from operations | | $6,830,778 |
Schwab Dividend Equity Fund
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $33,911,486 | $28,562,537 |
| Net realized gains | | 194,016,375 | 273,148,591 |
| Net change in unrealized appreciation (depreciation) | + | (221,097,083) | (45,088,782) |
| Increase in net assets from operations | | 6,830,778 | 256,622,346 |
| Distributions to Shareholders | |
| Distributions from net investment income | | (31,258,036) | (30,034,449) |
| Distributions from net realized gains | + | (272,348,613) | (118,279,747) |
| Total distributions | | ($303,606,649) | ($148,314,196) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 14,692,885 | $248,859,127 | 17,591,274 | $317,805,473 |
| Shares reinvested | | 12,419,993 | 210,709,144 | 5,046,536 | 87,839,410 |
| Shares redeemed | + | (20,322,510) | (344,140,463) | (14,499,226) | (264,363,089) |
| Net transactions in fund shares | | 6,790,368 | $115,427,808 | 8,138,584 | $141,281,794 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 107,124,258 | $2,053,230,927 | 98,985,674 | $1,803,640,983 |
| Total increase or decrease | + | 6,790,368 | (181,348,063) | 8,138,584 | 249,589,944 |
| End of period | | 113,914,626 | $1,871,882,864 | 107,124,258 | $2,053,230,927 |
| Net investment income not yet distributed | | | $587,212 | | $— |
Schwab Large-Cap Growth Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $18.38 | $15.66 | $12.48 | $11.18 | $10.48 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.13 1 | 0.11 | 0.14 | 0.07 | 0.07 | |
| Net realized and unrealized gains (losses) | 1.08 | 2.70 | 3.17 | 1.29 | 0.69 | |
| Total from investment operations | 1.21 | 2.81 | 3.31 | 1.36 | 0.76 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.09) | (0.09) | (0.13) | (0.06) | (0.06) | |
| Distributions from net realized gains | (1.82) | — | — | — | — | |
| Total distributions | (1.91) | (0.09) | (0.13) | (0.06) | (0.06) | |
| Net asset value at end of period | $17.68 | $18.38 | $15.66 | $12.48 | $11.18 | |
| Total return | 7.00% | 18.06% | 26.76% | 12.18% | 7.25% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 0.99% | 0.99% | 0.99% | 0.99% | 0.99% | |
| Gross operating expenses | 1.03% | 1.04% | 1.05% | 1.05% | 1.05% | |
| Net investment income (loss) | 0.75% | 0.60% | 1.00% | 0.53% | 0.56% | |
| Portfolio turnover rate | 90% | 82% | 87% | 79% | 62% | |
| Net assets, end of period (x 1,000,000) | $251 | $256 | $253 | $217 | $213 | |
| |
1
Calculated based on the average shares outstanding during the period.
Schwab Large-Cap Growth Fund
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 99.3% | Common Stock | 217,636,236 | 248,986,487 |
| 0.7% | Short-Term Investment | 1,849,974 | 1,849,974 |
| 100.0% | Total Investments | 219,486,210 | 250,836,461 |
| 0.0% | Other Assets and Liabilities, Net | | 33,583 |
| 100.0% | Net Assets | | 250,870,044 |
| Security | Number
of Shares | Value
($) |
| Common Stock 99.3% of net assets |
| Automobiles & Components 1.1% |
| Delphi Automotive plc | 6,056 | 503,799 |
| Lear Corp. | 18,650 | 2,332,369 |
| | | 2,836,168 |
| Banks 1.5% |
| MGIC Investment Corp. * | 24,964 | 234,662 |
| Radian Group, Inc. | 239,175 | 3,460,862 |
| | | 3,695,524 |
| Capital Goods 6.5% |
| BWX Technologies, Inc. | 107,884 | 3,053,117 |
| Huntington Ingalls Industries, Inc. | 49,804 | 5,973,492 |
| Masco Corp. | 9,327 | 270,483 |
| Owens Corning | 14,991 | 682,540 |
| Spirit AeroSystems Holdings, Inc., Class A * | 86,481 | 4,561,008 |
| Stanley Black & Decker, Inc. | 15,581 | 1,651,275 |
| | | 16,191,915 |
| Commercial & Professional Supplies 1.4% |
| R.R. Donnelley & Sons Co. | 201,500 | 3,399,305 |
| Consumer Durables & Apparel 2.4% |
| NIKE, Inc., Class B | 24,095 | 3,157,168 |
| Wolverine World Wide, Inc. | 147,463 | 2,738,388 |
| | | 5,895,556 |
| Consumer Services 2.9% |
| Cracker Barrel Old Country Store, Inc. | 1,714 | 235,606 |
| Darden Restaurants, Inc. | 55,733 | 3,449,315 |
| Security | Number
of Shares | Value
($) |
| Jack in the Box, Inc. | 8,936 | 666,000 |
| Six Flags Entertainment Corp. | 5,399 | 280,964 |
| Vail Resorts, Inc. | 23,144 | 2,642,351 |
| | | 7,274,236 |
| Diversified Financials 1.5% |
| Ally Financial, Inc. * | 14,089 | 280,653 |
| Lazard Ltd., Class A | 10,296 | 476,911 |
| Voya Financial, Inc. | 77,036 | 3,125,350 |
| | | 3,882,914 |
| Energy 2.7% |
| CVR Energy, Inc. | 12,427 | 552,505 |
| Marathon Petroleum Corp. | 29,483 | 1,527,219 |
| Tesoro Corp. | 5,852 | 625,754 |
| Valero Energy Corp. | 58,590 | 3,862,253 |
| Western Refining, Inc. | 5,558 | 231,324 |
| | | 6,799,055 |
| Food & Staples Retailing 2.1% |
| The Kroger Co. | 136,061 | 5,143,106 |
| Food, Beverage & Tobacco 6.9% |
| Archer-Daniels-Midland Co. | 49,589 | 2,264,234 |
| Bunge Ltd. | 28,660 | 2,091,034 |
| Campbell Soup Co. | 4,880 | 247,855 |
| ConAgra Foods, Inc. | 17,605 | 713,883 |
| Dr Pepper Snapple Group, Inc. | 63,220 | 5,649,971 |
| PepsiCo, Inc. | 63,145 | 6,452,787 |
| | | 17,419,764 |
| Health Care Equipment & Services 7.2% |
| Allscripts Healthcare Solutions, Inc. * | 18,143 | 255,091 |
| AmerisourceBergen Corp. | 56,774 | 5,479,259 |
| Cardinal Health, Inc. | 52,547 | 4,319,363 |
| Centene Corp. * | 9,532 | 566,963 |
| Community Health Systems, Inc. * | 20,002 | 560,856 |
| Express Scripts Holding Co. * | 8,725 | 753,666 |
| Hologic, Inc. * | 73,221 | 2,845,368 |
| McKesson Corp. | 1,248 | 223,142 |
| Molina Healthcare, Inc. * | 51,137 | 3,170,494 |
| | | 18,174,202 |
| Household & Personal Products 0.2% |
| Spectrum Brands Holdings, Inc. | 6,281 | 602,034 |
| Insurance 2.2% |
| MetLife, Inc. | 14,947 | 753,030 |
| Reinsurance Group of America, Inc. | 54,081 | 4,880,269 |
| | | 5,633,299 |
| Materials 2.0% |
| LyondellBasell Industries N.V., Class A | 24,602 | 2,285,772 |
| PolyOne Corp. | 42,580 | 1,423,875 |
| Steel Dynamics, Inc. | 76,421 | 1,411,496 |
| | | 5,121,143 |
Schwab Large-Cap Growth Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Media 3.9% |
| Comcast Corp., Class A | 121,275 | 7,594,241 |
| Scripps Networks Interactive, Inc., Class A | 28,148 | 1,691,132 |
| The Interpublic Group of Cos., Inc. | 18,266 | 418,839 |
| | | 9,704,212 |
| Pharmaceuticals, Biotechnology & Life Sciences 10.6% |
| AbbVie, Inc. | 52,782 | 3,143,168 |
| Amgen, Inc. | 48,647 | 7,694,982 |
| Biogen, Inc. * | 5,575 | 1,619,593 |
| Catalent, Inc. * | 29,197 | 776,056 |
| Celgene Corp. * | 34,412 | 4,222,697 |
| Eli Lilly & Co. | 5,412 | 441,457 |
| Gilead Sciences, Inc. | 76,998 | 8,325,794 |
| Zoetis, Inc. | 5,782 | 248,684 |
| | | 26,472,431 |
| Real Estate 1.9% |
| Lamar Advertising Co., Class A | 17,216 | 971,499 |
| SL Green Realty Corp. | 31,565 | 3,744,240 |
| | | 4,715,739 |
| Retailing 8.4% |
| Amazon.com, Inc. * | 9,054 | 5,666,899 |
| American Eagle Outfitters, Inc. | 14,361 | 219,436 |
| Best Buy Co., Inc. | 44,825 | 1,570,220 |
| Chico's FAS, Inc. | 45,151 | 623,987 |
| Expedia, Inc. | 2,729 | 371,963 |
| Genuine Parts Co. | 2,819 | 255,852 |
| Lowe's Cos., Inc. | 91,627 | 6,764,821 |
| Target Corp. | 13,258 | 1,023,253 |
| The Gap, Inc. | 76,911 | 2,093,517 |
| The Home Depot, Inc. | 17,145 | 2,119,808 |
| The TJX Cos., Inc. | 5,338 | 390,688 |
| | | 21,100,444 |
| Semiconductors & Semiconductor Equipment 1.7% |
| Intel Corp. | 47,878 | 1,621,149 |
| Microsemi Corp. * | 64,392 | 2,318,756 |
| Teradyne, Inc. | 14,885 | 290,555 |
| | | 4,230,460 |
| Software & Services 14.8% |
| Accenture plc, Class A | 23,119 | 2,478,357 |
| Alphabet, Inc., Class A * | 12,144 | 8,954,864 |
| Computer Sciences Corp. | 82,098 | 5,466,906 |
| eBay, Inc. * | 8,983 | 250,626 |
| Electronic Arts, Inc. * | 14,952 | 1,077,591 |
| Facebook, Inc., Class A * | 43,557 | 4,441,507 |
| Global Payments, Inc. | 8,345 | 1,138,341 |
| IAC/InterActiveCorp | 4,600 | 308,246 |
| Leidos Holdings, Inc. | 102,151 | 5,370,078 |
| Microsoft Corp. | 79,704 | 4,195,619 |
| Nuance Communications, Inc. * | 27,945 | 474,227 |
| Rackspace Hosting, Inc. * | 82,958 | 2,144,464 |
| Red Hat, Inc. * | 3,231 | 255,604 |
| Security | Number
of Shares | Value
($) |
| Sabre Corp. | 8,960 | 262,707 |
| Xerox Corp. | 43,559 | 409,019 |
| | | 37,228,156 |
| Technology Hardware & Equipment 11.1% |
| Apple, Inc. | 183,008 | 21,869,456 |
| Ciena Corp. * | 112,744 | 2,721,640 |
| Cisco Systems, Inc. | 27,816 | 802,492 |
| F5 Networks, Inc. * | 21,676 | 2,388,695 |
| | | 27,782,283 |
| Telecommunication Services 0.7% |
| Verizon Communications, Inc. | 36,345 | 1,703,854 |
| Transportation 4.6% |
| Alaska Air Group, Inc. | 7,796 | 594,445 |
| Delta Air Lines, Inc. | 118,825 | 6,041,063 |
| Matson, Inc. | 34,000 | 1,558,220 |
| United Continental Holdings, Inc. * | 18,715 | 1,128,701 |
| United Parcel Service, Inc., Class B | 21,688 | 2,234,298 |
| | | 11,556,727 |
| Utilities 1.0% |
| UGI Corp. | 66,102 | 2,423,960 |
| Total Common Stock |
| (Cost $217,636,236) | | 248,986,487 |
Security
Rate, Maturity Date | Face
Amount
($) | Value
($) |
| Short-Term Investment 0.7% of net assets |
| Time Deposit 0.7% |
| Australia & New Zealand Banking Group Ltd. |
| 0.03%, 11/02/15 | 1,849,974 | 1,849,974 |
| Total Short-Term Investment |
| (Cost $1,849,974) | | 1,849,974 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $219,468,554 and the unrealized appreciation and depreciation were $41,286,810 and ($9,918,903), respectively, with a net unrealized appreciation of $31,367,907.
| * | Non-income producing security. |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| S&P 500 Index, e-mini, Long, expires 12/18/15 | 10 | 1,036,850 | 61,760 |
Schwab Large-Cap Growth Fund
Portfolio Holdings continued
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Common Stock1 | | $248,986,487 | | $— | | $— | | $248,986,487 | |
| Short-Term Investment1 | | — | | 1,849,974 | | — | | 1,849,974 | |
| Total | | $248,986,487 | | $1,849,974 | | $— | | $250,836,461 | |
| Other Financial Instruments | | | | | | | | | |
| Futures Contracts2 | | $61,760 | | $— | | $— | | $61,760 | |
| 1 | As categorized in Portfolio Holdings. |
| 2 | Futures contracts are not included in Investments in the schedule of portfolio holdings and are valued at unrealized appreciation or depreciation. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Schwab Large-Cap Growth Fund
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments, at value (cost $219,486,210) | | $250,836,461 |
| Deposit with broker for futures contracts | | 69,000 |
| Receivables: | | |
| Dividends | | 129,393 |
| Fund shares sold | | 77,510 |
| Prepaid expenses | + | 12,627 |
| Total assets | | 251,124,991 |
| Liabilities |
| Payables: | | |
| Investment adviser and administrator fees | | 28,810 |
| Shareholder service fees | | 10,528 |
| Fund shares redeemed | | 147,499 |
| Variation margin on futures contracts | | 4,650 |
| Accrued expenses | + | 63,460 |
| Total liabilities | | 254,947 |
| Net Assets |
| Total assets | | 251,124,991 |
| Total liabilities | – | 254,947 |
| Net assets | | $250,870,044 |
| Net Assets by Source | | |
| Capital received from investors | | 184,799,030 |
| Net investment income not yet distributed | | 1,586,062 |
| Net realized capital gains | | 33,072,941 |
| Net unrealized capital appreciation | | 31,412,011 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $250,870,044 | | 14,189,605 | | $17.68 |
| | | | | |
Schwab Large-Cap Growth Fund
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends | | $4,423,453 |
| Interest | | 659 |
| Securities on loan | + | 49,709 |
| Total investment income | | 4,473,821 |
| Expenses |
| Investment adviser and administrator fees | | 1,846,082 |
| Shareholder service fees | | 626,648 |
| Portfolio accounting fees | | 41,397 |
| Professional fees | | 35,918 |
| Transfer agent fees | | 26,730 |
| Shareholder reports | | 23,099 |
| Registration fees | | 11,029 |
| Custodian fees | | 10,694 |
| Independent trustees' fees | | 8,064 |
| Proxy fees | | 6,596 |
| Other expenses | + | 12,139 |
| Total expenses | | 2,648,396 |
| Expense reduction by CSIM and its affiliates | – | 103,581 |
| Net expenses | – | 2,544,815 |
| Net investment income | | 1,929,006 |
| Realized and Unrealized Gains (Losses) |
| Net realized gains on investments | | 32,937,851 |
| Net realized gains on futures contracts | + | 3,787 |
| Net realized gains | | 32,941,638 |
| Net change in unrealized appreciation (depreciation) on investments | | (17,512,035) |
| Net change in unrealized appreciation (depreciation) on futures contracts | + | 49,573 |
| Net change in unrealized appreciation (depreciation) | + | (17,462,462) |
| Net realized and unrealized gains | | 15,479,176 |
| Increase in net assets resulting from operations | | $17,408,182 |
Schwab Large-Cap Growth Fund
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $1,929,006 | $1,533,883 |
| Net realized gains | | 32,941,638 | 39,312,198 |
| Net change in unrealized appreciation (depreciation) | + | (17,462,462) | 1,502,772 |
| Increase in net assets from operations | | 17,408,182 | 42,348,853 |
| Distributions to Shareholders | |
| Distributions from net investment income | | (1,230,983) | (1,490,864) |
| Distributions from net realized gains | + | (25,103,219) | — |
| Total distributions | | ($26,334,202) | ($1,490,864) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 1,525,412 | $26,545,521 | 1,209,235 | $20,323,834 |
| Shares reinvested | | 883,607 | 14,985,971 | 49,885 | 793,166 |
| Shares redeemed | + | (2,147,036) | (37,713,740) | (3,467,366) | (58,680,881) |
| Net transactions in fund shares | | 261,983 | $3,817,752 | (2,208,246) | ($37,563,881) |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 13,927,622 | $255,978,312 | 16,135,868 | $252,684,204 |
| Total increase or decrease | + | 261,983 | (5,108,268) | (2,208,246) | 3,294,108 |
| End of period | | 14,189,605 | $250,870,044 | 13,927,622 | $255,978,312 |
| Net investment income not yet distributed | | | $1,586,062 | | $972,556 |
Schwab Small-Cap Equity Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $25.11 | $24.87 | $17.72 | $15.61 | $13.96 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.05 1 | (0.02) | 0.09 | 0.02 | (0.01) | |
| Net realized and unrealized gains (losses) | 0.63 | 2.71 | 7.16 | 2.10 | 1.66 | |
| Total from investment operations | 0.68 | 2.69 | 7.25 | 2.12 | 1.65 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.02) | (0.07) | (0.10) | (0.01) | — | |
| Distributions from net realized gains | (4.58) | (2.38) | — | — | — | |
| Total distributions | (4.60) | (2.45) | (0.10) | (0.01) | — | |
| Net asset value at end of period | $21.19 | $25.11 | $24.87 | $17.72 | $15.61 | |
| Total return | 3.01% | 11.67% | 41.10% | 13.57% | 11.82% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 1.09% | 1.10% | 1.10% | 1.12% | 1.11% | |
| Gross operating expenses | 1.09% | 1.10% | 1.11% | 1.12% | 1.12% | |
| Net investment income (loss) | 0.22% | (0.10%) | 0.42% | 0.11% | (0.05%) | |
| Portfolio turnover rate | 95% | 103% | 84% | 101% | 72% | |
| Net assets, end of period (x 1,000,000) | $630 | $666 | $590 | $388 | $226 | |
| |
1
Calculated based on the average shares outstanding during the period.
Schwab Small-Cap Equity Fund
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 99.7% | Common Stock | 610,767,482 | 628,545,352 |
| 4.9% | Other Investment Company | 30,521,443 | 30,521,443 |
| 0.1% | Short-Term Investment | 831,079 | 831,079 |
| 104.7% | Total Investments | 642,120,004 | 659,897,874 |
| (4.7%) | Other Assets and Liabilities, Net | | (29,533,573) |
| 100.0% | Net Assets | | 630,364,301 |
| Security | Number
of Shares | Value
($) |
| Common Stock 99.7% of net assets |
| Automobiles & Components 3.4% |
| American Axle & Manufacturing Holdings, Inc. * | 340,212 | 7,539,098 |
| Cooper Tire & Rubber Co. | 45,901 | 1,918,203 |
| Dana Holding Corp. | 106,659 | 1,791,871 |
| Tenneco, Inc. * | 133,829 | 7,573,383 |
| Tower International, Inc. * | 102,880 | 2,826,114 |
| | | 21,648,669 |
| Banks 7.9% |
| 1st Source Corp. | 35,101 | 1,114,808 |
| Banc of California, Inc. | 342,855 | 4,470,829 |
| BancFirst Corp. | 13,210 | 814,132 |
| BNC Bancorp | 18,449 | 414,180 |
| Camden National Corp. | 14,621 | 571,535 |
| Federal Agricultural Mortgage Corp., Class C | 44,786 | 1,314,917 |
| First Bancorp (North Carolina) | 14,300 | 264,979 |
| First BanCorp (Puerto Rico) * | 1,059,719 | 4,016,335 |
| First Citizens BancShares, Inc., Class A | 4,287 | 1,098,072 |
| First Community Bancshares, Inc. | 27,051 | 520,191 |
| First Defiance Financial Corp. | 10,948 | 419,308 |
| First Financial Corp. | 34,409 | 1,179,196 |
| First Interstate BancSystem, Inc., Class A | 28,960 | 821,306 |
| Great Southern Bancorp, Inc. | 5,287 | 255,521 |
| Great Western Bancorp, Inc. | 73,760 | 2,084,458 |
| Heartland Financial USA, Inc. | 12,827 | 472,547 |
| International Bancshares Corp. | 44,030 | 1,186,608 |
| Lakeland Bancorp, Inc. | 13,494 | 156,935 |
| Security | Number
of Shares | Value
($) |
| MainSource Financial Group, Inc. | 29,140 | 630,590 |
| MGIC Investment Corp. * | 766,064 | 7,201,002 |
| NBT Bancorp, Inc. | 7,853 | 220,748 |
| OFG Bancorp | 14,567 | 134,162 |
| Preferred Bank | 31,993 | 1,059,288 |
| Radian Group, Inc. | 480,138 | 6,947,597 |
| Republic Bancorp, Inc., Class A | 24,098 | 612,812 |
| Synovus Financial Corp. | 112,784 | 3,567,358 |
| TCF Financial Corp. | 175,248 | 2,697,067 |
| TriState Capital Holdings, Inc. * | 8,826 | 110,237 |
| United Community Banks, Inc. | 210,147 | 4,236,563 |
| Waterstone Financial, Inc. | 46,541 | 619,926 |
| WSFS Financial Corp. | 14,072 | 447,067 |
| | | 49,660,274 |
| Capital Goods 8.1% |
| Accuride Corp. * | 167,189 | 471,473 |
| Aerojet Rocketdyne Holdings, Inc. * | 124,994 | 2,117,398 |
| Allied Motion Technologies, Inc. | 8,617 | 166,222 |
| Altra Industrial Motion Corp. | 20,400 | 539,784 |
| Blount International, Inc. * | 230,349 | 1,398,218 |
| BWX Technologies, Inc. | 177,048 | 5,010,458 |
| Commercial Vehicle Group, Inc. * | 22,729 | 94,553 |
| Cubic Corp. | 107,624 | 4,826,936 |
| Ducommun, Inc. * | 35,259 | 763,005 |
| DXP Enterprises, Inc. * | 4,452 | 134,717 |
| EMCOR Group, Inc. | 51,497 | 2,486,275 |
| General Cable Corp. | 392,882 | 6,046,454 |
| Global Brass & Copper Holdings, Inc. | 97,379 | 2,190,054 |
| Hillenbrand, Inc. | 19,568 | 580,583 |
| Hurco Cos., Inc. | 9,200 | 247,204 |
| John Bean Technologies Corp. | 87,360 | 3,918,970 |
| Kadant, Inc. | 20,540 | 844,605 |
| Kaman Corp. | 63,744 | 2,479,004 |
| L.B. Foster Co., Class A | 10,746 | 158,289 |
| Meritor, Inc. * | 210,226 | 2,285,157 |
| Moog, Inc., Class A * | 32,357 | 1,998,368 |
| MYR Group, Inc. * | 14,775 | 332,437 |
| National Presto Industries, Inc. | 13,791 | 1,214,298 |
| Patrick Industries, Inc. * | 46,530 | 1,888,187 |
| Rexnord Corp. * | 65,614 | 1,212,547 |
| Titan Machinery, Inc. *(a) | 15,257 | 186,593 |
| Wabash National Corp. * | 603,119 | 7,219,334 |
| | | 50,811,123 |
| Commercial & Professional Supplies 2.7% |
| ACCO Brands Corp. * | 53,714 | 433,472 |
| ARC Document Solutions, Inc. * | 30,710 | 191,016 |
| CDI Corp. | 6,016 | 48,128 |
| CRA International, Inc. * | 47,816 | 1,118,894 |
| Deluxe Corp. | 45,901 | 2,733,405 |
| Ennis, Inc. | 189,823 | 3,802,155 |
| Heidrick & Struggles International, Inc. | 100,606 | 2,672,095 |
| Hill International, Inc. * | 70,478 | 238,216 |
| Quad Graphics, Inc. | 371,666 | 4,794,491 |
| TrueBlue, Inc. * | 25,958 | 752,003 |
| | | 16,783,875 |
Schwab Small-Cap Equity Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Consumer Durables & Apparel 1.2% |
| CSS Industries, Inc. | 20,620 | 562,926 |
| Culp, Inc. | 25,758 | 772,998 |
| Installed Building Products, Inc. * | 5,103 | 113,031 |
| JAKKS Pacific, Inc. *(a) | 393,593 | 3,117,257 |
| Johnson Outdoors, Inc., Class A | 7,100 | 152,153 |
| Libbey, Inc. | 15,237 | 512,573 |
| Nautilus, Inc. * | 109,212 | 1,860,972 |
| Perry Ellis International, Inc. * | 33,752 | 724,655 |
| | | 7,816,565 |
| Consumer Services 3.6% |
| Ascent Capital Group, Inc., Class A * | 43,779 | 953,507 |
| Bloomin' Brands, Inc. | 152,293 | 2,584,412 |
| Boyd Gaming Corp. * | 32,999 | 659,650 |
| Bravo Brio Restaurant Group, Inc. * | 41,654 | 489,018 |
| Capella Education Co. | 22,345 | 1,008,877 |
| ClubCorp Holdings, Inc. | 30,153 | 616,327 |
| Denny's Corp. * | 30,038 | 329,216 |
| Diamond Resorts International, Inc. * | 145,128 | 4,127,440 |
| Isle of Capri Casinos, Inc. * | 172,058 | 3,291,470 |
| K12, Inc. * | 202,233 | 1,963,682 |
| Penn National Gaming, Inc. * | 153,465 | 2,740,885 |
| Regis Corp. * | 173,292 | 2,862,784 |
| Ruby Tuesday, Inc. * | 142,609 | 745,845 |
| Ruth's Hospitality Group, Inc. | 2,807 | 43,537 |
| Strayer Education, Inc. * | 4,742 | 250,947 |
| | | 22,667,597 |
| Diversified Financials 4.4% |
| Calamos Asset Management, Inc., Class A | 78,751 | 739,472 |
| Cash America International, Inc. | 127,547 | 4,404,198 |
| Diamond Hill Investment Group, Inc. | 999 | 199,850 |
| Gain Capital Holdings, Inc. | 229,235 | 1,707,801 |
| Interactive Brokers Group, Inc., Class A | 140,190 | 5,767,417 |
| Janus Capital Group, Inc. | 1,997 | 31,013 |
| KCG Holdings, Inc., Class A * | 498,533 | 6,226,677 |
| MarketAxess Holdings, Inc. | 41,969 | 4,251,879 |
| Marlin Business Services Corp. | 39,303 | 694,091 |
| Nelnet, Inc., Class A | 72,125 | 2,580,632 |
| Oppenheimer Holdings, Inc., Class A | 20,296 | 372,432 |
| Regional Management Corp. * | 25,001 | 407,766 |
| Westwood Holdings Group, Inc. | 3,268 | 189,871 |
| | | 27,573,099 |
| Energy 2.3% |
| Alon USA Energy, Inc. | 313,065 | 5,243,839 |
| Cloud Peak Energy, Inc. *(a) | 95,161 | 282,628 |
| Contango Oil & Gas Co. * | 39,908 | 305,296 |
| Delek US Holdings, Inc. | 30,583 | 831,858 |
| Exterran Holdings, Inc. | 29,659 | 644,787 |
| Matrix Service Co. * | 57,590 | 1,307,293 |
| Par Pacific Holdings, Inc. * | 51,044 | 1,163,803 |
| Parker Drilling Co. * | 368,640 | 1,054,310 |
| Pioneer Energy Services Corp. * | 459,778 | 1,062,087 |
| Security | Number
of Shares | Value
($) |
| REX American Resources Corp. * | 49,182 | 2,700,584 |
| TETRA Technologies, Inc. * | 17,608 | 118,678 |
| | | 14,715,163 |
| Food & Staples Retailing 1.7% |
| Ingles Markets, Inc., Class A | 14,855 | 741,859 |
| SpartanNash, Co. | 216,909 | 6,051,761 |
| SUPERVALU, Inc. * | 442,562 | 2,907,632 |
| The Fresh Market, Inc. * | 15,659 | 390,222 |
| Village Super Market, Inc., Class A | 24,752 | 620,285 |
| | | 10,711,759 |
| Food, Beverage & Tobacco 3.0% |
| Cal-Maine Foods, Inc. (a) | 86,409 | 4,619,425 |
| Darling Ingredients, Inc. * | 177,360 | 1,794,883 |
| Dean Foods Co. | 446,504 | 8,086,188 |
| Fresh Del Monte Produce, Inc. | 20,444 | 932,860 |
| John B. Sanfilippo & Son, Inc. | 30,010 | 1,942,247 |
| National Beverage Corp. * | 7,759 | 292,049 |
| Universal Corp. | 24,921 | 1,345,983 |
| | | 19,013,635 |
| Health Care Equipment & Services 3.6% |
| Alliance HealthCare Services, Inc. * | 8,250 | 69,795 |
| AngioDynamics, Inc. * | 19,638 | 247,046 |
| Cantel Medical Corp. | 1,824 | 108,127 |
| CryoLife, Inc. | 7,332 | 77,279 |
| Cynosure, Inc., Class A * | 7,020 | 264,233 |
| Exactech, Inc. * | 14,757 | 251,312 |
| Globus Medical, Inc., Class A * | 9,789 | 218,784 |
| Greatbatch, Inc. * | 1,289 | 68,897 |
| Hill-Rom Holdings, Inc. | 11,796 | 621,531 |
| Integra LifeSciences Holdings Corp. * | 48,337 | 2,879,435 |
| MedAssets, Inc. * | 77,518 | 1,835,626 |
| Merit Medical Systems, Inc. * | 135,471 | 2,511,632 |
| Molina Healthcare, Inc. * | 77,592 | 4,810,704 |
| National HealthCare Corp. | 8,700 | 567,936 |
| Natus Medical, Inc. * | 3,688 | 167,915 |
| Quality Systems, Inc. | 151,310 | 2,125,905 |
| RadNet, Inc. * | 393,735 | 2,602,588 |
| RTI Surgical, Inc. * | 44,624 | 187,644 |
| SurModics, Inc. * | 54,803 | 1,168,948 |
| Triple-S Management Corp., Class B * | 80,389 | 1,655,210 |
| | | 22,440,547 |
| Household & Personal Products 0.9% |
| Central Garden & Pet Co., Class A * | 122,735 | 2,071,767 |
| Natural Health Trends Corp. (a) | 5,632 | 277,432 |
| USANA Health Sciences, Inc. * | 25,518 | 3,281,615 |
| | | 5,630,814 |
| Insurance 2.9% |
| American Equity Investment Life Holding Co. | 200,416 | 5,146,683 |
| Employers Holdings, Inc. | 8,609 | 227,880 |
| Fidelity & Guaranty Life | 36,495 | 974,417 |
Schwab Small-Cap Equity Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Maiden Holdings Ltd. | 421,358 | 6,552,117 |
| National Western Life Group, Inc., Class A | 4,390 | 1,132,576 |
| Selective Insurance Group, Inc. | 109,433 | 3,993,210 |
| | | 18,026,883 |
| Materials 2.0% |
| AEP Industries, Inc. * | 27,604 | 2,208,320 |
| Century Aluminum Co. * | 460,547 | 1,667,180 |
| Commercial Metals Co. | 35,272 | 506,859 |
| Domtar Corp. | 46,924 | 1,935,146 |
| Innospec, Inc. | 8,039 | 444,074 |
| Koppers Holdings, Inc. | 52,425 | 993,978 |
| SunCoke Energy, Inc. | 107,342 | 532,416 |
| Trinseo S.A. *(a) | 128,666 | 4,175,212 |
| | | 12,463,185 |
| Media 1.1% |
| MSG Networks, Inc., Class A * | 93,375 | 1,916,055 |
| Nexstar Broadcasting Group, Inc., Class A | 40,807 | 2,172,157 |
| Sinclair Broadcast Group, Inc., Class A | 90,933 | 2,728,899 |
| World Wrestling Entertainment, Inc., Class A (a) | 13,240 | 236,069 |
| | | 7,053,180 |
| Pharmaceuticals, Biotechnology & Life Sciences 12.8% |
| Acorda Therapeutics, Inc. * | 180,601 | 6,508,860 |
| Aegerion Pharmaceuticals, Inc. *(a) | 91,188 | 1,338,640 |
| Affymetrix, Inc. * | 13,859 | 127,503 |
| AMAG Pharmaceuticals, Inc. * | 111,319 | 4,452,760 |
| ANI Pharmaceuticals, Inc. * | 10,181 | 425,973 |
| Array BioPharma, Inc. * | 25,504 | 130,580 |
| Bio-Rad Laboratories, Inc., Class A * | 1,555 | 216,891 |
| BioCryst Pharmaceuticals, Inc. * | 11,775 | 105,857 |
| BioSpecifics Technologies Corp. * | 36,710 | 2,144,231 |
| Cambrex Corp. * | 14,483 | 665,784 |
| Catalent, Inc. * | 181,884 | 4,834,477 |
| Concert Pharmaceuticals, Inc. * | 7,957 | 180,703 |
| Depomed, Inc. * | 60,468 | 1,058,190 |
| Dyax Corp. * | 6,180 | 170,135 |
| Emergent Biosolutions, Inc. * | 228,573 | 7,348,622 |
| Enanta Pharmaceuticals, Inc. * | 119,286 | 3,350,744 |
| Halozyme Therapeutics, Inc. * | 96,020 | 1,502,713 |
| INC Research Holdings, Inc., Class A * | 27,223 | 1,135,471 |
| Infinity Pharmaceuticals, Inc. * | 301,770 | 3,123,319 |
| Ligand Pharmaceuticals, Inc. * | 47,589 | 4,299,666 |
| MiMedx Group, Inc. *(a) | 282,849 | 2,059,141 |
| Momenta Pharmaceuticals, Inc. * | 55,237 | 906,439 |
| Myriad Genetics, Inc. *(a) | 74,067 | 2,990,085 |
| NewLink Genetics Corp. * | 45,280 | 1,732,866 |
| Osiris Therapeutics, Inc. (a) | 137,017 | 2,333,400 |
| PAREXEL International Corp. * | 19,105 | 1,205,908 |
| PDL BioPharma, Inc. | 396,033 | 1,813,831 |
| Pernix Therapeutics Holdings, Inc. *(a) | 242,133 | 680,394 |
| Phibro Animal Health Corp., Class A | 118,344 | 3,947,956 |
| Prestige Brands Holdings, Inc. * | 146,954 | 7,202,216 |
| Security | Number
of Shares | Value
($) |
| Repligen Corp. * | 49,597 | 1,648,604 |
| Retrophin, Inc. * | 10,287 | 196,790 |
| SciClone Pharmaceuticals, Inc. * | 260,697 | 1,986,511 |
| Spectrum Pharmaceuticals, Inc. * | 713,428 | 3,716,960 |
| Sucampo Pharmaceuticals, Inc., Class A * | 117,155 | 2,268,121 |
| Supernus Pharmaceuticals, Inc. * | 160,091 | 2,641,502 |
| Vanda Pharmaceuticals, Inc. *(a) | 12,237 | 131,425 |
| | | 80,583,268 |
| Real Estate 8.6% |
| Agree Realty Corp. | 6,287 | 203,573 |
| CBL & Associates Properties, Inc. | 61,435 | 895,722 |
| CoreSite Realty Corp. | 149,916 | 8,237,884 |
| CyrusOne, Inc. | 138,779 | 4,896,123 |
| DuPont Fabros Technology, Inc. | 3,783 | 121,397 |
| Empire State Realty Trust, Inc., Class A | 435,973 | 7,769,039 |
| First Industrial Realty Trust, Inc. | 392,600 | 8,511,568 |
| Highwoods Properties, Inc. | 60,743 | 2,639,284 |
| Inland Real Estate Corp. | 129,962 | 1,150,164 |
| Mack-Cali Realty Corp. | 270,282 | 5,881,336 |
| Marcus & Millichap, Inc. * | 36,129 | 1,574,141 |
| RE/MAX Holdings, Inc., Class A | 70,393 | 2,651,704 |
| RLJ Lodging Trust | 8,570 | 215,021 |
| Saul Centers, Inc. | 49,218 | 2,759,653 |
| Summit Hotel Properties, Inc. | 472,701 | 6,182,929 |
| Sunstone Hotel Investors, Inc. | 55,696 | 805,364 |
| | | 54,494,902 |
| Retailing 4.5% |
| 1-800-Flowers.com, Inc., Class A * | 115,574 | 1,147,650 |
| Aaron's, Inc. | 150,484 | 3,712,440 |
| Build-A-Bear Workshop, Inc. * | 86,560 | 1,346,873 |
| Chico's FAS, Inc. | 332,209 | 4,591,128 |
| Citi Trends, Inc. | 35,131 | 933,431 |
| Express, Inc. * | 110,118 | 2,125,277 |
| Outerwall, Inc. (a) | 97,175 | 5,830,500 |
| Rent-A-Center, Inc. | 219,964 | 4,045,138 |
| Stage Stores, Inc. | 109,907 | 1,069,395 |
| The Children's Place, Inc. | 60,283 | 3,235,389 |
| Tilly's, Inc., Class A * | 79,209 | 577,434 |
| | | 28,614,655 |
| Semiconductors & Semiconductor Equipment 2.5% |
| Advanced Energy Industries, Inc. * | 55,857 | 1,579,636 |
| Alpha & Omega Semiconductor Ltd. * | 12,475 | 110,778 |
| Amkor Technology, Inc. * | 212,210 | 1,319,946 |
| Cohu, Inc. | 196,436 | 2,473,129 |
| Diodes, Inc. * | 13,034 | 298,479 |
| FormFactor, Inc. * | 338,952 | 2,792,964 |
| IXYS Corp. | 107,621 | 1,340,958 |
| Microsemi Corp. * | 1,968 | 70,868 |
| NeoPhotonics Corp. * | 20,423 | 168,898 |
| Photronics, Inc. * | 205,088 | 1,966,794 |
| Tessera Technologies, Inc. | 71,566 | 2,502,663 |
| Xcerra Corp. * | 197,180 | 1,368,429 |
| | | 15,993,542 |
Schwab Small-Cap Equity Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Software & Services 9.2% |
| ACI Worldwide, Inc. * | 67,641 | 1,620,002 |
| AVG Technologies N.V. * | 135,942 | 3,221,825 |
| Blackhawk Network Holdings, Inc. * | 84,876 | 3,614,020 |
| BroadSoft, Inc. * | 35,331 | 1,129,532 |
| Carbonite, Inc. * | 6,538 | 66,165 |
| CSG Systems International, Inc. | 28,919 | 969,365 |
| DHI Group, Inc. * | 341,856 | 3,093,797 |
| EarthLink Holdings Corp. | 720,460 | 6,159,933 |
| Endurance International Group Holdings, Inc. * | 90,413 | 1,205,205 |
| Epiq Systems, Inc. | 65,465 | 903,417 |
| Fair Isaac Corp. | 19,393 | 1,791,332 |
| Gigamon, Inc. * | 46,866 | 1,229,295 |
| Internap Corp. * | 20,226 | 136,728 |
| Intralinks Holdings, Inc. * | 111,799 | 978,241 |
| Liquidity Services, Inc. * | 117,511 | 962,415 |
| Mentor Graphics Corp. | 79,257 | 2,155,790 |
| MicroStrategy, Inc., Class A * | 28,369 | 4,881,454 |
| Monster Worldwide, Inc. * | 600,831 | 3,767,210 |
| NeuStar, Inc., Class A *(a) | 107,125 | 2,912,729 |
| Progress Software Corp. * | 63,190 | 1,534,253 |
| QAD, Inc., Class A | 34,750 | 887,515 |
| QuinStreet, Inc. * | 33,965 | 188,506 |
| Science Applications International Corp. | 90,924 | 4,169,775 |
| Sykes Enterprises, Inc. * | 68,679 | 1,991,691 |
| TeleCommunication Systems, Inc., Class A * | 104,770 | 428,509 |
| United Online, Inc. * | 126,000 | 1,471,680 |
| VASCO Data Security International, Inc. *(a) | 68,447 | 1,301,178 |
| Web.com Group, Inc. * | 213,758 | 5,016,900 |
| | | 57,788,462 |
| Technology Hardware & Equipment 6.8% |
| Black Box Corp. | 27,486 | 335,604 |
| Checkpoint Systems, Inc. | 107,715 | 805,708 |
| Ciena Corp. * | 275,000 | 6,638,500 |
| Diebold, Inc. | 89,059 | 3,283,605 |
| Eastman Kodak Co. * | 7,598 | 95,127 |
| Harmonic, Inc. * | 305,019 | 1,756,910 |
| Insight Enterprises, Inc. * | 256,640 | 6,518,656 |
| Lexmark International, Inc., Class A | 28,979 | 941,528 |
| Methode Electronics, Inc. | 6,472 | 215,712 |
| NETGEAR, Inc. * | 108,191 | 4,479,107 |
| Newport Corp. * | 30,460 | 460,251 |
| Polycom, Inc. * | 284,888 | 3,925,757 |
| RealD, Inc. * | 43,986 | 447,338 |
| Sanmina Corp. * | 144,726 | 2,991,486 |
| SYNNEX Corp. | 48,516 | 4,290,755 |
| Tech Data Corp. * | 63,989 | 4,657,759 |
| TTM Technologies, Inc. * | 23,921 | 174,623 |
| Vishay Intertechnology, Inc. | 102,105 | 1,082,313 |
| | | 43,100,739 |
| Telecommunication Services 1.2% |
| General Communication, Inc., Class A * | 162,837 | 3,316,176 |
| Hawaiian Telcom Holdco, Inc. * | 5,948 | 135,733 |
| Security | Number
of Shares | Value
($) |
| IDT Corp., Class B | 160,719 | 2,081,311 |
| Inteliquent, Inc. | 47,185 | 977,673 |
| Spok Holdings, Inc. | 38,190 | 688,566 |
| Vonage Holdings Corp. * | 60,400 | 366,628 |
| | | 7,566,087 |
| Transportation 4.2% |
| Air Transport Services Group, Inc. * | 241,571 | 2,364,980 |
| ArcBest Corp. | 80,283 | 2,079,330 |
| Atlas Air Worldwide Holdings, Inc. * | 51,684 | 2,131,448 |
| Hawaiian Holdings, Inc. * | 222,027 | 7,704,337 |
| Matson, Inc. | 118,271 | 5,420,360 |
| P.A.M. Transportation Services, Inc. * | 2,595 | 92,667 |
| Park-Ohio Holdings Corp. | 17,697 | 610,547 |
| Virgin America, Inc. * | 33,277 | 1,184,994 |
| YRC Worldwide, Inc. * | 251,369 | 4,589,998 |
| | | 26,178,661 |
| Utilities 1.1% |
| American States Water Co. | 45,798 | 1,866,269 |
| Atlantic Power Corp. | 71,803 | 146,478 |
| Consolidated Water Co., Ltd. | 16,109 | 178,327 |
| Southwest Gas Corp. | 81,640 | 5,017,594 |
| | | 7,208,668 |
| Total Common Stock |
| (Cost $610,767,482) | | 628,545,352 |
|
| Other Investment Company 4.9% of net assets |
| Securities Lending Collateral 4.9% |
| Wells Fargo Advantage Government Money Market Fund, Institutional Class 0.01% (b) | 30,521,443 | 30,521,443 |
| Total Other Investment Company |
| (Cost $30,521,443) | | 30,521,443 |
Security
Rate, Maturity Date | Face
Amount
($) | Value
($) |
| Short-Term Investment 0.1% of net assets |
| Time Deposits 0.1% |
| Sumitomo Mitsui Banking Corp. |
| 0.03%, 11/02/15 | 831,079 | 831,079 |
| Total Short-Term Investment |
| (Cost $831,079) | | 831,079 |
End of Investments.
Schwab Small-Cap Equity Fund
Portfolio Holdings continued
At 10/31/15, the tax basis cost of the fund's investments was $642,490,561 and the unrealized appreciation and depreciation were $80,270,566 and ($62,863,253), respectively, with a net unrealized appreciation of $17,407,313.
| * | Non-income producing security. |
| (a) | All or a portion of this security is on loan. Securities on loan were valued at $29,735,390. |
| (b) | The rate shown is the 7-day yield. |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| Russell 2000 Index, mini, Long, expires 12/18/15 | 5 | 579,150 | 2,090 |
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Common Stock1 | | $628,545,352 | | $— | | $— | | $628,545,352 | |
| Other Investment Company | | 30,521,443 | | — | | — | | 30,521,443 | |
| Short-Term Investment1 | | — | | 831,079 | | — | | 831,079 | |
| Total | | $659,066,795 | | $831,079 | | $— | | $659,897,874 | |
| Other Financial Instruments | | | | | | | | | |
| Futures Contracts2 | | $2,090 | | $— | | $— | | $2,090 | |
| 1 | As categorized in Portfolio Holdings. |
| 2 | Futures contracts are not included in Investments in the schedule of portfolio holdings and are valued at unrealized appreciation or depreciation. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Schwab Small-Cap Equity Fund
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments, at value (cost $611,598,561) including securities on loan of $29,735,390 | | $629,376,431 |
| Collateral invested for securities on loan, at value (cost $30,521,443) | + | 30,521,443 |
| Total investments, at value (cost $642,120,004) | | 659,897,874 |
| Deposit with broker for futures contracts | | 1,902,300 |
| Receivables: | | |
| Fund shares sold | | 419,406 |
| Dividends | | 167,381 |
| Income from securities on loan | | 69,284 |
| Foreign tax reclaims | | 312 |
| Prepaid expenses | + | 20,062 |
| Total assets | | 662,476,619 |
| Liabilities |
| Collateral held for securities on loan | | 30,521,443 |
| Payables: | | |
| Investment adviser and administrator fees | | 84,400 |
| Shareholder service fees | | 29,219 |
| Fund shares redeemed | | 1,389,697 |
| Variation margin on futures contracts | | 1,300 |
| Accrued expenses | + | 86,259 |
| Total liabilities | | 32,112,318 |
| Net Assets |
| Total assets | | 662,476,619 |
| Total liabilities | – | 32,112,318 |
| Net assets | | $630,364,301 |
| Net Assets by Source | | |
| Capital received from investors | | 537,069,209 |
| Net investment income not yet distributed | | 881,488 |
| Net realized capital gains | | 74,633,644 |
| Net unrealized capital appreciation | | 17,779,960 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $630,364,301 | | 29,753,369 | | $21.19 |
| | | | | |
Schwab Small-Cap Equity Fund
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends (net of foreign withholding tax of $6,684) | | $7,916,635 |
| Interest | | 2,005 |
| Securities on loan | + | 876,874 |
| Total investment income | | 8,795,514 |
| Expenses |
| Investment adviser and administrator fees | | 5,456,212 |
| Shareholder service fees | | 1,651,725 |
| Portfolio accounting fees | | 56,546 |
| Custodian fees | | 36,507 |
| Professional fees | | 35,648 |
| Registration fees | | 35,088 |
| Shareholder reports | | 31,710 |
| Transfer agent fees | | 28,344 |
| Independent trustees' fees | | 10,067 |
| Proxy fees | | 9,764 |
| Interest expense | | 24 |
| Other expenses | + | 15,782 |
| Total expenses | | 7,367,417 |
| Expense reduction by CSIM and its affiliates | – | 28,344 |
| Net expenses | – | 7,339,073 |
| Net investment income | | 1,456,441 |
| Realized and Unrealized Gains (Losses) |
| Net realized gains on investments | | 74,802,235 |
| Net realized gains on futures contracts | + | 329,605 |
| Net realized gains | | 75,131,840 |
| Net change in unrealized appreciation (depreciation) on investments | | (54,080,433) |
| Net change in unrealized appreciation (depreciation) on futures contracts | + | (103,401) |
| Net change in unrealized appreciation (depreciation) | + | (54,183,834) |
| Net realized and unrealized gains | | 20,948,006 |
| Increase in net assets resulting from operations | | $22,404,447 |
Schwab Small-Cap Equity Fund
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income (loss) | | $1,456,441 | ($620,550) |
| Net realized gains | | 75,131,840 | 125,071,693 |
| Net change in unrealized appreciation (depreciation) | + | (54,183,834) | (55,511,789) |
| Increase in net assets from operations | | 22,404,447 | 68,939,354 |
| Distributions to Shareholders | |
| Distributions from net investment income | | (501,780) | (1,598,911) |
| Distributions from net realized gains | + | (122,791,233) | (56,889,199) |
| Total distributions | | ($123,293,013) | ($58,488,110) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 6,541,101 | $141,989,885 | 7,201,760 | $173,508,919 |
| Shares reinvested | | 4,347,908 | 90,523,445 | 1,076,328 | 24,841,650 |
| Shares redeemed | + | (7,655,131) | (167,260,267) | (5,496,700) | (133,118,038) |
| Net transactions in fund shares | | 3,233,878 | $65,253,063 | 2,781,388 | $65,232,531 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 26,519,491 | $665,999,804 | 23,738,103 | $590,316,029 |
| Total increase or decrease | + | 3,233,878 | (35,635,503) | 2,781,388 | 75,683,775 |
| End of period | | 29,753,369 | $630,364,301 | 26,519,491 | $665,999,804 |
| Net investment income not yet distributed | | | $881,488 | | $65,851 |
Schwab Hedged Equity Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $19.02 | $18.62 | $16.36 | $15.32 | $14.79 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | (0.01) 1 | (0.08) | (0.10) | (0.08) | (0.05) | |
| Net realized and unrealized gains (losses) | 0.89 | 1.99 | 2.36 | 1.12 | 0.58 | |
| Total from investment operations | 0.88 | 1.91 | 2.26 | 1.04 | 0.53 | |
| Less distributions: | | | | | | |
| Distributions from net realized gains | (2.44) | (1.51) | — | — | — | |
| Net asset value at end of period | $17.46 | $19.02 | $18.62 | $16.36 | $15.32 | |
| Total return | 4.84% | 11.07% | 13.81% | 6.79% | 3.58% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses (including dividend expense on short sales) | 1.82% | 1.99% | 2.48% | 2.08% | 1.86% | |
| Net operating expenses (excluding dividend expense on short sales) | 1.54 2 | 1.52 2 | 1.48 2 | 1.53 2 | 1.44 3 | |
| Gross operating expenses | 1.84% | 2.02% | 2.52% | 2.13% | 1.88% | |
| Net investment income (loss) | (0.06%) | (0.46%) | (0.49%) | (0.47%) | (0.25%) | |
| Portfolio turnover rate | 146% | 142% | 130% | 109% | 98% | |
| Net assets, end of period (x 1,000,000) | $212 | $200 | $193 | $194 | $236 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
The ratio of net operating expenses would have been 1.33% for the period ended 10/31/12, 10/31/13, 10/31/14 and 10/31/15, respectively, if stock loan fees on short sales had not been incurred.
3
The ratio of net operating expenses would have been 1.33% for the period ended 10/31/11, if stock loan fees on short sales and payment for state filing fees had not been included.
Schwab Hedged Equity Fund
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 98.5% | Common Stock | 197,408,536 | 208,478,108 |
| 1.4% | Other Investment Company | 2,871,884 | 2,871,884 |
| 99.9% | Total Investments | 200,280,420 | 211,349,992 |
| (37.2%) | Short Sales | (84,992,534) | (78,729,912) |
| 37.3% | Other Assets and Liabilities, Net | | 78,910,003 |
| 100.0% | Net Assets | | 211,530,083 |
| Security | Number
of Shares | Value
($) |
| Common Stock 98.5% of net assets |
| Automobiles & Components 1.1% |
| American Axle & Manufacturing Holdings, Inc. * | 102,518 | 2,271,799 |
| Banks 8.3% |
| Bank of America Corp. | 172,127 | 2,888,291 |
| Citigroup, Inc. (a) | 103,361 | 5,495,705 |
| Fifth Third Bancorp | 49,566 | 944,232 |
| MGIC Investment Corp. * | 158,548 | 1,490,351 |
| Radian Group, Inc. | 202,790 | 2,934,371 |
| Regions Financial Corp. (a) | 239,500 | 2,239,325 |
| The PNC Financial Services Group, Inc. (a) | 18,477 | 1,667,734 |
| | | 17,660,009 |
| Capital Goods 5.6% |
| Aerojet Rocketdyne Holdings, Inc. * | 25,514 | 432,207 |
| Allison Transmission Holdings, Inc. | 67,679 | 1,942,387 |
| Cubic Corp. | 49,489 | 2,219,582 |
| Huntington Ingalls Industries, Inc. (a) | 19,529 | 2,342,308 |
| Kaman Corp. | 32,246 | 1,254,047 |
| Spirit AeroSystems Holdings, Inc., Class A *(a) | 69,286 | 3,654,144 |
| | | 11,844,675 |
| Commercial & Professional Supplies 2.1% |
| Pitney Bowes, Inc. | 14,400 | 297,360 |
| R.R. Donnelley & Sons Co. (a) | 241,955 | 4,081,781 |
| | | 4,379,141 |
| Security | Number
of Shares | Value
($) |
| Consumer Durables & Apparel 2.1% |
| Carter's, Inc. | 643 | 58,436 |
| NIKE, Inc., Class B (a) | 17,601 | 2,306,259 |
| Wolverine World Wide, Inc. (a) | 113,495 | 2,107,602 |
| | | 4,472,297 |
| Consumer Services 2.5% |
| Bloomin' Brands, Inc. | 26,374 | 447,567 |
| Darden Restaurants, Inc. | 9,776 | 605,037 |
| Houghton Mifflin Harcourt Co. * | 109,457 | 2,144,263 |
| Penn National Gaming, Inc. * | 27,684 | 494,436 |
| ServiceMaster Global Holdings, Inc. * | 44,953 | 1,602,574 |
| | | 5,293,877 |
| Diversified Financials 3.8% |
| Interactive Brokers Group, Inc., Class A (a) | 81,199 | 3,340,527 |
| Lazard Ltd., Class A | 30,339 | 1,405,302 |
| Voya Financial, Inc. (a) | 79,310 | 3,217,607 |
| | | 7,963,436 |
| Energy 6.3% |
| Alon USA Energy, Inc. | 14,213 | 238,068 |
| Anadarko Petroleum Corp. | 13,046 | 872,516 |
| CVR Energy, Inc. (a) | 77,231 | 3,433,690 |
| Devon Energy Corp. | 36,120 | 1,514,512 |
| EOG Resources, Inc. (a) | 2,781 | 238,749 |
| Marathon Petroleum Corp. | 12,616 | 653,509 |
| Pioneer Energy Services Corp. * | 88,389 | 204,179 |
| Schlumberger Ltd. | 8,341 | 651,932 |
| Tesoro Corp. | 7,046 | 753,429 |
| Valero Energy Corp. (a) | 65,782 | 4,336,349 |
| Western Refining, Inc. | 8,665 | 360,637 |
| | | 13,257,570 |
| Food & Staples Retailing 2.4% |
| SpartanNash, Co. | 27,956 | 779,973 |
| SUPERVALU, Inc. * | 144,621 | 950,160 |
| The Kroger Co. (a) | 86,874 | 3,283,837 |
| | | 5,013,970 |
| Food, Beverage & Tobacco 5.7% |
| Bunge Ltd. (a) | 42,727 | 3,117,362 |
| Dean Foods Co. | 213,688 | 3,869,890 |
| Dr Pepper Snapple Group, Inc. | 12,752 | 1,139,646 |
| Ingredion, Inc. | 2,864 | 272,252 |
| Universal Corp. | 67,924 | 3,668,575 |
| | | 12,067,725 |
| Health Care Equipment & Services 6.2% |
| AmerisourceBergen Corp. | 12,182 | 1,175,685 |
| C.R. Bard, Inc. | 7,600 | 1,416,260 |
| Cardinal Health, Inc. (a) | 26,944 | 2,214,797 |
| Community Health Systems, Inc. * | 9,171 | 257,155 |
| Hologic, Inc. * | 8,298 | 322,460 |
| Kindred Healthcare, Inc. | 30,210 | 404,814 |
Schwab Hedged Equity Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| McKesson Corp. | 10,596 | 1,894,565 |
| Molina Healthcare, Inc. *(a) | 52,434 | 3,250,908 |
| Owens & Minor, Inc. | 64,490 | 2,311,966 |
| | | 13,248,610 |
| Household & Personal Products 0.6% |
| Spectrum Brands Holdings, Inc. (a) | 14,220 | 1,362,987 |
| Insurance 3.3% |
| American Equity Investment Life Holding Co. (a) | 64,638 | 1,659,904 |
| Genworth Financial, Inc., Class A *(a) | 82,885 | 387,902 |
| MetLife, Inc. | 27,302 | 1,375,475 |
| Reinsurance Group of America, Inc. (a) | 39,434 | 3,558,524 |
| | | 6,981,805 |
| Materials 4.9% |
| Century Aluminum Co. * | 93,371 | 338,003 |
| H.B. Fuller Co. | 29,603 | 1,124,618 |
| Innospec, Inc. | 29,250 | 1,615,770 |
| International Paper Co. (a) | 79,436 | 3,391,123 |
| LyondellBasell Industries N.V., Class A | 11,528 | 1,071,067 |
| Nucor Corp. | 43,861 | 1,855,320 |
| Steel Dynamics, Inc. | 50,087 | 925,107 |
| | | 10,321,008 |
| Media 1.3% |
| Nexstar Broadcasting Group, Inc., Class A | 48,646 | 2,589,426 |
| The Interpublic Group of Cos., Inc. | 6,787 | 155,626 |
| | | 2,745,052 |
| Pharmaceuticals, Biotechnology & Life Sciences 6.5% |
| AbbVie, Inc. | 22,239 | 1,324,333 |
| Amgen, Inc. (a) | 27,185 | 4,300,123 |
| Celgene Corp. *(a) | 8,372 | 1,027,328 |
| Emergent Biosolutions, Inc. * | 24,464 | 786,518 |
| Gilead Sciences, Inc. (a) | 26,378 | 2,852,253 |
| Pfizer, Inc. (a) | 100,450 | 3,397,219 |
| | | 13,687,774 |
| Real Estate 1.7% |
| CoreSite Realty Corp. | 5,418 | 297,719 |
| First Industrial Realty Trust, Inc. | 111,613 | 2,419,770 |
| Lamar Advertising Co., Class A | 7,419 | 418,654 |
| Simon Property Group, Inc. | 2,696 | 543,136 |
| | | 3,679,279 |
| Retailing 9.8% |
| Aaron's, Inc. | 52,039 | 1,283,802 |
| Amazon.com, Inc. *(a) | 9,662 | 6,047,446 |
| Best Buy Co., Inc. | 33,300 | 1,166,499 |
| Chico's FAS, Inc. | 65,288 | 902,280 |
| Groupon, Inc. * | 174,318 | 646,720 |
| Lowe's Cos., Inc. | 1,291 | 95,314 |
| Macy's, Inc. (a) | 12,717 | 648,313 |
| Outerwall, Inc. (a) | 61,171 | 3,670,260 |
| Security | Number
of Shares | Value
($) |
| Rent-A-Center, Inc. | 121,412 | 2,232,767 |
| Staples, Inc. | 49,186 | 638,926 |
| The Children's Place, Inc. | 21,948 | 1,177,949 |
| The Gap, Inc. (a) | 80,872 | 2,201,336 |
| | | 20,711,612 |
| Semiconductors & Semiconductor Equipment 1.9% |
| Cirrus Logic, Inc. * | 39,646 | 1,222,286 |
| Microsemi Corp. * | 26,148 | 941,589 |
| Teradyne, Inc. | 56,574 | 1,104,325 |
| Tessera Technologies, Inc. | 19,723 | 689,713 |
| | | 3,957,913 |
| Software & Services 8.7% |
| Computer Sciences Corp. (a) | 59,252 | 3,945,591 |
| Convergys Corp. | 32,016 | 821,851 |
| Electronic Arts, Inc. *(a) | 53,354 | 3,845,223 |
| Leidos Holdings, Inc. | 52,719 | 2,771,438 |
| LogMeIn, Inc. * | 6,296 | 424,098 |
| Microsoft Corp. (a) | 10,448 | 549,983 |
| NeuStar, Inc., Class A * | 5,355 | 145,602 |
| Progress Software Corp. * | 55,561 | 1,349,021 |
| Rackspace Hosting, Inc. * | 44,072 | 1,139,261 |
| Science Applications International Corp. (a) | 52,772 | 2,420,124 |
| Web.com Group, Inc. * | 44,592 | 1,046,574 |
| | | 18,458,766 |
| Technology Hardware & Equipment 8.9% |
| Apple, Inc. (a) | 74,368 | 8,886,976 |
| Ciena Corp. * | 88,221 | 2,129,655 |
| Cisco Systems, Inc. | 75,720 | 2,184,522 |
| Hewlett-Packard Co. (a) | 43,038 | 1,160,304 |
| Ingram Micro, Inc., Class A | 23,679 | 705,161 |
| Insight Enterprises, Inc. * | 5,304 | 134,722 |
| Jabil Circuit, Inc. | 58,456 | 1,343,319 |
| NETGEAR, Inc. * | 13,641 | 564,737 |
| Polycom, Inc. * | 124,893 | 1,721,025 |
| | | 18,830,421 |
| Transportation 2.6% |
| ArcBest Corp. | 9,592 | 248,433 |
| Delta Air Lines, Inc. | 51,765 | 2,631,733 |
| Hawaiian Holdings, Inc. * | 48,559 | 1,684,997 |
| United Continental Holdings, Inc. * | 16,190 | 976,419 |
| | | 5,541,582 |
| Utilities 2.2% |
| AES Corp. (a) | 88,810 | 972,470 |
| Edison International | 2,273 | 137,562 |
| Entergy Corp. (a) | 48,656 | 3,316,393 |
| Exelon Corp. | 2,632 | 73,485 |
| NRG Energy, Inc. | 17,602 | 226,890 |
| | | 4,726,800 |
| Total Common Stock |
| (Cost $197,408,536) | | 208,478,108 |
|
Schwab Hedged Equity Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Other Investment Company 1.4% of net assets |
| Money Market Fund 1.4% |
| State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (b) | 2,871,884 | 2,871,884 |
| Total Other Investment Company |
| (Cost $2,871,884) | | 2,871,884 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $200,275,210 and the unrealized appreciation and depreciation were $25,509,676 and ($14,434,894), respectively, with a net unrealized appreciation of $11,074,782.
| * | Non-income producing security. |
| (a) | All or a portion of this security is held as collateral for short sales |
| (b) | The rate shown is the 7-day yield. |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| S&P 500 Index, e-mini, Long, expires 12/18/15 | 20 | 2,073,700 | 158,162 |
Schwab Hedged Equity Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Short Sales 37.2% of net assets |
| Automobiles & Components 1.4% |
| Dorman Products, Inc. * | 17,200 | 802,896 |
| Tesla Motors, Inc. * | 10,565 | 2,186,215 |
| | | 2,989,111 |
| Banks 1.7% |
| BofI Holding, Inc. * | 3,575 | 286,036 |
| Signature Bank * | 7,200 | 1,072,224 |
| Texas Capital Bancshares, Inc. * | 39,231 | 2,165,551 |
| | | 3,523,811 |
| Capital Goods 2.5% |
| Air Lease Corp. | 50,224 | 1,693,051 |
| Hexcel Corp. | 53,065 | 2,457,971 |
| Proto Labs, Inc. * | 16,200 | 1,050,408 |
| SolarCity Corp. * | 6,200 | 183,830 |
| | | 5,385,260 |
| Consumer Durables & Apparel 1.3% |
| Under Armour, Inc., Class A * | 28,200 | 2,681,256 |
| Consumer Services 1.5% |
| Chipotle Mexican Grill, Inc. * | 414 | 265,055 |
| MGM Resorts International * | 51,775 | 1,200,662 |
| Wynn Resorts Ltd. | 24,283 | 1,698,596 |
| | | 3,164,313 |
| Diversified Financials 0.5% |
| Financial Engines, Inc. | 27,349 | 879,544 |
| Virtus Investment Partners, Inc. | 1,300 | 152,152 |
| | | 1,031,696 |
| Energy 3.9% |
| Cheniere Energy, Inc. * | 42,126 | 2,086,080 |
| Cobalt International Energy, Inc. * | 108,600 | 832,962 |
| Concho Resources, Inc. * | 9,641 | 1,117,488 |
| Diamondback Energy, Inc. * | 36,972 | 2,730,012 |
| Golar LNG Ltd. | 46,791 | 1,357,407 |
| RSP Permian, Inc. * | 2,243 | 61,503 |
| | | 8,185,452 |
| Food, Beverage & Tobacco 1.6% |
| Keurig Green Mountain, Inc. | 15,469 | 785,052 |
| Monster Beverage Corp. * | 17,558 | 2,393,507 |
| The WhiteWave Foods Co. * | 4,841 | 198,384 |
| | | 3,376,943 |
| Health Care Equipment & Services 0.9% |
| Acadia Healthcare Co., Inc. * | 17,306 | 1,062,761 |
| IDEXX Laboratories, Inc. * | 2,813 | 193,028 |
| Nevro Corp. * | 13,518 | 551,129 |
| | | 1,806,918 |
| Security | Number
of Shares | Value
($) |
| Insurance 2.0% |
| Mercury General Corp. | 30,269 | 1,634,829 |
| RLI Corp. | 30,736 | 1,870,285 |
| White Mountains Insurance Group Ltd. | 807 | 637,530 |
| | | 4,142,644 |
| Materials 3.7% |
| Albemarle Corp. | 7,544 | 403,755 |
| CF Industries Holdings, Inc. | 9,921 | 503,689 |
| FMC Corp. | 25,530 | 1,039,326 |
| Louisiana-Pacific Corp. * | 164,208 | 2,899,913 |
| Martin Marietta Materials, Inc. | 3,548 | 550,472 |
| Southern Copper Corp. | 85,956 | 2,386,139 |
| | | 7,783,294 |
| Media 0.5% |
| DreamWorks Animation SKG, Inc., Class A * | 39,400 | 797,456 |
| Loral Space & Communications, Inc. * | 5,400 | 241,434 |
| | | 1,038,890 |
| Real Estate 0.6% |
| The Howard Hughes Corp. * | 11,038 | 1,364,076 |
| Retailing 7.6% |
| Cabela's, Inc. * | 59,788 | 2,341,896 |
| CarMax, Inc. * | 24,665 | 1,455,482 |
| Dollar Tree, Inc. * | 19,955 | 1,306,853 |
| Lithia Motors, Inc., Class A | 9,837 | 1,154,765 |
| Netflix, Inc. * | 18,257 | 1,978,694 |
| Restoration Hardware Holdings, Inc. * | 16,263 | 1,676,553 |
| Signet Jewelers Ltd. | 3,561 | 537,497 |
| The Priceline Group, Inc. * | 746 | 1,084,863 |
| TripAdvisor, Inc. * | 23,203 | 1,943,947 |
| Ulta Salon, Cosmetics & Fragrance, Inc. * | 15,253 | 2,653,412 |
| | | 16,133,962 |
| Semiconductors & Semiconductor Equipment 1.6% |
| Ambarella, Inc. * | 5,371 | 265,542 |
| Cree, Inc. * | 12,662 | 318,956 |
| SunEdison, Inc. * | 48,000 | 350,400 |
| SunPower Corp. * | 94,858 | 2,545,989 |
| | | 3,480,887 |
| Software & Services 4.1% |
| Benefitfocus, Inc. * | 8,494 | 271,468 |
| Demandware, Inc. * | 9,489 | 538,026 |
| Globant S.A. * | 31,040 | 1,073,053 |
| Splunk, Inc. * | 23,170 | 1,301,227 |
| Syntel, Inc. * | 38,099 | 1,792,177 |
| Tableau Software, Inc., Class A * | 8,446 | 709,126 |
| The Ultimate Software Group, Inc. * | 7,414 | 1,515,051 |
| Workday, Inc., Class A * | 6,212 | 490,562 |
| Zillow Group, Inc., Class C * | 39,466 | 1,092,814 |
| | | 8,783,504 |
Schwab Hedged Equity Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Technology Hardware & Equipment 0.3% |
| Cray, Inc. * | 10,178 | 301,574 |
| Stratasys Ltd. * | 10,431 | 265,991 |
| | | 567,565 |
| Transportation 1.3% |
| Kansas City Southern | 1,360 | 112,554 |
| Kirby Corp. * | 15,500 | 1,011,995 |
| Spirit Airlines, Inc. * | 46,502 | 1,726,154 |
| | | 2,850,703 |
| Security | Number
of Shares | Value
($) |
| Utilities 0.2% |
| MDU Resources Group, Inc. | 23,310 | 439,627 |
| Total Short Sales |
| (Proceeds $84,992,534) | | 78,729,912 |
End of Short Sale Positions.
| * | Non-income producing security |
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
Assets Valuation Input
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Common Stock1 | | $208,478,108 | | $— | | $— | | $208,478,108 | |
| Other Investment Company1 | | 2,871,884 | | — | | — | | 2,871,884 | |
| Total | | $211,349,992 | | $— | | $— | | $211,349,992 | |
| Other Financial Instruments | | | | | | | | | |
| Futures Contracts2 | | $158,162 | | $— | | $— | | $158,162 | |
Liabilities Valuation Input
| | | | | | | | | |
| | | | | | | | | |
| Other Financial Instruments | | | | | | | | | |
| Short Sales1 | | ($78,729,912) | | $— | | $— | | ($78,729,912) | |
| 1 | As categorized in Portfolio Holdings. |
| 2 | Futures contracts are not included in Investments in the schedule of portfolio holdings and are valued at unrealized appreciation or depreciation. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Schwab Hedged Equity Fund
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments, at value (cost $200,280,420) | | $211,349,992 |
| Deposits with brokers for short sales and futures contracts | | 79,103,262 |
| Receivables: | | |
| Investments sold | | 2,273,985 |
| Fund shares sold | | 373,686 |
| Dividends | | 95,594 |
| Prepaid expenses | + | 17,649 |
| Total assets | | 293,214,168 |
| Liabilities |
| Securities sold short, at value (proceeds $84,992,534) | | 78,729,912 |
| Payables: | | |
| Investments bought | | 2,580,711 |
| Investment adviser and administrator fees | | 36,917 |
| Shareholder service fees | | 7,595 |
| Fund shares redeemed | | 262,855 |
| Dividends on short sales | | 12,103 |
| Variation margin on futures contracts | | 9,300 |
| Accrued expenses | + | 44,692 |
| Total liabilities | | 81,684,085 |
| Net Assets |
| Total assets | | 293,214,168 |
| Total liabilities | – | 81,684,085 |
| Net assets | | $211,530,083 |
| Net Assets by Source | | |
| Capital received from investors | | 175,080,262 |
| Net realized capital gains | | 18,959,465 |
| Net unrealized capital appreciation | | 17,490,356 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $211,530,083 | | 12,117,864 | | $17.46 |
| | | | | |
Schwab Hedged Equity Fund
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends | | $3,610,485 |
| Interest | + | 10 |
| Total investment income | | 3,610,495 |
| Expenses |
| Investment adviser and administrator fees | | 2,156,319 |
| Shareholder service fees | | 456,427 |
| Dividends on short sales | | 572,727 |
| Stock loan fees on short sales | | 421,045 |
| Transfer agent fees | | 46,394 |
| Professional fees | | 37,598 |
| Portfolio accounting fees | | 35,541 |
| Custodian fees | | 13,237 |
| Registration fees | | 13,093 |
| Shareholder reports | | 10,804 |
| Independent trustees' fees | | 7,811 |
| Proxy fees | | 2,067 |
| Interest expense | | 754 |
| Other expenses | + | 10,356 |
| Total expenses | | 3,784,173 |
| Expense reduction by CSIM and its affiliates | – | 56,280 |
| Net expenses | – | 3,727,893 |
| Net investment loss | | (117,398) |
| Realized and Unrealized Gains (Losses) |
| Net realized gains on investments | | 20,557,705 |
| Net realized gains on futures contracts | | 46,016 |
| Net realized losses on short sales | + | (234,397) |
| Net realized gains | | 20,369,324 |
| Net change in unrealized appreciation (depreciation) on investments | | (18,974,868) |
| Net change in unrealized appreciation (depreciation) on futures contracts | | 158,162 |
| Net change in unrealized appreciation (depreciation) on short sales | + | 8,273,071 |
| Net change in unrealized appreciation (depreciation) | + | (10,543,635) |
| Net realized and unrealized gains | | 9,825,689 |
| Increase in net assets resulting from operations | | $9,708,291 |
Schwab Hedged Equity Fund
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment loss | | ($117,398) | ($866,306) |
| Net realized gains | | 20,369,324 | 25,464,367 |
| Net change in unrealized appreciation (depreciation) | + | (10,543,635) | (4,709,147) |
| Increase in net assets from operations | | 9,708,291 | 19,888,914 |
| Distributions to Shareholders | |
| Distributions from net realized gains | | ($25,864,727) | ($15,225,593) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 4,578,084 | $79,572,795 | 2,013,414 | $36,941,019 |
| Shares reinvested | | 1,327,636 | 22,755,673 | 781,617 | 13,490,717 |
| Shares redeemed | + | (4,308,474) | (74,705,072) | (2,622,388) | (47,702,546) |
| Net transactions in fund shares | | 1,597,246 | $27,623,396 | 172,643 | $2,729,190 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 10,520,618 | $200,063,123 | 10,347,975 | $192,670,612 |
| Total increase | + | 1,597,246 | 11,466,960 | 172,643 | 7,392,511 |
| End of period | | 12,117,864 | $211,530,083 | 10,520,618 | $200,063,123 |
| Net investment loss | | | $— | | ($2,468,247) |
Schwab Financial Services Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $15.82 | $13.76 | $10.66 | $9.17 | $9.74 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.20 1 | 0.11 | 0.11 | 0.08 | 0.05 | |
| Net realized and unrealized gains (losses) | 0.23 | 2.07 | 3.08 | 1.46 | (0.58) | |
| Total from investment operations | 0.43 | 2.18 | 3.19 | 1.54 | (0.53) | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.13) | (0.12) | (0.09) | (0.05) | (0.04) | |
| Net asset value at end of period | $16.12 | $15.82 | $13.76 | $10.66 | $9.17 | |
| Total return | 2.70% | 15.92% | 30.20% | 16.92% | (5.51%) | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 0.90% | 0.90% | 0.94% | 0.94% | 0.93% 2 | |
| Gross operating expenses | 0.94% | 0.95% | 1.03% | 1.10% | 1.06% | |
| Net investment income (loss) | 1.23% | 0.76% | 0.91% | 0.78% | 0.45% | |
| Portfolio turnover rate | 53% | 75% | 74% | 84% | 77% | |
| Net assets, end of period (x 1,000,000) | $75 | $78 | $66 | $47 | $40 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
The ratio of net operating expenses would have been 0.94%, if payment for state filing fees had not been included.
Schwab Financial Services Fund
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 98.8% | Common Stock | 62,535,905 | 73,792,857 |
| 1.0% | Short-Term Investment | 753,779 | 753,779 |
| 99.8% | Total Investments | 63,289,684 | 74,546,636 |
| 0.2% | Other Assets and Liabilities, Net | | 164,472 |
| 100.0% | Net Assets | | 74,711,108 |
| Security | Number
of Shares | Value
($) |
| Common Stock 98.8% of net assets |
| Banks 34.8% |
| 1st Source Corp. | 3,683 | 116,972 |
| Banc of California, Inc. | 61,839 | 806,381 |
| Bank of America Corp. | 235,905 | 3,958,486 |
| Citigroup, Inc. | 72,008 | 3,828,665 |
| Citizens Financial Group, Inc. | 15,008 | 364,694 |
| Federal Agricultural Mortgage Corp., Class C | 6,910 | 202,878 |
| Fifth Third Bancorp | 55,299 | 1,053,446 |
| First Bancorp (North Carolina) | 6,208 | 115,034 |
| First Defiance Financial Corp. | 3,308 | 126,696 |
| Horizon Bancorp | 13,984 | 364,982 |
| Huntington Bancshares, Inc. | 69,000 | 756,930 |
| JPMorgan Chase & Co. | 66,860 | 4,295,755 |
| KeyCorp | 29,818 | 370,340 |
| Lakeland Bancorp, Inc. | 5,457 | 63,465 |
| MGIC Investment Corp. * | 72,174 | 678,436 |
| Radian Group, Inc. | 77,148 | 1,116,332 |
| Regions Financial Corp. | 82,500 | 771,375 |
| SunTrust Banks, Inc. | 23,954 | 994,570 |
| The PNC Financial Services Group, Inc. | 18,379 | 1,658,888 |
| Wells Fargo & Co. | 80,399 | 4,352,802 |
| | | 25,997,127 |
| Diversified Financials 27.0% |
| Affiliated Managers Group, Inc. * | 5,140 | 926,536 |
| Ally Financial, Inc. * | 66,618 | 1,327,031 |
| Ameriprise Financial, Inc. | 12,966 | 1,495,758 |
| Berkshire Hathaway, Inc., Class B * | 30,398 | 4,134,736 |
| Calamos Asset Management, Inc., Class A | 33,022 | 310,077 |
| Capital One Financial Corp. | 17,678 | 1,394,794 |
| Cash America International, Inc. | 2,233 | 77,105 |
| Discover Financial Services | 28,198 | 1,585,291 |
| Security | Number
of Shares | Value
($) |
| Evercore Partners, Inc., Class A | 8,690 | 469,260 |
| Interactive Brokers Group, Inc., Class A | 12,338 | 507,585 |
| Janus Capital Group, Inc. | 41,773 | 648,735 |
| Lazard Ltd., Class A | 21,783 | 1,008,989 |
| MarketAxess Holdings, Inc. | 443 | 44,880 |
| Morgan Stanley | 49,500 | 1,632,015 |
| Nasdaq, Inc. | 1,507 | 87,240 |
| Navient Corp. | 14,501 | 191,268 |
| Nelnet, Inc., Class A | 14,868 | 531,977 |
| Santander Consumer USA Holdings, Inc. * | 24,472 | 440,741 |
| SEI Investments Co. | 5,250 | 272,055 |
| The Goldman Sachs Group, Inc. | 8,410 | 1,576,875 |
| Voya Financial, Inc. | 36,147 | 1,466,484 |
| | | 20,129,432 |
| Insurance 14.8% |
| American Equity Investment Life Holding Co. | 38,081 | 977,920 |
| American Financial Group, Inc. | 10,110 | 729,841 |
| American International Group, Inc. | 7,943 | 500,886 |
| Assured Guaranty Ltd. | 46,050 | 1,263,612 |
| Heritage Insurance Holdings, Inc. * | 6,055 | 133,937 |
| Lincoln National Corp. | 5,309 | 284,085 |
| Maiden Holdings Ltd. | 77,675 | 1,207,846 |
| MetLife, Inc. | 55,976 | 2,820,071 |
| Reinsurance Group of America, Inc. | 20,492 | 1,849,198 |
| Selective Insurance Group, Inc. | 19,696 | 718,707 |
| The Travelers Cos., Inc. | 5,168 | 583,415 |
| | | 11,069,518 |
| Real Estate 22.2% |
| AvalonBay Communities, Inc. | 2,301 | 402,284 |
| Brixmor Property Group, Inc. | 39,211 | 1,004,586 |
| CBRE Group, Inc., Class A * | 26,778 | 998,284 |
| CoreSite Realty Corp. | 20,656 | 1,135,047 |
| CyrusOne, Inc. | 5,988 | 211,257 |
| Duke Realty Corp. | 26,593 | 550,475 |
| Empire State Realty Trust, Inc., Class A | 45,508 | 810,953 |
| Equity LifeStyle Properties, Inc. | 27,928 | 1,689,085 |
| Equity Residential | 9,112 | 704,540 |
| First Industrial Realty Trust, Inc. | 62,791 | 1,361,309 |
| General Growth Properties, Inc. | 7,889 | 228,386 |
| Highwoods Properties, Inc. | 2,234 | 97,067 |
| Lamar Advertising Co., Class A | 16,211 | 914,787 |
| Liberty Property Trust | 6,378 | 216,980 |
| Marcus & Millichap, Inc. * | 1,992 | 86,791 |
| RE/MAX Holdings, Inc., Class A | 6,139 | 231,256 |
| Saul Centers, Inc. | 5,907 | 331,205 |
| Simon Property Group, Inc. | 15,348 | 3,092,008 |
| SL Green Realty Corp. | 7,424 | 880,635 |
| Summit Hotel Properties, Inc. | 84,736 | 1,108,347 |
| Ventas, Inc. | 10,080 | 541,498 |
| | | 16,596,780 |
| Total Common Stock |
| (Cost $62,535,905) | | 73,792,857 |
Schwab Financial Services Fund
Portfolio Holdings continued
Security
Rate, Maturity Date | Face
Amount
($) | Value
($) |
| Short-Term Investment 1.0% of net assets |
| Time Deposit 1.0% |
| Sumitomo Mitsui Banking Corp. |
| 0.03%, 11/02/15 | 753,779 | 753,779 |
| Total Short-Term Investment |
| (Cost $753,779) | | 753,779 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $63,246,222 and the unrealized appreciation and depreciation were $12,705,977 and ($1,405,563), respectively, with a net unrealized appreciation of $11,300,414.
| * | Non-income producing security. |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| S&P 500 Index, e-mini, Long, expires 12/18/15 | 5 | 518,425 | 30,880 |
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Common Stock1 | | $73,792,857 | | $— | | $— | | $73,792,857 | |
| Short-Term Investment1 | | — | | 753,779 | | — | | 753,779 | |
| Total | | $73,792,857 | | $753,779 | | $— | | $74,546,636 | |
| Other Financial Instruments | | | | | | | | | |
| Futures Contracts2 | | $30,880 | | $— | | $— | | $30,880 | |
| 1 | As categorized in Portfolio Holdings. |
| 2 | Futures contracts are not included in Investments in the schedule of portfolio holdings and are valued at unrealized appreciation or depreciation. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Schwab Financial Services Fund
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments, at value (cost $63,289,684) | | $74,546,636 |
| Deposit with broker for futures contracts | | 55,200 |
| Receivables: | | |
| Fund shares sold | | 94,090 |
| Dividends | | 67,854 |
| Receivable from investment adviser | | 133 |
| Prepaid expenses | + | 5,007 |
| Total assets | | 74,768,920 |
| Liabilities |
| Payables: | | |
| Investment adviser and administrator fees | | 6,685 |
| Shareholder service fees | | 4,914 |
| Fund shares redeemed | | 10,716 |
| Variation margin on futures contracts | | 2,325 |
| Accrued expenses | + | 33,172 |
| Total liabilities | | 57,812 |
| Net Assets |
| Total assets | | 74,768,920 |
| Total liabilities | – | 57,812 |
| Net assets | | $74,711,108 |
| Net Assets by Source | | |
| Capital received from investors | | 80,737,559 |
| Net investment income not yet distributed | | 584,314 |
| Net realized capital losses | | (17,898,597) |
| Net unrealized capital appreciation | | 11,287,832 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $74,711,108 | | 4,634,155 | | $16.12 |
| | | | | |
Schwab Financial Services Fund
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends (net of foreign withholding tax of $1,841) | | $1,626,024 |
| Interest | | 227 |
| Securities on loan | + | 36,422 |
| Total investment income | | 1,662,673 |
| Expenses |
| Investment adviser and administrator fees | | 421,874 |
| Shareholder service fees | | 187,247 |
| Transfer agent fees | | 30,690 |
| Professional fees | | 28,942 |
| Registration fees | | 22,734 |
| Shareholder reports | | 12,016 |
| Portfolio accounting fees | | 8,963 |
| Independent trustees' fees | | 7,206 |
| Custodian fees | | 5,315 |
| Proxy fees | | 1,832 |
| Interest expense | | 363 |
| Other expenses | + | 3,296 |
| Total expenses | | 730,478 |
| Expense reduction by CSIM and its affiliates | – | 30,690 |
| Net expenses | – | 699,788 |
| Net investment income | | 962,885 |
| Realized and Unrealized Gains (Losses) |
| Net realized gains on investments | | 5,188,545 |
| Net realized losses on futures contracts | + | (8,052) |
| Net realized gains | | 5,180,493 |
| Net change in unrealized appreciation (depreciation) on investments | | (3,914,637) |
| Net change in unrealized appreciation (depreciation) on futures contracts | + | 30,880 |
| Net change in unrealized appreciation (depreciation) | + | (3,883,757) |
| Net realized and unrealized gains | | 1,296,736 |
| Increase in net assets resulting from operations | | $2,259,621 |
Schwab Financial Services Fund
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $962,885 | $547,971 |
| Net realized gains | | 5,180,493 | 8,324,709 |
| Net change in unrealized appreciation (depreciation) | + | (3,883,757) | 1,496,790 |
| Increase in net assets from operations | | 2,259,621 | 10,369,470 |
| Distributions to Shareholders | |
| Distributions from net investment income | | ($634,213) | ($544,804) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 1,229,645 | $19,921,091 | 1,726,999 | $25,585,699 |
| Shares reinvested | | 31,821 | 515,508 | 33,720 | 471,741 |
| Shares redeemed | + | (1,546,950) | (25,169,207) | (1,631,931) | (23,993,680) |
| Net transactions in fund shares | | (285,484) | ($4,732,608) | 128,788 | $2,063,760 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 4,919,639 | $77,818,308 | 4,790,851 | $65,929,882 |
| Total increase or decrease | + | (285,484) | (3,107,200) | 128,788 | 11,888,426 |
| End of period | | 4,634,155 | $74,711,108 | 4,919,639 | $77,818,308 |
| Net investment income not yet distributed | | | $584,314 | | $305,727 |
Schwab Health Care Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $28.19 | $24.57 | $20.59 | $17.29 | $15.48 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.14 1 | 0.23 | 0.22 | 0.27 | 0.15 | |
| Net realized and unrealized gains (losses) | 1.78 | 5.84 | 6.26 | 3.18 | 1.85 | |
| Total from investment operations | 1.92 | 6.07 | 6.48 | 3.45 | 2.00 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.21) | (0.19) | (0.33) | (0.15) | (0.19) | |
| Distributions from net realized gains | (3.22) | (2.26) | (2.17) | — | — | |
| Total distributions | (3.43) | (2.45) | (2.50) | (0.15) | (0.19) | |
| Net asset value at end of period | $26.68 | $28.19 | $24.57 | $20.59 | $17.29 | |
| Total return | 7.26% | 27.06% | 35.46% | 20.10% | 13.00% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 0.79% | 0.80% | 0.82% | 0.82% | 0.81% 2 | |
| Gross operating expenses | 0.80% | 0.81% | 0.83% | 0.85% | 0.85% | |
| Net investment income (loss) | 0.52% | 0.93% | 1.06% | 1.44% | 0.85% | |
| Portfolio turnover rate | 75% | 57% | 54% | 60% | 24% | |
| Net assets, end of period (x 1,000,000) | $1,118 | $1,064 | $816 | $511 | $414 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
The ratio of net operating expenses would have been 0.82%, if payment for state filing fees and a voluntary reduction of Investment Adviser fees had not been included.
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 99.7% | Common Stock | 910,845,001 | 1,114,306,658 |
| 0.1% | Other Investment Company | 1,147,481 | 1,147,481 |
| 0.2% | Short-Term Investment | 2,961,603 | 2,961,603 |
| 100.0% | Total Investments | 914,954,085 | 1,118,415,742 |
| (0.0%) | Other Assets and Liabilities, Net | | (407,776) |
| 100.0% | Net Assets | | 1,118,007,966 |
| Security | Number
of Shares | Value
($) |
| Common Stock 99.7% of net assets |
| Australia 1.6% |
| Health Care Equipment & Services 1.6% |
| Cochlear Ltd. | 290,626 | 18,342,341 |
| Denmark 3.5% |
| Pharmaceuticals, Biotechnology & Life Sciences 3.5% |
| Novo Nordisk A/S, Class B | 743,352 | 39,474,572 |
| Finland 1.4% |
| Pharmaceuticals, Biotechnology & Life Sciences 1.4% |
| Orion Oyj, Class B | 427,719 | 15,277,038 |
| France 1.2% |
| Pharmaceuticals, Biotechnology & Life Sciences 1.2% |
| Ipsen S.A. | 42,729 | 2,694,826 |
| Sanofi | 110,341 | 11,130,739 |
| | | 13,825,565 |
| Hong Kong 1.5% |
| Pharmaceuticals, Biotechnology & Life Sciences 1.5% |
| Sino Biopharmaceutical Ltd. | 13,219,000 | 16,427,243 |
| Ireland 3.9% |
| Health Care Equipment & Services 0.9% |
| Medtronic plc | 134,100 | 9,912,672 |
| Security | Number
of Shares | Value
($) |
| Pharmaceuticals, Biotechnology & Life Sciences 3.0% |
| Allergan plc * | 76,461 | 23,585,925 |
| Jazz Pharmaceuticals plc * | 47,200 | 6,479,616 |
| Mallinckrodt plc * | 37,200 | 2,442,924 |
| Perrigo Co., plc | 8,180 | 1,290,313 |
| | | 33,798,778 |
| | | 43,711,450 |
| Israel 1.5% |
| Pharmaceuticals, Biotechnology & Life Sciences 1.5% |
| Teva Pharmaceutical Industries Ltd. | 277,941 | 16,502,196 |
| Italy 0.6% |
| Pharmaceuticals, Biotechnology & Life Sciences 0.6% |
| Recordati S.p.A. | 286,435 | 7,119,459 |
| Japan 2.5% |
| Health Care Equipment & Services 0.7% |
| Hoya Corp. | 184,800 | 7,626,098 |
| Pharmaceuticals, Biotechnology & Life Sciences 1.8% |
| Astellas Pharma, Inc. | 208,500 | 3,026,266 |
| Kaken Pharmaceutical Co., Ltd. | 40,000 | 2,764,592 |
| Kissei Pharmaceutical Co., Ltd. | 41,800 | 1,075,294 |
| Nichi-iko Pharmaceutical Co., Ltd. | 245,400 | 6,810,909 |
| Shionogi & Co., Ltd. | 166,200 | 6,816,941 |
| | | 20,494,002 |
| | | 28,120,100 |
| New Zealand 0.4% |
| Health Care Equipment & Services 0.4% |
| Fisher & Paykel Healthcare Corp., Ltd. | 743,661 | 3,913,202 |
| Republic of Korea 0.3% |
| Health Care Equipment & Services 0.3% |
| Osstem Implant Co., Ltd. * | 48,599 | 2,837,867 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% |
| Korea United Pharm, Inc. | 27,667 | 451,946 |
| | | 3,289,813 |
| South Africa 0.3% |
| Health Care Equipment & Services 0.3% |
| Netcare Ltd. | 1,166,240 | 3,316,433 |
| Spain 0.1% |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| Almirall S.A. | 34,242 | 659,101 |
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Switzerland 6.1% |
| Pharmaceuticals, Biotechnology & Life Sciences 6.1% |
| Actelion Ltd. - Reg'd * | 117,408 | 16,297,886 |
| Lonza Group AG - Reg'd * | 191,918 | 28,169,671 |
| Novartis AG - Reg'd | 43,088 | 3,903,284 |
| Roche Holding AG | 72,077 | 19,568,824 |
| | | 67,939,665 |
| Taiwan 0.2% |
| Pharmaceuticals, Biotechnology & Life Sciences 0.2% |
| TTY Biopharm Co., Ltd. | 578,000 | 1,637,512 |
| United Kingdom 2.8% |
| Pharmaceuticals, Biotechnology & Life Sciences 2.8% |
| Abcam plc | 115,822 | 1,071,581 |
| Shire plc | 402,747 | 30,500,369 |
| | | 31,571,950 |
| United States 71.8% |
| Health Care Equipment & Services 21.6% |
| Abbott Laboratories | 599,500 | 26,857,600 |
| Alere, Inc. * | 111,029 | 5,120,658 |
| Alliance HealthCare Services, Inc. * | 17,700 | 149,742 |
| Amedisys, Inc. * | 28,485 | 1,127,436 |
| AmerisourceBergen Corp. | 292,246 | 28,204,661 |
| AngioDynamics, Inc. * | 36,300 | 456,654 |
| Anika Therapeutics, Inc. * | 81,100 | 3,123,972 |
| C.R. Bard, Inc. | 125,300 | 23,349,655 |
| Cardinal Health, Inc. | 49,419 | 4,062,242 |
| Centene Corp. * | 44,200 | 2,629,016 |
| Community Health Systems, Inc. * | 183,425 | 5,143,237 |
| DENTSPLY International, Inc. | 43,178 | 2,627,381 |
| Express Scripts Holding Co. * | 349,360 | 30,177,717 |
| HCA Holdings, Inc. * | 71,700 | 4,932,243 |
| Hill-Rom Holdings, Inc. | 121,900 | 6,422,911 |
| Hologic, Inc. * | 651,367 | 25,312,122 |
| Humana, Inc. | 28,199 | 5,037,187 |
| LifePoint Health, Inc. * | 108,800 | 7,494,144 |
| McKesson Corp. | 82,900 | 14,822,520 |
| Meridian Bioscience, Inc. | 215,000 | 4,087,150 |
| Merit Medical Systems, Inc. * | 48,230 | 894,184 |
| Molina Healthcare, Inc. * | 356,729 | 22,117,198 |
| Quality Systems, Inc. | 186,200 | 2,616,110 |
| RadNet, Inc. * | 112,700 | 744,947 |
| St. Jude Medical, Inc. | 84,300 | 5,379,183 |
| The Providence Service Corp. * | 17,500 | 903,875 |
| UnitedHealth Group, Inc. | 68,400 | 8,056,152 |
| | | 241,849,897 |
| Pharmaceuticals, Biotechnology & Life Sciences 50.2% |
| AbbVie, Inc. | 496,939 | 29,592,718 |
| Acorda Therapeutics, Inc. * | 224,900 | 8,105,396 |
| Affymetrix, Inc. * | 821,255 | 7,555,546 |
| Agilent Technologies, Inc. | 263,300 | 9,942,208 |
| AMAG Pharmaceuticals, Inc. * | 192,300 | 7,692,000 |
| Amgen, Inc. | 438,300 | 69,330,294 |
| Security | Number
of Shares | Value
($) |
| Biogen, Inc. * | 76,790 | 22,308,263 |
| Bristol-Myers Squibb Co. | 46,134 | 3,042,537 |
| Catalent, Inc. * | 148,200 | 3,939,156 |
| Celgene Corp. * | 453,106 | 55,600,637 |
| Charles River Laboratories International, Inc. * | 460,334 | 30,032,190 |
| Eli Lilly & Co. | 311,562 | 25,414,112 |
| Emergent Biosolutions, Inc. * | 203,000 | 6,526,450 |
| Gilead Sciences, Inc. | 751,913 | 81,304,353 |
| Incyte Corp. * | 96,106 | 11,295,338 |
| Infinity Pharmaceuticals, Inc. * | 96,854 | 1,002,439 |
| Johnson & Johnson | 636,400 | 64,295,492 |
| Ligand Pharmaceuticals, Inc. * | 15,829 | 1,430,150 |
| Luminex Corp. * | 76,700 | 1,395,940 |
| Merck & Co., Inc. | 543,218 | 29,692,296 |
| MiMedx Group, Inc. *(a) | 192,655 | 1,402,528 |
| PDL BioPharma, Inc. | 444,700 | 2,036,726 |
| Pernix Therapeutics Holdings, Inc. *(a) | 508,212 | 1,428,076 |
| Pfizer, Inc. | 1,703,500 | 57,612,370 |
| Phibro Animal Health Corp., Class A | 79,500 | 2,652,120 |
| Prestige Brands Holdings, Inc. * | 206,401 | 10,115,713 |
| SciClone Pharmaceuticals, Inc. * | 101,400 | 772,668 |
| Sucampo Pharmaceuticals, Inc., Class A * | 94,804 | 1,835,406 |
| Supernus Pharmaceuticals, Inc. * | 91,600 | 1,511,400 |
| Zoetis, Inc. | 289,807 | 12,464,599 |
| | | 561,329,121 |
| | | 803,179,018 |
| Total Common Stock |
| (Cost $910,845,001) | | 1,114,306,658 |
|
| Other Investment Company 0.1% of net assets |
| United States 0.1% |
| Securities Lending Collateral 0.1% |
| Wells Fargo Advantage Government Money Market Fund, Institutional Class 0.01% (b) | 1,147,481 | 1,147,481 |
| Total Other Investment Company |
| (Cost $1,147,481) | | 1,147,481 |
Portfolio Holdings continued
Security
Rate, Maturity Date | Face Amount
Local Currency | Value
($) |
| Short-Term Investment 0.2% of net assets |
| Time Deposit 0.2% |
| JPMorgan Chase Bank |
| U.S. Dollar | | |
| 0.03%, 11/02/15 | 2,961,603 | 2,961,603 |
| Total Short-Term Investment |
| (Cost $2,961,603) | | 2,961,603 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $915,743,830 and the unrealized appreciation and depreciation were $237,777,964 and ($35,106,052), respectively, with a net unrealized appreciation of $202,671,912.
At 10/31/15, the values of certain foreign securities held by the fund aggregating $267,416,190 were adjusted from their closing market values in accordance with international fair valuation procedures approved by the fund's Board of Trustees. (See financial note 2(a) for additional information)
| * | Non-income producing security. |
| (a) | All or a portion of this security is on loan. Securities on loan were valued at $1,112,249. |
| (b) | The rate shown is the 7-day yield. |
| | |
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Common Stock1 | | $846,890,468 | | $— | | $— | | $846,890,468 | |
| Australia 1 | | — | | 18,342,341 | | — | | 18,342,341 | |
| Denmark 1 | | — | | 39,474,572 | | — | | 39,474,572 | |
| Finland 1 | | — | | 15,277,038 | | — | | 15,277,038 | |
| France 1 | | — | | 13,825,565 | | — | | 13,825,565 | |
| Hong Kong1 | | — | | 16,427,243 | | — | | 16,427,243 | |
| Israel 1 | | — | | 16,502,196 | | — | | 16,502,196 | |
| Italy 1 | | — | | 7,119,459 | | — | | 7,119,459 | |
| Japan 1 | | — | | 28,120,100 | | — | | 28,120,100 | |
| New Zealand1 | | — | | 3,913,202 | | — | | 3,913,202 | |
| Republic of Korea1 | | — | | 3,289,813 | | — | | 3,289,813 | |
| South Africa1 | | — | | 3,316,433 | | — | | 3,316,433 | |
| Spain 1 | | — | | 659,101 | | — | | 659,101 | |
| Switzerland 1 | | — | | 67,939,665 | | — | | 67,939,665 | |
| Taiwan 1 | | — | | 1,637,512 | | — | | 1,637,512 | |
| United Kingdom1 | | — | | 31,571,950 | | — | | 31,571,950 | |
| Other Investment Company1 | | 1,147,481 | | — | | — | | 1,147,481 | |
| Short-Term Investment1 | | — | | 2,961,603 | | — | | 2,961,603 | |
| Total | | $848,037,949 | | $270,377,793 | | $— | | $1,118,415,742 | |
| 1 | As categorized in Portfolio Holdings. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments, at value (cost $913,806,604) including securities on loan of $1,112,249 | | $1,117,268,261 |
| Collateral invested for securities on loan, at value (cost $1,147,481) | + | 1,147,481 |
| Total investments, at value (cost $914,954,085) | | 1,118,415,742 |
| Deposit with broker for futures contracts | | 671,600 |
| Receivables: | | |
| Foreign tax reclaims | | 827,235 |
| Dividends | | 619,343 |
| Fund shares sold | | 411,133 |
| Income from securities on loan | | 376 |
| Prepaid expenses | + | 16,230 |
| Total assets | | 1,120,961,659 |
| Liabilities |
| Collateral held for securities on loan | | 1,147,481 |
| Payables: | | |
| Investment adviser and administrator fees | | 96,167 |
| Shareholder service fees | | 63,509 |
| Fund shares redeemed | | 1,537,287 |
| Due to custodian | | 66 |
| Accrued expenses | + | 109,183 |
| Total liabilities | | 2,953,693 |
| Net Assets |
| Total assets | | 1,120,961,659 |
| Total liabilities | – | 2,953,693 |
| Net assets | | $1,118,007,966 |
| Net Assets by Source | | |
| Capital received from investors | | 760,098,531 |
| Net investment income not yet distributed | | 5,464,139 |
| Net realized capital gains | | 149,044,372 |
| Net unrealized capital appreciation | | 203,400,924 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $1,118,007,966 | | 41,899,058 | | $26.68 |
| | | | | |
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends (net of foreign withholding tax of $580,190) | | $14,969,842 |
| Interest | | 2,985 |
| Securities on loan | + | 89,391 |
| Total investment income | | 15,062,218 |
| Expenses |
| Investment adviser and administrator fees | | 6,024,124 |
| Shareholder service fees | | 2,709,866 |
| Custodian fees | | 111,877 |
| Transfer agent fees | | 80,096 |
| Portfolio accounting fees | | 68,597 |
| Shareholder reports | | 54,279 |
| Registration fees | | 48,809 |
| Professional fees | | 33,463 |
| Proxy fees | | 12,546 |
| Independent trustees' fees | | 12,308 |
| Interest expense | | 3,871 |
| Other expenses | + | 40,764 |
| Total expenses | | 9,200,600 |
| Expense reduction by CSIM and its affiliates | – | 80,096 |
| Net expenses | – | 9,120,504 |
| Net investment income | | 5,941,714 |
| Realized and Unrealized Gains (Losses) |
| Net realized gains on investments | | 149,745,410 |
| Net realized gains on futures contracts | | 43,974 |
| Net realized losses on foreign currency transactions | + | (53,813) |
| Net realized gains | | 149,735,571 |
| Net change in unrealized appreciation (depreciation) on investments | | (79,006,868) |
| Net change in unrealized appreciation (depreciation) on futures contracts | | (358,386) |
| Net change in unrealized appreciation (depreciation) on foreign currency translations | + | 3,694 |
| Net change in unrealized appreciation (depreciation) | + | (79,361,560) |
| Net realized and unrealized gains | | 70,374,011 |
| Increase in net assets resulting from operations | | $76,315,725 |
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $5,941,714 | $8,554,649 |
| Net realized gains | | 149,735,571 | 122,400,978 |
| Net change in unrealized appreciation (depreciation) | + | (79,361,560) | 91,379,380 |
| Increase in net assets from operations | | 76,315,725 | 222,335,007 |
| Distributions to Shareholders | |
| Distributions from net investment income | | (8,134,921) | (6,270,757) |
| Distributions from net realized gains | + | (122,526,297) | (76,135,752) |
| Total distributions | | ($130,661,218) | ($82,406,509) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 7,812,599 | $212,724,582 | 8,951,426 | $224,018,159 |
| Shares reinvested | | 4,588,745 | 118,160,176 | 3,264,515 | 74,267,727 |
| Shares redeemed | + | (8,253,014) | (222,654,576) | (7,695,559) | (190,483,862) |
| Net transactions in fund shares | | 4,148,330 | $108,230,182 | 4,520,382 | $107,802,024 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 37,750,728 | $1,064,123,277 | 33,230,346 | $816,392,755 |
| Total increase | + | 4,148,330 | 53,884,689 | 4,520,382 | 247,730,522 |
| End of period | | 41,899,058 | $1,118,007,966 | 37,750,728 | $1,064,123,277 |
| Net investment income not yet distributed | | | $5,464,139 | | $7,711,159 |
Schwab International Core Equity Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $9.77 | $9.82 | $7.90 | $7.32 | $7.80 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.19 1 | 0.29 1 | 0.20 | 0.16 | 0.17 | |
| Net realized and unrealized gains (losses) | (0.01) | (0.08) | 1.93 | 0.62 | (0.46) | |
| Total from investment operations | 0.18 | 0.21 | 2.13 | 0.78 | (0.29) | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.15) | (0.26) | (0.21) | (0.20) | (0.19) | |
| Distributions from net realized gains | (0.18) | — | — | — | — | |
| Total distributions | (0.33) | (0.26) | (0.21) | (0.20) | (0.19) | |
| Net asset value at end of period | $9.62 | $9.77 | $9.82 | $7.90 | $7.32 | |
| Total return | 2.05% | 2.20% | 27.70% | 11.17% | (3.89%) | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 0.86% | 0.86% | 0.86% | 0.86% | 0.80% 2 | |
| Gross operating expenses | 0.92% | 0.98% | 1.10% | 1.16% | 1.22% | |
| Net investment income (loss) | 2.02% | 2.95% | 2.40% | 2.45% | 2.32% | |
| Portfolio turnover rate | 87% | 90% | 75% | 112% | 86% | |
| Net assets, end of period (x 1,000,000) | $679 | $423 | $147 | $78 | $60 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
The ratio of net operating expenses would have been 0.86%, if a voluntary reduction of Investment Adviser fees had not been included.
Schwab International Core Equity Fund
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 98.8% | Common Stock | 666,677,311 | 670,829,080 |
| 0.6% | Other Investment Company | 4,214,532 | 4,214,532 |
| 99.4% | Total Investments | 670,891,843 | 675,043,612 |
| 0.6% | Other Assets and Liabilities, Net | | 4,288,744 |
| 100.0% | Net Assets | | 679,332,356 |
| Security | Number
of Shares | Value
($) |
| Common Stock 98.8% of net assets |
| Australia 5.1% |
| Banks 2.0% |
| Australia & New Zealand Banking Group Ltd. | 692,021 | 13,383,887 |
| Commercial & Professional Supplies 0.2% |
| Downer EDI Ltd. | 501,938 | 1,261,323 |
| Diversified Financials 0.9% |
| ASX Ltd. | 21,443 | 626,860 |
| Macquarie Group Ltd. | 22,628 | 1,370,099 |
| Platinum Asset Management Ltd. | 808,660 | 4,239,798 |
| | | 6,236,757 |
| Energy 1.2% |
| Woodside Petroleum Ltd. | 382,914 | 8,030,838 |
| Health Care Equipment & Services 0.1% |
| Cochlear Ltd. | 10,626 | 670,641 |
| Materials 0.4% |
| Evolution Mining Ltd. | 1,042,527 | 1,038,474 |
| Northern Star Resources Ltd. | 490,610 | 957,316 |
| OZ Minerals Ltd. | 264,497 | 811,684 |
| Sandfire Resources NL | 74,803 | 334,314 |
| | | 3,141,788 |
| Retailing 0.3% |
| JB Hi-Fi Ltd. | 150,654 | 1,916,868 |
| | | 34,642,102 |
| Austria 0.3% |
| Capital Goods 0.3% |
| ANDRITZ AG | 43,944 | 2,207,843 |
| Security | Number
of Shares | Value
($) |
| Belgium 2.1% |
| Banks 1.0% |
| KBC Groep N.V. | 107,695 | 6,548,034 |
| Transportation 1.1% |
| bpost S.A. | 311,723 | 7,801,684 |
| | | 14,349,718 |
| Brazil 0.1% |
| Media 0.1% |
| Multiplus S.A. | 63,700 | 566,965 |
| Canada 0.8% |
| Automobiles & Components 0.7% |
| Magna International, Inc. | 85,826 | 4,526,278 |
| Materials 0.1% |
| Dominion Diamond Corp. | 92,800 | 981,511 |
| | | 5,507,789 |
| Denmark 3.3% |
| Banks 0.8% |
| Sydbank A/S | 167,009 | 5,493,562 |
| Capital Goods 0.7% |
| Vestas Wind Systems A/S | 81,855 | 4,772,491 |
| Pharmaceuticals, Biotechnology & Life Sciences 1.5% |
| Novo Nordisk A/S, Class B | 192,821 | 10,239,464 |
| Transportation 0.3% |
| AP Moeller - Maersk A/S, Series B | 1,219 | 1,799,025 |
| | | 22,304,542 |
| Finland 0.7% |
| Capital Goods 0.2% |
| Yit Oyj | 262,820 | 1,385,340 |
| Real Estate 0.1% |
| Sponda Oyj | 150,056 | 637,432 |
| Telecommunication Services 0.4% |
| Elisa Oyj | 71,583 | 2,696,980 |
| | | 4,719,752 |
| France 11.0% |
| Automobiles & Components 1.3% |
| Peugeot S.A. * | 502,339 | 8,825,839 |
| Banks 1.5% |
| Credit Agricole S.A. | 795,188 | 10,043,611 |
| Capital Goods 0.3% |
| Safran S.A. | 27,973 | 2,124,663 |
| Consumer Durables & Apparel 1.1% |
| Christian Dior SE | 38,420 | 7,551,146 |
| Energy 0.4% |
| Total S.A. | 53,956 | 2,609,248 |
| Health Care Equipment & Services 0.1% |
| Essilor International S.A. | 5,191 | 681,388 |
| Media 0.6% |
| Technicolor S.A. - Reg'd | 540,800 | 3,657,346 |
Schwab International Core Equity Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Pharmaceuticals, Biotechnology & Life Sciences 3.9% |
| Ipsen S.A. | 119,997 | 7,567,954 |
| Sanofi | 190,060 | 19,172,458 |
| | | 26,740,412 |
| Software & Services 0.9% |
| UBISOFT Entertainment * | 198,647 | 5,951,726 |
| Telecommunication Services 0.7% |
| Orange S.A. | 283,550 | 4,999,467 |
| Utilities 0.2% |
| Veolia Environnement S.A. | 54,762 | 1,272,134 |
| | | 74,456,980 |
| Germany 7.1% |
| Automobiles & Components 0.4% |
| Continental AG | 10,020 | 2,406,099 |
| Banks 0.1% |
| Aareal Bank AG | 17,612 | 670,984 |
| Capital Goods 0.4% |
| Duerr AG | 32,486 | 2,704,874 |
| Food & Staples Retailing 1.5% |
| METRO AG | 328,622 | 10,110,280 |
| Insurance 1.9% |
| Allianz SE - Reg'd | 74,033 | 12,960,789 |
| Materials 0.3% |
| Aurubis AG | 33,600 | 2,244,477 |
| Media 2.3% |
| CTS Eventim AG & Co. KGaA | 47,284 | 1,850,672 |
| ProSiebenSat.1 Media SE | 260,217 | 14,060,981 |
| | | 15,911,653 |
| Software & Services 0.2% |
| XING AG | 6,381 | 1,259,559 |
| | | 48,268,715 |
| Hong Kong 3.5% |
| Capital Goods 0.1% |
| EVA Precision Industrial Holdings Ltd. | 1,648,000 | 390,972 |
| Household & Personal Products 0.3% |
| Hengan International Group Co., Ltd. | 202,000 | 2,181,282 |
| Real Estate 2.3% |
| China Resources Land Ltd. | 576,000 | 1,496,786 |
| Hang Lung Group Ltd. | 251,000 | 910,075 |
| Hang Lung Properties Ltd. | 1,841,000 | 4,504,597 |
| Kerry Properties Ltd. | 197,000 | 583,149 |
| New World Development Co., Ltd. | 7,774,000 | 8,291,796 |
| | | 15,786,403 |
| Software & Services 0.8% |
| Tencent Holdings Ltd. | 280,148 | 5,280,614 |
| | | 23,639,271 |
| Ireland 0.4% |
| Consumer Services 0.3% |
| Paddy Power plc | 19,856 | 2,297,562 |
| Materials 0.1% |
| Smurfit Kappa Group plc | 21,868 | 622,342 |
| | | 2,919,904 |
| Security | Number
of Shares | Value
($) |
| Italy 1.7% |
| Automobiles & Components 0.3% |
| Brembo S.p.A. | 40,873 | 1,801,520 |
| Banks 1.0% |
| Banca Popolare Di Milano Scarl | 4,180,167 | 3,922,314 |
| Intesa Sanpaolo S.p.A. | 806,127 | 2,804,560 |
| | | 6,726,874 |
| Capital Goods 0.1% |
| Biesse S.p.A. | 21,675 | 354,954 |
| Maire Tecnimont S.p.A. * | 141,317 | 406,831 |
| | | 761,785 |
| Diversified Financials 0.2% |
| Banca IFIS S.p.A. | 60,898 | 1,502,132 |
| Energy 0.1% |
| Saras S.p.A. * | 294,205 | 580,488 |
| | | 11,372,799 |
| Japan 21.2% |
| Automobiles & Components 2.1% |
| Calsonic Kansei Corp. | 303,000 | 2,414,812 |
| Fuji Heavy Industries Ltd. | 235,590 | 9,111,115 |
| NHK Spring Co., Ltd. | 190,000 | 1,933,802 |
| Tokai Rika Co., Ltd. | 44,000 | 951,399 |
| | | 14,411,128 |
| Banks 3.7% |
| Fukuoka Financial Group, Inc. | 337,000 | 1,773,344 |
| Mitsubishi UFJ Financial Group, Inc. | 1,193,700 | 7,720,291 |
| Resona Holdings, Inc. | 2,150,300 | 11,377,932 |
| Sumitomo Mitsui Financial Group, Inc. | 111,400 | 4,444,152 |
| | | 25,315,719 |
| Capital Goods 2.1% |
| Hazama Ando Corp. | 838,400 | 4,943,163 |
| ITOCHU Corp. | 55,300 | 691,968 |
| Minebea Co., Ltd. | 42,000 | 462,579 |
| Mitsubishi Electric Corp. | 167,000 | 1,739,261 |
| OKUMA Corp. | 310,000 | 2,485,705 |
| Tadano Ltd. | 311,000 | 3,715,032 |
| | | 14,037,708 |
| Commercial & Professional Supplies 0.6% |
| Meitec Corp. | 39,000 | 1,416,389 |
| Nissha Printing Co., Ltd. | 123,900 | 2,694,404 |
| | | 4,110,793 |
| Consumer Durables & Apparel 0.5% |
| Fujitsu General Ltd. | 118,000 | 1,481,828 |
| Haseko Corp. | 126,000 | 1,281,065 |
| Iida Group Holdings Co., Ltd. | 39,000 | 730,971 |
| | | 3,493,864 |
| Consumer Services 0.4% |
| Kura Corp. | 83,200 | 2,514,399 |
| Energy 0.1% |
| Nippon Gas Co., Ltd. | 20,000 | 505,814 |
| Food, Beverage & Tobacco 0.2% |
| Japan Tobacco, Inc. | 21,300 | 737,231 |
| Morinaga & Co., Ltd. | 129,000 | 656,909 |
| | | 1,394,140 |
Schwab International Core Equity Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Health Care Equipment & Services 0.6% |
| Hoya Corp. | 85,400 | 3,524,182 |
| Sysmex Corp. | 11,300 | 645,894 |
| | | 4,170,076 |
| Insurance 0.1% |
| The Dai-ichi Life Insurance Co., Ltd. | 39,000 | 674,672 |
| Materials 1.1% |
| Denka Co., Ltd. | 301,100 | 1,397,259 |
| Sumitomo Chemical Co., Ltd. | 686,800 | 3,934,130 |
| Sumitomo Osaka Cement Co., Ltd. | 169,000 | 651,246 |
| Tokyo Steel Manufacturing Co., Ltd. | 215,900 | 1,440,737 |
| | | 7,423,372 |
| Media 0.1% |
| Daiichikosho Co., Ltd. | 12,900 | 430,241 |
| Pharmaceuticals, Biotechnology & Life Sciences 1.3% |
| Astellas Pharma, Inc. | 535,100 | 7,766,691 |
| Daiichi Sankyo Co., Ltd. | 51,200 | 1,005,519 |
| | | 8,772,210 |
| Real Estate 1.5% |
| Advance Residence Investment Corp. | 221 | 471,559 |
| Daiwa House Industry Co., Ltd. | 29,000 | 761,259 |
| Japan Logistics Fund, Inc. | 3,387 | 6,334,147 |
| Premier Investment Corp. | 2,890 | 2,835,185 |
| | | 10,402,150 |
| Retailing 1.1% |
| Geo Holdings Corp. | 99,092 | 1,482,791 |
| Nishimatsuya Chain Co., Ltd. | 177,900 | 1,570,781 |
| T-Gaia Corp. | 313,700 | 4,782,800 |
| | | 7,836,372 |
| Semiconductors & Semiconductor Equipment 0.2% |
| Nec Electronics Corp. * | 94,100 | 602,481 |
| Tokyo Seimitsu Co., Ltd. | 22,700 | 501,175 |
| | | 1,103,656 |
| Software & Services 1.1% |
| GMO Internet, Inc. | 197,400 | 2,795,798 |
| Mixi, Inc. | 126,700 | 4,838,264 |
| | | 7,634,062 |
| Technology Hardware & Equipment 0.6% |
| Alps Electric Co., Ltd. | 20,800 | 645,615 |
| Hitachi Kokusai Electric, Inc. | 57,000 | 786,998 |
| Japan Aviation Electronics Industry Ltd. | 18,000 | 318,853 |
| Murata Manufacturing Co., Ltd. | 6,100 | 868,344 |
| Yokogawa Electric Corp. | 109,300 | 1,220,912 |
| | | 3,840,722 |
| Telecommunication Services 0.5% |
| KDDI Corp. | 132,200 | 3,199,017 |
| Transportation 2.0% |
| Central Japan Railway Co. | 14,845 | 2,707,925 |
| Japan Airlines Co., Ltd. | 253,800 | 9,561,440 |
| Sankyu, Inc. | 124,000 | 698,522 |
| Senko Co., Ltd. | 88,000 | 609,120 |
| | | 13,577,007 |
| Security | Number
of Shares | Value
($) |
| Utilities 1.3% |
| Chubu Electric Power Co., Inc. | 158,300 | 2,435,128 |
| Tohoku Electric Power Co., Inc. | 477,300 | 6,701,499 |
| | | 9,136,627 |
| | | 143,983,749 |
| Luxembourg 0.2% |
| Materials 0.2% |
| APERAM S.A. * | 37,612 | 1,158,086 |
| Netherlands 4.0% |
| Diversified Financials 0.1% |
| Euronext N.V. | 14,052 | 617,120 |
| Food & Staples Retailing 1.4% |
| Koninklijke Ahold N.V. | 475,085 | 9,664,537 |
| Household & Personal Products 1.6% |
| Unilever N.V. CVA | 231,651 | 10,474,707 |
| Media 0.6% |
| RELX N.V. | 236,616 | 4,035,907 |
| Semiconductors & Semiconductor Equipment 0.1% |
| BE Semiconductor Industries N.V. | 40,929 | 883,459 |
| Telecommunication Services 0.2% |
| Koninklijke (Royal) KPN N.V. | 336,777 | 1,234,019 |
| | | 26,909,749 |
| New Zealand 0.1% |
| Transportation 0.1% |
| Air New Zealand Ltd. | 452,846 | 890,767 |
| Norway 0.9% |
| Banks 0.2% |
| SpareBank 1 SMN | 201,331 | 1,262,343 |
| Energy 0.6% |
| TGS Nopec Geophysical Co. A.S.A. | 196,813 | 3,902,380 |
| Telecommunication Services 0.1% |
| Telenor A.S.A. | 48,319 | 910,241 |
| | | 6,074,964 |
| Portugal 1.0% |
| Transportation 1.0% |
| CTT-Correios de Portugal S.A. | 620,825 | 7,051,711 |
| Republic of Korea 0.4% |
| Capital Goods 0.3% |
| Hyundai Development Co. | 24,171 | 970,746 |
| Hyundai Elevator Co., Ltd. * | 20,490 | 940,019 |
| | | 1,910,765 |
| Materials 0.1% |
| Lotte Chemical Corp. | 3,133 | 657,769 |
| | | 2,568,534 |
| Singapore 1.4% |
| Banks 0.7% |
| DBS Group Holdings Ltd. | 382,000 | 4,696,708 |
Schwab International Core Equity Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Food, Beverage & Tobacco 0.4% |
| Wilmar International Ltd. | 1,168,000 | 2,602,734 |
| Retailing 0.1% |
| Jardine Cycle & Carriage Ltd. | 29,000 | 671,431 |
| Transportation 0.2% |
| SATS Ltd. | 655,800 | 1,772,360 |
| | | 9,743,233 |
| South Africa 0.8% |
| Materials 0.8% |
| Mondi Ltd. | 246,128 | 5,718,876 |
| Spain 2.2% |
| Banks 0.4% |
| Banco Santander S.A. | 491,658 | 2,746,499 |
| Energy 0.3% |
| Tecnicas Reunidas S.A. | 34,618 | 1,541,778 |
| Materials 0.1% |
| Ence Energia y Celulosa S.A. | 175,285 | 612,678 |
| Media 0.5% |
| Mediaset Espana Comunicacion S.A. | 287,719 | 3,491,045 |
| Software & Services 0.1% |
| Amadeus IT Holding S.A., A Shares | 17,239 | 733,288 |
| Telecommunication Services 0.2% |
| Telefonica S.A. | 110,046 | 1,451,874 |
| Utilities 0.6% |
| Endesa S.A. | 191,034 | 4,247,676 |
| | | 14,824,838 |
| Sweden 2.0% |
| Banks 0.5% |
| Nordea Bank AB | 321,455 | 3,546,816 |
| Capital Goods 0.2% |
| Peab AB | 133,953 | 1,023,997 |
| Diversified Financials 0.4% |
| Industrivarden AB, A Shares | 121,687 | 2,374,472 |
| Food & Staples Retailing 0.4% |
| Axfood AB | 153,480 | 2,769,708 |
| Materials 0.0% |
| Boliden AB | 14,478 | 277,201 |
| Software & Services 0.5% |
| NetEnt AB * | 60,710 | 3,448,641 |
| | | 13,440,835 |
| Switzerland 9.0% |
| Capital Goods 0.6% |
| Schindler Holding AG | 23,386 | 3,794,218 |
| Diversified Financials 0.4% |
| Cembra Money Bank AG * | 46,521 | 2,773,596 |
| Food, Beverage & Tobacco 2.4% |
| Nestle S.A. - Reg'd | 212,097 | 16,198,682 |
| Insurance 2.1% |
| Swiss Life Holding AG - Reg'd * | 30,777 | 7,333,847 |
| Zurich Insurance Group AG * | 25,417 | 6,707,544 |
| | | 14,041,391 |
| Security | Number
of Shares | Value
($) |
| Materials 0.3% |
| Givaudan S.A. - Reg'd * | 1,131 | 2,022,455 |
| Pharmaceuticals, Biotechnology & Life Sciences 3.0% |
| Actelion Ltd. - Reg'd * | 29,212 | 4,055,038 |
| Lonza Group AG - Reg'd * | 20,542 | 3,015,149 |
| Novartis AG - Reg'd | 46,650 | 4,225,961 |
| Roche Holding AG | 34,696 | 9,419,924 |
| | | 20,716,072 |
| Telecommunication Services 0.2% |
| Swisscom AG - Reg'd | 3,108 | 1,601,287 |
| | | 61,147,701 |
| Taiwan 0.9% |
| Semiconductors & Semiconductor Equipment 0.4% |
| Taiwan Semiconductor Manufacturing Co., Ltd. | 684,000 | 2,882,147 |
| Technology Hardware & Equipment 0.5% |
| Foxconn Technology Co., Ltd. | 450,460 | 1,179,886 |
| Hon Hai Precision Industry Co., Ltd. | 182,000 | 483,767 |
| Pegatron Corp. | 625,700 | 1,528,999 |
| | | 3,192,652 |
| | | 6,074,799 |
| United Kingdom 18.6% |
| Banks 0.4% |
| Barclays plc | 444,409 | 1,583,331 |
| The Paragon Group of Cos. plc | 156,968 | 1,013,769 |
| | | 2,597,100 |
| Capital Goods 0.5% |
| QinetiQ Group plc | 1,089,966 | 3,755,232 |
| Commercial & Professional Supplies 0.3% |
| WS Atkins plc | 88,419 | 1,873,678 |
| Consumer Durables & Apparel 0.1% |
| Persimmon plc * | 33,419 | 1,024,877 |
| Consumer Services 0.6% |
| Unibet Group plc SDR | 46,748 | 4,117,184 |
| Energy 3.9% |
| BP plc | 1,679,013 | 9,978,350 |
| Royal Dutch Shell plc, B Shares | 626,688 | 16,409,753 |
| | | 26,388,103 |
| Food & Staples Retailing 0.1% |
| Greggs plc | 27,455 | 502,433 |
| Food, Beverage & Tobacco 2.7% |
| British American Tobacco plc | 34,919 | 2,074,522 |
| Imperial Tobacco Group plc | 302,253 | 16,275,719 |
| | | 18,350,241 |
| Household & Personal Products 1.6% |
| Reckitt Benckiser Group plc | 6,951 | 678,351 |
| Unilever plc | 231,046 | 10,288,130 |
| | | 10,966,481 |
| Insurance 1.0% |
| Hiscox Ltd. | 136,646 | 2,032,032 |
| Old Mutual plc | 1,364,463 | 4,459,624 |
| | | 6,491,656 |
Schwab International Core Equity Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Materials 1.8% |
| BHP Billiton plc | 494,833 | 7,909,422 |
| Rio Tinto plc | 125,242 | 4,564,473 |
| | | 12,473,895 |
| Media 0.2% |
| ITV plc | 379,436 | 1,473,080 |
| Pharmaceuticals, Biotechnology & Life Sciences 1.0% |
| Shire plc | 86,652 | 6,562,229 |
| Real Estate 0.8% |
| The Unite Group plc | 544,434 | 5,571,655 |
| Retailing 0.9% |
| Howden Joinery Group plc | 240,866 | 1,717,933 |
| Next plc | 20,659 | 2,544,257 |
| WH Smith plc | 63,690 | 1,670,807 |
| | | 5,932,997 |
| Software & Services 0.9% |
| Moneysupermarket.com Group plc | 1,240,106 | 6,382,182 |
| Telecommunication Services 1.5% |
| BT Group plc | 1,433,577 | 10,237,906 |
| Transportation 0.1% |
| Go-Ahead Group plc | 11,156 | 417,054 |
| Utilities 0.2% |
| Centrica plc | 335,350 | 1,166,875 |
| | | 126,284,858 |
| Total Common Stock |
| (Cost $666,677,311) | | 670,829,080 |
|
| Other Investment Company 0.6% of net assets |
| Money Market Fund 0.6% |
| State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (a) | 4,214,532 | 4,214,532 |
| Total Other Investment Company |
| (Cost $4,214,532) | | 4,214,532 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $672,904,002 and the unrealized appreciation and depreciation were $39,674,721 and ($37,535,111), respectively, with a net unrealized appreciation of $2,139,610.
At 10/31/15, the values of certain foreign securities held by the fund aggregating $654,429,530 were adjusted from their closing market values in accordance with international fair valuation procedures approved by the fund's Board of Trustees. (See financial note 2(a) for additional information).
| * | Non-income producing security. |
| (a) | The rate shown is the 7-day yield. |
| | |
| CVA — | Dutch Certificate |
| Reg'd — | Registered |
| SDR — | Swedish Depositary Receipt |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| MSCI EAFE, e-mini, Long, expires 12/18/15 | 20 | 1,757,100 | 40,007 |
Schwab International Core Equity Fund
Portfolio Holdings continued
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Common Stock1 | | $— | | $512,126,684 | | $— | | $512,126,684 | |
| Canada 1 | | 5,507,789 | | — | | — | | 5,507,789 | |
| Netherlands 1 | | — | | 16,435,042 | | — | | 16,435,042 | |
| Household & Personal Products | | 10,474,707 | | — | | — | | 10,474,707 | |
| United Kingdom1 | | — | | 125,867,804 | | — | | 125,867,804 | |
| Transportation | | 417,054 | | — | | — | | 417,054 | |
| Other Investment Company1 | | 4,214,532 | | — | | — | | 4,214,532 | |
| Total | | $20,614,082 | | $654,429,530 | | $— | | $675,043,612 | |
| Other Financial Instruments | | | | | | | | | |
| Futures Contracts2 | | $40,007 | | $— | | $— | | $40,007 | |
| 1 | As categorized in Portfolio Holdings. |
| 2 | Futures contracts are not included in Investments in the schedule of portfolio holdings and are valued at unrealized appreciation or depreciation. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were security transfers in the amount of $4,162,729 and $7,699,366 from Level 1 to Level 2 and from Level 2 to Level 1, respectively, for the period ended October 31, 2015. The transfers between Level 1 and Level 2 were primarily due to the use of international fair valuation by the fund. There were no transfers in or out of Level 3 during the period.
Schwab International Core Equity Fund
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments, at value (cost $670,891,843) | | $675,043,612 |
| Foreign currency, at value (cost $56,589) | | 56,895 |
| Deposit with broker for futures contracts | | 950,400 |
| Receivables: | | |
| Investments sold | | 123,910 |
| Fund shares sold | | 2,404,502 |
| Dividends | | 1,157,429 |
| Foreign tax reclaims | | 414,387 |
| Prepaid expenses | + | 28,069 |
| Total assets | | 680,179,204 |
| Liabilities |
| Payables: | | |
| Investment adviser and administrator fees | | 56,430 |
| Shareholder service fees | | 25,391 |
| Fund shares redeemed | | 643,040 |
| Variation margin on futures contracts | | 3,700 |
| Accrued expenses | + | 118,287 |
| Total liabilities | | 846,848 |
| Net Assets |
| Total assets | | 680,179,204 |
| Total liabilities | – | 846,848 |
| Net assets | | $679,332,356 |
| Net Assets by Source | | |
| Capital received from investors | | 677,861,071 |
| Net investment income not yet distributed | | 12,297,487 |
| Net realized capital losses | | (15,000,799) |
| Net unrealized capital appreciation | | 4,174,597 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $679,332,356 | | 70,592,461 | | $9.62 |
| | | | | |
Schwab International Core Equity Fund
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends (net of foreign withholding tax of $1,484,162) | | $16,135,976 |
| Expenses |
| Investment adviser and administrator fees | | 3,251,385 |
| Shareholder service fees | | 1,381,157 |
| Custodian fees | | 245,532 |
| Portfolio accounting fees | | 77,212 |
| Registration fees | | 75,594 |
| Professional fees | | 45,909 |
| Transfer agent fees | | 32,562 |
| Shareholder reports | | 29,665 |
| Independent trustees' fees | | 9,401 |
| Proxy fees | | 7,602 |
| Interest expense | | 15 |
| Other expenses | + | 16,286 |
| Total expenses | | 5,172,320 |
| Expense reduction by CSIM and its affiliates | – | 343,620 |
| Net expenses | – | 4,828,700 |
| Net investment income | | 11,307,276 |
| Realized and Unrealized Gains (Losses) |
| Net realized losses on investments | | (3,364,885) |
| Net realized losses on futures contracts | | (410,333) |
| Net realized losses on foreign currency transactions | + | (130,826) |
| Net realized losses | | (3,906,044) |
| Net change in unrealized appreciation (depreciation) on investments | | (484,092) |
| Net change in unrealized appreciation (depreciation) on futures contracts | | (112,226) |
| Net change in unrealized appreciation (depreciation) on foreign currency translations | + | 5,941 |
| Net change in unrealized appreciation (depreciation) | + | (590,377) |
| Net realized and unrealized losses | | (4,496,421) |
| Increase in net assets resulting from operations | | $6,810,855 |
Schwab International Core Equity Fund
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $11,307,276 | $6,372,776 |
| Net realized gains (losses) | | (3,906,044) | 12,538,542 |
| Net change in unrealized appreciation (depreciation) | + | (590,377) | (18,676,258) |
| Increase in net assets from operations | | 6,810,855 | 235,060 |
| Distributions to Shareholders | |
| Distributions from net investment income | | (6,697,762) | (4,000,904) |
| Distributions from net realized gains | + | (8,247,177) | — |
| Total distributions | | ($14,944,939) | ($4,000,904) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 39,601,250 | $382,386,533 | 35,207,779 | $349,758,745 |
| Shares reinvested | | 1,470,490 | 13,499,099 | 277,927 | 2,612,515 |
| Shares redeemed | + | (13,726,881) | (130,995,091) | (7,226,558) | (73,262,028) |
| Net transactions in fund shares | | 27,344,859 | $264,890,541 | 28,259,148 | $279,109,232 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 43,247,602 | $422,575,899 | 14,988,454 | $147,232,511 |
| Total increase | + | 27,344,859 | 256,756,457 | 28,259,148 | 275,343,388 |
| End of period | | 70,592,461 | $679,332,356 | 43,247,602 | $422,575,899 |
| Net investment income not yet distributed | | | $12,297,487 | | $4,844,140 |
Schwab Active Equity Funds
1. Business Structure of the Funds:
Each of the funds in this report is a series of Schwab Capital Trust (the trust), a no-load, open-end management investment company. The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the 1940 Act). The list below shows all the funds in the trust as of the end of the period, including the funds discussed in this report, which are highlighted:
| Schwab Capital Trust (organized May 7, 1993) | Schwab Target 2010 Fund |
| Schwab Core Equity Fund | Schwab Target 2015 Fund |
| Schwab Dividend Equity Fund | Schwab Target 2020 Fund |
| Schwab Large-Cap Growth Fund | Schwab Target 2025 Fund |
| Schwab Small-Cap Equity Fund | Schwab Target 2030 Fund |
| Schwab Hedged Equity Fund | Schwab Target 2035 Fund |
| Schwab Financial Services Fund | Schwab Target 2040 Fund |
| Schwab Health Care Fund | Schwab Target 2045 Fund |
| Schwab International Core Equity Fund | Schwab Target 2050 Fund |
| Schwab ® S&P 500 Index Fund | Schwab Target 2055 Fund |
| Schwab Small-Cap Index Fund® | Schwab Fundamental US Large Company Index Fund |
| Schwab Total Stock Market Index Fund® | Schwab Fundamental US Small Company Index Fund |
| Schwab International Index Fund® | Schwab Fundamental International Large Company Index Fund |
| Schwab MarketTrack All Equity Portfolio™ | Schwab Fundamental International Small Company Index Fund |
| Schwab MarketTrack Growth Portfolio™ | Schwab Fundamental Emerging Markets Large Company Index Fund |
| Schwab MarketTrack Balanced Portfolio™ | Schwab Fundamental Global Real Estate Index Fund |
| Schwab MarketTrack Conservative Portfolio™ | Schwab ® Monthly Income Fund - Moderate Payout |
| Laudus Small-Cap MarketMasters Fund™ | Schwab ® Monthly Income Fund - Enhanced Payout |
| Laudus International MarketMasters Fund™ | Schwab ® Monthly Income Fund - Maximum Payout |
| Schwab Balanced Fund™ | |
Each fund in this report offers one share class. Shares are bought and sold (subject to a redemption fee, see financial note 9) at closing net asset value per share (NAV), which is the price for all outstanding shares of a fund. Each share has a par value of 1/1,000 of a cent, and the funds' Board of Trustees (the Board) may authorize the issuance of as many shares as necessary.
Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, each fund may also keep certain assets in segregated accounts, as required by securities law.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies the funds use in their preparation of financial statements. The funds follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 Financial Services — Investment Companies. The accounting policies are in conformity with accounting principles generally accepted in the United States of America (GAAP).
The funds invest in certain other investment companies (underlying funds). For more information about the underlying funds’ operations and policies, please refer to those funds’ semiannual and annual reports, which are filed with the U.S. Securities and Exchange Commission (SEC).
(a) Security Valuation:
Under procedures approved by the Board, the investment adviser has formed a Pricing Committee to administer the pricing and valuation of portfolio securities and other assets and to ensure that prices used for internal purposes or provided by third parties reasonably reflect fair market value. Among other things, these procedures allow the funds to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.
The funds value the securities in their portfolios every business day. The funds use the following policies to value various types of securities:
• Securities traded on an exchange or over-the-counter: Traded securities are valued at the closing value for the day, or, on days when no closing value has been reported, at halfway between the most recent bid and ask quotes. Securities that are primarily traded on foreign exchanges are valued at the official closing price or the last sales price on the exchange where the securities are principally traded with these values then translated into U.S. dollars at the current exchange rate, unless these securities are fair valued as discussed below.
Schwab Active Equity Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
• Securities for which no quoted value is available: The Board has adopted procedures to fair value each fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the funds pursuant to the valuation procedures.
• Foreign equity security fair valuation: The Board has adopted procedures to fair value foreign equity securities that are traded in markets that close prior to the funds valuing their holdings. By fair valuing securities whose prices may have been affected by events occurring after the close of trading, each fund seeks to establish prices that investors might expect to realize upon the current sales of these securities. This methodology is designed to deter “arbitrage” market timers, who seek to exploit delays between the change in the value of a fund’s portfolio holdings and the NAV of the fund’s shares, and seeks to help ensure that the prices at which the fund’s shares are purchased and redeemed are fair and do not result in dilution of shareholder interest or other harm to shareholders. When fair value pricing is used at the open or close of a reporting period, it may cause a temporary divergence between the return of a fund and that of its comparative index or benchmark. The Board regularly reviews fair value determinations made by the funds pursuant to these procedures.
• Futures contracts and forward foreign currency exchange contracts (forwards): Futures contracts are valued at their settlement prices as of the close of their exchanges. Forwards are valued based on that day's forward exchange rates or by using an interpolated forward exchange rate for contracts with interim settlement dates.
• Short-term securities (60 days or less to maturity): A short-term security may be valued at its amortized cost when it approximates the security's market value.
• Underlying funds: Mutual funds are valued at their respective NAVs. Exchange traded funds (ETFs) traded on a recognized securities exchange are valued at the last reported sale price that day or the official closing price, if applicable.
In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the funds disclose the fair value of their investments in a hierarchy that prioritizes the significant inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). If inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the valuation. If the funds determine that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
The three levels of the fair value hierarchy are as follows:
• Level 1—quoted prices in active markets for identical securities—Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities, ETFs and futures contracts. Investments in mutual funds are valued daily at their NAVs, and investments in ETFs are valued daily at the last reported sale price or the official closing price, which are classified as Level 1 prices, without consideration to the classification level of the specific investments held by an underlying fund.
• Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)—Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed
Schwab Active Equity Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
equities, and state, municipal and provincial obligations. In addition, international securities whose markets close hours before the funds value their holdings may require fair valuations due to significant movement in the U.S. markets occurring after the daily close of the foreign markets. The Board has approved a vendor that calculates fair valuations of international equity securities based on a number of factors that appear to correlate to the movements in the U.S. markets.
• Level 3—significant unobservable inputs (including the funds' own assumptions in determining the fair value of investments)—Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the funds use one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the funds in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the funds in the absence of market information. Assumptions used by the funds due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds' results of operations.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The levels associated with valuing the funds' investments as of October 31, 2015 are disclosed in the Portfolio Holdings.
(b) Accounting Policies for certain Portfolio Investments (if held):
Futures Contracts: Futures contracts are instruments that represent an agreement between two parties that obligates one party to buy, and the other party to sell, specific instruments at an agreed upon price on a stipulated future date. A fund must give the broker a deposit of cash and/or securities (initial margin) whenever it enters into a futures contract. The amount of the deposit may vary from one contract to another. Subsequent payments (variation margin) are made or received by a fund depending on the daily fluctuations in the value of the futures contract and are accounted for as unrealized appreciation or depreciation until the contract is closed, at which time the gains or losses are realized. Futures contracts are traded publicly on exchanges, and their market value may change daily.
Forward Foreign Currency Exchange Contracts: Forwards are contracts to buy and sell a currency at a set price on a future date. The value of the forwards is accounted for as unrealized appreciation or depreciation until the contracts settle, at which time the gains or losses are realized.
Securities Lending: Under the trust’s Securities Lending Program, a fund (lender) may make short-term loans of its securities to another party (borrower) to generate additional revenue for the fund. The borrower pledges collateral in the form of cash, securities issued or fully guaranteed by the U.S. government or foreign governments, or letters of credit issued by a bank. Collateral at the individual loan level is required to be maintained on a daily marked-to-market basis in an amount at least equal to the current value of the securities loaned. The lending agent provides a fund with indemnification against borrower default (the borrower fails to return the security on loan) reducing the risk of loss as a result of default. The cash collateral of securities loaned is currently invested in money market portfolios operating under Rule 2a-7 of the 1940 Act. Each fund bears the risk of loss with respect to the investment of cash collateral. The terms of the securities lending agreement allows the funds to terminate any loans at any given time. Securities lending income, as disclosed in each fund’s Statement of Operations, if applicable, represents the income earned from the investment of the cash collateral plus any fees paid by borrowers, less the fees paid to the lending agent and broker rebates which are subject to adjustments pursuant to the securities lending agreement. On loans not collateralized by cash, a fee is received from the borrower, and is allocated between a fund and the lending agent. A fund retains the right to recall a security on loan. The aggregate market value of securities loaned will not at any time exceed one-third of the total assets of a fund, including collateral received from the loan (at market value computed at the time of the loan). Total costs and expenses, including lending agent fees associated with securities lending activities under the trust’s Securities Lending Program paid to the unaffiliated lending agents were approximately 15% of gross lending revenues through October 2, 2015. For the subsequent period through November 30, 2015, the total costs and expenses to be paid to the unaffiliated lending agents range from 10% to 15%, with subsequent breakpoints to a low of 7.5%, of gross lending revenue. After December 1, 2015, the total costs and expenses to be paid to the unaffiliated lending agents start at 10% of gross lending revenue, with subsequent breakpoints to a low of 7.5%.
Schwab Active Equity Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
The value of the securities on loan and the related collateral as of October 31, 2015, if any, are disclosed in each fund's Portfolio Holdings. The value of the securities on loan and the investment of cash collateral are also disclosed in each fund's Statement of Assets and Liabilities.
Short Sales: When a fund sells securities short (sells securities it does not own), the fund identifies assets worth at least 100% of the value of the short securities as collateral. If the market value of the short securities subsequently falls, the fund can realize a gain by closing the short position. However, if the value rises, the fund typically would have to add to its collateral or close out its short position at a loss. The potential for losses associated with short positions is much greater than the original value of the securities sold short and may exceed amounts recorded in the Statement of Assets and Liabilities.
(c) Security Transactions:
Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.
Assets and liabilities denominated in foreign currencies are reported in U.S. dollars. For assets and liabilities held on a given date, the dollar value is based on market exchange rates in effect on that date. Transactions involving foreign currencies, including purchases, sales, income receipts and expense payments, are calculated using exchange rates in effect on the transaction date. Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the differences between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange appreciation or depreciation arises from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period. These realized and unrealized foreign exchange gains or losses are reported in foreign currency transactions or translations in the Statement of Operations. The funds do not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.
If a fund sells securities short, it records the proceeds received as an asset and the obligation to buy back the securities as a liability. At the time a short sale is initiated, the asset and liability are of equal value and effectively cancel each other out. Subsequently, the fund values the liability side of the transaction according to the market price of the securities sold short, and values the asset side according to the value of the proceeds. When a fund closes out a short position (buys the security), it records the outcome as a realized gain or loss. Dividends accrued on securities sold short are recorded as an expense on a fund’s records and presented in the Statement of Operations. A fund may also incur stock loan fees which represent the cost of borrowing securities used for short sale transactions.
Gains realized by the funds on the sale of securities in certain foreign countries may be subject to non-U.S. taxes. In those instances, the funds record a liability based on unrealized appreciation to provide for potential non-U.S. taxes payable upon the sale of these securities.
When a fund closes out a futures contract or forward position, it calculates the difference between the value of the position at the beginning and at the end of the contract, and records a realized gain or loss accordingly.
(d) Investment Income:
Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying funds are recorded on the date they are effective (the ex-dividend date), although the funds record certain foreign security dividends on the day they learn of the ex-dividend date. Any distributions from underlying funds are recorded in accordance with the character of the distributions as designated by the underlying funds.
Income received from foreign sources may result in withholding tax. Withholding taxes are accrued at the same time as the related income if the tax rate is fixed and known, unless a tax withheld is reclaimable from the local tax authorities in which case it is recorded as receivable. If the tax rate is not known or estimable, such expense or reclaim receivable is recorded when the net proceeds are received.
Schwab Active Equity Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
(e) Expenses:
Expenses that are specific to a fund are charged directly to the fund. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their average daily net assets.
(f) Distributions to Shareholders:
The funds make distributions from net investment income, if any, once a year, with the exception of Schwab Dividend Equity Fund which typically pays quarterly dividends. The funds make distributions from net realized capital gains, if any, once a year.
(g) Custody Credit:
Certain funds have an arrangement with their custodian bank, State Street Bank and Trust Company (State Street), under which the funds may receive a credit for their uninvested cash balance to offset their custody fees and accounting fees. The credit amounts, if any, are disclosed in the Statement of Operations as a reduction to a fund's operating expenses.
(h) Accounting Estimates:
The accounting policies described in this report conform to GAAP. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It’s possible that once the results are known, they may turn out to be different from these estimates and these differences may be material.
(i) Federal Income Taxes:
The funds intend to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the funds distribute substantially all of their net investment income and net realized capital gains, if any, to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.
(j) Foreign Taxes:
The funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, corporate events, foreign currency exchanges and capital gains on investments. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in foreign markets in which the funds invest. These foreign taxes, if any, are paid by the funds and are disclosed in the Statement of Operations. Foreign taxes payable as of October 31, 2015, if any, are reflected in each fund's Statement of Assets and Liabilities.
(k) Indemnification:
Under the funds’ organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business the funds enter into contracts with their vendors and others that provide general indemnifications. The funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. However, based on experience, the funds expect the risk of loss attributable to these arrangements to be remote.
(l) New Accounting Pronouncements:
In June 2014, Accounting Standards Update (ASU) No. 2014-11, Topic 860 Transfers and Servicing — Repurchase-to-Maturity Transactions, Repurchase Financings and Disclosures, was issued and is effective for interim periods beginning after March 15, 2015 and annual periods beginning after December 15, 2014. The ASU modifies accounting guidance and enhances disclosure requirements for repurchase agreement and securities lending transactions. Management is currently evaluating the impact the adoption of ASU 2014-11 may have on the funds’ financial statement disclosures.
3. Risk Factors:
Investing in the funds may involve certain risks, as discussed in the funds' prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
Schwab Active Equity Funds
Financial Notes (continued)
3. Risk Factors (continued):
Market Risk. Equity markets rise and fall daily. As with any investment whose performance is tied to these markets, the value of the investment in a fund will fluctuate, which means that investors could lose money.
Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time.
Management Risk. The funds' investment adviser makes investment decisions for the funds using a strategy based largely on historical information. There is no guarantee that a strategy based on historical information will produce the desired results in the future. In addition, the portfolio optimization process used by each fund to assist in constructing the fund’s portfolio does not assure successful investment. Securities selected with the assistance of the process may be negatively impacted by factors or events not foreseen in developing the process. As a result, a fund may have a lower return than if it were managed using another process or strategy.
Small-Cap Risk. Historically, small-cap stocks have been riskier than large- and mid-cap stocks, and their prices may move sharply, especially during market upturns and downturns. Small-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies. During a period when small-cap stocks fall behind other types of investments—large-cap and mid-cap stocks, for instance—a fund's performance also will lag those investments.
Large- and Mid-Cap Risk. Both large- and mid-cap stocks tend to go in and out of favor based on market and economic conditions. However, stocks of mid-cap companies tend to be more vulnerable to adverse business or economic events than larger, more established companies. During a period when large- and mid-cap U.S. stocks fall behind other types of investments—small-cap stocks, for instance—a fund's performance also will lag those investments.
Growth Investing Risk. Growth stocks can be volatile. Growth companies usually invest a high portion of earnings in their businesses and may lack the dividends of value stocks that can cushion stock prices in a falling market. The prices of growth stocks are based largely on projections of the issuer’s future earnings and revenues. If a company’s earnings or revenues fall short of expectations, its stock price may fall dramatically. Growth stocks may also be more expensive relative to their earnings or assets compared to value or other stocks.
Dividend Paying Risk. To the extent that a fund invests in dividend paying stocks, the fund’s performance will correlate directly with the performance of the dividend paying stock segment of the stock market, and the fund may underperform funds that do not limit their investments to dividend paying stocks. If stocks held by a fund reduce or stop paying dividends, the fund’s ability to generate income may be affected.
Derivatives Risk. A fund’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Certain of these risks, such as liquidity risk, market risk and management risk, are discussed elsewhere in this section. A fund’s use of derivatives is also subject to credit risk, leverage risk, lack of availability risk, valuation risk, correlation risk and tax risk. Lack of availability risk is the risk that suitable derivative transactions may not be available in all circumstances for risk management or other purposes. Credit risk is the risk that the counterparty to a derivatives transaction may not fulfill its obligations. Leverage risk is the risk that a small percentage of assets invested in derivatives can have a disproportionately large impact on a fund. Valuation risk is the risk that a particular derivative may be valued incorrectly. Correlation risk is the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index. Tax risk is the risk that the use of derivatives may cause a fund to realize higher amounts of short-term capital gain. A fund's use of derivatives could reduce the fund's performance, increase its volatility, and could cause the fund to lose more than the initial amount invested.
Liquidity Risk. A particular investment may be difficult to purchase or sell. A fund may be unable to sell illiquid securities at an advantageous time or price.
Convertible Securities Risk. Convertible securities generally are debt obligations that pay income, but which may convert into common or preferred stock under certain circumstances. The value of a convertible security is influenced by the credit standing of the issuer, and changes in interest rates, with investment value declining as interest rates increase and increasing as interest rates decline. The price of a convertible security will also normally vary in some proportion to changes in the price of the underlying common stock because of the conversion or exercise feature.
Schwab Active Equity Funds
Financial Notes (continued)
3. Risk Factors (continued):
ETF Risk. When a fund invests in an ETF, it will bear a proportionate share of the ETF's expenses. In addition, lack of liquidity in the market for an ETF's shares can result in its value being more volatile than the underlying portfolio of securities.
REITs Risk. A fund's investments in real estate investment trusts (REITs) will be subject to the risks associated with the direct ownership of real estate, including fluctuations in the value of underlying properties, defaults by borrowers or tenants, changes in interest rates and risks related to general or local economic conditions. REITs are also subject to certain additional risks; for example, REITs are dependent upon specialized management skills and cash flows, and may have their investments in relatively few properties, a small geographic area or a single property type. Failure of a company to qualify as a REIT under federal tax law may have adverse consequences on a fund. In addition, REITs have their own expenses, and a fund will bear a proportionate share of those expenses.
Short Sales Risk. Certain funds engage in short sales transactions. Short sales are transactions in which a fund sells a security it does not own. To complete a short sale, a fund must borrow the security to deliver to the buyer. A fund is then obligated to replace the borrowed security by purchasing the security at the market price at the time of replacement. This price may be more or less than the price at which the security was sold by a fund, and the fund will incur a loss if the price of the security sold short increases between the time of the short sale and the time the fund replaces the borrowed security.
To the extent a fund establishes both long and short positions in equity securities the fund’s long positions could decline in value at the same time that the value of the stocks sold short increase, thereby increasing the fund’s overall potential for loss. A fund’s short sales may result in a loss if the prices of the borrowed securities rise and it costs more to replace the borrowed securities. In contrast to a fund’s long positions, the potential loss on the fund’s short positions is unlimited. In addition, the lender of the borrowed securities may require a fund to return the securities on short notice, which may require the fund to purchase the borrowed securities at an unfavorable price, resulting in a loss.
Foreign Investment Risk. A fund's investments in securities of foreign issuers may involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges); the imposition of economic sanctions or other government restrictions; differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. These risks may be heightened in connection with investments in emerging markets. To the extent a fund’s investments in a single country or a limited number of countries represent a higher percentage of the fund’s assets, the fund assumes the risk that economic, political and social conditions in those countries will have a significant impact on its investment performance and it may be subject to increased price volatility.
Emerging Markets Risk. Emerging market countries may be more likely to experience political turmoil or rapid changes in market or economic conditions than more developed countries. Such countries often have less uniformity in accounting and reporting requirements and greater risk associated with the custody of securities. In addition, the financial stability of issuers (including governments) in emerging market countries may be more precarious than in other countries. As a result, there will tend to be an increased risk of price volatility associated with a fund’s investments in emerging market countries, which may be magnified by currency fluctuations relative to the U.S. dollar.
Concentration Risk. The investments of certain funds are concentrated in issuers doing business in the same sector, and therefore, the companies in which a fund invests will be affected by many of the same factors, such as legislative or regulatory changes, intense competition for market share, and other competitive challenges. In addition, a fund is subject to the risks that stocks of these companies may underperform other segments of the equity market or stock market as a whole and are likely to have above-average volatility.
Securities Lending Risk. Securities lending involves the risk of loss of rights in the collateral or delay in recovery of the collateral if the borrower fails to return the security loaned or becomes insolvent.
Please refer to the funds’ prospectus for a more complete description of the principal risks of investing in the funds.
4. Affiliates and Affiliated Transactions:
Charles Schwab Investment Management, Inc. (CSIM or the investment adviser), a wholly owned subsidiary of The Charles Schwab Corporation, serves as each fund's investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement between CSIM and the trust.
Schwab Active Equity Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
For its advisory and administrative services to the funds, CSIM is entitled to receive an annual fee, payable monthly, based on a percentage of each fund’s average daily net assets as follows:
% of Average
Daily Net Assets | | Schwab
Core
Equity Fund | | Schwab
Dividend
Equity Fund | | Schwab
Large-Cap
Growth Fund | | Schwab
Small-Cap
Equity Fund | | Schwab
Hedged
Equity Fund | | Schwab
International
Core
Equity Fund |
| Flat rate | | 0.47% | | 0.62% | | 0.72% | | 0.81% | | 1.05% | | 0.58% |
% of Average
Daily Net Assets | | Schwab
Financial
Services Fund | | Schwab
Health Care
Fund |
| First $500 million | | 0.54% | | 0.54% |
| $500 million to $1 billion | | 0.515% | | 0.515% |
| Over $1 billion | | 0.49% | | 0.49% |
The Board has adopted a Shareholder Servicing Plan (the Plan) on behalf of the funds. The Plan enables each fund to bear expenses relating to the provision by service providers, including Charles Schwab & Co., Inc. (a broker-dealer affiliate of CSIM, Schwab), of certain account maintenance, customer liaison and shareholder services to the current shareholders of the funds. Schwab serves as the funds’ paying agent under the Plan for making payments of the shareholder service fee due to the service providers (other than Schwab) under the Plan. All shareholder service fees paid by the funds to Schwab in its capacity as the funds’ paying agent will be passed through to the service providers, and Schwab will not retain any portion of such fees.
Pursuant to the Plan, each fund’s shares are subject to an annual shareholder servicing fee up to 0.25%. The shareholder servicing fee paid to a particular service provider is made pursuant to its written agreement with Schwab (or, in the case of payments made to Schwab, pursuant to Schwab’s written agreement with the funds). Payments under the Plan are made as described above regardless of Schwab’s or the service provider’s actual cost of providing the services. If the cost of providing the services under the Plan is less than the payment received, the unexpended portion of the fees may be retained as profit by Schwab or the service provider.
Although these agreements specify certain fees for these services, CSIM and its affiliates have made an additional agreement with the funds, for so long as CSIM serves as the investment adviser to the funds, which may only be amended or terminated with the approval of the Board, to limit the total annual fund operating expenses charged, excluding interest, taxes and certain non-routine expenses (expense limitation). The expense limitation as a percentage of average daily net assets is as follows:
Schwab
Core
Equity Fund | | Schwab
Dividend
Equity Fund | | Schwab
Large-Cap
Growth Fund | | Schwab
Small-Cap
Equity Fund | | Schwab
Hedged
Equity Fund |
| 0.75% | | 0.89% | | 0.99% | | 1.12% | | 1.33%* |
Schwab
Financial
Services Fund | | Schwab
Health Care
Fund | | Schwab
International
Core Equity Fund |
| 0.94% | | 0.82% | | 0.86% |
| * | Excludes dividends and stock loan fees paid on securities sold short. |
Schwab Active Equity Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Certain Schwab funds may own shares of other Schwab funds. The table below reflects the percentages of shares of each fund in this report that are owned by other Schwab funds as of October 31, 2015, as applicable:
| | Underlying Funds | | | |
| | Schwab
Core
Equity Fund | | Schwab
Dividend
Equity Fund | | Schwab
Small-Cap
Equity Fund | | Schwab
International Core
Equity Fund |
| Schwab Target 2010 Fund | 0.2% | | 0.1% | | 0.2% | | 0.3% |
| Schwab Target 2015 Fund | 0.4% | | 0.2% | | 0.3% | | 0.6% |
| Schwab Target 2020 Fund | 2.2% | | 1.2% | | 2.1% | | 4.3% |
| Schwab Target 2025 Fund | 1.9% | | 1.1% | | 2.0% | | 3.9% |
| Schwab Target 2030 Fund | 4.1% | | 2.4% | | 4.8% | | 8.4% |
| Schwab Target 2035 Fund | 1.9% | | 1.1% | | 2.4% | | 3.9% |
| Schwab Target 2040 Fund | 5.0% | | 2.8% | | 6.9% | | 10.6% |
| Schwab Target 2045 Fund | 0.4% | | 0.2% | | 0.6% | | 0.9% |
| Schwab Target 2050 Fund | 0.3% | | 0.2% | | 0.5% | | 0.7% |
| Schwab Target 2055 Fund | 0.2% | | 0.1% | | 0.3% | | 0.4% |
| Schwab Monthly Income Fund - Moderate Payout | —% | | 0.7% | | —% | | —% |
| Schwab Monthly Income Fund - Enhanced Payout | —% | | 1.0% | | —% | | —% |
| Schwab Monthly Income Fund - Maximum Payout | —% | | 0.3% | | —% | | —% |
| Schwab Balanced Fund | 4.5% | | —% | | —% | | —% |
Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions with other funds in the Fund Complex (for definition refer to Trustees and Officers section). All loans are for temporary or emergency purposes and the interest rate to be charged will be the average of the overnight repurchase agreement rate and the short-term bank loan rate. All loans are subject to numerous conditions designed to ensure fair and equitable treatment of all participating funds/portfolios. The interfund lending facility is subject to the oversight and periodic review by the Board. The funds had no interfund borrowing or lending activity during the period.
During the period, the Schwab Core Equity Fund, Schwab Dividend Equity Fund, Schwab Large-Cap Growth Fund, Schwab Small-Cap Equity Fund, Schwab Hedged Equity Fund, Schwab Financial Services Fund and Schwab Health Care Fund received a reimbursement payment of $15,124, $3,933, $483, $3,487, $8,389, $747 and $4,378, respectively, related to state filing fees resulting from revised calculation methodologies being applied on sales of the funds' shares in prior periods.
During the periods under which the expense was incurred, the funds were operating above their expense limitation and waived fees including these state filing fees. As this amount was previously waived as part of an expense reduction by CSIM and its affiliates, it was reimbursed to the investment adviser. Each fund's net expense ratio was not impacted during the periods the expense was incurred or during the current period.
5. Board of Trustees:
The Board may include people who are officers and/or directors of CSIM or its affiliates. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these interested persons for their services as trustees, but it did pay non-interested persons (independent trustees), as noted on each fund’s Statement of Operations. For information regarding the trustees, please refer to the Trustees and Officers table at the end of this report.
6. Borrowing from Banks:
During the period prior to October 8, 2015, the funds had access to a committed line of credit of $150 million with State Street, an uncommitted line of credit of $100 million with Bank of America, N.A., and an uncommitted line of credit of $50 million with Brown Brothers Harriman & Co. The funds paid an annual fee to State Street for the committed line of
Schwab Active Equity Funds
Financial Notes (continued)
6. Borrowing from Banks (continued):
credit. Effective October 8, 2015, the previous lines of credit were terminated and the funds became participants with other U.S. registered investment companies managed by CSIM in a joint, syndicated, committed $530 million line of credit (the Credit Facility), with State Street as agent, which matures on October 6, 2016. Under the terms of the Credit Facility, in addition to the interest charged on any borrowings by a fund, each fund pays a commitment fee of 0.125% per annum on its proportionate share of the unused portion of the Credit Facility. There were no borrowings from any of the lines of credit during the period.
The funds also have access to custodian overdraft facilities. A fund may have utilized the overdraft facility and incurred an interest expense, which is disclosed on the fund’s Statement of Operations, if any. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.
7. Purchases and Sales/Maturities of Investment Securities:
For the period ended October 31, 2015, purchases and sales/maturities of securities (excluding short-term obligations) were as follows:
| | Purchases of Securities | | Sales/Maturities of Securities |
| Schwab Core Equity Fund | $1,867,504,144 | | $1,913,289,700 |
| Schwab Dividend Equity Fund | 1,393,105,790 | | 1,534,588,584 |
| Schwab Large-Cap Growth Fund | 227,866,564 | | 248,721,617 |
| Schwab Small-Cap Equity Fund | 630,519,263 | | 682,891,970 |
| Schwab Hedged Equity Fund* | 295,858,373 | | 300,024,559 |
| Schwab Financial Services Fund | 40,319,174 | | 45,141,084 |
| Schwab Health Care Fund | 865,868,242 | | 851,219,345 |
| Schwab International Core Equity Fund | 734,614,763 | | 477,058,730 |
| * | Including securities sold short. |
8. Derivatives:
Certain funds entered into equity index futures contracts during the report period. The funds invested in futures contracts to equitize available cash. The fair value and variation margin for futures contracts held at October 31, 2015 are presented on the Portfolio Holdings and Statement of Assets and Liabilities, respectively. The net realized and change in unrealized gains (losses) on futures contracts are presented on the Statement of Operations. Refer to financial note 2(b) for the funds' accounting policies with respect to futures contracts and financial note 3 for disclosures concerning the risks of investing in futures contracts. During the period ended October 31, 2015, the month-end average contract values of futures contracts held by the funds and the month-end average number of contracts held were as follows:
| | Contract Values | | Number of Contracts |
| Schwab Core Equity Fund | $12,635,663 | | 124 |
| Schwab Dividend Equity Fund | 10,175,755 | | 100 |
| Schwab Large-Cap Growth Fund | 1,449,570 | | 14 |
| Schwab Small-Cap Equity Fund | 2,995,964 | | 25 |
| Schwab Hedged Equity Fund | 983,013 | | 10 |
| Schwab Financial Services Fund | 474,677 | | 5 |
| Schwab Health Care Fund | 5,044,921 | | 49 |
| Schwab International Core Equity Fund | 7,423,432 | | 82 |
The Schwab International Core Equity Fund invested in forwards during the report period. The fund invested in forwards in connection with the purchase and sale of portfolio securities to minimize the uncertainty of changes in future foreign currency exchange rates and to manage cash. Refer to financial note 2(b) for the fund’s accounting policies with respect to forwards and financial note 3 for disclosures concerning the risks of investing in forwards. During the period ended October 31, 2015, the month-end average forward foreign currency notional amount and the month-end average unrealized appreciation (depreciation) were $180,342 and $194, respectively.
Schwab Active Equity Funds
Financial Notes (continued)
8. Derivatives (continued):
The effect of the derivatives held by the Schwab International Core Equity Fund in the Statement of Operations for the period ended October 31, 2015 were:
| | Schwab International
Core Equity Fund |
| Equity Index Futures Contracts | |
| Realized Gains (Losses)1 | ($410,333) |
| Change in Unrealized Appreciation (Depreciation)2 | (112,226) |
| Forward Foreign Currency Exchange Contracts | |
| Realized Gains (Losses)1 | $1,546 |
| Change in Unrealized Appreciation (Depreciation)2 | — |
| 1 | Statement of Operations location: Net realized gains (losses) on futures contracts and net realized gains (losses) on foreign currency transactions. |
| 2 | Statement of Operations location: Net change in unrealized appreciation (depreciation) on futures contracts and net change in unrealized appreciation (depreciation) on foreign currency translations. |
9. Redemption Fee:
The funds charge a 2.00% redemption fee on shares sold or exchanged within 30 days of the original purchase date. Such amounts are netted against redemption proceeds on the Statement of Changes in Net Assets. The redemption fees charged during the current and prior periods are:
| | Current Period
(11/1/14-10/31/15) | | Prior Period
(11/1/13-10/31/14) |
| Schwab Core Equity Fund | $22,991 | | $14,486 |
| Schwab Dividend Equity Fund | 17,039 | | 41,450 |
| Schwab Large-Cap Growth Fund | 5,458 | | 3,756 |
| Schwab Small-Cap Equity Fund | 13,614 | | 23,409 |
| Schwab Hedged Equity Fund | 8,264 | | 3,590 |
| Schwab Financial Services Fund | 4,975 | | 3,411 |
| Schwab Health Care Fund | 54,580 | | 39,555 |
| Schwab International Core Equity Fund | 15,500 | | 21,857 |
10. Federal Income Taxes:
As of October 31, 2015, the components of distributable earnings on a tax-basis were as follows:
| | Schwab
Core
Equity Fund | | Schwab
Dividend
Equity Fund | | Schwab
Large-Cap
Growth Fund | | Schwab
Small-Cap
Equity Fund | | Schwab
Hedged
Equity Fund |
| Undistributed ordinary income | $77,031,509 | | $34,855,402 | | $9,662,887 | | $11,391,353 | | $3,917,207 |
| Undistributed long-term capital gains | 245,370,769 | | 161,290,992 | | 25,040,220 | | 64,496,426 | | 15,501,729 |
| Unrealized appreciation on investments | 350,191,830 | | 207,248,267 | | 41,286,810 | | 80,270,566 | | 25,509,676 |
| Unrealized depreciation on investments | (66,140,264) | | (85,701,934) | | (9,918,903) | | (62,863,253) | | (14,434,894) |
| Other unrealized appreciation (depreciation) | — | | — | | — | | — | | 5,956,103 |
| Net unrealized appreciation (depreciation) | $284,051,566 | | $121,546,333 | | $31,367,907 | | $17,407,313 | | $17,030,885 |
Schwab Active Equity Funds
Financial Notes (continued)
10. Federal Income Taxes (continued):
| | Schwab
Financial
Services Fund | | Schwab
Health Care
Fund | | Schwab
International
Core
Equity Fund |
| Undistributed ordinary income | $584,314 | | $60,493,381 | | $12,415,100 |
| Undistributed long-term capital gains | — | | 94,804,875 | | — |
| Unrealized appreciation on investments | 12,705,977 | | 237,777,964 | | 39,674,721 |
| Unrealized depreciation on investments | (1,405,563) | | (35,106,052) | | (37,535,111) |
| Other unrealized appreciation (depreciation) | — | | (60,733) | | (17,179) |
| Net unrealized appreciation (depreciation) | $11,300,414 | | $202,611,179 | | $2,122,431 |
The primary differences between book-basis and tax-basis unrealized appreciation or unrealized depreciation of investments are the tax deferral of losses on wash sales, Passive Foreign Investment Companies (PFIC), partnership investments, non-taxable dividends and futures mark to market.
Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2015, the funds had capital loss carryforwards available to offset future net capital gains before the expiration dates as follows:
| Expiration Date | | Schwab
Core
Equity Fund | | Schwab
Dividend
Equity Fund | | Schwab
Large-Cap
Growth Fund | | Schwab
Small-Cap
Equity Fund | | Schwab
Hedged
Equity Fund |
| October 31, 2016 | | $9,727,766 | | $— | | $— | | $— | | $— |
| October 31, 2017 | | 1,636,580 | | — | | — | | — | | — |
| Total | | $11,364,346** | | $— | | $— | | $— | | $— |
| Expiration Date | | Schwab
Financial
Services Fund | | Schwab
Health Care
Fund | | Schwab
International
Core
Equity Fund |
| October 31, 2017 | | $17,740,785 | | $— | | $— |
| October 31, 2018 | | 170,394 | | — | | — |
| October 31, 2019 | | — | | — | | 7,906,336 |
| No expiration* | | — | | — | | 5,159,909 |
| Total | | $17,911,179 | | $— | | $13,066,245** |
| * | As a result of the passage of the Regulated Investment Company Modernization Act of 2010, capital losses incurred after December 31, 2010 may now be carried forward indefinitely, but must retain the character of the original loss. |
| ** | The Schwab Core Equity Fund and Schwab International Core Equity Fund have capital loss carryforwards acquired via mergers, which are subject to certain annual limitations in regard to availability to offset potential future capital gains. |
For the year ended October 31, 2015, the funds had capital loss carryforwards utilized and capital losses expired as follows:
| | Schwab
Core
Equity Fund | | Schwab
Dividend
Equity Fund | | Schwab
Large-Cap
Growth Fund | | Schwab
Small-Cap
Equity Fund | | Schwab
Hedged
Equity Fund |
| Capital loss carryforwards utilized | $9,727,768 | | $— | | $— | | $— | | $— |
| Capital losses expired | 872,465 | | — | | — | | — | | — |
Schwab Active Equity Funds
Financial Notes (continued)
10. Federal Income Taxes (continued):
| | Schwab
Financial
Services Fund | | Schwab
Health Care
Fund | | Schwab
International
Core
Equity Fund |
| Capital loss carryforwards utilized | $5,183,008 | | $— | | $— |
| Capital losses expired | — | | — | | — |
The tax-basis components of distributions paid during the current and prior fiscal years were as follows:
| | Schwab
Core
Equity Fund | | Schwab
Dividend
Equity Fund | | Schwab
Large-Cap
Growth Fund | | Schwab
Small-Cap
Equity Fund | | Schwab
Hedged
Equity Fund |
| Current period distributions | | | | | | | | | |
| Ordinary income | $73,466,144 | | $78,202,168 | | $1,230,983 | | $25,751,786 | | $— |
| Long-term capital gains | 264,913,205 | | 225,404,481 | | 25,103,219 | | 97,541,227 | | 25,864,727 |
| Return of capital | — | | — | | — | | — | | — |
| Prior period distributions | | | | | | | | | |
| Ordinary income | $21,200,511 | | $30,034,449 | | $1,490,864 | | $18,663,520 | | $— |
| Long-term capital gains | 157,596,466 | | 118,279,747 | | — | | 39,824,590 | | 15,225,593 |
| Return of capital | — | | — | | — | | — | | — |
| | Schwab
Financial
Services Fund | | Schwab
Health Care
Fund | | Schwab
International
Core
Equity Fund |
| Current period distributions | | | | | |
| Ordinary income | $634,213 | | $57,907,541 | | $6,699,187 |
| Long-term capital gains | — | | 72,753,677 | | 8,245,752 |
| Return of capital | — | | — | | — |
| Prior period distributions | | | | | |
| Ordinary income | $544,804 | | $21,202,575 | | $4,000,904 |
| Long-term capital gains | — | | 61,203,934 | | — |
| Return of capital | — | | — | | — |
Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
Permanent book and tax basis differences may result in reclassifications between components of net assets as required. The adjustments will have no impact on net assets or the results of operations. As of October 31, 2015, the funds made the following reclassifications:
| | Schwab
Core
Equity Fund | | Schwab
Dividend
Equity Fund | | Schwab
Large-Cap
Growth Fund | | Schwab
Small-Cap
Equity Fund | | Schwab
Hedged
Equity Fund |
| Capital shares | ($872,465) | | $— | | $— | | $— | | ($1,649,544) |
| Undistributed net investment income | (1,449,095) | | (2,066,238) | | (84,517) | | (139,024) | | 2,585,645 |
| Net realized capital gains (losses) | 2,321,560 | | 2,066,238 | | 84,517 | | 139,024 | | (936,101) |
Schwab Active Equity Funds
Financial Notes (continued)
10. Federal Income Taxes (continued):
| | Schwab
Financial
Services Fund | | Schwab
Health Care
Fund | | Schwab
International
Core
Equity Fund |
| Capital shares | ($129) | | $— | | $— |
| Undistributed net investment income | (50,085) | | (53,813) | | 2,843,833 |
| Net realized capital gains (losses) | 50,214 | | 53,813 | | (2,843,833) |
As of October 31, 2015, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and for state purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the funds’ financial statements. The funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period ended October 31, 2015, the funds did not incur any interest or penalties.
11. Subsequent Events:
At a Special Meeting of Shareholders on December 11, 2015, twelve individuals were elected to serve as trustees of all trusts constituting the Schwab Funds, Laudus Funds and Schwab ETFs effective January 1, 2016. The twelve individuals elected to the Boards of Trustees consist of current Schwab Funds and Laudus Funds trustees, current Schwab ETFs trustees and three new nominees. The trustees believe that combining the composition of the Boards of Trustees and adding the new nominees will further align oversight of the Schwab Funds, Laudus Funds and Schwab ETFs, among other benefits. Other than this election of trustees, management has determined there are no subsequent events or transactions through the date the financial statements were issued that would have materially impacted the financial statements as presented.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of:
Schwab Core Equity Fund
Schwab Dividend Equity Fund
Schwab Large-Cap Growth Fund
Schwab Small-Cap Equity Fund
Schwab Hedged Equity Fund
Schwab Financial Services Fund
Schwab Health Care Fund
Schwab International Core Equity Fund
In our opinion, the accompanying statements of assets and liabilities, including the portfolio holdings, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Schwab Core Equity Fund, Schwab Dividend Equity Fund, Schwab Large-Cap Growth Fund, Schwab Small-Cap Equity Fund, Schwab Hedged Equity Fund, Schwab Financial Services Fund, Schwab Health Care Fund and Schwab International Core Equity Fund (eight of the funds constituting Schwab Capital Trust, hereafter referred to as the "Funds") at October 31, 2015, and the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Funds' management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2015 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
December 16, 2015
Other Federal Tax Information (unaudited)
Schwab International Core Equity Fund elects to pass through under section 853 of the Internal Revenue Code foreign tax credit of $1,484,162 to its shareholders for the year ended October 31, 2015. The respective foreign source income on the fund is $18,320,924.
For corporate shareholders, the following percentage of the funds dividend distributions paid during the fiscal year ended October 31, 2015, qualify for the corporate dividends received deduction:
| | Percentage |
| Schwab Core Equity Fund | 60.47 |
| Schwab Dividend Equity Fund | 62.98 |
| Schwab Large-Cap Growth Fund | 86.78 |
| Schwab Small-Cap Equity Fund | 17.59 |
| Schwab Hedged Equity Fund | — |
| Schwab Financial Services Fund | 100.00 |
| Schwab Health Care Fund | 18.85 |
| Schwab International Core Equity Fund | — |
For the fiscal year ended October 31, 2015, the funds designate the following amounts of the dividend distributions as qualified dividends for the purpose of the maximum rate under section 1(h)(11) of the Internal Revenue Code. Shareholders will be notified in January 2016 via IRS form 1099 of the amounts for use in preparing their 2015 income tax return.
| Schwab Core Equity Fund | $44,611,853 |
| Schwab Dividend Equity Fund | 49,794,096 |
| Schwab Large-Cap Growth Fund | 1,071,848 |
| Schwab Small-Cap Equity Fund | 4,647,718 |
| Schwab Hedged Equity Fund | — |
| Schwab Financial Services Fund | 634,213 |
| Schwab Health Care Fund | 15,600,980 |
| Schwab International Core Equity Fund | 8,181,924 |
Under Section 852 (b)(3)(C) of the Internal Revenue Code, the funds hereby designate the following amounts as long-term capital gain dividends for the fiscal year ended October 31, 2015:
| Schwab Core Equity Fund | $264,913,205 |
| Schwab Dividend Equity Fund | 225,404,481 |
| Schwab Large-Cap Growth Fund | 25,103,219 |
| Schwab Small-Cap Equity Fund | 97,541,227 |
| Schwab Hedged Equity Fund | 25,864,727 |
| Schwab Financial Services Fund | — |
| Schwab Health Care Fund | 72,753,677 |
| Schwab International Core Equity Fund | 8,245,752 |
Investment Advisory Agreement Approval
The Investment Company Act of 1940 (the 1940 Act) requires that initial approval of, as well as the continuation of, a fund’s investment advisory agreement must be specifically approved (1) by the vote of the trustees or by a vote of the shareholders of the fund, and (2) by the vote of a majority of the trustees who are not parties to the investment advisory agreement or “interested persons” of any party (the Independent Trustees), cast in person at a meeting called for the purpose of voting on such approval. In connection with such approvals, the fund’s trustees must request and evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms of the investment advisory agreement.
The Board of Trustees (the Board or the Trustees, as appropriate) calls and holds one or more meetings each year that are dedicated, in whole or in part, to considering whether to renew the investment advisory agreement between Schwab Capital Trust (the Trust) and Charles Schwab Investment Management, Inc. (CSIM) (the Agreement) with respect to the existing funds in the Trust, including Schwab Core Equity Fund, Schwab Dividend Equity Fund, Schwab Large-Cap Growth Fund, Schwab Small-Cap Equity Fund, Schwab Hedged Equity Fund, Schwab Financial Services Fund, Schwab Health Care Fund and Schwab International Core Equity Fund (the Funds), and to review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting(s), the Board requests and reviews a wide variety of materials provided by CSIM, including information about CSIM’s affiliates, personnel and operations. As part of the renewal process, Independent Trustees’ legal counsel sends an information request letter to CSIM seeking certain relevant information. The responses by CSIM are provided to the Trustees for their review prior to their meeting, and the Trustees are provided with the opportunity to request any additional materials. The Board also receives extensive data provided by third parties. This information is in addition to the detailed information about the Funds that the Board reviews during the course of each year, including information that relates to Fund operations and Fund performance. The Independent Trustees receive advice from independent counsel to the Independent Trustees, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees meet in executive session outside the presence of Fund management and participate in question and answer sessions with representatives of CSIM.
The Board, including a majority of the Independent Trustees, considered information specifically relating to its
consideration of the continuance of the Agreement with respect to the Funds at meetings held on April 29, 2015, and June 1, 2015, and approved the renewal of the Agreement with respect to the Funds for an additional one-year term at the meeting held on June 1, 2015. The Board’s approval of the Agreement with respect to the Funds was based on consideration and evaluation of a variety of specific factors discussed at these meetings and at prior meetings, including:
| 1. | the nature, extent and quality of the services provided to the Funds under the Agreement, including the resources of CSIM and its affiliates dedicated to the Funds; |
| 2. | each Fund’s investment performance and how it compared to that of certain other comparable mutual funds; |
| 3. | each Fund’s expenses and how those expenses compared to those of certain other comparable mutual funds, exchange-traded funds and other accounts; |
| 4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to each Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
| 5. | the extent to which economies of scale would be realized as the Funds grow and whether fee levels in the Agreement reflect those economies of scale for the benefit of Fund investors. |
Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds. In this regard, the Trustees evaluated, among other things, CSIM’s personnel, experience, track record and compliance program. The Trustees also considered information provided by CSIM relating to each Fund’s portfolio management team, portfolio strategy and risk oversight structure, and internal investment guidelines. The Trustees also considered investments in CSIM’s mutual fund infrastructure, Schwab’s wide range of products, services, and channel alternatives such as investment and research tools, internet access, and an array of account features that benefit the Funds and certain of their shareholders. The Trustees also considered Schwab’s excellent reputation as a full service brokerage firm and its overall financial condition. Finally, the Trustees considered that the vast majority of the Funds’ shareholders are also brokerage clients of Schwab. Following such evaluation, the Board concluded, within the context of its full deliberations, that the nature, extent and quality of services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds supported renewal of the Agreement with respect to the Funds.
Fund Performance. The Board considered Fund performance in determining whether to renew the Agreement with respect to the Funds. Specifically, the Trustees considered each Fund’s performance relative to a peer category of other mutual funds and appropriate indices/benchmarks, in light of total return, and market trends. As part of this review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the third party who prepared the peer category analysis. In evaluating the performance of each Fund, the Trustees considered both risk and shareholder risk expectations for such Fund and the appropriateness of the benchmark used to compare the performance of each Fund. The Trustees further considered the level of Fund performance in the context of their review of Fund expenses and adviser profitability discussed below. Although Schwab Health Care Fund had performance that lagged that of a relevant peer group for certain (although not all) periods considered, the Board concluded that other factors relevant to performance supported renewal of the Agreement with respect to Schwab Health Care Fund including that the underperformance was attributable, to a significant extent, to investment decisions by CSIM that were reasonable and consistent with the Schwab Health Care Fund’s investment objective and policies and that CSIM had taken steps designed to help improve performance. Following such evaluation the Board concluded, within the context of its full deliberations, that the performance of the Funds supported renewal of the Agreement with respect to the Funds.
Fund Expenses. With respect to the Funds’ expenses, the Trustees considered the rate of compensation called for by the Agreement, and each Fund’s net operating expense ratio, in each case, in comparison to those of a peer group of mutual funds, such peer groups and comparisons having been selected and calculated by an independent third party. The Trustees considered the effects of CSIM’s and Schwab’s historical practice of voluntarily waiving management and other fees to prevent total Fund expenses from exceeding a specified cap. The Trustees also considered CSIM’s contractual commitment to keep each Fund’s expense cap for so long as CSIM serves as the adviser to such Fund. The Trustees also considered fees charged by CSIM to other mutual funds and to other types of accounts, such as exchange-traded funds and separately managed accounts, but, with respect to such other types of accounts, accorded less weight to such comparisons due to the different legal, regulatory, compliance and operating features of mutual funds as compared to these other types of accounts. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expenses of the Funds are reasonable and supported renewal of the Agreement with respect to the Funds.
Profitability. With regard to profitability, the Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly. In this connection, the Trustees reviewed management’s profitability analyses, together with certain commentary thereon from an independent accounting firm. The Trustees also considered any other benefits derived by CSIM from its relationship with the Funds, such as whether, by virtue of its management of the Funds, CSIM obtains investment information or other research resources that aid it in providing advisory services to other clients. The Trustees considered whether the varied levels of compensation and profitability under the Agreement and other service agreements were reasonable and justified in light of the quality of all services rendered to each Fund by CSIM and its affiliates. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM is reasonable and supported renewal of the Agreement with respect to the Funds.
Economies of Scale. The Trustees considered the existence of any economies of scale and whether those are passed along to a Fund’s shareholders through a graduated investment advisory fee schedule or other means, including any fee waivers by CSIM and its affiliates. In this regard, and consistent with their consideration of Fund expenses, the Trustees considered that CSIM and Schwab have committed resources to minimize the effects on shareholders of diseconomies of scale during periods when fund assets were relatively small through their contractual expense waivers. For example, such diseconomies of scale may particularly affect newer funds or funds with investment strategies that are from time to time out of favor, but shareholders may benefit from the continued availability of such funds at subsidized expense levels. The Trustees also considered the existing contractual investment advisory fee schedules relating to Schwab Financial Services Fund and Schwab Health Care Fund that, in each case, include lower fees at higher graduated asset levels. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the Funds obtain reasonable benefit from economies of scale.
In the course of their deliberations, the Trustees did not identify any particular information or factor that was all important or controlling. Based on the Trustees’ deliberation and their evaluation of the information described above, the Board, including all of the Independent Trustees, approved the continuation of the Agreement with respect to the Funds and concluded that the compensation under the Agreement with respect to the Funds is fair and reasonable in light of such services and expenses and such other matters as the Trustees have considered to be relevant in the exercise of their reasonable judgment.
Trustees and Officers
The tables below give information about the trustees and officers of Schwab Capital Trust prior to January 1, 2016, which includes the funds covered in this report. The “Fund Complex” includes The Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust, Laudus Trust and Laudus Institutional Trust. The Fund Complex includes 95 funds.
The address for all trustees and officers is 211 Main Street, San Francisco, CA 94105. You can find more information about the trustees and officers in the funds’ Statement of Additional Information, which is available free by calling 1-800-435-4000.
| Independent Trustees |
Name, Year of Birth,
and Position(s) with
the trust (Terms 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 |
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 (Oct. 1979 – present); Senior Fellow Stanford Institute for Economic Policy Research (2000 – present); Professor of Public Policy, Stanford University (1994 – 2015). | 74 | Director, Gilead Sciences, Inc. (2005 – present)
|
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. | 74 | 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) (Dec. 2008 – Sept. 2013) | 74 | Director, KLA-Tencor Corporation (2008 – present) |
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) (Jan. 2015 – present); Partner, Kudu Advisors, LLC (financial services) (June 2008 – Jan. 2015); Advisor, Asset International, Inc. (publisher of financial services information) (Aug. 2008 – Jan. 2015). | 95 | None |
| Independent Trustees (continued) |
Name, Year of Birth,
and Position(s) with
the trust (Terms 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 |
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) | Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (Mar. 1990 – present). | 74 | Director, Eaton (2012 – present)
Director and Chairman 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) (Jan. 2008 – present); Partner, Colgin Partners, LLC (vineyards) (Feb. 1998 – present). | 74 | Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 – present)
Lead Independent Director and Chair of Audit Committee, OUTFRONT Media Inc. (2014 – present) |
| Interested Trustees |
Name, Year of Birth,
and Position(s) with
the trust (Terms 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 |
Charles R. Schwab2
1937
Chairman and Trustee
(Chairman and Trustee of The Charles Schwab Family of Funds since 1989; Schwab Investments since 1991; Schwab Capital Trust since 1993; Schwab Annuity Portfolios since 1994; Laudus Trust and Laudus Institutional Trust since 2010) | Chairman and Director, The Charles Schwab Corporation (1986 – present); Chairman and Director of Charles Schwab & Co., Inc. (1971 – present); Chairman and Director of Charles Schwab Investment Management, Inc. (1989 – present); Chairman and Director of Charles Schwab Bank (2003 – present); Chairman and Chief Executive Officer of Schwab (SIS) Holdings Inc. I and Schwab International Holdings, Inc. (1996 – present); and Director, Chairman and Chief Executive Officer, Schwab Holdings, Inc. (1979 – present). | 74 | Chairman and Director, The Charles Schwab Corporation (1986 – present)
Director, Yahoo! Inc. (2014 – present) |
Walter W. Bettinger II2
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 and Charles Schwab & Co., Inc. (2008 – present); Director, Charles Schwab Bank (2006 – present); and Director, Schwab Holdings, Inc. (2008 – present). | 95 | Director, The Charles Schwab Corporation (2008 – present) |
| Officers of the Trust |
Name, Year of Birth, and Position(s)
with the trust (Terms of office, and
length of Time Served3) | Principal Occupations During the Past Five Years |
Marie Chandoha
1961
President and Chief Executive Officer
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2010) | Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer (Sept. 2010 – Oct. 2011), Charles Schwab Investment Management, Inc.; President, Chief Executive Officer (Dec. 2010 – present), and Chief Investment Officer (Sept. 2010 – Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Director, Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited (Jan. 2011 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (Mar. 2007 – Aug. 2010). |
George Pereira
1964
Treasurer and Principal Financial Officer, Schwab Funds
Treasurer and Chief Financial Officer, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2004; Laudus Trust and Laudus Institutional Trust since 2006) | Senior Vice President and Chief Financial Officer (Nov. 2004 – present), Chief Operating Officer (Jan. 2011 – present), Charles Schwab Investment Management, Inc.; Treasurer and Chief Financial Officer, Laudus Funds (June 2006 – present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – present) and Schwab ETFs (Oct. 2009 – present); Director, Charles Schwab Worldwide 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 Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust 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 – Jan. 2009). |
Brett Wander
1961
Senior Vice President and Chief Investment Officer – Fixed Income
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust 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 (Jan. 2008 – Oct. 2010); Director of Alpha Strategies Loomis, Sayles & Company (April 2006 – Jan. 2008). |
David Lekich
1964
Chief Legal Officer and Secretary, Schwab Funds
Vice President and Assistant Clerk, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2011) | Senior Vice President (Sept. 2011 – present), Vice President (Mar. 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present), Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (April 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; Vice President and Assistant Clerk, Laudus Funds (April 2011 – present); Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs. |
Catherine MacGregor
1964
Vice President and Assistant Secretary, Schwab Funds
Chief Legal Officer, Vice President and Clerk, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2005) | Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 – present); Vice President (Dec. 2005 – present), Chief Legal Officer and Clerk (Mar. 2007 – present), Laudus Funds; Vice President (Nov. 2005 – present) and Assistant Secretary (June 2007 – present), Schwab Funds; Vice President and Assistant Secretary, Schwab ETFs (Oct. 2009 – present). |
| 1 | Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab and Laudus Funds’ retirement policy 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 Schwab Funds or Laudus Funds to retire from all Boards upon their required retirement date from either Board. |
| 2 | Mr. Schwab and Mr. Bettinger are Interested Trustees because they own stock of The Charles Schwab Corporation, the parent company of the investment adviser. |
| 3 | The President, Treasurer and Secretary/Clerk 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 Boards. |
Glossary
asset allocation The practice of dividing a portfolio among different asset classes, with each asset class assigned a particular percentage.
asset class A group of securities with similar structure and basic characteristics. Stocks, bonds and cash are the three main examples of asset classes.
Barclays U.S. Aggregate Bond Index A broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid ARM pass-throughs), asset-backed securities, and commercial mortgage-backed securities.
Barclays U.S. Treasury Bills 1 – 3 Months Index An index that includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months and more than 1 month, are rated investment grade, and have $250 million or more of outstanding face value.
bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the coupon rate) until a specified date (the maturity date), at which time the issuer returns the money borrowed (principal or face value) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.”
An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.
bond fund A bond fund is subject to the same credit, interest rate, and inflation risks as bonds. In addition, a bond fund incurs ongoing fees and expenses. A bond fund’s net asset value will fluctuate with the price of the underlying bonds and the portfolio turnover activity; return of principal is not guaranteed.
cap, capitalization See “market cap.”
capital gain, capital loss the difference between the amount paid for an investment and its value at a later time. If the investment has been sold, the capital gain or loss is considered a realized gain or loss. If the investment is still held, the capital gain or loss is considered unrealized appreciation or depreciation.
Dividend Equity Spliced An internally calculated index, comprised of the S&P 500 Index (the Schwab Dividend Equity Fund’s former comparative index) from inception of the fund until the close of business on February 27, 2015 and the Russell 1000 Value Index thereafter.
Dow Jones Global Health Care Index An index that measures the performance of healthcare providers, researchers, and supplies producers around the world.
expense ratio The amount that is taken from a mutual fund’s assets each year to cover the fund’s operating expenses. An expense ratio of 0.50% means that a fund’s expenses amount to half of one percent of its average net assets a year.
market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.
MSCI EAFE (Europe, Australasia, Far East) Index A free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. & Canada. The Net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes; returns are calculated applying dividend withholding rates applicable to non-resident persons who do not benefit from double taxation treaties.
net asset value (NAV) The value of one share of a mutual fund. NAV is calculated by taking the fund’s total assets, subtracting liabilities, and dividing by the number of shares outstanding.
outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.
price-to-book ratio (P/B) The market price of a company’s stock compared with its “book value.” A mutual fund’s P/B is the weighted average of the P/B of all stocks in the fund’s portfolio.
price-to-earnings ratio (P/E) The market price of a company’s stock compared with earnings over the past year. A mutual fund’s P/E is the weighted average of the P/E of all stocks in the fund’s portfolio.
return on equity (ROE) The average yearly rate of return for each dollar of investors’ money, measured over the past five years.
Russell 1000 Growth Index An index that is composed of larger-cap companies and measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values
Russell 1000 Index An index that measures the performance of the large-cap segment of the U.S. equity universe.
Russell 1000 Value Index An index that measures the performance of the large-cap segment of the U.S. equity universe.
Russell 2000 Index An index that measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 Index companies with lower price-to-book ratios and lower expected growth values.
S&P 500 Index A market capitalization index that is designed to measure the performance of 500 leading publicly held companies in leading industries of the U.S. economy.
S&P 1500 SuperComposite Financial Sector Index A capitalization-weighted index designed to measure the performance of the financial sector of the S&P 1500 SuperComposite Index. The S&P SuperComposite 1500 is comprised of the 1500 companies included in the S&P 500, S&P MidCap 400 and S&P SmallCap 600 indices.
stock A share of ownership, or equity, in the issuing company.
total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.
weighted average For mutual funds, an average that gives the same weight to each security as the security represents in the fund’s portfolio.
yield The income paid out by an investment, expressed as a percentage of the investment’s market value.
PRIVACY NOTICE
THIS IS NOT PART OF THE SHAREHOLDER REPORT
A Commitment to Your Privacy
Your Privacy Is Not for Sale
We do not and will not sell your personal information to anyone, for any reason.
We are committed to protecting the privacy of information we maintain about you. Below are details about our commitment, including the types of information we collect and how we use and share that information. This Privacy Notice applies to you only if you are an individual who invests directly in the funds by placing orders through the funds’ transfer agent. If you place orders through your brokerage account at Charles Schwab & Co., Inc. or an account with another broker-dealer, investment advisor, 401(k) plan, employee benefit plan, administrator, bank or other financial intermediary, you are covered by the privacy policies of that financial institution and should consult those policies.
How We Collect Information About You
We collect personal information about you in a number of ways.
• APPLICATION AND REGISTRATION
INFORMATION.
We collect personal information from you when you open an account or utilize one of our services. We may also collect information about you from third parties such as consumer reporting agencies to verify your identity. The information we collect may include personal information, including your Social Security number, as well as details about your interests, investments and investment experience.
• TRANSACTION AND EXPERIENCE
INFORMATION.
Once your account has been opened, we collect and maintain personal information about your account activity, including your transactions, balances, positions and history. This information allows us to administer your account and provide the services you have requested.
• WEBSITE USAGE.
When you visit our websites, we may use devices known as “cookies,” graphic interchange format files (GIFs), or other similar web tools to enhance your web experience. These
tools help us to recognize you, maintain your web session, and provide a more personalized experience. To learn more, please go to www.schwab.com/privacy.
How We Share and Use Your Information
We provide access to information about you to our affiliated companies, outside companies and other third parties in certain limited circumstances, including:
• to help us process transactions for your account;
• when we use other companies to provide services for us, such as printing and mailing your account statements;
• when we believe that disclosure is required or permitted under law (for example, to cooperate with regulators or law enforcement, resolve consumer disputes, perform credit/authentication checks, or for risk control).
State Laws
We will comply with state laws that apply to the disclosure or use of information about you.
Safeguarding Your Information — Security Is a
Partnership
We take precautions to ensure the information we collect about you is protected and is accessed only by authorized individuals or organizations.
Companies we use to provide support services are not allowed to use information about our shareholders for their own purposes and are contractually obligated to maintain strict confidentiality. We limit their use of information to the performance of the specific services we have requested.
We restrict access to personal information by our employees and agents. Our employees are trained about privacy and are required to safeguard personal information.
We maintain physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
Contact Us
To provide us with updated information, report suspected fraud or identity theft, or for any other questions, please call the number below.
Schwab Funds® direct investors: 1-800-407-0256
© 2015 Schwab Funds. All rights reserved.
Schwab Funds® offers you an extensive family of mutual funds, each one based on a clearly defined investment approach and using disciplined management strategies. The list at right shows all currently available Schwab Funds.
Whether you are an experienced investor or just starting out, Schwab Funds can help you achieve your financial goals. An investor should consider a fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information can be found in the fund’s prospectus. Please call 1-800-435-4000 for a prospectus and brochure for any Schwab Fund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus.
Proxy Voting Policies, Procedures and Results
A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting the Schwab Funds’ website at www.csimfunds.com/schwabfunds_prospectus, the SEC’s website at www.sec.gov, or by contacting Schwab Funds at 1-800-435-4000.
Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting the fund’s website at www.csimfunds.com/schwabfunds_prospectus or the SEC’s website at www.sec.gov.
The Schwab Funds Family®
Stock Funds
Schwab Core Equity Fund™
Schwab Dividend Equity Fund™
Schwab Large-Cap Growth Fund™
Schwab Small-Cap Equity Fund™
Schwab Hedged Equity Fund™
Schwab Financial Services Fund™
Schwab Health Care Fund™
Schwab® International Core Equity Fund
Schwab Fundamental US Large Company Index Fund
Schwab Fundamental US Small Company Index Fund
Schwab Fundamental International Large Company Index Fund
Schwab Fundamental International Small Company Index Fund
Schwab Fundamental Emerging Markets Large Company Index Fund
Schwab Fundamental Global Real Estate Index Fund
Schwab Global Real Estate Fund™
Schwab® S&P 500 Index Fund
Schwab 1000 Index® Fund
Schwab Small-Cap Index Fund®
Schwab Total Stock Market Index Fund®
Schwab International Index Fund®
Asset Allocation Funds
Schwab Balanced Fund™
Schwab MarketTrack All Equity Portfolio™
Schwab MarketTrack Growth Portfolio™
Schwab MarketTrack Balanced Portfolio™
Schwab MarketTrack Conservative Portfolio™
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab 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
Bond Funds
Schwab Short-Term Bond Market Fund™
Schwab Intermediate-Term Bond Fund™
Schwab Total Bond Market Fund™
Schwab GNMA Fund™
Schwab® Treasury Inflation Protected Securities Index Fund
Schwab Tax-Free Bond Fund™
Schwab California Tax-Free Bond Fund™
Schwab Money Funds
Schwab offers an array of money market funds1. Choose from taxable or tax-advantaged alternatives. Many can be linked to your eligible Schwab account to “sweep” cash balances automatically, subject to availability, when you’re between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments®.
| 1 | Investments in money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency and, although they seek to preserve the value of your investment at $1 per share, it is possible to lose money. |
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
Funds
Schwab Funds®
1-800-435-4000
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
© 2015 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC®
Printed on recycled paper.
MFR26298-12
00156961
Annual report dated October 31, 2015, enclosed.
Schwab Fundamental Index* Funds
Schwab Fundamental
US Large Company Index Fund
Schwab Fundamental
US Small Company Index Fund
Schwab Fundamental
International Large Company
Index Fund
Schwab Fundamental
International Small Company
Index Fund
Schwab Fundamental
Emerging Markets Large
Company Index Fund
Go paperless today.
Simplify your financial life
by viewing these documents online.
Sign up at schwab.com/paperless
| * | SCHWAB is a registered trademark of Charles Schwab & Co., Inc.
FUNDAMENTAL INDEX is a registered trademark of Research
Affiliates LLC. |
This wrapper is not part of the shareholder report.
Schwab Fundamental Index* Funds
Annual Report
October 31, 2015
Schwab Fundamental
US Large Company Index Fund
Schwab Fundamental
US Small Company Index Fund
Schwab Fundamental
International Large Company
Index Fund
Schwab Fundamental
International Small Company
Index Fund
Schwab Fundamental
Emerging Markets Large
Company Index Fund
| * | SCHWAB is a registered trademark of Charles Schwab & Co., Inc.
FUNDAMENTAL INDEX is a registered trademark of Research
Affiliates LLC. |
This page is intentionally left blank.
Schwab Fundamental Index Funds
Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).
Distributor: Charles Schwab & Co., Inc. (Schwab)
The Sector/Industry classifications in this report use the Global Industry Classification Standard (GICS), which was developed by, and is the exclusive property of MSCI and Standard & Poor’s (S&P). GICS is a service mark of MSCI and S&P and has been licensed for use by Schwab. The Industry classifications used in the schedules of Portfolio Holdings are sub-categories of Sector classifications.
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
| Total Return for the 12 Months Ended October 31, 2015 |
Schwab Fundamental US Large Company Index Fund
(Ticker Symbol: SFLNX) | 1.44% |
| Russell Fundamental U.S. Large Company Index | 1.77% |
| Fund Category: Morningstar Large Value | 0.37% |
| Performance Details | pages 6-7 |
| |
Schwab Fundamental US Small Company Index Fund
(Ticker Symbol: SFSNX) | 1.01% |
| Russell Fundamental U.S. Small Company Index | 1.30% |
| Fund Category: Morningstar Small Blend | -0.45% |
| Performance Details | pages 8-9 |
| |
Schwab Fundamental International Large Company Index Fund1
(Ticker Symbol: SFNNX) | -4.07% |
| Russell Fundamental Developed ex-U.S. Large Company Index (Net)2 | -2.92% |
| Fund Category: Morningstar Foreign Large Value | -3.41% |
| Performance Details | pages 10-11 |
| Total Return for the 12 Months Ended October 31, 2015 |
Schwab Fundamental International Small Company Index Fund1
(Ticker Symbol: SFILX) | 3.09% |
| Russell Fundamental Developed ex-U.S. Small Company Index (Net)2 | 4.90% |
| Fund Category: Morningstar Foreign Small/Mid Blend | 2.51% |
| Performance Details | pages 12-13 |
| |
Schwab Fundamental Emerging Markets Large Company Index Fund1
(Ticker Symbol: SFENX) | -20.28% |
| Russell Fundamental Emerging Markets Large Company Index (Net)2 | -19.46% |
| Fund Category: Morningstar Diversified Emerging Markets | -14.62% |
| Performance Details | pages 14-15 |
| Minimum Initial Investment3 | $100 |
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, a fund’s total return would have been lower. Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
Index ownership— each of the names identifying the Russell Fundamental Index Series is a joint trademark of Frank Russell Company (Russell) and Research Affiliates LLC (RA) and is used by the funds under license. “Research Affiliates” and “Fundamental Index” are trademarks of RA. Subject to RA’s intellectual property rights in certain content, Russell is the owner of all copyrights related to the Russell Fundamental Index Series. Russell is the owner of the trademarks and copyrights related to the Russell Indexes. The Schwab Fundamental Index Funds are not sponsored, endorsed, sold or promoted by Russell or RA, and Russell and RA do not make any representation regarding the advisability of investing in shares of the funds.
Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date.
| 1 | The fund’s performance relative to the index may be affected by fair-value pricing and timing differences in foreign exchange calculations. See financial note 2 for more information. |
| 2 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
| 3 | Please see the funds' prospectus for further detail and eligibility requirements. |
2Schwab Fundamental Index Funds
Marie Chandoha is President and CEO of Charles Schwab Investment Management, Inc. and the funds covered in this report.
Dear Shareholder,
At Charles Schwab Investment Management, our goal is to provide foundational products with consistent performance that enable investors to build well-diversified portfolios. In recent years, fundamentally weighted index strategies have enjoyed significant asset growth as investors have embraced the value of different index strategies. Unlike traditional equity indexes that are often weighted by market capitalization, fundamentally weighted indexes select and weight stocks by objective non-price measures, such as dividends, cash flow, and sales. By using this weighting methodology, we believe the Schwab Fundamental Index Funds can serve as effective complements to capitalization-weighted and actively managed investments.
For the 12-month reporting period ended October 31, 2015, the funds produced returns that were generally aligned with their respective indexes. For the three international funds, the depreciation of many foreign currencies versus the U.S. dollar reduced returns.
Despite market volatility later in the period which was stimulated by concerns about global growth and speculation that the Fed might raise interest rates, the S&P 500 Index returned 5.2% for the period. Lackluster global economic activity weighed on international markets, bringing about aggressive stimulus policies by several central banks across the globe. This caused many foreign currencies to depreciate versus the U.S. dollar, thereby reducing returns on overseas investments in U.S. dollar terms. Emerging market countries suffered the steepest losses of the period, impacted by a sharp decline in
Asset Class Performance Comparison % returns during the 12 months ended 10/31/2015
Index figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Past performance is not an indication of future results.
For index definitions, please see the Glossary.
Data source: Index provider websites and CSIM.
Nothing in this report represents a recommendation of a security by the investment adviser.
Management views and portfolio holdings may have changed since the report date.
Schwab Fundamental Index Funds3
From the President continued
For the 12-month reporting period ended October 31, 2015, the funds produced returns that were generally aligned with their respective indexes.
commodities prices. Reflecting these conditions, the Russell Fundamental U.S. Large Company Index returned 1.8% and the Russell Fundamental Emerging Markets Large Company Index (Net) returned -19.5%.1
For more information about the Schwab Fundamental Index Funds, please continue reading this report. In addition, you can find further details about these funds by visiting our website at www.csimfunds.com. We are also happy to hear from you at 1-800-435-4000.
Sincerely,
| 1 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
4Schwab Fundamental Index Funds
 | Agnes Hong, CFA, Vice President and Head of Passive Equities, leads the portfolio management teams of Schwab's passive equity funds and ETFs, which comprise the Schwab Equity Index Funds, the Schwab Fundamental Index Funds, and the Schwab Equity ETFs. She also has overall responsibility for all aspects of the management of the funds. Prior to joining CSIM in 2009, Ms. Hong spent five years as a portfolio manager at Barclays Global Investors (subsequently acquired by BlackRock), where she managed institutional index funds and quantitative active funds. Prior to that, Ms. Hong worked in management consulting and product management, servicing global financial services clients. |
 | Ferian Juwono, CFA, Managing Director and Senior Portfolio Manager, is responsible for the day-to-day co-management of the funds. Prior to joining CSIM in 2010, Mr. Juwono worked at BlackRock (formerly Barclays Global Investors), where he spent over three years as a portfolio manager, managing equity index funds for institutional clients, and nearly two years as a senior business analyst. Prior to that, Mr. Juwono worked for over four years as a senior financial analyst with Union Bank of California. |
 | Jane Qin, Portfolio Manager, is responsible for the day-to-day co-management of the Schwab Fundamental US Large Company Index Fund, Schwab Fundamental US Small Company Index Fund, Schwab Fundamental International Large Company Index Fund, and Schwab Fundamental International Small Company Index Fund. Prior to joining CSIM in 2012, Ms. Qin worked at The Bank of New York Mellon Corporation, where she spent more than two years as an associate equity portfolio manager, and nearly two years as a performance analyst. Prior to that, Ms. Qin worked at Wells Fargo Fund Management as a mutual fund analyst and at CIGNA Reinsurance as a risk analyst. |
Schwab Fundamental Index Funds5
Schwab Fundamental US Large Company Index Fund
The Schwab Fundamental US Large Company Index Fund (the fund) seeks investment results that correspond generally (before fees and expenses) to the total return of the Russell Fundamental U.S. Large Company Index (the index), which measures the performance of the large company size segment by fundamental overall company scores that are created using as the universe the companies in the Russell 3000® Index. To pursue its investment objective, the fund uses a replication investment approach and generally gives the same weight to a given stock as does the index. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. U.S. stocks posted modest gains for the 12-month reporting period on mixed economic data, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest-rate hike.
Performance. The fund closely tracked the index for the reporting period. The fund returned 1.44% for the 12-month reporting period ended October 31, 2015, while the comparative index returned 1.77%. Differences between the return of the fund and the return of the index may be attributable to, among other things, the operational and transactional costs incurred by the fund and not the index.
Contributors and Detractors. From a sector standpoint, the Consumer Discretionary sector contributed the most to the fund’s return. Representing an average weight of roughly 13% of the fund, the sector returned 12.5% for the reporting period. Within the sector, the largest contributors to fund performance were home improvement specialty retailer Home Depot, Inc. and The Walt Disney Company, an international family entertainment and media enterprise, which returned more than 29% and 26%, respectively.
The fund’s holdings in the Health Care sector also provided meaningful contribution to the fund’s return. Representing an average weight of nearly 12% of the fund, the sector returned 9.6% for the reporting period. Within the sector, the strongest contributors to fund performance were UnitedHealth Group, Inc., a diversified managed care company, and Pfizer, Inc., a global pharmaceutical company. These two companies returned more than 25% and 16%, respectively.
The Energy sector detracted the most from fund performance. Representing an average weight of 13.6% of the fund, the sector returned -16.3% for the period. With oil prices falling sharply during much of 2015—recovering only marginally toward the end of the period—oil companies were among the largest drags on performance. Among the fund’s holdings, Chevron Corporation and Exxon Mobil Corporation were particularly detrimental, with those positions down more than 21% and 11%, respectively.
The fund’s holdings in the Materials sector also detracted from performance, as global commodity prices declined significantly during the period. Constituting an average weight of just under 4% of the fund, the sector fell more than 10% for the period. Like the Energy sector, the Materials sector rebounded somewhat during the final month of the reporting period. Within the sector, Freeport-McMoRan Inc., a large global producer of copper and gold, was the fund’s largest detractor, down more than 57% for the period. Alcoa, a multinational company involved in lightweight metals technology, engineering and manufacturing, was also a drag on performance, down more than 46% for the period.
As of 10/31/15:
| Statistics |
| Number of Holdings | 635 |
| Weighted Average Market Cap (millions) | $118,560 |
| Price/Earnings Ratio (P/E) | 25.2 |
| Price/Book Ratio (P/B) | 2.2 |
| Portfolio Turnover Rate | 12% |
| Sector Weightings % of Investments |
| Information Technology | 14.5% |
| Energy | 14.3% |
| Financials | 13.5% |
| Consumer Discretionary | 12.8% |
| Consumer Staples | 11.6% |
| Health Care | 10.7% |
| Industrials | 10.1% |
| Utilities | 4.2% |
| Telecommunication Services | 4.0% |
| Materials | 3.7% |
| Other | 0.6% |
| Total | 100.0% |
| Top Equity Holdings % of Net Assets1 |
| Exxon Mobil Corp. | 4.7% |
| Chevron Corp. | 2.5% |
| AT&T, Inc. | 2.5% |
| Microsoft Corp. | 2.1% |
| General Electric Co. | 1.5% |
| Apple, Inc. | 1.5% |
| The Procter & Gamble Co. | 1.4% |
| JPMorgan Chase & Co. | 1.4% |
| International Business Machines Corp. | 1.3% |
| Intel Corp. | 1.3% |
| Total | 20.2% |
Management views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S&P and MSCI.
| 1 | This list is not a recommendation of any security by the investment adviser. |
6Schwab Fundamental Index Funds
Schwab Fundamental US Large Company Index Fund
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
April 2, 2007 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1,2,3
Average Annual Total Returns1,2,4
| Fund and Inception Date | 1 Year | 5 Years | Since Inception |
| Fund: Schwab Fundamental US Large Company Index Fund (4/2/07) | 1.44% | 13.38% | 7.03% |
| Russell Fundamental U.S. Large Company Index3 | 1.77% | NA | NA |
| Fundamental U.S. Large Company Spliced Index | 1.77% | 13.78% | 7.26% |
| Fund Category: Morningstar Large Value | 0.37% | 11.70% | 4.74% |
Fund Expense Ratios5: Net 0.35%; Gross 0.39%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
Index ownership— "Russell Fundamental U.S. Large Company Index" is a joint trademark of Frank Russell Company (Russell) and Research Affiliates LLC (RA) and is used by the fund under license. “Research Affiliates” and “Fundamental Index” are trademarks of RA. Subject to RA’s intellectual property rights in certain content, Russell is the owner of all copyrights related to the Russell Fundamental Index Series. Schwab Fundamental Index Funds are not sponsored, endorsed, sold or promoted by Russell or RA, and Russell and RA do not make any representation regarding the advisability of investing in shares of the fund.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | On October 27, 2009, the Investor Share class, Select Share class and Institutional Share class were combined into a single class of shares of the fund. The performance history of the fund prior to October 27, 2009 is that of the fund’s former Institutional Shares. |
| 3 | The inception date of the Russell Fundamental U.S. Large Company Index is February 24, 2011. The fund began tracking the index on October 19, 2012. |
| 4 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 5 | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Fundamental Index Funds7
Schwab Fundamental US Small Company Index Fund
The Schwab Fundamental US Small Company Index Fund (the fund) seeks investment results that correspond generally (before fees and expenses) to the total return of the Russell Fundamental U.S. Small Company Index (the index), which measures the performance of the small company size segment by fundamental overall company scores that are created using as the universe the companies in the Russell 3000® Index. To pursue its investment objective, the fund uses a replication investment approach and generally gives the same weight to a given stock as does the index. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. U.S. stocks posted modest gains for the 12-month reporting period on mixed economic data, with small-cap stocks underperforming large-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest-rate hike.
Performance. The fund closely tracked the index for the reporting period. The fund returned 1.01% for the 12-month reporting period ended October 31, 2015, while the comparative index returned 1.30%. Differences between the return of the fund and the return of the index may be attributable to, among other things, the operational and transactional costs incurred by the fund and not the index.
Contributors and Detractors. From a sector standpoint, the Information Technology sector contributed the most to the fund’s return. Representing an average weight of roughly 14% of the fund, the sector returned 11.6% for the reporting period. Within the sector, the fund’s strongest contributors to performance were Qorvo, Inc., a leading provider of core technologies and radio frequency solutions for mobile, infrastructure and aerospace/defense applications; and EarthLink Holdings Corp., which provides managed network, security and cloud solutions for multi-location businesses. The fund’s holdings in the two companies were up more than 54% and 147%, respectively.
The Financials sector was also a positive contributor to fund performance. Representing an average weight of 22.3% of the fund, the sector returned roughly 6.3% for the reporting period. Within the sector, the strongest contributors to fund performance were financial products and services provider StanCorp Financial Group, Inc. and data center and Internet exchange provider Equinix Inc. For the reporting period, these two companies were up more than 68% and 50%, respectively.
The Energy sector detracted the most from fund performance. Representing an average weight of 4.8% of the fund, the sector declined 44% for the period. With oil prices falling sharply during much of 2015—recovering only marginally toward the end of the period—companies serving the oil industry were among the largest detractors to performance. Among the fund’s holdings, the two weakest performers were WPX Energy, Inc., which specializes in oil and natural gas extraction, particularly from shale via fracking, and Helix Energy Solutions Group, which provides subsea technologies to offshore energy producers. Those two positions were down more than 47% and 78%, respectively.
The fund’s holdings in the Materials sector also detracted from performance, as global commodity prices declined significantly during the period. Constituting an average weight of 5.7% of the fund, the sector fell more than 13% for the period. Like the Energy sector, the Materials sector rebounded somewhat during the final month of the reporting period. Among the fund’s Materials stocks, the two largest detractors from fund performance were Walter Energy, Inc., a coal, coke and natural gas producer that filed for Chapter 11 bankruptcy in July, and aluminum producer Century Aluminum Company, which suffered due to falling aluminum prices. The two companies were down more than 91% and 87%, respectively.
As of 10/31/15:
| Statistics |
| Number of Holdings | 890 |
| Weighted Average Market Cap (millions) | $4,301 |
| Price/Earnings Ratio (P/E) | 47.8 |
| Price/Book Ratio (P/B) | 1.8 |
| Portfolio Turnover Rate | 31% |
| Sector Weightings % of Investments |
| Financials | 22.4% |
| Industrials | 19.6% |
| Consumer Discretionary | 15.6% |
| Information Technology | 13.0% |
| Health Care | 6.4% |
| Materials | 5.4% |
| Energy | 5.1% |
| Utilities | 4.1% |
| Consumer Staples | 3.8% |
| Telecommunication Services | 1.1% |
| Other | 3.5% |
| Total | 100.0% |
| Top Equity Holdings % of Net Assets1 |
| Sealed Air Corp. | 0.3% |
| Weight Watchers International, Inc. | 0.3% |
| Masco Corp. | 0.3% |
| Endurance Specialty Holdings Ltd. | 0.3% |
| VeriSign, Inc. | 0.3% |
| SkyWest, Inc. | 0.3% |
| Netflix, Inc. | 0.3% |
| Service Corp. International | 0.3% |
| Lennox International, Inc. | 0.3% |
| Convergys Corp. | 0.3% |
| Total | 3.0% |
Management views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S&P and MSCI.
Small-company stocks are subject to greater volatility than many other asset classes.
| 1 | This list is not a recommendation of any security by the investment adviser. |
8Schwab Fundamental Index Funds
Schwab Fundamental US Small Company Index Fund
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
April 2, 2007 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1,2,3
Average Annual Total Returns1,2,4
| Fund and Inception Date | 1 Year | 5 Years | Since Inception |
| Fund: Schwab Fundamental US Small Company Index Fund (4/2/07) | 1.01% | 12.63% | 7.63% |
| Russell Fundamental U.S. Small Company Index3 | 1.30% | NA | NA |
| Fundamental U.S. Small Company Spliced Index | 1.30% | 13.04% | 8.17% |
| Fund Category: Morningstar Small Blend | -0.45% | 11.37% | 5.54% |
Fund Expense Ratios5: Net 0.35%; Gross 0.44%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
Index ownership— "Russell Fundamental U.S. Small Company Index" is a joint trademark of Frank Russell Company (Russell) and Research Affiliates LLC (RA) and is used by the fund under license. “Research Affiliates” and “Fundamental Index” are trademarks of RA. Subject to RA’s intellectual property rights in certain content, Russell is the owner of all copyrights related to the Russell Fundamental Index Series. Schwab Fundamental Index Funds are not sponsored, endorsed, sold or promoted by Russell or RA, and Russell and RA do not make any representation regarding the advisability of investing in shares of the fund.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | On October 27, 2009, the Investor Share class, Select Share class and Institutional Share class were combined into a single class of shares of the fund. The performance history of the fund prior to October 27, 2009 is that of the fund’s former Institutional Shares. |
| 3 | The inception date of the Russell Fundamental U.S. Small Company Index is February 24, 2011. The fund began tracking the index on October 19, 2012. |
| 4 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 5 | As stated in the prospectus. The expense information shown in the table has been restated to reflect the removal of expenses incurred indirectly by the fund through its investment in business development companies (BDCs). The fund’s benchmark index no longer includes BDCs. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Fundamental Index Funds9
Schwab Fundamental International Large Company Index Fund
The Schwab Fundamental International Large Company Index Fund (the fund) seeks investment results that correspond generally (before fees and expenses) to the total return of the Russell Fundamental Developed ex-U.S. Large Company Index (Net) (the index), which measures the performance of the large company size segment by fundamental overall company scores that is created using as the universe the companies in the Russell Developed ex-U.S. Index. To pursue its investment objective, the fund uses a replication investment approach and generally gives the same weight to a given stock as does the index. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. Slowing growth in China, along with declining energy and metals prices, weighed on global markets over the 12-month reporting period. Stocks in developed international markets produced just slightly negative overall returns, with the MSCI EAFE Index (Net) returning -0.07%. Emerging markets were particularly hard hit over the period, with the MSCI Emerging Markets Index (Net) returning -14.5%. The U.S. dollar remained strong against many foreign currencies, generally reducing returns of international investments in U.S. dollar terms.
Performance. The fund returned -4.07% for the 12-month reporting period ended October 31, 2015, while the comparative index returned -2.92%. Differences between the return of the fund and the return of the index may be attributable to, among other things, the operational and transactional costs incurred by the fund and not the index. Additionally, timing differences in foreign exchange calculations and fair valuation of the fund’s holdings contributed to the fund’s relative underperformance.1
Contributors and Detractors. From a geographic standpoint, stocks from Japan were among the largest contributors to the fund’s return. Representing an average weight of 22.3% of the fund, Japanese stocks returned 12.6% in U.S. dollar terms for the period. Among the fund’s Japanese stocks, the strongest contributors to fund performance were electric utility Tokyo Electric Power Company, Inc. and electronic and entertainment conglomerate Sony Corporation, which returned more than 93% and 56%, respectively. Stocks from France also contributed notably to the fund’s total return. Representing an average weight of 10.7%, French stocks returned 3.7% in U.S. dollar terms for the period. The two largest contributors to fund performance were telecommunications company Orange S.A., and multinational pharmaceutical company Sanofi. The two companies returned more than 16% and 13%, respectively.
Stocks from Australia provided the largest drag on fund performance. Representing an average weight of just over 5%, the fund’s Australian stocks returned -23% in U.S. dollar terms for the period. Among the fund’s Australian holdings, two of the weakest performers were BHP Billiton Limited, one of the world’s largest mining, metals and petroleum companies, and supermarket/grocery chain Woolworths Ltd., with those positions down more than 37% and 42%, respectively. Stocks from Canada also detracted from fund performance. Representing an average weight of 6.4%, the fund’s Canadian stocks returned -19.3% in U.S. dollar terms for the period. The two weakest performing Canadian stocks in the fund were energy producer Encana Corporation and financial services company Royal Bank of Canada, down more than 58% and 16%, respectively.
As of 10/31/15:
| Statistics |
| Number of Holdings | 844 |
| Weighted Average Market Cap (millions) | $53,629 |
| Price/Earnings Ratio (P/E) | 32.0 |
| Price/Book Ratio (P/B) | 1.3 |
| Portfolio Turnover Rate | 11% |
| Sector Weightings % of Investments |
| Financials | 19.0% |
| Energy | 13.0% |
| Industrials | 12.5% |
| Consumer Discretionary | 11.1% |
| Consumer Staples | 10.2% |
| Materials | 8.4% |
| Telecommunication Services | 7.3% |
| Health Care | 6.9% |
| Utilities | 6.2% |
| Information Technology | 4.0% |
| Other | 1.4% |
| Total | 100.0% |
| Top Equity Holdings % of Net Assets2 |
| BP plc | 2.3% |
| Royal Dutch Shell plc, A Shares | 2.0% |
| Total S.A. | 1.9% |
| Royal Dutch Shell plc, B Shares | 1.2% |
| Nestle S.A. – Reg'd | 1.1% |
| HSBC Holdings plc | 1.1% |
| Banco Santander S.A. | 1.1% |
| Eni S.p.A. | 1.0% |
| Telefonica S.A. | 1.0% |
| Vodafone Group plc | 0.9% |
| Total | 13.6% |
Management views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S&P and MSCI.
International investments are subject to additional risks such as currency fluctuation, geopolitical risk and the potential for illiquid markets.
| 1 | Typically, the securities in the index are valued using foreign exchange rates obtained at the close of the London foreign currency exchange (11:00 AM EST). Securities in the fund, however, are valued using foreign exchange rates obtained at the close of the New York foreign currency exchange (4:00 PM EST). This difference in closing times can result in different foreign currency exchange rates between the two exchanges, and thus different foreign currency exchange rates used in the valuation of the index’s and fund’s securities. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
10Schwab Fundamental Index Funds
Schwab Fundamental International Large Company Index Fund
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
April 2, 2007 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1,2,3
Average Annual Total Returns1,2,4
| Fund and Inception Date | 1 Year | 5 Years | Since Inception |
| Fund: Schwab Fundamental International Large Company Index Fund (4/2/07) | -4.07% | 3.37% | 0.54% |
| Russell Fundamental Developed ex-U.S. Large Company Index (Net)3,5 | -2.92% | NA | NA |
| Fundamental Developed ex-U.S. Large Company Spliced Index | -2.92% | 3.89% | 1.34% |
| Fund Category: Morningstar Foreign Large Value | -3.41% | 3.37% | -0.40% |
Fund Expense Ratios6: Net 0.35%; Gross 0.48%
Country Weightings % of Investments
| Japan | 22.0% |
| United Kingdom | 16.6% |
| France | 10.9% |
| Germany | 8.8% |
| Canada | 6.3% |
| Switzerland | 5.7% |
| Netherlands | 5.4% |
| Australia | 5.1% |
| Spain | 4.1% |
| Italy | 3.9% |
| Other Countries | 11.2% |
| Total | 100.0% |
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
The fund’s performance relative to the index may be affected by fair-value pricing, see financial note 2 for more information.
Index ownership— "Russell Fundamental Developed ex-U.S. Large Company Index" is a joint trademark of Frank Russell Company (Russell) and Research Affiliates LLC (RA) and is used by the fund under license. “Research Affiliates” and “Fundamental Index” are trademarks of RA. Subject to RA’s intellectual property rights in certain content, Russell is the owner of all copyrights related to the Russell Fundamental Index Series. Schwab Fundamental Index Funds are not sponsored, endorsed, sold or promoted by Russell or RA, and Russell and RA do not make any representation regarding the advisability of investing in shares of the fund.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | On October 19, 2009, the Investor Share class, Select Share class and Institutional Share class were combined into a single class of shares of the fund. The performance history of the fund prior to October 19, 2009 is that of the fund’s former Institutional Shares. |
| 3 | The inception date of the Russell Fundamental Developed ex-U.S. Large Company Index (Net) is February 24, 2011. The fund began tracking the index on October 19, 2012. |
| 4 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 5 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
| 6 | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Fundamental Index Funds11
Schwab Fundamental International Small Company Index Fund
The Schwab Fundamental International Small Company Index Fund (the fund) seeks investment results that correspond generally (before fees and expenses) to the total return of the Russell Fundamental Developed ex-U.S. Small Company Index (Net) (the index), which measures the performance of the small company size segment by fundamental overall company scores that is created using as the universe the companies in the Russell Developed ex-U.S. Index. To pursue its investment objective, the fund uses a replication investment approach and generally gives the same weight to a given stock as does the index. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. Slowing growth in China, along with declining energy and metals prices, weighed on global markets over the 12-month reporting period. Small-cap stocks in developed international markets strongly outperformed large-caps, with the MSCI EAFE Small Cap Index (Net) returning 8.5% versus the -0.07% return of the large-cap MSCI EAFE Index (Net). Emerging markets were particularly hard hit over the period, with the MSCI Emerging Markets Index (Net) returning -14.5%. The U.S. dollar remained strong against many foreign currencies, generally reducing returns of international investments in U.S. dollar terms.
Performance. The fund returned 3.09% for the 12-month reporting period ended October 31, 2015, while the comparative index returned 4.90%. Differences between the return of the fund and the return of the index may be attributable to, among other things, the operational and transactional costs incurred by the fund and not the index. Additionally, timing differences in foreign exchange calculations and fair valuation of the fund’s holdings contributed to the fund’s relative underperformance.1
Contributors and Detractors. From a country perspective, stocks from Japan were among the largest contributors to the fund’s total return. Representing an average weight of nearly 40% of the fund, Japanese stocks returned just under 16% in U.S. dollar terms for the period. Among the fund’s Japanese stocks, the strongest contributors to fund performance were electrical component producer Alps Electric Co., Ltd. and security provider Sohgo Security Services, Co., Ltd., which returned more than 91% and 113%, respectively. Stocks from the United Kingdom also contributed notably to the fund’s return. Representing an average weight of 13.5%, British stocks returned 8.2% in U.S. dollar terms for the period. Two of the largest contributors to fund performance were Provident Financial plc, which specializes in consumer credit products, and Greggs plc, the U.K.’s largest bakery chain. The two companies returned more than 62% and 97%, respectively.
Stocks from Canada detracted the most from the fund’s total return. Representing an average weight of 7.5%, the fund’s Canadian stocks returned -21.9% for the period. Among the fund’s Canadian holdings, the two weakest performers were oilfield service provider Trican Well Service Ltd. and nickel producer Sherritt International Corporation. Those two positions were down more than 92% and 74%, respectively, as a result of falling commodity prices. Stocks from Australia also detracted from fund performance. Representing an average weight of 5.5%, Australian stocks returned -17% in U.S. dollar terms for the period. The fund’s two weakest performing Australian stocks were Broadspectrum Limited, an electrical, commissioning, mechanical and instrumentation services provider; and department store chain Myer Holdings Ltd., with the two companies down more than 57% and 54%, respectively.
As of 10/31/15:
| Statistics |
| Number of Holdings | 1,380 |
| Weighted Average Market Cap (millions) | $3,129 |
| Price/Earnings Ratio (P/E) | 28.3 |
| Price/Book Ratio (P/B) | 1.4 |
| Portfolio Turnover Rate | 37% |
| Sector Weightings % of Investments |
| Industrials | 23.0% |
| Consumer Discretionary | 18.0% |
| Financials | 15.7% |
| Materials | 10.6% |
| Information Technology | 9.0% |
| Consumer Staples | 8.2% |
| Health Care | 4.6% |
| Energy | 3.1% |
| Telecommunication Services | 1.6% |
| Utilities | 1.4% |
| Other | 4.8% |
| Total | 100.0% |
| Top Equity Holdings % of Net Assets2 |
| iShares MSCI EAFE Small Cap ETF | 0.9% |
| Koninklijke BAM Groep N.V | 0.2% |
| UBISOFT Entertainment | 0.2% |
| Toyota Boshoku Corp. | 0.2% |
| Cable & Wireless Communications plc | 0.2% |
| IT Holdings Corp. | 0.2% |
| Greene King plc | 0.2% |
| Nichirei Corp. | 0.2% |
| Megmilk Snow Brand Co., Ltd. | 0.2% |
| Toho Holdings Co., Ltd. | 0.2% |
| Total | 2.7% |
Management views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S&P and MSCI.
Small-company stocks are subject to greater volatility than many other asset classes.
International investments are subject to additional risks such as currency fluctuation, geopolitical risk and the potential for illiquid markets.
| 1 | Typically, the securities in the index are valued using foreign exchange rates obtained at the close of the London foreign currency exchange (11:00 AM EST). Securities in the fund, however, are valued using foreign exchange rates obtained at the close of the New York foreign currency exchange (4:00 PM EST). This difference in closing times can result in different foreign currency exchange rates between the two exchanges, and thus different foreign currency exchange rates used in the valuation of the index’s and fund’s securities. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
12Schwab Fundamental Index Funds
Schwab Fundamental International Small Company Index Fund
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
January 31, 2008 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1,2,3
Average Annual Total Returns1,2,4
| Fund and Inception Date | 1 Year | 5 Years | Since Inception |
| Fund: Schwab Fundamental International Small Company Index Fund (1/31/08) | 3.09% | 6.25% | 4.96% |
| Russell Fundamental Developed ex-U.S. Small Company Index (Net)3,5 | 4.90% | NA | NA |
| Fundamental Developed ex-U.S. Small Company Spliced Index | 4.90% | 7.01% | 6.38% |
| Fund Category: Morningstar Foreign Small/Mid Blend | 2.51% | 6.85% | 4.10% |
Fund Expense Ratios6: Net 0.51%; Gross 0.82%
Country Weightings % of Investments
| Japan | 38.7% |
| United Kingdom | 12.0% |
| Canada | 7.1% |
| Australia | 5.2% |
| United States | 4.7% |
| France | 4.1% |
| Germany | 3.5% |
| Switzerland | 2.7% |
| Italy | 2.7% |
| Other Countries | 19.3% |
| Total | 100.0% |
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
The fund’s performance relative to the index may be affected by fair-value pricing, see financial note 2 for more information.
Index ownership— "Russell Fundamental Developed ex-U.S. Small Company Index" is a joint trademark of Frank Russell Company (Russell) and Research Affiliates LLC (RA) and is used by the fund under license. “Research Affiliates” and “Fundamental Index” are trademarks of RA. Subject to RA’s intellectual property rights in certain content, Russell is the owner of all copyrights related to the Russell Fundamental Index Series. Schwab Fundamental Index Funds are not sponsored, endorsed, sold or promoted by Russell or RA, and Russell and RA do not make any representation regarding the advisability of investing in shares of the fund.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | On October 19, 2009, the Investor Share class, Select Share class and Institutional Share class were combined into a single class of shares of the fund. The performance history of the fund prior to October 19, 2009 is that of the fund’s former Institutional Shares. |
| 3 | The inception date of the Russell Fundamental Developed ex-U.S. Small Company Index (Net) is February 24, 2011. The fund began tracking the index on October 19, 2012. |
| 4 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 5 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
| 6 | As stated in the prospectus. Includes acquired fund fees and expenses incurred indirectly by the fund through its investments in other investment companies. The annualized weighted average expense ratio of these investment companies was 0.02%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Fundamental Index Funds13
Schwab Fundamental Emerging Markets Large Company Index Fund
The Schwab Fundamental Emerging Markets Large Company Index Fund (the fund) seeks investment results that correspond generally (before fees and expenses) to the total return of the Russell Fundamental Emerging Markets Large Company Index (Net) (the index), which measures the performance of the large company size segment by fundamental overall company scores that is created using as the universe the companies in the Russell Emerging Markets Index. To pursue its investment objective, the fund invests at least 80% of its net assets in stocks included in the index and seeks to maintain a tight allocation across all countries, regions, sectors, market capitalizations, and valuation measures compared with the index. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. Slowing growth in China, along with declining energy and metals prices, weighed on global markets over the 12-month reporting period, hitting emerging markets particularly hard. For the period, the MSCI Emerging Markets Index (Net) returned -14.5% in U.S. dollar terms. The U.S. dollar remained strong against many foreign currencies, generally reducing returns of international investments in U.S. dollar terms. Geopolitical tensions continued across emerging markets as signs of global recovery dimmed.
Performance. The fund closely tracked the index for the reporting period. The fund returned -20.28% for the 12-month reporting period ended October 31, 2015, while the comparative index returned -19.46%. Differences between the return of the fund and the return of the index may be attributable to, among other things, the operational and transactional costs incurred by the fund and not the index. Additionally, timing differences in foreign exchange calculations and fair valuation of the fund’s holdings contributed to the fund’s relative underperformance.1
Contributors and Detractors. With the majority of emerging markets stocks posting negative returns for the period, the strongest contributors to total return were small positions in a few stocks with positive returns. Stocks from Hungary, representing an average weight of just 0.6% of the fund, contributed the most to fund performance. This was primarily due to the fund’s holding of OTP Bank plc, one of the largest independent financial services providers in Central and Eastern Europe, which returned more than 20% in U.S. dollar terms for the period. The fund’s holding of Compania de Minas Buenaventura SAA, Peru’s largest owner of precious metal mining rights, also contributed to fund performance with its 5.5% return (this position was sold prior to the end of the period).
Brazilian stocks detracted the most from fund performance. Representing an average weight of 12.4% of the fund, the fund’s Brazilian stocks fell more than 53% in U.S. dollar terms, as economic growth there has steadily eroded and inflation has risen due to sharply falling commodity prices. The fund’s holding of both common and preferred shares of Petroleo Brasileiro (Petrobras), which is involved in the entire oil and gas production chain—down more than 67% in U.S. dollar terms—was a notable drag on fund performance for the period. Russian stocks also detracted from fund performance. Representing an average weight of 12.8%, the fund’s Russian stocks fell more than 23% in U.S. dollar terms for the period. Two of the weakest performers were Gazprom PAO and Lukoil PJSC, two of Russia’s largest oil and gas producers and distributors. These two companies were down more than 34% and 22%, respectively.
As of 10/31/15:
| Statistics |
| Number of Holdings | 296 |
| Weighted Average Market Cap (millions) | $50,546 |
| Price/Earnings Ratio (P/E) | 15.5 |
| Price/Book Ratio (P/B) | 0.9 |
| Portfolio Turnover Rate | 27% |
| Sector Weightings % of Investments |
| Energy | 26.1% |
| Financials | 18.9% |
| Information Technology | 16.1% |
| Materials | 9.8% |
| Telecommunication Services | 9.6% |
| Consumer Discretionary | 6.8% |
| Industrials | 5.0% |
| Consumer Staples | 4.0% |
| Utilities | 3.7% |
| Total | 100.0% |
| Top Equity Holdings % of Net Assets2 |
| Samsung Electronics Co., Ltd. | 5.1% |
| Gazprom PAO | 2.8% |
| China Mobile Ltd. | 2.2% |
| China Construction Bank Corp., Class H | 2.1% |
| Industrial & Commercial Bank of China Ltd., Class H | 1.8% |
| Taiwan Semiconductor Manufacturing Co., Ltd. | 1.8% |
| Gazprom PAO ADR | 1.7% |
| China Petroleum & Chemical Corp., Class H | 1.7% |
| Hon Hai Precision Industry Co., Ltd. | 1.6% |
| Petroleo Brasileiro S.A., Preferred Stock | 1.6% |
| Total | 22.4% |
Management views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S&P and MSCI.
International investments are subject to additional risks such as currency fluctuation, geopolitical risk and the potential for illiquid markets. Investing in emerging markets may accentuate these risks.
| 1 | Typically, the securities in the index are valued using foreign exchange rates obtained at the close of the London foreign currency exchange (11:00 AM EST). Securities in the fund, however, are valued using foreign exchange rates obtained at the close of the New York foreign currency exchange (4:00 PM EST). This difference in closing times can result in different foreign currency exchange rates between the two exchanges, and thus different foreign currency exchange rates used in the valuation of the index’s and fund’s securities. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
14Schwab Fundamental Index Funds
Schwab Fundamental Emerging Markets Large Company Index Fund
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
January 31, 2008 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1,2,3
Average Annual Total Returns1,2,4
| Fund and Inception Date | 1 Year | 5 Years | Since Inception |
| Fund: Schwab Fundamental Emerging Markets Large Company Index Fund (1/31/08) | -20.28% | -6.09% | -2.55% |
| Russell Fundamental Emerging Markets Large Company Index (Net)3,5 | -19.46% | NA | NA |
| Fundamental Emerging Markets Large Company Spliced Index | -19.46% | -4.92% | -0.93% |
| Fund Category: Morningstar Diversified Emerging Markets | -14.62% | -2.85% | -1.22% |
Fund Expense Ratios6: Net 0.49%; Gross 0.85%
Country Weightings % of Investments
| Republic of Korea | 20.0% |
| China | 16.5% |
| Russia | 14.0% |
| Brazil | 12.1% |
| Taiwan | 11.9% |
| South Africa | 6.1% |
| India | 4.1% |
| Mexico | 3.9% |
| Other Countries | 11.4% |
| Total | 100.0% |
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
The fund’s performance relative to the index may be affected by fair-value pricing, see financial note 2 for more information.
Index ownership— "Russell Fundamental Emerging Markets Large Company Index" is a joint trademark of Frank Russell Company (Russell) and Research Affiliates LLC (RA) and is used by the fund under license. “Research Affiliates” and “Fundamental Index” are trademarks of RA. Subject to RA’s intellectual property rights in certain content, Russell is the owner of all copyrights related to the Russell Fundamental Index Series. Schwab Fundamental Index Funds are not sponsored, endorsed, sold or promoted by Russell or RA, and Russell and RA do not make any representation regarding the advisability of investing in shares of the fund.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | On October 19, 2009, the Investor Share class, Select Share class and Institutional Share class were combined into a single class of shares of the fund. The performance history of the fund prior to October 19, 2009 is that of the fund’s former Institutional Shares. |
| 3 | The inception date of the Russell Fundamental Emerging Markets Large Company Index (Net) is February 24, 2011. The fund began tracking the index on October 19, 2012. |
| 4 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 5 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
| 6 | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Fundamental Index Funds15
Fund Expenses (Unaudited)
Examples for a $1,000 Investment
As a fund shareholder, you may incur two types of costs: (1) transaction costs, such as redemption fees; and (2) ongoing costs, including management fees, transfer agent and shareholder services fees, and other fund expenses.
The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six months beginning May 1, 2015 and held through October 31, 2015.
Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number given for your fund under the heading entitled “Expenses Paid During Period.”
Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in a fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. Therefore, the hypothetical return lines of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | Expense Ratio1
(Annualized) | Beginning
Account Value
at 5/1/15 | Ending
Account Value
(Net of Expenses)
at 10/31/15 | Expenses Paid
During Period2
5/1/15–10/31/15 |
| Schwab Fundamental US Large Company Index Fund | | | | |
| Actual Return | 0.35% | $1,000.00 | $ 980.60 | $ 1.75 |
| Hypothetical 5% Return | 0.35% | $1,000.00 | $1,023.44 | $ 1.79 |
| Schwab Fundamental US Small Company Index Fund | | | | |
| Actual Return | 0.35% | $1,000.00 | $ 956.00 | $ 1.73 |
| Hypothetical 5% Return | 0.35% | $1,000.00 | $1,023.44 | $ 1.79 |
| Schwab Fundamental International Large Company Index Fund | | | | |
| Actual Return | 0.35% | $1,000.00 | $ 918.20 | $1.69 |
| Hypothetical 5% Return | 0.35% | $1,000.00 | $1,023.44 | $ 1.79 |
| Schwab Fundamental International Small Company Index Fund | | | | |
| Actual Return3 | 0.49% | $1,000.00 | $ 958.30 | $ 2.42 |
| Hypothetical 5% Return3 | 0.49% | $1,000.00 | $ 1,022.73 | $ 2.50 |
| Schwab Fundamental Emerging Markets Large Company Index Fund | | | | |
| Actual Return | 0.49% | $1,000.00 | $ 784.70 | $ 2.20 |
| Hypothetical 5% Return | 0.49% | $1,000.00 | $ 1,022.73 | $ 2.50 |
| 1 | Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights which covers a 12-month period. |
| 2 | Expenses for each fund are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 184 days of the period, and divided by the 365 days of the fiscal year. |
| 3 | The expenses incurred by the underlying funds in which the fund invests are not included in this ratio. |
16Schwab Fundamental Index Funds
Schwab Fundamental US Large Company Index Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $15.56 | $13.65 | $10.76 | $9.51 | $9.05 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.33 1 | 0.26 | 0.24 | 0.21 | 0.18 | |
| Net realized and unrealized gains (losses) | (0.10) | 1.87 | 2.89 | 1.22 | 0.43 | |
| Total from investment operations | 0.23 | 2.13 | 3.13 | 1.43 | 0.61 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.26) | (0.22) | (0.24) | (0.18) | (0.15) | |
| Distributions from net realized gains | (0.39) | — | — | — | — | |
| Total distributions | (0.65) | (0.22) | (0.24) | (0.18) | (0.15) | |
| Net asset value at end of period | $15.14 | $15.56 | $13.65 | $10.76 | $9.51 | |
| Total return | 1.44% | 15.74% | 29.67% | 15.29% | 6.74% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 0.35% | 0.35% | 0.35% | 0.32% 2 | 0.35% | |
| Gross operating expenses | 0.39% | 0.39% | 0.41% | 0.44% | 0.44% | |
| Net investment income (loss) | 2.16% | 1.95% | 2.03% | 2.13% | 2.06% | |
| Portfolio turnover rate | 12% | 14% | 10% | 32% 3 | 11% | |
| Net assets, end of period (x 1,000,000) | $4,886 | $4,465 | $3,020 | $1,960 | $1,490 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
The ratio of net operating expenses would have been 0.35%, if voluntary waiver by CSIM had not been included.
3
Portfolio turnover would have been 12%, if rebalancing trades had not been included due to a change in the fund's index.
Schwab Fundamental US Large Company Index Fund
Condensed Portfolio Holdings as of October 31, 2015
This section shows the fund's 50 largest portfolio holdings in unaffiliated issuers, and any holdings exceeding 1% of the fund's net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-800-435-4000. This complete schedule, filed on the fund's Form N-CSR, is also available on the SEC's website at www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15-20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 99.6% | Common Stock | 3,919,296,392 | 4,864,052,589 |
| 0.6% | Other Investment Companies | 30,796,847 | 30,796,847 |
| 100.2% | Total Investments | 3,950,093,239 | 4,894,849,436 |
| (0.2%) | Other Assets and Liabilities, Net | | (9,185,285) |
| 100.0% | Net Assets | | 4,885,664,151 |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Common Stock 99.6% of net assets | |
| Automobiles & Components 1.3% | |
| Other Securities | | 1.3 | 62,177,746 | |
| Banks 5.4% | |
| Bank of America Corp. | 2,866,194 | 1.0 | 48,094,735 | |
| Citigroup, Inc. | 685,472 | 0.7 | 36,446,546 | |
| JPMorgan Chase & Co. | 1,024,223 | 1.4 | 65,806,328 | |
| Wells Fargo & Co. | 929,263 | 1.0 | 50,310,299 | |
| Other Securities | | 1.3 | 63,111,369 | |
| | | 5.4 | 263,769,277 | |
| Capital Goods 7.7% | |
| 3M Co. | 136,961 | 0.4 | 21,531,639 | |
| General Electric Co. | 2,508,698 | 1.5 | 72,551,546 | |
| United Technologies Corp. | 247,892 | 0.5 | 24,395,052 | |
| Other Securities | | 5.3 | 256,221,250 | |
| | | 7.7 | 374,699,487 | |
| Commercial & Professional Supplies 0.8% | |
| Other Securities | | 0.8 | 39,625,757 | |
| Consumer Durables & Apparel 1.1% | |
| Other Securities | | 1.1 | 53,705,271 | |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Consumer Services 1.8% | |
| McDonald's Corp. | 327,588 | 0.8 | 36,771,753 | |
| Other Securities | | 1.0 | 49,810,253 | |
| | | 1.8 | 86,582,006 | |
| Diversified Financials 3.2% | |
| Berkshire Hathaway, Inc., Class B * | 287,526 | 0.8 | 39,109,287 | |
| The Charles Schwab Corp. (a) | 81,215 | 0.1 | 2,478,682 | |
| The Goldman Sachs Group, Inc. | 122,109 | 0.4 | 22,895,437 | |
| Other Securities | | 1.9 | 93,803,026 | |
| | | 3.2 | 158,286,432 | |
| Energy 14.4% | |
| Chevron Corp. | 1,344,612 | 2.5 | 122,198,339 | |
| ConocoPhillips | 971,082 | 1.1 | 51,807,225 | |
| Exxon Mobil Corp. | 2,746,881 | 4.7 | 227,276,934 | |
| Occidental Petroleum Corp. | 310,600 | 0.5 | 23,152,124 | |
| Phillips 66 | 460,908 | 0.8 | 41,043,857 | |
| Schlumberger Ltd. | 296,663 | 0.5 | 23,187,180 | |
| Valero Energy Corp. | 407,166 | 0.5 | 26,840,383 | |
| Other Securities | | 3.8 | 185,867,817 | |
| | | 14.4 | 701,373,859 | |
| Food & Staples Retailing 3.8% | |
| Costco Wholesale Corp. | 158,663 | 0.5 | 25,087,794 | |
| CVS Health Corp. | 454,716 | 0.9 | 44,916,846 | |
| Wal-Mart Stores, Inc. | 1,001,472 | 1.2 | 57,324,257 | |
| Walgreens Boots Alliance, Inc. | 276,182 | 0.5 | 23,387,092 | |
| Other Securities | | 0.7 | 33,998,449 | |
| | | 3.8 | 184,714,438 | |
| Food, Beverage & Tobacco 5.6% | |
| Altria Group, Inc. | 398,216 | 0.5 | 24,080,122 | |
| PepsiCo, Inc. | 375,263 | 0.8 | 38,348,126 | |
| Philip Morris International, Inc. | 531,188 | 0.9 | 46,957,019 | |
| The Coca-Cola Co. | 887,043 | 0.8 | 37,566,271 | |
| Other Securities | | 2.6 | 129,152,252 | |
| | | 5.6 | 276,103,790 | |
| Health Care Equipment & Services 5.3% | |
| Anthem, Inc. | 191,150 | 0.5 | 26,598,523 | |
| UnitedHealth Group, Inc. | 321,696 | 0.8 | 37,889,355 | |
| Other Securities | | 4.0 | 193,069,504 | |
| | | 5.3 | 257,557,382 | |
| Household & Personal Products 2.2% | |
| The Procter & Gamble Co. | 908,535 | 1.4 | 69,393,903 | |
| Other Securities | | 0.8 | 36,925,287 | |
| | | 2.2 | 106,319,190 | |
| Insurance 3.6% | |
| The Travelers Cos., Inc. | 232,672 | 0.5 | 26,266,342 | |
| Other Securities | | 3.1 | 151,522,877 | |
| | | 3.6 | 177,789,219 | |
Schwab Fundamental US Large Company Index Fund
Condensed Portfolio Holdings continued
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Materials 3.6% | |
| Other Securities | | 3.6 | 178,414,656 | |
| Media 3.6% | |
| Comcast Corp., Class A | 471,757 | 0.6 | 29,541,423 | |
| The Walt Disney Co. | 285,662 | 0.7 | 32,491,196 | |
| Time Warner Cable, Inc. | 106,901 | 0.4 | 20,247,050 | |
| Time Warner, Inc. | 319,033 | 0.5 | 24,035,946 | |
| Other Securities | | 1.4 | 67,583,339 | |
| | | 3.6 | 173,898,954 | |
| Pharmaceuticals, Biotechnology & Life Sciences 5.5% | |
| Amgen, Inc. | 155,423 | 0.5 | 24,584,810 | |
| Johnson & Johnson | 589,307 | 1.2 | 59,537,686 | |
| Merck & Co., Inc. | 652,362 | 0.8 | 35,658,107 | |
| Pfizer, Inc. | 1,774,304 | 1.2 | 60,006,961 | |
| Other Securities | | 1.8 | 87,576,944 | |
| | | 5.5 | 267,364,508 | |
| Real Estate 1.2% | |
| Other Securities | | 1.2 | 59,793,521 | |
| Retailing 5.1% | |
| Lowe's Cos., Inc. | 358,345 | 0.6 | 26,456,611 | |
| Target Corp. | 339,783 | 0.5 | 26,224,452 | |
| The Home Depot, Inc. | 328,643 | 0.8 | 40,633,421 | |
| Other Securities | | 3.2 | 156,873,829 | |
| | | 5.1 | 250,188,313 | |
| Semiconductors & Semiconductor Equipment 2.3% | |
| Intel Corp. | 1,843,576 | 1.3 | 62,423,483 | |
| Other Securities | | 1.0 | 51,806,185 | |
| | | 2.3 | 114,229,668 | |
| Software & Services 7.3% | |
| International Business Machines Corp. | 456,301 | 1.3 | 63,918,644 | |
| Microsoft Corp. | 1,988,728 | 2.1 | 104,686,642 | |
| Oracle Corp. | 735,544 | 0.6 | 28,568,529 | |
| Other Securities | | 3.3 | 158,468,145 | |
| | | 7.3 | 355,641,960 | |
| Technology Hardware & Equipment 4.9% | |
| Apple, Inc. | 602,357 | 1.5 | 71,981,661 | |
| Cisco Systems, Inc. | 1,376,751 | 0.8 | 39,719,266 | |
| Hewlett-Packard Co. | 1,446,391 | 0.8 | 38,994,701 | |
| Other Securities | | 1.8 | 88,167,002 | |
| | | 4.9 | 238,862,630 | |
| Telecommunication Services 4.0% | |
| AT&T, Inc. | 3,570,954 | 2.5 | 119,662,669 | |
| Verizon Communications, Inc. | 1,274,849 | 1.2 | 59,764,921 | |
| Other Securities | | 0.3 | 16,177,658 | |
| | | 4.0 | 195,605,248 | |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Transportation 1.7% | |
| Other Securities | | 1.7 | 80,917,481 | |
| Utilities 4.2% | |
| Other Securities | | 4.2 | 206,431,796 | |
| Total Common Stock |
| (Cost $3,919,296,392) | | | 4,864,052,589 | |
|
| Other Investment Companies 0.6% of net assets | |
| Money Market Fund 0.1% | |
| Other Securities | | 0.1 | 4,910,122 | |
| Securities Lending Collateral 0.5% | |
| Wells Fargo Advantage Government Money Market Fund, Institutional Class 0.01% (c) | 25,886,725 | 0.5 | 25,886,725 | |
| Total Other Investment Companies |
| (Cost $30,796,847) | | | 30,796,847 | |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $3,964,131,348 and the unrealized appreciation and depreciation were $1,136,802,288 and ($206,084,200), respectively, with a net unrealized appreciation of $930,718,088.
For the following notes, please refer to the complete schedule of portfolio holdings.
| * | Non-income producing security. |
| (a) | Issuer is affiliated with the fund's investment adviser. |
| (b) | All or a portion of this security is on loan. Securities on loan were valued at $25,544,730. |
| (c) | The rate shown is the 7-day yield. |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| S&P 500 Index, e-mini, Long, expires 12/18/15 | 125 | 12,960,625 | 262,110 |
Schwab Fundamental US Large Company Index Fund
Condensed Portfolio Holdings continued
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Common Stock1 | | $4,864,052,589 | | $— | | $— | | $4,864,052,589 | |
| Other Investment Companies1 | | 30,796,847 | | — | | — | | 30,796,847 | |
| Total | | $4,894,849,436 | | $— | | $— | | $4,894,849,436 | |
| Other Financial Instruments | | | | | | | | | |
| Futures Contracts2 | | $262,110 | | $— | | $— | | $262,110 | |
| 1 | As categorized in the complete schedule of portfolio holdings. |
| 2 | Futures contracts are not included in Investments in the schedule of condensed portfolio holdings and are valued at unrealized appreciation or depreciation. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Schwab Fundamental US Large Company Index Fund
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investment in affiliated issuer, at value (cost $1,401,251) | | $2,478,682 |
| Investments in unaffiliated issuers, at value (cost $3,922,805,263) including securities on loan of $25,544,730 | | 4,866,484,029 |
| Collateral invested for securities on loan, at value (cost $25,886,725) | + | 25,886,725 |
| Total investments, at value (cost $3,950,093,239) | | 4,894,849,436 |
| Deposit with broker for futures contracts | | 437,000 |
| Receivables: | | |
| Fund shares sold | | 18,631,647 |
| Dividends | | 6,969,563 |
| Income from securities on loan | | 20,857 |
| Prepaid expenses | + | 54,856 |
| Total assets | | 4,920,963,359 |
| Liabilities |
| Collateral held for securities on loan | | 25,886,725 |
| Payables: | | |
| Investment adviser and administrator fees | | 159,288 |
| Shareholder service fees | | 113,197 |
| Fund shares redeemed | | 7,861,334 |
| Variation margin on futures contracts | | 33,059 |
| Accrued expenses | + | 1,245,605 |
| Total liabilities | | 35,299,208 |
| Net Assets |
| Total assets | | 4,920,963,359 |
| Total liabilities | – | 35,299,208 |
| Net assets | | $4,885,664,151 |
| Net Assets by Source | | |
| Capital received from investors | | 3,722,320,518 |
| Net investment income not yet distributed | | 87,683,099 |
| Net realized capital gains | | 130,642,227 |
| Net unrealized capital appreciation | | 945,018,307 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $4,885,664,151 | | 322,640,686 | | $15.14 |
| | | | | |
Schwab Fundamental US Large Company Index Fund
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends received from affiliated issuer | | $23,440 |
| Dividends received from unaffiliated issuers (net of foreign withholding taxes of $24,577) | | 121,792,520 |
| Interest | | 232 |
| Securities on loan | + | 724,714 |
| Total investment income | | 122,540,906 |
| Expenses |
| Investment adviser and administrator fees | | 11,132,940 |
| Shareholder service fees | | 3,693,913 |
| Index fees | | 2,988,148 |
| Transfer agent fees | | 403,675 |
| Registration fees | | 194,541 |
| Shareholder reports | | 183,795 |
| Portfolio accounting fees | | 131,650 |
| Custodian fees | | 94,592 |
| Professional fees | | 65,670 |
| Proxy fees | | 30,906 |
| Independent trustees' fees | | 30,129 |
| Interest expense | | 3,604 |
| Other expenses | + | 138,716 |
| Total expenses | | 19,092,279 |
| Expense reduction by CSIM and its affiliates | – | 1,984,028 |
| Net expenses | – | 17,108,251 |
| Net investment income | | 105,432,655 |
| Realized and Unrealized Gains (Losses) |
| Net realized gains on affiliated issuer | | 286,540 |
| Net realized gains on unaffiliated issuers | | 144,520,587 |
| Net realized gains on futures contracts | + | 2,333,938 |
| Net realized gains | | 147,141,065 |
| Net change in unrealized appreciation (depreciation) on affiliated issuer | | (86,475) |
| Net change in unrealized appreciation (depreciation) on unaffiliated issuers | | (188,845,494) |
| Net change in unrealized appreciation (depreciation) on futures contracts | + | (253,985) |
| Net change in unrealized appreciation (depreciation) | + | (189,185,954) |
| Net realized and unrealized losses | | (42,044,889) |
| Increase in net assets resulting from operations | | $63,387,766 |
Schwab Fundamental US Large Company Index Fund
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $105,432,655 | $70,401,991 |
| Net realized gains | | 147,141,065 | 127,017,117 |
| Net change in unrealized appreciation (depreciation) | + | (189,185,954) | 337,814,424 |
| Increase in net assets from operations | | 63,387,766 | 535,233,532 |
| Distributions to Shareholders | |
| Distributions from net investment income | | (76,925,735) | (47,960,089) |
| Distributions from net realized gains | + | (114,155,826) | — |
| Total distributions | | ($191,081,561) | ($47,960,089) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 98,386,452 | $1,496,556,101 | 144,506,228 | $2,105,376,361 |
| Shares reinvested | | 7,976,908 | 122,684,844 | 2,075,077 | 29,051,072 |
| Shares redeemed | + | (70,618,440) | (1,070,631,347) | (80,931,679) | (1,177,384,046) |
| Net transactions in fund shares | | 35,744,920 | $548,609,598 | 65,649,626 | $957,043,387 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 286,895,766 | $4,464,748,348 | 221,246,140 | $3,020,431,518 |
| Total increase | + | 35,744,920 | 420,915,803 | 65,649,626 | 1,444,316,830 |
| End of period | | 322,640,686 | $4,885,664,151 | 286,895,766 | $4,464,748,348 |
| Net investment income not yet distributed | | | $87,683,099 | | $59,284,035 |
Schwab Fundamental US Small Company Index Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $13.51 | $12.78 | $10.31 | $10.11 | $10.10 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.18 1 | 0.14 | 0.16 | 0.15 | 0.11 | |
| Net realized and unrealized gains (losses) | (0.03) | 1.23 | 3.35 | 0.88 | 0.47 | |
| Total from investment operations | 0.15 | 1.37 | 3.51 | 1.03 | 0.58 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.16) | (0.12) | (0.20) | (0.12) | (0.10) | |
| Distributions from net realized gains | (0.68) | (0.52) | (0.84) | (0.71) | (0.47) | |
| Total distributions | (0.84) | (0.64) | (1.04) | (0.83) | (0.57) | |
| Net asset value at end of period | $12.82 | $13.51 | $12.78 | $10.31 | $10.11 | |
| Total return | 1.01% | 10.99% | 37.55% | 11.37% | 5.55% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 0.35% | 0.35% | 0.35% | 0.32% 2 | 0.35% | |
| Gross operating expenses | 0.43% | 0.44% | 0.48% | 0.50% | 0.50% | |
| Net investment income (loss) | 1.37% | 1.14% | 1.41% | 1.46% | 1.18% | |
| Portfolio turnover rate | 31% | 29% | 27% | 92% 3 | 35% | |
| Net assets, end of period (x 1,000,000) | $1,416 | $1,208 | $849 | $619 | $563 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
The ratio of net operating expenses would have been 0.35%, if voluntary waiver by CSIM had not been included.
3
Portfolio turnover would have been 29%, if rebalancing trades had not been included due to a change in the fund's index.
Schwab Fundamental US Small Company Index Fund
Condensed Portfolio Holdings as of October 31, 2015
This section shows the fund's 50 largest portfolio holdings in unaffiliated issuers, and any holdings exceeding 1% of the fund's net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-800-435-4000. This complete schedule, filed on the fund's Form N-CSR, is also available on the SEC's website at www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15-20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 99.0% | Common Stock | 1,209,007,594 | 1,401,645,072 |
| 0.0% | Rights | 266,857 | 266,364 |
| 3.6% | Other Investment Companies | 50,350,637 | 50,350,637 |
| 102.6% | Total Investments | 1,259,625,088 | 1,452,262,073 |
| (2.6%) | Other Assets and Liabilities, Net | | (36,694,514) |
| 100.0% | Net Assets | | 1,415,567,559 |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Common Stock 99.0% of net assets | |
| Automobiles & Components 1.2% | |
| Other Securities | | 1.2 | 16,533,794 | |
| Banks 5.2% | |
| Zions Bancorp | 125,500 | 0.3 | 3,610,635 | |
| Other Securities | | 4.9 | 69,675,211 | |
| | | 5.2 | 73,285,846 | |
| Capital Goods 12.0% | |
| General Cable Corp. | 223,200 | 0.2 | 3,435,048 | |
| Lennox International, Inc. | 29,800 | 0.3 | 3,957,738 | |
| Masco Corp. | 147,900 | 0.3 | 4,289,100 | |
| Orbital ATK, Inc. | 44,200 | 0.3 | 3,784,404 | |
| Spirit AeroSystems Holdings, Inc., Class A * | 63,000 | 0.2 | 3,322,620 | |
| Other Securities | | 10.7 | 151,264,792 | |
| | | 12.0 | 170,053,702 | |
| Commercial & Professional Supplies 5.0% | |
| Copart, Inc. * | 96,200 | 0.3 | 3,483,402 | |
| Other Securities | | 4.7 | 66,848,579 | |
| | | 5.0 | 70,331,981 | |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Consumer Durables & Apparel 3.2% | |
| D.R. Horton, Inc. | 132,300 | 0.3 | 3,894,912 | |
| Hanesbrands, Inc. | 104,600 | 0.2 | 3,340,924 | |
| Harman International Industries, Inc. | 32,300 | 0.2 | 3,551,708 | |
| Other Securities | | 2.5 | 35,154,128 | |
| | | 3.2 | 45,941,672 | |
| Consumer Services 4.5% | |
| Service Corp. International | 144,300 | 0.3 | 4,077,918 | |
| Weight Watchers International, Inc. *(a) | 292,192 | 0.3 | 4,493,913 | |
| Other Securities | | 3.9 | 55,015,381 | |
| | | 4.5 | 63,587,212 | |
| Diversified Financials 3.8% | |
| E*TRADE Financial Corp. * | 126,500 | 0.3 | 3,606,515 | |
| SEI Investments Co. | 68,300 | 0.2 | 3,539,306 | |
| TD Ameritrade Holding Corp. | 96,900 | 0.2 | 3,340,143 | |
| Other Securities | | 3.1 | 43,464,646 | |
| | | 3.8 | 53,950,610 | |
| Energy 5.2% | |
| McDermott International, Inc. * | 784,600 | 0.2 | 3,617,006 | |
| Western Refining, Inc. | 89,300 | 0.3 | 3,716,666 | |
| WPX Energy, Inc. * | 531,100 | 0.3 | 3,643,346 | |
| Other Securities | | 4.4 | 62,674,689 | |
| | | 5.2 | 73,651,707 | |
| Food & Staples Retailing 0.9% | |
| Other Securities | | 0.9 | 12,743,638 | |
| Food, Beverage & Tobacco 2.6% | |
| Flowers Foods, Inc. | 135,250 | 0.3 | 3,651,750 | |
| Fresh Del Monte Produce, Inc. | 75,900 | 0.2 | 3,463,317 | |
| Universal Corp. | 71,000 | 0.3 | 3,834,710 | |
| Other Securities | | 1.8 | 26,004,556 | |
| | | 2.6 | 36,954,333 | |
| Health Care Equipment & Services 4.6% | |
| STERIS Corp. (a) | 52,300 | 0.3 | 3,919,885 | |
| Other Securities | | 4.3 | 60,965,347 | |
| | | 4.6 | 64,885,232 | |
| Household & Personal Products 0.4% | |
| Other Securities | | 0.4 | 5,379,904 | |
| Insurance 4.0% | |
| Aspen Insurance Holdings Ltd. | 73,200 | 0.2 | 3,558,252 | |
| CNO Financial Group, Inc. | 200,500 | 0.3 | 3,851,605 | |
| Endurance Specialty Holdings Ltd. | 67,696 | 0.3 | 4,273,648 | |
| Primerica, Inc. | 73,800 | 0.2 | 3,515,094 | |
| StanCorp Financial Group, Inc. | 34,200 | 0.3 | 3,923,424 | |
| Other Securities | | 2.7 | 38,204,156 | |
| | | 4.0 | 57,326,179 | |
Schwab Fundamental US Small Company Index Fund
Condensed Portfolio Holdings continued
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Materials 5.5% | |
| Crown Holdings, Inc. * | 71,800 | 0.3 | 3,808,272 | |
| Martin Marietta Materials, Inc. | 22,200 | 0.2 | 3,444,330 | |
| Sealed Air Corp. | 93,000 | 0.3 | 4,568,160 | |
| Other Securities | | 4.7 | 66,889,957 | |
| | | 5.5 | 78,710,719 | |
| Media 1.8% | |
| Other Securities | | 1.8 | 26,137,793 | |
| Pharmaceuticals, Biotechnology & Life Sciences 2.0% | |
| Other Securities | | 2.0 | 28,374,867 | |
| Real Estate 9.9% | |
| Duke Realty Corp. | 159,300 | 0.2 | 3,297,510 | |
| Jones Lang LaSalle, Inc. | 21,900 | 0.3 | 3,650,949 | |
| Liberty Property Trust | 100,300 | 0.3 | 3,412,206 | |
| Mack-Cali Realty Corp. | 150,300 | 0.2 | 3,270,528 | |
| Piedmont Office Realty Trust, Inc., Class A | 174,900 | 0.2 | 3,389,562 | |
| Rayonier, Inc. | 148,400 | 0.2 | 3,361,260 | |
| Other Securities | | 8.5 | 120,176,901 | |
| | | 9.9 | 140,558,916 | |
| Retailing 5.3% | |
| Group 1 Automotive, Inc. | 39,100 | 0.3 | 3,399,745 | |
| Netflix, Inc. * | 37,840 | 0.3 | 4,101,099 | |
| Other Securities | | 4.7 | 67,060,937 | |
| | | 5.3 | 74,561,781 | |
| Semiconductors & Semiconductor Equipment 3.0% | |
| First Solar, Inc. * | 62,200 | 0.3 | 3,549,754 | |
| Other Securities | | 2.7 | 38,558,884 | |
| | | 3.0 | 42,108,638 | |
| Software & Services 5.5% | |
| Convergys Corp. | 153,300 | 0.3 | 3,935,211 | |
| Science Applications International Corp. | 72,400 | 0.2 | 3,320,264 | |
| VeriSign, Inc. * | 52,900 | 0.3 | 4,263,740 | |
| Other Securities | | 4.7 | 65,853,378 | |
| | | 5.5 | 77,372,593 | |
| Technology Hardware & Equipment 4.9% | |
| Other Securities | | 4.9 | 69,537,499 | |
| Telecommunication Services 1.2% | |
| Other Securities | | 1.2 | 16,517,203 | |
| Transportation 3.1% | |
| American Airlines Group, Inc. | 73,100 | 0.2 | 3,378,682 | |
| SkyWest, Inc. | 216,900 | 0.3 | 4,129,776 | |
| Southwest Airlines Co. | 76,600 | 0.3 | 3,545,814 | |
| Other Securities | | 2.3 | 32,565,398 | |
| | | 3.1 | 43,619,670 | |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Utilities 4.2% | |
| Piedmont Natural Gas Co., Inc. | 64,800 | 0.3 | 3,713,688 | |
| Portland General Electric Co. | 88,800 | 0.2 | 3,292,704 | |
| WGL Holdings, Inc. | 55,400 | 0.2 | 3,447,542 | |
| Other Securities | | 3.5 | 49,065,649 | |
| | | 4.2 | 59,519,583 | |
| Total Common Stock |
| (Cost $1,209,007,594) | | | 1,401,645,072 | |
|
| Rights 0.0% of net assets | |
| Technology Hardware & Equipment 0.0% | |
| Other Securities | | 0.0 | — | |
| Telecommunication Services 0.0% | |
| Other Securities | | 0.0 | 266,364 | |
| Total Rights |
| (Cost $266,857) | | | 266,364 | |
|
| Other Investment Companies 3.6% of net assets | |
| Money Market Fund 0.6% | |
| State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (d) | 7,676,787 | 0.6 | 7,676,787 | |
| Securities Lending Collateral 3.0% | |
| Wells Fargo Advantage Government Money Market Fund, Institutional Class 0.01% (d) | 42,673,850 | 3.0 | 42,673,850 | |
| Total Other Investment Companies |
| (Cost $50,350,637) | | | 50,350,637 | |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $1,266,175,700 and the unrealized appreciation and depreciation were $292,377,579 and ($106,291,206), respectively, with a net unrealized appreciation of $186,086,373.
For the following notes, please refer to the complete schedule of portfolio holdings.
| * | Non-income producing security. |
| (a) | All or a portion of this security is on loan. Securities on loan were valued at $41,236,990. |
| (b) | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| (c) | Illiquid security. At the period end, the value of these amounted to $266,364 or 0.0% of net assets. |
| (d) | The rate shown is the 7-day yield. |
| | |
| CVR — | Contingent Value Rights |
| REIT — | Real Estate Investment Trust |
Schwab Fundamental US Small Company Index Fund
Condensed Portfolio Holdings continued
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| Russell 2000 Index, mini, Long, expires 12/18/15 | 75 | 8,687,250 | 207,836 |
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Common Stock1 | | $1,401,645,072 | | $— | | $— | | $1,401,645,072 | |
| Rights 1 | | — | | — | | 266,364 | | 266,364 | |
| Other Investment Companies | | 50,350,637 | | — | | — | | 50,350,637 | |
| Total | | $1,451,995,709 | | $— | | $266,364 | | $1,452,262,073 | |
| Other Financial Instruments | | | | | | | | | |
| Futures Contracts2 | | $207,836 | | $— | | $— | | $207,836 | |
| 1 | As categorized in the complete schedule of portfolio holdings. |
| 2 | Futures contracts are not included in Investments in the schedule of condensed portfolio holdings and are valued at unrealized appreciation or depreciation. |
The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
| Investments in Securities | | Balance
as of
October 31,
2014 | | Realized
Gains
(Losses) | | Change in
Unrealized
Appreciation
(Depreciation) | | Gross
Purchases | | Gross
Sales | | Gross
Transfers
in | | Gross
Transfers
out | | Balance
as of
Oct 31,
2015 |
| Rights | | $266,364 | | $— | | $— | | $— | | $— | | $— | | $— | | $266,364 |
| Total | | $266,364 | | $— | | $— | | $— | | $— | | $— | | $— | | $266,364 |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Schwab Fundamental US Small Company Index Fund
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments, at value (cost $1,216,951,238) including securities on loan of $41,236,990 | | $1,409,588,223 |
| Collateral invested for securities on loan, at value (cost $42,673,850) | + | 42,673,850 |
| Total investments, at value (cost $1,259,625,088) | | 1,452,262,073 |
| Foreign currency, at value (cost $34) | | 25 |
| Deposit with broker for futures contracts | | 1,300,500 |
| Receivables: | | |
| Investments sold | | 5,210,605 |
| Fund shares sold | | 1,356,065 |
| Dividends | | 859,179 |
| Income from securities on loan | | 53,900 |
| Prepaid expenses | + | 18,573 |
| Total assets | | 1,461,060,920 |
| Liabilities |
| Collateral held for securities on loan | | 42,673,850 |
| Payables: | | |
| Investments bought | | 1,527,321 |
| Investment adviser and administrator fees | | 41,017 |
| Shareholder service fees | | 22,015 |
| Fund shares redeemed | | 779,807 |
| Variation margin on futures contracts | | 19,500 |
| Accrued expenses | + | 429,851 |
| Total liabilities | | 45,493,361 |
| Net Assets |
| Total assets | | 1,461,060,920 |
| Total liabilities | – | 45,493,361 |
| Net assets | | $1,415,567,559 |
| Net Assets by Source | | |
| Capital received from investors | | 1,153,062,058 |
| Net investment income not yet distributed | | 14,165,949 |
| Net realized capital gains | | 55,494,740 |
| Net unrealized capital appreciation | | 192,844,812 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $1,415,567,559 | | 110,396,474 | | $12.82 |
| | | | | |
Schwab Fundamental US Small Company Index Fund
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends (net of foreign withholding tax of $9,283) | | $22,374,808 |
| Interest | | 71 |
| Securities on loan | + | 2,035,976 |
| Total investment income | | 24,410,855 |
| Expenses |
| Investment adviser and administrator fees | | 3,513,844 |
| Shareholder service fees | | 1,267,369 |
| Index fees | | 866,923 |
| Transfer agent fees | | 88,583 |
| Portfolio accounting fees | | 76,638 |
| Registration fees | | 73,574 |
| Shareholder reports | | 56,039 |
| Custodian fees | | 50,538 |
| Professional fees | | 45,766 |
| Independent trustees' fees | | 13,537 |
| Proxy fees | | 11,032 |
| Interest expense | | 886 |
| Other expenses | + | 28,966 |
| Total expenses | | 6,093,695 |
| Expense reduction by CSIM and its affiliates | – | 1,128,219 |
| Net expenses | – | 4,965,476 |
| Net investment income | | 19,445,379 |
| Realized and Unrealized Gains (Losses) |
| Net realized gains on investments | | 59,348,184 |
| Net realized gains on futures contracts | | 1,393,488 |
| Net realized losses on foreign currency transactions | + | (330) |
| Net realized gains | | 60,741,342 |
| Net change in unrealized appreciation (depreciation) on investments | | (72,608,133) |
| Net change in unrealized appreciation (depreciation) on futures contracts | + | 143,874 |
| Net change in unrealized appreciation (depreciation) | + | (72,464,259) |
| Net realized and unrealized losses | | (11,722,917) |
| Increase in net assets resulting from operations | | $7,722,462 |
Schwab Fundamental US Small Company Index Fund
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $19,445,379 | $12,487,752 |
| Net realized gains | | 60,741,342 | 58,394,089 |
| Net change in unrealized appreciation (depreciation) | + | (72,464,259) | 37,889,684 |
| Increase in net assets from operations | | 7,722,462 | 108,771,525 |
| Distributions to Shareholders | |
| Distributions from net investment income | | (14,333,166) | (8,210,484) |
| Distributions from net realized gains | + | (60,933,871) | (37,238,379) |
| Total distributions | | ($75,267,037) | ($45,448,863) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 39,068,787 | $512,965,419 | 40,867,612 | $529,827,506 |
| Shares reinvested | | 3,422,676 | 44,597,473 | 1,787,741 | 22,900,966 |
| Shares redeemed | + | (21,506,579) | (281,966,672) | (19,718,745) | (257,947,641) |
| Net transactions in fund shares | | 20,984,884 | $275,596,220 | 22,936,608 | $294,780,831 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 89,411,590 | $1,207,515,914 | 66,474,982 | $849,412,421 |
| Total increase | + | 20,984,884 | 208,051,645 | 22,936,608 | 358,103,493 |
| End of period | | 110,396,474 | $1,415,567,559 | 89,411,590 | $1,207,515,914 |
| Net investment income not yet distributed | | | $14,165,949 | | $9,628,136 |
Schwab Fundamental International Large Company Index Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $8.84 | $9.05 | $7.16 | $7.26 | $8.09 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.25 1 | 0.30 | 0.23 | 0.22 | 0.23 | |
| Net realized and unrealized gains (losses) | (0.60) | (0.26) | 1.87 | (0.08) 2 | (0.85) | |
| Total from investment operations | (0.35) | 0.04 | 2.10 | 0.14 | (0.62) | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.30) | (0.25) | (0.21) | (0.24) | (0.21) | |
| Net asset value at end of period | $8.19 | $8.84 | $9.05 | $7.16 | $7.26 | |
| Total return | (4.07%) | 0.39% | 30.12% | 2.24% | (7.88%) | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 0.35% | 0.35% | 0.34% 3 | 0.31% 3 | 0.35% | |
| Gross operating expenses | 0.46% | 0.48% | 0.52% | 0.56% | 0.57% | |
| Net investment income (loss) | 2.96% | 3.52% | 2.95% | 3.58% | 3.24% | |
| Portfolio turnover rate | 11% | 8% | 22% | 61% 4 | 35% | |
| Net assets, end of period (x 1,000,000) | $1,173 | $908 | $646 | $501 | $372 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
The per share amount does not accord with the change in aggregate gains and losses in securities during the period because of the timing of fund transactions in relation to fluctuating market values.
3
The ratio of net operating expenses would have been 0.35%, if voluntary waiver by CSIM had not been included.
4
Portfolio turnover would have been 37%, if rebalancing trades had not been included due to a change in the fund's index.
Schwab Fundamental International Large Company Index Fund
Condensed Portfolio Holdings as of October 31, 2015
This section shows the fund's 50 largest portfolio holdings in unaffiliated issuers, and any holdings exceeding 1% of the fund's net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-800-435-4000. This complete schedule, filed on the fund's Form N-CSR, is also available on the SEC's website at www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15-20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 98.8% | Common Stock | 1,164,973,487 | 1,158,703,379 |
| 0.5% | Preferred Stock | 6,784,733 | 5,910,863 |
| 0.0% | Rights | 127,301 | 123,592 |
| 1.3% | Other Investment Company | 15,802,505 | 15,802,505 |
| 0.1% | Short-Term Investment | 864,326 | 864,326 |
| 100.7% | Total Investments | 1,188,552,352 | 1,181,404,665 |
| (0.7%) | Other Assets and Liabilities, Net | | (8,321,923) |
| 100.0% | Net Assets | | 1,173,082,742 |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Common Stock 98.8% of net assets | |
| Australia 5.1% | |
| BHP Billiton Ltd. | 412,632 | 0.6 | 6,767,469 | |
| Commonwealth Bank of Australia | 97,070 | 0.4 | 5,270,703 | |
| Wesfarmers Ltd. | 160,979 | 0.4 | 4,501,665 | |
| Westpac Banking Corp. | 209,446 | 0.4 | 4,665,202 | |
| Other Securities | | 3.3 | 38,961,971 | |
| | | 5.1 | 60,167,010 | |
| Austria 0.4% | |
| Other Securities | | 0.4 | 4,271,572 | |
| Belgium 1.0% | |
| Other Securities | | 1.0 | 11,579,594 | |
| Canada 6.3% | |
| Royal Bank of Canada | 84,744 | 0.4 | 4,845,755 | |
| Suncor Energy, Inc. | 166,359 | 0.4 | 4,950,313 | |
| Other Securities | | 5.5 | 64,540,150 | |
| | | 6.3 | 74,336,218 | |
| Denmark 0.8% | |
| Other Securities | | 0.8 | 9,039,585 | |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Finland 1.0% | |
| Other Securities | | 1.0 | 11,604,212 | |
| France 11.0% | |
| AXA S.A. | 179,728 | 0.4 | 4,796,601 | |
| BNP Paribas S.A. | 117,634 | 0.6 | 7,128,290 | |
| Engie (c) | 383,538 | 0.6 | 6,712,220 | |
| Orange S.A. | 516,562 | 0.8 | 9,107,863 | |
| Sanofi | 96,811 | 0.8 | 9,765,889 | |
| Total S.A. | 466,331 | 1.9 | 22,551,216 | |
| Vivendi S.A. | 202,701 | 0.4 | 4,876,339 | |
| Other Securities | | 5.5 | 64,273,922 | |
| | | 11.0 | 129,212,340 | |
| Germany 8.6% | |
| Allianz SE - Reg'd | 38,556 | 0.6 | 6,749,911 | |
| BASF SE | 110,002 | 0.8 | 9,011,785 | |
| Bayer AG - Reg'd | 44,027 | 0.5 | 5,870,358 | |
| Daimler AG - Reg'd | 95,404 | 0.7 | 8,272,836 | |
| Deutsche Telekom AG - Reg'd | 463,033 | 0.7 | 8,673,342 | |
| E.ON SE | 669,128 | 0.6 | 7,058,734 | |
| Siemens AG - Reg'd | 76,537 | 0.7 | 7,687,693 | |
| Other Securities | | 4.0 | 47,144,807 | |
| | | 8.6 | 100,469,466 | |
| Hong Kong 1.0% | |
| Other Securities | | 1.0 | 11,634,785 | |
| Ireland 0.6% | |
| Other Securities | | 0.6 | 6,714,913 | |
| Israel 0.4% | |
| Other Securities | | 0.4 | 5,156,126 | |
| Italy 3.8% | |
| Enel S.p.A. | 1,550,674 | 0.6 | 7,150,679 | |
| Eni S.p.A. | 718,833 | 1.0 | 11,738,720 | |
| Intesa Sanpaolo S.p.A. | 1,356,796 | 0.4 | 4,720,368 | |
| UniCredit S.p.A. | 841,112 | 0.5 | 5,431,115 | |
| Other Securities | | 1.3 | 15,279,666 | |
| | | 3.8 | 44,320,548 | |
| Japan 22.1% | |
| Hitachi Ltd. | 775,000 | 0.4 | 4,470,812 | |
| Honda Motor Co., Ltd. | 203,400 | 0.6 | 6,728,561 | |
| Mitsubishi UFJ Financial Group, Inc. | 814,834 | 0.4 | 5,269,963 | |
| Nippon Telegraph & Telephone Corp. | 170,608 | 0.5 | 6,254,722 | |
| Toyota Motor Corp. | 173,200 | 0.9 | 10,610,999 | |
| Other Securities | | 19.3 | 226,434,281 | |
| | | 22.1 | 259,769,338 | |
| Luxembourg 0.4% | |
| Other Securities | | 0.4 | 4,228,439 | |
Schwab Fundamental International Large Company Index Fund
Condensed Portfolio Holdings continued
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Netherlands 5.5% | |
| Royal Dutch Shell plc, A Shares | 884,646 | 2.0 | 23,173,671 | |
| Royal Dutch Shell plc, B Shares | 550,217 | 1.2 | 14,407,369 | |
| Other Securities | | 2.3 | 26,443,011 | |
| | | 5.5 | 64,024,051 | |
| New Zealand 0.1% | |
| Other Securities | | 0.1 | 1,540,499 | |
| Norway 0.9% | |
| Statoil A.S.A. | 331,631 | 0.4 | 5,360,569 | |
| Other Securities | | 0.5 | 5,394,623 | |
| | | 0.9 | 10,755,192 | |
| Portugal 0.3% | |
| Other Securities | | 0.3 | 3,233,673 | |
| Singapore 0.8% | |
| Other Securities | | 0.8 | 9,815,204 | |
| Spain 4.1% | |
| Banco Bilbao Vizcaya Argentaria S.A. | 621,803 | 0.4 | 5,349,751 | |
| Banco Santander S.A. | 2,253,845 | 1.1 | 12,590,425 | |
| Iberdrola S.A. | 663,854 | 0.4 | 4,734,035 | |
| Telefonica S.A. | 879,734 | 1.0 | 11,606,629 | |
| Other Securities | | 1.2 | 14,450,838 | |
| | | 4.1 | 48,731,678 | |
| Sweden 2.2% | |
| Other Securities | | 2.2 | 25,599,204 | |
| Switzerland 5.7% | |
| Nestle S.A. - Reg'd | 175,273 | 1.1 | 13,386,289 | |
| Novartis AG - Reg'd | 109,357 | 0.9 | 9,906,503 | |
| Roche Holding AG | 29,908 | 0.7 | 8,119,988 | |
| Other Securities | | 3.0 | 35,242,904 | |
| | | 5.7 | 66,655,684 | |
| United Kingdom 16.7% | |
| AstraZeneca plc | 124,668 | 0.7 | 7,945,402 | |
| Barclays plc | 1,549,673 | 0.5 | 5,521,143 | |
| BG Group plc | 277,130 | 0.4 | 4,378,243 | |
| BP plc | 4,563,325 | 2.3 | 27,119,774 | |
| British American Tobacco plc | 122,825 | 0.6 | 7,296,978 | |
| GlaxoSmithKline plc | 433,663 | 0.8 | 9,352,249 | |
| HSBC Holdings plc | 1,691,283 | 1.1 | 13,213,936 | |
| Rio Tinto plc | 142,295 | 0.5 | 5,185,973 | |
| Tesco plc * | 2,144,110 | 0.5 | 6,047,028 | |
| Vodafone Group plc | 3,302,898 | 0.9 | 10,869,613 | |
| Other Securities | | 8.4 | 98,913,709 | |
| | | 16.7 | 195,844,048 | |
| Total Common Stock |
| (Cost $1,164,973,487) | | | 1,158,703,379 | |
|
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Preferred Stock 0.5% of net assets | |
| Germany 0.3% | |
| Other Securities | | 0.3 | 3,868,926 | |
| Italy 0.2% | |
| Other Securities | | 0.2 | 2,020,775 | |
| United Kingdom 0.0% | |
| Other Securities | | 0.0 | 21,162 | |
| Total Preferred Stock |
| (Cost $6,784,733) | | | 5,910,863 | |
|
| Rights 0.0% of net assets | |
| Spain 0.0% | |
| Banks 0.0% | |
| Other Securities | | 0.0 | 123,592 | |
| Total Rights |
| (Cost $127,301) | | | 123,592 | |
|
| Other Investment Company 1.3% of net assets | |
| United States 1.3% | |
| Securities Lending Collateral 1.3% | |
| Wells Fargo Advantage Government Money Market Fund, Institutional Class 0.01% (d) | 15,802,505 | 1.3 | 15,802,505 | |
| Total Other Investment Company |
| (Cost $15,802,505) | | | 15,802,505 | |
Security
Rate, Maturity Date | Face
Amount
($) | % of Net
Assets | Value
($) | |
| Short-Term Investment 0.1% of net assets | |
| Time Deposit 0.1% | |
| Other Securities | | 0.1 | 864,326 | |
| Total Short-Term Investment |
| (Cost $864,326) | | | 864,326 | |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $1,207,067,986 unrealized appreciation and depreciation were $125,702,508 and ($151,365,829), respectively, with a net unrealized depreciation of ($25,663,321).
Schwab Fundamental International Large Company Index Fund
Condensed Portfolio Holdings continued
At 10/31/15, the values of certain foreign securities held by the fund aggregating $1,075,278,647 were adjusted from their closing market values in accordance with international fair valuation procedures approved by the fund's Board of Trustees. (See financial note 2(a) for additional information)
For the following notes, please refer to the complete schedule of portfolio holdings.
| * | Non-income producing security. |
| (a) | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| (b) | Illiquid security. At the period end, the value of these amounted to $0 or 0.0% of net assets. |
| (c) | All or a portion of this security is on loan. Securities on loan were valued at $14,961,672. |
| (d) | The rate shown is the 7-day yield. |
| | |
| ADR — | American Depositary Receipt |
| CDI — | CHESS Depositary Interest |
| CVA — | Dutch Certificate |
| Reg'd — | Registered |
| REIT — | Real Estate Investment Trust |
| RSP — | Risparmio (Convertible Savings Shares) |
| SDR — | Swedish Depositary Receipt |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| MSCI EAFE, e-mini, Long, expires 12/18/15 | 52 | 4,568,460 | 9,419 |
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Common Stock1 | | $— | | $647,157,248 | | $— | | $647,157,248 | |
| Australia | | 699,236 | | 59,467,774 | | — | | 60,167,010 | |
| Canada | | 74,336,218 | | — | | — | | 74,336,218 | |
| Ireland | | 1,195,731 | | 5,519,182 | | — | | 6,714,913 | |
| Israel | | 339,760 | | 4,816,366 | | — | | 5,156,126 | |
| Netherlands | | 7,516,283 | | 56,507,768 | | — | | 64,024,051 | |
| Portugal | | 661,029 | | 2,572,644 | | — | | 3,233,673 | |
| Singapore | | 883,465 | | 8,931,739 | | — | | 9,815,204 | |
| Sweden | | 820,431 | | 24,778,773 | | — | | 25,599,204 | |
| Switzerland | | 1,353,498 | | 65,302,186 | | — | | 66,655,684 | |
| United Kingdom | | 1,508,782 | | 194,335,266 | | — | | 195,844,048 | |
| Preferred Stock1 | | — | | 5,889,701 | | — | | 5,889,701 | |
| United Kingdom | | — | | — | | 21,162 | | 21,162 | |
| Rights 1 | | 123,592 | | — | | — | | 123,592 | |
| Other Investment Company1 | | 15,802,505 | | — | | — | | 15,802,505 | |
| Short-Term Investments1 | | — | | 864,326 | | — | | 864,326 | |
| Total | | $105,240,530 | | $1,076,142,973 | | $21,162 | | $1,181,404,665 | |
| Other Financial Instruments | | | | | | | | | |
| Futures Contracts2 | | $9,419 | | $— | | $— | | $9,419 | |
| 1 | As categorized in the complete schedule of portfolio holdings. |
| 2 | Futures contracts are not included in Investments in the schedule of condensed portfolio holdings and are valued at unrealized appreciation or depreciation. |
Schwab Fundamental International Large Company Index Fund
Condensed Portfolio Holdings continued
The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
| Investments in Securities | | Balance
as of
October 31,
2014 | | Realized
Gains
(Losses) | | Change in
Unrealized
Appreciation
(Depreciation) | | Gross
Purchases | | Gross
Sales | | Gross
Transfers
in | | Gross
Transfers
out | | Balance
as of
October 31,
2015 |
| Preferred Stock | | | | | | | | | | | | | | | | |
| United Kingdom | | $11,749 | | $— | | $36 | | $21,165 | | ($11,788) | | $— | | $— | | $21,162 |
| Total | | $11,749 | | $— | | $36 | | $21,165 | | ($11,788) | | $— | | $— | | $21,162 |
All net realized and change in unrealized gains (losses) in the table above are reflected on the accompanying Statement of Operations. The net change in unrealized appreciation (depreciation) for Level 3 investments held by the fund at October 31, 2015 was ($3).
The funds policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were security transfers in the amount of $3,684,054 and $6,562,914 from Level 1 to Level 2 and from Level 2 to Level 1, respectively, for the period ended October 31, 2015. The transfers between Level 1 and Level 2 were primarily due to the use of international fair valuation by the fund. There were no transfers in or out of Level 3 during the period.
Schwab Fundamental International Large Company Index Fund
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments, at value (cost $1,172,749,847) including securities on loan of $14,961,672 | | $1,165,602,160 |
| Collateral invested for securities on loan, at value (cost $15,802,505) | + | 15,802,505 |
| Total investments, at value (cost $1,188,552,352) | | 1,181,404,665 |
| Foreign currency, at value (cost $135) | | 135 |
| Deposit with broker for futures contracts | | 585,000 |
| Receivables: | | |
| Investments sold | | 3,233,837 |
| Dividends | | 2,506,321 |
| Fund shares sold | | 1,264,812 |
| Foreign tax reclaims | | 696,212 |
| Income from securities on loan | | 61,381 |
| Prepaid expenses | + | 20,887 |
| Total assets | | 1,189,773,250 |
| Liabilities |
| Collateral held for securities on loan | | 15,802,505 |
| Payables: | | |
| Investments bought | | 21,162 |
| Investment adviser and administrator fees | | 26,835 |
| Shareholder service fees | | 43,454 |
| Fund shares redeemed | | 428,753 |
| Variation margin on futures contracts | | 9,620 |
| Accrued expenses | + | 358,179 |
| Total liabilities | | 16,690,508 |
| Net Assets |
| Total assets | | 1,189,773,250 |
| Total liabilities | – | 16,690,508 |
| Net assets | | $1,173,082,742 |
| Net Assets by Source | | |
| Capital received from investors | | 1,252,472,705 |
| Net investment income not yet distributed | | 26,399,326 |
| Net realized capital losses | | (98,605,495) |
| Net unrealized capital depreciation | | (7,183,794) |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $1,173,082,742 | | 143,307,149 | | $8.19 |
| | | | | |
Schwab Fundamental International Large Company Index Fund
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends (net of foreign withholding tax of $3,272,862) | | $33,723,550 |
| Interest | | 1,687 |
| Securities on loan | + | 843,119 |
| Total investment income | | 34,568,356 |
| Expenses |
| Investment adviser and administrator fees | | 2,698,472 |
| Shareholder service fees | | 846,149 |
| Index fees | | 637,422 |
| Custodian fees | | 232,030 |
| Transfer agent fees | | 111,837 |
| Portfolio accounting fees | | 97,809 |
| Registration fees | | 61,514 |
| Professional fees | | 50,205 |
| Shareholder reports | | 30,892 |
| Independent trustees' fees | | 11,787 |
| Proxy fees | | 6,252 |
| Interest expense | | 804 |
| Other expenses | + | 43,259 |
| Total expenses | | 4,828,432 |
| Expense reduction by CSIM and its affiliates | – | 1,164,798 |
| Net expenses | – | 3,663,634 |
| Net investment income | | 30,904,722 |
| Realized and Unrealized Gains (Losses) |
| Net realized gains on investments | | 18,888,979 |
| Net realized gains on futures contracts | | 343,298 |
| Net realized losses on foreign currency transactions | + | (389,200) |
| Net realized gains | | 18,843,077 |
| Net change in unrealized appreciation (depreciation) on investments | | (94,743,405) |
| Net change in unrealized appreciation (depreciation) on futures contracts | | (82,401) |
| Net change in unrealized appreciation (depreciation) on foreign currency translations | + | 31,255 |
| Net change in unrealized appreciation (depreciation) | + | (94,794,551) |
| Net realized and unrealized losses | | (75,951,474) |
| Decrease in net assets resulting from operations | | ($45,046,752) |
Schwab Fundamental International Large Company Index Fund
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $30,904,722 | $29,342,366 |
| Net realized gains | | 18,843,077 | 19,760,200 |
| Net change in unrealized appreciation (depreciation) | + | (94,794,551) | (59,586,078) |
| Decrease in net assets from operations | | (45,046,752) | (10,483,512) |
| Distributions to Shareholders | |
| Distributions from net investment income | | ($30,718,378) | ($17,955,621) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 77,124,870 | $646,716,280 | 49,079,319 | $452,063,298 |
| Shares reinvested | | 2,428,390 | 20,277,055 | 1,447,761 | 12,841,641 |
| Shares redeemed | + | (38,940,325) | (326,201,774) | (19,204,938) | (174,204,252) |
| Net transactions in fund shares | | 40,612,935 | $340,791,561 | 31,322,142 | $290,700,687 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 102,694,214 | $908,056,311 | 71,372,072 | $645,794,757 |
| Total increase | + | 40,612,935 | 265,026,431 | 31,322,142 | 262,261,554 |
| End of period | | 143,307,149 | $1,173,082,742 | 102,694,214 | $908,056,311 |
| Net investment income not yet distributed | | | $26,398,915 | | $25,916,254 |
Schwab Fundamental International Small Company Index Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $11.15 | $11.47 | $9.13 | $9.53 | $9.96 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.22 | 0.22 | 0.22 | 0.21 | 0.24 | |
| Net realized and unrealized gains (losses) | 0.12 | (0.23) | 2.42 | 0.03 | (0.40) | |
| Total from investment operations | 0.34 | (0.01) | 2.64 | 0.24 | (0.16) | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.19) | (0.31) | (0.30) | (0.25) | (0.27) | |
| Distributions from net realized gains | (0.05) | — | — | (0.39) | — | |
| Total distributions | (0.24) | (0.31) | (0.30) | (0.64) | (0.27) | |
| Net asset value at end of period | $11.25 | $11.15 | $11.47 | $9.13 | $9.53 | |
| Total return | 3.09% | (0.07%) | 29.75% | 3.13% | (1.76%) | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 0.49% | 0.49% | 0.47% 2,3 | 0.46% 4,5 | 0.54% | |
| Gross operating expenses | 0.71% | 0.80% | 0.93% | 0.92% 5 | 0.99% | |
| Net investment income (loss) | 1.98% | 1.87% | 2.21% | 2.42% | 2.29% | |
| Portfolio turnover rate | 37% | 41% | 29% | 89% 6 | 63% | |
| Net assets, end of period (x 1,000,000) | $427 | $275 | $150 | $90 | $93 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Effective June 11, 2013, the net operating expense limitation was lowered. The ratio presented for period ended 10/31/13 is a blended ratio.
3
The ratio of net operating expenses would have been 0.52%, if voluntary waiver by CSIM had not been included.
4
The ratio of net operating expenses would have been 0.51%, if voluntary waiver by CSIM had not been included.
5
The net operating and gross operating expense ratios would have been 0.50% and 0.97%, respectively, if vendor payments had not been included.
6
Portfolio turnover would have been 48%, if rebalancing trades had not been included due to a change in the fund's index.
Schwab Fundamental International Small Company Index Fund
Condensed Portfolio Holdings as of October 31, 2015
This section shows the fund's 50 largest portfolio holdings in unaffiliated issuers, and any holdings exceeding 1% of the fund's net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-800-435-4000. This complete schedule, filed on the fund's Form N-CSR, is also available on the SEC's website at www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15-20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 98.4% | Common Stock | 397,890,536 | 420,007,227 |
| 0.4% | Preferred Stock | 1,652,774 | 1,786,493 |
| 0.0% | Rights | — | 1,967 |
| 4.9% | Other Investment Companies | 20,702,382 | 20,844,674 |
| 0.0% | Short-Term Investments | 153,640 | 153,640 |
| 103.7% | Total Investments | 420,399,332 | 442,794,001 |
| (3.7%) | Other Assets and Liabilities, Net | | (15,810,164) |
| 100.0% | Net Assets | | 426,983,837 |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Common Stock 98.4% of net assets | |
| Australia 5.3% | |
| Fairfax Media Ltd. | 1,074,649 | 0.1 | 718,742 | |
| Treasury Wine Estates Ltd. | 153,674 | 0.2 | 769,147 | |
| Other Securities | | 5.0 | 21,349,154 | |
| | | 5.3 | 22,837,043 | |
| Austria 0.9% | |
| Wienerberger AG | 38,076 | 0.2 | 702,012 | |
| Other Securities | | 0.7 | 3,197,130 | |
| | | 0.9 | 3,899,142 | |
| Belgium 1.0% | |
| Bekaert N.V. | 27,493 | 0.2 | 815,452 | |
| Other Securities | | 0.8 | 3,567,980 | |
| | | 1.0 | 4,383,432 | |
| Canada 7.4% | |
| Agnico-Eagle Mines Ltd. | 25,696 | 0.2 | 726,311 | |
| Other Securities | | 7.2 | 30,840,301 | |
| | | 7.4 | 31,566,612 | |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Denmark 1.5% | |
| Other Securities | | 1.5 | 6,550,265 | |
| Finland 1.6% | |
| Huhtamaki Oyj | 20,523 | 0.2 | 724,038 | |
| Other Securities | | 1.4 | 6,181,819 | |
| | | 1.6 | 6,905,857 | |
| France 4.3% | |
| SEB S.A. | 7,060 | 0.2 | 717,053 | |
| UBISOFT Entertainment * | 32,946 | 0.2 | 987,106 | |
| Other Securities | | 3.9 | 16,607,427 | |
| | | 4.3 | 18,311,586 | |
| Germany 3.3% | |
| Telefonica Deutschland Holding AG | 113,621 | 0.1 | 731,453 | |
| Other Securities | | 3.2 | 13,561,224 | |
| | | 3.3 | 14,292,677 | |
| Greece 0.0% | |
| Other Securities | | 0.0 | — | |
| Hong Kong 2.3% | |
| Other Securities | | 2.3 | 9,797,374 | |
| Ireland 0.7% | |
| Other Securities | | 0.7 | 3,016,946 | |
| Israel 1.0% | |
| Other Securities | | 1.0 | 4,357,643 | |
| Italy 2.7% | |
| Banca Popolare Di Milano Scarl | 761,437 | 0.2 | 714,468 | |
| Italcementi S.p.A. | 75,183 | 0.2 | 835,018 | |
| Other Securities | | 2.3 | 10,067,346 | |
| | | 2.7 | 11,616,832 | |
| Japan 40.1% | |
| Alps Electric Co., Ltd. | 26,500 | 0.2 | 822,538 | |
| Autobacs Seven Co., Ltd. | 44,100 | 0.2 | 773,319 | |
| Calsonic Kansei Corp. | 98,000 | 0.2 | 781,028 | |
| Credit Saison Co., Ltd. | 40,200 | 0.2 | 825,289 | |
| Fujikura Ltd. | 156,000 | 0.2 | 801,827 | |
| Fukuoka Financial Group, Inc. | 135,000 | 0.1 | 710,390 | |
| H2O Retailing Corp. | 36,300 | 0.1 | 705,147 | |
| IT Holdings Corp. | 37,700 | 0.2 | 931,978 | |
| Kikkoman Corp. | 26,000 | 0.2 | 814,355 | |
| Koito Manufacturing Co., Ltd. | 20,400 | 0.2 | 772,769 | |
| Kurita Water Industries Ltd. | 33,900 | 0.2 | 765,489 | |
| Matsumotokiyoshi Holdings Co., Ltd. | 18,700 | 0.2 | 800,663 | |
| Megmilk Snow Brand Co., Ltd. | 40,700 | 0.2 | 845,750 | |
| Mitsubishi Gas Chemical Co., Inc. | 137,000 | 0.2 | 763,827 | |
| Morinaga Milk Industry Co., Ltd. | 180,000 | 0.2 | 816,883 | |
| NGK Insulators Ltd. | 33,000 | 0.1 | 714,445 | |
| Nichirei Corp. | 132,000 | 0.2 | 858,597 | |
| Nippon Building Fund, Inc. | 150 | 0.1 | 712,391 | |
| Nomura Real Estate Holdings, Inc. | 33,700 | 0.2 | 720,133 | |
Schwab Fundamental International Small Company Index Fund
Condensed Portfolio Holdings continued
| Security | Number
of Shares | % of Net
Assets | | Value
($) |
| Otsuka Corp. | 14,900 | 0.2 | | 720,263 |
| Ryohin Keikaku Co., Ltd. | 3,600 | 0.2 | | 722,869 |
| Sankyu, Inc. | 129,000 | 0.2 | | 726,687 |
| Sohgo Security Services Co., Ltd. | 16,500 | 0.2 | | 796,014 |
| Toho Holdings Co., Ltd. | 37,700 | 0.2 | | 835,859 |
| Toyota Boshoku Corp. | 45,600 | 0.2 | | 974,329 |
| Other Securities | | 35.5 | | 151,549,582 |
| | | 40.1 | | 171,262,421 |
| Luxembourg 0.5% | |
| Other Securities | | 0.5 | | 2,266,533 |
| Netherlands 2.2% | |
| Koninklijke BAM Groep N.V * | 183,125 | 0.2 | | 1,008,568 |
| SBM Offshore N.V. * | 57,149 | 0.2 | | 780,785 |
| X5 Retail Group N.V. GDR - Reg'd * | 33,904 | 0.2 | | 700,725 |
| Other Securities | | 1.6 | | 6,751,238 |
| | | 2.2 | | 9,241,316 |
| New Zealand 0.9% | |
| Other Securities | | 0.9 | | 3,746,218 |
| Norway 1.1% | |
| Other Securities | | 1.1 | | 4,519,833 |
| Portugal 0.4% | |
| Other Securities | | 0.4 | | 1,581,120 |
| Singapore 1.6% | |
| Other Securities | | 1.6 | | 6,662,852 |
| Spain 2.1% | |
| Other Securities | | 2.1 | | 8,769,311 |
| Sweden 2.2% | |
| Other Securities | | 2.2 | | 9,239,279 |
| Switzerland 2.8% | |
| Galenica AG - Reg'd | 557 | 0.2 | | 815,947 |
| Other Securities | | 2.6 | | 11,054,112 |
| | | 2.8 | | 11,870,059 |
| United Kingdom 12.5% | |
| Cable & Wireless Communications plc | 835,234 | 0.2 | | 945,685 |
| Debenhams plc | 561,912 | 0.2 | | 772,791 |
| Greene King plc | 71,383 | 0.2 | | 883,081 |
| Hiscox Ltd. | 50,286 | 0.2 | | 747,792 |
| Lancashire Holdings Ltd. | 72,067 | 0.2 | | 789,472 |
| National Express Group plc | 159,282 | 0.2 | | 735,173 |
| Provident Financial plc | 15,608 | 0.2 | | 833,175 |
| The British Land Co., plc | 53,799 | 0.1 | | 720,621 |
| Other Securities | | 11.0 | | 46,885,086 |
| | | 12.5 | | 53,312,876 |
| Total Common Stock |
| (Cost $397,890,536) | | | | 420,007,227 |
|
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Preferred Stock 0.4% of net assets | |
| Germany 0.3% | |
| Other Securities | | 0.3 | 1,159,328 | |
| Italy 0.0% | |
| Other Securities | | 0.0 | 137,200 | |
| Spain 0.0% | |
| Other Securities | | 0.0 | 211,715 | |
| Sweden 0.1% | |
| Other Securities | | 0.1 | 278,250 | |
| Total Preferred Stock |
| (Cost $1,652,774) | | | 1,786,493 | |
|
| Rights 0.0% of net assets | |
| Australia 0.0% | |
| Other Securities | | 0.0 | 1,965 | |
| Italy 0.0% | |
| Other Securities | | 0.0 | 2 | |
| Total Rights |
| (Cost $—) | | | 1,967 | |
|
| Other Investment Companies 4.9% of net assets | |
| United States 4.9% | |
| Equity Fund 0.9% | |
| iShares MSCI EAFE Small Cap ETF | 75,000 | 0.9 | 3,759,000 | |
| Securities Lending Collateral 4.0% | |
| Wells Fargo Advantage Government Money Market Fund, Institutional Class 0.01% (e) | 17,085,674 | 4.0 | 17,085,674 | |
| | | 4.9 | 20,844,674 | |
| Total Other Investment Companies |
| (Cost $20,702,382) | | | 20,844,674 | |
Schwab Fundamental International Small Company Index Fund
Condensed Portfolio Holdings continued
Security
Rate, Maturity Date | Face
Amount
($) | % of Net
Assets | Value
($) | |
| Short-Term Investments 0.0% of net assets | |
| Time Deposit 0.0% | |
| Other Securities | | 0.0 | 153,640 | |
| Total Short-Term Investments |
| (Cost $153,640) | | | 153,640 | |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $427,751,941 and the unrealized appreciation and depreciation were $49,692,138 and ($34,650,078), respectively, with a net unrealized appreciation of $15,042,060.
At 10/31/15, the values of certain foreign securities held by the fund aggregating $373,064,205 were adjusted from their closing market values in accordance with international fair valuation procedures approved by the fund's Board of Trustees. (See financial note 2(a) for additional information)
For the following notes, please refer to the complete schedule of portfolio holdings.
| * | Non-income producing security. |
| (a) | All or a portion of this security is on loan. Securities on loan were valued at $16,225,783. |
| (b) | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| (c) | Illiquid security. At the period end, the value of these amounted to $139,793 or 0.0% of net assets. |
| (d) | Securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $555,094 or 0.1% of net assets. |
| (e) | The rate shown is the 7-day yield. |
| | |
| ADR — | American Depositary Receipt |
| CDI — | CHESS Depositary Interest |
| CVA — | Dutch Certificate |
| ETF — | Exchange Traded Fund |
| GDR — | Global Depositary Receipt |
| Reg'd — | Registered |
| REIT — | Real Estate Investment Trust |
| RSP — | Risparmio (Convertible Savings Shares) |
Schwab Fundamental International Small Company Index Fund
Condensed Portfolio Holdings continued
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Common Stock1 | | $— | | $5,938,763 | | $— | | $5,938,763 | |
| Australia | | 147,163 | | 22,358,534 | | 331,346 | | 22,837,043 | |
| Austria | | 746,229 | | 3,152,913 | | — | | 3,899,142 | |
| Belgium | | 286,781 | | 4,096,651 | | — | | 4,383,432 | |
| Canada | | 31,446,440 | | 120,172 | | — | | 31,566,612 | |
| Denmark | | 277,305 | | 6,272,960 | | — | | 6,550,265 | |
| Finland | | 286,506 | | 6,619,351 | | — | | 6,905,857 | |
| France | | 1,020,190 | | 17,291,396 | | — | | 18,311,586 | |
| Germany | | 195,231 | | 14,097,446 | | — | | 14,292,677 | |
| Greece | | — | | — | | — | | — | |
| Hong Kong | | 63,345 | | 9,734,029 | | — | | 9,797,374 | |
| Ireland | | 759,482 | | 2,257,464 | | — | | 3,016,946 | |
| Italy | | 1,403,678 | | 10,213,154 | | — | | 11,616,832 | |
| Japan | | 404,822 | | 170,857,599 | | — | | 171,262,421 | |
| Luxembourg | | 866,072 | | 1,400,461 | | — | | 2,266,533 | |
| Netherlands | | 1,753,867 | | 7,487,449 | | — | | 9,241,316 | |
| New Zealand | | 107,278 | | 3,638,940 | | — | | 3,746,218 | |
| Norway | | 275,269 | | 4,244,564 | | — | | 4,519,833 | |
| Singapore | | 301,958 | | 6,221,101 | | 139,793 | | 6,662,852 | |
| Spain | | 165,447 | | 8,603,864 | | — | | 8,769,311 | |
| Sweden | | 214,086 | | 9,025,193 | | — | | 9,239,279 | |
| Switzerland | | 621,606 | | 11,248,453 | | — | | 11,870,059 | |
| United Kingdom | | 6,637,371 | | 46,675,505 | | — | | 53,312,876 | |
| Preferred Stock1 | | — | | 1,508,243 | | — | | 1,508,243 | |
| Sweden | | 278,250 | | — | | — | | 278,250 | |
| Rights 1 | | — | | — | | 1,967 | | 1,967 | |
| Other Investment Companies | | | | | | | | | |
| United States1 | | 20,844,674 | | — | | — | | 20,844,674 | |
| Short-Term Investments1 | | — | | 153,640 | | — | | 153,640 | |
| Total | | $69,103,050 | | $373,217,845 | | $473,106 | | $442,794,001 | |
| 1 | As categorized in the complete schedule of portfolio holdings. |
Schwab Fundamental International Small Company Index Fund
Condensed Portfolio Holdings continued
The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
| Investments in Securities | | Balance
as of
October 31,
2014 | | Realized
Gains
(Losses) | | Change in
Unrealized
Appreciation
(Depreciation) | | Gross
Purchases | | Gross
Sales | | Gross
Transfers
in | | Gross
Transfers
out | | Balance
as of
October 31,
2015 |
| Common Stock | | | | | | | | | | | | | | | | |
| Australia | | $— | | ($93,624) | | $94,886 | | $330,084 | | $— | | $— | | $— | | $331,346 |
| Republic of Korea | | 2,970 | | 4,912 | | (2,970) | | — | | (4,912) | | — | | — | | — |
| Singapore | | — | | — | | (74,005) | | 95,389 | | — | | 118,409 | | — | | 139,793 |
| Rights | | | | | | | | | | | | | | | | |
| Australia | | — | | — | | 1,965 | | — | | — | | — | | — | | 1,965 |
| Italy | | — | | — | | 2 | | — | | — | | — | | — | | 2 |
| Total | | $2,970 | | ($88,712) | | $19,878 | | $425,473 | | ($4,912) | | $118,409 | | $— | | $473,106 |
All net realized and change in unrealized gains (losses) in the table above are reflected on the accompanying Statement of Operations. The net change in unrealized appreciation (depreciation) for Level 3 investments held by the fund at October 31, 2015 was ($99,067).
The fund’s policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were security transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015. The transfers in the amount of $10,124,887 and $4,204,546 from Level 1 to Level 2 and from Level 2 to Level 1, respectively, were primarily due to the use of international fair valuation by the fund. The transfers into Level 3 from Level 1 or Level 2 were due to the result of fair valued securities for which no quoted value was available.
Schwab Fundamental International Small Company Index Fund
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments, at value (cost $403,313,658) including securities on loan of $16,225,783 | | $425,708,327 |
| Collateral invested for securities on loan, at value (cost $17,085,674) | + | 17,085,674 |
| Total investments, at value (cost $420,399,332) | | 442,794,001 |
| Receivables: | | |
| Investments sold | | 884,102 |
| Dividends | | 1,127,439 |
| Fund shares sold | | 702,447 |
| Foreign tax reclaims | | 100,844 |
| Income from securities on loan | | 49,668 |
| Prepaid expenses | + | 9,779 |
| Total assets | | 445,668,280 |
| Liabilities |
| Collateral held for securities on loan | | 17,085,674 |
| Payables: | | |
| Investment adviser and administrator fees | | 9,395 |
| Shareholder service fees | | 4,456 |
| Fund shares redeemed | | 939,961 |
| Due to custodian | | 411,445 |
| Accrued expenses | + | 233,512 |
| Total liabilities | | 18,684,443 |
| Net Assets |
| Total assets | | 445,668,280 |
| Total liabilities | – | 18,684,443 |
| Net assets | | $426,983,837 |
| Net Assets by Source | | |
| Capital received from investors | | 405,206,523 |
| Net investment income not yet distributed | | 4,752,504 |
| Net realized capital losses | | (5,360,758) |
| Net unrealized capital appreciation | | 22,385,568 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $426,983,837 | | 37,969,897 | | $11.25 |
| | | | | |
Schwab Fundamental International Small Company Index Fund
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends (net of foreign withholding tax of $962,910) | | $8,827,491 |
| Interest | | 933 |
| Securities on loan | + | 356,806 |
| Total investment income | | 9,185,230 |
| Expenses |
| Investment adviser and administrator fees | | 1,483,944 |
| Shareholder service fees | | 317,684 |
| Index fees | | 316,516 |
| Custodian fees | | 222,208 |
| Portfolio accounting fees | | 91,374 |
| Registration fees | | 47,446 |
| Professional fees | | 46,783 |
| Transfer agent fees | | 41,355 |
| Shareholder reports | | 30,959 |
| Independent trustees' fees | | 8,567 |
| Proxy fees | | 4,131 |
| Interest expense | | 1,586 |
| Other expenses | + | 26,175 |
| Total expenses | | 2,638,728 |
| Expense reduction by CSIM and its affiliates | – | 815,033 |
| Net expenses | – | 1,823,695 |
| Net investment income | | 7,361,535 |
| Realized and Unrealized Gains (Losses) |
| Net realized losses on investments | | (3,314,784) |
| Net realized losses on futures contracts | | (152,598) |
| Net realized losses on foreign currency transactions | + | (140,166) |
| Net realized losses | | (3,607,548) |
| Net change in unrealized appreciation (depreciation) on investments | | 6,241,939 |
| Net change in unrealized appreciation (depreciation) on futures contracts | | (4,234) |
| Net change in unrealized appreciation (depreciation) on foreign currency translations | + | 13,109 |
| Net change in unrealized appreciation (depreciation) | + | 6,250,814 |
| Net realized and unrealized gains | | 2,643,266 |
| Increase in net assets resulting from operations | | $10,004,801 |
Schwab Fundamental International Small Company Index Fund
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $7,361,535 | $3,873,605 |
| Net realized gains (losses) | | (3,607,548) | 4,363,595 |
| Net change in unrealized appreciation (depreciation) | + | 6,250,814 | (12,459,728) |
| Increase (decrease) in net assets from operations | | 10,004,801 | (4,222,528) |
| Distributions to Shareholders | |
| Distributions from net investment income | | (4,674,757) | (4,201,706) |
| Distributions from net realized gains | + | (1,212,255) | — |
| Total distributions | | ($5,887,012) | ($4,201,706) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 21,683,419 | $240,269,549 | 15,320,962 | $176,589,635 |
| Shares reinvested | | 378,138 | 4,049,856 | 238,640 | 2,675,147 |
| Shares redeemed | + | (8,780,138) | (96,851,042) | (3,909,585) | (45,018,061) |
| Net transactions in fund shares | | 13,281,419 | $147,468,363 | 11,650,017 | $134,246,721 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 24,688,478 | $275,397,685 | 13,038,461 | $149,575,198 |
| Total increase | + | 13,281,419 | 151,586,152 | 11,650,017 | 125,822,487 |
| End of period | | 37,969,897 | $426,983,837 | 24,688,478 | $275,397,685 |
| Net investment income not yet distributed | | | $4,752,504 | | $1,960,947 |
Schwab Fundamental Emerging Markets Large Company Index Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $8.60 | $9.24 | $8.86 | $9.17 | $10.81 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.20 1 | 0.20 | 0.19 | 0.25 | 0.24 | |
| Net realized and unrealized gains (losses) | (1.92) | (0.66) | 0.43 | (0.17) | (1.37) | |
| Total from investment operations | (1.72) | (0.46) | 0.62 | 0.08 | (1.13) | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.21) | (0.18) | (0.24) | (0.22) | (0.15) | |
| Distributions from net realized gains | — | — | — | (0.17) | (0.36) | |
| Total distributions | (0.21) | (0.18) | (0.24) | (0.39) | (0.51) | |
| Net asset value at end of period | $6.67 | $8.60 | $9.24 | $8.86 | $9.17 | |
| Total return | (20.28%) | (5.03%) | 7.11% | 1.18% | (10.99%) | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 0.49% | 0.49% | 0.51% 2,3 | 0.56% 4 | 0.61% 5 | |
| Gross operating expenses | 0.85% | 0.85% | 0.88% | 0.91% | 0.91% | |
| Net investment income (loss) | 2.61% | 2.35% | 2.22% | 2.75% | 2.51% | |
| Portfolio turnover rate | 27% | 19% | 22% | 86% 6 | 56% | |
| Net assets, end of period (x 1,000,000) | $304 | $346 | $353 | $314 | $310 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Effective June 11, 2013, the net operating expense limitation was lowered. The ratio presented for period ended 10/31/13 is a blended ratio.
3
The ratio of net operating expenses would have been 0.56%, if voluntary waiver by CSIM had not been included.
4
The ratio of net operating expenses would have been 0.60%, if voluntary waiver by CSIM had not been included.
5
The ratio of net operating expenses would have been 0.60%, if interest expenses had not been incurred.
6
Portfolio turnover would have been 51%, if rebalancing trades had not been included due to a change in the fund's index.
Schwab Fundamental Emerging Markets Large Company Index Fund
Condensed Portfolio Holdings as of October 31, 2015
This section shows the fund's 50 largest portfolio holdings in unaffiliated issuers, and any holdings exceeding 1% of the fund's net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-800-435-4000. This complete schedule, filed on the fund's Form N-CSR, is also available on the SEC's website at www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15-20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 90.6% | Common Stock | 319,471,368 | 275,693,734 |
| 9.0% | Preferred Stock | 51,687,794 | 27,393,065 |
| 0.0% | Short-Term Investments | 7,265 | 7,265 |
| 99.6% | Total Investments | 371,166,427 | 303,094,064 |
| 0.4% | Other Assets and Liabilities, Net | | 1,316,994 |
| 100.0% | Net Assets | | 304,411,058 |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Common Stock 90.6% of net assets | |
| Brazil 5.9% | |
| Ambev S.A. | 387,350 | 0.6 | 1,916,679 | |
| Banco do Brasil S.A. | 347,315 | 0.5 | 1,439,328 | |
| Petroleo Brasileiro S.A. * | 1,605,758 | 1.3 | 3,900,742 | |
| Vale S.A. | 668,976 | 1.0 | 2,958,225 | |
| Other Securities | | 2.5 | 7,741,975 | |
| | | 5.9 | 17,956,949 | |
| Chile 0.8% | |
| Other Securities | | 0.8 | 2,451,841 | |
| China 16.4% | |
| Bank of China Ltd., Class H | 8,362,234 | 1.3 | 3,943,306 | |
| China Construction Bank Corp., Class H | 8,825,960 | 2.1 | 6,396,667 | |
| China Mobile Ltd. | 569,555 | 2.2 | 6,828,899 | |
| China Petroleum & Chemical Corp., Class H | 7,043,400 | 1.7 | 5,077,193 | |
| CNOOC Ltd. | 2,527,075 | 0.9 | 2,854,360 | |
| Industrial & Commercial Bank of China Ltd., Class H | 8,699,172 | 1.8 | 5,517,929 | |
| PetroChina Co., Ltd., Class H | 3,558,000 | 0.9 | 2,785,572 | |
| Other Securities | | 5.5 | 16,644,351 | |
| | | 16.4 | 50,048,277 | |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Colombia 0.3% | |
| Other Securities | | 0.3 | 962,497 | |
| Czech Republic 0.3% | |
| Other Securities | | 0.3 | 866,376 | |
| Greece 0.6% | |
| Other Securities | | 0.6 | 1,964,142 | |
| Hungary 0.6% | |
| Other Securities | | 0.6 | 1,666,012 | |
| India 4.1% | |
| Infosys Ltd. | 93,222 | 0.5 | 1,618,211 | |
| Reliance Industries Ltd. | 236,083 | 1.1 | 3,419,185 | |
| Other Securities | | 2.5 | 7,523,618 | |
| | | 4.1 | 12,561,014 | |
| Indonesia 1.2% | |
| Other Securities | | 1.2 | 3,592,878 | |
| Malaysia 2.0% | |
| Other Securities | | 2.0 | 5,935,432 | |
| Mexico 3.9% | |
| America Movil S.A.B. de C.V., Series L | 3,970,919 | 1.2 | 3,545,936 | |
| Wal-Mart de Mexico S.A.B. de C.V. | 502,737 | 0.4 | 1,326,404 | |
| Other Securities | | 2.3 | 6,881,903 | |
| | | 3.9 | 11,754,243 | |
| Peru 0.1% | |
| Other Securities | | 0.1 | 416,729 | |
| Philippines 0.2% | |
| Other Securities | | 0.2 | 498,331 | |
| Poland 2.3% | |
| Polski Koncern Naftowy Orlen S.A. | 115,447 | 0.6 | 1,872,949 | |
| Other Securities | | 1.7 | 5,015,285 | |
| | | 2.3 | 6,888,234 | |
| Republic of Korea 18.7% | |
| Hyundai Mobis Co., Ltd. | 8,160 | 0.6 | 1,715,478 | |
| Hyundai Motor Co. | 25,346 | 1.2 | 3,462,126 | |
| Kia Motors Corp. | 52,740 | 0.9 | 2,574,350 | |
| Korea Electric Power Corp. | 35,278 | 0.5 | 1,588,376 | |
| LG Chem Ltd. | 7,060 | 0.6 | 1,876,839 | |
| LG Corp. | 22,941 | 0.4 | 1,327,408 | |
| LG Electronics, Inc. | 37,686 | 0.5 | 1,617,938 | |
| POSCO | 20,296 | 1.1 | 3,263,817 | |
| Samsung Electronics Co., Ltd. | 12,934 | 5.1 | 15,513,371 | |
| Shinhan Financial Group Co., Ltd. | 50,181 | 0.6 | 1,915,170 | |
| SK Holdings Co., Ltd. | 10,681 | 0.8 | 2,496,690 | |
| SK Innovation Co., Ltd. * | 29,739 | 1.0 | 3,083,591 | |
| Other Securities | | 5.4 | 16,540,896 | |
| | | 18.7 | 56,976,050 | |
Schwab Fundamental Emerging Markets Large Company Index Fund
Condensed Portfolio Holdings continued
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Russia 12.4% | |
| Gazprom PAO | 3,949,000 | 2.8 | 8,397,521 | |
| Gazprom PAO ADR | 1,270,000 | 1.7 | 5,352,202 | |
| Lukoil PJSC * | 118,799 | 1.4 | 4,317,426 | |
| Lukoil PJSC ADR | 112,200 | 1.3 | 4,075,735 | |
| Surgutneftegas * | 6,493,005 | 1.2 | 3,639,745 | |
| Tatneft ADR | 68,600 | 0.7 | 2,115,522 | |
| Other Securities | | 3.3 | 9,920,219 | |
| | | 12.4 | 37,818,370 | |
| South Africa 6.1% | |
| MTN Group Ltd. | 230,145 | 0.8 | 2,620,111 | |
| Sasol Ltd. | 121,404 | 1.3 | 3,889,986 | |
| Standard Bank Group Ltd. | 140,359 | 0.5 | 1,458,348 | |
| Other Securities | | 3.5 | 10,575,269 | |
| | | 6.1 | 18,543,714 | |
| Taiwan 11.8% | |
| Asustek Computer, Inc. | 154,041 | 0.5 | 1,378,573 | |
| Chunghwa Telecom Co., Ltd. | 529,906 | 0.5 | 1,623,558 | |
| Formosa Chemicals & Fibre Corp. | 625,442 | 0.5 | 1,429,853 | |
| Formosa Plastics Corp. | 566,732 | 0.4 | 1,315,178 | |
| Hon Hai Precision Industry Co., Ltd. | 1,883,424 | 1.6 | 5,006,251 | |
| Taiwan Semiconductor Manufacturing Co., Ltd. | 1,291,103 | 1.8 | 5,440,276 | |
| Other Securities | | 6.5 | 19,710,799 | |
| | | 11.8 | 35,904,488 | |
| Thailand 1.4% | |
| PTT PCL | 199,187 | 0.5 | 1,540,070 | |
| Other Securities | | 0.9 | 2,734,955 | |
| | | 1.4 | 4,275,025 | |
| Turkey 1.5% | |
| Other Securities | | 1.5 | 4,613,132 | |
| Total Common Stock |
| (Cost $319,471,368) | | | 275,693,734 | |
|
| Preferred Stock 9.0% of net assets | |
| Brazil 6.2% | |
| Banco Bradesco S.A. | 388,242 | 0.7 | 2,115,078 | |
| Itau Unibanco Holding S.A. | 508,469 | 1.1 | 3,492,172 | |
| Petroleo Brasileiro S.A. * | 2,403,954 | 1.6 | 4,802,054 | |
| Vale S.A. | 968,728 | 1.2 | 3,523,992 | |
| Other Securities | | 1.6 | 4,760,201 | |
| | | 6.2 | 18,693,497 | |
| Colombia 0.1% | |
| Other Securities | | 0.1 | 373,089 | |
| Republic of Korea 1.2% | |
| Samsung Electronics Co., Ltd. | 2,227 | 0.8 | 2,326,056 | |
| Other Securities | | 0.4 | 1,340,906 | |
| | | 1.2 | 3,666,962 | |
| Security | Number
of Shares | % of Net
Assets | Value
($) | |
| Russia 1.5% | |
| AK Transneft OAO * | 1,416 | 1.1 | 3,300,581 | |
| Other Securities | | 0.4 | 1,358,936 | |
| | | 1.5 | 4,659,517 | |
| Total Preferred Stock |
| (Cost $51,687,794) | | | 27,393,065 | |
Security
Rate, Maturity Date | Face
Amount
($) | % of Net
Assets | Value
($) | |
| Short-Term Investments 0.0% of net assets | |
| Time Deposit 0.0% | |
| Other Securities | | 0.0 | 7,265 | |
| Total Short-Term Investments |
| (Cost $7,265) | | | 7,265 | |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $389,017,805 and the unrealized appreciation and depreciation were $24,950,801 and ($110,874,542), respectively, with a net unrealized depreciation of ($85,923,741).
At 10/31/15, the values of certain foreign securities held by the fund aggregating $254,185,520 were adjusted from their closing market values in accordance with international fair valuation procedures approved by the fund’s Board of Trustees. (See financial note 2(a) for additional information)
For the following notes, please refer to the complete schedule of portfolio holdings.
| * | Non-income producing security. |
| (a) | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| (b) | Illiquid security. At the period end, the value of these amounted to $0 or 0.0% of net assets. |
| | |
| ADR — | American Depositary Receipt |
| GDR — | Global Depositary Receipt |
| Reg'd — | Registered |
In additional to the above the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Depreciation
($) |
| Futures Contracts | | | |
| MSCI EAFE, e-mini, Long, expires 12/18/15 | 20 | 843,700 | (21,933) |
Schwab Fundamental Emerging Markets Large Company Index Fund
Condensed Portfolio Holdings continued
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
Assets Valuation Input
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Common Stock1 | | $— | | $93,033,753 | | $— | | $93,033,753 | |
| Brazil | | 397,696 | | 17,559,253 | | — | | 17,956,949 | |
| Chile | | 2,175,445 | | 276,396 | | — | | 2,451,841 | |
| China | | 618,108 | | 49,430,169 | | — | | 50,048,277 | |
| Colombia | | 962,497 | | — | | — | | 962,497 | |
| Mexico | | 11,754,243 | | — | | — | | 11,754,243 | |
| Peru | | 416,729 | | — | | — | | 416,729 | |
| Republic of Korea | | 1,057,154 | | 55,918,896 | | — | | 56,976,050 | |
| Russia | | 23,091,465 | | 14,726,905 | | — | | 37,818,370 | |
| Thailand | | 3,395,336 | | 879,689 | | — | | 4,275,025 | |
| Preferred Stock1 | | — | | 22,360,459 | | — | | 22,360,459 | |
| Colombia | | 373,089 | | — | | — | | 373,089 | |
| Russia | | 4,659,517 | | — | | — | | 4,659,517 | |
| Short-Term Investments1 | | — | | 7,265 | | — | | 7,265 | |
| Total | | $48,901,279 | | $254,192,785 | | $— | | $303,094,064 | |
Liabilities Valuation Input
| | | | | | | | | |
| | | | | | | | | |
| Other Financial Instruments | | | | | | | | | |
| Futures Contracts2 | | ($21,933) | | $— | | $— | | ($21,933) | |
| 1 | As categorized in the complete schedule of portfolio holdings. |
| 2 | Futures contracts are not included in Investments in the schedule of condensed portfolio holdings and are valued at unrealized appreciation or depreciation. |
The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
| Investments in Securities | | Balance
as of
October 31,
2014 | | Realized
Gains
(Losses) | | Change in
Unrealized
Appreciation
(Depreciation) | | Gross
Purchases | | Gross
Sales | | Gross
Transfers
in | | Gross
Transfers
out | | Balance
as of
October 31,
2015 |
| Common Stock | | | | | | | | | | | | | | | | |
| Republic of Korea | | $519,813 | | $— | | $29,288 | | $— | | ($549,101) | | $— | | $— | | $— |
| Total | | $519,813 | | $— | | $29,288 | | $— | | ($549,101) | | $— | | $— | | $— |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were security transfers in the amount of $39,519,361 and $1,543,117 from Level 1 to Level 2 and from Level 2 to Level 1, respectively, for the period ended October 31, 2015. The transfers between Level 1 and Level 2 were primarily due to the use of international fair valuation by the fund. There were no transfers in or out of Level 3 during the period.
Schwab Fundamental Emerging Markets Large Company Index Fund
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments, at value (cost $371,166,427) | | $303,094,064 |
| Foreign currency, at value (cost $260,317) | | 260,359 |
| Deposit with broker for futures contracts | | 231,000 |
| Receivables: | | |
| Investments sold | | 4,239,096 |
| Fund shares sold | | 1,113,083 |
| Dividends | | 146,317 |
| Variation margin on futures contracts | | 2,400 |
| Foreign tax reclaims | | 858 |
| Prepaid expenses | + | 9,147 |
| Total assets | | 309,096,324 |
| Liabilities |
| Payables: | | |
| Investment adviser and administrator fees | | 6,654 |
| Shareholder service fees | | 3,221 |
| Due to custodian | | 3,462,104 |
| Fund shares redeemed | | 849,866 |
| Foreign capital gains tax | | 182,926 |
| Accrued expenses and other liabilities | + | 180,495 |
| Total liabilities | | 4,685,266 |
| Net Assets |
| Total assets | | 309,096,324 |
| Total liabilities | – | 4,685,266 |
| Net assets | | $304,411,058 |
| Net Assets by Source | | |
| Capital received from investors | | 412,082,250 |
| Net investment income not yet distributed | | 7,562,010 |
| Net realized capital losses | | (46,932,835) |
| Net unrealized capital depreciation | | (68,300,367) |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $304,411,058 | | 45,631,844 | | $6.67 |
| | | | | |
Schwab Fundamental Emerging Markets Large Company Index Fund
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends (net of foreign withholding tax of $1,422,388) | | $10,691,964 |
| Interest | | 3,663 |
| Securities on loan | + | 5,886 |
| Total investment income | | 10,701,513 |
| Expenses |
| Investment adviser and administrator fees | | 1,726,439 |
| Shareholder service fees | | 261,234 |
| Custodian fees | | 366,325 |
| Index fees | | 297,974 |
| Portfolio accounting fees | | 74,499 |
| Professional fees | | 61,141 |
| Transfer agent fees | | 57,808 |
| Registration fees | | 31,166 |
| Shareholder reports | | 23,916 |
| Independent trustees' fees | | 8,522 |
| Proxy fees | | 4,927 |
| Interest expense | | 2,407 |
| Other expenses | + | 35,419 |
| Total expenses | | 2,951,777 |
| Expense reduction by CSIM and its affiliates | – | 1,252,779 |
| Net expenses | – | 1,698,998 |
| Net investment income | | 9,002,515 |
| Realized and Unrealized Gains (Losses) |
| Net realized losses on investments (net of foreign capital gain tax paid of $2,489) | | (23,789,062) |
| Net realized losses on futures contracts | | (32,504) |
| Net realized losses on foreign currency transactions | + | (271,106) |
| Net realized losses | | (24,092,672) |
| Net change in unrealized appreciation (depreciation) on investments (net of change in foreign capital gain tax of ($124,947)) | | (57,695,335) |
| Net change in unrealized appreciation (depreciation) on futures contracts | | (78,857) |
| Net change in unrealized appreciation (depreciation) on foreign currency translations | + | (14,001) |
| Net change in unrealized appreciation (depreciation) | + | (57,788,193) |
| Net realized and unrealized losses | | (81,880,865) |
| Decrease in net assets resulting from operations | | ($72,878,350) |
Schwab Fundamental Emerging Markets Large Company Index Fund
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $9,002,515 | $8,456,428 |
| Net realized losses | | (24,092,672) | (8,043,893) |
| Net change in unrealized appreciation (depreciation) | + | (57,788,193) | (20,621,161) |
| Decrease in net assets from operations | | (72,878,350) | (20,208,626) |
| Distributions to Shareholders | |
| Distributions from net investment income | | ($8,501,798) | ($7,207,709) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 28,202,624 | $207,886,222 | 17,844,818 | $157,305,857 |
| Shares reinvested | | 686,509 | 5,279,258 | 517,807 | 4,510,103 |
| Shares redeemed | + | (23,465,190) | (172,997,984) | (16,378,090) | (141,770,574) |
| Net transactions in fund shares | | 5,423,943 | $40,167,496 | 1,984,535 | $20,045,386 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 40,207,901 | $345,623,710 | 38,223,366 | $352,994,659 |
| Total increase or decrease | + | 5,423,943 | (41,212,652) | 1,984,535 | (7,370,949) |
| End of period | | 45,631,844 | $304,411,058 | 40,207,901 | $345,623,710 |
| Net investment income not yet distributed | | | $7,562,010 | | $7,079,065 |
Schwab Fundamental Index Funds
1. Business Structure of the Funds:
Each of the funds in this report is a series of Schwab Capital Trust (the trust), a no-load, open-end management investment company. The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the 1940 Act). The list below shows all the funds in the trust as of the end of the period, including the funds discussed in this report, which are highlighted:
| Schwab Capital Trust (organized May 7, 1993) | Schwab Large-Cap Growth Fund™ |
| Schwab Fundamental US Large Company Index Fund | Schwab Small-Cap Equity Fund™ |
| Schwab Fundamental US Small Company Index Fund | Schwab Hedged Equity Fund™ |
| Schwab Fundamental International Large Company Index Fund | Schwab Financial Services Fund™ |
| Schwab Fundamental International Small Company Index Fund | Schwab Health Care Fund™ |
| Schwab Fundamental Emerging Markets Large Company Index Fund | Schwab ® International Core Equity Fund |
| Schwab Fundamental Global Real Estate Index Fund | Schwab Target 2010 Fund |
| Schwab ® S&P 500 Index Fund | Schwab Target 2015 Fund |
| Schwab Small-Cap Index Fund® | Schwab Target 2020 Fund |
| Schwab Total Stock Market Index Fund® | Schwab Target 2025 Fund |
| Schwab International Index Fund® | Schwab Target 2030 Fund |
| Schwab MarketTrack All Equity Portfolio™ | Schwab Target 2035 Fund |
| Schwab MarketTrack Growth Portfolio™ | Schwab Target 2040 Fund |
| Schwab MarketTrack Balanced Portfolio™ | Schwab Target 2045 Fund |
| Schwab MarketTrack Conservative Portfolio™ | Schwab Target 2050 Fund |
| Laudus Small-Cap MarketMasters Fund™ | Schwab Target 2055 Fund |
| Laudus International MarketMasters Fund™ | Schwab ® Monthly Income Fund - Moderate Payout |
| Schwab Balanced Fund™ | Schwab ® Monthly Income Fund - Enhanced Payout |
| Schwab Core Equity Fund™ | Schwab ® Monthly Income Fund - Maximum Payout |
| Schwab Dividend Equity Fund™ | |
Each fund in this report offers one share class. Shares are bought and sold (subject to a redemption fee, see financial note 9) at closing net asset value per share (NAV), which is the price for all outstanding shares of a fund. Each share has a par value of 1/1,000 of a cent, and the funds' Board of Trustees (the Board) may authorize the issuance of as many shares as necessary.
Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, each fund may also keep certain assets in segregated accounts, as required by securities law.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies the funds use in their preparation of financial statements. The funds follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 Financial Services — Investment Companies. The accounting policies are in conformity with accounting principles generally accepted in the United States of America (GAAP).
The funds invest in certain other investment companies (underlying funds). For specific investments in underlying funds, please refer to the complete schedule of portfolio holdings on Form N-CSR for this reporting period, which is filed with the U.S. Securities and Exchange Commission (SEC). For more information about the underlying funds’ operations and policies, please refer to those funds’ semiannual and annual reports, which are filed with the SEC.
(a) Security Valuation:
Under procedures approved by the Board, the investment adviser has formed a Pricing Committee to administer the pricing and valuation of portfolio securities and other assets and to ensure that prices used for internal purposes or provided by third parties reasonably reflect fair market value. Among other things, these procedures allow the funds to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.
Schwab Fundamental Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
The funds value the securities in their portfolios every business day. The funds use the following policies to value various types of securities:
• Securities traded on an exchange or over-the-counter: Traded securities are valued at the closing value for the day, or, on days when no closing value has been reported, at halfway between the most recent bid and ask quotes. Securities that are primarily traded on foreign exchanges are valued at the official closing price or the last sales price on the exchange where the securities are principally traded with these values then translated into U.S. dollars at the current exchange rate, unless these securities are fair valued as discussed below.
• Securities for which no quoted value is available: The Board has adopted procedures to fair value each fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the funds pursuant to the valuation procedures.
• Foreign equity security fair valuation: The Board has adopted procedures to fair value foreign equity securities that are traded in markets that close prior to the funds valuing their holdings. By fair valuing securities whose prices may have been affected by events occurring after the close of trading, each fund seeks to establish prices that investors might expect to realize upon the current sales of these securities. This methodology is designed to deter “arbitrage” market timers, who seek to exploit delays between the change in the value of a fund’s portfolio holdings and the NAV of the fund’s shares, and seeks to help ensure that the prices at which the fund’s shares are purchased and redeemed are fair and do not result in dilution of shareholder interest or other harm to shareholders. When fair value pricing is used at the open or close of a reporting period, it may cause a temporary divergence between the return of a fund and that of its comparative index or benchmark. The Board regularly reviews fair value determinations made by the funds pursuant to these procedures.
• Futures contracts: Futures contracts are valued at their settlement prices as of the close of their exchanges.
• Short-term securities (60 days or less to maturity): A short-term security may be valued at its amortized cost when it approximates the security's market value.
• Underlying funds: Mutual funds are valued at their respective NAVs. Exchange traded funds (ETFs) traded on a recognized securities exchange are valued at the last reported sale price that day or the official closing price, if applicable.
In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the funds disclose the fair value of their investments in a hierarchy that prioritizes the significant inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). If inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the valuation. If the funds determine that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
The three levels of the fair value hierarchy are as follows:
• Level 1—quoted prices in active markets for identical securities—Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities, ETFs and futures contracts. Investments in mutual funds are valued daily at their NAVs, and investments in ETFs are valued daily at the last reported sale price or the official closing price, which are classified as Level 1 prices, without consideration to the classification level of the specific investments held by an underlying fund.
Schwab Fundamental Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
• Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)—Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. In addition, international securities whose markets close hours before the funds value their holdings may require fair valuations due to significant movement in the U.S. markets occurring after the daily close of the foreign markets. The Board has approved a vendor that calculates fair valuations of international equity securities based on a number of factors that appear to correlate to the movements in the U.S. markets.
• Level 3—significant unobservable inputs (including the funds' own assumptions in determining the fair value of investments)—Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the funds use one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the funds in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the funds in the absence of market information. Assumptions used by the funds due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds' results of operations.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The levels associated with valuing the funds' investments as of October 31, 2015 are disclosed in the Condensed Portfolio Holdings.
(b) Accounting Policies for certain Portfolio Investments (if held):
Futures Contracts: Futures contracts are instruments that represent an agreement between two parties that obligates one party to buy, and the other party to sell, specific instruments at an agreed upon price on a stipulated future date. A fund must give the broker a deposit of cash and/or securities (initial margin) whenever it enters into a futures contract. The amount of the deposit may vary from one contract to another. Subsequent payments (variation margin) are made or received by a fund depending on the daily fluctuations in the value of the futures contract and are accounted for as unrealized appreciation or depreciation until the contract is closed, at which time the gains or losses are realized. Futures contracts are traded publicly on exchanges, and their market value may change daily.
Securities Lending: Under the trust’s Securities Lending Program, a fund (lender) may make short-term loans of its securities to another party (borrower) to generate additional revenue for the fund. The borrower pledges collateral in the form of cash, securities issued or fully guaranteed by the U.S. government or foreign governments, or letters of credit issued by a bank. Collateral at the individual loan level is required to be maintained on a daily marked-to-market basis in an amount at least equal to the current value of the securities loaned. The lending agent provides a fund with indemnification against borrower default (the borrower fails to return the security on loan) reducing the risk of loss as a result of default. The cash collateral of securities loaned is currently invested in money market portfolios operating under Rule 2a-7 of the 1940 Act. Each fund bears the risk of loss with respect to the investment of cash collateral. The terms of the securities lending agreement allows the funds to terminate any loans at any given time. Securities lending income, as disclosed in each fund’s Statement of Operations, if applicable, represents the income earned from the investment of the cash collateral plus any fees paid by borrowers, less the fees paid to the lending agent and broker rebates which are subject to adjustments pursuant to the securities lending agreement. On loans not collateralized by cash, a fee is received from the borrower, and is allocated between a fund and the lending agent. A fund retains the right to recall a security on loan. The aggregate market value of securities loaned will not at any time exceed one-third of the total assets of a fund, including collateral received from the loan (at market value computed at the time of the loan). Total costs and expenses, including lending agent fees associated with securities lending activities under the trust’s Securities Lending Program paid to the unaffiliated lending agents were approximately 15% of gross lending revenues through October 2, 2015. For the subsequent period through November 30, 2015, the total costs and expenses to be
Schwab Fundamental Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
paid to the unaffiliated lending agents range from 10% to 15%, with subsequent breakpoints to a low of 7.5%, of gross lending revenue. After December 1, 2015, the total costs and expenses to be paid to the unaffiliated lending agents start at 10% of gross lending revenue, with subsequent breakpoints to a low of 7.5%.
The value of the securities on loan and the related collateral as of October 31, 2015, if any, are disclosed in each fund's Condensed Portfolio Holdings. The value of the securities on loan and the investment of cash collateral are also disclosed in each fund's Statement of Assets and Liabilities.
(c) Security Transactions:
Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.
Assets and liabilities denominated in foreign currencies are reported in U.S. dollars. For assets and liabilities held on a given date, the dollar value is based on market exchange rates in effect on that date. Transactions involving foreign currencies, including purchases, sales, income receipts and expense payments, are calculated using exchange rates in effect on the transaction date. Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the differences between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange appreciation or depreciation arises from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period. These realized and unrealized foreign exchange gains or losses are reported in foreign currency transactions or translations in the Statement of Operations. The funds do not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.
Gains realized by the funds on the sale of securities in certain foreign countries may be subject to non-U.S. taxes. In those instances, the funds record a liability based on unrealized appreciation to provide for potential non-U.S. taxes payable upon the sale of these securities.
When a fund closes out a futures contract position, it calculates the difference between the value of the position at the beginning and at the end of the contract, and records a realized gain or loss accordingly.
(d) Investment Income:
Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying funds are recorded on the date they are effective (the ex-dividend date), although the funds record certain foreign security dividends on the day they learn of the ex-dividend date. Any distributions from underlying funds are recorded in accordance with the character of the distributions as designated by the underlying funds.
Income received from foreign sources may result in withholding tax. Withholding taxes are accrued at the same time as the related income if the tax rate is fixed and known, unless a tax withheld is reclaimable from the local tax authorities in which case it is recorded as receivable. If the tax rate is not known or estimable, such expense or reclaim receivable is recorded when the net proceeds are received.
(e) Expenses:
Expenses that are specific to a fund are charged directly to the fund. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their average daily net assets.
(f) Distributions to Shareholders:
The funds make distributions from net investment income and net realized capital gains, if any, once a year.
(g) Custody Credit:
Certain funds have an arrangement with their custodian bank, State Street Bank and Trust Company (State Street), under which the funds may receive a credit for their uninvested cash balance to offset their custody fees and accounting fees. The credit amounts, if any, are disclosed in the Statement of Operations as a reduction to a fund's operating expenses.
Schwab Fundamental Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
(h) Accounting Estimates:
The accounting policies described in this report conform to GAAP. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It’s possible that once the results are known, they may turn out to be different from these estimates and these differences may be material.
(i) Federal Income Taxes:
The funds intend to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the funds distribute substantially all of their net investment income and net realized capital gains, if any, to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.
(j) Foreign Taxes:
The funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, corporate events, foreign currency exchanges and capital gains on investments. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in foreign markets in which the funds invest. These foreign taxes, if any, are paid by the funds and are disclosed in the Statement of Operations. Foreign taxes payable as of October 31, 2015, if any, are reflected in each fund's Statement of Assets and Liabilities.
(k) Indemnification:
Under the funds’ organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business the funds enter into contracts with their vendors and others that provide general indemnifications. The funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. However, based on experience, the funds expect the risk of loss attributable to these arrangements to be remote.
(l) New Accounting Pronouncements:
In June 2014, Accounting Standards Update (ASU) No. 2014-11, Topic 860 Transfers and Servicing — Repurchase-to-Maturity Transactions, Repurchase Financings and Disclosures, was issued and is effective for interim periods beginning after March 15, 2015 and annual periods beginning after December 15, 2014. The ASU modifies accounting guidance and enhances disclosure requirements for repurchase agreement and securities lending transactions. Management is currently evaluating the impact the adoption of ASU 2014-11 may have on the funds’ financial statement disclosures.
3. Risk Factors:
Investing in the funds may involve certain risks, as discussed in the funds' prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
Market Risk. Equity markets rise and fall daily. As with any investment whose performance is tied to these markets, the value of the investment in a fund will fluctuate, which means that the investors could lose money.
Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time.
Tracking Error Risk. As an index fund, each fund seeks to track the performance of its comparative index, although it may not be successful in doing so. The divergence between the performance of a fund and its index, positive or negative, is called “tracking error.” Tracking error can be caused by many factors and it may be significant. For example, a fund may not invest in certain securities in the index, or match the securities’ weightings to the index, due to regulatory, operational, custodial or liquidity constraints; corporate transactions; asset valuations; transaction costs and timing; tax considerations; and index rebalancing, which may result in tracking error.
Investment Style Risk. Each fund invests in companies measured by its respective index. It follows these stocks during upturns as well as downturns. Because of its indexing strategy, a fund does not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of a fund’s expenses, a fund’s performance may be below that of the index.
Schwab Fundamental Index Funds
Financial Notes (continued)
3. Risk Factors (continued):
A significant percentage of an index may be composed of securities in a single industry or sector of the economy. If a fund is focused in an industry or sector, it may present more risks than if it were broadly diversified over numerous industries and sectors of the economy.
Sampling Index Tracking Risk. If a fund uses a sampling method, the fund will not fully replicate its comparative index and may hold securities not included in the index. As a result, the fund will be subject to the risk that the investment adviser’s investment management strategy, the implementation of which is subject to a number of constraints, may not produce the intended results. If a fund utilizes a sampling approach, it may not track the return of the index as well as it would if the fund purchased all of the securities in the index.
Concentration Risk. To the extent that a fund’s or an index’s portfolio is concentrated in the securities of issuers in a particular market, industry, group of industries, sector, country, or asset class, the fund may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more susceptible to adverse economic, market, political or regulatory occurrences affecting that market, industry, group of industries, sector, country, or asset class.
Large-Cap Risk. Although certain indices encompass stocks from many different sectors of the economy, their performance may primarily reflect that of large company stocks, which tend to go in and out of favor based on market and economic conditions. As a result, during a period when these stocks fall behind other types of investments—bonds or small company stocks, for instance—a fund’s performance also will lag those investments.
Small-Cap Risk. Historically, small-cap stocks have been riskier than large-cap stocks. Stock prices of smaller companies may be based in substantial part on future expectations rather than current achievements and may move sharply, especially during market upturns and downturns. Small-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies. During a period when small-cap stocks fall behind other types of investments—large-cap stocks, for instance—a fund’s performance also will lag those investments.
Foreign Investment Risk. A fund's investments in securities of foreign issuers may involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges); the imposition of economic sanctions or other government restrictions; differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. These risks may negatively impact the value or liquidity of a fund's investments, and could impair the fund's ability to meet its investment objective or invest in accordance with its investment strategy. These risks may be heightened in connection with investments in emerging markets. Foreign securities also include American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs) and European Depositary Receipts (EDRs), which are depositary receipts issued by U.S. and foreign banks that represent shares of foreign-based corporations. Investments in ADRs, GDRs and EDRs may be less liquid than the underlying shares in their primary trading market and GDRs, many of which are issued by companies in emerging markets, may be more volatile. To the extent a fund's investments in a single country or a limited number of countries represent a larger percentage of the fund's assets, the fund's performance may be adversely affected by the economic, political and social conditions in those countries and it may be subject to increased price volatility.
Emerging Markets Risk. Emerging market countries may be more likely to experience political turmoil or rapid changes in market or economic conditions than more developed countries. Such countries often have less uniformity in accounting and reporting requirements and greater risk associated with the custody of securities. In addition, the financial stability of issuers (including governments) in emerging market countries may be more precarious than in other countries. As a result, there will tend to be an increased risk of price volatility associated with a fund’s investments in emerging market countries and, at times, it may be difficult to value such investments.
ETF Risk. A fund may purchase shares of ETFs to gain exposure to a particular portion of the market while awaiting an opportunity to purchase securities directly. When a fund invests in an ETF, in addition to directly bearing the expenses associated with its own operations, it will bear a proportionate share of the ETF's expenses. Therefore, it may be more costly to own an ETF than to own the underlying securities directly. In addition, while the risks of owning shares of an ETF generally reflect the risks of owning the underlying securities the ETF is designed to track, lack of liquidity in the market for an ETF's shares can result in its value being more volatile than the underlying portfolio securities.
Schwab Fundamental Index Funds
Financial Notes (continued)
3. Risk Factors (continued):
Derivatives Risk. A fund’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Certain of these risks, such as liquidity risk and market risk, are discussed elsewhere in this section. A fund’s use of derivatives is also subject to credit risk, leverage risk, lack of availability risk, valuation risk, correlation risk and tax risk. Lack of availability risk is the risk that suitable derivative transactions may not be available in all circumstances for risk management or other purposes. Credit risk is the risk that the counterparty to a derivatives transaction may not fulfill its obligations. Leverage risk is the risk that a small percentage of assets invested in derivatives can have a disproportionately large impact on a fund. Valuation risk is the risk that a particular derivative may be valued incorrectly. Correlation risk is the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index. Tax risk is the risk that the use of derivatives may cause a fund to realize higher amounts of short-term capital gain. A fund's use of derivatives could reduce the fund's performance, increase its volatility, and could cause the fund to lose more than the initial amount invested.
Liquidity Risk. A particular investment may be difficult to purchase or sell. A fund may be unable to sell illiquid securities at an advantageous time or price.
Securities Lending Risk. Securities lending involves the risk of loss of rights in the collateral or delay in recovery of the collateral if the borrower fails to return the security loaned or becomes insolvent.
Please refer to the funds’ prospectus for a more complete description of the principal risks of investing in the funds.
4. Affiliates and Affiliated Transactions:
Charles Schwab Investment Management, Inc. (CSIM or the investment adviser), a wholly owned subsidiary of The Charles Schwab Corporation, serves as each fund's investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement between CSIM and the trust.
For its advisory and administrative services to the funds, CSIM is entitled to receive an annual fee, payable monthly, based on a percentage of each fund’s average daily net assets as follows:
| % of Average Daily Net Assets | | Schwab
Fundamental
US Large
Company
Index Fund | | Schwab
Fundamental
US Small
Company
Index Fund | | Schwab
Fundamental
International
Large
Company
Index Fund | | Schwab
Fundamental
International
Small
Company
Index Fund | | Schwab
Fundamental
Emerging
Markets Large
Company
Index Fund |
| First $500 million | | 0.30% | | 0.30% | | 0.30% | | 0.40% | | 0.50% |
| $500 million to $5 billion | | 0.22% | | 0.22% | | 0.22% | | 0.38% | | 0.48% |
| $5 billion to $10 billion | | 0.20% | | 0.20% | | 0.20% | | 0.36% | | 0.46% |
| over $10 billion | | 0.18% | | 0.18% | | 0.18% | | 0.34% | | 0.44% |
The Board has adopted a Shareholder Servicing Plan (the Plan) on behalf of the funds. The Plan enables each fund to bear expenses relating to the provision by service providers, including Charles Schwab & Co., Inc. (a broker-dealer affiliate of CSIM, Schwab), of certain account maintenance, customer liaison and shareholder services to the current shareholders of the funds. Schwab serves as the funds’ paying agent under the Plan for making payments of the shareholder service fee due to the service providers (other than Schwab) under the Plan. All shareholder service fees paid by the funds to Schwab in its capacity as the funds’ paying agent will be passed through to the service providers, and Schwab will not retain any portion of such fees.
Pursuant to the Plan, each fund’s shares are subject to an annual shareholder servicing fee up to 0.10%. The shareholder servicing fee paid to a particular service provider is made pursuant to its written agreement with Schwab (or, in the case of payments made to Schwab, pursuant to Schwab’s written agreement with the funds). Payments under the Plan are made as described above regardless of Schwab’s or the service provider’s actual cost of providing the services. If the cost of providing the services under the Plan is less than the payments received, the unexpended portion of the fees may be retained as profit by Schwab or the service provider.
Schwab Fundamental Index Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Although these agreements specify certain fees for these services, CSIM and its affiliates have made an additional agreement with the funds, for so long as CSIM serves as the investment adviser to the funds, which may only be amended or terminated with the approval of the Board, to limit the total annual fund operating expenses charged, excluding interest, taxes and certain non-routine expenses (expense limitation). The expense limitation as a percentage of average daily net assets is as follows:
Schwab
Fundamental
US Large
Company
Index Fund | | Schwab
Fundamental
US Small
Company
Index Fund | | Schwab
Fundamental
International
Large
Company
Index Fund | | Schwab
Fundamental
International
Small
Company
Index Fund | | Schwab
Fundamental
Emerging
Markets Large
Company
Index Fund |
| 0.35% | | 0.35% | | 0.35% | | 0.49% | | 0.49% |
CSIM has a licensing agreement with the Frank Russell Company to use certain Russell indices and trademarks in connection with the offering and operation of certain registered investment companies. The funds have entered into a sub-license agreement with CSIM pursuant to which CSIM has agreed to sub-license certain Russell indices and trademarks to the funds. Under the sub-license agreement, each fund pays its pro rata share of licensing fees, as disclosed in each fund's Statement of Operations as Index fees.
The funds may engage in certain transactions involving affiliates. For instance, a fund may own shares of The Charles Schwab Corporation if that company is included in its index. Below is the summary of investment activities involving The Charles Schwab Corporation shares owned by the Schwab Fundamental US Large Company Index Fund during the report period:
| Fund | | Balance
of Shares
Held at
10/31/14 | | Gross
Purchases | | Gross
Sales | | Balance
of Shares
Held at
10/31/15 | | Market
Value at
10/31/15 | | Realized
Gains (Losses)
11/01/14
to 10/31/15 | | Dividends
Received
11/01/14
to 10/31/15 |
| Schwab Fundamental US Large Company Index Fund | | 106,515 | | — | | (25,300) | | 81,215 | | $2,478,682 | | $286,540 | | $23,440 |
Certain Schwab Funds may own shares of other Schwab Funds. The table below reflects the percentages of shares of each fund in this report that are owned by other Schwab Funds as of October 31, 2015, as applicable:
| | Underlying Funds |
| | Schwab
Fundamental
US Large
Company
Index Fund | | Schwab
Fundamental
US Small
Company
Index Fund | | Schwab
Fundamental
International
Large
Company
Index Fund | | Schwab
Fundamental
International
Small
Company
Index Fund | | Schwab
Fundamental
Emerging
Markets Large
Company
Index Fund |
| Schwab MarketTrack All Equity Portfolio | 1.6% | | 3.1% | | 3.0% | | 6.8% | | 8.6% |
| Schwab MarketTrack Growth Portfolio | 1.8% | | 3.0% | | 2.5% | | 5.6% | | 6.9% |
| Schwab MarketTrack Balanced Portfolio | 0.9% | | 1.6% | | 1.3% | | 3.0% | | 3.5% |
| Schwab MarketTrack Conservative Portfolio | 0.3% | | 0.5% | | 0.4% | | 0.9% | | 0.9% |
Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions with other funds in the Fund Complex (for definition refer to Trustees and Officers section). All loans are for temporary or emergency purposes and the interest rate to be charged will be the average of the overnight repurchase agreement rate and the short-term bank loan rate. All loans are subject to numerous conditions designed to ensure fair and equitable treatment of all participating funds/portfolios. The interfund lending facility is subject to the oversight and periodic review by the Board. The funds had no interfund borrowing or lending activity during the period.
Schwab Fundamental Index Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
The funds may engage in direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and/or officers. For the period ended October 31, 2015, each fund’s total aggregate security transactions with other Schwab Funds were as follows:
| Schwab Fundamental US Large Company Index Fund | $81,527,415 |
| Schwab Fundamental US Small Company Index Fund | 97,524,052 |
| Schwab Fundamental International Large Company Index Fund | 49,198,213 |
| Schwab Fundamental International Small Company Index Fund | 3,940,892 |
| Schwab Fundamental Emerging Markets Large Company Index Fund | 237,771 |
5. Board of Trustees:
The Board may include people who are officers and/or directors of CSIM or its affiliates. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these interested persons for their services as trustees, but it did pay non-interested persons (independent trustees), as noted on each fund’s Statement of Operations. For information regarding the trustees, please refer to the Trustees and Officers table at the end of this report.
6. Borrowing from Banks:
During the period prior to October 8, 2015, the funds had access to a committed line of credit of $150 million with State Street, an uncommitted line of credit of $100 million with Bank of America, N.A., and an uncommitted line of credit of $50 million with Brown Brothers Harriman & Co. The funds paid an annual fee to State Street for the committed line of credit. Effective October 8, 2015, the previous lines of credit were terminated and the funds became participants with other U.S. registered investment companies managed by CSIM in a joint, syndicated, committed $530 million line of credit (the Credit Facility), with State Street as agent, which matures on October 6, 2016. Under the terms of the Credit Facility, in addition to the interest charged on any borrowings by a fund, each fund pays a commitment fee of 0.125% per annum on its proportionate share of the unused portion of the Credit Facility. There were no borrowings from any of the lines of credit during the period.
The funds also have access to custodian overdraft facilities. A fund may have utilized the overdraft facility and incurred an interest expense, which is disclosed on the fund’s Statement of Operations, if any. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.
7. Derivatives:
Certain funds entered into equity index futures contracts during the report period. The funds invested in futures contracts to equitize available cash. The fair value and variation margin for futures contracts held at October 31, 2015 are presented on the Condensed Portfolio Holdings and Statement of Assets and Liabilities, respectively. The net realized and change in unrealized gains (losses) on futures contracts are presented on the Statement of Operations. Refer to financial note 2(b) for the funds' accounting policies with respect to futures contracts and financial note 3 for disclosures concerning the risks of investing in futures contracts. During the period ended October 31, 2015, the month-end average contract values of futures contracts held by the funds and the month-end average number of contracts held were as follows:
| | Contract Values | | Number of Contracts |
| Schwab Fundamental US Large Company Index Fund | $35,425,556 | | 344 |
| Schwab Fundamental US Small Company Index Fund | 11,869,767 | | 99 |
| Schwab Fundamental International Large Company Index Fund | 5,442,130 | | 61 |
| Schwab Fundamental International Small Company Index Fund | 202,652 | | 2 |
| Schwab Fundamental Emerging Markets Large Company Index Fund | 2,702,208 | | 60 |
Schwab Fundamental Index Funds
Financial Notes (continued)
8. Purchases and Sales/Maturities of Investment Securities:
For the period ended October 31, 2015, purchases and sales/maturities of securities (excluding short-term obligations) were as follows:
| | Purchases of Securities | | Sales/Maturities of Securities |
| Schwab Fundamental US Large Company Index Fund | $1,053,552,492 | | $561,940,314 |
| Schwab Fundamental US Small Company Index Fund | 672,364,348 | | 435,495,839 |
| Schwab Fundamental International Large Company Index Fund | 451,025,308 | | 113,442,590 |
| Schwab Fundamental International Small Company Index Fund | 283,899,807 | | 134,461,859 |
| Schwab Fundamental Emerging Markets Large Company Index Fund | 133,311,878 | | 91,355,469 |
9. Redemption Fee:
The funds charge a 2.00% redemption fee on shares sold or exchanged within 30 days of the original purchase date. Such amounts are netted against redemption proceeds on the Statement of Changes in Net Assets. The redemption fees charged during the current and prior periods are:
| | Current Period
(11/1/14-10/31/15) | | Prior Period
(11/1/13-10/31/14) |
| Schwab Fundamental US Large Company Index Fund | $81,788 | | $78,706 |
| Schwab Fundamental US Small Company Index Fund | 11,606 | | 9,756 |
| Schwab Fundamental International Large Company Index Fund | 22,524 | | 16,541 |
| Schwab Fundamental International Small Company Index Fund | 6,552 | | 5,415 |
| Schwab Fundamental Emerging Markets Large Company Index Fund | 13,706 | | 10,683 |
10. Federal Income Taxes:
As of October 31, 2015, the components of distributable earnings on a tax-basis were as follows:
| | Schwab
Fundamental
US Large
Company
Index Fund | | Schwab
Fundamental
US Small
Company
Index Fund | | Schwab
Fundamental
International
Large
Company
Index Fund | | Schwab
Fundamental
International
Small
Company
Index Fund | | Schwab
Fundamental
Emerging
Markets Large
Company
Index Fund |
| Undistributed ordinary income | $150,429,425 | | $15,160,432 | | $28,080,360 | | $7,691,004 | | $8,199,487 |
| Undistributed long-term capital gains | 82,196,120 | | 61,258,704 | | — | | — | | — |
| Unrealized appreciation on investments | 1,136,802,288 | | 292,377,579 | | 125,702,508 | | 49,692,138 | | 24,950,801 |
| Unrealized depreciation on investments | (206,084,200) | | (106,291,206) | | (151,365,829) | | (34,650,078) | | (110,874,542) |
| Other unrealized appreciation (depreciation) | — | | (8) | | (46,484) | | (9,101) | | (204,885) |
| Net unrealized appreciation (depreciation) | $930,718,088 | | $186,086,365 | | ($25,709,805) | | $15,032,959 | | ($86,128,626) |
The primary differences between book-basis and tax-basis unrealized appreciation or unrealized depreciation of investments are the tax deferral of losses on wash sales, Passive Foreign Investment Companies (PFIC), partnership investments, non-taxable dividends and futures mark to market.
Schwab Fundamental Index Funds
Financial Notes (continued)
10. Federal Income Taxes (continued):
Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2015, the funds had capital loss carryforwards available to offset future net capital gains before the expiration dates as follows:
| Expiration Date | | Schwab
Fundamental
US Large
Company
Index Fund | | Schwab
Fundamental
US Small
Company
Index Fund | | Schwab
Fundamental
International
Large
Company
Index Fund | | Schwab
Fundamental
International
Small
Company
Index Fund | | Schwab
Fundamental
Emerging
Markets Large
Company
Index Fund |
| October 31, 2016 | | $— | | $— | | $2,034,097 | | $— | | $— |
| October 31, 2017 | | — | | — | | 58,777,944 | | — | | — |
| October 31, 2018 | | — | | — | | 20,948,477 | | — | | — |
| No expiration* | | — | | — | | — | | 946,649 | | 29,742,049 |
| Total | | $— | | $— | | $81,760,518 | | $946,649 | | $29,742,049 |
| * | As a result of the passage of the Regulated Investment Company Modernization Act of 2010, capital losses incurred after December 31, 2010 may now be carried forward indefinitely, but must retain the character of the original loss. |
For the year ended October 31, 2015, the funds had capital loss carryforwards utilized as follows:
| | Schwab
Fundamental
US Large
Company
Index Fund | | Schwab
Fundamental
US Small
Company
Index Fund | | Schwab
Fundamental
International
Large
Company
Index Fund | | Schwab
Fundamental
International
Small
Company
Index Fund | | Schwab
Fundamental
Emerging
Markets Large
Company
Index Fund |
| Capital loss carryforwards utilized | $— | | $— | | $19,043,379 | | $— | | $— |
The tax-basis components of distributions paid during the current and prior fiscal years were as follows:
| | Schwab
Fundamental
US Large
Company
Index Fund | | Schwab
Fundamental
US Small
Company
Index Fund | | Schwab
Fundamental
International
Large
Company
Index Fund | | Schwab
Fundamental
International
Small
Company
Index Fund | | Schwab
Fundamental
Emerging
Markets Large
Company
Index Fund |
| Current period distributions | | | | | | | | | |
| Ordinary income | $138,919,379 | | $28,684,248 | | $30,718,378 | | $4,676,828 | | $8,501,798 |
| Long-term capital gains | 52,162,182 | | 46,582,789 | | — | | 1,210,184 | | — |
| Return of capital | — | | — | | — | | — | | — |
| Prior period distributions | | | | | | | | | |
| Ordinary income | $47,960,089 | | $24,624,349 | | $17,955,621 | | $4,201,706 | | $7,207,709 |
| Long-term capital gains | — | | 20,824,514 | | — | | — | | — |
| Return of capital | — | | — | | — | | — | | — |
Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
Schwab Fundamental Index Funds
Financial Notes (continued)
10. Federal Income Taxes (continued):
Permanent book and tax basis differences, which are mainly due to differing treatments of paydown gains and losses and amortization of bond discounts and premiums, may result in reclassifications between components of net assets as required. The adjustments will have no impact on net assets or the results of operations. As of October 31, 2015, the funds made the following reclassifications:
| | Schwab
Fundamental
US Large
Company
Index Fund | | Schwab
Fundamental
US Small
Company
Index Fund | | Schwab
Fundamental
International
Large
Company
Index Fund | | Schwab
Fundamental
International
Small
Company
Index Fund | | Schwab
Fundamental
Emerging
Markets Large
Company
Index Fund |
| Capital shares | $— | | ($15) | | $— | | $— | | $— |
| Undistributed net investment income | (107,856) | | (574,400) | | 296,728 | | 104,779 | | (17,772) |
| Net realized capital gains (losses) | 107,856 | | 574,415 | | (296,728) | | (104,779) | | 17,772 |
As of October 31, 2015, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and for state purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the funds’ financial statements. The funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period ended October 31, 2015, the funds did not incur any interest or penalties.
11. Other:
As a result of recent political and military actions undertaken by the Russian Federation, the U.S. and the European Union have instituted various economic sanctions against Russian individuals and entities. The U.S. and/or the European Union may impose additional economic sanctions, or take other actions, against individuals and/or companies in specific sectors of the Russian economy, including, but not limited to, the financial services, energy, metals and mining, engineering, and defense and defense-related materials sectors. These sanctions, and the threat of additional sanctions, could have adverse consequences for the Russian economy, including continued weakening of the Russian currency, downgrades in Russia’s credit rating, and a significant decline in the value and liquidity of securities issued by Russian companies or the Russian government. Any of these events could negatively impact a fund's investment in Russian securities. These sanctions have the possibility of impairing a fund’s ability to invest in accordance with its investment strategy and/or to meet its investment objective.
In addition, as index based products, the funds will generally maintain exposure to Russian securities to the extent the indexes which they track include such securities. For this reason, the sanction instituted against Russia, and any continued disruption of the Russian economy, could negatively impact a fund’s performance to the extent its index and its portfolio contain securities of Russian issuers, and, depending on the fund’s exposure to Russian issuers, the impact could be significant.
12. Subsequent Events:
At a Special Meeting of Shareholders on December 11, 2015, twelve individuals were elected to serve as trustees of all trusts constituting the Schwab Funds, Laudus Funds and Schwab ETFs effective January 1, 2016. The twelve individuals elected to the Boards of Trustees consist of current Schwab Funds and Laudus Funds trustees, current Schwab ETFs trustees and three new nominees. The trustees believe that combining the composition of the Boards of Trustees and adding the new nominees will further align oversight of the Schwab Funds, Laudus Funds and Schwab ETFs, among other benefits. Other than this election of trustees, management has determined there are no subsequent events or transactions through the date the financial statements were issued that would have materially impacted the financial statements as presented.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of:
Schwab Fundamental US Large Company Index Fund
Schwab Fundamental US Small Company Index Fund
Schwab Fundamental International Large Company Index Fund
Schwab Fundamental International Small Company Index Fund
Schwab Fundamental Emerging Markets Large Company Index Fund
In our opinion, the accompanying statements of assets and liabilities, including the condensed portfolio holdings, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Schwab Fundamental US Large Company Index Fund, Schwab Fundamental US Small Company Index Fund, Schwab Fundamental International Large Company Index Fund, Schwab Fundamental International Small Company Index Fund and Schwab Fundamental Emerging Markets Large Company Index Fund (five of the portfolios constituting Schwab Capital Trust, hereafter collectively referred to as the “Funds”) at October 31, 2015, and the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds' management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2015 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
December 16, 2015
Other Federal Tax Information (unaudited)
The funds elect to pass through under section 853 of the Internal Revenue Code foreign tax credit to its shareholders for the year ended October 31, 2015, and the respective foreign source income on the funds as follows.
| | Foreign Tax Credit | | Foreign Source Income |
| Schwab Fundamental US Large Company Index Fund | $— | | $— |
| Schwab Fundamental US Small Company Index Fund | — | | — |
| Schwab Fundamental International Large Company Index Fund | 2,514,557 | | 36,982,973 |
| Schwab Fundamental International Small Company Index Fund | 855,760 | | 9,640,826 |
| Schwab Fundamental Emerging Markets Large Company Index Fund | 1,422,090 | | 12,114,297 |
For corporate shareholders, the following percentage of the funds dividend distributions paid during the fiscal year ended October 31, 2015, qualify for the corporate dividends received deduction:
| | Percentage |
| Schwab Fundamental US Large Company Index Fund | 60.31 |
| Schwab Fundamental US Small Company Index Fund | 45.98 |
| Schwab Fundamental International Large Company Index Fund | — |
| Schwab Fundamental International Small Company Index Fund | — |
| Schwab Fundamental Emerging Markets Large Company Index Fund | — |
For the fiscal year ended October 31, 2015, the funds designate the following amounts of the dividend distributions as qualified dividends for the purpose of the maximum rate under section 1(h)(11) of the Internal Revenue Code. Shareholders will be notified in January 2016 via IRS form 1099 of the amounts for use in preparing their 2015 income tax return.
| Schwab Fundamental US Large Company Index Fund | $85,928,423 |
| Schwab Fundamental US Small Company Index Fund | 13,908,226 |
| Schwab Fundamental International Large Company Index Fund | 32,151,862 |
| Schwab Fundamental International Small Company Index Fund | 4,448,186 |
| Schwab Fundamental Emerging Markets Large Company Index Fund | 7,006,779 |
Under Section 852 (b)(3)(C) of the Internal Revenue Code, certain funds hereby designate the following amounts as long-term capital gain dividends for the fiscal year ended October 31, 2015:
| Schwab Fundamental US Large Company Index Fund | $52,162,182 |
| Schwab Fundamental US Small Company Index Fund | 46,582,789 |
| Schwab Fundamental International Large Company Index Fund | — |
| Schwab Fundamental International Small Company Index Fund | 1,210,184 |
| Schwab Fundamental Emerging Markets Large Company Index Fund | — |
Investment Advisory Agreement Approval
The Investment Company Act of 1940 (the 1940 Act) requires that initial approval of, as well as the continuation of, a fund’s investment advisory agreement must be specifically approved (1) by the vote of the trustees or by a vote of the shareholders of the fund, and (2) by the vote of a majority of the trustees who are not parties to the investment advisory agreement or “interested persons” of any party (the Independent Trustees), cast in person at a meeting called for the purpose of voting on such approval. In connection with such approvals, the fund’s trustees must request and evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms of the investment advisory agreement.
The Board of Trustees (the Board or the Trustees, as appropriate) calls and holds one or more meetings each year that are dedicated, in whole or in part, to considering whether to renew the investment advisory agreement between Schwab Capital Trust (the Trust) and Charles Schwab Investment Management, Inc. (CSIM) (the Agreement) with respect to the existing funds in the Trust, including Schwab Fundamental US Large Company Index Fund, Schwab Fundamental US Small Company Index Fund, Schwab Fundamental International Large Company Index Fund, Schwab Fundamental International Small Company Index Fund and Schwab Fundamental Emerging Markets Large Company Index Fund (the Funds), and to review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting(s), the Board requests and reviews a wide variety of materials provided by CSIM, including information about CSIM’s affiliates, personnel and operations. As part of the renewal process, Independent Trustees’ legal counsel sends an information request letter to CSIM seeking certain relevant information. The responses by CSIM are provided to the Trustees for their review prior to their meeting, and the Trustees are provided with the opportunity to request any additional materials. The Board also receives extensive data provided by third parties. This information is in addition to the detailed information about the Funds that the Board reviews during the course of each year, including information that relates to Fund operations and Fund performance. The Independent Trustees receive advice from independent counsel to the Independent Trustees, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees meet in executive session outside the presence of Fund management and participate in question and answer sessions with representatives of CSIM.
The Board, including a majority of the Independent Trustees, considered information specifically relating to its
consideration of the continuance of the Agreement with respect to the Funds at meetings held on April 29, 2015, and June 1, 2015, and approved the renewal of the Agreement with respect to the Funds for an additional one-year term at the meeting held on June 1, 2015. The Board’s approval of the Agreement with respect to the Funds was based on consideration and evaluation of a variety of specific factors discussed at these meetings and at prior meetings, including:
| 1. | the nature, extent and quality of the services provided to the Funds under the Agreement, including the resources of CSIM and its affiliates dedicated to the Funds; |
| 2. | each Fund’s investment performance and how it compared to that of certain other comparable mutual funds; |
| 3. | each Fund’s expenses and how those expenses compared to those of certain other comparable mutual funds, exchange-traded funds and other accounts; |
| 4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to each Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
| 5. | the extent to which economies of scale would be realized as the Funds grow and whether fee levels in the Agreement reflect those economies of scale for the benefit of Fund investors. |
Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds. In this regard, the Trustees evaluated, among other things, CSIM’s personnel, experience, track record and compliance program. The Trustees also considered information provided by CSIM relating to each Fund’s portfolio management team, portfolio strategy and risk oversight structure, and internal investment guidelines. The Trustees also considered investments in CSIM’s mutual fund infrastructure, Schwab’s wide range of products, services, and channel alternatives such as investment and research tools, internet access, and an array of account features that benefit the Funds and certain of their shareholders. The Trustees also considered Schwab’s excellent reputation as a full service brokerage firm and its overall financial condition. Finally, the Trustees considered that many of the Funds’ shareholders are also brokerage clients of Schwab. Following such evaluation, the Board concluded, within the context of its full deliberations, that the nature, extent and quality of services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds supported renewal of the Agreement with respect to the Funds.
Fund Performance. The Board considered Fund performance in determining whether to renew the Agreement with respect to the Funds. Specifically, the Trustees considered each Fund’s performance relative to a peer category of other mutual funds and appropriate indices/benchmarks, in light of total return, and market trends. As part of this review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the third party who prepared the peer category analysis. In evaluating the performance of each Fund, the Trustees considered both risk and shareholder risk expectations for such Fund and the appropriateness of the benchmark used to compare the performance of each Fund. The Trustees further considered the level of Fund performance in the context of their review of Fund expenses and adviser profitability discussed below. Although Schwab Fundamental Emerging Markets Large Company Index Fund had performance that lagged that of a relevant peer group for certain (although not all) periods considered, the Board concluded that other factors relevant to performance supported renewal of the Agreement with respect Schwab Fundamental Emerging Markets Large Company Index Fund, including that the underperformance was attributable, to a significant extent, to investment decisions by CSIM that were reasonable and consistent with Schwab Fundamental Emerging Markets Large Company Index Fund’s investment objective and policies and that CSIM had taken steps designed to help improve performance. Following such evaluation the Board concluded, within the context of its full deliberations, that the performance of the Funds supported renewal of the Agreement with respect to the Funds.
Fund Expenses. With respect to the Funds’ expenses, the Trustees considered the rate of compensation called for by the Agreement, and each Fund’s net operating expense ratio, in each case, in comparison to those of a peer group of mutual funds, such peer groups and comparisons having been selected and calculated by an independent third party. The Trustees considered the effects of CSIM’s and Schwab’s historical practice of voluntarily waiving management and other fees to prevent total Fund expenses from exceeding a specified cap. The Trustees also considered CSIM’s contractual commitment to keep each Fund’s expense cap for so long as CSIM serves as the adviser to such Fund. The Trustees also considered fees charged by CSIM to other mutual funds and to other types of accounts, such as exchange-traded funds and separately managed accounts, but, with respect to such other types of accounts, accorded less weight to such comparisons due to the different legal, regulatory, compliance and operating features of mutual funds as compared to these other types of accounts. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expenses of the Funds are reasonable and supported renewal of the Agreement with respect to the Funds.
Profitability. With regard to profitability, the Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly. In this connection, the Trustees reviewed management’s profitability analyses, together with certain commentary thereon from an independent accounting firm. The Trustees also considered any other benefits derived by CSIM from its relationship with the Funds, such as whether, by virtue of its management of the Funds, CSIM obtains investment information or other research resources that aid it in providing advisory services to other clients. The Trustees considered whether the varied levels of compensation and profitability under the Agreement and other service agreements were reasonable and justified in light of the quality of all services rendered to each Fund by CSIM and its affiliates. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM is reasonable and supported renewal of the Agreement with respect to the Funds.
Economies of Scale. The Trustees considered the existence of any economies of scale and whether those are passed along to a Fund’s shareholders through a graduated investment advisory fee schedule or other means, including any fee waivers by CSIM and its affiliates. In this regard, and consistent with their consideration of Fund expenses, the Trustees considered that CSIM and Schwab have committed resources to minimize the effects on shareholders of diseconomies of scale during periods when fund assets were relatively small through their contractual expense waivers. For example, such diseconomies of scale may particularly affect newer funds or funds with investment strategies that are from time to time out of favor, but shareholders may benefit from the continued availability of such funds at subsidized expense levels. The Trustees also considered the existing contractual investment advisory fee schedules relating to the Funds that, in each case, include lower fees at higher graduated asset levels. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the Funds obtain reasonable benefit from economies of scale.
In the course of their deliberations, the Trustees did not identify any particular information or factor that was all important or controlling. Based on the Trustees’ deliberation and their evaluation of the information described above, the Board, including all of the Independent Trustees, approved the continuation of the Agreement with respect to the Funds and concluded that the compensation under the Agreement with respect to the Funds is fair and reasonable in light of such services and expenses and such other matters as the Trustees have considered to be relevant in the exercise of their reasonable judgment.
Trustees and Officers
The tables below give information about the trustees and officers of Schwab Capital Trust prior to January 1, 2016, which includes the funds covered in this report. The “Fund Complex” includes The Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust, Laudus Trust and Laudus Institutional Trust. The Fund Complex includes 95 funds.
The address for all trustees and officers is 211 Main Street, San Francisco, CA 94105. You can find more information about the trustees and officers in the funds’ Statement of Additional Information, which is available free by calling 1-800-435-4000.
| Independent Trustees |
Name, Year of Birth,
and Position(s) with
the trust (Terms 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 |
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 (Oct. 1979 – present); Senior Fellow Stanford Institute for Economic Policy Research (2000 – present); Professor of Public Policy, Stanford University (1994 – 2015). | 74 | Director, Gilead Sciences, Inc. (2005 – present)
|
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. | 74 | 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) (Dec. 2008 – Sept. 2013) | 74 | Director, KLA-Tencor Corporation (2008 – present) |
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) (Jan. 2015 – present); Partner, Kudu Advisors, LLC (financial services) (June 2008 – Jan. 2015); Advisor, Asset International, Inc. (publisher of financial services information) (Aug. 2008 – Jan. 2015). | 95 | None |
| Independent Trustees (continued) |
Name, Year of Birth,
and Position(s) with
the trust (Terms 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 |
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) | Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (Mar. 1990 – present). | 74 | Director, Eaton (2012 – present)
Director and Chairman 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) (Jan. 2008 – present); Partner, Colgin Partners, LLC (vineyards) (Feb. 1998 – present). | 74 | Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 – present)
Lead Independent Director and Chair of Audit Committee, OUTFRONT Media Inc. (2014 – present) |
| Interested Trustees |
Name, Year of Birth,
and Position(s) with
the trust (Terms 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 |
Charles R. Schwab2
1937
Chairman and Trustee
(Chairman and Trustee of The Charles Schwab Family of Funds since 1989; Schwab Investments since 1991; Schwab Capital Trust since 1993; Schwab Annuity Portfolios since 1994; Laudus Trust and Laudus Institutional Trust since 2010) | Chairman and Director, The Charles Schwab Corporation (1986 – present); Chairman and Director of Charles Schwab & Co., Inc. (1971 – present); Chairman and Director of Charles Schwab Investment Management, Inc. (1989 – present); Chairman and Director of Charles Schwab Bank (2003 – present); Chairman and Chief Executive Officer of Schwab (SIS) Holdings Inc. I and Schwab International Holdings, Inc. (1996 – present); and Director, Chairman and Chief Executive Officer, Schwab Holdings, Inc. (1979 – present). | 74 | Chairman and Director, The Charles Schwab Corporation (1986 – present)
Director, Yahoo! Inc. (2014 – present) |
Walter W. Bettinger II2
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 and Charles Schwab & Co., Inc. (2008 – present); Director, Charles Schwab Bank (2006 – present); and Director, Schwab Holdings, Inc. (2008 – present). | 95 | Director, The Charles Schwab Corporation (2008 – present) |
| Officers of the Trust |
Name, Year of Birth, and Position(s)
with the trust (Terms of office, and
length of Time Served3) | Principal Occupations During the Past Five Years |
Marie Chandoha
1961
President and Chief Executive Officer
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2010) | Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer (Sept. 2010 – Oct. 2011), Charles Schwab Investment Management, Inc.; President, Chief Executive Officer (Dec. 2010 – present), and Chief Investment Officer (Sept. 2010 – Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Director, Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited (Jan. 2011 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (Mar. 2007 – Aug. 2010). |
George Pereira
1964
Treasurer and Principal Financial Officer, Schwab Funds
Treasurer and Chief Financial Officer, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2004; Laudus Trust and Laudus Institutional Trust since 2006) | Senior Vice President and Chief Financial Officer (Nov. 2004 – present), Chief Operating Officer (Jan. 2011 – present), Charles Schwab Investment Management, Inc.; Treasurer and Chief Financial Officer, Laudus Funds (June 2006 – present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – present) and Schwab ETFs (Oct. 2009 – present); Director, Charles Schwab Worldwide 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 Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust 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 – Jan. 2009). |
Brett Wander
1961
Senior Vice President and Chief Investment Officer – Fixed Income
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust 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 (Jan. 2008 – Oct. 2010); Director of Alpha Strategies Loomis, Sayles & Company (April 2006 – Jan. 2008). |
David Lekich
1964
Chief Legal Officer and Secretary, Schwab Funds
Vice President and Assistant Clerk, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2011) | Senior Vice President (Sept. 2011 – present), Vice President (Mar. 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present), Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (April 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; Vice President and Assistant Clerk, Laudus Funds (April 2011 – present); Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs. |
Catherine MacGregor
1964
Vice President and Assistant Secretary, Schwab Funds
Chief Legal Officer, Vice President and Clerk, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2005) | Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 – present); Vice President (Dec. 2005 – present), Chief Legal Officer and Clerk (Mar. 2007 – present), Laudus Funds; Vice President (Nov. 2005 – present) and Assistant Secretary (June 2007 – present), Schwab Funds; Vice President and Assistant Secretary, Schwab ETFs (Oct. 2009 – present). |
| 1 | Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab and Laudus Funds’ retirement policy 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 Schwab Funds or Laudus Funds to retire from all Boards upon their required retirement date from either Board. |
| 2 | Mr. Schwab and Mr. Bettinger are Interested Trustees because they own stock of The Charles Schwab Corporation, the parent company of the investment adviser. |
| 3 | The President, Treasurer and Secretary/Clerk 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 Boards. |
Glossary
asset allocation The practice of dividing a portfolio among different asset classes, with each asset class assigned a particular percentage.
asset class A group of securities with similar structure and basic characteristics. Stocks, bonds and cash are the three main examples of asset classes.
Barclays U.S. Aggregate Bond Index A broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid ARM pass-throughs), asset-backed securities, and commercial mortgage-backed securities.
Barclays U.S. Treasury Bills 1 – 3 Months Index An index that includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months and more than 1 month, are rated investment grade, and have $250 million or more of outstanding face value.
bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the coupon rate) until a specified date (the maturity date), at which time the issuer returns the money borrowed (principal or face value) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.”
An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.
bond fund A bond fund is subject to the same credit, interest rate, and inflation risks as bonds. In addition, a bond fund incurs ongoing fees and expenses. A bond fund’s net asset value will fluctuate with the price of the underlying bonds and the portfolio turnover activity; return of principal is not guaranteed.
cap, capitalization See “market cap.”
capital gain, capital loss the difference between the amount paid for an investment and its value at a later time. If the investment has been sold, the capital gain or loss is considered a realized gain or loss. If the investment is still held, the capital gain or loss is considered unrealized appreciation or depreciation.
expense ratio The amount that is taken from a mutual fund’s assets each year to cover the fund’s operating expenses. An expense ratio of 0.50% means that a fund’s expenses amount to half of one percent of its average net assets a year.
FTSE RAFI Developed ex-US 1000 Index An index that is designed to track the performance of the largest listed companies domiciled in developed international markets (excluding the U.S.), selected based on the following four fundamental measures: dividends, cash flows, sales and book value.
FTSE RAFI Developed ex-US Mid Small 1500 Index An index that is designed to track the performance of small and mid capitalization equities of companies domiciled in developed international markets (excluding the U.S.), selected based on the following four fundamental measures: dividends, cash flows, sales and book value.
FTSE RAFI Emerging Index An index that is designed to track the performance of the largest emerging market equities, selected based on the following four fundamental measures: dividends, cash flows, sales and book value.
FTSE RAFI US 1000 Index An index that is designed to track the performance of the largest listed U.S. companies, selected based on the following four fundamental measures: dividends, cash flows, sales and book value.
FTSE RAFI US Mid Small 1500 Index An index that is designed to track the performance of small and medium-sized listed U.S. companies, selected based on the following four fundamental measures: dividends, cash flows, sales and book value.
Fundamental Developed ex-U.S. Large Company Spliced Index An internally calculated index, comprised of the FTSE RAFI Developed ex-US 1000 Index from inception of the fund until the close of business on October 18, 2012 and the Russell Fundamental Developed ex-U.S. Large Company Index (Net) from October 19, 2012 forward.
Fundamental Developed ex-U.S. Small Company Spliced Index An internally calculated index, comprised of the FTSE RAFI Developed ex-US Mid Small 1500 Index from inception of the fund until the close of business on October 18, 2012 and the Russell Fundamental Developed ex-US Small Company Index (Net) from October 19, 2012 forward.
Fundamental Emerging Markets Large Company Spliced Index An internally calculated index, comprised of the FTSE RAFI Emerging Index from inception of the fund until the close of business on October 18, 2012 and the Russell Fundamental Emerging Markets Large Company Index (Net) from October 19, 2012 forward.
Fundamental U.S. Large Company Spliced Index An internally calculated index, comprised of the FTSE RAFI US 1000 Index from inception of the fund until the close of business on October 18, 2012 and the Russell Fundamental U.S. Large Company Index from October 19, 2012 forward.
Fundamental U.S. Small Company Spliced Index An internally calculated index, comprised of the FTSE RAFI US Mid Small 1500 Index from inception of the fund until the close of business on October 18, 2012 and the Russell Fundamental U.S. Small Company Index from October 19, 2012 forward.
market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.
MSCI EAFE (Europe, Australasia, Far East) Index A free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. & Canada. The Net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes; returns are calculated applying dividend withholding rates applicable to non-resident persons who do not benefit from double taxation treaties.
net asset value (NAV) The value of one share of a mutual fund. NAV is calculated by taking the fund’s total assets, subtracting liabilities, and dividing by the number of shares outstanding.
outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.
price-to-book ratio (P/B) The market price of a company’s stock compared with its “book value.” A mutual fund’s P/B is the weighted average of the P/B of all stocks in the fund’s portfolio.
price-to-earnings ratio (P/E) The market price of a company’s stock compared with earnings over the past year. A mutual fund’s P/E is the weighted average of the P/E of all stocks in the fund’s portfolio.
restricted and illiquid securities Restricted securities are securities that are subject to legal restrictions on their sale. Restricted securities generally can be sold in privately negotiated transactions, pursuant to an exemption from registration under the Securities Act of 1933 (the “1933 Act”), or in a registered public offering. Certain restricted securities, such as Section 4(a)(2) commercial paper and Rule 144A securities under the 1933 Act, may be considered to be liquid if they meet the criteria for liquidity established by the Board. Illiquid securities generally are any securities that cannot be disposed of promptly and in the ordinary course of business at approximately the amount at which a fund has valued the instruments. The liquidity of a fund’s investments is monitored under the supervision and direction of the Board. Investments currently not considered liquid include repurchase agreements not maturing within seven days and certain restricted securities.
return on equity (ROE) The average yearly rate of return for each dollar of investors’ money, measured over the past five years.
Russell 2000 Index An index that measures the performance of the small-cap segment of the U.S. equity universe. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.
Russell Fundamental Developed ex-U.S. Large Company Index An index that ranks companies in the Russell Developed ex-U.S. Index by fundamental measures of size and tracks the performance of those companies whose fundamental scores are in the top 87.5% of the Russell Developed ex-U.S. Index. The index uses a partial quarterly reconstitution methodology in which the index is split into four equal segments at the annual reconstitution and each segment is then rebalanced on a rolling quarterly basis. The Net series reduces index performance by adjusting for local taxes. The Russell Developed ex-U.S. Index measures the performance of the largest investable securities in developed countries globally, excluding companies assigned to the United States.
Russell Fundamental Developed ex-U.S. Small Company Index An index that ranks companies in the Russell Developed ex-U.S. Index by fundamental measures of size and tracks the performance of those companies whose fundamental scores are in the bottom 12.5% of the Russell Developed ex-U.S. Index.
The index uses a partial quarterly reconstitution methodology in which the index is split into four equal segments at the annual reconstitution and each segment is then rebalanced on a rolling quarterly basis. The Net series reduces index performance by adjusting for local taxes. The Russell Developed ex-U.S. Index measures the performance of the largest investable securities in developed countries globally, excluding companies assigned to the United States.
Russell Fundamental Emerging Markets Large Company Index An index that ranks companies in the Russell Emerging Markets Index by measures of fundamental size and tracks the performance of those companies whose fundamental scores are in the top 87.5% of the Russell Emerging Markets Index. The index uses a partial quarterly reconstitution methodology in which the index is split into four equal segments at the annual reconstitution and each segment is then rebalanced on a rolling quarterly basis. The Net series reduces index performance by adjusting for local taxes. The Russell Emerging Markets Index measures the performance of the investable securities in emerging countries globally.
Russell Fundamental U.S. Large Company Index An index that ranks companies in the Russell 3000 Index by fundamental measures of size, and tracks the performance of those companies whose fundamental scores are in the top 87.5% of the Russell 3000 Index. The index uses a partial quarterly reconstitution methodology in which the index is split into four equal segments at the annual reconstitution and each segment is then rebalanced on a rolling quarterly basis. The Russell 3000 Index measures the performance of the largest 3000 U.S. companies representing approximately 98% of the investable U.S. equity market.
Russell Fundamental U.S. Small Company Index An index that ranks companies in the Russell 3000 Index by fundamental measures of size and tracks the performance of those companies whose fundamental scores are in the bottom 12.5% of the Russell 3000 Index. The index uses a partial quarterly reconstitution methodology in which the index is split into four equal segments at the annual reconstitution and each segment is then rebalanced on a rolling quarterly basis. The Russell 3000 Index measures the performance of the largest 3000 U.S. companies representing approximately 98% of the investable U.S. equity market.
S&P 500 Index A market capitalization index that is designed to measure the performance of 500 leading publicly held companies in leading industries of the U.S. economy.
stock A share of ownership, or equity, in the issuing company.
total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.
weighted average For mutual funds, an average that gives the same weight to each security as the security represents in the fund’s portfolio.
yield The income paid out by an investment, expressed as a percentage of the investment’s market value.
PRIVACY NOTICE
THIS IS NOT PART OF THE SHAREHOLDER REPORT
A Commitment to Your Privacy
Your Privacy Is Not for Sale
We do not and will not sell your personal information to anyone, for any reason.
We are committed to protecting the privacy of information we maintain about you. Below are details about our commitment, including the types of information we collect and how we use and share that information. This Privacy Notice applies to you only if you are an individual who invests directly in the funds by placing orders through the funds’ transfer agent. If you place orders through your brokerage account at Charles Schwab & Co., Inc. or an account with another broker-dealer, investment advisor, 401(k) plan, employee benefit plan, administrator, bank or other financial intermediary, you are covered by the privacy policies of that financial institution and should consult those policies.
How We Collect Information About You
We collect personal information about you in a number of ways.
• APPLICATION AND REGISTRATION
INFORMATION.
We collect personal information from you when you open an account or utilize one of our services. We may also collect information about you from third parties such as consumer reporting agencies to verify your identity. The information we collect may include personal information, including your Social Security number, as well as details about your interests, investments and investment experience.
• TRANSACTION AND EXPERIENCE
INFORMATION.
Once your account has been opened, we collect and maintain personal information about your account activity, including your transactions, balances, positions and history. This information allows us to administer your account and provide the services you have requested.
• WEBSITE USAGE.
When you visit our websites, we may use devices known as “cookies,” graphic interchange format files (GIFs), or other similar web tools to enhance your web experience. These
tools help us to recognize you, maintain your web session, and provide a more personalized experience. To learn more, please go to www.schwab.com/privacy.
How We Share and Use Your Information
We provide access to information about you to our affiliated companies, outside companies and other third parties in certain limited circumstances, including:
• to help us process transactions for your account;
• when we use other companies to provide services for us, such as printing and mailing your account statements;
• when we believe that disclosure is required or permitted under law (for example, to cooperate with regulators or law enforcement, resolve consumer disputes, perform credit/authentication checks, or for risk control).
State Laws
We will comply with state laws that apply to the disclosure or use of information about you.
Safeguarding Your Information — Security Is a
Partnership
We take precautions to ensure the information we collect about you is protected and is accessed only by authorized individuals or organizations.
Companies we use to provide support services are not allowed to use information about our shareholders for their own purposes and are contractually obligated to maintain strict confidentiality. We limit their use of information to the performance of the specific services we have requested.
We restrict access to personal information by our employees and agents. Our employees are trained about privacy and are required to safeguard personal information.
We maintain physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
Contact Us
To provide us with updated information, report suspected fraud or identity theft, or for any other questions, please call the number below.
Schwab Funds® direct investors: 1-800-407-0256
© 2015 Schwab Funds. All rights reserved.
Schwab Funds® offers you an extensive family of mutual funds, each one based on a clearly defined investment approach and using disciplined management strategies. The list at right shows all currently available Schwab Funds.
Whether you are an experienced investor or just starting out, Schwab Funds can help you achieve your financial goals. An investor should consider a fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information can be found in the fund’s prospectus. Please call 1-800-435-4000 for a prospectus and brochure for any Schwab Fund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus.
Proxy Voting Policies, Procedures and Results
A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting the Schwab Funds’ website at www.csimfunds.com/schwabfunds_prospectus, the SEC’s website at www.sec.gov, or by contacting Schwab Funds at 1-800-435-4000.
Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting the fund’s website at www.csimfunds.com/schwabfunds_prospectus or the SEC’s website at www.sec.gov.
The Schwab Funds Family®
Stock Funds
Schwab Core Equity Fund™
Schwab Dividend Equity Fund™
Schwab Large-Cap Growth Fund™
Schwab Small-Cap Equity Fund™
Schwab Hedged Equity Fund™
Schwab Financial Services Fund™
Schwab Health Care Fund™
Schwab® International Core Equity Fund
Schwab Fundamental US Large Company Index Fund
Schwab Fundamental US Small Company Index Fund
Schwab Fundamental International Large Company Index Fund
Schwab Fundamental International Small Company Index Fund
Schwab Fundamental Emerging Markets Large Company Index Fund
Schwab Fundamental Global Real Estate Index Fund
Schwab Global Real Estate Fund™
Schwab® S&P 500 Index Fund
Schwab 1000 Index® Fund
Schwab Small-Cap Index Fund®
Schwab Total Stock Market Index Fund®
Schwab International Index Fund®
Asset Allocation Funds
Schwab Balanced Fund™
Schwab MarketTrack All Equity Portfolio™
Schwab MarketTrack Growth Portfolio™
Schwab MarketTrack Balanced Portfolio™
Schwab MarketTrack Conservative Portfolio™
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab 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
Bond Funds
Schwab Short-Term Bond Market Fund™
Schwab Intermediate-Term Bond Fund™
Schwab Total Bond Market Fund™
Schwab GNMA Fund™
Schwab® Treasury Inflation Protected Securities Index Fund
Schwab Tax-Free Bond Fund™
Schwab California Tax-Free Bond Fund™
Schwab Money Funds
Schwab offers an array of money market funds1. Choose from taxable or tax-advantaged alternatives. Many can be linked to your eligible Schwab account to “sweep” cash balances automatically, subject to availability, when you’re between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments®.
| 1 | Investments in money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency and, although they seek to preserve the value of your investment at $1 per share, it is possible to lose money. |
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
Funds
Schwab Funds®
1-800-435-4000
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
© 2015 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC®
Printed on recycled paper.
MFR39592-08
00156964
Annual report dated October 31, 2015, enclosed.
Laudus MarketMasters Funds™
Go paperless today.
Simplify your financial life by viewing these documents online.
Sign up at schwab.com/paperless
This wrapper is not part of the shareholder report.
Annual Report
October 31, 2015
Laudus MarketMasters Funds™
Laudus Small-Cap MarketMasters Fund™
Laudus International MarketMasters Fund™
This page is intentionally left blank.
Two distinct Funds, each combining the expertise of leading investment managers with CSIM’s overall supervision.
Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).
Distributor: Charles Schwab & Co., Inc. (Schwab)
The Sector/Industry classifications in this report use the Global Industry Classification Standard (GICS), which was developed by, and is the exclusive property of, MSCI and Standard & Poor’s (S&P). GICS is a service mark of MSCI and S&P and has been licensed for use by Schwab. The Industry classifications used in the schedules of Portfolio Holdings are sub-categories of Sector classifications.
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
| Total Return for the 12 Months Ended October 31, 2015 |
| Laudus Small-Cap MarketMasters Fund | |
| Investor Shares (Ticker Symbol: SWOSX) | -1.18% |
| Select Shares® (Ticker Symbol: SWMSX) | -0.99% |
| Russell 2000® Index | 0.34% |
| Fund Category: Morningstar Small Growth | 1.52% |
| Performance Details | pages 6-7 |
| |
| Laudus International MarketMasters Fund | |
| Investor Shares1 (Ticker Symbol: SWOIX) | 0.39% |
| Select Shares®1 (Ticker Symbol: SWMIX) | 0.52% 2 |
| MSCI EAFE® Index (Net)3 | -0.07% |
| Fund Category: Morningstar Foreign Large Growth | 0.96% |
| Performance Details | pages 8-10 |
| |
| Minimum Initial Investment4 | |
| Investor Shares | $ 100 |
| Select Shares® | $50,000 |
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, a fund’s total return would have been lower. Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date.
Small-company stocks are subject to greater volatility than other asset categories.
Foreign securities can involve risks such as political and economic instability and currency risk. These risks may be greater in emerging markets.
| 1 | The fund’s performance relative to the index may be affected by fair-value pricing and timing differences in foreign exchange calculations. See financial note 2 for more information. |
| 2 | Total return for the report period presented in the table differs from the return in the Financial Highlights. The total return presented in the above table is calculated based on the NAV at which shareholder transactions were processed. The total return presented in the Financial Highlights section of the report is calculated in the same manner, but also takes into account certain adjustments that are necessary under generally accepted accounting principles required in the annual and semi-annual reports. |
| 3 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
| 4 | Please see the funds' prospectus for further detail and eligibility requirements. |
2Laudus MarketMasters Funds
Marie Chandoha is President and CEO of Charles Schwab Investment Management, Inc. and the funds covered in this report.
Dear Shareholder,
At Charles Schwab Investment Management, our goal is to provide foundational products with consistent performance that enable investors to build well-diversified portfolios. Our Laudus MarketMasters Funds combine strategies from leading investment managers into single funds, with each providing diversification across multiple investment styles. CSIM provides ongoing monitoring of the investment managers, who are evaluated based on portfolio characteristics, investment style and consistency, discipline, and risk measures.
For the 12-month reporting period ended October 31, 2015, the funds generated returns that reflected a flat to slightly negative performance by U.S. small-cap stocks and broad international equity indexes. Despite market volatility later in the period which was stimulated by concerns about global growth and speculation that the Fed might raise interest rates, the S&P 500 Index returned 5.2% for the period. Large-cap stocks outperformed small-cap stocks, while growth-oriented stocks generally outperformed value-oriented stocks. Reflecting these conditions, the small-cap Russell 2000 Index returned approximately 0.3% for the 12-month reporting period.
Outside the U.S., turbulence in Greece, China, Brazil, and select emerging markets translated into challenges for international equities, reducing returns. In addition, lackluster global economic growth weighed on international markets, bringing about aggressive stimulus policies by several central banks across the globe. This caused many foreign currencies to depreciate versus the
Asset Class Performance Comparison % returns during the 12 months ended 10/31/2015
Index figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Past performance is not an indication of future results.
For index definitions, please see the Glossary.
Data source: Index provider websites and CSIM.
Nothing in this report represents a recommendation of a security by the investment adviser.
Management views and portfolio holdings may have changed since the report date.
Laudus MarketMasters Funds3
From the President continued
For the 12-month reporting period ended October 31, 2015, the funds generated returns that reflected a flat to slightly negative performance by U.S. small-cap stocks and broad international equity indexes.
U.S. dollar, thereby reducing returns on overseas investments in U.S. dollar terms. As a result, the MSCI EAFE Index (Net), which broadly represents the performance of international stocks, returned -0.1%.1
For more information about the Laudus MarketMasters Funds, please continue reading this report. In addition, you can find out more details about these funds by visiting our website at www.csimfunds.com. We are also happy to hear from you at 1-800-435-4000.
Sincerely,
| 1 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
4Laudus MarketMasters Funds
 | Omar Aguilar, Ph.D. Senior Vice President and Chief Investment Officer of Equities, has overall responsibility for all aspects of the management of the funds. Prior to joining CSIM in 2011, Mr. Aguilar was with Financial Engines, where he was responsible for managing assets from leading retirement plan sponsors in the defined contribution market. Prior to joining Financial Engines in 2009, Mr. Aguilar was the head of quantitative equity for ING Investment Management, where he was responsible for building and developing the firm’s quantitative equity group. He joined ING in 2004 from Lehman Brothers, where he served as the head of quantitative research for its alternative investment management business. Prior to that, he was a director of quantitative research and portfolio manager with Merrill Lynch Investment Management and Bankers Trust. |
Laudus MarketMasters Funds5
Laudus Small-Cap MarketMasters Fund
The Laudus MarketMasters Funds use a multi-manager strategy. Charles Schwab Investment Management, Inc. (CSIM)—the funds’ investment adviser—selects investment sub-advisers with strong long-term track records to manage a portion of each fund’s assets. In addition to selecting investment sub-advisers and allocating assets among them, CSIM is responsible for monitoring and coordinating the overall management of the funds. Each sub-adviser manages its respective portfolio relative to a comparative index that reflects its individual process and philosophy. The sub-adviser indexes may differ from a fund’s comparative index.
Market Highlights. U.S. small-cap stocks significantly underperformed large-cap stocks for the reporting period, with small-cap growth stocks outperforming small-cap value. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest rate hike. Slowing growth in China weighed on global markets, as did declining energy and metals prices. Among the index’s market sectors, the Information Technology and Health Care sectors were the strongest performers for the reporting period. The Energy sector was the weakest by a large margin, down more than 43%. Materials and Industrials also posted negative returns for the period.
Performance. For the 12-month reporting period ended October 31, 2015, Investor Shares of the Laudus Small-Cap MarketMasters Fund (the fund) returned -1.18%. The fund’s comparative index, the Russell 2000 Index (the index), returned 0.34%.
Positioning and Strategies. Over the 12-month reporting period, the fund’s growth exposures were the primary detractor from relative performance. The impact of manager selection was mixed, with one of the fund’s two active sub-advisers outperforming its comparative index and the other underperforming.
BMO Asset Management Corp., a growth-oriented manager that uses a bottom-up fundamental approach to identify stocks exhibiting strong and improving growth characteristics, posted a negative return for the reporting period and underperformed its comparative index, detracting from the fund’s relative performance. BMO’s overweight of the Energy sector was a key detractor from the fund’s total return as well as its performance relative to the index, although negative performance of BMO’s Energy stocks also detracted. BMO’s underperformance in the Financials and Information Technology sectors also dampened relative performance. BMO’s effective stock selection among Health Care companies, however, along with a strategic underweight to the sector, helped mitigate some of the downside.
Strong performance by Wellington Management Company LLP contributed both to the fund’s total return and its performance relative to the index. With its value orientation, Wellington’s performance was notable given the general underperformance of value compared to growth for the period; whereas Wellington’s comparative index, the Russell 2000 Value Index, returned -2.88% for the 12-month period, Wellington returned 5.83%. Wellington’s stock selection was effective across multiple sectors, most notably in the Energy sector, the weakest sector for the period. Wellington’s Energy holdings, although down more than 9%, outperformed those of the index by roughly 35%. Wellington’s stock selection also contributed to relative performance in the Industrials and Materials sectors, despite posting negative returns. Its stock selection in the Health Care and Financials sectors boosted both total return and relative performance. Several of Wellington’s sector allocations, however, detracted from its relative performance, most notably its significant underweight of the Financials sector and significant overweight to the Industrials sector as compared to the index.
Mellon Capital Management Corp. seeks to track the performance of the Fund’s index, employing a strategic trading approach to minimize transaction costs and preserve value. For the reporting period, the fund’s allocation to Mellon performed in line with this objective, slightly outperforming its comparative index.
As of 10/31/15:
| Statistics |
| Number of Holdings | 1,878 |
| Weighted Average Market Cap (millions) | $2,147 |
| Price/Earnings Ratio (P/E) | 55.4 |
| Price/Book Ratio (P/B) | 1.9 |
| Portfolio Turnover Rate | 51% |
| Sector Weightings % of Investments |
| Industrials | 20.1% |
| Information Technology | 16.4% |
| Financials | 15.4% |
| Health Care | 14.1% |
| Consumer Discretionary | 10.9% |
| Energy | 6.0% |
| Materials | 2.6% |
| Telecommunication Services | 2.2% |
| Utilities | 2.1% |
| Consumer Staples | 1.8% |
| Other | 8.4% |
| Total | 100.0% |
| Top Equity Holdings % of Net Assets1 |
| iShares Russell Mid-Cap ETF | 3.0% |
| inContact, Inc. | 1.7% |
| The Rubicon Project, Inc. | 1.4% |
| Mueller Industries, Inc. | 1.3% |
| Webster Financial Corp. | 1.3% |
| Belden, Inc. | 1.2% |
| G&K Services, Inc., Class A | 1.2% |
| InterOil Corp. | 1.1% |
| Albany International Corp., Class A | 1.0% |
| Summit Hotel Properties, Inc. | 1.0% |
| Total | 14.2% |
Management views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S&P and MSCI.
Small-company stocks are subject to greater volatility than many other asset classes.
| 1 | This list is not a recommendation of any security by the investment adviser. |
6Laudus MarketMasters Funds
Laudus Small-Cap MarketMasters Fund
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$10,000 Investment (Investor Shares)1
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$50,000 Investment (Select Shares)1
Average Annual Total Returns1,2
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Investor Shares (9/16/97) | -1.18% | 9.10% | 5.75% |
| Select Shares® (6/9/04) | -0.99% | 9.29% | 5.92% |
| Russell 2000® Index | 0.34% | 12.06% | 7.47% |
| Fund Category: Morningstar Small Growth | 1.52% | 12.11% | 7.86% |
Fund Expense Ratios3: Investor Shares: Net 1.35%; Gross 1.56% / Select Shares: Net 1.20%; Gross 1.51%
Investment Managers and Allocations4
| Investment Managers | Investment Style | % of
Net Assets |
| Wellington Management Company LLP | Small-Cap Value | 47.6% |
| BMO Asset Management Corp. | Small-Cap Growth | 39.6% |
| Mellon Capital Management Corp. | Small-Cap Blend | 8.0% |
| Cash & other assets | — | 4.8% |
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
| 4 | For more information about each of the investment manager's investment styles, refer to the fund's prospectus. |
Laudus MarketMasters Funds7
Laudus International MarketMasters Fund
The Laudus MarketMasters Funds use a multi-manager strategy. Charles Schwab Investment Management, Inc. (CSIM)—the funds’ investment adviser—selects investment sub-advisers with strong long-term track records to manage a portion of each fund’s assets. In addition to selecting investment sub-advisers and allocating assets among them, CSIM is responsible for monitoring and coordinating the overall management of the funds. Each sub-adviser manages its respective portfolio relative to a comparative index that reflects its individual process and philosophy. The sub-adviser indexes may differ from a fund’s comparative index.
Market Highlights. Slowing growth in China, along with declining energy and metals prices, weighed on global markets over the 12-month reporting period. Stocks in developed international markets produced just slightly negative overall returns, with the MSCI EAFE Index (Net) returning -0.1%. Emerging markets were particularly hard hit over the period, with the MSCI Emerging Markets Index (Net) falling 14.5%. The U.S. dollar remained strong as compared to many foreign currencies, generally reducing returns of international investments in U.S. dollar terms.
Performance. For the 12-month period ended October 31, 2015, Investor Shares of the Laudus International MarketMasters Fund (the fund) returned 0.39%, outperforming its comparative index, the MSCI EAFE Index (Net) (the index), which returned -0.07%.
Positioning and Strategies. Over the 12-month reporting period, the fund’s growth allocations generally enhanced relative performance, while its value allocations generally detracted. The fund’s manager selection added value due to strong performance of two of the fund’s four active sub-advisers.
The fund’s allocation to American Century Investment Management, Inc. positively contributed to both total return and its performance relative to the index. Among the fund’s four active sub-advisers, American Century posted the strongest absolute return and outperformed its small/mid-cap growth comparative index. Its stock selection contributed most significantly, primarily within the Consumer Discretionary and Industrials sectors, but also notably among Financials and Information Technology stocks. Although American Century’s positions in the Energy sector detracted from total return, its underweight to the sector boosted its relative performance, as did its overweight to the Consumer Discretionary sector. Geographically, American Century’s strongest relative contributions came from Germany and Japan, with the weakest from China and Ireland.
The fund’s allocation to Harris Associates L.P. also contributed to the fund’s total and relative performance for the period, as Harris posted a positive return and outperformed its large-cap value comparative index. Harris’s sector allocations contributed the most to relative performance, particularly its significant overweight of Consumer Discretionary stocks and its avoidance altogether of the Energy sector—the period’s weakest sector. Its stock selection also contributed, most notably within the Financials and Industrials sectors. Harris’s stock selection in the Materials sector, however, detracted from relative performance, as did its lack of exposure to the Telecommunications Services sector and its significant underweight to the Health Care sector. From a geographical standpoint, Harris’s strongest relative contributions came from Germany and France; its weakest from Japan and Hong Kong.
The fund’s allocation to Mondrian Investment Partners Limited detracted from both total return and relative performance, as Mondrian underperformed its small-cap value comparative index. Although Mondrian’s stock selection was strong within several sectors, its sector allocations dampened relative returns. Mondrian’s performance within the Consumer Staples and Materials sectors was notable, contributing to both absolute and relative performance. However, its positions in the Financials sector detracted from relative performance, as did its significant underweight of the sector. An overweight to the Industrials sector also dampened relative performance. From a geographic standpoint, Mondrian’s strongest relative contribution came from Canada and Denmark; its weakest from the United Kingdom and Singapore.
William Blair Investment Management, LLC, with its large-cap growth focus, posted a negative return for the period and underperformed its comparative index, detracting from both total return and relative performance. Although William Blair’s stock selection contributed within multiple sectors—most notably within Financials and Consumer Discretionary, its sector allocations detracted from relative performance, particularly due to its overweights of Financials and Energy and underweight to Consumer Staples. From a geographic standpoint, William Blair’s strongest contribution to relative performance came from Australia and Canada; its weakest from the Spain and the Netherlands.
Mellon Capital Management Corp. seeks to track the performance of the Fund’s index, employing a strategic trading approach to minimize transaction costs and preserve value. For the reporting period, the fund’s allocation to Mellon performed in line with this objective but slightly underperformed its comparative index.
Management views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S& P and MSCI.
International investments are subject to additional risks such as currency fluctuation, geopolitical risk and the potential for illiquid markets. Investing in emerging markets may accentuate these risks.
8Laudus MarketMasters Funds
Laudus International MarketMasters Fund
Performance and Fund Facts as of 10/31/15
As of 10/31/15:
Country Weightings % of Investments
| United Kingdom | 17.3% |
| Japan | 17.0% |
| Germany | 9.2% |
| France | 9.0% |
| Switzerland | 6.6% |
| Canada | 4.3% |
| United States | 4.1% |
| China | 3.9% |
| Australia | 3.8% |
| Italy | 3.5% |
| Sweden | 2.8% |
| Singapore | 2.5% |
| Other Countries | 16.0% |
| Total | 100.0% |
| Statistics |
| Number of Holdings | 1,168 |
| Weighted Average Market Cap (millions) | $25,665 |
| Price/Earnings Ratio (P/E) | 19.5 |
| Price/Book Ratio (P/B) | 0.3 |
| Portfolio Turnover Rate | 72% |
| Sector Weightings % of Investments |
| Consumer Discretionary | 21.0% |
| Financials | 20.4% |
| Industrials | 19.8% |
| Information Technology | 10.1% |
| Materials | 6.6% |
| Consumer Staples | 6.2% |
| Health Care | 6.0% |
| Energy | 2.3% |
| Telecommunication Services | 1.8% |
| Utilities | 1.7% |
| Other | 4.1% |
| Total | 100.0% |
| Top Equity Holdings % of Net Assets1 |
| Credit Suisse Group AG – Reg'd | 1.0% |
| Samsung Electronics Co., Ltd. | 1.0% |
| Allianz SE – Reg'd | 1.0% |
| Chr. Hansen Holding A/S | 0.9% |
| BNP Paribas S.A. | 0.9% |
| Bayerische Motoren Werke AG | 0.9% |
| Honda Motor Co., Ltd. | 0.9% |
| Toyota Motor Corp. | 0.9% |
| Daimler AG – Reg'd | 0.9% |
| Rubis S.C.A. | 0.9% |
| Total | 9.3% |
Management views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S&P and MSCI.
International investments are subject to additional risks such as currency fluctuation, geopolitical risk and the potential for illiquid markets. Investing in emerging markets may accentuate these risks.
| 1 | This list is not a recommendation of any security by the investment adviser. |
Laudus MarketMasters Funds9
Laudus International MarketMasters Fund
Performance and Fund Facts as of 10/31/15 continued
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$10,000 Investment (Investor Shares)1
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$50,000 Investment (Select Shares)1
Average Annual Total Returns1,2
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Investor Shares (10/16/96) | 0.39% | 5.84% | 6.39% |
| Select Shares® (4/2/04) | 0.52% 3 | 5.99% | 6.55% |
| MSCI EAFE® Index (Net)4 | -0.07% | 4.81% | 4.05% |
| MSCI EAFE® Index (Gross) | 0.37% | 5.28% | 4.53% |
| Fund Category: Morningstar Foreign Large Growth | 0.96% | 4.94% | 4.88% |
Fund Expense Ratios5: Investor Shares: Net 1.40%; Gross 1.59% / Select Shares: Net 1.25%; Gross 1.47%
Investment Managers and Allocations6
| Investment Managers | Investment Style | % of
Net Assets |
| American Century Investment Management, Inc. | International Small-Cap Growth | 25.9% |
| Harris Associates L.P. | International Large-Cap Value | 24.5% |
| William Blair Investment Management, LLC | International Multi-Cap Growth | 21.5% |
| Mondrian Investment Partners Limited | International Small-Cap Value | 20.0% |
| Mellon Capital Management Corp. | International Blend | 5.3% |
| Cash & other assets | — | 2.8% |
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
The fund’s performance relative to the index may be affected by fair-value pricing. See financial note 2 for more information.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | Total return for the report period presented in the table differs from the return in the Financial Highlights. The total return presented in the above table is calculated based on the NAV at which shareholder transactions were processed. The total return presented in the Financial Highlights section of the report is calculated in the same manner, but also takes into account certain adjustments that are necessary under generally accepted accounting principles required in the annual and semi-annual reports. |
| 4 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
| 5 | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
| 6 | For more information about each of the investment manager's investment styles, refer to the fund's prospectus. |
10Laudus MarketMasters Funds
Fund Expenses (Unaudited)
Examples for a $1,000 Investment
As a fund shareholder, you may incur two types of costs: (1) transaction costs, such as redemption fees; and (2) ongoing costs, including management fees, transfer agent and shareholder services fees, and other fund expenses.
The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six months beginning May 1, 2015 and held through October 31, 2015.
Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number given for your fund under the heading entitled “Expenses Paid During Period.”
Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s or share class’ actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in a fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. Therefore, the hypothetical return lines of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | Expense Ratio1
(Annualized) | Beginning
Account Value
at 5/1/15 | Ending
Account Value
(Net of Expenses)
at 10/31/15 | Expenses Paid
During Period2
5/1/15–10/31/15 |
| Laudus Small-Cap MarketMasters Fund | | | | |
| Investor Shares | | | | |
| Actual Return | 1.35% | $1,000.00 | $ 934.50 | $ 6.58 |
| Hypothetical 5% Return | 1.35% | $1,000.00 | $1,018.39 | $ 6.87 |
| Select Shares | | | | |
| Actual Return | 1.20% | $1,000.00 | $ 935.60 | $ 5.85 |
| Hypothetical 5% Return | 1.20% | $1,000.00 | $ 1,019.15 | $ 6.11 |
| Laudus International MarketMasters Fund | | | | |
| Investor Shares | | | | |
| Actual Return | 1.40% | $1,000.00 | $ 945.50 | $ 6.87 |
| Hypothetical 5% Return | 1.40% | $1,000.00 | $ 1,018.14 | $ 7.12 |
| Select Shares | | | | |
| Actual Return | 1.25% | $1,000.00 | $ 946.20 | $ 6.13 |
| Hypothetical 5% Return | 1.25% | $1,000.00 | $1,018.90 | $6.36 |
| 1 | Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights which covers a 12-month period. |
| 2 | Expenses for each fund or share class are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 184 days of the period, and divided by the 365 days of the fiscal year. |
Laudus MarketMasters Funds11
Laudus Small-Cap MarketMasters Fund
Financial Statements
Financial Highlights
| Investor Shares | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $18.02 | $17.28 | $13.14 | $11.99 | $11.52 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | (0.05) | (0.05) | (0.02) | (0.10) | (0.09) | |
| Net realized and unrealized gains (losses) | (0.17) 2 | 0.79 | 4.16 | 1.25 | 0.56 | |
| Total from investment operations | (0.22) | 0.74 | 4.14 | 1.15 | 0.47 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.03) | — | — | — | — | |
| Distributions from net realized gains | (0.35) | — | — | — | — | |
| Total distributions | (0.38) | — | — | — | — | |
| Net asset value at end of period | $17.42 | $18.02 | $17.28 | $13.14 | $11.99 | |
| Total return | (1.18%) | 4.28% | 31.51% | 9.59% | 4.08% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 1.35% | 1.35% | 1.35% | 1.42% 3 | 1.46% | |
| Gross operating expenses | 1.55% | 1.56% | 1.59% | 1.59% | 1.51% | |
| Net investment income (loss) | (0.26%) | (0.26%) | (0.16%) | (0.79%) | (0.70%) | |
| Portfolio turnover rate | 51% | 79% | 97% | 144% | 95% | |
| Net assets, end of period (x 1,000,000) | $62 | $70 | $76 | $65 | $62 | |
| |
| Select Shares | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $18.33 | $17.56 | $13.33 | $12.14 | $11.64 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | (0.02) | (0.02) | (0.00) 4 | (0.08) | (0.07) | |
| Net realized and unrealized gains (losses) | (0.17) 2 | 0.79 | 4.23 | 1.27 | 0.57 | |
| Total from investment operations | (0.19) | 0.77 | 4.23 | 1.19 | 0.50 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.06) | — | — | — | — | |
| Distributions from net realized gains | (0.35) | — | — | — | — | |
| Total distributions | (0.41) | — | — | — | — | |
| Net asset value at end of period | $17.73 | $18.33 | $17.56 | $13.33 | $12.14 | |
| Total return | (0.99%) | 4.39% | 31.73% | 9.80% | 4.30% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 1.20% | 1.20% | 1.20% | 1.27% 3 | 1.31% | |
| Gross operating expenses | 1.51% | 1.51% | 1.53% | 1.51% | 1.45% | |
| Net investment income (loss) | (0.09%) | (0.13%) | (0.03%) | (0.60%) | (0.54%) | |
| Portfolio turnover rate | 51% | 79% | 97% | 144% | 95% | |
| Net assets, end of period (x 1,000,000) | $107 | $122 | $113 | $88 | $219 | |
1
Calculated based on the average shares outstanding during the period.
2
The per share amount does not accord with the change in aggregate gains and losses in securities during the period because of the timing of sales and repurchases of fund shares in relation to fluctuating market values.
3
Effective June 6, 2012, the net operating expense limitation was lowered. The ratio presented for period ended 10/31/12 is a blended ratio.
4
Per-share amount was less than $0.005.
Laudus Small-Cap MarketMasters Fund
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15-20 days after calendar quarters on the fund's website at www.csimfunds.com/laudusfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 91.6% | Common Stock | 146,641,229 | 154,713,677 |
| 8.4% | Other Investment Companies | 14,208,273 | 14,121,415 |
| 0.0% | Rights | 2,814 | 2,814 |
| 0.0% | Warrants | — | — |
| 0.0% | Short-Term Investment | 5,999 | 5,999 |
| 100.0% | Total Investments | 160,858,315 | 168,843,905 |
| (0.0%) | Other Assets and Liabilities, Net | | (26,548) |
| 100.0% | Net Assets | | 168,817,357 |
| Security | Number
of Shares | Value
($) |
| Common Stock 91.6% of net assets |
| Automobiles & Components 0.2% |
| American Axle & Manufacturing Holdings, Inc. * | 518 | 11,479 |
| Cooper Tire & Rubber Co. | 361 | 15,086 |
| Cooper-Standard Holding, Inc. * | 71 | 4,618 |
| Dana Holding Corp. | 1,218 | 20,463 |
| Dorman Products, Inc. * | 200 | 9,336 |
| Drew Industries, Inc. | 170 | 10,171 |
| Federal-Mogul Holdings Corp. * | 125 | 969 |
| Fox Factory Holding Corp. * | 87 | 1,544 |
| Gentherm, Inc. * | 320 | 15,731 |
| Horizon Global Corp. * | 12,682 | 111,475 |
| Metaldyne Performance Group, Inc. | 77 | 1,680 |
| Motorcar Parts of America, Inc. * | 132 | 4,443 |
| Remy International, Inc. | 145 | 4,276 |
| Standard Motor Products, Inc. | 198 | 8,762 |
| Strattec Security Corp. | 22 | 1,316 |
| Superior Industries International, Inc. | 374 | 7,360 |
| Tenneco, Inc. * | 548 | 31,011 |
| Tower International, Inc. * | 122 | 3,351 |
| | | 263,071 |
| Banks 8.5% |
| 1st Source Corp. | 183 | 5,812 |
| Access National Corp. | 71 | 1,469 |
| American National Bankshares, Inc. | 73 | 1,840 |
| Ameris Bancorp | 222 | 6,993 |
| Ames National Corp. | 74 | 1,850 |
| Security | Number
of Shares | Value
($) |
| Anchor BanCorp Wisconsin, Inc. * | 150 | 6,153 |
| Arrow Financial Corp. | 70 | 1,932 |
| Astoria Financial Corp. | 530 | 8,459 |
| Banc of California, Inc. | 254 | 3,312 |
| BancFirst Corp. | 49 | 3,020 |
| Banco Latinoamericano de Exportaciones, S.A., Class E | 60 | 1,622 |
| BancorpSouth, Inc. | 923 | 23,010 |
| Bank of Marin Bancorp | 43 | 2,287 |
| Bank of the Ozarks, Inc. | 601 | 30,062 |
| Banner Corp. | 165 | 8,097 |
| Bar Harbor Bankshares | 42 | 1,485 |
| BBCN Bancorp, Inc. | 837 | 14,053 |
| BBX Capital Corp., Class A * | 88 | 1,615 |
| Bear State Financial, Inc. * | 162 | 1,774 |
| Beneficial Bancorp, Inc. * | 332 | 4,605 |
| Berkshire Hills Bancorp, Inc. | 102 | 2,917 |
| Blue Hills Bancorp, Inc. | 101 | 1,433 |
| BNC Bancorp | 198 | 4,445 |
| BofI Holding, Inc. * | 153 | 12,242 |
| Boston Private Financial Holdings, Inc. | 627 | 7,185 |
| Bridge Bancorp, Inc. | 186 | 5,340 |
| Brookline Bancorp, Inc. | 511 | 5,800 |
| Bryn Mawr Bank Corp. | 73 | 2,126 |
| BSB Bancorp, Inc. * | 66 | 1,451 |
| C1 Financial, Inc. * | 76 | 1,572 |
| Camden National Corp. | 47 | 1,837 |
| Capital Bank Financial Corp., Class A | 90 | 2,907 |
| Capital City Bank Group, Inc. | 144 | 2,223 |
| Capitol Federal Financial, Inc. | 665 | 8,632 |
| Cardinal Financial Corp. | 65 | 1,477 |
| Cascade Bancorp * | 518 | 2,906 |
| Cathay General Bancorp | 713 | 22,317 |
| CenterState Banks, Inc. | 196 | 2,858 |
| Central Pacific Financial Corp. | 17 | 380 |
| Century Bancorp, Inc., Class A | 48 | 2,134 |
| Charter Financial Corp. | 168 | 2,201 |
| Chemical Financial Corp. | 186 | 6,311 |
| Citizens & Northern Corp. | 277 | 5,487 |
| City Holding Co. | 117 | 5,596 |
| Clifton Bancorp, Inc. | 136 | 1,983 |
| CNB Financial Corp. | 102 | 1,895 |
| CoBiz Financial, Inc. | 304 | 3,788 |
| Columbia Banking System, Inc. | 565 | 18,826 |
| Community Bank System, Inc. | 438 | 17,853 |
| Community Trust Bancorp, Inc. | 185 | 6,377 |
| CommunityOne Bancorp * | 133 | 1,721 |
| ConnectOne Bancorp, Inc. | 278 | 4,962 |
| CU Bancorp * | 137 | 3,304 |
| Customers Bancorp, Inc. * | 126 | 3,465 |
| CVB Financial Corp. | 843 | 14,710 |
| Dime Community Bancshares, Inc. | 190 | 3,297 |
| Eagle Bancorp, Inc. * | 294 | 13,994 |
| Enterprise Bancorp, Inc. | 99 | 2,299 |
| Enterprise Financial Services Corp. | 341 | 9,671 |
| Essent Group Ltd. * | 549 | 13,231 |
| EverBank Financial Corp. | 912 | 15,741 |
| F.N.B. Corp. | 1,087 | 14,642 |
| Farmers Capital Bank Corp. * | 54 | 1,464 |
| FCB Financial Holdings, Inc., Class A * | 108 | 3,840 |
| Fidelity Southern Corp. | 86 | 1,802 |
| Financial Institutions, Inc. | 161 | 4,205 |
Laudus Small-Cap MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| First Bancorp (North Carolina) | 173 | 3,206 |
| First BanCorp (Puerto Rico) * | 1,156 | 4,381 |
| First Bancorp, Inc. | 103 | 2,176 |
| First Busey Corp. | 38,789 | 809,526 |
| First Business Financial Services, Inc. | 124 | 3,057 |
| First Citizens BancShares, Inc., Class A | 72 | 18,442 |
| First Commonwealth Financial Corp. | 130 | 1,195 |
| First Connecticut Bancorp, Inc. | 350 | 6,083 |
| First Defiance Financial Corp. | 73 | 2,796 |
| First Financial Bancorp | 612 | 11,799 |
| First Financial Bankshares, Inc. | 644 | 21,419 |
| First Financial Corp. | 124 | 4,249 |
| First Interstate BancSystem, Inc., Class A | 51 | 1,446 |
| First Merchants Corp. | 290 | 7,607 |
| First Midwest Bancorp, Inc. | 83,035 | 1,479,684 |
| First NBC Bank Holding Co. * | 118 | 4,388 |
| First Niagara Financial Group, Inc. | 92,000 | 952,200 |
| FirstMerit Corp. | 1,497 | 28,129 |
| Flagstar Bancorp, Inc. * | 177 | 3,936 |
| Flushing Financial Corp. | 39,992 | 841,432 |
| Fox Chase Bancorp, Inc. | 103 | 1,804 |
| Fulton Financial Corp. | 1,051 | 14,104 |
| German American Bancorp, Inc. | 77 | 2,412 |
| Glacier Bancorp, Inc. | 618 | 16,908 |
| Great Southern Bancorp, Inc. | 188 | 9,086 |
| Great Western Bancorp, Inc. | 37,164 | 1,050,255 |
| Green Bancorp, Inc. * | 94 | 1,152 |
| Guaranty Bancorp | 155 | 2,554 |
| Hampton Roads Bankshares, Inc. * | 883 | 1,634 |
| Hancock Holding Co. | 31,670 | 874,092 |
| Hanmi Financial Corp. | 351 | 8,951 |
| Heartland Financial USA, Inc. | 62 | 2,284 |
| Heritage Commerce Corp. | 248 | 2,624 |
| Heritage Oaks Bancorp | 282 | 2,484 |
| Hilltop Holdings, Inc. * | 534 | 11,198 |
| Hingham Institution for Savings | 14 | 1,784 |
| Home BancShares, Inc. | 562 | 24,121 |
| HomeStreet, Inc. * | 61 | 1,277 |
| HomeTrust Bancshares, Inc. * | 40 | 758 |
| Horizon Bancorp | 84 | 2,192 |
| IBERIABANK Corp. | 312 | 18,917 |
| Impac Mortgage Holdings, Inc. * | 74 | 1,654 |
| Independent Bank Corp., Massachusetts | 171 | 7,993 |
| Independent Bank Group, Inc. | 88 | 3,428 |
| International Bancshares Corp. | 57,577 | 1,551,700 |
| Investors Bancorp, Inc. | 2,464 | 30,825 |
| Kearny Financial Corp. | 230 | 2,749 |
| Lakeland Bancorp, Inc. | 280 | 3,256 |
| Lakeland Financial Corp. | 158 | 7,099 |
| LegacyTexas Financial Group, Inc. | 499 | 14,321 |
| LendingTree, Inc. * | 6,390 | 775,490 |
| MainSource Financial Group, Inc. | 122 | 2,640 |
| MB Financial, Inc. | 36,073 | 1,162,994 |
| Mercantile Bank Corp. | 158 | 3,485 |
| Merchants Bancshares, Inc. | 58 | 1,828 |
| Meridian Bancorp, Inc. | 109 | 1,530 |
| Meta Financial Group, Inc. | 84 | 3,619 |
| Metro Bancorp, Inc. | 247 | 7,652 |
| MGIC Investment Corp. * | 2,408 | 22,635 |
| MidWestOne Financial Group, Inc. | 70 | 2,145 |
| Security | Number
of Shares | Value
($) |
| National Bank Holdings Corp., Class A | 337 | 7,434 |
| National Bankshares, Inc. | 94 | 3,069 |
| National Commerce Corp. * | 60 | 1,507 |
| National Penn Bancshares, Inc. | 620 | 7,465 |
| Nationstar Mortgage Holdings, Inc. * | 547 | 7,259 |
| NBT Bancorp, Inc. | 497 | 13,971 |
| NewBridge Bancorp | 271 | 3,065 |
| NMI Holdings, Inc., Class A * | 429 | 3,226 |
| Northfield Bancorp, Inc. | 96 | 1,471 |
| Northwest Bancshares, Inc. | 101,491 | 1,366,069 |
| OceanFirst Financial Corp. | 300 | 5,538 |
| Ocwen Financial Corp. * | 448 | 3,132 |
| OFG Bancorp | 249 | 2,293 |
| Old National Bancorp | 725 | 10,150 |
| Old Second Bancorp, Inc. * | 224 | 1,501 |
| Opus Bank | 40 | 1,490 |
| Oritani Financial Corp. | 482 | 7,673 |
| Pacific Continental Corp. | 150 | 2,151 |
| Pacific Premier Bancorp, Inc. * | 85 | 1,815 |
| Park National Corp. | 92 | 8,346 |
| Park Sterling Corp. | 898 | 6,511 |
| Peapack-Gladstone Financial Corp. | 128 | 2,894 |
| Penns Woods Bancorp, Inc. | 41 | 1,827 |
| PennyMac Financial Services, Inc., Class A * | 80 | 1,323 |
| Peoples Bancorp, Inc. | 147 | 2,817 |
| Peoples Financial Services Corp. | 59 | 2,402 |
| PHH Corp. * | 286 | 4,204 |
| Pinnacle Financial Partners, Inc. | 365 | 19,206 |
| Preferred Bank | 104 | 3,443 |
| PrivateBancorp, Inc. | 471 | 19,702 |
| Prosperity Bancshares, Inc. | 444 | 22,813 |
| Provident Financial Services, Inc. | 491 | 9,977 |
| QCR Holdings, Inc. | 2 | 46 |
| Radian Group, Inc. | 1,415 | 20,475 |
| Renasant Corp. | 321 | 11,116 |
| Republic Bancorp, Inc., Class A | 75 | 1,907 |
| S&T Bancorp, Inc. | 199 | 6,344 |
| Sandy Spring Bancorp, Inc. | 230 | 6,325 |
| Seacoast Banking Corp of Florida * | 93 | 1,440 |
| ServisFirst Bancshares, Inc. | 39 | 1,653 |
| Sierra Bancorp | 117 | 1,897 |
| Simmons First National Corp., Class A | 206 | 10,617 |
| South State Corp. | 184 | 14,260 |
| Southside Bancshares, Inc. | 333 | 8,958 |
| Southwest Bancorp, Inc. | 261 | 4,414 |
| State Bank Financial Corp. | 192 | 4,109 |
| Sterling Bancorp | 587 | 9,034 |
| Stock Yards Bancorp, Inc. | 68 | 2,562 |
| Stonegate Mortgage Corp. * | 137 | 785 |
| Suffolk Bancorp | 99 | 2,959 |
| Sun Bancorp, Inc. * | 108 | 2,161 |
| Talmer Bancorp, Inc., Class A | 207 | 3,482 |
| Territorial Bancorp, Inc. | 73 | 2,035 |
| Texas Capital Bancshares, Inc. * | 409 | 22,577 |
| The First of Long Island Corp. | 76 | 2,111 |
| Tompkins Financial Corp. | 76 | 4,125 |
| Towne Bank | 375 | 8,048 |
| TriCo Bancshares | 237 | 6,247 |
| TriState Capital Holdings, Inc. * | 128 | 1,599 |
| Triumph Bancorp, Inc. * | 111 | 1,853 |
| Trustmark Corp. | 357 | 8,579 |
Laudus Small-Cap MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| UMB Financial Corp. | 369 | 18,111 |
| Umpqua Holdings Corp. | 1,509 | 25,200 |
| Union Bankshares Corp. | 364 | 9,118 |
| United Bankshares, Inc. | 396 | 15,662 |
| United Community Banks, Inc. | 540 | 10,886 |
| United Financial Bancorp, Inc. | 505 | 6,555 |
| Univest Corp. of Pennsylvania | 90 | 1,772 |
| Valley National Bancorp | 1,344 | 14,112 |
| Walker & Dunlop, Inc. * | 116 | 3,365 |
| Walter Investment Management Corp. * | 288 | 3,444 |
| Washington Federal, Inc. | 661 | 16,485 |
| Washington Trust Bancorp, Inc. | 60 | 2,328 |
| Waterstone Financial, Inc. | 110 | 1,465 |
| Webster Financial Corp. | 59,155 | 2,194,650 |
| WesBanco, Inc. | 268 | 8,750 |
| West Bancorp, Inc. | 141 | 2,786 |
| Westamerica Bancorp | 297 | 13,130 |
| Western Alliance Bancorp * | 596 | 21,307 |
| Wilshire Bancorp, Inc. | 485 | 5,185 |
| Wintrust Financial Corp. | 306 | 15,450 |
| WSFS Financial Corp. | 324 | 10,293 |
| Yadkin Financial Corp. | 276 | 6,500 |
| | | 14,403,098 |
| Capital Goods 10.8% |
| AAON, Inc. | 477 | 9,764 |
| AAR Corp. | 129 | 2,927 |
| Accuride Corp. * | 750 | 2,115 |
| Actuant Corp., Class A | 254 | 5,791 |
| Advanced Drainage Systems, Inc. | 152 | 4,776 |
| Aegion Corp. * | 205 | 3,954 |
| Aerojet Rocketdyne Holdings, Inc. * | 651 | 11,028 |
| Aerovironment, Inc. * | 310 | 7,152 |
| Aircastle Ltd. | 330 | 7,478 |
| Alamo Group, Inc. | 42 | 1,971 |
| Albany International Corp., Class A | 46,949 | 1,763,874 |
| Allied Motion Technologies, Inc. | 63 | 1,215 |
| Altra Industrial Motion Corp. | 222 | 5,874 |
| Ameresco, Inc., Class A * | 500 | 3,240 |
| American Railcar Industries, Inc. | 62 | 3,579 |
| American Science & Engineering, Inc. | 132 | 4,947 |
| American Woodmark Corp. * | 70 | 5,089 |
| Apogee Enterprises, Inc. | 190 | 9,411 |
| Applied Industrial Technologies, Inc. | 229 | 9,460 |
| Argan, Inc. | 185 | 6,836 |
| Astec Industries, Inc. | 123 | 3,998 |
| Astronics Corp. *(e) | 242 | 9,131 |
| AZZ, Inc. | 190 | 10,513 |
| Babcock & Wilcox Enterprises, Inc. * | 42,000 | 713,160 |
| Barnes Group, Inc. | 21,130 | 794,277 |
| Beacon Roofing Supply, Inc. * | 247 | 8,741 |
| Blount International, Inc. * | 129 | 783 |
| Blue Bird Corp. * | 110 | 1,190 |
| Briggs & Stratton Corp. | 448 | 7,961 |
| Builders FirstSource, Inc. * | 75,602 | 893,616 |
| CAI International, Inc. * | 97 | 1,127 |
| Chart Industries, Inc. * | 355 | 6,102 |
| CIRCOR International, Inc. | 14,838 | 681,361 |
| CLARCOR, Inc. | 311 | 15,506 |
| Columbus McKinnon Corp. | 79 | 1,477 |
| Security | Number
of Shares | Value
($) |
| Comfort Systems USA, Inc. | 210 | 6,705 |
| Commercial Vehicle Group, Inc. * | 186 | 774 |
| Continental Building Products, Inc. * | 21,057 | 369,972 |
| Cubic Corp. | 34,800 | 1,560,780 |
| Curtiss-Wright Corp. | 433 | 30,119 |
| DigitalGlobe, Inc. * | 650 | 9,705 |
| Ducommun, Inc. * | 33 | 714 |
| DXP Enterprises, Inc. * | 129 | 3,904 |
| Dycom Industries, Inc. * | 323 | 24,577 |
| EMCOR Group, Inc. | 587 | 28,340 |
| Encore Wire Corp. | 156 | 6,672 |
| EnerSys | 266 | 16,223 |
| Engility Holdings, Inc. | 249 | 8,015 |
| EnPro Industries, Inc. | 253 | 12,425 |
| ESCO Technologies, Inc. | 32,663 | 1,211,471 |
| Esterline Technologies Corp. * | 284 | 21,882 |
| Federal Signal Corp. | 464 | 6,988 |
| Franklin Electric Co., Inc. | 393 | 12,953 |
| FuelCell Energy, Inc. * | 3,306 | 2,924 |
| GATX Corp. | 29,120 | 1,359,904 |
| Generac Holdings, Inc. * | 534 | 16,853 |
| General Cable Corp. | 410 | 6,310 |
| Global Brass & Copper Holdings, Inc. | 78 | 1,754 |
| Granite Construction, Inc. | 188 | 6,174 |
| Griffon Corp. | 404 | 6,941 |
| H&E Equipment Services, Inc. | 411 | 7,936 |
| Harsco Corp. | 493 | 5,290 |
| HC2 Holdings, Inc. * | 148 | 1,119 |
| HEICO Corp. | 200 | 10,088 |
| HEICO Corp., Class A | 233 | 10,177 |
| Hexcel Corp. | 15,404 | 713,513 |
| Hillenbrand, Inc. | 351 | 10,414 |
| Hurco Cos., Inc. | 62 | 1,666 |
| Hyster-Yale Materials Handling, Inc. | 88 | 5,150 |
| Insteel Industries, Inc. | 78 | 1,668 |
| John Bean Technologies Corp. | 331 | 14,849 |
| Kadant, Inc. | 176 | 7,237 |
| Kaman Corp. | 176 | 6,845 |
| KLX, Inc. * | 311 | 12,163 |
| L.B. Foster Co., Class A | 39 | 574 |
| Lawson Products, Inc. * | 38 | 988 |
| Lennox International, Inc. | 6,540 | 868,577 |
| Lindsay Corp. | 135 | 9,150 |
| LSI Industries, Inc. | 57 | 612 |
| Luxfer Holdings plc ADR | 46,920 | 508,144 |
| Lydall, Inc. * | 251 | 8,592 |
| Masonite International Corp. * | 169 | 10,118 |
| MasTec, Inc. * | 636 | 10,666 |
| Meritor, Inc. * | 472 | 5,131 |
| Miller Industries, Inc. | 263 | 5,965 |
| Moog, Inc., Class A * | 313 | 19,331 |
| MRC Global, Inc. * | 708 | 8,425 |
| Mueller Industries, Inc. | 70,461 | 2,220,931 |
| Mueller Water Products, Inc., Class A | 1,283 | 11,290 |
| MYR Group, Inc. * | 220 | 4,950 |
| National Presto Industries, Inc. | 23 | 2,025 |
| Navistar International Corp. * | 302 | 3,715 |
| NCI Building Systems, Inc. * | 471 | 4,927 |
| Neff Corp., Class A * | 138 | 809 |
| NN, Inc. | 119 | 1,642 |
| Nortek, Inc. * | 45 | 2,761 |
| Northwest Pipe Co. * | 60 | 793 |
Laudus Small-Cap MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| NV5 Holdings, Inc. * | 61 | 1,420 |
| Omega Flex, Inc. | 119 | 4,919 |
| Orion Marine Group, Inc. * | 142 | 555 |
| Patrick Industries, Inc. * | 100 | 4,058 |
| PGT, Inc. * | 248 | 2,991 |
| Plug Power, Inc. * | 1,567 | 3,776 |
| Ply Gem Holdings, Inc. * | 176 | 2,080 |
| Powell Industries, Inc. | 43 | 1,433 |
| Power Solutions International, Inc. * | 26 | 469 |
| PowerSecure International, Inc. * | 43 | 536 |
| Preformed Line Products Co. | 25 | 1,063 |
| Primoris Services Corp. | 42,824 | 853,054 |
| Proto Labs, Inc. * | 154 | 9,985 |
| Raven Industries, Inc. | 296 | 5,390 |
| RBC Bearings, Inc. * | 163 | 11,148 |
| Rexnord Corp. * | 619 | 11,439 |
| Rush Enterprises, Inc., Class A * | 275 | 6,705 |
| Simpson Manufacturing Co., Inc. | 199 | 7,558 |
| Sparton Corp. * | 100 | 2,353 |
| Standex International Corp. | 110 | 9,869 |
| Stock Building Supply Holdings, Inc. * | 91 | 1,572 |
| Sun Hydraulics Corp. | 156 | 4,569 |
| TAL International Group, Inc. * | 294 | 4,986 |
| TASER International, Inc. * | 286 | 6,695 |
| Teledyne Technologies, Inc. * | 264 | 23,557 |
| Tennant Co. | 211 | 12,221 |
| Textainer Group Holdings Ltd. | 16 | 313 |
| The ExOne Co. * | 84 | 899 |
| The Gorman-Rupp Co. | 178 | 5,089 |
| The Greenbrier Cos., Inc. | 274 | 10,423 |
| The KEYW Holding Corp. * | 316 | 2,253 |
| Thermon Group Holdings, Inc. * | 29,435 | 591,938 |
| Titan International, Inc. | 80 | 568 |
| Trex Co., Inc. * | 281 | 10,979 |
| TriMas Corp. * | 72,336 | 1,447,443 |
| Tutor Perini Corp. * | 299 | 5,017 |
| Twin Disc, Inc. | 175 | 2,062 |
| Universal Forest Products, Inc. | 133 | 9,660 |
| Vectrus, Inc. * | 57 | 1,418 |
| Veritiv Corp. * | 37 | 1,554 |
| Vicor Corp. * | 299 | 2,888 |
| Wabash National Corp. * | 855 | 10,234 |
| Watsco, Inc. | 6,390 | 786,162 |
| Watts Water Technologies, Inc., Class A | 300 | 16,332 |
| Woodward, Inc. | 430 | 19,565 |
| Xerium Technologies, Inc. * | 350 | 4,725 |
| | | 18,194,657 |
| Commercial & Professional Supplies 8.8% |
| ABM Industries, Inc. | 310 | 8,804 |
| Acacia Research Corp. | 130,873 | 871,614 |
| ACCO Brands Corp. * | 147,197 | 1,187,880 |
| ARC Document Solutions, Inc. * | 118,070 | 734,395 |
| Barrett Business Services, Inc. | 134 | 6,563 |
| Brady Corp., Class A | 485 | 11,034 |
| CBIZ, Inc. * | 150 | 1,613 |
| CDI Corp. | 118 | 944 |
| CEB, Inc. | 200 | 14,952 |
| CECO Environmental Corp. | 172 | 1,534 |
| Civeo Corp. | 252 | 469 |
| CRA International, Inc. * | 91 | 2,129 |
| Security | Number
of Shares | Value
($) |
| Deluxe Corp. | 308 | 18,341 |
| Essendant, Inc. | 44,793 | 1,548,494 |
| Exponent, Inc. | 178 | 9,151 |
| Franklin Covey Co. * | 70 | 1,199 |
| FTI Consulting, Inc. * | 34,944 | 1,188,445 |
| G&K Services, Inc., Class A | 29,973 | 1,972,823 |
| GP Strategies Corp. * | 255 | 6,398 |
| Healthcare Services Group, Inc. | 605 | 22,542 |
| Heidrick & Struggles International, Inc. | 102 | 2,709 |
| Heritage-Crystal Clean, Inc. * | 114 | 1,359 |
| Herman Miller, Inc. | 360 | 11,423 |
| HNI Corp. | 417 | 17,906 |
| Huron Consulting Group, Inc. * | 5,425 | 262,028 |
| ICF International, Inc. * | 296 | 9,078 |
| Insperity, Inc. | 225 | 10,454 |
| Interface, Inc. | 552 | 10,792 |
| Kelly Services, Inc., Class A | 381 | 6,020 |
| Kforce, Inc. | 338 | 9,501 |
| Kimball International, Inc., Class B | 165 | 1,802 |
| Knoll, Inc. | 226 | 5,252 |
| Korn/Ferry International | 412 | 14,984 |
| Matthews International Corp., Class A | 23,938 | 1,381,941 |
| McGrath RentCorp | 152 | 4,568 |
| Mistras Group, Inc. * | 47,676 | 902,030 |
| Mobile Mini, Inc. | 380 | 13,011 |
| MSA Safety, Inc. | 316 | 13,740 |
| Multi-Color Corp. | 58 | 4,515 |
| Navigant Consulting, Inc. * | 112 | 1,926 |
| NL Industries, Inc. * | 152 | 531 |
| On Assignment, Inc. * | 23,898 | 1,078,039 |
| Pendrell Corp. * | 1,575 | 1,055 |
| Resources Connection, Inc. | 434 | 7,790 |
| RPX Corp. * | 155 | 2,207 |
| SP Plus Corp. * | 58,710 | 1,497,105 |
| Steelcase, Inc., Class A | 43,433 | 843,035 |
| Team, Inc. * | 247 | 8,645 |
| Tetra Tech, Inc. | 630 | 16,947 |
| The Advisory Board Co. * | 24,252 | 1,062,965 |
| The Brink's Co. | 217 | 6,723 |
| TriNet Group, Inc. * | 427 | 8,104 |
| TrueBlue, Inc. * | 239 | 6,924 |
| UniFirst Corp. | 132 | 13,869 |
| US Ecology, Inc. | 159 | 6,234 |
| Viad Corp. | 274 | 8,250 |
| Volt Information Sciences, Inc. * | 83 | 715 |
| VSE Corp. | 41 | 2,356 |
| WageWorks, Inc. * | 280 | 13,446 |
| West Corp. | 213 | 5,072 |
| | | 14,884,375 |
| Consumer Durables & Apparel 4.2% |
| Bassett Furniture Industries, Inc. | 51 | 1,630 |
| Beazer Homes USA, Inc. * | 116 | 1,652 |
| CalAtlantic Group, Inc. * | 630 | 23,997 |
| Callaway Golf Co. | 1,174 | 11,681 |
| Cavco Industries, Inc. * | 63 | 6,212 |
| Century Communities, Inc. * | 68 | 1,297 |
| Cherokee, Inc. * | 53 | 962 |
| Columbia Sportswear Co. | 15,650 | 858,403 |
| Crocs, Inc. * | 425 | 4,590 |
| CSS Industries, Inc. | 196 | 5,351 |
Laudus Small-Cap MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Deckers Outdoor Corp. * | 210 | 11,689 |
| Escalade, Inc. | 75 | 1,112 |
| Ethan Allen Interiors, Inc. | 330 | 8,979 |
| Flexsteel Industries, Inc. | 70 | 3,044 |
| G-III Apparel Group Ltd. * | 304 | 16,747 |
| Green Brick Partners, Inc. * | 135 | 1,424 |
| Helen of Troy Ltd. * | 14,769 | 1,465,233 |
| Hooker Furniture Corp. | 57 | 1,415 |
| Hovnanian Enterprises, Inc., Class A * | 257 | 529 |
| Iconix Brand Group, Inc. * | 180 | 2,758 |
| Installed Building Products, Inc. * | 62 | 1,373 |
| iRobot Corp. * | 301 | 9,033 |
| Johnson Outdoors, Inc., Class A | 37 | 793 |
| KB Home | 915 | 11,987 |
| La-Z-Boy, Inc. | 16,075 | 458,941 |
| LGI Homes, Inc. * | 73 | 2,046 |
| Libbey, Inc. | 233 | 7,838 |
| Lifetime Brands, Inc. | 127 | 1,952 |
| M.D.C. Holdings, Inc. | 200 | 5,198 |
| M/I Homes, Inc. * | 32,936 | 755,881 |
| Malibu Boats, Inc., Class A * | 33 | 469 |
| Marine Products Corp. | 229 | 1,619 |
| Meritage Homes Corp. * | 360 | 12,694 |
| Movado Group, Inc. | 110 | 2,831 |
| NACCO Industries, Inc., Class A | 44 | 1,973 |
| Nautilus, Inc. * | 68 | 1,159 |
| Oxford Industries, Inc. | 166 | 12,088 |
| Performance Sports Group Ltd. * | 40,342 | 463,126 |
| Perry Ellis International, Inc. * | 300 | 6,441 |
| Sequential Brands Group, Inc. * | 175 | 2,189 |
| Smith & Wesson Holding Corp. * | 673 | 12,020 |
| Steven Madden Ltd. * | 471 | 16,414 |
| Sturm, Ruger & Co., Inc. | 143 | 8,142 |
| Superior Uniform Group, Inc. | 88 | 1,500 |
| Taylor Morrison Home Corp., Class A * | 69 | 1,272 |
| The New Home Co., Inc. * | 84 | 1,202 |
| TRI Pointe Group, Inc. * | 103,517 | 1,343,651 |
| Tumi Holdings, Inc. * | 307 | 4,921 |
| UCP, Inc., Class A * | 11,986 | 80,306 |
| Unifi, Inc. * | 65 | 1,988 |
| Universal Electronics, Inc. * | 111 | 5,280 |
| Vera Bradley, Inc. * | 217 | 2,715 |
| Vince Holding Corp. * | 65 | 296 |
| WCI Communities, Inc. * | 57 | 1,362 |
| William Lyon Homes, Class A * | 69,468 | 1,482,447 |
| Wolverine World Wide, Inc. | 889 | 16,509 |
| ZAGG, Inc. * | 78 | 661 |
| | | 7,169,022 |
| Consumer Services 0.9% |
| 2U, Inc. * | 28 | 587 |
| American Public Education, Inc. * | 73 | 1,586 |
| Apollo Education Group, Inc. * | 351 | 2,548 |
| Ascent Capital Group, Inc., Class A * | 118 | 2,570 |
| Belmond Ltd., Class A * | 476 | 5,112 |
| Biglari Holdings, Inc. * | 15 | 5,762 |
| BJ's Restaurants, Inc. * | 248 | 10,647 |
| Bloomin' Brands, Inc. | 757 | 12,846 |
| Bob Evans Farms, Inc. | 234 | 10,125 |
| Bojangles', Inc. * | 62 | 1,031 |
| Boyd Gaming Corp. * | 781 | 15,612 |
| Security | Number
of Shares | Value
($) |
| Bravo Brio Restaurant Group, Inc. * | 350 | 4,109 |
| Bridgepoint Education, Inc. * | 135 | 1,046 |
| Bright Horizons Family Solutions, Inc. * | 205 | 13,124 |
| Buffalo Wild Wings, Inc. * | 125 | 19,284 |
| Caesars Acquisition Co., Class A * | 318 | 2,328 |
| Caesars Entertainment Corp. * | 511 | 4,114 |
| Cambium Learning Group, Inc. * | 344 | 1,655 |
| Capella Education Co. | 123 | 5,553 |
| Career Education Corp. * | 498 | 1,798 |
| Carrols Restaurant Group, Inc. * | 137 | 1,611 |
| Chegg, Inc. * | 514 | 3,547 |
| Churchill Downs, Inc. | 120 | 17,620 |
| Chuy's Holdings, Inc. * | 95 | 2,585 |
| ClubCorp Holdings, Inc. | 177 | 3,618 |
| Collectors Universe, Inc. | 127 | 2,196 |
| Cracker Barrel Old Country Store, Inc. | 181 | 24,880 |
| Dave & Buster's Entertainment, Inc. * | 39 | 1,505 |
| Del Frisco's Restaurant Group, Inc. * | 78 | 1,051 |
| Denny's Corp. * | 1,014 | 11,113 |
| DeVry Education Group, Inc. | 602 | 14,183 |
| Diamond Resorts International, Inc. * | 253 | 7,195 |
| DineEquity, Inc. | 126 | 10,515 |
| El Pollo Loco Holdings, Inc. * | 260 | 2,985 |
| Eldorado Resorts, Inc. * | 194 | 1,921 |
| Empire Resorts, Inc. * | 279 | 1,295 |
| Fiesta Restaurant Group, Inc. * | 4,622 | 163,434 |
| Grand Canyon Education, Inc. * | 446 | 18,536 |
| Houghton Mifflin Harcourt Co. * | 891 | 17,455 |
| International Speedway Corp., Class A | 2,106 | 73,057 |
| Interval Leisure Group, Inc. | 313 | 5,524 |
| Intrawest Resorts Holdings, Inc. * | 119 | 1,066 |
| Isle of Capri Casinos, Inc. * | 233 | 4,457 |
| J Alexander's Holdings, Inc. * | 62 | 598 |
| Jack in the Box, Inc. | 320 | 23,850 |
| K12, Inc. * | 350 | 3,399 |
| Kona Grill, Inc. * | 71 | 976 |
| Krispy Kreme Doughnuts, Inc. * | 51,877 | 710,196 |
| La Quinta Holdings, Inc. * | 541 | 8,196 |
| Liberty Tax, Inc. | 105 | 2,424 |
| LifeLock, Inc. * | 434 | 6,080 |
| Marriott Vacations Worldwide Corp. | 253 | 16,293 |
| Monarch Casino & Resort, Inc. * | 67 | 1,470 |
| Morgans Hotel Group Co. * | 452 | 1,623 |
| Noodles & Co. * | 96 | 1,418 |
| Papa John's International, Inc. | 290 | 20,349 |
| Papa Murphy's Holdings, Inc. * | 70 | 967 |
| Penn National Gaming, Inc. * | 663 | 11,841 |
| Pinnacle Entertainment, Inc. * | 548 | 19,185 |
| Popeyes Louisiana Kitchen, Inc. * | 234 | 13,207 |
| Potbelly Corp. * | 114 | 1,277 |
| Red Robin Gourmet Burgers, Inc. * | 166 | 12,432 |
| Regis Corp. * | 305 | 5,039 |
| Scientific Games Corp., Class A * | 423 | 4,691 |
| SeaWorld Entertainment, Inc. | 582 | 11,599 |
| Shake Shack, Inc., Class A * | 23 | 1,048 |
| Sonic Corp. | 550 | 15,697 |
| Sotheby's | 501 | 17,360 |
| Speedway Motorsports, Inc. | 96 | 1,773 |
| Steiner Leisure Ltd. * | 92 | 5,829 |
| Strayer Education, Inc. * | 108 | 5,715 |
| Texas Roadhouse, Inc. | 423 | 14,530 |
| The Cheesecake Factory, Inc. | 255 | 12,291 |
Laudus Small-Cap MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| The Habit Restaurants, Inc., Class A * | 43 | 1,027 |
| The Marcus Corp. | 350 | 7,241 |
| Universal Technical Institute, Inc. | 400 | 1,700 |
| Vail Resorts, Inc. | 242 | 27,629 |
| Weight Watchers International, Inc. * | 200 | 3,076 |
| Zoe's Kitchen, Inc. * | 37 | 1,274 |
| | | 1,506,086 |
| Diversified Financials 1.8% |
| Arlington Asset Investment Corp., Class A | 230 | 3,186 |
| Ashford, Inc. * | 10 | 643 |
| BGC Partners, Inc., Class A | 1,225 | 10,596 |
| Calamos Asset Management, Inc., Class A | 525 | 4,930 |
| Cash America International, Inc. | 192 | 6,630 |
| CIFC Corp. | 183 | 1,266 |
| Cohen & Steers, Inc. | 135 | 4,130 |
| Cowen Group, Inc., Class A * | 568 | 2,391 |
| Diamond Hill Investment Group, Inc. | 21 | 4,201 |
| Encore Capital Group, Inc. * | 184 | 7,489 |
| Enova International, Inc. * | 261 | 3,393 |
| Evercore Partners, Inc., Class A | 278 | 15,012 |
| Ezcorp, Inc., Class A * | 574 | 3,823 |
| Fifth Street Asset Management, Inc. | 40 | 234 |
| Financial Engines, Inc. | 484 | 15,565 |
| First Cash Financial Services, Inc. * | 309 | 11,788 |
| FNFV Group * | 360 | 4,046 |
| Gain Capital Holdings, Inc. | 178,142 | 1,327,158 |
| GAMCO Investors, Inc., Class A | 30 | 1,730 |
| Green Dot Corp., Class A * | 85 | 1,576 |
| Greenhill & Co., Inc. | 139 | 3,589 |
| HFF, Inc., Class A | 301 | 10,391 |
| INTL FCStone, Inc. * | 26 | 832 |
| Investment Technology Group, Inc. | 361 | 5,780 |
| Janus Capital Group, Inc. | 948 | 14,722 |
| KCG Holdings, Inc., Class A * | 502 | 6,270 |
| Ladenburg Thalmann Financial Services, Inc. * | 1,958 | 4,973 |
| MarketAxess Holdings, Inc. | 329 | 33,331 |
| Marlin Business Services Corp. | 80 | 1,413 |
| Medley Management, Inc., Class A | 121 | 888 |
| Moelis & Co., Class A | 51 | 1,503 |
| Nelnet, Inc., Class A | 172 | 6,154 |
| NewStar Financial, Inc. * | 255 | 2,690 |
| OM Asset Management plc | 80 | 1,214 |
| On Deck Capital, Inc. * | 115 | 1,095 |
| Oppenheimer Holdings, Inc., Class A | 71 | 1,303 |
| PICO Holdings, Inc. * | 73,334 | 708,406 |
| Piper Jaffray Cos. * | 236 | 8,395 |
| PRA Group, Inc. * | 445 | 24,386 |
| Pzena Investment Management, Inc., Class A | 326 | 3,107 |
| RCS Capital Corp., Class A * | 121 | 92 |
| Regional Management Corp. * | 66 | 1,076 |
| Resource America, Inc., Class A | 210 | 1,615 |
| Safeguard Scientifics, Inc. * | 390 | 6,923 |
| Solar Capital Ltd. | 37,320 | 646,009 |
| Stifel Financial Corp. * | 435 | 19,327 |
| The JG Wentworth Co., Class A * | 65 | 333 |
| Tiptree Financial, Inc., Class A | 206 | 1,395 |
| Security | Number
of Shares | Value
($) |
| Virtu Financial, Inc., Class A | 62 | 1,500 |
| Virtus Investment Partners, Inc. | 53 | 6,203 |
| Westwood Holdings Group, Inc. | 44 | 2,556 |
| WisdomTree Investments, Inc. | 942 | 18,115 |
| World Acceptance Corp. * | 106 | 4,042 |
| ZAIS Group Holdings, Inc. * | 131 | 1,361 |
| | | 2,980,776 |
| Energy 6.0% |
| Abraxas Petroleum Corp. * | 646 | 1,027 |
| Adams Resources & Energy, Inc. | 80 | 3,557 |
| Alon USA Energy, Inc. | 77 | 1,290 |
| Ardmore Shipping Corp. | 54 | 775 |
| Atwood Oceanics, Inc. | 638 | 10,559 |
| Basic Energy Services, Inc. * | 197 | 731 |
| Bill Barrett Corp. * | 355 | 1,729 |
| Bonanza Creek Energy, Inc. * | 268 | 1,525 |
| Bristow Group, Inc. | 308 | 10,697 |
| C&J Energy Services Ltd. * | 545 | 2,720 |
| Callon Petroleum Co. * | 425 | 3,689 |
| CARBO Ceramics, Inc. | 192 | 3,364 |
| Carrizo Oil & Gas, Inc. * | 495 | 18,627 |
| Clayton Williams Energy, Inc. * | 50 | 2,978 |
| Clean Energy Fuels Corp. * | 428 | 2,418 |
| Cloud Peak Energy, Inc. * | 604 | 1,794 |
| Contango Oil & Gas Co. * | 98 | 750 |
| Delek US Holdings, Inc. | 515 | 14,008 |
| DHT Holdings, Inc. | 1,141 | 8,968 |
| Dorian LPG Ltd. * | 54,676 | 644,083 |
| Earthstone Energy, Inc. * | 75 | 1,054 |
| Eclipse Resources Corp. * | 258 | 555 |
| Energy Fuels, Inc. * | 294 | 800 |
| Energy XXI Ltd. | 1,132 | 1,958 |
| Era Group, Inc. * | 34,543 | 480,493 |
| Erin Energy Corp. * | 327 | 1,308 |
| Evolution Petroleum Corp. | 368 | 2,539 |
| EXCO Resources, Inc. * | 1,244 | 1,393 |
| Exterran Holdings, Inc. | 687 | 14,935 |
| Fairmount Santrol Holdings, Inc. * | 159 | 425 |
| Forum Energy Technologies, Inc. * | 710 | 9,407 |
| Frontline Ltd. * | 849 | 2,683 |
| GasLog Ltd. | 101,259 | 1,171,567 |
| Gastar Exploration, Inc. * | 637 | 1,000 |
| Geospace Technologies Corp. * | 127 | 1,951 |
| Golar LNG Ltd. | 52,696 | 1,528,711 |
| Green Plains, Inc. | 171 | 3,507 |
| Halcon Resources Corp. * | 2,678 | 1,878 |
| Hallador Energy Co. | 121 | 737 |
| Helix Energy Solutions Group, Inc. * | 1,143 | 6,607 |
| Hornbeck Offshore Services, Inc. * | 271 | 3,661 |
| Independence Contract Drilling, Inc. * | 167 | 1,174 |
| InterOil Corp. * | 47,990 | 1,836,097 |
| ION Geophysical Corp. * | 1,487 | 550 |
| Isramco, Inc. * | 35 | 3,325 |
| Jones Energy, Inc., Class A * | 151 | 776 |
| Key Energy Services, Inc. * | 1,526 | 802 |
| Magnum Hunter Resources Corp. * | 2,000 | 532 |
| Matador Resources Co. * | 665 | 17,097 |
| McDermott International, Inc. * | 2,022 | 9,321 |
| Natural Gas Services Group, Inc. * | 230 | 5,180 |
| Navios Maritime Acquisition Corp. | 707 | 2,531 |
Laudus Small-Cap MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Newpark Resources, Inc. * | 427 | 2,417 |
| Nordic American Offshore Ltd. * | 196 | 1,182 |
| Nordic American Tankers Ltd. | 364 | 5,562 |
| North Atlantic Drilling Ltd. * | 402 | 332 |
| Northern Oil & Gas, Inc. * | 487 | 2,454 |
| Oasis Petroleum, Inc. * | 1,145 | 13,316 |
| Oil States International, Inc. * | 237 | 7,112 |
| Pacific Ethanol, Inc. * | 20 | 120 |
| Panhandle Oil & Gas, Inc., Class A | 112 | 2,059 |
| Par Pacific Holdings, Inc. * | 66 | 1,505 |
| Parker Drilling Co. * | 1,022 | 2,923 |
| Parsley Energy, Inc., Class A * | 518 | 9,184 |
| PDC Energy, Inc. * | 402 | 24,257 |
| Peabody Energy Corp. | 38 | 486 |
| Penn Virginia Corp. * | 604 | 374 |
| PHI, Inc. - Non Voting Shares * | 154 | 2,932 |
| Pioneer Energy Services Corp. * | 565 | 1,305 |
| Renewable Energy Group, Inc. * | 128 | 1,010 |
| REX American Resources Corp. * | 47 | 2,581 |
| Rex Energy Corp. * | 550 | 1,243 |
| RigNet, Inc. * | 67 | 2,010 |
| Ring Energy, Inc. * | 107 | 1,112 |
| RSP Permian, Inc. * | 44,565 | 1,221,972 |
| Sanchez Energy Corp. * | 321 | 1,910 |
| SandRidge Energy, Inc. * | 415 | 154 |
| Scorpio Tankers, Inc. | 176,424 | 1,608,987 |
| SEACOR Holdings, Inc. * | 16,474 | 962,411 |
| SemGroup Corp., Class A | 335 | 15,259 |
| Seventy Seven Energy, Inc. * | 275 | 313 |
| Ship Finance International Ltd. | 691 | 11,809 |
| Solazyme, Inc. * | 781 | 2,562 |
| Stone Energy Corp. * | 432 | 2,415 |
| Synergy Resources Corp. * | 640 | 7,162 |
| Teekay Tankers Ltd., Class A | 1,039 | 7,938 |
| Tesco Corp. | 39,600 | 316,800 |
| TETRA Technologies, Inc. * | 860 | 5,796 |
| Tidewater, Inc. | 355 | 4,384 |
| TransAtlantic Petroleum Ltd. * | 161 | 407 |
| Triangle Petroleum Corp. * | 903 | 1,084 |
| Ultra Petroleum Corp. * | 774 | 4,241 |
| Unit Corp. * | 178 | 2,245 |
| Uranium Energy Corp. * | 861 | 964 |
| US Silica Holdings, Inc. | 493 | 8,904 |
| W&T Offshore, Inc. | 247 | 805 |
| Western Refining, Inc. | 532 | 22,142 |
| Westmoreland Coal Co. * | 151 | 1,081 |
| | | 10,147,064 |
| Food & Staples Retailing 0.6% |
| Casey's General Stores, Inc. | 9,151 | 972,019 |
| Fairway Group Holdings Corp. * | 350 | 406 |
| Ingles Markets, Inc., Class A | 68 | 3,396 |
| Natural Grocers by Vitamin Cottage, Inc. * | 79 | 1,892 |
| PriceSmart, Inc. | 184 | 15,820 |
| Smart & Final Stores, Inc. * | 81 | 1,194 |
| SpartanNash, Co. | 442 | 12,332 |
| SUPERVALU, Inc. * | 1,518 | 9,973 |
| The Andersons, Inc. | 191 | 6,761 |
| The Chefs' Warehouse, Inc. * | 99 | 1,500 |
| The Fresh Market, Inc. * | 352 | 8,772 |
| Security | Number
of Shares | Value
($) |
| United Natural Foods, Inc. * | 332 | 16,750 |
| Village Super Market, Inc., Class A | 150 | 3,759 |
| Weis Markets, Inc. | 99 | 4,073 |
| | | 1,058,647 |
| Food, Beverage & Tobacco 1.2% |
| Alico, Inc. | 40 | 1,708 |
| Arcadia Biosciences, Inc. * | 233 | 652 |
| B&G Foods, Inc. | 316 | 11,468 |
| Boulder Brands, Inc. * | 519 | 4,598 |
| Cal-Maine Foods, Inc. | 262 | 14,007 |
| Calavo Growers, Inc. | 64 | 3,290 |
| Castle Brands, Inc. * | 952 | 1,238 |
| Coca-Cola Bottling Co. Consolidated | 28 | 5,914 |
| Craft Brew Alliance, Inc. * | 211 | 1,616 |
| Darling Ingredients, Inc. * | 1,615 | 16,344 |
| Dean Foods Co. | 802 | 14,524 |
| Diamond Foods, Inc. * | 60 | 2,377 |
| Farmer Bros. Co. * | 120 | 3,406 |
| Fresh Del Monte Produce, Inc. | 257 | 11,727 |
| Freshpet, Inc. * | 70 | 683 |
| Inventure Foods, Inc. * | 208 | 1,801 |
| J&J Snack Foods Corp. | 97 | 11,911 |
| John B. Sanfilippo & Son, Inc. | 86 | 5,566 |
| Lancaster Colony Corp. | 179 | 20,356 |
| Lifeway Foods, Inc. * | 98 | 1,112 |
| Limoneira Co. | 88 | 1,396 |
| MGP Ingredients, Inc. | 87 | 1,508 |
| National Beverage Corp. * | 228 | 8,582 |
| Post Holdings, Inc. * | 19,133 | 1,229,678 |
| Sanderson Farms, Inc. | 123 | 8,550 |
| Seaboard Corp. * | 2 | 6,736 |
| Seneca Foods Corp., Class A * | 55 | 1,605 |
| Snyder's-Lance, Inc. | 528 | 18,765 |
| The Boston Beer Co., Inc., Class A * | 82 | 18,006 |
| The Hain Celestial Group, Inc. * | 10,833 | 540,025 |
| Tootsie Roll Industries, Inc. | 56 | 1,777 |
| TreeHouse Foods, Inc. * | 321 | 27,490 |
| Universal Corp. | 104 | 5,617 |
| Vector Group Ltd. | 542 | 13,143 |
| | | 2,017,176 |
| Health Care Equipment & Services 8.6% |
| AAC Holdings, Inc. * | 34 | 789 |
| Abaxis, Inc. | 162 | 8,134 |
| ABIOMED, Inc. * | 8,450 | 622,427 |
| Acadia Healthcare Co., Inc. * | 14,103 | 866,065 |
| Accuray, Inc. * | 764 | 5,119 |
| Aceto Corp. | 352 | 10,616 |
| Adeptus Health, Inc., Class A * | 16 | 1,038 |
| Air Methods Corp. * | 218 | 8,923 |
| Alliance HealthCare Services, Inc. * | 105 | 888 |
| Allscripts Healthcare Solutions, Inc. * | 94,360 | 1,326,702 |
| Amedisys, Inc. * | 328 | 12,982 |
| AMN Healthcare Services, Inc. * | 31,114 | 882,704 |
| Amsurg Corp. * | 9,998 | 700,760 |
| Analogic Corp. | 146 | 12,793 |
| AngioDynamics, Inc. * | 88 | 1,107 |
| Anika Therapeutics, Inc. * | 42 | 1,618 |
| Antares Pharma, Inc. * | 419 | 578 |
Laudus Small-Cap MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| AtriCure, Inc. * | 367 | 6,799 |
| Atrion Corp. | 18 | 6,642 |
| BioScrip, Inc. * | 891 | 1,755 |
| BioTelemetry, Inc. * | 148 | 1,927 |
| Cantel Medical Corp. | 294 | 17,428 |
| Capital Senior Living Corp. * | 91 | 2,058 |
| Cardiovascular Systems, Inc. * | 172 | 2,356 |
| Castlight Health, Inc., Class B * | 117 | 592 |
| Cerus Corp. * | 389 | 1,856 |
| Chemed Corp. | 162 | 25,481 |
| Civitas Solutions, Inc. * | 1,017 | 26,167 |
| Computer Programs & Systems, Inc. | 180 | 6,842 |
| CONMED Corp. | 284 | 11,519 |
| Connecture, Inc. * | 77 | 454 |
| Corindus Vascular Robotics, Inc. * | 337 | 1,078 |
| CorVel Corp. * | 15,088 | 500,922 |
| Cutera, Inc. * | 46 | 624 |
| Cynosure, Inc., Class A * | 51 | 1,920 |
| Diplomat Pharmacy, Inc. * | 183 | 5,144 |
| EndoChoice Holdings, Inc. * | 23,320 | 240,662 |
| Endologix, Inc. * | 422 | 3,604 |
| Entellus Medical, Inc. * | 56 | 951 |
| Exactech, Inc. * | 178 | 3,031 |
| ExamWorks Group, Inc. * | 396 | 11,183 |
| Five Star Quality Care, Inc. * | 326 | 1,066 |
| Genesis Healthcare, Inc. * | 239 | 1,185 |
| GenMark Diagnostics, Inc. * | 323 | 2,054 |
| Globus Medical, Inc., Class A * | 36,131 | 807,528 |
| Greatbatch, Inc. * | 161 | 8,605 |
| Haemonetics Corp. * | 31,318 | 1,057,922 |
| Halyard Health, Inc. * | 474 | 14,068 |
| Hanger, Inc. * | 356 | 5,134 |
| HealthEquity, Inc. * | 159 | 5,201 |
| HealthSouth Corp. | 22,083 | 769,151 |
| HealthStream, Inc. * | 236 | 5,619 |
| Healthways, Inc. * | 78 | 918 |
| HeartWare International, Inc. * | 144 | 6,219 |
| Hill-Rom Holdings, Inc. | 17,490 | 921,548 |
| HMS Holdings Corp. * | 647 | 6,813 |
| ICU Medical, Inc. * | 6,742 | 741,418 |
| Imprivata, Inc. * | 89 | 960 |
| Inogen, Inc. * | 33 | 1,410 |
| Insulet Corp. * | 426 | 12,737 |
| Integra LifeSciences Holdings Corp. * | 258 | 15,369 |
| Invacare Corp. | 65 | 1,123 |
| InVivo Therapeutics Holdings Corp. * | 83 | 603 |
| IPC Healthcare, Inc. * | 208 | 16,328 |
| iRadimed Corp. * | 63 | 1,670 |
| K2M Group Holdings, Inc. * | 60 | 1,095 |
| Kindred Healthcare, Inc. | 658 | 8,817 |
| Landauer, Inc. | 74 | 2,922 |
| LDR Holding Corp. * | 85 | 2,151 |
| LeMaitre Vascular, Inc. | 134 | 1,785 |
| LHC Group, Inc. * | 187 | 8,427 |
| LivaNova plc * | 288 | 19,089 |
| Magellan Health, Inc. * | 249 | 13,297 |
| Masimo Corp. * | 253 | 10,039 |
| MedAssets, Inc. * | 45,345 | 1,073,770 |
| Medidata Solutions, Inc. * | 503 | 21,629 |
| Meridian Bioscience, Inc. | 95 | 1,806 |
| Merit Medical Systems, Inc. * | 495 | 9,177 |
| Molina Healthcare, Inc. * | 235 | 14,570 |
| Security | Number
of Shares | Value
($) |
| National HealthCare Corp. | 93 | 6,071 |
| National Research Corp., Class A | 104 | 1,594 |
| Natus Medical, Inc. * | 354 | 16,118 |
| Neogen Corp. * | 304 | 16,431 |
| Nevro Corp. * | 26 | 1,060 |
| Nobilis Health Corp. * | 215 | 606 |
| NuVasive, Inc. * | 393 | 18,534 |
| NxStage Medical, Inc. * | 75,948 | 1,269,091 |
| Omnicell, Inc. * | 386 | 10,499 |
| Orthofix International N.V. * | 107 | 3,643 |
| Owens & Minor, Inc. | 547 | 19,610 |
| Oxford Immunotec Global plc * | 100 | 1,254 |
| PharMerica Corp. * | 382 | 10,914 |
| Press Ganey Holdings, Inc. * | 55 | 1,724 |
| Quality Systems, Inc. | 250 | 3,513 |
| Quidel Corp. * | 62 | 1,192 |
| Rockwell Medical, Inc. * | 418 | 4,840 |
| RTI Surgical, Inc. * | 213 | 896 |
| SeaSpine Holdings Corp. * | 86 | 1,297 |
| Second Sight Medical Products, Inc. * | 168 | 988 |
| Select Medical Holdings Corp. | 1,001 | 11,311 |
| Sientra, Inc. * | 57 | 214 |
| STAAR Surgical Co. * | 395 | 3,219 |
| STERIS Corp. | 21,311 | 1,597,260 |
| Surgical Care Affiliates, Inc. * | 37 | 1,096 |
| SurModics, Inc. * | 218 | 4,650 |
| Tandem Diabetes Care, Inc. * | 124 | 1,125 |
| Team Health Holdings, Inc. * | 491 | 29,298 |
| The Ensign Group, Inc. | 165 | 6,956 |
| The Providence Service Corp. * | 187 | 9,659 |
| The Spectranetics Corp. * | 535 | 6,538 |
| TransEnterix, Inc. * | 315 | 784 |
| Trinity Biotech plc ADR | 46,555 | 522,813 |
| Trupanion, Inc. * | 171 | 1,124 |
| U.S. Physical Therapy, Inc. | 27 | 1,325 |
| Unilife Corp. * | 555 | 418 |
| Universal American Corp. | 236 | 1,761 |
| Utah Medical Products, Inc. | 34 | 2,005 |
| Vascular Solutions, Inc. * | 225 | 7,227 |
| Veracyte, Inc. * | 126 | 820 |
| Vocera Communications, Inc. * | 111 | 1,307 |
| WellCare Health Plans, Inc. * | 307 | 27,200 |
| West Pharmaceutical Services, Inc. | 547 | 32,826 |
| Wright Medical Group N.V. * | 555 | 10,728 |
| Zeltiq Aesthetics, Inc. * | 95 | 3,205 |
| | | 14,612,205 |
| Household & Personal Products 0.0% |
| Central Garden & Pet Co., Class A * | 440 | 7,427 |
| HRG Group, Inc. * | 477 | 6,416 |
| Inter Parfums, Inc. | 107 | 2,955 |
| Natural Health Trends Corp. | 33 | 1,626 |
| Nature's Sunshine Products, Inc. | 105 | 1,244 |
| Nutraceutical International Corp. * | 84 | 2,058 |
| Oil-Dri Corp. of America | 61 | 1,914 |
| Revlon, Inc., Class A * | 69 | 2,165 |
| Synutra International, Inc. * | 329 | 1,879 |
| USANA Health Sciences, Inc. * | 63 | 8,102 |
| WD-40 Co. | 99 | 9,462 |
| | | 45,248 |
Laudus Small-Cap MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Insurance 1.3% |
| Ambac Financial Group, Inc. * | 456 | 7,364 |
| American Equity Investment Life Holding Co. | 734 | 18,849 |
| AMERISAFE, Inc. | 9,061 | 495,909 |
| Argo Group International Holdings Ltd. | 185 | 11,566 |
| Atlas Financial Holdings, Inc. * | 74 | 1,407 |
| Baldwin & Lyons, Inc., Class B | 70 | 1,626 |
| Citizens, Inc. * | 419 | 3,520 |
| CNO Financial Group, Inc. | 1,748 | 33,579 |
| Crawford & Co., Class B | 204 | 1,224 |
| Donegal Group, Inc., Class A | 120 | 1,698 |
| eHealth, Inc. * | 289 | 3,454 |
| EMC Insurance Group, Inc. | 96 | 2,400 |
| Employers Holdings, Inc. | 297 | 7,862 |
| Enstar Group Ltd. * | 83 | 13,097 |
| FBL Financial Group, Inc., Class A | 152 | 9,561 |
| Federated National Holding Co. | 70 | 2,155 |
| Fidelity & Guaranty Life | 60 | 1,602 |
| First American Financial Corp. | 720 | 27,454 |
| Global Indemnity plc * | 72 | 2,046 |
| Greenlight Capital Re Ltd., Class A * | 42 | 922 |
| Hallmark Financial Services, Inc. * | 183 | 2,377 |
| HCI Group, Inc. | 177 | 7,719 |
| Heritage Insurance Holdings, Inc. * | 64 | 1,416 |
| Horace Mann Educators Corp. | 328 | 11,231 |
| Independence Holding Co. | 146 | 1,980 |
| Infinity Property & Casualty Corp. | 74 | 5,958 |
| James River Group Holdings Ltd. | 58 | 1,707 |
| Kansas City Life Insurance Co. | 45 | 2,206 |
| Kemper Corp. | 333 | 11,895 |
| Maiden Holdings Ltd. | 470 | 7,308 |
| MBIA, Inc. * | 529 | 3,973 |
| National General Holdings Corp. | 189 | 3,725 |
| National Interstate Corp. | 57 | 1,636 |
| National Western Life Group, Inc., Class A | 9 | 2,322 |
| Patriot National, Inc. * | 90 | 1,143 |
| Primerica, Inc. | 27,507 | 1,310,158 |
| RLI Corp. | 420 | 25,557 |
| Safety Insurance Group, Inc. | 100 | 5,795 |
| Selective Insurance Group, Inc. | 571 | 20,836 |
| State Auto Financial Corp. | 93 | 2,218 |
| State National Cos., Inc. | 133 | 1,201 |
| Stewart Information Services Corp. | 81 | 3,254 |
| Symetra Financial Corp. | 632 | 20,053 |
| The Navigators Group, Inc. * | 89 | 7,596 |
| Third Point Reinsurance Ltd. * | 394 | 5,386 |
| United Fire Group, Inc. | 216 | 8,033 |
| United Insurance Holdings Corp. | 4 | 66 |
| Universal Insurance Holdings, Inc. | 89 | 2,808 |
| | | 2,126,852 |
| Materials 2.6% |
| A. Schulman, Inc. | 317 | 11,377 |
| AEP Industries, Inc. * | 26 | 2,080 |
| AK Steel Holding Corp. * | 1,714 | 4,954 |
| American Vanguard Corp. | 404 | 5,418 |
| Axiall Corp. | 538 | 10,895 |
| Balchem Corp. | 318 | 21,719 |
| Security | Number
of Shares | Value
($) |
| Berry Plastics Group, Inc. * | 785 | 26,298 |
| Boise Cascade Co. * | 190 | 5,687 |
| Calgon Carbon Corp. | 171 | 2,941 |
| Carpenter Technology Corp. | 411 | 13,690 |
| Century Aluminum Co. * | 557 | 2,016 |
| Chase Corp. | 76 | 3,375 |
| Chemtura Corp. * | 497 | 15,874 |
| Clearwater Paper Corp. * | 229 | 11,549 |
| Cliffs Natural Resources, Inc. | 303 | 836 |
| Coeur Mining, Inc. * | 993 | 2,681 |
| Commercial Metals Co. | 593 | 8,521 |
| Core Molding Technologies, Inc. * | 63 | 1,263 |
| Deltic Timber Corp. | 18,356 | 1,137,338 |
| Ferro Corp. * | 884 | 11,041 |
| Flotek Industries, Inc. * | 556 | 10,064 |
| FutureFuel Corp. | 348 | 5,363 |
| Globe Specialty Metals, Inc. | 678 | 8,556 |
| Greif, Inc., Class A | 23,279 | 763,086 |
| H.B. Fuller Co. | 262 | 9,953 |
| Handy & Harman Ltd. * | 99 | 2,351 |
| Hawkins, Inc. | 42 | 1,741 |
| Haynes International, Inc. | 111 | 4,379 |
| Headwaters, Inc. * | 417 | 8,569 |
| Hecla Mining Co. | 2,963 | 6,133 |
| Horsehead Holding Corp. * | 332 | 943 |
| Innophos Holdings, Inc. | 249 | 10,580 |
| Innospec, Inc. | 9,819 | 542,402 |
| Intrepid Potash, Inc. * | 155 | 598 |
| Kaiser Aluminum Corp. | 73 | 5,934 |
| KapStone Paper & Packaging Corp. | 467 | 10,157 |
| KMG Chemicals, Inc. | 78 | 1,641 |
| Koppers Holdings, Inc. | 252 | 4,778 |
| Kraton Performance Polymers, Inc. * | 464 | 9,461 |
| Kronos Worldwide, Inc. | 152 | 1,201 |
| Louisiana-Pacific Corp. * | 1,079 | 19,055 |
| LSB Industries, Inc. * | 253 | 3,960 |
| Materion Corp. | 153 | 4,613 |
| Minerals Technologies, Inc. | 278 | 16,385 |
| Neenah Paper, Inc. | 178 | 11,999 |
| Olin Corp. | 1,252 | 24,013 |
| Olympic Steel, Inc. | 76 | 727 |
| OMNOVA Solutions, Inc. * | 151 | 1,084 |
| P.H. Glatfelter Co. | 505 | 9,797 |
| PolyOne Corp. | 558 | 18,660 |
| Quaker Chemical Corp. | 100 | 7,938 |
| Rayonier Advanced Materials, Inc. | 90 | 830 |
| Real Industry, Inc. * | 110 | 1,045 |
| Rentech, Inc. * | 265 | 1,550 |
| Ryerson Holding Corp. * | 157 | 919 |
| Schnitzer Steel Industries, Inc., Class A | 366 | 6,171 |
| Schweitzer-Mauduit International, Inc. | 284 | 11,025 |
| Sensient Technologies Corp. | 23,964 | 1,564,130 |
| Stepan Co. | 43 | 2,276 |
| Stillwater Mining Co. * | 807 | 7,537 |
| Summit Materials, Inc., Class A * | 177 | 3,728 |
| SunCoke Energy, Inc. | 828 | 4,107 |
| TimkenSteel Corp. | 105 | 1,117 |
| Trecora Resources * | 384 | 5,468 |
| Tredegar Corp. | 361 | 5,148 |
| Trinseo S.A. * | 52 | 1,687 |
| Tronox Ltd., Class A | 768 | 4,769 |
| United States Lime & Minerals, Inc. | 34 | 1,661 |
Laudus Small-Cap MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| US Concrete, Inc. * | 109 | 6,045 |
| Valhi, Inc. | 221 | 546 |
| Wausau Paper Corp. | 373 | 3,808 |
| Worthington Industries, Inc. | 417 | 12,802 |
| | | 4,472,043 |
| Media 1.2% |
| AMC Entertainment Holdings, Inc., Class A | 133 | 3,640 |
| Carmike Cinemas, Inc. * | 244 | 6,249 |
| Central European Media Enterprises Ltd., Class A * | 775 | 1,674 |
| Crown Media Holdings, Inc., Class A * | 678 | 3,926 |
| Cumulus Media, Inc., Class A * | 1,288 | 591 |
| Daily Journal Corp. * | 23 | 4,708 |
| DreamWorks Animation SKG, Inc., Class A * | 362 | 7,327 |
| Entercom Communications Corp., Class A * | 610 | 6,734 |
| Eros International plc * | 135 | 1,508 |
| Global Eagle Entertainment, Inc. * | 224 | 2,984 |
| Gray Television, Inc. * | 326 | 5,180 |
| Hemisphere Media Group, Inc. * | 122 | 1,651 |
| IMAX Corp. * | 554 | 21,268 |
| Journal Media Group, Inc. | 265 | 3,243 |
| Loral Space & Communications, Inc. * | 92 | 4,113 |
| Martha Stewart Living Omnimedia, Inc., Class A * | 235 | 1,419 |
| MDC Partners, Inc., Class A | 381 | 7,917 |
| Media General, Inc. * | 608 | 9,035 |
| Meredith Corp. | 257 | 12,084 |
| National CineMedia, Inc. | 31,049 | 440,896 |
| New Media Investment Group, Inc. | 83,210 | 1,339,681 |
| Nexstar Broadcasting Group, Inc., Class A | 314 | 16,714 |
| Reading International, Inc., Class A * | 278 | 4,309 |
| Rentrak Corp. * | 82 | 4,525 |
| Saga Communications, Inc., Class A | 146 | 6,281 |
| Scholastic Corp. | 266 | 10,871 |
| SFX Entertainment, Inc. * | 382 | 355 |
| Sinclair Broadcast Group, Inc., Class A | 666 | 19,987 |
| Sizmek, Inc. * | 490 | 2,906 |
| The E.W. Scripps Co., Class A | 662 | 14,604 |
| The New York Times Co., Class A | 1,064 | 14,130 |
| Time, Inc. | 786 | 14,604 |
| Townsquare Media, Inc., Class A * | 107 | 1,173 |
| Tribune Publishing Co. | 88 | 831 |
| | | 1,997,118 |
| Pharmaceuticals, Biotechnology & Life Sciences 5.5% |
| Abeona Therapeutics, Inc. * | 227 | 897 |
| ACADIA Pharmaceuticals, Inc. * | 664 | 23,120 |
| Accelerate Diagnostics, Inc. * | 200 | 3,354 |
| Acceleron Pharma, Inc. * | 145 | 4,525 |
| Achillion Pharmaceuticals, Inc. * | 1,533 | 11,988 |
| Acorda Therapeutics, Inc. * | 448 | 16,146 |
| Adamas Pharmaceuticals, Inc. * | 54 | 797 |
| Aduro Biotech, Inc. * | 40 | 1,080 |
| Advaxis, Inc. * | 71 | 787 |
| Aegerion Pharmaceuticals, Inc. * | 137 | 2,011 |
| Security | Number
of Shares | Value
($) |
| Aerie Pharmaceuticals, Inc. * | 85 | 1,939 |
| Affimed N.V. * | 109 | 691 |
| Affymetrix, Inc. * | 553 | 5,088 |
| Agenus, Inc. * | 449 | 2,047 |
| Agile Therapeutics, Inc. * | 161 | 1,278 |
| Akebia Therapeutics, Inc. * | 66 | 589 |
| Akorn, Inc. * | 6,330 | 169,264 |
| Albany Molecular Research, Inc. * | 42,582 | 768,179 |
| Alder Biopharmaceuticals, Inc. * | 97 | 3,102 |
| Alimera Sciences, Inc. * | 304 | 915 |
| AMAG Pharmaceuticals, Inc. * | 279 | 11,160 |
| Amicus Therapeutics, Inc. * | 1,196 | 8,970 |
| Amphastar Pharmaceuticals, Inc. * | 80 | 947 |
| Anacor Pharmaceuticals, Inc. * | 306 | 34,397 |
| ANI Pharmaceuticals, Inc. * | 59 | 2,469 |
| Anthera Pharmaceuticals, Inc. * | 171 | 987 |
| Applied Genetic Technologies Corp. * | 57 | 684 |
| Aratana Therapeutics, Inc. * | 208 | 1,454 |
| Ardelyx, Inc. * | 91 | 1,491 |
| Arena Pharmaceuticals, Inc. * | 2,410 | 4,555 |
| ARIAD Pharmaceuticals, Inc. * | 1,930 | 13,201 |
| Array BioPharma, Inc. * | 968 | 4,956 |
| Arrowhead Research Corp. * | 1,262 | 6,499 |
| Assembly Biosciences, Inc. * | 87 | 835 |
| Asterias Biotherapeutics, Inc. * | 325 | 1,489 |
| Atara Biotherapeutics, Inc. * | 169 | 4,355 |
| aTyr Pharma, Inc. * | 66 | 822 |
| Avalanche Biotechnologies, Inc. * | 87 | 733 |
| Bellicum Pharmaceuticals, Inc. * | 65 | 813 |
| BioCryst Pharmaceuticals, Inc. * | 486 | 4,369 |
| BioDelivery Sciences International, Inc. * | 473 | 2,545 |
| BioSpecifics Technologies Corp. * | 132 | 7,710 |
| BioTime, Inc. * | 43 | 162 |
| Blueprint Medicines Corp. * | 52 | 1,045 |
| Calithera Biosciences, Inc. * | 175 | 1,495 |
| Cambrex Corp. * | 216 | 9,930 |
| Cara Therapeutics, Inc. * | 341 | 4,832 |
| Carbylan Therapeutics, Inc. * | 203 | 731 |
| Catalent, Inc. * | 558 | 14,832 |
| Catalyst Pharmaceuticals, Inc. * | 350 | 1,106 |
| Celldex Therapeutics, Inc. * | 944 | 11,385 |
| Cellular Biomedicine Group, Inc. * | 40 | 840 |
| Cempra, Inc. * | 186 | 4,129 |
| Cepheid * | 620 | 20,708 |
| Charles River Laboratories International, Inc. * | 18,900 | 1,233,036 |
| ChemoCentryx, Inc. * | 35 | 245 |
| Chimerix, Inc. * | 283 | 11,088 |
| Cidara Therapeutics, Inc. * | 101 | 1,376 |
| Clovis Oncology, Inc. * | 235 | 23,479 |
| Coherus Biosciences, Inc. * | 53 | 1,476 |
| Collegium Pharmaceutical, Inc. * | 77 | 1,414 |
| Concert Pharmaceuticals, Inc. * | 89 | 2,021 |
| Corcept Therapeutics, Inc. * | 907 | 3,347 |
| Corium International, Inc. * | 104 | 722 |
| CorMedix, Inc. * | 298 | 757 |
| CTI BioPharma, Corp. * | 1,000 | 1,330 |
| Curis, Inc. * | 479 | 977 |
| Cytokinetics, Inc. * | 29 | 250 |
| CytRx Corp. * | 506 | 1,407 |
| Depomed, Inc. * | 571 | 9,993 |
Laudus Small-Cap MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Dermira, Inc. * | 88 | 2,375 |
| Dicerna Pharmaceuticals, Inc. * | 3 | 30 |
| Durect Corp. * | 581 | 1,185 |
| Dyax Corp. * | 1,136 | 31,274 |
| Dynavax Technologies Corp. * | 416 | 9,447 |
| Eagle Pharmaceuticals, Inc. * | 5,440 | 346,582 |
| Emergent Biosolutions, Inc. * | 205 | 6,591 |
| Enanta Pharmaceuticals, Inc. * | 193 | 5,421 |
| Endocyte, Inc. * | 91 | 468 |
| Epizyme, Inc. * | 125 | 1,636 |
| Esperion Therapeutics, Inc. * | 54 | 1,296 |
| Exact Sciences Corp. * | 739 | 6,156 |
| Exelixis, Inc. * | 2,297 | 13,828 |
| Fibrocell Science, Inc. * | 127 | 485 |
| FibroGen, Inc. * | 207 | 4,825 |
| Five Prime Therapeutics, Inc. * | 157 | 5,048 |
| Flex Pharma, Inc. * | 73 | 827 |
| Flexion Therapeutics, Inc. * | 69 | 1,137 |
| Fluidigm Corp. * | 308 | 3,329 |
| Foamix Pharmaceuticals Ltd. * | 123 | 877 |
| Foundation Medicine, Inc. * | 105 | 2,354 |
| Galena Biopharma, Inc. * | 1,426 | 2,396 |
| Genocea Biosciences, Inc. * | 112 | 536 |
| Genomic Health, Inc. * | 321 | 6,715 |
| Geron Corp. * | 1,639 | 5,687 |
| Halozyme Therapeutics, Inc. * | 1,029 | 16,104 |
| Harvard Bioscience, Inc. * | 268 | 788 |
| Heron Therapeutics, Inc. * | 194 | 5,319 |
| Heska Corp. * | 49 | 1,507 |
| Horizon Pharma plc * | 50,803 | 798,623 |
| ICON plc * | 11,560 | 738,337 |
| Idera Pharmaceuticals, Inc. * | 589 | 1,626 |
| Ignyta, Inc. * | 87 | 891 |
| Immune Design, Corp. * | 60 | 780 |
| ImmunoGen, Inc. * | 886 | 10,366 |
| Immunomedics, Inc. * | 1,236 | 3,696 |
| Impax Laboratories, Inc. * | 640 | 22,163 |
| INC Research Holdings, Inc., Class A * | 36 | 1,502 |
| Infinity Pharmaceuticals, Inc. * | 287 | 2,970 |
| Inovio Pharmaceuticals, Inc. * | 257 | 1,627 |
| Insmed, Inc. * | 332 | 6,587 |
| Insys Therapeutics, Inc. * | 277 | 7,136 |
| Intersect ENT, Inc. * | 50 | 958 |
| Intra-Cellular Therapies, Inc. * | 139 | 6,651 |
| Invitae Corp. * | 96 | 732 |
| Ironwood Pharmaceuticals, Inc. * | 1,155 | 13,121 |
| Karyopharm Therapeutics, Inc. * | 111 | 1,482 |
| Keryx Biopharmaceuticals, Inc. * | 1,269 | 5,685 |
| Kite Pharma, Inc. * | 154 | 10,480 |
| La Jolla Pharmaceutical Co. * | 64 | 1,599 |
| Lannett Co., Inc. * | 294 | 13,162 |
| Lexicon Pharmaceuticals, Inc. * | 586 | 5,573 |
| Ligand Pharmaceuticals, Inc. * | 171 | 15,450 |
| Lion Biotechnologies, Inc. * | 150 | 971 |
| Loxo Oncology, Inc. * | 107 | 2,502 |
| Luminex Corp. * | 81 | 1,474 |
| MacroGenics, Inc. * | 170 | 5,282 |
| MannKind Corp. * | 2,185 | 7,232 |
| Medgenics, Inc. * | 226 | 1,480 |
| Merrimack Pharmaceuticals, Inc. * | 1,255 | 11,722 |
| MiMedx Group, Inc. * | 749 | 5,453 |
| Mirati Therapeutics, Inc. * | 77 | 2,724 |
| Security | Number
of Shares | Value
($) |
| Momenta Pharmaceuticals, Inc. * | 637 | 10,453 |
| Myriad Genetics, Inc. * | 530 | 21,396 |
| NanoString Technologies, Inc. * | 94 | 1,364 |
| Navidea Biopharmaceuticals, Inc. * | 766 | 1,547 |
| Nektar Therapeutics * | 869 | 10,315 |
| NeoGenomics, Inc. * | 263 | 1,854 |
| Neurocrine Biosciences, Inc. * | 737 | 36,179 |
| NewLink Genetics Corp. * | 187 | 7,156 |
| Northwest Biotherapeutics, Inc. * | 454 | 2,216 |
| Novavax, Inc. * | 2,608 | 17,604 |
| Ocata Therapeutics, Inc. * | 270 | 1,188 |
| Ocular Therapeutix, Inc. * | 66 | 570 |
| Omeros Corp. * | 49,915 | 625,435 |
| OncoMed Pharmaceuticals, Inc. * | 102 | 2,041 |
| Oncothyreon, Inc. * | 612 | 1,812 |
| Ophthotech Corp. * | 169 | 8,438 |
| Orexigen Therapeutics, Inc. * | 1,156 | 3,514 |
| Organovo Holdings, Inc. * | 547 | 1,646 |
| Osiris Therapeutics, Inc. | 165 | 2,810 |
| Otonomy, Inc. * | 64 | 1,385 |
| OvaScience, Inc. * | 118 | 1,530 |
| Pacific Biosciences of California, Inc. * | 418 | 2,968 |
| Pacira Pharmaceuticals, Inc. * | 13,816 | 690,109 |
| Paratek Pharmaceuticals, Inc. * | 55 | 955 |
| PAREXEL International Corp. * | 489 | 30,866 |
| PDL BioPharma, Inc. | 437 | 2,001 |
| Peregrine Pharmaceuticals, Inc. * | 2,024 | 2,267 |
| Pernix Therapeutics Holdings, Inc. * | 319 | 896 |
| Pfenex, Inc. * | 76 | 1,374 |
| Phibro Animal Health Corp., Class A | 37,905 | 1,264,511 |
| Portola Pharmaceuticals, Inc. * | 242 | 11,522 |
| POZEN, Inc. * | 383 | 2,241 |
| PRA Health Sciences, Inc. * | 11,785 | 412,946 |
| Prestige Brands Holdings, Inc. * | 496 | 24,309 |
| Progenics Pharmaceuticals, Inc. * | 448 | 3,288 |
| Proteon Therapeutics, Inc. * | 89 | 1,219 |
| Prothena Corp. plc * | 221 | 11,384 |
| PTC Therapeutics, Inc. * | 208 | 5,173 |
| Radius Health, Inc. * | 190 | 12,204 |
| Raptor Pharmaceutical Corp. * | 660 | 3,597 |
| Regulus Therapeutics, Inc. * | 229 | 1,523 |
| Relypsa, Inc. * | 192 | 3,070 |
| Repligen Corp. * | 149 | 4,953 |
| Retrophin, Inc. * | 196 | 3,749 |
| Revance Therapeutics, Inc. * | 57 | 2,233 |
| Rigel Pharmaceuticals, Inc. * | 997 | 2,532 |
| Sage Therapeutics, Inc. * | 91 | 4,571 |
| Sagent Pharmaceuticals, Inc. * | 189 | 3,177 |
| Sangamo BioSciences, Inc. * | 652 | 4,597 |
| Sarepta Therapeutics, Inc. * | 303 | 7,290 |
| SciClone Pharmaceuticals, Inc. * | 423 | 3,223 |
| Sequenom, Inc. * | 797 | 1,395 |
| Sorrento Therapeutics, Inc. * | 86 | 743 |
| Spark Therapeutics, Inc. * | 22 | 1,186 |
| Spectrum Pharmaceuticals, Inc. * | 126 | 656 |
| Stemline Therapeutics, Inc. * | 66 | 587 |
| Sucampo Pharmaceuticals, Inc., Class A * | 245 | 4,743 |
| Supernus Pharmaceuticals, Inc. * | 164 | 2,706 |
| Synergy Pharmaceuticals, Inc. * | 849 | 5,442 |
| Synta Pharmaceuticals Corp. * | 932 | 624 |
| T2 Biosystems, Inc. * | 43 | 478 |
Laudus Small-Cap MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Teligent, Inc. * | 309 | 2,246 |
| TESARO, Inc. * | 176 | 8,003 |
| Tetraphase Pharmaceuticals, Inc. * | 253 | 2,285 |
| TG Therapeutics, Inc. * | 269 | 3,328 |
| The Medicines Co. * | 15,536 | 531,953 |
| TherapeuticsMD, Inc. * | 992 | 5,823 |
| Theravance Biopharma, Inc. * | 214 | 3,199 |
| Theravance, Inc. | 857 | 7,524 |
| Threshold Pharmaceuticals, Inc. * | 1,100 | 4,191 |
| Tobira Therapeutics, Inc. * | 77 | 776 |
| Tokai Pharmaceuticals, Inc. * | 98 | 1,083 |
| Trevena, Inc. * | 221 | 2,126 |
| Trovagene, Inc. * | 140 | 603 |
| Ultragenyx Pharmaceutical, Inc. * | 250 | 24,838 |
| Vanda Pharmaceuticals, Inc. * | 60,059 | 645,034 |
| Verastem, Inc. * | 132 | 243 |
| Versartis, Inc. * | 63 | 651 |
| Vitae Pharmaceuticals, Inc. * | 32 | 380 |
| Vital Therapies, Inc. * | 63 | 490 |
| VIVUS, Inc. * | 1,152 | 1,452 |
| XBiotech, Inc. * | 72 | 1,021 |
| Xencor, Inc. * | 161 | 1,744 |
| XenoPort, Inc. * | 356 | 2,175 |
| XOMA Corp. * | 1,300 | 1,586 |
| Zafgen, Inc. * | 97 | 934 |
| ZIOPHARM Oncology, Inc. * | 1,146 | 13,053 |
| Zogenix, Inc. * | 73 | 861 |
| ZS Pharma, Inc. * | 65 | 4,226 |
| | | 9,267,200 |
| Real Estate 3.8% |
| Acadia Realty Trust | 571 | 18,780 |
| Agree Realty Corp. | 205 | 6,638 |
| Alexander & Baldwin, Inc. | 485 | 18,304 |
| Alexander's, Inc. | 13 | 5,134 |
| Altisource Asset Management Corp. * | 14 | 344 |
| Altisource Portfolio Solutions S.A. * | 138 | 3,700 |
| Altisource Residential Corp. | 391 | 5,626 |
| American Assets Trust, Inc. | 397 | 16,738 |
| American Capital Mortgage Investment Corp. | 239 | 3,468 |
| American Residential Properties, Inc. | 76 | 1,259 |
| Anworth Mortgage Asset Corp. | 1,734 | 8,271 |
| Apollo Commercial Real Estate Finance, Inc. | 220 | 3,654 |
| Apollo Residential Mortgage, Inc. | 118 | 1,519 |
| ARMOUR Residential REIT, Inc. | 532 | 10,917 |
| Ashford Hospitality Prime, Inc. | 39 | 573 |
| Ashford Hospitality Trust, Inc. | 971 | 6,680 |
| AV Homes, Inc. * | 49 | 649 |
| Capstead Mortgage Corp. | 362 | 3,493 |
| CareTrust REIT, Inc. | 222 | 2,513 |
| CatchMark Timber Trust, Inc., Class A | 121 | 1,325 |
| Cedar Realty Trust, Inc. | 817 | 5,711 |
| Chambers Street Properties | 2,296 | 16,256 |
| Chatham Lodging Trust | 257 | 5,883 |
| Chesapeake Lodging Trust | 553 | 15,230 |
| Colony Capital, Inc., Class A | 912 | 18,550 |
| Consolidated-Tomoka Land Co. | 43 | 2,204 |
| CoreSite Realty Corp. | 184 | 10,111 |
| Cousins Properties, Inc. | 1,917 | 19,247 |
| Security | Number
of Shares | Value
($) |
| CubeSmart | 1,092 | 30,379 |
| CyrusOne, Inc. | 520 | 18,346 |
| CYS Investments, Inc. | 1,885 | 14,552 |
| DCT Industrial Trust, Inc. | 762 | 28,285 |
| DiamondRock Hospitality Co. | 67,636 | 789,988 |
| DuPont Fabros Technology, Inc. | 632 | 20,281 |
| Dynex Capital, Inc. | 185 | 1,227 |
| Easterly Government Properties, Inc. | 91 | 1,591 |
| EastGroup Properties, Inc. | 304 | 17,073 |
| Education Realty Trust, Inc. | 28,800 | 1,034,208 |
| EPR Properties | 353 | 20,054 |
| Equity One, Inc. | 405 | 10,765 |
| FelCor Lodging Trust, Inc. | 1,360 | 10,948 |
| First Industrial Realty Trust, Inc. | 890 | 19,295 |
| First Potomac Realty Trust | 864 | 10,187 |
| Forestar Group, Inc. * | 464 | 6,566 |
| Franklin Street Properties Corp. | 580 | 6,044 |
| FRP Holdings, Inc. * | 34 | 1,122 |
| Government Properties Income Trust | 748 | 12,177 |
| Gramercy Property Trust, Inc. | 249 | 5,647 |
| Great Ajax Corp. | 104 | 1,345 |
| Hannon Armstrong Sustainable Infrastructure Capital, Inc. | 202 | 3,638 |
| Hatteras Financial Corp. | 621 | 8,887 |
| Healthcare Realty Trust, Inc. | 734 | 19,348 |
| Hersha Hospitality Trust | 437 | 10,492 |
| Highwoods Properties, Inc. | 745 | 32,370 |
| Hudson Pacific Properties, Inc. | 685 | 19,570 |
| Independence Realty Trust, Inc. | 198 | 1,552 |
| InfraREIT, Inc. | 91 | 2,173 |
| Inland Real Estate Corp. | 668 | 5,912 |
| Invesco Mortgage Capital, Inc. | 1,302 | 15,689 |
| Investors Real Estate Trust | 593 | 4,815 |
| iStar, Inc. * | 973 | 12,591 |
| Kennedy-Wilson Holdings, Inc. | 717 | 17,581 |
| Kite Realty Group Trust | 545 | 14,393 |
| Ladder Capital Corp. | 124 | 1,768 |
| LaSalle Hotel Properties | 12,411 | 365,008 |
| Lexington Realty Trust | 1,679 | 14,842 |
| LTC Properties, Inc. | 147 | 6,299 |
| Mack-Cali Realty Corp. | 692 | 15,058 |
| Marcus & Millichap, Inc. * | 31 | 1,351 |
| Medical Properties Trust, Inc. | 1,616 | 18,261 |
| Monmouth Real Estate Investment Corp. | 752 | 7,828 |
| Monogram Residential Trust, Inc. | 862 | 8,499 |
| National Health Investors, Inc. | 318 | 18,679 |
| National Storage Affiliates Trust | 3 | 45 |
| New Residential Investment Corp. | 1,497 | 18,159 |
| New Senior Investment Group, Inc. | 132,930 | 1,331,959 |
| New York Mortgage Trust, Inc. | 794 | 4,510 |
| New York REIT, Inc. | 1,141 | 13,007 |
| NexPoint Residential Trust, Inc. | 100 | 1,318 |
| One Liberty Properties, Inc. | 123 | 2,898 |
| Parkway Properties, Inc. | 754 | 12,614 |
| Pebblebrook Hotel Trust | 628 | 21,465 |
| Pennsylvania Real Estate Investment Trust | 438 | 9,846 |
| PennyMac Mortgage Investment Trust | 319 | 4,664 |
| Physicians Realty Trust | 503 | 8,038 |
| Potlatch Corp. | 316 | 9,872 |
Laudus Small-Cap MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Preferred Apartment Communities, Inc., Class A | 7 | 77 |
| PS Business Parks, Inc. | 150 | 12,868 |
| QTS Realty Trust, Inc., Class A | 97 | 4,172 |
| RAIT Financial Trust | 1,290 | 6,256 |
| Ramco-Gershenson Properties Trust | 919 | 15,439 |
| RE/MAX Holdings, Inc., Class A | 41 | 1,544 |
| Redwood Trust, Inc. | 597 | 7,928 |
| Resource Capital Corp. | 365 | 4,687 |
| Retail Opportunity Investments Corp. | 1,003 | 18,184 |
| Rexford Industrial Realty, Inc. | 761 | 11,529 |
| RLJ Lodging Trust | 1,055 | 26,470 |
| Rouse Properties, Inc. | 488 | 8,584 |
| Ryman Hospitality Properties, Inc. | 360 | 18,936 |
| Sabra Health Care REIT, Inc. | 485 | 11,000 |
| Saul Centers, Inc. | 143 | 8,018 |
| Select Income REIT | 303 | 6,121 |
| Silver Bay Realty Trust Corp. | 376 | 6,091 |
| Sovran Self Storage, Inc. | 326 | 32,558 |
| STAG Industrial, Inc. | 506 | 10,383 |
| Starwood Waypoint Residential Trust | 276 | 6,790 |
| STORE Capital Corp. | 251 | 5,690 |
| Strategic Hotels & Resorts, Inc. * | 2,115 | 29,821 |
| Summit Hotel Properties, Inc. | 127,576 | 1,668,694 |
| Sun Communities, Inc. | 430 | 28,819 |
| Sunstone Hotel Investors, Inc. | 1,920 | 27,763 |
| Tejon Ranch Co. * | 287 | 6,466 |
| Terreno Realty Corp. | 337 | 7,542 |
| The Geo Group, Inc. | 710 | 22,912 |
| The St. Joe Co. * | 471 | 9,335 |
| United Development Funding IV | 84 | 1,445 |
| Universal Health Realty Income Trust | 106 | 5,267 |
| Urban Edge Properties | 502 | 11,917 |
| Urstadt Biddle Properties, Inc., Class A | 224 | 4,502 |
| Washington Real Estate Investment Trust | 351 | 9,481 |
| Western Asset Mortgage Capital Corp. | 312 | 3,563 |
| Xenia Hotels & Resorts, Inc. | 764 | 13,248 |
| | | 6,411,956 |
| Retailing 4.4% |
| Abercrombie & Fitch Co., Class A | 420 | 8,900 |
| America's Car-Mart, Inc. * | 38 | 1,301 |
| American Eagle Outfitters, Inc. | 1,386 | 21,178 |
| Asbury Automotive Group, Inc. * | 265 | 20,988 |
| Ascena Retail Group, Inc. * | 96,698 | 1,288,017 |
| Barnes & Noble Education, Inc. * | 233 | 3,437 |
| Barnes & Noble, Inc. | 369 | 4,793 |
| bebe stores, Inc. | 766 | 850 |
| Big 5 Sporting Goods Corp. | 100 | 915 |
| Big Lots, Inc. | 447 | 20,607 |
| Boot Barn Holdings, Inc. * | 47 | 705 |
| Build-A-Bear Workshop, Inc. * | 61 | 949 |
| Burlington Stores, Inc. * | 21,474 | 1,032,470 |
| Caleres, Inc. | 203 | 6,204 |
| Chico's FAS, Inc. | 1,048 | 14,483 |
| Christopher & Banks Corp. * | 284 | 415 |
| Citi Trends, Inc. | 57 | 1,515 |
| Conn's, Inc. * | 257 | 4,875 |
| Core-Mark Holding Co., Inc. | 210 | 17,071 |
| Destination XL Group, Inc. * | 286 | 1,670 |
| Security | Number
of Shares | Value
($) |
| Etsy, Inc. * | 101 | 1,101 |
| EVINE Live, Inc. * | 338 | 872 |
| Express, Inc. * | 532 | 10,268 |
| Fenix Parts, Inc. * | 66 | 519 |
| Five Below, Inc. * | 454 | 15,590 |
| Francesca's Holdings Corp. * | 230 | 3,268 |
| Fred's, Inc., Class A | 80,470 | 1,112,900 |
| FTD Cos., Inc. * | 208 | 5,891 |
| Genesco, Inc. * | 257 | 16,101 |
| Group 1 Automotive, Inc. | 214 | 18,607 |
| Guess?, Inc. | 256 | 5,389 |
| Haverty Furniture Cos., Inc. | 81 | 1,896 |
| Hibbett Sports, Inc. * | 135 | 4,612 |
| HSN, Inc. | 301 | 18,617 |
| Kirkland's, Inc. | 300 | 6,897 |
| Lands' End, Inc. * | 107 | 2,641 |
| Liberty TripAdvisor Holdings, Inc., Class A * | 449 | 14,004 |
| Lithia Motors, Inc., Class A | 219 | 25,708 |
| Lumber Liquidators Holdings, Inc. * | 132 | 1,824 |
| MarineMax, Inc. * | 149 | 2,354 |
| Mattress Firm Holding Corp. * | 92 | 3,916 |
| Monro Muffler Brake, Inc. | 307 | 22,770 |
| Nutrisystem, Inc. | 331 | 7,656 |
| Outerwall, Inc. | 185 | 11,100 |
| Overstock.com, Inc. * | 66 | 1,034 |
| Party City Holdco, Inc. * | 69 | 1,092 |
| Pier 1 Imports, Inc. | 796 | 5,906 |
| Pool Corp. | 384 | 31,311 |
| Rent-A-Center, Inc. | 355 | 6,529 |
| Restoration Hardware Holdings, Inc. * | 9,123 | 940,490 |
| Select Comfort Corp. * | 428 | 9,074 |
| Shoe Carnival, Inc. | 70 | 1,573 |
| Shutterfly, Inc. * | 400 | 16,684 |
| Sonic Automotive, Inc., Class A | 451 | 11,248 |
| Sportsman's Warehouse Holdings, Inc. * | 124 | 1,334 |
| Stage Stores, Inc. | 60,960 | 593,141 |
| Stein Mart, Inc. | 490 | 4,341 |
| Systemax, Inc. * | 93 | 862 |
| The Buckle, Inc. | 280 | 9,923 |
| The Cato Corp., Class A | 30,766 | 1,161,724 |
| The Children's Place, Inc. | 150 | 8,051 |
| The Container Store Group, Inc. * | 102 | 1,164 |
| The Finish Line, Inc., Class A | 505 | 9,408 |
| The Men's Wearhouse, Inc. | 20,236 | 809,035 |
| The Pep Boys - Manny, Moe & Jack * | 121 | 1,820 |
| Tile Shop Holdings, Inc. * | 190 | 2,757 |
| Tilly's, Inc., Class A * | 39 | 284 |
| Travelport Worldwide Ltd. | 710 | 9,621 |
| Tuesday Morning Corp. * | 672 | 3,636 |
| Vitamin Shoppe, Inc. * | 264 | 7,574 |
| VOXX International Corp. * | 301 | 1,553 |
| Wayfair, Inc., Class A * | 51 | 2,156 |
| West Marine, Inc. * | 151 | 1,537 |
| Weyco Group, Inc. | 68 | 1,931 |
| Winmark Corp. | 26 | 2,620 |
| Zumiez, Inc. * | 104 | 1,818 |
| | | 7,427,075 |
Laudus Small-Cap MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Semiconductors & Semiconductor Equipment 1.1% |
| Advanced Energy Industries, Inc. * | 353 | 9,983 |
| Advanced Micro Devices, Inc. * | 3,388 | 7,183 |
| Alpha & Omega Semiconductor Ltd. * | 46 | 408 |
| Ambarella, Inc. * | 241 | 11,915 |
| Amkor Technology, Inc. * | 1,019 | 6,338 |
| Applied Micro Circuits Corp. * | 476 | 3,084 |
| Axcelis Technologies, Inc. * | 1,509 | 4,225 |
| Brooks Automation, Inc. | 30 | 331 |
| Cabot Microelectronics Corp. * | 230 | 9,699 |
| Cascade Microtech, Inc. * | 91 | 1,394 |
| Cavium, Inc. * | 403 | 28,593 |
| CEVA, Inc. * | 286 | 6,684 |
| Cirrus Logic, Inc. * | 600 | 18,498 |
| Cypress Semiconductor Corp. * | 68,121 | 717,995 |
| Diodes, Inc. * | 365 | 8,359 |
| DSP Group, Inc. * | 82 | 828 |
| Entegris, Inc. * | 995 | 12,766 |
| Exar Corp. * | 382 | 2,174 |
| Fairchild Semiconductor International, Inc. * | 1,027 | 17,130 |
| FormFactor, Inc. * | 826 | 6,806 |
| Inphi Corp. * | 306 | 9,110 |
| Integrated Device Technology, Inc. * | 1,077 | 27,463 |
| Integrated Silicon Solution, Inc. | 493 | 11,083 |
| Intersil Corp., Class A | 930 | 12,602 |
| Kopin Corp. * | 1,298 | 3,466 |
| Lattice Semiconductor Corp. * | 821 | 3,760 |
| M/A-COM Technology Solutions Holdings, Inc. * | 55 | 1,856 |
| Mattson Technology, Inc. * | 426 | 997 |
| MaxLinear, Inc., Class A * | 452 | 5,876 |
| Microsemi Corp. * | 19,910 | 716,959 |
| MKS Instruments, Inc. | 405 | 14,272 |
| Monolithic Power Systems, Inc. | 349 | 21,785 |
| Nanometrics, Inc. * | 425 | 6,494 |
| NeoPhotonics Corp. * | 154 | 1,274 |
| NVE Corp. | 36 | 2,134 |
| OmniVision Technologies, Inc. * | 483 | 13,944 |
| PDF Solutions, Inc. * | 270 | 2,851 |
| Pericom Semiconductor Corp. | 101 | 1,762 |
| Photronics, Inc. * | 432 | 4,143 |
| PMC-Sierra, Inc. * | 1,182 | 14,089 |
| Power Integrations, Inc. | 321 | 16,246 |
| Rambus, Inc. * | 914 | 9,432 |
| Semtech Corp. * | 581 | 10,168 |
| Sigma Designs, Inc. * | 117 | 1,031 |
| Silicon Laboratories, Inc. * | 261 | 13,042 |
| Synaptics, Inc. * | 232 | 19,741 |
| Tessera Technologies, Inc. | 531 | 18,569 |
| Ultra Clean Holdings, Inc. * | 244 | 1,191 |
| Ultratech, Inc. * | 215 | 3,360 |
| Veeco Instruments, Inc. * | 284 | 5,118 |
| Xcerra Corp. * | 528 | 3,664 |
| | | 1,851,875 |
| Software & Services 11.0% |
| 6D Global Technologies, Inc. *(d) | 209 | 456 |
| A10 Networks, Inc. * | 325 | 2,334 |
| ACI Worldwide, Inc. * | 816 | 19,543 |
| Security | Number
of Shares | Value
($) |
| Actua Corp. * | 91,188 | 1,262,954 |
| Acxiom Corp. * | 571 | 12,631 |
| Amber Road, Inc. * | 204 | 820 |
| American Software, Inc., Class A | 406 | 4,153 |
| Angie's List, Inc. * | 196 | 1,515 |
| Apigee Corp. * | 126 | 1,216 |
| Aspen Technology, Inc. * | 598 | 24,751 |
| AVG Technologies N.V. * | 261 | 6,186 |
| Bankrate, Inc. * | 376 | 4,463 |
| Barracuda Networks, Inc. * | 64 | 1,228 |
| Bazaarvoice, Inc. * | 700 | 3,101 |
| Benefitfocus, Inc. * | 40 | 1,278 |
| Blackbaud, Inc. | 445 | 27,897 |
| Blackhawk Network Holdings, Inc. * | 298 | 12,689 |
| Blucora, Inc. * | 369 | 3,616 |
| Bottomline Technologies de, Inc. * | 508 | 14,061 |
| Box, Inc., Class A * | 78 | 973 |
| Brightcove, Inc. * | 325 | 2,015 |
| BroadSoft, Inc. * | 281 | 8,984 |
| CACI International, Inc., Class A * | 246 | 23,872 |
| Callidus Software, Inc. * | 49,312 | 856,549 |
| Cardtronics, Inc. * | 36,145 | 1,247,002 |
| Care.com, Inc. * | 115 | 691 |
| Cass Information Systems, Inc. | 37 | 1,930 |
| ChannelAdvisor Corp. * | 195 | 1,700 |
| Ciber, Inc. * | 1,217 | 4,345 |
| Cimpress N.V. * | 301 | 23,749 |
| Code Rebel Corp. * | 46 | 229 |
| CommVault Systems, Inc. * | 340 | 13,777 |
| comScore, Inc. * | 333 | 14,246 |
| Constant Contact, Inc. * | 133 | 3,471 |
| Convergys Corp. | 611 | 15,684 |
| Cornerstone OnDemand, Inc. * | 398 | 12,537 |
| Criteo S.A. ADR * | 43,030 | 1,637,722 |
| CSG Systems International, Inc. | 346 | 11,598 |
| Cvent, Inc. * | 139 | 4,394 |
| Datalink Corp. * | 156 | 1,139 |
| Demandware, Inc. * | 293 | 16,613 |
| Digimarc Corp. * | 61 | 1,370 |
| Digital Turbine, Inc. * | 435 | 722 |
| EarthLink Holdings Corp. | 768 | 6,566 |
| Ebix, Inc. | 202 | 5,601 |
| Ellie Mae, Inc. * | 167 | 12,188 |
| Endurance International Group Holdings, Inc. * | 42,613 | 568,031 |
| Envestnet, Inc. * | 355 | 10,600 |
| EPAM Systems, Inc. * | 315 | 24,365 |
| Epiq Systems, Inc. | 423 | 5,837 |
| Euronet Worldwide, Inc. * | 460 | 36,910 |
| Everi Holdings, Inc. * | 597 | 2,794 |
| EVERTEC, Inc. | 315 | 5,746 |
| Everyday Health, Inc. * | 96 | 902 |
| ExlService Holdings, Inc. * | 380 | 16,819 |
| Fair Isaac Corp. | 286 | 26,418 |
| Five9, Inc. * | 264 | 1,143 |
| Fleetmatics Group plc * | 14,482 | 806,068 |
| Forrester Research, Inc. | 34,609 | 1,116,832 |
| Gigamon, Inc. * | 21,026 | 551,512 |
| Globant S.A. * | 47 | 1,625 |
| Glu Mobile, Inc. * | 236 | 972 |
| Gogo, Inc. * | 606 | 8,563 |
| GrubHub, Inc. * | 700 | 16,786 |
Laudus Small-Cap MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| GTT Communications, Inc. * | 179 | 3,351 |
| Guidance Software, Inc. * | 162 | 914 |
| Guidewire Software, Inc. * | 458 | 26,669 |
| Heartland Payment Systems, Inc. | 349 | 25,826 |
| Hortonworks, Inc. * | 54 | 1,051 |
| HubSpot, Inc. * | 68 | 3,528 |
| Imperva, Inc. * | 182 | 12,853 |
| Infoblox, Inc. * | 409 | 6,671 |
| Interactive Intelligence Group, Inc. * | 204 | 6,597 |
| Internap Corp. * | 720 | 4,867 |
| Intralinks Holdings, Inc. * | 665 | 5,819 |
| j2 Global, Inc. | 6,999 | 542,772 |
| Jive Software, Inc. * | 257 | 1,252 |
| Limelight Networks, Inc. * | 612 | 1,248 |
| Liquidity Services, Inc. * | 38 | 311 |
| LivePerson, Inc. * | 533 | 4,157 |
| LogMeIn, Inc. * | 16,596 | 1,117,907 |
| Luxoft Holding, Inc. * | 73 | 4,865 |
| Manhattan Associates, Inc. * | 619 | 45,094 |
| ManTech International Corp., Class A | 49 | 1,416 |
| Marchex, Inc., Class B | 207 | 894 |
| Marin Software, Inc. * | 241 | 863 |
| Marketo, Inc. * | 110 | 3,237 |
| MAXIMUS, Inc. | 15,918 | 1,085,608 |
| MaxPoint Interactive, Inc. * | 171 | 824 |
| Mentor Graphics Corp. | 561 | 15,259 |
| MicroStrategy, Inc., Class A * | 91 | 15,658 |
| MobileIron, Inc. * | 159 | 614 |
| Model N, Inc. * | 157 | 1,586 |
| ModusLink Global Solutions, Inc. * | 891 | 2,575 |
| MoneyGram International, Inc. * | 348 | 3,518 |
| Monotype Imaging Holdings, Inc. | 438 | 11,975 |
| Monster Worldwide, Inc. * | 103,775 | 650,669 |
| NeuStar, Inc., Class A * | 257 | 6,988 |
| New Relic, Inc. * | 43 | 1,705 |
| NIC, Inc. | 599 | 11,363 |
| OPOWER, Inc. * | 124 | 1,197 |
| Park City Group, Inc. * | 110 | 1,282 |
| Paycom Software, Inc. * | 128 | 4,865 |
| Paylocity Holding Corp. * | 41 | 1,376 |
| Pegasystems, Inc. | 464 | 12,941 |
| Perficient, Inc. * | 203 | 3,394 |
| PFSweb, Inc. * | 2 | 32 |
| Progress Software Corp. * | 195 | 4,735 |
| Proofpoint, Inc. * | 13,430 | 946,009 |
| PROS Holdings, Inc. * | 257 | 6,173 |
| Q2 Holdings, Inc. * | 116 | 2,859 |
| QAD, Inc., Class A | 148 | 3,780 |
| Qlik Technologies, Inc. * | 623 | 19,544 |
| Qualys, Inc. * | 152 | 5,369 |
| QuinStreet, Inc. * | 551 | 3,058 |
| Quotient Technology, Inc. * | 219 | 1,213 |
| RealNetworks, Inc. * | 144 | 559 |
| RealPage, Inc. * | 505 | 8,535 |
| Reis, Inc. | 91 | 2,215 |
| RetailMeNot, Inc. * | 153 | 1,345 |
| RingCentral, Inc., Class A * | 20,586 | 380,841 |
| Rovi Corp. * | 14,170 | 129,656 |
| Sapiens International Corp. N.V. | 293 | 3,460 |
| Science Applications International Corp. | 260 | 11,924 |
| SciQuest, Inc. * | 370 | 4,388 |
| Security | Number
of Shares | Value
($) |
| ServiceSource International, Inc. * | 546 | 2,331 |
| Shutterstock, Inc. * | 15,737 | 448,190 |
| Silver Spring Networks, Inc. * | 299 | 3,920 |
| SPS Commerce, Inc. * | 166 | 11,922 |
| Stamps.com, Inc. * | 166 | 12,551 |
| Sykes Enterprises, Inc. * | 209 | 6,061 |
| Synchronoss Technologies, Inc. * | 298 | 10,484 |
| Syntel, Inc. * | 343 | 16,135 |
| Take-Two Interactive Software, Inc. * | 624 | 20,717 |
| Tangoe, Inc. * | 530 | 4,388 |
| TeleCommunication Systems, Inc., Class A * | 440 | 1,800 |
| TeleTech Holdings, Inc. | 251 | 7,304 |
| Textura, Corp. * | 171 | 5,021 |
| The Hackett Group, Inc. | 327 | 4,866 |
| The Rubicon Project, Inc. * | 160,754 | 2,437,031 |
| TiVo, Inc. * | 675 | 6,129 |
| Travelzoo, Inc. * | 203 | 1,815 |
| TrueCar, Inc. * | 240 | 1,474 |
| TubeMogul, Inc. * | 94 | 1,123 |
| Tyler Technologies, Inc. * | 270 | 45,997 |
| Unisys Corp. * | 452 | 6,057 |
| United Online, Inc. * | 94 | 1,098 |
| Varonis Systems, Inc. * | 61 | 974 |
| VASCO Data Security International, Inc. * | 211 | 4,011 |
| VeriFone Systems, Inc. * | 32,680 | 984,975 |
| Verint Systems, Inc. * | 402 | 19,127 |
| VirnetX Holding Corp. * | 369 | 1,402 |
| Virtusa Corp. * | 14,120 | 810,912 |
| Web.com Group, Inc. * | 553 | 12,979 |
| WebMD Health Corp. * | 213 | 8,661 |
| Wix.com Ltd. * | 132 | 2,920 |
| Workiva, Inc. * | 103 | 1,708 |
| XO Group, Inc. * | 322 | 4,872 |
| Xoom Corp. * | 445 | 11,098 |
| Xura, Inc. * | 58 | 1,501 |
| Yodlee, Inc. * | 96 | 1,611 |
| Zendesk, Inc. * | 178 | 3,581 |
| | | 18,654,482 |
| Technology Hardware & Equipment 4.3% |
| ADTRAN, Inc. | 546 | 8,479 |
| Aerohive Networks, Inc. * | 194 | 1,308 |
| Agilysys, Inc. * | 60 | 682 |
| Anixter International, Inc. * | 145 | 9,944 |
| Applied Optoelectronics, Inc. * | 98 | 2,021 |
| Avid Technology, Inc. * | 246 | 2,079 |
| AVX Corp. | 106 | 1,431 |
| Badger Meter, Inc. | 136 | 8,239 |
| Bel Fuse, Inc., Class B | 120 | 2,164 |
| Belden, Inc. | 32,817 | 2,101,273 |
| Benchmark Electronics, Inc. * | 565 | 11,176 |
| Black Box Corp. | 68 | 830 |
| CalAmp Corp. * | 398 | 7,546 |
| Checkpoint Systems, Inc. | 138 | 1,032 |
| Ciena Corp. * | 1,030 | 24,864 |
| Clearfield, Inc. * | 106 | 1,487 |
| Coherent, Inc. * | 14,564 | 789,369 |
| Comtech Telecommunications Corp. | 298 | 7,200 |
| Cray, Inc. * | 290 | 8,593 |
Laudus Small-Cap MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| CTS Corp. | 35,734 | 649,644 |
| Diebold, Inc. | 38,222 | 1,409,245 |
| Digi International, Inc. * | 149 | 1,922 |
| DTS, Inc. * | 286 | 8,511 |
| Eastman Kodak Co. * | 83 | 1,039 |
| Electro Rent Corp. | 245 | 2,543 |
| Electronics for Imaging, Inc. * | 279 | 12,957 |
| EMCORE Corp. * | 102 | 698 |
| ePlus, Inc. * | 28 | 2,364 |
| Extreme Networks, Inc. * | 1,418 | 5,091 |
| Fabrinet * | 249 | 5,396 |
| FARO Technologies, Inc. * | 117 | 3,953 |
| FEI Co. | 276 | 19,924 |
| Finisar Corp. * | 940 | 10,688 |
| GSI Group, Inc. * | 370 | 4,999 |
| Harmonic, Inc. * | 590 | 3,398 |
| II-VI, Inc. * | 642 | 11,633 |
| Imation Corp. * | 340 | 687 |
| Immersion Corp. * | 119 | 1,545 |
| Infinera Corp. * | 974 | 19,246 |
| Insight Enterprises, Inc. * | 288 | 7,315 |
| InterDigital, Inc. | 360 | 18,266 |
| InvenSense, Inc. * | 447 | 5,328 |
| Itron, Inc. * | 205 | 7,530 |
| Ixia * | 309 | 4,453 |
| Kimball Electronics, Inc. * | 123 | 1,401 |
| Knowles Corp. * | 461 | 7,680 |
| KVH Industries, Inc. * | 129 | 1,264 |
| Littelfuse, Inc. | 217 | 21,685 |
| Mercury Systems, Inc. * | 473 | 8,117 |
| Mesa Laboratories, Inc. | 31 | 3,467 |
| Methode Electronics, Inc. | 309 | 10,299 |
| MTS Systems Corp. | 124 | 8,188 |
| Multi-Fineline Electronix, Inc. * | 162 | 3,010 |
| NETGEAR, Inc. * | 363 | 15,028 |
| NetScout Systems, Inc. * | 696 | 24,966 |
| Newport Corp. * | 511 | 7,721 |
| Nimble Storage, Inc. * | 269 | 6,079 |
| Novatel Wireless, Inc. * | 421 | 905 |
| Oclaro, Inc. * | 788 | 2,309 |
| OSI Systems, Inc. * | 217 | 18,701 |
| PC Connection, Inc. | 112 | 2,603 |
| Plantronics, Inc. | 231 | 12,386 |
| Plexus Corp. * | 274 | 9,486 |
| Polycom, Inc. * | 729 | 10,046 |
| QLogic Corp. * | 403 | 4,997 |
| Quantum Corp. * | 1,535 | 1,289 |
| RealD, Inc. * | 627 | 6,377 |
| Rofin-Sinar Technologies, Inc. * | 393 | 11,381 |
| Rogers Corp. * | 112 | 5,210 |
| Ruckus Wireless, Inc. * | 38,510 | 434,393 |
| Sanmina Corp. * | 875 | 18,086 |
| ScanSource, Inc. * | 35,186 | 1,214,269 |
| ShoreTel, Inc. * | 202 | 1,907 |
| Sonus Networks, Inc. * | 179 | 1,183 |
| Stratasys Ltd. * | 285 | 7,267 |
| Super Micro Computer, Inc. * | 323 | 9,112 |
| SYNNEX Corp. | 257 | 22,729 |
| Tech Data Corp. * | 203 | 14,776 |
| TTM Technologies, Inc. * | 704 | 5,139 |
| Ubiquiti Networks, Inc. * | 261 | 7,616 |
| Universal Display Corp. * | 351 | 12,043 |
| Security | Number
of Shares | Value
($) |
| ViaSat, Inc. * | 395 | 26,054 |
| Violin Memory, Inc. * | 593 | 955 |
| Vishay Intertechnology, Inc. | 722 | 7,653 |
| Vishay Precision Group, Inc. * | 109 | 1,279 |
| | | 7,197,148 |
| Telecommunication Services 2.2% |
| 8x8, Inc. * | 76,325 | 813,624 |
| Atlantic Tele-Network, Inc. | 34 | 2,598 |
| Boingo Wireless, Inc. * | 80 | 618 |
| Cincinnati Bell, Inc. * | 1,940 | 7,314 |
| Cogent Communications Holdings, Inc. | 398 | 12,227 |
| Consolidated Communications Holdings, Inc. | 434 | 9,591 |
| FairPoint Communications, Inc. * | 420 | 6,737 |
| General Communication, Inc., Class A * | 408 | 8,309 |
| Globalstar, Inc. * | 2,732 | 4,918 |
| Hawaiian Telcom Holdco, Inc. * | 69 | 1,575 |
| inContact, Inc. * | 312,202 | 2,778,598 |
| Inteliquent, Inc. | 245 | 5,076 |
| Intelsat S.A. * | 128 | 847 |
| Iridium Communications, Inc. * | 595 | 4,885 |
| NTELOS Holdings Corp. * | 106 | 974 |
| ORBCOMM, Inc. * | 200 | 1,188 |
| Pacific DataVision, Inc. * | 34 | 953 |
| Premiere Global Services, Inc. * | 787 | 10,766 |
| Shenandoah Telecommunications Co. | 209 | 9,779 |
| Spok Holdings, Inc. | 257 | 4,634 |
| Straight Path Communications, Inc., Class B * | 44 | 1,364 |
| Vonage Holdings Corp. * | 1,484 | 9,008 |
| Windstream Holdings, Inc. | 196 | 1,276 |
| | | 3,696,859 |
| Transportation 0.5% |
| Air Transport Services Group, Inc. * | 673 | 6,589 |
| Allegiant Travel Co. | 121 | 23,891 |
| ArcBest Corp. | 334 | 8,651 |
| Atlas Air Worldwide Holdings, Inc. * | 244 | 10,063 |
| Celadon Group, Inc. | 131 | 1,897 |
| Covenant Transport Group, Inc., Class A * | 55 | 1,061 |
| Eagle Bulk Shipping, Inc. * | 205 | 1,250 |
| Echo Global Logistics, Inc. * | 62 | 1,475 |
| Forward Air Corp. | 308 | 13,971 |
| Golden Ocean Group Ltd. | 271 | 534 |
| Hawaiian Holdings, Inc. * | 485 | 16,829 |
| Heartland Express, Inc. | 343 | 6,459 |
| Hub Group, Inc., Class A * | 177 | 7,076 |
| Knight Transportation, Inc. | 490 | 12,456 |
| Marten Transport Ltd. | 113 | 1,852 |
| Matson, Inc. | 322 | 14,757 |
| Navios Maritime Holdings, Inc. | 675 | 1,424 |
| P.A.M. Transportation Services, Inc. * | 48 | 1,714 |
| Park-Ohio Holdings Corp. | 53 | 1,828 |
| Radiant Logistics, Inc. * | 95 | 377 |
| Roadrunner Transportation Systems, Inc. * | 377 | 4,011 |
| Safe Bulkers, Inc. | 243 | 748 |
| Saia, Inc. * | 93 | 2,196 |
Laudus Small-Cap MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Scorpio Bulkers, Inc. * | 1,065 | 1,491 |
| SkyWest, Inc. | 188 | 3,580 |
| Swift Transportation Co. * | 820 | 12,817 |
| Ultrapetrol Bahamas Ltd. * | 1,100 | 495 |
| Universal Truckload Services, Inc. | 73 | 1,167 |
| USA Truck, Inc. * | 31 | 564 |
| UTi Worldwide, Inc. * | 88,421 | 630,442 |
| Virgin America, Inc. * | 92 | 3,276 |
| Werner Enterprises, Inc. | 462 | 12,225 |
| Wesco Aircraft Holdings, Inc. * | 180 | 2,243 |
| XPO Logistics, Inc. * | 532 | 14,768 |
| YRC Worldwide, Inc. * | 174 | 3,177 |
| | | 827,354 |
| Utilities 2.1% |
| Abengoa Yield plc | 439 | 8,135 |
| ALLETE, Inc. | 270 | 13,557 |
| American States Water Co. | 422 | 17,196 |
| Artesian Resources Corp., Class A | 252 | 6,139 |
| Atlantic Power Corp. | 1,045 | 2,132 |
| Avista Corp. | 343 | 11,610 |
| Black Hills Corp. | 401 | 18,358 |
| California Water Service Group | 286 | 6,395 |
| Chesapeake Utilities Corp. | 55 | 2,872 |
| Cleco Corp. | 498 | 26,394 |
| Connecticut Water Service, Inc. | 59 | 2,172 |
| Consolidated Water Co., Ltd. | 113 | 1,251 |
| Dynegy, Inc. * | 1,065 | 20,693 |
| El Paso Electric Co. | 450 | 17,401 |
| Genie Energy Ltd., Class B | 129 | 1,463 |
| IDACORP, Inc. | 422 | 28,211 |
| MGE Energy, Inc. | 265 | 10,936 |
| Middlesex Water Co. | 87 | 2,242 |
| New Jersey Resources Corp. | 26,557 | 841,326 |
| Northwest Natural Gas Co. | 301 | 14,379 |
| NorthWestern Corp. | 263 | 14,252 |
| NRG Yield, Inc., Class A | 75 | 1,030 |
| NRG Yield, Inc., Class C | 185 | 2,671 |
| ONE Gas, Inc. | 310 | 15,140 |
| Ormat Technologies, Inc. | 322 | 12,146 |
| Otter Tail Corp. | 409 | 11,223 |
| Pattern Energy Group, Inc. | 210 | 4,912 |
| Piedmont Natural Gas Co., Inc. | 500 | 28,655 |
| PNM Resources, Inc. | 427 | 12,007 |
| Portland General Electric Co. | 633 | 23,472 |
| SJW Corp. | 65 | 2,062 |
| South Jersey Industries, Inc. | 724 | 19,193 |
| Southwest Gas Corp. | 437 | 26,858 |
| Spark Energy, Inc., Class A | 99 | 1,679 |
| Talen Energy Corp. * | 328 | 2,847 |
| The Empire District Electric Co. | 106 | 2,390 |
| The Laclede Group, Inc. | 19,243 | 1,127,062 |
| The York Water Co. | 254 | 5,888 |
| UIL Holdings Corp. | 523 | 26,668 |
| Vivint Solar, Inc. * | 386 | 4,566 |
| WGL Holdings, Inc. | 17,752 | 1,104,707 |
| | | 3,502,290 |
| Total Common Stock |
| (Cost $146,641,229) | | 154,713,677 |
|
| Security | Number
of Shares | Value
($) |
| Other Investment Companies 8.4% of net assets |
| Equity Funds 3.1% |
| iShares Russell 2000 ETF | 1,619 | 186,735 |
| iShares Russell Mid-Cap ETF | 30,550 | 5,044,111 |
| | | 5,230,846 |
| Money Market Fund 5.3% |
| State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (c) | 8,890,569 | 8,890,569 |
| Total Other Investment Companies |
| (Cost $14,208,273) | | 14,121,415 |
|
| Rights 0.0% of net assets |
| Automobiles & Components 0.0% |
| Furiex Pharmaceuticals CVR *(d)(e) | 66 | 645 |
| Telecommunication Services 0.0% |
| Leap Wireless CVR *(d)(e) | 861 | 2,169 |
| Total Rights |
| (Cost $2,814) | | 2,814 |
|
| Warrants 0.0% of net assets |
| Energy 0.0% |
| Magnum Hunter Resources Corp. *(d)(e) | 129 | — |
| Total Warrants |
| (Cost $—) | | — |
Security
Rate, Maturity Date | Face
Amount
($) | Value
($) |
| Short-Term Investment 0.0% of net assets |
| U.S. Treasury Obligation 0.0% |
| U.S. Treasury Bill |
| 0.03%, 02/25/16 (a)(b) | 6,000 | 5,999 |
| Total Short-Term Investment |
| (Cost $5,999) | | 5,999 |
End of Investments.
Laudus Small-Cap MarketMasters Fund
Portfolio Holdings continued
At 10/31/15, the tax basis cost of the fund's investments was $160,575,313 and the unrealized appreciation and depreciation were $23,166,274 and ($14,897,682), respectively, with a net appreciation of $8,268,592.
| * | Non-income producing security. |
| (a) | All or a portion of this security is held as collateral for open futures contracts. |
| (b) | The rate shown is the purchase yield. |
| (c) | The rate shown is the 7-day yield. |
| (d) | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| (e) | Illiquid security. At the period end, the value of these amounted to $11,945 or 0.0% of net assets. |
| | |
| ADR — | American Depositary Receipt |
| CVR — | Contingent Value Rights |
| ETF — | Exchange Traded Fund |
| REIT — | Real Estate Investment Trust |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| Russell 2000 Index, mini, Long, expires 12/18/15 | 22 | 2,548,260 | 65,981 |
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Common Stock1 | | $136,059,195 | | $— | | $— | | $136,059,195 | |
| Software & Services | | 18,654,026 | | — | | 456 | | 18,654,482 | |
| Other Investment Companies1 | | 14,121,415 | | — | | — | | 14,121,415 | |
| Rights 1 | | — | | — | | 2,814 | | 2,814 | |
| Warrants 1 | | — | | — | | — | | — | |
| Short-Term Investment1 | | — | | 5,999 | | — | | 5,999 | |
| Total | | $168,834,636 | | $5,999 | | $3,270 | | $168,843,905 | |
| Other Financial Instruments | | | | | | | | | |
| Futures Contracts2 | | $65,981 | | $— | | $— | | $65,981 | |
| 1 | As categorized in Portfolio Holdings. |
| 2 | Futures contracts are not included in Investments in the schedule of portfolio holdings and are valued at unrealized appreciation or depreciation. |
The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
| Investments in Securities | | Balance
as of
October 31,
2014 | | Realized
Gains
(Losses) | | Change in
Unrealized
Appreciation
(Depreciation) | | Gross
Purchases | | Gross
Sales | | Gross
Transfers
in | | Gross
Transfers
out | | Balance
as of
October 31,
2015 |
| Common Stock | | $— | | $— | | ($963) | | $1,419 | | $— | | $— | | $— | | $456 |
| Rights | | 2,814 | | — | | — | | — | | — | | — | | — | | 2,814 |
| Total | | $2,814 | | $— | | ($963) | | $1,419 | | $— | | $— | | $— | | $3,270 |
All net realized and change in unrealized gains (losses) in the table above are reflected on the accompanying Statement of Operations. The net change in unrealized appreciation (depreciation) for Level 3 investments held by the fund at October 31, 2015 was ($963).
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Laudus Small-Cap MarketMasters Fund
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments, at value (cost $160,858,315) | | $168,843,905 |
| Deposit with broker for futures contracts | | 566,100 |
| Receivables: | | |
| Investments sold | | 1,416,217 |
| Fund shares sold | | 745,188 |
| Dividends | | 35,938 |
| Prepaid expenses | + | 15,970 |
| Total assets | | 171,623,318 |
| Liabilities |
| Payables: | | |
| Investments bought | | 2,642,880 |
| Investment adviser and administrator fees | | 28,833 |
| Shareholder service fees | | 4,334 |
| Fund shares redeemed | | 66,955 |
| Variation margin on futures contracts | | 8,249 |
| Accrued expenses | + | 54,710 |
| Total liabilities | | 2,805,961 |
| Net Assets |
| Total assets | | 171,623,318 |
| Total liabilities | – | 2,805,961 |
| Net assets | | $168,817,357 |
| Net Assets by Source | | |
| Capital received from investors | | 150,524,567 |
| Distributions in excess of net investment income | | (4,520) |
| Net realized capital gains | | 10,245,739 |
| Net unrealized capital appreciation | | 8,051,571 |
| Net Asset Value (NAV) by Shares Class | |
| Share Class | Net Assets | ÷ | Shares
Outstanding | = | NAV |
| Investor Shares | $62,280,192 | | 3,574,632 | | $17.42 |
| Select Shares | $106,537,165 | | 6,009,636 | | $17.73 |
| | | | | | |
Laudus Small-Cap MarketMasters Fund
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends (net of foreign withholding tax of $577) | | $2,074,644 |
| Interest | + | 17 |
| Total investment income | | 2,074,661 |
| Expenses |
| Investment adviser and administrator fees | | 2,193,444 |
| Shareholder service fees: | | |
| Investor Shares | | 167,937 |
| Select Shares | | 235,601 |
| Portfolio accounting fees | | 62,962 |
| Transfer agent fees | | 48,263 |
| Custodian fees | | 45,065 |
| Professional fees | | 41,605 |
| Shareholder reports | | 24,660 |
| Registration fees | | 16,017 |
| Independent trustees' fees | | 7,738 |
| Proxy fees | | 1,432 |
| Interest expense | | 180 |
| Other expenses | + | 11,103 |
| Total expenses | | 2,856,007 |
| Expense reduction by CSIM and its affiliates | – | 501,664 |
| Net expenses | – | 2,354,343 |
| Net investment loss | | (279,682) |
| Realized and Unrealized Gains (Losses) |
| Net realized gains on investments | | 11,039,588 |
| Net realized gains on futures contracts | + | 546,273 |
| Net realized gains | | 11,585,861 |
| Net change in unrealized appreciation (depreciation) on investments | | (10,620,468) |
| Net change in unrealized appreciation (depreciation) on futures contracts | + | (90,638) |
| Net change in unrealized appreciation (depreciation) | + | (10,711,106) |
| Net realized and unrealized gains | | 874,755 |
| Increase in net assets resulting from operations | | $595,073 |
Laudus Small-Cap MarketMasters Fund
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment loss | | ($279,682) | ($333,865) |
| Net realized gains | | 11,585,861 | 26,752,312 |
| Net change in unrealized appreciation (depreciation) | + | (10,711,106) | (17,949,435) |
| Increase in net assets from operations | | 595,073 | 8,469,012 |
| Distributions to Shareholders | |
| Distributions from net investment income | | | |
| Investor Shares | | (112,615) | — |
| Select Shares | + | (400,670) | — |
| Total distributions from net investment income | | (513,285) | — |
| Distributions from net realized gains | | | |
| Investor Shares | | (1,348,302) | — |
| Select Shares | + | (2,370,239) | — |
| Total distributions from net realized gains | | (3,718,541) | — |
| Total distributions | | ($4,231,826) | $— |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares Sold | | | | | |
| Investor Shares | | 83,739 | $1,529,010 | 72,396 | $1,292,414 |
| Select Shares | + | 1,188,034 | 21,470,184 | 1,598,068 | 28,503,925 |
| Total shares sold | | 1,271,773 | $22,999,194 | 1,670,464 | $29,796,339 |
| Shares Reinvested | | | | | |
| Investor Shares | | 76,269 | $1,302,677 | — | $— |
| Select Shares | + | 156,402 | 2,715,136 | — | — |
| Total shares reinvested | | 232,671 | $4,017,813 | — | $— |
| Shares Redeemed | | | | | |
| Investor Shares | | (498,439) | ($9,134,342) | (547,678) | ($9,687,773) |
| Select Shares | + | (1,995,617) | (38,009,762) | (1,362,207) | (24,624,208) |
| Total shares redeemed | | (2,494,056) | ($47,144,104) | (1,909,885) | ($34,311,981) |
| Net transactions in fund shares | | (989,612) | ($20,127,097) | (239,421) | ($4,515,642) |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 10,573,880 | $192,581,207 | 10,813,301 | $188,627,837 |
| Total increase or decrease | + | (989,612) | (23,763,850) | (239,421) | 3,953,370 |
| End of period | | 9,584,268 | $168,817,357 | 10,573,880 | $192,581,207 |
| Distributions in excess of net investment income | | | ($4,520) | | ($1,405,856) |
Laudus International MarketMasters Fund
Financial Statements
Financial Highlights
| Investor Shares | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $22.95 | $23.68 | $19.03 | $17.45 | $18.36 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.18 1 | 0.25 | 0.23 | 0.21 | 0.16 | |
| Net realized and unrealized gains (losses) | (0.10) | (0.66) | 4.85 | 1.52 | (0.85) | |
| Total from investment operations | 0.08 | (0.41) | 5.08 | 1.73 | (0.69) | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.32) | (0.32) | (0.43) | (0.15) | (0.22) | |
| Net asset value at end of period | $22.71 | $22.95 | $23.68 | $19.03 | $17.45 | |
| Total return | 0.39% | (1.73%) | 27.23% | 10.05% | (3.87%) | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 1.40% | 1.40% | 1.40% | 1.53% 2 | 1.59% | |
| Gross operating expenses | 1.59% | 1.59% | 1.60% | 1.62% | 1.60% | |
| Net investment income (loss) | 0.76% | 1.06% | 1.10% | 1.19% | 0.80% | |
| Portfolio turnover rate | 72% | 74% | 65% | 68% | 78% | |
| Net assets, end of period (x 1,000,000) | $536 | $631 | $675 | $592 | $665 | |
| |
| Select Shares | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $22.95 | $23.68 | $19.03 | $17.46 | $18.38 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.21 1 | 0.28 | 0.28 | 0.25 | 0.19 | |
| Net realized and unrealized gains (losses) | (0.10) | (0.65) | 4.83 | 1.50 | (0.86) | |
| Total from investment operations | 0.11 | (0.37) | 5.11 | 1.75 | (0.67) | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.35) | (0.36) | (0.46) | (0.18) | (0.25) | |
| Net asset value at end of period | $22.71 | $22.95 | $23.68 | $19.03 | $17.46 | |
| Total return | 0.56% | (1.57%) | 27.43% | 10.20% | (3.76%) | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 1.25% | 1.25% | 1.25% | 1.37% 2 | 1.45% | |
| Gross operating expenses | 1.50% | 1.47% | 1.44% | 1.47% | 1.47% | |
| Net investment income (loss) | 0.91% | 1.20% | 1.26% | 1.40% | 0.99% | |
| Portfolio turnover rate | 72% | 74% | 65% | 68% | 78% | |
| Net assets, end of period (x 1,000,000) | $1,395 | $1,592 | $1,590 | $1,062 | $961 | |
1
Calculated based on the average shares outstanding during the period.
2
Effective June 6, 2012, the net operating expense limitation was lowered. The ratio presented for period ended 10/31/12 is a blended ratio.
Laudus International MarketMasters Fund
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15-20 days after calendar quarters on the fund's website at www.csimfunds.com/laudusfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 94.7% | Common Stock | 1,698,642,994 | 1,829,364,525 |
| 0.5% | Preferred Stock | 8,077,292 | 8,503,235 |
| 4.1% | Other Investment Companies | 82,419,204 | 78,753,449 |
| 0.0% | Rights | 6,603 | 6,410 |
| 0.0% | Short-Term Investments | 59,994 | 59,984 |
| 99.3% | Total Investments | 1,789,206,087 | 1,916,687,603 |
| 0.7% | Other Assets and Liabilities, Net | | 14,361,512 |
| 100.0% | Net Assets | | 1,931,049,115 |
| Security | Number
of Shares | Value
($) |
| Common Stock 94.7% of net assets |
| Australia 3.8% |
| Banks 0.1% |
| Australia & New Zealand Banking Group Ltd. | 22,545 | 436,027 |
| Bank of Queensland Ltd. | 2,681 | 24,855 |
| Bendigo & Adelaide Bank Ltd. | 3,734 | 28,327 |
| Commonwealth Bank of Australia | 13,783 | 748,389 |
| National Australia Bank Ltd. | 21,225 | 453,252 |
| Westpac Banking Corp. * | 1,110 | 24,102 |
| Westpac Banking Corp. | 25,530 | 568,655 |
| | | 2,283,607 |
| Capital Goods 0.0% |
| CIMIC Group Ltd. | 776 | 15,212 |
| Commercial & Professional Supplies 0.0% |
| Brambles Ltd. | 12,712 | 93,611 |
| Seek Ltd. | 2,421 | 21,993 |
| | | 115,604 |
| Consumer Services 0.7% |
| Aristocrat Leisure Ltd. | 1,236,987 | 8,165,249 |
| Crown Resorts Ltd. | 2,906 | 23,552 |
| Flight Centre Travel Group Ltd. | 21,937 | 590,184 |
| InvoCare Ltd. | 498,670 | 3,925,408 |
| Tabcorp Holdings Ltd. | 6,910 | 23,094 |
| Tatts Group Ltd. | 10,662 | 29,936 |
| | | 12,757,423 |
| Security | Number
of Shares | Value
($) |
| Diversified Financials 0.3% |
| ASX Ltd. | 1,575 | 46,043 |
| Challenger Ltd. | 56,507 | 329,505 |
| Macquarie Group Ltd. | 59,765 | 3,618,702 |
| OzForex Group Ltd. | 1,265,340 | 2,550,450 |
| Platinum Asset Management Ltd. | 1,696 | 8,892 |
| | | 6,553,592 |
| Energy 0.0% |
| Caltex Australia Ltd. | 2,190 | 49,026 |
| Origin Energy Ltd. | 14,173 | 55,073 |
| Santos Ltd. | 7,948 | 32,810 |
| Woodside Petroleum Ltd. | 6,031 | 126,488 |
| WorleyParsons Ltd. | 2,058 | 9,495 |
| | | 272,892 |
| Food & Staples Retailing 0.0% |
| Wesfarmers Ltd. | 9,137 | 255,510 |
| Woolworths Ltd. | 10,227 | 175,201 |
| | | 430,711 |
| Food, Beverage & Tobacco 0.3% |
| Bellamy's Australia Ltd. | 430,590 | 2,455,249 |
| Coca-Cola Amatil Ltd. | 4,658 | 30,143 |
| Costa Group Holdings Ltd. * | 1,816,249 | 3,014,048 |
| Treasury Wine Estates Ltd. | 6,454 | 32,303 |
| | | 5,531,743 |
| Health Care Equipment & Services 0.0% |
| Cochlear Ltd. | 419 | 26,444 |
| Healthscope Ltd. | 9,119 | 17,458 |
| Ramsay Health Care Ltd. | 1,204 | 52,925 |
| Sonic Healthcare Ltd. | 3,097 | 42,357 |
| | | 139,184 |
| Household & Personal Products 0.1% |
| Blackmores Ltd. | 23,440 | 2,790,429 |
| Insurance 0.4% |
| AMP Ltd. | 1,563,086 | 6,339,579 |
| Insurance Australia Group Ltd. | 19,045 | 75,701 |
| Medibank Pvt Ltd. | 22,305 | 37,420 |
| QBE Insurance Group Ltd. | 10,914 | 102,163 |
| Suncorp Group Ltd. | 10,464 | 97,206 |
| | | 6,652,069 |
| Materials 1.0% |
| Alumina Ltd. | 18,530 | 14,216 |
| Amcor Ltd. | 9,814 | 94,791 |
| BHP Billiton Ltd. | 26,121 | 428,404 |
| Boral Ltd. | 6,426 | 24,581 |
| Fortescue Metals Group Ltd. | 12,428 | 18,364 |
| Iluka Resources Ltd. | 4,224 | 19,154 |
| Incitec Pivot Ltd. | 13,672 | 38,180 |
| James Hardie Industries plc CDI | 3,846 | 49,787 |
| Newcrest Mining Ltd. * | 6,234 | 54,306 |
| Orica Ltd. | 607,581 | 7,107,713 |
| Pact Group Holdings Ltd. | 1,396,480 | 5,067,309 |
| Regis Resources Ltd. | 1,664,810 | 2,454,490 |
| Rio Tinto Ltd. | 3,544 | 126,726 |
| Sandfire Resources NL | 610,920 | 2,730,363 |
| South32 Ltd. *(e) | 17,178 | 17,660 |
| South32 Ltd. *(e) | 26,121 | 27,049 |
| | | 18,273,093 |
Laudus International MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Media 0.0% |
| REA Group Ltd. | 404 | 13,730 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% |
| CSL Ltd. | 3,817 | 253,717 |
| Real Estate 0.8% |
| Charter Hall Retail REIT | 2,615,614 | 7,868,391 |
| Dexus Property Group | 7,364 | 40,424 |
| Federation Centres (a) | 28,094 | 58,035 |
| Goodman Group | 13,831 | 59,340 |
| Lend Lease Group | 74,286 | 683,244 |
| Mirvac Group | 30,029 | 38,384 |
| Scentre Group | 43,302 | 127,010 |
| Shopping Centres Australasia Property Group | 3,800,587 | 5,553,725 |
| Stockland | 18,630 | 53,469 |
| The GPT Group | 13,708 | 46,427 |
| Westfield Corp. | 16,056 | 116,488 |
| | | 14,644,937 |
| Retailing 0.0% |
| Harvey Norman Holdings Ltd. | 5,214 | 14,649 |
| Software & Services 0.0% |
| Computershare Ltd. | 3,845 | 29,470 |
| Telecommunication Services 0.1% |
| Telstra Corp., Ltd. | 493,319 | 1,890,223 |
| TPG Telecom Ltd. | 2,113 | 16,561 |
| | | 1,906,784 |
| Transportation 0.0% |
| Asciano Ltd. | 7,933 | 46,198 |
| Aurizon Holdings Ltd. | 17,383 | 63,735 |
| Qantas Airways Ltd. * | 4,533 | 12,767 |
| Sydney Airport | 8,660 | 39,577 |
| Transurban Group | 15,918 | 117,953 |
| | | 280,230 |
| Utilities 0.0% |
| AGL Energy Ltd. | 5,376 | 63,752 |
| APA Group | 9,027 | 58,813 |
| AusNet Services | 11,439 | 11,732 |
| | | 134,297 |
| | | 73,093,373 |
| Austria 0.0% |
| Banks 0.0% |
| Erste Group Bank AG * | 2,235 | 65,539 |
| Raiffeisen Bank International AG * | 1,296 | 20,450 |
| | | 85,989 |
| Capital Goods 0.0% |
| ANDRITZ AG | 674 | 33,863 |
| Energy 0.0% |
| OMV AG | 1,175 | 31,288 |
| Materials 0.0% |
| voestalpine AG | 912 | 32,975 |
| | | 184,115 |
| Belgium 0.3% |
| Banks 0.2% |
| KBC Groep N.V. | 56,445 | 3,431,949 |
| Security | Number
of Shares | Value
($) |
| Diversified Financials 0.0% |
| Groupe Bruxelles Lambert S.A. | 645 | 52,354 |
| Food & Staples Retailing 0.0% |
| Colruyt S.A. | 560 | 27,699 |
| Delhaize Group | 833 | 77,293 |
| | | 104,992 |
| Food, Beverage & Tobacco 0.0% |
| Anheuser-Busch InBev N.V. | 6,540 | 780,383 |
| Insurance 0.0% |
| Ageas | 1,774 | 78,230 |
| Materials 0.0% |
| Solvay S.A. | 482 | 54,452 |
| Umicore S.A. | 803 | 34,094 |
| | | 88,546 |
| Media 0.1% |
| Telenet Group Holding N.V. * | 21,920 | 1,274,938 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% |
| UCB S.A. | 1,028 | 88,858 |
| Telecommunication Services 0.0% |
| Proximus | 1,215 | 42,045 |
| | | 5,942,295 |
| Brazil 0.2% |
| Food, Beverage & Tobacco 0.1% |
| Ambev S.A. ADR | 505,765 | 2,463,075 |
| Insurance 0.1% |
| BB Seguridade Participacoes S.A. | 157,300 | 1,084,019 |
| | | 3,547,094 |
| Canada 4.3% |
| Banks 0.1% |
| The Toronto-Dominion Bank | 70,446 | 2,891,971 |
| Capital Goods 0.5% |
| CAE, Inc. | 839,220 | 9,472,994 |
| Commercial & Professional Supplies 0.2% |
| Ritchie Bros. Auctioneers, Inc. | 152,800 | 3,966,069 |
| Diversified Financials 0.5% |
| CI Financial Corp. | 57,640 | 1,375,320 |
| Element Financial Corp. * | 636,080 | 8,225,843 |
| | | 9,601,163 |
| Energy 1.0% |
| Canadian Natural Resources Ltd. | 111,611 | 2,587,982 |
| Enbridge, Inc. | 86,888 | 3,713,804 |
| Pason Systems, Inc. | 119,746 | 1,761,940 |
| Raging River Exploration, Inc. * | 751,510 | 4,770,215 |
| Suncor Energy, Inc. | 104,000 | 3,094,708 |
| Whitecap Resources, Inc. | 488,420 | 4,336,614 |
| | | 20,265,263 |
| Food & Staples Retailing 0.1% |
| Alimentation Couche-Tard, Inc., Class B | 63,603 | 2,736,057 |
| Insurance 0.1% |
| Intact Financial Corp. | 18,200 | 1,299,861 |
Laudus International MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Materials 0.5% |
| CCL Industries, Inc., Class B | 42,270 | 5,988,466 |
| Norbord, Inc. | 150,890 | 2,851,401 |
| | | 8,839,867 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.2% |
| Concordia Healthcare Corp. | 119,560 | 3,657,388 |
| Real Estate 0.6% |
| Brookfield Asset Management, Inc., Class A | 105,283 | 3,681,747 |
| FirstService Corp. | 121,050 | 4,258,412 |
| Morguard Real Estate Investment Trust | 106,211 | 1,173,714 |
| Northern Property Real Estate Investment Trust | 217,100 | 3,069,883 |
| | | 12,183,756 |
| Retailing 0.1% |
| Dollarama, Inc. | 31,366 | 2,118,812 |
| Software & Services 0.3% |
| Constellation Software, Inc. | 1,802 | 778,625 |
| The Descartes Systems Group, Inc. * | 248,980 | 4,356,579 |
| | | 5,135,204 |
| Transportation 0.1% |
| Canadian National Railway Co. | 20,757 | 1,268,045 |
| | | 83,436,450 |
| China 3.8% |
| Automobiles & Components 0.4% |
| Nexteer Automotive Group Ltd. | 7,809,000 | 8,291,216 |
| Capital Goods 0.1% |
| Haitian International Holdings Ltd. | 1,472,000 | 2,575,557 |
| Consumer Durables & Apparel 0.2% |
| Cosmo Lady China Holdings Co., Ltd. | 4,598,000 | 4,573,914 |
| Insurance 0.2% |
| Ping An Insurance (Group) Co. of China Ltd., Class H | 656,000 | 3,682,291 |
| Real Estate 0.4% |
| China Overseas Land & Investment Ltd. | 776,000 | 2,506,376 |
| China Resources Land Ltd. | 762,000 | 1,980,123 |
| China Vanke Co., Ltd., Class H | 484,700 | 1,131,117 |
| Shenzhen Investment Ltd. | 6,810,000 | 2,755,017 |
| | | 8,372,633 |
| Semiconductors & Semiconductor Equipment 0.3% |
| Xinyi Solar Holdings Ltd. | 12,594,000 | 5,006,548 |
| Software & Services 1.4% |
| Baidu, Inc. ADR * | 85,645 | 16,055,868 |
| Cheetah Mobile, Inc. ADR * | 188,970 | 3,769,952 |
| Chinasoft International Ltd. * | 5,842,000 | 2,532,132 |
| NetEase, Inc. ADR | 10,976 | 1,586,361 |
| Tencent Holdings Ltd. | 156,500 | 2,949,927 |
| | | 26,894,240 |
| Technology Hardware & Equipment 0.5% |
| PAX Global Technology Ltd. | 3,946,000 | 5,160,030 |
| Wasion Group Holdings Ltd. | 3,480,000 | 3,860,655 |
| | | 9,020,685 |
| Security | Number
of Shares | Value
($) |
| Utilities 0.3% |
| CT Environmental Group Ltd. | 13,492,000 | 4,782,232 |
| ENN Energy Holdings Ltd. | 194,000 | 1,111,357 |
| | | 5,893,589 |
| | | 74,310,673 |
| Denmark 1.6% |
| Banks 0.2% |
| Danske Bank A/S | 5,725 | 157,516 |
| Sydbank A/S | 132,840 | 4,369,613 |
| | | 4,527,129 |
| Capital Goods 0.0% |
| Vestas Wind Systems A/S | 1,792 | 104,481 |
| Commercial & Professional Supplies 0.0% |
| ISS A/S | 1,179 | 41,473 |
| Consumer Durables & Apparel 0.1% |
| Pandora A/S | 23,209 | 2,678,257 |
| Food, Beverage & Tobacco 0.0% |
| Carlsberg A/S, Class B | 870 | 71,278 |
| Health Care Equipment & Services 0.0% |
| Coloplast A/S, Class B | 904 | 64,839 |
| William Demant Holding A/S * | 203 | 17,636 |
| | | 82,475 |
| Insurance 0.0% |
| Tryg A/S | 860 | 15,455 |
| Materials 1.0% |
| Chr. Hansen Holding A/S | 301,830 | 18,134,828 |
| Novozymes A/S, B Shares | 30,682 | 1,422,329 |
| | | 19,557,157 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.2% |
| Novo Nordisk A/S, Class B | 53,455 | 2,838,646 |
| Telecommunication Services 0.0% |
| TDC A/S | 6,604 | 34,525 |
| Transportation 0.1% |
| AP Moeller - Maersk A/S, Series A | 31 | 44,450 |
| AP Moeller - Maersk A/S, Series B | 58 | 85,598 |
| DSV A/S | 16,540 | 671,181 |
| | | 801,229 |
| | | 30,752,105 |
| Finland 0.6% |
| Automobiles & Components 0.0% |
| Nokian Renkaat Oyj | 828 | 31,238 |
| Capital Goods 0.3% |
| Cramo Oyj | 156,680 | 2,877,141 |
| Kone Oyj, Class B | 50,930 | 2,172,190 |
| Metso Oyj | 828 | 20,271 |
| Wartsila Oyj Abp | 1,183 | 50,503 |
| | | 5,120,105 |
| Energy 0.0% |
| Neste Oyj | 995 | 24,261 |
| Insurance 0.3% |
| Sampo Oyj, A Shares | 98,623 | 4,820,453 |
Laudus International MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Materials 0.0% |
| Stora Enso Oyj, R Shares | 4,645 | 43,088 |
| UPM-Kymmene Oyj | 4,259 | 79,732 |
| | | 122,820 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% |
| Orion Oyj, Class B | 820 | 29,288 |
| Technology Hardware & Equipment 0.0% |
| Nokia Oyj | 30,459 | 226,580 |
| Telecommunication Services 0.0% |
| Elisa Oyj | 23,371 | 880,532 |
| Utilities 0.0% |
| Fortum Oyj | 3,613 | 54,180 |
| | | 11,309,457 |
| France 8.9% |
| Automobiles & Components 0.5% |
| Compagnie Generale des Etablissements Michelin | 1,515 | 150,706 |
| Peugeot S.A. * | 3,643 | 64,006 |
| Renault S.A. | 1,563 | 147,272 |
| Valeo S.A. | 58,487 | 9,031,871 |
| | | 9,393,855 |
| Banks 0.9% |
| BNP Paribas S.A. | 294,656 | 17,855,328 |
| Credit Agricole S.A. | 8,719 | 110,125 |
| Natixis S.A. | 7,451 | 45,611 |
| Societe Generale S.A. | 5,856 | 271,972 |
| | | 18,283,036 |
| Capital Goods 0.5% |
| Airbus Group SE | 4,780 | 332,856 |
| Alstom S.A. * | 1,729 | 56,279 |
| Bouygues S.A. | 1,705 | 64,444 |
| Compagnie de Saint-Gobain | 3,873 | 162,128 |
| Legrand S.A. | 2,160 | 118,377 |
| LISI (f) | 158,464 | 3,868,426 |
| Rexel S.A. | 2,349 | 32,059 |
| Safran S.A. | 55,278 | 4,198,588 |
| Schneider Electric SE | 4,505 | 271,720 |
| Thales S.A. | 881 | 63,688 |
| Vinci S.A. | 3,932 | 264,727 |
| Zodiac Aerospace | 1,709 | 43,112 |
| | | 9,476,404 |
| Commercial & Professional Supplies 0.8% |
| Bureau Veritas S.A. | 288,301 | 6,511,531 |
| Edenred | 1,682 | 30,883 |
| Societe BIC S.A. | 232 | 36,971 |
| Teleperformance | 107,320 | 8,422,574 |
| | | 15,001,959 |
| Consumer Durables & Apparel 1.1% |
| Christian Dior SE | 10,959 | 2,153,904 |
| Hermes International | 3,723 | 1,432,043 |
| Kering | 66,106 | 12,225,936 |
| LVMH Moet Hennessy Louis Vuitton SE | 34,074 | 6,343,538 |
| | | 22,155,421 |
| Security | Number
of Shares | Value
($) |
| Consumer Services 0.0% |
| Accor S.A. | 1,712 | 85,017 |
| Sodexo S.A. | 767 | 68,180 |
| | | 153,197 |
| Diversified Financials 0.0% |
| Eurazeo S.A. | 276 | 19,434 |
| Wendel S.A. | 257 | 30,808 |
| | | 50,242 |
| Energy 0.7% |
| Gaztransport Et Technigaz S.A. | 132,867 | 6,647,427 |
| Technip S.A. | 844 | 43,981 |
| Total S.A. | 121,779 | 5,889,089 |
| | | 12,580,497 |
| Food & Staples Retailing 0.0% |
| Carrefour S.A. | 4,463 | 145,431 |
| Casino Guichard Perrachon S.A. | 452 | 25,970 |
| | | 171,401 |
| Food, Beverage & Tobacco 0.8% |
| Danone S.A. | 126,006 | 8,757,423 |
| Pernod-Ricard S.A. | 55,027 | 6,474,986 |
| Remy Cointreau S.A. | 159 | 11,045 |
| | | 15,243,454 |
| Health Care Equipment & Services 0.5% |
| Essilor International S.A. | 24,429 | 3,206,634 |
| Korian S.A. | 149,534 | 5,652,683 |
| | | 8,859,317 |
| Household & Personal Products 0.0% |
| L'Oreal S.A. | 2,044 | 372,631 |
| Insurance 0.3% |
| AXA S.A. | 245,747 | 6,558,524 |
| CNP Assurances | 1,416 | 20,198 |
| SCOR SE | 1,249 | 46,441 |
| | | 6,625,163 |
| Materials 0.0% |
| Air Liquide S.A. | 2,799 | 362,098 |
| Arkema S.A. | 555 | 40,559 |
| Imerys S.A. | 265 | 18,134 |
| | | 420,791 |
| Media 0.1% |
| Eutelsat Communications S.A. | 1,458 | 48,055 |
| JC Decaux S.A. | 681 | 27,661 |
| Lagardere S.C.A. | 993 | 28,892 |
| Numericable-SFR SAS * | 804 | 36,329 |
| Publicis Groupe S.A. | 8,756 | 567,172 |
| SES S.A. | 2,681 | 79,104 |
| Vivendi S.A. | 9,349 | 224,907 |
| | | 1,012,120 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.7% |
| Boiron S.A. (f) | 44,825 | 3,962,077 |
| Eurofins Scientific SE | 25,151 | 9,098,090 |
| Sanofi | 9,591 | 967,500 |
| | | 14,027,667 |
| Real Estate 0.3% |
| Fonciere Des Regions | 232 | 21,837 |
| Gecina S.A. | 302 | 38,518 |
| ICADE | 305 | 22,539 |
Laudus International MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Klepierre | 1,400 | 66,304 |
| Nexity S.A. | 113,010 | 5,000,724 |
| | | 5,149,922 |
| Semiconductors & Semiconductor Equipment 0.0% |
| STMicroelectronics N.V. | 5,184 | 35,719 |
| Software & Services 0.6% |
| Atos SE | 733 | 58,351 |
| Cap Gemini S.A. | 45,720 | 4,065,241 |
| Criteo S.A. ADR * | 62,270 | 2,369,996 |
| Dassault Systemes S.A. | 1,011 | 79,756 |
| Sopra Steria Group | 11,130 | 1,266,085 |
| Worldline S.A. * | 140,610 | 3,410,131 |
| | | 11,249,560 |
| Technology Hardware & Equipment 0.1% |
| Alcatel-Lucent * | 22,888 | 92,910 |
| Ingenico Group S.A. | 16,750 | 1,974,014 |
| | | 2,066,924 |
| Telecommunication Services 0.0% |
| Iliad S.A. | 209 | 43,893 |
| Orange S.A. | 16,189 | 285,440 |
| | | 329,333 |
| Transportation 0.0% |
| Aeroports de Paris | 237 | 29,773 |
| Bollore S.A. | 7,010 | 34,654 |
| Groupe Eurotunnel SE - Reg'd | 3,802 | 53,221 |
| | | 117,648 |
| Utilities 1.0% |
| Electricite de France S.A. | 1,934 | 35,948 |
| Engie | 11,774 | 206,054 |
| Rubis S.C.A. | 205,894 | 16,502,219 |
| Suez Environnement Co. | 2,504 | 47,546 |
| Veolia Environnement S.A. | 134,992 | 3,135,896 |
| | | 19,927,663 |
| | | 172,703,924 |
| Germany 8.7% |
| Automobiles & Components 2.3% |
| Bayerische Motoren Werke AG | 170,680 | 17,482,472 |
| Continental AG | 21,094 | 5,065,295 |
| Daimler AG - Reg'd | 192,431 | 16,686,409 |
| ElringKlinger AG | 236,505 | 5,291,886 |
| Volkswagen AG | 287 | 39,741 |
| | | 44,565,803 |
| Banks 0.0% |
| Commerzbank AG * | 8,629 | 94,899 |
| Capital Goods 2.1% |
| Brenntag AG | 33,477 | 2,021,452 |
| Duerr AG | 54,084 | 4,503,183 |
| GEA Group AG | 1,487 | 59,592 |
| MAN SE | 281 | 29,281 |
| MTU Aero Engines AG | 98,614 | 9,122,643 |
| Nordex SE * | 120,010 | 3,920,030 |
| Norma Group SE | 223,726 | 11,473,319 |
| OSRAM Licht AG | 757 | 44,485 |
| Rational AG | 7,817 | 3,102,103 |
| Security | Number
of Shares | Value
($) |
| Siemens AG - Reg'd | 6,449 | 647,764 |
| Stabilus S.A. *(f) | 137,367 | 5,290,411 |
| | | 40,214,263 |
| Consumer Durables & Apparel 0.1% |
| adidas AG | 15,002 | 1,344,456 |
| Hugo Boss AG | 541 | 55,629 |
| | | 1,400,085 |
| Diversified Financials 0.2% |
| Aurelius AG | 83,310 | 3,713,308 |
| Deutsche Bank AG - Reg'd | 11,219 | 314,006 |
| Deutsche Boerse AG | 1,570 | 144,761 |
| | | 4,172,075 |
| Food & Staples Retailing 0.0% |
| METRO AG | 1,294 | 39,811 |
| Health Care Equipment & Services 0.0% |
| Fresenius Medical Care AG & Co. KGaA | 1,760 | 158,413 |
| Fresenius SE & Co. KGaA | 3,071 | 225,665 |
| | | 384,078 |
| Household & Personal Products 0.0% |
| Beiersdorf AG | 807 | 76,646 |
| Henkel AG & Co. KGaA | 846 | 78,088 |
| | | 154,734 |
| Insurance 1.0% |
| Allianz SE - Reg'd | 107,363 | 18,795,795 |
| Hannover Rueck SE | 482 | 55,724 |
| Muenchener Rueckversicherungs-Gesellschaft AG - Reg'd | 1,365 | 272,173 |
| | | 19,123,692 |
| Materials 0.2% |
| BASF SE | 28,343 | 2,321,967 |
| Evonik Industries AG | 13,492 | 489,894 |
| HeidelbergCement AG | 1,146 | 85,342 |
| K&S AG - Reg'd | 1,635 | 41,273 |
| LANXESS AG | 685 | 36,759 |
| Linde AG | 1,510 | 261,918 |
| Symrise AG | 1,018 | 67,001 |
| ThyssenKrupp AG | 3,001 | 60,470 |
| | | 3,364,624 |
| Media 1.1% |
| Axel Springer SE | 304 | 17,085 |
| CTS Eventim AG & Co. KGaA | 150,910 | 5,906,542 |
| Kabel Deutschland Holding AG | 176 | 22,389 |
| ProSiebenSat.1 Media SE | 98,584 | 5,327,045 |
| RTL Group S.A. | 308 | 26,643 |
| Stroeer SE | 161,530 | 10,191,774 |
| | | 21,491,478 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.4% |
| Bayer AG - Reg'd | 6,726 | 896,814 |
| Gerresheimer AG | 31,510 | 2,456,987 |
| Merck KGaA | 1,051 | 102,608 |
| QIAGEN N.V. * | 138,359 | 3,354,318 |
| | | 6,810,727 |
Laudus International MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Real Estate 0.1% |
| Deutsche Wohnen AG | 34,762 | 979,912 |
| Vonovia SE | 32,738 | 1,091,286 |
| | | 2,071,198 |
| Retailing 0.4% |
| Fielmann AG | 83,819 | 5,868,065 |
| Zalando SE * | 24,984 | 873,063 |
| | | 6,741,128 |
| Semiconductors & Semiconductor Equipment 0.0% |
| Infineon Technologies AG | 9,171 | 112,968 |
| Software & Services 0.6% |
| SAP SE | 21,571 | 1,700,551 |
| United Internet AG - Reg'd | 982 | 50,988 |
| Wirecard AG | 189,240 | 9,775,026 |
| | | 11,526,565 |
| Telecommunication Services 0.2% |
| Deutsche Telekom AG - Reg'd | 26,105 | 488,988 |
| Drillisch AG | 81,190 | 4,187,010 |
| Telefonica Deutschland Holding AG | 4,887 | 31,461 |
| | | 4,707,459 |
| Transportation 0.0% |
| Deutsche Lufthansa AG - Reg'd * | 1,836 | 27,113 |
| Deutsche Post AG - Reg'd | 7,871 | 233,819 |
| Fraport AG Frankfurt Airport Services Worldwide | 367 | 23,269 |
| | | 284,201 |
| Utilities 0.0% |
| E.ON SE | 16,274 | 171,677 |
| RWE AG | 3,980 | 55,311 |
| | | 226,988 |
| | | 167,486,776 |
| Hong Kong 2.1% |
| Banks 0.0% |
| BOC Hong Kong (Holdings) Ltd. | 30,000 | 95,930 |
| Hang Seng Bank Ltd. | 6,200 | 113,744 |
| The Bank of East Asia Ltd. | 10,200 | 38,112 |
| | | 247,786 |
| Capital Goods 0.0% |
| CK Hutchison Holdings Ltd. | 22,038 | 301,777 |
| NWS Holdings Ltd. | 12,000 | 18,036 |
| | | 319,813 |
| Consumer Durables & Apparel 0.3% |
| Li & Fung Ltd. | 48,000 | 38,912 |
| Regina Miracle International Holdings Ltd. * | 3,052,000 | 2,783,996 |
| Techtronic Industries Co., Ltd. | 509,000 | 1,860,738 |
| Yue Yuen Industrial Holdings Ltd. | 6,000 | 21,888 |
| | | 4,705,534 |
| Consumer Services 0.7% |
| Galaxy Entertainment Group Ltd. | 19,000 | 64,902 |
| Melco Crown Entertainment Ltd. ADR | 447,300 | 8,377,929 |
| Melco International Development Ltd. | 3,738,000 | 5,786,243 |
| Security | Number
of Shares | Value
($) |
| MGM China Holdings Ltd. | 7,600 | 11,085 |
| Sands China Ltd. | 19,600 | 70,579 |
| Shangri-La Asia Ltd. | 8,000 | 7,321 |
| SJM Holdings Ltd. | 15,683 | 13,020 |
| Wynn Macau Ltd. | 12,400 | 17,023 |
| | | 14,348,102 |
| Diversified Financials 0.0% |
| First Pacific Co., Ltd. | 24,000 | 16,423 |
| Hong Kong Exchanges & Clearing Ltd. | 9,000 | 235,519 |
| | | 251,942 |
| Food, Beverage & Tobacco 0.0% |
| WH Group Ltd. * | 26,000 | 14,338 |
| Insurance 0.5% |
| AIA Group Ltd. | 1,523,800 | 8,934,541 |
| Real Estate 0.1% |
| Cheung Kong Property Holdings Ltd. | 22,038 | 154,203 |
| Hang Lung Properties Ltd. | 18,000 | 44,043 |
| Henderson Land Development Co., Ltd. | 9,123 | 58,266 |
| Hysan Development Co., Ltd. | 6,000 | 26,613 |
| Kerry Properties Ltd. | 6,000 | 17,761 |
| Link REIT | 19,000 | 113,519 |
| New World Development Co., Ltd. | 42,000 | 44,797 |
| Sino Land Co., Ltd. | 24,000 | 37,044 |
| Sun Hung Kai Properties Ltd. | 13,702 | 183,029 |
| Swire Pacific Ltd., Class A | 5,000 | 57,768 |
| Swire Properties Ltd. | 9,400 | 28,216 |
| The Wharf Holdings Ltd. | 11,349 | 67,531 |
| Wheelock & Co., Ltd. | 8,000 | 37,289 |
| | | 870,079 |
| Semiconductors & Semiconductor Equipment 0.1% |
| ASM Pacific Technology Ltd. | 241,200 | 1,712,676 |
| Technology Hardware & Equipment 0.2% |
| AAC Technologies Holdings, Inc. | 717,000 | 4,547,057 |
| China High Precision Automation Group Ltd. *(a)(f) | 766,000 | — |
| | | 4,547,057 |
| Telecommunication Services 0.2% |
| HKBN Ltd. * | 3,211,983 | 3,854,435 |
| HKT Trust & HKT Ltd. | 21,120 | 25,315 |
| PCCW Ltd. | 28,000 | 15,076 |
| | | 3,894,826 |
| Transportation 0.0% |
| Cathay Pacific Airways Ltd. | 10,000 | 19,833 |
| MTR Corp., Ltd. | 12,000 | 54,363 |
| Pacific Basin Shipping Ltd. | 2,170,000 | 641,874 |
| | | 716,070 |
| Utilities 0.0% |
| Cheung Kong Infrastructure Holdings Ltd. | 5,574 | 51,710 |
| CLP Holdings Ltd. | 15,500 | 134,749 |
| Hong Kong & China Gas Co., Ltd. | 56,643 | 114,846 |
| Power Assets Holdings Ltd. | 11,500 | 114,384 |
| | | 415,689 |
| | | 40,978,453 |
Laudus International MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| India 0.6% |
| Automobiles & Components 0.1% |
| Maruti Suzuki India Ltd. | 17,233 | 1,172,851 |
| Banks 0.5% |
| Axis Bank Ltd. | 195,744 | 1,418,612 |
| HDFC Bank Ltd. | 106,654 | 1,787,061 |
| Housing Development Finance Corp., Ltd. | 63,666 | 1,220,335 |
| Indiabulls Housing Finance Ltd. | 503,310 | 5,529,115 |
| | | 9,955,123 |
| Transportation 0.0% |
| Adani Ports & Special Economic Zone Ltd. | 139,467 | 630,123 |
| | | 11,758,097 |
| Indonesia 0.3% |
| Banks 0.3% |
| PT Bank Mandiri (Persero) Tbk | 10,251,800 | 6,488,056 |
| Ireland 0.6% |
| Banks 0.0% |
| Bank of Ireland * | 220,385 | 81,944 |
| Capital Goods 0.0% |
| Kingspan Group plc | 33,980 | 821,944 |
| Consumer Services 0.2% |
| Dalata Hotel Group plc * | 554,030 | 2,753,762 |
| Food, Beverage & Tobacco 0.3% |
| Glanbia plc (e) | 307,587 | 5,946,226 |
| Glanbia plc (e) | 3,091 | 59,897 |
| Kerry Group plc, Class A | 1,287 | 104,382 |
| | | 6,110,505 |
| Materials 0.1% |
| CRH plc | 6,589 | 180,346 |
| Smurfit Kappa Group plc | 82,104 | 2,336,599 |
| | | 2,516,945 |
| | | 12,285,100 |
| Israel 0.8% |
| Banks 0.0% |
| Bank Hapoalim B.M. | 8,587 | 44,698 |
| Bank Leumi Le-Israel B.M. * | 10,786 | 40,926 |
| Mizrahi Tefahot Bank Ltd. | 884 | 10,744 |
| | | 96,368 |
| Energy 0.0% |
| Delek Group Ltd. | 31 | 7,462 |
| Materials 0.3% |
| Frutarom Industries Ltd. | 120,670 | 5,210,875 |
| Israel Chemicals Ltd. | 4,483 | 24,857 |
| The Israel Corp., Ltd. | 35 | 9,029 |
| | | 5,244,761 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.3% |
| Teva Pharmaceutical Industries Ltd. | 7,047 | 418,402 |
| Teva Pharmaceutical Industries Ltd. ADR | 77,901 | 4,610,960 |
| | | 5,029,362 |
| Security | Number
of Shares | Value
($) |
| Real Estate 0.0% |
| Azrieli Group | 295 | 11,561 |
| Software & Services 0.2% |
| Check Point Software Technologies Ltd. * | 55,310 | 4,698,032 |
| NICE-Systems Ltd. | 537 | 33,190 |
| | | 4,731,222 |
| Telecommunication Services 0.0% |
| Bezeq The Israeli Telecommunication Corp., Ltd. | 13,894 | 29,775 |
| | | 15,150,511 |
| Italy 3.4% |
| Automobiles & Components 0.0% |
| Fiat Chrysler Automobiles N.V. * | 7,446 | 109,703 |
| Banks 1.1% |
| Banca Monte dei Paschi di Siena S.p.A. * | 17,688 | 32,470 |
| Banco Popolare SC * | 2,946 | 44,023 |
| FinecoBank Banca Fineco S.p.A. | 1,020,690 | 7,714,284 |
| Intesa Sanpaolo S.p.A. | 3,507,773 | 12,203,735 |
| UniCredit S.p.A. | 38,806 | 250,573 |
| Unione di Banche Italiane S.p.A. | 6,967 | 52,125 |
| | | 20,297,210 |
| Capital Goods 0.6% |
| CNH Industrial N.V. | 1,772,280 | 11,997,048 |
| Finmeccanica S.p.A. * | 3,291 | 43,022 |
| Prysmian S.p.A. | 1,704 | 36,799 |
| | | 12,076,869 |
| Consumer Durables & Apparel 0.8% |
| Luxottica Group S.p.A. | 1,361 | 95,406 |
| OVS S.p.A. * | 760,050 | 5,227,420 |
| Prada S.p.A. | 2,213,400 | 8,995,704 |
| Salvatore Ferragamo S.p.A. | 54,080 | 1,467,823 |
| | | 15,786,353 |
| Diversified Financials 0.6% |
| Azimut Holding S.p.A. | 35,348 | 850,226 |
| Banca Generali S.p.A. | 51,912 | 1,598,875 |
| EXOR S.p.A. | 176,685 | 8,762,534 |
| Mediobanca S.p.A. | 4,816 | 48,433 |
| | | 11,260,068 |
| Energy 0.0% |
| Eni S.p.A. | 20,690 | 337,873 |
| Saipem S.p.A. * | 2,112 | 19,841 |
| Tenaris S.A. | 3,841 | 48,375 |
| | | 406,089 |
| Food, Beverage & Tobacco 0.3% |
| Davide Campari-Milano S.p.A. | 569,250 | 4,874,724 |
| Insurance 0.0% |
| Assicurazioni Generali S.p.A. | 9,497 | 179,935 |
| UnipolSai S.p.A. | 7,022 | 16,930 |
| | | 196,865 |
| Retailing 0.0% |
| Yoox Net-A-Porter Group S.p.A. * | 20,657 | 700,388 |
| Telecommunication Services 0.0% |
| Telecom Italia S.p.A. * | 93,285 | 130,140 |
Laudus International MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Transportation 0.0% |
| Atlantia S.p.A. | 3,358 | 92,994 |
| Utilities 0.0% |
| Enel Green Power S.p.A. | 13,956 | 29,506 |
| Enel S.p.A. | 57,193 | 263,736 |
| Snam S.p.A. | 17,446 | 90,283 |
| Terna - Rete Elettrica Nationale S.p.A. | 12,062 | 61,351 |
| | | 444,876 |
| | | 66,376,279 |
| Japan 16.9% |
| Automobiles & Components 3.1% |
| Aisin Seiki Co., Ltd. | 1,600 | 63,502 |
| Bridgestone Corp. | 5,300 | 194,356 |
| Daihatsu Motor Co., Ltd. | 1,600 | 19,599 |
| Denso Corp. | 4,000 | 186,491 |
| F.C.C. Co., Ltd. | 160,100 | 2,831,338 |
| Fuji Heavy Industries Ltd. | 166,900 | 6,454,625 |
| Honda Motor Co., Ltd. | 522,307 | 17,278,143 |
| Isuzu Motors Ltd. | 4,800 | 56,062 |
| Koito Manufacturing Co., Ltd. | 885 | 33,524 |
| Mazda Motor Corp. | 4,400 | 86,369 |
| Mitsubishi Motors Corp. | 5,100 | 45,172 |
| Musashi Seimitsu Industry Co., Ltd. | 177,000 | 3,592,611 |
| NGK Spark Plug Co., Ltd. | 1,400 | 34,167 |
| NHK Spring Co., Ltd. | 1,000 | 10,178 |
| Nifco, Inc. | 310,500 | 11,969,524 |
| Nissan Motor Co., Ltd. | 20,200 | 209,398 |
| NOK Corp. | 900 | 21,150 |
| Stanley Electric Co., Ltd. | 1,400 | 26,741 |
| Sumitomo Electric Industries Ltd. | 6,100 | 83,252 |
| Sumitomo Rubber Industries Ltd. | 1,200 | 17,848 |
| Suzuki Motor Corp. | 3,000 | 98,230 |
| The Yokohama Rubber Co., Ltd. | 1,000 | 19,224 |
| Toyoda Gosei Co., Ltd. | 400 | 9,169 |
| Toyota Industries Corp. | 1,314 | 69,050 |
| Toyota Motor Corp. | 279,777 | 17,140,379 |
| Yamaha Motor Co., Ltd. | 2,100 | 47,087 |
| | | 60,597,189 |
| Banks 0.7% |
| Aozora Bank Ltd. | 9,000 | 32,895 |
| Fukuoka Financial Group, Inc. | 6,000 | 31,573 |
| Hokuhoku Financial Group, Inc. | 9,000 | 19,982 |
| Kyushu Financial Group, Inc. * | 3,000 | 23,071 |
| Mitsubishi UFJ Financial Group, Inc. | 577,800 | 3,736,939 |
| Mizuho Financial Group, Inc. | 190,100 | 391,576 |
| Resona Holdings, Inc. | 17,700 | 93,656 |
| Seven Bank Ltd. | 5,000 | 22,783 |
| Shinsei Bank Ltd. | 13,000 | 27,258 |
| Sumitomo Mitsui Financial Group, Inc. | 144,000 | 5,744,685 |
| Sumitomo Mitsui Trust Holdings, Inc. | 27,000 | 103,641 |
| Suruga Bank Ltd. | 97,400 | 1,917,515 |
| The Bank of Kyoto Ltd. | 3,000 | 30,299 |
| The Bank of Yokohama Ltd. | 9,194 | 57,381 |
| The Chiba Bank Ltd. | 6,000 | 43,770 |
| The Chugoku Bank Ltd. | 1,500 | 21,264 |
| The Gunma Bank Ltd. | 3,050 | 19,199 |
| Security | Number
of Shares | Value
($) |
| The Hachijuni Bank Ltd. | 3,311 | 22,577 |
| The Hiroshima Bank Ltd. | 4,086 | 22,692 |
| The Iyo Bank Ltd. | 2,300 | 24,730 |
| The Joyo Bank Ltd. | 5,000 | 25,971 |
| The Shizuoka Bank Ltd. | 4,454 | 44,681 |
| Yamaguchi Financial Group, Inc. | 1,274 | 15,670 |
| | | 12,473,808 |
| Capital Goods 2.3% |
| Amada Holdings Co., Ltd. | 2,826 | 25,203 |
| Asahi Glass Co., Ltd. | 8,000 | 45,804 |
| Daikin Industries Ltd. | 29,100 | 1,869,703 |
| FANUC Corp. | 14,099 | 2,487,648 |
| Fuji Electric Co., Ltd. | 142,000 | 633,541 |
| Hino Motors Ltd. | 2,100 | 24,031 |
| Hitachi Construction Machinery Co., Ltd. | 700 | 10,841 |
| Hoshizaki Electric Co., Ltd. | 56,600 | 4,092,645 |
| IHI Corp. | 11,000 | 31,036 |
| ITOCHU Corp. | 12,829 | 160,529 |
| Jamco Corp. | 115,400 | 4,840,681 |
| JGC Corp. | 2,000 | 31,744 |
| JTEKT Corp. | 1,700 | 29,303 |
| Kajima Corp. | 7,000 | 40,057 |
| Kawasaki Heavy Industries Ltd. | 12,000 | 48,165 |
| Keihan Electric Railway Co., Ltd. | 4,126 | 29,259 |
| Komatsu Ltd. | 593,100 | 9,749,073 |
| Kubota Corp. | 9,000 | 139,513 |
| Kurita Water Industries Ltd. | 900 | 20,323 |
| LIXIL Group Corp. | 2,100 | 44,961 |
| Mabuchi Motor Co., Ltd. | 400 | 19,792 |
| Makita Corp. | 20,900 | 1,145,170 |
| Marubeni Corp. | 13,245 | 76,530 |
| Minebea Co., Ltd. | 2,587 | 28,493 |
| MISUMI Group, Inc. | 558,100 | 7,267,632 |
| Mitsubishi Corp. | 11,449 | 208,149 |
| Mitsubishi Electric Corp. | 16,000 | 166,636 |
| Mitsubishi Heavy Industries Ltd. | 25,000 | 126,037 |
| Mitsui & Co., Ltd. | 13,800 | 175,024 |
| Nabtesco Corp. | 1,000 | 20,025 |
| NGK Insulators Ltd. | 2,000 | 43,300 |
| Nidec Corp. | 1,800 | 135,641 |
| NSK Ltd. | 4,000 | 47,308 |
| Obayashi Corp. | 5,000 | 43,850 |
| Penta-Ocean Construction Co., Ltd. | 1,147,900 | 5,212,842 |
| Seibu Holdings, Inc. | 900 | 18,215 |
| Shimizu Corp. | 5,000 | 43,778 |
| SMC Corp. | 437 | 112,415 |
| Sumitomo Corp. | 9,000 | 98,435 |
| Sumitomo Heavy Industries Ltd. | 5,000 | 22,530 |
| Tadano Ltd. | 69,000 | 824,235 |
| Taisei Corp. | 8,000 | 51,988 |
| Takeuchi Manufacturing Co., Ltd. | 195,000 | 3,673,183 |
| THK Co., Ltd. | 1,100 | 20,721 |
| Toshiba Corp. * | 33,000 | 93,095 |
| TOTO Ltd. | 1,100 | 37,296 |
| Toyota Tsusho Corp. | 1,700 | 38,933 |
| | | 44,105,313 |
| Commercial & Professional Supplies 1.1% |
| Dai Nippon Printing Co., Ltd. | 5,000 | 51,710 |
| Meitec Corp. | 1,400 | 50,845 |
| Mitsubishi Pencil Co., Ltd. | 74,600 | 3,340,257 |
Laudus International MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Nihon M&A Center, Inc. | 68,000 | 2,804,886 |
| Park24 Co., Ltd. | 600 | 12,575 |
| Recruit Holdings Co., Ltd. | 1,200 | 38,570 |
| Secom Co., Ltd. | 48,000 | 3,201,842 |
| Sohgo Security Services Co., Ltd. | 103,500 | 4,993,177 |
| Temp Holdings Co., Ltd. | 464,800 | 6,939,382 |
| Toppan Printing Co., Ltd. | 4,261 | 38,210 |
| | | 21,471,454 |
| Consumer Durables & Apparel 0.4% |
| Asics Corp. | 1,200 | 33,145 |
| Bandai Namco Holdings, Inc. | 1,400 | 34,412 |
| Casio Computer Co., Ltd. | 66,836 | 1,259,147 |
| Haseko Corp. | 506,500 | 5,149,677 |
| Iida Group Holdings Co., Ltd. | 1,313 | 24,609 |
| Nikon Corp. | 2,700 | 34,929 |
| Panasonic Corp. | 17,900 | 210,016 |
| Rinnai Corp. | 300 | 23,783 |
| Sankyo Co., Ltd. | 300 | 11,562 |
| Sega Sammy Holdings, Inc. | 1,800 | 18,956 |
| Sekisui Chemical Co., Ltd. | 3,382 | 39,904 |
| Sekisui House Ltd. | 4,955 | 82,483 |
| Sharp Corp. * | 11,419 | 12,516 |
| Shimano, Inc. | 645 | 101,632 |
| Sony Corp. | 10,200 | 289,939 |
| Yamaha Corp. | 1,400 | 34,746 |
| | | 7,361,456 |
| Consumer Services 0.4% |
| Benesse Holdings, Inc. | 500 | 13,405 |
| Kyoritsu Maintenance Co., Ltd. | 54,100 | 3,711,662 |
| McDonald's Holdings Co., Ltd. | 400 | 9,460 |
| Oriental Land Co., Ltd. | 1,600 | 97,195 |
| Resorttrust, Inc. | 133,700 | 3,436,206 |
| | | 7,267,928 |
| Diversified Financials 2.1% |
| Acom Co., Ltd. * | 3,100 | 16,972 |
| AEON Financial Service Co., Ltd. | 1,100 | 27,484 |
| Credit Saison Co., Ltd. | 1,211 | 24,861 |
| Daiwa Securities Group, Inc. | 2,007,000 | 13,723,003 |
| Hitachi Capital Corp. | 19,400 | 557,454 |
| Japan Exchange Group, Inc. | 4,200 | 67,582 |
| Mitsubishi UFJ Lease & Finance Co., Ltd. | 4,700 | 24,669 |
| Nomura Holdings, Inc. | 2,510,600 | 15,792,534 |
| ORIX Corp. | 441,100 | 6,441,722 |
| SBI Holdings, Inc. | 1,936 | 21,912 |
| Zenkoku Hosho Co., Ltd. | 121,200 | 4,101,059 |
| | | 40,799,252 |
| Energy 0.0% |
| Idemitsu Kosan Co., Ltd. | 600 | 9,839 |
| Inpex Corp. | 7,900 | 75,303 |
| JX Holdings, Inc. | 18,000 | 70,680 |
| Showa Shell Sekiyu K.K. | 1,200 | 10,592 |
| TonenGeneral Sekiyu K.K. | 2,367 | 24,592 |
| | | 191,006 |
| Food & Staples Retailing 0.3% |
| Aeon Co., Ltd. | 5,100 | 75,563 |
| FamilyMart Co., Ltd. | 600 | 24,526 |
| Lawson, Inc. | 529 | 39,185 |
| Security | Number
of Shares | Value
($) |
| Seven & i Holdings Co., Ltd. | 6,100 | 277,091 |
| Tsuruha Holdings, Inc. | 77,500 | 6,139,861 |
| | | 6,556,226 |
| Food, Beverage & Tobacco 0.7% |
| Ajinomoto Co., Inc. | 4,578 | 101,970 |
| Ariake Japan Co., Ltd. | 86,500 | 3,923,481 |
| Asahi Group Holdings Ltd. | 3,100 | 95,623 |
| Calbee, Inc. | 700 | 25,362 |
| Ezaki Glico Co., Ltd. | 106,300 | 5,077,123 |
| Japan Tobacco, Inc. | 83,100 | 2,876,240 |
| Kikkoman Corp. | 1,314 | 41,156 |
| Kirin Holdings Co., Ltd. | 6,600 | 93,478 |
| MEIJI Holdings Co., Ltd. | 1,000 | 78,800 |
| NH Foods Ltd. | 1,409 | 29,390 |
| Nisshin Seifun Group, Inc. | 1,900 | 29,040 |
| Nissin Foods Holdings Co., Ltd. | 600 | 27,737 |
| Suntory Beverage & Food Ltd. | 1,100 | 44,481 |
| Toyo Suisan Kaisha Ltd. | 665 | 24,504 |
| Yakult Honsha Co., Ltd. | 700 | 37,059 |
| Yamazaki Baking Co., Ltd. | 1,000 | 19,259 |
| | | 12,524,703 |
| Health Care Equipment & Services 1.2% |
| Alfresa Holdings Corp. | 1,200 | 23,011 |
| Asahi Intecc Co., Ltd. | 62,700 | 2,421,950 |
| Hogy Medical Co., Ltd. | 78,800 | 3,782,672 |
| Hoya Corp. | 114,600 | 4,729,171 |
| M3, Inc. | 44,100 | 854,752 |
| Medipal Holdings Corp. | 1,200 | 20,942 |
| Miraca Holdings, Inc. | 86,900 | 3,867,506 |
| Nipro Corp. | 323,900 | 3,631,048 |
| Olympus Corp. | 78,900 | 2,661,401 |
| Suzuken Co., Ltd. | 700 | 26,792 |
| Sysmex Corp. | 14,000 | 800,223 |
| Terumo Corp. | 2,500 | 74,175 |
| | | 22,893,643 |
| Household & Personal Products 0.6% |
| Kao Corp. | 47,700 | 2,448,885 |
| Kose Corp. | 27,200 | 2,656,341 |
| Pigeon Corp. | 193,700 | 5,427,256 |
| Pola Orbis Holdings, Inc. | 15,900 | 1,011,254 |
| Shiseido Co., Ltd. | 2,900 | 68,887 |
| Unicharm Corp. | 3,000 | 64,069 |
| | | 11,676,692 |
| Insurance 0.4% |
| Anicom Holdings, Inc. * | 204,400 | 4,866,130 |
| MS&AD Insurance Group Holdings, Inc. | 4,110 | 121,165 |
| Sompo Japan Nipponkoa Holdings, Inc. | 2,700 | 84,775 |
| Sony Financial Holdings, Inc. | 1,400 | 25,092 |
| T&D Holdings, Inc. | 4,600 | 60,447 |
| The Dai-ichi Life Insurance Co., Ltd. | 8,600 | 148,774 |
| Tokio Marine Holdings, Inc. | 71,000 | 2,735,749 |
| | | 8,042,132 |
| Materials 0.2% |
| Air Water, Inc. | 1,278 | 20,912 |
| Asahi Kasei Corp. | 10,463 | 64,208 |
| Daicel Corp. | 100,100 | 1,322,760 |
| Hitachi Chemical Co., Ltd. | 700 | 11,065 |
| Hitachi Metals Ltd. | 2,000 | 22,652 |
Laudus International MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| JFE Holdings, Inc. | 4,000 | 62,882 |
| JSR Corp. | 1,800 | 28,428 |
| Kaneka Corp. | 2,337 | 20,723 |
| Kansai Paint Co., Ltd. | 2,373 | 36,173 |
| Kobe Steel Ltd. | 25,000 | 31,569 |
| Kuraray Co., Ltd. | 2,500 | 30,835 |
| Maruichi Steel Tube Ltd. | 300 | 7,682 |
| Mitsubishi Chemical Holdings Corp. | 10,800 | 67,301 |
| Mitsubishi Gas Chemical Co., Inc. | 4,000 | 22,302 |
| Mitsubishi Materials Corp. | 9,049 | 31,566 |
| Mitsui Chemicals, Inc. | 6,000 | 22,687 |
| Nippon Paint Holdings Co., Ltd. | 1,400 | 29,571 |
| Nippon Steel & Sumitomo Metal Corp. | 6,200 | 125,690 |
| Nissan Chemical Industries Ltd. | 31,400 | 779,865 |
| Nitto Denko Corp. | 1,300 | 83,362 |
| Oji Holdings Corp. | 8,000 | 41,432 |
| Shin-Etsu Chemical Co., Ltd. | 3,324 | 197,675 |
| Sumitomo Chemical Co., Ltd. | 12,000 | 68,738 |
| Sumitomo Metal Mining Co., Ltd. | 4,000 | 49,626 |
| Taiheiyo Cement Corp. | 9,000 | 29,670 |
| Taiyo Nippon Sanso Corp. | 1,229 | 12,668 |
| Teijin Ltd. | 7,000 | 24,710 |
| Toray Industries, Inc. | 12,000 | 104,690 |
| Toyo Seikan Group Holdings Ltd. | 1,100 | 21,256 |
| | | 3,372,698 |
| Media 0.0% |
| Dentsu, Inc. | 1,800 | 101,193 |
| Hakuhodo DY Holdings, Inc. | 1,600 | 16,811 |
| Toho Co., Ltd. | 800 | 20,818 |
| | | 138,822 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.3% |
| Astellas Pharma, Inc. | 167,300 | 2,428,270 |
| Chugai Pharmaceutical Co., Ltd. | 1,800 | 57,942 |
| Daiichi Sankyo Co., Ltd. | 5,100 | 100,159 |
| Eisai Co., Ltd. | 2,100 | 131,354 |
| Hisamitsu Pharmaceutical Co., Inc. | 500 | 19,380 |
| Kyowa Hakko Kirin Co., Ltd. | 2,000 | 32,966 |
| Mitsubishi Tanabe Pharma Corp. | 1,800 | 30,437 |
| Ono Pharmaceutical Co., Ltd. | 700 | 95,896 |
| Otsuka Holdings Co., Ltd. | 3,200 | 106,497 |
| Santen Pharmaceutical Co., Ltd. | 3,000 | 40,717 |
| Shionogi & Co., Ltd. | 55,400 | 2,272,314 |
| Sumitomo Dainippon Pharma Co., Ltd. | 1,100 | 12,175 |
| Taisho Pharmaceutical Holdings Co., Ltd. | 300 | 18,718 |
| Takeda Pharmaceutical Co., Ltd. | 6,500 | 317,410 |
| | | 5,664,235 |
| Real Estate 0.4% |
| Aeon Mall Co., Ltd. | 1,100 | 18,400 |
| Daito Trust Construction Co., Ltd. | 600 | 64,948 |
| Daiwa House Industry Co., Ltd. | 81,400 | 2,136,774 |
| Hulic Co., Ltd. | 2,500 | 23,350 |
| Invincible Investment Corp. | 7,050 | 4,180,189 |
| Japan Prime Realty Investment Corp. | 5 | 16,276 |
| Japan Real Estate Investment Corp. | 10 | 46,225 |
| Japan Retail Fund Investment Corp. | 19 | 36,798 |
| Security | Number
of Shares | Value
($) |
| Mitsubishi Estate Co., Ltd. | 10,587 | 227,054 |
| Mitsui Fudosan Co., Ltd. | 8,000 | 217,709 |
| Nippon Building Fund, Inc. | 12 | 56,991 |
| Nippon Prologis REIT, Inc. | 13 | 22,861 |
| Nomura Real Estate Holdings, Inc. | 1,200 | 25,643 |
| Nomura Real Estate Master Fund, Inc. * | 29 | 36,746 |
| NTT Urban Development Corp. | 700 | 6,936 |
| Sumitomo Realty & Development Co., Ltd. | 26,495 | 872,437 |
| Tokyo Tatemono Co., Ltd. | 1,700 | 21,123 |
| Tokyu Fudosan Holdings Corp. | 3,900 | 27,414 |
| United Urban Investment Corp. | 23 | 31,910 |
| | | 8,069,784 |
| Retailing 0.6% |
| ABC-Mart, Inc. | 200 | 11,155 |
| Don Quijote Holdings Co., Ltd. | 1,000 | 36,734 |
| Fast Retailing Co., Ltd. | 430 | 157,071 |
| Gulliver International Co., Ltd. | 281,600 | 2,836,931 |
| Hikari Tsushin, Inc. | 100 | 7,610 |
| Isetan Mitsukoshi Holdings Ltd. | 2,721 | 43,650 |
| J. Front Retailing Co., Ltd. | 2,000 | 32,845 |
| Marui Group Co., Ltd. | 1,600 | 20,667 |
| Nitori Holdings Co., Ltd. | 8,205 | 639,817 |
| Rakuten, Inc. | 148,500 | 2,057,199 |
| Ryohin Keikaku Co., Ltd. | 25,700 | 5,160,481 |
| Sanrio Co., Ltd. | 300 | 7,970 |
| Shimamura Co., Ltd. | 142 | 15,948 |
| Takashimaya Co., Ltd. | 2,000 | 17,878 |
| USS Co., Ltd. | 1,800 | 31,777 |
| Yamada Denki Co., Ltd. | 5,600 | 25,192 |
| | | 11,102,925 |
| Semiconductors & Semiconductor Equipment 0.0% |
| Rohm Co., Ltd. | 800 | 39,545 |
| Tokyo Electron Ltd. | 1,400 | 83,971 |
| | | 123,516 |
| Software & Services 0.9% |
| COLOPL, Inc. | 400 | 6,534 |
| Dena Co., Ltd. | 133,900 | 2,148,330 |
| Dip Corp. | 194,700 | 3,441,782 |
| Fujitsu Ltd. | 15,000 | 70,899 |
| GungHo Online Entertainment, Inc. | 3,100 | 10,096 |
| IT Holdings Corp. | 26,900 | 664,993 |
| Itochu Techno-Solutions Corp. | 400 | 8,769 |
| Kakaku.com, Inc. | 1,000 | 18,655 |
| Konami Holdings Corp. | 700 | 15,905 |
| Mixi, Inc. | 301 | 11,494 |
| Nexon Co., Ltd. | 1,100 | 15,258 |
| Nintendo Co., Ltd. | 900 | 143,880 |
| Nomura Research Institute Ltd. | 55,300 | 2,260,135 |
| NS Solutions Corp. | 117,100 | 5,715,184 |
| NTT Data Corp. | 1,000 | 49,765 |
| Oracle Corp., Japan | 300 | 13,644 |
| Otsuka Corp. | 400 | 19,336 |
| SCSK Corp. | 22,300 | 854,981 |
| Trend Micro, Inc. | 58,100 | 2,264,241 |
| Yahoo Japan Corp. | 11,400 | 48,349 |
| | | 17,782,230 |
Laudus International MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Technology Hardware & Equipment 0.9% |
| Alps Electric Co., Ltd. | 35,000 | 1,086,371 |
| Brother Industries Ltd. | 1,800 | 23,007 |
| Canon, Inc. | 8,665 | 258,755 |
| Citizen Holdings Co., Ltd. | 1,700 | 12,885 |
| FUJIFILM Holdings Corp. | 3,800 | 151,577 |
| Hamamatsu Photonics K.K. | 1,400 | 35,638 |
| Hirose Electric Co., Ltd. | 300 | 36,311 |
| Hitachi High-Technologies Corp. | 400 | 10,757 |
| Hitachi Ltd. | 39,322 | 226,840 |
| Horiba Ltd. | 15,500 | 609,902 |
| Ibiden Co., Ltd. | 800 | 11,023 |
| Keyence Corp. | 6,000 | 3,123,650 |
| Konica Minolta, Inc. | 3,800 | 39,043 |
| Kyocera Corp. | 2,600 | 117,610 |
| Murata Manufacturing Co., Ltd. | 23,824 | 3,391,380 |
| NEC Corp. | 21,000 | 64,785 |
| Nippon Electric Glass Co., Ltd. | 3,000 | 14,680 |
| Omron Corp. | 258,200 | 8,549,737 |
| Ricoh Co., Ltd. | 5,700 | 61,434 |
| Seiko Epson Corp. | 2,400 | 36,660 |
| Shimadzu Corp. | 2,000 | 31,025 |
| TDK Corp. | 1,000 | 63,697 |
| Yaskawa Electric Corp. | 2,221 | 26,345 |
| Yokogawa Electric Corp. | 2,100 | 23,458 |
| | | 18,006,570 |
| Telecommunication Services 0.2% |
| KDDI Corp. | 142,100 | 3,438,580 |
| Nippon Telegraph & Telephone Corp. | 6,200 | 227,300 |
| NTT DOCOMO, Inc. | 11,700 | 227,863 |
| SoftBank Group Corp. | 7,831 | 438,755 |
| | | 4,332,498 |
| Transportation 0.1% |
| ANA Holdings, Inc. | 9,409 | 28,097 |
| Central Japan Railway Co. | 1,200 | 218,896 |
| East Japan Railway Co. | 2,738 | 260,317 |
| Hankyu Hanshin Holdings, Inc. | 9,000 | 58,627 |
| Japan Airlines Co., Ltd. | 1,000 | 37,673 |
| Japan Airport Terminal Co., Ltd. | 300 | 16,225 |
| Kamigumi Co., Ltd. | 2,000 | 17,183 |
| Keikyu Corp. | 4,000 | 32,903 |
| Keio Corp. | 5,000 | 40,694 |
| Keisei Electric Railway Co., Ltd. | 2,266 | 27,924 |
| Kintetsu Group Holdings Co., Ltd. | 15,000 | 57,991 |
| Mitsubishi Logistics Corp. | 1,000 | 14,352 |
| Mitsui O.S.K. Lines, Ltd. | 9,000 | 24,034 |
| Nagoya Railroad Co., Ltd. | 8,000 | 33,062 |
| Nippon Express Co., Ltd. | 7,000 | 36,062 |
| Nippon Yusen K.K. | 12,000 | 31,397 |
| Odakyu Electric Railway Co., Ltd. | 5,000 | 48,874 |
| Tobu Railway Co., Ltd. | 8,000 | 38,694 |
| Tokyu Corp. | 9,000 | 72,979 |
| West Japan Railway Co. | 1,341 | 94,214 |
| Yamato Holdings Co., Ltd. | 2,900 | 57,084 |
| | | 1,247,282 |
| Utilities 0.0% |
| Chubu Electric Power Co., Inc. | 5,131 | 78,930 |
| Electric Power Development Co., Ltd. | 1,200 | 39,559 |
| Security | Number
of Shares | Value
($) |
| Hokuriku Electric Power Co. | 1,200 | 17,899 |
| Kyushu Electric Power Co., Inc. * | 3,400 | 41,034 |
| Osaka Gas Co., Ltd. | 15,000 | 59,077 |
| Shikoku Electric Power Co., Inc. | 1,200 | 20,373 |
| The Chugoku Electric Power Co., Inc. | 2,200 | 33,245 |
| The Kansai Electric Power Co., Inc. * | 5,600 | 71,751 |
| Toho Gas Co., Ltd. | 3,330 | 20,394 |
| Tohoku Electric Power Co., Inc. | 3,600 | 50,546 |
| Tokyo Electric Power Co., Inc. * | 11,400 | 77,764 |
| Tokyo Gas Co., Ltd. | 19,000 | 94,028 |
| | | 604,600 |
| | | 326,405,962 |
| Luxembourg 0.2% |
| Materials 0.2% |
| APERAM S.A. * | 111,670 | 3,438,358 |
| Telecommunication Services 0.0% |
| Millicom International Cellular S.A. SDR | 528 | 29,434 |
| | | 3,467,792 |
| Malaysia 0.2% |
| Software & Services 0.2% |
| My EG Services Berhad | 6,358,700 | 4,366,365 |
| Mexico 0.2% |
| Banks 0.1% |
| Banregio Grupo Financiero S.A.B de C.V. | 505,240 | 2,725,662 |
| Food, Beverage & Tobacco 0.1% |
| Arca Continental S.A.B. de C.V. | 120,478 | 771,322 |
| Fomento Economico Mexicano S.A.B. de C.V. ADR | 9,333 | 924,807 |
| | | 1,696,129 |
| | | 4,421,791 |
| Netherlands 1.7% |
| Banks 0.0% |
| ING Groep N.V. CVA | 31,358 | 456,380 |
| Capital Goods 1.0% |
| Boskalis Westminster N.V. | 61,518 | 2,985,755 |
| Koninklijke Philips N.V. | 466,858 | 12,585,903 |
| TKH Group N.V. | 79,350 | 3,002,651 |
| | | 18,574,309 |
| Commercial & Professional Supplies 0.2% |
| Randstad Holding N.V. | 1,007 | 60,054 |
| USG People N.V. | 202,150 | 3,213,043 |
| | | 3,273,097 |
| Energy 0.0% |
| Koninklijke Vopak N.V. | 550 | 22,094 |
| Food & Staples Retailing 0.0% |
| Koninklijke Ahold N.V. | 7,567 | 153,934 |
Laudus International MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Food, Beverage & Tobacco 0.0% |
| Heineken Holding N.V. | 806 | 64,394 |
| Heineken N.V. | 1,874 | 170,689 |
| | | 235,083 |
| Household & Personal Products 0.0% |
| Unilever N.V. CVA | 13,249 | 599,088 |
| Insurance 0.0% |
| Aegon N.V. | 15,335 | 94,103 |
| Delta Lloyd N.V. | 1,975 | 15,563 |
| NN Group N.V. | 1,942 | 60,848 |
| | | 170,514 |
| Materials 0.1% |
| Akzo Nobel N.V. | 22,315 | 1,578,348 |
| ArcelorMittal | 8,127 | 45,383 |
| Koninklijke DSM N.V. | 1,446 | 77,083 |
| OCI N.V. * | 694 | 19,579 |
| | | 1,720,393 |
| Media 0.1% |
| Altice N.V., Class A * | 2,998 | 51,924 |
| Altice N.V., Class B * | 693 | 12,307 |
| RELX N.V. | 8,280 | 141,230 |
| Wolters Kluwer N.V. | 53,277 | 1,800,618 |
| | | 2,006,079 |
| Real Estate 0.2% |
| Unibail-Rodamco SE | 11,773 | 3,276,789 |
| Semiconductors & Semiconductor Equipment 0.1% |
| ASML Holding N.V. | 2,837 | 263,164 |
| NXP Semiconductors N.V. * | 32,285 | 2,529,530 |
| | | 2,792,694 |
| Software & Services 0.0% |
| Gemalto N.V. | 644 | 40,321 |
| Telecommunication Services 0.0% |
| Koninklijke (Royal) KPN N.V. | 26,048 | 95,445 |
| Transportation 0.0% |
| TNT Express N.V. | 4,420 | 37,141 |
| | | 33,453,361 |
| New Zealand 0.5% |
| Consumer Services 0.1% |
| SKYCITY Entertainment Group Ltd. | 920,409 | 2,496,800 |
| Health Care Equipment & Services 0.0% |
| Ryman Healthcare Ltd. | 2,586 | 13,798 |
| Materials 0.0% |
| Fletcher Building Ltd. | 5,143 | 25,903 |
| Telecommunication Services 0.0% |
| Spark New Zealand Ltd. | 13,651 | 30,964 |
| Transportation 0.4% |
| Auckland International Airport Ltd. | 2,101,709 | 7,468,674 |
| Utilities 0.0% |
| Contact Energy Ltd. | 2,424 | 8,508 |
| Meridian Energy Ltd. | 10,167 | 15,277 |
| Mighty River Power Ltd. | 5,669 | 10,737 |
| | | 34,522 |
| | | 10,070,661 |
| Security | Number
of Shares | Value
($) |
| Norway 0.3% |
| Banks 0.0% |
| DNB A.S.A. | 7,948 | 101,193 |
| Energy 0.1% |
| Hoegh LNG Holdings Ltd. | 158,770 | 1,909,195 |
| Seadrill Ltd. * | 3,053 | 19,633 |
| Statoil A.S.A. | 9,077 | 146,723 |
| Subsea 7 S.A. * | 2,037 | 15,977 |
| | | 2,091,528 |
| Food, Beverage & Tobacco 0.0% |
| Orkla A.S.A. | 6,519 | 55,477 |
| Insurance 0.1% |
| Gjensidige Forsikring A.S.A. | 36,789 | 560,114 |
| Materials 0.0% |
| Norsk Hydro A.S.A. | 10,761 | 38,544 |
| Yara International A.S.A. | 1,449 | 65,822 |
| | | 104,366 |
| Telecommunication Services 0.1% |
| Telenor A.S.A. | 105,144 | 1,980,719 |
| | | 4,893,397 |
| Peru 0.1% |
| Banks 0.1% |
| Credicorp Ltd. | 10,384 | 1,175,261 |
| Philippines 0.2% |
| Materials 0.2% |
| D&L Industries, Inc. | 15,374,800 | 3,195,142 |
| Portugal 0.1% |
| Banks 0.0% |
| Banco Comercial Portugues S.A., Class R * | 391,289 | 22,430 |
| Banco Espirito Santo S.A. - Reg'd *(a) | 42,176 | — |
| | | 22,430 |
| Energy 0.0% |
| Galp Energia, SGPS, S.A. | 3,081 | 33,259 |
| Food & Staples Retailing 0.1% |
| Jeronimo Martins, SGPS, S.A. | 92,117 | 1,293,020 |
| Utilities 0.0% |
| EDP - Energias de Portugal S.A. | 18,835 | 69,605 |
| | | 1,418,314 |
| Republic of Korea 2.0% |
| Capital Goods 0.2% |
| Byucksan Corp. | 499,490 | 4,104,774 |
| Consumer Durables & Apparel 0.2% |
| Cuckoo Electronics Co., Ltd. | 18,030 | 3,953,548 |
| Consumer Services 0.2% |
| Hana Tour Service, Inc. | 25,800 | 2,842,435 |
| Food, Beverage & Tobacco 0.2% |
| NongShim Co., Ltd. | 12,320 | 3,981,418 |
Laudus International MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Household & Personal Products 0.1% |
| Amorepacific Corp. | 2,138 | 705,742 |
| Cosmax, Inc. | 10,080 | 1,692,829 |
| | | 2,398,571 |
| Semiconductors & Semiconductor Equipment 0.1% |
| SK Hynix, Inc. | 40,620 | 1,087,081 |
| Technology Hardware & Equipment 1.0% |
| Samsung Electronics Co., Ltd. | 16,087 | 19,295,160 |
| | | 37,662,987 |
| Singapore 2.5% |
| Banks 0.2% |
| DBS Group Holdings Ltd. | 220,716 | 2,713,713 |
| Oversea-Chinese Banking Corp., Ltd. | 25,038 | 160,941 |
| United Overseas Bank Ltd. | 10,500 | 152,468 |
| | | 3,027,122 |
| Capital Goods 0.1% |
| Keppel Corp., Ltd. | 12,000 | 60,405 |
| Noble Group Ltd. | 34,000 | 12,207 |
| Sarine Technologies Ltd. (f) | 1,928,800 | 2,147,854 |
| Sembcorp Industries Ltd. | 8,000 | 20,385 |
| Sembcorp Marine Ltd. | 7,000 | 11,648 |
| Singapore Technologies Engineering Ltd. | 13,000 | 30,641 |
| Yangzijiang Shipbuilding Holdings Ltd. | 16,100 | 14,331 |
| | | 2,297,471 |
| Consumer Services 0.0% |
| Genting Singapore plc | 49,000 | 28,384 |
| Diversified Financials 0.0% |
| Singapore Exchange Ltd. | 7,000 | 36,830 |
| Energy 0.0% |
| Ezra Holdings Ltd. * | 3,559,120 | 309,729 |
| Food, Beverage & Tobacco 0.0% |
| Golden Agri-Resources Ltd. | 70,000 | 19,426 |
| Wilmar International Ltd. | 16,000 | 35,654 |
| | | 55,080 |
| Media 0.0% |
| Singapore Press Holdings Ltd. | 13,000 | 36,972 |
| Real Estate 0.9% |
| Ascendas Real Estate Investment Trust | 4,803,500 | 8,178,092 |
| CapitaLand Commercial Trust Ltd. | 15,000 | 15,053 |
| CapitaLand Ltd. | 21,000 | 46,324 |
| CapitaLand Mall Trust | 6,888,200 | 9,711,762 |
| City Developments Ltd. | 3,427 | 19,395 |
| Global Logistic Properties Ltd. | 25,000 | 39,985 |
| Suntec Real Estate Investment Trust | 19,224 | 22,580 |
| UOL Group Ltd. | 3,900 | 18,200 |
| | | 18,051,391 |
| Retailing 0.0% |
| Jardine Cycle & Carriage Ltd. | 1,111 | 25,723 |
| Security | Number
of Shares | Value
($) |
| Telecommunication Services 0.4% |
| Singapore Telecommunications Ltd. | 812,300 | 2,306,931 |
| StarHub Ltd. | 1,696,600 | 4,352,314 |
| | | 6,659,245 |
| Transportation 0.8% |
| ComfortDelGro Corp., Ltd. | 18,500 | 40,027 |
| Hutchison Port Holdings Trust, Class U | 46,000 | 25,477 |
| SATS Ltd. | 2,706,600 | 7,314,837 |
| SIA Engineering Co., Ltd. (f) | 2,858,600 | 8,129,155 |
| Singapore Airlines Ltd. | 4,331 | 33,320 |
| | | 15,542,816 |
| Utilities 0.1% |
| Hyflux Ltd. | 3,770,800 | 1,823,765 |
| | | 47,894,528 |
| South Africa 0.4% |
| Capital Goods 0.1% |
| The Bidvest Group Ltd. | 39,007 | 996,417 |
| Consumer Durables & Apparel 0.1% |
| Steinhoff International Holdings Ltd. | 455,893 | 2,787,073 |
| Diversified Financials 0.1% |
| FirstRand Ltd. | 467,493 | 1,713,052 |
| Insurance 0.0% |
| Sanlam Ltd. | 95,207 | 430,119 |
| Media 0.1% |
| Naspers Ltd., N Shares | 15,953 | 2,329,049 |
| | | 8,255,710 |
| Spain 1.7% |
| Banks 0.3% |
| Banco Bilbao Vizcaya Argentaria S.A. *(a) | 2,623 | 22,567 |
| Banco Bilbao Vizcaya Argentaria S.A. | 418,663 | 3,602,013 |
| Banco de Sabadell S.A. | 40,269 | 77,691 |
| Banco Popular Espanol S.A. | 14,705 | 55,910 |
| Banco Santander S.A. | 116,588 | 651,284 |
| Bankia S.A. | 36,876 | 47,389 |
| Bankinter S.A. | 249,562 | 1,804,872 |
| CaixaBank S.A. | 21,379 | 81,885 |
| | | 6,343,611 |
| Capital Goods 0.0% |
| ACS, Actividades de Construccion y Servicios S.A. | 1,467 | 49,773 |
| Ferrovial S.A. | 3,746 | 94,502 |
| Zardoya Otis S.A. | 1,387 | 17,054 |
| | | 161,329 |
| Commercial & Professional Supplies 0.1% |
| Prosegur Cia de Seguridad S.A. - Reg'd | 525,989 | 2,340,320 |
| Consumer Services 0.6% |
| Melia Hotels International S.A. | 800,380 | 11,557,518 |
| Energy 0.0% |
| Repsol S.A. | 8,779 | 110,513 |
Laudus International MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Food & Staples Retailing 0.1% |
| Distribuidora Internacional de Alimentacion S.A. * | 159,344 | 1,012,407 |
| Food, Beverage & Tobacco 0.0% |
| Viscofan S.A. | 9,701 | 565,812 |
| Insurance 0.0% |
| Mapfre S.A. | 152,269 | 451,746 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% |
| Grifols S.A. | 1,192 | 55,208 |
| Retailing 0.1% |
| Industria de Diseno Textil S.A. | 64,403 | 2,411,529 |
| Software & Services 0.2% |
| Amadeus IT Holding S.A., A Shares | 88,419 | 3,761,040 |
| Telecommunication Services 0.2% |
| Cellnex Telecom S.A.U. * | 195,840 | 3,389,756 |
| Telefonica S.A. | 36,405 | 480,304 |
| | | 3,870,060 |
| Transportation 0.0% |
| Abertis Infraestructuras S.A. | 3,987 | 66,208 |
| Aena S.A. * | 573 | 63,950 |
| International Consolidated Airlines Group S.A. * | 6,682 | 59,744 |
| | | 189,902 |
| Utilities 0.1% |
| Enagas S.A. | 1,834 | 55,457 |
| Endesa S.A. | 2,673 | 59,435 |
| Gas Natural SDG S.A. | 2,849 | 61,629 |
| Iberdrola S.A. | 44,072 | 314,283 |
| Red Electrica Corp. S.A. | 880 | 77,471 |
| | | 568,275 |
| | | 33,399,270 |
| Sweden 2.8% |
| Banks 0.1% |
| Nordea Bank AB | 24,704 | 272,575 |
| Skandinaviska Enskilda Banken AB, A Shares | 12,354 | 129,728 |
| Svenska Handelsbanken AB, A Shares | 12,180 | 165,422 |
| Swedbank AB, A Shares | 57,292 | 1,312,753 |
| | | 1,880,478 |
| Capital Goods 1.5% |
| Alfa Laval AB | 2,516 | 44,140 |
| Assa Abloy AB, Class B | 95,316 | 1,896,129 |
| Atlas Copco AB, A Shares | 68,530 | 1,785,939 |
| Atlas Copco AB, B Shares | 202,474 | 4,894,773 |
| Eltel AB *(f) | 354,185 | 3,905,995 |
| Indutrade AB | 58,290 | 2,771,758 |
| Inwido AB | 293,997 | 3,180,492 |
| Saab AB, Class B | 132,740 | 3,738,235 |
| Sandvik AB | 8,672 | 80,881 |
| Skanska AB, B Shares | 3,040 | 59,319 |
| SKF AB, B Shares | 396,970 | 6,975,595 |
| Volvo AB, B Shares | 12,473 | 129,010 |
| | | 29,462,266 |
| Security | Number
of Shares | Value
($) |
| Commercial & Professional Supplies 0.4% |
| AF AB, B Shares | 392,912 | 5,810,510 |
| Intrum Justitia AB | 20,321 | 729,061 |
| Securitas AB, B Shares | 2,569 | 33,540 |
| | | 6,573,111 |
| Consumer Durables & Apparel 0.3% |
| Electrolux AB, B Shares | 1,924 | 56,605 |
| Husqvarna AB, B Shares | 4,048 | 26,649 |
| Nobia AB | 452,380 | 5,540,353 |
| | | 5,623,607 |
| Diversified Financials 0.2% |
| Avanza Bank Holding AB | 79,610 | 3,148,604 |
| Industrivarden AB, C Shares | 1,365 | 24,776 |
| Investment AB Kinnevik, B Shares | 1,883 | 60,007 |
| Investor AB, B Shares | 3,704 | 137,078 |
| | | 3,370,465 |
| Energy 0.0% |
| Lundin Petroleum AB * | 1,568 | 22,697 |
| Food & Staples Retailing 0.0% |
| ICA Gruppen AB | 627 | 22,368 |
| Food, Beverage & Tobacco 0.1% |
| Swedish Match AB | 46,443 | 1,459,969 |
| Health Care Equipment & Services 0.0% |
| Getinge AB, B Shares | 1,628 | 40,686 |
| Household & Personal Products 0.0% |
| Svenska Cellulosa AB, S.C.A., B Shares | 4,775 | 140,643 |
| Materials 0.0% |
| Boliden AB | 2,307 | 44,170 |
| Hexpol AB | 65,346 | 634,750 |
| | | 678,920 |
| Retailing 0.2% |
| Hennes & Mauritz AB, B Shares | 93,522 | 3,635,468 |
| Technology Hardware & Equipment 0.0% |
| Hexagon AB, B Shares | 2,074 | 71,937 |
| Telefonaktiebolaget LM Ericsson, B Shares | 24,752 | 240,899 |
| | | 312,836 |
| Telecommunication Services 0.0% |
| Tele2 AB, B Shares | 2,620 | 26,165 |
| TeliaSonera AB | 22,079 | 112,813 |
| | | 138,978 |
| | | 53,362,492 |
| Switzerland 6.5% |
| Capital Goods 0.9% |
| ABB Ltd. - Reg'd * | 17,885 | 337,413 |
| Belimo Holding AG - Reg'd | 717 | 1,537,801 |
| Burckhardt Compression Holding AG (f) | 20,659 | 7,197,803 |
| Daetwyler Holding AG | 20,915 | 2,932,034 |
| Geberit AG - Reg'd | 5,494 | 1,773,020 |
| Schindler Holding AG | 17,926 | 2,908,370 |
| Schindler Holding AG - Reg'd | 169 | 27,507 |
| Sulzer AG - Reg'd | 240 | 24,251 |
| | | 16,738,199 |
Laudus International MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Commercial & Professional Supplies 0.0% |
| Adecco S.A. - Reg'd * | 1,385 | 102,954 |
| SGS S.A. - Reg'd | 45 | 85,685 |
| | | 188,639 |
| Consumer Durables & Apparel 1.0% |
| Cie Financiere Richemont S.A. - Reg'd | 162,492 | 13,933,292 |
| The Swatch Group AG - Bearer Shares | 15,251 | 5,956,117 |
| The Swatch Group AG - Reg'd | 396 | 28,608 |
| | | 19,918,017 |
| Diversified Financials 1.7% |
| Credit Suisse Group AG - Reg'd * | 786,852 | 19,625,048 |
| Julius Baer Group Ltd. * | 1,820 | 90,240 |
| Leonteq AG * | 48,370 | 9,303,120 |
| Pargesa Holding S.A. | 238 | 15,094 |
| Partners Group Holding AG | 9,550 | 3,455,623 |
| UBS Group AG - Reg’d | 59,212 | 1,182,607 |
| | | 33,671,732 |
| Energy 0.0% |
| Transocean Ltd. | 2,944 | 45,065 |
| Food, Beverage & Tobacco 0.4% |
| Aryzta AG * | 698 | 31,431 |
| Barry Callebaut AG - Reg'd * | 18 | 21,570 |
| Chocoladefabriken Lindt & Sprungli AG | 8 | 48,825 |
| Chocoladefabriken Lindt & Sprungli AG - Reg'd | 1 | 74,194 |
| Nestle S.A. - Reg'd | 105,748 | 8,076,391 |
| | | 8,252,411 |
| Health Care Equipment & Services 0.6% |
| Sonova Holding AG - Reg'd | 430 | 58,671 |
| Straumann Holding AG - Reg'd | 25,480 | 7,209,855 |
| Ypsomed Holding AG - Reg’d * | 27,260 | 3,585,209 |
| | | 10,853,735 |
| Insurance 0.0% |
| Baloise Holding AG - Reg'd | 386 | 46,280 |
| Swiss Life Holding AG - Reg'd * | 257 | 61,241 |
| Swiss Re AG | 2,864 | 265,867 |
| Zurich Insurance Group AG * | 1,214 | 320,374 |
| | | 693,762 |
| Materials 0.7% |
| Clariant AG - Reg'd * | 100,535 | 1,848,672 |
| EMS-Chemie Holding AG - Reg'd | 67 | 28,353 |
| Givaudan S.A. - Reg'd * | 75 | 134,115 |
| LafargeHolcim Ltd. * | 184,750 | 10,404,150 |
| Sika AG | 17 | 55,752 |
| Syngenta AG - Reg'd | 757 | 254,329 |
| | | 12,725,371 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.7% |
| Actelion Ltd. - Reg'd * | 22,478 | 3,120,263 |
| Lonza Group AG - Reg'd * | 15,889 | 2,332,183 |
| Novartis AG - Reg'd | 60,640 | 5,493,296 |
| Roche Holding AG | 5,716 | 1,551,888 |
| | | 12,497,630 |
| Real Estate 0.0% |
| Swiss Prime Site AG - Reg'd * | 569 | 43,473 |
| Security | Number
of Shares | Value
($) |
| Retailing 0.0% |
| Dufry AG - Reg'd * | 329 | 38,436 |
| Semiconductors & Semiconductor Equipment 0.2% |
| U-Blox AG * | 19,530 | 3,772,552 |
| Software & Services 0.0% |
| Luxoft Holding, Inc. * | 8,875 | 591,430 |
| Telecommunication Services 0.0% |
| Swisscom AG - Reg'd | 210 | 108,195 |
| Transportation 0.3% |
| Kuehne & Nagel International AG - Reg'd | 40,232 | 5,574,445 |
| | | 125,713,092 |
| Taiwan 1.1% |
| Automobiles & Components 0.2% |
| Hota Industrial Manufacturing Co., Ltd. | 1,296,000 | 4,296,537 |
| Consumer Durables & Apparel 0.2% |
| Eclat Textile Co., Ltd. | 287,000 | 4,221,177 |
| Diversified Financials 0.1% |
| Fubon Financial Holding Co., Ltd. | 916,000 | 1,480,550 |
| Health Care Equipment & Services 0.1% |
| St. Shine Optical Co., Ltd. | 120,000 | 1,810,847 |
| Semiconductors & Semiconductor Equipment 0.3% |
| Taiwan Semiconductor Manufacturing Co., Ltd. ADR | 242,369 | 5,322,423 |
| Technology Hardware & Equipment 0.2% |
| Catcher Technology Co., Ltd. | 130,000 | 1,275,823 |
| Delta Electronics, Inc. | 283,000 | 1,438,938 |
| Largan Precision Co., Ltd. | 11,000 | 854,795 |
| | | 3,569,556 |
| | | 20,701,090 |
| United Arab Emirates 0.0% |
| Banks 0.0% |
| Dubai Islamic Bank PJSC | 362,112 | 636,212 |
| United Kingdom 17.2% |
| Automobiles & Components 0.0% |
| GKN plc | 13,131 | 58,021 |
| Banks 0.8% |
| Barclays plc | 134,625 | 479,639 |
| HSBC Holdings plc | 158,216 | 1,236,136 |
| Lloyds Banking Group plc | 8,330,194 | 9,454,855 |
| Royal Bank of Scotland Group plc * | 26,359 | 128,807 |
| Standard Chartered plc | 20,071 | 222,801 |
| Virgin Money Holdings UK plc | 785,470 | 4,690,655 |
| | | 16,212,893 |
| Capital Goods 4.0% |
| Ashtead Group plc | 157,678 | 2,424,416 |
| BAE Systems plc | 25,717 | 173,962 |
| Bodycote plc | 784,737 | 6,199,329 |
| Brammer plc | 852,012 | 3,020,028 |
| Bunzl plc | 71,643 | 2,048,742 |
| Cobham plc | 9,260 | 39,536 |
| Diploma plc | 688,023 | 6,804,107 |
Laudus International MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Galliford Try plc | 130,130 | 2,997,596 |
| HellermannTyton Group plc | 1,242,722 | 9,078,878 |
| IMI plc | 2,207 | 32,364 |
| Interserve plc (f) | 929,460 | 7,942,124 |
| Meggitt plc | 697,487 | 3,799,692 |
| Melrose Industries plc | 7,414 | 30,332 |
| Rolls-Royce Holdings plc * | 15,293 | 161,716 |
| Rotork plc | 3,583,736 | 10,352,624 |
| Smiths Group plc | 372,655 | 5,513,052 |
| Spirax-Sarco Engineering plc | 192,998 | 9,047,183 |
| The Weir Group plc | 1,707 | 28,042 |
| Travis Perkins plc | 2,008 | 59,184 |
| Ultra Electronics Holdings plc | 164,114 | 4,253,188 |
| Wolseley plc | 55,134 | 3,236,987 |
| | | 77,243,082 |
| Commercial & Professional Supplies 0.5% |
| Aggreko plc | 2,083 | 29,361 |
| Babcock International Group plc | 2,000 | 29,648 |
| Capita plc | 97,572 | 1,913,961 |
| Experian plc | 449,881 | 7,666,000 |
| G4S plc | 283,619 | 1,059,422 |
| Intertek Group plc | 1,291 | 52,140 |
| | | 10,750,532 |
| Consumer Durables & Apparel 1.1% |
| Barratt Developments plc | 7,894 | 74,365 |
| Bellway plc | 258,390 | 10,320,820 |
| Berkeley Group Holdings plc | 33,390 | 1,704,177 |
| Burberry Group plc | 95,808 | 1,956,985 |
| Persimmon plc * | 2,482 | 76,117 |
| Redrow plc | 720,460 | 5,141,818 |
| Taylor Wimpey plc | 428,475 | 1,305,287 |
| | | 20,579,569 |
| Consumer Services 1.2% |
| Carnival plc | 1,471 | 81,870 |
| Compass Group plc | 201,653 | 3,466,596 |
| Domino's Pizza Group plc | 312,150 | 5,245,887 |
| Greene King plc | 577,159 | 7,140,052 |
| InterContinental Hotels Group plc | 47,754 | 1,908,222 |
| Merlin Entertainments plc | 6,740 | 43,007 |
| TUI AG (e) | 3,665 | 68,153 |
| TUI AG (e) | 116,728 | 2,168,088 |
| Whitbread plc | 29,309 | 2,238,154 |
| William Hill plc | 7,523 | 36,707 |
| | | 22,396,736 |
| Diversified Financials 0.4% |
| 3i Group plc | 7,905 | 60,893 |
| Aberdeen Asset Management plc | 7,356 | 39,222 |
| Hargreaves Lansdown plc | 2,251 | 50,026 |
| ICAP plc | 4,520 | 30,597 |
| Investec plc | 4,456 | 37,119 |
| London Stock Exchange Group plc | 2,533 | 99,173 |
| Provident Financial plc | 35,670 | 1,904,110 |
| Schroders plc | 119,780 | 5,495,903 |
| Schroders plc, Non Voting Shares | 1,100 | 38,295 |
| | | 7,755,338 |
| Energy 0.4% |
| Amec Foster Wheeler plc | 3,151 | 34,479 |
| BG Group plc | 27,736 | 438,188 |
| BP plc | 148,994 | 885,469 |
| Hunting plc | 81,659 | 452,628 |
| Security | Number
of Shares | Value
($) |
| Petrofac Ltd. | 2,110 | 27,378 |
| Royal Dutch Shell plc, A Shares | 212,333 | 5,559,365 |
| Royal Dutch Shell plc, B Shares | 19,848 | 519,718 |
| Tullow Oil plc * | 7,283 | 22,748 |
| | | 7,939,973 |
| Food & Staples Retailing 0.0% |
| J. Sainsbury plc | 11,567 | 47,395 |
| Tesco plc * | 66,021 | 186,199 |
| WM Morrison Supermarkets plc | 17,092 | 44,319 |
| | | 277,913 |
| Food, Beverage & Tobacco 0.7% |
| Associated British Foods plc | 2,897 | 153,934 |
| British American Tobacco plc | 15,233 | 904,986 |
| Coca-Cola HBC AG CDI * | 1,598 | 38,074 |
| Diageo plc | 397,729 | 11,466,499 |
| Imperial Tobacco Group plc | 7,784 | 419,153 |
| SABMiller plc | 7,843 | 481,743 |
| Tate & Lyle plc | 3,477 | 31,916 |
| | | 13,496,305 |
| Health Care Equipment & Services 0.0% |
| Smith & Nephew plc | 7,261 | 123,986 |
| Household & Personal Products 0.5% |
| Reckitt Benckiser Group plc | 27,497 | 2,683,445 |
| Unilever plc | 155,424 | 6,920,796 |
| | | 9,604,241 |
| Insurance 1.0% |
| Admiral Group plc | 1,574 | 39,061 |
| Aviva plc | 32,508 | 242,951 |
| Direct Line Insurance Group plc | 11,183 | 67,834 |
| Hiscox Ltd. | 69,847 | 1,038,679 |
| Legal & General Group plc | 48,131 | 193,823 |
| Old Mutual plc | 39,839 | 130,210 |
| Prudential plc | 275,959 | 6,445,430 |
| RSA Insurance Group plc | 8,104 | 52,448 |
| St. James's Place plc | 3,550 | 52,613 |
| Standard Life plc | 15,907 | 102,844 |
| Willis Group Holdings plc | 231,200 | 10,313,832 |
| | | 18,679,725 |
| Materials 2.2% |
| Anglo American plc | 11,359 | 95,299 |
| Antofagasta plc | 3,147 | 25,441 |
| BHP Billiton plc | 17,178 | 274,573 |
| Croda International plc | 320,003 | 14,274,378 |
| Elementis plc | 1,638,983 | 5,909,113 |
| Fresnillo plc | 1,755 | 19,685 |
| Glencore plc * | 7,787,970 | 13,445,548 |
| Johnson Matthey plc | 1,667 | 66,303 |
| Mondi plc | 2,922 | 67,569 |
| Randgold Resources Ltd. | 716 | 48,020 |
| Rexam plc | 5,726 | 47,610 |
| Rio Tinto plc | 10,349 | 377,172 |
| Victrex plc | 282,881 | 8,038,170 |
| | | 42,688,881 |
| Media 1.1% |
| ITV plc | 1,447,245 | 5,618,622 |
| Pearson plc | 6,661 | 88,430 |
| RELX plc | 152,132 | 2,720,288 |
| Rightmove plc | 88,310 | 5,215,706 |
| Sky plc | 8,397 | 141,705 |
Laudus International MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| UBM plc | 78,524 | 618,598 |
| WPP plc | 282,090 | 6,323,561 |
| | | 20,726,910 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.7% |
| AstraZeneca plc | 10,268 | 654,405 |
| GlaxoSmithKline plc | 107,115 | 2,310,011 |
| Hikma Pharmaceuticals plc | 147,330 | 4,909,351 |
| Shire plc | 67,099 | 5,081,464 |
| | | 12,955,231 |
| Real Estate 0.1% |
| Derwent London plc | 19,867 | 1,186,516 |
| Hammerson plc | 6,276 | 61,490 |
| Intu Properties plc | 7,222 | 38,445 |
| Land Securities Group plc | 6,428 | 132,428 |
| Segro plc | 5,536 | 38,349 |
| The British Land Co., plc | 7,819 | 104,733 |
| | | 1,561,961 |
| Retailing 0.3% |
| Dixons Carphone plc | 7,829 | 55,579 |
| Inchcape plc | 67,035 | 824,426 |
| Kingfisher plc | 19,274 | 104,769 |
| Marks & Spencer Group plc | 13,277 | 104,839 |
| Next plc | 34,286 | 4,222,489 |
| Sports Direct International plc * | 2,219 | 23,808 |
| | | 5,335,910 |
| Semiconductors & Semiconductor Equipment 0.0% |
| ARM Holdings plc | 11,453 | 180,369 |
| Software & Services 0.5% |
| Auto Trader Group plc * | 1,244,290 | 7,439,973 |
| Micro Focus International plc | 36,002 | 695,891 |
| The Sage Group plc | 131,864 | 1,105,622 |
| | | 9,241,486 |
| Technology Hardware & Equipment 1.1% |
| Halma plc | 594,808 | 6,991,728 |
| Laird plc | 866,112 | 4,512,306 |
| Oxford Instruments plc | 237,097 | 1,894,146 |
| Spectris plc | 209,867 | 5,382,515 |
| Telit Communications plc * | 569,620 | 2,186,533 |
| | | 20,967,228 |
| Telecommunication Services 0.3% |
| BT Group plc | 735,643 | 5,253,603 |
| Inmarsat plc | 3,582 | 54,292 |
| Vodafone Group plc | 216,673 | 713,056 |
| | | 6,020,951 |
| Transportation 0.2% |
| easyJet plc | 157,060 | 4,230,904 |
| Royal Mail plc | 5,187 | 35,537 |
| | | 4,266,441 |
| Utilities 0.1% |
| Centrica plc | 40,996 | 142,649 |
| National Grid plc | 30,823 | 439,070 |
| Severn Trent plc | 1,915 | 66,044 |
| SSE plc | 76,398 | 1,777,368 |
| United Utilities Group plc | 5,546 | 84,394 |
| | | 2,509,525 |
| | | 331,573,207 |
| Security | Number
of Shares | Value
($) |
| United States 0.1% |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| ICON plc * | 23,409 | 1,495,133 |
| Total Common Stock |
| (Cost $1,698,642,994) | | 1,829,364,525 |
|
| Preferred Stock 0.5% of net assets |
| Germany 0.5% |
| Automobiles & Components 0.0% |
| Bayerische Motoren Werke AG | 404 | 32,670 |
| Porsche Automobil Holding SE | 1,245 | 58,196 |
| Volkswagen AG | 1,322 | 158,687 |
| | | 249,553 |
| Capital Goods 0.2% |
| Jungheinrich AG | 50,550 | 3,734,494 |
| Health Care Equipment & Services 0.3% |
| Sartorius AG | 18,780 | 4,250,065 |
| Household & Personal Products 0.0% |
| Henkel AG & Co. KGaA | 1,449 | 157,149 |
| Materials 0.0% |
| Fuchs Petrolub SE | 585 | 28,056 |
| | | 8,419,317 |
| Italy 0.0% |
| Banks 0.0% |
| Intesa Sanpaolo S.p.A. - RSP | 8,353 | 26,649 |
| Telecommunication Services 0.0% |
| Telecom Italia S.p.A. - RSP | 49,011 | 55,084 |
| | | 81,733 |
| United Kingdom 0.0% |
| Capital Goods 0.0% |
| Rolls-Royce Holdings plc *(a) | 1,417,661 | 2,185 |
| Total Preferred Stock |
| (Cost $8,077,292) | | 8,503,235 |
|
| Other Investment Companies 4.1% of net assets |
| Equity Fund 0.6% |
| Vanguard FTSE Emerging Markets ETF | 335,000 | 11,671,400 |
| Money Market Fund 3.5% |
| State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (b) | 67,082,049 | 67,082,049 |
| Total Other Investment Companies |
| (Cost $82,419,204) | | 78,753,449 |
|
Laudus International MarketMasters Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Rights 0.0% of net assets |
| Spain 0.0% |
| Banks 0.0% |
| Banco Santander S.A. * | 116,588 | 6,410 |
| Total Rights |
| (Cost $6,603) | | 6,410 |
Security
Rate, Maturity Date | Face
Amount
($) | Value
($) |
| Short-Term Investments 0.0% of net assets |
| U.S. Treasury Obligations 0.0% |
| U.S. Treasury Bills |
| 0.03%, 02/25/16 (c)(d) | 50,000 | 49,988 |
| 0.03%, 03/17/16 (c)(d) | 5,000 | 4,998 |
| 0.04%, 03/17/16 (c)(d) | 5,000 | 4,998 |
| Total Short-Term Investments |
| (Cost $59,994) | | 59,984 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $1,817,921,100 and the unrealized appreciation and depreciation were $215,382,452 and ($116,615,949), respectively, with a net unrealized appreciation of $98,766,503.
At 10/31/15, the values of certain foreign securities held by the fund aggregating $1,624,719,124 were adjusted from their closing market values in accordance with international fair valuation procedures approved by the fund's Board of Trustees. (See financial note 2(a) for additional information)
| * | Non-income producing security. |
| (a) | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| (b) | The rate shown is the 7-day yield. |
| (c) | All or a portion of this security is held as collateral for open futures contracts. |
| (d) | The rate shown is the purchase yield. |
| (e) | Securities are traded on separate exchanges for the same entity. |
| (f) | Illiquid security. At the period end, the value of these amounted to $42,443,845 or 2.2% of net assets. |
| | |
| ADR — | American Depositary Receipt |
| CDI — | CHESS Depositary Interest |
| CVA — | Dutch Certificate |
| ETF — | Exchange Traded Fund |
| Reg'd — | Registered |
| REIT — | Real Estate Investment Trust |
| RSP — | Risparmio (Convertible Savings Shares) |
| SDR — | Swedish Depositary Receipt |
| AUD — | Australian dollar |
| CHF — | Swiss franc |
| NZD — | New Zealand dollar |
| USD — | U.S. dollar |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Depreciation
($) |
| Futures Contracts | | | |
| MSCI EAFE, e-mini, Long, expires 12/18/15 | 501 | 44,015,355 | (569,982) |
Expiration
Date | Counterparty | Currency
to be
Received | Amount of
Currency
to be
Received | Currency
to be
Delivered | Amount of
Currency
to be
Delivered | Unrealized
Appreciation
(Depreciation)
($) |
| Forward Foreign Currency Exchange Contracts | | | | | | |
| 03/16/2016 | State Street Bank & Trust Co. | AUD | 890,000 | USD | 630,665 | (18,412) |
| 03/16/2016 | State Street Bank & Trust Co. | AUD | 1,184,000 | USD | 838,997 | (2,842) |
| 03/16/2016 | State Street Bank & Trust Co. | USD | 2,794,060 | AUD | 3,943,000 | 194,182 |
| 03/16/2016 | State Street Bank & Trust Co. | USD | 12,241,963 | CHF | 12,037,000 | 254,403 |
| 01/29/2016 | State Street Bank & Trust Co. | USD | 6,476,732 | NZD | 9,624,500 | (41,406) |
| Net Unrealized Appreciation on Forward Foreign Currency Exchange Contracts | 385,925 |
Laudus International MarketMasters Fund
Portfolio Holdings continued
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
Assets Valuation Input
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Common Stock1 | | $— | | $361,249,973 | | $— | | $361,249,973 | |
| Australia 1 | | — | | 55,884,599 | | — | | 55,884,599 | |
| Banks | | 24,102 | | 2,259,505 | | — | | 2,283,607 | |
| Real Estate | | — | | 14,586,902 | | 58,035 | | 14,644,937 | |
| Transportation | | 12,767 | | 267,463 | | — | | 280,230 | |
| Brazil 1 | | — | | 1,084,019 | | — | | 1,084,019 | |
| Food, Beverage & Tobacco | | 2,463,075 | | — | | — | | 2,463,075 | |
| Canada 1 | | 83,436,450 | | — | | — | | 83,436,450 | |
| China 1 | | — | | 42,842,519 | | — | | 42,842,519 | |
| Consumer Durables & Apparel | | 4,573,914 | | — | | — | | 4,573,914 | |
| Software & Services | | 21,412,181 | | 5,482,059 | | — | | 26,894,240 | |
| France 1 | | — | | 147,426,697 | | — | | 147,426,697 | |
| Pharmaceuticals, Biotechnology & Life Sciences | | 3,962,077 | | 10,065,590 | | — | | 14,027,667 | |
| Software & Services | | 2,369,996 | | 8,879,564 | | — | | 11,249,560 | |
| Hong Kong1 | | — | | 18,029,991 | | — | | 18,029,991 | |
| Consumer Durables & Apparel | | 2,783,996 | | 1,921,538 | | — | | 4,705,534 | |
| Consumer Services | | 8,377,929 | | 5,970,173 | | — | | 14,348,102 | |
| Telecommunication Services | | 25,315 | | 3,869,511 | | — | | 3,894,826 | |
| Ireland 1 | | — | | 3,420,833 | | — | | 3,420,833 | |
| Consumer Services | | 2,753,762 | | — | | — | | 2,753,762 | |
| Food, Beverage & Tobacco | | 5,946,226 | | 164,279 | | — | | 6,110,505 | |
| Israel 1 | | — | | 5,389,927 | | — | | 5,389,927 | |
| Pharmaceuticals, Biotechnology & Life Sciences | | 4,610,960 | | 418,402 | | — | | 5,029,362 | |
| Software & Services | | 4,698,032 | | 33,190 | | — | | 4,731,222 | |
| Italy 1 | | — | | 50,589,926 | | — | | 50,589,926 | |
| Consumer Durables & Apparel | | 8,995,704 | | 6,790,649 | | — | | 15,786,353 | |
| Japan 1 | | — | | 305,862,370 | | — | | 305,862,370 | |
| Banks | | 23,071 | | 12,450,737 | | — | | 12,473,808 | |
| Real Estate | | 36,746 | | 8,033,038 | | — | | 8,069,784 | |
| Mexico 1 | | 4,421,791 | | — | | — | | 4,421,791 | |
| Netherlands 1 | | — | | 27,599,120 | | — | | 27,599,120 | |
| Banks | | 456,380 | | — | | — | | 456,380 | |
| Household & Personal Products | | 599,088 | | — | | — | | 599,088 | |
| Media | | 64,231 | | 1,941,848 | | — | | 2,006,079 | |
| Semiconductors & Semiconductor Equipment | | 2,529,530 | | 263,164 | | — | | 2,792,694 | |
| Peru 1 | | 1,175,261 | | — | | — | | 1,175,261 | |
| Singapore 1 | | — | | 45,597,057 | | — | | 45,597,057 | |
| Capital Goods | | 2,147,854 | | 149,617 | | — | | 2,297,471 | |
| Spain 1 | | — | | 27,055,659 | | — | | 27,055,659 | |
| Banks | | — | | 6,321,044 | | 22,567 | | 6,343,611 | |
Laudus International MarketMasters Fund
Portfolio Holdings continued
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Switzerland 1 | | $— | | $97,529,728 | | $— | | $97,529,728 | |
| Capital Goods | | 1,537,801 | | 15,200,398 | | — | | 16,738,199 | |
| Health Care Equipment & Services | | 3,585,209 | | 7,268,526 | | — | | 10,853,735 | |
| Software & Services | | 591,430 | | — | | — | | 591,430 | |
| Taiwan 1 | | — | | 15,378,667 | | — | | 15,378,667 | |
| Semiconductors & Semiconductor Equipment | | 5,322,423 | | — | | — | | 5,322,423 | |
| United Kingdom1 | | — | | 214,683,172 | | — | | 214,683,172 | |
| Capital Goods | | 15,882,985 | | 61,360,097 | | — | | 77,243,082 | |
| Insurance | | 10,313,832 | | 8,365,893 | | — | | 18,679,725 | |
| Technology Hardware & Equipment | | 2,186,533 | | 18,780,695 | | — | | 20,967,228 | |
| United States1 | | 1,495,133 | | — | | — | | 1,495,133 | |
| Preferred Stock1 | | — | | 81,733 | | — | | 81,733 | |
| Germany 1 | | — | | 4,169,252 | | — | | 4,169,252 | |
| Health Care Equipment & Services | | 4,250,065 | | — | | — | | 4,250,065 | |
| United Kingdom1 | | — | | — | | 2,185 | | 2,185 | |
| Other Investment Companies1 | | 78,753,449 | | — | | — | | 78,753,449 | |
| Rights | | | | | | | | | |
| Spain 1 | | 6,410 | | — | | — | | 6,410 | |
| Short-Term Investments1 | | — | | 59,984 | | — | | 59,984 | |
| Total | | $291,825,708 | | $1,624,779,108 | | $82,787 | | $1,916,687,603 | |
| Other Financial Instruments | | | | | | | | | |
| Forward Foreign Currency Exchange Contracts2 | | $— | | $448,585 | | $— | | $448,585 | |
Liabilities Valuation Input
| | | | | | | | | |
| | | | | | | | | |
| Other Financial Instruments | | | | | | | | | |
| Futures Contracts2 | | ($569,982) | | $— | | $— | | ($569,982) | |
| Forward Foreign Currency Exchange Contracts2 | | — | | (62,660) | | — | | (62,660) | |
| 1 | As categorized in Portfolio Holdings. |
| 2 | Futures contracts and forward foreign currency exchange contracts are not included in Investments in the schedule of portfolio holdings and are valued at unrealized appreciation or depreciation. |
The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
| Investments in Securities | | Balance
as of
October 31,
2014 | | Realized
Gains
(Losses) | | Change in
Unrealized
Appreciation
(Depreciation) | | Gross
Purchases | | Gross
Sales | | Gross
Transfers
in | | Gross
Transfers
out | | Balance
as of
October 31,
2015 |
| Common Stock | | | | | | | | | | | | | | | | |
| Australia | | $— | | $— | | ($7,835) | | $31,114 | | ($2) | | $34,758 | | $— | | $58,035 |
| Spain | | — | | (2) | | 936 | | 21,633 | | — | | — | | — | | 22,567 |
| Preferred Stock | | | | | | | | | | | | | | | | |
| United Kingdom | | 3,056 | | — | | 10 | | 2,185 | | (3,066) | | — | | — | | 2,185 |
| Total | | $3,056 | | ($2) | | ($6,889) | | $54,932 | | ($3,068) | | $34,758 | | $— | | $82,787 |
Laudus International MarketMasters Fund
Portfolio Holdings continued
All net realized and change in unrealized gains (losses) in the table above are reflected on the accompanying Statement of Operations. The net change in unrealized appreciation (depreciation) for Level 3 investments held by the fund at October 31, 2015 was ($8,496).
The fund’s policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were security transfers between Level 1, Level 2 and Level 3 for the the period ended October 31, 2015. The transfers in the amount of $35,435,305 and $20,909,041 from Level 1 to Level 2 and from Level 2 to Level 1, respectively, were primarily due to the use of international fair valuation by the fund. The transfers into Level 3 from Level 1 or Level 2 were due to the result of fair valued securities for which no quoted value was available.
Laudus International MarketMasters Fund
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments, at value (cost $1,789,206,087) | | $1,916,687,603 |
| Foreign currency, at value (cost $495,567) | | 494,621 |
| Deposit with broker for futures contracts | | 6,510,000 |
| Receivables: | | |
| Investments sold | | 9,453,961 |
| Fund shares sold | | 4,169,068 |
| Dividends | | 3,499,124 |
| Foreign tax reclaims | | 1,796,740 |
| Unrealized appreciation on forward foreign currency exchange contracts | | 448,585 |
| Prepaid expenses | + | 87,016 |
| Total assets | | 1,943,146,718 |
| Liabilities |
| Payables: | | |
| Investments bought | | 10,430,008 |
| Investment adviser and administrator fees | | 344,003 |
| Shareholder service fees | | 358,978 |
| Fund shares redeemed | | 813,492 |
| Variation margin on futures contracts | | 88,462 |
| Unrealized depreciation on forward foreign currency exchange contracts | + | 62,660 |
| Total liabilities | | 12,097,603 |
| Net Assets |
| Total assets | | 1,943,146,718 |
| Total liabilities | – | 12,097,603 |
| Net assets | | $1,931,049,115 |
| Net Assets by Source | | |
| Capital received from investors | | 1,706,507,361 |
| Net investment income not yet distributed | | 15,706,816 |
| Net realized capital gains | | 81,656,152 |
| Net unrealized capital appreciation | | 127,178,786 |
| Net Asset Value (NAV) by Shares Class | |
| Share Class | Net Assets | ÷ | Shares
Outstanding | = | NAV |
| Investor Shares | $536,121,818 | | 23,608,237 | | $22.71 |
| Select Shares | $1,394,927,297 | | 61,428,291 | | $22.71 |
| | | | | | |
Laudus International MarketMasters Fund
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends (net of foreign withholding tax of $4,279,276) | | $45,717,650 |
| Interest | + | 237 |
| Total investment income | | 45,717,887 |
| Expenses |
| Investment adviser and administrator fees | | 26,783,125 |
| Shareholder service fees: | | |
| Investor Shares | | 1,382,545 |
| Select Shares | | 2,192,211 |
| Custodian fees | | 1,208,544 |
| Portfolio accounting fees | | 198,879 |
| Transfer agent fees | | 159,000 |
| Shareholder reports | | 144,145 |
| Professional fees | | 69,667 |
| Registration fees | | 41,253 |
| Independent trustees' fees | | 17,049 |
| Proxy fees | | 9,426 |
| Interest expense | | 1,835 |
| Other expenses | + | 141,535 |
| Total expenses | | 32,349,214 |
| Expense reduction by CSIM and its affiliates | – | 4,981,287 |
| Net expenses | – | 27,367,927 |
| Net investment income | | 18,349,960 |
| Realized and Unrealized Gains (Losses) |
| Net realized gains on investments (net of foreign capital gain tax paid of $709,659) | | 108,010,892 |
| Net realized gains on futures contracts | | 91,709 |
| Net realized gains on foreign currency transactions | + | 5,846,601 |
| Net realized gains | | 113,949,202 |
| Net change in unrealized appreciation (depreciation) on investments (net of change in foreign capital gain tax of $1,138,481) | | (111,529,269) |
| Net change in unrealized appreciation (depreciation) on futures contracts | | (494,083) |
| Net change in unrealized appreciation (depreciation) on foreign currency translations | + | (3,247,545) |
| Net change in unrealized appreciation (depreciation) | + | (115,270,897) |
| Net realized and unrealized losses | | (1,321,695) |
| Increase in net assets resulting from operations | | $17,028,265 |
Laudus International MarketMasters Fund
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $18,349,960 | $26,641,585 |
| Net realized gains | | 113,949,202 | 224,500,692 |
| Net change in unrealized appreciation (depreciation) | + | (115,270,897) | (286,715,625) |
| Increase (decrease) in net assets from operations | | 17,028,265 | (35,573,348) |
| Distributions to Shareholders | |
| Distributions from net investment income | | | |
| Investor Shares | | (8,584,765) | (9,151,462) |
| Select Shares | + | (24,212,500) | (24,452,646) |
| Total distributions from net investment income | | (32,797,265) | (33,604,108) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares Sold | | | | | |
| Investor Shares | | 1,572,262 | $36,357,838 | 2,681,598 | $63,944,369 |
| Select Shares | + | 11,333,727 | 263,224,442 | 17,762,259 | 421,251,532 |
| Total shares sold | | 12,905,989 | $299,582,280 | 20,443,857 | $485,195,901 |
| Shares Reinvested | | | | | |
| Investor Shares | | 358,089 | $7,806,344 | 364,557 | $8,395,762 |
| Select Shares | + | 454,613 | 9,896,917 | 703,683 | 16,184,703 |
| Total shares reinvested | | 812,702 | $17,703,261 | 1,068,240 | $24,580,465 |
| Shares Redeemed | | | | | |
| Investor Shares | | (5,819,694) | ($132,991,809) | (4,050,133) | ($96,267,673) |
| Select Shares | + | (19,712,757) | (460,500,168) | (16,261,189) | (386,422,770) |
| Total shares redeemed | | (25,532,451) | ($593,491,977) | (20,311,322) | ($482,690,443) |
| Net transactions in fund shares | | (11,813,760) | ($276,206,436) | 1,200,775 | $27,085,923 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 96,850,288 | $2,223,024,551 | 95,649,513 | $2,265,116,084 |
| Total increase or decrease | + | (11,813,760) | (291,975,436) | 1,200,775 | (42,091,533) |
| End of period | | 85,036,528 | $1,931,049,115 | 96,850,288 | $2,223,024,551 |
| Net investment income not yet distributed | | | $15,706,816 | | $18,038,415 |
Laudus MarketMasters Funds
1. Business Structure of the Funds:
Each of the funds in this report is a series of Schwab Capital Trust (the trust), a no-load, open-end management investment company. The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the 1940 Act). The list below shows all the funds in the trust as of the end of the period, including the funds discussed in this report, which are highlighted:
| Schwab Capital Trust (organized May 7, 1993) | Schwab Target 2010 Fund |
| Laudus Small-Cap MarketMasters Fund | Schwab Target 2015 Fund |
| Laudus International MarketMasters Fund | Schwab Target 2020 Fund |
| Schwab ® S&P 500 Index Fund | Schwab Target 2025 Fund |
| Schwab Small-Cap Index Fund® | Schwab Target 2030 Fund |
| Schwab Total Stock Market Index Fund® | Schwab Target 2035 Fund |
| Schwab International Index Fund® | Schwab Target 2040 Fund |
| Schwab MarketTrack All Equity Portfolio™ | Schwab Target 2045 Fund |
| Schwab MarketTrack Growth Portfolio™ | Schwab Target 2050 Fund |
| Schwab MarketTrack Balanced Portfolio™ | Schwab Target 2055 Fund |
| Schwab MarketTrack Conservative Portfolio™ | Schwab Fundamental US Large Company Index Fund |
| Schwab Balanced Fund™ | Schwab Fundamental US Small Company Index Fund |
| Schwab Core Equity Fund™ | Schwab Fundamental International Large Company Index Fund |
| Schwab Dividend Equity Fund™ | Schwab Fundamental International Small Company Index Fund |
| Schwab Large-Cap Growth Fund™ | Schwab Fundamental Emerging Markets Large Company Index Fund |
| Schwab Small-Cap Equity Fund™ | Schwab Fundamental Global Real Estate Index Fund |
| Schwab Hedged Equity Fund™ | Schwab ® Monthly Income Fund - Moderate Payout |
| Schwab Financial Services Fund™ | Schwab ® Monthly Income Fund - Enhanced Payout |
| Schwab Health Care Fund™ | Schwab ® Monthly Income Fund - Maximum Payout |
| Schwab ® International Core Equity Fund | |
Each fund in this report offers two share classes: Investor Shares and Select Shares®. Shares of each class represent an interest in the same portfolio, but each class has different expenses and investment minimums.
Shares are bought and sold (subject to a redemption fee, see financial note 9) at closing net asset value per share (NAV), which is the price for all outstanding shares of a fund or share class, as applicable. Each share has a par value of 1/1,000 of a cent, and the funds' Board of Trustees (the Board) may authorize the issuance of as many shares as necessary.
Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, each fund may also keep certain assets in segregated accounts, as required by securities law.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies the funds use in their preparation of financial statements. The funds follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 Financial Services — Investment Companies. The accounting policies are in conformity with accounting principles generally accepted in the United States of America (GAAP).
The funds invest in certain other investment companies (underlying funds). For more information about the underlying funds’ operations and policies, please refer to those funds’ semiannual and annual reports, which are filed with the U.S. Securities and Exchange Commission (SEC).
(a) Security Valuation:
Under procedures approved by the Board, the investment adviser has formed a Pricing Committee to administer the pricing and valuation of portfolio securities and other assets and to ensure that prices used for internal purposes or provided by third parties reasonably reflect fair market value. Among other things, these procedures allow the funds to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.
Laudus MarketMasters Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
The funds value the securities in their portfolios every business day. The funds use the following policies to value various types of securities:
• Securities traded on an exchange or over-the-counter: Traded securities are valued at the closing value for the day, or, on days when no closing value has been reported, at halfway between the most recent bid and ask quotes. Securities that are primarily traded on foreign exchanges are valued at the official closing price or the last sales price on the exchange where the securities are principally traded with these values then translated into U.S. dollars at the current exchange rate, unless these securities are fair valued as discussed below.
• Securities for which no quoted value is available: The Board has adopted procedures to fair value each fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the funds pursuant to the valuation procedures.
• Foreign equity security fair valuation: The Board has adopted procedures to fair value foreign equity securities that are traded in markets that close prior to the funds valuing their holdings. By fair valuing securities whose prices may have been affected by events occurring after the close of trading, each fund seeks to establish prices that investors might expect to realize upon the current sales of these securities. This methodology is designed to deter “arbitrage” market timers, who seek to exploit delays between the change in the value of a fund’s portfolio holdings and the NAV of the fund’s shares, and seeks to help ensure that the prices at which the fund’s shares are purchased and redeemed are fair and do not result in dilution of shareholder interest or other harm to shareholders. When fair value pricing is used at the open or close of a reporting period, it may cause a temporary divergence between the return of a fund and that of its comparative index or benchmark. The Board regularly reviews fair value determinations made by the funds pursuant to these procedures.
• Futures contracts and forward foreign currency exchange contracts (forwards): Futures contracts are valued at their settlement prices as of the close of their exchanges. Forwards are valued based on that day's forward exchange rates or by using an interpolated forward exchange rate for contracts with interim settlement dates.
• Short-term securities (60 days or less to maturity): A short-term security may be valued at its amortized cost when it approximates the security's market value.
• Underlying funds: Mutual funds are valued at their respective NAVs. Exchange traded funds (ETFs) traded on a recognized securities exchange are valued at the last reported sale price that day or the official closing price, if applicable.
In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the funds disclose the fair value of their investments in a hierarchy that prioritizes the significant inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). If inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the valuation. If the funds determine that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
Laudus MarketMasters Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
The three levels of the fair value hierarchy are as follows:
• Level 1—quoted prices in active markets for identical securities—Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities, ETFs and futures contracts. Investments in mutual funds are valued daily at their NAVs, and investments in ETFs are valued daily at the last reported sale price or the official closing price, which are classified as Level 1 prices, without consideration to the classification level of the specific investments held by an underlying fund.
• Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)—Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. In addition, international securities whose markets close hours before the funds value their holdings may require fair valuations due to significant movement in the U.S. markets occurring after the daily close of the foreign markets. The Board has approved a vendor that calculates fair valuations of international equity securities based on a number of factors that appear to correlate to the movements in the U.S. markets.
• Level 3—significant unobservable inputs (including the funds' own assumptions in determining the fair value of investments)—Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the funds use one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the funds in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the funds in the absence of market information. Assumptions used by the funds due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds' results of operations.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The levels associated with valuing the funds' investments as of October 31, 2015 are disclosed in the Portfolio Holdings.
(b) Accounting Policies for certain Portfolio Investments (if held):
Futures Contracts: Futures contracts are instruments that represent an agreement between two parties that obligates one party to buy, and the other party to sell, specific instruments at an agreed upon price on a stipulated future date. A fund must give the broker a deposit of cash and/or securities (initial margin) whenever it enters into a futures contract. The amount of the deposit may vary from one contract to another. Subsequent payments (variation margin) are made or received by a fund depending on the daily fluctuations in the value of the futures contract and are accounted for as unrealized appreciation or depreciation until the contract is closed, at which time the gains or losses are realized. Futures contracts are traded publicly on exchanges, and their market value may change daily.
Forward Foreign Currency Exchange Contracts: Forwards are contracts to buy and sell a currency at a set price on a future date. The value of the forwards is accounted for as unrealized appreciation or depreciation until the contracts settle, at which time the gains or losses are realized.
(c) Security Transactions:
Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.
Assets and liabilities denominated in foreign currencies are reported in U.S. dollars. For assets and liabilities held on a given date, the dollar value is based on market exchange rates in effect on that date. Transactions involving foreign currencies, including purchases, sales, income receipts and expense payments, are calculated using exchange rates in effect on the
Laudus MarketMasters Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
transaction date. Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the differences between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange appreciation or depreciation arises from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period. These realized and unrealized foreign exchange gains or losses are reported in foreign currency transactions or translations in the Statement of Operations. The funds do not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.
Gains realized by the funds on the sale of securities in certain foreign countries may be subject to non-U.S. taxes. In those instances, the funds record a liability based on unrealized appreciation to provide for potential non-U.S. taxes payable upon the sale of these securities.
When a fund closes out a futures contract or forward position, it calculates the difference between the value of the position at the beginning and at the end of the contract, and records a realized gain or loss accordingly.
(d) Investment Income:
Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying funds are recorded on the date they are effective (the ex-dividend date), although the funds record certain foreign security dividends on the day they learn of the ex-dividend date. Any distributions from underlying funds are recorded in accordance with the character of the distributions as designated by the underlying funds.
Income received from foreign sources may result in withholding tax. Withholding taxes are accrued at the same time as the related income if the tax rate is fixed and known, unless a tax withheld is reclaimable from the local tax authorities in which case it is recorded as receivable. If the tax rate is not known or estimable, such expense or reclaim receivable is recorded when the net proceeds are received.
(e) Expenses:
Expenses that are specific to a fund are charged directly to the fund. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their average daily net assets.
For funds offering multiple share classes, the net investment income, other than class specific expenses, and the realized and unrealized gains or losses, are allocated daily to each class in proportion to their average daily net assets.
(f) Distributions to Shareholders:
The funds make distributions from net investment income and net realized capital gains, if any, once a year.
(g) Custody Credit:
The funds have an arrangement with their custodian bank, State Street Bank and Trust Company (State Street), under which the funds may receive a credit for their uninvested cash balance to offset their custody fees and accounting fees. The credit amounts, if any, are disclosed in the Statement of Operations as a reduction to the funds’ operating expenses.
(h) Accounting Estimates:
The accounting policies described in this report conform to GAAP. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It’s possible that once the results are known, they may turn out to be different from these estimates and these differences may be material.
(i) Federal Income Taxes:
The funds intend to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the funds distribute substantially all of their net investment income and net realized capital gains, if any, to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.
Laudus MarketMasters Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
(j) Foreign Taxes:
The funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, corporate events, foreign currency exchanges and capital gains on investments. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in foreign markets in which the funds invest. These foreign taxes, if any, are paid by the funds and are disclosed in the Statement of Operations. Foreign taxes payable as of October 31, 2015, if any, are reflected in each fund's Statement of Assets and Liabilities.
(k) Indemnification:
Under the funds’ organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business the funds enter into contracts with their vendors and others that provide general indemnifications. The funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. However, based on experience, the funds expect the risk of loss attributable to these arrangements to be remote.
3. Risk Factors:
Investing in the funds may involve certain risks, as discussed in the funds' prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
Market Risk. Equity markets rise and fall daily. As with any investment whose performance is tied to these markets, the value of the investment in a fund will fluctuate, which means that investors could lose money.
Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time.
Investment Style Risk. The funds’ investment managers attempt to reduce the impact of the performance of any given investment style by investing in both value and growth style stocks. But whenever value stocks fall out of favor with investors, they may underperform growth stocks, and vice versa.
Small-Cap Risk. Historically, small-cap stocks have been riskier than large- and mid-cap stocks, and their prices may move sharply, especially during market upturns and downturns. Small-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies. During a period when small-cap stocks fall behind other types of investments—bonds or large-cap and mid-cap stocks, for instance—a fund's performance also will lag those investments.
Large- and Mid-Cap Risk. Both large- and mid-cap stocks tend to go in and out of favor based on market and economic conditions. However, stocks of mid-cap companies tend to be more vulnerable to adverse business or economic events than larger, more established companies. During a period when large- and mid-cap U.S. stocks fall behind other types of investments—bonds and small-cap stocks, for instance—a fund's performance also will lag those investments.
Management Risk. As with all actively managed funds, a fund is subject to the risk that its investment adviser and investment managers will select investments or allocate assets in a manner that could cause the fund to underperform or otherwise not meet its objective. Poor stock selection or a focus on securities in a particular sector may cause a fund to underperform its benchmark or other funds with a similar investment objective.
Foreign Investment Risk. A fund's investments in securities of foreign issuers involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges); the imposition of economic sanctions or other government restrictions; differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. These restrictions may negatively impact the value or liquidity of a fund's investments, and could impair the fund's ability to meet its investment objective or invest in accordance with its investment strategy. These risks may be heightened in connection with investments in emerging markets.
Laudus MarketMasters Funds
Financial Notes (continued)
3. Risk Factors (continued):
Emerging Markets Risk. Emerging market countries may be more likely to experience political turmoil or rapid changes in market or economic conditions than more developed countries. Emerging market countries often have less uniformity in accounting and reporting requirements and greater risk associated with the custody of securities. In addition, the financial stability of issuers (including governments) in emerging market countries may be more precarious than in other countries. As a result, there will tend to be an increased risk of price volatility associated with a fund's investments in emerging market countries, which may be magnified by currency fluctuations relative to the U.S. dollar, and, at times, it may be difficult to value such investments.
Currency Risk. As a result of a fund’s investments in securities denominated in, and/or receiving revenues in, foreign currencies, the fund will be subject to currency risk. This is the risk that those currencies will decline in value relative to the U.S. dollar. If such an event occurs, the dollar value of an investment in the fund would be adversely affected.
Derivatives Risk. A fund’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Certain of these risks, such as liquidity risk, market risk and management risk, are discussed elsewhere in this section. A fund’s use of derivatives is also subject to credit risk, leverage risk, lack of availability risk, valuation risk, correlation risk and tax risk. Lack of availability risk is the risk that suitable derivative transactions may not be available in all circumstances for risk management or other purposes. Credit risk is the risk that the counterparty to a derivatives transaction may not fulfill its obligations. Leverage risk is the risk that a small percentage of assets invested in derivatives can have a disproportionately large impact on a fund. Valuation risk is the risk that a particular derivative may be valued incorrectly. Correlation risk is the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index. Tax risk is the risk that the use of derivatives may cause a fund to realize higher amounts of short-term capital gain. These risks could cause a fund to lose more than the initial amount invested.
Multi-Manager Risk. Although CSIM monitors and seeks to coordinate the overall management of a fund, each investment manager makes investment decisions independently, and it is possible that the investment styles of the investment managers may not complement one another. As a result, a fund's exposure to a given stock, industry or investment style could unintentionally be smaller or larger than if a fund had a single manager.
Liquidity Risk. A particular investment may be difficult to purchase or sell. A fund may be unable to sell illiquid securities at an advantageous time or price.
Please refer to the funds’ prospectus for a more complete description of the principal risks of investing in the funds.
4. Affiliates and Affiliated Transactions:
Charles Schwab Investment Management, Inc. (CSIM or the investment adviser), a wholly owned subsidiary of The Charles Schwab Corporation, serves as each fund's investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement between CSIM and the trust.
For its advisory and administrative services to the funds, CSIM is entitled to receive an annual fee, payable monthly, based on a percentage of each fund’s average daily net assets as follows:
| % of Average Daily Net Assets | | Laudus Small-Cap
MarketMasters Fund | | Laudus International
MarketMasters Fund |
| First $500 million | | 1.17% | | 1.29% |
| $500 million to $1 billion | | 1.13% | | 1.275% |
| Over $1 billion | | 1.07% | | 1.25% |
The Board has adopted a Shareholder Servicing Plan (the Plan) on behalf of the funds. The Plan enables each fund to bear expenses relating to the provision by service providers, including Charles Schwab & Co., Inc. (a broker-dealer affiliate of CSIM, Schwab), of certain account maintenance, customer liaison and shareholder services to the current shareholders of the funds. Schwab serves as the funds’ paying agent under the Plan for making payments of the shareholder service fee due to the service providers (other than Schwab) under the Plan. All shareholder service fees paid by the funds to Schwab in its capacity as the funds’ paying agent will be passed through to the service providers, and Schwab will not retain any portion of such fees.
Laudus MarketMasters Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Pursuant to the Plan, each fund's shares are subject to an annual shareholder servicing fee up to 0.25% for Investor Shares and 0.20% for Select Shares. The shareholder servicing fee paid to a particular service provider is made pursuant to its written agreement with Schwab (or, in the case of payments made to Schwab, pursuant to Schwab's written agreement with the funds) and a fund will pay no more than 0.25% for Investor Shares and 0.20% for Select Shares of the average annual daily net asset value of the fund shares owned by shareholders holding shares through such service provider. Payments under the Plan are made as described above regardless of Schwab's or the service provider's actual cost of providing the services. If the cost of providing the services under the Plan is less than the payments received, the unexpended portion of the fees may be retained as profit by Schwab or the service provider.
Although these agreements specify certain fees for these services, CSIM and its affiliates have made an additional agreement with the funds, for so long as CSIM serves as the investment adviser to the funds, which may only be amended or terminated with the approval of the Board, to limit the total annual fund operating expenses charged, excluding interest, taxes and certain non-routine expenses (expense limitation). The expense limitation as a percentage of average daily net assets is as follows:
| | Laudus Small-Cap
MarketMasters Fund | | Laudus International
MarketMasters Fund |
| Investor Shares | 1.35% | | 1.40% |
| Select Shares | 1.20% | | 1.25% |
Certain Schwab funds may own shares of other Schwab funds. The table below reflects the percentage of shares of each fund in this report that are owned by other Schwab funds as of October 31, 2015, as applicable:
| | Underlying Funds | |
| | Laudus Small-Cap
MarketMasters Fund | | Laudus International
MarketMasters Fund |
| Schwab Target 2010 Fund | 0.3% | | 0.2% |
| Schwab Target 2015 Fund | 0.6% | | 0.3% |
| Schwab Target 2020 Fund | 4.2% | | 2.2% |
| Schwab Target 2025 Fund | 4.0% | | 2.0% |
| Schwab Target 2030 Fund | 9.3% | | 4.4% |
| Schwab Target 2035 Fund | 4.7% | | 2.1% |
| Schwab Target 2040 Fund | 13.6% | | 5.6% |
| Schwab Target 2045 Fund | 1.2% | | 0.5% |
| Schwab Target 2050 Fund | 1.0% | | 0.4% |
| Schwab Target 2055 Fund | 0.6% | | 0.2% |
| Schwab Monthly Income Fund - Moderate Payout | —% | | 0.3% |
| Schwab Monthly Income Fund - Enhanced Payout | —% | | 0.4% |
| Schwab Monthly Income Fund - Maximum Payout | —% | | 0.1% |
| Schwab Balanced Fund | 18.7% | | —% |
Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions with other funds in the Fund Complex (for definition refer to Trustees and Officers section). All loans are for temporary or emergency purposes and the interest rate to be charged will be the average of the overnight repurchase agreement rate and the short-term bank loan rate. All loans are subject to numerous conditions designed to ensure fair and equitable treatment of all participating funds/portfolios. The interfund lending facility is subject to the oversight and periodic review by the Board. The funds had no interfund borrowing or lending activity during the period.
During the period, the Laudus Small-Cap MarketMasters Fund and Laudus International MarketMasters Fund received a reimbursement payment of $216 and $2,968, respectively, related to state filing fees resulting from revised calculation methodologies being applied on sales of the funds' shares in prior periods.
Laudus MarketMasters Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
During the periods under which the expense was incurred, the funds were operating above their expense limitation and waived fees including these state filing fees. As this amount was previously waived as part of an expense reduction by CSIM and its affiliates, it was reimbursed to the investment adviser. Each funds’ net expense ratio was not impacted during the periods the expense was incurred or during the current period.
5. Board of Trustees:
The Board may include people who are officers and/or directors of CSIM or its affiliates. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these interested persons for their services as trustees, but it did pay non-interested persons (independent trustees), as noted on each fund’s Statement of Operations. For information regarding the trustees, please refer to the Trustees and Officers table at the end of this report.
6. Borrowing from Banks:
During the period prior to October 8, 2015, the funds had access to a committed line of credit of $150 million with State Street, an uncommitted line of credit of $100 million with Bank of America, N.A., and an uncommitted line of credit of $50 million with Brown Brothers Harriman & Co. The funds paid an annual fee to State Street for the committed line of credit. Effective October 8, 2015, the previous lines of credit were terminated and the funds became participants with other U.S. registered investment companies managed by CSIM in a joint, syndicated, committed $530 million line of credit (the Credit Facility), with State Street as agent, which matures on October 6, 2016. Under the terms of the Credit Facility, in addition to the interest charged on any borrowings by a fund, each fund pays a commitment fee of 0.125% per annum on its proportionate share of the unused portion of the Credit Facility. There were no borrowings from any of the lines of credit during the period.
The funds also have access to custodian overdraft facilities. A fund may have utilized the overdraft facility and incurred an interest expense, which is disclosed on the fund’s Statement of Operations, if any. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.
7. Purchases and Sales/Maturities of Investment Securities:
For the period ended October 31, 2015, purchases and sales/maturities of securities (excluding short-term obligations) were as follows:
| | Purchases of Securities | | Sales/Maturities of Securities |
| Laudus Small-Cap MarketMasters Fund | $89,765,861 | | $106,543,979 |
| Laudus International MarketMasters Fund | 1,466,462,364 | | 1,749,465,130 |
8. Derivatives:
The funds entered into equity index futures contracts during the report period. The funds invested in futures contracts to equitize available cash. The fair value and variation margin for futures contracts held at October 31, 2015 are presented on the Portfolio Holdings and Statement of Assets and Liabilities, respectively. The net realized and change in unrealized gains (losses) on futures contracts are presented on the Statement of Operations. Refer to financial note 2(b) for the funds' accounting policies with respect to futures contracts and financial note 3 for disclosures concerning the risks of investing in futures contracts. During the period ended October 31, 2015, the month-end average contract values of futures contracts held by the funds and the month-end average number of contracts held were as follows:
| | Contract Values | | Number of Contracts |
| Laudus Small-Cap MarketMasters Fund | $2,979,978 | | 25 |
| Laudus International MarketMasters Fund | 26,686,677 | | 297 |
The Laudus International MarketMasters Fund invested in forwards during the report period. The fund invested in forwards in connection with the purchase and sale of portfolio securities to minimize the uncertainty of changes in future foreign currency exchange rates and to hedge exposure to certain currencies. Refer to financial note 2(b) for the fund’s accounting
Laudus MarketMasters Funds
Financial Notes (continued)
8. Derivatives (continued):
policies with respect to forwards and financial note 3 for disclosures concerning the risks of investing in forwards. During the period ended October 31, 2015, the month-end average forward foreign currency notional amount and the month-end average unrealized appreciation were $44,428,464 and $1,239,455, respectively.
As of October 31, 2015, the derivatives contracts held by the funds, categorized by primary risk exposure, were:
| | | Laudus Small-Cap
MarketMasters Fund | Laudus International
MarketMasters Fund | |
| Asset Derivatives | | Fair Value | |
| Equity Index - Futures Contracts1 | | $65,981 | $— | |
| Forward Foreign Currency Exchange Contracts2 | | — | 448,585 | |
| Total | | $65,981 | $448,585 | |
| Liability Derivatives | | Fair Value | |
| Equity Index - Futures Contracts3 | | $— | $569,982 | |
| Forward Foreign Currency Exchange Contracts4 | | — | 62,660 | |
| Total | | $— | $632,642 | |
| 1 | Includes cumulative unrealized appreciation of futures contracts as reported in the Schedule of Portfolio Holdings. Only current day's variation margin is reported within the Statement of Assets and Liabilities. |
| 2 | Statement of Assets and Liabilities location: Unrealized appreciation on forward foreign currency exchange contracts. |
| 3 | Includes cumulative unrealized depreciation of futures contracts as reported in the Schedule of Portfolio Holdings. Only current day's variation margin is reported within the Statement of Assets and Liabilities. |
| 4 | Statement of Assets and Liabilities location: Unrealized depreciation on forward foreign currency exchange contracts. |
The effects of the derivatives held by the funds in the Statement of Operations for the period ended October 31, 2015 were:
| | Laudus Small-Cap
MarketMasters Fund | | Laudus International
MarketMasters Fund |
| Equity Index Futures Contracts | | | |
| Realized Gains (Losses)1 | $546,273 | | $91,709 |
| Change in Unrealized Appreciation (Depreciation)2 | (90,638) | | (494,083) |
| Forward Foreign Currency Exchange Contracts | | | |
| Realized Gains (Losses)1 | $— | | $6,581,836 |
| Change in Unrealized Appreciation (Depreciation)2 | — | | (3,330,384) |
| 1 | Statement of Operations location: Net realized gains (losses) on futures contracts and net realized gains (losses) on foreign currency transactions. |
| 2 | Statement of Operations location: Net change in unrealized appreciation (depreciation) on futures contracts and net change in unrealized appreciation (depreciation) on foreign currency translations. |
The funds' forwards are entered into pursuant to International Swaps and Derivatives Association, Inc. (ISDA) agreements which govern certain terms of derivative transactions. ISDA agreements typically contain, among other things, master netting provisions in the event of a default or other termination event. Master netting provisions allow the funds and the counterparty, in the event of a default or other termination event, to offset payable and receivable amounts for each party related to derivative contracts to one net amount payable by either the funds or the counterparty. The Laudus International
Laudus MarketMasters Funds
Financial Notes (continued)
8. Derivatives (continued):
MarketMasters Fund's forwards, which are reported gross in the Statement of Assets and Liabilities, are presented in the table below. The following table presents the fund's forwards, net of amounts available for offset under a master netting agreement and net of any related collateral received by the fund for assets and pledged by the fund for liabilities as of October 31, 2015.
| | | | | Gross Amounts Not Offset in the
Statement of Assets & Liabilities |
| Counterparty | | Net Amounts of Assets
Presented in the
Statement of Assets and Liabilities | | Financial
Instruments | | Cash Collateral
Received | | Net
Amounts(a) |
| State Street Bank & Trust Co. | | $448,585 | | ($62,660) | | $— | | $385,925 |
| Total | | $448,585 | | ($62,660) | | $— | | $385,925 |
| Counterparty | | Net Amounts of Liabilities
Presented in the
Statement of Assets and Liabilities | | Financial
Instruments | | Cash Collateral
Pledged | | Net
Amounts(b) |
| State Street Bank & Trust Co. | | ($62,660) | | $62,660 | | $— | | $— |
| Total | | ($62,660) | | $62,660 | | $— | | $— |
| a | Represents the net amount due from the counterparty in the event of default. |
| b | Represents the net amount due to the counterparty in the event of default. |
9. Redemption Fee:
The funds charge a 2.00% redemption fee on shares sold or exchanged within 30 days of the original purchase date. Such amounts are netted against redemption proceeds on the Statement of Changes in Net Assets. The redemption fees charged during the current and prior periods are:
| | Current Period
(11/1/14-10/31/15) | | Prior Period
(11/1/13-10/31/14) |
| Laudus Small-Cap MarketMasters Fund | $565 | | $384 |
| Laudus International MarketMasters Fund | 10,335 | | 6,455 |
10. Federal Income Taxes:
As of October 31, 2015, the components of distributable earnings on a tax-basis were as follows:
| | Laudus Small-Cap
MarketMasters Fund | | Laudus International
MarketMasters Fund |
| Undistributed ordinary income | $1,923,280 | | $24,909,868 |
| Undistributed long-term capital gains | 8,100,917 | | 100,978,405 |
| Unrealized appreciation on investments | 23,166,274 | | 215,382,452 |
| Unrealized depreciation on investments | (14,897,682) | | (116,615,949) |
| Other unrealized appreciation (depreciation) | 1 | | (113,022) |
| Net unrealized appreciation (depreciation) | $8,268,593 | | $98,653,481 |
The primary differences between book-basis and tax-basis unrealized appreciation or unrealized depreciation of investments are the tax deferral of losses on wash sales, Passive Foreign Investment Companies (PFIC), partnership investments, non-taxable dividends and futures mark to market.
Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2015, the funds had no capital loss carryforwards.
Laudus MarketMasters Funds
Financial Notes (continued)
10. Federal Income Taxes (continued):
For the year ended October 31, 2015, the funds had capital loss carryforwards utilized as follows:
| | Laudus Small-Cap
MarketMasters Fund | | Laudus International
MarketMasters Fund |
| Capital loss carryforwards utilized | $— | | $3,821,832 |
The tax-basis components of distributions paid during the current and prior fiscal years were as follows:
| | Laudus Small-Cap
MarketMasters Fund | | Laudus International
MarketMasters Fund |
| Current period distributions | | | |
| Ordinary income | $513,285 | | $32,797,265 |
| Long-term capital gains | 3,718,541 | | — |
| Return of capital | — | | — |
| Prior period distributions | | | |
| Ordinary income | $— | | $33,604,108 |
| Long-term capital gains | — | | — |
| Return of capital | — | | — |
Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
Permanent book and tax basis differences may result in reclassifications between components of net assets as required. The adjustments will have no impact on net assets or the results of operations. As of October 31, 2015, the funds made the following reclassifications:
| | Laudus Small-Cap
MarketMasters Fund | | Laudus International
MarketMasters Fund |
| Capital shares | ($1,041,833) | | $— |
| Undistributed net investment income | 2,194,303 | | 12,115,706 |
| Net realized capital gains (losses) | (1,152,470) | | (12,115,706) |
As of October 31, 2015, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and for state purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the funds’ financial statements. The funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period ended October 31, 2015, the funds did not incur any interest or penalties.
11. Subsequent Events:
At a Special Meeting of Shareholders on December 11, 2015, twelve individuals were elected to serve as trustees of all trusts constituting the Schwab Funds, Laudus Funds and Schwab ETFs effective January 1, 2016. The twelve individuals elected to the Boards of Trustees consist of current Schwab Funds and Laudus Funds trustees, current Schwab ETFs trustees and three new nominees. The trustees believe that combining the composition of the Boards of Trustees and adding the new nominees will further align oversight of the Schwab Funds, Laudus Funds and Schwab ETFs, among other benefits. Other than this election of trustees, management has determined there are no subsequent events or transactions through the date the financial statements were issued that would have materially impacted the financial statements as presented.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of:
Laudus Small-Cap MarketMasters Fund
Laudus International MarketMasters Fund
In our opinion, the accompanying statements of assets and liabilities, including the portfolio holdings, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Laudus Small-Cap MarketMasters Fund and Laudus International MarketMasters Fund (two of the funds constituting Schwab Capital Trust, hereafter referred to as the "Funds") at October 31, 2015, and the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Funds' management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2015 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
December 16, 2015
Other Federal Tax Information (unaudited)
The Laudus International MarketMasters Fund elects to pass through, under section 853 of the Internal Revenue Code, the foreign tax credit of $4,156,855 to its shareholders for the year ended October 31, 2015. The respective foreign source income on the fund is $49,436,959.
For corporate shareholders, the following percentage of the funds dividend distributions paid during the fiscal year ended October 31, 2015, qualify for the corporate dividends received deduction:
| | Percentage |
| Laudus Small-Cap MarketMasters Fund | 59.03 |
| Laudus International MarketMasters Fund | — |
For the fiscal year ended October 31, 2015, the funds designate the following amounts of the dividend distributions as qualified dividends for the purpose of the maximum rate under 1(h)(ii) of the Internal Revenue Code. Shareholders will be notified in January 2016 via IRS form 1099 of the amounts for use in preparing their 2015 income tax return.
| Laudus Small-Cap MarketMasters Fund | $513,285 |
| Laudus International MarketMasters Fund | 36,954,120 |
Under Section 852 (b)(3)(C) of the Internal Revenue Code, the funds hereby designate the following amounts as long-term capital gain dividends for the fiscal year ended October 31, 2015:
| Laudus Small-Cap MarketMasters Fund | $3,718,541 |
| Laudus International MarketMasters Fund | — |
Approval of Renewal of Investment Advisory and Sub-Advisory Agreements
The Investment Company Act of 1940 (the 1940 Act) requires that initial approval of, as well as the continuation of, a fund’s investment advisory agreements be specifically approved (1) by the vote of the trustees or by a vote of the shareholders of the fund, and (2) by the vote of a majority of the trustees who are not parties to the investment advisory agreements or “interested persons” of any party (the Independent Trustees), cast in person at a meeting called for the purpose of voting on such approval. In connection with such approvals, the fund’s trustees must request and evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms of the investment advisory agreements.
The Board of Trustees (the Board or the Trustees, as appropriate) calls and holds one or more meetings each year that are dedicated, in whole or in part, to considering whether to renew the investment advisory agreements between Schwab Capital Trust (the Trust) and Charles Schwab Investment Management, Inc. (CSIM) with respect to the existing funds in the Trust, including Laudus Small-Cap MarketMasters Fund and Laudus International MarketMasters Fund (the Funds), and the individual sub-advisory agreements between CSIM and BMO Asset Management Corp., Mellon Capital Management Corp. (Mellon), TAMRO Capital Partners, LLC and Wellington Management Company LLP relating to Laudus Small-Cap MarketMasters Fund; and CSIM and American Century Investment Management, Inc., Harris Associates L.P., Mellon, Mondrian Investment Partners Limited and William Blair & Company, LLC, relating to the Laudus International Market-Masters Fund (collectively, the Sub-Advisers). Such investment advisory and sub-advisory agreements are collectively referred to herein as the “Agreements”. The Trustees also review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting(s), the Board requests and reviews a wide variety of materials provided by CSIM and the Sub-Advisers, including information about their affiliates, personnel and operations. The Board also receives extensive data provided by third parties. This information is in addition to the detailed information about the Funds that the Board reviews during the course of each year, including information that relates to Fund operations and Fund performance. The Independent Trustees receive advice from independent counsel to the Independent Trustees, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the
Independent Trustees meet in executive session outside the presence of Fund management and participate in question and answer sessions with representatives of CSIM. The Board also discusses with CSIM the Funds’ operations and CSIM’s ability, consistent with the “manager of managers” structure of each of the Funds to (i) identify and recommend to the Trustees sub-advisers for each Fund, (ii) monitor and oversee the performance and investment capabilities of each sub-adviser, and (iii) recommend the replacement of a sub-adviser when appropriate. As part of the renewal process, Independent Trustees’ legal counsel sends an information request letter to CSIM and CSIM sends an information request letter to each of the Sub-Advisers seeking certain relevant information. The responses by CSIM and the Sub-Advisers are provided to the Trustees for their review prior to their meeting, and the Trustees are provided with the opportunity to request any additional materials.
The Board, including a majority of the Independent Trustees, considered information specifically relating to its consideration of the continuance of the Agreements with respect to the Funds at meetings held on April 29, 2015, and June 1, 2015, and approved the renewal of the Agreements with respect to the Funds for an additional one-year term at the meeting held on June 1, 2015. The Board’s approval of the Agreements with respect to the Funds was based on consideration and evaluation of a variety of specific factors discussed at these meetings and at prior meetings, including:
| 1. | the nature, extent and quality of the services provided to the Funds under the Agreements, including the resources of CSIM and its affiliates, and the Sub-Advisers, dedicated to the Funds; |
| 2. | each Fund’s investment performance and how it compared to that of certain other comparable mutual funds; |
| 3. | each Fund’s expenses and how those expenses compared to those of certain other comparable mutual funds, exchange-traded funds and other types of accounts; |
| 4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to each Fund, including both direct and indirect benefits accruing to CSIM and its affiliates, as well as the profitability of the Sub-Advisers; and |
| 5. | the extent to which economies of scale would be realized as the Funds grow and whether fee levels in the Agreements reflect those economies of scale for the benefit of Fund investors. |
Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds. In this regard, the Trustees evaluated, among other things, CSIM’s personnel, experience, track record and compliance program. The Trustees also considered information provided by CSIM relating to each Fund’s portfolio management team, portfolio strategy and risk oversight structure, and internal investment guidelines. The Trustees also considered investments in CSIM’s mutual fund infrastructure, Schwab’s wide range of products, services, and channel alternatives such as investment and research tools, internet access, and an array of account features that benefit the Funds and certain of their shareholders. The Trustees also considered Schwab’s excellent reputation as a full service brokerage firm and its overall financial condition. In addition, the Trustees considered that many of the Funds’ shareholders are also brokerage clients of Schwab. The Board also considered the nature, extent and quality of the sub-advisory services provided by the Sub-Advisers to the Funds and the resources each dedicates to the Funds. Following such evaluation, the Board concluded, within the context of its full deliberations, that the nature, extent and quality of services provided by CSIM and the Sub-Advisers to the Funds and the resources of CSIM, its affiliates, and the Sub-Advisers dedicated to the Funds supported renewal of the Agreements with respect to the Funds.
Fund Performance. The Board considered Fund performance in determining whether to renew the Agreements with respect to the Funds. Specifically, the Trustees considered each Fund’s performance relative to a peer category of other mutual funds and appropriate indices/ benchmarks, in light of total return, and market trends. As part of this review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the third party who prepared the peer category analysis. In evaluating the performance of each Fund, the Trustees considered both risk and shareholder risk expectations for such Fund and the appropriateness of the benchmark used to compare the performance of each Fund. In addition, the Trustees considered whether irrespective of relative performance, each Sub-Adviser’s absolute performance was consistent with expectations for such Sub-Adviser’s unique investment methodology. The Trustees further considered the level of Fund performance in the context of their review of Fund expenses and adviser and Sub-Adviser profitability discussed below. Although Laudus Small-Cap MarketMasters Fund had performance that lagged that of a relevant peer group for certain (although not necessarily all) periods considered, the Board concluded that other factors relevant to performance supported renewal of the Agreements with respect to Laudus Small-Cap MarketMasters Fund, including that the underperformance was attributable, to a significant extent, to investment decisions by CSIM that were reasonable and consistent with the investment objective and policies of
Laudus Small-Cap MarketMasters Fundand that CSIM and the Sub-Advisers had taken steps designed to help improve performance. Following such evaluation the Board concluded, within the context of its full deliberations, that the performance of the Funds supported renewal of the Agreements with respect to the Funds.
Fund Expenses. With respect to the Funds’ expenses, the Trustees considered the rate of compensation called for by the Agreements, and each Fund’s net operating expense ratio, in each case, in comparison to those of a peer group of mutual funds, such peer groups and comparisons having been selected and calculated by an independent third party. The Trustees considered the effects of CSIM’s and Schwab’s historical practice of voluntarily waiving management and other fees to prevent total Fund expenses from exceeding a specified cap. The Trustees also considered CSIM’s contractual commitment to keep each Fund’s expense cap for so long as CSIM serves as the adviser to such Fund. The Trustees also considered fees charged by CSIM and the Sub-Advisers to other mutual funds, and to other types of accounts, such as exchange-traded funds and separately managed accounts, but, with respect to such other types of accounts, accorded less weight to such comparisons due to the different legal, regulatory, compliance and operating features of mutual funds as compared to these other types of accounts. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expenses of the Funds are reasonable and supported renewal of the Agreements with respect to the Funds.
Profitability. With regard to profitability, the Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly. In this connection, the Trustees reviewed management’s profitability analyses, together with certain commentary thereon from an independent accounting firm. The Trustees also considered any other benefits derived by CSIM from its relationship with the Funds, such as whether, by virtue of its management of the Funds, CSIM obtains investment information or other research resources that aid it in providing advisory services to other clients. With respect to CSIM, the Trustees considered whether the varied levels of compensation and profitability under the Agreements and other service agreements were reasonable and justified in light of the quality of all services rendered to each Fund by CSIM, and its respective affiliates. The Trustees also considered the compensation flowing to the Sub-Advisers, directly or indirectly. The Trustees also considered any other benefits derived by the Sub-Advisers from their relationship with the Funds, such as whether, by virtue of its management of the Funds, any Sub-Adviser obtains investment information or other research resources that aid it in providing advisory services to other clients. With respect to the Sub-Advisers, the Trustees considered whether the varied levels of compensation and profitability under the Agreements and other service agreements were reasonable and justified in light of the quality of all services
rendered to each Fund by the Sub-Advisers, and their respective affiliates. The Board also considered the profitability of the Sub-Advisers with respect to the sub-advisory services they provide to the Funds, although, when doing so, the Board took into account the fact that the Sub-Advisers are compensated by CSIM, and not by the Funds directly, and such compensation with respect to any Sub-Adviser reflects an arms-length negotiation between the Sub-Adviser and CSIM. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM and the Sub-Advisers is reasonable and supported renewal of the Agreements with respect to the Funds.
Economies of Scale. The Trustees considered the existence of any economies of scale and whether those are passed along to a Fund’s shareholders through a graduated investment advisory fee schedule or other means, including any fee waivers by CSIM and its affiliates. In this regard, and consistent with their consideration of Fund expenses, the Trustees considered that CSIM and Schwab have committed resources to minimize the effects on shareholders of diseconomies of scale during periods when fund assets were relatively small through their contractual expense waivers.
For example, such diseconomies of scale may particularly affect newer funds or funds with investment strategies that are from time to time out of favor, but shareholders may benefit from the continued availability of such funds at subsidized expense levels. The Trustees also considered the existing contractual investment advisory fee schedules relating to the Funds that, in each case, include lower fees at higher graduated asset levels. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the Funds obtain reasonable benefit from economies of scale.
In the course of their deliberations, the Trustees did not identify any particular information or factor that was all important or controlling. Based on the Trustees’ deliberation and their evaluation of the information described above, the Board, including all of the Independent Trustees, approved the continuation of the Agreements with respect to the Funds and concluded that the compensation under the Agreements with respect to the Funds is fair and reasonable in light of such services and expenses and such other matters as the Trustees have considered to be relevant in the exercise of their reasonable judgment.
Trustees and Officers
The tables below give information about the trustees and officers of Schwab Capital Trust prior to January 1, 2016, which includes the funds covered in this report. The “Fund Complex” includes The Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust, Laudus Trust and Laudus Institutional Trust. The Fund Complex includes 95 funds.
The address for all trustees and officers is 211 Main Street, San Francisco, CA 94105. You can find more information about the trustees and officers in the funds’ Statement of Additional Information, which is available free by calling 1-800-435-4000.
| Independent Trustees |
Name, Year of Birth,
and Position(s) with
the trust (Terms 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 |
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 (Oct. 1979 – present); Senior Fellow Stanford Institute for Economic Policy Research (2000 – present); Professor of Public Policy, Stanford University (1994 – 2015). | 74 | Director, Gilead Sciences, Inc. (2005 – present)
|
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. | 74 | 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) (Dec. 2008 – Sept. 2013) | 74 | Director, KLA-Tencor Corporation (2008 – present) |
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) (Jan. 2015 – present); Partner, Kudu Advisors, LLC (financial services) (June 2008 – Jan. 2015); Advisor, Asset International, Inc. (publisher of financial services information) (Aug. 2008 – Jan. 2015). | 95 | None |
| Independent Trustees (continued) |
Name, Year of Birth,
and Position(s) with
the trust (Terms 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 |
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) | Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (Mar. 1990 – present). | 74 | Director, Eaton (2012 – present)
Director and Chairman 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) (Jan. 2008 – present); Partner, Colgin Partners, LLC (vineyards) (Feb. 1998 – present). | 74 | Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 – present)
Lead Independent Director and Chair of Audit Committee, OUTFRONT Media Inc. (2014 – present) |
| Interested Trustees |
Name, Year of Birth,
and Position(s) with
the trust (Terms 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 |
Charles R. Schwab2
1937
Chairman and Trustee
(Chairman and Trustee of The Charles Schwab Family of Funds since 1989; Schwab Investments since 1991; Schwab Capital Trust since 1993; Schwab Annuity Portfolios since 1994; Laudus Trust and Laudus Institutional Trust since 2010) | Chairman and Director, The Charles Schwab Corporation (1986 – present); Chairman and Director of Charles Schwab & Co., Inc. (1971 – present); Chairman and Director of Charles Schwab Investment Management, Inc. (1989 – present); Chairman and Director of Charles Schwab Bank (2003 – present); Chairman and Chief Executive Officer of Schwab (SIS) Holdings Inc. I and Schwab International Holdings, Inc. (1996 – present); and Director, Chairman and Chief Executive Officer, Schwab Holdings, Inc. (1979 – present). | 74 | Chairman and Director, The Charles Schwab Corporation (1986 – present)
Director, Yahoo! Inc. (2014 – present) |
Walter W. Bettinger II2
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 and Charles Schwab & Co., Inc. (2008 – present); Director, Charles Schwab Bank (2006 – present); and Director, Schwab Holdings, Inc. (2008 – present). | 95 | Director, The Charles Schwab Corporation (2008 – present) |
| Officers of the Trust |
Name, Year of Birth, and Position(s)
with the trust (Terms of office, and
length of Time Served3) | Principal Occupations During the Past Five Years |
Marie Chandoha
1961
President and Chief Executive Officer
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2010) | Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer (Sept. 2010 – Oct. 2011), Charles Schwab Investment Management, Inc.; President, Chief Executive Officer (Dec. 2010 – present), and Chief Investment Officer (Sept. 2010 – Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Director, Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited (Jan. 2011 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (Mar. 2007 – Aug. 2010). |
George Pereira
1964
Treasurer and Principal Financial Officer, Schwab Funds
Treasurer and Chief Financial Officer, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2004; Laudus Trust and Laudus Institutional Trust since 2006) | Senior Vice President and Chief Financial Officer (Nov. 2004 – present), Chief Operating Officer (Jan. 2011 – present), Charles Schwab Investment Management, Inc.; Treasurer and Chief Financial Officer, Laudus Funds (June 2006 – present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – present) and Schwab ETFs (Oct. 2009 – present); Director, Charles Schwab Worldwide 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 Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust 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 – Jan. 2009). |
Brett Wander
1961
Senior Vice President and Chief Investment Officer – Fixed Income
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust 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 (Jan. 2008 – Oct. 2010); Director of Alpha Strategies Loomis, Sayles & Company (April 2006 – Jan. 2008). |
David Lekich
1964
Chief Legal Officer and Secretary, Schwab Funds
Vice President and Assistant Clerk, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2011) | Senior Vice President (Sept. 2011 – present), Vice President (Mar. 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present), Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (April 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; Vice President and Assistant Clerk, Laudus Funds (April 2011 – present); Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs. |
Catherine MacGregor
1964
Vice President and Assistant Secretary, Schwab Funds
Chief Legal Officer, Vice President and Clerk, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2005) | Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 – present); Vice President (Dec. 2005 – present), Chief Legal Officer and Clerk (Mar. 2007 – present), Laudus Funds; Vice President (Nov. 2005 – present) and Assistant Secretary (June 2007 – present), Schwab Funds; Vice President and Assistant Secretary, Schwab ETFs (Oct. 2009 – present). |
| 1 | Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab and Laudus Funds’ retirement policy 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 Schwab Funds or Laudus Funds to retire from all Boards upon their required retirement date from either Board. |
| 2 | Mr. Schwab and Mr. Bettinger are Interested Trustees because they own stock of The Charles Schwab Corporation, the parent company of the investment adviser. |
| 3 | The President, Treasurer and Secretary/Clerk 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 Boards. |
Glossary
asset allocation The practice of dividing a portfolio among different asset classes, with each asset class assigned a particular percentage.
asset class A group of securities with similar structure and basic characteristics. Stocks, bonds and cash are the three main examples of asset classes.
Barclays U.S. Aggregate Bond Index A broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid ARM pass-throughs), asset-backed securities, and commercial mortgage-backed securities.
Barclays U.S. Treasury Bills 1 – 3 Months Index An index that includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months and more than 1 month, are rated investment grade, and have $250 million or more of outstanding face value.
bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the coupon rate) until a specified date (the maturity date), at which time the issuer returns the money borrowed (principal or face value) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.”
An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.
bond fund A bond fund is subject to the same credit, interest rate, and inflation risks as bonds. In addition, a bond fund incurs ongoing fees and expenses. A bond fund’s net asset value will fluctuate with the price of the underlying bonds and the portfolio turnover activity; return of principal is not guaranteed.
cap, capitalization See “market cap.”
capital gain, capital loss the difference between the amount paid for an investment and its value at a later time. If the investment has been sold, the capital gain or loss is considered a realized gain or loss. If the investment is still held, the capital gain or loss is considered unrealized appreciation or depreciation.
expense ratio The amount that is taken from a mutual fund’s assets each year to cover the fund’s operating expenses. An expense ratio of 0.50% means that a fund’s expenses amount to half of one percent of its average net assets a year.
market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.
MSCI EAFE (Europe, Australasia, Far East) Index A free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. & Canada. The Net version of the index
reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes; returns are calculated applying dividend withholding rates applicable to non-resident persons who do not benefit from double taxation treaties.
net asset value (NAV) The value of one share of a mutual fund. NAV is calculated by taking the fund’s total assets, subtracting liabilities, and dividing by the number of shares outstanding.
outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.
price-to-book ratio (P/B) The market price of a company’s stock compared with its “book value.” A mutual fund’s P/B is the weighted average of the P/B of all stocks in the fund’s portfolio.
price-to-earnings ratio (P/E) The market price of a company’s stock compared with earnings over the past year. A mutual fund’s P/E is the weighted average of the P/E of all stocks in the fund’s portfolio.
restricted and illiquid securities Restricted securities are securities that are subject to legal restrictions on their sale. Restricted securities generally can be sold in privately negotiated transactions, pursuant to an exemption from registration under the Securities Act of 1933 (the “1933 Act”), or in a registered public offering. Certain restricted securities, such as Section 4(a)(2) commercial paper and Rule 144A securities under the 1933 Act, may be considered to be liquid if they meet the criteria for liquidity established by the Board. Illiquid securities generally are any securities that cannot be disposed of promptly and in the ordinary course of business at approximately the amount at which a fund has valued the instruments. The liquidity of a fund’s investments is monitored under the supervision and direction of the Board. Investments currently not considered liquid include repurchase agreements not maturing within seven days and certain restricted securities.
return on equity (ROE) The average yearly rate of return for each dollar of investors’ money, measured over the past five years.
Russell 2000 Index An index that measures the performance of the small-cap segment of the U.S. equity universe. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.
S&P 500 Index A market capitalization index that is designed to measure the performance of 500 leading publicly held companies in leading industries of the U.S. economy.
stock A share of ownership, or equity, in the issuing company.
total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.
weighted average For mutual funds, an average that gives the same weight to each security as the security represents in the fund’s portfolio.
yield The income paid out by an investment, expressed as a percentage of the investment’s market value.
PRIVACY NOTICE
THIS IS NOT PART OF THE SHAREHOLDER REPORT
A Commitment to Your Privacy
Your Privacy Is Not for Sale
We do not and will not sell your personal information to anyone, for any reason.
We are committed to protecting the privacy of information we maintain about you. Below are details about our commitment, including the types of information we collect and how we use and share that information. This Privacy Notice applies to you only if you are an individual who invests directly in the funds by placing orders through the funds’ transfer agent. If you place orders through your brokerage account at Charles Schwab & Co., Inc. or an account with another broker-dealer, investment advisor, 401(k) plan, employee benefit plan, administrator, bank or other financial intermediary, you are covered by the privacy policies of that financial institution and should consult those policies.
How We Collect Information About You
We collect personal information about you in a number of ways.
• APPLICATION AND REGISTRATION
INFORMATION.
We collect personal information from you when you open an account or utilize one of our services. We may also collect information about you from third parties such as consumer reporting agencies to verify your identity. The information we collect may include personal information, including your Social Security number, as well as details about your interests, investments and investment experience.
• TRANSACTION AND EXPERIENCE
INFORMATION.
Once your account has been opened, we collect and maintain personal information about your account activity, including your transactions, balances, positions and history. This information allows us to administer your account and provide the services you have requested.
• WEBSITE USAGE.
When you visit our websites, we may use devices known as “cookies,” graphic interchange format files (GIFs), or other similar web tools to enhance your web experience. These
tools help us to recognize you, maintain your web session, and provide a more personalized experience. To learn more, please go to www.schwab.com/privacy.
How We Share and Use Your Information
We provide access to information about you to our affiliated companies, outside companies and other third parties in certain limited circumstances, including:
• to help us process transactions for your account;
• when we use other companies to provide services for us, such as printing and mailing your account statements;
• when we believe that disclosure is required or permitted under law (for example, to cooperate with regulators or law enforcement, resolve consumer disputes, perform credit/authentication checks, or for risk control).
State Laws
We will comply with state laws that apply to the disclosure or use of information about you.
Safeguarding Your Information — Security Is a
Partnership
We take precautions to ensure the information we collect about you is protected and is accessed only by authorized individuals or organizations.
Companies we use to provide support services are not allowed to use information about our shareholders for their own purposes and are contractually obligated to maintain strict confidentiality. We limit their use of information to the performance of the specific services we have requested.
We restrict access to personal information by our employees and agents. Our employees are trained about privacy and are required to safeguard personal information.
We maintain physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
Contact Us
To provide us with updated information, report suspected fraud or identity theft, or for any other questions, please call the number below.
Schwab Funds® direct investors: 1-800-407-0256
© 2015 Schwab Funds. All rights reserved.
Proxy Voting Policies, Procedures and Results
A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting the Laudus Funds’ website at www.csimfunds.com/laudusfunds_prospectus, the SEC’s website at www.sec.gov, or by contacting Laudus Funds at 1-800-435-4000.
Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting the fund’s website at www.csimfunds.com/laudusfunds_prospectus or the SEC’s website at www.sec.gov.
The Laudus Funds™
Laudus Growth Investors
Laudus U.S. Large Cap Growth Fund
Laudus MarketMasters Funds™
Laudus International MarketMasters Fund™
Laudus Small-Cap MarketMasters Fund™
Laudus Mondrian Funds™
Laudus Mondrian International Equity Fund
Laudus Mondrian Emerging Markets Fund
Laudus Mondrian International Government Fixed Income Fund
Laudus Mondrian Global Government Fixed Income Fund
The Laudus Funds include the Laudus U.S. Large Cap Growth Fund and the Laudus Mondrian Funds, which are part of the Laudus Trust and distributed by ALPS Distributors Inc.; and the Laudus MarketMasters Funds, which are part of the Schwab Capital Trust, and distributed by Charles Schwab & Co., Inc. Charles Schwab & Co., Inc. and ALPS Distributors Inc. are unaffiliated entities.
For More Information about the Funds:
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
Funds
Laudus MarketMasters Funds
1-800-435-4000
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
MFR13812-18
00156960
© 2015 Charles Schwab & Co., Inc. All rights reserved. Member SIPC®. Printed on recycled paper
Annual report dated October 31, 2015, enclosed.
Schwab Target Funds
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab Target 2045 Fund
Schwab Target 2050 Fund
Schwab Target 2055 Fund
Go paperless today.
Simplify your financial life
by viewing these documents online.
Sign up at schwab.com/paperless
This wrapper is not part of the shareholder report.
Schwab Target Funds
Annual Report
October 31, 2015
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab Target 2045 Fund
Schwab Target 2050 Fund
Schwab Target 2055 Fund
Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).
Distributor: Charles Schwab & Co., Inc. (Schwab).
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
| Total Return for the 12 Months Ended October 31, 2015 |
| Schwab Target 2010 Fund (Ticker Symbol: SWBRX) | 2.03% |
| Target 2010 Composite Index | 2.26% |
| Fund Category: Morningstar Target Date 2000-2010 | 0.11% |
| Performance Details | pages 6-7 |
| |
| Schwab Target 2015 Fund (Ticker Symbol: SWGRX) | 1.99% |
| Target 2015 Composite Index | 2.32% |
| Fund Category: Morningstar Target Date 2011-2015 | 0.16% |
| Performance Details | pages 8-9 |
| |
| Schwab Target 2020 Fund (Ticker Symbol: SWCRX) | 2.25% |
| Target 2020 Composite Index | 2.58% |
| Fund Category: Morningstar Target Date 2016-2020 | 0.21% |
| Performance Details | pages 10-11 |
| |
| Schwab Target 2025 Fund (Ticker Symbol: SWHRX) | 2.36% |
| Target 2025 Composite Index | 2.68% |
| Fund Category: Morningstar Target Date 2021-2025 | 0.36% |
| Performance Details | pages 12-13 |
| |
| Schwab Target 2030 Fund (Ticker Symbol: SWDRX) | 2.44% |
| Target 2030 Composite Index | 2.71% |
| Fund Category: Morningstar Target Date 2026-2030 | 0.30% |
| Performance Details | pages 14-15 |
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
The components that make up each of the composite indexes may vary over time. For index definitions, please see the Glossary.
Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, a fund’s total return would have been lower. Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date.
Performance at a Glance continued
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
| Total Return for the 12 Months Ended October 31, 2015 |
| Schwab Target 2035 Fund (Ticker Symbol: SWIRX) | 2.43% |
| Target 2035 Composite Index | 2.71% |
| Fund Category: Morningstar Target Date 2031-2035 | 0.42% |
| Performance Details | pages 16-17 |
| |
| Schwab Target 2040 Fund (Ticker Symbol: SWERX) | 2.48% |
| Target 2040 Composite Index | 2.67% |
| Fund Category: Morningstar Target Date 2036-2040 | 0.27% |
| Performance Details | pages 18-19 |
| |
| Schwab Target 2045 Fund (Ticker Symbol: SWMRX) | 2.37% |
| Target 2045 Composite Index | 2.64% |
| Fund Category: Morningstar Target Date 2041-2045 | 0.45% |
| Performance Details | pages 20-21 |
| |
| Schwab Target 2050 Fund (Ticker Symbol: SWNRX) | 2.44% |
| Target 2050 Composite Index | 2.61% |
| Fund Category: Morningstar Target Date 2046-2050 | 0.36% |
| Performance Details | pages 22-23 |
| |
| Schwab Target 2055 Fund (Ticker Symbol: SWORX) | 2.36% |
| Target 2055 Composite Index | 2.58% |
| Fund Category: Morningstar Target Date 2051+ | 0.85% |
| Performance Details | pages 24-25 |
| |
| Minimum Initial Investment1 | $100 |
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
The components that make up each of the composite indexes may vary over time. For index definitions, please see the Glossary.
Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, a fund’s total return would have been lower. Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date.
| 1 | Please see the funds' prospectus for further detail and eligibility requirements. |
Marie Chandoha is President and CEO of Charles Schwab Investment Management, Inc. and the funds covered in this report.
Dear Shareholder,
At Charles Schwab Investment Management, our goal is to provide foundational products with consistent performance that enable investors to build well-diversified portfolios. The Schwab Target Funds are managed according to projected retirement dates and rebalanced to become more conservative as a target date approaches and beyond. Within each fund is a mix of active, passive, proprietary, and third-party strategies, seeking to provide diversification.
For the 12-month reporting period ended October 31, 2015, the funds generated returns that generally reflected positive returns for U.S. stocks and flat returns for broad international equity indexes amid market volatility. The funds’ performance included positive returns for some of the underlying investment strategies. For near-dated funds, returns reflected their more conservative positioning and lower exposure to volatile investment areas during the period compared with the longer-dated funds.
Despite market volatility later in the period stimulated by concern about global growth and speculation that the Fed might raise interest rates, the S&P 500 Index returned 5.2% for the period. The bond market generated modest returns amid the low interest rate environment, relatively stable credit conditions and limited inflation. Reflecting these conditions, the Barclays U.S. Aggregate Bond Index returned 2.0%.
Asset Class Performance Comparison % returns during the 12 months ended 10/31/2015
Index figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Past performance is not an indication of future results.
For index definitions, please see the Glossary.
Data source: Index provider websites and CSIM.
Nothing in this report represents a recommendation of a security by the investment adviser.
Management views and portfolio holdings may have changed since the report date.
From the President continued
For the 12-month reporting period ended October 31, 2015, the funds generated returns that generally reflected positive returns for U.S. stocks and flat returns for broad international equity indexes amid market volatility.
Outside the U.S., turbulence in Greece, China, and select emerging markets translated into challenges that reduced returns in U.S. dollar terms as commodities prices fell globally. Meanwhile, lackluster global economic growth led to differences in central bank policies, particularly between those of the U.S., Japan, and the euro zone. This caused foreign currencies to depreciate versus the U.S. dollar, particularly among emerging markets, reducing returns in U.S. dollar terms. As a result, the MSCI EAFE Index (Net), which broadly represents the performance of international stocks, returned -0.1%.1
For more information about the Schwab Target Funds, please continue reading this report. In addition, you can find answers to frequently asked questions and more details about these funds by visiting www.schwabfunds.com. We are also happy to hear from you at 1-800-435-4000.
Sincerely,
| 1 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
 | Zifan Tang, Ph.D., CFA, Managing Director and Head of Asset Allocation Strategies, leads the portfolio management team and has overall responsibility for all aspects of the management of the funds. She was appointed portfolio manager of the funds in February 2012. Prior to joining CSIM in 2012, Ms. Tang was a product manager at Thomson Reuters and, from 1997 to 2009, worked as a portfolio manager at Barclays Global Investors, which was subsequently acquired by BlackRock. |
Schwab Target 2010 Fund
The Schwab Target 2010 Fund (the 2010 Fund) seeks to provide capital appreciation and income consistent with its current asset allocation, and seeks to achieve its investment objective by investing primarily in a combination of other Schwab Funds and Laudus Funds. The 2010 Fund may also invest in unaffiliated third-party mutual funds. The target asset allocation is adjusted annually by the investment adviser; as of the last annual adjustment effective January 12, 2015, the 2010 Fund’s asset allocation was approximately 38.1% equity securities, 55.4% fixed income securities, and 6.5% cash and cash equivalents (including money market funds). (For portfolio allocations as of the end of this reporting period, please see the 2010 Fund’s Portfolio Holdings included in this report.)
Market Highlights. U.S. stocks posted modest gains for the 12-month report period on mixed economic data, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest rate hike. Slowing growth in China weighed on global markets, as did declining energy and metals prices. Against this backdrop, the U.S. dollar was strong, reducing returns of international investments in U.S. dollar terms.
Performance. For the 12-month reporting period ended October 31, 2015, the 2010 Fund returned 2.03%. The 2010 Fund’s internally calculated comparative index, the Target 2010 Composite Index (the composite index), returned 2.26%.
Positioning and Strategies. The 2010 Fund’s asset allocations were broadly in line with those of the composite index over the reporting period.
The 2010 Fund’s U.S. equity exposures provided the greatest contribution to total return, particularly among large-caps. The top contributor was the Laudus U.S. Large Cap Growth Fund. The Schwab Core Equity Fund and the Schwab S&P 500 Index Fund also contributed notably. On a relative basis, both the Laudus U.S. Large Cap Growth Fund and the Schwab Core Equity Fund outperformed the composite index’s U.S. equity allocation component, the S& P 500 Index, which returned 5.2%; the remaining four positions, while underperforming the comparative index by various degrees, all contributed positively to the 2010 Fund’s total return. Among small-cap holdings, the Laudus Small-Cap MarketMasters Fund (Select Shares) detracted from the 2010 Fund’s absolute and relative performance, while the Schwab Small-Cap Equity Fund enhanced both absolute and relative performance, outperforming the Russell 2000 Index by 2.7%.
The 2010 Fund’s international equity allocation contributed modestly to total return, reflecting the weak performance of international stocks. The largest positive contribution came from the Schwab International Core Equity Fund. On a relative basis, both the Schwab International Core Equity Fund and the Laudus International MarketMasters Fund (Select Shares) outperformed the composite index’s international equity allocation component, the MSCI EAFE Index (Net), which returned -0.1%.
The 2010 Fund’s U.S. fixed income allocation also contributed to total return. The greatest contribution came from the Schwab Total Bond Market Fund, the 2010 Fund’s largest position, although it underperformed the 2.0% return of the Barclays U.S. Aggregate Bond Index, the composite index’s U.S. fixed income component, detracting from relative performance. With investment-grade bonds and TIPS posting negative returns for the period, the 2010 Fund’s positions in the Schwab Treasury Inflation Protected Securities Index Fund and the Loomis Sayles Investment Grade Bond Fund detracted from total return.
As of 10/31/15:
| Statistics |
| Number of Holdings | 22 |
| Portfolio Turnover Rate | 33% |
| Asset Class Weightings % of Investments1 |
| Fixed-Income Funds – Intermediate-Term Bond | 38.6% |
| Equity Funds – Large-Cap | 25.4% |
| Fixed-Income Funds – Short-Term Bond | 9.4% |
| Equity Funds – International | 8.9% |
| Fixed-Income Funds – Inflation-Protected Bond | 6.2% |
| Money Market Fund | 3.8% |
| Short-Term Investments | 2.5% |
| Equity Funds – Small-Cap | 2.6% |
| Equity Funds – Global Real Estate | 2.0% |
| Fixed-Income Funds – International Bond | 0.6% |
| Total | 100.0% |
| Top Holdings % of Net Assets2,3 |
| Schwab Total Bond Market Fund | 23.2% |
| Schwab Short-Term Bond Market Fund | 9.3% |
| Metropolitan West Total Return Bond Fund, Class I | 9.3% |
| Schwab Core Equity Fund | 7.0% |
| Laudus U.S. Large Cap Growth Fund | 6.3% |
| Schwab Treasury Inflation Protected Securities Index Fund | 6.2% |
| Schwab S&P 500 Index Fund | 5.7% |
| Laudus International MarketMasters Fund, Select Shares | 5.3% |
| Wells Fargo Advantage Core Bond Fund, Class I | 4.8% |
| Schwab Value Advantage Money Fund, Ultra Shares | 3.8% |
| Total | 80.9% |
Management views and portfolio holdings may have changed since the report date.
The Laudus U.S. Large Cap Growth Fund is part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.
| 1 | The fund intends to invest in a combination of the underlying funds; however, the fund may also invest directly in equity and fixed income securities, exchange traded funds, and cash equivalents, including money market securities. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
| 3 | The holdings listed exclude any temporary liquidity investments. |
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1
Average Annual Total Returns1,2
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Target 2010 Fund (7/1/05) | 2.03% | 5.99% | 4.51% |
| Target 2010 Composite Index | 2.26% | 5.96% | 5.41% |
| Dow Jones U.S. Total Stock Market IndexSM | 4.40% | 14.11% | 8.07% |
| Barclays U.S. Aggregate Bond Index | 1.96% | 3.03% | 4.72% |
| Fund Category: Morningstar Target Date 2000-2010 | 0.11% | 5.14% | 4.16% |
Fund Expense Ratios3: Net 0.50%; Gross 0.67%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.50%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Target 2015 Fund
The Schwab Target 2015 Fund (the 2015 Fund) seeks to provide capital appreciation and income consistent with its current asset allocation, and seeks to achieve its investment objective by investing primarily in a combination of other Schwab Funds and Laudus Funds. The 2015 Fund may also invest in unaffiliated third-party mutual funds. The target asset allocation is adjusted annually by the investment adviser; as of the last annual adjustment effective January 12, 2015, the 2015 Fund’s asset allocation was approximately 40.0% equity securities, 53.8% fixed income securities, and 6.2% cash and cash equivalents (including money market funds). At its target date, the 2015 Fund’s allocation will be approximately 40.0% equity securities, 54.0% fixed income securities, and 6.0% cash and cash equivalents (including money market funds). (For portfolio allocations as of the end of this reporting period, please see the 2015 Fund’s Portfolio Holdings included in this report.)
Market Highlights. U.S. stocks posted modest gains for the 12-month report period on mixed economic data, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest rate hike. Slowing growth in China weighed on global markets, as did declining energy and metals prices. Against this backdrop, the U.S. dollar was strong, reducing returns of international investments in U.S. dollar terms.
Performance. For the 12-month reporting period ended October 31, 2015, the 2015 Fund returned 1.99%. The 2015 Fund’s internally calculated comparative index, the Target 2015 Composite Index (the composite index), returned 2.32%.
Positioning and Strategies. The 2015 Fund’s asset allocations were broadly in line with those of the composite index over the reporting period.
The 2015 Fund’s U.S. equity exposures provided the greatest contribution to total return, particularly among large-caps. The top contributor was the Laudus U.S. Large Cap Growth Fund. The Schwab Core Equity Fund and the Schwab S&P 500 Index Fund also contributed notably. On a relative basis, both the Laudus U.S. Large Cap Growth Fund and the Schwab Core Equity Fund outperformed the composite index’s U.S. equity allocation component, the S& P 500 Index, which returned 5.2%; the remaining four positions, while underperforming the S&P 500 Index by various degrees, all contributed positively to the 2015 Fund’s total return. Among small-cap holdings, the Laudus Small-Cap MarketMasters Fund (Select Shares) detracted from the 2015 Fund’s absolute and relative performance, while the Schwab Small-Cap Equity Fund enhanced both absolute and relative performance, outperforming the Russell 2000 Index by 2.7%.
The 2015 Fund’s international equity allocation contributed modestly to total return, reflecting the weak performance of international stocks. The largest positive contribution came from the Schwab International Core Equity Fund. On a relative basis, both the Schwab International Core Equity Fund and the Laudus International MarketMasters Fund (Select Shares) outperformed the composite index’s international equity allocation component, the MSCI EAFE Index (Net), which returned -0.1%.
The 2015 Fund’s U.S. fixed income allocation also contributed to total return. The greatest contribution came from the Schwab Total Bond Market Fund, the 2015 Fund’s largest position, although it underperformed the 2.0% return of the Barclays U.S. Aggregate Bond Index, the composite index’s U.S. fixed income component, detracting from relative performance. With investment-grade bonds and TIPS posting negative returns for the period, the 2015 Fund’s positions in the Schwab Treasury Inflation Protected Securities Index Fund and the Loomis Sayles Investment Grade Bond Fund detracted from total return.
As of 10/31/15:
| Statistics |
| Number of Holdings | 23 |
| Portfolio Turnover Rate | 33% |
| Asset Class Weightings % of Investments1 |
| Fixed-Income Funds – Intermediate-Term Bond | 37.5% |
| Equity Funds – Large-Cap | 26.6% |
| Equity Funds – International | 9.4% |
| Fixed-Income Funds – Short-Term Bond | 9.0% |
| Fixed-Income Funds – Inflation-Protected Bond | 6.0% |
| Short-Term Investments | 3.7% |
| Equity Funds – Small-Cap | 2.7% |
| Money Market Fund | 2.3% |
| Equity Funds – Global Real Estate | 2.1% |
| Fixed-Income Funds – International Bond | 0.7% |
| Total | 100.0% |
| Top Holdings % of Net Assets2,3 |
| Schwab Total Bond Market Fund | 22.3% |
| Metropolitan West Total Return Bond Fund, Class I | 9.3% |
| Schwab Short-Term Bond Market Fund | 9.0% |
| Schwab Core Equity Fund | 7.4% |
| Laudus U.S. Large Cap Growth Fund | 6.6% |
| Schwab S&P 500 Index Fund | 6.0% |
| Schwab Treasury Inflation Protected Securities Index Fund | 6.0% |
| Laudus International MarketMasters Fund, Select Shares | 5.6% |
| Wells Fargo Advantage Core Bond Fund, Class I | 4.5% |
| Schwab International Core Equity Fund | 3.7% |
| Total | 80.4% |
Management views and portfolio holdings may have changed since the report date.
The Laudus U.S. Large Cap Growth Fund is part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.
| 1 | The fund intends to invest in a combination of the underlying funds; however, the fund may also invest directly in equity and fixed income securities, exchange traded funds, and cash equivalents, including money market securities. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
| 3 | The holdings listed exclude any temporary liquidity investments. |
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
March 12, 2008 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1
Average Annual Total Returns1,2
| Fund and Inception Date | 1 Year | 5 Years | Since Inception |
| Fund: Schwab Target 2015 Fund (3/12/08) | 1.99% | 6.77% | 5.09% |
| Target 2015 Composite Index | 2.32% | 6.70% | 5.09% |
| Dow Jones U.S. Total Stock Market IndexSM | 4.40% | 14.11% | 8.72% |
| Barclays U.S. Aggregate Bond Index | 1.96% | 3.03% | 4.44% |
| Fund Category: Morningstar Target Date 2011-2015 | 0.16% | 5.71% | 4.24% |
Fund Expense Ratios3: Net 0.53%; Gross 0.64%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.53%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Target 2020 Fund
The Schwab Target 2020 Fund (the 2020 Fund) seeks to provide capital appreciation and income consistent with its current asset allocation, and seeks to achieve its investment objective by investing primarily in a combination of other Schwab Funds and Laudus Funds. The 2020 Fund may also invest in unaffiliated third-party mutual funds. The target asset allocation is adjusted annually by the investment adviser; as of the last annual adjustment effective January 12, 2015, the 2020 Fund’s asset allocation was approximately 54.4% equity securities, 41.2% fixed income securities, and 4.4% cash and cash equivalents (including money market funds). At its target date, the 2020 Fund’s allocation will be approximately 40.0% equity securities, 54.0% fixed income securities, and 6.0% cash and cash equivalents (including money market funds). (For portfolio allocations as of the end of this reporting period, please see the 2020 Fund’s Portfolio Holdings included in this report.)
Market Highlights. U.S. stocks posted modest gains for the 12-month report period on mixed economic data, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest rate hike. Slowing growth in China weighed on global markets, as did declining energy and metals prices. Against this backdrop, the U.S. dollar was strong, reducing returns of international investments in U.S. dollar terms.
Performance. For the 12-month reporting period ended October 31, 2015, the 2020 Fund returned 2.25%. The 2020 Fund’s internally calculated comparative index, the Target 2020 Composite Index (the composite index), returned 2.58%.
Positioning and Strategies. The 2020 Fund’s asset allocations were broadly in line with those of the composite index over the reporting period.
The 2020 Fund’s U.S. equity exposures provided the greatest contribution to total return, particularly among large-caps. The top contributor was the Laudus U.S. Large Cap Growth Fund. The Schwab Core Equity Fund and the Schwab S&P 500 Index Fund also contributed notably. On a relative basis, both the Laudus U.S. Large Cap Growth Fund and the Schwab Core Equity Fund outperformed the composite index’s U.S. equity allocation component, the S& P 500 Index, which returned 5.2%; the remaining four positions, while underperforming the S&P 500 Index by various degrees, all contributed positively to the 2020 Fund’s total return. Among small-cap holdings, the Laudus Small-Cap MarketMasters Fund (Select Shares) detracted from the 2020 Fund’s absolute and relative performance, while the Schwab Small-Cap Equity Fund enhanced both absolute and relative performance, outperforming the Russell 2000 Index by 2.7%.
The 2020 Fund’s international equity allocation contributed modestly to total return, reflecting the weak performance of international stocks. The largest positive contribution came from the Schwab International Core Equity Fund. On a relative basis, both the Schwab International Core Equity Fund and the Laudus International MarketMasters Fund (Select Shares) outperformed the composite index’s international equity allocation component, the MSCI EAFE Index (Net), which returned -0.1%. With emerging markets particularly hard-hit for the reporting period, a small position in the Laudus Mondrian Emerging Markets Institutional Fund detracted from both total and relative returns, underperforming the -14.5% return of the MSCI Emerging Markets Index (Net).
The 2020 Fund’s U.S. fixed income allocation also contributed to total return. The greatest contribution came from the Schwab Total Bond Market Fund, the 2020 Fund’s largest position, although it underperformed the 2.0% return of the Barclays U.S. Aggregate Bond Index, the composite index’s U.S. fixed income component, detracting from relative performance. With investment-grade bonds and TIPS posting negative returns for the period, small positions in the Schwab Treasury Inflation Protected Securities Index Fund and the Loomis Sayles Investment Grade Bond Fund detracted from total return.
As of 10/31/15:
| Statistics |
| Number of Holdings | 24 |
| Portfolio Turnover Rate | 25% |
| Asset Class Weightings % of Investments1 |
| Equity Funds – Large-Cap | 34.8% |
| Fixed-Income Funds – Intermediate-Term Bond | 31.9% |
| Equity Funds – International | 13.7% |
| Fixed-Income Funds – Short-Term Bond | 5.3% |
| Equity Funds – Small-Cap | 3.8% |
| Short-Term Investments | 2.8% |
| Equity Funds – Global Real Estate | 2.8% |
| Fixed-Income Funds – Inflation-Protected Bond | 2.3% |
| Fixed-Income Funds – International Bond | 1.1% |
| Money Market Fund | 1.5% |
| Total | 100.0% |
| Top Holdings % of Net Assets2,3 |
| Schwab Total Bond Market Fund | 16.9% |
| Schwab Core Equity Fund | 9.7% |
| Metropolitan West Total Return Bond Fund, Class I | 8.8% |
| Laudus U.S. Large Cap Growth Fund | 8.6% |
| Laudus International MarketMasters Fund, Select Shares | 8.1% |
| Schwab S&P 500 Index Fund | 7.9% |
| Schwab International Core Equity Fund | 5.4% |
| Schwab Short-Term Bond Market Fund | 5.3% |
| Schwab Dividend Equity Fund | 4.3% |
| TCW Relative Value Large Cap Fund, Class I | 3.4% |
| Total | 78.4% |
Management views and portfolio holdings may have changed since the report date.
The Laudus U.S. Large Cap Growth Fund is part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.
| 1 | The fund intends to invest in a combination of the underlying funds; however, the fund may also invest directly in equity and fixed income securities, exchange traded funds, and cash equivalents, including money market securities. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
| 3 | The holdings listed exclude any temporary liquidity investments. |
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1
Average Annual Total Returns1,2
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Target 2020 Fund (7/1/05) | 2.25% | 7.98% | 5.77% |
| Target 2020 Composite Index | 2.58% | 7.94% | 6.24% |
| Dow Jones U.S. Total Stock Market IndexSM | 4.40% | 14.11% | 8.07% |
| Barclays U.S. Aggregate Bond Index | 1.96% | 3.03% | 4.72% |
| Fund Category: Morningstar Target Date 2016-2020 | 0.21% | 6.02% | 4.59% |
Fund Expense Ratios3: Net 0.61%; Gross 0.65%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.61%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Target 2025 Fund
The Schwab Target 2025 Fund (the 2025 Fund) seeks to provide capital appreciation and income consistent with its current asset allocation, and seeks to achieve its investment objective by investing primarily in a combination of other Schwab Funds and Laudus Funds. The 2025 Fund may also invest in unaffiliated third-party mutual funds. The target asset allocation is adjusted annually by the investment adviser; as of the last annual adjustment effective January 12, 2015, the 2025 Fund’s asset allocation was approximately 65.0% equity securities, 31.7% fixed income securities, and 3.3% cash and cash equivalents (including money market funds). At its target date, the 2025 Fund’s allocation will be approximately 40.0% equity securities, 54.0% fixed income securities, and 6.0% cash and cash equivalents (including money market funds). (For portfolio allocations as of the end of this reporting period, please see the 2025 Fund’s Portfolio Holdings included in this report.)
Market Highlights. U.S. stocks posted modest gains for the 12-month report period on mixed economic data, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest rate hike. Slowing growth in China weighed on global markets, as did declining energy and metals prices. Against this backdrop, the U.S. dollar was strong, reducing returns of international investments in U.S. dollar terms.
Performance. For the 12-month reporting period ended October 31, 2015, the 2025 Fund returned 2.36%. The 2025 Fund’s internally calculated comparative index, the Target 2025 Composite Index (the composite index), returned 2.68%.
Positioning and Strategies. The 2025 Fund’s asset allocations were broadly in line with those of the composite index over the reporting period.
The 2025 Fund’s U.S. equity exposures provided the greatest contribution to total return, particularly among large-caps. The top contributor was the Laudus U.S. Large Cap Growth Fund. The Schwab Core Equity Fund and the Schwab S&P 500 Index Fund also contributed notably. On a relative basis, both the Laudus U.S. Large Cap Growth Fund and the Schwab Core Equity Fund outperformed the composite index’s U.S. equity allocation component, the S& P 500 Index, which returned 5.2%; the remaining four positions, while underperforming the S&P 500 Index by various degrees, all contributed positively to the 2025 Fund’s total return. Among small-cap holdings, the Laudus Small-Cap MarketMasters Fund (Select Shares) detracted from the 2025 Fund’s absolute and relative performance, while the Schwab Small-Cap Equity Fund enhanced both absolute and relative performance, outperforming the Russell 2000 Index by 2.7%.
The 2025 Fund’s international equity allocation contributed modestly to total return, reflecting the weak performance of international stocks. The largest positive contribution came from the Schwab International Core Equity Fund. On a relative basis, both the Schwab International Core Equity Fund and the Laudus International MarketMasters Fund (Select Shares) outperformed the composite index’s international equity allocation component, the MSCI EAFE Index (Net), which returned -0.1%. With emerging markets particularly hard-hit for the reporting period, a small position in the Laudus Mondrian Emerging Markets Institutional Fund detracted from both total and relative returns, underperforming the -14.5% return of the MSCI Emerging Markets Index (Net).
The 2025 Fund’s U.S. fixed income allocation also contributed to total return. The greatest contribution came from the Schwab Total Bond Market Fund, the 2025 Fund’s largest position, although it underperformed the 2.0% return of the Barclays U.S. Aggregate Bond Index, the composite index’s U.S. fixed income component, detracting from relative performance. With investment-grade bonds and TIPS posting negative returns for the period, small positions in the Schwab Treasury Inflation Protected Securities Index Fund and the Loomis Sayles Investment Grade Bond Fund detracted from total return.
As of 10/31/15:
| Statistics |
| Number of Holdings | 24 |
| Portfolio Turnover Rate | 21% |
| Asset Class Weightings % of Investments1 |
| Equity Funds – Large-Cap | 40.6% |
| Fixed-Income Funds – Intermediate-Term Bond | 26.2% |
| Equity Funds – International | 16.9% |
| Equity Funds – Small-Cap | 4.8% |
| Equity Funds – Global Real Estate | 3.4% |
| Short-Term Investments | 3.4% |
| Fixed-Income Funds – Short-Term Bond | 3.1% |
| Fixed-Income Funds – International Bond | 1.1% |
| Fixed-Income Funds – Inflation-Protected Bond | 0.5% |
| Total | 100.0% |
| Top Holdings % of Net Assets2,3 |
| Schwab Total Bond Market Fund | 12.7% |
| Schwab Core Equity Fund | 11.2% |
| Laudus U.S. Large Cap Growth Fund | 10.1% |
| Laudus International MarketMasters Fund, Select Shares | 9.6% |
| Schwab S&P 500 Index Fund | 9.2% |
| Metropolitan West Total Return Bond Fund, Class I | 7.5% |
| Schwab International Core Equity Fund | 6.5% |
| Schwab Dividend Equity Fund | 5.1% |
| TCW Relative Value Large Cap Fund, Class I | 4.0% |
| Schwab Global Real Estate Fund | 3.4% |
| Total | 79.3% |
Management views and portfolio holdings may have changed since the report date.
The Laudus U.S. Large Cap Growth Fund is part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.
| 1 | The fund intends to invest in a combination of the underlying funds; however, the fund may also invest directly in equity and fixed income securities, exchange traded funds, and cash equivalents, including money market securities. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
| 3 | The holdings listed exclude any temporary liquidity investments. |
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
March 12, 2008 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1
Average Annual Total Returns1,2
| Fund and Inception Date | 1 Year | 5 Years | Since Inception |
| Fund: Schwab Target 2025 Fund (3/12/08) | 2.36% | 8.85% | 6.82% |
| Target 2025 Composite Index | 2.68% | 8.76% | 6.22% |
| Dow Jones U.S. Total Stock Market IndexSM | 4.40% | 14.11% | 8.72% |
| Barclays U.S. Aggregate Bond Index | 1.96% | 3.03% | 4.44% |
| Fund Category: Morningstar Target Date 2021-2025 | 0.36% | 7.35% | 4.94% |
Fund Expense Ratios3: Net 0.67%; Gross 0.73%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.67%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Target 2030 Fund
The Schwab Target 2030 Fund (the 2030 Fund) seeks to provide capital appreciation and income consistent with its current asset allocation, and seeks to achieve its investment objective by investing primarily in a combination of other Schwab Funds and Laudus Funds. The 2030 Fund may also invest in unaffiliated third-party mutual funds. The target asset allocation is adjusted annually by the investment adviser; as of the last annual adjustment effective January 12, 2015, the 2030 Fund’s asset allocation was approximately 73.2% equity securities, 24.1% fixed income securities, and 2.7% cash and cash equivalents (including money market funds). At its target date, the 2030 Fund’s allocation will be approximately 40.0% equity securities, 54.0% fixed income securities, and 6.0% cash and cash equivalents (including money market funds). (For portfolio allocations as of the end of this reporting period, please see the 2030 Fund’s Portfolio Holdings included in this report.)
Market Highlights. U.S. stocks posted modest gains for the 12-month report period on mixed economic data, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest rate hike. Slowing growth in China weighed on global markets, as did declining energy and metals prices. Against this backdrop, the U.S. dollar was strong, reducing returns of international investments in U.S. dollar terms.
Performance. For the 12-month reporting period ended October 31, 2015, the 2030 Fund returned 2.44%. The 2030 Fund’s internally calculated comparative index, the Target 2030 Composite Index (the composite index), returned 2.71%.
Positioning and Strategies. The 2030 Fund’s asset allocations were broadly in line with those of the composite index over the reporting period.
The 2030 Fund’s U.S. equity exposures provided the greatest contribution to total return, particularly among large-caps. The top contributor was the Laudus U.S. Large Cap Growth Fund. The Schwab Core Equity Fund and the Schwab S&P 500 Index Fund also contributed notably. On a relative basis, both the Laudus U.S. Large Cap Growth Fund and the Schwab Core Equity Fund outperformed the composite index’s U.S. equity allocation component, the S& P 500 Index, which returned 5.2%; the remaining four positions, while underperforming the S&P 500 Index by various degrees, all contributed positively to the 2030 Fund’s total return. Among small-cap holdings, the Laudus Small-Cap MarketMasters Fund (Select Shares) detracted from the 2030 Fund’s absolute and relative performance, while the Schwab Small-Cap Equity Fund enhanced both absolute and relative performance, outperforming the Russell 2000 Index by 2.7%.
The 2030 Fund’s international equity allocation contributed modestly to total return, reflecting the weak performance of international stocks. The largest positive contribution came from the Schwab International Core Equity Fund. On a relative basis, both the Schwab International Core Equity Fund and the Laudus International MarketMasters Fund (Select Shares) outperformed the composite index’s international equity allocation component, the MSCI EAFE Index (Net), which returned -0.1%. With emerging markets particularly hard-hit for the reporting period, a small position in the Laudus Mondrian Emerging Markets Institutional Fund detracted from both total and relative returns, underperforming the -14.5% return of the MSCI Emerging Markets Index (Net).
The 2030 Fund’s U.S. fixed income allocation also contributed to total return. The greatest contribution came from the Schwab Total Bond Market Fund, although it underperformed the 2.0% return of the Barclays U.S. Aggregate Bond Index, the composite index’s U.S. fixed income component, detracting from relative performance. With investment-grade bonds posting negative returns for the period, a small position in the Loomis Sayles Investment Grade Bond Fund detracted from total return.
As of 10/31/15:
| Statistics |
| Number of Holdings | 22 |
| Portfolio Turnover Rate | 19% |
| Asset Class Weightings % of Investments1 |
| Equity Funds – Large-Cap | 44.7% |
| Fixed-Income Funds – Intermediate-Term Bond | 20.7% |
| Equity Funds – International | 19.5% |
| Equity Funds – Small-Cap | 5.8% |
| Equity Funds – Global Real Estate | 3.8% |
| Short-Term Investments | 2.8% |
| Fixed-Income Funds – Short-Term Bond | 1.8% |
| Fixed-Income Funds – International Bond | 0.9% |
| Total | 100.0% |
| Top Holdings % of Net Assets2,3 |
| Schwab Core Equity Fund | 12.4% |
| Laudus U.S. Large Cap Growth Fund | 11.1% |
| Laudus International MarketMasters Fund, Select Shares | 10.9% |
| Schwab S&P 500 Index Fund | 10.1% |
| Schwab Total Bond Market Fund | 9.3% |
| Schwab International Core Equity Fund | 7.2% |
| Metropolitan West Total Return Bond Fund, Class I | 6.0% |
| Schwab Dividend Equity Fund | 5.6% |
| TCW Relative Value Large Cap Fund, Class I | 4.4% |
| Schwab Small-Cap Equity Fund | 3.8% |
| Total | 80.8% |
Management views and portfolio holdings may have changed since the report date.
The Laudus U.S. Large Cap Growth Fund is part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.
| 1 | The fund intends to invest in a combination of the underlying funds; however, the fund may also invest directly in equity and fixed income securities, exchange traded funds, and cash equivalents, including money market securities. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
| 3 | The holdings listed exclude any temporary liquidity investments. |
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1
Average Annual Total Returns1,2
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Target 2030 Fund (7/1/05) | 2.44% | 9.42% | 6.56% |
| Target 2030 Composite Index | 2.71% | 9.38% | 6.78% |
| Dow Jones U.S. Total Stock Market IndexSM | 4.40% | 14.11% | 8.07% |
| Barclays U.S. Aggregate Bond Index | 1.96% | 3.03% | 4.72% |
| Fund Category: Morningstar Target Date 2026-2030 | 0.30% | 7.24% | 4.94% |
Fund Expense Ratios3: Net 0.72%; Gross 0.75%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.72%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Target 2035 Fund
The Schwab Target 2035 Fund (the 2035 Fund) seeks to provide capital appreciation and income consistent with its current asset allocation, and seeks to achieve its investment objective by investing primarily in a combination of other Schwab Funds and Laudus Funds. The 2035 Fund may also invest in unaffiliated third-party mutual funds. The target asset allocation is adjusted annually by the investment adviser; as of the last annual adjustment effective January 12, 2015, the 2035 Fund’s asset allocation was approximately 80.0% equity securities, 17.6% fixed income securities, and 2.4% cash and cash equivalents (including money market funds). At its target date, the 2035 Fund’s allocation will be approximately 40.0% equity securities, 54.0% fixed income securities, and 6.0% cash and cash equivalents (including money market funds). (For portfolio allocations as of the end of this reporting period, please see the 2035 Fund’s Portfolio Holdings included in this report.)
Market Highlights. U.S. stocks posted modest gains for the 12-month report period on mixed economic data, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest rate hike. Slowing growth in China weighed on global markets, as did declining energy and metals prices. Against this backdrop, the U.S. dollar was strong, reducing returns of international investments in U.S. dollar terms.
Performance. For the 12-month reporting period ended October 31, 2015, the 2035 Fund returned 2.43%. The 2035 Fund’s internally calculated comparative index, the Target 2035 Composite Index (the composite index), returned 2.71%.
Positioning and Strategies. The 2035 Fund’s asset allocations were broadly in line with those of the composite index over the reporting period.
The 2035 Fund’s U.S. equity exposures provided the greatest contribution to total return, particularly among large-caps. The top contributor was the Laudus U.S. Large Cap Growth Fund. The Schwab Core Equity Fund and the Schwab S&P 500 Index Fund also contributed notably. On a relative basis, both the Laudus U.S. Large Cap Growth Fund and the Schwab Core Equity Fund outperformed the composite index’s U.S. equity allocation component, the S& P 500 Index, which returned 5.2%; the remaining four positions, while underperforming the S&P 500 Index by various degrees, all contributed positively to the 2035 Fund’s total return. Among small-cap holdings, the Laudus Small-Cap MarketMasters Fund (Select Shares) detracted from the 2035 Fund’s absolute and relative performance, while the Schwab Small-Cap Equity Fund enhanced both absolute and relative performance, outperforming the Russell 2000 Index by 2.7%.
The 2035 Fund’s international equity allocation contributed modestly to total return, reflecting the weak performance of international stocks. The largest positive contribution came from the Schwab International Core Equity Fund. On a relative basis, both the Schwab International Core Equity Fund and the Laudus International MarketMasters Fund (Select Shares) outperformed the composite index’s international equity allocation component, the MSCI EAFE Index (Net), which returned -0.1%. With emerging markets particularly hard-hit for the reporting period, a small position in the Laudus Mondrian Emerging Markets Institutional Fund detracted from both total and relative returns, underperforming the -14.5% return of the MSCI Emerging Markets Index (Net). The 2035 Fund’s allocation to the Schwab Global Real Estate Fund enhanced total return and relative performance.
The 2035 Fund’s U.S. fixed income allocation also contributed to total return. The greatest contribution came from the Schwab Total Bond Market Fund, although it underperformed the 2.0% return of the Barclays U.S. Aggregate Bond Index, the composite index’s U.S. fixed income component, detracting from relative performance. With investment-grade bonds posting negative returns for the period, a small position in the Loomis Sayles Investment Grade Bond Fund detracted from total return.
As of 10/31/15:
| Statistics |
| Number of Holdings | 22 |
| Portfolio Turnover Rate | 14% |
| Asset Class Weightings % of Investments1 |
| Equity Funds – Large-Cap | 48.0% |
| Equity Funds – International | 21.7% |
| Fixed-Income Funds – Intermediate-Term Bond | 15.3% |
| Equity Funds – Small-Cap | 6.8% |
| Equity Funds – Global Real Estate | 4.2% |
| Short-Term Investments | 2.4% |
| Fixed-Income Funds – Short-Term Bond | 0.9% |
| Fixed-Income Funds – International Bond | 0.7% |
| Total | 100.0% |
| Top Holdings % of Net Assets2,3 |
| Schwab Core Equity Fund | 13.3% |
| Laudus U.S. Large Cap Growth Fund | 12.0% |
| Laudus International MarketMasters Fund, Select Shares | 11.9% |
| Schwab S&P 500 Index Fund | 10.8% |
| Schwab International Core Equity Fund | 7.9% |
| Schwab Total Bond Market Fund | 6.4% |
| Schwab Dividend Equity Fund | 5.9% |
| TCW Relative Value Large Cap Fund, Class I | 4.8% |
| Schwab Small-Cap Equity Fund | 4.4% |
| Metropolitan West Total Return Bond Fund, Class I | 4.4% |
| Total | 81.8% |
Management views and portfolio holdings may have changed since the report date.
The Laudus U.S. Large Cap Growth Fund is part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.
| 1 | The fund intends to invest in a combination of the underlying funds; however, the fund may also invest directly in equity and fixed income securities, exchange traded funds, and cash equivalents, including money market securities. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
| 3 | The holdings listed exclude any temporary liquidity investments. |
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
March 12, 2008 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1
Average Annual Total Returns1,2
| Fund and Inception Date | 1 Year | 5 Years | Since Inception |
| Fund: Schwab Target 2035 Fund (3/12/08) | 2.43% | 10.03% | 7.36% |
| Target 2035 Composite Index | 2.71% | 9.96% | 6.73% |
| Dow Jones U.S. Total Stock Market IndexSM | 4.40% | 14.11% | 8.72% |
| Barclays U.S. Aggregate Bond Index | 1.96% | 3.03% | 4.44% |
| Fund Category: Morningstar Target Date 2031-2035 | 0.42% | 8.37% | 5.28% |
Fund Expense Ratios3: Net 0.75%; Gross 0.82%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.75%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Target 2040 Fund
The Schwab Target 2040 Fund (the 2040 Fund) seeks to provide capital appreciation and income consistent with its current asset allocation, and seeks to achieve its investment objective by investing primarily in a combination of other Schwab Funds and Laudus Funds. The 2040 Fund may also invest in unaffiliated third-party mutual funds. The target asset allocation is adjusted annually by the investment adviser; as of the last annual adjustment effective January 7, 2015, the 2040 Fund’s asset allocation was approximately 86.4% equity securities, 11.5% fixed income securities, and 2.1% cash and cash equivalents (including money market funds). At its target date, the 2040 Fund’s allocation will be approximately 40.0% equity securities, 54.0% fixed income securities, and 6.0% cash and cash equivalents (including money market funds). (For portfolio allocations as of the end of this reporting period, please see the 2040 Fund’s Portfolio Holdings included in this report.)
Market Highlights. U.S. stocks posted modest gains for the 12-month report period on mixed economic data, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest rate hike. Slowing growth in China weighed on global markets, as did declining energy and metals prices. Against this backdrop, the U.S. dollar was strong, reducing returns of international investments in U.S. dollar terms.
Performance. For the 12-month reporting period ended October 31, 2015, the 2040 Fund returned 2.48%. The 2040 Fund’s internally calculated comparative index, the Target 2040 Composite Index (the composite index), returned 2.67%.
Positioning and Strategies. The 2040 Fund’s asset allocations were broadly in line with those of the composite index over the reporting period.
The 2040 Fund’s U.S. equity exposures provided the greatest contribution to total return, particularly among large-caps. The top contributor was the Laudus U.S. Large Cap Growth Fund. The Schwab Core Equity Fund and the Schwab S&P 500 Index Fund also contributed notably. On a relative basis, both the Laudus U.S. Large Cap Growth Fund and the Schwab Core Equity Fund outperformed the composite index’s U.S. equity allocation component, the S& P 500 Index, which returned 5.2%; the remaining four positions, while underperforming the S&P 500 Index by various degrees, all contributed positively to the 2040 Fund’s total return. Among small-cap holdings, the Laudus Small-Cap MarketMasters Fund (Select Shares) detracted from the 2040 Fund’s absolute and relative performance, while the Schwab Small-Cap Equity Fund enhanced both absolute and relative performance, outperforming the Russell 2000 Index by 2.7%.
The 2040 Fund’s international equity allocation contributed modestly to total return, reflecting the weak performance of international stocks. The largest positive contribution came from the Schwab International Core Equity Fund. On a relative basis, both the Schwab International Core Equity Fund and the Laudus International MarketMasters Fund (Select Shares) outperformed the composite index’s international equity allocation component, the MSCI EAFE Index (Net), which returned -0.1%. With emerging markets particularly hard-hit for the reporting period, a small position in the Laudus Mondrian Emerging Markets Institutional Fund detracted from both total and relative returns, underperforming the -14.5% return of the MSCI Emerging Markets Index (Net). The 2040 Fund’s allocation to the Schwab Global Real Estate Fund enhanced total return and relative performance.
The 2040 Fund’s U.S. fixed income allocation also contributed to total return. The greatest contribution came from the Schwab Total Bond Market Fund, although it underperformed the 2.0% return of the Barclays U.S. Aggregate Bond Index, the composite index’s U.S. fixed income component, detracting from relative performance. With investment-grade bonds posting negative returns for the period, a small position in the Loomis Sayles Investment Grade Bond Fund detracted from total return. Non-U.S. fixed income was also weak, and the 2040 Fund’s small position in international government bonds generated a negative return, reflecting the depreciation of many foreign currencies versus the U.S. dollar.
As of 10/31/15:
| Statistics |
| Number of Holdings | 22 |
| Portfolio Turnover Rate | 13% |
| Asset Class Weightings % of Investments1 |
| Equity Funds – Large-Cap | 50.7% |
| Equity Funds – International | 23.9% |
| Fixed-Income Funds – Intermediate-Term Bond | 10.0% |
| Equity Funds – Small-Cap | 7.9% |
| Equity Funds – Global Real Estate | 4.5% |
| Short-Term Investments | 2.2% |
| Fixed-Income Funds – Short-Term Bond | 0.4% |
| Fixed-Income Funds – International Bond | 0.4% |
| Total | 100.0% |
| Top Holdings % of Net Assets2,3 |
| Schwab Core Equity Fund | 14.1% |
| Laudus International MarketMasters Fund, Select Shares | 12.9% |
| Laudus U.S. Large Cap Growth Fund | 12.7% |
| Schwab S&P 500 Index Fund | 11.5% |
| Schwab International Core Equity Fund | 8.6% |
| Schwab Dividend Equity Fund | 6.2% |
| Schwab Small-Cap Equity Fund | 5.2% |
| TCW Relative Value Large Cap Fund, Class I | 5.1% |
| Schwab Global Real Estate Fund | 4.5% |
| Schwab Total Bond Market Fund | 3.8% |
| Total | 84.6% |
Management views and portfolio holdings may have changed since the report date.
The Laudus U.S. Large Cap Growth Fund is part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.
| 1 | The fund intends to invest in a combination of the underlying funds; however, the fund may also invest directly in equity and fixed income securities, exchange traded funds, and cash equivalents, including money market securities. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
| 3 | The holdings listed exclude any temporary liquidity investments. |
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1
Average Annual Total Returns1,2
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Target 2040 Fund (7/1/05) | 2.48% | 10.45% | 7.05% |
| Target 2040 Composite Index | 2.67% | 10.35% | 7.12% |
| Dow Jones U.S. Total Stock Market IndexSM | 4.40% | 14.11% | 8.07% |
| Barclays U.S. Aggregate Bond Index | 1.96% | 3.03% | 4.72% |
| Fund Category: Morningstar Target Date 2036-2040 | 0.27% | 7.94% | 5.22% |
Fund Expense Ratios3: Net 0.78%; Gross 0.82%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.78%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Target 2045 Fund
The Schwab Target 2045 Fund (the 2045 Fund) seeks to provide capital appreciation and income consistent with its current asset allocation, and seeks to achieve its investment objective by investing primarily in a combination of other Schwab Funds and Laudus Funds. The 2045 Fund may also invest in unaffiliated third-party mutual funds. The target asset allocation is adjusted annually by the investment adviser; as of the last annual adjustment effective January 12, 2015, the 2045 Fund’s asset allocation was approximately 90.0% equity securities, 8.0% fixed income securities, and 2.0% cash and cash equivalents (including money market funds). At its target date, the 2045 Fund’s allocation will be approximately 40.0% equity securities, 54.0% fixed income securities, and 6.0% cash and cash equivalents (including money market funds). (For portfolio allocations as of the end of this reporting period, please see the 2045 Fund’s Portfolio Holdings included in this report.)
Market Highlights. U.S. stocks posted modest gains for the 12-month report period on mixed economic data, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest rate hike. Slowing growth in China weighed on global markets, as did declining energy and metals prices. Against this backdrop, the U.S. dollar was strong, reducing returns of international investments in U.S. dollar terms.
Performance. For the 12-month reporting period ended October 31, 2015, the 2045 Fund returned 2.37%. The 2045 Fund’s internally calculated comparative index, the Target 2045 Composite Index (the composite index), returned 2.64%.
Positioning and Strategies. The 2045 Fund’s asset allocations were broadly in line with those of the composite index over the reporting period.
The 2045 Fund’s U.S. equity exposures provided the greatest contribution to total return, particularly among large-caps. The top contributor was the Laudus U.S. Large Cap Growth Fund. The Schwab Core Equity Fund and the Schwab S&P 500 Index Fund also contributed notably. On a relative basis, both the Laudus U.S. Large Cap Growth Fund and the Schwab Core Equity Fund outperformed the composite index’s U.S. equity allocation component, the S& P 500 Index, which returned 5.2%; the remaining four positions, while underperforming the S&P 500 Index by various degrees, all contributed positively to the 2045 Fund’s total return. Among small-cap holdings, the Laudus Small-Cap MarketMasters Fund (Select Shares) detracted from the 2045 Fund’s absolute and relative performance, while the Schwab Small-Cap Equity Fund enhanced both absolute and relative performance, outperforming the Russell 2000 Index by 2.7%.
The 2045 Fund’s international equity allocation contributed modestly to total return, reflecting the weak performance of international stocks. The largest positive contribution came from the Schwab International Core Equity Fund. On a relative basis, both the Schwab International Core Equity Fund and the Laudus International MarketMasters Fund (Select Shares) outperformed the composite index’s international equity allocation component, the MSCI EAFE Index (Net), which returned -0.1%. With emerging markets particularly hard-hit for the reporting period, a small position in the Laudus Mondrian Emerging Markets Institutional Fund detracted from both total and relative returns, underperforming the -14.5% return of the MSCI Emerging Markets Index (Net). The 2045 Fund’s allocation to the Schwab Global Real Estate Fund enhanced total return and relative performance.
The 2045 Fund’s U.S. fixed income allocation was small, but it contributed positively to the 2045 Fund’s total return.
As of 10/31/15:
| Statistics |
| Number of Holdings | 21 |
| Portfolio Turnover Rate | 10% |
| Asset Class Weightings % of Investments1 |
| Equity Funds – Large-Cap | 52.3% |
| Equity Funds – International | 25.2% |
| Equity Funds – Small-Cap | 8.7% |
| Fixed-Income Funds – Intermediate-Term Bond | 6.9% |
| Equity Funds – Global Real Estate | 4.6% |
| Short-Term Investments | 1.9% |
| Fixed-Income Funds – Short-Term Bond | 0.2% |
| Fixed-Income Funds – International Bond | 0.2% |
| Total | 100.0% |
| Top Holdings % of Net Assets2,3 |
| Schwab Core Equity Fund | 14.5% |
| Laudus International MarketMasters Fund, Select Shares | 13.4% |
| Laudus U.S. Large Cap Growth Fund | 13.0% |
| Schwab S&P 500 Index Fund | 11.8% |
| Schwab International Core Equity Fund | 8.9% |
| Schwab Dividend Equity Fund | 6.4% |
| Schwab Small-Cap Equity Fund | 5.7% |
| TCW Relative Value Large Cap Fund, Class I | 5.2% |
| Schwab Global Real Estate Fund | 4.6% |
| Laudus Small-Cap MarketMasters Fund, Select Shares | 3.0% |
| Total | 86.5% |
Management views and portfolio holdings may have changed since the report date.
The Laudus U.S. Large Cap Growth Fund is part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.
| 1 | The fund intends to invest in a combination of the underlying funds; however, the fund may also invest directly in equity and fixed income securities, exchange traded funds, and cash equivalents, including money market securities. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
| 3 | The holdings listed exclude any temporary liquidity investments. |
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
January 23, 2013 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1
Average Annual Total Returns1,2
| Fund and Inception Date | 1 Year | Since Inception |
| Fund: Schwab Target 2045 Fund (1/23/13) | 2.37% | 10.43% |
| Target 2045 Composite Index | 2.64% | 10.60% |
| Dow Jones U.S. Total Stock Market IndexSM | 4.40% | 14.55% |
| Barclays U.S. Aggregate Bond Index | 1.96% | 1.84% |
| Fund Category: Morningstar Target Date 2041-2045 | 0.45% | 8.25% |
Fund Expense Ratios3: Net 0.80%; Gross 1.12%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.80%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Target 2050 Fund
The Schwab Target 2050 Fund (the 2050 Fund) seeks to provide capital appreciation and income consistent with its current asset allocation, and seeks to achieve its investment objective by investing primarily in a combination of other Schwab Funds and Laudus Funds. The 2050 Fund may also invest in unaffiliated third-party mutual funds. The target asset allocation is adjusted annually by the investment adviser; as of the last annual adjustment effective January 12, 2015, the 2050 Fund’s asset allocation was approximately 92.5% equity securities, 5.5% fixed income securities, and 2.0% cash and cash equivalents (including money market funds). At its target date, the 2050 Fund’s allocation will be approximately 40.0% equity securities, 54.0% fixed income securities, and 6.0% cash and cash equivalents (including money market funds). (For portfolio allocations as of the end of this reporting period, please see the 2050 Fund’s Portfolio Holdings included in this report.)
Market Highlights. U.S. stocks posted modest gains for the 12-month report period on mixed economic data, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest rate hike. Slowing growth in China weighed on global markets, as did declining energy and metals prices. Against this backdrop, the U.S. dollar was strong, reducing returns of international investments in U.S. dollar terms.
Performance. For the 12-month reporting period ended October 31, 2015, the 2050 Fund returned 2.44%. The 2050 Fund’s internally calculated comparative index, the Target 2050 Composite Index (the composite index), returned 2.61%.
Positioning and Strategies. The 2050 Fund’s asset allocations were broadly in line with those of the composite index over the reporting period.
The 2050 Fund’s U.S. equity exposures provided the greatest contribution to total return, particularly among large-caps. The top contributor was the Laudus U.S. Large Cap Growth Fund. The Schwab Core Equity Fund and the Schwab S&P 500 Index Fund also contributed notably. On a relative basis, both the Laudus U.S. Large Cap Growth Fund and the Schwab Core Equity Fund outperformed the composite index’s U.S. equity allocation component, the S& P 500 Index, which returned 5.2%; the remaining four positions, while underperforming the S&P 500 Index by various degrees, all contributed positively to the 2050 Fund’s total return. Among small-cap holdings, the Laudus Small-Cap MarketMasters Fund (Select Shares) detracted from the 2050 Fund’s absolute and relative performance, while the Schwab Small-Cap Equity Fund enhanced both absolute and relative performance, outperforming the Russell 2000 Index by 2.7%.
The 2050 Fund’s international equity allocation contributed modestly to total return, reflecting the weak performance of international stocks. The largest positive contribution came from the Schwab International Core Equity Fund. On a relative basis, both the Schwab International Core Equity Fund and the Laudus International MarketMasters Fund (Select Shares) outperformed the composite index’s international equity allocation component, the MSCI EAFE Index (Net), which returned -0.1%. With emerging markets particularly hard-hit for the reporting period, a small position in the Laudus Mondrian Emerging Markets Institutional Fund detracted from both total and relative returns, underperforming the -14.5% return of the MSCI Emerging Markets Index (Net). The 2050 Fund’s allocation to the Schwab Global Real Estate Fund enhanced total return and relative performance.
The 2050 Fund’s U.S. fixed income allocation was small, but it contributed positively to the 2050 Fund’s total return.
As of 10/31/15:
| Statistics |
| Number of Holdings | 21 |
| Portfolio Turnover Rate | 8% |
| Asset Class Weightings % of Investments1 |
| Equity Funds – Large-Cap | 53.1% |
| Equity Funds – International | 26.1% |
| Equity Funds – Small-Cap | 9.2% |
| Equity Funds – Global Real Estate | 4.8% |
| Fixed-Income Funds – Intermediate-Term Bond | 4.6% |
| Short-Term Investments | 2.0% |
| Fixed-Income Funds – International Bond | 0.1% |
| Fixed-Income Funds – Short-Term Bond | 0.1% |
| Total | 100.0% |
| Top Holdings % of Net Assets2,3 |
| Schwab Core Equity Fund | 14.7% |
| Laudus International MarketMasters Fund, Select Shares | 13.8% |
| Laudus U.S. Large Cap Growth Fund | 13.2% |
| Schwab S&P 500 Index Fund | 12.0% |
| Schwab International Core Equity Fund | 9.2% |
| Schwab Dividend Equity Fund | 6.6% |
| Schwab Small-Cap Equity Fund | 6.0% |
| TCW Relative Value Large Cap Fund, Class I | 5.3% |
| Schwab Global Real Estate Fund | 4.8% |
| Laudus Small-Cap MarketMasters Fund, Select Shares | 3.2% |
| Total | 88.8% |
Management views and portfolio holdings may have changed since the report date.
The Laudus U.S. Large Cap Growth Fund is part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.
| 1 | The fund intends to invest in a combination of the underlying funds; however, the fund may also invest directly in equity and fixed income securities, exchange traded funds, and cash equivalents, including money market securities. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
| 3 | The holdings listed exclude any temporary liquidity investments. |
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
January 23, 2013 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1
Average Annual Total Returns1,2
| Fund and Inception Date | 1 Year | Since Inception |
| Fund: Schwab Target 2050 Fund (1/23/13) | 2.44% | 10.71% |
| Target 2050 Composite Index | 2.61% | 10.83% |
| Dow Jones U.S. Total Stock Market IndexSM | 4.40% | 14.55% |
| Barclays U.S. Aggregate Bond Index | 1.96% | 1.84% |
| Fund Category: Morningstar Target Date 2046-2050 | 0.36% | 7.99% |
Fund Expense Ratios3: Net 0.81%; Gross 1.20%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.81%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Target 2055 Fund
The Schwab Target 2055 Fund (the 2055 Fund) seeks to provide capital appreciation and income consistent with its current asset allocation, and seeks to achieve its investment objective by investing primarily in a combination of other Schwab Funds and Laudus Funds. The 2055 Fund may also invest in unaffiliated third-party mutual funds. The target asset allocation is adjusted annually by the investment adviser; as of the last annual adjustment effective January 12, 2015, the 2055 Fund’s asset allocation was approximately 95.0% equity securities, 3.0% fixed income securities, and 2.0% cash and cash equivalents (including money market funds). At its target date, the 2055 Fund’s allocation will be approximately 40.0% equity securities, 54.0% fixed income securities, and 6.0% cash and cash equivalents (including money market funds). (For portfolio allocations as of the end of this reporting period, please see the 2055 Fund’s Portfolio Holdings included in this report.)
Market Highlights. U.S. stocks posted modest gains for the 12-month report period on mixed economic data, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest rate hike. Slowing growth in China weighed on global markets, as did declining energy and metals prices. Against this backdrop, the U.S. dollar was strong, reducing returns of international investments in U.S. dollar terms.
Performance. For the 12-month reporting period ended October 31, 2015, the 2055 Fund returned 2.36%. The 2055 Fund’s internally calculated comparative index, the Target 2055 Composite Index (the composite index), returned 2.58%.
Positioning and Strategies. The 2055 Fund’s asset allocations were broadly in line with those of the composite index over the reporting period.
The 2055 Fund’s U.S. equity exposures provided the greatest contribution to total return, particularly among large-caps. The top contributor was the Laudus U.S. Large Cap Growth Fund. The Schwab Core Equity Fund and the Schwab S&P 500 Index Fund also contributed notably. On a relative basis, both the Laudus U.S. Large Cap Growth Fund and the Schwab Core Equity Fund outperformed the composite index’s U.S. equity allocation component, the S& P 500 Index, which returned 5.2%; the remaining four positions, while underperforming the S&P 500 Index by various degrees, all contributed positively to the 2055 Fund’s total return. Among small-cap holdings, the Laudus Small-Cap MarketMasters Fund (Select Shares) detracted from the 2055 Fund’s absolute and relative performance, while the Schwab Small-Cap Equity Fund enhanced both absolute and relative performance, outperforming the Russell 2000 Index by 2.7%.
The 2055 Fund’s international equity allocation contributed modestly to total return, reflecting the weak performance of international stocks. The largest positive contribution came from the Schwab International Core Equity Fund. On a relative basis, both the Schwab International Core Equity Fund and the Laudus International MarketMasters Fund (Select Shares) outperformed the composite index’s international equity allocation component, the MSCI EAFE Index (Net), which returned -0.1%. With emerging markets particularly hard-hit for the reporting period, a small position in the Laudus Mondrian Emerging Markets Institutional Fund detracted from both total and relative returns, underperforming the -14.5% return of the MSCI Emerging Markets Index (Net). The 2055 Fund’s allocation to the Schwab Global Real Estate Fund enhanced total return and relative performance.
The 2055 Fund’s U.S. fixed income allocation was small, but it contributed positively to the 2055 Fund’s total return.
As of 10/31/15:
| Statistics |
| Number of Holdings | 20 |
| Portfolio Turnover Rate | 8% |
| Asset Class Weightings % of Investments1 |
| Equity Funds – Large-Cap | 54.0% |
| Equity Funds – International | 27.0% |
| Equity Funds – Small-Cap | 9.8% |
| Equity Funds – Global Real Estate | 4.9% |
| Fixed-Income Funds – Intermediate-Term Bond | 2.2% |
| Short-Term Investments | 2.0% |
| Fixed-Income Funds – International Bond | 0.1% |
| Total | 100.0% |
| Top Holdings % of Net Assets2,3 |
| Schwab Core Equity Fund | 15.0% |
| Laudus International MarketMasters Fund, Select Shares | 14.2% |
| Laudus U.S. Large Cap Growth Fund | 13.4% |
| Schwab S&P 500 Index Fund | 12.2% |
| Schwab International Core Equity Fund | 9.4% |
| Schwab Dividend Equity Fund | 6.6% |
| Schwab Small-Cap Equity Fund | 6.4% |
| TCW Relative Value Large Cap Fund, Class I | 5.4% |
| Schwab Global Real Estate Fund | 4.9% |
| Laudus Small-Cap MarketMasters Fund, Select Shares | 3.4% |
| Total | 90.9% |
Management views and portfolio holdings may have changed since the report date.
The Laudus U.S. Large Cap Growth Fund is part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.
| 1 | The fund intends to invest in a combination of the underlying funds; however, the fund may also invest directly in equity and fixed income securities, exchange traded funds, and cash equivalents, including money market securities. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
| 3 | The holdings listed exclude any temporary liquidity investments. |
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
January 23, 2013 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1
Average Annual Total Returns1,2
| Fund and Inception Date | 1 Year | Since Inception |
| Fund: Schwab Target 2055 Fund (1/23/13) | 2.36% | 10.80% |
| Target 2055 Composite Index | 2.58% | 10.96% |
| Dow Jones U.S. Total Stock Market IndexSM | 4.40% | 14.55% |
| Barclays U.S. Aggregate Bond Index | 1.96% | 1.84% |
| Fund Category: Morningstar Target Date 2051+ | 0.85% | 8.77% |
Fund Expense Ratios3: Net 0.82%; Gross 1.50%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.82%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Fund Expenses (Unaudited)
Examples for a $1,000 Investment
As a fund shareholder, you may incur two types of costs: (1) transaction costs, such as redemption fees; and (2) ongoing costs, including management fees, transfer agent and shareholder services fees, and other fund expenses.
The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six months beginning May 1, 2015 and held through October 31, 2015.
Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number given for your fund under the heading entitled “Expenses Paid During Period.”
Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in a fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. Therefore, the hypothetical return lines of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | Expense Ratio1
(Annualized) | Beginning
Account Value
at 5/1/15 | Ending
Account Value
(Net of Expenses)
at 10/31/15 | Expenses Paid
During Period2
5/1/15–10/31/15 | |
| Schwab Target 2010 Fund | | | | | |
| Actual Return | 0.00% | $1,000.00 | $ 992.00 | $0.00 | |
| Hypothetical 5% Return | 0.00% | $1,000.00 | $1,025.20 | $0.00 | |
| Schwab Target 2015 Fund | | | | | |
| Actual Return | 0.00% | $1,000.00 | $ 991.10 | $0.00 | |
| Hypothetical 5% Return | 0.00% | $1,000.00 | $1,025.20 | $0.00 | |
| Schwab Target 2020 Fund | | | | | |
| Actual Return | 0.00% | $1,000.00 | $ 989.00 | $0.00 | |
| Hypothetical 5% Return | 0.00% | $1,000.00 | $1,025.20 | $0.00 | |
| Schwab Target 2025 Fund | | | | | |
| Actual Return | 0.00% | $1,000.00 | $ 986.00 | $0.00 | |
| Hypothetical 5% Return | 0.00% | $1,000.00 | $1,025.20 | $0.00 | |
| Schwab Target 2030 Fund | | | | | |
| Actual Return | 0.00% | $1,000.00 | $ 984.20 | $0.00 | |
| Hypothetical 5% Return | 0.00% | $1,000.00 | $1,025.20 | $0.00 | |
| Schwab Target 2035 Fund | | | | | |
| Actual Return | 0.00% | $1,000.00 | $ 982.00 | $0.00 | |
| Hypothetical 5% Return | 0.00% | $1,000.00 | $1,025.20 | $0.00 | |
| Schwab Target 2040 Fund | | | | | |
| Actual Return | 0.00% | $1,000.00 | $ 980.30 | $0.00 | |
| Hypothetical 5% Return | 0.00% | $1,000.00 | $1,025.20 | $0.00 | |
| Schwab Target 2045 Fund | | | | | |
| Actual Return | 0.00% | $1,000.00 | $ 978.90 | $0.00 | |
| Hypothetical 5% Return | 0.00% | $1,000.00 | $1,025.20 | $0.00 | |
| Schwab Target 2050 Fund | | | | | |
| Actual Return | 0.00% | $1,000.00 | $ 977.50 | $0.00 | |
| Hypothetical 5% Return | 0.00% | $1,000.00 | $1,025.20 | $0.00 | |
| Schwab Target 2055 Fund | | | | | |
| Actual Return | 0.01% | $1,000.00 | $ 976.80 | $0.05 | |
| Hypothetical 5% Return | 0.01% | $1,000.00 | $1,025.15 | $0.05 | |
| 1 | Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights which covers a 12-month period. The expenses incurred by the underlying funds in which the funds invest are not included in this ratio. |
| 2 | Expenses for each fund are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 184 days of the period, and divided by the 365 days of the fiscal year. |
Schwab Target 2010 Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $12.42 | $11.91 | $11.10 | $10.56 | $10.34 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.17 1 | 0.19 | 0.21 | 0.22 | 0.23 | |
| Net realized and unrealized gains (losses) | 0.08 | 0.52 | 0.85 | 0.57 | 0.24 | |
| Total from investment operations | 0.25 | 0.71 | 1.06 | 0.79 | 0.47 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.25) | (0.20) | (0.25) | (0.25) | (0.25) | |
| Net asset value at end of period | $12.42 | $12.42 | $11.91 | $11.10 | $10.56 | |
| Total return | 2.03% | 6.08% | 9.74% | 7.63% | 4.63% 2 | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses3 | 0.00% 4 | — | — | — | — | |
| Gross operating expenses3 | 0.14% | 0.17% | 0.18% | 0.18% | 0.14% | |
| Net investment income (loss) | 1.40% | 1.53% | 1.77% | 1.95% | 2.11% | |
| Portfolio turnover rate | 33% | 29% | 26% | 13% | 11% | |
| Net assets, end of period (x 1,000,000) | $65 | $64 | $61 | $60 | $64 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Includes proceeds from a litigation settlement related to an affiliated underlying fund. Without the litigation proceeds, performance would have been lower.
3
The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
4
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 97.3% | Other Investment Companies | 55,366,286 | 62,781,929 |
| 2.5% | Short-Term Investments | 1,592,760 | 1,592,760 |
| 99.8% | Total Investments | 56,959,046 | 64,374,689 |
| 0.2% | Other Assets and Liabilities, Net | | 136,515 |
| 100.0% | Net Assets | | 64,511,204 |
| Security | Number
of Shares | Value
($) |
| Other Investment Companies 97.3% of net assets |
| Equity Funds 38.8% |
| Global Real Estate 2.0% |
| Schwab Global Real Estate Fund (a) | 185,350 | 1,315,988 |
| International 8.9% |
| Laudus International MarketMasters Fund, Select Shares (a) | 149,571 | 3,396,762 |
| Schwab International Core Equity Fund (a) | 240,100 | 2,309,762 |
| | | 5,706,524 |
| Large-Cap 25.3% |
| Dodge & Cox Stock Fund | 2,293 | 401,380 |
| Laudus U.S. Large Cap Growth Fund *(a) | 228,536 | 4,051,943 |
| Schwab Core Equity Fund (a) | 196,100 | 4,529,915 |
| Schwab Dividend Equity Fund (a) | 124,102 | 2,039,001 |
| Schwab S&P 500 Index Fund (a) | 112,086 | 3,698,851 |
| TCW Relative Value Large Cap Fund, Class I | 73,568 | 1,617,759 |
| | | 16,338,849 |
| Small-Cap 2.6% |
| Laudus Small-Cap MarketMasters Fund, Select Shares (a) | 31,799 | 563,792 |
| Schwab Small-Cap Equity Fund (a) | 50,734 | 1,075,049 |
| | | 1,638,841 |
| | | 25,000,202 |
| Fixed-Income Funds 54.7% |
| Inflation-Protected Bond 6.2% |
| Schwab Treasury Inflation Protected Securities Index Fund (a) | 366,390 | 3,997,317 |
| Security | Number
of Shares | Value
($) |
| Intermediate-Term Bond 38.6% |
| Metropolitan West Total Return Bond Fund, Class I | 557,091 | 6,027,720 |
| Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares | 68,442 | 774,760 |
| Schwab Total Bond Market Fund (a) | 1,578,072 | 14,975,903 |
| Wells Fargo Advantage Core Bond Fund, Class I | 243,534 | 3,105,057 |
| | | 24,883,440 |
| International Bond 0.6% |
| Laudus Mondrian International Government Fixed Income Fund *(a) | 41,044 | 385,816 |
| Short-Term Bond 9.3% |
| Schwab Short-Term Bond Market Fund (a) | 650,054 | 6,045,504 |
| | | 35,312,077 |
| Money Market Fund 3.8% |
| Schwab Value Advantage Money Fund, Ultra Shares 0.11% (a)(b) | 2,469,650 | 2,469,650 |
| Total Other Investment Companies |
| (Cost $55,366,286) | | 62,781,929 |
Security
Rate, Maturity Date | Face
Amount
($) | Value
($) |
| Short-Term Investments 2.5% of net assets |
| Time Deposits 2.5% |
| Barclays Capital, Inc. |
| 0.03%, 11/02/15 | 303,556 | 303,556 |
| JPMorgan Chase Bank |
| 0.03%, 11/02/15 | 644,602 | 644,602 |
| Sumitomo Mitsui Banking Corp. |
| 0.03%, 11/02/15 | 644,602 | 644,602 |
| Total Short-Term Investments |
| (Cost $1,592,760) | | 1,592,760 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $57,719,320 and the unrealized appreciation and depreciation were $6,947,010 and ($291,641), respectively, with a net unrealized appreciation of $6,655,369.
| * | Non-income producing security. |
| (a) | Issuer is affiliated with the fund's investment adviser. |
| (b) | The rate shown is the 7-day yield. |
Portfolio Holdings continued
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Other Investment Companies1 | | $62,781,929 | | $— | | $— | | $62,781,929 | |
| Short-Term Investments1 | | — | | 1,592,760 | | — | | 1,592,760 | |
| Total | | $62,781,929 | | $1,592,760 | | $— | | $64,374,689 | |
| 1 | As categorized in Portfolio Holdings. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments in affiliated underlying funds, at value (cost $44,016,924) | | $50,855,253 |
| Investments in unaffiliated issuers, at value (cost $12,942,122) | + | 13,519,436 |
| Total investments, at value (cost $56,959,046) | | 64,374,689 |
| Receivables: | | |
| Investments sold | | 590,000 |
| Fund shares sold | | 91,591 |
| Dividends | | 46,592 |
| Due from investment adviser | | 907 |
| Prepaid expenses | + | 11,441 |
| Total assets | | 65,115,220 |
| Liabilities |
| Payables: | | |
| Investments bought | | 577,595 |
| Fund shares redeemed | | 2,200 |
| Accrued expenses | + | 24,221 |
| Total liabilities | | 604,016 |
| Net Assets |
| Total assets | | 65,115,220 |
| Total liabilities | – | 604,016 |
| Net assets | | $64,511,204 |
| Net Assets by Source | | |
| Capital received from investors | | 66,596,907 |
| Net investment income not yet distributed | | 518,547 |
| Net realized capital losses | | (10,019,893) |
| Net unrealized capital appreciation | | 7,415,643 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $64,511,204 | | 5,194,590 | | $12.42 |
| | | | | |
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends received from affiliated underlying funds | | $741,591 |
| Dividends received from unaffiliated underlying funds | | 174,752 |
| Interest | + | 627 |
| Total investment income | | 916,970 |
| Expenses |
| Professional fees | | 28,420 |
| Transfer agent fees | | 22,673 |
| Registration fees | | 9,126 |
| Shareholder reports | | 8,477 |
| Portfolio accounting fees | | 7,432 |
| Independent trustees' fees | | 7,140 |
| Custodian fees | | 4,258 |
| Proxy fees | | 544 |
| Other expenses | + | 3,138 |
| Total expenses | | 91,208 |
| Expense reduction by CSIM | – | 90,664 |
| Net expenses | – | 544 |
| Net investment income | | 916,426 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 1,919,912 |
| Realized capital gain distributions received from unaffiliated underlying funds | | 25,837 |
| Net realized gains on sales of affiliated underlying funds | | 1,017,543 |
| Net realized gains on sales of unaffiliated underlying funds | + | 201,704 |
| Net realized gains | | 3,164,996 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | | (2,374,672) |
| Net change in unrealized appreciation (depreciation) on unaffiliated underlying funds | + | (381,802) |
| Net change in unrealized appreciation (depreciation) | + | (2,756,474) |
| Net realized and unrealized gains | | 408,522 |
| Increase in net assets resulting from operations | | $1,324,948 |
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $916,426 | $947,578 |
| Net realized gains | | 3,164,996 | 4,161,004 |
| Net change in unrealized appreciation (depreciation) | + | (2,756,474) | (1,521,551) |
| Increase in net assets from operations | | 1,324,948 | 3,587,031 |
| Distributions to Shareholders | |
| Distributions from net investment income | | ($1,277,875) | ($1,036,165) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 1,228,160 | $15,228,571 | 955,289 | $11,575,490 |
| Shares reinvested | | 97,175 | 1,194,285 | 81,616 | 967,148 |
| Shares redeemed | + | (1,267,254) | (15,735,627) | (1,041,619) | (12,568,302) |
| Net transactions in fund shares | | 58,081 | $687,229 | (4,714) | ($25,664) |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 5,136,509 | $63,776,902 | 5,141,223 | $61,251,700 |
| Total increase or decrease | + | 58,081 | 734,302 | (4,714) | 2,525,202 |
| End of period | | 5,194,590 | $64,511,204 | 5,136,509 | $63,776,902 |
| Net investment income not yet distributed | | | $518,547 | | $604,856 |
Schwab Target 2015 Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $12.81 | $12.22 | $11.13 | $10.48 | $10.16 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.17 1 | 0.19 | 0.20 | 0.20 | 0.19 | |
| Net realized and unrealized gains (losses) | 0.08 | 0.60 | 1.12 | 0.66 | 0.32 | |
| Total from investment operations | 0.25 | 0.79 | 1.32 | 0.86 | 0.51 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.27) | (0.20) | (0.23) | (0.21) | (0.19) | |
| Distributions from net realized gains | (0.56) | — | — | — | — | |
| Total distributions | (0.83) | (0.20) | (0.23) | (0.21) | (0.19) | |
| Net asset value at end of period | $12.23 | $12.81 | $12.22 | $11.13 | $10.48 | |
| Total return | 1.99% | 6.56% | 12.06% | 8.41% | 5.10% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses2 | 0.00% 3 | — | — | — | — | |
| Gross operating expenses2 | 0.09% | 0.11% | 0.14% | 0.19% | 0.22% | |
| Net investment income (loss) | 1.42% | 1.52% | 1.72% | 1.85% | 1.94% | |
| Portfolio turnover rate | 33% | 32% | 16% | 13% | 16% | |
| Net assets, end of period (x 1,000,000) | $116 | $111 | $94 | $70 | $53 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
3
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 96.1% | Other Investment Companies | 100,921,651 | 111,035,609 |
| 3.7% | Short-Term Investments | 4,264,992 | 4,264,992 |
| 99.8% | Total Investments | 105,186,643 | 115,300,601 |
| 0.2% | Other Assets and Liabilities, Net | | 232,627 |
| 100.0% | Net Assets | | 115,533,228 |
| Security | Number
of Shares | Value
($) |
| Other Investment Companies 96.1% of net assets |
| Equity Funds 40.7% |
| Global Real Estate 2.1% |
| Schwab Global Real Estate Fund (a) | 345,116 | 2,450,327 |
| International 9.3% |
| Laudus International MarketMasters Fund, Select Shares (a) | 285,863 | 6,491,944 |
| Schwab International Core Equity Fund (a) | 445,723 | 4,287,851 |
| | | 10,779,795 |
| Large-Cap 26.6% |
| Dodge & Cox Stock Fund | 4,344 | 760,360 |
| Laudus U.S. Large Cap Growth Fund *(a) | 429,420 | 7,613,623 |
| Schwab Core Equity Fund (a) | 369,878 | 8,544,187 |
| Schwab Dividend Equity Fund (a) | 230,740 | 3,791,065 |
| Schwab S&P 500 Index Fund (a) | 210,352 | 6,941,614 |
| TCW Relative Value Large Cap Fund, Class I | 138,108 | 3,036,997 |
| | | 30,687,846 |
| Small-Cap 2.7% |
| Laudus Small-Cap MarketMasters Fund, Select Shares (a) | 59,796 | 1,060,183 |
| Schwab Small-Cap Equity Fund (a) | 94,786 | 2,008,519 |
| | | 3,068,702 |
| | | 46,986,670 |
| Fixed-Income Funds 53.1% |
| Inflation-Protected Bond 6.0% |
| Schwab Treasury Inflation Protected Securities Index Fund (a) | 636,258 | 6,941,578 |
| Security | Number
of Shares | Value
($) |
| Intermediate-Term Bond 37.4% |
| Metropolitan West Total Return Bond Fund, Class I | 991,258 | 10,725,412 |
| Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares | 137,437 | 1,555,792 |
| Schwab Total Bond Market Fund (a) | 2,715,881 | 25,773,712 |
| Wells Fargo Advantage Core Bond Fund, Class I | 406,268 | 5,179,920 |
| | | 43,234,836 |
| International Bond 0.7% |
| Laudus Mondrian International Government Fixed Income Fund *(a) | 86,086 | 809,206 |
| Short-Term Bond 9.0% |
| Schwab Short-Term Bond Market Fund (a) | 1,115,060 | 10,370,055 |
| | | 61,355,675 |
| Money Market Fund 2.3% |
| Schwab Value Advantage Money Fund, Ultra Shares 0.11% (a)(b) | 2,693,264 | 2,693,264 |
| Total Other Investment Companies |
| (Cost $100,921,651) | | 111,035,609 |
Security
Rate, Maturity Date | Face
Amount
($) | Value
($) |
| Short-Term Investments 3.7% of net assets |
| Time Deposits 3.7% |
| Australia & New Zealand Banking Group Ltd. |
| 0.03%, 11/02/15 | 1,158,434 | 1,158,434 |
| DNB |
| 0.03%, 11/02/15 | 1,158,434 | 1,158,434 |
| Nordea Bank |
| 0.03%, 11/02/15 | 1,158,434 | 1,158,434 |
| Wells Fargo |
| 0.03%, 11/02/15 | 789,690 | 789,690 |
| Total Short-Term Investments |
| (Cost $4,264,992) | | 4,264,992 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $105,586,857 and the unrealized appreciation and depreciation were $10,369,539 and ($655,795), respectively, with a net unrealized appreciation of $9,713,744.
| * | Non-income producing security. |
| (a) | Issuer is affiliated with the fund's investment adviser. |
| (b) | The rate shown is the 7-day yield. |
Portfolio Holdings continued
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Other Investment Companies1 | | $111,035,609 | | $— | | $— | | $111,035,609 | |
| Short-Term Investments1 | | — | | 4,264,992 | | — | | 4,264,992 | |
| Total | | $111,035,609 | | $4,264,992 | | $— | | $115,300,601 | |
| 1 | As categorized in Portfolio Holdings. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments in affiliated underlying funds, at value (cost $80,499,588) | | $89,777,128 |
| Investments in unaffiliated issuers, at value (cost $24,687,055) | + | 25,523,473 |
| Total investments, at value (cost $105,186,643) | | 115,300,601 |
| Receivables: | | |
| Investments sold | | 1,330,000 |
| Fund shares sold | | 118,073 |
| Dividends | | 78,664 |
| Due from investment adviser | | 1,161 |
| Prepaid expenses | + | 5,224 |
| Total assets | | 116,833,723 |
| Liabilities |
| Payables: | | |
| Investments bought | | 1,140,470 |
| Fund shares redeemed | | 133,178 |
| Accrued expenses | + | 26,847 |
| Total liabilities | | 1,300,495 |
| Net Assets |
| Total assets | | 116,833,723 |
| Total liabilities | – | 1,300,495 |
| Net assets | | $115,533,228 |
| Net Assets by Source | | |
| Capital received from investors | | 99,540,689 |
| Net investment income not yet distributed | | 775,782 |
| Net realized capital gains | | 5,102,799 |
| Net unrealized capital appreciation | | 10,113,958 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $115,533,228 | | 9,447,150 | | $12.23 |
| | | | | |
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends received from affiliated underlying funds | | $1,313,263 |
| Dividends received from unaffiliated underlying funds | | 310,059 |
| Interest | + | 1,206 |
| Total investment income | | 1,624,528 |
| Expenses |
| Professional fees | | 28,766 |
| Transfer agent fees | | 23,494 |
| Registration fees | | 18,451 |
| Shareholder reports | | 10,287 |
| Portfolio accounting fees | | 8,299 |
| Independent trustees' fees | | 7,374 |
| Custodian fees | | 4,944 |
| Proxy fees | | 792 |
| Other expenses | + | 2,981 |
| Total expenses | | 105,388 |
| Expense reduction by CSIM | – | 104,596 |
| Net expenses | – | 792 |
| Net investment income | | 1,623,736 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 3,737,877 |
| Realized capital gain distributions received from unaffiliated underlying funds | | 50,968 |
| Net realized gains on sales of affiliated underlying funds | | 1,944,104 |
| Net realized gains on sales of unaffiliated underlying funds | + | 356,000 |
| Net realized gains | | 6,088,949 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | | (4,798,461) |
| Net change in unrealized appreciation (depreciation) on unaffiliated underlying funds | + | (723,842) |
| Net change in unrealized appreciation (depreciation) | + | (5,522,303) |
| Net realized and unrealized gains | | 566,646 |
| Increase in net assets resulting from operations | | $2,190,382 |
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $1,623,736 | $1,599,816 |
| Net realized gains | | 6,088,949 | 5,236,905 |
| Net change in unrealized appreciation (depreciation) | + | (5,522,303) | (281,221) |
| Increase in net assets from operations | | 2,190,382 | 6,555,500 |
| Distributions to Shareholders | |
| Distributions from net investment income | | (2,377,309) | (1,610,833) |
| Distributions from net realized gains | + | (4,869,324) | — |
| Total distributions | | ($7,246,633) | ($1,610,833) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 3,086,913 | $37,992,475 | 3,043,782 | $37,901,842 |
| Shares reinvested | | 564,457 | 6,841,214 | 125,055 | 1,526,926 |
| Shares redeemed | + | (2,879,374) | (35,347,201) | (2,202,942) | (27,468,032) |
| Net transactions in fund shares | | 771,996 | $9,486,488 | 965,895 | $11,960,736 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 8,675,154 | $111,102,991 | 7,709,259 | $94,197,588 |
| Total increase | + | 771,996 | 4,430,237 | 965,895 | 16,905,403 |
| End of period | | 9,447,150 | $115,533,228 | 8,675,154 | $111,102,991 |
| Net investment income not yet distributed | | | $775,782 | | $990,271 |
Schwab Target 2020 Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $14.32 | $13.52 | $11.94 | $11.13 | $10.80 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.20 1 | 0.21 | 0.22 | 0.22 | 0.22 | |
| Net realized and unrealized gains (losses) | 0.12 | 0.82 | 1.62 | 0.82 | 0.34 | |
| Total from investment operations | 0.32 | 1.03 | 1.84 | 1.04 | 0.56 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.31) | (0.23) | (0.26) | (0.23) | (0.23) | |
| Net asset value at end of period | $14.33 | $14.32 | $13.52 | $11.94 | $11.13 | |
| Total return | 2.25% | 7.71% | 15.72% | 9.52% | 5.18% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses2 | 0.00% 3 | — | — | — | 0.00% 3 | |
| Gross operating expenses2 | 0.03% | 0.04% | 0.05% | 0.06% | 0.06% | |
| Net investment income (loss) | 1.42% | 1.48% | 1.71% | 1.89% | 1.92% | |
| Portfolio turnover rate | 25% | 26% | 14% | 13% | 15% | |
| Net assets, end of period (x 1,000,000) | $536 | $499 | $415 | $306 | $273 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
3
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 97.1% | Other Investment Companies | 453,786,929 | 521,173,514 |
| 2.8% | Short-Term Investments | 14,851,856 | 14,851,856 |
| 99.9% | Total Investments | 468,638,785 | 536,025,370 |
| 0.1% | Other Assets and Liabilities, Net | | 354,903 |
| 100.0% | Net Assets | | 536,380,273 |
| Security | Number
of Shares | Value
($) |
| Other Investment Companies 97.1% of net assets |
| Equity Funds 55.1% |
| Global Real Estate 2.8% |
| Schwab Global Real Estate Fund (a) | 2,135,735 | 15,163,716 |
| International 13.7% |
| Laudus International MarketMasters Fund, Select Shares (a) | 1,903,619 | 43,231,176 |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares (a) | 203,973 | 1,444,131 |
| Schwab International Core Equity Fund (a) | 3,003,249 | 28,891,254 |
| | | 73,566,561 |
| Large-Cap 34.8% |
| Dodge & Cox Stock Fund | 26,368 | 4,615,471 |
| Laudus U.S. Large Cap Growth Fund *(a) | 2,612,903 | 46,326,768 |
| Schwab Core Equity Fund (a) | 2,240,843 | 51,763,488 |
| Schwab Dividend Equity Fund (a) | 1,404,942 | 23,083,194 |
| Schwab S&P 500 Index Fund (a) | 1,276,154 | 42,113,088 |
| TCW Relative Value Large Cap Fund, Class I | 841,385 | 18,502,054 |
| | | 186,404,063 |
| Small-Cap 3.8% |
| Laudus Small-Cap MarketMasters Fund, Select Shares (a) | 404,664 | 7,174,692 |
| Schwab Small-Cap Equity Fund (a) | 625,696 | 13,258,509 |
| | | 20,433,201 |
| | | 295,567,541 |
| Security | Number
of Shares | Value
($) |
| Fixed-Income Funds 40.5% |
| Inflation-Protected Bond 2.3% |
| Schwab Treasury Inflation Protected Securities Index Fund (a) | 1,142,741 | 12,467,301 |
| Intermediate-Term Bond 31.8% |
| Metropolitan West Total Return Bond Fund, Class I | 4,357,339 | 47,146,409 |
| Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares | 1,204,335 | 13,633,074 |
| Schwab Intermediate-Term Bond Fund (a) | 467,601 | 4,774,201 |
| Schwab Total Bond Market Fund (a) | 9,568,667 | 90,806,651 |
| Wells Fargo Advantage Core Bond Fund, Class I | 1,125,935 | 14,355,668 |
| | | 170,716,003 |
| International Bond 1.1% |
| Laudus Mondrian International Government Fixed Income Fund *(a) | 644,158 | 6,055,089 |
| Short-Term Bond 5.3% |
| Schwab Short-Term Bond Market Fund (a) | 3,049,891 | 28,363,983 |
| | | 217,602,376 |
| Money Market Fund 1.5% |
| Schwab Value Advantage Money Fund, Ultra Shares 0.11% (a)(b) | 8,003,597 | 8,003,597 |
| Total Other Investment Companies |
| (Cost $453,786,929) | | 521,173,514 |
Security
Rate, Maturity Date | Face
Amount
($) | Value
($) |
| Short-Term Investments 2.8% of net assets |
| Time Deposits 2.8% |
| Barclays Capital, Inc. |
| 0.03%, 11/02/15 | 4,118,702 | 4,118,702 |
| JPMorgan Chase Bank |
| 0.03%, 11/02/15 | 5,366,577 | 5,366,577 |
| Sumitomo Mitsui Banking Corp. |
| 0.03%, 11/02/15 | 5,366,577 | 5,366,577 |
| Total Short-Term Investments |
| (Cost $14,851,856) | | 14,851,856 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $470,524,718 and the unrealized appreciation and depreciation were $69,315,588 and ($3,814,936), respectively, with a net unrealized appreciation of $65,500,652.
| * | Non-income producing security. |
| (a) | Issuer is affiliated with the fund's investment adviser. |
| (b) | The rate shown is the 7-day yield. |
Portfolio Holdings continued
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Other Investment Companies1 | | $521,173,514 | | $— | | $— | | $521,173,514 | |
| Short-Term Investments1 | | — | | 14,851,856 | | — | | 14,851,856 | |
| Total | | $521,173,514 | | $14,851,856 | | $— | | $536,025,370 | |
| 1 | As categorized in Portfolio Holdings. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments in affiliated underlying funds, at value (cost $360,883,298) | | $422,920,838 |
| Investments in unaffiliated issuers, at value (cost $107,755,487) | + | 113,104,532 |
| Total investments, at value (cost $468,638,785) | | 536,025,370 |
| Receivables: | | |
| Investments sold | | 6,450,000 |
| Fund shares sold | | 640,357 |
| Dividends | | 279,327 |
| Due from investment adviser | | 2,635 |
| Interest | | 25 |
| Prepaid expenses | + | 17,818 |
| Total assets | | 543,415,532 |
| Liabilities |
| Payables: | | |
| Investments bought | | 6,735,449 |
| Fund shares redeemed | | 250,610 |
| Accrued expenses | + | 49,200 |
| Total liabilities | | 7,035,259 |
| Net Assets |
| Total assets | | 543,415,532 |
| Total liabilities | – | 7,035,259 |
| Net assets | | $536,380,273 |
| Net Assets by Source | | |
| Capital received from investors | | 448,644,510 |
| Net investment income not yet distributed | | 3,585,956 |
| Net realized capital gains | | 16,763,222 |
| Net unrealized capital appreciation | | 67,386,585 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $536,380,273 | | 37,434,125 | | $14.33 |
| | | | | |
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends received from affiliated underlying funds | | $5,941,699 |
| Dividends received from unaffiliated underlying funds | | 1,518,902 |
| Interest | + | 4,849 |
| Total investment income | | 7,465,450 |
| Expenses |
| Shareholder reports | | 34,717 |
| Professional fees | | 31,662 |
| Transfer agent fees | | 28,350 |
| Portfolio accounting fees | | 24,597 |
| Registration fees | | 23,514 |
| Custodian fees | | 11,784 |
| Independent trustees' fees | | 9,320 |
| Proxy fees | | 3,223 |
| Other expenses | + | 12,399 |
| Total expenses | | 179,566 |
| Expense reduction by CSIM | – | 176,343 |
| Net expenses | – | 3,223 |
| Net investment income | | 7,462,227 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 22,017,994 |
| Realized capital gain distributions received from unaffiliated underlying funds | | 300,584 |
| Net realized gains on sales of affiliated underlying funds | | 7,997,739 |
| Net realized gains on sales of unaffiliated underlying funds | + | 1,755,592 |
| Net realized gains | | 32,071,909 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | | (24,780,767) |
| Net change in unrealized appreciation (depreciation) on unaffiliated underlying funds | + | (3,762,906) |
| Net change in unrealized appreciation (depreciation) | + | (28,543,673) |
| Net realized and unrealized gains | | 3,528,236 |
| Increase in net assets resulting from operations | | $10,990,463 |
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $7,462,227 | $6,816,459 |
| Net realized gains | | 32,071,909 | 26,910,774 |
| Net change in unrealized appreciation (depreciation) | + | (28,543,673) | 231,749 |
| Increase in net assets from operations | | 10,990,463 | 33,958,982 |
| Distributions to Shareholders | |
| Distributions from net investment income | | ($10,865,751) | ($7,213,636) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 8,456,975 | $121,244,776 | 8,720,572 | $120,772,973 |
| Shares reinvested | | 734,526 | 10,422,917 | 510,642 | 6,944,736 |
| Shares redeemed | + | (6,613,737) | (94,577,536) | (5,023,958) | (69,819,952) |
| Net transactions in fund shares | | 2,577,764 | $37,090,157 | 4,207,256 | $57,897,757 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 34,856,361 | $499,165,404 | 30,649,105 | $414,522,301 |
| Total increase | + | 2,577,764 | 37,214,869 | 4,207,256 | 84,643,103 |
| End of period | | 37,434,125 | $536,380,273 | 34,856,361 | $499,165,404 |
| Net investment income not yet distributed | | | $3,585,956 | | $3,805,442 |
Schwab Target 2025 Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $14.54 | $13.63 | $11.73 | $10.84 | $10.46 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.19 1 | 0.21 | 0.21 | 0.19 | 0.19 | |
| Net realized and unrealized gains (losses) | 0.15 | 0.93 | 1.93 | 0.89 | 0.38 | |
| Total from investment operations | 0.34 | 1.14 | 2.14 | 1.08 | 0.57 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.32) | (0.23) | (0.24) | (0.19) | (0.19) | |
| Distributions from net realized gains | (0.45) | — | — | — | — | |
| Total distributions | (0.77) | (0.23) | (0.24) | (0.19) | (0.19) | |
| Net asset value at end of period | $14.11 | $14.54 | $13.63 | $11.73 | $10.84 | |
| Total return | 2.36% | 8.44% | 18.54% | 10.14% | 5.44% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses2 | 0.00% 3 | — | — | 0.00% 3 | — | |
| Gross operating expenses2 | 0.04% | 0.06% | 0.08% | 0.10% | 0.14% | |
| Net investment income (loss) | 1.37% | 1.39% | 1.57% | 1.73% | 1.66% | |
| Portfolio turnover rate | 21% | 27% | 10% | 13% | 9% | |
| Net assets, end of period (x 1,000,000) | $409 | $344 | $251 | $141 | $104 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
3
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 96.7% | Other Investment Companies | 359,271,853 | 395,801,058 |
| 3.4% | Short-Term Investments | 14,011,498 | 14,011,498 |
| 100.1% | Total Investments | 373,283,351 | 409,812,556 |
| (0.1%) | Other Assets and Liabilities, Net | | (451,434) |
| 100.0% | Net Assets | | 409,361,122 |
| Security | Number
of Shares | Value
($) |
| Other Investment Companies 96.7% of net assets |
| Equity Funds 65.7% |
| Global Real Estate 3.4% |
| Schwab Global Real Estate Fund (a) | 1,954,647 | 13,877,993 |
| International 16.9% |
| Laudus International MarketMasters Fund, Select Shares (a) | 1,733,155 | 39,359,940 |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares (a) | 462,224 | 3,272,543 |
| Schwab International Core Equity Fund (a) | 2,749,043 | 26,445,789 |
| | | 69,078,272 |
| Large-Cap 40.6% |
| Dodge & Cox Stock Fund | 23,511 | 4,115,300 |
| Laudus U.S. Large Cap Growth Fund *(a) | 2,330,246 | 41,315,255 |
| Schwab Core Equity Fund (a) | 1,987,490 | 45,911,028 |
| Schwab Dividend Equity Fund (a) | 1,261,862 | 20,732,395 |
| Schwab S&P 500 Index Fund (a) | 1,136,046 | 37,489,504 |
| TCW Relative Value Large Cap Fund, Class I | 750,314 | 16,499,411 |
| | | 166,062,893 |
| Small-Cap 4.8% |
| Laudus Small-Cap MarketMasters Fund, Select Shares (a) | 387,230 | 6,865,592 |
| Schwab Small-Cap Equity Fund (a) | 609,392 | 12,913,018 |
| | | 19,778,610 |
| | | 268,797,768 |
| Security | Number
of Shares | Value
($) |
| Fixed-Income Funds 31.0% |
| Inflation-Protected Bond 0.5% |
| Schwab Treasury Inflation Protected Securities Index Fund (a) | 194,330 | 2,120,136 |
| Intermediate-Term Bond 26.3% |
| Metropolitan West Total Return Bond Fund, Class I | 2,839,451 | 30,722,863 |
| Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares | 1,136,717 | 12,867,638 |
| Schwab Intermediate-Term Bond Fund (a) | 507,330 | 5,179,836 |
| Schwab Total Bond Market Fund (a) | 5,479,728 | 52,002,615 |
| Wells Fargo Advantage Core Bond Fund, Class I | 524,087 | 6,682,110 |
| | | 107,455,062 |
| International Bond 1.1% |
| Laudus Mondrian International Government Fixed Income Fund *(a) | 488,782 | 4,594,555 |
| Short-Term Bond 3.1% |
| Schwab Short-Term Bond Market Fund (a) | 1,379,950 | 12,833,537 |
| | | 127,003,290 |
| Total Other Investment Companies |
| (Cost $359,271,853) | | 395,801,058 |
Security
Rate, Maturity Date | Face
Amount
($) | Value
($) |
| Short-Term Investments 3.4% of net assets |
| Time Deposits 3.4% |
| Bank of Tokyo - Mitsubishi UFJ |
| 0.03%, 11/02/15 | 4,098,988 | 4,098,988 |
| Barclays Capital, Inc. |
| 0.03%, 11/02/15 | 4,098,988 | 4,098,988 |
| DNB |
| 0.03%, 11/02/15 | 1,714,534 | 1,714,534 |
| Nordea Bank |
| 0.03%, 11/02/15 | 4,098,988 | 4,098,988 |
| Total Short-Term Investments |
| (Cost $14,011,498) | | 14,011,498 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $374,470,885 and the unrealized appreciation and depreciation were $38,685,746 and ($3,344,075), respectively, with a net unrealized appreciation of $35,341,671.
| * | Non-income producing security. |
| (a) | Issuer is affiliated with the fund's investment adviser. |
Portfolio Holdings continued
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Other Investment Companies1 | | $395,801,058 | | $— | | $— | | $395,801,058 | |
| Short-Term Investments1 | | — | | 14,011,498 | | — | | 14,011,498 | |
| Total | | $395,801,058 | | $14,011,498 | | $— | | $409,812,556 | |
| 1 | As categorized in Portfolio Holdings. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments in affiliated underlying funds, at value (cost $292,343,114) | | $324,913,736 |
| Investments in unaffiliated issuers, at value (cost $80,940,237) | + | 84,898,820 |
| Total investments, at value (cost $373,283,351) | | 409,812,556 |
| Receivables: | | |
| Investments sold | | 4,020,000 |
| Fund shares sold | | 303,058 |
| Dividends | | 161,810 |
| Due from investment adviser | | 2,795 |
| Interest | | 23 |
| Prepaid expenses | + | 10,116 |
| Total assets | | 414,310,358 |
| Liabilities |
| Payables: | | |
| Investments bought | | 4,875,445 |
| Fund shares redeemed | | 26,880 |
| Accrued expenses | + | 46,911 |
| Total liabilities | | 4,949,236 |
| Net Assets |
| Total assets | | 414,310,358 |
| Total liabilities | – | 4,949,236 |
| Net assets | | $409,361,122 |
| Net Assets by Source | | |
| Capital received from investors | | 352,532,789 |
| Net investment income not yet distributed | | 2,183,520 |
| Net realized capital gains | | 18,115,608 |
| Net unrealized capital appreciation | | 36,529,205 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $409,361,122 | | 29,014,394 | | $14.11 |
| | | | | |
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends received from affiliated underlying funds | | $4,184,002 |
| Dividends received from unaffiliated underlying funds | | 1,092,548 |
| Interest | + | 3,741 |
| Total investment income | | 5,280,291 |
| Expenses |
| Registration fees | | 33,982 |
| Professional fees | | 30,620 |
| Shareholder reports | | 27,797 |
| Transfer agent fees | | 27,490 |
| Portfolio accounting fees | | 22,066 |
| Custodian fees | | 9,952 |
| Independent trustees' fees | | 8,640 |
| Proxy fees | | 2,536 |
| Other expenses | + | 6,833 |
| Total expenses | | 169,916 |
| Expense reduction by CSIM | – | 167,380 |
| Net expenses | – | 2,536 |
| Net investment income | | 5,277,755 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 17,879,699 |
| Realized capital gain distributions received from unaffiliated underlying funds | | 247,721 |
| Net realized gains on sales of affiliated underlying funds | | 3,858,765 |
| Net realized losses on sales of unaffiliated underlying funds | + | (134,161) |
| Net realized gains | | 21,852,024 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | | (17,433,733) |
| Net change in unrealized appreciation (depreciation) on unaffiliated underlying funds | + | (1,509,414) |
| Net change in unrealized appreciation (depreciation) | + | (18,943,147) |
| Net realized and unrealized gains | | 2,908,877 |
| Increase in net assets resulting from operations | | $8,186,632 |
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $5,277,755 | $4,167,926 |
| Net realized gains | | 21,852,024 | 12,428,746 |
| Net change in unrealized appreciation (depreciation) | + | (18,943,147) | 7,489,895 |
| Increase in net assets from operations | | 8,186,632 | 24,086,567 |
| Distributions to Shareholders | |
| Distributions from net investment income | | (7,880,064) | (4,339,215) |
| Distributions from net realized gains | + | (10,940,164) | — |
| Total distributions | | ($18,820,228) | ($4,339,215) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 9,179,948 | $130,416,395 | 8,491,229 | $119,202,694 |
| Shares reinvested | | 1,313,209 | 18,358,656 | 308,192 | 4,243,806 |
| Shares redeemed | + | (5,145,739) | (73,004,027) | (3,588,071) | (50,461,215) |
| Net transactions in fund shares | | 5,347,418 | $75,771,024 | 5,211,350 | $72,985,285 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 23,666,976 | $344,223,694 | 18,455,626 | $251,491,057 |
| Total increase | + | 5,347,418 | 65,137,428 | 5,211,350 | 92,732,637 |
| End of period | | 29,014,394 | $409,361,122 | 23,666,976 | $344,223,694 |
| Net investment income not yet distributed | | | $2,183,520 | | $2,164,988 |
Schwab Target 2030 Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $15.77 | $14.70 | $12.42 | $11.43 | $11.05 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.21 1 | 0.22 | 0.22 | 0.19 | 0.19 | |
| Net realized and unrealized gains (losses) | 0.17 | 1.10 | 2.31 | 0.99 | 0.38 | |
| Total from investment operations | 0.38 | 1.32 | 2.53 | 1.18 | 0.57 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.36) | (0.25) | (0.25) | (0.19) | (0.19) | |
| Distributions from net realized gains | (0.20) | — | — | — | — | |
| Total distributions | (0.56) | (0.25) | (0.25) | (0.19) | (0.19) | |
| Net asset value at end of period | $15.59 | $15.77 | $14.70 | $12.42 | $11.43 | |
| Total return | 2.44% | 9.11% | 20.73% | 10.52% | 5.20% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses2 | 0.00% 3 | — | — | — | — | |
| Gross operating expenses2 | 0.03% | 0.03% | 0.04% | 0.05% | 0.05% | |
| Net investment income (loss) | 1.36% | 1.38% | 1.59% | 1.62% | 1.60% | |
| Portfolio turnover rate | 19% | 26% | 10% | 12% | 8% | |
| Net assets, end of period (x 1,000,000) | $789 | $727 | $621 | $444 | $372 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
3
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 97.3% | Other Investment Companies | 638,577,603 | 767,348,794 |
| 2.8% | Short-Term Investments | 21,863,467 | 21,863,467 |
| 100.1% | Total Investments | 660,441,070 | 789,212,261 |
| (0.1%) | Other Assets and Liabilities, Net | | (434,122) |
| 100.0% | Net Assets | | 788,778,139 |
| Security | Number
of Shares | Value
($) |
| Other Investment Companies 97.3% of net assets |
| Equity Funds 73.8% |
| Global Real Estate 3.8% |
| Schwab Global Real Estate Fund (a) | 4,219,822 | 29,960,737 |
| International 19.4% |
| Laudus International MarketMasters Fund, Select Shares (a) | 3,778,181 | 85,802,501 |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares (a) | 1,489,154 | 10,543,212 |
| Schwab International Core Equity Fund (a) | 5,937,402 | 57,117,811 |
| | | 153,463,524 |
| Large-Cap 44.8% |
| Dodge & Cox Stock Fund | 49,993 | 8,750,689 |
| Laudus U.S. Large Cap Growth Fund *(a) | 4,957,004 | 87,887,678 |
| Schwab Core Equity Fund (a) | 4,225,482 | 97,608,626 |
| Schwab Dividend Equity Fund (a) | 2,679,928 | 44,031,221 |
| Schwab S&P 500 Index Fund (a) | 2,414,262 | 79,670,654 |
| TCW Relative Value Large Cap Fund, Class I | 1,596,169 | 35,099,755 |
| | | 353,048,623 |
| Small-Cap 5.8% |
| Laudus Small-Cap MarketMasters Fund, Select Shares (a) | 891,921 | 15,813,760 |
| Schwab Small-Cap Equity Fund (a) | 1,418,219 | 30,052,067 |
| | | 45,865,827 |
| | | 582,338,711 |
| Security | Number
of Shares | Value
($) |
| Fixed-Income Funds 23.5% |
| Intermediate-Term Bond 20.8% |
| Metropolitan West Total Return Bond Fund, Class I | 4,339,939 | 46,958,138 |
| Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares | 2,231,373 | 25,259,142 |
| Schwab Intermediate-Term Bond Fund (a) | 1,041,224 | 10,630,899 |
| Schwab Total Bond Market Fund (a) | 7,706,982 | 73,139,262 |
| Wells Fargo Advantage Core Bond Fund, Class I | 594,685 | 7,582,230 |
| | | 163,569,671 |
| International Bond 0.9% |
| Laudus Mondrian International Government Fixed Income Fund *(a) | 780,730 | 7,338,866 |
| Short-Term Bond 1.8% |
| Schwab Short-Term Bond Market Fund (a) | 1,516,295 | 14,101,546 |
| | | 185,010,083 |
| Total Other Investment Companies |
| (Cost $638,577,603) | | 767,348,794 |
Security
Rate, Maturity Date | Face
Amount
($) | Value
($) |
| Short-Term Investments 2.8% of net assets |
| Time Deposits 2.8% |
| Barclays Capital, Inc. |
| 0.03%, 11/02/15 | 6,037,027 | 6,037,027 |
| JPMorgan Chase Bank |
| 0.03%, 11/02/15 | 7,913,220 | 7,913,220 |
| Sumitomo Mitsui Banking Corp. |
| 0.03%, 11/02/15 | 7,913,220 | 7,913,220 |
| Total Short-Term Investments |
| (Cost $21,863,467) | | 21,863,467 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $664,540,848 and the unrealized appreciation and depreciation were $131,978,392 and ($7,306,979), respectively, with a net unrealized appreciation of $124,671,413.
| * | Non-income producing security. |
| (a) | Issuer is affiliated with the fund's investment adviser. |
Portfolio Holdings continued
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Other Investment Companies1 | | $767,348,794 | | $— | | $— | | $767,348,794 | |
| Short-Term Investments1 | | — | | 21,863,467 | | — | | 21,863,467 | |
| Total | | $767,348,794 | | $21,863,467 | | $— | | $789,212,261 | |
| 1 | As categorized in Portfolio Holdings. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments in affiliated underlying funds, at value (cost $525,537,780) | | $643,698,840 |
| Investments in unaffiliated issuers, at value (cost $134,903,290) | + | 145,513,421 |
| Total investments, at value (cost $660,441,070) | | 789,212,261 |
| Receivables: | | |
| Investments sold | | 7,670,000 |
| Fund shares sold | | 944,599 |
| Dividends | | 232,053 |
| Due from investment adviser | | 3,434 |
| Interest | | 36 |
| Prepaid expenses | + | 21,617 |
| Total assets | | 798,084,000 |
| Liabilities |
| Payables: | | |
| Investments bought | | 7,117,123 |
| Fund shares redeemed | | 2,124,148 |
| Accrued expenses | + | 64,590 |
| Total liabilities | | 9,305,861 |
| Net Assets |
| Total assets | | 798,084,000 |
| Total liabilities | – | 9,305,861 |
| Net assets | | $788,778,139 |
| Net Assets by Source | | |
| Capital received from investors | | 608,456,731 |
| Net investment income not yet distributed | | 3,992,950 |
| Net realized capital gains | | 47,557,267 |
| Net unrealized capital appreciation | | 128,771,191 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $788,778,139 | | 50,605,003 | | $15.59 |
| | | | | |
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends received from affiliated underlying funds | | $8,440,238 |
| Dividends received from unaffiliated underlying funds | | 1,969,006 |
| Interest | + | 6,279 |
| Total investment income | | 10,415,523 |
| Expenses |
| Shareholder reports | | 50,929 |
| Professional fees | | 33,351 |
| Transfer agent fees | | 30,448 |
| Portfolio accounting fees | | 28,820 |
| Registration fees | | 28,333 |
| Custodian fees | | 14,334 |
| Independent trustees' fees | | 10,467 |
| Proxy fees | | 5,052 |
| Other expenses | + | 17,143 |
| Total expenses | | 218,877 |
| Expense reduction by CSIM | – | 213,825 |
| Net expenses | – | 5,052 |
| Net investment income | | 10,410,471 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 41,184,309 |
| Realized capital gain distributions received from unaffiliated underlying funds | | 424,590 |
| Net realized gains on sales of affiliated underlying funds | | 13,711,511 |
| Net realized gains on sales of unaffiliated underlying funds | + | 2,328,012 |
| Net realized gains | | 57,648,422 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | | (45,161,375) |
| Net change in unrealized appreciation (depreciation) on unaffiliated underlying funds | + | (5,204,303) |
| Net change in unrealized appreciation (depreciation) | + | (50,365,678) |
| Net realized and unrealized gains | | 7,282,744 |
| Increase in net assets resulting from operations | | $17,693,215 |
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $10,410,471 | $9,372,784 |
| Net realized gains | | 57,648,422 | 40,589,920 |
| Net change in unrealized appreciation (depreciation) | + | (50,365,678) | 8,954,942 |
| Increase in net assets from operations | | 17,693,215 | 58,917,646 |
| Distributions to Shareholders | |
| Distributions from net investment income | | (16,692,788) | (10,903,512) |
| Distributions from net realized gains | + | (9,243,382) | — |
| Total distributions | | ($25,936,170) | ($10,903,512) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 10,291,955 | $160,976,354 | 8,997,016 | $136,481,276 |
| Shares reinvested | | 1,631,332 | 25,204,083 | 710,161 | 10,588,500 |
| Shares redeemed | + | (7,433,036) | (116,539,103) | (5,865,191) | (89,178,074) |
| Net transactions in fund shares | | 4,490,251 | $69,641,334 | 3,841,986 | $57,891,702 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 46,114,752 | $727,379,760 | 42,272,766 | $621,473,924 |
| Total increase | + | 4,490,251 | 61,398,379 | 3,841,986 | 105,905,836 |
| End of period | | 50,605,003 | $788,778,139 | 46,114,752 | $727,379,760 |
| Net investment income not yet distributed | | | $3,992,950 | | $4,196,623 |
Schwab Target 2035 Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $15.23 | $14.12 | $11.69 | $10.70 | $10.32 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.19 1 | 0.20 | 0.20 | 0.16 | 0.16 | |
| Net realized and unrealized gains (losses) | 0.17 | 1.15 | 2.45 | 0.99 | 0.38 | |
| Total from investment operations | 0.36 | 1.35 | 2.65 | 1.15 | 0.54 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.35) | (0.24) | (0.22) | (0.16) | (0.16) | |
| Distributions from net realized gains | (0.54) | — | — | — | — | |
| Total distributions | (0.89) | (0.24) | (0.22) | (0.16) | (0.16) | |
| Net asset value at end of period | $14.70 | $15.23 | $14.12 | $11.69 | $10.70 | |
| Total return | 2.43% | 9.62% | 23.02% | 10.89% | 5.27% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses2 | 0.00% 3 | — | — | — | — | |
| Gross operating expenses2 | 0.05% | 0.07% | 0.09% | 0.13% | 0.17% | |
| Net investment income (loss) | 1.28% | 1.28% | 1.42% | 1.45% | 1.41% | |
| Portfolio turnover rate | 14% | 24% | 5% | 11% | 4% | |
| Net assets, end of period (x 1,000,000) | $337 | $282 | $204 | $111 | $77 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
3
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 97.6% | Other Investment Companies | 295,275,423 | 329,017,268 |
| 2.4% | Short-Term Investments | 7,970,983 | 7,970,983 |
| 100.0% | Total Investments | 303,246,406 | 336,988,251 |
| 0.0% | Other Assets and Liabilities, Net | | 8,329 |
| 100.0% | Net Assets | | 336,996,580 |
| Security | Number
of Shares | Value
($) |
| Other Investment Companies 97.6% of net assets |
| Equity Funds 80.7% |
| Global Real Estate 4.2% |
| Schwab Global Real Estate Fund (a) | 1,965,221 | 13,953,068 |
| International 21.7% |
| Laudus International MarketMasters Fund, Select Shares (a) | 1,766,255 | 40,111,661 |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares (a) | 893,478 | 6,325,823 |
| Schwab International Core Equity Fund (a) | 2,780,871 | 26,751,976 |
| | | 73,189,460 |
| Large-Cap 48.0% |
| Dodge & Cox Stock Fund | 22,948 | 4,016,873 |
| Laudus U.S. Large Cap Growth Fund *(a) | 2,272,925 | 40,298,967 |
| Schwab Core Equity Fund (a) | 1,940,254 | 44,819,871 |
| Schwab Dividend Equity Fund (a) | 1,220,114 | 20,046,466 |
| Schwab S&P 500 Index Fund (a) | 1,106,385 | 36,510,712 |
| TCW Relative Value Large Cap Fund, Class I | 731,893 | 16,094,338 |
| | | 161,787,227 |
| Small-Cap 6.8% |
| Laudus Small-Cap MarketMasters Fund, Select Shares (a) | 450,143 | 7,981,039 |
| Schwab Small-Cap Equity Fund (a) | 707,704 | 14,996,238 |
| | | 22,977,277 |
| | | 271,907,032 |
| Security | Number
of Shares | Value
($) |
| Fixed-Income Funds 16.9% |
| Intermediate-Term Bond 15.3% |
| Metropolitan West Total Return Bond Fund, Class I | 1,358,060 | 14,694,214 |
| Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares | 832,573 | 9,424,726 |
| Schwab Intermediate-Term Bond Fund (a) | 419,886 | 4,287,040 |
| Schwab Total Bond Market Fund (a) | 2,255,249 | 21,402,312 |
| Wells Fargo Advantage Core Bond Fund, Class I | 147,203 | 1,876,836 |
| | | 51,685,128 |
| International Bond 0.7% |
| Laudus Mondrian International Government Fixed Income Fund *(a) | 249,619 | 2,346,420 |
| Short-Term Bond 0.9% |
| Schwab Short-Term Bond Market Fund (a) | 331,042 | 3,078,688 |
| | | 57,110,236 |
| Total Other Investment Companies |
| (Cost $295,275,423) | | 329,017,268 |
Security
Rate, Maturity Date | Face
Amount
($) | Value
($) |
| Short-Term Investments 2.4% of net assets |
| Time Deposits 2.4% |
| Bank of Tokyo - Mitsubishi UFJ |
| 0.03%, 11/02/15 | 3,368,022 | 3,368,022 |
| DNB |
| 0.03%, 11/02/15 | 1,234,939 | 1,234,939 |
| Nordea Bank |
| 0.03%, 11/02/15 | 3,368,022 | 3,368,022 |
| Total Short-Term Investments |
| (Cost $7,970,983) | | 7,970,983 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $304,183,234 and the unrealized appreciation and depreciation were $35,869,490 and ($3,064,473), respectively, with a net unrealized appreciation of $32,805,017.
| * | Non-income producing security. |
| (a) | Issuer is affiliated with the fund's investment adviser. |
Portfolio Holdings continued
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Other Investment Companies1 | | $329,017,268 | | $— | | $— | | $329,017,268 | |
| Short-Term Investments1 | | — | | 7,970,983 | | — | | 7,970,983 | |
| Total | | $329,017,268 | | $7,970,983 | | $— | | $336,988,251 | |
| 1 | As categorized in Portfolio Holdings. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments in affiliated underlying funds, at value (cost $253,321,052) | | $282,910,281 |
| Investments in unaffiliated issuers, at value (cost $49,925,354) | + | 54,077,970 |
| Total investments, at value (cost $303,246,406) | | 336,988,251 |
| Receivables: | | |
| Investments sold | | 2,410,000 |
| Fund shares sold | | 852,864 |
| Dividends | | 69,466 |
| Due from investment adviser | | 2,849 |
| Interest | | 14 |
| Prepaid expenses | + | 8,902 |
| Total assets | | 340,332,346 |
| Liabilities |
| Payables: | | |
| Investments bought | | 3,270,967 |
| Fund shares redeemed | | 17,155 |
| Accrued expenses | + | 47,644 |
| Total liabilities | | 3,335,766 |
| Net Assets |
| Total assets | | 340,332,346 |
| Total liabilities | – | 3,335,766 |
| Net assets | | $336,996,580 |
| Net Assets by Source | | |
| Capital received from investors | | 283,910,622 |
| Net investment income not yet distributed | | 1,315,291 |
| Net realized capital gains | | 18,028,822 |
| Net unrealized capital appreciation | | 33,741,845 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $336,996,580 | | 22,928,423 | | $14.70 |
| | | | | |
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends received from affiliated underlying funds | | $3,338,443 |
| Dividends received from unaffiliated underlying funds | | 683,613 |
| Interest | + | 2,194 |
| Total investment income | | 4,024,250 |
| Expenses |
| Professional fees | | 30,128 |
| Registration fees | | 29,623 |
| Shareholder reports | | 29,167 |
| Transfer agent fees | | 28,926 |
| Portfolio accounting fees | | 20,854 |
| Custodian fees | | 10,099 |
| Independent trustees' fees | | 8,316 |
| Proxy fees | | 2,588 |
| Other expenses | + | 5,746 |
| Total expenses | | 165,447 |
| Expense reduction by CSIM | – | 162,859 |
| Net expenses | – | 2,588 |
| Net investment income | | 4,021,662 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 17,533,938 |
| Realized capital gain distributions received from unaffiliated underlying funds | | 161,378 |
| Net realized gains on sales of affiliated underlying funds | | 3,986,694 |
| Net realized losses on sales of unaffiliated underlying funds | + | (101,572) |
| Net realized gains | | 21,580,438 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | | (18,004,017) |
| Net change in unrealized appreciation (depreciation) on unaffiliated underlying funds | + | (1,009,593) |
| Net change in unrealized appreciation (depreciation) | + | (19,013,610) |
| Net realized and unrealized gains | | 2,566,828 |
| Increase in net assets resulting from operations | | $6,588,490 |
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $4,021,662 | $3,136,030 |
| Net realized gains | | 21,580,438 | 11,661,536 |
| Net change in unrealized appreciation (depreciation) | + | (19,013,610) | 7,420,048 |
| Increase in net assets from operations | | 6,588,490 | 22,217,614 |
| Distributions to Shareholders | |
| Distributions from net investment income | | (6,621,678) | (3,570,560) |
| Distributions from net realized gains | + | (10,314,099) | — |
| Total distributions | | ($16,935,777) | ($3,570,560) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 6,655,837 | $98,662,330 | 6,032,360 | $88,289,647 |
| Shares reinvested | | 1,133,588 | 16,527,714 | 242,410 | 3,485,859 |
| Shares redeemed | + | (3,359,991) | (49,645,929) | (2,250,360) | (32,933,604) |
| Net transactions in fund shares | | 4,429,434 | $65,544,115 | 4,024,410 | $58,841,902 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 18,498,989 | $281,799,752 | 14,474,579 | $204,310,796 |
| Total increase | + | 4,429,434 | 55,196,828 | 4,024,410 | 77,488,956 |
| End of period | | 22,928,423 | $336,996,580 | 18,498,989 | $281,799,752 |
| Net investment income not yet distributed | | | $1,315,291 | | $1,307,494 |
Schwab Target 2040 Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $16.77 | $15.49 | $12.67 | $11.55 | $11.16 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.21 1 | 0.21 | 0.22 | 0.17 | 0.17 | |
| Net realized and unrealized gains (losses) | 0.20 | 1.33 | 2.84 | 1.12 | 0.40 | |
| Total from investment operations | 0.41 | 1.54 | 3.06 | 1.29 | 0.57 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.39) | (0.26) | (0.24) | (0.17) | (0.18) | |
| Distributions from net realized gains | (0.37) | — | — | — | — | |
| Total distributions | (0.76) | (0.26) | (0.24) | (0.17) | (0.18) | |
| Net asset value at end of period | $16.42 | $16.77 | $15.49 | $12.67 | $11.55 | |
| Total return | 2.48% | 10.07% | 24.55% | 11.33% | 5.08% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses2 | 0.00% 3 | — | — | — | — | |
| Gross operating expenses2 | 0.03% | 0.04% | 0.04% | 0.06% | 0.06% | |
| Net investment income (loss) | 1.27% | 1.26% | 1.47% | 1.42% | 1.42% | |
| Portfolio turnover rate | 13% | 23% | 6% | 12% | 3% | |
| Net assets, end of period (x 1,000,000) | $834 | $768 | $639 | $435 | $342 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
3
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 97.9% | Other Investment Companies | 673,272,523 | 817,036,505 |
| 2.3% | Short-Term Investments | 18,819,634 | 18,819,634 |
| 100.2% | Total Investments | 692,092,157 | 835,856,139 |
| (0.2%) | Other Assets and Liabilities, Net | | (1,366,036) |
| 100.0% | Net Assets | | 834,490,103 |
| Security | Number
of Shares | Value
($) |
| Other Investment Companies 97.9% of net assets |
| Equity Funds 87.1% |
| Global Real Estate 4.5% |
| Schwab Global Real Estate Fund (a) | 5,246,536 | 37,250,406 |
| International 23.9% |
| Laudus International MarketMasters Fund, Select Shares (a) | 4,733,337 | 107,494,088 |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares (a) | 2,872,662 | 20,338,444 |
| Schwab International Core Equity Fund (a) | 7,451,387 | 71,682,346 |
| | | 199,514,878 |
| Large-Cap 50.8% |
| Dodge & Cox Stock Fund | 60,091 | 10,518,293 |
| Laudus U.S. Large Cap Growth Fund *(a) | 5,959,224 | 105,657,049 |
| Schwab Core Equity Fund (a) | 5,092,328 | 117,632,777 |
| Schwab Dividend Equity Fund (a) | 3,174,382 | 52,155,094 |
| Schwab S&P 500 Index Fund (a) | 2,898,817 | 95,660,952 |
| TCW Relative Value Large Cap Fund, Class I | 1,933,203 | 42,511,126 |
| | | 424,135,291 |
| Small-Cap 7.9% |
| Laudus Small-Cap MarketMasters Fund, Select Shares (a) | 1,299,448 | 23,039,214 |
| Schwab Small-Cap Equity Fund (a) | 2,043,606 | 43,304,004 |
| | | 66,343,218 |
| | | 727,243,793 |
| Security | Number
of Shares | Value
($) |
| Fixed-Income Funds 10.8% |
| Intermediate-Term Bond 10.0% |
| Metropolitan West Total Return Bond Fund, Class I | 2,162,504 | 23,398,290 |
| Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares | 1,551,515 | 17,563,145 |
| Schwab Intermediate-Term Bond Fund (a) | 799,428 | 8,162,159 |
| Schwab Total Bond Market Fund (a) | 3,354,260 | 31,831,927 |
| Wells Fargo Advantage Core Bond Fund, Class I | 177,299 | 2,260,565 |
| | | 83,216,086 |
| International Bond 0.4% |
| Laudus Mondrian International Government Fixed Income Fund *(a) | 331,487 | 3,115,975 |
| Short-Term Bond 0.4% |
| Schwab Short-Term Bond Market Fund (a) | 372,113 | 3,460,651 |
| | | 89,792,712 |
| Total Other Investment Companies |
| (Cost $673,272,523) | | 817,036,505 |
Security
Rate, Maturity Date | Face
Amount
($) | Value
($) |
| Short-Term Investments 2.3% of net assets |
| Time Deposits 2.3% |
| Bank of Tokyo - Mitsubishi UFJ |
| 0.03%, 11/02/15 | 8,358,459 | 8,358,459 |
| DNB |
| 0.03%, 11/02/15 | 2,102,716 | 2,102,716 |
| Nordea Bank |
| 0.03%, 11/02/15 | 8,358,459 | 8,358,459 |
| Total Short-Term Investments |
| (Cost $18,819,634) | | 18,819,634 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $696,521,879 and the unrealized appreciation and depreciation were $146,425,614 and ($7,091,354), respectively, with a net unrealized appreciation of $139,334,260.
| * | Non-income producing security. |
| (a) | Issuer is affiliated with the fund's investment adviser. |
Portfolio Holdings continued
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Other Investment Companies1 | | $817,036,505 | | $— | | $— | | $817,036,505 | |
| Short-Term Investments1 | | — | | 18,819,634 | | — | | 18,819,634 | |
| Total | | $817,036,505 | | $18,819,634 | | $— | | $835,856,139 | |
| 1 | As categorized in Portfolio Holdings. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments in affiliated underlying funds, at value (cost $591,100,288) | | $720,785,086 |
| Investments in unaffiliated issuers, at value (cost $100,991,869) | + | 115,071,053 |
| Total investments, at value (cost $692,092,157) | | 835,856,139 |
| Receivables: | | |
| Investments sold | | 3,430,000 |
| Fund shares sold | | 892,832 |
| Dividends | | 111,323 |
| Due from investment adviser | | 4,709 |
| Interest | | 31 |
| Prepaid expenses | + | 22,453 |
| Total assets | | 840,317,487 |
| Liabilities |
| Payables: | | |
| Investments bought | | 5,203,691 |
| Fund shares redeemed | | 532,931 |
| Accrued expenses | + | 90,762 |
| Total liabilities | | 5,827,384 |
| Net Assets |
| Total assets | | 840,317,487 |
| Total liabilities | – | 5,827,384 |
| Net assets | | $834,490,103 |
| Net Assets by Source | | |
| Capital received from investors | | 632,259,782 |
| Net investment income not yet distributed | | 2,851,945 |
| Net realized capital gains | | 55,614,394 |
| Net unrealized capital appreciation | | 143,763,982 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $834,490,103 | | 50,836,842 | | $16.42 |
| | | | | |
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends received from affiliated underlying funds | | $8,813,321 |
| Dividends received from unaffiliated underlying funds | | 1,466,088 |
| Interest | + | 5,156 |
| Total investment income | | 10,284,565 |
| Expenses |
| Shareholder reports | | 80,577 |
| Transfer agent fees | | 38,394 |
| Professional fees | | 33,655 |
| Registration fees | | 30,327 |
| Portfolio accounting fees | | 29,635 |
| Custodian fees | | 16,257 |
| Independent trustees' fees | | 10,685 |
| Proxy fees | | 8,468 |
| Other expenses | + | 17,078 |
| Total expenses | | 265,076 |
| Expense reduction by CSIM | – | 256,608 |
| Net expenses | – | 8,468 |
| Net investment income | | 10,276,097 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 50,338,480 |
| Realized capital gain distributions received from unaffiliated underlying funds | | 380,970 |
| Net realized gains on sales of affiliated underlying funds | | 14,383,196 |
| Net realized gains on sales of unaffiliated underlying funds | + | 2,378,679 |
| Net realized gains | | 67,481,325 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | | (54,360,956) |
| Net change in unrealized appreciation (depreciation) on unaffiliated underlying funds | + | (4,404,448) |
| Net change in unrealized appreciation (depreciation) | + | (58,765,404) |
| Net realized and unrealized gains | | 8,715,921 |
| Increase in net assets resulting from operations | | $18,992,018 |
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $10,276,097 | $8,930,035 |
| Net realized gains | | 67,481,325 | 42,520,112 |
| Net change in unrealized appreciation (depreciation) | + | (58,765,404) | 16,163,418 |
| Increase in net assets from operations | | 18,992,018 | 67,613,565 |
| Distributions to Shareholders | |
| Distributions from net investment income | | (18,123,716) | (11,083,321) |
| Distributions from net realized gains | + | (16,937,962) | — |
| Total distributions | | ($35,061,678) | ($11,083,321) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 9,498,363 | $156,723,911 | 9,715,793 | $156,225,134 |
| Shares reinvested | | 2,105,777 | 34,303,111 | 684,108 | 10,822,584 |
| Shares redeemed | + | (6,579,336) | (108,941,688) | (5,866,001) | (94,545,374) |
| Net transactions in fund shares | | 5,024,804 | $82,085,334 | 4,533,900 | $72,502,344 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 45,812,038 | $768,474,429 | 41,278,138 | $639,441,841 |
| Total increase | + | 5,024,804 | 66,015,674 | 4,533,900 | 129,032,588 |
| End of period | | 50,836,842 | $834,490,103 | 45,812,038 | $768,474,429 |
| Net investment income not yet distributed | | | $2,851,945 | | $3,169,629 |
Schwab Target 2045 Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 1/23/13 1–
10/31/13 | | | |
| Per-Share Data |
| Net asset value at beginning of period | $12.67 | $11.66 | $10.00 | | | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.14 2 | 0.16 | 0.02 | | | |
| Net realized and unrealized gains (losses) | 0.15 | 1.03 | 1.64 | | | |
| Total from investment operations | 0.29 | 1.19 | 1.66 | | | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.29) | (0.18) | — | | | |
| Distributions from net realized gains | (0.16) | — | — | | | |
| Total distributions | (0.45) | (0.18) | — | | | |
| Net asset value at end of period | $12.51 | $12.67 | $11.66 | | | |
| Total return | 2.37% | 10.30% | 16.60% 3 | | | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses4 | 0.00% 5 | — | 0.00% 6,7 | | | |
| Gross operating expenses4 | 0.20% | 0.32% | 1.08% 6 | | | |
| Net investment income (loss) | 1.09% | 1.03% | 0.46% 6 | | | |
| Portfolio turnover rate | 10% | 23% | 39% 3 | | | |
| Net assets, end of period (x 1,000,000) | $66 | $41 | $18 | | | |
| |
1
Commencement of operations.
2
Calculated based on the average shares outstanding during the period.
3
Not annualized.
4
The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
5
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
6
Annualized.
7
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if interest expense had not been incurred.
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 97.9% | Other Investment Companies | 63,643,455 | 64,440,100 |
| 1.9% | Short-Term Investments | 1,261,456 | 1,261,456 |
| 99.8% | Total Investments | 64,904,911 | 65,701,556 |
| 0.2% | Other Assets and Liabilities, Net | | 125,030 |
| 100.0% | Net Assets | | 65,826,586 |
| Security | Number
of Shares | Value
($) |
| Other Investment Companies 97.9% of net assets |
| Equity Funds 90.7% |
| Global Real Estate 4.6% |
| Schwab Global Real Estate Fund (a) | 430,025 | 3,053,176 |
| International 25.2% |
| Laudus International MarketMasters Fund, Select Shares (a) | 388,812 | 8,829,933 |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares (a) | 260,292 | 1,842,865 |
| Schwab International Core Equity Fund (a) | 611,981 | 5,887,256 |
| | | 16,560,054 |
| Large-Cap 52.2% |
| Dodge & Cox Stock Fund | 4,871 | 852,539 |
| Laudus U.S. Large Cap Growth Fund *(a) | 482,732 | 8,558,837 |
| Schwab Core Equity Fund (a) | 412,499 | 9,528,728 |
| Schwab Dividend Equity Fund (a) | 257,925 | 4,237,708 |
| Schwab S&P 500 Index Fund (a) | 234,798 | 7,748,334 |
| TCW Relative Value Large Cap Fund, Class I | 156,565 | 3,442,866 |
| | | 34,369,012 |
| Small-Cap 8.7% |
| Laudus Small-Cap MarketMasters Fund, Select Shares (a) | 111,137 | 1,970,465 |
| Schwab Small-Cap Equity Fund (a) | 175,938 | 3,728,112 |
| | | 5,698,577 |
| | | 59,680,819 |
| Security | Number
of Shares | Value
($) |
| Fixed-Income Funds 7.2% |
| Intermediate-Term Bond 6.9% |
| Metropolitan West Total Return Bond Fund, Class I | 116,478 | 1,260,288 |
| Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares | 91,120 | 1,031,478 |
| Schwab Intermediate-Term Bond Fund (a) | 49,368 | 504,052 |
| Schwab Total Bond Market Fund (a) | 172,153 | 1,633,733 |
| Wells Fargo Advantage Core Bond Fund, Class I | 7,722 | 98,452 |
| | | 4,528,003 |
| International Bond 0.1% |
| Laudus Mondrian International Government Fixed Income Fund *(a) | 11,852 | 111,406 |
| Short-Term Bond 0.2% |
| Schwab Short-Term Bond Market Fund (a) | 12,889 | 119,872 |
| | | 4,759,281 |
| Total Other Investment Companies |
| (Cost $63,643,455) | | 64,440,100 |
Security
Rate, Maturity Date | Face
Amount
($) | Value
($) |
| Short-Term Investments 1.9% of net assets |
| Time Deposits 1.9% |
| DNB |
| 0.03%, 11/02/15 | 602,089 | 602,089 |
| Nordea Bank |
| 0.03%, 11/02/15 | 659,367 | 659,367 |
| Total Short-Term Investments |
| (Cost $1,261,456) | | 1,261,456 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $65,161,957 and the unrealized appreciation and depreciation were $1,535,866 and ($996,267), respectively, with a net unrealized appreciation of $539,599.
| * | Non-income producing security. |
| (a) | Issuer is affiliated with the fund's investment adviser. |
Portfolio Holdings continued
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Other Investment Companies1 | | $64,440,100 | | $— | | $— | | $64,440,100 | |
| Short-Term Investments1 | | — | | 1,261,456 | | — | | 1,261,456 | |
| Total | | $64,440,100 | | $1,261,456 | | $— | | $65,701,556 | |
| 1 | As categorized in Portfolio Holdings. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments in affiliated underlying funds, at value (cost $57,183,509) | | $57,754,477 |
| Investments in unaffiliated issuers, at value (cost $7,721,402) | + | 7,947,079 |
| Total investments, at value (cost $64,904,911) | | 65,701,556 |
| Receivables: | | |
| Investments sold | | 426,000 |
| Fund shares sold | | 81,277 |
| Dividends | | 6,034 |
| Due from investment adviser | | 1,647 |
| Prepaid expenses | + | 3,742 |
| Total assets | | 66,220,256 |
| Liabilities |
| Payables: | | |
| Investments bought | | 301,161 |
| Fund shares redeemed | | 62,912 |
| Accrued expenses | + | 29,597 |
| Total liabilities | | 393,670 |
| Net Assets |
| Total assets | | 66,220,256 |
| Total liabilities | – | 393,670 |
| Net assets | | $65,826,586 |
| Net Assets by Source | | |
| Capital received from investors | | 62,751,635 |
| Net investment income not yet distributed | | 124,813 |
| Net realized capital gains | | 2,153,493 |
| Net unrealized capital appreciation | | 796,645 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $65,826,586 | | 5,261,268 | | $12.51 |
| | | | | |
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends received from affiliated underlying funds | | $518,981 |
| Dividends received from unaffiliated underlying funds | | 78,534 |
| Interest | + | 335 |
| Total investment income | | 597,850 |
| Expenses |
| Professional fees | | 29,016 |
| Registration fees | | 23,994 |
| Transfer agent fees | | 22,210 |
| Shareholder reports | | 12,966 |
| Portfolio accounting fees | | 7,221 |
| Independent trustees' fees | | 7,081 |
| Custodian fees | | 5,768 |
| Proxy fees | | 913 |
| Interest expense | | 20 |
| Other expenses | + | 1,342 |
| Total expenses | | 110,531 |
| Expense reduction by CSIM | – | 109,598 |
| Net expenses | – | 933 |
| Net investment income | | 596,917 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 2,945,020 |
| Realized capital gain distributions received from unaffiliated underlying funds | | 22,249 |
| Net realized losses on sales of affiliated underlying funds | | (285,230) |
| Net realized losses on sales of unaffiliated underlying funds | + | (52,129) |
| Net realized gains | | 2,629,910 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | | (2,274,409) |
| Net change in unrealized appreciation (depreciation) on unaffiliated underlying funds | + | (102,497) |
| Net change in unrealized appreciation (depreciation) | + | (2,376,906) |
| Net realized and unrealized gains | | 253,004 |
| Increase in net assets resulting from operations | | $849,921 |
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $596,917 | $300,417 |
| Net realized gains | | 2,629,910 | 670,918 |
| Net change in unrealized appreciation (depreciation) | + | (2,376,906) | 1,758,596 |
| Increase in net assets from operations | | 849,921 | 2,729,931 |
| Distributions to Shareholders | |
| Distributions from net investment income | | (1,032,882) | (312,358) |
| Distributions from net realized gains | + | (569,067) | — |
| Total distributions | | ($1,601,949) | ($312,358) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 2,576,788 | $32,462,188 | 2,059,069 | $25,057,061 |
| Shares reinvested | | 125,756 | 1,561,897 | 25,653 | 306,297 |
| Shares redeemed | + | (677,473) | (8,446,952) | (359,691) | (4,402,377) |
| Net transactions in fund shares | | 2,025,071 | $25,577,133 | 1,725,031 | $20,960,981 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 3,236,197 | $41,001,481 | 1,511,166 | $17,622,927 |
| Total increase | + | 2,025,071 | 24,825,105 | 1,725,031 | 23,378,554 |
| End of period | | 5,261,268 | $65,826,586 | 3,236,197 | $41,001,481 |
| Net investment income not yet distributed | | | $124,813 | | $119,149 |
Schwab Target 2050 Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 1/23/13 1–
10/31/13 | | | |
| Per-Share Data |
| Net asset value at beginning of period | $12.75 | $11.72 | $10.00 | | | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.13 2 | 0.17 | 0.02 | | | |
| Net realized and unrealized gains (losses) | 0.18 | 1.04 | 1.70 | | | |
| Total from investment operations | 0.31 | 1.21 | 1.72 | | | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.30) | (0.18) | — | | | |
| Distributions from net realized gains | (0.16) | — | — | | | |
| Total distributions | (0.46) | (0.18) | — | | | |
| Net asset value at end of period | $12.60 | $12.75 | $11.72 | | | |
| Total return | 2.44% | 10.43% | 17.20% 3 | | | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses4 | 0.00% 5 | — | 0.00% 6,7 | | | |
| Gross operating expenses4 | 0.25% | 0.39% | 1.37% 6 | | | |
| Net investment income (loss) | 1.05% | 0.99% | 0.40% 6 | | | |
| Portfolio turnover rate | 8% | 23% | 40% 3 | | | |
| Net assets, end of period (x 1,000,000) | $53 | $33 | $14 | | | |
| |
1
Commencement of operations.
2
Calculated based on the average shares outstanding during the period.
3
Not annualized.
4
The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
5
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
6
Annualized.
7
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if interest expense had not been incurred.
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 97.9% | Other Investment Companies | 51,074,660 | 51,755,294 |
| 2.0% | Short-Term Investments | 1,053,385 | 1,053,385 |
| 99.9% | Total Investments | 52,128,045 | 52,808,679 |
| 0.1% | Other Assets and Liabilities, Net | | 68,708 |
| 100.0% | Net Assets | | 52,877,387 |
| Security | Number
of Shares | Value
($) |
| Other Investment Companies 97.9% of net assets |
| Equity Funds 93.1% |
| Global Real Estate 4.8% |
| Schwab Global Real Estate Fund (a) | 354,606 | 2,517,704 |
| International 26.0% |
| Laudus International MarketMasters Fund, Select Shares (a) | 321,047 | 7,290,988 |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares (a) | 230,062 | 1,628,837 |
| Schwab International Core Equity Fund (a) | 505,203 | 4,860,055 |
| | | 13,779,880 |
| Large-Cap 53.1% |
| Dodge & Cox Stock Fund | 3,976 | 696,021 |
| Laudus U.S. Large Cap Growth Fund *(a) | 394,480 | 6,994,125 |
| Schwab Core Equity Fund (a) | 335,945 | 7,760,328 |
| Schwab Dividend Equity Fund (a) | 212,130 | 3,485,300 |
| Schwab S&P 500 Index Fund (a) | 191,919 | 6,333,341 |
| TCW Relative Value Large Cap Fund, Class I | 127,031 | 2,793,409 |
| | | 28,062,524 |
| Small-Cap 9.2% |
| Laudus Small-Cap MarketMasters Fund, Select Shares (a) | 96,278 | 1,707,011 |
| Schwab Small-Cap Equity Fund (a) | 149,660 | 3,171,298 |
| | | 4,878,309 |
| | | 49,238,417 |
| Security | Number
of Shares | Value
($) |
| Fixed-Income Funds 4.8% |
| Intermediate-Term Bond 4.6% |
| Metropolitan West Total Return Bond Fund, Class I | 63,840 | 690,744 |
| Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares | 51,528 | 583,301 |
| Schwab Intermediate-Term Bond Fund (a) | 25,092 | 256,192 |
| Schwab Total Bond Market Fund (a) | 85,885 | 815,044 |
| Wells Fargo Advantage Core Bond Fund, Class I | 4,707 | 60,020 |
| | | 2,405,301 |
| International Bond 0.1% |
| Laudus Mondrian International Government Fixed Income Fund *(a) | 7,172 | 67,420 |
| Short-Term Bond 0.1% |
| Schwab Short-Term Bond Market Fund (a) | 4,748 | 44,156 |
| | | 2,516,877 |
| Total Other Investment Companies |
| (Cost $51,074,660) | | 51,755,294 |
Security
Rate, Maturity Date | Face
Amount
($) | Value
($) |
| Short-Term Investments 2.0% of net assets |
| Time Deposits 2.0% |
| Barclays Capital, Inc. |
| 0.03%, 11/02/15 | 523,215 | 523,215 |
| Sumitomo Mitsui Banking Corp. |
| 0.03%, 11/02/15 | 530,170 | 530,170 |
| Total Short-Term Investments |
| (Cost $1,053,385) | | 1,053,385 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $52,291,137 and the unrealized appreciation and depreciation were $1,331,269 and ($813,727), respectively, with a net unrealized appreciation of $517,542.
| * | Non-income producing security. |
| (a) | Issuer is affiliated with the fund's investment adviser. |
Portfolio Holdings continued
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Other Investment Companies1 | | $51,755,294 | | $— | | $— | | $51,755,294 | |
| Short-Term Investments1 | | — | | 1,053,385 | | — | | 1,053,385 | |
| Total | | $51,755,294 | | $1,053,385 | | $— | | $52,808,679 | |
| 1 | As categorized in Portfolio Holdings. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments in affiliated underlying funds, at value (cost $46,456,078) | | $46,931,799 |
| Investments in unaffiliated issuers, at value (cost $5,671,967) | + | 5,876,880 |
| Total investments, at value (cost $52,128,045) | | 52,808,679 |
| Receivables: | | |
| Investments sold | | 338,000 |
| Fund shares sold | | 96,809 |
| Dividends | | 3,317 |
| Due from investment adviser | | 1,600 |
| Prepaid expenses | + | 4,140 |
| Total assets | | 53,252,545 |
| Liabilities |
| Payables: | | |
| Investments bought | | 313,385 |
| Fund shares redeemed | | 32,858 |
| Accrued expenses | + | 28,915 |
| Total liabilities | | 375,158 |
| Net Assets |
| Total assets | | 53,252,545 |
| Total liabilities | – | 375,158 |
| Net assets | | $52,877,387 |
| Net Assets by Source | | |
| Capital received from investors | | 50,292,273 |
| Net investment income not yet distributed | | 84,614 |
| Net realized capital gains | | 1,819,866 |
| Net unrealized capital appreciation | | 680,634 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $52,877,387 | | 4,196,167 | | $12.60 |
| | | | | |
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends received from affiliated underlying funds | | $417,071 |
| Dividends received from unaffiliated underlying funds | | 52,498 |
| Interest | + | 271 |
| Total investment income | | 469,840 |
| Expenses |
| Professional fees | | 28,948 |
| Transfer agent fees | | 22,453 |
| Registration fees | | 22,427 |
| Shareholder reports | | 13,633 |
| Portfolio accounting fees | | 7,042 |
| Independent trustees' fees | | 7,033 |
| Custodian fees | | 6,004 |
| Proxy fees | | 974 |
| Interest expense | | 23 |
| Other expenses | + | 1,205 |
| Total expenses | | 109,742 |
| Expense reduction by CSIM | – | 108,745 |
| Net expenses | – | 997 |
| Net investment income | | 468,843 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 2,417,658 |
| Realized capital gain distributions received from unaffiliated underlying funds | | 15,385 |
| Net realized losses on sales of affiliated underlying funds | | (179,162) |
| Net realized losses on sales of unaffiliated underlying funds | + | (31,966) |
| Net realized gains | | 2,221,915 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | | (1,856,263) |
| Net change in unrealized appreciation (depreciation) on unaffiliated underlying funds | + | (66,314) |
| Net change in unrealized appreciation (depreciation) | + | (1,922,577) |
| Net realized and unrealized gains | | 299,338 |
| Increase in net assets resulting from operations | | $768,181 |
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $468,843 | $228,395 |
| Net realized gains | | 2,221,915 | 525,789 |
| Net change in unrealized appreciation (depreciation) | + | (1,922,577) | 1,454,604 |
| Increase in net assets from operations | | 768,181 | 2,208,788 |
| Distributions to Shareholders | |
| Distributions from net investment income | | (830,660) | (246,172) |
| Distributions from net realized gains | + | (451,787) | — |
| Total distributions | | ($1,282,447) | ($246,172) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 2,053,340 | $26,056,935 | 1,761,233 | $21,571,597 |
| Shares reinvested | | 100,456 | 1,256,702 | 20,179 | 242,557 |
| Shares redeemed | + | (583,556) | (7,414,061) | (348,673) | (4,264,424) |
| Net transactions in fund shares | | 1,570,240 | $19,899,576 | 1,432,739 | $17,549,730 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 2,625,927 | $33,492,077 | 1,193,188 | $13,979,731 |
| Total increase | + | 1,570,240 | 19,385,310 | 1,432,739 | 19,512,346 |
| End of period | | 4,196,167 | $52,877,387 | 2,625,927 | $33,492,077 |
| Net investment income not yet distributed | | | $84,614 | | $83,422 |
Schwab Target 2055 Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 1/23/13 1–
10/31/13 | | | |
| Per-Share Data |
| Net asset value at beginning of period | $12.79 | $11.74 | $10.00 | | | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.13 2 | 0.16 | 0.02 | | | |
| Net realized and unrealized gains (losses) | 0.17 | 1.07 | 1.72 | | | |
| Total from investment operations | 0.30 | 1.23 | 1.74 | | | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.30) | (0.18) | — | | | |
| Distributions from net realized gains | (0.16) | — | — | | | |
| Total distributions | (0.46) | (0.18) | — | | | |
| Net asset value at end of period | $12.63 | $12.79 | $11.74 | | | |
| Total return | 2.36% | 10.59% | 17.40% 3 | | | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses4 | 0.00% 5 | — | 0.00% 6,7 | | | |
| Gross operating expenses4 | 0.44% | 0.68% | 2.78% 7 | | | |
| Net investment income (loss) | 1.03% | 0.94% | 0.34% 7 | | | |
| Portfolio turnover rate | 8% | 29% | 12% 3 | | | |
| Net assets, end of period (x 1,000,000) | $29 | $18 | $7 | | | |
| |
1
Commencement of operations.
2
Calculated based on the average shares outstanding during the period.
3
Not annualized.
4
The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
5
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
6
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if interest expense had not been incurred.
7
Annualized.
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 97.9% | Other Investment Companies | 27,858,087 | 28,194,271 |
| 2.0% | Short-Term Investments | 575,260 | 575,260 |
| 99.9% | Total Investments | 28,433,347 | 28,769,531 |
| 0.1% | Other Assets and Liabilities, Net | | 35,821 |
| 100.0% | Net Assets | | 28,805,352 |
| Security | Number
of Shares | Value
($) |
| Other Investment Companies 97.9% of net assets |
| Equity Funds 95.6% |
| Global Real Estate 4.9% |
| Schwab Global Real Estate Fund (a) | 198,219 | 1,407,356 |
| International 27.0% |
| Laudus International MarketMasters Fund, Select Shares (a) | 179,619 | 4,079,145 |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares (a) | 136,613 | 967,220 |
| Schwab International Core Equity Fund (a) | 282,649 | 2,719,086 |
| | | 7,765,451 |
| Large-Cap 53.9% |
| Dodge & Cox Stock Fund | 2,208 | 386,500 |
| Laudus U.S. Large Cap Growth Fund *(a) | 218,270 | 3,869,926 |
| Schwab Core Equity Fund (a) | 186,781 | 4,314,634 |
| Schwab Dividend Equity Fund (a) | 115,725 | 1,901,357 |
| Schwab S&P 500 Index Fund (a) | 106,118 | 3,501,889 |
| TCW Relative Value Large Cap Fund, Class I | 70,785 | 1,556,553 |
| | | 15,530,859 |
| Small-Cap 9.8% |
| Laudus Small-Cap MarketMasters Fund, Select Shares (a) | 55,241 | 979,429 |
| Schwab Small-Cap Equity Fund (a) | 87,547 | 1,855,111 |
| | | 2,834,540 |
| | | 27,538,206 |
| Security | Number
of Shares | Value
($) |
| Fixed-Income Funds 2.3% |
| Intermediate-Term Bond 2.2% |
| Metropolitan West Total Return Bond Fund, Class I | 18,785 | 203,256 |
| Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares | 12,835 | 145,295 |
| Schwab Intermediate-Term Bond Fund (a) | 6,509 | 66,459 |
| Schwab Total Bond Market Fund (a) | 21,076 | 200,011 |
| Wells Fargo Advantage Core Bond Fund, Class I | 1,418 | 18,073 |
| | | 633,094 |
| International Bond 0.1% |
| Laudus Mondrian International Government Fixed Income Fund *(a) | 2,444 | 22,971 |
| | | 656,065 |
| Total Other Investment Companies |
| (Cost $27,858,087) | | 28,194,271 |
Security
Rate, Maturity Date | Face
Amount
($) | Value
($) |
| Short-Term Investments 2.0% of net assets |
| Time Deposits 2.0% |
| Bank of Tokyo - Mitsubishi UFJ |
| 0.03%, 11/02/15 | 288,370 | 288,370 |
| Nordea Bank |
| 0.03%, 11/02/15 | 286,890 | 286,890 |
| Total Short-Term Investments |
| (Cost $575,260) | | 575,260 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $28,527,467 and the unrealized appreciation and depreciation were $709,302 and ($467,238), respectively, with a net unrealized appreciation of $242,064.
| * | Non-income producing security. |
| (a) | Issuer is affiliated with the fund's investment adviser. |
Portfolio Holdings continued
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Other Investment Companies1 | | $28,194,271 | | $— | | $— | | $28,194,271 | |
| Short-Term Investments1 | | — | | 575,260 | | — | | 575,260 | |
| Total | | $28,194,271 | | $575,260 | | $— | | $28,769,531 | |
| 1 | As categorized in Portfolio Holdings. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments in affiliated underlying funds, at value (cost $25,670,086) | | $25,884,594 |
| Investments in unaffiliated issuers, at value (cost $2,763,261) | + | 2,884,937 |
| Total investments, at value (cost $28,433,347) | | 28,769,531 |
| Receivables: | | |
| Investments sold | | 227,000 |
| Fund shares sold | | 30,663 |
| Due from investment adviser | | 1,515 |
| Dividends | | 962 |
| Prepaid expenses | + | 3,206 |
| Total assets | | 29,032,877 |
| Liabilities |
| Payables: | | |
| Investments bought | | 196,981 |
| Fund shares redeemed | | 2,277 |
| Accrued expenses | + | 28,267 |
| Total liabilities | | 227,525 |
| Net Assets |
| Total assets | | 29,032,877 |
| Total liabilities | – | 227,525 |
| Net assets | | $28,805,352 |
| Net Assets by Source | | |
| Capital received from investors | | 27,435,660 |
| Net investment income not yet distributed | | 35,305 |
| Net realized capital gains | | 998,203 |
| Net unrealized capital appreciation | | 336,184 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $28,805,352 | | 2,280,702 | | $12.63 |
| | | | | |
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends received from affiliated underlying funds | | $223,342 |
| Dividends received from unaffiliated underlying funds | | 22,574 |
| Interest | + | 144 |
| Total investment income | | 246,060 |
| Expenses |
| Professional fees | | 28,794 |
| Transfer agent fees | | 22,737 |
| Registration fees | | 19,681 |
| Shareholder reports | | 12,873 |
| Independent trustees' fees | | 6,938 |
| Portfolio accounting fees | | 6,655 |
| Custodian fees | | 5,119 |
| Proxy fees | | 900 |
| Other expenses | + | 951 |
| Total expenses | | 104,648 |
| Expense reduction by CSIM | – | 103,748 |
| Net expenses | – | 900 |
| Net investment income | | 245,160 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 1,328,949 |
| Realized capital gain distributions received from unaffiliated underlying funds | | 7,484 |
| Net realized losses on sales of affiliated underlying funds | | (86,615) |
| Net realized losses on sales of unaffiliated underlying funds | + | (12,333) |
| Net realized gains | | 1,237,485 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | | (1,042,352) |
| Net change in unrealized appreciation (depreciation) on unaffiliated underlying funds | + | (27,909) |
| Net change in unrealized appreciation (depreciation) | + | (1,070,261) |
| Net realized and unrealized gains | | 167,224 |
| Increase in net assets resulting from operations | | $412,384 |
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $245,160 | $119,200 |
| Net realized gains | | 1,237,485 | 255,531 |
| Net change in unrealized appreciation (depreciation) | + | (1,070,261) | 827,347 |
| Increase in net assets from operations | | 412,384 | 1,202,078 |
| Distributions to Shareholders | |
| Distributions from net investment income | | (449,182) | (131,185) |
| Distributions from net realized gains | + | (247,620) | — |
| Total distributions | | ($696,802) | ($131,185) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 1,224,356 | $15,542,457 | 1,167,531 | $14,320,677 |
| Shares reinvested | | 53,831 | 675,575 | 10,605 | 127,787 |
| Shares redeemed | + | (398,490) | (5,048,181) | (363,239) | (4,481,218) |
| Net transactions in fund shares | | 879,697 | $11,169,851 | 814,897 | $9,967,246 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 1,401,005 | $17,919,919 | 586,108 | $6,881,780 |
| Total increase | + | 879,697 | 10,885,433 | 814,897 | 11,038,139 |
| End of period | | 2,280,702 | $28,805,352 | 1,401,005 | $17,919,919 |
| Net investment income not yet distributed | | | $35,305 | | $39,478 |
1. Business Structure of the Funds:
Each of the funds in this report is a series of Schwab Capital Trust (the trust), a no-load, open-end management investment company. The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the 1940 Act). The list below shows all the funds in the trust as of the end of the period, including the funds discussed in this report, which are highlighted:
| Schwab Capital Trust (organized May 7, 1993) | Laudus International MarketMasters Fund™ |
| Schwab Target 2010 Fund | Schwab Balanced Fund™ |
| Schwab Target 2015 Fund | Schwab Core Equity Fund™ |
| Schwab Target 2020 Fund | Schwab Dividend Equity Fund™ |
| Schwab Target 2025 Fund | Schwab Large-Cap Growth Fund™ |
| Schwab Target 2030 Fund | Schwab Small-Cap Equity Fund™ |
| Schwab Target 2035 Fund | Schwab Hedged Equity Fund™ |
| Schwab Target 2040 Fund | Schwab Financial Services Fund™ |
| Schwab Target 2045 Fund | Schwab Health Care Fund™ |
| Schwab Target 2050 Fund | Schwab ® International Core Equity Fund |
| Schwab Target 2055 Fund | Schwab Fundamental US Large Company Index Fund |
| Schwab ® S&P 500 Index Fund | Schwab Fundamental US Small Company Index Fund |
| Schwab Small-Cap Index Fund® | Schwab Fundamental International Large Company Index Fund |
| Schwab Total Stock Market Index Fund® | Schwab Fundamental International Small Company Index Fund |
| Schwab International Index Fund® | Schwab Fundamental Emerging Markets Large Company Index Fund |
| Schwab MarketTrack All Equity Portfolio™ | Schwab Fundamental Global Real Estate Index Fund |
| Schwab MarketTrack Growth Portfolio™ | Schwab ® Monthly Income Fund - Moderate Payout |
| Schwab MarketTrack Balanced Portfolio™ | Schwab ® Monthly Income Fund - Enhanced Payout |
| Schwab MarketTrack Conservative Portfolio™ | Schwab ® Monthly Income Fund - Maximum Payout |
| Laudus Small-Cap MarketMasters Fund™ | |
The Schwab Target Funds are “funds of funds.” Each of the funds seeks to achieve its investment objective by investing in a combination of other Schwab and/or Laudus Funds and other unaffiliated, third-party mutual funds, in accordance with its target portfolio allocation. Each fund may also invest directly in equity and fixed-income securities, exchange-traded funds (ETFs), and cash equivalents, including money market securities.
Each fund in this report offers one share class. Shares are bought and sold (subject to a redemption fee, see financial note 8) at closing net asset value per share (NAV), which is the price for all outstanding shares of a fund. Each share has a par value of 1/1,000 of a cent, and the funds' Board of Trustees (the Board) may authorize the issuance of as many shares as necessary.
Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, each fund may also keep certain assets in segregated accounts, as required by securities law.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies the funds use in their preparation of financial statements. The funds follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 Financial Services — Investment Companies. The accounting policies are in conformity with accounting principles generally accepted in the United States of America (GAAP).
The financial statements of the funds should be read in conjunction with the underlying funds' financial statements. For more information about the underlying funds' operations and policies, please refer to those funds' semiannual and annual reports, which are filed and available on the U.S. Securities and Exchange Commission's (SEC) website at www.sec.gov or at the SEC's Public Reference Room in Washington D.C.
(a) Security Valuation:
Under procedures approved by the Board, the investment adviser has formed a Pricing Committee to administer the pricing and valuation of portfolio securities and other assets and to ensure that prices used for internal purposes or provided by third parties reasonably reflect fair market value. Among other things, these procedures allow the funds to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.
Financial Notes (continued)
2. Significant Accounting Policies (continued):
The funds value the securities in their portfolios every business day. The funds use the following policies to value various types of securities:
• Underlying funds: Mutual funds are valued at their respective NAVs.
• Securities for which no quoted value is available: The Board has adopted procedures to fair value each fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the funds pursuant to the valuation procedures.
• Short-term securities (60 days or less to maturity): A short-term security may be valued at its amortized cost when it approximates the security's market value.
In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the funds disclose the fair value of their investments in a hierarchy that prioritizes the significant inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). If inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the valuation. If the funds determine that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
The three levels of the fair value hierarchy are as follows:
• Level 1—quoted prices in active markets for identical securities—Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. Investments in mutual funds are valued daily at their NAVs, which are classified as Level 1 prices, without consideration to the classification level of the specific investments held by an underlying fund.
• Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)—Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations.
• Level 3—significant unobservable inputs (including the funds' own assumptions in determining the fair value of investments)—Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the funds use one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the funds in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the funds in the absence of market information. Assumptions used by the funds due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds' results of operations.
Financial Notes (continued)
2. Significant Accounting Policies (continued):
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The levels associated with valuing the funds' investments as of October 31, 2015 are disclosed in the Portfolio Holdings.
(b) Security Transactions:
Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.
(c) Investment Income:
Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying funds are recorded on the date they are effective (the ex-dividend date), although the funds record certain foreign security dividends on the day they learn of the ex-dividend date. Any distributions from underlying funds are recorded in accordance with the character of the distributions as designated by the underlying funds.
(d) Expenses:
Expenses that are specific to a fund are charged directly to the fund. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their average daily net assets. Each fund bears its share of the allocable expenses of the underlying funds in which it invests. Such expenses are reflected in the net asset values of the underlying funds.
(e) Distributions to Shareholders:
The funds make distributions from net investment income and net realized capital gains, if any, once a year.
(f) Accounting Estimates:
The accounting policies described in this report conform to GAAP. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It’s possible that once the results are known, they may turn out to be different from these estimates and these differences may be material.
(g) Federal Income Taxes:
The funds intend to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the funds distribute substantially all of their net investment income and net realized capital gains, if any, to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.
(h) Indemnification:
Under the funds’ organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business the funds enter into contracts with their vendors and others that provide general indemnifications. The funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. However, based on experience, the funds expect the risk of loss attributable to these arrangements to be remote.
3. Risk Factors:
Investing in the funds may involve certain risks, as discussed in the funds' prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
Asset Allocation Risk. The funds are subject to asset allocation risk, which is the risk that the selection of the underlying funds and the allocation of a fund's assets among the various asset classes and market segments will cause the funds to underperform other funds with a similar investment objective.
Financial Notes (continued)
3. Risk Factors (continued):
Affiliated Fund Risk. The investment adviser’s authority to select and substitute underlying funds from a variety of affiliated and unaffiliated mutual funds may create a conflict of interest because the fees paid to it by some underlying funds are higher than the fees paid by other underlying funds. However, the portfolio manager is a fiduciary to the fund and is legally obligated to act in the fund’s best interests when selecting underlying funds, without taking fees into consideration.
Market Risk. Stock and bond markets rise and fall daily. As with any investment whose performance is tied to these markets, the value of an investment in the funds will fluctuate, which means that an investor could lose money.
Underlying Fund Investment Risk. The value of your investment in the funds is based primarily on the prices of the underlying funds that the fund purchases. In turn, the price of each underlying fund is based on the value of its securities. The funds are subject to the performance and expenses of the underlying funds in which they invest. Before investing in the funds, investors should assess the risks associated with the underlying funds in which the funds may invest and the types of investments made by those underlying funds. These risks include any combination of the risks described below, although a fund's exposure to a particular risk will be proportionate to the fund's overall asset allocation and underlying fund allocation.
• Investment Risk. An investment in an underlying fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The funds may experience losses with respect to their investment in an underlying fund. Further, there is no guarantee that an underlying fund will be able to achieve its objective.
• Management Risk. Generally, the underlying funds are actively managed mutual funds. Any actively managed mutual fund is subject to the risk that its investment adviser (or subadviser(s)) will make poor security selections. An underlying fund's adviser applies its own investment techniques and risk analyses in making investment decisions for the underlying fund, but there can be no guarantee that they will produce the desired results.
• Fixed Income Risk. Interest rates rise and fall over time, which will affect an underlying fund's yield and share price. Because interest rates in the United States and other countries are at, or near, historically low levels, a change in a central bank’s monetary policy or improving economic conditions may result in an increase in interest rates. A rise in interest rates could cause an underlying fund’s shares price to fall. The credit quality of a portfolio investment could also cause an underlying fund's share price to fall. An underlying fund could lose money if the issuer or guarantor of a portfolio investment or the counterparty to a derivatives contract fails to make timely principal or interest payments or otherwise honor its obligations. Fixed income securities may be paid off earlier or later than expected. Either situation could cause a fund to hold securities paying lower-than-market rates of interest, which could hurt the fund's yield or share price. Below investment-grade bonds (junk bonds) involve greater credit risk, are more volatile, involve greater risk of price declines and may be more susceptible to economic downturns than investment-grade securities.
• Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, the equity market tends to move in cycles, which may cause stock prices to fall over short or extended periods of time.
• Large-, Mid- and Small-Cap Risk. Stocks of different market capitalizations tend to go in and out of favor based on market and economic conditions. Historically, small- and mid-cap stocks tend to be more volatile than large-cap stocks, and small-cap stocks have been riskier than large- and mid-cap stocks. During a period when stocks of a particular market capitalization fall behind other types of investments—bonds or stocks of another capitalization range, for instance—underlying fund's large-, mid- or small-cap holdings could reduce performance.
• Money Market Risk. Although an underlying money market fund seeks to maintain a stable $1 net asset value, it is possible to lose money by investing in a money market fund. In addition, a money market fund is not designed to offer capital appreciation.
• ETF Risk. When an underlying fund invests in an ETF, it will bear a proportionate share of the ETF's expenses. In addition, lack of liquidity in the market for an ETF's shares can result in its value being more volatile than the underlying portfolio of securities.
• Foreign Investment Risk. An underlying fund's investments in securities of foreign issuers may involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; changes in currency exchange rates or exchange control
Financial Notes (continued)
3. Risk Factors (continued):
regulations (including limitations on currency movements and exchanges); the imposition of economic sanctions or other government restrictions; differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. These risks may negatively impact the value or liquidity of the underlying fund's investments, and could impair the underlying fund's ability to meet its investment objective or invest in accordance with its investment strategy. To the extent an underlying fund's investment in a single country or a limited number of countries represents a large percentage of the underlying fund's assets, the underlying fund's performance may be adversely affected by the economic, political and social conditions in those countries and it may be subject to increased price volatility.
• Emerging Markets Risk. Emerging market countries may be more likely to experience political turmoil or rapid changes in market or economic conditions than more developed countries. Such countries often have less uniformity in accounting and reporting requirements and greater risk associated with the custody of securities. In addition, the financial stability of issuers (including governments) in emerging market countries may be more precarious than in other countries. As a result, there will tend to be an increased risk of price volatility associated with an underlying fund's investments in emerging market countries and, at times, it may be difficult to value such investments.
• Derivatives Risk. An underlying fund's use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. An underlying fund's use of derivatives could reduce the underlying fund's performance, increase volatility and could cause the fund to lose more than the initial amount invested. In addition, investments in derivatives may involve leverage, which means a small percentage of assets invested in derivatives can have a disproportionately large impact on an underlying fund. However, these risks are less severe when the underlying fund uses derivatives for hedging rather than to enhance the underlying fund's returns or as a substitute for a position or security.
• Leverage Risk. Certain underlying fund transactions, such as derivatives, short sales, reverse repurchase agreements, and mortgage dollar rolls, may give rise to a form of leverage and may expose a fund to greater risk. Leverage tends to magnify the effect of any decrease or increase in the value of an underlying fund's portfolio securities, which means even a small amount of leverage can have a disproportionately large impact on the underlying fund.
• Liquidity Risk. A particular investment may be difficult to purchase or sell. An underlying fund may be unable to sell illiquid securities at an advantageous time or price.
• Portfolio Turnover Risk. Certain of the underlying funds may buy and sell portfolio securities actively. If they do, their portfolio turnover rate and transaction costs will rise, which may lower the underlying fund's performance and may increase the likelihood of capital gain distributions.
Direct Investment Risk. The funds may invest a portion of their assets directly in equity and fixed income securities, ETFs, and cash equivalents, including money market securities. A fund’s direct investment in these securities is subject to the same or similar risks as an underlying fund’s investment in the same security.
Please refer to the funds’ prospectus for a more complete description of the principal risks of investing in the funds.
4. Affiliates and Affiliated Transactions:
Charles Schwab Investment Management, Inc. (CSIM or the investment adviser), a wholly owned subsidiary of The Charles Schwab Corporation, serves as each fund's investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement between CSIM and the trust.
The Board has adopted a Shareholder Servicing Plan (the Plan) on behalf of the funds. The Plan enables each fund to bear expenses relating to the provision by service providers, including Charles Schwab & Co., Inc. (a broker-dealer affiliate of CSIM, Schwab), of certain account maintenance, customer liaison and shareholder services to the current shareholders of the funds. The funds are not subject to any fee under the Plan.
CSIM and its affiliates have agreed with the funds, for so long as CSIM serves as the investment adviser to the funds, which may only be amended or terminated with the approval of the Board, to limit the total annual fund operating expense charged, excluding interest, taxes and certain non-routine expenses to 0.00%.
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
The agreement to limit the funds' total expenses charged is limited to each fund's direct operating expenses and, therefore, does not apply to underlying fund fees and expenses, which are indirect expenses incurred by a fund through its investments in the underlying funds.
The funds may engage in certain transactions involving related parties. Pursuant to an exemptive order issued by the SEC, the funds may invest in other related funds. As of October 31, 2015, each Schwab Target Fund's ownership percentages of other related funds' shares are:
| Underlying Funds | | Schwab
Target
2010
Fund | | Schwab
Target
2015
Fund | | Schwab
Target
2020
Fund | | Schwab
Target
2025
Fund | | Schwab
Target
2030
Fund | | Schwab
Target
2035
Fund | | Schwab
Target
2040
Fund | | Schwab
Target
2045
Fund | | Schwab
Target
2050
Fund | | Schwab
Target
2055
Fund |
| Schwab Global Real Estate Fund | | 0.5% | | 1.0% | | 5.9% | | 5.4% | | 11.6% | | 5.4% | | 14.5% | | 1.2% | | 1.0% | | 0.5% |
| Laudus International MarketMasters Fund, Select Shares | | 0.2% | | 0.3% | | 2.2% | | 2.0% | | 4.4% | | 2.1% | | 5.6% | | 0.5% | | 0.4% | | 0.2% |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares | | —% | | —% | | 0.3% | | 0.7% | | 2.4% | | 1.4% | | 4.6% | | 0.4% | | 0.4% | | 0.2% |
| Schwab International Core Equity Fund | | 0.3% | | 0.6% | | 4.3% | | 3.9% | | 8.4% | | 3.9% | | 10.6% | | 0.9% | | 0.7% | | 0.4% |
| Laudus U.S. Large Cap Growth Fund | | 0.2% | | 0.3% | | 2.1% | | 1.8% | | 3.9% | | 1.8% | | 4.7% | | 0.4% | | 0.3% | | 0.2% |
| Schwab Core Equity Fund | | 0.2% | | 0.4% | | 2.2% | | 1.9% | | 4.1% | | 1.9% | | 5.0% | | 0.4% | | 0.3% | | 0.2% |
| Schwab Dividend Equity Fund | | 0.1% | | 0.2% | | 1.2% | | 1.1% | | 2.4% | | 1.1% | | 2.8% | | 0.2% | | 0.2% | | 0.1% |
| Schwab S&P 500 Index Fund | | 0.0%* | | 0.0%* | | 0.2% | | 0.2% | | 0.4% | | 0.2% | | 0.4% | | 0.0%* | | 0.0%* | | 0.0%* |
| Laudus Small-Cap MarketMasters Fund, Select Shares | | 0.3% | | 0.6% | | 4.2% | | 4.0% | | 9.3% | | 4.7% | | 13.6% | | 1.2% | | 1.0% | | 0.6% |
| Schwab Small-Cap Equity Fund | | 0.2% | | 0.3% | | 2.1% | | 2.0% | | 4.8% | | 2.4% | | 6.9% | | 0.6% | | 0.5% | | 0.3% |
| Schwab Treasury Inflation Protected Securities Index Fund | | 1.5% | | 2.6% | | 4.6% | | 0.8% | | —% | | —% | | —% | | —% | | —% | | —% |
| Schwab Intermediate-Term Bond Fund | | —% | | —% | | 1.4% | | 1.5% | | 3.0% | | 1.2% | | 2.3% | | 0.1% | | 0.1% | | 0.0%* |
| Schwab Total Bond Market Fund | | 1.2% | | 2.0% | | 7.0% | | 4.0% | | 5.7% | | 1.7% | | 2.5% | | 0.1% | | 0.1% | | 0.0%* |
| Laudus Mondrian International Government Fixed Income Fund | | 0.3% | | 0.6% | | 4.4% | | 3.3% | | 5.3% | | 1.7% | | 2.3% | | 0.1% | | 0.0%* | | 0.0%* |
| Schwab Short-Term Bond Market Fund | | 1.5% | | 2.7% | | 7.3% | | 3.3% | | 3.6% | | 0.8% | | 0.9% | | 0.0%* | | 0.0%* | | —% |
| Schwab Value Advantage Money Fund, Ultra Shares (formerly named Institutional Prime Shares) | | 0.0%* | | 0.0%* | | 0.1% | | —% | | —% | | —% | | —% | | —% | | —% | | —% |
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Below is a summary of the funds' transactions with their affiliated underlying funds during the period ended October 31, 2015:
Schwab Target 2010 Fund:
| Underlying Funds | | Balance
of Shares
Held at
10/31/14 | | Gross
Purchases | | Gross
Sales | | Balance
of Shares
Held at
10/31/15 | | Market
Value at
10/31/15 | | Realized
Gains (Losses)
11/01/14
to 10/31/15 | | Distributions
Received*
11/01/14
to 10/31/15 |
| Schwab Global Real Estate Fund | | 182,707 | | 49,400 | | (46,757) | | 185,350 | | $1,315,988 | | $53,899 | | $45,273 |
| Laudus International MarketMasters Fund, Select Shares | | 123,407 | | 46,231 | | (20,067) | | 149,571 | | 3,396,762 | | 32,625 | | 44,144 |
| Schwab International Core Equity Fund | | 184,539 | | 92,714 | | (37,153) | | 240,100 | | 2,309,762 | | 18,205 | | 61,765 |
| Laudus U.S. Large Cap Growth Fund | | 212,802 | | 74,843 | | (59,109) | | 228,536 | | 4,051,943 | | 99,821 | | 709,944 |
| Schwab Core Equity Fund | | 172,000 | | 57,462 | | (33,362) | | 196,100 | | 4,529,915 | | 72,542 | | 625,106 |
| Schwab Dividend Equity Fund | | 117,077 | | 30,137 | | (23,112) | | 124,102 | | 2,039,001 | | 26,843 | | 326,569 |
| Schwab S&P 500 Index Fund | | 124,324 | | 19,457 | | (31,695) | | 112,086 | | 3,698,851 | | 93,262 | | 70,879 |
| Laudus Small-Cap MarketMasters Fund, Select Shares | | 41,294 | | 6,366 | | (15,861) | | 31,799 | | 563,792 | | 67,925 | | 16,935 |
| Schwab Small-Cap Equity Fund | | 56,677 | | 27,502 | | (33,445) | | 50,734 | | 1,075,049 | | 121,254 | | 274,816 |
| Schwab Treasury Inflation Protected Securities Index Fund | | 292,454 | | 127,604 | | (53,668) | | 366,390 | | 3,997,317 | | 18,185 | | 28,278 |
| Schwab Intermediate-Term Bond Fund | | 191,073 | | 8,230 | | (199,303) | | — | | — | | 138,645 | | 16,303 |
| Schwab Total Bond Market Fund | | 1,822,460 | | 260,400 | | (504,788) | | 1,578,072 | | 14,975,903 | | 91,330 | | 347,647 |
| Laudus Mondrian International Government Fixed Income Fund | | 32,199 | | 23,923 | | (15,078) | | 41,044 | | 385,816 | | (5,425) | | 17,156 |
| Schwab Short-Term Bond Market Fund | | 1,039,680 | | 120,965 | | (510,591) | | 650,054 | | 6,045,504 | | 188,432 | | 75,531 |
| Schwab Value Advantage Money Fund, Ultra Shares (formerly named Institutional Prime Shares) | | 1,968,602 | | 501,048 | | — | | 2,469,650 | | 2,469,650 | | — | | 1,157 |
| Total | | | | | | | | | | $50,855,253 | | $1,017,543 | | $2,661,503 |
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Schwab Target 2015 Fund:
| Underlying Funds | | Balance
of Shares
Held at
10/31/14 | | Gross
Purchases | | Gross
Sales | | Balance
of Shares
Held at
10/31/15 | | Market
Value at
10/31/15 | | Realized
Gains (Losses)
11/01/14
to 10/31/15 | | Distributions
Received*
11/01/14
to 10/31/15 |
| Schwab Global Real Estate Fund | | 353,666 | | 71,177 | | (79,727) | | 345,116 | | $2,450,327 | | $91,916 | | $84,355 |
| Laudus International MarketMasters Fund, Select Shares | | 241,988 | | 80,907 | | (37,032) | | 285,863 | | 6,491,944 | | 223,826 | | 86,592 |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares | | 33,040 | | 2,246 | | (35,286) | | — | | — | | (37,512) | | 7,874 |
| Schwab International Core Equity Fund | | 376,651 | | 138,678 | | (69,606) | | 445,723 | | 4,287,851 | | (16,819) | | 128,114 |
| Laudus U.S. Large Cap Growth Fund | | 405,274 | | 142,050 | | (117,904) | | 429,420 | | 7,613,623 | | 173,019 | | 1,367,679 |
| Schwab Core Equity Fund | | 329,482 | | 104,798 | | (64,402) | | 369,878 | | 8,544,187 | | 306,949 | | 1,204,507 |
| Schwab Dividend Equity Fund | | 221,065 | | 69,032 | | (59,357) | | 230,740 | | 3,791,065 | | 133,916 | | 617,466 |
| Schwab S&P 500 Index Fund | | 236,179 | | 37,300 | | (63,127) | | 210,352 | | 6,941,614 | | 197,569 | | 135,346 |
| Laudus Small-Cap MarketMasters Fund, Select Shares | | 86,165 | | 10,950 | | (37,319) | | 59,796 | | 1,060,183 | | 175,257 | | 35,649 |
| Schwab Small-Cap Equity Fund | | 117,199 | | 50,376 | | (72,789) | | 94,786 | | 2,008,519 | | 366,846 | | 568,040 |
| Schwab Treasury Inflation Protected Securities Index Fund | | 457,480 | | 240,946 | | (62,168) | | 636,258 | | 6,941,578 | | 45,776 | | 43,720 |
| Schwab Intermediate-Term Bond Fund | | 340,825 | | 36,036 | | (376,861) | | — | | — | | 39,744 | | 29,027 |
| Schwab Total Bond Market Fund | | 2,966,453 | | 473,106 | | (723,678) | | 2,715,881 | | 25,773,712 | | 144,758 | | 582,343 |
| Laudus Mondrian International Government Fixed Income Fund | | 81,493 | | 44,125 | | (39,532) | | 86,086 | | 809,206 | | (20,612) | | 36,354 |
| Schwab Short-Term Bond Market Fund | | 1,541,262 | | 323,870 | | (750,072) | | 1,115,060 | | 10,370,055 | | 119,471 | | 122,579 |
| Schwab Value Advantage Money Fund, Ultra Shares (formerly named Institutional Prime Shares) | | 2,691,884 | | 1,001,380 | | (1,000,000) | | 2,693,264 | | 2,693,264 | | — | | 1,495 |
| Total | | | | | | | | | | $89,777,128 | | $1,944,104 | | $5,051,140 |
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Schwab Target 2020 Fund:
| Underlying Funds | | Balance
of Shares
Held at
10/31/14 | | Gross
Purchases | | Gross
Sales | | Balance
of Shares
Held at
10/31/15 | | Market
Value at
10/31/15 | | Realized
Gains (Losses)
11/01/14
to 10/31/15 | | Distributions
Received*
11/01/14
to 10/31/15 |
| Schwab Global Real Estate Fund | | 2,058,638 | | 255,555 | | (178,458) | | 2,135,735 | | $15,163,716 | | $151,135 | | $511,847 |
| Laudus International MarketMasters Fund, Select Shares | | 1,448,274 | | 513,075 | | (57,730) | | 1,903,619 | | 43,231,176 | | 257,799 | | 526,311 |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares | | 415,864 | | 84,404 | | (296,295) | | 203,973 | | 1,444,131 | | 154,682 | | 99,981 |
| Schwab International Core Equity Fund | | 2,266,999 | | 826,534 | | (90,284) | | 3,003,249 | | 28,891,254 | | (31,307) | | 778,473 |
| Laudus U.S. Large Cap Growth Fund | | 2,307,052 | | 681,448 | | (375,597) | | 2,612,903 | | 46,326,768 | | 561,008 | | 7,814,562 |
| Schwab Core Equity Fund | | 1,886,193 | | 532,561 | | (177,911) | | 2,240,843 | | 51,763,488 | | 1,103,678 | | 6,962,070 |
| Schwab Dividend Equity Fund | | 1,242,032 | | 316,916 | | (154,006) | | 1,404,942 | | 23,083,194 | | 371,126 | | 3,527,912 |
| Schwab S&P 500 Index Fund | | 1,327,968 | | 160,469 | | (212,283) | | 1,276,154 | | 42,113,088 | | 586,131 | | 767,779 |
| Laudus Small-Cap MarketMasters Fund, Select Shares | | 581,124 | | 47,994 | | (224,454) | | 404,664 | | 7,174,692 | | 1,472,878 | | 239,975 |
| Schwab Small-Cap Equity Fund | | 785,522 | | 285,908 | | (445,734) | | 625,696 | | 13,258,509 | | 2,071,313 | | 3,784,075 |
| Schwab Treasury Inflation Protected Securities Index Fund | | 1,401,642 | | 488,382 | | (747,283) | | 1,142,741 | | 12,467,301 | | 340,637 | | 137,363 |
| Schwab Intermediate-Term Bond Fund | | 1,475,652 | | 262,018 | | (1,270,069) | | 467,601 | | 4,774,201 | | 261,235 | | 180,854 |
| Schwab Total Bond Market Fund | | 9,982,914 | | 2,616,456 | | (3,030,703) | | 9,568,667 | | 90,806,651 | | 415,259 | | 2,047,740 |
| Laudus Mondrian International Government Fixed Income Fund | | 502,623 | | 173,493 | | (31,958) | | 644,158 | | 6,055,089 | | (2,752) | | 247,726 |
| Schwab Short-Term Bond Market Fund | | 4,022,647 | | 754,416 | | (1,727,172) | | 3,049,891 | | 28,363,983 | | 284,917 | | 329,500 |
| Schwab Value Advantage Money Fund, Ultra Shares (formerly named Institutional Prime Shares) | | 5,000,430 | | 3,003,167 | | — | | 8,003,597 | | 8,003,597 | | — | | 3,525 |
| Total | | | | | | | | | | $422,920,838 | | $7,997,739 | | $27,959,693 |
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Schwab Target 2025 Fund:
| Underlying Funds | | Balance
of Shares
Held at
10/31/14 | | Gross
Purchases | | Gross
Sales | | Balance
of Shares
Held at
10/31/15 | | Market
Value at
10/31/15 | | Realized
Gains (Losses)
11/01/14
to 10/31/15 | | Distributions
Received*
11/01/14
to 10/31/15 |
| Schwab Global Real Estate Fund | | 1,654,273 | | 467,489 | | (167,115) | | 1,954,647 | | $13,877,993 | | $130,096 | | $434,589 |
| Laudus International MarketMasters Fund, Select Shares | | 1,177,278 | | 560,082 | | (4,205) | | 1,733,155 | | 39,359,940 | | 8,621 | | 432,998 |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares | | 499,531 | | 120,623 | | (157,930) | | 462,224 | | 3,272,543 | | (88,462) | | 122,439 |
| Schwab International Core Equity Fund | | 1,845,200 | | 936,171 | | (32,328) | | 2,749,043 | | 26,445,789 | | 15,862 | | 646,494 |
| Laudus U.S. Large Cap Growth Fund | | 1,810,717 | | 665,346 | | (145,817) | | 2,330,246 | | 41,315,255 | | 257,716 | | 6,252,854 |
| Schwab Core Equity Fund | | 1,493,786 | | 570,952 | | (77,248) | | 1,987,490 | | 45,911,028 | | 147,603 | | 5,554,838 |
| Schwab Dividend Equity Fund | | 967,290 | | 363,162 | | (68,590) | | 1,261,862 | | 20,732,395 | | 13,144 | | 2,797,306 |
| Schwab S&P 500 Index Fund | | 1,041,807 | | 215,880 | | (121,641) | | 1,136,046 | | 37,489,504 | | 446,266 | | 612,535 |
| Laudus Small-Cap MarketMasters Fund, Select Shares | | 512,156 | | 81,987 | | (206,913) | | 387,230 | | 6,865,592 | | 739,353 | | 214,648 |
| Schwab Small-Cap Equity Fund | | 693,545 | | 277,742 | | (361,895) | | 609,392 | | 12,913,018 | | 1,964,045 | | 3,367,751 |
| Schwab Treasury Inflation Protected Securities Index Fund | | 656,234 | | 193,530 | | (655,434) | | 194,330 | | 2,120,136 | | (102,917) | | 65,200 |
| Schwab Intermediate-Term Bond Fund | | 903,044 | | 241,995 | | (637,709) | | 507,330 | | 5,179,836 | | 54,033 | | 134,563 |
| Schwab Total Bond Market Fund | | 5,027,329 | | 2,456,938 | | (2,004,539) | | 5,479,728 | | 52,002,615 | | 248,603 | | 1,126,129 |
| Laudus Mondrian International Government Fixed Income Fund | | 331,802 | | 181,579 | | (24,599) | | 488,782 | | 4,594,555 | | 1,722 | | 157,826 |
| Schwab Short-Term Bond Market Fund | | 1,679,074 | | 433,810 | | (732,934) | | 1,379,950 | | 12,833,537 | | 23,080 | | 143,531 |
| Total | | | | | | | | | | $324,913,736 | | $3,858,765 | | $22,063,701 |
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Schwab Target 2030 Fund:
| Underlying Funds | | Balance
of Shares
Held at
10/31/14 | | Gross
Purchases | | Gross
Sales | | Balance
of Shares
Held at
10/31/15 | | Market
Value at
10/31/15 | | Realized
Gains (Losses)
11/01/14
to 10/31/15 | | Distributions
Received*
11/01/14
to 10/31/15 |
| Schwab Global Real Estate Fund | | 3,890,065 | | 695,820 | | (366,063) | | 4,219,822 | | $29,960,737 | | $278,772 | | $986,670 |
| Laudus International MarketMasters Fund, Select Shares | | 2,803,203 | | 995,504 | | (20,526) | | 3,778,181 | | 85,802,501 | | 53,161 | | 1,005,644 |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares | | 1,487,245 | | 213,449 | | (211,540) | | 1,489,154 | | 10,543,212 | | 433,261 | | 355,545 |
| Schwab International Core Equity Fund | | 4,348,656 | | 1,672,030 | | (83,284) | | 5,937,402 | | 57,117,811 | | 75,502 | | 1,503,892 |
| Laudus U.S. Large Cap Growth Fund | | 4,202,473 | | 1,221,213 | | (466,682) | | 4,957,004 | | 87,887,678 | | 811,379 | | 14,090,231 |
| Schwab Core Equity Fund | | 3,450,450 | | 979,289 | | (204,257) | | 4,225,482 | | 97,608,626 | | 1,196,667 | | 12,725,153 |
| Schwab Dividend Equity Fund | | 2,235,575 | | 616,113 | | (171,760) | | 2,679,928 | | 44,031,221 | | 443,867 | | 6,370,991 |
| Schwab S&P 500 Index Fund | | 2,390,764 | | 250,547 | | (227,049) | | 2,414,262 | | 79,670,654 | | 711,318 | | 1,374,859 |
| Laudus Small-Cap MarketMasters Fund, Select Shares | | 1,279,435 | | 106,240 | | (493,754) | | 891,921 | | 15,813,760 | | 3,675,487 | | 524,696 |
| Schwab Small-Cap Equity Fund | | 1,755,081 | | 509,303 | | (846,165) | | 1,418,219 | | 30,052,067 | | 5,386,499 | | 8,264,386 |
| Schwab Treasury Inflation Protected Securities Index Fund | | 939,055 | | 43,961 | | (983,016) | | — | | — | | 5,366 | | 91,723 |
| Schwab Intermediate-Term Bond Fund | | 1,517,416 | | 277,968 | | (754,160) | | 1,041,224 | | 10,630,899 | | 88,262 | | 248,503 |
| Schwab Total Bond Market Fund | | 8,104,012 | | 3,123,683 | | (3,520,713) | | 7,706,982 | | 73,139,262 | | 523,067 | | 1,652,619 |
| Laudus Mondrian International Government Fixed Income Fund | | 554,624 | | 226,106 | | — | | 780,730 | | 7,338,866 | | — | | 261,491 |
| Schwab Short-Term Bond Market Fund | | 2,167,151 | | 270,250 | | (921,106) | | 1,516,295 | | 14,101,546 | | 28,903 | | 168,144 |
| Total | | | | | | | | | | $643,698,840 | | $13,711,511 | | $49,624,547 |
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Schwab Target 2035 Fund:
| Underlying Funds | | Balance
of Shares
Held at
10/31/14 | | Gross
Purchases | | Gross
Sales | | Balance
of Shares
Held at
10/31/15 | | Market
Value at
10/31/15 | | Realized
Gains (Losses)
11/01/14
to 10/31/15 | | Distributions
Received*
11/01/14
to 10/31/15 |
| Schwab Global Real Estate Fund | | 1,641,505 | | 469,466 | | (145,750) | | 1,965,221 | | $13,953,068 | | $214,551 | | $432,404 |
| Laudus International MarketMasters Fund, Select Shares | | 1,186,085 | | 580,170 | | — | | 1,766,255 | | 40,111,661 | | — | | 432,218 |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares | | 752,760 | | 210,387 | | (69,669) | | 893,478 | | 6,325,823 | | 99,872 | | 182,757 |
| Schwab International Core Equity Fund | | 1,843,020 | | 937,851 | | — | | 2,780,871 | | 26,751,976 | | — | | 644,095 |
| Laudus U.S. Large Cap Growth Fund | | 1,737,627 | | 644,014 | | (108,716) | | 2,272,925 | | 40,298,967 | | 212,184 | | 5,969,027 |
| Schwab Core Equity Fund | | 1,438,310 | | 514,837 | | (12,893) | | 1,940,254 | | 44,819,871 | | 54,585 | | 5,342,860 |
| Schwab Dividend Equity Fund | | 926,642 | | 327,708 | | (34,236) | | 1,220,114 | | 20,046,466 | | 7,495 | | 2,657,779 |
| Schwab S&P 500 Index Fund | | 991,827 | | 210,096 | | (95,538) | | 1,106,385 | | 36,510,712 | | 323,399 | | 578,330 |
| Laudus Small-Cap MarketMasters Fund, Select Shares | | 568,739 | | 96,468 | | (215,064) | | 450,143 | | 7,981,039 | | 991,954 | | 240,446 |
| Schwab Small-Cap Equity Fund | | 783,366 | | 273,862 | | (349,524) | | 707,704 | | 14,996,238 | | 1,929,280 | | 3,718,987 |
| Schwab Treasury Inflation Protected Securities Index Fund | | 252,080 | | 15,279 | | (267,359) | | — | | — | | (35,244) | | 24,947 |
| Schwab Intermediate-Term Bond Fund | | 419,647 | | 158,180 | | (157,941) | | 419,886 | | 4,287,040 | | 16,981 | | 83,243 |
| Schwab Total Bond Market Fund | | 2,148,005 | | 1,162,603 | | (1,055,359) | | 2,255,249 | | 21,402,312 | | 158,689 | | 464,033 |
| Laudus Mondrian International Government Fixed Income Fund | | 129,325 | | 120,294 | | — | | 249,619 | | 2,346,420 | | — | | 62,810 |
| Schwab Short-Term Bond Market Fund | | 511,375 | | 104,719 | | (285,052) | | 331,042 | | 3,078,688 | | 12,948 | | 38,445 |
| Total | | | | | | | | | | $282,910,281 | | $3,986,694 | | $20,872,381 |
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Schwab Target 2040 Fund:
| Underlying Funds | | Balance
of Shares
Held at
10/31/14 | | Gross
Purchases | | Gross
Sales | | Balance
of Shares
Held at
10/31/15 | | Market
Value at
10/31/15 | | Realized
Gains (Losses)
11/01/14
to 10/31/15 | | Distributions
Received*
11/01/14
to 10/31/15 |
| Schwab Global Real Estate Fund | | 4,779,252 | | 856,957 | | (389,673) | | 5,246,536 | | $37,250,406 | | $660,027 | | $1,231,522 |
| Laudus International MarketMasters Fund, Select Shares | | 3,454,154 | | 1,279,183 | | — | | 4,733,337 | | 107,494,088 | | — | | 1,247,244 |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares | | 2,500,623 | | 477,880 | | (105,841) | | 2,872,662 | | 20,338,444 | | 181,378 | | 600,555 |
| Schwab International Core Equity Fund | | 5,400,807 | | 2,072,390 | | (21,810) | | 7,451,387 | | 71,682,346 | | 8,070 | | 1,861,776 |
| Laudus U.S. Large Cap Growth Fund | | 5,021,116 | | 1,328,599 | | (390,491) | | 5,959,224 | | 105,657,049 | | 712,598 | | 16,902,503 |
| Schwab Core Equity Fund | | 4,121,548 | | 1,080,480 | | (109,700) | | 5,092,328 | | 117,632,777 | | 920,389 | | 15,255,911 |
| Schwab Dividend Equity Fund | | 2,649,099 | | 679,178 | | (153,895) | | 3,174,382 | | 52,155,094 | | 639,830 | | 7,564,998 |
| Schwab S&P 500 Index Fund | | 2,836,058 | | 232,497 | | (169,738) | | 2,898,817 | | 95,660,952 | | 547,502 | | 1,636,613 |
| Laudus Small-Cap MarketMasters Fund, Select Shares | | 1,732,691 | | 161,718 | | (594,961) | | 1,299,448 | | 23,039,214 | | 4,203,650 | | 715,694 |
| Schwab Small-Cap Equity Fund | | 2,375,824 | | 681,494 | | (1,013,712) | | 2,043,606 | | 43,304,004 | | 6,085,862 | | 11,121,881 |
| Schwab Treasury Inflation Protected Securities Index Fund | | 366,838 | | 3,115 | | (369,953) | | — | | — | | 103,736 | | 34,519 |
| Schwab Intermediate-Term Bond Fund | | 671,685 | | 156,983 | | (29,240) | | 799,428 | | 8,162,159 | | 1,990 | | 153,156 |
| Schwab Total Bond Market Fund | | 3,538,065 | | 1,630,155 | | (1,813,960) | | 3,354,260 | | 31,831,927 | | 303,682 | | 716,016 |
| Laudus Mondrian International Government Fixed Income Fund | | 115,319 | | 227,415 | | (11,247) | | 331,487 | | 3,115,975 | | (10,460) | | 61,309 |
| Schwab Short-Term Bond Market Fund | | 917,303 | | 93,397 | | (638,587) | | 372,113 | | 3,460,651 | | 24,942 | | 48,104 |
| Total | | | | | | | | | | $720,785,086 | | $14,383,196 | | $59,151,801 |
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Schwab Target 2045 Fund:
| Underlying Funds | | Balance
of Shares
Held at
10/31/14 | | Gross
Purchases | | Gross
Sales | | Balance
of Shares
Held at
10/31/15 | | Market
Value at
10/31/15 | | Realized
Gains (Losses)
11/01/14
to 10/31/15 | | Distributions
Received*
11/01/14
to 10/31/15 |
| Schwab Global Real Estate Fund | | 263,963 | | 201,368 | | (35,306) | | 430,025 | | $3,053,176 | | ($18,849) | | $79,787 |
| Laudus International MarketMasters Fund, Select Shares | | 191,087 | | 198,825 | | (1,100) | | 388,812 | | 8,829,933 | | (3,437) | | 73,357 |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares | | 147,461 | | 121,928 | | (9,097) | | 260,292 | | 1,842,865 | | (14,402) | | 37,905 |
| Schwab International Core Equity Fund | | 296,812 | | 335,523 | | (20,354) | | 611,981 | | 5,887,256 | | (18,878) | | 109,922 |
| Laudus U.S. Large Cap Growth Fund | | 274,441 | | 219,635 | | (11,344) | | 482,732 | | 8,558,837 | | (25,441) | | 988,450 |
| Schwab Core Equity Fund | | 225,804 | | 193,515 | | (6,820) | | 412,499 | | 9,528,728 | | (29,304) | | 879,356 |
| Schwab Dividend Equity Fund | | 145,377 | | 122,497 | | (9,949) | | 257,925 | | 4,237,708 | | (33,220) | | 446,505 |
| Schwab S&P 500 Index Fund | | 155,822 | | 91,322 | | (12,346) | | 234,798 | | 7,748,334 | | (19,118) | | 95,155 |
| Laudus Small-Cap MarketMasters Fund, Select Shares | | 98,072 | | 40,644 | | (27,579) | | 111,137 | | 1,970,465 | | 17,508 | | 43,553 |
| Schwab Small-Cap Equity Fund | | 133,466 | | 95,774 | | (53,302) | | 175,938 | | 3,728,112 | | (134,847) | | 668,096 |
| Schwab Treasury Inflation Protected Securities Index Fund | | 10,886 | | 93 | | (10,979) | | — | | — | | (1,987) | | 1,024 |
| Schwab Intermediate-Term Bond Fund | | 19,885 | | 29,483 | | — | | 49,368 | | 504,052 | | — | | 6,637 |
| Schwab Total Bond Market Fund | | 117,794 | | 121,804 | | (67,445) | | 172,153 | | 1,633,733 | | (4,035) | | 30,220 |
| Laudus Mondrian International Government Fixed Income Fund | | 5,215 | | 6,637 | | — | | 11,852 | | 111,406 | | — | | 2,326 |
| Schwab Short-Term Bond Market Fund | | 34,422 | | 8,365 | | (29,898) | | 12,889 | | 119,872 | | 780 | | 1,708 |
| Total | | | | | | | | | | $57,754,477 | | ($285,230) | | $3,464,001 |
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Schwab Target 2050 Fund:
| Underlying Funds | | Balance
of Shares
Held at
10/31/14 | | Gross
Purchases | | Gross
Sales | | Balance
of Shares
Held at
10/31/15 | | Market
Value at
10/31/15 | | Realized
Gains (Losses)
11/01/14
to 10/31/15 | | Distributions
Received*
11/01/14
to 10/31/15 |
| Schwab Global Real Estate Fund | | 221,492 | | 162,214 | | (29,100) | | 354,606 | | $2,517,704 | | ($18,090) | | $67,001 |
| Laudus International MarketMasters Fund, Select Shares | | 159,800 | | 161,247 | | — | | 321,047 | | 7,290,988 | | — | | 60,527 |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares | | 129,830 | | 102,809 | | (2,577) | | 230,062 | | 1,628,837 | | (4,738) | | 33,005 |
| Schwab International Core Equity Fund | | 250,692 | | 254,511 | | — | | 505,203 | | 4,860,055 | | — | | 90,260 |
| Laudus U.S. Large Cap Growth Fund | | 227,146 | | 179,200 | | (11,866) | | 394,480 | | 6,994,125 | | (19,870) | | 808,683 |
| Schwab Core Equity Fund | | 188,842 | | 149,037 | | (1,934) | | 335,945 | | 7,760,328 | | (8,913) | | 720,285 |
| Schwab Dividend Equity Fund | | 120,704 | | 100,257 | | (8,831) | | 212,130 | | 3,485,300 | | (24,957) | | 363,593 |
| Schwab S&P 500 Index Fund | | 129,342 | | 71,404 | | (8,827) | | 191,919 | | 6,333,341 | | (12,194) | | 78,008 |
| Laudus Small-Cap MarketMasters Fund, Select Shares | | 83,183 | | 36,097 | | (23,002) | | 96,278 | | 1,707,011 | | 10,389 | | 36,347 |
| Schwab Small-Cap Equity Fund | | 114,073 | | 75,858 | | (40,271) | | 149,660 | | 3,171,298 | | (98,803) | | 556,311 |
| Schwab Treasury Inflation Protected Securities Index Fund | | 2,539 | | 566 | | (3,105) | | — | | — | | (123) | | 290 |
| Schwab Intermediate-Term Bond Fund | | 9,960 | | 20,029 | | (4,897) | | 25,092 | | 256,192 | | (388) | | 3,216 |
| Schwab Total Bond Market Fund | | 61,139 | | 74,471 | | (49,725) | | 85,885 | | 815,044 | | (2,258) | | 14,947 |
| Laudus Mondrian International Government Fixed Income Fund | | 2,945 | | 4,227 | | — | | 7,172 | | 67,420 | | — | | 1,443 |
| Schwab Short-Term Bond Market Fund | | 18,859 | | 6,003 | | (20,114) | | 4,748 | | 44,156 | | 783 | | 813 |
| Total | | | | | | | | | | $46,931,799 | | ($179,162) | | $2,834,729 |
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Schwab Target 2055 Fund:
| Underlying Funds | | Balance
of Shares
Held at
10/31/14 | | Gross
Purchases | | Gross
Sales | | Balance
of Shares
Held at
10/31/15 | | Market
Value at
10/31/15 | | Realized
Gains (Losses)
11/01/14
to 10/31/15 | | Distributions
Received*
11/01/14
to 10/31/15 |
| Schwab Global Real Estate Fund | | 120,724 | | 97,709 | | (20,214) | | 198,219 | | $1,407,356 | | ($10,694) | | $36,509 |
| Laudus International MarketMasters Fund, Select Shares | | 87,694 | | 92,704 | | (779) | | 179,619 | | 4,079,145 | | (2,403) | | 33,540 |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares | | 73,790 | | 64,142 | | (1,319) | | 136,613 | | 967,220 | | (1,643) | | 18,985 |
| Schwab International Core Equity Fund | | 136,701 | | 145,948 | | — | | 282,649 | | 2,719,086 | | — | | 49,765 |
| Laudus U.S. Large Cap Growth Fund | | 123,392 | | 99,984 | | (5,106) | | 218,270 | | 3,869,926 | | (11,646) | | 443,270 |
| Schwab Core Equity Fund | | 102,588 | | 84,692 | | (499) | | 186,781 | | 4,314,634 | | (2,184) | | 393,888 |
| Schwab Dividend Equity Fund | | 65,612 | | 54,243 | | (4,130) | | 115,725 | | 1,901,357 | | (10,410) | | 198,562 |
| Schwab S&P 500 Index Fund | | 70,350 | | 41,936 | | (6,168) | | 106,118 | | 3,501,889 | | (5,690) | | 42,976 |
| Laudus Small-Cap MarketMasters Fund, Select Shares | | 46,684 | | 21,619 | | (13,062) | | 55,241 | | 979,429 | | 7,261 | | 20,332 |
| Schwab Small-Cap Equity Fund | | 62,882 | | 44,214 | | (19,549) | | 87,547 | | 1,855,111 | | (49,406) | | 310,080 |
| Schwab Treasury Inflation Protected Securities Index Fund | | 677 | | 6 | | (683) | | — | | — | | (267) | | 64 |
| Schwab Intermediate-Term Bond Fund | | 792 | | 9,047 | | (3,330) | | 6,509 | | 66,459 | | (196) | | 572 |
| Schwab Total Bond Market Fund | | 17,508 | | 21,758 | | (18,190) | | 21,076 | | 200,011 | | 304 | | 3,461 |
| Laudus Mondrian International Government Fixed Income Fund | | 454 | | 1,990 | | — | | 2,444 | | 22,971 | | — | | 202 |
| Schwab Short-Term Bond Market Fund | | 4,666 | | 546 | | (5,212) | | — | | — | | 359 | | 85 |
| Total | | | | | | | | | | $25,884,594 | | ($86,615) | | $1,552,291 |
| * | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions with other funds in the Fund Complex (for definition refer to Trustees and Officers section). All loans are for temporary or emergency purposes and the interest rate to be charged will be the average of the overnight repurchase agreement rate and the short-term bank loan rate. All loans are subject to numerous conditions designed to ensure fair and equitable treatment of all participating funds/portfolios. The interfund lending facility is subject to the oversight and periodic review by the Board. The funds had no interfund borrowing or lending activity during the period.
During the period, the Schwab Target 2010 Fund, Schwab Target 2020 Fund, Schwab Target 2030 Fund and Schwab Target 2040 Fund received a reimbursement payment of $507, $647, $475 and $134, respectively, related to state filing fees resulting from revised calculation methodologies being applied on sales of the funds' shares in prior periods.
During the periods under which the expense was incurred, the funds were operating above their expense limitation and waived fees including these state filing fees. As this amount was previously waived as part of an expense reduction by CSIM, it was reimbursed to the investment adviser. Each fund's net expense ratio was not impacted during the periods the expense was incurred or during the current period.
5. Board of Trustees:
The Board may include people who are officers and/or directors of CSIM or its affiliates. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these interested persons for their services as trustees, but it did pay non-interested persons (independent trustees), as noted on each fund’s Statement of Operations. For information regarding the trustees, please refer to the Trustees and Officers table at the end of this report.
Financial Notes (continued)
6. Borrowing from Banks:
During the period prior to October 8, 2015, the funds had access to a committed line of credit of $150 million with State Street Bank and Trust Company (State Street), an uncommitted line of credit of $100 million with Bank of America, N.A., and an uncommitted line of credit of $50 million with Brown Brothers Harriman & Co. The funds paid an annual fee to State Street for the committed line of credit. Effective October 8, 2015, the previous lines of credit were terminated and the funds became participants with other U.S. registered investment companies managed by CSIM in a joint, syndicated, committed $530 million line of credit (the Credit Facility), with State Street as agent, which matures on October 6, 2016. Under the terms of the Credit Facility, in addition to the interest charged on any borrowings by a fund, each fund pays a commitment fee of 0.125% per annum on its proportionate share of the unused portion of the Credit Facility. There were no borrowings from any of the lines of credit during the period.
The funds also have access to custodian overdraft facilities. A fund may have utilized the overdraft facility and incurred an interest expense, which is disclosed on the fund’s Statement of Operations, if any. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.
7. Purchases and Sales/Maturities of Investment Securities:
For the period ended October 31, 2015, purchases and sales/maturities of securities (excluding short-term obligations) were as follows:
| | Purchases of Securities | | Sales/Maturities of Securities |
| Schwab Target 2010 Fund | $23,759,442 | | $21,115,094 |
| Schwab Target 2015 Fund | 43,297,086 | | 36,515,022 |
| Schwab Target 2020 Fund | 182,231,671 | | 126,454,000 |
| Schwab Target 2025 Fund | 154,574,274 | | 76,852,000 |
| Schwab Target 2030 Fund | 235,054,683 | | 141,791,643 |
| Schwab Target 2035 Fund | 112,060,757 | | 43,235,012 |
| Schwab Target 2040 Fund | 207,672,998 | | 101,282,782 |
| Schwab Target 2045 Fund | 32,271,906 | | 5,268,753 |
| Schwab Target 2050 Fund | 24,718,678 | | 3,582,430 |
| Schwab Target 2055 Fund | 13,591,354 | | 1,767,092 |
8. Redemption Fee:
The funds charge a 2.00% redemption fee on shares sold or exchanged within 30 days of the original purchase date. Such amounts are netted against redemption proceeds on the Statement of Changes in Net Assets. The redemption fees charged during the current and prior periods are:
| | Current Period
(11/1/14-10/31/15) | | Prior Period
(11/1/13-10/31/14) |
| Schwab Target 2010 Fund | $197 | | $794 |
| Schwab Target 2015 Fund | 8,500 | | 15,988 |
| Schwab Target 2020 Fund | 11,522 | | 3,150 |
| Schwab Target 2025 Fund | 3,821 | | 6,611 |
| Schwab Target 2030 Fund | 12,726 | | 6,510 |
| Schwab Target 2035 Fund | 5,806 | | 8,744 |
| Schwab Target 2040 Fund | 14,122 | | 16,557 |
| Schwab Target 2045 Fund | 2,334 | | 2,375 |
| Schwab Target 2050 Fund | 1,871 | | 3,231 |
| Schwab Target 2055 Fund | 1,743 | | 646 |
Financial Notes (continued)
9. Federal Income Taxes:
As of October 31, 2015, the components of distributable earnings on a tax-basis were as follows:
| | Schwab
Target
2010
Fund | | Schwab
Target
2015
Fund | | Schwab
Target
2020
Fund | | Schwab
Target
2025
Fund | | Schwab
Target
2030
Fund | | Schwab
Target
2035
Fund | | Schwab
Target
2040
Fund |
| Undistributed ordinary income | $513,057 | | $1,228,240 | | $3,585,956 | | $3,641,427 | | $6,945,710 | | $2,469,148 | | $5,527,725 |
| Undistributed long-term capital gains | — | | 5,050,555 | | 18,649,155 | | 17,845,235 | | 48,704,285 | | 17,811,793 | | 57,368,336 |
| Unrealized appreciation on investments | 6,947,010 | | 10,369,539 | | 69,315,588 | | 38,685,746 | | 131,978,392 | | 35,869,490 | | 146,425,614 |
| Unrealized depreciation on investments | (291,641) | | (655,795) | | (3,814,936) | | (3,344,075) | | (7,306,979) | | (3,064,473) | | (7,091,354) |
| Net unrealized appreciation (depreciation) | $6,655,369 | | $9,713,744 | | $65,500,652 | | $35,341,671 | | $124,671,413 | | $32,805,017 | | $139,334,260 |
| | Schwab
Target
2045
Fund | | Schwab
Target
2050
Fund | | Schwab
Target
2055
Fund |
| Undistributed ordinary income | $124,813 | | $84,614 | | $35,305 |
| Undistributed long-term capital gains | 2,410,539 | | 1,982,958 | | 1,092,323 |
| Unrealized appreciation on investments | 1,535,866 | | 1,331,269 | | 709,302 |
| Unrealized depreciation on investments | (996,267) | | (813,727) | | (467,238) |
| Net unrealized appreciation (depreciation) | $539,599 | | $517,542 | | $242,064 |
The primary difference between book-basis and tax-basis unrealized appreciation or unrealized depreciation of investments is the tax deferral of losses on wash sales.
Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2015, the funds had capital loss carryforwards available to offset future net capital gains before the expiration dates as follows:
| Expiration Date | | Schwab
Target
2010
Fund | | Schwab
Target
2015
Fund | | Schwab
Target
2020
Fund | | Schwab
Target
2025
Fund | | Schwab
Target
2030
Fund | | Schwab
Target
2035
Fund | | Schwab
Target
2040
Fund |
| October 31, 2017 | | $9,254,129 | | $— | | $— | | $— | | $— | | $— | | $— |
| Total | | $9,254,129 | | $— | | $— | | $— | | $— | | $— | | $— |
Financial Notes (continued)
9. Federal Income Taxes (continued):
| Expiration Date | | Schwab
Target
2045
Fund | | Schwab
Target
2050
Fund | | Schwab
Target
2055
Fund |
| October 31, 2017 | | $— | | $— | | $— |
| Total | | $— | | $— | | $— |
For the year ended October 31, 2015, the funds had capital loss carryforwards utilized as follows:
| | Schwab
Target
2010
Fund | | Schwab
Target
2015
Fund | | Schwab
Target
2020
Fund | | Schwab
Target
2025
Fund | | Schwab
Target
2030
Fund | | Schwab
Target
2035
Fund | | Schwab
Target
2040
Fund |
| Capital loss carryforwards utilized | $2,815,718 | | $— | | $9,786,763 | | $— | | $— | | $— | | $— |
| | Schwab
Target
2045
Fund | | Schwab
Target
2050
Fund | | Schwab
Target
2055
Fund |
| Capital loss carryforwards utilized | $— | | $— | | $— |
The tax-basis components of distributions paid during the current and prior fiscal years were as follows:
| | Schwab
Target
2010
Fund | | Schwab
Target
2015
Fund | | Schwab
Target
2020
Fund | | Schwab
Target
2025
Fund | | Schwab
Target
2030
Fund | | Schwab
Target
2035
Fund | | Schwab
Target
2040
Fund |
| Current period distributions | | | | | | | | | | | | | |
| Ordinary income | $1,277,875 | | $2,842,263 | | $10,865,751 | | $9,644,844 | | $16,692,788 | | $7,810,087 | | $18,123,716 |
| Long-term capital gains | — | | 4,404,370 | | — | | 9,175,384 | | 9,243,382 | | 9,125,690 | | 16,937,962 |
| Return of capital | — | | — | | — | | — | | — | | — | | — |
| Prior period distributions | | | | | | | | | | | | | |
| Ordinary income | $1,036,165 | | $1,610,833 | | $7,213,636 | | $4,339,215 | | $10,903,512 | | $3,570,560 | | $11,083,321 |
| Long-term capital gains | — | | — | | — | | — | | — | | — | | — |
| Return of capital | — | | — | | — | | — | | — | | — | | — |
| | Schwab
Target
2045
Fund | | Schwab
Target
2050
Fund | | Schwab
Target
2055
Fund |
| Current period distributions | | | | | |
| Ordinary income | $1,032,882 | | $830,660 | | $449,182 |
| Long-term capital gains | 569,067 | | 451,787 | | 247,620 |
| Return of capital | — | | — | | — |
| Prior period distributions | | | | | |
| Ordinary income | $312,358 | | $246,172 | | $131,185 |
| Long-term capital gains | — | | — | | — |
| Return of capital | — | | — | | — |
Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
Financial Notes (continued)
9. Federal Income Taxes (continued):
Permanent book and tax basis differences may result in reclassifications between components of net assets as required. The adjustments will have no impact on net assets or the results of operations. As of October 31, 2015, the funds made the following reclassifications:
| | Schwab
Target
2010
Fund | | Schwab
Target
2015
Fund | | Schwab
Target
2020
Fund | | Schwab
Target
2025
Fund | | Schwab
Target
2030
Fund | | Schwab
Target
2035
Fund | | Schwab
Target
2040
Fund |
| Capital shares | $— | | $— | | $— | | $— | | $— | | $— | | $— |
| Undistributed net investment income | 275,140 | | 539,084 | | 3,184,038 | | 2,620,841 | | 6,078,644 | | 2,607,813 | | 7,529,935 |
| Net realized capital gains (losses) | (275,140) | | (539,084) | | (3,184,038) | | (2,620,841) | | (6,078,644) | | (2,607,813) | | (7,529,935) |
| | Schwab
Target
2045
Fund | | Schwab
Target
2050
Fund | | Schwab
Target
2055
Fund |
| Capital shares | $— | | $— | | $— |
| Undistributed net investment income | 441,629 | | 363,009 | | 199,849 |
| Net realized capital gains (losses) | (441,629) | | (363,009) | | (199,849) |
As of October 31, 2015, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and for state purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the funds’ financial statements. The funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period ended October 31, 2015, the funds did not incur any interest or penalties.
10. Subsequent Events:
At a Special Meeting of Shareholders on December 11, 2015, twelve individuals were elected to serve as trustees of all trusts constituting the Schwab Funds, Laudus Funds and Schwab ETFs effective January 1, 2016. The twelve individuals elected to the Boards of Trustees consist of current Schwab Funds and Laudus Funds trustees, current Schwab ETFs trustees and three new nominees. The trustees believe that combining the composition of the Boards of Trustees and adding the new nominees will further align oversight of the Schwab Funds, Laudus Funds and Schwab ETFs, among other benefits. Other than this election of trustees, management has determined there are no subsequent events or transactions through the date the financial statements were issued that would have materially impacted the financial statements as presented.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of:
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab Target 2045 Fund
Schwab Target 2050 Fund
Schwab Target 2055 Fund
In our opinion, the accompanying statements of assets and liabilities, including the portfolio holdings, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Schwab Target 2010 Fund, Schwab Target 2015 Fund, Schwab Target 2020 Fund, Schwab Target 2025 Fund, Schwab Target 2030 Fund, Schwab Target 2035 Fund, Schwab Target 2040 Fund, Schwab Target 2045 Fund, Schwab Target 2050 Fund and Schwab Target 2055 Fund (ten of the funds constituting Schwab Capital Trust, hereafter collectively referred to as the “Funds”) at October 31, 2015, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities and investments in the underlying funds at October 31, 2015 by correspondence with the custodian and transfer agents of the underlying funds, respectively, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
December 16, 2015
Other Federal Tax Information (unaudited)
For corporate shareholders, the following percentage of the funds dividend distributions paid during the fiscal year ended October 31, 2015, qualify for the corporate dividends received deduction:
| | Percentage |
| Schwab Target 2010 Fund | 18.30 |
| Schwab Target 2015 Fund | 20.31 |
| Schwab Target 2020 Fund | 24.41 |
| Schwab Target 2025 Fund | 21.56 |
| Schwab Target 2030 Fund | 26.63 |
| Schwab Target 2035 Fund | 26.38 |
| Schwab Target 2040 Fund | 30.56 |
| Schwab Target 2045 Fund | 34.91 |
| Schwab Target 2050 Fund | 35.84 |
| Schwab Target 2055 Fund | 36.78 |
For the fiscal year ended October 31, 2015, the funds designate the following amounts of the dividend distributions as qualified dividends for the purpose of the maximum rate under section 1(h)(11) of the Internal Revenue Code. Shareholders will be notified in January 2016 via IRS form 1099 of the amounts for use in preparing their 2015 income tax return.
| Schwab Target 2010 Fund | $338,880 |
| Schwab Target 2015 Fund | 668,174 |
| Schwab Target 2020 Fund | 3,892,388 |
| Schwab Target 2025 Fund | 3,106,000 |
| Schwab Target 2030 Fund | 6,636,851 |
| Schwab Target 2035 Fund | 3,113,291 |
| Schwab Target 2040 Fund | 8,357,433 |
| Schwab Target 2045 Fund | 539,540 |
| Schwab Target 2050 Fund | 446,717 |
| Schwab Target 2055 Fund | 248,726 |
Under Section 852 (b)(3)(C) of the Internal Revenue Code, certain funds hereby designate the following amounts as long-term capital gain dividends for the fiscal year ended October 31, 2015:
| Schwab Target 2010 Fund | $— |
| Schwab Target 2015 Fund | 4,404,370 |
| Schwab Target 2020 Fund | — |
| Schwab Target 2025 Fund | 9,175,384 |
| Schwab Target 2030 Fund | 9,243,382 |
| Schwab Target 2035 Fund | 9,125,690 |
| Schwab Target 2040 Fund | 16,937,962 |
| Schwab Target 2045 Fund | 569,067 |
| Schwab Target 2050 Fund | 451,787 |
| Schwab Target 2055 Fund | 247,620 |
Investment Advisory Agreement Approval
The Investment Company Act of 1940 (the 1940 Act) requires that initial approval of, as well as the continuation of, a fund’s investment advisory agreement must be specifically approved (1) by the vote of the trustees or by a vote of the shareholders of the fund, and (2) by the vote of a majority of the trustees who are not parties to the investment advisory agreement or “interested persons” of any party (the Independent Trustees), cast in person at a meeting called for the purpose of voting on such approval. In connection with such approvals, the fund’s trustees must request and evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms of the investment advisory agreement.
The Board of Trustees (the Board or the Trustees, as appropriate) calls and holds one or more meetings each year that are dedicated, in whole or in part, to considering whether to renew the investment advisory agreement between Schwab Capital Trust (the Trust) and Charles Schwab Investment Management, Inc. (CSIM) (the Agreement) with respect to the existing funds in the Trust, including Schwab Target 2010 Fund, Schwab Target 2015 Fund, Schwab Target 2020 Fund, Schwab Target 2025 Fund, Schwab Target 2030 Fund, Schwab Target 2035 Fund, Schwab Target 2040 Fund, Schwab 2045 Fund, Schwab 2050 Fund and Schwab 2055 Fund (the Funds), and to review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting(s), the Board requests and reviews a wide variety of materials provided by CSIM, including information about CSIM’s affiliates, personnel and operations. As part of the renewal process, Independent Trustees’ legal counsel sends an information request letter to CSIM seeking certain relevant information. The responses by CSIM are provided to the Trustees for their review prior to their meeting, and the Trustees are provided with the opportunity to request any additional materials. The Board also receives extensive data provided by third parties. This information is in addition to the detailed information about the Funds that the Board reviews during the course of each year, including information that relates to Fund operations and Fund performance. The Independent Trustees receive advice from independent counsel to the Independent Trustees, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees meet in executive session outside the presence of Fund management and participate in question and answer sessions with representatives of CSIM.
The Board, including a majority of the Independent Trustees, considered information specifically relating to its consideration of the continuance of the Agreement with
respect to the Funds at meetings held on April 29, 2015, and June 1, 2015, and approved the renewal of the Agreement with respect to the Funds for an additional one-year term at the meeting held on June 1, 2015. The Board’s approval of the Agreement with respect to the Funds was based on consideration and evaluation of a variety of specific factors discussed at these meetings and at prior meetings, including:
| 1. | the nature, extent and quality of the services provided to the Funds under the Agreement, including the resources of CSIM and its affiliates dedicated to the Funds; |
| 2. | each Fund’s investment performance and how it compared to that of certain other comparable mutual funds; |
| 3. | each Fund’s expenses and how those expenses compared to those of certain other comparable mutual funds, exchange-traded funds and other accounts; |
| 4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to each Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
| 5. | the extent to which economies of scale would be realized as the Funds grow and whether fee levels in the Agreement reflect those economies of scale for the benefit of Fund investors. |
Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds. In this regard, the Trustees evaluated, among other things, CSIM’s personnel, experience, track record and compliance program. The Trustees also considered information provided by CSIM relating to each Fund’s portfolio management team, portfolio strategy and risk oversight structure, and internal investment guidelines. The Trustees also considered investments in CSIM’s mutual fund infrastructure, Schwab’s wide range of products, services, and channel alternatives such as investment and research tools, internet access, and an array of account features that benefit the Funds and certain of their shareholders. The Trustees also considered Schwab’s excellent reputation as a full service brokerage firm and its overall financial condition. Finally, the Trustees considered that the vast majority of the Funds’ shareholders are also brokerage clients of Schwab. Following such evaluation, the Board concluded, within the context of its full deliberations, that the nature, extent and quality of services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds supported renewal of the Agreement with respect to the Funds.
Fund Performance. The Board considered Fund performance in determining whether to renew the Agreement with respect to the Funds. Specifically, the Trustees considered each Fund’s performance relative to a peer category of other mutual funds and appropriate indices/benchmarks, in light of total return, yield, if applicable, and market trends. As part of this review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the third party who prepared the peer category analysis. In evaluating the performance of each Fund, the Trustees considered both risk and shareholder risk expectations for such Fund and the appropriateness of the benchmark used to compare the performance of each Fund. The Trustees further considered the level of Fund performance in the context of their review of Fund expenses and adviser profitability discussed below. Following such evaluation the Board concluded, within the context of its full deliberations, that the performance of the Funds supported renewal of the Agreement with respect to the Funds.
Fund Expenses. With respect to the Funds’ expenses, the Trustees considered the rate of compensation called for by the Agreement, and each Fund’s net operating expense ratio, in each case, in comparison to those of a peer group of mutual funds, such peer groups and comparisons having been selected and calculated by an independent third party. The Trustees considered the effects of CSIM’s and Schwab’s historical practice of voluntarily waiving management and other fees to prevent total Fund expenses from exceeding a specified cap. The Trustees also considered CSIM’s contractual commitment to keep each Fund’s expense cap for so long as CSIM serves as the adviser to such Fund. The Trustees also considered fees charged by CSIM to other mutual funds and to other types of accounts, such as exchange-traded funds and separately managed accounts, but, with respect to such other types of accounts, accorded less weight to such comparisons due to the different legal, regulatory, compliance and operating features of mutual funds as compared to these other types of accounts. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expenses of the Funds are reasonable and supported renewal of the Agreement with respect to the Funds.
Profitability. With regard to profitability, the Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly. In this connection, the
Trustees reviewed management’s profitability analyses, together with certain commentary thereon from an independent accounting firm. The Trustees also considered any other benefits derived by CSIM from its relationship with the Funds, such as whether, by virtue of its management of the Funds, CSIM obtains investment information or other research resources that aid it in providing advisory services to other clients. The Trustees considered whether the varied levels of compensation and profitability under the Agreement and other service agreements were reasonable and justified in light of the quality of all services rendered to each Fund by CSIM and its affiliates. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM is reasonable and supported renewal of the Agreement with respect to the Funds.
Economies of Scale. The Trustees considered the existence of any economies of scale and whether those are passed along to a Fund’s shareholders through a graduated investment advisory fee schedule or other means, including any fee waivers by CSIM and its affiliates. In this regard, and consistent with their consideration of Fund expenses, the Trustees considered that CSIM and Schwab have committed resources to minimize the effects on shareholders of diseconomies of scale during periods when fund assets were relatively small through their contractual expense waivers. For example, such diseconomies of scale may particularly affect newer funds or funds with investment strategies that are from time to time out of favor, but shareholders may benefit from the continued availability of such funds at subsidized expense levels. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the Funds obtain reasonable benefit from economies of scale.
In the course of their deliberations, the Trustees did not identify any particular information or factor that was all important or controlling. Based on the Trustees’ deliberation and their evaluation of the information described above, the Board, including all of the Independent Trustees, approved the continuation of the Agreement with respect to the Funds and concluded that the compensation under the Agreement with respect to the Funds is fair and reasonable in light of such services and expenses and such other matters as the Trustees have considered to be relevant in the exercise of their reasonable judgment.
Trustees and Officers
The tables below give information about the trustees and officers of Schwab Capital Trust prior to January 1, 2016, which includes the funds covered in this report. The “Fund Complex” includes The Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust, Laudus Trust and Laudus Institutional Trust. The Fund Complex includes 95 funds.
The address for all trustees and officers is 211 Main Street, San Francisco, CA 94105. You can find more information about the trustees and officers in the funds’ Statement of Additional Information, which is available free by calling 1-800-435-4000.
| Independent Trustees |
Name, Year of Birth,
and Position(s) with
the trust (Terms 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 |
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 (Oct. 1979 – present); Senior Fellow Stanford Institute for Economic Policy Research (2000 – present); Professor of Public Policy, Stanford University (1994 – 2015). | 74 | Director, Gilead Sciences, Inc. (2005 – present)
|
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. | 74 | 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) (Dec. 2008 – Sept. 2013) | 74 | Director, KLA-Tencor Corporation (2008 – present) |
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) (Jan. 2015 – present); Partner, Kudu Advisors, LLC (financial services) (June 2008 – Jan. 2015); Advisor, Asset International, Inc. (publisher of financial services information) (Aug. 2008 – Jan. 2015). | 95 | None |
| Independent Trustees (continued) |
Name, Year of Birth,
and Position(s) with
the trust (Terms 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 |
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) | Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (Mar. 1990 – present). | 74 | Director, Eaton (2012 – present)
Director and Chairman 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) (Jan. 2008 – present); Partner, Colgin Partners, LLC (vineyards) (Feb. 1998 – present). | 74 | Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 – present)
Lead Independent Director and Chair of Audit Committee, OUTFRONT Media Inc. (2014 – present) |
| Interested Trustees |
Name, Year of Birth,
and Position(s) with
the trust (Terms 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 |
Charles R. Schwab2
1937
Chairman and Trustee
(Chairman and Trustee of The Charles Schwab Family of Funds since 1989; Schwab Investments since 1991; Schwab Capital Trust since 1993; Schwab Annuity Portfolios since 1994; Laudus Trust and Laudus Institutional Trust since 2010) | Chairman and Director, The Charles Schwab Corporation (1986 – present); Chairman and Director of Charles Schwab & Co., Inc. (1971 – present); Chairman and Director of Charles Schwab Investment Management, Inc. (1989 – present); Chairman and Director of Charles Schwab Bank (2003 – present); Chairman and Chief Executive Officer of Schwab (SIS) Holdings Inc. I and Schwab International Holdings, Inc. (1996 – present); and Director, Chairman and Chief Executive Officer, Schwab Holdings, Inc. (1979 – present). | 74 | Chairman and Director, The Charles Schwab Corporation (1986 – present)
Director, Yahoo! Inc. (2014 – present) |
Walter W. Bettinger II2
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 and Charles Schwab & Co., Inc. (2008 – present); Director, Charles Schwab Bank (2006 – present); and Director, Schwab Holdings, Inc. (2008 – present). | 95 | Director, The Charles Schwab Corporation (2008 – present) |
| Officers of the Trust |
Name, Year of Birth, and Position(s)
with the trust (Terms of office, and
length of Time Served3) | Principal Occupations During the Past Five Years |
Marie Chandoha
1961
President and Chief Executive Officer
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2010) | Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer (Sept. 2010 – Oct. 2011), Charles Schwab Investment Management, Inc.; President, Chief Executive Officer (Dec. 2010 – present), and Chief Investment Officer (Sept. 2010 – Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Director, Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited (Jan. 2011 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (Mar. 2007 – Aug. 2010). |
George Pereira
1964
Treasurer and Principal Financial Officer, Schwab Funds
Treasurer and Chief Financial Officer, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2004; Laudus Trust and Laudus Institutional Trust since 2006) | Senior Vice President and Chief Financial Officer (Nov. 2004 – present), Chief Operating Officer (Jan. 2011 – present), Charles Schwab Investment Management, Inc.; Treasurer and Chief Financial Officer, Laudus Funds (June 2006 – present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – present) and Schwab ETFs (Oct. 2009 – present); Director, Charles Schwab Worldwide 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 Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust 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 – Jan. 2009). |
Brett Wander
1961
Senior Vice President and Chief Investment Officer – Fixed Income
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust 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 (Jan. 2008 – Oct. 2010); Director of Alpha Strategies Loomis, Sayles & Company (April 2006 – Jan. 2008). |
David Lekich
1964
Chief Legal Officer and Secretary, Schwab Funds
Vice President and Assistant Clerk, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2011) | Senior Vice President (Sept. 2011 – present), Vice President (Mar. 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present), Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (April 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; Vice President and Assistant Clerk, Laudus Funds (April 2011 – present); Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs. |
Catherine MacGregor
1964
Vice President and Assistant Secretary, Schwab Funds
Chief Legal Officer, Vice President and Clerk, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2005) | Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 – present); Vice President (Dec. 2005 – present), Chief Legal Officer and Clerk (Mar. 2007 – present), Laudus Funds; Vice President (Nov. 2005 – present) and Assistant Secretary (June 2007 – present), Schwab Funds; Vice President and Assistant Secretary, Schwab ETFs (Oct. 2009 – present). |
| 1 | Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab and Laudus Funds’ retirement policy 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 Schwab Funds or Laudus Funds to retire from all Boards upon their required retirement date from either Board. |
| 2 | Mr. Schwab and Mr. Bettinger are Interested Trustees because they own stock of The Charles Schwab Corporation, the parent company of the investment adviser. |
| 3 | The President, Treasurer and Secretary/Clerk 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 Boards. |
Glossary
asset allocation The practice of dividing a portfolio among different asset classes, with each asset class assigned a particular percentage.
asset class A group of securities with similar structure and basic characteristics. Stocks, bonds and cash are the three main examples of asset classes.
Barclays U.S. Aggregate Bond Index A broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid ARM pass-throughs), asset-backed securities, and commercial mortgage-backed securities.
Barclays U.S. Aggregate Intermediate Bond Index An index that represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities.
Barclays U.S. Government/Credit: 1 – 5 Years Index An index that includes investment-grade government and corporate bonds that are denominated in U.S. dollars and have maturities of one to five years. Bonds are represented in the index in proportion to their market value.
Barclays U.S. TIPS (Treasury Inflation-Protected Securities) Index An index that measures the performance of fixed income securities with fixed-rate coupon payments that adjust for inflation, as measured by the Consumer Price Index for All Urban Consumers.
Barclays U.S. Treasury Bills 1 – 3 Months Index An index that includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months and more than 1 month, are rated investment grade, and have $250 million or more of outstanding face value.
bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the coupon rate) until a specified date (the maturity date), at which time the issuer returns the money borrowed (principal or face value) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.”
An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.
bond fund A bond fund is subject to the same credit, interest rate, and inflation risks as bonds. In addition, a bond fund incurs ongoing fees and expenses. A bond fund’s net asset value will fluctuate with the price of the underlying bonds and the portfolio turnover activity; return of principal is not guaranteed.
cap, capitalization See “market cap.”
capital gain, capital loss the difference between the amount paid for an investment and its value at a later time. If the investment has been sold, the capital gain or loss is considered a realized gain or loss. If the investment is still held, the capital gain or loss is considered unrealized appreciation or depreciation.
Citigroup Non-U.S. Dollar World Government Bond Index An index that measures the total rate of return performance for the government bonds of 23 countries, excluding the U.S., with a remaining maturity of at least one year.
Dow Jones U.S. Total Stock Market Index An index that measures all U.S. equity securities with readily available prices.
expense ratio The amount that is taken from a mutual fund’s assets each year to cover the fund’s operating expenses. An expense ratio of 0.50% means that a fund’s expenses amount to half of one percent of its average net assets a year.
FTSE EPRA/NAREIT Global Index An index that is designed to provide a diverse representation of publicly traded equity REITs and listed property companies worldwide.
market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.
MSCI EAFE (Europe, Australasia, Far East) Index A free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. & Canada. The Net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes; returns are calculated applying dividend withholding rates applicable to non-resident persons who do not benefit from double taxation treaties.
MSCI Emerging Markets Index A free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.
net asset value (NAV) The value of one share of a mutual fund. NAV is calculated by taking the fund’s total assets, subtracting liabilities, and dividing by the number of shares outstanding.
outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.
Russell 2000 Index An index that measures the performance of the small-cap segment of the U.S. equity universe. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.
S&P 500 Index A market capitalization index that is designed to measure the performance of 500 leading publicly held companies in leading industries of the U.S. economy.
stock A share of ownership, or equity, in the issuing company.
Target 2010 Composite Index A custom blended index developed by CSIM based on the 2010 fund’s asset allocation glide schedule and will become more conservative as time elapses. Effective March 1, 2014, the Dow Jones U.S. Total Stock Market Index was replaced by a combination of the S&P 500 Index and the Russell 2000 Index. Effective October 1, 2015, the composite is derived using the following portion allocations: 25.2% S&P 500 Index, 2.2% Russell 2000 Index,
8.8% MSCI EAFE Index (Net), 37.2% Barclays U.S. Aggregate Bond Index, 1.9% FTSE EPRA/NAREIT Global Index (Net), 6.2% Barclays U.S. TIPS Index, 1.3% Citigroup Non-U.S. Dollar World Government Bond Index, 1.3% Barclays U.S. Government/Credit Index, 9.5% Barclays U.S. Government/Credit: 1-5 Years Index, and 6.5% Barclays U.S. Treasury Bills: 1-3 Months Index. The components that make up the composite index may vary over time. The composite index represents target allocations for 2015. Percentages listed may not total to 100% due to rounding.
Target 2015 Composite Index A custom blended index developed by CSIM based on the 2015 fund’s asset allocation glide schedule and will become more conservative as time elapses. Effective March 1, 2014, the Dow Jones U.S. Total Stock Market Index was replaced by a combination of the S&P 500 Index and the Russell 2000 Index. Effective October 1, 2015, the composite is derived using the following portion allocations: 26.4% S&P 500 Index, 2.3% Russell 2000 Index, 9.3% MSCI EAFE Index (Net), 36.0% Barclays U.S. Aggregate Bond Index, 2.0% FTSE EPRA/NAREIT Global Index (Net), 6.0% Barclays U.S. TIPS Index, 1.4% Citigroup Non-U.S. Dollar World Government Bond Index, 1.4% Barclays U.S. Government/Credit Index, 9.1% Barclays U.S. Government/Credit: 1-5 Years Index, and 6.2% Barclays U.S. Treasury Bills: 1-3 Months Index. The components that make up the composite index may vary over time. The composite index represents target allocations for 2015. Percentages listed may not total to 100% due to rounding.
Target 2020 Composite Index A custom blended index developed by CSIM based on the 2020 fund’s asset allocation glide schedule and will become more conservative as time elapses. Effective March 1, 2014, the Dow Jones U.S. Total Stock Market Index was replaced by a combination of the S&P 500 Index and the Russell 2000 Index. Effective October 1, 2015, the composite is derived using the following portion allocations: 34.6% S&P 500 Index, 3.4% Russell 2000 Index, 13.3% MSCI EAFE Index (Net), 28.3% Barclays U.S. Aggregate Bond Index, 2.7% FTSE EPRA/NAREIT Global Index (Net), 0.9% Barclays U.S. Intermediate Aggregate Bond Index, 0.5% MSCI Emerging Markets Index Net), 2.3% Barclays U.S. TIPS Index, 1.8% Citigroup Non-U.S. Dollar World Government Bond Index, 2.6% Barclays U.S. Government/Credit Index, 5.4% Barclays U.S. Government/Credit: 1-5 Years Index, and 4.4% Barclays U.S. Treasury Bills: 1-3 Months Index. The components that make up the composite index may vary over time. The composite index represents target allocations for 2015. Percentages listed may not total to 100% due to rounding.
Target 2025 Composite Index A custom blended index developed by CSIM based on the 2025 fund’s asset allocation glide schedule and will become more conservative as time elapses. Effective March 1, 2014, the Dow Jones U.S. Total Stock Market Index was replaced by a combination of the S&P 500 Index and the Russell 2000 Index. Effective October 1, 2015, the composite is derived using the following portion allocations: 40.4% S&P 500 Index, 4.5% Russell 2000 Index, 15.9% MSCI EAFE Index (Net), 21.7% Barclays U.S. Aggregate Bond Index, 3.3% FTSE EPRA/NAREIT Global Index (Net), 1.3% Barclays U.S. Intermediate Aggregate Bond Index, 1.0% MSCI Emerging Markets Index (Net), 0.5% Barclays U.S. TIPS Index, 1.8% Citigroup Non-U.S. Dollar World Government Bond Index, 3.2% Barclays U.S. Government/Credit Index, 3.2% Barclays U.S. Government/Credit: 1-5 Years Index, and 3.3%
Barclays U.S. Treasury Bills: 1-3 Months Index. The components that make up the composite index may vary over time. The composite index represents target allocations for 2015. Percentages listed may not total to 100% due to rounding.
Target 2030 Composite Index A custom blended index developed by CSIM based on the 2030 fund’s asset allocation glide schedule and will become more conservative as time elapses. Effective March 1, 2014, the Dow Jones U.S. Total Stock Market Index was replaced by a combination of the S&P 500 Index and the Russell 2000 Index. Effective October 1, 2015, the composite is derived using the following portion allocations: 44.6% S&P 500 Index, 5.5% Russell 2000 Index, 17.9% MSCI EAFE Index (Net), 16.1% Barclays U.S. Aggregate Bond Index, 3.7% FTSE EPRA/NAREIT Global Index (Net), 1.3% Barclays U.S. Intermediate Aggregate Bond Index, 1.5% MSCI Emerging Markets Index (Net), 1.6% Citigroup Non-U.S. Dollar World Government Bond Index, 3.2% Barclays U.S. Government/Credit Index, 1.9% Barclays U.S. Government/Credit: 1-5 Years Index, and 2.7% Barclays U.S. Treasury Bills: 1-3 Months Index. The components that make up the composite index may vary over time. The composite index represents target allocations for 2015. Percentages listed may not total to 100% due to rounding.
Target 2035 Composite Index A custom blended index developed by CSIM based on the 2035 fund’s asset allocation glide schedule and will become more conservative as time elapses. Effective March 1, 2014, the Dow Jones U.S. Total Stock Market Index was replaced by a combination of the S&P 500 Index and the Russell 2000 Index. Effective October 1, 2015, the composite is derived using the following portion allocations: 47.8% S&P 500 Index, 6.5% Russell 2000 Index, 19.6% MSCI EAFE Index (Net), 11.2% Barclays U.S. Aggregate Bond Index, 4.0% FTSE EPRA/NAREIT Global Index (Net), 1.3% Barclays U.S. Intermediate Aggregate Bond Index, 2.1% MSCI Emerging Markets Index (Net), 1.3% Citigroup Non-U.S. Dollar World Government Bond Index, 2.9% Barclays U.S. Government/Credit Index, 1.0% Barclays U.S. Government/Credit: 1-5 Years Index, and 2.4% Barclays U.S. Treasury Bills: 1-3 Months Index. The components that make up the composite index may vary over time. The composite index represents target allocations for 2015. Percentages listed may not total to 100% due to rounding.
Target 2040 Composite Index A custom blended index developed by CSIM based on the 2040 fund’s asset allocation glide schedule and will become more conservative as time elapses. Effective March 1, 2014, the Dow Jones U.S. Total Stock Market Index was replaced by a combination of the S&P 500 Index and the Russell 2000 Index. Effective October 1, 2015, the composite is derived using the following portion allocations: 50.6% S&P 500 Index, 7.6% Russell 2000 Index, 21.2% MSCI EAFE Index (Net), 6.8% Barclays U.S. Aggregate Bond Index, 4.3% FTSE EPRA/NAREIT Global Index (Net), 1.0% Barclays U.S. Intermediate Aggregate Bond Index, 2.7% MSCI Emerging Markets Index (Net), 0.9% Citigroup Non-U.S. Dollar World Government Bond Index, 2.2% Barclays U.S. Government/Credit Index, 0.4% Barclays U.S. Government/Credit: 1-5 Years Index, and 2.1% Barclays U.S. Treasury Bills: 1-3 Months Index. The components that make up the composite index may vary over time. The composite index represents target allocations for 2015. Percentages listed may not total to 100% due to rounding.
Target 2045 Composite Index A custom blended index developed by CSIM based on the 2045 fund’s asset allocation glide schedule and will become more conservative as time elapses. Effective March 1, 2014, the Dow Jones U.S. Total Stock Market Index was replaced by a combination of the S&P 500 Index and the Russell 2000 Index. Effective October 1, 2015, the composite is derived using the following portion allocations: 52.0% S&P 500 Index, 8.3% Russell 2000 Index, 22.1% MSCI EAFE Index (Net), 4.6% Barclays U.S. Aggregate Bond Index, 4.5% FTSE EPRA/NAREIT Global Index (Net), 0.8% Barclays U.S. Intermediate Aggregate Bond Index, 3.0% MSCI Emerging Markets Index (Net), 0.7% Citigroup Non-U.S. Dollar World Government Bond Index, 1.7% Barclays U.S. Government/Credit Index, 0.2% Barclays U.S. Government/Credit: 1-5 Years Index, and 2.1% Barclays U.S. Treasury Bills: 1-3 Months Index. The components that make up the composite index may vary over time. The composite index represents target allocations for 2015. Percentages listed may not total to 100% due to rounding.
Target 2050 Composite Index A custom blended index developed by CSIM based on the 2050 fund’s asset allocation glide schedule and will become more conservative as time elapses. Effective March 1, 2014, the Dow Jones U.S. Total Stock Market Index was replaced by a combination of the S&P 500 Index and the Russell 2000 Index. Effective October 1, 2015, the composite is derived using the following portion allocations: 52.9% S&P 500 Index, 8.9% Russell 2000 Index, 22.8% MSCI EAFE Index (Net), 3.1% Barclays U.S. Aggregate Bond Index, 4.6% FTSE EPRA/NAREIT Global Index (Net), 0.6% Barclays U.S. Intermediate Aggregate Bond Index, 3.3% MSCI Emerging Markets Index (Net), 0.5% Citigroup Non-U.S. Dollar World Government Bond Index, 1.2% Barclays U.S. Government/Credit Index, 0.1% Barclays
U.S. Government/Credit: 1-5 Years Index, and 2.0% Barclays U.S. Treasury Bills: 1-3 Months Index. The components that make up the composite index may vary over time. The composite index represents target allocations for 2015. Percentages listed may not total to 100% due to rounding.
Target 2055 Composite Index A custom blended index developed by CSIM based on the 2055 fund’s asset allocation glide schedule and will become more conservative as time elapses. Effective March 1, 2014, the Dow Jones U.S. Total Stock Market Index was replaced by a combination of the S&P 500 Index and the Russell 2000 Index. Effective October 1, 2015, the composite is derived using the following portion allocations: 53.8% S&P 500 Index, 9.5% Russell 2000 Index, 23.4% MSCI EAFE Index (Net), 1.6% Barclays U.S. Aggregate Bond Index, 4.8% FTSE EPRA/NAREIT Global Index (Net), 0.4% Barclays U.S. Intermediate Aggregate Bond Index, 3.6% MSCI Emerging Markets Index (Net), 0.3% Citigroup Non-U.S. Dollar World Government Bond Index, 0.7% Barclays U.S. Government/Credit Index, and 2.0% Barclays U.S. Treasury Bills: 1-3 Months Index. The components that make up the composite index may vary over time. The composite index represents target allocations for 2015. Percentages listed may not total to 100% due to rounding.
total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.
weighted average For mutual funds, an average that gives the same weight to each security as the security represents in the fund’s portfolio.
yield The income paid out by an investment, expressed as a percentage of the investment’s market value.
PRIVACY NOTICE
THIS IS NOT PART OF THE SHAREHOLDER REPORT
A Commitment to Your Privacy
Your Privacy Is Not for Sale
We do not and will not sell your personal information to anyone, for any reason.
We are committed to protecting the privacy of information we maintain about you. Below are details about our commitment, including the types of information we collect and how we use and share that information. This Privacy Notice applies to you only if you are an individual who invests directly in the funds by placing orders through the funds’ transfer agent. If you place orders through your brokerage account at Charles Schwab & Co., Inc. or an account with another broker-dealer, investment advisor, 401(k) plan, employee benefit plan, administrator, bank or other financial intermediary, you are covered by the privacy policies of that financial institution and should consult those policies.
How We Collect Information About You
We collect personal information about you in a number of ways.
• APPLICATION AND REGISTRATION
INFORMATION.
We collect personal information from you when you open an account or utilize one of our services. We may also collect information about you from third parties such as consumer reporting agencies to verify your identity. The information we collect may include personal information, including your Social Security number, as well as details about your interests, investments and investment experience.
• TRANSACTION AND EXPERIENCE
INFORMATION.
Once your account has been opened, we collect and maintain personal information about your account activity, including your transactions, balances, positions and history. This information allows us to administer your account and provide the services you have requested.
• WEBSITE USAGE.
When you visit our websites, we may use devices known as “cookies,” graphic interchange format files (GIFs), or other similar web tools to enhance your web experience. These
tools help us to recognize you, maintain your web session, and provide a more personalized experience. To learn more, please go to www.schwab.com/privacy.
How We Share and Use Your Information
We provide access to information about you to our affiliated companies, outside companies and other third parties in certain limited circumstances, including:
• to help us process transactions for your account;
• when we use other companies to provide services for us, such as printing and mailing your account statements;
• when we believe that disclosure is required or permitted under law (for example, to cooperate with regulators or law enforcement, resolve consumer disputes, perform credit/authentication checks, or for risk control).
State Laws
We will comply with state laws that apply to the disclosure or use of information about you.
Safeguarding Your Information — Security Is a
Partnership
We take precautions to ensure the information we collect about you is protected and is accessed only by authorized individuals or organizations.
Companies we use to provide support services are not allowed to use information about our shareholders for their own purposes and are contractually obligated to maintain strict confidentiality. We limit their use of information to the performance of the specific services we have requested.
We restrict access to personal information by our employees and agents. Our employees are trained about privacy and are required to safeguard personal information.
We maintain physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
Contact Us
To provide us with updated information, report suspected fraud or identity theft, or for any other questions, please call the number below.
Schwab Funds® direct investors: 1-800-407-0256
© 2015 Schwab Funds. All rights reserved.
Schwab Funds® offers you an extensive family of mutual funds, each one based on a clearly defined investment approach and using disciplined management strategies. The list at right shows all currently available Schwab Funds.
Whether you are an experienced investor or just starting out, Schwab Funds can help you achieve your financial goals. An investor should consider a fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information can be found in the fund’s prospectus. Please call 1-800-435-4000 for a prospectus and brochure for any Schwab Fund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus.
Proxy Voting Policies, Procedures and Results
A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting the Schwab Funds’ website at www.csimfunds.com/schwabfunds_prospectus, the SEC’s website at www.sec.gov, or by contacting Schwab Funds at 1-800-435-4000.
Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting the fund’s website at www.csimfunds.com/schwabfunds_prospectus or the SEC’s website at www.sec.gov.
The Schwab Funds Family®
Stock Funds
Schwab Core Equity Fund™
Schwab Dividend Equity Fund™
Schwab Large-Cap Growth Fund™
Schwab Small-Cap Equity Fund™
Schwab Hedged Equity Fund™
Schwab Financial Services Fund™
Schwab Health Care Fund™
Schwab® International Core Equity Fund
Schwab Fundamental US Large Company Index Fund
Schwab Fundamental US Small Company Index Fund
Schwab Fundamental International Large Company Index Fund
Schwab Fundamental International Small Company Index Fund
Schwab Fundamental Emerging Markets Large Company Index Fund
Schwab Fundamental Global Real Estate Index Fund
Schwab Global Real Estate Fund™
Schwab® S&P 500 Index Fund
Schwab 1000 Index® Fund
Schwab Small-Cap Index Fund®
Schwab Total Stock Market Index Fund®
Schwab International Index Fund®
Asset Allocation Funds
Schwab Balanced Fund™
Schwab MarketTrack All Equity Portfolio™
Schwab MarketTrack Growth Portfolio™
Schwab MarketTrack Balanced Portfolio™
Schwab MarketTrack Conservative Portfolio™
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab 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
Bond Funds
Schwab Short-Term Bond Market Fund™
Schwab Intermediate-Term Bond Fund™
Schwab Total Bond Market Fund™
Schwab GNMA Fund™
Schwab® Treasury Inflation Protected Securities Index Fund
Schwab Tax-Free Bond Fund™
Schwab California Tax-Free Bond Fund™
Schwab Money Funds
Schwab offers an array of money market funds1. Choose from taxable or tax-advantaged alternatives. Many can be linked to your eligible Schwab account to “sweep” cash balances automatically, subject to availability, when you’re between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments®.
| 1 | Investments in money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency and, although they seek to preserve the value of your investment at $1 per share, it is possible to lose money. |
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
Funds
Schwab Funds®
1-800-435-4000
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
© 2015 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC®
Printed on recycled paper.
MFR33732-10
00156962
Annual report dated October 31, 2015, enclosed.
Schwab Balanced Fund™
Go paperless today.
Simplify your financial life
by viewing these documents online.
Sign up at schwab.com/paperless
This wrapper is not part of the shareholder report.
Schwab Balanced Fund
Annual Report
October 31, 2015
This page is intentionally left blank.
Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).
Distributor: Charles Schwab & Co., Inc. (Schwab).
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
| Total Return for the 12 Months Ended October 31, 2015 |
| Schwab Balanced Fund (Ticker Symbol: SWOBX) | 3.95% |
| Balanced Blended Index | 3.61% |
| Fund Category: Morningstar Moderate Allocation | 0.61% |
| Performance Details | pages 6-7 |
| |
| Minimum Initial Investment1 | $100 |
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
The components that make up the composite index may vary over time. For index definition, please see the Glossary.
Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, a fund’s total return would have been lower. Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date.
| 1 | Please see the fund's prospectus for further detail and eligibility requirements. |
Marie Chandoha is President and CEO of Charles Schwab Investment Management, Inc. and the fund covered in this report.
Dear Shareholder,
At Charles Schwab Investment Management, our goal is to provide foundational products with consistent performance that enable investors to build well-diversified portfolios. The Schwab Balanced Fund offers a diversified asset allocation to U.S. equity, fixed income, and cash and cash equivalents. The fund utilizes a fund-of-funds strategy and seeks to provide a mix of growth and fixed income opportunities by investing in both equities and fixed income securities.
For the 12-month reporting period ended October 31, 2015, the fund returned 3.95% compared with the 3.61% return of the Balanced Blended Index. The performance of the fund reflected modest positive returns for the underlying investment strategies.
Despite market volatility later in the period which was stimulated by concerns about global growth and speculation that the Fed might raise interest rates, the S&P 500 Index returned 5.2% for the period. The bond market generated modest returns amid the low interest rate environment, relatively stable credit conditions and limited inflation. Reflecting these conditions, the Barclays U.S. Aggregate Bond Index returned 2.0%.
Asset Class Performance Comparison % returns during the 12 months ended 10/31/2015
Index figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Past performance is not an indication of future results.
For index definitions, please see the Glossary.
Data source: Index provider websites and CSIM.
Nothing in this report represents a recommendation of a security by the investment adviser.
Management views and portfolio holdings may have changed since the report date.
From the President continued
For the 12-month reporting period ended October 31, 2015, the fund returned 3.95% compared with the 3.61% return of the Balanced Blended Index.
For more information about the Schwab Balanced Fund, please continue reading this report. In addition, you can find more details about this fund by visiting our website at www.csimfunds.com. We are also happy to hear from you at 1-800-435-4000.
Sincerely,
 | Zifan Tang, Ph.D., CFA, Managing Director and Head of Asset Allocation Strategies, leads the portfolio management team and has overall responsibility for all aspects of the management of the fund. She was appointed portfolio manager of the fund in February 2012. Prior to joining CSIM in 2012, Ms. Tang was a product manager at Thomson Reuters and, from 1997 to 2009, worked as a portfolio manager at Barclays Global Investors, which was subsequently acquired by BlackRock. |
Schwab Balanced Fund
The Schwab Balanced Fund (the fund) seeks capital growth and income. To pursue its goal, the fund generally invests in a diversified group of other Schwab and/or Laudus Funds, in accordance with its target portfolio allocation. Normally, the fund invests 55% to 65% of its assets in equity securities (including stocks and equity funds) and 35% to 45% in fixed income securities (including bonds and fixed income funds), and cash or cash equivalents (including money market funds). The fund’s allocation is designed to provide a mix of the growth opportunities of stock investing with the income opportunities of bonds and other fixed income securities. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. U.S. stocks posted modest gains for the 12-month report period on mixed economic data. The S&P 500 Index returned 5.2%, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest rate hike. The Barclays U.S. Aggregate Bond Index returned 2.0% for the period.
Performance. For the 12-month period ended October 31, 2015, the fund returned 3.95%. The fund’s internally calculated comparative index—the Balanced Blended Index (the index)—returned 3.61%.
Positioning and Strategies. Over the reporting period, the fund’s asset allocations were broadly in line with those of the index.
Of the fund’s three underlying U.S. equity funds, the greatest contributions to total return for the reporting period came from the Schwab Core Equity Fund, which returned 5.6% and constituted the fund’s largest position, and the Laudus U.S. Large Cap Growth Fund, which returned 8.6%. On a relative basis, these two funds also contributed to the fund’s outperformance of the index. The Laudus Small-Cap MarketMasters Fund posted a slightly negative return and detracted from the fund’s performance relative to the index.
The fund’s fixed income allocation generated a positive return that contributed to the fund’s absolute performance—the Schwab Total Bond Market Fund and the Schwab Intermediate-Term Bond Fund each returned 1.7%. Both funds, however, slightly detracted from the fund’s performance relative to the index.
As of 10/31/15:
| Statistics |
| Number of Holdings | 6 |
| Portfolio Turnover Rate | 5% |
| Asset Class Weightings % of Investments |
| Equity Funds – Large-Cap | 50.3% |
| Fixed-Income Funds – Intermediate-Term Bond | 36.3% |
| Equity Funds – Small-Cap | 10.4% |
| Money Market Funds | 3.0% |
| Total | 100.0% |
| Top Holdings % of Net Assets1,2 |
| Schwab Core Equity Fund | 35.1% |
| Schwab Total Bond Market Fund | 24.6% |
| Laudus U.S. Large Cap Growth Fund | 15.1% |
| Schwab Intermediate-Term Bond Fund | 11.7% |
| Laudus Small-Cap MarketMasters Fund, Select Shares | 10.4% |
| Total | 96.9% |
Management views and portfolio holdings may have changed since the report date.
Small-company stocks are subject to greater volatility than many other asset classes.
The Laudus U.S. Large Cap Growth Fund is part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.
| 1 | This list is not a recommendation of any security by the investment adviser. |
| 2 | The holdings listed exclude any temporary liquidity investments. |
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1
Average Annual Total Returns1,2
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Balanced Fund (11/18/96) | 3.95% | 9.37% | 5.80% |
| Balanced Blended Index | 3.61% | 9.56% | 6.73% |
| S&P 500® Index | 5.20% | 14.33% | 7.85% |
| Barclays U.S. Aggregate Bond Index | 1.96% | 3.03% | 4.72% |
| Fund Category: Morningstar Moderate Allocation | 0.61% | 7.75% | 5.74% |
Fund Expense Ratios3: Net 0.62%; Gross 0.71%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
From June 3, 2002 to February 28, 2008, the fund used a manager of managers strategy, and therefore its performance during this time does not reflect the fund’s current multi-fund strategy and may have been different if it did.
| 1 | Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund's returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.62%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Fund Expenses (Unaudited)
Examples for a $1,000 Investment
As a fund shareholder, you may incur two types of costs: (1) transaction costs, such as redemption fees; and (2) ongoing costs, including management fees, transfer agent and shareholder services fees, and other fund expenses.
The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in the fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six months beginning May 1, 2015 and held through October 31, 2015.
Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number given for the fund under the heading entitled “Expenses Paid During Period.”
Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. Therefore, the hypothetical return lines of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | Expense Ratio1
(Annualized) | Beginning
Account Value
at 5/1/15 | Ending
Account Value
(Net of Expenses)
at 10/31/15 | Expenses Paid
During Period2
5/1/15–10/31/15 |
| Schwab Balanced Fund | | | | |
| Actual Return | 0.00% | $1,000.00 | $1,000.00 | $0.00 |
| Hypothetical 5% Return | 0.00% | $1,000.00 | $1,025.20 | $0.00 |
| 1 | Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights. The expenses incurred by the underlying funds in which the fund invests are not included in this ratio. |
| 2 | Expenses for the fund are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 184 days of the period, and divided by the 365 days of the fiscal year. |
Schwab Balanced Fund
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $15.56 | $14.28 | $12.51 | $11.61 | $11.00 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.18 | 0.16 | 0.14 | 0.19 | 0.17 | |
| Net realized and unrealized gains (losses) | 0.42 | 1.33 | 1.85 | 0.88 | 0.63 | |
| Total from investment operations | 0.60 | 1.49 | 1.99 | 1.07 | 0.80 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.34) | (0.21) | (0.22) | (0.17) | (0.19) | |
| Distributions from net realized gains | (0.42) | — | — | — | — | |
| Total distributions | (0.76) | (0.21) | (0.22) | (0.17) | (0.19) | |
| Net asset value at end of period | $15.40 | $15.56 | $14.28 | $12.51 | $11.61 | |
| Total return | 3.95% | 10.52% | 16.13% | 9.36% | 7.28% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses2,3 | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | |
| Gross operating expenses2 | 0.07% | 0.09% | 0.10% | 0.16% | 0.16% | |
| Net investment income (loss) | 1.18% | 1.09% | 1.06% | 1.54% | 1.52% | |
| Portfolio turnover rate | 5% | 27% | 33% | 38% | 53% | |
| Net assets, end of period (x 1,000,000) | $305 | $202 | $165 | $117 | $109 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
3
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses and/or interest expense had not been incurred.
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 99.9% | Other Investment Companies | 276,492,728 | 305,029,454 |
| 99.9% | Total Investments | 276,492,728 | 305,029,454 |
| 0.1% | Other Assets and Liabilities, Net | | 440,578 |
| 100.0% | Net Assets | | 305,470,032 |
| Security | Number
of Shares | Value
($) |
| Other Investment Companies 99.9% of net assets |
| Equity Funds 60.6% |
| Large-Cap 50.2% |
| Laudus U.S. Large Cap Growth Fund *(a) | 2,611,438 | 46,300,784 |
| Schwab Core Equity Fund (a) | 4,640,638 | 107,198,741 |
| | | 153,499,525 |
| Security | Number
of Shares | Value
($) |
| Small-Cap 10.4% |
| Laudus Small-Cap MarketMasters Fund, Select Shares (a) | 1,791,811 | 31,768,809 |
| | | 185,268,334 |
| Fixed-Income Funds 36.3% |
| Intermediate-Term Bond 36.3% |
| Schwab Intermediate-Term Bond Fund (a) | 3,504,525 | 35,781,196 |
| Schwab Total Bond Market Fund (a) | 7,899,025 | 74,961,752 |
| | | 110,742,948 |
| Money Market Fund 3.0% |
| State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (b) | 9,018,172 | 9,018,172 |
| Total Other Investment Companies |
| (Cost $276,492,728) | | 305,029,454 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $279,149,510 and the unrealized appreciation and depreciation were $26,077,218 and ($197,274), respectively, with a net unrealized appreciation of $25,879,944.
| * | Non-income producing security. |
| (a) | Issuer is affiliated with the fund's investment adviser. |
| (b) | The rate shown is the 7-day yield. |
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Other Investment Companies1 | | $305,029,454 | | $— | | $— | | $305,029,454 | |
| Total | | $305,029,454 | | $— | | $— | | $305,029,454 | |
| 1 | As categorized in Portfolio Holdings. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments in affiliated underlying funds, at value (cost $267,474,556) | | $296,011,282 |
| Investments in unaffiliated issuers, at value (cost $9,018,172) | + | 9,018,172 |
| Total investments, at value (cost $276,492,728) | | 305,029,454 |
| Receivables: | | |
| Investments sold | | 2,420,000 |
| Fund shares sold | | 1,083,387 |
| Dividends | | 183,971 |
| Due from investment adviser | | 2,627 |
| Prepaid expenses | + | 18,067 |
| Total assets | | 308,737,506 |
| Liabilities |
| Payables: | | |
| Investments bought | | 2,999,836 |
| Fund shares redeemed | | 211,360 |
| Accrued expenses | + | 56,278 |
| Total liabilities | | 3,267,474 |
| Net Assets |
| Total assets | | 308,737,506 |
| Total liabilities | – | 3,267,474 |
| Net assets | | $305,470,032 |
| Net Assets by Source | | |
| Capital received from investors | | 263,802,473 |
| Net investment income not yet distributed | | 1,469,990 |
| Net realized capital gains | | 11,660,843 |
| Net unrealized capital appreciation | | 28,536,726 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $305,470,032 | | 19,839,313 | | $15.40 |
| | | | | |
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends received from affiliated underlying funds | | $2,860,030 |
| Expenses |
| Shareholder reports | | 48,518 |
| Professional fees | | 33,294 |
| Transfer agent fees | | 28,200 |
| Registration fees | | 27,086 |
| Portfolio accounting fees | | 19,246 |
| Independent trustees' fees | | 7,945 |
| Custodian fees | | 3,252 |
| Proxy fees | | 2,895 |
| Other expenses | + | 6,300 |
| Total expenses | | 176,736 |
| Expense reduction by CSIM | – | 173,841 |
| Net expenses | – | 2,895 |
| Net investment income | | 2,857,135 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 15,711,636 |
| Net realized gains on sales of affiliated underlying funds | | 674,481 |
| Net realized gains on unaffiliated issuers | + | 701 |
| Net realized gains | | 16,386,818 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | + | (9,772,217) |
| Net realized and unrealized gains | | 6,614,601 |
| Increase in net assets resulting from operations | | $9,471,736 |
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $2,857,135 | $2,038,921 |
| Net realized gains | | 16,386,818 | 9,604,665 |
| Net change in unrealized appreciation (depreciation) | + | (9,772,217) | 7,261,754 |
| Increase in net assets from operations | | 9,471,736 | 18,905,340 |
| Distributions to Shareholders | |
| Distributions from net investment income | | (4,612,433) | (2,313,152) |
| Distributions from net realized gains | + | (5,780,880) | — |
| Total distributions | | ($10,393,313) | ($2,313,152) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 9,167,626 | $139,981,488 | 5,653,883 | $82,981,901 |
| Shares reinvested | | 628,361 | 9,532,242 | 147,616 | 2,143,378 |
| Shares redeemed | + | (2,913,119) | (44,685,668) | (4,387,683) | (64,959,175) |
| Net transactions in fund shares | | 6,882,868 | $104,828,062 | 1,413,816 | $20,166,104 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 12,956,445 | $201,563,547 | 11,542,629 | $164,805,255 |
| Total increase | + | 6,882,868 | 103,906,485 | 1,413,816 | 36,758,292 |
| End of period | | 19,839,313 | $305,470,032 | 12,956,445 | $201,563,547 |
| Net investment income not yet distributed | | | $1,469,990 | | $1,157,827 |
1. Business Structure of the Fund:
Schwab Balanced Fund is a series of Schwab Capital Trust (the trust), a no-load, open-end management investment company. The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the 1940 Act). The list below shows all the funds in the trust as of the end of the period, including the fund discussed in this report, which is highlighted:
| Schwab Capital Trust (organized May 7, 1993) | Schwab Target 2010 Fund |
| Schwab Balanced Fund | Schwab Target 2015 Fund |
| Schwab ® S&P 500 Index Fund | Schwab Target 2020 Fund |
| Schwab Small-Cap Index Fund® | Schwab Target 2025 Fund |
| 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 MarketTrack Growth Portfolio™ | Schwab Target 2045 Fund |
| Schwab MarketTrack Balanced Portfolio™ | Schwab Target 2050 Fund |
| Schwab MarketTrack Conservative Portfolio™ | Schwab Target 2055 Fund |
| Laudus Small-Cap MarketMasters Fund™ | Schwab Fundamental US Large Company Index Fund |
| Laudus International MarketMasters Fund™ | Schwab Fundamental US Small Company Index Fund |
| Schwab Core Equity Fund™ | Schwab Fundamental International Large Company Index Fund |
| Schwab Dividend Equity Fund™ | Schwab Fundamental International Small Company Index Fund |
| Schwab Large-Cap Growth Fund™ | Schwab Fundamental Emerging Markets Large Company Index Fund |
| Schwab Small-Cap Equity Fund™ | Schwab Fundamental Global Real Estate Index Fund |
| Schwab Hedged Equity Fund™ | Schwab ® Monthly Income Fund - Moderate Payout |
| Schwab Financial Services Fund™ | Schwab ® Monthly Income Fund - Enhanced Payout |
| Schwab Health Care Fund™ | Schwab ® Monthly Income Fund - Maximum Payout |
| Schwab ® International Core Equity Fund | |
The Schwab Balanced Fund is a single class “fund of funds” which seeks to achieve its investment objective by investing in a diversified group of other Schwab and/or Laudus Funds, but also may invest in other unaffiliated, third party mutual funds, including exchange-traded funds (ETFs). In addition, the fund may invest a portion of its assets directly in equity and fixed-income securities to maintain its allocations.
The fund offers one share class. Shares are bought and sold (subject to a redemption fee, see financial note 8) at closing net asset value per share (NAV), which is the price for all outstanding shares of the fund. Each share has a par value of 1/1,000 of a cent, and the fund's Board of Trustees (the Board) may authorize the issuance of as many shares as necessary.
The fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, the fund may also keep certain assets in segregated accounts, as required by securities law.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies the fund uses in its preparation of financial statements. The fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 Financial Services — Investment Companies. The accounting policies are in conformity with accounting principles generally accepted in the United States of America (GAAP).
The financial statements of the fund should be read in conjunction with the underlying funds' financial statements. For more information about the underlying funds' operations and policies, please refer to those funds' semiannual and annual reports, which are filed and available on the U.S. Securities and Exchange Commission's (SEC) website at www.sec.gov or at the SEC's Public Reference Room in Washington D.C.
(a) Security Valuation:
Under procedures approved by the Board, the investment adviser has formed a Pricing Committee to administer the pricing and valuation of portfolio securities and other assets and to ensure that prices used for internal purposes or provided by third parties reasonably reflect fair market value. Among other things, these procedures allow the fund to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.
The fund values the securities in its portfolio every business day. The fund uses the following policies to value various types of securities:
Financial Notes (continued)
2. Significant Accounting Policies (continued):
• Underlying funds: Mutual funds are valued at their respective NAVs.
• Securities for which no quoted value is available: The Board has adopted procedures to fair value the fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. The fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the fund pursuant to the valuation procedures.
• Short-term securities (60 days or less to maturity): A short-term security may be valued at its amortized cost when it approximates the security's market value.
In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the fund discloses the fair value of its investments in a hierarchy that prioritizes the significant inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). If inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the valuation. If the fund determines that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
The three levels of the fair value hierarchy are as follows:
• Level 1—quoted prices in active markets for identical securities—Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. Investments in mutual funds are valued daily at their NAVs, which are classified as Level 1 prices, without consideration to the classification level of the specific investments held by an underlying fund.
• Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)—Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations.
• Level 3—significant unobservable inputs (including the fund's own assumptions in determining the fair value of investments)—Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the fund in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the fund in the absence of market information. Assumptions used by the fund due to the lack of observable inputs may significantly impact the resulting fair value and therefore the fund's results of operations.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The levels associated with valuing the fund's investments as of October 31, 2015 are disclosed in the Portfolio Holdings.
Financial Notes (continued)
2. Significant Accounting Policies (continued):
(b) Security Transactions:
Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.
(c) Investment Income:
Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying funds are recorded on the date they are effective (the ex-dividend date), although the fund records certain foreign security dividends on the day it learns of the ex-dividend date. Any distributions from underlying funds are recorded in accordance with the character of the distributions as designated by the underlying funds.
(d) Expenses:
Expenses that are specific to the fund are charged directly to the fund. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their average daily net assets. The fund bears its share of the allocable expenses of the underlying funds in which it invests. Such expenses are reflected in the net asset values of the underlying funds.
(e) Distributions to Shareholders:
The fund makes distributions from net investment income and net realized capital gains, if any, once a year.
(f) Custody Credit:
The fund has an arrangement with its custodian bank, State Street Bank and Trust Company (State Street), under which the fund may receive a credit for its uninvested cash balance to offset its custody fees and accounting fees. The credit amounts, if any, are disclosed in the Statement of Operations as a reduction to the fund’s operating expenses.
(g) Accounting Estimates:
The accounting policies described in this report conform to GAAP. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It’s possible that once the results are known, they may turn out to be different from these estimates and these differences may be material.
(h) Federal Income Taxes:
The fund intends to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the fund distributes substantially all of its net investment income and net realized capital gains, if any, to its respective shareholders each year. As long as the fund meets the tax requirements, it is not required to pay federal income tax.
(i) Indemnification:
Under the fund’s organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business the fund enters into contracts with its vendors and others that provide general indemnifications. The fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the fund. However, based on experience, the fund expects the risk of loss attributable to these arrangements to be remote.
3. Risk Factors:
Investing in the fund may involve certain risks, as discussed in the fund's prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
Asset Allocation Risk. The fund is subject to asset allocation risk, which is the risk that the selection of the underlying funds and the allocation of the fund's assets among the various asset classes and market segments will cause the fund to underperform other funds with a similar investment objective.
Financial Notes (continued)
3. Risk Factors (continued):
Affiliated Fund Risk. The investment adviser’s authority to select and substitute underlying funds from a variety of affiliated and unaffiliated mutual funds may create a conflict of interest because the fees paid to it by some underlying funds are higher than the fees paid by other underlying funds. However, the portfolio manager is a fiduciary to the fund and is legally obligated to act in the fund’s best interests when selecting underlying funds, without taking fees into consideration.
Market Risk. Equity and fixed income markets rise and fall daily. As with any investment whose performance is tied to these markets, the value of an investment in the fund will fluctuate, which means that an investor could lose money.
Underlying Fund Investment Risk. The value of an investment in the fund is based primarily on the prices of the underlying funds that the fund purchases. In turn, the price of each underlying fund is based on the value of its securities. The fund is subject to the performance and expenses of the underlying funds in which it invests. Before investing in the fund, investors should assess the risks associated with the underlying funds in which the fund may invest and the types of investments made by those underlying funds. These risks include any combination of the risks described below, although the fund's exposure to a particular risk will be proportionate to the fund's overall asset allocation and underlying fund allocation.
• Investment Risk. An investment in an underlying fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund may experience losses with respect to its investment in an underlying fund. Further, there is no guarantee that an underlying fund will be able to achieve its objective.
• Management Risk. Generally, the underlying funds are actively managed mutual funds. Any actively managed mutual fund is subject to the risk that its investment adviser (or subadviser(s)) will select or allocate assets that could cause the fund to underperform or otherwise not meet its objective. An underlying fund's adviser applies its own investment techniques and risk analyses in making investment decisions for the fund, but there can be no guarantee that they will produce the desired results.
• Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, the equity market tends to move in cycles, which may cause stock prices to fall over short or extended periods of time.
• Large- and Mid-Cap Risk. Both large- and mid-cap stocks tend to go in and out of favor based on market and economic conditions. However, stocks of mid-cap companies tend to be more vulnerable to adverse business or economic events than larger more established companies. During a period when large- and mid-cap U.S. stocks fall behind other types of investments—small-cap stocks, for instance—an underlying fund's performance also will lag those investments.
• Small-Cap Risk. Historically, small-cap stocks have been riskier than large- and mid-cap stocks, and their prices may move sharply, especially during market upturns and downturns. Small-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies. During a period when small-cap stocks fall behind other types of investments — large-cap and mid-cap stocks, for instance — an underlying fund's performance also will lag those investments.
• Growth Investing Risk. An underlying fund’s investments in growth stocks can be volatile. Growth companies usually invest a high portion of earnings in their businesses and may lack the dividends of value stocks that can cushion stock prices in a falling market. The prices of growth stocks are based largely on projections of the issuer’s future earnings and revenues. If a company’s earnings or revenues fall short of expectations, its stock price may fall dramatically. Growth stocks may also be more expensive relative to their earnings or assets compared to value or other stocks.
• Fixed Income Risk. Interest rates rise and fall over time, which will affect an underlying fund's yield and share price. Because interest rates in the United States and other countries are at, or near, historically low levels, a change in a central bank's monetary policy or improving economic conditions may result in an increase in interest rates. A rise in interest rates could cause an underlying fund's share price to fall. The credit quality of a portfolio investment could also cause an underlying fund's share price to fall. An underlying fund could lose money if the issuer or guarantor of a portfolio investment or the counterparty to a derivatives contract fails to make timely principal or interest payments or otherwise honor its obligations. Fixed income securities may be paid off earlier or later than expected. Either situation could cause an underlying fund to hold securities paying lower-than-market rates of interest, which could hurt the fund's yield or share price. Below investment-grade bonds (junk bonds) involve greater credit risk, are more volatile, involve greater risk of price declines and may be more susceptible to economic downturns than investment-grade securities.
Financial Notes (continued)
3. Risk Factors (continued):
• ETF Risk. When an underlying fund invests in an ETF, it will bear a proportionate share of the ETF's expenses. In addition, lack of liquidity in the market for an ETF's shares can result in its value being more volatile than the underlying portfolio of securities.
• Money Market Risk. Although an underlying money market fund seeks to maintain a stable $1 net asset value, it is possible to lose money by investing in a money market fund. In addition, a money market fund is not designed to offer capital appreciation.
• Foreign Investment Risk. An underlying fund's investments in securities of foreign issuers may involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges); the imposition of economic sanctions or other government restrictions; differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. These risks may negatively impact the value or liquidity of the underlying fund's investments, and could impair the underlying fund's ability to meet its investment objective or invest in accordance with its investment strategy. To the extent an underlying fund's investment in a single country or a limited number of countries represents a large percentage of the underlying fund's assets, the underlying fund's performance may be adversely affected by the economic, political and social conditions in those countries and it may be subject to increased price volatility.
• Emerging Markets Risk. Emerging market countries may be more likely to experience political turmoil or rapid changes in market or economic conditions than more developed countries. Such countries often have less uniformity in accounting and reporting requirements and greater risk associated with the custody of securities. In addition, the financial stability of issuers (including governments) in emerging market countries may be more precarious than in other countries. As a result, there will tend to be an increased risk of price volatility associated with an underlying fund's investments in emerging market countries and, at times, it may be difficult to value such investments.
• Derivatives Risk. An underlying fund's use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. An underlying fund's use of derivatives could reduce the underlying fund's performance, increase volatility and could cause the fund to lose more than the principal amount invested. In addition, investments in derivatives may involve leverage, which means a small percentage of assets invested in derivatives can have a disproportionately large impact on an underlying fund. However, these risks are less severe when the underlying fund uses derivatives for hedging rather than to enhance the underlying fund’s returns or as a substitute for a position or security.
• Leverage Risk. Certain underlying fund transactions, such as derivatives, short sales, reverse repurchase agreements, and mortgage dollar rolls, may give rise to a form of leverage and may expose an underlying fund to greater risk. Leverage tends to magnify the effect of any decrease or increase in the value of an underlying fund's portfolio securities, which means even a small amount of leverage can have a disproportionately large impact on the underlying fund.
• Liquidity Risk. A particular investment may be difficult to purchase or sell. An underlying fund may be unable to sell illiquid securities at an advantageous time or price.
• Portfolio Turnover Risk. Certain of the underlying funds may buy and sell portfolio securities actively. If they do, their portfolio turnover rate and transaction costs will rise, which may lower the underlying fund's performance and may increase the likelihood of capital gain distributions.
• Securities Lending Risk. Certain underlying funds engage in securities lending, which involves the risk of loss of rights in the collateral or delay in recovery of the collateral if the borrower fails to return the security loaned or becomes insolvent.
• Mortgage-Backed and Mortgage Pass-Through Securities Risk. Certain of the mortgage-backed securities in which an underlying fund may invest are not backed by the full faith and credit of the U.S. government and there can be no assurance that the U.S. government would provide financial support to its agencies or instrumentalities where it was not obligated to do so. Mortgage-backed securities tend to increase in value less than other debt securities when interest rates decline, but are subject to similar risk of decline in market value during periods of rising interest rates. Because of prepayment and extension risk, mortgage-backed securities react differently to changes in interest rates than other
Financial Notes (continued)
3. Risk Factors (continued):
bonds. Small movements in interest rates — both increases and decreases — may quickly and significantly affect the value of certain mortgage-backed securities. Transactions in mortgage pass-through securities primarily occur through to be announced (TBA) transactions. Default by or bankruptcy of a counterparty to a TBA transaction would expose an underlying fund to possible losses because of an adverse market action, expenses, or delays in connection with the purchase or sale of the pools of mortgage pass-through securities specified in the TBA transaction.
• Mortgage Dollar Rolls Risk. Mortgage dollar rolls are transactions in which an underlying fund sells mortgage-backed securities to a dealer and simultaneously agrees to repurchase similar securities in the future at a predetermined price. An underlying fund’s mortgage dollar rolls could lose money if the price of the mortgage-backed securities sold falls below the agreed upon repurchase price, or if the counterparty is unable to honor the agreement.
Direct Investment Risk. The fund may invest a portion of its assets directly in equity and fixed income securities, as well as other mutual funds or ETFs, to maintain its asset allocations. The fund's direct investment in these securities is subject to the same or similar risks as an underlying fund's investment in the same security.
Please refer to the fund’s prospectus for a more complete description of the principal risks of investing in the fund.
4. Affiliates and Affiliated Transactions:
Charles Schwab Investment Management, Inc. (CSIM or the investment adviser), a wholly owned subsidiary of The Charles Schwab Corporation, serves as the fund's investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement between CSIM and the trust.
The Board has adopted a Shareholder Servicing Plan (the Plan) on behalf of the fund. The Plan enables the fund to bear expenses relating to the provision by service providers, including Charles Schwab & Co., Inc. (a broker-dealer affiliate of CSIM, Schwab), of certain account maintenance, customer liaison and shareholder services to the current shareholders of the fund. The fund is not subject to any fee under the Plan.
CSIM and its affiliates have agreed with the fund, for so long as CSIM serves as the investment adviser to the fund, which may only be amended or terminated with the approval of the Board, to limit the total annual fund operating expenses charged, excluding interest, taxes and certain non-routine expenses to 0.00%.
The agreement to limit the fund's total expenses charged is limited to the fund's direct operating expenses and, therefore, does not apply to underlying fund fees and expenses, which are indirect expenses incurred by a fund through its investments in the underlying funds.
The fund may engage in certain transactions involving related parties. Pursuant to an exemptive order issued by the SEC, the fund may invest in other related funds. As of October 31, 2015, the Schwab Balanced Fund's ownership percentages of other related funds' shares are:
| Laudus U.S. Large Cap Growth Fund | 2.1% |
| Schwab Core Equity Fund | 4.5% |
| Laudus Small-Cap MarketMasters Fund, Select Shares | 18.7% |
| Schwab Intermediate-Term Bond Fund | 10.2% |
| Schwab Total Bond Market Fund | 5.8% |
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Below is a summary of the fund's transactions with its affiliated underlying funds during the period ended October 31, 2015.
| Underlying Funds | | Balance
of Shares
Held at
10/31/14 | | Gross
Purchases | | Gross
Sales | | Balance
of Shares
Held at
10/31/15 | | Market
Value at
10/31/15 | | Realized
Gains (Losses)
11/01/14
to 10/31/15 | | Distributions
Received*
11/01/14
to 10/31/15 |
| Laudus U.S. Large Cap Growth Fund | | 1,558,414 | | 1,220,994 | | (167,970) | | 2,611,438 | | $46,300,784 | | $331,037 | | $5,497,424 |
| Schwab Core Equity Fund | | 2,825,465 | | 1,939,764 | | (124,591) | | 4,640,638 | | 107,198,741 | | 236,223 | | 10,739,887 |
| Laudus Small-Cap MarketMasters Fund, Select Shares | | 1,100,759 | | 720,031 | | (28,979) | | 1,791,811 | | 31,768,809 | | 61,013 | | 471,110 |
| Schwab Intermediate-Term Bond Fund | | 2,355,024 | | 1,278,998 | | (129,497) | | 3,504,525 | | 35,781,196 | | 6,213 | | 565,302 |
| Schwab Total Bond Market Fund | | 5,061,757 | | 3,335,188 | | (497,920) | | 7,899,025 | | 74,961,752 | | 39,995 | | 1,297,943 |
| Total | | | | | | | | | | $296,011,282 | | $674,481 | | $18,571,666 |
| * | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
Pursuant to an exemptive order issued by the SEC, the fund may enter into interfund borrowing and lending transactions with other funds in the Fund Complex (for definition refer to Trustees and Officers section). All loans are for temporary or emergency purposes and the interest rate to be charged will be the average of the overnight repurchase agreement rate and the short-term bank loan rate. All loans are subject to numerous conditions designed to ensure fair and equitable treatment of all participating funds/portfolios. The interfund lending facility is subject to the oversight and periodic review by the Board. The fund had no interfund borrowing or lending activity during the period.
During the period, the Schwab Balanced Fund received a reimbursement payment of $644 related to state filing fees resulting from revised calculation methodologies being applied on sales of the fund's shares in prior periods.
During the periods under which the expense was incurred, the fund was operating above its expense limitation and waived fees including these state filing fees. As this amount was previously waived as part of an expense reduction by CSIM, it was reimbursed to the adviser. The fund's net expense ratio was not impacted during the periods the expense was incurred or during the current period.
5. Board of Trustees:
The Board may include people who are officers and/or directors of CSIM or its affiliates. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these interested persons for their services as trustees, but it did pay non-interested persons (independent trustees), as noted on the fund’s Statement of Operations. For information regarding the trustees, please refer to the Trustees and Officers table at the end of this report.
6. Borrowing from Banks:
During the period prior to October 8, 2015, the fund had access to a committed line of credit of $150 million with State Street, an uncommitted line of credit of $100 million with Bank of America, N.A., and an uncommitted line of credit of $50 million with Brown Brothers Harriman & Co. The fund paid an annual fee to State Street for the committed line of credit. Effective October 8, 2015, the previous lines of credit were terminated and the fund became a participant with other U.S. registered investment companies managed by CSIM in a joint, syndicated, committed $530 million line of credit (the Credit Facility), with State Street as agent, which matures on October 6, 2016. Under the terms of the Credit Facility, in addition to the interest charged on any borrowings by a fund, the fund pays a commitment fee of 0.125% per annum on its proportionate share of the unused portion of the Credit Facility. There were no borrowings from any of the lines of credit during the period.
The fund also has access to custodian overdraft facilities. The fund may have utilized the overdraft facility and incurred an interest expense, which is disclosed on the fund’s Statement of Operations, if any. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.
Financial Notes (continued)
7. Purchases and Sales/Maturities of Investment Securities:
For the period ended October 31, 2015, purchases and sales/maturities of securities (excluding short-term obligations) were as follows:
| Purchases of Securities | | Sales/Maturities of Securities |
| $122,157,171 | | $12,565,000 |
8. Redemption Fee:
The fund charges a 2.00% redemption fee on shares sold or exchanged within 30 days of the original purchase date. Such amounts are netted against redemption proceeds on the Statement of Changes in Net Assets. The redemption fees charged during the current and prior periods are:
Current Period
(11/1/14-10/31/15) | | Prior Period
(11/1/13-10/31/14) |
| $46,338 | | $8,259 |
9. Federal Income Taxes:
As of October 31, 2015, the components of distributable earnings on a tax-basis were as follows:
| Undistributed ordinary income | $2,140,089 |
| Undistributed long-term capital gains | 13,647,526 |
| Unrealized appreciation on investments | 26,077,218 |
| Unrealized depreciation on investments | (197,274) |
| Net unrealized appreciation (depreciation) | $25,879,944 |
The primary difference between book-basis and tax-basis unrealized appreciation or unrealized depreciation of investments is the tax deferral of losses on wash sales.
Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2015, the fund had no capital loss carryforwards.
The tax-basis components of distributions paid during the current and prior fiscal years were as follows:
| Current period distributions | |
| Ordinary income | $4,612,433 |
| Long-term capital gains | 5,780,880 |
| Return of capital | — |
| Prior period distributions | |
| Ordinary income | $2,313,152 |
| Long-term capital gains | — |
| Return of capital | — |
Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
Permanent book and tax basis differences may result in reclassifications between components of net assets as required. The adjustments will have no impact on net assets or the results of operations. As of October 31, 2015, the fund made the following reclassifications:
| Capital shares | $— |
| Undistributed net investment income | 2,067,461 |
| Net realized capital gains (losses) | (2,067,461) |
Financial Notes (continued)
9. Federal Income Taxes (continued):
As of October 31, 2015, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and for state purposes, four years from the date of filing) as applicable to the fund, and has determined that no provision for income tax is required in the fund’s financial statements. The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period ended October 31, 2015, the fund did not incur any interest or penalties.
10. Subsequent Events:
At a Special Meeting of Shareholders on December 11, 2015, twelve individuals were elected to serve as trustees of all trusts constituting the Schwab Funds, Laudus Funds and Schwab ETFs effective January 1, 2016. The twelve individuals elected to the Boards of Trustees consist of current Schwab Funds and Laudus Funds trustees, current Schwab ETFs trustees and three new nominees. The trustees believe that combining the composition of the Boards of Trustees and adding the new nominees will further align oversight of the Schwab Funds, Laudus Funds and Schwab ETFs, among other benefits. Other than this election of trustees, management has determined there are no subsequent events or transactions through the date the financial statements were issued that would have materially impacted the financial statements as presented.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of:
Schwab Balanced Fund
In our opinion, the accompanying statement of assets and liabilities, including the portfolio holdings, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Schwab Balanced Fund (one of the funds constituting Schwab Capital Trust, hereafter referred to as the “Fund”) at October 31, 2015, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities and investments in the underlying funds at October 31, 2015 by correspondence with the custodian and transfer agent of the underlying funds, respectively, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
December 16, 2015
Other Federal Tax Information (unaudited)
For corporate shareholders, 26.78% of the fund's dividend distributions paid during the fiscal year ended October 31, 2015, qualify for the corporate dividends received deduction.
For the fiscal year ended October 31, 2015, the fund designates $1,264,878 of the dividend distributions as qualified dividends for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code. Shareholders will be notified in January 2016 via IRS form 1099 of the amounts for use in preparing their 2015 income tax return.
Under Section 852 (b)(3)(C) of the Internal Revenue Code, the fund hereby designates $5,780,880 as long-term capital gain dividends for the fiscal year ended October 31, 2015.
Investment Advisory Agreement Approval
The Investment Company Act of 1940 (the 1940 Act) requires that initial approval of, as well as the continuation of, a fund’s investment advisory agreement must be specifically approved (1) by the vote of the trustees or by a vote of the shareholders of the fund, and (2) by the vote of a majority of the trustees who are not parties to the investment advisory agreement or “interested persons” of any party (the Independent Trustees), cast in person at a meeting called for the purpose of voting on such approval. In connection with such approvals, the fund’s trustees must request and evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms of the investment advisory agreement.
The Board of Trustees (the Board or the Trustees, as appropriate) calls and holds one or more meetings each year that are dedicated, in whole or in part, to considering whether to renew the investment advisory agreement between Schwab Capital Trust (the Trust) and Charles Schwab Investment Management, Inc. (CSIM) (the Agreement) with respect to the existing funds in the Trust, including Schwab Balanced Fund (the Fund), and to review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting(s), the Board requests and reviews a wide variety of materials provided by CSIM, including information about CSIM’s affiliates, personnel and operations. As part of the renewal process, Independent Trustees’ legal counsel sends an information request letter to CSIM seeking certain relevant information. The responses by CSIM are provided to the Trustees for their review prior to their meeting, and the Trustees are provided with the opportunity to request any additional materials. The Board also receives extensive data provided by third parties. This information is in addition to the detailed information about the Fund that the Board reviews during the course of each year, including information that relates to Fund operations and Fund performance. The Independent Trustees receive advice from independent counsel to the Independent Trustees, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees meet in executive session outside the presence of Fund management and participate in question and answer sessions with representatives of CSIM.
The Board, including a majority of the Independent Trustees, considered information specifically relating to its consideration of the continuance of the Agreement with respect to the Fund at meetings held on April 29, 2015, and June 1, 2015, and approved the renewal of the Agreement with respect to the Fund for an additional one-year term at the meeting held on June 1, 2015. The Board’s approval of
the Agreement with respect to the Fund was based on consideration and evaluation of a variety of specific factors discussed at these meetings and at prior meetings, including:
| 1. | the nature, extent and quality of the services provided to the Fund under the Agreement, including the resources of CSIM and its affiliates dedicated to the Fund; |
| 2. | the Fund’s investment performance and how it compared to that of certain other comparable mutual funds; |
| 3. | the Fund’s expenses and how those expenses compared to those of certain other comparable mutual funds, exchange-traded funds and other accounts; |
| 4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to the Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
| 5. | the extent to which economies of scale would be realized as the Fund grows and whether fee levels in the Agreement reflect those economies of scale for the benefit of Fund investors. |
Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services provided by CSIM to the Fund and the resources of CSIM and its affiliates dedicated to the Fund. In this regard, the Trustees evaluated, among other things, CSIM’s personnel, experience, track record and compliance program. The Trustees also considered information provided by CSIM relating to the Fund’s portfolio management team, portfolio strategy and risk oversight structure, and internal investment guidelines. The Trustees also considered investments in CSIM’s mutual fund infrastructure, Schwab’s wide range of products, services, and channel alternatives such as investment and research tools, internet access, and an array of account features that benefit the Fund and certain of its shareholders. The Trustees also considered Schwab’s excellent reputation as a full service brokerage firm and its overall financial condition. Finally, the Trustees considered that many of the Fund’s shareholders are also brokerage clients of Schwab. Following such evaluation, the Board concluded, within the context of its full deliberations, that the nature, extent and quality of services provided by CSIM to the Fund and the resources of CSIM and its affiliates dedicated to the Fund supported renewal of the Agreement with respect to the Fund.
Fund Performance. The Board considered Fund performance in determining whether to renew the Agreement with respect to the Fund. Specifically, the Trustees considered the Fund’s performance relative to a peer category of other mutual funds and appropriate
indices/ benchmarks, in light of total return, yield, and market trends. As part of this review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the third party who prepared the peer category analysis. In evaluating the performance of the Fund, the Trustees considered both risk and shareholder risk expectations for the Fund and the appropriateness of the benchmark used to compare the performance of the Fund. The Trustees further considered the level of Fund performance in the context of their review of Fund expenses and adviser profitability discussed below. Following such evaluation the Board concluded, within the context of its full deliberations, that the performance of the Fund supported renewal of the Agreement with respect to the Fund.
Fund Expenses. With respect to the Fund’s expenses, the Trustees considered the rate of compensation called for by the Agreement, and the Fund’s net operating expense ratio, in each case, in comparison to those of a peer group of mutual funds, such peer groups and comparisons having been selected and calculated by an independent third party. The Trustees considered the effects of CSIM’s and Schwab’s historical practice of voluntarily waiving management and other fees to prevent total Fund expenses from exceeding a specified cap. The Trustees also considered CSIM’s contractual commitment to keep the Fund’s expense cap for so long as CSIM serves as the adviser to the Fund. The Trustees also considered fees charged by CSIM to other mutual funds and to other types of accounts, such as exchange-traded funds and separately managed accounts, but, with respect to such other types of accounts, accorded less weight to such comparisons due to the different legal, regulatory, compliance and operating features of mutual funds as compared to these other types of accounts. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expenses of the Fund are reasonable and supported renewal of the Agreement with respect to the Fund.
Profitability. With regard to profitability, the Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly. In this connection, the Trustees reviewed management’s profitability analyses, together with certain commentary thereon from an independent accounting firm. The Trustees also considered
any other benefits derived by CSIM from its relationship with the Fund, such as whether, by virtue of its management of the Fund, CSIM obtains investment information or other research resources that aid it in providing advisory services to other clients. The Trustees considered whether the varied levels of compensation and profitability under the Agreement and other service agreements were reasonable and justified in light of the quality of all services rendered to the Fund by CSIM and its affiliates. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM is reasonable and supported renewal of the Agreement with respect to the Fund.
Economies of Scale. The Trustees considered the existence of any economies of scale and whether those are passed along to the Fund’s shareholders through a graduated investment advisory fee schedule or other means, including any fee waivers by CSIM and its affiliates. In this regard, and consistent with their consideration of Fund expenses, the Trustees considered that CSIM and Schwab have committed resources to minimize the effects on shareholders of diseconomies of scale during periods when fund assets were relatively small through their contractual expense waivers. For example, such diseconomies of scale may particularly affect newer funds or funds with investment strategies that are from time to time out of favor, but shareholders may benefit from the continued availability of such funds at subsidized expense levels. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the Fund obtains reasonable benefit from economies of scale.
In the course of their deliberations, the Trustees did not identify any particular information or factor that was all important or controlling. Based on the Trustees’ deliberation and their evaluation of the information described above, the Board, including all of the Independent Trustees, approved the continuation of the Agreement with respect to the Fund and concluded that the compensation under the Agreement with respect to the Fund is fair and reasonable in light of such services and expenses and such other matters as the Trustees have considered to be relevant in the exercise of their reasonable judgment.
Trustees and Officers
The tables below give information about the trustees and officers of Schwab Capital Trust prior to January 1, 2016, which includes the fund covered in this report. The “Fund Complex” includes The Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust, Laudus Trust and Laudus Institutional Trust. The Fund Complex includes 95 funds.
The address for all trustees and officers is 211 Main Street, San Francisco, CA 94105. You can find more information about the trustees and officers in the fund’s Statement of Additional Information, which is available free by calling 1-800-435-4000.
| Independent Trustees |
Name, Year of Birth,
and Position(s) with
the trust (Terms 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 |
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 (Oct. 1979 – present); Senior Fellow Stanford Institute for Economic Policy Research (2000 – present); Professor of Public Policy, Stanford University (1994 – 2015). | 74 | Director, Gilead Sciences, Inc. (2005 – present)
|
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. | 74 | 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) (Dec. 2008 – Sept. 2013) | 74 | Director, KLA-Tencor Corporation (2008 – present) |
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) (Jan. 2015 – present); Partner, Kudu Advisors, LLC (financial services) (June 2008 – Jan. 2015); Advisor, Asset International, Inc. (publisher of financial services information) (Aug. 2008 – Jan. 2015). | 95 | None |
| Independent Trustees (continued) |
Name, Year of Birth,
and Position(s) with
the trust (Terms 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 |
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) | Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (Mar. 1990 – present). | 74 | Director, Eaton (2012 – present)
Director and Chairman 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) (Jan. 2008 – present); Partner, Colgin Partners, LLC (vineyards) (Feb. 1998 – present). | 74 | Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 – present)
Lead Independent Director and Chair of Audit Committee, OUTFRONT Media Inc. (2014 – present) |
| Interested Trustees |
Name, Year of Birth,
and Position(s) with
the trust (Terms 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 |
Charles R. Schwab2
1937
Chairman and Trustee
(Chairman and Trustee of The Charles Schwab Family of Funds since 1989; Schwab Investments since 1991; Schwab Capital Trust since 1993; Schwab Annuity Portfolios since 1994; Laudus Trust and Laudus Institutional Trust since 2010) | Chairman and Director, The Charles Schwab Corporation (1986 – present); Chairman and Director of Charles Schwab & Co., Inc. (1971 – present); Chairman and Director of Charles Schwab Investment Management, Inc. (1989 – present); Chairman and Director of Charles Schwab Bank (2003 – present); Chairman and Chief Executive Officer of Schwab (SIS) Holdings Inc. I and Schwab International Holdings, Inc. (1996 – present); and Director, Chairman and Chief Executive Officer, Schwab Holdings, Inc. (1979 – present). | 74 | Chairman and Director, The Charles Schwab Corporation (1986 – present)
Director, Yahoo! Inc. (2014 – present) |
Walter W. Bettinger II2
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 and Charles Schwab & Co., Inc. (2008 – present); Director, Charles Schwab Bank (2006 – present); and Director, Schwab Holdings, Inc. (2008 – present). | 95 | Director, The Charles Schwab Corporation (2008 – present) |
| Officers of the Trust |
Name, Year of Birth, and Position(s)
with the trust (Terms of office, and
length of Time Served3) | Principal Occupations During the Past Five Years |
Marie Chandoha
1961
President and Chief Executive Officer
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2010) | Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer (Sept. 2010 – Oct. 2011), Charles Schwab Investment Management, Inc.; President, Chief Executive Officer (Dec. 2010 – present), and Chief Investment Officer (Sept. 2010 – Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Director, Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited (Jan. 2011 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (Mar. 2007 – Aug. 2010). |
George Pereira
1964
Treasurer and Principal Financial Officer, Schwab Funds
Treasurer and Chief Financial Officer, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2004; Laudus Trust and Laudus Institutional Trust since 2006) | Senior Vice President and Chief Financial Officer (Nov. 2004 – present), Chief Operating Officer (Jan. 2011 – present), Charles Schwab Investment Management, Inc.; Treasurer and Chief Financial Officer, Laudus Funds (June 2006 – present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – present) and Schwab ETFs (Oct. 2009 – present); Director, Charles Schwab Worldwide 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 Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust 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 – Jan. 2009). |
Brett Wander
1961
Senior Vice President and Chief Investment Officer – Fixed Income
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust 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 (Jan. 2008 – Oct. 2010); Director of Alpha Strategies Loomis, Sayles & Company (April 2006 – Jan. 2008). |
David Lekich
1964
Chief Legal Officer and Secretary, Schwab Funds
Vice President and Assistant Clerk, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2011) | Senior Vice President (Sept. 2011 – present), Vice President (Mar. 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present), Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (April 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; Vice President and Assistant Clerk, Laudus Funds (April 2011 – present); Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs. |
Catherine MacGregor
1964
Vice President and Assistant Secretary, Schwab Funds
Chief Legal Officer, Vice President and Clerk, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2005) | Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 – present); Vice President (Dec. 2005 – present), Chief Legal Officer and Clerk (Mar. 2007 – present), Laudus Funds; Vice President (Nov. 2005 – present) and Assistant Secretary (June 2007 – present), Schwab Funds; Vice President and Assistant Secretary, Schwab ETFs (Oct. 2009 – present). |
| 1 | Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab and Laudus Funds’ retirement policy 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 Schwab Funds or Laudus Funds to retire from all Boards upon their required retirement date from either Board. |
| 2 | Mr. Schwab and Mr. Bettinger are Interested Trustees because they own stock of The Charles Schwab Corporation, the parent company of the investment adviser. |
| 3 | The President, Treasurer and Secretary/Clerk 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 Boards. |
Glossary
asset allocation The practice of dividing a portfolio among different asset classes, with each asset class assigned a particular percentage.
asset class A group of securities with similar structure and basic characteristics. Stocks, bonds and cash are the three main examples of asset classes.
Balanced Blended Index A custom blended index developed by CSIM that effective August 1, 2013 is composed of 50% S&P 500 Index, 10% Russell 2000 Index, 25% Barclays U.S. Aggregate Bond Index, 12% Barclays U.S. Aggregate Intermediate Bond Index and 3% Barclays U.S. Treasury Bills: 1 – 3 Months Index. Prior to August 1, 2013 the Balanced Blended Index was composed of 60% S&P 500 Index and 40% Barclays U.S. Aggregate Bond Index.
Barclays U.S. Aggregate Bond Index A broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid ARM pass-throughs), asset-backed securities, and commercial mortgage-backed securities.
Barclays U.S. Aggregate Intermediate Bond Index An index that represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities.
Barclays U.S. Treasury Bills 1 – 3 Months Index An index that includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months and more than 1 month, are rated investment grade, and have $250 million or more of outstanding face value.
bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the coupon rate) until a specified date (the maturity date), at which time the issuer returns the money borrowed (principal or face value) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.”
An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.
bond fund A bond fund is subject to the same credit, interest rate, and inflation risks as bonds. In addition, a bond fund incurs ongoing fees and expenses. A bond fund’s net asset value will fluctuate with the price of the underlying bonds and the portfolio turnover activity; return of principal is not guaranteed.
cap, capitalization See “market cap.”
capital gain, capital loss the difference between the amount paid for an investment and its value at a later time. If the investment has been sold, the capital gain or loss is considered a realized gain or loss. If the investment is still held, the capital gain or loss is considered unrealized appreciation or depreciation.
expense ratio The amount that is taken from a mutual fund’s assets each year to cover the fund’s operating expenses. An expense ratio of 0.50% means that a fund’s expenses amount to half of one percent of its average net assets a year.
market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.
MSCI EAFE (Europe, Australasia, Far East) Index A free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. & Canada. The Net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes; returns are calculated applying dividend withholding rates applicable to non-resident persons who do not benefit from double taxation treaties.
net asset value (NAV) The value of one share of a mutual fund. NAV is calculated by taking the fund’s total assets, subtracting liabilities, and dividing by the number of shares outstanding.
outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.
price-to-book ratio (P/B) The market price of a company’s stock compared with its “book value.” A mutual fund’s P/B is the weighted average of the P/B of all stocks in the fund’s portfolio.
price-to-earnings ratio (P/E) The market price of a company’s stock compared with earnings over the past year. A mutual fund’s P/E is the weighted average of the P/E of all stocks in the fund’s portfolio.
return on equity (ROE) The average yearly rate of return for each dollar of investors’ money, measured over the past five years.
Russell 2000 Index An index that measures the performance of the small-cap segment of the U.S. equity universe. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.
S&P 500 Index A market capitalization index that is designed to measure the performance of 500 leading publicly held companies in leading industries of the U.S. economy.
stock A share of ownership, or equity, in the issuing company.
total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.
weighted average For mutual funds, an average that gives the same weight to each security as the security represents in the fund’s portfolio.
yield The income paid out by an investment, expressed as a percentage of the investment’s market value.
PRIVACY NOTICE
THIS IS NOT PART OF THE SHAREHOLDER REPORT
A Commitment to Your Privacy
Your Privacy Is Not for Sale
We do not and will not sell your personal information to anyone, for any reason.
We are committed to protecting the privacy of information we maintain about you. Below are details about our commitment, including the types of information we collect and how we use and share that information. This Privacy Notice applies to you only if you are an individual who invests directly in the funds by placing orders through the funds’ transfer agent. If you place orders through your brokerage account at Charles Schwab & Co., Inc. or an account with another broker-dealer, investment advisor, 401(k) plan, employee benefit plan, administrator, bank or other financial intermediary, you are covered by the privacy policies of that financial institution and should consult those policies.
How We Collect Information About You
We collect personal information about you in a number of ways.
• APPLICATION AND REGISTRATION
INFORMATION.
We collect personal information from you when you open an account or utilize one of our services. We may also collect information about you from third parties such as consumer reporting agencies to verify your identity. The information we collect may include personal information, including your Social Security number, as well as details about your interests, investments and investment experience.
• TRANSACTION AND EXPERIENCE
INFORMATION.
Once your account has been opened, we collect and maintain personal information about your account activity, including your transactions, balances, positions and history. This information allows us to administer your account and provide the services you have requested.
• WEBSITE USAGE.
When you visit our websites, we may use devices known as “cookies,” graphic interchange format files (GIFs), or other similar web tools to enhance your web experience. These
tools help us to recognize you, maintain your web session, and provide a more personalized experience. To learn more, please go to www.schwab.com/privacy.
How We Share and Use Your Information
We provide access to information about you to our affiliated companies, outside companies and other third parties in certain limited circumstances, including:
• to help us process transactions for your account;
• when we use other companies to provide services for us, such as printing and mailing your account statements;
• when we believe that disclosure is required or permitted under law (for example, to cooperate with regulators or law enforcement, resolve consumer disputes, perform credit/authentication checks, or for risk control).
State Laws
We will comply with state laws that apply to the disclosure or use of information about you.
Safeguarding Your Information — Security Is a
Partnership
We take precautions to ensure the information we collect about you is protected and is accessed only by authorized individuals or organizations.
Companies we use to provide support services are not allowed to use information about our shareholders for their own purposes and are contractually obligated to maintain strict confidentiality. We limit their use of information to the performance of the specific services we have requested.
We restrict access to personal information by our employees and agents. Our employees are trained about privacy and are required to safeguard personal information.
We maintain physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
Contact Us
To provide us with updated information, report suspected fraud or identity theft, or for any other questions, please call the number below.
Schwab Funds® direct investors: 1-800-407-0256
© 2015 Schwab Funds. All rights reserved.
Schwab Funds® offers you an extensive family of mutual funds, each one based on a clearly defined investment approach and using disciplined management strategies. The list at right shows all currently available Schwab Funds.
Whether you are an experienced investor or just starting out, Schwab Funds can help you achieve your financial goals. An investor should consider a fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information can be found in the fund’s prospectus. Please call 1-800-435-4000 for a prospectus and brochure for any Schwab Fund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus.
Proxy Voting Policies, Procedures and Results
A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting the Schwab Funds’ website at www.csimfunds.com/schwabfunds_prospectus, the SEC’s website at www.sec.gov, or by contacting Schwab Funds at 1-800-435-4000.
Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting the fund’s website at www.csimfunds.com/schwabfunds_prospectus or the SEC’s website at www.sec.gov.
The Schwab Funds Family®
Stock Funds
Schwab Core Equity Fund™
Schwab Dividend Equity Fund™
Schwab Large-Cap Growth Fund™
Schwab Small-Cap Equity Fund™
Schwab Hedged Equity Fund™
Schwab Financial Services Fund™
Schwab Health Care Fund™
Schwab® International Core Equity Fund
Schwab Fundamental US Large Company Index Fund
Schwab Fundamental US Small Company Index Fund
Schwab Fundamental International Large Company Index Fund
Schwab Fundamental International Small Company Index Fund
Schwab Fundamental Emerging Markets Large Company Index Fund
Schwab Fundamental Global Real Estate Index Fund
Schwab Global Real Estate Fund™
Schwab® S&P 500 Index Fund
Schwab 1000 Index® Fund
Schwab Small-Cap Index Fund®
Schwab Total Stock Market Index Fund®
Schwab International Index Fund®
Asset Allocation Funds
Schwab Balanced Fund™
Schwab MarketTrack All Equity Portfolio™
Schwab MarketTrack Growth Portfolio™
Schwab MarketTrack Balanced Portfolio™
Schwab MarketTrack Conservative Portfolio™
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab 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
Bond Funds
Schwab Short-Term Bond Market Fund™
Schwab Intermediate-Term Bond Fund™
Schwab Total Bond Market Fund™
Schwab GNMA Fund™
Schwab® Treasury Inflation Protected Securities Index Fund
Schwab Tax-Free Bond Fund™
Schwab California Tax-Free Bond Fund™
Schwab Money Funds
Schwab offers an array of money market funds1. Choose from taxable or tax-advantaged alternatives. Many can be linked to your eligible Schwab account to “sweep” cash balances automatically, subject to availability, when you’re between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments®.
| 1 | Investments in money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency and, although they seek to preserve the value of your investment at $1 per share, it is possible to lose money. |
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
Funds
Schwab Funds®
1-800-435-4000
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
© 2015 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC®
Printed on recycled paper.
MFR36112-09
00156963
Annual report dated October 31, 2015, enclosed.
Schwab MarketTrack Portfolios®
Schwab MarketTrack
All Equity Portfolio™
Schwab MarketTrack
Growth Portfolio™
Schwab MarketTrack
Balanced Portfolio™
Schwab MarketTrack
Conservative Portfolio™
Go paperless today.
Simplify your financial life
by viewing these documents online.
Sign up at schwab.com/paperless
This wrapper is not part of the shareholder report.
Schwab MarketTrack Portfolios®
Annual Report
October 31, 2015
Schwab MarketTrack
All Equity Portfolio
Schwab MarketTrack
Growth Portfolio
Schwab MarketTrack
Balanced Portfolio
Schwab MarketTrack
Conservative Portfolio
This page is intentionally left blank.
Schwab MarketTrack Portfolios®
Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).
Distributor: Charles Schwab & Co., Inc. (Schwab).
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
| Total Return for the 12 Months Ended October 31, 2015 |
| Schwab MarketTrack All Equity Portfolio (Ticker Symbol: SWEGX) | 0.36% |
| All Equity Composite Index | 1.41% |
| Fund Category: Morningstar Large Blend | 2.79% |
| Performance Details | pages 6-7 |
| |
| Schwab MarketTrack Growth Portfolio (Ticker Symbol: SWHGX) | 0.95% |
| Growth Composite Index | 1.82% |
| Fund Category: Morningstar Aggressive Allocation | -0.21% |
| Performance Details | pages 8-9 |
| |
| Schwab MarketTrack Balanced Portfolio (Ticker Symbol: SWBGX) | 1.10% |
| Balanced Composite Index | 1.94% |
| Fund Category: Morningstar Moderate Allocation | 0.61% |
| Performance Details | pages 10-11 |
| |
| Schwab MarketTrack Conservative Portfolio (Ticker Symbol: SWCGX) | 1.23% |
| Conservative Composite Index | 1.99% |
| Fund Category: Morningstar Conservative Allocation | -0.77% |
| Performance Details | pages 12-13 |
| |
| Minimum Initial Investment1 | $100 |
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
The components that make up each of the composite indexes may vary over time. For index definitions, please see the Glossary.
Portfolio expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, a portfolio's total return would have been lower. Performance does not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or on the redemption of portfolio shares.
Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date.
| 1 | Please see the funds' prospectus for further detail and eligibility requirements. |
2Schwab MarketTrack Portfolios
Marie Chandoha is President and CEO of Charles Schwab Investment Management, Inc. and the funds covered in this report.
Dear Shareholder,
At Charles Schwab Investment Management, our goal is to provide foundational products with consistent performance that enable investors to build well-diversified portfolios. Our MarketTrack Portfolios offer diversification across major segments of the U.S. and international equity markets, in addition to bond exposure in select portfolios. Effective December 1, 2014, the portfolios added international small-cap equity and emerging markets equity as dedicated asset classes, and also began investing in certain Schwab Fundamental Index Funds. Each portfolio combines Fundamental Index® and market-cap weighted index strategies, plus asset allocation, into a single portfolio by investing in a combination of other funds.
For the 12-month reporting period ended October 31, 2015, the portfolios generated positive returns, but underperformed their comparative indexes. These returns reflected moderate positive performance by some of the underlying investment strategies.
Despite market volatility later in the period which was stimulated by concerns about global growth and speculation that the Fed might raise interest rates, the S&P 500 Index returned 5.2% for the period. The bond market generated modest returns amid the low interest rate environment, relatively stable credit conditions and limited inflation. Reflecting these conditions, the Barclays U.S. Aggregate Bond Index returned 2.0%
Asset Class Performance Comparison % returns during the 12 months ended 10/31/2015
Index figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Past performance is not an indication of future results.
For index definitions, please see the Glossary.
Data source: Index provider websites and CSIM.
Nothing in this report represents a recommendation of a security by the investment adviser.
Management views and portfolio holdings may have changed since the report date.
| 1 | The total return cited is for the MSCI EAFE Index (Net), which is calculated net of foreign withholding taxes. |
Schwab MarketTrack Portfolios3
From the President continued
For the 12-month reporting period ended October 31, 2015, the portfolios generated positive returns, but underperformed their comparative indexes.
Outside the U.S., turbulence in Greece, China, and select emerging markets translated into challenges that reduced returns in U.S. dollar terms. Meanwhile, lackluster global economic growth led to differences in central bank policies, particularly between those of the U.S., Japan, and the euro zone. This caused foreign currencies to depreciate versus the U.S. dollar, particularly among emerging markets, thereby reducing returns in U.S. dollar terms. As a result, the MSCI EAFE Index, which broadly represents the performance of international stocks, returned -0.1%.1
For more information about the Schwab MarketTrack Portfolios, please continue reading this report In addition, you can find further details about these funds by visiting our website at www.csimfunds.com. We are also happy to hear from you at 1-800-435-4000.
Sincerely,
| 1 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
4Schwab MarketTrack Portfolios
 | Zifan Tang, Ph.D., CFA, Managing Director and Head of Asset Allocation Strategies, leads the portfolio management team and has overall responsibility for all aspects of the management of the funds. She was appointed portfolio manager of the funds in February 2012. Prior to joining CSIM in 2012, Ms. Tang was a product manager at Thomson Reuters and, from 1997 to 2009, worked as a portfolio manager at Barclays Global Investors, which was subsequently acquired by BlackRock. |
Schwab MarketTrack Portfolios5
Schwab MarketTrack All Equity Portfolio
The Schwab MarketTrack All Equity Portfolio (the portfolio) seeks high capital growth through an all-stock portfolio. To pursue its goal, the portfolio maintains a defined asset allocation. The portfolio’s target allocation is 100% in stock investments, with certain percentages for different segments of the stock market. For the 12-month reporting period ended October 31, 2015, the portfolio remained close to the target allocations of 45% in U.S. large-cap, 30% in international, and 25% in U.S. small-cap stocks. The portfolio invests mainly in other Schwab Funds including index funds, which seek to track the total returns of various market indices. For more information concerning the portfolio’s investment objective, strategies, and risks, please see the portfolio’s prospectus.
Market Highlights. Large-cap U.S. stocks posted modest gains for the 12-month reporting period on mixed economic signals. Interest rates remained low, but economic growth was weaker than expected. The S& P 500 Index returned 5.2%. Small-cap U.S. stocks underperformed by comparison, with the Russell 2000 Index returning 0.3%. Outside the U.S., economic growth was weak, particularly in China, which weighed on markets around the globe. Declining energy and metals prices also dampened equity returns worldwide, and market volatility spiked dramatically in August. Developed international equities, as measured by the MSCI EAFE Index (Net), returned -0.1% for the period. Emerging markets were particularly hard hit, with the MSCI Emerging Markets Index (Net) returning -14.5% for the reporting period. The U.S. dollar was strong as compared to a number of foreign currencies, reducing returns of international investments in U.S. dollar terms. Against this backdrop, the U.S. Federal Reserve continued to push back the timing of its widely anticipated interest rate hike.
Performance. For the 12-month reporting period ended October 31, 2015, the portfolio returned 0.36%. The portfolio’s internally calculated comparative index, the All Equity Composite Index (the composite index), returned 1.41%.
Positioning and Strategies. Over the reporting period, the portfolio’s asset allocations were broadly in line with those of the composite index. During the period, the portfolio added exposure to several fundamentally weighted indexes to diversify its underlying index funds.
The portfolio’s international equity exposure generally detracted from both total return and relative performance, although two of the portfolio’s holdings contributed positively to total return. With emerging markets particularly hard-hit for the reporting period, the Schwab Fundamental Emerging Markets Large Company Index Fund returned -11.9% since its inclusion, detracting both from the portfolio’s total return and its relative performance. The Schwab International Index Fund, which returned -1.5% and underperformed its comparative index, also dragged on both total return and relative performance. The Schwab Fundamental International Large Company Index Fund and the Schwab Fundamental International Small Company Index both underperformed their respective comparative indices, dragging on relative performance, but added to the portfolio’s total return.
The portfolio’s U.S. equity exposures all contributed positively to the portfolio’s total return for the period, but its large-cap positions slightly underperformed their comparative indices, detracting from relative performance. The largest contribution to total return came from the Schwab S&P 500 Index Fund, which returned 5.1%, followed by the Schwab Fundamental US Large Company Index Fund, which returned 2.4% since its inclusion. Among U.S. small-cap stocks, the Schwab Fundamental US Small Company Index Fund was the strongest performer, returning 1.8% since its inclusion. The Schwab Small-Cap Index Fund contributed modestly, returning 0.4%.
As of 10/31/15:
| Statistics |
| Number of Holdings | 9 |
| Portfolio Turnover Rate | 42% |
| Asset Class Weightings % of Investments |
| Equity Funds – Large-Cap | 45.4% |
| Equity Funds – International | 29.4% |
| Equity Funds – Small-Cap | 24.9% |
| Short-Term Investments | 0.3% |
| Total | 100.0% |
| Top Holdings % of Net Assets1,2 |
| Schwab S&P 500 Index Fund | 31.8% |
| Schwab Small-Cap Index Fund | 17.4% |
| Schwab International Index Fund | 13.8% |
| Schwab Fundamental US Large Company Index Fund | 13.5% |
| Schwab Fundamental US Small Company Index Fund | 7.5% |
| Schwab Fundamental International Large Company Index Fund | 6.0% |
| Schwab Fundamental International Small Company Index Fund | 5.0% |
| Schwab Fundamental Emerging Markets Large Company Index Fund | 4.5% |
| Total | 99.5% |
Management views and portfolio holdings may have changed since the report date.
Small-company stocks are subject to greater volatility than many other asset classes.
International investments are subject to additional risks such as currency fluctuation, geopolitical risk and the potential for illiquid markets.
| 1 | This list is not a recommendation of any security by the investment adviser. |
| 2 | The holdings listed exclude any temporary liquidity investments. |
6Schwab MarketTrack Portfolios
Schwab MarketTrack All Equity Portfolio
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1
Average Annual Total Returns1,2
| Portfolio and Inception Date | 1 Year | 5 Years | 10 Years |
| Portfolio: Schwab MarketTrack All Equity Portfolio (5/19/98) | 0.36% | 10.12% | 6.26% |
| All Equity Composite Index | 1.41% | 10.69% | 6.63% |
| S&P 500® Index | 5.20% | 14.33% | 7.85% |
| Fund Category: Morningstar Large Blend | 2.79% | 12.51% | 6.99% |
Fund Expense Ratios3: 0.64%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
| 1 | Portfolio expenses have been partially absorbed by CSIM and its affiliates. Without these reductions, the portfolio’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. |
| 2 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | As stated in the prospectus. Includes expenses of the underlying funds in which the portfolio invests. The annualized weighted average expense ratio of the underlying funds was 0.23%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab MarketTrack Portfolios7
Schwab MarketTrack Growth Portfolio
The Schwab MarketTrack Growth Portfolio (the portfolio) seeks high capital growth with less volatility than an all-stock portfolio. To pursue its goal, the portfolio maintains a defined asset allocation. The portfolio’s target allocation includes stock, bond, and cash investments. For the 12-month reporting period ended October 31, 2015, the portfolio remained close to the target allocations of 80% equity, 15% fixed income, and 5% cash and cash equivalents. The portfolio invests mainly in other Schwab Funds including index funds, which seek to track the total returns of various market indices. For more information concerning the portfolio’s investment objective, strategies, and risks, please see the portfolio’s prospectus.
Market Highlights. Large-cap U.S. stocks posted modest gains for the 12-month reporting period on mixed economic signals. Interest rates remained low, but economic growth was weaker than expected. The S& P 500 Index returned 5.2%. Small-cap U.S. stocks underperformed by comparison, with the Russell 2000 Index returning 0.3%. Outside the U.S., economic growth was weak, particularly in China, which weighed on markets around the globe. Declining energy and metals prices also dampened equity returns worldwide, and market volatility spiked dramatically in August. Developed international equities, as measured by the MSCI EAFE Index (Net), returned -0.1% for the period. Emerging markets were particularly hard hit, with the MSCI Emerging Markets Index (Net) returning -14.5% for the reporting period. The U.S. dollar was strong as compared to a number of foreign currencies, reducing returns of international investments in U.S. dollar terms. Against this backdrop, the U.S. Federal Reserve continued to push back the timing of its widely anticipated interest rate hike. The Barclays U.S. Aggregate Bond Index returned 2.0% for the period.
Performance. For the 12-month reporting period ended October 31, 2015, the portfolio returned 0.95%. The portfolio’s internally calculated comparative index, the Growth Composite Index (the composite index), returned 1.82%.
Positioning and Strategies. Over the reporting period, the portfolio’s asset allocations were broadly in line with those of the composite index. During the period, the portfolio added exposure to several fundamentally weighted indexes to diversify its underlying index funds.
The portfolio’s international equity exposure generally detracted from both total return and relative performance, although two of the portfolio’s holdings contributed positively to total return. With emerging markets particularly hard-hit for the reporting period, the Schwab Fundamental Emerging Markets Large Company Index Fund returned -11.9% since its inclusion, detracting both from the portfolio’s total return and its relative performance. The Schwab International Index Fund, which returned -1.5% and underperformed its comparative index, also dampened both total return and relative performance. The Schwab Fundamental International Large Company Index Fund and the Schwab Fundamental International Small Company Index both underperformed their respective comparative indices, dragging on relative performance, but added to the portfolio’s total return.
The portfolio’s U.S. equity exposures all contributed positively to the portfolio’s total return for the period, but its large-cap positions slightly underperformed their comparative indices, detracting from relative performance. The largest contribution to total return came from the Schwab S&P 500 Index Fund, the portfolio’s largest position, which returned 5.1%, followed by the Schwab Fundamental US Large Company Index Fund, which returned 2.4% since its inclusion. Among U.S. small-cap stocks, the Schwab Fundamental US Small Company Index Fund was the strongest performer, returning 1.8% since its inclusion. The Schwab Small-Cap Index Fund contributed modestly, returning 0.4%.
The fixed income allocation generated a positive return that contributed to the portfolio’s total return, with the Schwab Total Bond Market Fund returning 1.7%. On a relative basis, however, the fund slightly underperformed the composite index’s U.S. fixed income allocation component, the Barclays U.S. Aggregate Bond Index, which returned 2.0%.
As of 10/31/15:
| Statistics |
| Number of Holdings | 14 |
| Portfolio Turnover Rate | 36% |
| Asset Class Weightings % of Investments |
| Equity Funds – Large-Cap | 40.1% |
| Equity Funds – Small-Cap | 20.1% |
| Equity Funds – International | 19.8% |
| Fixed-Income Funds – Intermediate-Term Bond | 15.0% |
| Short-Term Investments | 3.5% |
| Money Market Funds | 1.5% |
| Total | 100.0% |
| Top Holdings % of Net Assets1,2 |
| Schwab S&P 500 Index Fund | 28.1% |
| Schwab Total Bond Market Fund | 15.0% |
| Schwab Small-Cap Index Fund | 14.1% |
| Schwab Fundamental US Large Company Index Fund | 12.0% |
| Schwab International Index Fund | 9.5% |
| Schwab Fundamental US Small Company Index Fund | 6.0% |
| Schwab Fundamental International Large Company Index Fund | 4.1% |
| Schwab Fundamental International Small Company Index Fund | 3.3% |
| Schwab Fundamental Emerging Markets Large Company Index Fund | 2.9% |
| Schwab Value Advantage Money Fund, Ultra Shares | 1.5% |
| Total | 96.5% |
Management views and portfolio holdings may have changed since the report date.
Small-company stocks are subject to greater volatility than many other asset classes.
International investments are subject to additional risks such as currency fluctuation, geopolitical risk and the potential for illiquid markets.
| 1 | This list is not a recommendation of any security by the investment adviser. |
| 2 | The holdings listed exclude any temporary liquidity investments. |
8Schwab MarketTrack Portfolios
Schwab MarketTrack Growth Portfolio
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1
Average Annual Total Returns1,2
| Portfolio and Inception Date | 1 Year | 5 Years | 10 Years |
| Portfolio: Schwab MarketTrack Growth Portfolio (11/20/95) | 0.95% | 9.02% | 5.95% |
| Growth Composite Index | 1.82% | 9.51% | 6.46% |
| S&P 500® Index | 5.20% | 14.33% | 7.85% |
| Fund Category: Morningstar Aggressive Allocation | -0.21% | 8.30% | 5.50% |
Fund Expense Ratios3: 0.64%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
| 1 | Portfolio expenses have been partially absorbed by CSIM and its affiliates. Without these reductions, the portfolio’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. |
| 2 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | As stated in the prospectus. Includes expenses of the underlying funds in which the portfolio invests. The annualized weighted average expense ratio of the underlying funds was 0.23%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab MarketTrack Portfolios9
Schwab MarketTrack Balanced Portfolio
The Schwab MarketTrack Balanced Portfolio (the portfolio) seeks both capital growth and income. To pursue its goal, the portfolio maintains a defined asset allocation. The portfolio’s target allocation includes stock, bond, and cash investments. For the 12-month reporting period ended October 31, 2015, the portfolio remained close to the target allocations of 60% equity, 35% fixed income, and 5% cash and cash equivalents. The portfolio invests mainly in other Schwab Funds including index funds, which seek to track the total returns of various market indices. For more information concerning the portfolio’s investment objective, strategies, and risks, please see the portfolio’s prospectus.
Market Highlights. Large-cap U.S. stocks posted modest gains for the 12-month reporting period on mixed economic signals. Interest rates remained low, but economic growth was weaker than expected. The S& P 500 Index returned 5.2%. Small-cap U.S. stocks underperformed by comparison, with the Russell 2000 Index returning 0.3%. Outside the U.S., economic growth was weak, particularly in China, which weighed on markets around the globe. Declining energy and metals prices also dampened equity returns worldwide, and market volatility spiked dramatically in August. Developed international equities, as measured by the MSCI EAFE Index (Net), returned -0.1% for the period. Emerging markets were particularly hard hit, with the MSCI Emerging Markets Index (Net) returning -14.5% for the reporting period. The U.S. dollar was strong as compared to a number of foreign currencies, reducing returns of international investments in U.S. dollar terms. Against this backdrop, the U.S. Federal Reserve continued to push back the timing of its widely anticipated interest rate hike. The Barclays U.S. Aggregate Bond Index returned 2.0% for the period.
Performance. For the 12-month reporting period ended October 31, 2015, the portfolio returned 1.10%. The portfolio’s internally calculated comparative index, the Balanced Composite Index (the composite index), returned 1.94%.
Positioning and Strategies. Over the reporting period, the portfolio’s asset allocations were broadly in line with those of the composite index. During the period, the portfolio added exposure to several fundamentally weighted indexes to diversify its underlying index funds.
The portfolio’s international equity exposure generally detracted from both total return and relative performance, although two of the portfolio’s holdings contributed positively to total return. With emerging markets particularly hard-hit for the reporting period, the Schwab Fundamental Emerging Markets Large Company Index Fund returned -11.9% since its inclusion, detracting both from the portfolio’s total return and its relative performance. The Schwab International Index Fund, which returned -1.5% and underperformed its comparative index, also dampened both total return and relative performance. The Schwab Fundamental International Large Company Index Fund and the Schwab Fundamental International Small Company Index both underperformed their respective comparative indices, dragging on relative performance, but added to the portfolio’s total return.
The portfolio’s U.S. equity exposures all contributed positively to the portfolio’s total return for the period, but its large-cap positions slightly underperformed their comparative indices, detracting from relative returns. The largest contribution to total return came from the Schwab S&P 500 Index Fund, which returned 5.1%, followed by the Schwab Fundamental US Large Company Index Fund, which returned 2.4% since its inclusion. Among U.S. small-cap stocks, the Schwab Fundamental US Small Company Index Fund was the strongest performer, returning 1.8% since its inclusion. The Schwab Small-Cap Index Fund contributed modestly, returning 0.4%.
The fixed income allocation generated a positive return that contributed to the portfolio’s total return, with the Schwab Total Bond Market Fund, the portfolio’s largest position, returning 1.7%. On a relative basis, however, the fund slightly underperformed the composite index’s U.S. fixed income allocation component, the Barclays U.S. Aggregate Bond Index, which returned 2.0%.
As of 10/31/15:
| Statistics |
| Number of Holdings | 14 |
| Portfolio Turnover Rate | 36% |
| Asset Class Weightings % of Investments |
| Fixed-Income Funds – Intermediate-Term Bond | 35.0% |
| Equity Funds – Large-Cap | 30.1% |
| Equity Funds – Small-Cap | 15.1% |
| Equity Funds – International | 14.8% |
| Short-Term Investments | 3.4% |
| Money Market Funds | 1.6% |
| Total | 100.0% |
| Top Holdings % of Net Assets1,2 |
| Schwab Total Bond Market Fund | 35.0% |
| Schwab S&P 500 Index Fund | 21.1% |
| Schwab Small-Cap Index Fund | 10.6% |
| Schwab Fundamental US Large Company Index Fund | 9.0% |
| Schwab International Index Fund | 7.2% |
| Schwab Fundamental US Small Company Index Fund | 4.5% |
| Schwab Fundamental International Large Company Index Fund | 3.0% |
| Schwab Fundamental International Small Company Index Fund | 2.5% |
| Schwab Fundamental Emerging Markets Large Company Index Fund | 2.1% |
| Schwab Value Advantage Money Fund, Ultra Shares | 1.6% |
| Total | 96.6% |
Management views and portfolio holdings may have changed since the report date.
Small-company stocks are subject to greater volatility than many other asset classes.
International investments are subject to additional risks such as currency fluctuation, geopolitical risk and the potential for illiquid markets.
| 1 | This list is not a recommendation of any security by the investment adviser. |
| 2 | The holdings listed exclude any temporary liquidity investments. |
10Schwab MarketTrack Portfolios
Schwab MarketTrack Balanced Portfolio
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1
Average Annual Total Returns1,2
| Portfolio and Inception Date | 1 Year | 5 Years | 10 Years |
| Portfolio: Schwab MarketTrack Balanced Portfolio (11/20/95) | 1.10% | 7.41% | 5.30% |
| Balanced Composite Index | 1.94% | 7.93% | 6.15% |
| S&P 500® Index | 5.20% | 14.33% | 7.85% |
| Barclays U.S. Aggregate Bond Index | 1.96% | 3.03% | 4.72% |
| Fund Category: Morningstar Moderate Allocation | 0.61% | 7.75% | 5.74% |
Fund Expense Ratios3: 0.65%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
| 1 | Portfolio expenses have been partially absorbed by CSIM and its affiliates. Without these reductions, the portfolio’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. |
| 2 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | As stated in the prospectus. Includes expenses of the underlying funds in which the portfolio invests. The annualized weighted average expense ratio of the underlying funds was 0.24%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab MarketTrack Portfolios11
Schwab MarketTrack Conservative Portfolio
The Schwab MarketTrack Conservative Portfolio (the portfolio) seeks income and more growth potential than an all-bond portfolio. To pursue its goal, the portfolio maintains a defined asset allocation. The portfolio’s target allocation includes stock, bond, and cash investments. For the 12-month reporting period ended October 31, 2015, the portfolio remained close to the target allocations of 55% fixed income, 40% equity, and 5% cash and cash equivalents. The portfolio invests mainly in other Schwab Funds including index funds, which seek to track the total returns of various market indices. For more information concerning the portfolio’s investment objective, strategies, and risks, please see the portfolio’s prospectus.
Market Highlights. Large-cap U.S. stocks posted modest gains for the 12-month reporting period on mixed economic signals. Interest rates remained low, but economic growth was weaker than expected. The S& P 500 Index returned 5.2%. Small-cap U.S. stocks underperformed by comparison, with the Russell 2000 Index returning 0.3%. Outside the U.S., economic growth was weak, particularly in China, which weighed on markets around the globe. Declining energy and metals prices also dampened equity returns worldwide, and market volatility spiked dramatically in August. Developed international equities, as measured by the MSCI EAFE Index (Net), returned -0.1% for the period. Emerging markets were particularly hard hit, with the MSCI Emerging Markets Index (Net) returning -14.5% for the reporting period. The U.S. dollar was strong as compared to a number of foreign currencies, reducing returns of international investments in U.S. dollar terms. Against this backdrop, the U.S. Federal Reserve continued to push back the timing of its widely anticipated interest rate hike. The Barclays U.S. Aggregate Bond Index returned 2.0% for the period.
Performance. For the 12-month reporting period ended October 31, 2015, the portfolio returned 1.23%. The portfolio’s internally calculated comparative index, the Conservative Composite Index (the composite index), returned 1.99%.
Positioning and Strategies. Over the reporting period, the portfolio’s asset allocations were broadly in line with those of the composite index. During the period, the portfolio added exposure to several fundamentally weighted indexes to diversify its underlying index funds.
The portfolio’s international equity exposure generally detracted from both total return and relative performance, although two of the portfolio’s holdings contributed positively to total return. With emerging markets particularly hard-hit for the reporting period, the Schwab Fundamental Emerging Markets Large Company Index Fund returned -11.9% since its inclusion, detracting both from the portfolio’s total return and its relative performance. The Schwab International Index Fund, which returned -1.5% and underperformed its comparative index, also dampened both total return and relative performance. The Schwab Fundamental International Large Company Index Fund and the Schwab Fundamental International Small Company Index both underperformed their respective comparative indices, dragging on relative performance, but added to the portfolio’s total return.
The portfolio’s U.S. equity exposures all contributed positively to the portfolio’s total return for the period, but its large-cap positions slightly underperformed their comparative indices, detracting from relative returns. The largest contribution to total return came from the Schwab S&P 500 Index Fund, which returned 5.1%, followed by the Schwab Fundamental US Large Company Index Fund, which returned 2.4% since its inclusion. Among U.S. small-cap stocks, the Schwab Fundamental US Small Company Index Fund was the strongest performer, returning 1.8% since its inclusion. The Schwab Small-Cap Index Fund contributed modestly, returning 0.4%.
The fixed income allocation generated a positive return that contributed to the portfolio’s total return, with the Schwab Total Bond Market Fund, the portfolio’s largest position, returning 1.7%. On a relative basis, however, the fund slightly underperformed the composite index’s U.S. fixed income allocation component, the Barclays U.S. Aggregate Bond Index, which returned 2.0%.
As of 10/31/15:
| Statistics |
| Number of Holdings | 14 |
| Portfolio Turnover Rate | 24% |
| Asset Class Weightings % of Investments |
| Fixed-Income Funds – Intermediate-Term Bond | 55.1% |
| Equity Funds – Large-Cap | 20.1% |
| Equity Funds – Small-Cap | 10.1% |
| Equity Funds – International | 9.8% |
| Short-Term Investments | 3.4% |
| Money Market Funds | 1.5% |
| Total | 100.0% |
| Top Holdings % of Net Assets1,2 |
| Schwab Total Bond Market Fund | 55.0% |
| Schwab S&P 500 Index Fund | 14.1% |
| Schwab Small-Cap Index Fund | 7.1% |
| Schwab Fundamental US Large Company Index Fund | 6.0% |
| Schwab International Index Fund | 4.8% |
| Schwab Fundamental US Small Company Index Fund | 3.0% |
| Schwab Fundamental International Large Company Index Fund | 2.0% |
| Schwab Fundamental International Small Company Index Fund | 1.7% |
| Schwab Value Advantage Money Fund, Ultra Shares | 1.6% |
| Schwab Fundamental Emerging Markets Large Company Index Fund | 1.3% |
| Total | 96.6% |
Management views and portfolio holdings may have changed since the report date.
Small-company stocks are subject to greater volatility than many other asset classes.
International investments are subject to additional risks such as currency fluctuation, geopolitical risk and the potential for illiquid markets.
| 1 | This list is not a recommendation of any security by the investment adviser. |
| 2 | The holdings listed exclude any temporary liquidity investments. |
12Schwab MarketTrack Portfolios
Schwab MarketTrack Conservative Portfolio
Performance and Fund Facts as of 10/31/15
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.csimfunds.com.
October 31, 2005 – October 31, 2015
Performance of Hypothetical
$10,000 Investment1
Average Annual Total Returns1,2
| Portfolio and Inception Date | 1 Year | 5 Years | 10 Years |
| Portfolio: Schwab MarketTrack Conservative Portfolio (11/20/95) | 1.23% | 5.70% | 4.55% |
| Conservative Composite Index | 1.99% | 6.30% | 5.72% |
| S&P 500® Index | 5.20% | 14.33% | 7.85% |
| Barclays U.S. Aggregate Bond Index | 1.96% | 3.03% | 4.72% |
| Fund Category: Morningstar Conservative Allocation | -0.77% | 5.02% | 4.59% |
Fund Expense Ratios3: 0.70%
All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower.
For index definitions, please see the Glossary.
| 1 | Portfolio expenses have been partially absorbed by CSIM and its affiliates. Without these reductions, the portfolio’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. |
| 2 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | As stated in the prospectus. Includes expenses of the underlying funds in which the portfolio invests. The annualized weighted average expense ratio of the underlying funds was 0.26%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab MarketTrack Portfolios13
Fund Expenses (Unaudited)
Examples for a $1,000 Investment
As a fund shareholder, you may incur two types of costs: (1) transaction costs, such as redemption fees; and (2) ongoing costs, including management fees, transfer agent and shareholder services fees, and other fund expenses.
The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six months beginning May 1, 2015 and held through October 31, 2015.
Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number given for your fund under the heading entitled “Expenses Paid During Period.”
Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in a fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. Therefore, the hypothetical return lines of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | Expense Ratio1
(Annualized) | Beginning
Account Value
at 5/1/15 | Ending
Account Value
(Net of Expenses)
at 10/31/15 | Expenses Paid
During Period2
5/1/15–10/31/15 | |
| Schwab MarketTrack All Equity Portfolio | | | | | |
| Actual Return | 0.42% | $1,000.00 | $ 959.40 | $ 2.07 | |
| Hypothetical 5% Return | 0.42% | $1,000.00 | $1,023.08 | $ 2.14 | |
| Schwab MarketTrack Growth Portfolio | | | | | |
| Actual Return | 0.41% | $1,000.00 | $ 970.90 | $ 2.04 | |
| Hypothetical 5% Return | 0.41% | $1,000.00 | $ 1,023.13 | $2.09 | |
| Schwab MarketTrack Balanced Portfolio | | | | | |
| Actual Return | 0.41% | $1,000.00 | $ 977.40 | $ 2.04 | |
| Hypothetical 5% Return | 0.41% | $1,000.00 | $ 1,023.13 | $2.09 | |
| Schwab MarketTrack Conservative Portfolio | | | | | |
| Actual Return | 0.42% | $1,000.00 | $ 983.90 | $ 2.10 | |
| Hypothetical 5% Return | 0.42% | $1,000.00 | $1,023.08 | $ 2.14 | |
| 1 | Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights which covers a 12-month period. The expenses incurred by the underlying funds in which the portfolios invest are not included in this ratio. |
| 2 | Expenses for each portfolio are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 184 days of the period, and divided by the 365 days of the fiscal year. |
14Schwab MarketTrack Portfolios
Schwab MarketTrack All Equity Portfolio
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $17.17 | $15.99 | $12.79 | $11.52 | $11.30 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.29 1 | 0.21 | 0.27 | 0.25 | 0.16 | |
| Net realized and unrealized gains (losses) | (0.23) | 1.24 | 3.27 | 1.02 | 0.27 | |
| Total from investment operations | 0.06 | 1.45 | 3.54 | 1.27 | 0.43 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.23) | (0.27) | (0.34) | — | (0.21) | |
| Net asset value at end of period | $17.00 | $17.17 | $15.99 | $12.79 | $11.52 | |
| Total return | 0.36% | 9.12% | 28.37% | 11.02% | 3.76% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses2 | 0.42% 3 | 0.50% | 0.50% | 0.50% | 0.50% | |
| Gross operating expenses2 | 0.43% 3 | 0.51% | 0.52% | 0.54% | 0.53% | |
| Net investment income (loss) | 1.67% | 1.24% | 1.84% | 1.93% | 1.37% | |
| Portfolio turnover rate | 42% 4 | 9% | 6% | 6% | 12% | |
| Net assets, end of period (x 1,000,000) | $578 | $621 | $586 | $475 | $476 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
3
Effective December 1, 2014, the management fee was reduced. The ratio presented for the period ended 10/31/15 is a blended ratio. (See financial note 4)
4
The portfolio turnover ratio increased due to the addition of Schwab Fundamental Index Funds to the portfolio during the period.
Schwab MarketTrack All Equity Portfolio
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 99.5% | Other Investment Companies | 422,251,512 | 574,715,933 |
| 0.4% | Short-Term Investment | 1,988,106 | 1,988,106 |
| 99.9% | Total Investments | 424,239,618 | 576,704,039 |
| 0.1% | Other Assets and Liabilities, Net | | 841,113 |
| 100.0% | Net Assets | | 577,545,152 |
| Security | Number
of Shares | Value
($) |
| Other Investment Companies 99.5% of net assets |
| Equity Funds 99.5% |
| International 29.3% |
| Schwab Fundamental Emerging Markets Large Company Index Fund (a) | 3,907,265 | 26,061,460 |
| Schwab Fundamental International Large Company Index Fund (a) | 4,235,560 | 34,689,239 |
| Schwab Fundamental International Small Company Index Fund (a) | 2,571,858 | 28,933,405 |
| Schwab International Index Fund (a) | 4,318,720 | 79,853,140 |
| | | 169,537,244 |
| Security | Number
of Shares | Value
($) |
| Large-Cap 45.3% |
| Schwab Fundamental US Large Company Index Fund (a) | 5,149,167 | 77,958,384 |
| Schwab S&P 500 Index Fund (a) | 5,562,139 | 183,550,585 |
| | | 261,508,969 |
| Small-Cap 24.9% |
| Schwab Fundamental US Small Company Index Fund (a) | 3,391,816 | 43,483,075 |
| Schwab Small-Cap Index Fund (a) | 3,810,827 | 100,186,645 |
| | | 143,669,720 |
| Total Other Investment Companies |
| (Cost $422,251,512) | | 574,715,933 |
Security
Rate, Maturity Date | Face
Amount
($) | Value
($) |
| Short-Term Investment 0.4% of net assets |
| Time Deposit 0.4% |
| Nordea Bank |
| 0.03%, 11/02/15 | 1,988,106 | 1,988,106 |
| Total Short-Term Investment |
| (Cost $1,988,106) | | 1,988,106 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $435,325,553 and the unrealized appreciation and depreciation were $144,680,311 and ($3,301,825), respectively, with a net unrealized appreciation of $141,378,486.
| (a) | Issuer is affiliated with the fund's investment adviser. |
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Other Investment Companies1 | | $574,715,933 | | $— | | $— | | $574,715,933 | |
| Short-Term Investment1 | | — | | 1,988,106 | | — | | 1,988,106 | |
| Total | | $574,715,933 | | $1,988,106 | | $— | | $576,704,039 | |
| 1 | As categorized in Portfolio Holdings. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Schwab MarketTrack All Equity Portfolio
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments in affiliated underlying funds, at value (cost $422,251,512) | | $574,715,933 |
| Investments in unaffiliated issuers, at value (cost $1,988,106) | + | 1,988,106 |
| Total investments, at value (cost $424,239,618) | | 576,704,039 |
| Receivables: | | |
| Investments sold | | 1,990,000 |
| Fund shares sold | | 171,880 |
| Prepaid expenses | + | 19,412 |
| Total assets | | 578,885,331 |
| Liabilities |
| Payables: | | |
| Investments bought | | 970,000 |
| Investment adviser and administrator fees | | 12,408 |
| Shareholder service fees | | 23,438 |
| Fund shares redeemed | | 264,847 |
| Accrued expenses | + | 69,486 |
| Total liabilities | | 1,340,179 |
| Net Assets |
| Total assets | | 578,885,331 |
| Total liabilities | – | 1,340,179 |
| Net assets | | $577,545,152 |
| Net Assets by Source | | |
| Capital received from investors | | 386,638,052 |
| Net investment income not yet distributed | | 10,705,994 |
| Net realized capital gains | | 27,736,685 |
| Net unrealized capital appreciation | | 152,464,421 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $577,545,152 | | 33,976,269 | | $17.00 |
| | | | | |
Schwab MarketTrack All Equity Portfolio
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends received from affiliated underlying funds | | $12,651,936 |
| Interest | + | 759 |
| Total investment income | | 12,652,695 |
| Expenses |
| Investment adviser and administrator fees | | 838,432 |
| Shareholder service fees | | 1,469,593 |
| Shareholder reports | | 97,638 |
| Transfer agent fees | | 35,751 |
| Professional fees | | 32,571 |
| Portfolio accounting fees | | 25,861 |
| Registration fees | | 19,264 |
| Custodian fees | | 12,891 |
| Independent trustees' fees | | 9,744 |
| Proxy fees | | 9,162 |
| Other expenses | + | 26,423 |
| Total expenses | | 2,577,330 |
| Expense reduction by CSIM and its affiliates | – | 35,751 |
| Net expenses | – | 2,541,579 |
| Net investment income | | 10,111,116 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 8,408,971 |
| Net realized gains on sales of affiliated underlying funds | | 63,851,752 |
| Net realized gains on unaffiliated issuers | + | 14 |
| Net realized gains | | 72,260,737 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | + | (79,060,989) |
| Net realized and unrealized losses | | (6,800,252) |
| Increase in net assets resulting from operations | | $3,310,864 |
Schwab MarketTrack All Equity Portfolio
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $10,111,116 | $7,579,810 |
| Net realized gains | | 72,260,737 | 16,907,766 |
| Net change in unrealized appreciation (depreciation) | + | (79,060,989) | 28,397,026 |
| Increase in net assets from operations | | 3,310,864 | 52,884,602 |
| Distributions to Shareholders | |
| Distributions from net investment income | | ($8,349,307) | ($9,729,315) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 3,446,540 | $58,886,736 | 3,783,484 | $62,639,443 |
| Shares reinvested | | 449,055 | 7,719,249 | 553,923 | 9,089,878 |
| Shares redeemed | + | (6,085,680) | (104,963,000) | (4,817,645) | (80,084,457) |
| Net transactions in fund shares | | (2,190,085) | ($38,357,015) | (480,238) | ($8,355,136) |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 36,166,354 | $620,940,610 | 36,646,592 | $586,140,459 |
| Total increase or decrease | + | (2,190,085) | (43,395,458) | (480,238) | 34,800,151 |
| End of period | | 33,976,269 | $577,545,152 | 36,166,354 | $620,940,610 |
| Net investment income not yet distributed | | | $10,705,994 | | $8,345,966 |
Schwab MarketTrack Growth Portfolio
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $23.20 | $21.67 | $18.08 | $16.85 | $16.35 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.34 1 | 0.27 | 0.34 | 0.30 | 0.24 | |
| Net realized and unrealized gains (losses) | (0.12) | 1.57 | 3.60 | 1.35 | 0.51 | |
| Total from investment operations | 0.22 | 1.84 | 3.94 | 1.65 | 0.75 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.35) | (0.31) | (0.35) | (0.42) | (0.25) | |
| Distributions from net realized gains | (0.39) | — | — | — | — | |
| Total distributions | (0.74) | (0.31) | (0.35) | (0.42) | (0.25) | |
| Net asset value at end of period | $22.68 | $23.20 | $21.67 | $18.08 | $16.85 | |
| Total return | 0.95% | 8.55% | 22.14% | 10.03% | 4.55% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses2 | 0.42% 3 | 0.50% | 0.50% | 0.50% | 0.50% | |
| Gross operating expenses2 | 0.42% 3 | 0.51% | 0.52% | 0.53% | 0.52% | |
| Net investment income (loss) | 1.50% | 1.20% | 1.71% | 1.78% | 1.39% | |
| Portfolio turnover rate | 36% 4 | 7% | 9% | 9% | 17% | |
| Net assets, end of period (x 1,000,000) | $716 | $734 | $680 | $566 | $562 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
3
Effective December 1, 2014, the management fee was reduced. The ratio presented for the period ended 10/31/15 is a blended ratio. (See financial note 4)
4
The portfolio turnover ratio increased due to the addition of Schwab Fundamental Index Funds to the portfolio during the period.
Schwab MarketTrack Growth Portfolio
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 96.5% | Other Investment Companies | 477,117,557 | 691,131,922 |
| 3.5% | Short-Term Investments | 24,767,947 | 24,767,947 |
| 100.0% | Total Investments | 501,885,504 | 715,899,869 |
| (0.0%) | Other Assets and Liabilities, Net | | (20,064) |
| 100.0% | Net Assets | | 715,879,805 |
| Security | Number
of Shares | Value
($) |
| Other Investment Companies 96.5% of net assets |
| Equity Funds 80.0% |
| International 19.8% |
| Schwab Fundamental Emerging Markets Large Company Index Fund (a) | 3,155,206 | 21,045,225 |
| Schwab Fundamental International Large Company Index Fund (a) | 3,543,745 | 29,023,268 |
| Schwab Fundamental International Small Company Index Fund (a) | 2,129,293 | 23,954,549 |
| Schwab International Index Fund (a) | 3,668,131 | 67,823,748 |
| | | 141,846,790 |
| Large-Cap 40.1% |
| Schwab Fundamental US Large Company Index Fund (a) | 5,666,998 | 85,798,350 |
| Schwab S&P 500 Index Fund (a) | 6,100,571 | 201,318,830 |
| | | 287,117,180 |
| Small-Cap 20.1% |
| Schwab Fundamental US Small Company Index Fund (a) | 3,358,509 | 43,056,083 |
| Schwab Small-Cap Index Fund (a) | 3,838,509 | 100,914,407 |
| | | 143,970,490 |
| | | 572,934,460 |
| Security | Number
of Shares | Value
($) |
| Fixed-Income Fund 15.0% |
| Intermediate-Term Bond 15.0% |
| Schwab Total Bond Market Fund (a) | 11,289,832 | 107,140,508 |
| Money Market Fund 1.5% |
| Schwab Value Advantage Money Fund, Ultra Shares 0.11% (a)(b) | 11,056,954 | 11,056,954 |
| Total Other Investment Companies |
| (Cost $477,117,557) | | 691,131,922 |
Security
Rate, Maturity Date | Face
Amount
($) | Value
($) |
| Short-Term Investments 3.5% of net assets |
| Time Deposits 3.5% |
| Bank of Tokyo - Mitsubishi UFJ |
| 0.03%, 11/02/15 | 3,253,708 | 3,253,708 |
| Barclays Capital, Inc. |
| 0.03%, 11/02/15 | 7,171,413 | 7,171,413 |
| JPMorgan Chase Bank |
| 0.03%, 11/02/15 | 7,171,413 | 7,171,413 |
| Sumitomo Mitsui Banking Corp. |
| 0.03%, 11/02/15 | 7,171,413 | 7,171,413 |
| Total Short-Term Investments |
| (Cost $24,767,947) | | 24,767,947 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $505,019,660 and the unrealized appreciation and depreciation were $213,644,637 and ($2,764,428), respectively, with a net unrealized appreciation of $210,880,209.
| (a) | Issuer is affiliated with the fund's investment adviser. |
| (b) | The rate shown is the 7-day yield. |
Schwab MarketTrack Growth Portfolio
Portfolio Holdings continued
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Other Investment Companies1 | | $691,131,922 | | $— | | $— | | $691,131,922 | |
| Short-Term Investments1 | | — | | 24,767,947 | | — | | 24,767,947 | |
| Total | | $691,131,922 | | $24,767,947 | | $— | | $715,899,869 | |
| 1 | As categorized in Portfolio Holdings. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Schwab MarketTrack Growth Portfolio
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments in affiliated underlying funds, at value (cost $477,117,557) | | $691,131,922 |
| Investments in unaffiliated issuers, at value (cost $24,767,947) | + | 24,767,947 |
| Total investments, at value (cost $501,885,504) | | 715,899,869 |
| Receivables: | | |
| Investments sold | | 5,180,000 |
| Fund shares sold | | 358,440 |
| Dividends | | 192,995 |
| Interest | | 41 |
| Prepaid expenses | + | 17,820 |
| Total assets | | 721,649,165 |
| Liabilities |
| Payables: | | |
| Investments bought | | 5,538,544 |
| Investment adviser and administrator fees | | 15,320 |
| Shareholder service fees | | 29,339 |
| Fund shares redeemed | | 116,444 |
| Accrued expenses | + | 69,713 |
| Total liabilities | | 5,769,360 |
| Net Assets |
| Total assets | | 721,649,165 |
| Total liabilities | – | 5,769,360 |
| Net assets | | $715,879,805 |
| Net Assets by Source | | |
| Capital received from investors | | 427,390,911 |
| Distributions in excess of net investment income | | (522,853) |
| Net realized capital gains | | 74,997,382 |
| Net unrealized capital appreciation | | 214,014,365 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $715,879,805 | | 31,568,642 | | $22.68 |
| | | | | |
Schwab MarketTrack Growth Portfolio
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends received from affiliated underlying funds | | $14,101,048 |
| Interest | + | 7,672 |
| Total investment income | | 14,108,720 |
| Expenses |
| Investment adviser and administrator fees | | 1,018,902 |
| Shareholder service fees | | 1,798,542 |
| Shareholder reports | | 95,187 |
| Transfer agent fees | | 36,200 |
| Professional fees | | 33,446 |
| Portfolio accounting fees | | 27,773 |
| Registration fees | | 21,591 |
| Custodian fees | | 14,757 |
| Independent trustees' fees | | 10,364 |
| Proxy fees | | 8,866 |
| Other expenses | + | 31,617 |
| Total expenses | | 3,097,245 |
| Expense reduction by CSIM and its affiliates | – | 36,200 |
| Net expenses | – | 3,061,045 |
| Net investment income | | 11,047,675 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 8,055,089 |
| Net realized gains on sales of affiliated underlying funds | | 72,003,827 |
| Net realized gains on unaffiliated issuers | + | 9,995 |
| Net realized gains | | 80,068,911 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | + | (84,004,658) |
| Net realized and unrealized losses | | (3,935,747) |
| Increase in net assets resulting from operations | | $7,111,928 |
Schwab MarketTrack Growth Portfolio
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $11,047,675 | $8,557,275 |
| Net realized gains | | 80,068,911 | 15,151,167 |
| Net change in unrealized appreciation (depreciation) | + | (84,004,658) | 34,299,920 |
| Increase in net assets from operations | | 7,111,928 | 58,008,362 |
| Distributions to Shareholders | |
| Distributions from net investment income | | (11,176,663) | (9,625,225) |
| Distributions from net realized gains | + | (12,409,011) | — |
| Total distributions | | ($23,585,674) | ($9,625,225) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 3,249,257 | $74,702,105 | 3,913,595 | $87,721,647 |
| Shares reinvested | | 977,376 | 22,303,738 | 411,732 | 9,099,268 |
| Shares redeemed | + | (4,282,237) | (98,343,607) | (4,084,279) | (91,729,964) |
| Net transactions in fund shares | | (55,604) | ($1,337,764) | 241,048 | $5,090,951 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 31,624,246 | $733,691,315 | 31,383,198 | $680,217,227 |
| Total increase or decrease | + | (55,604) | (17,811,510) | 241,048 | 53,474,088 |
| End of period | | 31,568,642 | $715,879,805 | 31,624,246 | $733,691,315 |
| Distributions in excess of net investment income | | | ($522,853) | | ($966,909) |
Schwab MarketTrack Balanced Portfolio
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $19.50 | $18.55 | $16.33 | $15.41 | $14.96 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.29 1 | 0.26 | 0.31 | 0.29 | 0.25 | |
| Net realized and unrealized gains (losses) | (0.08) | 1.08 | 2.23 | 1.01 | 0.46 | |
| Total from investment operations | 0.21 | 1.34 | 2.54 | 1.30 | 0.71 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.30) | (0.27) | (0.32) | (0.38) | (0.26) | |
| Distributions from net realized gains | (0.34) | (0.12) | — | — | — | |
| Total distributions | (0.64) | (0.39) | (0.32) | (0.38) | (0.26) | |
| Net asset value at end of period | $19.07 | $19.50 | $18.55 | $16.33 | $15.41 | |
| Total return | 1.10% | 7.28% | 15.82% | 8.61% | 4.80% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses2 | 0.42% 3 | 0.50% | 0.50% | 0.50% | 0.50% | |
| Gross operating expenses2 | 0.42% 3 | 0.51% | 0.52% | 0.53% | 0.52% | |
| Net investment income (loss) | 1.51% | 1.30% | 1.75% | 1.86% | 1.64% | |
| Portfolio turnover rate | 36% 4 | 16% | 12% | 12% | 25% | |
| Net assets, end of period (x 1,000,000) | $512 | $522 | $481 | $425 | $432 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
3
Effective December 1, 2014, the management fee was reduced. The ratio presented for the period ended 10/31/15 is a blended ratio. (See financial note 4)
4
The portfolio turnover ratio increased due to the addition of Schwab Fundamental Index Funds to the portfolio during the period.
Schwab MarketTrack Balanced Portfolio
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 96.6% | Other Investment Companies | 373,581,996 | 494,684,986 |
| 3.4% | Short-Term Investments | 17,377,312 | 17,377,312 |
| 100.0% | Total Investments | 390,959,308 | 512,062,298 |
| 0.0% | Other Assets and Liabilities, Net | | 187,511 |
| 100.0% | Net Assets | | 512,249,809 |
| Security | Number
of Shares | Value
($) |
| Other Investment Companies 96.6% of net assets |
| Equity Funds 60.0% |
| International 14.8% |
| Schwab Fundamental Emerging Markets Large Company Index Fund (a) | 1,614,627 | 10,769,562 |
| Schwab Fundamental International Large Company Index Fund (a) | 1,903,457 | 15,589,309 |
| Schwab Fundamental International Small Company Index Fund (a) | 1,140,007 | 12,825,082 |
| Schwab International Index Fund (a) | 1,978,586 | 36,584,047 |
| | | 75,768,000 |
| Large-Cap 30.1% |
| Schwab Fundamental US Large Company Index Fund (a) | 3,037,893 | 45,993,704 |
| Schwab S&P 500 Index Fund (a) | 3,278,113 | 108,177,731 |
| | | 154,171,435 |
| Small-Cap 15.1% |
| Schwab Fundamental US Small Company Index Fund (a) | 1,801,386 | 23,093,767 |
| Schwab Small-Cap Index Fund (a) | 2,062,479 | 54,222,581 |
| | | 77,316,348 |
| | | 307,255,783 |
| Security | Number
of Shares | Value
($) |
| Fixed-Income Fund 35.0% |
| Intermediate-Term Bond 35.0% |
| Schwab Total Bond Market Fund (a) | 18,903,171 | 179,391,089 |
| Money Market Fund 1.6% |
| Schwab Value Advantage Money Fund, Ultra Shares 0.11% (a)(b) | 8,038,114 | 8,038,114 |
| Total Other Investment Companies |
| (Cost $373,581,996) | | 494,684,986 |
Security
Rate, Maturity Date | Face
Amount
($) | Value
($) |
| Short-Term Investments 3.4% of net assets |
| Time Deposits 3.4% |
| Australia & New Zealand Banking Group Ltd. |
| 0.03%, 11/02/15 | 5,128,805 | 5,128,805 |
| DNB |
| 0.03%, 11/02/15 | 5,128,805 | 5,128,805 |
| JPMorgan Chase Bank |
| 0.03%, 11/02/15 | 1,990,897 | 1,990,897 |
| Wells Fargo |
| 0.03%, 11/02/15 | 5,128,805 | 5,128,805 |
| Total Short-Term Investments |
| (Cost $17,377,312) | | 17,377,312 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $398,684,037 and the unrealized appreciation and depreciation were $114,739,603 and ($1,361,342), respectively, with a net unrealized appreciation of $113,378,261.
| (a) | Issuer is affiliated with the fund's investment adviser. |
| (b) | The rate shown is the 7-day yield. |
Schwab MarketTrack Balanced Portfolio
Portfolio Holdings continued
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Other Investment Companies1 | | $494,684,986 | | $— | | $— | | $494,684,986 | |
| Short-Term Investments1 | | — | | 17,377,312 | | — | | 17,377,312 | |
| Total | | $494,684,986 | | $17,377,312 | | $— | | $512,062,298 | |
| 1 | As categorized in Portfolio Holdings. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Schwab MarketTrack Balanced Portfolio
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments in affiliated underlying funds, at value (cost $373,581,996) | | $494,684,986 |
| Investments in unaffiliated issuers, at value (cost $17,377,312) | + | 17,377,312 |
| Total investments, at value (cost $390,959,308) | | 512,062,298 |
| Receivables: | | |
| Investments sold | | 6,460,000 |
| Fund shares sold | | 567,618 |
| Dividends | | 328,688 |
| Interest | | 29 |
| Prepaid expenses | + | 17,656 |
| Total assets | | 519,436,289 |
| Liabilities |
| Payables: | | |
| Investments bought | | 6,938,433 |
| Investment adviser and administrator fees | | 10,986 |
| Shareholder service fees | | 21,364 |
| Fund shares redeemed | | 168,056 |
| Accrued expenses | + | 47,641 |
| Total liabilities | | 7,186,480 |
| Net Assets |
| Total assets | | 519,436,289 |
| Total liabilities | – | 7,186,480 |
| Net assets | | $512,249,809 |
| Net Assets by Source | | |
| Capital received from investors | | 344,181,948 |
| Net investment income not yet distributed | | 1,540,404 |
| Net realized capital gains | | 45,424,467 |
| Net unrealized capital appreciation | | 121,102,990 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $512,249,809 | | 26,854,867 | | $19.07 |
| | | | | |
Schwab MarketTrack Balanced Portfolio
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends received from affiliated underlying funds | | $10,053,900 |
| Interest | + | 5,387 |
| Total investment income | | 10,059,287 |
| Expenses |
| Investment adviser and administrator fees | | 721,108 |
| Shareholder service fees | | 1,276,764 |
| Shareholder reports | | 53,377 |
| Professional fees | | 31,818 |
| Transfer agent fees | | 28,552 |
| Portfolio accounting fees | | 24,398 |
| Registration fees | | 16,233 |
| Custodian fees | | 10,993 |
| Independent trustees' fees | | 9,317 |
| Proxy fees | | 4,702 |
| Other expenses | + | 20,605 |
| Total expenses | | 2,197,867 |
| Expense reduction by CSIM and its affiliates | – | 28,552 |
| Net expenses | – | 2,169,315 |
| Net investment income | | 7,889,972 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 4,182,543 |
| Net realized gains on sales of affiliated underlying funds | | 49,191,865 |
| Net realized gains on unaffiliated issuers | + | 6,095 |
| Net realized gains | | 53,380,503 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | + | (55,491,706) |
| Net realized and unrealized losses | | (2,111,203) |
| Increase in net assets resulting from operations | | $5,778,769 |
Schwab MarketTrack Balanced Portfolio
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $7,889,972 | $6,710,856 |
| Net realized gains | | 53,380,503 | 9,295,980 |
| Net change in unrealized appreciation (depreciation) | + | (55,491,706) | 20,375,572 |
| Increase in net assets from operations | | 5,778,769 | 36,382,408 |
| Distributions to Shareholders | |
| Distributions from net investment income | | (7,938,877) | (6,922,856) |
| Distributions from net realized gains | + | (8,928,300) | (3,022,728) |
| Total distributions | | ($16,867,177) | ($9,945,584) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 5,459,344 | $104,614,248 | 6,823,497 | $128,625,138 |
| Shares reinvested | | 823,113 | 15,729,696 | 501,199 | 9,312,269 |
| Shares redeemed | + | (6,192,938) | (118,872,279) | (6,491,635) | (123,488,301) |
| Net transactions in fund shares | | 89,519 | $1,471,665 | 833,061 | $14,449,106 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 26,765,348 | $521,866,552 | 25,932,287 | $480,980,622 |
| Total increase or decrease | + | 89,519 | (9,616,743) | 833,061 | 40,885,930 |
| End of period | | 26,854,867 | $512,249,809 | 26,765,348 | $521,866,552 |
| Net investment income not yet distributed | | | $1,540,404 | | $1,291,759 |
Schwab MarketTrack Conservative Portfolio
Financial Statements
Financial Highlights
| | 11/1/14–
10/31/15 | 11/1/13–
10/31/14 | 11/1/12–
10/31/13 | 11/1/11–
10/31/12 | 11/1/10–
10/31/11 | |
| Per-Share Data |
| Net asset value at beginning of period | $16.00 | $15.34 | $14.23 | $13.59 | $13.22 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss) | 0.25 1 | 0.23 | 0.26 | 0.26 | 0.25 | |
| Net realized and unrealized gains (losses) | (0.05) | 0.67 | 1.10 | 0.69 | 0.37 | |
| Total from investment operations | 0.20 | 0.90 | 1.36 | 0.95 | 0.62 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.26) | (0.24) | (0.25) | (0.31) | (0.25) | |
| Net asset value at end of period | $15.94 | $16.00 | $15.34 | $14.23 | $13.59 | |
| Total return | 1.23% | 5.95% | 9.71% | 7.07% | 4.72% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses2 | 0.43% 3 | 0.50% | 0.50% | 0.50% | 0.50% | |
| Gross operating expenses2 | 0.44% 3 | 0.54% | 0.55% | 0.55% | 0.55% | |
| Net investment income (loss) | 1.54% | 1.43% | 1.78% | 1.96% | 1.84% | |
| Portfolio turnover rate | 24% 4 | 9% | 15% | 19% | 30% | |
| Net assets, end of period (x 1,000,000) | $228 | $223 | $203 | $189 | $198 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
3
Effective December 1, 2014, the management fee was reduced. The ratio presented for the period ended 10/31/15 is a blended ratio. (See financial note 4)
4
The portfolio turnover ratio increased due to the addition of Schwab Fundamental Index Funds to the portfolio during the period.
Schwab MarketTrack Conservative Portfolio
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 96.6% | Other Investment Companies | 180,441,859 | 219,712,793 |
| 3.4% | Short-Term Investments | 7,787,371 | 7,787,371 |
| 100.0% | Total Investments | 188,229,230 | 227,500,164 |
| 0.0% | Other Assets and Liabilities, Net | | 92,689 |
| 100.0% | Net Assets | | 227,592,853 |
| Security | Number
of Shares | Value
($) |
| Other Investment Companies 96.6% of net assets |
| Equity Funds 40.0% |
| International 9.8% |
| Schwab Fundamental Emerging Markets Large Company Index Fund (a) | 432,696 | 2,886,084 |
| Schwab Fundamental International Large Company Index Fund (a) | 554,331 | 4,539,971 |
| Schwab Fundamental International Small Company Index Fund (a) | 337,593 | 3,797,927 |
| Schwab International Index Fund (a) | 597,598 | 11,049,595 |
| | | 22,273,577 |
| Large-Cap 20.1% |
| Schwab Fundamental US Large Company Index Fund (a) | 899,135 | 13,612,911 |
| Schwab S&P 500 Index Fund (a) | 974,586 | 32,161,325 |
| | | 45,774,236 |
| Small-Cap 10.1% |
| Schwab Fundamental US Small Company Index Fund (a) | 532,697 | 6,829,182 |
| Schwab Small-Cap Index Fund (a) | 612,939 | 16,114,161 |
| | | 22,943,343 |
| | | 90,991,156 |
| Security | Number
of Shares | Value
($) |
| Fixed-Income Fund 55.0% |
| Intermediate-Term Bond 55.0% |
| Schwab Total Bond Market Fund (a) | 13,196,228 | 125,232,206 |
| Money Market Fund 1.6% |
| Schwab Value Advantage Money Fund, Ultra Shares 0.11% (a)(b) | 3,489,431 | 3,489,431 |
| Total Other Investment Companies |
| (Cost $180,441,859) | | 219,712,793 |
Security
Rate, Maturity Date | Face
Amount
($) | Value
($) |
| Short-Term Investments 3.4% of net assets |
| Time Deposits 3.4% |
| Bank of Tokyo - Mitsubishi UFJ |
| 0.03%, 11/02/15 | 958,582 | 958,582 |
| Barclays Capital, Inc. |
| 0.03%, 11/02/15 | 2,276,263 | 2,276,263 |
| JPMorgan Chase Bank |
| 0.03%, 11/02/15 | 2,276,263 | 2,276,263 |
| Sumitomo Mitsui Banking Corp. |
| 0.03%, 11/02/15 | 2,276,263 | 2,276,263 |
| Total Short-Term Investments |
| (Cost $7,787,371) | | 7,787,371 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $195,094,687 and the unrealized appreciation and depreciation were $32,789,376 and ($383,899), respectively, with a net unrealized appreciation of $32,405,477.
| (a) | Issuer is affiliated with the fund's investment adviser. |
| (b) | The rate shown is the 7-day yield. |
Schwab MarketTrack Conservative Portfolio
Portfolio Holdings continued
The following is a summary of the inputs used to value the fund's investments as of October 31, 2015 (see financial note 2(a) for additional information):
| Description | | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | | Other Significant
Observable Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | Total | |
| Other Investment Companies1 | | $219,712,793 | | $— | | $— | | $219,712,793 | |
| Short-Term Investments1 | | — | | 7,787,371 | | — | | 7,787,371 | |
| Total | | $219,712,793 | | $7,787,371 | | $— | | $227,500,164 | |
| 1 | As categorized in Portfolio Holdings. |
The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended October 31, 2015.
Schwab MarketTrack Conservative Portfolio
Statement of
Assets and Liabilities
As of October 31, 2015
| Assets |
| Investments in affiliated underlying funds, at value (cost $180,441,859) | | $219,712,793 |
| Investments in unaffiliated issuers, at value (cost $7,787,371) | + | 7,787,371 |
| Total investments, at value (cost $188,229,230) | | 227,500,164 |
| Receivables: | | |
| Investments sold | | 2,840,000 |
| Dividends | | 226,118 |
| Fund shares sold | | 166,676 |
| Interest | | 13 |
| Prepaid expenses | + | 15,322 |
| Total assets | | 230,748,293 |
| Liabilities |
| Payables: | | |
| Investments bought | | 3,093,114 |
| Investment adviser and administrator fees | | 4,876 |
| Shareholder service fees | | 9,130 |
| Fund shares redeemed | | 16,575 |
| Accrued expenses | + | 31,745 |
| Total liabilities | | 3,155,440 |
| Net Assets |
| Total assets | | 230,748,293 |
| Total liabilities | – | 3,155,440 |
| Net assets | | $227,592,853 |
| Net Assets by Source | | |
| Capital received from investors | | 182,255,961 |
| Net investment income not yet distributed | | 154,755 |
| Net realized capital gains | | 5,911,203 |
| Net unrealized capital appreciation | | 39,270,934 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $227,592,853 | | 14,279,444 | | $15.94 |
| | | | | |
Schwab MarketTrack Conservative Portfolio
Statement of
Operations
For the period November 1, 2014 through October 31, 2015
| Investment Income |
| Dividends received from affiliated underlying funds | | $4,487,322 |
| Interest | + | 2,370 |
| Total investment income | | 4,489,692 |
| Expenses |
| Investment adviser and administrator fees | | 314,540 |
| Shareholder service fees | | 559,741 |
| Professional fees | | 29,627 |
| Transfer agent fees | | 25,011 |
| Shareholder reports | | 21,513 |
| Portfolio accounting fees | | 19,177 |
| Registration fees | | 12,956 |
| Independent trustees' fees | | 7,916 |
| Custodian fees | | 6,035 |
| Proxy fees | | 1,913 |
| Other expenses | + | 7,725 |
| Total expenses | | 1,006,154 |
| Expense reduction by CSIM and its affiliates | – | 25,011 |
| Net expenses | – | 981,143 |
| Net investment income | | 3,508,549 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 1,211,768 |
| Net realized gains on sales of affiliated underlying funds | | 13,358,214 |
| Net realized gains on unaffiliated issuers | + | 6,068 |
| Net realized gains | | 14,576,050 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | + | (15,531,464) |
| Net realized and unrealized losses | | (955,414) |
| Increase in net assets resulting from operations | | $2,553,135 |
Schwab MarketTrack Conservative Portfolio
Statement of
Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| Net investment income | | $3,508,549 | $3,094,773 |
| Net realized gains | | 14,576,050 | 2,115,830 |
| Net change in unrealized appreciation (depreciation) | + | (15,531,464) | 7,357,863 |
| Increase in net assets from operations | | 2,553,135 | 12,568,466 |
| Distributions to Shareholders | |
| Distributions from net investment income | | ($3,590,423) | ($3,306,277) |
| Transactions in Fund Shares | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 2,432,532 | $39,115,068 | 2,855,381 | $44,555,555 |
| Shares reinvested | | 207,359 | 3,310,268 | 196,187 | 3,043,263 |
| Shares redeemed | + | (2,319,449) | (37,207,806) | (2,297,937) | (36,023,815) |
| Net transactions in fund shares | | 320,442 | $5,217,530 | 753,631 | $11,575,003 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/14-10/31/15 | 11/1/13-10/31/14 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 13,959,002 | $223,412,611 | 13,205,371 | $202,575,419 |
| Total increase | + | 320,442 | 4,180,242 | 753,631 | 20,837,192 |
| End of period | | 14,279,444 | $227,592,853 | 13,959,002 | $223,412,611 |
| Net investment income not yet distributed | | | $154,755 | | $150,423 |
Schwab MarketTrack Portfolios
1. Business Structure of the Funds:
Each of the funds in this report is a series of Schwab Capital Trust (the trust), a no-load, open-end management investment company. The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the 1940 Act). The list below shows all the funds in the trust as of the end of the period, including the funds discussed in this report, which are highlighted:
| Schwab Capital Trust (organized May 7, 1993) | Schwab Target 2010 Fund |
| Schwab MarketTrack All Equity Portfolio | Schwab Target 2015 Fund |
| Schwab MarketTrack Growth Portfolio | Schwab Target 2020 Fund |
| Schwab MarketTrack Balanced Portfolio | Schwab Target 2025 Fund |
| Schwab MarketTrack Conservative Portfolio | Schwab Target 2030 Fund |
| Schwab ® S&P 500 Index Fund | Schwab Target 2035 Fund |
| Schwab Small-Cap Index Fund® | Schwab Target 2040 Fund |
| Schwab Total Stock Market Index Fund® | Schwab Target 2045 Fund |
| Schwab International Index Fund® | Schwab Target 2050 Fund |
| Laudus Small-Cap MarketMasters Fund™ | Schwab Target 2055 Fund |
| Laudus International MarketMasters Fund™ | Schwab Fundamental US Large Company Index Fund |
| Schwab Balanced Fund™ | Schwab Fundamental US Small Company Index Fund |
| Schwab Core Equity Fund™ | Schwab Fundamental International Large Company Index Fund |
| Schwab Dividend Equity Fund™ | Schwab Fundamental International Small Company Index Fund |
| Schwab Large-Cap Growth Fund™ | Schwab Fundamental Emerging Markets Large Company Index Fund |
| Schwab Small-Cap Equity Fund™ | Schwab Fundamental Global Real Estate Index Fund |
| Schwab Hedged Equity Fund™ | Schwab ® Monthly Income Fund - Moderate Payout |
| Schwab Financial Services Fund™ | Schwab ® Monthly Income Fund - Enhanced Payout |
| Schwab Health Care Fund™ | Schwab ® Monthly Income Fund - Maximum Payout |
| Schwab ® International Core Equity Fund | |
The Schwab MarketTrack Portfolios are primarily “funds of funds.” Each of the funds seeks to achieve its investment objective by investing mainly in a combination of other Schwab Funds (underlying funds) in accordance with its target portfolio allocation. The funds may also invest directly in equity or fixed-income securities, other mutual funds, exchange-traded funds (ETFs) and cash equivalents, including money market securities to achieve their investment objectives.
Each fund in this report offers one share class. Shares are bought and sold (subject to a redemption fee, see financial note 8) at closing net asset value per share (NAV), which is the price for all outstanding shares of a fund. Each share has a par value of 1/1,000 of a cent, and the funds' Board of Trustees (the Board) may authorize the issuance of as many shares as necessary.
Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, each fund may also keep certain assets in segregated accounts, as required by securities law.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies the funds use in their preparation of financial statements. The funds follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 Financial Services — Investment Companies. The accounting policies are in conformity with accounting principles generally accepted in the United States of America (GAAP).
The financial statements of the funds should be read in conjunction with the underlying funds' financial statements. For more information about the underlying funds' operations and policies, please refer to those funds' semiannual and annual reports, which are filed and available on the U.S. Securities and Exchange Commission's (SEC) website at www.sec.gov or at the SEC's Public Reference Room in Washington D.C.
(a) Security Valuation:
Under procedures approved by the Board, the investment adviser has formed a Pricing Committee to administer the pricing and valuation of portfolio securities and other assets and to ensure that prices used for internal purposes or provided by third parties reasonably reflect fair market value. Among other things, these procedures allow the funds to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.
Schwab MarketTrack Portfolios
Financial Notes (continued)
2. Significant Accounting Policies (continued):
The funds value the securities in their portfolios every business day. The funds use the following policies to value various types of securities:
• Underlying funds: Mutual funds are valued at their respective NAVs.
• Securities for which no quoted value is available: The Board has adopted procedures to fair value each fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the funds pursuant to the valuation procedures.
• Short-term securities (60 days or less to maturity): A short-term security may be valued at its amortized cost when it approximates the security's market value.
In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the funds disclose the fair value of their investments in a hierarchy that prioritizes the significant inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). If inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the valuation. If the funds determine that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
The three levels of the fair value hierarchy are as follows:
• Level 1—quoted prices in active markets for identical securities—Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. Investments in mutual funds are valued daily at their NAVs, which are classified as Level 1 prices, without consideration to the classification level of the specific investments held by an underlying fund.
• Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)—Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations.
• Level 3—significant unobservable inputs (including the funds' own assumptions in determining the fair value of investments)—Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the funds use one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the funds in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the funds in the absence of market information. Assumptions used by the funds due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds' results of operations.
Schwab MarketTrack Portfolios
Financial Notes (continued)
2. Significant Accounting Policies (continued):
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The levels associated with valuing the funds' investments as of October 31, 2015 are disclosed in the Portfolio Holdings.
(b) Security Transactions:
Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.
(c) Investment Income:
Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying funds are recorded on the date they are effective (the ex-dividend date), although the funds record certain foreign security dividends on the day they learn of the ex-dividend date. Any distributions from underlying funds are recorded in accordance with the character of the distributions as designated by the underlying funds.
(d) Expenses:
Expenses that are specific to a fund are charged directly to the fund. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their average daily net assets. Each fund bears its share of the allocable expenses of the underlying funds in which it invests. Such expenses are reflected in the net asset values of the underlying funds.
(e) Distributions to Shareholders:
The funds make distributions from net investment income and net realized capital gains, if any, once a year, except for the Schwab MarketTrack Conservative Portfolio, which makes distributions from net investment income quarterly.
(f) Accounting Estimates:
The accounting policies described in this report conform to GAAP. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It’s possible that once the results are known, they may turn out to be different from these estimates and these differences may be material.
(g) Federal Income Taxes:
The funds intend to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the funds distribute substantially all of their net investment income and net realized capital gains, if any, to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.
(h) Indemnification:
Under the funds’ organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business the funds enter into contracts with their vendors and others that provide general indemnifications. The funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. However, based on experience, the funds expect the risk of loss attributable to these arrangements to be remote.
3. Risk Factors:
Investing in the funds may involve certain risks, as discussed in the funds' prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
Asset Allocation Risk. The funds are subject to asset allocation risk, which is the risk that the selection of the underlying funds and the allocation of a fund's assets among the various asset classes and market segments will cause the funds to underperform other funds with a similar investment objective.
Schwab MarketTrack Portfolios
Financial Notes (continued)
3. Risk Factors (continued):
Affiliated Fund Risk. The investment adviser’s authority to select and substitute underlying funds from a variety of affiliated and unaffiliated mutual funds may create a conflict of interest because the fees paid to it by some underlying funds are higher than the fees paid by other underlying funds. However, the portfolio manager is a fiduciary to the fund and is legally obligated to act in the fund’s best interests when selecting underlying funds, without taking fees into consideration.
Market Risk. Stock and bond markets rise and fall daily. As with any investment whose performance is tied to these markets, the value of an investment in the funds will fluctuate, which means that an investor could lose money.
Underlying Fund Investment Risk. The value of your investment in the funds is based primarily on the prices of the underlying funds that the fund purchases. In turn, the price of each underlying fund is based on the value of its securities. The funds are subject to the performance and expenses of the underlying funds in which they invest. Before investing in the funds, investors should assess the risks associated with the underlying funds in which the funds may invest and the types of investments made by those underlying funds. These risks include any combination of the risks described below, although a fund's exposure to a particular risk will be proportionate to the fund's overall asset allocation and underlying fund allocation.
• Investment Risk. An investment in an underlying fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The funds may experience losses with respect to their investment in an underlying fund. Further, there is no guarantee that an underlying fund will be able to achieve its objective.
• Investment Style Risk. Some underlying funds seek to track the performance of various segments of the stock market, as measured by their respective indices. Each underlying fund follows these stocks during upturns as well as downturns. Because of their indexing strategy, the underlying funds do not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of an underlying fund's expenses, the underlying fund's performance is normally below that of the index.
• Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, the equity market tends to move in cycles, which may cause stock prices to fall over short or extended periods of time.
• Tracking Error Risk. Each underlying index fund seeks to track the performance of its benchmark index, although it may not be successful in doing so. The divergence between the performance of a fund and its benchmark index, positive or negative, is called “tracking error.” Tracking error can be caused by many factors and it may be significant.
• Large-Cap Risk. Many of the risks of the underlying funds are associated with their investment in the large-cap segments of the stock market. Large-cap stocks tend to go in and out of favor based on market and economic conditions. During a period when large-cap stocks fall behind other types of investments — bonds or mid- or small-cap stocks, for instance — an underlying fund's performance also will lag those investments.
• Small-Cap Risk. Historically, small-cap stocks have been riskier than large- and mid-cap stocks, and their prices may move sharply, especially during market upturns and downturns. Small-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies. During a period when small-cap stocks fall behind other types of investments—bonds or large-cap stocks, for instance—an underlying fund's performance also will lag those investments.
• Money Market Risk. Although an underlying money market fund seeks to maintain a stable $1 net asset value, it is possible to lose money by investing in a money market fund. In addition, a money market fund is not designed to offer capital appreciation.
• Concentration Risk. To the extent that an underlying fund's or the index's portfolio is concentrated in the securities of issuers in a particular market, industry, group of industries, sector, country or asset class, the underlying fund may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more susceptible to adverse economic, market, political, or regulatory occurrences affecting that market, industry, group of industries, sector, country or asset class.
• Foreign Investment Risk. An underlying fund's investments in securities of foreign issuers may involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; changes in currency exchange rates or exchange control
Schwab MarketTrack Portfolios
Financial Notes (continued)
3. Risk Factors (continued):
regulations (including limitations on currency movements and exchanges); the imposition of economic sanctions or other government restrictions; differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. These risks may negatively impact the value or liquidity of an underlying fund's investments, and could impair an underlying fund's ability to meet its investment objective or invest in accordance with its investment strategy. These risks may be heightened in connection with investments in emerging markets. Foreign securities also include American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs), and European Depositary Receipts (EDRs), which are receipts issued by U.S. and foreign banks that represent shares of foreign-based corporations. Investment in ADRs, GDRs and EDRs may be less liquid than the underlying shares in their primary trading market and GDRs, many of which are issued by companies in emerging markets, may be more volatile. To the extent an underlying fund's investment in a single country or a limited number of countries represents a large percentage of the underlying fund's assets, the underlying fund's performance may be adversely affected by the economic, political and social conditions in those countries and it may be subject to increased price volatility.
• Currency Risk. As a result of an underlying fund's investments in securities denominated in, and/or receiving revenues in foreign currencies, the underlying fund will be subject to currency risk. This is the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of hedging positions, that the U.S. dollar will decline in value relative to the currency hedged. In either event, the dollar value of an investment in an underlying fund would be adversely affected.
• Emerging Markets Risk. Emerging market countries may be more likely to experience political turmoil or rapid changes in market or economic conditions than more developed countries. Such countries often have less uniformity in accounting and reporting requirements and greater risk associated with the custody of securities. In addition, the financial stability of issuers (including governments) in emerging market countries may be more precarious than in other countries. As a result, there will tend to be an increased risk of price volatility associated with an underlying fund's investments in emerging market countries and, at times, it may be difficult to value such investments.
• Derivatives Risk. An underlying fund's use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. An underlying fund's use of derivatives could reduce the underlying fund's performance, increase volatility, and could cause the fund to lose more than the initial amount invested. In addition, investments in derivatives may involve leverage, which means a small percentage of assets invested in derivatives can have a disproportionately large impact on an underlying fund. However, these risks are less severe when the underlying fund uses derivatives for hedging rather than to enhance the underlying fund's returns or as a substitute for a position or security.
• ETF Risk. When an underlying fund invests in an ETF, it will bear a proportionate share of the ETF's expenses. In addition, lack of liquidity in the market for an ETF's shares can result in its value being more volatile than the underlying portfolio of securities.
• Debt Securities Risk. Bond prices generally fall when interest rates rise. Bonds with longer maturities tend to be more sensitive to this risk. Underlying fund performance also could be affected if an issuer or guarantor of a bond held by the fund fails to make timely principal or interest payments or otherwise honor its obligations. Lower-quality bonds are considered speculative with respect to their issuer's ability to make timely payments or otherwise honor their obligations. In addition, prices of lower-quality bonds tend to be more volatile than those of investment-grade bonds, and may fall based on bad news about the issuer, an industry or the overall economy.
• Liquidity Risk. A particular investment may be difficult to purchase or sell. An underlying fund may be unable to sell illiquid securities at an advantageous time or price.
• Securities Lending Risk. An underlying fund may lend its portfolio securities to brokers, dealers, and other financial institutions. Securities lending involves the risk of loss of rights in the collateral or delay in recovery of the collateral if the borrower fails to return the security loaned or becomes insolvent.
• Interest Rate Risk. An underlying fund’s investments in fixed income securities are subject to the risk that interest rates rise and fall over time. As with any investment whose yield reflects current interest rates, the underlying fund’s yield will change over time. During periods when interest rates are low, the underlying fund’s yield (and total return) also may be
Schwab MarketTrack Portfolios
Financial Notes (continued)
3. Risk Factors (continued):
low. Changes in interest rates also may affect the underlying fund's share price: a rise in interest rates could cause the fund's share price to fall. The longer the underlying fund’s duration, the more sensitive to interest rate movements its share price is likely to be. Because interest rates in the United States are at, or near, historically low levels, a change in a central bank's monetary policy or improving economic conditions may result in an increase in interest rates.
• Sampling Index Tracking Risk. To the extent an underlying fund uses a sampling method, the underlying fund will not fully replicate its comparative index and may hold securities not included in the index. As a result, the underlying fund will be subject to the risk that the investment adviser’s investment management strategy, the implementation of which is subject to a number of constraints, may not produce the intended results. If the underlying fund utilizes a sampling approach, it may not track the return of the index as well as it would if the underlying fund purchased all of the securities in the index.
• Portfolio Turnover Risk. Certain of the underlying funds may buy and sell portfolio securities actively. If they do, their portfolio turnover rate and transaction costs will rise, which may lower the underlying fund's performance and may increase the likelihood of capital gain distributions.
Direct Investment Risk. A fund may invest directly in individual securities as well as other mutual funds, ETFs and cash equivalents, including money market securities. A fund's direct investment in these securities is subject to the same or similar risks as an underlying fund's investment in the same security.
Please refer to the funds’ prospectus for a more complete description of the principal risks of investing in the funds.
4. Affiliates and Affiliated Transactions:
Charles Schwab Investment Management, Inc. (CSIM or the investment adviser), a wholly owned subsidiary of The Charles Schwab Corporation, serves as each fund's investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement between CSIM and the trust.
For its advisory and administrative services to the funds, CSIM is entitled to receive an annual fee of 0.13% payable monthly based on a percentage of each fund's average daily net assets.
Prior to December 1, 2014, the advisory fee was 0.23%.
The Board has adopted a Shareholder Servicing Plan (the Plan) on behalf of the funds. The Plan enables each fund to bear expenses relating to the provision by service providers, including Charles Schwab & Co., Inc. (a broker-dealer affiliate of CSIM, Schwab), of certain account maintenance, customer liaison and shareholder services to the current shareholders of the funds. Schwab serves as the funds’ paying agent under the Plan for making payments of the shareholder service fee due to the service providers (other than Schwab) under the Plan. All shareholder service fees paid by the funds to Schwab in its capacity as the funds’ paying agent will be passed through to the service providers, and Schwab will not retain any portion of such fees.
Pursuant to the Plan, each fund's shares are subject to an annual shareholder servicing fee up to 0.25%. The shareholder servicing fee paid to a particular service provider is made pursuant to its written agreement with Schwab (or, in the case of payments made to Schwab, pursuant to Schwab's written agreement with the funds). Payments under the Plan are made as described above regardless of Schwab's or the service provider's actual cost of providing the services. If the cost of providing the services under the Plan is less than the payments received, the unexpended portion of the fees may be retained as profit by Schwab or the service provider.
Although these agreements specify certain fees for these services, CSIM and its affiliates have made an additional agreement with the funds, for so long as CSIM serves as the investment adviser to the funds, which may only be amended or terminated with the approval of the Board, to limit the total annual fund operating expenses charged, excluding interest, taxes and certain non-routine expenses (expense limitation). The expense limitation as a percentage of average daily net assets is as follows:
Schwab
MarketTrack
All Equity
Portfolio | | Schwab
MarketTrack
Growth
Portfolio | | Schwab
MarketTrack
Balanced
Portfolio | | Schwab
MarketTrack
Conservative
Portfolio |
| 0.50% | | 0.50% | | 0.50% | | 0.50% |
Schwab MarketTrack Portfolios
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
The agreement to limit the funds' total expenses charged is limited to each fund's direct operating expenses and, therefore, does not apply to underlying fund fees and expenses, which are indirect expenses incurred by a fund through its investments in the underlying funds.
The funds may engage in certain transactions involving related parties. Pursuant to an exemptive order issued by the SEC, the funds may invest in other related funds. As of October 31, 2015, each Schwab MarketTrack Portfolio's ownership percentages of other related funds' shares are:
| Underlying Funds | | Schwab
MarketTrack
All Equity
Portfolio | | Schwab
MarketTrack
Growth
Portfolio | | Schwab
MarketTrack
Balanced
Portfolio | | Schwab
MarketTrack
Conservative
Portfolio |
| Schwab Fundamental Emerging Markets Large Company Index Fund | | 8.6% | | 6.9% | | 3.5% | | 0.9% |
| Schwab Fundamental International Large Company Index Fund | | 3.0% | | 2.5% | | 1.3% | | 0.4% |
| Schwab Fundamental International Small Company Index Fund | | 6.8% | | 5.6% | | 3.0% | | 0.9% |
| Schwab International Index Fund | | 2.8% | | 2.4% | | 1.3% | | 0.4% |
| Schwab Fundamental US Large Company Index Fund | | 1.6% | | 1.8% | | 0.9% | | 0.3% |
| Schwab S&P 500 Index Fund | | 0.9% | | 0.9% | | 0.5% | | 0.1% |
| Schwab Fundamental US Small Company Index Fund | | 3.1% | | 3.0% | | 1.6% | | 0.5% |
| Schwab Small-Cap Index Fund | | 3.8% | | 3.9% | | 2.1% | | 0.6% |
| Schwab Total Bond Market Fund | | —% | | 8.3% | | 13.9% | | 9.7% |
| Schwab Value Advantage Money Fund, Ultra Shares (formerly named Institutional Prime Shares) | | —% | | 0.1% | | 0.1% | | 0.0%* |
Below is a summary of the funds' transactions with their affiliated underlying funds during the period ended October 31, 2015:
Schwab MarketTrack All Equity Portfolio:
| Underlying Funds | | Balance
of Shares
Held at
10/31/14 | | Gross
Purchases | | Gross
Sales | | Balance
of Shares
Held at
10/31/15 | | Market
Value at
10/31/15 | | Realized
Gains (Losses)
11/01/14
to 10/31/15 | | Distributions
Received*
11/01/14
to 10/31/15 |
| Schwab Fundamental Emerging Markets Large Company Index Fund | | — | | 4,200,094 | | (292,829) | | 3,907,265 | | $26,061,460 | | $54,286 | | $— |
| Schwab Fundamental International Large Company Index Fund | | — | | 4,555,578 | | (320,018) | | 4,235,560 | | 34,689,239 | | 172,527 | | — |
| Schwab Fundamental International Small Company Index Fund | | — | | 2,706,827 | | (134,969) | | 2,571,858 | | 28,933,405 | | 113,949 | | — |
| Schwab International Index Fund | | 9,522,611 | | 487,507 | | (5,691,398) | | 4,318,720 | | 79,853,140 | | 10,247,234 | | 5,828,152 |
| Schwab Fundamental US Large Company Index Fund | | — | | 5,508,130 | | (358,963) | | 5,149,167 | | 77,958,384 | | (3,859) | | — |
| Schwab S&P 500 Index Fund | | 8,701,477 | | 208,359 | | (3,347,697) | | 5,562,139 | | 183,550,585 | | 40,286,143 | | 4,944,916 |
| Schwab Fundamental US Small Company Index Fund | | — | | 3,602,228 | | (210,412) | | 3,391,816 | | 43,483,075 | | 70,136 | | — |
| Schwab Small-Cap Index Fund | | 5,509,666 | | 537,454 | | (2,236,293) | | 3,810,827 | | 100,186,645 | | 12,911,336 | | 10,287,839 |
| Total | | | | | | | | | | $574,715,933 | | $63,851,752 | | $21,060,907 |
Schwab MarketTrack Portfolios
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Schwab MarketTrack Growth Portfolio:
| Underlying Funds | | Balance
of Shares
Held at
10/31/14 | | Gross
Purchases | | Gross
Sales | | Balance
of Shares
Held at
10/31/15 | | Market
Value at
10/31/15 | | Realized
Gains (Losses)
11/01/14
to 10/31/15 | | Distributions
Received*
11/01/14
to 10/31/15 |
| Schwab Fundamental Emerging Markets Large Company Index Fund | | — | | 3,414,169 | | (258,963) | | 3,155,206 | | $21,045,225 | | $109,653 | | $— |
| Schwab Fundamental International Large Company Index Fund | | — | | 3,723,756 | | (180,011) | | 3,543,745 | | 29,023,268 | | 48,630 | | — |
| Schwab Fundamental International Small Company Index Fund | | — | | 2,182,031 | | (52,738) | | 2,129,293 | | 23,954,549 | | 7,540 | | — |
| Schwab International Index Fund | | 7,441,640 | | 489,127 | | (4,262,636) | | 3,668,131 | | 67,823,748 | | 13,674,153 | | 4,607,791 |
| Schwab Fundamental US Large Company Index Fund | | — | | 5,939,478 | | (272,480) | | 5,666,998 | | 85,798,350 | | 42,572 | | — |
| Schwab S&P 500 Index Fund | | 9,305,006 | | 244,232 | | (3,448,667) | | 6,100,571 | | 201,318,830 | | 45,741,590 | | 5,325,253 |
| Schwab Fundamental US Small Company Index Fund | | — | | 3,513,965 | | (155,456) | | 3,358,509 | | 43,056,083 | | 11,385 | | — |
| Schwab Small-Cap Index Fund | | 5,229,959 | | 562,500 | | (1,953,950) | | 3,838,509 | | 100,914,407 | | 12,364,652 | | 9,854,887 |
| Schwab Total Bond Market Fund | | 11,309,453 | | 1,490,468 | | (1,510,089) | | 11,289,832 | | 107,140,508 | | 3,652 | | 2,362,660 |
| Schwab Value Advantage Money Fund, Ultra Shares (formerly named Institutional Prime Shares) | | 11,051,882 | | 5,072 | | — | | 11,056,954 | | 11,056,954 | | — | | 5,546 |
| Total | | | | | | | | | | $691,131,922 | | $72,003,827 | | $22,156,137 |
Schwab MarketTrack Portfolios
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Schwab MarketTrack Balanced Portfolio:
| Underlying Funds | | Balance
of Shares
Held at
10/31/14 | | Gross
Purchases | | Gross
Sales | | Balance
of Shares
Held at
10/31/15 | | Market
Value at
10/31/15 | | Realized
Gains (Losses)
11/01/14
to 10/31/15 | | Distributions
Received*
11/01/14
to 10/31/15 |
| Schwab Fundamental Emerging Markets Large Company Index Fund | | — | | 1,880,016 | | (265,389) | | 1,614,627 | | $10,769,562 | | ($81,096) | | $— |
| Schwab Fundamental International Large Company Index Fund | | — | | 2,085,393 | | (181,936) | | 1,903,457 | | 15,589,309 | | 17,000 | | — |
| Schwab Fundamental International Small Company Index Fund | | — | | 1,215,068 | | (75,061) | | 1,140,007 | | 12,825,082 | | (6,650) | | — |
| Schwab International Index Fund | | 3,955,097 | | 398,137 | | (2,374,648) | | 1,978,586 | | 36,584,047 | | 8,715,469 | | 2,388,467 |
| Schwab Fundamental US Large Company Index Fund | | — | | 3,363,504 | | (325,611) | | 3,037,893 | | 45,993,704 | | 30,639 | | — |
| Schwab S&P 500 Index Fund | | 4,990,453 | | 363,662 | | (2,076,002) | | 3,278,113 | | 108,177,731 | | 33,198,305 | | 2,779,634 |
| Schwab Fundamental US Small Company Index Fund | | — | | 1,995,919 | | (194,533) | | 1,801,386 | | 23,093,767 | | (1,320) | | — |
| Schwab Small-Cap Index Fund | | 2,792,568 | | 455,110 | | (1,185,199) | | 2,062,479 | | 54,222,581 | | 7,327,853 | | 5,117,073 |
| Schwab Total Bond Market Fund | | 18,994,620 | | 3,427,353 | | (3,518,802) | | 18,903,171 | | 179,391,089 | | (8,335) | | 3,947,237 |
| Schwab Value Advantage Money Fund, Ultra Shares (formerly named Institutional Prime Shares) | | 8,034,427 | | 3,687 | | — | | 8,038,114 | | 8,038,114 | | — | | 4,032 |
| Total | | | | | | | | | | $494,684,986 | | $49,191,865 | | $14,236,443 |
Schwab MarketTrack Portfolios
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Schwab MarketTrack Conservative Portfolio:
| Underlying Funds | | Balance
of Shares
Held at
10/31/14 | | Gross
Purchases | | Gross
Sales | | Balance
of Shares
Held at
10/31/15 | | Market
Value at
10/31/15 | | Realized
Gains (Losses)
11/01/14
to 10/31/15 | | Distributions
Received*
11/01/14
to 10/31/15 |
| Schwab Fundamental Emerging Markets Large Company Index Fund | | — | | 534,451 | | (101,755) | | 432,696 | | $2,886,084 | | ($86,017) | | $— |
| Schwab Fundamental International Large Company Index Fund | | — | | 595,018 | | (40,687) | | 554,331 | | 4,539,971 | | 4,191 | | — |
| Schwab Fundamental International Small Company Index Fund | | — | | 356,703 | | (19,110) | | 337,593 | | 3,797,927 | | (1,767) | | — |
| Schwab International Index Fund | | 1,118,477 | | 120,070 | | (640,949) | | 597,598 | | 11,049,595 | | 2,574,615 | | 688,613 |
| Schwab Fundamental US Large Company Index Fund | | — | | 977,677 | | (78,542) | | 899,135 | | 13,612,911 | | 3,132 | | — |
| Schwab S&P 500 Index Fund | | 1,436,471 | | 105,047 | | (566,932) | | 974,586 | | 32,161,325 | | 9,071,417 | | 812,608 |
| Schwab Fundamental US Small Company Index Fund | | — | | 565,081 | | (32,384) | | 532,697 | | 6,829,182 | | (1,340) | | — |
| Schwab Small-Cap Index Fund | | 796,611 | | 138,408 | | (322,080) | | 612,939 | | 16,114,161 | | 1,834,760 | | 1,482,520 |
| Schwab Total Bond Market Fund | | 12,812,537 | | 1,562,107 | | (1,178,416) | | 13,196,228 | | 125,232,206 | | (40,777) | | 2,713,599 |
| Schwab Value Advantage Money Fund, Ultra Shares (formerly named Institutional Prime Shares) | | 3,487,830 | | 1,601 | | — | | 3,489,431 | | 3,489,431 | | — | | 1,750 |
| Total | | | | | | | | | | $219,712,793 | | $13,358,214 | | $5,699,090 |
| * | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions with other funds in the Fund Complex (for definition refer to Trustees and Officers section). All loans are for temporary or emergency purposes and the interest rate to be charged will be the average of the overnight repurchase agreement rate and the short-term bank loan rate. All loans are subject to numerous conditions designed to ensure fair and equitable treatment of all participating funds/portfolios. The interfund lending facility is subject to the oversight and periodic review by the Board. The funds had no interfund borrowing or lending activity during the period.
During the period, the Schwab MarketTrack All Equity Portfolio received a reimbursement payment of $1,621 related to state filing fees resulting from revised calculation methodologies being applied on sales of the fund's shares in prior periods.
During the periods under which the expense was incurred, the fund was operating above its expense limitation and waived fees including these state filing fees. As this amount was previously waived as part of an expense reduction by CSIM and its affiliates, it was reimbursed to the investment adviser. The fund's net expense ratio was not impacted during the periods the expense was incurred or during the current period.
5. Board of Trustees:
The Board may include people who are officers and/or directors of CSIM or its affiliates. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these interested persons for their services as trustees, but it did pay non-interested persons (independent trustees), as noted on each fund’s Statement of Operations. For information regarding the trustees, please refer to the Trustees and Officers table at the end of this report.
Schwab MarketTrack Portfolios
Financial Notes (continued)
6. Borrowing from Banks:
During the period prior to October 8, 2015, the funds had access to a committed line of credit of $150 million with State Street Bank and Trust Company (State Street), an uncommitted line of credit of $100 million with Bank of America, N.A., and an uncommitted line of credit of $50 million with Brown Brothers Harriman & Co. The funds paid an annual fee to State Street for the committed line of credit. Effective October 8, 2015, the previous lines of credit were terminated and the funds became participants with other U.S. registered investment companies managed by CSIM in a joint, syndicated, committed $530 million line of credit (the Credit Facility), with State Street as agent, which matures on October 6, 2016. Under the terms of the Credit Facility, in addition to the interest charged on any borrowings by a fund, each fund pays a commitment fee of 0.125% per annum on its proportionate share of the unused portion of the Credit Facility. There were no borrowings from any of the lines of credit during the period.
The funds also have access to custodian overdraft facilities. A fund may have utilized the overdraft facility and incurred an interest expense, which is disclosed on the fund’s Statement of Operations, if any. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.
7. Purchases and Sales/Maturities of Investment Securities:
For the period ended October 31, 2015, purchases and sales/maturities of securities (excluding short-term obligations) were as follows:
| | Purchases of Securities | | Sales/Maturities of Securities |
| Schwab MarketTrack All Equity Portfolio | $253,555,908 | | $281,907,000 |
| Schwab MarketTrack Growth Portfolio | 257,021,135 | | 262,135,000 |
| Schwab MarketTrack Balanced Portfolio | 182,370,207 | | 185,636,000 |
| Schwab MarketTrack Conservative Portfolio | 58,312,413 | | 52,228,000 |
8. Redemption Fee:
The funds charge a 2.00% redemption fee on shares sold or exchanged within 30 days of the original purchase date. Such amounts are netted against redemption proceeds on the Statement of Changes in Net Assets. The redemption fees charged during the current and prior periods are:
| | Current Period
(11/1/14-10/31/15) | | Prior Period
(11/1/13-10/31/14) |
| Schwab MarketTrack All Equity Portfolio | $10,890 | | $12,743 |
| Schwab MarketTrack Growth Portfolio | 5,446 | | 11,814 |
| Schwab MarketTrack Balanced Portfolio | 13,097 | | 10,547 |
| Schwab MarketTrack Conservative Portfolio | 1,921 | | 1,606 |
9. Federal Income Taxes:
As of October 31, 2015, the components of distributable earnings on a tax-basis were as follows:
| | Schwab
MarketTrack
All Equity
Portfolio | | Schwab
MarketTrack
Growth
Portfolio | | Schwab
MarketTrack
Balanced
Portfolio | | Schwab
MarketTrack
Conservative
Portfolio |
| Undistributed ordinary income | $10,705,994 | | $— | | $2,059,381 | | $154,755 |
| Undistributed long-term capital gains | 38,822,621 | | 78,131,538 | | 52,630,219 | | 12,776,660 |
| Unrealized appreciation on investments | 144,680,311 | | 213,644,637 | | 114,739,603 | | 32,789,376 |
| Unrealized depreciation on investments | (3,301,825) | | (2,764,428) | | (1,361,342) | | (383,899) |
| Net unrealized appreciation (depreciation) | $141,378,486 | | $210,880,209 | | $113,378,261 | | $32,405,477 |
The primary difference between book-basis and tax-basis unrealized appreciation or unrealized depreciation of investments is the tax deferral of losses on wash sales.
Schwab MarketTrack Portfolios
Financial Notes (continued)
9. Federal Income Taxes (continued):
Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2015, the funds had no capital loss carryforwards.
Qualified late-year losses are certain capital and ordinary losses which occur during the portion of a fund's taxable year subsequent to October 31. A fund may elect to treat any portion of qualified late-year losses as arising during the first day of the next taxable year. For the year ended October 31, 2015, the funds had late-year ordinary losses deferred and capital loss carryforwards utilized as follows:
| | Schwab
MarketTrack
All Equity
Portfolio | | Schwab
MarketTrack
Growth
Portfolio | | Schwab
MarketTrack
Balanced
Portfolio | | Schwab
MarketTrack
Conservative
Portfolio |
| Late-year ordinary losses deferred | $— | | $522,853 | | $— | | $— |
| Capital loss carryforwards utilized | 29,570,316 | | — | | — | | 838,110 |
The tax-basis components of distributions paid during the current and prior fiscal years were as follows:
| | Schwab
MarketTrack
All Equity
Portfolio | | Schwab
MarketTrack
Growth
Portfolio | | Schwab
MarketTrack
Balanced
Portfolio | | Schwab
MarketTrack
Conservative
Portfolio |
| Current period distributions | | | | | | | |
| Ordinary income | $8,349,307 | | $11,176,663 | | $9,693,210 | | $3,590,423 |
| Long-term capital gains | — | | 12,409,011 | | 7,173,967 | | — |
| Return of capital | — | | — | | — | | — |
| Prior period distributions | | | | | | | |
| Ordinary income | $9,729,315 | | $9,625,225 | | $6,922,856 | | $3,306,277 |
| Long-term capital gains | — | | — | | 3,022,728 | | — |
| Return of capital | — | | — | | — | | — |
Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
Permanent book and tax basis differences may result in reclassifications between components of net assets as required. The adjustments will have no impact on net assets or the results of operations. As of October 31, 2015, the funds made the following reclassifications:
| | Schwab
MarketTrack
All Equity
Portfolio | | Schwab
MarketTrack
Growth
Portfolio | | Schwab
MarketTrack
Balanced
Portfolio | | Schwab
MarketTrack
Conservative
Portfolio |
| Capital shares | $— | | $— | | $— | | $— |
| Undistributed net investment income | 598,219 | | 573,044 | | 297,550 | | 86,206 |
| Net realized capital gains (losses) | (598,219) | | (573,044) | | (297,550) | | (86,206) |
As of October 31, 2015, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and for state purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the funds’ financial statements. The funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period ended October 31, 2015, the funds did not incur any interest or penalties.
Schwab MarketTrack Portfolios
Financial Notes (continued)
10. Subsequent Events:
At a Special Meeting of Shareholders on December 11, 2015, twelve individuals were elected to serve as trustees of all trusts constituting the Schwab Funds, Laudus Funds and Schwab ETFs effective January 1, 2016. The twelve individuals elected to the Boards of Trustees consist of current Schwab Funds and Laudus Funds trustees, current Schwab ETFs trustees and three new nominees. The trustees believe that combining the composition of the Boards of Trustees and adding the new nominees will further align oversight of the Schwab Funds, Laudus Funds and Schwab ETFs, among other benefits. Other than this election of trustees, management has determined there are no subsequent events or transactions through the date the financial statements were issued that would have materially impacted the financial statements as presented.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of:
Schwab MarketTrack All Equity Portfolio
Schwab MarketTrack Growth Portfolio
Schwab MarketTrack Balanced Portfolio
Schwab MarketTrack Conservative Portfolio
In our opinion, the accompanying statements of assets and liabilities, including the portfolio holdings, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Schwab MarketTrack All Equity Portfolio, Schwab MarketTrack Growth Portfolio, Schwab MarketTrack Balanced Portfolio, and Schwab MarketTrack Conservative Portfolio (four of the portfolios constituting Schwab Capital Trust, hereafter referred to as the “Funds”) at October 31, 2015, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds' management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities and investments in the underlying funds at October 31, 2015 by correspondence with the custodian and transfer agent of the underlying funds, respectively, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
December 16, 2015
Other Federal Tax Information (unaudited)
For corporate shareholders, the following percentage of the funds dividend distributions paid during the fiscal year ended October 31, 2015, qualify for the corporate dividends received deduction:
| | Percentage |
| Schwab MarketTrack All Equity Portfolio | 67.70 |
| Schwab MarketTrack Growth Portfolio | 57.17 |
| Schwab MarketTrack Balanced Portfolio | 36.98 |
| Schwab MarketTrack Conservative Portfolio | 27.07 |
For the fiscal year ended October 31, 2015, the funds designate the following amounts of the dividend distributions as qualified dividends for the purpose of the maximum rate under 1(h)(ii) of the Internal Revenue Code. Shareholders will be notified in January 2016 via IRS form 1099 of the amounts for use in preparing their 2015 income tax return.
| Schwab MarketTrack All Equity Portfolio | $8,349,307 |
| Schwab MarketTrack Growth Portfolio | 10,166,963 |
| Schwab MarketTrack Balanced Portfolio | 5,622,172 |
| Schwab MarketTrack Conservative Portfolio | 1,534,682 |
Under Section 852 (b)(3)(C) of the Internal Revenue Code, certain funds hereby designate the following amounts as long-term capital gain dividends for the fiscal year ended October 31, 2015:
| Schwab MarketTrack All Equity Portfolio | $— |
| Schwab MarketTrack Growth Portfolio | 12,409,011 |
| Schwab MarketTrack Balanced Portfolio | 7,173,967 |
| Schwab MarketTrack Conservative Portfolio | — |
Investment Advisory Agreement Approval
The Investment Company Act of 1940 (the 1940 Act) requires that initial approval of, as well as the continuation of, a fund’s investment advisory agreement must be specifically approved (1) by the vote of the trustees or by a vote of the shareholders of the fund, and (2) by the vote of a majority of the trustees who are not parties to the investment advisory agreement or “interested persons” of any party (the Independent Trustees), cast in person at a meeting called for the purpose of voting on such approval. In connection with such approvals, the fund’s trustees must request and evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms of the investment advisory agreement.
The Board of Trustees (the Board or the Trustees, as appropriate) calls and holds one or more meetings each year that are dedicated, in whole or in part, to considering whether to renew the investment advisory agreement between Schwab Capital Trust (the Trust) and Charles Schwab Investment Management, Inc. (CSIM) (the Agreement) with respect to the existing funds in the Trust, including Schwab MarketTrack All Equity Portfolio, Schwab MarketTrack Growth Portfolio, Schwab MarketTrack Balanced Portfolio and Schwab MarketTrack Conservative Portfolio (the Funds), and to review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting(s), the Board requests and reviews a wide variety of materials provided by CSIM, including information about CSIM’s affiliates, personnel and operations. As part of the renewal process, Independent Trustees’ legal counsel sends an information request letter to CSIM seeking certain relevant information. The responses by CSIM are provided to the Trustees for their review prior to their meeting, and the Trustees are provided with the opportunity to request any additional materials. The Board also receives extensive data provided by third parties. This information is in addition to the detailed information about the Funds that the Board reviews during the course of each year, including information that relates to Fund operations and Fund performance. The Independent Trustees receive advice from independent counsel to the Independent Trustees, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees meet in executive session outside the presence of Fund management and participate in question and answer sessions with representatives of CSIM.
The Board, including a majority of the Independent Trustees, considered information specifically relating to its consideration of the continuance of the Agreement with respect to the Funds at meetings held on April 29, 2015, and
June 1, 2015, and approved the renewal of the Agreement with respect to the Funds for an additional one-year term at the meeting held on June 1, 2015. The Board’s approval of the Agreement with respect to the Funds was based on consideration and evaluation of a variety of specific factors discussed at these meetings and at prior meetings, including:
| 1. | the nature, extent and quality of the services provided to the Funds under the Agreement, including the resources of CSIM and its affiliates dedicated to the Funds; |
| 2. | each Fund’s investment performance and how it compared to that of certain other comparable mutual funds; |
| 3. | each Fund’s expenses and how those expenses compared to those of certain other comparable mutual funds, exchange-traded funds and other accounts; |
| 4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to each Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
| 5. | the extent to which economies of scale would be realized as the Funds grow and whether fee levels in the Agreement reflect those economies of scale for the benefit of Fund investors. |
Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds. In this regard, the Trustees evaluated, among other things, CSIM’s personnel, experience, track record and compliance program. The Trustees also considered information provided by CSIM relating to each Fund’s portfolio management team, portfolio strategy and risk oversight structure, and internal investment guidelines. The Trustees also considered investments in CSIM’s mutual fund infrastructure, Schwab’s wide range of products, services, and channel alternatives such as investment and research tools, internet access, and an array of account features that benefit the Funds and certain of their shareholders. The Trustees also considered Schwab’s excellent reputation as a full service brokerage firm and its overall financial condition. Finally, the Trustees considered that the vast majority of the Funds’ shareholders are also brokerage clients of Schwab. Following such evaluation, the Board concluded, within the context of its full deliberations, that the nature, extent and quality of services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds supported renewal of the Agreement with respect to the Funds.
Fund Performance. The Board considered Fund performance in determining whether to renew the Agreement with respect to the Funds. Specifically, the Trustees considered each Fund’s performance relative to a peer category of other mutual funds and appropriate indices/ benchmarks, in light of total return, yield, if applicable, and market trends. As part of this review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the third party who prepared the peer category analysis. In evaluating the performance of each Fund, the Trustees considered both risk and shareholder risk expectations for such Fund and the appropriateness of the benchmark used to compare the performance of each Fund. The Trustees further considered the level of Fund performance in the context of their review of Fund expenses and adviser profitability discussed below. Although Schwab MarketTrack All Equity Portfolio and Schwab MarketTrack Conservative Portfolio had performance that lagged that of a relevant peer group for certain (although not all) periods considered, the Board concluded that other factors relevant to performance supported renewal of the Agreements with respect to the Schwab MarketTrack All Equity Portfolio and Schwab MarketTrack Conservative Portfolio, including that the underperformance was attributable, to a significant extent, to investment decisions by CSIM that were reasonable and consistent with the investment objective and policies of Schwab MarketTrack All Equity Portfolio and Schwab MarketTrack Conservative Portfolio, and that CSIM had taken steps designed to help improve performance. Following such evaluation the Board concluded, within the context of its full deliberations, that the performance of the Funds supported renewal of the Agreement with respect to the Funds.
Fund Expenses. With respect to the Funds’ expenses, the Trustees considered the rate of compensation called for by the Agreement, and each Fund’s net operating expense ratio, in each case, in comparison to those of a peer group of mutual funds, such peer groups and comparisons having been selected and calculated by an independent third party. The Trustees considered the effects of CSIM’s and Schwab’s historical practice of voluntarily waiving management and other fees to prevent total Fund expenses from exceeding a specified cap. The Trustees also considered CSIM’s contractual commitment to keep each Fund’s expense cap for so long as CSIM serves as the adviser to such Fund. The Trustees also considered fees charged by CSIM to other mutual funds and to other types of accounts, such as exchange-traded funds and separately managed accounts, but, with respect to such other types of accounts, accorded less weight to such comparisons due to the different legal, regulatory, compliance and operating features of mutual funds as compared to these other types of accounts. Following such evaluation, the Board concluded, within the
context of its full deliberations, that the expenses of the Funds are reasonable and supported renewal of the Agreement with respect to the Funds.
Profitability. With regard to profitability, the Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly. In this connection, the Trustees reviewed management’s profitability analyses, together with certain commentary thereon from an independent accounting firm. The Trustees also considered any other benefits derived by CSIM from its relationship with the Funds, such as whether, by virtue of its management of the Funds, CSIM obtains investment information or other research resources that aid it in providing advisory services to other clients. The Trustees considered whether the varied levels of compensation and profitability under the Agreement and other service agreements were reasonable and justified in light of the quality of all services rendered to each Fund by CSIM and its affiliates. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM is reasonable and supported renewal of the Agreement with respect to the Funds.
Economies of Scale. The Trustees considered the existence of any economies of scale and whether those are passed along to a Fund’s shareholders through a graduated investment advisory fee schedule or other means, including any fee waivers by CSIM and its affiliates. In this regard, and consistent with their consideration of Fund expenses, the Trustees considered that CSIM and Schwab have committed resources to minimize the effects on shareholders of diseconomies of scale during periods when fund assets were relatively small through their contractual expense waivers. For example, such diseconomies of scale may particularly affect newer funds or funds with investment strategies that are from time to time out of favor, but shareholders may benefit from the continued availability of such funds at subsidized expense levels. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the Funds obtain reasonable benefit from economies of scale.
In the course of their deliberations, the Trustees did not identify any particular information or factor that was all important or controlling. Based on the Trustees’ deliberation and their evaluation of the information described above, the Board, including all of the Independent Trustees, approved the continuation of the Agreement with respect to the Funds and concluded that the compensation under the Agreement with respect to the Funds is fair and reasonable in light of such services and expenses and such other matters as the Trustees have considered to be relevant in the exercise of their reasonable judgment.
Trustees and Officers
The tables below give information about the trustees and officers of Schwab Capital Trust prior to January 1, 2016, which includes the funds covered in this report. The “Fund Complex” includes The Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust, Laudus Trust and Laudus Institutional Trust. The Fund Complex includes 95 funds.
The address for all trustees and officers is 211 Main Street, San Francisco, CA 94105. You can find more information about the trustees and officers in the funds’ Statement of Additional Information, which is available free by calling 1-800-435-4000.
| Independent Trustees |
Name, Year of Birth,
and Position(s) with
the trust (Terms 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 |
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 (Oct. 1979 – present); Senior Fellow Stanford Institute for Economic Policy Research (2000 – present); Professor of Public Policy, Stanford University (1994 – 2015). | 74 | Director, Gilead Sciences, Inc. (2005 – present)
|
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. | 74 | 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) (Dec. 2008 – Sept. 2013) | 74 | Director, KLA-Tencor Corporation (2008 – present) |
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) (Jan. 2015 – present); Partner, Kudu Advisors, LLC (financial services) (June 2008 – Jan. 2015); Advisor, Asset International, Inc. (publisher of financial services information) (Aug. 2008 – Jan. 2015). | 95 | None |
| Independent Trustees (continued) |
Name, Year of Birth,
and Position(s) with
the trust (Terms 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 |
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) | Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (Mar. 1990 – present). | 74 | Director, Eaton (2012 – present)
Director and Chairman 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) (Jan. 2008 – present); Partner, Colgin Partners, LLC (vineyards) (Feb. 1998 – present). | 74 | Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 – present)
Lead Independent Director and Chair of Audit Committee, OUTFRONT Media Inc. (2014 – present) |
| Interested Trustees |
Name, Year of Birth,
and Position(s) with
the trust (Terms 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 |
Charles R. Schwab2
1937
Chairman and Trustee
(Chairman and Trustee of The Charles Schwab Family of Funds since 1989; Schwab Investments since 1991; Schwab Capital Trust since 1993; Schwab Annuity Portfolios since 1994; Laudus Trust and Laudus Institutional Trust since 2010) | Chairman and Director, The Charles Schwab Corporation (1986 – present); Chairman and Director of Charles Schwab & Co., Inc. (1971 – present); Chairman and Director of Charles Schwab Investment Management, Inc. (1989 – present); Chairman and Director of Charles Schwab Bank (2003 – present); Chairman and Chief Executive Officer of Schwab (SIS) Holdings Inc. I and Schwab International Holdings, Inc. (1996 – present); and Director, Chairman and Chief Executive Officer, Schwab Holdings, Inc. (1979 – present). | 74 | Chairman and Director, The Charles Schwab Corporation (1986 – present)
Director, Yahoo! Inc. (2014 – present) |
Walter W. Bettinger II2
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 and Charles Schwab & Co., Inc. (2008 – present); Director, Charles Schwab Bank (2006 – present); and Director, Schwab Holdings, Inc. (2008 – present). | 95 | Director, The Charles Schwab Corporation (2008 – present) |
| Officers of the Trust |
Name, Year of Birth, and Position(s)
with the trust (Terms of office, and
length of Time Served3) | Principal Occupations During the Past Five Years |
Marie Chandoha
1961
President and Chief Executive Officer
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2010) | Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer (Sept. 2010 – Oct. 2011), Charles Schwab Investment Management, Inc.; President, Chief Executive Officer (Dec. 2010 – present), and Chief Investment Officer (Sept. 2010 – Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Director, Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited (Jan. 2011 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (Mar. 2007 – Aug. 2010). |
George Pereira
1964
Treasurer and Principal Financial Officer, Schwab Funds
Treasurer and Chief Financial Officer, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2004; Laudus Trust and Laudus Institutional Trust since 2006) | Senior Vice President and Chief Financial Officer (Nov. 2004 – present), Chief Operating Officer (Jan. 2011 – present), Charles Schwab Investment Management, Inc.; Treasurer and Chief Financial Officer, Laudus Funds (June 2006 – present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – present) and Schwab ETFs (Oct. 2009 – present); Director, Charles Schwab Worldwide 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 Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust 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 – Jan. 2009). |
Brett Wander
1961
Senior Vice President and Chief Investment Officer – Fixed Income
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust 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 (Jan. 2008 – Oct. 2010); Director of Alpha Strategies Loomis, Sayles & Company (April 2006 – Jan. 2008). |
David Lekich
1964
Chief Legal Officer and Secretary, Schwab Funds
Vice President and Assistant Clerk, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2011) | Senior Vice President (Sept. 2011 – present), Vice President (Mar. 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present), Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (April 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; Vice President and Assistant Clerk, Laudus Funds (April 2011 – present); Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs. |
Catherine MacGregor
1964
Vice President and Assistant Secretary, Schwab Funds
Chief Legal Officer, Vice President and Clerk, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2005) | Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 – present); Vice President (Dec. 2005 – present), Chief Legal Officer and Clerk (Mar. 2007 – present), Laudus Funds; Vice President (Nov. 2005 – present) and Assistant Secretary (June 2007 – present), Schwab Funds; Vice President and Assistant Secretary, Schwab ETFs (Oct. 2009 – present). |
| 1 | Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab and Laudus Funds’ retirement policy 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 Schwab Funds or Laudus Funds to retire from all Boards upon their required retirement date from either Board. |
| 2 | Mr. Schwab and Mr. Bettinger are Interested Trustees because they own stock of The Charles Schwab Corporation, the parent company of the investment adviser. |
| 3 | The President, Treasurer and Secretary/Clerk 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 Boards. |
Glossary
All Equity Composite Index A custom blended index developed by CSIM based on a comparable portfolio asset allocation and that effective December 1, 2014 is calculated using the following portion allocations: 31.4% S&P 500 Index, 17.3% Russell 2000 Index, 13.5% Russell Fundamental U.S. Large Company Index, 7.5% Russell Fundamental U.S. Small Company Index, 13.8% MSCI EAFE Index (Net), 6.0% Russell Fundamental Developed ex-U.S. Large Company Index (Net), 5.0% Russell Fundamental Developed ex-U.S. Small Company Index (Net), 5.0% Russell Fundamental Emerging Markets Large Company Index (Net), and 0.5% Barclays U.S. Treasury Bills: 1 - 3 Months Index. From March 1, 2014 to December 1, 2014, the index was comprised of 45% S&P 500 Index, 25% Russell 2000 Index and 30% MSCI EAFE Index (Net). On March 1, 2014, the combination of the S&P 500 Index and Russell 2000 Index replaced the Dow Jones U.S. Total Stock Market Index in the custom index. Prior to March 1, 2014, the index was comprised of 70% Dow Jones U.S. Total Stock Market Index and 30% MSCI EAFE (Net) Index. The components that make up the composite may vary over time.
asset allocation The practice of dividing a portfolio among different asset classes, with each asset class assigned a particular percentage.
asset class A group of securities with similar structure and basic characteristics. Stocks, bonds and cash are the three main examples of asset classes.
Balanced Composite Index A custom blended index developed by CSIM based on a comparable portfolio asset allocation and that effective December 1, 2014 is calculated using the following portion allocations: 21.0% S&P 500 Index, 10.5% Russell 2000 Index, 9.0% Russell Fundamental U.S. Large Company Index, 4.5% Russell Fundamental U.S. Small Company Index, 7.0% MSCI EAFE Index (Net), 3.0% Russell Fundamental Developed ex-U.S. Large Company Index (Net), 2.5% Russell Fundamental Developed ex-U.S. Small Company Index (Net), 2.5% Russell Fundamental Emerging Markets Large Company Index (Net), 35.0% Barclays U.S. Aggregate Bond Index, and 5.0% Barclays U.S. Treasury Bills: 1 – 3 Months Index. From March 1, 2014 to December 1, 2014, the index was comprised of 30% S&P 500 Index, 15% Russell 2000 Index, 15% MSCI EAFE Index (Net), 35% Barclays U.S. Aggregate Bond Index, and 5% Barclays U.S. Treasury Bills: 1 – 3 Months Index. On March 1, 2014, the combination of the S&P 500 Index and Russell 2000 Index replaced the Dow Jones U.S. Total Stock Market Index in the custom index. Prior to March 1, 2014, the index was comprised of 45% Dow Jones U.S. Total Stock Market Index, 15% MSCI EAFE (Net) Index, 35% Barclays U.S. Aggregate Bond Index, and 5% Barclays U.S. Treasury Bills: 1 – 3 Months Index. The components that make up the composite may vary over time.
Barclays U.S. Aggregate Bond Index A broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid ARM pass-throughs), asset-backed securities, and commercial mortgage-backed securities.
Barclays U.S. Treasury Bills 1 – 3 Months Index An index that includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months and more than 1 month, are rated investment grade, and have $250 million or more of outstanding face value.
Barclays U.S. Treasury Index An unmanaged index of public obligations of the U.S. Treasury with remaining maturities of one year or more.
bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the coupon rate) until a specified date (the maturity date), at which time the issuer returns the money borrowed (principal or face value) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.”
An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.
bond fund A bond fund is subject to the same credit, interest rate, and inflation risks as bonds. In addition, a bond fund incurs ongoing fees and expenses. A bond fund’s net asset value will fluctuate with the price of the underlying bonds and the portfolio turnover activity; return of principal is not guaranteed.
cap, capitalization See “market cap.”
capital gain, capital loss the difference between the amount paid for an investment and its value at a later time. If the investment has been sold, the capital gain or loss is considered a realized gain or loss. If the investment is still held, the capital gain or loss is considered unrealized appreciation or depreciation.
Conservative Composite Index A custom blended index developed by CSIM based on a comparable portfolio asset allocation and that effective December 1, 2014 is calculated using the following portion allocations: 14.0% S&P 500 Index, 7.0% Russell 2000 Index, 6.0% Russell Fundamental U.S. Large Company Index, 3.0% Russell Fundamental U.S. Small Company Index, 4.6% MSCI EAFE Index (Net), 2.0% Russell Fundamental Developed ex-U.S. Large Company Index (Net), 1.7% Russell Fundamental Developed ex U.S. Small Company Index (Net), 1.7% Russell Fundamental Emerging Markets Large Company Index (Net), 55.0% Barclays U.S. Aggregate Bond Index, and 5.0% Barclays U.S. Treasury Bills: 1 – 3 Months Index. From March 1, 2014 to December 1, 2014, the index was comprised of 20% S&P 500 Index, 10% Russell 2000 Index, 10% MSCI EAFE (Net) Index, 55% Barclays U.S. Aggregate Bond Index, and 5% Barclays U.S. Treasury Bills: 1 – 3 Months Index. On March 1, 2014, the combination of the S&P 500 Index and Russell 2000 Index replaced the Dow Jones U.S. Total Stock Market Index in the custom index. Prior to March 1, 2014, the index was comprised of 30% Dow Jones U.S. Total Stock Market Index, 10% MSCI EAFE (Net) Index, 55% Barclays U.S. Aggregate Bond Index, and 5% Barclays U.S. Treasury Bills: 1 – 3 Months Index. The components that make up the composite may vary over time.
expense ratio The amount that is taken from a mutual fund’s assets each year to cover the fund’s operating expenses. An expense ratio of 0.50% means that a fund’s expenses amount to half of one percent of its average net assets a year.
Growth Composite Index A custom blended index developed by CSIM based on a comparable portfolio asset allocation and that effective December 1, 2014 is calculated using the following portion allocations: 28.1% S&P 500 Index, 14.0% Russell 2000 Index, 12.0% Russell Fundamental U.S. Large Company Index, 6.0% Russell Fundamental U.S. Small Company Index, 9.3% MSCI EAFE Index (Net), 4.0% Russell Fundamental Developed ex-U.S. Large Company Index (Net), 3.3% Russell Fundamental Developed ex-U.S. Small Company Index (Net), 3.3% Russell Fundamental Emerging Markets Large Company Index (Net), 15.0% Barclays U.S. Aggregate Bond Index, and 5.0% Barclays U.S. Treasury Bills: 1 – 3 Months Index. From March 1, 2014 to December 1, 2014, the index was comprised of 40% S&P 500 Index, 20% Russell 2000 Index, 20% MSCI EAFE Index (Net), 15% Barclays U.S. Aggregate Bond Index, and 5% Barclays U.S. Treasury Bills: 1 – 3 Months Index. On March 1, 2014, the combination of the S&P 500 Index and Russell 2000 Index replaced the Dow Jones U.S. Total Stock Market Index in the custom index. Prior to March 1, 2014 the index was comprised of 60% Dow Jones U.S. Total Stock Market Index, 20% MSCI EAFE (Net) Index, 15% Barclays U.S. Aggregate Bond Index, and 5% Barclays U.S. Treasury Bills: 1 – 3 Months Index. The components that make up the composite may vary over time.
market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.
MSCI EAFE (Europe, Australasia, Far East) Index A free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. & Canada. The Net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes; returns are calculated applying dividend withholding rates applicable to non-resident persons who do not benefit from double taxation treaties.
MSCI Emerging Markets Index A free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.
net asset value (NAV) The value of one share of a mutual fund. NAV is calculated by taking the fund’s total assets, subtracting liabilities, and dividing by the number of shares outstanding.
outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.
price-to-book ratio (P/B) The market price of a company’s stock compared with its “book value.” A mutual fund’s P/B is the weighted average of the P/B of all stocks in the fund’s portfolio.
price-to-earnings ratio (P/E) The market price of a company’s stock compared with earnings over the past year. A mutual fund’s P/E is the weighted average of the P/E of all stocks in the fund’s portfolio.
return on equity (ROE) The average yearly rate of return for each dollar of investors’ money, measured over the past five years.
Russell 2000 Index An index that measures the performance of the small-cap segment of the U.S. equity universe. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.
S&P 500 Index A market capitalization index that is designed to measure the performance of 500 leading publicly held companies in leading industries of the U.S. economy.
stock A share of ownership, or equity, in the issuing company.
total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.
weighted average For mutual funds, an average that gives the same weight to each security as the security represents in the fund’s portfolio.
yield The income paid out by an investment, expressed as a percentage of the investment’s market value.
PRIVACY NOTICE
THIS IS NOT PART OF THE SHAREHOLDER REPORT
A Commitment to Your Privacy
Your Privacy Is Not for Sale
We do not and will not sell your personal information to anyone, for any reason.
We are committed to protecting the privacy of information we maintain about you. Below are details about our commitment, including the types of information we collect and how we use and share that information. This Privacy Notice applies to you only if you are an individual who invests directly in the funds by placing orders through the funds’ transfer agent. If you place orders through your brokerage account at Charles Schwab & Co., Inc. or an account with another broker-dealer, investment advisor, 401(k) plan, employee benefit plan, administrator, bank or other financial intermediary, you are covered by the privacy policies of that financial institution and should consult those policies.
How We Collect Information About You
We collect personal information about you in a number of ways.
• APPLICATION AND REGISTRATION
INFORMATION.
We collect personal information from you when you open an account or utilize one of our services. We may also collect information about you from third parties such as consumer reporting agencies to verify your identity. The information we collect may include personal information, including your Social Security number, as well as details about your interests, investments and investment experience.
• TRANSACTION AND EXPERIENCE
INFORMATION.
Once your account has been opened, we collect and maintain personal information about your account activity, including your transactions, balances, positions and history. This information allows us to administer your account and provide the services you have requested.
• WEBSITE USAGE.
When you visit our websites, we may use devices known as “cookies,” graphic interchange format files (GIFs), or other similar web tools to enhance your web experience. These
tools help us to recognize you, maintain your web session, and provide a more personalized experience. To learn more, please go to www.schwab.com/privacy.
How We Share and Use Your Information
We provide access to information about you to our affiliated companies, outside companies and other third parties in certain limited circumstances, including:
• to help us process transactions for your account;
• when we use other companies to provide services for us, such as printing and mailing your account statements;
• when we believe that disclosure is required or permitted under law (for example, to cooperate with regulators or law enforcement, resolve consumer disputes, perform credit/authentication checks, or for risk control).
State Laws
We will comply with state laws that apply to the disclosure or use of information about you.
Safeguarding Your Information — Security Is a
Partnership
We take precautions to ensure the information we collect about you is protected and is accessed only by authorized individuals or organizations.
Companies we use to provide support services are not allowed to use information about our shareholders for their own purposes and are contractually obligated to maintain strict confidentiality. We limit their use of information to the performance of the specific services we have requested.
We restrict access to personal information by our employees and agents. Our employees are trained about privacy and are required to safeguard personal information.
We maintain physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
Contact Us
To provide us with updated information, report suspected fraud or identity theft, or for any other questions, please call the number below.
Schwab Funds® direct investors: 1-800-407-0256
© 2015 Schwab Funds. All rights reserved.
Schwab Funds® offers you an extensive family of mutual funds, each one based on a clearly defined investment approach and using disciplined management strategies. The list at right shows all currently available Schwab Funds.
Whether you are an experienced investor or just starting out, Schwab Funds can help you achieve your financial goals. An investor should consider a fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information can be found in the fund’s prospectus. Please call 1-800-435-4000 for a prospectus and brochure for any Schwab Fund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus.
Proxy Voting Policies, Procedures and Results
A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting the Schwab Funds’ website at www.csimfunds.com/schwabfunds_prospectus, the SEC’s website at www.sec.gov, or by contacting Schwab Funds at 1-800-435-4000.
Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting the fund’s website at www.csimfunds.com/schwabfunds_prospectus or the SEC’s website at www.sec.gov.
The Schwab Funds Family®
Stock Funds
Schwab Core Equity Fund™
Schwab Dividend Equity Fund™
Schwab Large-Cap Growth Fund™
Schwab Small-Cap Equity Fund™
Schwab Hedged Equity Fund™
Schwab Financial Services Fund™
Schwab Health Care Fund™
Schwab® International Core Equity Fund
Schwab Fundamental US Large Company Index Fund
Schwab Fundamental US Small Company Index Fund
Schwab Fundamental International Large Company Index Fund
Schwab Fundamental International Small Company Index Fund
Schwab Fundamental Emerging Markets Large Company Index Fund
Schwab Fundamental Global Real Estate Index Fund
Schwab Global Real Estate Fund™
Schwab® S&P 500 Index Fund
Schwab 1000 Index® Fund
Schwab Small-Cap Index Fund®
Schwab Total Stock Market Index Fund®
Schwab International Index Fund®
Asset Allocation Funds
Schwab Balanced Fund™
Schwab MarketTrack All Equity Portfolio™
Schwab MarketTrack Growth Portfolio™
Schwab MarketTrack Balanced Portfolio™
Schwab MarketTrack Conservative Portfolio™
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab 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
Bond Funds
Schwab Short-Term Bond Market Fund™
Schwab Intermediate-Term Bond Fund™
Schwab Total Bond Market Fund™
Schwab GNMA Fund™
Schwab® Treasury Inflation Protected Securities Index Fund
Schwab Tax-Free Bond Fund™
Schwab California Tax-Free Bond Fund™
Schwab Money Funds
Schwab offers an array of money market funds1. Choose from taxable or tax-advantaged alternatives. Many can be linked to your eligible Schwab account to “sweep” cash balances automatically, subject to availability, when you’re between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments®.
| 1 | Investments in money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency and, although they seek to preserve the value of your investment at $1 per share, it is possible to lose money. |
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
Funds
Schwab Funds®
1-800-435-4000
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
© 2015 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC®
Printed on recycled paper.
MFR13813-18
00156959
Item 2: Code of Ethics.
| (a) | Registrant has adopted a code of ethics that applies to its principal executive officer, principal financial officer, and any other persons who perform a similar function, regardless of whether these individuals are employed by Registrant or a third party. |
| (c) | During the period covered by the report, no amendments were made to the provisions of this code of ethics. |
| (d) | During the period covered by the report, Registrant did not grant any waivers, including implicit waivers, from the provisions of this code of ethics. |
| (f)(1) | Registrant has filed this code of ethics as an exhibit pursuant to Item 12(a)(1) of Form N-CSR. |
Item 3: Audit Committee Financial Expert.
Registrant’s Board of Trustees has determined that that Kiran Patel, John Cogan, and David Mahoney, each currently serving on its audit committee, are each an “audit committee financial expert,” as such term is defined in Item 3 of Form N-CSR. Each member of Registrant’s audit committee is “independent” under the standards set forth in Item 3 of Form N-CSR.
The designation of each of Mr. Patel, Mr. Cogan, and Mr. Mahoney as an “audit committee financial expert” pursuant to Item 3 of Form N-CSR does not (i) impose upon such individual any duties, obligations, or liability that are greater than the duties, obligations and liability imposed upon such individual as a member of Registrant’s audit committee or Board of Trustees in the absence of such designation; and (ii) affect the duties, obligations or liability of any other member of Registrant’s audit committee or Board of Trustees.
Item 4: Principal Accountant Fees and Services.
Registrant is composed of thirty-eight series. Thirty-four series have a fiscal year-end of October 31, whose annual financial statements are reported in Item 1, three series have a fiscal year-end of December 31, and one series has a fiscal year-end of February 28. Principal accountant fees disclosed in Items 4(a)-(d) and 4(g) include fees billed for services rendered to each of the thirty-eight series, based on their respective 2015 and 2014 fiscal years, as applicable.
The following table presents fees billed by the principal accountant in each of the last two fiscal years for the services rendered to the Funds:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(a) Audit Fees | | | (b)Audit-Related Fees1 | | | (c) Tax Fees2 | | | (d) All Other Fees3 | |
Fiscal Year 2015 | | Fiscal
Year 2014 | | | Fiscal
Year
2015 | | | Fiscal
Year
2014 | | | Fiscal
Year
2015 | | | Fiscal
Year
2014 | | | Fiscal
Year
2015 | | | Fiscal
Year
2014 | |
| $ 1,275,248 | | $ | 1,301,980 | | | $ | 0 | | | $ | 88,798 | | | $ | 126,645 | | | $ | 108,614 | | | $ | 11,487 | | | $ | 5,251 | |
| 1 | The nature of the services includes assurance and related services reasonably related to the performance of the audit of financial statements not included in Audit Fees. |
| 2 | The nature of the services includes tax compliance, tax advice and tax planning. |
| 3 | The nature of the services include agreed upon procedures relating to Charles Schwab Investment Management., Inc.’s, (“CSIM”) expenses for purposes of Section 15(c) of the Investment Company Act of 1940. |
| | | | |
| (e) | | (1) | | Registrant’s audit committee does not have pre-approval policies and procedures as described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. |
| | |
| | (2) | | There were no services described in each of paragraphs (b) through (d) above (including services required to be approved by Registrant’s audit committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X) that were approved by Registrant’s audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. |
(f) Not applicable.
(g) Below are the aggregate non-audit fees billed in each of the last two fiscal years by Registrant’s principal accountant for services rendered to Registrant, to Registrant’s investment adviser, and to any entity controlling, controlled by, or under common control with Registrant’s investment adviser that provides ongoing services to Registrant.
| | | | | | | | | | |
2015: | | $ | 138,132 | | | 2014: | | $ | 202,663 | |
Although not required to be included in the amounts disclosed under this paragraph (g) or any other paragraph of this Item 4, below are the aggregate fees billed in each of the last two fiscal years by Registrant’s principal accountant for tax compliance services rendered to U.S. Trust, an entity under common control with Registrant’s investment adviser that does not provide services to Registrant.
| (h) | During the past fiscal year, all non-audit services provided by Registrant’s principal accountant to either Registrant’s investment adviser or to any entity controlling, controlled by, or under common control with Registrant’s investment adviser that provides ongoing services to Registrant were pre-approved. Included in the audit committee’s pre-approval was the review and consideration as to whether the provision of these non-audit services is compatible with maintaining the principal accountant’s independence. |
Item 5: Audit Committee of Listed Registrants.
Not applicable.
Item 6: Schedule of Investments.
Except as noted below, the condensed schedules of investments are included as part of the report to shareholders filed under Item 1 of this Form. The schedules of investments for the Schwab Fundamental US Large Company Index Fund, Schwab Fundamental US Small Company Index Fund, Schwab Fundamental International Large Company Index Fund, Schwab Fundamental International Small Company Index Fund, Schwab Fundamental Emerging Markets Large Company Index Fund, Schwab S&P 500 Index Fund, Schwab Small-Cap Index Fund, Schwab Total Stock Market Index Fund and Schwab International Index Fund are filed under this Item.
Schwab S&P 500 Index Fund
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 99.3% | Common Stock | 12,296,413,364 | 21,436,762,073 |
| 0.1% | Other Investment Company | 22,609,285 | 22,609,285 |
| 0.6% | Short-Term Investment | 120,801,912 | 120,801,912 |
| 100.0% | Total Investments | 12,439,824,561 | 21,580,173,270 |
| 0.0% | Other Assets and Liabilities, Net | | 6,331,869 |
| 100.0% | Net Assets | | 21,586,505,139 |
| Security | Number
of Shares | Value
($) |
| Common Stock 99.3% of net assets |
| Automobiles & Components 1.0% |
| BorgWarner, Inc. | 261,400 | 11,193,149 |
| Delphi Automotive plc | 336,400 | 27,985,116 |
| Ford Motor Co. | 4,533,997 | 67,148,496 |
| General Motors Co. | 1,688,400 | 58,942,044 |
| Harley-Davidson, Inc. | 246,470 | 12,187,941 |
| Johnson Controls, Inc. | 758,859 | 34,285,250 |
| The Goodyear Tire & Rubber Co. | 304,936 | 10,014,098 |
| | | 221,756,094 |
| Banks 5.8% |
| Bank of America Corp. | 12,227,811 | 205,182,669 |
| BB&T Corp. | 911,226 | 33,852,046 |
| Citigroup, Inc. | 3,519,347 | 187,123,680 |
| Comerica, Inc. | 211,070 | 9,160,438 |
| Fifth Third Bancorp | 940,929 | 17,924,698 |
| Hudson City Bancorp, Inc. | 594,892 | 6,020,307 |
| Huntington Bancshares, Inc. | 891,893 | 9,784,066 |
| JPMorgan Chase & Co. | 4,331,031 | 278,268,742 |
| KeyCorp | 1,027,498 | 12,761,525 |
| M&T Bank Corp. | 152,698 | 18,300,855 |
| People's United Financial, Inc. | 343,300 | 5,475,635 |
| Regions Financial Corp. | 1,567,445 | 14,655,611 |
| SunTrust Banks, Inc. | 605,816 | 25,153,480 |
| The PNC Financial Services Group, Inc. | 605,578 | 54,659,470 |
| U.S. Bancorp | 1,932,928 | 81,530,903 |
| Security | Number
of Shares | Value
($) |
| Wells Fargo & Co. | 5,453,509 | 295,252,977 |
| Zions Bancorp | 250,998 | 7,221,213 |
| | | 1,262,328,315 |
| Capital Goods 7.2% |
| 3M Co. | 732,719 | 115,190,754 |
| Allegion plc | 115,333 | 7,516,252 |
| AMETEK, Inc. | 289,400 | 15,864,908 |
| Caterpillar, Inc. | 707,762 | 51,659,548 |
| Cummins, Inc. | 195,962 | 20,284,027 |
| Danaher Corp. | 695,174 | 64,866,686 |
| Deere & Co. | 364,586 | 28,437,708 |
| Dover Corp. | 181,270 | 11,679,226 |
| Eaton Corp. plc | 545,538 | 30,501,030 |
| Emerson Electric Co. | 766,615 | 36,207,226 |
| Fastenal Co. | 329,398 | 12,899,226 |
| Flowserve Corp. | 150,300 | 6,967,908 |
| Fluor Corp. | 174,382 | 8,337,203 |
| General Dynamics Corp. | 353,060 | 52,457,655 |
| General Electric Co. | 11,824,352 | 341,960,260 |
| Honeywell International, Inc. | 917,329 | 94,741,739 |
| Illinois Tool Works, Inc. | 389,036 | 35,767,970 |
| Ingersoll-Rand plc | 308,100 | 18,258,006 |
| Jacobs Engineering Group, Inc. * | 139,834 | 5,612,937 |
| L-3 Communications Holdings, Inc. | 97,283 | 12,296,571 |
| Lockheed Martin Corp. | 312,591 | 68,716,880 |
| Masco Corp. | 385,388 | 11,176,252 |
| Northrop Grumman Corp. | 218,167 | 40,960,854 |
| PACCAR, Inc. | 410,350 | 21,604,927 |
| Parker-Hannifin Corp. | 164,036 | 17,174,569 |
| Pentair plc | 208,982 | 11,686,273 |
| Precision Castparts Corp. | 161,427 | 37,258,966 |
| Quanta Services, Inc. * | 231,900 | 4,663,509 |
| Raytheon Co. | 358,588 | 42,098,231 |
| Rockwell Automation, Inc. | 159,921 | 17,456,976 |
| Rockwell Collins, Inc. | 158,605 | 13,754,226 |
| Roper Technologies, Inc. | 117,800 | 21,952,030 |
| Snap-on, Inc. | 66,282 | 10,995,521 |
| Stanley Black & Decker, Inc. | 179,881 | 19,063,788 |
| Textron, Inc. | 316,904 | 13,363,842 |
| The Boeing Co. | 745,254 | 110,349,760 |
| United Rentals, Inc. * | 110,100 | 8,242,086 |
| United Technologies Corp. | 970,735 | 95,530,031 |
| W.W. Grainger, Inc. | 69,927 | 14,684,670 |
| Xylem, Inc. | 197,600 | 7,194,616 |
| | | 1,559,434,847 |
| Commercial & Professional Supplies 0.7% |
| Cintas Corp. | 111,376 | 10,367,992 |
| Equifax, Inc. | 136,561 | 14,553,306 |
| Nielsen Holdings plc | 438,300 | 20,823,633 |
| Pitney Bowes, Inc. | 231,591 | 4,782,354 |
| Republic Services, Inc. | 289,334 | 12,655,469 |
| Robert Half International, Inc. | 156,742 | 8,254,034 |
| Stericycle, Inc. * | 98,600 | 11,967,082 |
| The ADT Corp. | 194,500 | 6,426,280 |
| The Dun & Bradstreet Corp. | 46,800 | 5,329,116 |
| Tyco International plc | 505,300 | 18,413,132 |
Schwab S&P 500 Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Verisk Analytics, Inc. * | 185,000 | 13,247,850 |
| Waste Management, Inc. | 497,616 | 26,751,836 |
| | | 153,572,084 |
| Consumer Durables & Apparel 1.5% |
| Coach, Inc. | 327,028 | 10,203,274 |
| D.R. Horton, Inc. | 384,416 | 11,317,207 |
| Fossil Group, Inc. * | 54,900 | 2,987,109 |
| Garmin Ltd. | 131,100 | 4,650,117 |
| Hanesbrands, Inc. | 481,600 | 15,382,304 |
| Harman International Industries, Inc. | 85,956 | 9,451,722 |
| Hasbro, Inc. | 126,117 | 9,689,569 |
| Leggett & Platt, Inc. | 157,894 | 7,109,967 |
| Lennar Corp., Class A | 195,618 | 9,794,593 |
| Mattel, Inc. | 384,094 | 9,441,031 |
| Michael Kors Holdings Ltd. * | 230,600 | 8,910,384 |
| Mohawk Industries, Inc. * | 72,100 | 14,095,550 |
| Newell Rubbermaid, Inc. | 326,350 | 13,847,030 |
| NIKE, Inc., Class B | 793,024 | 103,909,935 |
| PulteGroup, Inc. | 370,186 | 6,785,509 |
| PVH Corp. | 99,900 | 9,085,905 |
| Ralph Lauren Corp. | 69,126 | 7,657,087 |
| Under Armour, Inc., Class A * | 211,200 | 20,080,896 |
| VF Corp. | 390,964 | 26,397,889 |
| Whirlpool Corp. | 88,922 | 14,239,969 |
| | | 315,037,047 |
| Consumer Services 1.9% |
| Carnival Corp. | 531,921 | 28,766,288 |
| Chipotle Mexican Grill, Inc. * | 36,959 | 23,662,261 |
| Darden Restaurants, Inc. | 130,948 | 8,104,372 |
| H&R Block, Inc. | 317,305 | 11,822,784 |
| Marriott International, Inc., Class A | 227,872 | 17,496,012 |
| McDonald's Corp. | 1,102,438 | 123,748,666 |
| Royal Caribbean Cruises Ltd. | 198,200 | 19,492,970 |
| Starbucks Corp. | 1,740,024 | 108,873,302 |
| Starwood Hotels & Resorts Worldwide, Inc. | 202,568 | 16,179,106 |
| Wyndham Worldwide Corp. | 136,364 | 11,093,211 |
| Wynn Resorts Ltd. (b) | 95,000 | 6,645,250 |
| Yum! Brands, Inc. | 501,985 | 35,595,756 |
| | | 411,479,978 |
| Diversified Financials 4.9% |
| Affiliated Managers Group, Inc. * | 66,000 | 11,897,160 |
| American Express Co. | 993,941 | 72,816,118 |
| Ameriprise Financial, Inc. | 210,214 | 24,250,287 |
| Berkshire Hathaway, Inc., Class B * | 2,187,130 | 297,493,423 |
| BlackRock, Inc. | 149,700 | 52,689,909 |
| Capital One Financial Corp. | 636,474 | 50,217,799 |
| CME Group, Inc. | 393,485 | 37,172,528 |
| Discover Financial Services | 507,173 | 28,513,266 |
| E*TRADE Financial Corp. * | 354,519 | 10,107,337 |
| Franklin Resources, Inc. | 452,905 | 18,460,408 |
| Intercontinental Exchange, Inc. | 131,066 | 33,081,058 |
| Invesco Ltd. | 497,347 | 16,497,000 |
| Legg Mason, Inc. | 137,198 | 6,139,610 |
| Security | Number
of Shares | Value
($) |
| Leucadia National Corp. | 379,851 | 7,600,819 |
| McGraw Hill Financial, Inc. | 321,467 | 29,780,703 |
| Moody's Corp. | 201,329 | 19,359,797 |
| Morgan Stanley | 1,770,254 | 58,365,274 |
| Nasdaq, Inc. | 142,400 | 8,243,536 |
| Navient Corp. | 465,000 | 6,133,350 |
| Northern Trust Corp. | 256,018 | 18,021,107 |
| State Street Corp. | 477,026 | 32,914,794 |
| T. Rowe Price Group, Inc. | 303,279 | 22,933,958 |
| The Bank of New York Mellon Corp. | 1,287,873 | 53,639,910 |
| The Charles Schwab Corp. (a) | 1,402,481 | 42,803,720 |
| The Goldman Sachs Group, Inc. | 467,469 | 87,650,437 |
| | | 1,046,783,308 |
| Energy 7.1% |
| Anadarko Petroleum Corp. | 589,009 | 39,392,922 |
| Apache Corp. | 445,806 | 21,010,837 |
| Baker Hughes, Inc. | 512,463 | 26,996,551 |
| Cabot Oil & Gas Corp. | 498,700 | 10,826,777 |
| Cameron International Corp. * | 224,600 | 15,275,046 |
| Chesapeake Energy Corp. (b) | 577,766 | 4,119,472 |
| Chevron Corp. | 2,205,834 | 200,466,194 |
| Cimarex Energy Co. | 108,400 | 12,797,704 |
| Columbia Pipeline Group, Inc. | 374,662 | 7,781,730 |
| ConocoPhillips | 1,449,690 | 77,340,961 |
| CONSOL Energy, Inc. | 264,418 | 1,761,024 |
| Devon Energy Corp. | 454,458 | 19,055,424 |
| Diamond Offshore Drilling, Inc. (b) | 65,300 | 1,298,164 |
| Ensco plc, Class A | 258,200 | 4,293,866 |
| EOG Resources, Inc. | 644,212 | 55,305,600 |
| EQT Corp. | 177,100 | 11,700,997 |
| Exxon Mobil Corp. | 4,871,741 | 403,087,850 |
| FMC Technologies, Inc. * | 275,300 | 9,313,399 |
| Halliburton Co. | 1,010,268 | 38,774,086 |
| Helmerich & Payne, Inc. | 118,300 | 6,656,741 |
| Hess Corp. | 291,140 | 16,364,979 |
| Kinder Morgan, Inc. | 2,104,644 | 57,562,013 |
| Marathon Oil Corp. | 790,952 | 14,537,698 |
| Marathon Petroleum Corp. | 632,852 | 32,781,734 |
| Murphy Oil Corp. | 184,892 | 5,256,480 |
| National Oilwell Varco, Inc. | 454,724 | 17,115,811 |
| Newfield Exploration Co. * | 187,300 | 7,527,587 |
| Noble Energy, Inc. | 498,668 | 17,872,261 |
| Occidental Petroleum Corp. | 901,150 | 67,171,721 |
| ONEOK, Inc. | 253,100 | 8,585,152 |
| Phillips 66 | 560,795 | 49,938,795 |
| Pioneer Natural Resources Co. | 175,400 | 24,054,356 |
| Range Resources Corp. | 191,200 | 5,820,128 |
| Schlumberger Ltd. | 1,475,715 | 115,341,884 |
| Southwestern Energy Co. * | 437,000 | 4,824,480 |
| Spectra Energy Corp. | 773,309 | 22,093,438 |
| Tesoro Corp. | 139,107 | 14,874,711 |
| The Williams Cos., Inc. | 795,098 | 31,358,665 |
| Transocean Ltd. (b) | 424,000 | 6,711,920 |
| Valero Energy Corp. | 576,540 | 38,005,517 |
| | | 1,525,054,675 |
Schwab S&P 500 Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Food & Staples Retailing 2.2% |
| Costco Wholesale Corp. | 515,492 | 81,509,595 |
| CVS Health Corp. | 1,302,751 | 128,685,744 |
| Sysco Corp. | 644,357 | 26,579,726 |
| The Kroger Co. | 1,146,094 | 43,322,353 |
| Wal-Mart Stores, Inc. | 1,845,802 | 105,653,707 |
| Walgreens Boots Alliance, Inc. | 1,021,711 | 86,518,487 |
| Whole Foods Market, Inc. | 416,432 | 12,476,303 |
| | | 484,745,915 |
| Food, Beverage & Tobacco 5.5% |
| Altria Group, Inc. | 2,296,091 | 138,844,623 |
| Archer-Daniels-Midland Co. | 724,899 | 33,098,888 |
| Brown-Forman Corp., Class B | 124,692 | 13,239,797 |
| Campbell Soup Co. | 210,511 | 10,691,854 |
| Coca-Cola Enterprises, Inc. | 237,862 | 12,211,835 |
| ConAgra Foods, Inc. | 508,149 | 20,605,442 |
| Constellation Brands, Inc., Class A | 203,565 | 27,440,562 |
| Dr Pepper Snapple Group, Inc. | 219,200 | 19,589,904 |
| General Mills, Inc. | 693,280 | 40,286,501 |
| Hormel Foods Corp. | 162,800 | 10,997,140 |
| Kellogg Co. | 293,934 | 20,728,226 |
| Keurig Green Mountain, Inc. | 139,900 | 7,099,925 |
| McCormick & Co., Inc. - Non Voting Shares | 142,802 | 11,992,512 |
| Mead Johnson Nutrition Co. | 233,400 | 19,138,800 |
| Molson Coors Brewing Co., Class B | 180,530 | 15,904,693 |
| Mondelez International, Inc., Class A | 1,894,654 | 87,457,229 |
| Monster Beverage Corp. * | 178,500 | 24,333,120 |
| PepsiCo, Inc. | 1,721,163 | 175,885,647 |
| Philip Morris International, Inc. | 1,807,546 | 159,787,066 |
| Reynolds American, Inc. | 961,950 | 46,481,424 |
| The Coca-Cola Co. | 4,587,756 | 194,291,467 |
| The Hershey Co. | 170,528 | 15,124,128 |
| The JM Smucker Co. | 123,075 | 14,447,774 |
| The Kraft Heinz Co. | 690,318 | 53,824,094 |
| Tyson Foods, Inc., Class A | 354,790 | 15,738,484 |
| | | 1,189,241,135 |
| Health Care Equipment & Services 4.8% |
| Abbott Laboratories | 1,736,286 | 77,785,613 |
| Aetna, Inc. | 404,475 | 46,425,640 |
| AmerisourceBergen Corp. | 244,646 | 23,610,785 |
| Anthem, Inc. | 309,329 | 43,043,130 |
| Baxter International, Inc. | 635,189 | 23,749,717 |
| Becton, Dickinson & Co. | 246,898 | 35,187,903 |
| Boston Scientific Corp. * | 1,570,774 | 28,713,749 |
| C.R. Bard, Inc. | 84,373 | 15,722,909 |
| Cardinal Health, Inc. | 378,733 | 31,131,853 |
| Cerner Corp. * | 361,900 | 23,990,351 |
| Cigna Corp. | 302,108 | 40,494,556 |
| DaVita HealthCare Partners, Inc. * | 204,000 | 15,812,040 |
| DENTSPLY International, Inc. | 170,400 | 10,368,840 |
| Edwards Lifesciences Corp. * | 123,600 | 19,423,740 |
| Express Scripts Holding Co. * | 790,495 | 68,282,958 |
| HCA Holdings, Inc. * | 373,200 | 25,672,428 |
| Security | Number
of Shares | Value
($) |
| Henry Schein, Inc. * | 97,100 | 14,731,041 |
| Humana, Inc. | 175,903 | 31,421,553 |
| Intuitive Surgical, Inc. * | 43,531 | 21,617,495 |
| Laboratory Corp. of America Holdings * | 115,791 | 14,212,187 |
| McKesson Corp. | 271,175 | 48,486,090 |
| Medtronic plc | 1,656,176 | 122,424,530 |
| Patterson Cos., Inc. | 104,447 | 4,950,788 |
| Quest Diagnostics, Inc. | 171,680 | 11,665,656 |
| St. Jude Medical, Inc. | 327,187 | 20,877,802 |
| Stryker Corp. | 372,740 | 35,641,399 |
| Tenet Healthcare Corp. * | 112,904 | 3,541,798 |
| UnitedHealth Group, Inc. | 1,116,010 | 131,443,658 |
| Universal Health Services, Inc., Class B | 108,400 | 13,234,556 |
| Varian Medical Systems, Inc. * | 110,706 | 8,693,742 |
| Zimmer Biomet Holdings, Inc. | 194,223 | 20,309,899 |
| | | 1,032,668,406 |
| Household & Personal Products 1.9% |
| Colgate-Palmolive Co. | 1,051,094 | 69,740,087 |
| Kimberly-Clark Corp. | 423,995 | 50,756,441 |
| The Clorox Co. | 150,257 | 18,322,339 |
| The Estee Lauder Cos., Inc., Class A | 265,052 | 21,326,084 |
| The Procter & Gamble Co. | 3,167,690 | 241,948,162 |
| | | 402,093,113 |
| Insurance 2.7% |
| ACE Ltd. | 382,300 | 43,406,342 |
| Aflac, Inc. | 507,873 | 32,376,904 |
| American International Group, Inc. | 1,513,654 | 95,451,021 |
| Aon plc | 323,350 | 30,171,788 |
| Assurant, Inc. | 74,246 | 6,053,276 |
| Cincinnati Financial Corp. | 173,003 | 10,419,971 |
| Genworth Financial, Inc., Class A * | 548,164 | 2,565,408 |
| Lincoln National Corp. | 294,671 | 15,767,845 |
| Loews Corp. | 326,316 | 11,897,481 |
| Marsh & McLennan Cos., Inc. | 625,279 | 34,853,051 |
| MetLife, Inc. | 1,304,877 | 65,739,703 |
| Principal Financial Group, Inc. | 316,567 | 15,879,001 |
| Prudential Financial, Inc. | 522,431 | 43,100,557 |
| The Allstate Corp. | 467,610 | 28,935,707 |
| The Chubb Corp. | 268,093 | 34,677,830 |
| The Hartford Financial Services Group, Inc. | 496,495 | 22,967,859 |
| The Progressive Corp. | 687,520 | 22,777,538 |
| The Travelers Cos., Inc. | 363,560 | 41,042,288 |
| Torchmark Corp. | 143,266 | 8,310,861 |
| Unum Group | 276,440 | 9,578,646 |
| XL Group plc | 362,299 | 13,796,346 |
| | | 589,769,423 |
| Materials 2.9% |
| Air Products & Chemicals, Inc. | 227,101 | 31,562,497 |
| Airgas, Inc. | 75,000 | 7,212,000 |
| Alcoa, Inc. | 1,553,564 | 13,873,326 |
| Avery Dennison Corp. | 103,076 | 6,696,848 |
Schwab S&P 500 Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Ball Corp. | 167,938 | 11,503,753 |
| CF Industries Holdings, Inc. | 265,925 | 13,501,012 |
| E.I. du Pont de Nemours & Co. | 1,048,404 | 66,468,814 |
| Eastman Chemical Co. | 172,716 | 12,464,914 |
| Ecolab, Inc. | 309,228 | 37,215,590 |
| FMC Corp. | 158,300 | 6,444,393 |
| Freeport-McMoRan, Inc. | 1,204,040 | 14,171,551 |
| International Flavors & Fragrances, Inc. | 89,743 | 10,415,573 |
| International Paper Co. | 494,389 | 21,105,466 |
| LyondellBasell Industries N.V., Class A | 437,100 | 40,610,961 |
| Martin Marietta Materials, Inc. | 80,300 | 12,458,545 |
| Monsanto Co. | 544,400 | 50,748,968 |
| Newmont Mining Corp. | 638,546 | 12,426,105 |
| Nucor Corp. | 375,200 | 15,870,960 |
| Owens-Illinois, Inc. * | 198,600 | 4,279,830 |
| PPG Industries, Inc. | 313,896 | 32,726,797 |
| Praxair, Inc. | 333,579 | 37,057,291 |
| Sealed Air Corp. | 236,068 | 11,595,660 |
| Sigma-Aldrich Corp. | 141,954 | 19,833,813 |
| The Dow Chemical Co. | 1,359,235 | 70,231,672 |
| The Mosaic Co. | 397,200 | 13,421,388 |
| The Sherwin-Williams Co. | 91,636 | 24,451,234 |
| Vulcan Materials Co. | 151,071 | 14,590,437 |
| WestRock Co. | 310,489 | 16,691,889 |
| | | 629,631,287 |
| Media 3.3% |
| Cablevision Systems Corp., Class A | 272,100 | 8,867,739 |
| CBS Corp., Class B - Non Voting Shares | 513,036 | 23,866,435 |
| Comcast Corp., Class A | 2,900,664 | 181,639,580 |
| Discovery Communications, Inc., Class A * | 159,800 | 4,704,512 |
| Discovery Communications, Inc., Class C * | 310,500 | 8,544,960 |
| News Corp., Class A | 443,000 | 6,822,200 |
| News Corp., Class B | 126,200 | 1,953,576 |
| Omnicom Group, Inc. | 280,047 | 20,981,121 |
| Scripps Networks Interactive, Inc., Class A | 116,593 | 7,004,907 |
| TEGNA, Inc. | 270,314 | 7,309,291 |
| The Interpublic Group of Cos., Inc. | 456,265 | 10,462,157 |
| The Walt Disney Co. | 1,815,683 | 206,515,784 |
| Time Warner Cable, Inc. | 331,001 | 62,691,589 |
| Time Warner, Inc. | 958,774 | 72,234,033 |
| Twenty-First Century Fox, Inc., Class A | 1,925,801 | 59,102,833 |
| Viacom, Inc., Class B | 417,053 | 20,564,883 |
| | | 703,265,600 |
| Pharmaceuticals, Biotechnology & Life Sciences 9.7% |
| AbbVie, Inc. | 1,937,286 | 115,365,381 |
| Agilent Technologies, Inc. | 379,266 | 14,321,084 |
| Alexion Pharmaceuticals, Inc. * | 261,900 | 46,094,400 |
| Allergan plc * | 461,268 | 142,287,340 |
| Amgen, Inc. | 888,459 | 140,536,445 |
| Security | Number
of Shares | Value
($) |
| Baxalta, Inc. | 635,189 | 21,888,613 |
| Biogen, Inc. * | 261,491 | 75,965,750 |
| Bristol-Myers Squibb Co. | 1,947,464 | 128,435,251 |
| Celgene Corp. * | 922,626 | 113,215,436 |
| Eli Lilly & Co. | 1,146,723 | 93,538,195 |
| Endo International plc * | 238,600 | 14,313,614 |
| Gilead Sciences, Inc. | 1,718,450 | 185,815,999 |
| Johnson & Johnson | 3,234,925 | 326,824,473 |
| Mallinckrodt plc * | 134,700 | 8,845,749 |
| Merck & Co., Inc. | 3,295,514 | 180,132,795 |
| Mylan N.V. * | 480,751 | 21,196,312 |
| PerkinElmer, Inc. | 141,360 | 7,299,830 |
| Perrigo Co., plc | 171,500 | 27,052,410 |
| Pfizer, Inc. | 7,215,333 | 244,022,562 |
| Regeneron Pharmaceuticals, Inc. * | 90,600 | 50,499,534 |
| Thermo Fisher Scientific, Inc. | 467,237 | 61,105,255 |
| Vertex Pharmaceuticals, Inc. * | 288,700 | 36,012,438 |
| Waters Corp. * | 92,352 | 11,802,586 |
| Zoetis, Inc. | 538,500 | 23,160,885 |
| | | 2,089,732,337 |
| Real Estate 2.6% |
| American Tower Corp. | 494,600 | 50,562,958 |
| Apartment Investment & Management Co., Class A | 179,414 | 7,031,235 |
| AvalonBay Communities, Inc. | 159,299 | 27,850,244 |
| Boston Properties, Inc. | 176,476 | 22,209,505 |
| CBRE Group, Inc., Class A * | 337,440 | 12,579,763 |
| Crown Castle International Corp. | 389,900 | 33,320,854 |
| Equinix, Inc. | 66,700 | 19,788,556 |
| Equity Residential | 424,522 | 32,824,041 |
| Essex Property Trust, Inc. | 74,900 | 16,510,956 |
| General Growth Properties, Inc. | 696,300 | 20,157,885 |
| HCP, Inc. | 527,700 | 19,630,440 |
| Host Hotels & Resorts, Inc. | 870,411 | 15,084,223 |
| Iron Mountain, Inc. | 240,402 | 7,365,917 |
| Kimco Realty Corp. | 475,559 | 12,730,714 |
| Plum Creek Timber Co., Inc. | 203,177 | 8,277,431 |
| Prologis, Inc. | 621,689 | 26,564,771 |
| Public Storage | 170,278 | 39,071,990 |
| Realty Income Corp. | 283,000 | 13,997,180 |
| Simon Property Group, Inc. | 363,153 | 73,160,803 |
| SL Green Realty Corp. | 118,300 | 14,032,746 |
| The Macerich Co. | 152,700 | 12,939,798 |
| Ventas, Inc. | 390,500 | 20,977,660 |
| Vornado Realty Trust | 203,856 | 20,497,721 |
| Welltower, Inc. | 416,300 | 27,005,381 |
| Weyerhaeuser Co. | 596,940 | 17,508,250 |
| | | 571,681,022 |
| Retailing 5.4% |
| Advance Auto Parts, Inc. | 85,000 | 16,866,550 |
| Amazon.com, Inc. * | 448,780 | 280,891,402 |
| AutoNation, Inc. * | 91,733 | 5,796,608 |
| AutoZone, Inc. * | 36,498 | 28,629,396 |
| Bed Bath & Beyond, Inc. * | 194,069 | 11,572,335 |
| Best Buy Co., Inc. | 359,257 | 12,584,773 |
| CarMax, Inc. * | 239,400 | 14,126,994 |
| Dollar General Corp. | 350,300 | 23,739,831 |
Schwab S&P 500 Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Dollar Tree, Inc. * | 275,330 | 18,031,362 |
| Expedia, Inc. | 114,513 | 15,608,122 |
| GameStop Corp., Class A (b) | 119,100 | 5,486,937 |
| Genuine Parts Co. | 178,638 | 16,213,185 |
| Kohl's Corp. | 231,910 | 10,695,689 |
| L Brands, Inc. | 303,235 | 29,104,495 |
| Lowe's Cos., Inc. | 1,075,988 | 79,440,194 |
| Macy's, Inc. | 382,226 | 19,485,882 |
| Netflix, Inc. * | 503,100 | 54,525,978 |
| Nordstrom, Inc. | 164,796 | 10,746,347 |
| O'Reilly Automotive, Inc. * | 116,800 | 32,267,168 |
| Ross Stores, Inc. | 476,200 | 24,086,196 |
| Signet Jewelers Ltd. | 94,000 | 14,188,360 |
| Staples, Inc. | 781,869 | 10,156,478 |
| Target Corp. | 734,408 | 56,681,609 |
| The Gap, Inc. | 277,162 | 7,544,350 |
| The Home Depot, Inc. | 1,502,950 | 185,824,738 |
| The Priceline Group, Inc. * | 59,315 | 86,258,246 |
| The TJX Cos., Inc. | 789,406 | 57,776,625 |
| Tiffany & Co. | 125,428 | 10,340,284 |
| Tractor Supply Co. | 162,600 | 15,022,614 |
| TripAdvisor, Inc. * | 129,813 | 10,875,733 |
| Urban Outfitters, Inc. * | 111,100 | 3,177,460 |
| | | 1,167,745,941 |
| Semiconductors & Semiconductor Equipment 2.4% |
| Altera Corp. | 358,646 | 18,846,847 |
| Analog Devices, Inc. | 366,554 | 22,037,227 |
| Applied Materials, Inc. | 1,383,972 | 23,209,210 |
| Avago Technologies Ltd. | 305,700 | 37,640,841 |
| Broadcom Corp., Class A | 656,918 | 33,765,585 |
| First Solar, Inc. * | 94,900 | 5,415,943 |
| Intel Corp. | 5,564,705 | 188,420,911 |
| KLA-Tencor Corp. | 185,081 | 12,422,637 |
| Lam Research Corp. | 181,374 | 13,891,435 |
| Linear Technology Corp. | 282,568 | 12,551,671 |
| Microchip Technology, Inc. | 240,423 | 11,610,027 |
| Micron Technology, Inc. * | 1,245,975 | 20,633,346 |
| NVIDIA Corp. | 601,582 | 17,066,881 |
| Qorvo, Inc. * | 175,400 | 7,705,322 |
| Skyworks Solutions, Inc. | 220,000 | 16,992,800 |
| Texas Instruments, Inc. | 1,211,454 | 68,713,671 |
| Xilinx, Inc. | 313,563 | 14,931,870 |
| | | 525,856,224 |
| Software & Services 11.9% |
| Accenture plc, Class A | 729,400 | 78,191,680 |
| Activision Blizzard, Inc. | 584,000 | 20,299,840 |
| Adobe Systems, Inc. * | 582,776 | 51,668,920 |
| Akamai Technologies, Inc. * | 202,841 | 12,336,790 |
| Alliance Data Systems Corp. * | 72,500 | 21,554,975 |
| Alphabet, Inc., Class A * | 336,212 | 247,919,367 |
| Alphabet, Inc., Class C * | 349,175 | 248,197,082 |
| Autodesk, Inc. * | 269,681 | 14,883,694 |
| Automatic Data Processing, Inc. | 543,373 | 47,268,017 |
| CA, Inc. | 370,925 | 10,278,332 |
| Citrix Systems, Inc. * | 193,308 | 15,870,587 |
| Cognizant Technology Solutions Corp., Class A * | 708,596 | 48,262,473 |
| Computer Sciences Corp. | 162,140 | 10,796,903 |
| Security | Number
of Shares | Value
($) |
| eBay, Inc. * | 1,297,169 | 36,191,015 |
| Electronic Arts, Inc. * | 357,392 | 25,757,241 |
| Facebook, Inc., Class A * | 2,644,800 | 269,690,256 |
| Fidelity National Information Services, Inc. | 335,634 | 24,474,431 |
| Fiserv, Inc. * | 280,704 | 27,090,743 |
| International Business Machines Corp. | 1,053,390 | 147,558,871 |
| Intuit, Inc. | 328,609 | 32,016,375 |
| MasterCard, Inc., Class A | 1,167,690 | 115,589,633 |
| Microsoft Corp. | 9,356,331 | 492,517,264 |
| Oracle Corp. | 3,803,386 | 147,723,512 |
| Paychex, Inc. | 371,965 | 19,185,955 |
| PayPal Holdings, Inc. * | 1,297,169 | 46,711,056 |
| Red Hat, Inc. * | 210,100 | 16,621,011 |
| salesforce.com, Inc. * | 726,665 | 56,469,137 |
| Symantec Corp. | 793,750 | 16,351,250 |
| Teradata Corp. * | 159,871 | 4,493,974 |
| The Western Union Co. | 573,025 | 11,030,731 |
| Total System Services, Inc. | 207,100 | 10,862,395 |
| VeriSign, Inc. * | 112,125 | 9,037,275 |
| Visa, Inc., Class A | 2,282,600 | 177,084,108 |
| Xerox Corp. | 1,208,366 | 11,346,557 |
| Yahoo! Inc. * | 1,012,455 | 36,063,647 |
| | | 2,561,395,097 |
| Technology Hardware & Equipment 6.4% |
| Amphenol Corp., Class A | 362,300 | 19,643,906 |
| Apple, Inc. | 6,669,715 | 797,030,943 |
| Cisco Systems, Inc. | 5,965,928 | 172,117,023 |
| Corning, Inc. | 1,427,787 | 26,556,838 |
| EMC Corp. | 2,259,645 | 59,247,892 |
| F5 Networks, Inc. * | 82,400 | 9,080,480 |
| FLIR Systems, Inc. | 149,700 | 3,992,499 |
| Harris Corp. | 145,100 | 11,481,763 |
| Hewlett-Packard Co. | 2,113,108 | 56,969,392 |
| Juniper Networks, Inc. | 403,065 | 12,652,210 |
| Motorola Solutions, Inc. | 186,422 | 13,043,947 |
| NetApp, Inc. | 342,374 | 11,640,716 |
| QUALCOMM, Inc. | 1,836,165 | 109,104,924 |
| SanDisk Corp. | 247,324 | 19,043,948 |
| Seagate Technology plc | 351,900 | 13,393,314 |
| TE Connectivity Ltd. | 468,700 | 30,203,028 |
| Western Digital Corp. | 268,300 | 17,927,806 |
| | | 1,383,130,629 |
| Telecommunication Services 2.4% |
| AT&T, Inc. | 7,206,802 | 241,499,935 |
| CenturyLink, Inc. | 645,643 | 18,213,589 |
| Frontier Communications Corp. | 1,396,845 | 7,179,783 |
| Level 3 Communications, Inc. * | 329,800 | 16,803,310 |
| Verizon Communications, Inc. | 4,763,278 | 223,302,473 |
| | | 506,999,090 |
| Transportation 2.2% |
| American Airlines Group, Inc. | 779,100 | 36,010,002 |
| C.H. Robinson Worldwide, Inc. | 168,095 | 11,662,431 |
| CSX Corp. | 1,148,591 | 31,000,471 |
| Delta Air Lines, Inc. | 925,300 | 47,042,252 |
Schwab S&P 500 Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Expeditors International of Washington, Inc. | 216,900 | 10,799,451 |
| FedEx Corp. | 306,768 | 47,871,146 |
| JB Hunt Transport Services, Inc. | 108,100 | 8,255,597 |
| Kansas City Southern | 129,400 | 10,709,144 |
| Norfolk Southern Corp. | 357,892 | 28,642,097 |
| Ryder System, Inc. | 60,702 | 4,357,190 |
| Southwest Airlines Co. | 780,136 | 36,112,495 |
| Union Pacific Corp. | 1,014,150 | 90,614,303 |
| United Continental Holdings, Inc. * | 450,000 | 27,139,500 |
| United Parcel Service, Inc., Class B | 816,618 | 84,127,986 |
| | | 474,344,065 |
| Utilities 2.9% |
| AES Corp. | 781,249 | 8,554,677 |
| AGL Resources, Inc. | 146,540 | 9,158,750 |
| Ameren Corp. | 287,020 | 12,537,034 |
| American Electric Power Co., Inc. | 585,802 | 33,185,683 |
| CenterPoint Energy, Inc. | 514,366 | 9,541,489 |
| CMS Energy Corp. | 317,784 | 11,462,469 |
| Consolidated Edison, Inc. | 347,565 | 22,852,399 |
| Dominion Resources, Inc. | 687,064 | 49,076,982 |
| DTE Energy Co. | 202,612 | 16,531,113 |
| Duke Energy Corp. | 807,599 | 57,719,101 |
| Edison International | 390,093 | 23,608,428 |
| Entergy Corp. | 209,653 | 14,289,948 |
| Eversource Energy | 359,500 | 18,312,930 |
| Exelon Corp. | 1,009,093 | 28,173,877 |
| FirstEnergy Corp. | 488,694 | 15,247,253 |
| NextEra Energy, Inc. | 540,638 | 55,501,897 |
| NiSource, Inc. | 374,662 | 7,178,524 |
| NRG Energy, Inc. | 378,600 | 4,880,154 |
| Pepco Holdings, Inc. | 316,200 | 8,420,406 |
| PG&E Corp. | 580,506 | 30,999,020 |
| Pinnacle West Capital Corp. | 125,361 | 7,961,677 |
| PPL Corp. | 790,470 | 27,192,168 |
| Public Service Enterprise Group, Inc. | 582,070 | 24,033,670 |
| SCANA Corp. | 157,500 | 9,327,150 |
| Sempra Energy | 270,569 | 27,708,971 |
| TECO Energy, Inc. | 273,819 | 7,393,113 |
| The Southern Co. | 1,065,625 | 48,059,687 |
| WEC Energy Group, Inc. | 369,078 | 19,029,662 |
| Xcel Energy, Inc. | 591,586 | 21,078,209 |
| | | 629,016,441 |
| Total Common Stock |
| (Cost $12,296,413,364) | | 21,436,762,073 |
|
| Other Investment Company 0.1% of net assets |
| Securities Lending Collateral 0.1% |
| Wells Fargo Advantage Government Money Market Fund, Institutional Class 0.01% (c) | 22,609,285 | 22,609,285 |
| Total Other Investment Company |
| (Cost $22,609,285) | | 22,609,285 |
Security
Rate, Maturity Date | Face
Amount
($) | Value
($) |
| Short-Term Investment 0.6% of net assets |
| Time Deposit 0.6% |
| JPMorgan Chase Bank |
| 0.03%, 11/02/15 | 120,801,912 | 120,801,912 |
| Total Short-Term Investment |
| (Cost $120,801,912) | | 120,801,912 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $12,472,604,206 and the unrealized appreciation and depreciation were $9,712,924,583 and ($605,355,519), respectively, with a net unrealized appreciation of $9,107,569,064.
| * | Non-income producing security. |
| (a) | Issuer is affiliated with the fund's investment adviser. |
| (b) | All or a portion of this security is on loan. Securities on loan were valued at $22,505,104. |
| (c) | The rate shown is the 7-day yield. |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| S&P 500 Index, e-mini, Long, expires 12/18/15 | 1,200 | 124,422,000 | 5,465,100 |
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 99.4% | Common Stock | 2,065,086,022 | 6,513,773,763 |
| 0.7% | Other Investment Companies | 45,418,794 | 45,418,794 |
| 100.1% | Total Investments | 2,110,504,816 | 6,559,192,557 |
| (0.1%) | Other Assets and Liabilities, Net | | (9,269,301) |
| 100.0% | Net Assets | | 6,549,923,256 |
| Security | Number
of Shares | Value
($) |
| Common Stock 99.4% of net assets |
| Automobiles & Components 1.2% |
| Autoliv, Inc. | 29,200 | 3,540,208 |
| BorgWarner, Inc. | 69,096 | 2,958,691 |
| Dana Holding Corp. | 50,100 | 841,680 |
| Delphi Automotive plc | 91,200 | 7,586,928 |
| Ford Motor Co. | 1,208,087 | 17,891,768 |
| General Motors Co. | 448,100 | 15,643,171 |
| Gentex Corp. | 97,544 | 1,598,746 |
| Harley-Davidson, Inc. | 66,292 | 3,278,139 |
| Johnson Controls, Inc. | 209,054 | 9,445,060 |
| Lear Corp. | 23,600 | 2,951,416 |
| Tesla Motors, Inc. * | 30,600 | 6,332,058 |
| The Goodyear Tire & Rubber Co. | 83,100 | 2,729,004 |
| Visteon Corp. * | 12,000 | 1,308,840 |
| | | 76,105,709 |
| Banks 5.5% |
| Bank of America Corp. | 3,277,241 | 54,992,104 |
| BB&T Corp. | 242,700 | 9,016,305 |
| BOK Financial Corp. | 8,900 | 597,902 |
| CIT Group, Inc. | 50,900 | 2,188,700 |
| Citigroup, Inc. | 945,456 | 50,269,896 |
| Comerica, Inc. | 51,128 | 2,218,955 |
| Commerce Bancshares, Inc. | 26,650 | 1,213,908 |
| Cullen/Frost Bankers, Inc. | 16,900 | 1,156,636 |
| East West Bancorp, Inc. | 45,800 | 1,849,862 |
| Fifth Third Bancorp | 259,984 | 4,952,695 |
| First Republic Bank | 40,200 | 2,625,462 |
| Hudson City Bancorp, Inc. | 146,840 | 1,486,021 |
| Huntington Bancshares, Inc. | 244,898 | 2,686,531 |
| Investors Bancorp, Inc. | 108,730 | 1,360,212 |
| JPMorgan Chase & Co. | 1,160,878 | 74,586,412 |
| KeyCorp | 259,914 | 3,228,132 |
| Security | Number
of Shares | Value
($) |
| M&T Bank Corp. | 42,943 | 5,146,719 |
| New York Community Bancorp, Inc. | 149,882 | 2,476,051 |
| PacWest Bancorp | 30,300 | 1,364,712 |
| People's United Financial, Inc. | 103,793 | 1,655,498 |
| Popular, Inc. | 31,600 | 934,412 |
| Prosperity Bancshares, Inc. | 15,900 | 816,942 |
| Regions Financial Corp. | 427,606 | 3,998,116 |
| Signature Bank * | 15,700 | 2,338,044 |
| SunTrust Banks, Inc. | 164,193 | 6,817,293 |
| SVB Financial Group * | 14,900 | 1,818,843 |
| Synovus Financial Corp. | 44,657 | 1,412,501 |
| TFS Financial Corp. | 27,300 | 479,388 |
| The PNC Financial Services Group, Inc. | 160,634 | 14,498,825 |
| U.S. Bancorp | 519,005 | 21,891,631 |
| Umpqua Holdings Corp. | 67,000 | 1,118,900 |
| Wells Fargo & Co. | 1,466,996 | 79,423,163 |
| Zions Bancorp | 63,198 | 1,818,206 |
| | | 362,438,977 |
| Capital Goods 7.4% |
| 3M Co. | 193,754 | 30,460,066 |
| A.O. Smith Corp. | 25,400 | 1,951,228 |
| Acuity Brands, Inc. | 14,300 | 3,125,980 |
| AECOM * | 49,700 | 1,464,659 |
| AGCO Corp. | 24,200 | 1,171,038 |
| Air Lease Corp. | 31,700 | 1,068,607 |
| Allegion plc | 28,700 | 1,870,379 |
| Allison Transmission Holdings, Inc. | 52,700 | 1,512,490 |
| AMETEK, Inc. | 75,105 | 4,117,256 |
| B/E Aerospace, Inc. | 31,700 | 1,488,315 |
| Carlisle Cos., Inc. | 20,736 | 1,804,032 |
| Caterpillar, Inc. | 190,796 | 13,926,200 |
| Chicago Bridge & Iron Co., N.V. (b) | 27,108 | 1,216,336 |
| CLARCOR, Inc. | 18,200 | 907,452 |
| Colfax Corp. * | 27,300 | 736,008 |
| Crane Co. | 16,384 | 862,454 |
| Cummins, Inc. | 53,492 | 5,536,957 |
| Curtiss-Wright Corp. | 15,200 | 1,057,312 |
| Danaher Corp. | 188,440 | 17,583,336 |
| Deere & Co. | 95,946 | 7,483,788 |
| Donaldson Co., Inc. | 43,500 | 1,313,700 |
| Dover Corp. | 50,237 | 3,236,770 |
| Eaton Corp. plc | 149,101 | 8,336,237 |
| Emerson Electric Co. | 200,228 | 9,456,768 |
| Esterline Technologies Corp. * | 10,100 | 778,205 |
| Fastenal Co. (b) | 92,300 | 3,614,468 |
| Flowserve Corp. | 43,023 | 1,994,546 |
| Fluor Corp. | 47,658 | 2,278,529 |
| Fortune Brands Home & Security, Inc. | 52,900 | 2,768,257 |
| General Dynamics Corp. | 93,944 | 13,958,200 |
| General Electric Co. | 3,162,802 | 91,468,234 |
| Graco, Inc. | 20,294 | 1,489,580 |
| HD Supply Holdings, Inc. * | 51,900 | 1,546,101 |
| HEICO Corp. | 5,006 | 252,503 |
| Hexcel Corp. | 33,500 | 1,551,720 |
| Honeywell International, Inc. | 243,699 | 25,169,233 |
| Hubbell, Inc., Class B | 16,932 | 1,639,864 |
| Huntington Ingalls Industries, Inc. | 16,200 | 1,943,028 |
| IDEX Corp. | 24,006 | 1,842,701 |
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Illinois Tool Works, Inc. | 106,104 | 9,755,202 |
| Ingersoll-Rand plc | 82,400 | 4,883,024 |
| ITT Corp. | 30,300 | 1,199,274 |
| Jacobs Engineering Group, Inc. * | 38,756 | 1,555,666 |
| Joy Global, Inc. | 26,308 | 451,971 |
| L-3 Communications Holdings, Inc. | 25,874 | 3,270,474 |
| Lennox International, Inc. | 11,700 | 1,553,877 |
| Lincoln Electric Holdings, Inc. | 22,200 | 1,327,782 |
| Lockheed Martin Corp. | 84,264 | 18,523,755 |
| Masco Corp. | 108,836 | 3,156,244 |
| MSC Industrial Direct Co., Inc., Class A | 15,558 | 976,576 |
| Nordson Corp. | 18,000 | 1,282,320 |
| Northrop Grumman Corp. | 57,932 | 10,876,733 |
| Orbital ATK, Inc. | 18,500 | 1,583,970 |
| Oshkosh Corp. | 23,600 | 969,724 |
| Owens Corning | 36,900 | 1,680,057 |
| PACCAR, Inc. | 113,889 | 5,996,256 |
| Parker-Hannifin Corp. | 44,553 | 4,664,699 |
| Pentair plc | 57,895 | 3,237,488 |
| Precision Castparts Corp. | 42,901 | 9,901,980 |
| Quanta Services, Inc. * | 59,400 | 1,194,534 |
| Raytheon Co. | 96,090 | 11,280,966 |
| Rockwell Automation, Inc. | 42,649 | 4,655,565 |
| Rockwell Collins, Inc. | 40,653 | 3,525,428 |
| Roper Technologies, Inc. | 32,591 | 6,073,333 |
| Sensata Technologies Holding N.V. * | 50,100 | 2,409,309 |
| Snap-on, Inc. | 17,250 | 2,861,602 |
| SolarCity Corp. *(b) | 15,700 | 465,505 |
| Spirit AeroSystems Holdings, Inc., Class A * | 37,400 | 1,972,476 |
| SPX Corp. | 12,614 | 154,522 |
| Stanley Black & Decker, Inc. | 46,641 | 4,943,013 |
| Teledyne Technologies, Inc. * | 12,600 | 1,124,298 |
| Textron, Inc. | 88,938 | 3,750,515 |
| The Boeing Co. | 200,889 | 29,745,634 |
| The Middleby Corp. * | 18,300 | 2,140,002 |
| The Timken Co. | 21,394 | 676,050 |
| The Toro Co. | 19,200 | 1,445,184 |
| TransDigm Group, Inc. * | 16,600 | 3,649,510 |
| Trinity Industries, Inc. | 44,200 | 1,196,494 |
| United Rentals, Inc. * | 31,467 | 2,355,620 |
| United Technologies Corp. | 258,203 | 25,409,757 |
| USG Corp. * | 29,200 | 688,244 |
| W.W. Grainger, Inc. | 19,476 | 4,089,960 |
| WABCO Holdings, Inc. * | 18,000 | 2,020,140 |
| Wabtec Corp. | 28,800 | 2,386,656 |
| Watsco, Inc. | 7,000 | 861,210 |
| Xylem, Inc. | 53,400 | 1,944,294 |
| | | 483,849,430 |
| Commercial & Professional Supplies 0.8% |
| Cintas Corp. | 29,210 | 2,719,159 |
| Copart, Inc. * | 36,074 | 1,306,240 |
| Equifax, Inc. | 37,300 | 3,975,061 |
| IHS, Inc., Class A * | 20,000 | 2,390,800 |
| KAR Auction Services, Inc. | 44,400 | 1,704,960 |
| ManpowerGroup, Inc. | 25,491 | 2,339,564 |
| Nielsen Holdings plc | 116,700 | 5,544,417 |
| Pitney Bowes, Inc. | 67,841 | 1,400,917 |
| Security | Number
of Shares | Value
($) |
| R.R. Donnelley & Sons Co. | 58,400 | 985,208 |
| Republic Services, Inc. | 69,681 | 3,047,847 |
| Robert Half International, Inc. | 43,891 | 2,311,300 |
| Rollins, Inc. | 32,850 | 881,037 |
| Stericycle, Inc. * | 27,098 | 3,288,884 |
| The ADT Corp. | 54,700 | 1,807,288 |
| The Dun & Bradstreet Corp. | 10,925 | 1,244,030 |
| Towers Watson & Co., Class A | 20,900 | 2,582,404 |
| Tyco International plc | 126,900 | 4,624,236 |
| Verisk Analytics, Inc. * | 47,800 | 3,422,958 |
| Waste Connections, Inc. | 37,900 | 2,064,792 |
| Waste Management, Inc. | 131,077 | 7,046,699 |
| | | 54,687,801 |
| Consumer Durables & Apparel 1.5% |
| Brunswick Corp. | 29,300 | 1,576,633 |
| Carter's, Inc. | 17,300 | 1,572,224 |
| Coach, Inc. | 91,330 | 2,849,496 |
| D.R. Horton, Inc. | 107,597 | 3,167,656 |
| Fossil Group, Inc. * | 13,700 | 745,417 |
| Garmin Ltd. | 39,886 | 1,414,756 |
| GoPro, Inc., Class A *(b) | 23,300 | 582,500 |
| Hanesbrands, Inc. | 121,600 | 3,883,904 |
| Harman International Industries, Inc. | 23,697 | 2,605,722 |
| Hasbro, Inc. | 34,225 | 2,629,507 |
| Jarden Corp. * | 63,675 | 2,852,640 |
| Kate Spade & Co. * | 39,500 | 709,815 |
| Leggett & Platt, Inc. | 46,944 | 2,113,888 |
| Lennar Corp., Class A | 51,975 | 2,602,388 |
| lululemon athletica, Inc. * | 34,500 | 1,696,365 |
| Mattel, Inc. | 102,797 | 2,526,750 |
| Michael Kors Holdings Ltd. * | 58,300 | 2,252,712 |
| Mohawk Industries, Inc. * | 19,439 | 3,800,325 |
| Newell Rubbermaid, Inc. | 88,526 | 3,756,158 |
| NIKE, Inc., Class B | 211,456 | 27,707,080 |
| NVR, Inc. * | 1,098 | 1,798,260 |
| Polaris Industries, Inc. | 19,200 | 2,156,928 |
| PulteGroup, Inc. | 98,799 | 1,810,986 |
| PVH Corp. | 25,514 | 2,320,498 |
| Ralph Lauren Corp. | 18,395 | 2,037,614 |
| Tempur Sealy International, Inc. * | 18,900 | 1,471,176 |
| Toll Brothers, Inc. * | 50,000 | 1,798,500 |
| Under Armour, Inc., Class A * | 56,200 | 5,343,496 |
| VF Corp. | 108,528 | 7,327,811 |
| Whirlpool Corp. | 24,515 | 3,925,832 |
| | | 101,037,037 |
| Consumer Services 2.3% |
| Aramark | 65,800 | 1,997,030 |
| Bloomin' Brands, Inc. | 33,500 | 568,495 |
| Bright Horizons Family Solutions, Inc. * | 12,900 | 825,858 |
| Brinker International, Inc. | 17,700 | 805,527 |
| Buffalo Wild Wings, Inc. * | 6,100 | 941,047 |
| Carnival Corp. | 146,860 | 7,942,189 |
| Chipotle Mexican Grill, Inc. * | 9,950 | 6,370,288 |
| Choice Hotels International, Inc. | 11,700 | 612,027 |
| Cracker Barrel Old Country Store, Inc. (b) | 8,100 | 1,113,426 |
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Darden Restaurants, Inc. | 34,165 | 2,114,472 |
| Domino's Pizza, Inc. | 18,600 | 1,984,062 |
| Dunkin' Brands Group, Inc. | 28,000 | 1,159,480 |
| Extended Stay America, Inc. | 15,000 | 288,000 |
| Graham Holdings Co., Class B | 1,254 | 692,797 |
| H&R Block, Inc. | 84,898 | 3,163,299 |
| Hilton Worldwide Holdings, Inc. | 164,800 | 4,118,352 |
| Hyatt Hotels Corp., Class A * | 7,700 | 388,080 |
| Jack in the Box, Inc. | 12,400 | 924,172 |
| Las Vegas Sands Corp. | 117,863 | 5,835,397 |
| Marriott International, Inc., Class A | 64,875 | 4,981,102 |
| McDonald's Corp. | 293,636 | 32,960,641 |
| MGM Resorts International * | 147,287 | 3,415,586 |
| Norwegian Cruise Line Holdings Ltd. * | 48,900 | 3,111,018 |
| Panera Bread Co., Class A * | 8,600 | 1,525,382 |
| Royal Caribbean Cruises Ltd. | 52,391 | 5,152,655 |
| Service Corp. International | 63,100 | 1,783,206 |
| ServiceMaster Global Holdings, Inc. * | 32,600 | 1,162,190 |
| Six Flags Entertainment Corp. | 30,200 | 1,571,608 |
| Starbucks Corp. | 468,254 | 29,298,653 |
| Starwood Hotels & Resorts Worldwide, Inc. | 54,542 | 4,356,270 |
| The Wendy's Co. | 90,700 | 830,812 |
| Vail Resorts, Inc. | 11,800 | 1,347,206 |
| Wyndham Worldwide Corp. | 39,217 | 3,190,303 |
| Wynn Resorts Ltd. (b) | 24,842 | 1,737,698 |
| Yum! Brands, Inc. | 135,676 | 9,620,785 |
| | | 147,889,113 |
| Diversified Financials 4.7% |
| Affiliated Managers Group, Inc. * | 17,859 | 3,219,263 |
| Ally Financial, Inc. * | 138,400 | 2,756,928 |
| American Express Co. | 266,277 | 19,507,453 |
| Ameriprise Financial, Inc. | 57,357 | 6,616,704 |
| Artisan Partners Asset Management, Inc., Class A | 14,000 | 535,500 |
| Berkshire Hathaway, Inc., Class B * | 588,012 | 79,981,392 |
| BlackRock, Inc. | 39,765 | 13,996,087 |
| Capital One Financial Corp. | 168,653 | 13,306,722 |
| CBOE Holdings, Inc. | 25,400 | 1,702,816 |
| CME Group, Inc. | 105,380 | 9,955,249 |
| Discover Financial Services | 134,724 | 7,574,183 |
| E*TRADE Financial Corp. * | 86,290 | 2,460,128 |
| Eaton Vance Corp. | 39,084 | 1,411,323 |
| FactSet Research Systems, Inc. | 12,900 | 2,259,048 |
| Federated Investors, Inc., Class B | 30,200 | 928,046 |
| Franklin Resources, Inc. | 124,158 | 5,060,680 |
| Intercontinental Exchange, Inc. | 34,510 | 8,710,324 |
| Invesco Ltd. | 135,190 | 4,484,252 |
| Lazard Ltd., Class A | 40,900 | 1,894,488 |
| Legg Mason, Inc. | 31,214 | 1,396,827 |
| Leucadia National Corp. | 101,178 | 2,024,572 |
| LPL Financial Holdings, Inc. (b) | 26,200 | 1,116,120 |
| McGraw Hill Financial, Inc. | 84,736 | 7,849,943 |
| Moody's Corp. | 56,526 | 5,435,540 |
| Morgan Stanley | 475,748 | 15,685,412 |
| MSCI, Inc. | 29,450 | 1,973,150 |
| Nasdaq, Inc. | 36,337 | 2,103,549 |
| Navient Corp. | 128,500 | 1,694,915 |
| Security | Number
of Shares | Value
($) |
| Northern Trust Corp. | 70,876 | 4,988,962 |
| NorthStar Asset Management Group, Inc. | 60,300 | 882,189 |
| Raymond James Financial, Inc. | 39,649 | 2,185,056 |
| Santander Consumer USA Holdings, Inc. * | 31,700 | 570,917 |
| SEI Investments Co. | 42,148 | 2,184,109 |
| SLM Corp. * | 136,624 | 964,565 |
| Springleaf Holdings, Inc. * | 12,500 | 586,375 |
| State Street Corp. | 129,150 | 8,911,350 |
| T. Rowe Price Group, Inc. | 81,850 | 6,189,497 |
| TD Ameritrade Holding Corp. | 87,231 | 3,006,853 |
| The Bank of New York Mellon Corp. | 344,396 | 14,344,093 |
| The Charles Schwab Corp. (a) | 375,265 | 11,453,088 |
| The Goldman Sachs Group, Inc. | 126,432 | 23,706,000 |
| Voya Financial, Inc. | 69,800 | 2,831,786 |
| Waddell & Reed Financial, Inc., Class A | 29,000 | 1,071,260 |
| | | 309,516,714 |
| Energy 6.7% |
| Anadarko Petroleum Corp. | 159,148 | 10,643,818 |
| Antero Resources Corp. *(b) | 17,500 | 412,475 |
| Apache Corp. | 118,700 | 5,594,331 |
| Baker Hughes, Inc. | 135,606 | 7,143,724 |
| Cabot Oil & Gas Corp. | 135,396 | 2,939,447 |
| Cameron International Corp. * | 59,300 | 4,032,993 |
| Cheniere Energy, Inc. * | 74,900 | 3,709,048 |
| Chesapeake Energy Corp. (b) | 162,497 | 1,158,604 |
| Chevron Corp. | 588,837 | 53,513,507 |
| Cimarex Energy Co. | 29,115 | 3,437,317 |
| Cobalt International Energy, Inc. * | 89,900 | 689,533 |
| Columbia Pipeline Group, Inc. | 95,880 | 1,991,428 |
| Concho Resources, Inc. * | 38,200 | 4,427,762 |
| ConocoPhillips | 385,266 | 20,553,941 |
| CONSOL Energy, Inc. | 77,098 | 513,473 |
| Continental Resources, Inc. * | 25,800 | 874,878 |
| Core Laboratories N.V. | 13,300 | 1,547,189 |
| Devon Energy Corp. | 123,082 | 5,160,828 |
| Diamond Offshore Drilling, Inc. (b) | 23,629 | 469,745 |
| Diamondback Energy, Inc. * | 17,700 | 1,306,968 |
| Energen Corp. | 24,496 | 1,424,442 |
| Ensco plc, Class A | 76,000 | 1,263,880 |
| EOG Resources, Inc. | 173,304 | 14,878,148 |
| EQT Corp. | 46,600 | 3,078,862 |
| Exxon Mobil Corp. | 1,309,563 | 108,353,243 |
| FMC Technologies, Inc. * | 72,568 | 2,454,975 |
| Gulfport Energy Corp. * | 32,500 | 990,275 |
| Halliburton Co. | 270,188 | 10,369,815 |
| Helmerich & Payne, Inc. | 31,392 | 1,766,428 |
| Hess Corp. | 74,123 | 4,166,454 |
| HollyFrontier Corp. | 58,600 | 2,869,642 |
| Kinder Morgan, Inc. | 566,917 | 15,505,180 |
| Marathon Oil Corp. | 217,096 | 3,990,224 |
| Marathon Petroleum Corp. | 171,000 | 8,857,800 |
| Memorial Resource Development Corp. * | 22,800 | 403,332 |
| Murphy Oil Corp. | 49,944 | 1,419,908 |
| National Oilwell Varco, Inc. | 119,426 | 4,495,195 |
| Newfield Exploration Co. * | 53,966 | 2,168,894 |
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Noble Corp., plc (b) | 85,800 | 1,155,726 |
| Noble Energy, Inc. | 134,622 | 4,824,852 |
| Occidental Petroleum Corp. | 239,416 | 17,846,069 |
| Oceaneering International, Inc. | 28,900 | 1,214,378 |
| ONEOK, Inc. | 66,824 | 2,266,670 |
| Phillips 66 | 150,900 | 13,437,645 |
| Pioneer Natural Resources Co. | 45,811 | 6,282,521 |
| QEP Resources, Inc. | 44,400 | 686,424 |
| Range Resources Corp. | 53,928 | 1,641,568 |
| Schlumberger Ltd. | 397,547 | 31,072,273 |
| Southwestern Energy Co. * | 121,188 | 1,337,916 |
| Spectra Energy Corp. | 209,421 | 5,983,158 |
| Targa Resources Corp. | 13,500 | 771,525 |
| Tesoro Corp. | 39,812 | 4,257,097 |
| The Williams Cos., Inc. | 214,321 | 8,452,820 |
| Transocean Ltd. (b) | 113,100 | 1,790,373 |
| Valero Energy Corp. | 154,120 | 10,159,590 |
| Weatherford International plc * | 229,600 | 2,351,104 |
| Western Refining, Inc. | 18,800 | 782,456 |
| Whiting Petroleum Corp. * | 64,700 | 1,114,781 |
| World Fuel Services Corp. | 24,500 | 1,089,270 |
| | | 437,095,922 |
| Food & Staples Retailing 2.1% |
| Casey's General Stores, Inc. | 12,200 | 1,295,884 |
| Costco Wholesale Corp. | 138,259 | 21,861,513 |
| CVS Health Corp. | 350,211 | 34,593,843 |
| Rite Aid Corp. * | 319,300 | 2,516,084 |
| Sprouts Farmers Market, Inc. * | 39,400 | 802,972 |
| Sysco Corp. | 173,130 | 7,141,612 |
| The Kroger Co. | 305,626 | 11,552,663 |
| United Natural Foods, Inc. * | 16,600 | 837,470 |
| Wal-Mart Stores, Inc. | 494,027 | 28,278,105 |
| Walgreens Boots Alliance, Inc. | 272,669 | 23,089,611 |
| Whole Foods Market, Inc. | 110,632 | 3,314,535 |
| | | 135,284,292 |
| Food, Beverage & Tobacco 5.1% |
| Altria Group, Inc. | 617,605 | 37,346,574 |
| Archer-Daniels-Midland Co. | 190,205 | 8,684,760 |
| Brown-Forman Corp., Class B | 32,180 | 3,416,872 |
| Bunge Ltd. | 45,892 | 3,348,280 |
| Campbell Soup Co. | 53,858 | 2,735,448 |
| Coca-Cola Enterprises, Inc. | 67,972 | 3,489,683 |
| ConAgra Foods, Inc. | 136,097 | 5,518,733 |
| Constellation Brands, Inc., Class A | 54,132 | 7,296,994 |
| Dr Pepper Snapple Group, Inc. | 57,920 | 5,176,311 |
| Flowers Foods, Inc. | 56,925 | 1,536,975 |
| General Mills, Inc. | 191,600 | 11,133,876 |
| Hormel Foods Corp. | 40,594 | 2,742,125 |
| Ingredion, Inc. | 21,800 | 2,072,308 |
| Kellogg Co. | 79,931 | 5,636,734 |
| Keurig Green Mountain, Inc. | 38,000 | 1,928,500 |
| McCormick & Co., Inc. - Non Voting Shares | 35,254 | 2,960,631 |
| Mead Johnson Nutrition Co. | 62,500 | 5,125,000 |
| Molson Coors Brewing Co., Class B | 49,272 | 4,340,863 |
| Mondelez International, Inc., Class A | 505,364 | 23,327,602 |
| Monster Beverage Corp. * | 48,100 | 6,556,992 |
| Security | Number
of Shares | Value
($) |
| PepsiCo, Inc. | 463,285 | 47,343,094 |
| Philip Morris International, Inc. | 484,265 | 42,809,026 |
| Pilgrim's Pride Corp. (b) | 15,000 | 284,850 |
| Pinnacle Foods, Inc. | 36,500 | 1,608,920 |
| Reynolds American, Inc. | 255,692 | 12,355,038 |
| Seaboard Corp. * | 105 | 353,640 |
| The Boston Beer Co., Inc., Class A * | 2,800 | 614,852 |
| The Coca-Cola Co. | 1,232,948 | 52,215,348 |
| The Hain Celestial Group, Inc. * | 29,400 | 1,465,590 |
| The Hershey Co. | 45,564 | 4,041,071 |
| The JM Smucker Co. | 31,301 | 3,674,424 |
| The Kraft Heinz Co. | 187,500 | 14,619,375 |
| The WhiteWave Foods Co. * | 55,779 | 2,285,824 |
| TreeHouse Foods, Inc. * | 13,600 | 1,164,704 |
| Tyson Foods, Inc., Class A | 95,159 | 4,221,253 |
| | | 333,432,270 |
| Health Care Equipment & Services 4.9% |
| Abbott Laboratories | 469,946 | 21,053,581 |
| Acadia Healthcare Co., Inc. * | 18,700 | 1,148,367 |
| Aetna, Inc. | 109,934 | 12,618,224 |
| Alere, Inc. * | 24,700 | 1,139,164 |
| Align Technology, Inc. * | 23,400 | 1,531,764 |
| AmerisourceBergen Corp. | 65,120 | 6,284,731 |
| Anthem, Inc. | 81,423 | 11,330,010 |
| athenahealth, Inc. * | 12,000 | 1,829,400 |
| Baxter International, Inc. | 170,825 | 6,387,147 |
| Becton, Dickinson & Co. | 64,307 | 9,165,034 |
| Boston Scientific Corp. * | 428,007 | 7,823,968 |
| Brookdale Senior Living, Inc. * | 58,000 | 1,212,780 |
| C.R. Bard, Inc. | 23,600 | 4,397,860 |
| Cardinal Health, Inc. | 104,010 | 8,549,622 |
| Centene Corp. * | 39,100 | 2,325,668 |
| Cerner Corp. * | 94,504 | 6,264,670 |
| Cigna Corp. | 81,054 | 10,864,478 |
| Community Health Systems, Inc. * | 35,624 | 998,897 |
| DaVita HealthCare Partners, Inc. * | 53,450 | 4,142,909 |
| DENTSPLY International, Inc. | 41,600 | 2,531,360 |
| DexCom, Inc. * | 25,900 | 2,157,988 |
| Edwards Lifesciences Corp. * | 34,592 | 5,436,133 |
| Envision Healthcare Holdings, Inc. * | 57,400 | 1,618,680 |
| Express Scripts Holding Co. * | 211,489 | 18,268,420 |
| HCA Holdings, Inc. * | 99,800 | 6,865,242 |
| Health Net, Inc. * | 24,400 | 1,567,944 |
| HealthSouth Corp. | 27,400 | 954,342 |
| Henry Schein, Inc. * | 25,919 | 3,932,171 |
| Hologic, Inc. * | 76,970 | 2,991,054 |
| Humana, Inc. | 46,391 | 8,286,824 |
| IDEXX Laboratories, Inc. * | 29,996 | 2,058,325 |
| IMS Health Holdings, Inc. * | 44,600 | 1,214,012 |
| Intuitive Surgical, Inc. * | 11,341 | 5,631,941 |
| Laboratory Corp. of America Holdings * | 30,368 | 3,727,368 |
| McKesson Corp. | 72,247 | 12,917,764 |
| MEDNAX, Inc. * | 28,208 | 1,987,818 |
| Medtronic plc | 444,022 | 32,822,106 |
| Patterson Cos., Inc. | 29,800 | 1,412,520 |
| Premier, Inc., Class A * | 10,000 | 338,100 |
| Quest Diagnostics, Inc. | 47,347 | 3,217,229 |
| ResMed, Inc. | 43,716 | 2,518,479 |
| Sirona Dental Systems, Inc. * | 18,900 | 2,062,557 |
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| St. Jude Medical, Inc. | 87,455 | 5,580,504 |
| STERIS Corp. | 17,800 | 1,334,110 |
| Stryker Corp. | 97,854 | 9,356,799 |
| Team Health Holdings, Inc. * | 22,500 | 1,342,575 |
| Teleflex, Inc. | 13,846 | 1,841,518 |
| Tenet Healthcare Corp. * | 33,425 | 1,048,542 |
| The Cooper Cos., Inc. | 14,400 | 2,193,984 |
| UnitedHealth Group, Inc. | 300,492 | 35,391,948 |
| Universal Health Services, Inc., Class B | 27,874 | 3,403,137 |
| Varian Medical Systems, Inc. * | 31,371 | 2,463,565 |
| VCA, Inc. * | 26,300 | 1,440,451 |
| Veeva Systems, Inc., Class A * | 22,000 | 558,140 |
| WellCare Health Plans, Inc. * | 14,100 | 1,249,260 |
| West Pharmaceutical Services, Inc. | 22,500 | 1,350,225 |
| Zimmer Biomet Holdings, Inc. | 52,212 | 5,459,809 |
| | | 317,601,218 |
| Household & Personal Products 1.8% |
| Avon Products, Inc. | 146,436 | 590,137 |
| Church & Dwight Co., Inc. | 44,094 | 3,796,052 |
| Colgate-Palmolive Co. | 278,654 | 18,488,693 |
| Coty, Inc., Class A | 30,200 | 874,290 |
| Edgewell Personal Care Co. | 19,900 | 1,685,729 |
| Energizer Holdings, Inc. | 19,900 | 852,317 |
| Kimberly-Clark Corp. | 113,204 | 13,551,651 |
| Spectrum Brands Holdings, Inc. | 8,200 | 785,970 |
| The Clorox Co. | 41,725 | 5,087,947 |
| The Estee Lauder Cos., Inc., Class A | 71,668 | 5,766,407 |
| The Procter & Gamble Co. | 846,819 | 64,680,035 |
| | | 116,159,228 |
| Insurance 3.0% |
| ACE Ltd. | 103,000 | 11,694,620 |
| Aflac, Inc. | 133,713 | 8,524,204 |
| Alleghany Corp. * | 5,186 | 2,573,656 |
| Allied World Assurance Co. Holdings AG | 33,600 | 1,221,696 |
| American Financial Group, Inc. | 17,605 | 1,270,905 |
| American International Group, Inc. | 405,976 | 25,600,847 |
| AmTrust Financial Services, Inc. | 9,800 | 668,556 |
| Aon plc | 88,603 | 8,267,546 |
| Arch Capital Group Ltd. * | 37,000 | 2,770,930 |
| Arthur J. Gallagher & Co. | 50,220 | 2,196,121 |
| Assurant, Inc. | 19,192 | 1,564,724 |
| Assured Guaranty Ltd. | 41,600 | 1,141,504 |
| Axis Capital Holdings Ltd. | 33,562 | 1,812,348 |
| Brown & Brown, Inc. | 39,476 | 1,273,891 |
| Cincinnati Financial Corp. | 43,317 | 2,608,983 |
| CNA Financial Corp. | 9,150 | 334,524 |
| Erie Indemnity Co., Class A | 8,285 | 724,606 |
| Everest Re Group Ltd. | 14,420 | 2,566,327 |
| First American Financial Corp. | 31,600 | 1,204,908 |
| FNF Group | 88,169 | 3,110,602 |
| Genworth Financial, Inc., Class A * | 166,939 | 781,275 |
| Lincoln National Corp. | 78,159 | 4,182,288 |
| Loews Corp. | 82,358 | 3,002,773 |
| Markel Corp. * | 4,447 | 3,859,996 |
| Marsh & McLennan Cos., Inc. | 166,820 | 9,298,547 |
| Security | Number
of Shares | Value
($) |
| Mercury General Corp. | 10,500 | 567,105 |
| MetLife, Inc. | 353,344 | 17,801,471 |
| Old Republic International Corp. | 86,909 | 1,567,838 |
| PartnerRe Ltd. | 15,809 | 2,197,451 |
| Principal Financial Group, Inc. | 88,009 | 4,414,531 |
| Prudential Financial, Inc. | 141,897 | 11,706,502 |
| Reinsurance Group of America, Inc. | 19,510 | 1,760,582 |
| RenaissanceRe Holdings Ltd. | 13,907 | 1,524,624 |
| The Allstate Corp. | 124,698 | 7,716,312 |
| The Chubb Corp. | 71,112 | 9,198,337 |
| The Hartford Financial Services Group, Inc. | 130,995 | 6,059,829 |
| The Progressive Corp. | 181,542 | 6,014,486 |
| The Travelers Cos., Inc. | 96,947 | 10,944,347 |
| Torchmark Corp. | 39,097 | 2,268,017 |
| Unum Group | 78,214 | 2,710,115 |
| Validus Holdings Ltd. | 25,509 | 1,130,049 |
| W. R. Berkley Corp. | 32,225 | 1,799,122 |
| White Mountains Insurance Group Ltd. | 1,813 | 1,432,270 |
| Willis Group Holdings plc | 56,600 | 2,524,926 |
| XL Group plc | 93,067 | 3,543,991 |
| | | 199,138,282 |
| Materials 3.2% |
| Air Products & Chemicals, Inc. | 61,078 | 8,488,620 |
| Airgas, Inc. | 21,451 | 2,062,728 |
| Albemarle Corp. | 37,439 | 2,003,735 |
| Alcoa, Inc. | 407,520 | 3,639,154 |
| AptarGroup, Inc. | 22,500 | 1,655,100 |
| Ashland, Inc. | 20,300 | 2,227,316 |
| Avery Dennison Corp. | 31,060 | 2,017,968 |
| Axalta Coating Systems Ltd. * | 41,600 | 1,149,408 |
| Ball Corp. | 40,576 | 2,779,456 |
| Bemis Co., Inc. | 35,049 | 1,604,543 |
| Berry Plastics Group, Inc. * | 36,100 | 1,209,350 |
| Celanese Corp., Series A | 49,443 | 3,512,925 |
| CF Industries Holdings, Inc. | 74,560 | 3,785,411 |
| Crown Holdings, Inc. * | 39,776 | 2,109,719 |
| E.I. du Pont de Nemours & Co. | 282,217 | 17,892,558 |
| Eagle Materials, Inc. | 15,200 | 1,003,656 |
| Eastman Chemical Co. | 45,762 | 3,302,644 |
| Ecolab, Inc. | 83,128 | 10,004,455 |
| FMC Corp. | 43,504 | 1,771,048 |
| Freeport-McMoRan, Inc. | 331,157 | 3,897,718 |
| Graphic Packaging Holding Co. | 104,500 | 1,479,720 |
| Huntsman Corp. | 64,700 | 852,099 |
| International Flavors & Fragrances, Inc. | 24,408 | 2,832,792 |
| International Paper Co. | 135,207 | 5,771,987 |
| LyondellBasell Industries N.V., Class A | 116,400 | 10,814,724 |
| Martin Marietta Materials, Inc. | 21,449 | 3,327,812 |
| Monsanto Co. | 145,834 | 13,594,645 |
| NewMarket Corp. | 3,600 | 1,417,464 |
| Newmont Mining Corp. | 162,928 | 3,170,579 |
| Nucor Corp. | 99,976 | 4,228,985 |
| Owens-Illinois, Inc. * | 55,877 | 1,204,149 |
| Packaging Corp. of America | 29,030 | 1,987,104 |
| Platform Specialty Products Corp. * | 37,800 | 394,632 |
| PolyOne Corp. | 30,900 | 1,033,296 |
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| PPG Industries, Inc. | 84,812 | 8,842,499 |
| Praxair, Inc. | 89,328 | 9,923,448 |
| Reliance Steel & Aluminum Co. | 25,122 | 1,506,315 |
| Royal Gold, Inc. | 21,800 | 1,042,912 |
| RPM International, Inc. | 44,600 | 2,038,666 |
| Sealed Air Corp. | 65,302 | 3,207,634 |
| Sigma-Aldrich Corp. | 36,508 | 5,100,898 |
| Silgan Holdings, Inc. | 10,200 | 518,874 |
| Sonoco Products Co. | 33,970 | 1,450,179 |
| Steel Dynamics, Inc. | 74,400 | 1,374,168 |
| The Chemours Co. | 56,443 | 391,150 |
| The Dow Chemical Co. | 361,056 | 18,655,764 |
| The Mosaic Co. | 106,995 | 3,615,361 |
| The Scotts Miracle-Gro Co., Class A | 14,668 | 970,435 |
| The Sherwin-Williams Co. | 25,090 | 6,694,765 |
| The Valspar Corp. | 24,346 | 1,970,809 |
| Vulcan Materials Co. | 40,825 | 3,942,878 |
| W.R. Grace & Co. * | 21,500 | 2,156,450 |
| Westlake Chemical Corp. | 14,000 | 843,780 |
| WestRock Co. | 84,842 | 4,561,106 |
| | | 207,035,591 |
| Media 3.4% |
| AMC Networks, Inc., Class A * | 19,500 | 1,440,855 |
| Cablevision Systems Corp., Class A | 75,110 | 2,447,835 |
| CBS Corp., Class B - Non Voting Shares | 142,705 | 6,638,637 |
| Charter Communications, Inc., Class A *(b) | 23,900 | 4,563,466 |
| Cinemark Holdings, Inc. | 34,600 | 1,226,224 |
| Clear Channel Outdoor Holdings, Inc., Class A * | 14,500 | 108,460 |
| Comcast Corp., Class A | 781,623 | 48,945,232 |
| Discovery Communications, Inc., Class A * | 47,200 | 1,389,568 |
| Discovery Communications, Inc., Class C * | 74,700 | 2,055,744 |
| DISH Network Corp., Class A * | 67,372 | 4,242,415 |
| John Wiley & Sons, Inc., Class A | 15,480 | 810,068 |
| Liberty Broadband Corp., Class C * | 20,700 | 1,113,039 |
| Liberty Global plc, Class A * | 79,241 | 3,527,809 |
| Liberty Global plc, Series C * | 193,772 | 8,262,438 |
| Liberty Media Corp., Class A * | 30,446 | 1,240,979 |
| Liberty Media Corp., Class C * | 62,700 | 2,454,705 |
| Lions Gate Entertainment Corp. | 26,400 | 1,028,808 |
| Live Nation Entertainment, Inc. * | 45,500 | 1,241,240 |
| MSG Networks, Inc., Class A * | 20,800 | 426,816 |
| News Corp., Class A | 118,782 | 1,829,243 |
| News Corp., Class B | 31,600 | 489,168 |
| Omnicom Group, Inc. | 77,888 | 5,835,369 |
| Scripps Networks Interactive, Inc., Class A | 30,900 | 1,856,472 |
| Sirius XM Holdings, Inc. * | 688,800 | 2,810,304 |
| TEGNA, Inc. | 73,854 | 1,997,012 |
| The Interpublic Group of Cos., Inc. | 127,164 | 2,915,871 |
| The Madison Square Garden Co., Class A * | 6,933 | 1,237,541 |
| The Walt Disney Co. | 487,560 | 55,455,075 |
| Time Warner Cable, Inc. | 87,736 | 16,617,198 |
| Time Warner, Inc. | 255,280 | 19,232,795 |
| Security | Number
of Shares | Value
($) |
| Twenty-First Century Fox, Inc., Class A | 523,828 | 16,076,281 |
| Viacom, Inc., Class B | 106,546 | 5,253,783 |
| | | 224,770,450 |
| Pharmaceuticals, Biotechnology & Life Sciences 9.3% |
| AbbVie, Inc. | 519,726 | 30,949,683 |
| ACADIA Pharmaceuticals, Inc. * | 24,700 | 860,054 |
| Agilent Technologies, Inc. | 107,031 | 4,041,491 |
| Agios Pharmaceuticals, Inc. * | 8,400 | 612,024 |
| Akorn, Inc. * | 23,300 | 623,042 |
| Alexion Pharmaceuticals, Inc. * | 70,304 | 12,373,504 |
| Alkermes plc * | 44,700 | 3,214,824 |
| Allergan plc * | 123,677 | 38,150,644 |
| Alnylam Pharmaceuticals, Inc. * | 22,100 | 1,899,495 |
| Amgen, Inc. | 238,802 | 37,773,700 |
| Baxalta, Inc. | 170,825 | 5,886,630 |
| Bio-Rad Laboratories, Inc., Class A * | 6,900 | 962,412 |
| Bio-Techne Corp. | 12,563 | 1,108,057 |
| Biogen, Inc. * | 70,155 | 20,380,729 |
| BioMarin Pharmaceutical, Inc. * | 49,600 | 5,805,184 |
| Bristol-Myers Squibb Co. | 519,939 | 34,289,977 |
| Celgene Corp. * | 248,040 | 30,436,988 |
| Cepheid * | 21,800 | 728,120 |
| Charles River Laboratories International, Inc. * | 14,400 | 939,456 |
| Eli Lilly & Co. | 305,271 | 24,900,955 |
| Endo International plc * | 63,428 | 3,805,046 |
| Gilead Sciences, Inc. | 459,344 | 49,668,867 |
| Illumina, Inc. * | 45,900 | 6,576,552 |
| Incyte Corp. * | 51,800 | 6,088,054 |
| Intercept Pharmaceuticals, Inc. * | 6,100 | 958,920 |
| Intrexon Corp. * | 15,000 | 504,000 |
| Isis Pharmaceuticals, Inc. * | 37,300 | 1,795,995 |
| Jazz Pharmaceuticals plc * | 19,200 | 2,635,776 |
| Johnson & Johnson | 869,187 | 87,813,963 |
| Mallinckrodt plc * | 35,320 | 2,319,464 |
| Medivation, Inc. * | 48,600 | 2,044,116 |
| Merck & Co., Inc. | 884,118 | 48,325,890 |
| Mettler-Toledo International, Inc. * | 8,800 | 2,736,712 |
| Mylan N.V. * | 127,600 | 5,625,884 |
| OPKO Health, Inc. *(b) | 101,700 | 961,065 |
| Pacira Pharmaceuticals, Inc. * | 11,300 | 564,435 |
| PAREXEL International Corp. * | 17,300 | 1,091,976 |
| PerkinElmer, Inc. | 38,500 | 1,988,140 |
| Perrigo Co., plc | 45,400 | 7,161,396 |
| Pfizer, Inc. | 1,936,551 | 65,494,155 |
| Puma Biotechnology, Inc. * | 6,200 | 511,004 |
| Quintiles Transnational Holdings, Inc. * | 29,500 | 1,877,675 |
| Regeneron Pharmaceuticals, Inc. * | 24,400 | 13,600,316 |
| Seattle Genetics, Inc. * | 33,600 | 1,394,064 |
| Thermo Fisher Scientific, Inc. | 123,798 | 16,190,302 |
| United Therapeutics Corp. * | 14,100 | 2,067,483 |
| Vertex Pharmaceuticals, Inc. * | 77,612 | 9,681,321 |
| VWR Corp. * | 12,900 | 354,879 |
| Waters Corp. * | 25,000 | 3,195,000 |
| Zoetis, Inc. | 144,700 | 6,223,547 |
| | | 609,192,966 |
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Real Estate 3.7% |
| Alexandria Real Estate Equities, Inc. | 24,500 | 2,198,630 |
| American Campus Communities, Inc. | 31,200 | 1,265,784 |
| American Capital Agency Corp. | 108,300 | 1,930,989 |
| American Homes 4 Rent, Class A | 44,000 | 726,000 |
| American Tower Corp. | 132,689 | 13,564,796 |
| Annaly Capital Management, Inc. | 304,600 | 3,030,770 |
| Apartment Investment & Management Co., Class A | 49,418 | 1,936,691 |
| AvalonBay Communities, Inc. | 41,849 | 7,316,461 |
| BioMed Realty Trust, Inc. | 58,600 | 1,371,826 |
| Boston Properties, Inc. | 47,905 | 6,028,844 |
| Brixmor Property Group, Inc. | 53,700 | 1,375,794 |
| Camden Property Trust | 26,864 | 1,982,295 |
| CBL & Associates Properties, Inc. | 53,200 | 775,656 |
| CBRE Group, Inc., Class A * | 84,537 | 3,151,539 |
| Chimera Investment Corp. | 66,080 | 930,406 |
| Corrections Corp. of America | 38,004 | 1,083,114 |
| Crown Castle International Corp. | 104,627 | 8,941,423 |
| CubeSmart | 50,100 | 1,393,782 |
| DCT Industrial Trust, Inc. | 27,600 | 1,024,512 |
| DDR Corp. | 91,800 | 1,542,240 |
| Digital Realty Trust, Inc. | 41,400 | 3,061,944 |
| Douglas Emmett, Inc. | 47,600 | 1,454,180 |
| Duke Realty Corp. | 104,537 | 2,163,916 |
| EPR Properties | 17,000 | 965,770 |
| Equinix, Inc. | 17,780 | 5,274,970 |
| Equity Commonwealth * | 40,300 | 1,157,013 |
| Equity LifeStyle Properties, Inc. | 27,800 | 1,681,344 |
| Equity One, Inc. | 20,200 | 536,916 |
| Equity Residential | 115,272 | 8,912,831 |
| Essex Property Trust, Inc. | 20,929 | 4,613,589 |
| Extra Space Storage, Inc. | 37,100 | 2,939,804 |
| Federal Realty Investment Trust | 21,596 | 3,098,810 |
| Forest City Enterprises, Inc., Class A * | 61,800 | 1,365,780 |
| Gaming & Leisure Properties, Inc. | 32,000 | 933,440 |
| General Growth Properties, Inc. | 186,400 | 5,396,280 |
| HCP, Inc. | 144,480 | 5,374,656 |
| Healthcare Trust of America, Inc., Class A | 36,800 | 968,208 |
| Highwoods Properties, Inc. | 31,600 | 1,373,020 |
| Hospitality Properties Trust | 52,081 | 1,397,854 |
| Host Hotels & Resorts, Inc. | 240,139 | 4,161,609 |
| Iron Mountain, Inc. | 61,866 | 1,895,574 |
| Jones Lang LaSalle, Inc. | 14,800 | 2,467,308 |
| Kilroy Realty Corp. | 27,700 | 1,823,768 |
| Kimco Realty Corp. | 126,531 | 3,387,235 |
| Lamar Advertising Co., Class A | 26,170 | 1,476,773 |
| LaSalle Hotel Properties | 34,000 | 999,940 |
| Liberty Property Trust | 46,304 | 1,575,262 |
| Mid-America Apartment Communities, Inc. | 23,900 | 2,036,041 |
| National Retail Properties, Inc. | 43,000 | 1,634,000 |
| NorthStar Realty Finance Corp. | 108,050 | 1,297,681 |
| Omega Healthcare Investors, Inc. | 51,900 | 1,791,588 |
| Outfront Media, Inc. | 42,500 | 1,003,425 |
| Pebblebrook Hotel Trust | 22,300 | 762,214 |
| Plum Creek Timber Co., Inc. | 54,798 | 2,232,471 |
| Security | Number
of Shares | Value
($) |
| Post Properties, Inc. | 17,000 | 1,015,580 |
| Prologis, Inc. | 162,080 | 6,925,678 |
| Public Storage | 45,509 | 10,442,495 |
| Rayonier, Inc. | 41,734 | 945,275 |
| Realogy Holdings Corp. * | 43,650 | 1,706,715 |
| Realty Income Corp. | 70,800 | 3,501,768 |
| Regency Centers Corp. | 30,582 | 2,078,353 |
| Retail Properties of America, Inc., Class A | 70,000 | 1,047,900 |
| RLJ Lodging Trust | 44,500 | 1,116,505 |
| Senior Housing Properties Trust | 69,500 | 1,055,705 |
| Simon Property Group, Inc. | 97,350 | 19,612,131 |
| SL Green Realty Corp. | 31,851 | 3,778,166 |
| Sovran Self Storage, Inc. | 10,100 | 1,008,687 |
| Spirit Realty Capital, Inc. | 146,700 | 1,493,406 |
| Starwood Property Trust, Inc. | 77,200 | 1,550,948 |
| Strategic Hotels & Resorts, Inc. * | 84,100 | 1,185,810 |
| Sun Communities, Inc. | 15,500 | 1,038,810 |
| Sunstone Hotel Investors, Inc. | 64,100 | 926,886 |
| Tanger Factory Outlet Centers, Inc. | 30,900 | 1,079,955 |
| Taubman Centers, Inc. | 19,800 | 1,524,204 |
| The Howard Hughes Corp. * | 11,500 | 1,421,170 |
| The Macerich Co. | 40,745 | 3,452,731 |
| Two Harbors Investment Corp. | 117,200 | 991,512 |
| UDR, Inc. | 85,262 | 2,938,129 |
| Ventas, Inc. | 102,229 | 5,491,742 |
| VEREIT, Inc. | 288,200 | 2,380,532 |
| Vornado Realty Trust | 54,334 | 5,463,284 |
| Weingarten Realty Investors | 32,102 | 1,147,968 |
| Welltower, Inc. | 111,421 | 7,227,880 |
| Weyerhaeuser Co. | 166,850 | 4,893,711 |
| WP Carey, Inc. | 29,500 | 1,869,415 |
| WP GLIMCHER, Inc. | 59,200 | 687,904 |
| | | 243,787,721 |
| Retailing 5.2% |
| Advance Auto Parts, Inc. | 22,622 | 4,488,883 |
| Amazon.com, Inc. * | 120,241 | 75,258,842 |
| AutoNation, Inc. * | 26,166 | 1,653,430 |
| AutoZone, Inc. * | 9,533 | 7,477,780 |
| Bed Bath & Beyond, Inc. * | 51,220 | 3,054,249 |
| Best Buy Co., Inc. | 95,526 | 3,346,276 |
| Burlington Stores, Inc. * | 26,100 | 1,254,888 |
| Cabela's, Inc. * | 15,100 | 591,467 |
| CarMax, Inc. * | 66,800 | 3,941,868 |
| CST Brands, Inc. | 25,900 | 930,587 |
| Dick's Sporting Goods, Inc. | 26,700 | 1,189,485 |
| Dillard's, Inc., Class A | 9,100 | 814,268 |
| Dollar General Corp. | 93,400 | 6,329,718 |
| Dollar Tree, Inc. * | 75,018 | 4,912,929 |
| Expedia, Inc. | 32,204 | 4,389,405 |
| Foot Locker, Inc. | 45,109 | 3,056,135 |
| GameStop Corp., Class A (b) | 31,900 | 1,469,633 |
| Genuine Parts Co. | 49,630 | 4,504,419 |
| GNC Holdings, Inc., Class A | 26,800 | 797,300 |
| Groupon, Inc. * | 120,700 | 447,797 |
| HSN, Inc. | 9,400 | 581,390 |
| Kohl's Corp. | 62,565 | 2,885,498 |
| L Brands, Inc. | 78,823 | 7,565,432 |
| Liberty Interactive Corp., QVC Group, Class A * | 136,208 | 3,728,013 |
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Liberty Ventures, Series A * | 44,681 | 1,946,751 |
| LKQ Corp. * | 99,600 | 2,949,156 |
| Lowe's Cos., Inc. | 288,936 | 21,332,145 |
| Macy's, Inc. | 102,476 | 5,224,226 |
| Murphy USA, Inc. * | 14,300 | 877,591 |
| Netflix, Inc. * | 134,800 | 14,609,624 |
| Nordstrom, Inc. | 41,600 | 2,712,736 |
| O'Reilly Automotive, Inc. * | 31,566 | 8,720,423 |
| Office Depot, Inc. * | 154,900 | 1,180,338 |
| Penske Automotive Group, Inc. | 15,300 | 747,252 |
| Restoration Hardware Holdings, Inc. * | 11,800 | 1,216,462 |
| Ross Stores, Inc. | 127,624 | 6,455,222 |
| Sally Beauty Holdings, Inc. * | 50,000 | 1,175,500 |
| Sears Holdings Corp. *(b) | 13,094 | 306,007 |
| Signet Jewelers Ltd. | 24,300 | 3,667,842 |
| Staples, Inc. | 197,970 | 2,571,630 |
| Target Corp. | 199,562 | 15,402,195 |
| The Gap, Inc. | 72,255 | 1,966,781 |
| The Home Depot, Inc. | 402,135 | 49,719,971 |
| The Michaels Cos., Inc. * | 24,100 | 563,458 |
| The Priceline Group, Inc. * | 15,846 | 23,043,887 |
| The TJX Cos., Inc. | 213,190 | 15,603,376 |
| Tiffany & Co. | 33,573 | 2,767,758 |
| Tractor Supply Co. | 41,400 | 3,824,946 |
| TripAdvisor, Inc. * | 33,200 | 2,781,496 |
| Ulta Salon, Cosmetics & Fragrance, Inc. * | 19,900 | 3,461,804 |
| Urban Outfitters, Inc. * | 27,996 | 800,686 |
| Williams-Sonoma, Inc. | 25,300 | 1,865,875 |
| | | 342,164,830 |
| Semiconductors & Semiconductor Equipment 2.3% |
| Altera Corp. | 92,269 | 4,848,736 |
| Analog Devices, Inc. | 101,274 | 6,088,593 |
| Applied Materials, Inc. | 385,589 | 6,466,327 |
| Atmel Corp. | 138,500 | 1,052,600 |
| Avago Technologies Ltd. | 82,400 | 10,145,912 |
| Broadcom Corp., Class A | 176,225 | 9,057,965 |
| Cavium, Inc. * | 17,300 | 1,227,435 |
| Cree, Inc. * | 27,100 | 682,649 |
| First Solar, Inc. * | 26,700 | 1,523,769 |
| Freescale Semiconductor Ltd. * | 31,900 | 1,068,331 |
| Intel Corp. | 1,493,680 | 50,576,005 |
| KLA-Tencor Corp. | 47,638 | 3,197,463 |
| Lam Research Corp. | 48,319 | 3,700,752 |
| Linear Technology Corp. | 77,466 | 3,441,040 |
| Marvell Technology Group Ltd. | 135,162 | 1,109,680 |
| Maxim Integrated Products, Inc. | 93,400 | 3,827,532 |
| Microchip Technology, Inc. | 65,366 | 3,156,524 |
| Micron Technology, Inc. * | 333,400 | 5,521,104 |
| NVIDIA Corp. | 156,999 | 4,454,062 |
| ON Semiconductor Corp. * | 126,800 | 1,394,800 |
| Qorvo, Inc. * | 46,400 | 2,038,352 |
| Skyworks Solutions, Inc. | 59,900 | 4,626,676 |
| SunEdison, Inc. * | 90,500 | 660,650 |
| Teradyne, Inc. | 62,600 | 1,221,952 |
| Texas Instruments, Inc. | 320,375 | 18,171,670 |
| Xilinx, Inc. | 78,605 | 3,743,170 |
| | | 153,003,749 |
| Security | Number
of Shares | Value
($) |
| Software & Services 11.8% |
| Accenture plc, Class A | 195,100 | 20,914,720 |
| Activision Blizzard, Inc. | 157,838 | 5,486,449 |
| Adobe Systems, Inc. * | 155,313 | 13,770,051 |
| Akamai Technologies, Inc. * | 55,509 | 3,376,057 |
| Alliance Data Systems Corp. * | 19,371 | 5,759,192 |
| Alphabet, Inc., Class A * | 89,988 | 66,356,251 |
| Alphabet, Inc., Class C * | 93,732 | 66,625,643 |
| Amdocs Ltd. | 51,600 | 3,073,812 |
| ANSYS, Inc. * | 27,400 | 2,611,494 |
| Autodesk, Inc. * | 69,872 | 3,856,236 |
| Automatic Data Processing, Inc. | 143,151 | 12,452,705 |
| Booz Allen Hamilton Holding Corp. | 27,900 | 821,934 |
| Broadridge Financial Solutions, Inc. | 36,400 | 2,168,712 |
| CA, Inc. | 98,881 | 2,739,993 |
| Cadence Design Systems, Inc. * | 92,587 | 2,057,283 |
| CDK Global, Inc. | 51,400 | 2,559,206 |
| Citrix Systems, Inc. * | 52,400 | 4,302,040 |
| Cognizant Technology Solutions Corp., Class A * | 191,332 | 13,031,623 |
| Computer Sciences Corp. | 42,331 | 2,818,821 |
| CoStar Group, Inc. * | 10,600 | 2,152,542 |
| DST Systems, Inc. | 10,980 | 1,341,207 |
| eBay, Inc. * | 348,470 | 9,722,313 |
| Electronic Arts, Inc. * | 98,381 | 7,090,319 |
| Facebook, Inc., Class A * | 708,500 | 72,245,745 |
| Fidelity National Information Services, Inc. | 89,008 | 6,490,463 |
| FireEye, Inc. * | 44,400 | 1,161,060 |
| Fiserv, Inc. * | 76,278 | 7,361,590 |
| FleetCor Technologies, Inc. * | 24,100 | 3,491,126 |
| Fortinet, Inc. * | 44,600 | 1,532,456 |
| Gartner, Inc. * | 26,400 | 2,393,688 |
| Genpact Ltd. * | 44,550 | 1,103,949 |
| Global Payments, Inc. | 19,738 | 2,692,461 |
| Guidewire Software, Inc. * | 21,100 | 1,228,653 |
| IAC/InterActiveCorp | 25,730 | 1,724,167 |
| International Business Machines Corp. | 282,040 | 39,508,163 |
| Intuit, Inc. | 86,444 | 8,422,239 |
| Jack Henry & Associates, Inc. | 24,200 | 1,871,628 |
| LinkedIn Corp., Class A * | 35,900 | 8,647,233 |
| Manhattan Associates, Inc. * | 24,200 | 1,762,970 |
| MasterCard, Inc., Class A | 312,010 | 30,885,870 |
| MAXIMUS, Inc. | 21,300 | 1,452,660 |
| Microsoft Corp. | 2,507,338 | 131,986,272 |
| NetSuite, Inc. * | 9,800 | 833,686 |
| Nuance Communications, Inc. * | 79,800 | 1,354,206 |
| Oracle Corp. | 1,018,410 | 39,555,044 |
| Pandora Media, Inc. * | 69,100 | 795,341 |
| Paychex, Inc. | 102,528 | 5,288,394 |
| PayPal Holdings, Inc. * | 348,470 | 12,548,405 |
| PTC, Inc. * | 39,700 | 1,406,968 |
| Rackspace Hosting, Inc. * | 35,200 | 909,920 |
| Red Hat, Inc. * | 57,283 | 4,531,658 |
| Sabre Corp. | 40,700 | 1,193,324 |
| salesforce.com, Inc. * | 194,940 | 15,148,787 |
| ServiceNow, Inc. * | 45,800 | 3,739,570 |
| SolarWinds, Inc. * | 20,600 | 1,195,418 |
| Solera Holdings, Inc. | 18,400 | 1,005,744 |
| Splunk, Inc. * | 37,800 | 2,122,848 |
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| SS&C Technologies Holdings, Inc. | 24,500 | 1,816,675 |
| Symantec Corp. | 213,489 | 4,397,873 |
| Synopsys, Inc. * | 48,700 | 2,434,026 |
| Syntel, Inc. * | 11,300 | 531,552 |
| Tableau Software, Inc., Class A * | 17,200 | 1,444,112 |
| Teradata Corp. * | 48,044 | 1,350,517 |
| The Ultimate Software Group, Inc. * | 8,900 | 1,818,715 |
| The Western Union Co. | 163,440 | 3,146,220 |
| Total System Services, Inc. | 55,100 | 2,889,995 |
| Twitter, Inc. * | 181,600 | 5,168,336 |
| Tyler Technologies, Inc. * | 11,200 | 1,908,032 |
| Vantiv, Inc., Class A * | 45,300 | 2,271,795 |
| VeriFone Systems, Inc. * | 35,800 | 1,079,012 |
| Verint Systems, Inc. * | 21,200 | 1,008,696 |
| VeriSign, Inc. * | 29,605 | 2,386,163 |
| Visa, Inc., Class A | 611,200 | 47,416,896 |
| VMware, Inc., Class A * | 24,100 | 1,449,615 |
| WEX, Inc. * | 13,100 | 1,177,821 |
| Workday, Inc., Class A * | 34,300 | 2,708,671 |
| Xerox Corp. | 331,345 | 3,111,330 |
| Yahoo! Inc. * | 274,979 | 9,794,752 |
| Yelp, Inc. * | 18,400 | 409,400 |
| Zillow Group, Inc., Class A *(b) | 13,200 | 406,692 |
| Zillow Group, Inc., Class C *(b) | 38,200 | 1,057,758 |
| | | 773,864,963 |
| Technology Hardware & Equipment 6.1% |
| 3D Systems Corp. *(b) | 30,149 | 303,299 |
| Amphenol Corp., Class A | 98,240 | 5,326,573 |
| Apple, Inc. | 1,788,174 | 213,686,793 |
| Arista Networks, Inc. *(b) | 10,800 | 696,708 |
| ARRIS Group, Inc. * | 36,900 | 1,042,794 |
| Arrow Electronics, Inc. * | 28,800 | 1,583,712 |
| Avnet, Inc. | 42,546 | 1,932,865 |
| Belden, Inc. | 13,900 | 890,017 |
| Brocade Communications Systems, Inc. | 127,300 | 1,326,466 |
| CDW Corp. | 42,900 | 1,917,201 |
| Cisco Systems, Inc. | 1,599,015 | 46,131,583 |
| Cognex Corp. | 26,700 | 1,003,920 |
| CommScope Holding Co., Inc. * | 37,600 | 1,219,368 |
| Corning, Inc. | 377,663 | 7,024,532 |
| Dolby Laboratories, Inc., Class A | 17,400 | 603,258 |
| EchoStar Corp., Class A * | 13,254 | 594,177 |
| EMC Corp. | 610,424 | 16,005,317 |
| F5 Networks, Inc. * | 23,200 | 2,556,640 |
| FEI Co. | 12,500 | 902,375 |
| FLIR Systems, Inc. | 38,200 | 1,018,794 |
| Harris Corp. | 38,807 | 3,070,798 |
| Hewlett-Packard Co. | 568,768 | 15,333,985 |
| Ingram Micro, Inc., Class A | 53,851 | 1,603,683 |
| IPG Photonics Corp. * | 9,400 | 776,628 |
| Jabil Circuit, Inc. | 62,300 | 1,431,654 |
| Juniper Networks, Inc. | 110,994 | 3,484,102 |
| Keysight Technologies, Inc. * | 54,100 | 1,789,628 |
| Motorola Solutions, Inc. | 49,912 | 3,492,342 |
| National Instruments Corp. | 31,200 | 950,664 |
| NCR Corp. * | 53,544 | 1,424,270 |
| NetApp, Inc. | 99,600 | 3,386,400 |
| Palo Alto Networks, Inc. * | 22,300 | 3,590,300 |
| QUALCOMM, Inc. | 492,478 | 29,263,043 |
| Security | Number
of Shares | Value
($) |
| SanDisk Corp. | 64,958 | 5,001,766 |
| Seagate Technology plc | 92,137 | 3,506,734 |
| TE Connectivity Ltd. | 126,600 | 8,158,104 |
| Trimble Navigation Ltd. * | 84,000 | 1,911,000 |
| Western Digital Corp. | 71,412 | 4,771,750 |
| Zebra Technologies Corp., Class A * | 16,700 | 1,284,230 |
| | | 399,997,473 |
| Telecommunication Services 2.2% |
| AT&T, Inc. | 1,926,241 | 64,548,336 |
| CenturyLink, Inc. | 182,811 | 5,157,098 |
| Frontier Communications Corp. | 338,406 | 1,739,407 |
| Level 3 Communications, Inc. * | 91,920 | 4,683,324 |
| SBA Communications Corp., Class A * | 41,300 | 4,915,526 |
| Sprint Corp. * | 278,164 | 1,315,716 |
| T-Mobile US, Inc. * | 82,500 | 3,125,925 |
| Verizon Communications, Inc. | 1,272,057 | 59,634,032 |
| Windstream Holdings, Inc. (b) | 33,024 | 214,986 |
| | | 145,334,350 |
| Transportation 2.2% |
| Alaska Air Group, Inc. | 38,800 | 2,958,500 |
| AMERCO | 2,000 | 812,620 |
| American Airlines Group, Inc. | 207,800 | 9,604,516 |
| Avis Budget Group, Inc. * | 34,800 | 1,737,912 |
| C.H. Robinson Worldwide, Inc. | 43,348 | 3,007,484 |
| CSX Corp. | 307,626 | 8,302,826 |
| Delta Air Lines, Inc. | 250,600 | 12,740,504 |
| Expeditors International of Washington, Inc. | 59,698 | 2,972,363 |
| FedEx Corp. | 81,728 | 12,753,654 |
| Genesee & Wyoming, Inc., Class A * | 14,700 | 986,370 |
| Hertz Global Holdings, Inc. * | 125,000 | 2,437,500 |
| JB Hunt Transport Services, Inc. | 30,591 | 2,336,235 |
| JetBlue Airways Corp. * | 99,400 | 2,469,096 |
| Kansas City Southern | 33,100 | 2,739,356 |
| Kirby Corp. * | 18,900 | 1,233,981 |
| Norfolk Southern Corp. | 96,586 | 7,729,778 |
| Old Dominion Freight Line, Inc. * | 19,400 | 1,201,636 |
| Ryder System, Inc. | 16,964 | 1,217,676 |
| Southwest Airlines Co. | 208,488 | 9,650,910 |
| Spirit Airlines, Inc. * | 23,400 | 868,608 |
| Swift Transportation Co. * | 23,800 | 371,994 |
| Union Pacific Corp. | 271,224 | 24,233,864 |
| United Continental Holdings, Inc. * | 120,282 | 7,254,207 |
| United Parcel Service, Inc., Class B | 216,935 | 22,348,644 |
| | | 141,970,234 |
| Utilities 3.0% |
| AES Corp. | 224,702 | 2,460,487 |
| AGL Resources, Inc. | 38,087 | 2,380,438 |
| Alliant Energy Corp. | 37,400 | 2,207,348 |
| Ameren Corp. | 78,585 | 3,432,593 |
| American Electric Power Co., Inc. | 153,071 | 8,671,472 |
| American Water Works Co., Inc. | 59,700 | 3,424,392 |
| Aqua America, Inc. | 58,917 | 1,685,026 |
| Atmos Energy Corp. | 30,718 | 1,935,234 |
| Calpine Corp. * | 112,000 | 1,737,120 |
| CenterPoint Energy, Inc. | 133,911 | 2,484,049 |
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Cleco Corp. | 18,800 | 996,400 |
| CMS Energy Corp. | 85,733 | 3,092,389 |
| Consolidated Edison, Inc. | 89,906 | 5,911,320 |
| Dominion Resources, Inc. | 186,908 | 13,350,838 |
| DTE Energy Co. | 55,897 | 4,560,636 |
| Duke Energy Corp. | 220,995 | 15,794,513 |
| Dynegy, Inc. * | 33,000 | 641,190 |
| Edison International | 99,454 | 6,018,956 |
| Entergy Corp. | 57,362 | 3,909,794 |
| Eversource Energy | 101,312 | 5,160,833 |
| Exelon Corp. | 264,319 | 7,379,786 |
| FirstEnergy Corp. | 136,391 | 4,255,399 |
| Great Plains Energy, Inc. | 52,000 | 1,430,000 |
| Hawaiian Electric Industries, Inc. | 32,000 | 936,320 |
| IDACORP, Inc. | 12,700 | 848,995 |
| ITC Holdings Corp. | 52,200 | 1,707,984 |
| MDU Resources Group, Inc. | 64,217 | 1,211,133 |
| National Fuel Gas Co. | 28,047 | 1,473,309 |
| NextEra Energy, Inc. | 142,308 | 14,609,339 |
| NiSource, Inc. | 95,880 | 1,837,061 |
| NRG Energy, Inc. | 108,030 | 1,392,507 |
| NRG Yield, Inc., Class A | 10,200 | 140,046 |
| NRG Yield, Inc., Class C (b) | 10,200 | 147,288 |
| OGE Energy Corp. | 66,760 | 1,903,328 |
| Pepco Holdings, Inc. | 76,274 | 2,031,177 |
| PG&E Corp. | 149,337 | 7,974,596 |
| Piedmont Natural Gas Co., Inc. | 25,300 | 1,449,943 |
| Pinnacle West Capital Corp. | 37,087 | 2,355,395 |
| PPL Corp. | 211,761 | 7,284,578 |
| Public Service Enterprise Group, Inc. | 156,372 | 6,456,600 |
| Questar Corp. | 60,420 | 1,247,673 |
| SCANA Corp. | 44,531 | 2,637,126 |
| Sempra Energy | 73,678 | 7,545,364 |
| TECO Energy, Inc. | 73,617 | 1,987,659 |
| The Southern Co. | 278,918 | 12,579,202 |
| UGI Corp. | 58,872 | 2,158,836 |
| Vectren Corp. | 22,800 | 1,036,716 |
| WEC Energy Group, Inc. | 101,777 | 5,247,622 |
| Westar Energy, Inc. | 39,800 | 1,580,060 |
| Xcel Energy, Inc. | 160,409 | 5,715,373 |
| | | 198,415,443 |
| Total Common Stock |
| (Cost $2,065,086,022) | | 6,513,773,763 |
|
| Other Investment Companies 0.7% of net assets |
| Money Market Fund 0.4% |
| State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (c) | 24,392,194 | 24,392,194 |
| Security | Number
of Shares | Value
($) |
| Securities Lending Collateral 0.3% |
| Wells Fargo Advantage Government Money Market Fund, Institutional Class 0.01% (c) | 21,026,600 | 21,026,600 |
| Total Other Investment Companies |
| (Cost $45,418,794) | | 45,418,794 |
End of Investments.
At 10/31/15, tax basis cost of the fund's investments was $2,085,831,624 and the unrealized appreciation and depreciation were $4,556,700,963 and ($83,340,030), respectively, with a net unrealized appreciation of $4,473,360,933.
| * | Non-income producing security. |
| (a) | Issuer is affiliated with the fund's investment adviser. |
| (b) | All or a portion of this security is on loan. Securities on loan were valued at $20,468,476. |
| (c) | The rate shown is the 7-day yield. |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| S&P 500 Index, e-mini, Long, expires 12/18/15 | 225 | 23,329,125 | 1,436,202 |
Schwab Small-Cap Index Fund
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 99.4% | Common Stock | 1,996,193,500 | 2,590,361,425 |
| 0.0% | Rights | 320,914 | 320,914 |
| 0.0% | Warrants | — | — |
| 6.4% | Other Investment Company | 166,858,920 | 166,858,920 |
| 0.4% | Short-Term Investment | 10,766,144 | 10,766,144 |
| 106.2% | Total Investments | 2,174,139,478 | 2,768,307,403 |
| (6.2%) | Other Assets and Liabilities, Net | | (161,052,176) |
| 100.0% | Net Assets | | 2,607,255,227 |
| Security | Number
of Shares | Value
($) |
| Common Stock 99.4% of net assets |
| Automobiles & Components 1.2% |
| American Axle & Manufacturing Holdings, Inc. * | 113,100 | 2,506,296 |
| Cooper Tire & Rubber Co. | 84,899 | 3,547,929 |
| Cooper-Standard Holding, Inc. * | 20,100 | 1,307,304 |
| Dana Holding Corp. | 245,429 | 4,123,207 |
| Dorman Products, Inc. * | 40,100 | 1,871,868 |
| Drew Industries, Inc. | 37,000 | 2,213,710 |
| Federal-Mogul Holdings Corp. * | 44,553 | 345,286 |
| Fox Factory Holding Corp. * | 22,700 | 402,925 |
| Gentherm, Inc. * | 52,600 | 2,585,816 |
| Horizon Global Corp. * | 26,800 | 235,572 |
| Metaldyne Performance Group, Inc. | 19,300 | 421,126 |
| Modine Manufacturing Co. * | 73,100 | 611,847 |
| Motorcar Parts of America, Inc. * | 26,100 | 878,526 |
| Remy International, Inc. | 44,000 | 1,297,560 |
| Standard Motor Products, Inc. | 28,800 | 1,274,400 |
| Stoneridge, Inc. * | 42,600 | 540,594 |
| Strattec Security Corp. | 5,100 | 305,082 |
| Superior Industries International, Inc. | 37,500 | 738,000 |
| Tenneco, Inc. * | 91,428 | 5,173,911 |
| Tower International, Inc. * | 30,200 | 829,594 |
| Winnebago Industries, Inc. | 43,600 | 915,164 |
| | | 32,125,717 |
| Security | Number
of Shares | Value
($) |
| Banks 11.2% |
| 1st Source Corp. | 26,203 | 832,207 |
| Access National Corp. | 8,038 | 166,306 |
| American National Bankshares, Inc. | 10,700 | 269,640 |
| Ameris Bancorp | 47,700 | 1,502,550 |
| Ames National Corp. | 15,500 | 387,500 |
| Anchor BanCorp Wisconsin, Inc. * | 12,400 | 508,648 |
| Arrow Financial Corp. | 14,718 | 406,217 |
| Astoria Financial Corp. | 130,200 | 2,077,992 |
| Banc of California, Inc. | 53,700 | 700,248 |
| BancFirst Corp. | 10,116 | 623,449 |
| Banco Latinoamericano de Exportaciones, S.A., Class E | 44,057 | 1,190,861 |
| BancorpSouth, Inc. | 143,800 | 3,584,934 |
| Bank Mutual Corp. | 71,800 | 519,832 |
| Bank of Marin Bancorp | 9,100 | 483,938 |
| Bank of the Ozarks, Inc. | 116,159 | 5,810,273 |
| BankFinancial Corp. | 28,200 | 347,706 |
| Banner Corp. | 31,757 | 1,558,316 |
| Bar Harbor Bankshares | 8,070 | 285,274 |
| BBCN Bancorp, Inc. | 114,300 | 1,919,097 |
| BBX Capital Corp., Class A * | 10,300 | 189,005 |
| Bear State Financial, Inc. *(c) | 18,000 | 197,100 |
| Beneficial Bancorp, Inc. * | 124,511 | 1,726,968 |
| Berkshire Hills Bancorp, Inc. | 48,100 | 1,375,660 |
| Blue Hills Bancorp, Inc. | 43,900 | 622,941 |
| BNC Bancorp | 39,687 | 890,973 |
| BofI Holding, Inc. *(c) | 22,220 | 1,777,822 |
| Boston Private Financial Holdings, Inc. | 127,100 | 1,456,566 |
| Bridge Bancorp, Inc. | 20,100 | 577,071 |
| Brookline Bancorp, Inc. | 105,522 | 1,197,675 |
| Bryn Mawr Bank Corp. | 27,200 | 792,336 |
| BSB Bancorp, Inc. * | 8,867 | 194,985 |
| C1 Financial, Inc. * | 6,700 | 138,623 |
| Camden National Corp. | 10,300 | 402,627 |
| Capital Bank Financial Corp., Class A | 35,300 | 1,140,190 |
| Capital City Bank Group, Inc. | 15,300 | 236,232 |
| Capitol Federal Financial, Inc. | 204,357 | 2,652,554 |
| Cardinal Financial Corp. | 48,200 | 1,095,586 |
| Cascade Bancorp * | 55,003 | 308,567 |
| Cathay General Bancorp | 117,426 | 3,675,434 |
| CenterState Banks, Inc. | 62,200 | 906,876 |
| Central Pacific Financial Corp. | 31,000 | 693,160 |
| Century Bancorp, Inc., Class A | 4,700 | 208,915 |
| Charter Financial Corp. | 24,859 | 325,653 |
| Chemical Financial Corp. | 50,231 | 1,704,338 |
| Citizens & Northern Corp. | 20,300 | 402,143 |
| City Holding Co. | 22,100 | 1,057,043 |
| Clifton Bancorp, Inc. | 38,861 | 566,593 |
| CNB Financial Corp. | 20,700 | 384,606 |
| CoBiz Financial, Inc. | 60,600 | 755,076 |
| Columbia Banking System, Inc. | 87,500 | 2,915,500 |
| Community Bank System, Inc. | 64,122 | 2,613,613 |
| Community Trust Bancorp, Inc. | 21,780 | 750,757 |
| CommunityOne Bancorp * | 13,700 | 177,278 |
| ConnectOne Bancorp, Inc. | 46,340 | 827,169 |
| CU Bancorp * | 25,400 | 612,648 |
| Customers Bancorp, Inc. * | 37,450 | 1,029,875 |
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| CVB Financial Corp. | 155,319 | 2,710,317 |
| Dime Community Bancshares, Inc. | 50,600 | 877,910 |
| Eagle Bancorp, Inc. * | 45,780 | 2,179,128 |
| Enterprise Bancorp, Inc. | 13,914 | 323,083 |
| Enterprise Financial Services Corp. | 28,000 | 794,080 |
| Essent Group Ltd. * | 84,600 | 2,038,860 |
| EverBank Financial Corp. | 146,600 | 2,530,316 |
| F.N.B. Corp. | 256,137 | 3,450,165 |
| Farmers Capital Bank Corp. * | 9,415 | 255,335 |
| FCB Financial Holdings, Inc., Class A * | 40,069 | 1,424,854 |
| Federal Agricultural Mortgage Corp., Class C | 15,800 | 463,888 |
| Fidelity Southern Corp. | 28,448 | 595,986 |
| Financial Institutions, Inc. | 18,500 | 483,220 |
| First Bancorp (North Carolina) | 31,600 | 585,548 |
| First BanCorp (Puerto Rico) * | 187,700 | 711,383 |
| First Bancorp, Inc. | 12,096 | 255,588 |
| First Busey Corp. | 34,400 | 717,928 |
| First Business Financial Services, Inc. | 11,600 | 285,940 |
| First Citizens BancShares, Inc., Class A | 11,541 | 2,956,112 |
| First Commonwealth Financial Corp. | 144,929 | 1,331,897 |
| First Community Bancshares, Inc. | 24,600 | 473,058 |
| First Connecticut Bancorp, Inc. | 23,900 | 415,382 |
| First Defiance Financial Corp. | 13,000 | 497,900 |
| First Financial Bancorp | 88,789 | 1,711,852 |
| First Financial Bankshares, Inc. (c) | 95,062 | 3,161,762 |
| First Financial Corp. | 17,700 | 606,579 |
| First Interstate BancSystem, Inc., Class A | 28,833 | 817,704 |
| First Merchants Corp. | 55,500 | 1,455,765 |
| First Midwest Bancorp, Inc. | 121,763 | 2,169,817 |
| First NBC Bank Holding Co. * | 21,900 | 814,461 |
| FirstMerit Corp. | 251,032 | 4,716,891 |
| Flagstar Bancorp, Inc. * | 28,300 | 629,392 |
| Flushing Financial Corp. | 47,500 | 999,400 |
| Fox Chase Bancorp, Inc. | 19,500 | 341,445 |
| Franklin Financial Network, Inc. * | 8,564 | 229,601 |
| Fulton Financial Corp. | 261,849 | 3,514,014 |
| German American Bancorp, Inc. | 20,700 | 648,531 |
| Glacier Bancorp, Inc. | 114,411 | 3,130,285 |
| Great Southern Bancorp, Inc. | 16,300 | 787,779 |
| Great Western Bancorp, Inc. | 64,217 | 1,814,772 |
| Green Bancorp, Inc. * | 12,500 | 153,125 |
| Guaranty Bancorp | 20,920 | 344,762 |
| Hampton Roads Bankshares, Inc. * | 74,100 | 137,085 |
| Hancock Holding Co. | 116,826 | 3,224,398 |
| Hanmi Financial Corp. | 45,900 | 1,170,450 |
| Heartland Financial USA, Inc. | 24,500 | 902,580 |
| Heritage Commerce Corp. | 39,500 | 417,910 |
| Heritage Financial Corp. | 45,545 | 838,939 |
| Heritage Oaks Bancorp | 27,600 | 243,156 |
| Hilltop Holdings, Inc. * | 114,613 | 2,403,435 |
| Hingham Institution for Savings | 1,596 | 203,346 |
| Home BancShares, Inc. | 85,680 | 3,677,386 |
| HomeStreet, Inc. * | 34,122 | 714,173 |
| HomeTrust Bancshares, Inc. * | 29,400 | 556,836 |
| Security | Number
of Shares | Value
($) |
| Horizon Bancorp | 15,200 | 396,720 |
| IBERIABANK Corp. | 56,575 | 3,430,142 |
| Impac Mortgage Holdings, Inc. *(c) | 12,642 | 282,549 |
| Independent Bank Corp., Massachusetts | 39,800 | 1,860,252 |
| Independent Bank Corp., Michigan | 33,600 | 486,528 |
| Independent Bank Group, Inc. | 13,400 | 521,930 |
| International Bancshares Corp. | 81,760 | 2,203,432 |
| Investors Bancorp, Inc. | 528,352 | 6,609,683 |
| Kearny Financial Corp. | 144,832 | 1,730,742 |
| Lakeland Bancorp, Inc. | 53,497 | 622,170 |
| Lakeland Financial Corp. | 23,200 | 1,042,376 |
| LegacyTexas Financial Group, Inc. | 71,900 | 2,063,530 |
| LendingTree, Inc. * | 8,700 | 1,055,832 |
| Live Oak Bancshares, Inc. | 9,100 | 130,495 |
| MainSource Financial Group, Inc. | 33,544 | 725,892 |
| MB Financial, Inc. | 113,187 | 3,649,149 |
| Mercantile Bank Corp. | 25,300 | 558,118 |
| Merchants Bancshares, Inc. | 9,946 | 313,498 |
| Meridian Bancorp, Inc. | 74,744 | 1,049,406 |
| Meta Financial Group, Inc. | 11,200 | 482,496 |
| Metro Bancorp, Inc. | 18,369 | 569,072 |
| MGIC Investment Corp. * | 505,545 | 4,752,123 |
| MidWestOne Financial Group, Inc. | 11,300 | 346,232 |
| National Bank Holdings Corp., Class A | 54,900 | 1,211,094 |
| National Bankshares, Inc. (c) | 9,300 | 303,645 |
| National Commerce Corp. * | 5,932 | 148,952 |
| National Penn Bancshares, Inc. | 198,578 | 2,390,879 |
| Nationstar Mortgage Holdings, Inc. *(c) | 55,797 | 740,426 |
| NBT Bancorp, Inc. | 62,323 | 1,751,900 |
| NewBridge Bancorp | 49,300 | 557,583 |
| NMI Holdings, Inc., Class A * | 74,100 | 557,232 |
| Northfield Bancorp, Inc. | 78,586 | 1,203,937 |
| Northwest Bancshares, Inc. | 150,809 | 2,029,889 |
| OceanFirst Financial Corp. | 19,600 | 361,816 |
| Ocwen Financial Corp. *(c) | 157,309 | 1,099,590 |
| OFG Bancorp | 64,500 | 594,045 |
| Old National Bancorp | 182,683 | 2,557,562 |
| Old Second Bancorp, Inc. * | 41,624 | 278,881 |
| Opus Bank | 15,142 | 564,039 |
| Oritani Financial Corp. | 67,950 | 1,081,764 |
| Pacific Continental Corp. | 24,700 | 354,198 |
| Pacific Premier Bancorp, Inc. * | 32,300 | 689,605 |
| Park National Corp. | 18,853 | 1,710,344 |
| Park Sterling Corp. | 71,600 | 519,100 |
| Peapack-Gladstone Financial Corp. | 28,100 | 635,341 |
| Penns Woods Bancorp, Inc. | 7,100 | 316,305 |
| PennyMac Financial Services, Inc., Class A * | 18,200 | 301,028 |
| People's Utah Bancorp | 6,800 | 111,928 |
| Peoples Bancorp, Inc. | 28,000 | 536,480 |
| Peoples Financial Services Corp. (c) | 11,100 | 451,992 |
| PHH Corp. * | 74,363 | 1,093,136 |
| Pinnacle Financial Partners, Inc. | 54,532 | 2,869,474 |
| Preferred Bank | 16,100 | 533,071 |
| PrivateBancorp, Inc. | 118,776 | 4,968,400 |
| Prosperity Bancshares, Inc. | 104,295 | 5,358,677 |
| Provident Financial Services, Inc. | 96,151 | 1,953,788 |
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| QCR Holdings, Inc. | 17,862 | 406,896 |
| Radian Group, Inc. | 288,440 | 4,173,727 |
| Renasant Corp. | 60,666 | 2,100,864 |
| Republic Bancorp, Inc., Class A | 16,100 | 409,423 |
| S&T Bancorp, Inc. | 52,581 | 1,676,282 |
| Sandy Spring Bancorp, Inc. | 37,500 | 1,031,250 |
| Seacoast Banking Corp of Florida * | 35,220 | 545,206 |
| ServisFirst Bancshares, Inc. | 33,640 | 1,425,663 |
| Sierra Bancorp | 15,900 | 257,739 |
| Simmons First National Corp., Class A | 44,084 | 2,272,089 |
| South State Corp. | 35,763 | 2,771,632 |
| Southside Bancshares, Inc. | 36,732 | 988,091 |
| Southwest Bancorp, Inc. | 32,600 | 551,266 |
| State Bank Financial Corp. | 50,000 | 1,070,000 |
| Sterling Bancorp | 180,905 | 2,784,128 |
| Stock Yards Bancorp, Inc. | 23,620 | 890,002 |
| Stonegate Bank | 14,600 | 455,666 |
| Stonegate Mortgage Corp. *(c) | 21,000 | 120,330 |
| Suffolk Bancorp | 19,300 | 576,877 |
| Sun Bancorp, Inc. * | 12,080 | 241,721 |
| Talmer Bancorp, Inc., Class A | 75,499 | 1,269,893 |
| Territorial Bancorp, Inc. | 16,800 | 468,384 |
| Texas Capital Bancshares, Inc. * | 68,900 | 3,803,280 |
| The Bancorp, Inc. * | 52,100 | 375,120 |
| The First of Long Island Corp. | 19,500 | 541,515 |
| Tompkins Financial Corp. | 23,042 | 1,250,720 |
| Towne Bank | 64,799 | 1,390,587 |
| TriCo Bancshares | 39,400 | 1,038,584 |
| TriState Capital Holdings, Inc. * | 32,400 | 404,676 |
| Triumph Bancorp, Inc. * | 22,100 | 368,849 |
| TrustCo Bank Corp. | 147,155 | 916,776 |
| Trustmark Corp. | 99,977 | 2,402,447 |
| UMB Financial Corp. | 58,700 | 2,880,996 |
| Umpqua Holdings Corp. | 331,688 | 5,539,190 |
| Union Bankshares Corp. | 69,268 | 1,735,163 |
| United Bankshares, Inc. | 103,848 | 4,107,188 |
| United Community Banks, Inc. | 79,500 | 1,602,720 |
| United Community Financial Corp. | 71,100 | 389,628 |
| United Financial Bancorp, Inc. | 79,107 | 1,026,809 |
| Univest Corp. of Pennsylvania | 25,000 | 492,250 |
| Valley National Bancorp | 353,570 | 3,712,485 |
| Walker & Dunlop, Inc. * | 37,645 | 1,092,081 |
| Walter Investment Management Corp. *(c) | 57,403 | 686,540 |
| Washington Federal, Inc. | 137,001 | 3,416,805 |
| Washington Trust Bancorp, Inc. | 21,000 | 814,800 |
| Waterstone Financial, Inc. | 45,557 | 606,819 |
| Webster Financial Corp. | 136,127 | 5,050,312 |
| WesBanco, Inc. | 57,358 | 1,872,739 |
| West Bancorp, Inc. | 20,800 | 411,008 |
| Westamerica Bancorp | 38,600 | 1,706,506 |
| Western Alliance Bancorp * | 127,424 | 4,555,408 |
| Wilshire Bancorp, Inc. | 98,300 | 1,050,827 |
| Wintrust Financial Corp. | 70,566 | 3,562,877 |
| WSFS Financial Corp. | 46,100 | 1,464,597 |
| Yadkin Financial Corp. | 43,362 | 1,021,175 |
| | | 291,147,729 |
| Security | Number
of Shares | Value
($) |
| Capital Goods 7.2% |
| AAON, Inc. | 61,087 | 1,250,451 |
| AAR Corp. | 51,120 | 1,159,913 |
| Accuride Corp. * | 65,000 | 183,300 |
| Actuant Corp., Class A | 91,423 | 2,084,444 |
| Advanced Drainage Systems, Inc. | 49,015 | 1,540,051 |
| Aegion Corp. * | 54,400 | 1,049,376 |
| Aerojet Rocketdyne Holdings, Inc. * | 89,400 | 1,514,436 |
| Aerovironment, Inc. * | 26,700 | 615,969 |
| Aircastle Ltd. | 94,800 | 2,148,168 |
| Alamo Group, Inc. | 13,100 | 614,652 |
| Albany International Corp., Class A | 42,100 | 1,581,697 |
| Allied Motion Technologies, Inc. | 7,974 | 153,818 |
| Altra Industrial Motion Corp. | 38,400 | 1,016,064 |
| Ameresco, Inc., Class A * | 27,700 | 179,496 |
| American Railcar Industries, Inc. (c) | 14,631 | 844,501 |
| American Science & Engineering, Inc. | 12,200 | 457,256 |
| American Woodmark Corp. * | 18,900 | 1,374,030 |
| Apogee Enterprises, Inc. | 43,400 | 2,149,602 |
| Applied Industrial Technologies, Inc. | 58,110 | 2,400,524 |
| Argan, Inc. | 19,900 | 735,305 |
| Astec Industries, Inc. | 27,695 | 900,088 |
| Astronics Corp. * | 31,292 | 1,183,151 |
| AZZ, Inc. | 38,800 | 2,146,804 |
| Barnes Group, Inc. | 83,240 | 3,128,992 |
| Beacon Roofing Supply, Inc. * | 72,382 | 2,561,599 |
| Blount International, Inc. * | 76,862 | 466,552 |
| Blue Bird Corp. *(c) | 7,000 | 75,740 |
| Briggs & Stratton Corp. | 69,593 | 1,236,668 |
| Builders FirstSource, Inc. * | 81,700 | 965,694 |
| CAI International, Inc. * | 24,500 | 284,690 |
| Chart Industries, Inc. * | 45,102 | 775,303 |
| CIRCOR International, Inc. | 26,300 | 1,207,696 |
| CLARCOR, Inc. | 75,465 | 3,762,685 |
| Columbus McKinnon Corp. | 30,600 | 571,914 |
| Comfort Systems USA, Inc. | 57,000 | 1,820,010 |
| Commercial Vehicle Group, Inc. * | 44,170 | 183,747 |
| Continental Building Products, Inc. * | 48,944 | 859,946 |
| Cubic Corp. | 33,215 | 1,489,693 |
| Curtiss-Wright Corp. | 71,640 | 4,983,278 |
| DigitalGlobe, Inc. * | 109,427 | 1,633,745 |
| Douglas Dynamics, Inc. | 30,400 | 666,976 |
| Ducommun, Inc. * | 15,100 | 326,764 |
| DXP Enterprises, Inc. * | 19,000 | 574,940 |
| Dycom Industries, Inc. * | 51,657 | 3,930,581 |
| EMCOR Group, Inc. | 95,097 | 4,591,283 |
| Encore Wire Corp. | 32,995 | 1,411,196 |
| EnerSys | 67,074 | 4,090,843 |
| Engility Holdings, Inc. | 28,234 | 908,852 |
| Enphase Energy, Inc. *(c) | 52,097 | 187,549 |
| EnPro Industries, Inc. | 34,800 | 1,709,028 |
| ESCO Technologies, Inc. | 37,669 | 1,397,143 |
| Esterline Technologies Corp. * | 44,842 | 3,455,076 |
| Federal Signal Corp. | 94,400 | 1,421,664 |
| Franklin Electric Co., Inc. | 70,936 | 2,338,051 |
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| FreightCar America, Inc. | 16,000 | 290,880 |
| FuelCell Energy, Inc. *(c) | 349,000 | 308,691 |
| Furmanite Corp. * | 59,700 | 414,915 |
| Generac Holdings, Inc. *(c) | 104,125 | 3,286,185 |
| General Cable Corp. | 71,076 | 1,093,860 |
| Gibraltar Industries, Inc. * | 46,000 | 1,164,720 |
| Global Brass & Copper Holdings, Inc. | 31,300 | 703,937 |
| Graham Corp. | 15,200 | 257,944 |
| Granite Construction, Inc. | 58,000 | 1,904,720 |
| Great Lakes Dredge & Dock Corp. * | 85,200 | 340,800 |
| Griffon Corp. | 48,800 | 838,384 |
| H&E Equipment Services, Inc. | 46,100 | 890,191 |
| Harsco Corp. | 118,500 | 1,271,505 |
| HC2 Holdings, Inc. *(c) | 27,021 | 204,279 |
| HEICO Corp. | 30,405 | 1,533,628 |
| HEICO Corp., Class A | 59,597 | 2,603,197 |
| Hillenbrand, Inc. | 92,100 | 2,732,607 |
| Hurco Cos., Inc. | 8,600 | 231,082 |
| Hyster-Yale Materials Handling, Inc. | 15,554 | 910,220 |
| Insteel Industries, Inc. | 28,500 | 609,615 |
| John Bean Technologies Corp. | 42,333 | 1,899,058 |
| Kadant, Inc. | 16,500 | 678,480 |
| Kaman Corp. | 40,355 | 1,569,406 |
| KLX, Inc. * | 78,994 | 3,089,455 |
| Kratos Defense & Security Solutions, Inc. * | 62,600 | 312,374 |
| L.B. Foster Co., Class A | 14,500 | 213,585 |
| Lawson Products, Inc. * | 8,000 | 208,080 |
| Lindsay Corp. (c) | 18,166 | 1,231,292 |
| LSI Industries, Inc. | 34,500 | 370,530 |
| Lydall, Inc. * | 26,600 | 910,518 |
| Masonite International Corp. * | 45,200 | 2,706,124 |
| MasTec, Inc. * | 100,173 | 1,679,901 |
| Meritor, Inc. * | 141,038 | 1,533,083 |
| Milacron Holdings Corp. * | 24,000 | 409,680 |
| Miller Industries, Inc. | 15,800 | 358,344 |
| Moog, Inc., Class A * | 57,857 | 3,573,248 |
| MRC Global, Inc. * | 158,578 | 1,887,078 |
| Mueller Industries, Inc. | 86,069 | 2,712,895 |
| Mueller Water Products, Inc., Class A | 242,600 | 2,134,880 |
| MYR Group, Inc. * | 33,000 | 742,500 |
| National Presto Industries, Inc. | 7,100 | 625,155 |
| Navistar International Corp. * | 81,807 | 1,006,226 |
| NCI Building Systems, Inc. * | 41,200 | 430,952 |
| Neff Corp., Class A * | 22,700 | 133,022 |
| NN, Inc. | 39,117 | 539,815 |
| Nortek, Inc. * | 14,128 | 866,753 |
| Northwest Pipe Co. * | 15,513 | 204,927 |
| NV5 Holdings, Inc. * | 8,500 | 197,880 |
| Omega Flex, Inc. | 5,672 | 234,481 |
| Orion Marine Group, Inc. * | 36,200 | 141,542 |
| Patrick Industries, Inc. * | 18,000 | 730,440 |
| PGT, Inc. * | 69,300 | 835,758 |
| Plug Power, Inc. *(c) | 245,100 | 590,691 |
| Ply Gem Holdings, Inc. * | 32,400 | 382,968 |
| Powell Industries, Inc. | 13,000 | 433,160 |
| Power Solutions International, Inc. *(c) | 6,600 | 119,064 |
| Security | Number
of Shares | Value
($) |
| PowerSecure International, Inc. * | 31,100 | 387,506 |
| Preformed Line Products Co. | 3,300 | 140,250 |
| Primoris Services Corp. | 56,900 | 1,133,448 |
| Proto Labs, Inc. * | 35,300 | 2,288,852 |
| Quanex Building Products Corp. | 53,204 | 1,003,960 |
| Raven Industries, Inc. | 53,000 | 965,130 |
| RBC Bearings, Inc. * | 35,300 | 2,414,167 |
| Rexnord Corp. * | 153,850 | 2,843,148 |
| Rush Enterprises, Inc., Class A * | 51,387 | 1,252,815 |
| Simpson Manufacturing Co., Inc. | 60,494 | 2,297,562 |
| Sparton Corp. * | 14,600 | 343,538 |
| Standex International Corp. | 19,900 | 1,785,428 |
| Stock Building Supply Holdings, Inc. * | 21,400 | 369,792 |
| Sun Hydraulics Corp. | 32,750 | 959,248 |
| Sunrun, Inc. *(c) | 30,400 | 225,264 |
| TAL International Group, Inc. * | 50,300 | 853,088 |
| TASER International, Inc. * | 82,500 | 1,931,325 |
| Teledyne Technologies, Inc. * | 52,326 | 4,669,049 |
| Tennant Co. | 26,376 | 1,527,698 |
| Textainer Group Holdings Ltd. (c) | 36,731 | 718,458 |
| The ExOne Co. *(c) | 14,600 | 156,220 |
| The Gorman-Rupp Co. | 29,031 | 829,996 |
| The Greenbrier Cos., Inc. (c) | 38,001 | 1,445,558 |
| The KEYW Holding Corp. *(c) | 46,700 | 332,971 |
| Thermon Group Holdings, Inc. * | 46,800 | 941,148 |
| Titan International, Inc. | 64,600 | 458,660 |
| Titan Machinery, Inc. * | 23,200 | 283,736 |
| Trex Co., Inc. * | 46,578 | 1,819,803 |
| TriMas Corp. * | 67,000 | 1,340,670 |
| Tutor Perini Corp. * | 54,030 | 906,623 |
| Twin Disc, Inc. | 11,300 | 133,114 |
| Univar, Inc. * | 61,700 | 1,089,622 |
| Universal Forest Products, Inc. | 30,262 | 2,197,929 |
| Vectrus, Inc. * | 13,547 | 336,914 |
| Veritiv Corp. * | 13,476 | 565,992 |
| Vicor Corp. * | 26,200 | 253,092 |
| Wabash National Corp. * | 98,800 | 1,182,636 |
| Watts Water Technologies, Inc., Class A | 40,911 | 2,227,195 |
| Woodward, Inc. | 98,758 | 4,493,489 |
| Xerium Technologies, Inc. * | 15,600 | 210,600 |
| | | 186,901,393 |
| Commercial & Professional Supplies 3.6% |
| ABM Industries, Inc. | 82,409 | 2,340,416 |
| Acacia Research Corp. | 72,500 | 482,850 |
| ACCO Brands Corp. * | 170,185 | 1,373,393 |
| ARC Document Solutions, Inc. * | 64,500 | 401,190 |
| Barrett Business Services, Inc. | 10,200 | 499,596 |
| Brady Corp., Class A | 69,929 | 1,590,885 |
| Casella Waste Systems, Inc., Class A * | 57,800 | 350,846 |
| CBIZ, Inc. * | 76,500 | 822,375 |
| CDI Corp. | 19,400 | 155,200 |
| CEB, Inc. | 50,153 | 3,749,438 |
| CECO Environmental Corp. | 50,352 | 449,140 |
| Civeo Corp. | 137,900 | 256,494 |
| CRA International, Inc. * | 14,500 | 339,300 |
| Deluxe Corp. | 75,172 | 4,476,493 |
| Ennis, Inc. | 38,200 | 765,146 |
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Essendant, Inc. | 57,734 | 1,995,864 |
| Exponent, Inc. | 38,400 | 1,974,144 |
| Franklin Covey Co. * | 17,900 | 306,627 |
| FTI Consulting, Inc. * | 60,600 | 2,061,006 |
| G&K Services, Inc., Class A | 29,830 | 1,963,411 |
| GP Strategies Corp. * | 20,376 | 511,234 |
| Healthcare Services Group, Inc. | 105,552 | 3,932,867 |
| Heidrick & Struggles International, Inc. | 24,100 | 640,096 |
| Heritage-Crystal Clean, Inc. * | 16,900 | 201,448 |
| Herman Miller, Inc. | 88,300 | 2,801,759 |
| Hill International, Inc. * | 35,300 | 119,314 |
| HNI Corp. | 69,189 | 2,970,976 |
| Huron Consulting Group, Inc. * | 34,800 | 1,680,840 |
| ICF International, Inc. * | 28,200 | 864,894 |
| InnerWorkings, Inc. * | 46,200 | 345,576 |
| Insperity, Inc. | 27,726 | 1,288,150 |
| Interface, Inc. | 97,500 | 1,906,125 |
| Kelly Services, Inc., Class A | 47,323 | 747,703 |
| Kforce, Inc. | 35,100 | 986,661 |
| Kimball International, Inc., Class B | 58,299 | 636,625 |
| Knoll, Inc. | 73,803 | 1,715,182 |
| Korn/Ferry International | 74,261 | 2,700,873 |
| Matthews International Corp., Class A | 50,059 | 2,889,906 |
| McGrath RentCorp | 40,535 | 1,218,077 |
| Mistras Group, Inc. * | 26,414 | 499,753 |
| Mobile Mini, Inc. | 68,568 | 2,347,768 |
| MSA Safety, Inc. | 43,089 | 1,873,510 |
| Multi-Color Corp. | 18,500 | 1,440,040 |
| Navigant Consulting, Inc. * | 72,548 | 1,247,826 |
| NL Industries, Inc. * | 8,900 | 31,061 |
| On Assignment, Inc. * | 79,539 | 3,588,004 |
| Pendrell Corp. * | 230,900 | 154,703 |
| Quad Graphics, Inc. | 41,700 | 537,930 |
| Resources Connection, Inc. | 53,450 | 959,427 |
| RPX Corp. * | 77,800 | 1,107,872 |
| SP Plus Corp. * | 26,500 | 675,750 |
| Steelcase, Inc., Class A | 126,942 | 2,463,944 |
| Team, Inc. * | 33,778 | 1,182,230 |
| Tetra Tech, Inc. | 91,261 | 2,454,921 |
| The Advisory Board Co. * | 63,038 | 2,762,955 |
| The Brink's Co. | 72,300 | 2,239,854 |
| TRC Cos., Inc. * | 27,863 | 287,825 |
| TriNet Group, Inc. * | 66,046 | 1,253,553 |
| TrueBlue, Inc. * | 61,576 | 1,783,857 |
| UniFirst Corp. | 22,206 | 2,333,184 |
| US Ecology, Inc. | 34,000 | 1,333,140 |
| Viad Corp. | 30,396 | 915,223 |
| Volt Information Sciences, Inc. * | 9,482 | 81,735 |
| VSE Corp. | 7,400 | 425,204 |
| WageWorks, Inc. * | 54,400 | 2,612,288 |
| West Corp. | 80,258 | 1,910,943 |
| | | 93,016,620 |
| Consumer Durables & Apparel 2.5% |
| Arctic Cat, Inc. | 18,800 | 386,152 |
| Bassett Furniture Industries, Inc. | 14,009 | 447,728 |
| Beazer Homes USA, Inc. * | 47,640 | 678,394 |
| Black Diamond, Inc. * | 36,700 | 203,318 |
| CalAtlantic Group, Inc. * | 116,406 | 4,433,904 |
| Security | Number
of Shares | Value
($) |
| Callaway Golf Co. | 122,269 | 1,216,576 |
| Cavco Industries, Inc. * | 13,000 | 1,281,800 |
| Century Communities, Inc. * | 20,052 | 382,592 |
| Cherokee, Inc. * | 10,804 | 196,093 |
| Columbia Sportswear Co. | 42,700 | 2,342,095 |
| Crocs, Inc. * | 110,400 | 1,192,320 |
| CSS Industries, Inc. | 13,400 | 365,820 |
| Culp, Inc. | 16,000 | 480,160 |
| Deckers Outdoor Corp. * | 49,271 | 2,742,424 |
| Escalade, Inc. | 14,500 | 215,035 |
| Ethan Allen Interiors, Inc. | 38,179 | 1,038,851 |
| Flexsteel Industries, Inc. | 10,100 | 439,249 |
| G-III Apparel Group Ltd. * | 58,510 | 3,223,316 |
| Green Brick Partners, Inc. * | 35,040 | 369,672 |
| Helen of Troy Ltd. * | 43,083 | 4,274,264 |
| Hooker Furniture Corp. | 13,334 | 330,950 |
| Hovnanian Enterprises, Inc., Class A *(c) | 161,300 | 332,278 |
| Iconix Brand Group, Inc. * | 70,800 | 1,084,656 |
| Installed Building Products, Inc. * | 30,971 | 686,008 |
| iRobot Corp. * | 44,245 | 1,327,792 |
| JAKKS Pacific, Inc. *(c) | 36,400 | 288,288 |
| Johnson Outdoors, Inc., Class A | 8,500 | 182,155 |
| KB Home | 125,700 | 1,646,670 |
| La-Z-Boy, Inc. | 78,200 | 2,232,610 |
| LGI Homes, Inc. *(c) | 21,000 | 588,630 |
| Libbey, Inc. | 34,479 | 1,159,873 |
| Lifetime Brands, Inc. | 12,400 | 190,588 |
| M.D.C. Holdings, Inc. | 55,093 | 1,431,867 |
| M/I Homes, Inc. * | 34,500 | 791,775 |
| Malibu Boats, Inc., Class A * | 25,461 | 361,801 |
| Marine Products Corp. | 13,700 | 96,859 |
| MCBC Holdings, Inc. * | 5,900 | 77,703 |
| Meritage Homes Corp. * | 58,185 | 2,051,603 |
| Movado Group, Inc. | 27,200 | 700,128 |
| NACCO Industries, Inc., Class A | 7,777 | 348,643 |
| Nautilus, Inc. * | 44,200 | 753,168 |
| Oxford Industries, Inc. | 22,296 | 1,623,595 |
| Performance Sports Group Ltd. * | 68,769 | 789,468 |
| Perry Ellis International, Inc. * | 16,800 | 360,696 |
| Sequential Brands Group, Inc. *(c) | 42,509 | 531,788 |
| Skullcandy, Inc. * | 36,100 | 202,160 |
| Smith & Wesson Holding Corp. * | 80,900 | 1,444,874 |
| Steven Madden Ltd. * | 85,176 | 2,968,384 |
| Sturm, Ruger & Co., Inc. | 27,000 | 1,537,380 |
| Superior Uniform Group, Inc. | 9,527 | 162,340 |
| Taylor Morrison Home Corp., Class A * | 50,000 | 921,500 |
| The New Home Co., Inc. * | 16,049 | 229,661 |
| TRI Pointe Group, Inc. * | 237,700 | 3,085,346 |
| Tumi Holdings, Inc. * | 82,300 | 1,319,269 |
| Unifi, Inc. * | 21,300 | 651,567 |
| Universal Electronics, Inc. * | 24,800 | 1,179,736 |
| Vera Bradley, Inc. * | 39,500 | 494,145 |
| Vince Holding Corp. * | 16,700 | 75,985 |
| WCI Communities, Inc. * | 23,200 | 554,248 |
| William Lyon Homes, Class A * | 32,000 | 682,880 |
| Wolverine World Wide, Inc. | 154,747 | 2,873,652 |
| ZAGG, Inc. * | 39,621 | 335,986 |
| | | 64,598,468 |
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Consumer Services 4.4% |
| 2U, Inc. * | 36,758 | 771,183 |
| American Public Education, Inc. * | 25,200 | 547,596 |
| Apollo Education Group, Inc. * | 145,126 | 1,053,615 |
| Ascent Capital Group, Inc., Class A * | 19,700 | 429,066 |
| Belmond Ltd., Class A * | 143,700 | 1,543,338 |
| Biglari Holdings, Inc. * | 2,410 | 925,753 |
| BJ's Restaurants, Inc. * | 33,000 | 1,416,690 |
| Bloomin' Brands, Inc. | 184,813 | 3,136,277 |
| Bob Evans Farms, Inc. | 33,546 | 1,451,535 |
| Bojangles', Inc. *(c) | 9,950 | 165,469 |
| Boyd Gaming Corp. * | 123,500 | 2,468,765 |
| Bravo Brio Restaurant Group, Inc. * | 28,900 | 339,286 |
| Bridgepoint Education, Inc. * | 36,200 | 280,550 |
| Bright Horizons Family Solutions, Inc. * | 55,021 | 3,522,444 |
| Buffalo Wild Wings, Inc. * | 28,079 | 4,331,747 |
| Caesars Acquisition Co., Class A * | 67,100 | 491,172 |
| Caesars Entertainment Corp. *(c) | 87,400 | 703,570 |
| Cambium Learning Group, Inc. * | 18,000 | 86,580 |
| Capella Education Co. | 18,500 | 835,275 |
| Career Education Corp. * | 91,200 | 329,232 |
| Carriage Services, Inc. | 21,800 | 468,918 |
| Carrols Restaurant Group, Inc. * | 51,700 | 607,992 |
| Chegg, Inc. *(c) | 125,300 | 864,570 |
| Churchill Downs, Inc. | 20,214 | 2,968,022 |
| Chuy's Holdings, Inc. * | 23,100 | 628,551 |
| ClubCorp Holdings, Inc. | 61,911 | 1,265,461 |
| Collectors Universe, Inc. | 10,100 | 174,629 |
| Cracker Barrel Old Country Store, Inc. (c) | 28,616 | 3,933,555 |
| Dave & Buster's Entertainment, Inc. * | 34,468 | 1,329,775 |
| Del Frisco's Restaurant Group, Inc. * | 34,700 | 467,409 |
| Denny's Corp. * | 132,500 | 1,452,200 |
| DeVry Education Group, Inc. | 93,884 | 2,211,907 |
| Diamond Resorts International, Inc. * | 59,198 | 1,683,591 |
| DineEquity, Inc. | 24,897 | 2,077,655 |
| El Pollo Loco Holdings, Inc. *(c) | 18,900 | 216,972 |
| Eldorado Resorts, Inc. * | 38,509 | 381,239 |
| Empire Resorts, Inc. *(c) | 22,100 | 102,544 |
| Fiesta Restaurant Group, Inc. * | 39,300 | 1,389,648 |
| Fogo De Chao, Inc. *(c) | 4,700 | 70,970 |
| Grand Canyon Education, Inc. * | 68,775 | 2,858,289 |
| Houghton Mifflin Harcourt Co. * | 204,894 | 4,013,873 |
| International Speedway Corp., Class A | 43,500 | 1,509,015 |
| Interval Leisure Group, Inc. | 60,600 | 1,069,590 |
| Intrawest Resorts Holdings, Inc. * | 31,900 | 285,824 |
| Isle of Capri Casinos, Inc. * | 37,100 | 709,723 |
| J Alexander's Holdings, Inc. * | 21,043 | 202,855 |
| Jack in the Box, Inc. | 55,908 | 4,166,823 |
| Jamba, Inc. *(c) | 20,260 | 268,445 |
| K12, Inc. * | 49,849 | 484,034 |
| Kona Grill, Inc. * | 10,019 | 137,761 |
| Krispy Kreme Doughnuts, Inc. * | 96,900 | 1,326,561 |
| La Quinta Holdings, Inc. * | 142,702 | 2,161,935 |
| Security | Number
of Shares | Value
($) |
| Liberty Tax, Inc. | 11,700 | 270,153 |
| LifeLock, Inc. *(c) | 134,667 | 1,886,685 |
| Marriott Vacations Worldwide Corp. | 39,085 | 2,517,074 |
| Monarch Casino & Resort, Inc. * | 11,900 | 261,086 |
| Morgans Hotel Group Co. * | 38,000 | 136,420 |
| Noodles & Co. *(c) | 15,900 | 234,843 |
| Papa John's International, Inc. | 43,911 | 3,081,235 |
| Papa Murphy's Holdings, Inc. *(c) | 11,500 | 158,815 |
| Penn National Gaming, Inc. * | 115,300 | 2,059,258 |
| Pinnacle Entertainment, Inc. * | 91,047 | 3,187,555 |
| Planet Fitness, Inc., Class A * | 19,700 | 321,898 |
| Popeyes Louisiana Kitchen, Inc. * | 35,700 | 2,014,908 |
| Potbelly Corp. *(c) | 34,100 | 381,920 |
| Red Robin Gourmet Burgers, Inc. * | 21,700 | 1,625,113 |
| Regis Corp. * | 58,100 | 959,812 |
| Ruby Tuesday, Inc. * | 87,200 | 456,056 |
| Ruth's Hospitality Group, Inc. | 56,600 | 877,866 |
| Scientific Games Corp., Class A *(c) | 77,100 | 855,039 |
| SeaWorld Entertainment, Inc. | 103,823 | 2,069,192 |
| Shake Shack, Inc., Class A * | 9,400 | 428,358 |
| Sonic Corp. | 77,501 | 2,211,879 |
| Sotheby's | 92,900 | 3,218,985 |
| Speedway Motorsports, Inc. | 15,784 | 291,531 |
| Steiner Leisure Ltd. * | 20,909 | 1,324,794 |
| Strayer Education, Inc. * | 16,400 | 867,888 |
| Texas Roadhouse, Inc. | 106,096 | 3,644,398 |
| The Cheesecake Factory, Inc. | 72,267 | 3,483,269 |
| The Habit Restaurants, Inc., Class A *(c) | 16,111 | 384,731 |
| The Marcus Corp. | 27,300 | 564,837 |
| Universal Technical Institute, Inc. | 43,900 | 186,575 |
| Vail Resorts, Inc. | 54,771 | 6,253,205 |
| Weight Watchers International, Inc. *(c) | 40,600 | 624,428 |
| Wingstop, Inc. * | 7,900 | 182,727 |
| Zoe's Kitchen, Inc. *(c) | 30,502 | 1,050,184 |
| | | 114,392,196 |
| Diversified Financials 2.2% |
| Arlington Asset Investment Corp., Class A | 33,300 | 461,205 |
| Ashford, Inc. * | 2,160 | 138,780 |
| BGC Partners, Inc., Class A | 278,100 | 2,405,565 |
| Calamos Asset Management, Inc., Class A | 24,400 | 229,116 |
| Cash America International, Inc. | 41,570 | 1,435,412 |
| CIFC Corp. | 12,194 | 84,382 |
| Cohen & Steers, Inc. | 28,128 | 860,435 |
| Cowen Group, Inc., Class A * | 169,300 | 712,753 |
| Diamond Hill Investment Group, Inc. | 4,100 | 820,205 |
| Encore Capital Group, Inc. *(c) | 37,800 | 1,538,460 |
| Enova International, Inc. * | 44,836 | 582,868 |
| Evercore Partners, Inc., Class A | 51,600 | 2,786,400 |
| Ezcorp, Inc., Class A * | 77,400 | 515,484 |
| Fifth Street Asset Management, Inc. | 15,700 | 92,002 |
| Financial Engines, Inc. (c) | 78,900 | 2,537,424 |
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| First Cash Financial Services, Inc. * | 40,441 | 1,542,824 |
| FNFV Group * | 121,836 | 1,369,437 |
| Gain Capital Holdings, Inc. | 50,700 | 377,715 |
| GAMCO Investors, Inc., Class A | 9,700 | 559,496 |
| Green Dot Corp., Class A * | 64,341 | 1,192,882 |
| Greenhill & Co., Inc. | 42,729 | 1,103,263 |
| HFF, Inc., Class A | 54,800 | 1,891,696 |
| Houlihan Lokey, Inc. * | 20,100 | 440,391 |
| INTL FCStone, Inc. * | 25,100 | 802,949 |
| Investment Technology Group, Inc. | 55,265 | 884,793 |
| Janus Capital Group, Inc. | 222,653 | 3,457,801 |
| KCG Holdings, Inc., Class A * | 53,181 | 664,231 |
| Ladenburg Thalmann Financial Services, Inc. * | 142,600 | 362,204 |
| MarketAxess Holdings, Inc. | 55,422 | 5,614,803 |
| Marlin Business Services Corp. | 11,600 | 204,856 |
| Medley Management, Inc., Class A (c) | 14,400 | 105,696 |
| Moelis & Co., Class A | 25,024 | 737,708 |
| Nelnet, Inc., Class A | 33,600 | 1,202,208 |
| NewStar Financial, Inc. * | 36,500 | 385,075 |
| OM Asset Management plc | 34,200 | 519,156 |
| On Deck Capital, Inc. *(c) | 18,400 | 175,168 |
| Oppenheimer Holdings, Inc., Class A | 13,800 | 253,230 |
| PICO Holdings, Inc. * | 39,800 | 384,468 |
| Piper Jaffray Cos. * | 23,529 | 836,927 |
| PRA Group, Inc. * | 72,381 | 3,966,479 |
| Pzena Investment Management, Inc., Class A | 13,700 | 130,561 |
| RCS Capital Corp., Class A *(c) | 68,846 | 52,192 |
| Regional Management Corp. * | 15,700 | 256,067 |
| Resource America, Inc., Class A | 16,500 | 126,885 |
| Safeguard Scientifics, Inc. * | 26,900 | 477,475 |
| Stifel Financial Corp. * | 102,310 | 4,545,633 |
| The JG Wentworth Co., Class A * | 14,200 | 72,704 |
| Tiptree Financial, Inc., Class A | 37,500 | 253,875 |
| Virtu Financial, Inc., Class A | 31,071 | 751,918 |
| Virtus Investment Partners, Inc. | 10,500 | 1,228,920 |
| Westwood Holdings Group, Inc. | 11,500 | 668,150 |
| WisdomTree Investments, Inc. | 174,900 | 3,363,327 |
| World Acceptance Corp. *(c) | 11,900 | 453,747 |
| ZAIS Group Holdings, Inc. * | 7,000 | 72,730 |
| | | 56,690,131 |
| Energy 3.0% |
| Abraxas Petroleum Corp. * | 129,000 | 205,110 |
| Adams Resources & Energy, Inc. | 2,900 | 128,934 |
| Alon USA Energy, Inc. | 48,900 | 819,075 |
| Approach Resources, Inc. *(c) | 57,800 | 136,408 |
| Ardmore Shipping Corp. | 26,500 | 380,275 |
| Atwood Oceanics, Inc. (c) | 101,121 | 1,673,553 |
| Basic Energy Services, Inc. *(c) | 46,100 | 171,031 |
| Bill Barrett Corp. * | 75,298 | 366,701 |
| Bonanza Creek Energy, Inc. * | 71,032 | 404,172 |
| Bristow Group, Inc. | 50,862 | 1,766,437 |
| C&J Energy Services Ltd. *(c) | 77,850 | 388,472 |
| Callon Petroleum Co. * | 102,400 | 888,832 |
| CARBO Ceramics, Inc. (c) | 29,300 | 513,336 |
| Carrizo Oil & Gas, Inc. * | 77,311 | 2,909,213 |
| Security | Number
of Shares | Value
($) |
| Clayton Williams Energy, Inc. * | 8,600 | 512,302 |
| Clean Energy Fuels Corp. *(c) | 108,338 | 612,110 |
| Cloud Peak Energy, Inc. *(c) | 92,300 | 274,131 |
| Contango Oil & Gas Co. * | 25,520 | 195,228 |
| Delek US Holdings, Inc. | 84,287 | 2,292,606 |
| DHT Holdings, Inc. | 135,700 | 1,066,602 |
| Dorian LPG Ltd. * | 32,103 | 378,173 |
| Earthstone Energy, Inc. * | 4,000 | 56,220 |
| Eclipse Resources Corp. *(c) | 68,600 | 147,490 |
| Energy Fuels, Inc. * | 58,740 | 159,773 |
| Energy XXI Ltd. (c) | 127,806 | 221,104 |
| Era Group, Inc. * | 28,700 | 399,217 |
| Erin Energy Corp. *(c) | 18,000 | 72,000 |
| Evolution Petroleum Corp. | 30,500 | 210,450 |
| EXCO Resources, Inc. *(c) | 222,774 | 249,507 |
| Exterran Holdings, Inc. | 107,428 | 2,335,485 |
| Fairmount Santrol Holdings, Inc. *(c) | 90,253 | 240,976 |
| Forum Energy Technologies, Inc. * | 86,355 | 1,144,204 |
| Frontline Ltd. *(c) | 161,719 | 511,032 |
| GasLog Ltd. (c) | 61,800 | 715,026 |
| Gastar Exploration, Inc. * | 104,600 | 164,222 |
| Gener8 Maritime, Inc. * | 20,300 | 211,120 |
| Geospace Technologies Corp. * | 19,800 | 304,128 |
| Green Plains, Inc. | 54,900 | 1,125,999 |
| Gulfmark Offshore, Inc., Class A (c) | 39,300 | 245,232 |
| Halcon Resources Corp. * | 601,921 | 422,007 |
| Hallador Energy Co. (c) | 15,600 | 95,004 |
| Helix Energy Solutions Group, Inc. * | 161,307 | 932,354 |
| Hornbeck Offshore Services, Inc. * | 54,245 | 732,850 |
| Independence Contract Drilling, Inc. * | 18,200 | 127,946 |
| ION Geophysical Corp. * | 206,400 | 76,368 |
| Isramco, Inc. * | 1,400 | 133,000 |
| Jones Energy, Inc., Class A * | 39,239 | 201,688 |
| Key Energy Services, Inc. * | 192,700 | 101,245 |
| Magnum Hunter Resources Corp. * | 390,400 | 103,925 |
| Matador Resources Co. * | 107,062 | 2,752,564 |
| Matrix Service Co. * | 39,700 | 901,190 |
| McDermott International, Inc. * | 348,685 | 1,607,438 |
| Natural Gas Services Group, Inc. * | 20,500 | 461,660 |
| Navios Maritime Acquisition Corp. | 120,600 | 431,748 |
| Newpark Resources, Inc. * | 126,710 | 717,179 |
| Nordic American Offshore Ltd. *(c) | 24,000 | 144,720 |
| Nordic American Tankers Ltd. (c) | 133,500 | 2,039,880 |
| North Atlantic Drilling Ltd. *(c) | 106,800 | 88,163 |
| Northern Oil & Gas, Inc. *(c) | 105,500 | 531,720 |
| Oasis Petroleum, Inc. *(c) | 212,213 | 2,468,037 |
| Oil States International, Inc. * | 75,000 | 2,250,750 |
| Pacific Ethanol, Inc. * | 54,600 | 328,146 |
| Panhandle Oil & Gas, Inc., Class A | 24,200 | 444,796 |
| Par Pacific Holdings, Inc. * | 25,238 | 575,426 |
| Parker Drilling Co. * | 181,265 | 518,418 |
| Parsley Energy, Inc., Class A * | 140,234 | 2,486,349 |
| PDC Energy, Inc. * | 60,003 | 3,620,581 |
| Peabody Energy Corp. (c) | 26,342 | 336,914 |
| Penn Virginia Corp. *(c) | 96,278 | 59,586 |
| PHI, Inc. - Non Voting Shares * | 19,572 | 372,651 |
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Pioneer Energy Services Corp. * | 91,500 | 211,365 |
| Renewable Energy Group, Inc. * | 75,800 | 598,062 |
| REX American Resources Corp. * | 8,500 | 466,735 |
| Rex Energy Corp. *(c) | 71,700 | 162,042 |
| RigNet, Inc. * | 16,900 | 507,000 |
| Ring Energy, Inc. * | 34,800 | 361,572 |
| RSP Permian, Inc. * | 91,349 | 2,504,790 |
| Sanchez Energy Corp. *(c) | 75,253 | 447,755 |
| SandRidge Energy, Inc. * | 621,926 | 230,299 |
| Scorpio Tankers, Inc. | 267,702 | 2,441,442 |
| SEACOR Holdings, Inc. * | 28,200 | 1,647,444 |
| SemGroup Corp., Class A | 67,465 | 3,073,031 |
| Seventy Seven Energy, Inc. *(c) | 80,408 | 91,665 |
| Ship Finance International Ltd. (c) | 85,700 | 1,464,613 |
| Solazyme, Inc. *(c) | 111,500 | 365,720 |
| Stone Energy Corp. * | 82,968 | 463,791 |
| Synergy Resources Corp. * | 149,512 | 1,673,039 |
| Teekay Tankers Ltd., Class A | 141,900 | 1,084,116 |
| Tesco Corp. | 52,500 | 420,000 |
| TETRA Technologies, Inc. * | 118,074 | 795,819 |
| Tidewater, Inc. (c) | 66,195 | 817,508 |
| TransAtlantic Petroleum Ltd. * | 33,200 | 83,996 |
| Triangle Petroleum Corp. *(c) | 77,500 | 93,000 |
| Ultra Petroleum Corp. *(c) | 219,981 | 1,205,496 |
| Unit Corp. * | 80,078 | 1,009,784 |
| Uranium Energy Corp. *(c) | 220,947 | 247,461 |
| US Silica Holdings, Inc. (c) | 81,000 | 1,462,860 |
| W&T Offshore, Inc. (c) | 49,000 | 159,740 |
| Western Refining, Inc. | 107,642 | 4,480,060 |
| Westmoreland Coal Co. *(c) | 26,052 | 186,532 |
| | | 79,416,926 |
| Food & Staples Retailing 0.9% |
| Casey's General Stores, Inc. | 57,506 | 6,108,287 |
| Fairway Group Holdings Corp. *(c) | 42,300 | 49,068 |
| Ingles Markets, Inc., Class A | 20,731 | 1,035,306 |
| Natural Grocers by Vitamin Cottage, Inc. * | 12,600 | 301,770 |
| PriceSmart, Inc. | 29,400 | 2,527,812 |
| Smart & Final Stores, Inc. * | 37,600 | 554,224 |
| SpartanNash, Co. | 57,833 | 1,613,541 |
| SUPERVALU, Inc. * | 398,636 | 2,619,039 |
| The Andersons, Inc. | 43,223 | 1,530,094 |
| The Chefs' Warehouse, Inc. * | 28,300 | 428,745 |
| The Fresh Market, Inc. * | 62,800 | 1,564,976 |
| United Natural Foods, Inc. * | 75,082 | 3,787,887 |
| Village Super Market, Inc., Class A | 11,600 | 290,696 |
| Weis Markets, Inc. | 15,800 | 650,012 |
| | | 23,061,457 |
| Food, Beverage & Tobacco 2.1% |
| Alico, Inc. | 4,700 | 200,643 |
| Amplify Snack Brands, Inc. *(c) | 26,200 | 316,496 |
| Arcadia Biosciences, Inc. *(c) | 11,000 | 30,800 |
| B&G Foods, Inc. | 87,057 | 3,159,299 |
| Boulder Brands, Inc. *(c) | 91,800 | 813,348 |
| Cal-Maine Foods, Inc. (c) | 47,416 | 2,534,859 |
| Calavo Growers, Inc. | 21,088 | 1,084,134 |
| Castle Brands, Inc. * | 71,331 | 92,730 |
| Security | Number
of Shares | Value
($) |
| Coca-Cola Bottling Co. Consolidated | 6,800 | 1,436,228 |
| Craft Brew Alliance, Inc. * | 13,900 | 106,474 |
| Darling Ingredients, Inc. * | 248,400 | 2,513,808 |
| Dean Foods Co. | 143,400 | 2,596,974 |
| Diamond Foods, Inc. * | 40,400 | 1,600,648 |
| Farmer Bros. Co. * | 9,100 | 258,258 |
| Fresh Del Monte Produce, Inc. | 47,861 | 2,183,897 |
| Freshpet, Inc. *(c) | 28,350 | 276,413 |
| Inventure Foods, Inc. * | 33,000 | 285,780 |
| J&J Snack Foods Corp. | 21,581 | 2,649,931 |
| John B. Sanfilippo & Son, Inc. | 10,900 | 705,448 |
| Lancaster Colony Corp. | 27,656 | 3,145,040 |
| Landec Corp. * | 44,654 | 549,244 |
| Lifeway Foods, Inc. * | 10,100 | 114,635 |
| Limoneira Co. (c) | 17,600 | 279,136 |
| MGP Ingredients, Inc. | 21,547 | 373,410 |
| National Beverage Corp. * | 15,001 | 564,638 |
| Omega Protein Corp. * | 33,400 | 607,880 |
| Post Holdings, Inc. * | 92,699 | 5,957,765 |
| Sanderson Farms, Inc. (c) | 34,143 | 2,373,280 |
| Seaboard Corp. * | 420 | 1,414,560 |
| Seneca Foods Corp., Class A * | 12,400 | 361,832 |
| Snyder's-Lance, Inc. | 73,300 | 2,605,082 |
| The Boston Beer Co., Inc., Class A *(c) | 13,500 | 2,964,465 |
| Tootsie Roll Industries, Inc. (c) | 28,401 | 901,448 |
| TreeHouse Foods, Inc. * | 63,252 | 5,416,901 |
| Universal Corp. | 32,424 | 1,751,220 |
| Vector Group Ltd. | 130,522 | 3,165,158 |
| | | 55,391,862 |
| Health Care Equipment & Services 6.7% |
| AAC Holdings, Inc. *(c) | 11,800 | 273,760 |
| Abaxis, Inc. | 34,300 | 1,722,203 |
| ABIOMED, Inc. * | 61,900 | 4,559,554 |
| Accuray, Inc. *(c) | 115,500 | 773,850 |
| Aceto Corp. | 46,000 | 1,387,360 |
| Addus HomeCare Corp. * | 7,800 | 194,844 |
| Adeptus Health, Inc., Class A *(c) | 9,400 | 609,966 |
| Air Methods Corp. * | 59,000 | 2,414,870 |
| Alliance HealthCare Services, Inc. * | 7,100 | 60,066 |
| Almost Family, Inc. * | 11,000 | 455,180 |
| Amedisys, Inc. * | 43,900 | 1,737,562 |
| AMN Healthcare Services, Inc. * | 71,300 | 2,022,781 |
| Amsurg Corp. * | 72,053 | 5,050,195 |
| Analogic Corp. | 17,954 | 1,573,129 |
| AngioDynamics, Inc. * | 41,100 | 517,038 |
| Anika Therapeutics, Inc. * | 21,900 | 843,588 |
| Antares Pharma, Inc. * | 256,299 | 353,693 |
| AtriCure, Inc. * | 41,500 | 768,788 |
| Atrion Corp. | 2,300 | 848,700 |
| BioScrip, Inc. *(c) | 100,400 | 197,788 |
| BioTelemetry, Inc. * | 38,700 | 503,874 |
| Cantel Medical Corp. | 51,445 | 3,049,660 |
| Capital Senior Living Corp. * | 44,800 | 1,013,376 |
| Cardiovascular Systems, Inc. * | 45,900 | 628,830 |
| Castlight Health, Inc., Class B *(c) | 45,673 | 231,105 |
| Cerus Corp. *(c) | 137,100 | 653,967 |
| Chemed Corp. | 25,598 | 4,026,309 |
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Civitas Solutions, Inc. * | 17,400 | 447,702 |
| Computer Programs & Systems, Inc. | 17,500 | 665,175 |
| ConforMIS, Inc. *(c) | 13,700 | 268,109 |
| CONMED Corp. | 43,000 | 1,744,080 |
| Connecture, Inc. *(c) | 13,900 | 82,010 |
| Corindus Vascular Robotics, Inc. *(c) | 25,000 | 80,000 |
| CorVel Corp. * | 14,500 | 481,400 |
| Cross Country Healthcare, Inc. * | 49,215 | 664,403 |
| CryoLife, Inc. | 37,400 | 394,196 |
| Cutera, Inc. * | 18,705 | 253,827 |
| Cynosure, Inc., Class A * | 34,944 | 1,315,292 |
| Diplomat Pharmacy, Inc. * | 51,688 | 1,452,950 |
| EndoChoice Holdings, Inc. * | 6,400 | 66,048 |
| Endologix, Inc. * | 98,037 | 837,236 |
| Entellus Medical, Inc. * | 9,800 | 166,502 |
| Evolent Health, Inc., Class A * | 16,100 | 206,885 |
| Exactech, Inc. * | 15,000 | 255,450 |
| ExamWorks Group, Inc. * | 59,613 | 1,683,471 |
| Five Star Quality Care, Inc. * | 56,200 | 183,774 |
| Genesis Healthcare, Inc. * | 48,100 | 238,576 |
| GenMark Diagnostics, Inc. * | 61,000 | 387,960 |
| Glaukos Corp. * | 8,200 | 164,328 |
| Globus Medical, Inc., Class A * | 104,200 | 2,328,870 |
| Greatbatch, Inc. * | 37,000 | 1,977,650 |
| Haemonetics Corp. * | 78,600 | 2,655,108 |
| Halyard Health, Inc. * | 68,293 | 2,026,936 |
| Hanger, Inc. * | 52,800 | 761,376 |
| HealthEquity, Inc. * | 55,634 | 1,819,788 |
| HealthSouth Corp. | 136,400 | 4,750,812 |
| HealthStream, Inc. * | 36,800 | 876,208 |
| Healthways, Inc. * | 48,800 | 574,376 |
| HeartWare International, Inc. * | 25,300 | 1,092,707 |
| HMS Holdings Corp. * | 138,452 | 1,457,900 |
| ICU Medical, Inc. * | 21,400 | 2,353,358 |
| Imprivata, Inc. * | 15,800 | 170,482 |
| Inogen, Inc. * | 24,598 | 1,051,319 |
| Insulet Corp. * | 83,600 | 2,499,640 |
| Integra LifeSciences Holdings Corp. * | 42,748 | 2,546,498 |
| Invacare Corp. | 49,211 | 850,366 |
| InVivo Therapeutics Holdings Corp. *(c) | 37,498 | 272,235 |
| Invuity, Inc. *(c) | 5,300 | 71,179 |
| IPC Healthcare, Inc. * | 26,300 | 2,064,550 |
| iRadimed Corp. * | 4,000 | 106,000 |
| K2M Group Holdings, Inc. * | 24,900 | 454,425 |
| Kindred Healthcare, Inc. | 124,823 | 1,672,628 |
| Landauer, Inc. | 13,300 | 525,217 |
| Lantheus Holdings, Inc. * | 13,000 | 39,000 |
| LDR Holding Corp. * | 36,873 | 932,887 |
| LeMaitre Vascular, Inc. | 22,435 | 298,834 |
| LHC Group, Inc. * | 19,700 | 887,781 |
| LivaNova plc * | 66,775 | 4,425,847 |
| Magellan Health, Inc. * | 39,368 | 2,102,251 |
| Masimo Corp. * | 66,000 | 2,618,880 |
| MedAssets, Inc. * | 93,100 | 2,204,608 |
| Medidata Solutions, Inc. * | 81,700 | 3,513,100 |
| Meridian Bioscience, Inc. | 64,350 | 1,223,293 |
| Merit Medical Systems, Inc. * | 66,300 | 1,229,202 |
| Molina Healthcare, Inc. * | 59,743 | 3,704,066 |
| Security | Number
of Shares | Value
($) |
| National HealthCare Corp. | 15,388 | 1,004,529 |
| National Research Corp., Class A | 12,500 | 191,625 |
| Natus Medical, Inc. * | 51,000 | 2,322,030 |
| Neogen Corp. * | 56,925 | 3,076,796 |
| Nevro Corp. * | 24,264 | 989,243 |
| Nobilis Health Corp. *(c) | 43,191 | 121,799 |
| NuVasive, Inc. * | 73,300 | 3,456,828 |
| NxStage Medical, Inc. * | 92,700 | 1,549,017 |
| Omnicell, Inc. * | 52,300 | 1,422,560 |
| OraSure Technologies, Inc. * | 87,400 | 454,480 |
| Orthofix International N.V. * | 28,200 | 960,210 |
| Owens & Minor, Inc. | 92,200 | 3,305,370 |
| Oxford Immunotec Global plc * | 29,400 | 368,676 |
| PharMerica Corp. * | 47,100 | 1,345,647 |
| Press Ganey Holdings, Inc. * | 14,686 | 460,259 |
| Quality Systems, Inc. | 73,100 | 1,027,055 |
| Quidel Corp. * | 40,300 | 774,566 |
| RadNet, Inc. * | 48,000 | 317,280 |
| Rockwell Medical, Inc. *(c) | 78,700 | 911,346 |
| RTI Surgical, Inc. * | 73,900 | 310,750 |
| SeaSpine Holdings Corp. * | 12,215 | 184,202 |
| Second Sight Medical Products, Inc. *(c) | 16,421 | 96,555 |
| Select Medical Holdings Corp. | 160,711 | 1,816,034 |
| Sientra, Inc. * | 11,000 | 41,360 |
| STAAR Surgical Co. * | 52,900 | 431,135 |
| STERIS Corp. (c) | 126,127 | 9,453,219 |
| Surgical Care Affiliates, Inc. * | 32,237 | 954,538 |
| SurModics, Inc. * | 20,400 | 435,132 |
| Tandem Diabetes Care, Inc. * | 25,400 | 230,378 |
| Team Health Holdings, Inc. * | 106,058 | 6,328,481 |
| Teladoc, Inc. *(c) | 12,000 | 236,040 |
| The Ensign Group, Inc. | 36,850 | 1,553,596 |
| The Providence Service Corp. * | 21,100 | 1,089,815 |
| The Spectranetics Corp. * | 63,236 | 772,744 |
| TransEnterix, Inc. *(c) | 42,100 | 104,829 |
| Triple-S Management Corp., Class B * | 40,600 | 835,954 |
| Trupanion, Inc. *(c) | 14,200 | 93,294 |
| U.S. Physical Therapy, Inc. | 19,300 | 946,858 |
| Unilife Corp. *(c) | 221,152 | 166,660 |
| Universal American Corp. | 84,202 | 628,147 |
| Utah Medical Products, Inc. | 7,300 | 430,481 |
| Vascular Solutions, Inc. * | 27,136 | 871,608 |
| Veracyte, Inc. * | 23,200 | 151,032 |
| Vocera Communications, Inc. * | 45,500 | 535,535 |
| WellCare Health Plans, Inc. * | 65,906 | 5,839,272 |
| West Pharmaceutical Services, Inc. | 108,532 | 6,513,005 |
| Wright Medical Group N.V. * | 134,961 | 2,608,796 |
| Zeltiq Aesthetics, Inc. * | 46,400 | 1,565,536 |
| | | 175,935,089 |
| Household & Personal Products 0.4% |
| Central Garden & Pet Co., Class A * | 66,600 | 1,124,208 |
| Elizabeth Arden, Inc. *(c) | 36,298 | 455,177 |
| HRG Group, Inc. * | 122,000 | 1,640,900 |
| Inter Parfums, Inc. | 25,400 | 701,548 |
| Medifast, Inc. * | 13,279 | 371,413 |
| Natural Health Trends Corp. (c) | 12,400 | 610,824 |
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Nature's Sunshine Products, Inc. | 15,000 | 177,750 |
| Nutraceutical International Corp. * | 12,300 | 301,350 |
| Oil-Dri Corp. of America | 6,887 | 216,114 |
| Orchids Paper Products Co. | 11,800 | 345,858 |
| Revlon, Inc., Class A * | 18,602 | 583,545 |
| Synutra International, Inc. *(c) | 23,200 | 132,472 |
| USANA Health Sciences, Inc. * | 9,100 | 1,170,260 |
| WD-40 Co. | 22,300 | 2,131,434 |
| | | 9,962,853 |
| Insurance 2.6% |
| Ambac Financial Group, Inc. * | 66,900 | 1,080,435 |
| American Equity Investment Life Holding Co. | 120,864 | 3,103,788 |
| AMERISAFE, Inc. | 28,035 | 1,534,356 |
| Argo Group International Holdings Ltd. | 42,010 | 2,626,465 |
| Atlas Financial Holdings, Inc. * | 16,900 | 321,438 |
| Baldwin & Lyons, Inc., Class B | 13,000 | 301,990 |
| Citizens, Inc. *(c) | 80,500 | 676,200 |
| CNO Financial Group, Inc. | 296,168 | 5,689,387 |
| Crawford & Co., Class B | 44,000 | 264,000 |
| Donegal Group, Inc., Class A | 10,400 | 147,160 |
| eHealth, Inc. * | 23,600 | 282,020 |
| EMC Insurance Group, Inc. | 9,300 | 232,500 |
| Employers Holdings, Inc. | 44,900 | 1,188,503 |
| Enstar Group Ltd. * | 13,894 | 2,192,473 |
| FBL Financial Group, Inc., Class A | 13,968 | 878,587 |
| Federated National Holding Co. | 20,246 | 623,273 |
| Fidelity & Guaranty Life | 14,800 | 395,160 |
| First American Financial Corp. | 162,900 | 6,211,377 |
| Global Indemnity plc * | 10,755 | 305,550 |
| Greenlight Capital Re Ltd., Class A * | 42,789 | 939,646 |
| Hallmark Financial Services, Inc. * | 21,200 | 275,388 |
| HCI Group, Inc. | 13,800 | 601,818 |
| Heritage Insurance Holdings, Inc. * | 34,462 | 762,299 |
| Horace Mann Educators Corp. | 59,578 | 2,039,951 |
| Independence Holding Co. | 11,248 | 152,523 |
| Infinity Property & Casualty Corp. | 16,592 | 1,335,988 |
| James River Group Holdings Ltd. | 18,600 | 547,398 |
| Kansas City Life Insurance Co. | 5,700 | 279,471 |
| Kemper Corp. | 65,014 | 2,322,300 |
| Maiden Holdings Ltd. | 76,900 | 1,195,795 |
| MBIA, Inc. * | 212,784 | 1,598,008 |
| National General Holdings Corp. | 58,700 | 1,156,977 |
| National Interstate Corp. | 12,498 | 358,693 |
| National Western Life Group, Inc., Class A | 3,494 | 901,417 |
| OneBeacon Insurance Group Ltd., Class A | 33,400 | 480,626 |
| Patriot National, Inc. * | 15,800 | 200,660 |
| Primerica, Inc. | 77,500 | 3,691,325 |
| RLI Corp. | 64,420 | 3,919,957 |
| Safety Insurance Group, Inc. | 22,770 | 1,319,522 |
| Selective Insurance Group, Inc. | 84,514 | 3,083,916 |
| State Auto Financial Corp. | 24,726 | 589,715 |
| State National Cos., Inc. | 46,500 | 419,895 |
| Stewart Information Services Corp. | 34,100 | 1,369,797 |
| Symetra Financial Corp. | 110,600 | 3,509,338 |
| Security | Number
of Shares | Value
($) |
| The Navigators Group, Inc. * | 16,470 | 1,405,714 |
| Third Point Reinsurance Ltd. * | 128,260 | 1,753,314 |
| United Fire Group, Inc. | 32,300 | 1,201,237 |
| United Insurance Holdings Corp. | 24,400 | 403,088 |
| Universal Insurance Holdings, Inc. | 48,122 | 1,518,249 |
| | | 67,388,687 |
| Materials 3.8% |
| A. Schulman, Inc. | 45,609 | 1,636,907 |
| AEP Industries, Inc. * | 5,800 | 464,000 |
| AK Steel Holding Corp. *(c) | 262,900 | 759,781 |
| American Vanguard Corp. | 40,900 | 548,469 |
| Axiall Corp. | 108,121 | 2,189,450 |
| Balchem Corp. | 46,900 | 3,203,270 |
| Berry Plastics Group, Inc. * | 180,257 | 6,038,609 |
| Boise Cascade Co. * | 60,800 | 1,819,744 |
| Calgon Carbon Corp. | 79,785 | 1,372,302 |
| Carpenter Technology Corp. | 75,144 | 2,503,047 |
| Century Aluminum Co. * | 73,400 | 265,708 |
| Chase Corp. | 10,300 | 457,423 |
| Chemtura Corp. * | 101,185 | 3,231,849 |
| Clearwater Paper Corp. * | 30,000 | 1,512,900 |
| Cliffs Natural Resources, Inc. (c) | 227,759 | 628,615 |
| Coeur Mining, Inc. * | 205,013 | 553,535 |
| Commercial Metals Co. | 172,600 | 2,480,262 |
| Core Molding Technologies, Inc. * | 11,000 | 220,440 |
| Deltic Timber Corp. | 16,721 | 1,036,033 |
| Ferro Corp. * | 105,100 | 1,312,699 |
| Flotek Industries, Inc. * | 78,900 | 1,428,090 |
| FutureFuel Corp. | 40,400 | 622,564 |
| Globe Specialty Metals, Inc. | 94,500 | 1,192,590 |
| Greif, Inc., Class A | 44,194 | 1,448,679 |
| H.B. Fuller Co. | 74,694 | 2,837,625 |
| Handy & Harman Ltd. * | 4,800 | 114,000 |
| Hawkins, Inc. | 15,500 | 642,320 |
| Haynes International, Inc. | 17,525 | 691,361 |
| Headwaters, Inc. * | 110,000 | 2,260,500 |
| Hecla Mining Co. | 545,640 | 1,129,475 |
| Horsehead Holding Corp. *(c) | 83,900 | 238,276 |
| Innophos Holdings, Inc. | 30,300 | 1,287,447 |
| Innospec, Inc. | 35,600 | 1,966,544 |
| Intrepid Potash, Inc. * | 89,300 | 344,698 |
| Kaiser Aluminum Corp. | 26,243 | 2,133,293 |
| KapStone Paper & Packaging Corp. | 127,503 | 2,773,190 |
| KMG Chemicals, Inc. | 12,300 | 258,792 |
| Koppers Holdings, Inc. | 30,900 | 585,864 |
| Kraton Performance Polymers, Inc. * | 44,835 | 914,186 |
| Kronos Worldwide, Inc. | 30,700 | 242,530 |
| Louisiana-Pacific Corp. * | 215,472 | 3,805,236 |
| LSB Industries, Inc. * | 28,000 | 438,200 |
| Materion Corp. | 31,829 | 959,644 |
| Minerals Technologies, Inc. | 52,522 | 3,095,647 |
| Myers Industries, Inc. | 34,900 | 544,789 |
| Neenah Paper, Inc. | 24,753 | 1,668,600 |
| Olin Corp. | 246,648 | 4,730,709 |
| Olympic Steel, Inc. | 12,200 | 116,754 |
| OMNOVA Solutions, Inc. * | 65,700 | 471,726 |
| P.H. Glatfelter Co. | 63,800 | 1,237,720 |
| PolyOne Corp. | 135,876 | 4,543,693 |
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Quaker Chemical Corp. | 20,100 | 1,595,538 |
| Rayonier Advanced Materials, Inc. | 55,842 | 514,863 |
| Real Industry, Inc. * | 32,714 | 310,783 |
| Rentech, Inc. * | 44,190 | 258,512 |
| Ryerson Holding Corp. *(c) | 14,000 | 81,900 |
| Schnitzer Steel Industries, Inc., Class A | 37,800 | 637,308 |
| Schweitzer-Mauduit International, Inc. | 44,700 | 1,735,254 |
| Senomyx, Inc. * | 62,400 | 308,880 |
| Sensient Technologies Corp. | 70,614 | 4,608,976 |
| Stepan Co. | 28,500 | 1,508,505 |
| Stillwater Mining Co. * | 182,900 | 1,708,286 |
| Summit Materials, Inc., Class A * | 35,015 | 737,416 |
| SunCoke Energy, Inc. | 96,800 | 480,128 |
| TimkenSteel Corp. | 63,644 | 677,172 |
| Trecora Resources * | 27,400 | 390,176 |
| Tredegar Corp. | 35,100 | 500,526 |
| Trinseo S.A. *(c) | 15,600 | 506,220 |
| Tronox Ltd., Class A | 90,200 | 560,142 |
| United States Lime & Minerals, Inc. | 2,700 | 131,895 |
| US Concrete, Inc. * | 21,700 | 1,203,482 |
| Valhi, Inc. (c) | 25,000 | 61,750 |
| Wausau Paper Corp. | 58,500 | 597,285 |
| Worthington Industries, Inc. | 73,817 | 2,266,182 |
| | | 98,340,964 |
| Media 1.6% |
| AMC Entertainment Holdings, Inc., Class A | 31,500 | 862,155 |
| Carmike Cinemas, Inc. * | 37,900 | 970,619 |
| Central European Media Enterprises Ltd., Class A *(c) | 109,100 | 235,656 |
| Crown Media Holdings, Inc., Class A * | 46,700 | 270,393 |
| Cumulus Media, Inc., Class A * | 197,200 | 90,535 |
| Daily Journal Corp. * | 2,000 | 409,400 |
| DreamWorks Animation SKG, Inc., Class A * | 115,430 | 2,336,303 |
| Entercom Communications Corp., Class A * | 43,000 | 474,720 |
| Entravision Communications Corp., Class A | 98,600 | 863,736 |
| Eros International plc *(c) | 41,690 | 465,677 |
| Global Eagle Entertainment, Inc. * | 65,900 | 877,788 |
| Gray Television, Inc. * | 92,193 | 1,464,947 |
| Harte-Hanks, Inc. | 75,416 | 320,518 |
| Hemisphere Media Group, Inc. *(c) | 12,300 | 166,419 |
| IMAX Corp. * | 92,000 | 3,531,880 |
| Journal Media Group, Inc. | 34,919 | 427,409 |
| Loral Space & Communications, Inc. * | 20,500 | 916,555 |
| Martha Stewart Living Omnimedia, Inc., Class A * | 58,700 | 354,548 |
| MDC Partners, Inc., Class A | 64,480 | 1,339,894 |
| Media General, Inc. * | 143,286 | 2,129,230 |
| Meredith Corp. | 55,600 | 2,614,312 |
| National CineMedia, Inc. | 86,800 | 1,232,560 |
| New Media Investment Group, Inc. | 64,082 | 1,031,720 |
| Security | Number
of Shares | Value
($) |
| Nexstar Broadcasting Group, Inc., Class A | 47,055 | 2,504,738 |
| Reading International, Inc., Class A * | 23,000 | 356,500 |
| Rentrak Corp. *(c) | 20,391 | 1,125,175 |
| Saga Communications, Inc., Class A | 6,400 | 275,328 |
| Scholastic Corp. | 38,469 | 1,572,228 |
| SFX Entertainment, Inc. *(c) | 64,800 | 60,270 |
| Sinclair Broadcast Group, Inc., Class A | 96,902 | 2,908,029 |
| Sizmek, Inc. * | 36,700 | 217,631 |
| The E.W. Scripps Co., Class A | 89,271 | 1,969,318 |
| The New York Times Co., Class A | 200,751 | 2,665,973 |
| Time, Inc. | 160,186 | 2,976,256 |
| Townsquare Media, Inc., Class A * | 10,100 | 110,696 |
| Tribune Publishing Co. | 35,717 | 337,169 |
| World Wrestling Entertainment, Inc., Class A (c) | 48,000 | 855,840 |
| | | 41,322,125 |
| Pharmaceuticals, Biotechnology & Life Sciences 8.3% |
| Abeona Therapeutics, Inc. *(c) | 14,621 | 57,753 |
| ACADIA Pharmaceuticals, Inc. * | 123,016 | 4,283,417 |
| Accelerate Diagnostics, Inc. *(c) | 33,300 | 558,441 |
| Acceleron Pharma, Inc. * | 34,327 | 1,071,346 |
| Achillion Pharmaceuticals, Inc. * | 170,889 | 1,336,352 |
| Acorda Therapeutics, Inc. * | 64,939 | 2,340,402 |
| Adamas Pharmaceuticals, Inc. * | 14,272 | 210,655 |
| Aduro Biotech, Inc. *(c) | 11,881 | 320,906 |
| Advaxis, Inc. *(c) | 44,111 | 489,191 |
| Aegerion Pharmaceuticals, Inc. *(c) | 43,100 | 632,708 |
| Aerie Pharmaceuticals, Inc. * | 29,844 | 680,742 |
| Affimed N.V. * | 22,114 | 140,203 |
| Affymetrix, Inc. * | 110,900 | 1,020,280 |
| Agenus, Inc. * | 110,054 | 501,846 |
| Agile Therapeutics, Inc. *(c) | 13,462 | 106,888 |
| Aimmune Therapeutics, Inc. * | 15,600 | 234,780 |
| Akebia Therapeutics, Inc. * | 34,547 | 308,159 |
| Albany Molecular Research, Inc. * | 40,600 | 732,424 |
| Alder Biopharmaceuticals, Inc. * | 33,946 | 1,085,593 |
| Alimera Sciences, Inc. *(c) | 45,500 | 136,955 |
| AMAG Pharmaceuticals, Inc. * | 50,131 | 2,005,240 |
| Amicus Therapeutics, Inc. * | 176,904 | 1,326,780 |
| Amphastar Pharmaceuticals, Inc. * | 42,926 | 508,244 |
| Anacor Pharmaceuticals, Inc. * | 62,396 | 7,013,934 |
| ANI Pharmaceuticals, Inc. * | 10,100 | 422,584 |
| Anthera Pharmaceuticals, Inc. * | 51,939 | 299,688 |
| Applied Genetic Technologies Corp. * | 17,400 | 208,800 |
| Aratana Therapeutics, Inc. * | 43,300 | 302,667 |
| Ardelyx, Inc. *(c) | 23,940 | 392,137 |
| Arena Pharmaceuticals, Inc. * | 365,000 | 689,850 |
| ARIAD Pharmaceuticals, Inc. * | 241,800 | 1,653,912 |
| Array BioPharma, Inc. * | 220,479 | 1,128,852 |
| Arrowhead Research Corp. *(c) | 98,400 | 506,760 |
| Assembly Biosciences, Inc. * | 20,668 | 198,413 |
| Asterias Biotherapeutics, Inc. *(c) | 15,125 | 69,273 |
| Atara Biotherapeutics, Inc. * | 24,043 | 619,588 |
| aTyr Pharma, Inc. *(c) | 8,518 | 106,134 |
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Avalanche Biotechnologies, Inc. * | 28,209 | 237,802 |
| Axovant Sciences Ltd. *(c) | 19,600 | 238,924 |
| Bellicum Pharmaceuticals, Inc. * | 14,200 | 177,642 |
| BioCryst Pharmaceuticals, Inc. * | 102,800 | 924,172 |
| BioDelivery Sciences International, Inc. *(c) | 79,500 | 427,710 |
| BioSpecifics Technologies Corp. * | 8,000 | 467,280 |
| BioTime, Inc. *(c) | 83,500 | 314,795 |
| Blueprint Medicines Corp. * | 13,264 | 266,474 |
| Calithera Biosciences, Inc. *(c) | 19,000 | 162,260 |
| Cambrex Corp. * | 47,100 | 2,165,187 |
| Cara Therapeutics, Inc. * | 27,617 | 391,333 |
| Carbylan Therapeutics, Inc. * | 15,751 | 56,704 |
| Catabasis Pharmaceuticals, Inc. *(c) | 5,500 | 38,390 |
| Catalent, Inc. * | 122,399 | 3,253,365 |
| Catalyst Pharmaceuticals, Inc. * | 107,345 | 339,210 |
| Celldex Therapeutics, Inc. * | 147,500 | 1,778,850 |
| Cellular Biomedicine Group, Inc. *(c) | 14,309 | 300,489 |
| Cempra, Inc. *(c) | 46,278 | 1,027,372 |
| Cepheid * | 108,500 | 3,623,900 |
| ChemoCentryx, Inc. *(c) | 35,000 | 244,650 |
| Chiasma, Inc. *(c) | 10,000 | 227,400 |
| Chimerix, Inc. * | 69,186 | 2,710,707 |
| Cidara Therapeutics, Inc. * | 4,559 | 62,094 |
| Clovis Oncology, Inc. * | 42,000 | 4,196,220 |
| Coherus Biosciences, Inc. * | 33,961 | 945,814 |
| Collegium Pharmaceutical, Inc. *(c) | 8,736 | 160,480 |
| Concert Pharmaceuticals, Inc. * | 21,722 | 493,307 |
| Corcept Therapeutics, Inc. * | 86,506 | 319,207 |
| Corium International, Inc. *(c) | 12,013 | 83,370 |
| CorMedix, Inc. *(c) | 45,377 | 115,258 |
| CTI BioPharma, Corp. *(c) | 297,500 | 395,675 |
| Curis, Inc. * | 158,654 | 323,654 |
| Cytokinetics, Inc. * | 45,900 | 395,199 |
| CytRx Corp. *(c) | 81,800 | 227,404 |
| Depomed, Inc. * | 86,900 | 1,520,750 |
| Dermira, Inc. * | 24,700 | 666,653 |
| Dicerna Pharmaceuticals, Inc. * | 21,814 | 218,576 |
| Durect Corp. * | 163,276 | 333,083 |
| Dyax Corp. * | 221,213 | 6,089,994 |
| Dynavax Technologies Corp. * | 52,100 | 1,183,191 |
| Eagle Pharmaceuticals, Inc. *(c) | 12,424 | 791,533 |
| Emergent Biosolutions, Inc. * | 43,700 | 1,404,955 |
| Enanta Pharmaceuticals, Inc. * | 22,222 | 624,216 |
| Endocyte, Inc. *(c) | 50,400 | 259,056 |
| Epizyme, Inc. *(c) | 41,759 | 546,625 |
| Esperion Therapeutics, Inc. *(c) | 18,670 | 448,080 |
| Exact Sciences Corp. *(c) | 139,762 | 1,164,217 |
| Exelixis, Inc. *(c) | 326,972 | 1,968,371 |
| Fibrocell Science, Inc. *(c) | 34,944 | 133,486 |
| FibroGen, Inc. * | 69,009 | 1,608,600 |
| Five Prime Therapeutics, Inc. * | 33,300 | 1,070,595 |
| Flex Pharma, Inc. *(c) | 9,700 | 109,901 |
| Flexion Therapeutics, Inc. * | 19,943 | 328,661 |
| Fluidigm Corp. * | 43,100 | 465,911 |
| Foamix Pharmaceuticals Ltd. * | 32,336 | 230,556 |
| Foundation Medicine, Inc. *(c) | 20,500 | 459,610 |
| Galena Biopharma, Inc. *(c) | 265,000 | 445,200 |
| Genocea Biosciences, Inc. * | 26,625 | 127,534 |
| Security | Number
of Shares | Value
($) |
| Genomic Health, Inc. * | 22,700 | 474,884 |
| Geron Corp. * | 231,200 | 802,264 |
| Global Blood Therapeutics, Inc. * | 9,600 | 447,648 |
| Halozyme Therapeutics, Inc. * | 154,500 | 2,417,925 |
| Harvard Bioscience, Inc. * | 74,929 | 220,291 |
| Heron Therapeutics, Inc. *(c) | 43,660 | 1,197,157 |
| Heska Corp. * | 8,091 | 248,879 |
| Idera Pharmaceuticals, Inc. *(c) | 151,729 | 418,772 |
| Ignyta, Inc. * | 35,845 | 367,053 |
| Immune Design, Corp. * | 16,243 | 211,159 |
| ImmunoGen, Inc. * | 128,000 | 1,497,600 |
| Immunomedics, Inc. *(c) | 175,000 | 523,250 |
| Impax Laboratories, Inc. * | 105,400 | 3,650,002 |
| INC Research Holdings, Inc., Class A * | 19,400 | 809,174 |
| Infinity Pharmaceuticals, Inc. * | 68,300 | 706,905 |
| Inovio Pharmaceuticals, Inc. *(c) | 120,362 | 761,891 |
| Insmed, Inc. * | 92,314 | 1,831,510 |
| Insys Therapeutics, Inc. * | 37,079 | 955,155 |
| Intersect ENT, Inc. * | 26,368 | 505,211 |
| Intra-Cellular Therapies, Inc. * | 31,300 | 1,497,705 |
| Invitae Corp. *(c) | 14,200 | 108,204 |
| Ironwood Pharmaceuticals, Inc. * | 196,700 | 2,234,512 |
| Karyopharm Therapeutics, Inc. *(c) | 33,263 | 444,061 |
| Keryx Biopharmaceuticals, Inc. *(c) | 150,634 | 674,840 |
| Kite Pharma, Inc. *(c) | 43,742 | 2,976,643 |
| La Jolla Pharmaceutical Co. * | 21,579 | 539,259 |
| Lannett Co., Inc. *(c) | 41,300 | 1,849,001 |
| Lexicon Pharmaceuticals, Inc. *(c) | 58,700 | 558,237 |
| Ligand Pharmaceuticals, Inc. * | 25,843 | 2,334,915 |
| Lion Biotechnologies, Inc. * | 64,872 | 419,722 |
| Loxo Oncology, Inc. * | 8,900 | 208,082 |
| Luminex Corp. * | 70,400 | 1,281,280 |
| MacroGenics, Inc. * | 49,449 | 1,536,380 |
| MannKind Corp. *(c) | 355,984 | 1,178,307 |
| Medgenics, Inc. *(c) | 23,712 | 155,314 |
| Merrimack Pharmaceuticals, Inc. * | 166,400 | 1,554,176 |
| MiMedx Group, Inc. *(c) | 156,150 | 1,136,772 |
| Mirati Therapeutics, Inc. * | 18,048 | 638,538 |
| Momenta Pharmaceuticals, Inc. * | 87,686 | 1,438,927 |
| Myriad Genetics, Inc. *(c) | 102,586 | 4,141,397 |
| NanoString Technologies, Inc. * | 24,100 | 349,691 |
| NantKwest, Inc. *(c) | 8,400 | 99,960 |
| Natera, Inc. * | 13,000 | 107,250 |
| Navidea Biopharmaceuticals, Inc. *(c) | 221,100 | 446,622 |
| Nektar Therapeutics * | 194,571 | 2,309,558 |
| NeoGenomics, Inc. * | 89,888 | 633,710 |
| Neos Therapeutics, Inc. * | 7,600 | 107,616 |
| Neurocrine Biosciences, Inc. * | 129,903 | 6,376,938 |
| NewLink Genetics Corp. * | 33,100 | 1,266,737 |
| Nivalis Therapeutics, Inc. * | 6,800 | 54,536 |
| Northwest Biotherapeutics, Inc. *(c) | 70,700 | 345,016 |
| Novavax, Inc. * | 411,321 | 2,776,417 |
| Ocata Therapeutics, Inc. *(c) | 48,125 | 211,750 |
| Ocular Therapeutix, Inc. * | 18,570 | 160,259 |
| Omeros Corp. *(c) | 57,100 | 715,463 |
| OncoMed Pharmaceuticals, Inc. *(c) | 24,500 | 490,245 |
| Oncothyreon, Inc. * | 151,709 | 449,059 |
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Ophthotech Corp. * | 37,643 | 1,879,515 |
| Orexigen Therapeutics, Inc. *(c) | 151,187 | 459,608 |
| Organovo Holdings, Inc. *(c) | 154,441 | 464,867 |
| Osiris Therapeutics, Inc. (c) | 30,400 | 517,712 |
| Otonomy, Inc. * | 21,039 | 455,284 |
| OvaScience, Inc. *(c) | 33,901 | 439,696 |
| Pacific Biosciences of California, Inc. *(c) | 85,600 | 607,760 |
| Pacira Pharmaceuticals, Inc. * | 53,400 | 2,667,330 |
| Paratek Pharmaceuticals, Inc. * | 17,408 | 302,203 |
| PAREXEL International Corp. * | 82,880 | 5,231,386 |
| PDL BioPharma, Inc. | 239,600 | 1,097,368 |
| Peregrine Pharmaceuticals, Inc. *(c) | 255,100 | 285,712 |
| Pernix Therapeutics Holdings, Inc. *(c) | 48,800 | 137,128 |
| Pfenex, Inc. * | 23,397 | 423,018 |
| Phibro Animal Health Corp., Class A | 25,500 | 850,680 |
| Portola Pharmaceuticals, Inc. * | 70,200 | 3,342,222 |
| POZEN, Inc. *(c) | 35,400 | 207,090 |
| PRA Health Sciences, Inc. * | 30,500 | 1,068,720 |
| Prestige Brands Holdings, Inc. * | 80,900 | 3,964,909 |
| Progenics Pharmaceuticals, Inc. * | 106,000 | 778,040 |
| Proteon Therapeutics, Inc. * | 10,998 | 150,673 |
| Prothena Corp. plc * | 45,853 | 2,361,888 |
| PTC Therapeutics, Inc. * | 48,936 | 1,217,038 |
| Radius Health, Inc. * | 50,314 | 3,231,668 |
| Raptor Pharmaceutical Corp. * | 119,565 | 651,629 |
| Regulus Therapeutics, Inc. *(c) | 39,681 | 263,879 |
| Relypsa, Inc. * | 46,624 | 745,518 |
| Repligen Corp. * | 49,100 | 1,632,084 |
| Retrophin, Inc. * | 55,293 | 1,057,755 |
| Revance Therapeutics, Inc. *(c) | 22,308 | 873,804 |
| Rigel Pharmaceuticals, Inc. * | 153,400 | 389,636 |
| Sage Therapeutics, Inc. * | 19,895 | 999,326 |
| Sagent Pharmaceuticals, Inc. * | 29,769 | 500,417 |
| Sangamo BioSciences, Inc. * | 99,700 | 702,885 |
| Sarepta Therapeutics, Inc. * | 60,900 | 1,465,254 |
| SciClone Pharmaceuticals, Inc. * | 78,000 | 594,360 |
| Sequenom, Inc. *(c) | 166,100 | 290,675 |
| Seres Therapeutics, Inc. *(c) | 12,000 | 355,680 |
| Sorrento Therapeutics, Inc. * | 39,855 | 344,347 |
| Spark Therapeutics, Inc. *(c) | 12,500 | 673,750 |
| Spectrum Pharmaceuticals, Inc. * | 114,300 | 595,503 |
| Stemline Therapeutics, Inc. * | 28,000 | 248,920 |
| Sucampo Pharmaceuticals, Inc., Class A * | 40,218 | 778,620 |
| Supernus Pharmaceuticals, Inc. * | 50,200 | 828,300 |
| Synergy Pharmaceuticals, Inc. *(c) | 140,600 | 901,246 |
| Synta Pharmaceuticals Corp. *(c) | 191,800 | 128,506 |
| T2 Biosystems, Inc. *(c) | 9,200 | 102,304 |
| Teligent, Inc. *(c) | 58,900 | 428,203 |
| TESARO, Inc. * | 35,100 | 1,595,997 |
| Tetraphase Pharmaceuticals, Inc. * | 52,053 | 470,039 |
| TG Therapeutics, Inc. * | 59,050 | 730,449 |
| The Medicines Co. * | 97,228 | 3,329,087 |
| TherapeuticsMD, Inc. * | 200,755 | 1,178,432 |
| Theravance Biopharma, Inc. *(c) | 34,500 | 515,775 |
| Theravance, Inc. (c) | 130,100 | 1,142,278 |
| Threshold Pharmaceuticals, Inc. * | 88,794 | 338,305 |
| Tobira Therapeutics, Inc. *(c) | 4,229 | 42,628 |
| Security | Number
of Shares | Value
($) |
| Tokai Pharmaceuticals, Inc. *(c) | 17,900 | 197,795 |
| Trevena, Inc. * | 50,234 | 483,251 |
| Trovagene, Inc. *(c) | 35,347 | 152,346 |
| Ultragenyx Pharmaceutical, Inc. * | 57,341 | 5,696,828 |
| Vanda Pharmaceuticals, Inc. *(c) | 60,600 | 650,844 |
| Verastem, Inc. * | 47,100 | 86,664 |
| Versartis, Inc. *(c) | 31,735 | 327,823 |
| Vitae Pharmaceuticals, Inc. * | 18,478 | 219,519 |
| Vital Therapies, Inc. *(c) | 23,347 | 181,406 |
| VIVUS, Inc. *(c) | 190,400 | 239,904 |
| vTv Therapeutics, Inc., Class A * | 7,000 | 51,380 |
| XBiotech, Inc. *(c) | 5,538 | 78,529 |
| Xencor, Inc. * | 40,028 | 433,503 |
| XenoPort, Inc. * | 98,100 | 599,391 |
| XOMA Corp. *(c) | 150,400 | 183,488 |
| Zafgen, Inc. * | 23,672 | 227,961 |
| ZIOPHARM Oncology, Inc. *(c) | 166,564 | 1,897,164 |
| Zogenix, Inc. * | 40,225 | 474,253 |
| ZS Pharma, Inc. * | 28,002 | 1,820,410 |
| Zynerba Pharmaceuticals, Inc. *(c) | 4,700 | 59,173 |
| | | 215,946,116 |
| Real Estate 9.6% |
| Acadia Realty Trust | 102,257 | 3,363,233 |
| AG Mortgage Investment Trust, Inc. | 41,300 | 628,173 |
| Agree Realty Corp. | 25,500 | 825,690 |
| Alexander & Baldwin, Inc. | 72,560 | 2,738,414 |
| Alexander's, Inc. | 3,041 | 1,200,861 |
| Altisource Asset Management Corp. * | 1,385 | 34,071 |
| Altisource Portfolio Solutions S.A. * | 19,887 | 533,171 |
| Altisource Residential Corp. | 87,800 | 1,263,442 |
| American Assets Trust, Inc. | 55,100 | 2,323,016 |
| American Capital Mortgage Investment Corp. | 76,700 | 1,112,917 |
| American Residential Properties, Inc. | 47,200 | 782,104 |
| Anworth Mortgage Asset Corp. | 147,000 | 701,190 |
| Apollo Commercial Real Estate Finance, Inc. | 87,200 | 1,448,392 |
| Apollo Residential Mortgage, Inc. | 50,875 | 654,761 |
| Ares Commercial Real Estate Corp. | 41,900 | 517,046 |
| Armada Hoffler Properties, Inc. | 40,500 | 434,970 |
| ARMOUR Residential REIT, Inc. | 63,829 | 1,309,771 |
| Ashford Hospitality Prime, Inc. | 42,487 | 624,559 |
| Ashford Hospitality Trust, Inc. | 128,682 | 885,332 |
| AV Homes, Inc. * | 24,800 | 328,352 |
| Bluerock Residential Growth REIT, Inc. | 21,808 | 255,590 |
| Campus Crest Communities, Inc. | 112,200 | 743,886 |
| Capstead Mortgage Corp. | 145,829 | 1,407,250 |
| CareTrust REIT, Inc. | 67,965 | 769,364 |
| CatchMark Timber Trust, Inc., Class A | 52,409 | 573,879 |
| Cedar Realty Trust, Inc. | 119,200 | 833,208 |
| Chambers Street Properties | 345,419 | 2,445,567 |
| Chatham Lodging Trust | 55,134 | 1,262,017 |
| Chesapeake Lodging Trust | 86,985 | 2,395,567 |
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Colony Capital, Inc., Class A | 163,826 | 3,332,221 |
| Consolidated-Tomoka Land Co. | 7,600 | 389,500 |
| CorEnergy Infrastructure Trust, Inc. | 97,500 | 498,225 |
| CoreSite Realty Corp. | 36,400 | 2,000,180 |
| Cousins Properties, Inc. | 326,001 | 3,273,050 |
| CubeSmart | 247,243 | 6,878,300 |
| CyrusOne, Inc. | 100,404 | 3,542,253 |
| CYS Investments, Inc. | 246,361 | 1,901,907 |
| DCT Industrial Trust, Inc. | 133,626 | 4,960,197 |
| DiamondRock Hospitality Co. | 303,517 | 3,545,079 |
| DuPont Fabros Technology, Inc. | 95,424 | 3,062,156 |
| Dynex Capital, Inc. | 77,200 | 511,836 |
| Easterly Government Properties, Inc. | 21,600 | 377,568 |
| EastGroup Properties, Inc. | 48,090 | 2,700,734 |
| Education Realty Trust, Inc. | 72,713 | 2,611,124 |
| EPR Properties | 84,900 | 4,823,169 |
| Equity One, Inc. | 111,931 | 2,975,126 |
| FelCor Lodging Trust, Inc. | 215,913 | 1,738,100 |
| First Industrial Realty Trust, Inc. | 163,237 | 3,538,978 |
| First Potomac Realty Trust | 90,700 | 1,069,353 |
| Forestar Group, Inc. * | 49,700 | 703,255 |
| Franklin Street Properties Corp. | 134,065 | 1,396,957 |
| FRP Holdings, Inc. * | 8,700 | 287,100 |
| Getty Realty Corp. | 39,242 | 662,405 |
| Gladstone Commercial Corp. | 34,300 | 549,143 |
| Government Properties Income Trust | 100,847 | 1,641,789 |
| Gramercy Property Trust, Inc. | 86,322 | 1,957,783 |
| Great Ajax Corp. | 9,400 | 121,542 |
| Hannon Armstrong Sustainable Infrastructure Capital, Inc. | 48,845 | 879,699 |
| Hatteras Financial Corp. | 145,051 | 2,075,680 |
| Healthcare Realty Trust, Inc. (c) | 147,981 | 3,900,779 |
| Hersha Hospitality Trust | 72,925 | 1,750,929 |
| Highwoods Properties, Inc. | 138,207 | 6,005,094 |
| Hudson Pacific Properties, Inc. | 109,311 | 3,123,015 |
| Independence Realty Trust, Inc. | 39,209 | 307,399 |
| InfraREIT, Inc. | 34,700 | 828,636 |
| Inland Real Estate Corp. | 133,336 | 1,180,024 |
| Invesco Mortgage Capital, Inc. | 188,006 | 2,265,472 |
| Investors Real Estate Trust | 187,002 | 1,518,456 |
| iStar, Inc. * | 131,700 | 1,704,198 |
| Kennedy-Wilson Holdings, Inc. | 140,587 | 3,447,193 |
| Kite Realty Group Trust | 126,439 | 3,339,254 |
| Ladder Capital Corp. | 55,962 | 798,018 |
| LaSalle Hotel Properties | 168,379 | 4,952,026 |
| Lexington Realty Trust | 314,774 | 2,782,602 |
| LTC Properties, Inc. | 52,651 | 2,256,095 |
| Mack-Cali Realty Corp. | 130,100 | 2,830,976 |
| Marcus & Millichap, Inc. * | 19,579 | 853,057 |
| Medical Properties Trust, Inc. | 353,767 | 3,997,567 |
| Monmouth Real Estate Investment Corp. | 84,500 | 879,645 |
| Monogram Residential Trust, Inc. | 247,724 | 2,442,559 |
| National Health Investors, Inc. | 56,468 | 3,316,930 |
| National Storage Affiliates Trust | 33,821 | 508,668 |
| New Residential Investment Corp. | 346,497 | 4,203,009 |
| New Senior Investment Group, Inc. | 133,669 | 1,339,363 |
| New York Mortgage Trust, Inc. (c) | 175,200 | 995,136 |
| Security | Number
of Shares | Value
($) |
| New York REIT, Inc. | 249,088 | 2,839,603 |
| NexPoint Residential Trust, Inc. | 30,669 | 404,217 |
| One Liberty Properties, Inc. | 18,700 | 440,572 |
| Orchid Island Capital, Inc. (c) | 36,959 | 328,196 |
| Parkway Properties, Inc. | 128,593 | 2,151,361 |
| Pebblebrook Hotel Trust | 108,000 | 3,691,440 |
| Pennsylvania Real Estate Investment Trust | 106,167 | 2,386,634 |
| PennyMac Mortgage Investment Trust | 109,021 | 1,593,887 |
| Physicians Realty Trust | 101,150 | 1,616,377 |
| Potlatch Corp. | 60,403 | 1,886,990 |
| Preferred Apartment Communities, Inc., Class A | 26,197 | 286,857 |
| PS Business Parks, Inc. | 29,938 | 2,568,381 |
| QTS Realty Trust, Inc., Class A | 41,439 | 1,782,291 |
| RAIT Financial Trust | 154,400 | 748,840 |
| Ramco-Gershenson Properties Trust | 120,921 | 2,031,473 |
| RE/MAX Holdings, Inc., Class A | 16,800 | 632,856 |
| Redwood Trust, Inc. | 123,500 | 1,640,080 |
| Resource Capital Corp. | 49,037 | 629,635 |
| Retail Opportunity Investments Corp. | 150,247 | 2,723,978 |
| Rexford Industrial Realty, Inc. | 88,116 | 1,334,957 |
| RLJ Lodging Trust | 195,135 | 4,895,937 |
| Rouse Properties, Inc. | 54,500 | 958,655 |
| Ryman Hospitality Properties, Inc. | 64,985 | 3,418,211 |
| Sabra Health Care REIT, Inc. | 94,996 | 2,154,509 |
| Saul Centers, Inc. | 13,400 | 751,338 |
| Select Income REIT | 94,928 | 1,917,546 |
| Silver Bay Realty Trust Corp. | 56,433 | 914,215 |
| Sovran Self Storage, Inc. | 53,417 | 5,334,756 |
| STAG Industrial, Inc. | 94,500 | 1,939,140 |
| Starwood Waypoint Residential Trust | 57,400 | 1,412,040 |
| STORE Capital Corp. | 56,600 | 1,283,122 |
| Strategic Hotels & Resorts, Inc. * | 407,984 | 5,752,574 |
| Summit Hotel Properties, Inc. | 125,500 | 1,641,540 |
| Sun Communities, Inc. | 70,536 | 4,727,323 |
| Sunstone Hotel Investors, Inc. | 308,208 | 4,456,688 |
| Tejon Ranch Co. * | 19,092 | 430,143 |
| Terreno Realty Corp. | 62,600 | 1,400,988 |
| The Geo Group, Inc. | 109,980 | 3,549,055 |
| The St. Joe Co. *(c) | 99,000 | 1,962,180 |
| UMH Properties, Inc. | 31,900 | 315,491 |
| United Development Funding IV (c) | 44,425 | 764,110 |
| Universal Health Realty Income Trust | 19,444 | 966,172 |
| Urban Edge Properties | 132,087 | 3,135,745 |
| Urstadt Biddle Properties, Inc., Class A | 47,174 | 948,197 |
| Washington Real Estate Investment Trust | 99,282 | 2,681,607 |
| Western Asset Mortgage Capital Corp. (c) | 59,656 | 681,272 |
| Whitestone REIT | 41,700 | 515,412 |
| Xenia Hotels & Resorts, Inc. | 170,562 | 2,957,545 |
| | | 251,510,438 |
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Retailing 4.3% |
| 1-800-Flowers.com, Inc., Class A * | 34,800 | 345,564 |
| Abercrombie & Fitch Co., Class A | 103,963 | 2,202,976 |
| America's Car-Mart, Inc. * | 11,500 | 393,760 |
| American Eagle Outfitters, Inc. | 293,215 | 4,480,325 |
| Asbury Automotive Group, Inc. * | 40,485 | 3,206,412 |
| Ascena Retail Group, Inc. * | 259,463 | 3,456,047 |
| Barnes & Noble Education, Inc. * | 46,395 | 684,326 |
| Barnes & Noble, Inc. | 73,410 | 953,596 |
| bebe stores, Inc. (c) | 51,449 | 57,108 |
| Big 5 Sporting Goods Corp. | 34,384 | 314,614 |
| Big Lots, Inc. | 73,300 | 3,379,130 |
| Blue Nile, Inc. * | 19,000 | 647,900 |
| Boot Barn Holdings, Inc. * | 21,411 | 321,165 |
| Build-A-Bear Workshop, Inc. * | 18,100 | 281,636 |
| Burlington Stores, Inc. * | 113,791 | 5,471,071 |
| Caleres, Inc. | 68,275 | 2,086,484 |
| Chico's FAS, Inc. | 212,351 | 2,934,691 |
| Christopher & Banks Corp. * | 51,800 | 75,628 |
| Citi Trends, Inc. | 24,846 | 660,158 |
| Conn's, Inc. *(c) | 40,600 | 770,182 |
| Core-Mark Holding Co., Inc. | 34,641 | 2,815,967 |
| Destination XL Group, Inc. * | 56,400 | 329,376 |
| Etsy, Inc. *(c) | 35,663 | 388,727 |
| EVINE Live, Inc. * | 56,000 | 144,480 |
| Express, Inc. * | 124,098 | 2,395,091 |
| Fenix Parts, Inc. *(c) | 27,427 | 215,851 |
| Five Below, Inc. * | 79,600 | 2,733,464 |
| Francesca's Holdings Corp. * | 62,800 | 892,388 |
| Fred's, Inc., Class A | 52,800 | 730,224 |
| FTD Cos., Inc. * | 28,097 | 795,707 |
| Genesco, Inc. * | 36,744 | 2,302,012 |
| Group 1 Automotive, Inc. | 35,300 | 3,069,335 |
| Guess?, Inc. | 94,900 | 1,997,645 |
| Haverty Furniture Cos., Inc. | 30,300 | 709,323 |
| Hibbett Sports, Inc. * | 37,575 | 1,283,562 |
| HSN, Inc. | 49,555 | 3,064,977 |
| Kirkland's, Inc. | 27,800 | 639,122 |
| Lands' End, Inc. *(c) | 24,200 | 597,256 |
| Liberty TripAdvisor Holdings, Inc., Class A * | 112,911 | 3,521,694 |
| Lithia Motors, Inc., Class A | 33,937 | 3,983,864 |
| Lumber Liquidators Holdings, Inc. *(c) | 39,398 | 544,480 |
| MarineMax, Inc. * | 37,700 | 595,660 |
| Mattress Firm Holding Corp. *(c) | 29,616 | 1,260,753 |
| Monro Muffler Brake, Inc. | 46,546 | 3,452,317 |
| Nutrisystem, Inc. | 39,948 | 923,997 |
| Ollie's Bargain Outlet Holdings, Inc. * | 11,900 | 188,615 |
| Outerwall, Inc. (c) | 28,700 | 1,722,000 |
| Overstock.com, Inc. * | 15,500 | 242,730 |
| Party City Holdco, Inc. * | 33,816 | 535,307 |
| PetMed Express, Inc. (c) | 29,500 | 496,190 |
| Pier 1 Imports, Inc. (c) | 140,400 | 1,041,768 |
| Pool Corp. | 65,028 | 5,302,383 |
| Rent-A-Center, Inc. | 77,385 | 1,423,110 |
| Restoration Hardware Holdings, Inc. * | 49,241 | 5,076,255 |
| Select Comfort Corp. * | 75,512 | 1,600,854 |
| Shoe Carnival, Inc. | 24,850 | 558,380 |
| Security | Number
of Shares | Value
($) |
| Shutterfly, Inc. * | 56,947 | 2,375,259 |
| Sonic Automotive, Inc., Class A | 50,774 | 1,266,304 |
| Sportsman's Warehouse Holdings, Inc. * | 23,000 | 247,480 |
| Stage Stores, Inc. | 46,827 | 455,627 |
| Stein Mart, Inc. | 44,300 | 392,498 |
| Systemax, Inc. * | 14,500 | 134,415 |
| The Buckle, Inc. (c) | 41,664 | 1,476,572 |
| The Cato Corp., Class A | 42,404 | 1,601,175 |
| The Children's Place, Inc. | 29,690 | 1,593,462 |
| The Container Store Group, Inc. *(c) | 25,200 | 287,532 |
| The Finish Line, Inc., Class A | 71,619 | 1,334,262 |
| The Men's Wearhouse, Inc. | 72,769 | 2,909,305 |
| The Pep Boys - Manny, Moe & Jack * | 75,800 | 1,140,032 |
| Tile Shop Holdings, Inc. * | 41,100 | 596,361 |
| Tilly's, Inc., Class A * | 12,600 | 91,854 |
| Travelport Worldwide Ltd. | 154,462 | 2,092,960 |
| Tuesday Morning Corp. * | 65,800 | 355,978 |
| Vitamin Shoppe, Inc. * | 45,400 | 1,302,526 |
| VOXX International Corp. * | 31,300 | 161,508 |
| Wayfair, Inc., Class A *(c) | 28,698 | 1,213,065 |
| West Marine, Inc. * | 24,500 | 249,410 |
| Weyco Group, Inc. | 9,100 | 258,349 |
| Winmark Corp. | 3,000 | 302,250 |
| Zumiez, Inc. * | 30,100 | 526,148 |
| | | 112,661,969 |
| Semiconductors & Semiconductor Equipment 3.3% |
| Advanced Energy Industries, Inc. * | 59,437 | 1,680,878 |
| Advanced Micro Devices, Inc. *(c) | 974,643 | 2,066,243 |
| Alpha & Omega Semiconductor Ltd. * | 28,000 | 248,640 |
| Ambarella, Inc. *(c) | 46,100 | 2,279,184 |
| Amkor Technology, Inc. * | 152,218 | 946,796 |
| Applied Micro Circuits Corp. * | 114,365 | 741,085 |
| Axcelis Technologies, Inc. * | 188,400 | 527,520 |
| Brooks Automation, Inc. | 95,831 | 1,057,974 |
| Cabot Microelectronics Corp. * | 35,700 | 1,505,469 |
| Cascade Microtech, Inc. * | 18,700 | 286,484 |
| Cavium, Inc. * | 82,300 | 5,839,185 |
| CEVA, Inc. * | 32,336 | 755,692 |
| Cirrus Logic, Inc. * | 95,900 | 2,956,597 |
| Cohu, Inc. | 46,700 | 587,953 |
| Diodes, Inc. * | 54,281 | 1,243,035 |
| DSP Group, Inc. * | 31,400 | 317,140 |
| Entegris, Inc. * | 210,800 | 2,704,564 |
| Exar Corp. * | 58,500 | 332,865 |
| Fairchild Semiconductor International, Inc. * | 178,942 | 2,984,753 |
| FormFactor, Inc. * | 94,273 | 776,810 |
| Inphi Corp. * | 60,433 | 1,799,090 |
| Integrated Device Technology, Inc. * | 220,089 | 5,612,269 |
| Integrated Silicon Solution, Inc. | 46,000 | 1,034,080 |
| Intersil Corp., Class A | 190,700 | 2,583,985 |
| IXYS Corp. | 32,400 | 403,704 |
| Kopin Corp. * | 100,300 | 267,801 |
| Lattice Semiconductor Corp. * | 170,200 | 779,516 |
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| M/A-COM Technology Solutions Holdings, Inc. * | 36,753 | 1,240,046 |
| Mattson Technology, Inc. * | 93,954 | 219,852 |
| MaxLinear, Inc., Class A * | 73,260 | 952,380 |
| Microsemi Corp. * | 141,981 | 5,112,736 |
| MKS Instruments, Inc. | 80,189 | 2,825,860 |
| Monolithic Power Systems, Inc. | 58,400 | 3,645,328 |
| Nanometrics, Inc. * | 40,600 | 620,368 |
| NeoPhotonics Corp. * | 41,863 | 346,207 |
| NVE Corp. | 6,500 | 385,385 |
| OmniVision Technologies, Inc. * | 87,073 | 2,513,798 |
| PDF Solutions, Inc. * | 44,800 | 473,088 |
| Pericom Semiconductor Corp. | 31,900 | 556,655 |
| Photronics, Inc. * | 92,837 | 890,307 |
| PMC-Sierra, Inc. * | 269,300 | 3,210,056 |
| Power Integrations, Inc. | 45,362 | 2,295,771 |
| Rambus, Inc. * | 167,900 | 1,732,728 |
| Rudolph Technologies, Inc. * | 46,700 | 597,293 |
| Semtech Corp. * | 100,229 | 1,754,008 |
| Sigma Designs, Inc. * | 48,758 | 429,558 |
| Silicon Laboratories, Inc. * | 63,550 | 3,175,594 |
| Synaptics, Inc. * | 55,600 | 4,731,004 |
| Tessera Technologies, Inc. | 77,959 | 2,726,226 |
| Ultra Clean Holdings, Inc. * | 43,300 | 211,304 |
| Ultratech, Inc. * | 47,700 | 745,551 |
| Veeco Instruments, Inc. * | 57,339 | 1,033,249 |
| Xcerra Corp. * | 84,400 | 585,736 |
| | | 85,329,400 |
| Software & Services 9.4% |
| 6D Global Technologies, Inc. *(b)(c) | 24,294 | 53,022 |
| A10 Networks, Inc. * | 45,219 | 324,672 |
| ACI Worldwide, Inc. * | 172,052 | 4,120,645 |
| Actua Corp. * | 57,600 | 797,760 |
| Acxiom Corp. * | 117,600 | 2,601,312 |
| Alarm.com Holdings, Inc. *(c) | 8,200 | 103,730 |
| Amber Road, Inc. * | 27,400 | 110,148 |
| American Software, Inc., Class A | 45,000 | 460,350 |
| Angie's List, Inc. *(c) | 60,200 | 465,346 |
| Apigee Corp. *(c) | 7,000 | 67,550 |
| Appfolio, Inc., Class A *(c) | 6,300 | 110,313 |
| Aspen Technology, Inc. * | 128,199 | 5,306,157 |
| AVG Technologies N.V. * | 58,258 | 1,380,715 |
| Bankrate, Inc. * | 98,300 | 1,166,821 |
| Barracuda Networks, Inc. * | 11,600 | 222,488 |
| Bazaarvoice, Inc. * | 107,400 | 475,782 |
| Benefitfocus, Inc. * | 11,390 | 364,024 |
| Blackbaud, Inc. | 70,769 | 4,436,509 |
| Blackhawk Network Holdings, Inc. * | 80,202 | 3,415,001 |
| Blucora, Inc. * | 63,100 | 618,380 |
| Bottomline Technologies de, Inc. * | 63,700 | 1,763,216 |
| Box, Inc., Class A * | 20,500 | 255,840 |
| Brightcove, Inc. * | 49,900 | 309,380 |
| BroadSoft, Inc. * | 42,200 | 1,349,134 |
| CACI International, Inc., Class A * | 35,158 | 3,411,732 |
| Callidus Software, Inc. * | 86,000 | 1,493,820 |
| Carbonite, Inc. * | 26,000 | 263,120 |
| Cardtronics, Inc. * | 67,600 | 2,332,200 |
| Care.com, Inc. *(c) | 23,800 | 143,038 |
| Security | Number
of Shares | Value
($) |
| Cass Information Systems, Inc. | 17,640 | 920,102 |
| ChannelAdvisor Corp. * | 30,400 | 265,088 |
| Ciber, Inc. * | 120,800 | 431,256 |
| Cimpress N.V. *(c) | 49,500 | 3,905,550 |
| Code Rebel Corp. *(c) | 2,500 | 12,425 |
| CommVault Systems, Inc. * | 68,247 | 2,765,368 |
| comScore, Inc. * | 50,800 | 2,173,224 |
| Constant Contact, Inc. * | 46,785 | 1,221,089 |
| Convergys Corp. | 146,000 | 3,747,820 |
| Cornerstone OnDemand, Inc. * | 82,700 | 2,605,050 |
| CSG Systems International, Inc. | 51,100 | 1,712,872 |
| Cvent, Inc. * | 36,000 | 1,137,960 |
| Datalink Corp. * | 27,300 | 199,290 |
| Demandware, Inc. * | 50,610 | 2,869,587 |
| DHI Group, Inc. * | 73,100 | 661,555 |
| Digimarc Corp. *(c) | 10,300 | 231,338 |
| Digital Turbine, Inc. *(c) | 65,944 | 109,467 |
| EarthLink Holdings Corp. | 147,381 | 1,260,108 |
| Ebix, Inc. (c) | 38,300 | 1,062,059 |
| Ellie Mae, Inc. * | 44,100 | 3,218,418 |
| Endurance International Group Holdings, Inc. * | 82,802 | 1,103,751 |
| EnerNOC, Inc. * | 42,000 | 329,280 |
| Envestnet, Inc. * | 54,700 | 1,633,342 |
| EPAM Systems, Inc. * | 72,383 | 5,598,825 |
| Epiq Systems, Inc. | 48,100 | 663,780 |
| Euronet Worldwide, Inc. * | 76,982 | 6,177,036 |
| Everi Holdings, Inc. * | 103,300 | 483,444 |
| EVERTEC, Inc. | 96,400 | 1,758,336 |
| Everyday Health, Inc. * | 26,939 | 253,227 |
| ExlService Holdings, Inc. * | 50,592 | 2,239,202 |
| Fair Isaac Corp. | 46,041 | 4,252,807 |
| Five9, Inc. * | 33,000 | 142,890 |
| Fleetmatics Group plc * | 57,800 | 3,217,148 |
| Forrester Research, Inc. | 16,017 | 516,869 |
| Gigamon, Inc. * | 39,600 | 1,038,708 |
| Globant S.A. *(c) | 21,151 | 731,190 |
| Glu Mobile, Inc. * | 170,358 | 701,875 |
| Gogo, Inc. *(c) | 82,000 | 1,158,660 |
| GrubHub, Inc. *(c) | 112,476 | 2,697,175 |
| GTT Communications, Inc. * | 32,943 | 616,693 |
| Guidance Software, Inc. * | 31,700 | 178,788 |
| Guidewire Software, Inc. * | 103,927 | 6,051,669 |
| Heartland Payment Systems, Inc. | 53,800 | 3,981,200 |
| Hortonworks, Inc. * | 12,500 | 243,250 |
| HubSpot, Inc. * | 29,889 | 1,550,641 |
| Imperva, Inc. * | 39,742 | 2,806,580 |
| Infoblox, Inc. * | 86,300 | 1,407,553 |
| Interactive Intelligence Group, Inc. * | 23,473 | 759,117 |
| Internap Corp. * | 96,000 | 648,960 |
| Intralinks Holdings, Inc. * | 61,600 | 539,000 |
| j2 Global, Inc. | 71,228 | 5,523,731 |
| Jive Software, Inc. * | 82,300 | 400,801 |
| Limelight Networks, Inc. * | 90,900 | 185,436 |
| Lionbridge Technologies, Inc. * | 99,900 | 538,461 |
| Liquidity Services, Inc. * | 35,400 | 289,926 |
| LivePerson, Inc. * | 78,700 | 613,860 |
| LogMeIn, Inc. * | 35,600 | 2,398,016 |
| Luxoft Holding, Inc. * | 26,670 | 1,777,289 |
| Manhattan Associates, Inc. * | 111,088 | 8,092,761 |
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| ManTech International Corp., Class A | 34,500 | 997,050 |
| Marchex, Inc., Class B | 48,200 | 208,224 |
| Marin Software, Inc. * | 38,600 | 138,188 |
| Marketo, Inc. * | 53,589 | 1,577,124 |
| MAXIMUS, Inc. | 98,817 | 6,739,319 |
| MaxPoint Interactive, Inc. * | 7,439 | 35,856 |
| Mentor Graphics Corp. | 149,167 | 4,057,342 |
| MicroStrategy, Inc., Class A * | 14,162 | 2,436,855 |
| MINDBODY, Inc., Class A *(c) | 9,300 | 145,452 |
| MobileIron, Inc. *(c) | 76,236 | 294,271 |
| Model N, Inc. * | 28,300 | 285,830 |
| ModusLink Global Solutions, Inc. * | 58,700 | 169,643 |
| MoneyGram International, Inc. * | 42,800 | 432,708 |
| Monotype Imaging Holdings, Inc. | 58,600 | 1,602,124 |
| Monster Worldwide, Inc. * | 133,500 | 837,045 |
| NeuStar, Inc., Class A *(c) | 83,179 | 2,261,637 |
| New Relic, Inc. * | 10,300 | 408,395 |
| NIC, Inc. | 96,800 | 1,836,296 |
| OPOWER, Inc. *(c) | 34,311 | 331,101 |
| Park City Group, Inc. *(c) | 14,000 | 163,100 |
| Paycom Software, Inc. * | 48,107 | 1,828,547 |
| Paylocity Holding Corp. * | 21,145 | 709,838 |
| Pegasystems, Inc. | 53,200 | 1,483,748 |
| Perficient, Inc. * | 49,897 | 834,278 |
| PFSweb, Inc. * | 18,923 | 303,146 |
| Progress Software Corp. * | 74,620 | 1,811,774 |
| Proofpoint, Inc. * | 59,700 | 4,205,268 |
| PROS Holdings, Inc. * | 34,000 | 816,680 |
| Q2 Holdings, Inc. * | 31,493 | 776,302 |
| QAD, Inc., Class A | 14,100 | 360,114 |
| Qlik Technologies, Inc. * | 136,621 | 4,285,801 |
| Qualys, Inc. * | 35,526 | 1,254,778 |
| QuinStreet, Inc. * | 44,900 | 249,195 |
| Quotient Technology, Inc. *(c) | 99,832 | 553,069 |
| Rapid7, Inc. *(c) | 9,900 | 203,544 |
| RealNetworks, Inc. * | 52,657 | 204,309 |
| RealPage, Inc. * | 76,600 | 1,294,540 |
| Reis, Inc. | 11,900 | 289,646 |
| RetailMeNot, Inc. * | 53,000 | 465,870 |
| RingCentral, Inc., Class A * | 82,168 | 1,520,108 |
| Rocket Fuel, Inc. *(c) | 26,900 | 123,740 |
| Rovi Corp. * | 135,536 | 1,240,154 |
| Sapiens International Corp. N.V. | 43,366 | 512,153 |
| Science Applications International Corp. | 67,484 | 3,094,816 |
| SciQuest, Inc. * | 48,200 | 571,652 |
| Seachange International, Inc. * | 46,700 | 302,149 |
| ServiceSource International, Inc. * | 105,500 | 450,485 |
| Shutterstock, Inc. *(c) | 32,660 | 930,157 |
| Silver Spring Networks, Inc. * | 51,400 | 673,854 |
| SPS Commerce, Inc. * | 25,500 | 1,831,410 |
| Stamps.com, Inc. * | 21,700 | 1,640,737 |
| Sykes Enterprises, Inc. * | 60,293 | 1,748,497 |
| Synchronoss Technologies, Inc. * | 58,562 | 2,060,211 |
| Syntel, Inc. * | 45,800 | 2,154,432 |
| Take-Two Interactive Software, Inc. * | 125,312 | 4,160,358 |
| Tangoe, Inc. * | 56,800 | 470,304 |
| TechTarget, Inc. * | 31,700 | 295,761 |
| TeleCommunication Systems, Inc., Class A * | 67,800 | 277,302 |
| Security | Number
of Shares | Value
($) |
| Telenav, Inc. * | 40,000 | 288,000 |
| TeleTech Holdings, Inc. | 27,200 | 791,520 |
| Textura, Corp. *(c) | 27,400 | 804,464 |
| The Hackett Group, Inc. | 40,800 | 607,104 |
| The Rubicon Project, Inc. * | 42,361 | 642,193 |
| TiVo, Inc. * | 150,203 | 1,363,843 |
| Travelzoo, Inc. * | 9,800 | 87,612 |
| TrueCar, Inc. *(c) | 69,159 | 424,636 |
| TubeMogul, Inc. *(c) | 29,288 | 349,992 |
| Tyler Technologies, Inc. * | 49,952 | 8,509,823 |
| Unisys Corp. * | 77,550 | 1,039,170 |
| United Online, Inc. * | 18,164 | 212,156 |
| Varonis Systems, Inc. * | 15,900 | 253,923 |
| VASCO Data Security International, Inc. *(c) | 45,900 | 872,559 |
| Verint Systems, Inc. * | 92,360 | 4,394,489 |
| VirnetX Holding Corp. *(c) | 65,700 | 249,660 |
| Virtusa Corp. * | 44,900 | 2,578,607 |
| Web.com Group, Inc. * | 66,800 | 1,567,796 |
| WebMD Health Corp. * | 58,570 | 2,381,456 |
| Wix.com Ltd. * | 26,100 | 577,332 |
| Workiva, Inc. *(c) | 14,300 | 237,094 |
| Xactly Corp. * | 8,500 | 79,050 |
| XO Group, Inc. * | 39,800 | 602,174 |
| Xoom Corp. * | 45,400 | 1,132,276 |
| Xura, Inc. * | 32,070 | 829,972 |
| Yodlee, Inc. * | 25,168 | 422,319 |
| Zendesk, Inc. * | 80,794 | 1,625,575 |
| Zix Corp. * | 88,900 | 460,502 |
| | | 246,064,692 |
| Technology Hardware & Equipment 4.9% |
| ADTRAN, Inc. | 70,800 | 1,099,524 |
| Aerohive Networks, Inc. *(c) | 31,800 | 214,332 |
| Agilysys, Inc. * | 24,000 | 272,880 |
| Alliance Fiber Optic Products, Inc. | 24,500 | 333,445 |
| Anixter International, Inc. * | 42,024 | 2,882,006 |
| Applied Optoelectronics, Inc. * | 21,700 | 447,454 |
| Avid Technology, Inc. * | 44,342 | 374,690 |
| AVX Corp. | 72,454 | 978,129 |
| Badger Meter, Inc. | 21,940 | 1,329,125 |
| Bel Fuse, Inc., Class B | 14,100 | 254,223 |
| Belden, Inc. | 64,008 | 4,098,432 |
| Benchmark Electronics, Inc. * | 81,294 | 1,607,995 |
| Black Box Corp. | 24,092 | 294,163 |
| CalAmp Corp. * | 53,500 | 1,014,360 |
| Calix, Inc. * | 58,800 | 411,012 |
| Checkpoint Systems, Inc. | 61,644 | 461,097 |
| Ciena Corp. * | 187,974 | 4,537,692 |
| Clearfield, Inc. *(c) | 16,700 | 234,301 |
| Coherent, Inc. * | 34,489 | 1,869,304 |
| Comtech Telecommunications Corp. | 25,300 | 611,248 |
| Control4 Corp. *(c) | 31,800 | 207,972 |
| Cray, Inc. * | 59,800 | 1,771,874 |
| CTS Corp. | 52,200 | 948,996 |
| Daktronics, Inc. | 59,300 | 575,210 |
| Diebold, Inc. | 97,533 | 3,596,042 |
| Digi International, Inc. * | 33,900 | 437,310 |
| DTS, Inc. * | 24,942 | 742,274 |
| Eastman Kodak Co. *(c) | 25,900 | 324,268 |
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Electro Rent Corp. | 25,200 | 261,576 |
| Electronics for Imaging, Inc. * | 69,188 | 3,213,091 |
| EMCORE Corp. * | 34,290 | 234,544 |
| ePlus, Inc. * | 9,200 | 776,664 |
| Extreme Networks, Inc. * | 135,200 | 485,368 |
| Fabrinet * | 51,500 | 1,116,005 |
| FARO Technologies, Inc. * | 25,200 | 851,508 |
| FEI Co. | 62,514 | 4,512,886 |
| Finisar Corp. * | 157,500 | 1,790,775 |
| GSI Group, Inc. * | 48,200 | 651,182 |
| Harmonic, Inc. * | 133,500 | 768,960 |
| II-VI, Inc. * | 76,900 | 1,393,428 |
| Imation Corp. * | 38,856 | 78,489 |
| Immersion Corp. * | 46,379 | 601,999 |
| Infinera Corp. * | 202,804 | 4,007,407 |
| Insight Enterprises, Inc. * | 60,100 | 1,526,540 |
| InterDigital, Inc. | 54,600 | 2,770,404 |
| InvenSense, Inc. *(c) | 113,500 | 1,352,920 |
| Itron, Inc. * | 57,869 | 2,125,528 |
| Ixia * | 90,364 | 1,302,145 |
| Kimball Electronics, Inc. * | 38,700 | 440,793 |
| Knowles Corp. *(c) | 133,397 | 2,222,394 |
| KVH Industries, Inc. * | 30,800 | 301,840 |
| Littelfuse, Inc. | 33,200 | 3,317,676 |
| Mercury Systems, Inc. * | 54,201 | 930,089 |
| Mesa Laboratories, Inc. | 4,800 | 536,880 |
| Methode Electronics, Inc. | 56,300 | 1,876,479 |
| MTS Systems Corp. | 21,775 | 1,437,803 |
| Multi-Fineline Electronix, Inc. * | 12,100 | 224,818 |
| NETGEAR, Inc. * | 45,500 | 1,883,700 |
| NetScout Systems, Inc. * | 136,500 | 4,896,255 |
| Newport Corp. * | 57,700 | 871,847 |
| Nimble Storage, Inc. * | 77,777 | 1,757,760 |
| Novatel Wireless, Inc. *(c) | 52,496 | 112,866 |
| Oclaro, Inc. *(c) | 137,300 | 402,289 |
| OSI Systems, Inc. * | 29,900 | 2,576,782 |
| Park Electrochemical Corp. | 32,946 | 538,338 |
| PC Connection, Inc. | 17,700 | 411,348 |
| Plantronics, Inc. | 52,230 | 2,800,573 |
| Plexus Corp. * | 50,262 | 1,740,070 |
| Polycom, Inc. * | 202,700 | 2,793,206 |
| QLogic Corp. * | 127,468 | 1,580,603 |
| Quantum Corp. * | 324,083 | 272,230 |
| RealD, Inc. * | 60,400 | 614,268 |
| Rofin-Sinar Technologies, Inc. * | 40,036 | 1,159,443 |
| Rogers Corp. * | 27,867 | 1,296,373 |
| Ruckus Wireless, Inc. * | 108,800 | 1,227,264 |
| Sanmina Corp. * | 126,100 | 2,606,487 |
| ScanSource, Inc. * | 43,405 | 1,497,907 |
| ShoreTel, Inc. * | 105,257 | 993,626 |
| Silicon Graphics International Corp. * | 53,400 | 233,358 |
| Sonus Networks, Inc. * | 72,111 | 476,654 |
| Stratasys Ltd. *(c) | 77,206 | 1,968,753 |
| Super Micro Computer, Inc. * | 55,826 | 1,574,851 |
| SYNNEX Corp. | 43,400 | 3,838,296 |
| Tech Data Corp. * | 54,767 | 3,986,490 |
| TTM Technologies, Inc. * | 91,192 | 665,702 |
| Ubiquiti Networks, Inc. *(c) | 44,472 | 1,297,693 |
| Universal Display Corp. * | 61,652 | 2,115,280 |
| ViaSat, Inc. * | 63,319 | 4,176,521 |
| Violin Memory, Inc. *(c) | 117,600 | 189,336 |
| Security | Number
of Shares | Value
($) |
| Vishay Intertechnology, Inc. | 205,828 | 2,181,777 |
| Vishay Precision Group, Inc. * | 16,500 | 193,545 |
| | | 127,971,040 |
| Telecommunication Services 0.9% |
| 8x8, Inc. * | 127,000 | 1,353,820 |
| Atlantic Tele-Network, Inc. | 15,200 | 1,161,584 |
| Boingo Wireless, Inc. * | 51,500 | 398,095 |
| Cincinnati Bell, Inc. * | 303,745 | 1,145,119 |
| Cogent Communications Holdings, Inc. | 71,600 | 2,199,552 |
| Consolidated Communications Holdings, Inc. | 76,274 | 1,685,655 |
| FairPoint Communications, Inc. * | 28,900 | 463,556 |
| General Communication, Inc., Class A * | 50,300 | 1,024,359 |
| Globalstar, Inc. *(c) | 745,589 | 1,342,060 |
| Hawaiian Telcom Holdco, Inc. * | 16,213 | 369,981 |
| IDT Corp., Class B | 31,300 | 405,335 |
| inContact, Inc. * | 101,000 | 898,900 |
| Inteliquent, Inc. | 54,500 | 1,129,240 |
| Intelsat S.A. * | 40,100 | 265,462 |
| Iridium Communications, Inc. *(c) | 116,700 | 958,107 |
| Lumos Networks Corp. | 37,200 | 482,112 |
| NTELOS Holdings Corp. * | 26,050 | 239,400 |
| ORBCOMM, Inc. * | 82,700 | 491,238 |
| Pacific DataVision, Inc. *(c) | 17,805 | 498,896 |
| Premiere Global Services, Inc. * | 70,000 | 957,600 |
| Shenandoah Telecommunications Co. | 34,800 | 1,628,292 |
| Spok Holdings, Inc. | 36,600 | 659,898 |
| Straight Path Communications, Inc., Class B *(c) | 13,015 | 403,465 |
| Vonage Holdings Corp. * | 285,200 | 1,731,164 |
| Windstream Holdings, Inc. (c) | 141,164 | 918,978 |
| | | 22,811,868 |
| Transportation 1.5% |
| Air Transport Services Group, Inc. * | 72,100 | 705,859 |
| Allegiant Travel Co. | 20,281 | 4,004,483 |
| ArcBest Corp. | 40,572 | 1,050,815 |
| Atlas Air Worldwide Holdings, Inc. * | 37,400 | 1,542,376 |
| Celadon Group, Inc. | 39,100 | 566,168 |
| Covenant Transport Group, Inc., Class A * | 15,994 | 308,684 |
| Eagle Bulk Shipping, Inc. * | 29,680 | 181,048 |
| Echo Global Logistics, Inc. * | 45,275 | 1,077,092 |
| Forward Air Corp. | 45,682 | 2,072,136 |
| Golden Ocean Group Ltd. (c) | 112,200 | 221,034 |
| Hawaiian Holdings, Inc. * | 71,700 | 2,487,990 |
| Heartland Express, Inc. | 74,000 | 1,393,420 |
| Hub Group, Inc., Class A * | 54,498 | 2,178,830 |
| Knight Transportation, Inc. | 96,600 | 2,455,572 |
| Marten Transport Ltd. | 42,465 | 696,001 |
| Matson, Inc. | 64,831 | 2,971,205 |
| Navios Maritime Holdings, Inc. | 116,400 | 245,604 |
| P.A.M. Transportation Services, Inc. * | 4,000 | 142,840 |
| Park-Ohio Holdings Corp. | 13,600 | 469,200 |
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Radiant Logistics, Inc. * | 36,754 | 145,913 |
| Republic Airways Holdings, Inc. * | 74,100 | 426,816 |
| Roadrunner Transportation Systems, Inc. * | 40,900 | 435,176 |
| Safe Bulkers, Inc. | 57,100 | 175,868 |
| Saia, Inc. * | 37,900 | 894,819 |
| Scorpio Bulkers, Inc. * | 486,900 | 681,660 |
| SkyWest, Inc. | 73,612 | 1,401,572 |
| Swift Transportation Co. * | 130,000 | 2,031,900 |
| Ultrapetrol Bahamas Ltd. * | 33,800 | 15,213 |
| Universal Truckload Services, Inc. (c) | 11,747 | 187,717 |
| USA Truck, Inc. * | 14,200 | 258,156 |
| UTi Worldwide, Inc. * | 137,300 | 978,949 |
| Virgin America, Inc. * | 38,288 | 1,363,436 |
| Werner Enterprises, Inc. | 66,349 | 1,755,595 |
| Wesco Aircraft Holdings, Inc. * | 88,900 | 1,107,694 |
| XPO Logistics, Inc. *(c) | 105,402 | 2,925,960 |
| YRC Worldwide, Inc. * | 47,200 | 861,872 |
| | | 40,418,673 |
| Utilities 3.8% |
| Abengoa Yield plc (c) | 73,784 | 1,367,217 |
| ALLETE, Inc. | 72,099 | 3,620,091 |
| American States Water Co. | 55,800 | 2,273,850 |
| Artesian Resources Corp., Class A | 10,500 | 255,780 |
| Atlantic Power Corp. (c) | 217,000 | 442,680 |
| Avista Corp. | 94,430 | 3,196,455 |
| Black Hills Corp. | 65,398 | 2,993,920 |
| California Water Service Group | 71,574 | 1,600,395 |
| Chesapeake Utilities Corp. | 23,400 | 1,221,714 |
| Cleco Corp. | 89,400 | 4,738,200 |
| Connecticut Water Service, Inc. | 15,000 | 552,150 |
| Consolidated Water Co., Ltd. | 20,376 | 225,562 |
| Dynegy, Inc. * | 192,800 | 3,746,104 |
| El Paso Electric Co. | 60,303 | 2,331,917 |
| Genie Energy Ltd., Class B * | 16,911 | 191,771 |
| IDACORP, Inc. | 76,243 | 5,096,845 |
| MGE Energy, Inc. | 50,940 | 2,102,294 |
| Middlesex Water Co. | 25,485 | 656,748 |
| New Jersey Resources Corp. | 126,700 | 4,013,856 |
| Northwest Natural Gas Co. | 39,895 | 1,905,784 |
| NorthWestern Corp. | 70,069 | 3,797,039 |
| NRG Yield, Inc., Class A | 59,933 | 822,880 |
| NRG Yield, Inc., Class C | 91,524 | 1,321,607 |
| ONE Gas, Inc. | 79,000 | 3,858,360 |
| Ormat Technologies, Inc. | 54,873 | 2,069,810 |
| Otter Tail Corp. | 54,253 | 1,488,702 |
| Pattern Energy Group, Inc. (c) | 80,800 | 1,889,912 |
| Piedmont Natural Gas Co., Inc. | 117,906 | 6,757,193 |
| PNM Resources, Inc. | 118,200 | 3,323,784 |
| Portland General Electric Co. | 133,008 | 4,931,937 |
| SJW Corp. | 24,600 | 780,558 |
| South Jersey Industries, Inc. | 101,320 | 2,685,993 |
| Southwest Gas Corp. | 70,696 | 4,344,976 |
| Spark Energy, Inc., Class A | 6,900 | 117,024 |
| Talen Energy Corp. * | 127,547 | 1,107,108 |
| TerraForm Global, Inc., Class A * | 56,000 | 427,280 |
| The Empire District Electric Co. | 62,100 | 1,400,355 |
| The Laclede Group, Inc. | 65,871 | 3,858,064 |
| The York Water Co. | 19,200 | 445,056 |
| Security | Number
of Shares | Value
($) |
| UIL Holdings Corp. | 84,010 | 4,283,670 |
| Unitil Corp. | 22,100 | 783,887 |
| Vivint Solar, Inc. *(c) | 27,000 | 319,410 |
| WGL Holdings, Inc. | 74,033 | 4,607,074 |
| | | 97,955,012 |
| Total Common Stock |
| (Cost $1,996,193,500) | | 2,590,361,425 |
|
| Rights 0.0% of net assets |
| Automobiles & Components 0.0% |
| Furiex Pharmaceuticals CVR *(a)(b) | 11,000 | 107,470 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% |
| Omthera Pharmaceutical CVR *(a)(b) | 8,400 | — |
| Telecommunication Services 0.0% |
| Leap Wireless CVR *(a)(b) | 84,700 | 213,444 |
| Total Rights |
| (Cost $320,914) | | 320,914 |
|
| Warrants 0.0% of net assets |
| Energy 0.0% |
| Magnum Hunter Resources Corp. *(a)(b) | 24,500 | — |
| Total Warrants |
| (Cost $—) | | — |
|
| Other Investment Company 6.4% of net assets |
| Securities Lending Collateral 6.4% |
| Wells Fargo Advantage Government Money Market Fund, Institutional Class 0.01% (d) | 166,858,920 | 166,858,920 |
| Total Other Investment Company |
| (Cost $166,858,920) | | 166,858,920 |
Security
Rate, Maturity Date | Face
Amount
($) | Value
($) |
| Short-Term Investment 0.4% of net assets |
| Time Deposit 0.4% |
| Sumitomo Mitsui Banking Corp. |
| 0.03%, 11/02/15 | 10,766,144 | 10,766,144 |
| Total Short-Term Investment |
| (Cost $10,766,144) | | 10,766,144 |
End of Investments.
Schwab Small-Cap Index Fund
Portfolio Holdings continued
At 10/31/15, tax basis cost of the fund's investments was $2,184,722,405 and the unrealized appreciation and depreciation were $844,629,291 and ($261,044,293), respectively, with a net unrealized appreciation of $583,584,998.
| * | Non-income producing security. |
| (a) | Illiquid security. At the period end, the value of these amounted to $320,914 or 0.0% of net assets. |
| (b) | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| (c) | All or a portion of this security is on loan. Securities on loan were valued at $161,902,253. |
| (d) | The rate shown is the 7-day yield. |
| | |
| CVR — | Contingent Value Rights |
| REIT — | Real Estate Investment Trust |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| Russell 2000 Index, mini, Long, expires 12/18/15 | 106 | 12,277,980 | 45,208 |
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 99.2% | Common Stock | 2,804,713,777 | 4,440,133,759 |
| 0.0% | Rights | 32,982 | 32,760 |
| 0.0% | Warrants | — | — |
| 0.8% | Other Investment Company | 36,468,372 | 36,468,372 |
| 1.5% | Short-Term Investments | 67,205,632 | 67,205,632 |
| 101.5% | Total Investments | 2,908,420,763 | 4,543,840,523 |
| (1.5%) | Other Assets and Liabilities, Net | | (66,982,719) |
| 100.0% | Net Assets | | 4,476,857,804 |
| Security | Number
of Shares | Value
($) |
| Common Stock 99.2% of net assets |
| Automobiles & Components 1.2% |
| American Axle & Manufacturing Holdings, Inc. * | 13,400 | 296,944 |
| Autoliv, Inc. (c) | 18,600 | 2,255,064 |
| BorgWarner, Inc. | 44,800 | 1,918,336 |
| Cooper Tire & Rubber Co. | 8,900 | 371,931 |
| Cooper-Standard Holding, Inc. * | 2,500 | 162,600 |
| Dana Holding Corp. | 35,200 | 591,360 |
| Delphi Automotive plc | 55,685 | 4,632,435 |
| Dorman Products, Inc. * | 5,000 | 233,400 |
| Drew Industries, Inc. | 5,400 | 323,082 |
| Federal-Mogul Holdings Corp. * | 22,200 | 172,050 |
| Ford Motor Co. | 751,740 | 11,133,269 |
| General Motors Co. | 283,885 | 9,910,425 |
| Gentex Corp. | 59,600 | 976,844 |
| Gentherm, Inc. * | 5,307 | 260,892 |
| Harley-Davidson, Inc. | 42,093 | 2,081,499 |
| Horizon Global Corp. * | 3,717 | 32,673 |
| Johnson Controls, Inc. | 132,500 | 5,986,350 |
| Lear Corp. | 14,000 | 1,750,840 |
| LookSmart Group, Inc. *(b) | 160 | — |
| Modine Manufacturing Co. * | 12,100 | 101,277 |
| Pyxis Tankers, Inc. * | 25 | 108 |
| Remy International, Inc. | 2,946 | 86,878 |
| Standard Motor Products, Inc. | 7,500 | 331,875 |
| Stoneridge, Inc. * | 13,100 | 166,239 |
| Strattec Security Corp. | 1,500 | 89,730 |
| Tenneco, Inc. * | 10,080 | 570,427 |
| Tesla Motors, Inc. * | 19,170 | 3,966,848 |
| Security | Number
of Shares | Value
($) |
| The Goodyear Tire & Rubber Co. | 53,637 | 1,761,439 |
| Thor Industries, Inc. | 7,500 | 405,600 |
| Tower International, Inc. * | 5,564 | 152,843 |
| Visteon Corp. * | 8,000 | 872,560 |
| Winnebago Industries, Inc. | 7,400 | 155,326 |
| | | 51,751,144 |
| Banks 6.0% |
| 1st Source Corp. | 6,080 | 193,101 |
| Ameris Bancorp | 6,348 | 199,962 |
| Arrow Financial Corp. | 3,526 | 97,318 |
| Associated Banc-Corp. | 25,000 | 483,500 |
| Astoria Financial Corp. | 19,300 | 308,028 |
| BancFirst Corp. | 2,300 | 141,749 |
| BancorpSouth, Inc. | 16,112 | 401,672 |
| Bank Mutual Corp. | 18,268 | 132,260 |
| Bank of America Corp. | 2,052,101 | 34,434,255 |
| Bank of Hawaii Corp. | 10,000 | 654,800 |
| Bank of the Ozarks, Inc. | 22,800 | 1,140,456 |
| BankUnited, Inc. | 26,896 | 999,993 |
| Banner Corp. | 5,571 | 273,369 |
| BB&T Corp. | 156,332 | 5,807,734 |
| BBCN Bancorp, Inc. | 19,100 | 320,689 |
| Beneficial Bancorp, Inc. * | 9,899 | 137,299 |
| Berkshire Hills Bancorp, Inc. | 8,000 | 228,800 |
| BNC Bancorp | 11,012 | 247,219 |
| BofI Holding, Inc. * | 2,100 | 168,021 |
| BOK Financial Corp. | 3,740 | 251,253 |
| Boston Private Financial Holdings, Inc. | 20,729 | 237,554 |
| Brookline Bancorp, Inc. | 11,705 | 132,852 |
| Bryn Mawr Bank Corp. | 3,400 | 99,042 |
| Camden National Corp. | 2,500 | 97,725 |
| Capital Bank Financial Corp., Class A | 10,300 | 332,690 |
| Capital City Bank Group, Inc. | 6,875 | 106,150 |
| Capitol Federal Financial, Inc. | 21,963 | 285,080 |
| Cardinal Financial Corp. | 3,700 | 84,101 |
| Cathay General Bancorp | 16,006 | 500,988 |
| CenterState Banks, Inc. | 17,590 | 256,462 |
| Central Pacific Financial Corp. | 10,269 | 229,615 |
| Century Bancorp, Inc., Class A | 800 | 35,560 |
| Chemical Financial Corp. | 8,683 | 294,614 |
| CIT Group, Inc. | 38,200 | 1,642,600 |
| Citigroup, Inc. | 591,989 | 31,476,055 |
| Citizens Financial Group, Inc. | 85,700 | 2,082,510 |
| City Holding Co. | 4,800 | 229,584 |
| Columbia Banking System, Inc. | 9,951 | 331,567 |
| Comerica, Inc. | 39,159 | 1,699,501 |
| Commerce Bancshares, Inc. | 18,579 | 846,273 |
| Community Bank System, Inc. | 10,700 | 436,132 |
| Community Trust Bancorp, Inc. | 2,735 | 94,275 |
| Cullen/Frost Bankers, Inc. | 12,600 | 862,344 |
| CVB Financial Corp. | 19,411 | 338,722 |
| Dime Community Bancshares, Inc. | 6,875 | 119,281 |
| Eagle Bancorp, Inc. * | 5,760 | 274,176 |
| East West Bancorp, Inc. | 29,100 | 1,175,349 |
| Essent Group Ltd. * | 14,900 | 359,090 |
| EverBank Financial Corp. | 15,400 | 265,804 |
| F.N.B. Corp. | 31,061 | 418,392 |
| Fifth Third Bancorp | 166,314 | 3,168,282 |
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| First BanCorp (Puerto Rico) * | 56,579 | 214,434 |
| First Busey Corp. | 6,733 | 140,518 |
| First Citizens BancShares, Inc., Class A | 1,900 | 486,666 |
| First Commonwealth Financial Corp. | 24,904 | 228,868 |
| First Financial Bancorp | 10,339 | 199,336 |
| First Financial Bankshares, Inc. (c) | 18,200 | 605,332 |
| First Financial Corp. | 2,600 | 89,102 |
| First Horizon National Corp. | 45,216 | 641,163 |
| First Interstate BancSystem, Inc., Class A | 8,900 | 252,404 |
| First Merchants Corp. | 9,041 | 237,145 |
| First Midwest Bancorp, Inc. | 15,825 | 282,002 |
| First Niagara Financial Group, Inc. | 58,465 | 605,113 |
| First Republic Bank | 28,724 | 1,875,964 |
| First United Corp. * | 2,200 | 19,008 |
| FirstMerit Corp. | 27,289 | 512,760 |
| Flagstar Bancorp, Inc. * | 8,060 | 179,254 |
| Flushing Financial Corp. | 6,800 | 143,072 |
| Fulton Financial Corp. | 28,262 | 379,276 |
| Glacier Bancorp, Inc. | 10,497 | 287,198 |
| Great Southern Bancorp, Inc. | 3,400 | 164,322 |
| Great Western Bancorp, Inc. | 13,000 | 367,380 |
| Hancock Holding Co. | 12,344 | 340,694 |
| Hanmi Financial Corp. | 7,000 | 178,500 |
| Heartland Financial USA, Inc. | 2,500 | 92,100 |
| Heritage Financial Corp. | 6,135 | 113,007 |
| Hilltop Holdings, Inc. * | 14,975 | 314,026 |
| Home BancShares, Inc. | 11,500 | 493,580 |
| Hudson City Bancorp, Inc. | 106,731 | 1,080,118 |
| Huntington Bancshares, Inc. | 177,099 | 1,942,776 |
| IBERIABANK Corp. | 6,075 | 368,327 |
| Independent Bank Corp., Massachusetts | 5,700 | 266,418 |
| Independent Bank Corp., Michigan | 431 | 6,241 |
| International Bancshares Corp. | 13,484 | 363,394 |
| Investors Bancorp, Inc. | 58,997 | 738,052 |
| JPMorgan Chase & Co. | 727,563 | 46,745,923 |
| Kearny Financial Corp. | 12,423 | 148,455 |
| KeyCorp | 192,190 | 2,387,000 |
| Lakeland Financial Corp. | 3,700 | 166,241 |
| LegacyTexas Financial Group, Inc. | 8,700 | 249,690 |
| LendingTree, Inc. * | 2,444 | 296,604 |
| M&T Bank Corp. | 26,666 | 3,195,920 |
| MainSource Financial Group, Inc. | 5,535 | 119,777 |
| MB Financial, Inc. | 13,857 | 446,750 |
| Merchants Bancshares, Inc. | 3,650 | 115,048 |
| MGIC Investment Corp. * | 62,600 | 588,440 |
| MutualFirst Financial, Inc. | 2,000 | 46,840 |
| National Bank Holdings Corp., Class A | 12,800 | 282,368 |
| National Penn Bancshares, Inc. | 32,675 | 393,407 |
| Nationstar Mortgage Holdings, Inc. * | 10,200 | 135,354 |
| NBT Bancorp, Inc. | 11,500 | 323,265 |
| New York Community Bancorp, Inc. | 94,285 | 1,557,588 |
| Northfield Bancorp, Inc. | 15,765 | 241,520 |
| Northrim BanCorp, Inc. | 4,281 | 118,241 |
| Northwest Bancshares, Inc. | 19,350 | 260,451 |
| OceanFirst Financial Corp. | 7,150 | 131,989 |
| Ocwen Financial Corp. *(c) | 18,620 | 130,154 |
| Security | Number
of Shares | Value
($) |
| OFG Bancorp | 8,163 | 75,181 |
| Old National Bancorp | 16,800 | 235,200 |
| Oritani Financial Corp. | 6,000 | 95,520 |
| PacWest Bancorp | 19,833 | 893,278 |
| Park National Corp. | 4,845 | 439,538 |
| People's United Financial, Inc. | 79,087 | 1,261,438 |
| Peoples Financial Corp. * | 3,000 | 27,210 |
| PHH Corp. * | 7,186 | 105,634 |
| Pinnacle Financial Partners, Inc. | 6,475 | 340,715 |
| Popular, Inc. | 19,720 | 583,120 |
| Premier Financial Bancorp, Inc. | 2,645 | 38,961 |
| PrivateBancorp, Inc. | 13,000 | 543,790 |
| Prosperity Bancshares, Inc. | 11,300 | 580,594 |
| Provident Financial Holdings, Inc. | 4,350 | 74,559 |
| Provident Financial Services, Inc. | 14,017 | 284,825 |
| Radian Group, Inc. | 34,300 | 496,321 |
| Regions Financial Corp. | 273,873 | 2,560,713 |
| Renasant Corp. | 8,910 | 308,553 |
| Republic Bancorp, Inc., Class A | 6,521 | 165,829 |
| S&T Bancorp, Inc. | 4,400 | 140,272 |
| Sandy Spring Bancorp, Inc. | 5,900 | 162,250 |
| Seacoast Banking Corp of Florida * | 3,936 | 60,929 |
| Shore Bancshares, Inc. | 1,250 | 12,388 |
| Signature Bank * | 11,500 | 1,712,580 |
| Simmons First National Corp., Class A | 4,000 | 206,160 |
| South State Corp. | 5,584 | 432,760 |
| Southside Bancshares, Inc. | 4,978 | 133,908 |
| Southwest Bancorp, Inc. | 7,800 | 131,898 |
| State Bank Financial Corp. | 6,200 | 132,680 |
| Sterling Bancorp | 19,185 | 295,257 |
| Stock Yards Bancorp, Inc. | 3,670 | 138,286 |
| Suffolk Bancorp | 4,600 | 137,494 |
| Sun Bancorp, Inc. * | 3,863 | 77,299 |
| SunTrust Banks, Inc. | 106,857 | 4,436,703 |
| SVB Financial Group * | 11,800 | 1,440,426 |
| Synovus Financial Corp. | 28,042 | 886,968 |
| TCF Financial Corp. | 32,100 | 494,019 |
| Texas Capital Bancshares, Inc. * | 7,800 | 430,560 |
| TFS Financial Corp. | 19,500 | 342,420 |
| The First of Long Island Corp. | 6,000 | 166,620 |
| The PNC Financial Services Group, Inc. | 102,842 | 9,282,519 |
| Timberland Bancorp, Inc. | 2,000 | 24,260 |
| Tompkins Financial Corp. | 4,024 | 218,423 |
| Towne Bank | 21,600 | 463,536 |
| TriCo Bancshares | 5,682 | 149,778 |
| TrustCo Bank Corp. | 20,657 | 128,693 |
| Trustmark Corp. | 14,762 | 354,731 |
| U.S. Bancorp | 325,537 | 13,731,151 |
| UMB Financial Corp. | 7,774 | 381,548 |
| Umpqua Holdings Corp. | 51,951 | 867,582 |
| Union Bankshares Corp. | 12,893 | 322,970 |
| United Bankshares, Inc. | 12,300 | 486,465 |
| United Community Banks, Inc. | 11,678 | 235,428 |
| United Financial Bancorp, Inc. | 14,699 | 190,793 |
| Valley National Bancorp | 77,242 | 811,041 |
| Walker & Dunlop, Inc. * | 9,700 | 281,397 |
| Walter Investment Management Corp. *(c) | 5,325 | 63,687 |
| Washington Federal, Inc. | 14,942 | 372,654 |
| Washington Trust Bancorp, Inc. | 3,600 | 139,680 |
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Webster Financial Corp. | 15,963 | 592,227 |
| Wells Fargo & Co. | 918,113 | 49,706,638 |
| WesBanco, Inc. | 7,756 | 253,233 |
| Westamerica Bancorp | 5,200 | 229,892 |
| Western Alliance Bancorp * | 16,600 | 593,450 |
| Wilshire Bancorp, Inc. | 9,900 | 105,831 |
| Wintrust Financial Corp. | 8,900 | 449,361 |
| WSFS Financial Corp. | 6,000 | 190,620 |
| Zions Bancorp | 42,725 | 1,229,198 |
| | | 270,362,065 |
| Capital Goods 7.4% |
| 3M Co. | 122,357 | 19,235,744 |
| A.O. Smith Corp. | 17,500 | 1,344,350 |
| AAON, Inc. | 10,279 | 210,411 |
| AAR Corp. | 8,400 | 190,596 |
| Actuant Corp., Class A | 10,280 | 234,384 |
| Acuity Brands, Inc. | 9,100 | 1,989,260 |
| AECOM * | 31,725 | 934,936 |
| Aegion Corp. * | 4,300 | 82,947 |
| Aerojet Rocketdyne Holdings, Inc. * | 11,600 | 196,504 |
| Aerovironment, Inc. * | 4,200 | 96,894 |
| AGCO Corp. | 15,462 | 748,206 |
| Air Lease Corp. | 17,400 | 586,554 |
| Aircastle Ltd. | 14,100 | 319,506 |
| Alamo Group, Inc. | 2,500 | 117,300 |
| Albany International Corp., Class A | 6,718 | 252,395 |
| Allegion plc | 17,433 | 1,136,109 |
| Allison Transmission Holdings, Inc. | 38,555 | 1,106,528 |
| Altra Industrial Motion Corp. | 4,300 | 113,778 |
| American Railcar Industries, Inc. (c) | 4,500 | 259,740 |
| American Science & Engineering, Inc. | 2,000 | 74,960 |
| American Superconductor Corp. * | 520 | 2,824 |
| American Woodmark Corp. * | 4,000 | 290,800 |
| AMETEK, Inc. | 50,659 | 2,777,126 |
| Apogee Enterprises, Inc. | 6,600 | 326,898 |
| Applied Industrial Technologies, Inc. | 6,525 | 269,548 |
| Armstrong World Industries, Inc. * | 8,495 | 421,522 |
| Astec Industries, Inc. | 5,700 | 185,250 |
| Astronics Corp. * | 2,550 | 96,416 |
| AZZ, Inc. | 5,700 | 315,381 |
| B/E Aerospace, Inc. | 22,900 | 1,075,155 |
| Babcock & Wilcox Enterprises, Inc. * | 8,700 | 147,726 |
| Barnes Group, Inc. | 11,200 | 421,008 |
| Beacon Roofing Supply, Inc. * | 16,100 | 569,779 |
| Blount International, Inc. * | 15,900 | 96,513 |
| Breeze-Eastern Corp. * | 500 | 10,200 |
| Briggs & Stratton Corp. | 11,400 | 202,578 |
| Builders FirstSource, Inc. * | 17,100 | 202,122 |
| BWX Technologies, Inc. | 17,400 | 492,420 |
| Carlisle Cos., Inc. | 15,000 | 1,305,000 |
| Caterpillar, Inc. | 121,269 | 8,851,424 |
| Chart Industries, Inc. * | 4,400 | 75,636 |
| Chicago Bridge & Iron Co., N.V. | 17,800 | 798,686 |
| CIRCOR International, Inc. | 3,750 | 172,200 |
| CLARCOR, Inc. | 14,800 | 737,928 |
| Colfax Corp. * | 16,400 | 442,144 |
| Columbus McKinnon Corp. | 4,300 | 80,367 |
| Comfort Systems USA, Inc. | 7,700 | 245,861 |
| Security | Number
of Shares | Value
($) |
| Crane Co. | 8,000 | 421,120 |
| Cubic Corp. | 4,500 | 201,825 |
| Cummins, Inc. | 32,400 | 3,353,724 |
| Curtiss-Wright Corp. | 9,100 | 632,996 |
| Danaher Corp. | 116,974 | 10,914,844 |
| Deere & Co. | 59,754 | 4,660,812 |
| DigitalGlobe, Inc. * | 12,322 | 183,967 |
| Donaldson Co., Inc. | 22,100 | 667,420 |
| Dover Corp. | 29,661 | 1,911,058 |
| Ducommun, Inc. * | 3,200 | 69,248 |
| DXP Enterprises, Inc. * | 1,700 | 51,442 |
| Dycom Industries, Inc. * | 5,300 | 403,277 |
| Dynamic Materials Corp. | 6,800 | 48,484 |
| Eaton Corp. plc | 89,977 | 5,030,614 |
| EMCOR Group, Inc. | 12,700 | 613,156 |
| Emerson Electric Co. | 129,408 | 6,111,940 |
| Encore Wire Corp. | 4,600 | 196,742 |
| EnerSys | 7,500 | 457,425 |
| Engility Holdings, Inc. | 4,116 | 132,494 |
| EnPro Industries, Inc. | 4,900 | 240,639 |
| ESCO Technologies, Inc. | 3,900 | 144,651 |
| Esterline Technologies Corp. * | 5,900 | 454,595 |
| Fastenal Co. (c) | 56,432 | 2,209,877 |
| Federal Signal Corp. | 12,800 | 192,768 |
| Flowserve Corp. | 27,700 | 1,284,172 |
| Fluor Corp. | 28,519 | 1,363,493 |
| Fortune Brands Home & Security, Inc. | 35,900 | 1,878,647 |
| Franklin Electric Co., Inc. | 9,700 | 319,712 |
| FreightCar America, Inc. | 2,500 | 45,450 |
| FuelCell Energy, Inc. * | 29,400 | 26,004 |
| Furmanite Corp. * | 7,200 | 50,040 |
| GATX Corp. | 8,900 | 415,630 |
| Generac Holdings, Inc. * | 12,500 | 394,500 |
| General Cable Corp. | 6,700 | 103,113 |
| General Dynamics Corp. | 59,200 | 8,795,936 |
| General Electric Co. | 1,978,012 | 57,204,107 |
| Gibraltar Industries, Inc. * | 6,300 | 159,516 |
| Graco, Inc. | 10,812 | 793,601 |
| Granite Construction, Inc. | 8,150 | 267,646 |
| Great Lakes Dredge & Dock Corp. * | 11,600 | 46,400 |
| Griffon Corp. | 15,100 | 259,418 |
| H&E Equipment Services, Inc. | 6,800 | 131,308 |
| Hardinge, Inc. | 4,800 | 45,408 |
| Harsco Corp. | 11,300 | 121,249 |
| HD Supply Holdings, Inc. * | 34,600 | 1,030,734 |
| HEICO Corp. | 5,175 | 261,027 |
| HEICO Corp., Class A | 6,000 | 262,080 |
| Hexcel Corp. | 16,400 | 759,648 |
| Hillenbrand, Inc. | 17,800 | 528,126 |
| Honeywell International, Inc. | 152,480 | 15,748,134 |
| Hubbell, Inc., Class B | 11,300 | 1,094,405 |
| Huntington Ingalls Industries, Inc. | 10,672 | 1,280,000 |
| Hyster-Yale Materials Handling, Inc. | 2,300 | 134,596 |
| IDEX Corp. | 19,025 | 1,460,359 |
| Illinois Tool Works, Inc. | 64,700 | 5,948,518 |
| Ingersoll-Rand plc | 51,700 | 3,063,742 |
| Integrated Electrical Services, Inc. * | 5,105 | 36,092 |
| ITT Corp. | 15,000 | 593,700 |
| Jacobs Engineering Group, Inc. * | 21,700 | 871,038 |
| John Bean Technologies Corp. | 4,983 | 223,537 |
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Joy Global, Inc. | 17,550 | 301,509 |
| Kadant, Inc. | 3,001 | 123,401 |
| Kaman Corp. | 5,700 | 221,673 |
| KBR, Inc. | 24,000 | 442,560 |
| Kennametal, Inc. | 14,700 | 413,364 |
| KLX, Inc. * | 9,000 | 351,990 |
| Kratos Defense & Security Solutions, Inc. * | 10,180 | 50,798 |
| L-3 Communications Holdings, Inc. | 16,200 | 2,047,680 |
| L.B. Foster Co., Class A | 1,400 | 20,622 |
| Lawson Products, Inc. * | 5,500 | 143,055 |
| Layne Christensen Co. * | 4,500 | 28,530 |
| Lennox International, Inc. | 7,471 | 992,224 |
| Lincoln Electric Holdings, Inc. | 13,600 | 813,416 |
| Lindsay Corp. (c) | 3,100 | 210,118 |
| Lockheed Martin Corp. | 52,635 | 11,570,752 |
| Lydall, Inc. * | 5,500 | 188,265 |
| Masco Corp. | 69,200 | 2,006,800 |
| Masonite International Corp. * | 4,000 | 239,480 |
| MasTec, Inc. * | 15,750 | 264,127 |
| Meritor, Inc. * | 22,600 | 245,662 |
| Moog, Inc., Class A * | 7,587 | 468,573 |
| MRC Global, Inc. * | 15,600 | 185,640 |
| MSC Industrial Direct Co., Inc., Class A | 12,000 | 753,240 |
| Mueller Industries, Inc. | 11,800 | 371,936 |
| Mueller Water Products, Inc., Class A | 23,139 | 203,623 |
| MYR Group, Inc. * | 8,500 | 191,250 |
| National Presto Industries, Inc. | 2,900 | 255,345 |
| Navistar International Corp. * | 11,600 | 142,680 |
| NCI Building Systems, Inc. * | 14,480 | 151,461 |
| NN, Inc. | 1,800 | 24,840 |
| Nordson Corp. | 9,500 | 676,780 |
| Nortek, Inc. * | 3,200 | 196,320 |
| Northrop Grumman Corp. | 37,659 | 7,070,477 |
| NOW, Inc. * | 18,205 | 300,565 |
| Omega Flex, Inc. | 700 | 28,938 |
| Orbital ATK, Inc. | 11,194 | 958,430 |
| Oshkosh Corp. | 14,300 | 587,587 |
| Owens Corning | 26,800 | 1,220,204 |
| PACCAR, Inc. | 67,022 | 3,528,708 |
| Parker-Hannifin Corp. | 26,900 | 2,816,430 |
| Pentair plc | 34,885 | 1,950,769 |
| Powell Industries, Inc. | 2,800 | 93,296 |
| Precision Castparts Corp. | 27,002 | 6,232,332 |
| Preformed Line Products Co. | 1,000 | 42,500 |
| Primoris Services Corp. | 6,900 | 137,448 |
| Proto Labs, Inc. * | 4,800 | 311,232 |
| Quanex Building Products Corp. | 6,125 | 115,579 |
| Quanta Services, Inc. * | 46,271 | 930,510 |
| Raven Industries, Inc. | 5,600 | 101,976 |
| Raytheon Co. | 60,477 | 7,100,000 |
| RBC Bearings, Inc. * | 6,000 | 410,340 |
| Regal Beloit Corp. | 8,700 | 554,973 |
| Rexnord Corp. * | 29,900 | 552,552 |
| Rockwell Automation, Inc. | 28,431 | 3,103,528 |
| Rockwell Collins, Inc. | 24,200 | 2,098,624 |
| Roper Technologies, Inc. | 20,959 | 3,905,710 |
| Rush Enterprises, Inc., Class A * | 8,200 | 199,916 |
| Sensata Technologies Holding N.V. * | 34,800 | 1,673,532 |
| Security | Number
of Shares | Value
($) |
| Simpson Manufacturing Co., Inc. | 6,200 | 235,476 |
| Snap-on, Inc. | 10,580 | 1,755,116 |
| SolarCity Corp. *(c) | 13,500 | 400,275 |
| Spirit AeroSystems Holdings, Inc., Class A * | 22,800 | 1,202,472 |
| SPX Corp. | 7,110 | 87,098 |
| SPX FLOW, Inc. * | 7,110 | 241,029 |
| Standex International Corp. | 3,000 | 269,160 |
| Stanley Black & Decker, Inc. | 29,213 | 3,095,994 |
| Sun Hydraulics Corp. | 5,600 | 164,024 |
| TAL International Group, Inc. * | 6,000 | 101,760 |
| TASER International, Inc. * | 11,800 | 276,238 |
| Teledyne Technologies, Inc. * | 6,757 | 602,927 |
| Tennant Co. | 4,200 | 243,264 |
| Terex Corp. | 18,400 | 369,104 |
| Textainer Group Holdings Ltd. (c) | 9,500 | 185,820 |
| Textron, Inc. | 56,100 | 2,365,737 |
| The Boeing Co. | 125,636 | 18,602,923 |
| The Gorman-Rupp Co. | 5,141 | 146,981 |
| The Greenbrier Cos., Inc. (c) | 5,800 | 220,632 |
| The KEYW Holding Corp. *(c) | 8,400 | 59,892 |
| The Manitowoc Co., Inc. (c) | 23,200 | 354,960 |
| The Middleby Corp. * | 11,500 | 1,344,810 |
| The Timken Co. | 13,100 | 413,960 |
| The Toro Co. | 10,600 | 797,862 |
| Thermon Group Holdings, Inc. * | 9,500 | 191,045 |
| Titan International, Inc. | 6,925 | 49,168 |
| Titan Machinery, Inc. * | 3,600 | 44,028 |
| TransDigm Group, Inc. * | 11,800 | 2,594,230 |
| Trex Co., Inc. * | 5,400 | 210,978 |
| TriMas Corp. * | 9,293 | 185,953 |
| Trinity Industries, Inc. | 28,300 | 766,081 |
| Triumph Group, Inc. | 8,100 | 377,298 |
| Tutor Perini Corp. * | 7,100 | 119,138 |
| United Rentals, Inc. * | 18,900 | 1,414,854 |
| United Technologies Corp. | 162,928 | 16,033,744 |
| Universal Forest Products, Inc. | 4,600 | 334,098 |
| USG Corp. * | 16,900 | 398,333 |
| Valmont Industries, Inc. | 4,300 | 466,292 |
| Vectrus, Inc. * | 1,938 | 48,198 |
| Veritiv Corp. * | 1,466 | 61,572 |
| Vicor Corp. * | 9,900 | 95,634 |
| W.W. Grainger, Inc. | 12,100 | 2,541,000 |
| Wabash National Corp. * | 11,200 | 134,064 |
| WABCO Holdings, Inc. * | 10,233 | 1,148,450 |
| Wabtec Corp. | 19,456 | 1,612,319 |
| Watsco, Inc. | 4,200 | 516,726 |
| Watts Water Technologies, Inc., Class A | 4,000 | 217,760 |
| WESCO International, Inc. * | 8,100 | 396,333 |
| Woodward, Inc. | 10,500 | 477,750 |
| Xylem, Inc. | 30,500 | 1,110,505 |
| | | 331,556,753 |
| Commercial & Professional Supplies 1.1% |
| ABM Industries, Inc. | 7,200 | 204,480 |
| Acacia Research Corp. | 15,600 | 103,896 |
| ACCO Brands Corp. * | 42,001 | 338,948 |
| AMREP Corp. * | 2,500 | 11,000 |
| ARC Document Solutions, Inc. * | 7,000 | 43,540 |
| Brady Corp., Class A | 6,400 | 145,600 |
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Casella Waste Systems, Inc., Class A * | 13,300 | 80,731 |
| CDI Corp. | 5,500 | 44,000 |
| CEB, Inc. | 5,500 | 411,180 |
| Cenveo, Inc. *(c) | 7,300 | 13,651 |
| Cintas Corp. | 19,650 | 1,829,218 |
| Clean Harbors, Inc. * | 9,100 | 423,059 |
| Compx International, Inc. | 2,000 | 22,480 |
| Copart, Inc. * | 27,218 | 985,564 |
| Covanta Holding Corp. | 26,400 | 442,464 |
| CRA International, Inc. * | 4,200 | 98,280 |
| Deluxe Corp. | 7,600 | 452,580 |
| Ennis, Inc. | 6,500 | 130,195 |
| Equifax, Inc. | 21,895 | 2,333,350 |
| Essendant, Inc. | 5,800 | 200,506 |
| Exponent, Inc. | 6,600 | 339,306 |
| FTI Consulting, Inc. * | 5,700 | 193,857 |
| G&K Services, Inc., Class A | 4,100 | 269,862 |
| GP Strategies Corp. * | 1,500 | 37,635 |
| Healthcare Services Group, Inc. | 12,656 | 471,563 |
| Heidrick & Struggles International, Inc. | 5,000 | 132,800 |
| Herman Miller, Inc. | 8,700 | 276,051 |
| HNI Corp. | 12,700 | 545,338 |
| Hudson Global, Inc. * | 3,220 | 7,438 |
| Huron Consulting Group, Inc. * | 5,000 | 241,500 |
| ICF International, Inc. * | 6,500 | 199,355 |
| IHS, Inc., Class A * | 15,200 | 1,817,008 |
| InnerWorkings, Inc. * | 7,400 | 55,352 |
| Insperity, Inc. | 6,800 | 315,928 |
| Interface, Inc. | 8,400 | 164,220 |
| KAR Auction Services, Inc. | 29,400 | 1,128,960 |
| Kelly Services, Inc., Class A | 5,700 | 90,060 |
| Kforce, Inc. | 7,105 | 199,721 |
| Kimball International, Inc., Class B | 9,100 | 99,372 |
| Knoll, Inc. | 7,000 | 162,680 |
| Korn/Ferry International | 6,600 | 240,042 |
| ManpowerGroup, Inc. | 14,537 | 1,334,206 |
| Mastech Holdings, Inc. * | 675 | 5,434 |
| Matthews International Corp., Class A | 5,300 | 305,969 |
| McGrath RentCorp | 4,600 | 138,230 |
| Mistras Group, Inc. * | 4,000 | 75,680 |
| Mobile Mini, Inc. | 14,700 | 503,328 |
| MSA Safety, Inc. | 8,700 | 378,276 |
| Multi-Color Corp. | 4,625 | 360,010 |
| Navigant Consulting, Inc. * | 14,000 | 240,800 |
| Nielsen Holdings plc | 75,100 | 3,568,001 |
| NL Industries, Inc. * | 7,800 | 27,222 |
| On Assignment, Inc. * | 6,500 | 293,215 |
| Performant Financial Corp. * | 7,700 | 17,787 |
| Pitney Bowes, Inc. | 35,500 | 733,075 |
| Quad Graphics, Inc. | 9,800 | 126,420 |
| R.R. Donnelley & Sons Co. | 36,638 | 618,083 |
| Republic Services, Inc. | 47,845 | 2,092,740 |
| Resources Connection, Inc. | 11,300 | 202,835 |
| Robert Half International, Inc. | 26,900 | 1,416,554 |
| Rollins, Inc. | 21,927 | 588,082 |
| RPX Corp. * | 10,300 | 146,672 |
| Steelcase, Inc., Class A | 11,500 | 223,215 |
| Stericycle, Inc. * | 16,600 | 2,014,742 |
| Team, Inc. * | 3,000 | 105,000 |
| Security | Number
of Shares | Value
($) |
| Tetra Tech, Inc. | 13,131 | 353,224 |
| The ADT Corp. | 33,866 | 1,118,933 |
| The Advisory Board Co. * | 6,800 | 298,044 |
| The Brink's Co. | 7,100 | 219,958 |
| The Dun & Bradstreet Corp. | 7,840 | 892,741 |
| Towers Watson & Co., Class A | 13,600 | 1,680,416 |
| TRC Cos., Inc. * | 3,350 | 34,605 |
| TriNet Group, Inc. * | 11,600 | 220,168 |
| TrueBlue, Inc. * | 10,100 | 292,597 |
| Tyco International plc | 80,758 | 2,942,821 |
| UniFirst Corp. | 3,700 | 388,759 |
| US Ecology, Inc. | 3,500 | 137,235 |
| Verisk Analytics, Inc. * | 31,000 | 2,219,910 |
| Viad Corp. | 3,625 | 109,149 |
| Virco Mfg. Corp. * | 1,170 | 4,235 |
| WageWorks, Inc. * | 11,900 | 571,438 |
| Waste Connections, Inc. | 26,412 | 1,438,926 |
| Waste Management, Inc. | 80,110 | 4,306,714 |
| West Corp. | 11,812 | 281,244 |
| | | 48,329,463 |
| Consumer Durables & Apparel 1.6% |
| Arctic Cat, Inc. | 2,400 | 49,296 |
| Beazer Homes USA, Inc. * | 10,835 | 154,290 |
| Brunswick Corp. | 18,400 | 990,104 |
| CalAtlantic Group, Inc. * | 12,527 | 477,153 |
| Callaway Golf Co. | 31,065 | 309,097 |
| Carter's, Inc. | 9,400 | 854,272 |
| Cavco Industries, Inc. * | 1,610 | 158,746 |
| Coach, Inc. | 52,508 | 1,638,250 |
| Columbia Sportswear Co. | 6,900 | 378,465 |
| Crocs, Inc. * | 15,000 | 162,000 |
| CSS Industries, Inc. | 4,800 | 131,040 |
| D.R. Horton, Inc. | 64,190 | 1,889,754 |
| Deckers Outdoor Corp. * | 7,500 | 417,450 |
| Ethan Allen Interiors, Inc. | 10,200 | 277,542 |
| Flexsteel Industries, Inc. | 1,900 | 82,631 |
| Foamex International, Inc. *(b)(e) | 2,278 | — |
| Fossil Group, Inc. * | 7,662 | 416,889 |
| G-III Apparel Group Ltd. * | 11,300 | 622,517 |
| Garmin Ltd. | 22,300 | 790,981 |
| GoPro, Inc., Class A *(c) | 15,000 | 375,000 |
| Hanesbrands, Inc. | 78,188 | 2,497,325 |
| Harman International Industries, Inc. | 13,600 | 1,495,456 |
| Hasbro, Inc. | 22,600 | 1,736,358 |
| Helen of Troy Ltd. * | 5,000 | 496,050 |
| Hovnanian Enterprises, Inc., Class A *(c) | 50,500 | 104,030 |
| Iconix Brand Group, Inc. * | 9,600 | 147,072 |
| iRobot Corp. * | 7,300 | 219,073 |
| JAKKS Pacific, Inc. *(c) | 7,500 | 59,400 |
| Jarden Corp. * | 40,149 | 1,798,675 |
| Kate Spade & Co. * | 27,500 | 494,175 |
| KB Home | 19,700 | 258,070 |
| La-Z-Boy, Inc. | 7,500 | 214,125 |
| LeapFrog Enterprises, Inc. * | 9,000 | 7,200 |
| Leggett & Platt, Inc. | 28,300 | 1,274,349 |
| Lennar Corp., Class A | 36,290 | 1,817,040 |
| Libbey, Inc. | 7,232 | 243,285 |
| lululemon athletica, Inc. * | 20,157 | 991,120 |
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| M.D.C. Holdings, Inc. | 9,003 | 233,988 |
| M/I Homes, Inc. * | 3,000 | 68,850 |
| Marine Products Corp. | 405 | 2,863 |
| Mattel, Inc. | 66,200 | 1,627,196 |
| Meritage Homes Corp. * | 5,900 | 208,034 |
| Michael Kors Holdings Ltd. * | 38,700 | 1,495,368 |
| Mohawk Industries, Inc. * | 12,319 | 2,408,365 |
| Movado Group, Inc. | 5,800 | 149,292 |
| NACCO Industries, Inc., Class A | 1,900 | 85,177 |
| Nautilus, Inc. * | 9,825 | 167,418 |
| Newell Rubbermaid, Inc. | 54,900 | 2,329,407 |
| NIKE, Inc., Class B | 131,495 | 17,229,790 |
| NVR, Inc. * | 700 | 1,146,432 |
| Oxford Industries, Inc. | 2,500 | 182,050 |
| Perry Ellis International, Inc. * | 5,500 | 118,085 |
| Polaris Industries, Inc. | 11,781 | 1,323,478 |
| PulteGroup, Inc. | 68,976 | 1,264,330 |
| PVH Corp. | 16,411 | 1,492,580 |
| Ralph Lauren Corp. | 12,400 | 1,373,548 |
| Skechers U.S.A., Inc., Class A * | 25,800 | 804,960 |
| Skyline Corp. * | 2,600 | 9,100 |
| Smith & Wesson Holding Corp. * | 12,400 | 221,464 |
| Stanley Furniture Co., Inc. * | 6,875 | 19,319 |
| Steven Madden Ltd. * | 9,112 | 317,553 |
| Sturm, Ruger & Co., Inc. | 2,700 | 153,738 |
| Superior Uniform Group, Inc. | 3,200 | 54,528 |
| Taylor Morrison Home Corp., Class A * | 9,876 | 182,015 |
| Tempur Sealy International, Inc. * | 13,900 | 1,081,976 |
| Toll Brothers, Inc. * | 31,200 | 1,122,264 |
| TopBuild Corp. * | 7,688 | 216,263 |
| TRI Pointe Group, Inc. * | 25,000 | 324,500 |
| Tumi Holdings, Inc. * | 9,200 | 147,476 |
| Tupperware Brands Corp. | 9,700 | 571,039 |
| Under Armour, Inc., Class A * | 34,300 | 3,261,244 |
| Universal Electronics, Inc. * | 5,200 | 247,364 |
| Vera Bradley, Inc. * | 11,000 | 137,610 |
| VF Corp. | 66,900 | 4,517,088 |
| Vince Holding Corp. * | 5,757 | 26,194 |
| Vista Outdoor, Inc. * | 11,074 | 495,229 |
| Whirlpool Corp. | 14,914 | 2,388,328 |
| Wolverine World Wide, Inc. | 27,500 | 510,675 |
| | | 73,744,458 |
| Consumer Services 2.3% |
| American Public Education, Inc. * | 5,600 | 121,688 |
| Apollo Education Group, Inc. * | 16,450 | 119,427 |
| Aramark | 46,800 | 1,420,380 |
| Ascent Capital Group, Inc., Class A * | 3,116 | 67,866 |
| Belmond Ltd., Class A * | 12,600 | 135,324 |
| Biglari Holdings, Inc. * | 279 | 107,172 |
| BJ's Restaurants, Inc. * | 7,300 | 313,389 |
| Bloomin' Brands, Inc. | 20,900 | 354,673 |
| Bob Evans Farms, Inc. | 4,200 | 181,734 |
| Boyd Gaming Corp. * | 21,300 | 425,787 |
| Bridgepoint Education, Inc. * | 13,700 | 106,175 |
| Bright Horizons Family Solutions, Inc. * | 4,912 | 314,466 |
| Brinker International, Inc. | 12,650 | 575,702 |
| Buffalo Wild Wings, Inc. * | 4,800 | 740,496 |
| Security | Number
of Shares | Value
($) |
| Caesars Entertainment Corp. *(c) | 8,300 | 66,815 |
| Career Education Corp. * | 25,114 | 90,662 |
| Carnival Corp. | 89,239 | 4,826,045 |
| Chipotle Mexican Grill, Inc. * | 6,179 | 3,955,981 |
| Choice Hotels International, Inc. | 5,200 | 272,012 |
| Churchill Downs, Inc. | 2,900 | 425,807 |
| Chuy's Holdings, Inc. * | 6,760 | 183,940 |
| ClubCorp Holdings, Inc. | 10,442 | 213,435 |
| Cracker Barrel Old Country Store, Inc. (c) | 5,146 | 707,369 |
| Darden Restaurants, Inc. | 25,500 | 1,578,195 |
| Denny's Corp. * | 21,100 | 231,256 |
| DeVry Education Group, Inc. | 9,400 | 221,464 |
| Diamond Resorts International, Inc. * | 12,100 | 344,124 |
| DineEquity, Inc. | 3,000 | 250,350 |
| Domino's Pizza, Inc. | 9,200 | 981,364 |
| Dover Downs Gaming & Entertainment, Inc. * | 5,899 | 5,899 |
| Dover Motorsports, Inc. | 1,400 | 3,150 |
| Dunkin' Brands Group, Inc. | 21,600 | 894,456 |
| Eldorado Resorts, Inc. * | 5,800 | 57,420 |
| Extended Stay America, Inc. | 13,200 | 253,440 |
| Fiesta Restaurant Group, Inc. * | 4,300 | 152,048 |
| Golden Entertainment, Inc. * | 3,400 | 31,790 |
| Graham Holdings Co., Class B | 900 | 497,223 |
| Grand Canyon Education, Inc. * | 8,500 | 353,260 |
| H&R Block, Inc. | 54,700 | 2,038,122 |
| Hilton Worldwide Holdings, Inc. | 103,347 | 2,582,642 |
| Houghton Mifflin Harcourt Co. * | 19,600 | 383,964 |
| Hyatt Hotels Corp., Class A * | 9,600 | 483,840 |
| International Speedway Corp., Class A | 6,445 | 223,577 |
| Interval Leisure Group, Inc. | 10,769 | 190,073 |
| Isle of Capri Casinos, Inc. * | 11,800 | 225,734 |
| ITT Educational Services, Inc. *(c) | 5,600 | 18,480 |
| J Alexander's Holdings, Inc. * | 2,846 | 27,435 |
| Jack in the Box, Inc. | 7,000 | 521,710 |
| K12, Inc. * | 12,100 | 117,491 |
| Krispy Kreme Doughnuts, Inc. * | 14,100 | 193,029 |
| La Quinta Holdings, Inc. * | 15,800 | 239,370 |
| Las Vegas Sands Corp. | 74,000 | 3,663,740 |
| LifeLock, Inc. *(c) | 11,000 | 154,110 |
| Luby's, Inc. * | 6,900 | 32,154 |
| Marriott International, Inc., Class A | 39,208 | 3,010,390 |
| Marriott Vacations Worldwide Corp. | 4,080 | 262,752 |
| McDonald's Corp. | 183,940 | 20,647,265 |
| MGM Resorts International * | 95,500 | 2,214,645 |
| Monarch Casino & Resort, Inc. * | 8,000 | 175,520 |
| Norwegian Cruise Line Holdings Ltd. * | 28,300 | 1,800,446 |
| Panera Bread Co., Class A * | 5,600 | 993,272 |
| Papa John's International, Inc. | 6,800 | 477,156 |
| Penn National Gaming, Inc. * | 17,000 | 303,620 |
| Pinnacle Entertainment, Inc. * | 9,800 | 343,098 |
| Popeyes Louisiana Kitchen, Inc. * | 6,600 | 372,504 |
| Red Robin Gourmet Burgers, Inc. * | 2,300 | 172,247 |
| Regis Corp. * | 17,300 | 285,796 |
| Royal Caribbean Cruises Ltd. | 34,300 | 3,373,405 |
| Ruby Tuesday, Inc. * | 33,713 | 176,319 |
| Scientific Games Corp., Class A *(c) | 10,900 | 120,881 |
| SeaWorld Entertainment, Inc. | 12,511 | 249,344 |
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Service Corp. International | 35,000 | 989,100 |
| ServiceMaster Global Holdings, Inc. * | 23,500 | 837,775 |
| Six Flags Entertainment Corp. | 15,600 | 811,824 |
| Sonic Corp. | 12,868 | 367,253 |
| Sotheby's | 11,338 | 392,862 |
| Speedway Motorsports, Inc. | 6,700 | 123,749 |
| Starbucks Corp. | 288,094 | 18,026,042 |
| Starwood Hotels & Resorts Worldwide, Inc. | 33,230 | 2,654,080 |
| Steiner Leisure Ltd. * | 3,000 | 190,080 |
| Strayer Education, Inc. * | 4,300 | 227,556 |
| Texas Roadhouse, Inc. | 16,100 | 553,035 |
| The Cheesecake Factory, Inc. | 7,087 | 341,593 |
| The Wendy's Co. | 50,775 | 465,099 |
| Vail Resorts, Inc. | 7,500 | 856,275 |
| Weight Watchers International, Inc. *(c) | 6,500 | 99,970 |
| Wyndham Worldwide Corp. | 23,044 | 1,874,629 |
| Wynn Resorts Ltd. (c) | 15,600 | 1,091,220 |
| Yum! Brands, Inc. | 85,200 | 6,041,532 |
| | | 103,599,589 |
| Diversified Financials 4.6% |
| Affiliated Managers Group, Inc. * | 11,217 | 2,021,976 |
| Ally Financial, Inc. * | 85,600 | 1,705,152 |
| American Express Co. | 164,803 | 12,073,468 |
| Ameriprise Financial, Inc. | 35,830 | 4,133,349 |
| Arlington Asset Investment Corp., Class A | 6,941 | 96,133 |
| Artisan Partners Asset Management, Inc., Class A | 5,500 | 210,375 |
| Ashford, Inc. * | 103 | 6,618 |
| Asta Funding, Inc. * | 6,000 | 51,600 |
| Atlanticus Holdings Corp. * | 4,629 | 13,980 |
| Berkshire Hathaway, Inc., Class B * | 368,002 | 50,055,632 |
| BGC Partners, Inc., Class A | 28,300 | 244,795 |
| BlackRock, Inc. | 25,032 | 8,810,513 |
| Calamos Asset Management, Inc., Class A | 5,000 | 46,950 |
| Capital One Financial Corp. | 105,257 | 8,304,777 |
| Cash America International, Inc. | 6,900 | 238,257 |
| CBOE Holdings, Inc. | 20,800 | 1,394,432 |
| CME Group, Inc. | 66,950 | 6,324,766 |
| Cohen & Steers, Inc. | 5,400 | 165,186 |
| Cowen Group, Inc., Class A * | 11,889 | 50,053 |
| Credit Acceptance Corp. * | 2,100 | 397,089 |
| Discover Financial Services | 88,507 | 4,975,864 |
| E*TRADE Financial Corp. * | 53,233 | 1,517,673 |
| Eaton Vance Corp. | 22,700 | 819,697 |
| Encore Capital Group, Inc. *(c) | 5,600 | 227,920 |
| Enova International, Inc. * | 6,313 | 82,069 |
| Evercore Partners, Inc., Class A | 6,500 | 351,000 |
| Ezcorp, Inc., Class A * | 20,600 | 137,196 |
| FactSet Research Systems, Inc. | 6,650 | 1,164,548 |
| FBR & Co. | 1,000 | 19,780 |
| Federated Investors, Inc., Class B | 14,650 | 450,194 |
| Financial Engines, Inc. (c) | 7,800 | 250,848 |
| First Cash Financial Services, Inc. * | 3,800 | 144,970 |
| FNFV Group * | 16,478 | 185,213 |
| Franklin Resources, Inc. | 74,800 | 3,048,848 |
| Security | Number
of Shares | Value
($) |
| FXCM, Inc., Class A (c) | 1,407 | 12,185 |
| GAMCO Investors, Inc., Class A | 3,400 | 196,112 |
| Green Dot Corp., Class A * | 10,049 | 186,308 |
| Greenhill & Co., Inc. | 4,500 | 116,190 |
| HFF, Inc., Class A | 9,800 | 338,296 |
| Interactive Brokers Group, Inc., Class A | 13,600 | 559,504 |
| Intercontinental Exchange, Inc. | 21,886 | 5,524,026 |
| INTL FCStone, Inc. * | 4,437 | 141,940 |
| Invesco Ltd. | 88,200 | 2,925,594 |
| Investment Technology Group, Inc. | 8,050 | 128,881 |
| Janus Capital Group, Inc. | 26,200 | 406,886 |
| KCG Holdings, Inc., Class A * | 15,533 | 194,007 |
| Lazard Ltd., Class A | 28,600 | 1,324,752 |
| Legg Mason, Inc. | 17,550 | 785,362 |
| LendingClub Corp. * | 51,500 | 730,270 |
| Leucadia National Corp. | 57,450 | 1,149,574 |
| LPL Financial Holdings, Inc. (c) | 12,800 | 545,280 |
| MarketAxess Holdings, Inc. | 8,900 | 901,659 |
| McGraw Hill Financial, Inc. | 52,461 | 4,859,987 |
| Moody's Corp. | 33,600 | 3,230,976 |
| Morgan Stanley | 292,525 | 9,644,549 |
| Morningstar, Inc. | 5,500 | 451,605 |
| MSCI, Inc. | 20,000 | 1,340,000 |
| Nasdaq, Inc. | 26,100 | 1,510,929 |
| Navient Corp. | 72,000 | 949,680 |
| Nelnet, Inc., Class A | 6,400 | 228,992 |
| NewStar Financial, Inc. * | 13,500 | 142,425 |
| Northern Trust Corp. | 45,100 | 3,174,589 |
| NorthStar Asset Management Group, Inc. | 33,475 | 489,739 |
| PICO Holdings, Inc. * | 3,700 | 35,742 |
| Piper Jaffray Cos. * | 3,950 | 140,501 |
| PRA Group, Inc. * | 9,800 | 537,040 |
| Raymond James Financial, Inc. | 30,750 | 1,694,632 |
| RCS Capital Corp., Class A *(c) | 9,017 | 6,836 |
| Resource America, Inc., Class A | 4,000 | 30,760 |
| Santander Consumer USA Holdings, Inc. * | 24,000 | 432,240 |
| SEI Investments Co. | 31,100 | 1,611,602 |
| SLM Corp. * | 72,000 | 508,320 |
| Springleaf Holdings, Inc. * | 10,500 | 492,555 |
| State Street Corp. | 78,960 | 5,448,240 |
| Stifel Financial Corp. * | 11,785 | 523,608 |
| Synchrony Financial *(c) | 21,900 | 673,644 |
| T. Rowe Price Group, Inc. | 49,500 | 3,743,190 |
| TD Ameritrade Holding Corp. | 56,600 | 1,951,002 |
| The Bank of New York Mellon Corp. | 213,318 | 8,884,695 |
| The Charles Schwab Corp. (a) | 240,126 | 7,328,646 |
| The First Marblehead Corp. * | 750 | 2,633 |
| The Goldman Sachs Group, Inc. | 79,655 | 14,935,312 |
| Virtus Investment Partners, Inc. | 875 | 102,410 |
| Voya Financial, Inc. | 45,389 | 1,841,432 |
| Waddell & Reed Financial, Inc., Class A | 14,750 | 544,865 |
| Westwood Holdings Group, Inc. | 1,785 | 103,709 |
| WisdomTree Investments, Inc. | 20,500 | 394,215 |
| World Acceptance Corp. *(c) | 3,000 | 114,390 |
| | | 203,993,437 |
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Energy 6.5% |
| Abraxas Petroleum Corp. * | 36,200 | 57,558 |
| Adams Resources & Energy, Inc. | 2,300 | 102,258 |
| Alon USA Energy, Inc. | 8,700 | 145,725 |
| Anadarko Petroleum Corp. | 99,168 | 6,632,356 |
| Antero Resources Corp. *(c) | 27,800 | 655,246 |
| Apache Corp. | 71,572 | 3,373,188 |
| Approach Resources, Inc. *(c) | 4,000 | 9,440 |
| Arch Coal, Inc. *(c) | 2,650 | 3,975 |
| Atwood Oceanics, Inc. | 9,500 | 157,225 |
| Baker Hughes, Inc. | 83,465 | 4,396,936 |
| Basic Energy Services, Inc. *(c) | 8,500 | 31,535 |
| Bill Barrett Corp. * | 6,700 | 32,629 |
| Bonanza Creek Energy, Inc. * | 6,200 | 35,278 |
| Bristow Group, Inc. | 6,000 | 208,380 |
| C&J Energy Services Ltd. *(c) | 10,200 | 50,898 |
| Cabot Oil & Gas Corp. | 86,400 | 1,875,744 |
| California Resources Corp. | 55,701 | 225,032 |
| Callon Petroleum Co. * | 18,200 | 157,976 |
| Cameron International Corp. * | 39,247 | 2,669,189 |
| CARBO Ceramics, Inc. (c) | 3,300 | 57,816 |
| Carrizo Oil & Gas, Inc. * | 13,100 | 492,953 |
| Cheniere Energy, Inc. * | 46,200 | 2,287,824 |
| Chesapeake Energy Corp. (c) | 102,430 | 730,326 |
| Chevron Corp. | 369,023 | 33,536,810 |
| Cimarex Energy Co. | 20,162 | 2,380,326 |
| Clayton Williams Energy, Inc. * | 2,500 | 148,925 |
| Clean Energy Fuels Corp. *(c) | 17,300 | 97,745 |
| Cloud Peak Energy, Inc. * | 8,700 | 25,839 |
| Cobalt International Energy, Inc. * | 75,700 | 580,619 |
| Columbia Pipeline Group, Inc. | 65,764 | 1,365,918 |
| Comstock Resources, Inc. (c) | 6,400 | 14,720 |
| Concho Resources, Inc. * | 26,831 | 3,109,981 |
| ConocoPhillips | 237,731 | 12,682,949 |
| CONSOL Energy, Inc. | 44,600 | 297,036 |
| Contango Oil & Gas Co. * | 5,200 | 39,780 |
| Continental Resources, Inc. * | 17,000 | 576,470 |
| Core Laboratories N.V. | 9,800 | 1,140,034 |
| CVR Energy, Inc. | 5,100 | 226,746 |
| Delek US Holdings, Inc. | 10,700 | 291,040 |
| Denbury Resources, Inc. (c) | 57,225 | 202,577 |
| Devon Energy Corp. | 74,260 | 3,113,722 |
| DHT Holdings, Inc. | 26,011 | 204,446 |
| Diamond Offshore Drilling, Inc. (c) | 11,400 | 226,632 |
| Diamondback Energy, Inc. * | 13,721 | 1,013,159 |
| Dril-Quip, Inc. * | 6,700 | 412,452 |
| Energen Corp. | 17,500 | 1,017,625 |
| Energy XXI Ltd. (c) | 15,061 | 26,056 |
| ENGlobal Corp. * | 4,000 | 4,160 |
| Ensco plc, Class A | 57,100 | 949,573 |
| EOG Resources, Inc. | 106,048 | 9,104,221 |
| EP Energy Corp., Class A *(c) | 19,147 | 105,500 |
| EQT Corp. | 28,600 | 1,889,602 |
| Era Group, Inc. * | 2,850 | 39,644 |
| EXCO Resources, Inc. *(c) | 51,400 | 57,568 |
| Exterran Holdings, Inc. | 10,720 | 233,053 |
| Exxon Mobil Corp. | 819,399 | 67,797,073 |
| FMC Technologies, Inc. * | 46,764 | 1,582,026 |
| Forum Energy Technologies, Inc. * | 11,200 | 148,400 |
| Frank's International N.V. | 14,000 | 240,240 |
| Geospace Technologies Corp. * | 1,800 | 27,648 |
| Security | Number
of Shares | Value
($) |
| Goodrich Petroleum Corp. *(c) | 9,800 | 5,880 |
| Green Plains, Inc. | 9,300 | 190,743 |
| Gulf Island Fabrication, Inc. | 4,100 | 41,451 |
| Gulfmark Offshore, Inc., Class A (c) | 4,100 | 25,584 |
| Gulfport Energy Corp. * | 24,003 | 731,371 |
| Halcon Resources Corp. * | 75,700 | 53,073 |
| Halliburton Co. | 166,144 | 6,376,607 |
| Harvest Natural Resources, Inc. * | 9,300 | 9,207 |
| Helix Energy Solutions Group, Inc. * | 14,064 | 81,290 |
| Helmerich & Payne, Inc. | 19,017 | 1,070,087 |
| Hess Corp. | 47,300 | 2,658,733 |
| HollyFrontier Corp. | 38,654 | 1,892,886 |
| Hornbeck Offshore Services, Inc. * | 5,000 | 67,550 |
| Houston American Energy Corp. * | 4,000 | 680 |
| ION Geophysical Corp. * | 13,900 | 5,143 |
| Key Energy Services, Inc. * | 22,300 | 11,716 |
| Kinder Morgan, Inc. | 356,678 | 9,755,143 |
| Kosmos Energy Ltd. * | 31,100 | 212,102 |
| Laredo Petroleum, Inc. *(c) | 22,700 | 260,596 |
| Magnum Hunter Resources Corp. * | 22,939 | 6,106 |
| Marathon Oil Corp. | 130,614 | 2,400,685 |
| Marathon Petroleum Corp. | 105,008 | 5,439,414 |
| Matador Resources Co. * | 12,100 | 311,091 |
| Matrix Service Co. * | 8,000 | 181,600 |
| McDermott International, Inc. * | 39,100 | 180,251 |
| Memorial Resource Development Corp. * | 16,000 | 283,040 |
| Midstates Petroleum Co., Inc. * | 1,440 | 5,544 |
| Murphy Oil Corp. | 29,000 | 824,470 |
| Nabors Industries Ltd. | 70,734 | 710,169 |
| National Oilwell Varco, Inc. | 72,822 | 2,741,020 |
| Natural Gas Services Group, Inc. * | 7,500 | 168,900 |
| Newfield Exploration Co. * | 33,100 | 1,330,289 |
| Newpark Resources, Inc. * | 11,500 | 65,090 |
| Noble Corp., plc (c) | 46,155 | 621,708 |
| Noble Energy, Inc. | 87,679 | 3,142,415 |
| Northern Oil & Gas, Inc. *(c) | 8,200 | 41,328 |
| Oasis Petroleum, Inc. * | 24,200 | 281,446 |
| Occidental Petroleum Corp. | 149,753 | 11,162,589 |
| Oceaneering International, Inc. | 23,100 | 970,662 |
| Oil States International, Inc. * | 8,600 | 258,086 |
| ONEOK, Inc. | 45,929 | 1,557,912 |
| Pacific Ethanol, Inc. * | 10,200 | 61,302 |
| Panhandle Oil & Gas, Inc., Class A | 6,200 | 113,956 |
| Paragon Offshore plc | 15,385 | 3,692 |
| Parker Drilling Co. * | 18,300 | 52,338 |
| Parsley Energy, Inc., Class A * | 17,000 | 301,410 |
| Patterson-UTI Energy, Inc. | 28,500 | 424,365 |
| PBF Energy, Inc., Class A | 21,913 | 745,042 |
| PDC Energy, Inc. * | 9,300 | 561,162 |
| Peabody Energy Corp. (c) | 3,120 | 39,905 |
| Penn Virginia Corp. * | 12,200 | 7,551 |
| PetroQuest Energy, Inc. * | 13,200 | 14,784 |
| PHI, Inc. - Non Voting Shares * | 4,000 | 76,160 |
| Phillips 66 | 92,165 | 8,207,293 |
| Pioneer Energy Services Corp. * | 13,100 | 30,261 |
| Pioneer Natural Resources Co. | 29,633 | 4,063,870 |
| QEP Resources, Inc. | 30,600 | 473,076 |
| Range Resources Corp. | 30,805 | 937,704 |
| Resolute Energy Corp. * | 11,900 | 5,593 |
| REX American Resources Corp. * | 4,875 | 267,686 |
| Rex Energy Corp. *(c) | 8,000 | 18,080 |
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Rice Energy, Inc. * | 12,036 | 183,669 |
| RigNet, Inc. * | 4,141 | 124,230 |
| Rowan Cos. plc, Class A | 20,500 | 403,440 |
| RPC, Inc. | 16,118 | 177,782 |
| RSP Permian, Inc. * | 12,800 | 350,976 |
| Sanchez Energy Corp. *(c) | 8,700 | 51,765 |
| SandRidge Energy, Inc. * | 72,792 | 26,955 |
| Schlumberger Ltd. | 246,103 | 19,235,411 |
| SEACOR Holdings, Inc. * | 4,850 | 283,337 |
| SemGroup Corp., Class A | 7,000 | 318,850 |
| Seventy Seven Energy, Inc. * | 6,366 | 7,257 |
| SM Energy Co. | 11,200 | 373,520 |
| Solazyme, Inc. *(c) | 12,100 | 39,688 |
| Southwestern Energy Co. * | 79,675 | 879,612 |
| Spectra Energy Corp. | 124,778 | 3,564,907 |
| Stone Energy Corp. * | 7,383 | 41,271 |
| Superior Energy Services, Inc. | 26,099 | 369,562 |
| Swift Energy Co. * | 5,500 | 3,282 |
| Synergy Resources Corp. * | 11,100 | 124,209 |
| Targa Resources Corp. | 8,300 | 474,345 |
| Teekay Corp. | 8,600 | 276,318 |
| Tesco Corp. | 7,000 | 56,000 |
| Tesoro Corp. | 24,700 | 2,641,171 |
| TETRA Technologies, Inc. * | 12,100 | 81,554 |
| The Williams Cos., Inc. | 138,600 | 5,466,384 |
| Tidewater, Inc. (c) | 7,700 | 95,095 |
| Transocean Ltd. (c) | 67,500 | 1,068,525 |
| Ultra Petroleum Corp. *(c) | 25,300 | 138,644 |
| Unit Corp. * | 7,400 | 93,314 |
| US Silica Holdings, Inc. (c) | 10,600 | 191,436 |
| VAALCO Energy, Inc. * | 12,600 | 23,184 |
| Valero Energy Corp. | 98,280 | 6,478,618 |
| W&T Offshore, Inc. (c) | 7,500 | 24,450 |
| Warren Resources, Inc. * | 22,100 | 9,967 |
| Weatherford International plc * | 155,549 | 1,592,822 |
| Western Refining, Inc. | 12,253 | 509,970 |
| Westmoreland Coal Co. *(c) | 9,600 | 68,736 |
| Whiting Petroleum Corp. * | 42,070 | 724,866 |
| World Fuel Services Corp. | 11,900 | 529,074 |
| WPX Energy, Inc. * | 33,353 | 228,802 |
| | | 289,171,687 |
| Food & Staples Retailing 1.9% |
| Casey's General Stores, Inc. | 7,100 | 754,162 |
| Costco Wholesale Corp. | 86,285 | 13,643,384 |
| CVS Health Corp. | 218,937 | 21,626,597 |
| Ingles Markets, Inc., Class A | 4,200 | 209,748 |
| PriceSmart, Inc. | 7,100 | 610,458 |
| Rite Aid Corp. * | 201,480 | 1,587,662 |
| SpartanNash, Co. | 12,540 | 349,866 |
| Sprouts Farmers Market, Inc. * | 26,674 | 543,616 |
| SUPERVALU, Inc. * | 39,532 | 259,725 |
| Sysco Corp. | 107,836 | 4,448,235 |
| The Andersons, Inc. | 3,600 | 127,440 |
| The Fresh Market, Inc. * | 11,100 | 276,612 |
| The Kroger Co. | 189,232 | 7,152,970 |
| United Natural Foods, Inc. * | 8,800 | 443,960 |
| Wal-Mart Stores, Inc. | 310,489 | 17,772,390 |
| Walgreens Boots Alliance, Inc. | 172,608 | 14,616,446 |
| Security | Number
of Shares | Value
($) |
| Weis Markets, Inc. | 2,400 | 98,736 |
| Whole Foods Market, Inc. | 70,777 | 2,120,479 |
| | | 86,642,486 |
| Food, Beverage & Tobacco 4.8% |
| Alico, Inc. | 2,000 | 85,380 |
| Alliance One International, Inc. * | 2,460 | 43,296 |
| Altria Group, Inc. | 381,823 | 23,088,837 |
| Archer-Daniels-Midland Co. | 117,358 | 5,358,566 |
| B&G Foods, Inc. | 15,000 | 544,350 |
| Boulder Brands, Inc. *(c) | 9,100 | 80,626 |
| Brown-Forman Corp., Class A (c) | 5,000 | 573,750 |
| Brown-Forman Corp., Class B | 22,116 | 2,348,277 |
| Bunge Ltd. | 26,700 | 1,948,032 |
| Cal-Maine Foods, Inc. (c) | 5,200 | 277,992 |
| Calavo Growers, Inc. | 4,846 | 249,133 |
| Campbell Soup Co. | 34,100 | 1,731,939 |
| Coca-Cola Bottling Co. Consolidated | 1,248 | 263,590 |
| Coca-Cola Enterprises, Inc. | 41,600 | 2,135,744 |
| ConAgra Foods, Inc. | 88,393 | 3,584,336 |
| Constellation Brands, Inc., Class A | 33,769 | 4,552,061 |
| Darling Ingredients, Inc. * | 25,900 | 262,108 |
| Dean Foods Co. | 13,556 | 245,499 |
| Diamond Foods, Inc. * | 5,200 | 206,024 |
| Dr Pepper Snapple Group, Inc. | 36,900 | 3,297,753 |
| Farmer Bros. Co. * | 4,500 | 127,710 |
| Flowers Foods, Inc. | 44,605 | 1,204,335 |
| Fresh Del Monte Produce, Inc. | 7,900 | 360,477 |
| General Mills, Inc. | 115,838 | 6,731,346 |
| Hormel Foods Corp. | 27,400 | 1,850,870 |
| Ingredion, Inc. | 15,700 | 1,492,442 |
| J&J Snack Foods Corp. | 2,093 | 256,999 |
| John B. Sanfilippo & Son, Inc. | 5,000 | 323,600 |
| Kellogg Co. | 47,400 | 3,342,648 |
| Keurig Green Mountain, Inc. | 23,250 | 1,179,938 |
| Lancaster Colony Corp. | 3,400 | 386,648 |
| Landec Corp. * | 9,100 | 111,930 |
| Limoneira Co. (c) | 2,900 | 45,994 |
| McCormick & Co., Inc. - Non Voting Shares | 25,100 | 2,107,898 |
| Mead Johnson Nutrition Co. | 39,500 | 3,239,000 |
| Molson Coors Brewing Co., Class B | 31,500 | 2,775,150 |
| Mondelez International, Inc., Class A | 315,924 | 14,583,052 |
| Monster Beverage Corp. * | 29,589 | 4,033,572 |
| National Beverage Corp. * | 6,400 | 240,896 |
| PepsiCo, Inc. | 287,358 | 29,365,114 |
| Philip Morris International, Inc. | 304,009 | 26,874,396 |
| Pilgrim's Pride Corp. (c) | 12,466 | 236,729 |
| Pinnacle Foods, Inc. | 23,600 | 1,040,288 |
| Post Holdings, Inc. * | 11,950 | 768,027 |
| Primo Water Corp. * | 1,000 | 8,800 |
| Reynolds American, Inc. | 160,206 | 7,741,154 |
| Rocky Mountain Chocolate Factory, Inc. | 3,427 | 37,903 |
| Sanderson Farms, Inc. (c) | 2,850 | 198,104 |
| Seaboard Corp. * | 100 | 336,800 |
| Snyder's-Lance, Inc. | 8,900 | 316,306 |
| The Boston Beer Co., Inc., Class A *(c) | 2,100 | 461,139 |
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| The Coca-Cola Co. | 764,614 | 32,381,403 |
| The Hain Celestial Group, Inc. * | 19,412 | 967,688 |
| The Hershey Co. | 27,800 | 2,465,582 |
| The JM Smucker Co. | 24,293 | 2,851,755 |
| The Kraft Heinz Co. | 116,804 | 9,107,208 |
| The WhiteWave Foods Co. * | 31,825 | 1,304,189 |
| Tootsie Roll Industries, Inc. (c) | 7,818 | 248,143 |
| TreeHouse Foods, Inc. * | 8,622 | 738,388 |
| Tyson Foods, Inc., Class A | 59,084 | 2,620,966 |
| Universal Corp. | 4,800 | 259,248 |
| Vector Group Ltd. | 15,869 | 384,823 |
| | | 215,985,951 |
| Health Care Equipment & Services 4.9% |
| Abaxis, Inc. | 5,600 | 281,176 |
| Abbott Laboratories | 294,243 | 13,182,086 |
| ABIOMED, Inc. * | 7,800 | 574,548 |
| Acadia Healthcare Co., Inc. * | 12,500 | 767,625 |
| Accuray, Inc. * | 21,200 | 142,040 |
| Aceto Corp. | 7,900 | 238,264 |
| Aetna, Inc. | 67,385 | 7,734,450 |
| Air Methods Corp. * | 8,700 | 356,091 |
| Alere, Inc. * | 18,541 | 855,111 |
| Align Technology, Inc. * | 16,400 | 1,073,544 |
| Alliance HealthCare Services, Inc. * | 360 | 3,046 |
| Allscripts Healthcare Solutions, Inc. * | 31,560 | 443,734 |
| Amedisys, Inc. * | 10,834 | 428,810 |
| AmerisourceBergen Corp. | 39,596 | 3,821,410 |
| AMN Healthcare Services, Inc. * | 11,210 | 318,028 |
| Amsurg Corp. * | 10,700 | 749,963 |
| Analogic Corp. | 2,700 | 236,574 |
| Anika Therapeutics, Inc. * | 4,606 | 177,423 |
| Antares Pharma, Inc. * | 28,100 | 38,778 |
| Anthem, Inc. | 50,323 | 7,002,445 |
| athenahealth, Inc. * | 7,800 | 1,189,110 |
| Atrion Corp. | 616 | 227,304 |
| Baxter International, Inc. | 105,806 | 3,956,086 |
| Becton, Dickinson & Co. | 39,908 | 5,687,688 |
| BioScrip, Inc. *(c) | 8,372 | 16,493 |
| Boston Scientific Corp. * | 255,567 | 4,671,765 |
| Brookdale Senior Living, Inc. * | 33,925 | 709,372 |
| C.R. Bard, Inc. | 13,760 | 2,564,176 |
| Cantel Medical Corp. | 8,034 | 476,256 |
| Capital Senior Living Corp. * | 8,394 | 189,872 |
| Cardinal Health, Inc. | 61,818 | 5,081,440 |
| Cardiovascular Systems, Inc. * | 5,000 | 68,500 |
| Centene Corp. * | 22,000 | 1,308,560 |
| Cerner Corp. * | 62,800 | 4,163,012 |
| Chemed Corp. | 3,900 | 613,431 |
| Cigna Corp. | 50,451 | 6,762,452 |
| Community Health Systems, Inc. * | 23,796 | 667,240 |
| Computer Programs & Systems, Inc. | 3,600 | 136,836 |
| CONMED Corp. | 7,300 | 296,088 |
| CorVel Corp. * | 2,700 | 89,640 |
| Cross Country Healthcare, Inc. * | 12,500 | 168,750 |
| CryoLife, Inc. | 9,050 | 95,387 |
| DaVita HealthCare Partners, Inc. * | 34,300 | 2,658,593 |
| DENTSPLY International, Inc. | 32,300 | 1,965,455 |
| DexCom, Inc. * | 16,500 | 1,374,780 |
| Security | Number
of Shares | Value
($) |
| Diplomat Pharmacy, Inc. * | 9,000 | 252,990 |
| Edwards Lifesciences Corp. * | 21,200 | 3,331,580 |
| Endologix, Inc. * | 13,700 | 116,998 |
| Envision Healthcare Holdings, Inc. * | 38,000 | 1,071,600 |
| ExamWorks Group, Inc. * | 6,200 | 175,088 |
| Express Scripts Holding Co. * | 133,352 | 11,518,946 |
| Five Star Quality Care, Inc. * | 14,335 | 46,875 |
| Globus Medical, Inc., Class A * | 13,900 | 310,665 |
| Greatbatch, Inc. * | 6,700 | 358,115 |
| Haemonetics Corp. * | 16,300 | 550,614 |
| Halyard Health, Inc. * | 8,217 | 243,881 |
| Hanger, Inc. * | 5,400 | 77,868 |
| HCA Holdings, Inc. * | 64,300 | 4,423,197 |
| Health Net, Inc. * | 15,500 | 996,030 |
| HealthEquity, Inc. * | 8,000 | 261,680 |
| HealthSouth Corp. | 20,600 | 717,498 |
| HealthStream, Inc. * | 6,800 | 161,908 |
| Healthways, Inc. * | 8,100 | 95,337 |
| HeartWare International, Inc. * | 4,100 | 177,079 |
| Henry Schein, Inc. * | 16,100 | 2,442,531 |
| Hill-Rom Holdings, Inc. | 10,200 | 537,438 |
| HMS Holdings Corp. * | 12,200 | 128,466 |
| Hologic, Inc. * | 49,612 | 1,927,922 |
| Humana, Inc. | 28,600 | 5,108,818 |
| ICU Medical, Inc. * | 3,350 | 368,399 |
| IDEXX Laboratories, Inc. * | 17,200 | 1,180,264 |
| IMS Health Holdings, Inc. * | 29,800 | 811,156 |
| Insulet Corp. * | 9,800 | 293,020 |
| Integra LifeSciences Holdings Corp. * | 5,300 | 315,721 |
| Intuitive Surgical, Inc. * | 7,550 | 3,749,330 |
| Invacare Corp. | 6,000 | 103,680 |
| IPC Healthcare, Inc. * | 4,000 | 314,000 |
| Kindred Healthcare, Inc. | 11,559 | 154,891 |
| Laboratory Corp. of America Holdings * | 20,869 | 2,561,461 |
| Landauer, Inc. | 2,100 | 82,929 |
| LeMaitre Vascular, Inc. | 6,800 | 90,576 |
| LifePoint Health, Inc. * | 9,607 | 661,730 |
| LivaNova plc * | 10,400 | 689,312 |
| Magellan Health, Inc. * | 3,907 | 208,634 |
| Masimo Corp. * | 8,500 | 337,280 |
| McKesson Corp. | 45,052 | 8,055,298 |
| MedAssets, Inc. * | 10,200 | 241,536 |
| Medidata Solutions, Inc. * | 9,100 | 391,300 |
| MEDNAX, Inc. * | 19,600 | 1,381,212 |
| Medtronic plc | 275,688 | 20,378,857 |
| Meridian Bioscience, Inc. | 10,050 | 191,050 |
| Merit Medical Systems, Inc. * | 10,277 | 190,536 |
| Molina Healthcare, Inc. * | 6,550 | 406,100 |
| National HealthCare Corp. | 4,100 | 267,648 |
| Natus Medical, Inc. * | 7,600 | 346,028 |
| Neogen Corp. * | 10,257 | 554,391 |
| NuVasive, Inc. * | 10,000 | 471,600 |
| NxStage Medical, Inc. * | 18,700 | 312,477 |
| Omnicell, Inc. * | 7,400 | 201,280 |
| OraSure Technologies, Inc. * | 12,200 | 63,440 |
| Orthofix International N.V. * | 2,800 | 95,340 |
| Owens & Minor, Inc. | 9,100 | 326,235 |
| Patterson Cos., Inc. | 18,800 | 891,120 |
| PDI, Inc. * | 2,900 | 4,727 |
| PharMerica Corp. * | 4,813 | 137,507 |
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Premier, Inc., Class A * | 5,000 | 169,050 |
| Quality Systems, Inc. | 10,500 | 147,525 |
| Quest Diagnostics, Inc. | 28,720 | 1,951,524 |
| Quidel Corp. * | 5,200 | 99,944 |
| ResMed, Inc. | 28,000 | 1,613,080 |
| RTI Surgical, Inc. * | 18,100 | 76,110 |
| SeaSpine Holdings Corp. * | 1,766 | 26,631 |
| Select Medical Holdings Corp. | 22,600 | 255,380 |
| Sirona Dental Systems, Inc. * | 11,900 | 1,298,647 |
| St. Jude Medical, Inc. | 54,300 | 3,464,883 |
| STERIS Corp. (c) | 19,400 | 1,454,030 |
| Stryker Corp. | 63,400 | 6,062,308 |
| SurModics, Inc. * | 4,200 | 89,586 |
| Symmetry Surgical, Inc. * | 2,050 | 17,425 |
| Team Health Holdings, Inc. * | 14,000 | 835,380 |
| Teleflex, Inc. | 9,600 | 1,276,800 |
| Tenet Healthcare Corp. * | 18,812 | 590,132 |
| The Cooper Cos., Inc. | 9,081 | 1,383,581 |
| The Ensign Group, Inc. | 5,300 | 223,448 |
| The Providence Service Corp. * | 4,800 | 247,920 |
| The Spectranetics Corp. * | 6,700 | 81,874 |
| Triple-S Management Corp., Class B * | 5,300 | 109,127 |
| U.S. Physical Therapy, Inc. | 3,500 | 171,710 |
| Unilife Corp. *(c) | 29,100 | 21,930 |
| UnitedHealth Group, Inc. | 186,481 | 21,963,732 |
| Universal American Corp. | 20,600 | 153,676 |
| Universal Health Services, Inc., Class B | 18,100 | 2,209,829 |
| Utah Medical Products, Inc. | 2,500 | 147,425 |
| Varian Medical Systems, Inc. * | 21,100 | 1,656,983 |
| VCA, Inc. * | 16,800 | 920,136 |
| Veeva Systems, Inc., Class A * | 15,100 | 383,087 |
| Vocera Communications, Inc. * | 3,700 | 43,549 |
| WellCare Health Plans, Inc. * | 8,200 | 726,520 |
| West Pharmaceutical Services, Inc. | 15,800 | 948,158 |
| Wright Medical Group N.V. * | 14,965 | 289,273 |
| Zeltiq Aesthetics, Inc. * | 9,601 | 323,938 |
| Zimmer Biomet Holdings, Inc. | 33,300 | 3,482,181 |
| | | 220,343,133 |
| Household & Personal Products 1.7% |
| Avon Products, Inc. | 70,000 | 282,100 |
| Central Garden & Pet Co., Class A * | 8,600 | 145,168 |
| Church & Dwight Co., Inc. | 26,400 | 2,272,776 |
| Colgate-Palmolive Co. | 177,509 | 11,777,722 |
| Coty, Inc., Class A | 15,600 | 451,620 |
| Edgewell Personal Care Co. | 10,933 | 926,135 |
| Elizabeth Arden, Inc. *(c) | 3,500 | 43,890 |
| Energizer Holdings, Inc. | 10,933 | 468,260 |
| Herbalife Ltd. *(c) | 11,900 | 666,876 |
| HRG Group, Inc. * | 19,100 | 256,895 |
| Inter Parfums, Inc. | 5,613 | 155,031 |
| Kimberly-Clark Corp. | 70,539 | 8,444,224 |
| Medifast, Inc. * | 3,500 | 97,895 |
| Nu Skin Enterprises, Inc., Class A | 9,600 | 366,816 |
| Nutraceutical International Corp. * | 5,000 | 122,500 |
| Oil-Dri Corp. of America | 1,600 | 50,208 |
| Orchids Paper Products Co. | 2,500 | 73,275 |
| Revlon, Inc., Class A * | 5,400 | 169,398 |
| Spectrum Brands Holdings, Inc. | 6,500 | 623,025 |
| Security | Number
of Shares | Value
($) |
| The Clorox Co. | 24,700 | 3,011,918 |
| The Estee Lauder Cos., Inc., Class A | 43,100 | 3,467,826 |
| The Female Health Co. *(c) | 7,500 | 12,825 |
| The Procter & Gamble Co. | 533,724 | 40,765,839 |
| USANA Health Sciences, Inc. * | 2,682 | 344,905 |
| WD-40 Co. | 4,600 | 439,668 |
| | | 75,436,795 |
| Insurance 3.1% |
| ACE Ltd. | 63,428 | 7,201,615 |
| Aflac, Inc. | 85,300 | 5,437,875 |
| Alleghany Corp. * | 3,440 | 1,707,169 |
| Allied World Assurance Co. Holdings AG | 14,700 | 534,492 |
| Ambac Financial Group, Inc. * | 13,400 | 216,410 |
| American Equity Investment Life Holding Co. | 12,600 | 323,568 |
| American Financial Group, Inc. | 18,750 | 1,353,562 |
| American International Group, Inc. | 257,115 | 16,213,672 |
| American National Insurance Co. | 2,300 | 237,544 |
| AMERISAFE, Inc. | 4,000 | 218,920 |
| AmTrust Financial Services, Inc. | 7,314 | 498,961 |
| Aon plc | 53,796 | 5,019,705 |
| Arch Capital Group Ltd. * | 23,800 | 1,782,382 |
| Argo Group International Holdings Ltd. | 5,512 | 344,610 |
| Arthur J. Gallagher & Co. | 33,400 | 1,460,582 |
| Aspen Insurance Holdings Ltd. | 10,400 | 505,544 |
| Assurant, Inc. | 14,800 | 1,206,644 |
| Assured Guaranty Ltd. | 31,900 | 875,336 |
| Axis Capital Holdings Ltd. | 17,600 | 950,400 |
| Baldwin & Lyons, Inc., Class B | 1,950 | 45,299 |
| Brown & Brown, Inc. | 19,300 | 622,811 |
| Cincinnati Financial Corp. | 35,450 | 2,135,153 |
| Citizens, Inc. *(c) | 16,000 | 134,400 |
| CNA Financial Corp. | 6,900 | 252,264 |
| CNO Financial Group, Inc. | 39,000 | 749,190 |
| Crawford & Co., Class B | 5,800 | 34,800 |
| EMC Insurance Group, Inc. | 1,800 | 45,000 |
| Employers Holdings, Inc. | 7,500 | 198,525 |
| Endurance Specialty Holdings Ltd. | 10,023 | 632,752 |
| Enstar Group Ltd. * | 3,300 | 520,740 |
| Erie Indemnity Co., Class A | 6,300 | 550,998 |
| Everest Re Group Ltd. | 8,700 | 1,548,339 |
| FBL Financial Group, Inc., Class A | 5,190 | 326,451 |
| Federated National Holding Co. | 1,500 | 46,178 |
| First American Financial Corp. | 16,800 | 640,584 |
| FNF Group | 55,539 | 1,959,416 |
| Genworth Financial, Inc., Class A * | 86,800 | 406,224 |
| Greenlight Capital Re Ltd., Class A * | 7,400 | 162,504 |
| Horace Mann Educators Corp. | 8,300 | 284,192 |
| Independence Holding Co. | 2,970 | 40,273 |
| Infinity Property & Casualty Corp. | 2,500 | 201,300 |
| Kemper Corp. | 7,700 | 275,044 |
| Lincoln National Corp. | 51,626 | 2,762,507 |
| Loews Corp. | 60,174 | 2,193,944 |
| Maiden Holdings Ltd. | 18,900 | 293,895 |
| Markel Corp. * | 2,503 | 2,172,604 |
| Marsh & McLennan Cos., Inc. | 104,200 | 5,808,108 |
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| MBIA, Inc. * | 25,250 | 189,628 |
| Mercury General Corp. | 5,400 | 291,654 |
| MetLife, Inc. | 219,603 | 11,063,599 |
| National General Holdings Corp. | 10,400 | 204,984 |
| National Western Life Group, Inc., Class A | 500 | 128,995 |
| Old Republic International Corp. | 43,822 | 790,549 |
| OneBeacon Insurance Group Ltd., Class A | 14,800 | 212,972 |
| PartnerRe Ltd. | 8,900 | 1,237,100 |
| Primerica, Inc. | 10,700 | 509,641 |
| Principal Financial Group, Inc. | 55,641 | 2,790,953 |
| ProAssurance Corp. | 8,540 | 452,278 |
| Prudential Financial, Inc. | 88,472 | 7,298,940 |
| Reinsurance Group of America, Inc. | 12,900 | 1,164,096 |
| RenaissanceRe Holdings Ltd. | 8,532 | 935,363 |
| RLI Corp. | 5,600 | 340,760 |
| Safety Insurance Group, Inc. | 3,400 | 197,030 |
| Selective Insurance Group, Inc. | 7,800 | 284,622 |
| StanCorp Financial Group, Inc. | 9,300 | 1,066,896 |
| State Auto Financial Corp. | 5,500 | 131,175 |
| Stewart Information Services Corp. | 3,600 | 144,612 |
| Symetra Financial Corp. | 19,000 | 602,870 |
| The Allstate Corp. | 77,867 | 4,818,410 |
| The Chubb Corp. | 42,394 | 5,483,664 |
| The Hanover Insurance Group, Inc. | 6,900 | 581,325 |
| The Hartford Financial Services Group, Inc. | 78,262 | 3,620,400 |
| The Navigators Group, Inc. * | 4,200 | 358,470 |
| The Phoenix Cos., Inc. * | 475 | 16,331 |
| The Progressive Corp. | 107,064 | 3,547,030 |
| The Travelers Cos., Inc. | 62,752 | 7,084,073 |
| Torchmark Corp. | 22,200 | 1,287,822 |
| United Fire Group, Inc. | 5,000 | 185,950 |
| Universal Insurance Holdings, Inc. | 8,700 | 274,485 |
| Unum Group | 52,114 | 1,805,750 |
| Validus Holdings Ltd. | 16,857 | 746,765 |
| W. R. Berkley Corp. | 18,050 | 1,007,732 |
| White Mountains Insurance Group Ltd. | 1,300 | 1,027,000 |
| Willis Group Holdings plc | 39,800 | 1,775,478 |
| XL Group plc | 57,900 | 2,204,832 |
| | | 136,996,720 |
| Materials 3.2% |
| A. Schulman, Inc. | 5,300 | 190,217 |
| A.M. Castle & Co. *(c) | 5,800 | 13,862 |
| AEP Industries, Inc. * | 1,900 | 152,000 |
| Air Products & Chemicals, Inc. | 38,000 | 5,281,240 |
| Airgas, Inc. | 15,100 | 1,452,016 |
| AK Steel Holding Corp. *(c) | 32,127 | 92,847 |
| Albemarle Corp. | 23,603 | 1,263,233 |
| Alcoa, Inc. | 254,198 | 2,269,988 |
| Allegheny Technologies, Inc. | 20,092 | 295,352 |
| American Vanguard Corp. | 3,000 | 40,230 |
| Ampco-Pittsburgh Corp. | 4,500 | 52,155 |
| AptarGroup, Inc. | 10,900 | 801,804 |
| Ashland, Inc. | 11,923 | 1,308,192 |
| Avery Dennison Corp. | 16,000 | 1,039,520 |
| Axalta Coating Systems Ltd. * | 31,300 | 864,819 |
| Axiall Corp. | 15,400 | 311,850 |
| Security | Number
of Shares | Value
($) |
| Balchem Corp. | 9,800 | 669,340 |
| Ball Corp. | 29,000 | 1,986,500 |
| Bemis Co., Inc. | 16,700 | 764,526 |
| Berry Plastics Group, Inc. * | 24,600 | 824,100 |
| Boise Cascade Co. * | 5,500 | 164,615 |
| Cabot Corp. | 10,900 | 391,746 |
| Calgon Carbon Corp. | 12,500 | 215,000 |
| Carpenter Technology Corp. | 8,300 | 276,473 |
| Celanese Corp., Series A | 30,700 | 2,181,235 |
| Century Aluminum Co. * | 11,600 | 41,992 |
| CF Industries Holdings, Inc. | 47,500 | 2,411,575 |
| Chase Corp. | 5,200 | 230,932 |
| Chemtura Corp. * | 14,000 | 447,160 |
| Clearwater Paper Corp. * | 5,472 | 275,953 |
| Cliffs Natural Resources, Inc. (c) | 21,100 | 58,236 |
| Codexis, Inc. * | 1,870 | 6,068 |
| Coeur Mining, Inc. * | 22,400 | 60,480 |
| Commercial Metals Co. | 22,800 | 327,636 |
| Compass Minerals International, Inc. | 7,300 | 593,052 |
| Crown Holdings, Inc. * | 28,000 | 1,485,120 |
| Cytec Industries, Inc. | 13,200 | 982,344 |
| Deltic Timber Corp. | 1,500 | 92,940 |
| Domtar Corp. | 10,500 | 433,020 |
| E.I. du Pont de Nemours & Co. | 178,907 | 11,342,704 |
| Eagle Materials, Inc. | 11,543 | 762,184 |
| Eastman Chemical Co. | 28,980 | 2,091,487 |
| Ecolab, Inc. | 51,904 | 6,246,646 |
| Ferro Corp. * | 21,000 | 262,290 |
| Flotek Industries, Inc. * | 13,300 | 240,730 |
| FMC Corp. | 28,000 | 1,139,880 |
| Freeport-McMoRan, Inc. | 236,818 | 2,787,348 |
| FutureFuel Corp. | 8,300 | 127,903 |
| General Moly, Inc. * | 15,700 | 4,553 |
| Globe Specialty Metals, Inc. | 15,900 | 200,658 |
| Graphic Packaging Holding Co. | 52,900 | 749,064 |
| Greif, Inc., Class A | 11,300 | 370,414 |
| H.B. Fuller Co. | 9,000 | 341,910 |
| Hawkins, Inc. | 2,700 | 111,888 |
| Haynes International, Inc. | 2,500 | 98,625 |
| Headwaters, Inc. * | 12,000 | 246,600 |
| Hecla Mining Co. | 72,100 | 149,247 |
| Horsehead Holding Corp. *(c) | 12,800 | 36,352 |
| Huntsman Corp. | 38,600 | 508,362 |
| Innophos Holdings, Inc. | 5,300 | 225,197 |
| Innospec, Inc. | 4,200 | 232,008 |
| International Flavors & Fragrances, Inc. | 18,100 | 2,100,686 |
| International Paper Co. | 85,480 | 3,649,141 |
| Intrepid Potash, Inc. * | 11,800 | 45,548 |
| Kaiser Aluminum Corp. | 3,600 | 292,644 |
| KapStone Paper & Packaging Corp. | 15,800 | 343,650 |
| KMG Chemicals, Inc. | 1,600 | 33,664 |
| Koppers Holdings, Inc. | 4,800 | 91,008 |
| Kraton Performance Polymers, Inc. * | 3,500 | 71,365 |
| Kronos Worldwide, Inc. | 11,720 | 92,588 |
| Louisiana-Pacific Corp. * | 32,900 | 581,014 |
| LSB Industries, Inc. * | 3,000 | 46,950 |
| LyondellBasell Industries N.V., Class A | 73,032 | 6,785,403 |
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Martin Marietta Materials, Inc. | 12,700 | 1,970,405 |
| Materion Corp. | 4,000 | 120,600 |
| McEwen Mining, Inc. (c) | 31,130 | 28,023 |
| Minerals Technologies, Inc. | 6,200 | 365,428 |
| Monsanto Co. | 92,626 | 8,634,596 |
| Myers Industries, Inc. | 8,080 | 126,129 |
| Neenah Paper, Inc. | 4,231 | 285,212 |
| NewMarket Corp. | 1,900 | 748,106 |
| Newmont Mining Corp. | 111,174 | 2,163,446 |
| Noranda Aluminum Holding Corp. | 2,357 | 4,054 |
| Nucor Corp. | 62,400 | 2,639,520 |
| Olin Corp. | 41,920 | 804,026 |
| Olympic Steel, Inc. | 1,400 | 13,398 |
| OMNOVA Solutions, Inc. * | 10,400 | 74,672 |
| Owens-Illinois, Inc. * | 33,600 | 724,080 |
| P.H. Glatfelter Co. | 7,000 | 135,800 |
| Packaging Corp. of America | 20,100 | 1,375,845 |
| Platform Specialty Products Corp. * | 24,500 | 255,780 |
| PolyOne Corp. | 14,810 | 495,246 |
| PPG Industries, Inc. | 52,800 | 5,504,928 |
| Praxair, Inc. | 54,900 | 6,098,841 |
| Quaker Chemical Corp. | 3,200 | 254,016 |
| Rayonier Advanced Materials, Inc. | 6,960 | 64,171 |
| Reliance Steel & Aluminum Co. | 13,300 | 797,468 |
| Rentech, Inc. * | 3,740 | 21,879 |
| Resolute Forest Products, Inc. * | 14,000 | 104,580 |
| Royal Gold, Inc. | 11,400 | 545,376 |
| RPM International, Inc. | 24,600 | 1,124,466 |
| Schnitzer Steel Industries, Inc., Class A | 3,450 | 58,167 |
| Schweitzer-Mauduit International, Inc. | 4,600 | 178,572 |
| Sealed Air Corp. | 37,300 | 1,832,176 |
| Sensient Technologies Corp. | 7,400 | 482,998 |
| Sigma-Aldrich Corp. | 22,500 | 3,143,700 |
| Silgan Holdings, Inc. | 6,900 | 351,003 |
| Sonoco Products Co. | 16,800 | 717,192 |
| Steel Dynamics, Inc. | 47,300 | 873,631 |
| Stepan Co. | 4,300 | 227,599 |
| Stillwater Mining Co. * | 24,633 | 230,072 |
| SunCoke Energy, Inc. | 15,217 | 75,476 |
| The Chemours Co. | 34,661 | 240,201 |
| The Dow Chemical Co. | 224,451 | 11,597,383 |
| The Mosaic Co. | 71,112 | 2,402,875 |
| The Scotts Miracle-Gro Co., Class A | 12,500 | 827,000 |
| The Sherwin-Williams Co. | 15,601 | 4,162,815 |
| The Valspar Corp. | 13,300 | 1,076,635 |
| TimkenSteel Corp. | 6,550 | 69,692 |
| Tredegar Corp. | 5,100 | 72,726 |
| Tronox Ltd., Class A | 9,800 | 60,858 |
| United States Steel Corp. (c) | 26,300 | 307,184 |
| Universal Stainless & Alloy Products, Inc. * | 1,800 | 15,660 |
| Valhi, Inc. (c) | 13,600 | 33,592 |
| Vulcan Materials Co. | 26,192 | 2,529,623 |
| W.R. Grace & Co. * | 13,600 | 1,364,080 |
| Wausau Paper Corp. | 8,700 | 88,827 |
| Westlake Chemical Corp. | 7,500 | 452,025 |
| WestRock Co. | 51,969 | 2,793,853 |
| Worthington Industries, Inc. | 16,800 | 515,760 |
| | | 145,020,545 |
| Security | Number
of Shares | Value
($) |
| Media 3.3% |
| A. H. Belo Corp., Class A | 13,980 | 75,632 |
| AMC Networks, Inc., Class A * | 10,400 | 768,456 |
| Cable One, Inc. * | 900 | 390,096 |
| Cablevision Systems Corp., Class A | 43,900 | 1,430,701 |
| Carmike Cinemas, Inc. * | 6,300 | 161,343 |
| CBS Corp., Class B - Non Voting Shares | 91,190 | 4,242,159 |
| Central European Media Enterprises Ltd., Class A *(c) | 9,900 | 21,384 |
| Charter Communications, Inc., Class A *(c) | 15,800 | 3,016,852 |
| Cinemark Holdings, Inc. | 19,600 | 694,624 |
| Clear Channel Outdoor Holdings, Inc., Class A * | 20,700 | 154,836 |
| Comcast Corp., Class A | 481,860 | 30,174,073 |
| Crown Media Holdings, Inc., Class A * | 6,000 | 34,740 |
| Cumulus Media, Inc., Class A * | 25,351 | 11,639 |
| Discovery Communications, Inc., Class A * | 26,061 | 767,236 |
| Discovery Communications, Inc., Class C * | 57,261 | 1,575,823 |
| DISH Network Corp., Class A * | 43,300 | 2,726,601 |
| DreamWorks Animation SKG, Inc., Class A * | 19,500 | 394,680 |
| Entercom Communications Corp., Class A * | 11,000 | 121,440 |
| Gannett Co., Inc. | 19,500 | 308,490 |
| Global Eagle Entertainment, Inc. * | 17,114 | 227,958 |
| Harte-Hanks, Inc. | 17,200 | 73,100 |
| John Wiley & Sons, Inc., Class A | 9,000 | 470,970 |
| Journal Media Group, Inc. | 5,745 | 70,319 |
| Liberty Broadband Corp., Class A * | 4,373 | 238,591 |
| Liberty Broadband Corp., Class C * | 17,496 | 940,760 |
| Liberty Global plc LiLAC., Class A * | 2,498 | 96,473 |
| Liberty Global plc LiLAC., Class C * | 5,708 | 220,671 |
| Liberty Global plc, Class A * | 49,975 | 2,224,887 |
| Liberty Global plc, Series C * | 121,175 | 5,166,902 |
| Liberty Media Corp., Class A * | 17,495 | 713,096 |
| Liberty Media Corp., Class C * | 42,690 | 1,671,313 |
| Lions Gate Entertainment Corp. | 20,600 | 802,782 |
| Live Nation Entertainment, Inc. * | 26,457 | 721,747 |
| Loral Space & Communications, Inc. * | 2,800 | 125,188 |
| Martha Stewart Living Omnimedia, Inc., Class A * | 26,100 | 157,644 |
| Media General, Inc. * | 18,400 | 273,424 |
| Meredith Corp. | 5,100 | 239,802 |
| MSG Networks, Inc., Class A * | 10,175 | 208,791 |
| National CineMedia, Inc. | 13,200 | 187,440 |
| New Media Investment Group, Inc. | 11,500 | 185,150 |
| News Corp., Class A | 104,687 | 1,612,180 |
| Nexstar Broadcasting Group, Inc., Class A | 4,500 | 239,535 |
| Omnicom Group, Inc. | 45,800 | 3,431,336 |
| Regal Entertainment Group, Class A | 12,100 | 234,498 |
| Rentrak Corp. *(c) | 3,000 | 165,540 |
| Salem Media Group, Inc. | 5,700 | 35,853 |
| Scholastic Corp. | 7,300 | 298,351 |
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Scripps Networks Interactive, Inc., Class A | 19,200 | 1,153,536 |
| Sinclair Broadcast Group, Inc., Class A | 11,000 | 330,110 |
| Sirius XM Holdings, Inc. * | 485,300 | 1,980,024 |
| Sizmek, Inc. * | 8,300 | 49,219 |
| Starz, Class A * | 16,195 | 542,694 |
| TEGNA, Inc. | 46,100 | 1,246,544 |
| The E.W. Scripps Co., Class A | 18,547 | 409,147 |
| The Interpublic Group of Cos., Inc. | 73,037 | 1,674,738 |
| The Madison Square Garden Co., Class A * | 3,391 | 605,293 |
| The New York Times Co., Class A | 40,200 | 533,856 |
| The Walt Disney Co. | 302,439 | 34,399,412 |
| Time Warner Cable, Inc. | 55,437 | 10,499,768 |
| Time Warner, Inc. | 156,757 | 11,810,072 |
| Time, Inc. | 19,122 | 355,287 |
| Tribune Media Co., Class A | 18,500 | 746,105 |
| Twenty-First Century Fox, Inc., Class A | 323,878 | 9,939,816 |
| Viacom, Inc., Class B | 68,922 | 3,398,544 |
| World Wrestling Entertainment, Inc., Class A (c) | 5,700 | 101,631 |
| | | 147,880,902 |
| Pharmaceuticals, Biotechnology & Life Sciences 9.2% |
| AbbVie, Inc. | 322,096 | 19,180,817 |
| ACADIA Pharmaceuticals, Inc. * | 16,600 | 578,012 |
| Accelerate Diagnostics, Inc. *(c) | 5,300 | 88,881 |
| Achillion Pharmaceuticals, Inc. * | 19,800 | 154,836 |
| Acorda Therapeutics, Inc. * | 8,400 | 302,736 |
| Acura Pharmaceuticals, Inc. * | 4,180 | 10,283 |
| Aegerion Pharmaceuticals, Inc. *(c) | 3,800 | 55,784 |
| Affymetrix, Inc. * | 25,500 | 234,600 |
| Agilent Technologies, Inc. | 62,917 | 2,375,746 |
| Agios Pharmaceuticals, Inc. * | 6,000 | 437,160 |
| Akorn, Inc. * | 15,400 | 411,796 |
| Albany Molecular Research, Inc. * | 8,800 | 158,752 |
| Alder Biopharmaceuticals, Inc. * | 6,300 | 201,474 |
| Alexion Pharmaceuticals, Inc. * | 43,500 | 7,656,000 |
| Alkermes plc * | 28,600 | 2,056,912 |
| Allergan plc * | 77,087 | 23,779,027 |
| Alnylam Pharmaceuticals, Inc. * | 15,500 | 1,332,225 |
| AMAG Pharmaceuticals, Inc. * | 6,600 | 264,000 |
| Amgen, Inc. | 150,989 | 23,883,440 |
| Amicus Therapeutics, Inc. * | 27,200 | 204,000 |
| Anacor Pharmaceuticals, Inc. * | 9,800 | 1,101,618 |
| Aratana Therapeutics, Inc. * | 10,100 | 70,599 |
| Arena Pharmaceuticals, Inc. * | 32,100 | 60,669 |
| ARIAD Pharmaceuticals, Inc. * | 57,200 | 391,248 |
| ArQule, Inc. * | 21,000 | 47,460 |
| Array BioPharma, Inc. * | 62,184 | 318,382 |
| Arrowhead Research Corp. *(c) | 10,700 | 55,105 |
| AVEO Pharmaceuticals, Inc. *(c) | 15,100 | 17,516 |
| Baxalta, Inc. | 105,806 | 3,646,075 |
| Bio-Rad Laboratories, Inc., Class A * | 4,900 | 683,452 |
| Bio-Techne Corp. | 7,800 | 687,960 |
| BioCryst Pharmaceuticals, Inc. * | 23,900 | 214,861 |
| BioDelivery Sciences International, Inc. *(c) | 14,119 | 75,960 |
| Security | Number
of Shares | Value
($) |
| Biogen, Inc. * | 46,312 | 13,454,099 |
| BioMarin Pharmaceutical, Inc. * | 31,000 | 3,628,240 |
| Biota Pharmaceuticals, Inc. * | 26,016 | 50,211 |
| Bluebird Bio, Inc. * | 8,000 | 617,040 |
| Bristol-Myers Squibb Co. | 326,953 | 21,562,550 |
| Bruker Corp. * | 18,000 | 330,660 |
| Cambrex Corp. * | 7,200 | 330,984 |
| Catalent, Inc. * | 18,000 | 478,440 |
| Celgene Corp. * | 155,562 | 19,089,013 |
| Celldex Therapeutics, Inc. * | 25,800 | 311,148 |
| Cempra, Inc. *(c) | 7,500 | 166,500 |
| Cepheid * | 16,200 | 541,080 |
| Charles River Laboratories International, Inc. * | 10,416 | 679,540 |
| Chimerix, Inc. * | 7,200 | 282,096 |
| Clovis Oncology, Inc. * | 6,400 | 639,424 |
| Depomed, Inc. * | 14,500 | 253,750 |
| Durect Corp. * | 14,500 | 29,580 |
| Dyax Corp. * | 31,000 | 853,430 |
| Dynavax Technologies Corp. * | 10,950 | 248,674 |
| Eli Lilly & Co. | 192,289 | 15,685,014 |
| Emergent Biosolutions, Inc. * | 10,400 | 334,360 |
| Endo International plc * | 39,350 | 2,360,606 |
| Endocyte, Inc. * | 11,300 | 58,082 |
| Enzo Biochem, Inc. * | 43,981 | 163,609 |
| Enzon Pharmaceuticals, Inc. | 21,300 | 14,058 |
| EPIRUS Biopharmaceuticals, Inc. *(c) | 843 | 4,510 |
| Esperion Therapeutics, Inc. *(c) | 3,500 | 84,000 |
| Exact Sciences Corp. *(c) | 16,300 | 135,779 |
| Exelixis, Inc. *(c) | 44,700 | 269,094 |
| FibroGen, Inc. * | 12,700 | 296,037 |
| Fluidigm Corp. * | 6,000 | 64,860 |
| Foundation Medicine, Inc. *(c) | 6,500 | 145,730 |
| Genomic Health, Inc. * | 8,400 | 175,728 |
| Geron Corp. * | 46,200 | 160,314 |
| Gilead Sciences, Inc. | 289,192 | 31,270,331 |
| GTx, Inc. *(c) | 15,900 | 16,854 |
| Halozyme Therapeutics, Inc. * | 28,000 | 438,200 |
| Harvard Apparatus Regenerative Technology, Inc. * | 4,825 | 2,905 |
| Harvard Bioscience, Inc. * | 19,300 | 56,742 |
| Heron Therapeutics, Inc. *(c) | 8,200 | 224,844 |
| Horizon Pharma plc * | 30,500 | 479,460 |
| Illumina, Inc. * | 28,000 | 4,011,840 |
| ImmunoGen, Inc. * | 16,900 | 197,730 |
| Immunomedics, Inc. *(c) | 64,448 | 192,699 |
| Impax Laboratories, Inc. * | 13,800 | 477,894 |
| Incyte Corp. * | 32,200 | 3,784,466 |
| Infinity Pharmaceuticals, Inc. * | 19,600 | 202,860 |
| Inovio Pharmaceuticals, Inc. *(c) | 20,194 | 127,828 |
| Insmed, Inc. * | 15,000 | 297,600 |
| Intercept Pharmaceuticals, Inc. * | 3,900 | 613,080 |
| Intra-Cellular Therapies, Inc. * | 8,000 | 382,800 |
| Intrexon Corp. *(c) | 8,700 | 292,320 |
| Ironwood Pharmaceuticals, Inc. * | 19,800 | 224,928 |
| Isis Pharmaceuticals, Inc. * | 22,900 | 1,102,635 |
| Jazz Pharmaceuticals plc * | 11,400 | 1,564,992 |
| Johnson & Johnson | 544,109 | 54,971,332 |
| Juno Therapeutics, Inc. *(c) | 13,900 | 719,464 |
| Keryx Biopharmaceuticals, Inc. *(c) | 24,800 | 111,104 |
| Kite Pharma, Inc. *(c) | 8,300 | 564,815 |
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Lannett Co., Inc. *(c) | 8,800 | 393,976 |
| Lexicon Pharmaceuticals, Inc. *(c) | 18,214 | 173,215 |
| Ligand Pharmaceuticals, Inc. * | 4,948 | 447,052 |
| Luminex Corp. * | 12,900 | 234,780 |
| MacroGenics, Inc. * | 7,500 | 233,025 |
| Mallinckrodt plc * | 21,702 | 1,425,170 |
| MannKind Corp. *(c) | 40,800 | 135,048 |
| Medivation, Inc. * | 30,400 | 1,278,624 |
| Merck & Co., Inc. | 556,516 | 30,419,165 |
| Merrimack Pharmaceuticals, Inc. * | 38,590 | 360,431 |
| Mettler-Toledo International, Inc. * | 5,900 | 1,834,841 |
| MiMedx Group, Inc. * | 26,820 | 195,250 |
| Momenta Pharmaceuticals, Inc. * | 13,500 | 221,535 |
| Mylan N.V. * | 80,100 | 3,531,609 |
| Myriad Genetics, Inc. *(c) | 16,600 | 670,142 |
| Nektar Therapeutics * | 43,600 | 517,532 |
| Neurocrine Biosciences, Inc. * | 17,200 | 844,348 |
| NewLink Genetics Corp. * | 4,700 | 179,869 |
| Novavax, Inc. * | 52,500 | 354,375 |
| Omeros Corp. *(c) | 8,800 | 110,264 |
| Oncothyreon, Inc. * | 25,700 | 76,072 |
| Ophthotech Corp. * | 8,000 | 399,440 |
| OPKO Health, Inc. *(c) | 77,300 | 730,485 |
| Orexigen Therapeutics, Inc. *(c) | 32,750 | 99,560 |
| OvaScience, Inc. *(c) | 4,900 | 63,553 |
| Pacira Pharmaceuticals, Inc. * | 6,500 | 324,675 |
| Pain Therapeutics, Inc. * | 18,600 | 34,410 |
| PAREXEL International Corp. * | 13,800 | 871,056 |
| PDL BioPharma, Inc. | 28,700 | 131,446 |
| PerkinElmer, Inc. | 23,577 | 1,217,516 |
| Perrigo Co., plc | 29,700 | 4,684,878 |
| Pfizer, Inc. | 1,213,725 | 41,048,179 |
| Portola Pharmaceuticals, Inc. * | 13,300 | 633,213 |
| POZEN, Inc. *(c) | 16,100 | 94,185 |
| Prestige Brands Holdings, Inc. * | 8,500 | 416,585 |
| Prothena Corp. plc * | 8,919 | 459,418 |
| PTC Therapeutics, Inc. * | 5,885 | 146,360 |
| Puma Biotechnology, Inc. * | 4,800 | 395,616 |
| Quintiles Transnational Holdings, Inc. * | 18,800 | 1,196,620 |
| Radius Health, Inc. * | 8,000 | 513,840 |
| Raptor Pharmaceutical Corp. * | 29,942 | 163,184 |
| Regeneron Pharmaceuticals, Inc. * | 15,400 | 8,583,806 |
| Relypsa, Inc. * | 7,400 | 118,326 |
| Repligen Corp. * | 9,886 | 328,611 |
| Retrophin, Inc. * | 9,400 | 179,822 |
| Rigel Pharmaceuticals, Inc. * | 48,200 | 122,428 |
| Sagent Pharmaceuticals, Inc. * | 9,800 | 164,738 |
| Sangamo BioSciences, Inc. * | 14,600 | 102,930 |
| Sarepta Therapeutics, Inc. * | 9,800 | 235,788 |
| Seattle Genetics, Inc. * | 23,400 | 970,866 |
| Sequenom, Inc. *(c) | 87,600 | 153,300 |
| Spectrum Pharmaceuticals, Inc. * | 24,200 | 126,082 |
| Sucampo Pharmaceuticals, Inc., Class A * | 4,300 | 83,248 |
| Synta Pharmaceuticals Corp. *(c) | 43,900 | 29,413 |
| TESARO, Inc. * | 6,195 | 281,687 |
| Tetraphase Pharmaceuticals, Inc. * | 5,600 | 50,568 |
| The Medicines Co. * | 15,600 | 534,144 |
| TherapeuticsMD, Inc. * | 35,777 | 210,011 |
| Theravance Biopharma, Inc. * | 3,914 | 58,514 |
| Theravance, Inc. (c) | 13,700 | 120,286 |
| Security | Number
of Shares | Value
($) |
| Thermo Fisher Scientific, Inc. | 77,302 | 10,109,556 |
| Ultragenyx Pharmaceutical, Inc. * | 7,700 | 764,995 |
| United Therapeutics Corp. * | 9,100 | 1,334,333 |
| Vanda Pharmaceuticals, Inc. *(c) | 13,953 | 149,855 |
| Vertex Pharmaceuticals, Inc. * | 48,244 | 6,017,957 |
| Vical, Inc. * | 34,400 | 14,448 |
| VIVUS, Inc. *(c) | 23,400 | 29,484 |
| VWR Corp. * | 9,000 | 247,590 |
| Waters Corp. * | 16,100 | 2,057,580 |
| XenoPort, Inc. * | 37,200 | 227,292 |
| ZIOPHARM Oncology, Inc. *(c) | 33,811 | 385,107 |
| Zoetis, Inc. | 92,879 | 3,994,726 |
| | | 411,613,382 |
| Real Estate 4.2% |
| Acadia Realty Trust | 23,300 | 766,337 |
| AG Mortgage Investment Trust, Inc. | 12,000 | 182,520 |
| Agree Realty Corp. | 5,000 | 161,900 |
| Alexander & Baldwin, Inc. | 6,400 | 241,536 |
| Alexander's, Inc. | 800 | 315,912 |
| Alexandria Real Estate Equities, Inc. | 15,800 | 1,417,892 |
| Altisource Portfolio Solutions S.A. * | 2,800 | 75,068 |
| Altisource Residential Corp. | 10,789 | 155,254 |
| American Assets Trust, Inc. | 8,000 | 337,280 |
| American Campus Communities, Inc. | 29,900 | 1,213,043 |
| American Capital Agency Corp. | 72,900 | 1,299,807 |
| American Capital Mortgage Investment Corp. | 14,600 | 211,846 |
| American Homes 4 Rent, Class A | 24,300 | 400,950 |
| American Realty Investors, Inc. * | 1,537 | 7,992 |
| American Tower Corp. | 82,944 | 8,479,365 |
| Annaly Capital Management, Inc. | 180,600 | 1,796,970 |
| Anworth Mortgage Asset Corp. | 24,200 | 115,434 |
| Apartment Investment & Management Co., Class A | 39,211 | 1,536,679 |
| Apollo Commercial Real Estate Finance, Inc. | 11,400 | 189,354 |
| Apollo Residential Mortgage, Inc. | 12,900 | 166,023 |
| Apple Hospitality REIT, Inc. (c) | 35,000 | 690,200 |
| ARMOUR Residential REIT, Inc. | 7,625 | 156,465 |
| Ashford Hospitality Prime, Inc. | 2,168 | 31,870 |
| Ashford Hospitality Trust, Inc. | 9,000 | 61,920 |
| AV Homes, Inc. * | 6,500 | 86,060 |
| AvalonBay Communities, Inc. | 26,919 | 4,706,249 |
| BioMed Realty Trust, Inc. | 46,700 | 1,093,247 |
| Blackstone Mortgage Trust, Inc., Class A | 18,102 | 498,167 |
| Boston Properties, Inc. | 31,100 | 3,913,935 |
| Brandywine Realty Trust | 62,663 | 845,950 |
| Brixmor Property Group, Inc. | 31,600 | 809,592 |
| Camden Property Trust | 17,500 | 1,291,325 |
| Campus Crest Communities, Inc. | 17,900 | 118,677 |
| Capstead Mortgage Corp. | 21,740 | 209,791 |
| Care Capital Properties, Inc. | 16,741 | 551,616 |
| CareTrust REIT, Inc. | 7,131 | 80,723 |
| CBL & Associates Properties, Inc. | 26,785 | 390,525 |
| CBRE Group, Inc., Class A * | 57,000 | 2,124,960 |
| Cedar Realty Trust, Inc. | 33,200 | 232,068 |
| Chambers Street Properties | 37,300 | 264,084 |
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Chatham Lodging Trust | 8,234 | 188,476 |
| Chesapeake Lodging Trust | 8,500 | 234,090 |
| Chimera Investment Corp. | 33,940 | 477,875 |
| CIM Commercial Trust Corp. | 9,700 | 188,762 |
| Colony Capital, Inc., Class A | 19,300 | 392,562 |
| Columbia Property Trust, Inc. | 20,200 | 501,768 |
| Communications Sales & Leasing, Inc. | 21,853 | 439,027 |
| Consolidated-Tomoka Land Co. | 2,000 | 102,500 |
| CoreSite Realty Corp. | 3,400 | 186,830 |
| Corporate Office Properties Trust | 14,400 | 331,200 |
| Corrections Corp. of America | 20,285 | 578,122 |
| Cousins Properties, Inc. | 53,345 | 535,584 |
| Crown Castle International Corp. | 65,323 | 5,582,504 |
| CubeSmart | 41,400 | 1,151,748 |
| CyrusOne, Inc. | 10,000 | 352,800 |
| CYS Investments, Inc. | 25,500 | 196,860 |
| DCT Industrial Trust, Inc. | 15,900 | 590,208 |
| DDR Corp. | 54,584 | 917,011 |
| DiamondRock Hospitality Co. | 59,386 | 693,628 |
| Digital Realty Trust, Inc. | 27,300 | 2,019,108 |
| Douglas Emmett, Inc. | 24,948 | 762,161 |
| Duke Realty Corp. | 69,590 | 1,440,513 |
| DuPont Fabros Technology, Inc. | 9,200 | 295,228 |
| Dynex Capital, Inc. | 21,998 | 145,847 |
| EastGroup Properties, Inc. | 6,300 | 353,808 |
| Education Realty Trust, Inc. | 9,166 | 329,151 |
| Empire State Realty Trust, Inc., Class A | 22,502 | 400,986 |
| EPR Properties | 9,600 | 545,376 |
| Equinix, Inc. | 10,586 | 3,140,654 |
| Equity Commonwealth * | 23,450 | 673,249 |
| Equity LifeStyle Properties, Inc. | 20,700 | 1,251,936 |
| Equity One, Inc. | 12,100 | 321,618 |
| Equity Residential | 73,500 | 5,683,020 |
| Essex Property Trust, Inc. | 12,989 | 2,863,295 |
| Extra Space Storage, Inc. | 23,200 | 1,838,368 |
| Federal Realty Investment Trust | 15,200 | 2,181,048 |
| FelCor Lodging Trust, Inc. | 28,000 | 225,400 |
| First Industrial Realty Trust, Inc. | 15,900 | 344,712 |
| First Potomac Realty Trust | 14,800 | 174,492 |
| Forest City Enterprises, Inc., Class A * | 33,700 | 744,770 |
| Forestar Group, Inc. * | 4,933 | 69,802 |
| Franklin Street Properties Corp. | 22,500 | 234,450 |
| Gaming & Leisure Properties, Inc. | 21,618 | 630,597 |
| General Growth Properties, Inc. | 125,309 | 3,627,696 |
| Getty Realty Corp. | 9,500 | 160,360 |
| Global Net Lease, Inc. (c) | 40,000 | 367,200 |
| Government Properties Income Trust | 9,900 | 161,172 |
| Gramercy Property Trust, Inc. | 6,807 | 154,383 |
| Griffin Industrial Realty, Inc. | 300 | 7,674 |
| Hatteras Financial Corp. | 13,800 | 197,478 |
| HCP, Inc. | 89,348 | 3,323,746 |
| Healthcare Realty Trust, Inc. | 15,800 | 416,488 |
| Healthcare Trust of America, Inc., Class A | 21,000 | 552,510 |
| Hersha Hospitality Trust | 10,000 | 240,100 |
| Highwoods Properties, Inc. | 17,261 | 749,990 |
| Hospitality Properties Trust | 24,500 | 657,580 |
| Host Hotels & Resorts, Inc. | 146,663 | 2,541,670 |
| Security | Number
of Shares | Value
($) |
| Hudson Pacific Properties, Inc. | 9,100 | 259,987 |
| Inland Real Estate Corp. | 20,300 | 179,655 |
| Invesco Mortgage Capital, Inc. | 22,300 | 268,715 |
| Investors Real Estate Trust | 28,600 | 232,232 |
| Iron Mountain, Inc. | 36,173 | 1,108,341 |
| iStar, Inc. * | 13,390 | 173,267 |
| Jones Lang LaSalle, Inc. | 9,300 | 1,550,403 |
| Kennedy-Wilson Holdings, Inc. | 12,200 | 299,144 |
| Kilroy Realty Corp. | 15,400 | 1,013,936 |
| Kimco Realty Corp. | 82,295 | 2,203,037 |
| Kite Realty Group Trust | 15,825 | 417,938 |
| Lamar Advertising Co., Class A | 16,100 | 908,523 |
| LaSalle Hotel Properties | 19,700 | 579,377 |
| Lexington Realty Trust | 33,567 | 296,732 |
| Liberty Property Trust | 33,100 | 1,126,062 |
| LTC Properties, Inc. | 8,700 | 372,795 |
| Mack-Cali Realty Corp. | 18,500 | 402,560 |
| Maui Land & Pineapple Co., Inc. * | 800 | 4,160 |
| Medical Properties Trust, Inc. | 65,300 | 737,890 |
| MFA Financial, Inc. | 60,500 | 418,660 |
| Mid-America Apartment Communities, Inc. | 12,844 | 1,094,180 |
| Monmouth Real Estate Investment Corp. | 18,100 | 188,421 |
| Monogram Residential Trust, Inc. | 55,400 | 546,244 |
| National Health Investors, Inc. | 5,900 | 346,566 |
| National Retail Properties, Inc. | 29,220 | 1,110,360 |
| New Century Financial Corp. *(b)(e) | 3,600 | — |
| New Residential Investment Corp. | 45,250 | 548,882 |
| New Senior Investment Group, Inc. | 20,583 | 206,242 |
| New York Mortgage Trust, Inc. (c) | 18,600 | 105,648 |
| New York REIT, Inc. | 28,100 | 320,340 |
| Newcastle Investment Corp. | 20,583 | 101,268 |
| NorthStar Realty Finance Corp. | 63,075 | 757,531 |
| Omega Healthcare Investors, Inc. | 32,494 | 1,121,693 |
| One Liberty Properties, Inc. | 1,400 | 32,984 |
| Outfront Media, Inc. | 24,003 | 566,711 |
| Paramount Group, Inc. | 45,900 | 815,643 |
| Parkway Properties, Inc. | 14,940 | 249,946 |
| Pebblebrook Hotel Trust | 12,300 | 420,414 |
| Pennsylvania Real Estate Investment Trust | 13,900 | 312,472 |
| PennyMac Mortgage Investment Trust | 14,400 | 210,528 |
| Physicians Realty Trust | 10,600 | 169,388 |
| Piedmont Office Realty Trust, Inc., Class A | 27,500 | 532,950 |
| Plum Creek Timber Co., Inc. | 37,947 | 1,545,961 |
| Post Properties, Inc. | 8,200 | 489,868 |
| Potlatch Corp. | 5,753 | 179,724 |
| Preferred Apartment Communities, Inc., Class A | 3,700 | 40,515 |
| Prologis, Inc. | 106,534 | 4,552,198 |
| PS Business Parks, Inc. | 3,000 | 257,370 |
| Public Storage | 28,097 | 6,447,138 |
| QTS Realty Trust, Inc., Class A | 9,100 | 391,391 |
| RAIT Financial Trust | 16,199 | 78,565 |
| Ramco-Gershenson Properties Trust | 22,500 | 378,000 |
| Rayonier, Inc. | 32,182 | 728,922 |
| Realogy Holdings Corp. * | 29,400 | 1,149,540 |
| Realty Income Corp. | 48,035 | 2,375,811 |
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Redwood Trust, Inc. | 19,700 | 261,616 |
| Regency Centers Corp. | 20,233 | 1,375,035 |
| Resource Capital Corp. | 7,150 | 91,806 |
| Retail Opportunity Investments Corp. | 14,400 | 261,072 |
| Retail Properties of America, Inc., Class A | 41,600 | 622,752 |
| RLJ Lodging Trust | 30,400 | 762,736 |
| Rouse Properties, Inc. | 10,715 | 188,477 |
| Ryman Hospitality Properties, Inc. | 7,837 | 412,226 |
| Sabra Health Care REIT, Inc. | 13,700 | 310,716 |
| Saul Centers, Inc. | 4,700 | 263,529 |
| Select Income REIT | 14,600 | 294,920 |
| Senior Housing Properties Trust | 37,819 | 574,471 |
| Seritage Growth Properties *(c) | 13,000 | 547,690 |
| Silver Bay Realty Trust Corp. | 13,033 | 211,135 |
| Simon Property Group, Inc. | 60,105 | 12,108,753 |
| SL Green Realty Corp. | 19,566 | 2,320,919 |
| Sovran Self Storage, Inc. | 6,626 | 661,739 |
| Spirit Realty Capital, Inc. | 89,048 | 906,509 |
| STAG Industrial, Inc. | 11,900 | 244,188 |
| Starwood Property Trust, Inc. | 50,873 | 1,022,039 |
| Starwood Waypoint Residential Trust | 6,440 | 158,424 |
| Strategic Hotels & Resorts, Inc. * | 42,000 | 592,200 |
| Summit Hotel Properties, Inc. | 9,600 | 125,568 |
| Sun Communities, Inc. | 11,300 | 757,326 |
| Sunstone Hotel Investors, Inc. | 60,145 | 869,697 |
| Tanger Factory Outlet Centers, Inc. | 15,600 | 545,220 |
| Taubman Centers, Inc. | 11,600 | 892,968 |
| Tejon Ranch Co. * | 3,674 | 82,775 |
| The Geo Group, Inc. | 11,899 | 383,981 |
| The Howard Hughes Corp. * | 6,300 | 778,554 |
| The Macerich Co. | 27,405 | 2,322,300 |
| The St. Joe Co. *(c) | 18,800 | 372,616 |
| Two Harbors Investment Corp. | 60,300 | 510,138 |
| UDR, Inc. | 50,961 | 1,756,116 |
| UMH Properties, Inc. | 7,900 | 78,131 |
| Universal Health Realty Income Trust | 4,700 | 233,543 |
| Urban Edge Properties | 16,046 | 380,932 |
| Urstadt Biddle Properties, Inc., Class A | 4,500 | 90,450 |
| Ventas, Inc. | 66,966 | 3,597,413 |
| VEREIT, Inc. | 178,200 | 1,471,932 |
| Vornado Realty Trust | 34,092 | 3,427,951 |
| Washington Real Estate Investment Trust | 9,700 | 261,997 |
| Weingarten Realty Investors | 23,175 | 828,738 |
| Welltower, Inc. | 71,958 | 4,667,915 |
| Western Asset Mortgage Capital Corp. (c) | 4,607 | 52,612 |
| Weyerhaeuser Co. | 99,992 | 2,932,765 |
| Whitestone REIT | 2,100 | 25,956 |
| WP Carey, Inc. | 22,700 | 1,438,499 |
| WP GLIMCHER, Inc. | 33,804 | 392,802 |
| Xenia Hotels & Resorts, Inc. | 35,200 | 610,368 |
| | | 185,706,820 |
| Security | Number
of Shares | Value
($) |
| Retailing 5.1% |
| Aaron's, Inc. | 14,675 | 362,032 |
| Abercrombie & Fitch Co., Class A | 11,800 | 250,042 |
| Advance Auto Parts, Inc. | 15,340 | 3,043,916 |
| Aeropostale, Inc. *(c) | 25,600 | 15,872 |
| Amazon.com, Inc. * | 75,225 | 47,083,327 |
| America's Car-Mart, Inc. * | 6,850 | 234,544 |
| American Eagle Outfitters, Inc. | 40,750 | 622,660 |
| Asbury Automotive Group, Inc. * | 6,500 | 514,800 |
| Ascena Retail Group, Inc. * | 34,141 | 454,758 |
| AutoNation, Inc. * | 13,800 | 872,022 |
| AutoZone, Inc. * | 5,900 | 4,628,019 |
| Barnes & Noble Education, Inc. * | 4,676 | 68,971 |
| Barnes & Noble, Inc. | 7,400 | 96,126 |
| Bed Bath & Beyond, Inc. * | 35,500 | 2,116,865 |
| Best Buy Co., Inc. | 63,425 | 2,221,778 |
| Big Lots, Inc. | 14,700 | 677,670 |
| Burlington Stores, Inc. * | 17,000 | 817,360 |
| Cabela's, Inc. * | 7,700 | 301,609 |
| Caleres, Inc. | 6,675 | 203,988 |
| CarMax, Inc. * | 40,246 | 2,374,916 |
| Chico's FAS, Inc. | 26,200 | 362,084 |
| Christopher & Banks Corp. * | 13,400 | 19,564 |
| Conn's, Inc. * | 7,900 | 149,863 |
| Core-Mark Holding Co., Inc. | 4,000 | 325,160 |
| CST Brands, Inc. | 12,286 | 441,436 |
| Destination Maternity Corp. | 5,000 | 34,650 |
| Dick's Sporting Goods, Inc. | 17,500 | 779,625 |
| Dillard's, Inc., Class A | 4,300 | 384,764 |
| Dollar General Corp. | 59,625 | 4,040,786 |
| Dollar Tree, Inc. * | 43,344 | 2,838,599 |
| DSW, Inc., Class A | 11,560 | 288,306 |
| Expedia, Inc. | 19,472 | 2,654,034 |
| Express, Inc. * | 12,600 | 243,180 |
| Five Below, Inc. * | 15,800 | 542,572 |
| Foot Locker, Inc. | 29,900 | 2,025,725 |
| Francesca's Holdings Corp. * | 13,300 | 188,993 |
| Fred's, Inc., Class A | 6,700 | 92,661 |
| FTD Cos., Inc. * | 8,070 | 228,542 |
| GameStop Corp., Class A (c) | 19,348 | 891,362 |
| Genesco, Inc. * | 4,300 | 269,395 |
| Genuine Parts Co. | 30,300 | 2,750,028 |
| GNC Holdings, Inc., Class A | 15,500 | 461,125 |
| Group 1 Automotive, Inc. | 4,400 | 382,580 |
| Groupon, Inc. * | 88,400 | 327,964 |
| Guess?, Inc. | 16,800 | 353,640 |
| Hibbett Sports, Inc. * | 3,543 | 121,029 |
| HSN, Inc. | 6,269 | 387,738 |
| J.C. Penney Co., Inc. * | 72,200 | 662,074 |
| Kirkland's, Inc. | 8,700 | 200,013 |
| Kohl's Corp. | 39,600 | 1,826,352 |
| L Brands, Inc. | 51,320 | 4,925,694 |
| Lands' End, Inc. *(c) | 7,747 | 191,196 |
| Liberty Interactive Corp., QVC Group, Class A * | 89,109 | 2,438,913 |
| Liberty TripAdvisor Holdings, Inc., Class A * | 13,830 | 431,358 |
| Liberty Ventures, Series A * | 25,347 | 1,104,369 |
| Lithia Motors, Inc., Class A | 3,300 | 387,387 |
| LKQ Corp. * | 58,900 | 1,744,029 |
| Lowe's Cos., Inc. | 181,451 | 13,396,527 |
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Lumber Liquidators Holdings, Inc. *(c) | 4,600 | 63,572 |
| Macy's, Inc. | 63,863 | 3,255,736 |
| MarineMax, Inc. * | 16,300 | 257,540 |
| Mattress Firm Holding Corp. * | 3,200 | 136,224 |
| Monro Muffler Brake, Inc. | 4,462 | 330,947 |
| Murphy USA, Inc. * | 6,875 | 421,919 |
| Netflix, Inc. * | 84,347 | 9,141,528 |
| Nordstrom, Inc. | 26,300 | 1,715,023 |
| O'Reilly Automotive, Inc. * | 19,799 | 5,469,672 |
| Office Depot, Inc. * | 99,656 | 759,379 |
| Outerwall, Inc. (c) | 5,000 | 300,000 |
| Pacific Sunwear of California, Inc. * | 41,175 | 11,027 |
| Penske Automotive Group, Inc. | 9,100 | 444,444 |
| Pier 1 Imports, Inc. (c) | 15,800 | 117,236 |
| Pool Corp. | 6,662 | 543,219 |
| Rent-A-Center, Inc. | 7,750 | 142,523 |
| Restoration Hardware Holdings, Inc. * | 6,300 | 649,467 |
| Ross Stores, Inc. | 80,400 | 4,066,632 |
| Sally Beauty Holdings, Inc. * | 39,950 | 939,225 |
| Sears Holdings Corp. *(c) | 11,385 | 266,067 |
| Select Comfort Corp. * | 12,200 | 258,640 |
| Shoe Carnival, Inc. | 6,300 | 141,561 |
| Shutterfly, Inc. * | 6,300 | 262,773 |
| Signet Jewelers Ltd. | 16,800 | 2,535,792 |
| Sonic Automotive, Inc., Class A | 11,200 | 279,328 |
| Stage Stores, Inc. | 14,275 | 138,896 |
| Staples, Inc. | 118,900 | 1,544,511 |
| Stein Mart, Inc. | 10,300 | 91,258 |
| Systemax, Inc. * | 8,000 | 74,160 |
| Target Corp. | 120,378 | 9,290,774 |
| The Buckle, Inc. (c) | 3,875 | 137,330 |
| The Cato Corp., Class A | 7,100 | 268,096 |
| The Children's Place, Inc. | 3,600 | 193,212 |
| The Finish Line, Inc., Class A | 7,161 | 133,409 |
| The Gap, Inc. | 51,800 | 1,409,996 |
| The Home Depot, Inc. | 251,963 | 31,152,705 |
| The Men's Wearhouse, Inc. | 6,600 | 263,868 |
| The Michaels Cos., Inc. * | 16,000 | 374,080 |
| The Pep Boys - Manny, Moe & Jack * | 19,400 | 291,776 |
| The Priceline Group, Inc. * | 9,976 | 14,507,498 |
| The TJX Cos., Inc. | 133,447 | 9,766,986 |
| Tiffany & Co. | 22,200 | 1,830,168 |
| Tractor Supply Co. | 25,700 | 2,374,423 |
| Trans World Entertainment Corp. * | 9,700 | 36,860 |
| Travelport Worldwide Ltd. | 20,000 | 271,000 |
| TripAdvisor, Inc. * | 22,272 | 1,865,948 |
| Tuesday Morning Corp. * | 10,800 | 58,428 |
| Ulta Salon, Cosmetics & Fragrance, Inc. * | 12,100 | 2,104,916 |
| Urban Outfitters, Inc. * | 18,000 | 514,800 |
| Vitamin Shoppe, Inc. * | 4,200 | 120,498 |
| VOXX International Corp. * | 9,100 | 46,956 |
| West Marine, Inc. * | 8,200 | 83,476 |
| Williams-Sonoma, Inc. | 16,200 | 1,194,750 |
| Winmark Corp. | 1,700 | 171,275 |
| Zumiez, Inc. * | 10,500 | 183,540 |
| | | 228,859,659 |
| Security | Number
of Shares | Value
($) |
| Semiconductors & Semiconductor Equipment 2.4% |
| Advanced Energy Industries, Inc. * | 4,500 | 127,260 |
| Advanced Micro Devices, Inc. * | 123,300 | 261,396 |
| Altera Corp. | 59,500 | 3,126,725 |
| Amkor Technology, Inc. * | 35,700 | 222,054 |
| Amtech Systems, Inc. * | 3,500 | 18,025 |
| ANADIGICS, Inc. * | 8,150 | 1,875 |
| Analog Devices, Inc. | 60,249 | 3,622,170 |
| Applied Materials, Inc. | 232,598 | 3,900,668 |
| Applied Micro Circuits Corp. * | 21,300 | 138,024 |
| Atmel Corp. | 84,600 | 642,960 |
| Avago Technologies Ltd. | 51,300 | 6,316,569 |
| AXT, Inc. * | 3,500 | 7,700 |
| Broadcom Corp., Class A | 111,590 | 5,735,726 |
| Brooks Automation, Inc. | 11,885 | 131,210 |
| Cabot Microelectronics Corp. * | 5,660 | 238,682 |
| Cavium, Inc. * | 10,400 | 737,880 |
| CEVA, Inc. * | 7,233 | 169,035 |
| Cirrus Logic, Inc. * | 9,800 | 302,134 |
| Cohu, Inc. | 7,500 | 94,425 |
| Cree, Inc. *(c) | 20,900 | 526,471 |
| Cypress Semiconductor Corp. * | 69,226 | 729,642 |
| Diodes, Inc. * | 11,012 | 252,175 |
| DSP Group, Inc. * | 6,300 | 63,630 |
| Entegris, Inc. * | 48,499 | 622,242 |
| Exar Corp. * | 9,834 | 55,955 |
| Fairchild Semiconductor International, Inc. * | 17,800 | 296,904 |
| First Solar, Inc. * | 13,279 | 757,833 |
| FormFactor, Inc. * | 14,600 | 120,304 |
| Freescale Semiconductor Ltd. * | 21,400 | 716,686 |
| GSI Technology, Inc. * | 8,500 | 35,870 |
| Integrated Device Technology, Inc. * | 26,920 | 686,460 |
| Integrated Silicon Solution, Inc. | 9,338 | 209,918 |
| Intel Corp. | 931,897 | 31,554,032 |
| Intersil Corp., Class A | 26,764 | 362,652 |
| IXYS Corp. | 6,900 | 85,974 |
| KLA-Tencor Corp. | 29,000 | 1,946,480 |
| Kopin Corp. * | 19,600 | 52,332 |
| Kulicke & Soffa Industries, Inc. * | 18,500 | 196,100 |
| Lam Research Corp. | 30,267 | 2,318,150 |
| Lattice Semiconductor Corp. * | 25,100 | 114,958 |
| Linear Technology Corp. | 49,900 | 2,216,558 |
| Marvell Technology Group Ltd. | 111,400 | 914,594 |
| Maxim Integrated Products, Inc. | 55,700 | 2,282,586 |
| MaxLinear, Inc., Class A * | 4,422 | 57,486 |
| Microchip Technology, Inc. | 42,875 | 2,070,434 |
| Micron Technology, Inc. * | 208,307 | 3,449,564 |
| Microsemi Corp. * | 22,552 | 812,098 |
| MKS Instruments, Inc. | 7,900 | 278,396 |
| Monolithic Power Systems, Inc. | 6,500 | 405,730 |
| MoSys, Inc. * | 6,400 | 8,896 |
| Nanometrics, Inc. * | 5,300 | 80,984 |
| NVIDIA Corp. | 97,000 | 2,751,890 |
| OmniVision Technologies, Inc. * | 13,900 | 401,293 |
| ON Semiconductor Corp. * | 75,165 | 826,815 |
| PDF Solutions, Inc. * | 9,699 | 102,421 |
| Pericom Semiconductor Corp. | 6,600 | 115,170 |
| Photronics, Inc. * | 18,000 | 172,620 |
| PMC-Sierra, Inc. * | 54,300 | 647,256 |
| Power Integrations, Inc. | 4,200 | 212,562 |
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Qorvo, Inc. * | 30,074 | 1,321,151 |
| QuickLogic Corp. *(c) | 27,600 | 38,088 |
| Rambus, Inc. * | 19,600 | 202,272 |
| Rudolph Technologies, Inc. * | 16,418 | 209,986 |
| Semtech Corp. * | 21,700 | 379,750 |
| Silicon Laboratories, Inc. * | 5,000 | 249,850 |
| Skyworks Solutions, Inc. | 35,789 | 2,764,342 |
| SunEdison, Inc. * | 58,000 | 423,400 |
| SunPower Corp. * | 6,800 | 182,512 |
| Synaptics, Inc. * | 8,450 | 719,011 |
| Teradyne, Inc. | 34,959 | 682,400 |
| Tessera Technologies, Inc. | 11,100 | 388,167 |
| Texas Instruments, Inc. | 201,197 | 11,411,894 |
| Ultratech, Inc. * | 4,800 | 75,024 |
| Veeco Instruments, Inc. * | 8,800 | 158,576 |
| Xcerra Corp. * | 19,192 | 133,193 |
| Xilinx, Inc. | 47,500 | 2,261,950 |
| | | 106,908,205 |
| Software & Services 11.5% |
| Accenture plc, Class A | 121,997 | 13,078,078 |
| ACI Worldwide, Inc. * | 23,100 | 553,245 |
| Activision Blizzard, Inc. | 98,232 | 3,414,544 |
| Actua Corp. * | 8,050 | 111,492 |
| Acxiom Corp. * | 13,300 | 294,196 |
| Adobe Systems, Inc. * | 98,610 | 8,742,763 |
| Akamai Technologies, Inc. * | 37,038 | 2,252,651 |
| Alliance Data Systems Corp. * | 11,844 | 3,521,340 |
| Alphabet, Inc., Class A * | 57,076 | 42,087,272 |
| Alphabet, Inc., Class C * | 58,027 | 41,246,172 |
| Amdocs Ltd. | 34,600 | 2,061,122 |
| Angie's List, Inc. *(c) | 22,248 | 171,977 |
| ANSYS, Inc. * | 19,286 | 1,838,149 |
| Aspen Technology, Inc. * | 15,400 | 637,406 |
| Autodesk, Inc. * | 44,300 | 2,444,917 |
| Automatic Data Processing, Inc. | 89,762 | 7,808,396 |
| Bankrate, Inc. * | 14,600 | 173,302 |
| Bazaarvoice, Inc. * | 15,200 | 67,336 |
| Blackbaud, Inc. | 13,400 | 840,046 |
| Blackhawk Network Holdings, Inc. * | 12,003 | 511,088 |
| Blucora, Inc. * | 11,572 | 113,406 |
| Booz Allen Hamilton Holding Corp. | 24,800 | 730,608 |
| Bottomline Technologies de, Inc. * | 8,800 | 243,584 |
| Broadridge Financial Solutions, Inc. | 19,725 | 1,175,215 |
| BroadSoft, Inc. * | 6,500 | 207,805 |
| CA, Inc. | 69,408 | 1,923,296 |
| CACI International, Inc., Class A * | 4,100 | 397,864 |
| Cadence Design Systems, Inc. * | 47,500 | 1,055,450 |
| Callidus Software, Inc. * | 16,546 | 287,404 |
| Cardtronics, Inc. * | 8,800 | 303,600 |
| CDK Global, Inc. | 32,620 | 1,624,150 |
| Ciber, Inc. * | 24,900 | 88,893 |
| Citrix Systems, Inc. * | 30,800 | 2,528,680 |
| Cognizant Technology Solutions Corp., Class A * | 121,700 | 8,288,987 |
| CommVault Systems, Inc. * | 6,900 | 279,588 |
| Computer Sciences Corp. | 27,638 | 1,840,414 |
| comScore, Inc. * | 7,500 | 320,850 |
| Constant Contact, Inc. * | 7,000 | 182,700 |
| Convergys Corp. | 16,000 | 410,720 |
| CoreLogic, Inc. * | 23,100 | 900,438 |
| Security | Number
of Shares | Value
($) |
| Cornerstone OnDemand, Inc. * | 7,100 | 223,650 |
| CoStar Group, Inc. * | 6,600 | 1,340,262 |
| Covisint Corp. * | 4,460 | 9,411 |
| CSG Systems International, Inc. | 8,900 | 298,328 |
| Demand Media, Inc. * | 5,920 | 25,752 |
| Demandware, Inc. * | 6,800 | 385,560 |
| Digimarc Corp. *(c) | 3,542 | 79,553 |
| DST Systems, Inc. | 5,900 | 720,685 |
| EarthLink Holdings Corp. | 17,050 | 145,777 |
| eBay, Inc. * | 215,744 | 6,019,258 |
| Ebix, Inc. (c) | 8,303 | 230,242 |
| Edgewater Technology, Inc. * | 767 | 6,090 |
| Electronic Arts, Inc. * | 62,500 | 4,504,375 |
| Ellie Mae, Inc. * | 8,393 | 612,521 |
| Endurance International Group Holdings, Inc. * | 13,300 | 177,289 |
| EnerNOC, Inc. * | 9,754 | 76,471 |
| Envestnet, Inc. * | 7,300 | 217,978 |
| EPAM Systems, Inc. * | 7,800 | 603,330 |
| Epiq Systems, Inc. | 8,525 | 117,645 |
| Euronet Worldwide, Inc. * | 8,800 | 706,112 |
| Everi Holdings, Inc. * | 28,300 | 132,444 |
| EVERTEC, Inc. | 14,000 | 255,360 |
| ExlService Holdings, Inc. * | 7,200 | 318,672 |
| Facebook, Inc., Class A * | 444,207 | 45,295,788 |
| Fair Isaac Corp. | 4,744 | 438,203 |
| FalconStor Software, Inc. * | 1,200 | 2,400 |
| Fidelity National Information Services, Inc. | 56,091 | 4,090,156 |
| FireEye, Inc. * | 29,500 | 771,425 |
| Fiserv, Inc. * | 48,600 | 4,690,386 |
| FleetCor Technologies, Inc. * | 14,800 | 2,143,928 |
| Forrester Research, Inc. | 6,800 | 219,436 |
| Fortinet, Inc. * | 26,700 | 917,412 |
| Gartner, Inc. * | 18,100 | 1,641,127 |
| Genpact Ltd. * | 28,274 | 700,630 |
| Global Payments, Inc. | 11,440 | 1,560,530 |
| Glu Mobile, Inc. * | 38,900 | 160,268 |
| Gogo, Inc. * | 16,000 | 226,080 |
| GrubHub, Inc. *(c) | 20,400 | 489,192 |
| GSE Systems, Inc. * | 2,424 | 3,297 |
| Guidewire Software, Inc. * | 14,700 | 855,981 |
| Heartland Payment Systems, Inc. | 7,700 | 569,800 |
| Higher One Holdings, Inc. * | 19,400 | 57,036 |
| HomeAway, Inc. * | 24,200 | 763,752 |
| IAC/InterActiveCorp | 18,072 | 1,211,005 |
| Imperva, Inc. * | 8,262 | 583,462 |
| Infoblox, Inc. * | 8,600 | 140,266 |
| Information Services Group, Inc. | 7,500 | 27,525 |
| Interactive Intelligence Group, Inc. * | 2,900 | 93,786 |
| Internap Corp. * | 13,200 | 89,232 |
| International Business Machines Corp. | 176,151 | 24,675,232 |
| Intralinks Holdings, Inc. * | 12,200 | 106,750 |
| Intuit, Inc. | 54,530 | 5,312,858 |
| j2 Global, Inc. | 9,000 | 697,950 |
| Jack Henry & Associates, Inc. | 13,800 | 1,067,292 |
| Jive Software, Inc. * | 27,994 | 136,331 |
| Leidos Holdings, Inc. | 11,000 | 578,270 |
| LinkedIn Corp., Class A * | 22,800 | 5,491,836 |
| Lionbridge Technologies, Inc. * | 19,500 | 105,105 |
| Liquidity Services, Inc. * | 15,481 | 126,789 |
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| LivePerson, Inc. * | 19,700 | 153,660 |
| LogMeIn, Inc. * | 7,600 | 511,936 |
| Manhattan Associates, Inc. * | 16,300 | 1,187,455 |
| ManTech International Corp., Class A | 8,600 | 248,540 |
| Marketo, Inc. * | 6,684 | 196,710 |
| MasterCard, Inc., Class A | 195,156 | 19,318,492 |
| Mattersight Corp. * | 190 | 1,370 |
| MAXIMUS, Inc. | 11,300 | 770,660 |
| Mentor Graphics Corp. | 23,800 | 647,360 |
| Microsoft Corp. | 1,569,518 | 82,619,428 |
| MicroStrategy, Inc., Class A * | 2,256 | 388,190 |
| ModusLink Global Solutions, Inc. * | 10,450 | 30,201 |
| MoneyGram International, Inc. * | 9,037 | 91,364 |
| Monotype Imaging Holdings, Inc. | 6,500 | 177,710 |
| Monster Worldwide, Inc. * | 35,800 | 224,466 |
| NetSuite, Inc. * | 7,900 | 672,053 |
| NeuStar, Inc., Class A *(c) | 9,300 | 252,867 |
| NIC, Inc. | 8,000 | 151,760 |
| Nuance Communications, Inc. * | 59,974 | 1,017,759 |
| Oracle Corp. | 636,313 | 24,714,397 |
| Pandora Media, Inc. * | 38,400 | 441,984 |
| Paychex, Inc. | 61,864 | 3,190,945 |
| PayPal Holdings, Inc. * | 215,744 | 7,768,941 |
| Pegasystems, Inc. | 12,800 | 356,992 |
| Perficient, Inc. * | 7,800 | 130,416 |
| PRGX Global, Inc. * | 11,000 | 41,250 |
| Progress Software Corp. * | 9,300 | 225,804 |
| Proofpoint, Inc. * | 9,000 | 633,960 |
| PROS Holdings, Inc. * | 7,826 | 187,981 |
| PTC, Inc. * | 19,780 | 701,003 |
| Qlik Technologies, Inc. * | 22,200 | 696,414 |
| Qualys, Inc. * | 5,600 | 197,792 |
| Rackspace Hosting, Inc. * | 23,700 | 612,645 |
| RealNetworks, Inc. * | 12,725 | 49,373 |
| RealPage, Inc. * | 10,500 | 177,450 |
| Red Hat, Inc. * | 36,600 | 2,895,426 |
| Reis, Inc. | 1,400 | 34,076 |
| Rightside Group Ltd. *(c) | 5,920 | 47,656 |
| Rovi Corp. * | 15,412 | 141,020 |
| Sabre Corp. | 20,500 | 601,060 |
| salesforce.com, Inc. * | 120,222 | 9,342,452 |
| Science Applications International Corp. | 6,285 | 288,230 |
| Seachange International, Inc. * | 9,250 | 59,847 |
| ServiceNow, Inc. * | 27,100 | 2,212,715 |
| ServiceSource International, Inc. * | 14,400 | 61,488 |
| Shutterstock, Inc. *(c) | 4,000 | 113,920 |
| SolarWinds, Inc. * | 12,000 | 696,360 |
| Solera Holdings, Inc. | 11,400 | 623,124 |
| Splunk, Inc. * | 27,000 | 1,516,320 |
| SPS Commerce, Inc. * | 4,300 | 308,826 |
| SS&C Technologies Holdings, Inc. | 16,700 | 1,238,305 |
| Stamps.com, Inc. * | 5,827 | 440,579 |
| StarTek, Inc. * | 3,900 | 14,040 |
| support.com, Inc. * | 18,400 | 21,344 |
| Sykes Enterprises, Inc. * | 11,026 | 319,754 |
| Symantec Corp. | 139,573 | 2,875,204 |
| Synchronoss Technologies, Inc. * | 8,100 | 284,958 |
| Synopsys, Inc. * | 28,084 | 1,403,638 |
| Syntel, Inc. * | 8,600 | 404,544 |
| Tableau Software, Inc., Class A * | 10,742 | 901,898 |
| Security | Number
of Shares | Value
($) |
| Take-Two Interactive Software, Inc. * | 22,600 | 750,320 |
| Tangoe, Inc. * | 8,200 | 67,896 |
| TeleCommunication Systems, Inc., Class A * | 10,800 | 44,172 |
| TeleTech Holdings, Inc. | 9,100 | 264,810 |
| Teradata Corp. * | 27,000 | 758,970 |
| Textura, Corp. *(c) | 6,941 | 203,788 |
| The Hackett Group, Inc. | 7,200 | 107,136 |
| The Ultimate Software Group, Inc. * | 6,600 | 1,348,710 |
| The Western Union Co. | 102,032 | 1,964,116 |
| TiVo, Inc. * | 17,800 | 161,624 |
| Total System Services, Inc. | 36,904 | 1,935,615 |
| Twitter, Inc. * | 113,500 | 3,230,210 |
| Tyler Technologies, Inc. * | 6,800 | 1,158,448 |
| Unisys Corp. * | 18,200 | 243,880 |
| United Online, Inc. * | 2,478 | 28,943 |
| Unwired Planet, Inc. * | 7,771 | 6,583 |
| Vantiv, Inc., Class A * | 24,900 | 1,248,735 |
| VASCO Data Security International, Inc. *(c) | 9,200 | 174,892 |
| VeriFone Systems, Inc. * | 18,000 | 542,520 |
| Verint Systems, Inc. * | 9,510 | 452,486 |
| VeriSign, Inc. * | 22,275 | 1,795,365 |
| VirnetX Holding Corp. *(c) | 10,600 | 40,280 |
| Virtusa Corp. * | 4,700 | 269,921 |
| Visa, Inc., Class A | 381,804 | 29,620,354 |
| VMware, Inc., Class A *(c) | 17,100 | 1,028,565 |
| Web.com Group, Inc. * | 8,923 | 209,423 |
| WebMD Health Corp. * | 7,074 | 287,629 |
| WEX, Inc. * | 6,400 | 575,424 |
| Workday, Inc., Class A * | 20,100 | 1,587,297 |
| Xerox Corp. | 194,056 | 1,822,186 |
| Xura, Inc. * | 6,250 | 161,750 |
| Yahoo! Inc. * | 169,444 | 6,035,595 |
| Yelp, Inc. * | 14,300 | 318,175 |
| Zendesk, Inc. * | 15,000 | 301,800 |
| Zillow Group, Inc., Class A *(c) | 8,797 | 271,036 |
| Zillow Group, Inc., Class C *(c) | 17,594 | 487,178 |
| Zynga, Inc., Class A * | 127,000 | 300,990 |
| | | 513,449,359 |
| Technology Hardware & Equipment 6.0% |
| 3D Systems Corp. *(c) | 18,800 | 189,128 |
| ADTRAN, Inc. | 9,100 | 141,323 |
| Agilysys, Inc. * | 8,460 | 96,190 |
| Amphenol Corp., Class A | 60,800 | 3,296,576 |
| Anixter International, Inc. * | 4,000 | 274,320 |
| Apple, Inc. | 1,122,262 | 134,110,309 |
| Arista Networks, Inc. *(c) | 8,600 | 554,786 |
| ARRIS Group, Inc. * | 24,075 | 680,359 |
| Arrow Electronics, Inc. * | 18,532 | 1,019,075 |
| Aviat Networks, Inc. * | 18,877 | 19,255 |
| Avnet, Inc. | 26,588 | 1,207,893 |
| AVX Corp. | 14,000 | 189,000 |
| Badger Meter, Inc. | 4,000 | 242,320 |
| Belden, Inc. | 6,900 | 441,807 |
| Benchmark Electronics, Inc. * | 7,830 | 154,877 |
| Black Box Corp. | 4,100 | 50,061 |
| Brocade Communications Systems, Inc. | 106,135 | 1,105,927 |
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| CalAmp Corp. * | 4,000 | 75,840 |
| CDW Corp. | 24,400 | 1,090,436 |
| Checkpoint Systems, Inc. | 7,100 | 53,108 |
| Ciena Corp. * | 17,970 | 433,796 |
| Cisco Systems, Inc. | 992,840 | 28,643,434 |
| Cognex Corp. | 14,800 | 556,480 |
| Coherent, Inc. * | 4,100 | 222,220 |
| CommScope Holding Co., Inc. * | 27,582 | 894,484 |
| Comtech Telecommunications Corp. | 4,175 | 100,868 |
| Corning, Inc. | 239,007 | 4,445,530 |
| Cray, Inc. * | 7,600 | 225,188 |
| CTS Corp. | 8,800 | 159,984 |
| Daktronics, Inc. | 8,700 | 84,390 |
| Diebold, Inc. | 12,900 | 475,623 |
| Digi International, Inc. * | 9,100 | 117,390 |
| Dolby Laboratories, Inc., Class A | 8,800 | 305,096 |
| DTS, Inc. * | 4,300 | 127,968 |
| Echelon Corp. * | 7,200 | 4,176 |
| EchoStar Corp., Class A * | 6,740 | 302,154 |
| Electro Rent Corp. | 7,100 | 73,698 |
| Electro Scientific Industries, Inc. | 9,900 | 46,233 |
| Electronics for Imaging, Inc. * | 15,500 | 719,820 |
| EMC Corp. | 374,899 | 9,829,852 |
| Extreme Networks, Inc. * | 27,500 | 98,725 |
| F5 Networks, Inc. * | 13,100 | 1,443,620 |
| Fabrinet * | 11,108 | 240,710 |
| FARO Technologies, Inc. * | 3,000 | 101,370 |
| FEI Co. | 10,000 | 721,900 |
| Finisar Corp. * | 15,800 | 179,646 |
| Fitbit, Inc., Class A * | 5,000 | 202,700 |
| FLIR Systems, Inc. | 26,100 | 696,087 |
| Frequency Electronics, Inc. * | 500 | 5,460 |
| Harmonic, Inc. * | 20,042 | 115,442 |
| Harris Corp. | 22,755 | 1,800,603 |
| Hewlett-Packard Co. | 353,736 | 9,536,723 |
| Hutchinson Technology, Inc. * | 6,000 | 10,500 |
| I.D. Systems, Inc. * | 5,500 | 19,360 |
| Identiv, Inc. * | 120 | 308 |
| II-VI, Inc. * | 13,000 | 235,560 |
| Imation Corp. * | 5,500 | 11,110 |
| Immersion Corp. * | 4,300 | 55,814 |
| Infinera Corp. * | 27,300 | 539,448 |
| Ingram Micro, Inc., Class A | 25,500 | 759,390 |
| Insight Enterprises, Inc. * | 8,950 | 227,330 |
| Intellicheck Mobilisa, Inc. * | 62 | 63 |
| InterDigital, Inc. | 6,700 | 339,958 |
| InvenSense, Inc. * | 8,900 | 106,088 |
| IPG Photonics Corp. * | 7,400 | 611,388 |
| Itron, Inc. * | 5,700 | 209,361 |
| Ixia * | 14,900 | 214,709 |
| Jabil Circuit, Inc. | 35,300 | 811,194 |
| Juniper Networks, Inc. | 75,965 | 2,384,541 |
| Keysight Technologies, Inc. * | 31,458 | 1,040,631 |
| Kimball Electronics, Inc. * | 6,825 | 77,737 |
| Knowles Corp. *(c) | 13,900 | 231,574 |
| Lexmark International, Inc., Class A | 10,900 | 354,141 |
| LightPath Technologies, Inc., Class A * | 75 | 110 |
| Littelfuse, Inc. | 3,700 | 369,741 |
| Lumentum Holdings, Inc. * | 8,910 | 127,769 |
| Maxwell Technologies, Inc. *(c) | 7,700 | 46,200 |
| Security | Number
of Shares | Value
($) |
| Mercury Systems, Inc. * | 7,800 | 133,848 |
| Methode Electronics, Inc. | 9,500 | 316,635 |
| MOCON, Inc. | 600 | 8,226 |
| Motorola Solutions, Inc. | 34,733 | 2,430,268 |
| MTS Systems Corp. | 3,781 | 249,659 |
| Multi-Fineline Electronix, Inc. * | 5,700 | 105,906 |
| National Instruments Corp. | 16,112 | 490,933 |
| NCR Corp. * | 35,100 | 933,660 |
| NetApp, Inc. | 64,900 | 2,206,600 |
| NETGEAR, Inc. * | 6,000 | 248,400 |
| NetScout Systems, Inc. * | 26,000 | 932,620 |
| Newport Corp. * | 8,500 | 128,435 |
| Nimble Storage, Inc. * | 16,100 | 363,860 |
| OSI Systems, Inc. * | 3,700 | 318,866 |
| Palo Alto Networks, Inc. * | 14,900 | 2,398,900 |
| Park Electrochemical Corp. | 3,600 | 58,824 |
| PC Connection, Inc. | 7,000 | 162,680 |
| PC-Tel, Inc. | 8,900 | 50,864 |
| Plantronics, Inc. | 6,000 | 321,720 |
| Plexus Corp. * | 6,500 | 225,030 |
| Polycom, Inc. * | 22,400 | 308,672 |
| QLogic Corp. * | 17,044 | 211,346 |
| QUALCOMM, Inc. | 305,839 | 18,172,953 |
| Quantum Corp. * | 125,000 | 105,000 |
| Radisys Corp. * | 7,200 | 18,504 |
| Research Frontiers, Inc. *(c) | 2,800 | 14,084 |
| Richardson Electronics Ltd. | 7,300 | 43,800 |
| Rofin-Sinar Technologies, Inc. * | 3,800 | 110,048 |
| Rogers Corp. * | 4,200 | 195,384 |
| SanDisk Corp. | 41,700 | 3,210,900 |
| Sanmina Corp. * | 20,900 | 432,003 |
| ScanSource, Inc. * | 6,300 | 217,413 |
| Seagate Technology plc | 61,966 | 2,358,426 |
| Sonus Networks, Inc. * | 15,860 | 104,835 |
| Super Micro Computer, Inc. * | 8,200 | 231,322 |
| SYNNEX Corp. | 8,400 | 742,896 |
| TE Connectivity Ltd. | 78,300 | 5,045,652 |
| Tech Data Corp. * | 5,300 | 385,787 |
| TESSCO Technologies, Inc. | 4,025 | 87,906 |
| TransAct Technologies, Inc. | 1,500 | 14,355 |
| Trimble Navigation Ltd. * | 62,084 | 1,412,411 |
| TTM Technologies, Inc. * | 11,000 | 80,300 |
| Ubiquiti Networks, Inc. *(c) | 3,200 | 93,376 |
| Universal Display Corp. * | 5,800 | 198,998 |
| ViaSat, Inc. * | 10,700 | 705,772 |
| Viavi Solutions, Inc. * | 44,553 | 265,090 |
| Vishay Intertechnology, Inc. | 18,588 | 197,033 |
| Vishay Precision Group, Inc. * | 5,620 | 65,923 |
| Western Digital Corp. | 47,345 | 3,163,593 |
| Zebra Technologies Corp., Class A * | 9,575 | 736,317 |
| | | 267,704,018 |
| Telecommunication Services 2.1% |
| Alaska Communications Systems Group, Inc. * | 5,000 | 11,450 |
| Alteva, Inc. | 1,100 | 4,884 |
| AT&T, Inc. | 1,200,507 | 40,228,990 |
| Atlantic Tele-Network, Inc. | 3,250 | 248,365 |
| CenturyLink, Inc. | 114,178 | 3,220,961 |
| Cincinnati Bell, Inc. * | 61,468 | 231,734 |
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Cogent Communications Holdings, Inc. | 9,900 | 304,128 |
| Consolidated Communications Holdings, Inc. | 16,757 | 370,330 |
| Frontier Communications Corp. | 257,368 | 1,322,871 |
| General Communication, Inc., Class A * | 10,500 | 213,832 |
| Globalstar, Inc. *(c) | 42,400 | 76,320 |
| inContact, Inc. * | 20,172 | 179,531 |
| Iridium Communications, Inc. * | 11,800 | 96,878 |
| Level 3 Communications, Inc. * | 62,725 | 3,195,839 |
| Lumos Networks Corp. | 1,500 | 19,440 |
| NTELOS Holdings Corp. * | 4,500 | 41,355 |
| Premiere Global Services, Inc. * | 11,400 | 155,952 |
| SBA Communications Corp., Class A * | 26,400 | 3,142,128 |
| Shenandoah Telecommunications Co. | 7,100 | 332,209 |
| Spok Holdings, Inc. | 5,500 | 99,165 |
| Sprint Corp. * | 142,805 | 675,468 |
| T-Mobile US, Inc. * | 57,450 | 2,176,780 |
| Telephone & Data Systems, Inc. | 22,222 | 636,438 |
| United States Cellular Corp. * | 5,400 | 219,996 |
| Verizon Communications, Inc. | 795,069 | 37,272,835 |
| Vonage Holdings Corp. * | 36,400 | 220,948 |
| Windstream Holdings, Inc. (c) | 18,211 | 118,554 |
| Zayo Group Holdings, Inc. * | 12,000 | 318,360 |
| | | 95,135,741 |
| Transportation 2.1% |
| Alaska Air Group, Inc. | 25,000 | 1,906,250 |
| Allegiant Travel Co. | 3,200 | 631,840 |
| AMERCO | 1,000 | 406,310 |
| American Airlines Group, Inc. | 130,597 | 6,036,193 |
| ArcBest Corp. | 4,800 | 124,320 |
| Atlas Air Worldwide Holdings, Inc. * | 6,500 | 268,060 |
| Avis Budget Group, Inc. * | 20,600 | 1,028,764 |
| C.H. Robinson Worldwide, Inc. | 29,100 | 2,018,958 |
| Celadon Group, Inc. | 8,890 | 128,727 |
| Covenant Transport Group, Inc., Class A * | 3,000 | 57,900 |
| CSX Corp. | 192,700 | 5,200,973 |
| Delta Air Lines, Inc. | 153,911 | 7,824,835 |
| Expeditors International of Washington, Inc. | 40,900 | 2,036,411 |
| FedEx Corp. | 51,363 | 8,015,196 |
| Forward Air Corp. | 4,600 | 208,656 |
| Genesee & Wyoming, Inc., Class A * | 9,000 | 603,900 |
| Hawaiian Holdings, Inc. * | 10,700 | 371,290 |
| Heartland Express, Inc. | 16,241 | 305,818 |
| Hertz Global Holdings, Inc. * | 87,300 | 1,702,350 |
| Hub Group, Inc., Class A * | 7,100 | 283,858 |
| JB Hunt Transport Services, Inc. | 19,600 | 1,496,852 |
| JetBlue Airways Corp. * | 60,662 | 1,506,844 |
| Kansas City Southern | 23,255 | 1,924,584 |
| Kirby Corp. * | 11,100 | 724,719 |
| Knight Transportation, Inc. | 14,650 | 372,403 |
| Landstar System, Inc. | 6,600 | 416,064 |
| Macquarie Infrastructure Corp. | 13,700 | 1,089,835 |
| Marten Transport Ltd. | 9,476 | 155,312 |
| Matson, Inc. | 10,500 | 481,215 |
| Security | Number
of Shares | Value
($) |
| Norfolk Southern Corp. | 57,500 | 4,601,725 |
| Old Dominion Freight Line, Inc. * | 12,412 | 768,799 |
| Park-Ohio Holdings Corp. | 3,600 | 124,200 |
| Republic Airways Holdings, Inc. * | 12,500 | 72,000 |
| Roadrunner Transportation Systems, Inc. * | 4,900 | 52,136 |
| Ryder System, Inc. | 9,500 | 681,910 |
| Saia, Inc. * | 4,450 | 105,065 |
| SkyWest, Inc. | 7,000 | 133,280 |
| Southwest Airlines Co. | 129,015 | 5,972,104 |
| Spirit Airlines, Inc. * | 14,000 | 519,680 |
| Swift Transportation Co. * | 19,000 | 296,970 |
| Union Pacific Corp. | 170,970 | 15,276,169 |
| United Continental Holdings, Inc. * | 75,700 | 4,565,467 |
| United Parcel Service, Inc., Class B | 135,285 | 13,937,061 |
| Universal Truckload Services, Inc. (c) | 3,300 | 52,734 |
| UTI Worldwide, Inc. * | 14,600 | 104,098 |
| Werner Enterprises, Inc. | 10,032 | 265,447 |
| Wesco Aircraft Holdings, Inc. * | 13,500 | 168,210 |
| XPO Logistics, Inc. *(c) | 11,710 | 325,070 |
| YRC Worldwide, Inc. * | 8,600 | 157,036 |
| | | 95,507,598 |
| Utilities 3.0% |
| AES Corp. | 138,596 | 1,517,626 |
| AGL Resources, Inc. | 21,529 | 1,345,563 |
| ALLETE, Inc. | 14,633 | 734,723 |
| Alliant Energy Corp. | 26,300 | 1,552,226 |
| Ameren Corp. | 43,176 | 1,885,928 |
| American DG Energy, Inc. * | 11,400 | 6,270 |
| American Electric Power Co., Inc. | 92,320 | 5,229,928 |
| American States Water Co. | 9,600 | 391,200 |
| American Water Works Co., Inc. | 31,200 | 1,789,632 |
| Aqua America, Inc. | 37,467 | 1,071,556 |
| Artesian Resources Corp., Class A | 4,000 | 97,440 |
| Atmos Energy Corp. | 17,400 | 1,096,200 |
| Avista Corp. | 15,800 | 534,830 |
| Black Hills Corp. | 7,700 | 352,506 |
| Cadiz, Inc. *(c) | 6,356 | 21,738 |
| California Water Service Group | 11,300 | 252,668 |
| Calpine Corp. * | 65,100 | 1,009,701 |
| CenterPoint Energy, Inc. | 88,700 | 1,645,385 |
| Chesapeake Utilities Corp. | 2,770 | 144,622 |
| Cleco Corp. | 11,700 | 620,100 |
| CMS Energy Corp. | 56,959 | 2,054,511 |
| Connecticut Water Service, Inc. | 5,100 | 187,731 |
| Consolidated Edison, Inc. | 55,510 | 3,649,782 |
| Delta Natural Gas Co., Inc. | 1,291 | 26,375 |
| Dominion Resources, Inc. | 115,465 | 8,247,665 |
| DTE Energy Co. | 33,748 | 2,753,499 |
| Duke Energy Corp. | 133,750 | 9,559,112 |
| Dynegy, Inc. * | 27,300 | 530,439 |
| Edison International | 62,910 | 3,807,313 |
| El Paso Electric Co. | 11,300 | 436,971 |
| Entergy Corp. | 34,293 | 2,337,411 |
| Eversource Energy | 61,336 | 3,124,456 |
| Exelon Corp. | 168,869 | 4,714,822 |
| FirstEnergy Corp. | 82,056 | 2,560,147 |
| Genie Energy Ltd., Class B * | 12,800 | 145,152 |
| Great Plains Energy, Inc. | 41,341 | 1,136,878 |
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Hawaiian Electric Industries, Inc. | 19,300 | 564,718 |
| IDACORP, Inc. | 9,800 | 655,130 |
| ITC Holdings Corp. | 33,000 | 1,079,760 |
| MDU Resources Group, Inc. | 36,025 | 679,432 |
| MGE Energy, Inc. | 9,950 | 410,637 |
| Middlesex Water Co. | 9,400 | 242,238 |
| National Fuel Gas Co. | 20,700 | 1,087,371 |
| New Jersey Resources Corp. | 12,450 | 394,416 |
| NextEra Energy, Inc. | 89,372 | 9,174,930 |
| NiSource, Inc. | 65,764 | 1,260,038 |
| Northwest Natural Gas Co. | 6,300 | 300,951 |
| NorthWestern Corp. | 7,100 | 384,749 |
| NRG Energy, Inc. | 63,356 | 816,659 |
| NRG Yield, Inc., Class A | 8,300 | 113,959 |
| NRG Yield, Inc., Class C | 8,300 | 119,852 |
| OGE Energy Corp. | 41,200 | 1,174,612 |
| ONE Gas, Inc. | 8,525 | 416,361 |
| Ormat Technologies, Inc. | 8,600 | 324,392 |
| Otter Tail Corp. | 7,800 | 214,032 |
| Pattern Energy Group, Inc. | 6,400 | 149,696 |
| Pepco Holdings, Inc. | 48,400 | 1,288,892 |
| PG&E Corp. | 94,100 | 5,024,940 |
| Piedmont Natural Gas Co., Inc. | 24,400 | 1,398,364 |
| Pinnacle West Capital Corp. | 24,200 | 1,536,942 |
| PNM Resources, Inc. | 11,200 | 314,944 |
| Portland General Electric Co. | 24,800 | 919,584 |
| PPL Corp. | 125,700 | 4,324,080 |
| Public Service Enterprise Group, Inc. | 97,800 | 4,038,162 |
| Pure Cycle Corp. *(c) | 8,000 | 40,800 |
| Questar Corp. | 28,900 | 596,785 |
| SCANA Corp. | 27,305 | 1,617,002 |
| Sempra Energy | 44,396 | 4,546,594 |
| SJW Corp. | 4,470 | 141,833 |
| South Jersey Industries, Inc. | 8,400 | 222,684 |
| Southwest Gas Corp. | 13,400 | 823,564 |
| Talen Energy Corp. * | 15,700 | 136,276 |
| TECO Energy, Inc. | 41,000 | 1,107,000 |
| TerraForm Power, Inc., Class A * | 9,400 | 171,550 |
| The Empire District Electric Co. | 11,200 | 252,560 |
| The Laclede Group, Inc. | 15,200 | 890,264 |
| The Southern Co. | 172,921 | 7,798,737 |
| The York Water Co. | 6,100 | 141,398 |
| UGI Corp. | 27,900 | 1,023,093 |
| UIL Holdings Corp. | 11,166 | 569,354 |
| Unitil Corp. | 7,200 | 255,384 |
| Vectren Corp. | 15,266 | 694,145 |
| WEC Energy Group, Inc. | 61,277 | 3,159,442 |
| Westar Energy, Inc. | 28,600 | 1,135,420 |
| WGL Holdings, Inc. | 7,300 | 454,279 |
| Xcel Energy, Inc. | 103,108 | 3,673,738 |
| | | 134,433,849 |
| Total Common Stock |
| (Cost $2,804,713,777) | | 4,440,133,759 |
|
| Rights 0.0% of net assets |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% |
| FRD Acquisition Co. CVR *(b)(e) | 8,700 | — |
| Security | Number
of Shares | Value
($) |
| Technology Hardware & Equipment 0.0% |
| Gerber Scientific, Inc. CVR *(b)(e) | 8,900 | — |
| Telecommunication Services 0.0% |
| Leap Wireless CVR *(b)(e) | 13,000 | 32,760 |
| Total Rights |
| (Cost $32,982) | | 32,760 |
|
| Warrants 0.0% of net assets |
| Energy 0.0% |
| Magnum Hunter Resources Corp. *(b)(e) | 2,293 | — |
| Total Warrants |
| (Cost $—) | | — |
|
| Other Investment Company 0.8% of net assets |
| Securities Lending Collateral 0.8% |
| Wells Fargo Advantage Government Money Market Fund, Institutional Class 0.01% (d) | 36,468,372 | 36,468,372 |
| Total Other Investment Company |
| (Cost $36,468,372) | | 36,468,372 |
Security
Rate, Maturity Date | Face
Amount
($) | Value
($) |
| Short-Term Investments 1.5% of net assets |
| Time Deposits 1.5% |
| Australia & New Zealand Banking Group Ltd. |
| 0.03%, 11/02/15 | 44,948,979 | 44,948,979 |
| Wells Fargo |
| 0.03%, 11/02/15 | 22,256,653 | 22,256,653 |
| Total Short-Term Investments |
| (Cost $67,205,632) | | 67,205,632 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $2,925,724,612 and the unrealized appreciation and depreciation were $1,756,538,810 and ($138,422,899), respectively, with a net unrealized appreciation of $1,618,115,911.
| * | Non-income producing security. |
| (a) | Issuer is affiliated with the fund's investment adviser. |
| (b) | Illiquid security. At the period end, the value of these amounted to $32,760 or 0.0% of net assets. |
| (c) | All or a portion of this security is on loan. Securities on loan were valued at $35,642,649. |
| (d) | The rate shown is the 7-day yield. |
| (e) | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| | |
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| CVR — | Contingent Value Rights |
| REIT — | Real Estate Investment Trust |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| Russell 2000 Index, mini, Long, expires 12/18/15 | 35 | 4,054,050 | 52,723 |
| S&P 500 Index, e-mini, Long, expires 12/18/15 | 230 | 23,847,550 | 1,048,233 |
| Net Unrealized Appreciation | 1,100,956 |
Schwab International Index Fund
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 97.8% | Common Stock | 2,378,291,644 | 2,781,955,810 |
| 0.5% | Preferred Stock | 15,443,474 | 14,364,962 |
| 0.4% | Other Investment Company | 12,250,477 | 12,250,477 |
| 1.2% | Short-Term Investments | 32,604,445 | 32,604,445 |
| 99.9% | Total Investments | 2,438,590,040 | 2,841,175,694 |
| 0.1% | Other Assets and Liabilities, Net | | 3,157,769 |
| 100.0% | Net Assets | | 2,844,333,463 |
| Security | Number
of Shares | Value
($) |
| Common Stock 97.8% of net assets |
| Australia 6.2% |
| Banks 2.2% |
| Australia & New Zealand Banking Group Ltd. | 618,955 | 11,970,769 |
| Bank of Queensland Ltd. | 89,063 | 825,667 |
| Bendigo & Adelaide Bank Ltd. | 98,787 | 749,414 |
| Commonwealth Bank of Australia | 379,463 | 20,604,067 |
| National Australia Bank Ltd. | 585,298 | 12,498,831 |
| Westpac Banking Corp. * | 29,815 | 647,400 |
| Westpac Banking Corp. | 685,727 | 15,273,888 |
| | | 62,570,036 |
| Capital Goods 0.0% |
| CIMIC Group Ltd. | 26,359 | 516,720 |
| Commercial & Professional Supplies 0.1% |
| Brambles Ltd. | 338,913 | 2,495,747 |
| Seek Ltd. | 74,156 | 673,658 |
| | | 3,169,405 |
| Consumer Services 0.1% |
| Aristocrat Leisure Ltd. | 120,776 | 797,232 |
| Crown Resorts Ltd. | 86,330 | 699,663 |
| Flight Centre Travel Group Ltd. (a) | 11,202 | 301,374 |
| Tabcorp Holdings Ltd. | 197,467 | 659,950 |
| Tatts Group Ltd. | 311,493 | 874,588 |
| | | 3,332,807 |
| Security | Number
of Shares | Value
($) |
| Diversified Financials 0.2% |
| ASX Ltd. | 42,332 | 1,237,524 |
| Macquarie Group Ltd. | 67,748 | 4,102,063 |
| Platinum Asset Management Ltd. | 46,261 | 242,546 |
| | | 5,582,133 |
| Energy 0.3% |
| Caltex Australia Ltd. | 59,417 | 1,330,125 |
| Origin Energy Ltd. | 383,647 | 1,490,776 |
| Santos Ltd. | 217,726 | 898,802 |
| Woodside Petroleum Ltd. | 162,333 | 3,404,603 |
| WorleyParsons Ltd. | 40,513 | 186,906 |
| | | 7,311,212 |
| Food & Staples Retailing 0.4% |
| Wesfarmers Ltd. | 252,624 | 7,064,453 |
| Woolworths Ltd. | 284,343 | 4,871,142 |
| | | 11,935,595 |
| Food, Beverage & Tobacco 0.1% |
| Coca-Cola Amatil Ltd. | 129,657 | 839,041 |
| Treasury Wine Estates Ltd. | 153,623 | 768,892 |
| | | 1,607,933 |
| Health Care Equipment & Services 0.1% |
| Cochlear Ltd. | 13,562 | 855,941 |
| Healthscope Ltd. | 273,248 | 523,124 |
| Ramsay Health Care Ltd. | 30,893 | 1,357,982 |
| Sonic Healthcare Ltd. | 85,234 | 1,165,712 |
| | | 3,902,759 |
| Insurance 0.4% |
| AMP Ltd. | 672,544 | 2,727,710 |
| Insurance Australia Group Ltd. | 534,332 | 2,123,892 |
| Medibank Pvt Ltd. | 623,599 | 1,046,177 |
| QBE Insurance Group Ltd. | 307,020 | 2,873,935 |
| Suncorp Group Ltd. | 292,776 | 2,719,758 |
| | | 11,491,472 |
| Materials 0.9% |
| Alumina Ltd. | 529,070 | 405,904 |
| Amcor Ltd. | 260,682 | 2,517,877 |
| BHP Billiton Ltd. | 719,690 | 11,803,446 |
| Boral Ltd. | 158,683 | 606,996 |
| Fortescue Metals Group Ltd. (a) | 384,488 | 568,134 |
| Iluka Resources Ltd. | 88,811 | 402,730 |
| Incitec Pivot Ltd. | 387,731 | 1,082,756 |
| Newcrest Mining Ltd. * | 168,083 | 1,464,214 |
| Orica Ltd. | 85,202 | 996,725 |
| Rio Tinto Ltd. | 93,233 | 3,333,830 |
| South32 Ltd. * | 1,132,663 | 1,172,887 |
| | | 24,355,499 |
| Media 0.0% |
| REA Group Ltd. | 11,698 | 397,566 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.2% |
| CSL Ltd. | 104,279 | 6,931,451 |
| Real Estate 0.6% |
| Dexus Property Group | 212,604 | 1,167,062 |
| Federation Centres (d) | 732,685 | 1,513,552 |
| Goodman Group | 376,758 | 1,616,431 |
| Lend Lease Group | 121,117 | 1,113,971 |
| Mirvac Group | 854,706 | 1,092,526 |
Schwab International Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Scentre Group | 1,188,720 | 3,486,670 |
| Stockland | 506,718 | 1,454,306 |
| The GPT Group | 397,163 | 1,345,122 |
| Westfield Corp. | 440,722 | 3,197,491 |
| | | 15,987,131 |
| Retailing 0.0% |
| Harvey Norman Holdings Ltd. | 132,814 | 373,149 |
| Software & Services 0.0% |
| Computershare Ltd. | 98,275 | 753,224 |
| Telecommunication Services 0.2% |
| Telstra Corp., Ltd. | 972,819 | 3,727,495 |
| TPG Telecom Ltd. | 68,681 | 538,315 |
| | | 4,265,810 |
| Transportation 0.3% |
| Asciano Ltd. | 218,233 | 1,270,882 |
| Aurizon Holdings Ltd. | 462,305 | 1,695,046 |
| Qantas Airways Ltd. * | 98,127 | 276,399 |
| Sydney Airport | 251,805 | 1,150,775 |
| Transurban Group | 431,356 | 3,196,365 |
| | | 7,589,467 |
| Utilities 0.1% |
| AGL Energy Ltd. | 145,962 | 1,730,913 |
| APA Group | 241,967 | 1,576,460 |
| AusNet Services | 407,266 | 417,706 |
| | | 3,725,079 |
| | | 175,798,448 |
| Austria 0.2% |
| Banks 0.1% |
| Erste Group Bank AG * | 61,150 | 1,793,150 |
| Raiffeisen Bank International AG * | 22,302 | 351,921 |
| | | 2,145,071 |
| Capital Goods 0.0% |
| ANDRITZ AG | 16,557 | 831,860 |
| Energy 0.1% |
| OMV AG | 34,514 | 919,031 |
| Materials 0.0% |
| voestalpine AG | 24,764 | 895,371 |
| | | 4,791,333 |
| Belgium 1.3% |
| Banks 0.1% |
| KBC Groep N.V. | 56,880 | 3,458,398 |
| Diversified Financials 0.0% |
| Groupe Bruxelles Lambert S.A. | 17,007 | 1,380,454 |
| Food & Staples Retailing 0.1% |
| Colruyt S.A. | 14,318 | 708,214 |
| Delhaize Group | 23,014 | 2,135,441 |
| | | 2,843,655 |
| Food, Beverage & Tobacco 0.8% |
| Anheuser-Busch InBev N.V. | 179,808 | 21,455,518 |
| Insurance 0.1% |
| Ageas | 44,712 | 1,971,703 |
| Security | Number
of Shares | Value
($) |
| Materials 0.1% |
| Solvay S.A. | 12,824 | 1,448,742 |
| Umicore S.A. | 22,105 | 938,535 |
| | | 2,387,277 |
| Media 0.0% |
| Telenet Group Holding N.V. * | 11,584 | 673,763 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| UCB S.A. | 28,803 | 2,489,671 |
| Telecommunication Services 0.0% |
| Proximus | 34,582 | 1,196,703 |
| | | 37,857,142 |
| Denmark 1.7% |
| Banks 0.2% |
| Danske Bank A/S | 159,024 | 4,375,331 |
| Capital Goods 0.1% |
| Vestas Wind Systems A/S | 50,062 | 2,918,825 |
| Commercial & Professional Supplies 0.0% |
| ISS A/S | 33,325 | 1,172,248 |
| Consumer Durables & Apparel 0.1% |
| Pandora A/S | 24,107 | 2,781,883 |
| Food, Beverage & Tobacco 0.1% |
| Carlsberg A/S, Class B | 24,724 | 2,025,616 |
| Health Care Equipment & Services 0.1% |
| Coloplast A/S, Class B | 24,946 | 1,789,233 |
| William Demant Holding A/S * | 4,937 | 428,915 |
| | | 2,218,148 |
| Insurance 0.0% |
| Tryg A/S | 28,614 | 514,229 |
| Materials 0.1% |
| Novozymes A/S, B Shares | 52,176 | 2,418,728 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.8% |
| Novo Nordisk A/S, Class B | 436,977 | 23,204,996 |
| Telecommunication Services 0.0% |
| TDC A/S | 180,494 | 943,603 |
| Transportation 0.2% |
| AP Moeller - Maersk A/S, Series A | 825 | 1,182,957 |
| AP Moeller - Maersk A/S, Series B | 1,576 | 2,325,893 |
| DSV A/S | 39,169 | 1,589,449 |
| | | 5,098,299 |
| | | 47,671,906 |
| Finland 0.9% |
| Automobiles & Components 0.0% |
| Nokian Renkaat Oyj | 26,034 | 982,173 |
| Capital Goods 0.2% |
| Kone Oyj, Class B | 73,401 | 3,130,589 |
| Metso Oyj | 25,010 | 612,298 |
| Wartsila Oyj Abp | 33,092 | 1,412,729 |
| | | 5,155,616 |
| Energy 0.0% |
| Neste Oyj | 30,786 | 750,640 |
Schwab International Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Insurance 0.2% |
| Sampo Oyj, A Shares | 98,448 | 4,811,899 |
| Materials 0.1% |
| Stora Enso Oyj, R Shares | 127,451 | 1,182,260 |
| UPM-Kymmene Oyj | 120,969 | 2,264,657 |
| | | 3,446,917 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% |
| Orion Oyj, Class B | 23,550 | 841,146 |
| Technology Hardware & Equipment 0.2% |
| Nokia Oyj | 814,819 | 6,061,327 |
| Telecommunication Services 0.1% |
| Elisa Oyj | 31,961 | 1,204,171 |
| Utilities 0.1% |
| Fortum Oyj | 102,012 | 1,529,761 |
| | | 24,783,650 |
| France 9.9% |
| Automobiles & Components 0.4% |
| Compagnie Generale des Etablissements Michelin | 41,908 | 4,168,831 |
| Peugeot S.A. * | 93,891 | 1,649,617 |
| Renault S.A. | 43,529 | 4,101,480 |
| Valeo S.A. | 18,070 | 2,790,465 |
| | | 12,710,393 |
| Banks 0.9% |
| BNP Paribas S.A. | 236,121 | 14,308,271 |
| Credit Agricole S.A. | 231,052 | 2,918,299 |
| Natixis S.A. | 205,635 | 1,258,791 |
| Societe Generale S.A. | 160,572 | 7,457,478 |
| | | 25,942,839 |
| Capital Goods 1.5% |
| Airbus Group SE | 132,163 | 9,203,203 |
| Alstom S.A. * | 47,814 | 1,556,354 |
| Bouygues S.A. | 44,213 | 1,671,119 |
| Compagnie de Saint-Gobain | 105,554 | 4,418,601 |
| Legrand S.A. | 58,610 | 3,212,063 |
| Rexel S.A. | 65,307 | 891,297 |
| Safran S.A. | 65,419 | 4,968,838 |
| Schneider Electric SE | 124,321 | 7,498,438 |
| Thales S.A. | 23,007 | 1,663,206 |
| Vinci S.A. | 107,395 | 7,230,502 |
| Zodiac Aerospace | 47,203 | 1,190,777 |
| | | 43,504,398 |
| Commercial & Professional Supplies 0.1% |
| Bureau Veritas S.A. | 59,466 | 1,343,092 |
| Edenred | 49,244 | 904,163 |
| Societe BIC S.A. | 6,847 | 1,091,122 |
| | | 3,338,377 |
| Consumer Durables & Apparel 0.7% |
| Christian Dior SE | 12,169 | 2,391,720 |
| Hermes International | 5,927 | 2,279,806 |
| Kering | 16,984 | 3,141,096 |
| LVMH Moet Hennessy Louis Vuitton SE | 62,352 | 11,608,039 |
| | | 19,420,661 |
| Security | Number
of Shares | Value
($) |
| Consumer Services 0.1% |
| Accor S.A. | 47,592 | 2,363,394 |
| Sodexo S.A. | 20,337 | 1,807,790 |
| | | 4,171,184 |
| Diversified Financials 0.1% |
| Eurazeo S.A. | 9,055 | 637,591 |
| Wendel S.A. | 6,304 | 755,699 |
| | | 1,393,290 |
| Energy 0.9% |
| Technip S.A. | 21,650 | 1,128,176 |
| Total S.A. | 481,485 | 23,284,046 |
| | | 24,412,222 |
| Food & Staples Retailing 0.2% |
| Carrefour S.A. | 121,075 | 3,945,346 |
| Casino Guichard Perrachon S.A. | 11,366 | 653,031 |
| | | 4,598,377 |
| Food, Beverage & Tobacco 0.5% |
| Danone S.A. | 129,119 | 8,973,776 |
| Pernod-Ricard S.A. | 46,805 | 5,507,510 |
| Remy Cointreau S.A. | 5,148 | 357,610 |
| | | 14,838,896 |
| Health Care Equipment & Services 0.2% |
| Essilor International S.A. | 46,099 | 6,051,113 |
| Household & Personal Products 0.4% |
| L'Oreal S.A. | 56,104 | 10,228,017 |
| Insurance 0.5% |
| AXA S.A. | 437,672 | 11,680,640 |
| CNP Assurances | 42,813 | 610,695 |
| SCOR SE | 34,843 | 1,295,555 |
| | | 13,586,890 |
| Materials 0.5% |
| Air Liquide S.A. | 77,036 | 9,965,910 |
| ArcelorMittal | 211,971 | 1,183,702 |
| Arkema S.A. | 14,630 | 1,069,141 |
| Imerys S.A. | 8,347 | 571,189 |
| | | 12,789,942 |
| Media 0.5% |
| Eutelsat Communications S.A. | 37,892 | 1,248,902 |
| JC Decaux S.A. | 15,814 | 642,333 |
| Lagardere S.C.A. | 27,000 | 785,576 |
| Numericable-SFR SAS * | 22,318 | 1,008,462 |
| Publicis Groupe S.A. | 41,855 | 2,711,168 |
| SES S.A. | 69,593 | 2,053,366 |
| Vivendi S.A. | 259,728 | 6,248,227 |
| | | 14,698,034 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.9% |
| Sanofi | 262,431 | 26,472,942 |
| Real Estate 0.4% |
| Fonciere Des Regions | 6,593 | 620,569 |
| Gecina S.A. | 7,883 | 1,005,433 |
| ICADE | 7,471 | 552,089 |
| Klepierre | 40,677 | 1,926,453 |
| Unibail-Rodamco SE | 22,030 | 6,131,628 |
| | | 10,236,172 |
| Semiconductors & Semiconductor Equipment 0.0% |
| STMicroelectronics N.V. | 149,777 | 1,032,004 |
Schwab International Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Software & Services 0.2% |
| Atos SE | 18,943 | 1,507,986 |
| Cap Gemini S.A. | 35,281 | 3,137,046 |
| Dassault Systemes S.A. | 29,185 | 2,302,348 |
| | | 6,947,380 |
| Technology Hardware & Equipment 0.1% |
| Alcatel-Lucent * | 627,090 | 2,545,569 |
| Ingenico Group S.A. | 11,985 | 1,412,451 |
| | | 3,958,020 |
| Telecommunication Services 0.3% |
| Iliad S.A. | 5,532 | 1,161,806 |
| Orange S.A. | 443,430 | 7,818,422 |
| | | 8,980,228 |
| Transportation 0.1% |
| Aeroports de Paris | 6,658 | 836,405 |
| Bollore S.A. | 195,141 | 964,664 |
| Groupe Eurotunnel SE - Reg'd | 101,963 | 1,427,298 |
| | | 3,228,367 |
| Utilities 0.4% |
| Electricite de France S.A. | 54,100 | 1,005,584 |
| Engie (a) | 327,960 | 5,739,561 |
| Suez Environnement Co. | 66,049 | 1,254,127 |
| Veolia Environnement S.A. | 98,233 | 2,281,976 |
| | | 10,281,248 |
| | | 282,820,994 |
| Germany 8.5% |
| Automobiles & Components 1.2% |
| Bayerische Motoren Werke AG | 73,685 | 7,547,433 |
| Continental AG | 24,641 | 5,917,035 |
| Daimler AG - Reg'd | 214,576 | 18,606,685 |
| Volkswagen AG | 7,710 | 1,067,614 |
| | | 33,138,767 |
| Banks 0.1% |
| Commerzbank AG * | 230,492 | 2,534,888 |
| Capital Goods 0.8% |
| Brenntag AG | 35,268 | 2,129,598 |
| GEA Group AG | 39,056 | 1,565,195 |
| MAN SE | 8,274 | 862,170 |
| OSRAM Licht AG | 19,208 | 1,128,743 |
| Siemens AG - Reg'd | 176,926 | 17,771,179 |
| | | 23,456,885 |
| Consumer Durables & Apparel 0.2% |
| adidas AG | 45,951 | 4,118,058 |
| Hugo Boss AG | 15,109 | 1,553,601 |
| | | 5,671,659 |
| Diversified Financials 0.4% |
| Deutsche Bank AG - Reg'd | 308,994 | 8,648,370 |
| Deutsche Boerse AG | 42,480 | 3,916,842 |
| | | 12,565,212 |
| Food & Staples Retailing 0.0% |
| METRO AG | 39,043 | 1,201,185 |
| Security | Number
of Shares | Value
($) |
| Health Care Equipment & Services 0.4% |
| Fresenius Medical Care AG & Co. KGaA | 49,277 | 4,435,300 |
| Fresenius SE & Co. KGaA | 85,680 | 6,295,972 |
| | | 10,731,272 |
| Household & Personal Products 0.1% |
| Beiersdorf AG | 22,967 | 2,181,311 |
| Henkel AG & Co. KGaA | 23,238 | 2,144,933 |
| | | 4,326,244 |
| Insurance 0.9% |
| Allianz SE - Reg'd | 101,698 | 17,804,037 |
| Hannover Rueck SE | 13,693 | 1,583,049 |
| Muenchener Rueckversicherungs-Gesellschaft AG - Reg'd | 36,974 | 7,372,391 |
| | | 26,759,477 |
| Materials 1.2% |
| BASF SE | 205,226 | 16,812,899 |
| Evonik Industries AG | 30,748 | 1,116,460 |
| HeidelbergCement AG | 31,071 | 2,313,843 |
| K&S AG - Reg'd | 42,301 | 1,067,817 |
| LANXESS AG | 20,526 | 1,101,482 |
| Linde AG | 41,020 | 7,115,142 |
| Symrise AG | 27,662 | 1,820,619 |
| ThyssenKrupp AG | 81,848 | 1,649,229 |
| | | 32,997,491 |
| Media 0.2% |
| Axel Springer SE | 9,201 | 517,094 |
| Kabel Deutschland Holding AG | 4,715 | 599,784 |
| ProSiebenSat.1 Media SE | 49,521 | 2,675,897 |
| RTL Group S.A. | 8,951 | 774,303 |
| | | 4,567,078 |
| Pharmaceuticals, Biotechnology & Life Sciences 1.0% |
| Bayer AG - Reg'd | 184,438 | 24,592,116 |
| Merck KGaA | 29,436 | 2,873,793 |
| QIAGEN N.V. * | 50,348 | 1,220,616 |
| | | 28,686,525 |
| Real Estate 0.2% |
| Deutsche Wohnen AG | 73,219 | 2,063,982 |
| Vonovia SE | 105,466 | 3,515,596 |
| | | 5,579,578 |
| Semiconductors & Semiconductor Equipment 0.1% |
| Infineon Technologies AG | 255,998 | 3,153,363 |
| Software & Services 0.7% |
| SAP SE | 219,158 | 17,277,334 |
| United Internet AG - Reg'd | 27,639 | 1,435,096 |
| | | 18,712,430 |
| Telecommunication Services 0.5% |
| Deutsche Telekom AG - Reg'd | 708,212 | 13,265,934 |
| Telefonica Deutschland Holding AG | 138,346 | 890,623 |
| | | 14,156,557 |
Schwab International Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Transportation 0.3% |
| Deutsche Lufthansa AG - Reg'd * | 53,108 | 784,285 |
| Deutsche Post AG - Reg'd | 216,552 | 6,432,972 |
| Fraport AG Frankfurt Airport Services Worldwide | 9,632 | 610,695 |
| | | 7,827,952 |
| Utilities 0.2% |
| E.ON SE | 447,779 | 4,723,689 |
| RWE AG | 106,308 | 1,477,390 |
| | | 6,201,079 |
| | | 242,267,642 |
| Hong Kong 3.0% |
| Banks 0.2% |
| BOC Hong Kong (Holdings) Ltd. | 805,500 | 2,575,734 |
| Hang Seng Bank Ltd. | 170,736 | 3,132,293 |
| The Bank of East Asia Ltd. | 262,000 | 978,949 |
| | | 6,686,976 |
| Capital Goods 0.3% |
| CK Hutchison Holdings Ltd. | 608,025 | 8,325,986 |
| NWS Holdings Ltd. | 321,000 | 482,449 |
| | | 8,808,435 |
| Consumer Durables & Apparel 0.1% |
| Li & Fung Ltd. | 1,378,000 | 1,117,093 |
| Techtronic Industries Co., Ltd. | 295,500 | 1,080,252 |
| Yue Yuen Industrial Holdings Ltd. | 160,500 | 585,513 |
| | | 2,782,858 |
| Consumer Services 0.2% |
| Galaxy Entertainment Group Ltd. | 521,000 | 1,779,672 |
| MGM China Holdings Ltd. | 183,200 | 267,212 |
| Sands China Ltd. | 547,200 | 1,970,441 |
| Shangri-La Asia Ltd. | 258,000 | 236,113 |
| SJM Holdings Ltd. | 398,000 | 330,409 |
| Wynn Macau Ltd. (a) | 321,600 | 441,503 |
| | | 5,025,350 |
| Diversified Financials 0.2% |
| First Pacific Co., Ltd. | 493,250 | 337,521 |
| Hong Kong Exchanges & Clearing Ltd. | 247,018 | 6,464,174 |
| | | 6,801,695 |
| Food, Beverage & Tobacco 0.0% |
| WH Group Ltd. * | 1,296,000 | 714,677 |
| Insurance 0.6% |
| AIA Group Ltd. | 2,700,400 | 15,833,335 |
| Real Estate 0.8% |
| Cheung Kong Property Holdings Ltd. | 600,025 | 4,198,458 |
| Hang Lung Properties Ltd. | 468,000 | 1,145,112 |
| Henderson Land Development Co., Ltd. | 262,438 | 1,676,126 |
| Hysan Development Co., Ltd. | 156,000 | 691,942 |
| Kerry Properties Ltd. | 166,500 | 492,864 |
| Link REIT | 522,000 | 3,118,783 |
| Security | Number
of Shares | Value
($) |
| New World Development Co., Ltd. | 1,126,666 | 1,201,709 |
| Sino Land Co., Ltd. | 700,000 | 1,080,451 |
| Sun Hung Kai Properties Ltd. | 383,604 | 5,124,105 |
| Swire Pacific Ltd., Class A | 126,090 | 1,456,786 |
| Swire Properties Ltd. | 277,600 | 833,259 |
| The Wharf Holdings Ltd. | 298,100 | 1,773,825 |
| Wheelock & Co., Ltd. | 214,000 | 997,478 |
| | | 23,790,898 |
| Semiconductors & Semiconductor Equipment 0.0% |
| ASM Pacific Technology Ltd. | 56,800 | 403,317 |
| Telecommunication Services 0.1% |
| HKT Trust & HKT Ltd. | 536,000 | 642,459 |
| PCCW Ltd. | 976,000 | 525,518 |
| | | 1,167,977 |
| Transportation 0.1% |
| Cathay Pacific Airways Ltd. | 259,000 | 513,687 |
| MTR Corp., Ltd. | 311,000 | 1,408,908 |
| | | 1,922,595 |
| Utilities 0.4% |
| Cheung Kong Infrastructure Holdings Ltd. | 136,000 | 1,261,668 |
| CLP Holdings Ltd. | 432,080 | 3,756,295 |
| Hong Kong & China Gas Co., Ltd. | 1,600,516 | 3,245,102 |
| Power Assets Holdings Ltd. | 309,000 | 3,073,441 |
| | | 11,336,506 |
| | | 85,274,619 |
| Ireland 0.4% |
| Banks 0.1% |
| Bank of Ireland * | 6,120,647 | 2,275,795 |
| Food, Beverage & Tobacco 0.1% |
| Kerry Group plc, Class A | 34,919 | 2,832,092 |
| Materials 0.2% |
| CRH plc | 183,938 | 5,034,534 |
| James Hardie Industries plc CDI | 96,740 | 1,252,309 |
| | | 6,286,843 |
| Transportation 0.0% |
| Ryanair Holdings plc | 43,580 | 646,957 |
| | | 12,041,687 |
| Israel 0.6% |
| Banks 0.1% |
| Bank Hapoalim B.M. | 234,191 | 1,219,050 |
| Bank Leumi Le-Israel B.M. * | 308,155 | 1,169,257 |
| Mizrahi Tefahot Bank Ltd. | 30,973 | 376,429 |
| | | 2,764,736 |
| Energy 0.0% |
| Delek Group Ltd. | 790 | 190,148 |
| Materials 0.0% |
| Israel Chemicals Ltd. | 111,577 | 618,667 |
| The Israel Corp., Ltd. | 609 | 157,103 |
| | | 775,770 |
Schwab International Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Pharmaceuticals, Biotechnology & Life Sciences 0.4% |
| Teva Pharmaceutical Industries Ltd. | 189,693 | 11,262,646 |
| Real Estate 0.0% |
| Azrieli Group | 8,005 | 313,722 |
| Software & Services 0.0% |
| NICE-Systems Ltd. | 13,354 | 825,366 |
| Telecommunication Services 0.1% |
| Bezeq The Israeli Telecommunication Corp., Ltd. | 407,063 | 872,330 |
| | | 17,004,718 |
| Italy 2.4% |
| Automobiles & Components 0.1% |
| Fiat Chrysler Automobiles N.V. * | 203,098 | 2,992,270 |
| Banks 0.7% |
| Banca Monte dei Paschi di Siena S.p.A. * | 562,621 | 1,032,819 |
| Banco Popolare SC * | 75,605 | 1,129,780 |
| Intesa Sanpaolo S.p.A. | 2,823,494 | 9,823,091 |
| UniCredit S.p.A. | 1,073,752 | 6,933,287 |
| Unione di Banche Italiane S.p.A. | 204,609 | 1,530,832 |
| | | 20,449,809 |
| Capital Goods 0.1% |
| CNH Industrial N.V. | 202,319 | 1,369,553 |
| Finmeccanica S.p.A. * | 92,749 | 1,212,481 |
| Prysmian S.p.A. | 46,111 | 995,780 |
| | | 3,577,814 |
| Consumer Durables & Apparel 0.1% |
| Luxottica Group S.p.A. | 37,573 | 2,633,879 |
| Diversified Financials 0.1% |
| EXOR S.p.A. | 21,408 | 1,061,710 |
| Mediobanca S.p.A. | 123,900 | 1,246,034 |
| | | 2,307,744 |
| Energy 0.4% |
| Eni S.p.A. | 568,859 | 9,289,608 |
| Saipem S.p.A. *(a) | 62,014 | 582,607 |
| Tenaris S.A. | 105,620 | 1,330,211 |
| | | 11,202,426 |
| Insurance 0.2% |
| Assicurazioni Generali S.p.A. | 259,516 | 4,916,935 |
| UnipolSai S.p.A. | 249,290 | 601,022 |
| | | 5,517,957 |
| Telecommunication Services 0.1% |
| Telecom Italia S.p.A. * | 2,486,969 | 3,469,524 |
| Transportation 0.1% |
| Atlantia S.p.A. | 91,706 | 2,539,646 |
| Utilities 0.5% |
| Enel Green Power S.p.A. | 383,029 | 809,786 |
| Enel S.p.A. | 1,558,541 | 7,186,957 |
| Security | Number
of Shares | Value
($) |
| Snam S.p.A. | 480,891 | 2,488,609 |
| Terna - Rete Elettrica Nationale S.p.A. | 333,535 | 1,696,461 |
| | | 12,181,813 |
| | | 66,872,882 |
| Japan 22.6% |
| Automobiles & Components 3.2% |
| Aisin Seiki Co., Ltd. | 42,100 | 1,670,907 |
| Bridgestone Corp. | 147,257 | 5,400,046 |
| Daihatsu Motor Co., Ltd. | 39,700 | 486,313 |
| Denso Corp. | 107,200 | 4,997,949 |
| Fuji Heavy Industries Ltd. | 131,600 | 5,089,447 |
| Honda Motor Co., Ltd. | 362,839 | 12,002,872 |
| Isuzu Motors Ltd. | 131,900 | 1,540,528 |
| Koito Manufacturing Co., Ltd. | 22,500 | 852,318 |
| Mazda Motor Corp. | 122,000 | 2,394,770 |
| Mitsubishi Motors Corp. | 146,600 | 1,298,482 |
| NGK Spark Plug Co., Ltd. | 40,200 | 981,082 |
| NHK Spring Co., Ltd. | 37,000 | 376,583 |
| Nissan Motor Co., Ltd. | 561,396 | 5,819,554 |
| NOK Corp. | 20,800 | 488,793 |
| Stanley Electric Co., Ltd. | 33,100 | 632,229 |
| Sumitomo Electric Industries Ltd. | 164,400 | 2,243,723 |
| Sumitomo Rubber Industries Ltd. | 40,700 | 605,350 |
| Suzuki Motor Corp. | 81,700 | 2,675,141 |
| The Yokohama Rubber Co., Ltd. | 24,500 | 470,979 |
| Toyoda Gosei Co., Ltd. | 11,300 | 259,019 |
| Toyota Industries Corp. | 37,000 | 1,944,342 |
| Toyota Motor Corp. | 608,803 | 37,297,969 |
| Yamaha Motor Co., Ltd. | 57,100 | 1,280,322 |
| | | 90,808,718 |
| Banks 2.1% |
| Aozora Bank Ltd. | 253,000 | 924,729 |
| Fukuoka Financial Group, Inc. | 180,000 | 947,187 |
| Hokuhoku Financial Group, Inc. | 282,000 | 626,103 |
| Kyushu Financial Group, Inc. * | 75,000 | 576,780 |
| Mitsubishi UFJ Financial Group, Inc. | 2,836,309 | 18,343,913 |
| Mizuho Financial Group, Inc. | 5,218,434 | 10,749,162 |
| Resona Holdings, Inc. | 486,000 | 2,571,583 |
| Seven Bank Ltd. | 149,400 | 680,749 |
| Shinsei Bank Ltd. | 411,000 | 861,774 |
| Sumitomo Mitsui Financial Group, Inc. | 283,546 | 11,311,683 |
| Sumitomo Mitsui Trust Holdings, Inc. | 751,000 | 2,882,749 |
| Suruga Bank Ltd. | 37,000 | 728,419 |
| The Bank of Kyoto Ltd. | 77,000 | 777,662 |
| The Bank of Yokohama Ltd. | 253,000 | 1,579,001 |
| The Chiba Bank Ltd. | 148,000 | 1,079,664 |
| The Chugoku Bank Ltd. | 32,500 | 460,730 |
| The Gunma Bank Ltd. | 94,000 | 591,702 |
| The Hachijuni Bank Ltd. | 95,000 | 647,781 |
| The Hiroshima Bank Ltd. | 116,000 | 644,213 |
| The Iyo Bank Ltd. | 57,500 | 618,251 |
Schwab International Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| The Joyo Bank Ltd. | 125,000 | 649,265 |
| The Shizuoka Bank Ltd. | 117,000 | 1,173,716 |
| Yamaguchi Financial Group, Inc. | 50,000 | 614,979 |
| | | 60,041,795 |
| Capital Goods 2.8% |
| Amada Holdings Co., Ltd. | 71,000 | 633,205 |
| Asahi Glass Co., Ltd. | 223,000 | 1,276,784 |
| Daikin Industries Ltd. | 52,900 | 3,398,876 |
| FANUC Corp. | 45,400 | 8,010,441 |
| Fuji Electric Co., Ltd. | 140,000 | 624,618 |
| Hino Motors Ltd. | 61,600 | 704,895 |
| Hitachi Construction Machinery Co., Ltd. | 23,300 | 360,843 |
| IHI Corp. | 305,000 | 860,532 |
| ITOCHU Corp. | 348,500 | 4,360,773 |
| JGC Corp. | 48,000 | 761,853 |
| JTEKT Corp. | 44,300 | 763,592 |
| Kajima Corp. | 194,000 | 1,110,161 |
| Kawasaki Heavy Industries Ltd. | 315,000 | 1,264,343 |
| Keihan Electric Railway Co., Ltd. | 115,000 | 815,505 |
| Komatsu Ltd. | 205,709 | 3,381,339 |
| Kubota Corp. | 248,000 | 3,844,360 |
| Kurita Water Industries Ltd. | 25,000 | 564,520 |
| LIXIL Group Corp. | 58,600 | 1,254,628 |
| Mabuchi Motor Co., Ltd. | 11,300 | 559,117 |
| Makita Corp. | 26,700 | 1,462,969 |
| Marubeni Corp. | 368,100 | 2,126,892 |
| Minebea Co., Ltd. | 70,000 | 770,966 |
| Mitsubishi Corp. | 304,500 | 5,535,987 |
| Mitsubishi Electric Corp. | 437,000 | 4,551,240 |
| Mitsubishi Heavy Industries Ltd. | 686,000 | 3,458,447 |
| Mitsui & Co., Ltd. | 383,800 | 4,867,701 |
| Nabtesco Corp. | 28,000 | 560,698 |
| NGK Insulators Ltd. | 57,000 | 1,234,041 |
| Nidec Corp. | 48,800 | 3,677,375 |
| NSK Ltd. | 104,000 | 1,230,005 |
| Obayashi Corp. | 142,000 | 1,245,348 |
| Seibu Holdings, Inc. | 27,000 | 546,447 |
| Shimizu Corp. | 140,000 | 1,225,784 |
| SMC Corp. | 11,900 | 3,061,180 |
| Sumitomo Corp. | 246,700 | 2,698,227 |
| Sumitomo Heavy Industries Ltd. | 123,000 | 554,239 |
| Taisei Corp. | 233,000 | 1,514,153 |
| THK Co., Ltd. | 25,700 | 484,127 |
| Toshiba Corp. * | 922,178 | 2,601,517 |
| TOTO Ltd. | 32,500 | 1,101,924 |
| Toyota Tsusho Corp. | 49,200 | 1,126,781 |
| | | 80,186,433 |
| Commercial & Professional Supplies 0.2% |
| Dai Nippon Printing Co., Ltd. | 115,000 | 1,189,339 |
| Park24 Co., Ltd. | 18,000 | 377,254 |
| Recruit Holdings Co., Ltd. | 33,000 | 1,060,672 |
| Secom Co., Ltd. | 46,000 | 3,068,432 |
| Toppan Printing Co., Ltd. | 112,000 | 1,004,356 |
| | | 6,700,053 |
| Security | Number
of Shares | Value
($) |
| Consumer Durables & Apparel 1.0% |
| Asics Corp. | 36,800 | 1,016,441 |
| Bandai Namco Holdings, Inc. | 41,500 | 1,020,080 |
| Casio Computer Co., Ltd. | 48,900 | 921,245 |
| Iida Group Holdings Co., Ltd. | 30,100 | 564,160 |
| Nikon Corp. | 81,700 | 1,056,909 |
| Panasonic Corp. | 495,812 | 5,817,233 |
| Rinnai Corp. | 8,500 | 673,846 |
| Sankyo Co., Ltd. | 10,600 | 408,521 |
| Sega Sammy Holdings, Inc. | 36,600 | 385,428 |
| Sekisui Chemical Co., Ltd. | 97,000 | 1,144,503 |
| Sekisui House Ltd. | 138,200 | 2,300,535 |
| Sharp Corp. *(a) | 310,785 | 340,645 |
| Shimano, Inc. | 18,000 | 2,836,232 |
| Sony Corp. | 278,400 | 7,913,632 |
| Yamaha Corp. | 34,900 | 866,175 |
| | | 27,265,585 |
| Consumer Services 0.1% |
| Benesse Holdings, Inc. | 14,200 | 380,692 |
| McDonald's Holdings Co., Ltd. (a) | 15,000 | 354,769 |
| Oriental Land Co., Ltd. | 45,000 | 2,733,604 |
| | | 3,469,065 |
| Diversified Financials 0.6% |
| Acom Co., Ltd. * | 88,800 | 486,161 |
| AEON Financial Service Co., Ltd. | 24,800 | 619,642 |
| Credit Saison Co., Ltd. | 34,000 | 698,005 |
| Daiwa Securities Group, Inc. | 381,000 | 2,605,114 |
| Japan Exchange Group, Inc. | 121,200 | 1,950,223 |
| Mitsubishi UFJ Lease & Finance Co., Ltd. | 97,400 | 511,229 |
| Nomura Holdings, Inc. | 810,200 | 5,096,436 |
| ORIX Corp. | 298,600 | 4,360,685 |
| SBI Holdings, Inc. | 48,290 | 546,561 |
| | | 16,874,056 |
| Energy 0.2% |
| Idemitsu Kosan Co., Ltd. | 20,100 | 329,629 |
| Inpex Corp. | 206,800 | 1,971,217 |
| JX Holdings, Inc. | 492,800 | 1,935,057 |
| Showa Shell Sekiyu K.K. | 49,300 | 435,144 |
| TonenGeneral Sekiyu K.K. | 61,000 | 633,770 |
| | | 5,304,817 |
| Food & Staples Retailing 0.4% |
| Aeon Co., Ltd. | 141,700 | 2,099,462 |
| FamilyMart Co., Ltd. | 14,000 | 572,275 |
| Lawson, Inc. | 14,900 | 1,103,684 |
| Seven & i Holdings Co., Ltd. | 168,603 | 7,658,759 |
| | | 11,434,180 |
| Food, Beverage & Tobacco 0.9% |
| Ajinomoto Co., Inc. | 125,000 | 2,784,248 |
| Asahi Group Holdings Ltd. | 84,700 | 2,612,672 |
| Calbee, Inc. | 16,700 | 605,071 |
| Japan Tobacco, Inc. | 246,400 | 8,528,345 |
| Kikkoman Corp. | 35,000 | 1,096,247 |
| Kirin Holdings Co., Ltd. | 179,500 | 2,542,315 |
| MEIJI Holdings Co., Ltd. | 27,200 | 2,143,353 |
| NH Foods Ltd. | 39,000 | 813,482 |
| Nisshin Seifun Group, Inc. | 49,400 | 755,051 |
Schwab International Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Nissin Foods Holdings Co., Ltd. | 15,200 | 702,667 |
| Suntory Beverage & Food Ltd. | 30,400 | 1,229,305 |
| Toyo Suisan Kaisha Ltd. | 18,800 | 692,738 |
| Yakult Honsha Co., Ltd. | 19,700 | 1,042,949 |
| Yamazaki Baking Co., Ltd. | 26,000 | 500,723 |
| | | 26,049,166 |
| Health Care Equipment & Services 0.5% |
| Alfresa Holdings Corp. | 43,000 | 824,542 |
| Hoya Corp. | 94,707 | 3,908,251 |
| M3, Inc. | 43,700 | 846,999 |
| Medipal Holdings Corp. | 34,800 | 607,332 |
| Miraca Holdings, Inc. | 11,800 | 525,162 |
| Olympus Corp. | 59,900 | 2,020,506 |
| Suzuken Co., Ltd. | 15,900 | 608,555 |
| Sysmex Corp. | 32,500 | 1,857,661 |
| Terumo Corp. | 66,500 | 1,973,057 |
| | | 13,172,065 |
| Household & Personal Products 0.4% |
| Kao Corp. | 111,619 | 5,730,443 |
| Kose Corp. | 6,500 | 634,787 |
| Shiseido Co., Ltd. | 78,500 | 1,864,694 |
| Unicharm Corp. | 87,200 | 1,862,267 |
| | | 10,092,191 |
| Insurance 0.6% |
| MS&AD Insurance Group Holdings, Inc. | 113,962 | 3,359,668 |
| Sompo Japan Nipponkoa Holdings, Inc. | 75,700 | 2,376,848 |
| Sony Financial Holdings, Inc. | 40,600 | 727,656 |
| T&D Holdings, Inc. | 128,200 | 1,684,640 |
| The Dai-ichi Life Insurance Co., Ltd. | 238,700 | 4,129,340 |
| Tokio Marine Holdings, Inc. | 151,999 | 5,856,776 |
| | | 18,134,928 |
| Materials 1.2% |
| Air Water, Inc. | 34,000 | 556,333 |
| Asahi Kasei Corp. | 291,000 | 1,785,759 |
| Daicel Corp. | 62,500 | 825,899 |
| Hitachi Chemical Co., Ltd. | 22,600 | 357,252 |
| Hitachi Metals Ltd. | 46,000 | 520,989 |
| JFE Holdings, Inc. | 113,800 | 1,788,995 |
| JSR Corp. | 40,400 | 638,049 |
| Kaneka Corp. | 58,000 | 514,300 |
| Kansai Paint Co., Ltd. | 56,000 | 853,652 |
| Kobe Steel Ltd. | 687,000 | 867,524 |
| Kuraray Co., Ltd. | 76,700 | 946,008 |
| Maruichi Steel Tube Ltd. | 8,800 | 225,353 |
| Mitsubishi Chemical Holdings Corp. | 301,100 | 1,876,321 |
| Mitsubishi Gas Chemical Co., Inc. | 85,000 | 473,908 |
| Mitsubishi Materials Corp. | 272,000 | 948,826 |
| Mitsui Chemicals, Inc. | 180,000 | 680,607 |
| Nippon Paint Holdings Co., Ltd. | 30,200 | 637,885 |
| Nippon Steel & Sumitomo Metal Corp. | 172,641 | 3,499,872 |
| Nitto Denko Corp. | 37,800 | 2,423,902 |
| Oji Holdings Corp. | 173,000 | 895,967 |
| Security | Number
of Shares | Value
($) |
| Shin-Etsu Chemical Co., Ltd. | 91,460 | 5,439,049 |
| Sumitomo Chemical Co., Ltd. | 322,000 | 1,844,481 |
| Sumitomo Metal Mining Co., Ltd. | 106,000 | 1,315,079 |
| Taiheiyo Cement Corp. | 281,000 | 926,379 |
| Taiyo Nippon Sanso Corp. | 29,000 | 298,920 |
| Teijin Ltd. | 201,000 | 709,540 |
| Toray Industries, Inc. | 336,000 | 2,931,332 |
| Toyo Seikan Group Holdings Ltd. | 33,400 | 645,397 |
| | | 35,427,578 |
| Media 0.1% |
| Dentsu, Inc. | 47,400 | 2,664,740 |
| Hakuhodo DY Holdings, Inc. | 53,300 | 560,014 |
| Toho Co., Ltd. | 23,800 | 619,352 |
| | | 3,844,106 |
| Pharmaceuticals, Biotechnology & Life Sciences 1.3% |
| Astellas Pharma, Inc. | 467,650 | 6,787,690 |
| Chugai Pharmaceutical Co., Ltd. | 49,200 | 1,583,743 |
| Daiichi Sankyo Co., Ltd. | 140,700 | 2,763,212 |
| Eisai Co., Ltd. | 55,900 | 3,496,522 |
| Hisamitsu Pharmaceutical Co., Inc. | 14,600 | 565,895 |
| Kyowa Hakko Kirin Co., Ltd. | 53,000 | 873,600 |
| Mitsubishi Tanabe Pharma Corp. | 51,200 | 865,753 |
| Ono Pharmaceutical Co., Ltd. | 18,300 | 2,507,003 |
| Otsuka Holdings Co., Ltd. | 86,900 | 2,892,067 |
| Santen Pharmaceutical Co., Ltd. | 82,400 | 1,118,372 |
| Shionogi & Co., Ltd. | 65,400 | 2,682,479 |
| Sumitomo Dainippon Pharma Co., Ltd. | 41,500 | 459,324 |
| Taisho Pharmaceutical Holdings Co., Ltd. | 6,500 | 405,566 |
| Takeda Pharmaceutical Co., Ltd. | 174,800 | 8,535,877 |
| | | 35,537,103 |
| Real Estate 1.1% |
| Aeon Mall Co., Ltd. | 27,400 | 458,339 |
| Daito Trust Construction Co., Ltd. | 16,000 | 1,731,941 |
| Daiwa House Industry Co., Ltd. | 136,500 | 3,583,165 |
| Hulic Co., Ltd. | 66,400 | 620,171 |
| Japan Prime Realty Investment Corp. | 196 | 638,015 |
| Japan Real Estate Investment Corp. | 279 | 1,289,672 |
| Japan Retail Fund Investment Corp. | 554 | 1,072,971 |
| Mitsubishi Estate Co., Ltd. | 277,502 | 5,951,438 |
| Mitsui Fudosan Co., Ltd. | 208,777 | 5,681,584 |
| Nippon Building Fund, Inc. | 316 | 1,500,771 |
| Nippon Prologis REIT, Inc. | 330 | 580,331 |
| Nomura Real Estate Holdings, Inc. | 31,300 | 668,848 |
| Nomura Real Estate Master Fund, Inc. * | 760 | 962,990 |
Schwab International Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| NTT Urban Development Corp. | 22,700 | 224,936 |
| Sumitomo Realty & Development Co., Ltd. | 81,000 | 2,667,197 |
| Tokyo Tatemono Co., Ltd. | 48,500 | 602,629 |
| Tokyu Fudosan Holdings Corp. | 110,200 | 774,612 |
| United Urban Investment Corp. | 576 | 799,143 |
| | | 29,808,753 |
| Retailing 0.6% |
| ABC-Mart, Inc. | 5,980 | 333,547 |
| Don Quijote Holdings Co., Ltd. | 28,100 | 1,032,230 |
| Fast Retailing Co., Ltd. | 11,900 | 4,346,859 |
| Hikari Tsushin, Inc. | 5,100 | 388,104 |
| Isetan Mitsukoshi Holdings Ltd. | 78,000 | 1,251,261 |
| J. Front Retailing Co., Ltd. | 50,900 | 835,894 |
| Marui Group Co., Ltd. | 52,300 | 675,547 |
| Nitori Holdings Co., Ltd. | 16,200 | 1,263,258 |
| Rakuten, Inc. | 209,920 | 2,908,062 |
| Ryohin Keikaku Co., Ltd. | 5,100 | 1,024,064 |
| Sanrio Co., Ltd. (a) | 10,800 | 286,915 |
| Shimamura Co., Ltd. | 5,400 | 606,480 |
| Takashimaya Co., Ltd. | 60,000 | 536,352 |
| USS Co., Ltd. | 51,600 | 910,940 |
| Yamada Denki Co., Ltd. | 140,700 | 632,959 |
| | | 17,032,472 |
| Semiconductors & Semiconductor Equipment 0.1% |
| Rohm Co., Ltd. | 21,500 | 1,062,778 |
| Tokyo Electron Ltd. | 39,400 | 2,363,168 |
| | | 3,425,946 |
| Software & Services 0.5% |
| COLOPL, Inc. (a) | 9,400 | 153,560 |
| Fujitsu Ltd. | 404,000 | 1,909,553 |
| GungHo Online Entertainment, Inc. (a) | 80,100 | 260,871 |
| Itochu Techno-Solutions Corp. | 9,012 | 197,570 |
| Kakaku.com, Inc. | 31,300 | 583,909 |
| Konami Holdings Corp. | 19,400 | 440,802 |
| Mixi, Inc. | 10,100 | 385,686 |
| Nexon Co., Ltd. | 28,900 | 400,872 |
| Nintendo Co., Ltd. | 23,439 | 3,747,113 |
| Nomura Research Institute Ltd. | 29,400 | 1,201,591 |
| NTT Data Corp. | 28,300 | 1,408,347 |
| Oracle Corp., Japan | 9,600 | 436,616 |
| Otsuka Corp. | 10,700 | 517,236 |
| Trend Micro, Inc. | 24,700 | 962,595 |
| Yahoo Japan Corp. | 317,400 | 1,346,132 |
| | | 13,952,453 |
| Technology Hardware & Equipment 1.7% |
| Alps Electric Co., Ltd. | 37,100 | 1,151,554 |
| Brother Industries Ltd. | 54,100 | 691,476 |
| Canon, Inc. | 238,695 | 7,127,924 |
| Citizen Holdings Co., Ltd. | 68,300 | 517,679 |
| FUJIFILM Holdings Corp. | 102,011 | 4,069,089 |
| Hamamatsu Photonics K.K. | 32,100 | 817,132 |
| Hirose Electric Co., Ltd. | 7,085 | 857,539 |
| Security | Number
of Shares | Value
($) |
| Hitachi High-Technologies Corp. | 15,900 | 427,600 |
| Hitachi Ltd. | 1,067,079 | 6,155,754 |
| Ibiden Co., Ltd. | 22,300 | 307,274 |
| Keyence Corp. | 10,100 | 5,258,144 |
| Konica Minolta, Inc. | 106,500 | 1,094,225 |
| Kyocera Corp. | 70,600 | 3,193,566 |
| Murata Manufacturing Co., Ltd. | 45,274 | 6,444,818 |
| NEC Corp. | 564,000 | 1,739,930 |
| Nippon Electric Glass Co., Ltd. | 88,000 | 430,616 |
| Omron Corp. | 42,500 | 1,407,296 |
| Ricoh Co., Ltd. | 157,600 | 1,698,596 |
| Seiko Epson Corp. | 60,700 | 927,202 |
| Shimadzu Corp. | 58,000 | 899,724 |
| TDK Corp. | 27,400 | 1,745,282 |
| Yaskawa Electric Corp. | 53,900 | 639,356 |
| Yokogawa Electric Corp. | 51,000 | 569,685 |
| | | 48,171,461 |
| Telecommunication Services 1.2% |
| KDDI Corp. | 392,000 | 9,485,738 |
| Nippon Telegraph & Telephone Corp. | 165,756 | 6,076,842 |
| NTT DOCOMO, Inc. | 323,000 | 6,290,582 |
| SoftBank Group Corp. | 214,200 | 12,001,178 |
| | | 33,854,340 |
| Transportation 1.2% |
| ANA Holdings, Inc. | 246,000 | 734,604 |
| Central Japan Railway Co. | 32,100 | 5,855,466 |
| East Japan Railway Co. | 74,360 | 7,069,818 |
| Hankyu Hanshin Holdings, Inc. | 251,000 | 1,635,045 |
| Japan Airlines Co., Ltd. | 27,200 | 1,024,709 |
| Japan Airport Terminal Co., Ltd. | 9,200 | 497,572 |
| Kamigumi Co., Ltd. | 51,000 | 438,174 |
| Keikyu Corp. | 111,000 | 913,070 |
| Keio Corp. | 132,000 | 1,074,319 |
| Keisei Electric Railway Co., Ltd. | 62,000 | 764,016 |
| Kintetsu Group Holdings Co., Ltd. | 407,000 | 1,573,496 |
| Mitsubishi Logistics Corp. | 25,000 | 358,798 |
| Mitsui O.S.K. Lines Ltd. | 273,000 | 729,023 |
| Nagoya Railroad Co., Ltd. | 194,000 | 801,762 |
| Nippon Express Co., Ltd. | 184,000 | 947,911 |
| Nippon Yusen K.K. | 383,000 | 1,002,087 |
| Odakyu Electric Railway Co., Ltd. | 140,000 | 1,368,461 |
| Tobu Railway Co., Ltd. | 222,000 | 1,073,749 |
| Tokyu Corp. | 247,000 | 2,002,860 |
| West Japan Railway Co. | 36,200 | 2,543,294 |
| Yamato Holdings Co., Ltd. | 76,700 | 1,509,785 |
| | | 33,918,019 |
| Utilities 0.6% |
| Chubu Electric Power Co., Inc. | 140,100 | 2,155,157 |
| Electric Power Development Co., Ltd. | 33,800 | 1,114,248 |
| Hokuriku Electric Power Co. | 40,300 | 601,109 |
| Kyushu Electric Power Co., Inc. * | 91,000 | 1,098,254 |
Schwab International Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Osaka Gas Co., Ltd. | 432,000 | 1,701,418 |
| Shikoku Electric Power Co., Inc. | 42,400 | 719,829 |
| The Chugoku Electric Power Co., Inc. | 70,100 | 1,059,316 |
| The Kansai Electric Power Co., Inc. * | 151,700 | 1,943,690 |
| Toho Gas Co., Ltd. | 89,000 | 545,068 |
| Tohoku Electric Power Co., Inc. | 101,200 | 1,420,892 |
| Tokyo Electric Power Co., Inc. * | 320,990 | 2,189,609 |
| Tokyo Gas Co., Ltd. | 509,201 | 2,519,964 |
| | | 17,068,554 |
| | | 641,573,837 |
| Netherlands 2.8% |
| Banks 0.4% |
| ING Groep N.V. CVA | 863,791 | 12,571,503 |
| Capital Goods 0.2% |
| Boskalis Westminster N.V. | 18,315 | 888,912 |
| Koninklijke Philips N.V. | 206,708 | 5,572,587 |
| | | 6,461,499 |
| Commercial & Professional Supplies 0.1% |
| Randstad Holding N.V. | 29,661 | 1,768,872 |
| Energy 0.0% |
| Koninklijke Vopak N.V. | 16,676 | 669,883 |
| Food & Staples Retailing 0.2% |
| Koninklijke Ahold N.V. | 200,625 | 4,081,265 |
| Food, Beverage & Tobacco 0.2% |
| Heineken Holding N.V. | 22,615 | 1,806,778 |
| Heineken N.V. | 50,465 | 4,596,496 |
| | | 6,403,274 |
| Household & Personal Products 0.6% |
| Unilever N.V. CVA | 363,881 | 16,453,833 |
| Insurance 0.2% |
| Aegon N.V. | 411,208 | 2,523,364 |
| Delta Lloyd N.V. | 45,606 | 359,377 |
| NN Group N.V. | 53,211 | 1,667,250 |
| | | 4,549,991 |
| Materials 0.2% |
| Akzo Nobel N.V. | 53,914 | 3,813,357 |
| Koninklijke DSM N.V. | 39,390 | 2,099,784 |
| OCI N.V. * | 16,510 | 465,767 |
| | | 6,378,908 |
| Media 0.3% |
| Altice N.V., Class A * | 82,251 | 1,424,546 |
| Altice N.V., Class B * | 24,908 | 442,350 |
| RELX N.V. | 230,378 | 3,929,506 |
| Wolters Kluwer N.V. | 65,547 | 2,215,311 |
| | | 8,011,713 |
| Semiconductors & Semiconductor Equipment 0.3% |
| ASML Holding N.V. | 77,770 | 7,214,044 |
| Software & Services 0.0% |
| Gemalto N.V. | 17,841 | 1,117,014 |
| Telecommunication Services 0.1% |
| Koninklijke (Royal) KPN N.V. | 707,646 | 2,592,957 |
| Security | Number
of Shares | Value
($) |
| Transportation 0.0% |
| TNT Express N.V. | 109,123 | 916,963 |
| | | 79,191,719 |
| New Zealand 0.1% |
| Health Care Equipment & Services 0.0% |
| Ryman Healthcare Ltd. | 72,734 | 388,075 |
| Materials 0.0% |
| Fletcher Building Ltd. | 141,562 | 712,998 |
| Telecommunication Services 0.0% |
| Spark New Zealand Ltd. | 420,111 | 952,905 |
| Transportation 0.0% |
| Auckland International Airport Ltd. | 203,237 | 722,227 |
| Utilities 0.1% |
| Contact Energy Ltd. | 165,447 | 580,711 |
| Meridian Energy Ltd. | 316,280 | 475,246 |
| Mighty River Power Ltd. | 127,463 | 241,414 |
| | | 1,297,371 |
| | | 4,073,576 |
| Norway 0.6% |
| Banks 0.1% |
| DNB A.S.A. | 217,398 | 2,767,900 |
| Energy 0.2% |
| Seadrill Ltd. *(a) | 78,629 | 505,631 |
| Statoil A.S.A. | 245,585 | 3,969,700 |
| Subsea 7 S.A. * | 64,866 | 508,763 |
| | | 4,984,094 |
| Food, Beverage & Tobacco 0.1% |
| Orkla A.S.A. | 181,529 | 1,544,824 |
| Insurance 0.0% |
| Gjensidige Forsikring A.S.A. | 42,041 | 640,076 |
| Materials 0.1% |
| Norsk Hydro A.S.A. | 292,622 | 1,048,108 |
| Yara International A.S.A. | 41,350 | 1,878,364 |
| | | 2,926,472 |
| Telecommunication Services 0.1% |
| Telenor A.S.A. | 171,711 | 3,234,718 |
| | | 16,098,084 |
| Portugal 0.1% |
| Banks 0.0% |
| Banco Comercial Portugues S.A., Class R * | 8,699,500 | 498,678 |
| Banco Espirito Santo S.A. - Reg'd *(b)(d) | 470,491 | — |
| | | 498,678 |
| Energy 0.0% |
| Galp Energia, SGPS, S.A. | 78,082 | 842,892 |
| Food & Staples Retailing 0.0% |
| Jeronimo Martins, SGPS, S.A. | 59,857 | 840,196 |
Schwab International Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Utilities 0.1% |
| EDP - Energias de Portugal S.A. | 522,434 | 1,930,643 |
| | | 4,112,409 |
| Singapore 1.3% |
| Banks 0.5% |
| DBS Group Holdings Ltd. | 395,146 | 4,858,339 |
| Oversea-Chinese Banking Corp., Ltd. | 660,071 | 4,242,839 |
| United Overseas Bank Ltd. | 285,533 | 4,146,161 |
| | | 13,247,339 |
| Capital Goods 0.2% |
| Keppel Corp., Ltd. | 313,000 | 1,575,548 |
| Noble Group Ltd. (a) | 1,093,900 | 392,753 |
| Sembcorp Industries Ltd. | 200,000 | 509,631 |
| Sembcorp Marine Ltd. (a) | 152,000 | 252,930 |
| Singapore Technologies Engineering Ltd. | 375,200 | 884,338 |
| Yangzijiang Shipbuilding Holdings Ltd. | 431,000 | 383,653 |
| | | 3,998,853 |
| Consumer Services 0.0% |
| Genting Singapore plc | 1,293,300 | 749,171 |
| Diversified Financials 0.0% |
| Singapore Exchange Ltd. | 186,900 | 983,352 |
| Food, Beverage & Tobacco 0.1% |
| Golden Agri-Resources Ltd. | 1,652,500 | 458,606 |
| Wilmar International Ltd. | 456,200 | 1,016,581 |
| | | 1,475,187 |
| Media 0.0% |
| Singapore Press Holdings Ltd. | 350,600 | 997,105 |
| Real Estate 0.2% |
| Ascendas Real Estate Investment Trust | 456,400 | 777,034 |
| CapitaLand Commercial Trust Ltd. | 452,900 | 454,495 |
| CapitaLand Ltd. | 585,800 | 1,292,223 |
| CapitaLand Mall Trust | 542,800 | 765,301 |
| City Developments Ltd. | 87,300 | 494,058 |
| Global Logistic Properties Ltd. | 709,500 | 1,134,776 |
| Suntec Real Estate Investment Trust | 570,100 | 669,634 |
| UOL Group Ltd. | 95,000 | 443,342 |
| | | 6,030,863 |
| Retailing 0.0% |
| Jardine Cycle & Carriage Ltd. | 28,000 | 648,278 |
| Telecommunication Services 0.2% |
| Singapore Telecommunications Ltd. | 1,791,437 | 5,089,924 |
| StarHub Ltd. | 129,000 | 330,926 |
| | | 5,420,850 |
| Security | Number
of Shares | Value
($) |
| Transportation 0.1% |
| ComfortDelGro Corp., Ltd. | 471,800 | 1,020,791 |
| Hutchison Port Holdings Trust, Class U | 1,227,600 | 679,914 |
| Singapore Airlines Ltd. | 128,400 | 987,812 |
| | | 2,688,517 |
| | | 36,239,515 |
| Spain 3.4% |
| Banks 1.3% |
| Banco Bilbao Vizcaya Argentaria S.A. | 1,420,594 | 12,222,237 |
| Banco de Sabadell S.A. | 1,115,231 | 2,151,617 |
| Banco Popular Espanol S.A. | 380,024 | 1,444,886 |
| Banco Santander S.A. | 3,197,315 | 17,860,836 |
| Bankia S.A. | 1,025,002 | 1,317,235 |
| Bankinter S.A. | 147,447 | 1,066,360 |
| CaixaBank S.A. | 597,217 | 2,287,434 |
| | | 38,350,605 |
| Capital Goods 0.2% |
| ACS, Actividades de Construccion y Servicios S.A. | 43,240 | 1,467,064 |
| Ferrovial S.A. | 98,466 | 2,484,043 |
| Zardoya Otis S.A. | 43,251 | 531,813 |
| | | 4,482,920 |
| Energy 0.1% |
| Repsol S.A. | 237,439 | 2,988,972 |
| Food & Staples Retailing 0.0% |
| Distribuidora Internacional de Alimentacion S.A. * | 135,669 | 861,985 |
| Insurance 0.0% |
| Mapfre S.A. | 244,029 | 723,976 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| Grifols S.A. | 34,764 | 1,610,094 |
| Retailing 0.3% |
| Industria de Diseno Textil S.A. | 243,317 | 9,110,848 |
| Software & Services 0.2% |
| Amadeus IT Holding S.A., A Shares | 99,967 | 4,252,252 |
| Telecommunication Services 0.5% |
| Telefonica S.A. | 992,492 | 13,094,284 |
| Transportation 0.2% |
| Abertis Infraestructuras S.A. | 107,353 | 1,782,711 |
| Aena S.A. * | 14,531 | 1,621,744 |
| International Consolidated Airlines Group S.A. * | 176,416 | 1,577,335 |
| | | 4,981,790 |
| Utilities 0.5% |
| Enagas S.A. | 48,488 | 1,466,193 |
| Endesa S.A. | 69,660 | 1,548,903 |
| Gas Natural SDG S.A. | 75,382 | 1,630,650 |
| Iberdrola S.A. | 1,212,801 | 8,648,652 |
| Red Electrica Corp. S.A. | 24,590 | 2,164,778 |
| | | 15,459,176 |
| | | 95,916,902 |
Schwab International Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Sweden 2.8% |
| Banks 0.7% |
| Nordea Bank AB | 682,989 | 7,535,850 |
| Skandinaviska Enskilda Banken AB, A Shares | 344,230 | 3,614,715 |
| Svenska Handelsbanken AB, A Shares | 330,341 | 4,486,516 |
| Swedbank AB, A Shares | 201,167 | 4,609,414 |
| | | 20,246,495 |
| Capital Goods 0.7% |
| Alfa Laval AB | 63,558 | 1,115,050 |
| Assa Abloy AB, Class B | 223,813 | 4,452,329 |
| Atlas Copco AB, A Shares | 151,357 | 3,944,467 |
| Atlas Copco AB, B Shares | 87,494 | 2,115,152 |
| Sandvik AB | 243,305 | 2,269,236 |
| Skanska AB, B Shares | 80,665 | 1,574,015 |
| SKF AB, B Shares | 85,821 | 1,508,055 |
| Volvo AB, B Shares | 335,693 | 3,472,116 |
| | | 20,450,420 |
| Commercial & Professional Supplies 0.0% |
| Securitas AB, B Shares | 64,419 | 841,035 |
| Consumer Durables & Apparel 0.1% |
| Electrolux AB, B Shares | 51,441 | 1,513,413 |
| Husqvarna AB, B Shares (a) | 94,980 | 625,279 |
| | | 2,138,692 |
| Diversified Financials 0.2% |
| Industrivarden AB, C Shares | 41,251 | 748,745 |
| Investment AB Kinnevik, B Shares | 50,660 | 1,614,422 |
| Investor AB, B Shares | 103,027 | 3,812,834 |
| | | 6,176,001 |
| Energy 0.0% |
| Lundin Petroleum AB * | 49,912 | 722,475 |
| Food & Staples Retailing 0.0% |
| ICA Gruppen AB (a) | 19,005 | 677,986 |
| Food, Beverage & Tobacco 0.1% |
| Swedish Match AB | 45,711 | 1,436,958 |
| Health Care Equipment & Services 0.0% |
| Getinge AB, B Shares | 41,359 | 1,033,629 |
| Household & Personal Products 0.1% |
| Svenska Cellulosa AB, S.C.A., B Shares | 130,925 | 3,856,260 |
| Materials 0.1% |
| Boliden AB | 59,204 | 1,133,541 |
| Retailing 0.3% |
| Hennes & Mauritz AB, B Shares | 212,752 | 8,270,279 |
| Technology Hardware & Equipment 0.3% |
| Hexagon AB, B Shares | 58,904 | 2,043,109 |
| Telefonaktiebolaget LM Ericsson, B Shares | 670,287 | 6,523,570 |
| | | 8,566,679 |
| Security | Number
of Shares | Value
($) |
| Telecommunication Services 0.2% |
| Millicom International Cellular S.A. SDR | 14,921 | 831,794 |
| Tele2 AB, B Shares | 74,695 | 745,949 |
| TeliaSonera AB | 579,294 | 2,959,914 |
| | | 4,537,657 |
| | | 80,088,107 |
| Switzerland 9.2% |
| Capital Goods 0.5% |
| ABB Ltd. - Reg'd * | 492,158 | 9,284,903 |
| Geberit AG - Reg'd | 8,562 | 2,763,123 |
| Schindler Holding AG | 9,794 | 1,589,009 |
| Schindler Holding AG - Reg'd | 4,537 | 738,453 |
| Sulzer AG - Reg'd | 5,762 | 582,225 |
| | | 14,957,713 |
| Commercial & Professional Supplies 0.2% |
| Adecco S.A. - Reg'd * | 38,296 | 2,846,744 |
| SGS S.A. - Reg'd | 1,217 | 2,317,293 |
| | | 5,164,037 |
| Consumer Durables & Apparel 0.5% |
| Cie Financiere Richemont S.A. - Reg'd | 116,595 | 9,997,737 |
| The Swatch Group AG - Bearer Shares | 6,891 | 2,691,207 |
| The Swatch Group AG - Reg'd | 11,639 | 840,821 |
| | | 13,529,765 |
| Diversified Financials 1.0% |
| Credit Suisse Group AG - Reg'd * | 348,239 | 8,685,505 |
| Julius Baer Group Ltd. * | 49,527 | 2,455,673 |
| Pargesa Holding S.A. | 5,743 | 364,205 |
| Partners Group Holding AG | 3,761 | 1,360,900 |
| UBS Group AG - Reg’d | 815,237 | 16,282,261 |
| | | 29,148,544 |
| Energy 0.0% |
| Transocean Ltd. (a) | 84,166 | 1,288,363 |
| Food, Beverage & Tobacco 2.1% |
| Aryzta AG * | 19,166 | 863,045 |
| Barry Callebaut AG - Reg'd * | 534 | 639,914 |
| Chocoladefabriken Lindt & Sprungli AG | 209 | 1,275,564 |
| Chocoladefabriken Lindt & Sprungli AG - Reg'd | 23 | 1,706,461 |
| Nestle S.A. - Reg'd | 719,332 | 54,938,215 |
| | | 59,423,199 |
| Health Care Equipment & Services 0.1% |
| Sonova Holding AG - Reg'd | 11,733 | 1,600,901 |
| Insurance 0.7% |
| Baloise Holding AG - Reg'd | 11,516 | 1,380,732 |
| Swiss Life Holding AG - Reg'd * | 7,056 | 1,681,373 |
| Swiss Re AG | 78,074 | 7,247,669 |
| Zurich Insurance Group AG * | 33,608 | 8,869,148 |
| | | 19,178,922 |
Schwab International Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Materials 0.6% |
| EMS-Chemie Holding AG - Reg'd | 1,753 | 741,826 |
| Givaudan S.A. - Reg'd * | 2,092 | 3,740,915 |
| LafargeHolcim Ltd. * | 96,595 | 5,439,723 |
| Sika AG | 468 | 1,534,831 |
| Syngenta AG - Reg'd | 20,758 | 6,974,071 |
| | | 18,431,366 |
| Pharmaceuticals, Biotechnology & Life Sciences 3.3% |
| Actelion Ltd. - Reg'd * | 22,570 | 3,133,034 |
| Lonza Group AG - Reg'd * | 12,026 | 1,765,173 |
| Novartis AG - Reg'd | 507,583 | 45,981,260 |
| Roche Holding AG | 156,706 | 42,545,501 |
| | | 93,424,968 |
| Real Estate 0.0% |
| Swiss Prime Site AG - Reg'd * | 14,809 | 1,131,452 |
| Retailing 0.0% |
| Dufry AG - Reg'd * | 9,260 | 1,081,802 |
| Telecommunication Services 0.1% |
| Swisscom AG - Reg'd | 5,609 | 2,889,840 |
| Transportation 0.1% |
| Kuehne & Nagel International AG - Reg'd | 12,033 | 1,667,262 |
| | | 262,918,134 |
| United Kingdom 19.8% |
| Automobiles & Components 0.1% |
| GKN plc | 358,453 | 1,583,871 |
| Banks 2.5% |
| Barclays plc | 3,738,239 | 13,318,521 |
| HSBC Holdings plc | 4,354,714 | 34,023,230 |
| Lloyds Banking Group plc | 12,728,817 | 14,447,337 |
| Royal Bank of Scotland Group plc * | 734,188 | 3,587,712 |
| Standard Chartered plc | 569,527 | 6,322,111 |
| | | 71,698,911 |
| Capital Goods 0.8% |
| Ashtead Group plc | 114,085 | 1,754,141 |
| BAE Systems plc | 697,194 | 4,716,161 |
| Bunzl plc | 74,222 | 2,122,493 |
| Cobham plc | 266,366 | 1,137,272 |
| IMI plc | 60,653 | 889,425 |
| Meggitt plc | 179,669 | 978,781 |
| Melrose Industries plc | 217,979 | 891,779 |
| Rolls-Royce Holdings plc * | 412,592 | 4,362,958 |
| Smiths Group plc | 91,636 | 1,355,661 |
| The Weir Group plc | 45,373 | 745,381 |
| Travis Perkins plc | 54,666 | 1,611,236 |
| Wolseley plc | 58,505 | 3,434,903 |
| | | 24,000,191 |
| Commercial & Professional Supplies 0.4% |
| Aggreko plc | 53,732 | 757,396 |
| Babcock International Group plc | 58,617 | 868,943 |
| Capita plc | 150,226 | 2,946,816 |
| Experian plc | 217,237 | 3,701,732 |
| Security | Number
of Shares | Value
($) |
| G4S plc | 338,396 | 1,264,034 |
| Intertek Group plc | 37,167 | 1,501,064 |
| | | 11,039,985 |
| Consumer Durables & Apparel 0.3% |
| Barratt Developments plc | 214,307 | 2,018,872 |
| Burberry Group plc | 101,607 | 2,075,436 |
| Persimmon plc | 66,446 | 2,037,732 |
| Taylor Wimpey plc | 700,970 | 2,135,404 |
| | | 8,267,444 |
| Consumer Services 0.6% |
| Carnival plc | 39,824 | 2,216,431 |
| Compass Group plc | 366,560 | 6,301,495 |
| InterContinental Hotels Group plc | 54,244 | 2,167,559 |
| Merlin Entertainments plc | 147,259 | 939,647 |
| TUI AG | 108,580 | 2,019,121 |
| Whitbread plc | 40,564 | 3,097,631 |
| William Hill plc | 196,791 | 960,196 |
| | | 17,702,080 |
| Diversified Financials 0.4% |
| 3i Group plc | 221,065 | 1,702,882 |
| Aberdeen Asset Management plc | 203,474 | 1,084,923 |
| Hargreaves Lansdown plc | 57,521 | 1,278,334 |
| ICAP plc | 115,235 | 780,057 |
| Investec plc | 130,696 | 1,088,724 |
| London Stock Exchange Group plc | 70,579 | 2,763,341 |
| Schroders plc | 27,532 | 1,263,259 |
| | | 9,961,520 |
| Energy 2.6% |
| Amec Foster Wheeler plc | 90,553 | 990,850 |
| BG Group plc | 763,918 | 12,068,771 |
| BP plc | 4,078,629 | 24,239,233 |
| Petrofac Ltd. | 60,315 | 782,601 |
| Royal Dutch Shell plc, A Shares | 862,532 | 22,518,423 |
| Royal Dutch Shell plc, B Shares | 538,661 | 14,104,777 |
| Tullow Oil plc * | 209,287 | 653,703 |
| | | 75,358,358 |
| Food & Staples Retailing 0.3% |
| J. Sainsbury plc | 297,156 | 1,217,578 |
| Tesco plc * | 1,807,468 | 5,097,597 |
| WM Morrison Supermarkets plc | 511,940 | 1,327,456 |
| | | 7,642,631 |
| Food, Beverage & Tobacco 2.5% |
| Associated British Foods plc | 78,433 | 4,167,605 |
| British American Tobacco plc | 416,025 | 24,715,858 |
| Coca-Cola HBC AG CDI * | 46,971 | 1,119,143 |
| Diageo plc | 562,011 | 16,202,737 |
| Imperial Tobacco Group plc | 213,490 | 11,496,009 |
| SABMiller plc | 216,502 | 13,298,284 |
| Tate & Lyle plc | 103,776 | 952,569 |
| | | 71,952,205 |
| Health Care Equipment & Services 0.1% |
| Smith & Nephew plc | 198,297 | 3,386,032 |
Schwab International Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Household & Personal Products 0.9% |
| Reckitt Benckiser Group plc | 143,178 | 13,972,806 |
| Unilever plc | 286,445 | 12,754,964 |
| | | 26,727,770 |
| Insurance 1.3% |
| Admiral Group plc | 46,673 | 1,158,245 |
| Aviva plc | 910,970 | 6,808,197 |
| Direct Line Insurance Group plc | 305,349 | 1,852,203 |
| Legal & General Group plc | 1,309,432 | 5,273,082 |
| Old Mutual plc | 1,089,149 | 3,559,785 |
| Prudential plc | 573,911 | 13,404,539 |
| RSA Insurance Group plc | 226,227 | 1,464,122 |
| St. James's Place plc | 115,322 | 1,709,127 |
| Standard Life plc | 443,346 | 2,866,369 |
| | | 38,095,669 |
| Materials 1.2% |
| Anglo American plc | 316,049 | 2,651,559 |
| Antofagasta plc | 88,778 | 717,692 |
| BHP Billiton plc | 472,822 | 7,557,597 |
| Croda International plc | 30,961 | 1,381,078 |
| Fresnillo plc | 54,397 | 610,137 |
| Glencore plc * | 2,734,013 | 4,720,139 |
| Johnson Matthey plc | 47,110 | 1,873,762 |
| Mondi plc | 79,674 | 1,842,393 |
| Randgold Resources Ltd. | 21,531 | 1,444,016 |
| Rexam plc | 159,024 | 1,322,251 |
| Rio Tinto plc | 282,987 | 10,313,525 |
| | | 34,434,149 |
| Media 0.7% |
| ITV plc | 847,161 | 3,288,923 |
| Pearson plc | 180,891 | 2,401,471 |
| RELX plc | 248,022 | 4,434,907 |
| Sky plc | 228,161 | 3,850,381 |
| WPP plc | 287,967 | 6,455,304 |
| | | 20,430,986 |
| Pharmaceuticals, Biotechnology & Life Sciences 1.8% |
| AstraZeneca plc | 281,870 | 17,964,278 |
| GlaxoSmithKline plc | 1,085,292 | 23,405,087 |
| Shire plc | 132,350 | 10,022,977 |
| | | 51,392,342 |
| Real Estate 0.4% |
| Hammerson plc | 169,520 | 1,660,907 |
| Intu Properties plc | 214,014 | 1,139,269 |
| Land Securities Group plc | 177,361 | 3,653,938 |
| Segro plc | 170,411 | 1,180,459 |
| The British Land Co., plc | 220,247 | 2,950,140 |
| | | 10,584,713 |
| Retailing 0.4% |
| Dixons Carphone plc | 218,188 | 1,548,934 |
| Kingfisher plc | 519,154 | 2,822,000 |
| Marks & Spencer Group plc | 373,012 | 2,945,401 |
| Next plc | 32,162 | 3,960,908 |
| Sports Direct International plc * | 53,606 | 575,141 |
| | | 11,852,384 |
| Semiconductors & Semiconductor Equipment 0.2% |
| ARM Holdings plc | 313,904 | 4,943,558 |
| Security | Number
of Shares | Value
($) |
| Software & Services 0.1% |
| The Sage Group plc | 240,619 | 2,017,484 |
| Telecommunication Services 1.2% |
| BT Group plc | 1,866,458 | 13,329,330 |
| Inmarsat plc | 104,142 | 1,578,470 |
| Vodafone Group plc | 5,916,316 | 19,470,195 |
| | | 34,377,995 |
| Transportation 0.1% |
| easyJet plc | 37,117 | 999,863 |
| Royal Mail plc | 172,766 | 1,183,633 |
| | | 2,183,496 |
| Utilities 0.9% |
| Centrica plc | 1,117,196 | 3,887,367 |
| National Grid plc | 835,111 | 11,896,053 |
| Severn Trent plc | 52,885 | 1,823,887 |
| SSE plc | 218,340 | 5,079,590 |
| United Utilities Group plc | 147,060 | 2,237,835 |
| | | 24,924,732 |
| | | 564,558,506 |
| Total Common Stock |
| (Cost $2,378,291,644) | | 2,781,955,810 |
|
| Preferred Stock 0.5% of net assets |
| Germany 0.4% |
| Automobiles & Components 0.2% |
| Bayerische Motoren Werke AG | 12,237 | 989,570 |
| Porsche Automobil Holding SE | 35,569 | 1,662,635 |
| Volkswagen AG | 36,532 | 4,385,120 |
| | | 7,037,325 |
| Household & Personal Products 0.2% |
| Henkel AG & Co. KGaA | 39,609 | 4,295,732 |
| Materials 0.0% |
| Fuchs Petrolub SE | 16,120 | 773,100 |
| | | 12,106,157 |
| Ireland 0.0% |
| Transportation 0.0% |
| Ryanair Holding plc, B Shares *(d) | 44,698 | 14,460 |
| Italy 0.1% |
| Banks 0.0% |
| Intesa Sanpaolo S.p.A. - RSP | 209,571 | 668,619 |
| Telecommunication Services 0.1% |
| Telecom Italia S.p.A. - RSP | 1,349,547 | 1,516,764 |
| | | 2,185,383 |
Schwab International Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| United Kingdom 0.0% |
| Capital Goods 0.0% |
| Rolls-Royce Holdings plc *(d) | 38,247,278 | 58,962 |
| Total Preferred Stock |
| (Cost $15,443,474) | | 14,364,962 |
|
| Other Investment Company 0.4% of net assets |
| United States 0.4% |
| Securities Lending Collateral 0.4% |
| Wells Fargo Advantage Government Money Market Fund, Institutional Class 0.01% (c) | 12,250,477 | 12,250,477 |
| Total Other Investment Company |
| (Cost $12,250,477) | | 12,250,477 |
Security
Rate, Maturity Date | Face Amount
Local Currency | Value
($) |
| Short-Term Investments 1.2% of net assets |
| Time Deposits 1.2% |
| Brown Brothers Harriman |
| Euro | | |
| (0.24%), 11/02/15 | 15,068 | 16,569 |
| Hong Kong Dollar | | |
| 0.01%, 11/02/15 | 72,940 | 9,411 |
| Japanese Yen | | |
| 0.01%, 11/02/15 | 744,140 | 6,167 |
| Singapore Dollar | | |
| 0.10%, 11/02/15 | 3,911 | 2,791 |
| Credit Suisse AG |
| Swiss Franc | | |
| (1.00%), 11/02/15 | 197,840 | 200,152 |
| DNB |
| Great British Pound | | |
| 0.08%, 11/02/15 | 325,906 | 502,416 |
| U.S. Dollar | | |
| 0.03%, 11/02/15 | 3,344,569 | 3,344,569 |
| National Australia Bank |
| Australian Dollar | | |
| 0.85%, 11/02/15 | 151,515 | 108,046 |
| Nordea Bank |
| U.S. Dollar | | |
| 0.03%, 11/02/15 | 28,414,324 | 28,414,324 |
| Total Short-Term Investments |
| (Cost $32,604,445) | | 32,604,445 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $2,465,117,613 and the unrealized appreciation and depreciation were $585,873,657 and ($209,815,576), respectively, with a net unrealized appreciation of $376,058,081.
At 10/31/15, the values of certain foreign securities held by the fund aggregating $2,760,088,581 were adjusted from their closing market values in accordance with international fair valuation procedures approved by the fund's Board of Trustees. (See financial note 2(a) for additional information).
| * | Non-income producing security. |
| (a) | All or a portion of this security is on loan. Securities on loan were valued at $11,696,492. |
| (b) | Illiquid security. At the period end, the value of these amounted to $0 or 0.0% of net assets. |
| (c) | The rate shown is the 7-day yield. |
| (d) | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| | |
| CDI — | CHESS Depositary Interest |
| CVA — | Dutch Certificate |
| Reg'd — | Registered |
| REIT — | Real Estate Investment Trust |
| RSP — | Risparmio (Convertible Savings Shares) |
| SDR — | Swedish Depositary Receipt |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| MSCI EAFE, e-mini, Long, expires 12/18/15 | 400 | 35,142,000 | 266,130 |
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 99.6% | Common Stock | 3,919,296,392 | 4,864,052,589 |
| 0.6% | Other Investment Companies | 30,796,847 | 30,796,847 |
| 100.2% | Total Investments | 3,950,093,239 | 4,894,849,436 |
| (0.2%) | Other Assets and Liabilities, Net | | (9,185,285) |
| 100.0% | Net Assets | | 4,885,664,151 |
| Security | Number
of Shares | Value
($) |
| Common Stock 99.6% of net assets |
| Automobiles & Components 1.3% |
| BorgWarner, Inc. | 48,567 | 2,079,639 |
| Dana Holding Corp. | 60,700 | 1,019,760 |
| Delphi Automotive plc | 41,200 | 3,427,428 |
| Ford Motor Co. | 1,207,141 | 17,877,758 |
| General Motors Co. | 519,268 | 18,127,646 |
| Harley-Davidson, Inc. | 47,654 | 2,356,490 |
| Johnson Controls, Inc. | 209,709 | 9,474,653 |
| Lear Corp. | 32,200 | 4,026,932 |
| The Goodyear Tire & Rubber Co. | 62,190 | 2,042,320 |
| Visteon Corp. * | 16,000 | 1,745,120 |
| | | 62,177,746 |
| Banks 5.4% |
| Bank of America Corp. | 2,866,194 | 48,094,735 |
| BB&T Corp. | 189,975 | 7,057,571 |
| CIT Group, Inc. | 42,700 | 1,836,100 |
| Citigroup, Inc. | 685,472 | 36,446,546 |
| Citizens Financial Group, Inc. | 26,600 | 646,380 |
| Comerica, Inc. | 37,600 | 1,631,840 |
| Fifth Third Bancorp | 229,890 | 4,379,404 |
| Hudson City Bancorp, Inc. | 165,590 | 1,675,771 |
| Huntington Bancshares, Inc. | 144,327 | 1,583,267 |
| JPMorgan Chase & Co. | 1,024,223 | 65,806,328 |
| KeyCorp | 203,557 | 2,528,178 |
| M&T Bank Corp. | 25,414 | 3,045,868 |
| New York Community Bancorp, Inc. | 138,530 | 2,288,516 |
| People's United Financial, Inc. | 103,777 | 1,655,243 |
| PHH Corp. * | 78,058 | 1,147,453 |
| Popular, Inc. | 37,100 | 1,097,047 |
| Regions Financial Corp. | 363,025 | 3,394,284 |
| SunTrust Banks, Inc. | 128,260 | 5,325,355 |
| Security | Number
of Shares | Value
($) |
| The PNC Financial Services Group, Inc. | 112,035 | 10,112,279 |
| U.S. Bancorp | 324,960 | 13,706,813 |
| Wells Fargo & Co. | 929,263 | 50,310,299 |
| | | 263,769,277 |
| Capital Goods 7.7% |
| 3M Co. | 136,961 | 21,531,639 |
| AECOM * | 55,254 | 1,628,335 |
| AGCO Corp. | 47,140 | 2,281,105 |
| AMETEK, Inc. | 30,700 | 1,682,974 |
| Armstrong World Industries, Inc. * | 32,700 | 1,622,574 |
| Carlisle Cos., Inc. | 13,700 | 1,191,900 |
| Caterpillar, Inc. | 203,337 | 14,841,568 |
| Chicago Bridge & Iron Co., N.V. (b) | 22,800 | 1,023,036 |
| Cummins, Inc. | 53,894 | 5,578,568 |
| Danaher Corp. | 74,256 | 6,928,827 |
| Deere & Co. | 139,093 | 10,849,254 |
| Dover Corp. | 56,475 | 3,638,684 |
| Eaton Corp. plc | 95,516 | 5,340,300 |
| EMCOR Group, Inc. | 30,240 | 1,459,987 |
| Emerson Electric Co. | 275,810 | 13,026,506 |
| Fastenal Co. | 52,440 | 2,053,550 |
| Flowserve Corp. | 51,875 | 2,404,925 |
| Fluor Corp. | 127,750 | 6,107,727 |
| Fortune Brands Home & Security, Inc. | 25,500 | 1,334,415 |
| General Dynamics Corp. | 90,716 | 13,478,583 |
| General Electric Co. | 2,508,698 | 72,551,546 |
| Honeywell International, Inc. | 130,245 | 13,451,704 |
| Hubbell, Inc., Class B | 15,684 | 1,518,995 |
| Illinois Tool Works, Inc. | 103,734 | 9,537,304 |
| Ingersoll-Rand plc | 78,882 | 4,674,547 |
| Jacobs Engineering Group, Inc. * | 75,240 | 3,020,134 |
| Joy Global, Inc. | 70,800 | 1,216,344 |
| KBR, Inc. | 186,700 | 3,442,748 |
| Kennametal, Inc. | 36,200 | 1,017,944 |
| L-3 Communications Holdings, Inc. | 61,566 | 7,781,942 |
| Lincoln Electric Holdings, Inc. | 19,400 | 1,160,314 |
| Lockheed Martin Corp. | 72,784 | 16,000,107 |
| Northrop Grumman Corp. | 93,433 | 17,542,046 |
| NOW, Inc. *(b) | 35,300 | 582,803 |
| Oshkosh Corp. | 41,720 | 1,714,275 |
| Owens Corning | 51,950 | 2,365,283 |
| PACCAR, Inc. | 85,521 | 4,502,681 |
| Parker-Hannifin Corp. | 49,397 | 5,171,866 |
| Pentair plc | 33,837 | 1,892,165 |
| Precision Castparts Corp. | 19,416 | 4,481,407 |
| Quanta Services, Inc. * | 74,900 | 1,506,239 |
| Raytheon Co. | 122,515 | 14,383,261 |
| Rockwell Automation, Inc. | 22,550 | 2,461,558 |
| Rockwell Collins, Inc. | 35,430 | 3,072,490 |
| Roper Technologies, Inc. | 10,300 | 1,919,405 |
| Snap-on, Inc. | 9,200 | 1,526,188 |
| SPX Corp. | 23,436 | 287,091 |
| Stanley Black & Decker, Inc. | 35,403 | 3,752,010 |
| Textron, Inc. | 68,020 | 2,868,403 |
| The Boeing Co. | 103,572 | 15,335,906 |
| The Timken Co. | 39,265 | 1,240,774 |
| TransDigm Group, Inc. * | 6,800 | 1,494,980 |
| Trinity Industries, Inc. | 37,100 | 1,004,297 |
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| United Rentals, Inc. * | 21,400 | 1,602,004 |
| United Technologies Corp. | 247,892 | 24,395,052 |
| W.W. Grainger, Inc. | 18,638 | 3,913,980 |
| WESCO International, Inc. * | 18,200 | 890,526 |
| Xylem, Inc. | 38,855 | 1,414,711 |
| | | 374,699,487 |
| Commercial & Professional Supplies 0.8% |
| Cintas Corp. | 22,250 | 2,071,252 |
| Equifax, Inc. | 16,830 | 1,793,573 |
| ManpowerGroup, Inc. | 50,590 | 4,643,150 |
| Nielsen Holdings plc | 43,300 | 2,057,183 |
| Pitney Bowes, Inc. | 108,719 | 2,245,047 |
| R.R. Donnelley & Sons Co. | 143,340 | 2,418,146 |
| Republic Services, Inc. | 97,163 | 4,249,910 |
| Robert Half International, Inc. | 34,810 | 1,833,095 |
| The ADT Corp. | 80,600 | 2,663,024 |
| The Dun & Bradstreet Corp. | 14,540 | 1,655,670 |
| Towers Watson & Co., Class A | 9,400 | 1,161,464 |
| Tyco International plc | 90,887 | 3,311,922 |
| Verisk Analytics, Inc. * | 16,000 | 1,145,760 |
| Waste Management, Inc. | 155,814 | 8,376,561 |
| | | 39,625,757 |
| Consumer Durables & Apparel 1.1% |
| Coach, Inc. | 153,575 | 4,791,540 |
| Fossil Group, Inc. * | 18,200 | 990,262 |
| Garmin Ltd. | 37,170 | 1,318,420 |
| Hasbro, Inc. | 34,541 | 2,653,785 |
| Jarden Corp. * | 33,472 | 1,499,546 |
| Leggett & Platt, Inc. | 43,717 | 1,968,577 |
| Mattel, Inc. | 159,735 | 3,926,286 |
| Mohawk Industries, Inc. * | 10,035 | 1,961,842 |
| Newell Rubbermaid, Inc. | 56,150 | 2,382,444 |
| NIKE, Inc., Class B | 123,927 | 16,238,155 |
| NVR, Inc. * | 1,329 | 2,176,583 |
| Polaris Industries, Inc. | 8,800 | 988,592 |
| PVH Corp. | 12,400 | 1,127,780 |
| Ralph Lauren Corp. | 24,020 | 2,660,695 |
| Tupperware Brands Corp. | 20,658 | 1,216,136 |
| VF Corp. | 54,980 | 3,712,250 |
| Whirlpool Corp. | 25,555 | 4,092,378 |
| | | 53,705,271 |
| Consumer Services 1.8% |
| Apollo Education Group, Inc. * | 153,650 | 1,115,499 |
| Aramark | 28,200 | 855,870 |
| Brinker International, Inc. | 26,655 | 1,213,069 |
| Carnival Corp. | 124,110 | 6,711,869 |
| Chipotle Mexican Grill, Inc. * | 2,187 | 1,400,183 |
| Darden Restaurants, Inc. | 42,362 | 2,621,784 |
| DeVry Education Group, Inc. | 41,400 | 975,384 |
| Graham Holdings Co., Class B | 1,720 | 950,248 |
| H&R Block, Inc. | 61,065 | 2,275,282 |
| Las Vegas Sands Corp. | 57,200 | 2,831,972 |
| Marriott International, Inc., Class A | 24,989 | 1,918,655 |
| McDonald's Corp. | 327,588 | 36,771,753 |
| MGM Resorts International * | 75,315 | 1,746,555 |
| Royal Caribbean Cruises Ltd. | 29,429 | 2,894,342 |
| Starbucks Corp. | 131,780 | 8,245,475 |
| Security | Number
of Shares | Value
($) |
| Starwood Hotels & Resorts Worldwide, Inc. | 31,270 | 2,497,535 |
| Wyndham Worldwide Corp. | 37,440 | 3,045,744 |
| Wynn Resorts Ltd. (b) | 30,404 | 2,126,760 |
| Yum! Brands, Inc. | 90,030 | 6,384,027 |
| | | 86,582,006 |
| Diversified Financials 3.2% |
| Ally Financial, Inc. * | 166,900 | 3,324,648 |
| American Express Co. | 206,017 | 15,092,805 |
| Ameriprise Financial, Inc. | 37,334 | 4,306,850 |
| Berkshire Hathaway, Inc., Class B * | 287,526 | 39,109,287 |
| BlackRock, Inc. | 14,000 | 4,927,580 |
| Capital One Financial Corp. | 143,332 | 11,308,895 |
| CME Group, Inc. | 46,600 | 4,402,302 |
| Discover Financial Services | 96,422 | 5,420,845 |
| Franklin Resources, Inc. | 109,409 | 4,459,511 |
| Invesco Ltd. | 66,600 | 2,209,122 |
| Legg Mason, Inc. | 43,520 | 1,947,520 |
| Leucadia National Corp. | 63,200 | 1,264,632 |
| McGraw Hill Financial, Inc. | 47,968 | 4,443,756 |
| Moody's Corp. | 18,670 | 1,795,307 |
| Morgan Stanley | 193,383 | 6,375,837 |
| Nasdaq, Inc. | 33,983 | 1,967,276 |
| Northern Trust Corp. | 38,910 | 2,738,875 |
| SLM Corp. * | 233,200 | 1,646,392 |
| State Street Corp. | 71,236 | 4,915,284 |
| T. Rowe Price Group, Inc. | 49,345 | 3,731,469 |
| The Bank of New York Mellon Corp. | 161,949 | 6,745,176 |
| The Charles Schwab Corp. (a) | 81,215 | 2,478,682 |
| The Goldman Sachs Group, Inc. | 122,109 | 22,895,437 |
| Voya Financial, Inc. | 19,200 | 778,944 |
| | | 158,286,432 |
| Energy 14.4% |
| Anadarko Petroleum Corp. | 118,579 | 7,930,563 |
| Apache Corp. | 219,168 | 10,329,388 |
| Baker Hughes, Inc. | 153,986 | 8,111,982 |
| California Resources Corp. | 320,800 | 1,296,032 |
| Cameron International Corp. * | 63,753 | 4,335,841 |
| Chesapeake Energy Corp. (b) | 351,526 | 2,506,380 |
| Chevron Corp. | 1,344,612 | 122,198,339 |
| Cimarex Energy Co. | 13,045 | 1,540,093 |
| ConocoPhillips | 971,082 | 51,807,225 |
| CONSOL Energy, Inc. | 78,435 | 522,377 |
| Delek US Holdings, Inc. | 34,400 | 935,680 |
| Denbury Resources, Inc. | 345,400 | 1,222,716 |
| Devon Energy Corp. | 184,427 | 7,733,024 |
| Diamond Offshore Drilling, Inc. (b) | 84,920 | 1,688,210 |
| Energen Corp. | 20,610 | 1,198,471 |
| Ensco plc, Class A | 149,000 | 2,477,870 |
| EOG Resources, Inc. | 70,201 | 6,026,756 |
| EQT Corp. | 18,100 | 1,195,867 |
| Exxon Mobil Corp. | 2,746,881 | 227,276,934 |
| FMC Technologies, Inc. * | 42,178 | 1,426,882 |
| Halliburton Co. | 307,270 | 11,793,023 |
| Helmerich & Payne, Inc. | 29,395 | 1,654,057 |
| Hess Corp. | 206,204 | 11,590,727 |
| HollyFrontier Corp. | 133,202 | 6,522,902 |
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Kinder Morgan, Inc. | 146,900 | 4,017,715 |
| Marathon Oil Corp. | 560,919 | 10,309,691 |
| Marathon Petroleum Corp. | 342,862 | 17,760,252 |
| Murphy Oil Corp. | 200,750 | 5,707,322 |
| Nabors Industries Ltd. | 244,700 | 2,456,788 |
| National Oilwell Varco, Inc. | 178,801 | 6,730,070 |
| Newfield Exploration Co. * | 45,307 | 1,820,888 |
| Noble Corp., plc (b) | 216,400 | 2,914,908 |
| Noble Energy, Inc. | 82,670 | 2,962,893 |
| Occidental Petroleum Corp. | 310,600 | 23,152,124 |
| Oceaneering International, Inc. | 24,600 | 1,033,692 |
| ONEOK, Inc. | 63,120 | 2,141,030 |
| Patterson-UTI Energy, Inc. | 97,900 | 1,457,731 |
| Peabody Energy Corp. (b) | 58,836 | 752,512 |
| Phillips 66 | 460,908 | 41,043,857 |
| Pioneer Natural Resources Co. | 12,900 | 1,769,106 |
| QEP Resources, Inc. | 106,142 | 1,640,955 |
| Schlumberger Ltd. | 296,663 | 23,187,180 |
| Seadrill Ltd. (b) | 513,100 | 3,319,757 |
| Southwestern Energy Co. * | 90,940 | 1,003,978 |
| Spectra Energy Corp. | 169,560 | 4,844,329 |
| Superior Energy Services, Inc. | 67,500 | 955,800 |
| Tesoro Corp. | 67,092 | 7,174,148 |
| The Williams Cos., Inc. | 102,109 | 4,027,179 |
| Valero Energy Corp. | 407,166 | 26,840,383 |
| Weatherford International plc * | 356,200 | 3,647,488 |
| Whiting Petroleum Corp. * | 47,800 | 823,594 |
| World Fuel Services Corp. | 102,500 | 4,557,150 |
| | | 701,373,859 |
| Food & Staples Retailing 3.8% |
| Casey's General Stores, Inc. | 16,612 | 1,764,527 |
| Costco Wholesale Corp. | 158,663 | 25,087,794 |
| CVS Health Corp. | 454,716 | 44,916,846 |
| Sysco Corp. | 312,639 | 12,896,359 |
| The Kroger Co. | 404,168 | 15,277,550 |
| United Natural Foods, Inc. * | 22,100 | 1,114,945 |
| Wal-Mart Stores, Inc. | 1,001,472 | 57,324,257 |
| Walgreens Boots Alliance, Inc. | 276,182 | 23,387,092 |
| Whole Foods Market, Inc. | 98,300 | 2,945,068 |
| | | 184,714,438 |
| Food, Beverage & Tobacco 5.6% |
| Altria Group, Inc. | 398,216 | 24,080,122 |
| Archer-Daniels-Midland Co. | 404,774 | 18,481,981 |
| Brown-Forman Corp., Class B | 25,677 | 2,726,384 |
| Bunge Ltd. | 133,936 | 9,771,971 |
| Campbell Soup Co. | 51,430 | 2,612,130 |
| Coca-Cola Enterprises, Inc. | 104,995 | 5,390,443 |
| ConAgra Foods, Inc. | 146,420 | 5,937,331 |
| Constellation Brands, Inc., Class A | 14,420 | 1,943,816 |
| Dr Pepper Snapple Group, Inc. | 54,541 | 4,874,329 |
| General Mills, Inc. | 186,618 | 10,844,372 |
| Hormel Foods Corp. | 34,039 | 2,299,335 |
| Ingredion, Inc. | 23,000 | 2,186,380 |
| Kellogg Co. | 72,037 | 5,080,049 |
| McCormick & Co., Inc. - Non Voting Shares | 24,778 | 2,080,856 |
| Mead Johnson Nutrition Co. | 18,300 | 1,500,600 |
| Molson Coors Brewing Co., Class B | 24,780 | 2,183,118 |
| Security | Number
of Shares | Value
($) |
| Mondelez International, Inc., Class A | 407,795 | 18,823,817 |
| Monster Beverage Corp. * | 10,700 | 1,458,624 |
| PepsiCo, Inc. | 375,263 | 38,348,126 |
| Philip Morris International, Inc. | 531,188 | 46,957,019 |
| Reynolds American, Inc. | 185,110 | 8,944,515 |
| The Coca-Cola Co. | 887,043 | 37,566,271 |
| The Hershey Co. | 22,012 | 1,952,244 |
| The JM Smucker Co. | 37,825 | 4,440,277 |
| The Kraft Heinz Co. | 103,374 | 8,060,071 |
| Tyson Foods, Inc., Class A | 170,415 | 7,559,609 |
| | | 276,103,790 |
| Health Care Equipment & Services 5.3% |
| Abbott Laboratories | 263,063 | 11,785,222 |
| Aetna, Inc. | 123,091 | 14,128,385 |
| AmerisourceBergen Corp. | 68,967 | 6,656,005 |
| Anthem, Inc. | 191,150 | 26,598,523 |
| Baxter International, Inc. | 198,453 | 7,420,158 |
| Becton, Dickinson & Co. | 57,062 | 8,132,476 |
| Boston Scientific Corp. * | 226,865 | 4,147,092 |
| C.R. Bard, Inc. | 18,500 | 3,447,475 |
| Cardinal Health, Inc. | 155,967 | 12,820,487 |
| Centene Corp. * | 17,900 | 1,064,692 |
| Cerner Corp. * | 19,300 | 1,279,397 |
| Cigna Corp. | 35,209 | 4,719,414 |
| Community Health Systems, Inc. * | 53,462 | 1,499,075 |
| DaVita HealthCare Partners, Inc. * | 28,420 | 2,202,834 |
| DENTSPLY International, Inc. | 24,735 | 1,505,125 |
| Express Scripts Holding Co. * | 177,007 | 15,289,865 |
| HCA Holdings, Inc. * | 137,774 | 9,477,474 |
| Health Net, Inc. * | 55,170 | 3,545,224 |
| Henry Schein, Inc. * | 21,252 | 3,224,141 |
| Humana, Inc. | 60,170 | 10,748,167 |
| Intuitive Surgical, Inc. * | 2,979 | 1,479,371 |
| Laboratory Corp. of America Holdings * | 20,299 | 2,491,499 |
| LifePoint Health, Inc. * | 17,830 | 1,228,130 |
| Magellan Health, Inc. * | 24,100 | 1,286,940 |
| McKesson Corp. | 77,317 | 13,824,280 |
| Medtronic plc | 240,936 | 17,809,989 |
| Owens & Minor, Inc. | 60,802 | 2,179,752 |
| Patterson Cos., Inc. | 33,275 | 1,577,235 |
| Quest Diagnostics, Inc. | 72,452 | 4,923,113 |
| ResMed, Inc. | 19,600 | 1,129,156 |
| St. Jude Medical, Inc. | 73,960 | 4,719,388 |
| Stryker Corp. | 60,418 | 5,777,169 |
| Tenet Healthcare Corp. * | 36,893 | 1,157,333 |
| UnitedHealth Group, Inc. | 321,696 | 37,889,355 |
| Universal Health Services, Inc., Class B | 15,448 | 1,886,046 |
| Varian Medical Systems, Inc. * | 24,903 | 1,955,633 |
| WellCare Health Plans, Inc. * | 20,100 | 1,780,860 |
| Zimmer Biomet Holdings, Inc. | 45,624 | 4,770,902 |
| | | 257,557,382 |
| Household & Personal Products 2.2% |
| Avon Products, Inc. | 520,625 | 2,098,119 |
| Church & Dwight Co., Inc. | 20,900 | 1,799,281 |
| Colgate-Palmolive Co. | 199,268 | 13,221,432 |
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Edgewell Personal Care Co. | 12,320 | 1,043,627 |
| Herbalife Ltd. * | 37,200 | 2,084,688 |
| Kimberly-Clark Corp. | 90,601 | 10,845,846 |
| The Clorox Co. | 27,220 | 3,319,207 |
| The Estee Lauder Cos., Inc., Class A | 31,234 | 2,513,087 |
| The Procter & Gamble Co. | 908,535 | 69,393,903 |
| | | 106,319,190 |
| Insurance 3.6% |
| ACE Ltd. | 67,804 | 7,698,466 |
| Aflac, Inc. | 131,798 | 8,402,122 |
| Alleghany Corp. * | 2,000 | 992,540 |
| American Financial Group, Inc. | 23,940 | 1,728,229 |
| American International Group, Inc. | 306,442 | 19,324,233 |
| Aon plc | 48,936 | 4,566,218 |
| Arch Capital Group Ltd. * | 35,375 | 2,649,234 |
| Arthur J. Gallagher & Co. | 25,800 | 1,128,234 |
| Assurant, Inc. | 46,955 | 3,828,241 |
| Axis Capital Holdings Ltd. | 47,350 | 2,556,900 |
| Cincinnati Financial Corp. | 40,780 | 2,456,179 |
| Everest Re Group Ltd. | 15,325 | 2,727,390 |
| First American Financial Corp. | 33,000 | 1,258,290 |
| FNF Group | 67,584 | 2,384,364 |
| Genworth Financial, Inc., Class A * | 299,600 | 1,402,128 |
| Lincoln National Corp. | 37,880 | 2,026,959 |
| Loews Corp. | 133,689 | 4,874,301 |
| Marsh & McLennan Cos., Inc. | 98,620 | 5,497,079 |
| MetLife, Inc. | 162,818 | 8,202,771 |
| Old Republic International Corp. | 80,800 | 1,457,632 |
| PartnerRe Ltd. | 25,756 | 3,580,084 |
| Principal Financial Group, Inc. | 44,871 | 2,250,729 |
| Prudential Financial, Inc. | 87,637 | 7,230,052 |
| Reinsurance Group of America, Inc. | 21,600 | 1,949,184 |
| RenaissanceRe Holdings Ltd. | 24,025 | 2,633,861 |
| The Allstate Corp. | 122,643 | 7,589,149 |
| The Chubb Corp. | 101,729 | 13,158,646 |
| The Hartford Financial Services Group, Inc. | 134,927 | 6,241,723 |
| The Progressive Corp. | 230,445 | 7,634,643 |
| The Travelers Cos., Inc. | 232,672 | 26,266,342 |
| Torchmark Corp. | 38,965 | 2,260,360 |
| Unum Group | 110,725 | 3,836,621 |
| Validus Holdings Ltd. | 29,800 | 1,320,140 |
| W. R. Berkley Corp. | 36,163 | 2,018,980 |
| White Mountains Insurance Group Ltd. | 2,729 | 2,155,910 |
| XL Group plc | 65,685 | 2,501,285 |
| | | 177,789,219 |
| Materials 3.6% |
| Air Products & Chemicals, Inc. | 39,385 | 5,473,727 |
| Airgas, Inc. | 20,900 | 2,009,744 |
| Albemarle Corp. | 35,585 | 1,904,509 |
| Alcoa, Inc. | 459,630 | 4,104,496 |
| Allegheny Technologies, Inc. | 50,611 | 743,982 |
| AptarGroup, Inc. | 21,800 | 1,603,608 |
| Ashland, Inc. | 17,535 | 1,923,940 |
| Avery Dennison Corp. | 34,900 | 2,267,453 |
| Ball Corp. | 44,180 | 3,026,330 |
| Security | Number
of Shares | Value
($) |
| Bemis Co., Inc. | 42,138 | 1,929,078 |
| Celanese Corp., Series A | 28,500 | 2,024,925 |
| CF Industries Holdings, Inc. | 62,555 | 3,175,917 |
| Cliffs Natural Resources, Inc. (b) | 537,200 | 1,482,672 |
| Commercial Metals Co. | 114,845 | 1,650,323 |
| Cytec Industries, Inc. | 21,400 | 1,592,588 |
| Domtar Corp. | 67,182 | 2,770,586 |
| E.I. du Pont de Nemours & Co. | 199,986 | 12,679,112 |
| Eastman Chemical Co. | 41,720 | 3,010,932 |
| Ecolab, Inc. | 27,591 | 3,320,577 |
| FMC Corp. | 32,980 | 1,342,616 |
| Freeport-McMoRan, Inc. | 954,940 | 11,239,644 |
| Graphic Packaging Holding Co. | 88,600 | 1,254,576 |
| Huntsman Corp. | 96,615 | 1,272,420 |
| International Flavors & Fragrances, Inc. | 12,235 | 1,419,994 |
| International Paper Co. | 149,593 | 6,386,125 |
| LyondellBasell Industries N.V., Class A | 165,480 | 15,374,747 |
| Monsanto Co. | 93,069 | 8,675,892 |
| Newmont Mining Corp. | 351,511 | 6,840,404 |
| Nucor Corp. | 157,516 | 6,662,927 |
| Owens-Illinois, Inc. * | 86,645 | 1,867,200 |
| Packaging Corp. of America | 16,521 | 1,130,862 |
| PPG Industries, Inc. | 54,400 | 5,671,744 |
| Praxair, Inc. | 71,595 | 7,953,489 |
| Reliance Steel & Aluminum Co. | 43,920 | 2,633,443 |
| RPM International, Inc. | 30,365 | 1,387,984 |
| Sigma-Aldrich Corp. | 14,930 | 2,086,020 |
| Sonoco Products Co. | 39,855 | 1,701,410 |
| Southern Copper Corp. (b) | 51,597 | 1,432,333 |
| Steel Dynamics, Inc. | 113,150 | 2,089,880 |
| The Dow Chemical Co. | 345,168 | 17,834,831 |
| The Mosaic Co. | 161,731 | 5,464,890 |
| The Sherwin-Williams Co. | 8,265 | 2,205,350 |
| The Valspar Corp. | 20,750 | 1,679,712 |
| United States Steel Corp. (b) | 119,104 | 1,391,135 |
| Vulcan Materials Co. | 17,423 | 1,682,713 |
| WestRock Co. | 56,507 | 3,037,816 |
| | | 178,414,656 |
| Media 3.6% |
| Cablevision Systems Corp., Class A | 100,465 | 3,274,154 |
| CBS Corp., Class B - Non Voting Shares | 149,721 | 6,965,021 |
| Charter Communications, Inc., Class A *(b) | 14,000 | 2,673,160 |
| Comcast Corp., Class A | 471,757 | 29,541,423 |
| Comcast Corp., Special Class A | 38,100 | 2,389,251 |
| Discovery Communications, Inc., Class A * | 94,241 | 2,774,455 |
| Discovery Communications, Inc., Class C * | 121,367 | 3,340,020 |
| DISH Network Corp., Class A * | 34,735 | 2,187,263 |
| Liberty Media Corp., Class A * | 20,000 | 815,200 |
| Liberty Media Corp., Class C * | 35,300 | 1,381,995 |
| News Corp., Class A | 180,400 | 2,778,160 |
| News Corp., Class B | 17,500 | 270,900 |
| Omnicom Group, Inc. | 78,313 | 5,867,210 |
| Scripps Networks Interactive, Inc., Class A | 26,000 | 1,562,080 |
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| TEGNA, Inc. | 79,630 | 2,153,195 |
| The Interpublic Group of Cos., Inc. | 107,605 | 2,467,383 |
| The Walt Disney Co. | 285,662 | 32,491,196 |
| Thomson Reuters Corp. | 112,657 | 4,621,190 |
| Time Warner Cable, Inc. | 106,901 | 20,247,050 |
| Time Warner, Inc. | 319,033 | 24,035,946 |
| Time, Inc. | 43,500 | 808,230 |
| Twenty-First Century Fox, Inc., Class A | 320,121 | 9,824,514 |
| Twenty-First Century Fox, Inc., Class B | 50,300 | 1,553,264 |
| Viacom, Inc., Class B | 200,298 | 9,876,694 |
| | | 173,898,954 |
| Pharmaceuticals, Biotechnology & Life Sciences 5.5% |
| AbbVie, Inc. | 152,522 | 9,082,685 |
| Agilent Technologies, Inc. | 73,836 | 2,788,047 |
| Allergan plc * | 7,540 | 2,325,864 |
| Amgen, Inc. | 155,423 | 24,584,810 |
| Biogen, Inc. * | 12,450 | 3,616,850 |
| Bristol-Myers Squibb Co. | 288,761 | 19,043,788 |
| Celgene Corp. * | 46,356 | 5,688,345 |
| Eli Lilly & Co. | 232,681 | 18,979,789 |
| Gilead Sciences, Inc. | 104,487 | 11,298,179 |
| Johnson & Johnson | 589,307 | 59,537,686 |
| Merck & Co., Inc. | 652,362 | 35,658,107 |
| Mettler-Toledo International, Inc. * | 4,300 | 1,337,257 |
| Mylan N.V. * | 52,475 | 2,313,623 |
| Perrigo Co., plc | 7,600 | 1,198,824 |
| Pfizer, Inc. | 1,774,304 | 60,006,961 |
| Thermo Fisher Scientific, Inc. | 45,545 | 5,956,375 |
| Waters Corp. * | 14,800 | 1,891,440 |
| Zoetis, Inc. | 47,800 | 2,055,878 |
| | | 267,364,508 |
| Real Estate 1.2% |
| American Capital Agency Corp. | 72,500 | 1,292,675 |
| American Tower Corp. | 28,765 | 2,940,646 |
| Annaly Capital Management, Inc. | 469,561 | 4,672,132 |
| AvalonBay Communities, Inc. | 10,299 | 1,800,574 |
| Boston Properties, Inc. | 16,490 | 2,075,266 |
| Corrections Corp. of America | 45,800 | 1,305,300 |
| Crown Castle International Corp. | 17,680 | 1,510,933 |
| Digital Realty Trust, Inc. | 19,900 | 1,471,804 |
| Equity Residential | 39,145 | 3,026,691 |
| General Growth Properties, Inc. | 59,100 | 1,710,945 |
| HCP, Inc. | 71,365 | 2,654,778 |
| Hospitality Properties Trust | 50,961 | 1,367,793 |
| Host Hotels & Resorts, Inc. | 114,278 | 1,980,438 |
| Iron Mountain, Inc. | 70,079 | 2,147,221 |
| Kimco Realty Corp. | 60,860 | 1,629,222 |
| Plum Creek Timber Co., Inc. | 40,195 | 1,637,544 |
| Prologis, Inc. | 44,100 | 1,884,393 |
| Public Storage | 13,630 | 3,127,540 |
| Simon Property Group, Inc. | 30,111 | 6,066,162 |
| The Macerich Co. | 14,997 | 1,270,846 |
| Ventas, Inc. | 45,178 | 2,426,962 |
| Vornado Realty Trust | 28,941 | 2,910,018 |
| Security | Number
of Shares | Value
($) |
| Welltower, Inc. | 27,600 | 1,790,412 |
| Weyerhaeuser Co. | 241,842 | 7,093,226 |
| | | 59,793,521 |
| Retailing 5.1% |
| Aaron's, Inc. | 43,100 | 1,063,277 |
| Abercrombie & Fitch Co., Class A | 96,478 | 2,044,369 |
| Advance Auto Parts, Inc. | 9,845 | 1,953,543 |
| Amazon.com, Inc. * | 15,650 | 9,795,335 |
| American Eagle Outfitters, Inc. | 141,035 | 2,155,015 |
| AutoNation, Inc. * | 30,200 | 1,908,338 |
| AutoZone, Inc. * | 3,321 | 2,605,026 |
| Bed Bath & Beyond, Inc. * | 93,905 | 5,599,555 |
| Best Buy Co., Inc. | 227,176 | 7,957,975 |
| Big Lots, Inc. | 47,365 | 2,183,527 |
| CarMax, Inc. * | 35,307 | 2,083,466 |
| Chico's FAS, Inc. | 78,300 | 1,082,106 |
| Core-Mark Holding Co., Inc. | 27,065 | 2,200,114 |
| CST Brands, Inc. | 95,500 | 3,431,315 |
| Dick's Sporting Goods, Inc. | 32,500 | 1,447,875 |
| Dillard's, Inc., Class A | 16,675 | 1,492,079 |
| Dollar General Corp. | 75,300 | 5,103,081 |
| Dollar Tree, Inc. * | 56,181 | 3,679,294 |
| Expedia, Inc. | 12,565 | 1,712,610 |
| Foot Locker, Inc. | 43,195 | 2,926,461 |
| GameStop Corp., Class A (b) | 98,390 | 4,532,827 |
| Genuine Parts Co. | 51,700 | 4,692,292 |
| Guess?, Inc. | 62,300 | 1,311,415 |
| J.C. Penney Co., Inc. *(b) | 479,910 | 4,400,775 |
| Kohl's Corp. | 168,745 | 7,782,519 |
| L Brands, Inc. | 50,520 | 4,848,910 |
| Liberty Interactive Corp., QVC Group, Class A * | 135,425 | 3,706,582 |
| LKQ Corp. * | 41,200 | 1,219,932 |
| Lowe's Cos., Inc. | 358,345 | 26,456,611 |
| Macy's, Inc. | 117,036 | 5,966,495 |
| Murphy USA, Inc. * | 81,500 | 5,001,655 |
| Nordstrom, Inc. | 43,055 | 2,807,617 |
| O'Reilly Automotive, Inc. * | 16,930 | 4,677,082 |
| Office Depot, Inc. * | 161,800 | 1,232,916 |
| Rent-A-Center, Inc. | 64,170 | 1,180,086 |
| Ross Stores, Inc. | 70,480 | 3,564,878 |
| Signet Jewelers Ltd. | 14,300 | 2,158,442 |
| Staples, Inc. | 630,156 | 8,185,726 |
| Target Corp. | 339,783 | 26,224,452 |
| The Gap, Inc. | 149,775 | 4,076,876 |
| The Home Depot, Inc. | 328,643 | 40,633,421 |
| The Priceline Group, Inc. * | 2,584 | 3,757,756 |
| The TJX Cos., Inc. | 171,288 | 12,536,569 |
| Tiffany & Co. | 21,135 | 1,742,369 |
| Tractor Supply Co. | 22,400 | 2,069,536 |
| Urban Outfitters, Inc. * | 36,054 | 1,031,144 |
| Williams-Sonoma, Inc. | 26,645 | 1,965,069 |
| | | 250,188,313 |
| Semiconductors & Semiconductor Equipment 2.3% |
| Altera Corp. | 36,150 | 1,899,683 |
| Analog Devices, Inc. | 49,065 | 2,949,788 |
| Applied Materials, Inc. | 322,126 | 5,402,053 |
| Avago Technologies Ltd. | 12,700 | 1,563,751 |
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Broadcom Corp., Class A | 72,527 | 3,727,888 |
| Intel Corp. | 1,843,576 | 62,423,483 |
| KLA-Tencor Corp. | 43,580 | 2,925,090 |
| Lam Research Corp. | 26,390 | 2,021,210 |
| Linear Technology Corp. | 35,455 | 1,574,911 |
| Marvell Technology Group Ltd. | 225,530 | 1,851,601 |
| Maxim Integrated Products, Inc. | 85,700 | 3,511,986 |
| Microchip Technology, Inc. | 37,380 | 1,805,080 |
| Micron Technology, Inc. * | 162,212 | 2,686,231 |
| NVIDIA Corp. | 89,937 | 2,551,513 |
| Texas Instruments, Inc. | 262,209 | 14,872,494 |
| Xilinx, Inc. | 51,720 | 2,462,906 |
| | | 114,229,668 |
| Software & Services 7.3% |
| Accenture plc, Class A | 134,565 | 14,425,368 |
| Activision Blizzard, Inc. | 150,600 | 5,234,856 |
| Adobe Systems, Inc. * | 43,807 | 3,883,929 |
| Akamai Technologies, Inc. * | 18,000 | 1,094,760 |
| Alliance Data Systems Corp. * | 7,080 | 2,104,955 |
| Alphabet, Inc., Class A * | 20,089 | 14,813,428 |
| Alphabet, Inc., Class C * | 20,874 | 14,837,448 |
| Amdocs Ltd. | 49,700 | 2,960,629 |
| Autodesk, Inc. * | 25,100 | 1,385,269 |
| Automatic Data Processing, Inc. | 78,619 | 6,839,067 |
| Booz Allen Hamilton Holding Corp. | 51,500 | 1,517,190 |
| Broadridge Financial Solutions, Inc. | 26,400 | 1,572,912 |
| CA, Inc. | 107,205 | 2,970,651 |
| CACI International, Inc., Class A * | 16,024 | 1,554,969 |
| Citrix Systems, Inc. * | 23,563 | 1,934,522 |
| Cognizant Technology Solutions Corp., Class A * | 54,700 | 3,725,617 |
| Computer Sciences Corp. | 61,045 | 4,064,987 |
| CoreLogic, Inc. * | 41,600 | 1,621,568 |
| DST Systems, Inc. | 11,500 | 1,404,725 |
| eBay, Inc. * | 184,727 | 5,153,883 |
| Electronic Arts, Inc. * | 22,208 | 1,600,531 |
| Facebook, Inc., Class A * | 25,000 | 2,549,250 |
| Fidelity National Information Services, Inc. | 71,923 | 5,244,625 |
| Fiserv, Inc. * | 44,138 | 4,259,758 |
| Global Payments, Inc. | 11,300 | 1,541,433 |
| IAC/InterActiveCorp | 29,362 | 1,967,548 |
| International Business Machines Corp. | 456,301 | 63,918,644 |
| Intuit, Inc. | 41,622 | 4,055,231 |
| Leidos Holdings, Inc. | 53,800 | 2,828,266 |
| MasterCard, Inc., Class A | 77,938 | 7,715,083 |
| Microsoft Corp. | 1,988,728 | 104,686,642 |
| Oracle Corp. | 735,544 | 28,568,529 |
| Paychex, Inc. | 53,359 | 2,752,257 |
| Symantec Corp. | 214,545 | 4,419,627 |
| Teradata Corp. * | 46,600 | 1,309,926 |
| The Western Union Co. | 233,010 | 4,485,442 |
| Total System Services, Inc. | 32,470 | 1,703,051 |
| Visa, Inc., Class A | 129,012 | 10,008,751 |
| Xerox Corp. | 622,126 | 5,841,763 |
| Yahoo! Inc. * | 86,605 | 3,084,870 |
| | | 355,641,960 |
| Security | Number
of Shares | Value
($) |
| Technology Hardware & Equipment 4.9% |
| Amphenol Corp., Class A | 44,100 | 2,391,102 |
| Anixter International, Inc. * | 20,120 | 1,379,830 |
| Apple, Inc. | 602,357 | 71,981,661 |
| Arrow Electronics, Inc. * | 73,525 | 4,043,140 |
| Avnet, Inc. | 103,400 | 4,697,462 |
| Cisco Systems, Inc. | 1,376,751 | 39,719,266 |
| Corning, Inc. | 370,171 | 6,885,181 |
| EMC Corp. | 451,243 | 11,831,591 |
| FLIR Systems, Inc. | 39,700 | 1,058,799 |
| Harris Corp. | 47,368 | 3,748,230 |
| Hewlett-Packard Co. | 1,446,391 | 38,994,701 |
| Ingram Micro, Inc., Class A | 221,951 | 6,609,701 |
| Jabil Circuit, Inc. | 130,895 | 3,007,967 |
| Juniper Networks, Inc. | 124,170 | 3,897,696 |
| Keysight Technologies, Inc. * | 25,700 | 850,156 |
| Lexmark International, Inc., Class A | 41,745 | 1,356,295 |
| Motorola Solutions, Inc. | 75,172 | 5,259,785 |
| NetApp, Inc. | 68,330 | 2,323,220 |
| QUALCOMM, Inc. | 244,555 | 14,531,458 |
| SanDisk Corp. | 43,565 | 3,354,505 |
| SYNNEX Corp. | 18,095 | 1,600,322 |
| Tech Data Corp. * | 66,640 | 4,850,726 |
| Vishay Intertechnology, Inc. | 97,740 | 1,036,044 |
| Western Digital Corp. | 51,688 | 3,453,792 |
| | | 238,862,630 |
| Telecommunication Services 4.0% |
| AT&T, Inc. | 3,570,954 | 119,662,669 |
| CenturyLink, Inc. | 341,907 | 9,645,197 |
| Frontier Communications Corp. | 668,098 | 3,434,024 |
| Telephone & Data Systems, Inc. | 83,527 | 2,392,213 |
| Verizon Communications, Inc. | 1,274,849 | 59,764,921 |
| Windstream Holdings, Inc. (b) | 108,483 | 706,224 |
| | | 195,605,248 |
| Transportation 1.7% |
| Alaska Air Group, Inc. | 17,900 | 1,364,875 |
| Avis Budget Group, Inc. * | 48,690 | 2,431,578 |
| C.H. Robinson Worldwide, Inc. | 62,544 | 4,339,303 |
| CSX Corp. | 311,033 | 8,394,781 |
| Delta Air Lines, Inc. | 23,500 | 1,194,740 |
| Expeditors International of Washington, Inc. | 65,625 | 3,267,469 |
| FedEx Corp. | 95,933 | 14,970,345 |
| Hertz Global Holdings, Inc. * | 189,600 | 3,697,200 |
| JB Hunt Transport Services, Inc. | 16,245 | 1,240,631 |
| JetBlue Airways Corp. * | 53,600 | 1,331,424 |
| Kansas City Southern | 13,687 | 1,132,736 |
| Norfolk Southern Corp. | 80,479 | 6,440,734 |
| Ryder System, Inc. | 26,420 | 1,896,427 |
| Union Pacific Corp. | 171,735 | 15,344,522 |
| United Parcel Service, Inc., Class B | 134,641 | 13,870,716 |
| | | 80,917,481 |
| Utilities 4.2% |
| AES Corp. | 494,040 | 5,409,738 |
| AGL Resources, Inc. | 32,414 | 2,025,875 |
| Alliant Energy Corp. | 33,275 | 1,963,891 |
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Ameren Corp. | 115,690 | 5,053,339 |
| American Electric Power Co., Inc. | 176,401 | 9,993,117 |
| American Water Works Co., Inc. | 40,600 | 2,328,816 |
| Atmos Energy Corp. | 36,960 | 2,328,480 |
| Calpine Corp. * | 161,050 | 2,497,886 |
| CenterPoint Energy, Inc. | 196,570 | 3,646,373 |
| CMS Energy Corp. | 89,405 | 3,224,838 |
| Consolidated Edison, Inc. | 119,302 | 7,844,106 |
| Dominion Resources, Inc. | 146,380 | 10,455,923 |
| DTE Energy Co. | 63,130 | 5,150,777 |
| Duke Energy Corp. | 180,177 | 12,877,250 |
| Edison International | 105,376 | 6,377,356 |
| Entergy Corp. | 109,770 | 7,481,923 |
| Eversource Energy | 67,115 | 3,418,838 |
| Exelon Corp. | 466,173 | 13,015,550 |
| FirstEnergy Corp. | 258,165 | 8,054,748 |
| Great Plains Energy, Inc. | 57,870 | 1,591,425 |
| MDU Resources Group, Inc. | 92,358 | 1,741,872 |
| National Fuel Gas Co. | 23,245 | 1,221,060 |
| NextEra Energy, Inc. | 103,759 | 10,651,899 |
| NiSource, Inc. | 104,435 | 2,000,975 |
| NRG Energy, Inc. | 168,682 | 2,174,311 |
| OGE Energy Corp. | 66,684 | 1,901,161 |
| Pepco Holdings, Inc. | 104,165 | 2,773,914 |
| PG&E Corp. | 168,811 | 9,014,507 |
| Pinnacle West Capital Corp. | 42,185 | 2,679,169 |
| PPL Corp. | 214,175 | 7,367,620 |
| Public Service Enterprise Group, Inc. | 206,222 | 8,514,906 |
| SCANA Corp. | 51,259 | 3,035,558 |
| Sempra Energy | 59,315 | 6,074,449 |
| TECO Energy, Inc. | 97,625 | 2,635,875 |
| The Southern Co. | 314,406 | 14,179,711 |
| UGI Corp. | 54,280 | 1,990,448 |
| Vectren Corp. | 28,600 | 1,300,442 |
| WEC Energy Group, Inc. | 84,986 | 4,381,878 |
| Westar Energy, Inc. | 42,270 | 1,678,119 |
| Xcel Energy, Inc. | 178,885 | 6,373,673 |
| | | 206,431,796 |
| Total Common Stock |
| (Cost $3,919,296,392) | | 4,864,052,589 |
|
| Other Investment Companies 0.6% of net assets |
| Money Market Fund 0.1% |
| State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (c) | 4,910,122 | 4,910,122 |
| Securities Lending Collateral 0.5% |
| Wells Fargo Advantage Government Money Market Fund, Institutional Class 0.01% (c) | 25,886,725 | 25,886,725 |
| Total Other Investment Companies |
| (Cost $30,796,847) | | 30,796,847 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $3,964,131,348 and the unrealized appreciation and depreciation were $1,136,802,288 and ($206,084,200), respectively, with a net unrealized appreciation of $930,718,088.
| * | Non-income producing security. |
| (a) | Issuer is affiliated with the fund's investment adviser. |
| (b) | All or a portion of this security is on loan. Securities on loan were valued at $25,544,730. |
| (c) | The rate shown is the 7-day yield. |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| S&P 500 Index, e-mini, Long, expires 12/18/15 | 125 | 12,960,625 | 262,110 |
Schwab Fundamental US Small Company Index Fund
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 99.0% | Common Stock | 1,209,007,594 | 1,401,645,072 |
| 0.0% | Rights | 266,857 | 266,364 |
| 3.6% | Other Investment Companies | 50,350,637 | 50,350,637 |
| 102.6% | Total Investments | 1,259,625,088 | 1,452,262,073 |
| (2.6%) | Other Assets and Liabilities, Net | | (36,694,514) |
| 100.0% | Net Assets | | 1,415,567,559 |
| Security | Number
of Shares | Value
($) |
| Common Stock 99.0% of net assets |
| Automobiles & Components 1.2% |
| American Axle & Manufacturing Holdings, Inc. * | 19,900 | 440,984 |
| Cooper Tire & Rubber Co. | 75,000 | 3,134,250 |
| Cooper-Standard Holding, Inc. * | 10,100 | 656,904 |
| Dorman Products, Inc. * | 7,300 | 340,764 |
| Drew Industries, Inc. | 18,895 | 1,130,488 |
| Gentex Corp. | 148,700 | 2,437,193 |
| Modine Manufacturing Co. * | 83,800 | 701,406 |
| Remy International, Inc. | 19,000 | 560,310 |
| Standard Motor Products, Inc. | 20,200 | 893,850 |
| Tenneco, Inc. * | 42,600 | 2,410,734 |
| Thor Industries, Inc. | 57,100 | 3,087,968 |
| Tower International, Inc. * | 26,900 | 738,943 |
| | | 16,533,794 |
| Banks 5.2% |
| Associated Banc-Corp. | 101,300 | 1,959,142 |
| Astoria Financial Corp. | 77,800 | 1,241,688 |
| BancorpSouth, Inc. | 52,700 | 1,313,811 |
| Bank of Hawaii Corp. | 36,400 | 2,383,472 |
| Bank of the Ozarks, Inc. | 6,900 | 345,138 |
| BankUnited, Inc. | 56,500 | 2,100,670 |
| BOK Financial Corp. | 19,100 | 1,283,138 |
| Capitol Federal Financial, Inc. | 143,286 | 1,859,852 |
| Cathay General Bancorp | 30,700 | 960,910 |
| Commerce Bancshares, Inc. | 53,589 | 2,440,979 |
| Community Bank System, Inc. | 20,000 | 815,200 |
| Cullen/Frost Bankers, Inc. | 29,700 | 2,032,668 |
| CVB Financial Corp. | 56,080 | 978,596 |
| East West Bancorp, Inc. | 50,500 | 2,039,695 |
| EverBank Financial Corp. | 53,000 | 914,780 |
| Security | Number
of Shares | Value
($) |
| F.N.B. Corp. | 103,900 | 1,399,533 |
| First Citizens BancShares, Inc., Class A | 5,400 | 1,383,156 |
| First Financial Bancorp | 54,900 | 1,058,472 |
| First Financial Bankshares, Inc. | 23,900 | 794,914 |
| First Horizon National Corp. | 160,700 | 2,278,726 |
| First Niagara Financial Group, Inc. | 309,000 | 3,198,150 |
| First Republic Bank | 40,800 | 2,664,648 |
| FirstMerit Corp. | 93,501 | 1,756,884 |
| Fulton Financial Corp. | 147,600 | 1,980,792 |
| Glacier Bancorp, Inc. | 35,380 | 967,997 |
| Great Western Bancorp, Inc. | 16,300 | 460,638 |
| Hancock Holding Co. | 44,900 | 1,239,240 |
| IBERIABANK Corp. | 12,400 | 751,812 |
| International Bancshares Corp. | 41,800 | 1,126,510 |
| MB Financial, Inc. | 30,945 | 997,667 |
| NBT Bancorp, Inc. | 30,955 | 870,145 |
| Northwest Bancshares, Inc. | 116,392 | 1,566,636 |
| Ocwen Financial Corp. * | 56,100 | 392,139 |
| Old National Bancorp | 61,725 | 864,150 |
| PacWest Bancorp | 6,900 | 310,776 |
| PrivateBancorp, Inc. | 9,200 | 384,836 |
| Prosperity Bancshares, Inc. | 22,800 | 1,171,464 |
| Signature Bank * | 7,800 | 1,161,576 |
| SVB Financial Group * | 10,400 | 1,269,528 |
| Synovus Financial Corp. | 64,900 | 2,052,787 |
| TCF Financial Corp. | 137,200 | 2,111,508 |
| Trustmark Corp. | 61,000 | 1,465,830 |
| UMB Financial Corp. | 19,801 | 971,833 |
| Umpqua Holdings Corp. | 43,100 | 719,770 |
| United Bankshares, Inc. | 32,995 | 1,304,952 |
| Valley National Bancorp | 234,900 | 2,466,450 |
| Walter Investment Management Corp. *(a) | 39,800 | 476,008 |
| Washington Federal, Inc. | 79,300 | 1,977,742 |
| Webster Financial Corp. | 42,700 | 1,584,170 |
| Westamerica Bancorp | 20,770 | 918,242 |
| Wintrust Financial Corp. | 17,940 | 905,791 |
| Zions Bancorp | 125,500 | 3,610,635 |
| | | 73,285,846 |
| Capital Goods 12.0% |
| A.O. Smith Corp. | 29,000 | 2,227,780 |
| AAR Corp. | 63,480 | 1,440,361 |
| Actuant Corp., Class A | 73,100 | 1,666,680 |
| Acuity Brands, Inc. | 14,600 | 3,191,560 |
| Aegion Corp. * | 51,915 | 1,001,440 |
| Air Lease Corp. | 23,600 | 795,556 |
| Aircastle Ltd. | 64,600 | 1,463,836 |
| Alamo Group, Inc. | 6,700 | 314,364 |
| Albany International Corp., Class A | 23,100 | 867,867 |
| Allegion plc | 45,600 | 2,971,752 |
| Allison Transmission Holdings, Inc. | 79,000 | 2,267,300 |
| Apogee Enterprises, Inc. | 18,295 | 906,151 |
| Applied Industrial Technologies, Inc. | 66,720 | 2,756,203 |
| Astec Industries, Inc. | 23,250 | 755,625 |
| AZZ, Inc. | 16,600 | 918,478 |
| B/E Aerospace, Inc. | 43,400 | 2,037,630 |
| Barnes Group, Inc. | 40,665 | 1,528,597 |
| Beacon Roofing Supply, Inc. * | 58,080 | 2,055,451 |
| Briggs & Stratton Corp. | 100,400 | 1,784,108 |
Schwab Fundamental US Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| BWX Technologies, Inc. | 99,700 | 2,821,510 |
| Chart Industries, Inc. * | 32,410 | 557,128 |
| CIRCOR International, Inc. | 15,890 | 729,669 |
| CLARCOR, Inc. | 33,125 | 1,651,613 |
| Colfax Corp. * | 23,900 | 644,344 |
| Comfort Systems USA, Inc. | 49,900 | 1,593,307 |
| Crane Co. | 40,500 | 2,131,920 |
| Cubic Corp. | 24,390 | 1,093,892 |
| Curtiss-Wright Corp. | 32,400 | 2,253,744 |
| DigitalGlobe, Inc. * | 28,100 | 419,533 |
| Donaldson Co., Inc. | 91,400 | 2,760,280 |
| Dycom Industries, Inc. * | 27,170 | 2,067,365 |
| Encore Wire Corp. | 41,240 | 1,763,835 |
| EnerSys | 41,500 | 2,531,085 |
| EnPro Industries, Inc. | 14,870 | 730,266 |
| ESCO Technologies, Inc. | 24,300 | 901,287 |
| Esterline Technologies Corp. * | 19,900 | 1,533,295 |
| Franklin Electric Co., Inc. | 31,660 | 1,043,514 |
| GATX Corp. | 52,200 | 2,437,740 |
| Generac Holdings, Inc. *(a) | 61,900 | 1,953,564 |
| General Cable Corp. | 223,200 | 3,435,048 |
| Graco, Inc. | 24,140 | 1,771,876 |
| Granite Construction, Inc. | 60,900 | 1,999,956 |
| Griffon Corp. | 57,000 | 979,260 |
| H&E Equipment Services, Inc. | 46,920 | 906,025 |
| Harsco Corp. | 219,200 | 2,352,016 |
| HD Supply Holdings, Inc. * | 19,700 | 586,863 |
| HEICO Corp. | 18,912 | 953,921 |
| Hexcel Corp. | 43,785 | 2,028,121 |
| Hillenbrand, Inc. | 51,200 | 1,519,104 |
| Huntington Ingalls Industries, Inc. | 24,800 | 2,974,512 |
| Hyster-Yale Materials Handling, Inc. | 12,000 | 702,240 |
| IDEX Corp. | 39,400 | 3,024,344 |
| ITT Corp. | 42,700 | 1,690,066 |
| Kaman Corp. | 29,380 | 1,142,588 |
| KLX, Inc. * | 26,500 | 1,036,415 |
| L.B. Foster Co., Class A | 15,700 | 231,261 |
| Lennox International, Inc. | 29,800 | 3,957,738 |
| Lindsay Corp. (a) | 9,200 | 623,576 |
| Masco Corp. | 147,900 | 4,289,100 |
| Masonite International Corp. * | 21,100 | 1,263,257 |
| MasTec, Inc. * | 99,010 | 1,660,398 |
| Moog, Inc., Class A * | 32,700 | 2,019,552 |
| MRC Global, Inc. * | 252,000 | 2,998,800 |
| MSC Industrial Direct Co., Inc., Class A | 42,600 | 2,674,002 |
| Mueller Industries, Inc. | 91,800 | 2,893,536 |
| MYR Group, Inc. * | 28,000 | 630,000 |
| Navistar International Corp. * | 44,600 | 548,580 |
| Nordson Corp. | 30,350 | 2,162,134 |
| Orbital ATK, Inc. | 44,200 | 3,784,404 |
| Primoris Services Corp. | 21,300 | 424,296 |
| Quanex Building Products Corp. | 47,150 | 889,721 |
| Raven Industries, Inc. | 41,630 | 758,082 |
| RBC Bearings, Inc. * | 10,000 | 683,900 |
| Regal Beloit Corp. | 44,200 | 2,819,518 |
| Rexnord Corp. * | 50,700 | 936,936 |
| Rush Enterprises, Inc., Class A * | 42,560 | 1,037,613 |
| Simpson Manufacturing Co., Inc. | 34,785 | 1,321,134 |
| Spirit AeroSystems Holdings, Inc., Class A * | 63,000 | 3,322,620 |
| Standex International Corp. | 8,900 | 798,508 |
| Security | Number
of Shares | Value
($) |
| TAL International Group, Inc. * | 50,190 | 851,222 |
| Teledyne Technologies, Inc. * | 22,100 | 1,971,983 |
| Tennant Co. | 13,680 | 792,346 |
| Terex Corp. | 138,500 | 2,778,310 |
| The Greenbrier Cos., Inc. (a) | 17,720 | 674,069 |
| The Manitowoc Co., Inc. | 105,000 | 1,606,500 |
| The Middleby Corp. * | 12,524 | 1,464,557 |
| The Toro Co. | 41,620 | 3,132,738 |
| Titan International, Inc. | 92,775 | 658,703 |
| Titan Machinery, Inc. * | 22,500 | 275,175 |
| TriMas Corp. * | 36,700 | 734,367 |
| Triumph Group, Inc. | 52,900 | 2,464,082 |
| Tutor Perini Corp. * | 104,100 | 1,746,798 |
| Universal Forest Products, Inc. | 40,070 | 2,910,284 |
| Valmont Industries, Inc. | 25,850 | 2,803,174 |
| Veritiv Corp. * | 25,000 | 1,050,000 |
| WABCO Holdings, Inc. * | 26,600 | 2,985,318 |
| Wabtec Corp. | 29,620 | 2,454,609 |
| Watsco, Inc. | 21,645 | 2,662,984 |
| Watts Water Technologies, Inc., Class A | 27,755 | 1,510,982 |
| Woodward, Inc. | 46,700 | 2,124,850 |
| | | 170,053,702 |
| Commercial & Professional Supplies 5.0% |
| ABM Industries, Inc. | 109,700 | 3,115,480 |
| ACCO Brands Corp. * | 120,000 | 968,400 |
| Brady Corp., Class A | 84,800 | 1,929,200 |
| CEB, Inc. | 13,170 | 984,589 |
| Civeo Corp. | 471,400 | 876,804 |
| Clean Harbors, Inc. * | 36,930 | 1,716,876 |
| Copart, Inc. * | 96,200 | 3,483,402 |
| Covanta Holding Corp. | 111,000 | 1,860,360 |
| Deluxe Corp. | 40,300 | 2,399,865 |
| Essendant, Inc. | 86,000 | 2,973,020 |
| FTI Consulting, Inc. * | 71,300 | 2,424,913 |
| G&K Services, Inc., Class A | 19,290 | 1,269,668 |
| Healthcare Services Group, Inc. | 47,655 | 1,775,625 |
| Herman Miller, Inc. | 46,910 | 1,488,454 |
| HNI Corp. | 40,100 | 1,721,894 |
| Huron Consulting Group, Inc. * | 12,600 | 608,580 |
| ICF International, Inc. * | 23,600 | 723,812 |
| IHS, Inc., Class A * | 14,210 | 1,698,664 |
| Insperity, Inc. | 23,660 | 1,099,244 |
| Interface, Inc. | 46,885 | 916,602 |
| KAR Auction Services, Inc. | 64,700 | 2,484,480 |
| Kelly Services, Inc., Class A | 154,500 | 2,441,100 |
| Kforce, Inc. | 40,900 | 1,149,699 |
| Knoll, Inc. | 42,700 | 992,348 |
| Korn/Ferry International | 30,130 | 1,095,828 |
| Matthews International Corp., Class A | 28,615 | 1,651,944 |
| McGrath RentCorp | 25,625 | 770,031 |
| Mobile Mini, Inc. | 18,800 | 643,712 |
| MSA Safety, Inc. | 24,725 | 1,075,043 |
| Navigant Consulting, Inc. * | 70,525 | 1,213,030 |
| On Assignment, Inc. * | 20,500 | 924,755 |
| Quad Graphics, Inc. | 117,600 | 1,517,040 |
| Resources Connection, Inc. | 65,660 | 1,178,597 |
| Rollins, Inc. | 40,733 | 1,092,459 |
| Steelcase, Inc., Class A | 122,900 | 2,385,489 |
Schwab Fundamental US Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Stericycle, Inc. * | 21,100 | 2,560,907 |
| Team, Inc. * | 17,700 | 619,500 |
| Tetra Tech, Inc. | 74,395 | 2,001,226 |
| The Brink's Co. | 90,700 | 2,809,886 |
| TrueBlue, Inc. * | 51,130 | 1,481,236 |
| UniFirst Corp. | 12,605 | 1,324,407 |
| Viad Corp. | 36,165 | 1,088,928 |
| Waste Connections, Inc. | 52,000 | 2,832,960 |
| West Corp. | 40,400 | 961,924 |
| | | 70,331,981 |
| Consumer Durables & Apparel 3.2% |
| Arctic Cat, Inc. | 22,600 | 464,204 |
| Brunswick Corp. | 23,400 | 1,259,154 |
| Carter's, Inc. | 29,500 | 2,680,960 |
| Columbia Sportswear Co. | 19,260 | 1,056,411 |
| Crocs, Inc. * | 89,060 | 961,848 |
| D.R. Horton, Inc. | 132,300 | 3,894,912 |
| Deckers Outdoor Corp. * | 33,350 | 1,856,261 |
| G-III Apparel Group Ltd. * | 19,700 | 1,085,273 |
| Hanesbrands, Inc. | 104,600 | 3,340,924 |
| Harman International Industries, Inc. | 32,300 | 3,551,708 |
| Helen of Troy Ltd. * | 16,230 | 1,610,178 |
| Iconix Brand Group, Inc. * | 51,100 | 782,852 |
| La-Z-Boy, Inc. | 52,620 | 1,502,301 |
| Lennar Corp., Class A | 44,600 | 2,233,122 |
| lululemon athletica, Inc. * | 27,400 | 1,347,258 |
| M.D.C. Holdings, Inc. | 42,900 | 1,114,971 |
| Meritage Homes Corp. * | 18,800 | 662,888 |
| Michael Kors Holdings Ltd. * | 50,000 | 1,932,000 |
| Oxford Industries, Inc. | 11,100 | 808,302 |
| PulteGroup, Inc. | 120,900 | 2,216,097 |
| Skechers U.S.A., Inc., Class A * | 49,035 | 1,529,892 |
| Smith & Wesson Holding Corp. * | 23,600 | 421,496 |
| Steven Madden Ltd. * | 35,122 | 1,224,002 |
| Sturm, Ruger & Co., Inc. | 17,300 | 985,062 |
| Tempur Sealy International, Inc. * | 39,615 | 3,083,631 |
| Toll Brothers, Inc. * | 38,600 | 1,388,442 |
| Under Armour, Inc., Class A * | 20,360 | 1,935,829 |
| Wolverine World Wide, Inc. | 54,480 | 1,011,694 |
| | | 45,941,672 |
| Consumer Services 4.5% |
| Ascent Capital Group, Inc., Class A * | 10,300 | 224,334 |
| Bloomin' Brands, Inc. | 36,100 | 612,617 |
| Bob Evans Farms, Inc. | 52,455 | 2,269,728 |
| Boyd Gaming Corp. * | 69,800 | 1,395,302 |
| Buffalo Wild Wings, Inc. * | 6,000 | 925,620 |
| Caesars Entertainment Corp. * | 52,900 | 425,845 |
| Capella Education Co. | 17,800 | 803,670 |
| Career Education Corp. * | 439,200 | 1,585,512 |
| Choice Hotels International, Inc. | 27,440 | 1,435,386 |
| Churchill Downs, Inc. | 6,700 | 983,761 |
| Cracker Barrel Old Country Store, Inc. (a) | 11,220 | 1,542,301 |
| DineEquity, Inc. | 11,730 | 978,869 |
| Domino's Pizza, Inc. | 17,100 | 1,824,057 |
| Dunkin' Brands Group, Inc. | 34,900 | 1,445,209 |
| Security | Number
of Shares | Value
($) |
| Grand Canyon Education, Inc. * | 8,600 | 357,416 |
| Hilton Worldwide Holdings, Inc. | 77,800 | 1,944,222 |
| Houghton Mifflin Harcourt Co. * | 47,600 | 932,484 |
| Hyatt Hotels Corp., Class A * | 21,400 | 1,078,560 |
| International Speedway Corp., Class A | 30,050 | 1,042,434 |
| Jack in the Box, Inc. | 28,200 | 2,101,746 |
| K12, Inc. * | 25,800 | 250,518 |
| La Quinta Holdings, Inc. * | 16,500 | 249,975 |
| Marriott Vacations Worldwide Corp. | 15,600 | 1,004,640 |
| Norwegian Cruise Line Holdings Ltd. * | 26,000 | 1,654,120 |
| Panera Bread Co., Class A * | 16,675 | 2,957,645 |
| Papa John's International, Inc. | 16,020 | 1,124,123 |
| Penn National Gaming, Inc. * | 88,200 | 1,575,252 |
| Pinnacle Entertainment, Inc. * | 30,875 | 1,080,934 |
| Red Robin Gourmet Burgers, Inc. * | 13,680 | 1,024,495 |
| Regis Corp. * | 125,700 | 2,076,564 |
| Ruby Tuesday, Inc. * | 176,550 | 923,357 |
| SeaWorld Entertainment, Inc. | 138,900 | 2,768,277 |
| Service Corp. International | 144,300 | 4,077,918 |
| Six Flags Entertainment Corp. | 33,500 | 1,743,340 |
| Sotheby's | 28,220 | 977,823 |
| Steiner Leisure Ltd. * | 16,860 | 1,068,250 |
| Strayer Education, Inc. * | 35,600 | 1,883,952 |
| Texas Roadhouse, Inc. | 48,610 | 1,669,753 |
| The Cheesecake Factory, Inc. | 53,435 | 2,575,567 |
| The Wendy's Co. | 289,600 | 2,652,736 |
| Vail Resorts, Inc. | 16,160 | 1,844,987 |
| Weight Watchers International, Inc. *(a) | 292,192 | 4,493,913 |
| | | 63,587,212 |
| Diversified Financials 3.8% |
| Affiliated Managers Group, Inc. * | 11,300 | 2,036,938 |
| BGC Partners, Inc., Class A | 99,500 | 860,675 |
| Cash America International, Inc. | 63,505 | 2,192,827 |
| CBOE Holdings, Inc. | 34,900 | 2,339,696 |
| Credit Acceptance Corp. * | 2,100 | 397,089 |
| E*TRADE Financial Corp. * | 126,500 | 3,606,515 |
| Eaton Vance Corp. | 83,100 | 3,000,741 |
| Evercore Partners, Inc., Class A | 7,100 | 383,400 |
| Ezcorp, Inc., Class A * | 151,200 | 1,006,992 |
| FactSet Research Systems, Inc. | 13,465 | 2,357,991 |
| Federated Investors, Inc., Class B | 99,100 | 3,045,343 |
| First Cash Financial Services, Inc. * | 20,590 | 785,508 |
| Greenhill & Co., Inc. | 36,935 | 953,662 |
| Intercontinental Exchange, Inc. | 12,400 | 3,129,760 |
| Janus Capital Group, Inc. | 76,900 | 1,194,257 |
| Lazard Ltd., Class A | 33,900 | 1,570,248 |
| LPL Financial Holdings, Inc. (a) | 63,200 | 2,692,320 |
| MarketAxess Holdings, Inc. | 3,500 | 354,585 |
| Morningstar, Inc. | 10,300 | 845,733 |
| MSCI, Inc. | 29,600 | 1,983,200 |
| Nelnet, Inc., Class A | 22,440 | 802,903 |
| PRA Group, Inc. * | 16,100 | 882,280 |
| Raymond James Financial, Inc. | 48,900 | 2,694,879 |
| Santander Consumer USA Holdings, Inc. * | 100,400 | 1,808,204 |
| SEI Investments Co. | 68,300 | 3,539,306 |
| Springleaf Holdings, Inc. * | 10,600 | 497,246 |
Schwab Fundamental US Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Stifel Financial Corp. * | 19,060 | 846,836 |
| Synchrony Financial *(a) | 45,700 | 1,405,732 |
| TD Ameritrade Holding Corp. | 96,900 | 3,340,143 |
| Waddell & Reed Financial, Inc., Class A | 64,300 | 2,375,242 |
| World Acceptance Corp. *(a) | 26,760 | 1,020,359 |
| | | 53,950,610 |
| Energy 5.2% |
| Alon USA Energy, Inc. | 60,700 | 1,016,725 |
| Atwood Oceanics, Inc. (a) | 78,600 | 1,300,830 |
| Basic Energy Services, Inc. *(a) | 141,985 | 526,764 |
| Bill Barrett Corp. * | 225,900 | 1,100,133 |
| Bristow Group, Inc. | 42,900 | 1,489,917 |
| Cabot Oil & Gas Corp. | 95,900 | 2,081,989 |
| CARBO Ceramics, Inc. (a) | 40,080 | 702,202 |
| Cloud Peak Energy, Inc. * | 345,500 | 1,026,135 |
| Concho Resources, Inc. * | 27,100 | 3,141,161 |
| Contango Oil & Gas Co. * | 29,400 | 224,910 |
| Continental Resources, Inc. * | 21,600 | 732,456 |
| CVR Energy, Inc. | 26,800 | 1,191,528 |
| Dril-Quip, Inc. * | 19,785 | 1,217,964 |
| Energy XXI Ltd. (a) | 727,200 | 1,258,056 |
| Exterran Holdings, Inc. | 91,300 | 1,984,862 |
| Forum Energy Technologies, Inc. * | 51,600 | 683,700 |
| Frontline Ltd. *(a) | 896,300 | 2,832,308 |
| Golar LNG Ltd. | 27,000 | 783,270 |
| Green Plains, Inc. | 54,300 | 1,113,693 |
| Gulfmark Offshore, Inc., Class A (a) | 67,805 | 423,103 |
| Helix Energy Solutions Group, Inc. * | 148,800 | 860,064 |
| Hornbeck Offshore Services, Inc. * | 43,780 | 591,468 |
| Key Energy Services, Inc. * | 1,402,500 | 736,873 |
| Matrix Service Co. * | 38,400 | 871,680 |
| McDermott International, Inc. * | 784,600 | 3,617,006 |
| Newpark Resources, Inc. * | 131,940 | 746,780 |
| Nordic American Tankers Ltd. (a) | 67,285 | 1,028,115 |
| North Atlantic Drilling Ltd. * | 856,300 | 706,876 |
| Oasis Petroleum, Inc. * | 39,200 | 455,896 |
| Oil States International, Inc. * | 78,800 | 2,364,788 |
| Parker Drilling Co. * | 361,010 | 1,032,489 |
| PBF Energy, Inc., Class A | 68,000 | 2,312,000 |
| PDC Energy, Inc. * | 17,555 | 1,059,269 |
| Pioneer Energy Services Corp. * | 211,700 | 489,027 |
| Range Resources Corp. | 61,300 | 1,865,972 |
| Renewable Energy Group, Inc. * | 50,900 | 401,601 |
| Rowan Cos. plc, Class A | 162,900 | 3,205,872 |
| RPC, Inc. | 76,700 | 846,001 |
| SandRidge Energy, Inc. * | 1,606,000 | 594,702 |
| SEACOR Holdings, Inc. * | 52,500 | 3,067,050 |
| SemGroup Corp., Class A | 24,800 | 1,129,640 |
| Seventy Seven Energy, Inc. *(a) | 304,400 | 347,016 |
| Ship Finance International Ltd. (a) | 69,500 | 1,187,755 |
| SM Energy Co. | 72,500 | 2,417,875 |
| Stone Energy Corp. * | 169,100 | 945,269 |
| Targa Resources Corp. | 27,100 | 1,548,765 |
| Teekay Corp. | 46,300 | 1,487,619 |
| Tesco Corp. | 40,000 | 320,000 |
| TETRA Technologies, Inc. * | 178,060 | 1,200,124 |
| Tidewater, Inc. (a) | 132,000 | 1,630,200 |
| Unit Corp. * | 111,700 | 1,408,537 |
| US Silica Holdings, Inc. (a) | 14,700 | 265,482 |
| Security | Number
of Shares | Value
($) |
| W&T Offshore, Inc. (a) | 220,300 | 718,178 |
| Western Refining, Inc. | 89,300 | 3,716,666 |
| WPX Energy, Inc. * | 531,100 | 3,643,346 |
| | | 73,651,707 |
| Food & Staples Retailing 0.9% |
| Ingles Markets, Inc., Class A | 31,900 | 1,593,086 |
| PriceSmart, Inc. | 13,740 | 1,181,365 |
| Rite Aid Corp. * | 324,000 | 2,553,120 |
| SpartanNash, Co. | 69,300 | 1,933,470 |
| Sprouts Farmers Market, Inc. * | 17,500 | 356,650 |
| SUPERVALU, Inc. * | 370,900 | 2,436,813 |
| The Andersons, Inc. | 51,537 | 1,824,410 |
| The Fresh Market, Inc. * | 34,700 | 864,724 |
| | | 12,743,638 |
| Food, Beverage & Tobacco 2.6% |
| B&G Foods, Inc. | 35,300 | 1,281,037 |
| Cal-Maine Foods, Inc. (a) | 23,400 | 1,250,964 |
| Darling Ingredients, Inc. * | 124,520 | 1,260,142 |
| Dean Foods Co. | 87,500 | 1,584,625 |
| Flowers Foods, Inc. | 135,250 | 3,651,750 |
| Fresh Del Monte Produce, Inc. | 75,900 | 3,463,317 |
| J&J Snack Foods Corp. | 10,035 | 1,232,198 |
| Keurig Green Mountain, Inc. | 31,980 | 1,622,985 |
| Lancaster Colony Corp. | 18,965 | 2,156,700 |
| Pilgrim's Pride Corp. (a) | 40,400 | 767,196 |
| Pinnacle Foods, Inc. | 32,600 | 1,437,008 |
| Post Holdings, Inc. * | 27,300 | 1,754,571 |
| Sanderson Farms, Inc. (a) | 29,000 | 2,015,790 |
| Seaboard Corp. * | 422 | 1,421,296 |
| Snyder's-Lance, Inc. | 43,160 | 1,533,906 |
| The Boston Beer Co., Inc., Class A * | 1,600 | 351,344 |
| The Hain Celestial Group, Inc. * | 21,740 | 1,083,739 |
| The WhiteWave Foods Co. * | 42,200 | 1,729,356 |
| TreeHouse Foods, Inc. * | 24,985 | 2,139,716 |
| Universal Corp. | 71,000 | 3,834,710 |
| Vector Group Ltd. | 56,989 | 1,381,983 |
| | | 36,954,333 |
| Health Care Equipment & Services 4.6% |
| Air Methods Corp. * | 22,900 | 937,297 |
| Alere, Inc. * | 43,400 | 2,001,608 |
| Align Technology, Inc. * | 13,800 | 903,348 |
| Allscripts Healthcare Solutions, Inc. * | 192,800 | 2,710,768 |
| Amedisys, Inc. * | 42,370 | 1,677,005 |
| Amsurg Corp. * | 20,825 | 1,459,624 |
| Analogic Corp. | 10,565 | 925,705 |
| Brookdale Senior Living, Inc. * | 58,600 | 1,225,326 |
| Chemed Corp. | 19,295 | 3,034,911 |
| CONMED Corp. | 18,895 | 766,381 |
| Edwards Lifesciences Corp. * | 20,200 | 3,174,430 |
| Envision Healthcare Holdings, Inc. * | 42,300 | 1,192,860 |
| Greatbatch, Inc. * | 15,500 | 828,475 |
| Haemonetics Corp. * | 31,300 | 1,057,314 |
| Halyard Health, Inc. * | 36,900 | 1,095,192 |
| Hanger, Inc. * | 44,600 | 643,132 |
| HealthSouth Corp. | 42,400 | 1,476,792 |
| Hill-Rom Holdings, Inc. | 47,100 | 2,481,699 |
Schwab Fundamental US Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| IDEXX Laboratories, Inc. * | 42,600 | 2,923,212 |
| IMS Health Holdings, Inc. * | 15,900 | 432,798 |
| Integra LifeSciences Holdings Corp. * | 13,220 | 787,515 |
| Invacare Corp. | 84,865 | 1,466,467 |
| Kindred Healthcare, Inc. | 142,422 | 1,908,455 |
| LivaNova plc * | 21,400 | 1,418,392 |
| Masimo Corp. * | 32,900 | 1,305,472 |
| MedAssets, Inc. * | 15,000 | 355,200 |
| MEDNAX, Inc. * | 39,300 | 2,769,471 |
| Meridian Bioscience, Inc. | 17,900 | 340,279 |
| Molina Healthcare, Inc. * | 30,657 | 1,900,734 |
| Orthofix International N.V. * | 24,500 | 834,225 |
| PharMerica Corp. * | 58,640 | 1,675,345 |
| Quality Systems, Inc. | 59,700 | 838,785 |
| Select Medical Holdings Corp. | 130,400 | 1,473,520 |
| Sirona Dental Systems, Inc. * | 17,890 | 1,952,336 |
| STERIS Corp. (a) | 52,300 | 3,919,885 |
| Team Health Holdings, Inc. * | 12,900 | 769,743 |
| Teleflex, Inc. | 21,100 | 2,806,300 |
| The Cooper Cos., Inc. | 14,100 | 2,148,276 |
| Triple-S Management Corp., Class B * | 65,000 | 1,338,350 |
| VCA, Inc. * | 39,100 | 2,141,507 |
| West Pharmaceutical Services, Inc. | 29,780 | 1,787,098 |
| | | 64,885,232 |
| Household & Personal Products 0.4% |
| Elizabeth Arden, Inc. *(a) | 65,770 | 824,756 |
| Nu Skin Enterprises, Inc., Class A | 66,320 | 2,534,087 |
| Spectrum Brands Holdings, Inc. | 10,700 | 1,025,595 |
| WD-40 Co. | 10,415 | 995,466 |
| | | 5,379,904 |
| Insurance 4.0% |
| Allied World Assurance Co. Holdings AG | 81,500 | 2,963,340 |
| Ambac Financial Group, Inc. * | 54,400 | 878,560 |
| American Equity Investment Life Holding Co. | 58,515 | 1,502,665 |
| AmTrust Financial Services, Inc. | 4,900 | 334,278 |
| Argo Group International Holdings Ltd. | 27,564 | 1,723,301 |
| Aspen Insurance Holdings Ltd. | 73,200 | 3,558,252 |
| Assured Guaranty Ltd. | 110,000 | 3,018,400 |
| Brown & Brown, Inc. | 67,100 | 2,165,317 |
| CNA Financial Corp. | 8,100 | 296,136 |
| CNO Financial Group, Inc. | 200,500 | 3,851,605 |
| Employers Holdings, Inc. | 46,700 | 1,236,149 |
| Endurance Specialty Holdings Ltd. | 67,696 | 4,273,648 |
| Horace Mann Educators Corp. | 28,590 | 978,922 |
| Infinity Property & Casualty Corp. | 15,865 | 1,277,450 |
| Kemper Corp. | 78,400 | 2,800,448 |
| Maiden Holdings Ltd. | 21,000 | 326,550 |
| Markel Corp. * | 3,582 | 3,109,176 |
| MBIA, Inc. * | 123,200 | 925,232 |
| Mercury General Corp. | 35,600 | 1,922,756 |
| Primerica, Inc. | 73,800 | 3,515,094 |
| ProAssurance Corp. | 46,100 | 2,441,456 |
| RLI Corp. | 37,500 | 2,281,875 |
| Security | Number
of Shares | Value
($) |
| Safety Insurance Group, Inc. | 16,005 | 927,490 |
| Selective Insurance Group, Inc. | 40,500 | 1,477,845 |
| StanCorp Financial Group, Inc. | 34,200 | 3,923,424 |
| Stewart Information Services Corp. | 29,000 | 1,164,930 |
| Symetra Financial Corp. | 41,000 | 1,300,930 |
| The Hanover Insurance Group, Inc. | 37,400 | 3,150,950 |
| | | 57,326,179 |
| Materials 5.5% |
| A. Schulman, Inc. | 45,133 | 1,619,823 |
| Axalta Coating Systems Ltd. * | 14,300 | 395,109 |
| Axiall Corp. | 72,624 | 1,470,636 |
| Berry Plastics Group, Inc. * | 46,700 | 1,564,450 |
| Boise Cascade Co. * | 34,400 | 1,029,592 |
| Cabot Corp. | 84,700 | 3,044,118 |
| Calgon Carbon Corp. | 39,200 | 674,240 |
| Carpenter Technology Corp. | 50,300 | 1,675,493 |
| Century Aluminum Co. * | 65,800 | 238,196 |
| Chemtura Corp. * | 90,100 | 2,877,794 |
| Clearwater Paper Corp. * | 26,460 | 1,334,378 |
| Coeur Mining, Inc. * | 308,000 | 831,600 |
| Compass Minerals International, Inc. | 23,730 | 1,927,825 |
| Crown Holdings, Inc. * | 71,800 | 3,808,272 |
| Eagle Materials, Inc. | 12,070 | 796,982 |
| Ferro Corp. * | 69,930 | 873,426 |
| Globe Specialty Metals, Inc. | 37,200 | 469,464 |
| Greif, Inc., Class A | 65,300 | 2,140,534 |
| H.B. Fuller Co. | 46,580 | 1,769,574 |
| Hecla Mining Co. | 327,300 | 677,511 |
| Innophos Holdings, Inc. | 27,350 | 1,162,101 |
| Innospec, Inc. | 21,080 | 1,164,459 |
| Intrepid Potash, Inc. * | 72,500 | 279,850 |
| Kaiser Aluminum Corp. | 23,380 | 1,900,560 |
| KapStone Paper & Packaging Corp. | 42,400 | 922,200 |
| Koppers Holdings, Inc. | 46,560 | 882,778 |
| Kraton Performance Polymers, Inc. * | 59,200 | 1,207,088 |
| Louisiana-Pacific Corp. * | 63,000 | 1,112,580 |
| LSB Industries, Inc. * | 21,400 | 334,910 |
| Martin Marietta Materials, Inc. | 22,200 | 3,444,330 |
| Materion Corp. | 30,760 | 927,414 |
| Minerals Technologies, Inc. | 25,620 | 1,510,043 |
| Myers Industries, Inc. | 39,005 | 608,868 |
| Neenah Paper, Inc. | 6,100 | 411,201 |
| NewMarket Corp. | 5,895 | 2,321,097 |
| Olin Corp. | 105,600 | 2,025,408 |
| P.H. Glatfelter Co. | 73,845 | 1,432,593 |
| PolyOne Corp. | 54,500 | 1,822,480 |
| Quaker Chemical Corp. | 9,600 | 762,048 |
| Royal Gold, Inc. | 7,400 | 354,016 |
| Schnitzer Steel Industries, Inc., Class A | 165,310 | 2,787,127 |
| Schweitzer-Mauduit International, Inc. | 28,972 | 1,124,693 |
| Sealed Air Corp. | 93,000 | 4,568,160 |
| Sensient Technologies Corp. | 36,800 | 2,401,936 |
| Silgan Holdings, Inc. | 48,500 | 2,467,195 |
| Stepan Co. | 32,730 | 1,732,399 |
| Stillwater Mining Co. * | 66,570 | 621,764 |
Schwab Fundamental US Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| SunCoke Energy, Inc. | 83,500 | 414,160 |
| The Scotts Miracle-Gro Co., Class A | 38,300 | 2,533,928 |
| Tronox Ltd., Class A | 110,900 | 688,689 |
| W.R. Grace & Co. * | 18,400 | 1,845,520 |
| Westlake Chemical Corp. | 25,100 | 1,512,777 |
| Worthington Industries, Inc. | 71,900 | 2,207,330 |
| | | 78,710,719 |
| Media 1.8% |
| AMC Networks, Inc., Class A * | 16,800 | 1,241,352 |
| Cinemark Holdings, Inc. | 89,300 | 3,164,792 |
| DreamWorks Animation SKG, Inc., Class A * | 69,300 | 1,402,632 |
| John Wiley & Sons, Inc., Class A | 35,500 | 1,857,715 |
| Liberty Broadband Corp., Class A * | 900 | 49,104 |
| Liberty Broadband Corp., Class C * | 6,200 | 333,374 |
| Lions Gate Entertainment Corp. | 27,100 | 1,056,087 |
| Live Nation Entertainment, Inc. * | 79,500 | 2,168,760 |
| Loral Space & Communications, Inc. * | 23,000 | 1,028,330 |
| Meredith Corp. | 35,200 | 1,655,104 |
| MSG Networks, Inc., Class A * | 16,800 | 344,736 |
| National CineMedia, Inc. | 73,100 | 1,038,020 |
| Regal Entertainment Group, Class A | 102,700 | 1,990,326 |
| Scholastic Corp. | 52,800 | 2,157,936 |
| Sinclair Broadcast Group, Inc., Class A | 39,919 | 1,197,969 |
| Sirius XM Holdings, Inc. * | 679,900 | 2,773,992 |
| Starz, Class A * | 14,600 | 489,246 |
| The New York Times Co., Class A | 116,800 | 1,551,104 |
| Tribune Media Co., Class A | 15,800 | 637,214 |
| | | 26,137,793 |
| Pharmaceuticals, Biotechnology & Life Sciences 2.0% |
| Alexion Pharmaceuticals, Inc. * | 9,200 | 1,619,200 |
| Bio-Rad Laboratories, Inc., Class A * | 15,100 | 2,106,148 |
| Bio-Techne Corp. | 16,065 | 1,416,933 |
| Bruker Corp. * | 49,700 | 912,989 |
| Charles River Laboratories International, Inc. * | 39,400 | 2,570,456 |
| Endo International plc * | 39,100 | 2,345,609 |
| Illumina, Inc. * | 9,560 | 1,369,757 |
| Impax Laboratories, Inc. * | 28,900 | 1,000,807 |
| Jazz Pharmaceuticals plc * | 2,600 | 356,928 |
| Mallinckrodt plc * | 26,821 | 1,761,335 |
| Myriad Genetics, Inc. *(a) | 39,300 | 1,586,541 |
| PAREXEL International Corp. * | 19,320 | 1,219,478 |
| PDL BioPharma, Inc. | 256,150 | 1,173,167 |
| PerkinElmer, Inc. | 60,300 | 3,113,892 |
| Prestige Brands Holdings, Inc. * | 6,800 | 333,268 |
| QIAGEN N.V. * | 84,000 | 2,030,280 |
| Quintiles Transnational Holdings, Inc. * | 25,300 | 1,610,345 |
| Regeneron Pharmaceuticals, Inc. * | 1,000 | 557,390 |
| United Therapeutics Corp. * | 8,800 | 1,290,344 |
| | | 28,374,867 |
| Security | Number
of Shares | Value
($) |
| Real Estate 9.9% |
| Alexandria Real Estate Equities, Inc. | 25,900 | 2,324,266 |
| Altisource Portfolio Solutions S.A. * | 11,300 | 302,953 |
| American Campus Communities, Inc. | 40,260 | 1,633,348 |
| Anworth Mortgage Asset Corp. | 208,455 | 994,330 |
| Apartment Investment & Management Co., Class A | 75,500 | 2,958,845 |
| BioMed Realty Trust, Inc. | 94,700 | 2,216,927 |
| Brandywine Realty Trust | 125,100 | 1,688,850 |
| Brixmor Property Group, Inc. | 31,100 | 796,782 |
| Camden Property Trust | 37,900 | 2,796,641 |
| Capstead Mortgage Corp. | 108,350 | 1,045,577 |
| CBL & Associates Properties, Inc. | 127,200 | 1,854,576 |
| CBRE Group, Inc., Class A * | 86,100 | 3,209,808 |
| Chambers Street Properties | 48,600 | 344,088 |
| Chimera Investment Corp. | 132,400 | 1,864,192 |
| Columbia Property Trust, Inc. | 106,100 | 2,635,524 |
| Corporate Office Properties Trust | 67,400 | 1,550,200 |
| CubeSmart | 14,200 | 395,044 |
| DCT Industrial Trust, Inc. | 34,650 | 1,286,208 |
| DDR Corp. | 107,600 | 1,807,680 |
| DiamondRock Hospitality Co. | 98,700 | 1,152,816 |
| Douglas Emmett, Inc. | 60,900 | 1,860,495 |
| Duke Realty Corp. | 159,300 | 3,297,510 |
| DuPont Fabros Technology, Inc. | 12,300 | 394,707 |
| EastGroup Properties, Inc. | 14,650 | 822,744 |
| EPR Properties | 28,300 | 1,607,723 |
| Equinix, Inc. | 10,307 | 3,057,881 |
| Equity Commonwealth * | 109,200 | 3,135,132 |
| Equity LifeStyle Properties, Inc. | 21,540 | 1,302,739 |
| Equity One, Inc. | 25,300 | 672,474 |
| Essex Property Trust, Inc. | 10,709 | 2,360,692 |
| Extra Space Storage, Inc. | 19,865 | 1,574,103 |
| Federal Realty Investment Trust | 21,200 | 3,041,988 |
| Forest City Enterprises, Inc., Class A * | 15,700 | 346,970 |
| Franklin Street Properties Corp. | 60,100 | 626,242 |
| Government Properties Income Trust | 37,300 | 607,244 |
| Hatteras Financial Corp. | 94,700 | 1,355,157 |
| Healthcare Realty Trust, Inc. | 55,100 | 1,452,436 |
| Healthcare Trust of America, Inc., Class A | 38,100 | 1,002,411 |
| Hersha Hospitality Trust | 25,625 | 615,256 |
| Highwoods Properties, Inc. | 47,600 | 2,068,220 |
| HomeBanc Corp. *(b)(c) | 6,875 | — |
| Invesco Mortgage Capital, Inc. | 104,400 | 1,258,020 |
| Investors Real Estate Trust | 92,300 | 749,476 |
| Jones Lang LaSalle, Inc. | 21,900 | 3,650,949 |
| Kilroy Realty Corp. | 22,100 | 1,455,064 |
| Lamar Advertising Co., Class A | 33,600 | 1,896,048 |
| LaSalle Hotel Properties | 39,140 | 1,151,107 |
| Lexington Realty Trust | 137,100 | 1,211,964 |
| Liberty Property Trust | 100,300 | 3,412,206 |
| Mack-Cali Realty Corp. | 150,300 | 3,270,528 |
| Medical Properties Trust, Inc. | 57,800 | 653,140 |
| MFA Financial, Inc. | 318,200 | 2,201,944 |
| Mid-America Apartment Communities, Inc. | 23,221 | 1,978,197 |
Schwab Fundamental US Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| National Retail Properties, Inc. | 41,000 | 1,558,000 |
| New Residential Investment Corp. | 51,500 | 624,695 |
| NorthStar Realty Finance Corp. | 64,666 | 776,639 |
| Omega Healthcare Investors, Inc. | 40,490 | 1,397,715 |
| Outfront Media, Inc. | 54,200 | 1,279,662 |
| Pennsylvania Real Estate Investment Trust | 45,200 | 1,016,096 |
| PennyMac Mortgage Investment Trust | 61,500 | 899,130 |
| Piedmont Office Realty Trust, Inc., Class A | 174,900 | 3,389,562 |
| Post Properties, Inc. | 17,920 | 1,070,541 |
| Potlatch Corp. | 33,000 | 1,030,920 |
| PS Business Parks, Inc. | 10,250 | 879,348 |
| Rayonier, Inc. | 148,400 | 3,361,260 |
| Realogy Holdings Corp. * | 34,700 | 1,356,770 |
| Realty Income Corp. | 48,300 | 2,388,918 |
| Redwood Trust, Inc. | 75,700 | 1,005,296 |
| Regency Centers Corp. | 38,200 | 2,596,072 |
| Retail Properties of America, Inc., Class A | 141,500 | 2,118,255 |
| RLJ Lodging Trust | 45,500 | 1,141,595 |
| Ryman Hospitality Properties, Inc. | 21,300 | 1,120,380 |
| Sabra Health Care REIT, Inc. | 41,100 | 932,148 |
| Senior Housing Properties Trust | 130,900 | 1,988,371 |
| SL Green Realty Corp. | 22,200 | 2,633,364 |
| Sovran Self Storage, Inc. | 11,170 | 1,115,548 |
| Spirit Realty Capital, Inc. | 42,600 | 433,668 |
| Starwood Property Trust, Inc. | 58,300 | 1,171,247 |
| Sun Communities, Inc. | 14,355 | 962,072 |
| Sunstone Hotel Investors, Inc. | 62,027 | 896,910 |
| Tanger Factory Outlet Centers, Inc. | 36,580 | 1,278,471 |
| Taubman Centers, Inc. | 23,700 | 1,824,426 |
| The Geo Group, Inc. | 47,036 | 1,517,852 |
| Two Harbors Investment Corp. | 109,500 | 926,370 |
| UDR, Inc. | 94,300 | 3,249,578 |
| Washington Real Estate Investment Trust | 53,000 | 1,431,530 |
| Weingarten Realty Investors | 70,500 | 2,521,080 |
| Western Asset Mortgage Capital Corp. (a) | 24,300 | 277,506 |
| WP Carey, Inc. | 22,700 | 1,438,499 |
| | | 140,558,916 |
| Retailing 5.3% |
| Asbury Automotive Group, Inc. * | 24,300 | 1,924,560 |
| Ascena Retail Group, Inc. * | 230,500 | 3,070,260 |
| Barnes & Noble, Inc. | 101,300 | 1,315,887 |
| Burlington Stores, Inc. * | 41,200 | 1,980,896 |
| Cabela's, Inc. * | 25,200 | 987,084 |
| Caleres, Inc. | 57,242 | 1,749,315 |
| Citi Trends, Inc. | 13,000 | 345,410 |
| Conn's, Inc. *(a) | 10,100 | 191,597 |
| DSW, Inc., Class A | 72,836 | 1,816,530 |
| Express, Inc. * | 127,800 | 2,466,540 |
| Five Below, Inc. * | 24,400 | 837,896 |
| Fred's, Inc., Class A | 134,970 | 1,866,635 |
| Genesco, Inc. * | 35,400 | 2,217,810 |
| GNC Holdings, Inc., Class A | 71,700 | 2,133,075 |
| Group 1 Automotive, Inc. | 39,100 | 3,399,745 |
| Haverty Furniture Cos., Inc. | 15,400 | 360,514 |
| Security | Number
of Shares | Value
($) |
| Hibbett Sports, Inc. * | 26,185 | 894,480 |
| HSN, Inc. | 30,300 | 1,874,055 |
| Lands' End, Inc. *(a) | 17,300 | 426,964 |
| Liberty TripAdvisor Holdings, Inc., Class A * | 15,300 | 477,207 |
| Lithia Motors, Inc., Class A | 13,435 | 1,577,135 |
| Lumber Liquidators Holdings, Inc. * | 38,000 | 525,160 |
| Monro Muffler Brake, Inc. | 15,940 | 1,182,270 |
| Netflix, Inc. * | 37,840 | 4,101,099 |
| Nutrisystem, Inc. | 44,330 | 1,025,353 |
| Outerwall, Inc. | 34,025 | 2,041,500 |
| Penske Automotive Group, Inc. | 50,000 | 2,442,000 |
| Pier 1 Imports, Inc. | 168,585 | 1,250,901 |
| Pool Corp. | 27,780 | 2,265,181 |
| Restoration Hardware Holdings, Inc. * | 3,600 | 371,124 |
| Sally Beauty Holdings, Inc. * | 76,865 | 1,807,096 |
| Sears Holdings Corp. *(a) | 131,900 | 3,082,503 |
| Select Comfort Corp. * | 29,470 | 624,764 |
| Shutterfly, Inc. * | 8,000 | 333,680 |
| Sonic Automotive, Inc., Class A | 87,200 | 2,174,768 |
| Stage Stores, Inc. | 106,455 | 1,035,807 |
| Stein Mart, Inc. | 62,700 | 555,522 |
| The Buckle, Inc. | 43,522 | 1,542,420 |
| The Cato Corp., Class A | 39,495 | 1,491,331 |
| The Children's Place, Inc. | 41,960 | 2,251,993 |
| The Finish Line, Inc., Class A | 84,152 | 1,567,752 |
| The Men's Wearhouse, Inc. | 67,900 | 2,714,642 |
| The Michaels Cos., Inc. * | 11,700 | 273,546 |
| The Pep Boys - Manny, Moe & Jack * | 139,015 | 2,090,785 |
| Travelport Worldwide Ltd. | 44,900 | 608,395 |
| TripAdvisor, Inc. * | 13,700 | 1,147,786 |
| Tuesday Morning Corp. * | 61,900 | 334,879 |
| Ulta Salon, Cosmetics & Fragrance, Inc. * | 15,900 | 2,765,964 |
| Vitamin Shoppe, Inc. * | 26,500 | 760,285 |
| Zumiez, Inc. * | 16,000 | 279,680 |
| | | 74,561,781 |
| Semiconductors & Semiconductor Equipment 3.0% |
| Advanced Micro Devices, Inc. *(a) | 1,098,700 | 2,329,244 |
| Amkor Technology, Inc. * | 189,700 | 1,179,934 |
| Atmel Corp. | 370,300 | 2,814,280 |
| Brooks Automation, Inc. | 70,090 | 773,794 |
| Cabot Microelectronics Corp. * | 30,830 | 1,300,101 |
| Cirrus Logic, Inc. * | 46,335 | 1,428,508 |
| Cree, Inc. * | 59,500 | 1,498,805 |
| Cypress Semiconductor Corp. * | 195,103 | 2,056,386 |
| Diodes, Inc. * | 28,600 | 654,940 |
| Entegris, Inc. * | 85,745 | 1,100,108 |
| Fairchild Semiconductor International, Inc. * | 134,100 | 2,236,788 |
| First Solar, Inc. * | 62,200 | 3,549,754 |
| Freescale Semiconductor Ltd. * | 24,900 | 833,901 |
| Integrated Device Technology, Inc. * | 52,980 | 1,350,990 |
| Intersil Corp., Class A | 137,400 | 1,861,770 |
| Microsemi Corp. * | 30,945 | 1,114,329 |
| MKS Instruments, Inc. | 40,550 | 1,428,982 |
| OmniVision Technologies, Inc. * | 41,680 | 1,203,302 |
| ON Semiconductor Corp. * | 250,800 | 2,758,800 |
Schwab Fundamental US Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Photronics, Inc. * | 96,025 | 920,880 |
| PMC-Sierra, Inc. * | 132,725 | 1,582,082 |
| Silicon Laboratories, Inc. * | 34,390 | 1,718,468 |
| Skyworks Solutions, Inc. | 28,400 | 2,193,616 |
| Synaptics, Inc. * | 14,605 | 1,242,739 |
| Teradyne, Inc. | 117,700 | 2,297,504 |
| Veeco Instruments, Inc. * | 37,660 | 678,633 |
| | | 42,108,638 |
| Software & Services 5.5% |
| ACI Worldwide, Inc. * | 33,800 | 809,510 |
| Acxiom Corp. * | 92,215 | 2,039,796 |
| ANSYS, Inc. * | 19,800 | 1,887,138 |
| AVG Technologies N.V. * | 18,100 | 428,970 |
| Cadence Design Systems, Inc. * | 54,100 | 1,202,102 |
| Cardtronics, Inc. * | 9,400 | 324,300 |
| Cimpress N.V. *(a) | 19,920 | 1,571,688 |
| Convergys Corp. | 153,300 | 3,935,211 |
| CSG Systems International, Inc. | 33,845 | 1,134,484 |
| EarthLink Holdings Corp. | 331,375 | 2,833,256 |
| Euronet Worldwide, Inc. * | 18,295 | 1,467,991 |
| Everi Holdings, Inc. * | 98,135 | 459,272 |
| Fair Isaac Corp. | 22,105 | 2,041,839 |
| FleetCor Technologies, Inc. * | 7,400 | 1,071,964 |
| Gartner, Inc. * | 23,700 | 2,148,879 |
| Genpact Ltd. * | 101,450 | 2,513,931 |
| Heartland Payment Systems, Inc. | 24,665 | 1,825,210 |
| j2 Global, Inc. | 16,085 | 1,247,392 |
| Jack Henry & Associates, Inc. | 33,180 | 2,566,141 |
| LinkedIn Corp., Class A * | 2,100 | 505,827 |
| Manhattan Associates, Inc. * | 19,080 | 1,389,978 |
| ManTech International Corp., Class A | 64,600 | 1,866,940 |
| MAXIMUS, Inc. | 29,080 | 1,983,256 |
| Mentor Graphics Corp. | 44,420 | 1,208,224 |
| Monster Worldwide, Inc. * | 288,600 | 1,809,522 |
| NeuStar, Inc., Class A *(a) | 91,975 | 2,500,800 |
| Nuance Communications, Inc. * | 92,200 | 1,564,634 |
| Progress Software Corp. * | 58,825 | 1,428,271 |
| PTC, Inc. * | 40,340 | 1,429,650 |
| Rackspace Hosting, Inc. * | 38,620 | 998,327 |
| Red Hat, Inc. * | 30,600 | 2,420,766 |
| Rovi Corp. * | 67,969 | 621,916 |
| salesforce.com, Inc. * | 30,933 | 2,403,803 |
| Science Applications International Corp. | 72,400 | 3,320,264 |
| Solera Holdings, Inc. | 27,860 | 1,522,828 |
| SS&C Technologies Holdings, Inc. | 5,400 | 400,410 |
| Sykes Enterprises, Inc. * | 52,955 | 1,535,695 |
| Synopsys, Inc. * | 51,600 | 2,578,968 |
| Take-Two Interactive Software, Inc. * | 64,055 | 2,126,626 |
| Unisys Corp. * | 94,800 | 1,270,320 |
| United Online, Inc. * | 43,100 | 503,408 |
| Vantiv, Inc., Class A * | 29,700 | 1,489,455 |
| VeriFone Systems, Inc. * | 34,500 | 1,039,830 |
| Verint Systems, Inc. * | 6,700 | 318,786 |
| VeriSign, Inc. * | 52,900 | 4,263,740 |
| VMware, Inc., Class A * | 12,500 | 751,875 |
| WebMD Health Corp. * | 35,400 | 1,439,364 |
| Security | Number
of Shares | Value
($) |
| WEX, Inc. * | 9,700 | 872,127 |
| Zynga, Inc., Class A * | 125,700 | 297,909 |
| | | 77,372,593 |
| Technology Hardware & Equipment 4.9% |
| ADTRAN, Inc. | 83,245 | 1,292,795 |
| ARRIS Group, Inc. * | 54,605 | 1,543,137 |
| AVX Corp. | 26,800 | 361,800 |
| Belden, Inc. | 24,440 | 1,564,893 |
| Benchmark Electronics, Inc. * | 119,900 | 2,371,622 |
| Brocade Communications Systems, Inc. | 279,400 | 2,911,348 |
| CDW Corp. | 43,000 | 1,921,670 |
| Cognex Corp. | 18,330 | 689,208 |
| Coherent, Inc. * | 23,540 | 1,275,868 |
| CommScope Holding Co., Inc. * | 53,200 | 1,725,276 |
| Comtech Telecommunications Corp. | 53,670 | 1,296,667 |
| Diebold, Inc. | 85,400 | 3,148,698 |
| Dolby Laboratories, Inc., Class A | 44,800 | 1,553,216 |
| EchoStar Corp., Class A * | 28,900 | 1,295,587 |
| Electronics for Imaging, Inc. * | 22,902 | 1,063,569 |
| F5 Networks, Inc. * | 27,040 | 2,979,808 |
| Fabrinet * | 39,100 | 847,297 |
| FEI Co. | 13,320 | 961,571 |
| Finisar Corp. * | 69,830 | 793,967 |
| Harmonic, Inc. * | 59,600 | 343,296 |
| II-VI, Inc. * | 18,900 | 342,468 |
| Insight Enterprises, Inc. * | 118,900 | 3,020,060 |
| InterDigital, Inc. | 27,300 | 1,385,202 |
| IPG Photonics Corp. * | 3,900 | 322,218 |
| Itron, Inc. * | 56,100 | 2,060,553 |
| Knowles Corp. *(a) | 82,100 | 1,367,786 |
| Littelfuse, Inc. | 11,045 | 1,103,727 |
| Methode Electronics, Inc. | 9,400 | 313,302 |
| MTS Systems Corp. | 12,180 | 804,245 |
| National Instruments Corp. | 51,842 | 1,579,626 |
| NCR Corp. * | 114,900 | 3,056,340 |
| NETGEAR, Inc. * | 40,050 | 1,658,070 |
| OSI Systems, Inc. * | 11,200 | 965,216 |
| Plantronics, Inc. | 26,810 | 1,437,552 |
| Plexus Corp. * | 58,480 | 2,024,578 |
| Polycom, Inc. * | 196,840 | 2,712,455 |
| QLogic Corp. * | 184,680 | 2,290,032 |
| Rofin-Sinar Technologies, Inc. * | 34,210 | 990,722 |
| Sanmina Corp. * | 150,900 | 3,119,103 |
| ScanSource, Inc. * | 55,440 | 1,913,235 |
| Super Micro Computer, Inc. * | 10,500 | 296,205 |
| Trimble Navigation Ltd. * | 93,500 | 2,127,125 |
| TTM Technologies, Inc. * | 91,900 | 670,870 |
| ViaSat, Inc. * | 13,915 | 917,833 |
| Viavi Solutions, Inc. * | 151,500 | 901,425 |
| Zebra Technologies Corp., Class A * | 28,820 | 2,216,258 |
| | | 69,537,499 |
| Telecommunication Services 1.2% |
| Cincinnati Bell, Inc. * | 479,200 | 1,806,584 |
| Consolidated Communications Holdings, Inc. | 50,014 | 1,105,309 |
Schwab Fundamental US Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| General Communication, Inc., Class A * | 20,600 | 419,519 |
| Inteliquent, Inc. | 42,500 | 880,600 |
| Intelsat S.A. *(a) | 98,700 | 653,394 |
| Iridium Communications, Inc. * | 43,900 | 360,419 |
| Level 3 Communications, Inc. * | 63,230 | 3,221,569 |
| NTELOS Holdings Corp. * | 124,720 | 1,146,177 |
| SBA Communications Corp., Class A * | 20,905 | 2,488,113 |
| T-Mobile US, Inc. * | 72,300 | 2,739,447 |
| Vonage Holdings Corp. * | 222,600 | 1,351,182 |
| Zayo Group Holdings, Inc. * | 13,000 | 344,890 |
| | | 16,517,203 |
| Transportation 3.1% |
| Allegiant Travel Co. | 6,100 | 1,204,445 |
| AMERCO | 3,600 | 1,462,716 |
| American Airlines Group, Inc. | 73,100 | 3,378,682 |
| ArcBest Corp. | 37,640 | 974,876 |
| Atlas Air Worldwide Holdings, Inc. * | 33,100 | 1,365,044 |
| Copa Holdings S.A., Class A (a) | 32,100 | 1,621,692 |
| Forward Air Corp. | 19,825 | 899,262 |
| Genesee & Wyoming, Inc., Class A * | 14,165 | 950,472 |
| Hawaiian Holdings, Inc. * | 33,740 | 1,170,778 |
| Heartland Express, Inc. | 42,665 | 803,382 |
| Hub Group, Inc., Class A * | 51,510 | 2,059,370 |
| Kirby Corp. * | 32,500 | 2,121,925 |
| Knight Transportation, Inc. | 49,525 | 1,258,925 |
| Landstar System, Inc. | 40,770 | 2,570,141 |
| Macquarie Infrastructure Corp. | 7,700 | 612,535 |
| Marten Transport Ltd. | 15,200 | 249,128 |
| Matson, Inc. | 29,500 | 1,351,985 |
| Navios Maritime Holdings, Inc. | 306,300 | 646,293 |
| Old Dominion Freight Line, Inc. * | 24,475 | 1,515,981 |
| Republic Airways Holdings, Inc. * | 202,700 | 1,167,552 |
| Saia, Inc. * | 20,450 | 482,825 |
| SkyWest, Inc. | 216,900 | 4,129,776 |
| Southwest Airlines Co. | 76,600 | 3,545,814 |
| Spirit Airlines, Inc. * | 21,000 | 779,520 |
| Swift Transportation Co. * | 53,400 | 834,642 |
| United Continental Holdings, Inc. * | 40,200 | 2,424,462 |
| UTi Worldwide, Inc. * | 254,700 | 1,816,011 |
| Werner Enterprises, Inc. | 72,700 | 1,923,642 |
| Wesco Aircraft Holdings, Inc. * | 23,900 | 297,794 |
| | | 43,619,670 |
| Utilities 4.2% |
| ALLETE, Inc. | 36,600 | 1,837,686 |
| American States Water Co. | 23,830 | 971,073 |
| Aqua America, Inc. | 93,375 | 2,670,525 |
| Avista Corp. | 72,200 | 2,443,970 |
| Black Hills Corp. | 48,300 | 2,211,174 |
| California Water Service Group | 37,880 | 846,997 |
| Cleco Corp. | 47,200 | 2,501,600 |
| Dynegy, Inc. * | 54,300 | 1,055,049 |
| El Paso Electric Co. | 51,090 | 1,975,650 |
| Hawaiian Electric Industries, Inc. | 105,200 | 3,078,152 |
| IDACORP, Inc. | 38,400 | 2,567,040 |
| ITC Holdings Corp. | 62,200 | 2,035,184 |
| MGE Energy, Inc. | 26,050 | 1,075,083 |
| Security | Number
of Shares | Value
($) |
| New Jersey Resources Corp. | 82,600 | 2,616,768 |
| Northwest Natural Gas Co. | 33,705 | 1,610,088 |
| NorthWestern Corp. | 38,200 | 2,070,058 |
| ONE Gas, Inc. | 20,700 | 1,010,988 |
| Otter Tail Corp. | 46,380 | 1,272,667 |
| Piedmont Natural Gas Co., Inc. | 64,800 | 3,713,688 |
| PNM Resources, Inc. | 98,500 | 2,769,820 |
| Portland General Electric Co. | 88,800 | 3,292,704 |
| Questar Corp. | 128,000 | 2,643,200 |
| South Jersey Industries, Inc. | 49,680 | 1,317,017 |
| Southwest Gas Corp. | 49,700 | 3,054,562 |
| The Empire District Electric Co. | 52,910 | 1,193,120 |
| The Laclede Group, Inc. | 32,140 | 1,882,440 |
| UIL Holdings Corp. | 46,200 | 2,355,738 |
| WGL Holdings, Inc. | 55,400 | 3,447,542 |
| | | 59,519,583 |
| Total Common Stock |
| (Cost $1,209,007,594) | | 1,401,645,072 |
|
| Rights 0.0% of net assets |
| Technology Hardware & Equipment 0.0% |
| Gerber Scientific, Inc. CVR *(b)(c) | 19,700 | — |
| Telecommunication Services 0.0% |
| Leap Wireless CVR *(b)(c) | 105,700 | 266,364 |
| Total Rights |
| (Cost $266,857) | | 266,364 |
|
| Other Investment Companies 3.6% of net assets |
| Money Market Fund 0.6% |
| State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (d) | 7,676,787 | 7,676,787 |
| Securities Lending Collateral 3.0% |
| Wells Fargo Advantage Government Money Market Fund, Institutional Class 0.01% (d) | 42,673,850 | 42,673,850 |
| Total Other Investment Companies |
| (Cost $50,350,637) | | 50,350,637 |
End of Investments.
Schwab Fundamental US Small Company Index Fund
Portfolio Holdings continued
At 10/31/15, the tax basis cost of the fund's investments was $1,266,175,700 and the unrealized appreciation and depreciation were $292,377,579 and ($106,291,206), respectively, with a net unrealized appreciation of $186,086,373.
| * | Non-income producing security. |
| (a) | All or a portion of this security is on loan. Securities on loan were valued at $41,236,990. |
| (b) | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| (c) | Illiquid security. At the period end, the value of these amounted to $266,364 or 0.0% of net assets. |
| (d) | The rate shown is the 7-day yield. |
| | |
| CVR — | Contingent Value Rights |
| REIT — | Real Estate Investment Trust |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| Russell 2000 Index, mini, Long, expires 12/18/15 | 75 | 8,687,250 | 207,836 |
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 98.8% | Common Stock | 1,164,973,487 | 1,158,703,379 |
| 0.5% | Preferred Stock | 6,784,733 | 5,910,863 |
| 0.0% | Rights | 127,301 | 123,592 |
| 1.3% | Other Investment Company | 15,802,505 | 15,802,505 |
| 0.1% | Short-Term Investments | 864,326 | 864,326 |
| 100.7% | Total Investments | 1,188,552,352 | 1,181,404,665 |
| (0.7%) | Other Assets and Liabilities, Net | | (8,321,923) |
| 100.0% | Net Assets | | 1,173,082,742 |
| Security | Number
of Shares | Value
($) |
| Common Stock 98.8% of net assets |
| Australia 5.1% |
| Banks 1.6% |
| Australia & New Zealand Banking Group Ltd. | 193,888 | 3,749,850 |
| Bendigo & Adelaide Bank Ltd. | 33,402 | 253,393 |
| Commonwealth Bank of Australia | 97,070 | 5,270,703 |
| National Australia Bank Ltd. | 194,796 | 4,159,799 |
| Westpac Banking Corp. * | 9,633 | 209,170 |
| Westpac Banking Corp. | 209,446 | 4,665,202 |
| | | 18,308,117 |
| Capital Goods 0.1% |
| CIMIC Group Ltd. | 19,085 | 374,127 |
| UGL Ltd. (c) | 207,313 | 333,958 |
| | | 708,085 |
| Commercial & Professional Supplies 0.1% |
| Brambles Ltd. | 91,025 | 670,306 |
| Downer EDI Ltd. | 126,343 | 317,488 |
| | | 987,794 |
| Consumer Services 0.1% |
| Tabcorp Holdings Ltd. | 100,257 | 335,067 |
| Tatts Group Ltd. | 178,688 | 501,707 |
| | | 836,774 |
| Diversified Financials 0.1% |
| BGP Holdings plc (a)(b) | 453,854 | — |
| Macquarie Group Ltd. | 15,620 | 945,773 |
| | | 945,773 |
| Security | Number
of Shares | Value
($) |
| Energy 0.3% |
| Caltex Australia Ltd. | 20,882 | 467,470 |
| Origin Energy Ltd. | 145,471 | 565,271 |
| Santos Ltd. | 140,189 | 578,719 |
| Woodside Petroleum Ltd. | 55,514 | 1,164,293 |
| WorleyParsons Ltd. | 67,889 | 313,205 |
| | | 3,088,958 |
| Food & Staples Retailing 0.7% |
| Metcash Ltd. | 675,235 | 568,755 |
| Wesfarmers Ltd. | 160,979 | 4,501,665 |
| Woolworths Ltd. | 182,542 | 3,127,167 |
| | | 8,197,587 |
| Food, Beverage & Tobacco 0.0% |
| Coca-Cola Amatil Ltd. | 63,581 | 411,448 |
| Health Care Equipment & Services 0.0% |
| Sonic Healthcare Ltd. | 28,635 | 391,630 |
| Insurance 0.4% |
| AMP Ltd. | 229,633 | 931,348 |
| Insurance Australia Group Ltd. | 154,227 | 613,030 |
| Medibank Pvt Ltd. | 111,882 | 187,698 |
| QBE Insurance Group Ltd. | 154,803 | 1,449,071 |
| Suncorp Group Ltd. | 188,572 | 1,751,749 |
| | | 4,932,896 |
| Materials 1.1% |
| Amcor Ltd. | 70,992 | 685,698 |
| Arrium Ltd. *(c) | 4,915,074 | 347,297 |
| BHP Billiton Ltd. | 412,632 | 6,767,469 |
| BlueScope Steel Ltd. | 182,620 | 575,540 |
| Boral Ltd. | 101,148 | 386,913 |
| Fortescue Metals Group Ltd. (c) | 202,008 | 298,495 |
| Incitec Pivot Ltd. | 182,985 | 510,993 |
| Newcrest Mining Ltd. * | 86,986 | 757,757 |
| Orica Ltd. | 58,782 | 687,654 |
| Rio Tinto Ltd. | 51,504 | 1,841,683 |
| | | 12,859,499 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| CSL Ltd. | 18,233 | 1,211,952 |
| Real Estate 0.2% |
| Lend Lease Group | 47,812 | 439,750 |
| Mirvac Group | 229,311 | 293,116 |
| Scentre Group | 67,477 | 197,919 |
| Stockland | 213,071 | 611,524 |
| Westfield Corp. | 126,273 | 916,126 |
| | | 2,458,435 |
| Telecommunication Services 0.1% |
| Telstra Corp., Ltd. | 451,494 | 1,729,964 |
| Transportation 0.1% |
| Asciano Ltd. | 83,166 | 484,318 |
| Aurizon Holdings Ltd. | 134,216 | 492,104 |
| Qantas Airways Ltd. * | 173,983 | 490,066 |
| Transurban Group | 44,186 | 327,420 |
| | | 1,793,908 |
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Utilities 0.1% |
| AGL Energy Ltd. | 64,450 | 764,290 |
| APA Group | 42,535 | 277,123 |
| DUET Group | 156,740 | 262,777 |
| | | 1,304,190 |
| | | 60,167,010 |
| Austria 0.4% |
| Banks 0.2% |
| Erste Group Bank AG * | 51,583 | 1,512,610 |
| Raiffeisen Bank International AG * | 33,899 | 534,919 |
| | | 2,047,529 |
| Energy 0.1% |
| OMV AG | 57,157 | 1,521,963 |
| Materials 0.1% |
| voestalpine AG | 19,418 | 702,080 |
| | | 4,271,572 |
| Belgium 1.0% |
| Banks 0.1% |
| KBC Groep N.V. | 12,651 | 769,202 |
| Diversified Financials 0.0% |
| Groupe Bruxelles Lambert S.A. | 4,011 | 325,572 |
| Food & Staples Retailing 0.2% |
| Colruyt S.A. | 9,225 | 456,298 |
| Delhaize Group | 23,253 | 2,157,618 |
| | | 2,613,916 |
| Food, Beverage & Tobacco 0.3% |
| Anheuser-Busch InBev N.V. | 29,896 | 3,567,328 |
| Insurance 0.1% |
| Ageas | 30,668 | 1,352,393 |
| Materials 0.1% |
| Solvay S.A. | 5,592 | 631,734 |
| Umicore S.A. | 18,657 | 792,140 |
| | | 1,423,874 |
| Media 0.0% |
| Telenet Group Holding N.V. * | 5,376 | 312,685 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| UCB S.A. | 5,676 | 490,622 |
| Telecommunication Services 0.1% |
| Proximus | 20,922 | 724,002 |
| | | 11,579,594 |
| Canada 6.3% |
| Automobiles & Components 0.2% |
| Magna International, Inc. | 42,627 | 2,248,056 |
| Banks 1.5% |
| Bank of Montreal (c) | 45,261 | 2,632,033 |
| Canadian Imperial Bank of Commerce | 29,261 | 2,244,029 |
| National Bank of Canada | 22,833 | 756,269 |
| Royal Bank of Canada | 84,744 | 4,845,755 |
| Security | Number
of Shares | Value
($) |
| The Bank of Nova Scotia | 76,315 | 3,588,719 |
| The Toronto-Dominion Bank | 96,652 | 3,967,788 |
| | | 18,034,593 |
| Capital Goods 0.1% |
| Bombardier, Inc., Class B | 260,553 | 282,950 |
| Finning International, Inc. | 20,617 | 329,531 |
| SNC-Lavalin Group, Inc. | 11,840 | 379,485 |
| | | 991,966 |
| Diversified Financials 0.1% |
| CI Financial Corp. | 13,415 | 320,089 |
| IGM Financial, Inc. | 11,334 | 327,642 |
| Onex Corp. | 9,115 | 552,644 |
| | | 1,200,375 |
| Energy 1.8% |
| ARC Resources Ltd. | 27,572 | 406,537 |
| Baytex Energy Corp. | 36,492 | 148,468 |
| Bonavista Energy Corp. | 64,722 | 144,531 |
| Cameco Corp. | 28,667 | 406,021 |
| Canadian Natural Resources Ltd. | 95,045 | 2,203,858 |
| Canadian Oil Sands Ltd. | 157,393 | 1,188,031 |
| Cenovus Energy, Inc. | 118,795 | 1,769,751 |
| Crescent Point Energy Corp. | 37,171 | 506,567 |
| Enbridge, Inc. | 33,958 | 1,451,447 |
| Encana Corp. | 184,897 | 1,406,948 |
| Enerplus Corp. (c) | 56,547 | 266,821 |
| Gibson Energy, Inc. | 16,253 | 216,649 |
| Husky Energy, Inc. | 52,495 | 709,381 |
| Imperial Oil Ltd. | 25,341 | 843,214 |
| Inter Pipeline Ltd. | 12,274 | 229,973 |
| Pacific Exploration & Production Corp. (c) | 116,614 | 227,413 |
| Pembina Pipeline Corp. | 14,478 | 363,943 |
| Pengrowth Energy Corp. (c) | 236,095 | 231,112 |
| Penn West Petroleum Ltd. (c) | 827,911 | 962,393 |
| Suncor Energy, Inc. | 166,359 | 4,950,313 |
| TransCanada Corp. | 52,572 | 1,769,018 |
| Vermilion Energy, Inc. | 7,654 | 269,318 |
| | | 20,671,707 |
| Food & Staples Retailing 0.4% |
| Alimentation Couche-Tard, Inc., Class B | 22,840 | 982,525 |
| Empire Co., Ltd., Class A | 30,000 | 628,403 |
| George Weston Ltd. | 7,211 | 607,277 |
| Loblaw Cos., Ltd. | 19,143 | 1,008,682 |
| Metro, Inc. | 34,394 | 983,475 |
| | | 4,210,362 |
| Food, Beverage & Tobacco 0.0% |
| Saputo, Inc. | 17,075 | 407,157 |
| Insurance 0.5% |
| Fairfax Financial Holdings Ltd. | 870 | 428,426 |
| Great-West Lifeco, Inc. | 17,554 | 465,296 |
| Intact Financial Corp. | 6,006 | 428,954 |
| Manulife Financial Corp. | 87,700 | 1,454,066 |
| Power Corp. of Canada | 44,944 | 1,010,175 |
| Power Financial Corp. | 23,314 | 576,788 |
| Sun Life Financial, Inc. | 33,675 | 1,135,720 |
| | | 5,499,425 |
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Materials 0.6% |
| Agrium, Inc. | 13,353 | 1,242,270 |
| Barrick Gold Corp. | 180,739 | 1,389,130 |
| First Quantum Minerals Ltd. | 51,070 | 272,613 |
| Goldcorp, Inc. | 56,720 | 725,700 |
| Kinross Gold Corp. * | 214,592 | 431,613 |
| Potash Corp. of Saskatchewan, Inc. | 64,964 | 1,315,576 |
| Teck Resources Ltd., Class B | 133,168 | 780,106 |
| Yamana Gold, Inc. | 154,978 | 338,970 |
| | | 6,495,978 |
| Media 0.1% |
| Quebecor, Inc., Class B | 11,625 | 273,733 |
| Shaw Communications, Inc., Class B | 30,055 | 624,039 |
| Yellow Pages Ltd. * | 36,379 | 471,013 |
| | | 1,368,785 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% |
| Valeant Pharmaceuticals International, Inc. * | 2,409 | 224,835 |
| Real Estate 0.1% |
| Brookfield Asset Management, Inc., Class A | 49,132 | 1,716,389 |
| Retailing 0.1% |
| Canadian Tire Corp., Ltd., Class A | 6,176 | 543,257 |
| RONA, Inc. | 33,450 | 349,184 |
| | | 892,441 |
| Software & Services 0.0% |
| CGI Group, Inc., Class A * | 8,592 | 319,145 |
| Technology Hardware & Equipment 0.1% |
| BlackBerry Ltd. * | 160,888 | 1,172,578 |
| Celestica, Inc. * | 31,066 | 348,293 |
| | | 1,520,871 |
| Telecommunication Services 0.3% |
| BCE, Inc. | 39,212 | 1,694,908 |
| Rogers Communications, Inc., Class B | 35,341 | 1,406,235 |
| TELUS Corp. | 25,871 | 863,422 |
| | | 3,964,565 |
| Transportation 0.2% |
| Canadian National Railway Co. | 36,117 | 2,206,076 |
| Canadian Pacific Railway Ltd. | 4,150 | 583,177 |
| | | 2,789,253 |
| Utilities 0.2% |
| Atco Ltd., Class I | 9,489 | 271,042 |
| Canadian Utilities Ltd., Class A | 13,293 | 349,709 |
| Emera, Inc. | 9,798 | 321,005 |
| Fortis, Inc. | 17,427 | 504,445 |
| TransAlta Corp. | 71,621 | 334,114 |
| | | 1,780,315 |
| | | 74,336,218 |
| Security | Number
of Shares | Value
($) |
| Denmark 0.8% |
| Banks 0.1% |
| Danske Bank A/S | 31,963 | 879,419 |
| Capital Goods 0.1% |
| FLSmidth & Co. A/S | 7,581 | 286,976 |
| Vestas Wind Systems A/S | 9,493 | 553,482 |
| | | 840,458 |
| Commercial & Professional Supplies 0.0% |
| ISS A/S | 3,280 | 115,378 |
| Food, Beverage & Tobacco 0.1% |
| Carlsberg A/S, Class B | 10,658 | 873,201 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.2% |
| Novo Nordisk A/S, Class B | 50,709 | 2,692,824 |
| Telecommunication Services 0.1% |
| TDC A/S | 165,850 | 867,046 |
| Transportation 0.2% |
| AP Moeller - Maersk A/S, Series A | 634 | 909,084 |
| AP Moeller - Maersk A/S, Series B | 981 | 1,447,780 |
| DSV A/S | 10,212 | 414,395 |
| | | 2,771,259 |
| | | 9,039,585 |
| Finland 1.0% |
| Automobiles & Components 0.0% |
| Nokian Renkaat Oyj | 10,948 | 413,030 |
| Capital Goods 0.1% |
| Kone Oyj, Class B | 13,286 | 566,655 |
| Metso Oyj | 17,276 | 422,953 |
| Wartsila Oyj Abp | 11,850 | 505,888 |
| | | 1,495,496 |
| Energy 0.1% |
| Neste Oyj | 19,633 | 478,702 |
| Food & Staples Retailing 0.1% |
| Kesko Oyj, B Shares | 22,438 | 716,318 |
| Insurance 0.1% |
| Sampo Oyj, A Shares | 22,659 | 1,107,517 |
| Materials 0.2% |
| Stora Enso Oyj, R Shares | 99,026 | 918,584 |
| UPM-Kymmene Oyj | 77,194 | 1,445,147 |
| | | 2,363,731 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% |
| Orion Oyj, Class B | 10,511 | 375,426 |
| Technology Hardware & Equipment 0.3% |
| Nokia Oyj | 465,376 | 3,461,868 |
| Telecommunication Services 0.0% |
| Elisa Oyj | 11,394 | 429,283 |
| Utilities 0.1% |
| Fortum Oyj | 50,870 | 762,841 |
| | | 11,604,212 |
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| France 11.0% |
| Automobiles & Components 0.4% |
| Faurecia | 7,895 | 312,078 |
| Peugeot S.A. * | 105,510 | 1,853,757 |
| Renault S.A. | 23,934 | 2,255,159 |
| Valeo S.A. | 5,355 | 826,947 |
| | | 5,247,941 |
| Banks 1.0% |
| BNP Paribas S.A. | 117,634 | 7,128,290 |
| Credit Agricole S.A. | 91,445 | 1,154,995 |
| Societe Generale S.A. | 81,493 | 3,784,796 |
| | | 12,068,081 |
| Capital Goods 1.7% |
| Airbus Group SE | 22,992 | 1,601,053 |
| Alstom S.A. * | 31,390 | 1,021,750 |
| Bouygues S.A. | 45,997 | 1,738,549 |
| Compagnie de Saint-Gobain | 94,307 | 3,947,790 |
| Eiffage S.A. | 7,144 | 445,082 |
| Legrand S.A. | 15,658 | 858,121 |
| Nexans S.A. * | 8,525 | 338,877 |
| Rexel S.A. | 62,719 | 855,977 |
| Safran S.A. | 14,446 | 1,097,232 |
| Schneider Electric SE | 44,784 | 2,701,153 |
| Thales S.A. | 7,092 | 512,690 |
| Vallourec S.A. | 44,213 | 489,407 |
| Vinci S.A. | 62,373 | 4,199,340 |
| Zodiac Aerospace | 8,929 | 225,249 |
| | | 20,032,270 |
| Commercial & Professional Supplies 0.1% |
| Bureau Veritas S.A. | 12,911 | 291,606 |
| Teleperformance | 4,558 | 357,716 |
| | | 649,322 |
| Consumer Durables & Apparel 0.4% |
| Christian Dior SE | 3,844 | 755,508 |
| Kering | 5,933 | 1,097,275 |
| LVMH Moet Hennessy Louis Vuitton SE | 14,721 | 2,740,601 |
| | | 4,593,384 |
| Consumer Services 0.1% |
| Accor S.A. | 14,550 | 722,545 |
| Sodexo S.A. | 7,037 | 625,531 |
| | | 1,348,076 |
| Diversified Financials 0.0% |
| Wendel S.A. | 2,815 | 337,451 |
| Energy 2.0% |
| CGG S.A. *(c) | 81,234 | 325,625 |
| Technip S.A. | 14,101 | 734,800 |
| Total S.A. | 466,331 | 22,551,216 |
| | | 23,611,641 |
| Food & Staples Retailing 0.4% |
| Carrefour S.A. | 118,536 | 3,862,611 |
| Casino Guichard Perrachon S.A. | 13,428 | 771,502 |
| Rallye S.A. | 17,004 | 314,420 |
| | | 4,948,533 |
| Security | Number
of Shares | Value
($) |
| Food, Beverage & Tobacco 0.4% |
| Danone S.A. | 43,120 | 2,996,842 |
| Pernod-Ricard S.A. | 11,477 | 1,350,490 |
| | | 4,347,332 |
| Health Care Equipment & Services 0.1% |
| Essilor International S.A. | 7,021 | 921,600 |
| Household & Personal Products 0.2% |
| L'Oreal S.A. | 10,595 | 1,931,517 |
| Insurance 0.5% |
| AXA S.A. | 179,728 | 4,796,601 |
| CNP Assurances | 16,345 | 233,149 |
| SCOR SE | 16,578 | 616,414 |
| | | 5,646,164 |
| Materials 0.3% |
| Air Liquide S.A. | 21,814 | 2,822,010 |
| Arkema S.A. | 9,153 | 668,889 |
| | | 3,490,899 |
| Media 0.5% |
| Eutelsat Communications S.A. | 12,193 | 401,876 |
| Publicis Groupe S.A. | 8,987 | 582,135 |
| Vivendi S.A. | 202,701 | 4,876,339 |
| | | 5,860,350 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.8% |
| Sanofi | 96,811 | 9,765,889 |
| Real Estate 0.1% |
| Klepierre | 8,027 | 380,157 |
| Unibail-Rodamco SE | 3,421 | 952,170 |
| | | 1,332,327 |
| Software & Services 0.1% |
| Atos SE | 6,059 | 482,336 |
| Cap Gemini S.A. | 12,926 | 1,149,328 |
| | | 1,631,664 |
| Technology Hardware & Equipment 0.1% |
| Alcatel-Lucent * | 148,259 | 601,833 |
| Telecommunication Services 0.8% |
| Orange S.A. | 516,562 | 9,107,863 |
| Transportation 0.1% |
| Air France-KLM *(c) | 115,396 | 844,240 |
| Utilities 0.9% |
| Electricite de France S.A. | 57,076 | 1,060,901 |
| Engie (c) | 383,538 | 6,712,220 |
| Suez Environnement Co. | 50,459 | 958,107 |
| Veolia Environnement S.A. | 93,100 | 2,162,735 |
| | | 10,893,963 |
| | | 129,212,340 |
| Germany 8.6% |
| Automobiles & Components 1.2% |
| Bayerische Motoren Werke AG | 35,365 | 3,622,379 |
| Continental AG | 6,438 | 1,545,955 |
| Daimler AG - Reg'd | 95,404 | 8,272,836 |
| Leoni AG | 4,637 | 189,414 |
| Volkswagen AG | 3,159 | 437,431 |
| | | 14,068,015 |
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Banks 0.1% |
| Commerzbank AG * | 88,839 | 977,027 |
| Capital Goods 1.0% |
| Brenntag AG | 13,309 | 803,641 |
| GEA Group AG | 11,388 | 456,381 |
| HOCHTIEF AG | 4,144 | 385,528 |
| Kloeckner & Co. SE (c) | 39,705 | 353,679 |
| MAN SE | 3,136 | 326,778 |
| MTU Aero Engines AG | 3,676 | 340,062 |
| OSRAM Licht AG | 9,471 | 556,556 |
| Rheinmetall AG | 6,379 | 401,219 |
| Siemens AG - Reg'd | 76,537 | 7,687,693 |
| | | 11,311,537 |
| Commercial & Professional Supplies 0.0% |
| Bilfinger SE (c) | 10,560 | 473,270 |
| Consumer Durables & Apparel 0.2% |
| adidas AG | 19,801 | 1,774,535 |
| Hugo Boss AG | 2,252 | 231,565 |
| | | 2,006,100 |
| Consumer Services 0.1% |
| TUI AG | 41,332 | 767,694 |
| Diversified Financials 0.4% |
| Deutsche Bank AG - Reg'd | 125,708 | 3,518,416 |
| Deutsche Boerse AG | 9,905 | 913,284 |
| | | 4,431,700 |
| Food & Staples Retailing 0.1% |
| METRO AG | 52,822 | 1,625,105 |
| Food, Beverage & Tobacco 0.0% |
| Suedzucker AG (c) | 23,894 | 445,920 |
| Health Care Equipment & Services 0.2% |
| Fresenius Medical Care AG & Co. KGaA | 11,716 | 1,054,528 |
| Fresenius SE & Co. KGaA | 20,895 | 1,535,415 |
| | | 2,589,943 |
| Household & Personal Products 0.1% |
| Beiersdorf AG | 4,579 | 434,895 |
| Henkel AG & Co. KGaA | 5,254 | 484,959 |
| | | 919,854 |
| Insurance 0.9% |
| Allianz SE - Reg'd | 38,556 | 6,749,911 |
| Hannover Rueck SE | 4,455 | 515,043 |
| Muenchener Rueckversicherungs-Gesellschaft AG - Reg'd | 16,101 | 3,210,441 |
| | | 10,475,395 |
| Materials 1.4% |
| Aurubis AG | 10,737 | 717,230 |
| BASF SE | 110,002 | 9,011,785 |
| HeidelbergCement AG | 16,552 | 1,232,620 |
| K&S AG - Reg'd | 25,638 | 647,188 |
| LANXESS AG | 12,762 | 684,844 |
| Linde AG | 11,908 | 2,065,507 |
| Salzgitter AG | 15,427 | 444,871 |
| Symrise AG | 4,667 | 307,166 |
| ThyssenKrupp AG | 56,814 | 1,144,797 |
| | | 16,256,008 |
| Security | Number
of Shares | Value
($) |
| Media 0.1% |
| ProSiebenSat.1 Media SE | 15,628 | 844,468 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.5% |
| Bayer AG - Reg'd | 44,027 | 5,870,358 |
| Merck KGaA | 4,832 | 471,741 |
| | | 6,342,099 |
| Semiconductors & Semiconductor Equipment 0.1% |
| Infineon Technologies AG | 55,088 | 678,570 |
| Software & Services 0.2% |
| SAP SE | 37,539 | 2,959,389 |
| Telecommunication Services 0.8% |
| Deutsche Telekom AG - Reg'd | 463,033 | 8,673,342 |
| Freenet AG | 13,490 | 455,068 |
| | | 9,128,410 |
| Transportation 0.4% |
| Deutsche Lufthansa AG - Reg'd * | 63,605 | 939,302 |
| Deutsche Post AG - Reg'd | 110,446 | 3,280,949 |
| | | 4,220,251 |
| Utilities 0.8% |
| E.ON SE | 669,128 | 7,058,734 |
| RWE AG | 207,953 | 2,889,977 |
| | | 9,948,711 |
| | | 100,469,466 |
| Hong Kong 1.0% |
| Banks 0.1% |
| Hang Seng Bank Ltd. | 35,900 | 658,615 |
| Capital Goods 0.2% |
| Jardine Matheson Holdings Ltd. | 17,300 | 940,711 |
| Jardine Strategic Holdings Ltd. | 11,400 | 343,146 |
| Noble Group Ltd. (c) | 2,562,879 | 920,174 |
| | | 2,204,031 |
| Consumer Durables & Apparel 0.1% |
| Li & Fung Ltd. | 836,000 | 677,714 |
| Consumer Services 0.1% |
| Galaxy Entertainment Group Ltd. | 55,000 | 187,873 |
| Sands China Ltd. | 99,200 | 357,215 |
| SJM Holdings Ltd. | 243,000 | 201,732 |
| | | 746,820 |
| Diversified Financials 0.0% |
| Hong Kong Exchanges & Clearing Ltd. | 11,700 | 306,175 |
| Insurance 0.1% |
| AIA Group Ltd. | 222,800 | 1,306,350 |
| Real Estate 0.2% |
| Hongkong Land Holdings Ltd. | 35,000 | 262,437 |
| Link REIT | 56,500 | 337,569 |
| New World Development Co., Ltd. | 296,000 | 315,715 |
| Sun Hung Kai Properties Ltd. | 40,000 | 534,312 |
| Swire Pacific Ltd., Class A | 56,000 | 646,998 |
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| The Wharf Holdings Ltd. | 71,000 | 422,481 |
| Wheelock & Co., Ltd. | 50,000 | 233,056 |
| | | 2,752,568 |
| Retailing 0.1% |
| Esprit Holdings Ltd. | 635,984 | 714,509 |
| Transportation 0.0% |
| MTR Corp., Ltd. | 64,000 | 289,936 |
| Utilities 0.1% |
| CLP Holdings Ltd. | 140,500 | 1,221,439 |
| Hong Kong & China Gas Co., Ltd. | 184,308 | 373,691 |
| Power Assets Holdings Ltd. | 38,500 | 382,937 |
| | | 1,978,067 |
| | | 11,634,785 |
| Ireland 0.6% |
| Banks 0.0% |
| Bank of Ireland * | 1,321,901 | 491,513 |
| Commercial & Professional Supplies 0.1% |
| Experian plc | 51,940 | 885,061 |
| Food, Beverage & Tobacco 0.0% |
| Kerry Group plc, Class A | 6,378 | 517,285 |
| Materials 0.3% |
| CRH plc | 87,176 | 2,386,079 |
| Smurfit Kappa Group plc | 21,852 | 621,886 |
| | | 3,007,965 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| Shire plc | 8,152 | 617,358 |
| Technology Hardware & Equipment 0.1% |
| Seagate Technology plc | 31,417 | 1,195,731 |
| | | 6,714,913 |
| Israel 0.4% |
| Banks 0.1% |
| Bank Hapoalim B.M. | 49,931 | 259,909 |
| Bank Leumi Le-Israel B.M. * | 92,928 | 352,604 |
| | | 612,513 |
| Materials 0.0% |
| Israel Chemicals Ltd. | 77,401 | 429,170 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.2% |
| Teva Pharmaceutical Industries Ltd. | 50,622 | 3,005,581 |
| Software & Services 0.0% |
| Check Point Software Technologies Ltd. * | 4,000 | 339,760 |
| Telecommunication Services 0.1% |
| Bezeq The Israeli Telecommunication Corp., Ltd. | 358,893 | 769,102 |
| | | 5,156,126 |
| Italy 3.8% |
| Automobiles & Components 0.0% |
| Pirelli & C. S.p.A. | 23,245 | 382,171 |
| Security | Number
of Shares | Value
($) |
| Banks 1.0% |
| Banca Monte dei Paschi di Siena S.p.A. * | 289,665 | 531,746 |
| Banca Popolare dell'Emilia Romagna SC | 48,481 | 391,246 |
| Banco Popolare SC * | 32,748 | 489,360 |
| Intesa Sanpaolo S.p.A. | 1,356,796 | 4,720,368 |
| UniCredit S.p.A. | 841,112 | 5,431,115 |
| Unione di Banche Italiane S.p.A. | 91,479 | 684,422 |
| | | 12,248,257 |
| Capital Goods 0.1% |
| Finmeccanica S.p.A. * | 52,329 | 684,082 |
| Prysmian S.p.A. | 20,459 | 441,818 |
| | | 1,125,900 |
| Consumer Durables & Apparel 0.0% |
| Luxottica Group S.p.A. | 4,809 | 337,112 |
| Diversified Financials 0.1% |
| EXOR S.p.A. | 27,671 | 1,372,318 |
| Mediobanca S.p.A. | 35,125 | 353,244 |
| | | 1,725,562 |
| Energy 1.1% |
| Eni S.p.A. | 718,833 | 11,738,720 |
| Saipem S.p.A. *(c) | 74,342 | 698,426 |
| | | 12,437,146 |
| Insurance 0.2% |
| Assicurazioni Generali S.p.A. | 97,865 | 1,854,205 |
| Media 0.1% |
| Mediaset S.p.A. | 128,322 | 651,312 |
| Telecommunication Services 0.3% |
| Telecom Italia S.p.A. * | 2,753,808 | 3,841,786 |
| Transportation 0.1% |
| Atlantia S.p.A. | 27,805 | 770,013 |
| Utilities 0.8% |
| A2A S.p.A. | 268,901 | 368,347 |
| Enel S.p.A. | 1,550,674 | 7,150,679 |
| Snam S.p.A. | 180,310 | 933,104 |
| Terna - Rete Elettrica Nationale S.p.A. | 97,311 | 494,954 |
| | | 8,947,084 |
| | | 44,320,548 |
| Japan 22.1% |
| Automobiles & Components 3.0% |
| Aisin Seiki Co., Ltd. | 29,800 | 1,182,732 |
| Bridgestone Corp. | 67,300 | 2,467,951 |
| Daihatsu Motor Co., Ltd. | 41,000 | 502,238 |
| Denso Corp. | 41,700 | 1,944,165 |
| Fuji Heavy Industries Ltd. | 25,400 | 982,310 |
| Honda Motor Co., Ltd. | 203,400 | 6,728,561 |
| Isuzu Motors Ltd. | 56,800 | 663,397 |
| Mazda Motor Corp. | 41,900 | 822,466 |
| Mitsubishi Motors Corp. | 40,900 | 362,264 |
| NGK Spark Plug Co., Ltd. | 10,000 | 244,050 |
| NHK Spring Co., Ltd. | 35,200 | 358,262 |
| Nissan Motor Co., Ltd. | 337,400 | 3,497,562 |
| Stanley Electric Co., Ltd. | 13,900 | 265,498 |
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Sumitomo Electric Industries Ltd. | 114,300 | 1,559,960 |
| Sumitomo Rubber Industries Ltd. | 23,600 | 351,014 |
| Suzuki Motor Corp. | 38,000 | 1,244,252 |
| The Yokohama Rubber Co., Ltd. | 12,900 | 247,985 |
| Toyoda Gosei Co., Ltd. | 12,200 | 279,649 |
| Toyota Industries Corp. | 13,400 | 704,167 |
| Toyota Motor Corp. | 173,200 | 10,610,999 |
| Yamaha Motor Co., Ltd. | 23,300 | 522,443 |
| | | 35,541,925 |
| Banks 1.3% |
| Mitsubishi UFJ Financial Group, Inc. | 814,834 | 5,269,963 |
| Mizuho Financial Group, Inc. | 1,719,916 | 3,542,759 |
| North Pacific Bank Ltd. | 62,400 | 239,192 |
| Resona Holdings, Inc. | 176,358 | 933,167 |
| Sumitomo Mitsui Financial Group, Inc. | 106,510 | 4,249,072 |
| Sumitomo Mitsui Trust Holdings, Inc. | 181,000 | 694,777 |
| The Bank of Yokohama Ltd. | 61,000 | 380,708 |
| | | 15,309,638 |
| Capital Goods 3.0% |
| Asahi Glass Co., Ltd. | 231,000 | 1,322,588 |
| Daikin Industries Ltd. | 14,200 | 912,364 |
| Ebara Corp. | 62,000 | 268,617 |
| FANUC Corp. | 5,600 | 988,072 |
| Furukawa Electric Co., Ltd. | 215,000 | 393,455 |
| Hanwa Co., Ltd. | 86,000 | 355,637 |
| Hino Motors Ltd. | 23,400 | 267,769 |
| Hitachi Construction Machinery Co., Ltd. | 15,100 | 233,851 |
| IHI Corp. | 133,000 | 375,248 |
| ITOCHU Corp. | 179,300 | 2,243,577 |
| JGC Corp. | 29,000 | 460,286 |
| JTEKT Corp. | 23,500 | 405,066 |
| Kajima Corp. | 100,000 | 572,248 |
| Kawasaki Heavy Industries Ltd. | 122,000 | 489,682 |
| Kinden Corp. | 28,000 | 363,787 |
| Komatsu Ltd. | 94,200 | 1,548,411 |
| Kubota Corp. | 54,000 | 837,078 |
| LIXIL Group Corp. | 34,600 | 740,788 |
| Makita Corp. | 8,800 | 482,177 |
| Marubeni Corp. | 272,600 | 1,575,090 |
| Mitsubishi Corp. | 171,700 | 3,121,606 |
| Mitsubishi Electric Corp. | 197,000 | 2,051,703 |
| Mitsubishi Heavy Industries Ltd. | 332,000 | 1,673,767 |
| Mitsui & Co., Ltd. | 254,400 | 3,226,532 |
| Mitsui Engineering & Shipbuilding Co., Ltd. | 174,000 | 267,876 |
| Nagase & Co., Ltd. | 27,300 | 338,562 |
| Nidec Corp. | 7,500 | 565,170 |
| NSK Ltd. | 30,200 | 357,175 |
| Obayashi Corp. | 66,000 | 578,824 |
| Shimizu Corp. | 62,000 | 542,847 |
| SMC Corp. | 2,000 | 514,484 |
| Sojitz Corp. | 516,600 | 1,136,260 |
| Security | Number
of Shares | Value
($) |
| Sumitomo Corp. | 180,800 | 1,977,460 |
| Sumitomo Heavy Industries Ltd. | 85,000 | 383,011 |
| Taisei Corp. | 91,000 | 591,365 |
| Toshiba Corp. * | 679,000 | 1,915,498 |
| TOTO Ltd. | 10,500 | 356,006 |
| Toyota Tsusho Corp. | 47,300 | 1,083,267 |
| | | 35,517,204 |
| Commercial & Professional Supplies 0.3% |
| Dai Nippon Printing Co., Ltd. | 128,000 | 1,323,786 |
| Recruit Holdings Co., Ltd. | 11,600 | 372,842 |
| Secom Co., Ltd. | 16,000 | 1,067,281 |
| Toppan Printing Co., Ltd. | 116,000 | 1,040,226 |
| | | 3,804,135 |
| Consumer Durables & Apparel 1.0% |
| Bandai Namco Holdings, Inc. | 23,100 | 567,803 |
| Iida Group Holdings Co., Ltd. | 8,300 | 155,566 |
| Nikon Corp. | 56,300 | 728,323 |
| Panasonic Corp. | 276,950 | 3,249,382 |
| Sega Sammy Holdings, Inc. | 29,100 | 306,447 |
| Sekisui Chemical Co., Ltd. | 50,000 | 589,950 |
| Sekisui House Ltd. | 71,600 | 1,191,883 |
| Sharp Corp. *(c) | 503,000 | 551,328 |
| Shimano, Inc. | 2,400 | 378,164 |
| Sony Corp. | 105,300 | 2,993,195 |
| Sumitomo Forestry Co., Ltd. | 24,900 | 297,819 |
| Yamaha Corp. | 14,100 | 349,945 |
| | | 11,359,805 |
| Consumer Services 0.1% |
| Benesse Holdings, Inc. | 10,400 | 278,816 |
| Oriental Land Co., Ltd. | 7,100 | 431,302 |
| | | 710,118 |
| Diversified Financials 0.2% |
| Daiwa Securities Group, Inc. | 48,000 | 328,203 |
| Nomura Holdings, Inc. | 125,600 | 790,067 |
| ORIX Corp. | 64,600 | 943,404 |
| | | 2,061,674 |
| Energy 0.7% |
| Cosmo Energy Holdings Co., Ltd. * | 32,300 | 439,054 |
| Idemitsu Kosan Co., Ltd. | 62,900 | 1,031,525 |
| Inpex Corp. | 159,300 | 1,518,447 |
| JX Holdings, Inc. | 1,049,400 | 4,120,636 |
| Showa Shell Sekiyu K.K. | 46,800 | 413,078 |
| TonenGeneral Sekiyu K.K. | 64,000 | 664,939 |
| | | 8,187,679 |
| Food & Staples Retailing 0.6% |
| Aeon Co., Ltd. | 157,100 | 2,327,633 |
| Lawson, Inc. | 6,100 | 451,844 |
| Seven & i Holdings Co., Ltd. | 91,700 | 4,165,455 |
| UNY Group Holdings Co., Ltd. | 84,900 | 469,382 |
| | | 7,414,314 |
| Food, Beverage & Tobacco 0.9% |
| Ajinomoto Co., Inc. | 46,000 | 1,024,603 |
| Asahi Group Holdings Ltd. | 32,400 | 999,417 |
| Coca-Cola West Co., Ltd. | 19,200 | 388,270 |
| Japan Tobacco, Inc. | 71,100 | 2,460,898 |
| Kewpie Corp. | 14,100 | 322,056 |
| Kirin Holdings Co., Ltd. | 121,400 | 1,719,426 |
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| MEIJI Holdings Co., Ltd. | 10,800 | 851,037 |
| NH Foods Ltd. | 28,000 | 584,038 |
| Nisshin Seifun Group, Inc. | 28,030 | 428,423 |
| Nissin Foods Holdings Co., Ltd. | 6,200 | 286,614 |
| Suntory Beverage & Food Ltd. | 8,400 | 339,676 |
| Toyo Suisan Kaisha Ltd. | 9,500 | 350,054 |
| Yamazaki Baking Co., Ltd. | 22,000 | 423,689 |
| | | 10,178,201 |
| Health Care Equipment & Services 0.4% |
| Alfresa Holdings Corp. | 43,200 | 828,377 |
| Hoya Corp. | 28,700 | 1,184,356 |
| Medipal Holdings Corp. | 47,500 | 828,973 |
| Olympus Corp. | 9,000 | 303,582 |
| Suzuken Co., Ltd. | 22,030 | 843,174 |
| Terumo Corp. | 17,700 | 525,160 |
| | | 4,513,622 |
| Household & Personal Products 0.2% |
| Kao Corp. | 34,800 | 1,786,608 |
| Shiseido Co., Ltd. | 35,900 | 852,771 |
| Unicharm Corp. | 15,500 | 331,022 |
| | | 2,970,401 |
| Insurance 0.4% |
| MS&AD Insurance Group Holdings, Inc. | 28,190 | 831,058 |
| Sompo Japan Nipponkoa Holdings, Inc. | 26,200 | 822,634 |
| T&D Holdings, Inc. | 36,350 | 477,665 |
| The Dai-ichi Life Insurance Co., Ltd. | 49,400 | 854,585 |
| Tokio Marine Holdings, Inc. | 37,600 | 1,448,791 |
| | | 4,434,733 |
| Materials 1.8% |
| Air Water, Inc. | 20,000 | 327,255 |
| Asahi Kasei Corp. | 142,000 | 871,401 |
| Daicel Corp. | 26,400 | 348,860 |
| Denka Co., Ltd. | 74,000 | 343,398 |
| DIC Corp. | 134,000 | 362,719 |
| Hitachi Chemical Co., Ltd. | 13,800 | 218,145 |
| JFE Holdings, Inc. | 89,200 | 1,402,270 |
| JSR Corp. | 19,400 | 306,390 |
| Kaneka Corp. | 53,000 | 469,964 |
| Kobe Steel Ltd. | 538,000 | 679,371 |
| Kuraray Co., Ltd. | 38,100 | 469,920 |
| Mitsubishi Chemical Holdings Corp. | 240,100 | 1,496,196 |
| Mitsubishi Materials Corp. | 165,000 | 575,575 |
| Mitsui Chemicals, Inc. | 189,000 | 714,638 |
| Mitsui Mining & Smelting Co., Ltd. | 128,000 | 246,050 |
| Nippon Paper Industries Co., Ltd. | 27,400 | 507,850 |
| Nippon Steel & Sumitomo Metal Corp. | 93,200 | 1,889,401 |
| Nitto Denko Corp. | 13,700 | 878,504 |
| Oji Holdings Corp. | 168,000 | 870,072 |
| Shin-Etsu Chemical Co., Ltd. | 28,600 | 1,700,818 |
| Showa Denko K.K. | 353,000 | 444,594 |
| Sumitomo Chemical Co., Ltd. | 196,000 | 1,122,728 |
| Security | Number
of Shares | Value
($) |
| Sumitomo Metal Mining Co., Ltd. | 57,000 | 707,165 |
| Taiheiyo Cement Corp. | 128,000 | 421,981 |
| Taiyo Nippon Sanso Corp. | 26,700 | 275,213 |
| Teijin Ltd. | 179,000 | 631,879 |
| Toray Industries, Inc. | 132,000 | 1,151,595 |
| Tosoh Corp. | 72,000 | 365,670 |
| Toyo Seikan Group Holdings Ltd. | 37,800 | 730,420 |
| Ube Industries Ltd. | 270,000 | 566,935 |
| | | 21,096,977 |
| Media 0.1% |
| Dentsu, Inc. | 18,501 | 1,040,092 |
| Hakuhodo DY Holdings, Inc. | 43,100 | 452,845 |
| | | 1,492,937 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.9% |
| Astellas Pharma, Inc. | 124,500 | 1,807,051 |
| Chugai Pharmaceutical Co., Ltd. | 10,700 | 344,432 |
| Daiichi Sankyo Co., Ltd. | 74,000 | 1,453,289 |
| Eisai Co., Ltd. | 17,200 | 1,075,853 |
| Kyowa Hakko Kirin Co., Ltd. | 24,000 | 395,592 |
| Mitsubishi Tanabe Pharma Corp. | 18,200 | 307,748 |
| Ono Pharmaceutical Co., Ltd. | 3,100 | 424,683 |
| Otsuka Holdings Co., Ltd. | 38,400 | 1,277,968 |
| Shionogi & Co., Ltd. | 13,300 | 545,519 |
| Takeda Pharmaceutical Co., Ltd. | 67,800 | 3,310,827 |
| | | 10,942,962 |
| Real Estate 0.4% |
| Daito Trust Construction Co., Ltd. | 7,200 | 779,373 |
| Daiwa House Industry Co., Ltd. | 48,700 | 1,278,389 |
| Mitsubishi Estate Co., Ltd. | 40,000 | 857,859 |
| Mitsui Fudosan Co., Ltd. | 37,000 | 1,006,905 |
| Sumitomo Realty & Development Co., Ltd. | 16,500 | 543,318 |
| Tokyu Fudosan Holdings Corp. | 18,400 | 129,336 |
| | | 4,595,180 |
| Retailing 0.5% |
| EDION Corp. (c) | 49,500 | 371,313 |
| Fast Retailing Co., Ltd. | 1,600 | 584,452 |
| Isetan Mitsukoshi Holdings Ltd. | 41,700 | 668,943 |
| J. Front Retailing Co., Ltd. | 33,400 | 548,504 |
| K's Holdings Corp. | 13,400 | 472,894 |
| Marui Group Co., Ltd. | 29,800 | 384,920 |
| Nitori Holdings Co., Ltd. | 5,000 | 389,895 |
| Shimamura Co., Ltd. | 5,300 | 595,249 |
| Takashimaya Co., Ltd. | 48,000 | 429,082 |
| Yamada Denki Co., Ltd. | 307,500 | 1,383,332 |
| | | 5,828,584 |
| Semiconductors & Semiconductor Equipment 0.1% |
| Rohm Co., Ltd. | 8,400 | 415,225 |
| Tokyo Electron Ltd. | 11,500 | 689,757 |
| | | 1,104,982 |
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Software & Services 0.4% |
| Fujitsu Ltd. | 397,000 | 1,876,467 |
| Konami Holdings Corp. | 16,300 | 370,365 |
| Nintendo Co., Ltd. | 11,530 | 1,843,262 |
| Nomura Research Institute Ltd. | 8,910 | 364,155 |
| NTT Data Corp. | 15,800 | 786,286 |
| | | 5,240,535 |
| Technology Hardware & Equipment 1.7% |
| Brother Industries Ltd. | 29,300 | 374,496 |
| Canon, Inc. | 143,600 | 4,288,191 |
| FUJIFILM Holdings Corp. | 58,900 | 2,349,446 |
| Hitachi Ltd. | 775,000 | 4,470,812 |
| Ibiden Co., Ltd. | 23,200 | 319,676 |
| Keyence Corp. | 673 | 350,369 |
| Konica Minolta, Inc. | 65,300 | 670,919 |
| Kyocera Corp. | 32,000 | 1,447,509 |
| Murata Manufacturing Co., Ltd. | 6,700 | 953,755 |
| NEC Corp. | 489,000 | 1,508,556 |
| Nippon Electric Glass Co., Ltd. | 111,000 | 543,164 |
| Omron Corp. | 14,300 | 473,514 |
| Ricoh Co., Ltd. | 124,900 | 1,346,159 |
| Seiko Epson Corp. | 26,300 | 401,737 |
| TDK Corp. | 12,500 | 796,205 |
| | | 20,294,508 |
| Telecommunication Services 1.5% |
| KDDI Corp. | 177,200 | 4,287,941 |
| Nippon Telegraph & Telephone Corp. | 170,608 | 6,254,722 |
| NTT DOCOMO, Inc. | 186,500 | 3,632,178 |
| SoftBank Group Corp. | 53,200 | 2,980,685 |
| | | 17,155,526 |
| Transportation 1.3% |
| ANA Holdings, Inc. | 151,000 | 450,916 |
| Central Japan Railway Co. | 11,800 | 2,152,477 |
| East Japan Railway Co. | 32,518 | 3,091,666 |
| Hankyu Hanshin Holdings, Inc. | 98,000 | 638,384 |
| Kamigumi Co., Ltd. | 31,000 | 266,341 |
| Kawasaki Kisen Kaisha Ltd. | 182,000 | 408,611 |
| Keio Corp. | 36,000 | 292,996 |
| Kintetsu Group Holdings Co., Ltd. | 116,000 | 448,466 |
| Mitsui O.S.K. Lines Ltd. | 254,000 | 678,285 |
| Nagoya Railroad Co., Ltd. | 89,000 | 367,819 |
| Nippon Express Co., Ltd. | 169,000 | 870,635 |
| Nippon Yusen K.K. | 352,000 | 920,978 |
| Odakyu Electric Railway Co., Ltd. | 32,000 | 312,791 |
| Seino Holdings Co., Ltd. | 32,000 | 379,784 |
| Tobu Railway Co., Ltd. | 86,000 | 415,957 |
| Tokyu Corp. | 90,000 | 729,787 |
| West Japan Railway Co. | 19,763 | 1,388,484 |
| Yamato Holdings Co., Ltd. | 46,800 | 921,225 |
| | | 14,735,602 |
| Utilities 1.3% |
| Chubu Electric Power Co., Inc. | 138,200 | 2,125,930 |
| Electric Power Development Co., Ltd. | 14,800 | 487,896 |
| Security | Number
of Shares | Value
($) |
| Hokkaido Electric Power Co., Inc. * | 40,700 | 434,781 |
| Hokuriku Electric Power Co. | 32,400 | 483,274 |
| Kyushu Electric Power Co., Inc. * | 75,400 | 909,982 |
| Osaka Gas Co., Ltd. | 284,000 | 1,118,524 |
| Shikoku Electric Power Co., Inc. | 28,200 | 478,754 |
| The Chugoku Electric Power Co., Inc. | 51,100 | 772,197 |
| The Kansai Electric Power Co., Inc. * | 148,000 | 1,896,283 |
| Toho Gas Co., Ltd. | 55,000 | 336,840 |
| Tohoku Electric Power Co., Inc. | 77,900 | 1,093,750 |
| Tokyo Electric Power Co., Inc. * | 543,100 | 3,704,716 |
| Tokyo Gas Co., Ltd. | 290,000 | 1,435,169 |
| | | 15,278,096 |
| | | 259,769,338 |
| Luxembourg 0.4% |
| Energy 0.1% |
| Tenaris S.A. | 50,309 | 633,607 |
| Materials 0.2% |
| ArcelorMittal | 395,204 | 2,206,924 |
| Media 0.1% |
| RTL Group S.A. * | 4,587 | 396,797 |
| SES S.A. | 17,484 | 515,872 |
| | | 912,669 |
| Telecommunication Services 0.0% |
| Millicom International Cellular S.A. SDR | 8,525 | 475,239 |
| | | 4,228,439 |
| Netherlands 5.5% |
| Banks 0.2% |
| ING Groep N.V. CVA | 193,408 | 2,814,835 |
| Capital Goods 0.3% |
| Boskalis Westminster N.V. | 6,775 | 328,822 |
| Koninklijke Philips N.V. | 101,074 | 2,724,828 |
| | | 3,053,650 |
| Commercial & Professional Supplies 0.1% |
| Randstad Holding N.V. | 14,058 | 838,367 |
| Diversified Financials 0.0% |
| SNS Reaal N.V. *(a)(b)(c) | 124,822 | — |
| Energy 3.2% |
| Fugro N.V. CVA * | 17,876 | 339,089 |
| Royal Dutch Shell plc, A Shares | 884,646 | 23,173,671 |
| Royal Dutch Shell plc, B Shares | 550,217 | 14,407,369 |
| | | 37,920,129 |
| Food & Staples Retailing 0.3% |
| Koninklijke Ahold N.V. | 156,237 | 3,178,291 |
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Food, Beverage & Tobacco 0.2% |
| Heineken Holding N.V. | 10,671 | 852,537 |
| Heineken N.V. | 12,705 | 1,157,208 |
| | | 2,009,745 |
| Household & Personal Products 0.3% |
| Unilever N.V. CVA | 89,436 | 4,044,083 |
| Insurance 0.1% |
| Aegon N.V. | 157,889 | 968,881 |
| Delta Lloyd N.V. | 24,904 | 196,244 |
| | | 1,165,125 |
| Materials 0.3% |
| Akzo Nobel N.V. | 26,537 | 1,876,972 |
| Koninklijke DSM N.V. | 21,478 | 1,144,939 |
| | | 3,021,911 |
| Media 0.1% |
| RELX N.V. | 38,903 | 663,560 |
| Wolters Kluwer N.V. | 19,889 | 672,194 |
| | | 1,335,754 |
| Semiconductors & Semiconductor Equipment 0.1% |
| ASML Holding N.V. | 6,737 | 624,932 |
| NXP Semiconductors N.V. * | 2,617 | 205,042 |
| | | 829,974 |
| Software & Services 0.0% |
| Gemalto N.V. | 4,101 | 256,761 |
| Telecommunication Services 0.2% |
| Koninklijke (Royal) KPN N.V. | 643,721 | 2,358,723 |
| VimpelCom Ltd. ADR | 29,956 | 113,234 |
| | | 2,471,957 |
| Transportation 0.1% |
| PostNL N.V. * | 82,920 | 341,608 |
| TNT Express N.V. | 88,285 | 741,861 |
| | | 1,083,469 |
| | | 64,024,051 |
| New Zealand 0.1% |
| Materials 0.0% |
| Fletcher Building Ltd. | 83,548 | 420,801 |
| Telecommunication Services 0.1% |
| Spark New Zealand Ltd. | 347,279 | 787,706 |
| Utilities 0.0% |
| Meridian Energy Ltd. | 220,943 | 331,992 |
| | | 1,540,499 |
| Norway 0.9% |
| Banks 0.1% |
| DNB A.S.A. | 64,834 | 825,463 |
| Energy 0.5% |
| Petroleum Geo-Services A.S.A. (c) | 76,782 | 321,275 |
| Statoil A.S.A. | 331,631 | 5,360,569 |
| | | 5,681,844 |
| Food, Beverage & Tobacco 0.1% |
| Marine Harvest A.S.A. * | 25,848 | 346,930 |
| Orkla A.S.A. | 99,589 | 847,510 |
| | | 1,194,440 |
| Security | Number
of Shares | Value
($) |
| Materials 0.1% |
| Norsk Hydro A.S.A. | 173,842 | 622,664 |
| Yara International A.S.A. | 22,072 | 1,002,642 |
| | | 1,625,306 |
| Telecommunication Services 0.1% |
| Telenor A.S.A. | 75,811 | 1,428,139 |
| | | 10,755,192 |
| Portugal 0.3% |
| Banks 0.0% |
| Banco Comercial Portugues S.A., Class R * | 3,981,767 | 228,245 |
| Energy 0.1% |
| Galp Energia, SGPS, S.A. | 60,275 | 650,667 |
| Food & Staples Retailing 0.0% |
| Jeronimo Martins, SGPS, S.A. | 23,875 | 335,127 |
| Telecommunication Services 0.1% |
| Pharol SGPS S.A. * | 1,565,434 | 661,029 |
| Utilities 0.1% |
| EDP - Energias de Portugal S.A. | 367,640 | 1,358,605 |
| | | 3,233,673 |
| Singapore 0.8% |
| Banks 0.3% |
| DBS Group Holdings Ltd. | 84,056 | 1,033,472 |
| Oversea-Chinese Banking Corp., Ltd. | 146,997 | 944,875 |
| United Overseas Bank Ltd. | 67,852 | 985,264 |
| | | 2,963,611 |
| Capital Goods 0.1% |
| Keppel Corp., Ltd. | 138,200 | 695,657 |
| Sembcorp Industries Ltd. | 121,400 | 309,346 |
| | | 1,005,003 |
| Food, Beverage & Tobacco 0.1% |
| Golden Agri-Resources Ltd. | 997,800 | 276,912 |
| Wilmar International Ltd. | 233,266 | 519,802 |
| | | 796,714 |
| Media 0.0% |
| Singapore Press Holdings Ltd. | 129,700 | 368,866 |
| Real Estate 0.0% |
| CapitaLand Ltd. | 126,800 | 279,710 |
| Retailing 0.0% |
| Jardine Cycle & Carriage Ltd. | 13,500 | 312,563 |
| Technology Hardware & Equipment 0.1% |
| Flextronics International Ltd. * | 77,565 | 883,465 |
| Venture Corp., Ltd. | 53,500 | 315,287 |
| | | 1,198,752 |
| Telecommunication Services 0.1% |
| Singapore Telecommunications Ltd. | 579,186 | 1,645,614 |
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Transportation 0.1% |
| ComfortDelGro Corp., Ltd. | 149,000 | 322,378 |
| Hutchison Port Holdings Trust, Class U | 613,600 | 339,846 |
| Singapore Airlines Ltd. | 75,670 | 582,147 |
| | | 1,244,371 |
| | | 9,815,204 |
| Spain 4.1% |
| Banks 1.7% |
| Banco Bilbao Vizcaya Argentaria S.A. | 621,803 | 5,349,751 |
| Banco de Sabadell S.A. | 282,612 | 545,244 |
| Banco Popular Espanol S.A. | 210,479 | 800,260 |
| Banco Santander S.A. | 2,253,845 | 12,590,425 |
| CaixaBank S.A. | 159,280 | 610,067 |
| | | 19,895,747 |
| Capital Goods 0.1% |
| ACS, Actividades de Construccion y Servicios S.A. | 30,431 | 1,032,475 |
| Ferrovial S.A. | 40,365 | 1,018,305 |
| | | 2,050,780 |
| Energy 0.3% |
| Repsol S.A. | 278,012 | 3,499,720 |
| Food & Staples Retailing 0.0% |
| Distribuidora Internacional de Alimentacion S.A. * | 47,010 | 298,682 |
| Insurance 0.0% |
| Mapfre S.A. | 126,608 | 375,616 |
| Retailing 0.1% |
| Industria de Diseno Textil S.A. | 44,812 | 1,677,957 |
| Software & Services 0.1% |
| Amadeus IT Holding S.A., A Shares | 14,666 | 623,841 |
| Telecommunication Services 1.0% |
| Telefonica S.A. | 879,734 | 11,606,629 |
| Transportation 0.1% |
| Abertis Infraestructuras S.A. | 39,271 | 652,137 |
| Utilities 0.7% |
| Acciona S.A. | 5,260 | 441,259 |
| Enagas S.A. | 13,539 | 409,396 |
| Endesa S.A. | 49,948 | 1,110,603 |
| Gas Natural SDG S.A. | 39,646 | 857,615 |
| Iberdrola S.A. | 663,854 | 4,734,035 |
| Red Electrica Corp. S.A. | 5,653 | 497,661 |
| | | 8,050,569 |
| | | 48,731,678 |
| Sweden 2.2% |
| Automobiles & Components 0.1% |
| Autoliv, Inc. (c) | 6,767 | 820,431 |
| Banks 0.4% |
| Nordea Bank AB | 184,631 | 2,037,151 |
| Skandinaviska Enskilda Banken AB, A Shares | 71,282 | 748,523 |
| Security | Number
of Shares | Value
($) |
| Svenska Handelsbanken AB, A Shares | 78,423 | 1,065,099 |
| Swedbank AB, A Shares | 49,376 | 1,131,371 |
| | | 4,982,144 |
| Capital Goods 0.7% |
| Alfa Laval AB | 20,621 | 361,771 |
| Assa Abloy AB, Class B | 35,603 | 708,253 |
| Atlas Copco AB, A Shares | 35,888 | 935,266 |
| Atlas Copco AB, B Shares | 18,014 | 435,485 |
| NCC AB, B Shares | 10,931 | 338,069 |
| Sandvik AB | 117,222 | 1,093,296 |
| Skanska AB, B Shares | 43,199 | 842,941 |
| SKF AB, B Shares | 36,051 | 633,492 |
| Trelleborg AB, B Shares | 16,894 | 284,633 |
| Volvo AB, A Shares | 20,027 | 207,425 |
| Volvo AB, B Shares | 166,227 | 1,719,308 |
| | | 7,559,939 |
| Commercial & Professional Supplies 0.0% |
| Securitas AB, B Shares | 36,745 | 479,731 |
| Consumer Durables & Apparel 0.1% |
| Electrolux AB, B Shares | 25,925 | 762,723 |
| Husqvarna AB, B Shares (c) | 49,332 | 324,766 |
| | | 1,087,489 |
| Food, Beverage & Tobacco 0.1% |
| Swedish Match AB | 15,982 | 502,406 |
| Health Care Equipment & Services 0.0% |
| Getinge AB, B Shares | 13,584 | 339,486 |
| Household & Personal Products 0.1% |
| Svenska Cellulosa AB, S.C.A., B Shares | 51,761 | 1,524,567 |
| Materials 0.1% |
| Boliden AB | 34,547 | 661,449 |
| SSAB AB, A Shares *(c) | 56,874 | 205,052 |
| SSAB AB, B Shares * | 26,715 | 84,317 |
| | | 950,818 |
| Retailing 0.2% |
| Hennes & Mauritz AB, B Shares | 52,973 | 2,059,212 |
| Technology Hardware & Equipment 0.2% |
| Telefonaktiebolaget LM Ericsson, B Shares | 287,650 | 2,799,554 |
| Telecommunication Services 0.2% |
| Tele2 AB, B Shares | 82,206 | 820,959 |
| TeliaSonera AB | 327,324 | 1,672,468 |
| | | 2,493,427 |
| | | 25,599,204 |
| Switzerland 5.7% |
| Capital Goods 0.5% |
| ABB Ltd. - Reg'd * | 183,877 | 3,468,968 |
| Geberit AG - Reg'd | 1,289 | 415,985 |
| Schindler Holding AG | 1,793 | 290,902 |
| Schindler Holding AG - Reg'd | 150 | 24,414 |
| Wolseley plc | 25,282 | 1,484,338 |
| | | 5,684,607 |
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Commercial & Professional Supplies 0.1% |
| Adecco S.A. - Reg'd * | 15,298 | 1,137,181 |
| SGS S.A. - Reg'd | 299 | 569,327 |
| | | 1,706,508 |
| Consumer Durables & Apparel 0.2% |
| Cie Financiere Richemont S.A. - Reg'd | 19,933 | 1,709,206 |
| The Swatch Group AG - Bearer Shares | 1,569 | 612,757 |
| The Swatch Group AG - Reg'd | 3,439 | 248,439 |
| | | 2,570,402 |
| Diversified Financials 0.3% |
| Credit Suisse Group AG - Reg'd * | 87,100 | 2,172,380 |
| UBS Group AG - Reg’d | 52,059 | 1,039,745 |
| | | 3,212,125 |
| Energy 0.1% |
| Transocean Ltd. (c) | 103,847 | 1,589,628 |
| Food, Beverage & Tobacco 1.2% |
| Aryzta AG * | 5,957 | 268,244 |
| Chocoladefabriken Lindt & Sprungli AG | 29 | 176,992 |
| Chocoladefabriken Lindt & Sprungli AG - Reg'd | 3 | 222,582 |
| Coca-Cola HBC AG CDI * | 18,630 | 443,883 |
| Nestle S.A. - Reg'd | 175,273 | 13,386,289 |
| | | 14,497,990 |
| Insurance 0.6% |
| Baloise Holding AG - Reg'd | 2,785 | 333,913 |
| Swiss Life Holding AG - Reg'd * | 1,985 | 473,005 |
| Swiss Re AG | 27,199 | 2,524,904 |
| Zurich Insurance Group AG * | 13,668 | 3,606,984 |
| | | 6,938,806 |
| Materials 0.7% |
| Clariant AG - Reg'd * | 19,430 | 357,285 |
| Givaudan S.A. - Reg'd * | 339 | 606,200 |
| Glencore plc * | 1,601,387 | 2,764,716 |
| LafargeHolcim Ltd. * | 39,648 | 2,232,767 |
| Sika AG | 116 | 380,428 |
| Syngenta AG - Reg'd | 5,154 | 1,731,591 |
| | | 8,072,987 |
| Pharmaceuticals, Biotechnology & Life Sciences 1.6% |
| Actelion Ltd. - Reg'd * | 2,138 | 296,785 |
| Lonza Group AG - Reg'd * | 2,432 | 356,968 |
| Novartis AG - Reg'd | 109,357 | 9,906,503 |
| Roche Holding AG | 29,908 | 8,119,988 |
| Roche Holding AG - Bearer Shares | 990 | 270,850 |
| | | 18,951,094 |
| Semiconductors & Semiconductor Equipment 0.1% |
| STMicroelectronics N.V. | 87,754 | 604,607 |
| Technology Hardware & Equipment 0.1% |
| TE Connectivity Ltd. | 21,004 | 1,353,498 |
| Telecommunication Services 0.1% |
| Swisscom AG - Reg'd | 1,818 | 936,660 |
| Security | Number
of Shares | Value
($) |
| Transportation 0.1% |
| Kuehne & Nagel International AG - Reg'd | 3,874 | 536,772 |
| | | 66,655,684 |
| United Kingdom 16.7% |
| Automobiles & Components 0.1% |
| Fiat Chrysler Automobiles N.V. * | 71,258 | 1,049,854 |
| GKN plc | 110,573 | 488,581 |
| | | 1,538,435 |
| Banks 2.2% |
| Barclays plc | 1,549,673 | 5,521,143 |
| HSBC Holdings plc | 1,691,283 | 13,213,936 |
| Lloyds Banking Group plc | 3,024,374 | 3,432,695 |
| Royal Bank of Scotland Group plc * | 182,517 | 891,895 |
| Standard Chartered plc | 210,342 | 2,334,929 |
| | | 25,394,598 |
| Capital Goods 0.7% |
| BAE Systems plc | 326,849 | 2,210,966 |
| Balfour Beatty plc * | 146,951 | 563,228 |
| Bunzl plc | 18,384 | 525,719 |
| Carillion plc (c) | 71,926 | 338,368 |
| CNH Industrial N.V. | 43,787 | 296,406 |
| Cobham plc | 93,299 | 398,348 |
| DCC plc | 5,760 | 461,736 |
| IMI plc | 20,176 | 295,864 |
| Meggitt plc | 47,414 | 258,297 |
| Rolls-Royce Holdings plc * | 148,083 | 1,565,905 |
| Smiths Group plc | 31,360 | 463,939 |
| The Weir Group plc | 15,376 | 252,595 |
| Travis Perkins plc | 16,568 | 488,328 |
| | | 8,119,699 |
| Commercial & Professional Supplies 0.2% |
| AA plc | 22,559 | 96,205 |
| Aggreko plc | 19,120 | 269,512 |
| Babcock International Group plc | 21,545 | 319,385 |
| Capita plc | 25,867 | 507,404 |
| G4S plc | 158,657 | 592,642 |
| Intertek Group plc | 8,199 | 331,133 |
| Serco Group plc * | 202,226 | 291,743 |
| | | 2,408,024 |
| Consumer Durables & Apparel 0.1% |
| Barratt Developments plc | 41,255 | 388,642 |
| Burberry Group plc | 17,758 | 362,727 |
| Persimmon plc * | 10,712 | 328,510 |
| Taylor Wimpey plc | 115,695 | 352,448 |
| | | 1,432,327 |
| Consumer Services 0.3% |
| Carnival plc | 10,952 | 609,541 |
| Compass Group plc | 108,005 | 1,856,703 |
| InterContinental Hotels Group plc | 11,663 | 466,047 |
| Thomas Cook Group plc * | 211,603 | 400,180 |
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Whitbread plc | 5,476 | 418,169 |
| William Hill plc | 56,814 | 277,211 |
| | | 4,027,851 |
| Diversified Financials 0.1% |
| 3i Group plc | 15,781 | 121,562 |
| ICAP plc | 43,467 | 294,240 |
| Man Group plc | 296,017 | 759,778 |
| | | 1,175,580 |
| Energy 2.8% |
| Amec Foster Wheeler plc | 38,206 | 418,058 |
| BG Group plc | 277,130 | 4,378,243 |
| BP plc | 4,563,325 | 27,119,774 |
| John Wood Group plc | 47,011 | 431,579 |
| Petrofac Ltd. | 25,546 | 331,466 |
| Subsea 7 S.A. * | 40,679 | 319,057 |
| Tullow Oil plc * | 85,709 | 267,710 |
| | | 33,265,887 |
| Food & Staples Retailing 0.9% |
| Booker Group plc | 143,960 | 412,322 |
| J. Sainsbury plc | 474,166 | 1,942,865 |
| Tesco plc * | 2,144,110 | 6,047,028 |
| WM Morrison Supermarkets plc | 885,266 | 2,295,487 |
| | | 10,697,702 |
| Food, Beverage & Tobacco 1.5% |
| Associated British Foods plc | 17,872 | 949,644 |
| British American Tobacco plc | 122,825 | 7,296,978 |
| Diageo plc | 108,013 | 3,114,007 |
| Imperial Tobacco Group plc | 65,517 | 3,527,960 |
| SABMiller plc | 36,724 | 2,255,712 |
| Tate & Lyle plc | 55,500 | 509,439 |
| | | 17,653,740 |
| Health Care Equipment & Services 0.1% |
| Smith & Nephew plc | 42,204 | 720,657 |
| Household & Personal Products 0.5% |
| Reckitt Benckiser Group plc | 28,064 | 2,738,779 |
| Unilever plc | 74,991 | 3,339,236 |
| | | 6,078,015 |
| Insurance 0.8% |
| Admiral Group plc | 14,761 | 366,311 |
| Amlin plc | 42,043 | 426,611 |
| Aviva plc | 309,642 | 2,314,131 |
| Direct Line Insurance Group plc | 128,283 | 778,146 |
| Legal & General Group plc | 226,850 | 913,525 |
| Old Mutual plc | 330,885 | 1,081,467 |
| Phoenix Group Holdings | 22,000 | 289,298 |
| Prudential plc | 76,961 | 1,797,538 |
| RSA Insurance Group plc | 114,802 | 742,989 |
| Standard Life plc | 113,520 | 733,942 |
| Willis Group Holdings plc | 7,531 | 335,958 |
| | | 9,779,916 |
| Materials 1.3% |
| Anglo American plc | 284,925 | 2,390,438 |
| Antofagasta plc | 51,357 | 415,176 |
| BHP Billiton plc | 273,834 | 4,376,969 |
| DS Smith plc | 58,211 | 346,839 |
| Johnson Matthey plc | 21,712 | 863,577 |
| Security | Number
of Shares | Value
($) |
| KAZ Minerals plc * | 103,222 | 184,604 |
| Mondi plc | 28,002 | 647,522 |
| Rexam plc | 88,342 | 734,545 |
| Rio Tinto plc | 142,295 | 5,185,973 |
| Vedanta Resources plc | 39,643 | 301,781 |
| | | 15,447,424 |
| Media 0.5% |
| Informa plc | 45,102 | 394,433 |
| ITV plc | 104,308 | 404,954 |
| Liberty Global plc, Class A * | 7,695 | 342,581 |
| Liberty Global plc, Series C * | 19,471 | 830,243 |
| Pearson plc | 62,595 | 830,998 |
| RELX plc | 38,572 | 689,710 |
| Sky plc | 59,819 | 1,009,489 |
| WPP plc | 60,957 | 1,366,462 |
| | | 5,868,870 |
| Pharmaceuticals, Biotechnology & Life Sciences 1.5% |
| AstraZeneca plc | 124,668 | 7,945,402 |
| GlaxoSmithKline plc | 433,663 | 9,352,249 |
| | | 17,297,651 |
| Real Estate 0.1% |
| Land Securities Group plc | 26,916 | 554,515 |
| Retailing 0.5% |
| Home Retail Group plc | 373,146 | 644,958 |
| Inchcape plc | 50,759 | 624,257 |
| Kingfisher plc | 316,905 | 1,722,621 |
| Marks & Spencer Group plc | 180,679 | 1,426,689 |
| Next plc | 7,826 | 963,811 |
| | | 5,382,336 |
| Software & Services 0.1% |
| The Sage Group plc | 72,758 | 610,044 |
| Telecommunication Services 1.3% |
| BT Group plc | 483,195 | 3,450,743 |
| Inmarsat plc | 23,392 | 354,550 |
| Vodafone Group plc | 3,302,898 | 10,869,613 |
| | | 14,674,906 |
| Transportation 0.1% |
| easyJet plc | 11,676 | 314,530 |
| FirstGroup plc * | 361,443 | 537,968 |
| International Consolidated Airlines Group S.A. * | 39,186 | 351,198 |
| Royal Mail plc | 56,018 | 383,783 |
| | | 1,587,479 |
| Utilities 1.0% |
| Centrica plc | 862,164 | 2,999,964 |
| Drax Group plc | 76,855 | 308,178 |
| National Grid plc | 294,490 | 4,194,974 |
| Pennon Group plc | 26,994 | 336,828 |
| Severn Trent plc | 19,814 | 683,341 |
| SSE plc | 121,596 | 2,828,880 |
| United Utilities Group plc | 51,010 | 776,227 |
| | | 12,128,392 |
| | | 195,844,048 |
| Total Common Stock |
| (Cost $1,164,973,487) | | 1,158,703,379 |
|
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Preferred Stock 0.5% of net assets |
| Germany 0.3% |
| Automobiles & Components 0.2% |
| Bayerische Motoren Werke AG | 5,342 | 431,992 |
| Volkswagen AG | 18,962 | 2,276,104 |
| | | 2,708,096 |
| Household & Personal Products 0.1% |
| Henkel AG & Co. KGaA | 8,964 | 972,177 |
| Utilities 0.0% |
| RWE AG, Non Voting Shares | 17,183 | 188,653 |
| | | 3,868,926 |
| Italy 0.2% |
| Banks 0.0% |
| Intesa Sanpaolo S.p.A. - RSP | 87,221 | 278,271 |
| Telecommunication Services 0.2% |
| Telecom Italia S.p.A. - RSP | 1,550,399 | 1,742,504 |
| | | 2,020,775 |
| United Kingdom 0.0% |
| Capital Goods 0.0% |
| Rolls-Royce Holdings plc *(a) | 13,727,294 | 21,162 |
| Total Preferred Stock |
| (Cost $6,784,733) | | 5,910,863 |
|
| Rights 0.0% of net assets |
| Spain 0.0% |
| Banks 0.0% |
| Banco Santander S.A. * | 2,247,842 | 123,592 |
| Total Rights |
| (Cost $127,301) | | 123,592 |
|
| Other Investment Company 1.3% of net assets |
| United States 1.3% |
| Securities Lending Collateral 1.3% |
| Wells Fargo Advantage Government Money Market Fund, Institutional Class 0.01% (d) | 15,802,505 | 15,802,505 |
| Total Other Investment Company |
| (Cost $15,802,505) | | 15,802,505 |
Security
Rate, Maturity Date | Face Amount
Local Currency | Value
($) |
| Short-Term Investments 0.1% of net assets |
| Time Deposits 0.1% |
| Brown Brothers Harriman |
| Hong Kong Dollar | | |
| 0.01%, 11/02/15 | 4,620 | 596 |
| Japanese Yen | | |
| 0.01%, 11/02/15 | 427,171 | 3,540 |
| Norwegian Krone | | |
| 0.12%, 11/02/15 | 86,040 | 10,126 |
| Singapore Dollar | | |
| 0.10%, 11/02/15 | 438 | 313 |
| Swedish Krona | | |
| (0.64%), 11/02/15 | 55,748 | 6,525 |
| Swiss Franc | | |
| (1.00%), 11/02/15 | 9,425 | 9,535 |
| DNB |
| Euro | | |
| (0.24%), 11/02/15 | 19,928 | 21,914 |
| Great British Pound | | |
| 0.08%, 11/02/15 | 55,779 | 85,989 |
| JPMorgan Chase Bank |
| U.S. Dollar | | |
| 0.03%, 11/02/15 | 603,883 | 603,883 |
| Royal Bank of Canada |
| Canadian Dollar | | |
| 0.05%, 11/02/15 | 159,402 | 121,905 |
| Total Short-Term Investments |
| (Cost $864,326) | | 864,326 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $1,207,067,986 unrealized appreciation and depreciation were $125,702,508 and ($151,365,829), respectively, with a net unrealized depreciation of ($25,663,321).
At 10/31/15, the values of certain foreign securities held by the fund aggregating $1,075,278,647 were adjusted from their closing market values in accordance with international fair valuation procedures approved by the fund's Board of Trustees. (See financial note 2(a) for additional information)
| * | Non-income producing security. |
| (a) | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| (b) | Illiquid security. At the period end, the value of these amounted to $0 or 0.0% of net assets. |
| (c) | All or a portion of this security is on loan. Securities on loan were valued at $14,961,672. |
| (d) | The rate shown is the 7-day yield. |
| | |
| ADR — | American Depositary Receipt |
| CDI — | CHESS Depositary Interest |
| CVA — | Dutch Certificate |
| Reg'd — | Registered |
| REIT — | Real Estate Investment Trust |
| RSP — | Risparmio (Convertible Savings Shares) |
| SDR — | Swedish Depositary Receipt |
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
In addition to the above the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Appreciation
($) |
| Futures Contracts | | | |
| MSCI EAFE, e-mini, Long, expires 12/18/15 | 52 | 4,568,460 | 9,419 |
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 98.4% | Common Stock | 397,890,536 | 420,007,227 |
| 0.4% | Preferred Stock | 1,652,774 | 1,786,493 |
| 0.0% | Rights | — | 1,967 |
| 4.9% | Other Investment Companies | 20,702,382 | 20,844,674 |
| 0.0% | Short-Term Investments | 153,640 | 153,640 |
| 103.7% | Total Investments | 420,399,332 | 442,794,001 |
| (3.7%) | Other Assets and Liabilities, Net | | (15,810,164) |
| 100.0% | Net Assets | | 426,983,837 |
| Security | Number
of Shares | Value
($) |
| Common Stock 98.4% of net assets |
| Australia 5.3% |
| Banks 0.1% |
| Bank of Queensland Ltd. | 47,611 | 441,382 |
| Capital Goods 0.2% |
| Cardno Ltd. (a) | 103,306 | 223,409 |
| GWA Group Ltd. (a) | 112,580 | 197,980 |
| Monadelphous Group Ltd. (a) | 61,960 | 303,583 |
| Seven Group Holdings Ltd. | 42,752 | 152,893 |
| | | 877,865 |
| Commercial & Professional Supplies 0.4% |
| ALS Ltd. | 143,105 | 520,921 |
| Cabcharge Australia Ltd. | 46,893 | 93,852 |
| Mineral Resources Ltd. | 48,258 | 145,569 |
| Recall Holdings Ltd. | 21,066 | 114,208 |
| SAI Global Ltd. | 50,138 | 156,081 |
| Seek Ltd. | 17,769 | 161,420 |
| Spotless Group Holdings Ltd. | 83,810 | 127,984 |
| Transfield Services Ltd. * | 442,719 | 314,078 |
| Transpacific Industries Group Ltd. | 588,838 | 283,113 |
| | | 1,917,226 |
| Consumer Durables & Apparel 0.1% |
| Billabong International Ltd. * | 445,294 | 232,436 |
| G.U.D. Holdings Ltd. | 34,324 | 195,746 |
| | | 428,182 |
| Security | Number
of Shares | Value
($) |
| Consumer Services 0.5% |
| Ardent Leisure Group | 117,962 | 233,109 |
| Aristocrat Leisure Ltd. | 30,662 | 202,397 |
| Crown Resorts Ltd. | 81,353 | 659,327 |
| Echo Entertainment Group Ltd. | 140,991 | 509,571 |
| Flight Centre Travel Group Ltd. | 8,680 | 233,523 |
| InvoCare Ltd. | 7,165 | 56,401 |
| Navitas Ltd. | 51,463 | 152,961 |
| | | 2,047,289 |
| Diversified Financials 0.3% |
| ASX Ltd. | 19,286 | 563,803 |
| Challenger Ltd. | 64,618 | 376,802 |
| IOOF Holdings Ltd. | 32,159 | 212,819 |
| Perpetual Ltd. | 6,444 | 204,896 |
| | | 1,358,320 |
| Energy 0.1% |
| AWE Ltd. * | 244,016 | 108,990 |
| Beach Energy Ltd. | 419,260 | 190,449 |
| Whitehaven Coal Ltd. *(a) | 261,993 | 188,151 |
| | | 487,590 |
| Food, Beverage & Tobacco 0.3% |
| Bega Cheese Ltd. | 38,831 | 159,704 |
| GrainCorp Ltd., Class A | 76,345 | 489,419 |
| Treasury Wine Estates Ltd. | 153,674 | 769,147 |
| | | 1,418,270 |
| Health Care Equipment & Services 0.6% |
| Ansell Ltd. | 22,294 | 317,243 |
| Australian Pharmaceutical Industries Ltd. | 119,332 | 167,934 |
| Cochlear Ltd. | 6,509 | 410,804 |
| Healthscope Ltd. | 47,620 | 91,167 |
| Primary Health Care Ltd. | 150,659 | 395,820 |
| Ramsay Health Care Ltd. | 10,289 | 452,280 |
| Sigma Pharmaceuticals Ltd. | 1,046,205 | 620,800 |
| | | 2,456,048 |
| Insurance 0.1% |
| nib Holdings Ltd. | 98,994 | 253,793 |
| Materials 0.7% |
| Adelaide Brighton Ltd. | 112,696 | 334,743 |
| CSR Ltd. | 231,055 | 452,334 |
| DuluxGroup Ltd. | 42,500 | 177,685 |
| Iluka Resources Ltd. | 123,605 | 560,510 |
| Nufarm Ltd. | 65,835 | 390,002 |
| OceanaGold Corp. | 76,972 | 147,163 |
| Orora Ltd. | 115,726 | 191,347 |
| OZ Minerals Ltd. | 227,154 | 697,087 |
| Western Areas Ltd. | 36,625 | 61,718 |
| | | 3,012,589 |
| Media 0.4% |
| Amalgamated Holdings Ltd. | 8,937 | 88,997 |
| APN News & Media Ltd. * | 366,859 | 133,645 |
| Fairfax Media Ltd. | 1,074,649 | 718,742 |
| Nine Entertainment Co. Holdings Ltd. | 91,900 | 100,814 |
| Seven West Media Ltd. | 463,725 | 222,004 |
| Southern Cross Media Group Ltd. | 258,699 | 179,595 |
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Ten Network Holdings Ltd. * | 971,164 | 113,800 |
| Village Roadshow Ltd. | 32,125 | 171,156 |
| | | 1,728,753 |
| Real Estate 0.6% |
| Charter Hall Retail REIT | 44,770 | 134,679 |
| Dexus Property Group | 122,978 | 675,071 |
| Federation Centres (b) | 160,399 | 331,346 |
| Goodman Group | 140,692 | 603,621 |
| Investa Office Fund | 74,993 | 214,636 |
| The GPT Group | 183,477 | 621,405 |
| | | 2,580,758 |
| Retailing 0.5% |
| Automotive Holdings Group Ltd. | 91,270 | 274,853 |
| Burson Group Ltd. | 28,400 | 72,209 |
| Harvey Norman Holdings Ltd. | 137,357 | 385,913 |
| JB Hi-Fi Ltd. (a) | 32,023 | 407,449 |
| Myer Holdings Ltd. (a) | 680,415 | 462,628 |
| Premier Investments Ltd. | 25,543 | 247,961 |
| Super Retail Group Ltd. | 28,409 | 194,022 |
| | | 2,045,035 |
| Software & Services 0.2% |
| carsales.com Ltd. | 9,924 | 69,007 |
| Computershare Ltd. | 74,293 | 569,415 |
| IRESS Ltd. | 17,270 | 115,019 |
| | | 753,441 |
| Transportation 0.1% |
| Qube Holdings Ltd. | 39,612 | 64,217 |
| Sydney Airport | 118,526 | 541,676 |
| Virgin Australia International Holdings (b)(c) | 176,214 | — |
| | | 605,893 |
| Utilities 0.1% |
| AusNet Services | 413,996 | 424,609 |
| | | 22,837,043 |
| Austria 0.9% |
| Capital Goods 0.4% |
| ANDRITZ AG | 12,515 | 628,781 |
| Wienerberger AG | 38,076 | 702,012 |
| Zumtobel Group AG | 7,217 | 164,016 |
| | | 1,494,809 |
| Energy 0.0% |
| Schoeller-Bleckmann Oilfield Equipment AG | 2,257 | 135,669 |
| Insurance 0.1% |
| UNIQA Insurance Group AG | 8,179 | 75,953 |
| Vienna Insurance Group AG Wiener Versicherung Gruppe | 9,761 | 312,369 |
| | | 388,322 |
| Materials 0.1% |
| Lenzing AG | 2,773 | 211,834 |
| RHI AG | 9,014 | 203,395 |
| | | 415,229 |
| Real Estate 0.1% |
| IMMOFINANZ AG * | 117,934 | 301,894 |
| Security | Number
of Shares | Value
($) |
| Semiconductors & Semiconductor Equipment 0.0% |
| ams AG | 1,517 | 48,544 |
| Telecommunication Services 0.1% |
| Telekom Austria AG | 98,264 | 592,363 |
| Transportation 0.1% |
| Oesterreichische Post AG | 10,134 | 368,446 |
| Utilities 0.0% |
| Verbund AG (a) | 10,872 | 153,866 |
| | | 3,899,142 |
| Belgium 1.0% |
| Diversified Financials 0.1% |
| Ackermans & van Haaren N.V. | 1,316 | 200,263 |
| Gimv N.V. | 7,016 | 329,647 |
| | | 529,910 |
| Health Care Equipment & Services 0.0% |
| Fagron | 2,993 | 73,433 |
| Household & Personal Products 0.0% |
| Ontex Group N.V. | 2,672 | 82,079 |
| Materials 0.3% |
| Bekaert N.V. | 27,493 | 815,452 |
| Nyrstar N.V. *(a) | 127,099 | 194,194 |
| Tessenderlo Chemie N.V. * | 11,673 | 376,477 |
| | | 1,386,123 |
| Real Estate 0.1% |
| Befimmo S.A. | 2,382 | 159,388 |
| Cofinimmo S.A. | 2,632 | 293,306 |
| | | 452,694 |
| Technology Hardware & Equipment 0.1% |
| Barco N.V. | 4,364 | 286,781 |
| EVS Broadcast Equipment S.A. | 5,231 | 152,366 |
| | | 439,147 |
| Telecommunication Services 0.2% |
| Mobistar S.A. * | 26,271 | 641,673 |
| Transportation 0.1% |
| bpost S.A. | 13,996 | 350,287 |
| Utilities 0.1% |
| Elia System Operator S.A./N.V. | 8,850 | 428,086 |
| | | 4,383,432 |
| Canada 7.4% |
| Automobiles & Components 0.1% |
| Linamar Corp. | 6,832 | 397,035 |
| Martinrea International, Inc. | 24,171 | 204,999 |
| | | 602,034 |
| Banks 0.2% |
| Canadian Western Bank | 11,739 | 225,605 |
| Genworth MI Canada, Inc. (a) | 12,305 | 304,237 |
| Home Capital Group, Inc. (a) | 7,970 | 194,130 |
| Laurentian Bank of Canada | 6,311 | 255,655 |
| | | 979,627 |
| Capital Goods 0.7% |
| Aecon Group, Inc. | 33,272 | 384,475 |
| Ag Growth International, Inc. | 1,862 | 48,757 |
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| ATS Automation Tooling Systems, Inc. * | 12,056 | 126,959 |
| Bird Construction, Inc. | 19,012 | 190,614 |
| CAE, Inc. | 40,119 | 452,858 |
| MacDonald, Dettwiler & Associates Ltd. | 5,199 | 309,888 |
| New Flyer Industries, Inc. | 12,364 | 179,276 |
| Russel Metals, Inc. (a) | 30,317 | 472,979 |
| Toromont Industries Ltd. | 13,981 | 363,852 |
| Wajax Corp. | 13,617 | 249,826 |
| WSP Global, Inc. | 8,223 | 286,258 |
| | | 3,065,742 |
| Commercial & Professional Supplies 0.4% |
| Horizon North Logistics, Inc. | 29,394 | 50,579 |
| Morneau Shepell, Inc. | 11,957 | 141,461 |
| Progressive Waste Solutions Ltd. | 19,885 | 478,116 |
| Ritchie Bros. Auctioneers, Inc. | 9,355 | 242,818 |
| Stantec, Inc. | 12,048 | 302,398 |
| Transcontinental, Inc., Class A | 36,420 | 561,229 |
| | | 1,776,601 |
| Consumer Durables & Apparel 0.2% |
| Dorel Industries, Inc., Class B | 17,436 | 443,367 |
| Gildan Activewear, Inc. | 17,999 | 517,423 |
| | | 960,790 |
| Consumer Services 0.1% |
| EnerCare, Inc. | 7,067 | 82,528 |
| Great Canadian Gaming Corp. * | 8,827 | 121,847 |
| | | 204,375 |
| Diversified Financials 0.1% |
| AGF Management Ltd., Class B (a) | 72,846 | 302,503 |
| Canaccord Genuity Group, Inc. | 14,921 | 57,854 |
| Dundee Corp., Class A * | 21,626 | 124,371 |
| | | 484,728 |
| Energy 1.4% |
| AltaGas Ltd. | 17,749 | 458,249 |
| Bankers Petroleum Ltd. * | 36,381 | 61,210 |
| Bonterra Energy Corp. | 3,622 | 60,136 |
| Calfrac Well Services Ltd. | 46,322 | 81,832 |
| Canadian Energy Services & Technology Corp. (a) | 12,642 | 54,625 |
| Canyon Services Group, Inc. (a) | 14,895 | 55,589 |
| Crew Energy, Inc. * | 17,816 | 60,631 |
| Enbridge Income Fund Holdings, Inc. | 5,155 | 126,707 |
| Enerflex Ltd. | 32,949 | 318,000 |
| Ensign Energy Services, Inc. | 69,489 | 436,830 |
| Gran Tierra Energy, Inc. * | 90,251 | 218,104 |
| Keyera Corp. | 20,774 | 641,045 |
| MEG Energy Corp. * | 14,762 | 122,828 |
| Mullen Group Ltd. | 30,692 | 409,821 |
| Newalta Corp. | 16,226 | 92,571 |
| NuVista Energy Ltd. * | 28,805 | 101,774 |
| Parkland Fuel Corp. | 29,162 | 507,369 |
| Pason Systems, Inc. | 10,996 | 161,795 |
| Peyto Exploration & Development Corp. (a) | 14,302 | 295,315 |
| Precision Drilling Corp. | 112,800 | 448,578 |
| Secure Energy Services, Inc. | 8,631 | 57,360 |
| Security | Number
of Shares | Value
($) |
| ShawCor Ltd. | 18,196 | 386,157 |
| Tourmaline Oil Corp. * | 2,877 | 59,868 |
| Trican Well Service Ltd. | 209,856 | 139,626 |
| Trinidad Drilling Ltd. | 101,796 | 176,718 |
| Veresen, Inc. | 35,496 | 308,920 |
| | | 5,841,658 |
| Food & Staples Retailing 0.2% |
| Liquor Stores N.A. Ltd. | 8,752 | 81,389 |
| The Jean Coutu Group (PJC), Inc., Class A | 20,014 | 305,047 |
| The North West Co., Inc. | 18,115 | 401,755 |
| | | 788,191 |
| Food, Beverage & Tobacco 0.2% |
| Cott Corp. | 36,000 | 375,803 |
| Maple Leaf Foods, Inc. | 27,063 | 430,284 |
| | | 806,087 |
| Insurance 0.1% |
| Industrial Alliance Insurance & Financial Services, Inc. | 15,224 | 499,472 |
| Materials 1.8% |
| Agnico-Eagle Mines Ltd. | 25,696 | 726,311 |
| Alamos Gold, Inc., Class A | 27,630 | 106,285 |
| Canfor Corp. * | 14,295 | 202,247 |
| Cascades, Inc. | 57,219 | 407,832 |
| CCL Industries, Inc., Class B | 2,438 | 345,396 |
| Centerra Gold, Inc. | 63,977 | 360,103 |
| Chemtrade Logistics Income Fund | 13,226 | 188,033 |
| Dominion Diamond Corp. | 10,787 | 114,090 |
| Eldorado Gold Corp. | 114,908 | 401,598 |
| Franco-Nevada Corp. | 5,882 | 298,328 |
| HudBay Minerals, Inc. | 47,156 | 244,868 |
| IAMGOLD Corp. * | 353,368 | 637,770 |
| Interfor Corp. * | 6,295 | 59,792 |
| Labrador Iron Ore Royalty Corp. | 11,786 | 137,095 |
| Lundin Mining Corp. * | 105,725 | 356,567 |
| Major Drilling Group International, Inc. | 42,005 | 133,314 |
| Methanex Corp. | 12,975 | 517,670 |
| Nevsun Resources Ltd. | 43,165 | 129,072 |
| New Gold, Inc. * | 74,092 | 183,587 |
| Pan American Silver Corp. | 46,030 | 349,203 |
| Resolute Forest Products, Inc. * | 48,053 | 358,956 |
| SEMAFO, Inc. * | 62,700 | 142,413 |
| Sherritt International Corp. (a) | 413,160 | 259,094 |
| Silver Wheaton Corp. | 25,162 | 341,946 |
| West Fraser Timber Co., Ltd. | 13,186 | 466,592 |
| | | 7,468,162 |
| Media 0.4% |
| Aimia, Inc. | 48,999 | 453,417 |
| Cineplex, Inc. | 11,260 | 433,918 |
| Cogeco Cable, Inc. | 4,631 | 239,165 |
| Cogeco, Inc. | 1,945 | 82,435 |
| Corus Entertainment, Inc., Class B | 27,543 | 262,665 |
| Entertainment One Ltd. | 35,553 | 120,172 |
| | | 1,591,772 |
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Real Estate 0.5% |
| Artis Real Estate Investment Trust | 7,073 | 72,428 |
| Boardwalk Real Estate Investment Trust | 3,477 | 142,845 |
| Canadian Apartment Properties REIT | 3,099 | 63,800 |
| Canadian Real Estate Investment Trust | 4,551 | 148,231 |
| Colliers International Group, Inc. | 2,634 | 130,592 |
| Cominar Real Estate Investment Trust | 11,713 | 137,768 |
| Dream Office Real Estate Investment Trust | 9,017 | 144,744 |
| First Capital Realty, Inc. | 13,378 | 198,174 |
| Granite Real Estate Investment Trust | 7,404 | 215,790 |
| H&R Real Estate Investment Trust | 15,104 | 242,339 |
| RioCan Real Estate Investment Trust | 21,520 | 419,670 |
| Smart Real Estate Investment Trust | 8,925 | 211,999 |
| | | 2,128,380 |
| Retailing 0.2% |
| Dollarama, Inc. | 8,900 | 601,206 |
| Hudson's Bay Co. | 16,000 | 278,128 |
| Uni-Select, Inc. | 3,210 | 159,076 |
| | | 1,038,410 |
| Software & Services 0.2% |
| Constellation Software, Inc. | 588 | 254,068 |
| DH Corp. | 11,291 | 304,812 |
| Open Text Corp. | 6,375 | 295,495 |
| | | 854,375 |
| Telecommunication Services 0.0% |
| Manitoba Telecom Services, Inc. | 7,776 | 170,851 |
| Transportation 0.2% |
| Air Canada * | 6,936 | 57,075 |
| Exchange Income Corp. | 3,730 | 70,800 |
| TransForce, Inc. | 24,770 | 484,565 |
| Westshore Terminals Investment Corp. | 8,556 | 142,709 |
| | | 755,149 |
| Utilities 0.4% |
| Capital Power Corp. | 31,999 | 459,821 |
| Just Energy Group, Inc. | 58,614 | 430,774 |
| Northland Power, Inc. (a) | 15,746 | 203,508 |
| Superior Plus Corp. | 55,843 | 456,105 |
| | | 1,550,208 |
| | | 31,566,612 |
| Denmark 1.5% |
| Banks 0.2% |
| Jyske Bank A/S - Reg'd * | 7,777 | 379,359 |
| Sydbank A/S | 10,764 | 354,069 |
| | | 733,428 |
| Security | Number
of Shares | Value
($) |
| Capital Goods 0.2% |
| NKT Holding A/S | 7,197 | 391,669 |
| PER Aarsleff A/S, Class B | 182 | 61,078 |
| Rockwool International A/S, B Shares | 2,106 | 329,961 |
| | | 782,708 |
| Consumer Durables & Apparel 0.1% |
| Pandora A/S | 5,632 | 649,918 |
| Food, Beverage & Tobacco 0.1% |
| Royal Unibrew A/S | 4,188 | 165,834 |
| Schouw & Co. | 3,876 | 202,541 |
| | | 368,375 |
| Health Care Equipment & Services 0.2% |
| Coloplast A/S, Class B | 7,429 | 532,839 |
| GN Store Nord A/S | 17,401 | 317,389 |
| William Demant Holding A/S * | 2,452 | 213,024 |
| | | 1,063,252 |
| Insurance 0.1% |
| Topdanmark A/S * | 7,961 | 211,843 |
| Tryg A/S | 13,657 | 245,433 |
| | | 457,276 |
| Materials 0.2% |
| Chr. Hansen Holding A/S | 5,739 | 344,816 |
| Novozymes A/S, B Shares | 14,249 | 660,542 |
| | | 1,005,358 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| H. Lundbeck A/S * | 15,831 | 465,064 |
| Retailing 0.0% |
| Matas A/S | 3,324 | 60,330 |
| Software & Services 0.1% |
| SimCorp A/S | 6,209 | 304,638 |
| Transportation 0.2% |
| D/S Norden A/S *(a) | 19,189 | 382,613 |
| Dfds A/S | 9,130 | 277,305 |
| | | 659,918 |
| | | 6,550,265 |
| Finland 1.6% |
| Capital Goods 0.6% |
| Cargotec Oyj, B Shares | 12,064 | 430,062 |
| Cramo Oyj | 12,928 | 237,399 |
| Konecranes Oyj | 13,514 | 362,286 |
| Outotec Oyj (a) | 74,554 | 256,432 |
| PKC Group Oyj | 3,124 | 57,500 |
| Ramirent Oyj | 25,883 | 201,163 |
| Uponor Oyj | 14,172 | 188,682 |
| Valmet Oyj | 14,838 | 156,168 |
| Yit Oyj (a) | 108,701 | 572,969 |
| | | 2,462,661 |
| Commercial & Professional Supplies 0.1% |
| Caverion Corp. | 35,891 | 312,488 |
| Lassila & Tikanoja Oyj | 4,608 | 89,081 |
| | | 401,569 |
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Consumer Durables & Apparel 0.2% |
| Amer Sports Oyj | 21,860 | 613,513 |
| Fiskars Oyj Abp | 3,718 | 76,978 |
| | | 690,491 |
| Health Care Equipment & Services 0.0% |
| Oriola-KD Oyj, B Shares * | 15,184 | 74,197 |
| Materials 0.4% |
| Huhtamaki Oyj | 20,523 | 724,038 |
| Kemira Oyj | 31,087 | 368,210 |
| Metsa Board Oyj | 41,208 | 262,174 |
| Outokumpu Oyj *(a) | 74,507 | 252,999 |
| Tikkurila Oyj | 10,757 | 197,425 |
| | | 1,804,846 |
| Media 0.1% |
| Sanoma Oyj (a) | 99,883 | 437,890 |
| Real Estate 0.0% |
| Sponda Oyj | 35,264 | 149,800 |
| Retailing 0.1% |
| Stockmann Oyj Abp, B Shares *(a) | 32,584 | 253,860 |
| Software & Services 0.1% |
| Tieto Oyj | 24,589 | 630,543 |
| | | 6,905,857 |
| France 4.3% |
| Automobiles & Components 0.1% |
| Plastic Omnium S.A. | 10,465 | 302,072 |
| Banks 0.1% |
| Natixis S.A. | 96,684 | 591,849 |
| Capital Goods 0.1% |
| Saft Groupe S.A. | 6,794 | 175,119 |
| Tarkett S.A. | 2,560 | 76,430 |
| | | 251,549 |
| Commercial & Professional Supplies 0.3% |
| Derichebourg S.A. * | 69,715 | 213,946 |
| Edenred | 28,859 | 529,877 |
| Elior (d) | 4,661 | 88,370 |
| Societe BIC S.A. | 4,171 | 664,681 |
| | | 1,496,874 |
| Consumer Durables & Apparel 0.2% |
| SEB S.A. | 7,060 | 717,053 |
| Diversified Financials 0.1% |
| Coface S.A. | 9,909 | 80,231 |
| Eurazeo S.A. | 7,966 | 560,911 |
| | | 641,142 |
| Energy 0.1% |
| Bourbon S.A. (a) | 14,482 | 213,405 |
| Etablissements Maurel et Prom * | 30,902 | 111,165 |
| | | 324,570 |
| Food, Beverage & Tobacco 0.1% |
| Remy Cointreau S.A. | 4,069 | 282,656 |
| Vilmorin & Cie S.A. | 2,220 | 156,483 |
| | | 439,139 |
| Security | Number
of Shares | Value
($) |
| Health Care Equipment & Services 0.1% |
| BioMerieux | 2,791 | 324,240 |
| Orpea | 4,540 | 364,213 |
| | | 688,453 |
| Insurance 0.1% |
| Euler Hermes Group | 3,145 | 294,829 |
| Materials 0.2% |
| Eramet *(a) | 2,806 | 110,699 |
| Imerys S.A. | 8,792 | 601,641 |
| Vicat S.A. | 5,337 | 341,928 |
| | | 1,054,268 |
| Media 0.7% |
| Havas S.A. | 38,836 | 336,350 |
| IPSOS | 10,463 | 212,246 |
| JC Decaux S.A. | 11,552 | 469,219 |
| Metropole Television S.A. | 27,018 | 519,712 |
| Societe Television Francaise | 35,937 | 461,670 |
| Solocal Group *(a) | 46,937 | 381,655 |
| Technicolor S.A. - Reg'd (a) | 74,659 | 504,907 |
| | | 2,885,759 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| Ipsen S.A. | 5,101 | 321,709 |
| Real Estate 0.6% |
| Fonciere Des Regions | 7,161 | 674,032 |
| Gecina S.A. | 3,840 | 489,771 |
| ICADE | 7,313 | 540,413 |
| Mercialys S.A. | 9,481 | 217,797 |
| Nexity S.A. | 13,024 | 576,316 |
| | | 2,498,329 |
| Retailing 0.1% |
| Groupe Fnac S.A. * | 4,815 | 312,341 |
| Software & Services 0.6% |
| Alten S.A. | 6,732 | 348,974 |
| Altran Technologies S.A. | 26,612 | 331,755 |
| Dassault Systemes S.A. | 7,343 | 579,275 |
| Sopra Steria Group | 2,041 | 232,172 |
| UBISOFT Entertainment * | 32,946 | 987,106 |
| | | 2,479,282 |
| Technology Hardware & Equipment 0.2% |
| Ingenico Group S.A. | 2,770 | 326,449 |
| Neopost S.A. | 15,510 | 385,336 |
| | | 711,785 |
| Telecommunication Services 0.1% |
| Iliad S.A. | 2,071 | 434,942 |
| Transportation 0.4% |
| Aeroports de Paris | 4,766 | 598,724 |
| Bollore S.A. | 83,017 | 410,388 |
| Groupe Eurotunnel SE - Reg'd | 41,289 | 577,972 |
| Norbert Dentressangle S.A. | 819 | 178,681 |
| Stef S.A. | 1,356 | 99,876 |
| | | 1,865,641 |
| | | 18,311,586 |
| Germany 3.3% |
| Automobiles & Components 0.1% |
| ElringKlinger AG | 6,649 | 148,774 |
| Grammer AG | 5,173 | 137,954 |
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Hella KGaA Hueck & Co. | 1,504 | 61,876 |
| SAF-Holland S.A. | 10,813 | 157,819 |
| | | 506,423 |
| Banks 0.0% |
| Aareal Bank AG | 4,397 | 167,517 |
| Capital Goods 0.8% |
| BayWa AG | 10,120 | 342,554 |
| Deutz AG | 44,725 | 167,595 |
| DMG Mori AG | 8,875 | 352,383 |
| Duerr AG | 2,598 | 216,317 |
| Heidelberger Druckmaschinen AG * | 92,636 | 265,937 |
| Indus Holding AG | 6,438 | 299,684 |
| KION Group AG * | 6,196 | 279,203 |
| Krones AG | 2,059 | 247,645 |
| KUKA AG (a) | 775 | 65,494 |
| Norma Group SE | 4,269 | 218,927 |
| Pfeiffer Vacuum Technology AG | 2,433 | 302,986 |
| SGL Carbon SE *(a) | 12,389 | 227,298 |
| Vossloh AG * | 4,011 | 294,757 |
| Wacker Neuson SE | 3,506 | 48,755 |
| | | 3,329,535 |
| Consumer Durables & Apparel 0.1% |
| Gerry Weber International AG | 5,746 | 93,548 |
| Puma SE | 872 | 195,231 |
| | | 288,779 |
| Diversified Financials 0.0% |
| Aurelius AG | 3,817 | 170,132 |
| Health Care Equipment & Services 0.2% |
| Carl Zeiss Meditec AG, Class B | 2,326 | 68,132 |
| Rhoen-Klinikum AG | 19,631 | 585,606 |
| | | 653,738 |
| Insurance 0.1% |
| Talanx AG * | 9,093 | 291,365 |
| Materials 0.2% |
| Evonik Industries AG | 17,188 | 624,097 |
| Wacker Chemie AG | 4,643 | 407,455 |
| | | 1,031,552 |
| Media 0.2% |
| Axel Springer SE | 9,702 | 545,250 |
| Kabel Deutschland Holding AG | 1,865 | 237,242 |
| | | 782,492 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.2% |
| Gerresheimer AG | 6,019 | 469,330 |
| STADA Arzneimittel AG | 15,103 | 574,553 |
| | | 1,043,883 |
| Real Estate 0.2% |
| Deutsche Euroshop AG | 4,696 | 226,416 |
| Deutsche Wohnen AG | 3,634 | 102,439 |
| LEG Immobilien AG * | 1,067 | 85,067 |
| Vonovia SE | 7,465 | 248,838 |
| | | 662,760 |
| Retailing 0.1% |
| Fielmann AG | 3,189 | 223,258 |
| Security | Number
of Shares | Value
($) |
| Semiconductors & Semiconductor Equipment 0.2% |
| Aixtron SE *(a) | 30,569 | 194,524 |
| SMA Solar Technology AG *(a) | 13,678 | 659,380 |
| | | 853,904 |
| Software & Services 0.3% |
| Bechtle AG | 4,122 | 380,448 |
| Software AG | 16,873 | 490,242 |
| United Internet AG - Reg'd | 7,621 | 395,704 |
| Wirecard AG | 3,662 | 189,157 |
| | | 1,455,551 |
| Technology Hardware & Equipment 0.2% |
| Jenoptik AG | 13,014 | 210,439 |
| Wincor Nixdorf AG | 12,635 | 648,062 |
| | | 858,501 |
| Telecommunication Services 0.2% |
| Drillisch AG | 4,321 | 222,836 |
| Telefonica Deutschland Holding AG | 113,621 | 731,453 |
| | | 954,289 |
| Transportation 0.2% |
| Fraport AG Frankfurt Airport Services Worldwide | 8,184 | 518,888 |
| Hamburger Hafen und Logistik AG | 7,584 | 109,696 |
| Sixt SE | 7,000 | 390,414 |
| | | 1,018,998 |
| | | 14,292,677 |
| Greece 0.0% |
| Banks 0.0% |
| TT Hellenic Postbank S.A. *(b)(c) | 24,275 | — |
| Hong Kong 2.3% |
| Automobiles & Components 0.1% |
| Xinyi Glass Holdings Ltd. | 430,000 | 222,767 |
| Banks 0.1% |
| The Bank of East Asia Ltd. | 142,200 | 531,322 |
| Capital Goods 0.1% |
| Hopewell Holdings Ltd. | 19,500 | 70,363 |
| Johnson Electric Holdings Ltd. | 70,500 | 258,029 |
| | | 328,392 |
| Consumer Durables & Apparel 0.2% |
| Global Brands Group Holding Ltd. * | 830,000 | 172,080 |
| Techtronic Industries Co., Ltd. | 155,500 | 568,457 |
| | | 740,537 |
| Consumer Services 0.2% |
| Cafe De Coral Holdings Ltd. | 54,000 | 182,650 |
| MGM China Holdings Ltd. | 118,000 | 172,113 |
| Wynn Macau Ltd. (a) | 272,000 | 373,411 |
| | | 728,174 |
| Diversified Financials 0.1% |
| First Pacific Co., Ltd. | 738,000 | 504,998 |
| Sun Hung Kai & Co., Ltd. | 87,000 | 58,552 |
| | | 563,550 |
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Energy 0.0% |
| Brightoil Petroleum Holdings Ltd. *(a) | 146,000 | 51,961 |
| Food & Staples Retailing 0.1% |
| Dairy Farm International Holdings Ltd. | 44,900 | 295,622 |
| Food, Beverage & Tobacco 0.0% |
| Vitasoy International Holdings Ltd. | 38,000 | 63,345 |
| WH Group Ltd. *(d) | 216,000 | 119,113 |
| | | 182,458 |
| Media 0.0% |
| Television Broadcasts Ltd. | 51,600 | 188,056 |
| Real Estate 0.6% |
| China South City Holdings Ltd. | 222,000 | 52,943 |
| Great Eagle Holdings Ltd. | 50,000 | 164,468 |
| Hang Lung Group Ltd. | 106,000 | 384,335 |
| Hang Lung Properties Ltd. | 196,000 | 479,577 |
| Henderson Land Development Co., Ltd. | 61,144 | 390,512 |
| Hysan Development Co., Ltd. | 39,000 | 172,986 |
| Sino Land Co., Ltd. | 344,000 | 530,964 |
| Swire Properties Ltd. | 85,600 | 256,941 |
| | | 2,432,726 |
| Retailing 0.2% |
| Chow Sang Sang Holdings International Ltd. | 129,000 | 250,950 |
| Giordano International Ltd. | 442,000 | 237,181 |
| Luk Fook Holdings International Ltd. | 98,000 | 252,177 |
| Sa Sa International Holdings Ltd. (a) | 148,000 | 47,476 |
| | | 787,784 |
| Technology Hardware & Equipment 0.1% |
| VTech Holdings Ltd. | 41,100 | 498,472 |
| Telecommunication Services 0.2% |
| Hutchison Telecommunications Hong Kong Holdings Ltd. | 486,000 | 179,322 |
| PCCW Ltd. | 1,168,000 | 628,899 |
| SmarTone Telecommunications Holdings Ltd. | 37,500 | 66,386 |
| | | 874,607 |
| Transportation 0.3% |
| Cathay Pacific Airways Ltd. | 281,000 | 557,320 |
| Orient Overseas International Ltd. | 107,000 | 509,549 |
| Pacific Basin Shipping Ltd. | 1,028,000 | 304,077 |
| | | 1,370,946 |
| | | 9,797,374 |
| Ireland 0.7% |
| Capital Goods 0.1% |
| Kingspan Group plc | 18,328 | 443,337 |
| Consumer Services 0.1% |
| Paddy Power plc | 3,411 | 394,691 |
| Security | Number
of Shares | Value
($) |
| Food & Staples Retailing 0.1% |
| Fyffes plc | 110,567 | 188,943 |
| Total Produce plc | 86,419 | 131,618 |
| | | 320,561 |
| Food, Beverage & Tobacco 0.1% |
| C&C Group plc | 76,099 | 303,014 |
| Glanbia plc | 15,555 | 301,422 |
| | | 604,436 |
| Health Care Equipment & Services 0.1% |
| UDG Healthcare plc | 55,098 | 403,385 |
| Materials 0.1% |
| James Hardie Industries plc CDI | 31,797 | 411,615 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| ICON plc * | 4,013 | 256,310 |
| Transportation 0.0% |
| Irish Continental Group plc | 33,548 | 182,611 |
| | | 3,016,946 |
| Israel 1.0% |
| Banks 0.1% |
| Israel Discount Bank Ltd., Class A * | 198,313 | 362,731 |
| Mizrahi Tefahot Bank Ltd. | 20,211 | 245,633 |
| | | 608,364 |
| Capital Goods 0.1% |
| Elbit Systems Ltd. | 4,110 | 325,744 |
| IDB Development Corp., Ltd. * | 227,465 | 129,218 |
| Shikun & Binui Ltd. | 32,803 | 59,853 |
| | | 514,815 |
| Energy 0.2% |
| Delek Group Ltd. | 1,302 | 313,383 |
| Oil Refineries Ltd. * | 684,489 | 250,150 |
| Paz Oil Co., Ltd. | 2,346 | 349,548 |
| | | 913,081 |
| Food & Staples Retailing 0.1% |
| Shufersal Ltd. * | 75,807 | 217,036 |
| Insurance 0.0% |
| Harel Insurance Investments & Finances Service Ltd. | 17,182 | 72,561 |
| Materials 0.1% |
| The Israel Corp., Ltd. | 1,364 | 351,870 |
| Real Estate 0.0% |
| Gazit-Globe Ltd. | 6,251 | 67,769 |
| Software & Services 0.1% |
| NICE-Systems Ltd. | 4,987 | 308,230 |
| Telecommunication Services 0.3% |
| B Communications Ltd. | 9,644 | 235,658 |
| Cellcom Israel Ltd. * | 81,099 | 603,437 |
| Partner Communications Co., Ltd. * | 102,655 | 464,822 |
| | | 1,303,917 |
| | | 4,357,643 |
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Italy 2.7% |
| Automobiles & Components 0.1% |
| Brembo S.p.A. | 1,476 | 65,056 |
| Piaggio & C. S.p.A. | 67,146 | 166,611 |
| | | 231,667 |
| Banks 0.5% |
| Banca Carige S.p.A. * | 130,068 | 237,083 |
| Banca Popolare Di Milano Scarl | 761,437 | 714,468 |
| Banca Popolare Di Sondrio Scarl | 127,922 | 583,499 |
| Credito Valtellinese Scarl * | 289,919 | 364,964 |
| | | 1,900,014 |
| Capital Goods 0.2% |
| Astaldi S.p.A. | 19,740 | 159,008 |
| C.I.R. S.p.A. - Compagnie Industriali Riunite * | 266,469 | 294,275 |
| Danieli & Co., Officine Meccaniche S.p.A. | 3,136 | 66,966 |
| Interpump Group S.p.A. | 3,782 | 55,648 |
| Salini Impregilo S.p.A. | 36,097 | 149,465 |
| Trevi Finanziaria Industriale S.p.A. (a) | 47,484 | 61,301 |
| | | 786,663 |
| Consumer Durables & Apparel 0.2% |
| Brunello Cucinelli S.p.A. | 3,179 | 57,500 |
| De'Longhi S.p.A. | 7,617 | 186,328 |
| Prada S.p.A. (a) | 60,900 | 247,510 |
| Safilo Group S.p.A. * | 14,622 | 181,571 |
| Tod's S.p.A. | 2,435 | 203,937 |
| | | 876,846 |
| Consumer Services 0.1% |
| Autogrill S.p.A. * | 28,414 | 264,493 |
| Diversified Financials 0.0% |
| Banca Generali S.p.A. | 2,405 | 74,073 |
| Energy 0.2% |
| ERG S.p.A. | 34,188 | 485,314 |
| Saras S.p.A. *(a) | 225,884 | 445,686 |
| | | 931,000 |
| Food & Staples Retailing 0.0% |
| MARR S.p.A. | 8,738 | 177,867 |
| Food, Beverage & Tobacco 0.2% |
| Davide Campari-Milano S.p.A. | 37,228 | 318,799 |
| Parmalat S.p.A. | 123,435 | 321,150 |
| | | 639,949 |
| Health Care Equipment & Services 0.0% |
| DiaSorin S.p.A. | 759 | 33,983 |
| Insurance 0.2% |
| Mediolanum S.p.A. | 29,033 | 236,533 |
| Societa Cattolica di Assicurazioni S.c.r.l. | 33,177 | 258,938 |
| Unipol Gruppo Finanziario S.p.A. | 70,134 | 326,683 |
| UnipolSai S.p.A. | 29,671 | 71,535 |
| | | 893,689 |
| Security | Number
of Shares | Value
($) |
| Materials 0.3% |
| Buzzi Unicem S.p.A. | 32,554 | 550,817 |
| Italcementi S.p.A. | 75,183 | 835,018 |
| | | 1,385,835 |
| Media 0.0% |
| RCS MediaGroup S.p.A. *(a) | 162,431 | 129,614 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| Recordati S.p.A. | 11,610 | 288,571 |
| Real Estate 0.0% |
| Beni Stabili S.p.A | 197,281 | 162,085 |
| Technology Hardware & Equipment 0.0% |
| Esprinet S.p.A. | 20,999 | 189,191 |
| Transportation 0.2% |
| Alitalia S.p.A. *(b)(c) | 14,782 | — |
| Ansaldo STS S.p.A. | 19,450 | 206,939 |
| ASTM S.p.A. | 19,517 | 261,582 |
| Societa Iniziative Autostradali e Servizi S.p.A. | 27,325 | 313,666 |
| | | 782,187 |
| Utilities 0.4% |
| ACEA S.p.A. | 16,373 | 235,364 |
| Enel Green Power S.p.A. | 278,690 | 589,196 |
| Hera S.p.A. | 229,093 | 601,188 |
| Iren S.p.A. | 269,132 | 443,357 |
| | | 1,869,105 |
| | | 11,616,832 |
| Japan 40.1% |
| Automobiles & Components 2.8% |
| Aisan Industry Co., Ltd. | 16,200 | 162,026 |
| Akebono Brake Industry Co., Ltd. (a) | 52,300 | 153,133 |
| Calsonic Kansei Corp. | 98,000 | 781,028 |
| Exedy Corp. | 15,200 | 349,572 |
| F.C.C. Co., Ltd. | 20,200 | 357,233 |
| Futaba Industrial Co., Ltd. | 69,400 | 298,364 |
| G-Tekt Corp. | 16,600 | 205,054 |
| HI-LEX Corp. | 4,300 | 131,773 |
| Kasai Kogyo Co., Ltd. | 6,200 | 77,056 |
| Keihin Corp. | 28,400 | 463,267 |
| Koito Manufacturing Co., Ltd. | 20,400 | 772,769 |
| KYB Corp. | 115,000 | 328,173 |
| Mitsuba Corp. | 9,600 | 150,794 |
| Musashi Seimitsu Industry Co., Ltd. | 11,300 | 229,359 |
| Nifco, Inc. | 9,200 | 354,653 |
| Nippon Seiki Co., Ltd. | 16,000 | 335,295 |
| Nissan Shatai Co., Ltd. | 47,800 | 551,215 |
| Nissin Kogyo Co., Ltd. | 20,200 | 310,696 |
| NOK Corp. | 24,300 | 571,042 |
| Pacific Industrial Co., Ltd. | 19,500 | 218,248 |
| Piolax, Inc. | 1,500 | 79,364 |
| Press Kogyo Co., Ltd. | 61,800 | 265,607 |
| Sanden Holdings Corp. | 49,000 | 168,680 |
| Showa Corp. | 30,400 | 281,777 |
| Sumitomo Riko Co., Ltd. | 31,000 | 250,591 |
| Tachi-S Co., Ltd. | 26,500 | 369,954 |
| Takata Corp. *(a) | 33,400 | 378,556 |
| Tokai Rika Co., Ltd. | 21,500 | 464,888 |
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Topre Corp. | 9,900 | 215,066 |
| Toyo Tire & Rubber Co., Ltd. | 16,300 | 342,997 |
| Toyota Boshoku Corp. | 45,600 | 974,329 |
| TS Tech Co., Ltd. | 18,600 | 510,115 |
| Unipres Corp. | 26,700 | 606,798 |
| Yorozu Corp. | 10,700 | 228,674 |
| | | 11,938,146 |
| Banks 2.3% |
| Aozora Bank Ltd. | 163,000 | 595,774 |
| Ashikaga Holdings Co., Ltd. | 16,800 | 75,396 |
| Fukuoka Financial Group, Inc. | 135,000 | 710,390 |
| Hokuhoku Financial Group, Inc. | 228,000 | 506,211 |
| Kyushu Financial Group, Inc. * | 52,640 | 404,822 |
| Senshu Ikeda Holdings, Inc. | 31,300 | 134,804 |
| Seven Bank Ltd. | 61,300 | 279,317 |
| Shinsei Bank Ltd. | 209,000 | 438,226 |
| Suruga Bank Ltd. | 15,200 | 299,242 |
| The 77 Bank Ltd. | 37,000 | 204,601 |
| The Awa Bank Ltd. | 30,000 | 166,372 |
| The Bank of Kyoto Ltd. | 27,000 | 272,687 |
| The Chiba Bank Ltd. | 87,000 | 634,668 |
| The Chugoku Bank Ltd. | 23,300 | 330,308 |
| The Daishi Bank Ltd. | 43,000 | 194,314 |
| The Gunma Bank Ltd. | 51,000 | 321,030 |
| The Hachijuni Bank Ltd. | 45,000 | 306,843 |
| The Hiroshima Bank Ltd. | 49,000 | 272,124 |
| The Hyakugo Bank Ltd. | 35,000 | 179,036 |
| The Hyakujushi Bank Ltd. | 10,000 | 37,601 |
| The Iyo Bank Ltd. | 25,500 | 274,181 |
| The Joyo Bank Ltd. | 63,000 | 327,230 |
| The Juroku Bank Ltd. | 49,000 | 218,584 |
| The Keiyo Bank Ltd. | 35,000 | 175,850 |
| The Kiyo Bank Ltd. | 11,000 | 167,289 |
| The Musashino Bank Ltd. | 5,000 | 190,227 |
| The Nanto Bank Ltd. | 19,000 | 60,272 |
| The Nishi-Nippon City Bank Ltd. | 119,000 | 347,735 |
| The Ogaki Kyoritsu Bank Ltd. | 56,000 | 218,212 |
| The San-in Godo Bank Ltd. | 24,000 | 221,793 |
| The Shiga Bank Ltd. | 26,000 | 138,967 |
| The Shizuoka Bank Ltd. | 58,000 | 581,842 |
| TOMONY Holdings, Inc. | 31,500 | 122,154 |
| Yamaguchi Financial Group, Inc. | 31,000 | 381,287 |
| | | 9,789,389 |
| Capital Goods 7.2% |
| Aica Kogyo Co., Ltd. | 12,300 | 243,636 |
| Amada Holdings Co., Ltd. | 60,700 | 541,346 |
| Asahi Diamond Industrial Co., Ltd. | 14,300 | 150,889 |
| Bunka Shutter Co., Ltd. | 8,700 | 67,540 |
| Central Glass Co., Ltd. | 101,000 | 498,537 |
| Chiyoda Corp. | 45,000 | 342,264 |
| Chudenko Corp. | 8,000 | 172,858 |
| CKD Corp. | 16,000 | 145,483 |
| COMSYS Holdings Corp. | 50,900 | 664,832 |
| Daifuku Co., Ltd. | 20,700 | 306,356 |
| Daihen Corp. | 31,000 | 154,151 |
| DMG Mori Co., Ltd. | 17,400 | 247,632 |
| Fuji Electric Co., Ltd. | 151,000 | 673,695 |
| Fuji Machine Manufacturing Co., Ltd. | 23,038 | 225,985 |
| Security | Number
of Shares | Value
($) |
| Fujikura Ltd. | 156,000 | 801,827 |
| Fujitec Co., Ltd. | 15,800 | 170,491 |
| Furukawa Co., Ltd. | 76,000 | 179,713 |
| Futaba Corp. | 10,900 | 140,730 |
| Glory Ltd. | 15,200 | 384,550 |
| GS Yuasa Corp. | 109,000 | 414,389 |
| Hazama Ando Corp. | 26,100 | 153,884 |
| Hitachi Koki Co., Ltd. | 19,100 | 139,146 |
| Hitachi Zosen Corp. | 72,300 | 395,161 |
| Hoshizaki Electric Co., Ltd. | 7,200 | 520,619 |
| Inaba Denki Sangyo Co., Ltd. | 11,700 | 365,075 |
| Inabata & Co., Ltd. | 42,800 | 495,756 |
| Iseki & Co., Ltd. (a) | 97,000 | 159,788 |
| Iwatani Corp. (a) | 88,000 | 487,196 |
| Kanamoto Co., Ltd. | 3,200 | 64,662 |
| Kandenko Co., Ltd. | 71,000 | 501,704 |
| Kanematsu Corp. | 321,000 | 530,046 |
| Keihan Electric Railway Co., Ltd. | 76,000 | 538,942 |
| Kitz Corp. | 49,800 | 229,212 |
| Komori Corp. | 16,100 | 190,481 |
| Kumagai Gumi Co., Ltd. | 22,000 | 65,914 |
| Kurita Water Industries Ltd. | 33,900 | 765,489 |
| Kuroda Electric Co., Ltd. | 19,400 | 392,974 |
| Kyowa Exeo Corp. | 51,400 | 536,415 |
| Kyudenko Corp. | 19,000 | 391,641 |
| Mabuchi Motor Co., Ltd. | 6,000 | 296,876 |
| Maeda Corp. | 35,000 | 254,154 |
| Maeda Road Construction Co., Ltd. | 25,000 | 454,437 |
| Makino Milling Machine Co., Ltd. | 21,000 | 162,655 |
| Meidensha Corp. | 54,000 | 189,933 |
| Minebea Co., Ltd. | 39,000 | 429,538 |
| Mirait Holdings Corp. | 35,900 | 311,083 |
| MISUMI Group, Inc. | 38,200 | 497,444 |
| Miura Co., Ltd. | 19,900 | 237,447 |
| Nabtesco Corp. | 20,800 | 416,518 |
| Nachi-Fujikoshi Corp. | 37,000 | 166,101 |
| Namura Shipbuilding Co., Ltd. | 22,000 | 192,395 |
| NGK Insulators Ltd. | 33,000 | 714,445 |
| Nichias Corp. | 46,000 | 289,923 |
| Nichiha Corp. | 13,400 | 180,711 |
| Nippo Corp. | 22,000 | 383,369 |
| Nippon Densetsu Kogyo Co., Ltd. | 14,400 | 272,914 |
| Nippon Sheet Glass Co., Ltd. * | 737,000 | 632,623 |
| Nippon Steel & Sumikin Bussan Corp. | 97,000 | 337,297 |
| Nishimatsu Construction Co., Ltd. | 96,000 | 381,106 |
| Nishio Rent All Co., Ltd. | 5,400 | 125,679 |
| Nisshinbo Holdings, Inc. | 50,000 | 679,031 |
| Nitta Corp. | 6,300 | 171,618 |
| Nitto Kogyo Corp. | 7,400 | 142,811 |
| Noritz Corp. | 16,500 | 257,908 |
| NTN Corp. | 133,000 | 660,971 |
| Oiles Corp. | 9,780 | 155,486 |
| OKUMA Corp. | 26,000 | 208,479 |
| Okumura Corp. | 52,000 | 275,206 |
| OSG Corp. | 12,900 | 242,651 |
| Penta-Ocean Construction Co., Ltd. | 82,300 | 373,741 |
| Ryobi Ltd. | 74,000 | 272,835 |
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Sanki Engineering Co., Ltd. | 25,600 | 211,392 |
| Sankyo Tateyama, Inc. | 15,400 | 214,369 |
| Sanwa Holdings Corp. | 46,300 | 374,509 |
| Seibu Holdings, Inc. | 9,200 | 186,197 |
| Shinmaywa Industries Ltd. | 28,000 | 305,671 |
| SHO-BOND Holdings Co., Ltd. | 3,300 | 131,059 |
| Sintokogio Ltd. | 21,900 | 188,285 |
| Tadano Ltd. | 15,000 | 179,182 |
| Taihei Dengyo Kaisha Ltd. | 7,000 | 74,391 |
| Taikisha Ltd. | 10,300 | 249,343 |
| Takara Standard Co., Ltd. | 34,000 | 256,836 |
| Takasago Thermal Engineering Co., Ltd. | 19,800 | 284,252 |
| Takuma Co., Ltd. | 8,000 | 63,169 |
| The Japan Steel Works Ltd. | 132,000 | 491,264 |
| The Nippon Road Co., Ltd. | 36,000 | 195,598 |
| THK Co., Ltd. | 23,600 | 444,568 |
| Toa Corp. | 97,000 | 220,094 |
| Toda Corp. | 71,000 | 386,224 |
| TOKAI Holdings Corp. | 21,300 | 90,329 |
| Toshiba Machine Co., Ltd. | 39,000 | 134,299 |
| Toshiba Plant Systems & Services Corp. | 12,500 | 133,893 |
| Totetsu Kogyo Co., Ltd. | 7,000 | 151,358 |
| Toyo Engineering Corp. | 67,000 | 168,485 |
| Trusco Nakayama Corp. | 9,800 | 343,600 |
| Tsubakimoto Chain Co. | 29,000 | 212,491 |
| Ushio, Inc. | 34,400 | 473,888 |
| Wakita & Co., Ltd. | 6,300 | 49,582 |
| Yamazen Corp. | 30,600 | 273,267 |
| Yuasa Trading Co., Ltd. | 10,600 | 247,088 |
| Yurtec Corp. | 9,000 | 86,354 |
| | | 30,639,431 |
| Commercial & Professional Supplies 1.1% |
| Aeon Delight Co., Ltd. | 7,100 | 204,538 |
| Daiseki Co., Ltd. | 8,500 | 136,378 |
| Duskin Co., Ltd. | 28,100 | 482,269 |
| Itoki Corp. | 5,900 | 43,133 |
| Kokuyo Co., Ltd. | 47,900 | 534,403 |
| Meitec Corp. | 5,300 | 192,484 |
| Nissha Printing Co., Ltd. | 9,900 | 215,291 |
| Nomura Co., Ltd. | 13,400 | 181,082 |
| Okamura Corp. | 27,600 | 256,078 |
| Park24 Co., Ltd. | 17,600 | 368,871 |
| Relia, Inc. | 18,300 | 173,542 |
| Sato Holdings Corp. | 7,200 | 156,525 |
| Sohgo Security Services Co., Ltd. | 16,500 | 796,014 |
| Temp Holdings Co., Ltd. | 28,800 | 429,979 |
| Toppan Forms Co., Ltd. | 24,800 | 319,492 |
| | | 4,490,079 |
| Consumer Durables & Apparel 2.0% |
| Alpine Electronics, Inc. | 17,600 | 231,098 |
| Asics Corp. | 18,400 | 508,221 |
| Casio Computer Co., Ltd. | 35,300 | 665,029 |
| Foster Electric Co., Ltd. | 4,600 | 112,866 |
| Fujitsu General Ltd. | 16,000 | 200,926 |
| Funai Electric Co., Ltd. | 27,700 | 285,837 |
| Gunze Ltd. | 105,000 | 333,503 |
| Haseko Corp. | 43,700 | 444,306 |
| Heiwa Corp. | 9,500 | 175,368 |
| Security | Number
of Shares | Value
($) |
| JVC Kenwood Corp. | 74,100 | 193,825 |
| Kurabo Industries Ltd. | 118,000 | 209,076 |
| Misawa Homes Co., Ltd. | 15,700 | 94,468 |
| Mizuno Corp. | 61,000 | 299,455 |
| Onward Holdings Co., Ltd. | 78,000 | 489,888 |
| PanaHome Corp. | 41,000 | 291,761 |
| Pioneer Corp. * | 224,200 | 603,831 |
| Rinnai Corp. | 7,000 | 554,932 |
| Sangetsu Co., Ltd. | 25,200 | 402,013 |
| Sankyo Co., Ltd. | 16,800 | 647,466 |
| Sanyo Shokai Ltd. | 30,000 | 87,497 |
| Seiko Holdings Corp. | 15,000 | 97,724 |
| Seiren Co., Ltd. | 17,500 | 205,904 |
| Tamron Co., Ltd. | 7,400 | 147,792 |
| Token Corp. | 4,150 | 329,288 |
| Tomy Co., Ltd. (a) | 44,200 | 222,688 |
| TSI Holdings Co., Ltd. | 40,800 | 286,114 |
| Wacoal Holdings Corp. | 37,000 | 464,294 |
| | | 8,585,170 |
| Consumer Services 0.9% |
| Accordia Golf Co., Ltd. | 31,200 | 282,867 |
| Doutor Nichires Holdings Co., Ltd. | 13,800 | 200,957 |
| Dynam Japan Holdings Co., Ltd. | 157,800 | 193,894 |
| H.I.S. Co., Ltd. | 11,500 | 386,587 |
| McDonald's Holdings Co., Ltd. (a) | 25,833 | 610,983 |
| MOS Food Services, Inc. | 7,900 | 171,232 |
| Ohsho Food Service Corp. | 1,200 | 40,030 |
| Plenus Co., Ltd. | 9,700 | 149,999 |
| Resorttrust, Inc. | 7,500 | 192,757 |
| Round One Corp. | 48,300 | 218,172 |
| Royal Holdings Co., Ltd. | 11,400 | 200,224 |
| Saint Marc Holdings Co., Ltd. | 4,900 | 145,661 |
| Saizeriya Co., Ltd. | 13,400 | 303,730 |
| Skylark Co., Ltd. | 6,500 | 84,545 |
| Tokyo Dome Corp. | 38,000 | 176,423 |
| Yoshinoya Holdings Co., Ltd. | 28,900 | 356,071 |
| Zensho Holdings Co., Ltd. | 33,300 | 313,760 |
| | | 4,027,892 |
| Diversified Financials 0.8% |
| Acom Co., Ltd. * | 62,100 | 339,984 |
| AEON Financial Service Co., Ltd. | 14,000 | 349,798 |
| Century Tokyo Leasing Corp. | 7,300 | 247,626 |
| Credit Saison Co., Ltd. | 40,200 | 825,289 |
| Fuyo General Lease Co., Ltd. | 4,000 | 179,330 |
| Hitachi Capital Corp. | 8,900 | 255,739 |
| Jaccs Co., Ltd. | 40,000 | 167,382 |
| Japan Exchange Group, Inc. | 6,600 | 106,200 |
| Mitsubishi UFJ Lease & Finance Co., Ltd. | 60,700 | 318,599 |
| Okasan Securities Group, Inc. | 9,000 | 52,899 |
| Orient Corp. * | 182,900 | 365,680 |
| SBI Holdings, Inc. | 22,900 | 259,190 |
| Tokai Tokyo Financial Holdings, Inc. | 9,200 | 55,973 |
| | | 3,523,689 |
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Energy 0.2% |
| Itochu Enex Co., Ltd. | 26,000 | 208,246 |
| Japan Petroleum Exploration Co., Ltd. | 13,800 | 414,166 |
| Nippon Gas Co., Ltd. | 2,300 | 58,169 |
| | | 680,581 |
| Food & Staples Retailing 1.9% |
| Ain Pharmaciez, Inc. | 5,400 | 255,629 |
| Arcs Co., Ltd. | 25,000 | 503,976 |
| Axial Retailing, Inc. | 2,800 | 104,167 |
| Belc Co., Ltd. | 1,900 | 70,896 |
| Cawachi Ltd. | 20,400 | 353,048 |
| Cocokara fine, Inc. | 15,600 | 616,716 |
| Cosmos Pharmaceutical Corp. | 1,400 | 174,264 |
| Create SD Holdings Co., Ltd. | 1,500 | 88,321 |
| FamilyMart Co., Ltd. | 12,500 | 510,960 |
| Heiwado Co., Ltd. | 16,500 | 370,164 |
| Kato Sangyo Co., Ltd. | 24,500 | 596,280 |
| Matsumotokiyoshi Holdings Co., Ltd. | 18,700 | 800,663 |
| Ministop Co., Ltd. | 9,400 | 173,671 |
| Mitsubishi Shokuhin Co., Ltd. | 14,400 | 366,282 |
| San-A Co., Ltd. | 6,000 | 254,794 |
| Sugi Holdings Co., Ltd. | 9,800 | 476,210 |
| Sundrug Co., Ltd. | 9,400 | 495,187 |
| Tsuruha Holdings, Inc. | 8,700 | 689,249 |
| Valor Holdings Co., Ltd. | 26,200 | 610,992 |
| Welcia Holdings Co., Ltd. | 5,500 | 271,069 |
| Yaoko Co., Ltd. | 5,900 | 237,637 |
| Yokohama Reito Co., Ltd. | 35,300 | 281,529 |
| | | 8,301,704 |
| Food, Beverage & Tobacco 2.6% |
| Calbee, Inc. | 8,400 | 304,347 |
| Coca-Cola East Japan Co., Ltd. | 18,100 | 254,384 |
| Dydo Drinco, Inc. | 5,500 | 234,895 |
| Ezaki Glico Co., Ltd. | 12,600 | 601,804 |
| Fuji Oil Holdings, Inc. | 28,900 | 407,518 |
| Hokuto Corp. | 10,000 | 195,469 |
| House Foods Group, Inc. | 21,800 | 376,652 |
| Ito En Ltd. | 24,600 | 513,856 |
| Itoham Foods, Inc. | 86,000 | 439,345 |
| J-Oil Mills, Inc. | 64,000 | 185,031 |
| Kagome Co., Ltd. (a) | 26,200 | 445,240 |
| Kikkoman Corp. | 26,000 | 814,355 |
| Marudai Food Co., Ltd. | 21,000 | 77,858 |
| Maruha Nichiro Corp. | 5,900 | 88,547 |
| Megmilk Snow Brand Co., Ltd. | 40,700 | 845,750 |
| Mitsui Sugar Co., Ltd. | 32,000 | 128,699 |
| Morinaga & Co., Ltd. | 69,000 | 351,370 |
| Morinaga Milk Industry Co., Ltd. | 180,000 | 816,883 |
| Nichirei Corp. | 132,000 | 858,597 |
| Nippon Flour Mills Co., Ltd. | 80,000 | 497,196 |
| Nippon Suisan Kaisha Ltd. | 118,300 | 396,334 |
| Prima Meat Packers Ltd. | 76,000 | 212,305 |
| Sapporo Holdings Ltd. | 136,000 | 560,506 |
| Takara Holdings, Inc. | 51,700 | 371,349 |
| The Nisshin Oillio Group Ltd. | 100,000 | 371,275 |
| Warabeya Nichiyo Co., Ltd. | 12,500 | 244,019 |
| Yakult Honsha Co., Ltd. | 10,600 | 561,181 |
| | | 11,154,765 |
| Security | Number
of Shares | Value
($) |
| Health Care Equipment & Services 0.9% |
| BML, Inc. | 2,000 | 58,898 |
| Hogy Medical Co., Ltd. | 2,800 | 134,410 |
| Miraca Holdings, Inc. | 13,600 | 605,271 |
| Nichii Gakkan Co. (a) | 26,500 | 182,948 |
| Nihon Kohden Corp. | 14,800 | 288,123 |
| Nikkiso Co., Ltd. | 16,800 | 135,598 |
| Nipro Corp. | 36,600 | 410,301 |
| Paramount Bed Holdings Co., Ltd. | 6,600 | 211,696 |
| Ship Healthcare Holdings, Inc. | 12,000 | 290,679 |
| Sysmex Corp. | 10,700 | 611,599 |
| Toho Holdings Co., Ltd. | 37,700 | 835,859 |
| | | 3,765,382 |
| Household & Personal Products 0.7% |
| Earth Chemical Co., Ltd. | 5,600 | 221,168 |
| Fancl Corp. | 17,100 | 239,630 |
| Kobayashi Pharmaceutical Co., Ltd. | 5,500 | 426,405 |
| Kose Corp. | 4,800 | 468,766 |
| Lion Corp. | 64,000 | 616,979 |
| Mandom Corp. | 6,300 | 250,000 |
| Pigeon Corp. | 9,500 | 266,180 |
| Pola Orbis Holdings, Inc. | 5,000 | 318,004 |
| | | 2,807,132 |
| Insurance 0.1% |
| Sony Financial Holdings, Inc. | 26,199 | 469,554 |
| Materials 4.3% |
| ADEKA Corp. | 33,900 | 498,188 |
| Aichi Steel Corp. | 62,000 | 269,316 |
| Asahi Holdings, Inc. | 18,000 | 264,891 |
| Chugoku Marine Paints Ltd. | 23,000 | 164,425 |
| Daido Steel Co., Ltd. | 117,000 | 447,854 |
| Daio Paper Corp. (a) | 37,000 | 365,025 |
| Dowa Holdings Co., Ltd. | 77,000 | 671,333 |
| FP Corp. | 6,800 | 278,159 |
| Fuji Seal International, Inc. | 7,700 | 261,420 |
| Fujimori Kogyo Co., Ltd. | 5,400 | 148,762 |
| Godo Steel Ltd. | 40,000 | 69,998 |
| Hitachi Metals Ltd. | 39,690 | 449,523 |
| Hokuetsu Kishu Paper Co., Ltd. | 68,700 | 478,711 |
| Ishihara Sangyo Kaisha Ltd. * | 178,000 | 172,596 |
| Kansai Paint Co., Ltd. | 29,000 | 442,070 |
| Konishi Co., Ltd. | 8,500 | 156,233 |
| Kureha Corp. | 63,000 | 240,552 |
| Kyoei Steel Ltd. | 11,100 | 183,554 |
| Lintec Corp. | 18,800 | 440,390 |
| Maruichi Steel Tube Ltd. | 15,700 | 402,050 |
| Mitsubishi Gas Chemical Co., Inc. | 137,000 | 763,827 |
| Mitsubishi Steel Manufacturing Co., Ltd. | 84,000 | 161,152 |
| Nihon Parkerizing Co., Ltd. | 18,500 | 164,562 |
| Nippon Denko Co., Ltd. | 74,200 | 149,647 |
| Nippon Kayaku Co., Ltd. | 41,000 | 427,745 |
| Nippon Light Metal Holdings Co., Ltd. | 317,200 | 542,560 |
| Nippon Paint Holdings Co., Ltd. | 11,500 | 242,903 |
| Nippon Shokubai Co., Ltd. | 8,400 | 657,359 |
| Nippon Soda Co., Ltd. | 42,000 | 326,012 |
| Nissan Chemical Industries Ltd. | 25,500 | 633,330 |
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Nisshin Steel Co., Ltd. | 36,200 | 371,500 |
| Nittetsu Mining Co., Ltd. | 48,000 | 211,461 |
| NOF Corp. | 50,000 | 357,393 |
| Pacific Metals Co., Ltd. * | 77,000 | 206,065 |
| Rengo Co., Ltd. | 144,000 | 684,533 |
| Sakai Chemical Industry Co., Ltd. | 27,000 | 79,857 |
| Sakata INX Corp. | 15,700 | 143,204 |
| Sanyo Chemical Industries Ltd. | 26,000 | 192,309 |
| Sanyo Special Steel Co., Ltd. | 65,000 | 267,751 |
| Sumitomo Bakelite Co., Ltd. | 93,000 | 381,530 |
| Sumitomo Osaka Cement Co., Ltd. | 148,000 | 570,322 |
| The Nippon Synthetic Chemical Industry Co., Ltd. | 20,000 | 148,135 |
| Toagosei Co., Ltd. | 56,400 | 472,194 |
| Toho Zinc Co., Ltd. | 60,000 | 165,817 |
| Tokai Carbon Co., Ltd. | 107,000 | 291,765 |
| Tokuyama Corp. *(a) | 300,000 | 605,013 |
| Tokyo Ohka Kogyo Co., Ltd. | 8,000 | 255,689 |
| Tokyo Steel Manufacturing Co., Ltd. | 46,100 | 307,633 |
| Topy Industries Ltd. | 116,000 | 260,996 |
| Toyo Ink SC Holdings Co., Ltd. | 83,000 | 342,231 |
| Toyobo Co., Ltd. | 407,000 | 596,600 |
| UACJ Corp. | 97,300 | 188,953 |
| Yamato Kogyo Co., Ltd. | 12,800 | 340,955 |
| Yodogawa Steel Works Ltd. | 12,100 | 213,299 |
| Zeon Corp. | 53,000 | 432,574 |
| | | 18,561,926 |
| Media 0.7% |
| Asatsu-DK, Inc. | 20,500 | 503,074 |
| Avex Group Holdings, Inc. | 14,400 | 169,752 |
| CyberAgent, Inc. | 5,000 | 205,362 |
| Daiichikosho Co., Ltd. | 11,900 | 396,889 |
| SKY Perfect JSAT Holdings, Inc. | 59,000 | 310,549 |
| Toei Co., Ltd. | 20,000 | 178,697 |
| Toho Co., Ltd. | 20,200 | 525,669 |
| Tokyo Broadcasting System Holdings, Inc. | 15,100 | 224,343 |
| TV Asahi Holdings Corp. | 9,500 | 158,542 |
| Zenrin Co., Ltd. | 12,000 | 174,778 |
| | | 2,847,655 |
| Pharmaceuticals, Biotechnology & Life Sciences 1.1% |
| Hisamitsu Pharmaceutical Co., Inc. | 13,800 | 534,886 |
| Kaken Pharmaceutical Co., Ltd. | 4,300 | 297,194 |
| Kissei Pharmaceutical Co., Ltd. | 6,700 | 172,356 |
| KYORIN Holdings, Inc. | 12,500 | 210,136 |
| Mochida Pharmaceutical Co., Ltd. | 4,700 | 277,515 |
| Nichi-iko Pharmaceutical Co., Ltd. | 6,900 | 191,505 |
| Nippon Shinyaku Co., Ltd. | 5,000 | 195,492 |
| Rohto Pharmaceutical Co., Ltd. | 24,200 | 399,263 |
| Santen Pharmaceutical Co., Ltd. | 46,900 | 636,549 |
| Sawai Pharmaceutical Co., Ltd. | 4,900 | 313,685 |
| Sumitomo Dainippon Pharma Co., Ltd. | 39,000 | 431,654 |
| Security | Number
of Shares | Value
($) |
| Taisho Pharmaceutical Holdings Co., Ltd. | 11,200 | 698,822 |
| Tsumura & Co. | 17,300 | 416,862 |
| | | 4,775,919 |
| Real Estate 1.5% |
| Advance Residence Investment Corp. | 128 | 273,120 |
| Aeon Mall Co., Ltd. | 20,230 | 338,402 |
| Daikyo, Inc. | 59,000 | 101,989 |
| Frontier Real Estate Investment Corp. | 35 | 141,605 |
| Fukuoka REIT Corp. | 41 | 66,858 |
| Japan Excellent, Inc. | 153 | 167,603 |
| Japan Logistics Fund, Inc. | 32 | 59,844 |
| Japan Prime Realty Investment Corp. | 81 | 263,669 |
| Japan Real Estate Investment Corp. | 122 | 563,943 |
| Japan Retail Fund Investment Corp. | 268 | 519,055 |
| Kenedix Office Investment Corp. | 43 | 197,116 |
| Leopalace21 Corp. * | 73,400 | 391,069 |
| Mori Trust Sogo REIT, Inc. | 79 | 139,764 |
| Nippon Accommodations Fund, Inc. | 43 | 148,347 |
| Nippon Building Fund, Inc. | 150 | 712,391 |
| Nippon Prologis REIT, Inc. | 31 | 54,516 |
| Nomura Real Estate Holdings, Inc. | 33,700 | 720,133 |
| NTT Urban Development Corp. | 17,500 | 173,408 |
| Orix JREIT, Inc. | 203 | 273,273 |
| Premier Investment Corp. | 50 | 49,052 |
| Relo Holdings, Inc. | 1,800 | 193,544 |
| Tokyo Tatemono Co., Ltd. | 24,600 | 305,663 |
| Top REIT, Inc. | 31 | 116,430 |
| United Urban Investment Corp. | 207 | 287,192 |
| | | 6,257,986 |
| Retailing 2.6% |
| ABC-Mart, Inc. | 3,500 | 195,220 |
| Adastria Co., Ltd. | 8,190 | 461,053 |
| Alpen Co., Ltd. | 11,700 | 191,524 |
| AOKI Holdings, Inc. | 16,000 | 195,024 |
| Aoyama Trading Co., Ltd. | 18,400 | 670,373 |
| Arcland Sakamoto Co., Ltd. | 8,700 | 190,446 |
| ASKUL Corp. | 8,200 | 300,988 |
| Autobacs Seven Co., Ltd. | 44,100 | 773,319 |
| Bic Camera, Inc. (a) | 25,300 | 205,844 |
| Canon Marketing Japan, Inc. | 28,900 | 439,359 |
| Chiyoda Co., Ltd. | 12,200 | 404,462 |
| DCM Holdings Co., Ltd. | 82,400 | 545,868 |
| Don Quijote Holdings Co., Ltd. | 18,100 | 664,888 |
| Doshisha Co., Ltd. | 12,500 | 230,155 |
| Geo Holdings Corp. | 38,000 | 568,624 |
| Gulliver International Co., Ltd. (a) | 20,600 | 207,531 |
| H2O Retailing Corp. | 36,300 | 705,147 |
| Hikari Tsushin, Inc. | 4,500 | 342,444 |
| Izumi Co., Ltd. | 9,600 | 356,140 |
| Joyful Honda Co., Ltd. | 8,200 | 154,574 |
| Kohnan Shoji Co., Ltd. | 31,700 | 462,400 |
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Komeri Co., Ltd. | 16,800 | 359,178 |
| Nojima Corp. | 6,300 | 74,460 |
| Rakuten, Inc. | 34,660 | 480,152 |
| Ryohin Keikaku Co., Ltd. | 3,600 | 722,869 |
| Sanrio Co., Ltd. (a) | 8,200 | 217,843 |
| United Arrows Ltd. | 5,900 | 254,177 |
| USS Co., Ltd. | 28,100 | 496,074 |
| Xebio Holdings Co., Ltd. | 21,400 | 382,888 |
| | | 11,253,024 |
| Semiconductors & Semiconductor Equipment 0.3% |
| Advantest Corp. (a) | 20,300 | 161,935 |
| Disco Corp. | 3,300 | 300,979 |
| Sanken Electric Co., Ltd. | 30,000 | 104,267 |
| SCREEN Holdings Co., Ltd. | 39,000 | 230,425 |
| Shindengen Electric Manufacturing Co., Ltd. | 15,000 | 54,781 |
| Shinko Electric Industries Co., Ltd. | 35,000 | 212,569 |
| Tokyo Seimitsu Co., Ltd. | 8,000 | 176,626 |
| Ulvac, Inc. | 11,500 | 204,525 |
| | | 1,446,107 |
| Software & Services 1.9% |
| Capcom Co., Ltd. | 14,600 | 307,839 |
| Dena Co., Ltd. | 41,386 | 664,009 |
| DTS Corp. | 8,100 | 191,468 |
| Fuji Soft, Inc. | 10,000 | 191,077 |
| Gree, Inc. (a) | 60,900 | 308,483 |
| Ines Corp. | 6,800 | 60,889 |
| Internet Initiative Japan, Inc. | 8,300 | 155,329 |
| IT Holdings Corp. | 37,700 | 931,978 |
| Itochu Techno-Solutions Corp. | 19,000 | 416,537 |
| NEC Networks & System Integration Corp. | 14,600 | 273,484 |
| NET One Systems Co., Ltd. | 60,800 | 374,861 |
| Nexon Co., Ltd. | 18,061 | 250,524 |
| Nihon Unisys Ltd. | 26,500 | 291,154 |
| NS Solutions Corp. | 5,000 | 244,030 |
| NSD Co., Ltd. | 10,820 | 150,721 |
| Obic Co., Ltd. | 7,000 | 369,439 |
| Oracle Corp., Japan | 2,900 | 131,894 |
| Otsuka Corp. | 14,900 | 720,263 |
| SCSK Corp. | 6,476 | 248,290 |
| Square Enix Holdings Co., Ltd. | 15,200 | 410,847 |
| Transcosmos, Inc. | 9,300 | 259,667 |
| Trend Micro, Inc. | 15,600 | 607,954 |
| Yahoo Japan Corp. | 139,500 | 591,636 |
| | | 8,152,373 |
| Technology Hardware & Equipment 2.7% |
| Alps Electric Co., Ltd. | 26,500 | 822,538 |
| Amano Corp. | 19,900 | 258,475 |
| Anritsu Corp. | 36,200 | 235,746 |
| Azbil Corp. | 21,500 | 542,427 |
| Canon Electronics, Inc. | 9,700 | 165,460 |
| Citizen Holdings Co., Ltd. | 81,600 | 618,487 |
| Daiwabo Holdings Co., Ltd. | 165,000 | 324,933 |
| Eizo Corp. | 8,850 | 207,194 |
| Hamamatsu Photonics K.K. | 16,200 | 412,384 |
| Hirose Electric Co., Ltd. | 4,795 | 580,367 |
| Hitachi High-Technologies Corp. | 25,200 | 677,705 |
| Hitachi Kokusai Electric, Inc. | 9,500 | 131,166 |
| Security | Number
of Shares | Value
($) |
| Hitachi Maxell Ltd. | 12,400 | 212,660 |
| Horiba Ltd. | 9,600 | 377,746 |
| Hosiden Corp. | 88,700 | 545,458 |
| Japan Aviation Electronics Industry Ltd. | 11,000 | 194,855 |
| Japan Display, Inc. * | 85,100 | 267,353 |
| Melco Holdings, Inc. | 9,100 | 157,381 |
| Mitsumi Electric Co., Ltd. | 71,600 | 432,267 |
| Nichicon Corp. | 22,400 | 179,580 |
| Nippon Chemi-Con Corp. | 56,000 | 129,576 |
| Nippon Signal Co., Ltd. | 17,800 | 184,920 |
| Oki Electric Industry Co., Ltd. | 148,000 | 249,800 |
| Riso Kagaku Corp. | 8,900 | 161,432 |
| Ryosan Co., Ltd. | 19,900 | 481,579 |
| Ryoyo Electro Corp. | 17,500 | 215,389 |
| Shimadzu Corp. | 44,000 | 682,549 |
| Siix Corp. | 6,200 | 174,483 |
| Taiyo Yuden Co., Ltd. | 34,900 | 491,430 |
| Toshiba TEC Corp. | 63,000 | 228,238 |
| Wacom Co., Ltd. (a) | 38,200 | 142,984 |
| Yaskawa Electric Corp. | 34,700 | 411,608 |
| Yokogawa Electric Corp. | 49,800 | 556,280 |
| | | 11,454,450 |
| Transportation 1.4% |
| Fukuyama Transporting Co., Ltd. (a) | 63,000 | 342,132 |
| Hitachi Transport System Ltd. | 24,600 | 433,067 |
| Japan Airport Terminal Co., Ltd. | 3,800 | 205,519 |
| Keikyu Corp. | 63,000 | 518,229 |
| Keisei Electric Railway Co., Ltd. | 35,000 | 431,299 |
| Kintetsu World Express, Inc. | 16,200 | 304,396 |
| Konoike Transport Co., Ltd. | 17,000 | 210,623 |
| Mitsubishi Logistics Corp. | 24,000 | 344,446 |
| Mitsui-Soko Holdings Co., Ltd. | 57,000 | 183,910 |
| Nankai Electric Railway Co., Ltd. | 91,000 | 465,396 |
| Nikkon Holdings Co., Ltd. | 20,800 | 401,820 |
| Nishi-Nippon Railroad Co., Ltd. | 94,000 | 486,048 |
| Sankyu, Inc. | 129,000 | 726,687 |
| Senko Co., Ltd. | 42,000 | 290,716 |
| Sotetsu Holdings, Inc. | 70,000 | 398,561 |
| The Sumitomo Warehouse Co., Ltd. | 39,000 | 206,906 |
| | | 5,949,755 |
| Utilities 0.1% |
| The Okinawa Electric Power Co., Inc. | 15,900 | 390,312 |
| | | 171,262,421 |
| Luxembourg 0.5% |
| Banks 0.0% |
| Espirito Santo Financial Group S.A. *(b)(c) | 69,773 | — |
| Commercial & Professional Supplies 0.1% |
| Regus plc | 75,311 | 387,782 |
| Consumer Durables & Apparel 0.1% |
| Samsonite International S.A. | 120,400 | 356,512 |
| Household & Personal Products 0.1% |
| Oriflame Holding AG *(a) | 25,781 | 357,193 |
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Materials 0.2% |
| APERAM S.A. * | 18,939 | 583,138 |
| Ternium S.A. ADR | 31,177 | 448,014 |
| | | 1,031,152 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% |
| Eurofins Scientific SE | 200 | 72,348 |
| Retailing 0.0% |
| L'Occitane International S.A. | 30,500 | 61,546 |
| | | 2,266,533 |
| Netherlands 2.2% |
| Capital Goods 0.7% |
| Aalberts Industries N.V. | 17,215 | 558,116 |
| AerCap Holdings N.V. * | 7,354 | 305,191 |
| Arcadis N.V. | 14,845 | 374,232 |
| Koninklijke BAM Groep N.V * | 183,125 | 1,008,568 |
| Sensata Technologies Holding N.V. * | 7,623 | 366,590 |
| TKH Group N.V. | 5,119 | 193,706 |
| | | 2,806,403 |
| Commercial & Professional Supplies 0.1% |
| Brunel International N.V. | 3,348 | 62,793 |
| USG People N.V. | 34,865 | 554,157 |
| | | 616,950 |
| Consumer Durables & Apparel 0.1% |
| TomTom N.V. * | 22,598 | 245,064 |
| Diversified Financials 0.1% |
| Euronext N.V. (d) | 3,102 | 136,230 |
| HAL Trust | 1,358 | 251,026 |
| | | 387,256 |
| Energy 0.4% |
| Core Laboratories N.V. | 3,044 | 354,109 |
| Koninklijke Vopak N.V. | 9,744 | 391,421 |
| Nostrum Oil & Gas plc | 8,304 | 55,046 |
| SBM Offshore N.V. * | 57,149 | 780,785 |
| | | 1,581,361 |
| Food & Staples Retailing 0.2% |
| X5 Retail Group N.V. GDR - Reg'd * | 33,904 | 700,725 |
| Food, Beverage & Tobacco 0.1% |
| Corbion N.V. | 25,557 | 627,550 |
| Insurance 0.1% |
| NN Group N.V. | 8,433 | 264,230 |
| Materials 0.1% |
| Koninklijke Ten Cate N.V. | 14,574 | 394,568 |
| OCI N.V. * | 5,904 | 166,559 |
| | | 561,127 |
| Real Estate 0.2% |
| Eurocommercial Properties N.V. CVA | 5,159 | 246,044 |
| NSI N.V. | 19,507 | 84,855 |
| Vastned Retail N.V. | 4,629 | 224,499 |
| Wereldhave N.V. | 4,630 | 288,631 |
| | | 844,029 |
| Retailing 0.0% |
| Beter Bed Holding N.V. | 2,934 | 70,190 |
| Security | Number
of Shares | Value
($) |
| Semiconductors & Semiconductor Equipment 0.1% |
| ASM International N.V. | 8,605 | 328,258 |
| Software & Services 0.0% |
| Yandex N.V., Class A * | 12,930 | 208,173 |
| | | 9,241,316 |
| New Zealand 0.9% |
| Consumer Services 0.1% |
| SKYCITY Entertainment Group Ltd. | 120,613 | 327,188 |
| Energy 0.1% |
| Z Energy Ltd. | 62,709 | 284,501 |
| Food, Beverage & Tobacco 0.0% |
| Fonterra Co-operative Group Ltd. | 31,832 | 115,870 |
| Health Care Equipment & Services 0.1% |
| Fisher & Paykel Healthcare Corp., Ltd. | 45,784 | 240,919 |
| Materials 0.1% |
| Nuplex Industries Ltd. | 106,145 | 305,800 |
| Media 0.1% |
| SKY Network Television Ltd. | 95,946 | 294,561 |
| Real Estate 0.0% |
| Kiwi Property Group Ltd. | 177,467 | 163,188 |
| Telecommunication Services 0.1% |
| Chorus Ltd. * | 165,171 | 317,560 |
| Transportation 0.1% |
| Air New Zealand Ltd. | 149,636 | 294,340 |
| Auckland International Airport Ltd. | 70,194 | 249,443 |
| Mainfreight Ltd. (a) | 14,458 | 151,666 |
| | | 695,449 |
| Utilities 0.2% |
| Contact Energy Ltd. | 65,450 | 229,727 |
| Genesis Energy Ltd. | 67,950 | 85,761 |
| Infratil Ltd. | 165,611 | 347,830 |
| Mighty River Power Ltd. | 121,746 | 230,586 |
| TrustPower Ltd. | 20,311 | 107,278 |
| | | 1,001,182 |
| | | 3,746,218 |
| Norway 1.1% |
| Banks 0.1% |
| SpareBank 1 SMN | 27,683 | 173,572 |
| SpareBank 1 SR Bank A.S.A. | 37,515 | 179,204 |
| | | 352,776 |
| Capital Goods 0.0% |
| Veidekke A.S.A. | 11,784 | 149,694 |
| Commercial & Professional Supplies 0.1% |
| Tomra Systems A.S.A. | 19,458 | 207,596 |
| Diversified Financials 0.0% |
| Aker A.S.A., A Shares | 3,652 | 71,928 |
| Energy 0.3% |
| Akastor A.S.A. * | 210,711 | 275,269 |
| BW Offshore Ltd. | 115,295 | 48,070 |
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Fred Olsen Energy A.S.A. * | 53,610 | 250,544 |
| TGS Nopec Geophysical Co. A.S.A. (a) | 23,714 | 470,198 |
| | | 1,044,081 |
| Food, Beverage & Tobacco 0.1% |
| Austevoll Seafood A.S.A. | 32,475 | 199,717 |
| Leroy Seafood Group A.S.A. | 5,486 | 192,428 |
| Salmar A.S.A. | 3,782 | 61,875 |
| | | 454,020 |
| Insurance 0.2% |
| Gjensidige Forsikring A.S.A. | 40,228 | 612,473 |
| Storebrand A.S.A. * | 107,387 | 374,708 |
| | | 987,181 |
| Materials 0.0% |
| Borregaard A.S.A. | 23,434 | 124,888 |
| Media 0.1% |
| Schibsted A.S.A., Class A | 9,468 | 317,712 |
| Semiconductors & Semiconductor Equipment 0.1% |
| REC Silicon A.S.A. *(a) | 2,155,464 | 387,434 |
| Software & Services 0.1% |
| Atea A.S.A. * | 39,071 | 363,250 |
| Transportation 0.0% |
| Norwegian Air Shuttle A.S.A. * | 1,613 | 59,273 |
| | | 4,519,833 |
| Portugal 0.4% |
| Banks 0.0% |
| Banco BPI S.A. - Reg'd * | 108,552 | 131,682 |
| Banco Espirito Santo S.A. - Reg'd *(b)(c) | 320,558 | — |
| | | 131,682 |
| Capital Goods 0.0% |
| Mota-Engil, SGPS, S.A. (a) | 53,477 | 133,768 |
| Food & Staples Retailing 0.1% |
| Sonae SGPS S.A. | 350,405 | 418,662 |
| Materials 0.1% |
| Portucel S.A. | 21,069 | 85,775 |
| Semapa-Sociedade de Investimento e Gestao | 19,535 | 276,480 |
| | | 362,255 |
| Media 0.1% |
| NOS SGPS S.A. | 26,149 | 216,999 |
| Transportation 0.0% |
| CTT-Correios de Portugal S.A. | 13,888 | 157,748 |
| Utilities 0.1% |
| Redes Energeticas Nacionais SGPS, S.A. | 52,506 | 160,006 |
| | | 1,581,120 |
| Singapore 1.6% |
| Capital Goods 0.3% |
| Cosco Corp., (Singapore) Ltd. (a)(b)(c) | 522,231 | 139,793 |
| Sembcorp Marine Ltd. (a) | 251,296 | 418,160 |
| Singapore Technologies Engineering Ltd. | 284,400 | 670,325 |
| Security | Number
of Shares | Value
($) |
| United Engineers Ltd. | 96,100 | 136,084 |
| Vard Holdings Ltd. *(a) | 461,600 | 124,857 |
| | | 1,489,219 |
| Consumer Services 0.1% |
| Genting Singapore plc | 643,100 | 372,529 |
| Diversified Financials 0.1% |
| Singapore Exchange Ltd. | 58,200 | 306,212 |
| Energy 0.0% |
| InterOil Corp. * | 1,818 | 69,557 |
| Sakari Resources Ltd. *(b)(c) | 18,000 | — |
| | | 69,557 |
| Food & Staples Retailing 0.1% |
| Olam International Ltd. | 160,204 | 228,077 |
| Real Estate 0.6% |
| Ascendas Real Estate Investment Trust | 214,100 | 364,511 |
| CapitaLand Commercial Trust Ltd. | 196,302 | 196,993 |
| CapitaLand Mall Trust | 234,700 | 330,907 |
| City Developments Ltd. | 88,500 | 500,849 |
| Global Logistic Properties Ltd. | 146,400 | 234,153 |
| Mapletree Greater China Commercial Trust | 100,600 | 71,317 |
| Mapletree Industrial Trust | 56,600 | 61,614 |
| Mapletree Logistics Trust | 82,200 | 59,785 |
| Suntec Real Estate Investment Trust | 165,800 | 194,747 |
| UOL Group Ltd. | 66,500 | 310,340 |
| Wing Tai Holdings Ltd. | 62,600 | 77,901 |
| Yanlord Land Group Ltd. | 85,500 | 63,694 |
| | | 2,466,811 |
| Semiconductors & Semiconductor Equipment 0.0% |
| Kulicke & Soffa Industries, Inc. * | 16,112 | 170,787 |
| Telecommunication Services 0.1% |
| M1 Ltd. | 67,900 | 137,480 |
| StarHub Ltd. | 96,600 | 247,810 |
| | | 385,290 |
| Transportation 0.3% |
| Neptune Orient Lines Ltd. *(a) | 402,100 | 284,807 |
| SATS Ltd. | 156,149 | 422,007 |
| SIA Engineering Co., Ltd. | 25,600 | 72,800 |
| Singapore Post Ltd. | 170,500 | 230,148 |
| SMRT Corp., Ltd. (a) | 158,200 | 164,608 |
| | | 1,174,370 |
| | | 6,662,852 |
| Spain 2.1% |
| Banks 0.3% |
| Bankia S.A. | 427,748 | 549,701 |
| Bankinter S.A. | 84,367 | 610,156 |
| Caja de Ahorros del Mediterraneo *(b)(c) | 5,382 | — |
| Liberbank S.A. * | 230,392 | 142,485 |
| | | 1,302,342 |
| Capital Goods 0.6% |
| Abengoa S.A., B Shares (a) | 225,251 | 218,156 |
| Abengoa S.A., Class A | 8,266 | 9,824 |
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Construcciones y Auxiliar de Ferrocarriles S.A. | 699 | 195,124 |
| Duro Felguera S.A. | 41,040 | 96,411 |
| Fomento de Construcciones y Contratas S.A. *(a) | 74,238 | 565,160 |
| Gamesa Corp. Tecnologica S.A. | 40,934 | 646,076 |
| Obrascon Huarte Lain S.A. (a) | 23,657 | 189,213 |
| Sacyr S.A. (a) | 92,604 | 232,988 |
| Zardoya Otis S.A. | 35,654 | 438,400 |
| | | 2,591,352 |
| Commercial & Professional Supplies 0.1% |
| Prosegur Cia de Seguridad S.A. - Reg'd | 60,320 | 268,386 |
| Consumer Services 0.1% |
| Melia Hotels International S.A. | 13,028 | 188,125 |
| NH Hotel Group S.A. * | 27,021 | 165,149 |
| | | 353,274 |
| Diversified Financials 0.1% |
| Bolsas y Mercados Espanoles, SHMSF, S.A. | 9,565 | 343,172 |
| Energy 0.1% |
| Tecnicas Reunidas S.A. | 6,431 | 286,417 |
| Food, Beverage & Tobacco 0.2% |
| Ebro Foods S.A. | 23,865 | 452,018 |
| Pescanova S.A. *(b)(c) | 1,125 | — |
| Viscofan S.A. | 6,777 | 395,269 |
| | | 847,287 |
| Insurance 0.1% |
| Grupo Catalana Occidente S.A. | 7,388 | 229,075 |
| Materials 0.2% |
| Acerinox S.A. (a) | 43,939 | 474,732 |
| Ence Energia y Celulosa S.A. | 22,524 | 78,729 |
| Vidrala S.A. | 3,490 | 165,447 |
| | | 718,908 |
| Media 0.1% |
| Mediaset Espana Comunicacion S.A. | 30,674 | 372,184 |
| Promotora de Informaciones S.A., Class A * | 48,926 | 271,342 |
| | | 643,526 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| Almirall S.A. | 9,042 | 174,043 |
| Grifols S.A. | 8,556 | 396,271 |
| | | 570,314 |
| Software & Services 0.1% |
| Indra Sistemas S.A. *(a) | 50,916 | 544,720 |
| Utilities 0.0% |
| EDP Renovaveis S.A. | 9,723 | 70,538 |
| | | 8,769,311 |
| Sweden 2.2% |
| Capital Goods 0.3% |
| AddTech AB, B Shares | 5,021 | 71,405 |
| B&B Tools AB, B Shares | 9,883 | 129,000 |
| Indutrade AB | 3,776 | 179,553 |
| Nibe Industrier AB, B Shares | 7,238 | 233,069 |
| Security | Number
of Shares | Value
($) |
| Peab AB | 65,604 | 501,507 |
| Saab AB, Class B | 13,296 | 374,443 |
| | | 1,488,977 |
| Commercial & Professional Supplies 0.2% |
| AF AB, B Shares | 9,980 | 147,588 |
| Intrum Justitia AB | 8,894 | 319,092 |
| Loomis AB, Class B | 11,729 | 304,404 |
| | | 771,084 |
| Consumer Durables & Apparel 0.1% |
| JM AB | 15,168 | 428,701 |
| Consumer Services 0.1% |
| Betsson AB * | 15,947 | 259,358 |
| Diversified Financials 0.2% |
| LE Lundbergfortagen AB, B Shares | 6,017 | 306,259 |
| Ratos AB, B Shares | 84,951 | 495,842 |
| | | 802,101 |
| Energy 0.1% |
| Lundin Petroleum AB * | 22,166 | 320,852 |
| Food & Staples Retailing 0.1% |
| Axfood AB | 19,557 | 352,927 |
| ICA Gruppen AB | 2,327 | 83,013 |
| | | 435,940 |
| Food, Beverage & Tobacco 0.1% |
| AAK AB | 3,363 | 242,146 |
| Health Care Equipment & Services 0.1% |
| Elekta AB, B Shares | 53,479 | 413,789 |
| Materials 0.2% |
| BillerudKorsnas AB | 19,588 | 354,491 |
| Hexpol AB | 19,190 | 186,405 |
| Holmen AB, B Shares | 13,172 | 397,068 |
| | | 937,964 |
| Media 0.1% |
| Modern Times Group MTG AB, B Shares | 16,138 | 457,784 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| Meda AB, A Shares | 39,753 | 583,423 |
| Real Estate 0.2% |
| Castellum AB | 21,225 | 317,685 |
| Fabege AB | 14,649 | 232,726 |
| Kungsleden AB | 24,687 | 184,893 |
| Wihlborgs Fastigheter AB | 2,254 | 44,067 |
| | | 779,371 |
| Retailing 0.1% |
| Bilia AB, A Shares | 15,367 | 322,098 |
| Clas Ohlson AB, B Shares | 9,395 | 142,681 |
| | | 464,779 |
| Technology Hardware & Equipment 0.1% |
| Hexagon AB, B Shares | 17,942 | 622,325 |
| Transportation 0.1% |
| SAS AB *(a) | 119,610 | 230,685 |
| | | 9,239,279 |
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Switzerland 2.8% |
| Banks 0.1% |
| Banque Cantonale Vaudoise - Reg'd | 366 | 225,388 |
| Valiant Holding AG - Reg'd | 2,434 | 281,008 |
| | | 506,396 |
| Capital Goods 0.7% |
| AFG Arbonia-Forster Holding AG - Reg'd * | 7,738 | 74,948 |
| Belimo Holding AG - Reg'd | 66 | 141,555 |
| Bucher Industries AG - Reg'd | 1,263 | 287,427 |
| Burckhardt Compression Holding AG | 173 | 60,275 |
| Conzzeta AG - Reg’d | 90 | 55,769 |
| Daetwyler Holding AG | 1,115 | 156,310 |
| Georg Fischer AG - Reg'd | 1,012 | 621,775 |
| Implenia AG - Reg'd | 3,928 | 194,685 |
| Meyer Burger Technology AG *(a) | 24,313 | 174,147 |
| OC Oerlikon Corp. AG - Reg'd * | 32,292 | 309,871 |
| Schweiter Technologies AG | 78 | 62,451 |
| Sulzer AG - Reg'd | 6,121 | 618,501 |
| Zehnder Group AG | 1,914 | 65,255 |
| | | 2,822,969 |
| Commercial & Professional Supplies 0.2% |
| DKSH Holding Ltd. * | 5,733 | 349,165 |
| dorma+kaba Holding AG - Reg'd, Series B | 424 | 264,385 |
| Gategroup Holding AG * | 7,520 | 281,956 |
| | | 895,506 |
| Consumer Durables & Apparel 0.1% |
| Forbo Holding AG - Reg'd * | 206 | 234,261 |
| Consumer Services 0.1% |
| Kuoni Reisen Holding AG - Reg'd, Series B * | 1,581 | 327,349 |
| Diversified Financials 0.3% |
| Cembra Money Bank AG * | 1,252 | 74,645 |
| GAM Holding AG * | 12,589 | 230,284 |
| Julius Baer Group Ltd. * | 13,166 | 652,803 |
| Partners Group Holding AG | 949 | 343,391 |
| | | 1,301,123 |
| Food, Beverage & Tobacco 0.1% |
| Barry Callebaut AG - Reg'd * | 313 | 375,081 |
| Emmi AG - Reg'd * | 657 | 297,188 |
| | | 672,269 |
| Health Care Equipment & Services 0.2% |
| Sonova Holding AG - Reg'd | 3,843 | 524,356 |
| Straumann Holding AG - Reg'd | 642 | 181,661 |
| | | 706,017 |
| Insurance 0.1% |
| Helvetia Holding AG - Reg'd | 972 | 508,377 |
| Materials 0.1% |
| EMS-Chemie Holding AG - Reg'd | 828 | 350,389 |
| Schmolz & Bickenbach AG - Reg'd * | 281,930 | 153,779 |
| | | 504,168 |
| Security | Number
of Shares | Value
($) |
| Pharmaceuticals, Biotechnology & Life Sciences 0.2% |
| Galenica AG - Reg'd | 557 | 815,947 |
| Real Estate 0.1% |
| Allreal Holding AG - Reg'd * | 1,395 | 184,880 |
| Swiss Prime Site AG - Reg'd * | 3,139 | 239,829 |
| | | 424,709 |
| Retailing 0.1% |
| Dufry AG - Reg'd * | 2,480 | 289,727 |
| Valora Holding AG - Reg'd * | 1,585 | 318,775 |
| | | 608,502 |
| Software & Services 0.1% |
| Temenos Group AG - Reg'd * | 4,741 | 221,473 |
| Technology Hardware & Equipment 0.1% |
| Kudelski S.A. - BR | 11,025 | 148,185 |
| Logitech International S.A. - Reg'd | 30,969 | 454,955 |
| | | 603,140 |
| Transportation 0.2% |
| Flughafen Zuerich AG - Reg'd | 441 | 333,784 |
| Panalpina Welttransport Holding AG - Reg'd | 3,364 | 384,069 |
| | | 717,853 |
| | | 11,870,059 |
| United Kingdom 12.5% |
| Banks 0.0% |
| The Paragon Group of Cos. plc | 22,533 | 145,528 |
| Capital Goods 1.7% |
| Ashtead Group plc | 40,468 | 622,225 |
| Bodycote plc | 36,523 | 288,527 |
| Brammer plc | 27,044 | 95,860 |
| Chemring Group plc | 98,199 | 260,380 |
| Diploma plc | 2,995 | 29,619 |
| Fenner plc | 77,227 | 181,118 |
| Galliford Try plc | 15,192 | 349,954 |
| Grafton Group plc | 48,789 | 506,991 |
| HellermannTyton Group plc | 30,119 | 220,039 |
| Interserve plc | 43,588 | 372,454 |
| Keller Group plc | 24,699 | 309,533 |
| Kier Group plc | 13,275 | 281,181 |
| Lavendon Group plc | 58,249 | 135,144 |
| Melrose Industries plc | 147,172 | 602,099 |
| Morgan Advanced Materials plc | 72,738 | 313,302 |
| QinetiQ Group plc | 165,858 | 571,426 |
| Rotork plc | 103,044 | 297,671 |
| Senior plc | 67,061 | 234,004 |
| SIG plc | 265,363 | 544,745 |
| Speedy Hire plc | 160,878 | 74,683 |
| Spirax-Sarco Engineering plc | 9,200 | 431,269 |
| Ultra Electronics Holdings plc | 12,467 | 323,095 |
| Vesuvius plc | 63,657 | 350,124 |
| | | 7,395,443 |
| Commercial & Professional Supplies 1.2% |
| Berendsen plc | 39,428 | 621,641 |
| Cape plc | 60,677 | 214,946 |
| De La Rue plc | 47,756 | 340,187 |
| Hays plc | 316,353 | 685,376 |
| HomeServe plc | 51,624 | 322,213 |
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Mears Group plc | 23,518 | 150,097 |
| Michael Page International plc | 61,274 | 466,701 |
| Mitie Group plc | 113,272 | 560,498 |
| PayPoint plc | 9,316 | 142,179 |
| Rentokil Initial plc | 257,260 | 611,941 |
| RPS Group plc | 69,953 | 252,760 |
| Shanks Group plc | 168,995 | 246,845 |
| WS Atkins plc | 15,658 | 331,807 |
| | | 4,947,191 |
| Consumer Durables & Apparel 0.5% |
| Bellway plc | 14,107 | 563,473 |
| Berkeley Group Holdings plc | 13,209 | 674,168 |
| Bovis Homes Group plc | 11,076 | 174,707 |
| Coats Group plc * | 933,456 | 423,795 |
| Crest Nicholson Holdings plc | 22,395 | 187,324 |
| Telford Homes plc | 11,095 | 67,689 |
| | | 2,091,156 |
| Consumer Services 1.0% |
| Betfair Group plc | 5,463 | 271,395 |
| Bwin Party Digital Entertainment plc | 110,852 | 191,020 |
| Dignity plc | 4,497 | 168,069 |
| Domino's Pizza Group plc | 4,614 | 77,541 |
| Enterprise Inns plc * | 322,508 | 533,314 |
| Greene King plc | 71,383 | 883,081 |
| J.D. Wetherspoon plc | 22,514 | 268,520 |
| Ladbrokes plc | 392,446 | 637,871 |
| Marston's plc | 173,980 | 432,737 |
| Merlin Entertainments plc (d) | 33,127 | 211,381 |
| Mitchells & Butlers plc * | 57,280 | 312,262 |
| The Restaurant Group plc | 26,766 | 295,444 |
| | | 4,282,635 |
| Diversified Financials 1.6% |
| Aberdeen Asset Management plc | 87,283 | 465,393 |
| Ashmore Group plc (a) | 64,291 | 266,843 |
| Brewin Dolphin Holdings plc | 30,735 | 127,551 |
| Close Brothers Group plc | 17,012 | 383,320 |
| Hargreaves Lansdown plc | 9,380 | 208,459 |
| Henderson Group plc | 122,240 | 538,815 |
| IG Group Holdings plc | 52,884 | 614,698 |
| Intermediate Capital Group plc | 55,444 | 482,552 |
| International Personal Finance plc | 58,021 | 330,426 |
| Investec plc | 74,872 | 623,699 |
| Jupiter Fund Management plc | 41,234 | 286,005 |
| London Stock Exchange Group plc | 15,137 | 592,651 |
| Markit Ltd. * | 5,603 | 170,891 |
| Provident Financial plc | 15,608 | 833,175 |
| Schroders plc | 9,837 | 451,354 |
| Schroders plc, Non Voting Shares | 1,000 | 34,814 |
| Tullett Prebon plc | 60,557 | 327,504 |
| | | 6,738,150 |
| Energy 0.2% |
| EnQuest plc * | 553,180 | 230,378 |
| Genel Energy plc * | 12,792 | 50,490 |
| Security | Number
of Shares | Value
($) |
| Hunting plc | 39,943 | 221,400 |
| Premier Oil plc * | 205,136 | 215,857 |
| | | 718,125 |
| Food & Staples Retailing 0.1% |
| Greggs plc | 25,751 | 471,250 |
| Food, Beverage & Tobacco 0.5% |
| Britvic plc | 29,190 | 313,797 |
| Cranswick plc | 14,742 | 389,755 |
| Dairy Crest Group plc | 54,706 | 542,053 |
| Devro plc | 31,856 | 139,470 |
| Greencore Group plc | 48,185 | 224,045 |
| Premier Foods plc * | 664,301 | 348,189 |
| | | 1,957,309 |
| Household & Personal Products 0.1% |
| PZ Cussons plc | 58,187 | 269,352 |
| Insurance 0.6% |
| Beazley plc | 81,110 | 453,381 |
| Hiscox Ltd. | 50,286 | 747,792 |
| Jardine Lloyd Thompson Group plc | 17,625 | 255,885 |
| Lancashire Holdings Ltd. | 72,067 | 789,472 |
| Saga plc | 15,000 | 48,005 |
| St. James's Place plc | 21,933 | 325,057 |
| | | 2,619,592 |
| Materials 0.9% |
| Acacia Mining plc | 51,364 | 152,349 |
| Alent plc | 34,025 | 260,257 |
| Centamin plc | 76,893 | 75,217 |
| Croda International plc | 14,684 | 655,009 |
| Elementis plc | 65,047 | 234,517 |
| Essentra plc | 19,917 | 258,028 |
| Evraz plc * | 362,139 | 471,642 |
| Ferrexpo plc | 157,580 | 82,595 |
| Marshalls plc | 11,651 | 62,235 |
| Petropavlovsk plc * | 1,343,169 | 120,511 |
| Polyus Gold International Ltd. | 70,736 | 207,461 |
| Randgold Resources Ltd. | 7,702 | 516,549 |
| RPC Group plc | 32,190 | 322,454 |
| Synthomer plc | 41,936 | 212,964 |
| Victrex plc | 8,417 | 239,172 |
| | | 3,870,960 |
| Media 0.2% |
| Daily Mail & General Trust plc | 39,360 | 453,457 |
| UBM plc | 59,378 | 467,769 |
| | | 921,226 |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| Genus plc | 6,528 | 146,113 |
| Indivior plc | 33,389 | 105,494 |
| | | 251,607 |
| Real Estate 0.8% |
| Derwent London plc | 4,348 | 259,676 |
| Hammerson plc | 68,177 | 667,978 |
| Intu Properties plc | 97,221 | 517,540 |
| Mapeley Ltd. *(b)(c) | 2,199 | — |
| Savills plc | 19,437 | 274,330 |
| Segro plc | 94,261 | 652,958 |
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Shaftesbury plc | 11,434 | 165,505 |
| The British Land Co., plc | 53,799 | 720,621 |
| | | 3,258,608 |
| Retailing 1.1% |
| Debenhams plc | 561,912 | 772,791 |
| Dixons Carphone plc | 84,302 | 598,467 |
| Dunelm Group plc | 12,619 | 184,224 |
| Halfords Group plc | 65,520 | 438,552 |
| Howden Joinery Group plc | 39,072 | 278,674 |
| John Menzies plc | 38,659 | 240,771 |
| Lookers plc | 91,572 | 247,771 |
| N Brown Group plc | 42,818 | 246,874 |
| Pendragon plc | 751,651 | 518,538 |
| Poundland Group plc | 19,631 | 83,224 |
| Sports Direct International plc * | 23,586 | 253,055 |
| Vertu Motors plc | 67,297 | 77,549 |
| WH Smith plc | 23,212 | 608,930 |
| | | 4,549,420 |
| Semiconductors & Semiconductor Equipment 0.1% |
| ARM Holdings plc | 29,174 | 459,451 |
| Dialog Semiconductor plc * | 1,300 | 48,093 |
| | | 507,544 |
| Software & Services 0.4% |
| AVEVA Group plc | 7,519 | 237,477 |
| Computacenter plc | 15,892 | 185,336 |
| Fidessa Group plc | 5,584 | 168,636 |
| Micro Focus International plc | 15,330 | 296,317 |
| Moneysupermarket.com Group plc | 39,634 | 203,976 |
| Playtech plc | 17,784 | 234,311 |
| Telecity Group plc | 11,877 | 214,825 |
| Xchanging plc | 103,140 | 267,121 |
| | | 1,807,999 |
| Technology Hardware & Equipment 0.6% |
| e2v Technologies plc | 14,981 | 53,926 |
| Electrocomponents plc | 162,012 | 511,477 |
| Halma plc | 37,288 | 438,305 |
| Laird plc | 50,577 | 263,498 |
| Pace plc | 61,943 | 355,801 |
| Premier Farnell plc | 120,557 | 185,851 |
| Spectris plc | 17,571 | 450,648 |
| Spirent Communications plc | 222,306 | 251,889 |
| TT Electronics plc | 89,063 | 175,400 |
| | | 2,686,795 |
| Telecommunication Services 0.3% |
| Cable & Wireless Communications plc | 835,234 | 945,685 |
| KCOM Group plc | 127,296 | 170,196 |
| TalkTalk Telecom Group plc (a) | 104,015 | 404,917 |
| | | 1,520,798 |
| Transportation 0.5% |
| BBA Aviation plc | 105,817 | 310,860 |
| Go-Ahead Group plc | 8,903 | 332,828 |
| National Express Group plc | 159,282 | 735,173 |
| Northgate plc | 55,307 | 345,051 |
| Stagecoach Group plc | 63,589 | 339,088 |
| Stolt-Nielsen Ltd. | 12,114 | 163,686 |
| | | 2,226,686 |
| Security | Number
of Shares | Value
($) |
| Utilities 0.0% |
| Telecom Plus plc | 4,665 | 75,502 |
| | | 53,312,876 |
| Total Common Stock |
| (Cost $397,890,536) | | 420,007,227 |
|
| Preferred Stock 0.4% of net assets |
| Germany 0.3% |
| Capital Goods 0.1% |
| Jungheinrich AG | 3,632 | 268,322 |
| Health Care Equipment & Services 0.1% |
| Draegerwerk AG & Co. KGaA | 3,013 | 216,974 |
| Materials 0.1% |
| Fuchs Petrolub SE | 12,111 | 580,832 |
| Transportation 0.0% |
| Sixt SE | 2,168 | 93,200 |
| | | 1,159,328 |
| Italy 0.0% |
| Capital Goods 0.0% |
| Danieli S.p.A. - Officine Meccaniche Danieli & C. - RSP | 9,067 | 137,200 |
| Spain 0.0% |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% |
| Grifols S.A., Class B | 6,067 | 211,715 |
| Sweden 0.1% |
| Transportation 0.1% |
| SAS AB | 4,745 | 278,250 |
| Total Preferred Stock |
| (Cost $1,652,774) | | 1,786,493 |
|
| Rights 0.0% of net assets |
| Australia 0.0% |
| Media 0.0% |
| Ten Network Holdings Ltd. *(b) | 183,734 | 1,965 |
| Italy 0.0% |
| Insurance 0.0% |
| Mediolanum S.p.A. *(b) | 29,033 | 2 |
| Total Rights |
| (Cost $—) | | 1,967 |
|
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Other Investment Companies 4.9% of net assets |
| United States 4.9% |
| Equity Fund 0.9% |
| iShares MSCI EAFE Small Cap ETF | 75,000 | 3,759,000 |
| Securities Lending Collateral 4.0% |
| Wells Fargo Advantage Government Money Market Fund, Institutional Class 0.01% (e) | 17,085,674 | 17,085,674 |
| Total Other Investment Companies |
| (Cost $20,702,382) | | 20,844,674 |
Security
Rate, Maturity Date | Face Amount
Local Currency | Value
($) |
| Short-Term Investments 0.0% of net assets |
| Time Deposits 0.0% |
| Brown Brothers Harriman |
| Swiss Franc | | |
| (1.00%), 11/02/15 | 5,238 | 5,299 |
| Swedish Krone | | |
| (0.64%), 11/02/15 | 631 | 74 |
| Euro | | |
| (0.24%), 11/02/15 | 15,676 | 17,238 |
| Japanese Yen | | |
| 0.01%, 11/02/15 | 8,779 | 73 |
| Singapore Dollar | | |
| 0.10%, 11/02/15 | 396 | 283 |
| Norwegian Krone | | |
| 0.12%, 11/02/15 | 126,981 | 14,945 |
| Australian Dollar | | |
| 0.85%, 11/02/15 | 5,020 | 3,580 |
| New Zealand Dollar | | |
| 1.50%, 11/02/15 | 157 | 106 |
| Royal Bank of Canada |
| Canadian Dollar | | |
| 0.05%, 11/02/15 | 146,506 | 112,042 |
| Total Short-Term Investments |
| (Cost $153,640) | | 153,640 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $427,751,941 and the unrealized appreciation and depreciation were $49,692,138 and ($34,650,078), respectively, with a net unrealized appreciation of $15,042,060.
At 10/31/15, the values of certain foreign securities held by the fund aggregating $373,064,205 were adjusted from their closing market values in accordance with international fair valuation procedures approved by the fund's Board of Trustees. (See financial 2(a) for additional information)
| * | Non-income producing security. |
| (a) | All or a portion of this security is on loan. Securities on loan were valued at $16,225,783. |
| (b) | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| (c) | Illiquid security. At the period end, the value of these amounted to $139,793 or 0.0% of net assets. |
| (d) | Securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $555,094 or 0.1% of net assets. |
| (e) | The rate shown is the 7-day yield. |
| | |
| ADR — | American Depositary Receipt |
| CDI — | CHESS Depositary Interest |
| CVA — | Dutch Certificate |
| ETF — | Exchange Traded Fund |
| GDR — | Global Depositary Receipt |
| Reg'd — | Registered |
| REIT — | Real Estate Investment Trust |
| RSP — | Risparmio (Convertible Savings Shares) |
Schwab Fundamental Emerging Markets Large Company Index Fund
Portfolio Holdings as of October 31, 2015
This section shows all the securities in the fund's portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be viewed and copied at the SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund's website at www.csimfunds.com/schwabfunds_prospectus.
| Holdings by Category | Cost
($) | Value
($) |
| 90.6% | Common Stock | 319,471,368 | 275,693,734 |
| 9.0% | Preferred Stock | 51,687,794 | 27,393,065 |
| 0.0% | Short-Term Investments | 7,265 | 7,265 |
| 99.6% | Total Investments | 371,166,427 | 303,094,064 |
| 0.4% | Other Assets and Liabilities, Net | | 1,316,994 |
| 100.0% | Net Assets | | 304,411,058 |
| Security | Number
of Shares | Value
($) |
| Common Stock 90.6% of net assets |
| Brazil 5.9% |
| Banks 0.9% |
| Banco Bradesco S.A. | 140,518 | 854,545 |
| Banco do Brasil S.A. | 347,315 | 1,439,328 |
| Itau Unibanco Holding S.A. | 46,229 | 297,415 |
| | | 2,591,288 |
| Capital Goods 0.2% |
| Embraer S.A. | 79,751 | 584,556 |
| Diversified Financials 0.2% |
| BM&F Bovespa S.A. - Bolsa de Valores Mercadorias e Futuros | 156,233 | 461,948 |
| Energy 1.7% |
| Cosan Ltd., Class A | 72,505 | 253,768 |
| Petroleo Brasileiro S.A. * | 1,605,758 | 3,900,742 |
| Ultrapar Participacoes S.A. | 61,214 | 1,062,805 |
| | | 5,217,315 |
| Food, Beverage & Tobacco 1.0% |
| Ambev S.A. | 387,350 | 1,916,679 |
| BRF S.A. | 30,718 | 478,406 |
| JBS S.A. | 176,800 | 652,697 |
| | | 3,047,782 |
| Insurance 0.1% |
| Sul America S.A. | 78,071 | 383,044 |
| Materials 1.1% |
| Companhia Siderurgica Nacional S.A. | 449,216 | 505,222 |
| Vale S.A. | 668,976 | 2,958,225 |
| | | 3,463,447 |
| Security | Number
of Shares | Value
($) |
| Software & Services 0.1% |
| Cielo S.A. | 34,988 | 332,129 |
| Telecommunication Services 0.2% |
| Oi S.A. * | 176,773 | 143,928 |
| Tim Participacoes S.A. | 161,447 | 353,336 |
| | | 497,264 |
| Transportation 0.1% |
| CCR S.A. | 105,200 | 330,532 |
| Utilities 0.3% |
| Centrais Eletricas Brasileiras S.A. * | 245,416 | 319,161 |
| Companhia de Saneamento Basico do Estado de Sao Paulo | 99,510 | 431,796 |
| CPFL Energia S.A. * | 73,932 | 296,687 |
| | | 1,047,644 |
| | | 17,956,949 |
| Chile 0.8% |
| Energy 0.2% |
| Empresas Copec S.A. | 61,545 | 576,568 |
| Food & Staples Retailing 0.1% |
| Cencosud S.A. | 217,254 | 476,982 |
| Transportation 0.1% |
| Latam Airlines Group S.A. * | 51,741 | 276,396 |
| Utilities 0.4% |
| Empresa Nacional de Electricidad S.A. | 309,644 | 387,925 |
| Enersis S.A. | 2,782,312 | 733,970 |
| | | 1,121,895 |
| | | 2,451,841 |
| China 16.4% |
| Automobiles & Components 0.3% |
| Byd Co., Ltd., Class H * | 41,500 | 258,035 |
| Dongfeng Motor Group Co., Ltd., Class H | 388,000 | 556,935 |
| | | 814,970 |
| Banks 6.5% |
| Agricultural Bank of China Ltd., Class H | 2,605,600 | 1,065,457 |
| Bank of China Ltd., Class H | 8,362,234 | 3,943,306 |
| Bank of Communications Co., Ltd., Class H | 695,000 | 512,631 |
| BOC Hong Kong (Holdings) Ltd. | 247,500 | 791,427 |
| China CITIC Bank Corp., Ltd., Class H * | 613,000 | 396,412 |
| China Construction Bank Corp., Class H | 8,825,960 | 6,396,667 |
| China Merchants Bank Co., Ltd., Class H | 335,850 | 876,876 |
| China Minsheng Banking Corp., Ltd., Class H | 412,500 | 414,544 |
| Industrial & Commercial Bank of China Ltd., Class H | 8,699,172 | 5,517,929 |
| | | 19,915,249 |
Schwab Fundamental Emerging Markets Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Capital Goods 0.4% |
| China Communications Construction Co., Ltd., Class H | 481,322 | 664,314 |
| CRRC Corp., Ltd., Class H * | 349,000 | 443,655 |
| | | 1,107,969 |
| Consumer Durables & Apparel 0.3% |
| Belle International Holdings Ltd. | 508,000 | 493,083 |
| Yue Yuen Industrial Holdings Ltd. | 117,000 | 426,822 |
| | | 919,905 |
| Energy 3.8% |
| China Petroleum & Chemical Corp., Class H | 7,043,400 | 5,077,193 |
| China Shenhua Energy Co., Ltd., Class H | 558,500 | 939,691 |
| CNOOC Ltd. | 2,527,075 | 2,854,360 |
| PetroChina Co., Ltd., Class H | 3,558,000 | 2,785,572 |
| | | 11,656,816 |
| Food & Staples Retailing 0.1% |
| China Resources Beer Holdings Co., Ltd. | 165,000 | 311,548 |
| Insurance 0.7% |
| China Life Insurance Co., Ltd., Class H | 248,000 | 894,309 |
| China Pacific Insurance Group Co., Ltd., Class H | 95,200 | 379,219 |
| Ping An Insurance (Group) Co. of China Ltd., Class H | 129,000 | 724,109 |
| | | 1,997,637 |
| Materials 0.3% |
| China National Building Material Co., Ltd., Class H | 638,000 | 396,401 |
| Jiangxi Copper Co., Ltd., Class H | 271,000 | 356,887 |
| | | 753,288 |
| Real Estate 0.2% |
| China Overseas Land & Investment Ltd. | 204,000 | 658,893 |
| Retailing 0.1% |
| GOME Electrical Appliances Holding Ltd. | 2,222,000 | 406,025 |
| Software & Services 0.4% |
| Alibaba Group Holding Ltd. ADR * | 2,080 | 174,366 |
| Baidu, Inc. ADR * | 2,367 | 443,742 |
| Tencent Holdings Ltd. | 33,400 | 629,569 |
| | | 1,247,677 |
| Technology Hardware & Equipment 0.2% |
| Kingboard Chemical Holdings Ltd. | 202,500 | 285,578 |
| Lenovo Group Ltd. | 454,000 | 421,828 |
| | | 707,406 |
| Security | Number
of Shares | Value
($) |
| Telecommunication Services 2.9% |
| China Mobile Ltd. | 569,555 | 6,828,899 |
| China Telecom Corp., Ltd., Class H | 1,787,000 | 932,138 |
| China Unicom (Hong Kong) Ltd. | 887,056 | 1,081,044 |
| | | 8,842,081 |
| Utilities 0.2% |
| China Resources Power Holdings Co., Ltd. | 142,000 | 321,228 |
| Huaneng Power International, Inc., Class H | 358,000 | 387,585 |
| | | 708,813 |
| | | 50,048,277 |
| Colombia 0.3% |
| Banks 0.1% |
| Bancolombia S.A. | 27,344 | 222,188 |
| Energy 0.2% |
| Ecopetrol S.A. | 1,588,649 | 740,309 |
| | | 962,497 |
| Czech Republic 0.3% |
| Utilities 0.3% |
| CEZ A/S | 43,361 | 866,376 |
| Greece 0.6% |
| Banks 0.1% |
| National Bank of Greece S.A. * | 255,027 | 191,396 |
| Consumer Services 0.3% |
| OPAP S.A. | 91,873 | 816,497 |
| Telecommunication Services 0.1% |
| Hellenic Telecommunications Organization S.A. | 54,401 | 509,260 |
| Utilities 0.1% |
| Public Power Corp. S.A. | 77,254 | 446,989 |
| | | 1,964,142 |
| Hungary 0.6% |
| Banks 0.3% |
| OTP Bank plc | 45,023 | 871,273 |
| Energy 0.3% |
| MOL Hungarian Oil & Gas plc | 17,611 | 794,739 |
| | | 1,666,012 |
| India 4.1% |
| Automobiles & Components 0.3% |
| Mahindra & Mahindra Ltd. | 20,140 | 363,900 |
| Tata Motors Ltd. * | 103,231 | 609,652 |
| Tata Motors Ltd., Class A * | 7,121 | 28,258 |
| | | 1,001,810 |
Schwab Fundamental Emerging Markets Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Banks 0.6% |
| Housing Development Finance Corp., Ltd. | 44,184 | 846,909 |
| ICICI Bank Ltd. | 138,620 | 586,154 |
| State Bank of India | 114,837 | 415,003 |
| | | 1,848,066 |
| Energy 1.7% |
| Bharat Petroleum Corp., Ltd. | 28,795 | 382,990 |
| Indian Oil Corp., Ltd. | 71,870 | 438,340 |
| Oil & Natural Gas Corp., Ltd. | 276,112 | 1,042,309 |
| Reliance Industries Ltd. | 236,083 | 3,419,185 |
| | | 5,282,824 |
| Food, Beverage & Tobacco 0.1% |
| ITC Ltd. | 74,361 | 380,008 |
| Materials 0.2% |
| Hindalco Industries Ltd. | 243,664 | 312,213 |
| Tata Steel Ltd. | 87,056 | 327,910 |
| | | 640,123 |
| Software & Services 0.7% |
| Infosys Ltd. | 93,222 | 1,618,211 |
| Tata Consultancy Services Ltd. | 13,682 | 521,629 |
| | | 2,139,840 |
| Telecommunication Services 0.3% |
| Bharti Airtel Ltd. | 134,671 | 717,846 |
| Utilities 0.2% |
| NTPC Ltd. | 271,143 | 550,497 |
| | | 12,561,014 |
| Indonesia 1.2% |
| Automobiles & Components 0.3% |
| PT Astra International Tbk | 1,989,100 | 855,072 |
| Banks 0.4% |
| PT Bank Central Asia Tbk | 399,500 | 375,301 |
| PT Bank Mandiri (Persero) Tbk | 549,900 | 348,015 |
| PT Bank Rakyat Indonesia (Persero) Tbk | 574,000 | 439,314 |
| | | 1,162,630 |
| Capital Goods 0.1% |
| PT United Tractors Tbk | 228,700 | 300,898 |
| Telecommunication Services 0.3% |
| PT Telekomunikasi Indonesia (Persero) Tbk | 5,288,700 | 1,037,577 |
| Utilities 0.1% |
| PT Perusahaan Gas Negara (Persero) Tbk | 1,083,700 | 236,701 |
| | | 3,592,878 |
| Malaysia 2.0% |
| Banks 0.6% |
| CIMB Group Holdings Berhad | 383,000 | 410,313 |
| Malayan Banking Berhad | 372,600 | 714,302 |
| Public Bank Berhad | 147,265 | 619,132 |
| | | 1,743,747 |
| Capital Goods 0.2% |
| Sime Darby Berhad | 366,900 | 712,515 |
| Security | Number
of Shares | Value
($) |
| Consumer Services 0.2% |
| Genting Berhad | 256,800 | 442,666 |
| Materials 0.1% |
| Petronas Chemicals Group Berhad | 290,400 | 428,166 |
| Telecommunication Services 0.6% |
| Axiata Group Berhad | 480,300 | 688,190 |
| DiGi.com Berhad | 251,200 | 307,334 |
| Maxis Berhad | 226,754 | 347,374 |
| Telekom Malaysia Berhad | 222,500 | 345,151 |
| | | 1,688,049 |
| Utilities 0.3% |
| Tenaga Nasional Berhad | 313,100 | 920,289 |
| | | 5,935,432 |
| Mexico 3.9% |
| Banks 0.3% |
| Grupo Financiero Banorte S.A.B. de C.V., Class O | 115,800 | 623,595 |
| Grupo Financiero Santander Mexico S.A.B. de C.V., Class B | 214,700 | 394,492 |
| | | 1,018,087 |
| Capital Goods 0.2% |
| Alfa S.A.B. de C.V., Class A | 286,900 | 597,672 |
| Food & Staples Retailing 0.4% |
| Wal-Mart de Mexico S.A.B. de C.V. | 502,737 | 1,326,404 |
| Food, Beverage & Tobacco 0.7% |
| Coca-Cola Femsa S.A.B. de C.V., Series L | 45,500 | 349,752 |
| Fomento Economico Mexicano S.A.B. de C.V. | 118,015 | 1,165,804 |
| Grupo Bimbo S.A.B. de C.V., Series A * | 169,900 | 482,099 |
| | | 1,997,655 |
| Household & Personal Products 0.1% |
| Kimberly-Clark de Mexico S.A.B. de C.V., Class A | 150,000 | 361,973 |
| Materials 0.7% |
| Cemex S.A.B. de C.V., Series CPO * | 1,541,796 | 977,285 |
| Grupo Mexico S.A.B. de C.V., Series B | 336,436 | 819,612 |
| Industrias Penoles S.A.B. de C.V. | 20,170 | 268,155 |
| | | 2,065,052 |
| Media 0.3% |
| Grupo Televisa S.A.B., Series CPO | 144,617 | 841,464 |
| Telecommunication Services 1.2% |
| America Movil S.A.B. de C.V., Series L | 3,970,919 | 3,545,936 |
| | | 11,754,243 |
Schwab Fundamental Emerging Markets Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Peru 0.1% |
| Banks 0.1% |
| Credicorp Ltd. | 3,682 | 416,729 |
| Philippines 0.2% |
| Telecommunication Services 0.2% |
| Philippine Long Distance Telephone Co. | 10,630 | 498,331 |
| Poland 2.3% |
| Banks 0.3% |
| Bank Pekao S.A. | 8,958 | 348,355 |
| Powszechna Kasa Oszczednosci Bank Polski S.A. * | 89,512 | 662,930 |
| | | 1,011,285 |
| Energy 0.9% |
| Grupa Lotos S.A. * | 42,317 | 311,673 |
| Polski Koncern Naftowy Orlen S.A. | 115,447 | 1,872,949 |
| Polskie Gornictwo Naftowe i Gazownictwo S.A. | 226,502 | 401,297 |
| | | 2,585,919 |
| Insurance 0.2% |
| Powszechny Zaklad Ubezpieczen S.A. | 5,960 | 578,710 |
| Materials 0.4% |
| KGHM Polska Miedz S.A. | 50,524 | 1,172,970 |
| Telecommunication Services 0.2% |
| Orange Polska S.A. | 317,708 | 583,713 |
| Utilities 0.3% |
| PGE S.A. | 165,647 | 616,577 |
| Tauron Polska Energia S.A. | 432,460 | 339,060 |
| | | 955,637 |
| | | 6,888,234 |
| Republic of Korea 18.7% |
| Automobiles & Components 2.6% |
| Hankook Tire Co., Ltd. | 7,765 | 296,847 |
| Hyundai Mobis Co., Ltd. | 8,160 | 1,715,478 |
| Hyundai Motor Co. | 25,346 | 3,462,126 |
| Kia Motors Corp. | 52,740 | 2,574,350 |
| | | 8,048,801 |
| Banks 1.5% |
| Hana Financial Group, Inc. | 31,440 | 764,589 |
| Industrial Bank Of Korea | 38,292 | 468,725 |
| KB Financial Group, Inc. | 31,063 | 984,118 |
| Shinhan Financial Group Co., Ltd. | 50,181 | 1,915,170 |
| Woori Bank | 37,495 | 325,252 |
| | | 4,457,854 |
| Capital Goods 2.4% |
| Daelim Industrial Co., Ltd. | 6,133 | 400,398 |
| Daewoo Shipbuilding & Marine Engineering Co., Ltd. | 50,203 | 303,453 |
| Security | Number
of Shares | Value
($) |
| Hyundai Engineering & Construction Co., Ltd. | 12,316 | 371,354 |
| Hyundai Heavy Industries Co., Ltd. * | 15,835 | 1,315,150 |
| LG Corp. | 22,941 | 1,327,408 |
| LG International Corp. | 11,223 | 342,755 |
| Samsung Heavy Industries Co., Ltd. | 41,206 | 478,066 |
| SK Holdings Co., Ltd. | 10,681 | 2,496,690 |
| SK Networks Co., Ltd. | 59,444 | 368,739 |
| | | 7,404,013 |
| Consumer Durables & Apparel 0.5% |
| LG Electronics, Inc. | 37,686 | 1,617,938 |
| Energy 1.6% |
| GS Holdings Corp. | 18,604 | 817,180 |
| S-Oil Corp. | 13,597 | 813,196 |
| SK Innovation Co., Ltd. * | 29,739 | 3,083,591 |
| | | 4,713,967 |
| Food & Staples Retailing 0.2% |
| E-Mart Co., Ltd. | 3,161 | 588,030 |
| Food, Beverage & Tobacco 0.4% |
| KT&G Corp. | 10,572 | 1,057,154 |
| Insurance 0.4% |
| Samsung Fire & Marine Insurance Co., Ltd. | 2,682 | 752,176 |
| Samsung Life Insurance Co., Ltd. | 5,971 | 570,100 |
| | | 1,322,276 |
| Materials 2.1% |
| Hyundai Steel Co. | 12,749 | 580,460 |
| LG Chem Ltd. | 7,060 | 1,876,839 |
| Lotte Chemical Corp. | 2,832 | 594,574 |
| POSCO | 20,296 | 3,263,817 |
| | | 6,315,690 |
| Retailing 0.1% |
| Lotte Shopping Co., Ltd. | 2,012 | 407,632 |
| Semiconductors & Semiconductor Equipment 0.3% |
| SK Hynix, Inc. | 35,167 | 941,147 |
| Technology Hardware & Equipment 5.8% |
| LG Display Co., Ltd. | 57,908 | 1,100,084 |
| Samsung Electro-Mechanics Co., Ltd. | 12,590 | 716,522 |
| Samsung Electronics Co., Ltd. | 12,934 | 15,513,371 |
| Samsung SDI Co., Ltd. | 4,607 | 428,833 |
| | | 17,758,810 |
| Telecommunication Services 0.2% |
| LG Uplus Corp. | 45,955 | 440,442 |
| Utilities 0.6% |
| Korea Electric Power Corp. | 35,278 | 1,588,376 |
| Korea Gas Corp. | 8,431 | 313,920 |
| | | 1,902,296 |
| | | 56,976,050 |
Schwab Fundamental Emerging Markets Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Russia 12.4% |
| Banks 0.4% |
| Sberbank of Russia * | 804,530 | 1,140,930 |
| VTB Bank JSC * | 140,000,000 | 158,620 |
| | | 1,299,550 |
| Energy 9.9% |
| Bashneft PAO * | 8,400 | 252,641 |
| Gazprom PAO | 3,949,000 | 8,397,521 |
| Gazprom PAO ADR | 1,270,000 | 5,352,202 |
| Lukoil PJSC * | 118,799 | 4,317,426 |
| Lukoil PJSC ADR | 112,200 | 4,075,735 |
| NovaTek OAO * | 102,090 | 934,422 |
| Rosneft OJSC GDR - Reg'd | 193,200 | 770,288 |
| Surgutneftegas * | 6,493,005 | 3,639,745 |
| Surgutneftegas ADR | 88,206 | 483,900 |
| Tatneft ADR | 68,600 | 2,115,522 |
| | | 30,339,402 |
| Food & Staples Retailing 0.2% |
| Magnit PJSC * | 3,200 | 558,217 |
| Materials 0.6% |
| MMC Norilsk Nickel PJSC ADR | 88,200 | 1,306,211 |
| Severstal PAO GDR - Reg'd | 38,971 | 457,245 |
| | | 1,763,456 |
| Telecommunication Services 0.9% |
| Mobile TeleSystems PJSC ADR | 167,851 | 1,179,993 |
| Rostelecom PJSC * | 425,480 | 623,515 |
| Sistema JSFC * | 3,378,800 | 934,711 |
| | | 2,738,219 |
| Transportation 0.2% |
| Aeroflot Russian Airlines PJSC * | 545,000 | 418,328 |
| Globaltrans Investment plc GDR - Reg'd * | 39,500 | 165,803 |
| | | 584,131 |
| Utilities 0.2% |
| Rosseti JSC * | 1 | — |
| RusHydro PJSC * | 52,500,000 | 535,395 |
| | | 535,395 |
| | | 37,818,370 |
| South Africa 6.1% |
| Banks 0.8% |
| Barclays Africa Group Ltd. | 32,927 | 421,987 |
| Nedbank Group Ltd. | 26,015 | 432,447 |
| Standard Bank Group Ltd. | 140,359 | 1,458,348 |
| | | 2,312,782 |
| Capital Goods 0.5% |
| Barloworld Ltd. | 71,710 | 404,594 |
| The Bidvest Group Ltd. | 48,492 | 1,238,707 |
| | | 1,643,301 |
| Consumer Durables & Apparel 0.2% |
| Steinhoff International Holdings Ltd. | 104,681 | 639,961 |
| Security | Number
of Shares | Value
($) |
| Diversified Financials 0.2% |
| African Bank Investments Ltd. *(a)(b) | 319,000 | — |
| FirstRand Ltd. | 211,251 | 774,095 |
| | | 774,095 |
| Energy 1.3% |
| Sasol Ltd. | 121,404 | 3,889,986 |
| Food & Staples Retailing 0.2% |
| Shoprite Holdings Ltd. | 49,145 | 510,698 |
| Food, Beverage & Tobacco 0.1% |
| Tiger Brands Ltd. | 19,014 | 434,733 |
| Insurance 0.2% |
| Sanlam Ltd. | 114,344 | 516,575 |
| Materials 0.8% |
| AngloGold Ashanti Ltd. * | 104,403 | 880,943 |
| Gold Fields Ltd. | 280,356 | 731,166 |
| Impala Platinum Holdings Ltd. * | 180,155 | 491,312 |
| Kumba Iron Ore Ltd. | 61,587 | 265,868 |
| | | 2,369,289 |
| Media 0.3% |
| Naspers Ltd., N Shares | 5,406 | 789,246 |
| Retailing 0.3% |
| Imperial Holdings Ltd. | 42,234 | 549,746 |
| Woolworths Holdings Ltd. | 68,183 | 504,459 |
| | | 1,054,205 |
| Telecommunication Services 1.2% |
| MTN Group Ltd. | 230,145 | 2,620,111 |
| Telkom SA SOC Ltd. | 104,364 | 548,035 |
| Vodacom Group Ltd. | 40,801 | 440,697 |
| | | 3,608,843 |
| | | 18,543,714 |
| Taiwan 11.8% |
| Automobiles & Components 0.1% |
| Cheng Shin Rubber Industry Co., Ltd. | 145,000 | 262,538 |
| Banks 0.3% |
| CTBC Financial Holding Co., Ltd. | 814,075 | 445,996 |
| Mega Financial Holding Co., Ltd. | 627,404 | 457,160 |
| | | 903,156 |
| Capital Goods 0.3% |
| Far Eastern New Century Corp. | 612,817 | 556,974 |
| Walsin Lihwa Corp. * | 1,472,000 | 354,613 |
| | | 911,587 |
| Consumer Durables & Apparel 0.2% |
| Pou Chen Corp. | 332,267 | 468,638 |
| Diversified Financials 0.2% |
| Fubon Financial Holding Co., Ltd. | 288,674 | 466,590 |
| Energy 0.2% |
| Formosa Petrochemical Corp. | 256,330 | 622,987 |
| Food, Beverage & Tobacco 0.2% |
| Uni-President Enterprises Corp. | 417,678 | 706,193 |
Schwab Fundamental Emerging Markets Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Insurance 0.1% |
| Cathay Financial Holding Co., Ltd. | 268,599 | 382,591 |
| Materials 1.7% |
| China Steel Corp. | 1,704,198 | 1,030,101 |
| Formosa Chemicals & Fibre Corp. | 625,442 | 1,429,853 |
| Formosa Plastics Corp. | 566,732 | 1,315,178 |
| Nan Ya Plastics Corp. | 567,622 | 1,126,351 |
| Taiwan Cement Corp. | 347,299 | 386,233 |
| | | 5,287,716 |
| Retailing 0.1% |
| Hotai Motor Co., Ltd. | 21,000 | 245,000 |
| Semiconductors & Semiconductor Equipment 2.6% |
| Advanced Semiconductor Engineering, Inc. | 514,094 | 593,498 |
| MediaTek, Inc. | 91,138 | 710,726 |
| Siliconware Precision Industries Co., Ltd. | 437,270 | 577,738 |
| Taiwan Semiconductor Manufacturing Co., Ltd. | 1,291,103 | 5,440,276 |
| United Microelectronics Corp. | 1,720,965 | 627,664 |
| | | 7,949,902 |
| Technology Hardware & Equipment 5.0% |
| Acer, Inc. * | 1,509,496 | 640,001 |
| Asustek Computer, Inc. | 154,041 | 1,378,573 |
| AU Optronics Corp. | 2,913,800 | 857,113 |
| Compal Electronics, Inc. | 1,981,305 | 1,232,234 |
| Delta Electronics, Inc. | 125,025 | 635,700 |
| Foxconn Technology Co., Ltd. | 126,146 | 330,413 |
| Hon Hai Precision Industry Co., Ltd. | 1,883,424 | 5,006,251 |
| HTC Corp. | 368,473 | 887,410 |
| Innolux Corp. | 1,887,357 | 633,164 |
| Inventec Corp. | 742,639 | 425,630 |
| Lite-On Technology Corp. | 560,644 | 581,170 |
| Pegatron Corp. | 256,264 | 626,223 |
| Quanta Computer, Inc. | 430,500 | 733,113 |
| Synnex Technology International Corp. | 332,000 | 349,893 |
| Wistron Corp. | 1,078,399 | 542,444 |
| WPG Holdings Ltd. | 414,000 | 431,997 |
| | | 15,291,329 |
| Telecommunication Services 0.8% |
| Chunghwa Telecom Co., Ltd. | 529,906 | 1,623,558 |
| Far EasTone Telecommunications Co., Ltd. | 142,622 | 309,442 |
| Taiwan Mobile Co., Ltd. | 150,334 | 473,261 |
| | | 2,406,261 |
| | | 35,904,488 |
| Thailand 1.4% |
| Banks 0.2% |
| Kasikornbank PCL | 60,000 | 290,659 |
| The Siam Commercial Bank PCL | 88,800 | 333,304 |
| | | 623,963 |
| Security | Number
of Shares | Value
($) |
| Energy 0.8% |
| PTT Exploration & Production PCL | 194,000 | 398,172 |
| PTT PCL | 199,187 | 1,540,070 |
| Thai Oil PCL | 362,800 | 553,368 |
| | | 2,491,610 |
| Materials 0.2% |
| PTT Global Chemical PCL | 370,700 | 589,030 |
| Telecommunication Services 0.2% |
| Advanced Info Service PCL - Reg'd | 87,075 | 570,422 |
| | | 4,275,025 |
| Turkey 1.5% |
| Banks 0.6% |
| Akbank T.A.S. | 244,348 | 626,200 |
| Turkiye Garanti Bankasi A/S | 245,591 | 635,941 |
| Turkiye Halk Bankasi A/S | 91,030 | 341,016 |
| Turkiye Is Bankasi, Class C | 231,101 | 393,876 |
| | | 1,997,033 |
| Capital Goods 0.3% |
| KOC Holding A/S | 186,096 | 840,479 |
| Diversified Financials 0.1% |
| Haci Omer Sabanci Holding A/S | 141,138 | 447,471 |
| Energy 0.3% |
| Tupras-Turkiye Petrol Rafinerileri A/S * | 31,251 | 824,650 |
| Telecommunication Services 0.2% |
| Turkcell Iletisim Hizmetleri A/S | 126,700 | 503,499 |
| | | 4,613,132 |
| Total Common Stock |
| (Cost $319,471,368) | | 275,693,734 |
|
| Preferred Stock 9.0% of net assets |
| Brazil 6.2% |
| Banks 2.1% |
| Banco Bradesco S.A. | 388,242 | 2,115,078 |
| Itau Unibanco Holding S.A. | 508,469 | 3,492,172 |
| Itausa - Investimentos Itau S.A. | 305,321 | 570,165 |
| | | 6,177,415 |
| Energy 1.6% |
| Petroleo Brasileiro S.A. * | 2,403,954 | 4,802,054 |
| Food & Staples Retailing 0.1% |
| Compania Brasileira de Distribuicao Grupo Pao de Acucar | 27,715 | 364,690 |
| Materials 1.5% |
| Gerdau S.A. | 559,006 | 786,242 |
| Metalurgica Gerdau S.A. | 451,595 | 304,288 |
| Vale S.A. | 968,728 | 3,523,992 |
| | | 4,614,522 |
Schwab Fundamental Emerging Markets Large Company Index Fund
Portfolio Holdings continued
| Security | Number
of Shares | Value
($) |
| Telecommunication Services 0.3% |
| Oi S.A. * | 353,871 | 194,548 |
| Telefonica Brasil S.A. | 67,772 | 701,951 |
| | | 896,499 |
| Utilities 0.6% |
| Centrais Eletricas Brasileiras S.A., Class B | 191,620 | 468,192 |
| Companhia Energetica de Minas Gerais | 388,008 | 720,100 |
| Companhia Paranaense de Energia-Copel | 37,544 | 316,104 |
| Eletropaulo Metropolitana S.A. * | 129,993 | 333,921 |
| | | 1,838,317 |
| | | 18,693,497 |
| Colombia 0.1% |
| Banks 0.1% |
| Bancolombia S.A. | 43,027 | 373,089 |
| Republic of Korea 1.2% |
| Automobiles & Components 0.3% |
| Hyundai Motor Co., Ltd. | 3,335 | 321,171 |
| Hyundai Motor Co., Ltd. 2nd | 5,550 | 554,294 |
| | | 875,465 |
| Consumer Durables & Apparel 0.1% |
| LG Electronics, Inc. | 11,256 | 241,847 |
| Materials 0.1% |
| LG Chem Ltd. | 1,188 | 223,594 |
| Technology Hardware & Equipment 0.7% |
| Samsung Electronics Co., Ltd. | 2,227 | 2,326,056 |
| | | 3,666,962 |
| Russia 1.5% |
| Banks 0.0% |
| Sberbank of Russia * | 86,900 | 93,233 |
| Energy 1.5% |
| AK Transneft OAO | 1,416 | 3,300,581 |
| Bashneft PAO * | 4,477 | 111,579 |
| Surgutneftegas * | 1,694,100 | 1,154,124 |
| | | 4,566,284 |
| | | 4,659,517 |
| Total Preferred Stock |
| (Cost $51,687,794) | | 27,393,065 |
Security
Rate, Maturity Date | Face Amount
Local Currency | Value
($) |
| Short-Term Investments 0.0% of net assets |
| Time Deposits 0.0% |
| Brown Brothers Harriman |
| Euro | | |
| (0.24%), 11/02/15 | 5,610 | 6,169 |
| South African Rand | | |
| 5.25%, 11/02/15 | 15,162 | 1,096 |
| Total Short-Term Investments |
| (Cost $7,265) | | 7,265 |
End of Investments.
At 10/31/15, the tax basis cost of the fund's investments was $389,017,805 and the unrealized appreciation and depreciation were $24,950,801 and ($110,874,542), respectively, with a net unrealized depreciation of ($85,923,741).
At 10/31/15, the values of certain foreign securities held by the fund aggregating $254,185,520 were adjusted from their closing market values in accordance with international fair valuation procedures approved by the fund’s Board of Trustees. (See financial note 2(a) for additional information)
| * | Non-income producing security. |
| (a) | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| (b) | Illiquid security. At the period end, the value of these amounted to $0 or 0.0% of net assets. |
| | |
| ADR — | American Depositary Receipt |
| GDR — | Global Depositary Receipt |
| Reg'd — | Registered |
In addition to the above, the fund held the following at 10/31/15:
| | Number of
Contracts | Contract
Value
($) | Unrealized
Depreciation
($) |
| Futures Contracts | | | |
| MSCI EAFE, e-mini, Long, expires 12/18/15 | 20 | 843,700 | (21,933) |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of:
Schwab S&P 500 Index Fund
Schwab Small-Cap Index Fund
Schwab Total Stock Market Index Fund
Schwab International Index Fund
Schwab Fundamental US Large Company Index Fund
Schwab Fundamental US Small Company Index Fund
Schwab Fundamental International Large Company Index Fund
Schwab Fundamental International Small Company Index Fund
Schwab Fundamental Emerging Markets Large Company Index Fund
In our opinion, the accompanying statements of assets and liabilities, including the condensed portfolio holdings, and the related statements of operations and of changes in net assets and the financial highlights (included in Item 1 of this Form N-CSR) and the portfolio holdings (included in Item 6 of this Form N-CSR) present fairly, in all material respects, the financial position of Schwab S&P 500 Index Fund, Schwab Small-Cap Index Fund, Schwab Total Stock Market Index Fund, Schwab International Index Fund, Schwab Fundamental US Large Company Index Fund, Schwab Fundamental US Small Company Index Fund, Schwab Fundamental International Large Company Index Fund, Schwab Fundamental International Small Company Index Fund and Schwab Fundamental Emerging Markets Large Company Index Fund (nine of the funds constituting Schwab Capital Trust, hereafter referred to as the “Funds”) at October 31, 2015, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements, financial highlights and portfolio holdings (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2015 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
December 16, 2015
Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8: Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9: Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10: Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11: Controls and Procedures.
| (a) | Based on their evaluation of Registrant’s disclosure controls and procedures, as of a date within 90 days of the filing date, Registrant’s Chief Executive Officer, Marie Chandoha and Registrant’s Principal Financial Officer, George Pereira, have concluded that Registrant’s disclosure controls and procedures are: (i) reasonably designed to ensure that information required to be disclosed in this report is appropriately communicated to Registrant’s officers to allow timely decisions regarding disclosures required in this report; (ii) reasonably designed to ensure that information required to be disclosed in this report is recorded, processed, summarized and reported in a timely manner; and (iii) are effective in achieving the goals described in (i) and (ii) above. |
| (b) | During the second fiscal quarter of the period covered by this report, there have been no changes in Registrant’s internal control over financial reporting that the above officers believe to have materially affected, or to be reasonably likely to materially affect, Registrant’s internal control over financial reporting. |
Item 12: Exhibits.
| | | | |
| (a) | | (1) | | Registrant’s code of ethics (that is the subject of the disclosure required by Item 2(a)) is attached. |
| | |
| | (2) | | Separate certifications for Registrant’s principal executive officer and principal financial officer, as required by Rule 30a-2(a) under the 1940 Act, are attached. |
| | |
| | (3) | | Not applicable. |
| (b) | A certification for Registrant’s principal executive officer and principal financial officer, as required by Rule 30a-2(b) under the 1940 Act, is attached. This certification is being furnished to the Securities and Exchange Commission solely pursuant to 18 U.S.C. section 1350 and is not being filed as part of the Form N-CSR with the Commission. |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Schwab Capital Trust
| | |
| By: | | /s/ Marie Chandoha |
| | Marie Chandoha |
| | Chief Executive Officer |
Date: December 15, 2015
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | |
| By: | | /s/ Marie Chandoha |
| | Marie Chandoha |
| | Chief Executive Officer |
Date: December 15, 2015
| | |
| By: | | /s/ George Pereira |
| | George Pereira |
| | Principal Financial Officer |
Date: December 15, 2015
