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) |
Jonathan de St. Paer
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, 2020
Item 1: Report(s) to Shareholders.
Annual Report | October 31, 2020
Laudus International MarketMasters Fund™
| New Notice Regarding Shareholder Report Delivery Options |
| Beginning on January 1, 2021, paper copies of a fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from a fund or from your financial intermediary (such as a bank or broker-dealer). Instead, the reports will be made available on a fund’s website www.schwabfunds.com/laudusfunds_prospectus, and you will be notified by mail each time a report is posted and the mailing will provide a website link to access the report. You will continue to receive other fund regulatory documents (such as prospectuses or supplements) in paper unless you have elected to receive all fund documents electronically. |
| If you would like to receive a fund’s future shareholder reports in paper free of charge after January 1, 2021, you can make that request: |
| • If you invest through Charles Schwab & Co, Inc. (broker-dealer), by calling 1-866-345-5954 and using the unique identifier attached to this mailing; |
| • If you invest through another financial intermediary (such as a bank or broker-dealer) by contacting them directly; or |
| • If owned directly through a fund by calling 1-800-407-0256. |
| If you already receive shareholder reports and other fund documents electronically, you will not be affected by this change and you need not take any action. |
Laudus International MarketMasters Fund
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 Inc. (MSCI) and Standard & Poor’s (S&P). GICS is a service mark of MSCI and S&P and has been licensed for use by Schwab. The Industry classifications used in the schedules of Portfolio Holdings are sub-categories of Sector classifications.
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
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.schwabfunds.com/laudusfunds_prospectus.
| Total Return for the 12 Months Ended October 31, 2020 |
| Laudus International MarketMasters Fund1 (Ticker Symbol: SWMIX) | 8.56% |
| MSCI EAFE® Index (Net)2 | -6.86% |
| Fund Category: Morningstar Foreign Large Growth3 | 12.71% |
| Performance Details | pages 7-10 |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
For index definitions, please see the Glossary.
Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the 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.
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 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
| 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. |
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
Jonathan de St. Paer
President of Charles Schwab
Investment Management, Inc.
and the fund covered
in this report.
Dear Shareholder,
Equity market performance for the 12-month reporting period ended October 31, 2020 barely hints at the market turmoil investors endured this year. U.S. and international equity markets ended the period with mixed gains. However, the past year was one of the most volatile in history. Market gains were robust through the last week of February 2020 before being wiped out as the spreading COVID-19 pandemic drove equities sharply lower. In mid-March, market volatility spiked to its highest level since the peak of the Great Recession in 2008. While global equity markets subsequently rallied from their March lows, historic volatility remained and international equity markets retreated and volatility began to increase again throughout September and October in the face of a resurgence of COVID-19 infections.
High levels of volatility can undermine our confidence as investors, which can lead to emotion-based trading. Although it is important to reassess your individual risk tolerance and make strategic adjustments to your portfolio from time to time, impulsive reactions driven by fear can often make investing outcomes worse. At Charles Schwab Investment Management, we believe that the best way to avoid these pitfalls is to maintain a long-term investing plan. A commitment to a long-term investing plan can help make it significantly easier and less stressful to stay the course when market volatility rises.
At Charles Schwab Investment Management, we aim to offer products with clear objectives, straightforward pricing, and a consistent approach to investing to help simplify investing decisions, so investors can focus on their long-term goals without unnecessary complexity. The Laudus International MarketMasters Fund plays a role in our goal to provide investors with a diverse variety of investment choices. The fund provides exposure to international developed and emerging markets, large- and small-capitalization, and growth and value stocks. Each of its subadvisers is selected based on their investment style and consistency of returns, as well as their measures for managing risk. We believe this offers the opportunity for investors to gain access to the collective expertise of multiple subadvisers in a diversified solution.
Thank you for investing with Charles Schwab Investment Management, and for trusting us to help you achieve your financial goals. For more information about the Laudus International MarketMasters Fund, please continue reading this report. In addition, you can find further details about this fund by visiting our website at www.schwabfunds.com. We are also happy to hear from you at 1-877-824-5615.
Sincerely,
“ A commitment to a long-term investing plan can help make it significantly easier and less stressful to stay the course when market volatility rises.”
Diversification and asset allocation strategies do not ensure a profit and cannot protect against losses in a declining market.
Management views may have changed since the report date.
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
The Investment Environment
The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and plunging markets into bear-market territory with record speed. At their lows, key international stock indices had lost as much as one-third of their former value. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. While the extraordinary response prompted a rally in global equity markets from their March lows, historic volatility remained and international equity markets lost steam during the final two months of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. The U.S. dollar weakened against a basket of foreign currencies for the reporting period, generally increasing the returns on overseas investments in U.S. dollar terms. For the reporting period, the S&P 500® Index, a bellwether for the overall U.S. stock market, returned 9.71%. Among international markets, the MSCI EAFE® Index (Net)*, a broad measure of developed international equity performance, returned -6.86% for the reporting period and the MSCI Emerging Markets Index (Net)* returned 8.25% for the reporting period.
Prior to the onset of the COVID-19 pandemic, the U.S. economy, despite ongoing trade tensions with China, maintained steady growth, albeit at a slowing pace. However, amid the fallout of the COVID-19 pandemic, the U.S. entered recessionary territory with record speed. U.S. gross domestic product (GDP) fell steeply, declining 5.0% and 31.4% for the first and second quarters of 2020, respectively, with the second quarter representing the largest contraction in U.S. GDP since 1947 when modern GDP measurements began. GDP subsequently jumped by 33.1% for the third quarter of 2020, reflecting increased consumer and business spending.
Asset Class Performance Comparison % returns during the 12 months ended October 31, 2020
Index figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. 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 may have changed since the report date.
| * | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
The Investment Environment (continued)
Outside the U.S., conditions continued to soften, dampened by slowing economic output, slumping world trade, geopolitical concerns, and the COVID-19 pandemic. The COVID-19 pandemic exacerbated economic weakness around the globe, dramatically slowing growth amid stay-at-home orders, supply chain disruptions, and broadly diminishing demand. In the first half of the reporting period, oil prices deteriorated amid significantly reduced demand, coupled with rising U.S. crude production and a price war between Russia and Saudi Arabia. In April, oil futures briefly fell into negative territory as storage capacity evaporated and demand waned. However, as production was slashed, relieving pressure on constrained storage capacity, demand also stabilized. First and second quarter 2020 growth was negative in the eurozone and the United Kingdom. In January, Brexit occurred with the formal departure of the United Kingdom from the European Union resulting in an 11-month transition period with respect to economic and customs matters. Japan fared slightly better, although GDP still contracted for the first and second quarters of 2020. Even China and India, which had maintained stronger growth than many developed countries, showed weakness. In China, GDP contracted in the first quarter, but rebounded in the second and third quarters. While India’s second quarter GDP contracted, third quarter GDP was positive.
Many central banks around the world, including the U.S. Federal Reserve (Fed), reduced their policy rates over the reporting period, while others maintained low—and for some international central banks, negative—interest rates. In the U.S., after enacting three interest rate cuts in the second half of 2019 and as the economic implications of the COVID-19 pandemic grew, the Fed cut interest rates by 0.50% in early March and by 1.00% in mid-March, resulting in a federal funds rate of 0.00% to 0.25%. In addition, the Fed also announced extensive emergency measures to support the economy in light of the COVID-19 pandemic, including large purchases of U.S. Treasuries and other securities to support smooth market function, facilitating the flow of credit to municipalities, new financing for employers, consumers, and businesses, and the establishment of facilities to support credit to businesses and consumers alike. In August, the Fed announced that it was shifting its interest rate policy approach to potentially allow inflation to rise above its 2% target for periods of time even in times of rising employment. Outside the U.S., central banks were similarly accommodative. The European Central Bank held its policy rate at 0.00%, unchanged since March 2016, and launched a new asset purchase program to help counter the impact of the COVID-19 pandemic. The Bank of Japan upheld its short-term interest rate target of -0.1%, also unchanged since 2016, and increased the annual pace of its purchases of exchange-traded funds (ETFs) and other assets. The Bank of England lowered its key official bank rate from 0.75% to 0.10% in two emergency rate cuts in March. Central banks in key emerging market economies—including China, India, Mexico, Russia, and Thailand—lowered their policy rates or maintained already low rates in response to pandemic-driven pressures.
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
 | Omar Aguilar, Ph.D., Senior Vice President and Chief Investment Officer of Passive Equity and Multi-Asset Strategies, has overall responsibility for all aspects of the management of the fund. 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 that, he served as head of quantitative equity for ING Investment Management (now known as Voya Investment Management), building and developing the group and managing assets with global active, index, and enhanced index strategies for pension funds, variable annuities, and mutual funds. Mr. Aguilar also served as head of quantitative research for Lehman Brothers’ alternative investment management business and as a director of quantitative research and a portfolio manager with both Merrill Lynch Investment Management and Bankers Trust. |
 | Jane Shi, CFA, Portfolio Manager, is responsible for the day-to-day co-management of the fund. Prior to joining CSIM in 2011, Ms. Shi was a vice president investment analyst at Bailard, Inc., where she developed quantitative models for domestic equity and tactical asset allocation strategies, and was also responsible for performance measurement and attribution. Prior to that, she was a treasury analyst at Sun Microsystems, Inc. |
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
The Laudus International MarketMasters Fund (the fund) uses a multi-manager strategy. Charles Schwab Investment Management, Inc. (CSIM)—the fund’s investment adviser—selects investment subadvisers with strong long-term track records to manage a portion of the fund’s assets. In addition to selecting investment subadvisers and allocating assets among them, CSIM is responsible for monitoring and coordinating the overall management of the fund. Each subadviser manages its respective portfolio relative to a comparative index that reflects its individual process and philosophy. The subadviser comparative indices may differ from the fund’s comparative index.
Market Highlights. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and plunging markets into bear-market territory with record speed. At their lows, key international stock indices had lost as much as one-third of their former value. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. While the extraordinary response prompted a rally in global equity markets from their March lows, historic volatility remained and international equity markets lost steam during the final two months of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. The U.S. dollar weakened against a basket of foreign currencies for the reporting period, generally increasing the returns on overseas investments in U.S. dollar terms.
Performance. For the 12-month period ended October 31, 2020, the fund returned 8.56%, outperforming the fund’s comparative index, the MSCI EAFE® Index (Net) (the index), which returned -6.86%.
Positioning and Strategies. Over the 12-month reporting period, two of the fund’s active subadvisers posted positive returns and two of the fund’s active subadvisers posted negative returns. One of the fund’s active subadvisers began managing fund assets in January 2020 and posted positive returns for the period it managed fund assets. All five of the fund’s active subadvisers outperformed their comparative indices.
Among the fund’s five active subadvisers, Baillie Gifford Overseas Limited posted the strongest total return and outperformed its international growth comparative index, contributing to the fund’s relative performance. Baillie Gifford began managing fund assets on January 31, 2020. Baillie Gifford’s stock selection contributed positively to its performance relative to its comparative index, primarily due to selection in the consumer discretionary and health care sectors and within the U.S. and Germany. However, stock selection within Spain detracted from relative performance. Baillie Gifford’s allocation across sectors and country segments also contributed positively to relative performance, most notably in the consumer discretionary and consumer staples sectors and in the U.S. and Hong Kong. However, allocation in the information technology and health care sectors and in Taiwan and Germany detracted from relative performance.
William Blair Investment Management, LLC posted a positive total return and outperformed its international multi-cap growth comparative index, contributing to the fund’s relative performance. Stock selection was strongest in the communication services and industrials sectors and weakest in the consumer discretionary and consumer staples sectors. From a sector allocation standpoint, William Blair’s underweight to the consumer staples sector and overweight to the information technology sector contributed to relative performance, while an overweight to the financials and industrials sectors detracted from relative performance. From a geographic perspective, stock selection in Switzerland and Japan contributed to relative performance, while stock selection in Hong Kong and Spain detracted from relative performance.
American Century Investment Management, Inc., which focuses on international small-cap growth, also posted a positive return and outperformed it comparative index. Stock selection contributed to performance relative to the comparative index, primarily due to selection in the information technology and consumer discretionary sectors, and within Japan and Australia. However, stock selection in the real estate sector and in Canada and Norway detracted from relative performance. Allocation across country segments contributed to performance relative to the comparative index, most notably within Hong Kong and Australia. However, allocation in Brazil and Indonesia detracted from relative performance. American Century’s allocation across sectors detracted from performance relative to the comparative index, primarily due to selection in the financials and health care sectors. However, allocation in the information technology and real estate sectors contributed to relative performance.
Harris Associates L.P. posted a negative return but outperformed its comparative index. Stock selection was strongest in the consumer discretionary and communication services sectors and weakest in the materials and financials sectors. From a sector allocation standpoint, Harris’ underweight to the energy sector and overweight to the consumer discretionary sector contributed to relative performance, while an underweight to the health care and consumer staples sectors detracted from relative performance. From a geographic perspective, stock selection in Ireland and the U.S. contributed to relative performance, while stock selection in Germany and Italy detracted from relative performance.
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
Performance and Fund Facts as of October 31, 2020
Mondrian Investment Partners Limited, with its international small-cap value focus, also posted a negative total return but outperformed its comparative index. Mondrian’s stock selection contributed positively to its performance relative to its comparative index, primarily due to selection in the industrials and real estate sectors and within Canada and Germany. However, stock selection in the materials and communications services sectors and within the Netherlands and Australia detracted from relative performance. From a sector allocation standpoint, Mondrian’s underweight to the energy sector and overweight to the utilities sector contributed to relative performance, while an underweight to the materials sector and an overweight to the industrials sector detracted from relative performance. From a country allocation standpoint, Mondrian’s overweight to Canada and Australia contributed to relative performance, while an overweight to France and Singapore detracted from relative performance.
Mellon Investments Corporation seeks to track the performance of the fund’s index by employing a strategic trading approach to minimize transaction costs and preserve value. During the 12-month reporting period, the fund’s allocation to Mellon was liquidated to cash on January 31, 2020 and was reallocated within the fund. Minor residual positions remained with Mellon through the end of the reporting period. Mellon has remained as a dormant subadviser for the fund.
Management views and portfolio holdings may have changed since the report date.
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
Performance and Fund Facts as of October 31, 2020 (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.schwabfunds.com/laudusfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1,2,3
Average Annual Total Returns1,3
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Laudus International MarketMasters Fund (4/2/04)2 | 8.56% | 6.51% | 6.25% |
| MSCI EAFE® Index (Net)4 | -6.86% | 2.85% | 3.82% |
| Fund Category: Morningstar Foreign Large Growth5 | 12.71% | 7.86% | 6.47% |
| Fund Expense Ratios6: Net 1.25%; Gross 1.50% |
Investment Managers and Allocations7
| Investment Managers | Investment Style | % of
Net Assets |
| American Century Investment Management, Inc. | International Small-Cap Growth | 29.6% |
| William Blair Investment Management, LLC | International Multi-Cap Growth | 28.4% |
| Mondrian Investment Partners Limited | International Small-Cap Value | 17.9% |
| Harris Associates L.P. | International Large-Cap Value | 15.1% |
| Baillie Gifford Overseas Limited8 | International Growth | 7.8% |
| Mellon Investments Corporation | International Blend | 0.0% 9 |
| Cash and other assets | | 1.2% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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 | The fund commenced operations on October 16, 1996 which became the Laudus International MarketMasters Fund Investor Shares. The Investor Shares were consolidated into Select Shares on February 26, 2019. The performance presented is that of the former Select Shares which commenced operations on April 2, 2004. |
| 3 | The fund’s performance relative to the index may be affected by fair-value pricing. See financial note 2 for more information. |
| 4 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
| 5 | 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. |
| 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 expense ratios during the period, refer to the financial highlights section of the financial statements. |
| 7 | For more information about each of the investment manager’s investment styles, refer to the fund’s prospectus. |
| 8 | Baillie Gifford Overseas Limited began managing fund assets on January 31, 2020. |
| 9 | Less than 0.05%. |
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 448 |
| Weighted Average Market Cap (millions) | $56,227 |
| Price/Earnings Ratio (P/E) | 26.5 |
| Price/Book Ratio (P/B) | 2.5 |
| Portfolio Turnover Rate | 65% |
Sector Weightings % of Investments1
Top Equity Holdings % of Net Assets2
Top Country Weightings % of Investments3
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 | Excludes derivatives. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
| 3 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
Fund Expenses (Unaudited)
Examples for a $1,000 Investment
As a fund shareholder, you may incur two types of costs: (1) transaction costs; 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, 2020 and held through October 31, 2020.
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. 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 Ratio
(Annualized)1 | Beginning
Account Value
at 5/1/20 | Ending
Account Value
(Net of Expenses)
at 10/31/20 | Expenses Paid
During Period
5/1/20-10/31/202 |
| Laudus International MarketMasters Fund | | | | |
| Actual Return | 1.25% | $1,000.00 | $1,233.30 | $7.02 |
| Hypothetical 5% Return | 1.25% | $1,000.00 | $1,018.82 | $6.34 |
| 1 | Based on the most recent six-month expense 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 366 days of the fiscal year. |
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/191 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $22.89 | $22.89 | $26.96 | $21.16 | $22.71 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)2 | 0.00 3 | 0.31 | 0.24 | 0.22 | 0.19 | |
| Net realized and unrealized gains (losses) | 1.95 | 1.74 | (3.09) | 5.76 | (0.23) | |
| Total from investment operations | 1.95 | 2.05 | (2.85) | 5.98 | (0.04) | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.43) | (0.29) | (0.36) | (0.18) | (0.31) | |
| Distributions from net realized gains | (0.04) | (1.76) | (0.86) | — | (1.20) | |
| Total distributions | (0.47) | (2.05) | (1.22) | (0.18) | (1.51) | |
| Net asset value at end of period | $24.37 | $22.89 | $22.89 | $26.96 | $21.16 | |
| Total return | 8.56% | 10.50% | (11.09%) | 28.52% | 0.00% 4 | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 1.25% | 1.25% | 1.25% | 1.25% | 1.25% | |
| Gross operating expenses | 1.51% | 1.50% | 1.51% | 1.53% | 1.54% | |
| Net investment income (loss) | 0.00% 4 | 1.43% | 0.92% | 0.92% | 0.93% | |
| Portfolio turnover rate | 65% | 54% | 69% | 71% | 69% | |
| Net assets, end of period (x 1,000,000) | $1,243 | $1,413 | $1,127 | $1,229 | $1,063 | |
| |
1
Effective February 26, 2019, the Investor Share class, and the Select Share class were consolidated into a single class of shares of the fund. The financial history as shown in the financial highlights is that of the former Select Shares.
2
Calculated based on the average shares outstanding during the period.
3
Per-share amount was less than $0.005.
4
Less than 0.005%.
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Common Stock 94.8% of net assets |
| |
| Argentina 1.1% |
| Globant S.A. * | 15,756 | 2,845,691 |
| MercadoLibre, Inc. * | 8,685 | 10,544,024 |
| | | 13,389,715 |
| |
| Australia 4.9% |
| Altium Ltd. | 86,096 | 2,259,777 |
| AMP Ltd. | 1,993,775 | 2,145,485 |
| Aristocrat Leisure Ltd. | 94,528 | 1,903,485 |
| Atlassian Corp. plc, Class A * | 11,031 | 2,113,760 |
| Brambles Ltd. | 190,300 | 1,283,444 |
| Breville Group Ltd. | 143,779 | 2,663,839 |
| carsales.com Ltd. | 116,529 | 1,702,463 |
| Centuria Office REIT | 1,573,492 | 2,278,407 |
| Charter Hall Retail REIT | 1,779,895 | 4,306,938 |
| Costa Group Holdings Ltd. | 642,103 | 1,606,583 |
| CSL Ltd. | 10,878 | 2,202,330 |
| Gold Road Resources Ltd. * | 3,145,522 | 2,944,410 |
| Goodman Group | 112,013 | 1,449,801 |
| Inghams Group Ltd. | 1,417,802 | 2,852,876 |
| InvoCare Ltd. | 137,163 | 974,395 |
| Kogan.com Ltd. | 210,678 | 3,049,781 |
| National Storage REIT | 2,165,673 | 2,748,527 |
| NEXTDC Ltd. * | 616,203 | 5,517,387 |
| Orica Ltd. | 274,702 | 2,948,864 |
| Pact Group Holdings Ltd. | 619,668 | 1,023,646 |
| Redbubble Ltd * | 498,939 | 1,512,576 |
| Seven Group Holdings Ltd. | 354,563 | 4,841,516 |
| Shopping Centres Australasia Property Group | 2,471,951 | 4,033,091 |
| Technology One Ltd. | 121,184 | 765,004 |
| Temple & Webster Group Ltd. * | 305,808 | 2,245,557 |
| | | 61,373,942 |
| |
| Belgium 0.5% |
| Anheuser-Busch InBev S.A./N.V. | 33,300 | 1,722,481 |
| Melexis N.V. | 35,626 | 2,711,811 |
| Warehouses De Pauw CVA | 62,049 | 2,078,845 |
| | | 6,513,137 |
| |
| Brazil 1.0% |
| B3 S.A. - Brasil Bolsa Balcao | 148,600 | 1,322,080 |
| Duratex S.A. | 621,500 | 2,076,378 |
| Locaweb Servicos de Internet S.A. * | 258,800 | 3,118,888 |
| Magazine Luiza S.A. | 330,000 | 1,416,516 |
| Notre Dame Intermedica Participacoes S.A. | 63,000 | 721,904 |
| Pet Center Comercio e Participacoes SA * | 686,519 | 2,123,705 |
| Totvs S.A. | 374,800 | 1,763,627 |
| | | 12,543,098 |
| |
| Security | Number
of Shares | Value ($) |
| Canada 5.8% |
| Alamos Gold, Inc., Class A | 436,954 | 3,998,129 |
| Alimentation Couche-Tard, Inc., Class B | 39,623 | 1,220,244 |
| Boralex, Inc., Class A | 187,185 | 5,444,283 |
| Brookfield Asset Management, Inc., Class A | 13,048 | 388,569 |
| BRP, Inc. | 57,389 | 3,099,687 |
| CAE, Inc. | 220,591 | 3,770,065 |
| Canadian National Railway Co. | 47,462 | 4,714,851 |
| Cenovus Energy, Inc. | 640,225 | 2,095,160 |
| Cineplex, Inc. | 137,320 | 524,626 |
| Element Fleet Management Corp. | 387,776 | 3,652,772 |
| Enghouse Systems Ltd. | 11,375 | 564,438 |
| FirstService Corp. | 29,135 | 3,906,754 |
| Gibson Energy, Inc. | 90,142 | 1,327,468 |
| Innergex Renewable Energy, Inc. | 491,424 | 8,859,870 |
| Kinaxis, Inc. * | 18,915 | 2,887,437 |
| Lululemon Athletica, Inc. * | 9,538 | 3,045,388 |
| Northview Apartment Real Estate Investment Trust | 118,975 | 3,225,533 |
| Nuvei Corp. * | 40,671 | 1,511,334 |
| Open Text Corp. | 44,900 | 1,649,670 |
| Ritchie Bros. Auctioneers, Inc. | 28,136 | 1,705,519 |
| Spin Master Corp. * | 99,511 | 2,015,167 |
| TFI International, Inc. | 84,178 | 3,747,984 |
| The Descartes Systems Group, Inc. * | 41,595 | 2,230,389 |
| Toromont Industries Ltd. | 8,613 | 536,252 |
| TransAlta Renewables, Inc. | 30,801 | 386,082 |
| WSP Global, Inc. | 83,151 | 5,259,427 |
| | | 71,767,098 |
| |
| China 8.4% |
| A-Living Services Co., Ltd., H Shares | 122,750 | 516,934 |
| Aier Eye Hospital Group Co., Ltd., A Shares | 177,480 | 1,654,133 |
| AK Medical Holdings Ltd. | 142,000 | 317,737 |
| Alibaba Group Holding Ltd. * | 269,532 | 10,213,604 |
| Alibaba Group Holding Ltd. ADR * | 25,140 | 7,659,907 |
| Baidu, Inc. ADR * | 11,290 | 1,502,135 |
| Centre Testing International Group Co., Ltd., A Shares | 384,300 | 1,550,530 |
| China Lesso Group Holdings Ltd | 931,000 | 1,509,361 |
| China Yongda Automobiles Services Holdings Ltd. | 3,570,000 | 5,086,702 |
| Country Garden Services Holdings Co., Ltd. | 287,000 | 1,807,439 |
| Foshan Haitian Flavouring & Food Co., Ltd., A Shares | 56,260 | 1,347,259 |
| GDS Holdings Ltd. ADR * | 17,681 | 1,485,911 |
| Hangzhou Tigermed Consulting Co., Ltd., A Shares | 83,800 | 1,557,384 |
| JD.com, Inc. * | 73,750 | 3,008,151 |
| Kingsoft Cloud Holdings Ltd. ADR * | 116,675 | 3,389,409 |
| Kweichow Moutai Co., Ltd., A Shares | 9,000 | 2,249,882 |
| Li Ning Co., Ltd. | 599,000 | 3,121,952 |
| Meituan, B Shares * | 317,500 | 11,836,133 |
| NAURA Technology Group Co., Ltd., A Shares | 30,300 | 776,788 |
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| NetEase, Inc. | 164,125 | 2,870,721 |
| NIO, Inc. ADR * | 58,430 | 1,786,789 |
| Offcn Education Technology Co., Ltd., A Shares | 161,500 | 954,794 |
| Ping An Insurance Group Co. of China Ltd., H Shares | 475,000 | 4,911,345 |
| Shenzhen Mindray Bio-Medical Electronics Co., Ltd., A Shares | 17,000 | 984,612 |
| Shenzhou International Group Holdings Ltd. | 78,000 | 1,357,151 |
| Silergy Corp. | 26,000 | 1,602,973 |
| TAL Education Group ADR * | 51,750 | 3,439,305 |
| Tencent Holdings Ltd. | 214,000 | 16,350,800 |
| Tencent Music Entertainment Group ADR * | 34,919 | 519,595 |
| Times Neighborhood Holdings Ltd. | 1,609,000 | 1,635,880 |
| Topchoice Medical Corp., A Shares * | 34,900 | 1,176,872 |
| Trip.Com Group Ltd. ADR * | 80,814 | 2,324,211 |
| Venus MedTech Hangzhou, Inc., H Shares * | 50,000 | 482,092 |
| Will Semiconductor Ltd. Class A | 14,100 | 417,890 |
| WuXi AppTec Co. Ltd., A Shares | 49,700 | 840,046 |
| Wuxi Biologics Cayman, Inc. * | 99,000 | 2,780,287 |
| | | 105,026,714 |
| |
| Denmark 2.6% |
| Alk-Abello A/S * | 10,110 | 3,382,734 |
| Chr. Hansen Holding A/S | 12,833 | 1,294,976 |
| Coloplast A/S, Class B | 11,180 | 1,634,996 |
| DSV PANALPINA A/S | 37,619 | 6,103,360 |
| Genmab A/S * | 12,684 | 4,236,771 |
| Netcompany Group A/S * | 60,202 | 5,007,307 |
| Novo Nordisk A/S, Class B | 48,144 | 3,069,933 |
| Orsted A/S | 16,190 | 2,569,580 |
| Royal Unibrew A/S | 41,674 | 4,063,594 |
| Tryg A/S | 14,086 | 390,925 |
| | | 31,754,176 |
| |
| Finland 1.1% |
| Huhtamaki Oyj | 70,560 | 3,446,681 |
| Metso Outotec Oyj | 614,108 | 4,329,135 |
| Neste Oyj | 67,418 | 3,516,088 |
| UPM-Kymmene Oyj | 76,500 | 2,161,810 |
| | | 13,453,714 |
| |
| France 6.3% |
| Accor S.A. * | 147,200 | 3,751,825 |
| Airbus SE * | 50,201 | 3,673,008 |
| BNP Paribas S.A. * | 227,503 | 7,934,114 |
| Bureau Veritas S.A. * | 58,994 | 1,293,641 |
| Coface S.A. * | 357,092 | 2,790,022 |
| Dassault Systemes SE | 14,762 | 2,517,073 |
| EssilorLuxottica S.A. * | 11,000 | 1,358,048 |
| Gaztransport Et Technigaz S.A. | 44,920 | 4,305,885 |
| Hermes International | 3,357 | 3,125,702 |
| Kering S.A. | 12,359 | 7,468,743 |
| Korian S.A. * | 123,736 | 3,485,942 |
| L'Oreal S.A. | 13,299 | 4,298,041 |
| LISI * | 58,688 | 948,712 |
| LVMH Moet Hennessy Louis Vuitton SE | 9,503 | 4,454,509 |
| Orpea * | 6,679 | 667,127 |
| Publicis Groupe S.A. | 111,410 | 3,870,638 |
| Rubis S.C.A. | 116,320 | 3,824,578 |
| Safran S.A. * | 36,282 | 3,827,021 |
| Security | Number
of Shares | Value ($) |
| Sartorius Stedim Biotech | 4,325 | 1,640,084 |
| SOITEC * | 31,268 | 4,435,693 |
| Teleperformance | 9,074 | 2,723,859 |
| Valeo S.A. | 69,314 | 2,096,846 |
| Verallia S.A. | 84,497 | 2,353,011 |
| Worldline S.A. * | 26,137 | 1,935,875 |
| | | 78,779,997 |
| |
| Germany 8.0% |
| Allianz SE | 27,870 | 4,909,428 |
| Bayer AG (a) | 542 | 25,409 |
| Bayer AG (a) | 109,081 | 5,125,772 |
| Bayerische Motoren Werke AG | 86,700 | 5,924,968 |
| Carl Zeiss Meditec AG | 7,120 | 919,976 |
| CompuGroup Medical SE & Co. KgaA | 29,192 | 2,508,174 |
| Continental AG | 51,835 | 5,507,515 |
| Daimler AG | 135,094 | 6,982,804 |
| Delivery Hero SE * | 48,616 | 5,580,832 |
| Dermapharm Holding SE | 16,346 | 793,858 |
| Duerr AG | 50,643 | 1,456,411 |
| Fielmann AG * | 85,075 | 6,450,278 |
| Flatex AG * | 83,625 | 4,480,118 |
| Fresenius Medical Care AG & Co. KGaA | 28,400 | 2,168,686 |
| Gerresheimer AG | 38,416 | 3,861,744 |
| HelloFresh SE * | 49,706 | 2,656,131 |
| Henkel AG & Co. KGaA | 8,800 | 795,554 |
| Infineon Technologies AG | 155,256 | 4,322,510 |
| JOST Werke AG * | 49,519 | 1,857,048 |
| KION Group AG | 14,634 | 1,140,294 |
| MTU Aero Engines AG | 19,920 | 3,404,753 |
| Nemetschek SE | 24,182 | 1,750,944 |
| Norma Group SE | 38,645 | 1,199,010 |
| Puma SE * | 28,630 | 2,506,360 |
| SAP SE | 23,167 | 2,471,562 |
| Sixt SE * | 28,223 | 2,132,383 |
| Stabilus S.A. | 34,536 | 1,957,959 |
| Stroeer SE & Co. KGaA * | 39,315 | 2,841,980 |
| Teamviewer AG * | 30,632 | 1,350,198 |
| ThyssenKrupp AG *(a) | 600 | 2,858 |
| ThyssenKrupp AG *(a) | 405,800 | 1,936,986 |
| Varta AG * | 20,803 | 2,614,712 |
| Vonovia SE | 35,681 | 2,278,713 |
| Zalando SE * | 56,544 | 5,265,625 |
| | | 99,181,553 |
| |
| Hong Kong 2.1% |
| AIA Group Ltd. | 583,600 | 5,554,222 |
| ASM Pacific Technology Ltd. | 156,900 | 1,582,228 |
| Cafe De Coral Holdings Ltd. | 1,214,000 | 2,509,343 |
| HKBN Ltd. | 1,820,983 | 3,154,499 |
| Man Wah Holdings Ltd. | 2,333,200 | 3,256,300 |
| Melco International Development Ltd. | 450,000 | 730,459 |
| Minth Group Ltd. | 990,000 | 4,096,615 |
| SUNeVision Holdings Ltd. | 3,636,000 | 3,191,163 |
| Yue Yuen Industrial Holdings Ltd. | 1,292,000 | 2,104,428 |
| | | 26,179,257 |
| |
| India 0.8% |
| Axis Bank Ltd. * | 529,224 | 3,508,027 |
| HDFC Bank Ltd. * | 82,439 | 1,316,546 |
| Ipca Laboratories Ltd. | 20,409 | 636,819 |
| Pidilite Industries Ltd. | 27,261 | 577,303 |
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Reliance Industries Ltd. | 150,524 | 4,173,242 |
| Reliance Industries Ltd. - Partly Paid Up | 9,089 | 144,849 |
| | | 10,356,786 |
| |
| Indonesia 0.4% |
| PT Bank Central Asia Tbk | 1,502,700 | 2,956,796 |
| PT Bank Mandiri (Persero) Tbk | 4,741,600 | 1,846,999 |
| | | 4,803,795 |
| |
| Ireland 0.9% |
| Glanbia plc | 227,733 | 2,166,104 |
| ICON plc * | 12,461 | 2,246,718 |
| Kingspan Group plc * | 33,877 | 2,953,195 |
| Ryanair Holdings plc * | 10,000 | 137,793 |
| Ryanair Holdings plc ADR * | 39,421 | 3,177,333 |
| | | 10,681,143 |
| |
| Israel 0.9% |
| AudioCodes Ltd. | 37,543 | 1,088,371 |
| CyberArk Software Ltd. * | 6,625 | 656,869 |
| Inmode Ltd * | 65,335 | 2,388,648 |
| Kornit Digital Ltd. * | 54,151 | 3,645,445 |
| Nova Measuring Instruments Ltd * | 31,635 | 1,759,855 |
| Wix.com Ltd. * | 6,215 | 1,537,094 |
| | | 11,076,282 |
| |
| Italy 1.2% |
| Amplifon S.p.A. * | 24,047 | 874,294 |
| Banca Farmafactoring S.p.A. * | 268,183 | 1,237,286 |
| Brunello Cucinelli S.p.A. * | 14,139 | 424,541 |
| Ferrari N.V. | 15,220 | 2,715,124 |
| Interpump Group S.p.A. | 60,917 | 2,300,923 |
| Intesa Sanpaolo S.p.A. * | 4,269,700 | 7,088,145 |
| Moncler S.p.A. * | 12,886 | 515,591 |
| | | 15,155,904 |
| |
| Japan 12.2% |
| Anritsu Corp. | 157,200 | 3,441,494 |
| Ariake Japan Co., Ltd. | 35,400 | 2,267,727 |
| Asahi Intecc Co., Ltd. | 48,700 | 1,509,124 |
| BASE, Inc. * | 35,800 | 3,837,254 |
| BayCurrent Consulting, Inc. | 18,100 | 2,341,964 |
| Benefit One, Inc. | 32,900 | 823,312 |
| Comture Corp. | 49,000 | 1,246,604 |
| Cosmos Pharmaceutical Corp. | 14,000 | 2,377,751 |
| Daikin Industries Ltd. | 21,100 | 3,948,511 |
| Digital Arts, Inc. | 14,000 | 989,377 |
| Disco Corp. | 7,500 | 2,024,312 |
| en-Japan, Inc. | 116,800 | 2,567,918 |
| GMO Payment Gateway, Inc. | 8,400 | 1,029,239 |
| Harmonic Drive Systems, Inc. | 42,100 | 2,788,600 |
| Hennge KK * | 22,600 | 1,634,933 |
| Hoya Corp. | 23,300 | 2,629,566 |
| Infomart Corp. | 261,800 | 2,165,094 |
| Invincible Investment Corp. | 8,792 | 2,810,441 |
| IR Japan Holdings Ltd. | 15,100 | 1,671,826 |
| JMDC, Inc. * | 48,600 | 2,549,230 |
| Kakaku.com, Inc. | 84,100 | 2,222,546 |
| Keyence Corp. | 14,300 | 6,489,662 |
| Kobe Bussan Co., Ltd. | 73,800 | 2,076,366 |
| Komatsu Ltd. | 108,200 | 2,439,419 |
| Kyudenko Corp. | 153,000 | 4,175,560 |
| M3, Inc. | 77,000 | 5,200,250 |
| Security | Number
of Shares | Value ($) |
| Mabuchi Motor Co., Ltd. | 43,800 | 1,805,819 |
| Matsumotokiyoshi Holdings Co., Ltd. | 82,700 | 3,052,982 |
| Meitec Corp. | 7,400 | 366,856 |
| Menicon Co., Ltd. | 44,500 | 3,142,039 |
| Mercari, Inc. * | 45,000 | 1,891,906 |
| MISUMI Group, Inc. | 96,300 | 2,860,068 |
| MonotaRO Co., Ltd. | 32,000 | 1,769,975 |
| Musashi Seimitsu Industry Co., Ltd. | 121,400 | 1,268,972 |
| Nabtesco Corp. | 96,600 | 3,608,805 |
| Nifco, Inc. | 165,700 | 4,959,755 |
| Nihon Kohden Corp. | 52,400 | 1,638,998 |
| Nihon M&A Center, Inc. | 36,400 | 2,137,464 |
| Nippon Gas Co., Ltd. | 76,300 | 3,639,259 |
| Nomura Research Institute Ltd. | 63,200 | 1,862,977 |
| NS Solutions Corp. | 12,900 | 377,771 |
| Olympus Corp. | 87,400 | 1,673,193 |
| Omron Corp. | 49,700 | 3,588,640 |
| Open House Co., Ltd. | 106,800 | 3,636,769 |
| PALTAC Corp. | 10,200 | 570,257 |
| Persol Holdings Co., Ltd. | 53,400 | 808,807 |
| Rakus Co. Ltd | 134,700 | 2,647,080 |
| Resorttrust, Inc. | 191,300 | 2,694,211 |
| Seria Co., Ltd. | 95,800 | 3,691,088 |
| SHIFT, Inc. * | 24,100 | 3,058,546 |
| SHO-BOND Holdings Co., Ltd. | 73,300 | 3,538,062 |
| SMC Corp. | 8,700 | 4,627,576 |
| SoftBank Group Corp. | 20,000 | 1,302,675 |
| Sushiro Global Holdings Ltd. | 25,100 | 681,376 |
| Systena Corp. | 170,400 | 3,091,990 |
| TechnoPro Holdings, Inc. | 12,200 | 758,809 |
| Terumo Corp. | 51,200 | 1,884,364 |
| The Japan Steel Works Ltd. | 44,000 | 940,647 |
| TIS, Inc. | 59,700 | 1,141,771 |
| Toyota Motor Corp. | 34,700 | 2,277,947 |
| UT Group Co., Ltd. * | 79,500 | 2,477,131 |
| Zeon Corp. | 370,800 | 4,511,311 |
| | | 151,243,976 |
| |
| Luxembourg 0.1% |
| Eurofins Scientific SE * | 1,871 | 1,489,915 |
| |
| Mexico 0.2% |
| Grupo Aeroportuario del Sureste S.A.B. de C.V. ADR * | 4,431 | 511,116 |
| Grupo Televisa S.A.B. ADR * | 253,900 | 1,614,804 |
| | | 2,125,920 |
| |
| Netherlands 3.5% |
| Adyen N.V. * | 3,185 | 5,353,167 |
| Alfen Beheer BV * | 42,250 | 2,700,033 |
| ASM International N.V. | 20,174 | 2,881,469 |
| ASML Holding N.V. | 38,335 | 13,869,713 |
| B&S Group Sarl | 260,977 | 1,717,437 |
| Basic-Fit N.V. * | 81,036 | 1,963,075 |
| BE Semiconductor Industries N.V. | 14,605 | 588,490 |
| Boskalis Westminster N.V. * | 128,142 | 2,576,759 |
| Euronext N.V. | 23,714 | 2,469,137 |
| EXOR N.V. | 72,900 | 3,792,755 |
| IMCD N.V. | 29,165 | 3,375,586 |
| Marel Hf | 489,211 | 2,364,502 |
| | | 43,652,123 |
| |
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Norway 1.0% |
| Bakkafrost P/F * | 45,148 | 2,582,766 |
| Elkem A.S.A. | 575,647 | 1,224,338 |
| Fjordkraft Holding ASA | 357,379 | 2,943,300 |
| LINK Mobility Group Holding ASA * | 396,025 | 2,115,640 |
| NEL ASA * | 875,215 | 1,675,144 |
| Tomra Systems A.S.A. | 34,877 | 1,408,566 |
| | | 11,949,754 |
| |
| Panama 0.1% |
| Copa Holdings S.A., Class A | 32,302 | 1,591,843 |
| |
| Poland 0.2% |
| Dino Polska S.A. * | 48,475 | 2,665,127 |
| |
| Portugal 0.0% |
| Banco Espirito Santo S.A. *(b) | 42,176 | — |
| |
| Republic of Korea 1.6% |
| Cosmax, Inc. | 16,535 | 1,540,098 |
| Douzone Bizon Co., Ltd. | 20,198 | 1,780,775 |
| Hugel, Inc. * | 18,944 | 3,528,233 |
| Kakao Corp. | 6,259 | 1,825,068 |
| NAVER Corp. | 7,440 | 1,903,680 |
| Orion Corp/Republic of Korea | 29,843 | 2,859,517 |
| Samsung Electronics Co., Ltd. | 31,600 | 1,588,393 |
| Samsung SDI Co., Ltd. | 5,158 | 2,031,923 |
| SK Materials Co., Ltd. | 16,776 | 3,304,126 |
| | | 20,361,813 |
| |
| Russia 0.1% |
| Yandex N.V., Class A * | 31,346 | 1,804,589 |
| |
| Singapore 1.4% |
| Ascendas Real Estate Investment Trust | 599,871 | 1,265,799 |
| CapitaLand Mall Trust | 1,166,100 | 1,478,099 |
| ESR-REIT | 7,600,748 | 1,951,822 |
| NetLink NBN Trust | 4,393,700 | 3,092,255 |
| SATS Ltd. | 1,455,900 | 3,175,075 |
| Sheng Siong Group Ltd. | 3,842,800 | 4,696,895 |
| SPH REIT | 4,000,500 | 2,182,599 |
| | | 17,842,544 |
| |
| South Africa 0.4% |
| Naspers Ltd., N Shares | 23,270 | 4,542,942 |
| |
| Spain 0.5% |
| Amadeus IT Group S.A. | 111,597 | 5,317,168 |
| Industria de Diseno Textil S.A. | 31,455 | 776,603 |
| | | 6,093,771 |
| |
| Sweden 5.7% |
| AAK AB * | 170,341 | 3,315,209 |
| AddTech AB, B Shares | 295,678 | 3,267,560 |
| AF POYRY AB * | 84,305 | 1,926,411 |
| Atlas Copco AB, A Shares | 124,718 | 5,505,197 |
| Atlas Copco AB, B Shares | 19,995 | 766,124 |
| Beijer Ref AB | 20,986 | 581,035 |
| BHG Group AB * | 265,262 | 4,132,397 |
| Bravida Holding AB | 312,830 | 3,610,496 |
| Security | Number
of Shares | Value ($) |
| Embracer Group AB * | 165,094 | 3,322,698 |
| Evolution Gaming Group AB | 29,999 | 2,225,033 |
| Fabege AB | 38,595 | 487,335 |
| Hennes & Mauritz AB, B Shares | 212,400 | 3,453,284 |
| Hexagon AB, B Shares * | 61,016 | 4,472,301 |
| Indutrade AB * | 22,655 | 1,146,999 |
| Kinnevik AB, B Shares | 36,182 | 1,481,614 |
| Lifco AB, B Shares | 48,422 | 3,544,567 |
| Lindab International AB | 163,584 | 2,525,337 |
| MIPS AB | 36,910 | 1,587,830 |
| Nibe Industrier AB, B Shares * | 41,677 | 1,003,532 |
| Nolato AB, B Shares * | 9,342 | 777,031 |
| Samhallsbyggnadsbolaget i Norden AB | 1,659,701 | 4,567,730 |
| Sinch AB * | 32,417 | 3,077,429 |
| SKF AB, B Shares | 131,400 | 2,689,885 |
| Spotify Technology S.A. * | 14,801 | 3,550,612 |
| Stillfront Group AB * | 39,278 | 4,616,090 |
| Vitrolife AB * | 17,314 | 421,197 |
| Volvo AB, B Shares * | 142,900 | 2,777,574 |
| | | 70,832,507 |
| |
| Switzerland 5.4% |
| Belimo Holding AG | 89 | 661,867 |
| Burckhardt Compression Holding AG | 12,284 | 3,075,574 |
| Cembra Money Bank AG | 29,849 | 3,316,335 |
| Cie Financiere Richemont S.A. | 39,400 | 2,462,649 |
| Credit Suisse Group AG | 683,753 | 6,448,728 |
| Daetwyler Holding AG | 7,931 | 1,774,321 |
| Glencore plc * | 4,057,600 | 8,185,134 |
| LafargeHolcim Ltd. * | 35,464 | 1,522,102 |
| Logitech International S.A. | 22,671 | 1,907,224 |
| Lonza Group AG | 7,823 | 4,740,034 |
| Novartis AG | 20,600 | 1,605,205 |
| Partners Group Holding AG | 2,972 | 2,675,709 |
| SIG Combibloc Group AG * | 207,796 | 4,274,109 |
| Sika AG | 19,357 | 4,761,914 |
| Softwareone Holding AG * | 26,259 | 646,395 |
| Stmicroelectronics N.V. | 91,454 | 2,789,995 |
| Straumann Holding AG | 2,426 | 2,532,386 |
| Tecan Group AG | 9,806 | 4,653,225 |
| Temenos AG | 11,628 | 1,249,680 |
| The Swatch Group AG - Bearer Shares | 10,305 | 2,182,299 |
| u-blox Holding AG * | 14,953 | 751,690 |
| VAT Group AG | 4,483 | 841,077 |
| Zur Rose Group AG * | 16,380 | 4,557,656 |
| | | 67,615,308 |
| |
| Taiwan 3.2% |
| Accton Technology Corp. | 360,000 | 2,615,504 |
| Airtac International Group | 203,000 | 5,464,933 |
| Alchip Technologies Ltd. | 153,000 | 2,596,427 |
| ASPEED Technology, Inc. | 40,000 | 1,935,980 |
| Chailease Holding Co., Ltd. | 776,714 | 3,773,190 |
| Genius Electronic Optical Co., Ltd. | 126,000 | 2,476,710 |
| Globalwafers Co. Ltd. | 44,000 | 640,740 |
| Land Mark Optoelectronics Corp. | 79,000 | 731,904 |
| MediaTek, Inc. | 200,000 | 4,754,052 |
| Merida Industry Co., Ltd. | 464,000 | 4,523,762 |
| Nien Made Enterprise Co., Ltd. | 228,000 | 2,570,501 |
| Taiwan Semiconductor Manufacturing Co., Ltd. ADR | 88,561 | 7,427,611 |
| | | 39,511,314 |
| |
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Thailand 0.6% |
| Airports of Thailand plc | 241,400 | 400,817 |
| Carabao Group plc | 136,900 | 480,967 |
| Sea Ltd. ADR * | 24,041 | 3,791,266 |
| Sri Trang Gloves Thailand PCL * | 743,100 | 2,181,556 |
| | | 6,854,606 |
| |
| United Kingdom 11.6% |
| 3i Group plc | 90,961 | 1,136,075 |
| Abcam plc | 23,166 | 442,070 |
| Ashtead Group plc | 125,871 | 4,548,639 |
| ASOS plc * | 36,804 | 2,099,803 |
| Assura plc | 759,133 | 749,394 |
| Avast plc | 411,221 | 2,527,055 |
| AVEVA Group plc | 17,806 | 988,372 |
| Big Yellow Group plc | 48,878 | 696,557 |
| boohoo Group plc * | 625,176 | 2,191,056 |
| Bunzl plc | 33,400 | 1,038,281 |
| Cineworld Group plc | 1,452,135 | 537,077 |
| CNH Industrial N.V. * | 825,892 | 6,403,698 |
| Coats Group plc * | 3,610,571 | 2,657,934 |
| Compass Group plc | 345,240 | 4,725,553 |
| ContourGlobal plc | 1,361,684 | 3,406,285 |
| Croda International plc | 18,533 | 1,448,523 |
| Diploma plc | 168,066 | 4,839,537 |
| Electrocomponents plc | 414,979 | 3,643,437 |
| Endava plc * | 61,029 | 3,899,753 |
| Equiniti Group plc * | 1,576,367 | 2,108,852 |
| Experian plc | 107,264 | 3,929,497 |
| Ferguson plc | 8,635 | 857,636 |
| Fevertree Drinks plc | 57,887 | 1,511,101 |
| Future plc | 126,960 | 3,264,198 |
| G4S plc * | 909,100 | 2,397,223 |
| Games Workshop Group plc | 22,975 | 3,088,676 |
| Greggs plc * | 26,686 | 445,679 |
| Halma plc | 88,294 | 2,709,530 |
| Hill & Smith Holdings plc | 180,599 | 2,808,675 |
| HomeServe plc | 121,058 | 1,734,931 |
| Howden Joinery Group plc * | 264,830 | 2,186,396 |
| IMI plc | 79,293 | 1,063,204 |
| Intermediate Capital Group plc | 224,877 | 3,415,729 |
| Intertek Group plc | 21,173 | 1,525,107 |
| JD Sports Fashion plc | 242,333 | 2,331,359 |
| Liberty Global plc, Class A * | 137,000 | 2,600,260 |
| Liberty Global plc, Class C * | 26,239 | 489,620 |
| Lloyds Banking Group plc * | 22,985,500 | 8,369,173 |
| London Stock Exchange Group plc | 30,251 | 3,260,992 |
| Natwest Group plc * | 2,019,400 | 3,255,993 |
| Ocado Group plc * | 78,908 | 2,326,989 |
| Prudential plc | 256,200 | 3,133,453 |
| Renishaw plc * | 10,433 | 756,929 |
| Rentokil Initial plc * | 350,855 | 2,388,694 |
| Rolls-Royce Holdings plc * | 658,200 | 609,207 |
| Rotork plc | 248,446 | 905,202 |
| Schroders plc | 74,133 | 2,511,438 |
| Schroders plc, Non-Voting Shares | 1,100 | 26,164 |
| Segro plc | 178,200 | 2,082,212 |
| Signature Aviation plc | 397,418 | 1,216,966 |
| Smiths Group plc | 80,800 | 1,392,183 |
| Softcat plc | 35,613 | 519,153 |
| Spectris plc | 89,296 | 2,865,979 |
| Spirax-Sarco Engineering plc | 15,951 | 2,331,931 |
| Security | Number
of Shares | Value ($) |
| SSP Group plc | 647,797 | 1,568,647 |
| The Weir Group plc * | 161,751 | 3,004,969 |
| Trainline plc * | 75,985 | 270,902 |
| Tritax Big Box REIT plc | 2,346,989 | 4,762,001 |
| Ultra Electronics Holdings plc | 82,047 | 2,001,856 |
| Vesuvius plc | 296,136 | 1,531,786 |
| Victrex plc | 141,603 | 3,383,646 |
| WPP plc | 367,800 | 2,937,723 |
| | | 143,860,960 |
| |
| United States 1.0% |
| Amazon.com, Inc. * | 1,035 | 3,142,415 |
| Illumina, Inc. * | 5,728 | 1,676,586 |
| NVIDIA Corp. | 2,329 | 1,167,667 |
| Tesla, Inc. * | 15,474 | 6,004,531 |
| | | 11,991,199 |
| Total Common Stock |
| (Cost $936,035,960) | | 1,178,066,522 |
|
| Preferred Stock 0.2% of net assets |
| |
| Brazil 0.2% |
| Randon SA Implementos e Participacoes | 1,110,800 | 2,456,636 |
| |
| Germany 0.0% |
| Henkel AG & Co. KGaA | 5,400 | 525,477 |
| Total Preferred Stock |
| (Cost $3,069,688) | | 2,982,113 |
|
| Rights 0.1% of net assets |
| |
| United Kingdom 0.1% |
Rolls-Royce Holdings PLC
expires 11/11/20 * | 2,278,333 | 1,151,116 |
| Total Rights |
| (Cost $4,652,904) | | 1,151,116 |
|
| Other Investment Company 1.2% of net assets |
| |
| Money Market Fund 1.2% |
| State Street Institutional U.S. Government Money Market Fund, Premier Class 0.03% (c) | 14,515,883 | 14,515,883 |
| Total Other Investment Company |
| (Cost $14,515,883) | | 14,515,883 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | |
| Long | |
| MSCI EAFE Index, expires 12/18/20 | 477 | 42,546,015 | (372,733) |
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
Portfolio Holdings as of October 31, 2020 (continued)
Settlement
Date | Counterparty | Currency
to be
Received | Amount of
Currency
to be
Received | Currency
to be
Delivered | Amount of
Currency
to be
Delivered | Unrealized
Depreciation
($) |
| Forward Foreign Currency Exchange Contract | | | | | | |
| 12/16/2020 | State Street Bank & Trust Co. | USD | 2,003,471 | CHF | 1,893,000 | (63,783) |
| * | Non-income producing security. |
| (a) | Securities are traded on separate exchanges for the same entity. |
| (b) | Fair-valued by management using significant unobservable inputs in accordance with procedures approved by the fund’s Board of Trustees. |
| (c) | The rate shown is the 7-day yield. |
| | |
| ADR — | American Depositary Receipt |
| CVA — | Dutch Certificate |
| REIT — | Real Estate Investment Trust |
| |
| CHF — | Swiss franc |
| USD — | U.S. dollar |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 (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 | |
| Assets | | | | | |
| Common Stock1 | $— | $348,317,989 | $— | $348,317,989 | |
| Argentina | 13,389,715 | — | — | 13,389,715 | |
| Australia | 2,113,760 | 59,260,182 | — | 61,373,942 | |
| Brazil | 12,543,098 | — | — | 12,543,098 | |
| Canada | 71,767,098 | — | — | 71,767,098 | |
| China | 22,107,262 | 82,919,452 | — | 105,026,714 | |
| Denmark | 2,569,580 | 29,184,596 | — | 31,754,176 | |
| France | 2,588,796 | 76,191,201 | — | 78,779,997 | |
| Germany | 14,780,312 | 84,401,241 | — | 99,181,553 | |
| Ireland | 8,377,246 | 2,303,897 | — | 10,681,143 | |
| Israel | 11,076,282 | — | — | 11,076,282 | |
| Mexico | 2,125,920 | — | — | 2,125,920 | |
| Netherlands | 4,327,577 | 39,324,546 | — | 43,652,123 | |
| Norway | 2,115,640 | 9,834,114 | — | 11,949,754 | |
| Panama | 1,591,843 | — | — | 1,591,843 | |
| Portugal | — | — | — * | — | |
| Russia | 1,804,589 | — | — | 1,804,589 | |
| Sweden | 7,161,108 | 63,671,399 | — | 70,832,507 | |
| Taiwan | 8,159,515 | 31,351,799 | — | 39,511,314 | |
| Thailand | 6,854,606 | — | — | 6,854,606 | |
| United Kingdom | 9,718,362 | 134,142,598 | — | 143,860,960 | |
| United States | 11,991,199 | — | — | 11,991,199 | |
| Preferred Stock1 | — | 525,477 | — | 525,477 | |
| Brazil | 2,456,636 | — | — | 2,456,636 | |
| Rights 1 | 1,151,116 | — | — | 1,151,116 | |
| Other Investment Company1 | 14,515,883 | — | — | 14,515,883 | |
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Description | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | Other Significant
Observable Inputs
(Level 2) | Significant
Unobservable Inputs
(Level 3) | Total | |
| Liabilities | | | | | |
| Futures Contracts2 | (372,733) | — | — | (372,733) | |
| Forward Foreign Currency Exchange Contracts2 | — | (63,783) | — | (63,783) | |
| Total | $234,914,410 | $961,364,708 | $— | $1,196,279,118 | |
| * | Level 3 amount shown includes securities determined to have no value at October 31, 2020. |
| 1 | As categorized in Portfolio Holdings. |
| 2 | Futures contracts and forward foreign currency exchange contracts are valued at unrealized appreciation or depreciation. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in unaffiliated issuers, at value (cost $958,274,435) | | $1,196,715,634 |
| Foreign currency, at value (cost $611,251) | | 617,118 |
| Deposit with broker for futures contracts | | 2,510,640 |
| Receivables: | | |
| Investments sold | | 50,085,496 |
| Foreign tax reclaims | | 1,006,000 |
| Dividends | | 916,798 |
| Fund shares sold | | 81,139 |
| Prepaid expenses | + | 18,686 |
| Total assets | | 1,251,951,511 |
| Liabilities |
| Payables: | | |
| Investments bought | | 6,376,794 |
| Investment adviser and administrator fees | | 1,231,386 |
| Shareholder service fees | | 180,861 |
| Fund shares redeemed | | 722,589 |
| Variation margin on futures contracts | | 148,950 |
| Unrealized depreciation on forward foreign currency exchange contracts | | 63,783 |
| Accrued expenses | + | 521,717 |
| Total liabilities | | 9,246,080 |
| Net Assets |
| Total assets | | 1,251,951,511 |
| Total liabilities | – | 9,246,080 |
| Net assets | | $1,242,705,431 |
| Net Assets by Source | | |
| Capital received from investors | | 951,697,683 |
| Total distributable earnings | | 291,007,748 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $1,242,705,431 | | 50,984,395 | | $24.37 |
| | | | | |
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends (net of foreign withholding tax of $1,703,441) | | $16,215,421 |
| Expenses |
| Investment adviser and administrator fees | | 16,485,323 |
| Shareholder service fees | | 2,063,304 |
| Custodian fees | | 501,594 |
| Portfolio accounting fees | | 162,283 |
| Professional fees | | 56,064* |
| Shareholder reports | | 53,270 |
| Registration fees | | 40,326 |
| Transfer agent fees | | 23,467 |
| Independent trustees’ fees | | 15,129 |
| Other expenses | + | 61,599 |
| Total expenses | | 19,462,359 |
| Expense reduction by CSIM and its affiliates | – | 3,302,570* |
| Net expenses | – | 16,159,789 |
| Net investment income | | 55,632 |
| Realized and Unrealized Gains (Losses) |
| Net realized gains on investments | | 88,551,925 |
| Net realized gains on futures contracts | | 710,289 |
| Net realized losses on foreign currency transactions | | (58,655) |
| Net realized losses on forward foreign currency exchange contracts | + | (18,397) |
| Net realized gains | | 89,185,162 |
| Net change in unrealized appreciation (depreciation) on investments | | 24,050,690 |
| Net change in unrealized appreciation (depreciation) on futures contracts | | (2,299,368) |
| Net change in unrealized appreciation (depreciation) on foreign currency translations | | 86,075 |
| Net change in unrealized appreciation (depreciation) on forward foreign currency exchange contracts | + | (79,393) |
| Net change in unrealized appreciation (depreciation) | + | 21,758,004 |
| Net realized and unrealized gains | | 110,943,166 |
| Increase in net assets resulting from operations | | $110,998,798 |
| * | Includes professional fees of $257 associated with the filing of tax claims in the European Union deemed to be non-routine expenses of the fund. See financial notes 2(d) and 4 for additional information. |
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $55,632 | $18,495,360 |
| Net realized gains (losses) | | 89,185,162 | (5,592,579) |
| Net change in unrealized appreciation (depreciation) | + | 21,758,004 | 125,000,030 |
| Increase in net assets from operations | | 110,998,798 | 137,902,811 |
| Distributions to Shareholders1 | |
| Investor Shares | | — | (34,719,762) |
| Select Shares | + | (27,899,553) | (99,317,431) |
| Total distributions | | ($27,899,553) | ($134,037,193) |
| Transactions in Fund Shares1 | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares Sold | | | | | |
| Investor Shares | | — | $— | 103,775 | $2,181,854 |
| Select Shares | + | 4,963,270 | 95,437,857 | 21,106,679 | 454,485,861 |
| Total shares sold | | 4,963,270 | $95,437,857 | 21,210,454 | $456,667,715 |
| Shares Reinvested | | | | | |
| Investor Shares | | — | $— | 1,583,820 | $30,947,842 |
| Select Shares | + | 891,003 | 21,116,755 | 3,532,129 | 68,841,189 |
| Total shares reinvested | | 891,003 | $21,116,755 | 5,115,949 | $99,789,031 |
| Shares Redeemed | | | | | |
| Investor Shares | | — | $— | (19,296,537) | ($416,594,739) |
| Select Shares | + | (16,594,568) | (369,846,702) | (12,155,331) | (261,429,704) |
| Total shares redeemed | | (16,594,568) | ($369,846,702) | (31,451,868) | ($678,024,443) |
| Net transactions in fund shares | | (10,740,295) | ($253,292,090) | (5,125,465) | ($121,567,697) |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 61,724,690 | $1,412,898,276 | 66,850,155 | $1,530,600,355 |
| Total decrease | + | (10,740,295) | (170,192,845) | (5,125,465) | (117,702,079) |
| End of period | | 50,984,395 | $1,242,705,431 | 61,724,690 | $1,412,898,276 |
| 1 | Effective February 26, 2019, all outstanding Investor Shares (17,685,944 shares valued at $382,997,961) were consolidated into the Select Shares, resulting in a single class of shares of the fund. |
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
1. Business Structure of the Fund:
Laudus International MarketMasters 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) |
| Laudus International MarketMasters Fund | Schwab Target 2040 Fund |
| Schwab S&P 500 Index Fund | Schwab Target 2045 Fund |
| Schwab Small-Cap Index Fund® | Schwab Target 2050 Fund |
| Schwab Total Stock Market Index Fund® | Schwab Target 2055 Fund |
| Schwab U.S. Large-Cap Growth Index Fund | Schwab Target 2060 Fund |
| Schwab U.S. Large-Cap Value Index Fund | Schwab Fundamental US Large Company Index Fund |
| Schwab U.S. Mid-Cap 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 Target 2010 Index Fund |
| Schwab Balanced Fund | Schwab Target 2015 Index Fund |
| Schwab Core Equity Fund | Schwab Target 2020 Index Fund |
| Schwab Dividend Equity Fund | Schwab Target 2025 Index Fund |
| Schwab Large-Cap Growth Fund | Schwab Target 2030 Index Fund |
| Schwab Small-Cap Equity Fund | Schwab Target 2035 Index Fund |
| Schwab Hedged Equity Fund | Schwab Target 2040 Index Fund |
| Schwab Health Care Fund | Schwab Target 2045 Index Fund |
| Schwab International Core Equity Fund | Schwab Target 2050 Index Fund |
| Schwab Target 2010 Fund | Schwab Target 2055 Index Fund |
| Schwab Target 2015 Fund | Schwab Target 2060 Index Fund |
| Schwab Target 2020 Fund | Schwab Monthly Income Fund - Moderate Payout |
| Schwab Target 2025 Fund | Schwab Monthly Income Fund - Enhanced Payout |
| Schwab Target 2030 Fund | Schwab Monthly Income Fund - Maximum Payout |
| Schwab Target 2035 Fund | |
The fund offers one share class. Shares are bought and sold 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 fund invests 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) and are available on the SEC’s website at www.sec.gov.
(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 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.
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
Financial Notes (continued)
2. Significant Accounting Policies (continued):
The fund values the securities in its portfolio every business day. The fund uses 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 the mean of 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 the fund’s securities when market prices are not “readily available” or are unreliable. For example, the 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 the 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.
• 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 fund valuing its holdings. By fair valuing securities whose prices may have been affected by events occurring after the close of trading, the 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 the 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 the fund and that of its comparative index or benchmark. The Board regularly reviews fair value determinations made by the fund 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.
• Underlying funds: Mutual funds are valued at their respective NAVs.
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 and futures contracts. 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
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
Financial Notes (continued)
2. Significant Accounting Policies (continued):
provincial obligations. In addition, international securities whose markets close hours before the fund values its holdings may require fair valuations due to significant movement in the U.S. markets occurring after the daily close of the foreign markets. The Board 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 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, 2020 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. The 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 the 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 fair 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 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 fund does 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 fund on the sale of securities in certain foreign countries may be subject to non-U.S. taxes. In those instances, the fund records a liability based on unrealized appreciation to provide for potential non-U.S. taxes payable upon the sale of these securities.
When the 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.
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Financial Notes (continued)
2. Significant Accounting Policies (continued):
(d) Investment Income:
Interest income is recorded as it accrues. Dividends, in the form of cash or non-cash income such as in the form of additional securities, 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 date the ex-dividend date is confirmed. 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.
The fund filed claims to recover taxes previously withheld in certain European Union countries on the basis that those countries had purportedly violated certain provisions in the Treaty on the Functioning of the European Union. These filings are subject to various administrative and judicial proceedings within these countries, and all professional fees associated with these filings have been paid by the investment adviser. For additional details see Affiliates and Affiliated Transactions in financial note 4, Other Affiliated Transactions.
(e) Expenses:
Expenses that are specific to the fund are charged directly to the fund. Expenses that are common to more than one fund in the trusts generally are allocated among those funds in proportion to their average daily net assets.
(f) Distributions to Shareholders:
The fund makes distributions from net investment income and net realized capital gains, if any, once a year.
(g) 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 under subchapter M of the Internal Revenue Code, as amended. Accordingly, the fund distributes substantially all of its net investment income and net realized capital gains, if any, to its shareholders each year. As long as the fund meets the tax requirements, it is not required to pay federal income tax.
(i) Foreign Taxes:
The fund 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 fund invests. These foreign taxes, if any, are paid by the fund and are disclosed in the Statement of Operations. Foreign taxes accrued as of October 31, 2020, if any, are reflected in the fund’s Statement of Assets and Liabilities.
(j) Indemnification:
Under the fund’s organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business the fund enters into contracts with its vendors and others that provide general indemnifications. The fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the fund. However, based on experience, the fund expects the risk of loss attributable to these arrangements to be remote.
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Financial Notes (continued)
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.
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. Markets may be impacted by economic, political, regulatory and other conditions, including economic sanctions and other government actions. In addition, the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters and epidemics, may also negatively affect the financial markets. 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 over short or long periods.
Investment Style Risk. CSIM may attempt to reduce the impact of the performance of any given investment style by allocating to investment managers who invest 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.
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. As with all actively managed funds, the 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 investment objective. Poor stock selection or a focus on securities in a particular sector may cause the fund to underperform its benchmark or other funds with a similar investment objective.
Market Capitalization Risk. Securities issued by companies of different market capitalizations tend to go in and out of favor based on market and economic conditions. During a period when securities of a particular market capitalization fall behind other types of investments, the fund’s performance could be impacted.
Large-Cap Company Risk. Large-cap companies are generally more mature and the securities issued by these companies may not be able to reach the same levels of growth as the securities issued by small- or mid-cap companies.
Mid-Cap Company Risk. Mid-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies and the value of securities issued by these companies may move sharply.
Small-Cap Company Risk. Securities issued by small-cap companies may be riskier than those issued by larger companies, and their prices may move sharply, especially during market upturns and downturns.
Foreign Investment Risk. The fund’s investments in securities of foreign issuers involve certain risks that may be 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 fund’s investments, and could impair the fund’s ability to meet its investment objective or invest in accordance with its investment strategy. There is a risk that investments in securities denominated in, and/or receiving revenues in, foreign 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, resulting in the dollar value of the fund’s investment being adversely affected. To the extent the fund’s investments in a single country or a limited number of countries represent a large percentage of the fund’s assets, the fund’s performance may be adversely affected by the economic, political, regulatory and social conditions in those countries, and the fund’s price may be more volatile than the price of a fund that is geographically diversified.
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 developed countries. As a result, there may be an increased risk of illiquidity and price volatility associated with the 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 the 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.
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Financial Notes (continued)
3. Risk Factors (continued):
Derivatives Risk. The fund may use derivatives to enhance returns or hedge against market declines. Examples of derivatives are options, futures, options on futures and swaps. An option is the right to buy or sell an instrument at a specific price before a specific date. A future is an agreement to buy or sell a financial instrument at a specific price on a specific day. A swap is an agreement whereby two parties agree to exchange payment streams calculated in relation to a rate, index, instrument or certain securities and a predetermined amount. A credit default swap is an agreement in which the seller agrees to make a payment to the buyer in the event of a specified credit event in exchange for a fixed payment or series of fixed payments.
The 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. The fund’s use of derivatives is also subject to credit risk, leverage risk, lack of availability risk, valuation risk, correlation risk and tax risk. 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 the fund. Lack of availability risk is the risk that suitable derivative transactions may not be available in all circumstances for risk management or other purposes. 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 the fund to realize higher amounts of short-term capital gains. The 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. The use of derivatives, that are subject to regulation by the Commodity Futures Trading Commission (CFTC), could cause the fund to become a commodity pool, which would require the fund to comply with certain CFTC rules.
Liquidity Risk. The fund may be unable to sell certain securities, such as illiquid securities, readily at a favorable time or price, or the fund may have to sell them at a loss.
Multi-Manager Risk. Although CSIM monitors and coordinates the overall management of the 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, the fund’s exposure to a given stock, industry or investment style could unintentionally be smaller or larger than if the fund had a single manager.
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:
Investment Adviser
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.
For its advisory and administrative services to the fund, CSIM is entitled to receive a graduated annual fee, payable monthly, based on a percentage of the fund’s average daily net assets as follows:
| First $500 million | 1.29% |
| $500 million to $1 billion | 1.275% |
| Over $1 billion | 1.25% |
For the period ended October 31, 2020, the aggregate advisory fees paid to CSIM by the fund was 1.28% as a percentage of the fund’s average daily net assets.
Shareholder Servicing
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 financial intermediaries, including Charles Schwab & Co., Inc. (Schwab), a broker-dealer affiliate of CSIM, (together, service providers), of certain account maintenance, customer liaison and shareholder services to the current shareholders of the fund.
Pursuant to the Plan, the fund’s shares are subject to an annual shareholder servicing fee up to 0.20%. The shareholder servicing fee paid to a particular service provider is made pursuant to its written agreement with Schwab, as distributor of the fund (or, in the case of payments made to Schwab acting as a service provider, pursuant to Schwab’s written agreement with the fund), and the
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Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
fund will pay no more than 0.20% 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 without regard to whether the fee is more or less than the service provider’s actual cost of providing the services, and if more, such excess may be retained as profit by the service provider.
Expense Limitation
Although these agreements specify certain fees for these services, CSIM and its affiliates have made an additional agreement 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 1.25%.
Investments from Affiliates
Certain funds in the Fund Complex (for definition refer to Trustees and Officers section) may own shares of other funds in the Fund Complex. The table below reflects the percentage of shares of the fund in this report that are owned by other funds in the Fund Complex as of October 31, 2020, as applicable:
| | Underlying Fund |
| Schwab Monthly Income Fund - Enhanced Payout | 0.6% |
| Schwab Monthly Income Fund - Maximum Payout | 0.4% |
| Schwab Monthly Income Fund - Moderate Payout | 0.4% |
| Schwab Target 2010 Fund | 0.3% |
| Schwab Target 2015 Fund | 0.4% |
| Schwab Target 2020 Fund | 3.2% |
| Schwab Target 2025 Fund | 4.6% |
| Schwab Target 2030 Fund | 9.1% |
| Schwab Target 2035 Fund | 5.1% |
| Schwab Target 2040 Fund | 11.3% |
| Schwab Target 2045 Fund | 2.2% |
| Schwab Target 2050 Fund | 2.4% |
| Schwab Target 2055 Fund | 1.4% |
| Schwab Target 2060 Fund | 0.3% |
Other Affiliated Transactions
The professional fees related to foreign withholding tax claims discussed in financial note 2 were non-routine expenses. The investment adviser agreed to pay these professional fees, which are subject to reimbursement by the fund to the extent the fund is able to successfully recover taxes withheld in the future.
The professional fees incurred by the fund were $257 and the fund made no reimbursements to the investment adviser during the period ended October 31, 2020.
As of October 31, 2020, the balance of professional fees related to foreign withholding tax subject to future reimbursement by the fund to the investment adviser was $27,682.
No other amounts for additional tax reclaims are reflected in the financial statements due to the uncertainty surrounding the ultimate resolution of proceedings, the likelihood of receipt of these claims, and the potential timing of payment.
Interfund Borrowing and Lending
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. 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. 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.
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Financial Notes (continued)
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, the fund was a participant with other funds in the Fund Complex in a joint, syndicated, committed $750 million line of credit (the Syndicated Credit Facility), which matured on October 1, 2020. On October 1, 2020, the Syndicated Credit Facility was amended to run for a new 364 day period with a line of credit of $850 million, maturing on September 30, 2021. Under the terms of the Syndicated Credit Facility, in addition to the interest charged on any borrowings by the fund, the fund paid a commitment fee of 0.15% per annum on the fund’s proportionate share of the unused portion of the Syndicated Credit Facility.
During the period, the fund was a participant with other funds in the Fund Complex in a joint, unsecured, uncommitted $500 million line of credit (the Uncommitted Credit Facility), with State Street Bank and Trust Company, which matured on November 29, 2019. On November 29, 2019, the Uncommitted Credit Facility was amended to run for a new 364 day period, which was scheduled to mature on November 27, 2020. However, on October 1, 2020, the Uncommitted Credit Facility was amended to run for a new 364 day period with a line of credit of $400 million, maturing on September 30, 2021. Under the terms of the Uncommitted Credit Facility, the fund pays interest on the amount it borrows. There were no borrowings from either line 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.
7. Purchases and Sales of Investment Securities:
For the period ended October 31, 2020, purchases and sales of securities (excluding short-term obligations) were as follows:
| | Purchases
of Securities | Sales
of Securities |
| | $795,709,915 | $1,078,652,515 |
8. Derivatives:
The fund entered into equity index futures contracts during the report period. The fund invested in futures contracts to equitize available cash. The current value and variation margin for futures contracts held at October 31, 2020 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 fund’s accounting policies with respect to futures contracts and financial note 3 for disclosures concerning the risks of investing in futures contracts. During the period ended October 31, 2020, the month-end average notional amounts of futures contracts held by the fund and the month-end average number of contracts held were $39,441,306 and 507, respectively.
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 policies with respect to forwards and financial note 3 for disclosures concerning the risks of investing in forwards. During the period ended October 31, 2020, the month-end average forward foreign currency notional amount and the month-end average unrealized depreciation were $2,519,850 and ($24,243), respectively.
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Financial Notes (continued)
8. Derivatives (continued):
As of October 31, 2020, the derivatives contracts held by the fund, categorized by primary risk exposure, were:
| Asset Derivatives | Fair Value |
| Equity Index Futures Contracts1 | $— |
| Forward Foreign Currency Exchange Contracts2 | — |
| Liability Derivatives | Fair Value |
| Equity Index Futures Contracts3 | ($372,733) |
| Forward Foreign Currency Exchange Contracts4 | (63,783) |
| 1 | Includes cumulative unrealized appreciation of futures contracts as reported in the 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 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 fund in the Statement of Operations for the period ended October 31, 2020 were:
| Equity Index Futures Contracts | |
| Realized gains1 | $710,289 |
| Net change in unrealized appreciation (depreciation)2 | (2,299,368) |
| Forward Foreign Currency Exchange Contracts | |
| Realized losses1 | ($18,397) |
| Net change in unrealized appreciation (depreciation)2 | (79,393) |
| 1 | Statement of Operations location: Net realized gains on futures contracts and net realized losses on forward foreign currency exchange contracts. |
| 2 | Statement of Operations location: Net change in unrealized appreciation (depreciation) on futures contracts and net change in unrealized appreciation (depreciation) on forward foreign currency exchange contracts. |
The fund’s 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 fund 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 fund or the counterparty. The 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, 2020.
| Counterparty | Gross Amounts of Liabilities
Presented in the
Statement of Assets and Liabilities | | Financial
Instruments
Available for Offset | | Cash Collateral
Pledged | | Net
Amounts(a) |
| State Street Bank & Trust Co. | ($63,783) | | $— | | $— | | ($63,783) |
| Total | ($63,783) | | $— | | $— | | ($63,783) |
| a | Represents the net amount due to the counterparty in the event of default. |
9. Federal Income Taxes:
As of October 31, 2020, the tax basis cost of the fund’s investments and gross unrealized appreciation and depreciation were as follows:
| Tax cost | $990,920,149 |
| Gross unrealized appreciation | $318,558,295 |
| Gross unrealized depreciation | (113,199,326) |
| Net unrealized appreciation (depreciation) | $205,358,969 |
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Financial Notes (continued)
9. Federal Income Taxes (continued):
As of October 31, 2020, the components of distributable earnings on a tax basis were as follows:
| Undistributed long-term capital gains | $85,550,910 |
| Net unrealized appreciation (depreciation) on investments | 205,358,969 |
| Net other unrealized appreciation (depreciation) | 97,869 |
| Total | $291,007,748 |
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, realization for tax purposes of unrealized gains (losses) on futures contracts and the realization for tax purposes of unrealized appreciation on investments in Passive Foreign Investment Companies (PFIC) and partnership investments. The tax cost of the funds’ investments, disclosed above, have been adjusted from their book amounts to reflect these unrealized appreciation or depreciation differences, as applicable.
Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2020, the fund had no capital loss carryforwards available to offset future net capital gains.
The tax basis components of distributions paid during the current and prior fiscal years were as follows:
| Current fiscal year end distributions | |
| Ordinary income | $25,483,603 |
| Long-term capital gains | 2,415,950 |
| Prior fiscal year end distributions | |
| Ordinary income | $18,404,188 |
| Long-term capital gains | 115,633,005 |
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, 2020, 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 fiscal year ended October 31, 2020, the fund did not incur any interest or penalties.
10. Independent Registered Public Accounting Firm:
On June 8, 2020, the Audit, Compliance and Valuation Committee of the Board approved, and on June 9, 2020, the Board approved, Deloitte & Touche LLP as the independent registered accounting firm of the Schwab Funds Complex for fiscal periods ending after June 8, 2020.
On June 8, 2020, the PricewaterhouseCoopers LLP (the “Prior Auditor”) resigned as the independent registered public accounting firm of the Schwab Funds Complex. The Prior Auditor’s reports on the financial statements of the fund for the past two fiscal years, the years ended October 31, 2018 and October 31, 2019, did not contain an adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the last two fiscal year-ends and through June 8, 2020, there were no (1) disagreements with the Prior Auditor on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the Prior Auditor’s satisfaction, would have caused it to make reference to that matter in connection with its reports on the fund’s financial statements for such periods; or (2) “reportable events,” as that term is defined in Item 304 (a)(1)(v) of Regulation S-K under the Securities Exchange Act of 1934.
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Financial Notes (continued)
11. Subsequent Events:
Management has determined there are no subsequent events or transactions through the date the financial statements were issued that would have materially impacted the financial statements as presented.
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Laudus International MarketMasters Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Schwab Capital Trust and Shareholders of Laudus International MarketMasters Fund:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the portfolio holdings, of Laudus International MarketMasters Fund (the “Fund”), one of the funds constituting Schwab Capital Trust, as of October 31, 2020, and the related statement of operations, statement of changes in net assets, and the financial highlights for the year then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of October 31, 2020, and the results of its operations, the changes in its net assets, and the financial highlights for the year then ended in conformity with accounting principles generally accepted in the United States of America. The statement of changes in net assets for the year ended October 31, 2019 and the financial highlights for each of the four years in the period ended October 31, 2019 were audited by other auditors, whose report, dated December 16, 2019, expressed an unqualified opinion on such statement of changes in net assets and financial highlights.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2020, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audit provides a reasonable basis for our opinion.
Deloitte & Touche LLP
Denver, Colorado
December 16, 2020
We have served as the auditor of one or more investment companies in the Schwab Funds Complex since 2020.
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
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 $1,373,156 to its shareholders for the fiscal year ended October 31, 2020. The respective foreign source income on the fund is $17,581,757.
For the fiscal year ended October 31, 2020, the fund designates $26,904,698 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 2021 via IRS Form 1099 of the amounts for use in preparing their 2020 income tax return.
Under section 852(b)(3)(C) of the Internal Revenue Code, the fund hereby designates $2,415,950 as long-term capital gain dividends for the fiscal year ended October 31, 2020.
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
Liquidity Risk Management Program (Unaudited)
The Fund has adopted and implemented a liquidity risk management program (the “program”) as required by Rule 22e-4 under the Investment Company Act of 1940, as amended. The Fund’s Board of Trustees (the “Board”) has designated the Fund’s investment adviser, Charles Schwab Investment Management, Inc. (“CSIM”) as the administrator of the program. Personnel of CSIM or its affiliates conduct the day-to-day operation of the program.
Under the program, CSIM manages a Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. The program is reasonably designed to assess and manage a Fund’s liquidity risk, taking into consideration the Fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably foreseeable stressed conditions; its historical redemption history and shareholder concentrations; and its cash holdings and access to other funding sources, including the custodian overdraft facility and lines of credit. CSIM’s process of determining the degree of liquidity of each Fund’s investments is supported by third-party liquidity assessment vendors.
The Fund’s Board reviewed a report at its meeting held on September 22, 2020 prepared by CSIM regarding the operation and effectiveness of the program for the period June 1, 2019, through May 31, 2020. No significant liquidity events impacting the Fund were noted in the report. In addition, CSIM provided its assessment that the program had been operating effectively in managing the Fund’s liquidity risk.
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Laudus International MarketMasters Fund
Investment Advisory and Sub-Advisory Agreement Approval
The Investment Company Act of 1940, as amended (the 1940 Act), requires that 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 and administration agreement between Schwab Capital Trust (the Trust) and Charles Schwab Investment Management, Inc. (CSIM) with respect to the existing funds in the Trust, including Laudus International MarketMasters Fund (the Fund), and the individual sub-advisory agreements between CSIM and American Century Investment Management, Inc., Harris Associates L.P. (Harris), Mellon Investments Corporation, Mondrian Investment Partners Limited (Mondrian) and William Blair Investment Management, LLC, relating to the Fund (each, a Sub-Adviser and collectively, the Sub-Advisers). Such investment advisory and administration agreement 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, business goals and priorities, profitability, third-party oversight, corporate structure and operations. As part of the renewal process, the Independent Trustees’ legal counsel, on behalf of the Independent Trustees, 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 in the Board materials for their review prior to their meeting, and the Trustees are provided with the opportunity to request any additional materials. The Board also receives data provided by an independent provider of investment company data. 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 the Fund’s operations and performance, legal and compliance matters, risk management, portfolio turnover, and sales and marketing activity. In
considering the renewal, the Independent Trustees receive advice from Independent Trustees’ legal counsel, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees participate in question and answer sessions with representatives of CSIM and meet in executive session outside the presence of Fund management. The Board also discusses with CSIM the Fund’s operations and CSIM’s ability, consistent with the “manager of managers” structure of the Fund, to (i) identify and recommend to the Trustees sub-advisers for the Fund, (ii) monitor and oversee the performance and investment capabilities of each Sub-Adviser, and (iii) recommend the termination and/or replacement of a Sub-Adviser when appropriate.
The Board, including a majority of the Independent Trustees, considered information relating to the continuance of the Agreements with respect to the Fund at meetings held on May 11, 2020 and June 9, 2020, and approved the renewal of the Agreements with respect to the Fund for an additional one-year term at the meeting on June 9, 2020 called for the purpose of voting on such approval.1
The Board’s approval of the continuance of the Agreements 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 Agreements, including the resources of CSIM and its affiliates, and the Sub-Advisers, dedicated to the Fund; |
| 2. | the Fund’s investment performance and how it compared to that of certain other comparable mutual funds and benchmark data; |
| 3. | the Fund’s expenses and how those expenses compared to those of certain other similar mutual funds; |
| 4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to the Fund, including both direct and indirect benefits accruing to CSIM and its affiliates, as well as the profitability of the Sub-Advisers; and |
| 5. | the extent to which economies of scale would be realized as the Fund grows 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 Fund and the resources of CSIM and its affiliates dedicated to the Fund. In this regard, the Trustees evaluated, among other things, CSIM’s experience, track record, compliance program, resources dedicated to hiring and
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Laudus International MarketMasters Fund
retaining skilled personnel and specialized talent, and information security resources. The Trustees also considered information provided by CSIM and the Sub-Advisers relating to the services and support provided with respect to the Fund’s portfolio management team, portfolio strategy, and internal investment guidelines, as well as trading infrastructure, liquidity management, product design and analysis, shareholder communications, securities valuation, fund accounting and custody, and vendor and risk oversight. The Trustees also considered investments CSIM has made in its infrastructure, including modernizing CSIM’s technology and use of data, increasing expertise in key areas (including portfolio management and trade operations), and improving business continuity, cybersecurity, due diligence, risk management processes, and information security programs, which are designed to provide enhanced services to the Fund and its shareholders. The Trustees also considered Schwab’s wide range of products, services, and channel alternatives such as investment research tools and an array of account features that benefit Funds shareholders who are brokerage clients of Schwab. The Trustees also considered Schwab’s reputation as a full service brokerage firm and its overall financial condition, including Schwab’s ability to maintain consistent operations and service levels during recent periods of remote work and market volatility. The Board also considered the nature, extent and quality of the sub-advisory services provided by the Sub-Advisers to the Fund and the resources each dedicates to the Fund. 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 Fund and the resources of CSIM, its affiliates, and the Sub-Advisers dedicated to the Fund supported renewal of the Agreements with respect to the Fund.
Fund Performance. The Board considered the Fund’s performance in determining whether to renew the Agreements with respect to the Fund. Specifically, the Trustees considered the Fund’s performance relative to a peer category of other mutual funds and applicable benchmark index, in light of total return, yield if applicable, and market trends, as well as in consideration of the Fund’s investment style and strategy attributes and disclosures. As part of this review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the independent provider of investment company data who prepared the peer category analysis. 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 and also noted that the Board and a designated committee of the Board review performance throughout the year. Following such evaluation, the Board concluded, within the context of its full
deliberations, that the performance of the Fund supported renewal of the Agreements 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 other similar mutual funds, such peer groups and comparisons having been selected and calculated by an independent provider of investment company data. CSIM reported to the Board, and the Board took into account, the risk assumed by CSIM in the development of products and provision of services as well as the competitive marketplace for financial products. The Trustees considered the effects of CSIM’s and Schwab’s practice of waiving certain fees to prevent total annual operating expenses of the Fund 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 and the Sub-Advisers to other mutual funds and to other types of 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, and any differences in the nature and scope of the services CSIM provides to these other accounts, as well as differences in the market for these 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. The Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly and reviewed profitability on a pre-tax basis, without regard to distribution expenses. In this connection, the Trustees reviewed management’s profitability analyses. The Trustees also reviewed profitability of CSIM relating to the Schwab fund complex as a whole, noting the benefits to Fund shareholders of being part of the Schwab fund complex, including the allocations of certain fixed costs across the Fund and other funds in the complex. 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 compensation and profitability with respect to the Fund under the Agreements 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. The Trustees noted that CSIM continues to invest substantial sums in its business in order to provide enhanced research capabilities, services, and systems to benefit the Fund.
In addition, the Trustees also considered the compensation received by each Sub-Adviser, directly or indirectly. The Trustees also considered any other benefits derived by each
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Laudus International MarketMasters Fund
Sub-Adviser from its relationship with the Fund, such as whether, by virtue of its management of the Fund, such Sub-Adviser obtains investment information or other research resources that aid it in providing advisory services to other clients. With respect to each Sub-Adviser, the Trustees considered whether the compensation and profitability under the applicable Agreement were reasonable and justified in light of the quality of all services rendered to the Fund by such Sub-Adviser, and its affiliates. The Board also considered the profitability of each Sub-Adviser with respect to the sub-advisory services it provides to the Fund, although, when doing so, the Board took into account the fact that the Sub-Advisers are compensated by CSIM, and not by the Fund 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 Fund.
Economies of Scale. Although the Trustees recognized the difficulty of determining economies of scale with precision, the Trustees considered the potential existence of any economies of scale and whether those are passed along to the Fund’s shareholders through (i) the enhancement of services provided to the Fund in return for fees paid, including through investments by CSIM in CSIM’s infrastructure, including modernizing CSIM’s technology and use of data, increasing expertise and capabilities in key areas (including portfolio and trade operations), and improving business continuity, cybersecurity, due diligence, and information security programs, which are designed to provide enhanced services to the Fund and its shareholders; (ii) graduated investment
advisory fee schedules or unitary fee structures, fee waivers, or expense caps by CSIM and its affiliates for those funds in the Schwab fund complex with such features; and (iii) pricing a fund to scale and keeping overall expenses down as the fund grows. The Trustees acknowledged that, CSIM has shared any economies of scale with the Fund by investing in CSIM’s infrastructure, as discussed above, over time and that CSIM’s internal costs of providing investment management, technology, administrative, legal and compliance services to the Fund continues to increase as a result of regulatory or other developments. The Trustees considered that CSIM and its affiliates may employ contractual expense caps to protect shareholders from high fees when fund assets were relatively small, for example, in the case of newer funds or funds with investment strategies that are from time to time out of favor, because, among other reasons, 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 benefits from economies of scale.
In the course of their deliberations, the Trustees may have accorded different weights to various factors and 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 Fund and concluded that the compensation under the Agreements 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.
| 1 | The meeting on June 9, 2020 was held telephonically in reliance on exemptive relief from the in-person voting requirement under the 1940 Act as provided by the Securities and Exchange Commission. |
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
Trustees and Officers
The tables below give information about the trustees and officers of Schwab Capital Trust, which includes the fund covered in this report. The “Fund Complex” includes The Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust. The Fund Complex includes 100 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 1-877-824-5615.
| 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 |
Robert W. Burns
1959
Trustee
(Trustee of Schwab Strategic Trust since 2009; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016) | Retired/Private Investor (Jan. 2009 – present). Formerly, Managing Director, Pacific Investment Management Company, LLC (PIMCO) (investment management firm) and President, PIMCO Funds. | 100 | None |
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 since 2010; Schwab Strategic Trust since 2016) | Senior Fellow (Oct. 1979 – present), The Hoover Institution at Stanford University (public policy think tank); Senior Fellow (2000 – present), Stanford Institute for Economic Policy Research; Professor of Public Policy (1994 – 2015), Stanford University. | 100 | Director (2005 – 2020), Gilead Sciences, Inc. |
Nancy F. Heller
1956
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018) | Retired. President and Chairman (2014 – 2016), TIAA Charitable (financial services); Senior Managing Director (2003 – 2016), TIAA (financial services). | 100 | None |
Stephen Timothy Kochis
1946
Trustee
(Trustee of Schwab Strategic Trust since 2012; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016) | CEO and Owner (May 2012 – present), Kochis Global (wealth management consulting). | 100 | None |
David L. Mahoney
1954
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016) | Private Investor. | 100 | Director (2004 – present), Corcept Therapeutics Incorporated
Director (2009 – present), Adamas Pharmaceuticals, Inc.
Director (2003 – 2019), Symantec Corporation |
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| 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 |
Jane P. Moncreiff
1961
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2019) | Consultant (2018 – present), Fulham Advisers LLC (management consulting); Chief Investment Officer (2009 – 2017), CareGroup Healthcare System, Inc. (healthcare). | 100 | None |
Kiran M. Patel
1948
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016) | Retired. Executive Vice President and General Manager of Small Business Group (Dec. 2008 – Sept. 2013), Intuit, Inc. (financial software and services firm for consumers and small businesses). | 100 | Director (2008 – present), KLA-Tencor Corporation |
Kimberly S. Patmore
1956
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016) | Consultant (2008 – present), Patmore Management Consulting (management consulting). | 100 | None |
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 since 2010; Schwab Strategic Trust since 2016) | Chairman, Chief Executive Officer and Founder (Mar. 1990 – present), Smith Graham & Co. (investment advisors). | 100 | Director (2012 – present), Eaton Corporation plc |
| 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 |
Walter W. Bettinger II2
1960
Chairman and 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 since 2010) | Director, President and Chief Executive Officer (Oct. 2008 – present), The Charles Schwab Corporation; President and Chief Executive Officer (Oct. 2008 – present) and Director (May 2008 – present), Charles Schwab & Co., Inc.; Director (Apr. 2006 – present), Charles Schwab Bank, SSB; Director (Nov. 2017 – present), Charles Schwab Premier Bank, SSB; Director (July 2019 – present), Charles Schwab Trust Bank; Director (May 2008 – present) and President and Chief Executive Officer (Aug. 2017 – present), Schwab Holdings, Inc.; Director (Oct. 2020 – present), TD Ameritrade Holding Corporation; Director (July 2016 – present), Charles Schwab Investment Management, Inc. | 100 | Director (2008 – present), The Charles Schwab Corporation |
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Laudus International MarketMasters Fund
| Interested 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 |
Jonathan de St. Paer2
1973
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2019) | Director (Apr. 2019 – present), President (Oct. 2018 – present), and Chief Executive Officer (Apr. 2019 – Nov. 2019), Charles Schwab Investment Management, Inc.; Senior Vice President (June 2020 – present), Charles Schwab Investment Advisory, Inc.; Trustee and Chief Executive Officer (Apr. 2019 – present) and President (Nov. 2018 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Director (Apr. 2019 – present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited; Senior Vice President (Apr. 2019 – present), Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014 – Mar. 2019), and Vice President (Jan. 2009 – Dec. 2013), Charles Schwab & Co., Inc. | 100 | None |
Joseph R. Martinetto2
1962
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016) | Chief Operating Officer (Feb. 2018 – present) and Senior Executive Vice President (July 2015 – Feb. 2018), The Charles Schwab Corporation; Senior Executive Vice President (July 2015 – present), Charles Schwab & Co., Inc.; Chief Financial Officer (July 2015 – Aug. 2017) and Executive Vice President and Chief Financial Officer (May 2007 – July 2015), The Charles Schwab Corporation and Charles Schwab & Co., Inc.; Director (May 2007 – present), Charles Schwab & Co., Inc.; Director (Apr. 2010 – present) and Chief Executive Officer (July 2013 – Apr. 2015), Charles Schwab Bank, SSB; Director (Nov. 2017 – present), Charles Schwab Premier Bank, SSB; Director (May 2007 – present), Chief Financial Officer (May 2007 – Aug. 2017), Senior Executive Vice President (Feb. 2016 – present), and Executive Vice President (May 2007 – Feb. 2016), Schwab Holdings, Inc.; Director (Oct. 2020 – present), TD Ameritrade Holding Corporation. | 100 | None |
| 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 |
Jonathan de St. Paer
1973
President and Chief Executive Officer
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018) | Director (Apr. 2019 – present), President (Oct. 2018 – present), and Chief Executive Officer (Apr. 2019 – Nov. 2019), Charles Schwab Investment Management, Inc.; Senior Vice President (June 2020 – present), Charles Schwab Investment Advisory, Inc.; Trustee and Chief Executive Officer (Apr. 2019 – present) and President (Nov. 2018 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Director (Apr. 2019 – present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited; Senior Vice President (Apr. 2019 – present), Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014 – Mar. 2019), and Vice President (Jan. 2009 – Dec. 2013), Charles Schwab & Co., Inc. |
Mark Fischer
1970
Treasurer, Chief Financial Officer and Chief Operating Officer
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2013) | Treasurer and Chief Financial Officer (Jan. 2016 – present) and Chief Operating Officer (Dec. 2020 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Assistant Treasurer (Dec. 2013 – Dec. 2015), Schwab Funds and Laudus Funds; Assistant Treasurer (Nov. 2013 – Dec. 2015), Schwab ETFs; Chief Financial Officer (Mar. 2020 – present) and Vice President (Oct. 2013 – present), Charles Schwab Investment Management, Inc.; Executive Director (Apr. 2011 – Sept. 2013), J.P. Morgan Investor Services; Assistant Treasurer (May 2005 – Mar. 2011), Massachusetts Financial Service Investment Management. |
Omar Aguilar
1970
Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President and Chief Investment Officer (Apr. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies (June 2011 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Head of the Portfolio Management Group and Vice President of Portfolio Management (May 2009 – Apr. 2011), Financial Engines, Inc. (investment management firm); Head of Quantitative Equity (July 2004 – Jan. 2009), ING Investment Management. |
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| Officers of the Trust (continued) |
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 |
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, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President and Chief Investment Officer (Apr. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Investment Officer – Fixed Income (June 2011 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Senior Managing Director and Global Head of Active Fixed-Income Strategies (Jan. 2008 – Oct. 2010), State Street Global Advisors; Director of Alpha Strategies (Apr. 2006 – Jan. 2008), Loomis, Sayles & Company (investment management firm). |
David Lekich
1964
Chief Legal Officer and Secretary, Schwab Funds and Schwab ETFs
Vice President and Assistant Clerk, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President (Sept. 2011 – present) and Vice President (Mar. 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present) and Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (Apr. 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; Vice President and Assistant Clerk (Apr. 2011 – present), Laudus Funds; Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs. |
Catherine MacGregor
1964
Vice President and Assistant Secretary, Schwab Funds and Schwab ETFs
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 and Laudus Trust since 2005; Schwab Strategic Trust since 2009) | Vice President (July 2005 – present), Charles Schwab & Co., Inc.; Vice President (Sept. 2005 – present), Charles Schwab Investment Management, Inc.; Vice President (Dec. 2005 – present) and 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 (Oct. 2009 – present), Schwab ETFs. |
| 1 | Each Trustee shall hold office until the election and qualification of his or her successor, or until he or she dies, resigns or is removed. The retirement policy requires that each independent trustee retire by December 31 of the year in which the Trustee turns 74 or the Trustee’s twentieth year of service as an independent trustee on any trust in the Fund Complex, whichever occurs first. |
| 2 | Mr. Bettinger, Mr. de St. Paer and Mr. Martinetto are Interested Trustees. Mr. Bettinger is an Interested Trustee because he owns stock of The Charles Schwab Corporation (CSC), the parent company of Charles Schwab Investment Management, Inc. (CSIM), the investment adviser for the trusts in the Fund Complex, is an employee and director of Charles Schwab & Co., Inc. (CS&Co), the principal underwriter for The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust, and is a director of CSIM. Mr. de St. Paer is an Interested Trustee because he owns stock of CSC and is an employee and director of CSIM. Mr. Martinetto is an Interested Trustee because he owns stock of CSC and is an employee and director of CS&Co. |
| 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 Board. |
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
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.
Bloomberg Barclays US Aggregate Bond Index An index that is a broad-based benchmark measuring the performance of the U.S. investment grade, taxable bond market, including U.S. Treasuries, government-related and corporate bonds, mortgage pass-through securities, commercial mortgage-backed securities, and asset-backed securities that are publicly available for sale in the United States. To be eligible for inclusion in the index, securities must be fixed rate, non-convertible, U.S. dollar-denominated with at least $300 million or more of outstanding face value and have one or more years remaining to maturity. The index excludes certain types of securities, including tax-exempt state and local government series bonds, structured notes embedded with swaps or other special features, private placements, floating rate securities, inflation-linked bonds and Eurobonds. The index is market capitalization weighted and the securities in the index are updated on the last business day of each month.
Bloomberg Barclays US Treasury Bills 1–3 Month Index An index that includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months but more than 1 month, are rated investment grade and have $300 million or more of outstanding face value. It excludes zero-coupon STRIPS.
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 Index (Net) A free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets in Europe, Australasia, and the Far East. 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 (Net) A free float-adjusted market capitalization weighted index that is designed to measure equity market performance in the global emerging markets. This series approximates the minimum possible dividend reinvestment. The 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 2,000 smallest companies in the Russell 3000 Index. The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.
S&P 500 Index An index that is designed to measure the performance of 500 leading publicly traded companies from a broad range of industries.
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.
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
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.
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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
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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; and
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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
© 2020 Schwab Funds. All rights reserved.
Laudus International MarketMasters Fund | Annual Report
Laudus International MarketMasters Fund
Laudus Funds®
Laudus Funds offer investors access to some of the world’s leading investment managers. With a rigorous manager selection process and ongoing oversight by Charles Schwab Investment Management, Laudus Funds offer single and multi-manager strategies as a complement to other funds managed by Charles Schwab Investment Management. The list below shows all currently available Laudus Funds.
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 or, if available, the summary prospectus. Please call 1-877-824-5615 for a prospectus for any Laudus 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 Laudus Funds’ website at www.schwabfunds.com/laudusfunds_prospectus, the SEC’s website at www.sec.gov, or by contacting Laudus Funds at 1-877-824-5615.
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.schwabfunds.com/laudusfunds_prospectus or the SEC’s website at www.sec.gov.
Laudus® U.S. Large Cap Growth Fund
Laudus International MarketMasters Fund™
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
Fund
Laudus International MarketMasters Fund
1-877-824-5615
Printed on recycled paper.
This page is intentionally left blank.
Annual Report | October 31, 2020
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 Health Care Fund
Schwab International Core Equity Fund
| New Notice Regarding Shareholder Report Delivery Options |
| Beginning on January 1, 2021, paper copies of a fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from a fund or from your financial intermediary (such as a bank or broker-dealer). Instead, the reports will be made available on a fund’s website www.schwabfunds.com/schwabfunds_prospectus, and you will be notified by mail each time a report is posted and the mailing will provide a website link to access the report. You will continue to receive other fund regulatory documents (such as prospectuses or supplements) in paper unless you have elected to receive all fund documents electronically. |
| If you would like to receive a fund’s future shareholder reports in paper free of charge after January 1, 2021, you can make that request: |
| • If you invest through Charles Schwab & Co, Inc. (broker-dealer), by calling 1-866-345-5954 and using the unique identifier attached to this mailing; |
| • If you invest through another financial intermediary (such as a bank or broker-dealer) by contacting them directly; or |
| • If owned directly through a fund by calling 1-800-407-0256. |
| If you already receive shareholder reports and other fund documents electronically, you will not be affected by this change and you need not take any action. |
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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 Inc. (MSCI) and Standard & Poor’s (S&P). GICS is a service mark of MSCI and S&P and has been licensed for use by Schwab. The Industry classifications used in the schedules of Portfolio Holdings are sub-categories of Sector classifications.
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
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.schwabfunds.com/schwabfunds_prospectus.
| Total Return for the 12 Months Ended October 31, 2020 |
Schwab Core Equity Fund
(Ticker Symbol: SWANX) | 4.65% |
| S&P 500® Index | 9.71% |
| Fund Category: Morningstar Large Blend1 | 6.30% |
| Performance Details | pages 7-9 |
| |
Schwab Dividend Equity Fund2
(Ticker Symbol: SWDSX) | -13.30% |
| Russell 1000® Value Index | -7.57% |
| Fund Category: Morningstar Large Value1 | -7.37% |
| Performance Details | pages 10-12 |
| |
Schwab Large-Cap Growth Fund
(Ticker Symbol: SWLSX) | 21.60% |
| Russell 1000® Growth Index | 29.22% |
| Fund Category: Morningstar Large Growth1 | 25.92% |
| Performance Details | pages 13-15 |
| |
Schwab Small-Cap Equity Fund
(Ticker Symbol: SWSCX) | -9.86% |
| Russell 2000® Index | -0.14% |
| Fund Category: Morningstar Small Blend1 | -6.45% |
| Performance Details | pages 16-18 |
| Total Return for the 12 Months Ended October 31, 2020 |
Schwab Hedged Equity Fund
(Ticker Symbol: SWHEX) | -9.33% |
| S&P 500® Index | 9.71% |
| Fund Category: Morningstar Long-Short Equity1 | 2.03% |
| Performance Details | pages 19-21 |
| |
Schwab Health Care Fund2
(Ticker Symbol: SWHFX) | 9.57% |
| Dow Jones Global Health Care Index | 11.63% |
| Fund Category: Morningstar Health1 | 22.92% |
| Performance Details | pages 22-24 |
| |
Schwab International Core Equity Fund2
(Ticker Symbol: SICNX) | -6.01% |
| MSCI EAFE® Index (Net)3 | -6.86% |
| Fund Category: Morningstar Foreign Large Blend1 | -4.19% |
| Performance Details | pages 25-27 |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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.
| 1 | 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. |
| 2 | 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. |
| 3 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
Jonathan de St. Paer
President of Charles Schwab
Investment Management, Inc.
and the funds covered
in this report.
Dear Shareholder,
Equity market performance for the 12-month reporting period ended October 31, 2020 barely hints at the market turmoil investors endured this year. U.S. and international equity markets ended the period with mixed gains, including a 9.7% rise for the S&P 500® Index, a bellwether for the overall U.S. stock market. However, the past year was one of the most volatile in history. Market gains were robust through the last week of February 2020 before being wiped out as the spreading COVID-19 pandemic drove equities sharply lower. In mid-March, market volatility spiked to its highest level since the peak of the Great Recession in 2008 with the S&P 500® Index dropping 30% over just 22 trading days in late February and early March. By early September, however, most broad U.S. equity markets had regained all the ground they lost in March, propelling the S&P 500® Index to new record highs. However, markets retreated and volatility began to increase again throughout September and October in the face of a resurgence of COVID-19 infections, corporate earnings concerns and growing uncertainty regarding the U.S. election.
High levels of volatility can undermine our confidence as investors, which can lead to emotion-based trading. Although it is important to reassess your individual risk tolerance and make strategic adjustments to your portfolio from time to time, impulsive reactions driven by fear can often make investing outcomes worse. At Charles Schwab Investment Management, we believe that the best way to avoid these pitfalls is to maintain a long-term investing plan. A commitment to a long-term investing plan can help make it significantly easier and less stressful to stay the course when market volatility rises.
At Charles Schwab Investment Management, we provide a range of foundational products that are designed to suit a variety of risk appetites. One way we do this is through actively managed strategies, such as the Schwab Active Equity Funds, which take on the job of sifting through the latest market developments and researching company fundamentals, identifying trends that could impact valuations, and factoring that analysis into investment decisions.
Thank you for investing with Charles Schwab Investment Management, and for trusting us to help you achieve your financial goals. 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.schwabfunds.com. We are also happy to hear from you at 1-877-824-5615.
Sincerely,
“ A commitment to a long-term investing plan can help make it significantly easier and less stressful to stay the course when market volatility rises.”
Past performance is no guarantee of future results.
Management views may have changed since the report date.
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
The Investment Environment
The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms. For the reporting period, the S&P 500® Index returned 9.71%, with sectors that benefitted as a result of the COVID-19 pandemic and associated stay-at-home orders, such as the information technology sector, outperforming other sectors that were more impacted by the COVID-19 pandemic. U.S. large-cap stocks outperformed small-cap stocks, with the Russell 1000® Index and the Russell 2000® Index returning 10.87% and -0.14%, respectively, for the reporting period. Among large-cap stocks, growth stocks outperformed value stocks by a large margin, with the Russell 1000® Growth Index and Russell 1000® Value Index returning 29.22% and -7.57%, respectively, for the reporting period. Among international markets, the MSCI EAFE® Index (Net)*, a broad measure of developed international equity performance, returned -6.86% for the reporting period.
Asset Class Performance Comparison % returns during the 12 months ended October 31, 2020
Index figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. 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 may have changed since the report date.
| * | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
The Investment Environment (continued)
Prior to the onset of the COVID-19 pandemic, the U.S. economy, despite ongoing trade tensions with China, maintained steady growth, albeit at a slowing pace. However, amid the fallout of the COVID-19 pandemic, the U.S. entered recessionary territory with record speed. U.S. gross domestic product (GDP) fell steeply, declining 5.0% and 31.4% for the first and second quarters of 2020, respectively, with the second quarter representing the largest contraction in U.S. GDP since 1947 when modern GDP measurements began. GDP subsequently jumped by 33.1% for the third quarter of 2020, reflecting increased consumer and business spending. Unemployment remained at record lows through February before a record number of unemployment claims in March resulted in the largest monthly increase in the U.S unemployment rate since January 1975. In April, this record was broken again when unemployment skyrocketed, rising to the highest level since the Great Depression. Unemployment declined in May through October, dropping below double digits beginning in August. Consumer confidence remained solid through February, but was volatile over the remainder of the reporting period.
Outside the U.S., conditions continued to soften, dampened by slowing economic output, slumping world trade, geopolitical concerns, and the COVID-19 pandemic. The COVID-19 pandemic exacerbated economic weakness around the globe, dramatically slowing growth amid stay-at-home orders, supply chain disruptions, and broadly diminishing demand. In the first half of the reporting period, oil prices deteriorated amid significantly reduced demand, coupled with rising U.S. crude production and a price war between Russia and Saudi Arabia. In April, oil futures briefly fell into negative territory as storage capacity evaporated and demand waned. However, as production was slashed, relieving pressure on constrained storage capacity, demand also stabilized. First and second quarter 2020 growth was negative in the eurozone and the United Kingdom. In January, Brexit occurred with the formal departure of the United Kingdom from the European Union resulting in an 11-month transition period with respect to economic and customs matters. Japan fared slightly better, although GDP still contracted for the first and second quarters of 2020. Even China and India, which had maintained stronger growth than many developed countries, showed weakness. In China, GDP contracted in the first quarter, but rebounded in the second and third quarters. While India’s second quarter GDP contracted, third quarter GDP was positive.
Many central banks around the world, including the U.S. Federal Reserve (Fed), reduced their policy rates over the reporting period, while others maintained low—and for some international central banks, negative—interest rates. In the U.S., after enacting three interest rate cuts in the second half of 2019 and as the economic implications of the COVID-19 pandemic grew, the Fed cut interest rates by 0.50% in early March and by 1.00% in mid-March, resulting in a federal funds rate of 0.00% to 0.25%. In addition, the Fed also announced extensive emergency measures to support the economy in light of the COVID-19 pandemic, including large purchases of U.S. Treasuries and other securities to support smooth market function, facilitating the flow of credit to municipalities, new financing for employers, consumers, and businesses, and the establishment of facilities to support credit to businesses and consumers alike. In August, the Fed announced that it was shifting its interest rate policy approach to potentially allow inflation to rise above its 2% target for periods of time even in times of rising employment. Outside the U.S., central banks were similarly accommodative. The European Central Bank held its policy rate at 0.00%, unchanged since March 2016, and launched a new asset purchase program to help counter the impact of the COVID-19 pandemic. The Bank of Japan upheld its short-term interest rate target of -0.1%, also unchanged since 2016, and increased the annual pace of its purchases of exhange-traded funds (ETFs) and other assets. The Bank of England lowered its key official bank rate from 0.75% to 0.10% in two emergency rate cuts in March. Central banks in key emerging market economies—including China, India, Mexico, Russia, and Thailand—lowered their policy rates or maintained already low rates in response to pandemic-driven pressures.
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
 | Jonas Svallin, CFA, Vice President and Head of Active Equities, has overall responsibility for all aspects of the management of the funds and leads the Active Equities 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 to 2009, Mr. Svallin was a principal and head portfolio manager at Algert Coldiron Investors LLC (now known as Algert Global). Prior to joining Algert, Mr. Svallin worked as a quantitative research associate at RCM Capital Management (now known as Allianz Global Investors) and a senior consultant at FactSet Research Systems. |
 | Wei Li, Ph.D., CFA, 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 Barclays Global Investors (now known as BlackRock), 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, 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 RCM Capital Management (now known as Allianz Global Investors) 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 and assistant portfolio manager. He has also worked as a quantitative research analyst at RCM Capital Management. |
 | Holly Emerson, CFA, Portfolio Manager, is responsible for the day-to-day co-management of the Schwab Large-Cap Growth Fund and the Schwab Dividend Equity Fund. Prior to joining CSIM in 2014, Ms. Emerson spent nearly 10 years at Algert Coldiron Investors LLC (now known as Algert Global), a quantitative market-neutral hedge fund manager. She held a number of positions at Algert, including assistant portfolio manager and director of operations. In her various roles, she acted as the lead portfolio manager for the Canadian fund, conducted macroeconomic research, and managed relationships with prime brokerage investment banks. |
Schwab Active Equity Funds | Annual Report
Schwab Core Equity Fund as of October 31, 2020
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 at the time of purchase. 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. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses.
Performance. The fund returned 4.65% for the 12-month reporting period ended October 31, 2020, underperforming the S&P 500® Index (the index), which the fund uses for performance comparisons. The index returned 9.71% for the reporting period.
Positioning and Strategies. The fund’s overweight investment in investment banking company Citigroup, Inc. weighed on the fund’s relative performance. The fund’s holdings of Citigroup returned approximately -40% for the reporting period, as many banks struggled due to concerns around potential loan losses related to the COVID-19 pandemic, slower loan growth, rising credit risk, and the impact of low interest rates on their income.
Boston Properties, Inc., a real estate investment trust company, was another detractor from the fund’s relative performance over the reporting period. The fund’s overweight investment in Boston Properties returned approximately -42% for the reporting period. Boston Properties, which owns office space in cities across the country, was impacted by the shift to work from home related to the COVID-19 pandemic and the potential for reduced future demand for office space. The fund sold its position in Boston Properties in May 2020.
The fund’s performance relative to the index was enhanced by an overweight to e-commerce company Amazon.com, Inc. The fund’s holdings of Amazon returned approximately 71% for the reporting period. Amazon benefitted from increased demand for cloud computing and work from home solutions related to the COVID-19 pandemic, increased online shopping as stay-at-home orders were implemented, and a growing advertising presence.
The fund’s overweight position in technology company Apple Inc. was another contributor to the fund’s relative performance as a result of the 5G iPhone release, consumer spending driven by fiscal stimulus payments, and the company pushing into providing services. The return of the fund’s holdings of Apple was approximately 77% for the reporting period.
Management views and portfolio holdings may have changed since the report date.
Schwab Active Equity Funds | Annual Report
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1,2
Average Annual Total Returns1,2
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Core Equity Fund (7/1/96) | 4.65% | 8.59% | 11.24% |
| S&P 500® Index | 9.71% | 11.71% | 13.01% |
| Fund Category: Morningstar Large Blend3 | 6.30% | 9.64% | 11.28% |
| Fund Expense Ratio4: 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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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 7, 2012, 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 expense ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Active Equity Funds | Annual Report
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 137 |
| Weighted Average Market Cap (millions) | $478,586 |
| Price/Earnings Ratio (P/E) | 21.1 |
| Price/Book Ratio (P/B) | 3.6 |
| Portfolio Turnover Rate | 97% |
Sector Weightings % of Investments1
Top Equity Holdings % of Net Assets2
Portfolio holdings may have changed since the report date.
Source of Sector Classification: S& P and MSCI.
| 1 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
Schwab Active Equity Funds | Annual Report
Schwab Dividend Equity Fund as of October 31, 2020
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 (including, for this purpose, any borrowings for investment purposes) in dividend paying common and preferred stocks. 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. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms. Over the reporting period, growth stocks generally outperformed value, leading to the underperformance of high dividend-paying stocks compared to the broader stock market. Higher-yield stocks generally underperformed as the market has been growth driven.
Performance. The fund returned -13.30% for the 12-month reporting period ended October 31, 2020, underperforming the Russell 1000® Value Index (the index), which the fund uses for performance comparisons. The index returned -7.57% for the reporting period.
As of October 31, 2020, the fund’s dividend yield was 3.12%, higher than the 2.51% dividend yield of the index. As of October 31, 2020, the fund’s 30-Day SEC yield was 2.12%.
Positioning and Strategies. The fund’s position in insurance company Aviva plc weighed on the fund’s relative performance. The fund’s holdings of Aviva returned approximately -48% for the reporting period as insurance companies were impacted by low interest rates, concerns about higher claims due to the COVID-19 pandemic, and suspension of dividends. Aviva was a non-index stock.
Investment banking company Citigroup, Inc. was another detractor from the fund’s relative performance. The fund’s overweight investment in Citigroup returned approximately -40% for the reporting period as many banks struggled due to concerns around potential loan losses related to the COVID-19 pandemic, slower loan growth, rising credit risk, and the impact of low interest rates on their income.
The fund’s performance relative to the index was enhanced by the fund’s position in Cisco Systems, Inc., a multinational technology conglomerate. The fund held an overweight position in Cisco through June 2020, which had negatively impacted the relative performance of the fund. However, in June, the weight of Cisco in the index increased significantly as part of its reconstitution. As a result, the fund ended up underweight in Cisco for the remainder of the reporting period, ultimately contributing to the fund’s relative performance over the reporting period. The fund’s holdings of Cisco returned approximately -9% for the reporting period. Cisco was impacted by decreased enterprise spending as a result of the COVID-19 pandemic.
Information technology company Apple Inc. was another contributor to the fund’s relative performance as a result of the 5G iPhone release, consumer spending driven by fiscal stimulus payments, and the company pushing into providing services. The return of the fund’s holdings of Apple was approximately 77% for the reporting period. Apple was a non-index stock.
Management views and portfolio holdings may have changed since the report date.
Schwab Active Equity Funds | Annual Report
Schwab Dividend Equity Fund
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1,2
Average Annual Total Returns1,2
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Dividend Equity Fund (9/2/03) | -13.30% | 2.63% | 7.60% |
| Russell 1000® Value Index | -7.57% | 5.82% | 9.48% |
| Dividend Equity Spliced Index | -7.57% | 5.82% | 9.68% |
| S&P 500® Index | 9.71% | 11.71% | 13.01% |
| Fund Category: Morningstar Large Value3 | -7.37% | 5.38% | 8.64% |
| 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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
The first index listed for the fund is the fund’s primary benchmark, as shown in the prospectus. Additional indices shown are provided for comparative purposes.
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 | The fund’s performance relative to the index may be affected by fair-value pricing. See financial note 2 for more information. |
| 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 expense ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Active Equity Funds | Annual Report
Schwab Dividend Equity Fund
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 183 |
| Weighted Average Market Cap (millions) | $126,933 |
| Price/Earnings Ratio (P/E) | 15.0 |
| Price/Book Ratio (P/B) | 2.0 |
| Portfolio Turnover Rate | 70% |
Sector Weightings % of Investments1
Top Equity Holdings % of Net Assets2
Portfolio holdings may have changed since the report date.
Source of Sector Classification: S& P and MSCI.
| 1 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
Schwab Active Equity Funds | Annual Report
Schwab Large-Cap Growth Fund as of October 31, 2020
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 (including, for this purpose, any borrowings for investment purposes) 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. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, U.S. large-cap stocks outperformed small-cap stocks and growth stocks outperformed value stocks.
Performance. The fund returned 21.60% for the 12-month reporting period ended October 31, 2020, underperforming the Russell 1000® Growth Index (the index), which the fund uses for performance comparisons. The index returned 29.22% for the reporting period.
Positioning and Strategies. The fund’s underweight investment in electric car company Tesla, Inc. weighed on the fund’s relative performance. The fund’s holdings of Tesla returned approximately 80% for the reporting period, benefitting from its large-cap and growth characteristics. In addition, it saw solid demand from Chinese customers.
MasTec, Inc., an engineering company, was another detractor from the fund’s relative performance. The fund’s holdings of MasTec returned approximately -43% for the reporting period. MasTec suffered from concerns about its oil and gas construction business. MasTec was a non-index stock.
The Boeing Co. contributed to the fund relative performance. Boeing suffered from safety problems with the 737 MAX as well as decreased demand from airlines due to COVID-19 pandemic-related travel restrictions. The fund did not hold Boeing during the reporting period. Boeing was included in the index prior to its reconstitution in June 2020.
The fund’s overweight position in e-commerce company Amazon.com, Inc. was another contributor to the fund’s relative performance. The fund’s holdings of Amazon returned approximately 71% for the reporting period. Amazon benefitted from increased demand for cloud computing and work from home solutions related to the COVID-19 pandemic, increased online shopping as stay-at-home orders were implemented, and a growing advertising presence.
Management views and portfolio holdings may have changed since the report date.
Schwab Active Equity Funds | Annual Report
Schwab Large-Cap Growth Fund
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Large-Cap Growth Fund (10/3/05) | 21.60% | 12.91% | 13.46% |
| Russell 1000® Growth Index | 29.22% | 17.32% | 16.31% |
| Fund Category: Morningstar Large Growth2 | 25.92% | 14.64% | 14.19% |
| Fund Expense Ratios3: Net 0.99%; Gross 1.03% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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 expense ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Active Equity Funds | Annual Report
Schwab Large-Cap Growth Fund
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 108 |
| Weighted Average Market Cap (millions) | $656,981 |
| Price/Earnings Ratio (P/E) | 31.7 |
| Price/Book Ratio (P/B) | 9.2 |
| Portfolio Turnover Rate | 65% |
Sector Weightings % of Investments2
Top Equity Holdings % of Net Assets3
Portfolio holdings may have changed since the report date.
Source of Sector Classification: S& P and MSCI.
| 1 | Excludes derivatives. |
| 2 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 3 | This list is not a recommendation of any security by the investment adviser. |
Schwab Active Equity Funds | Annual Report
Schwab Small-Cap Equity Fund as of October 31, 2020
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 (including, for this purpose, any borrowings for investment purposes) 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. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, U.S. large-cap stocks outperformed small-cap stocks.
Performance. The fund returned -9.86% for the 12-month reporting period ended October 31, 2020, underperforming the Russell 2000® Index (the index), which the fund uses for performance comparisons. The index returned -0.14% for the reporting period.
Positioning and Strategies. The fund’s overweight investment in Atkore International Group, Inc. weighed on the fund’s relative performance. The fund’s holdings of Atkore International Group, a manufacturer and supplier of metal products and electrical raceway solutions, returned approximately -40% for the reporting period. Atkore International Group underperformed due to pricing headwinds as well as a lack of a performance catalyst.
First Bancorp, a bank holding company, was another detractor from the fund’s relative performance over the reporting period. The fund’s overweight investment in First Bancorp returned approximately -37% for the reporting period, underperforming other commercial banks partially as a result of it being based in Puerto Rico which, as a U.S. territory and not a state, some investors view as riskier especially during times of market uncertainty.
The fund’s performance relative to the index was enhanced by the fund’s holdings in Horizon Therapeutics plc, a biopharmaceutical company. The fund’s holdings of Horizon Therapeutics returned approximately 159% for the reporting period, as the company successfully transitioned from primary care drugs to specialty drugs for rare diseases. Horizon Therapeutics was a non-index stock.
Multinational specialty biopharmaceutical company Emergent BioSolutions, Inc. was another contributor to the fund’s relative performance as the company experienced momentum in contract development and manufacturing wins. The return of the fund’s overweight investment of Emergent BioSolutions was approximately 57% for the reporting period.
Management views and portfolio holdings may have changed since the report date.
Schwab Active Equity Funds | Annual Report
Schwab Small-Cap Equity Fund
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Small-Cap Equity Fund (7/1/03) | -9.86% | 3.16% | 9.19% |
| Russell 2000® Index | -0.14% | 7.27% | 9.64% |
| Fund Category: Morningstar Small Blend2 | -6.45% | 5.00% | 8.48% |
| Fund Expense Ratio3: 1.09% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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. Reflects the total annual fund operating expenses without contractual fee waivers. For actual expense ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Active Equity Funds | Annual Report
Schwab Small-Cap Equity Fund
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 327 |
| Weighted Average Market Cap (millions) | $2,559 |
| Price/Earnings Ratio (P/E) | 12.2 |
| Price/Book Ratio (P/B) | 1.8 |
| Portfolio Turnover Rate | 113% |
Sector Weightings % of Investments1
Top Equity Holdings % of Net Assets2
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 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
Schwab Active Equity Funds | Annual Report
Schwab Hedged Equity Fund as of October 31, 2020
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. 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. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses.
Performance. The fund returned -9.33% for the 12-month reporting period ended October 31, 2020, underperforming the S&P 500® Index (the index), which the fund uses for performance comparisons. The index returned 9.71% for the reporting period.
Positioning and Strategies. Over the reporting period, stock selection within sectors detracted from the fund’s performance relative to the index. Allocation across sectors also detracted.
From a sector allocation standpoint, the fund’s short positions in the information technology and consumer discretionary sectors and long positions in the real estate sector detracted from relative performance. Short positions in the energy, industrials, and financials sectors, however, contributed to the fund’s relative performance.
Looking at stock selection, long positions in the financials and industrials sectors and short positions in the industrials sector detracted from relative performance. Long positions in the real estate and energy sectors and short positions in the consumer staples sector, however, contributed to the fund’s relative performance.
At the security level, the largest detractor from the total return of the fund was the fund’s long position in financial services company Citigroup, Inc. Citigroup returned approximately -40% for the reporting period. In contrast, the fund’s long position in technology company Apple Inc. contributed the most to the fund’s total return. The fund’s holdings of Apple returned approximately 77% for the reporting period.
Management views and portfolio holdings may have changed since the report date.
Schwab Active Equity Funds | Annual Report
Schwab Hedged Equity Fund
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Hedged Equity Fund (9/3/02) | -9.33% | 1.04% | 4.44% |
| S&P 500® Index | 9.71% | 11.71% | 13.01% |
| Fund Category: Morningstar Long-Short Equity2 | 2.03% | 3.18% | 4.57% |
| Fund Expense Ratios3: Net 1.92%; Gross 1.94% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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 | 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 expense ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Active Equity Funds | Annual Report
Schwab Hedged Equity Fund
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | |
| Long Holdings | 193 |
| Short Holdings | 113 |
| Weighted Average Market Cap (millions) | |
| Long Holdings | $301,517 |
| Short Holdings | $11,571 |
| Price/Earnings Ratio (P/E) | |
| Long Holdings | 17.0 |
| Short Holdings | 23.9 |
| Price/Book Ratio (P/B) | |
| Long Holdings | 2.7 |
| Short Holdings | 2.6 |
| Portfolio Turnover Rate including short sales | 168% |
| Portfolio Turnover Rate excluding short sales | 75% |
Top Equity Long Holdings % of Net Assets1
Top Equity Short Holdings % of Net Assets1
Portfolio holdings may have changed since the report date.
| 1 | This list is not a recommendation of any security by the investment adviser. |
Schwab Active Equity Funds | Annual Report
Schwab Health Care Fund as of October 31, 2020
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. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms. U.S. health care stocks performed well over the reporting period, though slightly lagged the broader U.S. stock market. Health care stocks performed in line with the S&P 500® Index and performed better than the MSCI EAFE® Index. Many health care stocks benefitted from COVID-19 related testing and diagnostic demands and the development of vaccines.
Performance. The fund returned 9.57% for the 12-month reporting period ended October 31, 2020, underperforming the Dow Jones Global Health Care Index (the index), which the fund uses for performance comparisons. The index returned 11.63% for the reporting period.
Positioning and Strategies. The fund’s overweight investment in Merck & Co., Inc., a pharmaceutical company, weighed on the fund’s relative performance. The fund’s holdings of Merck returned approximately -11% for the reporting period, as a result of concerns about the company’s increasing reliance on a single drug and the likelihood of merger and acquisitions in order to diversify pressured stock.
Biopharmaceutical company Regeneron Pharmaceutical, Inc. was another detractor from the fund’s relative performance over the reporting period. The fund’s underweight investment in Regeneron Pharmaceutical returned approximately 19% for the reporting period. As the maker of an experimental COVID-19 antibody treatment, Regeneron Pharmaceutical performed well.
The fund’s performance relative to the index was enhanced by an overweight investment in Horizon Therapeutics plc, a biopharmaceutical company. The fund’s holdings of Horizon Therapeutics returned approximately 159% for the reporting period, benefitting from strong demand for its major drugs.
The fund’s overweight position in Thermo Fisher Scientific, Inc., which manufactures scientific instruments, consumables, and chemicals, was another contributor to the fund’s relative performance, benefiting from COVID-19 related testing demand. The return of the fund’s holdings of Thermo Fisher Scientific was approximately 57% for the reporting period.
Management views and portfolio holdings may have changed since the report date.
Schwab Active Equity Funds | Annual Report
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1,2
Average Annual Total Returns1,2
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Health Care Fund (7/3/00) | 9.57% | 7.76% | 13.79% |
| Dow Jones Global Health Care Index | 11.63% | 8.60% | 12.86% |
| S&P 500® Index | 9.71% | 11.71% | 13.01% |
| Fund Category: Morningstar Health3 | 22.92% | 9.21% | 14.90% |
| Fund Expense Ratio4: 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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
The first index listed for the fund is the fund’s primary benchmark, as shown in the prospectus. Additional indices shown are provided for comparative purposes.
For index definitions, please see the Glossary.
Since the Schwab Health Care Fund focuses its investments on companies involved in a specific sector, 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 | The fund’s performance relative to the index may be affected by fair-value pricing. See financial note 2 for more information. |
| 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 expense ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Active Equity Funds | Annual Report
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 91 |
| Weighted Average Market Cap (millions) | $123,222 |
| Price/Earnings Ratio (P/E) | 24.8 |
| Price/Book Ratio (P/B) | 5.3 |
| Portfolio Turnover Rate | 73% |
Industry Weightings % of Investments
Top Equity Holdings % of Net Assets1
Portfolio holdings may have changed since the report date.
Source of Industry Classification: S&P and MSCI.
| 1 | This list is not a recommendation of any security by the investment adviser. |
Schwab Active Equity Funds | Annual Report
Schwab International Core Equity Fund as of October 31, 2020
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 market 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. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and plunging markets into bear-market territory with record speed. At their lows, key international stock indices had lost as much as one-third of their former value. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. While the extraordinary response prompted a rally in global equity markets from their March lows and key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period, historic volatility remained and international equity markets lost steam during the final two months of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. The U.S. dollar weakened against a basket of foreign currencies for the reporting period, generally increasing the returns on overseas investments in U.S. dollar terms.
Performance. The fund returned -6.01% for the 12-month reporting period ended October 31, 2020, outperforming the MSCI EAFE® Index (Net) (the index), which the fund uses for performance comparisons. The index returned -6.86% for the reporting period.
Positioning and Strategies. The fund’s position in Tencent Holdings Ltd., a multinational technology conglomerate holding company, enhanced the fund’s relative performance. The fund’s holdings of Tencent Holdings returned approximately 87% in U.S. dollar terms for the reporting period. Tencent benefitted from new game releases and an increase in gaming activity as people stayed home. Tencent Holdings was a non-index stock.
The fund’s overweight position in Sony Corp. was another contributor to the fund’s relative performance as a result of an increase in demand for image sensors and excitement over the launch of a new PlayStation, the PS5. The return of the fund’s holdings of Sony was approximately 36% in U.S. dollar terms for the reporting period.
The fund’s position in Invincible Investment Corp., a real estate investment trust, weighed on the fund’s relative performance. The fund’s holdings of Invincible Investment returned approximately -53% in U.S. dollar terms for the reporting period, impacted by the shutdown of global tourism and the postponement of the 2020 summer Olympics in Japan. Invincible Investment was a non-stock index. The fund sold its position in Invincible Investment Corp. in September 2020.
Insurance company Aviva plc was another detractor from the fund’s relative performance. The fund’s overweight investment in Aviva returned approximately -29% in U.S. dollar terms for the reporting period as insurance companies were impacted by low interest rates, concerns about higher claims due to the COVID-19 pandemic, and suspension of dividends. The fund sold its position in Aviva in September 2020.
Management views and portfolio holdings may have changed since the report date.
Schwab Active Equity Funds | Annual Report
Schwab International Core Equity Fund
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1,2
Average Annual Total Returns1,2
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab International Core Equity Fund (5/30/08) | -6.01% | 1.61% | 4.42% |
| MSCI EAFE® Index (Net)3 | -6.86% | 2.85% | 3.82% |
| Fund Category: Morningstar Foreign Large Blend4 | -4.19% | 3.23% | 3.65% |
| Fund Expense Ratios5: Net 0.86%; Gross 0.87% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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 | The fund’s performance relative to the index may be affected by fair-value pricing. See financial note 2 for more information. |
| 3 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
| 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 expense ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Active Equity Funds | Annual Report
Schwab International Core Equity Fund
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 166 |
| Weighted Average Market Cap (millions) | $81,425 |
| Price/Earnings Ratio (P/E) | 17.7 |
| Price/Book Ratio (P/B) | 2.1 |
| Portfolio Turnover Rate | 97% |
Sector Weightings % of Investments
Top Equity Holdings % of Net Assets1
Top Country Weightings % of Investments2
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. |
| 2 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
Fund Expenses (Unaudited)
Examples for a $1,000 Investment
As a fund shareholder, you may incur two types of costs: (1) transaction costs; 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, 2020 and held through October 31, 2020.
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. 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 Ratio
(Annualized)1 | Beginning
Account Value
at 5/1/20 | Ending
Account Value
(Net of Expenses)
at 10/31/20 | Expenses Paid
During Period
5/1/20-10/31/202 |
| Schwab Core Equity Fund | | | | |
| Actual Return | 0.73% | $1,000.00 | $1,103.20 | $ 3.86 |
| Hypothetical 5% Return | 0.73% | $1,000.00 | $1,021.43 | $ 3.71 |
| Schwab Dividend Equity Fund | | | | |
| Actual Return | 0.89% | $1,000.00 | $1,039.10 | $ 4.56 |
| Hypothetical 5% Return | 0.89% | $1,000.00 | $1,020.63 | $ 4.52 |
| Schwab Large-Cap Growth Fund | | | | |
| Actual Return | 0.99% | $1,000.00 | $1,176.00 | $ 5.42 |
| Hypothetical 5% Return | 0.99% | $1,000.00 | $1,020.12 | $ 5.03 |
| Schwab Small-Cap Equity Fund | | | | |
| Actual Return | 1.09% | $1,000.00 | $1,153.60 | $ 5.90 |
| Hypothetical 5% Return | 1.09% | $1,000.00 | $1,019.62 | $ 5.53 |
| Schwab Hedged Equity Fund3 | | | | |
| Actual Return | 1.98% | $1,000.00 | $ 969.40 | $ 9.80 |
| Hypothetical 5% Return | 1.98% | $1,000.00 | $1,015.15 | $10.03 |
| Schwab Health Care Fund | | | | |
| Actual Return | 0.80% | $1,000.00 | $1,036.30 | $ 4.09 |
| Hypothetical 5% Return | 0.80% | $1,000.00 | $1,021.08 | $ 4.06 |
| Schwab International Core Equity Fund | | | | |
| Actual Return | 0.86% | $1,000.00 | $1,117.80 | $ 4.58 |
| Hypothetical 5% Return | 0.86% | $1,000.00 | $1,020.78 | $ 4.37 |
| 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 366 days of the fiscal year. |
| 3 | Schwab Hedged Equity Fund’s expense ratio includes non-recurring interest expense, stock loan fees and dividend expenses paid on securities sold short. |
Schwab Active Equity Funds | Annual Report
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $21.87 | $22.40 | $24.36 | $19.65 | $23.10 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.20 | 0.21 | 0.26 | 0.34 | 0.38 | |
| Net realized and unrealized gains (losses) | 0.82 | 1.99 | 0.41 | 4.71 | (0.52) | |
| Total from investment operations | 1.02 | 2.20 | 0.67 | 5.05 | (0.14) | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.20) | (0.27) | (0.34) | (0.34) | (0.36) | |
| Distributions from net realized gains | (0.45) | (2.46) | (2.29) | — | (2.95) | |
| Total distributions | (0.65) | (2.73) | (2.63) | (0.34) | (3.31) | |
| Net asset value at end of period | $22.24 | $21.87 | $22.40 | $24.36 | $19.65 | |
| Total return | 4.65% | 12.02% | 2.71% | 26.00% | (0.50%) | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 0.73% | 0.73% | 0.73% | 0.73% | 0.73% | |
| Gross operating expenses | 0.73% | 0.73% | 0.73% | 0.74% | 0.73% | |
| Net investment income (loss) | 0.91% | 1.01% | 1.12% | 1.53% | 1.93% | |
| Portfolio turnover rate | 97% | 98% | 101% | 86% | 80% | |
| Net assets, end of period (x 1,000,000) | $1,957 | $2,182 | $2,138 | $2,353 | $2,075 | |
| |
1
Calculated based on the average shares outstanding during the period.
Schwab Active Equity Funds | Annual Report
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Common Stock 99.2% of net assets |
| |
| Automobiles & Components 0.2% |
| General Motors Co. | 89,688 | 3,096,927 |
| |
| Banks 2.8% |
| Bank of America Corp. | 342,920 | 8,127,204 |
| Citigroup, Inc. | 171,497 | 7,103,406 |
| Citizens Financial Group, Inc. | 315,794 | 8,605,387 |
| Comerica, Inc. | 66,755 | 3,038,020 |
| JPMorgan Chase & Co. | 292,604 | 28,686,896 |
| | | 55,560,913 |
| |
| Capital Goods 4.6% |
| AGCO Corp. | 79,542 | 6,127,120 |
| Allison Transmission Holdings, Inc. | 134,182 | 4,850,679 |
| Dover Corp. | 59,138 | 6,547,168 |
| Illinois Tool Works, Inc. | 116,396 | 22,799,649 |
| Lockheed Martin Corp. | 50,213 | 17,581,078 |
| Masco Corp. | 135,174 | 7,245,326 |
| Otis Worldwide Corp. | 101,304 | 6,207,909 |
| Rexnord Corp. | 202,295 | 6,489,624 |
| Rockwell Automation, Inc. | 53,201 | 12,615,021 |
| | | 90,463,574 |
| |
| Commercial & Professional Services 1.3% |
| Cintas Corp. | 17,279 | 5,435,109 |
| Republic Services, Inc. | 126,980 | 11,195,827 |
| Robert Half International, Inc. | 190,916 | 9,677,532 |
| | | 26,308,468 |
| |
| Consumer Durables & Apparel 3.1% |
| Carter's, Inc. | 23,743 | 1,933,867 |
| Deckers Outdoor Corp. * | 67,464 | 17,093,354 |
| Hanesbrands, Inc. | 474,053 | 7,618,032 |
| Lululemon Athletica, Inc. * | 24,754 | 7,903,705 |
| NIKE, Inc., Class B | 106,891 | 12,835,471 |
| PulteGroup, Inc. | 163,900 | 6,680,564 |
| Tapestry, Inc. | 85,832 | 1,908,045 |
| YETI Holdings, Inc. * | 104,636 | 5,177,389 |
| | | 61,150,427 |
| |
| Consumer Services 1.2% |
| Domino's Pizza, Inc. | 22,061 | 8,346,117 |
| Hilton Worldwide Holdings, Inc. | 131,076 | 11,509,784 |
| Papa John's International, Inc. | 42,258 | 3,236,963 |
| | | 23,092,864 |
| |
| Diversified Financials 3.6% |
| Affiliated Managers Group, Inc. | 107,441 | 8,097,828 |
| Ameriprise Financial, Inc. | 35,840 | 5,764,147 |
| Capital One Financial Corp. | 164,317 | 12,008,286 |
| Jefferies Financial Group, Inc. | 406,530 | 7,931,400 |
| OneMain Holdings, Inc. | 166,680 | 5,815,465 |
| Security | Number
of Shares | Value ($) |
| S&P Global, Inc. | 85,869 | 27,712,503 |
| T. Rowe Price Group, Inc. | 22,075 | 2,796,020 |
| The Bank of New York Mellon Corp. | 9,334 | 320,716 |
| | | 70,446,365 |
| |
| Energy 1.0% |
| Chevron Corp. | 79,373 | 5,516,424 |
| ConocoPhillips | 256,455 | 7,339,742 |
| Valero Energy Corp. | 172,269 | 6,651,306 |
| | | 19,507,472 |
| |
| Food & Staples Retailing 1.9% |
| Koninklijke Ahold Delhaize N.V. ADR | 262,981 | 7,247,756 |
| The Kroger Co. | 485,050 | 15,623,460 |
| Walmart, Inc. | 99,934 | 13,865,843 |
| | | 36,737,059 |
| |
| Food, Beverage & Tobacco 3.7% |
| Altria Group, Inc. | 180,219 | 6,502,302 |
| Campbell Soup Co. | 163,857 | 7,647,206 |
| General Mills, Inc. | 450,081 | 26,608,789 |
| Monster Beverage Corp. * | 74,992 | 5,742,137 |
| Nestle S.A. ADR | 93,492 | 10,496,347 |
| PepsiCo, Inc. | 40,787 | 5,436,499 |
| The JM Smucker Co. | 18,544 | 2,080,637 |
| Tyson Foods, Inc., Class A | 128,350 | 7,345,470 |
| | | 71,859,387 |
| |
| Health Care Equipment & Services 6.2% |
| Anthem, Inc. | 66,812 | 18,226,313 |
| Cardinal Health, Inc. | 94,952 | 4,347,852 |
| Cerner Corp. | 87,531 | 6,135,048 |
| Edwards Lifesciences Corp. * | 255,978 | 18,351,063 |
| Hill-Rom Holdings, Inc. | 114,109 | 10,391,907 |
| Hologic, Inc. * | 215,331 | 14,819,079 |
| IDEXX Laboratories, Inc. * | 24,460 | 10,391,097 |
| McKesson Corp. | 25,855 | 3,813,354 |
| Medtronic plc | 69,989 | 7,038,794 |
| ResMed, Inc. | 23,585 | 4,526,905 |
| UnitedHealth Group, Inc. | 56,460 | 17,228,204 |
| West Pharmaceutical Services, Inc. | 22,411 | 6,097,361 |
| | | 121,366,977 |
| |
| Household & Personal Products 1.2% |
| The Procter & Gamble Co. | 172,753 | 23,684,436 |
| |
| Insurance 4.1% |
| Aflac, Inc. | 226,521 | 7,690,388 |
| Fidelity National Financial, Inc. | 508,327 | 15,905,552 |
| MetLife, Inc. | 539,052 | 20,403,118 |
Schwab Active Equity Funds | Annual Report
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| The Allstate Corp. | 277,814 | 24,655,992 |
| The Hartford Financial Services Group, Inc. | 312,617 | 12,042,007 |
| | | 80,697,057 |
| |
| Materials 3.1% |
| Berry Global Group, Inc. * | 241,886 | 11,279,144 |
| Louisiana-Pacific Corp. | 196,524 | 5,616,656 |
| RPM International, Inc. | 85,378 | 7,228,955 |
| The Scotts Miracle-Gro Co. | 12,757 | 1,914,188 |
| The Sherwin-Williams Co. | 49,944 | 34,360,473 |
| | | 60,399,416 |
| |
| Media & Entertainment 9.4% |
| Alphabet, Inc., Class A * | 37,070 | 59,909,198 |
| Altice USA, Inc., Class A * | 311,515 | 8,395,329 |
| Charter Communications, Inc., Class A * | 26,238 | 15,843,029 |
| Electronic Arts, Inc. * | 51,123 | 6,126,069 |
| Facebook, Inc., Class A * | 272,113 | 71,595,652 |
| Nintendo Co., Ltd. ADR | 325,652 | 22,056,410 |
| | | 183,925,687 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 6.9% |
| Alexion Pharmaceuticals, Inc. * | 201,559 | 23,207,503 |
| Amgen, Inc. | 58,404 | 12,670,164 |
| Emergent BioSolutions, Inc. * | 64,390 | 5,793,168 |
| Gilead Sciences, Inc. | 71,658 | 4,166,913 |
| Johnson & Johnson | 77,660 | 10,647,963 |
| Merck & Co., Inc. | 73,101 | 5,497,926 |
| Novartis AG ADR | 200,831 | 15,680,884 |
| Novo Nordisk A/S ADR | 155,830 | 9,955,979 |
| PerkinElmer, Inc. | 33,674 | 4,362,467 |
| Regeneron Pharmaceuticals, Inc. * | 17,667 | 9,603,074 |
| Roche Holding AG ADR | 361,293 | 14,448,107 |
| Thermo Fisher Scientific, Inc. | 23,877 | 11,296,686 |
| Vertex Pharmaceuticals, Inc. * | 38,813 | 8,087,077 |
| | | 135,417,911 |
| |
| Real Estate 3.1% |
| American Tower Corp. | 17,545 | 4,029,209 |
| Cousins Properties, Inc. | 185,034 | 4,714,666 |
| CyrusOne, Inc. | 113,816 | 8,086,627 |
| Host Hotels & Resorts, Inc. | 544,700 | 5,708,456 |
| Mid-America Apartment Communities, Inc. | 120,193 | 14,018,110 |
| Omega Healthcare Investors, Inc. | 170,936 | 4,924,666 |
| SBA Communications Corp. | 68,650 | 19,933,901 |
| | | 61,415,635 |
| |
| Retailing 9.5% |
| Amazon.com, Inc. * | 36,386 | 110,473,354 |
| AutoNation, Inc. * | 145,298 | 8,242,756 |
| Best Buy Co., Inc. | 129,833 | 14,482,871 |
| Etsy, Inc. * | 14,269 | 1,734,968 |
| Lowe's Cos., Inc. | 137,442 | 21,729,580 |
| The Home Depot, Inc. | 108,131 | 28,839,619 |
| | | 185,503,148 |
| |
| Semiconductors & Semiconductor Equipment 3.5% |
| Broadcom, Inc. | 25,529 | 8,925,704 |
| Intel Corp. | 255,430 | 11,310,440 |
| KLA Corp. | 79,379 | 15,651,951 |
| Security | Number
of Shares | Value ($) |
| NVIDIA Corp. | 53,199 | 26,671,851 |
| Teradyne, Inc. | 72,729 | 6,389,243 |
| | | 68,949,189 |
| |
| Software & Services 14.7% |
| Accenture plc, Class A | 79,652 | 17,277,315 |
| Adobe, Inc. * | 65,585 | 29,323,054 |
| Booz Allen Hamilton Holding Corp. | 200,383 | 15,730,066 |
| Citrix Systems, Inc. | 114,187 | 12,933,961 |
| Cognizant Technology Solutions Corp., Class A | 29,426 | 2,101,605 |
| DocuSign, Inc. * | 24,597 | 4,974,743 |
| Fair Isaac Corp. * | 15,129 | 5,922,247 |
| International Business Machines Corp. | 34,309 | 3,830,943 |
| Mastercard, Inc., Class A | 142,855 | 41,233,667 |
| Microsoft Corp. | 660,062 | 133,642,753 |
| VeriSign, Inc. * | 71,448 | 13,625,134 |
| Visa, Inc., Class A | 28,562 | 5,190,001 |
| Workday, Inc., Class A * | 9,645 | 2,026,607 |
| | | 287,812,096 |
| |
| Technology Hardware & Equipment 8.2% |
| Apple Inc. | 1,470,288 | 160,055,552 |
| |
| Telecommunication Services 2.5% |
| AT&T, Inc. | 403,493 | 10,902,381 |
| Verizon Communications, Inc. | 655,687 | 37,367,602 |
| | | 48,269,983 |
| |
| Transportation 1.1% |
| Expeditors International of Washington, Inc. | 170,041 | 15,026,523 |
| Union Pacific Corp. | 30,946 | 5,483,322 |
| | | 20,509,845 |
| |
| Utilities 2.3% |
| Exelon Corp. | 268,048 | 10,692,435 |
| NextEra Energy, Inc. | 136,348 | 9,982,037 |
| NRG Energy, Inc. | 288,449 | 9,120,757 |
| OGE Energy Corp. | 136,461 | 4,198,905 |
| Portland General Electric Co. | 90,782 | 3,567,733 |
| UGI Corp. | 113,198 | 3,660,823 |
| Xcel Energy, Inc. | 57,772 | 4,045,773 |
| | | 45,268,463 |
| Total Common Stock |
| (Cost $1,477,710,457) | | 1,941,498,851 |
|
| Other Investment Company 0.7% of net assets |
| |
| Money Market Fund 0.7% |
| State Street Institutional U.S. Government Money Market Fund, Premier Class 0.03% (a) | 12,873,240 | 12,873,240 |
| Total Other Investment Company |
| (Cost $12,873,240) | | 12,873,240 |
| * | Non-income producing security. |
| (a) | The rate shown is the 7-day yield. |
| | |
| ADR — | American Depositary Receipt |
Schwab Active Equity Funds | Annual Report
Portfolio Holdings as of October 31, 2020 (continued)
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 (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 | |
| Assets | | | | | |
| Common Stock1 | $1,941,498,851 | $— | $— | $1,941,498,851 | |
| Other Investment Company1 | 12,873,240 | — | — | 12,873,240 | |
| Total | $1,954,372,091 | $— | $— | $1,954,372,091 | |
| 1 | As categorized in Portfolio Holdings. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Active Equity Funds | Annual Report
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in unaffiliated issuers, at value (cost $1,490,583,697) | | $1,954,372,091 |
| Deposit with broker for futures contracts | | 1,200,000 |
| Receivables: | | |
| Dividends | | 2,075,422 |
| Fund shares sold | | 1,199,628 |
| Foreign tax reclaims | | 374,104 |
| Prepaid expenses | + | 18,797 |
| Total assets | | 1,959,240,042 |
| Liabilities |
| Payables: | | |
| Investment adviser and administrator fees | | 846,539 |
| Shareholder service fees | | 436,951 |
| Fund shares redeemed | | 915,251 |
| Accrued expenses | + | 136,612 |
| Total liabilities | | 2,335,353 |
| Net Assets |
| Total assets | | 1,959,240,042 |
| Total liabilities | – | 2,335,353 |
| Net assets | | $1,956,904,689 |
| Net Assets by Source | | |
| Capital received from investors | | 1,402,150,952 |
| Total distributable earnings | | 554,753,737 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $1,956,904,689 | | 87,997,701 | | $22.24 |
| | | | | |
Schwab Active Equity Funds | Annual Report
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends (net of foreign withholding tax of $337,506) | | $33,535,381 |
| Securities on loan, net | + | 181,521 |
| Total investment income | | 33,716,902 |
| Expenses |
| Investment adviser and administrator fees | | 9,713,496 |
| Shareholder service fees | | 5,019,597 |
| Portfolio accounting fees | | 70,325 |
| Shareholder reports | | 50,932 |
| Professional fees | | 42,554 |
| Registration fees | | 33,187 |
| Transfer agent fees | | 30,539 |
| Independent trustees’ fees | | 17,079 |
| Custodian fees | | 16,310 |
| Other expenses | + | 26,057 |
| Total expenses | | 15,020,076 |
| Expense reduction by CSIM and its affiliates | – | 30,539 |
| Net expenses | – | 14,989,537 |
| Net investment income | | 18,727,365 |
| Realized and Unrealized Gains (Losses) |
| Net realized gains on investments | | 79,686,207 |
| Net realized losses on futures contracts | + | (2,012,011) |
| Net realized gains | | 77,674,196 |
| Net change in unrealized appreciation (depreciation) on investments | + | (9,143,636) |
| Net realized and unrealized gains | | 68,530,560 |
| Increase in net assets resulting from operations | | $87,257,925 |
Schwab Active Equity Funds | Annual Report
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $18,727,365 | $21,633,840 |
| Net realized gains | | 77,674,196 | 45,629,093 |
| Net change in unrealized appreciation (depreciation) | + | (9,143,636) | 179,996,703 |
| Increase in net assets from operations | | 87,257,925 | 247,259,636 |
| Distributions to Shareholders | |
| Total distributions | | ($63,919,641) | ($258,813,892) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 4,154,672 | $86,639,129 | 11,415,378 | $217,630,660 |
| Shares reinvested | | 2,083,874 | 46,553,727 | 10,439,291 | 193,753,240 |
| Shares redeemed | + | (18,036,297) | (381,670,564) | (17,535,305) | (356,277,403) |
| Net transactions in fund shares | | (11,797,751) | ($248,477,708) | 4,319,364 | $55,106,497 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 99,795,452 | $2,182,044,113 | 95,476,088 | $2,138,491,872 |
| Total increase or decrease | + | (11,797,751) | (225,139,424) | 4,319,364 | 43,552,241 |
| End of period | | 87,997,701 | $1,956,904,689 | 99,795,452 | $2,182,044,113 |
Schwab Active Equity Funds | Annual Report
Schwab Dividend Equity Fund
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $15.07 | $15.43 | $17.21 | $14.39 | $16.43 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.28 | 0.23 | 0.22 | 0.29 | 0.31 | |
| Net realized and unrealized gains (losses) | (2.15) | 0.93 | (0.27) | 2.75 | (0.29) | |
| Total from investment operations | (1.87) | 1.16 | (0.05) | 3.04 | 0.02 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.26) | (0.24) | (0.30) | (0.22) | (0.32) | |
| Distributions from net realized gains | (0.80) | (1.28) | (1.43) | — | (1.74) | |
| Total distributions | (1.06) | (1.52) | (1.73) | (0.22) | (2.06) | |
| Net asset value at end of period | $12.14 | $15.07 | $15.43 | $17.21 | $14.39 | |
| Total return | (13.30%) | 8.78% | (0.63%) | 21.19% | 0.26% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 0.89% | 0.89% | 0.88% | 0.88% | 0.88% | |
| Gross operating expenses | 0.90% | 0.89% | 0.88% | 0.88% | 0.89% | |
| Net investment income (loss) | 2.16% | 1.58% | 1.36% | 1.78% | 2.18% | |
| Portfolio turnover rate | 70% | 70% | 79% | 70% | 74% | |
| Net assets, end of period (x 1,000,000) | $577 | $847 | $1,249 | $1,469 | $1,560 | |
| |
1
Calculated based on the average shares outstanding during the period.
Schwab Active Equity Funds | Annual Report
Schwab Dividend Equity Fund
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Common Stock 99.5% of net assets |
| |
| Automobiles & Components 0.3% |
| Dorman Products, Inc. * | 6,500 | 580,255 |
| Magna International, Inc. | 28,201 | 1,440,002 |
| | | 2,020,257 |
| |
| Banks 7.0% |
| Australia & New Zealand Banking Group Ltd. | 257,063 | 3,411,388 |
| Bank of America Corp. | 201,491 | 4,775,337 |
| Citigroup, Inc. | 139,610 | 5,782,646 |
| Citizens Financial Group, Inc. | 100,497 | 2,738,543 |
| Fifth Third Bancorp | 83,639 | 1,942,098 |
| Flagstar Bancorp, Inc. | 187,320 | 5,497,842 |
| JPMorgan Chase & Co. | 159,956 | 15,682,086 |
| MGIC Investment Corp. | 71,329 | 717,570 |
| | | 40,547,510 |
| |
| Capital Goods 8.6% |
| ACS Actividades de Construccion y Servicios S.A. | 32,164 | 764,561 |
| Allison Transmission Holdings, Inc. | 112,670 | 4,073,021 |
| Carlisle Cos., Inc. | 11,377 | 1,409,269 |
| CITIC Ltd. | 460,000 | 328,872 |
| Crane Co. | 27,973 | 1,419,630 |
| Cummins, Inc. | 7,597 | 1,670,505 |
| Dover Corp. | 80,358 | 8,896,434 |
| Illinois Tool Works, Inc. | 18,181 | 3,561,294 |
| Lockheed Martin Corp. | 12,578 | 4,403,935 |
| Masco Corp. | 161,752 | 8,669,907 |
| Masonite International Corp. * | 21,928 | 1,929,664 |
| MSC Industrial Direct Co., Inc., Class A | 19,097 | 1,330,297 |
| Mueller Industries, Inc. | 91,500 | 2,647,095 |
| Raytheon Technologies Corp. | 53,282 | 2,894,278 |
| Rexnord Corp. | 163,766 | 5,253,613 |
| SPX Corp. * | 7,500 | 317,925 |
| | | 49,570,300 |
| |
| Commercial & Professional Services 1.7% |
| CoreLogic, Inc. | 35,500 | 2,731,015 |
| ManpowerGroup, Inc. | 70,606 | 4,792,029 |
| McGrath RentCorp | 18,330 | 1,046,277 |
| Republic Services, Inc. | 15,400 | 1,357,818 |
| | | 9,927,139 |
| |
| Consumer Durables & Apparel 2.8% |
| Crocs, Inc. * | 39,324 | 2,057,825 |
| Hanesbrands, Inc. | 255,469 | 4,105,387 |
| Leggett & Platt, Inc. | 18,085 | 754,687 |
| Lennar Corp., Class A | 11,838 | 831,383 |
| Newell Brands, Inc. | 184,755 | 3,262,773 |
| PulteGroup, Inc. | 18,073 | 736,656 |
| Security | Number
of Shares | Value ($) |
| TRI Pointe Group, Inc. * | 162,416 | 2,668,495 |
| Wolverine World Wide, Inc. | 55,984 | 1,493,093 |
| | | 15,910,299 |
| |
| Consumer Services 1.0% |
| Bloomin' Brands, Inc. | 55,758 | 779,497 |
| Domino's Pizza, Inc. | 1,584 | 599,259 |
| Extended Stay America, Inc. | 88,164 | 1,000,661 |
| Hilton Worldwide Holdings, Inc. | 26,336 | 2,312,564 |
| Papa John's International, Inc. | 6,348 | 486,257 |
| Wyndham Destinations, Inc. | 24,486 | 798,978 |
| | | 5,977,216 |
| |
| Diversified Financials 7.2% |
| Ameriprise Financial, Inc. | 34,362 | 5,526,441 |
| Berkshire Hathaway, Inc., Class B * | 6,180 | 1,247,742 |
| BlackRock, Inc. | 1,603 | 960,534 |
| Capital One Financial Corp. | 29,000 | 2,119,320 |
| Evercore, Inc., Class A | 42,004 | 3,340,998 |
| Invesco Ltd. | 48,300 | 633,213 |
| Jefferies Financial Group, Inc. | 45,908 | 895,665 |
| Lazard Ltd., Class A | 100,729 | 3,391,545 |
| Morgan Stanley | 142,603 | 6,866,334 |
| Navient Corp. | 464,097 | 3,717,417 |
| OneMain Holdings, Inc. | 133,319 | 4,651,500 |
| ORIX Corp. | 87,300 | 1,020,994 |
| S&P Global, Inc. | 6,748 | 2,177,782 |
| State Street Corp. | 20,947 | 1,233,778 |
| Synchrony Financial | 32,003 | 800,715 |
| T. Rowe Price Group, Inc. | 23,628 | 2,992,723 |
| Virtu Financial, Inc., Class A | 9,500 | 203,110 |
| | | 41,779,811 |
| |
| Energy 3.4% |
| Chevron Corp. | 136,284 | 9,471,738 |
| Exxon Mobil Corp. | 191,525 | 6,247,545 |
| HollyFrontier Corp. | 28,159 | 521,223 |
| Kinder Morgan, Inc. | 71,943 | 856,122 |
| Marathon Petroleum Corp. | 36,178 | 1,067,251 |
| Valero Energy Corp. | 32,396 | 1,250,810 |
| | | 19,414,689 |
| |
| Food & Staples Retailing 1.5% |
| Koninklijke Ahold Delhaize N.V. | 74,358 | 2,038,582 |
| Sprouts Farmers Market, Inc. * | 15,163 | 288,855 |
| The Kroger Co. | 84,569 | 2,723,968 |
| Walmart, Inc. | 26,803 | 3,718,916 |
| | | 8,770,321 |
| |
| Food, Beverage & Tobacco 4.5% |
| Altria Group, Inc. | 166,301 | 6,000,140 |
| Flowers Foods, Inc. | 241,911 | 5,704,261 |
| General Mills, Inc. | 77,812 | 4,600,245 |
| Ingredion, Inc. | 10,793 | 765,116 |
| The Hershey Co. | 24,211 | 3,328,044 |
Schwab Active Equity Funds | Annual Report
Schwab Dividend Equity Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| The JM Smucker Co. | 34,808 | 3,905,458 |
| Tyson Foods, Inc., Class A | 31,739 | 1,816,423 |
| | | 26,119,687 |
| |
| Health Care Equipment & Services 6.1% |
| Abbott Laboratories | 21,997 | 2,312,105 |
| Anthem, Inc. | 8,924 | 2,434,467 |
| Cardinal Health, Inc. | 90,406 | 4,139,691 |
| CONMED Corp. | 13,794 | 1,075,518 |
| Danaher Corp. | 7,400 | 1,698,596 |
| DENTSPLY SIRONA, Inc. | 30,592 | 1,443,637 |
| Hill-Rom Holdings, Inc. | 59,533 | 5,421,670 |
| Hologic, Inc. * | 29,456 | 2,027,162 |
| McKesson Corp. | 10,515 | 1,550,857 |
| Medtronic plc | 84,435 | 8,491,628 |
| STERIS plc | 11,453 | 2,029,357 |
| UnitedHealth Group, Inc. | 8,117 | 2,476,821 |
| Zimmer Biomet Holdings, Inc. | 419 | 55,350 |
| | | 35,156,859 |
| |
| Household & Personal Products 2.8% |
| Kimberly-Clark Corp. | 37,641 | 4,990,820 |
| The Procter & Gamble Co. | 81,771 | 11,210,804 |
| | | 16,201,624 |
| |
| Insurance 4.3% |
| American Financial Group, Inc. | 20,000 | 1,498,800 |
| Fidelity National Financial, Inc. | 61,095 | 1,911,663 |
| First American Financial Corp. | 42,059 | 1,875,411 |
| MetLife, Inc. | 186,384 | 7,054,634 |
| The Allstate Corp. | 125,391 | 11,128,451 |
| The Hartford Financial Services Group, Inc. | 29,565 | 1,138,844 |
| | | 24,607,803 |
| |
| Materials 7.2% |
| Axalta Coating Systems Ltd. * | 107,444 | 2,697,919 |
| Berry Global Group, Inc. * | 51,549 | 2,403,730 |
| BHP Group plc | 112,063 | 2,170,923 |
| Boise Cascade Co. | 28,900 | 1,109,182 |
| CF Industries Holdings, Inc. | 57,275 | 1,581,363 |
| China Resources Cement Holdings Ltd. | 848,000 | 1,110,396 |
| Commercial Metals Co. | 39,330 | 812,164 |
| Fortescue Metals Group Ltd. | 151,690 | 1,855,698 |
| Minerals Technologies, Inc. | 87,817 | 4,802,712 |
| PPG Industries, Inc. | 35,418 | 4,594,423 |
| Reliance Steel & Aluminum Co. | 49,126 | 5,354,243 |
| RPM International, Inc. | 22,025 | 1,864,857 |
| Sensient Technologies Corp. | 35,798 | 2,342,263 |
| The Sherwin-Williams Co. | 12,536 | 8,624,517 |
| | | 41,324,390 |
| |
| Media & Entertainment 3.3% |
| Activision Blizzard, Inc. | 34,150 | 2,586,180 |
| Alphabet, Inc., Class A * | 1,212 | 1,958,725 |
| Altice USA, Inc., Class A * | 70,600 | 1,902,670 |
| Comcast Corp., Class A | 181,362 | 7,660,731 |
| Electronic Arts, Inc. * | 15,356 | 1,840,110 |
| Nintendo Co., Ltd. | 5,200 | 2,811,581 |
| Take-Two Interactive Software, Inc. * | 1,607 | 248,956 |
| | | 19,008,953 |
| |
| Security | Number
of Shares | Value ($) |
| Pharmaceuticals, Biotechnology & Life Sciences 7.7% |
| Alexion Pharmaceuticals, Inc. * | 3,070 | 353,480 |
| Amgen, Inc. | 1,862 | 403,942 |
| Biogen, Inc. * | 5,106 | 1,287,069 |
| Bristol-Myers Squibb Co. | 60 | 3,507 |
| Gilead Sciences, Inc. | 76,028 | 4,421,028 |
| Johnson & Johnson | 99,080 | 13,584,859 |
| Medpace Holdings, Inc. * | 14,666 | 1,627,046 |
| Merck & Co., Inc. | 6,855 | 515,565 |
| Novartis AG | 11,522 | 897,824 |
| Novo Nordisk A/S, Class B | 14,681 | 936,143 |
| Pfizer, Inc. | 255,316 | 9,058,612 |
| Regeneron Pharmaceuticals, Inc. * | 4,056 | 2,204,679 |
| Roche Holding AG | 27,865 | 8,953,898 |
| | | 44,247,652 |
| |
| Real Estate 4.7% |
| American Tower Corp. | 7,484 | 1,718,701 |
| Corporate Office Properties Trust | 126,966 | 2,847,847 |
| Cousins Properties, Inc. | 114,580 | 2,919,499 |
| CyrusOne, Inc. | 15,800 | 1,122,590 |
| Gaming & Leisure Properties, Inc. | 25,397 | 923,181 |
| Global Net Lease, Inc. | 111,700 | 1,589,491 |
| Longfor Group Holdings Ltd. | 78,500 | 430,110 |
| Mid-America Apartment Communities, Inc. | 26,864 | 3,133,148 |
| National Storage Affiliates Trust | 26,997 | 914,928 |
| Omega Healthcare Investors, Inc. | 77,179 | 2,223,527 |
| Prologis, Inc. | 83,050 | 8,238,560 |
| Sabra Health Care REIT, Inc. | 65,033 | 855,834 |
| | | 26,917,416 |
| |
| Retailing 2.7% |
| AutoNation, Inc. * | 20,100 | 1,140,273 |
| Best Buy Co., Inc. | 45,740 | 5,102,297 |
| Lowe's Cos., Inc. | 15,591 | 2,464,937 |
| Target Corp. | 11,263 | 1,714,454 |
| The Home Depot, Inc. | 20,351 | 5,427,815 |
| | | 15,849,776 |
| |
| Semiconductors & Semiconductor Equipment 3.8% |
| Broadcom, Inc. | 6,860 | 2,398,462 |
| Intel Corp. | 262,105 | 11,606,009 |
| KLA Corp. | 9,315 | 1,836,732 |
| QUALCOMM, Inc. | 33,522 | 4,135,274 |
| Texas Instruments, Inc. | 13,032 | 1,884,297 |
| | | 21,860,774 |
| |
| Software & Services 2.7% |
| Accenture plc, Class A | 15,494 | 3,360,804 |
| Citrix Systems, Inc. | 12,778 | 1,447,364 |
| Cognizant Technology Solutions Corp., Class A | 23,111 | 1,650,588 |
| Fortinet, Inc. * | 10,289 | 1,135,597 |
| International Business Machines Corp. | 27,300 | 3,048,318 |
| Microsoft Corp. | 20,243 | 4,098,600 |
| Oracle Corp. | 16,794 | 942,311 |
| | | 15,683,582 |
| |
| Technology Hardware & Equipment 3.1% |
| Apple Inc. | 66,272 | 7,214,370 |
| HP, Inc. | 21,856 | 392,534 |
Schwab Active Equity Funds | Annual Report
Schwab Dividend Equity Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Jabil, Inc. | 179,696 | 5,955,125 |
| Samsung Electronics Co., Ltd. | 88,564 | 4,451,723 |
| | | 18,013,752 |
| |
| Telecommunication Services 4.7% |
| AT&T, Inc. | 350,657 | 9,474,752 |
| Verizon Communications, Inc. | 308,741 | 17,595,150 |
| | | 27,069,902 |
| |
| Transportation 1.9% |
| Ryder System, Inc. | 79,903 | 3,936,022 |
| Schneider National, Inc., Class B | 157,872 | 3,482,656 |
| Southwest Airlines Co. | 24,764 | 978,921 |
| Union Pacific Corp. | 10,400 | 1,842,776 |
| Werner Enterprises, Inc. | 13,566 | 515,779 |
| | | 10,756,154 |
| |
| Utilities 6.5% |
| American Water Works Co., Inc. | 9,470 | 1,425,330 |
| Exelon Corp. | 260,358 | 10,385,681 |
| IDACORP, Inc. | 30,380 | 2,665,237 |
| NextEra Energy, Inc. | 43,300 | 3,169,993 |
| NRG Energy, Inc. | 135,878 | 4,296,462 |
| Security | Number
of Shares | Value ($) |
| OGE Energy Corp. | 202,852 | 6,241,756 |
| Portland General Electric Co. | 96,059 | 3,775,119 |
| UGI Corp. | 115,893 | 3,747,980 |
| Vistra Corp. | 96,230 | 1,671,515 |
| | | 37,379,073 |
| Total Common Stock |
| (Cost $542,408,082) | | 574,114,939 |
Security
Rate, Maturity Date | Face Amount
Local Currency | Value ($) |
| Short-Term Investment 0.4% of net assets |
| |
| Time Deposit 0.4% |
| JPMorgan Chase Bank |
| 0.01%, 11/02/20 (a) | 2,049,286 | 2,049,286 |
| Total Short-Term Investment |
| (Cost $2,049,286) | | 2,049,286 |
| * | Non-income producing security. |
| (a) | The rate shown is the current daily overnight rate. |
| | |
| REIT — | Real Estate Investment Trust |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 (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 | |
| Assets | | | | | |
| Common Stock1 | $283,934,834 | $— | $— | $283,934,834 | |
| Banks | 37,136,122 | 3,411,388 | — | 40,547,510 | |
| Capital Goods | 48,476,867 | 1,093,433 | — | 49,570,300 | |
| Diversified Financials | 40,758,817 | 1,020,994 | — | 41,779,811 | |
| Food & Staples Retailing | 6,731,739 | 2,038,582 | — | 8,770,321 | |
| Materials | 36,187,373 | 5,137,017 | — | 41,324,390 | |
| Media & Entertainment | 16,197,372 | 2,811,581 | — | 19,008,953 | |
| Pharmaceuticals, Biotechnology & Life Sciences | 33,459,787 | 10,787,865 | — | 44,247,652 | |
| Real Estate | 26,487,306 | 430,110 | — | 26,917,416 | |
| Technology Hardware & Equipment | 13,562,029 | 4,451,723 | — | 18,013,752 | |
| Short-Term Investment1 | — | 2,049,286 | — | 2,049,286 | |
| Total | $542,932,246 | $33,231,979 | $— | $576,164,225 | |
| 1 | As categorized in Portfolio Holdings. |
Schwab Active Equity Funds | Annual Report
Schwab Dividend Equity Fund
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in unaffiliated issuers, at value (cost $544,457,368) | | $576,164,225 |
| Receivables: | | |
| Dividends | | 1,149,503 |
| Foreign tax reclaims | | 137,095 |
| Fund shares sold | | 90,749 |
| Prepaid expenses | + | 16,330 |
| Total assets | | 577,557,902 |
| Liabilities |
| Payables: | | |
| Investment adviser and administrator fees | | 309,324 |
| Shareholder service fees | | 126,686 |
| Fund shares redeemed | | 300,919 |
| Accrued expenses | + | 119,585 |
| Total liabilities | | 856,514 |
| Net Assets |
| Total assets | | 577,557,902 |
| Total liabilities | – | 856,514 |
| Net assets | | $576,701,388 |
| Net Assets by Source | | |
| Capital received from investors | | 572,705,412 |
| Total distributable earnings | | 3,995,976 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $576,701,388 | | 47,518,830 | | $12.14 |
| | | | | |
Schwab Active Equity Funds | Annual Report
Schwab Dividend Equity Fund
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends (net of foreign withholding tax of $123,534) | | $21,051,847 |
| Interest | | 10,512 |
| Securities on loan, net | + | 26,772 |
| Total investment income | | 21,089,131 |
| Expenses |
| Investment adviser and administrator fees | | 4,297,978 |
| Shareholder service fees | | 1,658,499 |
| Portfolio accounting fees | | 87,228 |
| Shareholder reports | | 37,827 |
| Professional fees | | 37,108 |
| Registration fees | | 28,948 |
| Custodian fees | | 26,186 |
| Transfer agent fees | | 16,855 |
| Independent trustees’ fees | | 10,951 |
| Other expenses | + | 13,359 |
| Total expenses | | 6,214,939 |
| Expense reduction by CSIM and its affiliates | – | 44,623 |
| Net expenses | – | 6,170,316 |
| Net investment income | | 14,918,815 |
| Realized and Unrealized Gains (Losses) |
| Net realized losses on investments | | (28,811,207) |
| Net realized gains on futures contracts | | 103,224 |
| Net realized losses on foreign currency transactions | + | (37,666) |
| Net realized losses | | (28,745,649) |
| Net change in unrealized appreciation (depreciation) on investments | | (91,572,168) |
| Net change in unrealized appreciation (depreciation) on foreign currency translations | + | 8,729 |
| Net change in unrealized appreciation (depreciation) | + | (91,563,439) |
| Net realized and unrealized losses | | (120,309,088) |
| Decrease in net assets resulting from operations | | ($105,390,273) |
Schwab Active Equity Funds | Annual Report
Schwab Dividend Equity Fund
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $14,918,815 | $14,944,406 |
| Net realized gains (losses) | | (28,745,649) | 43,656,520 |
| Net change in unrealized appreciation (depreciation) | + | (91,563,439) | 7,941,778 |
| Increase (decrease) in net assets from operations | | (105,390,273) | 66,542,704 |
| Distributions to Shareholders | |
| Total distributions | | ($57,745,153) | ($116,674,245) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 3,025,001 | $39,046,505 | 4,035,151 | $55,294,907 |
| Shares reinvested | | 3,317,070 | 46,974,063 | 5,687,633 | 76,661,106 |
| Shares redeemed | + | (15,016,968) | (193,138,459) | (34,473,540) | (483,993,577) |
| Net transactions in fund shares | | (8,674,897) | ($107,117,891) | (24,750,756) | ($352,037,564) |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 56,193,727 | $846,954,705 | 80,944,483 | $1,249,123,810 |
| Total decrease | + | (8,674,897) | (270,253,317) | (24,750,756) | (402,169,105) |
| End of period | | 47,518,830 | $576,701,388 | 56,193,727 | $846,954,705 |
Schwab Active Equity Funds | Annual Report
Schwab Large-Cap Growth Fund
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $18.07 | $18.04 | $18.65 | $15.20 | $17.68 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.00 2 | 0.06 | 0.06 | 0.08 | 0.20 | |
| Net realized and unrealized gains (losses) | 3.76 | 1.79 | 0.75 | 4.04 | (0.12) | |
| Total from investment operations | 3.76 | 1.85 | 0.81 | 4.12 | 0.08 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.03) | (0.07) | (0.07) | (0.17) | (0.20) | |
| Distributions from net realized gains | (0.95) | (1.75) | (1.35) | (0.50) | (2.36) | |
| Total distributions | (0.98) | (1.82) | (1.42) | (0.67) | (2.56) | |
| Net asset value at end of period | $20.85 | $18.07 | $18.04 | $18.65 | $15.20 | |
| Total return | 21.60% | 12.18% | 4.46% | 28.10% | 0.54% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 0.99% | 0.99% | 0.99% | 0.99% | 1.00% 3 | |
| Gross operating expenses | 1.02% | 1.03% | 1.02% | 1.04% | 1.04% | |
| Net investment income (loss) | 0.01% | 0.34% | 0.30% | 0.48% | 1.32% | |
| Portfolio turnover rate | 65% | 67% | 88% | 81% | 84% | |
| Net assets, end of period (x 1,000,000) | $210 | $181 | $243 | $257 | $219 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Per-share amount was less than $0.005.
3
The ratio of net operating expenses would have been 0.99%, if certain non-routine expenses had not been incurred.
Schwab Active Equity Funds | Annual Report
Schwab Large-Cap Growth Fund
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Common Stock 99.0% of net assets |
| |
| Automobiles & Components 1.1% |
| Tesla, Inc. * | 6,070 | 2,355,403 |
| |
| Capital Goods 2.5% |
| Illinois Tool Works, Inc. | 6,634 | 1,299,468 |
| Lockheed Martin Corp. | 5,033 | 1,762,204 |
| Masco Corp. | 27,534 | 1,475,823 |
| Rexnord Corp. | 21,703 | 696,232 |
| | | 5,233,727 |
| |
| Commercial & Professional Services 1.0% |
| Cintas Corp. | 2,808 | 883,256 |
| CoreLogic, Inc. | 15,404 | 1,185,030 |
| | | 2,068,286 |
| |
| Consumer Durables & Apparel 2.7% |
| Lennar Corp., Class A | 5,558 | 390,338 |
| NIKE, Inc., Class B | 11,126 | 1,336,010 |
| PulteGroup, Inc. | 44,796 | 1,825,885 |
| Sony Corp. ADR | 14,759 | 1,234,738 |
| YETI Holdings, Inc. * | 17,382 | 860,062 |
| | | 5,647,033 |
| |
| Consumer Services 1.2% |
| Domino's Pizza, Inc. | 3,231 | 1,222,352 |
| Hilton Worldwide Holdings, Inc. | 5,334 | 468,378 |
| Papa John's International, Inc. | 11,621 | 890,169 |
| | | 2,580,899 |
| |
| Diversified Financials 1.6% |
| MSCI, Inc. | 4,615 | 1,614,512 |
| S&P Global, Inc. | 2,791 | 900,739 |
| T. Rowe Price Group, Inc. | 6,573 | 832,536 |
| | | 3,347,787 |
| |
| Food & Staples Retailing 0.8% |
| The Kroger Co. | 19,722 | 635,246 |
| Walmart, Inc. | 7,871 | 1,092,101 |
| | | 1,727,347 |
| |
| Food, Beverage & Tobacco 2.7% |
| Flowers Foods, Inc. | 41,556 | 979,890 |
| General Mills, Inc. | 16,595 | 981,096 |
| Monster Beverage Corp. * | 21,442 | 1,641,814 |
| Nestle S.A. ADR | 5,748 | 645,328 |
| PepsiCo, Inc. | 11,061 | 1,474,321 |
| | | 5,722,449 |
| |
| Security | Number
of Shares | Value ($) |
| Health Care Equipment & Services 5.6% |
| Abbott Laboratories | 2,974 | 312,597 |
| Cardinal Health, Inc. | 15,275 | 699,442 |
| Hologic, Inc. * | 27,176 | 1,870,252 |
| IDEXX Laboratories, Inc. * | 3,674 | 1,560,789 |
| McKesson Corp. | 5,533 | 816,062 |
| ResMed, Inc. | 6,270 | 1,203,464 |
| UnitedHealth Group, Inc. | 9,246 | 2,821,325 |
| Veeva Systems, Inc., Class A * | 3,695 | 997,835 |
| West Pharmaceutical Services, Inc. | 5,002 | 1,360,894 |
| | | 11,642,660 |
| |
| Household & Personal Products 0.2% |
| Kimberly-Clark Corp. | 2,926 | 387,958 |
| |
| Materials 1.2% |
| Berry Global Group, Inc. * | 8,725 | 406,847 |
| RPM International, Inc. | 2,576 | 218,110 |
| The Sherwin-Williams Co. | 2,787 | 1,917,400 |
| | | 2,542,357 |
| |
| Media & Entertainment 12.9% |
| Activision Blizzard, Inc. | 6,390 | 483,915 |
| Alphabet, Inc., Class A * | 6,012 | 9,716,053 |
| Altice USA, Inc., Class A * | 23,756 | 640,224 |
| Charter Communications, Inc., Class A * | 2,290 | 1,382,748 |
| Electronic Arts, Inc. * | 2,127 | 254,879 |
| Facebook, Inc., Class A * | 34,476 | 9,070,980 |
| Netflix, Inc. * | 3,915 | 1,862,522 |
| Nintendo Co., Ltd. ADR | 22,779 | 1,542,822 |
| Take-Two Interactive Software, Inc. * | 4,309 | 667,550 |
| Tencent Holdings Ltd. ADR | 17,936 | 1,369,234 |
| | | 26,990,927 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 7.1% |
| Alexion Pharmaceuticals, Inc. * | 6,291 | 724,346 |
| Amgen, Inc. | 5,988 | 1,299,037 |
| Avantor, Inc. * | 46,783 | 1,088,640 |
| Charles River Laboratories International, Inc. * | 5,534 | 1,260,092 |
| Emergent BioSolutions, Inc. * | 6,650 | 598,300 |
| Horizon Therapeutics plc * | 7,540 | 564,972 |
| Jazz Pharmaceuticals plc * | 3,627 | 522,651 |
| Johnson & Johnson | 2,957 | 405,434 |
| Medpace Holdings, Inc. * | 12,801 | 1,420,143 |
| Novartis AG ADR | 6,134 | 478,943 |
| Novo Nordisk A/S ADR | 19,292 | 1,232,566 |
| Regeneron Pharmaceuticals, Inc. * | 1,809 | 983,300 |
| Roche Holding AG ADR | 53,720 | 2,148,263 |
| Vertex Pharmaceuticals, Inc. * | 9,890 | 2,060,680 |
| | | 14,787,367 |
| |
| Real Estate 1.5% |
| American Tower Corp. | 7,178 | 1,648,428 |
| CyrusOne, Inc. | 7,369 | 523,567 |
Schwab Active Equity Funds | Annual Report
Schwab Large-Cap Growth Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Prologis, Inc. | 3,444 | 341,645 |
| SBA Communications Corp. | 2,199 | 638,524 |
| | | 3,152,164 |
| |
| Retailing 12.1% |
| Amazon.com, Inc. * | 6,071 | 18,432,467 |
| Best Buy Co., Inc. | 11,741 | 1,309,709 |
| eBay, Inc. | 18,204 | 867,056 |
| Lowe's Cos., Inc. | 13,279 | 2,099,410 |
| The Home Depot, Inc. | 10,179 | 2,714,841 |
| | | 25,423,483 |
| |
| Semiconductors & Semiconductor Equipment 5.9% |
| Advanced Micro Devices, Inc. * | 25,716 | 1,936,158 |
| Broadcom, Inc. | 3,554 | 1,242,585 |
| KLA Corp. | 6,411 | 1,264,121 |
| Monolithic Power Systems, Inc. | 3,607 | 1,152,797 |
| NVIDIA Corp. | 9,468 | 4,746,876 |
| QUALCOMM, Inc. | 13,424 | 1,655,985 |
| Teradyne, Inc. | 5,002 | 439,426 |
| | | 12,437,948 |
| |
| Software & Services 25.8% |
| Accenture plc, Class A | 9,250 | 2,006,417 |
| Adobe, Inc. * | 10,418 | 4,657,888 |
| Autodesk, Inc. * | 3,923 | 924,023 |
| Booz Allen Hamilton Holding Corp. | 16,171 | 1,269,424 |
| Cadence Design Systems, Inc. * | 26,687 | 2,918,757 |
| Citrix Systems, Inc. | 8,493 | 962,002 |
| DocuSign, Inc. * | 5,576 | 1,127,746 |
| Fair Isaac Corp. * | 1,014 | 396,930 |
| Fortinet, Inc. * | 15,443 | 1,704,444 |
| GoDaddy, Inc., Class A * | 19,381 | 1,371,012 |
| Intuit, Inc. | 4,891 | 1,539,100 |
| Manhattan Associates, Inc. * | 6,539 | 559,085 |
| Mastercard, Inc., Class A | 15,634 | 4,512,598 |
| Microsoft Corp. | 99,364 | 20,118,229 |
| Oracle Corp. | 5,733 | 321,679 |
| PayPal Holdings, Inc. * | 9,350 | 1,740,315 |
| Science Applications International Corp. | 3,523 | 269,052 |
| ServiceNow, Inc. * | 3,337 | 1,660,391 |
| SS&C Technologies Holdings, Inc. | 2,804 | 166,053 |
| SVMK, Inc. * | 28,496 | 596,421 |
| Synopsys, Inc. * | 8,525 | 1,823,156 |
| VeriSign, Inc. * | 1,921 | 366,335 |
| Visa, Inc., Class A | 17,850 | 3,243,523 |
| | | 54,254,580 |
| |
| Security | Number
of Shares | Value ($) |
| Technology Hardware & Equipment 11.5% |
| Apple Inc. | 221,828 | 24,148,196 |
| |
| Telecommunication Services 0.3% |
| Verizon Communications, Inc. | 10,954 | 624,268 |
| |
| Transportation 1.3% |
| JB Hunt Transport Services, Inc. | 3,177 | 386,768 |
| Knight-Swift Transportation Holdings, Inc. | 11,187 | 424,994 |
| Union Pacific Corp. | 6,038 | 1,069,873 |
| Werner Enterprises, Inc. | 23,738 | 902,519 |
| | | 2,784,154 |
| Total Common Stock |
| (Cost $116,887,594) | | 207,858,993 |
Security
Rate, Maturity Date | Face
Amount ($) | Value ($) |
| Short-Term Investment 0.9% of net assets |
| |
| Time Deposit 0.9% |
| Australia & New Zealand Banking Group Ltd. |
| 0.01%, 11/02/20 (a) | 1,958,394 | 1,958,394 |
| Total Short-Term Investment |
| (Cost $1,958,394) | | 1,958,394 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | | | |
| Long | |
| S&P 500 Index, e-mini, expires 12/18/20 | 12 | 1,958,820 | (75,079) |
| * | Non-income producing security. |
| (a) | The rate shown is the current daily overnight rate. |
| | |
| ADR — | American Depositary Receipt |
Schwab Active Equity Funds | Annual Report
Schwab Large-Cap Growth Fund
Portfolio Holdings as of October 31, 2020 (continued)
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 (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 | |
| Assets | | | | | |
| Common Stock1 | $207,858,993 | $— | $— | $207,858,993 | |
| Short-Term Investment1 | — | 1,958,394 | — | 1,958,394 | |
| Liabilities | | | | | |
| Futures Contracts2 | (75,079) | — | — | (75,079) | |
| Total | $207,783,914 | $1,958,394 | $— | $209,742,308 | |
| 1 | As categorized in Portfolio Holdings. |
| 2 | Futures contracts are valued at unrealized appreciation or depreciation. |
Schwab Active Equity Funds | Annual Report
Schwab Large-Cap Growth Fund
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in unaffiliated issuers, at value (cost $118,845,988) | | $209,817,387 |
| Deposit with broker for futures contracts | | 216,000 |
| Receivables: | | |
| Fund shares sold | | 274,422 |
| Dividends | | 40,945 |
| Foreign tax reclaims | | 4,379 |
| Prepaid expenses | + | 16,779 |
| Total assets | | 210,369,912 |
| Liabilities |
| Payables: | | |
| Investment adviser and administrator fees | | 138,329 |
| Shareholder service fees | | 45,241 |
| Fund shares redeemed | | 74,964 |
| Variation margin on futures contracts | | 22,560 |
| Accrued expenses | + | 55,806 |
| Total liabilities | | 336,900 |
| Net Assets |
| Total assets | | 210,369,912 |
| Total liabilities | – | 336,900 |
| Net assets | | $210,033,012 |
| Net Assets by Source | | |
| Capital received from investors | | 116,703,274 |
| Total distributable earnings | | 93,329,738 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $210,033,012 | | 10,071,245 | | $20.85 |
| | | | | |
Schwab Active Equity Funds | Annual Report
Schwab Large-Cap Growth Fund
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends (net of foreign withholding tax of $26,198) | | $1,914,036 |
| Interest | | 1,419 |
| Securities on loan, net | + | 6,093 |
| Total investment income | | 1,921,548 |
| Expenses |
| Investment adviser and administrator fees | | 1,390,170 |
| Shareholder service fees | | 456,926 |
| Professional fees | | 33,642 |
| Registration fees | | 24,674 |
| Portfolio accounting fees | | 24,181 |
| Independent trustees’ fees | | 8,610 |
| Shareholder reports | | 7,392 |
| Custodian fees | | 7,064 |
| Transfer agent fees | | 6,708 |
| Other expenses | + | 5,180 |
| Total expenses | | 1,964,547 |
| Expense reduction by CSIM and its affiliates | – | 52,937 |
| Net expenses | – | 1,911,610 |
| Net investment income | | 9,938 |
| Realized and Unrealized Gains (Losses) |
| Net realized gains on investments | | 2,261,164 |
| Net realized gains on futures contracts | + | 397,107 |
| Net realized gains | | 2,658,271 |
| Net change in unrealized appreciation (depreciation) on investments | | 34,128,924 |
| Net change in unrealized appreciation (depreciation) on futures contracts | + | (75,079) |
| Net change in unrealized appreciation (depreciation) | + | 34,053,845 |
| Net realized and unrealized gains | | 36,712,116 |
| Increase in net assets resulting from operations | | $36,722,054 |
Schwab Active Equity Funds | Annual Report
Schwab Large-Cap Growth Fund
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $9,938 | $658,429 |
| Net realized gains | | 2,658,271 | 9,266,572 |
| Net change in unrealized appreciation (depreciation) | + | 34,053,845 | 8,686,239 |
| Increase in net assets from operations | | 36,722,054 | 18,611,240 |
| Distributions to Shareholders | |
| Total distributions | | ($9,705,767) | ($24,256,179) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 2,205,536 | $41,760,250 | 1,083,640 | $17,768,963 |
| Shares reinvested | | 459,787 | 8,322,151 | 1,033,263 | 15,729,023 |
| Shares redeemed | + | (2,598,754) | (47,874,418) | (5,570,871) | (89,814,641) |
| Net transactions in fund shares | | 66,569 | $2,207,983 | (3,453,968) | ($56,316,655) |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 10,004,676 | $180,808,742 | 13,458,644 | $242,770,336 |
| Total increase or decrease | + | 66,569 | 29,224,270 | (3,453,968) | (61,961,594) |
| End of period | | 10,071,245 | $210,033,012 | 10,004,676 | $180,808,742 |
Schwab Active Equity Funds | Annual Report
Schwab Small-Cap Equity Fund
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $16.68 | $20.87 | $23.58 | $18.81 | $21.19 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.03 | 0.02 | 0.01 | (0.00) 2 | 0.07 | |
| Net realized and unrealized gains (losses) | (1.67) | (0.35) 3 | 0.32 | 4.86 | 0.12 | |
| Total from investment operations | (1.64) | (0.33) | 0.33 | 4.86 | 0.19 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.02) | (0.01) | — | (0.09) | (0.04) | |
| Distributions from net realized gains | — | (3.85) | (3.04) | — | (2.53) | |
| Total distributions | (0.02) | (3.86) | (3.04) | (0.09) | (2.57) | |
| Net asset value at end of period | $15.02 | $16.68 | $20.87 | $23.58 | $18.81 | |
| Total return | (9.86%) | 0.08% | 1.37% | 25.87% | 1.47% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 1.09% | 1.09% | 1.09% | 1.10% | 1.09% | |
| Gross operating expenses | 1.10% | 1.09% | 1.09% | 1.10% | 1.10% | |
| Net investment income (loss) | 0.17% | 0.09% | 0.06% | (0.01%) | 0.37% | |
| Portfolio turnover rate | 113% | 117% | 111% | 99% | 85% | |
| Net assets, end of period (x 1,000,000) | $491 | $579 | $573 | $645 | $571 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Per-share amount was less than $0.005.
3
The per share amount does not accord with the change in aggregate gains and losses in securities during the period because of the timing of sales and repurchases of fund shares in relation to fluctuating market values.
Schwab Active Equity Funds | Annual Report
Schwab Small-Cap Equity Fund
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Common Stock 99.7% of net assets |
| |
| Automobiles & Components 0.6% |
| American Axle & Manufacturing Holdings, Inc. * | 119,894 | 805,688 |
| The Goodyear Tire & Rubber Co. | 104,187 | 862,668 |
| Winnebago Industries, Inc. | 26,358 | 1,237,508 |
| | | 2,905,864 |
| |
| Banks 9.0% |
| Amalgamated Bank, Class A | 82,279 | 913,297 |
| Associated Banc-Corp. | 56,786 | 777,400 |
| BancorpSouth Bank | 47,996 | 1,123,586 |
| Bank of Marin Bancorp | 21,165 | 637,913 |
| Customers Bancorp, Inc. * | 88,260 | 1,219,753 |
| CVB Financial Corp. | 54,742 | 957,985 |
| Financial Institutions, Inc. | 96,231 | 1,706,176 |
| First BanCorp | 651,053 | 4,225,334 |
| Flagstar Bancorp, Inc. | 175,844 | 5,161,021 |
| Glacier Bancorp, Inc. | 67,517 | 2,417,109 |
| Hilltop Holdings, Inc. | 146,567 | 3,343,193 |
| Howard Bancorp, Inc. * | 15,154 | 153,510 |
| Independent Bank Corp., Michigan | 112,505 | 1,684,200 |
| International Bancshares Corp. | 115,312 | 3,191,836 |
| Metropolitan Bank Holding Corp. * | 7,301 | 218,665 |
| MGIC Investment Corp. | 180,800 | 1,818,848 |
| NMI Holdings, Inc., Class A * | 49,161 | 1,056,470 |
| Premier Financial Corp. | 43,502 | 782,601 |
| QCR Holdings, Inc. | 8,420 | 261,273 |
| Radian Group, Inc. | 185,840 | 3,335,828 |
| Republic Bancorp, Inc., Class A | 40,737 | 1,357,764 |
| ServisFirst Bancshares, Inc. | 12,069 | 445,346 |
| UMB Financial Corp. | 50,687 | 3,085,318 |
| Westamerica Bancorp | 51,318 | 2,687,524 |
| WSFS Financial Corp. | 48,426 | 1,534,620 |
| | | 44,096,570 |
| |
| Capital Goods 10.0% |
| Atkore International Group, Inc. * | 95,466 | 1,975,192 |
| Barnes Group, Inc. | 18,438 | 676,675 |
| Builders FirstSource, Inc. * | 35,011 | 1,060,833 |
| Comfort Systems USA, Inc. | 51,351 | 2,351,876 |
| Cornerstone Building Brands, Inc. * | 123,305 | 945,749 |
| Ducommun, Inc. * | 79,976 | 2,631,210 |
| EMCOR Group, Inc. | 45,807 | 3,123,579 |
| Evoqua Water Technologies Corp. * | 122,787 | 2,815,506 |
| Federal Signal Corp. | 99,618 | 2,857,044 |
| Foundation Building Materials, Inc. * | 38,521 | 560,866 |
| Generac Holdings, Inc. * | 10,367 | 2,178,625 |
| Gibraltar Industries, Inc. * | 12,058 | 692,732 |
| GMS, Inc. * | 55,914 | 1,263,656 |
| H&E Equipment Services, Inc. | 15,759 | 331,569 |
| IES Holdings, Inc. * | 24,201 | 772,496 |
| Masonite International Corp. * | 20,942 | 1,842,896 |
| MasTec, Inc. * | 5,627 | 279,324 |
| Moog, Inc., Class A | 44,033 | 2,747,219 |
| Mueller Industries, Inc. | 165,088 | 4,775,996 |
| Security | Number
of Shares | Value ($) |
| MYR Group, Inc. * | 39,106 | 1,671,782 |
| Northwest Pipe Co. * | 25,371 | 679,943 |
| Parsons Corp. * | 21,231 | 669,201 |
| Quanex Building Products Corp. | 23,029 | 419,128 |
| Rexnord Corp. | 117,868 | 3,781,205 |
| SiteOne Landscape Supply, Inc. * | 8,363 | 999,295 |
| SPX Corp. * | 99,303 | 4,209,454 |
| UFP Industries, Inc. | 31,192 | 1,556,793 |
| Vectrus, Inc. * | 27,765 | 1,097,273 |
| | | 48,967,117 |
| |
| Commercial & Professional Services 3.2% |
| ASGN, Inc. * | 32,677 | 2,178,902 |
| Huron Consulting Group, Inc. * | 34,688 | 1,313,288 |
| Interface, Inc. | 73,672 | 451,609 |
| Kforce, Inc. | 17,087 | 592,919 |
| Mastech Digital, Inc. * | 34,892 | 547,107 |
| Matthews International Corp., Class A | 73,055 | 1,594,791 |
| McGrath RentCorp | 85,117 | 4,858,478 |
| TriNet Group, Inc. * | 57,583 | 3,968,620 |
| | | 15,505,714 |
| |
| Consumer Durables & Apparel 5.4% |
| Crocs, Inc. * | 38,603 | 2,020,095 |
| Deckers Outdoor Corp. * | 14,479 | 3,668,544 |
| Hamilton Beach Brands Holding Co., Class A | 53,151 | 1,171,980 |
| Helen of Troy Ltd. * | 25,365 | 4,809,204 |
| Installed Building Products, Inc. * | 30,062 | 2,721,814 |
| Lakeland Industries, Inc. *(a) | 85,879 | 1,852,410 |
| Meritage Homes Corp. * | 9,642 | 839,722 |
| Nautilus, Inc. * | 29,872 | 647,924 |
| Rocky Brands, Inc. | 20,166 | 542,465 |
| Tempur Sealy International, Inc. * | 29,362 | 2,613,218 |
| TopBuild Corp. * | 10,810 | 1,656,200 |
| Universal Electronics, Inc. * | 23,425 | 868,131 |
| Vista Outdoor, Inc. * | 64,403 | 1,273,247 |
| YETI Holdings, Inc. * | 35,128 | 1,738,133 |
| | | 26,423,087 |
| |
| Consumer Services 3.2% |
| Bloomin' Brands, Inc. | 22,154 | 309,713 |
| Brinker International, Inc. | 35,544 | 1,547,586 |
| Carrols Restaurant Group, Inc. * | 26,806 | 156,815 |
| Del Taco Restaurants, Inc. * | 280,877 | 2,082,703 |
| Extended Stay America, Inc. | 51,796 | 587,885 |
| International Game Technology plc | 139,652 | 1,146,543 |
| Marriott Vacations Worldwide Corp. | 16,479 | 1,591,871 |
| Papa John's International, Inc. | 42,030 | 3,219,498 |
| Perdoceo Education Corp. * | 109,232 | 1,233,229 |
| PlayAGS, Inc. * | 174,338 | 470,713 |
| Red Rock Resorts, Inc., Class A | 17,535 | 335,269 |
| Scientific Games Corp., Class A * | 68,217 | 2,174,758 |
| Wyndham Destinations, Inc. | 31,687 | 1,033,947 |
| | | 15,890,530 |
| |
Schwab Active Equity Funds | Annual Report
Schwab Small-Cap Equity Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Diversified Financials 4.7% |
| Artisan Partners Asset Management, Inc., Class A | 28,249 | 1,131,655 |
| BGC Partners, Inc., Class A | 85,711 | 252,847 |
| Cohen & Steers, Inc. | 13,539 | 762,381 |
| Enova International, Inc. * | 143,291 | 2,199,517 |
| Federated Hermes, Inc. | 71,247 | 1,702,803 |
| Hannon Armstrong Sustainable Infrastructure Capital, Inc. | 65,657 | 2,747,745 |
| Navient Corp. | 84,510 | 676,925 |
| OneMain Holdings, Inc. | 83,524 | 2,914,152 |
| Oppenheimer Holdings, Inc., Class A | 115,675 | 2,898,816 |
| PRA Group, Inc. * | 15,344 | 523,691 |
| Regional Management Corp. * | 37,864 | 769,397 |
| Stifel Financial Corp. | 86,668 | 5,066,611 |
| Virtus Investment Partners, Inc. | 8,263 | 1,318,362 |
| | | 22,964,902 |
| |
| Energy 2.2% |
| Ardmore Shipping Corp. | 131,482 | 368,150 |
| Aspen Aerogels, Inc. * | 22,931 | 259,120 |
| Cimarex Energy Co. | 137,177 | 3,480,181 |
| DHT Holdings, Inc. | 402,196 | 1,934,563 |
| Dorian LPG Ltd. * | 116,127 | 952,241 |
| Renewable Energy Group, Inc. * | 41,228 | 2,325,259 |
| Teekay Corp. *(a) | 207,460 | 365,130 |
| Teekay Tankers Ltd., Class A * | 32,810 | 309,398 |
| World Fuel Services Corp. | 41,042 | 863,934 |
| | | 10,857,976 |
| |
| Food & Staples Retailing 0.8% |
| BJ's Wholesale Club Holdings, Inc. * | 15,125 | 579,136 |
| SpartanNash, Co. | 18,223 | 335,485 |
| Sprouts Farmers Market, Inc. * | 150,471 | 2,866,473 |
| United Natural Foods, Inc. * | 18,173 | 264,781 |
| | | 4,045,875 |
| |
| Food, Beverage & Tobacco 1.7% |
| B&G Foods, Inc. (a) | 19,217 | 510,404 |
| Coca-Cola Consolidated, Inc. | 14,701 | 3,365,794 |
| Darling Ingredients, Inc. * | 38,271 | 1,645,653 |
| National Beverage Corp. * | 20,386 | 1,596,020 |
| Seneca Foods Corp., Class A * | 8,855 | 326,307 |
| Vector Group Ltd. | 77,055 | 708,135 |
| | | 8,152,313 |
| |
| Health Care Equipment & Services 5.6% |
| Accuray, Inc. * | 74,543 | 216,920 |
| CONMED Corp. | 36,210 | 2,823,294 |
| Electromed, Inc. * | 77,737 | 645,994 |
| GenMark Diagnostics, Inc. * | 109,171 | 1,334,070 |
| Globus Medical, Inc., Class A * | 20,518 | 1,069,398 |
| Haemonetics Corp. * | 11,954 | 1,208,430 |
| Inovalon Holdings, Inc., Class A * | 55,085 | 1,046,064 |
| Integer Holdings Corp. * | 57,317 | 3,350,179 |
| Meridian Bioscience, Inc. * | 91,496 | 1,569,156 |
| Merit Medical Systems, Inc. * | 17,301 | 865,915 |
| National Research Corp. | 4,804 | 248,847 |
| Natus Medical, Inc. * | 75,251 | 1,370,321 |
| Nevro Corp. * | 3,170 | 472,996 |
| Novocure Ltd. * | 5,423 | 662,148 |
| Owens & Minor, Inc. | 12,437 | 312,417 |
| Quidel Corp. * | 13,355 | 3,583,013 |
| Security | Number
of Shares | Value ($) |
| R1 RCM, Inc. * | 17,198 | 308,188 |
| Repro-Med Systems, Inc. * | 76,876 | 424,355 |
| Retractable Technologies, Inc. *(a) | 145,768 | 1,069,937 |
| Tenet Healthcare Corp. * | 90,827 | 2,228,895 |
| Tivity Health, Inc. * | 46,037 | 633,009 |
| Utah Medical Products, Inc. | 7,950 | 659,850 |
| Zynex, Inc. * | 115,444 | 1,478,838 |
| | | 27,582,234 |
| |
| Household & Personal Products 0.6% |
| Central Garden & Pet Co. * | 18,707 | 728,825 |
| Lifevantage Corp. * | 28,746 | 317,643 |
| Medifast, Inc. | 8,526 | 1,197,818 |
| USANA Health Sciences, Inc. * | 11,319 | 856,282 |
| | | 3,100,568 |
| |
| Insurance 1.3% |
| American Equity Investment Life Holding Co. | 52,019 | 1,291,112 |
| American National Group, Inc. | 18,297 | 1,258,834 |
| Assured Guaranty Ltd. | 12,404 | 316,674 |
| Employers Holdings, Inc. | 18,086 | 578,933 |
| Global Indemnity Group LLC, Class A | 10,552 | 258,629 |
| Investors Title Co. | 1,114 | 148,741 |
| Mercury General Corp. | 30,798 | 1,253,787 |
| National Western Life Group, Inc., Class A | 6,826 | 1,157,894 |
| | | 6,264,604 |
| |
| Materials 4.0% |
| Boise Cascade Co. | 74,863 | 2,873,242 |
| Clearwater Paper Corp. * | 57,642 | 2,141,400 |
| Commercial Metals Co. | 50,455 | 1,041,896 |
| Compass Minerals International, Inc. | 50,204 | 3,031,317 |
| Hawkins, Inc. | 6,911 | 322,813 |
| Hecla Mining Co. | 408,329 | 1,870,147 |
| Koppers Holdings, Inc. * | 69,140 | 1,550,810 |
| Louisiana-Pacific Corp. | 16,805 | 480,287 |
| Minerals Technologies, Inc. | 20,230 | 1,106,379 |
| Ryerson Holding Corp. * | 32,865 | 258,647 |
| Tronox Holdings plc, Class A * | 534,653 | 5,223,560 |
| | | 19,900,498 |
| |
| Media & Entertainment 1.7% |
| Cars.com, Inc. * | 100,508 | 742,754 |
| Glu Mobile, Inc. * | 174,119 | 1,246,692 |
| Gray Television, Inc. * | 67,515 | 856,090 |
| Lions Gate Entertainment Corp., Class A * | 486,914 | 3,262,324 |
| QuinStreet, Inc. * | 24,190 | 387,161 |
| TrueCar, Inc. * | 27,505 | 119,922 |
| World Wrestling Entertainment, Inc., Class A | 52,190 | 1,897,628 |
| | | 8,512,571 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 15.2% |
| ACADIA Pharmaceuticals, Inc. * | 86,941 | 4,038,409 |
| Acceleron Pharma, Inc. * | 7,587 | 793,448 |
| Affimed N.V. * | 127,787 | 403,807 |
| Agenus, Inc. * | 61,421 | 226,643 |
| Amicus Therapeutics, Inc. * | 211,031 | 3,762,683 |
| Anika Therapeutics, Inc. * | 20,406 | 665,644 |
| Aquestive Therapeutics, Inc. *(a) | 129,345 | 626,030 |
| Ardelyx, Inc. * | 59,788 | 305,517 |
| Assembly Biosciences, Inc. * | 23,053 | 339,801 |
| BioDelivery Sciences International, Inc. * | 470,773 | 1,487,643 |
| CareDx, Inc. * | 49,355 | 2,420,863 |
Schwab Active Equity Funds | Annual Report
Schwab Small-Cap Equity Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Catalyst Pharmaceuticals, Inc. * | 270,011 | 801,933 |
| ChemoCentryx, Inc. * | 39,644 | 1,902,912 |
| Coherus Biosciences, Inc. * | 99,326 | 1,655,764 |
| Corcept Therapeutics, Inc. * | 86,337 | 1,448,735 |
| Cymabay Therapeutics, Inc. * | 97,141 | 808,213 |
| CytomX Therapeutics, Inc. * | 23,600 | 156,232 |
| Dicerna Pharmaceuticals, Inc. * | 87,848 | 1,843,929 |
| Emergent BioSolutions, Inc. * | 54,006 | 4,858,920 |
| FibroGen, Inc. * | 56,447 | 2,166,436 |
| Five Prime Therapeutics, Inc. * | 61,190 | 279,026 |
| Halozyme Therapeutics, Inc. * | 91,005 | 2,548,140 |
| Harpoon Therapeutics, Inc. * | 24,668 | 356,946 |
| Horizon Therapeutics plc * | 26,224 | 1,964,964 |
| Insmed, Inc. * | 63,238 | 2,083,060 |
| Intercept Pharmaceuticals, Inc. * | 21,364 | 593,706 |
| Ironwood Pharmaceuticals, Inc. * | 95,370 | 942,256 |
| Jounce Therapeutics, Inc. * | 195,200 | 1,624,064 |
| Karyopharm Therapeutics, Inc. * | 84,365 | 1,250,289 |
| La Jolla Pharmaceutical Co. *(a) | 140,978 | 479,325 |
| Ligand Pharmaceuticals, Inc. *(a) | 18,232 | 1,503,228 |
| Luminex Corp. | 28,006 | 617,252 |
| Medpace Holdings, Inc. * | 35,601 | 3,949,575 |
| MEI Pharma, Inc. * | 515,846 | 1,341,200 |
| Natera, Inc. * | 17,886 | 1,203,012 |
| Novavax, Inc. * | 24,956 | 2,014,199 |
| OPKO Health, Inc. * | 506,846 | 1,784,098 |
| Pacira BioSciences, Inc. * | 54,814 | 2,866,772 |
| Prestige Consumer Healthcare, Inc. * | 73,686 | 2,433,849 |
| PTC Therapeutics, Inc. * | 13,221 | 690,004 |
| Puma Biotechnology, Inc. * | 103,975 | 870,271 |
| Radius Health, Inc. * | 141,958 | 1,903,657 |
| Repligen Corp. * | 7,949 | 1,324,065 |
| Retrophin, Inc. * | 207,613 | 4,202,087 |
| Supernus Pharmaceuticals, Inc. * | 109,378 | 2,008,180 |
| Syneos Health, Inc. * | 18,645 | 989,677 |
| Veracyte, Inc. * | 18,259 | 632,857 |
| Vericel Corp. * | 52,748 | 977,420 |
| Xencor, Inc. * | 12,175 | 467,276 |
| | | 74,614,017 |
| |
| Real Estate 6.7% |
| Apple Hospitality REIT, Inc. | 13,369 | 132,353 |
| CareTrust REIT, Inc. | 68,632 | 1,173,607 |
| Chatham Lodging Trust | 100,253 | 736,860 |
| CorEnergy Infrastructure Trust, Inc. | 37,517 | 175,580 |
| CorePoint Lodging, Inc. | 95,889 | 458,349 |
| Corporate Office Properties Trust | 102,219 | 2,292,772 |
| Easterly Government Properties, Inc. | 49,191 | 1,028,092 |
| EastGroup Properties, Inc. | 42,405 | 5,643,257 |
| eXp World Holdings, Inc. * | 44,389 | 1,881,650 |
| First Industrial Realty Trust, Inc. | 36,260 | 1,443,511 |
| Getty Realty Corp. | 17,350 | 455,958 |
| Gladstone Land Corp. | 23,119 | 320,660 |
| Global Medical REIT, Inc. | 168,231 | 2,091,111 |
| Industrial Logistics Properties Trust | 45,268 | 868,240 |
| National Storage Affiliates Trust | 49,176 | 1,666,575 |
| New Senior Investment Group, Inc. | 130,511 | 510,298 |
| Office Properties Income Trust | 154,023 | 2,835,563 |
| Paramount Group, Inc. | 52,351 | 302,589 |
| Piedmont Office Realty Trust, Inc., Class A | 135,622 | 1,548,803 |
| PotlatchDeltic Corp. | 31,624 | 1,313,977 |
| QTS Realty Trust, Inc., Class A | 12,121 | 745,563 |
| Realogy Holdings Corp. * | 96,016 | 1,071,539 |
| Sabra Health Care REIT, Inc. | 157,959 | 2,078,740 |
| STAG Industrial, Inc. | 29,475 | 917,262 |
| Security | Number
of Shares | Value ($) |
| Sunstone Hotel Investors, Inc. | 143,987 | 1,068,384 |
| Urban Edge Properties | 45,418 | 426,929 |
| | | 33,188,222 |
| |
| Retailing 5.2% |
| 1-800-Flowers.com, Inc., Class A * | 86,145 | 1,708,255 |
| Aaron's Holdings Co., Inc. | 39,510 | 2,064,793 |
| At Home Group, Inc. * | 15,201 | 247,624 |
| AutoNation, Inc. * | 46,055 | 2,612,700 |
| Big Lots, Inc. | 35,381 | 1,684,136 |
| Camping World Holdings, Inc., Class A | 46,392 | 1,226,604 |
| CarParts.com, Inc. * | 66,470 | 843,504 |
| Group 1 Automotive, Inc. | 24,273 | 2,574,880 |
| Lithia Motors, Inc., Class A | 10,851 | 2,491,064 |
| MarineMax, Inc. * | 62,656 | 1,878,427 |
| Murphy USA, Inc. * | 16,479 | 2,015,217 |
| PetMed Express, Inc. | 22,434 | 663,598 |
| Rent-A-Center, Inc. | 46,430 | 1,434,687 |
| RH * | 6,550 | 2,195,756 |
| Sportsman's Warehouse Holdings, Inc. * | 77,932 | 1,014,675 |
| Stamps.com, Inc. * | 3,861 | 861,930 |
| | | 25,517,850 |
| |
| Semiconductors & Semiconductor Equipment 4.0% |
| Amkor Technology, Inc. * | 107,729 | 1,276,589 |
| Axcelis Technologies, Inc. * | 21,139 | 466,538 |
| Cirrus Logic, Inc. * | 84,982 | 5,852,710 |
| FormFactor, Inc. * | 79,142 | 2,243,676 |
| Inphi Corp. * | 20,080 | 2,806,381 |
| MACOM Technology Solutions Holdings, Inc. * | 40,035 | 1,461,277 |
| NeoPhotonics Corp. * | 243,424 | 1,657,717 |
| Synaptics, Inc. * | 48,928 | 3,751,310 |
| | | 19,516,198 |
| |
| Software & Services 7.1% |
| A10 Networks, Inc. * | 225,371 | 1,519,001 |
| Agilysys, Inc. * | 101,969 | 2,761,320 |
| Alarm.com Holdings, Inc. * | 11,215 | 654,171 |
| Avaya Holdings Corp. * | 39,963 | 687,364 |
| Box, Inc., Class A * | 277,556 | 4,302,118 |
| CACI International, Inc., Class A * | 10,840 | 2,260,465 |
| ChannelAdvisor Corp. * | 155,500 | 2,519,100 |
| Domo, Inc., Class B * | 20,608 | 654,716 |
| eGain Corp. * | 84,602 | 1,340,942 |
| EVERTEC, Inc. | 71,178 | 2,368,804 |
| Mimecast Ltd. * | 21,901 | 836,837 |
| Mitek Systems, Inc. * | 393,653 | 4,900,980 |
| Perspecta, Inc. | 48,739 | 873,890 |
| Progress Software Corp. | 54,596 | 1,985,656 |
| Qualys, Inc. * | 24,722 | 2,171,828 |
| Sykes Enterprises, Inc. * | 64,459 | 2,207,076 |
| Synchronoss Technologies, Inc. * | 144,079 | 399,099 |
| Telenav, Inc. * | 240,827 | 980,166 |
| Tenable Holdings, Inc. * | 37,879 | 1,292,053 |
| The Hackett Group, Inc. | 20,262 | 261,785 |
| | | 34,977,371 |
| |
| Technology Hardware & Equipment 3.3% |
| Avid Technology, Inc. * | 99,260 | 925,103 |
| Badger Meter, Inc. | 13,773 | 1,010,112 |
| Calix, Inc. * | 140,277 | 3,283,885 |
| Ciena Corp. * | 116,395 | 4,584,799 |
| Intellicheck, Inc. *(a) | 63,083 | 456,721 |
| Lumentum Holdings, Inc. * | 9,284 | 767,694 |
Schwab Active Equity Funds | Annual Report
Schwab Small-Cap Equity Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Luna Innovations, Inc. * | 42,026 | 265,184 |
| OSI Systems, Inc. * | 54,576 | 4,211,084 |
| Viavi Solutions, Inc. * | 66,153 | 816,989 |
| | | 16,321,571 |
| |
| Telecommunication Services 0.3% |
| Liberty Latin America Ltd., Class A * | 46,144 | 452,211 |
| Shenandoah Telecommunications Co. | 9,956 | 434,281 |
| Spok Holdings, Inc. | 21,360 | 193,949 |
| Telephone & Data Systems, Inc. | 38,837 | 660,229 |
| | | 1,740,670 |
| |
| Transportation 1.3% |
| Air Transport Services Group, Inc. * | 52,260 | 1,465,370 |
| ArcBest Corp. | 4,601 | 140,423 |
| Atlas Air Worldwide Holdings, Inc. * | 26,106 | 1,544,431 |
| Costamare, Inc. | 399,473 | 2,273,001 |
| Daseke, Inc. * | 42,073 | 276,420 |
| Grupo Aeroportuario del Centro Norte S.A.B. de C.V. ADR * | 8,184 | 296,097 |
| SkyWest, Inc. | 8,114 | 235,549 |
| US Xpress Enterprises, Inc., Class A * | 30,679 | 221,196 |
| | | 6,452,487 |
| |
| Utilities 2.6% |
| Atlantic Power Corp. * | 555,593 | 1,105,630 |
| Avista Corp. | 32,945 | 1,094,433 |
| Black Hills Corp. | 10,321 | 584,788 |
| Clearway Energy, Inc., Class A | 161,632 | 4,236,375 |
| Consolidated Water Co., Ltd. | 52,800 | 531,168 |
| NorthWestern Corp. | 11,944 | 622,641 |
| Ormat Technologies, Inc. | 15,336 | 1,086,862 |
| Portland General Electric Co. | 27,346 | 1,074,698 |
| Spark Energy, Inc., Class A | 244,412 | 2,229,037 |
| | | 12,565,632 |
| Total Common Stock |
| (Cost $463,461,601) | | 490,064,441 |
| Security | Number
of Shares | Value ($) |
| Other Investment Company 1.0% of net assets |
| |
| Securities Lending Collateral 1.0% |
| Wells Fargo Government Money Market Fund, Select Class 0.04% (b) | 4,699,616 | 4,699,616 |
| Total Other Investment Company |
| (Cost $4,699,616) | | 4,699,616 |
Security
Rate, Maturity Date | Face
Amount ($) | Value ($) |
| Short-Term Investment 0.3% of net assets |
| |
| Time Deposits 0.3% |
| JPMorgan Chase Bank |
| 0.01%, 11/02/20 (c) | 1,441,419 | 1,441,419 |
| Total Short-Term Investment |
| (Cost $1,441,419) | | 1,441,419 |
| * | Non-income producing security. |
| (a) | All or a portion of this security is on loan. Securities on loan were valued at $4,391,370. |
| (b) | The rate shown is the 7-day yield. |
| (c) | The rate shown is the current daily overnight rate. |
| | |
| ADR — | American Depositary Receipt |
| REIT — | Real Estate Investment Trust |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 (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 | |
| Assets | | | | | |
| Common Stock1 | $490,064,441 | $— | $— | $490,064,441 | |
| Other Investment Company1 | 4,699,616 | — | — | 4,699,616 | |
| Short-Term Investment1 | — | 1,441,419 | — | 1,441,419 | |
| Total | $494,764,057 | $1,441,419 | $— | $496,205,476 | |
| 1 | As categorized in Portfolio Holdings. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Active Equity Funds | Annual Report
Schwab Small-Cap Equity Fund
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in unaffiliated issuers, at value (cost $464,903,020) including securities on loan of $4,391,370 | | $491,505,860 |
| Collateral invested for securities on loan, at value (cost $4,699,616) | | 4,699,616 |
| Receivables: | | |
| Investments sold | | 1,103,163 |
| Dividends | | 312,892 |
| Fund shares sold | | 188,453 |
| Income from securities on loan | | 5,742 |
| Prepaid expenses | + | 13,225 |
| Total assets | | 497,828,951 |
| Liabilities |
| Collateral held for securities on loan | | 4,699,616 |
| Payables: | | |
| Investments bought | | 853,748 |
| Investment adviser and administrator fees | | 366,449 |
| Shareholder service fees | | 109,891 |
| Fund shares redeemed | | 230,626 |
| Accrued expenses | + | 90,701 |
| Total liabilities | | 6,351,031 |
| Net Assets |
| Total assets | | 497,828,951 |
| Total liabilities | – | 6,351,031 |
| Net assets | | $491,477,920 |
| Net Assets by Source | | |
| Capital received from investors | | 555,166,855 |
| Total distributable loss | | (63,688,935) |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $491,477,920 | | 32,728,480 | | $15.02 |
| | | | | |
Schwab Active Equity Funds | Annual Report
Schwab Small-Cap Equity Fund
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends (net of foreign withholding tax of $26,395) | | $6,247,102 |
| Interest | | 5,581 |
| Securities on loan, net | + | 73,783 |
| Total investment income | | 6,326,466 |
| Expenses |
| Investment adviser and administrator fees | | 4,069,530 |
| Shareholder service fees | | 1,225,007 |
| Portfolio accounting fees | | 55,376 |
| Professional fees | | 36,211 |
| Registration fees | | 29,805 |
| Shareholder reports | | 26,484 |
| Custodian fees | | 18,987 |
| Transfer agent fees | | 11,177 |
| Independent trustees’ fees | | 10,047 |
| Other expenses | + | 10,960 |
| Total expenses | | 5,493,584 |
| Expense reduction by CSIM and its affiliates | – | 11,177 |
| Net expenses | – | 5,482,407 |
| Net investment income | | 844,059 |
| Realized and Unrealized Gains (Losses) |
| Net realized losses on investments | | (49,609,654) |
| Net realized gains on futures contracts | + | 668,950 |
| Net realized losses | | (48,940,704) |
| Net change in unrealized appreciation (depreciation) on investments | + | (5,706,272) |
| Net realized and unrealized losses | | (54,646,976) |
| Decrease in net assets resulting from operations | | ($53,802,917) |
Schwab Active Equity Funds | Annual Report
Schwab Small-Cap Equity Fund
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $844,059 | $521,857 |
| Net realized losses | | (48,940,704) | (40,911,996) |
| Net change in unrealized appreciation (depreciation) | + | (5,706,272) | 43,145,274 |
| Increase (decrease) in net assets from operations | | (53,802,917) | 2,755,135 |
| Distributions to Shareholders | |
| Total distributions | | ($635,564) | ($105,061,725) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 5,747,653 | $80,000,238 | 8,709,089 | $139,266,609 |
| Shares reinvested | | 28,552 | 496,524 | 5,236,122 | 80,112,670 |
| Shares redeemed | + | (7,764,392) | (113,723,120) | (6,703,704) | (111,336,125) |
| Net transactions in fund shares | | (1,988,187) | ($33,226,358) | 7,241,507 | $108,043,154 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 34,716,667 | $579,142,759 | 27,475,160 | $573,406,195 |
| Total increase or decrease | + | (1,988,187) | (87,664,839) | 7,241,507 | 5,736,564 |
| End of period | | 32,728,480 | $491,477,920 | 34,716,667 | $579,142,759 |
Schwab Active Equity Funds | Annual Report
Schwab Hedged Equity Fund
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $15.49 | $16.89 | $17.65 | $16.25 | $17.46 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | (0.01) | 0.07 | 0.08 | 0.03 | 0.03 | |
| Net realized and unrealized gains (losses) | (1.42) | (0.34) | 0.24 | 1.85 | 0.49 | |
| Total from investment operations | (1.43) | (0.27) | 0.32 | 1.88 | 0.52 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.10) | (0.08) | (0.01) | — | (0.12) | |
| Distributions from net realized gains | — | (1.05) | (1.07) | (0.48) | (1.61) | |
| Total distributions | (0.10) | (1.13) | (1.08) | (0.48) | (1.73) | |
| Net asset value at end of period | $13.96 | $15.49 | $16.89 | $17.65 | $16.25 | |
| Total return | (9.33%) | (1.31%) | 1.75% | 11.71% | 3.55% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses (including dividend expense on short sales) | 1.92% | 1.93% | 1.66% | 1.64% | 1.85% | |
| Net operating expenses (excluding dividend expense on short sales) | 1.34% 2 | 1.34% 2 | 1.33% | 1.33% | 1.57% 3 | |
| Gross operating expenses | 1.96% | 1.95% | 1.67% | 1.65% | 1.87% | |
| Net investment income (loss) | (0.04%) | 0.46% | 0.43% | 0.16% | 0.22% | |
| Portfolio turnover rate | 168% | 176% | 180% | 163% | 142% | |
| Net assets, end of period (x 1,000,000) | $67 | $182 | $300 | $252 | $204 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
The ratios of net operating expenses would have been 1.33%, if interest expense had not been incurred.
3
The ratios of net operating expenses would have been 1.33%, if stock loan fees on short sales had not been incurred.
Schwab Active Equity Funds | Annual Report
Schwab Hedged Equity Fund
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Common Stock 99.3% of net assets |
| |
| Automobiles & Components 0.6% |
| Dana, Inc. | 12,995 | 181,800 |
| Thor Industries, Inc. | 1,856 | 156,980 |
| Winnebago Industries, Inc. | 1,406 | 66,012 |
| | | 404,792 |
| |
| Banks 4.5% |
| Bank of America Corp. | 8,661 | 205,266 |
| Citigroup, Inc. (a) | 13,307 | 551,176 |
| Fifth Third Bancorp | 4,338 | 100,728 |
| First BanCorp (a) | 141,243 | 916,667 |
| Flagstar Bancorp, Inc. | 3,234 | 94,918 |
| JPMorgan Chase & Co. | 4,778 | 468,435 |
| Popular, Inc. | 13,296 | 561,091 |
| Wells Fargo & Co. | 6,313 | 135,414 |
| | | 3,033,695 |
| |
| Capital Goods 6.8% |
| Allison Transmission Holdings, Inc. (a) | 1,633 | 59,033 |
| Atkore International Group, Inc. * | 7,485 | 154,865 |
| BWX Technologies, Inc. | 2,073 | 114,036 |
| Comfort Systems USA, Inc. | 736 | 33,709 |
| Dover Corp. (a) | 8,485 | 939,374 |
| EMCOR Group, Inc. | 1,977 | 134,812 |
| Generac Holdings, Inc. * | 410 | 86,161 |
| Herc Holdings, Inc. * | 9,655 | 428,296 |
| Hubbell, Inc. | 552 | 80,321 |
| Huntington Ingalls Industries, Inc. | 516 | 76,100 |
| Lockheed Martin Corp. (a) | 2,813 | 984,916 |
| Masonite International Corp. * | 1,214 | 106,832 |
| Mueller Industries, Inc. | 4,859 | 140,571 |
| Northrop Grumman Corp. (a) | 1,843 | 534,138 |
| Pentair plc | 1,394 | 69,365 |
| Rexnord Corp. | 8,197 | 262,960 |
| UFP Industries, Inc. | 7,317 | 365,191 |
| | | 4,570,680 |
| |
| Commercial & Professional Services 2.1% |
| ABM Industries, Inc. | 2,937 | 101,973 |
| ASGN, Inc. * | 4,733 | 315,596 |
| CoreLogic, Inc. | 7,123 | 547,972 |
| Huron Consulting Group, Inc. * | 4,964 | 187,937 |
| ManpowerGroup, Inc. | 826 | 56,061 |
| McGrath RentCorp | 2,345 | 133,853 |
| RELX plc ADR | 4,362 | 86,062 |
| | | 1,429,454 |
| |
| Consumer Durables & Apparel 3.3% |
| Brunswick Corp. | 249 | 15,864 |
| Crocs, Inc. * | 2,354 | 123,185 |
| Deckers Outdoor Corp. * | 768 | 194,588 |
| Lennar Corp., Class A | 347 | 24,370 |
| Polaris, Inc. | 1,714 | 155,734 |
| Security | Number
of Shares | Value ($) |
| Tempur Sealy International, Inc. *(a) | 7,388 | 657,532 |
| TRI Pointe Group, Inc. * | 28,734 | 472,099 |
| YETI Holdings, Inc. * | 11,143 | 551,356 |
| | | 2,194,728 |
| |
| Consumer Services 1.5% |
| Hilton Worldwide Holdings, Inc. | 2,276 | 199,856 |
| International Game Technology plc | 9,747 | 80,023 |
| Marriott Vacations Worldwide Corp. (a) | 549 | 53,033 |
| Papa John's International, Inc. | 1,342 | 102,797 |
| Perdoceo Education Corp. * | 29,615 | 334,353 |
| Wyndham Hotels & Resorts, Inc. | 5,276 | 245,387 |
| | | 1,015,449 |
| |
| Diversified Financials 2.4% |
| Affiliated Managers Group, Inc. | 1,831 | 138,002 |
| Ameriprise Financial, Inc. | 829 | 133,328 |
| Artisan Partners Asset Management, Inc., Class A | 2,442 | 97,827 |
| Capital One Financial Corp. (a) | 6,508 | 475,605 |
| Jefferies Financial Group, Inc. | 3,580 | 69,846 |
| Lazard Ltd., Class A | 9,730 | 327,609 |
| OneMain Holdings, Inc. | 4,243 | 148,038 |
| Synchrony Financial | 3,790 | 94,826 |
| T. Rowe Price Group, Inc. | 1,149 | 145,532 |
| | | 1,630,613 |
| |
| Energy 1.9% |
| Cimarex Energy Co. | 22,873 | 580,288 |
| ConocoPhillips | 1,744 | 49,913 |
| EOG Resources, Inc. | 1,878 | 64,303 |
| HollyFrontier Corp. | 3,096 | 57,307 |
| National Oilwell Varco, Inc. | 5,954 | 50,014 |
| Phillips 66 (a) | 1,103 | 51,466 |
| Renewable Energy Group, Inc. * | 1,704 | 96,105 |
| Schlumberger N.V. | 8,354 | 124,809 |
| Targa Resources Corp. | 11,020 | 176,871 |
| | | 1,251,076 |
| |
| Food & Staples Retailing 2.7% |
| BJ's Wholesale Club Holdings, Inc. * | 3,465 | 132,675 |
| Koninklijke Ahold Delhaize N.V. ADR | 22,194 | 611,667 |
| Sprouts Farmers Market, Inc. * | 11,943 | 227,514 |
| The Kroger Co. (a) | 26,187 | 843,483 |
| | | 1,815,339 |
| |
| Food, Beverage & Tobacco 3.9% |
| Altria Group, Inc. | 4,665 | 168,313 |
| Campbell Soup Co. | 2,878 | 134,316 |
| Coca-Cola Consolidated, Inc. | 1,787 | 409,134 |
| Conagra Brands, Inc. | 7,863 | 275,913 |
| Darling Ingredients, Inc. * | 1,979 | 85,097 |
| Flowers Foods, Inc. | 18,490 | 435,994 |
| General Mills, Inc. | 2,505 | 148,096 |
| Mondelez International, Inc., Class A | 8,768 | 465,756 |
Schwab Active Equity Funds | Annual Report
Schwab Hedged Equity Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| TreeHouse Foods, Inc. * | 6,442 | 250,207 |
| Tyson Foods, Inc., Class A | 4,682 | 267,951 |
| | | 2,640,777 |
| |
| Health Care Equipment & Services 4.9% |
| Cerner Corp. | 13,416 | 940,327 |
| CVS Health Corp. (a) | 572 | 32,083 |
| Danaher Corp. | 1,057 | 242,624 |
| DaVita, Inc. * | 1,124 | 96,945 |
| Edwards Lifesciences Corp. * | 4,645 | 333,000 |
| HCA Healthcare, Inc. (a) | 2,441 | 302,538 |
| Hill-Rom Holdings, Inc. | 4,264 | 388,323 |
| Hologic, Inc. *(a) | 10,589 | 728,735 |
| ResMed, Inc. | 983 | 188,677 |
| Veeva Systems, Inc., Class A * | 248 | 66,972 |
| | | 3,320,224 |
| |
| Household & Personal Products 0.5% |
| Spectrum Brands Holdings, Inc. | 1,240 | 70,519 |
| Unilever N.V., NY Shares | 4,048 | 228,955 |
| | | 299,474 |
| |
| Insurance 2.4% |
| Aflac, Inc. | 3,375 | 114,581 |
| Fidelity National Financial, Inc. | 4,956 | 155,073 |
| The Allstate Corp. (a) | 15,379 | 1,364,887 |
| | | 1,634,541 |
| |
| Materials 4.0% |
| Axalta Coating Systems Ltd. *(a) | 15,185 | 381,295 |
| Berry Global Group, Inc. * | 10,379 | 483,973 |
| Commercial Metals Co. | 9,598 | 198,199 |
| Fortescue Metals Group Ltd. ADR | 4,613 | 112,234 |
| Reliance Steel & Aluminum Co. | 5,054 | 550,836 |
| Summit Materials, Inc., Class A * | 17,268 | 305,471 |
| The Chemours Co. | 2,388 | 48,094 |
| The Sherwin-Williams Co. | 497 | 341,926 |
| Tronox Holdings plc, Class A * | 18,189 | 177,707 |
| Vale S.A. ADR | 6,802 | 71,897 |
| | | 2,671,632 |
| |
| Media & Entertainment 6.6% |
| Activision Blizzard, Inc. | 8,968 | 679,147 |
| Alphabet, Inc., Class A *(a) | 813 | 1,313,897 |
| Altice USA, Inc., Class A * | 2,486 | 66,998 |
| Charter Communications, Inc., Class A * | 1,133 | 684,128 |
| Electronic Arts, Inc. * | 279 | 33,433 |
| Facebook, Inc., Class A *(a) | 5,335 | 1,403,692 |
| Gray Television, Inc. * | 5,321 | 67,470 |
| Take-Two Interactive Software, Inc. * | 219 | 33,927 |
| World Wrestling Entertainment, Inc., Class A | 3,520 | 127,987 |
| | | 4,410,679 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 7.1% |
| AbbVie, Inc. | 3,360 | 285,936 |
| Alexion Pharmaceuticals, Inc. * | 4,848 | 558,199 |
| Amgen, Inc. | 742 | 160,970 |
| Bristol-Myers Squibb Co. | 12,665 | 740,269 |
| Eli Lilly & Co. | 753 | 98,236 |
| Emergent BioSolutions, Inc. * | 5,574 | 501,493 |
| Gilead Sciences, Inc. | 2,456 | 142,817 |
| Medpace Holdings, Inc. * | 379 | 42,046 |
| Security | Number
of Shares | Value ($) |
| Neurocrine Biosciences, Inc. * | 1,368 | 134,981 |
| Novartis AG ADR (a) | 12,686 | 990,523 |
| Novavax, Inc. * | 420 | 33,898 |
| PerkinElmer, Inc. | 327 | 42,363 |
| Perrigo Co., plc | 4,498 | 197,327 |
| Regeneron Pharmaceuticals, Inc. * | 256 | 139,151 |
| Roche Holding AG ADR | 11,167 | 446,568 |
| United Therapeutics Corp. * | 1,416 | 190,070 |
| Vertex Pharmaceuticals, Inc. * | 440 | 91,678 |
| | | 4,796,525 |
| |
| Real Estate 3.1% |
| Alexander & Baldwin, Inc. | 5,134 | 65,972 |
| Corporate Office Properties Trust | 25,484 | 571,606 |
| Cousins Properties, Inc. | 18,437 | 469,775 |
| EastGroup Properties, Inc. (a) | 4,156 | 553,081 |
| First Industrial Realty Trust, Inc. | 1,765 | 70,265 |
| Highwoods Properties, Inc. | 4,198 | 124,974 |
| Prologis, Inc. (a) | 2,546 | 252,563 |
| | | 2,108,236 |
| |
| Retailing 9.7% |
| Aaron's Holdings Co., Inc. | 1,728 | 90,305 |
| Amazon.com, Inc. *(a) | 942 | 2,860,053 |
| AutoNation, Inc. * | 2,100 | 119,133 |
| Best Buy Co., Inc. (a) | 11,020 | 1,229,281 |
| Dollar General Corp. | 2,527 | 527,410 |
| eBay, Inc. | 2,610 | 124,314 |
| Etsy, Inc. * | 334 | 40,611 |
| Lowe's Cos., Inc. | 3,550 | 561,255 |
| Qurate Retail, Inc. Class A | 7,297 | 49,401 |
| Target Corp. (a) | 3,704 | 563,823 |
| The Home Depot, Inc. | 698 | 186,164 |
| Williams-Sonoma, Inc. | 1,901 | 173,390 |
| | | 6,525,140 |
| |
| Semiconductors & Semiconductor Equipment 3.7% |
| Amkor Technology, Inc. * | 27,471 | 325,531 |
| Cirrus Logic, Inc. * | 11,653 | 802,542 |
| Intel Corp. (a) | 2,637 | 116,767 |
| NVIDIA Corp. | 762 | 382,036 |
| Qorvo, Inc. *(a) | 4,347 | 553,634 |
| Synaptics, Inc. * | 4,161 | 319,024 |
| | | 2,499,534 |
| |
| Software & Services 14.5% |
| Adobe, Inc. * | 776 | 346,950 |
| Autodesk, Inc. * | 882 | 207,746 |
| Box, Inc., Class A * | 32,180 | 498,790 |
| CACI International, Inc., Class A *(a) | 1,465 | 305,496 |
| Cadence Design Systems, Inc. *(a) | 2,989 | 326,907 |
| DocuSign, Inc. * | 200 | 40,450 |
| Dropbox, Inc., Class A * | 21,566 | 393,795 |
| Fair Isaac Corp. * | 246 | 96,297 |
| Fortinet, Inc. * | 5,377 | 593,459 |
| Mastercard, Inc., Class A (a) | 3,354 | 968,099 |
| Microsoft Corp. (a) | 14,271 | 2,889,449 |
| Mimecast Ltd. * | 816 | 31,179 |
| Perspecta, Inc. | 5,326 | 95,495 |
| Progress Software Corp. (a) | 7,599 | 276,376 |
| Science Applications International Corp. | 3,618 | 276,307 |
| ServiceNow, Inc. * | 329 | 163,700 |
| SS&C Technologies Holdings, Inc. | 11,522 | 682,333 |
| SVMK, Inc. * | 17,375 | 363,659 |
Schwab Active Equity Funds | Annual Report
Schwab Hedged Equity Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Synopsys, Inc. *(a) | 4,697 | 1,004,500 |
| Visa, Inc., Class A | 1,029 | 186,980 |
| | | 9,747,967 |
| |
| Technology Hardware & Equipment 7.8% |
| Apple Inc. (a) | 32,113 | 3,495,821 |
| Ciena Corp. * | 11,389 | 448,613 |
| Jabil, Inc. (a) | 24,622 | 815,973 |
| SYNNEX Corp. | 3,551 | 467,454 |
| | | 5,227,861 |
| |
| Telecommunication Services 0.5% |
| AT&T, Inc. | 9,321 | 251,853 |
| CenturyLink, Inc. | 9,740 | 83,959 |
| | | 335,812 |
| |
| Transportation 2.2% |
| Air Transport Services Group, Inc. * | 15,320 | 429,573 |
| Atlas Air Worldwide Holdings, Inc. * | 1,227 | 72,589 |
| Marten Transport Ltd. | 21,704 | 333,048 |
| Old Dominion Freight Line, Inc. | 193 | 36,741 |
| Werner Enterprises, Inc. | 9,904 | 376,550 |
| XPO Logistics, Inc. * | 2,426 | 218,340 |
| | | 1,466,841 |
| |
| Utilities 2.6% |
| Entergy Corp. | 5,477 | 554,382 |
| NRG Energy, Inc. (a) | 29,916 | 945,944 |
| Vistra Corp. (a) | 15,583 | 270,677 |
| | | 1,771,003 |
| Total Common Stock |
| (Cost $56,263,093) | | 66,802,072 |
|
| Preferred Stock 0.1% of net assets |
| |
| Retailing 0.1% |
| Qurate Retail, Inc. | 453 | 44,312 |
| Total Preferred Stock |
| (Cost $42,510) | | 44,312 |
Schwab Active Equity Funds | Annual Report
Schwab Hedged Equity Fund
Portfolio Holdings as of October 31, 2020 (continued)
In addition to the above, the fund had the following short sale positions at October 31, 2020:
| Security | Number
of Shares | Value ($) |
| Short Sales (39.0%) of net assets |
| |
| Automobiles & Components (0.5%) |
| Fox Factory Holding Corp. | 3,976 | (334,302) |
| |
| Banks (1.6%) |
| Cullen/Frost Bankers, Inc. | 8,331 | (585,419) |
| First Hawaiian, Inc. | 2,905 | (50,140) |
| Old National Bancorp | 1,726 | (24,130) |
| Triumph Bancorp, Inc. | 6,257 | (263,607) |
| Truist Financial Corp. | 3,432 | (144,556) |
| | | (1,067,852) |
| |
| Capital Goods (4.6%) |
| A O Smith Corp. | 2,960 | (153,002) |
| Air Lease Corp. | 9,432 | (256,928) |
| Cubic Corp. | 3,097 | (183,064) |
| Enerpac Tool Group Corp. | 3,704 | (66,042) |
| Ingersoll Rand, Inc. | 12,431 | (434,339) |
| Jacobs Engineering Group, Inc. | 3,717 | (353,115) |
| Kaman Corp. | 7,051 | (279,643) |
| Kennametal, Inc. | 2,529 | (78,399) |
| Kratos Defense & Security Solutions, Inc. | 9,450 | (178,510) |
| Plug Power, Inc. | 13,298 | (186,172) |
| Spirit AeroSystems Holdings, Inc., Class A | 20,996 | (381,917) |
| The Boeing Co. | 2,310 | (333,541) |
| Vicor Corp. | 2,842 | (221,676) |
| | | (3,106,348) |
| |
| Commercial & Professional Services (1.1%) |
| IHS Markit Ltd. | 4,231 | (342,161) |
| MSA Safety, Inc. | 554 | (73,084) |
| The Brink's Co. | 5,315 | (227,641) |
| Upwork, Inc. | 4,362 | (80,479) |
| | | (723,365) |
| |
| Consumer Durables & Apparel (1.8%) |
| Acushnet Holdings Corp. | 2,269 | (77,441) |
| Hasbro, Inc. | 5,746 | (475,309) |
| Leggett & Platt, Inc. | 2,604 | (108,665) |
| Under Armour, Inc., Class A | 37,944 | (525,145) |
| | | (1,186,560) |
| |
| Consumer Services (2.0%) |
| Bright Horizons Family Solutions, Inc. | 1,268 | (200,407) |
| Hyatt Hotels Corp., Class A | 2,913 | (160,623) |
| Las Vegas Sands Corp. | 2,419 | (116,257) |
| MGM Resorts International | 20,902 | (429,954) |
| Planet Fitness, Inc., Class A | 602 | (35,681) |
| Royal Caribbean Cruises Ltd. | 3,182 | (179,528) |
| Vail Resorts, Inc. | 862 | (200,019) |
| | | (1,322,469) |
| |
| Security | Number
of Shares | Value ($) |
| Diversified Financials (1.6%) |
| Cannae Holdings, Inc. | 10,005 | (369,985) |
| FirstCash, Inc. | 9,030 | (469,921) |
| Green Dot Corp., Class A | 4,182 | (222,984) |
| | | (1,062,890) |
| |
| Energy (0.7%) |
| Equitrans Midstream Corp. | 5,197 | (37,730) |
| ONEOK, Inc. | 12,463 | (361,427) |
| PBF Energy, Inc., Class A | 13,486 | (62,980) |
| | | (462,137) |
| |
| Food & Staples Retailing (0.6%) |
| Sysco Corp. | 7,484 | (413,940) |
| |
| Food, Beverage & Tobacco (1.4%) |
| Cal-Maine Foods, Inc. | 16,460 | (631,241) |
| Freshpet, Inc. | 1,372 | (157,094) |
| J & J Snack Foods Corp. | 1,105 | (149,805) |
| | | (938,140) |
| |
| Health Care Equipment & Services (1.3%) |
| 1Life Healthcare, Inc. | 8,802 | (248,304) |
| Glaukos Corp. | 1,755 | (98,140) |
| Guardant Health, Inc. | 1,465 | (156,257) |
| Penumbra, Inc. | 977 | (255,026) |
| The Cooper Cos., Inc. | 395 | (126,025) |
| | | (883,752) |
| |
| Materials (2.1%) |
| Albemarle Corp. | 2,559 | (238,525) |
| Allegheny Technologies, Inc. | 8,696 | (80,090) |
| Ball Corp. | 4,164 | (370,596) |
| Huntsman Corp. | 861 | (20,914) |
| Olin Corp. | 7,017 | (116,131) |
| Quaker Chemical Corp. | 2,846 | (542,988) |
| Trinseo S.A. | 1,500 | (47,730) |
| | | (1,416,974) |
| |
| Media & Entertainment (1.0%) |
| Live Nation Entertainment, Inc. | 4,846 | (236,485) |
| TripAdvisor, Inc. | 11,491 | (219,593) |
| Twitter, Inc. | 5,501 | (227,521) |
| | | (683,599) |
| |
| Pharmaceuticals, Biotechnology & Life Sciences (0.7%) |
| Alnylam Pharmaceuticals, Inc. | 351 | (43,162) |
| Arrowhead Pharmaceuticals, Inc. | 1,302 | (74,605) |
| Natera, Inc. | 2,218 | (149,183) |
| NeoGenomics, Inc. | 5,918 | (232,163) |
| | | (499,113) |
| |
| Real Estate (3.6%) |
| American Campus Communities, Inc. | 12,810 | (479,863) |
| EPR Properties | 5,190 | (123,730) |
| Federal Realty Investment Trust | 12,743 | (876,464) |
| Pebblebrook Hotel Trust | 3,736 | (44,757) |
Schwab Active Equity Funds | Annual Report
Schwab Hedged Equity Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| The Howard Hughes Corp. | 6,265 | (389,620) |
| Washington Real Estate Investment Trust | 29,040 | (507,619) |
| | | (2,422,053) |
| |
| Retailing (4.9%) |
| Burlington Stores, Inc. | 3,302 | (639,201) |
| Carvana Co. | 1,088 | (201,661) |
| Expedia Group, Inc. | 5,718 | (538,350) |
| Five Below, Inc. | 3,318 | (442,422) |
| Floor & Decor Holdings, Inc., Class A | 1,782 | (130,086) |
| Foot Locker, Inc. | 6,667 | (245,879) |
| National Vision Holdings, Inc. | 4,884 | (196,972) |
| Ross Stores, Inc. | 5,245 | (446,717) |
| The Gap, Inc. | 16,743 | (325,651) |
| The TJX Cos., Inc. | 3,004 | (152,603) |
| | | (3,319,542) |
| |
| Semiconductors & Semiconductor Equipment (2.0%) |
| Analog Devices, Inc. | 988 | (117,108) |
| Brooks Automation, Inc. | 3,263 | (152,382) |
| Cree, Inc. | 5,465 | (347,574) |
| First Solar, Inc. | 1,511 | (131,525) |
| Marvell Technology Group Ltd. | 1,951 | (73,182) |
| ON Semiconductor Corp. | 9,568 | (240,061) |
| Universal Display Corp. | 1,337 | (265,140) |
| | | (1,326,972) |
| |
| Software & Services (4.1%) |
| Black Knight, Inc. | 2,107 | (185,311) |
| Ceridian HCM Holding, Inc. | 1,315 | (113,379) |
| Coupa Software, Inc. | 255 | (68,263) |
| Fastly, Inc., Class A | 1,254 | (79,642) |
| Fidelity National Information Services, Inc. | 1,531 | (190,747) |
| Guidewire Software, Inc. | 3,544 | (340,614) |
| NortonLifeLock, Inc. | 6,699 | (137,798) |
| Nuance Communications, Inc. | 7,238 | (230,965) |
| Nutanix, Inc., Class A | 2,447 | (59,560) |
| Security | Number
of Shares | Value ($) |
| Ping Identity Holding Corp. | 3,095 | (85,701) |
| Q2 Holdings, Inc. | 3,611 | (329,468) |
| Rapid7, Inc. | 3,549 | (219,790) |
| Smartsheet, Inc., Class A | 825 | (41,126) |
| Splunk, Inc. | 1,502 | (297,456) |
| Square, Inc., Class A | 1,372 | (212,495) |
| Twilio, Inc., Class A | 188 | (52,446) |
| Yext, Inc. | 4,858 | (80,546) |
| | | (2,725,307) |
| |
| Technology Hardware & Equipment (2.7%) |
| Cognex Corp. | 8,601 | (566,806) |
| II-VI, Inc. | 2,003 | (91,077) |
| IPG Photonics Corp. | 917 | (170,525) |
| Littelfuse, Inc. | 716 | (141,725) |
| Novanta, Inc. | 7,807 | (848,777) |
| | | (1,818,910) |
| |
| Transportation (0.3%) |
| JetBlue Airways Corp. | 3,319 | (39,728) |
| Southwest Airlines Co. | 1,902 | (75,186) |
| United Airlines Holdings, Inc. | 3,567 | (120,779) |
| | | (235,693) |
| |
| Utilities (0.4%) |
| Edison International | 4,356 | (244,110) |
| New Jersey Resources Corp. | 1,050 | (30,639) |
| | | (274,749) |
| Total Short Sales |
| (Proceeds $26,792,419) | | (26,224,667) |
| * | Non-income producing security. |
| (a) | All or a portion of this security is held as collateral for short sales. |
| | |
| ADR — | American Depositary Receipt |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 (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 | |
| Assets | | | | | |
| Common Stock1 | $66,802,072 | $— | $— | $66,802,072 | |
| Preferred Stock1 | 44,312 | — | — | 44,312 | |
| Liabilities | | | | | |
| Short Sales1 | (26,224,667) | — | — | (26,224,667) | |
| Total | $40,621,717 | $— | $— | $40,621,717 | |
| 1 | As categorized in Portfolio Holdings. |
Schwab Active Equity Funds | Annual Report
Schwab Hedged Equity Fund
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in unaffiliated issuers, at value (cost $56,305,603) | | $66,846,384 |
| Deposit with broker for short sales | | 26,738,574 |
| Receivables: | | |
| Investments sold | | 273,221 |
| Dividends | | 48,625 |
| Fund shares sold | | 753 |
| Prepaid expenses | + | 13,192 |
| Total assets | | 93,920,749 |
| Liabilities |
| Securities sold short, at value (proceeds $26,792,419) | | 26,224,667 |
| Payables: | | |
| Investments bought | | 103,964 |
| Investment adviser and administrator fees | | 64,201 |
| Shareholder service fees | | 12,209 |
| Due to custodian | | 60,559 |
| Fund shares redeemed | | 45,494 |
| Dividends on short sales | | 19,826 |
| Accrued expenses | + | 124,592 |
| Total liabilities | | 26,655,512 |
| Net Assets |
| Total assets | | 93,920,749 |
| Total liabilities | – | 26,655,512 |
| Net assets | | $67,265,237 |
| Net Assets by Source | | |
| Capital received from investors | | 77,227,254 |
| Total distributable loss | | (9,962,017) |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $67,265,237 | | 4,817,227 | | $13.96 |
| | | | | |
Schwab Active Equity Funds | Annual Report
Schwab Hedged Equity Fund
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends (net of foreign withholding tax of $24,964) | | $1,975,201 |
| Rebates on short sales, net of fees | | 194,374 |
| Securities on loan, net | + | 215 |
| Total investment income | | 2,169,790 |
| Expenses |
| Investment adviser and administrator fees | | 1,213,594 |
| Shareholder service fees | | 242,891 |
| Dividends on short sales | | 666,460 |
| Professional fees | | 38,923 |
| Portfolio accounting fees | | 25,856 |
| Registration fees | | 25,414 |
| Custodian fees | | 9,293 |
| Interest expense | | 8,560 |
| Independent trustees’ fees | | 8,316 |
| Transfer agent fees | | 7,960 |
| Shareholder reports | | 6,824 |
| Other expenses | + | 4,937 |
| Total expenses | | 2,259,028 |
| Expense reduction by CSIM and its affiliates | – | 46,789 |
| Net expenses | – | 2,212,239 |
| Net investment loss | | (42,449) |
| Realized and Unrealized Gains (Losses) |
| Net realized losses on investments | | (381,875) |
| Net realized gains on futures contracts | | 376,569 |
| Net realized losses on short sales | + | (4,821,374) |
| Net realized losses | | (4,826,680) |
| Net change in unrealized appreciation (depreciation) on investments | | (4,949,781) |
| Net change in unrealized appreciation (depreciation) on short sales | + | (1,090,069) |
| Net change in unrealized appreciation (depreciation) | + | (6,039,850) |
| Net realized and unrealized losses | | (10,866,530) |
| Decrease in net assets resulting from operations | | ($10,908,979) |
Schwab Active Equity Funds | Annual Report
Schwab Hedged Equity Fund
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income (loss) | | ($42,449) | $1,100,935 |
| Net realized losses | | (4,826,680) | (15,812,685) |
| Net change in unrealized appreciation (depreciation) | + | (6,039,850) | 7,919,579 |
| Decrease in net assets from operations | | (10,908,979) | (6,792,171) |
| Distributions to Shareholders | |
| Total distributions | | ($1,081,623) | ($19,341,478) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 805,921 | $12,059,020 | 3,932,131 | $60,687,628 |
| Shares reinvested | | 39,687 | 632,208 | 1,047,501 | 15,597,289 |
| Shares redeemed | + | (7,802,666) | (115,824,167) | (10,987,256) | (168,052,659) |
| Net transactions in fund shares | | (6,957,058) | ($103,132,939) | (6,007,624) | ($91,767,742) |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 11,774,285 | $182,388,778 | 17,781,909 | $300,290,169 |
| Total decrease | + | (6,957,058) | (115,123,541) | (6,007,624) | (117,901,391) |
| End of period | | 4,817,227 | $67,265,237 | 11,774,285 | $182,388,778 |
Schwab Active Equity Funds | Annual Report
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $25.08 | $25.85 | $25.44 | $21.56 | $26.68 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.26 | 0.26 | 0.23 | 0.21 | 0.19 | |
| Net realized and unrealized gains (losses) | 2.11 | 1.27 | 1.96 | 4.24 | (1.52) | |
| Total from investment operations | 2.37 | 1.53 | 2.19 | 4.45 | (1.33) | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.29) | (0.24) | (0.24) | (0.20) | (0.16) | |
| Distributions from net realized gains | (0.89) | (2.06) | (1.54) | (0.37) | (3.63) | |
| Total distributions | (1.18) | (2.30) | (1.78) | (0.57) | (3.79) | |
| Net asset value at end of period | $26.27 | $25.08 | $25.85 | $25.44 | $21.56 | |
| Total return | 9.57% | 6.51% | 9.13% | 21.10% | (5.78%) | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 0.80% | 0.80% | 0.80% | 0.81% | 0.80% | |
| Gross operating expenses | 0.80% | 0.80% | 0.80% | 0.81% | 0.80% | |
| Net investment income (loss) | 1.01% | 1.05% | 0.91% | 0.89% | 0.82% | |
| Portfolio turnover rate | 73% | 45% | 45% | 42% | 54% | |
| Net assets, end of period (x 1,000,000) | $746 | $779 | $826 | $853 | $853 | |
| |
1
Calculated based on the average shares outstanding during the period.
Schwab Active Equity Funds | Annual Report
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Common Stock 99.4% of net assets |
| |
| Australia 0.5% |
| Ansell Ltd. | 128,571 | 3,635,612 |
| |
| China 0.6% |
| Wuxi Biologics Cayman, Inc. * | 156,000 | 4,381,059 |
| |
| Denmark 1.0% |
| Chemometec A/S | 9,989 | 578,798 |
| Genmab A/S * | 5,704 | 1,905,278 |
| Novo Nordisk A/S, Class B | 76,520 | 4,879,346 |
| | | 7,363,422 |
| |
| France 1.1% |
| Ipsen S.A. | 28,430 | 2,589,402 |
| Sartorius Stedim Biotech | 15,738 | 5,968,008 |
| | | 8,557,410 |
| |
| Germany 0.6% |
| Fresenius Medical Care AG & Co. KGaA | 35,115 | 2,681,458 |
| Fresenius SE & Co. KGaA | 44,047 | 1,633,854 |
| | | 4,315,312 |
| |
| Hong Kong 0.6% |
| CSPC Pharmaceutical Group Ltd. | 662,400 | 703,419 |
| Livzon Pharmaceutical Group, Inc., H Shares (a) | 897,400 | 3,977,251 |
| | | 4,680,670 |
| |
| Ireland 3.5% |
| Horizon Therapeutics plc * | 118,574 | 8,884,750 |
| Medtronic plc | 100,274 | 10,084,556 |
| STERIS plc | 39,707 | 7,035,683 |
| | | 26,004,989 |
| |
| Italy 0.6% |
| DiaSorin S.p.A. | 21,920 | 4,812,068 |
| |
| Japan 2.4% |
| Hoya Corp. | 61,500 | 6,940,699 |
| Kanamic Network Co., Ltd. | 50,000 | 379,254 |
| M3, Inc. | 31,000 | 2,093,607 |
| Ono Pharmaceutical Co., Ltd. | 140,300 | 4,002,087 |
| Takara Bio, Inc. | 25,000 | 680,784 |
| Takeda Pharmaceutical Co., Ltd. | 129,000 | 3,986,434 |
| | | 18,082,865 |
| |
| Luxembourg 0.1% |
| Eurofins Scientific SE * | 1,000 | 796,320 |
| |
| Security | Number
of Shares | Value ($) |
| New Zealand 1.0% |
| Fisher & Paykel Healthcare Corp., Ltd. | 318,978 | 7,379,359 |
| |
| Republic of Korea 1.1% |
| Boditech Med, Inc. | 20,000 | 562,362 |
| Celltrion, Inc. * | 12,000 | 2,562,284 |
| DongKook Pharmaceutical Co., Ltd. | 25,140 | 537,863 |
| Hugel, Inc. * | 10,000 | 1,862,454 |
| LegoChem Biosciences, Inc. * | 20,000 | 936,303 |
| Samsung Biologics Co., Ltd. * | 3,000 | 1,812,891 |
| | | 8,274,157 |
| |
| Spain 0.1% |
| Pharma Mar S.A. | 2,820 | 378,577 |
| |
| Sweden 1.3% |
| Arjo AB, B Shares | 234,001 | 1,663,284 |
| Getinge AB, B Shares | 321,606 | 6,297,035 |
| Swedish Orphan Biovitrum AB * | 84,656 | 1,459,980 |
| | | 9,420,299 |
| |
| Switzerland 4.7% |
| Novartis AG | 61,395 | 4,784,057 |
| Roche Holding AG | 74,840 | 24,048,438 |
| Sonova Holding AG * | 12,390 | 2,940,987 |
| Tecan Group AG | 6,457 | 3,064,029 |
| | | 34,837,511 |
| |
| Taiwan 0.5% |
| TaiDoc Technology Corp. | 517,000 | 4,186,116 |
| |
| United Kingdom 0.8% |
| AstraZeneca plc | 61,962 | 6,221,324 |
| |
| United States 78.9% |
| Abbott Laboratories | 387,644 | 40,745,261 |
| AbbVie, Inc. | 288,451 | 24,547,180 |
| Agilent Technologies, Inc. | 112,142 | 11,448,577 |
| Alexion Pharmaceuticals, Inc. * | 83,934 | 9,664,161 |
| Amedisys, Inc. * | 33,512 | 8,679,608 |
| Amgen, Inc. | 148,423 | 32,198,886 |
| Anthem, Inc. | 22,092 | 6,026,698 |
| Bio-Rad Laboratories, Inc., Class A * | 4,076 | 2,390,248 |
| Bio-Techne Corp. | 22,802 | 5,755,453 |
| Biogen, Inc. * | 18,353 | 4,626,241 |
| Bristol-Myers Squibb Co. | 429,000 | 25,075,050 |
| Catalent, Inc. * | 30,926 | 2,714,375 |
| Chemed Corp. | 13,072 | 6,252,599 |
| CONMED Corp. | 15,018 | 1,170,953 |
| Danaher Corp. | 77,364 | 17,758,133 |
| DaVita, Inc. * | 64,205 | 5,537,681 |
| DexCom, Inc. * | 14,857 | 4,748,000 |
| Edwards Lifesciences Corp. * | 181,836 | 13,035,823 |
| Eli Lilly & Co. | 218,950 | 28,564,217 |
Schwab Active Equity Funds | Annual Report
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Emergent BioSolutions, Inc. * | 59,874 | 5,386,864 |
| Gilead Sciences, Inc. | 209,241 | 12,167,364 |
| HCA Healthcare, Inc. | 13,262 | 1,643,692 |
| Hill-Rom Holdings, Inc. | 13,494 | 1,228,899 |
| Hologic, Inc. * | 226,417 | 15,582,018 |
| Humana, Inc. | 20,487 | 8,180,049 |
| IDEXX Laboratories, Inc. * | 18,361 | 7,800,120 |
| Illumina, Inc. * | 23,182 | 6,785,371 |
| Intuitive Surgical, Inc. * | 2,647 | 1,765,761 |
| Johnson & Johnson | 273,704 | 37,527,555 |
| Laboratory Corp. of America Holdings * | 1,863 | 372,171 |
| LHC Group, Inc. * | 9,788 | 2,119,591 |
| Medpace Holdings, Inc. * | 15,223 | 1,688,840 |
| Merck & Co., Inc. | 508,537 | 38,247,068 |
| Meridian Bioscience, Inc. * | 117,986 | 2,023,460 |
| Mettler-Toledo International, Inc. * | 4,735 | 4,725,104 |
| Molina Healthcare, Inc. * | 41,739 | 7,783,071 |
| Neurocrine Biosciences, Inc. * | 13,179 | 1,300,372 |
| PerkinElmer, Inc. | 34,840 | 4,513,522 |
| Pfizer, Inc. | 664,256 | 23,567,803 |
| Quest Diagnostics, Inc. | 9,078 | 1,108,787 |
| Security | Number
of Shares | Value ($) |
| Regeneron Pharmaceuticals, Inc. * | 22,858 | 12,424,694 |
| Repligen Corp. * | 30,643 | 5,104,204 |
| ResMed, Inc. | 36,610 | 7,026,923 |
| Retrophin, Inc. * | 39,175 | 792,902 |
| Thermo Fisher Scientific, Inc. | 79,272 | 37,505,169 |
| United Therapeutics Corp. * | 3,685 | 494,638 |
| UnitedHealth Group, Inc. | 151,204 | 46,138,389 |
| Veeva Systems, Inc., Class A * | 17,461 | 4,715,343 |
| Vertex Pharmaceuticals, Inc. * | 72,750 | 15,158,190 |
| West Pharmaceutical Services, Inc. | 28,015 | 7,622,041 |
| Zimmer Biomet Holdings, Inc. | 15,232 | 2,012,147 |
| Zoetis, Inc. | 80,869 | 12,821,780 |
| | | 588,273,046 |
| Total Common Stock |
| (Cost $516,900,992) | | 741,600,116 |
| * | Non-income producing security. |
| (a) | Represents a China based company which is listed on the Hong Kong exchange and traded in Hong Kong dollars. |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 (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 | |
| Assets | | | | | |
| Common Stock1 | $614,278,035 | $— | $— | $614,278,035 | |
| Australia | — | 3,635,612 | — | 3,635,612 | |
| China | — | 4,381,059 | — | 4,381,059 | |
| Denmark | — | 7,363,422 | — | 7,363,422 | |
| France | 5,968,008 | 2,589,402 | — | 8,557,410 | |
| Germany | — | 4,315,312 | — | 4,315,312 | |
| Hong Kong | — | 4,680,670 | — | 4,680,670 | |
| Italy | — | 4,812,068 | — | 4,812,068 | |
| Japan | — | 18,082,865 | — | 18,082,865 | |
| Luxembourg | — | 796,320 | — | 796,320 | |
| New Zealand | — | 7,379,359 | — | 7,379,359 | |
| Republic of Korea | — | 8,274,157 | — | 8,274,157 | |
| Spain | — | 378,577 | — | 378,577 | |
| Sweden | 1,663,284 | 7,757,015 | — | 9,420,299 | |
| Switzerland | — | 34,837,511 | — | 34,837,511 | |
| Taiwan | — | 4,186,116 | — | 4,186,116 | |
| United Kingdom | — | 6,221,324 | — | 6,221,324 | |
| Total | $621,909,327 | $119,690,789 | $— | $741,600,116 | |
| 1 | As categorized in Portfolio Holdings. |
Schwab Active Equity Funds | Annual Report
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in unaffiliated issuers, at value (cost $516,900,992) | | $741,600,116 |
| Foreign currency, at value (cost $2,223,436) | | 2,216,970 |
| Receivables: | | |
| Investments sold | | 7,634,050 |
| Foreign tax reclaims | | 1,376,118 |
| Dividends | | 914,311 |
| Fund shares sold | | 415,913 |
| Prepaid expenses | + | 16,107 |
| Total assets | | 754,173,585 |
| Liabilities |
| Payables: | | |
| Investments bought | | 7,306,987 |
| Investment adviser and administrator fees | | 362,889 |
| Shareholder service fees | | 155,438 |
| Fund shares redeemed | | 522,440 |
| Due to custodian | | 8,048 |
| Accrued expenses | + | 112,490 |
| Total liabilities | | 8,468,292 |
| Net Assets |
| Total assets | | 754,173,585 |
| Total liabilities | – | 8,468,292 |
| Net assets | | $745,705,293 |
| Net Assets by Source | | |
| Capital received from investors | | 438,126,307 |
| Total distributable earnings | | 307,578,986 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $745,705,293 | | 28,385,542 | | $26.27 |
| | | | | |
Schwab Active Equity Funds | Annual Report
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends (net of foreign withholding tax of $420,688) | | $13,845,217 |
| Interest | | 10,758 |
| Securities on loan, net | + | 50,127 |
| Total investment income | | 13,906,102 |
| Expenses |
| Investment adviser and administrator fees | | 4,101,607 |
| Shareholder service fees | | 1,776,076 |
| Portfolio accounting fees | | 84,580 |
| Custodian fees | | 39,531 |
| Shareholder reports | | 37,425 |
| Professional fees | | 34,647 |
| Registration fees | | 30,665 |
| Transfer agent fees | | 23,712 |
| Independent trustees’ fees | | 11,200 |
| Other expenses | + | 22,061 |
| Total expenses | | 6,161,504 |
| Expense reduction by CSIM and its affiliates | – | 23,712 |
| Net expenses | – | 6,137,792 |
| Net investment income | | 7,768,310 |
| Realized and Unrealized Gains (Losses) |
| Net realized gains on investments | | 77,453,384 |
| Net realized gains on futures contracts | | 49,223 |
| Net realized gains on foreign currency transactions | + | 22,011 |
| Net realized gains | | 77,524,618 |
| Net change in unrealized appreciation (depreciation) on investments | | (16,843,543) |
| Net change in unrealized appreciation (depreciation) on foreign currency translations | + | 86,702 |
| Net change in unrealized appreciation (depreciation) | + | (16,756,841) |
| Net realized and unrealized gains | | 60,767,777 |
| Increase in net assets resulting from operations | | $68,536,087 |
Schwab Active Equity Funds | Annual Report
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $7,768,310 | $8,419,505 |
| Net realized gains | | 77,524,618 | 26,005,472 |
| Net change in unrealized appreciation (depreciation) | + | (16,756,841) | 14,471,726 |
| Increase in net assets from operations | | 68,536,087 | 48,896,703 |
| Distributions to Shareholders | |
| Total distributions | | ($35,647,551) | ($73,744,967) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 2,950,067 | $75,727,246 | 2,837,228 | $69,277,171 |
| Shares reinvested | | 1,220,267 | 31,165,636 | 2,764,704 | 64,998,182 |
| Shares redeemed | + | (6,832,001) | (172,829,403) | (6,495,890) | (156,442,620) |
| Net transactions in fund shares | | (2,661,667) | ($65,936,521) | (893,958) | ($22,167,267) |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 31,047,209 | $778,753,278 | 31,941,167 | $825,768,809 |
| Total decrease | + | (2,661,667) | (33,047,985) | (893,958) | (47,015,531) |
| End of period | | 28,385,542 | $745,705,293 | 31,047,209 | $778,753,278 |
Schwab Active Equity Funds | Annual Report
Schwab International Core Equity Fund
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $10.04 | $9.64 | $11.27 | $9.20 | $9.62 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.14 | 0.24 | 0.24 | 0.22 | 0.22 | |
| Net realized and unrealized gains (losses) | (0.71) | 0.41 | (1.58) | 2.08 | (0.45) | |
| Total from investment operations | (0.57) | 0.65 | (1.34) | 2.30 | (0.23) | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.36) | (0.25) | (0.26) | (0.23) | (0.19) | |
| Distributions from net realized gains | — | — | (0.03) | — | — | |
| Total distributions | (0.36) | (0.25) | (0.29) | (0.23) | (0.19) | |
| Net asset value at end of period | $9.11 | $10.04 | $9.64 | $11.27 | $9.20 | |
| Total return | (6.01%) | 7.08% | (12.18%) | 25.58% | (2.41%) | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses | 0.86% | 0.86% | 0.86% | 0.86% | 0.86% | |
| Gross operating expenses | 0.88% | 0.87% | 0.89% | 0.90% | 0.91% | |
| Net investment income (loss) | 1.51% | 2.44% | 2.22% | 2.15% | 2.40% | |
| Portfolio turnover rate | 97% | 91% | 98% | 85% | 90% | |
| Net assets, end of period (x 1,000,000) | $664 | $976 | $1,166 | $1,227 | $772 | |
| |
1
Calculated based on the average shares outstanding during the period.
Schwab Active Equity Funds | Annual Report
Schwab International Core Equity Fund
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after calendar quarters on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Common Stock 99.3% of net assets |
| |
| Australia 5.2% |
| Australia & New Zealand Banking Group Ltd. | 680,929 | 9,036,358 |
| Coles Group Ltd. | 369,682 | 4,618,169 |
| Evolution Mining Ltd. | 299,766 | 1,175,213 |
| Fortescue Metals Group Ltd. | 314,321 | 3,845,243 |
| JB Hi-Fi Ltd. | 51,376 | 1,716,753 |
| Macquarie Group Ltd. | 33,022 | 2,944,240 |
| Magellan Financial Group Ltd. | 131,886 | 5,111,709 |
| Netwealth Group Ltd. | 82,617 | 1,003,430 |
| Rio Tinto Ltd. | 16,674 | 1,084,708 |
| Santos Ltd. | 520,539 | 1,730,472 |
| Sonic Healthcare Ltd. | 85,089 | 2,084,087 |
| | | 34,350,382 |
| |
| Austria 0.9% |
| BAWAG Group AG * | 39,093 | 1,435,697 |
| Wienerberger AG | 192,618 | 4,859,044 |
| | | 6,294,741 |
| |
| Belgium 0.7% |
| bpost S.A. | 220,895 | 1,957,436 |
| Euronav N.V. | 360,446 | 2,633,730 |
| | | 4,591,166 |
| |
| Canada 1.0% |
| Constellation Software, Inc. | 2,700 | 2,834,341 |
| Endeavour Mining Corp. * | 113,857 | 2,792,800 |
| Royal Bank of Canada | 13,600 | 950,969 |
| | | 6,578,110 |
| |
| China 0.2% |
| Meituan, B Shares * | 45,000 | 1,677,562 |
| |
| Denmark 3.2% |
| Genmab A/S * | 9,759 | 3,259,748 |
| Novo Nordisk A/S, Class B | 235,502 | 15,016,934 |
| Novozymes A/S, Class B | 50,573 | 3,041,519 |
| | | 21,318,201 |
| |
| Finland 0.9% |
| Kemira Oyj | 78,407 | 968,633 |
| Kone Oyj, Class B | 52,649 | 4,191,551 |
| Neste Oyj | 18,982 | 989,979 |
| | | 6,150,163 |
| |
| France 10.4% |
| Air Liquide S.A. | 53,770 | 7,863,232 |
| Christian Dior SE | 14,963 | 6,367,701 |
| Cie de Saint-Gobain * | 132,024 | 5,142,798 |
| CNP Assurances * | 368,965 | 4,161,420 |
| Credit Agricole S.A. * | 337,171 | 2,667,203 |
| Security | Number
of Shares | Value ($) |
| Gaztransport Et Technigaz S.A. | 38,911 | 3,729,882 |
| Ipsen S.A. | 16,320 | 1,486,425 |
| L'Oreal S.A. | 45,893 | 14,831,942 |
| LVMH Moet Hennessy Louis Vuitton SE | 13,857 | 6,495,437 |
| Schneider Electric SE | 105,112 | 12,771,782 |
| Veolia Environnement S.A. | 188,556 | 3,509,525 |
| | | 69,027,347 |
| |
| Germany 6.8% |
| Aareal Bank AG * | 143,050 | 2,471,719 |
| Aurubis AG | 20,119 | 1,287,082 |
| Bayerische Motoren Werke AG | 64,636 | 4,417,142 |
| Brenntag AG | 65,292 | 4,173,228 |
| Deutsche Post AG | 31,936 | 1,415,978 |
| GEA Group AG | 234,754 | 7,818,177 |
| HelloFresh SE * | 47,292 | 2,527,134 |
| Hornbach Holding AG & Co. KGaA | 51,535 | 4,963,674 |
| KION Group AG | 16,878 | 1,315,149 |
| Knorr-Bremse AG | 22,479 | 2,603,094 |
| MorphoSys AG * | 38,402 | 3,914,255 |
| Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen | 2,667 | 625,084 |
| SAP SE | 16,646 | 1,775,871 |
| Siemens AG | 3,500 | 410,606 |
| Symrise AG | 13,384 | 1,650,386 |
| Teamviewer AG * | 35,927 | 1,583,591 |
| Wacker Chemie AG | 20,015 | 1,930,888 |
| | | 44,883,058 |
| |
| Greece 0.2% |
| Hellenic Telecommunications Organization S.A. | 122,692 | 1,627,105 |
| |
| Hong Kong 2.3% |
| AIA Group Ltd. | 159,000 | 1,513,231 |
| Longfor Group Holdings Ltd. | 535,960 | 2,936,583 |
| Tencent Holdings Ltd. | 140,006 | 10,697,244 |
| | | 15,147,058 |
| |
| Ireland 0.3% |
| Smurfit Kappa Group plc | 57,451 | 2,164,702 |
| |
| Italy 2.6% |
| Ferrari N.V. | 47,112 | 8,404,397 |
| Italgas S.p.A. | 1,525,538 | 8,815,676 |
| | | 17,220,073 |
| |
| Japan 27.2% |
| Advantest Corp. | 81,800 | 4,738,098 |
| Anritsu Corp. | 60,000 | 1,313,548 |
| BayCurrent Consulting, Inc. | 15,000 | 1,940,855 |
| Bridgestone Corp. | 40,500 | 1,320,097 |
| Capcom Co., Ltd. | 31,000 | 1,695,438 |
| Daifuku Co., Ltd. | 14,500 | 1,495,208 |
Schwab Active Equity Funds | Annual Report
Schwab International Core Equity Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Elecom Co., Ltd. | 28,000 | 1,402,252 |
| Fuji Corp. | 35,000 | 703,639 |
| Fujitsu Ltd. | 34,000 | 4,022,696 |
| GMO Payment Gateway, Inc. | 31,000 | 3,798,382 |
| Honda Motor Co., Ltd. | 144,000 | 3,406,022 |
| Hoya Corp. | 108,763 | 12,274,654 |
| IR Japan Holdings Ltd. | 17,900 | 1,981,834 |
| Izumi Co., Ltd. | 8,000 | 271,310 |
| Japan Exchange Group, Inc. | 42,000 | 1,025,355 |
| K's Holdings Corp. | 11,200 | 143,034 |
| Kanamoto Co., Ltd. | 69,000 | 1,423,454 |
| KDDI Corp. | 153,900 | 4,163,763 |
| Keyence Corp. | 17,000 | 7,714,982 |
| Kintetsu World Express, Inc. | 152,300 | 3,237,602 |
| M3, Inc. | 60,200 | 4,065,650 |
| Macnica Fuji Electronics Holdings, Inc. | 40,000 | 715,348 |
| Medical Data Vision Co., Ltd. (a) | 13,500 | 317,033 |
| Meitec Corp. | 46,000 | 2,280,457 |
| Mercari, Inc. * | 20,000 | 840,847 |
| Mitsubishi Electric Corp. | 156,000 | 2,009,106 |
| Mitsubishi UFJ Financial Group, Inc. | 406,847 | 1,603,752 |
| Mitsubishi UFJ Lease & Finance Co., Ltd. | 887,900 | 3,762,024 |
| Nabtesco Corp. | 43,300 | 1,617,611 |
| Nexon Co., Ltd. | 172,600 | 4,810,516 |
| Nidec Corp. | 10,000 | 1,010,020 |
| Nihon M&A Center, Inc. | 30,600 | 1,796,879 |
| Nintendo Co., Ltd. | 30,000 | 16,220,662 |
| Nomura Holdings, Inc. | 1,134,100 | 5,078,996 |
| Omron Corp. | 61,000 | 4,404,568 |
| Ono Pharmaceutical Co., Ltd. | 136,700 | 3,899,396 |
| Senko Group Holdings Co., Ltd. | 177,000 | 1,582,921 |
| Seria Co., Ltd. | 33,000 | 1,271,461 |
| Shimano, Inc. | 1,300 | 297,330 |
| Shin-Etsu Chemical Co., Ltd. | 54,979 | 7,343,367 |
| SMC Corp. | 6,000 | 3,191,431 |
| SoftBank Group Corp. | 16,000 | 1,042,140 |
| Sony Corp. | 209,298 | 17,448,426 |
| T&D Holdings, Inc. | 511,000 | 5,106,973 |
| Tokai Tokyo Financial Holdings, Inc. | 200,000 | 514,942 |
| Tokyo Electron Ltd. | 36,600 | 9,823,836 |
| Tokyo Steel Manufacturing Co., Ltd. | 261,353 | 1,663,187 |
| Trend Micro, Inc. | 90,000 | 5,041,360 |
| ValueCommerce Co., Ltd. | 65,000 | 2,059,473 |
| Wacom Co., Ltd. | 481,300 | 3,164,072 |
| Welcia Holdings Co., Ltd. | 104,000 | 4,072,783 |
| ZOZO, Inc. | 188,500 | 4,781,847 |
| | | 180,910,637 |
| |
| Netherlands 5.6% |
| ASML Holding N.V. | 5,789 | 2,094,477 |
| Euronext N.V. | 17,992 | 1,873,354 |
| Koninklijke Ahold Delhaize N.V. | 468,825 | 12,853,197 |
| Signify N.V. * | 94,912 | 3,368,932 |
| Unilever N.V. | 186,040 | 10,487,770 |
| Wolters Kluwer N.V. | 79,476 | 6,434,906 |
| | | 37,112,636 |
| |
| New Zealand 0.9% |
| a2 Milk Co., Ltd. * | 108,298 | 1,048,668 |
| Fisher & Paykel Healthcare Corp., Ltd. | 169,552 | 3,922,481 |
| Spark New Zealand Ltd. | 252,406 | 749,056 |
| | | 5,720,205 |
| |
| Security | Number
of Shares | Value ($) |
| Norway 0.1% |
| Aker BP A.S.A. | 40,403 | 629,210 |
| |
| Republic of Korea 1.8% |
| Samsung Biologics Co., Ltd. * | 4,633 | 2,799,708 |
| Samsung Electronics Co., Ltd. | 181,305 | 9,113,406 |
| | | 11,913,114 |
| |
| Singapore 1.1% |
| Keppel DC REIT | 950,000 | 2,017,054 |
| Sheng Siong Group Ltd. | 2,060,000 | 2,517,853 |
| Singapore Exchange Ltd. | 397,909 | 2,523,678 |
| | | 7,058,585 |
| |
| Spain 2.7% |
| ACS Actividades de Construccion y Servicios S.A. | 72,628 | 1,726,420 |
| Iberdrola S.A. | 245,139 | 2,894,498 |
| Industria de Diseno Textil S.A. | 429,112 | 10,594,485 |
| Pharma Mar S.A. | 18,814 | 2,525,724 |
| | | 17,741,127 |
| |
| Sweden 1.3% |
| Evolution Gaming Group AB | 43,504 | 3,226,703 |
| Paradox Interactive AB | 40,761 | 1,263,233 |
| Sandvik AB * | 225,468 | 4,018,986 |
| | | 8,508,922 |
| |
| Switzerland 11.3% |
| ALSO Holding AG * | 3,500 | 818,883 |
| Credit Suisse Group AG | 1,160,650 | 10,946,520 |
| Geberit AG | 12,548 | 7,141,936 |
| Givaudan S.A. | 320 | 1,304,940 |
| Nestle S.A. | 132,994 | 14,958,884 |
| Novartis AG | 143,568 | 11,187,189 |
| Roche Holding AG | 60,266 | 19,365,355 |
| Schindler Holding AG | 7,216 | 1,848,488 |
| Sonova Holding AG * | 13,601 | 3,228,440 |
| Zurich Insurance Group AG | 13,695 | 4,548,733 |
| | | 75,349,368 |
| |
| Taiwan 0.8% |
| Taiwan Semiconductor Manufacturing Co., Ltd. | 350,000 | 5,295,386 |
| |
| United Kingdom 11.8% |
| 3i Group plc | 375,187 | 4,685,969 |
| AstraZeneca plc | 62,126 | 6,237,790 |
| Barclays plc * | 2,009,113 | 2,784,778 |
| BHP Group plc | 582,018 | 11,275,056 |
| Ferguson plc | 36,131 | 3,588,563 |
| Games Workshop Group plc | 35,219 | 4,734,716 |
| GlaxoSmithKline plc | 406,054 | 6,780,484 |
| GVC Holdings plc * | 149,749 | 1,875,910 |
| Hikma Pharmaceuticals plc | 70,929 | 2,306,147 |
| JD Sports Fashion plc | 289,203 | 2,782,271 |
| Land Securities Group plc | 58,375 | 385,159 |
| London Stock Exchange Group plc | 28,182 | 3,037,958 |
| Natwest Group plc * | 1,250,646 | 2,016,488 |
| Reckitt Benckiser Group plc | 15,095 | 1,329,696 |
Schwab Active Equity Funds | Annual Report
Schwab International Core Equity Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| RELX plc | 65,498 | 1,296,068 |
| Royal Dutch Shell plc, A Shares | 308,850 | 3,885,172 |
| Spirent Communications plc | 1,025,133 | 3,848,595 |
| Standard Chartered plc * | 376,915 | 1,722,428 |
| Unilever plc | 234,670 | 13,373,566 |
| Vodafone Group plc | 379,071 | 505,669 |
| | | 78,452,483 |
| Total Common Stock |
| (Cost $593,481,507) | | 659,721,341 |
|
| Other Investment Company 0.0% of net assets |
| |
| Securities Lending Collateral 0.0% |
| Wells Fargo Government Money Market Fund, Select Class 0.04% (b) | 315,008 | 315,008 |
| Total Other Investment Company |
| (Cost $315,008) | | 315,008 |
| * | Non-income producing security. |
| (a) | All or a portion of this security is on loan. Securities on loan were valued at $300,595. |
| (b) | The rate shown is the 7-day yield. |
| | |
| REIT — | Real Estate Investment Trust |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 (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 | |
| Assets | | | | | |
| Common Stock1 | $— | $352,027,448 | $— | $352,027,448 | |
| Austria | 4,859,044 | 1,435,697 | — | 6,294,741 | |
| Canada | 6,578,110 | — | — | 6,578,110 | |
| France | 6,367,701 | 62,659,646 | — | 69,027,347 | |
| Germany | 7,566,768 | 37,316,290 | — | 44,883,058 | |
| Japan | 4,072,783 | 176,837,854 | — | 180,910,637 | |
| Other Investment Company1 | 315,008 | — | — | 315,008 | |
| Total | $29,759,414 | $630,276,935 | $— | $660,036,349 | |
| 1 | As categorized in Portfolio Holdings. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Active Equity Funds | Annual Report
Schwab International Core Equity Fund
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in unaffiliated issuers, at value (cost $593,481,507) including securities on loan of $300,595 | | $659,721,341 |
| Collateral invested for securities on loan, at value (cost $315,008) | | 315,008 |
| Foreign currency, at value (cost $981,629) | | 965,703 |
| Deposit with broker for futures contracts | | 387,200 |
| Receivables: | | |
| Investments sold | | 2,348,983 |
| Foreign tax reclaims | | 1,778,724 |
| Dividends | | 1,712,031 |
| Fund shares sold | | 118,610 |
| Income from securities on loan | | 48 |
| Prepaid expenses | + | 15,827 |
| Total assets | | 667,363,475 |
| Liabilities |
| Collateral held for securities on loan | | 315,008 |
| Payables: | | |
| Investments bought | | 1,035,453 |
| Investment adviser and administrator fees | | 358,963 |
| Shareholder service fees | | 148,188 |
| Due to custodian | | 584,747 |
| Fund shares redeemed | | 157,034 |
| Accrued expenses | + | 277,522 |
| Total liabilities | | 2,876,915 |
| Net Assets |
| Total assets | | 667,363,475 |
| Total liabilities | – | 2,876,915 |
| Net assets | | $664,486,560 |
| Net Assets by Source | | |
| Capital received from investors | | 772,870,132 |
| Total distributable loss | | (108,383,572) |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $664,486,560 | | 72,971,719 | | $9.11 |
| | | | | |
Schwab Active Equity Funds | Annual Report
Schwab International Core Equity Fund
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends (net of foreign withholding tax of $2,251,471) | | $18,691,393 |
| Securities on loan, net | + | 94,261 |
| Total investment income | | 18,785,654 |
| Expenses |
| Investment adviser and administrator fees | | 4,607,643 |
| Shareholder service fees | | 1,943,806 |
| Custodian fees | | 164,498 |
| Portfolio accounting fees | | 83,365 |
| Professional fees | | 43,222* |
| Registration fees | | 32,065 |
| Transfer agent fees | | 31,855 |
| Shareholder reports | | 25,693 |
| Independent trustees’ fees | | 11,383 |
| Other expenses | + | 30,221 |
| Total expenses | | 6,973,751 |
| Expense reduction by CSIM and its affiliates | – | 133,246* |
| Net expenses | – | 6,840,505 |
| Net investment income | | 11,945,149 |
| Realized and Unrealized Gains (Losses) |
| Net realized losses on investments | | (49,468,365) |
| Net realized gains on futures contracts | | 89,571 |
| Net realized losses on foreign currency transactions | + | (99,924) |
| Net realized losses | | (49,478,718) |
| Net change in unrealized appreciation (depreciation) on investments | | (22,787,222) |
| Net change in unrealized appreciation (depreciation) on foreign currency translations | + | 108,919 |
| Net change in unrealized appreciation (depreciation) | + | (22,678,303) |
| Net realized and unrealized losses | | (72,157,021) |
| Decrease in net assets resulting from operations | | ($60,211,872) |
| * | Includes professional fees of $304 associated with the filing of tax claims in the European Union deemed to be non-routine expenses of the fund. See financial notes 2(d) and 4 for additional information. |
Schwab Active Equity Funds | Annual Report
Schwab International Core Equity Fund
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $11,945,149 | $25,716,639 |
| Net realized losses | | (49,478,718) | (113,223,498) |
| Net change in unrealized appreciation (depreciation) | + | (22,678,303) | 154,448,499 |
| Increase (decrease) in net assets from operations | | (60,211,872) | 66,941,640 |
| Distributions to Shareholders | |
| Total distributions | | ($34,016,026) | ($29,979,566) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 10,774,447 | $93,817,527 | 16,140,498 | $153,928,560 |
| Shares reinvested | | 2,656,064 | 26,826,251 | 2,751,748 | 24,710,692 |
| Shares redeemed | + | (37,617,681) | (337,440,372) | (42,745,841) | (406,370,048) |
| Net transactions in fund shares | | (24,187,170) | ($216,796,594) | (23,853,595) | ($227,730,796) |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 97,158,889 | $975,511,052 | 121,012,484 | $1,166,279,774 |
| Total decrease | + | (24,187,170) | (311,024,492) | (23,853,595) | (190,768,722) |
| End of period | | 72,971,719 | $664,486,560 | 97,158,889 | $975,511,052 |
Schwab Active Equity Funds | Annual Report
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 Core Equity Fund | Schwab Target 2040 Fund |
| Schwab Dividend Equity Fund | Schwab Target 2045 Fund |
| Schwab Large-Cap Growth Fund | Schwab Target 2050 Fund |
| Schwab Small-Cap Equity Fund | Schwab Target 2055 Fund |
| Schwab Hedged Equity Fund | Schwab Target 2060 Fund |
| Schwab Health Care Fund | Schwab Fundamental US Large Company Index Fund |
| Schwab International Core Equity Fund | Schwab Fundamental US Small Company Index Fund |
| Schwab S&P 500 Index Fund | Schwab Fundamental International Large Company Index Fund |
| Schwab Small-Cap Index Fund® | Schwab Fundamental International Small Company Index Fund |
| Schwab Total Stock Market Index Fund® | Schwab Fundamental Emerging Markets Large Company Index Fund |
| Schwab U.S. Large-Cap Growth Index Fund | Schwab Fundamental Global Real Estate Index Fund |
| Schwab U.S. Large-Cap Value Index Fund | Schwab Target 2010 Index Fund |
| Schwab U.S. Mid-Cap Index Fund | Schwab Target 2015 Index Fund |
| Schwab International Index Fund® | Schwab Target 2020 Index Fund |
| Schwab MarketTrack All Equity Portfolio™ | Schwab Target 2025 Index Fund |
| Schwab MarketTrack Growth Portfolio™ | Schwab Target 2030 Index Fund |
| Schwab MarketTrack Balanced Portfolio™ | Schwab Target 2035 Index Fund |
| Schwab MarketTrack Conservative Portfolio™ | Schwab Target 2040 Index Fund |
| Laudus International MarketMasters Fund™ | Schwab Target 2045 Index Fund |
| Schwab Balanced Fund | Schwab Target 2050 Index Fund |
| Schwab Target 2010 Fund | Schwab Target 2055 Index Fund |
| Schwab Target 2015 Fund | Schwab Target 2060 Index Fund |
| Schwab Target 2020 Fund | Schwab Monthly Income Fund - Moderate Payout |
| Schwab Target 2025 Fund | Schwab Monthly Income Fund - Enhanced Payout |
| Schwab Target 2030 Fund | Schwab Monthly Income Fund - Maximum Payout |
| Schwab Target 2035 Fund | |
Each fund in this report offers one share class. Shares are bought and sold 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) and are available on the SEC’s website at www.sec.gov.
(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 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 Active Equity Funds | Annual Report
Schwab Active Equity 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 the mean of 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.
• Underlying funds: Mutual funds are valued at their respective NAVs.
• Cash management sweep time deposits: Balances held in cash management sweep time deposits are accounted for on a cost basis, which approximates fair 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 and futures contracts. 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
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
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, 2020 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 fair 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 allow the funds or the lending agent to terminate any loan at any given time and the securities must be returned within the earlier of the standard trade settlement period or the specified time period under the relevant securities lending agreement. 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. The aggregate fair 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. Securities lending fees paid to the unaffiliated lending agents start at 10% of gross lending revenue, with subsequent breakpoints to a low of 7.5%. In this context, the gross lending revenue equals the income received from the investment of cash collateral and fees paid by borrowers less any rebates paid to the borrowers. Any expenses charged by the cash collateral fund are in addition to these fees. All remaining revenue is retained by the fund, as applicable. No portion of lending revenue is paid to or retained by Charles Schwab Investment Management, Inc. (CSIM or the investment adviser) or any affiliate of CSIM.
As of October 31, 2020, certain funds had securities on loan, all of which were classified as common stocks. The value of the securities on loan and the related collateral as of October 31, 2020, if any, are disclosed in each fund’s Portfolio Holdings and Statement of Assets and Liabilities.
Cash Management Transactions: The funds may subscribe to the Brown Brothers Harriman & Co. (BBH) Cash Management Service Sweep (CMS Sweep). The BBH CMS Sweep is an investment product that automatically sweeps the funds’ cash balances into overnight offshore time deposits with either the BBH Grand Cayman branch or a branch of a pre-approved commercial bank. This
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
fully automated program allows the funds to earn interest on cash balances. Excess cash invested with deposit institutions domiciled outside of the U.S., as with any offshore deposit, may be subject to sovereign actions in the jurisdiction of the deposit institution including, but not limited to, freeze, seizure or diminution. The funds bear the risk associated with the repayment of principal and payment of interest on such instruments by the institution with which the deposit is ultimately placed.
Short Sales: Dividends declared on short positions are recorded on the ex-date as an expense. 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. A fund may also earn rebates as an element of the broker arrangement, which are recorded as an offset to stock loan fees on short sales transactions. The stock loan fees on short sales are recognized on the Statement of Operations. In the event that rebates exceed the stock loan fees on short sales, the net rebates are recognized as a component of investment income on the Statement of Operations.
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, in the form of cash or non-cash income such as in the form of additional securities, 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 date the ex-dividend date is confirmed. 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 | Annual Report
Schwab Active Equity Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
The Schwab International Core Equity Fund filed claims to recover taxes previously withheld in certain European Union countries on the basis that those countries had purportedly violated certain provisions in the Treaty on the Functioning of the European Union. These filings are subject to various administrative and judicial proceedings within these countries, and all professional fees associated with these filings have been paid by the investment adviser. For additional details see Affiliates and Affiliated Transactions in financial note 4, Other Affiliated Transactions.
(e) Expenses:
Expenses that are specific to a fund are charged directly to the fund. Expenses that are common to more than one fund in the trusts generally are allocated among those 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 distributions. The funds make distributions from net realized capital gains, if any, once a year.
(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 funds intend to meet federal income and excise tax requirements for regulated investment companies under subchapter M of the Internal Revenue Code, as amended. Accordingly, the funds distribute substantially all of their net investment income and net realized capital gains, if any, to their shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.
(i) 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 accrued as of October 31, 2020, if any, are reflected in each fund’s Statement of Assets and Liabilities.
(j) 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. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. Markets may be impacted by economic, political, regulatory and other conditions, including economic sanctions and other government actions. In addition, the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters and epidemics, may also negatively affect the financial markets. As with any investment whose performance is tied to these markets, the value of an investment in a fund will fluctuate, which means that an investor could lose money over short or long periods.
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.
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
Financial Notes (continued)
3. Risk Factors (continued):
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.
Market Capitalization Risk. Securities issued by companies of different market capitalizations tend to go in and out of favor based on market and economic conditions. During a period when securities of a particular market capitalization fall behind other types of investments, a fund’s performance could be impacted.
Large-Cap Company Risk. Large-cap companies are generally more mature and the securities issued by these companies may not be able to reach the same levels of growth as the securities issued by small- or mid-cap companies.
Mid-Cap Company Risk. Mid-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies and the value of securities issued by these companies may move sharply.
Small-Cap Company Risk. Securities issued by small-cap companies may be riskier than those issued by larger companies, and their prices may move sharply, especially during market upturns and downturns.
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 Stock Risk. To the extent that a fund invests in dividend paying stocks, the fund’s performance will correlate 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. The principal type of derivative used by a fund is a futures contract. A futures contract is an agreement to buy or sell a financial instrument at a specific price on a specific day. The use of derivatives that are subject to regulation by the Commodity Futures Trading Commission (CFTC), could cause a fund to become a commodity pool, which would require the fund to comply with certain CFTC rules. 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 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 gains. 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 fund may be unable to sell certain securities, such as illiquid securities, readily at a favorable time or price, or the fund may have to sell them at a loss.
Exchange-Traded Fund (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.
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
Financial Notes (continued)
3. Risk Factors (continued):
Short Sales Risk. 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. The price of a borrowed security in a short sale transaction may be more or less than the price at which the security was sold by the fund. 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 and could result in a loss to the fund.
Foreign Investment Risk. A fund’s investments in securities of foreign issuers involve certain risks that may be 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. There is a risk that investments in securities denominated in, and/or receiving revenues in, foreign currencies will decline in value relative to the U.S. dollar. To the extent a fund’s investments in a single country or a limited number of countries represent a large percentage of the fund’s assets, the fund’s performance may be adversely affected by the economic, political, regulatory and social conditions in those countries, and the fund’s price may be more volatile than the price of a fund that is geographically diversified.
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 developed countries. As a result, there may be an increased risk of illiquidity and 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.
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, or delay in recovery of, the loaned securities if the borrower fails to return the security loaned or becomes insolvent.
Portfolio Turnover Risk. The funds buy and sell portfolio securities actively. This may cause a fund’s portfolio turnover rate and transaction costs to rise, which may lower a fund’s performance and may increase the likelihood of capital gains distributions.
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:
Investment Adviser
CSIM, 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
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% |
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
| % of Average Daily Net Assets | Schwab
Health Care
Fund |
| First $500 million | 0.54% |
| $500 million to $1 billion | 0.515% |
| Over $1 billion | 0.49% |
For the period ended October 31, 2020, the aggregate advisory fee paid to CSIM by the Schwab Health Care Fund was 0.53%, as a percentage of the fund’s average daily net assets.
Shareholder Servicing
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 financial intermediaries, including Charles Schwab & Co., Inc. (Schwab), a broker-dealer affiliate of CSIM (together, service providers), of certain shareholder services to the current shareholders of the funds.
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, as distributor of the funds (or, in the case of payments made to Schwab acting as a service provider, pursuant to Schwab’s written agreement with the funds), and a fund will pay no more than 0.25% of the average annual daily net asset value of the fund shares owned by shareholders holding shares through such service provider. Payments under the Plan are made as described above without regard to whether the fee is more or less than the service provider’s actual cost of providing the services, and if more, such excess may be retained as profit by the service provider.
Expense Limitation
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 | Schwab
Health Care
Fund | Schwab
International
Core Equity Fund |
| 0.75% | 0.89% | 0.99% | 1.12% | 1.33%* | 0.82% | 0.86% |
| * | Excludes dividend expenses and stock loan fees paid on securities sold short. |
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Investments from Affiliates
Certain funds in the Fund Complex (for definition refer to Trustees and Officers section) may own shares of other funds in the Fund Complex. The table below reflects the percentages of shares of each fund in this report that are owned by other funds in the Fund Complex as of October 31, 2020, as applicable:
| | Underlying Funds | | | |
| | Schwab
Core
Equity Fund | Schwab
Dividend
Equity Fund | Schwab
Small-Cap
Equity Fund | Schwab
International Core
Equity Fund |
| Schwab Balanced Fund | 10.0% | —% | 12.2% | —% |
| Schwab Monthly Income Fund - Enhanced Payout | —% | 2.8% | —% | —% |
| Schwab Monthly Income Fund - Maximum Payout | —% | 1.8% | —% | —% |
| Schwab Monthly Income Fund - Moderate Payout | —% | 2.1% | —% | —% |
| Schwab Target 2010 Fund | 0.1% | 0.0%* | 0.1% | 0.3% |
| Schwab Target 2015 Fund | 0.2% | 0.0%* | 0.2% | 0.4% |
| Schwab Target 2020 Fund | 1.4% | 0.1% | 1.4% | 3.1% |
| Schwab Target 2025 Fund | 2.4% | 0.2% | 2.5% | 4.9% |
| Schwab Target 2030 Fund | 4.7% | 1.3% | 5.9% | 10.0% |
| Schwab Target 2035 Fund | 2.6% | 1.2% | 3.6% | 5.5% |
| Schwab Target 2040 Fund | 5.8% | 3.4% | 8.7% | 12.6% |
| Schwab Target 2045 Fund | 1.1% | 0.7% | 1.7% | 2.5% |
| Schwab Target 2050 Fund | 1.2% | 0.9% | 1.9% | 2.6% |
| Schwab Target 2055 Fund | 0.7% | 0.5% | 1.1% | 1.6% |
| Schwab Target 2060 Fund | 0.1% | 0.1% | 0.2% | 0.3% |
Other Affiliated Transactions
The professional fees related to foreign withholding tax claims discussed in financial note 2 were non-routine expenses. The investment adviser agreed to pay these professional fees, which are subject to reimbursement by the Schwab International Core Equity Fund to the extent the fund is able to successfully recover taxes withheld in the future.
The professional fees incurred by the Schwab International Core Equity Fund were $304 and the fund made no reimbursement to the investment adviser during the period ended October 31, 2020.
As of October 31, 2020, the balance of professional fees related to foreign withholding tax subject to future reimbursement by the fund to the investment adviser was $19,475 for the Schwab International Core Equity Fund.
No other amounts for additional tax reclaims are reflected in the financial statements due to the uncertainty surrounding the ultimate resolution of proceedings, the likelihood of receipt of these claims, and the potential timing of payment.
Interfund Borrowing and Lending
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. 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. 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 Active Equity Funds | Annual Report
Schwab Active Equity Funds
Financial Notes (continued)
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, the funds were participants with other funds in the Fund Complex in a joint, syndicated, committed $750 million line of credit (the Syndicated Credit Facility), which matured on October 1, 2020. On October 1, 2020, the Syndicated Credit Facility was amended to run for a new 364 day period with a line of credit of $850 million, maturing on September 30, 2021. Under the terms of the Syndicated Credit Facility, in addition to the interest charged on any borrowings by a fund, each fund paid a commitment fee of 0.15% per annum on the funds’ proportionate share of the unused portion of the Syndicated Credit Facility.
During the period, the funds were participants with other funds in the Fund Complex in a joint, unsecured, uncommitted $500 million line of credit (the Uncommitted Credit Facility), with State Street Bank and Trust Company, which matured on November 29, 2019. On November 29, 2019, the Uncommitted Credit Facility was amended to run for a new 364 day period, which was scheduled to mature on November 27, 2020. However, on October 1, 2020, the Uncommitted Credit Facility was amended to run for a new 364 day period with a line of credit of $400 million, maturing on September 30, 2021. Under the terms of the Uncommitted Credit Facility, each fund pays interest on the amount a fund borrows. There were no borrowings from either line 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 of Investment Securities:
For the period ended October 31, 2020, purchases and sales of securities (excluding short-term obligations) were as follows:
| | Purchases
of Securities | Sales
of Securities |
| Schwab Core Equity Fund | $1,978,478,108 | $2,283,423,385 |
| Schwab Dividend Equity Fund | 477,020,466 | 626,895,003 |
| Schwab Large-Cap Growth Fund | 124,220,884 | 132,960,796 |
| Schwab Small-Cap Equity Fund | 561,532,378 | 591,942,091 |
| Schwab Hedged Equity Fund* | 193,640,978 | 251,117,671 |
| Schwab Health Care Fund | 555,524,784 | 646,692,776 |
| Schwab International Core Equity Fund | 761,016,151 | 999,732,177 |
| * | Including securities sold short. |
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 current value and variation margin for futures contracts held at October 31, 2020, if any, 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
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
Financial Notes (continued)
8. Derivatives (continued):
respect to futures contracts and financial note 3 for disclosures concerning the risks of investing in futures contracts. During the period ended October 31, 2020, the month-end average notional amounts of futures contracts held by the funds and the month-end average number of contracts held were as follows:
| | Notional Amounts | Number of Contracts |
| Schwab Core Equity Fund | $1,979,005 | 12 |
| Schwab Dividend Equity Fund | 193,458 | 1 |
| Schwab Large-Cap Growth Fund | 1,176,115 | 7 |
| Schwab Small-Cap Equity Fund | 1,179,737 | 19 |
| Schwab Hedged Equity Fund | 124,000 | 1 |
| Schwab Health Care Fund | 74,564 | 0* |
| Schwab International Core Equity Fund | 534,065 | 6 |
9. Federal Income Taxes:
As of October 31, 2020, the tax basis cost of the funds’ investments and gross unrealized appreciation and depreciation 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 | | Schwab
Health Care
Fund | | Schwab
International
Core
Equity Fund |
| Tax cost | $1,494,739,283 | | $544,918,166 | | $118,835,822 | | $470,233,990 | | $29,767,357 | | $518,340,673 | | $595,885,510 |
| Gross unrealized appreciation | $513,905,415 | | $67,149,039 | | $93,689,248 | | $67,986,367 | | $16,377,024 | | $232,467,443 | | $93,792,642 |
| Gross unrealized depreciation | (54,272,607) | | (35,902,980) | | (2,782,762) | | (42,014,881) | | (5,522,664) | | (9,208,000) | | (29,641,803) |
| Net unrealized appreciation (depreciation) | $459,632,808 | | $31,246,059 | | $90,906,486 | | $25,971,486 | | $10,854,360 | | $223,259,443 | | $64,150,839 |
As of October 31, 2020, 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 | $14,352,526 | | $1,465,256 | | $— | | $729,099 | | $— |
| Undistributed long-term capital gains | 80,768,403 | | — | | 2,529,980 | | — | | — |
| Net unrealized appreciation (depreciation) on investments | 459,632,808 | | 31,246,059 | | 90,906,486 | | 25,971,486 | | 10,854,360 |
| Net other unrealized appreciation (depreciation) | — | | 8,729 | | — | | — | | — |
| Total | $554,753,737 | | $32,720,044 | | $93,436,466 | | $26,700,585 | | $10,854,360 |
| | Schwab
Health Care
Fund | | Schwab
International
Core
Equity Fund |
| Undistributed ordinary income | $6,243,172 | | $6,772,256 |
| Undistributed long-term capital gains | 78,003,865 | | — |
| Net unrealized appreciation (depreciation) on investments | 223,259,443 | | 64,150,839 |
| Net other unrealized appreciation (depreciation) | 72,506 | | 104,535 |
| Total | $307,578,986 | | $71,027,630 |
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
Financial Notes (continued)
9. Federal Income Taxes (continued):
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, realization for tax purposes of unrealized gains (losses) on futures contracts and the realization for tax purposes of unrealized appreciation on investments in Passive Foreign Investment Companies (PFIC) and partnership investments. The tax cost of the funds’ investments, disclosed above, have been adjusted from their book amounts to reflect these unrealized appreciation or depreciation differences, as applicable.
Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2020, the funds had capital loss carryforwards available to offset future net capital gains 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 |
| No expiration | $— | | $28,724,068 | | $— | | $90,389,520 | | $20,528,902 |
| Total | $— | | $28,724,068 | | $— | | $90,389,520 | | $20,528,902 |
| Expiration Date | Schwab
Health Care
Fund | | Schwab
International
Core
Equity Fund |
| No expiration | $— | | $179,411,202 |
| Total | $— | | $179,411,202 |
For tax purposes, late-year ordinary losses may be deferred and treated as occurring on the first day of the following fiscal year. For the fiscal year ended October 31, 2020, the funds had ordinary losses deferred as follows:
| | Schwab
Core
Equity Fund | Schwab
Dividend
Equity Fund | Schwab
Large-Cap
Growth Fund | Schwab
Small-Cap
Equity Fund | Schwab
Hedged
Equity Fund |
| Ordinary losses deferred | $— | $— | $106,728 | $— | $280,648 |
| | Schwab
Health Care
Fund | Schwab
International
Core
Equity Fund |
| Ordinary losses deferred | $— | $— |
For the fiscal year ended October 31, 2020, the Schwab Hedged Equity Fund had other accumulated losses of $6,827.
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 fiscal year end distributions | | | | | |
| Ordinary income | $19,826,971 | $13,605,187 | $244,834 | $635,564 | $1,081,623 |
| Long-term capital gains | 44,092,670 | 44,139,966 | 9,460,933 | — | — |
| Prior fiscal year end distributions | | | | | |
| Ordinary income | $50,106,445 | $17,703,109 | $6,863,262 | $47,742,964 | $2,154,010 |
| Long-term capital gains | 208,707,447 | 98,971,136 | 17,392,917 | 57,318,761 | 17,187,468 |
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
Financial Notes (continued)
9. Federal Income Taxes (continued):
| | Schwab
Health Care
Fund | Schwab
International
Core
Equity Fund |
| Current fiscal year end distributions | | |
| Ordinary income | $8,653,407 | $34,016,026 |
| Long-term capital gains | 26,994,144 | — |
| Prior fiscal year end distributions | | |
| Ordinary income | $13,608,829 | $29,979,566 |
| Long-term capital gains | 60,136,138 | — |
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, 2020, 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 fiscal year ended October 31, 2020, the funds did not incur any interest or penalties.
10. Independent Registered Public Accounting Firm:
On June 8, 2020, the Audit, Compliance and Valuation Committee of the Board approved, and on June 9, 2020, the Board approved, Deloitte & Touche LLP as the independent registered accounting firm of the Schwab Funds Complex for fiscal periods ending after June 8, 2020.
On June 8, 2020, the PricewaterhouseCoopers LLP (the “Prior Auditor”) resigned as the independent registered public accounting firm of the Schwab Funds Complex. The Prior Auditor’s reports on the financial statements of the funds for the past two fiscal years, the years ended October 31, 2018 and October 31, 2019, did not contain an adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the last two fiscal year-ends and through June 8, 2020, there were no (1) disagreements with the Prior Auditor on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the Prior Auditor’s satisfaction, would have caused it to make reference to that matter in connection with its reports on the funds’ financial statements for such periods; or (2) “reportable events,” as that term is defined in Item 304 (a)(1)(v) of Regulation S-K under the Securities Exchange Act of 1934.
11. Subsequent Events:
Management has determined there are no subsequent events or transactions through the date the financial statements were issued that would have materially impacted the financial statements as presented.
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Schwab Capital Trust 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 Health Care Fund and Schwab International Core Equity Fund:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statements of assets and liabilities, including the portfolio holdings, of Schwab Core Equity Fund, Schwab Dividend Equity Fund, Schwab Large-Cap Growth Fund, Schwab Small-Cap Equity Fund, Schwab Hedged Equity Fund, Schwab Health Care Fund and Schwab International Core Equity Fund (the “Funds”), seven of the funds constituting Schwab Capital Trust, as of October 31, 2020, and the related statements of operations, statements of changes in net assets, and the financial highlights for the year then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of each of the Funds as of October 31, 2020, and the results of their operations, the changes in their net assets, and the financial highlights for the year then ended in conformity with accounting principles generally accepted in the United States of America. The statements of changes in net assets for the year ended October 31, 2019 and the financial highlights for each of the four years in the period ended October 31, 2019 were audited by other auditors, whose report, dated December 16, 2019, expressed an unqualified opinion on such statements of changes in net assets and financial highlights.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2020, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
Deloitte & Touche LLP
Denver, Colorado
December 16, 2020
We have served as the auditor of one or more investment companies in the Schwab Funds Complex since 2020.
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
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 $1,864,197 to its shareholders for the fiscal year ended October 31, 2020. The respective foreign source income on the fund is $20,933,662.
For corporate shareholders, the following percentage of the funds’ dividend distributions paid during the fiscal year ended October 31, 2020, qualify for the corporate dividends received deduction:
| | Percentage |
| Schwab Core Equity Fund | 100.00 |
| Schwab Dividend Equity Fund | 100.00 |
| Schwab Large-Cap Growth Fund | 100.00 |
| Schwab Small-Cap Equity Fund | 100.00 |
| Schwab Hedged Equity Fund | 100.00 |
| Schwab Health Care Fund | 100.00 |
| Schwab International Core Equity Fund | — |
For the fiscal year ended October 31, 2020, 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 2021 via IRS Form 1099 of the amounts for use in preparing their 2020 income tax return.
| | |
| Schwab Core Equity Fund | $19,826,971 |
| Schwab Dividend Equity Fund | 13,605,187 |
| Schwab Large-Cap Growth Fund | 244,834 |
| Schwab Small-Cap Equity Fund | 635,564 |
| Schwab Hedged Equity Fund | 1,081,623 |
| Schwab Health Care Fund | 8,653,407 |
| Schwab International Core Equity Fund | 32,386,919 |
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, 2020:
| | |
| Schwab Core Equity Fund | $44,092,670 |
| Schwab Dividend Equity Fund | 44,139,966 |
| Schwab Large-Cap Growth Fund | 9,460,933 |
| Schwab Small-Cap Equity Fund | — |
| Schwab Hedged Equity Fund | — |
| Schwab Health Care Fund | 26,994,144 |
| Schwab International Core Equity Fund | — |
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
Liquidity Risk Management Program (Unaudited)
The Funds have adopted and implemented a liquidity risk management program (the “program”) as required by Rule 22e-4 under the Investment Company Act of 1940, as amended. The Funds’ Board of Trustees (the “Board”) has designated the Funds’ investment adviser, Charles Schwab Investment Management, Inc. (“CSIM”) as the administrator of the program. Personnel of CSIM or its affiliates conduct the day-to-day operation of the program.
Under the program, CSIM manages a Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. The program is reasonably designed to assess and manage a Fund’s liquidity risk, taking into consideration the Fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably foreseeable stressed conditions; its historical redemption history and shareholder concentrations; and its cash holdings and access to other funding sources, including the custodian overdraft facility and lines of credit. CSIM’s process of determining the degree of liquidity of each Fund’s investments is supported by third-party liquidity assessment vendors.
The Funds’ Board reviewed a report at its meeting held on September 22, 2020 prepared by CSIM regarding the operation and effectiveness of the program for the period June 1, 2019, through May 31, 2020. No significant liquidity events impacting any of the Funds were noted in the report. In addition, CSIM provided its assessment that the program had been operating effectively in managing each Fund’s liquidity risk.
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
Investment Advisory Agreement Approval
The Investment Company Act of 1940, as amended (the 1940 Act), requires that 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 and administration agreement (the Agreement) between Schwab Capital Trust (the Trust) and Charles Schwab Investment Management, Inc. (CSIM) 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 Health Care Fund and Schwab International Core Equity Fund (each, a Fund and collectively, 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, business goals and priorities, profitability, third-party oversight, corporate structure and operations. As part of the renewal process, the Independent Trustees’ legal counsel, on behalf of the Independent Trustees, sends an information request letter to CSIM seeking certain relevant information. The responses by CSIM are provided to the Trustees in the Board materials for their review prior to their meeting, and the Trustees are provided with the opportunity to request any additional materials. The Board also receives data provided by an independent provider of investment company data. 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 the Funds’ operations and performance, legal and compliance matters, risk management, portfolio turnover, and sales and marketing activity. In considering the renewal, the Independent Trustees receive advice from Independent Trustees’ legal counsel, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees participate in question and answer sessions with representatives of CSIM and meet in executive session outside the presence of Fund management.
The Board, including a majority of the Independent Trustees, considered information relating to the continuance of the Agreement with respect to the Funds at meetings held on May 11, 2020 and June 9, 2020, and approved the renewal of the Agreement with respect to the Funds for an additional one-year term at the meeting on June 9, 2020 called for the purpose of voting on such approval.1
The Board’s approval of the continuance 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 each Fund 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 and benchmark data; |
| 3. | each Fund’s expenses and how those expenses compared to those of certain other similar mutual funds; |
| 4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to each Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
| 5. | the extent to which economies of scale would be realized as each 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 Funds and the resources of CSIM and its affiliates dedicated to the Funds. In this regard, the Trustees evaluated, among other things, CSIM’s experience, track record, compliance program, resources dedicated to hiring and retaining skilled personnel and specialized talent, and information security resources. The Trustees also considered information provided by CSIM relating to services and support provided with respect to each Fund’s portfolio management team, portfolio strategy, and internal investment guidelines, as well as trading infrastructure, liquidity management, product design and analysis, shareholder communications, securities valuation, fund accounting and custody, and vendor and risk oversight. The Trustees also considered investments CSIM has made in its infrastructure, including modernizing CSIM’s technology and use of data, increasing expertise in key areas (including portfolio management and trade operations), and improving business continuity, cybersecurity, due diligence, risk management processes, and information security programs, which are designed to provide enhanced services to each Fund and its shareholders. The Trustees also considered Schwab’s
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
wide range of products, services, and channel alternatives such as investment research tools and an array of account features that benefit Fund shareholders who are brokerage clients of Schwab. Finally, the Trustees also considered Schwab’s reputation as a full service brokerage firm and its overall financial condition, including Schwab’s ability to maintain consistent operations and service levels during recent periods of remote work and market volatility. 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 each Fund’s performance in determining whether to renew the Agreement with respect to such Fund. Specifically, the Trustees considered each Fund’s performance relative to a peer category of other mutual funds and applicable indices/benchmarks, in light of total return, yield, if applicable, and market trends, as well as in consideration of each Fund’s investment style and strategy attributes and disclosures. As part of this review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the independent provider of investment company data who prepared the peer category analysis. The Trustees further considered the level of Fund performance in the context of their review of Fund expenses and adviser profitability discussed below and also noted that the Board and a designated committee of the Board review performance throughout the year. Although Schwab Dividend Equity Fund and Schwab Small-Cap Equity Fund each had performance that lagged that of its respective peer group for certain periods considered, the Board concluded that other factors relevant to performance supported renewal of the Agreement with respect to each Fund, including that the underperformance was attributable, to a significant extent, to investment decisions by CSIM that were reasonable and consistent with each 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 with respect to each Fund, the performance of such Fund supported renewal of the Agreement with respect to such Fund.
Fund Expenses. With respect to each Fund’s 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 other similar mutual funds, such peer groups and comparisons having been selected and calculated by an independent provider of investment company data. CSIM reported to the Board, and the Board took into account, the risk assumed by CSIM in the development of products and provision of services as well as the competitive marketplace for financial products. The Trustees considered the effects of CSIM’s and Schwab’s practice of waiving certain fees to prevent total annual
operating expenses of the Funds 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, 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, and any differences in the nature and scope of the services CSIM provides to these other accounts, as well as differences in the market for these types of accounts. Following such evaluation, the Board concluded, within the context of its full deliberations, that, with respect to each Fund, the expenses of such Fund are reasonable and supported renewal of the Agreement with respect to such Fund.
Profitability. The Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly and reviewed profitability on a pre-tax basis, without regard to distribution expenses. In this connection, the Trustees reviewed management’s profitability analyses. The Trustees also reviewed profitability of CSIM relating to the Schwab fund complex as a whole, noting the benefits to Fund shareholders of being part of the Schwab fund complex, including the allocations of certain fixed costs across the Funds and other funds in the complex. 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 compensation and profitability with respect to the Funds 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. The Trustees noted that CSIM continues to invest substantial sums in its business in order to provide enhanced research capabilities, services, and systems to benefit the Funds. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM with respect to each Fund is reasonable and supported renewal of the Agreement with respect to such Fund.
Economies of Scale. Although the Trustees recognized the difficulty of determining economies of scale with precision, the Trustees considered the potential existence of any economies of scale and whether those are passed along to a Fund’s shareholders through (i) the enhancement of services provided to the Funds in return for fees paid, including through investments by CSIM in CSIM’s infrastructure, including modernizing CSIM’s technology and use of data, increasing expertise and capabilities in key areas (including portfolio and trade operations), and improving business continuity, cybersecurity, due diligence, and information security programs, which are designed to provide enhanced services to
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
the Funds and their shareholders; (ii) graduated investment advisory fee schedules or unitary fee structures, fee waivers, or expense caps by CSIM and its affiliates for those funds in the Schwab fund complex with such features; and (iii) pricing a fund to scale and keeping overall expenses down as the fund grows. The Trustees acknowledged that CSIM has shared any economies of scale with the Funds by investing in CSIM’s infrastructure, as discussed above, over time and that CSIM’s internal costs of providing investment management, technology, administrative, legal and compliance services to the Funds continues to increase as a result of regulatory or other developments. The Trustees considered that CSIM and its affiliates may employ contractual expense caps to protect shareholders from high fees when fund assets were relatively small, for example, in the case of newer funds or funds with investment strategies that are from time to time out of favor, because, among other reasons, 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 each Fund obtains reasonable benefits from economies of scale.
In the course of their deliberations, the Trustees may have accorded different weights to various factors and 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.
| 1 | The meeting on June 9, 2020 was held telephonically in reliance on exemptive relief from the in-person voting requirement under the 1940 Act as provided by the Securities and Exchange Commission. |
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
Trustees and Officers
The tables below give information about the trustees and officers of Schwab Capital Trust, which includes the funds covered in this report. The “Fund Complex” includes The Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust. The Fund Complex includes 100 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 1-877-824-5615.
| 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 |
Robert W. Burns
1959
Trustee
(Trustee of Schwab Strategic Trust since 2009; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016) | Retired/Private Investor (Jan. 2009 – present). Formerly, Managing Director, Pacific Investment Management Company, LLC (PIMCO) (investment management firm) and President, PIMCO Funds. | 100 | None |
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 since 2010; Schwab Strategic Trust since 2016) | Senior Fellow (Oct. 1979 – present), The Hoover Institution at Stanford University (public policy think tank); Senior Fellow (2000 – present), Stanford Institute for Economic Policy Research; Professor of Public Policy (1994 – 2015), Stanford University. | 100 | Director (2005 – 2020), Gilead Sciences, Inc. |
Nancy F. Heller
1956
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018) | Retired. President and Chairman (2014 – 2016), TIAA Charitable (financial services); Senior Managing Director (2003 – 2016), TIAA (financial services). | 100 | None |
Stephen Timothy Kochis
1946
Trustee
(Trustee of Schwab Strategic Trust since 2012; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016) | CEO and Owner (May 2012 – present), Kochis Global (wealth management consulting). | 100 | None |
David L. Mahoney
1954
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016) | Private Investor. | 100 | Director (2004 – present), Corcept Therapeutics Incorporated
Director (2009 – present), Adamas Pharmaceuticals, Inc.
Director (2003 – 2019), Symantec Corporation |
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
| 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 |
Jane P. Moncreiff
1961
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2019) | Consultant (2018 – present), Fulham Advisers LLC (management consulting); Chief Investment Officer (2009 – 2017), CareGroup Healthcare System, Inc. (healthcare). | 100 | None |
Kiran M. Patel
1948
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016) | Retired. Executive Vice President and General Manager of Small Business Group (Dec. 2008 – Sept. 2013), Intuit, Inc. (financial software and services firm for consumers and small businesses). | 100 | Director (2008 – present), KLA-Tencor Corporation |
Kimberly S. Patmore
1956
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016) | Consultant (2008 – present), Patmore Management Consulting (management consulting). | 100 | None |
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 since 2010; Schwab Strategic Trust since 2016) | Chairman, Chief Executive Officer and Founder (Mar. 1990 – present), Smith Graham & Co. (investment advisors). | 100 | Director (2012 – present), Eaton Corporation plc |
| 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 |
Walter W. Bettinger II2
1960
Chairman and 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 since 2010) | Director, President and Chief Executive Officer (Oct. 2008 – present), The Charles Schwab Corporation; President and Chief Executive Officer (Oct. 2008 – present) and Director (May 2008 – present), Charles Schwab & Co., Inc.; Director (Apr. 2006 – present), Charles Schwab Bank, SSB; Director (Nov. 2017 – present), Charles Schwab Premier Bank, SSB; Director (July 2019 – present), Charles Schwab Trust Bank; Director (May 2008 – present) and President and Chief Executive Officer (Aug. 2017 – present), Schwab Holdings, Inc.; Director (Oct. 2020 – present), TD Ameritrade Holding Corporation; Director (July 2016 – present), Charles Schwab Investment Management, Inc. | 100 | Director (2008 – present), The Charles Schwab Corporation |
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
| Interested 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 |
Jonathan de St. Paer2
1973
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2019) | Director (Apr. 2019 – present), President (Oct. 2018 – present), and Chief Executive Officer (Apr. 2019 – Nov. 2019), Charles Schwab Investment Management, Inc.; Senior Vice President (June 2020 – present), Charles Schwab Investment Advisory, Inc.; Trustee and Chief Executive Officer (Apr. 2019 – present) and President (Nov. 2018 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Director (Apr. 2019 – present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited; Senior Vice President (Apr. 2019 – present), Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014 – Mar. 2019), and Vice President (Jan. 2009 – Dec. 2013), Charles Schwab & Co., Inc. | 100 | None |
Joseph R. Martinetto2
1962
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016) | Chief Operating Officer (Feb. 2018 – present) and Senior Executive Vice President (July 2015 – Feb. 2018), The Charles Schwab Corporation; Senior Executive Vice President (July 2015 – present), Charles Schwab & Co., Inc.; Chief Financial Officer (July 2015 – Aug. 2017) and Executive Vice President and Chief Financial Officer (May 2007 – July 2015), The Charles Schwab Corporation and Charles Schwab & Co., Inc.; Director (May 2007 – present), Charles Schwab & Co., Inc.; Director (Apr. 2010 – present) and Chief Executive Officer (July 2013 – Apr. 2015), Charles Schwab Bank, SSB; Director (Nov. 2017 – present), Charles Schwab Premier Bank, SSB; Director (May 2007 – present), Chief Financial Officer (May 2007 – Aug. 2017), Senior Executive Vice President (Feb. 2016 – present), and Executive Vice President (May 2007 – Feb. 2016), Schwab Holdings, Inc.; Director (Oct. 2020 – present), TD Ameritrade Holding Corporation. | 100 | None |
| 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 |
Jonathan de St. Paer
1973
President and Chief Executive Officer
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018) | Director (Apr. 2019 – present), President (Oct. 2018 – present), and Chief Executive Officer (Apr. 2019 – Nov. 2019), Charles Schwab Investment Management, Inc.; Senior Vice President (June 2020 – present), Charles Schwab Investment Advisory, Inc.; Trustee and Chief Executive Officer (Apr. 2019 – present) and President (Nov. 2018 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Director (Apr. 2019 – present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited; Senior Vice President (Apr. 2019 – present), Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014 – Mar. 2019), and Vice President (Jan. 2009 – Dec. 2013), Charles Schwab & Co., Inc. |
Mark Fischer
1970
Treasurer, Chief Financial Officer and Chief Operating Officer
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2013) | Treasurer and Chief Financial Officer (Jan. 2016 – present) and Chief Operating Officer (Dec. 2020 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Assistant Treasurer (Dec. 2013 – Dec. 2015), Schwab Funds and Laudus Funds; Assistant Treasurer (Nov. 2013 – Dec. 2015), Schwab ETFs; Chief Financial Officer (Mar. 2020 – present) and Vice President (Oct. 2013 – present), Charles Schwab Investment Management, Inc.; Executive Director (Apr. 2011 – Sept. 2013), J.P. Morgan Investor Services; Assistant Treasurer (May 2005 – Mar. 2011), Massachusetts Financial Service Investment Management. |
Omar Aguilar
1970
Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President and Chief Investment Officer (Apr. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies (June 2011 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Head of the Portfolio Management Group and Vice President of Portfolio Management (May 2009 – Apr. 2011), Financial Engines, Inc. (investment management firm); Head of Quantitative Equity (July 2004 – Jan. 2009), ING Investment Management. |
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
| Officers of the Trust (continued) |
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 |
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, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President and Chief Investment Officer (Apr. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Investment Officer – Fixed Income (June 2011 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Senior Managing Director and Global Head of Active Fixed-Income Strategies (Jan. 2008 – Oct. 2010), State Street Global Advisors; Director of Alpha Strategies (Apr. 2006 – Jan. 2008), Loomis, Sayles & Company (investment management firm). |
David Lekich
1964
Chief Legal Officer and Secretary, Schwab Funds and Schwab ETFs
Vice President and Assistant Clerk, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President (Sept. 2011 – present) and Vice President (Mar. 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present) and Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (Apr. 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; Vice President and Assistant Clerk (Apr. 2011 – present), Laudus Funds; Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs. |
Catherine MacGregor
1964
Vice President and Assistant Secretary, Schwab Funds and Schwab ETFs
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 and Laudus Trust since 2005; Schwab Strategic Trust since 2009) | Vice President (July 2005 – present), Charles Schwab & Co., Inc.; Vice President (Sept. 2005 – present), Charles Schwab Investment Management, Inc.; Vice President (Dec. 2005 – present) and 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 (Oct. 2009 – present), Schwab ETFs. |
| 1 | Each Trustee shall hold office until the election and qualification of his or her successor, or until he or she dies, resigns or is removed. The retirement policy requires that each independent trustee retire by December 31 of the year in which the Trustee turns 74 or the Trustee’s twentieth year of service as an independent trustee on any trust in the Fund Complex, whichever occurs first. |
| 2 | Mr. Bettinger, Mr. de St. Paer and Mr. Martinetto are Interested Trustees. Mr. Bettinger is an Interested Trustee because he owns stock of The Charles Schwab Corporation (CSC), the parent company of Charles Schwab Investment Management, Inc. (CSIM), the investment adviser for the trusts in the Fund Complex, is an employee and director of Charles Schwab & Co., Inc. (CS&Co), the principal underwriter for The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust, and is a director of CSIM. Mr. de St. Paer is an Interested Trustee because he owns stock of CSC and is an employee and director of CSIM. Mr. Martinetto is an Interested Trustee because he owns stock of CSC and is an employee and director of CS&Co. |
| 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 Board. |
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
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.
Bloomberg Barclays US Aggregate Bond Index An index that is a broad-based benchmark measuring the performance of the U.S. investment grade, taxable bond market, including U.S. Treasuries, government-related and corporate bonds, mortgage pass-through securities, commercial mortgage-backed securities, and asset-backed securities that are publicly available for sale in the United States. To be eligible for inclusion in the index, securities must be fixed rate, non-convertible, U.S. dollar-denominated with at least $300 million or more of outstanding face value and have one or more years remaining to maturity. The index excludes certain types of securities, including tax-exempt state and local government series bonds, structured notes embedded with swaps or other special features, private placements, floating rate securities, inflation-linked bonds and Eurobonds. The index is market capitalization weighted and the securities in the index are updated on the last business day of each month.
Bloomberg Barclays US Treasury Bills 1–3 Month Index An index that includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months but more than 1 month, are rated investment grade and have $300 million or more of outstanding face value. It excludes zero-coupon STRIPS.
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 Index An internally calculated index, comprised of the S&P 500 Index from inception of the Schwab Dividend Equity 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. The index is quoted in U.S. dollars.
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 Index (Net) A free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets in Europe, Australasia, and the Far East. 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 measures the performance of those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values.
Russell 1000 Index An index that measures the performance of the 1,000 largest companies in the Russell 3000 Index, and represents approximately 92% of the total market capitalization of the Russell 3000 Index. The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.
Russell 1000 Value 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.
Russell 2000 Index An index that measures the performance of the 2,000 smallest companies in the Russell 3000 Index. The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.
S&P 500 Index An index that is designed to measure the performance of 500 leading publicly traded companies from a broad range of industries.
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.
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
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; and
• 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
© 2020 Schwab Funds. All rights reserved.
Schwab Active Equity Funds | Annual Report
Schwab Active Equity Funds
Charles Schwab Investment Management
With a straightforward lineup of core products and solutions for building the foundation of a portfolio, Charles Schwab Investment Management advocates for investors of all sizes with a steadfast focus on lowering costs and reducing unnecessary complexity. The list below shows all currently available Schwab Funds®.
Investors should carefully consider information contained in the prospectus, or if available, the summary prospectus, including investment objectives, risks, charges and expenses before investing. Please call 1-877-824-5615 for a prospectus 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.schwabfunds.com/schwabfunds_prospectus, the SEC’s website at www.sec.gov, or by contacting Schwab Funds at 1-877-824-5615.
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.schwabfunds.com/schwabfunds_prospectus or the SEC’s website at www.sec.gov.
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 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 U.S. Large-Cap Growth Index Fund
Schwab U.S. Large-Cap Value Index Fund
Schwab U.S. Mid-Cap Index Fund
Schwab International Index Fund®
Asset Allocation Funds
Schwab Balanced Fund
Schwab MarketTrack Portfolios®
Schwab Target Funds
Schwab Target Index Funds
Schwab Monthly Income Funds
Bond Funds
Schwab Treasury Inflation Protected Securities Index Fund
Schwab U.S. Aggregate Bond Index Fund
Schwab Short-Term Bond Index Fund
Schwab Tax-Free Bond Fund1
Schwab California Tax-Free Bond Fund1
Schwab High Yield Municipal Bond Fund
Schwab Money Funds2
Schwab provides a broad choice of taxable and tax-exempt money market funds for both retail and institutional client types.
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
Funds
Schwab Funds
1-877-824-5615
© 2020 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC®
Printed on recycled paper.
| ¹ | State, local, and the Federal Alternative Minimum Tax may apply. Capital gains are not exempt from Federal Taxation. |
| ² | You could lose money by investing in the Schwab Money Funds. All Schwab Money Funds with the exception of Schwab Variable Share Price Money Fund seek to preserve the value of your investment at $1.00 per share, but cannot guarantee they will do so. Because the share price of Schwab Variable Share Price Money Fund will fluctuate, when you sell your shares they may be worth more or less than what you originally paid for them. All Schwab Money Funds with the exception of Schwab Government Money Fund, Schwab Retirement Government Money Fund, Schwab U.S. Treasury Money Fund, Schwab Treasury Obligations Money Fund and Schwab Government Money Market Portfolio may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Schwab Money Funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Schwab Money Funds’ sponsor has no legal obligation to provide financial support to the Funds, and you should not expect that the sponsor will provide financial support to the Funds at any time. |
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Annual Report | October 31, 2020
Schwab Balanced Fund
| New Notice Regarding Shareholder Report Delivery Options |
| Beginning on January 1, 2021, paper copies of a fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from a fund or from your financial intermediary (such as a bank or broker-dealer). Instead, the reports will be made available on a fund’s website www.schwabfunds.com/schwabfunds_prospectus, and you will be notified by mail each time a report is posted and the mailing will provide a website link to access the report. You will continue to receive other fund regulatory documents (such as prospectuses or supplements) in paper unless you have elected to receive all fund documents electronically. |
| If you would like to receive a fund’s future shareholder reports in paper free of charge after January 1, 2021, you can make that request: |
| • If you invest through Charles Schwab & Co, Inc. (broker-dealer), by calling 1-866-345-5954 and using the unique identifier attached to this mailing; |
| • If you invest through another financial intermediary (such as a bank or broker-dealer) by contacting them directly; or |
| • If owned directly through a fund by calling 1-800-407-0256. |
| If you already receive shareholder reports and other fund documents electronically, you will not be affected by this change and you need not take any action. |
Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM)
Distributor: Charles Schwab & Co., Inc. (Schwab)
Schwab Balanced Fund | Annual Report
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.schwabfunds.com/schwabfunds_prospectus.
| Total Return for the 12 Months Ended October 31, 2020 |
| Schwab Balanced Fund (Ticker Symbol: SWOBX) | 8.58% |
| Balanced Blended Index | 7.91% |
| Fund Category: Morningstar Allocation—50% to 70% Equity1 | 3.88% |
| Performance Details | pages 7-9 |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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, the 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.
| 1 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
Schwab Balanced Fund | Annual Report
Jonathan de St. Paer
President of Charles Schwab
Investment Management, Inc.
and the fund covered
in this report.
Dear Shareholder,
Equity market performance for the 12-month reporting period ended October 31, 2020 barely hints at the market turmoil investors endured this year. U.S. equity markets ended the period with mixed gains, including a 9.7% rise for the S&P 500® Index, a bellwether for the overall U.S. stock market, and most fixed-income markets ended the period with moderate gains. However, the past year was one of the most volatile in history. Market gains were robust through the last week of February 2020 before being wiped out as the spreading COVID-19 pandemic drove equities and corporate bonds sharply lower. In mid-March, market volatility spiked to its highest level since the peak of the Great Recession in 2008 with the S&P 500® Index dropping 30% over just 22 trading days in late February and early March. By early September, however, most broad U.S. equity markets had regained all the ground they lost in March, propelling the S&P 500® Index to new record highs. However, markets retreated and volatility began to increase again throughout September and October in the face of a resurgence of COVID-19 infections, corporate earnings concerns, and growing uncertainty regarding the U.S. election.
High levels of volatility can undermine our confidence as investors, which can lead to emotion-based trading. Although it is important to reassess your individual risk tolerance and make strategic adjustments to your portfolio from time to time, impulsive reactions driven by fear can often make investing outcomes worse. At Charles Schwab Investment Management, we believe that the best way to avoid these pitfalls is to maintain a long-term investing plan. A commitment to a long-term investing plan can help make it significantly easier and less stressful to stay the course when market volatility rises.
For investors who don’t have the time or desire to take on the responsibility of managing ongoing asset allocation and diversification decisions, the Schwab Balanced Fund offers a convenient portfolio solution. The fund seeks to provide investors access to both growth and income opportunities by typically investing most of its assets in equity funds while maintaining an allocation to bond funds. The portfolio management team balances the exposures between each asset class.
Thank you for investing with Charles Schwab Investment Management, and for trusting us to help you achieve your financial goals. For more information about the Schwab Balanced Fund, please continue reading this report. In addition, you can find further details about this fund by visiting our website at www.schwabfunds.com. We are also happy to hear from you at 1-877-824-5615.
Sincerely,
“ A commitment to a long-term investing plan can help make it significantly easier and less stressful to stay the course when market volatility rises.”
Past performance is no guarantee of future results.
Diversification and asset allocation strategies do not ensure a profit and cannot protect against losses in a declining market.
Management views may have changed since the report date.
Schwab Balanced Fund | Annual Report
The Investment Environment
The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms. For the reporting period, the S&P 500® Index returned 9.71%, with sectors that benefitted as a result of the COVID-19 pandemic and associated stay-at-home orders, such as the information technology sector, outperforming other sectors that were more impacted by the COVID-19 pandemic. U.S. large-cap stocks outperformed small-cap stocks, with the Russell 1000® Index and the Russell 2000® Index returning 10.87% and -0.14%, respectively, for the reporting period. Among large-cap stocks, growth stocks outperformed value stocks by a large margin, with the Russell 1000® Growth Index and Russell 1000® Value Index returning 29.22% and -7.57%, respectively, for the reporting period. Among international markets, the MSCI EAFE® Index (Net)*, a broad measure of developed international equity performance, returned -6.86% for the reporting period and the MSCI Emerging Markets Index (Net)* returned 8.25% for the reporting period. Fixed-income markets were particularly strong over the period with the Bloomberg Barclays US Aggregate Bond Index returning 6.19% and the FTSE non-US Dollar World Government Bond Index returning 4.99% for the reporting period.
Asset Class Performance Comparison % returns during the 12 months ended October 31, 2020
Index figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. 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 may have changed since the report date.
| * | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
Schwab Balanced Fund | Annual Report
The Investment Environment (continued)
Prior to the onset of the COVID-19 pandemic, the U.S. economy, despite ongoing trade tensions with China, maintained steady growth, albeit at a slowing pace. However, amid the fallout of the COVID-19 pandemic, the U.S. entered recessionary territory with record speed. U.S. gross domestic product (GDP) fell steeply, declining 5.0% and 31.4% for the first and second quarters of 2020, respectively, with the second quarter representing the largest contraction in U.S. GDP since 1947 when modern GDP measurements began. GDP subsequently jumped by 33.1% for the third quarter of 2020, reflecting increased consumer and business spending. Unemployment remained at record lows through February before a record number of unemployment claims in March resulted in the largest monthly increase in the U.S. unemployment rate since January 1975. In April, this record was broken again when unemployment skyrocketed, rising to the highest level since the Great Depression. Unemployment declined in May through October, dropping below double digits beginning in August. Consumer confidence remained solid through February, but was volatile over the remainder of the reporting period.
Outside the U.S., conditions continued to soften, dampened by slowing economic output, slumping world trade, geopolitical concerns, and the COVID-19 pandemic. The COVID-19 pandemic exacerbated economic weakness around the globe, dramatically slowing growth amid stay-at-home orders, supply chain disruptions, and broadly diminishing demand. In the first half of the reporting period, oil prices deteriorated amid significantly reduced demand, coupled with rising U.S. crude production and a price war between Russia and Saudi Arabia. In April, oil futures briefly fell into negative territory as storage capacity evaporated and demand waned. However, as production was slashed, relieving pressure on constrained storage capacity, demand also stabilized. First and second quarter 2020 growth was negative in the eurozone and the United Kingdom. In January, Brexit occurred with the formal departure of the United Kingdom from the European Union resulting in an 11-month transition period with respect to economic and customs matters. Japan fared slightly better, although GDP still contracted for the first and second quarters of 2020. Even China and India, which had maintained stronger growth than many developed countries, showed weakness. In China, GDP contracted in the first quarter, but rebounded in the second and third quarters. While India’s second quarter GDP contracted, third quarter GDP was positive.
Many central banks around the world, including the U.S. Federal Reserve (Fed), reduced their policy rates over the reporting period, while others maintained low—and for some international central banks, negative—interest rates. In the U.S., after enacting three interest rate cuts in the second half of 2019 and as the economic implications of the COVID-19 pandemic grew, the Fed cut interest rates by 0.50% in early March and by 1.00% in mid-March, resulting in a federal funds rate of 0.00% to 0.25%. In addition, the Fed also announced extensive emergency measures to support the economy in light of the COVID-19 pandemic, including large purchases of U.S. Treasuries and other securities to support smooth market function, facilitating the flow of credit to municipalities, new financing for employers, consumers, and businesses, and the establishment of facilities to support credit to businesses and consumers alike. In August, the Fed announced that it was shifting its interest rate policy approach to potentially allow inflation to rise above its 2% target for periods of time even in times of rising employment. Outside the U.S., central banks were similarly accommodative. The European Central Bank held its policy rate at 0.00%, unchanged since March 2016, and launched a new asset purchase program to help counter the impact of the COVID-19 pandemic. The Bank of Japan upheld its short-term interest rate target of -0.1%, also unchanged since 2016, and increased the annual pace of its purchases of exchange-traded funds (ETFs) and other assets. The Bank of England lowered its key official bank rate from 0.75% to 0.10% in two emergency rate cuts in March. Central banks in key emerging market economies—including China, India, Mexico, Russia, and Thailand—lowered their policy rates or maintained already low rates in response to pandemic-driven pressures.
Throughout most of the reporting period, bond prices rose on strong demand, driving yields down. (Bond prices and bond yields typically move in opposite directions.) Corporate credit markets were particularly strong. At the end of March 2020, as equity markets plummeted, as investors sought the perceived safety of asset classes such as fixed-income securities, and as the Fed implemented additional rate cuts, demand for U.S. Treasuries soared, driving yields to historic lows. The yield on the 10-year U.S. Treasury fell from 1.69% at the beginning of the reporting period to 0.88% at the end of the reporting period. The yield on the three-month U.S. Treasury fell from 1.54% to 0.09% over the reporting period. Yields on longer-term U.S. Treasuries trended upward late in the reporting period in anticipation of a new fiscal aid package and hope for economic improvement in 2021.
Schwab Balanced Fund | Annual Report
 | Zifan Tang, Ph.D., CFA, Senior Portfolio Manager, is responsible for the co-management of the fund. Prior to joining CSIM in January 2012, Ms. Tang was a product manager at Thomson Reuters and from 1997 to 2009 worked as a portfolio manager at Barclays Global Investors (now known as BlackRock). |
 | Patrick Kwok, CFA, Portfolio Manager, is responsible for the co-management of the fund. Previously, Mr. Kwok served as an associate portfolio manager with CSIM from 2012 to 2016. Prior to that, he worked as a fund administration manager for CSIM, where he was responsible for oversight of sub-advisers, trading, cash management, and fund administration for the Charles Schwab Trust Bank Collective Investment Trusts and Schwab’s multi-asset mutual funds. Prior to joining CSIM in 2008, Mr. Kwok spent two years as an asset operations specialist at Charles Schwab Trust Company. He also worked for one year at State Street Bank & Trust as a portfolio accountant and pricing specialist. |
Schwab Balanced Fund | Annual Report
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 affiliated 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 and 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. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms. Bond prices generally rose over the reporting period as yields fell.
Performance. For the 12-month reporting period ended October 31, 2020, the fund returned 8.58%. The fund’s internally calculated comparative index, the Balanced Blended Index (the index), returned 7.91%.
Positioning and Strategies. Over the reporting period, the fund’s asset allocations were broadly in line with those of the index.
The fund’s U.S. large-cap equity exposure contributed positively to total return and relative performance. The Laudus U.S. Large Cap Growth Fund contributed to the fund’s total return, returning approximately 31.3% for the reporting period. The Schwab Core Equity Fund also contributed to the fund’s total return, returning approximately 4.7% for the reporting period but dragged on relative performance with its comparative index, the S&P 500® Index, returning approximately 9.7%.
The fund’s fixed-income allocation also contributed to the fund’s total return. The Schwab U.S. Aggregate Bond Index Fund returned approximately 6.1% for the reporting period, while its comparative benchmark, the Bloomberg Barclays US Aggregate Bond Index, returned approximately 6.2%.
The U.S. small-cap equity allocation detracted from the total return of the fund. The Schwab Small-Cap Equity Fund returned approximately -9.9% for the reporting period, underperforming its comparative index, the Russell 2000® Index, which returned approximately -0.1%.
Management views and portfolio holdings may have changed since the report date.
Schwab Balanced Fund | Annual Report
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Balanced Fund (11/18/96) | 8.58% | 7.66% | 8.51% |
| S&P 500® Index | 9.71% | 11.71% | 13.01% |
| Bloomberg Barclays US Aggregate Bond Index | 6.19% | 4.08% | 3.55% |
| Balanced Blended Index | 7.91% | 8.40% | 8.98% |
| Fund Category: Morningstar Allocation—50% to 70% Equity2 | 3.88% | 6.23% | 7.13% |
| Fund Expense Ratios3: Net 0.51%; Gross 0.55% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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 0.51% of acquired fund fees and expenses (AFFE), which are indirect expenses incurred by the fund through its investments in the underlying funds. 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 expense ratios during the period, not including AFFE, refer to the financial highlights section of the financial statements. |
Schwab Balanced Fund | Annual Report
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 6 |
| Portfolio Turnover Rate | 18% |
Asset Class Weightings % of Investments1
Top Holdings % of Net Assets2,3
Portfolio holdings may have changed since the report date.
Small-company stocks are subject to greater volatility than many other asset classes.
| 1 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
| 3 | The holdings listed exclude any temporary liquidity investments. |
Schwab Balanced Fund | Annual Report
Fund Expenses (Unaudited)
Examples for a $1,000 Investment
As a fund shareholder, you may incur two types of costs: (1) transaction costs; and (2) ongoing costs, including transfer agent 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, 2020 and held through October 31, 2020.
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. 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 Ratio
(Annualized)1,2 | Effective
Expense Ratio
(Annualized)3,4 | Beginning
Account Value
at 5/1/20 | Ending
Account Value
(Net of Expenses)
at 10/31/20 | Expenses Paid
During Period
5/1/20-10/31/202,5 | Effective
Expenses Paid
During Period
5/1/20-10/31/204,5 |
| Schwab Balanced Fund | | | | | | |
| Actual Return | 0.00% | 0.50% | $1,000.00 | $1,087.70 | $0.00 | $2.62 |
| Hypothetical 5% Return | 0.00% | 0.50% | $1,000.00 | $1,025.10 | $0.00 | $2.54 |
| 1 | Based on the most recent six-month expense ratio. |
| 2 | Excludes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds. |
| 3 | Based on the most recent six-month acquired fund fees and expense ratio; may differ from the acquired fund fees and expense ratio in the prospectus. |
| 4 | Includes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds. |
| 5 | 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 366 days of the fiscal year. |
Schwab Balanced Fund | Annual Report
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $15.99 | $15.41 | $15.60 | $14.51 | $15.40 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.20 | 0.24 | 0.23 | 0.21 | 0.19 | |
| Net realized and unrealized gains (losses) | 1.13 | 1.32 | 0.08 2 | 1.96 | 0.00 3 | |
| Total from investment operations | 1.33 | 1.56 | 0.31 | 2.17 | 0.19 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.22) | (0.37) | (0.48) | (0.22) | (0.32) | |
| Distributions from net realized gains | (0.60) | (0.61) | (0.02) | (0.86) | (0.76) | |
| Total distributions | (0.82) | (0.98) | (0.50) | (1.08) | (1.08) | |
| Net asset value at end of period | $16.50 | $15.99 | $15.41 | $15.60 | $14.51 | |
| Total return | 8.58% | 11.19% | 1.94% | 15.90% | 1.41% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses4 | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% 5 | |
| Gross operating expenses4 | 0.03% | 0.04% | 0.04% | 0.06% | 0.06% | |
| Net investment income (loss) | 1.26% | 1.55% | 1.44% | 1.39% | 1.34% | |
| Portfolio turnover rate | 18% | 32% | 6% | 28% 6 | 19% | |
| Net assets, end of period (x 1,000,000) | $577 | $526 | $447 | $386 | $282 | |
| |
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
Less than $0.005.
4
Ratio excludes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds.
5
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses and/or interest expense had not been incurred.
6
The portfolio turnover rate increased due to the in-kind transactions relating to Schwab Total Bond Market Fund and Schwab U.S. Aggregate Bond Index Fund. For comparison purposes, the portfolio turnover rate would have been 7% without including these transactions. There were no transaction costs associated with these transactions.
Schwab Balanced Fund | Annual Report
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Affiliated Underlying Funds 98.7% of net assets |
| |
| Equity Funds 59.8% |
| Large-Cap 49.4% |
| Laudus U.S. Large Cap Growth Fund | 3,300,449 | 89,442,175 |
| Schwab Core Equity Fund | 8,817,133 | 196,093,026 |
| | | 285,535,201 |
| Small-Cap 10.4% |
| Schwab Small-Cap Equity Fund | 3,989,116 | 59,916,522 |
| | | 345,451,723 |
| |
| Fixed-Income Fund 37.1% |
| Intermediate-Term Bond 37.1% |
| Schwab U.S. Aggregate Bond Index Fund | 19,956,910 | 214,337,213 |
| |
| Money Market Fund 1.8% |
| Schwab Variable Share Price Money Fund, Ultra Shares 0.03% (a) | 10,212,714 | 10,216,799 |
| Total Affiliated Underlying Funds |
| (Cost $500,157,347) | | 570,005,735 |
| Security | Number
of Shares | Value ($) |
| Unaffiliated Underlying Fund 1.3% of net assets |
| |
| Money Market Fund 1.3% |
| State Street Institutional U.S. Government Money Market Fund, Premier Class 0.03% (a) | 7,186,601 | 7,186,601 |
| Total Unaffiliated Underlying Fund |
| (Cost $7,186,601) | | 7,186,601 |
| (a) | The rate shown is the 7-day yield. |
Below is a summary of the fund’s transactions with its affiliated underlying funds during the period ended October 31, 2020:
| Affiliated Underlying Funds |
Value at
10/31/19 | Gross
Purchases | Gross
Sales | Realized
Gains (Losses) | Net Change
in Unrealized
Appreciation
(depreciation) |
Value at
10/31/20 | Balance
of Shares
Held at
10/31/20 | Distributions
Received* |
| Laudus U.S. Large Cap Growth Fund | $77,612,608 | $10,892,605 | ($14,980,000) | $1,080,265 | $14,836,697 | $89,442,175 | 3,300,449 | $6,512,605 |
| Schwab Core Equity Fund | 185,648,795 | 32,049,605 | (24,037,000) | (2,934,224) | 5,365,850 | 196,093,026 | 8,817,133 | 5,485,605 |
| Schwab Small-Cap Equity Fund | 53,323,240 | 15,449,781 | (4,810,000) | (1,528,961) | (2,517,538) | 59,916,522 | 3,989,116 | 59,781 |
| Schwab U.S. Aggregate Bond Index Fund | 193,852,620 | 59,705,777 | (45,450,263) | 1,165,277 | 5,063,802 | 214,337,213 | 19,956,910 | 4,925,055 |
| Schwab Variable Share Price Money Fund, Ultra Shares | 12,118,997 | 4,100,816 | (6,000,000) | (718) | (2,296) | 10,216,799 | 10,212,714 | 90,317 |
| Total | $522,556,260 | $122,198,584 | ($95,277,263) | ($2,218,361) | $22,746,515 | $570,005,735 | | $17,073,363 |
| * | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
| | |
At October 31, 2020, all of the fund’s investment securities were classified as Level 1. Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3 (see financial note 2(a) for additional information).
Schwab Balanced Fund | Annual Report
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in affiliated underlying funds, at value (cost $500,157,347) | | $570,005,735 |
| Investments in unaffiliated underlying funds, at value (cost $7,186,601) | | 7,186,601 |
| Receivables: | | |
| Investments sold | | 600,000 |
| Fund shares sold | | 977,922 |
| Dividends | | 409,643 |
| Due from investment adviser | | 13,129 |
| Prepaid expenses | + | 28,114 |
| Total assets | | 579,221,144 |
| Liabilities |
| Payables: | | |
| Investments bought | | 1,409,517 |
| Fund shares redeemed | | 320,545 |
| Accrued expenses | + | 63,984 |
| Total liabilities | | 1,794,046 |
| Net Assets |
| Total assets | | 579,221,144 |
| Total liabilities | – | 1,794,046 |
| Net assets | | $577,427,098 |
| Net Assets by Source | | |
| Capital received from investors | | 501,221,439 |
| Total distributable earnings | | 76,205,659 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $577,427,098 | | 34,990,159 | | $16.50 |
| | | | | |
Schwab Balanced Fund | Annual Report
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends received from affiliated underlying funds | | $6,832,776 |
| Dividends received from unaffiliated underlying funds | + | 26,536 |
| Total investment income | | 6,859,312 |
| Expenses |
| Registration fees | | 47,995 |
| Shareholder reports | | 44,872 |
| Portfolio accounting fees | | 26,141 |
| Professional fees | | 23,278 |
| Transfer agent fees | | 19,082 |
| Independent trustees’ fees | | 10,165 |
| Custodian fees | | 902 |
| Other expenses | + | 8,627 |
| Total expenses | | 181,062 |
| Expense reduction by CSIM and its affiliates | – | 181,062 |
| Net expenses | – | — |
| Net investment income | | 6,859,312 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 10,240,587 |
| Net realized losses on sales of affiliated underlying funds | + | (2,218,361) |
| Net realized gains | | 8,022,226 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | + | 22,746,515 |
| Net realized and unrealized gains | | 30,768,741 |
| Increase in net assets resulting from operations | | $37,628,053 |
Schwab Balanced Fund | Annual Report
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $6,859,312 | $7,461,092 |
| Net realized gains | | 8,022,226 | 21,204,175 |
| Net change in unrealized appreciation (depreciation) | + | 22,746,515 | 20,529,722 |
| Increase in net assets from operations | | 37,628,053 | 49,194,989 |
| Distributions to Shareholders | |
| Total distributions | | ($27,287,501) | ($28,049,773) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 11,812,461 | $187,887,955 | 11,096,629 | $169,470,196 |
| Shares reinvested | | 1,536,645 | 24,202,165 | 1,812,747 | 24,889,012 |
| Shares redeemed | + | (11,266,936) | (171,177,405) | (8,978,575) | (135,957,018) |
| Net transactions in fund shares | | 2,082,170 | $40,912,715 | 3,930,801 | $58,402,190 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 32,907,989 | $526,173,831 | 28,977,188 | $446,626,425 |
| Total increase | + | 2,082,170 | 51,253,267 | 3,930,801 | 79,547,406 |
| End of period | | 34,990,159 | $577,427,098 | 32,907,989 | $526,173,831 |
Schwab Balanced Fund | Annual Report
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 Balanced Fund | Schwab Target 2040 Fund |
| Schwab S&P 500 Index Fund | Schwab Target 2045 Fund |
| Schwab Small-Cap Index Fund® | Schwab Target 2050 Fund |
| Schwab Total Stock Market Index Fund® | Schwab Target 2055 Fund |
| Schwab U.S. Large-Cap Growth Index Fund | Schwab Target 2060 Fund |
| Schwab U.S. Large-Cap Value Index Fund | Schwab Fundamental US Large Company Index Fund |
| Schwab U.S. Mid-Cap 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 Target 2010 Index Fund |
| Laudus International MarketMasters Fund™ | Schwab Target 2015 Index Fund |
| Schwab Core Equity Fund | Schwab Target 2020 Index Fund |
| Schwab Dividend Equity Fund | Schwab Target 2025 Index Fund |
| Schwab Large-Cap Growth Fund | Schwab Target 2030 Index Fund |
| Schwab Small-Cap Equity Fund | Schwab Target 2035 Index Fund |
| Schwab Hedged Equity Fund | Schwab Target 2040 Index Fund |
| Schwab Health Care Fund | Schwab Target 2045 Index Fund |
| Schwab International Core Equity Fund | Schwab Target 2050 Index Fund |
| Schwab Target 2010 Fund | Schwab Target 2055 Index Fund |
| Schwab Target 2015 Fund | Schwab Target 2060 Index Fund |
| Schwab Target 2020 Fund | Schwab Monthly Income Fund - Moderate Payout |
| Schwab Target 2025 Fund | Schwab Monthly Income Fund - Enhanced Payout |
| Schwab Target 2030 Fund | Schwab Monthly Income Fund - Maximum Payout |
| Schwab Target 2035 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 affiliated Schwab and/or Laudus Funds (the underlying 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 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 with the U.S. Securities and Exchange Commission (SEC) and are available on the SEC’s website at www.sec.gov.
Schwab Balanced Fund | Annual Report
Financial Notes (continued)
2. Significant Accounting Policies (continued):
(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 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:
• 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, the 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 the 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.
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.
Schwab Balanced Fund | Annual Report
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). 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 more than one fund in the trusts generally are allocated among those funds in proportion to their average daily net assets. The fund bears its share of the acquired fund fees and expenses of the underlying funds, which are indirect expenses incurred by the fund through its investments in the underlying funds. 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) 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 fund intends to meet federal income and excise tax requirements for regulated investment companies under subchapter M of the Internal Revenue Code, as amended. Accordingly, the fund distributes substantially all of its net investment income and net realized capital gains, if any, to its shareholders each year. As long as the fund meets the tax requirements, it is not required to pay federal income tax.
(h) 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 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 may cause the fund to underperform other funds with a similar investment objective.
Conflicts of Interest Risk. The investment adviser’s authority to select and substitute underlying funds from a variety of affiliated and unaffiliated mutual funds and ETFs may create a conflict of interest because the fees paid to it and its affiliates by some underlying funds are higher than the fees paid by other underlying funds. The investment adviser also may have an incentive to select an affiliated underlying fund for other reasons, including to increase assets under management or to support new investment strategies. In addition, other conflicts of interest may exist where the best interests of the affiliated underlying fund may not be aligned with those of the fund. However, the investment adviser is a fiduciary to the fund and is legally obligated to act in the fund’s best interests when selecting underlying funds.
Schwab Balanced Fund | Annual Report
Financial Notes (continued)
3. Risk Factors (continued):
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. Markets may be impacted by economic, political, regulatory and other conditions, including economic sanctions and other government actions. In addition, the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters and epidemics, may also negatively affect the financial markets. 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 over short or long periods.
Direct Investment Risk. The fund may invest directly in cash, cash equivalents and equity and fixed-income securities, including money market securities, to maintain its 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 securities.
Underlying Fund Investment Risk. Before investing in the fund, investors should assess the risks associated with the underlying funds in which the fund may invest, which include any combination of the risks described below.
• Investment Risk. 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 sub-adviser(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 underlying fund, but there can be no guarantee that they will produce the desired results.
• Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time.
• Market Capitalization Risk. Securities issued by companies of different market capitalizations tend to go in and out of favor based on market and economic conditions. During a period when securities of a particular market capitalization fall behind other types of investments, an underlying fund’s performance could be impacted.
• 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. A change in a central bank’s monetary policy or economic conditions, among other things, may result in a change 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.
• 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 Fund Risk. The fund may invest in underlying money market funds that either seek to maintain a stable $1 net asset value (“stable share price money market funds”) or that have a share price that fluctuates (“variable share price money market funds”). Although an underlying stable share price money market fund seeks to maintain a stable $1 net asset value, it is possible to lose money by investing in such a money market fund. Because the share price of an underlying variable share price money market fund will fluctuate, when the fund sells the shares it owns they may be worth more or less than what the fund originally paid for them. In addition, neither type of money market fund is designed to offer capital appreciation. Certain underlying money market funds may impose a fee upon the sale of shares or may temporarily suspend the ability to sell shares if such fund’s liquidity falls below required minimums.
Schwab Balanced Fund | Annual Report
Financial Notes (continued)
3. Risk Factors (continued):
• Foreign Investment Risk. An underlying fund’s investments in securities of foreign issuers involve certain risks that may be 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 an 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. There is a risk that investments in securities denominated in, and/or receiving revenues in, foreign currencies will decline in value relative to the U.S. dollar.
• 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 developed countries. As a result, there may be an increased risk of illiquidity and price volatility associated with an underlying 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.
• Derivatives Risk. An underlying fund may use derivatives to enhance returns or hedge against market declines. Examples of derivatives are options, futures, options on futures and swaps. An option is the right to buy or sell an instrument at a specific price before a specific date. A future is an agreement to buy or sell a financial instrument at a specific price on a specific day. A swap is an agreement whereby two parties agree to exchange payment streams calculated in relation to a rate, index, instrument or certain securities and a predetermined amount. A credit default swap is an agreement in which the seller agrees to make a payment to the buyer in the event of a specified credit event in exchange for a fixed payment or series of fixed payments.
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. Certain of these risks, such as leverage risk, liquidity risk, market risk and management risk, are discussed elsewhere in this section. An underlying fund’s use of derivatives is also subject to 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. 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 an underlying fund to realize higher amounts of short-term capital gains. An underlying fund’s use of derivatives could reduce the underlying fund’s performance, increase its volatility, and could cause the fund to lose more than the initial amount invested. The use of derivatives that are subject to regulation by the Commodity Futures Trading Commission (CFTC) by an underlying fund could cause the fund to become a commodity pool, which would require the fund to comply with certain CFTC rules.
• Leverage Risk. Certain underlying fund transactions, such as derivatives transactions, 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. An underlying fund may be unable to sell certain securities, such as illiquid securities, readily at a favorable time or price, or the underlying fund may have to sell them at a loss.
• 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 gains distributions.
• 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, or delay in recovery of, the loaned securities 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 or greater risk of decline in market value during periods of rising interest rates. Because of prepayment and
Schwab Balanced Fund | Annual Report
Financial Notes (continued)
3. Risk Factors (continued):
extension risk, mortgage-backed securities react differently to changes in interest rates than other 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 often occur through to-be-announced (TBA) transactions. Default by or bankruptcy of a counterparty to a TBA transaction could 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.
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:
Investment Adviser
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 investment adviser does not receive a fee for the services it performs for the fund. However, the investment adviser is entitled to receive an annual management fee from each of the affiliated Schwab Funds and/or Laudus Funds that serve as underlying funds.
Shareholder Servicing
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 financial intermediaries, including Charles Schwab & Co., Inc., a broker-dealer affiliate of CSIM (together, service providers), of certain shareholder services to the current shareholders of the fund. The fund is not subject to any fee under the Plan.
Expense Limitation
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 acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in the underlying funds.
Investments in Affiliates
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, 2020, the fund’s ownership percentages of other related funds’ shares are:
| Laudus U.S. Large Cap Growth Fund | 3.3% |
| Schwab Core Equity Fund | 10.0% |
| Schwab Small-Cap Equity Fund | 12.2% |
| Schwab U.S. Aggregate Bond Index Fund | 4.5% |
| Schwab Variable Share Price Money Fund, Ultra Shares | 0.3% |
Schwab Balanced Fund | Annual Report
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Interfund Borrowing and Lending
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. 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.
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, the fund was a participant with other funds in the Fund Complex in a joint, syndicated, committed $750 million line of credit (the Syndicated Credit Facility), which matured on October 1, 2020. On October 1, 2020, the Syndicated Credit Facility was amended to run for a new 364 day period with a line of credit of $850 million, maturing on September 30, 2021. Under the terms of the Syndicated Credit Facility, in addition to the interest charged on any borrowings by the fund, the fund paid a commitment fee of 0.15% per annum on the fund’s proportionate share of the unused portion of the Syndicated Credit Facility.
During the period, the fund was a participant with other funds in the Fund Complex in a joint, unsecured, uncommitted $500 million line of credit (the Uncommitted Credit Facility), with State Street Bank and Trust Company, which matured on November 29, 2019. On November 29, 2019, the Uncommitted Credit Facility was amended to run for a new 364 day period, which was scheduled to mature on November 27, 2020. However, on October 1, 2020, the Uncommitted Credit Facility was amended to run for a new 364 day period with a line of credit of $400 million, maturing on September 30, 2021. Under the terms of the Uncommitted Credit Facility, the fund pays interest on the amount it borrows. There were no borrowings from either line 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.
7. Purchases and Sales of Investment Securities:
For the period ended October 31, 2020, purchases and sales of securities (excluding short-term obligations) were as follows:
Purchases
of Securities | Sales
of Securities |
| $122,198,584 | $95,277,263 |
8. Federal Income Taxes:
As of October 31, 2020, the tax basis cost of the fund’s investments and gross unrealized appreciation and depreciation were as follows:
| Tax cost | $516,983,016 |
| Gross unrealized appreciation | $70,991,449 |
| Gross unrealized depreciation | (10,782,129) |
| Net unrealized appreciation (depreciation) | $60,209,320 |
Schwab Balanced Fund | Annual Report
Financial Notes (continued)
8. Federal Income Taxes (continued):
As of October 31, 2020, the components of distributable earnings on a tax basis were as follows:
| Undistributed ordinary income | $4,674,444 |
| Undistributed long-term capital gains | 11,321,895 |
| Net unrealized appreciation (depreciation) on investments | 60,209,320 |
| Total | $76,205,659 |
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. The tax cost of the fund’s investments, disclosed above, has been adjusted from the book amounts to reflect these unrealized appreciation or depreciation differences, as applicable.
Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2020, the fund had no capital loss carryforwards available to offset future net capital gains.
The tax basis components of distributions paid during the current and prior fiscal years were as follows:
| Current fiscal year end distributions | |
| Ordinary income | $7,431,786 |
| Long-term capital gains | 19,855,715 |
| Prior fiscal year end distributions | |
| Ordinary income | $10,526,518 |
| Long-term capital gains | 17,523,255 |
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, 2020, 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 fiscal year ended October 31, 2020, the fund did not incur any interest or penalties.
9. Independent Registered Public Accounting Firm:
On June 8, 2020, the Audit, Compliance and Valuation Committee of the Board approved, and on June 9, 2020, the Board approved, Deloitte & Touche LLP as the independent registered accounting firm of the Schwab Funds Complex for fiscal periods ending after June 8, 2020.
On June 8, 2020, the PricewaterhouseCoopers LLP (the “Prior Auditor”) resigned as the independent registered public accounting firm of the Schwab Funds Complex. The Prior Auditor’s reports on the financial statements of the fund for the past two fiscal years, the years ended October 31, 2018 and October 31, 2019, did not contain an adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the last two fiscal year-ends and through June 8, 2020, there were no (1) disagreements with the Prior Auditor on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the Prior Auditor’s satisfaction, would have caused it to make reference to that matter in connection with its reports on the fund’s financial statements for such periods; or (2) “reportable events,” as that term is defined in Item 304 (a)(1)(v) of Regulation S-K under the Securities Exchange Act of 1934.
10. Subsequent Events:
Management has determined there are no subsequent events or transactions through the date the financial statements were issued that would have materially impacted the financial statements as presented.
Schwab Balanced Fund | Annual Report
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Schwab Capital Trust and Shareholders of Schwab Balanced Fund:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the portfolio holdings, of Schwab Balanced Fund (the “Fund”), one of the funds constituting Schwab Capital Trust, as of October 31, 2020, and the related statement of operations, statement of changes in net assets, and the financial highlights for the year then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of October 31, 2020, and the results of its operations, the changes in its net assets, and the financial highlights for the year then ended in conformity with accounting principles generally accepted in the United States of America. The statement of changes in net assets for the year ended October 31, 2019 and the financial highlights for each of the four years in the period ended October 31, 2019 were audited by other auditors, whose report, dated December 16, 2019, expressed an unqualified opinion on such statement of changes in net assets and financial highlights.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2020, by correspondence with the custodian and transfer agent. We believe that our audit provides a reasonable basis for our opinion.
Deloitte & Touche LLP
Denver, Colorado
December 16, 2020
We have served as the auditor of one or more investment companies in the Schwab Funds Complex since 2020.
Schwab Balanced Fund | Annual Report
Other Federal Tax Information (unaudited)
For corporate shareholders, 25.28% of the fund’s dividend distributions paid during the fiscal year ended October 31, 2020, qualify for the corporate dividends received deduction.
For the fiscal year ended October 31, 2020, the fund designates $2,086,542 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 2021 via IRS Form 1099 of the amounts for use in preparing their 2020 income tax return.
Under section 852(b)(3)(C) of the Internal Revenue Code, the fund hereby designates $19,855,715 as long-term capital gain dividends for the fiscal year ended October 31, 2020.
Schwab Balanced Fund | Annual Report
Liquidity Risk Management Program (Unaudited)
The Fund has adopted and implemented a liquidity risk management program (the “program”) as required by Rule 22e-4 under the Investment Company Act of 1940, as amended. The Fund’s Board of Trustees (the “Board”) has designated the Fund’s investment adviser, Charles Schwab Investment Management, Inc. (“CSIM”) as the administrator of the program. Personnel of CSIM or its affiliates conduct the day-to-day operation of the program.
Under the program, CSIM manages a Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. The program is reasonably designed to assess and manage a Fund’s liquidity risk, taking into consideration the Fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably foreseeable stressed conditions; its historical redemption history and shareholder concentrations; and its cash holdings and access to other funding sources, including the custodian overdraft facility and lines of credit. CSIM’s process of determining the degree of liquidity of each Fund’s investments is supported by third-party liquidity assessment vendors.
The Fund’s Board reviewed a report at its meeting held on September 22, 2020 prepared by CSIM regarding the operation and effectiveness of the program for the period June 1, 2019, through May 31, 2020. No significant liquidity events impacting the Fund were noted in the report. In addition, CSIM provided its assessment that the program had been operating effectively in managing the Fund’s liquidity risk.
Schwab Balanced Fund | Annual Report
Investment Advisory Agreement Approval
The Investment Company Act of 1940, as amended (the 1940 Act), requires that 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 and administration agreement (the Agreement) between Schwab Capital Trust (the Trust) and Charles Schwab Investment Management, Inc. (CSIM) 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, business goals and priorities, profitability, third-party oversight, corporate structure and operations. As part of the renewal process, the Independent Trustees’ legal counsel, on behalf of the Independent Trustees, sends an information request letter to CSIM seeking certain relevant information. The responses by CSIM are provided to the Trustees in the Board materials for their review prior to their meeting, and the Trustees are provided with the opportunity to request any additional materials. The Board also receives data provided by an independent provider of investment company data. 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 the Fund’s operations and performance, legal and compliance matters, risk management, portfolio turnover, and sales and marketing activity. In considering the renewal, the Independent Trustees receive advice from Independent Trustees’ legal counsel, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees participate in question and answer sessions with representatives of CSIM and meet in executive session outside the presence of Fund management.
The Board, including a majority of the Independent Trustees, considered information relating to the continuance of the Agreement with respect to the Fund at meetings held on May 11, 2020 and June 9, 2020, and approved the renewal of
the Agreement with respect to the Fund for an additional one-year term at the meeting on June 9, 2020 called for the purpose of voting on such approval.1
The Board’s approval of the continuance 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 and benchmark data; |
| 3. | the Fund’s expenses and how those expenses compared to those of certain other similar mutual funds; |
| 4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to the Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
| 5. | the extent to which economies of scale would be realized as the Fund grows and whether fee levels in the Agreement reflect those economies of scale for the benefit of Fund investors. |
Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services provided by CSIM to the Fund and the resources of CSIM and its affiliates dedicated to the Fund. In this regard, the Trustees evaluated, among other things, CSIM’s experience, track record, compliance program, resources dedicated to hiring and retaining skilled personnel and specialized talent, and information security resources. The Trustees also considered information provided by CSIM relating to services and support provided with respect to the Fund’s portfolio management team, portfolio strategy, and internal investment guidelines, as well as trading infrastructure, liquidity management, product design and analysis, shareholder communications, securities valuation, fund accounting and custody, and vendor and risk oversight. The Trustees also considered investments CSIM has made in its infrastructure, including modernizing CSIM’s technology and use of data, increasing expertise in key areas (including portfolio management and trade operations), and improving business continuity, cybersecurity, due diligence, risk management processes, and information security programs, which are designed to provide enhanced services to the Fund and its shareholders. The Trustees also considered Schwab’s wide range of products, services, and channel alternatives such as investment research tools and an array of account features that benefit Fund shareholders who are brokerage clients of Schwab. Finally, the Trustees also considered
Schwab Balanced Fund | Annual Report
Schwab’s reputation as a full service brokerage firm and its overall financial condition including Schwab’s ability to maintain consistent operations and service levels during recent periods of remote work and market volatility. 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 the Fund’s 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 applicable indices/benchmarks, in light of total return, yield, and market trends, as well as in consideration of the Fund’s investment style and strategy attributes and disclosures. As part of this review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the independent provider of investment company data who prepared the peer category analysis. The Trustees further considered the level of Fund performance in the context of their review of Fund expenses and adviser profitability discussed below and also noted that the Board and a designated committee of the Board review performance throughout the year. 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 other similar mutual funds, such peer groups and comparisons having been selected and calculated by an independent provider of investment company data. CSIM reported to the Board, and the Board took into account, the risk assumed by CSIM in the development of products and provision of services as well as the competitive marketplace for financial products. The Trustees considered the effects of CSIM’s and Schwab’s practice of waiving certain 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, 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, and any differences in the nature and scope of the services CSIM provides to these other accounts, as well as differences in the market for these types of accounts. The Trustees noted that shareholders of the Fund indirectly pay their pro rata share of the fees and expenses of the underlying funds in which the Fund invests. 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. The Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly and reviewed profitability on a pre-tax basis, without regard to distribution expenses. In this connection, the Trustees reviewed management’s profitability analyses. The Trustees also reviewed profitability of CSIM relating to the Schwab fund complex as a whole, noting the benefits to Fund shareholders of being part of the Schwab fund complex, including the allocations of certain fixed costs across other funds in the complex. The Trustees considered that CSIM is not charging any management fees at the Fund level; it being understood that there is a management fee at the underlying fund level. 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. Also, because the Fund invests a portion of its assets in other funds within the Schwab fund complex, the Trustees considered whether CSIM indirectly benefits from the Fund’s investments in other underlying funds managed by CSIM. The Trustees considered whether the compensation and profitability with respect to the Fund 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. The Trustees noted that CSIM continues to invest substantial sums in its business in order to provide enhanced research capabilities, services, and systems to benefit the Fund. 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. Although the Trustees recognized the difficulty of determining economies of scale with precision, the Trustees considered the potential existence of any economies of scale and whether those are passed along to the Fund’s shareholders through (i) the enhancement of services provided to the Fund in return for fees paid, including through investments by CSIM in CSIM’s infrastructure, including modernizing CSIM’s technology and use of data, increasing expertise and capabilities in key areas (including portfolio and trade operations), and improving business continuity, cybersecurity, due diligence, and information security programs, which are designed to provide enhanced services to the Fund and its shareholders; (ii) graduated investment advisory fee schedules or unitary fee structures, fee waivers, or expense caps by CSIM and its affiliates for those funds in the Schwab fund complex with such features; and (iii) pricing a fund to scale and keeping overall expenses down as the fund grows. The Trustees acknowledged that, CSIM has shared any economies of scale with the Fund by investing in CSIM’s infrastructure, as discussed above, over time and that CSIM’s internal costs of providing investment management, technology, administrative, legal and compliance services to
Schwab Balanced Fund | Annual Report
the Fund continues to increase as a result of regulatory or other developments. The Trustees considered that CSIM and its affiliates may employ contractual expense caps to protect shareholders from high fees when fund assets were relatively small, for example, in the case of newer funds or funds with investment strategies that are from time to time out of favor, because, among other reasons, 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 benefits from economies of scale.
In the course of their deliberations, the Trustees may have accorded different weights to various factors and 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.
| 1 | The meeting on June 9, 2020 was held telephonically in reliance on exemptive relief from the in-person voting requirement under the 1940 Act as provided by the Securities and Exchange Commission. |
Schwab Balanced Fund | Annual Report
Trustees and Officers
The tables below give information about the trustees and officers of Schwab Capital Trust, which includes the fund covered in this report. The “Fund Complex” includes The Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust. The Fund Complex includes 100 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 1-877-824-5615.
| 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 |
Robert W. Burns
1959
Trustee
(Trustee of Schwab Strategic Trust since 2009; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016) | Retired/Private Investor (Jan. 2009 – present). Formerly, Managing Director, Pacific Investment Management Company, LLC (PIMCO) (investment management firm) and President, PIMCO Funds. | 100 | None |
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 since 2010; Schwab Strategic Trust since 2016) | Senior Fellow (Oct. 1979 – present), The Hoover Institution at Stanford University (public policy think tank); Senior Fellow (2000 – present), Stanford Institute for Economic Policy Research; Professor of Public Policy (1994 – 2015), Stanford University. | 100 | Director (2005 – 2020), Gilead Sciences, Inc. |
Nancy F. Heller
1956
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018) | Retired. President and Chairman (2014 – 2016), TIAA Charitable (financial services); Senior Managing Director (2003 – 2016), TIAA (financial services). | 100 | None |
Stephen Timothy Kochis
1946
Trustee
(Trustee of Schwab Strategic Trust since 2012; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016) | CEO and Owner (May 2012 – present), Kochis Global (wealth management consulting). | 100 | None |
David L. Mahoney
1954
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016) | Private Investor. | 100 | Director (2004 – present), Corcept Therapeutics Incorporated
Director (2009 – present), Adamas Pharmaceuticals, Inc.
Director (2003 – 2019), Symantec Corporation |
Schwab Balanced Fund | Annual Report
| 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 |
Jane P. Moncreiff
1961
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2019) | Consultant (2018 – present), Fulham Advisers LLC (management consulting); Chief Investment Officer (2009 – 2017), CareGroup Healthcare System, Inc. (healthcare). | 100 | None |
Kiran M. Patel
1948
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016) | Retired. Executive Vice President and General Manager of Small Business Group (Dec. 2008 – Sept. 2013), Intuit, Inc. (financial software and services firm for consumers and small businesses). | 100 | Director (2008 – present), KLA-Tencor Corporation |
Kimberly S. Patmore
1956
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016) | Consultant (2008 – present), Patmore Management Consulting (management consulting). | 100 | None |
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 since 2010; Schwab Strategic Trust since 2016) | Chairman, Chief Executive Officer and Founder (Mar. 1990 – present), Smith Graham & Co. (investment advisors). | 100 | Director (2012 – present), Eaton Corporation plc |
| 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 |
Walter W. Bettinger II2
1960
Chairman and 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 since 2010) | Director, President and Chief Executive Officer (Oct. 2008 – present), The Charles Schwab Corporation; President and Chief Executive Officer (Oct. 2008 – present) and Director (May 2008 – present), Charles Schwab & Co., Inc.; Director (Apr. 2006 – present), Charles Schwab Bank, SSB; Director (Nov. 2017 – present), Charles Schwab Premier Bank, SSB; Director (July 2019 – present), Charles Schwab Trust Bank; Director (May 2008 – present) and President and Chief Executive Officer (Aug. 2017 – present), Schwab Holdings, Inc.; Director (Oct. 2020 – present), TD Ameritrade Holding Corporation; Director (July 2016 – present), Charles Schwab Investment Management, Inc. | 100 | Director (2008 �� present), The Charles Schwab Corporation |
Schwab Balanced Fund | Annual Report
| Interested 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 |
Jonathan de St. Paer2
1973
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2019) | Director (Apr. 2019 – present), President (Oct. 2018 – present), and Chief Executive Officer (Apr. 2019 – Nov. 2019), Charles Schwab Investment Management, Inc.; Senior Vice President (June 2020 – present), Charles Schwab Investment Advisory, Inc.; Trustee and Chief Executive Officer (Apr. 2019 – present) and President (Nov. 2018 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Director (Apr. 2019 – present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited; Senior Vice President (Apr. 2019 – present), Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014 – Mar. 2019), and Vice President (Jan. 2009 – Dec. 2013), Charles Schwab & Co., Inc. | 100 | None |
Joseph R. Martinetto2
1962
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016) | Chief Operating Officer (Feb. 2018 – present) and Senior Executive Vice President (July 2015 – Feb. 2018), The Charles Schwab Corporation; Senior Executive Vice President (July 2015 – present), Charles Schwab & Co., Inc.; Chief Financial Officer (July 2015 – Aug. 2017) and Executive Vice President and Chief Financial Officer (May 2007 – July 2015), The Charles Schwab Corporation and Charles Schwab & Co., Inc.; Director (May 2007 – present), Charles Schwab & Co., Inc.; Director (Apr. 2010 – present) and Chief Executive Officer (July 2013 – Apr. 2015), Charles Schwab Bank, SSB; Director (Nov. 2017 – present), Charles Schwab Premier Bank, SSB; Director (May 2007 – present), Chief Financial Officer (May 2007 – Aug. 2017), Senior Executive Vice President (Feb. 2016 – present), and Executive Vice President (May 2007 – Feb. 2016), Schwab Holdings, Inc.; Director (Oct. 2020 – present), TD Ameritrade Holding Corporation. | 100 | None |
| 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 |
Jonathan de St. Paer
1973
President and Chief Executive Officer
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018) | Director (Apr. 2019 – present), President (Oct. 2018 – present), and Chief Executive Officer (Apr. 2019 – Nov. 2019), Charles Schwab Investment Management, Inc.; Senior Vice President (June 2020 – present), Charles Schwab Investment Advisory, Inc.; Trustee and Chief Executive Officer (Apr. 2019 – present) and President (Nov. 2018 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Director (Apr. 2019 – present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited; Senior Vice President (Apr. 2019 – present), Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014 – Mar. 2019), and Vice President (Jan. 2009 – Dec. 2013), Charles Schwab & Co., Inc. |
Mark Fischer
1970
Treasurer, Chief Financial Officer and Chief Operating Officer
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2013) | Treasurer and Chief Financial Officer (Jan. 2016 – present) and Chief Operating Officer (Dec. 2020 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Assistant Treasurer (Dec. 2013 – Dec. 2015), Schwab Funds and Laudus Funds; Assistant Treasurer (Nov. 2013 – Dec. 2015), Schwab ETFs; Chief Financial Officer (Mar. 2020 – present) and Vice President (Oct. 2013 – present), Charles Schwab Investment Management, Inc.; Executive Director (Apr. 2011 – Sept. 2013), J.P. Morgan Investor Services; Assistant Treasurer (May 2005 – Mar. 2011), Massachusetts Financial Service Investment Management. |
Omar Aguilar
1970
Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President and Chief Investment Officer (Apr. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies (June 2011 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Head of the Portfolio Management Group and Vice President of Portfolio Management (May 2009 – Apr. 2011), Financial Engines, Inc. (investment management firm); Head of Quantitative Equity (July 2004 – Jan. 2009), ING Investment Management. |
Schwab Balanced Fund | Annual Report
| Officers of the Trust (continued) |
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 |
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, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President and Chief Investment Officer (Apr. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Investment Officer – Fixed Income (June 2011 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Senior Managing Director and Global Head of Active Fixed-Income Strategies (Jan. 2008 – Oct. 2010), State Street Global Advisors; Director of Alpha Strategies (Apr. 2006 – Jan. 2008), Loomis, Sayles & Company (investment management firm). |
David Lekich
1964
Chief Legal Officer and Secretary, Schwab Funds and Schwab ETFs
Vice President and Assistant Clerk, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President (Sept. 2011 – present) and Vice President (Mar. 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present) and Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (Apr. 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; Vice President and Assistant Clerk (Apr. 2011 – present), Laudus Funds; Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs. |
Catherine MacGregor
1964
Vice President and Assistant Secretary, Schwab Funds and Schwab ETFs
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 and Laudus Trust since 2005; Schwab Strategic Trust since 2009) | Vice President (July 2005 – present), Charles Schwab & Co., Inc.; Vice President (Sept. 2005 – present), Charles Schwab Investment Management, Inc.; Vice President (Dec. 2005 – present) and 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 (Oct. 2009 – present), Schwab ETFs. |
| 1 | Each Trustee shall hold office until the election and qualification of his or her successor, or until he or she dies, resigns or is removed. The retirement policy requires that each independent trustee retire by December 31 of the year in which the Trustee turns 74 or the Trustee’s twentieth year of service as an independent trustee on any trust in the Fund Complex, whichever occurs first. |
| 2 | Mr. Bettinger, Mr. de St. Paer and Mr. Martinetto are Interested Trustees. Mr. Bettinger is an Interested Trustee because he owns stock of The Charles Schwab Corporation (CSC), the parent company of Charles Schwab Investment Management, Inc. (CSIM), the investment adviser for the trusts in the Fund Complex, is an employee and director of Charles Schwab & Co., Inc. (CS&Co), the principal underwriter for The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust, and is a director of CSIM. Mr. de St. Paer is an Interested Trustee because he owns stock of CSC and is an employee and director of CSIM. Mr. Martinetto is an Interested Trustee because he owns stock of CSC and is an employee and director of CS&Co. |
| 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 Board. |
Schwab Balanced Fund | Annual Report
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 January 29, 2019, is composed of 50% S&P 500 Index, 10% Russell 2000 Index, 37% Bloomberg Barclays US Aggregate Bond Index, and 3% Bloomberg Barclays US Treasury Bills 1-3 Month Index. From August 1, 2013 through January 28, 2019, the composite was composed of 50% S&P 500 Index, 10% Russell 2000 Index, 25% Bloomberg Barclays US Aggregate Bond Index, 12% Bloomberg Barclays US Intermediate Aggregate Bond Index and 3% Bloomberg Barclays US Treasury Bills 1-3 Month Index. Prior to August 1, 2013 the Balanced Blended Index was composed of 60% S&P 500 Index and 40% Bloomberg Barclays US Aggregate Bond Index. Percentages listed may not total to 100% due to rounding.
Bloomberg Barclays US Aggregate Bond Index An index that is a broad-based benchmark measuring the performance of the U.S. investment grade, taxable bond market, including U.S. Treasuries, government-related and corporate bonds, mortgage pass-through securities, commercial mortgage-backed securities, and asset-backed securities that are publicly available for sale in the United States. To be eligible for inclusion in the index, securities must be fixed rate, non-convertible, U.S. dollar-denominated with at least $300 million or more of outstanding face value and have one or more years remaining to maturity. The index excludes certain types of securities, including tax-exempt state and local government series bonds, structured notes embedded with swaps or other special features, private placements, floating rate securities, inflation-linked bonds and Eurobonds. The index is market capitalization weighted and the securities in the index are updated on the last business day of each month.
Bloomberg Barclays US Intermediate Aggregate 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.
Bloomberg Barclays US Treasury Bills 1–3 Month Index An index that includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months but more than 1 month, are rated investment grade and have $300 million or more of outstanding face value. It excludes zero-coupon STRIPS.
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 non-US Dollar World Government Bond Index A market capitalization index that measures the total rate of return performance for the government bonds of 22 countries, excluding the U.S., with a remaining maturity of at least 1 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 Index (Net) A free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets in Europe, Australasia, and the Far East. 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 (Net) A free float-adjusted market capitalization weighted index that is designed to measure equity market performance in the global emerging markets. This series approximates the minimum possible dividend reinvestment. The 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 measures the performance of those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values.
Russell 1000 Index An index that measures the performance of the 1,000 largest companies in the Russell 3000 Index, and represents approximately 92% of the total market capitalization of the Russell 3000 Index. The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.
Russell 1000 Value 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.
Schwab Balanced Fund | Annual Report
Russell 2000 Index An index that measures the performance of the 2,000 smallest companies in the Russell 3000 Index. The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.
S&P 500 Index An index that is designed to measure the performance of 500 leading publicly traded companies from a broad range of industries.
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.
Schwab Balanced Fund | Annual Report
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; and
• 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
© 2020 Schwab Funds. All rights reserved.
Schwab Balanced Fund | Annual Report
Charles Schwab Investment Management
With a straightforward lineup of core products and solutions for building the foundation of a portfolio, Charles Schwab Investment Management advocates for investors of all sizes with a steadfast focus on lowering costs and reducing unnecessary complexity. The list below shows all currently available Schwab Funds®.
Investors should carefully consider information contained in the prospectus, or if available, the summary prospectus, including investment objectives, risks, charges and expenses before investing. Please call 1-877-824-5615 for a prospectus 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.schwabfunds.com/schwabfunds_prospectus, the SEC’s website at www.sec.gov, or by contacting Schwab Funds at 1-877-824-5615.
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.schwabfunds.com/schwabfunds_prospectus or the SEC’s website at www.sec.gov.
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 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 U.S. Large-Cap Growth Index Fund
Schwab U.S. Large-Cap Value Index Fund
Schwab U.S. Mid-Cap Index Fund
Schwab International Index Fund®
Asset Allocation Funds
Schwab Balanced Fund
Schwab MarketTrack Portfolios®
Schwab Target Funds
Schwab Target Index Funds
Schwab Monthly Income Funds
Bond Funds
Schwab Treasury Inflation Protected Securities Index Fund
Schwab U.S. Aggregate Bond Index Fund
Schwab Short-Term Bond Index Fund
Schwab Tax-Free Bond Fund1
Schwab California Tax-Free Bond Fund1
Schwab High Yield Municipal Bond Fund
Schwab Money Funds2
Schwab provides a broad choice of taxable and tax-exempt money market funds for both retail and institutional client types.
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
Funds
Schwab Funds
1-877-824-5615
© 2020 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC®
Printed on recycled paper.
| ¹ | State, local, and the Federal Alternative Minimum Tax may apply. Capital gains are not exempt from Federal Taxation. |
| ² | You could lose money by investing in the Schwab Money Funds. All Schwab Money Funds with the exception of Schwab Variable Share Price Money Fund seek to preserve the value of your investment at $1.00 per share, but cannot guarantee they will do so. Because the share price of Schwab Variable Share Price Money Fund will fluctuate, when you sell your shares they may be worth more or less than what you originally paid for them. All Schwab Money Funds with the exception of Schwab Government Money Fund, Schwab Retirement Government Money Fund, Schwab U.S. Treasury Money Fund, Schwab Treasury Obligations Money Fund and Schwab Government Money Market Portfolio may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Schwab Money Funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Schwab Money Funds’ sponsor has no legal obligation to provide financial support to the Funds, and you should not expect that the sponsor will provide financial support to the Funds at any time. |
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Annual Report | October 31, 2020
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 U.S. Large-Cap Growth
Index Fund
Schwab U.S. Large-Cap Value
Index Fund
Schwab U.S. Mid-Cap Index Fund
Schwab International Index Fund®
| New Notice Regarding Shareholder Report Delivery Options |
| Beginning on January 1, 2021, paper copies of a fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from a fund or from your financial intermediary (such as a bank or broker-dealer). Instead, the reports will be made available on a fund’s website www.schwabfunds.com/schwabfunds_prospectus, and you will be notified by mail each time a report is posted and the mailing will provide a website link to access the report. You will continue to receive other fund regulatory documents (such as prospectuses or supplements) in paper unless you have elected to receive all fund documents electronically. |
| If you would like to receive a fund’s future shareholder reports in paper free of charge after January 1, 2021, you can make that request: |
| • If you invest through Charles Schwab & Co, Inc. (broker-dealer), by calling 1-866-345-5954 and using the unique identifier attached to this mailing; |
| • If you invest through another financial intermediary (such as a bank or broker-dealer) by contacting them directly; or |
| • If owned directly through a fund by calling 1-800-407-0256. |
| If you already receive shareholder reports and other fund documents electronically, you will not be affected by this change and you need not take any action. |
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Eight 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 Inc. (MSCI) and Standard & Poor’s (S&P). GICS is a service mark of MSCI and S&P and has been licensed for use by Schwab. The Industry classifications used in the schedules of Condensed Portfolio Holdings are sub-categories of Sector classifications.
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
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.schwabfunds.com/schwabfunds_prospectus.
| Total Return for the 12 Months Ended October 31, 2020 |
Schwab S&P 500 Index Fund
(Ticker Symbol: SWPPX) | 9.69% |
| S&P 500® Index | 9.71% |
| Fund Category: Morningstar Large Blend1 | 6.30% |
| Performance Details | pages 7-9 |
| |
Schwab 1000 Index Fund
(Ticker Symbol: SNXFX) | 10.60% |
| Schwab 1000 Index® | 10.65% |
| Russell 1000® Index | 10.87% |
| Fund Category: Morningstar Large Blend1 | 6.30% |
| Performance Details | pages 10-12 |
| |
Schwab Small-Cap Index Fund
(Ticker Symbol: SWSSX) | 0.00% |
| Russell 2000® Index | -0.14% |
| Fund Category: Morningstar Small Blend1 | -6.45% |
| Performance Details | pages 13-15 |
| |
Schwab Total Stock Market Index Fund
(Ticker Symbol: SWTSX) | 9.94% |
| Dow Jones U.S. Total Stock Market IndexSM | 9.99% |
| Fund Category: Morningstar Large Blend1 | 6.30% |
| Performance Details | pages 16-18 |
| Total Return for the 12 Months Ended October 31, 2020 |
Schwab U.S. Large-Cap Growth Index Fund
(Ticker Symbol: SWLGX) | 29.16% |
| Russell 1000® Growth Index | 29.22% |
| Fund Category: Morningstar Large Growth1 | 25.92% |
| Performance Details | pages 19-21 |
| |
Schwab U.S. Large-Cap Value Index Fund
(Ticker Symbol: SWLVX) | -7.69% |
| Russell 1000® Value Index | -7.57% |
| Fund Category: Morningstar Large Value1 | -7.37% |
| Performance Details | pages 22-24 |
| |
Schwab U.S. Mid-Cap Index Fund
(Ticker Symbol: SWMCX) | 4.04% |
| Russell Midcap® Index | 4.12% |
| Fund Category: Morningstar Mid-Cap Blend1 | -0.89% |
| Performance Details | pages 25-27 |
| |
Schwab International Index Fund2
(Ticker Symbol: SWISX) | -6.56% |
| MSCI EAFE® Index (Net)3 | -6.86% |
| Fund Category: Morningstar Foreign Large Blend1 | -4.19% |
| Performance Details | pages 28-30 |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
For index definitions, please see the Glossary.
Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
| 1 | 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. |
| 2 | 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. |
| 3 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
Jonathan de St. Paer
President of Charles Schwab
Investment Management, Inc.
and the funds covered
in this report.
Dear Shareholder,
Equity market performance for the 12-month reporting period ended October 31, 2020 barely hints at the market turmoil investors endured this year. U.S. and international equity markets ended the period with mixed gains, including a 9.7% rise for the S&P 500® Index, a bellwether for the overall U.S. stock market. However, the past year was one of the most volatile in history. Market gains were robust through the last week of February 2020 before being wiped out as the spreading COVID-19 pandemic drove equities sharply lower. In mid-March, market volatility spiked to its highest level since the peak of the Great Recession in 2008 with the S&P 500® Index dropping 30% over just 22 trading days in late February and early March. By early September, however, most broad U.S. equity markets had regained all the ground they lost in March, propelling the S&P 500® Index to new record highs. However, markets retreated and volatility began to increase again throughout September and October in the face of a resurgence of COVID-19 infections, corporate earnings concerns and growing uncertainty regarding the U.S. election.
High levels of volatility can undermine our confidence as investors, which can lead to emotion-based trading. Although it is important to reassess your individual risk tolerance and make strategic adjustments to your portfolio from time to time, impulsive reactions driven by fear can often make investing outcomes worse. At Charles Schwab Investment Management, we believe that the best way to avoid these pitfalls is to maintain a long-term investing plan. A commitment to a long-term investing plan can help make it significantly easier and less stressful to stay the course when market volatility rises.
At Charles Schwab Investment Management, we provide a range of foundational products that are designed to suit a variety of risk appetites. The Schwab Equity Index Funds play a role in our goal to provide investors with a diverse variety of investment choices. The funds provide access to broad segments of the equities markets with different risk and return profiles, including small-cap, mid-cap, and large-cap stocks, those oriented toward value or growth, and equities from both U.S. and international markets. In addition, the Schwab Equity Index Funds can help investors achieve their financial goals by keeping investing costs down. The funds have among the lowest expenses in the industry, along with no investment minimums.
Thank you for investing with Charles Schwab Investment Management, and for trusting us to help you achieve your financial goals. 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.schwabfunds.com. We are also happy to hear from you at 1-877-824-5615.
Sincerely,
“ A commitment to a long-term investing plan can help make it significantly easier and less stressful to stay the course when market volatility rises.”
Past performance is no guarantee of future results.
Management views may have changed since the report date.
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
The Investment Environment
The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms. For the reporting period, the S&P 500® Index returned 9.71%, with sectors that benefitted as a result of the COVID-19 pandemic and associated stay-at-home orders, such as the information technology sector, outperforming other sectors that were more impacted by the COVID-19 pandemic. U.S. large-cap stocks outperformed small-cap stocks, with the Russell 1000® Index and the Russell 2000® Index returning 10.87% and -0.14%, respectively, for the reporting period. Among large-cap stocks, growth stocks outperformed value stocks by a large margin, with the Russell 1000® Growth Index and Russell 1000® Value Index returning 29.22% and -7.57%, respectively, for the reporting period. Among international markets, the MSCI EAFE® Index (Net)*, a broad measure of developed international equity performance, returned -6.86% for the reporting period.
Asset Class Performance Comparison % returns during the 12 months ended October 31, 2020
Index figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. 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 may have changed since the report date.
| * | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
The Investment Environment (continued)
Prior to the onset of the COVID-19 pandemic, the U.S. economy, despite ongoing trade tensions with China, maintained steady growth, albeit at a slowing pace. However, amid the fallout of the COVID-19 pandemic, the U.S. entered recessionary territory with record speed. U.S. gross domestic product (GDP) fell steeply, declining 5.0% and 31.4% for the first and second quarters of 2020, respectively, with the second quarter representing the largest contraction in U.S. GDP since 1947 when modern GDP measurements began. GDP subsequently jumped by 33.1% for the third quarter of 2020, reflecting increased consumer and business spending. Unemployment remained at record lows through February before a record number of unemployment claims in March resulted in the largest monthly increase in the U.S unemployment rate since January 1975. In April, this record was broken again when unemployment skyrocketed, rising to the highest level since the Great Depression. Unemployment declined in May through October, dropping below double digits beginning in August. Consumer confidence remained solid through February, but was volatile over the remainder of the reporting period.
Outside the U.S., conditions continued to soften, dampened by slowing economic output, slumping world trade, geopolitical concerns, and the COVID-19 pandemic. The COVID-19 pandemic exacerbated economic weakness around the globe, dramatically slowing growth amid stay-at-home orders, supply chain disruptions, and broadly diminishing demand. In the first half of the reporting period, oil prices deteriorated amid significantly reduced demand, coupled with rising U.S. crude production and a price war between Russia and Saudi Arabia. In April, oil futures briefly fell into negative territory as storage capacity evaporated and demand waned. However, as production was slashed, relieving pressure on constrained storage capacity, demand also stabilized. First and second quarter 2020 growth was negative in the eurozone and the United Kingdom. In January, Brexit occurred with the formal departure of the United Kingdom from the European Union resulting in an 11-month transition period with respect to economic and customs matters. Japan fared slightly better, although GDP still contracted for the first and second quarters of 2020. Even China and India, which had maintained stronger growth than many developed countries, showed weakness. In China, GDP contracted in the first quarter, but rebounded in the second and third quarters. While India’s second quarter GDP contracted, third quarter GDP was positive.
Many central banks around the world, including the U.S. Federal Reserve (Fed), reduced their policy rates over the reporting period, while others maintained low—and for some international central banks, negative—interest rates. In the U.S., after enacting three interest rate cuts in the second half of 2019 and as the economic implications of the COVID-19 pandemic grew, the Fed cut interest rates by 0.50% in early March and by 1.00% in mid-March, resulting in a federal funds rate of 0.00% to 0.25%. In addition, the Fed also announced extensive emergency measures to support the economy in light of the COVID-19 pandemic, including large purchases of U.S. Treasuries and other securities to support smooth market function, facilitating the flow of credit to municipalities, new financing for employers, consumers, and businesses, and the establishment of facilities to support credit to businesses and consumers alike. In August, the Fed announced that it was shifting its interest rate policy approach to potentially allow inflation to rise above its 2% target for periods of time even in times of rising employment. Outside the U.S., central banks were similarly accommodative. The European Central Bank held its policy rate at 0.00%, unchanged since March 2016, and launched a new asset purchase program to help counter the impact of the COVID-19 pandemic. The Bank of Japan upheld its short-term interest rate target of -0.1%, also unchanged since 2016, and increased the annual pace of its purchases of exhange-traded funds (ETFs) and other assets. The Bank of England lowered its key official bank rate from 0.75% to 0.10% in two emergency rate cuts in March. Central banks in key emerging market economies—including China, India, Mexico, Russia, and Thailand—lowered their policy rates or maintained already low rates in response to pandemic-driven pressures.
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
 | Christopher Bliss, CFA, Vice President and Head of Passive Equity Strategies, leads the portfolio management team for Schwab’s passive equity mutual funds and ETFs. He also has overall responsibility for all aspects of the management of the funds. Before joining CSIM in 2016, Mr. Bliss spent 12 years at BlackRock (formerly Barclays Global Investors) managing and leading institutional index teams, most recently as a managing director and the head of the Americas institutional index team. Prior to BlackRock, he worked as an equity analyst and portfolio manager for Harris Bretall and before that, as a research analyst for JP Morgan. |
 | Jeremy Brown, Portfolio Manager, is responsible for the day-to-day co-management of the the funds, except for the Schwab International Index Fund. Prior to joining CSIM in 2017, Mr. Brown spent six years with ALPS Advisors, Inc. in Denver, most recently as a senior analyst on the ETF portfolio management and research team where he performed portfolio management, trading, and analytics/research functions for ALPS ETFs and passive funds. Additionally, Mr. Brown led a number of investment research, commentary, industry trend analysis, and sales and marketing support initiatives. |
 | Chuck Craig, CFA, Senior Portfolio Manager, is responsible for the day-to-day co-management of the Schwab International Index Fund. Prior to joining CSIM in 2012, Mr. Craig worked at Guggenheim Funds (formerly Claymore Group), where he spent more than five years as a managing director of portfolio management and supervision, and three years as vice president of product research and development. Prior to that, he worked as an equity research analyst at First Trust Portfolios (formerly Niké Securities), and a trader and analyst at PMA Securities, Inc. |
 | Ferian Juwono, CFA, Senior Portfolio Manager, is responsible for the day-to-day co-management of the the funds, except for the Schwab International Index Fund. Prior to joining CSIM in 2010, Mr. Juwono worked at BlackRock (formerly Barclays Global Investors) where he spent more than three years as a portfolio manager, managing equity index funds for institutional clients, and two years as a senior business analyst. Prior to that, Mr. Juwono worked for more than 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 International Index Fund. Prior to joining CSIM in 2012, Ms. Qin spent more than four years at The Bank of New York Mellon Corporation. During that time, Ms. Qin spent more than two years as an associate equity portfolio manager and nearly two years as a performance analyst. She also worked at Wells Fargo Funds Management as a mutual fund analyst and at CIGNA Reinsurance in the risk management group as a risk analyst. |
 | David Rios, Portfolio Manager, is responsible for the day-to-day co-management of the Schwab International Index Fund. Prior to this role, Mr. Rios was an associate portfolio manager on the Schwab equity index strategies team for four years. His first role with CSIM was as a trade operations specialist. Prior to joining CSIM in 2008, Mr. Rios was a senior fund accountant at Investors Bank & Trust (subsequently acquired by State Street Corporation). |
 | Sabya Sinha, Portfolio Manager, is responsible for the day-to-day co-management of the the funds, except for the Schwab International Index Fund. Prior to joining CSIM in 2015, Mr. Sinha spent a year at F-Squared Investments on the product development and analytics team. Prior to F-Squared, he worked at IndexIQ Advisors as a senior index portfolio manager for three years and for Bank of America’s Columbia Management subsidiary as a portfolio manager for three years. |
Schwab Equity Index Funds | Annual Report
Schwab S&P 500 Index Fund as of October 31, 2020
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 seeks to replicate the performance of the index by giving the same weight to a given stock as the index does. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. From a sector standpoint within the index, the information technology and consumer discretionary sectors outperformed over the 12-month reporting period, while the energy and financials sectors underperformed.
Performance. The fund generally tracked the index for the reporting period. The fund returned 9.69% for the 12-month reporting period ended October 31, 2020, compared with the index, which returned 9.71%. 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. The fund’s holdings in the financials sector were the largest detractors from the total return of the fund. Financials stocks represented an average weight of approximately 11% of the fund’s investments and returned approximately -15% for the reporting period. One example from this sector is Wells Fargo & Co. The fund’s holdings of Wells Fargo & Co. returned approximately -57% for the reporting period.
The energy sector also detracted from the total return of the fund. Energy stocks represented an average weight of approximately 3% of the fund’s investments and returned approximately -46% for the reporting period.
The fund’s holdings in the information technology sector were the largest contributors to the total return of the fund. Information technology stocks represented an average weight of approximately 26% of the fund’s investments and returned approximately 34% for the reporting period. The fund’s holdings of Apple Inc. are one example from this sector, returning approximately 77% for the reporting period.
Stocks in the consumer discretionary sector also contributed to the total return of the fund. Consumer discretionary stocks represented an average weight of approximately 10% of the fund’s investments and returned approximately 25% for the reporting period.
Management views and portfolio holdings may have changed since the report date.
Schwab Equity Index Funds | Annual Report
Schwab S&P 500 Index Fund
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab S&P 500 Index Fund (5/19/97) | 9.69% | 11.65% | 12.93% |
| S&P 500® Index | 9.71% | 11.71% | 13.01% |
| Fund Category: Morningstar Large Blend2 | 6.30% | 9.64% | 11.28% |
| Fund Expense Ratio3: 0.02% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
For index definitions, please see the Glossary.
Index ownership – “Standard & Poor’s®,” “S&P®,” and “S&P 500®” are registered trademarks of Standard & Poor’s Financial Services LLC (S&P), and “Dow Jones®” is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones) and have been licensed for use by S& P Dow Jones Indices LLC and its affiliates and sublicensed for certain purposes by CSIM. The “S&P 500® Index” is a product of S&P Dow Jones Indices LLC or its affiliates, and has been licensed for use by CSIM. The Schwab S&P 500 Index Fund is not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, or their respective affiliates, and neither S&P Dow Jones Indices LLC, Dow Jones, S&P, nor their respective affiliates make any representation regarding the advisability of investing in the fund.
| 1 | Performance does 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. |
Schwab Equity Index Funds | Annual Report
Schwab S&P 500 Index Fund
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 508 |
| Weighted Average Market Cap (millions) | $433,361 |
| Price/Earnings Ratio (P/E) | 25.1 |
| Price/Book Ratio (P/B) | 3.4 |
| Portfolio Turnover Rate | 4% |
Sector Weightings % of Investments2
Top Equity Holdings % of Net Assets3
Portfolio holdings may have changed since the report date.
Source of Sector Classification: S& P and MSCI.
| 1 | Excludes derivatives. |
| 2 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 3 | This list is not a recommendation of any security by the investment adviser. |
Schwab Equity Index Funds | Annual Report
Schwab 1000 Index Fund as of October 31, 2020
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 1,000 largest stocks of 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 seeks to replicate the performance of the index by giving the same weight to a given stock as the index does. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. From a sector standpoint within the index, the information technology and consumer discretionary sectors outperformed over the 12-month reporting period, while the energy and financials sectors underperformed.
Performance. The fund generally tracked the index for the reporting period. The fund returned 10.60% for the 12-month reporting period ended October 31, 2020, compared with the index, which returned 10.65%. 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. The fund’s holdings in the financials sector were the largest detractors from the total return of the fund. The financials sector represented an average weight of approximately 11% of the fund’s investments and returned approximately -15% for the reporting period. One example from this sector is Wells Fargo & Co. The fund’s holdings of Wells Fargo & Co. returned approximately -57% for the reporting period.
The energy sector also detracted from the total return of the fund. Energy stocks represented an average weight of approximately 3% of the fund’s investments and returned approximately -47% for the reporting period.
The fund’s holdings in the information technology sector were the largest contributors to the total return of the fund. Information technology stocks represented an average weight of approximately 25% of the fund’s investments and returned approximately 35% for the reporting period. The fund’s holdings of Apple Inc. are one example from this sector, returning approximately 77% for the reporting period.
Stocks in the consumer discretionary sector were another contributor to the total return of the fund. Consumer discretionary stocks represented an average weight of approximately 11% of the fund’s investments and returned approximately 33% for the reporting period.
Management views and portfolio holdings may have changed since the report date.
Schwab Equity Index Funds | Annual Report
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab 1000 Index Fund (4/2/91) | 10.60% | 11.60% | 12.74% |
| Schwab 1000 Index® | 10.65% | 11.70% | 12.94% |
| Russell 1000® Index | 10.87% | 11.79% | 13.05% |
| Fund Category: Morningstar Large Blend2 | 6.30% | 9.64% | 11.28% |
| Fund Expense Ratio3: 0.05% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
For index definitions, please see the Glossary.
| 1 | Performance does 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. |
Schwab Equity Index Funds | Annual Report
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 992 2 |
| Weighted Average Market Cap (millions) | $387,635 |
| Price/Earnings Ratio (P/E) | 25.5 |
| Price/Book Ratio (P/B) | 3.4 |
| Portfolio Turnover Rate | 4% |
Sector Weightings % of Investments3
Top Equity Holdings % of Net Assets4
Portfolio holdings may have changed since the report date.
Source of Sector Classification: S& P and MSCI.
| 1 | Excludes derivatives. |
| 2 | As a result of the Schwab 1000 Index®’s once per year reconstitution and the effects of certain corporate actions, the fund may hold more or less than 1,000 securities. |
| 3 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 4 | This list is not a recommendation of any security by the investment adviser. |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund as of October 31, 2020
The Schwab Small-Cap Index Fund’s (the fund) goal is to track the performance of a benchmark index that measures the total return of small-capitalization U.S. stocks. To pursue its investment objective, the fund generally invests in stocks that are included in the Russell 2000® Index (the index). To pursue its goal, the fund seeks to replicate the performance of the index by giving the same weight to a given stock as the index does. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. From a sector standpoint within the index, the health care and consumer discretionary sectors outperformed over the 12-month reporting period, while the energy and real estate sectors underperformed.
Performance. The fund generally tracked the index for the reporting period. The fund returned 0.00% for the 12-month reporting period ended October 31, 2020, compared with the index, which returned -0.14%.
Contributors and Detractors. The fund’s holdings in the health care sector were the largest contributors to the total return of the fund. Health care stocks represented an average weight of approximately 20% of the fund’s investments and returned approximately 34% for the reporting period. The fund’s holdings of Teladoc Health, Inc., a multinational telemedicine and virtual healthcare company, are one example from this sector, returning approximately 152% for the reporting period.
Stocks in the information technology sector also contributed to the total return of the fund. Information technology stocks represented an average weight of approximately 14% of the fund’s investments and returned approximately 9% for the reporting period.
The fund’s holdings in the financials sector were the largest detractors from the total return of the fund. Financials stocks represented an average weight of approximately 16% of the fund’s investments and returned approximately -19% for the reporting period. One example from this sector is Invesco Mortgage Capital, Inc. The fund’s holdings of Invesco Mortgage Capital, Inc. returned approximately -79% over the reporting period.
Stocks in the real estate sector also detracted from the total return of the fund. Real estate stocks represented an average weight of approximately 7% of the fund’s investments and returned approximately -24% for the reporting period.
Management views and portfolio holdings may have changed since the report date.
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Small-Cap Index Fund (5/19/97) | 0.00% | 7.33% | 9.83% |
| Russell 2000® Index | -0.14% | 7.27% | 9.64% |
| Small-Cap Spliced Index | -0.14% | 7.27% | 9.79% |
| Fund Category: Morningstar Small Blend2 | -6.45% | 5.00% | 8.48% |
| Fund Expense Ratio3: 0.04% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
The first index listed for the fund is the fund’s primary benchmark, as shown in the prospectus. Additional indices shown are provided for comparative purposes.
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 | Performance does 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. |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 2,021 |
| Weighted Average Market Cap (millions) | $2,518 |
| Price/Earnings Ratio (P/E) | 17.4 |
| Price/Book Ratio (P/B) | 1.8 |
| Portfolio Turnover Rate | 21% |
Sector Weightings % of Investments2
Top Equity Holdings % of Net Assets3
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 | Excludes derivatives. |
| 2 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 3 | This list is not a recommendation of any security by the investment adviser. |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund as of October 31, 2020
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 IndexSM (the index), which includes all publicly traded stocks of 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 securities included in the index that, when taken together, are expected to perform similarly to the index as a whole. Due to the use of representative sampling, the fund may not hold all of the securities in the index. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. From a sector standpoint within the index, the information technology and consumer discretionary sectors outperformed over the 12-month reporting period, while the energy and real estate sectors underperformed.
Performance. The fund generally tracked the index for the reporting period. The fund returned 9.94% for the 12-month reporting period ended October 31, 2020, compared with the index, which returned 9.99%. 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. The fund’s holdings in the financials sector were the largest detractors from the total return of the fund. The financials sector represented an average weight of approximately 12% of the fund’s investments and returned approximately -15% for the reporting period. One example from this sector is Wells Fargo & Co. The fund’s holdings of Wells Fargo & Co. returned approximately -57% for the reporting period.
The energy sector also detracted from the total return of the fund. Energy stocks represented an average weight of approximately 3% of the fund’s investments and returned approximately -47% for the reporting period.
The fund’s holdings in the information technology sector were the largest contributors to the total return of the fund. Information technology stocks represented an average weight of approximately 25% of the fund’s investments and returned approximately 34% for the reporting period. The fund’s holdings of Apple Inc. are one example from this sector, returning approximately 77% for the reporting period.
Stocks in the consumer discretionary sector also contributed to the total return of the fund. Consumer discretionary stocks represented an average weight of approximately 11% of the fund’s investments and returned approximately 31% for the reporting period.
Management views and portfolio holdings may have changed since the report date.
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Total Stock Market Index Fund (6/1/99) | 9.94% | 11.37% | 12.72% |
| Dow Jones U.S. Total Stock Market IndexSM | 9.99% | 11.41% | 12.75% |
| Fund Category: Morningstar Large Blend2 | 6.30% | 9.64% | 11.28% |
| Fund Expense Ratio3: 0.03% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
For index definitions, please see the Glossary.
Index ownership – “Standard & Poor’s®” and “S&P®” are registered trademarks of Standard & Poor’s Financial Services LLC (S&P), and “Dow Jones®” is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones) and have been licensed for use by S& P Dow Jones Indices LLC and its affiliates and sublicensed for certain purposes by CSIM. The “Dow Jones U.S. Total Stock Market IndexSM” is a product of S&P Dow Jones Indices LLC or its affiliates, and has been licensed for use by CSIM. The Schwab Total Stock Market Index Fund is not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, or their respective affiliates, and neither S&P Dow Jones Indices LLC, Dow Jones, S&P, nor their respective affiliates make any representation regarding the advisability of investing in the fund.
| 1 | Performance does 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. |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 3,184 |
| Weighted Average Market Cap (millions) | $363,282 |
| Price/Earnings Ratio (P/E) | 25.1 |
| Price/Book Ratio (P/B) | 3.2 |
| Portfolio Turnover Rate | 4% |
Sector Weightings % of Investments2
Top Equity Holdings % of Net Assets3
Portfolio holdings may have changed since the report date.
Source of Sector Classification: S& P and MSCI.
| 1 | Excludes derivatives. |
| 2 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 3 | This list is not a recommendation of any security by the investment adviser. |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Growth Index Fund as of October 31, 2020
The Schwab U.S. Large-Cap Growth Index Fund’s (the fund) goal is to track the performance of a benchmark index that measures the total return of large-capitalization U.S. growth stocks. To pursue its investment objective, the fund generally invests in stocks that are included in the Russell 1000® Growth Index (the index). The fund seeks to replicate the performance of the index by giving the same weight to a given stock as the index does. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. From a sector standpoint within the index, the information technology and consumer discretionary sectors outperformed over the 12-month reporting period, while the energy and industrials sectors underperformed.
Performance. The fund generally tracked the index for the reporting period. The fund returned 29.16% during the 12-month reporting period ended October 31, 2020, compared with the index, which returned 29.22%. 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. The fund’s holdings in the industrials sector were the largest detractors from the total return of the fund. The industrials sector represented an average weight of 7% of the fund’s investments and returned approximately -1% for the reporting period. One example from this sector is The Boeing Co. The fund’s holdings of The Boeing Co. returned approximately -49% for the reporting period.
The energy sector also detracted from the total return of the fund. Energy stocks represented an average weight of less than 1% of the fund’s investments and returned approximately -29% for the reporting period.
The fund’s holdings in the information technology sector were the largest contributors to the total return of the fund. Information technology stocks represented an average weight of approximately 41% of the fund’s investments and returned approximately 43% for the reporting period. The fund’s holdings of Apple Inc. are one example from this sector, returning approximately 77% for the reporting period.
Stocks in the consumer discretionary sector also contributed to the total return of the fund. Consumer discretionary stocks represented an average weight of approximately 15% of the fund’s investments and returned approximately 45% for the reporting period.
Management views and portfolio holdings may have changed since the report date.
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Growth Index Fund
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (December 20, 2017 – October 31, 2020)1
| Fund and Inception Date | 1 Year | Since Inception |
| Fund: Schwab U.S. Large-Cap Growth Index Fund (12/20/17) | 29.16% | 17.85% |
| Russell 1000® Growth Index | 29.22% | 17.91% |
| Fund Category: Morningstar Large Growth2 | 25.92% | N/A |
| Fund Expense Ratio3: 0.035% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
For index definitions, please see the Glossary.
Index ownership – The Russell 1000® Growth Index is a registered mark of the Frank Russell Company (Russell) and has been licensed for use by the Schwab U.S. Large-Cap Growth Index Fund. The Schwab U.S. Large-Cap Growth 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 | Performance does 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. |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Growth Index Fund
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 450 |
| Weighted Average Market Cap (millions) | $636,052 |
| Price/Earnings Ratio (P/E) | 35.0 |
| Price/Book Ratio (P/B) | 10.4 |
| Portfolio Turnover Rate | 41% |
Sector Weightings % of Investments2
Top Equity Holdings % of Net Assets3
Portfolio holdings may have changed since the report date.
Source of Sector Classification: S& P and MSCI.
| 1 | Excludes derivatives. |
| 2 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 3 | This list is not a recommendation of any security by the investment adviser. |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Value Index Fund as of October 31, 2020
The Schwab U.S. Large-Cap Value Index Fund’s (the fund) goal is to track the performance of a benchmark index that measures the total return of large-capitalization U.S. value stocks. To pursue its investment objective, the fund generally invests in stocks that are included in the Russell 1000® Value Index (the index). The fund seeks to replicate the performance of the index by giving the same weight to a given stock as the index does. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. From a sector standpoint within the index, the health care and materials sectors outperformed over the 12-month reporting period, while the energy and real estate sectors underperformed.
Performance. The fund generally tracked the index for the reporting period. The fund returned -7.69% during the 12-month reporting period ended October 31, 2020, compared with the index, which returned -7.57%. 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. The fund’s holdings in the financials sector were the largest detractors from the total return of the fund. The financials sector represented an average weight of approximately 21% of the fund’s investments and returned approximately -18% for the reporting period. One example from this sector is Wells Fargo & Co. The fund’s holdings of Wells Fargo & Co. returned approximately -57% for the reporting period.
The energy sector also detracted from the total return of the fund. Energy stocks represented an average weight of approximately 6% of the fund’s investments and returned approximately -46% for the reporting period.
The fund’s holdings in the health care sector were the largest contributors to the total return of the fund. Health care stocks represented an average weight of approximately 14% of the fund’s investments and returned approximately 11% for the reporting period. The fund’s holdings of Danaher Corp., a designer and manufacturer of medical, industrial, and commercial products and services, are one example from this sector, returning approximately 67% for the reporting period.
Stocks in the materials sector also contributed to the total return of the fund. The fund’s holdings in the materials sector represented an average weight of approximately 4% of the fund’s investments and returned approximately 9% for the reporting period.
Management views and portfolio holdings may have changed since the report date.
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Value Index Fund
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (December 20, 2017 – October 31, 2020)1
| Fund and Inception Date | 1 Year | Since Inception |
| Fund: Schwab U.S. Large-Cap Value Index Fund (12/20/17) | -7.69% | 0.44% |
| Russell 1000® Value Index | -7.57% | 0.55% |
| Fund Category: Morningstar Large Value2 | -7.37% | N/A |
| Fund Expense Ratio3: 0.035% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
For index definitions, please see the Glossary.
Index ownership – The Russell 1000® Value Index is a registered mark of the Frank Russell Company (Russell) and has been licensed for use by the Schwab U.S. Large-Cap Value Index Fund. The Schwab U.S. Large-Cap Value 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 | Performance does 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. |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Value Index Fund
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 850 |
| Weighted Average Market Cap (millions) | $119,166 |
| Price/Earnings Ratio (P/E) | 19.3 |
| Price/Book Ratio (P/B) | 1.9 |
| Portfolio Turnover Rate | 50% |
Sector Weightings % of Investments2
Top Equity Holdings % of Net Assets3
Portfolio holdings may have changed since the report date.
Source of Sector Classification: S& P and MSCI.
| 1 | Excludes derivatives. |
| 2 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 3 | This list is not a recommendation of any security by the investment adviser. |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Mid-Cap Index Fund as of October 31, 2020
The Schwab U.S. Mid-Cap Index Fund’s (the fund) goal is to track the performance of a benchmark index that measures the total return of mid-capitalization U.S. stocks. To pursue its investment objective, the fund generally invests in securities that are included in the Russell Midcap® Index (the index). The fund seeks to replicate the performance of the index by giving the same weight to a given security as the index does. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. From a sector standpoint within the index, the health care and information technology sectors outperformed over the 12-month reporting period, while the energy and real estate sectors underperformed.
Performance. The fund generally tracked the index for the reporting period. The fund returned 4.04% during the 12-month reporting period ended October 31, 2020, compared with the index, which returned 4.12%. 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. The fund’s holdings in the real estate sector were the largest detractors from the total return of the fund. The real estate sector represented an average weight of approximately 9% of the fund’s investments and returned approximately -23% for the reporting period. One example from this sector is Equity Residential. The fund’s holdings of Equity Residential, a real estate investment trust, returned approximately -45% for the reporting period.
The financials sector also detracted from the total return of the fund. Financials stocks represented an average weight of approximately 12% of the fund’s investments and returned approximately -13% for the reporting period.
The fund’s holdings in the information technology sector were the largest contributors to the total return of the fund. Information technology stocks represented an average weight of approximately 19% of the fund’s investments and returned approximately 23% for the reporting period. The fund’s Class A holdings of Twilio, Inc., which develops and publishes internet infrastructure solutions, are one example from this sector, returning approximately 189% for the reporting period.
Stocks in the health care sector also contributed to the total return of the fund. Health care stocks represented an average weight of approximately 12% of the fund’s investments and returned approximately 31% for the reporting period.
Management views and portfolio holdings may have changed since the report date.
Schwab Equity Index Funds | Annual Report
Schwab U.S. Mid-Cap Index Fund
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (December 20, 2017 – October 31, 2020)1
| Fund and Inception Date | 1 Year | Since Inception |
| Fund: Schwab U.S. Mid-Cap Index Fund (12/20/17) | 4.04% | 5.59% |
| Russell Midcap® Index | 4.12% | 5.67% |
| Fund Category: Morningstar Mid-Cap Blend2 | -0.89% | N/A |
| Fund Expense Ratio3: 0.04% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
For index definitions, please see the Glossary.
Index ownership – The Russell Midcap® Index is a registered mark of the Frank Russell Company (Russell) and has been licensed for use by the Schwab U.S. Mid-Cap Index Fund. The Schwab U.S. Mid-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 | Performance does 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. |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Mid-Cap Index Fund
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 820 |
| Weighted Average Market Cap (millions) | $17,353 |
| Price/Earnings Ratio (P/E) | 22.8 |
| Price/Book Ratio (P/B) | 2.6 |
| Portfolio Turnover Rate | 29% |
Sector Weightings % of Investments2
Top Equity Holdings % of Net Assets3
Portfolio holdings may have changed since the report date.
Source of Sector Classification: S& P and MSCI.
| 1 | Excludes derivatives. |
| 2 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 3 | This list is not a recommendation of any security by the investment adviser. |
Schwab Equity Index Funds | Annual Report
Schwab International Index Fund as of October 31, 2020
The Schwab International Index Fund’s (the fund) goal is to track the performance of a benchmark index that 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 investment objective, the fund generally invests in stocks that are included in the MSCI EAFE® Index (Net) (the index), which includes stocks from developed markets in Europe, Australasia and the Far East. To pursue its goal, the fund seeks to replicate the performance of the index by giving the same weight to a given stock as the index does. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and plunging markets into bear-market territory with record speed. At their lows, key international stock indices had lost as much as one-third of their former value. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. While the extraordinary response prompted a rally in global equity markets from their March lows, historic volatility remained and international equity markets lost steam during the final two months of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. The U.S. dollar weakened against a basket of foreign currencies for the reporting period, generally increasing the returns on overseas investments in U.S. dollar terms.
Performance. The fund generally tracked the index for the reporting period. The fund returned -6.56% for the 12-month reporting period ended October 31, 2020, compared with the index, which returned -6.86%. Timing differences in foreign exchange calculations slightly detracted and fair valuation of the fund’s holdings slightly contributed to the fund’s relative performance.1
Contributors and Detractors. From a country perspective, stocks from Denmark contributed the most to the total return of the fund. Representing an average weight of approximately 2% of the fund’s investments, Danish stocks returned approximately 34% in U.S. dollar terms for the reporting period. One example from Denmark is the fund’s Class B holdings of Novo Nordisk A/S, a multinational pharmaceutical company, which returned approximately 20% in U.S. dollar terms for the reporting period.
Stocks from Switzerland also contributed to the total return of the fund. Representing an average weight of approximately 10% of the fund’s investments, Swiss stocks returned approximately 4% in U.S. dollar terms for the reporting period.
Stocks from the United Kingdom detracted the most from the fund’s total return. Representing an average weight of approximately 15% of the fund’s investments, stocks from the United Kingdom returned approximately -21% in U.S. dollar terms for the reporting period. One example from the United Kingdom is HSBC Holdings plc, a multinational investment bank and financial services holding company, which returned approximately -44% in U.S. dollar terms for the reporting period.
Stocks from France also detracted from the total return of the fund. Representing an average weight of approximately 11% of the fund’s investments, French stocks returned approximately -12% in U.S. dollar terms for the reporting period.
Management views and portfolio holdings may have changed since the report date.
| 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. |
Schwab Equity Index Funds | Annual Report
Schwab International Index Fund
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1,2
Average Annual Total Returns1,2
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab International Index Fund (5/19/97) | -6.56% | 3.08% | 3.88% |
| MSCI EAFE® Index (Net)3 | -6.86% | 2.85% | 3.82% |
| International Spliced Index | -6.86% | 2.85% | 3.90% |
| Fund Category: Morningstar Foreign Large Blend4 | -4.19% | 3.23% | 3.65% |
| Fund Expense Ratio5: 0.06% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
The first index listed for the fund is the fund’s primary benchmark, as shown in the prospectus. Additional indices shown are provided for comparative purposes.
For index definitions, please see the Glossary.
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 | Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | The fund’s performance relative to the index may be affected by fair-value pricing. See financial note 2 for more information. |
| 3 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
| 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. |
Schwab Equity Index Funds | Annual Report
Schwab International Index Fund
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 913 |
| Weighted Average Market Cap (millions) | $61,247 |
| Price/Earnings Ratio (P/E) | 18.2 |
| Price/Book Ratio (P/B) | 1.5 |
| Portfolio Turnover Rate | 7% |
Sector Weightings % of Investments1
Top Equity Holdings % of Net Assets2
Top Country Weightings % of Investments3
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 | Excludes derivatives. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
| 3 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
Fund Expenses (Unaudited)
Examples for a $1,000 Investment
As a fund shareholder, you may incur two types of costs: (1) transaction costs; and (2) ongoing costs, including management fees.
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, 2020 and held through October 31, 2020.
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. 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 Ratio
(Annualized)1 | Beginning
Account Value
at 5/1/20 | Ending
Account Value
(Net of Expenses)
at 10/31/20 | Expenses Paid
During Period
5/1/20-10/31/202 |
| Schwab S&P 500 Index Fund | | | | |
| Actual Return | 0.02% | $1,000.00 | $1,132.80 | $0.11 |
| Hypothetical 5% Return | 0.02% | $1,000.00 | $1,025.00 | $0.10 |
| Schwab 1000 Index Fund | | | | |
| Actual Return | 0.05% | $1,000.00 | $1,148.30 | $0.27 |
| Hypothetical 5% Return | 0.05% | $1,000.00 | $1,024.85 | $0.25 |
| Schwab Small-Cap Index Fund | | | | |
| Actual Return | 0.04% | $1,000.00 | $1,181.70 | $0.22 |
| Hypothetical 5% Return | 0.04% | $1,000.00 | $1,024.90 | $0.20 |
| Schwab Total Stock Market Index Fund | | | | |
| Actual Return | 0.03% | $1,000.00 | $1,150.60 | $0.16 |
| Hypothetical 5% Return | 0.03% | $1,000.00 | $1,024.95 | $0.15 |
| Schwab U.S. Large-Cap Growth Index Fund | | | | |
| Actual Return | 0.035% | $1,000.00 | $1,217.70 | $0.20 |
| Hypothetical 5% Return | 0.035% | $1,000.00 | $1,024.92 | $0.18 |
| Schwab U.S. Large-Cap Value Index Fund | | | | |
| Actual Return | 0.035% | $1,000.00 | $1,069.00 | $0.18 |
| Hypothetical 5% Return | 0.035% | $1,000.00 | $1,024.92 | $0.18 |
| Schwab U.S. Mid-Cap Index Fund | | | | |
| Actual Return | 0.04% | $1,000.00 | $1,177.80 | $0.22 |
| Hypothetical 5% Return | 0.04% | $1,000.00 | $1,024.90 | $0.20 |
| Schwab International Index Fund | | | | |
| Actual Return | 0.06% | $1,000.00 | $1,094.30 | $0.32 |
| Hypothetical 5% Return | 0.06% | $1,000.00 | $1,024.80 | $0.31 |
| 1 | Based on the most recent six-month expense 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 366 days of the fiscal year. |
Schwab Equity Index Funds | Annual Report
Schwab S&P 500 Index Fund
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $47.17 | $42.41 | $40.23 | $33.38 | $33.00 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 1.02 | 0.92 | 0.80 | 0.74 | 0.69 | |
| Net realized and unrealized gains (losses) | 3.52 | 4.86 | 2.12 | 6.99 | 0.69 | |
| Total from investment operations | 4.54 | 5.78 | 2.92 | 7.73 | 1.38 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.87) | (0.84) | (0.72) | (0.69) | (0.68) | |
| Distributions from net realized gains | (0.09) | (0.18) | (0.02) | (0.19) | (0.32) | |
| Total distributions | (0.96) | (1.02) | (0.74) | (0.88) | (1.00) | |
| Net asset value at end of period | $50.75 | $47.17 | $42.41 | $40.23 | $33.38 | |
| Total return | 9.69% | 14.30% | 7.29% | 23.57% | 4.40% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Total expenses | 0.02% | 0.02% 2 | 0.03% | 0.05% 3 | 0.09% | |
| Net operating expenses | N/A | N/A | N/A 4 | 0.05% 3 | 0.09% | |
| Net investment income (loss) | 2.11% | 2.11% | 1.88% | 2.01% | 2.12% | |
| Portfolio turnover rate | 4% | 3% | 2% | 2% | 2% | |
| Net assets, end of period (x 1,000,000) | $44,184 | $40,232 | $34,410 | $29,999 | $22,675 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Effective December 20, 2018, the annual operating expense ratio was reduced to 0.02%. The ratio presented for period ended 10/31/19 is a blended ratio.
3
Effective March 1, 2017, the annual operating expense ratio was reduced. The ratio presented for period ended 10/31/17 is a blended ratio.
4
Effective March 1, 2017, the fund instituted a new fee structure and the contractual expense limitation was terminated.
Schwab Equity Index Funds | Annual Report
Schwab S&P 500 Index Fund
Condensed Portfolio Holdings as of October 31, 2020
This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers, any holdings exceeding 1% of the fund’s net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-877-824-5615. This complete schedule, filed on the fund’s N-CSR(S), is also available on the U.S. Securities and Exchange Commission (SEC)’s website at www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Common Stock 99.5% of net assets | |
| |
| Automobiles & Components 0.4% | |
| Other Securities | | 0.4 | 175,683,366 |
| |
| Banks 3.5% | |
| Bank of America Corp. | 12,355,276 | 0.7 | 292,820,041 |
| JPMorgan Chase & Co. | 4,939,328 | 1.1 | 484,251,717 |
| Other Securities | | 1.7 | 750,251,667 |
| | | 3.5 | 1,527,323,425 |
| |
| Capital Goods 5.6% | |
| Other Securities | | 5.6 | 2,470,893,683 |
| |
| Commercial & Professional Services 0.7% | |
| Other Securities | | 0.7 | 333,023,013 |
| |
| Consumer Durables & Apparel 1.2% | |
| NIKE, Inc., Class B | 2,017,430 | 0.5 | 242,252,994 |
| Other Securities | | 0.7 | 271,745,541 |
| | | 1.2 | 513,998,535 |
| |
| Consumer Services 1.6% | |
| McDonald's Corp. | 1,206,199 | 0.6 | 256,920,387 |
| Other Securities | | 1.0 | 473,794,545 |
| | | 1.6 | 730,714,932 |
| |
| Diversified Financials 4.5% | |
| Berkshire Hathaway, Inc., Class B * | 3,212,682 | 1.5 | 648,640,496 |
| The Charles Schwab Corp. (a) | 2,391,011 | 0.2 | 98,294,462 |
| Other Securities | | 2.8 | 1,259,957,204 |
| | | 4.5 | 2,006,892,162 |
| |
| Energy 2.0% | |
| Chevron Corp. | 3,120,307 | 0.5 | 216,861,337 |
| Exxon Mobil Corp. | 6,855,647 | 0.5 | 223,631,205 |
| Other Securities | | 1.0 | 444,871,880 |
| | | 2.0 | 885,364,422 |
| |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Food & Staples Retailing 1.6% | |
| Costco Wholesale Corp. | 715,756 | 0.6 | 255,968,661 |
| Walmart, Inc. | 2,250,718 | 0.7 | 312,287,122 |
| Other Securities | | 0.3 | 125,824,624 |
| | | 1.6 | 694,080,407 |
| �� |
| Food, Beverage & Tobacco 3.4% | |
| PepsiCo, Inc. | 2,244,122 | 0.7 | 299,119,021 |
| The Coca-Cola Co. | 6,266,381 | 0.7 | 301,162,271 |
| Other Securities | | 2.0 | 888,880,563 |
| | | 3.4 | 1,489,161,855 |
| |
| Health Care Equipment & Services 6.7% | |
| Abbott Laboratories | 2,870,109 | 0.7 | 301,677,157 |
| Danaher Corp. | 1,023,164 | 0.5 | 234,857,065 |
| Medtronic plc | 2,178,195 | 0.5 | 219,061,071 |
| UnitedHealth Group, Inc. | 1,540,479 | 1.1 | 470,061,762 |
| Other Securities | | 3.9 | 1,739,239,227 |
| | | 6.7 | 2,964,896,282 |
| |
| Household & Personal Products 2.0% | |
| The Procter & Gamble Co. | 4,035,300 | 1.3 | 553,239,630 |
| Other Securities | | 0.7 | 340,890,895 |
| | | 2.0 | 894,130,525 |
| |
| Insurance 1.8% | |
| Other Securities | | 1.8 | 806,539,501 |
| |
| Materials 2.7% | |
| Other Securities | | 2.7 | 1,174,667,607 |
| |
| Media & Entertainment 9.3% | |
| Alphabet, Inc., Class A * | 487,031 | 1.8 | 787,095,669 |
| Alphabet, Inc., Class C * | 475,882 | 1.7 | 771,409,481 |
| Comcast Corp., Class A | 7,389,397 | 0.7 | 312,128,129 |
| Facebook, Inc., Class A * | 3,897,113 | 2.3 | 1,025,369,402 |
| Netflix, Inc. * | 715,005 | 0.8 | 340,156,479 |
| The Walt Disney Co. | 2,929,198 | 0.8 | 355,165,258 |
| Other Securities | | 1.2 | 501,059,752 |
| | | 9.3 | 4,092,384,170 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 7.3% | |
| AbbVie, Inc. | 2,860,791 | 0.6 | 243,453,314 |
| Amgen, Inc. | 949,368 | 0.5 | 205,955,894 |
| Bristol-Myers Squibb Co. | 3,653,695 | 0.5 | 213,558,473 |
| Johnson & Johnson | 4,267,622 | 1.3 | 585,133,652 |
Schwab Equity Index Funds | Annual Report
Schwab S&P 500 Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Merck & Co., Inc. | 4,099,769 | 0.7 | 308,343,626 |
| Pfizer, Inc. | 9,007,472 | 0.7 | 319,585,107 |
| Thermo Fisher Scientific, Inc. | 641,234 | 0.7 | 303,380,630 |
| Other Securities | | 2.3 | 1,038,096,239 |
| | | 7.3 | 3,217,506,935 |
| |
| Real Estate 2.6% | |
| Other Securities | | 2.6 | 1,152,102,958 |
| |
| Retailing 8.3% | |
| Amazon.com, Inc. * | 690,098 | 4.7 | 2,095,241,043 |
| Lowe's Cos., Inc. | 1,225,286 | 0.4 | 193,717,717 |
| The Home Depot, Inc. | 1,744,990 | 1.1 | 465,406,283 |
| Other Securities | | 2.1 | 913,393,833 |
| | | 8.3 | 3,667,758,876 |
| |
| Semiconductors & Semiconductor Equipment 5.0% | |
| Broadcom, Inc. | 651,831 | 0.5 | 227,899,673 |
| Intel Corp. | 6,892,979 | 0.7 | 305,221,110 |
| NVIDIA Corp. | 1,000,023 | 1.1 | 501,371,531 |
| QUALCOMM, Inc. | 1,828,475 | 0.5 | 225,560,676 |
| Texas Instruments, Inc. | 1,484,562 | 0.5 | 214,652,820 |
| Other Securities | | 1.7 | 728,823,912 |
| | | 5.0 | 2,203,529,722 |
| |
| Software & Services 14.3% | |
| Accenture plc, Class A | 1,031,319 | 0.5 | 223,703,404 |
| Adobe, Inc. * | 777,511 | 0.8 | 347,625,168 |
| Mastercard, Inc., Class A | 1,431,974 | 0.9 | 413,324,975 |
| Microsoft Corp. | 12,266,451 | 5.6 | 2,483,588,334 |
| PayPal Holdings, Inc. * | 1,901,872 | 0.8 | 353,995,435 |
| salesforce.com, Inc. * | 1,474,980 | 0.8 | 342,593,605 |
| Visa, Inc., Class A | 2,733,066 | 1.1 | 496,625,423 |
| Other Securities | | 3.8 | 1,662,993,845 |
| | | 14.3 | 6,324,450,189 |
| |
| Technology Hardware & Equipment 8.0% | |
| Apple Inc. | 26,057,919 | 6.4 | 2,836,665,062 |
| Cisco Systems, Inc. | 6,861,350 | 0.6 | 246,322,465 |
| Other Securities | | 1.0 | 455,414,257 |
| | | 8.0 | 3,538,401,784 |
| |
| Telecommunication Services 1.8% | |
| AT&T, Inc. | 11,550,195 | 0.7 | 312,086,269 |
| Verizon Communications, Inc. | 6,707,808 | 0.9 | 382,277,978 |
| Other Securities | | 0.2 | 117,070,779 |
| | | 1.8 | 811,435,026 |
| |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Transportation 2.0% | |
| Union Pacific Corp. | 1,100,432 | 0.4 | 194,985,546 |
| Other Securities | | 1.6 | 684,399,540 |
| | | 2.0 | 879,385,086 |
| |
| Utilities 3.2% | |
| NextEra Energy, Inc. | 3,174,624 | 0.5 | 232,414,223 |
| Other Securities | | 2.7 | 1,175,942,214 |
| | | 3.2 | 1,408,356,437 |
| Total Common Stock | |
| (Cost $20,594,421,840) | | | 43,962,680,898 |
|
| Other Investment Company 0.1% of net assets | |
| |
| Securities Lending Collateral 0.1% | |
| Other Securities | | 0.1 | 26,288,917 |
| Total Other Investment Company | |
| (Cost $26,288,917) | | | 26,288,917 |
Security
Rate, Maturity Date | Face
Amount ($) | % of Net
Assets | Value
($) |
| Short-Term Investments 0.2% of net assets | |
| |
| Time Deposits 0.2% | |
| Other Securities | | 0.2 | 98,222,299 |
| Total Short-Term Investments | |
| (Cost $98,222,299) | | | 98,222,299 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | |
| Long | |
| S&P 500 Index, e-mini, expires 12/18/20 | 1,185 | 193,433,475 | (3,964,109) |
The following footnotes may not be applicable to the Condensed Portfolio Holdings. 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 $25,808,897. |
| (c) | The rate shown is the 7-day yield. |
| (d) | The rate shown is the current daily overnight rate. |
The fund owns shares of an affiliate, The Charles Schwab Corp., since that company is included in its index. Below is the summary of investment activities involving The Charles Schwab Corp. shares owned by the fund during the period ended October 31, 2020:
| |
Value at
10/31/19 | Gross
Purchases | Gross
Sales | Realized
Gains (Losses) | Net Change
in Unrealized
Appreciation
(depreciation) |
Value at
10/31/20 | Balance
of Shares
Held at
10/31/20 | Dividends
Received |
| The Charles Schwab Corp. | $74,967,791 | $23,287,026 | ($2,600,906) | ($1,027,037) | $3,667,588 | $98,294,462 | 2,391,011 | $1,316,874 |
Schwab Equity Index Funds | Annual Report
Schwab S&P 500 Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 and reflects the complete schedule of portfolio holdings (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 | |
| Assets | | | | | |
| Common Stock1 | $43,962,680,898 | $— | $— | $43,962,680,898 | |
| Other Investment Company1 | 26,288,917 | — | — | 26,288,917 | |
| Short-Term Investments1 | — | 98,222,299 | — | 98,222,299 | |
| Liabilities | | | | | |
| Futures Contracts2 | (3,964,109) | — | — | (3,964,109) | |
| Total | $43,985,005,706 | $98,222,299 | $— | $44,083,228,005 | |
| 1 | As categorized in the complete schedule of Portfolio Holdings. |
| 2 | Futures contracts are valued at unrealized appreciation or depreciation. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Equity Index Funds | Annual Report
Schwab S&P 500 Index Fund
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investment in affiliated issuer, at value (cost $58,970,924) | | $98,294,462 |
| Investments in unaffiliated issuers, at value (cost $20,633,673,215) including securities on loan of $25,808,897 | | 43,962,608,735 |
| Collateral invested for securities on loan, at value (cost $26,288,917) | | 26,288,917 |
| Deposit with broker for futures contracts | | 17,340,000 |
| Receivables: | | |
| Fund shares sold | | 101,513,339 |
| Dividends | | 43,845,463 |
| Income from securities on loan | | 17,131 |
| Interest | + | 55 |
| Total assets | | 44,249,908,102 |
| Liabilities |
| Collateral held for securities on loan | | 26,288,917 |
| Payables: | | |
| Investment adviser fees | | 807,365 |
| Fund shares redeemed | | 36,480,703 |
| Variation margin on futures contracts | + | 2,072,624 |
| Total liabilities | | 65,649,609 |
| Net Assets |
| Total assets | | 44,249,908,102 |
| Total liabilities | – | 65,649,609 |
| Net assets | | $44,184,258,493 |
| Net Assets by Source | | |
| Capital received from investors | | 20,534,552,723 |
| Total distributable earnings | | 23,649,705,770 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $44,184,258,493 | | 870,563,401 | | $50.75 |
| | | | | |
Schwab Equity Index Funds | Annual Report
Schwab S&P 500 Index Fund
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends received from affiliated issuer | | $1,316,874 |
| Dividends received from unaffiliated issuers | | 899,795,340 |
| Interest | | 366,683 |
| Securities on loan, net | + | 370,393 |
| Total investment income | | 901,849,290 |
| Expenses |
| Investment adviser fees | | 8,499,556 |
| Total expenses | – | 8,499,556 |
| Net investment income | | 893,349,734 |
| Realized and Unrealized Gains (Losses) |
| Net realized losses on affiliated issuer | | (1,027,037) |
| Net realized losses on unaffiliated issuers | | (302,975,744) |
| Net realized gains on futures contracts | + | 12,210,279 |
| Net realized losses | | (291,792,502) |
| Net change in unrealized appreciation (depreciation) on affiliated issuer | | 3,667,588 |
| Net change in unrealized appreciation (depreciation) on unaffiliated issuers | | 3,168,428,504 |
| Net change in unrealized appreciation (depreciation) on futures contracts | + | (6,049,994) |
| Net change in unrealized appreciation (depreciation) | + | 3,166,046,098 |
| Net realized and unrealized gains | | 2,874,253,596 |
| Increase in net assets resulting from operations | | $3,767,603,330 |
Schwab Equity Index Funds | Annual Report
Schwab S&P 500 Index Fund
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $893,349,734 | $777,902,944 |
| Net realized gains (losses) | | (291,792,502) | 16,453,205 |
| Net change in unrealized appreciation (depreciation) | + | 3,166,046,098 | 4,213,657,469 |
| Increase in net assets from operations | | 3,767,603,330 | 5,008,013,618 |
| Distributions to Shareholders | |
| Total distributions | | ($829,255,576) | ($835,129,475) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 236,073,289 | $11,084,108,165 | 185,382,757 | $8,015,175,116 |
| Shares reinvested | | 13,928,557 | 685,702,860 | 18,929,002 | 700,551,667 |
| Shares redeemed | + | (232,288,137) | (10,755,681,037) | (162,770,508) | (7,066,557,661) |
| Net transactions in fund shares | | 17,713,709 | $1,014,129,988 | 41,541,251 | $1,649,169,122 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 852,849,692 | $40,231,780,751 | 811,308,441 | $34,409,727,486 |
| Total increase | + | 17,713,709 | 3,952,477,742 | 41,541,251 | 5,822,053,265 |
| End of period | | 870,563,401 | $44,184,258,493 | 852,849,692 | $40,231,780,751 |
Schwab Equity Index Funds | Annual Report
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $68.68 | $64.19 | $62.61 | $52.40 | $53.67 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 1.38 | 1.38 | 1.18 | 1.08 | 0.95 | |
| Net realized and unrealized gains (losses) | 5.81 | 6.73 | 3.05 | 10.96 | 0.92 | |
| Total from investment operations | 7.19 | 8.11 | 4.23 | 12.04 | 1.87 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (1.29) | (1.28) | (1.10) | (0.97) | (0.96) | |
| Distributions from net realized gains | (0.85) | (2.34) | (1.55) | (0.86) | (2.18) | |
| Total distributions | (2.14) | (3.62) | (2.65) | (1.83) | (3.14) | |
| Net asset value at end of period | $73.73 | $68.68 | $64.19 | $62.61 | $52.40 | |
| Total return | 10.60% | 14.20% | 6.84% | 23.52% | 3.87% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Total expenses | 0.05% | 0.05% | 0.05% | 0.14% 2 | 0.33% | |
| Net operating expenses | N/A | N/A | N/A 3 | 0.12% 2 | 0.29% | |
| Net investment income (loss) | 1.97% | 2.15% | 1.82% | 1.87% | 1.86% | |
| Portfolio turnover rate | 4% | 5% | 4% | 5% | 3% | |
| Net assets, end of period (x 1,000,000) | $9,774 | $9,346 | $7,909 | $7,681 | $6,432 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Effective March 1, 2017, the annual operating expense ratio was reduced. The ratio presented for period ended 10/31/17 is a blended ratio.
3
Effective March 1, 2017, the fund instituted a new fee structure and the contractual expense limitation was terminated.
Schwab Equity Index Funds | Annual Report
Condensed Portfolio Holdings as of October 31, 2020
This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers, any holdings exceeding 1% of the fund’s net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-877-824-5615. This complete schedule, filed on the fund’s N-CSR(S), is also available on the U.S. Securities and Exchange Commission (SEC)’s website at www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Common Stock 99.6% of net assets | |
| |
| Automobiles & Components 1.4% | |
| Tesla, Inc. * | 235,981 | 0.9 | 91,570,067 |
| Other Securities | | 0.5 | 43,396,618 |
| | | 1.4 | 134,966,685 |
| |
| Banks 3.4% | |
| Bank of America Corp. | 2,413,704 | 0.6 | 57,204,785 |
| JPMorgan Chase & Co. | 964,793 | 1.0 | 94,588,306 |
| Other Securities | | 1.8 | 183,253,640 |
| | | 3.4 | 335,046,731 |
| |
| Capital Goods 5.7% | |
| Other Securities | | 5.7 | 556,099,919 |
| |
| Commercial & Professional Services 1.0% | |
| Other Securities | | 1.0 | 93,765,359 |
| |
| Consumer Durables & Apparel 1.3% | |
| NIKE, Inc., Class B | 394,251 | 0.5 | 47,341,660 |
| Other Securities | | 0.8 | 80,629,360 |
| | | 1.3 | 127,971,020 |
| |
| Consumer Services 1.8% | |
| McDonald's Corp. | 235,548 | 0.5 | 50,171,724 |
| Other Securities | | 1.3 | 127,869,672 |
| | | 1.8 | 178,041,396 |
| |
| Diversified Financials 4.5% | |
| Berkshire Hathaway, Inc., Class B * | 627,590 | 1.3 | 126,710,421 |
| The Charles Schwab Corp. (a) | 466,411 | 0.2 | 19,174,156 |
| Other Securities | | 3.0 | 296,197,457 |
| | | 4.5 | 442,082,034 |
| |
| Energy 1.9% | |
| Chevron Corp. | 609,427 | 0.4 | 42,355,177 |
| Exxon Mobil Corp. | 1,338,557 | 0.4 | 43,663,729 |
| Other Securities | | 1.1 | 95,551,105 |
| | | 1.9 | 181,570,011 |
| |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Food & Staples Retailing 1.4% | |
| Costco Wholesale Corp. | 139,862 | 0.5 | 50,017,448 |
| Walmart, Inc. | 439,708 | 0.6 | 61,009,485 |
| Other Securities | | 0.3 | 29,388,918 |
| | | 1.4 | 140,415,851 |
| |
| Food, Beverage & Tobacco 3.2% | |
| PepsiCo, Inc. | 438,492 | 0.6 | 58,446,599 |
| The Coca-Cola Co. | 1,223,525 | 0.6 | 58,802,611 |
| Other Securities | | 2.0 | 191,611,686 |
| | | 3.2 | 308,860,896 |
| |
| Health Care Equipment & Services 6.5% | |
| Abbott Laboratories | 560,663 | 0.6 | 58,931,288 |
| Danaher Corp. | 199,990 | 0.5 | 45,905,705 |
| Medtronic plc | 425,702 | 0.4 | 42,812,850 |
| UnitedHealth Group, Inc. | 300,904 | 0.9 | 91,817,847 |
| Other Securities | | 4.1 | 398,033,888 |
| | | 6.5 | 637,501,578 |
| |
| Household & Personal Products 1.8% | |
| The Procter & Gamble Co. | 788,329 | 1.1 | 108,079,906 |
| Other Securities | | 0.7 | 68,259,220 |
| | | 1.8 | 176,339,126 |
| |
| Insurance 2.0% | |
| Other Securities | | 2.0 | 195,386,105 |
| |
| Materials 2.7% | |
| Other Securities | | 2.7 | 262,770,002 |
| |
| Media & Entertainment 8.9% | |
| Alphabet, Inc., Class A * | 95,124 | 1.6 | 153,730,848 |
| Alphabet, Inc., Class C * | 92,947 | 1.5 | 150,668,017 |
| Comcast Corp., Class A | 1,443,215 | 0.6 | 60,961,402 |
| Facebook, Inc., Class A * | 761,135 | 2.0 | 200,262,230 |
| Netflix, Inc. * | 139,603 | 0.7 | 66,414,731 |
| The Walt Disney Co. | 571,960 | 0.7 | 69,350,150 |
| Other Securities | | 1.8 | 169,373,783 |
| | | 8.9 | 870,761,161 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 7.3% | |
| AbbVie, Inc. | 558,288 | 0.5 | 47,510,309 |
| Amgen, Inc. | 185,316 | 0.4 | 40,202,453 |
| Bristol-Myers Squibb Co. | 713,400 | 0.4 | 41,698,230 |
| Johnson & Johnson | 833,519 | 1.2 | 114,283,790 |
Schwab Equity Index Funds | Annual Report
Condensed Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Merck & Co., Inc. | 800,788 | 0.6 | 60,227,266 |
| Pfizer, Inc. | 1,759,131 | 0.6 | 62,413,968 |
| Thermo Fisher Scientific, Inc. | 125,264 | 0.6 | 59,264,904 |
| Other Securities | | 3.0 | 286,973,893 |
| | | 7.3 | 712,574,813 |
| |
| Real Estate 3.1% | |
| Other Securities | | 3.1 | 304,903,139 |
| |
| Retailing 7.6% | |
| Amazon.com, Inc. * | 134,781 | 4.2 | 409,215,333 |
| The Home Depot, Inc. | 340,886 | 0.9 | 90,917,705 |
| Other Securities | | 2.5 | 245,716,970 |
| | | 7.6 | 745,850,008 |
| |
| Semiconductors & Semiconductor Equipment 4.8% | |
| Broadcom, Inc. | 127,339 | 0.5 | 44,521,535 |
| Intel Corp. | 1,346,773 | 0.6 | 59,635,108 |
| NVIDIA Corp. | 195,304 | 1.0 | 97,917,613 |
| QUALCOMM, Inc. | 357,239 | 0.5 | 44,069,003 |
| Texas Instruments, Inc. | 290,272 | 0.4 | 41,970,429 |
| Other Securities | | 1.8 | 184,309,733 |
| | | 4.8 | 472,423,421 |
| |
| Software & Services 15.1% | |
| Accenture plc, Class A | 201,511 | 0.4 | 43,709,751 |
| Adobe, Inc. * | 151,856 | 0.7 | 67,894,818 |
| Mastercard, Inc., Class A | 279,643 | 0.8 | 80,716,155 |
| Microsoft Corp. | 2,395,688 | 5.0 | 485,054,949 |
| PayPal Holdings, Inc. * | 371,402 | 0.7 | 69,129,054 |
| salesforce.com, Inc. * | 288,062 | 0.7 | 66,908,161 |
| Visa, Inc., Class A | 533,770 | 1.0 | 96,991,347 |
| Other Securities | | 5.8 | 565,804,890 |
| | | 15.1 | 1,476,209,125 |
| |
| Technology Hardware & Equipment 7.4% | |
| Apple Inc. | 5,089,294 | 5.7 | 554,020,545 |
| Cisco Systems, Inc. | 1,340,750 | 0.5 | 48,132,925 |
| Other Securities | | 1.2 | 119,002,944 |
| | | 7.4 | 721,156,414 |
| |
| Telecommunication Services 1.7% | |
| AT&T, Inc. | 2,256,030 | 0.6 | 60,957,931 |
| Verizon Communications, Inc. | 1,310,336 | 0.8 | 74,676,049 |
| Other Securities | | 0.3 | 28,512,296 |
| | | 1.7 | 164,146,276 |
| |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Transportation 2.0% | |
| Union Pacific Corp. | 214,949 | 0.4 | 38,086,813 |
| Other Securities | | 1.6 | 159,114,138 |
| | | 2.0 | 197,200,951 |
| |
| Utilities 3.1% | |
| NextEra Energy, Inc. | 621,177 | 0.5 | 45,476,368 |
| Other Securities | | 2.6 | 254,746,523 |
| | | 3.1 | 300,222,891 |
| Total Common Stock | |
| (Cost $2,535,785,297) | | | 9,736,264,912 |
|
| Other Investment Companies 0.3% of net assets | |
| |
| Money Market Fund 0.2% | |
| Other Securities | | 0.2 | 26,263,404 |
| |
| Securities Lending Collateral 0.1% | |
| Other Securities | | 0.1 | 5,820,600 |
| Total Other Investment Companies | |
| (Cost $32,084,004) | | | 32,084,004 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | | | |
| Long | |
| S&P 500 Index, e-mini, expires 12/18/20 | 208 | 33,952,880 | (1,323,653) |
The following footnotes may not be applicable to the Condensed Portfolio Holdings. 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 $5,675,853. |
| (c) | The rate shown is the 7-day yield. |
| | |
| REIT — | Real Estate Investment Trust |
The fund owns shares of an affiliate, The Charles Schwab Corp., since that company is included in its index. Below is the summary of investment activities involving The Charles Schwab Corp. shares owned by the fund during the period ended October 31, 2020:
| |
Value at
10/31/19 | Gross
Purchases | Gross
Sales | Realized
Gains (Losses) | Net Change
in Unrealized
Appreciation
(depreciation) |
Value at
10/31/20 | Balance
of Shares
Held at
10/31/20 | Dividends
Received |
| The Charles Schwab Corp. | $15,595,187 | $1,594,082 | ($1,049,005) | ($6,418) | $3,040,310 | $19,174,156 | 466,411 | $264,536 |
Schwab Equity Index Funds | Annual Report
Condensed Portfolio Holdings as of October 31, 2020 (continued)
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 and reflects the complete schedule of portfolio holdings (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 | |
| Assets | | | | | |
| Common Stock1 | $9,736,264,912 | $— | $— | $9,736,264,912 | |
| Other Investment Companies1 | 32,084,004 | — | — | 32,084,004 | |
| Liabilities | | | | | |
| Futures Contracts2 | (1,323,653) | — | — | (1,323,653) | |
| Total | $9,767,025,263 | $— | $— | $9,767,025,263 | |
| 1 | As categorized in the complete schedule of Portfolio Holdings. |
| 2 | Futures contracts are valued at unrealized appreciation or depreciation. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Equity Index Funds | Annual Report
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investment in affiliated issuer, at value (cost $3,294,045) | | $19,174,156 |
| Investments in unaffiliated issuers, at value (cost $2,558,754,656) including securities on loan of $5,675,853 | | 9,743,354,160 |
| Collateral invested for securities on loan, at value (cost $5,820,600) | | 5,820,600 |
| Deposit with broker for futures contracts | | 2,844,000 |
| Receivables: | | |
| Investments sold | | 373,727 |
| Dividends | | 8,829,736 |
| Fund shares sold | | 8,286,881 |
| Income from securities on loan | + | 4,927 |
| Total assets | | 9,788,688,187 |
| Liabilities |
| Collateral held for securities on loan | | 5,820,600 |
| Payables: | | |
| Investments bought | | 3,315,253 |
| Investment adviser fees | | 447,582 |
| Fund shares redeemed | | 4,764,399 |
| Variation margin on futures contracts | + | 399,938 |
| Total liabilities | | 14,747,772 |
| Net Assets |
| Total assets | | 9,788,688,187 |
| Total liabilities | – | 14,747,772 |
| Net assets | | $9,773,940,415 |
| Net Assets by Source | | |
| Capital received from investors | | 2,283,611,583 |
| Total distributable earnings | | 7,490,328,832 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $9,773,940,415 | | 132,568,023 | | $73.73 |
| | | | | |
Schwab Equity Index Funds | Annual Report
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends received from affiliated issuer | | $264,536 |
| Dividends received from unaffiliated issuers (net of foreign withholding tax of $4,519) | | 191,469,491 |
| Securities on loan, net | + | 153,520 |
| Total investment income | | 191,887,547 |
| Expenses |
| Investment adviser fees | | 4,756,649 |
| Total expenses | – | 4,756,649 |
| Net investment income | | 187,130,898 |
| Realized and Unrealized Gains (Losses) |
| Net realized losses on affiliated issuer | | (6,418) |
| Net realized gains on unaffiliated issuers | | 111,568,510 |
| Net realized gains on futures contracts | + | 6,175,964 |
| Net realized gains | | 117,738,056 |
| Net change in unrealized appreciation (depreciation) on affiliated issuer | | 3,040,310 |
| Net change in unrealized appreciation (depreciation) on unaffiliated issuers | | 640,546,681 |
| Net change in unrealized appreciation (depreciation) on futures contracts | + | (1,652,329) |
| Net change in unrealized appreciation (depreciation) | + | 641,934,662 |
| Net realized and unrealized gains | | 759,672,718 |
| Increase in net assets resulting from operations | | $946,803,616 |
Schwab Equity Index Funds | Annual Report
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $187,130,898 | $181,692,334 |
| Net realized gains | | 117,738,056 | 111,070,500 |
| Net change in unrealized appreciation (depreciation) | + | 641,934,662 | 831,678,079 |
| Increase in net assets from operations | | 946,803,616 | 1,124,440,913 |
| Distributions to Shareholders | |
| Total distributions | | ($290,754,043) | ($445,433,607) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 13,800,508 | $925,426,862 | 20,231,558 | $1,297,409,694 |
| Shares reinvested | | 3,367,064 | 238,859,473 | 6,798,612 | 365,978,493 |
| Shares redeemed | + | (20,677,471) | (1,392,525,764) | (14,175,603) | (905,415,456) |
| Net transactions in fund shares | | (3,509,899) | ($228,239,429) | 12,854,567 | $757,972,731 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 136,077,922 | $9,346,130,271 | 123,223,355 | $7,909,150,234 |
| Total increase or decrease | + | (3,509,899) | 427,810,144 | 12,854,567 | 1,436,980,037 |
| End of period | | 132,568,023 | $9,773,940,415 | 136,077,922 | $9,346,130,271 |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $28.84 | $30.48 | $31.45 | $25.60 | $26.29 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.35 | 0.40 | 0.43 | 0.38 | 0.39 | |
| Net realized and unrealized gains (losses) | (0.23) | 0.54 | 0.20 | 6.62 | 0.59 | |
| Total from investment operations | 0.12 | 0.94 | 0.63 | 7.00 | 0.98 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.42) | (0.40) | (0.39) | (0.39) | (0.36) | |
| Distributions from net realized gains | (1.36) | (2.18) | (1.21) | (0.76) | (1.31) | |
| Total distributions | (1.78) | (2.58) | (1.60) | (1.15) | (1.67) | |
| Net asset value at end of period | $27.18 | $28.84 | $30.48 | $31.45 | $25.60 | |
| Total return | 0.00% | 4.95% | 1.93% | 27.84% | 4.17% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Total expenses | 0.04% | 0.04% 2 | 0.05% | 0.10% 3 | 0.20% | |
| Net operating expenses | N/A | N/A | N/A 4 | 0.09% 3 | 0.17% | |
| Net investment income (loss) | 1.31% | 1.43% | 1.33% | 1.31% | 1.60% | |
| Portfolio turnover rate | 21% | 14% | 17% | 11% | 17% | |
| Net assets, end of period (x 1,000,000) | $3,988 | $4,187 | $3,874 | $3,531 | $2,619 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Effective December 20, 2018, the annual operating expense ratio was reduced to 0.04%. The ratio presented for period ended 10/31/19 is a blended ratio.
3
Effective March 1, 2017, the annual operating expense ratio was reduced. The ratio presented for period ended 10/31/17 is a blended ratio.
4
Effective March 1, 2017, the fund instituted a new fee structure and the contractual expense limitation was terminated.
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Condensed Portfolio Holdings as of October 31, 2020
This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers, any holdings exceeding 1% of the fund’s net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-877-824-5615. This complete schedule, filed on the fund’s N-CSR(S), is also available on the U.S. Securities and Exchange Commission (SEC)’s website at www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Common Stock 99.7% of net assets | |
| |
| Automobiles & Components 1.5% | |
| Other Securities | | 1.5 | 58,627,761 |
| |
| Banks 9.8% | |
| Essent Group Ltd. | 228,604 | 0.2 | 9,109,869 |
| South State Corp. | 144,934 | 0.2 | 8,898,948 |
| Other Securities | | 9.4 | 370,788,292 |
| | | 9.8 | 388,797,109 |
| |
| Capital Goods 10.2% | |
| Plug Power, Inc. * | 706,281 | 0.2 | 9,887,934 |
| SiteOne Landscape Supply, Inc. * | 91,090 | 0.3 | 10,884,344 |
| Sunrun, Inc. * | 302,438 | 0.4 | 15,732,825 |
| Other Securities | | 9.3 | 371,203,256 |
| | | 10.2 | 407,708,359 |
| |
| Commercial & Professional Services 3.2% | |
| Tetra Tech, Inc. | 111,813 | 0.3 | 11,283,050 |
| Other Securities | | 2.9 | 116,530,771 |
| | | 3.2 | 127,813,821 |
| |
| Consumer Durables & Apparel 3.9% | |
| Deckers Outdoor Corp. * | 58,061 | 0.4 | 14,710,916 |
| Helen of Troy Ltd. * | 52,485 | 0.2 | 9,951,156 |
| TopBuild Corp. * | 68,573 | 0.3 | 10,506,069 |
| Other Securities | | 3.0 | 122,207,433 |
| | | 3.9 | 157,375,574 |
| |
| Consumer Services 4.0% | |
| Caesars Entertainment, Inc. * | 343,846 | 0.4 | 15,411,178 |
| Churchill Downs, Inc. | 78,774 | 0.3 | 11,749,142 |
| Penn National Gaming, Inc. * | 315,382 | 0.4 | 17,024,320 |
| Texas Roadhouse, Inc. | 136,139 | 0.2 | 9,533,814 |
| Other Securities | | 2.7 | 103,796,630 |
| | | 4.0 | 157,515,084 |
| |
| Diversified Financials 3.7% | |
| Other Securities | | 3.7 | 147,334,219 |
| |
| Energy 1.9% | |
| Other Securities | | 1.9 | 74,113,994 |
| |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Food & Staples Retailing 0.8% | |
| BJ's Wholesale Club Holdings, Inc. * | 283,817 | 0.3 | 10,867,353 |
| Performance Food Group Co. * | 271,491 | 0.2 | 9,124,812 |
| Other Securities | | 0.3 | 12,615,951 |
| | | 0.8 | 32,608,116 |
| |
| Food, Beverage & Tobacco 1.9% | |
| Darling Ingredients, Inc. * | 333,575 | 0.4 | 14,343,725 |
| Freshpet, Inc. * | 80,262 | 0.2 | 9,189,999 |
| Other Securities | | 1.3 | 54,156,981 |
| | | 1.9 | 77,690,705 |
| |
| Health Care Equipment & Services 7.5% | |
| iRhythm Technologies, Inc. * | 56,832 | 0.3 | 12,017,126 |
| LHC Group, Inc. * | 62,938 | 0.3 | 13,629,224 |
| Nevro Corp. * | 69,617 | 0.3 | 10,387,553 |
| Other Securities | | 6.6 | 264,712,379 |
| | | 7.5 | 300,746,282 |
| |
| Household & Personal Products 0.6% | |
| Other Securities | | 0.6 | 24,750,493 |
| |
| Insurance 2.4% | |
| Other Securities | | 2.4 | 94,578,248 |
| |
| Materials 4.2% | |
| Other Securities | | 4.2 | 165,843,322 |
| |
| Media & Entertainment 1.2% | |
| Other Securities | | 1.2 | 48,286,351 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 13.7% | |
| Amicus Therapeutics, Inc. * | 526,357 | 0.2 | 9,384,945 |
| Arena Pharmaceuticals, Inc. * | 120,394 | 0.3 | 10,320,174 |
| Arrowhead Pharmaceuticals, Inc. * | 207,968 | 0.3 | 11,916,566 |
| Blueprint Medicines Corp. * | 114,616 | 0.3 | 11,722,924 |
| Emergent BioSolutions, Inc. * | 92,489 | 0.2 | 8,321,235 |
| Invitae Corp. * | 239,134 | 0.2 | 9,376,444 |
| Mirati Therapeutics, Inc. * | 85,554 | 0.5 | 18,577,196 |
| MyoKardia, Inc. * | 105,111 | 0.6 | 23,495,462 |
| Natera, Inc. * | 146,661 | 0.2 | 9,864,419 |
| NeoGenomics, Inc. * | 214,636 | 0.2 | 8,420,170 |
| Novavax, Inc. * | 127,748 | 0.3 | 10,310,541 |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Ultragenyx Pharmaceutical, Inc. * | 119,279 | 0.3 | 11,987,539 |
| Other Securities | | 10.1 | 400,886,086 |
| | | 13.7 | 544,583,701 |
| |
| Real Estate 6.3% | |
| EastGroup Properties, Inc. | 80,123 | 0.3 | 10,662,769 |
| Redfin Corp. * | 200,903 | 0.2 | 8,391,718 |
| STAG Industrial, Inc. | 310,776 | 0.2 | 9,671,349 |
| Other Securities | | 5.6 | 221,868,800 |
| | | 6.3 | 250,594,636 |
| |
| Retailing 3.8% | |
| Lithia Motors, Inc., Class A | 52,818 | 0.3 | 12,125,428 |
| RH * | 32,237 | 0.3 | 10,806,809 |
| Other Securities | | 3.2 | 130,437,330 |
| | | 3.8 | 153,369,567 |
| |
| Semiconductors & Semiconductor Equipment 2.8% | |
| CMC Materials, Inc. | 60,171 | 0.2 | 8,555,715 |
| Lattice Semiconductor Corp. * | 278,802 | 0.2 | 9,730,190 |
| Silicon Laboratories, Inc. * | 89,870 | 0.2 | 9,208,080 |
| Other Securities | | 2.2 | 83,677,751 |
| | | 2.8 | 111,171,736 |
| |
| Software & Services 7.4% | |
| Blackline, Inc. * | 104,001 | 0.3 | 10,158,818 |
| Envestnet, Inc. * | 110,081 | 0.2 | 8,447,616 |
| LiveRamp Holdings, Inc. * | 132,895 | 0.2 | 8,783,031 |
| MAXIMUS, Inc. | 126,758 | 0.2 | 8,566,306 |
| Q2 Holdings, Inc. * | 102,813 | 0.2 | 9,380,658 |
| Other Securities | | 6.3 | 249,077,408 |
| | | 7.4 | 294,413,837 |
| |
| Technology Hardware & Equipment 3.2% | |
| II-VI, Inc. * | 208,882 | 0.2 | 9,497,865 |
| Other Securities | | 3.0 | 119,552,112 |
| | | 3.2 | 129,049,977 |
| |
| Telecommunication Services 1.0% | |
| Other Securities | | 1.0 | 39,112,729 |
| |
| Transportation 1.4% | |
| Other Securities | | 1.4 | 56,393,568 |
| |
| Utilities 3.3% | |
| Brookfield Renewable Corp., Class A | 141,696 | 0.2 | 9,461,042 |
| PNM Resources, Inc. | 164,492 | 0.2 | 8,224,600 |
| Other Securities | | 2.9 | 115,367,110 |
| | | 3.3 | 133,052,752 |
| Total Common Stock | |
| (Cost $3,189,817,855) | | | 3,975,531,941 |
|
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Rights 0.0% of net assets | |
| |
| Capital Goods 0.0% | |
| Other Securities | | 0.0 | — |
| |
| Media & Entertainment 0.0% | |
| Other Securities | | 0.0 | 14,883 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% | |
| Other Securities | | 0.0 | 254,263 |
| Total Rights | |
| (Cost $6,703) | | | 269,146 |
|
| Warrants 0.0% of net assets | |
| |
| Energy 0.0% | |
| Other Securities | | 0.0 | 9,962 |
| Total Warrants | |
| (Cost $—) | | | 9,962 |
|
| Other Investment Company 1.5% of net assets | |
| |
| Securities Lending Collateral 1.5% | |
| Wells Fargo Government Money Market Fund, Select Class 0.04% (c) | 57,653,589 | 1.5 | 57,653,589 |
| Total Other Investment Company | |
| (Cost $57,653,589) | | | 57,653,589 |
Security
Rate, Maturity Date | Face
Amount ($) | % of Net
Assets | Value
($) |
| Short-Term Investment 0.3% of net assets | |
| |
| Time Deposit 0.3% | |
Sumitomo Mitsui Banking Corp.
0.01%, 11/02/20 (d) | 13,572,108 | 0.3 | 13,572,108 |
| Total Short-Term Investment | |
| (Cost $13,572,108) | | | 13,572,108 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | |
| Long | |
| Russell 2000 Index, e-mini, expires 12/18/20 | 160 | 12,294,400 | (514,409) |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
The following footnotes may not be applicable to the Condensed Portfolio Holdings. 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 $53,460,251. |
| (b) | Fair-valued by management using significant unobservable inputs in accordance with procedures approved by the fund’s Board of Trustees. |
| (c) | The rate shown is the 7-day yield. |
| (d) | The rate shown is the current daily overnight rate. |
| | |
| CVR — | Contingent Value Rights |
| REIT — | Real Estate Investment Trust |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 and reflects the complete schedule of portfolio holdings (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 | |
| Assets | | | | | |
| Common Stock1 | $3,809,688,619 | $— | $— | $3,809,688,619 | |
| Materials | 165,843,322 | — | — * | 165,843,322 | |
| Rights 1 | | | | | |
| Capital Goods | — | — | — * | — | |
| Media & Entertainment | — | — | 14,883 | 14,883 | |
| Pharmaceuticals, Biotechnology & Life Sciences | — | — | 254,263 * | 254,263 | |
| Warrants 1 | | | | | |
| Energy | — | — | 9,962 | 9,962 | |
| Other Investment Company1 | 57,653,589 | — | — | 57,653,589 | |
| Short-Term Investment1 | — | 13,572,108 | — | 13,572,108 | |
| Liabilities | | | | | |
| Futures Contracts2 | (514,409) | — | — | (514,409) | |
| Total | $4,032,671,121 | $13,572,108 | $279,108 | $4,046,522,337 | |
| * | Level 3 amount shown includes securities determined to have no value at October 31, 2020. |
| 1 | As categorized in the complete schedule of Portfolio Holdings. |
| 2 | Futures contracts are valued at unrealized appreciation or depreciation. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in unaffiliated issuers, at value (cost $3,203,396,666) including securities on loan of $53,460,251 | | $3,989,383,157 |
| Collateral invested for securities on loan, at value (cost $57,653,589) | | 57,653,589 |
| Deposit with broker for futures contracts | | 1,410,500 |
| Receivables: | | |
| Investments sold | | 331,369 |
| Fund shares sold | | 4,274,240 |
| Dividends | | 1,148,368 |
| Income from securities on loan | | 560,773 |
| Foreign tax reclaims | + | 888 |
| Total assets | | 4,054,762,884 |
| Liabilities |
| Collateral held for securities on loan | | 57,653,589 |
| Payables: | | |
| Investments bought | | 2,330,996 |
| Investment adviser fees | | 137,352 |
| Fund shares redeemed | | 6,237,449 |
| Variation margin on futures contracts | + | 231,943 |
| Total liabilities | | 66,591,329 |
| Net Assets |
| Total assets | | 4,054,762,884 |
| Total liabilities | – | 66,591,329 |
| Net assets | | $3,988,171,555 |
| Net Assets by Source | | |
| Capital received from investors | | 3,212,453,051 |
| Total distributable earnings | | 775,718,504 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $3,988,171,555 | | 146,713,114 | | $27.18 |
| | | | | |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends (net of foreign withholding tax of $60,214) | | $48,336,155 |
| Interest | | 50,283 |
| Securities on loan, net | + | 5,318,547 |
| Total investment income | | 53,704,985 |
| Expenses |
| Investment adviser fees | | 1,594,282 |
| Total expenses | – | 1,594,282 |
| Net investment income | | 52,110,703 |
| Realized and Unrealized Gains (Losses) |
| Net realized gains on investments | | 17,480,900 |
| Net realized losses on futures contracts | + | (1,171,165) |
| Net realized gains | | 16,309,735 |
| Net change in unrealized appreciation (depreciation) on investments | | (65,407,073) |
| Net change in unrealized appreciation (depreciation) on futures contracts | + | (802,666) |
| Net change in unrealized appreciation (depreciation) | + | (66,209,739) |
| Net realized and unrealized losses | | (49,900,004) |
| Increase in net assets resulting from operations | | $2,210,699 |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $52,110,703 | $57,367,678 |
| Net realized gains | | 16,309,735 | 164,782,862 |
| Net change in unrealized appreciation (depreciation) | + | (66,209,739) | (24,103,919) |
| Increase in net assets from operations | | 2,210,699 | 198,046,621 |
| Distributions to Shareholders | |
| Total distributions | | ($258,984,423) | ($331,678,196) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 42,497,497 | $1,056,026,388 | 34,352,492 | $953,623,893 |
| Shares reinvested | | 7,453,061 | 217,331,235 | 12,063,839 | 284,224,067 |
| Shares redeemed | + | (48,388,038) | (1,215,269,449) | (28,348,900) | (791,168,893) |
| Net transactions in fund shares | | 1,562,520 | $58,088,174 | 18,067,431 | $446,679,067 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 145,150,594 | $4,186,857,105 | 127,083,163 | $3,873,809,613 |
| Total increase or decrease | + | 1,562,520 | (198,685,550) | 18,067,431 | 313,047,492 |
| End of period | | 146,713,114 | $3,988,171,555 | 145,150,594 | $4,186,857,105 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $53.42 | $48.38 | $46.25 | $38.19 | $37.69 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 1.07 | 0.99 | 0.88 | 0.80 | 0.75 | |
| Net realized and unrealized gains (losses) | 4.21 | 5.18 | 2.12 | 8.19 | 0.75 | |
| Total from investment operations | 5.28 | 6.17 | 3.00 | 8.99 | 1.50 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.94) | (0.90) | (0.76) | (0.74) | (0.70) | |
| Distributions from net realized gains | (0.14) | (0.23) | (0.11) | (0.19) | (0.30) | |
| Total distributions | (1.08) | (1.13) | (0.87) | (0.93) | (1.00) | |
| Net asset value at end of period | $57.62 | $53.42 | $48.38 | $46.25 | $38.19 | |
| Total return | 9.94% | 13.37% | 6.51% | 23.89% | 4.19% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Total expenses | 0.03% | 0.03% | 0.03% | 0.05% 2 | 0.10% | |
| Net operating expenses | N/A | N/A | N/A 3 | 0.05% 2 | 0.09% | |
| Net investment income (loss) | 1.96% | 1.99% | 1.80% | 1.89% | 2.03% | |
| Portfolio turnover rate | 4% | 3% | 4% | 2% | 1% | |
| Net assets, end of period (x 1,000,000) | $11,487 | $10,220 | $8,410 | $6,720 | $4,850 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Effective March 1, 2017, the annual operating expense ratio was reduced. The ratio presented for period ended 10/31/17 is a blended ratio.
3
Effective March 1, 2017, the fund instituted a new fee structure and the contractual expense limitation was terminated.
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Condensed Portfolio Holdings as of October 31, 2020
This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers, any holdings exceeding 1% of the fund’s net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-877-824-5615. This complete schedule, filed on the fund’s N-CSR(S), is also available on the U.S. Securities and Exchange Commission (SEC)’s website at www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Common Stock 99.3% of net assets | |
| |
| Automobiles & Components 1.4% | |
| Tesla, Inc. * | 258,880 | 0.9 | 100,455,795 |
| Other Securities | | 0.5 | 58,479,721 |
| | | 1.4 | 158,935,516 |
| |
| Banks 3.7% | |
| Bank of America Corp. | 2,648,462 | 0.5 | 62,768,549 |
| JPMorgan Chase & Co. | 1,058,399 | 0.9 | 103,765,438 |
| Other Securities | | 2.3 | 258,500,472 |
| | | 3.7 | 425,034,459 |
| |
| Capital Goods 5.9% | |
| Other Securities | | 5.9 | 679,683,978 |
| |
| Commercial & Professional Services 1.1% | |
| Other Securities | | 1.1 | 123,147,922 |
| |
| Consumer Durables & Apparel 1.5% | |
| NIKE, Inc., Class B | 431,771 | 0.5 | 51,847,062 |
| Other Securities | | 1.0 | 120,187,104 |
| | | 1.5 | 172,034,166 |
| |
| Consumer Services 1.9% | |
| McDonald's Corp. | 258,413 | 0.5 | 55,041,969 |
| Other Securities | | 1.4 | 164,459,452 |
| | | 1.9 | 219,501,421 |
| |
| Diversified Financials 4.5% | |
| Berkshire Hathaway, Inc., Class B * | 688,318 | 1.2 | 138,971,404 |
| The Charles Schwab Corp. (c) | 514,196 | 0.2 | 21,138,598 |
| Other Securities | | 3.1 | 363,304,530 |
| | | 4.5 | 523,414,532 |
| |
| Energy 1.9% | |
| Chevron Corp. | 668,886 | 0.4 | 46,487,577 |
| Exxon Mobil Corp. | 1,467,442 | 0.4 | 47,867,958 |
| Other Securities | | 1.1 | 120,143,497 |
| | | 1.9 | 214,499,032 |
| |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Food & Staples Retailing 1.4% | |
| Costco Wholesale Corp. | 153,276 | 0.5 | 54,814,563 |
| Walmart, Inc. | 482,312 | 0.6 | 66,920,790 |
| Other Securities | | 0.3 | 38,661,951 |
| | | 1.4 | 160,397,304 |
| |
| Food, Beverage & Tobacco 3.1% | |
| PepsiCo, Inc. | 480,930 | 0.6 | 64,103,160 |
| The Coca-Cola Co. | 1,342,562 | 0.6 | 64,523,530 |
| Other Securities | | 1.9 | 224,524,166 |
| | | 3.1 | 353,150,856 |
| |
| Health Care Equipment & Services 6.6% | |
| Abbott Laboratories | 614,510 | 0.6 | 64,591,146 |
| Danaher Corp. | 218,952 | 0.4 | 50,258,242 |
| Medtronic plc | 466,769 | 0.4 | 46,942,958 |
| UnitedHealth Group, Inc. | 330,093 | 0.9 | 100,724,578 |
| Other Securities | | 4.3 | 494,450,833 |
| | | 6.6 | 756,967,757 |
| |
| Household & Personal Products 1.7% | |
| The Procter & Gamble Co. | 864,619 | 1.0 | 118,539,265 |
| Other Securities | | 0.7 | 82,063,289 |
| | | 1.7 | 200,602,554 |
| |
| Insurance 2.0% | |
| Other Securities | | 2.0 | 230,583,323 |
| |
| Materials 2.8% | |
| Other Securities | | 2.8 | 318,876,203 |
| |
| Media & Entertainment 8.4% | |
| Alphabet, Inc., Class A * | 104,341 | 1.5 | 168,626,534 |
| Alphabet, Inc., Class C * | 101,954 | 1.4 | 165,268,454 |
| Comcast Corp., Class A | 1,581,730 | 0.6 | 66,812,275 |
| Facebook, Inc., Class A * | 835,106 | 1.9 | 219,724,740 |
| Netflix, Inc. * | 153,279 | 0.6 | 72,920,951 |
| The Walt Disney Co. | 627,587 | 0.7 | 76,094,924 |
| Other Securities | | 1.7 | 199,131,635 |
| | | 8.4 | 968,579,513 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 7.7% | |
| AbbVie, Inc. | 613,266 | 0.5 | 52,188,937 |
| Amgen, Inc. | 203,408 | 0.4 | 44,127,332 |
| Bristol-Myers Squibb Co. | 783,757 | 0.4 | 45,810,597 |
| Johnson & Johnson | 914,373 | 1.1 | 125,369,682 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Merck & Co., Inc. | 878,448 | 0.6 | 66,068,074 |
| Pfizer, Inc. | 1,929,965 | 0.6 | 68,475,158 |
| Thermo Fisher Scientific, Inc. | 137,337 | 0.6 | 64,976,881 |
| Other Securities | | 3.5 | 413,572,103 |
| | | 7.7 | 880,588,764 |
| |
| Real Estate 3.2% | |
| Other Securities | | 3.2 | 372,856,413 |
| |
| Retailing 7.4% | |
| Amazon.com, Inc. * | 147,856 | 3.9 | 448,912,994 |
| The Home Depot, Inc. | 373,887 | 0.9 | 99,719,402 |
| Other Securities | | 2.6 | 298,407,323 |
| | | 7.4 | 847,039,719 |
| |
| Semiconductors & Semiconductor Equipment 4.8% | |
| Broadcom, Inc. | 139,654 | 0.4 | 48,827,228 |
| Intel Corp. | 1,477,190 | 0.6 | 65,409,973 |
| NVIDIA Corp. | 214,201 | 0.9 | 107,391,813 |
| QUALCOMM, Inc. | 391,263 | 0.4 | 48,266,204 |
| Texas Instruments, Inc. | 317,623 | 0.4 | 45,925,110 |
| Other Securities | | 2.1 | 232,427,802 |
| | | 4.8 | 548,248,130 |
| |
| Software & Services 14.6% | |
| Accenture plc, Class A | 220,847 | 0.4 | 47,903,923 |
| Adobe, Inc. * | 166,590 | 0.6 | 74,482,389 |
| Mastercard, Inc., Class A | 306,804 | 0.8 | 88,555,907 |
| Microsoft Corp. | 2,627,948 | 4.6 | 532,080,632 |
| PayPal Holdings, Inc. * | 407,785 | 0.7 | 75,901,022 |
| salesforce.com, Inc. * | 316,156 | 0.6 | 73,433,554 |
| Visa, Inc., Class A | 585,552 | 0.9 | 106,400,654 |
| Other Securities | | 6.0 | 682,219,977 |
| | | 14.6 | 1,680,978,058 |
| |
| Technology Hardware & Equipment 7.1% | |
| Apple Inc. | 5,582,864 | 5.3 | 607,750,575 |
| Cisco Systems, Inc. | 1,470,037 | 0.5 | 52,774,328 |
| Other Securities | | 1.3 | 154,472,404 |
| | | 7.1 | 814,997,307 |
| |
| Telecommunication Services 1.6% | |
| AT&T, Inc. | 2,474,722 | 0.6 | 66,866,988 |
| Verizon Communications, Inc. | 1,437,058 | 0.7 | 81,897,935 |
| Other Securities | | 0.3 | 38,639,222 |
| | | 1.6 | 187,404,145 |
| |
| Transportation 2.0% | |
| Other Securities | | 2.0 | 226,973,386 |
| |
| Utilities 3.0% | |
| NextEra Energy, Inc. | 679,260 | 0.4 | 49,728,625 |
| Other Securities | | 2.6 | 293,880,727 |
| | | 3.0 | 343,609,352 |
| Total Common Stock | |
| (Cost $6,454,404,116) | | | 11,408,103,810 |
|
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Rights 0.0% of net assets | |
| |
| Capital Goods 0.0% | |
| Other Securities | | 0.0 | — |
| |
| Media & Entertainment 0.0% | |
| Other Securities | | 0.0 | 1,566 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% | |
| Other Securities | | 0.0 | 17,337 |
| Total Rights | |
| (Cost $1,204) | | | 18,903 |
|
| Warrants 0.0% of net assets | |
| |
| Energy 0.0% | |
| Other Securities | | 0.0 | 1,219 |
| Total Warrants | |
| (Cost $—) | | | 1,219 |
|
| Other Investment Company 0.1% of net assets | |
| |
| Securities Lending Collateral 0.1% | |
| Other Securities | | 0.1 | 18,771,910 |
| Total Other Investment Company | |
| (Cost $18,771,910) | | | 18,771,910 |
Security
Rate, Maturity Date | Face
Amount ($) | % of Net
Assets | Value
($) |
| Short-Term Investment 0.5% of net assets | |
| |
| Time Deposit 0.5% | |
Skandinaviska Enskilda Banken
0.01%, 11/02/20 (e) | 53,766,597 | 0.5 | 53,766,597 |
| Total Short-Term Investment | |
| (Cost $53,766,597) | | | 53,766,597 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Appreciation
(Depreciation)
($) |
| Futures Contracts | |
| Long | |
| Russell 2000 Index, e-mini, expires 12/18/20 | 150 | 11,526,000 | 105,271 |
| S&P 500 Index, e-mini, expires 12/18/20 | 404 | 65,946,940 | (1,624,776) |
| Net Unrealized Depreciation | (1,519,505) |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
The following footnotes may not be applicable to the Condensed Portfolio Holdings. 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 $17,807,791. |
| (b) | Fair-valued by management using significant unobservable inputs in accordance with procedures approved by the fund’s Board of Trustees. |
| (c) | Issuer is affiliated with the fund’s investment adviser. |
| (d) | The rate shown is the 7-day yield. |
| (e) | The rate shown is the current daily overnight rate. |
| | |
| CVR — | Contingent Value Rights |
| REIT — | Real Estate Investment Trust |
The fund owns shares of an affiliate, The Charles Schwab Corp., since that company is included in its index. Below is the summary of investment activities involving The Charles Schwab Corp. shares owned by the fund during the period ended October 31, 2020:
| |
Value at
10/31/19 | Gross
Purchases | Gross
Sales | Realized
Gains (Losses) | Net Change
in Unrealized
Appreciation
(depreciation) |
Value at
10/31/20 | Balance
of Shares
Held at
10/31/20 | Dividends
Received |
| The Charles Schwab Corp. | $15,925,101 | $4,347,073 | ($421,136) | ($78,452) | $1,366,012 | $21,138,598 | 514,196 | $282,384 |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 and reflects the complete schedule of portfolio holdings (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 | |
| Assets | | | | | |
| Common Stock1 | $10,119,344,124 | $— | $— | $10,119,344,124 | |
| Automobiles & Components | 158,878,137 | — | 57,379 | 158,935,516 | |
| Health Care Equipment & Services | 754,258,764 | — | 2,708,993 | 756,967,757 | |
| Real Estate | 372,856,413 | — | — * | 372,856,413 | |
| Rights 1 | | | | | |
| Capital Goods | — | — | — * | — | |
| Media & Entertainment | — | — | 1,566 | 1,566 | |
| Pharmaceuticals, Biotechnology & Life Sciences | — | — | 17,337 * | 17,337 | |
| Warrants 1 | | | | | |
| Energy | — | — | 1,219 | 1,219 | |
| Other Investment Company1 | 18,771,910 | — | — | 18,771,910 | |
| Short-Term Investment1 | — | 53,766,597 | — | 53,766,597 | |
| Futures Contracts2 | 105,271 | — | — | 105,271 | |
| Liabilities | | | | | |
| Futures Contracts2 | (1,624,776) | — | — | (1,624,776) | |
| Total | $11,422,589,843 | $53,766,597 | $2,786,494 | $11,479,142,934 | |
| * | Level 3 amount shown includes securities determined to have no value at October 31, 2020. |
| 1 | As categorized in the complete schedule of Portfolio Holdings. |
| 2 | Futures contracts are valued at unrealized appreciation or depreciation. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investment in affiliated issuer, at value (cost $15,612,346) | | $21,138,598 |
| Investments in unaffiliated issuers, at value (cost $6,492,559,571) including securities on loan of $17,807,791 | | 11,440,751,931 |
| Collateral invested for securities on loan, at value (cost $18,771,910) | | 18,771,910 |
| Deposit with broker for futures contracts | | 5,674,999 |
| Receivables: | | |
| Investments sold | | 488,093 |
| Fund shares sold | | 16,385,725 |
| Dividends | | 9,874,920 |
| Income from securities on loan | | 146,956 |
| Foreign tax reclaims | | 159 |
| Interest | + | 45 |
| Total assets | | 11,513,233,336 |
| Liabilities |
| Collateral held for securities on loan | | 18,771,910 |
| Payables: | | |
| Investments bought | | 1,166,947 |
| Investment adviser fees | | 291,264 |
| Fund shares redeemed | | 4,721,387 |
| Variation margin on futures contracts | + | 844,058 |
| Total liabilities | | 25,795,566 |
| Net Assets |
| Total assets | | 11,513,233,336 |
| Total liabilities | – | 25,795,566 |
| Net assets | | $11,487,437,770 |
| Net Assets by Source | | |
| Capital received from investors | | 6,454,783,428 |
| Total distributable earnings | | 5,032,654,342 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $11,487,437,770 | | 199,376,459 | | $57.62 |
| | | | | |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends received from affiliated issuer | | $282,384 |
| Dividends received from unaffiliated issuers (net of foreign withholding tax of $16,788) | | 214,139,541 |
| Interest | | 90,763 |
| Securities on loan, net | + | 1,244,377 |
| Total investment income | | 215,757,065 |
| Expenses |
| Investment adviser fees | | 3,259,136 |
| Total expenses | – | 3,259,136 |
| Net investment income | | 212,497,929 |
| Realized and Unrealized Gains (Losses) |
| Net realized losses on affiliated issuer | | (78,452) |
| Net realized losses on unaffiliated issuers | | (31,263,854) |
| Net realized gains on futures contracts | + | 5,938,005 |
| Net realized losses | | (25,404,301) |
| Net change in unrealized appreciation (depreciation) on affiliated issuer | | 1,366,012 |
| Net change in unrealized appreciation (depreciation) on unaffiliated issuers | | 847,824,605 |
| Net change in unrealized appreciation (depreciation) on futures contracts | + | (1,503,468) |
| Net change in unrealized appreciation (depreciation) | + | 847,687,149 |
| Net realized and unrealized gains | | 822,282,848 |
| Increase in net assets resulting from operations | | $1,034,780,777 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $212,497,929 | $184,998,541 |
| Net realized gains (losses) | | (25,404,301) | 606,877 |
| Net change in unrealized appreciation (depreciation) | + | 847,687,149 | 1,012,024,065 |
| Increase in net assets from operations | | 1,034,780,777 | 1,197,629,483 |
| Distributions to Shareholders | |
| Total distributions | | ($207,148,798) | ($199,442,079) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 47,954,413 | $2,507,068,155 | 41,564,151 | $2,031,277,091 |
| Shares reinvested | | 2,723,498 | 151,971,124 | 3,549,021 | 149,293,091 |
| Shares redeemed | + | (42,603,146) | (2,219,143,615) | (27,643,143) | (1,368,397,596) |
| Net transactions in fund shares | | 8,074,765 | $439,895,664 | 17,470,029 | $812,172,586 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 191,301,694 | $10,219,910,127 | 173,831,665 | $8,409,550,137 |
| Total increase | + | 8,074,765 | 1,267,527,643 | 17,470,029 | 1,810,359,990 |
| End of period | | 199,376,459 | $11,487,437,770 | 191,301,694 | $10,219,910,127 |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Growth Index Fund
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 12/20/17 1–
10/31/18 | | | |
| Per-Share Data |
| Net asset value at beginning of period | $49.06 | $42.37 | $40.00 | | | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)2 | 0.55 | 0.57 | 0.46 | | | |
| Net realized and unrealized gains (losses) | 13.65 | 6.52 | 1.91 3 | | | |
| Total from investment operations | 14.20 | 7.09 | 2.37 | | | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.50) | (0.40) | — | | | |
| Net asset value at end of period | $62.76 | $49.06 | $42.37 | | | |
| Total return | 29.16% | 17.04% | 5.93% 4 | | | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Total expenses | 0.035% | 0.035% 5 | 0.040% 6,7 | | | |
| Net operating expenses | N/A | N/A | 0.02% 6,7 | | | |
| Net investment income (loss) | 0.97% | 1.27% | 1.23% 6 | | | |
| Portfolio turnover rate | 41% | 46% | 23% 4 | | | |
| Net assets, end of period (x 1,000,000) | $487 | $166 | $93 | | | |
| |
1
Commencement of operations.
2
Calculated based on the average shares outstanding during the period.
3
The per share amount does not accord with the change in aggregate gains and losses in securities during the period because of the timing of sales and repurchases of fund shares in relation to fluctuating market values.
4
Not annualized.
5
Effective December 20, 2018, the annual operating expense ratio was reduced to 0.035%. The ratio presented for period ended 10/31/19 is a blended ratio.
6
Annualized.
7
The investment adviser voluntarily agreed to waive the fund’s management fees to 0.00% beginning with the fund’s commencement of operations through June 30, 2018. The ratio presented for period ended 10/31/18 is a blended ratio.
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Growth Index Fund
Condensed Portfolio Holdings as of October 31, 2020
This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers, any holdings exceeding 1% of the fund’s net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-877-824-5615. This complete schedule, filed on the fund’s N-CSR(S), is also available on the U.S. Securities and Exchange Commission (SEC)’s website at www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Common Stock 99.6% of net assets | |
| |
| Automobiles & Components 1.8% | |
| Tesla, Inc. * | 22,490 | 1.8 | 8,727,019 |
| Other Securities | | 0.0 | 31,692 |
| | | 1.8 | 8,758,711 |
| |
| Banks 0.0% | |
| Other Securities | | 0.0 | 20,636 |
| |
| Capital Goods 2.3% | |
| 3M Co. | 11,287 | 0.4 | 1,805,468 |
| Lockheed Martin Corp. | 7,529 | 0.5 | 2,636,129 |
| Other Securities | | 1.4 | 6,654,179 |
| | | 2.3 | 11,095,776 |
| |
| Commercial & Professional Services 1.0% | |
| Other Securities | | 1.0 | 5,116,928 |
| |
| Consumer Durables & Apparel 1.2% | |
| NIKE, Inc., Class B | 36,845 | 0.9 | 4,424,348 |
| Other Securities | | 0.3 | 1,458,140 |
| | | 1.2 | 5,882,488 |
| |
| Consumer Services 1.1% | |
| Starbucks Corp. | 20,521 | 0.4 | 1,784,506 |
| Other Securities | | 0.7 | 3,511,980 |
| | | 1.1 | 5,296,486 |
| |
| Diversified Financials 1.2% | |
| Other Securities | | 1.2 | 5,935,783 |
| |
| Energy 0.1% | |
| Other Securities | | 0.1 | 344,508 |
| |
| Food & Staples Retailing 1.0% | |
| Costco Wholesale Corp. | 11,850 | 0.9 | 4,237,797 |
| Other Securities | | 0.1 | 695,913 |
| | | 1.0 | 4,933,710 |
| |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Food, Beverage & Tobacco 2.3% | |
| PepsiCo, Inc. | 30,982 | 0.8 | 4,129,591 |
| The Coca-Cola Co. | 69,032 | 0.7 | 3,317,678 |
| Other Securities | | 0.8 | 3,819,783 |
| | | 2.3 | 11,267,052 |
| |
| Health Care Equipment & Services 6.0% | |
| Abbott Laboratories | 20,191 | 0.4 | 2,122,276 |
| Intuitive Surgical, Inc. * | 3,521 | 0.5 | 2,348,789 |
| UnitedHealth Group, Inc. | 23,893 | 1.5 | 7,290,710 |
| Other Securities | | 3.6 | 17,334,192 |
| | | 6.0 | 29,095,967 |
| |
| Household & Personal Products 1.5% | |
| The Procter & Gamble Co. | 33,124 | 0.9 | 4,541,300 |
| Other Securities | | 0.6 | 2,632,552 |
| | | 1.5 | 7,173,852 |
| |
| Insurance 0.7% | |
| Other Securities | | 0.7 | 3,331,556 |
| |
| Materials 0.9% | |
| Other Securities | | 0.9 | 4,170,270 |
| |
| Media & Entertainment 11.6% | |
| Alphabet, Inc., Class A * | 7,084 | 2.3 | 11,448,523 |
| Alphabet, Inc., Class C * | 6,992 | 2.3 | 11,334,102 |
| Charter Communications, Inc., Class A * | 4,108 | 0.5 | 2,480,493 |
| Facebook, Inc., Class A * | 73,039 | 3.9 | 19,217,291 |
| Netflix, Inc. * | 12,937 | 1.3 | 6,154,648 |
| Other Securities | | 1.3 | 5,859,530 |
| | | 11.6 | 56,494,587 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 7.8% | |
| AbbVie, Inc. | 50,380 | 0.9 | 4,287,338 |
| Amgen, Inc. | 17,907 | 0.8 | 3,884,745 |
| Eli Lilly & Co. | 25,620 | 0.7 | 3,342,385 |
| Merck & Co., Inc. | 67,156 | 1.0 | 5,050,803 |
| Thermo Fisher Scientific, Inc. | 7,051 | 0.7 | 3,335,969 |
| Zoetis, Inc. | 13,082 | 0.4 | 2,074,151 |
| Other Securities | | 3.3 | 15,902,011 |
| | | 7.8 | 37,877,402 |
| |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Growth Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Real Estate 1.8% | |
| American Tower Corp. | 13,417 | 0.6 | 3,081,214 |
| Crown Castle International Corp. | 11,791 | 0.4 | 1,841,754 |
| Equinix, Inc. | 2,673 | 0.4 | 1,954,604 |
| Other Securities | | 0.4 | 1,983,892 |
| | | 1.8 | 8,861,464 |
| |
| Retailing 12.1% | |
| Amazon.com, Inc. * | 12,896 | 8.0 | 39,154,190 |
| Booking Holdings, Inc. * | 1,243 | 0.4 | 2,016,767 |
| Lowe's Cos., Inc. | 22,989 | 0.7 | 3,634,561 |
| The Home Depot, Inc. | 16,336 | 0.9 | 4,356,975 |
| Other Securities | | 2.1 | 10,050,225 |
| | | 12.1 | 59,212,718 |
| |
| Semiconductors & Semiconductor Equipment 6.1% | |
| Advanced Micro Devices, Inc. * | 32,986 | 0.5 | 2,483,516 |
| Broadcom, Inc. | 11,257 | 0.8 | 3,935,785 |
| NVIDIA Corp. | 17,957 | 1.8 | 9,002,921 |
| QUALCOMM, Inc. | 34,237 | 0.9 | 4,223,476 |
| Texas Instruments, Inc. | 13,907 | 0.4 | 2,010,813 |
| Other Securities | | 1.7 | 8,334,441 |
| | | 6.1 | 29,990,952 |
| |
| Software & Services 26.2% | |
| Accenture plc, Class A | 19,387 | 0.9 | 4,205,234 |
| Adobe, Inc. * | 14,634 | 1.3 | 6,542,861 |
| Intuit, Inc. | 7,665 | 0.5 | 2,412,022 |
| Mastercard, Inc., Class A | 26,835 | 1.6 | 7,745,654 |
| Microsoft Corp. | 227,751 | 9.5 | 46,112,745 |
| Oracle Corp. | 51,408 | 0.6 | 2,884,503 |
| PayPal Holdings, Inc. * | 35,724 | 1.4 | 6,649,308 |
| salesforce.com, Inc. * | 24,422 | 1.2 | 5,672,498 |
| ServiceNow, Inc. * | 5,780 | 0.6 | 2,875,955 |
| Visa, Inc., Class A | 51,358 | 1.9 | 9,332,262 |
| Zoom Video Communications, Inc., Class A * | 5,079 | 0.5 | 2,340,962 |
| Other Securities | | 6.2 | 30,725,907 |
| | | 26.2 | 127,499,911 |
| |
| Technology Hardware & Equipment 11.6% | |
| Apple Inc. | 490,823 | 11.0 | 53,430,992 |
| Other Securities | | 0.6 | 2,904,440 |
| | | 11.6 | 56,335,432 |
| |
| Transportation 1.3% | |
| Union Pacific Corp. | 10,533 | 0.4 | 1,866,342 |
| United Parcel Service, Inc., Class B | 14,158 | 0.5 | 2,224,363 |
| Other Securities | | 0.4 | 2,105,361 |
| | | 1.3 | 6,196,066 |
| |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Utilities 0.0% | |
| Other Securities | | 0.0 | 81,833 |
| Total Common Stock | |
| (Cost $360,904,879) | | | 484,974,088 |
|
| Other Investment Companies 0.8% of net assets | |
| |
| Equity Funds 0.1% | |
| Other Securities | | 0.1 | 482,034 |
| |
| Money Market Fund 0.7% | |
| State Street Institutional U.S. Government Money Market Fund, Premier Class 0.03% (c) | 3,525,848 | 0.7 | 3,525,848 |
| |
| Securities Lending Collateral 0.0% | |
| Other Securities | | 0.0 | 18,600 |
| Total Other Investment Companies | |
| (Cost $4,005,638) | | | 4,026,482 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | |
| Long | |
| Russell 1000 Index, e-mini, expires 12/18/20 | 20 | 2,108,600 | (53,043) |
| S&P 500 Index, e-mini, expires 12/18/20 | 1 | 163,235 | (10,492) |
| Net Unrealized Depreciation | (63,535) |
The following footnotes may not be applicable to the Condensed Portfolio Holdings. Please refer to the complete schedule of portfolio holdings.
| * | Non-income producing security. |
| (a) | Fair-valued by management using significant unobservable inputs in accordance with procedures approved by fund’s Board of Trustees. |
| (b) | All or a portion of this security is on loan. Securities on loan were valued at $17,700. |
| (c) | The rate shown is the 7-day yield. |
| | |
| ETF — | Exchange-traded fund |
| REIT — | Real Estate Investment Trust |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Growth Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
During the period, the fund held shares of an affiliate, The Charles Schwab Corp., since that company was included in its index.Below is the summary of investment activities involving The Charles Schwab Corp. shares owned by the fund during the period ended October 31, 2020:
| |
Value at
10/31/19 | Gross
Purchases | Gross
Sales | Realized
Gains (Losses) | Net Change
in Unrealized
Appreciation
(depreciation) |
Value at
10/31/20 | Balance
of Shares
Held at
10/31/20 | Dividends
Received |
| The Charles Schwab Corp. | $328,652 | $487,415 | ($658,489) | ($185,704) | $28,126 | $— | — | $5,963 |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 and reflects the complete schedule of portfolio holdings (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 | |
| Assets | | | | | |
| Common Stock1 | $455,878,121 | $— | $— | $455,878,121 | |
| Health Care Equipment & Services | 28,893,814 | — | 202,153 | 29,095,967 | |
| Other Investment Companies1 | 4,026,482 | — | — | 4,026,482 | |
| Liabilities | | | | | |
| Futures Contracts2 | (63,535) | — | — | (63,535) | |
| Total | $488,734,882 | $— | $202,153 | $488,937,035 | |
| 1 | As categorized in the complete schedule of Portfolio Holdings. |
| 2 | Futures contracts are valued at unrealized appreciation or depreciation. |
Fund investments in underlying mutual funds and ETFs are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds and ETFs, which could be Level 1, Level 2 or Level 3.
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Growth Index Fund
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in unaffiliated issuers, at value (cost $364,891,917) including securities on loan of $17,700 | | $488,981,970 |
| Collateral invested for securities on loan, at value (cost $18,600) | | 18,600 |
| Deposit with broker for futures contracts | | 112,800 |
| Receivables: | | |
| Investments sold | | 64,346 |
| Fund shares sold | | 1,491,713 |
| Dividends | | 191,747 |
| Income from securities on loan | + | 264 |
| Total assets | | 490,861,440 |
| Liabilities |
| Collateral held for securities on loan | | 18,600 |
| Payables: | | |
| Investments bought | | 2,798,047 |
| Investment adviser fees | | 15,587 |
| Fund shares redeemed | | 788,205 |
| Variation margin on futures contracts | + | 36,007 |
| Total liabilities | | 3,656,446 |
| Net Assets |
| Total assets | | 490,861,440 |
| Total liabilities | – | 3,656,446 |
| Net assets | | $487,204,994 |
| Net Assets by Source | | |
| Capital received from investors | | 375,282,029 |
| Total distributable earnings | | 111,922,965 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $487,204,994 | | 7,763,241 | | $62.76 |
| | | | | |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Growth Index Fund
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends received from affiliated issuer | | $5,963 |
| Dividends received from unaffiliated issuers | | 3,381,295 |
| Securities on loan, net | + | 4,016 |
| Total investment income | | 3,391,274 |
| Expenses |
| Investment adviser fees | | 118,739 |
| Total expenses | – | 118,739 |
| Net investment income | | 3,272,535 |
| Realized and Unrealized Gains (Losses) |
| Net realized losses on affiliated issuer | | (185,704) |
| Net realized losses on unaffiliated issuers | | (11,032,513) |
| Net realized gains on futures contracts | + | 726,432 |
| Net realized losses | | (10,491,785) |
| Net change in unrealized appreciation (depreciation) on affiliated issuer | | 28,126 |
| Net change in unrealized appreciation (depreciation) on unaffiliated issuers | | 98,499,456 |
| Net change in unrealized appreciation (depreciation) on futures contracts | + | (62,964) |
| Net change in unrealized appreciation (depreciation) | + | 98,464,618 |
| Net realized and unrealized gains | | 87,972,833 |
| Increase in net assets resulting from operations | | $91,245,368 |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Growth Index Fund
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $3,272,535 | $1,673,328 |
| Net realized losses | | (10,491,785) | (3,852,313) |
| Net change in unrealized appreciation (depreciation) | + | 98,464,618 | 25,108,024 |
| Increase in net assets from operations | | 91,245,368 | 22,929,039 |
| Distributions to Shareholders | |
| Total distributions | | ($1,890,344) | ($949,803) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 8,242,661 | $434,758,920 | 2,776,749 | $120,542,470 |
| Shares reinvested | | 30,207 | 1,571,983 | 22,696 | 838,591 |
| Shares redeemed | + | (3,889,701) | (204,300,295) | (1,608,317) | (70,292,844) |
| Net transactions in fund shares | | 4,383,167 | $232,030,608 | 1,191,128 | $51,088,217 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 3,380,074 | $165,819,362 | 2,188,946 | $92,751,909 |
| Total increase | + | 4,383,167 | 321,385,632 | 1,191,128 | 73,067,453 |
| End of period | | 7,763,241 | $487,204,994 | 3,380,074 | $165,819,362 |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Value Index Fund
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 12/20/17 1–
10/31/18 | | | |
| Per-Share Data |
| Net asset value at beginning of period | $43.06 | $39.51 | $40.00 | | | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)2 | 1.00 | 1.13 | 0.82 | | | |
| Net realized and unrealized gains (losses) | (4.07) | 3.10 | (1.31) | | | |
| Total from investment operations | (3.07) | 4.23 | (0.49) | | | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (1.06) | (0.62) | — | | | |
| Distributions from net realized gains | (0.84) | (0.06) | — | | | |
| Total distributions | (1.90) | (0.68) | — | | | |
| Net asset value at end of period | $38.09 | $43.06 | $39.51 | | | |
| Total return | (7.69%) | 11.08% | (1.23%) 3 | | | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Total expenses | 0.035% | 0.035% 4 | 0.040% 5,6 | | | |
| Net operating expenses | N/A | N/A | 0.02% 5,6 | | | |
| Net investment income (loss) | 2.57% | 2.79% | 2.36% 5 | | | |
| Portfolio turnover rate | 50% | 22% | 22% 3 | | | |
| Net assets, end of period (x 1,000,000) | $331 | $212 | $70 | | | |
| |
1
Commencement of operations.
2
Calculated based on the average shares outstanding during the period.
3
Not annualized.
4
Effective December 20, 2018, the annual operating expense ratio was reduced to 0.035%. The ratio presented for period ended 10/31/19 is a blended ratio.
5
Annualized.
6
The investment adviser voluntarily agreed to waive the fund’s management fees to 0.00% beginning with the fund’s commencement of operations through June 30, 2018. The ratio presented for period ended 10/31/18 is a blended ratio.
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Value Index Fund
Condensed Portfolio Holdings as of October 31, 2020
This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers, any holdings exceeding 1% of the fund’s net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-877-824-5615. This complete schedule, filed on the fund’s N-CSR(S), is also available on the U.S. Securities and Exchange Commission (SEC)’s website at www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Common Stock 99.7% of net assets | |
| |
| Automobiles & Components 0.9% | |
| Other Securities | | 0.9 | 2,940,409 |
| |
| Banks 7.0% | |
| Bank of America Corp. | 174,717 | 1.2 | 4,140,793 |
| Citigroup, Inc. | 47,034 | 0.6 | 1,948,148 |
| JPMorgan Chase & Co. | 68,420 | 2.0 | 6,707,897 |
| Wells Fargo & Co. | 84,818 | 0.5 | 1,819,346 |
| Other Securities | | 2.7 | 8,460,201 |
| | | 7.0 | 23,076,385 |
| |
| Capital Goods 9.4% | |
| Caterpillar, Inc. | 12,230 | 0.6 | 1,920,721 |
| Deere & Co. | 6,367 | 0.4 | 1,438,369 |
| General Electric Co. | 196,294 | 0.4 | 1,456,501 |
| Honeywell International, Inc. | 15,860 | 0.8 | 2,616,107 |
| Raytheon Technologies Corp. | 32,198 | 0.5 | 1,748,995 |
| The Boeing Co. | 12,062 | 0.5 | 1,741,632 |
| Other Securities | | 6.2 | 20,107,854 |
| | | 9.4 | 31,030,179 |
| |
| Commercial & Professional Services 0.8% | |
| Other Securities | | 0.8 | 2,849,841 |
| |
| Consumer Durables & Apparel 1.4% | |
| Other Securities | | 1.4 | 4,584,046 |
| |
| Consumer Services 2.7% | |
| McDonald's Corp. | 14,411 | 0.9 | 3,069,543 |
| Other Securities | | 1.8 | 5,744,350 |
| | | 2.7 | 8,813,893 |
| |
| Diversified Financials 8.0% | |
| Berkshire Hathaway, Inc., Class B * | 43,277 | 2.6 | 8,737,626 |
| BlackRock, Inc. | 3,324 | 0.6 | 1,991,774 |
| Morgan Stanley | 30,120 | 0.4 | 1,450,278 |
| The Charles Schwab Corp. (a) | 32,350 | 0.4 | 1,329,909 |
| Other Securities | | 4.0 | 12,922,206 |
| | | 8.0 | 26,431,793 |
| |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Energy 3.9% | |
| Chevron Corp. | 43,505 | 0.9 | 3,023,598 |
| Exxon Mobil Corp. | 95,600 | 0.9 | 3,118,472 |
| Other Securities | | 2.1 | 6,649,743 |
| | | 3.9 | 12,791,813 |
| |
| Food & Staples Retailing 1.9% | |
| Walmart, Inc. | 31,479 | 1.3 | 4,367,711 |
| Other Securities | | 0.6 | 2,003,193 |
| | | 1.9 | 6,370,904 |
| |
| Food, Beverage & Tobacco 4.1% | |
| Mondelez International, Inc., Class A | 31,888 | 0.5 | 1,693,891 |
| Philip Morris International, Inc. | 35,145 | 0.8 | 2,495,998 |
| The Coca-Cola Co. | 36,057 | 0.5 | 1,732,899 |
| Other Securities | | 2.3 | 7,657,730 |
| | | 4.1 | 13,580,518 |
| |
| Health Care Equipment & Services 7.2% | |
| Abbott Laboratories | 24,051 | 0.8 | 2,528,001 |
| Becton, Dickinson & Co. | 6,231 | 0.4 | 1,440,171 |
| CVS Health Corp. | 29,522 | 0.5 | 1,655,889 |
| Danaher Corp. | 14,140 | 1.0 | 3,245,696 |
| Medtronic plc | 30,300 | 0.9 | 3,047,271 |
| Other Securities | | 3.6 | 11,985,683 |
| | | 7.2 | 23,902,711 |
| |
| Household & Personal Products 2.2% | |
| Colgate-Palmolive Co. | 19,030 | 0.5 | 1,501,277 |
| The Procter & Gamble Co. | 30,437 | 1.3 | 4,172,913 |
| Other Securities | | 0.4 | 1,547,808 |
| | | 2.2 | 7,221,998 |
| |
| Insurance 3.4% | |
| Other Securities | | 3.4 | 11,438,479 |
| |
| Materials 4.8% | |
| Linde plc | 11,863 | 0.8 | 2,613,893 |
| Other Securities | | 4.0 | 13,272,346 |
| | | 4.8 | 15,886,239 |
| |
| Media & Entertainment 6.0% | |
| Alphabet, Inc., Class A * | 1,519 | 0.7 | 2,454,871 |
| Alphabet, Inc., Class C * | 1,499 | 0.7 | 2,429,894 |
| Comcast Corp., Class A | 102,351 | 1.3 | 4,323,306 |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Value Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| The Walt Disney Co. | 40,824 | 1.5 | 4,949,910 |
| Other Securities | | 1.8 | 5,601,564 |
| | | 6.0 | 19,759,545 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 6.9% | |
| Bristol-Myers Squibb Co. | 32,574 | 0.6 | 1,903,950 |
| Gilead Sciences, Inc. | 28,364 | 0.5 | 1,649,367 |
| Johnson & Johnson | 51,580 | 2.1 | 7,072,134 |
| Pfizer, Inc. | 125,613 | 1.3 | 4,456,749 |
| Thermo Fisher Scientific, Inc. | 3,684 | 0.5 | 1,742,974 |
| Other Securities | | 1.9 | 6,210,334 |
| | | 6.9 | 23,035,508 |
| |
| Real Estate 4.5% | |
| Prologis, Inc. | 16,623 | 0.5 | 1,649,002 |
| Other Securities | | 4.0 | 13,229,351 |
| | | 4.5 | 14,878,353 |
| |
| Retailing 2.7% | |
| Target Corp. | 11,289 | 0.5 | 1,718,412 |
| The Home Depot, Inc. | 12,134 | 1.0 | 3,236,259 |
| Other Securities | | 1.2 | 4,097,694 |
| | | 2.7 | 9,052,365 |
| |
| Semiconductors & Semiconductor Equipment 3.2% | |
| Intel Corp. | 95,750 | 1.3 | 4,239,810 |
| Texas Instruments, Inc. | 10,410 | 0.5 | 1,505,182 |
| Other Securities | | 1.4 | 4,969,977 |
| | | 3.2 | 10,714,969 |
| |
| Software & Services 3.3% | |
| Fidelity National Information Services, Inc. | 13,945 | 0.5 | 1,737,408 |
| International Business Machines Corp. | 20,068 | 0.7 | 2,240,793 |
| Other Securities | | 2.1 | 7,076,487 |
| | | 3.3 | 11,054,688 |
| |
| Technology Hardware & Equipment 2.7% | |
| Cisco Systems, Inc. | 95,914 | 1.0 | 3,443,313 |
| Other Securities | | 1.7 | 5,425,043 |
| | | 2.7 | 8,868,356 |
| |
| Telecommunication Services 3.5% | |
| AT&T, Inc. | 161,063 | 1.3 | 4,351,922 |
| Verizon Communications, Inc. | 93,583 | 1.6 | 5,333,295 |
| Other Securities | | 0.6 | 1,802,630 |
| | | 3.5 | 11,487,847 |
| |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Transportation 2.9% | |
| Other Securities | | 2.9 | 9,565,540 |
| |
| Utilities 6.3% | |
| Dominion Energy, Inc. | 18,933 | 0.5 | 1,521,077 |
| Duke Energy Corp. | 16,581 | 0.5 | 1,527,276 |
| NextEra Energy, Inc. | 44,212 | 1.0 | 3,236,761 |
| Other Securities | | 4.3 | 14,602,694 |
| | | 6.3 | 20,887,808 |
| Total Common Stock | |
| (Cost $308,297,025) | | | 330,224,187 |
|
| Other Investment Companies 0.4% of net assets | |
| |
| Equity Funds 0.1% | |
| Other Securities | | 0.1 | 303,498 |
| |
| Money Market Fund 0.2% | |
| Other Securities | | 0.2 | 686,767 |
| |
| Securities Lending Collateral 0.1% | |
| Other Securities | | 0.1 | 356,750 |
| Total Other Investment Companies | |
| (Cost $1,347,755) | | | 1,347,015 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | |
| Long | |
| Russell 1000 Index, e-mini, expires 12/18/20 | 21 | 1,204,245 | (58,082) |
| S&P 500 Index, e-mini, expires 12/18/20 | 1 | 163,235 | (342) |
| Net Unrealized Depreciation | (58,424) |
The following footnotes may not be applicable to the Condensed Portfolio Holdings. 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 $349,151. |
| (c) | The rate shown is the 7-day yield. |
| | |
| ETF — | Exchange-traded fund |
| REIT — | Real Estate Investment Trust |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Value Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
The fund owns shares of an affiliate, The Charles Schwab Corp., since that company is included in its index. Below is the summary of investment activities involving The Charles Schwab Corp. shares owned by the fund during the period ended October 31, 2020:
| |
Value at
10/31/19 | Gross
Purchases | Gross
Sales | Realized
Gains (Losses) | Net Change
in Unrealized
Appreciation
(depreciation) |
Value at
10/31/20 | Balance
of Shares
Held at
10/31/20 | Dividends
Received |
| The Charles Schwab Corp. | $293,723 | $937,495 | ($106,717) | ($15,581) | $220,989 | $1,329,909 | 32,350 | $8,996 |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 and reflects the complete schedule of portfolio holdings (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 | |
| Assets | | | | | |
| Common Stock1 | $330,224,187 | $— | $— | $330,224,187 | |
| Other Investment Companies1 | 1,347,015 | — | — | 1,347,015 | |
| Liabilities | | | | | |
| Futures Contracts2 | (58,424) | — | — | (58,424) | |
| Total | $331,512,778 | $— | $— | $331,512,778 | |
| 1 | As categorized in the complete schedule of Portfolio Holdings. |
| 2 | Futures contracts are valued at unrealized appreciation or depreciation. |
Fund investments in underlying mutual funds and ETFs are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds and ETFs, which could be Level 1, Level 2 or Level 3.
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Value Index Fund
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investment in affiliated issuer, at value (cost $1,104,535) | | $1,329,909 |
| Investments in unaffiliated issuers, at value (cost $308,183,495) including securities on loan of $349,151 | | 329,884,543 |
| Collateral invested for securities on loan, at value (cost $356,750) | | 356,750 |
| Deposit with broker for futures contracts | | 106,000 |
| Receivables: | | |
| Dividends | | 482,685 |
| Fund shares sold | | 410,843 |
| Income from securities on loan | + | 280 |
| Total assets | | 332,571,010 |
| Liabilities |
| Collateral held for securities on loan | | 356,750 |
| Payables: | | |
| Investments bought | | 93,390 |
| Investment adviser fees | | 10,550 |
| Fund shares redeemed | | 785,297 |
| Variation margin on futures contracts | + | 2,636 |
| Total liabilities | | 1,248,623 |
| Net Assets |
| Total assets | | 332,571,010 |
| Total liabilities | – | 1,248,623 |
| Net assets | | $331,322,387 |
| Net Assets by Source | | |
| Capital received from investors | | 329,958,653 |
| Total distributable earnings | | 1,363,734 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $331,322,387 | | 8,698,237 | | $38.09 |
| | | | | |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Value Index Fund
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends received from affiliated issuer | | $8,996 |
| Dividends received from unaffiliated issuers (net of foreign withholding tax of $316) | | 7,062,218 |
| Securities on loan, net | + | 5,530 |
| Total investment income | | 7,076,744 |
| Expenses |
| Investment adviser fees | | 95,176 |
| Total expenses | – | 95,176 |
| Net investment income | | 6,981,568 |
| Realized and Unrealized Gains (Losses) |
| Net realized losses on affiliated issuer | | (15,581) |
| Net realized losses on unaffiliated issuers | | (24,809,148) |
| Net realized gains on futures contracts | + | 34,355 |
| Net realized losses | | (24,790,374) |
| Net change in unrealized appreciation (depreciation) on affiliated issuer | | 220,989 |
| Net change in unrealized appreciation (depreciation) on unaffiliated issuers | | 6,994,920 |
| Net change in unrealized appreciation (depreciation) on futures contracts | + | (58,390) |
| Net change in unrealized appreciation (depreciation) | + | 7,157,519 |
| Net realized and unrealized losses | | (17,632,855) |
| Decrease in net assets resulting from operations | | ($10,651,287) |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Value Index Fund
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $6,981,568 | $4,561,029 |
| Net realized gains (losses) | | (24,790,374) | 3,255,061 |
| Net change in unrealized appreciation (depreciation) | + | 7,157,519 | 16,353,464 |
| Increase (decrease) in net assets from operations | | (10,651,287) | 24,169,554 |
| Distributions to Shareholders | |
| Total distributions | | ($9,633,049) | ($1,536,515) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 7,976,599 | $290,627,433 | 4,104,466 | $157,914,398 |
| Shares reinvested | | 182,880 | 7,979,022 | 38,320 | 1,344,745 |
| Shares redeemed | + | (4,389,206) | (159,213,048) | (979,981) | (39,427,758) |
| Net transactions in fund shares | | 3,770,273 | $139,393,407 | 3,162,805 | $119,831,385 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 4,927,964 | $212,213,316 | 1,765,159 | $69,748,892 |
| Total increase | + | 3,770,273 | 119,109,071 | 3,162,805 | 142,464,424 |
| End of period | | 8,698,237 | $331,322,387 | 4,927,964 | $212,213,316 |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Mid-Cap Index Fund
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 12/20/17 1–
10/31/18 | | | |
| Per-Share Data |
| Net asset value at beginning of period | $44.29 | $39.55 | $40.00 | | | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)2 | 0.72 | 0.70 | 0.59 | | | |
| Net realized and unrealized gains (losses) | 1.09 | 4.54 | (1.04) | | | |
| Total from investment operations | 1.81 | 5.24 | (0.45) | | | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.64) | (0.42) | — | | | |
| Distributions from net realized gains | (0.48) | (0.08) | — | | | |
| Total distributions | (1.12) | (0.50) | — | | | |
| Net asset value at end of period | $44.98 | $44.29 | $39.55 | | | |
| Total return | 4.04% | 13.61% | (1.13%) 3 | | | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Total expenses | 0.04% | 0.04% 4 | 0.05% 5,6 | | | |
| Net operating expenses | N/A | N/A | 0.03% 5,6 | | | |
| Net investment income (loss) | 1.69% | 1.67% | 1.65% 5 | | | |
| Portfolio turnover rate | 29% | 21% | 15% 3 | | | |
| Net assets, end of period (x 1,000,000) | $483 | $357 | $171 | | | |
| |
1
Commencement of operations.
2
Calculated based on the average shares outstanding during the period.
3
Not annualized.
4
Effective December 20, 2018, the annual operating expense ratio was reduced to 0.04%. The ratio presented for period ended 10/31/19 is a blended ratio.
5
Annualized.
6
The investment adviser voluntarily agreed to waive the fund’s management fees to 0.00% beginning with the fund’s commencement of operations through June 30, 2018. The ratio presented for period ended 10/31/18 is a blended ratio.
Schwab Equity Index Funds | Annual Report
Schwab U.S. Mid-Cap Index Fund
Condensed Portfolio Holdings as of October 31, 2020
This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers, any holdings exceeding 1% of the fund’s net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-877-824-5615. This complete schedule, filed on the fund’s N-CSR(S), is also available on the U.S. Securities and Exchange Commission (SEC)’s website at www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Common Stock 99.4% of net assets | |
| |
| Automobiles & Components 1.1% | |
| Aptiv plc | 16,414 | 0.3 | 1,583,787 |
| Ford Motor Co. | 239,016 | 0.4 | 1,847,594 |
| Other Securities | | 0.4 | 1,975,578 |
| | | 1.1 | 5,406,959 |
| |
| Banks 2.7% | |
| Other Securities | | 2.7 | 13,283,859 |
| |
| Capital Goods 10.0% | |
| Carrier Global Corp. | 53,224 | 0.4 | 1,777,149 |
| Cummins, Inc. | 9,034 | 0.4 | 1,986,486 |
| Johnson Controls International plc | 45,656 | 0.4 | 1,927,140 |
| PACCAR, Inc. | 20,786 | 0.4 | 1,774,709 |
| Parker-Hannifin Corp. | 7,845 | 0.3 | 1,634,584 |
| Rockwell Automation, Inc. | 7,104 | 0.3 | 1,684,500 |
| Stanley Black & Decker, Inc. | 9,449 | 0.3 | 1,570,424 |
| Trane Technologies plc | 14,641 | 0.4 | 1,943,593 |
| Other Securities | | 7.1 | 33,879,204 |
| | | 10.0 | 48,177,789 |
| |
| Commercial & Professional Services 3.2% | |
| Cintas Corp. | 5,409 | 0.4 | 1,701,401 |
| CoStar Group, Inc. * | 2,389 | 0.4 | 1,967,604 |
| IHS Markit Ltd. | 24,325 | 0.4 | 1,967,163 |
| Verisk Analytics, Inc. | 9,718 | 0.4 | 1,729,513 |
| Other Securities | | 1.6 | 7,918,711 |
| | | 3.2 | 15,284,392 |
| |
| Consumer Durables & Apparel 3.2% | |
| Lululemon Athletica, Inc. * | 6,963 | 0.5 | 2,223,216 |
| Other Securities | | 2.7 | 13,185,682 |
| | | 3.2 | 15,408,898 |
| |
| Consumer Services 3.0% | |
| Chipotle Mexican Grill, Inc. * | 1,707 | 0.4 | 2,050,926 |
| Other Securities | | 2.6 | 12,388,895 |
| | | 3.0 | 14,439,821 |
| |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Diversified Financials 4.6% | |
| MSCI, Inc. | 4,990 | 0.4 | 1,745,702 |
| T. Rowe Price Group, Inc. | 13,864 | 0.4 | 1,756,014 |
| Other Securities | | 3.8 | 18,570,577 |
| | | 4.6 | 22,072,293 |
| |
| Energy 2.2% | |
| Other Securities | | 2.2 | 10,748,985 |
| |
| Food & Staples Retailing 0.5% | |
| Other Securities | | 0.5 | 2,560,087 |
| |
| Food, Beverage & Tobacco 2.9% | |
| Other Securities | | 2.9 | 13,981,353 |
| |
| Health Care Equipment & Services 7.3% | |
| Align Technology, Inc. * | 4,784 | 0.4 | 2,038,367 |
| IDEXX Laboratories, Inc. * | 5,155 | 0.5 | 2,189,947 |
| ResMed, Inc. | 8,783 | 0.3 | 1,685,809 |
| Veeva Systems, Inc., Class A * | 8,187 | 0.5 | 2,210,899 |
| Zimmer Biomet Holdings, Inc. | 12,695 | 0.3 | 1,677,009 |
| Other Securities | | 5.3 | 25,269,949 |
| | | 7.3 | 35,071,980 |
| |
| Household & Personal Products 0.8% | |
| The Clorox Co. | 7,732 | 0.3 | 1,602,457 |
| Other Securities | | 0.5 | 2,167,523 |
| | | 0.8 | 3,769,980 |
| |
| Insurance 3.4% | |
| Other Securities | | 3.4 | 16,613,871 |
| |
| Materials 5.5% | |
| Ball Corp. | 19,548 | 0.4 | 1,739,772 |
| PPG Industries, Inc. | 14,456 | 0.4 | 1,875,232 |
| Other Securities | | 4.7 | 22,839,174 |
| | | 5.5 | 26,454,178 |
| |
| Media & Entertainment 4.3% | |
| Spotify Technology S.A. * | 8,023 | 0.4 | 1,924,637 |
| Twitter, Inc. * | 47,139 | 0.4 | 1,949,669 |
| Other Securities | | 3.5 | 16,978,690 |
| | | 4.3 | 20,852,996 |
| |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Mid-Cap Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Pharmaceuticals, Biotechnology & Life Sciences 6.0% | |
| Agilent Technologies, Inc. | 18,958 | 0.4 | 1,935,422 |
| IQVIA Holdings, Inc. * | 11,651 | 0.4 | 1,794,138 |
| Other Securities | | 5.2 | 25,232,929 |
| | | 6.0 | 28,962,489 |
| |
| Real Estate 6.9% | |
| Other Securities | | 6.9 | 33,231,663 |
| |
| Retailing 4.3% | |
| AutoZone, Inc. * | 1,431 | 0.3 | 1,615,570 |
| O'Reilly Automotive, Inc. * | 4,486 | 0.4 | 1,958,588 |
| Other Securities | | 3.6 | 17,102,879 |
| | | 4.3 | 20,677,037 |
| |
| Semiconductors & Semiconductor Equipment 3.5% | |
| KLA Corp. | 9,514 | 0.4 | 1,875,971 |
| Xilinx, Inc. | 14,969 | 0.4 | 1,776,671 |
| Other Securities | | 2.7 | 13,379,963 |
| | | 3.5 | 17,032,605 |
| |
| Software & Services 11.6% | |
| ANSYS, Inc. * | 5,251 | 0.3 | 1,598,247 |
| Cadence Design Systems, Inc. * | 16,899 | 0.4 | 1,848,244 |
| DocuSign, Inc. * | 10,927 | 0.5 | 2,209,986 |
| Paychex, Inc. | 19,661 | 0.3 | 1,617,117 |
| Splunk, Inc. * | 9,744 | 0.4 | 1,929,702 |
| Synopsys, Inc. * | 9,175 | 0.4 | 1,962,165 |
| Twilio, Inc., Class A * | 8,394 | 0.5 | 2,341,674 |
| Other Securities | | 8.8 | 42,320,992 |
| | | 11.6 | 55,828,127 |
| |
| Technology Hardware & Equipment 4.1% | |
| Amphenol Corp., Class A | 17,692 | 0.4 | 1,996,365 |
| HP, Inc. | 87,711 | 0.3 | 1,575,290 |
| Motorola Solutions, Inc. | 10,423 | 0.3 | 1,647,459 |
| Other Securities | | 3.1 | 14,438,141 |
| | | 4.1 | 19,657,255 |
| |
| Telecommunication Services 0.2% | |
| Other Securities | | 0.2 | 1,199,172 |
| |
| Transportation 2.2% | |
| Other Securities | | 2.2 | 10,656,139 |
| |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Utilities 5.9% | |
| American Water Works Co., Inc. | 11,103 | 0.3 | 1,671,112 |
| Consolidated Edison, Inc. | 20,533 | 0.3 | 1,611,635 |
| Eversource Energy | 21,043 | 0.4 | 1,836,423 |
| Public Service Enterprise Group, Inc. | 30,965 | 0.4 | 1,800,615 |
| WEC Energy Group, Inc. | 19,356 | 0.4 | 1,946,246 |
| Xcel Energy, Inc. | 32,214 | 0.5 | 2,255,946 |
| Other Securities | | 3.6 | 17,642,488 |
| | | 5.9 | 28,764,465 |
| Total Common Stock | |
| (Cost $433,487,343) | | | 480,136,393 |
|
| Other Investment Companies 0.6% of net assets | |
| |
| Equity Funds 0.1% | |
| Other Securities | | 0.1 | 534,188 |
| |
| Money Market Fund 0.3% | |
| Other Securities | | 0.3 | 1,321,608 |
| |
| Securities Lending Collateral 0.2% | |
| Other Securities | | 0.2 | 1,047,925 |
| Total Other Investment Companies | |
| (Cost $2,904,664) | | | 2,903,721 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | | | |
| Long | |
| S&P 400 Mid-Cap Index, e-mini, expires 12/18/20 | 12 | 2,274,720 | (107,774) |
The following footnotes may not be applicable to the Condensed Portfolio Holdings. 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 $1,016,695. |
| (b) | Fair-valued by management using significant unobservable inputs in accordance with procedures approved by fund’s Board of Trustees. |
| (c) | The rate shown is the 7-day yield. |
| | |
| ETF — | Exchange-traded fund |
| REIT — | Real Estate Investment Trust |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Mid-Cap Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 and reflects the complete schedule of portfolio holdings (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 | |
| Assets | | | | | |
| Common Stock1 | $445,064,413 | $— | $— | $445,064,413 | |
| Health Care Equipment & Services | 34,663,817 | — | 408,163 | 35,071,980 | |
| Other Investment Companies1 | 2,903,721 | — | — | 2,903,721 | |
| Liabilities | | | | | |
| Futures Contracts2 | (107,774) | — | — | (107,774) | |
| Total | $482,524,177 | $— | $408,163 | $482,932,340 | |
| 1 | As categorized in the complete schedule of Portfolio Holdings. |
| 2 | Futures contracts are valued at unrealized appreciation or depreciation. |
Fund investments in underlying mutual funds and ETFs are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds and ETFs, which could be Level 1, Level 2 or Level 3.
Schwab Equity Index Funds | Annual Report
Schwab U.S. Mid-Cap Index Fund
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in unaffiliated issuers, at value (cost $435,344,082) including securities on loan of $1,016,695 | | $481,992,189 |
| Collateral invested for securities on loan, at value (cost $1,047,925) | | 1,047,925 |
| Deposit with broker for futures contracts | | 175,500 |
| Receivables: | | |
| Fund shares sold | | 796,078 |
| Dividends | | 234,190 |
| Income from securities on loan | + | 2,577 |
| Total assets | | 484,248,459 |
| Liabilities |
| Collateral held for securities on loan | | 1,047,925 |
| Payables: | | |
| Investments bought | | 43,308 |
| Investment adviser fees | | 17,493 |
| Fund shares redeemed | | 149,748 |
| Variation margin on futures contracts | + | 13,134 |
| Total liabilities | | 1,271,608 |
| Net Assets |
| Total assets | | 484,248,459 |
| Total liabilities | – | 1,271,608 |
| Net assets | | $482,976,851 |
| Net Assets by Source | | |
| Capital received from investors | | 445,422,545 |
| Total distributable earnings | | 37,554,306 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $482,976,851 | | 10,737,482 | | $44.98 |
| | | | | |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Mid-Cap Index Fund
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends (net of foreign withholding tax of $948) | | $7,790,069 |
| Securities on loan, net | + | 30,924 |
| Total investment income | | 7,820,993 |
| Expenses |
| Investment adviser fees | | 181,186 |
| Total expenses | – | 181,186 |
| Net investment income | | 7,639,807 |
| Realized and Unrealized Gains (Losses) |
| Net realized losses on investments | | (10,409,510) |
| Net realized gains on futures contracts | + | 617,857 |
| Net realized losses | | (9,791,653) |
| Net change in unrealized appreciation (depreciation) on investments | | 20,499,049 |
| Net change in unrealized appreciation (depreciation) on futures contracts | + | (104,189) |
| Net change in unrealized appreciation (depreciation) | + | 20,394,860 |
| Net realized and unrealized gains | | 10,603,207 |
| Increase in net assets resulting from operations | | $18,243,014 |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Mid-Cap Index Fund
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $7,639,807 | $4,785,991 |
| Net realized losses | | (9,791,653) | (662,598) |
| Net change in unrealized appreciation (depreciation) | + | 20,394,860 | 35,427,266 |
| Increase in net assets from operations | | 18,243,014 | 39,550,659 |
| Distributions to Shareholders | |
| Total distributions | | ($9,582,557) | ($2,951,274) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 7,486,752 | $310,557,071 | 6,140,825 | $247,965,349 |
| Shares reinvested | | 166,927 | 7,635,275 | 76,761 | 2,670,904 |
| Shares redeemed | + | (4,967,958) | (200,471,749) | (2,496,685) | (101,917,905) |
| Net transactions in fund shares | | 2,685,721 | $117,720,597 | 3,720,901 | $148,718,348 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 8,051,761 | $356,595,797 | 4,330,860 | $171,278,064 |
| Total increase | + | 2,685,721 | 126,381,054 | 3,720,901 | 185,317,733 |
| End of period | | 10,737,482 | $482,976,851 | 8,051,761 | $356,595,797 |
Schwab Equity Index Funds | Annual Report
Schwab International Index Fund
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $20.48 | $19.00 | $21.01 | $17.52 | $18.49 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.47 | 0.64 | 0.62 | 0.55 | 0.53 | |
| Net realized and unrealized gains (losses) | (1.75) | 1.39 | (2.06) | 3.49 | (1.03) | |
| Total from investment operations | (1.28) | 2.03 | (1.44) | 4.04 | (0.50) | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.64) | (0.55) | (0.57) | (0.55) | (0.47) | |
| Net asset value at end of period | $18.56 | $20.48 | $19.00 | $21.01 | $17.52 | |
| Total return | (6.56%) | 11.27% | (7.11%) | 23.76% | (2.64%) | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Total expenses | 0.06% | 0.06% | 0.06% | 0.11% 2 | 0.23% | |
| Net operating expenses | N/A | N/A | N/A 3 | 0.10% 2 | 0.19% | |
| Net investment income (loss) | 2.47% | 3.32% | 2.99% | 2.88% | 3.06% | |
| Portfolio turnover rate | 7% | 5% | 5% | 3% | 4% | |
| Net assets, end of period (x 1,000,000) | $5,937 | $5,443 | $4,314 | $4,128 | $2,900 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Effective March 1, 2017, the annual operating expense ratio was reduced. The ratio presented for period ended 10/31/17 is a blended ratio.
3
Effective March 1, 2017, the fund instituted a new fee structure and the contractual expense limitation was terminated.
Schwab Equity Index Funds | Annual Report
Schwab International Index Fund
Condensed Portfolio Holdings as of October 31, 2020
This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers, any holdings exceeding 1% of the fund’s net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-877-824-5615. This complete schedule, filed on the fund’s N-CSR(S), is also available on the U.S. Securities and Exchange Commission (SEC)’s website at www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Common Stock 98.7% of net assets | |
| |
| Australia 6.8% | |
| BHP Group Ltd. | 1,318,528 | 0.5 | 31,607,261 |
| Commonwealth Bank of Australia | 793,999 | 0.6 | 38,549,866 |
| CSL Ltd. | 203,506 | 0.7 | 41,201,270 |
| Westpac Banking Corp. | 1,614,101 | 0.3 | 20,429,451 |
| Other Securities | | 4.7 | 272,441,652 |
| | | 6.8 | 404,229,500 |
| |
| Austria 0.2% | |
| Other Securities | | 0.2 | 9,495,608 |
| |
| Belgium 0.9% | |
| Other Securities | | 0.9 | 56,306,882 |
| |
| Denmark 2.6% | |
| Novo Nordisk A/S, Class B | 770,680 | 0.8 | 49,142,899 |
| Other Securities | | 1.8 | 102,333,029 |
| | | 2.6 | 151,475,928 |
| |
| Finland 1.0% | |
| Other Securities | | 1.0 | 59,618,351 |
| |
| France 10.5% | |
| Air Liquide S.A. | 211,543 | 0.5 | 30,935,683 |
| Kering S.A. | 33,897 | 0.3 | 20,484,503 |
| L'Oreal S.A. | 112,611 | 0.6 | 36,394,218 |
| LVMH Moet Hennessy Louis Vuitton SE | 124,438 | 1.0 | 58,330,025 |
| Sanofi | 505,958 | 0.8 | 45,684,637 |
| Schneider Electric SE | 247,382 | 0.5 | 30,058,500 |
| TOTAL SE | 1,109,150 | 0.6 | 33,603,594 |
| Other Securities | | 6.2 | 367,546,309 |
| | | 10.5 | 623,037,469 |
| |
| Germany 8.4% | |
| adidas AG * | 85,079 | 0.4 | 25,277,384 |
| Allianz SE | 186,907 | 0.6 | 32,924,527 |
| BASF SE | 412,205 | 0.4 | 22,571,598 |
| Bayer AG | 438,762 | 0.3 | 20,617,653 |
| Deutsche Telekom AG | 1,489,569 | 0.4 | 22,639,583 |
| SAP SE | 467,434 | 0.8 | 49,867,998 |
| Siemens AG | 342,762 | 0.7 | 40,211,478 |
| Other Securities | | 4.8 | 283,514,123 |
| | | 8.4 | 497,624,344 |
| |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Hong Kong 3.4% | |
| AIA Group Ltd. | 5,417,400 | 0.9 | 51,558,335 |
| Hong Kong Exchanges & Clearing Ltd. | 539,765 | 0.4 | 25,864,841 |
| Other Securities | | 2.1 | 124,380,741 |
| | | 3.4 | 201,803,917 |
| |
| Ireland 0.7% | |
| Other Securities | | 0.7 | 42,872,191 |
| |
| Israel 0.6% | |
| Other Securities | | 0.6 | 35,952,656 |
| |
| Italy 2.2% | |
| Enel S.p.A. | 3,636,304 | 0.5 | 28,910,444 |
| Other Securities | | 1.7 | 99,049,100 |
| | | 2.2 | 127,959,544 |
| |
| Japan 26.4% | |
| Daikin Industries Ltd. | 111,700 | 0.4 | 20,902,781 |
| Keyence Corp. | 81,600 | 0.6 | 37,031,916 |
| Mitsubishi UFJ Financial Group, Inc. | 5,488,909 | 0.4 | 21,636,756 |
| Nintendo Co., Ltd. | 49,939 | 0.5 | 27,001,455 |
| Recruit Holdings Co., Ltd. | 568,300 | 0.4 | 21,624,182 |
| Shin-Etsu Chemical Co., Ltd. | 158,060 | 0.4 | 21,111,561 |
| SoftBank Group Corp. | 702,000 | 0.8 | 45,723,908 |
| Sony Corp. | 564,700 | 0.8 | 47,077,019 |
| Takeda Pharmaceutical Co., Ltd. | 704,590 | 0.4 | 21,773,654 |
| Toyota Motor Corp. | 950,103 | 1.1 | 62,371,304 |
| Other Securities | | 20.6 | 1,239,233,739 |
| | | 26.4 | 1,565,488,275 |
| |
| Netherlands 4.4% | |
| ASML Holding N.V. | 190,496 | 1.2 | 68,922,001 |
| Prosus N.V. * | 217,776 | 0.4 | 21,741,874 |
| Unilever N.V. | 654,584 | 0.6 | 36,901,344 |
| Other Securities | | 2.2 | 132,215,926 |
| | | 4.4 | 259,781,145 |
| |
| New Zealand 0.3% | |
| Other Securities | | 0.3 | 19,146,079 |
| |
| Norway 0.5% | |
| Other Securities | | 0.5 | 32,012,665 |
| |
Schwab Equity Index Funds | Annual Report
Schwab International Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Portugal 0.2% | |
| Other Securities | | 0.2 | 9,863,809 |
| |
| Singapore 1.0% | |
| Other Securities | | 1.0 | 61,941,845 |
| |
| Spain 2.2% | |
| Iberdrola S.A. | 2,663,602 | 0.5 | 31,450,684 |
| Other Securities | | 1.7 | 100,853,812 |
| | | 2.2 | 132,304,496 |
| |
| Sweden 3.3% | |
| Other Securities | | 3.3 | 194,935,484 |
| |
| Switzerland 10.1% | |
| Nestle S.A. | 1,332,710 | 2.5 | 149,900,407 |
| Novartis AG | 993,909 | 1.3 | 77,447,953 |
| Roche Holding AG | 314,600 | 1.7 | 101,090,840 |
| Zurich Insurance Group AG | 67,397 | 0.4 | 22,385,615 |
| Other Securities | | 4.2 | 251,633,495 |
| | | 10.1 | 602,458,310 |
| |
| United Kingdom 13.0% | |
| AstraZeneca plc | 587,537 | 1.0 | 58,991,928 |
| BP plc | 9,098,280 | 0.4 | 23,206,830 |
| British American Tobacco plc | 1,024,938 | 0.5 | 32,485,790 |
| Diageo plc | 1,044,131 | 0.6 | 33,744,065 |
| GlaxoSmithKline plc | 2,248,150 | 0.6 | 37,540,685 |
| HSBC Holdings plc * | 9,122,150 | 0.6 | 38,227,214 |
| Reckitt Benckiser Group plc | 317,104 | 0.5 | 27,933,218 |
| Rio Tinto plc | 502,453 | 0.5 | 28,419,425 |
| Royal Dutch Shell plc, A Shares | 1,840,483 | 0.4 | 23,152,318 |
| Unilever plc | 522,149 | 0.5 | 29,756,653 |
| Other Securities | | 7.4 | 439,917,229 |
| | | 13.0 | 773,375,355 |
| Total Common Stock | |
| (Cost $5,183,940,803) | | | 5,861,683,853 |
|
| Preferred Stock 0.6% of net assets | |
| |
| Germany 0.6% | |
| Other Securities | | 0.6 | 33,156,426 |
| Total Preferred Stock | |
| (Cost $30,108,759) | | | 33,156,426 |
|
| Rights 0.0% of net assets | |
| |
| Singapore 0.0% | |
| Other Securities | | 0.0 | — |
| |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| United Kingdom 0.0% | |
| Other Securities | | 0.0 | 1,479,160 |
| Total Rights | |
| (Cost $4,351,445) | | | 1,479,160 |
|
| Other Investment Company 0.1% of net assets | |
| |
| United States 0.1% | |
| Securities Lending Collateral 0.1% | |
| Other Securities | | 0.1 | 6,847,633 |
| Total Other Investment Company | |
| (Cost $6,847,633) | | | 6,847,633 |
Security
Rate, Maturity Date | Face
Amount ($) | % of Net
Assets | Value
($) |
| Short-Term Investments 0.1% of net assets | |
| |
| Time Deposits 0.1% | |
| Other Securities | | 0.1 | 6,922,042 |
| Total Short-Term Investments | |
| (Cost $6,922,042) | | | 6,922,042 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | |
| Long | |
| MSCI EAFE Index, expires 12/18/20 | 406 | 36,213,170 | (1,705,238) |
The following footnotes may not be applicable to the Condensed Portfolio Holdings. Please refer to the complete schedule of portfolio holdings.
| * | Non-income producing security. |
| (a) | Fair-valued by management using significant unobservable inputs in accordance with procedures approved by fund’s Board of Trustees. |
| (b) | All or a portion of this security is on loan. Securities on loan were valued at $5,890,477. |
| (c) | Securities are traded on separate exchanges for the same entity. |
| (d) | The rate shown is the 7-day yield. |
| (e) | The rate shown is the current daily overnight rate. |
| (f) | Rate is negative due to the current daily overnight rate at the central bank of the denominated currency and therefore is non-income producing. |
| | |
| ADR — | American Depositary Receipt |
| CVA — | Dutch Certificate |
| REIT — | Real Estate Investment Trust |
| RSP — | Risparmio (Convertible Savings Shares) |
Schwab Equity Index Funds | Annual Report
Schwab International Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 and reflects the complete schedule of portfolio holdings (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 | |
| Assets | | | | | |
| Common Stock1 | $— | $1,207,859,717 | $— | $1,207,859,717 | |
| Australia | — | 401,971,363 | 2,258,137 | 404,229,500 | |
| Belgium | 1,545,564 | 54,761,318 | — | 56,306,882 | |
| Denmark | 13,357,054 | 138,118,874 | — | 151,475,928 | |
| France | 4,808,763 | 618,228,706 | — | 623,037,469 | |
| Germany | 13,284,712 | 484,339,632 | — | 497,624,344 | |
| Hong Kong | 6,890,443 | 194,913,474 | — | 201,803,917 | |
| Ireland | 5,959,742 | 36,912,449 | — | 42,872,191 | |
| Israel | 17,410,289 | 18,542,367 | — | 35,952,656 | |
| Japan | 1,727,017 | 1,563,761,258 | — | 1,565,488,275 | |
| Netherlands | 6,289,582 | 253,491,563 | — | 259,781,145 | |
| Norway | 1,664,276 | 30,348,389 | — | 32,012,665 | |
| Portugal | — | 9,863,809 | — * | 9,863,809 | |
| United Kingdom | — | 773,359,755 | 15,600 | 773,375,355 | |
| Preferred Stock1 | — | 33,156,426 | — | 33,156,426 | |
| Rights | | | | | |
| Singapore | — | — | — * | — | |
| United Kingdom | 1,479,160 | — | — | 1,479,160 | |
| Other Investment Company1 | 6,847,633 | — | — | 6,847,633 | |
| Short-Term Investments1 | — | 6,922,042 | — | 6,922,042 | |
| Liabilities | | | | | |
| Futures Contracts2 | (1,705,238) | — | — | (1,705,238) | |
| Total | $79,558,997 | $5,826,551,142 | $2,273,737 | $5,908,383,876 | |
| * | Level 3 amount shown includes securities determined to have no value at October 31, 2020. |
| 1 | As categorized in the complete schedule of Portfolio Holdings. |
| 2 | Futures contracts are valued at unrealized appreciation or depreciation. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Equity Index Funds | Annual Report
Schwab International Index Fund
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in unaffiliated issuers, at value (cost $5,225,323,049) including securities on loan of $5,890,477 | | $5,903,241,481 |
| Collateral invested for securities on loan, at value (cost $6,847,633) | | 6,847,633 |
| Deposit with broker for futures contracts | | 2,993,760 |
| Receivables: | | |
| Investments sold | | 3,741,894 |
| Dividends | | 14,507,276 |
| Fund shares sold | | 10,178,586 |
| Foreign tax reclaims | | 9,414,673 |
| Income from securities on loan | + | 25,639 |
| Total assets | | 5,950,950,942 |
| Liabilities |
| Collateral held for securities on loan | | 6,847,633 |
| Payables: | | |
| Investments bought | | 3,017,004 |
| Investment adviser fees | | 326,495 |
| Fund shares redeemed | | 3,077,265 |
| Variation margin on futures contracts | + | 190,527 |
| Total liabilities | | 13,458,924 |
| Net Assets |
| Total assets | | 5,950,950,942 |
| Total liabilities | – | 13,458,924 |
| Net assets | | $5,937,492,018 |
| Net Assets by Source | | |
| Capital received from investors | | 5,576,714,080 |
| Total distributable earnings | | 360,777,938 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $5,937,492,018 | | 319,898,201 | | $18.56 |
| | | | | |
Schwab Equity Index Funds | Annual Report
Schwab International Index Fund
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends (net of foreign withholding tax of $14,713,020) | | $133,750,062 |
| Income from non-cash dividends | | 9,085,074 |
| Interest | | 44,303 |
| Securities on loan, net | + | 797,929 |
| Total investment income | | 143,677,368 |
| Expenses |
| Investment adviser fees | | 3,421,849 |
| Professional fees | + | 37,098* |
| Total expenses | | 3,458,947 |
| Expense reduction by CSIM | – | 37,098* |
| Net expenses | – | 3,421,849 |
| Net investment income | | 140,255,519 |
| Realized and Unrealized Gains (Losses) |
| Net realized losses on investments | | (166,722,849) |
| Net realized losses on futures contracts | | (4,249,319) |
| Net realized losses on foreign currency transactions | + | (741,956) |
| Net realized losses | | (171,714,124) |
| Net change in unrealized appreciation (depreciation) on investments | | (259,943,014) |
| Net change in unrealized appreciation (depreciation) on futures contracts | | (2,550,688) |
| Net change in unrealized appreciation (depreciation) on foreign currency translations | + | 542,350 |
| Net change in unrealized appreciation (depreciation) | + | (261,951,352) |
| Net realized and unrealized losses | | (433,665,476) |
| Decrease in net assets resulting from operations | | ($293,409,957) |
| * | Professional fees associated with the filing of tax claims in the European Union deemed to be non-routine expenses of the fund. See financial notes 2(d) and 4 for additional information. |
Schwab Equity Index Funds | Annual Report
Schwab International Index Fund
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $140,255,519 | $161,653,306 |
| Net realized losses | | (171,714,124) | (81,047,333) |
| Net change in unrealized appreciation (depreciation) | + | (261,951,352) | 450,579,679 |
| Increase (decrease) in net assets from operations | | (293,409,957) | 531,185,652 |
| Distributions to Shareholders | |
| Total distributions | | ($172,919,468) | ($132,253,839) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 137,962,023 | $2,458,528,501 | 101,475,911 | $1,918,826,792 |
| Shares reinvested | | 6,184,493 | 127,647,953 | 5,815,026 | 99,611,394 |
| Shares redeemed | + | (90,042,895) | (1,625,600,717) | (68,493,022) | (1,288,104,681) |
| Net transactions in fund shares | | 54,103,621 | $960,575,737 | 38,797,915 | $730,333,505 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 265,794,580 | $5,443,245,706 | 226,996,665 | $4,313,980,388 |
| Total increase | + | 54,103,621 | 494,246,312 | 38,797,915 | 1,129,265,318 |
| End of period | | 319,898,201 | $5,937,492,018 | 265,794,580 | $5,443,245,706 |
Schwab Equity Index Funds | Annual Report
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 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 U.S. Large-Cap Growth Index Fund | Schwab Target 2055 Fund |
| Schwab U.S. Large-Cap Value Index Fund | Schwab Target 2060 Fund |
| Schwab U.S. Mid-Cap Index Fund | Schwab Fundamental US Large Company Index Fund |
| Schwab International Index Fund | Schwab Fundamental US Small Company Index Fund |
| Schwab MarketTrack All Equity Portfolio™ | Schwab Fundamental International Large Company Index Fund |
| Schwab MarketTrack Growth Portfolio™ | Schwab Fundamental International Small Company Index Fund |
| Schwab MarketTrack Balanced Portfolio™ | Schwab Fundamental Emerging Markets Large Company Index Fund |
| Schwab MarketTrack Conservative Portfolio™ | Schwab Fundamental Global Real Estate Index Fund |
| Laudus International MarketMasters Fund™ | Schwab Target 2010 Index Fund |
| Schwab Balanced Fund | Schwab Target 2015 Index Fund |
| Schwab Core Equity Fund | Schwab Target 2020 Index Fund |
| Schwab Dividend Equity Fund | Schwab Target 2025 Index Fund |
| Schwab Large-Cap Growth Fund | Schwab Target 2030 Index Fund |
| Schwab Small-Cap Equity Fund | Schwab Target 2035 Index Fund |
| Schwab Hedged Equity Fund | Schwab Target 2040 Index Fund |
| Schwab Health Care Fund | Schwab Target 2045 Index Fund |
| Schwab International Core Equity Fund | Schwab Target 2050 Index Fund |
| Schwab Target 2010 Fund | Schwab Target 2055 Index Fund |
| Schwab Target 2015 Fund | Schwab Target 2060 Index Fund |
| Schwab Target 2020 Fund | Schwab Monthly Income Fund – Moderate Payout |
| Schwab Target 2025 Fund | Schwab Monthly Income Fund – Enhanced Payout |
| Schwab Target 2030 Fund | Schwab Monthly Income Fund – Maximum Payout |
| Schwab Target 2035 Fund | |
| |
| SCHWAB INVESTMENTS (ORGANIZED OCTOBER 26, 1990) |
| Schwab 1000 Index Fund | Schwab Tax-Free Bond Fund |
| Schwab Treasury Inflation Protected Securities Index Fund | Schwab California Tax-Free Bond Fund |
| Schwab U.S. Aggregate Bond Index Fund | Schwab High Yield Municipal Bond Fund |
| Schwab Short-Term Bond Index Fund | Schwab Global Real Estate Fund |
Each fund in this report offers one share class. Shares are bought and sold 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).
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
The funds may 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(S) 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 and available on the SEC’s website at www.sec.gov.
(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 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 the mean of 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.
• 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.
• Cash management sweep time deposits: Balances held in cash management sweep time deposits are accounted for on a cost basis, which approximates fair 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
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
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 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, 2020 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 fair 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 allow the funds or the lending agent to terminate any loan at any given time and the securities must be returned within the earlier of the standard trade settlement period or the specified time period under the relevant securities lending agreement. 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,
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
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. The aggregate fair 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. Securities lending fees paid to the unaffiliated lending agents start at 10% of gross lending revenue, with subsequent breakpoints to a low of 7.5%. In this context, the gross lending revenue equals the income received from the investment of cash collateral and fees paid by borrowers less any rebates paid to the borrowers. Any expenses charged by the cash collateral fund are in addition to these fees. All remaining revenue is retained by the fund, as applicable. No portion of lending revenue is paid to or retained by Charles Schwab Investment Management, Inc. (CSIM or the investment adviser) or any affiliate of CSIM.
As of October 31, 2020, the funds had securities on loan, all of which were classified as common stocks and rights. The value of the securities on loan and the related collateral as of October 31, 2020, if any, are disclosed in each fund’s Condensed Portfolio Holdings and Statement of Assets and Liabilities.
Cash Management Transactions: The funds, except for Schwab 1000 Index Fund, Schwab U.S. Large-Cap Growth Index Fund, Schwab U.S. Large-Cap Value Index Fund and Schwab U.S. Mid-Cap Index Fund may subscribe to the Brown Brothers Harriman & Co. (BBH) Cash Management Service Sweep (CMS Sweep). The BBH CMS Sweep is an investment product that automatically sweeps the funds’ cash balances into overnight offshore time deposits with either the BBH Grand Cayman branch or a branch of a pre-approved commercial bank. This fully automated program allows the funds to earn interest on cash balances, however, interest rates may be negative due to overnight rates at the central bank of the denominated currency. Excess cash invested with deposit institutions domiciled outside of the U.S., as with any offshore deposit, may be subject to sovereign actions in the jurisdiction of the deposit institution including, but not limited to, freeze, seizure or diminution. The funds bear the risk associated with the repayment of principal and payment of interest on such instruments by the institution with which the deposit is ultimately placed.
(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, in the form of cash or non-cash income such as in the form of additional securities, 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 date the ex-dividend date is confirmed. Any distributions from underlying funds are recorded in accordance with the character of the distributions as designated by the underlying funds.
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
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.
The Schwab International Index Fund filed claims to recover taxes previously withheld in certain European Union countries on the basis that those countries had purportedly violated certain provisions in the Treaty on the Functioning of the European Union. These filings are subject to various administrative and judicial proceedings within these countries, and all professional fees associated with these filings have been paid by the investment adviser. For additional details see Affiliates and Affiliated Transactions in financial note 4, Other Affiliated Transactions.
(e) Expenses:
Pursuant to an Amended and Restated Investment Advisory and Administration Agreement (Advisory Agreement) between CSIM and each trust, CSIM pays the operating expenses of each fund, excluding acquired fund fees and expenses, taxes, any brokerage expenses, and extraordinary or non-routine expenses. Taxes, any brokerage expenses and extraordinary or non-routine expenses that are specific to a fund are charged directly to the fund.
(f) Distributions to Shareholders:
The funds make distributions from net investment income and net realized capital gains, if any, once a year.
(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 funds intend to meet federal income and excise tax requirements for regulated investment companies under subchapter M of the Internal Revenue Code, as amended. Accordingly, the funds distribute substantially all of their net investment income and net realized capital gains, if any, to their shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.
(i) 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 accrued as of October 31, 2020, if any, are reflected in each fund’s Statement of Assets and Liabilities.
(j) 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’ prospectuses, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
Financial Notes (continued)
3. Risk Factors (continued):
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. Markets may be impacted by economic, political, regulatory and other conditions, including economic sanctions and other government actions. In addition, the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters and epidemics, may also negatively affect the financial markets. As with any investment whose performance is tied to these markets, the value of an investment in a fund will fluctuate, which means that an investor could lose money over short or long periods.
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 respective index, although it may not be successful in doing so. The divergence between the performance of a fund and the index, positive or negative, is called “tracking error.” Tracking error can be caused by many factors and it may be significant.
Investment Style Risk. The funds are index funds. Therefore, each fund follows the securities included in its respective index 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. Market disruptions could cause delays in an index’s rebalancing schedule which may result in the index and, in turn, a fund experiencing returns different than those that would have been achieved under a normal rebalancing schedule.
Sampling Index Tracking Risk. To the extent a fund uses sampling techniques, a fund will not fully replicate its index and may hold securities not included in the index. As a result, a 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 its respective 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 vulnerable to adverse economic, market, political or regulatory occurrences affecting that market, industry, group of industries, sector, country or asset class.
Market Capitalization Risk. Securities issued by companies of different market capitalizations tend to go in and out of favor based on market and economic conditions. During a period when securities of a particular market capitalization fall behind other types of investments, a fund’s performance could be impacted.
Large-Cap Company Risk. Large-cap companies are generally more mature and the securities issued by these companies may not be able to reach the same levels of growth as the securities issued by small- or mid-cap companies.
Mid-Cap Company Risk. Mid-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies and the value of securities issued by these companies may move sharply.
Small-Cap Company Risk. Securities issued by small-cap companies may be riskier than those issued by larger companies, and their prices may move sharply, especially during market upturns and downturns.
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.
Value Investing Risk. A fund may emphasize “value” style of investing, which targets undervalued companies with characteristics for improved valuations. This style of investing is subject to the risk that the valuations never improve or that the returns on “value” securities may not move in tandem with the returns on other styles of investing or the stock market in general.
Foreign Investment Risk. A fund’s investments in securities of foreign issuers involve certain risks that may be 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. There is a risk that investments in securities denominated in, and/or receiving revenues in, foreign currencies will decline in value relative to the U.S. dollar. To the extent a fund’s investments
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
Financial Notes (continued)
3. Risk Factors (continued):
in a single country or a limited number of countries represent a large percentage of the fund’s assets, the fund’s performance may be adversely affected by the economic, political, regulatory and social conditions in those countries, and the fund’s price may be more volatile than the price of a fund that is geographically diversified.
Derivatives Risk. A fund may use derivatives to enhance returns or hedge against market declines. Examples of derivatives are futures and options on futures. An option is the right to buy or sell an instrument at a specific price before a specific date. A future is an agreement to buy or sell a financial instrument at a specific price on a specific day. The use of derivatives that are subject to regulation by the Commodity Futures Trading Commission (CFTC) could cause the fund to become a commodity pool, which would require the fund to comply with certain CFTC rules.
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 gains. 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 fund may be unable to sell certain securities, such as illiquid securities, readily at a favorable time or price, or the fund may have to sell them at a loss.
Securities Lending Risk. Securities lending involves the risk of loss of rights in, or delay in recovery of, the loaned securities if the borrower fails to return the security loaned or becomes insolvent.
Please refer to the funds’ prospectuses for a more complete description of the principal risks of investing in the funds.
4. Affiliates and Affiliated Transactions:
Investment Adviser
CSIM, a wholly owned subsidiary of The Charles Schwab Corporation, serves as each fund’s investment adviser and administrator pursuant to an Advisory Agreement between CSIM and each 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:
Schwab
S&P 500
Index Fund | Schwab
1000
Index Fund | Schwab
Small-Cap
Index Fund | Schwab
Total Stock
Market
Index Fund | Schwab
U.S. Large-Cap
Growth
Index Fund | Schwab
U.S. Large-Cap
Value
Index Fund | Schwab
U.S. Mid-Cap
Index Fund | Schwab
International
Index Fund |
| 0.02% | 0.05% | 0.04% | 0.03% | 0.035% | 0.035% | 0.04% | 0.06% |
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Investments from Affiliates
Certain funds in the Fund Complex (for definition refer to Trustees and Officers section) may own shares of other funds in the Fund Complex. The table below reflects the percentages of shares of each fund in this report that are owned by other funds in the Fund Complex as of October 31, 2020, as applicable:
| | Underlying Funds |
| | Schwab
S&P 500
Index Fund | Schwab
Small-Cap
Index Fund | Schwab
U.S. Large-Cap
Growth
Index Fund | Schwab
U.S. Mid-Cap
Index Fund | Schwab
International
Index Fund |
| Schwab MarketTrack All Equity Portfolio | 0.4% | 1.6% | 6.4% | —% | 1.4% |
| Schwab MarketTrack Balanced Portfolio | 0.2% | 0.8% | 3.3% | —% | 0.6% |
| Schwab MarketTrack Conservative Portfolio | 0.1% | 0.3% | 1.2% | —% | 0.2% |
| Schwab MarketTrack Growth Portfolio | 0.5% | 1.7% | 5.2% | —% | 1.2% |
| Schwab Target 2010 Fund | 0.0%* | —% | —% | 0.1% | —% |
| Schwab Target 2015 Fund | 0.0%* | —% | —% | 0.1% | —% |
| Schwab Target 2020 Fund | 0.1% | —% | —% | 0.9% | —% |
| Schwab Target 2025 Fund | 0.2% | —% | —% | 1.4% | —% |
| Schwab Target 2030 Fund | 0.3% | —% | —% | 2.4% | —% |
| Schwab Target 2035 Fund | 0.2% | —% | —% | 1.5% | —% |
| Schwab Target 2040 Fund | 0.3% | —% | —% | 3.2% | —% |
| Schwab Target 2045 Fund | 0.1% | —% | —% | 0.6% | —% |
| Schwab Target 2050 Fund | 0.1% | —% | —% | 0.6% | —% |
| Schwab Target 2055 Fund | 0.0%* | —% | —% | 0.4% | —% |
| Schwab Target 2060 Fund | 0.0%* | —% | —% | 0.1% | —% |
Other Affiliated Transactions
The professional fees related to foreign withholding tax claims discussed in financial note 2 were non-routine expenses. The investment adviser agreed to pay these professional fees, which are subject to reimbursement by the Schwab International Index Fund to the extent the fund is able to successfully recover taxes withheld in the future.
The professional fees incurred by the Schwab International Index Fund were $37,098 and the fund made no reimbursement to the investment adviser during the period ended October 31, 2020.
As of October 31, 2020, the balance of professional fees related to foreign withholding tax subject to future reimbursement by the fund to the investment adviser was $158,346 for the Schwab International Index Fund.
No other amounts for additional tax reclaims are reflected in the financial statements due to the uncertainty surrounding the ultimate resolution of proceedings, the likelihood of receipt of these claims, and the potential timing of payment.
Interfund Borrowing and Lending
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. 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. 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 Equity Index Funds | Annual Report
Schwab Equity Index Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Interfund Transactions
The funds may engage in transactions with certain other funds in the Fund Complex when permitted by applicable law. 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, 2020, each fund’s total aggregate security transactions with other funds in the Fund Complex as well as any realized gains (losses) were as follows:
| | Total Aggregate Transactions | Realized Gains (Losses) |
| Schwab S&P 500 Index Fund | $448,719,008 | ($30,147,012) |
| Schwab 1000 Index Fund | 168,360,448 | 28,715,127 |
| Schwab Small-Cap Index Fund | 92,871,145 | (11,738,204) |
| Schwab Total Stock Market Index Fund | 152,380,599 | (23,064,132) |
| Schwab U.S. Large-Cap Growth Index Fund | 61,408,968 | (3,005,199) |
| Schwab U.S. Large-Cap Value Index Fund | 60,679,072 | (566,260) |
| Schwab U.S. Mid-Cap Index Fund | 30,988,721 | (4,440,043) |
| Schwab International Index Fund | 9,325,639 | (2,176,395) |
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 funds do not pay any interested or non-interested (independent trustees) trustees. The independent trustees are paid by CSIM. 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, the funds were participants with other funds in the Fund Complex in a joint, syndicated, committed $750 million line of credit (the Syndicated Credit Facility), which matured on October 1, 2020. On October 1, 2020, the Syndicated Credit Facility was amended to run for a new 364 day period with a line of credit of $850 million, maturing on September 30, 2021. Under the terms of the Syndicated Credit Facility, in addition to CSIM paying the interest charged on any borrowings by a fund, CSIM paid a commitment fee of 0.15% per annum on the funds’ proportionate share of the unused portion of the Syndicated Credit Facility.
During the period, the funds were participants with other funds in the Fund Complex in a joint, unsecured, uncommitted $500 million line of credit (the Uncommitted Credit Facility), with State Street Bank and Trust Company, which matured on November 29, 2019. On November 29, 2019, the Uncommitted Credit Facility was amended to run for a new 364 day period, which was scheduled to mature on November 27, 2020. However, on October 1, 2020, the Uncommitted Credit Facility was amended to run for a new 364 day period with a line of credit of $400 million, maturing on September 30, 2021. Under the terms of the Uncommitted Credit Facility, CSIM pays interest on the amount a fund borrows. There were no borrowings from either line 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 paid by CSIM. 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 current value and variation margin for futures contracts held at October 31, 2020 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, if any. Refer to financial note 2(b) for the funds’
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
Financial Notes (continued)
7. Derivatives (continued):
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, 2020, the month-end average notional amounts of futures contracts held by the funds and the month-end average number of contracts held were as follows:
| | Notional Amounts | Number of Contracts |
| Schwab S&P 500 Index Fund | $169,972,343 | 1,099 |
| Schwab 1000 Index Fund | 30,491,298 | 196 |
| Schwab Small-Cap Index Fund | 17,654,672 | 242 |
| Schwab Total Stock Market Index Fund | 48,355,711 | 359 |
| Schwab U.S. Large-Cap Growth Index Fund | 1,596,768 | 16 |
| Schwab U.S. Large-Cap Value Index Fund | 1,251,215 | 21 |
| Schwab U.S. Mid-Cap Index Fund | 1,904,547 | 11 |
| Schwab International Index Fund | 34,885,241 | 388 |
8. Purchases and Sales of Investment Securities:
For the period ended October 31, 2020, purchases and sales of securities (excluding short-term obligations) were as follows:
| | Purchases
of Securities | Sales
of Securities |
| Schwab S&P 500 Index Fund | $2,754,606,077 | $1,769,182,368 |
| Schwab 1000 Index Fund | 344,582,891 | 666,920,752 |
| Schwab Small-Cap Index Fund | 848,379,644 | 851,080,072 |
| Schwab Total Stock Market Index Fund | 862,924,648 | 417,298,633 |
| Schwab U.S. Large-Cap Growth Index Fund | 372,824,528 | 138,714,079 |
| Schwab U.S. Large-Cap Value Index Fund | 274,028,025 | 135,725,291 |
| Schwab U.S. Mid-Cap Index Fund | 247,687,257 | 127,707,214 |
| Schwab International Index Fund | 1,287,465,490 | 376,546,823 |
9. Federal Income Taxes:
As of October 31, 2020, the tax basis cost of the funds’ investments and gross unrealized appreciation and depreciation 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
U.S. Large-Cap
Growth
Index Fund | |
| Tax cost | $20,994,325,511 | $2,546,627,985 | | $3,383,267,705 | | $6,598,856,301 | | $374,201,023 | |
| Gross unrealized appreciation | $24,820,020,911 | $7,436,920,050 | | $1,310,999,799 | | $5,533,184,724 | | $126,539,263 | |
| Gross unrealized depreciation | (1,731,118,417) | (216,522,772) | | (647,745,167) | | (652,898,091) | | (11,803,251) | |
| Net unrealized appreciation (depreciation) | $23,088,902,494 | $7,220,397,278 | | $663,254,632 | | $4,880,286,633 | | $114,736,012 | |
| | Schwab
U.S. Large-Cap
Value
Index Fund | | Schwab
U.S. Mid-Cap
Index Fund | | Schwab
International
Index Fund |
| Tax cost | $334,833,790 | | $448,373,995 | | $5,463,982,136 |
| Gross unrealized appreciation | $39,111,681 | | $90,388,626 | | $1,445,722,017 |
| Gross unrealized depreciation | (42,432,693) | | (55,830,281) | | (1,001,320,277) |
| Net unrealized appreciation (depreciation) | ($3,321,012) | | $34,558,345 | | $444,401,740 |
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
Financial Notes (continued)
9. Federal Income Taxes (continued):
As of October 31, 2020, 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
U.S. Large-Cap
Growth
Index Fund | |
| Undistributed ordinary income | $738,207,831 | $152,829,210 | | $39,685,604 | | $173,485,433 | | $2,759,338 | |
| Undistributed long-term capital gains | — | 117,102,344 | | 72,778,268 | | — | | — | |
| Net unrealized appreciation (depreciation) on investments | 23,088,902,494 | 7,220,397,278 | | 663,254,632 | | 4,880,286,633 | | 114,736,012 | |
| Net other unrealized appreciation (depreciation) | — | — | | — | | — | | — | |
| Total | $23,827,110,325 | $7,490,328,832 | | $775,718,504 | | $5,053,772,066 | | $117,495,350 | |
| | Schwab
U.S. Large-Cap
Value
Index Fund | | Schwab
U.S. Mid-Cap
Index Fund | | Schwab
International
Index Fund |
| Undistributed ordinary income | $5,774,891 | | $6,125,106 | | $118,175,088 |
| Undistributed long-term capital gains | — | | — | | — |
| Net unrealized appreciation (depreciation) on investments | (3,321,012) | | 34,558,345 | | 444,401,740 |
| Net other unrealized appreciation (depreciation) | — | | — | | 573,654 |
| Total | $2,453,879 | | $40,683,451 | | $563,150,482 |
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, realization for tax purposes of unrealized gains (losses) on futures contracts and the realization for tax purposes of unrealized appreciation on investments in Passive Foreign Investment Companies (PFIC) and partnership investments. The tax cost of the funds’ investments, disclosed above, have been adjusted from their book amounts to reflect these unrealized appreciation or depreciation differences, as applicable.
Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2020, the funds had capital loss carryforwards available to offset future net capital gains 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
U.S. Large-Cap
Growth
Index Fund |
| No expiration | $177,404,555 | | $— | | $— | | $21,117,724 | | $5,572,385 |
| Total | $177,404,555 | | $— | | $— | | $21,117,724 | | $5,572,385 |
| Expiration Date | Schwab
U.S. Large-Cap
Value
Index Fund | | Schwab
U.S. Mid-Cap
Index Fund | | Schwab
International
Index Fund |
| No expiration | $1,090,145 | | $3,129,145 | | $202,372,544 |
| Total | $1,090,145 | | $3,129,145 | | $202,372,544 |
The Schwab U.S. Large-Cap Growth Index Fund had an ownership change due to shareholder activity which subjects the fund to certain annual limitations under Internal Revenue Code Section 382 in regard to the availability of capital loss carryforwards to offset potential future capital gains.
For the fiscal year ended October 31, 2020, the funds had no capital loss carryforwards utilized.
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
Financial Notes (continued)
9. 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
U.S. Large-Cap
Growth
Index Fund |
| Current fiscal year end distributions | | | | | |
| Ordinary income | $752,543,848 | $175,073,765 | $71,467,544 | $180,871,651 | $1,890,344 |
| Long-term capital gains | 76,711,728 | 115,680,278 | 187,516,879 | 26,277,147 | — |
| Prior fiscal year end distributions | | | | | |
| Ordinary income | $696,643,335 | $157,630,133 | $75,407,201 | $163,508,663 | $949,803 |
| Long-term capital gains | 138,486,140 | 287,803,474 | 256,270,995 | 35,933,416 | — |
| | Schwab
U.S. Large-Cap
Value
Index Fund | Schwab
U.S. Mid-Cap
Index Fund | Schwab
International
Index Fund |
| Current fiscal year end distributions | | | |
| Ordinary income | $7,613,944 | $7,422,021 | $172,919,468 |
| Long-term capital gains | 2,019,105 | 2,160,536 | — |
| Prior fiscal year end distributions | | | |
| Ordinary income | $1,536,515 | $2,937,860 | $132,253,839 |
| Long-term capital gains | — | 13,414 | — |
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, 2020, 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 fiscal year ended October 31, 2020, the funds did not incur any interest or penalties.
10. Independent Registered Public Accounting Firm:
On June 8, 2020, the Audit, Compliance and Valuation Committee of the Board approved, and on June 9, 2020, the Board approved, Deloitte & Touche LLP as the independent registered accounting firm of the Schwab Funds Complex for fiscal periods ending after June 8, 2020.
On June 8, 2020, PricewaterhouseCoopers LLP (the “Prior Auditor”) resigned as the independent registered public accounting firm of the Schwab Funds Complex. The Prior Auditor’s reports on the financial statements of the Schwab 1000 Index Fund, Schwab S&P 500 Index Fund, Schwab Small-Cap Index Fund, Schwab Total Stock Market Index Fund and Schwab International Index Fund for the past two fiscal years, October 31, 2018 and October 31, 2019, and the Schwab U.S. Large-Cap Growth Index Fund, Schwab U.S. Large-Cap Value Index Fund and Schwab U.S. Mid-Cap Index Fund for the period December 20, 2017 (commencement of operations) through October 31, 2018 and the year ended October 31, 2019, did not contain an adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the last two period year-ends detailed above and through June 8, 2020, there were no (1) disagreements with the Prior Auditor on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the Prior Auditor’s satisfaction, would have caused it to make reference to that matter in connection with its reports on the funds’ financial statements for such periods; or (2) “reportable events,” as that term is defined in Item 304 (a)(1)(v) of Regulation S-K under the Securities Exchange Act of 1934.
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
Financial Notes (continued)
11. Subsequent Events:
Management has determined there are no subsequent events or transactions through the date the financial statements were issued that would have materially impacted the financial statements as presented.
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Schwab Investments and Schwab Capital Trust and Shareholders of Schwab 1000 Index Fund, Schwab S&P 500 Index Fund, Schwab Small-Cap Index Fund, Schwab Total Stock Market Index Fund, Schwab U.S. Large-Cap Growth Index Fund, Schwab U.S. Large-Cap Value Index Fund, Schwab U.S. Mid-Cap Index Fund and Schwab International Index Fund:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statements of assets and liabilities, including the condensed portfolio holdings, of Schwab 1000 Index Fund, one of the funds constituting Schwab Investments, and Schwab S&P 500 Index Fund, Schwab Small-Cap Index Fund, Schwab Total Stock Market Index Fund, Schwab U.S. Large-Cap Growth Index Fund, Schwab U.S. Large-Cap Value Index Fund, Schwab U.S. Mid-Cap Index Fund and Schwab International Index Fund (the “Funds”), seven of the funds constituting Schwab Capital Trust, as of October 31, 2020, and the related statements of operations, statements of changes in net assets, and the financial highlights for the year then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of each of the Funds as of October 31, 2020, and the results of their operations, the changes in their net assets, and the financial highlights for the year then ended in conformity with accounting principles generally accepted in the United States of America. The statements of changes in net assets for the year ended October 31, 2019 and the financial highlights for each of the four years in the period ended October 31, 2019; except for Schwab U.S. Large-Cap Growth Index Fund, Schwab U.S. Large-Cap Value Index Fund, and Schwab U.S. Mid-Cap Index Fund, the financial highlights for the year ended October 31, 2019 and for the period from December 20, 2017 to October 31, 2018, were audited by other auditors, whose report, dated December 16, 2019, expressed an unqualified opinion on such statements of changes in net assets and financial highlights.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2020, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
Deloitte & Touche LLP
Denver, Colorado
December 16, 2020
We have served as the auditor of one or more investment companies in the Schwab Funds Complex since 2020.
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
Other Federal Tax Information (unaudited)
Schwab International Index Fund may elect to pass on the benefits of the foreign tax credit of $13,625,982 to its shareholders for the fiscal year ended October 31, 2020. The respective foreign source income on the fund is $157,548,156.
For corporate shareholders, the following percentage of the funds’ dividend distributions paid during the fiscal year ended October 31, 2020, qualify for the corporate dividends received deduction:
| | Percentage |
| Schwab S&P 500 Index Fund | 91.09 |
| Schwab 1000 Index Fund | 90.97 |
| Schwab Small-Cap Index Fund | 62.00 |
| Schwab Total Stock Market Index Fund | 88.23 |
| Schwab U.S. Large-Cap Growth Index Fund | 95.14 |
| Schwab U.S. Large-Cap Value Index Fund | 64.73 |
| Schwab U.S. Mid-Cap Index Fund | 61.70 |
| Schwab International Index Fund | — |
For the fiscal year ended October 31, 2020, 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 2021 via IRS Form 1099 of the amounts for use in preparing their 2020 income tax return.
| | |
| Schwab S&P 500 Index Fund | $752,543,848 |
| Schwab 1000 Index Fund | 166,557,709 |
| Schwab Small-Cap Index Fund | 44,664,481 |
| Schwab Total Stock Market Index Fund | 168,043,272 |
| Schwab U.S. Large-Cap Growth Index Fund | 1,830,390 |
| Schwab U.S. Large-Cap Value Index Fund | 5,059,613 |
| Schwab U.S. Mid-Cap Index Fund | 4,903,160 |
| Schwab International Index Fund | 162,726,986 |
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, 2020:
| | |
| Schwab S&P 500 Index Fund | $76,711,728 |
| Schwab 1000 Index Fund | 115,680,278 |
| Schwab Small-Cap Index Fund | 187,516,879 |
| Schwab Total Stock Market Index Fund | 26,277,147 |
| Schwab U.S. Large-Cap Growth Index Fund | — |
| Schwab U.S. Large-Cap Value Index Fund | 2,019,105 |
| Schwab U.S. Mid-Cap Index Fund | 2,160,536 |
| Schwab International Index Fund | — |
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
Liquidity Risk Management Program (Unaudited)
The Funds have adopted and implemented a liquidity risk management program (the “program”) as required by Rule 22e-4 under the Investment Company Act of 1940, as amended. The Funds’ Board of Trustees (the “Board”) has designated the Funds’ investment adviser, Charles Schwab Investment Management, Inc. (“CSIM”) as the administrator of the program. Personnel of CSIM or its affiliates conduct the day-to-day operation of the program.
Under the program, CSIM manages a Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. The program is reasonably designed to assess and manage a Fund’s liquidity risk, taking into consideration the Fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably foreseeable stressed conditions; its historical redemption history and shareholder concentrations; and its cash holdings and access to other funding sources, including the custodian overdraft facility and lines of credit. CSIM’s process of determining the degree of liquidity of each Fund’s investments is supported by third-party liquidity assessment vendors.
The Funds’ Board reviewed a report at its meeting held on September 22, 2020 prepared by CSIM regarding the operation and effectiveness of the program for the period June 1, 2019, through May 31, 2020. No significant liquidity events impacting any of the Funds were noted in the report. In addition, CSIM provided its assessment that the program had been operating effectively in managing each Fund’s liquidity risk.
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
Investment Advisory Agreement Approval
The Investment Company Act of 1940, as amended (the 1940 Act), requires that 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 amended and restated investment advisory and administration agreements (the Agreements) between Schwab Capital Trust and Schwab Investments (collectively, the Trusts) and Charles Schwab Investment Management, Inc. (CSIM) 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, Schwab International Index Fund, Schwab U.S. Large-Cap Growth Index Fund, Schwab U.S. Large-Cap Value Index Fund, and Schwab U.S. Mid-Cap Index Fund (each, a Fund and collectively, 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, business goals and priorities, profitability, third-party oversight, corporate structure and operations. As part of the renewal process, the Independent Trustees’ legal counsel, on behalf of the Independent Trustees, sends an information request letter to CSIM seeking certain relevant information. The responses by CSIM are provided to the Trustees in the Board materials for their review prior to their meeting, and the Trustees are provided with the opportunity to request any additional materials. The Board also receives data provided by an independent provider of investment company data. 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 the Funds’ operations and performance, legal and compliance matters, risk management, portfolio turnover, and sales and marketing activity. In considering the renewal, the Independent Trustees receive advice from Independent Trustees’ legal counsel, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees participate in question and
answer sessions with representatives of CSIM and meet in executive session outside the presence of Fund management.
The Board, including a majority of the Independent Trustees, considered information relating to the continuance of the Agreements with respect to the Funds at meetings held on May 11, 2020 and June 9, 2020, and approved the renewal of the Agreements with respect to the Funds for an additional one-year term at the meeting on June 9, 2020 called for the purpose of voting on such approval.1
The Board’s approval of the continuance 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 each Fund 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 and benchmark data; |
| 3. | each Fund’s expenses and how those expenses compared to those of certain other similar mutual funds; |
| 4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to each Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
| 5. | the extent to which economies of scale would be realized as each Fund grows 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 experience, track record, compliance program, resources dedicated to hiring and retaining skilled personnel and specialized talent, and information security resources. The Trustees also considered information provided by CSIM relating to services and support provided with respect to each Fund’s portfolio management team, portfolio strategy, and internal investment guidelines, as well as trading infrastructure, liquidity management, product design and analysis, shareholder communications, securities valuation, fund accounting and custody, and vendor and risk oversight. The Trustees also considered investments CSIM has made in its infrastructure, including modernizing CSIM’s technology and use of data, increasing expertise in key areas (including portfolio management and trade operations), and improving business continuity, cybersecurity, due diligence, risk management processes, and information security programs,
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
which are designed to provide enhanced services to each Fund and its shareholders. The Trustees also considered Schwab’s wide range of products, services, and channel alternatives such as investment research tools and an array of account features that benefit Fund shareholders who are brokerage clients of Schwab. Finally, the Trustees also considered Schwab’s reputation as a full service brokerage firm and its overall financial condition, including Schwab’s ability to maintain consistent operations and service levels during recent periods of remote work and market volatility. 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 each Fund’s performance in determining whether to renew the Agreements with respect to such Fund. Specifically, the Trustees considered each Fund’s performance relative to a peer category of other mutual funds and applicable indices/benchmarks, in light of total return, yield, if applicable, and market trends, as well as in consideration of each Fund’s investment style and strategy attributes and disclosures. As part of this review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the independent provider of investment company data who prepared the peer category analysis. In evaluating the performance of each Fund, the Trustees considered the risk profile for such Fund and each Fund’s demonstrated performance in tracking its benchmark index. The Trustees further considered the level of Fund performance in the context of their review of Fund expenses and adviser profitability discussed below and also noted that the Board and a designated committee of the Board review performance throughout the year. Following such evaluation, the Board concluded, within the context of its full deliberations, that with respect to each Fund, the performance of such Fund supported renewal of the Agreements with respect to such Fund.
Fund Expenses. With respect to each Fund’s 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 other similar mutual funds, such peer groups and comparisons having been selected and calculated by an independent provider of investment company data. CSIM reported to the Board, and the Board took into account, the risk assumed by CSIM in the development of products and provision of services as well as the competitive marketplace for financial products. The Trustees also considered fees charged by CSIM to other mutual funds and to other types of 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, and any differences in the nature and
scope of the services CSIM provides to these other accounts, as well as differences in the market for these types of accounts. Following such evaluation, the Board concluded, within the context of its full deliberations, that, with respect to each Fund, the expenses of such Fund are reasonable and supported renewal of the Agreements with respect to such Fund.
Profitability. The Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly and reviewed profitability on a pre-tax basis, without regard to distribution expenses. In this connection, the Trustees reviewed management’s profitability analyses. The Trustees also reviewed profitability of CSIM relating to the Schwab fund complex as a whole, noting the benefits to Fund shareholders of being part of the Schwab fund complex, including the allocations of certain fixed costs across the Funds and other funds in the complex. 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 compensation and profitability with respect to the Funds 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. The Trustees noted that CSIM continues to invest substantial sums in its business in order to provide enhanced research capabilities, services, and systems to benefit the Funds. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM with respect to each Fund is reasonable and supported renewal of the Agreements with respect to such Fund.
Economies of Scale. Although the Trustees recognized the difficulty of determining economies of scale with precision, the Trustees considered the potential existence of any economies of scale and whether those are passed along to a Fund’s shareholders by way of the relatively low advisory fee and unitary fee structure of the Funds through (i) the enhancement of services provided to the Funds in return for fees paid, including through investments by CSIM in CSIM’s infrastructure, including modernizing CSIM’s technology and use of data, increasing expertise and capabilities in key areas (including portfolio and trade operations), and improving business continuity, cybersecurity, due diligence, and information security programs, which are designed to provide enhanced services to the Funds and their shareholders; (ii) graduated investment advisory fee schedules or unitary fee structures, fee waivers, or expense caps by CSIM and its affiliates for those funds in the Schwab fund complex with such features; and (iii) pricing a fund to scale and keeping overall expenses down as the fund grows. The Trustees acknowledged that CSIM has shared any economies of scale with the Funds by investing in CSIM’s infrastructure, as discussed above, over time and that CSIM’s internal costs of
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
providing investment management, technology, administrative, legal and compliance services to the Funds continues to increase as a result of regulatory or other developments. The Trustees considered that CSIM and its affiliates may employ contractual expense caps to protect shareholders from high fees when fund assets were relatively small, for example, in the case of newer funds or funds with investment strategies that are from time to time out of favor, because, among other reasons, 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 each Fund obtains reasonable benefits from economies of scale.
In the course of their deliberations, the Trustees may have accorded different weights to various factors and 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.
| 1 | The meeting on June 9, 2020 was held telephonically in reliance on exemptive relief from the in-person voting requirement under the 1940 Act as provided by the Securities and Exchange Commission. |
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
Trustees and Officers
The tables below give information about the trustees and officers of Schwab Capital Trust and Schwab Investments, 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 and Laudus Trust. The Fund Complex includes 100 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 1-877-824-5615.
| 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 |
Robert W. Burns
1959
Trustee
(Trustee of Schwab Strategic Trust since 2009; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016) | Retired/Private Investor (Jan. 2009 – present). Formerly, Managing Director, Pacific Investment Management Company, LLC (PIMCO) (investment management firm) and President, PIMCO Funds. | 100 | None |
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 since 2010; Schwab Strategic Trust since 2016) | Senior Fellow (Oct. 1979 – present), The Hoover Institution at Stanford University (public policy think tank); Senior Fellow (2000 – present), Stanford Institute for Economic Policy Research; Professor of Public Policy (1994 – 2015), Stanford University. | 100 | Director (2005 – 2020), Gilead Sciences, Inc. |
Nancy F. Heller
1956
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018) | Retired. President and Chairman (2014 – 2016), TIAA Charitable (financial services); Senior Managing Director (2003 – 2016), TIAA (financial services). | 100 | None |
Stephen Timothy Kochis
1946
Trustee
(Trustee of Schwab Strategic Trust since 2012; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016) | CEO and Owner (May 2012 – present), Kochis Global (wealth management consulting). | 100 | None |
David L. Mahoney
1954
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016) | Private Investor. | 100 | Director (2004 – present), Corcept Therapeutics Incorporated
Director (2009 – present), Adamas Pharmaceuticals, Inc.
Director (2003 – 2019), Symantec Corporation |
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
| 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 |
Jane P. Moncreiff
1961
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2019) | Consultant (2018 – present), Fulham Advisers LLC (management consulting); Chief Investment Officer (2009 – 2017), CareGroup Healthcare System, Inc. (healthcare). | 100 | None |
Kiran M. Patel
1948
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016) | Retired. Executive Vice President and General Manager of Small Business Group (Dec. 2008 – Sept. 2013), Intuit, Inc. (financial software and services firm for consumers and small businesses). | 100 | Director (2008 – present), KLA-Tencor Corporation |
Kimberly S. Patmore
1956
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016) | Consultant (2008 – present), Patmore Management Consulting (management consulting). | 100 | None |
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 since 2010; Schwab Strategic Trust since 2016) | Chairman, Chief Executive Officer and Founder (Mar. 1990 – present), Smith Graham & Co. (investment advisors). | 100 | Director (2012 – present), Eaton Corporation plc |
| 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 |
Walter W. Bettinger II2
1960
Chairman and 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 since 2010) | Director, President and Chief Executive Officer (Oct. 2008 – present), The Charles Schwab Corporation; President and Chief Executive Officer (Oct. 2008 – present) and Director (May 2008 – present), Charles Schwab & Co., Inc.; Director (Apr. 2006 – present), Charles Schwab Bank, SSB; Director (Nov. 2017 – present), Charles Schwab Premier Bank, SSB; Director (July 2019 – present), Charles Schwab Trust Bank; Director (May 2008 – present) and President and Chief Executive Officer (Aug. 2017 – present), Schwab Holdings, Inc.; Director (Oct. 2020 – present), TD Ameritrade Holding Corporation; Director (July 2016 – present), Charles Schwab Investment Management, Inc. | 100 | Director (2008 – present), The Charles Schwab Corporation |
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
| Interested 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 |
Jonathan de St. Paer2
1973
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2019) | Director (Apr. 2019 – present), President (Oct. 2018 – present), and Chief Executive Officer (Apr. 2019 – Nov. 2019), Charles Schwab Investment Management, Inc.; Senior Vice President (June 2020 – present), Charles Schwab Investment Advisory, Inc.; Trustee and Chief Executive Officer (Apr. 2019 – present) and President (Nov. 2018 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Director (Apr. 2019 – present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited; Senior Vice President (Apr. 2019 – present), Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014 – Mar. 2019), and Vice President (Jan. 2009 – Dec. 2013), Charles Schwab & Co., Inc. | 100 | None |
Joseph R. Martinetto2
1962
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016) | Chief Operating Officer (Feb. 2018 – present) and Senior Executive Vice President (July 2015 – Feb. 2018), The Charles Schwab Corporation; Senior Executive Vice President (July 2015 – present), Charles Schwab & Co., Inc.; Chief Financial Officer (July 2015 – Aug. 2017) and Executive Vice President and Chief Financial Officer (May 2007 – July 2015), The Charles Schwab Corporation and Charles Schwab & Co., Inc.; Director (May 2007 – present), Charles Schwab & Co., Inc.; Director (Apr. 2010 – present) and Chief Executive Officer (July 2013 – Apr. 2015), Charles Schwab Bank, SSB; Director (Nov. 2017 – present), Charles Schwab Premier Bank, SSB; Director (May 2007 – present), Chief Financial Officer (May 2007 – Aug. 2017), Senior Executive Vice President (Feb. 2016 – present), and Executive Vice President (May 2007 – Feb. 2016), Schwab Holdings, Inc.; Director (Oct. 2020 – present), TD Ameritrade Holding Corporation. | 100 | None |
| 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 |
Jonathan de St. Paer
1973
President and Chief Executive Officer
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018) | Director (Apr. 2019 – present), President (Oct. 2018 – present), and Chief Executive Officer (Apr. 2019 – Nov. 2019), Charles Schwab Investment Management, Inc.; Senior Vice President (June 2020 – present), Charles Schwab Investment Advisory, Inc.; Trustee and Chief Executive Officer (Apr. 2019 – present) and President (Nov. 2018 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Director (Apr. 2019 – present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited; Senior Vice President (Apr. 2019 – present), Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014 – Mar. 2019), and Vice President (Jan. 2009 – Dec. 2013), Charles Schwab & Co., Inc. |
Mark Fischer
1970
Treasurer, Chief Financial Officer and Chief Operating Officer
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2013) | Treasurer and Chief Financial Officer (Jan. 2016 – present) and Chief Operating Officer (Dec. 2020 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Assistant Treasurer (Dec. 2013 – Dec. 2015), Schwab Funds and Laudus Funds; Assistant Treasurer (Nov. 2013 – Dec. 2015), Schwab ETFs; Chief Financial Officer (Mar. 2020 – present) and Vice President (Oct. 2013 – present), Charles Schwab Investment Management, Inc.; Executive Director (Apr. 2011 – Sept. 2013), J.P. Morgan Investor Services; Assistant Treasurer (May 2005 – Mar. 2011), Massachusetts Financial Service Investment Management. |
Omar Aguilar
1970
Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President and Chief Investment Officer (Apr. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies (June 2011 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Head of the Portfolio Management Group and Vice President of Portfolio Management (May 2009 – Apr. 2011), Financial Engines, Inc. (investment management firm); Head of Quantitative Equity (July 2004 – Jan. 2009), ING Investment Management. |
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
| Officers of the Trust (continued) |
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 |
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, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President and Chief Investment Officer (Apr. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Investment Officer – Fixed Income (June 2011 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Senior Managing Director and Global Head of Active Fixed-Income Strategies (Jan. 2008 – Oct. 2010), State Street Global Advisors; Director of Alpha Strategies (Apr. 2006 – Jan. 2008), Loomis, Sayles & Company (investment management firm). |
David Lekich
1964
Chief Legal Officer and Secretary, Schwab Funds and Schwab ETFs
Vice President and Assistant Clerk, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President (Sept. 2011 – present) and Vice President (Mar. 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present) and Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (Apr. 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; Vice President and Assistant Clerk (Apr. 2011 – present), Laudus Funds; Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs. |
Catherine MacGregor
1964
Vice President and Assistant Secretary, Schwab Funds and Schwab ETFs
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 and Laudus Trust since 2005; Schwab Strategic Trust since 2009) | Vice President (July 2005 – present), Charles Schwab & Co., Inc.; Vice President (Sept. 2005 – present), Charles Schwab Investment Management, Inc.; Vice President (Dec. 2005 – present) and 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 (Oct. 2009 – present), Schwab ETFs. |
| 1 | Each Trustee shall hold office until the election and qualification of his or her successor, or until he or she dies, resigns or is removed. The retirement policy requires that each independent trustee retire by December 31 of the year in which the Trustee turns 74 or the Trustee’s twentieth year of service as an independent trustee on any trust in the Fund Complex, whichever occurs first. |
| 2 | Mr. Bettinger, Mr. de St. Paer and Mr. Martinetto are Interested Trustees. Mr. Bettinger is an Interested Trustee because he owns stock of The Charles Schwab Corporation (CSC), the parent company of Charles Schwab Investment Management, Inc. (CSIM), the investment adviser for the trusts in the Fund Complex, is an employee and director of Charles Schwab & Co., Inc. (CS&Co), the principal underwriter for The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust, and is a director of CSIM. Mr. de St. Paer is an Interested Trustee because he owns stock of CSC and is an employee and director of CSIM. Mr. Martinetto is an Interested Trustee because he owns stock of CSC and is an employee and director of CS&Co. |
| 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 Board. |
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
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.
Bloomberg Barclays US Aggregate Bond Index An index that is a broad-based benchmark measuring the performance of the U.S. investment grade, taxable bond market, including U.S. Treasuries, government-related and corporate bonds, mortgage pass-through securities, commercial mortgage-backed securities, and asset-backed securities that are publicly available for sale in the United States. To be eligible for inclusion in the index, securities must be fixed rate, non-convertible, U.S. dollar-denominated with at least $300 million or more of outstanding face value and have one or more years remaining to maturity. The index excludes certain types of securities, including tax-exempt state and local government series bonds, structured notes embedded with swaps or other special features, private placements, floating rate securities, inflation-linked bonds and Eurobonds. The index is market capitalization weighted and the securities in the index are updated on the last business day of each month.
Bloomberg Barclays US Treasury Bills 1–3 Month Index An index that includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months but more than 1 month, are rated investment grade and have $300 million or more of outstanding face value. It excludes zero-coupon STRIPS.
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 which includes all publicly traded stocks of companies headquartered in the United States for which pricing information is readily available. The index is a float-adjusted market capitalization weighted index that reflects the shares of securities actually available to investors in the marketplace.
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.
International Spliced Index An internally calculated index comprised of the Schwab International Index from inception of the Schwab International Index Fund until the close of business on December 20, 2011, the MSCI EAFE Index from December 21, 2011 until the close of business on February 28, 2013, and the MSCI EAFE Index (Net) from March 1, 2013 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 Index (Net) A free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets in Europe, Australasia, and the Far East. 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 1000 Growth Index An index that measures the performance of those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values.
Russell 1000 Index An index that measures the performance of the 1,000 largest companies in the Russell 3000 Index, and represents approximately 92% of the total market capitalization of the Russell 3000 Index. The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.
Russell 1000 Value 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.
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
Russell 2000 Index An index that measures the performance of the 2,000 smallest companies in the Russell 3000 Index. The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.
Russell Midcap Index An index that measures the performance of the mid-cap segment of the U.S. equity universe. The Russell Midcap Index is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership.
S&P 500 Index An index that is designed to measure the performance of 500 leading publicly traded companies from a broad range of industries.
Schwab 1000 Index A float-adjusted market capitalization weighted index developed by Charles Schwab & Co., Inc. that represents the performance of the largest 1,000 publicly traded companies in the United States. As a result of corporate actions, the index may be comprised of more or less than 1,000 securities.
Small-Cap Spliced Index An internally calculated index comprised of the Schwab Small-Cap Index from inception of the Schwab Small-Cap Index 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.
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
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; and
• 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
© 2020 Schwab Funds. All rights reserved.
Schwab Equity Index Funds | Annual Report
Schwab Equity Index Funds
Charles Schwab Investment Management
With a straightforward lineup of core products and solutions for building the foundation of a portfolio, Charles Schwab Investment Management advocates for investors of all sizes with a steadfast focus on lowering costs and reducing unnecessary complexity. The list below shows all currently available Schwab Funds®.
Investors should carefully consider information contained in the prospectus, or if available, the summary prospectus, including investment objectives, risks, charges and expenses before investing. Please call 1-877-824-5615 for a prospectus 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.schwabfunds.com/schwabfunds_prospectus, the SEC’s website at www.sec.gov, or by contacting Schwab Funds at 1-877-824-5615.
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.schwabfunds.com/schwabfunds_prospectus or the SEC’s website at www.sec.gov.
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 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 U.S. Large-Cap Growth Index Fund
Schwab U.S. Large-Cap Value Index Fund
Schwab U.S. Mid-Cap Index Fund
Schwab International Index Fund®
Asset Allocation Funds
Schwab Balanced Fund
Schwab MarketTrack Portfolios®
Schwab Target Funds
Schwab Target Index Funds
Schwab Monthly Income Funds
Bond Funds
Schwab Treasury Inflation Protected Securities Index Fund
Schwab U.S. Aggregate Bond Index Fund
Schwab Short-Term Bond Index Fund
Schwab Tax-Free Bond Fund1
Schwab California Tax-Free Bond Fund1
Schwab High Yield Municipal Bond Fund
Schwab Money Funds2
Schwab provides a broad choice of taxable and tax-exempt money market funds for both retail and institutional client types.
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
Funds
Schwab Funds
1-877-824-5615
© 2020 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC®
Printed on recycled paper.
| ¹ | State, local, and the Federal Alternative Minimum Tax may apply. Capital gains are not exempt from Federal Taxation. |
| ² | You could lose money by investing in the Schwab Money Funds. All Schwab Money Funds with the exception of Schwab Variable Share Price Money Fund seek to preserve the value of your investment at $1.00 per share, but cannot guarantee they will do so. Because the share price of Schwab Variable Share Price Money Fund will fluctuate, when you sell your shares they may be worth more or less than what you originally paid for them. All Schwab Money Funds with the exception of Schwab Government Money Fund, Schwab Retirement Government Money Fund, Schwab U.S. Treasury Money Fund, Schwab Treasury Obligations Money Fund and Schwab Government Money Market Portfolio may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Schwab Money Funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Schwab Money Funds’ sponsor has no legal obligation to provide financial support to the Funds, and you should not expect that the sponsor will provide financial support to the Funds at any time. |
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Annual Report | October 31, 2020
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
| New Notice Regarding Shareholder Report Delivery Options |
| Beginning on January 1, 2021, paper copies of a fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from a fund or from your financial intermediary (such as a bank or broker-dealer). Instead, the reports will be made available on a fund’s website www.schwabfunds.com/schwabfunds_prospectus, and you will be notified by mail each time a report is posted and the mailing will provide a website link to access the report. You will continue to receive other fund regulatory documents (such as prospectuses or supplements) in paper unless you have elected to receive all fund documents electronically. |
| If you would like to receive a fund’s future shareholder reports in paper free of charge after January 1, 2021, you can make that request: |
| • If you invest through Charles Schwab & Co, Inc. (broker-dealer), by calling 1-866-345-5954 and using the unique identifier attached to this mailing; |
| • If you invest through another financial intermediary (such as a bank or broker-dealer) by contacting them directly; or |
| • If owned directly through a fund by calling 1-800-407-0256. |
| If you already receive shareholder reports and other fund documents electronically, you will not be affected by this change and you need not take any action. |
| * | SCHWAB is a registered trademark of Charles Schwab & Co., Inc.
FUNDAMENTAL INDEX is a registered trademark of Research Affiliates LLC. |
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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 Inc. (MSCI) and Standard & Poor’s (S&P). GICS is a service mark of MSCI and S&P and has been licensed for use by Schwab. The Industry classifications used in the schedules of Condensed Portfolio Holdings are sub-categories of Sector classifications.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Index Funds
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.schwabfunds.com/schwabfunds_prospectus.
| Total Return for the 12 Months Ended October 31, 2020 |
Schwab Fundamental US Large Company Index Fund
(Ticker Symbol: SFLNX) | -2.33% |
| Russell RAFITM US Large Company Index | -2.20% |
| Russell 1000® Index | 10.87% |
| Fund Category: Morningstar Large Value1 | -7.37% |
| Performance Details | pages 7-9 |
| |
Schwab Fundamental US Small Company Index Fund
(Ticker Symbol: SFSNX) | -10.42% |
| Russell RAFITM US Small Company Index | -10.42% |
| Russell 2000® Index | -0.14% |
| Fund Category: Morningstar Small Blend1 | -6.45% |
| Performance Details | pages 10-12 |
| |
Schwab Fundamental International Large Company Index Fund2
(Ticker Symbol: SFNNX) | -13.29% |
| Russell RAFITM Developed ex US Large Company Index (Net)3 | -13.77% |
| MSCI EAFE® Index (Net)3 | -6.86% |
| Fund Category: Morningstar Foreign Large Value1 | -13.04% |
| Performance Details | pages 13-15 |
| Total Return for the 12 Months Ended October 31, 2020 |
Schwab Fundamental International Small Company Index Fund2
(Ticker Symbol: SFILX) | -6.28% |
| Russell RAFITM Developed ex US Small Company Index (Net)3 | -6.49% |
| S&P Developed ex-U.S. Small Cap Index (Net)3 | -0.53% |
| Fund Category: Morningstar Foreign Small/Mid Blend1 | -1.99% |
| Performance Details | pages 16-18 |
| |
Schwab Fundamental Emerging Markets Large Company Index Fund2
(Ticker Symbol: SFENX) | -15.79% 4 |
| Russell RAFITM Emerging Markets Large Company Index (Net)3 | -15.28% |
| MSCI Emerging Markets Index (Net)3 | 8.25% |
| Fund Category: Morningstar Diversified Emerging Markets1 | 6.67% |
| Performance Details | pages 19-21 |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
The first index listed for each fund is the fund’s primary benchmark, as shown in the prospectus. Additional indices shown are provided for comparative purposes.
For index definitions, please see the Glossary.
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 — The funds are not in any way sponsored, endorsed, sold or promoted by Frank Russell Company (Russell), by the London Stock Exchange Group companies (LSEG), or by Research Affiliates LLC (RA) (collectively the Licensor Parties), and none of the Licensor Parties make any warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the Russell RAFITM Index Series (the Indices) or otherwise. The Indices are compiled and calculated by Russell in conjunction with RA. None of the Licensor Parties shall be liable (whether in negligence or otherwise) to any person for any error in the Indices and none of the Licensor Parties shall be under any obligation to advise any person of any error therein. “Russell®” is a trademark of Russell. The trade names “Research Affiliates®”, “Fundamental Index®” and “RAFI®” are registered trademarks of RA. CSIM has obtained full license from Russell to use the Indices. For full disclaimer please see the funds’ statement of additional information.
| 1 | 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. |
| 2 | 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. |
| 3 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
| 4 | 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 net asset value (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 semiannual reports. |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Index Funds
Jonathan de St. Paer
President of Charles Schwab
Investment Management, Inc.
and the funds covered
in this report.
Dear Shareholder,
Equity market performance for the 12-month reporting period ended October 31, 2020 barely hints at the market turmoil investors endured this year. U.S. and international equity markets ended the period with mixed gains, including a 9.7% rise for the S&P 500® Index, a bellwether for the overall U.S. stock market. However, the past year was one of the most volatile in history. Market gains were robust through the last week of February 2020 before being wiped out as the spreading COVID-19 pandemic drove equities sharply lower. In mid-March, market volatility spiked to its highest level since the peak of the Great Recession in 2008 with the S&P 500® Index dropping 30% over just 22 trading days in late February and early March. By early September, however, most broad U.S. equity markets had regained all the ground they lost in March, propelling the S&P 500® Index to new record highs. However, markets retreated and volatility began to increase again throughout September and October in the face of a resurgence of COVID-19 infections, corporate earnings concerns and growing uncertainty regarding the U.S. election.
High levels of volatility can undermine our confidence as investors, which can lead to emotion-based trading. Although it is important to reassess your individual risk tolerance and make strategic adjustments to your portfolio from time to time, impulsive reactions driven by fear can often make investing outcomes worse. At Charles Schwab Investment Management, we believe that the best way to avoid these pitfalls is to maintain a long-term investing plan. A commitment to a long-term investing plan can help make it significantly easier and less stressful to stay the course when market volatility rises.
At Charles Schwab Investment Management, we provide a range of foundational products that are designed to suit a variety of risk appetites. The Schwab Fundamental Index Funds play a role in our goal to provide investors with a diverse variety of investment choices. The funds weight their holdings based on objective financial measures of company size—adjusted sales, retained operating cash flow, and dividends plus buybacks. This can result in a different risk profile than market-cap index funds that use market capitalization to weight the same set of stocks. When the two approaches are combined, we believe a portfolio has the potential for better diversification and more attractive risk-adjusted returns.
Thank you for investing with Charles Schwab Investment Management, and for trusting us to help you achieve your financial goals. 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.schwabfunds.com. We are also happy to hear from you at 1-877-824-5615.
Sincerely,
“ A commitment to a long-term investing plan can help make it significantly easier and less stressful to stay the course when market volatility rises.”
Past performance is no guarantee of future results.
Diversification and asset allocation strategies do not ensure a profit and cannot protect against losses in a declining market.
Management views may have changed since the report date.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Index Funds
The Investment Environment
The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms. For the reporting period, the S&P 500® Index returned 9.71%, with sectors that benefitted as a result of the COVID-19 pandemic and associated stay-at-home orders, such as the information technology sector, outperforming other sectors that were more impacted by the COVID-19 pandemic. U.S. large-cap stocks outperformed small-cap stocks, with the Russell 1000® Index and the Russell 2000® Index returning 10.87% and -0.14%, respectively, for the reporting period. Among large-cap stocks, growth stocks outperformed value stocks by a large margin, with the Russell 1000® Growth Index and Russell 1000® Value Index returning 29.22% and -7.57%, respectively, for the reporting period. Among international markets, the MSCI EAFE® Index (Net)*, a broad measure of developed international equity performance, returned -6.86% and the MSCI Emerging Markets Index (Net)* returned 8.25% for the reporting period.
Asset Class Performance Comparison % returns during the 12 months ended October 31, 2020
Index figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. 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 may have changed since the report date.
| * | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Index Funds
The Investment Environment (continued)
Prior to the onset of the COVID-19 pandemic, the U.S. economy, despite ongoing trade tensions with China, maintained steady growth, albeit at a slowing pace. However, amid the fallout of the COVID-19 pandemic, the U.S. entered recessionary territory with record speed. U.S. gross domestic product (GDP) fell steeply, declining 5.0% and 31.4% for the first and second quarters of 2020, respectively, with the second quarter representing the largest contraction in U.S. GDP since 1947 when modern GDP measurements began. GDP subsequently jumped by 33.1% for the third quarter of 2020, reflecting increased consumer and business spending. Unemployment remained at record lows through February before a record number of unemployment claims in March resulted in the largest monthly increase in the U.S unemployment rate since January 1975. In April, this record was broken again when unemployment skyrocketed, rising to the highest level since the Great Depression. Unemployment declined in May through October, dropping below double digits beginning in August. Consumer confidence remained solid through February, but was volatile over the remainder of the reporting period.
Outside the U.S., conditions continued to soften, dampened by slowing economic output, slumping world trade, geopolitical concerns, and the COVID-19 pandemic. The COVID-19 pandemic exacerbated economic weakness around the globe, dramatically slowing growth amid stay-at-home orders, supply chain disruptions, and broadly diminishing demand. In the first half of the reporting period, oil prices deteriorated amid significantly reduced demand, coupled with rising U.S. crude production and a price war between Russia and Saudi Arabia. In April, oil futures briefly fell into negative territory as storage capacity evaporated and demand waned. However, as production was slashed, relieving pressure on constrained storage capacity, demand also stabilized. First and second quarter 2020 growth was negative in the eurozone and the United Kingdom. In January, Brexit occurred with the formal departure of the United Kingdom from the European Union resulting in an 11-month transition period with respect to economic and customs matters. Japan fared slightly better, although GDP still contracted for the first and second quarters of 2020. Even China and India, which had maintained stronger growth than many developed countries, showed weakness. In China, GDP contracted in the first quarter, but rebounded in the second and third quarters. While India’s second quarter GDP contracted, third quarter GDP was positive.
Many central banks around the world, including the U.S. Federal Reserve (Fed), reduced their policy rates over the reporting period, while others maintained low—and for some international central banks, negative—interest rates. In the U.S., after enacting three interest rate cuts in the second half of 2019 and as the economic implications of the COVID-19 pandemic grew, the Fed cut interest rates by 0.50% in early March and by 1.00% in mid-March, resulting in a federal funds rate of 0.00% to 0.25%. In addition, the Fed also announced extensive emergency measures to support the economy in light of the COVID-19 pandemic, including large purchases of U.S. Treasuries and other securities to support smooth market function, facilitating the flow of credit to municipalities, new financing for employers, consumers, and businesses, and the establishment of facilities to support credit to businesses and consumers alike. In August, the Fed announced that it was shifting its interest rate policy approach to potentially allow inflation to rise above its 2% target for periods of time even in times of rising employment. Outside the U.S., central banks were similarly accommodative. The European Central Bank held its policy rate at 0.00%, unchanged since March 2016, and launched a new asset purchase program to help counter the impact of the COVID-19 pandemic. The Bank of Japan upheld its short-term interest rate target of -0.1%, also unchanged since 2016, and increased the annual pace of its purchases of exchange-traded funds (ETFs) and other assets. The Bank of England lowered its key official bank rate from 0.75% to 0.10% in two emergency rate cuts in March. Central banks in key emerging market economies—including China, India, Mexico, Russia, and Thailand—lowered their policy rates or maintained already low rates in response to pandemic-driven pressures.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Index Funds
 | Christopher Bliss, CFA, Vice President and Head of Passive Equity Strategies, leads the portfolio management team for Schwab’s passive equity mutual funds and ETFs. He also has overall responsibility for all aspects of the management of the funds. Before joining CSIM in 2016, Mr. Bliss spent 12 years at BlackRock (formerly Barclays Global Investors) managing and leading institutional index teams, most recently as a managing director and the head of the Americas institutional index team. Prior to BlackRock, he worked as an equity analyst and portfolio manager for Harris Bretall and before that, as a research analyst for JP Morgan. |
 | Jeremy Brown, Portfolio Manager, is responsible for the day-to-day co-management of the Schwab Fundamental US Large Company Index Fund and Schwab Fundamental US Small Company Index Fund. Prior to joining CSIM in 2017, Mr. Brown spent six years with ALPS Advisors, Inc. in Denver, most recently as a senior analyst on the ETF portfolio management and research team where he performed portfolio management, trading, and analytics/research functions for ALPS ETFs and passive funds. Additionally, Mr. Brown led a number of investment research, commentary, industry trend analysis, and sales and marketing support initiatives. |
 | Chuck Craig, CFA, Senior Portfolio Manager, is responsible for the day-to-day co-management of the Schwab Fundamental International Large Company Index Fund, Schwab Fundamental International Small Company Index Fund, and Schwab Fundamental Emerging Markets Large Company Index Fund. Prior to joining CSIM in 2012, Mr. Craig worked at Guggenheim Funds (formerly Claymore Group), where he spent more than five years as a managing director of portfolio management and supervision, and three years as vice president of product research and development. Prior to that, he worked as an equity research analyst at First Trust Portfolios (formerly Niké Securities), and a trader and analyst at PMA Securities, Inc. |
 | Ferian Juwono, CFA, Senior Portfolio Manager, is responsible for the day-to-day co-management of the Schwab Fundamental US Large Company Index Fund and Schwab Fundamental US Small Company Index Fund. Prior to joining CSIM in 2010, Mr. Juwono worked at BlackRock (formerly Barclays Global Investors) where he spent more than three years as a portfolio manager, managing equity index funds for institutional clients, and two years as a senior business analyst. Prior to that, Mr. Juwono worked for more than 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 International Large Company Index Fund, Schwab Fundamental International Small Company Index Fund, and Schwab Fundamental Emerging Markets Large Company Index Fund. Prior to joining CSIM in 2012, Ms. Qin spent more than four years at The Bank of New York Mellon Corporation. During that time, Ms. Qin spent more than two years as an associate equity portfolio manager and nearly two years as a performance analyst. She also worked at Wells Fargo Funds Management as a mutual fund analyst and at CIGNA Reinsurance in the risk management group as a risk analyst. |
 | David Rios, Portfolio Manager, is responsible for the day-to-day co-management of the Schwab Fundamental International Large Company Index Fund, Schwab Fundamental International Small Company Index Fund, and Schwab Fundamental Emerging Markets Large Company Index Fund. Prior to this role, Mr. Rios was an associate portfolio manager on the Schwab equity index strategies team for four years. His first role with CSIM was as a trade operations specialist. Prior to joining CSIM in 2008, Mr. Rios was a senior fund accountant at Investors Bank & Trust (subsequently acquired by State Street Corporation). |
 | Sabya Sinha, Portfolio Manager, is responsible for the day-to-day co-management of the Schwab Fundamental US Large Company Index Fund and Schwab Fundamental US Small Company Index Fund. Prior to joining CSIM in 2015, Mr. Sinha spent a year at F-Squared Investments on the product development and analytics team. Prior to F-Squared, he worked at IndexIQ Advisors as a senior index portfolio manager for three years and for Bank of America’s Columbia Management subsidiary as a portfolio manager for three years. |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Large Company Index Fund as of October 31, 2020
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 RAFITM US Large Company Index (the index), which measures the performance of the large company size segment by fundamental overall company scores, which are created using as the universe the U.S. companies in the FTSE Global Total Cap Index. To pursue its investment objective, the fund uses a replication investment approach and generally gives the same weight to a given stock as the index does. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses.
Performance. The fund generally tracked the index for the reporting period. The fund returned -2.33% for the 12-month reporting period ended October 31, 2020, while the index returned -2.20%. 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. The energy sector detracted the most from the total return of the fund. Representing an average weight of approximately 7% of the fund’s investments, the energy sector returned approximately -50% for the reporting period. One example from this sector is Exxon Mobile Corp. The fund’s holding of Exxon Mobile Corp. returned approximately -48% for the reporting period.
The financials sector also detracted from the total return of the fund. Financials stocks represented an average weight of approximately 14% of the fund’s investments and returned approximately -20% for the reporting period.
The information technology sector contributed the most to the total return of the fund. The information technology sector represented an average weight of approximately 19% of the fund’s investments and returned approximately 26% for the reporting period. The fund’s holdings of Apple Inc. are one example from this sector, returning approximately 77% for the reporting period.
The consumer discretionary sector also contributed to total return of the fund. Consumer discretionary stocks represented an average weight of approximately 10% of the fund’s investments and returned approximately 8% for the reporting period.
Management views and portfolio holdings may have changed since the report date.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Large Company Index Fund
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1,2
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Fundamental US Large Company Index Fund (4/2/07) | -2.33% | 7.84% | 10.57% |
| Russell RAFITM US Large Company Index2 | -2.20% | 8.09% | N/A |
| Fundamental U.S. Large Company Spliced Index | -2.20% | 8.09% | 10.90% |
| Russell 1000® Index | 10.87% | 11.79% | 13.05% |
| Fund Category: Morningstar Large Value3 | -7.37% | 5.38% | 8.64% |
| Fund Expense Ratio4: 0.25% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
The first index listed for the fund is the fund’s primary benchmark, as shown in the prospectus. Additional indices shown are provided for comparative purposes.
For index definitions, please see the Glossary.
Index ownership—The Schwab Fundamental US Large Company Index Fund is not in any way sponsored, endorsed, sold or promoted by Frank Russell Company (Russell), by the London Stock Exchange Group companies (LSEG), or by Research Affiliates LLC (RA) (collectively the Licensor Parties), and none of the Licensor Parties make any warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the Russell RAFITM US Large Company Index (the Index) or otherwise. The Index is compiled and calculated by Russell in conjunction with RA. None of the Licensor Parties shall be liable (whether in negligence or otherwise) to any person for any error in the Index and none of the Licensor Parties shall be under any obligation to advise any person of any error therein. “Russell®” is a trademark of Russell. The trade names “Research Affiliates®”, “Fundamental Index®” and “RAFI®” are registered trademarks of RA. CSIM has obtained full license from Russell to use the Index. For full disclaimer please see the fund’s statement of additional information.
| 1 | Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | The inception date of the Russell RAFITM US Large Company Index is February 24, 2011. The fund began tracking the index on October 19, 2012. |
| 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. |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Large Company Index Fund
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 709 |
| Weighted Average Market Cap (millions) | $255,999 |
| Price/Earnings Ratio (P/E) | 19.4 |
| Price/Book Ratio (P/B) | 1.9 |
| Portfolio Turnover Rate | 13% |
Sector Weightings % of Investments2
Top Equity Holdings % of Net Assets3
Portfolio holdings may have changed since the report date.
Source of Sector Classification: S& P and MSCI.
| 1 | Excludes derivatives. |
| 2 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 3 | This list is not a recommendation of any security by the investment adviser. |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Small Company Index Fund as of October 31, 2020
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 RAFITM US Small Company Index (the index), which measures the performance of the small company size segment by fundamental overall company scores, which are created using as the universe the U.S. companies in the FTSE Global Total Cap Index. To pursue its investment objective, the fund uses a replication investment approach and generally gives the same weight to a given stock as the index does. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses.
Performance. The fund generally tracked the index for the reporting period. The fund returned -10.42% for the 12-month reporting period ended October 31, 2020, while the index returned -10.42%.
Contributors and Detractors. The real estate sector detracted the most from the total return of the fund. Representing an average weight of approximately 10% of the fund’s investments, the real estate sector returned approximately -33% for the reporting period. One example from this sector is Washington Prime Group, Inc., a real estate investment trust, which returned approximately -85% for the reporting period.
The financials sector also detracted from the total return of the fund. Financials stocks represented an average weight of approximately 14% of the fund’s investments and returned approximately -18% for the reporting period.
The health care sector contributed to the total return of the fund. The health care sector represented an average weight of approximately 7% of the fund’s investments and returned approximately 21% for the reporting period. One example from this sector is the fund’s holdings of Covetrus, Inc., a global animal-health technology and services company, which returned approximately 297% for the reporting period.
The information technology sector also contributed to the total return of the fund. Information technology stocks represented an average weight of approximately 12% of the fund’s investments and returned approximately 5% for the reporting period.
Management views and portfolio holdings may have changed since the report date.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Small Company Index Fund
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1,2
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Fundamental US Small Company Index Fund (4/2/07) | -10.42% | 4.65% | 8.57% |
| Russell RAFITM US Small Company Index2 | -10.42% | 4.83% | N/A |
| Fundamental U.S. Small Company Spliced Index | -10.42% | 4.83% | 8.85% |
| Russell 2000® Index | -0.14% | 7.27% | 9.64% |
| Fund Category: Morningstar Small Blend3 | -6.45% | 5.00% | 8.48% |
| Fund Expense Ratio4: 0.25% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
The first index listed for the fund is the fund’s primary benchmark, as shown in the prospectus. Additional indices shown are provided for comparative purposes.
For index definitions, please see the Glossary.
Index ownership—The Schwab Fundamental US Small Company Index Fund is not in any way sponsored, endorsed, sold or promoted by Frank Russell Company (Russell), by the London Stock Exchange Group companies (LSEG), or by Research Affiliates LLC (RA) (collectively the Licensor Parties), and none of the Licensor Parties make any warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the Russell RAFITM US Small Company Index (the Index) or otherwise. The Index is compiled and calculated by Russell in conjunction with RA. None of the Licensor Parties shall be liable (whether in negligence or otherwise) to any person for any error in the Index and none of the Licensor Parties shall be under any obligation to advise any person of any error therein. “Russell®” is a trademark of Russell. The trade names “Research Affiliates®”, “Fundamental Index®” and “RAFI®” are registered trademarks of RA. CSIM has obtained full license from Russell to use the Index. For full disclaimer please see the fund’s statement of additional information.
| 1 | Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | The inception date of the Russell RAFITM US Small Company Index is February 24, 2011. The fund began tracking the index on October 19, 2012. |
| 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. |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Small Company Index Fund
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 933 |
| Weighted Average Market Cap (millions) | $6,079 |
| Price/Earnings Ratio (P/E) | 17.7 |
| Price/Book Ratio (P/B) | 1.4 |
| Portfolio Turnover Rate | 28% |
Sector Weightings % of Investments2
Top Equity Holdings % of Net Assets3
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 | Excludes derivatives. |
| 2 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 3 | This list is not a recommendation of any security by the investment adviser. |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Large Company Index Fund as of October 31, 2020
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 RAFITM Developed ex US Large Company Index (the index), which measures the performance of the large company size segment by fundamental overall company scores, which are created using as the universe the developed ex U.S. companies in the FTSE Global Total Cap Index. To pursue its investment objective, the fund uses a replication investment approach and generally gives the same weight to a given stock as the index does. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and plunging markets into bear-market territory with record speed. At their lows, key international stock indices had lost as much as one-third of their former value. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. While the extraordinary response prompted a rally in global equity markets from their March lows, historic volatility remained and international equity markets lost steam during the final two months of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. The U.S. dollar weakened against a basket of foreign currencies for the reporting period, generally increasing the returns on overseas investments in U.S. dollar terms.
Performance. The fund generally tracked the index for the reporting period. The fund returned -13.29% for the 12-month reporting period ended October 31, 2020, while the index returned -13.77%.
Contributors and Detractors. From a country perspective, stocks from South Korea contributed the most to the total return of the fund. South Korean stocks represented an average weight of approximately 6% of the fund’s investments and returned approximately 12% in U.S. dollar terms for the reporting period. One example from this country is Samsung Electronics Co., Ltd. The fund’s holdings of Samsung Electronics Co., Ltd. returned approximately 18% in U.S. dollar terms for the reporting period.
Stocks from Denmark also contributed to the total return of the fund, representing an average weight of less than 1% of the fund’s investments and returning approximately 27% in U.S. dollar terms for the reporting period.
Stocks from the United Kingdom detracted the most from the total return of the fund. Stocks from the United Kingdom represented an average weight of approximately 15% of the fund’s investments and returned approximately -29% in U.S. dollar terms for the reporting period. One example from this country is BP plc. The fund’s holdings of BP plc returned approximately -57% in U.S. dollar terms for the reporting period.
Stocks from Japan also detracted from the total return of the fund. Japanese stocks represented approximately 25% of the fund’s investments and returned approximately -9% in U.S. dollar terms for the reporting period.
Management views and portfolio holdings may have changed since the report date.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Large Company Index Fund
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1,2,3,4
Average Annual Total Returns1,4
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Fundamental International Large Company Index Fund (4/2/07) | -13.29% | 1.46% | 2.41% |
| Russell RAFITM Developed ex US Large Company Index (Net)2,3 | -13.77% | 1.38% | N/A |
| Fundamental Developed ex-U.S. Large Company Spliced Index | -13.77% | 1.38% | 2.63% |
| MSCI EAFE® Index (Net)3 | -6.86% | 2.85% | 3.82% |
| Fund Category: Morningstar Foreign Large Value5 | -13.04% | 0.43% | 1.78% |
| Fund Expense Ratio6: 0.25% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
The first index listed for the fund is the fund’s primary benchmark, as shown in the prospectus. Additional indices shown are provided for comparative purposes.
For index definitions, please see the Glossary.
Index ownership—The Schwab Fundamental International Large Company Index Fund is not in any way sponsored, endorsed, sold or promoted by Frank Russell Company (Russell), by the London Stock Exchange Group companies (LSEG), or by Research Affiliates LLC (RA) (collectively the Licensor Parties), and none of the Licensor Parties make any warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the Russell RAFITM Developed ex US Large Company Index (the Index) or otherwise. The Index is compiled and calculated by Russell in conjunction with RA. None of the Licensor Parties shall be liable (whether in negligence or otherwise) to any person for any error in the Index and none of the Licensor Parties shall be under any obligation to advise any person of any error therein. “Russell®” is a trademark of Russell. The trade names “Research Affiliates®”, “Fundamental Index®” and “RAFI®” are registered trademarks of RA. CSIM has obtained full license from Russell to use the Index. For full disclaimer please see the fund’s statement of additional information.
| 1 | Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | The inception date of the Russell RAFITM Developed ex US Large Company Index (Net) is February 24, 2011. The fund began tracking the index on October 19, 2012. |
| 3 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
| 4 | The fund’s performance relative to the index may be affected by fair-value pricing. See financial note 2 for more information. |
| 5 | 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. |
| 6 | As stated in the prospectus. |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Large Company Index Fund
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 945 |
| Weighted Average Market Cap (millions) | $52,167 |
| Price/Earnings Ratio (P/E) | 14.6 |
| Price/Book Ratio (P/B) | 0.9 |
| Portfolio Turnover Rate | 14% |
Sector Weightings % of Investments1
Top Equity Holdings % of Net Assets2
Top Country Weightings % of Investments3
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 | Excludes derivatives. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
| 3 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund as of October 31, 2020
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 RAFITM Developed ex US Small Company Index (the index), which measures the performance of the small company size segment by fundamental overall company scores, which are created using as the universe the developed ex U.S. companies in the FTSE Global Total Cap Index. To pursue its investment objective, the fund uses a replication investment approach and generally gives the same weight to a given stock as the index does. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and plunging markets into bear-market territory with record speed. At their lows, key international stock indices had lost as much as one-third of their former value. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. While the extraordinary response prompted a rally in global equity markets from their March lows, historic volatility remained and international equity markets lost steam during the final two months of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. The U.S. dollar weakened against a basket of foreign currencies for the reporting period, generally increasing the returns on overseas investments in U.S. dollar terms.
Performance. The fund generally tracked the index for the reporting period. The fund returned -6.28% for the 12-month reporting period ended October 31, 2020, while the index returned -6.49%.
Contributors and Detractors. From a country perspective, stocks from Sweden contributed the most to the total return of the fund. Swedish stocks represented an average weight of approximately 4% of the fund’s investments and returned approximately 13% in U.S. dollar terms for the reporting period. One example from Sweden is the fund’s Class B holdings of Kinnevik AB, an investment company, which returned approximately 191% in U.S. dollar terms for the reporting period.
Stocks from Japan also contributed to the total return of the fund, representing an average weight of approximately 35% of the fund’s investments and returning approximately -3% in U.S. dollar terms for the reporting period.
Stocks from the United Kingdom detracted the most from the total return of the fund. Stocks from the United Kingdom represented an average weight of approximately 10% of the fund’s investments and returned approximately -17% in U.S. dollar terms for the reporting period. One example from this country is Vistry Group plc, a home construction services company. The fund’s holdings of Vistry Group plc returned approximately -50% in U.S. dollar terms for the reporting period.
Stocks from France also detracted from the total return of the fund. French stocks represented an average weight of approximately 4% of the fund’s investments and returned approximately -22% in U.S. dollar terms for the reporting period.
Management views and portfolio holdings may have changed since the report date.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1,2,3,4
Average Annual Total Returns1,4
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Fundamental International Small Company Index Fund (1/31/08) | -6.28% | 3.81% | 5.02% |
| Russell RAFITM Developed ex US Small Company Index (Net)2,3 | -6.49% | 3.94% | N/A |
| Fundamental Developed ex-U.S. Small Company Spliced Index | -6.49% | 3.94% | 5.47% |
| S&P Developed ex-U.S. Small Cap Index (Net)3 | -0.53% | 4.93% | 5.76% |
| Fund Category: Morningstar Foreign Small/Mid Blend5 | -1.99% | 3.84% | 4.88% |
| Fund Expense Ratio6: 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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
The first index listed for the fund is the fund’s primary benchmark, as shown in the prospectus. Additional indices shown are provided for comparative purposes.
For index definitions, please see the Glossary.
Index ownership—The Schwab Fundamental International Small Company Index Fund is not in any way sponsored, endorsed, sold or promoted by Frank Russell Company (Russell), by the London Stock Exchange Group companies (LSEG), or by Research Affiliates LLC (RA) (collectively the Licensor Parties), and none of the Licensor Parties make any warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the Russell RAFITM Developed ex US Small Company Index (the Index) or otherwise. The Index is compiled and calculated by Russell in conjunction with RA. None of the Licensor Parties shall be liable (whether in negligence or otherwise) to any person for any error in the Index and none of the Licensor Parties shall be under any obligation to advise any person of any error therein. “Russell®” is a trademark of Russell. The trade names “Research Affiliates®”, “Fundamental Index®” and “RAFI®” are registered trademarks of RA. CSIM has obtained full license from Russell to use the Index. For full disclaimer please see the fund’s statement of additional information.
| 1 | Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | The inception date of the Russell RAFITM Developed ex US Small Company Index (Net) is February 24, 2011. The fund began tracking the index on October 19, 2012. |
| 3 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
| 4 | The fund’s performance relative to the index may be affected by fair-value pricing. See financial note 2 for more information. |
| 5 | 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. |
| 6 | As stated in the prospectus. |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 1,618 |
| Weighted Average Market Cap (millions) | $3,681 |
| Price/Earnings Ratio (P/E) | 14.0 |
| Price/Book Ratio (P/B) | 0.9 |
| Portfolio Turnover Rate | 25% |
Sector Weightings % of Investments1
Top Equity Holdings % of Net Assets2
Top Country Weightings % of Investments3
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 | Excludes derivatives. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
| 3 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Emerging Markets Large Company Index Fund as of October 31, 2020
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 RAFITM Emerging Markets Large Company Index (the index), which measures the performance of the large company size segment by fundamental overall company scores, which are created using as the universe the emerging markets companies in the FTSE Global Total Cap Index. To pursue its investment objective, the fund invests in a representative sample of securities included in the index which, when taken together, are expected to perform similarly to the index as a whole. Due to the use of sampling techniques, the fund may not hold all of the securities in the index. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and plunging markets into bear-market territory with record speed. At their lows, key international stock indices had lost as much as one-third of their former value. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. While the extraordinary response prompted a rally in global equity markets from their March lows, historic volatility remained and international equity markets lost steam during the final two months of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. The U.S. dollar weakened against a basket of foreign currencies for the reporting period, generally increasing the returns on overseas investments in U.S. dollar terms.
Performance. The fund generally tracked the index for the reporting period. The fund returned -15.79%1 for the 12-month reporting period ended October 31, 2020, while the index returned -15.28%. 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 country perspective, stocks from Brazil detracted the most from the total return of the fund. Brazilian stocks represented an average weight of approximately 9% of the fund’s investments and returned approximately -45% in U.S. dollar terms for the reporting period. One example from this country is Itau Unibanco Holding S.A., a financial products and services company. The fund’s holdings of Itau Unibanco Holding S.A. returned approximately -53% in U.S. dollar terms for the reporting period.
Stocks from Russia also detracted from the total return of the fund, representing approximately 13% of the fund’s investments and returning approximately -33% in U.S. dollar terms for the reporting period.
Stocks from Taiwan contributed the most to the total return of the fund. Taiwanese stocks represented an average weight of approximately 20% of the fund’s investments and returned approximately 24% in U.S. dollar terms for the reporting period. One example from this country is Taiwan Semiconductor Manufacturing Co., Ltd. The fund’s holdings of Taiwan Semiconductor Manufacturing Co., Ltd. returned approximately 59% in U.S. dollar terms for the reporting period.
Stocks from Saudi Arabia also contributed to the total return of the fund, representing an average weight of less than 1% of the fund’s investments and returning approximately 23% in U.S. dollar terms for the reporting period.
Management views and portfolio holdings may have changed since the report date.
| 1 | Total return for the report period above differs from the return in the Financial Highlights. The total return presented above is calculated based on the net asset value (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 semiannual reports. |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Emerging Markets Large Company Index Fund
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1,2,3,4
Average Annual Total Returns1,4
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Fundamental Emerging Markets Large Company Index Fund (1/31/08) | -15.79% 5 | 5.37% | -0.52% |
| Russell RAFITM Emerging Markets Large Company Index (Net)2,3 | -15.28% | 5.98% | N/A |
| Fundamental Emerging Markets Large Company Spliced Index | -15.28% | 5.98% | 0.38% |
| MSCI Emerging Markets Index (Net)3 | 8.25% | 7.92% | 2.42% |
| Fund Category: Morningstar Diversified Emerging Markets6 | 6.67% | 7.05% | 2.30% |
| Fund Expense Ratio7: 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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
The first index listed for the fund is the fund’s primary benchmark, as shown in the prospectus. Additional indices shown are provided for comparative purposes.
For index definitions, please see the Glossary.
Index ownership—The Schwab Fundamental Emerging Markets Large Company Index Fund is not in any way sponsored, endorsed, sold or promoted by Frank Russell Company (Russell), by the London Stock Exchange Group companies (LSEG), or by Research Affiliates LLC (RA) (collectively the Licensor Parties), and none of the Licensor Parties make any warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the Russell RAFITM Emerging Markets Large Company Index (the Index) or otherwise. The Index is compiled and calculated by Russell in conjunction with RA. None of the Licensor Parties shall be liable (whether in negligence or otherwise) to any person for any error in the Index and none of the Licensor Parties shall be under any obligation to advise any person of any error therein. “Russell®” is a trademark of Russell. The trade names “Research Affiliates®”, “Fundamental Index®” and “RAFI®” are registered trademarks of RA. CSIM has obtained full license from Russell to use the Index. For full disclaimer please see the fund’s statement of additional information.
| 1 | Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | The inception date of the Russell RAFITM Emerging Markets Large Company Index (Net) is February 24, 2011. The fund began tracking the index on October 19, 2012. |
| 3 | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
| 4 | The fund’s performance relative to the index may be affected by fair-value pricing. See financial note 2 for more information. |
| 5 | 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 net asset value (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 semiannual reports. |
| 6 | 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. |
| 7 | As stated in the prospectus. |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Emerging Markets Large Company Index Fund
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 328 |
| Weighted Average Market Cap (millions) | $88,969 |
| Price/Earnings Ratio (P/E) | 10.3 |
| Price/Book Ratio (P/B) | 0.9 |
| Portfolio Turnover Rate | 32% |
Sector Weightings % of Investments1
Top Equity Holdings % of Net Assets2
Top Country Weightings % of Investments3
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 | Excludes derivatives. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
| 3 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Index Funds
Fund Expenses (Unaudited)
Examples for a $1,000 Investment
As a fund shareholder, you may incur two types of costs: (1) transaction costs; and (2) ongoing costs, including management fees.
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, 2020 and held through October 31, 2020.
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. 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 Ratio
(Annualized)1 | Beginning
Account Value
at 5/1/20 | Ending
Account Value
(Net of Expenses)
at 10/31/20 | Expenses Paid
During Period
5/1/20-10/31/202 |
| Schwab Fundamental US Large Company Index Fund | | | | |
| Actual Return | 0.25% | $1,000.00 | $1,100.00 | $1.32 |
| Hypothetical 5% Return | 0.25% | $1,000.00 | $1,023.84 | $1.27 |
| Schwab Fundamental US Small Company Index Fund | | | | |
| Actual Return | 0.25% | $1,000.00 | $1,149.90 | $1.35 |
| Hypothetical 5% Return | 0.25% | $1,000.00 | $1,023.84 | $1.27 |
| Schwab Fundamental International Large Company Index Fund | | | | |
| Actual Return | 0.25% | $1,000.00 | $1,080.60 | $1.31 |
| Hypothetical 5% Return | 0.25% | $1,000.00 | $1,023.84 | $1.27 |
| Schwab Fundamental International Small Company Index Fund | | | | |
| Actual Return | 0.39% | $1,000.00 | $1,129.10 | $2.09 |
| Hypothetical 5% Return | 0.39% | $1,000.00 | $1,023.14 | $1.98 |
| Schwab Fundamental Emerging Markets Large Company Index Fund | | | | |
| Actual Return | 0.39% | $1,000.00 | $1,060.70 | $2.02 |
| Hypothetical 5% Return | 0.39% | $1,000.00 | $1,023.14 | $1.98 |
| 1 | Based on the most recent six-month expense 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 366 days of the fiscal year. |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Large Company Index Fund
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $17.56 | $17.47 | $16.89 | $15.12 | $15.14 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.42 | 0.42 | 0.38 | 0.35 | 0.34 | |
| Net realized and unrealized gains (losses) | (0.75) | 1.08 | 0.76 | 2.52 | 0.44 | |
| Total from investment operations | (0.33) | 1.50 | 1.14 | 2.87 | 0.78 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.43) | (0.42) | (0.36) | (0.34) | (0.34) | |
| Distributions from net realized gains | (0.52) | (0.99) | (0.20) | (0.76) | (0.46) | |
| Total distributions | (0.95) | (1.41) | (0.56) | (1.10) | (0.80) | |
| Net asset value at end of period | $16.28 | $17.56 | $17.47 | $16.89 | $15.12 | |
| Total return | (2.33%) | 10.56% | 6.83% | 19.69% | 5.61% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Total expenses | 0.25% | 0.25% | 0.25% | 0.31% 2 | 0.39% | |
| Net operating expenses | N/A | N/A | N/A 3 | 0.30% 2 | 0.35% | |
| Net investment income (loss) | 2.57% | 2.53% | 2.17% | 2.19% | 2.33% | |
| Portfolio turnover rate | 13% | 20% | 10% | 15% | 11% | |
| Net assets, end of period (x 1,000,000) | $4,547 | $5,237 | $4,887 | $5,367 | $4,569 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Effective May 1, 2017, the annual operating expense ratio was reduced. The ratio presented for period ended 10/31/17 is a blended ratio.
3
Effective May 1, 2017, the fund instituted a new fee structure and the contractual expense limitation was terminated.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Large Company Index Fund
Condensed Portfolio Holdings as of October 31, 2020
This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers, any holdings exceeding 1% of the fund’s net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-877-824-5615. This complete schedule, filed on the fund’s N-CSR(S), is also available on the U.S. Securities and Exchange Commission (SEC)’s website at www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Common Stock 99.7% of net assets | |
| |
| Automobiles & Components 2.1% | |
| Ford Motor Co. | 3,559,027 | 0.6 | 27,511,279 |
| General Motors Co. | 941,950 | 0.7 | 32,525,533 |
| Other Securities | | 0.8 | 34,579,616 |
| | | 2.1 | 94,616,428 |
| |
| Banks 5.3% | |
| Bank of America Corp. | 1,482,851 | 0.8 | 35,143,569 |
| Citigroup, Inc. | 837,980 | 0.8 | 34,709,132 |
| JPMorgan Chase & Co. | 644,713 | 1.4 | 63,207,662 |
| Wells Fargo & Co. | 1,841,026 | 0.9 | 39,490,008 |
| Other Securities | | 1.4 | 66,913,004 |
| | | 5.3 | 239,463,375 |
| |
| Capital Goods 8.1% | |
| 3M Co. | 135,080 | 0.5 | 21,607,397 |
| General Electric Co. | 4,619,916 | 0.8 | 34,279,777 |
| Other Securities | | 6.8 | 312,877,335 |
| | | 8.1 | 368,764,509 |
| |
| Commercial & Professional Services 0.6% | |
| Other Securities | | 0.6 | 28,611,408 |
| |
| Consumer Durables & Apparel 1.7% | |
| Other Securities | | 1.7 | 75,443,225 |
| |
| Consumer Services 1.9% | |
| McDonald's Corp. | 116,695 | 0.5 | 24,856,035 |
| Other Securities | | 1.4 | 60,981,303 |
| | | 1.9 | 85,837,338 |
| |
| Diversified Financials 5.2% | |
| Berkshire Hathaway, Inc., Class A * | 65 | 0.4 | 19,662,501 |
| Berkshire Hathaway, Inc., Class B * | 202,279 | 0.9 | 40,840,130 |
| The Charles Schwab Corp. (a) | 129,130 | 0.1 | 5,308,534 |
| Other Securities | | 3.8 | 171,370,758 |
| | | 5.2 | 237,181,923 |
| |
| Energy 5.7% | |
| Chevron Corp. | 754,257 | 1.2 | 52,420,862 |
| Exxon Mobil Corp. | 2,315,175 | 1.7 | 75,521,009 |
| Other Securities | | 2.8 | 132,529,611 |
| | | 5.7 | 260,471,482 |
| |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Food & Staples Retailing 3.2% | |
| Costco Wholesale Corp. | 73,983 | 0.6 | 26,457,801 |
| Walmart, Inc. | 484,857 | 1.5 | 67,273,909 |
| Other Securities | | 1.1 | 53,732,094 |
| | | 3.2 | 147,463,804 |
| |
| Food, Beverage & Tobacco 4.2% | |
| PepsiCo, Inc. | 205,958 | 0.6 | 27,452,142 |
| Philip Morris International, Inc. | 321,359 | 0.5 | 22,822,916 |
| The Coca-Cola Co. | 503,136 | 0.5 | 24,180,716 |
| Other Securities | | 2.6 | 117,143,151 |
| | | 4.2 | 191,598,925 |
| |
| Health Care Equipment & Services 5.9% | |
| Anthem, Inc. | 76,928 | 0.5 | 20,985,958 |
| CVS Health Corp. | 572,306 | 0.7 | 32,100,644 |
| Medtronic plc | 201,187 | 0.4 | 20,233,377 |
| UnitedHealth Group, Inc. | 151,427 | 1.0 | 46,206,435 |
| Other Securities | | 3.3 | 149,635,480 |
| | | 5.9 | 269,161,894 |
| |
| Household & Personal Products 1.7% | |
| The Procter & Gamble Co. | 366,451 | 1.1 | 50,240,432 |
| Other Securities | | 0.6 | 25,180,970 |
| | | 1.7 | 75,421,402 |
| |
| Insurance 3.4% | |
| American International Group, Inc. | 715,795 | 0.5 | 22,540,385 |
| Other Securities | | 2.9 | 132,074,903 |
| | | 3.4 | 154,615,288 |
| |
| Materials 3.7% | |
| Other Securities | | 3.7 | 165,857,163 |
| |
| Media & Entertainment 4.6% | |
| Alphabet, Inc., Class A * | 18,196 | 0.6 | 29,406,738 |
| Alphabet, Inc., Class C * | 18,267 | 0.7 | 29,610,990 |
| Comcast Corp., Class A | 932,411 | 0.9 | 39,385,041 |
| Facebook, Inc., Class A * | 97,592 | 0.6 | 25,677,431 |
| The Walt Disney Co. | 300,482 | 0.8 | 36,433,442 |
| Other Securities | | 1.0 | 50,361,684 |
| | | 4.6 | 210,875,326 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 6.0% | |
| AbbVie, Inc. | 301,461 | 0.6 | 25,654,331 |
| Amgen, Inc. | 104,429 | 0.5 | 22,654,827 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Large Company Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Gilead Sciences, Inc. | 424,815 | 0.5 | 24,702,992 |
| Johnson & Johnson | 394,308 | 1.2 | 54,063,570 |
| Merck & Co., Inc. | 421,770 | 0.7 | 31,721,322 |
| Pfizer, Inc. | 1,343,885 | 1.0 | 47,681,040 |
| Other Securities | | 1.5 | 68,416,443 |
| | | 6.0 | 274,894,525 |
| |
| Real Estate 1.9% | |
| Other Securities | | 1.9 | 87,531,452 |
| |
| Retailing 5.9% | |
| Amazon.com, Inc. * | 9,033 | 0.6 | 27,425,543 |
| Lowe's Cos., Inc. | 144,036 | 0.5 | 22,772,092 |
| Target Corp. | 157,876 | 0.5 | 24,031,885 |
| The Home Depot, Inc. | 144,174 | 0.8 | 38,452,647 |
| Other Securities | | 3.5 | 157,580,000 |
| | | 5.9 | 270,262,167 |
| |
| Semiconductors & Semiconductor Equipment 3.8% | |
| Intel Corp. | 951,191 | 0.9 | 42,118,737 |
| QUALCOMM, Inc. | 266,669 | 0.7 | 32,896,288 |
| Other Securities | | 2.2 | 97,841,841 |
| | | 3.8 | 172,856,866 |
| |
| Software & Services 6.4% | |
| International Business Machines Corp. | 332,909 | 0.8 | 37,172,619 |
| Microsoft Corp. | 480,237 | 2.1 | 97,233,585 |
| Oracle Corp. | 471,646 | 0.6 | 26,464,057 |
| Other Securities | | 2.9 | 129,155,108 |
| | | 6.4 | 290,025,369 |
| |
| Technology Hardware & Equipment 8.4% | |
| Apple Inc. | 2,350,490 | 5.6 | 255,874,341 |
| Cisco Systems, Inc. | 938,540 | 0.7 | 33,693,586 |
| Other Securities | | 2.1 | 91,514,024 |
| | | 8.4 | 381,081,951 |
| |
| Telecommunication Services 3.5% | |
| AT&T, Inc. | 2,518,612 | 1.5 | 68,052,896 |
| Verizon Communications, Inc. | 1,190,105 | 1.5 | 67,824,084 |
| Other Securities | | 0.5 | 22,661,028 |
| | | 3.5 | 158,538,008 |
| |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Transportation 2.7% | |
| FedEx Corp. | 101,140 | 0.6 | 26,242,796 |
| Union Pacific Corp. | 134,785 | 0.5 | 23,882,554 |
| Other Securities | | 1.6 | 71,880,872 |
| | | 2.7 | 122,006,222 |
| |
| Utilities 3.8% | |
| Other Securities | | 3.8 | 174,349,933 |
| Total Common Stock | |
| (Cost $3,097,661,049) | | | 4,536,929,983 |
|
| Other Investment Companies 0.3% of net assets | |
| |
| Money Market Fund 0.0% | |
| Other Securities | | 0.0 | 1,383,897 |
| |
| Securities Lending Collateral 0.3% | |
| Other Securities | | 0.3 | 11,209,213 |
| Total Other Investment Companies | |
| (Cost $12,593,110) | | | 12,593,110 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | |
| Long | |
| S&P 500 Index, e-mini, expires 12/18/20 | 59 | 9,630,865 | (541,323) |
The following footnotes may not be applicable to the Condensed Portfolio Holdings. 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 $10,257,993. |
| (c) | The rate shown is the 7-day yield. |
| | |
| REIT — | Real Estate Investment Trust |
The fund owns shares of an affiliate, The Charles Schwab Corp., since that company is included in its index. Below is the summary of investment activities involving The Charles Schwab Corp. shares owned by the fund during the period ended October 31, 2020:
| |
Value at
10/31/19 | Gross
Purchases | Gross
Sales | Realized
Gains (Losses) | Net Change
in Unrealized
Appreciation
(depreciation) |
Value at
10/31/20 | Balance
of Shares
Held at
10/31/20 | Dividends
Received |
| The Charles Schwab Corp. | $3,126,284 | $1,927,465 | ($332,964) | ($81,281) | $669,030 | $5,308,534 | 129,130 | $57,346 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Large Company Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 and reflects the complete schedule of portfolio holdings (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 | |
| Assets | | | | | |
| Common Stock1 | $4,536,929,983 | $— | $— | $4,536,929,983 | |
| Other Investment Companies1 | 12,593,110 | — | — | 12,593,110 | |
| Liabilities | | | | | |
| Futures Contracts2 | (541,323) | — | — | (541,323) | |
| Total | $4,548,981,770 | $— | $— | $4,548,981,770 | |
| 1 | As categorized in the complete schedule of Portfolio Holdings. |
| 2 | Futures contracts are valued at unrealized appreciation or depreciation. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Large Company Index Fund
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investment in affiliated issuer, at value (cost $3,427,013) | | $5,308,534 |
| Investments in unaffiliated issuers, at value (cost $3,095,617,933) including securities on loan of $10,257,993 | | 4,533,005,346 |
| Collateral invested for securities on loan, at value (cost $11,209,213) | | 11,209,213 |
| Deposit with broker for futures contracts | | 756,000 |
| Receivables: | | |
| Dividends | | 6,444,001 |
| Fund shares sold | | 5,535,089 |
| Income from securities on loan | + | 144,062 |
| Total assets | | 4,562,402,245 |
| Liabilities |
| Collateral held for securities on loan | | 11,209,213 |
| Payables: | | |
| Investment adviser fees | | 1,033,659 |
| Fund shares redeemed | | 2,737,996 |
| Variation margin on futures contracts | + | 105,630 |
| Total liabilities | | 15,086,498 |
| Net Assets |
| Total assets | | 4,562,402,245 |
| Total liabilities | – | 15,086,498 |
| Net assets | | $4,547,315,747 |
| Net Assets by Source | | |
| Capital received from investors | | 2,950,727,321 |
| Total distributable earnings | | 1,596,588,426 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $4,547,315,747 | | 279,328,897 | | $16.28 |
| | | | | |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Large Company Index Fund
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends received from affiliated issuer | | $57,346 |
| Dividends received from unaffiliated issuers (net of foreign withholding tax of $9,266) | | 134,149,459 |
| Securities on loan, net | + | 1,369,652 |
| Total investment income | | 135,576,457 |
| Expenses |
| Investment adviser fees | | 12,041,457 |
| Total expenses | – | 12,041,457 |
| Net investment income | | 123,535,000 |
| Realized and Unrealized Gains (Losses) |
| Net realized losses on sales of affiliated underlying funds | | (81,281) |
| Net realized gains on unaffiliated issuers | | 123,628,132 |
| Net realized losses on futures contracts | + | (1,662,657) |
| Net realized gains | | 121,884,194 |
| Net change in unrealized appreciation (depreciation) on affiliated issuer | | 669,030 |
| Net change in unrealized appreciation (depreciation) on unaffiliated issuers | | (397,088,823) |
| Net change in unrealized appreciation (depreciation) on futures contracts | + | (870,009) |
| Net change in unrealized appreciation (depreciation) | + | (397,289,802) |
| Net realized and unrealized losses | | (275,405,608) |
| Decrease in net assets resulting from operations | | ($151,870,608) |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Large Company Index Fund
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $123,535,000 | $124,374,648 |
| Net realized gains | | 121,884,194 | 126,461,116 |
| Net change in unrealized appreciation (depreciation) | + | (397,289,802) | 245,896,113 |
| Increase (decrease) in net assets from operations | | (151,870,608) | 496,731,877 |
| Distributions to Shareholders | |
| Total distributions | | ($280,720,286) | ($384,906,616) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 65,360,142 | $1,034,311,318 | 72,965,468 | $1,170,251,181 |
| Shares reinvested | | 9,908,434 | 175,775,620 | 17,039,769 | 240,260,741 |
| Shares redeemed | + | (94,170,173) | (1,467,566,455) | (71,475,046) | (1,171,686,052) |
| Net transactions in fund shares | | (18,901,597) | ($257,479,517) | 18,530,191 | $238,825,870 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 298,230,494 | $5,237,386,158 | 279,700,303 | $4,886,735,027 |
| Total increase or decrease | + | (18,901,597) | (690,070,411) | 18,530,191 | 350,651,131 |
| End of period | | 279,328,897 | $4,547,315,747 | 298,230,494 | $5,237,386,158 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Small Company Index Fund
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $13.85 | $14.68 | $15.32 | $12.69 | $12.82 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.17 | 0.20 | 0.22 | 0.21 | 0.18 | |
| Net realized and unrealized gains (losses) | (1.53) | 0.32 | 0.17 | 2.68 | 0.43 | |
| Total from investment operations | (1.36) | 0.52 | 0.39 | 2.89 | 0.61 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.20) | (0.22) | (0.21) | (0.17) | (0.18) | |
| Distributions from net realized gains | (0.32) | (1.13) | (0.82) | (0.09) | (0.56) | |
| Total distributions | (0.52) | (1.35) | (1.03) | (0.26) | (0.74) | |
| Net asset value at end of period | $11.97 | $13.85 | $14.68 | $15.32 | $12.69 | |
| Total return | (10.42%) | 5.61% | 2.40% | 22.94% | 5.37% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Total expenses | 0.25% | 0.25% | 0.25% | 0.33% 2 | 0.43% | |
| Net operating expenses | N/A | N/A | N/A 3 | 0.30% 2 | 0.35% | |
| Net investment income (loss) | 1.43% | 1.50% | 1.42% | 1.43% | 1.50% | |
| Portfolio turnover rate | 28% | 34% | 30% | 27% | 30% | |
| Net assets, end of period (x 1,000,000) | $1,394 | $1,908 | $1,782 | $1,727 | $1,361 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Effective May 1, 2017, the annual operating expense ratio was reduced. The ratio presented for period ended 10/31/17 is a blended ratio.
3
Effective May 1, 2017, the fund instituted a new fee structure and the contractual expense limitation was terminated.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Small Company Index Fund
Condensed Portfolio Holdings as of October 31, 2020
This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers, any holdings exceeding 1% of the fund’s net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-877-824-5615. This complete schedule, filed on the fund’s N-CSR(S), is also available on the U.S. Securities and Exchange Commission (SEC)’s website at www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Common Stock 99.3% of net assets | |
| |
| Automobiles & Components 1.7% | |
| Tesla, Inc. * | 12,646 | 0.4 | 4,907,154 |
| Other Securities | | 1.3 | 18,466,985 |
| | | 1.7 | 23,374,139 |
| |
| Banks 7.6% | |
| First Horizon National Corp. | 331,544 | 0.2 | 3,451,373 |
| SVB Financial Group * | 14,588 | 0.3 | 4,240,732 |
| Synovus Financial Corp. | 125,910 | 0.2 | 3,273,660 |
| Other Securities | | 6.9 | 95,025,477 |
| | | 7.6 | 105,991,242 |
| |
| Capital Goods 11.6% | |
| Dycom Industries, Inc. * | 54,141 | 0.3 | 3,515,917 |
| EnerSys | 45,743 | 0.2 | 3,275,199 |
| Generac Holdings, Inc. * | 16,829 | 0.3 | 3,536,614 |
| MasTec, Inc. * | 66,258 | 0.2 | 3,289,047 |
| Rush Enterprises, Inc., Class A | 94,465 | 0.2 | 3,385,626 |
| Terex Corp. | 160,777 | 0.3 | 3,969,584 |
| Other Securities | | 10.1 | 140,698,737 |
| | | 11.6 | 161,670,724 |
| |
| Commercial & Professional Services 5.2% | |
| Copart, Inc. * | 31,534 | 0.2 | 3,480,092 |
| CoreLogic, Inc. | 53,508 | 0.3 | 4,116,370 |
| Other Securities | | 4.7 | 65,205,957 |
| | | 5.2 | 72,802,419 |
| |
| Consumer Durables & Apparel 5.1% | |
| Deckers Outdoor Corp. * | 17,568 | 0.3 | 4,451,204 |
| Fossil Group, Inc. * | 597,356 | 0.2 | 3,410,903 |
| Kontoor Brands, Inc. * | 108,139 | 0.3 | 3,557,773 |
| Tupperware Brands Corp. * | 396,367 | 0.9 | 12,572,762 |
| Vista Outdoor, Inc. * | 181,182 | 0.3 | 3,581,968 |
| Other Securities | | 3.1 | 43,559,165 |
| | | 5.1 | 71,133,775 |
| |
| Consumer Services 5.3% | |
| Brinker International, Inc. | 90,248 | 0.3 | 3,929,398 |
| Jack in the Box, Inc. | 40,037 | 0.2 | 3,205,362 |
| Penn National Gaming, Inc. * | 73,512 | 0.3 | 3,968,178 |
| Vail Resorts, Inc. | 13,633 | 0.2 | 3,163,401 |
| Other Securities | | 4.3 | 59,899,322 |
| | | 5.3 | 74,165,661 |
| |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Diversified Financials 4.5% | |
| Eaton Vance Corp. | 72,388 | 0.3 | 4,328,079 |
| Janus Henderson Group plc | 148,018 | 0.3 | 3,596,837 |
| Waddell & Reed Financial, Inc., Class A | 224,950 | 0.2 | 3,452,982 |
| Other Securities | | 3.7 | 51,648,186 |
| | | 4.5 | 63,026,084 |
| |
| Energy 3.8% | |
| CNX Resources Corp. * | 326,240 | 0.2 | 3,164,528 |
| EQT Corp. | 265,767 | 0.3 | 4,023,712 |
| Range Resources Corp. | 596,907 | 0.3 | 3,927,648 |
| Renewable Energy Group, Inc. * | 64,451 | 0.3 | 3,635,036 |
| Other Securities | | 2.7 | 38,024,289 |
| | | 3.8 | 52,775,213 |
| |
| Food & Staples Retailing 0.7% | |
| Other Securities | | 0.7 | 9,866,070 |
| |
| Food, Beverage & Tobacco 2.5% | |
| Other Securities | | 2.5 | 34,724,355 |
| |
| Health Care Equipment & Services 4.6% | |
| Align Technology, Inc. * | 10,055 | 0.3 | 4,284,234 |
| Community Health Systems, Inc. * | 570,463 | 0.3 | 3,559,689 |
| Covetrus, Inc. * | 192,650 | 0.3 | 4,756,529 |
| West Pharmaceutical Services, Inc. | 13,535 | 0.3 | 3,682,467 |
| Other Securities | | 3.4 | 48,007,843 |
| | | 4.6 | 64,290,762 |
| |
| Household & Personal Products 1.0% | |
| Herbalife Nutrition Ltd. * | 72,713 | 0.2 | 3,282,265 |
| Other Securities | | 0.8 | 10,995,058 |
| | | 1.0 | 14,277,323 |
| |
| Insurance 2.6% | |
| Brown & Brown, Inc. | 77,374 | 0.2 | 3,366,543 |
| White Mountains Insurance Group Ltd. | 3,530 | 0.2 | 3,206,405 |
| Other Securities | | 2.2 | 29,568,135 |
| | | 2.6 | 36,141,083 |
| |
| Materials 7.5% | |
| Avient Corp. | 102,068 | 0.2 | 3,171,253 |
| Axalta Coating Systems Ltd. * | 129,155 | 0.2 | 3,243,082 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Small Company Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Cleveland-Cliffs, Inc. | 555,013 | 0.3 | 4,595,508 |
| Trinseo S.A. | 111,826 | 0.3 | 3,558,303 |
| Worthington Industries, Inc. | 65,702 | 0.2 | 3,233,195 |
| Other Securities | | 6.3 | 86,445,968 |
| | | 7.5 | 104,247,309 |
| |
| Media & Entertainment 3.2% | |
| Other Securities | | 3.2 | 43,964,806 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 2.2% | |
| PerkinElmer, Inc. | 32,247 | 0.3 | 4,177,599 |
| Other Securities | | 1.9 | 26,096,674 |
| | | 2.2 | 30,274,273 |
| |
| Real Estate 9.1% | |
| Uniti Group, Inc. | 358,425 | 0.2 | 3,161,308 |
| Other Securities | | 8.9 | 123,360,659 |
| | | 9.1 | 126,521,967 |
| |
| Retailing 4.0% | |
| Dillard’s, Inc., Class A (a) | 85,398 | 0.3 | 3,819,853 |
| Pool Corp. | 10,741 | 0.3 | 3,757,524 |
| Sonic Automotive, Inc., Class A | 93,899 | 0.2 | 3,385,998 |
| Other Securities | | 3.2 | 44,911,395 |
| | | 4.0 | 55,874,770 |
| |
| Semiconductors & Semiconductor Equipment 2.5% | |
| Cree, Inc. * | 58,252 | 0.3 | 3,704,827 |
| First Solar, Inc. * | 62,903 | 0.4 | 5,475,392 |
| Other Securities | | 1.8 | 25,662,796 |
| | | 2.5 | 34,843,015 |
| |
| Software & Services 4.0% | |
| Other Securities | | 4.0 | 56,021,182 |
| |
| Technology Hardware & Equipment 4.5% | |
| Keysight Technologies, Inc. * | 31,449 | 0.2 | 3,298,057 |
| Other Securities | | 4.3 | 59,637,251 |
| | | 4.5 | 62,935,308 |
| |
| Telecommunication Services 0.8% | |
| Other Securities | | 0.8 | 10,687,493 |
| |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Transportation 2.4% | |
| Other Securities | | 2.4 | 33,353,105 |
| |
| Utilities 2.9% | |
| Other Securities | | 2.9 | 40,452,448 |
| Total Common Stock | |
| (Cost $1,138,844,757) | | | 1,383,414,526 |
|
| Other Investment Companies 1.5% of net assets | |
| |
| Money Market Fund 0.4% | |
| State Street Institutional U.S. Government Money Market Fund, Premier Class 0.03% (c) | 6,437,103 | 0.4 | 6,437,103 |
| |
| Securities Lending Collateral 1.1% | |
| Wells Fargo Government Money Market Fund, Select Class 0.04% (c) | 14,860,776 | 1.1 | 14,860,776 |
| Total Other Investment Companies | |
| (Cost $21,297,879) | | | 21,297,879 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | |
| Long | |
| Russell 2000 Index, e-mini, expires 12/18/20 | 113 | 8,682,920 | (329,056) |
The following footnotes may not be applicable to the Condensed Portfolio Holdings. 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 $13,731,147. |
| (b) | Fair-valued by management using significant unobservable inputs in accordance with procedures approved by the fund’s Board of Trustees. |
| (c) | The rate shown is the 7-day yield. |
| | |
| REIT — | Real Estate Investment Trust |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Small Company Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 and reflects the complete schedule of portfolio holdings (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 | |
| Assets | | | | | |
| Common Stock1 | $1,256,892,559 | $— | $— | $1,256,892,559 | |
| Real Estate | 126,521,967 | — | — * | 126,521,967 | |
| Other Investment Companies1 | 21,297,879 | — | — | 21,297,879 | |
| Liabilities | | | | | |
| Futures Contracts2 | (329,056) | — | — | (329,056) | |
| Total | $1,404,383,349 | $— | $— | $1,404,383,349 | |
| * | Level 3 amount shown includes securities determined to have no value at October 31, 2020. |
| 1 | As categorized in the complete schedule of Portfolio Holdings. |
| 2 | Futures contracts are valued at unrealized appreciation or depreciation. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Small Company Index Fund
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in unaffiliated issuers, at value (cost $1,145,281,860) including securities on loan of $13,731,147 | | $1,389,851,629 |
| Collateral invested for securities on loan, at value (cost $14,860,776) | | 14,860,776 |
| Cash | | 1,529,948 |
| Deposit with broker for futures contracts | | 949,000 |
| Receivables: | | |
| Investments sold | | 8,514 |
| Fund shares sold | | 3,765,426 |
| Dividends | | 725,337 |
| Income from securities on loan | + | 284,533 |
| Total assets | | 1,411,975,163 |
| Liabilities |
| Collateral held for securities on loan | | 14,860,776 |
| Payables: | | |
| Investments bought | | 212,957 |
| Investment adviser fees | | 315,194 |
| Fund shares redeemed | | 2,467,023 |
| Variation margin on futures contracts | + | 119,834 |
| Total liabilities | | 17,975,784 |
| Net Assets |
| Total assets | | 1,411,975,163 |
| Total liabilities | – | 17,975,784 |
| Net assets | | $1,393,999,379 |
| Net Assets by Source | | |
| Capital received from investors | | 1,260,312,316 |
| Total distributable earnings | | 133,687,063 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $1,393,999,379 | | 116,504,720 | | $11.97 |
| | | | | |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Small Company Index Fund
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends (net of foreign withholding tax of $44,288) | | $24,735,805 |
| Securities on loan, net | + | 2,026,931 |
| Total investment income | | 26,762,736 |
| Expenses |
| Investment adviser fees | | 3,985,955 |
| Total expenses | – | 3,985,955 |
| Net investment income | | 22,776,781 |
| Realized and Unrealized Gains (Losses) |
| Net realized losses on investments | | (96,710,877) |
| Net realized losses on futures contracts | + | (317,509) |
| Net realized losses | | (97,028,386) |
| Net change in unrealized appreciation (depreciation) on investments | | (122,506,904) |
| Net change in unrealized appreciation (depreciation) on futures contracts | + | (527,376) |
| Net change in unrealized appreciation (depreciation) | + | (123,034,280) |
| Net realized and unrealized losses | | (220,062,666) |
| Decrease in net assets resulting from operations | | ($197,285,885) |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Small Company Index Fund
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $22,776,781 | $26,088,897 |
| Net realized gains (losses) | | (97,028,386) | 28,592,321 |
| Net change in unrealized appreciation (depreciation) | + | (123,034,280) | 43,662,004 |
| Increase (decrease) in net assets from operations | | (197,285,885) | 98,343,222 |
| Distributions to Shareholders | |
| Total distributions | | ($70,795,483) | ($157,177,616) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 37,437,204 | $412,136,335 | 41,667,076 | $538,341,603 |
| Shares reinvested | | 3,614,741 | 50,967,840 | 9,687,290 | 109,950,745 |
| Shares redeemed | + | (62,280,936) | (708,695,318) | (34,964,711) | (463,377,091) |
| Net transactions in fund shares | | (21,228,991) | ($245,591,143) | 16,389,655 | $184,915,257 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 137,733,711 | $1,907,671,890 | 121,344,056 | $1,781,591,027 |
| Total increase or decrease | + | (21,228,991) | (513,672,511) | 16,389,655 | 126,080,863 |
| End of period | | 116,504,720 | $1,393,999,379 | 137,733,711 | $1,907,671,890 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Large Company Index Fund
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $8.98 | $8.69 | $9.55 | $7.96 | $8.19 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.21 | 0.30 | 0.29 | 0.25 | 0.24 | |
| Net realized and unrealized gains (losses) | (1.35) | 0.27 | (0.89) | 1.59 | (0.25) | |
| Total from investment operations | (1.14) | 0.57 | (0.60) | 1.84 | (0.01) | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.33) | (0.28) | (0.26) | (0.25) | (0.22) | |
| Net asset value at end of period | $7.51 | $8.98 | $8.69 | $9.55 | $7.96 | |
| Total return | (13.29%) | 7.04% | (6.53%) | 23.83% | 0.07% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Total expenses | 0.25% | 0.25% | 0.25% | 0.34% 2 | 0.46% | |
| Net operating expenses | N/A | N/A | N/A 3 | 0.29% 2 | 0.35% | |
| Net investment income (loss) | 2.60% | 3.51% | 3.10% | 2.92% | 3.20% | |
| Portfolio turnover rate | 14% | 28% | 13% | 11% | 18% | |
| Net assets, end of period (x 1,000,000) | $966 | $1,327 | $1,349 | $1,372 | $971 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Effective May 1, 2017, the annual operating expense ratio was reduced. The ratio presented for period ended 10/31/17 is a blended ratio.
3
Effective May 1, 2017, the fund instituted a new fee structure and the contractual expense limitation was terminated.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Large Company Index Fund
Condensed Portfolio Holdings as of October 31, 2020
This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers, any holdings exceeding 1% of the fund’s net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-877-824-5615. This complete schedule, filed on the fund’s N-CSR(S), is also available on the U.S. Securities and Exchange Commission (SEC)’s website at www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Common Stock 98.1% of net assets | |
| |
| Australia 5.5% | |
| Australia & New Zealand Banking Group Ltd. | 289,719 | 0.4 | 3,844,754 |
| BHP Group Ltd. | 219,490 | 0.5 | 5,261,532 |
| Commonwealth Bank of Australia | 110,136 | 0.6 | 5,347,271 |
| National Australia Bank Ltd. | 272,171 | 0.4 | 3,560,807 |
| Westpac Banking Corp. | 359,588 | 0.5 | 4,551,255 |
| Other Securities | | 3.1 | 30,903,828 |
| | | 5.5 | 53,469,447 |
| |
| Austria 0.3% | |
| Other Securities | | 0.3 | 2,464,945 |
| |
| Belgium 0.8% | |
| Other Securities | | 0.8 | 7,335,367 |
| |
| Canada 6.6% | |
| Royal Bank of Canada | 65,544 | 0.5 | 4,583,111 |
| The Toronto-Dominion Bank | 83,352 | 0.4 | 3,677,423 |
| Other Securities | | 5.7 | 55,520,865 |
| | | 6.6 | 63,781,399 |
| |
| Denmark 1.1% | |
| Other Securities | | 1.1 | 10,655,285 |
| |
| Finland 1.2% | |
| Other Securities | | 1.2 | 11,268,013 |
| |
| France 8.3% | |
| BNP Paribas S.A. * | 120,888 | 0.4 | 4,215,941 |
| Sanofi | 57,396 | 0.5 | 5,182,477 |
| TOTAL SE | 305,721 | 1.0 | 9,262,340 |
| Other Securities | | 6.4 | 61,722,176 |
| | | 8.3 | 80,382,934 |
| |
| Germany 8.0% | |
| Allianz SE | 27,365 | 0.5 | 4,820,470 |
| BASF SE | 115,294 | 0.7 | 6,313,290 |
| Bayerische Motoren Werke AG | 62,942 | 0.4 | 4,301,376 |
| Daimler AG | 169,758 | 0.9 | 8,774,534 |
| Deutsche Post AG | 84,611 | 0.4 | 3,751,481 |
| Deutsche Telekom AG | 348,156 | 0.5 | 5,291,535 |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Siemens AG | 50,791 | 0.6 | 5,958,599 |
| Other Securities | | 4.0 | 38,242,223 |
| | | 8.0 | 77,453,508 |
| |
| Hong Kong 1.8% | |
| Other Securities | | 1.8 | 16,940,172 |
| |
| Ireland 0.1% | |
| Other Securities | | 0.1 | 757,966 |
| |
| Israel 0.2% | |
| Other Securities | | 0.2 | 2,073,539 |
| |
| Italy 2.8% | |
| Enel S.p.A. | 640,686 | 0.5 | 5,093,776 |
| Eni S.p.A. | 525,711 | 0.4 | 3,682,629 |
| Fiat Chrysler Automobiles N.V. * | 279,895 | 0.4 | 3,433,643 |
| Other Securities | | 1.5 | 14,619,700 |
| | | 2.8 | 26,829,748 |
| |
| Japan 25.4% | |
| Hitachi Ltd. | 131,700 | 0.5 | 4,438,856 |
| Honda Motor Co., Ltd. | 311,800 | 0.8 | 7,374,985 |
| KDDI Corp. | 142,700 | 0.4 | 3,860,747 |
| Mitsubishi UFJ Financial Group, Inc. | 1,098,934 | 0.4 | 4,331,893 |
| SoftBank Group Corp. | 117,700 | 0.8 | 7,666,245 |
| Sony Corp. | 40,700 | 0.4 | 3,393,013 |
| Toyota Motor Corp. | 227,518 | 1.5 | 14,935,848 |
| Other Securities | | 20.6 | 199,857,885 |
| | | 25.4 | 245,859,472 |
| |
| Netherlands 2.8% | |
| Koninklijke Ahold Delhaize N.V. | 132,062 | 0.4 | 3,620,581 |
| Unilever N.V. | 62,589 | 0.4 | 3,528,376 |
| Other Securities | | 2.0 | 19,865,260 |
| | | 2.8 | 27,014,217 |
| |
| New Zealand 0.1% | |
| Other Securities | | 0.1 | 1,164,660 |
| |
| Norway 0.7% | |
| Other Securities | | 0.7 | 6,661,102 |
| |
| Poland 0.3% | |
| Other Securities | | 0.3 | 2,588,218 |
| |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Large Company Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Portugal 0.2% | |
| Other Securities | | 0.2 | 1,970,612 |
| |
| Republic of Korea 7.1% | |
| Hyundai Motor Co. | 28,325 | 0.4 | 4,146,100 |
| POSCO | 20,387 | 0.4 | 3,763,525 |
| Samsung Electronics Co., Ltd. | 413,044 | 2.1 | 20,761,908 |
| Other Securities | | 4.2 | 40,211,914 |
| | | 7.1 | 68,883,447 |
| |
| Singapore 0.6% | |
| Other Securities | | 0.6 | 6,161,924 |
| |
| Spain 2.7% | |
| Banco Santander S.A. * | 3,190,199 | 0.7 | 6,388,550 |
| Iberdrola S.A. | 347,588 | 0.4 | 4,104,172 |
| Other Securities | | 1.6 | 15,699,283 |
| | | 2.7 | 26,192,005 |
| |
| Sweden 2.2% | |
| Other Securities | | 2.2 | 21,336,975 |
| |
| Switzerland 5.0% | |
| Nestle S.A. | 100,139 | 1.2 | 11,263,423 |
| Novartis AG | 66,307 | 0.5 | 5,166,812 |
| Roche Holding AG | 22,297 | 0.7 | 7,164,725 |
| Other Securities | | 2.6 | 24,610,416 |
| | | 5.0 | 48,205,376 |
| |
| United Kingdom 14.3% | |
| AstraZeneca plc | 34,827 | 0.4 | 3,496,821 |
| BP plc | 3,358,855 | 0.9 | 8,567,375 |
| British American Tobacco plc | 134,661 | 0.4 | 4,268,130 |
| GlaxoSmithKline plc | 238,005 | 0.4 | 3,974,321 |
| Glencore plc * | 3,115,697 | 0.7 | 6,285,094 |
| HSBC Holdings plc * | 1,673,045 | 0.7 | 7,011,050 |
| National Grid plc | 317,322 | 0.4 | 3,774,699 |
| Rio Tinto plc | 91,894 | 0.5 | 5,197,650 |
| Royal Dutch Shell plc, A Shares | 767,587 | 1.0 | 9,655,845 |
| Royal Dutch Shell plc, B Shares | 702,953 | 0.9 | 8,477,144 |
| Vodafone Group plc | 4,363,829 | 0.6 | 5,821,209 |
| Other Securities | | 7.4 | 71,275,288 |
| | | 14.3 | 137,804,626 |
| Total Common Stock | |
| (Cost $986,196,686) | | | 947,254,957 |
|
| Preferred Stock 1.2% of net assets | |
| |
| Germany 0.7% | |
| Volkswagen AG | 29,665 | 0.4 | 4,321,125 |
| Other Securities | | 0.3 | 1,889,143 |
| | | 0.7 | 6,210,268 |
| |
| Italy 0.1% | |
| Other Securities | | 0.1 | 575,298 |
| |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Republic of Korea 0.4% | |
| Other Securities | | 0.4 | 4,232,320 |
| Total Preferred Stock | |
| (Cost $10,199,858) | | | 11,017,886 |
|
| Rights 0.0% of net assets | |
| |
| Republic of Korea 0.0% | |
| Other Securities | | 0.0 | 81,171 |
| |
| United Kingdom 0.0% | |
| Other Securities | | 0.0 | 245,105 |
| Total Rights | |
| (Cost $884,794) | | | 326,276 |
|
| Other Investment Company 0.5% of net assets | |
| |
| United States 0.5% | |
| Securities Lending Collateral 0.5% | |
| Wells Fargo Government Money Market Fund, Select Class 0.04% (c) | 5,038,856 | 0.5 | 5,038,856 |
| Total Other Investment Company | |
| (Cost $5,038,856) | | | 5,038,856 |
Security
Rate, Maturity Date | Face
Amount ($) | % of Net
Assets | Value
($) |
| Short-Term Investments 0.0% of net assets | |
| |
| Time Deposits 0.0% | |
| Other Securities | | 0.0 | 223,991 |
| Total Short-Term Investments | |
| (Cost $223,991) | | | 223,991 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | |
| Long | |
| MSCI EAFE Index, expires 12/18/20 | 79 | 7,046,405 | (87,751) |
The following footnotes may not be applicable to the Condensed Portfolio Holdings. Please refer to the complete schedule of portfolio holdings.
| * | Non-income producing security. |
| (a) | Fair-valued by management using significant unobservable inputs in accordance with procedures approved by the fund’s Board of Trustees. |
| (b) | All or a portion of this security is on loan. Securities on loan were valued at $4,398,913. |
| (c) | The rate shown is the 7-day yield. |
| (d) | The rate shown is the current daily overnight rate. |
| (e) | Rate is negative due to the current daily overnight rate at the central bank of the denominated currency and therefore is non-income producing. |
| | |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Large Company Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
| CVA — | Dutch Certificate |
| REIT — | Real Estate Investment Trust |
| RSP — | Risparmio (Convertible Savings Shares) |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 and reflects the complete schedule of portfolio holdings (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 | |
| Assets | | | | | |
| Common Stock1 | $— | $550,335,991 | $— | $550,335,991 | |
| Australia | — | 53,468,809 | 638 | 53,469,447 | |
| Austria | 231,679 | 2,233,266 | — | 2,464,945 | |
| Belgium | 318,606 | 7,016,761 | — | 7,335,367 | |
| Canada | 63,781,399 | — | — | 63,781,399 | |
| Denmark | 681,518 | 9,973,767 | — | 10,655,285 | |
| Germany | 1,463,245 | 75,990,263 | — | 77,453,508 | |
| Hong Kong | — | 16,735,724 | 204,448 | 16,940,172 | |
| Netherlands | — | 27,014,217 | — * | 27,014,217 | |
| United Kingdom | 325,586 | 137,479,040 | — | 137,804,626 | |
| Preferred Stock1 | — | 11,017,886 | — | 11,017,886 | |
| Rights | | | | | |
| Republic of Korea | — | — | 81,171 | 81,171 | |
| United Kingdom | 245,105 | — | — | 245,105 | |
| Other Investment Company1 | 5,038,856 | — | — | 5,038,856 | |
| Short-Term Investments1 | — | 223,991 | — | 223,991 | |
| Liabilities | | | | | |
| Futures Contracts2 | (87,751) | — | — | (87,751) | |
| Total | $71,998,243 | $891,489,715 | $286,257 | $963,774,215 | |
| * | Level 3 amount shown includes securities determined to have no value at October 31, 2020. |
| 1 | As categorized in the complete schedule of Portfolio Holdings. |
| 2 | Futures contracts are valued at unrealized appreciation or depreciation. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Large Company Index Fund
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in unaffiliated issuers, at value (cost $997,505,329) including securities on loan of $4,398,913 | | $958,823,110 |
| Collateral invested for securities on loan, at value (cost $5,038,856) | | 5,038,856 |
| Foreign currency, at value (cost $47,156) | | 47,080 |
| Deposit with broker for futures contracts | | 641,529 |
| Receivables: | | |
| Investments sold | | 5,496,847 |
| Dividends | | 2,886,184 |
| Foreign tax reclaims | | 1,850,025 |
| Fund shares sold | | 1,221,510 |
| Income from securities on loan | + | 18,191 |
| Total assets | | 976,023,332 |
| Liabilities |
| Collateral held for securities on loan | | 5,038,856 |
| Payables: | | |
| Investments bought | | 90,615 |
| Investment adviser fees | | 222,531 |
| Due to custodian | | 3,743,911 |
| Fund shares redeemed | | 855,534 |
| Variation margin on futures contracts | + | 41,224 |
| Total liabilities | | 9,992,671 |
| Net Assets |
| Total assets | | 976,023,332 |
| Total liabilities | – | 9,992,671 |
| Net assets | | $966,030,661 |
| Net Assets by Source | | |
| Capital received from investors | | 1,137,935,745 |
| Total distributable loss | | (171,905,084) |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $966,030,661 | | 128,710,685 | | $7.51 |
| | | | | |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Large Company Index Fund
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends (net of foreign withholding tax of $3,675,424) | | $30,015,531 |
| Income from non-cash dividends | | 1,793,557 |
| Interest | | 4,392 |
| Securities on loan, net | + | 350,143 |
| Total investment income | | 32,163,623 |
| Expenses |
| Investment adviser fees | | 2,824,242 |
| Professional fees | + | 14,535* |
| Total expenses | | 2,838,777 |
| Expense reduction by CSIM | – | 14,535* |
| Net expenses | – | 2,824,242 |
| Net investment income | | 29,339,381 |
| Realized and Unrealized Gains (Losses) |
| Net realized losses on investments | | (56,016,612) |
| Net realized losses on futures contracts | | (1,172,106) |
| Net realized losses on foreign currency transactions | + | (151,603) |
| Net realized losses | | (57,340,321) |
| Net change in unrealized appreciation (depreciation) on investments | | (138,652,592) |
| Net change in unrealized appreciation (depreciation) on futures contracts | | (185,994) |
| Net change in unrealized appreciation (depreciation) on foreign currency translations | + | 108,774 |
| Net change in unrealized appreciation (depreciation) | + | (138,729,812) |
| Net realized and unrealized losses | | (196,070,133) |
| Decrease in net assets resulting from operations | | ($166,730,752) |
| * | Professional fees associated with the filing of tax claims in the European Union deemed to be non-routine expenses of the fund. See financial notes 2(d) and 4 for additional information. |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Large Company Index Fund
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $29,339,381 | $47,477,521 |
| Net realized losses | | (57,340,321) | (74,180,947) |
| Net change in unrealized appreciation (depreciation) | + | (138,729,812) | 115,623,816 |
| Increase (decrease) in net assets from operations | | (166,730,752) | 88,920,390 |
| Distributions to Shareholders | |
| Total distributions | | ($48,541,581) | ($43,980,238) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 46,294,520 | $338,877,413 | 48,492,601 | $406,679,894 |
| Shares reinvested | | 2,997,596 | 27,038,314 | 3,195,805 | 24,767,484 |
| Shares redeemed | + | (68,317,340) | (511,865,550) | (59,146,394) | (498,217,108) |
| Net transactions in fund shares | | (19,025,224) | ($145,949,823) | (7,457,988) | ($66,769,730) |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 147,735,909 | $1,327,252,817 | 155,193,897 | $1,349,082,395 |
| Total decrease | + | (19,025,224) | (361,222,156) | (7,457,988) | (21,829,578) |
| End of period | | 128,710,685 | $966,030,661 | 147,735,909 | $1,327,252,817 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $12.57 | $12.67 | $14.58 | $11.93 | $11.25 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.22 | 0.29 | 0.33 | 0.27 | 0.25 | |
| Net realized and unrealized gains (losses) | (0.97) | 0.25 | (1.70) | 2.67 | 0.66 | |
| Total from investment operations | (0.75) | 0.54 | (1.37) | 2.94 | 0.91 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.36) | (0.30) | (0.34) | (0.29) | (0.23) | |
| Distributions from net realized gains | — | (0.34) | (0.20) | — | — | |
| Total distributions | (0.36) | (0.64) | (0.54) | (0.29) | (0.23) | |
| Net asset value at end of period | $11.46 | $12.57 | $12.67 | $14.58 | $11.93 | |
| Total return | (6.28%) | 5.13% | (9.79%) | 25.23% | 8.29% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Total expenses | 0.39% | 0.39% | 0.39% | 0.48% 2 | 0.68% | |
| Net operating expenses | N/A | N/A | N/A 3 | 0.43% 2 | 0.49% | |
| Net investment income (loss) | 1.89% | 2.44% | 2.30% | 2.04% | 2.24% | |
| Portfolio turnover rate | 25% | 38% | 26% | 21% | 40% | |
| Net assets, end of period (x 1,000,000) | $577 | $775 | $763 | $749 | $476 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Effective May 1, 2017, the annual operating expense ratio was reduced. The ratio presented for period ended 10/31/17 is a blended ratio.
3
Effective May 1, 2017, the fund instituted a new fee structure and the contractual expense limitation was terminated.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Condensed Portfolio Holdings as of October 31, 2020
This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers, any holdings exceeding 1% of the fund’s net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-877-824-5615. This complete schedule, filed on the fund’s N-CSR(S), is also available on the U.S. Securities and Exchange Commission (SEC)’s website at www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Common Stock 99.1% of net assets | |
| |
| Australia 5.7% | |
| James Hardie Industries plc | 36,789 | 0.2 | 893,232 |
| JB Hi-Fi Ltd. | 27,980 | 0.2 | 934,965 |
| Other Securities | | 5.3 | 31,320,680 |
| | | 5.7 | 33,148,877 |
| |
| Austria 0.5% | |
| Other Securities | | 0.5 | 3,111,343 |
| |
| Belgium 1.1% | |
| Other Securities | | 1.1 | 6,242,515 |
| |
| Canada 7.4% | |
| Tourmaline Oil Corp. | 68,677 | 0.2 | 889,713 |
| Wheaton Precious Metals Corp. | 19,389 | 0.2 | 889,772 |
| Other Securities | | 7.0 | 41,180,310 |
| | | 7.4 | 42,959,795 |
| |
| Denmark 1.5% | |
| Other Securities | | 1.5 | 8,563,284 |
| |
| Finland 1.1% | |
| Huhtamaki Oyj | 18,245 | 0.2 | 891,223 |
| Other Securities | | 0.9 | 5,668,103 |
| | | 1.1 | 6,559,326 |
| |
| France 3.8% | |
| Iliad S.A. | 5,176 | 0.2 | 1,000,685 |
| SEB S.A. | 5,162 | 0.1 | 838,894 |
| UbiSoft Entertainment S.A. * | 10,281 | 0.2 | 908,156 |
| Worldline S.A. * | 11,848 | 0.2 | 877,539 |
| Other Securities | | 3.1 | 17,988,363 |
| | | 3.8 | 21,613,637 |
| |
| Germany 3.9% | |
| Kloeckner & Co. SE * | 153,376 | 0.1 | 861,970 |
| Other Securities | | 3.8 | 21,588,433 |
| | | 3.9 | 22,450,403 |
| |
| Greece 0.0% | |
| Other Securities | | 0.0 | — |
| |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Hong Kong 4.1% | |
| First Pacific Co., Ltd. | 3,262,000 | 0.2 | 1,013,397 |
| Xinyi Glass Holdings Ltd. | 410,000 | 0.2 | 900,375 |
| Other Securities | | 3.7 | 21,698,306 |
| | | 4.1 | 23,612,078 |
| |
| Ireland 0.4% | |
| Kingspan Group plc * | 12,386 | 0.2 | 1,079,738 |
| Other Securities | | 0.2 | 1,403,993 |
| | | 0.4 | 2,483,731 |
| |
| Israel 1.0% | |
| Other Securities | | 1.0 | 5,501,108 |
| |
| Italy 2.2% | |
| Other Securities | | 2.2 | 12,955,670 |
| |
| Japan 34.4% | |
| Azbil Corp. | 25,900 | 0.2 | 1,051,107 |
| Daifuku Co., Ltd. | 9,300 | 0.2 | 958,995 |
| Ibiden Co., Ltd. | 29,700 | 0.2 | 1,210,972 |
| Iwatani Corp. | 24,000 | 0.2 | 1,088,941 |
| Japan Exchange Group, Inc. | 41,400 | 0.2 | 1,010,707 |
| Kawasaki Kisen Kaisha Ltd. * | 70,900 | 0.2 | 866,395 |
| Kurita Water Industries Ltd. | 28,500 | 0.1 | 847,981 |
| Morinaga Milk Industry Co., Ltd. | 18,500 | 0.2 | 891,935 |
| Nabtesco Corp. | 23,900 | 0.2 | 892,862 |
| Nexon Co., Ltd. | 31,322 | 0.2 | 872,972 |
| Nippon Paint Holdings Co., Ltd. | 11,200 | 0.2 | 1,008,896 |
| Nissan Chemical Corp. | 17,200 | 0.2 | 912,815 |
| Nissin Foods Holdings Co., Ltd. | 10,400 | 0.2 | 900,530 |
| Nomura Research Institute Ltd. | 29,880 | 0.2 | 880,787 |
| Rinnai Corp. | 9,100 | 0.2 | 896,682 |
| Sanwa Holdings Corp. | 74,700 | 0.1 | 852,095 |
| Shimachu Co., Ltd. | 18,500 | 0.2 | 977,857 |
| Sundrug Co., Ltd. | 22,900 | 0.1 | 850,318 |
| Taiyo Yuden Co., Ltd. | 27,800 | 0.2 | 1,028,236 |
| Other Securities | | 30.9 | 180,551,125 |
| | | 34.4 | 198,552,208 |
| |
| Luxembourg 0.0% | |
| Other Securities | | 0.0 | — |
| |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Netherlands 1.6% | |
| PostNL N.V. * | 257,025 | 0.1 | 852,481 |
| Other Securities | | 1.5 | 8,116,014 |
| | | 1.6 | 8,968,495 |
| |
| New Zealand 1.0% | |
| Other Securities | | 1.0 | 5,764,362 |
| |
| Norway 1.4% | |
| Other Securities | | 1.4 | 7,778,982 |
| |
| Poland 0.9% | |
| Tauron Polska Energia S.A. * | 2,046,340 | 0.2 | 899,383 |
| Other Securities | | 0.7 | 4,380,872 |
| | | 0.9 | 5,280,255 |
| |
| Portugal 0.3% | |
| Other Securities | | 0.3 | 1,889,407 |
| |
| Republic of Korea 7.0% | |
| Doosan Infracore Co., Ltd. * | 124,413 | 0.2 | 920,521 |
| GS Engineering & Construction Corp. | 35,764 | 0.1 | 848,583 |
| Hyundai Wia Corp. | 23,565 | 0.2 | 875,088 |
| Kumho Petrochemical Co., Ltd. | 8,672 | 0.2 | 1,025,794 |
| LG Innotek Co., Ltd. | 6,312 | 0.1 | 855,696 |
| LS Corp. | 21,998 | 0.2 | 1,007,717 |
| Other Securities | | 6.0 | 34,630,640 |
| | | 7.0 | 40,164,039 |
| |
| Singapore 1.5% | |
| Venture Corp., Ltd. | 66,500 | 0.2 | 937,435 |
| Other Securities | | 1.3 | 7,649,416 |
| | | 1.5 | 8,586,851 |
| |
| Spain 1.3% | |
| Other Securities | | 1.3 | 7,504,744 |
| |
| Sweden 3.9% | |
| BillerudKorsnas AB | 60,629 | 0.2 | 947,090 |
| Kinnevik AB, B Shares | 29,562 | 0.2 | 1,210,532 |
| Svenska Cellulosa AB, S.C.A., B Shares * | 73,856 | 0.2 | 999,014 |
| Other Securities | | 3.3 | 19,099,414 |
| | | 3.9 | 22,256,050 |
| |
| Switzerland 3.4% | |
| Logitech International S.A. | 13,628 | 0.2 | 1,146,471 |
| Sunrise Communications Group AG * | 8,238 | 0.2 | 991,142 |
| Other Securities | | 3.0 | 17,712,270 |
| | | 3.4 | 19,849,883 |
| |
| United Kingdom 9.7% | |
| B&M European Value Retail S.A. | 140,792 | 0.2 | 883,598 |
| Howden Joinery Group plc * | 102,625 | 0.1 | 847,256 |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| William Hill plc * | 388,374 | 0.2 | 1,379,301 |
| Other Securities | | 9.2 | 53,106,804 |
| | | 9.7 | 56,216,959 |
| Total Common Stock | |
| (Cost $519,972,497) | | | 572,014,002 |
|
| Preferred Stock 0.4% of net assets | |
| |
| Germany 0.4% | |
| Other Securities | | 0.4 | 2,027,466 |
| Total Preferred Stock | |
| (Cost $1,579,320) | | | 2,027,466 |
|
| Rights 0.0% of net assets | |
| |
| Italy 0.0% | |
| Other Securities | | 0.0 | — |
| |
| Singapore 0.0% | |
| Other Securities | | 0.0 | — |
| Total Rights | |
| (Cost $—) | | | — |
|
| Other Investment Company 1.5% of net assets | |
| |
| United States 1.5% | |
| Securities Lending Collateral 1.5% | |
| Wells Fargo Government Money Market Fund, Select Class 0.04% (c) | 8,614,376 | 1.5 | 8,614,376 |
| Total Other Investment Company | |
| (Cost $8,614,376) | | | 8,614,376 |
Security
Rate, Maturity Date | Face
Amount ($) | % of Net
Assets | Value
($) |
| Short-Term Investments 0.1% of net assets | |
| |
| Time Deposits 0.1% | |
| Other Securities | | 0.1 | 696,509 |
| Total Short-Term Investments | |
| (Cost $696,509) | | | 696,509 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | |
| Long | |
| MSCI EAFE Index, expires 12/18/20 | 27 | 2,408,265 | (138,487) |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
The following footnotes may not be applicable to the Condensed Portfolio Holdings. Please refer to the complete schedule of portfolio holdings.
| * | Non-income producing security. |
| (a) | Fair-valued by management using significant unobservable inputs in accordance with procedures approved by the fund’s Board of Trustees. |
| (b) | All or a portion of this security is on loan. Securities on loan were valued at $7,928,976. |
| (c) | The rate shown is the 7-day yield. |
| (d) | The rate shown is the current daily overnight rate. |
| (e) | Rate is negative due to the current daily overnight rate at the central bank of the denominated currency and therefore is non-income producing. |
| | |
| CVA — | Dutch Certificate |
| REIT — | Real Estate Investment Trust |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 and reflects the complete schedule of portfolio holdings (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 | |
| Assets | | | | | |
| Common Stock1 | $— | $28,372,710 | $— | $28,372,710 | |
| Australia | 163,533 | 32,388,927 | 596,417 * | 33,148,877 | |
| Austria | 246,461 | 2,864,882 | — | 3,111,343 | |
| Canada | 42,959,795 | — | — | 42,959,795 | |
| Denmark | 1,370,110 | 7,193,174 | — | 8,563,284 | |
| Finland | 723,633 | 5,835,693 | — | 6,559,326 | |
| France | 1,946,878 | 19,666,759 | — | 21,613,637 | |
| Germany | 4,497,971 | 17,952,432 | — | 22,450,403 | |
| Greece | — | — | — * | — | |
| Hong Kong | 339,078 | 23,273,000 | — * | 23,612,078 | |
| Ireland | 1,079,738 | 1,403,993 | — | 2,483,731 | |
| Israel | 130,450 | 5,370,658 | — | 5,501,108 | |
| Italy | 218,945 | 12,734,269 | 2,456 * | 12,955,670 | |
| Japan | 552,175 | 198,000,033 | — | 198,552,208 | |
| Luxembourg | — | — | — * | — | |
| Netherlands | 1,122,951 | 7,845,544 | — | 8,968,495 | |
| Poland | 391,505 | 4,888,750 | — | 5,280,255 | |
| Portugal | — | 1,889,407 | — * | 1,889,407 | |
| Republic of Korea | 117,308 | 40,046,731 | — | 40,164,039 | |
| Spain | 1,631,438 | 5,515,142 | 358,164 * | 7,504,744 | |
| Sweden | 1,693,801 | 20,562,249 | — | 22,256,050 | |
| Switzerland | 33,840 | 19,816,043 | — | 19,849,883 | |
| United Kingdom | 6,149,295 | 50,039,882 | 27,782 * | 56,216,959 | |
| Preferred Stock1 | — | 2,027,466 | — | 2,027,466 | |
| Rights 1 | | | | | |
| Italy | — | — | — * | — | |
| Singapore | — | — | — * | — | |
| Other Investment Company1 | 8,614,376 | — | — | 8,614,376 | |
| Short-Term Investments1 | — | 696,509 | — | 696,509 | |
| Liabilities | | | | | |
| Futures Contracts2 | (138,487) | — | — | (138,487) | |
| Total | $73,844,794 | $508,384,253 | $984,819 | $583,213,866 | |
| * | Level 3 amount shown includes securities determined to have no value at October 31, 2020. |
| 1 | As categorized in the complete schedule of Portfolio Holdings. |
| 2 | Futures contracts are valued at unrealized appreciation or depreciation. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in unaffiliated issuers, at value (cost $522,248,326) including securities on loan of $7,928,976 | | $574,737,977 |
| Collateral invested for securities on loan, at value (cost $8,614,376) | | 8,614,376 |
| Foreign currency, at value (cost $79,160) | | 77,977 |
| Deposit with broker for futures contracts | | 448,800 |
| Receivables: | | |
| Investments sold | | 20,255 |
| Dividends | | 1,464,427 |
| Fund shares sold | | 748,304 |
| Foreign tax reclaims | | 647,885 |
| Income from securities on loan | + | 48,722 |
| Total assets | | 586,808,723 |
| Liabilities |
| Collateral held for securities on loan | | 8,614,376 |
| Payables: | | |
| Investments bought | | 447,460 |
| Investment adviser fees | | 206,519 |
| Fund shares redeemed | | 300,052 |
| Due to custodian | | 276,890 |
| Variation margin on futures contracts | + | 15,004 |
| Total liabilities | | 9,860,301 |
| Net Assets |
| Total assets | | 586,808,723 |
| Total liabilities | – | 9,860,301 |
| Net assets | | $576,948,422 |
| Net Assets by Source | | |
| Capital received from investors | | 591,764,529 |
| Total distributable loss | | (14,816,107) |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $576,948,422 | | 50,333,475 | | $11.46 |
| | | | | |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends (net of foreign withholding tax of $1,771,589) | | $13,258,840 |
| Income from non-cash dividends | | 987,855 |
| Interest | | 2,232 |
| Securities on loan, net | + | 654,673 |
| Total investment income | | 14,903,600 |
| Expenses |
| Investment adviser fees | | 2,560,565 |
| Total expenses | – | 2,560,565 |
| Net investment income | | 12,343,035 |
| Realized and Unrealized Gains (Losses) |
| Net realized losses on investments (net of foreign capital gain tax paid of $8,348) | | (47,413,575) |
| Net realized losses on futures contracts | | (1,039,983) |
| Net realized losses on foreign currency transactions | + | (62,055) |
| Net realized losses | | (48,515,613) |
| Net change in unrealized appreciation (depreciation) on investments | | (12,923,888) |
| Net change in unrealized appreciation (depreciation) on futures contracts | | (160,742) |
| Net change in unrealized appreciation (depreciation) on foreign currency translations | + | 32,975 |
| Net change in unrealized appreciation (depreciation) | + | (13,051,655) |
| Net realized and unrealized losses | | (61,567,268) |
| Decrease in net assets resulting from operations | | ($49,224,233) |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $12,343,035 | $18,989,748 |
| Net realized losses | | (48,515,613) | (12,664,287) |
| Net change in unrealized appreciation (depreciation) | + | (13,051,655) | 31,326,114 |
| Increase (decrease) in net assets from operations | | (49,224,233) | 37,651,575 |
| Distributions to Shareholders | |
| Total distributions | | ($21,815,081) | ($40,145,201) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 18,584,362 | $193,918,636 | 21,189,779 | $254,698,550 |
| Shares reinvested | | 1,327,830 | 17,115,730 | 2,920,765 | 31,485,839 |
| Shares redeemed | + | (31,234,955) | (338,304,616) | (22,650,454) | (271,063,058) |
| Net transactions in fund shares | | (11,322,763) | ($127,270,250) | 1,460,090 | $15,121,331 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 61,656,238 | $775,257,986 | 60,196,148 | $762,630,281 |
| Total increase or decrease | + | (11,322,763) | (198,309,564) | 1,460,090 | 12,627,705 |
| End of period | | 50,333,475 | $576,948,422 | 61,656,238 | $775,257,986 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Emerging Markets Large Company Index Fund
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $9.25 | $8.60 | $9.38 | $7.86 | $6.67 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.27 | 0.35 | 0.27 | 0.22 | 0.16 | |
| Net realized and unrealized gains (losses) | (1.65) | 0.54 | (0.83) | 1.47 | 1.22 | |
| Total from investment operations | (1.38) | 0.89 | (0.56) | 1.69 | 1.38 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.36) | (0.24) | (0.22) | (0.17) | (0.19) | |
| Net asset value at end of period | $7.51 | $9.25 | $8.60 | $9.38 | $7.86 | |
| Total return | (15.68%) | 10.73% | (6.09%) | 21.96% | 21.64% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Total expenses | 0.39% | 0.39% | 0.39% | 0.57% 2 | 0.88% | |
| Net operating expenses | N/A | N/A | N/A 3 | 0.43% 2 | 0.49% | |
| Net investment income (loss) | 3.32% | 3.93% | 2.92% | 2.62% | 2.41% | |
| Portfolio turnover rate | 32% | 38% | 19% | 18% | 20% | |
| Net assets, end of period (x 1,000,000) | $550 | $671 | $548 | $554 | $336 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Effective May 1, 2017, the annual operating expense ratio was reduced. The ratio presented for period ended 10/31/17 is a blended ratio.
3
Effective May 1, 2017, the fund instituted a new fee structure and the contractual expense limitation was terminated.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Emerging Markets Large Company Index Fund
Condensed Portfolio Holdings as of October 31, 2020
This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers, any holdings exceeding 1% of the fund’s net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-877-824-5615. This complete schedule, filed on the fund’s N-CSR(S), is also available on the U.S. Securities and Exchange Commission (SEC)’s website at www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Common Stock 94.9% of net assets | |
| |
| Brazil 5.0% | |
| Petroleo Brasileiro S.A. | 860,558 | 0.5 | 2,849,555 |
| Vale S.A. | 763,797 | 1.5 | 8,060,006 |
| Other Securities | | 3.0 | 16,466,995 |
| | | 5.0 | 27,376,556 |
| |
| Chile 0.9% | |
| Other Securities | | 0.9 | 4,973,798 |
| |
| China 30.5% | |
| Agricultural Bank of China Ltd., H Shares | 8,380,600 | 0.5 | 2,851,217 |
| Alibaba Group Holding Ltd. ADR * | 25,767 | 1.4 | 7,850,947 |
| Baidu, Inc. ADR * | 22,800 | 0.6 | 3,033,540 |
| Bank of China Ltd., H Shares | 24,342,234 | 1.4 | 7,688,764 |
| China Construction Bank Corp., H Shares | 26,762,960 | 3.4 | 18,442,705 |
| China Merchants Bank Co., Ltd., H Shares | 539,150 | 0.5 | 2,808,396 |
| China Mobile Ltd. | 1,816,555 | 2.0 | 11,111,030 |
| China Petroleum & Chemical Corp., H Shares | 22,614,400 | 1.6 | 8,830,266 |
| China Telecom Corp., Ltd., H Shares | 8,454,000 | 0.5 | 2,653,789 |
| CNOOC Ltd. | 5,088,075 | 0.8 | 4,655,363 |
| Industrial & Commercial Bank of China Ltd., H Shares | 19,248,172 | 2.0 | 10,930,345 |
| JD.com, Inc. ADR * | 30,953 | 0.5 | 2,523,289 |
| PetroChina Co., Ltd., H Shares | 12,722,000 | 0.6 | 3,572,812 |
| Ping An Insurance Group Co. of China Ltd., H Shares | 445,000 | 0.8 | 4,601,155 |
| Tencent Holdings Ltd. | 120,900 | 1.7 | 9,237,438 |
| Other Securities | | 12.2 | 67,055,568 |
| | | 30.5 | 167,846,624 |
| |
| Colombia 0.2% | |
| Other Securities | | 0.2 | 1,109,945 |
| |
| Czech Republic 0.2% | |
| Other Securities | | 0.2 | 955,034 |
| |
| Egypt 0.1% | |
| Other Securities | | 0.1 | 558,059 |
| |
| Greece 0.4% | |
| Other Securities | | 0.4 | 1,941,194 |
| |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Hungary 0.4% | |
| Other Securities | | 0.4 | 2,086,233 |
| |
| India 8.3% | |
| Infosys Ltd. | 439,668 | 1.1 | 6,299,186 |
| Reliance Industries Ltd. | 247,245 | 1.2 | 6,854,809 |
| Tata Consultancy Services Ltd. | 81,113 | 0.5 | 2,923,349 |
| Other Securities | | 5.5 | 29,814,613 |
| | | 8.3 | 45,891,957 |
| |
| Indonesia 1.2% | |
| Other Securities | | 1.2 | 6,739,369 |
| |
| Kuwait 0.6% | |
| Other Securities | | 0.6 | 3,284,351 |
| |
| Malaysia 1.6% | |
| Tenaga Nasional Berhad | 1,002,900 | 0.4 | 2,302,050 |
| Other Securities | | 1.2 | 6,416,092 |
| | | 1.6 | 8,718,142 |
| |
| Mexico 4.0% | |
| America Movil S.A.B. de C.V., Series L | 8,485,619 | 0.9 | 5,164,620 |
| Cemex S.A.B. de C.V., Series CPO | 8,672,656 | 0.7 | 3,581,664 |
| Grupo Financiero Banorte S.A.B. de C.V., Class O * | 548,100 | 0.4 | 2,441,857 |
| Other Securities | | 2.0 | 10,801,202 |
| | | 4.0 | 21,989,343 |
| |
| Philippines 0.3% | |
| Other Securities | | 0.3 | 1,817,518 |
| |
| Qatar 0.5% | |
| Other Securities | | 0.5 | 2,709,967 |
| |
| Russia 8.3% | |
| Gazprom PJSC - USD | 5,915,930 | 2.1 | 11,542,370 |
| Lukoil PJSC | 206,866 | 1.9 | 10,532,899 |
| Magnit PJSC | 43,263 | 0.5 | 2,570,389 |
| Rosneft Oil Co. PJSC | 578,190 | 0.5 | 2,555,298 |
| Sberbank of Russia PJSC | 1,859,090 | 0.9 | 4,704,371 |
| Other Securities | | 2.4 | 13,527,244 |
| | | 8.3 | 45,432,571 |
| |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Emerging Markets Large Company Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Saudi Arabia 2.1% | |
| Saudi Basic Industries Corp. | 179,181 | 0.8 | 4,297,631 |
| Other Securities | | 1.3 | 7,543,529 |
| | | 2.1 | 11,841,160 |
| |
| South Africa 5.0% | |
| MTN Group Ltd. | 1,218,243 | 0.8 | 4,349,749 |
| Sasol Ltd. * | 570,371 | 0.5 | 2,978,605 |
| Standard Bank Group Ltd. | 393,612 | 0.5 | 2,573,786 |
| Other Securities | | 3.2 | 17,658,745 |
| | | 5.0 | 27,560,885 |
| |
| Taiwan 20.5% | |
| Asustek Computer, Inc. | 356,041 | 0.5 | 3,024,963 |
| AU Optronics Corp. * | 9,017,800 | 0.7 | 3,642,137 |
| China Steel Corp. | 3,239,198 | 0.4 | 2,301,003 |
| Compal Electronics, Inc. | 3,624,305 | 0.4 | 2,361,229 |
| Hon Hai Precision Industry Co., Ltd. | 6,071,572 | 3.0 | 16,466,894 |
| Innolux Corp. * | 11,618,357 | 0.7 | 4,032,599 |
| MediaTek, Inc. | 160,338 | 0.7 | 3,811,276 |
| Nan Ya Plastics Corp. | 1,153,622 | 0.4 | 2,369,699 |
| Pegatron Corp. | 1,372,264 | 0.5 | 2,957,267 |
| Taiwan Semiconductor Manufacturing Co., Ltd. | 1,787,803 | 4.9 | 27,048,876 |
| United Microelectronics Corp. | 3,521,965 | 0.7 | 3,785,234 |
| Other Securities | | 7.6 | 40,914,606 |
| | | 20.5 | 112,715,783 |
| |
| Thailand 2.8% | |
| PTT PCL NVDR | 5,067,670 | 0.9 | 5,036,237 |
| The Siam Cement PCL NVDR | 221,700 | 0.4 | 2,402,271 |
| Other Securities | | 1.5 | 7,738,231 |
| | | 2.8 | 15,176,739 |
| |
| Turkey 1.3% | |
| Other Securities | | 1.3 | 7,286,922 |
| |
| United Arab Emirates 0.7% | |
| Other Securities | | 0.7 | 3,876,481 |
| Total Common Stock | |
| (Cost $526,484,143) | | | 521,888,631 |
|
| Preferred Stock 4.7% of net assets | |
| |
| Brazil 3.5% | |
| Banco Bradesco S.A. | 1,181,833 | 0.8 | 4,152,311 |
| Itau Unibanco Holding S.A. | 1,493,479 | 1.1 | 6,111,397 |
| Petroleo Brasileiro S.A. | 1,294,254 | 0.8 | 4,272,113 |
| Other Securities | | 0.8 | 4,690,827 |
| | | 3.5 | 19,226,648 |
| |
| Security | Number
of Shares | % of Net
Assets | Value
($) |
| Colombia 0.1% | |
| Other Securities | | 0.1 | 803,635 |
| |
| Russia 1.1% | |
| Transneft PJSC | 2,870 | 0.9 | 4,772,270 |
| Other Securities | | 0.2 | 1,391,943 |
| | | 1.1 | 6,164,213 |
| Total Preferred Stock | |
| (Cost $30,267,023) | | | 26,194,496 |
|
| Other Investment Company 0.1% of net assets | |
| |
| United States 0.1% | |
| Securities Lending Collateral 0.1% | |
| Other Securities | | 0.1 | 420,000 |
| Total Other Investment Company | |
| (Cost $420,000) | | | 420,000 |
Security
Rate, Maturity Date | Face
Amount ($) | % of Net
Assets | Value
($) |
| Short-Term Investments 0.0% of net assets | |
| |
| Time Deposits 0.0% | |
| Other Securities | | 0.0 | 91,937 |
| Total Short-Term Investments | |
| (Cost $91,937) | | | 91,937 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | |
| Long | |
| MSCI Emerging Markets Index, expires 12/18/20 | 28 | 1,542,660 | (32,981) |
The following footnotes may not be applicable to the Condensed Portfolio Holdings. 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 $398,843. |
| (b) | Fair-valued by management using significant unobservable inputs in accordance with procedures approved by the fund’s Board of Trustees. |
| (c) | The rate shown is the 7-day yield. |
| (d) | The rate shown is the current daily overnight rate. |
| (e) | Rate is negative due to the current daily overnight rate at the central bank of the denominated currency and therefore is non-income producing. |
| | |
| ADR — | American Depositary Receipt |
| GDR — | Global Depositary Receipt |
| NVDR — | Non-Voting Depositary Receipt |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Emerging Markets Large Company Index Fund
Condensed Portfolio Holdings as of October 31, 2020 (continued)
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 and reflects the complete schedule of portfolio holdings (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 | |
| Assets | | | | | |
| Common Stock1 | $— | $216,914,029 | $— | $216,914,029 | |
| Brazil | 27,376,556 | — | — | 27,376,556 | |
| China | 15,945,374 | 151,901,250 | — | 167,846,624 | |
| Colombia | 1,109,945 | — | — | 1,109,945 | |
| Mexico | 21,989,343 | — | — | 21,989,343 | |
| Philippines | — | — | 1,817,518 | 1,817,518 | |
| Russia | 41,738,662 | 3,693,909 | — | 45,432,571 | |
| Saudi Arabia | 1,543,404 | 10,297,756 | — | 11,841,160 | |
| South Africa | 2,528,646 | 25,032,239 | — | 27,560,885 | |
| Preferred Stock | | | | | |
| Brazil | 19,226,648 | — | — | 19,226,648 | |
| Colombia | 803,635 | — | — | 803,635 | |
| Russia | 5,995,089 | 169,124 | — | 6,164,213 | |
| Other Investment Company1 | 420,000 | — | — | 420,000 | |
| Short-Term Investments1 | — | 91,937 | — | 91,937 | |
| Liabilities | | | | | |
| Futures Contracts2 | (32,981) | — | — | (32,981) | |
| Total | $138,644,321 | $408,100,244 | $1,817,518 | $548,562,083 | |
| 1 | As categorized in the complete schedule of Portfolio Holdings. |
| 2 | Futures contracts are valued at unrealized appreciation or depreciation. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Emerging Markets Large Company Index Fund
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in unaffiliated issuers, at value (cost $556,843,103) including securities on loan of $398,843 | | $548,175,064 |
| Collateral invested for securities on loan, at value (cost $420,000) | | 420,000 |
| Foreign currency, at value (cost $256,009) | | 255,387 |
| Deposit with broker for futures contracts | | 157,410 |
| Receivables: | | |
| Fund shares sold | | 1,236,280 |
| Dividends | | 1,180,268 |
| Income from securities on loan | | 3,434 |
| Foreign tax reclaims | + | 838 |
| Total assets | | 551,428,681 |
| Liabilities |
| Collateral held for securities on loan | | 420,000 |
| Payables: | | |
| Investment adviser fees | | 193,265 |
| Fund shares redeemed | | 352,624 |
| Foreign capital gains tax | | 311,084 |
| Variation margin on futures contracts | + | 17,528 |
| Total liabilities | | 1,294,501 |
| Net Assets |
| Total assets | | 551,428,681 |
| Total liabilities | – | 1,294,501 |
| Net assets | | $550,134,180 |
| Net Assets by Source | | |
| Capital received from investors | | 662,911,120 |
| Total distributable loss | | (112,776,940) |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $550,134,180 | | 73,301,021 | | $7.51 |
| | | | | |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Emerging Markets Large Company Index Fund
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends (net of foreign withholding tax of $3,088,410) | | $21,908,994 |
| Interest | | 5,834 |
| Securities on loan, net | + | 8,814 |
| Total investment income | | 21,923,642 |
| Expenses |
| Investment adviser fees | | 2,312,739 |
| Total expenses | – | 2,312,739 |
| Net investment income | | 19,610,903 |
| Realized and Unrealized Gains (Losses) |
| Net realized losses on investments (net of foreign capital gain tax paid of $12,630) | | (41,079,144) |
| Net realized losses on futures contracts | | (654,564) |
| Net realized losses on foreign currency transactions | + | (286,349) |
| Net realized losses | | (42,020,057) |
| Net change in unrealized appreciation (depreciation) on investments (net of change in foreign capital gains tax of ($58,772)) | | (85,963,236) |
| Net change in unrealized appreciation (depreciation) on futures contracts | | (47,086) |
| Net change in unrealized appreciation (depreciation) on foreign currency translations | + | (24,982) |
| Net change in unrealized appreciation (depreciation) | + | (86,035,304) |
| Net realized and unrealized losses | | (128,055,361) |
| Decrease in net assets resulting from operations | | ($108,444,458) |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Emerging Markets Large Company Index Fund
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $19,610,903 | $24,384,488 |
| Net realized gains (losses) | | (42,020,057) | 6,327,116 |
| Net change in unrealized appreciation (depreciation) | + | (86,035,304) | 31,350,637 |
| Increase (decrease) in net assets from operations | | (108,444,458) | 62,062,241 |
| Distributions to Shareholders | |
| Total distributions | | ($26,542,518) | ($15,972,543) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 36,046,335 | $278,152,407 | 25,021,407 | $219,417,177 |
| Shares reinvested | | 2,049,543 | 19,245,216 | 1,405,982 | 11,419,761 |
| Shares redeemed | + | (37,357,533) | (283,186,415) | (17,582,733) | (154,001,819) |
| Net transactions in fund shares | | 738,345 | $14,211,208 | 8,844,656 | $76,835,119 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 72,562,676 | $670,909,948 | 63,718,020 | $547,985,131 |
| Total increase or decrease | + | 738,345 | (120,775,768) | 8,844,656 | 122,924,817 |
| End of period | | 73,301,021 | $550,134,180 | 72,562,676 | $670,909,948 |
Schwab Fundamental Index Funds | Annual Report
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 Fundamental US Large Company Index Fund | Schwab Target 2010 Fund |
| Schwab Fundamental US Small Company Index Fund | Schwab Target 2015 Fund |
| Schwab Fundamental International Large Company Index Fund | Schwab Target 2020 Fund |
| Schwab Fundamental International Small Company Index Fund | Schwab Target 2025 Fund |
| Schwab Fundamental Emerging Markets Large Company Index Fund | Schwab Target 2030 Fund |
| Schwab Fundamental Global Real Estate Index Fund | Schwab Target 2035 Fund |
| Schwab S&P 500 Index Fund | Schwab Target 2040 Fund |
| Schwab Small-Cap Index Fund® | Schwab Target 2045 Fund |
| Schwab U.S. Large-Cap Growth Index Fund | Schwab Target 2050 Fund |
| Schwab U.S. Large-Cap Value Index Fund | Schwab Target 2055 Fund |
| Schwab U.S. Mid-Cap Index Fund | Schwab Target 2060 Fund |
| Schwab Total Stock Market Index Fund® | Schwab Target 2010 Index Fund |
| Schwab International Index Fund® | Schwab Target 2015 Index Fund |
| Schwab MarketTrack All Equity Portfolio™ | Schwab Target 2020 Index Fund |
| Schwab MarketTrack Growth Portfolio™ | Schwab Target 2025 Index Fund |
| Schwab MarketTrack Balanced Portfolio™ | Schwab Target 2030 Index Fund |
| Schwab MarketTrack Conservative Portfolio™ | Schwab Target 2035 Index Fund |
| Laudus International MarketMasters Fund™ | Schwab Target 2040 Index Fund |
| Schwab Balanced Fund | Schwab Target 2045 Index Fund |
| Schwab Core Equity Fund | Schwab Target 2050 Index Fund |
| Schwab Dividend Equity Fund | Schwab Target 2055 Index Fund |
| Schwab Large-Cap Growth Fund | Schwab Target 2060 Index Fund |
| Schwab Small-Cap Equity Fund | Schwab Monthly Income Fund - Moderate Payout |
| Schwab Hedged Equity 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 one share class. Shares are bought and sold 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 may 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(S) 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 and available on the SEC’s website at www.sec.gov.
(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 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 | Annual Report
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 the mean of 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.
• Underlying funds: Mutual funds are valued at their respective NAVs.
• Cash management sweep time deposits: Balances held in cash management sweep time deposits are accounted for on a cost basis, which approximates fair 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 and futures contracts. 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
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Schwab Fundamental Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
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, 2020 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 fair 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 allow the funds or the lending agent to terminate any loan at any given time and the securities must be returned within the earlier of the standard trade settlement period or the specified time period under the relevant securities lending agreement. 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. The aggregate fair 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. Securities lending fees paid to the unaffiliated lending agents start at 10% of gross lending revenue, with subsequent breakpoints to a low of 7.5%. In this context, the gross lending revenue equals the income received from the investment of cash collateral and fees paid by borrowers less any rebates paid to the borrowers. Any expenses charged by the cash collateral fund are in addition to these fees. All remaining revenue is retained by the fund, as applicable. No portion of lending revenue is paid to or retained by Charles Schwab Investment Management, Inc. (CSIM or the investment adviser) or any affiliate of CSIM.
As of October 31, 2020, the funds had securities on loan, all of which were classified as common stocks. The value of the securities on loan and the related collateral as of October 31, 2020, if any, are disclosed in each fund’s Condensed Portfolio Holdings and Statement of Assets and Liabilities.
Cash Management Transactions: The funds may subscribe to the Brown Brothers Harriman & Co. (BBH) Cash Management Service Sweep (CMS Sweep). The BBH CMS Sweep is an investment product that automatically sweeps the funds’ cash balances into overnight offshore time deposits with either the BBH Grand Cayman branch or a branch of a pre-approved commercial bank. This fully automated program allows the funds to earn interest on cash balances, however, interest rates may be negative due to overnight rates at the central bank of the denominated currency. Excess cash invested with deposit institutions domiciled outside of
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Schwab Fundamental Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
the U.S., as with any offshore deposit, may be subject to sovereign actions in the jurisdiction of the deposit institution including, but not limited to, freeze, seizure or diminution. The funds bear the risk associated with the repayment of principal and payment of interest on such instruments by the institution with which the deposit is ultimately placed.
(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, in the form of cash or non-cash income such as in the form of additional securities, 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 date the ex-dividend date is confirmed. 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.
The Schwab Fundamental International Large Company Index Fund filed claims to recover taxes previously withheld in certain European Union countries on the basis that those countries had purportedly violated certain provisions in the Treaty on the Functioning of the European Union. These filings are subject to various administrative and judicial proceedings within these countries, and all professional fees associated with these filings have been paid by the investment adviser. For additional details see Affiliates and Affiliated Transactions in financial note 4, Other Affiliated Transactions.
(e) Expenses:
Pursuant to an Amended and Restated Investment Advisory and Administration Agreement (Advisory Agreement) between CSIM and the trust, CSIM pays the operating expenses of each fund, excluding acquired fund fees and expenses, taxes, any brokerage expenses, and extraordinary or non-routine expenses. Taxes, any brokerage expenses and extraordinary or non-routine expenses that are specific to a fund are charged directly to the fund.
(f) Distributions to Shareholders:
The funds make distributions from net investment income and net realized capital gains, if any, once a year.
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Schwab Fundamental Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
(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 funds intend to meet federal income and excise tax requirements for regulated investment companies under subchapter M of the Internal Revenue Code, as amended. Accordingly, the funds distribute substantially all of their net investment income and net realized capital gains, if any, to their shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.
(i) 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 accrued as of October 31, 2020, if any, are reflected in each fund’s Statement of Assets and Liabilities.
(j) 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. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. Markets may be impacted by economic, political, regulatory and other conditions, including economic sanctions and other government actions. In addition, the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters and epidemics, may also negatively affect the financial markets. As with any investment whose performance is tied to these markets, the value of an investment in a fund will fluctuate, which means that an investor could lose money over short or long periods.
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 respective 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.
Investment Style Risk. The funds are index funds. Therefore, each fund follows the securities included in its respective index 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, the fund’s performance may be below that of its respective index. Market disruptions could cause delays in an index’s rebalancing schedule which may result in the index and, in turn, a fund experiencing returns different than those that would have been achieved under a normal rebalancing schedule.
Sampling Index Tracking Risk. To the extent a fund uses a sampling method, the fund may not fully replicate its respective index and may hold securities not included in the index. As a result, the fund is subject to the risk that the investment adviser’s investment 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.
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Schwab Fundamental Index Funds
Financial Notes (continued)
3. Risk Factors (continued):
Concentration Risk. To the extent that a fund’s or its respective 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 vulnerable to adverse economic, market, political or regulatory occurrences affecting that market, industry, group of industries, sector, country or asset class.
Market Capitalization Risk. Securities issued by companies of different market capitalizations tend to go in and out of favor based on market and economic conditions. During a period when securities of a particular market capitalization fall behind other types of investments, a fund’s performance could be impacted.
Large-Cap Company Risk. Large-cap companies are generally more mature and the securities issued by these companies may not be able to reach the same levels of growth as the securities issued by small- or mid-cap companies.
Small-Cap Company Risk. Securities issued by small-cap companies may be riskier than those issued by larger companies, and their prices may move sharply, especially during market upturns and downturns.
Foreign Investment Risk. A fund’s investments in securities of foreign issuers involve certain risks that may be 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. There is a risk that investments in securities denominated in, and/or receiving revenues in, foreign currencies will decline in value relative to the U.S. dollar. Foreign securities may also include American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs) and European Depositary Receipts (EDRs), which 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 large percentage of the fund’s assets, the fund’s performance may be adversely affected by the economic, political, regulatory and social conditions in those countries, and the fund’s price may be more volatile than the price of a fund that is geographically diversified.
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 developed countries. As a result, there may be an increased risk of illiquidity and 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.
ETF Risk. Certain funds 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 holds, lack of liquidity in the market for an ETF’s shares can result in its value being more volatile than the underlying portfolio securities.
Derivatives Risk. Each fund may use derivatives to enhance returns or hedge against market declines. Examples of derivatives are options, futures, options on futures and swaps. An option is the right to buy or sell an instrument at a specific price before a specific date. A future is an agreement to buy or sell a financial instrument at a specific price on a specific day. A swap is an agreement whereby two parties agree to exchange payment streams calculated in relation to a rate, index, instrument or certain securities and a predetermined amount. A fund’s use of derivatives that are subject to regulation by the Commodity Futures Trading Commission (CFTC) could cause the fund to become a commodity pool, which would require the fund to comply with certain CFTC rules.
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. 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 the 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 the fund to realize higher amounts of short-term capital gains. A fund’s use of derivatives could reduce the fund’s performance, increase the fund’s volatility, and could cause the fund to lose more than the initial amount invested.
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Schwab Fundamental Index Funds
Financial Notes (continued)
3. Risk Factors (continued):
Liquidity Risk. A fund may be unable to sell certain securities, such as illiquid securities, readily at a favorable time or price, or the fund may have to sell them at a loss.
Securities Lending Risk. Securities lending involves the risk of loss of rights in, or delay in recovery of, the loaned securities 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:
Investment Adviser
CSIM, a wholly owned subsidiary of The Charles Schwab Corporation, serves as each fund’s investment adviser and administrator pursuant to an Advisory 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:
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 |
| 0.25% | 0.25% | 0.25% | 0.39% | 0.39% |
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. CSIM pays all applicable licensing fees.
Investments from Affiliates
Certain funds in the Fund Complex (for definition refer to Trustees and Officers section) may own shares of other funds in the Fund Complex. The table below reflects the percentages of shares of each fund in this report that are owned by other funds in the Fund Complex as of October 31, 2020, 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 | 1.8% | 2.1% | 3.9% | 5.4% | 5.8% |
| Schwab MarketTrack Balanced Portfolio | 1.0% | 1.0% | 1.6% | 2.3% | 2.3% |
| Schwab MarketTrack Conservative Portfolio | 0.4% | 0.3% | 0.6% | 0.8% | 0.8% |
| Schwab MarketTrack Growth Portfolio | 2.0% | 2.1% | 3.1% | 4.3% | 4.5% |
Other Affiliated Transactions
The professional fees related to foreign withholding tax claims discussed in financial note 2 were non-routine expenses. The investment adviser agreed to pay these professional fees, which are subject to reimbursement by the Schwab Fundamental International Large Company Index Fund to the extent the fund is able to successfully recover taxes withheld in the future.
The professional fees incurred by the Schwab Fundamental International Large Company Index Fund were $14,535 and the fund made no reimbursement to the investment adviser during the period ended October 31, 2020.
As of October 31, 2020, the balance of professional fees related to foreign withholding tax subject to future reimbursement by the fund to the investment adviser was $70,540 for the Fundamental International Large Company Index Fund.
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Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
No other amounts for additional tax reclaims are reflected in the financial statements due to the uncertainty surrounding the ultimate resolution of proceedings, the likelihood of receipt of these claims, and the potential timing of payment.
Interfund Borrowing and Lending
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. 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. 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.
Interfund Transactions
The funds may engage in transactions with certain other funds in the Fund Complex when permitted by applicable law. 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, 2020, each fund’s total aggregate security transactions with other funds in the Fund Complex as well as any realized gains (losses) were as follows:
| | Total Aggregate Transactions | Realized Gains (Losses) |
| Schwab Fundamental US Large Company Index Fund | $479,171,365 | $90,605,314 |
| Schwab Fundamental US Small Company Index Fund | 239,052,620 | 13,047,109 |
| Schwab Fundamental International Large Company Index Fund | 39,343,962 | (1,898,975) |
| Schwab Fundamental International Small Company Index Fund | 41,468,926 | 1,736,784 |
| Schwab Fundamental Emerging Markets Large Company Index Fund | 14,986,843 | 54,633 |
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 funds do not pay any interested or non-interested (independent trustees) trustees. The independent trustees are paid by CSIM. 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, the funds were participants with other funds in the Fund Complex in a joint, syndicated, committed $750 million line of credit (the Syndicated Credit Facility), which matured on October 1, 2020. On October 1, 2020, the Syndicated Credit Facility was amended to run for a new 364 day period with a line of credit of $850 million, maturing on September 30, 2021. Under the terms of the Syndicated Credit Facility, in addition to CSIM paying the interest charged on any borrowings by a fund, CSIM paid a commitment fee of 0.15% per annum on the funds’ proportionate share of the unused portion of the Syndicated Credit Facility.
During the period, the funds were participants with other funds in the Fund Complex in a joint, unsecured, uncommitted $500 million line of credit (the Uncommitted Credit Facility), with State Street Bank and Trust Company, which matured on November 29, 2019. On November 29, 2019, the Uncommitted Credit Facility was amended to run for a new 364 day period, which was scheduled to mature on November 27, 2020. However, on October 1, 2020, the Uncommitted Credit Facility was amended to run for a new 364 day period with a line of credit of $400 million, maturing on September 30, 2021. Under the terms of the Uncommitted Credit Facility, CSIM pays interest on the amount a fund borrows. There were no borrowings from either line 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 paid by CSIM. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.
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Schwab Fundamental 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 current value and variation margin for futures contracts held at October 31, 2020 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, if any. 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, 2020, the month-end average notional amounts of futures contracts held by the funds and the month-end average number of contracts held were as follows:
| | Notional Amounts | Number of Contracts |
| Schwab Fundamental US Large Company Index Fund | $19,598,327 | 128 |
| Schwab Fundamental US Small Company Index Fund | 7,570,890 | 101 |
| Schwab Fundamental International Large Company Index Fund | 6,563,722 | 73 |
| Schwab Fundamental International Small Company Index Fund | 4,271,225 | 48 |
| Schwab Fundamental Emerging Markets Large Company Index Fund | 2,881,382 | 57 |
8. Purchases and Sales of Investment Securities:
For the period ended October 31, 2020, purchases and sales of securities (excluding short-term obligations) were as follows:
| | Purchases
of Securities | Sales
of Securities |
| Schwab Fundamental US Large Company Index Fund | $634,253,255 | $1,039,392,492 |
| Schwab Fundamental US Small Company Index Fund | 445,713,163 | 703,594,013 |
| Schwab Fundamental International Large Company Index Fund | 160,159,418 | 328,116,477 |
| Schwab Fundamental International Small Company Index Fund | 162,936,026 | 298,674,174 |
| Schwab Fundamental Emerging Markets Large Company Index Fund | 194,117,140 | 188,516,195 |
9. Federal Income Taxes:
As of October 31, 2020, the tax basis cost of the funds’ investments and gross unrealized appreciation and depreciation 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 |
| Tax cost | $3,238,767,758 | | $1,255,407,137 | | $1,103,931,279 | | $580,272,049 | | $605,904,289 |
| Gross unrealized appreciation | $1,844,305,527 | | $412,388,278 | | $160,617,463 | | $137,598,410 | | $90,496,710 |
| Gross unrealized depreciation | (534,091,515) | | (263,412,066) | | (300,774,527) | | (134,656,593) | | (147,838,916) |
| Net unrealized appreciation (depreciation) | $1,310,214,012 | | $148,976,212 | | ($140,157,064) | | $2,941,817 | | ($57,342,206) |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Index Funds
Financial Notes (continued)
9. Federal Income Taxes (continued):
As of October 31, 2020, 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 | $99,511,360 | | $15,501,168 | | $23,922,591 | | $11,476,893 | | $16,742,726 |
| Undistributed long-term capital gains | 186,863,054 | | — | | — | | — | | — |
| Net unrealized appreciation (depreciation) on investments | 1,310,214,012 | | 148,976,212 | | (140,157,064) | | 2,941,817 | | (57,342,206) |
| Net other unrealized appreciation (depreciation) | — | | — | | 128,962 | | 39,651 | | (342,002) |
| Total | $1,596,588,426 | | $164,477,380 | | ($116,105,511) | | $14,458,361 | | ($40,941,482) |
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, realization for tax purposes of unrealized gains (losses) on futures contracts and the realization for tax purposes of unrealized appreciation on investments in Passive Foreign Investment Companies (PFIC) and partnership investments. The tax cost of the funds’ investments, disclosed above, have been adjusted from their book amounts to reflect these unrealized appreciation or depreciation differences, as applicable.
Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2020, the funds had capital loss carryforwards available to offset future net capital gains 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 |
| No expiration | $— | | $30,790,317 | | $55,799,573 | | $29,274,468 | | $71,835,458 |
| Total | $— | | $30,790,317 | | $55,799,573 | | $29,274,468 | | $71,835,458 |
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 fiscal year end distributions | | | | | |
| Ordinary income | $135,286,528 | $27,292,972 | $48,541,581 | $21,815,081 | $26,542,518 |
| Long-term capital gains | 145,433,758 | 43,502,511 | — | — | — |
| Prior fiscal year end distributions | | | | | |
| Ordinary income | $115,941,650 | $49,180,336 | $43,980,238 | $18,761,883 | $15,972,543 |
| Long-term capital gains | 268,964,966 | 107,997,280 | — | 21,383,318 | — |
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.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Index Funds
Financial Notes (continued)
9. Federal Income Taxes (continued):
As of October 31, 2020, 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 fiscal year ended October 31, 2020, the funds did not incur any interest or penalties.
10. Independent Registered Public Accounting Firm:
On June 8, 2020, the Audit, Compliance and Valuation Committee of the Board approved, and on June 9, 2020, the Board approved, Deloitte & Touche LLP as the independent registered accounting firm of the Schwab Funds Complex for fiscal periods ending after June 8, 2020.
On June 8, 2020, the PricewaterhouseCoopers LLP (the “Prior Auditor”) resigned as the independent registered public accounting firm of the Schwab Funds Complex. The Prior Auditor’s reports on the financial statements of the funds for the past two fiscal years, the years ended October 31, 2018 and October 31, 2019, did not contain an adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the last two fiscal year-ends and through June 8, 2020, there were no (1) disagreements with the Prior Auditor on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the Prior Auditor’s satisfaction, would have caused it to make reference to that matter in connection with its reports on the funds’ financial statements for such periods; or (2) “reportable events,” as that term is defined in Item 304 (a)(1)(v) of Regulation S-K under the Securities Exchange Act of 1934.
11. Subsequent Events:
Management has determined there are no subsequent events or transactions through the date the financial statements were issued that would have materially impacted the financial statements as presented.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Index Funds
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Schwab Capital Trust 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 and Schwab Fundamental Emerging Markets Large Company Index Fund:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statements of assets and liabilities, including the condensed portfolio holdings, 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 (the “Funds”), five of the funds constituting Schwab Capital Trust, as of October 31, 2020, and the related statements of operations, statements of changes in net assets, and the financial highlights for the year then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of each of the Funds as of October 31, 2020, and the results of their operations, the changes in their net assets, and the financial highlights for the year then ended in conformity with accounting principles generally accepted in the United States of America. The statements of changes in net assets for the year ended October 31, 2019 and the financial highlights for each of the four years in the period ended October 31, 2019 were audited by other auditors, whose report, dated December 16, 2019, expressed an unqualified opinion on such statements of changes in net assets and financial highlights.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2020, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
Deloitte & Touche LLP
Denver, Colorado
December 16, 2020
We have served as the auditor of one or more investment companies in the Schwab Funds Complex since 2020.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Index Funds
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 fiscal year ended October 31, 2020, 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 | 3,588,659 | 29,238,908 |
| Schwab Fundamental International Small Company Index Fund | 1,448,300 | 12,138,913 |
| Schwab Fundamental Emerging Markets Large Company Index Fund | 3,093,499 | 24,997,404 |
For corporate shareholders, the following percentage of the funds’ dividend distributions paid during the fiscal year ended October 31, 2020, qualify for the corporate dividends received deduction:
| | Percentage |
| Schwab Fundamental US Large Company Index Fund | 95.48 |
| Schwab Fundamental US Small Company Index Fund | 79.30 |
| 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, 2020, 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 2021 via IRS Form 1099 of the amounts for use in preparing their 2020 income tax return.
| | |
| Schwab Fundamental US Large Company Index Fund | $123,724,288 |
| Schwab Fundamental US Small Company Index Fund | 22,264,986 |
| Schwab Fundamental International Large Company Index Fund | 49,683,676 |
| Schwab Fundamental International Small Company Index Fund | 17,983,679 |
| Schwab Fundamental Emerging Markets Large Company Index Fund | 20,621,021 |
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, 2020:
| | |
| Schwab Fundamental US Large Company Index Fund | $145,433,758 |
| Schwab Fundamental US Small Company Index Fund | 43,502,511 |
| Schwab Fundamental International Large Company Index Fund | — |
| Schwab Fundamental International Small Company Index Fund | — |
| Schwab Fundamental Emerging Markets Large Company Index Fund | — |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Index Funds
Liquidity Risk Management Program (Unaudited)
The Funds have adopted and implemented a liquidity risk management program (the “program”) as required by Rule 22e-4 under the Investment Company Act of 1940, as amended. The Funds’ Board of Trustees (the “Board”) has designated the Funds’ investment adviser, Charles Schwab Investment Management, Inc. (“CSIM”) as the administrator of the program. Personnel of CSIM or its affiliates conduct the day-to-day operation of the program.
Under the program, CSIM manages a Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. The program is reasonably designed to assess and manage a Fund’s liquidity risk, taking into consideration the Fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably foreseeable stressed conditions; its historical redemption history and shareholder concentrations; and its cash holdings and access to other funding sources, including the custodian overdraft facility and lines of credit. CSIM’s process of determining the degree of liquidity of each Fund’s investments is supported by third-party liquidity assessment vendors.
The Funds’ Board reviewed a report at its meeting held on September 22, 2020 prepared by CSIM regarding the operation and effectiveness of the program for the period June 1, 2019, through May 31, 2020. No significant liquidity events impacting any of the Funds were noted in the report. In addition, CSIM provided its assessment that the program had been operating effectively in managing each Fund’s liquidity risk.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Index Funds
Investment Advisory Agreement Approval
The Investment Company Act of 1940, as amended (the 1940 Act), requires that 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 and administration agreement (the Agreement) between Schwab Capital Trust (the Trust) and Charles Schwab Investment Management, Inc. (CSIM) 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 (each, a Fund and collectively, 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, business goals and priorities, profitability, third-party oversight, corporate structure and operations. As part of the renewal process, the Independent Trustees’ legal counsel, on behalf of the Independent Trustees, sends an information request letter to CSIM seeking certain relevant information. The responses by CSIM are provided to the Trustees in the Board materials for their review prior to their meeting, and the Trustees are provided with the opportunity to request any additional materials. The Board also receives data provided by an independent provider of investment company data. 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 the Funds’ operations and performance, legal and compliance matters, risk management, portfolio turnover, and sales and marketing activity. In considering the renewal, the Independent Trustees receive advice from Independent Trustees’ legal counsel, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees participate in question and answer sessions with
representatives of CSIM and meet in executive session outside the presence of Fund management.
The Board, including a majority of the Independent Trustees, considered information relating to the continuance of the Agreement with respect to the Funds at meetings held on May 11, 2020 and June 9, 2020, and approved the renewal of the Agreement with respect to the Funds for an additional one-year term at the meeting on June 9, 2020 called for the purpose of voting on such approval.1
The Board’s approval of the continuance 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 each Fund 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 and benchmark data; |
| 3. | each Fund’s expenses and how those expenses compared to those of certain other similar mutual funds; |
| 4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to each Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
| 5. | the extent to which economies of scale would be realized as each 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 Funds and the resources of CSIM and its affiliates dedicated to the Funds. In this regard, the Trustees evaluated, among other things, CSIM’s experience, track record, compliance program, resources dedicated to hiring and retaining skilled personnel and specialized talent, and information security resources. The Trustees also considered information provided by CSIM relating to services and support provided with respect to each Fund’s portfolio management team, portfolio strategy, and internal investment guidelines, as well as trading infrastructure, liquidity management, product design and analysis, shareholder communications, securities valuation, fund accounting and custody, and vendor and risk oversight. The Trustees also considered investments CSIM has made in its infrastructure, including modernizing CSIM’s technology and use of data, increasing expertise in key areas (including portfolio management and trade operations), and improving business continuity, cybersecurity, due diligence, risk management processes, and information security programs,
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Index Funds
which are designed to provide enhanced services to each Fund and its shareholders. The Trustees also considered Schwab’s wide range of products, services, and channel alternatives such as investment research tools and an array of account features that benefit Fund shareholders who are brokerage clients of Schwab. Finally, the Trustees also considered Schwab’s reputation as a full service brokerage firm and its overall financial condition, including Schwab’s ability to maintain consistent operations and service levels during recent periods of remote work and market volatility. 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 each Fund’s performance in determining whether to renew the Agreement with respect to such Fund. Specifically, the Trustees considered each Fund’s performance relative to a peer category of other mutual funds and applicable indices/benchmarks, in light of total return, yield, if applicable, and market trends, as well as in consideration of each Fund’s investment style and strategy attributes and disclosures. As part of this review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the independent provider of investment company data who prepared the peer category analysis. In evaluating the performance of each Fund, the Trustees considered the risk profile for such Fund and such Fund’s demonstrated performance in tracking its benchmark index. The Trustees further considered the level of Fund performance in the context of their review of Fund expenses and adviser profitability discussed below and also noted that the Board and a designated committee of the Board review performance throughout the year. Following such evaluation, the Board concluded, within the context of its full deliberations, that with respect to each Fund, the performance of such Fund supported renewal of the Agreement with respect to such Fund.
Fund Expenses. With respect to each Fund’s 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 other similar mutual funds, such peer groups and comparisons having been selected and calculated by an independent provider of investment company data. CSIM reported to the Board, and the Board took into account, the risk assumed by CSIM in the development of products and provision of services as well as the competitive marketplace for financial products. The Trustees also considered fees charged by CSIM to other mutual funds and to other types of 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, and any differences in the nature and
scope of the services CSIM provides to these other accounts, as well as differences in the market for these types of accounts. Following such evaluation, the Board concluded, within the context of its full deliberations, that, with respect to each Fund, the expenses of such Fund are reasonable and supported renewal of the Agreement with respect to such Fund.
Profitability. The Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly and reviewed profitability on a pre-tax basis, without regard to distribution expenses. In this connection, the Trustees reviewed management’s profitability analyses. The Trustees also reviewed profitability of CSIM relating to the Schwab fund complex as a whole, noting the benefits to Fund shareholders of being part of the Schwab fund complex, including the allocations of certain fixed costs across the Funds and other funds in the complex. 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 compensation and profitability with respect to the Funds 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. The Trustees noted that CSIM continues to invest substantial sums in its business in order to provide enhanced research capabilities, services, and systems to benefit the Funds. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM with respect to each Fund is reasonable and supported renewal of the Agreement with respect to such Fund.
Economies of Scale. Although the Trustees recognized the difficulty of determining economies of scale with precision, the Trustees considered the potential existence of any economies of scale and whether those are passed along to a Fund’s shareholders by way of the relatively low advisory fee and unitary fee structure of the Funds through (i) the enhancement of services provided to the Funds in return for fees paid, including through investments by CSIM in CSIM’s infrastructure, including modernizing CSIM’s technology and use of data, increasing expertise and capabilities in key areas (including portfolio and trade operations), and improving business continuity, cybersecurity, due diligence, and information security programs, which are designed to provide enhanced services to the Funds and their shareholders; (ii) graduated investment advisory fee schedules or unitary fee structures, fee waivers, or expense caps by CSIM and its affiliates for those funds in the Schwab fund complex with such features; and (iii) pricing a fund to scale and keeping overall expenses down as the fund grows. The Trustees acknowledged that CSIM has shared any economies of scale with the Funds by investing in CSIM’s infrastructure, as discussed above, over time and that CSIM’s internal costs of
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Index Funds
providing investment management, technology, administrative, legal and compliance services to the Funds continues to increase as a result of regulatory or other developments. The Trustees considered that CSIM and its affiliates may employ contractual expense caps to protect shareholders from high fees when fund assets were relatively small, for example, in the case of newer funds or funds with investment strategies that are from time to time out of favor, because, among other reasons, 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 each Fund obtains reasonable benefits from economies of scale.
In the course of their deliberations, the Trustees may have accorded different weights to various factors and 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.
| 1 | The meeting on June 9, 2020 was held telephonically in reliance on exemptive relief from the in-person voting requirement under the 1940 Act as provided by the Securities and Exchange Commission. |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Index Funds
Trustees and Officers
The tables below give information about the trustees and officers of Schwab Capital Trust, which includes the funds covered in this report. The “Fund Complex” includes The Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust. The Fund Complex includes 100 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 1-877-824-5615.
| 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 |
Robert W. Burns
1959
Trustee
(Trustee of Schwab Strategic Trust since 2009; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016) | Retired/Private Investor (Jan. 2009 – present). Formerly, Managing Director, Pacific Investment Management Company, LLC (PIMCO) (investment management firm) and President, PIMCO Funds. | 100 | None |
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 since 2010; Schwab Strategic Trust since 2016) | Senior Fellow (Oct. 1979 – present), The Hoover Institution at Stanford University (public policy think tank); Senior Fellow (2000 – present), Stanford Institute for Economic Policy Research; Professor of Public Policy (1994 – 2015), Stanford University. | 100 | Director (2005 – 2020), Gilead Sciences, Inc. |
Nancy F. Heller
1956
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018) | Retired. President and Chairman (2014 – 2016), TIAA Charitable (financial services); Senior Managing Director (2003 – 2016), TIAA (financial services). | 100 | None |
Stephen Timothy Kochis
1946
Trustee
(Trustee of Schwab Strategic Trust since 2012; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016) | CEO and Owner (May 2012 – present), Kochis Global (wealth management consulting). | 100 | None |
David L. Mahoney
1954
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016) | Private Investor. | 100 | Director (2004 – present), Corcept Therapeutics Incorporated
Director (2009 – present), Adamas Pharmaceuticals, Inc.
Director (2003 – 2019), Symantec Corporation |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Index Funds
| 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 |
Jane P. Moncreiff
1961
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2019) | Consultant (2018 – present), Fulham Advisers LLC (management consulting); Chief Investment Officer (2009 – 2017), CareGroup Healthcare System, Inc. (healthcare). | 100 | None |
Kiran M. Patel
1948
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016) | Retired. Executive Vice President and General Manager of Small Business Group (Dec. 2008 – Sept. 2013), Intuit, Inc. (financial software and services firm for consumers and small businesses). | 100 | Director (2008 – present), KLA-Tencor Corporation |
Kimberly S. Patmore
1956
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016) | Consultant (2008 – present), Patmore Management Consulting (management consulting). | 100 | None |
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 since 2010; Schwab Strategic Trust since 2016) | Chairman, Chief Executive Officer and Founder (Mar. 1990 – present), Smith Graham & Co. (investment advisors). | 100 | Director (2012 – present), Eaton Corporation plc |
| 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 |
Walter W. Bettinger II2
1960
Chairman and 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 since 2010) | Director, President and Chief Executive Officer (Oct. 2008 – present), The Charles Schwab Corporation; President and Chief Executive Officer (Oct. 2008 – present) and Director (May 2008 – present), Charles Schwab & Co., Inc.; Director (Apr. 2006 – present), Charles Schwab Bank, SSB; Director (Nov. 2017 – present), Charles Schwab Premier Bank, SSB; Director (July 2019 – present), Charles Schwab Trust Bank; Director (May 2008 – present) and President and Chief Executive Officer (Aug. 2017 – present), Schwab Holdings, Inc.; Director (Oct. 2020 – present), TD Ameritrade Holding Corporation; Director (July 2016 – present), Charles Schwab Investment Management, Inc. | 100 | Director (2008 – present), The Charles Schwab Corporation |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Index Funds
| Interested 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 |
Jonathan de St. Paer2
1973
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2019) | Director (Apr. 2019 – present), President (Oct. 2018 – present), and Chief Executive Officer (Apr. 2019 – Nov. 2019), Charles Schwab Investment Management, Inc.; Senior Vice President (June 2020 – present), Charles Schwab Investment Advisory, Inc.; Trustee and Chief Executive Officer (Apr. 2019 – present) and President (Nov. 2018 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Director (Apr. 2019 – present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited; Senior Vice President (Apr. 2019 – present), Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014 – Mar. 2019), and Vice President (Jan. 2009 – Dec. 2013), Charles Schwab & Co., Inc. | 100 | None |
Joseph R. Martinetto2
1962
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016) | Chief Operating Officer (Feb. 2018 – present) and Senior Executive Vice President (July 2015 – Feb. 2018), The Charles Schwab Corporation; Senior Executive Vice President (July 2015 – present), Charles Schwab & Co., Inc.; Chief Financial Officer (July 2015 – Aug. 2017) and Executive Vice President and Chief Financial Officer (May 2007 – July 2015), The Charles Schwab Corporation and Charles Schwab & Co., Inc.; Director (May 2007 – present), Charles Schwab & Co., Inc.; Director (Apr. 2010 – present) and Chief Executive Officer (July 2013 – Apr. 2015), Charles Schwab Bank, SSB; Director (Nov. 2017 – present), Charles Schwab Premier Bank, SSB; Director (May 2007 – present), Chief Financial Officer (May 2007 – Aug. 2017), Senior Executive Vice President (Feb. 2016 – present), and Executive Vice President (May 2007 – Feb. 2016), Schwab Holdings, Inc.; Director (Oct. 2020 – present), TD Ameritrade Holding Corporation. | 100 | None |
| 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 |
Jonathan de St. Paer
1973
President and Chief Executive Officer
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018) | Director (Apr. 2019 – present), President (Oct. 2018 – present), and Chief Executive Officer (Apr. 2019 – Nov. 2019), Charles Schwab Investment Management, Inc.; Senior Vice President (June 2020 – present), Charles Schwab Investment Advisory, Inc.; Trustee and Chief Executive Officer (Apr. 2019 – present) and President (Nov. 2018 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Director (Apr. 2019 – present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited; Senior Vice President (Apr. 2019 – present), Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014 – Mar. 2019), and Vice President (Jan. 2009 – Dec. 2013), Charles Schwab & Co., Inc. |
Mark Fischer
1970
Treasurer, Chief Financial Officer and Chief Operating Officer
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2013) | Treasurer and Chief Financial Officer (Jan. 2016 – present) and Chief Operating Officer (Dec. 2020 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Assistant Treasurer (Dec. 2013 – Dec. 2015), Schwab Funds and Laudus Funds; Assistant Treasurer (Nov. 2013 – Dec. 2015), Schwab ETFs; Chief Financial Officer (Mar. 2020 – present) and Vice President (Oct. 2013 – present), Charles Schwab Investment Management, Inc.; Executive Director (Apr. 2011 – Sept. 2013), J.P. Morgan Investor Services; Assistant Treasurer (May 2005 – Mar. 2011), Massachusetts Financial Service Investment Management. |
Omar Aguilar
1970
Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President and Chief Investment Officer (Apr. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies (June 2011 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Head of the Portfolio Management Group and Vice President of Portfolio Management (May 2009 – Apr. 2011), Financial Engines, Inc. (investment management firm); Head of Quantitative Equity (July 2004 – Jan. 2009), ING Investment Management. |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Index Funds
| Officers of the Trust (continued) |
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 |
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, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President and Chief Investment Officer (Apr. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Investment Officer – Fixed Income (June 2011 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Senior Managing Director and Global Head of Active Fixed-Income Strategies (Jan. 2008 – Oct. 2010), State Street Global Advisors; Director of Alpha Strategies (Apr. 2006 – Jan. 2008), Loomis, Sayles & Company (investment management firm). |
David Lekich
1964
Chief Legal Officer and Secretary, Schwab Funds and Schwab ETFs
Vice President and Assistant Clerk, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President (Sept. 2011 – present) and Vice President (Mar. 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present) and Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (Apr. 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; Vice President and Assistant Clerk (Apr. 2011 – present), Laudus Funds; Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs. |
Catherine MacGregor
1964
Vice President and Assistant Secretary, Schwab Funds and Schwab ETFs
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 and Laudus Trust since 2005; Schwab Strategic Trust since 2009) | Vice President (July 2005 – present), Charles Schwab & Co., Inc.; Vice President (Sept. 2005 – present), Charles Schwab Investment Management, Inc.; Vice President (Dec. 2005 – present) and 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 (Oct. 2009 – present), Schwab ETFs. |
| 1 | Each Trustee shall hold office until the election and qualification of his or her successor, or until he or she dies, resigns or is removed. The retirement policy requires that each independent trustee retire by December 31 of the year in which the Trustee turns 74 or the Trustee’s twentieth year of service as an independent trustee on any trust in the Fund Complex, whichever occurs first. |
| 2 | Mr. Bettinger, Mr. de St. Paer and Mr. Martinetto are Interested Trustees. Mr. Bettinger is an Interested Trustee because he owns stock of The Charles Schwab Corporation (CSC), the parent company of Charles Schwab Investment Management, Inc. (CSIM), the investment adviser for the trusts in the Fund Complex, is an employee and director of Charles Schwab & Co., Inc. (CS&Co), the principal underwriter for The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust, and is a director of CSIM. Mr. de St. Paer is an Interested Trustee because he owns stock of CSC and is an employee and director of CSIM. Mr. Martinetto is an Interested Trustee because he owns stock of CSC and is an employee and director of CS&Co. |
| 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 Board. |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Index Funds
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.
Bloomberg Barclays US Aggregate Bond Index An index that is a broad-based benchmark measuring the performance of the U.S. investment grade, taxable bond market, including U.S. Treasuries, government-related and corporate bonds, mortgage pass-through securities, commercial mortgage-backed securities, and asset-backed securities that are publicly available for sale in the United States. To be eligible for inclusion in the index, securities must be fixed rate, non-convertible, U.S. dollar-denominated with at least $300 million or more of outstanding face value and have one or more years remaining to maturity. The index excludes certain types of securities, including tax-exempt state and local government series bonds, structured notes embedded with swaps or other special features, private placements, floating rate securities, inflation-linked bonds and Eurobonds. The index is market capitalization weighted and the securities in the index are updated on the last business day of each month.
Bloomberg Barclays US Treasury Bills 1–3 Month Index An index that includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months but more than 1 month, are rated investment grade and have $300 million or more of outstanding face value. It excludes zero-coupon STRIPS.
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.
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 Schwab Fundamental International Large Company Index Fund until the close of business on October 18, 2012 and the Russell RAFI Developed ex US Large Company Index (Net) from October 19, 2012 forward. The FTSE RAFI
Developed ex-US 1000 Index is composed of the largest 1,000 listed companies incorporated outside the United States, ranked by four fundamental financial measures of size, sales, cash flows, book value and dividends. The index is rebalanced and reconstituted annually.
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 Schwab Fundamental International Small Company Index Fund until the close of business on October 18, 2012 and the Russell RAFI Developed ex US Small Company Index (Net) from October 19, 2012 forward. The FTSE RAFI Developed ex US Mid Small 1500 Index 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 of firm size: book value, cash flow, sales and dividends. The equities with the highest fundamental strength are weighted according to their fundamental scores. The fundamentally weighted portfolio is rebalanced and reconstituted annually.
Fundamental Emerging Markets Large Company Spliced Index An internally calculated index comprised of the FTSE RAFI Emerging Index from inception of the Schwab Fundamental Emerging Markets Large Company Index Fund until the close of business on October 18, 2012 and the Russell RAFI Emerging Markets Large Company Index (Net) from October 19, 2012 forward. The FTSE RAFI Emerging Index is designed to track the performance of the largest emerging market equities, selected based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends. The equities with the highest fundamental strength are weighted according to their fundamental scores. The fundamentally weighted portfolio is rebalanced and reconstituted annually.
Fundamental U.S. Large Company Spliced Index An internally calculated index comprised of the FTSE RAFI US 1000 Index from inception of the Schwab Fundamental US Large Company Index Fund until the close of business on October 18, 2012 and the Russell RAFI US Large Company Index from October 19, 2012 forward. The FTSE RAFI US 1000 Index is designed to track the performance of the largest U.S. equities, selected based on the following four fundamental measures of firm size, book value, income, sales and dividends. The 1,000 equities with the highest fundamental strength are weighted by their fundamental scale. The fundamentally weighted portfolio is rebalanced and reconstituted annually.
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 Schwab Fundamental US Small Company Index Fund until the close of business on October 18, 2012 and the Russell RAFI US Small Company Index from October 19, 2012 forward. The FTSE RAFI US Mid Small 1500 Index is composed of approximately 1,500 listed small and medium sized companies incorporated in the United States, ranked by fundamental value. The fundamentally weighted portfolio is rebalanced and reconstituted annually.
market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.
MSCI EAFE Index (Net) A free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets in Europe, Australasia, and the Far East. 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.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Index Funds
MSCI Emerging Markets Index (Net) A free float-adjusted market capitalization weighted index that is designed to measure equity market performance in the global emerging markets. This series approximates the minimum possible dividend reinvestment. The 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 1000 Growth Index An index that measures the performance of those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values.
Russell 1000 Index An index that measures the performance of the 1,000 largest companies in the Russell 3000 Index, and represents approximately 92% of the total market capitalization of the Russell 3000 Index. The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.
Russell 1000 Value 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.
Russell 2000 Index An index that measures the performance of the 2,000 smallest companies in the Russell 3000 Index. The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.
Russell RAFI Developed ex US Large Company Index (Net) An index that ranks developed ex-U.S. companies in the FTSE Global Total Cap Index by fundamental measures of size and tracks the performance of those companies whose fundamental scores are in the top 87.5%. 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. Selecting
the developed ex-U.S. companies in the FTSE Global Total Cap Index measures the performance of the largest investable securities in developed countries globally, excluding companies assigned to the United States.
Russell RAFI Developed ex US Small Company Index (Net) An index that ranks developed ex-U.S. companies in the FTSE Global Total Cap Index by fundamental measures of size and tracks the performance of those companies whose fundamental scores rank below the 87.5% threshold. 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. Selecting the developed ex-U.S. companies in the FTSE Global Total Cap Index measures the performance of the smallest investable securities in developed countries globally, excluding companies assigned to the United States.
Russell RAFI Emerging Markets Large Company Index (Net) An index that ranks emerging market companies in the FTSE Global Total Cap Index by measures of fundamental size and tracks the performance of those companies whose fundamental scores are in the top 87.5%. 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. Selecting the emerging companies in the FTSE Global Total Cap Index measures the performance of the investable securities in emerging countries globally.
Russell RAFI US Large Company Index An index that ranks U.S. companies in the FTSE Global Total Cap Index. The Russell RAFI US Large Company Index includes only those securities that are members of the U.S. portion whose fundamental scores are in the top 87.5%. 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.
Russell RAFI US Small Company Index An index that ranks U.S. companies in the FTSE Global Total Cap Index. The Russell RAFI US Small Company Index includes only those securities that are members of the U.S. portion and rank below the 87.5% fundamental score threshold. 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.
S&P 500 Index An index that is designed to measure the performance of 500 leading publicly traded companies from a broad range of industries.
S&P Developed ex-U.S. Small Cap Index (Net) An index composed of the stocks representing the lowest 15% of float-adjusted market cap in each developed market country, excluding the U.S. The returns are calculated applying dividend withholding rates applicable to non-resident persons who do not benefit from double taxation treaties.
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.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Index Funds
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; and
• 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
© 2020 Schwab Funds. All rights reserved.
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Index Funds
Charles Schwab Investment Management
With a straightforward lineup of core products and solutions for building the foundation of a portfolio, Charles Schwab Investment Management advocates for investors of all sizes with a steadfast focus on lowering costs and reducing unnecessary complexity. The list below shows all currently available Schwab Funds®.
Investors should carefully consider information contained in the prospectus, or if available, the summary prospectus, including investment objectives, risks, charges and expenses before investing. Please call 1-877-824-5615 for a prospectus 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.schwabfunds.com/schwabfunds_prospectus, the SEC’s website at www.sec.gov, or by contacting Schwab Funds at 1-877-824-5615.
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.schwabfunds.com/schwabfunds_prospectus or the SEC’s website at www.sec.gov.
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 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 U.S. Large-Cap Growth Index Fund
Schwab U.S. Large-Cap Value Index Fund
Schwab U.S. Mid-Cap Index Fund
Schwab International Index Fund®
Asset Allocation Funds
Schwab Balanced Fund
Schwab MarketTrack Portfolios®
Schwab Target Funds
Schwab Target Index Funds
Schwab Monthly Income Funds
Bond Funds
Schwab Treasury Inflation Protected Securities Index Fund
Schwab U.S. Aggregate Bond Index Fund
Schwab Short-Term Bond Index Fund
Schwab Tax-Free Bond Fund1
Schwab California Tax-Free Bond Fund1
Schwab High Yield Municipal Bond Fund
Schwab Money Funds2
Schwab provides a broad choice of taxable and tax-exempt money market funds for both retail and institutional client types.
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
Funds
Schwab Funds
1-877-824-5615
© 2020 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC®
Printed on recycled paper.
| ¹ | State, local, and the Federal Alternative Minimum Tax may apply. Capital gains are not exempt from Federal Taxation. |
| ² | You could lose money by investing in the Schwab Money Funds. All Schwab Money Funds with the exception of Schwab Variable Share Price Money Fund seek to preserve the value of your investment at $1.00 per share, but cannot guarantee they will do so. Because the share price of Schwab Variable Share Price Money Fund will fluctuate, when you sell your shares they may be worth more or less than what you originally paid for them. All Schwab Money Funds with the exception of Schwab Government Money Fund, Schwab Retirement Government Money Fund, Schwab U.S. Treasury Money Fund, Schwab Treasury Obligations Money Fund and Schwab Government Money Market Portfolio may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Schwab Money Funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Schwab Money Funds’ sponsor has no legal obligation to provide financial support to the Funds, and you should not expect that the sponsor will provide financial support to the Funds at any time. |
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Annual Report | October 31, 2020
Schwab MarketTrack Portfolios®
Schwab MarketTrack
All Equity Portfolio™
Schwab MarketTrack
Growth Portfolio™
Schwab MarketTrack
Balanced Portfolio™
Schwab MarketTrack
Conservative Portfolio™
| New Notice Regarding Shareholder Report Delivery Options |
| Beginning on January 1, 2021, paper copies of a fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from a fund or from your financial intermediary (such as a bank or broker-dealer). Instead, the reports will be made available on a fund’s website www.schwabfunds.com/schwabfunds_prospectus, and you will be notified by mail each time a report is posted and the mailing will provide a website link to access the report. You will continue to receive other fund regulatory documents (such as prospectuses or supplements) in paper unless you have elected to receive all fund documents electronically. |
| If you would like to receive a fund’s future shareholder reports in paper free of charge after January 1, 2021, you can make that request: |
| • If you invest through Charles Schwab & Co, Inc. (broker-dealer), by calling 1-866-345-5954 and using the unique identifier attached to this mailing; |
| • If you invest through another financial intermediary (such as a bank or broker-dealer) by contacting them directly; or |
| • If owned directly through a fund by calling 1-800-407-0256. |
| If you already receive shareholder reports and other fund documents electronically, you will not be affected by this change and you need not take any action. |
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Schwab MarketTrack Portfolios
Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM)
Distributor: Charles Schwab & Co., Inc. (Schwab)
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
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.schwabfunds.com/schwabfunds_prospectus.
| Total Return for the 12 Months Ended October 31, 2020 |
| Schwab MarketTrack All Equity Portfolio (Ticker Symbol: SWEGX) | -1.35% |
| All Equity Composite Index | -1.05% |
| Fund Category: Morningstar Allocation—85%+ Equity1 | 2.47% |
| Performance Details | pages 7-9 |
| |
| Schwab MarketTrack Growth Portfolio (Ticker Symbol: SWHGX) | 0.74% |
| Growth Composite Index | 1.06% |
| Fund Category: Morningstar Allocation—70% to 85% Equity1 | 1.83% |
| Performance Details | pages 10-12 |
| |
| Schwab MarketTrack Balanced Portfolio (Ticker Symbol: SWBGX) | 2.37% |
| Balanced Composite Index | 2.70% |
| Fund Category: Morningstar Allocation—50% to 70% Equity1 | 3.88% |
| Performance Details | pages 13-15 |
| |
| Schwab MarketTrack Conservative Portfolio (Ticker Symbol: SWCGX) | 3.57% |
| Conservative Composite Index | 4.00% |
| Fund Category: Morningstar Allocation—30% to 50% Equity1 | 2.76% |
| Performance Details | pages 16-18 |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
The components that make up each of the composite indices 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.
| 1 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
Jonathan de St. Paer
President of Charles Schwab
Investment Management, Inc.
and the funds covered
in this report.
Dear Shareholder,
Equity market performance for the 12-month reporting period ended October 31, 2020 barely hints at the market turmoil investors endured this year. U.S. and international equity markets ended the period with mixed gains, including a 9.7% rise for the S&P 500® Index, a bellwether for the overall U.S. stock market, and most fixed-income markets ended the period with moderate gains. However, the past year was one of the most volatile in history. Market gains were robust through the last week of February 2020 before being wiped out as the spreading COVID-19 pandemic drove equities and corporate bonds sharply lower. In mid-March, market volatility spiked to its highest level since the peak of the Great Recession in 2008 with the S&P 500® Index dropping 30% over just 22 trading days in late February and early March. By early September, however, most broad U.S. equity markets had regained all the ground they lost in March, propelling the S&P 500® Index to new record highs. However, markets retreated and volatility began to increase again throughout September and October in the face of a resurgence of COVID-19 infections, corporate earnings concerns and growing uncertainty regarding the U.S. election.
High levels of volatility can undermine our confidence as investors, which can lead to emotion-based trading. Although it is important to reassess your individual risk tolerance and make strategic adjustments to your portfolio from time to time, impulsive reactions driven by fear can often make investing outcomes worse. At Charles Schwab Investment Management, we believe that the best way to avoid these pitfalls is to maintain a long-term investing plan. A commitment to a long-term investing plan can help make it significantly easier and less stressful to stay the course when market volatility rises.
The Schwab MarketTrack Portfolios are a convenient way of implementing a long-term plan, providing investors with four different allocation options based on their risk appetite. For those with a longer time horizon and a greater tolerance for volatility, the Schwab MarketTrack All Equity Portfolio is a diversified all-stock solution. At the other end of the risk spectrum, investors who are more risk averse or seeking short-term stability of their investment can opt to invest in the Schwab MarketTrack Conservative Portfolio, a solution with a larger allocation to bond holdings. The Schwab MarketTrack Growth Portfolio and Schwab MarketTrack Balanced Portfolio fill out the offerings in between. All four funds invest in passive strategies to keep costs down, combining investments in traditional market-cap index funds, Schwab Fundamental Index Funds, which select and weight stocks based on fundamental measures of company size rather than market capitalization, and bond funds.
Thank you for investing with Charles Schwab Investment Management, and for trusting us to help you achieve your financial goals. 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.schwabfunds.com. We are also happy to hear from you at 1-877-824-5615.
Sincerely,
“ A commitment to a long-term investing plan can help make it significantly easier and less stressful to stay the course when market volatility rises.”
Fundamental Index is a registered trademark of Research Affiliates LLC.
Past performance is no guarantee of future results.
Diversification and asset allocation strategies do not ensure a profit and cannot protect against losses in a declining market.
Management views may have changed since the report date.
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
The Investment Environment
The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms. For the reporting period, the S&P 500® Index returned 9.71%, with sectors that benefitted as a result of the COVID-19 pandemic and associated stay-at-home orders, such as the information technology sector, outperforming other sectors that were more impacted by the COVID-19 pandemic. U.S. large-cap stocks outperformed small-cap stocks, with the Russell 1000® Index and the Russell 2000® Index returning 10.87% and -0.14%, respectively, for the reporting period. Among large-cap stocks, growth stocks outperformed value stocks by a large margin, with the Russell 1000® Growth Index and Russell 1000® Value Index returning 29.22% and -7.57%, respectively, for the reporting period. Among international markets, the MSCI EAFE® Index (Net)*, a broad measure of developed international equity performance, returned -6.86% for the reporting period and the MSCI Emerging Markets Index (Net)* returned 8.25% for the reporting period. Fixed-income markets were particularly strong over the period with the Bloomberg Barclays US Aggregate Bond Index returning 6.19% and the FTSE non-US Dollar World Government Bond Index returning 4.99% for the reporting period.
Asset Class Performance Comparison % returns during the 12 months ended October 31, 2020
Index figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. 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 may have changed since the report date.
| * | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
The Investment Environment (continued)
Prior to the onset of the COVID-19 pandemic, the U.S. economy, despite ongoing trade tensions with China, maintained steady growth, albeit at a slowing pace. However, amid the fallout of the COVID-19 pandemic, the U.S. entered recessionary territory with record speed. U.S. gross domestic product (GDP) fell steeply, declining 5.0% and 31.4% for the first and second quarters of 2020, respectively, with the second quarter representing the largest contraction in U.S. GDP since 1947 when modern GDP measurements began. GDP subsequently jumped by 33.1% for the third quarter of 2020, reflecting increased consumer and business spending. Unemployment remained at record lows through February before a record number of unemployment claims in March resulted in the largest monthly increase in the U.S. unemployment rate since January 1975. In April, this record was broken again when unemployment skyrocketed, rising to the highest level since the Great Depression. Unemployment declined in May through October, dropping below double digits beginning in August. Consumer confidence remained solid through February, but was volatile over the remainder of the reporting period.
Outside the U.S., conditions continued to soften, dampened by slowing economic output, slumping world trade, geopolitical concerns, and the COVID-19 pandemic. The COVID-19 pandemic exacerbated economic weakness around the globe, dramatically slowing growth amid stay-at-home orders, supply chain disruptions, and broadly diminishing demand. In the first half of the reporting period, oil prices deteriorated amid significantly reduced demand, coupled with rising U.S. crude production and a price war between Russia and Saudi Arabia. In April, oil futures briefly fell into negative territory as storage capacity evaporated and demand waned. However, as production was slashed, relieving pressure on constrained storage capacity, demand also stabilized. First and second quarter 2020 growth was negative in the eurozone and the United Kingdom. In January, Brexit occurred with the formal departure of the United Kingdom from the European Union resulting in an 11-month transition period with respect to economic and customs matters. Japan fared slightly better, although GDP still contracted for the first and second quarters of 2020. Even China and India, which had maintained stronger growth than many developed countries, showed weakness. In China, GDP contracted in the first quarter, but rebounded in the second and third quarters. While India’s second quarter GDP contracted, third quarter GDP was positive.
Many central banks around the world, including the U.S. Federal Reserve (Fed), reduced their policy rates over the reporting period, while others maintained low—and for some international central banks, negative—interest rates. In the U.S., after enacting three interest rate cuts in the second half of 2019 and as the economic implications of the COVID-19 pandemic grew, the Fed cut interest rates by 0.50% in early March and by 1.00% in mid-March, resulting in a federal funds rate of 0.00% to 0.25%. In addition, the Fed also announced extensive emergency measures to support the economy in light of the COVID-19 pandemic, including large purchases of U.S. Treasuries and other securities to support smooth market function, facilitating the flow of credit to municipalities, new financing for employers, consumers, and businesses, and the establishment of facilities to support credit to businesses and consumers alike. In August, the Fed announced that it was shifting its interest rate policy approach to potentially allow inflation to rise above its 2% target for periods of time even in times of rising employment. Outside the U.S., central banks were similarly accommodative. The European Central Bank held its policy rate at 0.00%, unchanged since March 2016, and launched a new asset purchase program to help counter the impact of the COVID-19 pandemic. The Bank of Japan upheld its short-term interest rate target of -0.1%, also unchanged since 2016, and increased the annual pace of its purchases of exchange-traded funds (ETFs) and other assets. The Bank of England lowered its key official bank rate from 0.75% to 0.10% in two emergency rate cuts in March. Central banks in key emerging market economies—including China, India, Mexico, Russia, and Thailand—lowered their policy rates or maintained already low rates in response to pandemic-driven pressures.
Throughout most of the reporting period, bond prices rose on strong demand, driving yields down. (Bond prices and bond yields typically move in opposite directions.) Corporate credit markets were particularly strong. At the end of March 2020, as equity markets plummeted, as investors sought the perceived safety of asset classes such as fixed-income securities, and as the Fed implemented additional rate cuts, demand for U.S. Treasuries soared, driving yields to historic lows. The yield on the 10-year U.S. Treasury fell from 1.69% at the beginning of the reporting period to 0.88% at the end of the reporting period. The yield on the three-month U.S. Treasury fell from 1.54% to 0.09% over the reporting period. Yields on longer-term U.S. Treasuries trended upward late in the reporting period in anticipation of a new fiscal aid package and hope for economic improvement in 2021.
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
 | Zifan Tang, Ph.D., CFA, Senior Portfolio Manager, is responsible for the co-management of the funds. Prior to joining CSIM in January 2012, Ms. Tang was a product manager at Thomson Reuters and from 1997 to 2009 worked as a portfolio manager at Barclays Global Investors (now known as BlackRock). |
 | Patrick Kwok, CFA, Portfolio Manager, is responsible for the co-management of the funds. Previously, Mr. Kwok served as an associate portfolio manager with CSIM from 2012 to 2016. Prior to that, he worked as a fund administration manager for CSIM, where he was responsible for oversight of sub-advisers, trading, cash management, and fund administration for the Charles Schwab Trust Bank Collective Investment Trusts and Schwab’s multi-asset mutual funds. Prior to joining CSIM in 2008, Mr. Kwok spent two years as an asset operations specialist at Charles Schwab Trust Company. He also worked for one year at State Street Bank & Trust as a portfolio accountant and pricing specialist. |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack All Equity Portfolio as of October 31, 2020
The Schwab MarketTrack All Equity Portfolio (the fund) seeks high capital growth through an all-stock portfolio. To pursue its goal, the fund maintains a defined asset allocation. The fund’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, 2020, the fund remained close to the target allocations of 50% in U.S. large-cap, 30% in international, and 15% in U.S. small-cap stocks. The fund invests mainly in other affiliated Schwab Funds, including index funds and exchange-traded funds (ETFs), which seek to track or replicate the total returns of various market indices. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms.
Performance. For the 12-month reporting period ended October 31, 2020, the fund returned -1.35%. The fund’s custom blended comparative index, the All Equity Composite Index (the composite index), returned -1.05%.
Positioning and Strategies. Over the reporting period, the fund’s asset allocations were broadly in line with those of the composite index.
The fund’s international equity allocations detracted from the total return of the fund. The fund’s position in the Schwab International Index Fund was the largest detractor from the total return of the fund, returning approximately -6.6% for the reporting period, but slightly outperformed the MSCI EAFE® Index (Net), its comparative index, which returned approximately -6.9%, contributing to relative performance. The Schwab Fundamental Emerging Markets Large Company Index Fund detracted from the fund’s total return and relative performance, returning approximately -15.8% for the reporting period. The Schwab Fundamental International Large Company Index Fund and Schwab Fundamental International Small Company Index Fund detracted from the fund’s total return, returning approximately -13.3% and -6.3%, respectively, for the reporting period, but both slightly contributed to the relative performance of the fund.
The fund’s real estate allocation was added in February of 2020 and also detracted from the fund’s total return. The Schwab U.S. REIT ETF returned approximately -17.7% while held by the fund.
The fund’s U.S. equity allocations contributed to the total return of the fund. The Schwab S&P 500 Index Fund contributed to the total return of the fund, returning approximately 9.7% for the reporting period. The Schwab S&P 500 Index Fund was the fund’s top contributor, largely due to the Schwab S&P 500 Index Fund’s large position within the fund. The Schwab U.S. Large-Cap Growth Index Fund was added in February 2020 and also contributed to the total return of the fund, returning approximately 26.0% while held by the fund. The Schwab Fundamental US Small Company Index Fund and Schwab Fundamental US Large Company Index Fund detracted from the total return of the fund, returning approximately -10.4% and -2.3%, respectively, for the reporting period. The Schwab Small-Cap Index Fund also detracted from the total return of the fund and was flat for the reporting period.
Management views and portfolio holdings may have changed since the report date.
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack All Equity Portfolio
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab MarketTrack All Equity Portfolio (5/19/98) | -1.35% | 6.99% | 8.54% |
| S&P 500® Index | 9.71% | 11.71% | 13.01% |
| All Equity Composite Index | -1.05% | 7.49% | 9.08% |
| Fund Category: Morningstar Allocation—85%+ Equity2 | 2.47% | 6.84% | 8.40% |
| Fund Expense Ratio3: 0.53% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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 0.13% of acquired fund fees and expenses (AFFE), which are indirect expenses incurred by the fund through its investments in the underlying funds. Reflects the total annual fund operating expenses without contractual fee waivers. For actual expense ratios during the period, not including AFFE, refer to the financial highlights section of the financial statements. |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack All Equity Portfolio
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 11 |
| Portfolio Turnover Rate | 18% |
Asset Class Weightings % of Investments1
Top Holdings % of Net Assets2,3
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 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
| 3 | The holdings listed exclude any temporary liquidity investments. |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Growth Portfolio as of October 31, 2020
The Schwab MarketTrack Growth Portfolio (the fund) seeks high capital growth with less volatility than an all-stock portfolio. To pursue its goal, the fund maintains a defined asset allocation. The fund’s target allocation includes stock, bond, and cash investments. For the 12-month reporting period ended October 31, 2020, the fund remained close to the target allocations of 80% equity, 16% fixed income, and 4% cash and cash equivalents (including money market funds). The fund invests mainly in other affiliated Schwab Funds, including index funds and exchange-traded funds (ETFs), which seek to track or replicate the total returns of various market indices. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms. Bond prices generally rose over the reporting period as yields fell.
Performance. For the 12-month reporting period ended October 31, 2020, the fund returned 0.74%. The fund’s custom blended comparative index, the Growth Composite Index (the composite index), returned 1.06%.
Positioning and Strategies. Over the reporting period, the fund’s asset allocations were broadly in line with those of the composite index.
The fund’s U.S. equity allocations contributed to the total return of the fund. The Schwab S&P 500 Index Fund contributed to the total return of the fund, returning approximately 9.7% for the reporting period. The Schwab S&P 500 Index Fund was the fund’s top contributor, largely due to the Schwab S&P 500 Index Fund’s large position within the fund. The Schwab U.S. Large-Cap Growth Index Fund was added in February 2020 and also contributed to the total return of the fund, returning approximately 26.0% while held by the fund. The Schwab Fundamental US Small Company Index Fund and Schwab Fundamental US Large Company Index Fund detracted from the total return of the fund, returning approximately -10.4% and -2.3%, respectively, for the reporting period. The Schwab Small-Cap Index Fund also detracted from the total return of the fund and was flat for the reporting period.
The fund’s fixed-income allocation also contributed to the total return of the fund with the Schwab U.S. Aggregate Bond Index Fund returning approximately 6.1% for the reporting period. The Schwab U.S. Aggregate Bond Index Fund generally tracked its comparative index, the Bloomberg Barclays US Aggregate Bond Index, which returned approximately 6.2%.
The fund’s international equity allocations detracted from the total return of the fund. The fund’s position in the Schwab International Index Fund was the largest detractor from the total return of the fund, returning approximately -6.6% for the reporting period, but slightly outperformed the MSCI EAFE® Index (Net), its comparative index, which returned approximately -6.9%, contributing to relative performance. The Schwab Fundamental International Large Company Index Fund also detracted from the fund’s total return, returning approximately -13.3% for the reporting period but slightly contributed to the relative performance of the fund. The Schwab Fundamental Emerging Markets Large Company Index Fund detracted from the fund’s total return and relative performance, returning approximately -15.8% for the reporting period. The Schwab Fundamental International Small Company Index Fund detracted from the fund’s total return, returning approximately -6.3%, for the reporting period, but slightly contributed to the relative performance of the fund.
The fund’s real estate allocation was added in February of 2020 and also detracted from the fund’s total return. The Schwab U.S. REIT ETF returned approximately -17.7% while held by the fund.
Management views and portfolio holdings may have changed since the report date.
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Growth Portfolio
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab MarketTrack Growth Portfolio (11/20/95) | 0.74% | 6.65% | 7.83% |
| S&P 500® Index | 9.71% | 11.71% | 13.01% |
| Bloomberg Barclays US Aggregate Bond Index | 6.19% | 4.08% | 3.55% |
| Growth Composite Index | 1.06% | 7.14% | 8.32% |
| Fund Category: Morningstar Allocation—70% to 85% Equity2 | 1.83% | 6.21% | 7.46% |
| Fund Expense Ratio3: 0.51% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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 0.11% of acquired fund fees and expenses (AFFE), which are indirect expenses incurred by the fund through its investments in the underlying funds. Reflects the total annual fund operating expenses without contractual fee waivers. For actual expense ratios during the period, not including AFFE, refer to the financial highlights section of the financial statements. |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Growth Portfolio
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 14 |
| Portfolio Turnover Rate | 19% |
Asset Class Weightings % of Investments1
Top Holdings % of Net Assets2,3
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 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
| 3 | The holdings listed exclude any temporary liquidity investments. |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Balanced Portfolio as of October 31, 2020
The Schwab MarketTrack Balanced Portfolio (the fund) seeks both capital growth and income. To pursue its goal, the fund maintains a defined asset allocation. The fund’s target allocation includes bond, stock and cash investments. For the 12-month reporting period ended October 31, 2020, the fund remained close to the target allocations of 60% equity, 36% fixed income, and 4% cash and cash equivalents (including money market funds). The fund invests mainly in other affiliated Schwab Funds, including index funds and exchange-traded funds (ETFs), which seek to track or replicate the total returns of various market indices. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms. Bond prices generally rose over the reporting period as yields fell.
Performance. For the 12-month reporting period ended October 31, 2020, the fund returned 2.37%. The fund’s custom blended comparative index, the Balanced Composite Index (the composite index), returned 2.70%.
Positioning and Strategies. Over the reporting period, the fund’s asset allocations were broadly in line with those of the composite index.
The fund’s U.S. equity allocations contributed to the total return of the fund. The Schwab S&P 500 Index Fund contributed to the total return of the fund, returning approximately 9.7% for the reporting period. The Schwab S&P 500 Index Fund was the fund’s top contributor, largely due to the Schwab S&P 500 Index Fund’s large position within the fund. The Schwab U.S. Large-Cap Growth Index Fund was added in February 2020 and also contributed to the total return of the fund, returning approximately 26.0% while held by the fund. The Schwab Fundamental US Small Company Index Fund and Schwab Fundamental US Large Company Index Fund detracted from the total return of the fund, returning approximately -10.4% and -2.3%, respectively, for the reporting period. The Schwab Small-Cap Index Fund also detracted from the total return of the fund and was flat for the reporting period.
The fund’s fixed-income allocation also contributed to the total return of the fund with the Schwab U.S. Aggregate Bond Index Fund returning approximately 6.1% for the reporting period. The Schwab U.S. Aggregate Bond Index Fund generally tracked its comparative index, the Bloomberg Barclays US Aggregate Bond Index, which returned approximately 6.2%. The Schwab Short-Term Bond Index Fund was added in February 2020 and also contributed to the total return of the fund, returning approximately 2.1% while held by the fund.
The fund’s international equity allocations detracted from the total return of the fund. The fund’s position in the Schwab International Index Fund was the largest detractor from the total return of the fund, returning approximately -6.6% for the reporting period, but slightly outperformed the MSCI EAFE® Index (Net), its comparative index, which returned approximately -6.9%, contributing to relative performance. The Schwab Fundamental Emerging Markets Large Company Index Fund detracted from the fund’s total return and relative performance, returning approximately -15.8% for the reporting period. The Schwab Fundamental International Large Company Index Fund and Schwab Fundamental International Small Company Index Fund detracted from the fund’s total return, returning approximately -13.3% and -6.3%, respectively, for the reporting period, but both slightly contributed to the relative performance of the fund.
The fund’s real estate allocation was added in February of 2020 and also detracted from the fund’s total return. The Schwab U.S. REIT ETF returned approximately -17.7% while held by the fund.
Management views and portfolio holdings may have changed since the report date.
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Balanced Portfolio
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab MarketTrack Balanced Portfolio (11/20/95) | 2.37% | 6.00% | 6.70% |
| S&P 500® Index | 9.71% | 11.71% | 13.01% |
| Bloomberg Barclays US Aggregate Bond Index | 6.19% | 4.08% | 3.55% |
| Balanced Composite Index | 2.70% | 6.51% | 7.22% |
| Fund Category: Morningstar Allocation—50% to 70% Equity2 | 3.88% | 6.23% | 7.13% |
| Fund Expense Ratio3: 0.50% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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 0.10% of acquired fund fees and expenses (AFFE), which are indirect expenses incurred by the fund through its investments in the underlying funds. Reflects the total annual fund operating expenses without contractual fee waivers. For actual expense ratios during the period, not including AFFE, refer to the financial highlights section of the financial statements. |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Balanced Portfolio
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 15 |
| Portfolio Turnover Rate | 22% |
Asset Class Weightings % of Investments1
Top Holdings % of Net Assets2,3
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 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
| 3 | The holdings listed exclude any temporary liquidity investments. |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Conservative Portfolio as of October 31, 2020
The Schwab MarketTrack Conservative Portfolio (the fund) seeks income and more growth potential than an all-bond portfolio. To pursue its goal, the fund maintains a defined asset allocation. The fund’s target allocation includes bond, stock and cash investments. For the 12-month reporting period ended October 31, 2020, the fund remained close to the target allocations of 56% fixed income, 40% equity, and 4% cash and cash equivalents (including money market funds). The fund invests mainly in other affiliated Schwab Funds, including index funds and exchange-traded funds (ETFs), which seek to track or replicate the total returns of various market indices. For more information concerning the fund’s investment objective, strategies, and risks, please see the fund’s prospectus.
Market Highlights. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms. Bond prices generally rose over the reporting period as yields fell.
Performance. For the 12-month reporting period ended October 31, 2020, the fund returned 3.57%. The fund’s custom blended comparative index, the Conservative Composite Index (the composite index), returned 4.00%.
Positioning and Strategies. Over the reporting period, the fund’s asset allocations were broadly in line with those of the composite index.
The fund’s fixed-income allocation contributed to the total return of the fund with the Schwab U.S. Aggregate Bond Index Fund returning approximately 6.1% for the reporting period. The Schwab U.S. Aggregate Bond Index Fund generally tracked its comparative index, the Bloomberg Barclays US Aggregate Bond Index, which returned approximately 6.2%. The Schwab Short-Term Bond Index Fund was added in February 2020 and also contributed to the total return of the fund, returning approximately 2.1% while held by the fund.
The fund’s U.S. equity allocations also contributed to the total return of the fund. The Schwab S&P 500 Index Fund contributed to the total return of the fund, returning approximately 9.7% for the reporting period. The Schwab S&P 500 Index Fund was the fund’s top contributor, largely due to the Schwab S&P 500 Index Fund’s large position within the fund. The Schwab U.S. Large-Cap Growth Index Fund was added in February 2020 and also contributed to the total return of the fund, returning approximately 26.0% while held by the fund. The Schwab Small-Cap Index Fund neither contributed to nor detracted from the total return of the fund and was flat for the reporting period. The Schwab Fundamental US Small Company Index Fund and Schwab Fundamental US Large Company Index Fund detracted from the total return of the fund, returning approximately -10.4% and -2.3%, respectively, for the reporting period.
The fund’s international equity allocations detracted from the total return of the fund. The fund’s position in the Schwab International Index Fund was the largest detractor from the total return of the fund, returning approximately -6.6% for the reporting period, but slightly outperformed the MSCI EAFE® Index (Net), its comparative index, which returned approximately -6.9%, contributing to relative performance. The Schwab Fundamental Emerging Markets Large Company Index Fund detracted from the fund’s total return and relative performance, returning approximately -15.8% for the reporting period. The Schwab Fundamental International Large Company Index Fund and Schwab Fundamental International Small Company Index Fund detracted from the fund’s total return, returning approximately -13.3% and -6.3%, respectively, for the reporting period, but both slightly contributed to the relative performance of the fund.
The fund’s real estate allocation was added in February of 2020 and also detracted from the fund’s total return. The Schwab U.S. REIT ETF returned approximately -17.7% while held by the fund.
Management views and portfolio holdings may have changed since the report date.
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Conservative Portfolio
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab MarketTrack Conservative Portfolio (11/20/95) | 3.57% | 5.16% | 5.43% |
| S&P 500® Index | 9.71% | 11.71% | 13.01% |
| Bloomberg Barclays US Aggregate Bond Index | 6.19% | 4.08% | 3.55% |
| Conservative Composite Index | 4.00% | 5.75% | 6.02% |
| Fund Category: Morningstar Allocation—30% to 50% Equity2 | 2.76% | 4.82% | 5.44% |
| Fund Expense Ratio3: 0.51% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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 0.08% of acquired fund fees and expenses (AFFE), which are indirect expenses incurred by the fund through its investments in the underlying funds. Reflects the total annual fund operating expenses without contractual fee waivers. For actual expense ratios during the period, not including AFFE, refer to the financial highlights section of the financial statements. |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Conservative Portfolio
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 14 |
| Portfolio Turnover Rate | 35% |
Asset Class Weightings % of Investments1
Top Holdings % of Net Assets2,3
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 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 2 | This list is not a recommendation of any security by the investment adviser. |
| 3 | The holdings listed exclude any temporary liquidity investments. |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
Fund Expenses (Unaudited)
Examples for a $1,000 Investment
As a fund shareholder, you may incur two types of costs: (1) transaction costs; 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, 2020 and held through October 31, 2020.
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. 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 Ratio
(Annualized)1,2 | Effective
Expense Ratio
(Annualized)3,4 | Beginning
Account Value
at 5/1/20 | Ending
Account Value
(Net of Expenses)
at 10/31/20 | Expenses Paid
During Period
5/1/20-10/31/202,5 | Effective
Expenses Paid
During Period
5/1/20-10/31/204,5 |
| Schwab MarketTrack All Equity Portfolio | | | | | | |
| Actual Return | 0.39% | 0.51% | $1,000.00 | $1,115.80 | $2.07 | $2.71 |
| Hypothetical 5% Return | 0.39% | 0.51% | $1,000.00 | $1,023.14 | $1.98 | $2.59 |
| Schwab MarketTrack Growth Portfolio | | | | | | |
| Actual Return | 0.39% | 0.50% | $1,000.00 | $1,095.80 | $2.05 | $2.63 |
| Hypothetical 5% Return | 0.39% | 0.50% | $1,000.00 | $1,023.14 | $1.98 | $2.54 |
| Schwab MarketTrack Balanced Portfolio | | | | | | |
| Actual Return | 0.40% | 0.49% | $1,000.00 | $1,074.20 | $2.09 | $2.55 |
| Hypothetical 5% Return | 0.40% | 0.49% | $1,000.00 | $1,023.09 | $2.03 | $2.49 |
| Schwab MarketTrack Conservative Portfolio | | | | | | |
| Actual Return | 0.41% | 0.49% | $1,000.00 | $1,052.70 | $2.12 | $2.53 |
| Hypothetical 5% Return | 0.41% | 0.49% | $1,000.00 | $1,023.04 | $2.08 | $2.49 |
| 1 | Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights. |
| 2 | Excludes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds. |
| 3 | Based on the most recent six-month acquired fund fees and expense ratio; may differ from the acquired fund fees and expenses ratios in the prospectus. |
| 4 | Includes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds. |
| 5 | 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 366 days of the fiscal year. |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack All Equity Portfolio
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $19.15 | $18.33 | $18.76 | $15.90 | $17.00 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.37 | 0.31 | 0.28 | 0.27 | 0.27 | |
| Net realized and unrealized gains (losses) | (0.54) | 1.30 | (0.05) | 3.33 | 0.31 | |
| Total from investment operations | (0.17) | 1.61 | 0.23 | 3.60 | 0.58 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.53) | (0.36) | (0.33) | (0.30) | (0.53) | |
| Distributions from net realized gains | (0.72) | (0.43) | (0.33) | (0.44) | (1.15) | |
| Total distributions | (1.25) | (0.79) | (0.66) | (0.74) | (1.68) | |
| Net asset value at end of period | $17.73 | $19.15 | $18.33 | $18.76 | $15.90 | |
| Total return | (1.35%) | 9.58% | 1.10% | 23.33% | 3.99% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses2 | 0.40% | 0.40% | 0.39% | 0.40% | 0.41% | |
| Gross operating expenses2 | 0.40% | 0.40% | 0.39% | 0.40% | 0.42% | |
| Net investment income (loss) | 2.08% | 1.72% | 1.46% | 1.56% | 1.73% | |
| Portfolio turnover rate | 18% | 6% | 5% | 5% | 6% | |
| Net assets, end of period (x 1,000,000) | $623 | $691 | $660 | $662 | $553 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Ratio excludes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds.
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack All Equity Portfolio
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Affiliated Underlying Funds 99.5% of net assets |
| |
| Equity Funds 99.5% |
| International 29.8% |
| Schwab Fundamental Emerging Markets Large Company Index Fund | 4,264,688 | 31,985,158 |
| Schwab Fundamental International Large Company Index Fund | 4,959,736 | 37,247,617 |
| Schwab Fundamental International Small Company Index Fund | 2,738,712 | 31,385,635 |
| Schwab International Index Fund | 4,579,159 | 84,989,194 |
| | | 185,607,604 |
| Large-Cap 49.7% |
| Schwab Fundamental US Large Company Index Fund | 5,149,892 | 83,840,241 |
| Schwab S&P 500 Index Fund | 3,837,819 | 194,769,310 |
| Schwab U.S. Large-Cap Growth Index Fund | 500,462 | 31,408,980 |
| | | 310,018,531 |
| Real Estate 4.9% |
| Schwab U.S. REIT ETF | 892,473 | 30,585,050 |
| Small-Cap 15.1% |
| Schwab Fundamental US Small Company Index Fund | 2,434,979 | 29,146,693 |
| Schwab Small-Cap Index Fund | 2,386,850 | 64,874,595 |
| | | 94,021,288 |
| Total Affiliated Underlying Funds |
| (Cost $428,011,191) | | 620,232,473 |
Issuer
Rate, Maturity Date | Face
Amount ($) | Value ($) |
| Short-Term Investment 0.4% of net assets |
| |
| Time Deposit 0.4% |
| JPMorgan Chase Bank |
| 0.01%, 11/02/20 (a) | 2,265,040 | 2,265,040 |
| Total Short-Term Investment |
| (Cost $2,265,040) | | 2,265,040 |
| (a) | The rate shown is the current daily overnight rate. |
| | |
| ETF — | Exchange-traded fund |
| REIT — | Real Estate Investment Trust |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack All Equity Portfolio
Portfolio Holdings as of October 31, 2020 (continued)
Below is a summary of the fund’s transactions with its affiliated underlying funds during the period ended October 31, 2020:
| Affiliated Underlying Funds |
Value at
10/31/19 | Gross
Purchases | Gross
Sales | Realized
Gains (Losses) | Net Change
in Unrealized
Appreciation
(depreciation) |
Value at
10/31/20 | Balance
of Shares
Held at
10/31/20 | Distributions
Received* |
| Schwab Fundamental Emerging Markets Large Company Index Fund | $34,543,201 | $4,633,720 | ($320,000) | $3,038 | ($6,874,801) | $31,985,158 | 4,264,688 | $1,353,720 |
| Schwab Fundamental International Large Company Index Fund | 40,345,903 | 4,323,427 | (490,000) | (72,315) | (6,859,398) | 37,247,617 | 4,959,736 | 1,493,427 |
| Schwab Fundamental International Small Company Index Fund | 35,162,430 | 1,475,116 | (2,190,000) | (340,621) | (2,721,290) | 31,385,635 | 2,738,712 | 995,116 |
| Schwab Fundamental US Large Company Index Fund | 93,229,404 | 5,002,650 | (6,920,000) | (457,807) | (7,014,006) | 83,840,241 | 5,149,892 | 5,002,650 |
| Schwab Fundamental US Small Company Index Fund | 50,829,585 | 5,350,054 | (20,990,000) | (1,519,480) | (4,523,466) | 29,146,693 | 2,434,979 | 1,890,053 |
| Schwab International Index Fund | 96,463,199 | 7,477,772 | (9,260,000) | (1,244,417) | (8,447,360) | 84,989,194 | 4,579,159 | 3,017,772 |
| Schwab S&P 500 Index Fund | 217,206,651 | 4,772,544 | (40,080,000) | 20,830,189 | (7,960,074) | 194,769,310 | 3,837,819 | 4,372,544 |
| Schwab Small-Cap Index Fund | 119,883,006 | 12,637,133 | (59,360,000) | 12,215,300 | (20,500,844) | 64,874,595 | 2,386,850 | 7,347,133 |
| Schwab U.S. Large-Cap Growth Index Fund | — | 32,900,000 | (8,590,000) | 653,032 | 6,445,948 | 31,408,980 | 500,462 | — |
| Schwab U.S. REIT ETF | — | 37,289,875 | — | — | (6,704,825) | 30,585,050 | 892,473 | 484,686 |
| Total | $687,663,379 | $115,862,291 | ($148,200,000) | $30,066,919 | ($65,160,116) | $620,232,473 | | $25,957,101 |
| * | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
| | |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 (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 | |
| Assets | | | | | |
| Affiliated Underlying Funds1 | $620,232,473 | $— | $— | $620,232,473 | |
| Short-Term Investment1 | — | 2,265,040 | — | 2,265,040 | |
| Total | $620,232,473 | $2,265,040 | $— | $622,497,513 | |
| 1 | As categorized in Portfolio Holdings. |
Fund investments in underlying mutual funds and ETFs are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds and ETFs, which could be Level 1, Level 2 or Level 3.
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack All Equity Portfolio
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in affiliated underlying funds, at value (cost $428,011,191) | | $620,232,473 |
| Investments in unaffiliated issuers, at value (cost $2,265,040) | | 2,265,040 |
| Receivables: | | |
| Investments sold | | 1,780,001 |
| Fund shares sold | | 438,586 |
| Prepaid expenses | + | 13,799 |
| Total assets | | 624,729,899 |
| Liabilities |
| Payables: | | |
| Investments bought | | 1,176,061 |
| Investment adviser and administrator fees | | 74,287 |
| Shareholder service fees | | 135,990 |
| Fund shares redeemed | | 167,220 |
| Accrued expenses | + | 81,430 |
| Total liabilities | | 1,634,988 |
| Net Assets |
| Total assets | | 624,729,899 |
| Total liabilities | – | 1,634,988 |
| Net assets | | $623,094,911 |
| Net Assets by Source | | |
| Capital received from investors | | 405,312,759 |
| Total distributable earnings | | 217,782,152 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $623,094,911 | | 35,135,909 | | $17.73 |
| | | | | |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack All Equity Portfolio
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends received from affiliated underlying funds | | $16,006,732 |
| Interest | + | 14,385 |
| Total investment income | | 16,021,117 |
| Expenses |
| Investment adviser and administrator fees | | 844,678 |
| Shareholder service fees | | 1,543,927 |
| Shareholder reports | | 65,325 |
| Registration fees | | 32,167 |
| Portfolio accounting fees | | 27,078 |
| Professional fees | | 25,311 |
| Transfer agent fees | | 15,713 |
| Independent trustees’ fees | | 10,676 |
| Custodian fees | | 2,055 |
| Other expenses | + | 10,143 |
| Total expenses | | 2,577,073 |
| Expense reduction by CSIM and its affiliates | – | 15,713 |
| Net expenses | – | 2,561,360 |
| Net investment income | | 13,459,757 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 9,950,369 |
| Net realized gains on sales of affiliated underlying funds | + | 30,066,919 |
| Net realized gains | | 40,017,288 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | + | (65,160,116) |
| Net realized and unrealized losses | | (25,142,828) |
| Decrease in net assets resulting from operations | | ($11,683,071) |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack All Equity Portfolio
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $13,459,757 | $11,446,552 |
| Net realized gains | | 40,017,288 | 26,061,302 |
| Net change in unrealized appreciation (depreciation) | + | (65,160,116) | 23,445,012 |
| Increase (decrease) in net assets from operations | | (11,683,071) | 60,952,866 |
| Distributions to Shareholders | |
| Total distributions | | ($44,690,295) | ($28,006,553) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 4,011,146 | $68,570,719 | 3,457,644 | $62,047,856 |
| Shares reinvested | | 2,115,919 | 40,244,771 | 1,580,131 | 25,376,894 |
| Shares redeemed | + | (7,060,916) | (120,148,036) | (4,966,158) | (89,453,708) |
| Net transactions in fund shares | | (933,851) | ($11,332,546) | 71,617 | ($2,028,958) |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 36,069,760 | $690,800,823 | 35,998,143 | $659,883,468 |
| Total increase or decrease | + | (933,851) | (67,705,912) | 71,617 | 30,917,355 |
| End of period | | 35,135,909 | $623,094,911 | 36,069,760 | $690,800,823 |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Growth Portfolio
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $23.54 | $22.67 | $23.47 | $20.54 | $22.68 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.43 | 0.41 | 0.37 | 0.34 | 0.32 | |
| Net realized and unrealized gains (losses) | (0.20) | 1.62 | (0.04) | 3.37 | 0.41 | |
| Total from investment operations | 0.23 | 2.03 | 0.33 | 3.71 | 0.73 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.47) | (0.45) | (0.40) | (0.36) | (0.39) | |
| Distributions from net realized gains | (0.88) | (0.71) | (0.73) | (0.42) | (2.48) | |
| Total distributions | (1.35) | (1.16) | (1.13) | (0.78) | (2.87) | |
| Net asset value at end of period | $22.42 | $23.54 | $22.67 | $23.47 | $20.54 | |
| Total return | 0.74% | 9.86% | 1.28% | 18.52% | 3.88% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses2 | 0.39% | 0.40% | 0.39% | 0.40% | 0.41% | |
| Gross operating expenses2 | 0.40% | 0.40% | 0.39% | 0.40% | 0.41% | |
| Net investment income (loss) | 1.92% | 1.82% | 1.59% | 1.57% | 1.61% | |
| Portfolio turnover rate | 19% | 7% | 7% | 20% 3 | 12% | |
| Net assets, end of period (x 1,000,000) | $748 | $817 | $783 | $804 | $707 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Ratio excludes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds.
3
The portfolio turnover rate increased due to the in-kind transactions relating to Schwab Total Bond Market Fund and Schwab U.S. Aggregate Bond Index Fund. For comparison purposes, the portfolio turnover rate would have been 6% without including these transactions. There were no transaction costs associated with these transactions.
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Growth Portfolio
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Affiliated Underlying Funds 98.7% of net assets |
| |
| Equity Funds 79.9% |
| International 20.0% |
| Schwab Fundamental Emerging Markets Large Company Index Fund | 3,275,930 | 24,569,478 |
| Schwab Fundamental International Large Company Index Fund | 4,008,276 | 30,102,153 |
| Schwab Fundamental International Small Company Index Fund | 2,187,940 | 25,073,791 |
| Schwab International Index Fund | 3,755,438 | 69,700,927 |
| | | 149,446,349 |
| Large-Cap 43.2% |
| Schwab Fundamental US Large Company Index Fund | 5,476,326 | 89,154,595 |
| Schwab S&P 500 Index Fund | 4,114,244 | 208,797,893 |
| Schwab U.S. Large-Cap Growth Index Fund | 406,010 | 25,481,188 |
| | | 323,433,676 |
| Real Estate 3.7% |
| Schwab U.S. REIT ETF | 807,983 | 27,689,578 |
| | | 27,689,578 |
| Small-Cap 13.0% |
| Schwab Fundamental US Small Company Index Fund | 2,442,276 | 29,234,040 |
| Schwab Small-Cap Index Fund | 2,494,982 | 67,813,605 |
| | | 97,047,645 |
| | | 597,617,248 |
| |
| Security | Number
of Shares | Value ($) |
| Fixed-Income Funds 16.2% |
| Intermediate-Term Bond 16.2% |
| Schwab U.S. Aggregate Bond Index Fund | 11,301,586 | 121,379,029 |
| |
| Money Market Fund 2.6% |
| Schwab Variable Share Price Money Fund, Ultra Shares 0.03% (a) | 19,559,587 | 19,567,411 |
| Total Affiliated Underlying Funds |
| (Cost $497,556,659) | | 738,563,688 |
Issuer
Rate, Maturity Date | Face
Amount ($) | Value ($) |
| Short-Term Investments 1.2% of net assets |
| |
| Time Deposits 1.2% |
| Skandinaviska Enskilda Banken |
| 0.01%, 11/02/20 (b) | 1,302,063 | 1,302,063 |
| Sumitomo Mitsui Banking Corp. |
| 0.01%, 11/02/20 (b) | 7,554,194 | 7,554,194 |
| Total Short-Term Investments |
| (Cost $8,856,257) | | 8,856,257 |
| (a) | The rate shown is the 7-day yield. |
| (b) | The rate shown is the current daily overnight rate. |
| | |
| ETF — | Exchange-traded fund |
| REIT — | Real Estate Investment Trust |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Growth Portfolio
Portfolio Holdings as of October 31, 2020 (continued)
Below is a summary of the fund’s transactions with its affiliated underlying funds during the period ended October 31, 2020:
| Affiliated Underlying Funds |
Value at
10/31/19 | Gross
Purchases | Gross
Sales | Realized
Gains (Losses) | Net Change
in Unrealized
Appreciation
(depreciation) |
Value at
10/31/20 | Balance
of Shares
Held at
10/31/20 | Distributions
Received* |
| Schwab Fundamental Emerging Markets Large Company Index Fund | $28,413,513 | $2,746,380 | ($1,610,000) | $129,514 | ($5,109,929) | $24,569,478 | 3,275,930 | $1,066,381 |
| Schwab Fundamental International Large Company Index Fund | 32,938,332 | 3,239,233 | (680,000) | (163,686) | (5,231,726) | 30,102,153 | 4,008,276 | 1,219,232 |
| Schwab Fundamental International Small Company Index Fund | 26,960,646 | 1,903,215 | (1,640,000) | (231,032) | (1,919,038) | 25,073,791 | 2,187,940 | 773,215 |
| Schwab Fundamental US Large Company Index Fund | 98,801,392 | 7,803,339 | (10,270,000) | 401,621 | (7,581,757) | 89,154,595 | 5,476,326 | 5,178,338 |
| Schwab Fundamental US Small Company Index Fund | 48,680,656 | 5,160,148 | (19,070,001) | (1,133,889) | (4,402,874) | 29,234,040 | 2,442,276 | 1,810,147 |
| Schwab International Index Fund | 75,410,421 | 5,989,153 | (4,400,000) | (340,635) | (6,958,012) | 69,700,927 | 3,755,438 | 2,359,153 |
| Schwab S&P 500 Index Fund | 229,515,716 | 8,869,564 | (45,190,000) | 28,857,575 | (13,254,962) | 208,797,893 | 4,114,244 | 4,594,565 |
| Schwab Small-Cap Index Fund | 114,668,640 | 14,986,509 | (54,510,000) | 12,956,379 | (20,287,923) | 67,813,605 | 2,494,982 | 6,906,509 |
| Schwab U.S. Aggregate Bond Index Fund | 120,769,170 | 26,934,213 | (30,329,464) | 962,543 | 3,042,567 | 121,379,029 | 11,301,586 | 2,974,682 |
| Schwab U.S. Large-Cap Growth Index Fund | — | 26,270,000 | (6,710,001) | 691,780 | 5,229,409 | 25,481,188 | 406,010 | — |
| Schwab U.S. REIT ETF | — | 36,079,504 | (1,627,561) | (687,019) | (6,075,346) | 27,689,578 | 807,983 | 458,642 |
| Schwab Variable Share Price Money Fund, Ultra Shares | 33,651,006 | 3,269,108 | (17,350,000) | 4,565 | (7,268) | 19,567,411 | 19,559,587 | 239,820 |
| Total | $809,809,492 | $143,250,366 | ($193,387,027) | $41,447,716 | ($62,556,859) | $738,563,688 | | $27,580,684 |
| * | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
| | |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 (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 | |
| Assets | | | | | |
| Affiliated Underlying Funds1 | $738,563,688 | $— | $— | $738,563,688 | |
| Short-Term Investments1 | — | 8,856,257 | — | 8,856,257 | |
| Total | $738,563,688 | $8,856,257 | $— | $747,419,945 | |
| 1 | As categorized in Portfolio Holdings. |
Fund investments in underlying mutual funds and ETFs are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds and ETFs, which could be Level 1, Level 2 or Level 3.
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Growth Portfolio
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in affiliated underlying funds, at value (cost $497,556,659) | | $738,563,688 |
| Investments in unaffiliated issuers, at value (cost $8,856,257) | | 8,856,257 |
| Receivables: | | |
| Investments sold | | 2,780,007 |
| Fund shares sold | | 926,106 |
| Dividends | | 232,747 |
| Prepaid expenses | + | 20,047 |
| Total assets | | 751,378,852 |
| Liabilities |
| Payables: | | |
| Investments bought | | 1,913,898 |
| Investment adviser and administrator fees | | 88,545 |
| Shareholder service fees | | 163,441 |
| Fund shares redeemed | | 639,791 |
| Accrued expenses | + | 81,191 |
| Total liabilities | | 2,886,866 |
| Net Assets |
| Total assets | | 751,378,852 |
| Total liabilities | – | 2,886,866 |
| Net assets | | $748,491,986 |
| Net Assets by Source | | |
| Capital received from investors | | 456,848,899 |
| Total distributable earnings | | 291,643,087 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $748,491,986 | | 33,383,332 | | $22.42 |
| | | | | |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Growth Portfolio
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends received from affiliated underlying funds | | $17,899,544 |
| Interest | + | 26,064 |
| Total investment income | | 17,925,608 |
| Expenses |
| Investment adviser and administrator fees | | 1,009,086 |
| Shareholder service fees | | 1,862,445 |
| Shareholder reports | | 62,541 |
| Registration fees | | 34,913 |
| Portfolio accounting fees | | 28,279 |
| Professional fees | | 26,361 |
| Transfer agent fees | | 14,772 |
| Independent trustees’ fees | | 11,235 |
| Custodian fees | | 1,775 |
| Other expenses | + | 11,460 |
| Total expenses | | 3,062,867 |
| Expense reduction by CSIM and its affiliates | – | 14,772 |
| Net expenses | – | 3,048,095 |
| Net investment income | | 14,877,513 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 9,681,140 |
| Net realized gains on sales of affiliated underlying funds | + | 41,447,716 |
| Net realized gains | | 51,128,856 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | + | (62,556,859) |
| Net realized and unrealized losses | | (11,428,003) |
| Increase in net assets resulting from operations | | $3,449,510 |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Growth Portfolio
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $14,877,513 | $14,441,539 |
| Net realized gains | | 51,128,856 | 31,540,675 |
| Net change in unrealized appreciation (depreciation) | + | (62,556,859) | 28,613,519 |
| Increase in net assets from operations | | 3,449,510 | 74,595,733 |
| Distributions to Shareholders | |
| Total distributions | | ($46,215,156) | ($39,927,176) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 3,194,314 | $69,920,922 | 2,937,909 | $65,107,948 |
| Shares reinvested | | 1,816,570 | 42,344,247 | 1,829,307 | 36,750,784 |
| Shares redeemed | + | (6,318,253) | (137,539,154) | (4,611,016) | (102,839,073) |
| Net transactions in fund shares | | (1,307,369) | ($25,273,985) | 156,200 | ($980,341) |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 34,690,701 | $816,531,617 | 34,534,501 | $782,843,401 |
| Total increase or decrease | + | (1,307,369) | (68,039,631) | 156,200 | 33,688,216 |
| End of period | | 33,383,332 | $748,491,986 | 34,690,701 | $816,531,617 |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Balanced Portfolio
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $18.75 | $18.24 | $19.12 | $17.35 | $19.07 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.35 | 0.36 | 0.34 | 0.30 | 0.27 | |
| Net realized and unrealized gains (losses) | 0.10 | 1.32 | (0.24) | 2.02 | 0.35 | |
| Total from investment operations | 0.45 | 1.68 | 0.10 | 2.32 | 0.62 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.39) | (0.39) | (0.33) | (0.30) | (0.33) | |
| Distributions from net realized gains | (0.43) | (0.78) | (0.65) | (0.25) | (2.01) | |
| Total distributions | (0.82) | (1.17) | (0.98) | (0.55) | (2.34) | |
| Net asset value at end of period | $18.38 | $18.75 | $18.24 | $19.12 | $17.35 | |
| Total return | 2.37% | 10.14% | 0.44% | 13.71% | 3.92% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses2 | 0.40% | 0.40% | 0.40% | 0.40% | 0.41% | |
| Gross operating expenses2 | 0.40% | 0.40% | 0.40% | 0.40% | 0.41% | |
| Net investment income (loss) | 1.91% | 1.99% | 1.79% | 1.67% | 1.60% | |
| Portfolio turnover rate | 22% | 11% | 8% | 46% 3 | 15% | |
| Net assets, end of period (x 1,000,000) | $518 | $545 | $515 | $551 | $516 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Ratio excludes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds.
3
The portfolio turnover rate increased due to the in-kind transactions relating to Schwab Total Bond Market Fund and Schwab U.S. Aggregate Bond Index Fund. For comparison purposes, the portfolio turnover rate would have been 10% without including these transactions. There were no transaction costs associated with these transactions.
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Balanced Portfolio
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Affiliated Underlying Funds 98.7% of net assets |
| |
| Equity Funds 59.8% |
| International 14.9% |
| Schwab Fundamental Emerging Markets Large Company Index Fund | 1,692,183 | 12,691,376 |
| Schwab Fundamental International Large Company Index Fund | 2,069,910 | 15,545,027 |
| Schwab Fundamental International Small Company Index Fund | 1,141,818 | 13,085,236 |
| Schwab International Index Fund | 1,932,045 | 35,858,755 |
| | | 77,180,394 |
| Large-Cap 33.0% |
| Schwab Fundamental US Large Company Index Fund | 2,838,726 | 46,214,451 |
| Schwab S&P 500 Index Fund | 2,136,585 | 108,431,681 |
| Schwab U.S. Large-Cap Growth Index Fund | 257,207 | 16,142,289 |
| | | 170,788,421 |
| Real Estate 2.7% |
| Schwab U.S. REIT ETF | 405,034 | 13,880,515 |
| Small-Cap 9.2% |
| Schwab Fundamental US Small Company Index Fund | 1,204,677 | 14,419,988 |
| Schwab Small-Cap Index Fund | 1,226,610 | 33,339,271 |
| | | 47,759,259 |
| | | 309,608,589 |
| |
| Fixed-Income Funds 36.2% |
| Intermediate-Term Bond 35.2% |
| Schwab U.S. Aggregate Bond Index Fund | 16,965,754 | 182,212,199 |
| Security | Number
of Shares | Value ($) |
| Short-Term Bond 1.0% |
| Schwab Short-Term Bond Index Fund | 521,549 | 5,403,247 |
| | | 187,615,446 |
| |
| Money Market Fund 2.7% |
| Schwab Variable Share Price Money Fund, Ultra Shares 0.03% (a) | 13,761,952 | 13,767,457 |
| Total Affiliated Underlying Funds |
| (Cost $375,943,680) | | 510,991,492 |
Issuer
Rate, Maturity Date | Face
Amount ($) | Value ($) |
| Short-Term Investments 1.2% of net assets |
| |
| Time Deposits 1.2% |
| JPMorgan Chase Bank |
| 0.01%, 11/02/20 (b) | 5,212,778 | 5,212,778 |
| Skandinaviska Enskilda Banken |
| 0.01%, 11/02/20 (b) | 913,590 | 913,590 |
| Total Short-Term Investments |
| (Cost $6,126,368) | | 6,126,368 |
| (a) | The rate shown is the 7-day yield. |
| (b) | The rate shown is the current daily overnight rate. |
| | |
| ETF — | Exchange-traded fund |
| REIT — | Real Estate Investment Trust |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Balanced Portfolio
Portfolio Holdings as of October 31, 2020 (continued)
Below is a summary of the fund’s transactions with its affiliated underlying funds during the period ended October 31, 2020:
| Affiliated Underlying Funds |
Value at
10/31/19 | Gross
Purchases | Gross
Sales | Realized
Gains (Losses) | Net Change
in Unrealized
Appreciation
(depreciation) |
Value at
10/31/20 | Balance
of Shares
Held at
10/31/20 | Distributions
Received* |
| Schwab Fundamental Emerging Markets Large Company Index Fund | $13,985,994 | $2,288,100 | ($1,150,000) | ($128,872) | ($2,303,846) | $12,691,376 | 1,692,183 | $548,100 |
| Schwab Fundamental International Large Company Index Fund | 16,361,563 | 2,255,633 | (520,000) | (125,873) | (2,426,296) | 15,545,027 | 2,069,910 | 605,633 |
| Schwab Fundamental International Small Company Index Fund | 13,942,514 | 1,973,121 | (1,950,000) | (100,622) | (779,777) | 13,085,236 | 1,141,818 | 383,121 |
| Schwab Fundamental US Large Company Index Fund | 49,891,262 | 7,941,363 | (8,485,000) | 361,513 | (3,494,687) | 46,214,451 | 2,838,726 | 2,591,363 |
| Schwab Fundamental US Small Company Index Fund | 24,552,319 | 3,402,956 | (10,990,000) | (710,614) | (1,834,673) | 14,419,988 | 1,204,677 | 912,956 |
| Schwab International Index Fund | 38,010,985 | 4,229,143 | (2,840,001) | (70,886) | (3,470,486) | 35,858,755 | 1,932,045 | 1,189,143 |
| Schwab S&P 500 Index Fund | 114,675,422 | 9,125,313 | (24,005,000) | 12,958,251 | (4,322,305) | 108,431,681 | 2,136,585 | 2,275,313 |
| Schwab Short-Term Bond Index Fund | — | 6,017,359 | (685,735) | — | 71,623 | 5,403,247 | 521,549 | 51,631 |
| Schwab Small-Cap Index Fund | 56,788,172 | 8,543,448 | (28,470,000) | 6,790,168 | (10,312,517) | 33,339,271 | 1,226,610 | 3,443,449 |
| Schwab U.S. Aggregate Bond Index Fund | 189,452,490 | 31,779,584 | (45,186,810) | 1,497,274 | 4,669,661 | 182,212,199 | 16,965,754 | 4,559,509 |
| Schwab U.S. Large-Cap Growth Index Fund | — | 16,050,000 | (3,760,000) | 539,467 | 3,312,822 | 16,142,289 | 257,207 | — |
| Schwab U.S. REIT ETF | — | 18,258,171 | (1,078,345) | (249,787) | (3,049,524) | 13,880,515 | 405,034 | 235,543 |
| Schwab Variable Share Price Money Fund, Ultra Shares | 23,045,463 | 1,683,413 | (10,960,000) | 2,727 | (4,146) | 13,767,457 | 13,761,952 | 163,360 |
| Total | $540,706,184 | $113,547,604 | ($140,080,891) | $20,762,746 | ($23,944,151) | $510,991,492 | | $16,959,121 |
| * | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
| | |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 (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 | |
| Assets | | | | | |
| Affiliated Underlying Funds1 | $510,991,492 | $— | $— | $510,991,492 | |
| Short-Term Investments1 | — | 6,126,368 | — | 6,126,368 | |
| Total | $510,991,492 | $6,126,368 | $— | $517,117,860 | |
| 1 | As categorized in Portfolio Holdings. |
Fund investments in underlying mutual funds and ETFs are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds and ETFs, which could be Level 1, Level 2 or Level 3.
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Balanced Portfolio
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in affiliated underlying funds, at value (cost $375,943,680) | | $510,991,492 |
| Investments in unaffiliated issuers, at value (cost $6,126,368) | | 6,126,368 |
| Receivables: | | |
| Investments sold | | 1,830,005 |
| Dividends | | 356,614 |
| Fund shares sold | | 276,139 |
| Prepaid expenses | + | 17,391 |
| Total assets | | 519,598,009 |
| Liabilities |
| Payables: | | |
| Investments bought | | 1,506,509 |
| Investment adviser and administrator fees | | 60,659 |
| Shareholder service fees | | 112,537 |
| Fund shares redeemed | | 239,421 |
| Accrued expenses | + | 59,749 |
| Total liabilities | | 1,978,875 |
| Net Assets |
| Total assets | | 519,598,009 |
| Total liabilities | – | 1,978,875 |
| Net assets | | $517,619,134 |
| Net Assets by Source | | |
| Capital received from investors | | 358,511,508 |
| Total distributable earnings | | 159,107,626 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $517,619,134 | | 28,154,862 | | $18.38 |
| | | | | |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Balanced Portfolio
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends received from affiliated underlying funds | | $12,122,036 |
| Interest | + | 15,037 |
| Total investment income | | 12,137,073 |
| Expenses |
| Investment adviser and administrator fees | | 686,149 |
| Shareholder service fees | | 1,274,818 |
| Shareholder reports | | 34,995 |
| Registration fees | | 32,681 |
| Portfolio accounting fees | | 25,895 |
| Professional fees | | 24,078 |
| Independent trustees’ fees | | 10,105 |
| Transfer agent fees | | 9,640 |
| Custodian fees | | 2,033 |
| Other expenses | + | 8,691 |
| Total expenses | | 2,109,085 |
| Expense reduction by CSIM and its affiliates | – | 9,640 |
| Net expenses | – | 2,099,445 |
| Net investment income | | 10,037,628 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 4,837,085 |
| Net realized gains on sales of affiliated underlying funds | + | 20,762,746 |
| Net realized gains | | 25,599,831 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | + | (23,944,151) |
| Net realized and unrealized gains | | 1,655,680 |
| Increase in net assets resulting from operations | | $11,693,308 |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Balanced Portfolio
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $10,037,628 | $10,507,329 |
| Net realized gains | | 25,599,831 | 12,873,385 |
| Net change in unrealized appreciation (depreciation) | + | (23,944,151) | 27,918,849 |
| Increase in net assets from operations | | 11,693,308 | 51,299,563 |
| Distributions to Shareholders | |
| Total distributions | | ($23,741,670) | ($32,704,957) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 3,534,438 | $63,437,613 | 4,645,103 | $82,462,045 |
| Shares reinvested | | 1,162,605 | 21,612,831 | 1,824,301 | 29,754,346 |
| Shares redeemed | + | (5,586,534) | (99,936,630) | (5,649,914) | (100,958,347) |
| Net transactions in fund shares | | (889,491) | ($14,886,186) | 819,490 | $11,258,044 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 29,044,353 | $544,553,682 | 28,224,863 | $514,701,032 |
| Total increase or decrease | + | (889,491) | (26,934,548) | 819,490 | 29,852,650 |
| End of period | | 28,154,862 | $517,619,134 | 29,044,353 | $544,553,682 |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Conservative Portfolio
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $16.43 | $15.63 | $16.27 | $15.31 | $15.94 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.30 | 0.35 | 0.31 | 0.27 | 0.24 | |
| Net realized and unrealized gains (losses) | 0.27 | 1.18 | (0.38) | 1.09 | 0.30 | |
| Total from investment operations | 0.57 | 1.53 | (0.07) | 1.36 | 0.54 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.31) | (0.36) | (0.32) | (0.28) | (0.27) | |
| Distributions from net realized gains | (0.19) | (0.37) | (0.25) | (0.12) | (0.90) | |
| Total distributions | (0.50) | (0.73) | (0.57) | (0.40) | (1.17) | |
| Net asset value at end of period | $16.50 | $16.43 | $15.63 | $16.27 | $15.31 | |
| Total return | 3.57% | 10.31% | (0.49%) | 9.07% | 3.68% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses2 | 0.42% | 0.43% | 0.41% | 0.42% | 0.43% | |
| Gross operating expenses2 | 0.42% | 0.43% | 0.41% | 0.42% | 0.44% | |
| Net investment income (loss) | 1.84% | 2.19% | 1.93% | 1.71% | 1.61% | |
| Portfolio turnover rate | 35% | 26% | 9% | 74% 3 | 10% | |
| Net assets, end of period (x 1,000,000) | $279 | $263 | $239 | $251 | $238 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Ratio excludes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds.
3
The portfolio turnover rate increased due to the in-kind transactions relating to Schwab Total Bond Market Fund and Schwab U.S. Aggregate Bond Index Fund. For comparison purposes, the portfolio turnover rate would have been 23% without including these transactions. There were no transaction costs associated with these transactions.
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Conservative Portfolio
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Affiliated Underlying Funds 99.4% of net assets |
| |
| Equity Funds 40.1% |
| International 10.0% |
| Schwab Fundamental Emerging Markets Large Company Index Fund | 613,825 | 4,603,691 |
| Schwab Fundamental International Large Company Index Fund | 730,852 | 5,488,699 |
| Schwab Fundamental International Small Company Index Fund | 424,631 | 4,866,268 |
| Schwab International Index Fund | 695,115 | 12,901,329 |
| | | 27,859,987 |
| Large-Cap 22.1% |
| Schwab Fundamental US Large Company Index Fund | 1,028,986 | 16,751,890 |
| Schwab S&P 500 Index Fund | 771,915 | 39,174,699 |
| Schwab U.S. Large-Cap Growth Index Fund | 89,908 | 5,642,623 |
| | | 61,569,212 |
| Real Estate 2.0% |
| Schwab U.S. REIT ETF | 162,751 | 5,577,477 |
| Small-Cap 6.0% |
| Schwab Fundamental US Small Company Index Fund | 403,700 | 4,832,284 |
| Schwab Small-Cap Index Fund | 439,081 | 11,934,226 |
| | | 16,766,510 |
| | | 111,773,186 |
| |
| Fixed-Income Funds 56.0% |
| Intermediate-Term Bond 54.9% |
| Schwab U.S. Aggregate Bond Index Fund | 14,264,340 | 153,199,010 |
| Security | Number
of Shares | Value ($) |
| Short-Term Bond 1.1% |
| Schwab Short-Term Bond Index Fund | 286,487 | 2,968,009 |
| |
| Money Market Fund 3.3% |
| Schwab Variable Share Price Money Fund, Ultra Shares 0.03% (a) | 9,215,287 | 9,218,973 |
| Total Affiliated Underlying Funds |
| (Cost $222,938,922) | | 277,159,178 |
Issuer
Rate, Maturity Date | Face
Amount ($) | Value ($) |
| Short-Term Investment 0.6% of net assets |
| |
| Time Deposit 0.6% |
| Australia & New Zealand Banking Group Ltd. |
| 0.01%, 11/02/20 (b) | 1,812,113 | 1,812,113 |
| Total Short-Term Investment |
| (Cost $1,812,113) | | 1,812,113 |
| (a) | The rate shown is the 7-day yield. |
| (b) | The rate shown is the current daily overnight rate. |
| | |
| ETF — | Exchange-traded fund |
| REIT — | Real Estate Investment Trust |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Conservative Portfolio
Portfolio Holdings as of October 31, 2020 (continued)
Below is a summary of the fund’s transactions with its affiliated underlying funds during the period ended October 31, 2020:
| Affiliated Underlying Funds |
Value at
10/31/19 | Gross
Purchases | Gross
Sales | Realized
Gains (Losses) | Net Change
in Unrealized
Appreciation
(depreciation) |
Value at
10/31/20 | Balance
of Shares
Held at
10/31/20 | Distributions
Received* |
| Schwab Fundamental Emerging Markets Large Company Index Fund | $4,603,496 | $1,810,407 | ($900,000) | ($123,841) | ($786,371) | $4,603,691 | 613,825 | $180,407 |
| Schwab Fundamental International Large Company Index Fund | 5,300,132 | 2,364,199 | (1,340,000) | (61,234) | (774,398) | 5,488,699 | 730,852 | 184,199 |
| Schwab Fundamental International Small Company Index Fund | 4,204,530 | 1,580,583 | (620,000) | (37,518) | (261,327) | 4,866,268 | 424,631 | 120,583 |
| Schwab Fundamental US Large Company Index Fund | 16,081,095 | 7,102,579 | (5,400,000) | (51,862) | (979,922) | 16,751,890 | 1,028,986 | 842,581 |
| Schwab Fundamental US Small Company Index Fund | 8,140,482 | 1,905,423 | (4,460,000) | (180,351) | (573,270) | 4,832,284 | 403,700 | 295,423 |
| Schwab International Index Fund | 12,298,142 | 3,914,738 | (2,100,000) | (113,098) | (1,098,453) | 12,901,329 | 695,115 | 384,737 |
| Schwab S&P 500 Index Fund | 37,203,924 | 13,239,187 | (14,560,000) | 939,392 | 2,352,196 | 39,174,699 | 771,915 | 739,187 |
| Schwab Short-Term Bond Index Fund | — | 3,231,825 | (303,552) | 1,722 | 38,014 | 2,968,009 | 286,487 | 28,277 |
| Schwab Small-Cap Index Fund | 18,249,017 | 5,452,850 | (10,660,000) | 1,519,779 | (2,627,420) | 11,934,226 | 439,081 | 1,102,850 |
| Schwab U.S. Aggregate Bond Index Fund | 144,260,615 | 44,889,923 | (40,731,635) | 726,996 | 4,053,111 | 153,199,010 | 14,264,340 | 3,735,141 |
| Schwab U.S. Large-Cap Growth Index Fund | — | 5,910,001 | (1,640,000) | 214,608 | 1,158,014 | 5,642,623 | 89,908 | — |
| Schwab U.S. REIT ETF | — | 7,860,200 | (959,126) | (272,925) | (1,050,672) | 5,577,477 | 162,751 | 94,341 |
| Schwab Variable Share Price Money Fund, Ultra Shares | 10,780,838 | 10,088,607 | (11,650,000) | 4,583 | (5,055) | 9,218,973 | 9,215,287 | 79,268 |
| Total | $261,122,271 | $109,350,522 | ($95,324,313) | $2,566,251 | ($555,553) | $277,159,178 | | $7,786,994 |
| * | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
| | |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 (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 | |
| Assets | | | | | |
| Affiliated Underlying Funds1 | $277,159,178 | $— | $— | $277,159,178 | |
| Short-Term Investment1 | — | 1,812,113 | — | 1,812,113 | |
| Total | $277,159,178 | $1,812,113 | $— | $278,971,291 | |
| 1 | As categorized in Portfolio Holdings. |
Fund investments in underlying mutual funds and ETFs are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds and ETFs, which could be Level 1, Level 2 or Level 3.
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Conservative Portfolio
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in affiliated underlying funds, at value (cost $222,938,922) | | $277,159,178 |
| Investments in unaffiliated issuers, at value (cost $1,812,113) | | 1,812,113 |
| Receivables: | | |
| Investments sold | | 2,640,874 |
| Fund shares sold | | 431,023 |
| Dividends | | 315,069 |
| Prepaid expenses | + | 20,453 |
| Total assets | | 282,378,710 |
| Liabilities |
| Payables: | | |
| Investments bought | | 314,864 |
| Investment adviser and administrator fees | | 34,229 |
| Shareholder service fees | | 63,736 |
| Fund shares redeemed | | 3,034,970 |
| Accrued expenses | + | 48,262 |
| Total liabilities | | 3,496,061 |
| Net Assets |
| Total assets | | 282,378,710 |
| Total liabilities | – | 3,496,061 |
| Net assets | | $278,882,649 |
| Net Assets by Source | | |
| Capital received from investors | | 223,048,809 |
| Total distributable earnings | | 55,833,840 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $278,882,649 | | 16,904,752 | | $16.50 |
| | | | | |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Conservative Portfolio
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends received from affiliated underlying funds | | $6,228,005 |
| Interest | + | 7,933 |
| Total investment income | | 6,235,938 |
| Expenses |
| Investment adviser and administrator fees | | 360,010 |
| Shareholder service fees | | 675,573 |
| Registration fees | | 34,785 |
| Portfolio accounting fees | | 23,232 |
| Shareholder reports | | 22,003 |
| Professional fees | | 21,735 |
| Independent trustees’ fees | | 8,958 |
| Transfer agent fees | | 5,208 |
| Custodian fees | | 1,643 |
| Other expenses | + | 5,888 |
| Total expenses | | 1,159,035 |
| Expense reduction by CSIM and its affiliates | – | 5,208 |
| Net expenses | – | 1,153,827 |
| Net investment income | | 5,082,111 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 1,558,989 |
| Net realized gains on sales of affiliated underlying funds | + | 2,566,251 |
| Net realized gains | | 4,125,240 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | + | (555,553) |
| Net realized and unrealized gains | | 3,569,687 |
| Increase in net assets resulting from operations | | $8,651,798 |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Conservative Portfolio
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $5,082,111 | $5,503,537 |
| Net realized gains | | 4,125,240 | 2,283,185 |
| Net change in unrealized appreciation (depreciation) | + | (555,553) | 16,814,789 |
| Increase in net assets from operations | | 8,651,798 | 24,601,511 |
| Distributions to Shareholders | |
| Total distributions | | ($8,266,008) | ($11,877,962) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 5,944,934 | $97,316,710 | 5,250,695 | $82,352,774 |
| Shares reinvested | | 435,195 | 7,084,017 | 706,231 | 10,568,989 |
| Shares redeemed | + | (5,509,526) | (89,276,819) | (5,219,713) | (81,340,605) |
| Net transactions in fund shares | | 870,603 | $15,123,908 | 737,213 | $11,581,158 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 16,034,149 | $263,372,951 | 15,296,936 | $239,068,244 |
| Total increase | + | 870,603 | 15,509,698 | 737,213 | 24,304,707 |
| End of period | | 16,904,752 | $278,882,649 | 16,034,149 | $263,372,951 |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
1. Business Structure of the Funds:
Schwab MarketTrack All Equity Portfolio, Schwab MarketTrack Growth Portfolio, Schwab MarketTrack Balanced Portfolio, and Schwab MarketTrack Conservative Portfolio (the funds) are each 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 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 |
| Schwab S&P 500 Index Fund | Schwab Target 2060 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 U.S. Large-Cap Growth Index Fund | Schwab Fundamental International Large Company Index Fund |
| Schwab U.S. Large-Cap Value Index Fund | Schwab Fundamental International Small Company Index Fund |
| Schwab U.S. Mid-Cap Index Fund | Schwab Fundamental Emerging Markets Large Company Index Fund |
| Schwab International Index Fund® | Schwab Fundamental Global Real Estate Index Fund |
| Laudus International MarketMasters Fund™ | Schwab Target 2010 Index Fund |
| Schwab Balanced Fund | Schwab Target 2015 Index Fund |
| Schwab Core Equity Fund | Schwab Target 2020 Index Fund |
| Schwab Dividend Equity Fund | Schwab Target 2025 Index Fund |
| Schwab Large-Cap Growth Fund | Schwab Target 2030 Index Fund |
| Schwab Small-Cap Equity Fund | Schwab Target 2035 Index Fund |
| Schwab Hedged Equity Fund | Schwab Target 2040 Index Fund |
| Schwab Health Care Fund | Schwab Target 2045 Index Fund |
| Schwab International Core Equity Fund | Schwab Target 2050 Index Fund |
| Schwab Target 2010 Fund | Schwab Target 2055 Index Fund |
| Schwab Target 2015 Fund | Schwab Target 2060 Index Fund |
| Schwab Target 2020 Fund | Schwab Monthly Income Fund - Moderate Payout |
| Schwab Target 2025 Fund | Schwab Monthly Income Fund - Enhanced Payout |
| Schwab Target 2030 Fund | Schwab Monthly Income Fund - Maximum Payout |
| Schwab Target 2035 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 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 with the U.S. Securities and Exchange Commission (SEC) and are available on the SEC’s website at www.sec.gov.
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
Financial Notes (continued)
2. Significant Accounting Policies (continued):
(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 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:
• Underlying funds: Mutual funds are valued at their respective net asset values (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.
• 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.
• Cash management sweep time deposits: Balances held in cash management sweep time deposits are accounted for on a cost basis, which approximates fair 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 and ETFs. 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.
• 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
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
Financial Notes (continued)
2. Significant Accounting Policies (continued):
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, 2020 are disclosed in the Portfolio Holdings.
(b) Accounting Policies for certain Portfolio Investments (if held):
Cash Management Transactions: The funds may subscribe to the Brown Brothers Harriman & Co. (BBH) Cash Management Service Sweep (CMS Sweep). The BBH CMS Sweep is an investment product that automatically sweeps the funds’ cash balances into overnight offshore time deposits with either the BBH Grand Cayman branch or a branch of a pre-approved commercial bank. This fully automated program allows the funds to earn interest on cash balances. Excess cash invested with deposit institutions domiciled outside of the U.S., as with any offshore deposit, may be subject to sovereign actions in the jurisdiction of the deposit institution including, but not limited to, freeze, seizure or diminution. The funds bear the risk associated with the repayment of principal and payment of interest on such instruments by the institution with which the deposit is ultimately placed.
(c) Security Transactions:
Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.
(d) Investment Income:
Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying funds are recorded on the date they are effective (the ex-dividend date). Any distributions from underlying funds are recorded in accordance with the character of the distributions as designated by the underlying funds.
(e) Expenses:
Expenses that are specific to a fund are charged directly to the fund. Expenses that are common to more than one fund in the trusts generally are allocated among those funds in proportion to their average daily net assets. Each fund bears its share of the acquired fund fees and expenses of the underlying funds, which are indirect expenses incurred by the fund through its investments in the underlying funds. Such expenses are reflected in the net asset values of the underlying funds.
(f) 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.
(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 funds intend to meet federal income and excise tax requirements for regulated investment companies under subchapter M of the Internal Revenue Code, as amended. Accordingly, the funds distribute substantially all of their net investment income and net realized capital gains, if any, to their shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
Financial Notes (continued)
2. Significant Accounting Policies (continued):
(i) 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 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 may cause the fund to underperform other funds with a similar investment objective.
Conflicts of Interest Risk. The investment adviser’s authority to select and substitute underlying funds from a variety of affiliated and unaffiliated mutual funds and ETFs may create a conflict of interest because the fees paid to it and its affiliates by some underlying funds are higher than the fees paid by other underlying funds. The investment adviser also may have an incentive to select an affiliated underlying fund for other reasons, including to increase assets under management or to support new investment strategies. In addition, other conflicts of interest may exist where the best interests of the affiliated underlying fund may not be aligned with those of a fund. However, the investment adviser is a fiduciary to the fund and is legally obligated to act in the fund’s best interests when selecting underlying funds.
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. Markets may be impacted by economic, political, regulatory and other conditions, including economic sanctions and other government actions. In addition, the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters and epidemics, may also negatively affect the financial markets. As with any investment whose performance is tied to these markets, the value of an investment in a fund will fluctuate, which means that an investor could lose money over short or long periods.
Exchange-Traded Fund (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.
Direct Investment Risk. The funds may invest directly in cash, cash equivalents and equity and fixed-income securities, including money market securities, to maintain their allocations. A fund’s direct investment in these securities is subject to the same or similar risks as an underlying fund’s investment in the same securities.
Securities Lending Risk. Securities lending involves the risk of loss of rights in, or delay in recovery of, the loaned securities if the borrower fails to return the security loaned or becomes insolvent.
Underlying Fund Investment Risk. Before investing in the funds, investors should assess the risks associated with the underlying funds in which the funds may invest, which include any combination of the risks described below.
• Investment Risk. 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. Certain underlying funds seek to track the performance of various segments of the stock market, as measured by their respective indices. Such underlying funds follow these stocks during upturns as well as downturns. Because of their indexing strategy, these 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.
• 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. 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.
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
Financial Notes (continued)
3. Risk Factors (continued):
• 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.
• Fixed Income Risk. Interest rates rise and fall over time, which will affect an underlying fund’s yield and share price. A change in a central bank’s monetary policy or economic conditions, among other things, may result in a change 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.
• Market Capitalization Risk. Securities issued by companies of different market capitalizations tend to go in and out of favor based on market and economic conditions. During a period when securities of a particular market capitalization fall behind other types of investments, an underlying fund’s performance could be impacted.
• Real Estate Investment Risk. An underlying fund that has a policy of concentrating its investments in real estate companies and companies related to the real estate industry is subject to risks associated with the direct ownership of real estate securities. These risks include, among others, declines in the value of real estate; risks related to general and local economic conditions; possible lack of availability of mortgage funds or other limits to accessing the credit or capital markets; defaults by borrowers or tenants, particularly during an economic downturn; and changes in interest rates.
• Money Market Fund Risk. The funds may invest in underlying money market funds that either seek to maintain a stable $1 net asset value (“stable share price money market funds”) or that have a share price that fluctuates (“variable share price money market funds”). Although an underlying stable share price money market fund seeks to maintain a stable $1 net asset value, it is possible to lose money by investing in such a money market fund. Because the share price of an underlying variable share price money market fund will fluctuate, when the fund sells the shares it owns they may be worth more or less than what the fund originally paid for them. In addition, neither type of money market fund is designed to offer capital appreciation. Certain underlying money market funds may impose a fee upon the sale of shares or may temporarily suspend the ability to sell shares if such fund’s liquidity falls below required minimums.
• 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 vulnerable 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 involve certain risks that may be 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 an 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. There is a risk that investments in securities denominated in, and/or receiving revenues in, foreign currencies will decline in value relative to the U.S. dollar.
• 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 developed countries. As a result, there may be an increased risk of illiquidity and price volatility associated with an underlying 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.
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
Financial Notes (continued)
3. Risk Factors (continued):
• Derivatives Risk. An underlying fund may use derivatives to enhance returns or hedge against market declines. Examples of derivatives are options, futures, options on futures and swaps. An option is the right to buy or sell an instrument at a specific price before a specific date. A future is an agreement to buy or sell a financial instrument at a specific price on a specific day. A swap is an agreement whereby two parties agree to exchange payment streams calculated in relation to a rate, index, instrument or certain securities and a predetermined amount. A credit default swap is an agreement in which the seller agrees to make a payment to the buyer in the event of a specified credit event in exchange for a fixed payment or series of fixed payments.
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. Certain of these risks, such as leverage risk, liquidity risk and market risk are discussed elsewhere in this section. An underlying fund’s use of derivatives is also subject to 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. 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 an underlying fund to realize higher amounts of short-term capital gains. An underlying fund’s use of derivatives could reduce the underlying fund’s performance, increase its volatility, and could cause an underlying fund to lose more than the initial amount invested. The use of derivatives that are subject to regulation by the Commodity Futures Trading Commission (CFTC) by an underlying fund could cause a fund to become a commodity pool, which would require the fund to comply with certain CFTC rules.
• Leverage Risk. Certain underlying fund transactions, such as derivatives transactions, 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. An underlying fund may be unable to sell certain securities, such as illiquid securities, readily at a favorable time or price, or the underlying fund may have to sell them at a loss.
• 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 gains distributions.
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:
Investment Adviser
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.
Shareholder Servicing
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 financial intermediaries, including Charles Schwab & Co., Inc. (Schwab), a broker-dealer affiliate of CSIM, (together, service providers), of certain account maintenance, customer liaison and shareholder services to the current shareholders of the funds.
Pursuant to the Plan, each fund’s shares are subject to an annual shareholder servicing fee of up to 0.25%. The shareholder servicing fee paid to a particular service provider is made pursuant to its written agreement with Schwab, as distributor of the funds (or, in the case of payments made to Schwab acting as a service provider, pursuant to Schwab’s written agreement with the funds). Payments under the Plan are made as described above without regard to whether the fee is more or less than the service provider’s actual cost of providing the services, and if more, such excess may be retained as profit by the service provider.
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Expense Limitation
Although these agreements specify certain fees for these services, 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 expenses charged, excluding interest, taxes and certain non-routine expenses as a percentage of average daily net assets 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% |
The agreement to limit the funds’ total expenses charged is limited to each fund’s direct operating expenses and, therefore, does not apply to acquired fund fees and expenses, which are indirect expenses incurred by a fund through its investments in the underlying funds.
Investments in Affiliates
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, 2020, 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 | 5.8% | 4.5% | 2.3% | 0.8% |
| Schwab Fundamental International Large Company Index Fund | 3.9% | 3.1% | 1.6% | 0.6% |
| Schwab Fundamental International Small Company Index Fund | 5.4% | 4.3% | 2.3% | 0.8% |
| Schwab Fundamental US Large Company Index Fund | 1.8% | 2.0% | 1.0% | 0.4% |
| Schwab Fundamental US Small Company Index Fund | 2.1% | 2.1% | 1.0% | 0.3% |
| Schwab International Index Fund | 1.4% | 1.2% | 0.6% | 0.2% |
| Schwab S&P 500 Index Fund | 0.4% | 0.5% | 0.2% | 0.1% |
| Schwab Short-Term Bond Index Fund | —% | —% | 0.3% | 0.2% |
| Schwab Small-Cap Index Fund | 1.6% | 1.7% | 0.8% | 0.3% |
| Schwab U.S. Aggregate Bond Index Fund | —% | 2.5% | 3.8% | 3.2% |
| Schwab U.S. Large-Cap Growth Index Fund | 6.4% | 5.2% | 3.3% | 1.2% |
| Schwab U.S. REIT ETF | 0.7% | 0.7% | 0.3% | 0.1% |
| Schwab Variable Share Price Money Fund, Ultra Shares | —% | 0.5% | 0.4% | 0.2% |
Interfund Borrowing and Lending
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. 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.
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 | Annual Report
Schwab MarketTrack Portfolios
Financial Notes (continued)
6. Borrowing from Banks:
During the period, the funds were participants with other funds in the Fund Complex in a joint, syndicated, committed $750 million line of credit (the Syndicated Credit Facility), which matured on October 1, 2020. On October 1, 2020, the Syndicated Credit Facility was amended to run for a new 364 day period with a line of credit of $850 million, maturing on September 30, 2021. Under the terms of the Syndicated Credit Facility, in addition to the interest charged on any borrowings by a fund, each fund paid a commitment fee of 0.15% per annum on the funds’ proportionate share of the unused portion of the Syndicated Credit Facility.
During the period, the funds were participants with other funds in the Fund Complex in a joint, unsecured, uncommitted $500 million line of credit (the Uncommitted Credit Facility), with State Street Bank and Trust Company, which matured on November 29, 2019. On November 29, 2019, the Uncommitted Credit Facility was amended to run for a new 364 day period, which was scheduled to mature on November 27, 2020. However, on October 1, 2020, the Uncommitted Credit Facility was amended to run for a new 364 day period with a line of credit of $400 million, maturing on September 30, 2021. Under the terms of the Uncommitted Credit Facility, each fund pays interest on the amount a fund borrows. There were no borrowings from either line 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 of Investment Securities:
For the period ended October 31, 2020, purchases and sales of securities (excluding short-term obligations) were as follows:
| | Purchases
of Securities | Sales
of Securities |
| Schwab MarketTrack All Equity Portfolio | $115,862,291 | $148,200,000 |
| Schwab MarketTrack Growth Portfolio | 143,250,366 | 193,387,027 |
| Schwab MarketTrack Balanced Portfolio | 113,547,604 | 140,080,891 |
| Schwab MarketTrack Conservative Portfolio | 109,350,522 | 95,324,313 |
8. Federal Income Taxes:
As of October 31, 2020, the tax basis cost of the funds’ investments and gross unrealized appreciation and depreciation were as follows:
| | Schwab
MarketTrack
All Equity
Portfolio | | Schwab
MarketTrack
Growth
Portfolio | | Schwab
MarketTrack
Balanced
Portfolio | | Schwab
MarketTrack
Conservative
Portfolio |
| Tax cost | $442,462,478 | | $508,103,979 | | $386,191,026 | | $228,128,200 |
| Gross unrealized appreciation | $201,190,755 | | $248,542,267 | | $142,560,393 | | $55,385,917 |
| Gross unrealized depreciation | (21,155,720) | | (9,226,301) | | (11,633,559) | | (4,542,826) |
| Net unrealized appreciation (depreciation) | $180,035,035 | | $239,315,966 | | $130,926,834 | | $50,843,091 |
As of October 31, 2020, 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 | $— | | $614,921 | | $2,982,542 | | $971,204 |
| Undistributed long-term capital gains | 39,351,108 | | 51,712,200 | | 25,198,250 | | 4,019,545 |
| Net unrealized appreciation (depreciation) on investments | 180,035,035 | | 239,315,966 | | 130,926,834 | | 50,843,091 |
| Total | $219,386,143 | | $291,643,087 | | $159,107,626 | | $55,833,840 |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
Financial Notes (continued)
8. Federal Income Taxes (continued):
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. The tax cost of the funds’ investments, disclosed above, have been adjusted from their book amounts to reflect these unrealized appreciation or depreciation differences, as applicable.
Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2020, the funds had no capital loss carryforwards available to offset future net capital gains.
For tax purposes, late-year ordinary losses may be deferred and treated as occurring on the first day of the following fiscal year. For the fiscal year ended October 31, 2020, the funds had ordinary losses deferred as follows:
| | Schwab
MarketTrack
All Equity
Portfolio | Schwab
MarketTrack
Growth
Portfolio | Schwab
MarketTrack
Balanced
Portfolio | Schwab
MarketTrack
Conservative
Portfolio |
| Ordinary losses deferred | ($1,603,991) | $— | $— | $— |
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 fiscal year end distributions | | | | |
| Ordinary income | $19,507,535 | $16,953,005 | $12,876,300 | $5,723,865 |
| Long-term capital gains | 25,182,760 | 29,262,151 | 10,865,370 | 2,542,143 |
| Prior fiscal year end distributions | | | | |
| Ordinary income | $13,644,585 | $16,219,023 | $10,931,597 | $5,884,258 |
| Long-term capital gains | 14,361,968 | 23,708,153 | 21,773,360 | 5,993,704 |
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, 2020, 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 fiscal year ended October 31, 2020, the funds did not incur any interest or penalties.
9. Independent Registered Public Accounting Firm:
On June 8, 2020, the Audit, Compliance and Valuation Committee of the Board approved, and on June 9, 2020, the Board approved, Deloitte & Touche LLP as the independent registered accounting firm of the Schwab Funds Complex for fiscal periods ending after June 8, 2020.
On June 8, 2020, the PricewaterhouseCoopers LLP (the “Prior Auditor”) resigned as the independent registered public accounting firm of the Schwab Funds Complex. The Prior Auditor’s reports on the financial statements of the funds for the past two fiscal years, the years ended October 31, 2018 and October 31, 2019, did not contain an adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the last two fiscal year-ends and through June 8, 2020, there were no (1) disagreements with the Prior Auditor on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the Prior Auditor’s satisfaction, would have caused it to make reference to that matter in connection with its reports on the funds’ financial statements for such periods; or (2) “reportable events,” as that term is defined in Item 304 (a)(1)(v) of Regulation S-K under the Securities Exchange Act of 1934.
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
Financial Notes (continued)
10. Subsequent Events:
Management has determined there are no subsequent events or transactions through the date the financial statements were issued that would have materially impacted the financial statements as presented.
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Schwab Capital Trust and Shareholders of Schwab MarketTrack All Equity Portfolio, Schwab MarketTrack Growth Portfolio, Schwab MarketTrack Balanced Portfolio and Schwab MarketTrack Conservative Portfolio:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statements of assets and liabilities, including the portfolio holdings, of Schwab MarketTrack All Equity Portfolio, Schwab MarketTrack Growth Portfolio, Schwab MarketTrack Balanced Portfolio and Schwab MarketTrack Conservative Portfolio (the “Funds”), four of the funds constituting Schwab Capital Trust, as of October 31, 2020, and the related statements of operations, statements of changes in net assets, and the financial highlights for the year then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of each of the Funds as of October 31, 2020, and the results of their operations, the changes in their net assets, and the financial highlights for the year then ended in conformity with accounting principles generally accepted in the United States of America. The statements of changes in net assets for the year ended October 31, 2019 and the financial highlights for each of the four years in the period ended October 31, 2019 were audited by other auditors, whose report, dated December 16, 2019, expressed an unqualified opinion on such statements of changes in net assets and financial highlights.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2020, by correspondence with the custodian and transfer agent. We believe that our audits provide a reasonable basis for our opinion.
Deloitte & Touche LLP
Denver, Colorado
December 16, 2020
We have served as the auditor of one or more investment companies in the Schwab Funds Complex since 2020.
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
Other Federal Tax Information (unaudited)
The funds may elect to pass on the benefits of the foreign tax credit to their shareholders for the fiscal year ended October 31, 2020. The foreign tax credit and the foreign source income amounts are as follows:
| | Foreign Tax Credit | Foreign Source Income |
| Schwab MarketTrack All Equity Portfolio | $728,235 | $6,494,759 |
| Schwab MarketTrack Growth Portfolio | 575,370 | 5,131,112 |
| Schwab MarketTrack Balanced Portfolio | 289,948 | 2,582,406 |
| Schwab MarketTrack Conservative Portfolio | 92,687 | 824,270 |
For corporate shareholders, the following percentage of the funds’ dividend distributions paid during the fiscal year ended October 31, 2020, qualify for the corporate dividends received deduction:
| | Percentage |
| Schwab MarketTrack All Equity Portfolio | 48.83 |
| Schwab MarketTrack Growth Portfolio | 48.96 |
| Schwab MarketTrack Balanced Portfolio | 33.26 |
| Schwab MarketTrack Conservative Portfolio | 21.33 |
For the fiscal year ended October 31, 2020, 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 2021 via IRS form 1099 of the amounts for use in preparing their 2020 income tax return.
| | |
| Schwab MarketTrack All Equity Portfolio | $18,047,189 |
| Schwab MarketTrack Growth Portfolio | 14,198,525 |
| Schwab MarketTrack Balanced Portfolio | 7,156,364 |
| Schwab MarketTrack Conservative Portfolio | 2,040,585 |
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, 2020:
| | |
| Schwab MarketTrack All Equity Portfolio | $25,182,760 |
| Schwab MarketTrack Growth Portfolio | 29,262,151 |
| Schwab MarketTrack Balanced Portfolio | 10,865,370 |
| Schwab MarketTrack Conservative Portfolio | 2,542,143 |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
Liquidity Risk Management Program (Unaudited)
The Funds have adopted and implemented a liquidity risk management program (the “program”) as required by Rule 22e-4 under the Investment Company Act of 1940, as amended. The Funds’ Board of Trustees (the “Board”) has designated the Funds’ investment adviser, Charles Schwab Investment Management, Inc. (“CSIM”) as the administrator of the program. Personnel of CSIM or its affiliates conduct the day-to-day operation of the program.
Under the program, CSIM manages a Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. The program is reasonably designed to assess and manage a Fund’s liquidity risk, taking into consideration the Fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably foreseeable stressed conditions; its historical redemption history and shareholder concentrations; and its cash holdings and access to other funding sources, including the custodian overdraft facility and lines of credit. CSIM’s process of determining the degree of liquidity of each Fund’s investments is supported by third-party liquidity assessment vendors.
The Funds’ Board reviewed a report at its meeting held on September 22, 2020 prepared by CSIM regarding the operation and effectiveness of the program for the period June 1, 2019, through May 31, 2020. No significant liquidity events impacting any of the Funds were noted in the report. In addition, CSIM provided its assessment that the program had been operating effectively in managing each Fund’s liquidity risk.
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
Investment Advisory Agreement Approval
The Investment Company Act of 1940, as amended (the 1940 Act), requires that 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 and administration agreement (the Agreement) between Schwab Capital Trust (the Trust) and Charles Schwab Investment Management, Inc. (CSIM) 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 (each, a Fund and collectively, 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, business goals and priorities, profitability, third-party oversight, corporate structure and operations. As part of the renewal process, the Independent Trustees’ legal counsel, on behalf of the Independent Trustees, sends an information request letter to CSIM seeking certain relevant information. The responses by CSIM are provided to the Trustees in the Board materials for their review prior to their meeting, and the Trustees are provided with the opportunity to request any additional materials. The Board also receives data provided by an independent provider of investment company data. 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 the Funds’ operations and performance, legal and compliance matters, risk management, portfolio turnover, and sales and marketing activity. In considering the renewal, the Independent Trustees receive advice from Independent Trustees’ legal counsel, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees participate in question and answer sessions with representatives of CSIM and meet in executive session outside the presence of Fund management.
The Board, including a majority of the Independent Trustees, considered information relating to the continuance of the Agreement with respect to the Funds at meetings held on May 11, 2020 and June 9, 2020, and approved the renewal of the Agreement with respect to the Funds for an additional one-year term at the meeting on June 9, 2020 called for the purpose of voting on such approval.1
The Board’s approval of the continuance 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 each Fund 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 and benchmark data; |
| 3. | each Fund’s expenses and how those expenses compared to those of certain other similar mutual funds; |
| 4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to each Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
| 5. | the extent to which economies of scale would be realized as each 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 Funds and the resources of CSIM and its affiliates dedicated to the Funds. In this regard, the Trustees evaluated, among other things, CSIM’s experience, track record, compliance program, resources dedicated to hiring and retaining skilled personnel and specialized talent, and information security resources. The Trustees also considered information provided by CSIM relating to services and support provided with respect to each Fund’s portfolio management team, portfolio strategy, and internal investment guidelines, as well as trading infrastructure, liquidity management, product design and analysis, shareholder communications, securities valuation, fund accounting and custody, and vendor and risk oversight. The Trustees also considered investments CSIM has made in its infrastructure, including modernizing CSIM’s technology and use of data, increasing expertise in key areas (including portfolio management and trade operations), and improving business continuity, cybersecurity, due diligence, risk management processes, and information security programs, which are designed to provide enhanced services to each Fund and its shareholders. The Trustees also considered Schwab’s
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
wide range of products, services, and channel alternatives such as investment research tools and an array of account features that benefit Fund shareholders who are brokerage clients of Schwab. Finally, the Trustees also considered Schwab’s reputation as a full service brokerage firm and its overall financial condition, including Schwab’s ability to maintain consistent operations and service levels during recent periods of remote work and market volatility. 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 each Fund’s performance in determining whether to renew the Agreement with respect to such Fund. Specifically, the Trustees considered each Fund’s performance relative to a peer category of other mutual funds and applicable indices/benchmarks, in light of total return, yield, if applicable, and market trends, as well as in consideration of each Fund’s investment style and strategy attributes and disclosures. As part of this review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the independent provider of investment company data who prepared the peer category analysis. The Trustees further considered the level of Fund performance in the context of their review of Fund expenses and adviser profitability discussed below and also noted that the Board and a designated committee of the Board review performance throughout the year. Although Schwab MarketTrack All Equity Portfolio and Schwab MarketTrack Conservative Portfolio each had performance that lagged that of its respective peer group for certain periods considered, the Board concluded that other factors relevant to performance supported renewal of the Agreement with respect to each Fund, including that the underperformance was attributable, to a significant extent, to investment decisions by CSIM that were reasonable and consistent with each 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 with respect to each Fund, the performance of such Fund supported renewal of the Agreement with respect to such Fund.
Fund Expenses. With respect to each Fund’s 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 other similar mutual funds, such peer groups and comparisons having been selected and calculated by an independent provider of investment company data. CSIM reported to the Board, and the Board took into account, the risk assumed by CSIM in the development of products and provision of services as well as the competitive marketplace for financial products. The Trustees also considered fees charged by CSIM to other mutual funds and to other types of 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, and any differences in the nature and scope of the services CSIM provides to these other accounts, as well as differences in the market for these types of accounts. The Trustees noted that shareholders of the Funds indirectly pay their pro rata share of the fees and expenses of the underlying funds in which the Funds invest. Following such evaluation, the Board concluded, within the context of its full deliberations, that, with respect to each Fund, the expenses of such Fund are reasonable and supported renewal of the Agreement with respect to such Fund.
Profitability. The Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly and reviewed profitability on a pre-tax basis, without regard to distribution expenses. In this connection, the Trustees reviewed management’s profitability analyses. The Trustees also reviewed profitability of CSIM relating to the Schwab fund complex as a whole, noting the benefits to Fund shareholders of being part of the Schwab fund complex, including the allocations of certain fixed costs across the Funds and other funds in the complex. 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. Also, because each Fund invests a portion of its assets in other funds within the Schwab fund complex, the Trustees considered whether CSIM indirectly benefits from the Funds’ investments in other underlying funds managed by CSIM. The Trustees considered whether the compensation and profitability with respect to the Funds 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. The Trustees noted that CSIM continues to invest substantial sums in its business in order to provide enhanced research capabilities, services, and systems to benefit the Funds. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM with respect to each Fund is reasonable and supported renewal of the Agreement with respect to such Fund.
Economies of Scale. Although the Trustees recognized the difficulty of determining economies of scale with precision, the Trustees considered the potential existence of any economies of scale and whether those are passed along to a Fund’s shareholders through (i) the enhancement of services provided to the Funds in return for fees paid, including through investments by CSIM in CSIM’s infrastructure, including modernizing CSIM’s technology and use of data, increasing expertise and capabilities in key areas (including portfolio and trade operations), and improving business continuity, cybersecurity, due diligence, and information security programs, which are designed to provide enhanced services to
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
the Funds and their shareholders; (ii) graduated investment advisory fee schedules or unitary fee structures, fee waivers, or expense caps by CSIM and its affiliates for those funds in the Schwab fund complex with such features; and (iii) pricing a fund to scale and keeping overall expenses down as the fund grows. The Trustees acknowledged that CSIM has shared any economies of scale with the Funds by investing in CSIM’s infrastructure, as discussed above, over time and that CSIM’s internal costs of providing investment management, technology, administrative, legal and compliance services to the Funds continues to increase as a result of regulatory or other developments. The Trustees considered that CSIM and its affiliates may employ contractual expense caps to protect shareholders from high fees when fund assets were relatively small, for example, in the case of newer funds or funds with investment strategies that are from time to time out of favor, because, among other reasons, 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 each Fund obtains reasonable benefits from economies of scale.
In the course of their deliberations, the Trustees may have accorded different weights to various factors and 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.
| 1 | The meeting on June 9, 2020 was held telephonically in reliance on exemptive relief from the in-person voting requirement under the 1940 Act as provided by the Securities and Exchange Commission. |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
Trustees and Officers
The tables below give information about the trustees and officers of Schwab Capital Trust, which includes the funds covered in this report. The “Fund Complex” includes The Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust. The Fund Complex includes 100 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 1-877-824-5615.
| 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 |
Robert W. Burns
1959
Trustee
(Trustee of Schwab Strategic Trust since 2009; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016) | Retired/Private Investor (Jan. 2009 – present). Formerly, Managing Director, Pacific Investment Management Company, LLC (PIMCO) (investment management firm) and President, PIMCO Funds. | 100 | None |
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 since 2010; Schwab Strategic Trust since 2016) | Senior Fellow (Oct. 1979 – present), The Hoover Institution at Stanford University (public policy think tank); Senior Fellow (2000 – present), Stanford Institute for Economic Policy Research; Professor of Public Policy (1994 – 2015), Stanford University. | 100 | Director (2005 – 2020), Gilead Sciences, Inc. |
Nancy F. Heller
1956
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018) | Retired. President and Chairman (2014 – 2016), TIAA Charitable (financial services); Senior Managing Director (2003 – 2016), TIAA (financial services). | 100 | None |
Stephen Timothy Kochis
1946
Trustee
(Trustee of Schwab Strategic Trust since 2012; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016) | CEO and Owner (May 2012 – present), Kochis Global (wealth management consulting). | 100 | None |
David L. Mahoney
1954
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016) | Private Investor. | 100 | Director (2004 – present), Corcept Therapeutics Incorporated
Director (2009 – present), Adamas Pharmaceuticals, Inc.
Director (2003 – 2019), Symantec Corporation |
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Schwab MarketTrack Portfolios
| 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 |
Jane P. Moncreiff
1961
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2019) | Consultant (2018 – present), Fulham Advisers LLC (management consulting); Chief Investment Officer (2009 – 2017), CareGroup Healthcare System, Inc. (healthcare). | 100 | None |
Kiran M. Patel
1948
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016) | Retired. Executive Vice President and General Manager of Small Business Group (Dec. 2008 – Sept. 2013), Intuit, Inc. (financial software and services firm for consumers and small businesses). | 100 | Director (2008 – present), KLA-Tencor Corporation |
Kimberly S. Patmore
1956
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016) | Consultant (2008 – present), Patmore Management Consulting (management consulting). | 100 | None |
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 since 2010; Schwab Strategic Trust since 2016) | Chairman, Chief Executive Officer and Founder (Mar. 1990 – present), Smith Graham & Co. (investment advisors). | 100 | Director (2012 – present), Eaton Corporation plc |
| 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 |
Walter W. Bettinger II2
1960
Chairman and 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 since 2010) | Director, President and Chief Executive Officer (Oct. 2008 – present), The Charles Schwab Corporation; President and Chief Executive Officer (Oct. 2008 – present) and Director (May 2008 – present), Charles Schwab & Co., Inc.; Director (Apr. 2006 – present), Charles Schwab Bank, SSB; Director (Nov. 2017 – present), Charles Schwab Premier Bank, SSB; Director (July 2019 – present), Charles Schwab Trust Bank; Director (May 2008 – present) and President and Chief Executive Officer (Aug. 2017 – present), Schwab Holdings, Inc.; Director (Oct. 2020 – present), TD Ameritrade Holding Corporation; Director (July 2016 – present), Charles Schwab Investment Management, Inc. | 100 | Director (2008 – present), The Charles Schwab Corporation |
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Schwab MarketTrack Portfolios
| Interested 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 |
Jonathan de St. Paer2
1973
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2019) | Director (Apr. 2019 – present), President (Oct. 2018 – present), and Chief Executive Officer (Apr. 2019 – Nov. 2019), Charles Schwab Investment Management, Inc.; Senior Vice President (June 2020 – present), Charles Schwab Investment Advisory, Inc.; Trustee and Chief Executive Officer (Apr. 2019 – present) and President (Nov. 2018 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Director (Apr. 2019 – present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited; Senior Vice President (Apr. 2019 – present), Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014 – Mar. 2019), and Vice President (Jan. 2009 – Dec. 2013), Charles Schwab & Co., Inc. | 100 | None |
Joseph R. Martinetto2
1962
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016) | Chief Operating Officer (Feb. 2018 – present) and Senior Executive Vice President (July 2015 – Feb. 2018), The Charles Schwab Corporation; Senior Executive Vice President (July 2015 – present), Charles Schwab & Co., Inc.; Chief Financial Officer (July 2015 – Aug. 2017) and Executive Vice President and Chief Financial Officer (May 2007 – July 2015), The Charles Schwab Corporation and Charles Schwab & Co., Inc.; Director (May 2007 – present), Charles Schwab & Co., Inc.; Director (Apr. 2010 – present) and Chief Executive Officer (July 2013 – Apr. 2015), Charles Schwab Bank, SSB; Director (Nov. 2017 – present), Charles Schwab Premier Bank, SSB; Director (May 2007 – present), Chief Financial Officer (May 2007 – Aug. 2017), Senior Executive Vice President (Feb. 2016 – present), and Executive Vice President (May 2007 – Feb. 2016), Schwab Holdings, Inc.; Director (Oct. 2020 – present), TD Ameritrade Holding Corporation. | 100 | None |
| 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 |
Jonathan de St. Paer
1973
President and Chief Executive Officer
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018) | Director (Apr. 2019 – present), President (Oct. 2018 – present), and Chief Executive Officer (Apr. 2019 – Nov. 2019), Charles Schwab Investment Management, Inc.; Senior Vice President (June 2020 – present), Charles Schwab Investment Advisory, Inc.; Trustee and Chief Executive Officer (Apr. 2019 – present) and President (Nov. 2018 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Director (Apr. 2019 – present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited; Senior Vice President (Apr. 2019 – present), Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014 – Mar. 2019), and Vice President (Jan. 2009 – Dec. 2013), Charles Schwab & Co., Inc. |
Mark Fischer
1970
Treasurer, Chief Financial Officer and Chief Operating Officer
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2013) | Treasurer and Chief Financial Officer (Jan. 2016 – present) and Chief Operating Officer (Dec. 2020 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Assistant Treasurer (Dec. 2013 – Dec. 2015), Schwab Funds and Laudus Funds; Assistant Treasurer (Nov. 2013 – Dec. 2015), Schwab ETFs; Chief Financial Officer (Mar. 2020 – present) and Vice President (Oct. 2013 – present), Charles Schwab Investment Management, Inc.; Executive Director (Apr. 2011 – Sept. 2013), J.P. Morgan Investor Services; Assistant Treasurer (May 2005 – Mar. 2011), Massachusetts Financial Service Investment Management. |
Omar Aguilar
1970
Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President and Chief Investment Officer (Apr. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies (June 2011 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Head of the Portfolio Management Group and Vice President of Portfolio Management (May 2009 – Apr. 2011), Financial Engines, Inc. (investment management firm); Head of Quantitative Equity (July 2004 – Jan. 2009), ING Investment Management. |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
| Officers of the Trust (continued) |
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 |
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, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President and Chief Investment Officer (Apr. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Investment Officer – Fixed Income (June 2011 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Senior Managing Director and Global Head of Active Fixed-Income Strategies (Jan. 2008 – Oct. 2010), State Street Global Advisors; Director of Alpha Strategies (Apr. 2006 – Jan. 2008), Loomis, Sayles & Company (investment management firm). |
David Lekich
1964
Chief Legal Officer and Secretary, Schwab Funds and Schwab ETFs
Vice President and Assistant Clerk, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President (Sept. 2011 – present) and Vice President (Mar. 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present) and Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (Apr. 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; Vice President and Assistant Clerk (Apr. 2011 – present), Laudus Funds; Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs. |
Catherine MacGregor
1964
Vice President and Assistant Secretary, Schwab Funds and Schwab ETFs
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 and Laudus Trust since 2005; Schwab Strategic Trust since 2009) | Vice President (July 2005 – present), Charles Schwab & Co., Inc.; Vice President (Sept. 2005 – present), Charles Schwab Investment Management, Inc.; Vice President (Dec. 2005 – present) and 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 (Oct. 2009 – present), Schwab ETFs. |
| 1 | Each Trustee shall hold office until the election and qualification of his or her successor, or until he or she dies, resigns or is removed. The retirement policy requires that each independent trustee retire by December 31 of the year in which the Trustee turns 74 or the Trustee’s twentieth year of service as an independent trustee on any trust in the Fund Complex, whichever occurs first. |
| 2 | Mr. Bettinger, Mr. de St. Paer and Mr. Martinetto are Interested Trustees. Mr. Bettinger is an Interested Trustee because he owns stock of The Charles Schwab Corporation (CSC), the parent company of Charles Schwab Investment Management, Inc. (CSIM), the investment adviser for the trusts in the Fund Complex, is an employee and director of Charles Schwab & Co., Inc. (CS&Co), the principal underwriter for The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust, and is a director of CSIM. Mr. de St. Paer is an Interested Trustee because he owns stock of CSC and is an employee and director of CSIM. Mr. Martinetto is an Interested Trustee because he owns stock of CSC and is an employee and director of CS&Co. |
| 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 Board. |
Schwab MarketTrack Portfolios | Annual Report
Schwab MarketTrack Portfolios
All Equity Composite Index A custom blended index developed by CSIM based on a comparable portfolio asset allocation. Effective July 1, 2020, the index is composed of 31.33% S&P 500 Index, 5.0% Russell 1000 Growth Index, 13.5% Russell RAFI US Large Company Index, 10.33% Russell 2000 Index, 4.5% Russell RAFI US Small Company Index, 13.83% MSCI EAFE Index (Net), 6.0% Russell RAFI Developed ex US Large Company Index (Net), 5.0% Russell RAFI Developed ex US Small Company Index (Net), 5.0% Russell RAFI Emerging Markets Large Company Index (Net), 5.0% Dow Jones Equity All REIT Capped Index, and 0.5% Bloomberg Barclays US Treasury Bills 1-3 Month Index. From February 28, 2020 through June 30, 2020, the index was composed of 31.33% S&P 500 Index, 5.0% Russell 1000 Growth Index, 13.5% Russell RAFI US Large Company Index, 10.33% Russell 2000 Index, 4.5% Russell RAFI US Small Company Index, 13.83% MSCI EAFE Index (Net), 6.0% Russell RAFI Developed ex US Large Company Index (Net), 5.0% Russell RAFI Developed ex US Small Company Index (Net), 5.0% Russell RAFI Emerging Markets Large Company Index (Net), 5.0% Dow Jones U.S. Select REIT Index, and 0.5% Bloomberg Barclays US Treasury Bills 1-3 Month Index. From December 1, 2014 through February 27, 2020, the index was composed of 31.33% S&P 500 Index, 17.33% Russell 2000 Index, 13.50% Russell RAFI US Large Company Index, 7.50% Russell RAFI US Small Company Index, 13.83% MSCI EAFE Index (Net), 6% Russell RAFI Developed ex US Large Company Index (Net), 5% Russell RAFI Developed ex US Small Company Index (Net), 5% Russell RAFI Emerging Markets Large Company Index (Net), and 0.5% Bloomberg Barclays US Treasury Bills 1-3 Month Index. From March 1, 2014 through November 30, 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 Index (Net). Percentages listed may not total to 100% due to rounding.
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. Effective July 1, 2020 the index is composed of 21.0% S&P 500 Index, 3.0% Russell 1000 Growth Index, 9.0% Russell RAFI US Large Company Index, 6.3% Russell 2000 Index, 2.7% Russell RAFI US Small Company Index, 7.0% MSCI EAFE Index (Net), 3.0% Russell RAFI Developed ex US Large Company Index (Net), 2.5% Russell RAFI Developed ex US Small Company Index (Net), 2.5% Russell RAFI Emerging Markets Large Company Index (Net), 3.0% Dow Jones Equity All REIT Capped Index, 35.0% Bloomberg Barclays US Aggregate Bond Index, 1.0% Bloomberg Barclays US Government/Credit 1-5 Year Index, and 4.0% Bloomberg Barclays US Treasury Bills 1-3 Month Index. From February 28, 2020 through June 30, 2020, the index was composed of 21% S&P 500 Index, 3.0% Russell 1000 Growth Index, 9.0% Russell RAFI US Large Company Index, 6.3% Russell 2000 Index, 2.7% Russell RAFI US Small Company Index, 7.0% MSCI EAFE Index (Net), 3.0% Russell RAFI Developed ex US Large Company Index (Net), 2.5% Russell RAFI Developed ex US Small Company Index (Net), 2.5% Russell RAFI Emerging Markets Large Company Index (Net), 3.0% Dow Jones U.S. Select REIT Index, 35.0% Bloomberg Barclays US Aggregate Bond Index, 1.0% Bloomberg Barclays US Government/Credit 1-5 Year Index, and 4.0% Bloomberg Barclays US Treasury Bills 1-3 Month Index. From
December 1, 2014 through February 27, 2020, the Balanced Composite Index was composed of 21% S&P 500 Index, 10.5% Russell 2000 Index, 9% Russell RAFI US Large Company Index, 4.5% Russell RAFI US Small Company Index, 7% MSCI EAFE Index (Net), 3% Russell RAFI Developed ex US Large Company Index (Net), 2.5% Russell RAFI Developed ex US Small Company Index (Net), 2.5% Russell RAFI Emerging Markets Large Company Index (Net), 35% Bloomberg Barclays US Aggregate Bond Index, and 5% Bloomberg Barclays US Treasury Bills 1-3 Month Index. From March 1, 2014 through November 30, 2014, the index was comprised of 30% S&P 500 Index, 15% Russell 2000 Index, 15% MSCI EAFE Index (Net), 35% Bloomberg Barclays US Aggregate Bond Index, and 5% Bloomberg Barclays US Treasury Bills 1-3 Month 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 Index (Net), 35% Bloomberg Barclays US Aggregate Bond Index, and 5% Bloomberg Barclays US Treasury Bills 1-3 Month Index. Percentages listed may not total to 100% due to rounding.
Bloomberg Barclays US Aggregate Bond Index An index that is a broad-based benchmark measuring the performance of the U.S. investment grade, taxable bond market, including U.S. Treasuries, government-related and corporate bonds, mortgage pass-through securities, commercial mortgage-backed securities, and asset-backed securities that are publicly available for sale in the United States. To be eligible for inclusion in the index, securities must be fixed rate, non-convertible, U.S. dollar-denominated with at least $300 million or more of outstanding face value and have one or more years remaining to maturity. The index excludes certain types of securities, including tax-exempt state and local government series bonds, structured notes embedded with swaps or other special features, private placements, floating rate securities, inflation-linked bonds and Eurobonds. The index is market capitalization weighted and the securities in the index are updated on the last business day of each month.
Bloomberg Barclays US Government/Credit 1–5 Year Index An index that is a broad-based benchmark measuring the performance of U.S. dollar-denominated U.S. Treasury bonds, government related bonds (i.e., U.S. and non-U.S. agencies, sovereign, quasi-sovereign, supranational and local authority debt) and investment grade U.S. corporate bonds that have a remaining maturity of greater than or equal to one year and less than five years. To be eligible for inclusion in the index, securities must be fixed rate, non-convertible, U.S. dollar-denominated with at least $300 million or more of outstanding face value and have a remaining maturity greater than or equal to one year and less than five years. The index excludes certain types of securities, including, bonds with equity type features (e.g., warrants, convertibles and preferreds), tax-exempt municipal securities, inflation-linked bonds, floating rate issues, strips, private placements, U.S. dollar-denominated 25 and 50 par retail bonds, structured notes and pass-through certificates. The index is market capitalization weighted and the securities in the index are updated on the last business day of each month.
Bloomberg Barclays US Treasury Bills 1–3 Month Index An index that includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months but more than 1 month, are rated investment grade and have $300 million or more of outstanding face value. It excludes zero-coupon STRIPS.
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Schwab MarketTrack Portfolios
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. Effective July 1, 2020, the index is composed of 14.0% S&P 500 Index, 2.0% Russell 1000 Growth Index, 6.0% Russell RAFI US Large Company Index, 4.67% MSCI EAFE Index (Net), 4.2% Russell 2000 Index, 1.8% Russell RAFI US Small Company Index, 2.0% Russell RAFI Developed ex US Large Company Index (Net), 1.67% Russell RAFI Developed ex US Small Company Index (Net), 1.67% Russell RAFI Emerging Markets Large Company Index (Net), 2.0% Dow Jones Equity All REIT Capped Index, 55.0% Bloomberg Barclays US Aggregate Bond Index, 1.0% Bloomberg Barclays US Government/Credit 1-5 Year Index, and 4.0% Bloomberg Barclays US Treasury Bills 1-3 Month Index. From February 28, 2020 through June 30, 2020, the index was composed of 14.0% S&P 500 Index, 2.0% Russell 1000 Growth Index, 6.0% Russell RAFI US Large Company Index, 4.67% MSCI EAFE Index (Net), 4.2% Russell 2000 Index, 1.8% Russell RAFI US Small Company Index, 2.0% Russell RAFI Developed ex US Large Company Index (Net), 1.67% Russell RAFI Developed ex US Small Company Index (Net), 1.67% Russell RAFI Emerging Markets Large Company Index (Net), 2.0% Dow Jones U.S. Select REIT Index, 55.0% Bloomberg Barclays US Aggregate Bond Index, 1.0% Bloomberg Barclays US Government/Credit 1-5 Year Index, and 4.0% Bloomberg Barclays US Treasury Bills 1-3 Month Index. From December 1, 2014, through February 27, 2020, the index was composed of 14.0% S&P 500 Index, 7.0% Russell 2000 Index, 6.0% Russell RAFI US Large Company Index, 3.0% Russell RAFI US Small Company Index, 4.67% MSCI EAFE Index (Net), 2.0% Russell RAFI Developed ex US Large Company Index (Net), 1.67% Russell RAFI Developed ex US Small Company Index (Net), 1.67% Russell RAFI Emerging Markets Large Company Index (Net), 55.0% Bloomberg Barclays US Aggregate Bond Index, and 5.0% Bloomberg Barclays US Treasury Bills 1-3 Month Index. From March 1, 2014 through November 30, 2014, the index was composed of 20% S&P 500 Index, 10% Russell 2000 Index, 10% MSCI EAFE Index (Net), 55% Bloomberg Barclays US Aggregate Bond Index, and 5% Bloomberg Barclays US Treasury Bills 1-3 Month 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 composed of 30% Dow Jones U.S. Total Stock Market Index, 10% MSCI EAFE Index (Net), 55% Bloomberg Barclays US Aggregate Bond Index, and 5% Bloomberg Barclays US Treasury Bills 1-3 Month Index. Percentages listed may not total to 100% due to rounding.
Dow Jones Equity All REIT Capped Index A float-adjusted market cap weighted index that is designed to measure all equity real estate investment trusts (REITs) in the Dow Jones U.S. Total Stock Market Index, as defined by the S&P Dow Jones Indices REIT/RESI Industry Classification Hierarchy, that meet the minimum float market capitalization (FMC) and liquidity thresholds. The aggregate weight of all companies weighing more than 4.5% cannot exceed 22.5%, and no single company’s weight can exceed 10%. The index is reviewed daily based on each company’s capped market capitalization weight. Daily capping is only performed when the sum of companies with weights great than 5% exceeds 25%.
Dow Jones U.S. Select REIT Index An index that is a float-adjusted market-capitalization weighted index comprised of income-producing commercial and/or residential real estate investment trusts (REITs). The index excludes mortgage REITs, net-lease REITs, real estate finance companies, mortgage brokers and bankers, commercial and residential real estate brokers and estate agents, homebuilders, large landowners and sub-dividers of unimproved land, hybrid REITs, timber REITs and companies that have more than 25% of their assets in direct mortgage investments.
Dow Jones U.S. Total Stock Market Index An index which includes all publicly traded stocks of companies headquartered in the United States for which pricing information is readily available. The index is a float-adjusted market capitalization weighted index that reflects the shares of securities actually available to investors in the marketplace.
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 non-US Dollar World Government Bond Index A market capitalization index that measures the total rate of return performance for the government bonds of 22 countries, excluding the U.S., with a remaining maturity of at least 1 year.
Growth Composite Index A custom blended index developed by CSIM based on a comparable portfolio asset allocation. Effective July 1, 2020 the index is composed of 28.0% S&P 500 Index, 3.3% Russell 1000 Growth Index, 12.0% Russell RAFI US Large Company Index, 8.9% Russell 2000 Index, 3.8% Russell RAFI US Small Company Index, 9.33% MSCI EAFE Index (Net), 4.0% Russell RAFI Developed ex US Large Company Index (Net), 3.33% Russell RAFI Developed ex US Small Company Index (Net), 3.33% Russell RAFI Emerging Markets Large Company Index (Net), 4.0% Dow Jones Equity All REIT Capped Index, 16.0% Bloomberg Barclays US Aggregate Bond Index, and 4.0% Bloomberg Barclays US Treasury Bills 1-3 Month Index. From February 28, 2020 through June 30, 2020, the index was composed of 28.0% S&P 500 Index, 3.3% Russell 1000 Growth Index, 12.0% Russell RAFI US Large Company Index, 8.9% Russell 2000 Index, 3.8% Russell RAFI US Small Company Index, 9.33% MSCI EAFE Index (Net), 4.0% Russell RAFI Developed ex US Large Company Index (Net), 3.33% Russell RAFI Developed ex US Small Company Index (Net), 3.33% Russell RAFI Emerging Markets Large Company Index (Net), 4.0% Dow Jones U.S. Select REIT Index, 16.0% Bloomberg Barclays US Aggregate Bond Index, and 4.0% Bloomberg Barclays US Treasury Bills 1-3 Month Index. From December 1, 2014 through February 27, 2020, the Growth Composite Index was composed of 28% S&P 500 Index, 14% Russell 2000 Index, 12% Russell RAFI US Large Company Index, 6% Russell RAFI US Small Company Index, 9.33% MSCI EAFE Index (Net), 4% Russell RAFI Developed ex US Large Company Index (Net), 3.33% Russell RAFI Developed ex US Small Company Index (Net), 3.33% Russell RAFI Emerging Markets Large Company Index (Net), 15% Bloomberg Barclays US Aggregate Bond Index, and 5% Bloomberg Barclays US Treasury Bills 1-3 Month Index. From March 1, 2014 through November 30, 2014, the index was comprised of 40% S&P 500 Index, 20% Russell 2000 Index, 20% MSCI EAFE Index (Net), 15%
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Schwab MarketTrack Portfolios
Bloomberg Barclays US Aggregate Bond Index, and 5% Bloomberg Barclays US Treasury Bills 1-3 Month 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 Index (Net), 15% Bloomberg Barclays US Aggregate Bond Index, and 5% Bloomberg Barclays US Treasury Bills 1-3 Month Index. Percentages listed may not total to 100% due to rounding.
market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.
MSCI EAFE Index (Net) A free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets in Europe, Australasia, and the Far East. 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 (Net) A free float-adjusted market capitalization weighted index that is designed to measure equity market performance in the global emerging markets. This series approximates the minimum possible dividend reinvestment. The 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 measures the performance of those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values.
Russell 1000 Index An index that measures the performance of the 1,000 largest companies in the Russell 3000 Index, and represents approximately 92% of the total market capitalization of the Russell 3000 Index. The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.
Russell 1000 Value 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.
Russell 2000 Index An index that measures the performance of the 2,000 smallest companies in the Russell 3000 Index. The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.
Russell RAFI Developed ex US Large Company Index (Net) An index that ranks developed ex-U.S. companies in the FTSE Global Total Cap Index by fundamental measures of size and tracks the performance of those companies whose fundamental scores are in the top 87.5%. 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. Selecting the developed ex-U.S. companies in the FTSE Global Total Cap Index measures the performance of the largest investable securities in developed countries globally, excluding companies assigned to the United States.
Russell RAFI Developed ex US Small Company Index (Net) An index that ranks developed ex-U.S. companies in the FTSE Global Total Cap Index by fundamental measures of size and tracks the performance of those companies whose fundamental scores rank below the 87.5% threshold. 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. Selecting the developed ex-U.S. companies in the FTSE Global Total Cap Index measures the performance of the smallest investable securities in developed countries globally, excluding companies assigned to the United States.
Russell RAFI Emerging Markets Large Company Index (Net) An index that ranks emerging market companies in the FTSE Global Total Cap Index by measures of fundamental size and tracks the performance of those companies whose fundamental scores are in the top 87.5%. 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. Selecting the emerging companies in the FTSE Global Total Cap Index measures the performance of the investable securities in emerging countries globally.
Russell RAFI US Large Company Index An index that ranks U.S. companies in the FTSE Global Total Cap Index. The Russell RAFI US Large Company Index includes only those securities that are members of the U.S. portion whose fundamental scores are in the top 87.5%. 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.
Russell RAFI US Small Company Index An index that ranks U.S. companies in the FTSE Global Total Cap Index. The Russell RAFI US Small Company Index includes only those securities that are members of the U.S. portion and rank below the 87.5% fundamental score threshold. 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.
S&P 500 Index An index that is designed to measure the performance of 500 leading publicly traded companies from a broad range of industries.
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.
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Schwab MarketTrack Portfolios
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.
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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; and
• when we believe that disclosure is required or permitted under law (for example, to cooperate with regulators or law enforcement, resolve consumer disputes, perform credit/authentication checks, or for risk control).
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Safeguarding Your Information — Security Is a Partnership
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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
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Schwab MarketTrack Portfolios
Charles Schwab Investment Management
With a straightforward lineup of core products and solutions for building the foundation of a portfolio, Charles Schwab Investment Management advocates for investors of all sizes with a steadfast focus on lowering costs and reducing unnecessary complexity. The list below shows all currently available Schwab Funds®.
Investors should carefully consider information contained in the prospectus, or if available, the summary prospectus, including investment objectives, risks, charges and expenses before investing. Please call 1-877-824-5615 for a prospectus 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.schwabfunds.com/schwabfunds_prospectus, the SEC’s website at www.sec.gov, or by contacting Schwab Funds at 1-877-824-5615.
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.schwabfunds.com/schwabfunds_prospectus or the SEC’s website at www.sec.gov.
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 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 U.S. Large-Cap Growth Index Fund
Schwab U.S. Large-Cap Value Index Fund
Schwab U.S. Mid-Cap Index Fund
Schwab International Index Fund®
Asset Allocation Funds
Schwab Balanced Fund
Schwab MarketTrack Portfolios®
Schwab Target Funds
Schwab Target Index Funds
Schwab Monthly Income Funds
Bond Funds
Schwab Treasury Inflation Protected Securities Index Fund
Schwab U.S. Aggregate Bond Index Fund
Schwab Short-Term Bond Index Fund
Schwab Tax-Free Bond Fund1
Schwab California Tax-Free Bond Fund1
Schwab High Yield Municipal Bond Fund
Schwab Money Funds2
Schwab provides a broad choice of taxable and tax-exempt money market funds for both retail and institutional client types.
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
Funds
Schwab Funds
1-877-824-5615
© 2020 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC®
Printed on recycled paper.
| ¹ | State, local, and the Federal Alternative Minimum Tax may apply. Capital gains are not exempt from Federal Taxation. |
| ² | You could lose money by investing in the Schwab Money Funds. All Schwab Money Funds with the exception of Schwab Variable Share Price Money Fund seek to preserve the value of your investment at $1.00 per share, but cannot guarantee they will do so. Because the share price of Schwab Variable Share Price Money Fund will fluctuate, when you sell your shares they may be worth more or less than what you originally paid for them. All Schwab Money Funds with the exception of Schwab Government Money Fund, Schwab Retirement Government Money Fund, Schwab U.S. Treasury Money Fund, Schwab Treasury Obligations Money Fund and Schwab Government Money Market Portfolio may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Schwab Money Funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Schwab Money Funds’ sponsor has no legal obligation to provide financial support to the Funds, and you should not expect that the sponsor will provide financial support to the Funds at any time. |
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Annual Report | October 31, 2020
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
Schwab Target 2060 Fund
| New Notice Regarding Shareholder Report Delivery Options |
| Beginning on January 1, 2021, paper copies of a fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from a fund or from your financial intermediary (such as a bank or broker-dealer). Instead, the reports will be made available on a fund’s website www.schwabfunds.com/schwabfunds_prospectus, and you will be notified by mail each time a report is posted and the mailing will provide a website link to access the report. You will continue to receive other fund regulatory documents (such as prospectuses or supplements) in paper unless you have elected to receive all fund documents electronically. |
| If you would like to receive a fund’s future shareholder reports in paper free of charge after January 1, 2021, you can make that request: |
| • If you invest through Charles Schwab & Co, Inc. (broker-dealer), by calling 1-866-345-5954 and using the unique identifier attached to this mailing; |
| • If you invest through another financial intermediary (such as a bank or broker-dealer) by contacting them directly; or |
| • If owned directly through a fund by calling 1-800-407-0256. |
| If you already receive shareholder reports and other fund documents electronically, you will not be affected by this change and you need not take any action. |
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Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM)
Distributor: Charles Schwab & Co., Inc. (Schwab)
Schwab Target Funds | Annual Report
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.schwabfunds.com/schwabfunds_prospectus.
| Total Return for the 12 Months Ended October 31, 2020 |
| Schwab Target 2010 Fund (Ticker Symbol: SWBRX) | 6.38% |
| Target 2010 Composite Index | 5.24% |
| Fund Category: Morningstar Target-Date 2000-20101 | 5.55% |
| Performance Details | pages 8-10 |
| |
| Schwab Target 2015 Fund (Ticker Symbol: SWGRX) | 6.41% |
| Target 2015 Composite Index | 5.12% |
| Fund Category: Morningstar Target-Date 20151 | 5.34% |
| Performance Details | pages 11-13 |
| |
| Schwab Target 2020 Fund (Ticker Symbol: SWCRX) | 6.33% |
| Target 2020 Composite Index | 5.10% |
| Fund Category: Morningstar Target-Date 20201 | 4.65% |
| Performance Details | pages 14-16 |
| |
| Schwab Target 2025 Fund (Ticker Symbol: SWHRX) | 5.98% |
| Target 2025 Composite Index | 4.46% |
| Fund Category: Morningstar Target-Date 20251 | 5.01% |
| Performance Details | pages 17-19 |
| |
| Schwab Target 2030 Fund (Ticker Symbol: SWDRX) | 5.81% |
| Target 2030 Composite Index | 3.98% |
| Fund Category: Morningstar Target-Date 20301 | 5.10% |
| Performance Details | pages 20-22 |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
The components that make up each of the composite indices 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.
| 1 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| | |
Schwab Target Funds | Annual Report
Performance at a Glance (continued)
| Total Return for the 12 Months Ended October 31, 2020 |
| Schwab Target 2035 Fund (Ticker Symbol: SWIRX) | 5.51% |
| Target 2035 Composite Index | 3.63% |
| Fund Category: Morningstar Target-Date 20351 | 5.12% |
| Performance Details | pages 23-25 |
| |
| Schwab Target 2040 Fund (Ticker Symbol: SWERX) | 5.31% |
| Target 2040 Composite Index | 3.33% |
| Fund Category: Morningstar Target-Date 20401 | 4.74% |
| Performance Details | pages 26-28 |
| |
| Schwab Target 2045 Fund (Ticker Symbol: SWMRX) | 5.10% |
| Target 2045 Composite Index | 3.00% |
| Fund Category: Morningstar Target-Date 20451 | 4.73% |
| Performance Details | pages 29-31 |
| |
| Schwab Target 2050 Fund (Ticker Symbol: SWNRX) | 4.96% |
| Target 2050 Composite Index | 2.80% |
| Fund Category: Morningstar Target-Date 20501 | 4.49% |
| Performance Details | pages 32-34 |
| |
| Schwab Target 2055 Fund (Ticker Symbol: SWORX) | 4.86% |
| Target 2055 Composite Index | 2.67% |
| Fund Category: Morningstar Target-Date 20551 | 4.61% |
| Performance Details | pages 35-37 |
| |
| Schwab Target 2060 Fund (Ticker Symbol: SWPRX) | 4.73% |
| Target 2060 Composite Index | 2.51% |
| Fund Category: Morningstar Target-Date 2060+1 | 4.49% |
| Performance Details | pages 38-40 |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
The components that make up each of the composite indices 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.
| 1 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
Schwab Target Funds | Annual Report
Jonathan de St. Paer
President of Charles Schwab
Investment Management, Inc.
and the funds covered
in this report.
Dear Shareholder,
Equity market performance for the 12-month reporting period ended October 31, 2020 barely hints at the market turmoil investors endured this year. U.S. and international equity markets ended the period with mixed gains, including a 9.7% rise for the S&P 500® Index, a bellwether for the overall U.S. stock market, and most fixed-income markets ended the period with moderate gains. However, the past year was one of the most volatile in history. Market gains were robust through the last week of February 2020 before being wiped out as the spreading COVID-19 pandemic drove equities and corporate bonds sharply lower. In mid-March, market volatility spiked to its highest level since the peak of the Great Recession in 2008 with the S&P 500® Index dropping 30% over just 22 trading days in late February and early March. By early September, however, most broad U.S. equity markets had regained all the ground they lost in March, propelling the S&P 500® Index to new record highs. However, markets retreated and volatility began to increase again throughout September and October in the face of a resurgence of COVID-19 infections, corporate earnings concerns, and growing uncertainty regarding the U.S. election.
High levels of volatility can undermine our confidence as investors, which can lead to emotion-based trading. Although it is important to reassess your individual risk tolerance and make strategic adjustments to your portfolio from time to time, impulsive reactions driven by fear can often make investing outcomes worse. At Charles Schwab Investment Management, we believe that the best way to avoid these pitfalls is to maintain a long-term investing plan. A commitment to a long-term investing plan can help make it significantly easier and less stressful to stay the course when market volatility rises.
For investors who don’t have the time or desire to take on managing ongoing asset allocation and diversification decisions—and making changes as they approach retirement—the Schwab Target Funds offer an all-in-one portfolio solution. Each fund’s investments are allocated along its “glide path” based on your expected retirement date, and is designed to reflect an investor’s risk tolerance and investment goals as they change over time. As your target retirement date approaches, allocations shift from equity funds to fixed-income funds and from actively managed strategies to index strategies. The funds can help you maintain a diversified portfolio that reflects your evolving risk appetite at every stage of your investment lifecycle up to and through retirement.
Thank you for investing with Charles Schwab Investment Management, and for trusting us to help you achieve your financial goals. For more information about the Schwab Target Funds, please continue reading this report. In addition, you can find further details about these funds by visiting our website at www.schwabfunds.com. We are also happy to hear from you at 1-877-824-5615.
Sincerely,
“ A commitment to a long-term investing plan can help make it significantly easier and less stressful to stay the course when market volatility rises.”
Past performance is no guarantee of future results.
Diversification and asset allocation strategies do not ensure a profit and cannot protect against losses in a declining market.
Management views may have changed since the report date.
Schwab Target Funds | Annual Report
The Investment Environment
The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms. For the reporting period, the S&P 500® Index returned 9.71%, with sectors that benefitted as a result of the COVID-19 pandemic and associated stay-at-home orders, such as the information technology sector, outperforming other sectors that were more impacted by the COVID-19 pandemic. U.S. large-cap stocks outperformed small-cap stocks, with the Russell 1000® Index and the Russell 2000® Index returning 10.87% and -0.14%, respectively, for the reporting period. Among large-cap stocks, growth stocks outperformed value stocks by a large margin, with the Russell 1000® Growth Index and Russell 1000® Value Index returning 29.22% and -7.57%, respectively, for the reporting period. Among international markets, the MSCI EAFE® Index (Net)*, a broad measure of developed international equity performance, returned -6.86% for the reporting period and the MSCI Emerging Markets Index (Net)* returned 8.25% for the reporting period. Fixed-income markets were particularly strong over the period with the Bloomberg Barclays US Aggregate Bond Index returning 6.19% and the FTSE non-US Dollar World Government Bond Index returning 4.99% for the reporting period.
Asset Class Performance Comparison % returns during the 12 months ended October 31, 2020
Index figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. 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 may have changed since the report date.
| * | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
Schwab Target Funds | Annual Report
The Investment Environment (continued)
Prior to the onset of the COVID-19 pandemic, the U.S. economy, despite ongoing trade tensions with China, maintained steady growth, albeit at a slowing pace. However, amid the fallout of the COVID-19 pandemic, the U.S. entered recessionary territory with record speed. U.S. gross domestic product (GDP) fell steeply, declining 5.0% and 31.4% for the first and second quarters of 2020, respectively, with the second quarter representing the largest contraction in U.S. GDP since 1947 when modern GDP measurements began. GDP subsequently jumped by 33.1% for the third quarter of 2020, reflecting increased consumer and business spending. Unemployment remained at record lows through February before a record number of unemployment claims in March resulted in the largest monthly increase in the U.S. unemployment rate since January 1975. In April, this record was broken again when unemployment skyrocketed, rising to the highest level since the Great Depression. Unemployment declined in May through October, dropping below double digits beginning in August. Consumer confidence remained solid through February, but was volatile over the remainder of the reporting period.
Outside the U.S., conditions continued to soften, dampened by slowing economic output, slumping world trade, geopolitical concerns, and the COVID-19 pandemic. The COVID-19 pandemic exacerbated economic weakness around the globe, dramatically slowing growth amid stay-at-home orders, supply chain disruptions, and broadly diminishing demand. In the first half of the reporting period, oil prices deteriorated amid significantly reduced demand, coupled with rising U.S. crude production and a price war between Russia and Saudi Arabia. In April, oil futures briefly fell into negative territory as storage capacity evaporated and demand waned. However, as production was slashed, relieving pressure on constrained storage capacity, demand also stabilized. First and second quarter 2020 growth was negative in the eurozone and the United Kingdom. In January, Brexit occurred with the formal departure of the United Kingdom from the European Union resulting in an 11-month transition period with respect to economic and customs matters. Japan fared slightly better, although GDP still contracted for the first and second quarters of 2020. Even China and India, which had maintained stronger growth than many developed countries, showed weakness. In China, GDP contracted in the first quarter, but rebounded in the second and third quarters. While India’s second quarter GDP contracted, third quarter GDP was positive.
Many central banks around the world, including the U.S. Federal Reserve (Fed), reduced their policy rates over the reporting period, while others maintained low—and for some international central banks, negative—interest rates. In the U.S., after enacting three interest rate cuts in the second half of 2019 and as the economic implications of the COVID-19 pandemic grew, the Fed cut interest rates by 0.50% in early March and by 1.00% in mid-March, resulting in a federal funds rate of 0.00% to 0.25%. In addition, the Fed also announced extensive emergency measures to support the economy in light of the COVID-19 pandemic, including large purchases of U.S. Treasuries and other securities to support smooth market function, facilitating the flow of credit to municipalities, new financing for employers, consumers, and businesses, and the establishment of facilities to support credit to businesses and consumers alike. In August, the Fed announced that it was shifting its interest rate policy approach to potentially allow inflation to rise above its 2% target for periods of time even in times of rising employment. Outside the U.S., central banks were similarly accommodative. The European Central Bank held its policy rate at 0.00%, unchanged since March 2016, and launched a new asset purchase program to help counter the impact of the COVID-19 pandemic. The Bank of Japan upheld its short-term interest rate target of -0.1%, also unchanged since 2016, and increased the annual pace of its purchases of exchange-traded funds (ETFs) and other assets. The Bank of England lowered its key official bank rate from 0.75% to 0.10% in two emergency rate cuts in March. Central banks in key emerging market economies—including China, India, Mexico, Russia, and Thailand—lowered their policy rates or maintained already low rates in response to pandemic-driven pressures.
Throughout most of the reporting period, bond prices rose on strong demand, driving yields down. (Bond prices and bond yields typically move in opposite directions.) Corporate credit markets were particularly strong. At the end of March 2020, as equity markets plummeted, as investors sought the perceived safety of asset classes such as fixed-income securities, and as the Fed implemented additional rate cuts, demand for U.S. Treasuries soared, driving yields to historic lows. The yield on the 10-year U.S. Treasury fell from 1.69% at the beginning of the reporting period to 0.88% at the end of the reporting period. The yield on the three-month U.S. Treasury fell from 1.54% to 0.09% over the reporting period. Yields on longer-term U.S. Treasuries trended upward late in the reporting period in anticipation of a new fiscal aid package and hope for economic improvement in 2021.
Schwab Target Funds | Annual Report
 | Zifan Tang, Ph.D., CFA, Senior Portfolio Manager, is responsible for the co-management of the funds. Prior to joining CSIM in January 2012, Ms. Tang was a product manager at Thomson Reuters and from 1997 to 2009 worked as a portfolio manager at Barclays Global Investors (now known as BlackRock). |
 | Patrick Kwok, CFA, Portfolio Manager, is responsible for the co-management of the funds. Previously, Mr. Kwok served as an associate portfolio manager with CSIM from 2012 to 2016. Prior to that, he worked as a fund administration manager for CSIM, where he was responsible for oversight of sub-advisers, trading, cash management, and fund administration for the Charles Schwab Trust Bank Collective Investment Trusts and Schwab’s multi-asset mutual funds. Prior to joining CSIM in 2008, Mr. Kwok spent two years as an asset operations specialist at Charles Schwab Trust Company. He also worked for one year at State Street Bank & Trust as a portfolio accountant and pricing specialist. |
Schwab Target Funds | Annual Report
Schwab Target 2010 Fund as of October 31, 2020
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 affiliated 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 at the end of January 2020, the 2010 Fund’s asset allocation was approximately 35.3% equity securities, 60.1% fixed-income securities, and 4.6% 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. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms. Bond prices generally rose over the reporting period as yields fell.
Performance. For the 12-month reporting period ended October 31, 2020, the 2010 Fund returned 6.38%. The 2010 Fund’s internally calculated comparative index, the Target 2010 Composite Index (the composite index), returned 5.24%.
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 fixed-income allocations provided the largest contribution to the total return of the 2010 Fund. The Schwab U.S. Aggregate Bond Index Fund was the top contributor to the total return of the 2010 Fund, returning approximately 6.1% for the reporting period and generally tracking its comparative index, the Bloomberg Barclays US Aggregate Bond Index, which returned approximately 6.2%.
The 2010 Fund’s U.S. equity allocations also contributed to the total return of the 2010 Fund, particularly among U.S. large-cap equity exposures, but detracted from relative performance. The Schwab S&P 500 Index Fund, which returned approximately 9.7% for the reporting period, generally tracked its comparative index, the S&P 500® Index. The ClearBridge Large Cap Growth Fund (Class IS) also contributed positively to the total return and relative performance of the 2010 Fund.
The 2010 Fund’s international equity allocations provided the smallest contribution to the total return of the 2010 Fund. The Laudus International MarketMasters Fund contributed to the total return of the 2010 Fund, returning approximately 8.6% for the reporting period and outperforming its comparative index, the MSCI EAFE® Index (Net). The Schwab International Core Equity Fund detracted from the total return of the 2010 Fund, returning approximately -6.0% for the reporting period, but contributing to relative performance, as it outperformed its comparative index, the MSCI EAFE® Index (Net), which returned approximately -6.9%.
The 2010 Fund’s real estate allocation was the only allocation that detracted from the 2010 Fund’s total return. The Schwab Global Real Estate Fund was the largest detractor from the total return of the 2010 Fund and returned approximately -22.0% for the reporting period, slightly outperforming its comparative index, the FTSE EPRA Nareit Global Index (Net), which returned approximately -22.2%.
Management views and portfolio holdings may have changed since the report date.
Schwab Target Funds | Annual Report
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Target 2010 Fund (7/1/05) | 6.38% | 5.54% | 5.76% |
| Dow Jones U.S. Total Stock Market IndexSM | 9.99% | 11.41% | 12.75% |
| Bloomberg Barclays US Aggregate Bond Index | 6.19% | 4.08% | 3.55% |
| Target 2010 Composite Index | 5.24% | 5.69% | 5.82% |
| Fund Category: Morningstar Target-Date 2000-20102 | 5.55% | 5.62% | 5.66% |
| Fund Expense Ratios3: Net 0.32%; Gross 0.49% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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 0.32% of acquired fund fees and expenses (AFFE), which are indirect expenses incurred by the fund through its investments in the underlying funds. 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 expense ratios during the period, not including AFFE, refer to the financial highlights section of the financial statements. |
Schwab Target Funds | Annual Report
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 20 |
| Portfolio Turnover Rate | 27% |
Asset Class Weightings % of Investments1,2
Top Holdings % of Net Assets3,4
Portfolio holdings may have changed since the report date.
| 1 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 2 | 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. |
| 3 | This list is not a recommendation of any security by the investment adviser. |
| 4 | The holdings listed exclude any temporary liquidity investments. |
Schwab Target Funds | Annual Report
Schwab Target 2015 Fund as of October 31, 2020
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 affiliated 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 at the end of January 2020, the 2015 Fund’s asset allocation was approximately 38.1% equity securities, 57.7% fixed-income securities and 4.3% cash and cash equivalents (including money market funds).1 (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. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms. Bond prices generally rose over the reporting period as yields fell.
Performance. For the 12-month reporting period ended October 31, 2020, the 2015 Fund returned 6.41%. The 2015 Fund’s internally calculated comparative index, the Target 2015 Composite Index (the composite index), returned 5.12%.
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 fixed-income allocations provided the largest contribution to the total return of the 2015 Fund. The Schwab U.S. Aggregate Bond Index Fund was the top contributor to the total return of the 2015 Fund, returning approximately 6.1% for the reporting period and generally tracking its comparative index, the Bloomberg Barclays US Aggregate Bond Index, which returned approximately 6.2%.
The 2015 Fund’s U.S. equity allocations also contributed to the total return of the 2015 Fund, particularly among U.S. large-cap equity exposures, but detracted from relative performance. The Schwab S&P 500 Index Fund, which returned approximately 9.7% for the reporting period, generally tracked its comparative index, the S&P 500® Index. The ClearBridge Large Cap Growth Fund (Class IS) also contributed positively to the total return and relative performance of the 2015 Fund.
The 2015 Fund’s international equity allocations provided the smallest contribution to the total return of the 2015 Fund. The Laudus International MarketMasters Fund contributed to the total return of the 2015 Fund, returning approximately 8.6% for the reporting period and outperforming its comparative index, the MSCI EAFE® Index (Net). The Schwab International Core Equity Fund detracted from the total return of the 2015 Fund, returning approximately -6.0% for the reporting period, but contributing to relative performance, as it outperformed its comparative index, the MSCI EAFE® Index (Net), which returned approximately -6.9%.
The 2015 Fund’s real estate allocation was the only allocation that detracted from the 2015 Fund’s total return. The Schwab Global Real Estate Fund was the largest detractor from the total return of the 2015 Fund and returned approximately -22.0% for the reporting period, slightly outperforming its comparative index, the FTSE EPRA Nareit Global Index (Net), which returned approximately -22.2%.
Management views and portfolio holdings may have changed since the report date.
| 1 | Percentages may not add up to 100% due to rounding. |
Schwab Target Funds | Annual Report
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Target 2015 Fund (3/12/08) | 6.41% | 5.63% | 6.20% |
| Dow Jones U.S. Total Stock Market IndexSM | 9.99% | 11.41% | 12.75% |
| Bloomberg Barclays US Aggregate Bond Index | 6.19% | 4.08% | 3.55% |
| Target 2015 Composite Index | 5.12% | 5.79% | 6.24% |
| Fund Category: Morningstar Target-Date 20152 | 5.34% | 5.99% | 6.33% |
| Fund Expense Ratios3: Net 0.34%; Gross 0.45% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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 0.34% of acquired fund fees and expenses (AFFE), which are indirect expenses incurred by the fund through its investments in the underlying funds. 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 expense ratios during the period, not including AFFE, refer to the financial highlights section of the financial statements. |
Schwab Target Funds | Annual Report
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 21 |
| Portfolio Turnover Rate | 15% |
Asset Class Weightings % of Investments1,2
Top Holdings % of Net Assets3,4
Portfolio holdings may have changed since the report date.
| 1 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 2 | 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. |
| 3 | This list is not a recommendation of any security by the investment adviser. |
| 4 | The holdings listed exclude any temporary liquidity investments. |
Schwab Target Funds | Annual Report
Schwab Target 2020 Fund as of October 31, 2020
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 affiliated 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 at the end of January 2020, the 2020 Fund’s asset allocation was approximately 40.0% equity securities, 56.0% fixed-income securities, and 4.0% 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. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms. Bond prices generally rose over the reporting period as yields fell.
Performance. For the 12-month reporting period ended October 31, 2020, the 2020 Fund returned 6.33%. The 2020 Fund’s internally calculated comparative index, the Target 2020 Composite Index (the composite index), returned 5.10%.
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 fixed-income allocations provided the largest contribution to the total return of the 2020 Fund. The Schwab U.S. Aggregate Bond Index Fund was the top contributor to the total return of the 2020 Fund, returning approximately 6.1% for the reporting period and generally tracking its comparative index, the Bloomberg Barclays US Aggregate Bond Index, which returned approximately 6.2%.
The 2020 Fund’s U.S. equity allocations also contributed to the total return of the 2020 Fund, particularly among U.S. large-cap equity exposures, but detracted from relative performance. The Schwab S&P 500 Index Fund, which returned approximately 9.7% for the reporting period, generally tracked its comparative index, the S&P 500® Index. The ClearBridge Large Cap Growth Fund (Class IS) also contributed positively to the total return and relative performance of the 2020 Fund.
The 2020 Fund’s international equity allocations provided the smallest contribution to the total return of the 2020 Fund. The Laudus International MarketMasters Fund contributed to the total return of the 2020 Fund, returning approximately 8.6% for the reporting period and outperforming its comparative index, the MSCI EAFE® Index (Net). The Schwab International Core Equity Fund detracted from the total return of the 2020 Fund, returning approximately -6.0% for the reporting period, but contributing to relative performance, as it outperformed its comparative index, the MSCI EAFE® Index (Net), which returned approximately -6.9%.
The 2020 Fund’s real estate allocation was the only allocation that detracted from the 2020 Fund’s total return. The Schwab Global Real Estate Fund was the largest detractor from the total return of the 2020 Fund and returned approximately -22.0% for the reporting period, slightly outperforming its comparative index, the FTSE EPRA Nareit Global Index (Net), which returned approximately -22.2%.
Management views and portfolio holdings may have changed since the report date.
Schwab Target Funds | Annual Report
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Target 2020 Fund (7/1/05) | 6.33% | 6.08% | 7.02% |
| Dow Jones U.S. Total Stock Market IndexSM | 9.99% | 11.41% | 12.75% |
| Bloomberg Barclays US Aggregate Bond Index | 6.19% | 4.08% | 3.55% |
| Target 2020 Composite Index | 5.10% | 6.31% | 7.12% |
| Fund Category: Morningstar Target-Date 20202 | 4.65% | 5.89% | 6.40% |
| Fund Expense Ratios3: Net 0.38%; Gross 0.41% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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 0.38% of acquired fund fees and expenses (AFFE), which are indirect expenses incurred by the fund through its investments in the underlying funds. 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 expense ratios during the period, not including AFFE, refer to the financial highlights section of the financial statements. |
Schwab Target Funds | Annual Report
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 20 |
| Portfolio Turnover Rate | 17% |
Asset Class Weightings % of Investments1,2
Top Holdings % of Net Assets3,4
Portfolio holdings may have changed since the report date.
| 1 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 2 | 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. |
| 3 | This list is not a recommendation of any security by the investment adviser. |
| 4 | The holdings listed exclude any temporary liquidity investments. |
Schwab Target Funds | Annual Report
Schwab Target 2025 Fund as of October 31, 2020
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 affiliated 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 at the end of January 2020, the 2025 Fund’s asset allocation was approximately 54.4% equity securities, 42.5% fixed-income securities, and 3.1% 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. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms. Bond prices generally rose over the reporting period as yields fell.
Performance. For the 12-month reporting period ended October 31, 2020, the 2025 Fund returned 5.98%. The 2025 Fund’s internally calculated comparative index, the Target 2025 Composite Index (the composite index), returned 4.46%.
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 allocations provided the largest contribution to the total return of the 2025 Fund, particularly among U.S. large-cap equity exposures, but detracted from relative performance. The Schwab S&P 500 Index Fund was the top contributor to the total return of the 2025 Fund and returned approximately 9.7% for the reporting period, generally tracking its comparative index, the S&P 500® Index. The ClearBridge Large Cap Growth Fund (Class IS) also contributed positively to the total return and relative performance of the 2025 Fund.
The 2025 Fund’s fixed-income allocations also contributed to the total return of the 2025 Fund. The Schwab U.S. Aggregate Bond Index Fund contributed to the total return of the 2025 Fund, returning approximately 6.1% for the reporting period and generally tracking its comparative index, the Bloomberg Barclays US Aggregate Bond Index, which returned approximately 6.2%.
The 2025 Fund’s international equity allocations provided the smallest contribution to the total return of the 2025 Fund. The Laudus International MarketMasters Fund contributed to the total return of the 2025 Fund, returning approximately 8.6% for the reporting period and outperforming its comparative index, the MSCI EAFE® Index (Net). The Schwab International Core Equity Fund detracted from the total return of the 2025 Fund, returning approximately -6.0% for the reporting period, but contributing to relative performance, as it outperformed its comparative index, the MSCI EAFE® Index (Net), which returned approximately -6.9%.
The 2025 Fund’s real estate allocation was the only allocation that detracted from the 2025 Fund’s total return. The Schwab Global Real Estate Fund was the largest detractor from the total return of the 2025 Fund and returned approximately -22.0% for the reporting period, slightly outperforming its comparative index, the FTSE EPRA Nareit Global Index (Net), which returned approximately -22.2%.
.
Management views and portfolio holdings may have changed since the report date.
Schwab Target Funds | Annual Report
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Target 2025 Fund (3/12/08) | 5.98% | 6.53% | 7.68% |
| Dow Jones U.S. Total Stock Market IndexSM | 9.99% | 11.41% | 12.75% |
| Bloomberg Barclays US Aggregate Bond Index | 6.19% | 4.08% | 3.55% |
| Target 2025 Composite Index | 4.46% | 6.82% | 7.79% |
| Fund Category: Morningstar Target-Date 20252 | 5.01% | 6.48% | 7.03% |
| Fund Expense Ratios3: Net 0.48%; Gross 0.51% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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 0.48% of acquired fund fees and expenses (AFFE), which are indirect expenses incurred by the fund through its investments in the underlying funds. 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 expense ratios during the period, not including AFFE, refer to the financial highlights section of the financial statements. |
Schwab Target Funds | Annual Report
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 22 |
| Portfolio Turnover Rate | 16% |
Asset Class Weightings % of Investments1,2
Top Holdings % of Net Assets3,4
Portfolio holdings may have changed since the report date.
| 1 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 2 | 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. |
| 3 | This list is not a recommendation of any security by the investment adviser. |
| 4 | The holdings listed exclude any temporary liquidity investments. |
Schwab Target Funds | Annual Report
Schwab Target 2030 Fund as of October 31, 2020
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 affiliated 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 at the end of January 2020, the 2030 Fund’s asset allocation was approximately 65.0% equity securities, 32.6% fixed-income securities, and 2.4% 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. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms. Bond prices generally rose over the reporting period as yields fell.
Performance. For the 12-month reporting period ended October 31, 2020, the 2030 Fund returned 5.81%. The 2030 Fund’s internally calculated comparative index, the Target 2030 Composite Index (the composite index), returned 3.98%.
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 allocations provided the largest contribution to the total return of the 2030 Fund, particularly among U.S. large-cap equity exposures, but detracted from relative performance. The Schwab S&P 500 Index Fund was the top contributor to the total return of the 2030 Fund and returned approximately 9.7% for the reporting period, generally tracking its comparative index, the S&P 500® Index. The ClearBridge Large Cap Growth Fund (Class IS) also contributed positively to the total return and relative performance of the 2030 Fund.
The 2030 Fund’s fixed-income allocations also contributed to the total return of the 2030 Fund. The Schwab U.S. Aggregate Bond Index Fund contributed to the total return of the 2030 Fund, returning approximately 6.1% for the reporting period and generally tracking its comparative index, the Bloomberg Barclays US Aggregate Bond Index, which returned approximately 6.2%.
The 2030 Fund’s international equity allocations provided the smallest contribution to the total return of the 2030 Fund. The Laudus International MarketMasters Fund contributed to the total return of the 2030 Fund, returning approximately 8.6% for the reporting period and outperforming its comparative index, the MSCI EAFE® Index (Net). The Schwab International Core Equity Fund detracted from the total return of the 2030 Fund, returning approximately -6.0% for the reporting period, but contributing to relative performance, as it outperformed its comparative index, the MSCI EAFE® Index (Net), which returned approximately -6.9%.
The 2030 Fund’s real estate allocation was the only allocation that detracted from the 2030 Fund’s total return. The Schwab Global Real Estate Fund was the largest detractor from the total return of the 2030 Fund and returned approximately -22.0% for the reporting period, slightly outperforming its comparative index, the FTSE EPRA Nareit Global Index (Net), which returned approximately -22.2%.
Management views and portfolio holdings may have changed since the report date.
Schwab Target Funds | Annual Report
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Target 2030 Fund (7/1/05) | 5.81% | 6.84% | 8.12% |
| Dow Jones U.S. Total Stock Market IndexSM | 9.99% | 11.41% | 12.75% |
| Bloomberg Barclays US Aggregate Bond Index | 6.19% | 4.08% | 3.55% |
| Target 2030 Composite Index | 3.98% | 7.17% | 8.27% |
| Fund Category: Morningstar Target-Date 20302 | 5.10% | 6.95% | 7.43% |
| Fund Expense Ratios3: Net 0.55%; Gross 0.57% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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 0.55% of acquired fund fees and expenses (AFFE), which are indirect expenses incurred by the fund through its investments in the underlying funds. 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 expense ratios during the period, not including AFFE, refer to the financial highlights section of the financial statements. |
Schwab Target Funds | Annual Report
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 23 |
| Portfolio Turnover Rate | 13% |
Asset Class Weightings % of Investments1,2
Top Holdings % of Net Assets3,4
Portfolio holdings may have changed since the report date.
| 1 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 2 | 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. |
| 3 | This list is not a recommendation of any security by the investment adviser. |
| 4 | The holdings listed exclude any temporary liquidity investments. |
Schwab Target Funds | Annual Report
Schwab Target 2035 Fund as of October 31, 2020
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 affiliated 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 at the end of January 2020, the 2035 Fund’s asset allocation was approximately 73.2% equity securities, 25.0% fixed-income securities, and 1.9% cash and cash equivalents (including money market funds).1 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. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms. Bond prices generally rose over the reporting period as yields fell.
Performance. For the 12-month reporting period ended October 31, 2020, the 2035 Fund returned 5.51%. The 2035 Fund’s internally calculated comparative index, the Target 2035 Composite Index (the composite index), returned 3.63%.
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 allocations provided the largest contribution to the total return of the 2035 Fund, particularly among U.S. large-cap equity exposures, but detracted from relative performance. The Schwab S&P 500 Index Fund was the top contributor to the total return of the 2035 Fund and returned approximately 9.7% for the reporting period, generally tracking its comparative index, the S&P 500® Index. The Laudus U.S. Large Cap Growth Fund also contributed positively to the total return and relative performance of the 2035 Fund, returning approximately 31.3% for the reporting period.
The 2035 Fund’s fixed-income allocations also contributed to the total return of the 2035 Fund. The Schwab U.S. Aggregate Bond Index Fund contributed to the total return of the 2035 Fund, returning approximately 6.1% for the reporting period and generally tracking its comparative index, the Bloomberg Barclays US Aggregate Bond Index, which returned approximately 6.2%.
The 2035 Fund’s international equity allocations contributed to the total return of the 2035 Fund. The Laudus International MarketMasters Fund contributed to the total return of the 2035 Fund, returning approximately 8.6% for the reporting period and outperforming its comparative index, the MSCI EAFE® Index (Net). The Schwab International Core Equity Fund detracted from the total return of the 2035 Fund, returning approximately -6.0% for the reporting period, but contributing to relative performance, as it outperformed its comparative index, the MSCI EAFE® Index (Net), which returned approximately -6.9%.
The 2035 Fund’s real estate allocation was the only allocation that detracted from the 2035 Fund’s total return. The Schwab Global Real Estate Fund was the largest detractor from the total return of the 2035 Fund and returned approximately -22.0% for the reporting period, slightly outperforming its comparative index, the FTSE EPRA Nareit Global Index (Net), which returned approximately -22.2%.
Management views and portfolio holdings may have changed since the report date.
| 1 | Percentages may not add up to 100% due to rounding. |
Schwab Target Funds | Annual Report
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Target 2035 Fund (3/12/08) | 5.51% | 7.04% | 8.52% |
| Dow Jones U.S. Total Stock Market IndexSM | 9.99% | 11.41% | 12.75% |
| Bloomberg Barclays US Aggregate Bond Index | 6.19% | 4.08% | 3.55% |
| Target 2035 Composite Index | 3.63% | 7.44% | 8.69% |
| Fund Category: Morningstar Target-Date 20352 | 5.12% | 7.40% | 7.96% |
| Fund Expense Ratios3: Net 0.60%; Gross 0.63% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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 0.60% of acquired fund fees and expenses (AFFE), which are indirect expenses incurred by the fund through its investments in the underlying funds. 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 expense ratios during the period, not including AFFE, refer to the financial highlights section of the financial statements. |
Schwab Target Funds | Annual Report
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 21 |
| Portfolio Turnover Rate | 12% |
Asset Class Weightings % of Investments1,2
Top Holdings % of Net Assets3,4
Portfolio holdings may have changed since the report date.
| 1 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 2 | 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. |
| 3 | This list is not a recommendation of any security by the investment adviser. |
| 4 | The holdings listed exclude any temporary liquidity investments. |
Schwab Target Funds | Annual Report
Schwab Target 2040 Fund as of October 31, 2020
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 affiliated 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 at the end of January 2020, the 2040 Fund’s asset allocation was approximately 80.0% equity securities, 18.5% fixed-income securities, and 1.5% 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. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms. Bond prices generally rose over the reporting period as yields fell.
Performance. For the 12-month reporting period ended October 31, 2020, the 2040 Fund returned 5.31%. The 2040 Fund’s internally calculated comparative index, the Target 2040 Composite Index (the composite index), returned 3.33%.
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 allocations provided the largest contribution to the total return of the 2040 Fund, particularly among U.S. large-cap equity exposures, but detracted from relative performance. The Schwab S&P 500 Index Fund was the top contributor to the total return of the 2040 Fund and returned approximately 9.7% for the reporting period, generally tracking its comparative index, the S&P 500® Index. The Laudus U.S. Large Cap Growth Fund also contributed positively to the total return and relative performance of the 2040 Fund, returning approximately 31.3% for the reporting period.
The 2040 Fund’s international equity allocations contributed to the total return of the 2040 Fund. The Laudus International MarketMasters Fund contributed to the total return of the 2040 Fund, returning approximately 8.6% for the reporting period and outperforming its comparative index, the MSCI EAFE® Index (Net). The Schwab International Core Equity Fund detracted from the total return of the 2040 Fund, returning approximately -6.0% for the reporting period, but contributing to relative performance, as it outperformed its comparative index, the MSCI EAFE® Index (Net), which returned approximately -6.9%.
The 2040 Fund’s fixed-income allocations also contributed to the total return of the 2040 Fund. The Schwab U.S. Aggregate Bond Index Fund contributed to the total return of the 2040 Fund, returning approximately 6.1% for the reporting period and generally tracking its comparative index, the Bloomberg Barclays US Aggregate Bond Index, which returned approximately 6.2%.
The 2040 Fund’s real estate allocation was the only allocation that detracted from the 2040 Fund’s total return. The Schwab Global Real Estate Fund was the largest detractor from the total return of the 2040 Fund and returned approximately -22.0% for the reporting period, slightly outperforming its comparative index, the FTSE EPRA Nareit Global Index (Net), which returned approximately -22.2%.
Management views and portfolio holdings may have changed since the report date.
Schwab Target Funds | Annual Report
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (October 31, 2010 – October 31, 2020)1
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | 10 Years |
| Fund: Schwab Target 2040 Fund (7/1/05) | 5.31% | 7.21% | 8.82% |
| Dow Jones U.S. Total Stock Market IndexSM | 9.99% | 11.41% | 12.75% |
| Bloomberg Barclays US Aggregate Bond Index | 6.19% | 4.08% | 3.55% |
| Target 2040 Composite Index | 3.33% | 7.69% | 9.01% |
| Fund Category: Morningstar Target-Date 20402 | 4.74% | 7.52% | 8.08% |
| Fund Expense Ratios3: Net 0.65%; 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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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 0.65% of acquired fund fees and expenses (AFFE), which are indirect expenses incurred by the fund through its investments in the underlying funds. 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 expense ratios during the period, not including AFFE, refer to the financial highlights section of the financial statements. |
Schwab Target Funds | Annual Report
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 21 |
| Portfolio Turnover Rate | 10% |
Asset Class Weightings % of Investments1,2
Top Holdings % of Net Assets3,4
Portfolio holdings may have changed since the report date.
| 1 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 2 | 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. |
| 3 | This list is not a recommendation of any security by the investment adviser. |
| 4 | The holdings listed exclude any temporary liquidity investments. |
Schwab Target Funds | Annual Report
Schwab Target 2045 Fund as of October 31, 2020
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 affiliated 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 at the end of January 2020, the 2045 Fund’s asset allocation was approximately 86.4% equity securities, 12.5% fixed-income securities, and 1.0% cash and cash equivalents (including money market funds).1 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. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms. Bond prices generally rose over the reporting period as yields fell.
Performance. For the 12-month reporting period ended October 31, 2020, the 2045 Fund returned 5.10%. The 2045 Fund’s internally calculated comparative index, the Target 2045 Composite Index (the composite index), returned 3.00%.
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 allocations provided the largest contribution to the total return of the 2045 Fund, particularly among U.S. large-cap equity exposures, but detracted from relative performance. The Laudus U.S. Large Cap Growth Fund was the top contributor to the total return of the 2045 Fund, returning approximately 31.3% for the reporting period and contributing to relative performance. The Schwab S&P 500 Index Fund also contributed to the total return of the 2045 Fund and returned approximately 9.7% for the reporting period, generally tracking its comparative index, the S&P 500® Index.
The 2045 Fund’s international equity allocations contributed to the total return of the 2045 Fund. The Laudus International MarketMasters Fund contributed to the total return of the 2045 Fund, returning approximately 8.6% for the reporting period and outperforming its comparative index, the MSCI EAFE® Index (Net). The Schwab International Core Equity Fund detracted from the total return of the 2045 Fund, returning approximately -6.0% for the reporting period, but contributing to relative performance, as it outperformed its comparative index, the MSCI EAFE® Index (Net), which returned approximately -6.9%.
The 2045 Fund’s fixed-income allocations provided the smallest contribution to the total return of the 2045 Fund. The Schwab U.S. Aggregate Bond Index Fund contributed to the total return of the 2045 Fund, returning approximately 6.1% for the reporting period and generally tracking its comparative index, the Bloomberg Barclays US Aggregate Bond Index, which returned approximately 6.2%.
The 2045 Fund’s real estate allocation was the only allocation that detracted from the 2045 Fund’s total return. The Schwab Global Real Estate Fund was the largest detractor from the total return of the 2045 Fund and returned approximately -22.0% for the reporting period, slightly outperforming its comparative index, the FTSE EPRA Nareit Global Index (Net), which returned approximately -22.2%.
Management views and portfolio holdings may have changed since the report date.
| 1 | Percentages may not add up to 100% due to rounding. |
Schwab Target Funds | Annual Report
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (January 23, 2013 – October 31, 2020)1
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | Since Inception |
| Fund: Schwab Target 2045 Fund (1/23/13) | 5.10% | 7.31% | 8.41% |
| Dow Jones U.S. Total Stock Market IndexSM | 9.99% | 11.41% | 12.52% |
| Bloomberg Barclays US Aggregate Bond Index | 6.19% | 4.08% | 3.28% |
| Target 2045 Composite Index | 3.00% | 7.81% | 8.79% |
| Fund Category: Morningstar Target-Date 20452 | 4.73% | 7.72% | N/A |
| Fund Expense Ratios3: Net 0.69%; Gross 0.77% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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 0.69% of acquired fund fees and expenses (AFFE), which are indirect expenses incurred by the fund through its investments in the underlying funds. 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 expense ratios during the period, not including AFFE, refer to the financial highlights section of the financial statements. |
Schwab Target Funds | Annual Report
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 21 |
| Portfolio Turnover Rate | 6% |
Asset Class Weightings % of Investments1,2
Top Holdings % of Net Assets3,4
Portfolio holdings may have changed since the report date.
| 1 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 2 | 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. |
| 3 | This list is not a recommendation of any security by the investment adviser. |
| 4 | The holdings listed exclude any temporary liquidity investments. |
Schwab Target Funds | Annual Report
Schwab Target 2050 Fund as of October 31, 2020
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 affiliated 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 at the end of January 2020, the 2050 Fund’s asset allocation was approximately 90.0% equity securities, 9.2% fixed-income securities, and 0.8% 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. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms. Bond prices generally rose over the reporting period as yields fell.
Performance. For the 12-month reporting period ended October 31, 2020, the 2050 Fund returned 4.96%. The 2050 Fund’s internally calculated comparative index, the Target 2050 Composite Index (the composite index), returned 2.80%.
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 allocations provided the largest contribution to the total return of the 2050 Fund, particularly among U.S. large-cap equity exposures, but detracted from relative performance. The Laudus U.S. Large Cap Growth Fund was the top contributor to the total return of the 2050 Fund, returning approximately 31.3% for the reporting period and contributing to relative performance. The Schwab S&P 500 Index Fund also contributed to the total return of the 2050 Fund and returned approximately 9.7% for the reporting period, generally tracking its comparative index, the S&P 500® Index.
The 2050 Fund’s international equity allocations contributed to the total return of the 2050 Fund. The Laudus International MarketMasters Fund contributed to the total return of the 2050 Fund, returning approximately 8.6% for the reporting period and outperforming its comparative index, the MSCI EAFE® Index (Net). The Schwab International Core Equity Fund detracted from the total return of the 2050 Fund, returning approximately -6.0% for the reporting period, but contributing to relative performance, as it outperformed its comparative index, the MSCI EAFE® Index (Net), which returned approximately -6.9%.
The 2050 Fund’s fixed-income allocations provided the smallest contribution to the total return of the 2050 Fund. The Schwab U.S. Aggregate Bond Index Fund contributed to the total return of the 2050 Fund, returning approximately 6.1% for the reporting period and generally tracking its comparative index, the Bloomberg Barclays US Aggregate Bond Index, which returned approximately 6.2%.
The 2050 Fund’s real estate allocation was the only allocation that detracted from the 2050 Fund’s total return. The Schwab Global Real Estate Fund was the largest detractor from the total return of the 2050 Fund and returned approximately -22.0% for the reporting period, slightly outperforming its comparative index, the FTSE EPRA Nareit Global Index (Net), which returned approximately -22.2%.
Management views and portfolio holdings may have changed since the report date.
Schwab Target Funds | Annual Report
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (January 23, 2013 – October 31, 2020)1
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | Since Inception |
| Fund: Schwab Target 2050 Fund (1/23/13) | 4.96% | 7.35% | 8.54% |
| Dow Jones U.S. Total Stock Market IndexSM | 9.99% | 11.41% | 12.52% |
| Bloomberg Barclays US Aggregate Bond Index | 6.19% | 4.08% | 3.28% |
| Target 2050 Composite Index | 2.80% | 7.88% | 8.92% |
| Fund Category: Morningstar Target-Date 20502 | 4.49% | 7.69% | N/A |
| Fund Expense Ratios3: Net 0.71%; Gross 0.79% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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 0.71% of acquired fund fees and expenses (AFFE), which are indirect expenses incurred by the fund through its investments in the underlying funds. 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 expense ratios during the period, not including AFFE, refer to the financial highlights section of the financial statements. |
Schwab Target Funds | Annual Report
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 21 |
| Portfolio Turnover Rate | 5% |
Asset Class Weightings % of Investments1,2
Top Holdings % of Net Assets3,4
Portfolio holdings may have changed since the report date.
| 1 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 2 | 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. |
| 3 | This list is not a recommendation of any security by the investment adviser. |
| 4 | The holdings listed exclude any temporary liquidity investments. |
Schwab Target Funds | Annual Report
Schwab Target 2055 Fund as of October 31, 2020
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 affiliated 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 at the end of January 2020, the 2055 Fund’s asset allocation was approximately 92.5% equity securities, 6.8% fixed-income securities, and 0.7% 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. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms. Bond prices generally rose over the reporting period as yields fell.
Performance. For the 12-month reporting period ended October 31, 2020, the 2055 Fund returned 4.86%. The 2055 Fund’s internally calculated comparative index, the Target 2055 Composite Index (the composite index), returned 2.67%.
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 allocations provided the largest contribution to the total return of the 2055 Fund, particularly among U.S. large-cap equity exposures, but detracted from relative performance. The Laudus U.S. Large Cap Growth Fund was the top contributor to the total return of the 2055 Fund, returning approximately 31.3% for the reporting period and contributing to relative performance. The Schwab S&P 500 Index Fund also contributed to the total return of the 2055 Fund and returned approximately 9.7% for the reporting period, generally tracking its comparative index, the S&P 500® Index.
The 2055 Fund’s international equity allocations contributed to the total return of the 2055 Fund. The Laudus International MarketMasters Fund contributed to the total return of the 2055 Fund, returning approximately 8.6% for the reporting period and outperforming its comparative index, the MSCI EAFE® Index (Net). The Schwab International Core Equity Fund detracted from the total return of the 2055 Fund, returning approximately -6.0% for the reporting period, but contributing to relative performance, as it outperformed its comparative index, the MSCI EAFE® Index (Net), which returned approximately -6.9%.
The 2055 Fund’s fixed-income allocations provided the smallest contribution to the total return of the 2055 Fund. The Schwab U.S. Aggregate Bond Index Fund contributed to the total return of the 2055 Fund, returning approximately 6.1% for the reporting period and generally tracking its comparative index, the Bloomberg Barclays US Aggregate Bond Index, which returned approximately 6.2%.
The 2055 Fund’s real estate allocation was the only allocation that detracted from the 2055 Fund’s total return. The Schwab Global Real Estate Fund was the largest detractor from the total return of the 2055 Fund and returned approximately -22.0% for the reporting period, slightly outperforming its comparative index, the FTSE EPRA Nareit Global Index (Net), which returned approximately -22.2%.
Management views and portfolio holdings may have changed since the report date.
Schwab Target Funds | Annual Report
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (January 23, 2013 – October 31, 2020)1
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 5 Years | Since Inception |
| Fund: Schwab Target 2055 Fund (1/23/13) | 4.86% | 7.40% | 8.60% |
| Dow Jones U.S. Total Stock Market IndexSM | 9.99% | 11.41% | 12.52% |
| Bloomberg Barclays US Aggregate Bond Index | 6.19% | 4.08% | 3.28% |
| Target 2055 Composite Index | 2.67% | 7.95% | 9.01% |
| Fund Category: Morningstar Target-Date 20552 | 4.61% | 7.81% | N/A |
| Fund Expense Ratios3: Net 0.73%; Gross 0.86% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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 0.73% of acquired fund fees and expenses (AFFE), which are indirect expenses incurred by the fund through its investments in the underlying funds. 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 expense ratios during the period, not including AFFE, refer to the financial highlights section of the financial statements. |
Schwab Target Funds | Annual Report
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 20 |
| Portfolio Turnover Rate | 6% |
Asset Class Weightings % of Investments1,2
Top Holdings % of Net Assets3,4
Portfolio holdings may have changed since the report date.
| 1 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 2 | 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. |
| 3 | This list is not a recommendation of any security by the investment adviser. |
| 4 | The holdings listed exclude any temporary liquidity investments. |
Schwab Target Funds | Annual Report
Schwab Target 2060 Fund as of October 31, 2020
The Schwab Target 2060 Fund (the 2060 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 affiliated Schwab Funds and Laudus Funds. The 2060 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 at the end of January 2020, the 2060 Fund’s asset allocation was approximately 95.0% equity securities, 4.5% fixed-income securities, and 0.5% cash and cash equivalents (including money market funds). At its target date, the 2060 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 2060 Fund’s Portfolio Holdings included in this report.)
Market Highlights. The 12-month reporting period ended October 31, 2020, was a historically volatile one for global equity markets. Up until the final week of February 2020, U.S. and international equity markets had risen steadily, with several major market indices hitting new highs in mid-February. However, beginning in late February, the COVID-19 outbreak wreaked havoc on the global economy, prompting dramatic social distancing restrictions, shuttering businesses, and resulting in a new record for the fastest U.S. market decline with the S&P 500® Index, a bellwether for the overall U.S. stock market, dropping 30% in just 22 trading days in late February and early March. By the end of March, governments and central banks around the world had begun passing extensive emergency rescue and fiscal stimulus measures in an effort to support their economies. The extraordinary response prompted a rally in global equity markets from their March lows, particularly in the U.S. By early September, key U.S. market indices hit new record highs before falling back slightly by the end of the reporting period as COVID-19 infection rates spiked, raising fears of a resurgence as well as the possibility of increased social distancing restrictions and shuttering of businesses. Over the reporting period, the U.S. dollar weakened against a basket of international currencies, generally increasing the returns on overseas investments in U.S. dollar terms. Bond prices generally rose over the reporting period as yields fell.
Performance. For the 12-month reporting period ended October 31, 2020, the 2060 Fund returned 4.73%. The 2060 Fund’s internally calculated comparative index, the Target 2060 Composite Index (the composite index), returned 2.51%.
Positioning and Strategies. The 2060 Fund’s asset allocations were broadly in line with those of the composite index over the reporting period.
The 2060 Fund’s U.S. equity allocations provided the largest contribution to the total return of the 2060 Fund, particularly among U.S. large-cap equity exposures, but detracted from relative performance. The Laudus U.S. Large Cap Growth Fund was the top contributor to the total return of the 2060 Fund, returning approximately 31.3% for the reporting period and contributing to relative performance. The Schwab S&P 500 Index Fund also contributed to the total return of the 2060 Fund and returned approximately 9.7% for the reporting period, generally tracking its comparative index, the S&P 500® Index.
The 2060 Fund’s international equity allocations contributed to the total return of the 2060 Fund. The Laudus International MarketMasters Fund contributed to the total return of the 2060 Fund, returning approximately 8.6% for the reporting period and outperforming its comparative index, the MSCI EAFE® Index (Net). The Schwab International Core Equity Fund detracted from the total return of the 2060 Fund, returning approximately -6.0% for the reporting period, but contributing to relative performance, as it outperformed its comparative index, the MSCI EAFE® Index (Net), which returned approximately -6.9%.
The 2060 Fund’s fixed-income allocations provided the smallest contribution to the total return of the 2060 Fund. The Schwab U.S. Aggregate Bond Index Fund contributed to the total return of the 2060 Fund, returning approximately 6.1% for the reporting period and generally tracking its comparative index, the Bloomberg Barclays US Aggregate Bond Index, which returned approximately 6.2%.
The 2060 Fund’s real estate allocation was the only allocation that detracted from the 2060 Fund’s total return. The Schwab Global Real Estate Fund was the largest detractor from the total return of the 2060 Fund and returned approximately -22.0% for the reporting period, slightly outperforming its comparative index, the FTSE EPRA Nareit Global Index (Net), which returned approximately -22.2%.
Management views and portfolio holdings may have changed since the report date.
Schwab Target Funds | Annual Report
Performance and Fund Facts as of October 31, 2020
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.schwabfunds.com/schwabfunds_prospectus.
Performance of Hypothetical $10,000 Investment (August 25, 2016 – October 31, 2020)1
Average Annual Total Returns1
| Fund and Inception Date | 1 Year | 3 Years | Since Inception |
| Fund: Schwab Target 2060 Fund (8/25/16) | 4.73% | 4.52% | 8.15% |
| Dow Jones U.S. Total Stock Market IndexSM | 9.99% | 9.95% | 12.12% |
| Bloomberg Barclays US Aggregate Bond Index | 6.19% | 5.06% | 3.64% |
| Target 2060 Composite Index | 2.51% | 5.29% | 8.32% |
| Fund Category: Morningstar Target-Date 2060+2 | 4.49% | 5.44% | N/A |
| Fund Expense Ratios3: Net 0.74%; Gross 1.41% |
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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.
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 0.74% of acquired fund fees and expenses (AFFE), which are indirect expenses incurred by the fund through its investments in the underlying funds. 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 expense ratios during the period, not including AFFE, refer to the financial highlights section of the financial statements. |
Schwab Target Funds | Annual Report
Performance and Fund Facts as of October 31, 2020 (continued)
| Number of Holdings | 20 |
| Portfolio Turnover Rate | 8% |
Asset Class Weightings % of Investments1,2
Top Holdings % of Net Assets3,4
Portfolio holdings may have changed since the report date.
| 1 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
| 2 | 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. |
| 3 | This list is not a recommendation of any security by the investment adviser. |
| 4 | The holdings listed exclude any temporary liquidity investments. |
Schwab Target Funds | Annual Report
Fund Expenses (Unaudited)
Examples for a $1,000 Investment
As a fund shareholder, you may incur two types of costs: (1) transaction costs; and (2) ongoing costs, including transfer agent 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, 2020 and held through October 31, 2020.
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. 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 Ratio
(Annualized)1,2 | Effective
Expense Ratio
(Annualized)3,4 | Beginning
Account Value
at 5/1/20 | Ending
Account Value
(Net of Expenses)
at 10/31/202 | Expenses Paid
During Period
5/1/20-10/31/202,5 | Effective
Expenses Paid
During Period
5/1/20-10/31/204,5 |
| Schwab Target 2010 Fund | | | | | | |
| Actual Return | 0.00% | 0.32% | $1,000.00 | $1,064.20 | $0.00 | $1.66 |
| Hypothetical 5% Return | 0.00% | 0.32% | $1,000.00 | $1,025.10 | $0.00 | $1.63 |
| Schwab Target 2015 Fund | | | | | | |
| Actual Return | 0.00% | 0.34% | $1,000.00 | $1,067.50 | $0.00 | $1.77 |
| Hypothetical 5% Return | 0.00% | 0.34% | $1,000.00 | $1,025.10 | $0.00 | $1.73 |
| Schwab Target 2020 Fund | | | | | | |
| Actual Return | 0.00% | 0.35% | $1,000.00 | $1,069.90 | $0.00 | $1.82 |
| Hypothetical 5% Return | 0.00% | 0.35% | $1,000.00 | $1,025.10 | $0.00 | $1.78 |
| Schwab Target 2025 Fund | | | | | | |
| Actual Return | 0.00% | 0.46% | $1,000.00 | $1,089.80 | $0.00 | $2.42 |
| Hypothetical 5% Return | 0.00% | 0.46% | $1,000.00 | $1,025.10 | $0.00 | $2.34 |
| Schwab Target 2030 Fund | | | | | | |
| Actual Return | 0.00% | 0.54% | $1,000.00 | $1,105.90 | $0.00 | $2.86 |
| Hypothetical 5% Return | 0.00% | 0.54% | $1,000.00 | $1,025.10 | $0.00 | $2.75 |
| Schwab Target 2035 Fund | | | | | | |
| Actual Return | 0.00% | 0.59% | $1,000.00 | $1,115.60 | $0.00 | $3.14 |
| Hypothetical 5% Return | 0.00% | 0.59% | $1,000.00 | $1,025.10 | $0.00 | $3.00 |
| Schwab Target 2040 Fund | | | | | | |
| Actual Return | 0.00% | 0.64% | $1,000.00 | $1,126.20 | $0.00 | $3.42 |
| Hypothetical 5% Return | 0.00% | 0.64% | $1,000.00 | $1,025.10 | $0.00 | $3.25 |
| Schwab Target 2045 Fund | | | | | | |
| Actual Return | 0.00% | 0.68% | $1,000.00 | $1,135.50 | $0.00 | $3.65 |
| Hypothetical 5% Return | 0.00% | 0.68% | $1,000.00 | $1,025.10 | $0.00 | $3.46 |
| Schwab Target 2050 Fund | | | | | | |
| Actual Return | 0.00% | 0.71% | $1,000.00 | $1,139.70 | $0.00 | $3.82 |
| Hypothetical 5% Return | 0.00% | 0.71% | $1,000.00 | $1,025.10 | $0.00 | $3.61 |
| Schwab Target 2055 Fund | | | | | | |
| Actual Return | 0.00% | 0.72% | $1,000.00 | $1,143.40 | $0.00 | $3.88 |
| Hypothetical 5% Return | 0.00% | 0.72% | $1,000.00 | $1,025.10 | $0.00 | $3.66 |
Schwab Target Funds | Annual Report
Fund Expenses (Unaudited) (continued)
| | Expense Ratio
(Annualized)1,2 | Effective
Expense Ratio
(Annualized)3,4 | Beginning
Account Value
at 5/1/20 | Ending
Account Value
(Net of Expenses)
at 10/31/202 | Expenses Paid
During Period
5/1/20-10/31/202,5 | Effective
Expenses Paid
During Period
5/1/20-10/31/204,5 |
| Schwab Target 2060 Fund | | | | | | |
| Actual Return | 0.00% | 0.74% | $1,000.00 | $1,147.60 | $0.00 | $3.99 |
| Hypothetical 5% Return | 0.00% | 0.74% | $1,000.00 | $1,025.10 | $0.00 | $3.76 |
| 1 | Based on the most recent six-month expense ratio. |
| 2 | Excludes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds. |
| 3 | Based on the most recent six-month acquired fund fees and expense ratio; may differ from the acquired fund fees and expenses ratios in the prospectus. |
| 4 | Includes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds. |
| 5 | 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 366 days of the fiscal year. |
Schwab Target Funds | Annual Report
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $13.57 | $13.06 | $13.42 | $12.52 | $12.42 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.27 | 0.30 | 0.29 | 0.22 | 0.20 | |
| Net realized and unrealized gains (losses) | 0.57 | 0.97 | (0.35) | 0.90 | 0.12 | |
| Total from investment operations | 0.84 | 1.27 | (0.06) | 1.12 | 0.32 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.34) | (0.34) | (0.30) | (0.22) | (0.22) | |
| Distributions from net realized gains | (0.31) | (0.42) | — | — | — | |
| Total distributions | (0.65) | (0.76) | (0.30) | (0.22) | (0.22) | |
| Net asset value at end of period | $13.76 | $13.57 | $13.06 | $13.42 | $12.52 | |
| Total return | 6.38% | 10.42% | (0.52%) | 9.11% | 2.68% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses2 | 0.00% | 0.00% | 0.00% 3 | 0.00% | 0.00% 3 | |
| Gross operating expenses2 | 0.14% | 0.17% | 0.12% | 0.14% | 0.14% | |
| Net investment income (loss) | 2.03% | 2.33% | 2.15% | 1.75% | 1.60% | |
| Portfolio turnover rate | 27% | 13% | 16% | 51% 4 | 14% | |
| Net assets, end of period (x 1,000,000) | $56 | $51 | $52 | $59 | $59 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Ratio excludes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds.
3
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
4
The portfolio turnover rate increased due to the in-kind transactions relating to Schwab Total Bond Market Fund and Schwab U.S. Aggregate Bond Index Fund. For comparison purposes, the portfolio turnover rate would have been 30% without including these transactions. There were no transaction costs associated with these transactions.
Schwab Target Funds | Annual Report
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Affiliated Underlying Funds 73.7% of net assets |
| |
| Equity Funds 27.8% |
| Global Real Estate 1.5% |
| Schwab Global Real Estate Fund | 137,882 | 847,973 |
| International 9.4% |
| Laudus International MarketMasters Fund | 141,726 | 3,453,864 |
| Schwab International Core Equity Fund | 195,514 | 1,781,129 |
| | | 5,234,993 |
| Large-Cap 15.1% |
| Schwab Core Equity Fund | 114,227 | 2,540,417 |
| Schwab Dividend Equity Fund | 6,263 | 76,027 |
| Schwab S&P 500 Index Fund | 112,941 | 5,731,755 |
| | | 8,348,199 |
| Mid-Cap 0.7% |
| Schwab U.S. Mid-Cap Index Fund | 9,029 | 406,110 |
| Small-Cap 1.1% |
| Schwab Small-Cap Equity Fund | 40,495 | 608,229 |
| | | 15,445,504 |
| |
| Fixed-Income Funds 42.2% |
| Inflation-Protected Bond 6.3% |
| Schwab Treasury Inflation Protected Securities Index Fund | 285,605 | 3,472,960 |
| Intermediate-Term Bond 25.9% |
| Schwab U.S. Aggregate Bond Index Fund | 1,340,956 | 14,401,866 |
| Short-Term Bond 10.0% |
| Schwab Short-Term Bond Index Fund | 534,588 | 5,538,328 |
| | | 23,413,154 |
| |
| Money Market Fund 3.7% |
| Schwab Variable Share Price Money Fund, Ultra Shares 0.03% (a) | 2,039,868 | 2,040,684 |
| Total Affiliated Underlying Funds |
| (Cost $34,989,562) | | 40,899,342 |
|
| Unaffiliated Underlying Funds 25.4% of net assets |
| |
| Equity Funds 7.4% |
| Large-Cap 6.4% |
| ClearBridge Large Cap Growth Fund, Class IS | 31,824 | 2,013,522 |
| Dodge & Cox Stock Fund | 9,584 | 1,565,470 |
| | | 3,578,992 |
| Security | Number
of Shares | Value ($) |
| Small-Cap 1.0% |
| ClearBridge Small Cap Growth Fund, Class IS * | 11,951 | 541,483 |
| | | 4,120,475 |
| |
| Fixed-Income Funds 18.0% |
| Intermediate-Term Bond 15.7% |
| Baird Aggregate Bond Fund, Institutional Class | 248,510 | 2,927,445 |
| Loomis Sayles Investment Grade Bond Fund, Class Y | 58,266 | 689,866 |
| Metropolitan West Total Return Bond Fund, Class I | 439,941 | 5,090,118 |
| | | 8,707,429 |
| International Bond 2.3% |
| PIMCO International Bond Fund (U.S. Dollar-Hedged), Institutional Class | 113,330 | 1,251,158 |
| | | 9,958,587 |
| Total Unaffiliated Underlying Funds |
| (Cost $12,897,507) | | 14,079,062 |
Issuer
Rate, Maturity Date | Face
Amount ($) | Value ($) |
| Short-Term Investment 0.9% of net assets |
| |
| Time Deposit 0.9% |
| JPMorgan Chase Bank |
| 0.01%, 11/02/20 (b) | 534,427 | 534,427 |
| Total Short-Term Investment |
| (Cost $534,427) | | 534,427 |
| * | Non-income producing security. |
| (a) | The rate shown is the 7-day yield. |
| (b) | The rate shown is the current daily overnight rate. |
Schwab Target Funds | Annual Report
Portfolio Holdings as of October 31, 2020 (continued)
Below is a summary of the fund’s transactions with its affiliated underlying funds during the period ended October 31, 2020:
| Affiliated Underlying Funds |
Value at
10/31/19 | Gross
Purchases | Gross
Sales | Realized
Gains (Losses) | Net Change
in Unrealized
Appreciation
(depreciation) |
Value at
10/31/20 | Balance
of Shares
Held at
10/31/20 | Distributions
Received* |
| Laudus International MarketMasters Fund | $2,895,314 | $1,013,326 | ($789,000) | $17,875 | $316,349 | $3,453,864 | 141,726 | $61,325 |
| Schwab Core Equity Fund | 2,718,520 | 499,910 | (780,000) | 10,262 | 91,725 | 2,540,417 | 114,227 | 80,909 |
| Schwab Dividend Equity Fund | 87,695 | 6,238 | — | — | (17,906) | 76,027 | 6,263 | 6,239 |
| Schwab Global Real Estate Fund | 961,884 | 259,618 | (123,000) | (25,225) | (225,304) | 847,973 | 137,882 | 53,618 |
| Schwab International Core Equity Fund | 1,983,635 | 325,461 | (350,000) | (39,041) | (138,926) | 1,781,129 | 195,514 | 71,462 |
| Schwab S&P 500 Index Fund | 5,446,654 | 2,190,122 | (2,410,000) | 133,915 | 371,064 | 5,731,755 | 112,941 | 113,122 |
| Schwab Short-Term Bond Index Fund | 5,052,710 | 1,480,231 | (1,119,685) | 10,737 | 114,335 | 5,538,328 | 534,588 | 93,550 |
| Schwab Small-Cap Equity Fund | 743,230 | 100,833 | (154,000) | (87,179) | 5,345 | 608,229 | 40,495 | 833 |
| Schwab Treasury Inflation Protected Securities Index Fund | 3,255,343 | 837,591 | (866,000) | (2,499) | 248,525 | 3,472,960 | 285,605 | 47,590 |
| Schwab U.S. Aggregate Bond Index Fund | 11,796,171 | 5,864,163 | (3,708,624) | 14,269 | 435,887 | 14,401,866 | 1,340,956 | 336,520 |
| Schwab U.S. Mid-Cap Index Fund | 375,464 | 170,491 | (163,000) | 5,263 | 17,892 | 406,110 | 9,029 | 9,491 |
| Schwab Variable Share Price Money Fund, Ultra Shares | 3,307,470 | 423,456 | (1,690,000) | 531 | (773) | 2,040,684 | 2,039,868 | 20,580 |
| Total | $38,624,090 | $13,171,440 | ($12,153,309) | $38,908 | $1,218,213 | $40,899,342 | | $895,239 |
| * | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
| | |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 (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 | |
| Assets | | | | | |
| Affiliated Underlying Funds1 | $40,899,342 | $— | $— | $40,899,342 | |
| Unaffiliated Underlying Funds1 | 14,079,062 | — | — | 14,079,062 | |
| Short-Term Investment1 | — | 534,427 | — | 534,427 | |
| Total | $54,978,404 | $534,427 | $— | $55,512,831 | |
| 1 | As categorized in Portfolio Holdings. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Target Funds | Annual Report
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in affiliated underlying funds, at value (cost $34,989,562) | | $40,899,342 |
| Investments in unaffiliated funds and issuers, at value (cost $13,431,934) | | 14,613,489 |
| Receivables: | | |
| Fund shares sold | | 65,603 |
| Dividends | | 41,543 |
| Due from investment adviser | | 5,531 |
| Prepaid expenses | + | 10,536 |
| Total assets | | 55,636,044 |
| Liabilities |
| Payables: | | |
| Investments bought | | 96,385 |
| Accrued expenses | + | 32,887 |
| Total liabilities | | 129,272 |
| Net Assets |
| Total assets | | 55,636,044 |
| Total liabilities | – | 129,272 |
| Net assets | | $55,506,772 |
| Net Assets by Source | | |
| Capital received from investors | | 47,718,298 |
| Total distributable earnings | | 7,788,474 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $55,506,772 | | 4,035,122 | | $13.76 |
| | | | | |
Schwab Target Funds | Annual Report
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends received from affiliated underlying funds | | $809,484 |
| Dividends received from unaffiliated underlying funds | | 277,149 |
| Interest | + | 1,655 |
| Total investment income | | 1,088,288 |
| Expenses |
| Professional fees | | 21,717 |
| Registration fees | | 21,196 |
| Portfolio accounting fees | | 11,485 |
| Independent trustees’ fees | | 7,994 |
| Shareholder reports | | 4,460 |
| Custodian fees | | 1,842 |
| Transfer agent fees | | 1,635 |
| Other expenses | + | 3,831 |
| Total expenses | | 74,160 |
| Expense reduction by CSIM and its affiliates | – | 74,160 |
| Net expenses | – | — |
| Net investment income | | 1,088,288 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 85,755 |
| Realized capital gain distributions received from unaffiliated underlying funds | | 233,637 |
| Net realized gains on sales of affiliated underlying funds | | 38,908 |
| Net realized gains on sales of unaffiliated underlying funds | + | 33,354 |
| Net realized gains | | 391,654 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | | 1,218,213 |
| Net change in unrealized appreciation (depreciation) on unaffiliated underlying funds | + | 534,192 |
| Net change in unrealized appreciation (depreciation) | + | 1,752,405 |
| Net realized and unrealized gains | | 2,144,059 |
| Increase in net assets resulting from operations | | $3,232,347 |
Schwab Target Funds | Annual Report
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $1,088,288 | $1,200,215 |
| Net realized gains | | 391,654 | 1,269,295 |
| Net change in unrealized appreciation (depreciation) | + | 1,752,405 | 2,675,510 |
| Increase in net assets from operations | | 3,232,347 | 5,145,020 |
| Distributions to Shareholders | |
| Total distributions | | ($2,519,058) | ($2,901,734) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 1,235,019 | $16,620,379 | 451,805 | $5,747,022 |
| Shares reinvested | | 172,129 | 2,273,818 | 218,767 | 2,638,341 |
| Shares redeemed | + | (1,139,051) | (15,206,801) | (886,220) | (11,518,751) |
| Net transactions in fund shares | | 268,097 | $3,687,396 | (215,648) | ($3,133,388) |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 3,767,025 | $51,106,087 | 3,982,673 | $51,996,189 |
| Total increase or decrease | + | 268,097 | 4,400,685 | (215,648) | (890,102) |
| End of period | | 4,035,122 | $55,506,772 | 3,767,025 | $51,106,087 |
Schwab Target Funds | Annual Report
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $12.07 | $11.49 | $12.21 | $11.72 | $12.23 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.25 | 0.27 | 0.25 | 0.20 | 0.18 | |
| Net realized and unrealized gains (losses) | 0.50 | 0.86 | (0.30) | 0.88 | 0.11 | |
| Total from investment operations | 0.75 | 1.13 | (0.05) | 1.08 | 0.29 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.31) | (0.30) | (0.27) | (0.22) | (0.21) | |
| Distributions from net realized gains | (0.33) | (0.25) | (0.40) | (0.37) | (0.59) | |
| Total distributions | (0.64) | (0.55) | (0.67) | (0.59) | (0.80) | |
| Net asset value at end of period | $12.18 | $12.07 | $11.49 | $12.21 | $11.72 | |
| Total return | 6.41% | 10.48% | (0.57%) | 9.67% | 2.59% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses2 | 0.00% | 0.00% | 0.00% 3 | 0.00% | 0.00% 3 | |
| Gross operating expenses2 | 0.10% | 0.11% | 0.07% | 0.09% | 0.08% | |
| Net investment income (loss) | 2.07% | 2.35% | 2.12% | 1.74% | 1.59% | |
| Portfolio turnover rate | 15% | 10% | 14% | 52% 4 | 14% | |
| Net assets, end of period (x 1,000,000) | $77 | $81 | $90 | $103 | $104 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Ratio excludes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds.
3
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
4
The portfolio turnover rate increased due to the in-kind transactions relating to Schwab Total Bond Market Fund and Schwab U.S. Aggregate Bond Index Fund. For comparison purposes, the portfolio turnover rate would have been 33% without including these transactions. There were no transaction costs associated with these transactions.
Schwab Target Funds | Annual Report
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Affiliated Underlying Funds 73.3% of net assets |
| |
| Equity Funds 30.2% |
| Global Real Estate 1.7% |
| Schwab Global Real Estate Fund | 214,324 | 1,318,093 |
| International 10.5% |
| Laudus International MarketMasters Fund | 221,277 | 5,392,510 |
| Schwab International Core Equity Fund | 302,431 | 2,755,151 |
| | | 8,147,661 |
| Large-Cap 15.9% |
| Schwab Core Equity Fund | 168,063 | 3,737,720 |
| Schwab Dividend Equity Fund | 7,331 | 89,000 |
| Schwab S&P 500 Index Fund | 165,874 | 8,418,126 |
| | | 12,244,846 |
| Mid-Cap 0.8% |
| Schwab U.S. Mid-Cap Index Fund | 13,531 | 608,622 |
| Small-Cap 1.3% |
| Schwab Small-Cap Equity Fund | 66,826 | 1,003,720 |
| | | 23,322,942 |
| |
| Fixed-Income Funds 40.2% |
| Inflation-Protected Bond 6.2% |
| Schwab Treasury Inflation Protected Securities Index Fund | 390,246 | 4,745,389 |
| Intermediate-Term Bond 24.6% |
| Schwab U.S. Aggregate Bond Index Fund | 1,772,803 | 19,039,900 |
| Short-Term Bond 9.4% |
| Schwab Short-Term Bond Index Fund | 701,306 | 7,265,534 |
| | | 31,050,823 |
| |
| Money Market Fund 2.9% |
| Schwab Variable Share Price Money Fund, Ultra Shares 0.03% (a) | 2,289,013 | 2,289,929 |
| Total Affiliated Underlying Funds |
| (Cost $46,255,658) | | 56,663,694 |
|
| Unaffiliated Underlying Funds 25.4% of net assets |
| |
| Equity Funds 7.7% |
| Large-Cap 6.8% |
| ClearBridge Large Cap Growth Fund, Class IS | 46,363 | 2,933,382 |
| Dodge & Cox Stock Fund | 14,373 | 2,347,697 |
| | | 5,281,079 |
| Security | Number
of Shares | Value ($) |
| Small-Cap 0.9% |
| ClearBridge Small Cap Growth Fund, Class IS * | 14,504 | 657,179 |
| | | 5,938,258 |
| |
| Fixed-Income Funds 17.7% |
| Intermediate-Term Bond 15.5% |
| Baird Aggregate Bond Fund, Institutional Class | 308,829 | 3,638,011 |
| Loomis Sayles Investment Grade Bond Fund, Class Y | 94,752 | 1,121,867 |
| Metropolitan West Total Return Bond Fund, Class I | 621,740 | 7,193,532 |
| | | 11,953,410 |
| International Bond 2.2% |
| PIMCO International Bond Fund (U.S. Dollar-Hedged), Institutional Class | 156,706 | 1,730,038 |
| | | 13,683,448 |
| Total Unaffiliated Underlying Funds |
| (Cost $17,924,153) | | 19,621,706 |
Issuer
Rate, Maturity Date | Face
Amount ($) | Value ($) |
| Short-Term Investments 1.3% of net assets |
| |
| Time Deposits 1.3% |
| BNP Paribas |
| 0.01%, 11/02/20 (b) | 176,953 | 176,953 |
| JPMorgan Chase Bank |
| 0.01%, 11/02/20 (b) | 776,229 | 776,229 |
| Total Short-Term Investments |
| (Cost $953,182) | | 953,182 |
| * | Non-income producing security. |
| (a) | The rate shown is the 7-day yield. |
| (b) | The rate shown is the current daily overnight rate. |
Schwab Target Funds | Annual Report
Portfolio Holdings as of October 31, 2020 (continued)
Below is a summary of the fund’s transactions with its affiliated underlying funds during the period ended October 31, 2020:
| Affiliated Underlying Funds |
Value at
10/31/19 | Gross
Purchases | Gross
Sales | Realized
Gains (Losses) | Net Change
in Unrealized
Appreciation
(depreciation) |
Value at
10/31/20 | Balance
of Shares
Held at
10/31/20 | Distributions
Received* |
| Laudus International MarketMasters Fund | $5,121,917 | $842,059 | ($1,107,000) | ($3,622) | $539,156 | $5,392,510 | 221,277 | $102,059 |
| Schwab Core Equity Fund | 4,602,775 | 456,756 | (1,482,000) | 392,136 | (231,947) | 3,737,720 | 168,063 | 126,756 |
| Schwab Dividend Equity Fund | 237,989 | 7,303 | (140,000) | 15,616 | (31,908) | 89,000 | 7,331 | 7,303 |
| Schwab Global Real Estate Fund | 1,634,776 | 289,596 | (195,000) | (6,396) | (404,883) | 1,318,093 | 214,324 | 89,594 |
| Schwab International Core Equity Fund | 3,436,913 | 370,383 | (762,000) | (77,187) | (212,958) | 2,755,151 | 302,431 | 120,383 |
| Schwab S&P 500 Index Fund | 9,206,847 | 1,759,539 | (3,390,000) | 844,882 | (3,142) | 8,418,126 | 165,874 | 179,539 |
| Schwab Short-Term Bond Index Fund | 7,539,057 | 841,255 | (1,288,726) | 18,250 | 155,698 | 7,265,534 | 701,306 | 128,539 |
| Schwab Small-Cap Equity Fund | 1,389,668 | 1,394 | (257,000) | (2,412) | (127,930) | 1,003,720 | 66,826 | 1,394 |
| Schwab Treasury Inflation Protected Securities Index Fund | 4,928,698 | 136,417 | (660,000) | 21,771 | 318,503 | 4,745,389 | 390,246 | 66,304 |
| Schwab U.S. Aggregate Bond Index Fund | 17,696,214 | 3,461,645 | (2,723,009) | 10,564 | 594,486 | 19,039,900 | 1,772,803 | 460,592 |
| Schwab U.S. Mid-Cap Index Fund | 583,167 | 74,742 | (80,000) | 5,567 | 25,146 | 608,622 | 13,531 | 14,742 |
| Schwab Variable Share Price Money Fund, Ultra Shares | 4,837,629 | 32,756 | (2,580,000) | 911 | (1,367) | 2,289,929 | 2,289,013 | 28,538 |
| Total | $61,215,650 | $8,273,845 | ($14,664,735) | $1,220,080 | $618,854 | $56,663,694 | | $1,325,743 |
| * | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
| | |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 (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 | |
| Assets | | | | | |
| Affiliated Underlying Funds1 | $56,663,694 | $— | $— | $56,663,694 | |
| Unaffiliated Underlying Funds1 | 19,621,706 | — | — | 19,621,706 | |
| Short-Term Investments1 | — | 953,182 | — | 953,182 | |
| Total | $76,285,400 | $953,182 | $— | $77,238,582 | |
| 1 | As categorized in Portfolio Holdings. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Target Funds | Annual Report
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in affiliated underlying funds, at value (cost $46,255,658) | | $56,663,694 |
| Investments in unaffiliated funds and issuers, at value (cost $18,877,335) | | 20,574,888 |
| Receivables: | | |
| Investments sold | | 36,001 |
| Dividends | | 54,951 |
| Fund shares sold | | 22,957 |
| Due from investment adviser | | 5,442 |
| Prepaid expenses | + | 4,869 |
| Total assets | | 77,362,802 |
| Liabilities |
| Payables: | | |
| Investments bought | | 54,734 |
| Fund shares redeemed | | 19 |
| Accrued expenses | + | 33,756 |
| Total liabilities | | 88,509 |
| Net Assets |
| Total assets | | 77,362,802 |
| Total liabilities | – | 88,509 |
| Net assets | | $77,274,293 |
| Net Assets by Source | | |
| Capital received from investors | | 62,962,335 |
| Total distributable earnings | | 14,311,958 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $77,274,293 | | 6,344,789 | | $12.18 |
| | | | | |
Schwab Target Funds | Annual Report
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends received from affiliated underlying funds | | $1,191,828 |
| Dividends received from unaffiliated underlying funds | | 410,942 |
| Interest | + | 2,317 |
| Total investment income | | 1,605,087 |
| Expenses |
| Professional fees | | 21,831 |
| Registration fees | | 20,326 |
| Portfolio accounting fees | | 11,751 |
| Independent trustees’ fees | | 8,102 |
| Shareholder reports | | 4,641 |
| Transfer agent fees | | 2,306 |
| Custodian fees | | 2,088 |
| Other expenses | + | 4,081 |
| Total expenses | | 75,126 |
| Expense reduction by CSIM and its affiliates | – | 75,126 |
| Net expenses | – | — |
| Net investment income | | 1,605,087 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 133,915 |
| Realized capital gain distributions received from unaffiliated underlying funds | | 367,401 |
| Net realized gains on sales of affiliated underlying funds | | 1,220,080 |
| Net realized gains on sales of unaffiliated underlying funds | + | 189,211 |
| Net realized gains | | 1,910,607 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | | 618,854 |
| Net change in unrealized appreciation (depreciation) on unaffiliated underlying funds | + | 633,077 |
| Net change in unrealized appreciation (depreciation) | + | 1,251,931 |
| Net realized and unrealized gains | | 3,162,538 |
| Increase in net assets resulting from operations | | $4,767,625 |
Schwab Target Funds | Annual Report
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $1,605,087 | $1,963,769 |
| Net realized gains | | 1,910,607 | 2,268,491 |
| Net change in unrealized appreciation (depreciation) | + | 1,251,931 | 3,984,094 |
| Increase in net assets from operations | | 4,767,625 | 8,216,354 |
| Distributions to Shareholders | |
| Total distributions | | ($4,189,125) | ($4,192,333) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 767,274 | $9,075,200 | 663,357 | $7,656,603 |
| Shares reinvested | | 335,649 | 3,930,448 | 364,172 | 3,892,994 |
| Shares redeemed | + | (1,481,051) | (17,448,525) | (2,164,691) | (24,726,747) |
| Net transactions in fund shares | | (378,128) | ($4,442,877) | (1,137,162) | ($13,177,150) |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 6,722,917 | $81,138,670 | 7,860,079 | $90,291,799 |
| Total decrease | + | (378,128) | (3,864,377) | (1,137,162) | (9,153,129) |
| End of period | | 6,344,789 | $77,274,293 | 6,722,917 | $81,138,670 |
Schwab Target Funds | Annual Report
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $14.46 | $13.87 | $14.71 | $13.84 | $14.33 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.30 | 0.32 | 0.30 | 0.23 | 0.22 | |
| Net realized and unrealized gains (losses) | 0.58 | 1.04 | (0.33) | 1.39 | 0.06 | |
| Total from investment operations | 0.88 | 1.36 | (0.03) | 1.62 | 0.28 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.36) | (0.35) | (0.33) | (0.24) | (0.27) | |
| Distributions from net realized gains | (0.43) | (0.42) | (0.48) | (0.51) | (0.50) | |
| Total distributions | (0.79) | (0.77) | (0.81) | (0.75) | (0.77) | |
| Net asset value at end of period | $14.55 | $14.46 | $13.87 | $14.71 | $13.84 | |
| Total return | 6.33% | 10.58% | (0.32%) | 12.28% | 2.05% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses2 | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% 3 | |
| Gross operating expenses2 | 0.02% | 0.03% | 0.02% | 0.03% | 0.03% | |
| Net investment income (loss) | 2.13% | 2.28% | 2.07% | 1.67% | 1.59% | |
| Portfolio turnover rate | 17% | 14% | 18% | 47% 4 | 9% | |
| Net assets, end of period (x 1,000,000) | $525 | $549 | $542 | $579 | $530 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Ratio excludes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds.
3
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
4
The portfolio turnover rate increased due to the in-kind transactions relating to Schwab Total Bond Market Fund and Schwab U.S. Aggregate Bond Index Fund. For comparison purposes, the portfolio turnover rate would have been 31% without including these transactions. There were no transaction costs associated with these transactions.
Schwab Target Funds | Annual Report
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Affiliated Underlying Funds 73.8% of net assets |
| |
| Equity Funds 32.2% |
| Global Real Estate 1.8% |
| Schwab Global Real Estate Fund | 1,539,721 | 9,469,280 |
| International 11.6% |
| Laudus International MarketMasters Fund | 1,653,653 | 40,299,521 |
| Schwab International Core Equity Fund | 2,241,024 | 20,415,732 |
| | | 60,715,253 |
| Large-Cap 16.6% |
| Schwab Core Equity Fund | 1,205,919 | 26,819,643 |
| Schwab Dividend Equity Fund | 40,755 | 494,768 |
| Schwab S&P 500 Index Fund | 1,183,239 | 60,049,369 |
| | | 87,363,780 |
| Mid-Cap 0.9% |
| Schwab U.S. Mid-Cap Index Fund | 100,536 | 4,522,092 |
| Small-Cap 1.3% |
| Schwab Small-Cap Equity Fund | 468,102 | 7,030,894 |
| | | 169,101,299 |
| |
| Fixed-Income Funds 38.8% |
| Inflation-Protected Bond 5.8% |
| Schwab Treasury Inflation Protected Securities Index Fund | 2,530,300 | 30,768,451 |
| Intermediate-Term Bond 23.9% |
| Schwab U.S. Aggregate Bond Index Fund | 11,699,490 | 125,652,527 |
| Short-Term Bond 9.1% |
| Schwab Short-Term Bond Index Fund | 4,605,078 | 47,708,605 |
| | | 204,129,583 |
| |
| Money Market Fund 2.8% |
| Schwab Variable Share Price Money Fund, Ultra Shares 0.03% (a) | 14,742,530 | 14,748,426 |
| Total Affiliated Underlying Funds |
| (Cost $315,611,183) | | 387,979,308 |
|
| Unaffiliated Underlying Funds 25.0% of net assets |
| |
| Equity Funds 7.7% |
| Large-Cap 6.8% |
| ClearBridge Large Cap Growth Fund, Class IS | 322,441 | 20,400,823 |
| Dodge & Cox Stock Fund | 94,192 | 15,385,341 |
| | | 35,786,164 |
| Security | Number
of Shares | Value ($) |
| Small-Cap 0.9% |
| ClearBridge Small Cap Growth Fund, Class IS * | 101,976 | 4,620,524 |
| | | 40,406,688 |
| |
| Fixed-Income Funds 17.3% |
| Intermediate-Term Bond 15.0% |
| Baird Aggregate Bond Fund, Institutional Class | 1,940,161 | 22,855,101 |
| Loomis Sayles Investment Grade Bond Fund, Class Y | 624,212 | 7,390,673 |
| Metropolitan West Total Return Bond Fund, Class I | 4,189,669 | 48,474,467 |
| | | 78,720,241 |
| International Bond 2.3% |
| PIMCO International Bond Fund (U.S. Dollar-Hedged), Institutional Class | 1,094,865 | 12,087,311 |
| | | 90,807,552 |
| Total Unaffiliated Underlying Funds |
| (Cost $119,393,528) | | 131,214,240 |
Issuer
Rate, Maturity Date | Face
Amount ($) | Value ($) |
| Short-Term Investment 0.8% of net assets |
| |
| Time Deposit 0.8% |
| JPMorgan Chase Bank |
| 0.01%, 11/02/20 (b) | 4,397,342 | 4,397,342 |
| Total Short-Term Investment |
| (Cost $4,397,342) | | 4,397,342 |
| * | Non-income producing security. |
| (a) | The rate shown is the 7-day yield. |
| (b) | The rate shown is the current daily overnight rate. |
Schwab Target Funds | Annual Report
Portfolio Holdings as of October 31, 2020 (continued)
Below is a summary of the fund’s transactions with its affiliated underlying funds during the period ended October 31, 2020:
| Affiliated Underlying Funds |
Value at
10/31/19 | Gross
Purchases | Gross
Sales | Realized
Gains (Losses) | Net Change
in Unrealized
Appreciation
(depreciation) |
Value at
10/31/20 | Balance
of Shares
Held at
10/31/20 | Distributions
Received* |
| Laudus International MarketMasters Fund | $40,354,107 | $5,185,592 | ($8,610,000) | ($188,838) | $3,558,660 | $40,299,521 | 1,653,653 | $805,593 |
| Laudus U.S. Large Cap Growth Fund | 1,023,113 | 85,851 | (1,126,845) | 645,348 | (627,467) | — | — | 85,851 |
| Schwab Core Equity Fund | 34,762,217 | 2,532,450 | (11,390,000) | 1,730,963 | (815,987) | 26,819,643 | 1,205,919 | 982,449 |
| Schwab Dividend Equity Fund | 1,361,750 | 89,499 | (660,000) | (46,978) | (249,503) | 494,768 | 40,755 | 89,499 |
| Schwab Global Real Estate Fund | 12,461,685 | 2,245,796 | (2,180,000) | (34,413) | (3,023,788) | 9,469,280 | 1,539,721 | 675,796 |
| Schwab International Core Equity Fund | 27,044,335 | 2,314,297 | (6,600,000) | (606,597) | (1,736,303) | 20,415,732 | 2,241,024 | 974,296 |
| Schwab S&P 500 Index Fund | 66,191,930 | 9,890,641 | (21,080,000) | 3,845,372 | 1,201,426 | 60,049,369 | 1,183,239 | 1,350,641 |
| Schwab Short-Term Bond Index Fund | 45,506,292 | 8,038,425 | (6,965,286) | 91,247 | 1,037,927 | 47,708,605 | 4,605,078 | 823,171 |
| Schwab Small-Cap Equity Fund | 10,124,182 | 10,761 | (2,090,000) | (264,372) | (749,677) | 7,030,894 | 468,102 | 10,761 |
| Schwab Treasury Inflation Protected Securities Index Fund | 27,550,743 | 5,268,140 | (4,210,000) | 25,878 | 2,133,690 | 30,768,451 | 2,530,300 | 388,140 |
| Schwab U.S. Aggregate Bond Index Fund | 109,012,348 | 31,832,224 | (19,119,473) | 65,650 | 3,861,778 | 125,652,527 | 11,699,490 | 2,980,439 |
| Schwab U.S. Mid-Cap Index Fund | 5,143,346 | 626,961 | (1,450,000) | 44,515 | 157,270 | 4,522,092 | 100,536 | 106,961 |
| Schwab Variable Share Price Money Fund, Ultra Shares | 29,511,748 | 208,438 | (14,970,000) | 2,880 | (4,640) | 14,748,426 | 14,742,530 | 182,716 |
| Total | $410,047,796 | $68,329,075 | ($100,451,604) | $5,310,655 | $4,743,386 | $387,979,308 | | $9,456,313 |
| * | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
| | |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 (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 | |
| Assets | | | | | |
| Affiliated Underlying Funds1 | $387,979,308 | $— | $— | $387,979,308 | |
| Unaffiliated Underlying Funds1 | 131,214,240 | — | — | 131,214,240 | |
| Short-Term Investment1 | — | 4,397,342 | — | 4,397,342 | |
| Total | $519,193,548 | $4,397,342 | $— | $523,590,890 | |
| 1 | As categorized in Portfolio Holdings. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Target Funds | Annual Report
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in affiliated underlying funds, at value (cost $315,611,183) | | $387,979,308 |
| Investments in unaffiliated funds and issuers, at value (cost $123,790,870) | | 135,611,582 |
| Receivables: | | |
| Investments sold | | 1,916,004 |
| Fund shares sold | | 390,052 |
| Dividends | | 362,935 |
| Due from investment adviser | | 7,026 |
| Prepaid expenses | + | 14,742 |
| Total assets | | 526,281,649 |
| Liabilities |
| Payables: | | |
| Investments bought | | 361,450 |
| Fund shares redeemed | | 421,869 |
| Accrued expenses | + | 54,737 |
| Total liabilities | | 838,056 |
| Net Assets |
| Total assets | | 526,281,649 |
| Total liabilities | – | 838,056 |
| Net assets | | $525,443,593 |
| Net Assets by Source | | |
| Capital received from investors | | 427,548,146 |
| Total distributable earnings | | 97,895,447 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $525,443,593 | | 36,101,483 | | $14.55 |
| | | | | |
Schwab Target Funds | Annual Report
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends received from affiliated underlying funds | | $8,310,227 |
| Dividends received from unaffiliated underlying funds | | 2,955,117 |
| Interest | + | 11,950 |
| Total investment income | | 11,277,294 |
| Expenses |
| Registration fees | | 30,467 |
| Portfolio accounting fees | | 25,432 |
| Professional fees | | 23,534 |
| Shareholder reports | | 18,127 |
| Independent trustees’ fees | | 10,109 |
| Transfer agent fees | | 8,850 |
| Custodian fees | | 2,148 |
| Other expenses | + | 8,862 |
| Total expenses | | 127,529 |
| Expense reduction by CSIM and its affiliates | – | 127,529 |
| Net expenses | – | — |
| Net investment income | | 11,277,294 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 1,146,086 |
| Realized capital gain distributions received from unaffiliated underlying funds | | 2,681,479 |
| Net realized gains on sales of affiliated underlying funds | | 5,310,655 |
| Net realized gains on sales of unaffiliated underlying funds | + | 924,346 |
| Net realized gains | | 10,062,566 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | | 4,743,386 |
| Net change in unrealized appreciation (depreciation) on unaffiliated underlying funds | + | 4,306,511 |
| Net change in unrealized appreciation (depreciation) | + | 9,049,897 |
| Net realized and unrealized gains | | 19,112,463 |
| Increase in net assets resulting from operations | | $30,389,757 |
Schwab Target Funds | Annual Report
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $11,277,294 | $12,429,435 |
| Net realized gains | | 10,062,566 | 17,864,060 |
| Net change in unrealized appreciation (depreciation) | + | 9,049,897 | 24,386,674 |
| Increase in net assets from operations | | 30,389,757 | 54,680,169 |
| Distributions to Shareholders | |
| Total distributions | | ($29,966,408) | ($29,733,328) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 5,736,654 | $81,673,353 | 5,237,831 | $72,332,026 |
| Shares reinvested | | 1,985,761 | 27,880,086 | 2,194,423 | 27,913,053 |
| Shares redeemed | + | (9,574,984) | (133,223,621) | (8,554,258) | (118,357,642) |
| Net transactions in fund shares | | (1,852,569) | ($23,670,182) | (1,122,004) | ($18,112,563) |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 37,954,052 | $548,690,426 | 39,076,056 | $541,856,148 |
| Total increase or decrease | + | (1,852,569) | (23,246,833) | (1,122,004) | 6,834,278 |
| End of period | | 36,101,483 | $525,443,593 | 37,954,052 | $548,690,426 |
Schwab Target Funds | Annual Report
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $14.74 | $14.10 | $14.71 | $13.45 | $14.11 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.31 | 0.30 | 0.28 | 0.22 | 0.20 | |
| Net realized and unrealized gains (losses) | 0.55 | 1.10 | (0.34) | 1.73 | 0.06 | |
| Total from investment operations | 0.86 | 1.40 | (0.06) | 1.95 | 0.26 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.35) | (0.34) | (0.34) | (0.23) | (0.26) | |
| Distributions from net realized gains | (0.44) | (0.42) | (0.21) | (0.46) | (0.66) | |
| Total distributions | (0.79) | (0.76) | (0.55) | (0.69) | (0.92) | |
| Net asset value at end of period | $14.81 | $14.74 | $14.10 | $14.71 | $13.45 | |
| Total return | 5.98% | 10.79% | (0.53%) | 15.17% | 2.01% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses2 | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% 3 | |
| Gross operating expenses2 | 0.02% | 0.03% | 0.02% | 0.03% | 0.04% | |
| Net investment income (loss) | 2.14% | 2.10% | 1.88% | 1.59% | 1.53% | |
| Portfolio turnover rate | 16% | 15% | 13% | 36% 4 | 5% | |
| Net assets, end of period (x 1,000,000) | $572 | $577 | $531 | $521 | $443 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Ratio excludes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds.
3
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
4
The portfolio turnover rate increased due to the in-kind transactions relating to Schwab Total Bond Market Fund and Schwab U.S. Aggregate Bond Index Fund. For comparison purposes, the portfolio turnover rate would have been 26% without including these transactions. There were no transaction costs associated with these transactions.
Schwab Target Funds | Annual Report
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Affiliated Underlying Funds 71.3% of net assets |
| |
| Equity Funds 44.6% |
| Global Real Estate 2.5% |
| Schwab Global Real Estate Fund | 2,316,757 | 14,248,053 |
| International 15.7% |
| Laudus International MarketMasters Fund | 2,369,203 | 57,737,488 |
| Schwab International Core Equity Fund | 3,542,504 | 32,272,214 |
| | | 90,009,702 |
| Large-Cap 23.1% |
| Laudus U.S. Large Cap Growth Fund | 275,670 | 7,470,645 |
| Schwab Core Equity Fund | 2,089,943 | 46,480,332 |
| Schwab Dividend Equity Fund | 76,627 | 930,257 |
| Schwab S&P 500 Index Fund | 1,519,311 | 77,105,046 |
| | | 131,986,280 |
| Mid-Cap 1.2% |
| Schwab U.S. Mid-Cap Index Fund | 146,529 | 6,590,860 |
| Small-Cap 2.1% |
| Schwab Small-Cap Equity Fund | 817,540 | 12,279,447 |
| | | 255,114,342 |
| |
| Fixed-Income Funds 24.8% |
| Inflation-Protected Bond 2.2% |
| Schwab Treasury Inflation Protected Securities Index Fund | 1,032,931 | 12,560,445 |
| Intermediate-Term Bond 16.3% |
| Schwab U.S. Aggregate Bond Index Fund | 8,698,423 | 93,421,065 |
| Short-Term Bond 6.3% |
| Schwab Short-Term Bond Index Fund | 3,478,218 | 36,034,341 |
| | | 142,015,851 |
| |
| Money Market Fund 1.9% |
| Schwab Variable Share Price Money Fund, Ultra Shares 0.03% (a) | 10,646,628 | 10,650,887 |
| Total Affiliated Underlying Funds |
| (Cost $340,927,443) | | 407,781,080 |
|
| Unaffiliated Underlying Funds 27.4% of net assets |
| |
| Equity Funds 9.6% |
| International 0.9% |
| Goldman Sachs Emerging Markets Equity Insights Fund, Institutional Class | 526,364 | 5,389,972 |
| Security | Number
of Shares | Value ($) |
| Large-Cap 7.4% |
| ClearBridge Large Cap Growth Fund, Class IS | 324,620 | 20,538,734 |
| Dodge & Cox Stock Fund | 134,433 | 21,958,288 |
| | | 42,497,022 |
| Small-Cap 1.3% |
| ClearBridge Small Cap Growth Fund, Class IS * | 161,240 | 7,305,803 |
| | | 55,192,797 |
| |
| Fixed-Income Funds 17.8% |
| Intermediate-Term Bond 13.5% |
| Baird Aggregate Bond Fund, Institutional Class | 1,239,245 | 14,598,311 |
| Loomis Sayles Investment Grade Bond Fund, Class Y | 1,273,084 | 15,073,309 |
| Metropolitan West Total Return Bond Fund, Class I | 4,085,361 | 47,267,622 |
| | | 76,939,242 |
| International Bond 4.3% |
| PIMCO International Bond Fund (U.S. Dollar-Hedged), Institutional Class | 2,242,965 | 24,762,335 |
| | | 101,701,577 |
| Total Unaffiliated Underlying Funds |
| (Cost $144,904,723) | | 156,894,374 |
Issuer
Rate, Maturity Date | Face
Amount ($) | Value ($) |
| Short-Term Investment 1.0% of net assets |
| |
| Time Deposit 1.0% |
| Skandinaviska Enskilda Banken |
| 0.01%, 11/02/20 (b) | 5,508,601 | 5,508,601 |
| Total Short-Term Investment |
| (Cost $5,508,601) | | 5,508,601 |
| * | Non-income producing security. |
| (a) | The rate shown is the 7-day yield. |
| (b) | The rate shown is the current daily overnight rate. |
Schwab Target Funds | Annual Report
Portfolio Holdings as of October 31, 2020 (continued)
Below is a summary of the fund’s transactions with its affiliated underlying funds during the period ended October 31, 2020:
| Affiliated Underlying Funds |
Value at
10/31/19 | Gross
Purchases | Gross
Sales | Realized
Gains (Losses) | Net Change
in Unrealized
Appreciation
(depreciation) |
Value at
10/31/20 | Balance
of Shares
Held at
10/31/20 | Distributions
Received* |
| Laudus International MarketMasters Fund | $56,558,130 | $6,000,280 | ($9,280,000) | ($1,134,854) | $5,593,932 | $57,737,488 | 2,369,203 | $1,140,280 |
| Laudus U.S. Large Cap Growth Fund | 6,728,398 | 1,954,592 | (2,770,000) | 881,920 | 675,735 | 7,470,645 | 275,670 | 564,591 |
| Schwab Core Equity Fund | 53,527,691 | 1,548,243 | (9,609,999) | (581) | 1,014,978 | 46,480,332 | 2,089,943 | 1,548,244 |
| Schwab Dividend Equity Fund | 2,066,652 | 132,681 | (700,000) | (124,946) | (444,130) | 930,257 | 76,627 | 132,682 |
| Schwab Global Real Estate Fund | 16,958,713 | 3,056,551 | (1,310,000) | (102,214) | (4,354,997) | 14,248,053 | 2,316,757 | 936,551 |
| Schwab International Core Equity Fund | 37,091,229 | 2,926,245 | (4,383,002) | (938,846) | (2,423,412) | 32,272,214 | 3,542,504 | 1,336,245 |
| Schwab S&P 500 Index Fund | 81,277,045 | 9,400,602 | (19,520,000) | 3,219,189 | 2,728,210 | 77,105,046 | 1,519,311 | 1,640,602 |
| Schwab Short-Term Bond Index Fund | 33,442,382 | 8,024,128 | (6,281,436) | 96,341 | 752,926 | 36,034,341 | 3,478,218 | 612,717 |
| Schwab Small-Cap Equity Fund | 15,913,251 | 757,039 | (2,940,000) | (1,482,407) | 31,564 | 12,279,447 | 817,540 | 17,038 |
| Schwab Treasury Inflation Protected Securities Index Fund | 10,429,385 | 3,438,437 | (2,190,000) | 16,342 | 866,281 | 12,560,445 | 1,032,931 | 158,438 |
| Schwab U.S. Aggregate Bond Index Fund | 82,065,620 | 27,403,428 | (19,068,667) | 70,861 | 2,949,823 | 93,421,065 | 8,698,423 | 2,280,588 |
| Schwab U.S. Mid-Cap Index Fund | 6,334,698 | 160,134 | — | — | 96,028 | 6,590,860 | 146,529 | 160,134 |
| Schwab Variable Share Price Money Fund, Ultra Shares | 21,391,508 | 150,634 | (10,890,000) | 1,795 | (3,050) | 10,650,887 | 10,646,628 | 131,988 |
| Total | $423,784,702 | $64,952,994 | ($88,943,104) | $502,600 | $7,483,888 | $407,781,080 | | $10,660,098 |
| * | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
| | |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 (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 | |
| Assets | | | | | |
| Affiliated Underlying Funds1 | $407,781,080 | $— | $— | $407,781,080 | |
| Unaffiliated Underlying Funds1 | 156,894,374 | — | — | 156,894,374 | |
| Short-Term Investment1 | — | 5,508,601 | — | 5,508,601 | |
| Total | $564,675,454 | $5,508,601 | $— | $570,184,055 | |
| 1 | As categorized in Portfolio Holdings. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Target Funds | Annual Report
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in affiliated underlying funds, at value (cost $340,927,443) | | $407,781,080 |
| Investments in unaffiliated funds and issuers, at value (cost $150,413,324) | | 162,402,975 |
| Receivables: | | |
| Investments sold | | 920,003 |
| Fund shares sold | | 706,504 |
| Dividends | | 311,634 |
| Due from investment adviser | | 8,222 |
| Prepaid expenses | + | 11,852 |
| Total assets | | 572,142,270 |
| Liabilities |
| Payables: | | |
| Investments bought | | 310,414 |
| Fund shares redeemed | | 38,770 |
| Accrued expenses | + | 55,252 |
| Total liabilities | | 404,436 |
| Net Assets |
| Total assets | | 572,142,270 |
| Total liabilities | – | 404,436 |
| Net assets | | $571,737,834 |
| Net Assets by Source | | |
| Capital received from investors | | 484,345,381 |
| Total distributable earnings | | 87,392,453 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $571,737,834 | | 38,597,550 | | $14.81 |
| | | | | |
Schwab Target Funds | Annual Report
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends received from affiliated underlying funds | | $8,507,774 |
| Dividends received from unaffiliated underlying funds | | 3,708,829 |
| Interest | + | 19,208 |
| Total investment income | | 12,235,811 |
| Expenses |
| Registration fees | | 35,797 |
| Portfolio accounting fees | | 25,846 |
| Professional fees | | 23,549 |
| Shareholder reports | | 18,937 |
| Transfer agent fees | | 11,000 |
| Independent trustees’ fees | | 10,298 |
| Custodian fees | | 2,202 |
| Other expenses | + | 9,111 |
| Total expenses | | 136,740 |
| Expense reduction by CSIM and its affiliates | – | 136,740 |
| Net expenses | – | — |
| Net investment income | | 12,235,811 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 2,152,324 |
| Realized capital gain distributions received from unaffiliated underlying funds | | 3,355,295 |
| Net realized gains on sales of affiliated underlying funds | | 502,600 |
| Net realized gains on sales of unaffiliated underlying funds | + | 156,815 |
| Net realized gains | | 6,167,034 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | | 7,483,888 |
| Net change in unrealized appreciation (depreciation) on unaffiliated underlying funds | + | 4,182,099 |
| Net change in unrealized appreciation (depreciation) | + | 11,665,987 |
| Net realized and unrealized gains | | 17,833,021 |
| Increase in net assets resulting from operations | | $30,068,832 |
Schwab Target Funds | Annual Report
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $12,235,811 | $11,528,934 |
| Net realized gains | | 6,167,034 | 18,998,513 |
| Net change in unrealized appreciation (depreciation) | + | 11,665,987 | 25,891,364 |
| Increase in net assets from operations | | 30,068,832 | 56,418,811 |
| Distributions to Shareholders | |
| Total distributions | | ($31,204,773) | ($28,587,026) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 6,665,930 | $96,099,310 | 6,370,762 | $89,570,449 |
| Shares reinvested | | 2,073,359 | 29,960,039 | 2,152,966 | 27,536,429 |
| Shares redeemed | + | (9,291,366) | (130,280,378) | (7,018,067) | (98,439,951) |
| Net transactions in fund shares | | (552,077) | ($4,221,029) | 1,505,661 | $18,666,927 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 39,149,627 | $577,094,804 | 37,643,966 | $530,596,092 |
| Total increase or decrease | + | (552,077) | (5,356,970) | 1,505,661 | 46,498,712 |
| End of period | | 38,597,550 | $571,737,834 | 39,149,627 | $577,094,804 |
Schwab Target Funds | Annual Report
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $15.79 | $15.24 | $16.10 | $14.51 | $15.59 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.33 | 0.30 | 0.29 | 0.23 | 0.22 | |
| Net realized and unrealized gains (losses) | 0.57 | 1.21 | (0.38) | 2.18 | 0.01 | |
| Total from investment operations | 0.90 | 1.51 | (0.09) | 2.41 | 0.23 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.37) | (0.37) | (0.39) | (0.24) | (0.30) | |
| Distributions from net realized gains | (0.65) | (0.59) | (0.38) | (0.58) | (1.01) | |
| Total distributions | (1.02) | (0.96) | (0.77) | (0.82) | (1.31) | |
| Net asset value at end of period | $15.67 | $15.79 | $15.24 | $16.10 | $14.51 | |
| Total return | 5.81% | 10.94% | (0.75%) | 17.47% | 1.72% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses2 | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% 3 | |
| Gross operating expenses2 | 0.02% | 0.02% | 0.02% | 0.02% | 0.03% | |
| Net investment income (loss) | 2.15% | 2.00% | 1.79% | 1.53% | 1.51% | |
| Portfolio turnover rate | 13% | 17% | 14% | 30% | 5% | |
| Net assets, end of period (x 1,000,000) | $965 | $999 | $958 | $966 | $814 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Ratio excludes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds.
3
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
Schwab Target Funds | Annual Report
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Affiliated Underlying Funds 71.2% of net assets |
| |
| Equity Funds 53.3% |
| Global Real Estate 3.0% |
| Schwab Global Real Estate Fund | 4,698,604 | 28,896,417 |
| International 18.6% |
| Laudus International MarketMasters Fund | 4,636,688 | 112,996,078 |
| Schwab International Core Equity Fund | 7,301,011 | 66,512,210 |
| | | 179,508,288 |
| Large-Cap 27.5% |
| Laudus U.S. Large Cap Growth Fund | 851,371 | 23,072,141 |
| Schwab Core Equity Fund | 4,165,286 | 92,635,966 |
| Schwab Dividend Equity Fund | 638,748 | 7,754,406 |
| Schwab S&P 500 Index Fund | 2,809,707 | 142,592,653 |
| | | 266,055,166 |
| Mid-Cap 1.2% |
| Schwab U.S. Mid-Cap Index Fund | 255,751 | 11,503,681 |
| Small-Cap 3.0% |
| Schwab Small-Cap Equity Fund | 1,924,165 | 28,900,959 |
| | | 514,864,511 |
| |
| Fixed-Income Funds 16.6% |
| Inflation-Protected Bond 0.5% |
| Schwab Treasury Inflation Protected Securities Index Fund | 378,945 | 4,607,974 |
| Intermediate-Term Bond 11.6% |
| Schwab U.S. Aggregate Bond Index Fund | 10,464,579 | 112,389,577 |
| Short-Term Bond 4.5% |
| Schwab Short-Term Bond Index Fund | 4,167,236 | 43,172,563 |
| | | 160,170,114 |
| |
| Money Market Fund 1.3% |
| Schwab Variable Share Price Money Fund, Ultra Shares 0.03% (a) | 12,651,650 | 12,656,711 |
| Total Affiliated Underlying Funds |
| (Cost $529,258,446) | | 687,691,336 |
|
| Unaffiliated Underlying Funds 27.7% of net assets |
| |
| Equity Funds 11.8% |
| International 1.9% |
| Goldman Sachs Emerging Markets Equity Insights Fund, Institutional Class | 1,762,171 | 18,044,632 |
| Security | Number
of Shares | Value ($) |
| Large-Cap 8.3% |
| ClearBridge Large Cap Growth Fund, Class IS | 580,340 | 36,718,138 |
| Dodge & Cox Stock Fund | 265,794 | 43,414,726 |
| | | 80,132,864 |
| Small-Cap 1.6% |
| ClearBridge Small Cap Growth Fund, Class IS * | 333,706 | 15,120,228 |
| | | 113,297,724 |
| |
| Fixed-Income Funds 15.9% |
| Intermediate-Term Bond 11.3% |
| Baird Aggregate Bond Fund, Institutional Class | 1,382,682 | 16,287,988 |
| Loomis Sayles Investment Grade Bond Fund, Class Y | 2,336,405 | 27,663,037 |
| Metropolitan West Total Return Bond Fund, Class I | 5,604,526 | 64,844,363 |
| | | 108,795,388 |
| International Bond 4.6% |
| PIMCO International Bond Fund (U.S. Dollar-Hedged), Institutional Class | 4,076,037 | 44,999,449 |
| | | 153,794,837 |
| Total Unaffiliated Underlying Funds |
| (Cost $248,036,385) | | 267,092,561 |
Issuer
Rate, Maturity Date | Face
Amount ($) | Value ($) |
| Short-Term Investments 1.1% of net assets |
| |
| Time Deposits 1.1% |
| JPMorgan Chase Bank |
| 0.01%, 11/02/20 (b) | 9,732,997 | 9,732,997 |
| Skandinaviska Enskilda Banken |
| 0.01%, 11/02/20 (b) | 1,108,954 | 1,108,954 |
| Total Short-Term Investments |
| (Cost $10,841,951) | | 10,841,951 |
| * | Non-income producing security. |
| (a) | The rate shown is the 7-day yield. |
| (b) | The rate shown is the current daily overnight rate. |
Schwab Target Funds | Annual Report
Portfolio Holdings as of October 31, 2020 (continued)
Below is a summary of the fund’s transactions with its affiliated underlying funds during the period ended October 31, 2020:
| Affiliated Underlying Funds |
Value at
10/31/19 | Gross
Purchases | Gross
Sales | Realized
Gains (Losses) | Net Change
in Unrealized
Appreciation
(depreciation) |
Value at
10/31/20 | Balance
of Shares
Held at
10/31/20 | Distributions
Received* |
| Laudus International MarketMasters Fund | $114,060,550 | $7,871,075 | ($17,490,000) | ($1,375,670) | $9,930,123 | $112,996,078 | 4,636,688 | $2,321,075 |
| Laudus U.S. Large Cap Growth Fund | 22,578,525 | 3,214,603 | (7,280,000) | 2,715,477 | 1,843,536 | 23,072,141 | 851,371 | 1,894,602 |
| Schwab Core Equity Fund | 104,714,833 | 3,063,115 | (17,050,000) | 567,086 | 1,340,932 | 92,635,966 | 4,165,286 | 3,063,115 |
| Schwab Dividend Equity Fund | 11,389,803 | 782,137 | (2,240,000) | (113,021) | (2,064,513) | 7,754,406 | 638,748 | 782,139 |
| Schwab Global Real Estate Fund | 34,719,157 | 5,653,990 | (2,620,000) | (125,878) | (8,730,852) | 28,896,417 | 4,698,604 | 1,913,991 |
| Schwab International Core Equity Fund | 75,878,157 | 4,533,579 | (6,830,000) | (1,770,122) | (5,299,404) | 66,512,210 | 7,301,011 | 2,733,579 |
| Schwab S&P 500 Index Fund | 147,472,503 | 15,279,165 | (30,590,000) | 5,016,164 | 5,414,821 | 142,592,653 | 2,809,707 | 3,009,164 |
| Schwab Short-Term Bond Index Fund | 41,847,840 | 8,914,945 | (8,599,785) | 124,416 | 885,147 | 43,172,563 | 4,167,236 | 744,212 |
| Schwab Small-Cap Equity Fund | 34,020,480 | 2,237,327 | (4,390,000) | (910,951) | (2,055,897) | 28,900,959 | 1,924,165 | 37,327 |
| Schwab Treasury Inflation Protected Securities Index Fund | — | 4,359,020 | — | — | 248,954 | 4,607,974 | 378,945 | 19,021 |
| Schwab U.S. Aggregate Bond Index Fund | 104,917,645 | 27,420,433 | (23,614,664) | 53,880 | 3,612,283 | 112,389,577 | 10,464,579 | 2,791,714 |
| Schwab U.S. Mid-Cap Index Fund | 12,651,067 | 319,804 | (1,590,000) | 24,654 | 98,156 | 11,503,681 | 255,751 | 319,804 |
| Schwab Variable Share Price Money Fund, Ultra Shares | 26,491,561 | 187,602 | (14,020,000) | 1,309 | (3,761) | 12,656,711 | 12,651,650 | 164,502 |
| Total | $730,742,121 | $83,836,795 | ($136,314,449) | $4,207,344 | $5,219,525 | $687,691,336 | | $19,794,245 |
| * | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
| | |
| | |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 (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 | |
| Assets | | | | | |
| Affiliated Underlying Funds1 | $687,691,336 | $— | $— | $687,691,336 | |
| Unaffiliated Underlying Funds1 | 267,092,561 | — | — | 267,092,561 | |
| Short-Term Investments1 | — | 10,841,951 | — | 10,841,951 | |
| Total | $954,783,897 | $10,841,951 | $— | $965,625,848 | |
| 1 | As categorized in Portfolio Holdings. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Target Funds | Annual Report
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in affiliated underlying funds, at value (cost $529,258,446) | | $687,691,336 |
| Investments in unaffiliated funds and issuers, at value (cost $258,878,336) | | 277,934,512 |
| Receivables: | | |
| Investments sold | | 3,000,009 |
| Fund shares sold | | 674,325 |
| Dividends | | 407,932 |
| Due from investment adviser | | 7,849 |
| Prepaid expenses | + | 21,108 |
| Total assets | | 969,737,071 |
| Liabilities |
| Payables: | | |
| Investments bought | | 3,406,172 |
| Fund shares redeemed | | 969,534 |
| Accrued expenses | + | 73,188 |
| Total liabilities | | 4,448,894 |
| Net Assets |
| Total assets | | 969,737,071 |
| Total liabilities | – | 4,448,894 |
| Net assets | | $965,288,177 |
| Net Assets by Source | | |
| Capital received from investors | | 770,273,118 |
| Total distributable earnings | | 195,015,059 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $965,288,177 | | 61,612,086 | | $15.67 |
| | | | | |
Schwab Target Funds | Annual Report
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends received from affiliated underlying funds | | $14,387,704 |
| Dividends received from unaffiliated underlying funds | | 6,514,934 |
| Interest | + | 26,357 |
| Total investment income | | 20,928,995 |
| Expenses |
| Registration fees | | 34,389 |
| Shareholder reports | | 33,474 |
| Portfolio accounting fees | | 29,888 |
| Professional fees | | 25,108 |
| Transfer agent fees | | 12,335 |
| Independent trustees’ fees | | 12,098 |
| Custodian fees | | 2,345 |
| Other expenses | + | 13,335 |
| Total expenses | | 162,972 |
| Expense reduction by CSIM and its affiliates | – | 162,972 |
| Net expenses | – | — |
| Net investment income | | 20,928,995 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 5,406,541 |
| Realized capital gain distributions received from unaffiliated underlying funds | | 6,375,882 |
| Net realized gains on sales of affiliated underlying funds | | 4,207,344 |
| Net realized gains on sales of unaffiliated underlying funds | + | 580,894 |
| Net realized gains | | 16,570,661 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | | 5,219,525 |
| Net change in unrealized appreciation (depreciation) on unaffiliated underlying funds | + | 6,178,332 |
| Net change in unrealized appreciation (depreciation) | + | 11,397,857 |
| Net realized and unrealized gains | | 27,968,518 |
| Increase in net assets resulting from operations | | $48,897,513 |
Schwab Target Funds | Annual Report
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $20,928,995 | $19,375,183 |
| Net realized gains | | 16,570,661 | 44,516,378 |
| Net change in unrealized appreciation (depreciation) | + | 11,397,857 | 36,469,471 |
| Increase in net assets from operations | | 48,897,513 | 100,361,032 |
| Distributions to Shareholders | |
| Total distributions | | ($64,665,015) | ($59,673,092) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 8,331,450 | $126,649,806 | 6,655,676 | $100,210,585 |
| Shares reinvested | | 4,044,928 | 62,251,430 | 4,238,554 | 57,474,786 |
| Shares redeemed | + | (14,016,675) | (206,526,474) | (10,487,734) | (157,448,421) |
| Net transactions in fund shares | | (1,640,297) | ($17,625,238) | 406,496 | $236,950 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 63,252,383 | $998,680,917 | 62,845,887 | $957,756,027 |
| Total increase or decrease | + | (1,640,297) | (33,392,740) | 406,496 | 40,924,890 |
| End of period | | 61,612,086 | $965,288,177 | 63,252,383 | $998,680,917 |
Schwab Target Funds | Annual Report
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $15.46 | $14.94 | $15.58 | $13.82 | $14.70 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.31 | 0.28 | 0.27 | 0.21 | 0.20 | |
| Net realized and unrealized gains (losses) | 0.53 | 1.19 | (0.38) | 2.32 | 0.01 | |
| Total from investment operations | 0.84 | 1.47 | (0.11) | 2.53 | 0.21 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.34) | (0.36) | (0.39) | (0.22) | (0.28) | |
| Distributions from net realized gains | (0.62) | (0.59) | (0.14) | (0.55) | (0.81) | |
| Total distributions | (0.96) | (0.95) | (0.53) | (0.77) | (1.09) | |
| Net asset value at end of period | $15.34 | $15.46 | $14.94 | $15.58 | $13.82 | |
| Total return | 5.51% | 10.90% | (0.88%) | 19.19% | 1.63% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses2 | 0.00% | 0.00% | 0.00% 3 | 0.00% | 0.00% 3 | |
| Gross operating expenses2 | 0.03% | 0.03% | 0.03% | 0.04% | 0.04% | |
| Net investment income (loss) | 2.06% | 1.87% | 1.70% | 1.48% | 1.46% | |
| Portfolio turnover rate | 12% | 15% | 14% | 24% | 3% | |
| Net assets, end of period (x 1,000,000) | $477 | $483 | $447 | $440 | $361 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Ratio excludes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds.
3
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
Schwab Target Funds | Annual Report
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Affiliated Underlying Funds 72.6% of net assets |
| |
| Equity Funds 60.2% |
| Global Real Estate 3.4% |
| Schwab Global Real Estate Fund | 2,605,953 | 16,026,608 |
| International 20.9% |
| Laudus International MarketMasters Fund | 2,609,767 | 63,600,010 |
| Schwab International Core Equity Fund | 3,987,530 | 36,326,402 |
| | | 99,926,412 |
| Large-Cap 30.7% |
| Laudus U.S. Large Cap Growth Fund | 615,642 | 16,683,899 |
| Schwab Core Equity Fund | 2,305,598 | 51,276,494 |
| Schwab Dividend Equity Fund | 580,206 | 7,043,705 |
| Schwab S&P 500 Index Fund | 1,403,573 | 71,231,322 |
| | | 146,235,420 |
| Mid-Cap 1.5% |
| Schwab U.S. Mid-Cap Index Fund | 158,265 | 7,118,767 |
| Small-Cap 3.7% |
| Schwab Small-Cap Equity Fund | 1,180,828 | 17,736,031 |
| | | 287,043,238 |
| |
| Fixed-Income Funds 11.6% |
| Intermediate-Term Bond 8.4% |
| Schwab U.S. Aggregate Bond Index Fund | 3,730,053 | 40,060,770 |
| Short-Term Bond 3.2% |
| Schwab Short-Term Bond Index Fund | 1,458,385 | 15,108,866 |
| | | 55,169,636 |
| |
| Money Market Fund 0.8% |
| Schwab Variable Share Price Money Fund, Ultra Shares 0.03% (a) | 4,013,918 | 4,015,524 |
| Total Affiliated Underlying Funds |
| (Cost $285,174,710) | | 346,228,398 |
|
| Unaffiliated Underlying Funds 26.4% of net assets |
| |
| Equity Funds 13.0% |
| International 2.8% |
| Goldman Sachs Emerging Markets Equity Insights Fund, Institutional Class | 1,299,433 | 13,306,189 |
| Security | Number
of Shares | Value ($) |
| Large-Cap 8.5% |
| ClearBridge Large Cap Growth Fund, Class IS | 283,212 | 17,918,801 |
| Dodge & Cox Stock Fund | 139,051 | 22,712,534 |
| | | 40,631,335 |
| Small-Cap 1.7% |
| ClearBridge Small Cap Growth Fund, Class IS * | 179,402 | 8,128,712 |
| | | 62,066,236 |
| |
| Fixed-Income Funds 13.4% |
| Intermediate-Term Bond 9.7% |
| Baird Aggregate Bond Fund, Institutional Class | 461,065 | 5,431,349 |
| Loomis Sayles Investment Grade Bond Fund, Class Y | 1,259,791 | 14,915,922 |
| Metropolitan West Total Return Bond Fund, Class I | 2,246,111 | 25,987,507 |
| | | 46,334,778 |
| International Bond 3.7% |
| PIMCO International Bond Fund (U.S. Dollar-Hedged), Institutional Class | 1,594,501 | 17,603,287 |
| | | 63,938,065 |
| Total Unaffiliated Underlying Funds |
| (Cost $117,570,075) | | 126,004,301 |
Issuer
Rate, Maturity Date | Face
Amount ($) | Value ($) |
| Short-Term Investment 1.0% of net assets |
| |
| Time Deposit 1.0% |
| JPMorgan Chase Bank |
| 0.01%, 11/02/20 (b) | 4,645,484 | 4,645,484 |
| Total Short-Term Investment |
| (Cost $4,645,484) | | 4,645,484 |
| * | Non-income producing security. |
| (a) | The rate shown is the 7-day yield. |
| (b) | The rate shown is the current daily overnight rate. |
Schwab Target Funds | Annual Report
Portfolio Holdings as of October 31, 2020 (continued)
Below is a summary of the fund’s transactions with its affiliated underlying funds during the period ended October 31, 2020:
| Affiliated Underlying Funds |
Value at
10/31/19 | Gross
Purchases | Gross
Sales | Realized
Gains (Losses) | Net Change
in Unrealized
Appreciation
(depreciation) |
Value at
10/31/20 | Balance
of Shares
Held at
10/31/20 | Distributions
Received* |
| Laudus International MarketMasters Fund | $60,904,081 | $3,629,368 | ($5,540,000) | ($844,013) | $5,450,574 | $63,600,010 | 2,609,767 | $1,239,368 |
| Laudus U.S. Large Cap Growth Fund | 16,567,813 | 1,390,233 | (4,630,000) | 1,653,524 | 1,702,329 | 16,683,899 | 615,642 | 1,390,233 |
| Schwab Core Equity Fund | 55,646,758 | 1,628,170 | (6,950,000) | (79,018) | 1,030,584 | 51,276,494 | 2,305,598 | 1,628,170 |
| Schwab Dividend Equity Fund | 8,124,685 | 577,985 | — | — | (1,658,965) | 7,043,705 | 580,206 | 577,985 |
| Schwab Global Real Estate Fund | 18,642,442 | 3,025,174 | (730,000) | (90,706) | (4,820,302) | 16,026,608 | 2,605,953 | 1,035,175 |
| Schwab International Core Equity Fund | 41,017,479 | 3,127,691 | (4,060,000) | (1,196,641) | (2,562,127) | 36,326,402 | 3,987,530 | 1,477,691 |
| Schwab S&P 500 Index Fund | 73,858,143 | 6,543,335 | (14,380,000) | 2,338,793 | 2,871,051 | 71,231,322 | 1,403,573 | 1,483,335 |
| Schwab Short-Term Bond Index Fund | 14,485,816 | 3,267,286 | (2,997,327) | 41,302 | 311,789 | 15,108,866 | 1,458,385 | 259,969 |
| Schwab Small-Cap Equity Fund | 19,559,286 | 1,781,473 | (1,770,000) | (1,009,066) | (825,662) | 17,736,031 | 1,180,828 | 21,472 |
| Schwab U.S. Aggregate Bond Index Fund | 36,869,413 | 11,057,180 | (9,195,389) | 6,827 | 1,322,739 | 40,060,770 | 3,730,053 | 1,001,717 |
| Schwab U.S. Mid-Cap Index Fund | 6,842,087 | 172,960 | — | — | 103,720 | 7,118,767 | 158,265 | 172,960 |
| Schwab Variable Share Price Money Fund, Ultra Shares | 9,182,420 | 63,951 | (5,230,000) | 71 | (918) | 4,015,524 | 4,013,918 | 55,939 |
| Total | $361,700,423 | $36,264,806 | ($55,482,716) | $821,073 | $2,924,812 | $346,228,398 | | $10,344,014 |
| * | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
| | |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 (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 | |
| Assets | | | | | |
| Affiliated Underlying Funds1 | $346,228,398 | $— | $— | $346,228,398 | |
| Unaffiliated Underlying Funds1 | 126,004,301 | — | — | 126,004,301 | |
| Short-Term Investment1 | — | 4,645,484 | — | 4,645,484 | |
| Total | $472,232,699 | $4,645,484 | $— | $476,878,183 | |
| 1 | As categorized in Portfolio Holdings. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Target Funds | Annual Report
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in affiliated underlying funds, at value (cost $285,174,710) | | $346,228,398 |
| Investments in unaffiliated funds and issuers, at value (cost $122,215,559) | | 130,649,785 |
| Receivables: | | |
| Investments sold | | 800,004 |
| Fund shares sold | | 328,019 |
| Dividends | | 150,419 |
| Due from investment adviser | | 8,881 |
| Prepaid expenses | + | 10,272 |
| Total assets | | 478,175,778 |
| Liabilities |
| Payables: | | |
| Investments bought | | 949,809 |
| Fund shares redeemed | | 259,217 |
| Accrued expenses | + | 56,201 |
| Total liabilities | | 1,265,227 |
| Net Assets |
| Total assets | | 478,175,778 |
| Total liabilities | – | 1,265,227 |
| Net assets | | $476,910,551 |
| Net Assets by Source | | |
| Capital received from investors | | 399,608,958 |
| Total distributable earnings | | 77,301,593 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $476,910,551 | | 31,080,107 | | $15.34 |
| | | | | |
Schwab Target Funds | Annual Report
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends received from affiliated underlying funds | | $6,988,863 |
| Dividends received from unaffiliated underlying funds | | 2,813,446 |
| Interest | + | 12,040 |
| Total investment income | | 9,814,349 |
| Expenses |
| Registration fees | | 31,398 |
| Portfolio accounting fees | | 24,860 |
| Professional fees | | 23,229 |
| Shareholder reports | | 19,210 |
| Transfer agent fees | | 11,152 |
| Independent trustees’ fees | | 9,883 |
| Custodian fees | | 2,127 |
| Other expenses | + | 7,851 |
| Total expenses | | 129,710 |
| Expense reduction by CSIM and its affiliates | – | 129,710 |
| Net expenses | – | — |
| Net investment income | | 9,814,349 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 3,355,151 |
| Realized capital gain distributions received from unaffiliated underlying funds | | 3,188,714 |
| Net realized gains on sales of affiliated underlying funds | | 821,073 |
| Net realized gains on sales of unaffiliated underlying funds | + | 28,320 |
| Net realized gains | | 7,393,258 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | | 2,924,812 |
| Net change in unrealized appreciation (depreciation) on unaffiliated underlying funds | + | 2,973,533 |
| Net change in unrealized appreciation (depreciation) | + | 5,898,345 |
| Net realized and unrealized gains | | 13,291,603 |
| Increase in net assets resulting from operations | | $23,105,952 |
Schwab Target Funds | Annual Report
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $9,814,349 | $8,647,898 |
| Net realized gains | | 7,393,258 | 20,972,631 |
| Net change in unrealized appreciation (depreciation) | + | 5,898,345 | 18,014,725 |
| Increase in net assets from operations | | 23,105,952 | 47,635,254 |
| Distributions to Shareholders | |
| Total distributions | | ($30,104,205) | ($27,960,017) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 4,950,446 | $73,475,207 | 4,397,034 | $64,804,146 |
| Shares reinvested | | 1,911,963 | 29,023,597 | 2,053,408 | 27,084,446 |
| Shares redeemed | + | (7,041,886) | (101,780,856) | (5,092,947) | (75,084,216) |
| Net transactions in fund shares | | (179,477) | $717,948 | 1,357,495 | $16,804,376 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 31,259,584 | $483,190,856 | 29,902,089 | $446,711,243 |
| Total increase or decrease | + | (179,477) | (6,280,305) | 1,357,495 | 36,479,613 |
| End of period | | 31,080,107 | $476,910,551 | 31,259,584 | $483,190,856 |
Schwab Target Funds | Annual Report
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $16.61 | $16.27 | $17.14 | $15.12 | $16.42 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.32 | 0.28 | 0.28 | 0.23 | 0.22 | |
| Net realized and unrealized gains (losses) | 0.56 | 1.28 | (0.45) | 2.78 | (0.03) 2 | |
| Total from investment operations | 0.88 | 1.56 | (0.17) | 3.01 | 0.19 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.35) | (0.39) | (0.44) | (0.24) | (0.32) | |
| Distributions from net realized gains | (0.90) | (0.83) | (0.26) | (0.75) | (1.17) | |
| Total distributions | (1.25) | (1.22) | (0.70) | (0.99) | (1.49) | |
| Net asset value at end of period | $16.24 | $16.61 | $16.27 | $17.14 | $15.12 | |
| Total return | 5.31% | 10.90% | (1.17%) | 21.02% | 1.38% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses3 | 0.00% | 0.00% | 0.00% 4 | 0.00% | 0.00% 4 | |
| Gross operating expenses3 | 0.02% | 0.02% | 0.02% | 0.02% | 0.03% | |
| Net investment income (loss) | 2.01% | 1.78% | 1.65% | 1.44% | 1.45% | |
| Portfolio turnover rate | 10% | 15% | 17% | 21% | 4% | |
| Net assets, end of period (x 1,000,000) | $985 | $1,012 | $962 | $998 | $841 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
The per share amount does not accord with the change in aggregate gains and losses in securities during the period because of the timing of sales and repurchases of fund shares in relation to fluctuating market values.
3
Ratio excludes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds.
4
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
Schwab Target Funds | Annual Report
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Affiliated Underlying Funds 74.3% of net assets |
| |
| Equity Funds 65.7% |
| Global Real Estate 3.7% |
| Schwab Global Real Estate Fund | 5,985,143 | 36,808,630 |
| International 22.7% |
| Laudus International MarketMasters Fund | 5,743,851 | 139,977,655 |
| Schwab International Core Equity Fund | 9,179,152 | 83,622,077 |
| | | 223,599,732 |
| Large-Cap 33.4% |
| Laudus U.S. Large Cap Growth Fund | 1,692,483 | 45,866,279 |
| Schwab Core Equity Fund | 5,141,901 | 114,355,888 |
| Schwab Dividend Equity Fund | 1,607,385 | 19,513,656 |
| Schwab S&P 500 Index Fund | 2,931,705 | 148,784,034 |
| | | 328,519,857 |
| Mid-Cap 1.6% |
| Schwab U.S. Mid-Cap Index Fund | 343,180 | 15,436,223 |
| Small-Cap 4.3% |
| Schwab Small-Cap Equity Fund | 2,838,214 | 42,629,978 |
| | | 646,994,420 |
| |
| Fixed-Income Funds 8.1% |
| Intermediate-Term Bond 5.9% |
| Schwab U.S. Aggregate Bond Index Fund | 5,434,712 | 58,368,806 |
| Short-Term Bond 2.2% |
| Schwab Short-Term Bond Index Fund | 2,080,597 | 21,554,981 |
| | | 79,923,787 |
| |
| Money Market Fund 0.5% |
| Schwab Variable Share Price Money Fund, Ultra Shares 0.03% (a) | 4,875,163 | 4,877,113 |
| Total Affiliated Underlying Funds |
| (Cost $556,011,541) | | 731,795,320 |
|
| Unaffiliated Underlying Funds 24.8% of net assets |
| |
| Equity Funds 14.5% |
| International 3.8% |
| Goldman Sachs Emerging Markets Equity Insights Fund, Institutional Class | 3,627,214 | 37,142,671 |
| Security | Number
of Shares | Value ($) |
| Large-Cap 8.8% |
| ClearBridge Large Cap Growth Fund, Class IS | 557,411 | 35,267,370 |
| Dodge & Cox Stock Fund | 317,418 | 51,846,996 |
| | | 87,114,366 |
| Small-Cap 1.9% |
| ClearBridge Small Cap Growth Fund, Class IS * | 405,968 | 18,394,422 |
| | | 142,651,459 |
| |
| Fixed-Income Funds 10.3% |
| Intermediate-Term Bond 7.6% |
| Baird Aggregate Bond Fund, Institutional Class | 542,436 | 6,389,894 |
| Loomis Sayles Investment Grade Bond Fund, Class Y | 2,400,625 | 28,423,405 |
| Metropolitan West Total Return Bond Fund, Class I | 3,503,607 | 40,536,731 |
| | | 75,350,030 |
| International Bond 2.7% |
| PIMCO International Bond Fund (U.S. Dollar-Hedged), Institutional Class | 2,398,189 | 26,476,008 |
| | | 101,826,038 |
| Total Unaffiliated Underlying Funds |
| (Cost $228,996,177) | | 244,477,497 |
Issuer
Rate, Maturity Date | Face
Amount ($) | Value ($) |
| Short-Term Investment 0.7% of net assets |
| |
| Time Deposit 0.7% |
| JPMorgan Chase Bank |
| 0.01%, 11/02/20 (b) | 7,541,813 | 7,541,813 |
| Total Short-Term Investment |
| (Cost $7,541,813) | | 7,541,813 |
| * | Non-income producing security. |
| (a) | The rate shown is the 7-day yield. |
| (b) | The rate shown is the current daily overnight rate. |
Schwab Target Funds | Annual Report
Portfolio Holdings as of October 31, 2020 (continued)
Below is a summary of the fund’s transactions with its affiliated underlying funds during the period ended October 31, 2020:
| Affiliated Underlying Funds |
Value at
10/31/19 | Gross
Purchases | Gross
Sales | Realized
Gains (Losses) | Net Change
in Unrealized
Appreciation
(depreciation) |
Value at
10/31/20 | Balance
of Shares
Held at
10/31/20 | Distributions
Received* |
| Laudus International MarketMasters Fund | $140,453,404 | $9,498,156 | ($20,130,000) | ($2,177,702) | $12,333,797 | $139,977,655 | 5,743,851 | $2,858,156 |
| Laudus U.S. Large Cap Growth Fund | 48,618,750 | 4,079,681 | (16,180,000) | 6,411,739 | 2,936,109 | 45,866,279 | 1,692,483 | 4,079,681 |
| Schwab Core Equity Fund | 125,474,027 | 3,652,881 | (16,900,000) | (117,166) | 2,246,146 | 114,355,888 | 5,141,901 | 3,652,881 |
| Schwab Dividend Equity Fund | 23,122,489 | 1,636,057 | (630,000) | (11,528) | (4,603,362) | 19,513,656 | 1,607,385 | 1,636,057 |
| Schwab Global Real Estate Fund | 42,514,092 | 7,359,633 | (1,980,000) | (101,679) | (10,983,416) | 36,808,630 | 5,985,143 | 2,359,632 |
| Schwab International Core Equity Fund | 92,910,361 | 5,487,179 | (6,100,000) | (1,684,848) | (6,990,615) | 83,622,077 | 9,179,152 | 3,347,179 |
| Schwab S&P 500 Index Fund | 153,253,679 | 7,787,128 | (23,300,000) | 4,244,040 | 6,799,187 | 148,784,034 | 2,931,705 | 3,127,129 |
| Schwab Short-Term Bond Index Fund | 20,806,043 | 4,787,432 | (4,555,041) | 65,225 | 451,322 | 21,554,981 | 2,080,597 | 372,406 |
| Schwab Small-Cap Equity Fund | 46,725,134 | 2,912,384 | (2,920,000) | (1,313,705) | (2,773,835) | 42,629,978 | 2,838,214 | 52,384 |
| Schwab U.S. Aggregate Bond Index Fund | 52,449,147 | 18,328,463 | (14,311,807) | 101,221 | 1,801,782 | 58,368,806 | 5,434,712 | 1,448,349 |
| Schwab U.S. Mid-Cap Index Fund | 14,836,274 | 375,044 | — | — | 224,905 | 15,436,223 | 343,180 | 375,044 |
| Schwab Variable Share Price Money Fund, Ultra Shares | 12,553,710 | 85,286 | (7,760,000) | 646 | (2,529) | 4,877,113 | 4,875,163 | 74,323 |
| Total | $773,717,110 | $65,989,324 | ($114,766,848) | $5,416,243 | $1,439,491 | $731,795,320 | | $23,383,221 |
| * | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
| | |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 (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 | |
| Assets | | | | | |
| Affiliated Underlying Funds1 | $731,795,320 | $— | $— | $731,795,320 | |
| Unaffiliated Underlying Funds1 | 244,477,497 | — | — | 244,477,497 | |
| Short-Term Investment1 | — | 7,541,813 | — | 7,541,813 | |
| Total | $976,272,817 | $7,541,813 | $— | $983,814,630 | |
| 1 | As categorized in Portfolio Holdings. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Target Funds | Annual Report
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in affiliated underlying funds, at value (cost $556,011,541) | | $731,795,320 |
| Investments in unaffiliated funds and issuers, at value (cost $236,537,990) | | 252,019,310 |
| Receivables: | | |
| Investments sold | | 1,965,004 |
| Fund shares sold | | 497,135 |
| Dividends | | 226,279 |
| Due from investment adviser | | 7,949 |
| Prepaid expenses | + | 21,164 |
| Total assets | | 986,532,161 |
| Liabilities |
| Payables: | | |
| Investments bought | | 225,356 |
| Fund shares redeemed | | 894,370 |
| Accrued expenses | + | 87,079 |
| Total liabilities | | 1,206,805 |
| Net Assets |
| Total assets | | 986,532,161 |
| Total liabilities | – | 1,206,805 |
| Net assets | | $985,325,356 |
| Net Assets by Source | | |
| Capital received from investors | | 775,497,181 |
| Total distributable earnings | | 209,828,175 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $985,325,356 | | 60,688,112 | | $16.24 |
| | | | | |
Schwab Target Funds | Annual Report
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends received from affiliated underlying funds | | $14,658,395 |
| Dividends received from unaffiliated underlying funds | | 5,132,842 |
| Interest | + | 18,073 |
| Total investment income | | 19,809,310 |
| Expenses |
| Shareholder reports | | 49,240 |
| Registration fees | | 37,059 |
| Portfolio accounting fees | | 29,898 |
| Professional fees | | 25,168 |
| Transfer agent fees | | 15,865 |
| Independent trustees’ fees | | 12,166 |
| Custodian fees | | 2,396 |
| Other expenses | + | 13,507 |
| Total expenses | | 185,299 |
| Expense reduction by CSIM and its affiliates | – | 185,299 |
| Net expenses | – | — |
| Net investment income | | 19,809,310 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 8,724,826 |
| Realized capital gain distributions received from unaffiliated underlying funds | | 6,841,238 |
| Net realized gains on sales of affiliated underlying funds | | 5,416,243 |
| Net realized losses on sales of unaffiliated underlying funds | + | (839,876) |
| Net realized gains | | 20,142,431 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | | 1,439,491 |
| Net change in unrealized appreciation (depreciation) on unaffiliated underlying funds | + | 6,485,784 |
| Net change in unrealized appreciation (depreciation) | + | 7,925,275 |
| Net realized and unrealized gains | | 28,067,706 |
| Increase in net assets resulting from operations | | $47,877,016 |
Schwab Target Funds | Annual Report
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $19,809,310 | $17,515,301 |
| Net realized gains | | 20,142,431 | 58,610,358 |
| Net change in unrealized appreciation (depreciation) | + | 7,925,275 | 25,987,197 |
| Increase in net assets from operations | | 47,877,016 | 102,112,856 |
| Distributions to Shareholders | |
| Total distributions | | ($75,661,959) | ($71,258,344) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 7,287,918 | $111,975,602 | 6,025,941 | $95,176,212 |
| Shares reinvested | | 4,584,013 | 74,123,497 | 4,962,246 | 69,868,426 |
| Shares redeemed | + | (12,097,184) | (184,546,752) | (9,203,118) | (146,239,888) |
| Net transactions in fund shares | | (225,253) | $1,552,347 | 1,785,069 | $18,804,750 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 60,913,365 | $1,011,557,952 | 59,128,296 | $961,898,690 |
| Total increase or decrease | + | (225,253) | (26,232,596) | 1,785,069 | 49,659,262 |
| End of period | | 60,688,112 | $985,325,356 | 60,913,365 | $1,011,557,952 |
Schwab Target Funds | Annual Report
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $13.88 | $13.35 | $13.92 | $12.00 | $12.51 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.25 | 0.22 | 0.21 | 0.17 | 0.16 | |
| Net realized and unrealized gains (losses) | 0.46 | 1.09 | (0.39) | 2.37 | 0.00 2 | |
| Total from investment operations | 0.71 | 1.31 | (0.18) | 2.54 | 0.16 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.28) | (0.31) | (0.36) | (0.18) | (0.23) | |
| Distributions from net realized gains | (0.48) | (0.47) | (0.03) | (0.44) | (0.44) | |
| Total distributions | (0.76) | (0.78) | (0.39) | (0.62) | (0.67) | |
| Net asset value at end of period | $13.83 | $13.88 | $13.35 | $13.92 | $12.00 | |
| Total return | 5.10% | 10.91% | (1.43%) | 22.11% | 1.40% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses3 | 0.00% | 0.00% | 0.00% 4 | 0.00% | 0.00% 4 | |
| Gross operating expenses3 | 0.05% | 0.08% | 0.06% | 0.10% | 0.13% | |
| Net investment income (loss) | 1.87% | 1.65% | 1.52% | 1.31% | 1.34% | |
| Portfolio turnover rate | 6% | 8% | 12% | 11% | 1% | |
| Net assets, end of period (x 1,000,000) | $178 | $162 | $139 | $121 | $82 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Per-share amount was less than $0.005.
3
Ratio excludes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds.
4
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
Schwab Target Funds | Annual Report
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Affiliated Underlying Funds 75.9% of net assets |
| |
| Equity Funds 70.6% |
| Global Real Estate 4.0% |
| Schwab Global Real Estate Fund | 1,148,496 | 7,063,252 |
| International 24.5% |
| Laudus International MarketMasters Fund | 1,115,133 | 27,175,788 |
| Schwab International Core Equity Fund | 1,806,673 | 16,458,791 |
| | | 43,634,579 |
| Large-Cap 35.9% |
| Laudus U.S. Large Cap Growth Fund | 398,623 | 10,802,694 |
| Schwab Core Equity Fund | 992,630 | 22,076,096 |
| Schwab Dividend Equity Fund | 329,174 | 3,996,168 |
| Schwab S&P 500 Index Fund | 532,332 | 27,015,854 |
| | | 63,890,812 |
| Mid-Cap 1.6% |
| Schwab U.S. Mid-Cap Index Fund | 61,870 | 2,782,886 |
| Small-Cap 4.6% |
| Schwab Small-Cap Equity Fund | 551,361 | 8,281,447 |
| | | 125,652,976 |
| |
| Fixed-Income Funds 5.1% |
| Intermediate-Term Bond 3.7% |
| Schwab U.S. Aggregate Bond Index Fund | 612,158 | 6,574,580 |
| Short-Term Bond 1.4% |
| Schwab Short-Term Bond Index Fund | 237,730 | 2,462,881 |
| | | 9,037,461 |
| |
| Money Market Fund 0.2% |
| Schwab Variable Share Price Money Fund, Ultra Shares 0.03% (a) | 425,161 | 425,331 |
| Total Affiliated Underlying Funds |
| (Cost $122,768,919) | | 135,115,768 |
|
| Unaffiliated Underlying Funds 23.3% of net assets |
| |
| Equity Funds 16.0% |
| International 4.8% |
| Goldman Sachs Emerging Markets Equity Insights Fund, Institutional Class | 826,994 | 8,468,420 |
| Security | Number
of Shares | Value ($) |
| Large-Cap 9.0% |
| ClearBridge Large Cap Growth Fund, Class IS | 86,134 | 5,449,704 |
| Dodge & Cox Stock Fund | 64,404 | 10,519,692 |
| | | 15,969,396 |
| Small-Cap 2.2% |
| ClearBridge Small Cap Growth Fund, Class IS * | 88,446 | 4,007,498 |
| | | 28,445,314 |
| |
| Fixed-Income Funds 7.3% |
| Intermediate-Term Bond 5.5% |
| Baird Aggregate Bond Fund, Institutional Class | 49,504 | 583,154 |
| Loomis Sayles Investment Grade Bond Fund, Class Y | 343,012 | 4,061,256 |
| Metropolitan West Total Return Bond Fund, Class I | 443,691 | 5,133,508 |
| | | 9,777,918 |
| International Bond 1.8% |
| PIMCO International Bond Fund (U.S. Dollar-Hedged), Institutional Class | 293,706 | 3,242,514 |
| | | 13,020,432 |
| Total Unaffiliated Underlying Funds |
| (Cost $39,354,175) | | 41,465,746 |
Issuer
Rate, Maturity Date | Face
Amount ($) | Value ($) |
| Short-Term Investment 0.7% of net assets |
| |
| Time Deposit 0.7% |
| Citibank |
| 0.01%, 11/02/20 (b) | 1,262,912 | 1,262,912 |
| Total Short-Term Investment |
| (Cost $1,262,912) | | 1,262,912 |
| * | Non-income producing security. |
| (a) | The rate shown is the 7-day yield. |
| (b) | The rate shown is the current daily overnight rate. |
Schwab Target Funds | Annual Report
Portfolio Holdings as of October 31, 2020 (continued)
Below is a summary of the fund’s transactions with its affiliated underlying funds during the period ended October 31, 2020:
| Affiliated Underlying Funds |
Value at
10/31/19 | Gross
Purchases | Gross
Sales | Realized
Gains (Losses) | Net Change
in Unrealized
Appreciation
(depreciation) |
Value at
10/31/20 | Balance
of Shares
Held at
10/31/20 | Distributions
Received* |
| Laudus International MarketMasters Fund | $23,910,113 | $2,732,081 | ($1,560,000) | ($266,436) | $2,360,030 | $27,175,788 | 1,115,133 | $492,081 |
| Laudus U.S. Large Cap Growth Fund | 9,771,857 | 819,973 | (1,805,000) | 248,891 | 1,766,973 | 10,802,694 | 398,623 | 819,973 |
| Schwab Core Equity Fund | 20,871,037 | 1,331,169 | (580,001) | 6,881 | 447,010 | 22,076,096 | 992,630 | 621,169 |
| Schwab Dividend Equity Fund | 4,609,450 | 327,913 | — | — | (941,195) | 3,996,168 | 329,174 | 327,913 |
| Schwab Global Real Estate Fund | 7,507,982 | 1,583,356 | — | — | (2,028,086) | 7,063,252 | 1,148,496 | 423,357 |
| Schwab International Core Equity Fund | 15,675,852 | 2,864,659 | (510,000) | (170,252) | (1,401,468) | 16,458,791 | 1,806,673 | 584,658 |
| Schwab S&P 500 Index Fund | 24,345,193 | 1,883,659 | (1,139,997) | (18,572) | 1,945,571 | 27,015,854 | 532,332 | 508,659 |
| Schwab Short-Term Bond Index Fund | 2,096,302 | 673,280 | (362,806) | 7,898 | 48,207 | 2,462,881 | 237,730 | 40,478 |
| Schwab Small-Cap Equity Fund | 8,357,484 | 689,559 | — | — | (765,596) | 8,281,447 | 551,361 | 9,558 |
| Schwab U.S. Aggregate Bond Index Fund | 5,695,409 | 2,149,776 | (1,507,557) | 19,140 | 217,812 | 6,574,580 | 612,158 | 166,208 |
| Schwab U.S. Mid-Cap Index Fund | 2,674,726 | 67,614 | — | — | 40,546 | 2,782,886 | 61,869 | 67,614 |
| Schwab Variable Share Price Money Fund, Ultra Shares | 1,078,348 | 7,025 | (660,000) | 196 | (238) | 425,331 | 425,161 | 6,083 |
| Total | $126,593,753 | $15,130,064 | ($8,125,361) | ($172,254) | $1,689,566 | $135,115,768 | | $4,067,751 |
| * | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
| | |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 (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 | |
| Assets | | | | | |
| Affiliated Underlying Funds1 | $135,115,768 | $— | $— | $135,115,768 | |
| Unaffiliated Underlying Funds1 | 41,465,746 | — | — | 41,465,746 | |
| Short-Term Investment1 | — | 1,262,912 | — | 1,262,912 | |
| Total | $176,581,514 | $1,262,912 | $— | $177,844,426 | |
| 1 | As categorized in Portfolio Holdings. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Target Funds | Annual Report
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in affiliated underlying funds, at value (cost $122,768,919) | | $135,115,768 |
| Investments in unaffiliated funds and issuers, at value (cost $40,617,087) | | 42,728,658 |
| Receivables: | | |
| Investments sold | | 143,001 |
| Fund shares sold | | 134,189 |
| Dividends | | 26,372 |
| Due from investment adviser | | 6,294 |
| Prepaid expenses | + | 5,625 |
| Total assets | | 178,159,907 |
| Liabilities |
| Payables: | | |
| Investments bought | | 26,257 |
| Fund shares redeemed | | 100,992 |
| Accrued expenses | + | 40,946 |
| Total liabilities | | 168,195 |
| Net Assets |
| Total assets | | 178,159,907 |
| Total liabilities | – | 168,195 |
| Net assets | | $177,991,712 |
| Net Assets by Source | | |
| Capital received from investors | | 160,728,266 |
| Total distributable earnings | | 17,263,446 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $177,991,712 | | 12,870,707 | | $13.83 |
| | | | | |
Schwab Target Funds | Annual Report
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends received from affiliated underlying funds | | $2,421,546 |
| Dividends received from unaffiliated underlying funds | | 739,711 |
| Interest | + | 4,540 |
| Total investment income | | 3,165,797 |
| Expenses |
| Registration fees | | 24,254 |
| Professional fees | | 22,079 |
| Shareholder reports | | 13,012 |
| Portfolio accounting fees | | 12,554 |
| Independent trustees’ fees | | 8,507 |
| Transfer agent fees | | 4,310 |
| Custodian fees | | 1,930 |
| Other expenses | + | 4,881 |
| Total expenses | | 91,527 |
| Expense reduction by CSIM and its affiliates | – | 91,527 |
| Net expenses | – | — |
| Net investment income | | 3,165,797 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 1,646,205 |
| Realized capital gain distributions received from unaffiliated underlying funds | | 1,091,817 |
| Net realized losses on sales of affiliated underlying funds | | (172,254) |
| Net realized gains on sales of unaffiliated underlying funds | + | 46,856 |
| Net realized gains | | 2,612,624 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | | 1,689,566 |
| Net change in unrealized appreciation (depreciation) on unaffiliated underlying funds | + | 1,170,416 |
| Net change in unrealized appreciation (depreciation) | + | 2,859,982 |
| Net realized and unrealized gains | | 5,472,606 |
| Increase in net assets resulting from operations | | $8,638,403 |
Schwab Target Funds | Annual Report
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $3,165,797 | $2,478,428 |
| Net realized gains | | 2,612,624 | 6,627,236 |
| Net change in unrealized appreciation (depreciation) | + | 2,859,982 | 6,450,937 |
| Increase in net assets from operations | | 8,638,403 | 15,556,601 |
| Distributions to Shareholders | |
| Total distributions | | ($8,999,527) | ($8,203,160) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 2,950,192 | $38,924,237 | 2,379,015 | $31,439,276 |
| Shares reinvested | | 634,950 | 8,781,363 | 685,490 | 8,033,942 |
| Shares redeemed | + | (2,390,959) | (31,369,522) | (1,786,094) | (23,623,378) |
| Net transactions in fund shares | | 1,194,183 | $16,336,078 | 1,278,411 | $15,849,840 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 11,676,524 | $162,016,758 | 10,398,113 | $138,813,477 |
| Total increase | + | 1,194,183 | 15,974,954 | 1,278,411 | 23,203,281 |
| End of period | | 12,870,707 | $177,991,712 | 11,676,524 | $162,016,758 |
Schwab Target Funds | Annual Report
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $14.03 | $13.49 | $14.07 | $12.08 | $12.60 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.25 | 0.21 | 0.21 | 0.16 | 0.15 | |
| Net realized and unrealized gains (losses) | 0.45 | 1.11 | (0.41) | 2.47 | 0.01 | |
| Total from investment operations | 0.70 | 1.32 | (0.20) | 2.63 | 0.16 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.27) | (0.31) | (0.36) | (0.18) | (0.23) | |
| Distributions from net realized gains | (0.43) | (0.47) | (0.02) | (0.46) | (0.45) | |
| Total distributions | (0.70) | (0.78) | (0.38) | (0.64) | (0.68) | |
| Net asset value at end of period | $14.03 | $14.03 | $13.49 | $14.07 | $12.08 | |
| Total return | 4.96% | 10.87% | (1.50%) | 22.68% | 1.39% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses2 | 0.00% | 0.00% | 0.00% 3 | 0.00% | 0.01% 4 | |
| Gross operating expenses2 | 0.06% | 0.08% | 0.07% | 0.11% | 0.16% | |
| Net investment income (loss) | 1.83% | 1.54% | 1.45% | 1.27% | 1.31% | |
| Portfolio turnover rate | 5% | 7% | 10% | 10% | 1% | |
| Net assets, end of period (x 1,000,000) | $181 | $161 | $122 | $104 | $68 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Ratio excludes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds.
3
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
4
The ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
Schwab Target Funds | Annual Report
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Affiliated Underlying Funds 77.4% of net assets |
| |
| Equity Funds 73.8% |
| Global Real Estate 4.2% |
| Schwab Global Real Estate Fund | 1,233,291 | 7,584,737 |
| International 25.6% |
| Laudus International MarketMasters Fund | 1,198,221 | 29,200,634 |
| Schwab International Core Equity Fund | 1,887,526 | 17,195,358 |
| | | 46,395,992 |
| Large-Cap 37.3% |
| Laudus U.S. Large Cap Growth Fund | 450,807 | 12,216,880 |
| Schwab Core Equity Fund | 1,042,596 | 23,187,335 |
| Schwab Dividend Equity Fund | 410,868 | 4,987,939 |
| Schwab S&P 500 Index Fund | 536,909 | 27,248,154 |
| | | 67,640,308 |
| Mid-Cap 1.7% |
| Schwab U.S. Mid-Cap Index Fund | 67,502 | 3,036,218 |
| Small-Cap 5.0% |
| Schwab Small-Cap Equity Fund | 612,718 | 9,203,031 |
| | | 133,860,286 |
| |
| Fixed-Income Funds 3.6% |
| Intermediate-Term Bond 2.6% |
| Schwab U.S. Aggregate Bond Index Fund | 441,375 | 4,740,365 |
| Short-Term Bond 1.0% |
| Schwab Short-Term Bond Index Fund | 164,997 | 1,709,365 |
| | | 6,449,730 |
| |
| Money Market Fund 0.0% |
| Schwab Variable Share Price Money Fund, Ultra Shares 0.03% (a) | 28,039 | 28,050 |
| Total Affiliated Underlying Funds |
| (Cost $128,994,923) | | 140,338,066 |
|
| Unaffiliated Underlying Funds 21.8% of net assets |
| |
| Equity Funds 16.3% |
| International 5.2% |
| Goldman Sachs Emerging Markets Equity Insights Fund, Institutional Class | 929,729 | 9,520,430 |
| Security | Number
of Shares | Value ($) |
| Large-Cap 8.8% |
| ClearBridge Large Cap Growth Fund, Class IS | 78,515 | 4,967,612 |
| Dodge & Cox Stock Fund | 67,693 | 11,057,056 |
| | | 16,024,668 |
| Small-Cap 2.3% |
| ClearBridge Small Cap Growth Fund, Class IS * | 90,755 | 4,112,094 |
| | | 29,657,192 |
| |
| Fixed-Income Funds 5.5% |
| Intermediate-Term Bond 4.2% |
| Baird Aggregate Bond Fund, Institutional Class | 22,181 | 261,293 |
| Loomis Sayles Investment Grade Bond Fund, Class Y | 302,437 | 3,580,850 |
| Metropolitan West Total Return Bond Fund, Class I | 324,533 | 3,754,842 |
| | | 7,596,985 |
| International Bond 1.3% |
| PIMCO International Bond Fund (U.S. Dollar-Hedged), Institutional Class | 210,898 | 2,328,309 |
| | | 9,925,294 |
| Total Unaffiliated Underlying Funds |
| (Cost $37,797,182) | | 39,582,486 |
Issuer
Rate, Maturity Date | Face
Amount ($) | Value ($) |
| Short-Term Investment 0.9% of net assets |
| |
| Time Deposit 0.9% |
| Sumitomo Mitsui Trust Bank, Limited |
| 0.01%, 11/02/20 (b) | 1,735,340 | 1,735,340 |
| Total Short-Term Investment |
| (Cost $1,735,340) | | 1,735,340 |
| * | Non-income producing security. |
| (a) | The rate shown is the 7-day yield. |
| (b) | The rate shown is the current daily overnight rate. |
Schwab Target Funds | Annual Report
Portfolio Holdings as of October 31, 2020 (continued)
Below is a summary of the fund’s transactions with its affiliated underlying funds during the period ended October 31, 2020:
| Affiliated Underlying Funds |
Value at
10/31/19 | Gross
Purchases | Gross
Sales | Realized
Gains (Losses) | Net Change
in Unrealized
Appreciation
(depreciation) |
Value at
10/31/20 | Balance
of Shares
Held at
10/31/20 | Distributions
Received* |
| Laudus International MarketMasters Fund | $24,584,626 | $3,676,793 | ($909,000) | ($145,645) | $1,993,860 | $29,200,634 | 1,198,221 | $506,793 |
| Laudus U.S. Large Cap Growth Fund | 10,892,497 | 914,008 | (1,830,000) | 175,111 | 2,065,264 | 12,216,880 | 450,807 | 914,008 |
| Schwab Core Equity Fund | 21,314,438 | 1,668,961 | (160,000) | (21,610) | 385,546 | 23,187,335 | 1,042,596 | 638,961 |
| Schwab Dividend Equity Fund | 4,969,277 | 1,110,853 | — | — | (1,092,191) | 4,987,939 | 410,868 | 360,853 |
| Schwab Global Real Estate Fund | 7,550,419 | 2,126,019 | — | — | (2,091,701) | 7,584,737 | 1,233,291 | 436,017 |
| Schwab International Core Equity Fund | 16,318,911 | 2,866,817 | (390,000) | (145,488) | (1,454,882) | 17,195,358 | 1,887,526 | 597,816 |
| Schwab S&P 500 Index Fund | 24,190,315 | 2,620,033 | (1,340,000) | (115,604) | 1,893,410 | 27,248,154 | 536,909 | 506,002 |
| Schwab Short-Term Bond Index Fund | 1,678,637 | 441,719 | (452,046) | 8,932 | 32,123 | 1,709,365 | 164,997 | 29,675 |
| Schwab Small-Cap Equity Fund | 8,852,260 | 1,119,924 | — | — | (769,153) | 9,203,031 | 612,718 | 9,924 |
| Schwab U.S. Aggregate Bond Index Fund | 4,110,083 | 863,863 | (389,963) | 3,673 | 152,709 | 4,740,365 | 441,375 | 113,875 |
| Schwab U.S. Mid-Cap Index Fund | 2,677,178 | 317,675 | — | — | 41,365 | 3,036,218 | 67,502 | 67,676 |
| Schwab Variable Share Price Money Fund, Ultra Shares | 694,379 | 3,673 | (670,000) | 152 | (154) | 28,050 | 28,039 | 3,064 |
| Total | $127,833,020 | $17,730,338 | ($6,141,009) | ($240,479) | $1,156,196 | $140,338,066 | | $4,184,664 |
| * | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
| | |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 (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 | |
| Assets | | | | | |
| Affiliated Underlying Funds1 | $140,338,066 | $— | $— | $140,338,066 | |
| Unaffiliated Underlying Funds1 | 39,582,486 | — | — | 39,582,486 | |
| Short-Term Investment1 | — | 1,735,340 | — | 1,735,340 | |
| Total | $179,920,552 | $1,735,340 | $— | $181,655,892 | |
| 1 | As categorized in Portfolio Holdings. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Target Funds | Annual Report
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in affiliated underlying funds, at value (cost $128,994,923) | | $140,338,066 |
| Investments in unaffiliated funds and issuers, at value (cost $39,532,522) | | 41,317,826 |
| Receivables: | | |
| Fund shares sold | | 160,227 |
| Dividends | | 18,605 |
| Due from investment adviser | | 6,354 |
| Prepaid expenses | + | 5,897 |
| Total assets | | 181,846,975 |
| Liabilities |
| Payables: | | |
| Investments bought | | 375,580 |
| Fund shares redeemed | | 36,865 |
| Accrued expenses | + | 43,349 |
| Total liabilities | | 455,794 |
| Net Assets |
| Total assets | | 181,846,975 |
| Total liabilities | – | 455,794 |
| Net assets | | $181,391,181 |
| Net Assets by Source | | |
| Capital received from investors | | 165,649,580 |
| Total distributable earnings | | 15,741,601 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $181,391,181 | | 12,925,813 | | $14.03 |
| | | | | |
Schwab Target Funds | Annual Report
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends received from affiliated underlying funds | | $2,411,977 |
| Dividends received from unaffiliated underlying funds | | 669,288 |
| Interest | + | 3,835 |
| Total investment income | | 3,085,100 |
| Expenses |
| Registration fees | | 23,847 |
| Professional fees | | 22,045 |
| Shareholder reports | | 15,144 |
| Portfolio accounting fees | | 12,541 |
| Independent trustees’ fees | | 8,503 |
| Transfer agent fees | | 5,280 |
| Custodian fees | | 1,735 |
| Other expenses | + | 4,878 |
| Total expenses | | 93,973 |
| Expense reduction by CSIM and its affiliates | – | 93,973 |
| Net expenses | – | — |
| Net investment income | | 3,085,100 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 1,772,687 |
| Realized capital gain distributions received from unaffiliated underlying funds | | 1,094,367 |
| Net realized losses on sales of affiliated underlying funds | | (240,479) |
| Net realized losses on sales of unaffiliated underlying funds | + | (126,698) |
| Net realized gains | | 2,499,877 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | | 1,156,196 |
| Net change in unrealized appreciation (depreciation) on unaffiliated underlying funds | + | 1,083,415 |
| Net change in unrealized appreciation (depreciation) | + | 2,239,611 |
| Net realized and unrealized gains | | 4,739,488 |
| Increase in net assets resulting from operations | | $7,824,588 |
Schwab Target Funds | Annual Report
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $3,085,100 | $2,199,900 |
| Net realized gains | | 2,499,877 | 5,687,326 |
| Net change in unrealized appreciation (depreciation) | + | 2,239,611 | 6,762,154 |
| Increase in net assets from operations | | 7,824,588 | 14,649,380 |
| Distributions to Shareholders | |
| Total distributions | | ($8,146,453) | ($7,175,224) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 3,278,640 | $44,358,522 | 3,665,701 | $48,849,543 |
| Shares reinvested | | 564,445 | 7,947,390 | 591,705 | 6,993,949 |
| Shares redeemed | + | (2,395,025) | (31,595,800) | (1,854,387) | (24,773,359) |
| Net transactions in fund shares | | 1,448,060 | $20,710,112 | 2,403,019 | $31,070,133 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 11,477,753 | $161,002,934 | 9,074,734 | $122,458,645 |
| Total increase | + | 1,448,060 | 20,388,247 | 2,403,019 | 38,544,289 |
| End of period | | 12,925,813 | $181,391,181 | 11,477,753 | $161,002,934 |
Schwab Target Funds | Annual Report
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 11/1/15–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $14.15 | $13.60 | $14.18 | $12.09 | $12.63 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)1 | 0.24 | 0.21 | 0.20 | 0.16 | 0.15 | |
| Net realized and unrealized gains (losses) | 0.45 | 1.10 | (0.39) | 2.55 | 0.00 2 | |
| Total from investment operations | 0.69 | 1.31 | (0.19) | 2.71 | 0.15 | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.27) | (0.31) | (0.37) | (0.17) | (0.23) | |
| Distributions from net realized gains | (0.46) | (0.45) | (0.02) | (0.45) | (0.46) | |
| Total distributions | (0.73) | (0.76) | (0.39) | (0.62) | (0.69) | |
| Net asset value at end of period | $14.11 | $14.15 | $13.60 | $14.18 | $12.09 | |
| Total return | 4.86% | 10.73% | (1.49%) | 23.35% | 1.28% | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses3 | 0.00% | 0.00% | 0.00% 4 | 0.00% | 0.01% 5 | |
| Gross operating expenses3 | 0.09% | 0.13% | 0.11% | 0.19% | 0.27% | |
| Net investment income (loss) | 1.78% | 1.53% | 1.41% | 1.24% | 1.26% | |
| Portfolio turnover rate | 6% | 6% | 10% | 9% | 1% | |
| Net assets, end of period (x 1,000,000) | $107 | $94 | $73 | $60 | $38 | |
| |
1
Calculated based on the average shares outstanding during the period.
2
Per-share amount was less than $0.005.
3
Ratio excludes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds.
4
Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
5
The ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
Schwab Target Funds | Annual Report
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Affiliated Underlying Funds 78.3% of net assets |
| |
| Equity Funds 75.8% |
| Global Real Estate 4.4% |
| Schwab Global Real Estate Fund | 762,121 | 4,687,042 |
| International 26.1% |
| Laudus International MarketMasters Fund | 719,406 | 17,531,912 |
| Schwab International Core Equity Fund | 1,155,137 | 10,523,299 |
| | | 28,055,211 |
| Large-Cap 38.4% |
| Laudus U.S. Large Cap Growth Fund | 299,881 | 8,126,767 |
| Schwab Core Equity Fund | 622,100 | 13,835,514 |
| Schwab Dividend Equity Fund | 257,498 | 3,126,027 |
| Schwab S&P 500 Index Fund | 318,545 | 16,166,175 |
| | | 41,254,483 |
| Mid-Cap 1.7% |
| Schwab U.S. Mid-Cap Index Fund | 41,976 | 1,888,066 |
| Small-Cap 5.2% |
| Schwab Small-Cap Equity Fund | 371,214 | 5,575,641 |
| | | 81,460,443 |
| |
| Fixed-Income Funds 2.5% |
| Intermediate-Term Bond 1.8% |
| Schwab U.S. Aggregate Bond Index Fund | 177,776 | 1,909,309 |
| Short-Term Bond 0.7% |
| Schwab Short-Term Bond Index Fund | 70,423 | 729,579 |
| | | 2,638,888 |
| Total Affiliated Underlying Funds |
| (Cost $77,083,048) | | 84,099,331 |
|
| Unaffiliated Underlying Funds 21.0% of net assets |
| |
| Equity Funds 16.9% |
| International 5.9% |
| Goldman Sachs Emerging Markets Equity Insights Fund, Institutional Class | 619,475 | 6,343,425 |
| Security | Number
of Shares | Value ($) |
| Large-Cap 8.6% |
| ClearBridge Large Cap Growth Fund, Class IS | 44,017 | 2,784,931 |
| Dodge & Cox Stock Fund | 39,493 | 6,450,791 |
| | | 9,235,722 |
| Small-Cap 2.4% |
| ClearBridge Small Cap Growth Fund, Class IS * | 56,766 | 2,572,049 |
| | | 18,151,196 |
| |
| Fixed-Income Funds 4.1% |
| Intermediate-Term Bond 3.3% |
| Baird Aggregate Bond Fund, Institutional Class | 21,601 | 254,454 |
| Loomis Sayles Investment Grade Bond Fund, Class Y | 142,041 | 1,681,768 |
| Metropolitan West Total Return Bond Fund, Class I | 139,457 | 1,613,519 |
| | | 3,549,741 |
| International Bond 0.8% |
| PIMCO International Bond Fund (U.S. Dollar-Hedged), Institutional Class | 78,959 | 871,705 |
| | | 4,421,446 |
| Total Unaffiliated Underlying Funds |
| (Cost $21,464,761) | | 22,572,642 |
Issuer
Rate, Maturity Date | Face
Amount ($) | Value ($) |
| Short-Term Investment 0.6% of net assets |
| |
| Time Deposit 0.6% |
| Sumitomo Mitsui Banking Corp. |
| 0.01%, 11/02/20 (a) | 574,395 | 574,395 |
| Total Short-Term Investment |
| (Cost $574,395) | | 574,395 |
| * | Non-income producing security. |
| (a) | The rate shown is the current daily overnight rate. |
Schwab Target Funds | Annual Report
Portfolio Holdings as of October 31, 2020 (continued)
Below is a summary of the fund’s transactions with its affiliated underlying funds during the period ended October 31, 2020:
| Affiliated Underlying Funds |
Value at
10/31/19 | Gross
Purchases | Gross
Sales | Realized
Gains (Losses) | Net Change
in Unrealized
Appreciation
(depreciation) |
Value at
10/31/20 | Balance
of Shares
Held at
10/31/20 | Distributions
Received* |
| Laudus International MarketMasters Fund | $14,779,238 | $2,485,750 | ($979,000) | ($114,694) | $1,360,618 | $17,531,912 | 719,406 | $300,750 |
| Laudus U.S. Large Cap Growth Fund | 6,907,119 | 850,446 | (1,015,000) | (6,751) | 1,390,953 | 8,126,767 | 299,881 | 600,445 |
| Schwab Core Equity Fund | 12,628,257 | 995,845 | — | — | 211,412 | 13,835,514 | 622,100 | 375,845 |
| Schwab Dividend Equity Fund | 3,133,035 | 658,363 | — | — | (665,371) | 3,126,027 | 257,498 | 228,363 |
| Schwab Global Real Estate Fund | 4,497,300 | 1,490,772 | — | — | (1,301,030) | 4,687,042 | 762,121 | 266,772 |
| Schwab International Core Equity Fund | 9,755,219 | 2,355,508 | (638,000) | (171,932) | (777,496) | 10,523,299 | 1,155,137 | 361,508 |
| Schwab S&P 500 Index Fund | 13,941,998 | 1,538,531 | (450,000) | (43,477) | 1,179,123 | 16,166,175 | 318,545 | 293,530 |
| Schwab Short-Term Bond Index Fund | 778,773 | 94,007 | (160,873) | 3,232 | 14,440 | 729,579 | 70,423 | 13,135 |
| Schwab Small-Cap Equity Fund | 5,251,592 | 1,164,175 | (377,000) | (264,068) | (199,058) | 5,575,641 | 371,214 | 6,175 |
| Schwab U.S. Aggregate Bond Index Fund | 1,593,363 | 1,202,564 | (960,221) | 13,692 | 59,911 | 1,909,309 | 177,776 | 48,339 |
| Schwab U.S. Mid-Cap Index Fund | 1,579,537 | 239,928 | — | — | 68,601 | 1,888,066 | 41,976 | 39,929 |
| Total | $74,845,431 | $13,075,889 | ($4,580,094) | ($583,998) | $1,342,103 | $84,099,331 | | $2,534,791 |
| * | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
| | |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 (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 | |
| Assets | | | | | |
| Affiliated Underlying Funds1 | $84,099,331 | $— | $— | $84,099,331 | |
| Unaffiliated Underlying Funds1 | 22,572,642 | — | — | 22,572,642 | |
| Short-Term Investment1 | — | 574,395 | — | 574,395 | |
| Total | $106,671,973 | $574,395 | $— | $107,246,368 | |
| 1 | As categorized in Portfolio Holdings. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Target Funds | Annual Report
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in affiliated underlying funds, at value (cost $77,083,048) | | $84,099,331 |
| Investments in unaffiliated funds and issuers, at value (cost $22,039,156) | | 23,147,037 |
| Receivables: | | |
| Investments sold | | 99,000 |
| Fund shares sold | | 130,364 |
| Dividends | | 7,839 |
| Due from investment adviser | | 6,824 |
| Prepaid expenses | + | 4,620 |
| Total assets | | 107,495,015 |
| Liabilities |
| Payables: | | |
| Investments bought | | 7,810 |
| Fund shares redeemed | | 45,098 |
| Accrued expenses | + | 40,834 |
| Total liabilities | | 93,742 |
| Net Assets |
| Total assets | | 107,495,015 |
| Total liabilities | – | 93,742 |
| Net assets | | $107,401,273 |
| Net Assets by Source | | |
| Capital received from investors | | 98,121,276 |
| Total distributable earnings | | 9,279,997 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $107,401,273 | | 7,609,639 | | $14.11 |
| | | | | |
Schwab Target Funds | Annual Report
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends received from affiliated underlying funds | | $1,417,885 |
| Dividends received from unaffiliated underlying funds | | 364,748 |
| Interest | + | 2,562 |
| Total investment income | | 1,785,195 |
| Expenses |
| Professional fees | | 21,831 |
| Registration fees | | 21,559 |
| Shareholder reports | | 15,552 |
| Portfolio accounting fees | | 11,895 |
| Independent trustees’ fees | | 8,201 |
| Transfer agent fees | | 4,104 |
| Custodian fees | | 1,936 |
| Other expenses | + | 4,229 |
| Total expenses | | 89,307 |
| Expense reduction by CSIM and its affiliates | – | 89,307 |
| Net expenses | – | — |
| Net investment income | | 1,785,195 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 1,116,906 |
| Realized capital gain distributions received from unaffiliated underlying funds | | 635,730 |
| Net realized losses on sales of affiliated underlying funds | | (583,998) |
| Net realized losses on sales of unaffiliated underlying funds | + | (139,775) |
| Net realized gains | | 1,028,863 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | | 1,342,103 |
| Net change in unrealized appreciation (depreciation) on unaffiliated underlying funds | + | 809,345 |
| Net change in unrealized appreciation (depreciation) | + | 2,151,448 |
| Net realized and unrealized gains | | 3,180,311 |
| Increase in net assets resulting from operations | | $4,965,506 |
Schwab Target Funds | Annual Report
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $1,785,195 | $1,267,248 |
| Net realized gains | | 1,028,863 | 3,688,542 |
| Net change in unrealized appreciation (depreciation) | + | 2,151,448 | 3,614,466 |
| Increase in net assets from operations | | 4,965,506 | 8,570,256 |
| Distributions to Shareholders | |
| Total distributions | | ($4,969,426) | ($4,215,901) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 2,219,735 | $29,888,670 | 1,825,581 | $24,571,388 |
| Shares reinvested | | 340,618 | 4,836,775 | 343,303 | 4,088,743 |
| Shares redeemed | + | (1,576,305) | (21,062,762) | (930,807) | (12,531,078) |
| Net transactions in fund shares | | 984,048 | $13,662,683 | 1,238,077 | $16,129,053 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 6,625,591 | $93,742,510 | 5,387,514 | $73,259,102 |
| Total increase | + | 984,048 | 13,658,763 | 1,238,077 | 20,483,408 |
| End of period | | 7,609,639 | $107,401,273 | 6,625,591 | $93,742,510 |
Schwab Target Funds | Annual Report
Financial Statements
Financial Highlights
| | 11/1/19–
10/31/20 | 11/1/18–
10/31/19 | 11/1/17–
10/31/18 | 11/1/16–
10/31/17 | 8/25/16 1–
10/31/16 | |
| Per-Share Data |
| Net asset value at beginning of period | $12.16 | $11.53 | $12.02 | $9.83 | $10.00 | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income (loss)2 | 0.20 | 0.16 | 0.14 | 0.08 | 0.01 | |
| Net realized and unrealized gains (losses) | 0.38 | 0.99 | (0.32) | 2.22 | (0.18) | |
| Total from investment operations | 0.58 | 1.15 | (0.18) | 2.30 | (0.17) | |
| Less distributions: | | | | | | |
| Distributions from net investment income | (0.22) | (0.26) | (0.29) | (0.11) | — | |
| Distributions from net realized gains | (0.31) | (0.26) | (0.02) | — | — | |
| Total distributions | (0.53) | (0.52) | (0.31) | (0.11) | — | |
| Net asset value at end of period | $12.21 | $12.16 | $11.53 | $12.02 | $9.83 | |
| Total return | 4.73% | 10.85% | (1.64%) | 23.63% | (1.70%) 3 | |
| Ratios/Supplemental Data |
| Ratios to average net assets: | | | | | | |
| Net operating expenses4 | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% 5 | |
| Gross operating expenses4 | 0.41% | 0.67% | 0.73% | 1.89% | 7.87% 5 | |
| Net investment income (loss) | 1.67% | 1.42% | 1.18% | 0.75% | 0.43% 5 | |
| Portfolio turnover rate | 8% | 13% | 22% | 7% | 0% 3 | |
| Net assets, end of period (x 1,000,000) | $22 | $16 | $10 | $6 | $1 | |
| |
1
Commencement of operations.
2
Calculated based on the average shares outstanding during the period.
3
Not annualized.
4
Ratio excludes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds.
5
Annualized (except for non-recurring professional fees and shareholder report fees).
Schwab Target Funds | Annual Report
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Affiliated Underlying Funds 79.2% of net assets |
| |
| Equity Funds 77.8% |
| Global Real Estate 4.4% |
| Schwab Global Real Estate Fund | 153,503 | 944,042 |
| International 26.4% |
| Laudus International MarketMasters Fund | 146,188 | 3,562,611 |
| Schwab International Core Equity Fund | 233,521 | 2,127,378 |
| | | 5,689,989 |
| Large-Cap 39.6% |
| Laudus U.S. Large Cap Growth Fund | 65,057 | 1,763,036 |
| Schwab Core Equity Fund | 126,754 | 2,819,014 |
| Schwab Dividend Equity Fund | 55,784 | 677,221 |
| Schwab S&P 500 Index Fund | 64,104 | 3,253,286 |
| | | 8,512,557 |
| Mid-Cap 1.8% |
| Schwab U.S. Mid-Cap Index Fund | 8,403 | 377,955 |
| Small-Cap 5.6% |
| Schwab Small-Cap Equity Fund | 79,988 | 1,201,420 |
| | | 16,725,963 |
| |
| Fixed-Income Funds 1.4% |
| Intermediate-Term Bond 1.1% |
| Schwab U.S. Aggregate Bond Index Fund | 21,634 | 232,349 |
| Short-Term Bond 0.3% |
| Schwab Short-Term Bond Index Fund | 7,552 | 78,241 |
| | | 310,590 |
| Total Affiliated Underlying Funds |
| (Cost $16,261,158) | | 17,036,553 |
|
| Unaffiliated Underlying Funds 20.3% of net assets |
| |
| Equity Funds 17.5% |
| International 6.3% |
| Goldman Sachs Emerging Markets Equity Insights Fund, Institutional Class | 132,234 | 1,354,079 |
| Security | Number
of Shares | Value ($) |
| Large-Cap 8.7% |
| ClearBridge Large Cap Growth Fund, Class IS | 7,332 | 463,921 |
| Dodge & Cox Stock Fund | 8,584 | 1,402,082 |
| | | 1,866,003 |
| Small-Cap 2.5% |
| ClearBridge Small Cap Growth Fund, Class IS * | 12,135 | 549,826 |
| | | 3,769,908 |
| |
| Fixed-Income Funds 2.8% |
| Intermediate-Term Bond 2.2% |
| Baird Aggregate Bond Fund, Institutional Class | 3,040 | 35,809 |
| Loomis Sayles Investment Grade Bond Fund, Class Y | 17,854 | 211,390 |
| Metropolitan West Total Return Bond Fund, Class I | 19,747 | 228,476 |
| | | 475,675 |
| International Bond 0.6% |
| PIMCO International Bond Fund (U.S. Dollar-Hedged), Institutional Class | 11,089 | 122,426 |
| | | 598,101 |
| Total Unaffiliated Underlying Funds |
| (Cost $4,177,166) | | 4,368,009 |
Issuer
Rate, Maturity Date | Face
Amount ($) | Value ($) |
| Short-Term Investment 0.8% of net assets |
| |
| Time Deposit 0.8% |
| Australia & New Zealand Banking Group Ltd. |
| 0.01%, 11/02/20 (a) | 162,141 | 162,141 |
| Total Short-Term Investment |
| (Cost $162,141) | | 162,141 |
| * | Non-income producing security. |
| (a) | The rate shown is the current daily overnight rate. |
Schwab Target Funds | Annual Report
Portfolio Holdings as of October 31, 2020 (continued)
Below is a summary of the fund’s transactions with its affiliated underlying funds during the period ended October 31, 2020:
| Affiliated Underlying Funds |
Value at
10/31/19 | Gross
Purchases | Gross
Sales | Realized
Gains (Losses) | Net Change
in Unrealized
Appreciation
(depreciation) |
Value at
10/31/20 | Balance
of Shares
Held at
10/31/20 | Distributions
Received* |
| Laudus International MarketMasters Fund | $2,530,622 | $990,507 | ($214,000) | ($46,512) | $301,994 | $3,562,611 | 146,188 | $52,507 |
| Laudus U.S. Large Cap Growth Fund | 1,244,898 | 369,395 | (134,000) | 205 | 282,538 | 1,763,036 | 65,057 | 107,395 |
| Schwab Core Equity Fund | 2,162,028 | 786,687 | (166,000) | (21,046) | 57,345 | 2,819,014 | 126,754 | 65,687 |
| Schwab Dividend Equity Fund | 542,402 | 308,932 | (40,000) | (12,523) | (121,590) | 677,221 | 55,784 | 43,932 |
| Schwab Global Real Estate Fund | 769,641 | 411,152 | — | — | (236,751) | 944,042 | 153,503 | 47,151 |
| Schwab International Core Equity Fund | 1,682,737 | 688,790 | (60,000) | (11,624) | (172,525) | 2,127,378 | 233,521 | 61,790 |
| Schwab S&P 500 Index Fund | 2,369,029 | 1,053,859 | (350,000) | (33,028) | 213,426 | 3,253,286 | 64,104 | 49,859 |
| Schwab Short-Term Bond Index Fund | 75,020 | 1,447 | (94) | — | 1,868 | 78,241 | 7,552 | 1,353 |
| Schwab Small-Cap Equity Fund | 925,151 | 458,062 | (90,000) | (66,181) | (25,612) | 1,201,420 | 79,988 | 1,062 |
| Schwab U.S. Aggregate Bond Index Fund | 200,897 | 152,067 | (128,488) | 1,706 | 6,167 | 232,349 | 21,634 | 5,578 |
| Schwab U.S. Mid-Cap Index Fund | 274,719 | 90,944 | — | — | 12,292 | 377,955 | 8,403 | 6,945 |
| Total | $12,777,144 | $5,311,842 | ($1,182,582) | ($189,003) | $319,152 | $17,036,553 | | $443,259 |
| * | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
| | |
The following is a summary of the inputs used to value the fund’s investments as of October 31, 2020 (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 | |
| Assets | | | | | |
| Affiliated Underlying Funds1 | $17,036,553 | $— | $— | $17,036,553 | |
| Unaffiliated Underlying Funds1 | 4,368,009 | — | — | 4,368,009 | |
| Short-Term Investment1 | — | 162,141 | — | 162,141 | |
| Total | $21,404,562 | $162,141 | $— | $21,566,703 | |
| 1 | As categorized in Portfolio Holdings. |
Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.
Schwab Target Funds | Annual Report
Statement of Assets and Liabilities
As of October 31, 2020
| Assets |
| Investments in affiliated underlying funds, at value (cost $16,261,158) | | $17,036,553 |
| Investments in unaffiliated funds and issuers, at value (cost $4,339,307) | | 4,530,150 |
| Receivables: | | |
| Fund shares sold | | 42,014 |
| Due from investment adviser | | 5,539 |
| Dividends | | 972 |
| Prepaid expenses | + | 12,043 |
| Total assets | | 21,627,271 |
| Liabilities |
| Payables: | | |
| Investments bought | | 19,968 |
| Fund shares redeemed | | 63,753 |
| Accrued expenses | + | 34,639 |
| Total liabilities | | 118,360 |
| Net Assets |
| Total assets | | 21,627,271 |
| Total liabilities | – | 118,360 |
| Net assets | | $21,508,911 |
| Net Assets by Source | | |
| Capital received from investors | | 20,531,997 |
| Total distributable earnings | | 976,914 |
| Net Asset Value (NAV) |
| Net Assets | ÷ | Shares
Outstanding | = | NAV |
| $21,508,911 | | 1,761,437 | | $12.21 |
| | | | | |
Schwab Target Funds | Annual Report
Statement of Operations
For the period November 1, 2019 through October 31, 2020
| Investment Income |
| Dividends received from affiliated underlying funds | | $243,533 |
| Dividends received from unaffiliated underlying funds | | 59,726 |
| Interest | + | 206 |
| Total investment income | | 303,465 |
| Expenses |
| Professional fees | | 21,538 |
| Registration fees | | 20,949 |
| Portfolio accounting fees | | 11,117 |
| Independent trustees’ fees | | 7,836 |
| Shareholder reports | | 6,479 |
| Custodian fees | | 1,970 |
| Transfer agent fees | | 1,309 |
| Other expenses | + | 3,491 |
| Total expenses | | 74,689 |
| Expense reduction by CSIM and its affiliates | – | 74,689 |
| Net expenses | – | — |
| Net investment income | | 303,465 |
| Realized and Unrealized Gains (Losses) |
| Realized capital gain distributions received from affiliated underlying funds | | 199,726 |
| Realized capital gain distributions received from unaffiliated underlying funds | | 106,232 |
| Net realized losses on sales of affiliated underlying funds | | (189,003) |
| Net realized losses on sales of unaffiliated underlying funds | + | (32,559) |
| Net realized gains | | 84,396 |
| Net change in unrealized appreciation (depreciation) on affiliated underlying funds | | 319,152 |
| Net change in unrealized appreciation (depreciation) on unaffiliated underlying funds | + | 152,336 |
| Net change in unrealized appreciation (depreciation) | + | 471,488 |
| Net realized and unrealized gains | | 555,884 |
| Increase in net assets resulting from operations | | $859,349 |
Schwab Target Funds | Annual Report
Statement of Changes in Net Assets
For the current and prior report periods
| Operations | |
| | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| Net investment income | | $303,465 | $188,772 |
| Net realized gains | | 84,396 | 412,453 |
| Net change in unrealized appreciation (depreciation) | + | 471,488 | 760,621 |
| Increase in net assets from operations | | 859,349 | 1,361,846 |
| Distributions to Shareholders | |
| Total distributions | | ($715,136) | ($501,444) |
| Transactions in Fund Shares | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | VALUE | SHARES | VALUE |
| Shares sold | | 930,416 | $10,935,135 | 663,372 | $7,706,262 |
| Shares reinvested | | 55,993 | 689,274 | 46,852 | 478,361 |
| Shares redeemed | + | (521,878) | (6,024,879) | (321,911) | (3,759,126) |
| Net transactions in fund shares | | 464,531 | $5,599,530 | 388,313 | $4,425,497 |
| Shares Outstanding and Net Assets | | | |
| | | 11/1/19-10/31/20 | 11/1/18-10/31/19 |
| | | SHARES | NET ASSETS | SHARES | NET ASSETS |
| Beginning of period | | 1,296,906 | $15,765,168 | 908,593 | $10,479,269 |
| Total increase | + | 464,531 | 5,743,743 | 388,313 | 5,285,899 |
| End of period | | 1,761,437 | $21,508,911 | 1,296,906 | $15,765,168 |
Schwab Target Funds | Annual Report
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 Large-Cap Growth Fund |
| Schwab Target 2015 Fund | Schwab Small-Cap Equity Fund |
| Schwab Target 2020 Fund | Schwab Hedged Equity Fund |
| Schwab Target 2025 Fund | Schwab Health Care Fund |
| Schwab Target 2030 Fund | Schwab International Core Equity Fund |
| Schwab Target 2035 Fund | Schwab Fundamental US Large Company Index Fund |
| Schwab Target 2040 Fund | Schwab Fundamental US Small Company Index Fund |
| Schwab Target 2045 Fund | Schwab Fundamental International Large Company Index Fund |
| Schwab Target 2050 Fund | Schwab Fundamental International Small Company Index Fund |
| Schwab Target 2055 Fund | Schwab Fundamental Emerging Markets Large Company Index Fund |
| Schwab Target 2060 Fund | Schwab Fundamental Global Real Estate Index Fund |
| Schwab S&P 500 Index Fund | Schwab Target 2010 Index Fund |
| Schwab Small-Cap Index Fund® | Schwab Target 2015 Index Fund |
| Schwab Total Stock Market Index Fund® | Schwab Target 2020 Index Fund |
| Schwab U.S. Large-Cap Growth Index Fund | Schwab Target 2025 Index Fund |
| Schwab U.S. Large-Cap Value Index Fund | Schwab Target 2030 Index Fund |
| Schwab U.S. Mid-Cap Index Fund | Schwab Target 2035 Index Fund |
| Schwab International Index Fund® | Schwab Target 2040 Index Fund |
| Schwab MarketTrack All Equity Portfolio™ | Schwab Target 2045 Index Fund |
| Schwab MarketTrack Growth Portfolio™ | Schwab Target 2050 Index Fund |
| Schwab MarketTrack Balanced Portfolio™ | Schwab Target 2055 Index Fund |
| Schwab MarketTrack Conservative Portfolio™ | Schwab Target 2060 Index 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 | |
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 affiliated 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 and cash equivalents, including money market securities.
Each fund in this report offers one share class. Shares are bought and sold 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 with the U.S. Securities and Exchange Commission (SEC) and are available on the SEC’s website at www.sec.gov.
Schwab Target Funds | Annual Report
Financial Notes (continued)
2. Significant Accounting Policies (continued):
(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 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:
• 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.
• Cash management sweep time deposits: Balances held in cash management sweep time deposits are accounted for on a cost basis, which approximates fair 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
Schwab Target Funds | Annual Report
Financial Notes (continued)
2. Significant Accounting Policies (continued):
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, 2020 are disclosed in the Portfolio Holdings.
(b) Accounting Policies for certain Portfolio Investments (if held):
Cash Management Transactions: The funds may subscribe to the Brown Brothers Harriman & Co. (BBH) Cash Management Service Sweep (CMS Sweep). The BBH CMS Sweep is an investment product that automatically sweeps the funds’ cash balances into overnight offshore time deposits with either the BBH Grand Cayman branch or a branch of a pre-approved commercial bank. This fully automated program allows the funds to earn interest on cash balances. Excess cash invested with deposit institutions domiciled outside of the U.S., as with any offshore deposit, may be subject to sovereign actions in the jurisdiction of the deposit institution including, but not limited to, freeze, seizure or diminution. The funds bear the risk associated with the repayment of principal and payment of interest on such instruments by the institution with which the deposit is ultimately placed.
(c) Security Transactions:
Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.
(d) Investment Income:
Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying funds are recorded on the date they are effective (the ex-dividend date). Any distributions from underlying funds are recorded in accordance with the character of the distributions as designated by the underlying funds.
(e) Expenses:
Expenses that are specific to a fund are charged directly to the fund. Expenses that are common to more than one fund in the trusts generally are allocated among those funds in proportion to their average daily net assets. Each fund bears its share of the acquired fund fees and expenses of the underlying funds, which are indirect expenses incurred by the fund through its investments in the underlying funds. Such expenses are reflected in the net asset values of the underlying funds.
(f) Distributions to Shareholders:
The funds make distributions from net investment income and net realized capital gains, if any, once a year.
(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 funds intend to meet federal income and excise tax requirements for regulated investment companies under subchapter M of the Internal Revenue Code, as amended. Accordingly, the funds distribute substantially all of their net investment income and net realized capital gains, if any, to their shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.
Schwab Target Funds | Annual Report
Financial Notes (continued)
2. Significant Accounting Policies (continued):
(i) 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 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 may cause the fund to underperform other funds with a similar investment objective.
Conflicts of Interest Risk. The investment adviser’s authority to select and substitute underlying funds from a variety of affiliated and unaffiliated mutual funds and ETFs may create a conflict of interest because the fees paid to it and its affiliates by some underlying funds are higher than the fees paid by other underlying funds. The investment adviser also may have an incentive to select an affiliated underlying fund for other reasons, including to increase assets under management or to support new investment strategies. In addition, other conflicts of interest may exist where the best interests of the affiliated underlying fund may not be aligned with those of a fund. However, the investment adviser is a fiduciary to the fund and is legally obligated to act in the fund’s best interests when selecting underlying funds.
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. Markets may be impacted by economic, political, regulatory and other conditions, including economic sanctions and other government actions. In addition, the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters and epidemics may also negatively affect the financial markets. As with any investment whose performance is tied to these markets, the value of an investment in a fund will fluctuate, which means that an investor could lose money over short or long periods.
Direct Investment Risk. The funds may invest directly in cash, cash equivalents and equity and fixed-income securities, including money market securities, to maintain their allocations. A fund’s direct investment in these securities is subject to the same or similar risks as an underlying fund’s investment in the same securities.
Underlying Fund Investment Risk. Before investing in the funds, investors should assess the risks associated with the underlying funds in which the funds may invest, which include any combination of the risks described below.
• Investment Risk. 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 sub-adviser(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. A change in a central bank’s monetary policy or economic conditions, among other things, may result in a change 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.
• 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.
Schwab Target Funds | Annual Report
Financial Notes (continued)
3. Risk Factors (continued):
• Market Capitalization Risk. Securities issued by companies of different market capitalizations tend to go in and out of favor based on market and economic conditions. During a period when securities of a particular market capitalization fall behind other types of investments, an underlying fund’s performance could be impacted.
• Money Market Fund Risk. The funds may invest in underlying money market funds that either seek to maintain a stable $1 net asset value (“stable share price money market funds”) or that have a share price that fluctuates (“variable share price money market funds”). Although an underlying stable share price money market fund seeks to maintain a stable $1 net asset value, it is possible to lose money by investing in such a money market fund. Because the share price of an underlying variable share price money market fund will fluctuate, when the fund sells the shares it owns they may be worth more or less than what the fund originally paid for them. In addition, neither type of money market fund is designed to offer capital appreciation. Certain underlying money market funds may impose a fee upon the sale of shares or may temporarily suspend the ability to sell shares if such fund’s liquidity falls below required minimums.
• 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 involve certain risks that may be 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 an 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. There is a risk that investments in securities denominated in, and/or receiving revenues in, foreign currencies will decline in value relative to the U.S. dollar.
• 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 developed countries. As a result, there may be an increased risk of illiquidity and price volatility associated with an underlying 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.
• Derivatives Risk. An underlying fund may use derivatives to enhance returns or hedge against market declines. Examples of derivatives are options, futures, options on futures and swaps. An option is the right to buy or sell an instrument at a specific price before a specific date. A future is an agreement to buy or sell a financial instrument at a specific price on a specific day. A swap is an agreement whereby two parties agree to exchange payment streams calculated in relation to a rate, index, instrument or certain securities and a predetermined amount. A credit default swap is an agreement in which the seller agrees to make a payment to the buyer in the event of a specified credit event in exchange for a fixed payment or series of fixed payments.
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. Certain of these risks, such as leverage risk, liquidity risk, market risk and management risk, are discussed elsewhere in this section. An underlying fund’s use of derivatives is also subject to 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. 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 an underlying fund to realize higher amounts of short-term capital gains. An underlying fund’s use of derivatives could reduce the underlying fund’s performance, increase its volatility, and could cause the fund to lose more than the initial amount invested. The use of derivatives that are subject to regulation by the Commodity Futures Trading Commission (CFTC) by an underlying fund could cause a fund to become a commodity pool, which would require the fund to comply with certain CFTC rules.
Schwab Target Funds | Annual Report
Financial Notes (continued)
3. Risk Factors (continued):
• Leverage Risk. Certain underlying fund transactions, such as derivatives transactions, 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. An underlying fund may be unable to sell certain securities, such as illiquid securities, readily at a favorable time or price, or the underlying fund may have to sell them at a loss.
• 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 gains distributions.
• 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, or delay in recovery of, the loaned securities 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:
Investment Adviser
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 investment adviser does not receive a fee for the services it performs for the funds. However, the investment adviser is entitled to receive an annual management fee from each of the affiliated Schwab Funds and/or Laudus Funds that serve as underlying funds.
Shareholder Servicing
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 financial intermediaries, including Charles Schwab & Co., Inc., a broker-dealer affiliate of CSIM (together, service providers), 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.
Expense Limitation
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 expenses charged, excluding interest, taxes and certain non-routine expenses to 0.00%.
The agreement to limit the funds’ total expenses charged is limited to each fund’s direct operating expenses and, therefore, does not apply to acquired fund fees and expenses, which are indirect expenses incurred by a fund through its investments in the underlying funds.
Schwab Target Funds | Annual Report
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Investments in Affiliates
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, 2020, 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
Target
2060
Fund |
| Laudus International MarketMasters Fund | 0.3% | 0.4% | 3.2% | 4.6% | 9.1% | 5.1% | 11.3% | 2.2% | 2.4% | 1.4% | 0.3% |
| Laudus U.S. Large Cap Growth Fund | —% | —% | —% | 0.3% | 0.8% | 0.6% | 1.7% | 0.4% | 0.4% | 0.3% | 0.1% |
| Schwab Core Equity Fund | 0.1% | 0.2% | 1.4% | 2.4% | 4.7% | 2.6% | 5.8% | 1.1% | 1.2% | 0.7% | 0.1% |
| Schwab Dividend Equity Fund | 0.0%* | 0.0%* | 0.1% | 0.2% | 1.3% | 1.2% | 3.4% | 0.7% | 0.9% | 0.5% | 0.1% |
| Schwab Global Real Estate Fund | 0.3% | 0.5% | 3.9% | 5.8% | 11.8% | 6.5% | 15.0% | 2.9% | 3.1% | 1.9% | 0.4% |
| Schwab International Core Equity Fund | 0.3% | 0.4% | 3.1% | 4.9% | 10.0% | 5.5% | 12.6% | 2.5% | 2.6% | 1.6% | 0.3% |
| Schwab S&P 500 Index Fund | 0.0%* | 0.0%* | 0.1% | 0.2% | 0.3% | 0.2% | 0.3% | 0.1% | 0.1% | 0.0%* | 0.0%* |
| Schwab Short-Term Bond Index Fund | 0.3% | 0.4% | 2.5% | 1.9% | 2.3% | 0.8% | 1.1% | 0.1% | 0.1% | 0.0%* | 0.0%* |
| Schwab Small-Cap Equity Fund | 0.1% | 0.2% | 1.4% | 2.5% | 5.9% | 3.6% | 8.7% | 1.7% | 1.9% | 1.1% | 0.2% |
| Schwab Treasury Inflation Protected Securities Index Fund | 0.2% | 0.3% | 2.0% | 0.8% | 0.3% | —% | —% | —% | —% | —% | —% |
| Schwab U.S. Aggregate Bond Index Fund | 0.3% | 0.4% | 2.6% | 1.9% | 2.3% | 0.8% | 1.2% | 0.1% | 0.1% | 0.0%* | 0.0%* |
| Schwab U.S. Mid-Cap Index Fund | 0.1% | 0.1% | 0.9% | 1.4% | 2.4% | 1.5% | 3.2% | 0.6% | 0.6% | 0.4% | 0.1% |
| Schwab Variable Share Price Money Fund, Ultra Shares | 0.1% | 0.1% | 0.4% | 0.3% | 0.3% | 0.1% | 0.1% | 0.0%* | 0.0%* | —% | —% |
Interfund Borrowing and Lending
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. 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.
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, the funds were participants with other funds in the Fund Complex in a joint, syndicated, committed $750 million line of credit (the Syndicated Credit Facility), which matured on October 1, 2020. On October 1, 2020, the Syndicated Credit Facility was amended to run for a new 364 day period with a line of credit of $850 million, maturing on September 30, 2021. Under the terms of the Syndicated Credit Facility, in addition to the interest charged on any borrowings by a fund, each fund paid a commitment fee of 0.15% per annum on the funds’ proportionate share of the unused portion of the Syndicated Credit Facility.
During the period, the funds were participants with other funds in the Fund Complex in a joint, unsecured, uncommitted $500 million line of credit (the Uncommitted Credit Facility), with State Street Bank and Trust Company, which matured on November 29, 2019. On November 29, 2019, the Uncommitted Credit Facility was amended to run for a new 364 day period, which
Schwab Target Funds | Annual Report
Financial Notes (continued)
6. Borrowing from Banks (continued):
was scheduled to mature on November 27, 2020. However, on October 1, 2020, the Uncommitted Credit Facility was amended to run for a new 364 day period with a line of credit of $400 million, maturing on September 30, 2021. Under the terms of the Uncommitted Credit Facility, each fund pays interest on the amount a fund borrows. There were no borrowings from either line 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 of Investment Securities:
For the period ended October 31, 2020, purchases and sales of securities (excluding short-term obligations) were as follows:
| | Purchases
of Securities | Sales
of Securities |
| Schwab Target 2010 Fund | $16,988,947 | $14,558,308 |
| Schwab Target 2015 Fund | 11,477,741 | 18,354,735 |
| Schwab Target 2020 Fund | 89,788,480 | 130,589,190 |
| Schwab Target 2025 Fund | 91,293,477 | 111,533,103 |
| Schwab Target 2030 Fund | 126,681,950 | 180,034,449 |
| Schwab Target 2035 Fund | 57,134,668 | 71,932,716 |
| Schwab Target 2040 Fund | 100,550,041 | 143,122,389 |
| Schwab Target 2045 Fund | 23,381,161 | 10,385,361 |
| Schwab Target 2050 Fund | 25,740,736 | 7,861,009 |
| Schwab Target 2055 Fund | 18,074,253 | 5,920,094 |
| Schwab Target 2060 Fund | 6,930,796 | 1,473,582 |
8. Federal Income Taxes:
As of October 31, 2020, the tax basis cost of the funds’ investments and gross unrealized appreciation and depreciation 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 |
| Tax cost | $48,736,970 | | $65,652,272 | | $441,300,463 | | $494,812,378 | | $794,447,317 | | $409,930,196 | | $800,940,147 |
| Gross unrealized appreciation | $7,449,046 | | $12,405,294 | | $87,386,975 | | $88,709,729 | | $188,686,748 | | $77,596,910 | | $207,751,978 |
| Gross unrealized depreciation | (673,185) | | (818,984) | | (5,096,548) | | (13,338,052) | | (17,508,217) | | (10,648,923) | | (24,877,495) |
| Net unrealized appreciation (depreciation) | $6,775,861 | | $11,586,310 | | $82,290,427 | | $75,371,677 | | $171,178,531 | | $66,947,987 | | $182,874,483 |
| | Schwab
Target
2045
Fund | | Schwab
Target
2050
Fund | | Schwab
Target
2055
Fund | | Schwab
Target
2060
Fund |
| Tax cost | $163,896,724 | | $169,217,916 | | $99,813,919 | | $20,865,432 |
| Gross unrealized appreciation | $20,912,499 | | $21,520,220 | | $11,182,831 | | $1,743,034 |
| Gross unrealized depreciation | (6,964,797) | | (9,082,244) | | (3,750,382) | | (1,041,763) |
| Net unrealized appreciation (depreciation) | $13,947,702 | | $12,437,976 | | $7,432,449 | | $701,271 |
Schwab Target Funds | Annual Report
Financial Notes (continued)
8. Federal Income Taxes (continued):
As of October 31, 2020, 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 | $627,490 | | $861,545 | | $5,351,060 | | $4,753,627 | | $6,896,010 | | $2,873,223 | | $5,008,632 |
| Undistributed long-term capital gains | 385,123 | | 1,864,103 | | 10,253,960 | | 7,267,149 | | 16,940,518 | | 7,480,383 | | 21,945,060 |
| Net unrealized appreciation (depreciation) on investments | 6,775,861 | | 11,586,310 | | 82,290,427 | | 75,371,677 | | 171,178,531 | | 66,947,987 | | 182,874,483 |
| Total | $7,788,474 | | $14,311,958 | | $97,895,447 | | $87,392,453 | | $195,015,059 | | $77,301,593 | | $209,828,175 |
| | Schwab
Target
2045
Fund | | Schwab
Target
2050
Fund | | Schwab
Target
2055
Fund | | Schwab
Target
2060
Fund |
| Undistributed ordinary income | $722,521 | | $630,488 | | $340,162 | | $57,261 |
| Undistributed long-term capital gains | 2,593,223 | | 2,673,137 | | 1,507,386 | | 218,382 |
| Net unrealized appreciation (depreciation) on investments | 13,947,702 | | 12,437,976 | | 7,432,449 | | 701,271 |
| Total | $17,263,446 | | $15,741,601 | | $9,279,997 | | $976,914 |
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. The tax cost of the funds’ investments, disclosed above, have been adjusted from their book amounts to reflect these unrealized appreciation or depreciation differences, as applicable.
Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2020, the funds had no capital loss carryforwards available to offset future net capital gains.
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 fiscal year end distributions | | | | | | | |
| Ordinary income | $1,314,831 | $2,018,665 | $13,636,822 | $13,898,587 | $23,515,128 | $10,709,488 | $21,322,805 |
| Long-term capital gains | 1,204,227 | 2,170,460 | 16,329,586 | 17,306,186 | 41,149,887 | 19,394,717 | 54,339,154 |
| Prior fiscal year end distributions | | | | | | | |
| Ordinary income | $1,495,169 | $2,479,149 | $14,329,454 | $13,118,422 | $23,478,753 | $10,929,045 | $23,580,844 |
| Long-term capital gains | 1,406,565 | 1,713,184 | 15,403,874 | 15,468,604 | 36,194,339 | 17,030,972 | 47,677,500 |
| �� | Schwab
Target
2045
Fund | Schwab
Target
2050
Fund | Schwab
Target
2055
Fund | Schwab
Target
2060
Fund |
| Current fiscal year end distributions | | | | |
| Ordinary income | $3,301,292 | $3,187,945 | $1,817,735 | $302,277 |
| Long-term capital gains | 5,698,235 | 4,958,508 | 3,151,691 | 412,859 |
| Prior fiscal year end distributions | | | | |
| Ordinary income | $3,334,924 | $2,879,645 | $1,737,352 | $258,171 |
| Long-term capital gains | 4,868,236 | 4,295,579 | 2,478,549 | 243,273 |
Schwab Target Funds | Annual Report
Financial Notes (continued)
8. Federal Income Taxes (continued):
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, 2020, 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 fiscal year ended October 31, 2020, the funds did not incur any interest or penalties.
9. Independent Registered Public Accounting Firm:
On June 8, 2020, the Audit, Compliance and Valuation Committee of the Board approved, and on June 9, 2020, the Board approved, Deloitte & Touche LLP as the independent registered accounting firm of the Schwab Funds Complex for fiscal periods ending after June 8, 2020.
On June 8, 2020, the PricewaterhouseCoopers LLP (the “Prior Auditor”) resigned as the independent registered public accounting firm of the Schwab Funds Complex. The Prior Auditor’s reports on the financial statements of the funds for the past two fiscal years, the years ended October 31, 2018 and October 31, 2019, did not contain an adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the last two fiscal year-ends and through June 8, 2020, there were no (1) disagreements with the Prior Auditor on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the Prior Auditor’s satisfaction, would have caused it to make reference to that matter in connection with its reports on the funds’ financial statements for such periods; or (2) “reportable events,” as that term is defined in Item 304 (a)(1)(v) of Regulation S-K under the Securities Exchange Act of 1934.
10. Subsequent Events:
Management has determined there are no subsequent events or transactions through the date the financial statements were issued that would have materially impacted the financial statements as presented.
Schwab Target Funds | Annual Report
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Schwab Capital Trust 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 and Schwab Target 2060 Fund:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statements of assets and liabilities, including the portfolio holdings, 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 and Schwab Target 2060 Fund (the “Funds”), eleven of the funds constituting Schwab Capital Trust, as of October 31, 2020, and the related statements of operations, statements of changes in net assets, and the financial highlights for the year then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of each of the Funds as of October 31, 2020, and the results of their operations, the changes in their net assets, and the financial highlights for the year then ended in conformity with accounting principles generally accepted in the United States of America. The statements of changes in net assets for the year ended October 31, 2019 and the financial highlights for each of the four years in the period ended October 31, 2019; except for Schwab Target 2060 Fund, the financial highlights for the three years in the period ended October 31, 2019 and for the period from August 25, 2016 to October 31, 2016, were audited by other auditors, whose report, dated December 16, 2019, expressed an unqualified opinion on such statements of changes in net assets and financial highlights.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2020, by correspondence with the custodian and transfer agent. We believe that our audits provide a reasonable basis for our opinion.
Deloitte & Touche LLP
Denver, Colorado
December 16, 2020
We have served as the auditor of one or more investment companies in the Schwab Funds Complex since 2020.
Schwab Target Funds | Annual Report
Other Federal Tax Information (unaudited)
The funds may elect to pass on the benefits of the foreign tax credit to their shareholders for the fiscal year ended October 31, 2020. The foreign tax credit and the foreign source income amounts are as follows:
| | Foreign Tax Credit | Foreign Source Income |
| Schwab Target 2010 Fund | $14,853 | $123,290 |
| Schwab Target 2015 Fund | 24,871 | 206,451 |
| Schwab Target 2020 Fund | 201,125 | 1,648,543 |
| Schwab Target 2025 Fund | 300,493 | 2,381,625 |
| Schwab Target 2030 Fund | 643,194 | 4,994,184 |
| Schwab Target 2035 Fund | 360,385 | 2,752,465 |
| Schwab Target 2040 Fund | 852,985 | 6,413,166 |
| Schwab Target 2045 Fund | 153,331 | 1,141,621 |
| Schwab Target 2050 Fund | 160,076 | 1,183,837 |
| Schwab Target 2055 Fund | 97,079 | 716,865 |
| Schwab Target 2060 Fund | 16,983 | 125,072 |
For corporate shareholders, the following percentage of the funds’ dividend distributions paid during the fiscal year ended October 31, 2020, qualify for the corporate dividends received deduction:
| | Percentage |
| Schwab Target 2010 Fund | 18.11 |
| Schwab Target 2015 Fund | 20.21 |
| Schwab Target 2020 Fund | 22.65 |
| Schwab Target 2025 Fund | 25.88 |
| Schwab Target 2030 Fund | 28.91 |
| Schwab Target 2035 Fund | 31.25 |
| Schwab Target 2040 Fund | 33.84 |
| Schwab Target 2045 Fund | 33.15 |
| Schwab Target 2050 Fund | 35.38 |
| Schwab Target 2055 Fund | 36.20 |
| Schwab Target 2060 Fund | 37.23 |
For the fiscal year ended October 31, 2020, 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 2021 via IRS Form 1099 of the amounts for use in preparing their 2020 income tax return.
| | |
| Schwab Target 2010 Fund | $384,055 |
| Schwab Target 2015 Fund | 667,128 |
| Schwab Target 2020 Fund | 5,186,716 |
| Schwab Target 2025 Fund | 6,526,117 |
| Schwab Target 2030 Fund | 12,976,350 |
| Schwab Target 2035 Fund | 6,672,008 |
| Schwab Target 2040 Fund | 14,993,217 |
| Schwab Target 2045 Fund | 2,430,391 |
| Schwab Target 2050 Fund | 2,522,027 |
| Schwab Target 2055 Fund | 1,501,755 |
| Schwab Target 2060 Fund | 257,907 |
Schwab Target Funds | Annual Report
Other Federal Tax Information (unaudited) (continued)
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, 2020:
| | |
| Schwab Target 2010 Fund | $1,204,227 |
| Schwab Target 2015 Fund | 2,170,460 |
| Schwab Target 2020 Fund | 16,329,586 |
| Schwab Target 2025 Fund | 17,306,186 |
| Schwab Target 2030 Fund | 41,149,887 |
| Schwab Target 2035 Fund | 19,394,717 |
| Schwab Target 2040 Fund | 54,339,154 |
| Schwab Target 2045 Fund | 5,698,235 |
| Schwab Target 2050 Fund | 4,958,508 |
| Schwab Target 2055 Fund | 3,151,691 |
| Schwab Target 2060 Fund | 412,859 |
Schwab Target Funds | Annual Report
Liquidity Risk Management Program (Unaudited)
The Funds have adopted and implemented a liquidity risk management program (the “program”) as required by Rule 22e-4 under the Investment Company Act of 1940, as amended. The Funds’ Board of Trustees (the “Board”) has designated the Funds’ investment adviser, Charles Schwab Investment Management, Inc. (“CSIM”) as the administrator of the program. Personnel of CSIM or its affiliates conduct the day-to-day operation of the program.
Under the program, CSIM manages a Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. The program is reasonably designed to assess and manage a Fund’s liquidity risk, taking into consideration the Fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably foreseeable stressed conditions; its historical redemption history and shareholder concentrations; and its cash holdings and access to other funding sources, including the custodian overdraft facility and lines of credit. CSIM’s process of determining the degree of liquidity of each Fund’s investments is supported by third-party liquidity assessment vendors.
The Funds’ Board reviewed a report at its meeting held on September 22, 2020 prepared by CSIM regarding the operation and effectiveness of the program for the period June 1, 2019, through May 31, 2020. No significant liquidity events impacting any of the Funds were noted in the report. In addition, CSIM provided its assessment that the program had been operating effectively in managing each Fund’s liquidity risk.
Schwab Target Funds | Annual Report
Investment Advisory Agreement Approval
The Investment Company Act of 1940, as amended (the 1940 Act), requires that 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 and administration agreement (the Agreement) between Schwab Capital Trust (the Trust) and Charles Schwab Investment Management, Inc. (CSIM) 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 Target 2045 Fund, Schwab Target 2050 Fund, Schwab Target 2055 Fund, and Schwab Target 2060 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, business goals and priorities, profitability, third-party oversight, corporate structure and operations. As part of the renewal process, the Independent Trustees’ legal counsel, on behalf of the Independent Trustees, sends an information request letter to CSIM seeking certain relevant information. The responses by CSIM are provided to the Trustees in the Board materials for their review prior to their meeting, and the Trustees are provided with the opportunity to request any additional materials. The Board also receives data provided by an independent provider of investment company data. 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 the Funds’ operations and performance, legal and compliance matters, risk management, portfolio turnover, and sales and marketing activity. In considering the renewal, the Independent Trustees receive advice from Independent Trustees’ legal counsel, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees participate in question and answer sessions with
representatives of CSIM and meet in executive session outside the presence of Fund management.
The Board, including a majority of the Independent Trustees, considered information relating to the continuance of the Agreement with respect to the Funds at meetings held on May 11, 2020 and June 9, 2020, and approved the renewal of the Agreement with respect to the Funds for an additional one-year term at the meeting on June 9, 2020 called for the purpose of voting on such approval.1
The Board’s approval of the continuance 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 each Fund 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 and benchmark data; |
| 3. | each Fund’s expenses and how those expenses compared to those of certain other similar mutual funds; |
| 4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to each Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
| 5. | the extent to which economies of scale would be realized as each 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 Funds and the resources of CSIM and its affiliates dedicated to the Funds. In this regard, the Trustees evaluated, among other things, CSIM’s experience, track record, compliance program, resources dedicated to hiring and retaining skilled personnel and specialized talent, and information security resources. The Trustees also considered information provided by CSIM relating to services and support provided with respect to each Fund’s portfolio management team, portfolio strategy, and internal investment guidelines, as well as trading infrastructure, liquidity management, product design and analysis, shareholder communications, securities valuation, fund accounting and custody, and vendor and risk oversight. The Trustees also considered investments CSIM has made in its infrastructure, including modernizing CSIM’s technology and use of data, increasing expertise in key areas (including portfolio management and trade operations), and improving business continuity, cybersecurity, due diligence, risk management processes, and information security programs,
Schwab Target Funds | Annual Report
which are designed to provide enhanced services to each Fund and its shareholders. The Trustees also considered Schwab’s wide range of products, services, and channel alternatives such as investment research tools and an array of account features that benefit Fund shareholders who are brokerage clients of Schwab. Finally, the Trustees also considered Schwab’s reputation as a full service brokerage firm and its overall financial condition, including Schwab’s ability to maintain consistent operations and service levels during recent periods of remote work and market volatility. 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 each Fund’s performance in determining whether to renew the Agreement with respect to such Fund. Specifically, the Trustees considered each Fund’s performance relative to a peer category of other mutual funds and applicable indices/benchmarks, in light of total return, yield, if applicable, and market trends, as well as in consideration of each Fund’s investment style and strategy attributes and disclosures. As part of this review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the independent provider of investment company data who prepared the peer category analysis. In evaluating the performance of each Fund, the Trustees considered the risk profile 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 and also noted that the Board and a designated committee of the Board review performance throughout the year. Following such evaluation, the Board concluded, within the context of its full deliberations that, with respect to each Fund, the performance of such Fund supported renewal of the Agreement with respect to such Fund.
Fund Expenses. With respect to each Fund’s 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 other similar mutual funds, such peer groups and comparisons having been selected and calculated by an independent provider of investment company data. CSIM reported to the Board, and the Board took into account, the risk assumed by CSIM in the development of products and provision of services as well as the competitive marketplace for financial products. The Trustees considered the effects of CSIM’s and Schwab’s practice of waiving certain 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, 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, and any differences in the nature and scope of the services CSIM provides to these other accounts, as well as differences in the market for these types of accounts. The Trustees noted that shareholders of the Funds indirectly pay their pro rata share of the fees and expenses of the underlying funds in which the Funds invest. Following such evaluation, the Board concluded, within the context of its full deliberations, that, with respect to each Fund, the expenses of such Fund are reasonable and supported renewal of the Agreement with respect to such Fund.
Profitability. The Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly and reviewed profitability on a pre-tax basis, without regard to distribution expenses. In this connection, the Trustees reviewed management’s profitability analyses. The Trustees also reviewed profitability of CSIM relating to the Schwab fund complex as a whole, noting the benefits to Fund shareholders of being part of the Schwab fund complex, including the allocations of certain fixed costs across the Funds and other funds in the complex. 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. Also, because each Fund invests a portion of its assets in other funds within the Schwab fund complex, the Trustees considered the indirect benefits to CSIM from such Fund’s investments in other underlying funds managed by CSIM. The Trustees considered whether the compensation and profitability with respect to the Funds 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. The Trustees noted that CSIM continues to invest substantial sums in its business in order to provide enhanced research capabilities, services, and systems to benefit the Funds. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM with respect to each Fund is reasonable and supported renewal of the Agreement with respect to such Fund.
Economies of Scale. Although the Trustees recognized the difficulty of determining economies of scale with precision, the Trustees considered the potential existence of any economies of scale and whether those are passed along to a Fund’s shareholders through (i) the enhancement of services provided to the Funds in return for fees paid, including through investments by CSIM in CSIM’s infrastructure, including modernizing CSIM’s technology and use of data, increasing expertise and capabilities in key areas (including portfolio and trade operations), and improving business continuity, cybersecurity, due diligence, and information security
Schwab Target Funds | Annual Report
programs, which are designed to provide enhanced services to the Funds and their shareholders; (ii) graduated investment advisory fee schedules or unitary fee structures, fee waivers, or expense caps by CSIM and its affiliates for those funds in the Schwab fund complex with such features; and (iii) pricing a fund to scale and keeping overall expenses down as the fund grows. The Trustees acknowledged that CSIM has shared any economies of scale with the Funds by investing in CSIM’s infrastructure, as discussed above, over time and that CSIM’s internal costs of providing investment management, technology, administrative, legal and compliance services to the Funds continues to increase as a result of regulatory or other developments. The Trustees considered that CSIM and its affiliates may employ contractual expense caps to protect shareholders from high fees when fund assets were relatively small, for example, in the case of newer funds or funds with investment strategies that are from time to time out of favor,
because, among other reasons, 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 each Fund obtains reasonable benefits from economies of scale.
In the course of their deliberations, the Trustees may have accorded different weights to various factors and 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.
| 1 | The meeting on June 9, 2020 was held telephonically in reliance on exemptive relief from the in-person voting requirement under the 1940 Act as provided by the Securities and Exchange Commission. |
Schwab Target Funds | Annual Report
Trustees and Officers
The tables below give information about the trustees and officers of Schwab Capital Trust, which includes the funds covered in this report. The “Fund Complex” includes The Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust. The Fund Complex includes 100 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 1-877-824-5615.
| 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 |
Robert W. Burns
1959
Trustee
(Trustee of Schwab Strategic Trust since 2009; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016) | Retired/Private Investor (Jan. 2009 – present). Formerly, Managing Director, Pacific Investment Management Company, LLC (PIMCO) (investment management firm) and President, PIMCO Funds. | 100 | None |
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 since 2010; Schwab Strategic Trust since 2016) | Senior Fellow (Oct. 1979 – present), The Hoover Institution at Stanford University (public policy think tank); Senior Fellow (2000 – present), Stanford Institute for Economic Policy Research; Professor of Public Policy (1994 – 2015), Stanford University. | 100 | Director (2005 – 2020), Gilead Sciences, Inc. |
Nancy F. Heller
1956
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018) | Retired. President and Chairman (2014 – 2016), TIAA Charitable (financial services); Senior Managing Director (2003 – 2016), TIAA (financial services). | 100 | None |
Stephen Timothy Kochis
1946
Trustee
(Trustee of Schwab Strategic Trust since 2012; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016) | CEO and Owner (May 2012 – present), Kochis Global (wealth management consulting). | 100 | None |
David L. Mahoney
1954
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016) | Private Investor. | 100 | Director (2004 – present), Corcept Therapeutics Incorporated
Director (2009 – present), Adamas Pharmaceuticals, Inc.
Director (2003 – 2019), Symantec Corporation |
Schwab Target Funds | Annual Report
| 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 |
Jane P. Moncreiff
1961
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2019) | Consultant (2018 – present), Fulham Advisers LLC (management consulting); Chief Investment Officer (2009 – 2017), CareGroup Healthcare System, Inc. (healthcare). | 100 | None |
Kiran M. Patel
1948
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016) | Retired. Executive Vice President and General Manager of Small Business Group (Dec. 2008 – Sept. 2013), Intuit, Inc. (financial software and services firm for consumers and small businesses). | 100 | Director (2008 – present), KLA-Tencor Corporation |
Kimberly S. Patmore
1956
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016) | Consultant (2008 – present), Patmore Management Consulting (management consulting). | 100 | None |
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 since 2010; Schwab Strategic Trust since 2016) | Chairman, Chief Executive Officer and Founder (Mar. 1990 – present), Smith Graham & Co. (investment advisors). | 100 | Director (2012 – present), Eaton Corporation plc |
| 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 |
Walter W. Bettinger II2
1960
Chairman and 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 since 2010) | Director, President and Chief Executive Officer (Oct. 2008 – present), The Charles Schwab Corporation; President and Chief Executive Officer (Oct. 2008 – present) and Director (May 2008 – present), Charles Schwab & Co., Inc.; Director (Apr. 2006 – present), Charles Schwab Bank, SSB; Director (Nov. 2017 – present), Charles Schwab Premier Bank, SSB; Director (July 2019 – present), Charles Schwab Trust Bank; Director (May 2008 – present) and President and Chief Executive Officer (Aug. 2017 – present), Schwab Holdings, Inc.; Director (Oct. 2020 – present), TD Ameritrade Holding Corporation; Director (July 2016 – present), Charles Schwab Investment Management, Inc. | 100 | Director (2008 – present), The Charles Schwab Corporation |
Schwab Target Funds | Annual Report
| Interested 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 |
Jonathan de St. Paer2
1973
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2019) | Director (Apr. 2019 – present), President (Oct. 2018 – present), and Chief Executive Officer (Apr. 2019 – Nov. 2019), Charles Schwab Investment Management, Inc.; Senior Vice President (June 2020 – present), Charles Schwab Investment Advisory, Inc.; Trustee and Chief Executive Officer (Apr. 2019 – present) and President (Nov. 2018 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Director (Apr. 2019 – present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited; Senior Vice President (Apr. 2019 – present), Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014 – Mar. 2019), and Vice President (Jan. 2009 – Dec. 2013), Charles Schwab & Co., Inc. | 100 | None |
Joseph R. Martinetto2
1962
Trustee
(Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016) | Chief Operating Officer (Feb. 2018 – present) and Senior Executive Vice President (July 2015 – Feb. 2018), The Charles Schwab Corporation; Senior Executive Vice President (July 2015 – present), Charles Schwab & Co., Inc.; Chief Financial Officer (July 2015 – Aug. 2017) and Executive Vice President and Chief Financial Officer (May 2007 – July 2015), The Charles Schwab Corporation and Charles Schwab & Co., Inc.; Director (May 2007 – present), Charles Schwab & Co., Inc.; Director (Apr. 2010 – present) and Chief Executive Officer (July 2013 – Apr. 2015), Charles Schwab Bank, SSB; Director (Nov. 2017 – present), Charles Schwab Premier Bank, SSB; Director (May 2007 – present), Chief Financial Officer (May 2007 – Aug. 2017), Senior Executive Vice President (Feb. 2016 – present), and Executive Vice President (May 2007 – Feb. 2016), Schwab Holdings, Inc.; Director (Oct. 2020 – present), TD Ameritrade Holding Corporation. | 100 | None |
| 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 |
Jonathan de St. Paer
1973
President and Chief Executive Officer
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018) | Director (Apr. 2019 – present), President (Oct. 2018 – present), and Chief Executive Officer (Apr. 2019 – Nov. 2019), Charles Schwab Investment Management, Inc.; Senior Vice President (June 2020 – present), Charles Schwab Investment Advisory, Inc.; Trustee and Chief Executive Officer (Apr. 2019 – present) and President (Nov. 2018 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Director (Apr. 2019 – present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited; Senior Vice President (Apr. 2019 – present), Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014 – Mar. 2019), and Vice President (Jan. 2009 – Dec. 2013), Charles Schwab & Co., Inc. |
Mark Fischer
1970
Treasurer, Chief Financial Officer and Chief Operating Officer
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2013) | Treasurer and Chief Financial Officer (Jan. 2016 – present) and Chief Operating Officer (Dec. 2020 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Assistant Treasurer (Dec. 2013 – Dec. 2015), Schwab Funds and Laudus Funds; Assistant Treasurer (Nov. 2013 – Dec. 2015), Schwab ETFs; Chief Financial Officer (Mar. 2020 – present) and Vice President (Oct. 2013 – present), Charles Schwab Investment Management, Inc.; Executive Director (Apr. 2011 – Sept. 2013), J.P. Morgan Investor Services; Assistant Treasurer (May 2005 – Mar. 2011), Massachusetts Financial Service Investment Management. |
Omar Aguilar
1970
Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President and Chief Investment Officer (Apr. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies (June 2011 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Head of the Portfolio Management Group and Vice President of Portfolio Management (May 2009 – Apr. 2011), Financial Engines, Inc. (investment management firm); Head of Quantitative Equity (July 2004 – Jan. 2009), ING Investment Management. |
Schwab Target Funds | Annual Report
| Officers of the Trust (continued) |
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 |
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, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President and Chief Investment Officer (Apr. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Investment Officer – Fixed Income (June 2011 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Senior Managing Director and Global Head of Active Fixed-Income Strategies (Jan. 2008 – Oct. 2010), State Street Global Advisors; Director of Alpha Strategies (Apr. 2006 – Jan. 2008), Loomis, Sayles & Company (investment management firm). |
David Lekich
1964
Chief Legal Officer and Secretary, Schwab Funds and Schwab ETFs
Vice President and Assistant Clerk, Laudus Funds
(Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President (Sept. 2011 – present) and Vice President (Mar. 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present) and Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (Apr. 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; Vice President and Assistant Clerk (Apr. 2011 – present), Laudus Funds; Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs. |
Catherine MacGregor
1964
Vice President and Assistant Secretary, Schwab Funds and Schwab ETFs
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 and Laudus Trust since 2005; Schwab Strategic Trust since 2009) | Vice President (July 2005 – present), Charles Schwab & Co., Inc.; Vice President (Sept. 2005 – present), Charles Schwab Investment Management, Inc.; Vice President (Dec. 2005 – present) and 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 (Oct. 2009 – present), Schwab ETFs. |
| 1 | Each Trustee shall hold office until the election and qualification of his or her successor, or until he or she dies, resigns or is removed. The retirement policy requires that each independent trustee retire by December 31 of the year in which the Trustee turns 74 or the Trustee’s twentieth year of service as an independent trustee on any trust in the Fund Complex, whichever occurs first. |
| 2 | Mr. Bettinger, Mr. de St. Paer and Mr. Martinetto are Interested Trustees. Mr. Bettinger is an Interested Trustee because he owns stock of The Charles Schwab Corporation (CSC), the parent company of Charles Schwab Investment Management, Inc. (CSIM), the investment adviser for the trusts in the Fund Complex, is an employee and director of Charles Schwab & Co., Inc. (CS&Co), the principal underwriter for The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust, and is a director of CSIM. Mr. de St. Paer is an Interested Trustee because he owns stock of CSC and is an employee and director of CSIM. Mr. Martinetto is an Interested Trustee because he owns stock of CSC and is an employee and director of CS&Co. |
| 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 Board. |
Schwab Target Funds | Annual Report
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.
Bloomberg Barclays US Aggregate Bond Index An index that is a broad-based benchmark measuring the performance of the U.S. investment grade, taxable bond market, including U.S. Treasuries, government-related and corporate bonds, mortgage pass-through securities, commercial mortgage-backed securities, and asset-backed securities that are publicly available for sale in the United States. To be eligible for inclusion in the index, securities must be fixed rate, non-convertible, U.S. dollar-denominated with at least $300 million or more of outstanding face value and have one or more years remaining to maturity. The index excludes certain types of securities, including tax-exempt state and local government series bonds, structured notes embedded with swaps or other special features, private placements, floating rate securities, inflation-linked bonds and Eurobonds. The index is market capitalization weighted and the securities in the index are updated on the last business day of each month.
Bloomberg Barclays US Government/Credit 1–5 Year Index An index that is a broad-based benchmark measuring the performance of U.S. dollar-denominated U.S. Treasury bonds, government related bonds (i.e., U.S. and non-U.S. agencies, sovereign, quasi-sovereign, supranational and local authority debt) and investment grade U.S. corporate bonds that have a remaining maturity of greater than or equal to one year and less than five years. To be eligible for inclusion in the index, securities must be fixed rate, non-convertible, U.S. dollar-denominated with at least $300 million or more of outstanding face value and have a remaining maturity greater than or equal to one year and less than five years. The index excludes certain types of securities, including, bonds with equity type features (e.g., warrants, convertibles and preferreds), tax-exempt municipal securities, inflation-linked bonds, floating rate issues, strips, private placements, U.S. dollar-denominated 25 and 50 par retail bonds, structured notes and pass-through certificates. The index is market capitalization weighted and the securities in the index are updated on the last business day of each month.
Bloomberg Barclays US Treasury Bills 1–3 Month Index An index that includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months but more than 1 month, are rated investment grade and have $300 million or more of outstanding face value. It excludes zero-coupon STRIPS.
Bloomberg Barclays US Treasury Inflation-Linked Bond Index (Series-L) An index which includes all publicly-issued U.S. Treasury Inflation-Protected Securities (TIPS) that have at least one year remaining to maturity, are rated investment grade and have $500 million or more of outstanding face value. The TIPS in the index must be denominated in U.S. dollars and must be fixed-rate and non-convertible. The index is market capitalization weighted and the TIPS in the index are updated on the last business day of each month. TIPS are publicly issued, dollar denominated U.S. Government securities issued by the U.S. Treasury that have principal and interest payments linked to an official inflation measure (as measured by the Consumer Price Index, or CPI) and their payments are supported by the full faith and credit of the United States.
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 which includes all publicly traded stocks of companies headquartered in the United States for which pricing information is readily available. The index is a float-adjusted market capitalization weighted index that reflects the shares of securities actually available to investors in the marketplace.
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 (Net) An index that provides a diverse representation of publicly traded equity real estate investment trusts (REITs) and listed property companies worldwide. The index constituents are free-float adjusted, and screened on liquidity, size and revenue. The index is comprised of countries in developed and emerging markets. The Net of Tax Index is calculated based on the maximum withholding tax rates applicable to dividends received by institutional investors who are not resident in the same country as the remitting company and who do not benefit from double taxation treaties.
FTSE non-US Dollar World Government Bond Index A market capitalization index that measures the total rate of return performance for the government bonds of 22 countries, excluding the U.S., with a remaining maturity of at least 1 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 Index (Net) A free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets in Europe, Australasia, and the Far East. 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.
Schwab Target Funds | Annual Report
MSCI Emerging Markets Index (Net) A free float-adjusted market capitalization weighted index that is designed to measure equity market performance in the global emerging markets. This series approximates the minimum possible dividend reinvestment. The 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.
Russell 1000 Growth Index An index that measures the performance of those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values.
Russell 1000 Index An index that measures the performance of the 1,000 largest companies in the Russell 3000 Index, and represents approximately 92% of the total market capitalization of the Russell 3000 Index. The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.
Russell 1000 Value 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.
Russell 2000 Index An index that measures the performance of the 2,000 smallest companies in the Russell 3000 Index. The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.
Russell Midcap Index An index that measures the performance of the mid-cap segment of the U.S. equity universe. The Russell Midcap Index is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership.
S&P 500 Index An index that is designed to measure the performance of 500 leading publicly traded companies from a broad range of industries.
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 August 24, 2018, the FTSE non-US Dollar World Government Bond Index was replaced by the Bloomberg Barclays Global Aggregate ex-US Hedged Index. Effective February 1, 2020, the composite is derived using the following portion allocations: 21.5% S&P 500 Index, 0.7% Russell Midcap Index, 1.9% Russell 2000 Index, 9.3% MSCI EAFE Index (Net), 40.3% Bloomberg Barclays US Aggregate Bond Index, 1.8% FTSE EPRA Nareit Global Index (Net), 6.5% Bloomberg Barclays US Treasury Inflation-Linked Bond Index (Series-L), 2.3% Bloomberg Barclays Global Aggregate ex-US Hedged Index, 1.0% Bloomberg Barclays US Government/Credit Index, 10.1% Bloomberg Barclays US Government/Credit 1-5 Year Index, and 4.6% Bloomberg Barclays US Treasury Bills 1-3 Month Index. The components that make up the composite index may vary over time. The composite index represents target allocations for 2020. 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 August 24, 2018, the FTSE non-US Dollar World Government Bond Index was replaced by the Bloomberg Barclays Global Aggregate ex-US Hedged Index. Effective February 1, 2020, the composite is derived using the following portion allocations: 22.9% S&P 500 Index, 0.8% Russell Midcap Index, 2.1% Russell 2000 Index, 10.4% MSCI EAFE Index (Net), 38.5% Bloomberg Barclays US Aggregate Bond Index, 1.9% FTSE EPRA Nareit Global Index (Net), 6.2% Bloomberg Barclays US Treasury Inflation-Linked Bond Index (Series-L), 2.4% Bloomberg Barclays Global Aggregate ex-US Hedged Index, 1.2% Bloomberg Barclays US Government/Credit Index, 9.5% Bloomberg Barclays US Government/Credit 1-5 Year Index, and 4.3% Bloomberg Barclays US Treasury Bills 1-3 Month Index. The components that make up the composite index may vary over time. The composite index represents target allocations for 2020. 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 August 24, 2018, the FTSE non-US Dollar World Government Bond Index was replaced by the Bloomberg Barclays Global Aggregate ex-US Hedged Index. Effective February 1, 2020, the composite is derived using the following portion allocations: 23.8% S&P 500 Index, 0.8% Russell Midcap Index, 2.1% Russell 2000 Index, 11.3% MSCI EAFE Index (Net), 37.2% Bloomberg Barclays US Aggregate Bond Index, 2.0% FTSE EPRA Nareit Global Index (Net), 6.0% Bloomberg Barclays US Treasury Inflation-Linked Bond Index (Series-L), 2.4% Bloomberg Barclays Global Aggregate ex-US Hedged Index, 1.3% Bloomberg Barclays US Government/Credit Index, 9.1% Bloomberg Barclays US Government/Credit 1-5 Year Index, and 4.0% Bloomberg Barclays US Treasury Bills 1-3 Month Index. The components that make up the composite index may vary over time. The composite index represents target allocations for 2020. 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 August 24, 2018, the FTSE non-US Dollar World Government Bond Index was replaced by the Bloomberg Barclays Global Aggregate ex-US Hedged Index. Effective February 1, 2020, the composite is derived using the following portion allocations: 31.1% S&P 500 Index, 1.1% Russell Midcap Index, 3.4% Russell 2000 Index, 15.5% MSCI EAFE Index (Net), 27.2% Bloomberg Barclays US Aggregate Bond Index, 2.7% FTSE EPRA Nareit Global Index (Net), 0.8% MSCI Emerging Markets Index (Net), 2.3% Bloomberg Barclays US Treasury Inflation-Linked Bond Index (Series-L), 4.3% Bloomberg Barclays Global Aggregate ex-US Hedged Index, 2.3% Bloomberg Barclays US Government/Credit Index, 6.3% Bloomberg Barclays US Government/Credit 1-5 Year Index, and 3.1% Bloomberg Barclays US Treasury Bills 1-3 Month Index. The components that make up the composite index may vary over time. The composite index represents target allocations for 2020. 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
Schwab Target Funds | Annual Report
combination of the S&P 500 Index and the Russell 2000 Index. Effective August 24, 2018, the FTSE non-US Dollar World Government Bond Index was replaced by the Bloomberg Barclays Global Aggregate ex-US Hedged Index. Effective February 1, 2020, the composite is derived using the following portion allocations: 36.1% S&P 500 Index, 1.3% Russell Midcap Index, 4.4% Russell 2000 Index, 18.4% MSCI EAFE Index (Net), 20.1% Bloomberg Barclays US Aggregate Bond Index, 3.2% FTSE EPRA Nareit Global Index (Net), 1.6% MSCI Emerging Markets Index (Net), 0.5% Bloomberg Barclays US Treasury Inflation-Linked Bond Index (Series L), 4.7% Bloomberg Barclays Global Aggregate ex-US Hedged Index, 2.8% Bloomberg Barclays US Government/Credit Index, 4.5% Bloomberg Barclays US Government/Credit 1-5 Year Index, and 2.4% Bloomberg Barclays US Treasury Bills 1-3 Month Index. The components that make up the composite index may vary over time. The composite index represents target allocations for 2020. 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 August 24, 2018, the FTSE non-US Dollar World Government Bond Index was replaced by the Bloomberg Barclays Global Aggregate ex-US Hedged Index. Effective February 1, 2020, the composite is derived using the following portion allocations: 39.7% S&P 500 Index, 1.4% Russell Midcap Index, 5.2% Russell 2000 Index, 20.7% MSCI EAFE Index (Net), 15.0% Bloomberg Barclays US Aggregate Bond Index, 3.7% FTSE EPRA Nareit Global Index (Net), 2.5% MSCI Emerging Markets Index (Net), 3.9% Bloomberg Barclays Global Aggregate ex-US Hedged Index, 2.9% Bloomberg Barclays US Government/Credit Index, 3.2% Bloomberg Barclays US Government/Credit 1-5 Year Index, and 1.9% Bloomberg Barclays US Treasury Bills 1-3 Month Index. The components that make up the composite index may vary over time. The composite index represents target allocations for 2020. 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 August 24, 2018, the FTSE non-US Dollar World Government Bond Index was replaced by the Bloomberg Barclays Global Aggregate ex-US Hedged Index. Effective February 1, 2020, the composite is derived using the following portion allocations: 42.6% S&P 500 Index, 1.5% Russell Midcap Index, 6.0% Russell 2000 Index, 22.5% MSCI EAFE Index (Net), 10.7% Bloomberg Barclays US Aggregate Bond Index, 4.0% FTSE EPRA Nareit Global Index (Net), 3.4% MSCI Emerging Markets Index (Net), 2.9% Bloomberg Barclays Global Aggregate ex-US Hedged Index, 2.6% Bloomberg Barclays US Government/Credit Index, 2.3% Bloomberg Barclays US Government/Credit 1-5 Year Index, and 1.5% Bloomberg Barclays US Treasury Bills 1-3 Month Index. The components that make up the composite index may vary over time. The composite index represents target allocations for 2020. 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 August 24, 2018, the FTSE non-US Dollar World Government Bond Index was replaced by the Bloomberg Barclays Global Aggregate ex-US Hedged Index. Effective February 1, 2020, the composite is derived using the following portion allocations: 45.1% S&P 500 Index, 1.6% Russell Midcap Index, 6.8% Russell 2000 Index, 24.3% MSCI EAFE
Index (Net), 6.9% Bloomberg Barclays US Aggregate Bond Index, 4.3% FTSE EPRA Nareit Global Index (Net), 4.3% MSCI Emerging Markets Index (Net), 2.0% Bloomberg Barclays Global Aggregate ex-US Hedged Index, 2.1% Bloomberg Barclays US Government/Credit Index, 1.5% Bloomberg Barclays US Government/Credit 1-5 Year Index, and 1.0% Bloomberg Barclays US Treasury Bills 1-3 Month Index. The components that make up the composite index may vary over time. The composite index represents target allocations for 2020. 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 August 24, 2018, the FTSE non-US Dollar World Government Bond Index was replaced by the Bloomberg Barclays Global Aggregate ex-US Hedged Index. Effective February 1, 2020, the composite is derived using the following portion allocations: 46.5% S&P 500 Index, 1.7% Russell Midcap Index, 7.2% Russell 2000 Index, 25.3% MSCI EAFE Index (Net), 4.9% Bloomberg Barclays US Aggregate Bond Index, 4.5% FTSE EPRA Nareit Global Index (Net), 4.9% MSCI Emerging Markets Index (Net), 1.5% Bloomberg Barclays Global Aggregate ex-US Hedged Index, 1.7% Bloomberg Barclays US Government/Credit Index, 1.0% Bloomberg Barclays US Government/Credit 1-5 Year Index, and 0.8% Bloomberg Barclays US Treasury Bills 1-3 Month Index. The components that make up the composite index may vary over time. The composite index represents target allocations for 2020. 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 August 24, 2018, the FTSE non-US Dollar World Government Bond Index was replaced by the Bloomberg Barclays Global Aggregate ex-US Hedged Index. Effective February 1, 2020, the composite is derived using the following portion allocations: 47.4% S&P 500 Index, 1.7% Russell Midcap Index, 7.5% Russell 2000 Index, 25.9% MSCI EAFE Index (Net), 3.6% Bloomberg Barclays US Aggregate Bond Index, 4.6% FTSE EPRA Nareit Global Index (Net), 5.4% MSCI Emerging Markets Index (Net), 1.1% Bloomberg Barclays Global Aggregate ex-US Hedged Index, 1.4% Bloomberg Barclays US Government/Credit Index, 0.8% Bloomberg Barclays US Government/Credit 1-5 Year Index, and 0.7% Bloomberg Barclays US Treasury Bills 1-3 Month Index. The components that make up the composite index may vary over time. The composite index represents target allocations for 2020. Percentages listed may not total to 100% due to rounding.
Target 2060 Composite Index: A custom blended index developed by CSIM based on the 2060 fund’s asset allocation glide schedule and will become more conservative as time elapses. Effective August 24, 2018, the FTSE non-US Dollar World Government Bond Index was replaced by the Bloomberg Barclays Global Aggregate ex-US Hedged Index. Effective February 1, 2020, the composite is derived using the following portion allocations: 48.3% S&P 500 Index, 1.7% Russell Midcap Index, 7.8% Russell 2000 Index, 26.6% MSCI EAFE Index (Net), 2.3% Bloomberg Barclays US Aggregate Bond Index, 4.8% FTSE EPRA Nareit Global Index (Net), 5.8% MSCI Emerging Markets Index (Net), 0.8% Bloomberg Barclays Global Aggregate ex-US Hedged Index, 1.0% Bloomberg Barclays US Government/Credit Index, 0.5% Bloomberg Barclays US Government/Credit 1-5 Year Index, and 0.5% Bloomberg Barclays US Treasury Bills 1-3 Month Index. The components that make up the composite index may vary over time. The composite index represents target allocations for 2020. Percentages listed may not total to 100% due to rounding.
Schwab Target Funds | Annual Report
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.
Schwab Target Funds | Annual Report
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; and
• 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
© 2020 Schwab Funds. All rights reserved.
Schwab Target Funds | Annual Report
Charles Schwab Investment Management
With a straightforward lineup of core products and solutions for building the foundation of a portfolio, Charles Schwab Investment Management advocates for investors of all sizes with a steadfast focus on lowering costs and reducing unnecessary complexity. The list below shows all currently available Schwab Funds®.
Investors should carefully consider information contained in the prospectus, or if available, the summary prospectus, including investment objectives, risks, charges and expenses before investing. Please call 1-877-824-5615 for a prospectus 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.schwabfunds.com/schwabfunds_prospectus, the SEC’s website at www.sec.gov, or by contacting Schwab Funds at 1-877-824-5615.
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.schwabfunds.com/schwabfunds_prospectus or the SEC’s website at www.sec.gov.
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 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 U.S. Large-Cap Growth Index Fund
Schwab U.S. Large-Cap Value Index Fund
Schwab U.S. Mid-Cap Index Fund
Schwab International Index Fund®
Asset Allocation Funds
Schwab Balanced Fund
Schwab MarketTrack Portfolios®
Schwab Target Funds
Schwab Target Index Funds
Schwab Monthly Income Funds
Bond Funds
Schwab Treasury Inflation Protected Securities Index Fund
Schwab U.S. Aggregate Bond Index Fund
Schwab Short-Term Bond Index Fund
Schwab Tax-Free Bond Fund1
Schwab California Tax-Free Bond Fund1
Schwab High Yield Municipal Bond Fund
Schwab Money Funds2
Schwab provides a broad choice of taxable and tax-exempt money market funds for both retail and institutional client types.
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
Funds
Schwab Funds
1-877-824-5615
© 2020 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC®
Printed on recycled paper.
| ¹ | State, local, and the Federal Alternative Minimum Tax may apply. Capital gains are not exempt from Federal Taxation. |
| ² | You could lose money by investing in the Schwab Money Funds. All Schwab Money Funds with the exception of Schwab Variable Share Price Money Fund seek to preserve the value of your investment at $1.00 per share, but cannot guarantee they will do so. Because the share price of Schwab Variable Share Price Money Fund will fluctuate, when you sell your shares they may be worth more or less than what you originally paid for them. All Schwab Money Funds with the exception of Schwab Government Money Fund, Schwab Retirement Government Money Fund, Schwab U.S. Treasury Money Fund, Schwab Treasury Obligations Money Fund and Schwab Government Money Market Portfolio may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Schwab Money Funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Schwab Money Funds’ sponsor has no legal obligation to provide financial support to the Funds, and you should not expect that the sponsor will provide financial support to the Funds at any time. |
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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 13(a)(1) of Form N-CSR. |
Item 3: Audit Committee Financial Expert.
Registrant’s Board of Trustees has determined that Kiran M. Patel and Kimberly S. Patmore, each currently serving on its audit, compliance and valuation 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, compliance and valuation committee is “independent” under the standards set forth in Item 3 of Form N-CSR.
The designation of each of Mr. Patel and Ms. Patmore 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, compliance and valuation 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, compliance and valuation committee or Board of Trustees.
Item 4: Principal Accountant Fees and Services.
Registrant is composed of fifty-one operational series. Thirty-six 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, eleven series have a fiscal year-end of March 31, and one series has a fiscal year-end of the last day of February. Principal accountant fees disclosed in Items 4(a)-(d) and 4(g) include fees billed for services rendered to the fifty-one operational series during 2020/2021 and 2019/2020, based on their respective 2020/2021 and 2019/2020 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 Fees |
Fiscal Year
2019/2020 | | Fiscal Year
2018/2019 | | Fiscal Year
2019/2020 | | Fiscal Year
2018/2019 | | Fiscal Year
2019/2020 | | Fiscal Year
2018/2019 | | Fiscal Year
2019/2020 | | Fiscal Year
2018/2019 |
| $1,203,450 | | $1,517,001 | | $90,000 | | $87,870 | | $158,100 | | $177,307 | | $0 | | $0 |
| 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. |
| (e) (1) | Registrant’s audit, compliance and valuation 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, compliance and valuation committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X) that were approved by Registrant’s audit, compliance and valuation 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.
2019/2020: $3,570,594 2018/2019: $265,177
| (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, compliance and valuation 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, Schwab U.S. Large-Cap Growth Index Fund, Schwab U.S. Large-Cap Value Index Fund, Schwab U.S. Mid-Cap Index Fund and Schwab International Index Fund are filed under this Item.
Schwab S&P 500 Index Fund
Portfolio Holdings as of October 31, 2020
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 U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Common Stock 99.5% of net assets |
| |
| Automobiles & Components 0.4% |
| Aptiv plc | 438,148 | 42,276,900 |
| BorgWarner, Inc. | 396,197 | 13,858,971 |
| Ford Motor Co. | 6,348,442 | 49,073,457 |
| General Motors Co. | 2,040,951 | 70,474,038 |
| | | 175,683,366 |
| |
| Banks 3.5% |
| Bank of America Corp. | 12,355,276 | 292,820,041 |
| Citigroup, Inc. | 3,373,959 | 139,749,382 |
| Citizens Financial Group, Inc. | 689,428 | 18,786,913 |
| Comerica, Inc. | 227,778 | 10,366,177 |
| Fifth Third Bancorp | 1,152,380 | 26,758,264 |
| First Republic Bank | 278,689 | 35,153,830 |
| Huntington Bancshares, Inc. | 1,660,055 | 17,330,974 |
| JPMorgan Chase & Co. | 4,939,328 | 484,251,717 |
| KeyCorp | 1,591,408 | 20,656,476 |
| M&T Bank Corp. | 207,614 | 21,504,658 |
| People's United Financial, Inc. | 696,109 | 7,427,483 |
| Regions Financial Corp. | 1,563,420 | 20,793,486 |
| SVB Financial Group * | 84,160 | 24,465,312 |
| The PNC Financial Services Group, Inc. | 687,604 | 76,929,135 |
| Truist Financial Corp. | 2,183,657 | 91,975,633 |
| U.S. Bancorp | 2,220,696 | 86,496,109 |
| Wells Fargo & Co. | 6,675,459 | 143,188,596 |
| Zions Bancorp NA | 268,647 | 8,669,239 |
| | | 1,527,323,425 |
| |
| Capital Goods 5.6% |
| 3M Co. | 933,306 | 149,291,628 |
| A.O. Smith Corp. | 219,980 | 11,370,766 |
| Allegion plc | 149,131 | 14,689,403 |
| AMETEK, Inc. | 372,803 | 36,609,255 |
| Carrier Global Corp. | 1,315,841 | 43,935,931 |
| Caterpillar, Inc. | 877,639 | 137,833,205 |
| Cummins, Inc. | 239,059 | 52,566,683 |
| Deere & Co. | 508,530 | 114,882,012 |
| Dover Corp. | 233,006 | 25,796,094 |
| Eaton Corp. plc | 649,518 | 67,413,473 |
| Emerson Electric Co. | 970,378 | 62,870,791 |
| Fastenal Co. | 932,304 | 40,303,502 |
| Flowserve Corp. | 214,867 | 6,256,927 |
| Fortive Corp. | 545,861 | 33,625,038 |
| Fortune Brands Home & Security, Inc. | 224,138 | 18,126,040 |
| General Dynamics Corp. | 376,980 | 49,508,783 |
| General Electric Co. | 14,188,244 | 105,276,770 |
| Honeywell International, Inc. | 1,137,520 | 187,633,924 |
| Howmet Aerospace, Inc. | 635,567 | 10,963,531 |
| Huntington Ingalls Industries, Inc. | 66,244 | 9,769,665 |
| IDEX Corp. | 122,985 | 20,955,414 |
| Illinois Tool Works, Inc. | 466,226 | 91,324,349 |
| Ingersoll Rand, Inc. * | 601,015 | 20,999,464 |
| Jacobs Engineering Group, Inc. | 209,996 | 19,949,620 |
| Johnson Controls International plc | 1,205,547 | 50,886,139 |
| L3Harris Technologies, Inc. | 350,471 | 56,464,383 |
| Security | Number
of Shares | Value ($) |
| Lockheed Martin Corp. | 398,635 | 139,574,073 |
| Masco Corp. | 423,445 | 22,696,652 |
| Northrop Grumman Corp. | 251,208 | 72,805,103 |
| Otis Worldwide Corp. | 658,784 | 40,370,283 |
| PACCAR, Inc. | 560,261 | 47,835,084 |
| Parker-Hannifin Corp. | 208,760 | 43,497,234 |
| Pentair plc | 267,212 | 13,296,469 |
| Quanta Services, Inc. | 225,376 | 14,070,224 |
| Raytheon Technologies Corp. | 2,475,215 | 134,453,679 |
| Rockwell Automation, Inc. | 188,495 | 44,695,934 |
| Roper Technologies, Inc. | 169,702 | 63,017,141 |
| Snap-on, Inc. | 88,352 | 13,918,091 |
| Stanley Black & Decker, Inc. | 258,692 | 42,994,610 |
| Teledyne Technologies, Inc. * | 60,065 | 18,569,095 |
| Textron, Inc. | 370,069 | 13,248,470 |
| The Boeing Co. | 860,056 | 124,183,486 |
| Trane Technologies plc | 388,961 | 51,634,573 |
| TransDigm Group, Inc. | 87,828 | 41,929,965 |
| United Rentals, Inc. * | 116,376 | 20,748,677 |
| W.W. Grainger, Inc. | 72,865 | 25,504,207 |
| Westinghouse Air Brake Technologies Corp. | 289,556 | 17,170,671 |
| Xylem, Inc. | 291,223 | 25,377,172 |
| | | 2,470,893,683 |
| |
| Commercial & Professional Services 0.7% |
| Cintas Corp. | 140,863 | 44,308,457 |
| Copart, Inc. * | 335,319 | 37,005,805 |
| Equifax, Inc. | 197,067 | 26,919,352 |
| IHS Markit Ltd. | 604,866 | 48,915,513 |
| Nielsen Holdings plc | 585,745 | 7,913,415 |
| Republic Services, Inc. | 341,254 | 30,088,365 |
| Robert Half International, Inc. | 183,797 | 9,316,670 |
| Rollins, Inc. | 238,494 | 13,796,878 |
| Verisk Analytics, Inc. | 263,205 | 46,842,594 |
| Waste Management, Inc. | 629,376 | 67,915,964 |
| | | 333,023,013 |
| |
| Consumer Durables & Apparel 1.2% |
| D.R. Horton, Inc. | 536,549 | 35,846,839 |
| Garmin Ltd. | 241,755 | 25,147,355 |
| Hanesbrands, Inc. | 570,321 | 9,165,059 |
| Hasbro, Inc. | 207,951 | 17,201,707 |
| Leggett & Platt, Inc. | 212,099 | 8,850,891 |
| Lennar Corp., Class A | 446,362 | 31,348,003 |
| Mohawk Industries, Inc. * | 97,293 | 10,039,665 |
| Newell Brands, Inc. | 606,979 | 10,719,249 |
| NIKE, Inc., Class B | 2,017,430 | 242,252,994 |
| NVR, Inc. * | 5,656 | 22,358,677 |
| PulteGroup, Inc. | 435,318 | 17,743,562 |
| PVH Corp. | 116,177 | 6,771,957 |
| Ralph Lauren Corp. | 78,271 | 5,232,416 |
| Tapestry, Inc. | 441,730 | 9,819,658 |
| Under Armour, Inc., Class A * | 309,404 | 4,282,151 |
| Under Armour, Inc., Class C * | 313,942 | 3,839,511 |
Schwab Equity Index Funds | Annual Report
Schwab S&P 500 Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| VF Corp. | 517,477 | 34,774,454 |
| Whirlpool Corp. | 100,586 | 18,604,387 |
| | | 513,998,535 |
| |
| Consumer Services 1.6% |
| Carnival Corp. | 839,831 | 11,514,083 |
| Chipotle Mexican Grill, Inc. * | 45,323 | 54,454,678 |
| Darden Restaurants, Inc. | 210,159 | 19,317,815 |
| Domino's Pizza, Inc. | 63,965 | 24,199,239 |
| Hilton Worldwide Holdings, Inc. | 450,009 | 39,515,290 |
| Las Vegas Sands Corp. | 532,447 | 25,589,403 |
| Marriott International, Inc., Class A | 431,289 | 40,058,122 |
| McDonald's Corp. | 1,206,199 | 256,920,387 |
| MGM Resorts International | 664,256 | 13,663,746 |
| Norwegian Cruise Line Holdings Ltd. * | 447,203 | 7,436,986 |
| Royal Caribbean Cruises Ltd. | 288,972 | 16,303,800 |
| Starbucks Corp. | 1,894,999 | 164,789,113 |
| Wynn Resorts Ltd. | 156,385 | 11,326,966 |
| Yum! Brands, Inc. | 488,860 | 45,625,304 |
| | | 730,714,932 |
| |
| Diversified Financials 4.5% |
| American Express Co. | 1,057,353 | 96,472,888 |
| Ameriprise Financial, Inc. | 194,963 | 31,355,899 |
| Berkshire Hathaway, Inc., Class B * | 3,212,682 | 648,640,496 |
| BlackRock, Inc. | 229,877 | 137,744,597 |
| Capital One Financial Corp. | 740,269 | 54,098,859 |
| Cboe Global Markets, Inc. | 176,297 | 14,331,183 |
| CME Group, Inc. | 581,163 | 87,592,887 |
| Discover Financial Services | 496,026 | 32,246,650 |
| Franklin Resources, Inc. | 433,688 | 8,131,650 |
| Intercontinental Exchange, Inc. | 909,371 | 85,844,623 |
| Invesco Ltd. | 611,421 | 8,015,729 |
| MarketAxess Holdings, Inc. | 61,607 | 33,196,932 |
| Moody's Corp. | 261,396 | 68,721,009 |
| Morgan Stanley | 2,315,081 | 111,471,150 |
| MSCI, Inc. | 135,563 | 47,425,360 |
| Nasdaq, Inc. | 185,705 | 22,468,448 |
| Northern Trust Corp. | 337,520 | 26,417,691 |
| Raymond James Financial, Inc. | 199,418 | 15,243,512 |
| S&P Global, Inc. | 390,689 | 126,087,061 |
| State Street Corp. | 572,441 | 33,716,775 |
| Synchrony Financial | 879,818 | 22,013,046 |
| T. Rowe Price Group, Inc. | 367,967 | 46,606,700 |
| The Bank of New York Mellon Corp. | 1,319,970 | 45,354,169 |
| The Charles Schwab Corp. (a) | 2,391,011 | 98,294,462 |
| The Goldman Sachs Group, Inc. | 557,556 | 105,400,386 |
| | | 2,006,892,162 |
| |
| Energy 2.0% |
| Apache Corp. | 618,239 | 5,131,384 |
| Baker Hughes Co. | 1,058,514 | 15,634,252 |
| Cabot Oil & Gas Corp. | 640,523 | 11,394,904 |
| Chevron Corp. | 3,120,307 | 216,861,337 |
| Concho Resources, Inc. | 317,479 | 13,178,553 |
| ConocoPhillips | 1,739,733 | 49,791,158 |
| Devon Energy Corp. | 619,855 | 5,535,305 |
| Diamondback Energy, Inc. | 253,043 | 6,568,996 |
| EOG Resources, Inc. | 941,415 | 32,234,050 |
| Exxon Mobil Corp. | 6,855,647 | 223,631,205 |
| Halliburton Co. | 1,419,024 | 17,113,429 |
| Hess Corp. | 443,616 | 16,511,388 |
| HollyFrontier Corp. | 240,558 | 4,452,729 |
| Kinder Morgan, Inc. | 3,148,132 | 37,462,771 |
| Marathon Oil Corp. | 1,300,665 | 5,150,633 |
| Security | Number
of Shares | Value ($) |
| Marathon Petroleum Corp. | 1,055,566 | 31,139,197 |
| National Oilwell Varco, Inc. | 629,693 | 5,289,421 |
| Occidental Petroleum Corp. | 1,359,775 | 12,414,746 |
| ONEOK, Inc. | 720,731 | 20,901,199 |
| Phillips 66 | 707,124 | 32,994,406 |
| Pioneer Natural Resources Co. | 267,016 | 21,243,793 |
| Schlumberger N.V. | 2,252,819 | 33,657,116 |
| TechnipFMC plc | 696,083 | 3,849,339 |
| The Williams Cos., Inc. | 1,968,700 | 37,779,353 |
| Valero Energy Corp. | 658,994 | 25,443,758 |
| | | 885,364,422 |
| |
| Food & Staples Retailing 1.6% |
| Costco Wholesale Corp. | 715,756 | 255,968,661 |
| Sysco Corp. | 822,890 | 45,514,046 |
| The Kroger Co. | 1,261,039 | 40,618,066 |
| Walgreens Boots Alliance, Inc. | 1,166,055 | 39,692,512 |
| Walmart, Inc. | 2,250,718 | 312,287,122 |
| | | 694,080,407 |
| |
| Food, Beverage & Tobacco 3.4% |
| Altria Group, Inc. | 3,012,722 | 108,699,010 |
| Archer-Daniels-Midland Co. | 902,445 | 41,729,057 |
| Brown-Forman Corp., Class B | 296,959 | 20,701,012 |
| Campbell Soup Co. | 327,651 | 15,291,472 |
| Conagra Brands, Inc. | 790,756 | 27,747,628 |
| Constellation Brands, Inc., Class A | 272,407 | 45,009,809 |
| General Mills, Inc. | 989,472 | 58,497,585 |
| Hormel Foods Corp. | 453,955 | 22,103,069 |
| Kellogg Co. | 410,860 | 25,838,985 |
| Lamb Weston Holdings, Inc. | 235,752 | 14,958,464 |
| McCormick & Co., Inc. - Non Voting Shares | 201,156 | 36,310,669 |
| Molson Coors Beverage Co., Class B | 306,615 | 10,811,245 |
| Mondelez International, Inc., Class A | 2,315,339 | 122,990,808 |
| Monster Beverage Corp. * | 598,210 | 45,804,940 |
| PepsiCo, Inc. | 2,244,122 | 299,119,021 |
| Philip Morris International, Inc. | 2,524,311 | 179,276,567 |
| The Coca-Cola Co. | 6,266,381 | 301,162,271 |
| The Hershey Co. | 239,832 | 32,967,307 |
| The JM Smucker Co. | 184,481 | 20,698,768 |
| The Kraft Heinz Co. | 1,049,133 | 32,092,978 |
| Tyson Foods, Inc., Class A | 477,917 | 27,351,190 |
| | | 1,489,161,855 |
| |
| Health Care Equipment & Services 6.7% |
| Abbott Laboratories | 2,870,109 | 301,677,157 |
| ABIOMED, Inc. * | 72,805 | 18,338,123 |
| Align Technology, Inc. * | 116,021 | 49,434,228 |
| AmerisourceBergen Corp. | 238,301 | 22,893,577 |
| Anthem, Inc. | 407,742 | 111,232,018 |
| Baxter International, Inc. | 820,766 | 63,666,819 |
| Becton, Dickinson & Co. | 469,893 | 108,606,369 |
| Boston Scientific Corp. * | 2,317,969 | 79,436,798 |
| Cardinal Health, Inc. | 471,916 | 21,609,034 |
| Centene Corp. * | 941,322 | 55,632,130 |
| Cerner Corp. | 494,930 | 34,689,644 |
| Cigna Corp. | 595,352 | 99,405,923 |
| CVS Health Corp. | 2,119,644 | 118,890,832 |
| Danaher Corp. | 1,023,164 | 234,857,065 |
| DaVita, Inc. * | 121,964 | 10,519,395 |
| DENTSPLY SIRONA, Inc. | 353,081 | 16,661,892 |
| DexCom, Inc. * | 155,185 | 49,594,022 |
| Edwards Lifesciences Corp. * | 1,007,036 | 72,194,411 |
| HCA Healthcare, Inc. | 427,184 | 52,945,185 |
Schwab Equity Index Funds | Annual Report
Schwab S&P 500 Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Henry Schein, Inc. * | 229,653 | 14,601,338 |
| Hologic, Inc. * | 419,181 | 28,848,036 |
| Humana, Inc. | 214,497 | 85,644,362 |
| IDEXX Laboratories, Inc. * | 137,692 | 58,494,315 |
| Intuitive Surgical, Inc. * | 189,764 | 126,587,769 |
| Laboratory Corp. of America Holdings * | 157,823 | 31,528,301 |
| McKesson Corp. | 263,352 | 38,841,786 |
| Medtronic plc | 2,178,195 | 219,061,071 |
| Quest Diagnostics, Inc. | 216,727 | 26,471,036 |
| ResMed, Inc. | 235,631 | 45,227,014 |
| STERIS plc | 138,566 | 24,552,510 |
| Stryker Corp. | 529,720 | 107,008,737 |
| Teleflex, Inc. | 75,329 | 23,971,948 |
| The Cooper Cos., Inc. | 79,418 | 25,338,313 |
| UnitedHealth Group, Inc. | 1,540,479 | 470,061,762 |
| Universal Health Services, Inc., Class B | 126,672 | 13,876,918 |
| Varian Medical Systems, Inc. * | 148,214 | 25,611,379 |
| West Pharmaceutical Services, Inc. | 119,892 | 32,619,016 |
| Zimmer Biomet Holdings, Inc. | 335,095 | 44,266,049 |
| | | 2,964,896,282 |
| |
| Household & Personal Products 2.0% |
| Church & Dwight Co., Inc. | 399,760 | 35,334,786 |
| Colgate-Palmolive Co. | 1,389,178 | 109,592,252 |
| Kimberly-Clark Corp. | 552,476 | 73,252,793 |
| The Clorox Co. | 204,811 | 42,447,080 |
| The Estee Lauder Cos., Inc., Class A | 365,401 | 80,263,984 |
| The Procter & Gamble Co. | 4,035,300 | 553,239,630 |
| | | 894,130,525 |
| |
| Insurance 1.8% |
| Aflac, Inc. | 1,074,784 | 36,488,917 |
| American International Group, Inc. | 1,394,220 | 43,903,988 |
| Aon plc, Class A | 375,926 | 69,174,143 |
| Arthur J. Gallagher & Co. | 310,416 | 32,193,243 |
| Assurant, Inc. | 96,843 | 12,044,364 |
| Chubb Ltd. | 731,470 | 95,025,268 |
| Cincinnati Financial Corp. | 242,364 | 17,144,829 |
| Everest Re Group Ltd. | 65,174 | 12,844,492 |
| Globe Life, Inc. | 160,163 | 12,987,618 |
| Lincoln National Corp. | 294,627 | 10,341,408 |
| Loews Corp. | 388,941 | 13,488,474 |
| Marsh & McLennan Cos., Inc. | 820,898 | 84,930,107 |
| MetLife, Inc. | 1,250,199 | 47,320,032 |
| Principal Financial Group, Inc. | 410,920 | 16,116,282 |
| Prudential Financial, Inc. | 639,191 | 40,921,008 |
| The Allstate Corp. | 506,094 | 44,915,842 |
| The Hartford Financial Services Group, Inc. | 580,623 | 22,365,598 |
| The Progressive Corp. | 948,658 | 87,181,670 |
| The Travelers Cos., Inc. | 410,009 | 49,492,186 |
| Unum Group | 335,134 | 5,918,466 |
| W.R. Berkley Corp. | 227,713 | 13,690,106 |
| Willis Towers Watson plc | 208,524 | 38,051,460 |
| | | 806,539,501 |
| |
| Materials 2.7% |
| Air Products & Chemicals, Inc. | 358,023 | 98,900,274 |
| Albemarle Corp. | 173,263 | 16,149,844 |
| Amcor plc | 2,532,743 | 26,416,509 |
| Avery Dennison Corp. | 136,120 | 18,837,647 |
| Ball Corp. | 530,208 | 47,188,512 |
| Celanese Corp. | 191,440 | 21,730,354 |
| CF Industries Holdings, Inc. | 342,817 | 9,465,177 |
| Corteva, Inc. | 1,216,177 | 40,109,517 |
| Security | Number
of Shares | Value ($) |
| Dow, Inc. | 1,201,349 | 54,649,366 |
| DuPont de Nemours, Inc. | 1,188,727 | 67,614,792 |
| Eastman Chemical Co. | 218,456 | 17,659,983 |
| Ecolab, Inc. | 402,300 | 73,858,257 |
| FMC Corp. | 209,478 | 21,521,770 |
| Freeport-McMoRan, Inc. | 2,357,412 | 40,877,524 |
| International Flavors & Fragrances, Inc. (b) | 173,384 | 17,799,601 |
| International Paper Co. | 637,145 | 27,875,094 |
| Linde plc | 851,574 | 187,635,815 |
| LyondellBasell Industries N.V., Class A | 416,698 | 28,522,978 |
| Martin Marietta Materials, Inc. | 101,050 | 26,914,668 |
| Newmont Corp. | 1,301,575 | 81,790,973 |
| Nucor Corp. | 488,047 | 23,309,125 |
| Packaging Corp. of America | 154,327 | 17,668,898 |
| PPG Industries, Inc. | 383,258 | 49,716,228 |
| Sealed Air Corp. | 250,203 | 9,905,537 |
| The Mosaic Co. | 562,547 | 10,407,120 |
| The Sherwin-Williams Co. | 132,791 | 91,357,552 |
| Vulcan Materials Co. | 214,713 | 31,099,031 |
| WestRock Co. | 417,722 | 15,685,461 |
| | | 1,174,667,607 |
| |
| Media & Entertainment 9.3% |
| Activision Blizzard, Inc. | 1,251,217 | 94,754,663 |
| Alphabet, Inc., Class A * | 487,031 | 787,095,669 |
| Alphabet, Inc., Class C * | 475,882 | 771,409,481 |
| Charter Communications, Inc., Class A * | 242,494 | 146,422,727 |
| Comcast Corp., Class A | 7,389,397 | 312,128,129 |
| Discovery, Inc., Class A * | 259,079 | 5,243,759 |
| Discovery, Inc., Class C * | 503,004 | 9,215,033 |
| DISH Network Corp., Class A * | 400,137 | 10,199,492 |
| Electronic Arts, Inc. * | 468,939 | 56,192,960 |
| Facebook, Inc., Class A * | 3,897,113 | 1,025,369,402 |
| Fox Corp., Class A | 553,584 | 14,681,048 |
| Fox Corp., Class B | 258,291 | 6,751,727 |
| Live Nation Entertainment, Inc. * | 230,721 | 11,259,185 |
| Netflix, Inc. * | 715,005 | 340,156,479 |
| News Corp., Class A | 624,330 | 8,197,453 |
| News Corp., Class B | 204,109 | 2,657,499 |
| Omnicom Group, Inc. | 345,760 | 16,319,872 |
| Take-Two Interactive Software, Inc. * | 184,887 | 28,642,694 |
| The Interpublic Group of Cos., Inc. | 626,857 | 11,339,843 |
| The Walt Disney Co. | 2,929,198 | 355,165,258 |
| Twitter, Inc. * | 1,283,109 | 53,069,388 |
| ViacomCBS, Inc., Class B | 913,980 | 26,112,409 |
| | | 4,092,384,170 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 7.3% |
| AbbVie, Inc. | 2,860,791 | 243,453,314 |
| Agilent Technologies, Inc. | 499,937 | 51,038,568 |
| Alexion Pharmaceuticals, Inc. * | 355,309 | 40,910,278 |
| Amgen, Inc. | 949,368 | 205,955,894 |
| Bio-Rad Laboratories, Inc., Class A * | 34,574 | 20,274,885 |
| Biogen, Inc. * | 256,617 | 64,685,447 |
| Bristol-Myers Squibb Co. | 3,653,695 | 213,558,473 |
| Catalent, Inc. * | 265,969 | 23,344,099 |
| Eli Lilly & Co. | 1,286,823 | 167,878,929 |
| Gilead Sciences, Inc. | 2,032,127 | 118,168,185 |
| Illumina, Inc. * | 236,668 | 69,272,724 |
| Incyte Corp. * | 301,192 | 26,095,275 |
| IQVIA Holdings, Inc. * | 310,036 | 47,742,444 |
| Johnson & Johnson | 4,267,622 | 585,133,652 |
| Merck & Co., Inc. | 4,099,769 | 308,343,626 |
| Mettler-Toledo International, Inc. * | 38,851 | 38,769,801 |
| Mylan N.V. * | 831,870 | 12,095,390 |
Schwab Equity Index Funds | Annual Report
Schwab S&P 500 Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| PerkinElmer, Inc. | 182,047 | 23,584,189 |
| Perrigo Co., plc | 221,431 | 9,714,178 |
| Pfizer, Inc. | 9,007,472 | 319,585,107 |
| Regeneron Pharmaceuticals, Inc. * | 169,418 | 92,088,848 |
| Thermo Fisher Scientific, Inc. | 641,234 | 303,380,630 |
| Vertex Pharmaceuticals, Inc. * | 422,516 | 88,035,434 |
| Waters Corp. * | 100,119 | 22,308,516 |
| Zoetis, Inc. | 770,035 | 122,089,049 |
| | | 3,217,506,935 |
| |
| Real Estate 2.6% |
| Alexandria Real Estate Equities, Inc. | 190,282 | 28,831,529 |
| American Tower Corp. | 719,047 | 165,129,144 |
| Apartment Investment & Management Co., Class A | 244,064 | 7,785,642 |
| AvalonBay Communities, Inc. | 228,286 | 31,761,431 |
| Boston Properties, Inc. | 229,921 | 16,648,580 |
| CBRE Group, Inc., Class A * | 544,640 | 27,449,856 |
| Crown Castle International Corp. | 680,138 | 106,237,556 |
| Digital Realty Trust, Inc. | 435,898 | 62,900,081 |
| Duke Realty Corp. | 597,584 | 22,702,216 |
| Equinix, Inc. | 143,467 | 104,908,809 |
| Equity Residential | 555,429 | 26,094,054 |
| Essex Property Trust, Inc. | 105,765 | 21,638,461 |
| Extra Space Storage, Inc. | 209,138 | 24,249,551 |
| Federal Realty Investment Trust | 111,857 | 7,693,524 |
| Healthpeak Properties, Inc. | 871,031 | 23,491,706 |
| Host Hotels & Resorts, Inc. | 1,135,050 | 11,895,324 |
| Iron Mountain, Inc. | 470,412 | 12,258,937 |
| Kimco Realty Corp. | 707,740 | 7,261,412 |
| Mid-America Apartment Communities, Inc. | 184,742 | 21,546,459 |
| Prologis, Inc. | 1,197,680 | 118,809,856 |
| Public Storage | 246,437 | 56,451,324 |
| Realty Income Corp. | 560,524 | 32,431,919 |
| Regency Centers Corp. | 256,222 | 9,118,941 |
| SBA Communications Corp. | 181,718 | 52,765,456 |
| Simon Property Group, Inc. | 494,205 | 31,041,016 |
| SL Green Realty Corp. | 119,004 | 5,094,561 |
| UDR, Inc. | 476,303 | 14,879,706 |
| Ventas, Inc. | 606,081 | 23,922,017 |
| Vornado Realty Trust | 253,033 | 7,775,704 |
| Welltower, Inc. | 674,651 | 36,275,984 |
| Weyerhaeuser Co. | 1,211,147 | 33,052,202 |
| | | 1,152,102,958 |
| |
| Retailing 8.3% |
| Advance Auto Parts, Inc. | 111,733 | 16,456,036 |
| Amazon.com, Inc. * | 690,098 | 2,095,241,043 |
| AutoZone, Inc. * | 37,829 | 42,708,184 |
| Best Buy Co., Inc. | 373,450 | 41,658,348 |
| Booking Holdings, Inc. * | 66,383 | 107,706,417 |
| CarMax, Inc. * | 263,413 | 22,769,420 |
| Dollar General Corp. | 403,710 | 84,258,314 |
| Dollar Tree, Inc. * | 385,807 | 34,846,088 |
| eBay, Inc. | 1,077,596 | 51,325,897 |
| Etsy, Inc. * | 193,429 | 23,519,032 |
| Expedia Group, Inc. | 218,937 | 20,612,919 |
| Genuine Parts Co. | 234,004 | 21,160,982 |
| L Brands, Inc. | 375,426 | 12,017,386 |
| LKQ Corp. * | 454,568 | 14,541,630 |
| Lowe's Cos., Inc. | 1,225,286 | 193,717,717 |
| O'Reilly Automotive, Inc. * | 120,113 | 52,441,336 |
| Pool Corp. | 64,925 | 22,712,713 |
| Ross Stores, Inc. | 576,385 | 49,090,710 |
| Target Corp. | 810,967 | 123,445,397 |
| Security | Number
of Shares | Value ($) |
| The Gap, Inc. | 333,890 | 6,494,161 |
| The Home Depot, Inc. | 1,744,990 | 465,406,283 |
| The TJX Cos., Inc. | 1,944,210 | 98,765,868 |
| Tiffany & Co. | 174,650 | 22,851,206 |
| Tractor Supply Co. | 189,177 | 25,200,268 |
| Ulta Beauty, Inc. * | 90,978 | 18,811,521 |
| | | 3,667,758,876 |
| |
| Semiconductors & Semiconductor Equipment 5.0% |
| Advanced Micro Devices, Inc. * | 1,903,270 | 143,297,198 |
| Analog Devices, Inc. | 598,513 | 70,941,746 |
| Applied Materials, Inc. | 1,480,430 | 87,685,869 |
| Broadcom, Inc. | 651,831 | 227,899,673 |
| Intel Corp. | 6,892,979 | 305,221,110 |
| KLA Corp. | 252,604 | 49,808,457 |
| Lam Research Corp. | 236,203 | 80,800,322 |
| Maxim Integrated Products, Inc. | 432,799 | 30,144,450 |
| Microchip Technology, Inc. | 409,093 | 42,987,492 |
| Micron Technology, Inc. * | 1,800,966 | 90,660,628 |
| NVIDIA Corp. | 1,000,023 | 501,371,531 |
| Qorvo, Inc. * | 185,232 | 23,591,148 |
| QUALCOMM, Inc. | 1,828,475 | 225,560,676 |
| Skyworks Solutions, Inc. | 271,250 | 38,324,912 |
| Teradyne, Inc. | 268,886 | 23,621,635 |
| Texas Instruments, Inc. | 1,484,562 | 214,652,820 |
| Xilinx, Inc. | 395,653 | 46,960,055 |
| | | 2,203,529,722 |
| |
| Software & Services 14.3% |
| Accenture plc, Class A | 1,031,319 | 223,703,404 |
| Adobe, Inc. * | 777,511 | 347,625,168 |
| Akamai Technologies, Inc. * | 263,465 | 25,060,791 |
| ANSYS, Inc. * | 139,094 | 42,336,041 |
| Autodesk, Inc. * | 355,504 | 83,735,412 |
| Automatic Data Processing, Inc. | 697,188 | 110,127,816 |
| Broadridge Financial Solutions, Inc. | 186,049 | 25,600,342 |
| Cadence Design Systems, Inc. * | 452,099 | 49,446,068 |
| Citrix Systems, Inc. | 200,200 | 22,676,654 |
| Cognizant Technology Solutions Corp., Class A | 880,857 | 62,910,807 |
| DXC Technology Co. | 406,457 | 7,486,938 |
| Fidelity National Information Services, Inc. | 1,003,820 | 125,065,934 |
| Fiserv, Inc. * | 901,193 | 86,036,896 |
| FleetCor Technologies, Inc. * | 136,261 | 30,101,417 |
| Fortinet, Inc. * | 217,833 | 24,042,228 |
| Gartner, Inc. * | 144,329 | 17,333,913 |
| Global Payments, Inc. | 485,078 | 76,516,204 |
| International Business Machines Corp. | 1,443,284 | 161,157,091 |
| Intuit, Inc. | 424,017 | 133,429,670 |
| Jack Henry & Associates, Inc. | 124,547 | 18,464,093 |
| Leidos Holdings, Inc. | 215,780 | 17,909,740 |
| Mastercard, Inc., Class A | 1,431,974 | 413,324,975 |
| Microsoft Corp. | 12,266,451 | 2,483,588,334 |
| NortonLifeLock, Inc. | 957,871 | 19,703,406 |
| Oracle Corp. | 3,133,914 | 175,843,915 |
| Paychex, Inc. | 519,139 | 42,699,183 |
| Paycom Software, Inc. * | 79,369 | 28,897,459 |
| PayPal Holdings, Inc. * | 1,901,872 | 353,995,435 |
| salesforce.com, Inc. * | 1,474,980 | 342,593,605 |
| ServiceNow, Inc. * | 310,879 | 154,684,064 |
| Synopsys, Inc. * | 245,582 | 52,520,167 |
| The Western Union Co. | 662,847 | 12,885,746 |
| Tyler Technologies, Inc. * | 65,189 | 25,057,348 |
Schwab Equity Index Funds | Annual Report
Schwab S&P 500 Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| VeriSign, Inc. * | 163,946 | 31,264,502 |
| Visa, Inc., Class A | 2,733,066 | 496,625,423 |
| | | 6,324,450,189 |
| |
| Technology Hardware & Equipment 8.0% |
| Amphenol Corp., Class A | 483,480 | 54,555,883 |
| Apple Inc. | 26,057,919 | 2,836,665,062 |
| Arista Networks, Inc. * | 88,998 | 18,591,682 |
| CDW Corp. | 230,786 | 28,294,364 |
| Cisco Systems, Inc. | 6,861,350 | 246,322,465 |
| Corning, Inc. | 1,233,958 | 39,449,637 |
| F5 Networks, Inc. * | 99,892 | 13,279,643 |
| FLIR Systems, Inc. | 212,754 | 7,380,436 |
| Hewlett Packard Enterprise Co. | 2,075,018 | 17,928,156 |
| HP, Inc. | 2,226,111 | 39,980,954 |
| IPG Photonics Corp. * | 57,655 | 10,721,524 |
| Juniper Networks, Inc. | 541,089 | 10,670,275 |
| Keysight Technologies, Inc. * | 303,797 | 31,859,191 |
| Motorola Solutions, Inc. | 274,651 | 43,411,336 |
| NetApp, Inc. | 360,979 | 15,843,368 |
| Seagate Technology plc | 364,007 | 17,406,815 |
| TE Connectivity Ltd. | 534,330 | 51,765,890 |
| Vontier Corp. * | 218,343 | 6,275,178 |
| Western Digital Corp. | 490,200 | 18,495,246 |
| Xerox Holdings Corp. | 294,192 | 5,113,057 |
| Zebra Technologies Corp., Class A * | 85,995 | 24,391,622 |
| | | 3,538,401,784 |
| |
| Telecommunication Services 1.8% |
| AT&T, Inc. | 11,550,195 | 312,086,269 |
| CenturyLink, Inc. | 1,595,127 | 13,749,995 |
| T-Mobile US, Inc. * | 942,966 | 103,320,784 |
| Verizon Communications, Inc. | 6,707,808 | 382,277,978 |
| | | 811,435,026 |
| |
| Transportation 2.0% |
| Alaska Air Group, Inc. | 201,431 | 7,632,221 |
| American Airlines Group, Inc. (b) | 831,215 | 9,376,105 |
| C.H. Robinson Worldwide, Inc. | 217,904 | 19,269,251 |
| CSX Corp. | 1,240,346 | 97,912,913 |
| Delta Air Lines, Inc. | 1,033,126 | 31,654,981 |
| Expeditors International of Washington, Inc. | 271,768 | 24,016,138 |
| FedEx Corp. | 390,148 | 101,231,702 |
| JB Hunt Transport Services, Inc. | 135,173 | 16,455,961 |
| Kansas City Southern | 152,866 | 26,925,817 |
| Norfolk Southern Corp. | 413,604 | 86,492,868 |
| Old Dominion Freight Line, Inc. | 155,859 | 29,670,878 |
| Southwest Airlines Co. | 954,789 | 37,742,809 |
| Union Pacific Corp. | 1,100,432 | 194,985,546 |
| United Airlines Holdings, Inc. * | 471,374 | 15,960,724 |
| United Parcel Service, Inc., Class B | 1,146,058 | 180,057,172 |
| | | 879,385,086 |
| |
| Utilities 3.2% |
| Alliant Energy Corp. | 403,663 | 22,314,491 |
| Ameren Corp. | 400,965 | 32,526,281 |
| American Electric Power Co., Inc. | 804,957 | 72,389,783 |
| American Water Works Co., Inc. | 294,426 | 44,314,057 |
| Atmos Energy Corp. | 200,298 | 18,361,318 |
| CenterPoint Energy, Inc. | 880,420 | 18,603,275 |
| CMS Energy Corp. | 464,576 | 29,421,598 |
| Consolidated Edison, Inc. | 543,480 | 42,657,745 |
| Dominion Energy, Inc. | 1,360,852 | 109,330,850 |
| Security | Number
of Shares | Value ($) |
| DTE Energy Co. | 312,992 | 38,629,473 |
| Duke Energy Corp. | 1,190,813 | 109,685,785 |
| Edison International | 614,179 | 34,418,591 |
| Entergy Corp. | 325,171 | 32,913,809 |
| Evergy, Inc. | 367,505 | 20,286,276 |
| Eversource Energy | 554,675 | 48,406,487 |
| Exelon Corp. | 1,581,294 | 63,077,818 |
| FirstEnergy Corp. | 881,185 | 26,188,818 |
| NextEra Energy, Inc. | 3,174,624 | 232,414,223 |
| NiSource, Inc. | 616,533 | 14,161,763 |
| NRG Energy, Inc. | 392,554 | 12,412,557 |
| Pinnacle West Capital Corp. | 181,630 | 14,815,559 |
| PPL Corp. | 1,248,343 | 34,329,432 |
| Public Service Enterprise Group, Inc. | 818,765 | 47,611,185 |
| Sempra Energy | 468,987 | 58,792,210 |
| The AES Corp. | 1,072,908 | 20,921,706 |
| The Southern Co. | 1,711,978 | 98,353,136 |
| WEC Energy Group, Inc. | 511,203 | 51,401,462 |
| Xcel Energy, Inc. | 851,303 | 59,616,749 |
| | | 1,408,356,437 |
| Total Common Stock |
| (Cost $20,594,421,840) | | 43,962,680,898 |
|
| Other Investment Company 0.1% of net assets |
| |
| Securities Lending Collateral 0.1% |
| Wells Fargo Government Money Market Fund, Select Class 0.04% (c) | 26,288,917 | 26,288,917 |
| Total Other Investment Company |
| (Cost $26,288,917) | | 26,288,917 |
Security
Rate, Maturity Date | Face
Amount ($) | Value ($) |
| Short-Term Investments 0.2% of net assets |
| |
| Time Deposits 0.2% |
| Australia & New Zealand Banking Group Ltd. |
| 0.01%, 11/02/20 (d) | 53,742,658 | 53,742,658 |
| Royal Bank of Canada |
| 0.01%, 11/02/20 (d) | 44,479,641 | 44,479,641 |
| Total Short-Term Investments |
| (Cost $98,222,299) | | 98,222,299 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | |
| Long | |
| S&P 500 Index, e-mini, expires 12/18/20 | 1,185 | 193,433,475 | (3,964,109) |
| * | 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 $25,808,897. |
| (c) | The rate shown is the 7-day yield. |
| (d) | The rate shown is the current daily overnight rate. |
Schwab Equity Index Funds | Annual Report
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Common Stock 99.6% of net assets |
| |
| Automobiles & Components 1.4% |
| Aptiv plc | 85,571 | 8,256,746 |
| Autoliv, Inc. | 24,786 | 1,878,779 |
| BorgWarner, Inc. | 77,568 | 2,713,329 |
| Ford Motor Co. | 1,234,347 | 9,541,502 |
| General Motors Co. | 398,334 | 13,754,473 |
| Gentex Corp. | 77,412 | 2,141,990 |
| Harley-Davidson, Inc. | 47,918 | 1,575,544 |
| Lear Corp. | 17,147 | 2,071,529 |
| Tesla, Inc. * | 235,981 | 91,570,067 |
| Thor Industries, Inc. | 17,294 | 1,462,726 |
| | | 134,966,685 |
| |
| Banks 3.4% |
| Bank of America Corp. | 2,413,704 | 57,204,785 |
| Bank of Hawaii Corp. | 12,588 | 763,336 |
| Bank OZK | 39,106 | 969,047 |
| BOK Financial Corp. | 9,347 | 549,043 |
| CIT Group, Inc. | 30,989 | 912,626 |
| Citigroup, Inc. | 659,419 | 27,313,135 |
| Citizens Financial Group, Inc. | 134,624 | 3,668,504 |
| Comerica, Inc. | 43,835 | 1,994,931 |
| Commerce Bancshares, Inc. | 31,593 | 1,966,664 |
| Community Bank System, Inc. | 17,025 | 987,280 |
| Cullen/Frost Bankers, Inc. | 17,758 | 1,247,855 |
| East West Bancorp, Inc. | 44,383 | 1,619,092 |
| Essent Group Ltd. | 35,671 | 1,421,489 |
| F.N.B. Corp. | 104,231 | 787,986 |
| Fifth Third Bancorp | 225,530 | 5,236,807 |
| First Citizens BancShares, Inc., Class A | 2,309 | 1,068,374 |
| First Financial Bankshares, Inc. | 45,931 | 1,369,203 |
| First Hawaiian, Inc. | 40,838 | 704,864 |
| First Horizon National Corp. | 176,241 | 1,834,669 |
| First Republic Bank | 54,593 | 6,886,361 |
| Glacier Bancorp, Inc. | 30,409 | 1,088,642 |
| Hancock Whitney Corp. | 26,622 | 608,845 |
| Huntington Bancshares, Inc. | 324,360 | 3,386,318 |
| JPMorgan Chase & Co. | 964,793 | 94,588,306 |
| KeyCorp | 308,295 | 4,001,669 |
| M&T Bank Corp. | 40,521 | 4,197,165 |
| MGIC Investment Corp. | 109,422 | 1,100,785 |
| New York Community Bancorp, Inc. | 146,117 | 1,214,232 |
| PacWest Bancorp | 35,734 | 687,522 |
| People's United Financial, Inc. | 137,542 | 1,467,573 |
| Pinnacle Financial Partners, Inc. | 23,394 | 1,071,211 |
| Popular, Inc. | 26,787 | 1,130,411 |
| Prosperity Bancshares, Inc. | 29,055 | 1,601,221 |
| Radian Group, Inc. | 59,320 | 1,064,794 |
| Regions Financial Corp. | 303,768 | 4,040,115 |
| Signature Bank | 16,904 | 1,364,829 |
| Sterling Bancorp | 62,731 | 839,341 |
| SVB Financial Group * | 16,411 | 4,770,678 |
| Synovus Financial Corp. | 45,764 | 1,189,864 |
| TCF Financial Corp. | 48,422 | 1,317,563 |
| TFS Financial Corp. | 16,400 | 257,644 |
| The PNC Financial Services Group, Inc. | 134,263 | 15,021,345 |
| Security | Number
of Shares | Value ($) |
| Truist Financial Corp. | 426,467 | 17,962,790 |
| U.S. Bancorp | 433,780 | 16,895,731 |
| Umpqua Holdings Corp. | 68,094 | 855,261 |
| United Bankshares, Inc. | 41,048 | 1,076,689 |
| Valley National Bancorp | 128,972 | 985,346 |
| Webster Financial Corp. | 28,095 | 904,940 |
| Wells Fargo & Co. | 1,305,116 | 27,994,738 |
| Western Alliance Bancorp | 32,116 | 1,323,179 |
| Wintrust Financial Corp. | 17,735 | 873,094 |
| Zions Bancorp NA | 51,405 | 1,658,839 |
| | | 335,046,731 |
| |
| Capital Goods 5.7% |
| 3M Co. | 182,466 | 29,187,261 |
| A.O. Smith Corp. | 42,655 | 2,204,837 |
| Acuity Brands, Inc. | 12,444 | 1,109,258 |
| AECOM * | 50,597 | 2,268,769 |
| Aerojet Rocketdyne Holdings, Inc. * | 22,322 | 723,679 |
| AGCO Corp. | 19,180 | 1,477,435 |
| Air Lease Corp. | 34,403 | 937,138 |
| Allegion plc | 29,314 | 2,887,429 |
| Allison Transmission Holdings, Inc. | 35,289 | 1,275,697 |
| AMETEK, Inc. | 72,902 | 7,158,976 |
| Armstrong World Industries, Inc. | 15,294 | 916,111 |
| Axon Enterprise, Inc. * | 19,874 | 1,965,539 |
| BWX Technologies, Inc. | 29,821 | 1,640,453 |
| Carlisle Cos., Inc. | 17,348 | 2,148,897 |
| Carrier Global Corp. | 258,161 | 8,619,996 |
| Caterpillar, Inc. | 171,507 | 26,935,174 |
| Colfax Corp. * | 31,998 | 870,026 |
| Crane Co. | 15,943 | 809,107 |
| Cummins, Inc. | 46,861 | 10,304,265 |
| Curtiss-Wright Corp. | 12,875 | 1,086,135 |
| Deere & Co. | 99,214 | 22,413,435 |
| Donaldson Co., Inc. | 39,418 | 1,872,355 |
| Dover Corp. | 45,697 | 5,059,115 |
| Eaton Corp. plc | 126,506 | 13,130,058 |
| EMCOR Group, Inc. | 17,522 | 1,194,825 |
| Emerson Electric Co. | 188,921 | 12,240,192 |
| Fastenal Co. | 182,041 | 7,869,632 |
| Flowserve Corp. | 41,009 | 1,194,182 |
| Fortive Corp. | 106,972 | 6,589,475 |
| Fortune Brands Home & Security, Inc. | 43,913 | 3,551,244 |
| Gates Industrial Corp. plc * | 14,417 | 160,029 |
| Generac Holdings, Inc. * | 19,942 | 4,190,811 |
| General Dynamics Corp. | 73,730 | 9,682,961 |
| General Electric Co. | 2,770,842 | 20,559,648 |
| Graco, Inc. | 52,369 | 3,241,641 |
| HD Supply Holdings, Inc. * | 51,151 | 2,038,879 |
| HEICO Corp. | 13,213 | 1,388,026 |
| HEICO Corp., Class A | 23,421 | 2,189,864 |
| Hexcel Corp. | 26,521 | 887,923 |
| Honeywell International, Inc. | 222,302 | 36,668,715 |
| Howmet Aerospace, Inc. | 123,246 | 2,125,994 |
| Hubbell, Inc. | 17,072 | 2,484,147 |
| Huntington Ingalls Industries, Inc. | 12,791 | 1,886,417 |
| IDEX Corp. | 23,862 | 4,065,846 |
| Illinois Tool Works, Inc. | 91,028 | 17,830,565 |
| Ingersoll Rand, Inc. * | 117,806 | 4,116,142 |
Schwab Equity Index Funds | Annual Report
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| ITT, Inc. | 27,666 | 1,674,070 |
| Jacobs Engineering Group, Inc. | 41,463 | 3,938,985 |
| Johnson Controls International plc | 235,088 | 9,923,064 |
| L3Harris Technologies, Inc. | 68,590 | 11,050,535 |
| Lennox International, Inc. | 10,924 | 2,967,614 |
| Lincoln Electric Holdings, Inc. | 19,036 | 1,938,246 |
| Lockheed Martin Corp. | 77,907 | 27,277,578 |
| Masco Corp. | 83,083 | 4,453,249 |
| MasTec, Inc. * | 17,744 | 880,812 |
| Mercury Systems, Inc. * | 17,366 | 1,196,170 |
| Nordson Corp. | 17,133 | 3,314,036 |
| Northrop Grumman Corp. | 49,027 | 14,209,005 |
| nVent Electric plc | 54,127 | 976,992 |
| Oshkosh Corp. | 21,835 | 1,470,806 |
| Otis Worldwide Corp. | 129,184 | 7,916,396 |
| Owens Corning | 34,014 | 2,226,897 |
| PACCAR, Inc. | 109,794 | 9,374,212 |
| Parker-Hannifin Corp. | 40,801 | 8,501,296 |
| Parsons Corp. * | 7,374 | 232,428 |
| Pentair plc | 52,757 | 2,625,188 |
| Quanta Services, Inc. | 43,572 | 2,720,200 |
| Raytheon Technologies Corp. | 483,310 | 26,253,399 |
| RBC Bearings, Inc. * | 7,827 | 931,804 |
| Rexnord Corp. | 38,335 | 1,229,787 |
| Rockwell Automation, Inc. | 36,806 | 8,727,439 |
| Roper Technologies, Inc. | 33,106 | 12,293,582 |
| Sensata Technologies Holding plc * | 49,434 | 2,160,760 |
| SiteOne Landscape Supply, Inc. * | 14,025 | 1,675,847 |
| Snap-on, Inc. | 17,329 | 2,729,837 |
| Spirit AeroSystems Holdings, Inc., Class A | 34,044 | 619,260 |
| Stanley Black & Decker, Inc. | 50,382 | 8,373,488 |
| Teledyne Technologies, Inc. * | 11,700 | 3,617,055 |
| Textron, Inc. | 72,381 | 2,591,240 |
| The Boeing Co. | 167,876 | 24,239,616 |
| The Middleby Corp. * | 17,584 | 1,750,311 |
| The Timken Co. | 21,066 | 1,257,640 |
| The Toro Co. | 34,051 | 2,795,587 |
| Trane Technologies plc | 75,587 | 10,034,174 |
| TransDigm Group, Inc. | 17,200 | 8,211,452 |
| Trex Co., Inc. * | 36,512 | 2,539,044 |
| United Rentals, Inc. * | 22,696 | 4,046,470 |
| Univar Solutions, Inc. * | 53,810 | 892,708 |
| W.W. Grainger, Inc. | 14,287 | 5,000,736 |
| Watsco, Inc. | 10,407 | 2,332,625 |
| Westinghouse Air Brake Technologies Corp. | 56,795 | 3,367,943 |
| Woodward, Inc. | 18,262 | 1,452,742 |
| Xylem, Inc. | 56,797 | 4,949,291 |
| | | 556,099,919 |
| |
| Commercial & Professional Services 1.0% |
| ADT, Inc. | 48,281 | 318,172 |
| ASGN, Inc. * | 16,472 | 1,098,353 |
| Cintas Corp. | 27,591 | 8,678,749 |
| Clean Harbors, Inc. * | 15,813 | 837,615 |
| Copart, Inc. * | 65,573 | 7,236,636 |
| CoStar Group, Inc. * | 12,432 | 10,239,120 |
| Equifax, Inc. | 38,551 | 5,266,067 |
| FTI Consulting, Inc. * | 11,633 | 1,145,385 |
| IAA, Inc. * | 42,387 | 2,398,680 |
| IHS Markit Ltd. | 118,367 | 9,572,339 |
| ManpowerGroup, Inc. | 18,677 | 1,267,608 |
| MSA Safety, Inc. | 11,278 | 1,487,794 |
| Nielsen Holdings plc | 112,402 | 1,518,551 |
| Republic Services, Inc. | 66,719 | 5,882,614 |
| Robert Half International, Inc. | 36,215 | 1,835,738 |
| Rollins, Inc. | 46,818 | 2,708,421 |
| Security | Number
of Shares | Value ($) |
| Stericycle, Inc. * | 28,501 | 1,775,612 |
| Tetra Tech, Inc. | 16,816 | 1,696,903 |
| The Brink's Co. | 16,117 | 690,291 |
| TransUnion | 60,218 | 4,796,966 |
| TriNet Group, Inc. * | 12,768 | 879,971 |
| Verisk Analytics, Inc. | 51,542 | 9,172,930 |
| Waste Management, Inc. | 122,888 | 13,260,844 |
| | | 93,765,359 |
| |
| Consumer Durables & Apparel 1.3% |
| Brunswick Corp. | 24,797 | 1,579,817 |
| Capri Holdings Ltd. * | 47,193 | 1,001,436 |
| Carter's, Inc. | 13,909 | 1,132,888 |
| Columbia Sportswear Co. | 9,701 | 723,598 |
| D.R. Horton, Inc. | 105,100 | 7,021,731 |
| Deckers Outdoor Corp. * | 8,825 | 2,235,990 |
| Garmin Ltd. | 47,358 | 4,926,179 |
| Hanesbrands, Inc. | 109,656 | 1,762,172 |
| Hasbro, Inc. | 40,098 | 3,316,907 |
| Helen of Troy Ltd. * | 7,946 | 1,506,562 |
| Leggett & Platt, Inc. | 41,615 | 1,736,594 |
| Lennar Corp., Class A | 87,211 | 6,124,829 |
| Lululemon Athletica, Inc. * | 37,446 | 11,956,133 |
| Mattel, Inc. * | 108,814 | 1,498,369 |
| Mohawk Industries, Inc. * | 18,806 | 1,940,591 |
| Newell Brands, Inc. | 119,705 | 2,113,990 |
| NIKE, Inc., Class B | 394,251 | 47,341,660 |
| NVR, Inc. * | 1,104 | 4,364,211 |
| Polaris, Inc. | 18,040 | 1,639,114 |
| PulteGroup, Inc. | 85,236 | 3,474,219 |
| PVH Corp. | 22,544 | 1,314,090 |
| Ralph Lauren Corp. | 15,438 | 1,032,030 |
| Skechers U.S.A., Inc., Class A * | 42,630 | 1,351,797 |
| Tapestry, Inc. | 87,656 | 1,948,593 |
| Tempur Sealy International, Inc. * | 15,250 | 1,357,250 |
| Toll Brothers, Inc. | 36,393 | 1,538,696 |
| Under Armour, Inc., Class A * | 59,687 | 826,068 |
| Under Armour, Inc., Class C * | 61,564 | 752,928 |
| VF Corp. | 101,416 | 6,815,155 |
| Whirlpool Corp. | 19,666 | 3,637,423 |
| | | 127,971,020 |
| |
| Consumer Services 1.8% |
| Aramark | 80,046 | 2,220,476 |
| Bright Horizons Family Solutions, Inc. * | 19,186 | 3,032,347 |
| Caesars Entertainment, Inc. * | 63,297 | 2,836,972 |
| Carnival Corp. | 164,419 | 2,254,184 |
| Chegg, Inc. * | 39,463 | 2,898,163 |
| Chipotle Mexican Grill, Inc. * | 8,835 | 10,615,076 |
| Choice Hotels International, Inc. | 9,153 | 799,515 |
| Churchill Downs, Inc. | 11,066 | 1,650,494 |
| Cracker Barrel Old Country Store, Inc. | 7,251 | 825,309 |
| Darden Restaurants, Inc. | 41,296 | 3,795,928 |
| Domino's Pizza, Inc. | 12,403 | 4,692,303 |
| Dunkin' Brands Group, Inc. | 25,857 | 2,578,201 |
| frontdoor, Inc. * | 27,165 | 1,076,277 |
| Grand Canyon Education, Inc. * | 14,861 | 1,164,657 |
| H&R Block, Inc. | 61,015 | 1,053,119 |
| Hilton Worldwide Holdings, Inc. | 88,004 | 7,727,631 |
| Las Vegas Sands Corp. | 104,232 | 5,009,390 |
| Marriott International, Inc., Class A | 83,866 | 7,789,474 |
| Marriott Vacations Worldwide Corp. | 13,042 | 1,259,857 |
| McDonald's Corp. | 235,548 | 50,171,724 |
| MGM Resorts International | 129,985 | 2,673,791 |
| Norwegian Cruise Line Holdings Ltd. * | 88,431 | 1,470,608 |
| Planet Fitness, Inc., Class A * | 25,639 | 1,519,623 |
Schwab Equity Index Funds | Annual Report
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Royal Caribbean Cruises Ltd. | 56,554 | 3,190,777 |
| Service Corp. International | 55,986 | 2,592,712 |
| Starbucks Corp. | 370,007 | 32,175,809 |
| Terminix Global Holdings, Inc. * | 41,450 | 1,951,880 |
| Texas Roadhouse, Inc. | 20,403 | 1,428,822 |
| The Wendy's Co. | 57,183 | 1,249,449 |
| Vail Resorts, Inc. | 12,620 | 2,928,345 |
| Wyndham Destinations, Inc. | 27,429 | 895,008 |
| Wyndham Hotels & Resorts, Inc. | 29,566 | 1,375,115 |
| Wynn Resorts Ltd. | 30,688 | 2,222,732 |
| Yum! Brands, Inc. | 95,528 | 8,915,628 |
| | | 178,041,396 |
| |
| Diversified Financials 4.5% |
| Affiliated Managers Group, Inc. | 14,555 | 1,097,010 |
| AGNC Investment Corp. | 177,295 | 2,476,811 |
| Ally Financial, Inc. | 118,697 | 3,166,836 |
| American Express Co. | 206,410 | 18,832,848 |
| Ameriprise Financial, Inc. | 38,177 | 6,140,007 |
| Annaly Capital Management, Inc. | 445,549 | 3,158,942 |
| Berkshire Hathaway, Inc., Class B * | 627,590 | 126,710,421 |
| BlackRock, Inc. | 44,892 | 26,899,735 |
| Blackstone Mortgage Trust, Inc., Class A | 47,122 | 1,022,547 |
| Capital One Financial Corp. | 144,840 | 10,584,907 |
| Cboe Global Markets, Inc. | 34,535 | 2,807,350 |
| Chimera Investment Corp. | 74,130 | 618,986 |
| CME Group, Inc. | 113,479 | 17,103,555 |
| Credit Acceptance Corp. * | 3,868 | 1,153,128 |
| Discover Financial Services | 97,235 | 6,321,247 |
| Eaton Vance Corp. | 35,983 | 2,151,424 |
| Equitable Holdings, Inc. | 128,460 | 2,760,605 |
| FactSet Research Systems, Inc. | 12,066 | 3,698,229 |
| Franklin Resources, Inc. | 84,975 | 1,593,281 |
| Interactive Brokers Group, Inc., Class A | 25,103 | 1,194,150 |
| Intercontinental Exchange, Inc. | 177,572 | 16,762,797 |
| Invesco Ltd. | 119,698 | 1,569,241 |
| Janus Henderson Group plc | 47,705 | 1,159,232 |
| Jefferies Financial Group, Inc. | 68,636 | 1,339,088 |
| Lazard Ltd., Class A | 35,274 | 1,187,676 |
| LendingTree, Inc. * | 2,535 | 820,301 |
| LPL Financial Holdings, Inc. | 24,863 | 1,987,300 |
| MarketAxess Holdings, Inc. | 12,052 | 6,494,220 |
| Moody's Corp. | 51,035 | 13,417,102 |
| Morgan Stanley | 451,951 | 21,761,441 |
| Morningstar, Inc. | 6,820 | 1,298,392 |
| MSCI, Inc. | 26,398 | 9,235,076 |
| Nasdaq, Inc. | 36,613 | 4,429,807 |
| New Residential Investment Corp. | 129,500 | 971,250 |
| Northern Trust Corp. | 66,062 | 5,170,673 |
| OneMain Holdings, Inc. | 23,072 | 804,982 |
| Raymond James Financial, Inc. | 38,668 | 2,955,782 |
| S&P Global, Inc. | 76,318 | 24,630,108 |
| Santander Consumer USA Holdings, Inc. | 23,104 | 469,935 |
| SEI Investments Co. | 38,679 | 1,901,073 |
| Starwood Property Trust, Inc. | 88,358 | 1,234,361 |
| State Street Corp. | 111,844 | 6,587,612 |
| Stifel Financial Corp. | 21,314 | 1,246,016 |
| Synchrony Financial | 172,357 | 4,312,372 |
| T. Rowe Price Group, Inc. | 72,035 | 9,123,953 |
| The Bank of New York Mellon Corp. | 257,911 | 8,861,822 |
| The Blackstone Group, Inc., Class A | 212,937 | 10,736,284 |
| The Charles Schwab Corp. (a) | 466,411 | 19,174,156 |
| The Goldman Sachs Group, Inc. | 108,921 | 20,590,426 |
| Two Harbors Investment Corp. | 90,007 | 455,435 |
| Voya Financial, Inc. | 39,685 | 1,902,102 |
| | | 442,082,034 |
| |
| Security | Number
of Shares | Value ($) |
| Energy 1.9% |
| Apache Corp. | 119,134 | 988,812 |
| Baker Hughes Co. | 208,160 | 3,074,523 |
| Cabot Oil & Gas Corp. | 126,555 | 2,251,413 |
| Cheniere Energy, Inc. * | 73,080 | 3,498,340 |
| Chevron Corp. | 609,427 | 42,355,177 |
| Cimarex Energy Co. | 32,384 | 821,582 |
| Concho Resources, Inc. | 62,400 | 2,590,224 |
| ConocoPhillips | 337,979 | 9,672,959 |
| Continental Resources, Inc. | 19,852 | 238,820 |
| CVR Energy, Inc. | 8,884 | 97,813 |
| Devon Energy Corp. | 122,166 | 1,090,942 |
| Diamondback Energy, Inc. | 49,602 | 1,287,668 |
| EOG Resources, Inc. | 184,852 | 6,329,332 |
| Exxon Mobil Corp. | 1,338,557 | 43,663,729 |
| Halliburton Co. | 277,521 | 3,346,903 |
| Helmerich & Payne, Inc. | 35,325 | 525,283 |
| Hess Corp. | 86,821 | 3,231,478 |
| HollyFrontier Corp. | 47,416 | 877,670 |
| Kinder Morgan, Inc. | 616,882 | 7,340,896 |
| Marathon Oil Corp. | 253,489 | 1,003,816 |
| Marathon Petroleum Corp. | 206,529 | 6,092,606 |
| Murphy Oil Corp. | 45,849 | 353,954 |
| National Oilwell Varco, Inc. | 123,569 | 1,037,980 |
| Occidental Petroleum Corp. | 265,854 | 2,427,247 |
| ONEOK, Inc. | 140,350 | 4,070,150 |
| Parsley Energy, Inc., Class A | 96,462 | 965,585 |
| PBF Energy, Inc., Class A | 33,772 | 157,715 |
| Phillips 66 | 138,340 | 6,454,944 |
| Pioneer Natural Resources Co. | 52,167 | 4,150,407 |
| Schlumberger N.V. | 440,778 | 6,585,223 |
| Targa Resources Corp. | 73,044 | 1,172,356 |
| TechnipFMC plc | 130,770 | 723,158 |
| The Williams Cos., Inc. | 385,163 | 7,391,278 |
| Transocean Ltd. *(b) | 189,158 | 126,830 |
| Valero Energy Corp. | 129,428 | 4,997,215 |
| WPX Energy, Inc. * | 124,942 | 575,983 |
| | | 181,570,011 |
| |
| Food & Staples Retailing 1.4% |
| Casey's General Stores, Inc. | 11,631 | 1,960,638 |
| Costco Wholesale Corp. | 139,862 | 50,017,448 |
| Performance Food Group Co. * | 42,248 | 1,419,955 |
| Sysco Corp. | 160,571 | 8,881,182 |
| The Kroger Co. | 245,409 | 7,904,624 |
| U.S. Foods Holding Corp. * | 69,425 | 1,450,983 |
| Walgreens Boots Alliance, Inc. | 228,306 | 7,771,536 |
| Walmart, Inc. | 439,708 | 61,009,485 |
| | | 140,415,851 |
| |
| Food, Beverage & Tobacco 3.2% |
| Altria Group, Inc. | 588,080 | 21,217,926 |
| Archer-Daniels-Midland Co. | 176,372 | 8,155,441 |
| Beyond Meat, Inc. * | 15,659 | 2,230,311 |
| Brown-Forman Corp., Class B | 57,777 | 4,027,635 |
| Bunge Ltd. | 43,973 | 2,494,588 |
| Campbell Soup Co. | 64,288 | 3,000,321 |
| Conagra Brands, Inc. | 154,875 | 5,434,564 |
| Constellation Brands, Inc., Class A | 53,329 | 8,811,551 |
| Darling Ingredients, Inc. * | 51,439 | 2,211,877 |
| Flowers Foods, Inc. | 61,687 | 1,454,579 |
| General Mills, Inc. | 193,660 | 11,449,179 |
| Hormel Foods Corp. | 88,716 | 4,319,582 |
| Ingredion, Inc. | 21,087 | 1,494,857 |
| Kellogg Co. | 80,190 | 5,043,149 |
Schwab Equity Index Funds | Annual Report
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Keurig Dr Pepper, Inc. | 147,383 | 3,964,603 |
| Lamb Weston Holdings, Inc. | 46,044 | 2,921,492 |
| Lancaster Colony Corp. | 6,287 | 1,044,522 |
| McCormick & Co., Inc. - Non Voting Shares | 39,339 | 7,101,083 |
| Molson Coors Beverage Co., Class B | 58,943 | 2,078,330 |
| Mondelez International, Inc., Class A | 452,268 | 24,024,476 |
| Monster Beverage Corp. * | 117,173 | 8,971,937 |
| PepsiCo, Inc. | 438,492 | 58,446,599 |
| Philip Morris International, Inc. | 493,085 | 35,018,897 |
| Pilgrim's Pride Corp. * | 16,389 | 274,352 |
| Post Holdings, Inc. * | 20,034 | 1,720,921 |
| Sanderson Farms, Inc. | 6,056 | 774,986 |
| Seaboard Corp. | 74 | 254,930 |
| The Coca-Cola Co. | 1,223,525 | 58,802,611 |
| The Hershey Co. | 46,673 | 6,415,671 |
| The JM Smucker Co. | 36,222 | 4,064,108 |
| The Kraft Heinz Co. | 205,644 | 6,290,650 |
| Tyson Foods, Inc., Class A | 93,398 | 5,345,168 |
| | | 308,860,896 |
| |
| Health Care Equipment & Services 6.5% |
| Abbott Laboratories | 560,663 | 58,931,288 |
| ABIOMED, Inc. * | 14,261 | 3,592,061 |
| Align Technology, Inc. * | 22,643 | 9,647,729 |
| Amedisys, Inc. * | 10,175 | 2,635,325 |
| AmerisourceBergen Corp. | 46,669 | 4,483,491 |
| Anthem, Inc. | 79,637 | 21,724,974 |
| Baxter International, Inc. | 160,022 | 12,412,907 |
| Becton, Dickinson & Co. | 91,770 | 21,210,800 |
| Boston Scientific Corp. * | 452,658 | 15,512,590 |
| Cardinal Health, Inc. | 92,629 | 4,241,482 |
| Centene Corp. * | 183,122 | 10,822,510 |
| Cerner Corp. | 96,925 | 6,793,473 |
| Chemed Corp. | 5,045 | 2,413,124 |
| Cigna Corp. | 116,241 | 19,408,760 |
| CVS Health Corp. | 414,407 | 23,244,089 |
| Danaher Corp. | 199,990 | 45,905,705 |
| DaVita, Inc. * | 23,878 | 2,059,477 |
| DENTSPLY SIRONA, Inc. | 69,531 | 3,281,168 |
| DexCom, Inc. * | 30,259 | 9,670,171 |
| Edwards Lifesciences Corp. * | 196,659 | 14,098,484 |
| Encompass Health Corp. | 31,462 | 1,928,935 |
| Globus Medical, Inc., Class A * | 23,551 | 1,227,478 |
| Guardant Health, Inc. * | 26,815 | 2,860,088 |
| Haemonetics Corp. * | 15,892 | 1,606,522 |
| HCA Healthcare, Inc. | 83,301 | 10,324,326 |
| HealthEquity, Inc. * | 24,638 | 1,268,611 |
| Henry Schein, Inc. * | 45,429 | 2,888,376 |
| Hill-Rom Holdings, Inc. | 21,219 | 1,932,414 |
| Hologic, Inc. * | 81,908 | 5,636,909 |
| Humana, Inc. | 41,862 | 16,714,659 |
| ICU Medical, Inc. * | 6,082 | 1,081,319 |
| IDEXX Laboratories, Inc. * | 26,875 | 11,417,037 |
| Insulet Corp. * | 20,721 | 4,605,242 |
| Integra LifeSciences Holdings Corp. * | 21,913 | 966,363 |
| Intuitive Surgical, Inc. * | 37,056 | 24,719,316 |
| Laboratory Corp. of America Holdings * | 30,821 | 6,157,111 |
| LHC Group, Inc. * | 10,032 | 2,172,430 |
| Masimo Corp. * | 16,053 | 3,592,982 |
| McKesson Corp. | 51,419 | 7,583,788 |
| Medtronic plc | 425,702 | 42,812,850 |
| Molina Healthcare, Inc. * | 18,651 | 3,477,852 |
| NuVasive, Inc. * | 16,265 | 722,654 |
| Penumbra, Inc. * | 10,669 | 2,784,929 |
| Quest Diagnostics, Inc. | 42,348 | 5,172,385 |
| ResMed, Inc. | 45,978 | 8,825,017 |
| Security | Number
of Shares | Value ($) |
| STERIS plc | 27,010 | 4,785,902 |
| Stryker Corp. | 103,460 | 20,899,955 |
| Tandem Diabetes Care, Inc. * | 19,339 | 2,107,951 |
| Teladoc Health, Inc. * | 37,738 | 7,414,007 |
| Teleflex, Inc. | 14,685 | 4,673,208 |
| Tenet Healthcare Corp. * | 34,031 | 835,121 |
| The Cooper Cos., Inc. | 15,563 | 4,965,375 |
| UnitedHealth Group, Inc. | 300,904 | 91,817,847 |
| Universal Health Services, Inc., Class B | 24,674 | 2,703,037 |
| Varian Medical Systems, Inc. * | 28,707 | 4,960,570 |
| Veeva Systems, Inc., Class A * | 42,665 | 11,521,683 |
| West Pharmaceutical Services, Inc. | 23,438 | 6,376,777 |
| Wright Medical Group N.V. * | 40,456 | 1,237,549 |
| Zimmer Biomet Holdings, Inc. | 65,355 | 8,633,395 |
| | | 637,501,578 |
| |
| Household & Personal Products 1.8% |
| Church & Dwight Co., Inc. | 78,499 | 6,938,527 |
| Colgate-Palmolive Co. | 271,414 | 21,411,850 |
| Coty, Inc., Class A | 94,864 | 275,106 |
| Herbalife Nutrition Ltd. * | 31,103 | 1,403,989 |
| Kimberly-Clark Corp. | 107,846 | 14,299,301 |
| The Clorox Co. | 39,841 | 8,257,047 |
| The Estee Lauder Cos., Inc., Class A | 71,353 | 15,673,400 |
| The Procter & Gamble Co. | 788,329 | 108,079,906 |
| | | 176,339,126 |
| |
| Insurance 2.0% |
| Aflac, Inc. | 210,344 | 7,141,179 |
| Alleghany Corp. | 4,544 | 2,485,250 |
| American Financial Group, Inc. | 22,384 | 1,677,457 |
| American International Group, Inc. | 271,729 | 8,556,746 |
| Aon plc, Class A | 73,245 | 13,477,812 |
| Arch Capital Group Ltd. * | 127,728 | 3,858,663 |
| Arthur J. Gallagher & Co. | 60,355 | 6,259,417 |
| Assurant, Inc. | 18,918 | 2,352,832 |
| Assured Guaranty Ltd. | 26,571 | 678,358 |
| Athene Holding Ltd., Class A * | 40,093 | 1,286,183 |
| Axis Capital Holdings Ltd. | 25,451 | 1,086,503 |
| Brighthouse Financial, Inc. * | 29,546 | 977,973 |
| Brown & Brown, Inc. | 74,313 | 3,233,359 |
| Chubb Ltd. | 142,806 | 18,551,927 |
| Cincinnati Financial Corp. | 47,486 | 3,359,160 |
| CNA Financial Corp. | 8,422 | 250,891 |
| Erie Indemnity Co., Class A | 7,915 | 1,843,166 |
| Everest Re Group Ltd. | 12,689 | 2,500,748 |
| Fidelity National Financial, Inc. | 91,711 | 2,869,637 |
| First American Financial Corp. | 35,410 | 1,578,932 |
| Globe Life, Inc. | 31,045 | 2,517,439 |
| Kemper Corp. | 19,642 | 1,211,126 |
| Lincoln National Corp. | 57,676 | 2,024,428 |
| Loews Corp. | 75,674 | 2,624,374 |
| Markel Corp. * | 4,335 | 4,043,688 |
| Marsh & McLennan Cos., Inc. | 160,234 | 16,577,810 |
| MetLife, Inc. | 244,742 | 9,263,485 |
| Old Republic International Corp. | 89,629 | 1,459,160 |
| Primerica, Inc. | 12,550 | 1,383,512 |
| Principal Financial Group, Inc. | 81,176 | 3,183,723 |
| Prudential Financial, Inc. | 125,327 | 8,023,435 |
| Reinsurance Group of America, Inc. | 21,515 | 2,173,445 |
| RenaissanceRe Holdings Ltd. | 16,254 | 2,628,597 |
| RLI Corp. | 12,510 | 1,084,617 |
| Selective Insurance Group, Inc. | 18,480 | 962,069 |
| The Allstate Corp. | 99,086 | 8,793,882 |
| The Hanover Insurance Group, Inc. | 11,711 | 1,120,274 |
Schwab Equity Index Funds | Annual Report
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| The Hartford Financial Services Group, Inc. | 112,867 | 4,347,637 |
| The Progressive Corp. | 185,185 | 17,018,501 |
| The Travelers Cos., Inc. | 79,916 | 9,646,660 |
| Unum Group | 63,861 | 1,127,785 |
| W.R. Berkley Corp. | 44,646 | 2,684,118 |
| Willis Towers Watson plc | 40,882 | 7,460,147 |
| | | 195,386,105 |
| |
| Materials 2.7% |
| Air Products & Chemicals, Inc. | 69,919 | 19,314,425 |
| Albemarle Corp. | 33,803 | 3,150,778 |
| Alcoa Corp. * | 58,176 | 751,634 |
| Amcor plc | 497,866 | 5,192,742 |
| AptarGroup, Inc. | 20,518 | 2,340,899 |
| Arconic Corp. * | 31,581 | 686,571 |
| Ashland Global Holdings, Inc. | 17,332 | 1,209,254 |
| Avery Dennison Corp. | 26,302 | 3,639,934 |
| Axalta Coating Systems Ltd. * | 65,775 | 1,651,610 |
| Ball Corp. | 103,517 | 9,213,013 |
| Berry Global Group, Inc. * | 41,766 | 1,947,549 |
| Celanese Corp. | 37,585 | 4,266,273 |
| CF Industries Holdings, Inc. | 67,984 | 1,877,038 |
| Corteva, Inc. | 236,909 | 7,813,259 |
| Crown Holdings, Inc. * | 42,825 | 3,674,385 |
| Dow, Inc. | 234,136 | 10,650,847 |
| DuPont de Nemours, Inc. | 232,033 | 13,198,037 |
| Eagle Materials, Inc. | 13,047 | 1,112,257 |
| Eastman Chemical Co. | 42,637 | 3,446,775 |
| Ecolab, Inc. | 78,535 | 14,418,241 |
| FMC Corp. | 41,024 | 4,214,806 |
| Freeport-McMoRan, Inc. | 460,888 | 7,991,798 |
| Graphic Packaging Holding Co. | 86,503 | 1,149,625 |
| Huntsman Corp. | 62,484 | 1,517,736 |
| International Flavors & Fragrances, Inc. (b) | 33,961 | 3,486,436 |
| International Paper Co. | 124,914 | 5,464,987 |
| Linde plc | 166,343 | 36,652,017 |
| LyondellBasell Industries N.V., Class A | 81,466 | 5,576,348 |
| Martin Marietta Materials, Inc. | 19,782 | 5,268,936 |
| NewMarket Corp. | 2,325 | 831,629 |
| Newmont Corp. | 253,912 | 15,955,830 |
| Nucor Corp. | 95,868 | 4,578,656 |
| Packaging Corp. of America | 29,912 | 3,424,625 |
| PPG Industries, Inc. | 74,515 | 9,666,086 |
| Reliance Steel & Aluminum Co. | 20,123 | 2,193,206 |
| Royal Gold, Inc. | 20,934 | 2,487,168 |
| RPM International, Inc. | 41,336 | 3,499,919 |
| Sealed Air Corp. | 49,193 | 1,947,551 |
| Sonoco Products Co. | 31,614 | 1,545,608 |
| Steel Dynamics, Inc. | 63,501 | 1,999,011 |
| The Mosaic Co. | 110,370 | 2,041,845 |
| The Scotts Miracle-Gro Co. | 12,927 | 1,939,696 |
| The Sherwin-Williams Co. | 25,927 | 17,837,257 |
| Valvoline, Inc. | 58,833 | 1,157,245 |
| Vulcan Materials Co. | 42,052 | 6,090,812 |
| W.R. Grace & Co. | 19,802 | 861,189 |
| Westlake Chemical Corp. | 11,139 | 753,219 |
| WestRock Co. | 82,057 | 3,081,240 |
| | | 262,770,002 |
| |
| Media & Entertainment 8.9% |
| Activision Blizzard, Inc. | 244,284 | 18,499,627 |
| Alphabet, Inc., Class A * | 95,124 | 153,730,848 |
| Alphabet, Inc., Class C * | 92,947 | 150,668,017 |
| Altice USA, Inc., Class A * | 104,931 | 2,827,890 |
| Cable One, Inc. | 1,720 | 2,978,799 |
| Security | Number
of Shares | Value ($) |
| Charter Communications, Inc., Class A * | 47,359 | 28,596,311 |
| Cinemark Holdings, Inc. | 35,543 | 291,097 |
| Comcast Corp., Class A | 1,443,215 | 60,961,402 |
| Discovery, Inc., Class A * | 49,998 | 1,011,960 |
| Discovery, Inc., Class C * | 98,284 | 1,800,563 |
| DISH Network Corp., Class A * | 78,313 | 1,996,198 |
| Electronic Arts, Inc. * | 91,236 | 10,932,810 |
| Facebook, Inc., Class A * | 761,135 | 200,262,230 |
| Fox Corp., Class A | 108,529 | 2,878,189 |
| Fox Corp., Class B | 49,962 | 1,306,007 |
| IAC/InterActiveCorp * | 25,245 | 3,047,576 |
| Liberty Broadband Corp., Class C * | 48,548 | 6,879,737 |
| Liberty Media Corp. - Liberty Formula One, Class C * | 64,398 | 2,326,700 |
| Liberty Media Corp. - Liberty SiriusXM, Class A * | 26,933 | 931,074 |
| Liberty Media Corp. - Liberty SiriusXM, Class C * | 55,266 | 1,912,204 |
| Live Nation Entertainment, Inc. * | 45,118 | 2,201,758 |
| Madison Square Garden Entertainment Corp. * | 5,575 | 362,375 |
| Madison Square Garden Sports Corp. * | 5,575 | 789,643 |
| Match Group, Inc. * | 82,083 | 9,585,653 |
| Netflix, Inc. * | 139,603 | 66,414,731 |
| News Corp., Class A | 122,428 | 1,607,480 |
| Nexstar Media Group, Inc., Class A | 14,428 | 1,188,867 |
| Omnicom Group, Inc. | 68,220 | 3,219,984 |
| Pinterest, Inc., Class A * | 146,836 | 8,655,982 |
| Roku, Inc. * | 33,603 | 6,801,247 |
| Sirius XM Holdings, Inc. | 385,720 | 2,210,176 |
| Snap, Inc., Class A * | 283,164 | 11,153,830 |
| Take-Two Interactive Software, Inc. * | 36,258 | 5,617,089 |
| TEGNA, Inc. | 67,199 | 808,404 |
| The Interpublic Group of Cos., Inc. | 123,711 | 2,237,932 |
| The New York Times Co., Class A | 45,865 | 1,819,006 |
| The Walt Disney Co. | 571,960 | 69,350,150 |
| TripAdvisor, Inc. | 29,692 | 567,414 |
| Twitter, Inc. * | 250,011 | 10,340,455 |
| ViacomCBS, Inc., Class B | 178,916 | 5,111,630 |
| Zillow Group, Inc., Class C * | 45,405 | 4,023,791 |
| Zynga, Inc., Class A * | 317,500 | 2,854,325 |
| | | 870,761,161 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 7.3% |
| AbbVie, Inc. | 558,288 | 47,510,309 |
| ACADIA Pharmaceuticals, Inc. * | 36,819 | 1,710,243 |
| Agilent Technologies, Inc. | 97,872 | 9,991,752 |
| Alexion Pharmaceuticals, Inc. * | 69,557 | 8,008,793 |
| Allakos, Inc. * | 9,871 | 939,028 |
| Alnylam Pharmaceuticals, Inc. * | 36,806 | 4,526,034 |
| Amgen, Inc. | 185,316 | 40,202,453 |
| Arrowhead Pharmaceuticals, Inc. * | 32,794 | 1,879,096 |
| Avantor, Inc. * | 140,658 | 3,273,112 |
| Bio-Rad Laboratories, Inc., Class A * | 6,756 | 3,961,854 |
| Bio-Techne Corp. | 12,141 | 3,064,510 |
| Biogen, Inc. * | 50,040 | 12,613,583 |
| BioMarin Pharmaceutical, Inc. * | 57,489 | 4,278,906 |
| Bluebird Bio, Inc. * | 20,807 | 1,075,930 |
| Blueprint Medicines Corp. * | 17,644 | 1,804,628 |
| Bridgebio Pharma, Inc. * | 24,480 | 939,542 |
| Bristol-Myers Squibb Co. | 713,400 | 41,698,230 |
| Bruker Corp. | 32,088 | 1,365,024 |
| Catalent, Inc. * | 51,980 | 4,562,285 |
| Charles River Laboratories International, Inc. * | 15,740 | 3,583,998 |
| Elanco Animal Health, Inc. * | 103,863 | 3,220,792 |
Schwab Equity Index Funds | Annual Report
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Eli Lilly & Co. | 251,339 | 32,789,686 |
| Exact Sciences Corp. * | 47,665 | 5,902,357 |
| Exelixis, Inc. * | 97,532 | 1,997,455 |
| FibroGen, Inc. * | 26,417 | 1,013,884 |
| Gilead Sciences, Inc. | 396,707 | 23,068,512 |
| Global Blood Therapeutics, Inc. * | 19,722 | 1,042,899 |
| Horizon Therapeutics plc * | 67,100 | 5,027,803 |
| Illumina, Inc. * | 46,174 | 13,515,130 |
| Incyte Corp. * | 59,008 | 5,112,453 |
| Intercept Pharmaceuticals, Inc. * | 8,455 | 234,964 |
| Ionis Pharmaceuticals, Inc. * | 44,379 | 2,083,594 |
| IQVIA Holdings, Inc. * | 60,399 | 9,300,842 |
| Jazz Pharmaceuticals plc * | 17,564 | 2,530,972 |
| Johnson & Johnson | 833,519 | 114,283,790 |
| Merck & Co., Inc. | 800,788 | 60,227,266 |
| Mettler-Toledo International, Inc. * | 7,609 | 7,593,097 |
| Mirati Therapeutics, Inc. * | 13,815 | 2,999,789 |
| Moderna, Inc. * | 95,157 | 6,420,243 |
| Mylan N.V. * | 163,169 | 2,372,477 |
| Nektar Therapeutics * | 57,684 | 913,715 |
| Neurocrine Biosciences, Inc. * | 29,544 | 2,915,106 |
| PerkinElmer, Inc. | 35,524 | 4,602,134 |
| Perrigo Co., plc | 42,931 | 1,883,383 |
| Pfizer, Inc. | 1,759,131 | 62,413,968 |
| PRA Health Sciences, Inc. * | 20,116 | 1,960,103 |
| Reata Pharmaceuticals, Inc., Class A * | 7,625 | 889,914 |
| Regeneron Pharmaceuticals, Inc. * | 33,069 | 17,974,986 |
| Repligen Corp. * | 15,508 | 2,583,168 |
| Sage Therapeutics, Inc. * | 16,316 | 1,197,268 |
| Sarepta Therapeutics, Inc. * | 24,920 | 3,386,877 |
| Seagen, Inc. * | 38,652 | 6,447,154 |
| Syneos Health, Inc. * | 22,173 | 1,176,943 |
| Thermo Fisher Scientific, Inc. | 125,264 | 59,264,904 |
| United Therapeutics Corp. * | 14,140 | 1,898,012 |
| Vertex Pharmaceuticals, Inc. * | 82,268 | 17,141,360 |
| Waters Corp. * | 19,554 | 4,357,022 |
| Zoetis, Inc. | 150,372 | 23,841,481 |
| | | 712,574,813 |
| |
| Real Estate 3.1% |
| Alexandria Real Estate Equities, Inc. | 37,224 | 5,640,180 |
| American Campus Communities, Inc. | 43,312 | 1,622,467 |
| American Homes 4 Rent, Class A | 84,697 | 2,394,384 |
| American Tower Corp. | 140,418 | 32,246,994 |
| Americold Realty Trust | 64,655 | 2,342,451 |
| Apartment Investment & Management Co., Class A | 46,779 | 1,492,250 |
| AvalonBay Communities, Inc. | 44,674 | 6,215,494 |
| Boston Properties, Inc. | 44,983 | 3,257,219 |
| Brixmor Property Group, Inc. | 93,129 | 1,020,694 |
| Camden Property Trust | 30,956 | 2,855,381 |
| CBRE Group, Inc., Class A * | 106,502 | 5,367,701 |
| CoreSite Realty Corp. | 13,509 | 1,612,434 |
| Cousins Properties, Inc. | 47,237 | 1,203,599 |
| Crown Castle International Corp. | 132,845 | 20,750,389 |
| CubeSmart | 61,264 | 2,078,687 |
| CyrusOne, Inc. | 37,106 | 2,636,381 |
| Digital Realty Trust, Inc. | 85,023 | 12,268,819 |
| Douglas Emmett, Inc. | 52,267 | 1,233,501 |
| Duke Realty Corp. | 117,396 | 4,459,874 |
| EastGroup Properties, Inc. | 12,263 | 1,631,960 |
| EPR Properties | 23,118 | 551,133 |
| Equinix, Inc. | 28,033 | 20,498,851 |
| Equity Commonwealth | 39,015 | 1,030,776 |
| Equity LifeStyle Properties, Inc. | 53,806 | 3,184,777 |
| Equity Residential | 108,722 | 5,107,760 |
| Essex Property Trust, Inc. | 20,652 | 4,225,193 |
| Security | Number
of Shares | Value ($) |
| Extra Space Storage, Inc. | 40,937 | 4,746,645 |
| Federal Realty Investment Trust | 21,888 | 1,505,457 |
| First Industrial Realty Trust, Inc. | 40,218 | 1,601,079 |
| Gaming & Leisure Properties, Inc. | 64,973 | 2,361,768 |
| Healthcare Realty Trust, Inc. | 43,342 | 1,204,908 |
| Healthcare Trust of America, Inc., Class A | 68,778 | 1,671,305 |
| Healthpeak Properties, Inc. | 169,704 | 4,576,917 |
| Highwoods Properties, Inc. | 33,502 | 997,354 |
| Host Hotels & Resorts, Inc. | 223,895 | 2,346,420 |
| Hudson Pacific Properties, Inc. | 48,073 | 925,886 |
| Invitation Homes, Inc. | 177,946 | 4,850,808 |
| Iron Mountain, Inc. | 91,794 | 2,392,152 |
| JBG SMITH Properties | 35,798 | 835,883 |
| Jones Lang LaSalle, Inc. | 16,248 | 1,833,749 |
| Kilroy Realty Corp. | 33,333 | 1,569,318 |
| Kimco Realty Corp. | 136,430 | 1,399,772 |
| Lamar Advertising Co., Class A | 27,198 | 1,685,188 |
| Life Storage, Inc. | 14,679 | 1,675,608 |
| Medical Properties Trust, Inc. | 167,819 | 2,990,535 |
| Mid-America Apartment Communities, Inc. | 36,045 | 4,203,928 |
| National Retail Properties, Inc. | 55,089 | 1,763,399 |
| Omega Healthcare Investors, Inc. | 71,565 | 2,061,788 |
| Outfront Media, Inc. | 47,093 | 617,389 |
| Park Hotels & Resorts, Inc. | 75,179 | 746,527 |
| Prologis, Inc. | 233,814 | 23,194,349 |
| PS Business Parks, Inc. | 6,312 | 719,757 |
| Public Storage | 48,144 | 11,028,346 |
| Rayonier, Inc. | 42,941 | 1,089,843 |
| Realty Income Corp. | 109,324 | 6,325,487 |
| Regency Centers Corp. | 50,129 | 1,784,091 |
| Rexford Industrial Realty, Inc. | 38,623 | 1,794,425 |
| Ryman Hospitality Properties, Inc. | 16,822 | 670,357 |
| Sabra Health Care REIT, Inc. | 65,318 | 859,585 |
| SBA Communications Corp. | 35,354 | 10,265,741 |
| Service Properties Trust | 53,012 | 382,216 |
| Simon Property Group, Inc. | 97,081 | 6,097,658 |
| SL Green Realty Corp. | 23,303 | 997,601 |
| Spirit Realty Capital, Inc. | 31,799 | 955,560 |
| STAG Industrial, Inc. | 47,151 | 1,467,339 |
| STORE Capital Corp. | 72,126 | 1,853,638 |
| Sun Communities, Inc. | 31,092 | 4,279,192 |
| The Howard Hughes Corp. * | 14,258 | 886,705 |
| UDR, Inc. | 93,891 | 2,933,155 |
| Ventas, Inc. | 118,409 | 4,673,603 |
| VEREIT, Inc. | 342,163 | 2,121,411 |
| VICI Properties, Inc. | 169,399 | 3,887,707 |
| Vornado Realty Trust | 48,724 | 1,497,288 |
| Weingarten Realty Investors | 38,809 | 615,511 |
| Welltower, Inc. | 132,434 | 7,120,976 |
| Weyerhaeuser Co. | 236,851 | 6,463,664 |
| WP Carey, Inc. | 55,020 | 3,444,802 |
| | | 304,903,139 |
| |
| Retailing 7.6% |
| Aaron's Holdings Co., Inc. | 21,156 | 1,105,613 |
| Advance Auto Parts, Inc. | 21,743 | 3,202,309 |
| Amazon.com, Inc. * | 134,781 | 409,215,333 |
| AutoNation, Inc. * | 18,063 | 1,024,714 |
| AutoZone, Inc. * | 7,414 | 8,370,258 |
| Best Buy Co., Inc. | 72,671 | 8,106,450 |
| Booking Holdings, Inc. * | 12,964 | 21,034,090 |
| Burlington Stores, Inc. * | 20,851 | 4,036,337 |
| CarMax, Inc. * | 51,773 | 4,475,258 |
| Carvana Co. * | 17,616 | 3,265,126 |
| Dollar General Corp. | 78,792 | 16,444,678 |
| Dollar Tree, Inc. * | 75,085 | 6,781,677 |
Schwab Equity Index Funds | Annual Report
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| eBay, Inc. | 210,073 | 10,005,777 |
| Etsy, Inc. * | 37,695 | 4,583,335 |
| Expedia Group, Inc. | 43,193 | 4,066,621 |
| Five Below, Inc. * | 17,649 | 2,353,318 |
| Floor & Decor Holdings, Inc., Class A * | 32,956 | 2,405,788 |
| Foot Locker, Inc. | 33,076 | 1,219,843 |
| Genuine Parts Co. | 45,585 | 4,122,252 |
| GrubHub, Inc. * | 29,121 | 2,153,789 |
| Kohl's Corp. | 50,983 | 1,085,428 |
| L Brands, Inc. | 73,986 | 2,368,292 |
| LKQ Corp. * | 88,944 | 2,845,319 |
| Lowe's Cos., Inc. | 239,351 | 37,841,393 |
| Macy's, Inc. (b) | 101,576 | 630,787 |
| Nordstrom, Inc. (b) | 34,533 | 417,849 |
| O'Reilly Automotive, Inc. * | 23,394 | 10,213,820 |
| Penske Automotive Group, Inc. | 9,959 | 509,502 |
| Pool Corp. | 12,728 | 4,452,636 |
| RH * | 4,901 | 1,642,962 |
| Ross Stores, Inc. | 112,409 | 9,573,875 |
| Target Corp. | 158,541 | 24,133,111 |
| The Gap, Inc. | 65,314 | 1,270,357 |
| The Home Depot, Inc. | 340,886 | 90,917,705 |
| The TJX Cos., Inc. | 379,593 | 19,283,324 |
| Tiffany & Co. | 34,281 | 4,485,326 |
| Tractor Supply Co. | 36,695 | 4,888,141 |
| Ulta Beauty, Inc. * | 17,726 | 3,665,205 |
| Wayfair, Inc., Class A * | 21,745 | 5,393,412 |
| Williams-Sonoma, Inc. | 24,767 | 2,258,998 |
| | | 745,850,008 |
| |
| Semiconductors & Semiconductor Equipment 4.8% |
| Advanced Micro Devices, Inc. * | 371,615 | 27,978,893 |
| Analog Devices, Inc. | 116,804 | 13,844,778 |
| Applied Materials, Inc. | 288,952 | 17,114,627 |
| Broadcom, Inc. | 127,339 | 44,521,535 |
| Cirrus Logic, Inc. * | 18,195 | 1,253,090 |
| CMC Materials, Inc. | 9,158 | 1,302,176 |
| Cree, Inc. * | 34,434 | 2,190,002 |
| Enphase Energy, Inc. * | 39,986 | 3,922,227 |
| Entegris, Inc. | 42,757 | 3,196,941 |
| First Solar, Inc. * | 26,901 | 2,341,598 |
| Inphi Corp. * | 16,488 | 2,304,363 |
| Intel Corp. | 1,346,773 | 59,635,108 |
| KLA Corp. | 49,332 | 9,727,284 |
| Lam Research Corp. | 46,063 | 15,757,231 |
| Marvell Technology Group Ltd. | 211,109 | 7,918,699 |
| Maxim Integrated Products, Inc. | 84,736 | 5,901,862 |
| Microchip Technology, Inc. | 80,112 | 8,418,169 |
| Micron Technology, Inc. * | 351,569 | 17,697,983 |
| MKS Instruments, Inc. | 17,285 | 1,873,521 |
| Monolithic Power Systems, Inc. | 13,402 | 4,283,279 |
| NVIDIA Corp. | 195,304 | 97,917,613 |
| ON Semiconductor Corp. * | 130,217 | 3,267,145 |
| Qorvo, Inc. * | 36,255 | 4,617,437 |
| QUALCOMM, Inc. | 357,239 | 44,069,003 |
| Silicon Laboratories, Inc. * | 13,748 | 1,408,620 |
| Skyworks Solutions, Inc. | 53,008 | 7,489,500 |
| SolarEdge Technologies, Inc. * | 15,794 | 4,069,956 |
| Teradyne, Inc. | 52,334 | 4,597,542 |
| Texas Instruments, Inc. | 290,272 | 41,970,429 |
| Universal Display Corp. | 13,494 | 2,675,995 |
| Xilinx, Inc. | 77,149 | 9,156,815 |
| | | 472,423,421 |
| |
| Security | Number
of Shares | Value ($) |
| Software & Services 15.1% |
| Accenture plc, Class A | 201,511 | 43,709,751 |
| ACI Worldwide, Inc. * | 35,928 | 1,048,020 |
| Adobe, Inc. * | 151,856 | 67,894,818 |
| Akamai Technologies, Inc. * | 51,608 | 4,908,953 |
| Alliance Data Systems Corp. | 15,170 | 781,862 |
| Alteryx, Inc., Class A * | 16,988 | 2,129,446 |
| Amdocs Ltd. | 41,729 | 2,352,681 |
| Anaplan, Inc. * | 43,663 | 2,416,747 |
| ANSYS, Inc. * | 27,223 | 8,285,864 |
| Aspen Technology, Inc. * | 21,428 | 2,353,009 |
| Autodesk, Inc. * | 69,378 | 16,341,294 |
| Automatic Data Processing, Inc. | 136,097 | 21,497,882 |
| Avalara, Inc. * | 26,497 | 3,949,378 |
| Black Knight, Inc. * | 49,847 | 4,384,044 |
| Blackbaud, Inc. | 15,760 | 777,598 |
| Booz Allen Hamilton Holding Corp. | 43,268 | 3,396,538 |
| Broadridge Financial Solutions, Inc. | 36,331 | 4,999,146 |
| CACI International, Inc., Class A * | 7,901 | 1,647,595 |
| Cadence Design Systems, Inc. * | 88,471 | 9,676,073 |
| CDK Global, Inc. | 38,448 | 1,657,109 |
| Ceridian HCM Holding, Inc. * | 41,203 | 3,552,523 |
| Citrix Systems, Inc. | 39,203 | 4,440,524 |
| Cognizant Technology Solutions Corp., Class A | 171,382 | 12,240,102 |
| Cornerstone OnDemand, Inc. * | 19,256 | 731,535 |
| Coupa Software, Inc. * | 21,218 | 5,680,059 |
| DocuSign, Inc. * | 57,998 | 11,730,095 |
| Dropbox, Inc., Class A * | 93,188 | 1,701,613 |
| DXC Technology Co. | 81,117 | 1,494,175 |
| Dynatrace, Inc. * | 57,660 | 2,035,975 |
| Elastic N.V. * | 18,955 | 1,922,226 |
| Envestnet, Inc. * | 17,203 | 1,320,158 |
| EPAM Systems, Inc. * | 17,684 | 5,463,472 |
| Euronet Worldwide, Inc. * | 16,622 | 1,476,698 |
| Fair Isaac Corp. * | 9,109 | 3,565,718 |
| Fidelity National Information Services, Inc. | 196,239 | 24,449,417 |
| FireEye, Inc. * | 71,497 | 989,518 |
| Fiserv, Inc. * | 175,861 | 16,789,450 |
| Five9, Inc. * | 20,744 | 3,147,280 |
| FleetCor Technologies, Inc. * | 26,679 | 5,893,658 |
| Fortinet, Inc. * | 42,536 | 4,694,698 |
| Gartner, Inc. * | 28,336 | 3,403,154 |
| Genpact Ltd. | 56,365 | 1,937,265 |
| Global Payments, Inc. | 94,659 | 14,931,511 |
| GoDaddy, Inc., Class A * | 52,805 | 3,735,426 |
| Guidewire Software, Inc. * | 26,405 | 2,537,784 |
| HubSpot, Inc. * | 13,594 | 3,943,212 |
| International Business Machines Corp. | 282,030 | 31,491,470 |
| Intuit, Inc. | 82,906 | 26,088,860 |
| j2 Global, Inc. * | 14,100 | 957,108 |
| Jack Henry & Associates, Inc. | 24,267 | 3,597,583 |
| KBR, Inc. | 44,451 | 990,813 |
| Leidos Holdings, Inc. | 42,201 | 3,502,683 |
| Manhattan Associates, Inc. * | 20,211 | 1,728,040 |
| Mastercard, Inc., Class A | 279,643 | 80,716,155 |
| MAXIMUS, Inc. | 19,049 | 1,287,331 |
| Medallia, Inc. * | 24,668 | 701,805 |
| Microsoft Corp. | 2,395,688 | 485,054,949 |
| MongoDB, Inc. * | 16,047 | 3,666,258 |
| New Relic, Inc. * | 16,436 | 997,008 |
| NortonLifeLock, Inc. | 187,559 | 3,858,089 |
| Nuance Communications, Inc. * | 89,493 | 2,855,722 |
| Nutanix, Inc., Class A * | 58,585 | 1,425,959 |
| Okta, Inc. * | 36,821 | 7,726,150 |
| Oracle Corp. | 612,325 | 34,357,556 |
| Palo Alto Networks, Inc. * | 30,613 | 6,771,289 |
Schwab Equity Index Funds | Annual Report
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Paychex, Inc. | 101,697 | 8,364,578 |
| Paycom Software, Inc. * | 15,439 | 5,621,185 |
| Paylocity Holding Corp. * | 11,793 | 2,187,837 |
| PayPal Holdings, Inc. * | 371,402 | 69,129,054 |
| Pegasystems, Inc. | 12,324 | 1,428,105 |
| Perspecta, Inc. | 42,238 | 757,327 |
| Proofpoint, Inc. * | 18,290 | 1,751,085 |
| PTC, Inc. * | 33,087 | 2,775,338 |
| Q2 Holdings, Inc. * | 15,976 | 1,457,650 |
| RealPage, Inc. * | 28,139 | 1,567,061 |
| RingCentral, Inc., Class A * | 24,758 | 6,395,982 |
| Sabre Corp. | 100,165 | 653,076 |
| salesforce.com, Inc. * | 288,062 | 66,908,161 |
| Science Applications International Corp. | 18,491 | 1,412,158 |
| ServiceNow, Inc. * | 60,714 | 30,209,465 |
| Slack Technologies, Inc., Class A * | 137,291 | 3,511,904 |
| Smartsheet, Inc., Class A * | 35,609 | 1,775,109 |
| SolarWinds Corp. * | 21,428 | 437,774 |
| Splunk, Inc. * | 50,172 | 9,936,063 |
| Square, Inc., Class A * | 117,468 | 18,193,444 |
| SS&C Technologies Holdings, Inc. | 71,258 | 4,219,899 |
| Synopsys, Inc. * | 48,158 | 10,299,070 |
| The Trade Desk, Inc., Class A * | 13,160 | 7,454,482 |
| The Western Union Co. | 130,425 | 2,535,462 |
| Twilio, Inc., Class A * | 43,432 | 12,116,225 |
| Tyler Technologies, Inc. * | 12,690 | 4,877,782 |
| Verint Systems, Inc. * | 20,699 | 1,004,315 |
| VeriSign, Inc. * | 32,082 | 6,118,037 |
| Visa, Inc., Class A | 533,770 | 96,991,347 |
| VMware, Inc., Class A * | 25,412 | 3,271,287 |
| WEX, Inc. * | 14,080 | 1,781,824 |
| Workday, Inc., Class A * | 54,973 | 11,550,927 |
| Zendesk, Inc. * | 36,644 | 4,065,285 |
| Zoom Video Communications, Inc., Class A * | 57,644 | 26,568,696 |
| Zscaler, Inc. * | 22,779 | 3,092,249 |
| | | 1,476,209,125 |
| |
| Technology Hardware & Equipment 7.4% |
| Amphenol Corp., Class A | 94,660 | 10,681,434 |
| Apple Inc. | 5,089,294 | 554,020,545 |
| Arista Networks, Inc. * | 17,318 | 3,617,730 |
| Arrow Electronics, Inc. * | 24,708 | 1,924,506 |
| Avnet, Inc. | 31,369 | 773,873 |
| CDW Corp. | 45,098 | 5,529,015 |
| Ciena Corp. * | 49,095 | 1,933,852 |
| Cisco Systems, Inc. | 1,340,750 | 48,132,925 |
| Cognex Corp. | 54,848 | 3,614,483 |
| Coherent, Inc. * | 7,508 | 939,551 |
| Corning, Inc. | 241,553 | 7,722,449 |
| Dell Technologies, Inc., Class C * | 74,413 | 4,484,127 |
| Dolby Laboratories, Inc., Class A | 20,059 | 1,506,030 |
| F5 Networks, Inc. * | 19,275 | 2,562,419 |
| FLIR Systems, Inc. | 41,162 | 1,427,910 |
| Hewlett Packard Enterprise Co. | 409,322 | 3,536,542 |
| HP, Inc. | 435,818 | 7,827,291 |
| IPG Photonics Corp. * | 11,245 | 2,091,120 |
| Jabil, Inc. | 42,423 | 1,405,898 |
| Juniper Networks, Inc. | 105,316 | 2,076,832 |
| Keysight Technologies, Inc. * | 59,283 | 6,217,008 |
| Littelfuse, Inc. | 7,651 | 1,514,439 |
| Lumentum Holdings, Inc. * | 23,878 | 1,974,472 |
| Motorola Solutions, Inc. | 53,880 | 8,516,273 |
| National Instruments Corp. | 41,806 | 1,307,692 |
| NCR Corp. * | 39,377 | 800,141 |
| NetApp, Inc. | 70,166 | 3,079,586 |
| Pure Storage, Inc., Class A * | 75,781 | 1,220,074 |
| Security | Number
of Shares | Value ($) |
| Seagate Technology plc | 70,831 | 3,387,138 |
| SYNNEX Corp. | 12,922 | 1,701,052 |
| TE Connectivity Ltd. | 104,295 | 10,104,100 |
| Trimble, Inc. * | 78,699 | 3,787,783 |
| Ubiquiti, Inc. | 2,431 | 451,218 |
| ViaSat, Inc. * | 20,397 | 691,458 |
| Vontier Corp. * | 42,788 | 1,229,727 |
| Western Digital Corp. | 95,357 | 3,597,820 |
| Xerox Holdings Corp. | 57,157 | 993,389 |
| Zebra Technologies Corp., Class A * | 16,833 | 4,774,512 |
| | | 721,156,414 |
| |
| Telecommunication Services 1.7% |
| AT&T, Inc. | 2,256,030 | 60,957,931 |
| CenturyLink, Inc. | 309,843 | 2,670,847 |
| GCI Liberty, Inc., Class A * | 32,171 | 2,613,250 |
| Liberty Global plc, Class A * | 45,207 | 858,029 |
| Liberty Global plc, Class C * | 117,716 | 2,196,580 |
| T-Mobile US, Inc. * | 184,116 | 20,173,590 |
| Verizon Communications, Inc. | 1,310,336 | 74,676,049 |
| | | 164,146,276 |
| |
| Transportation 2.0% |
| Alaska Air Group, Inc. | 39,246 | 1,487,031 |
| AMERCO | 2,866 | 994,961 |
| American Airlines Group, Inc. (b) | 161,113 | 1,817,355 |
| C.H. Robinson Worldwide, Inc. | 42,368 | 3,746,602 |
| CSX Corp. | 242,110 | 19,112,163 |
| Delta Air Lines, Inc. | 202,378 | 6,200,862 |
| Expeditors International of Washington, Inc. | 53,214 | 4,702,521 |
| FedEx Corp. | 76,302 | 19,798,080 |
| JB Hunt Transport Services, Inc. | 26,460 | 3,221,240 |
| JetBlue Airways Corp. * | 85,989 | 1,029,288 |
| Kansas City Southern | 29,941 | 5,273,808 |
| Kirby Corp. * | 19,086 | 734,620 |
| Knight-Swift Transportation Holdings, Inc. | 39,988 | 1,519,144 |
| Landstar System, Inc. | 12,004 | 1,496,899 |
| Lyft, Inc., Class A * | 77,028 | 1,758,549 |
| Macquarie Infrastructure Corp. | 23,211 | 598,844 |
| Norfolk Southern Corp. | 80,707 | 16,877,448 |
| Old Dominion Freight Line, Inc. | 30,530 | 5,811,996 |
| Southwest Airlines Co. | 187,145 | 7,397,842 |
| Uber Technologies, Inc. * | 437,902 | 14,630,306 |
| Union Pacific Corp. | 214,949 | 38,086,813 |
| United Airlines Holdings, Inc. * | 92,357 | 3,127,208 |
| United Parcel Service, Inc., Class B | 223,889 | 35,175,201 |
| XPO Logistics, Inc. * | 28,913 | 2,602,170 |
| | | 197,200,951 |
| |
| Utilities 3.1% |
| ALLETE, Inc. | 16,211 | 836,163 |
| Alliant Energy Corp. | 78,707 | 4,350,923 |
| Ameren Corp. | 78,428 | 6,362,079 |
| American Electric Power Co., Inc. | 156,917 | 14,111,546 |
| American Water Works Co., Inc. | 57,495 | 8,653,572 |
| Atmos Energy Corp. | 39,106 | 3,584,847 |
| Avangrid, Inc. | 17,935 | 884,913 |
| Black Hills Corp. | 20,082 | 1,137,846 |
| CenterPoint Energy, Inc. | 171,179 | 3,617,012 |
| CMS Energy Corp. | 90,870 | 5,754,797 |
| Consolidated Edison, Inc. | 106,063 | 8,324,885 |
| Dominion Energy, Inc. | 265,943 | 21,365,861 |
| DTE Energy Co. | 61,141 | 7,546,022 |
| Duke Energy Corp. | 232,808 | 21,443,945 |
Schwab Equity Index Funds | Annual Report
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Edison International | 120,050 | 6,727,602 |
| Entergy Corp. | 63,563 | 6,433,847 |
| Essential Utilities, Inc. | 70,907 | 2,921,368 |
| Evergy, Inc. | 71,536 | 3,948,787 |
| Eversource Energy | 108,747 | 9,490,351 |
| Exelon Corp. | 308,063 | 12,288,633 |
| FirstEnergy Corp. | 171,794 | 5,105,718 |
| Hawaiian Electric Industries, Inc. | 33,881 | 1,119,428 |
| IDACORP, Inc. | 15,808 | 1,386,836 |
| MDU Resources Group, Inc. | 63,052 | 1,498,116 |
| National Fuel Gas Co. | 28,128 | 1,123,995 |
| New Jersey Resources Corp. | 29,815 | 870,002 |
| NextEra Energy, Inc. | 621,177 | 45,476,368 |
| NiSource, Inc. | 121,755 | 2,796,712 |
| NRG Energy, Inc. | 77,343 | 2,445,586 |
| OGE Energy Corp. | 62,911 | 1,935,771 |
| ONE Gas, Inc. | 17,040 | 1,176,442 |
| Ormat Technologies, Inc. | 12,665 | 897,569 |
| Pinnacle West Capital Corp. | 35,484 | 2,894,430 |
| PNM Resources, Inc. | 24,794 | 1,239,700 |
| Portland General Electric Co. | 27,734 | 1,089,946 |
| PPL Corp. | 243,998 | 6,709,945 |
| Public Service Enterprise Group, Inc. | 160,496 | 9,332,842 |
| Sempra Energy | 91,403 | 11,458,280 |
| Southwest Gas Holdings, Inc. | 17,725 | 1,164,887 |
| Spire, Inc. | 16,296 | 913,228 |
| The AES Corp. | 211,098 | 4,116,411 |
| The Southern Co. | 334,283 | 19,204,558 |
| UGI Corp. | 66,381 | 2,146,762 |
| Vistra Corp. | 155,162 | 2,695,164 |
| WEC Energy Group, Inc. | 99,593 | 10,014,076 |
| Xcel Energy, Inc. | 166,002 | 11,625,120 |
| | | 300,222,891 |
| Total Common Stock |
| (Cost $2,535,785,297) | | 9,736,264,912 |
|
| Other Investment Companies 0.3% of net assets |
| |
| Money Market Fund 0.2% |
| State Street Institutional U.S. Government Money Market Fund, Premier Class 0.03% (c) | 26,263,404 | 26,263,404 |
| |
| Securities Lending Collateral 0.1% |
| Wells Fargo Government Money Market Fund, Select Class 0.04% (c) | 5,820,600 | 5,820,600 |
| Total Other Investment Companies |
| (Cost $32,084,004) | | 32,084,004 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | |
| Long | |
| S&P 500 Index, e-mini, expires 12/18/20 | 208 | 33,952,880 | (1,323,653) |
| * | 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 $5,675,853. |
| (c) | The rate shown is the 7-day yield. |
| | |
| REIT — | Real Estate Investment Trust |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Common Stock 99.7% of net assets |
| |
| Automobiles & Components 1.5% |
| Adient plc * | 182,832 | 3,879,695 |
| American Axle & Manufacturing Holdings, Inc. * | 233,654 | 1,570,155 |
| Cooper Tire & Rubber Co. | 104,793 | 3,603,831 |
| Cooper-Standard Holdings, Inc. * | 35,166 | 551,755 |
| Dana, Inc. | 300,800 | 4,208,192 |
| Dorman Products, Inc. * | 55,134 | 4,921,812 |
| Fox Factory Holding Corp. * | 85,697 | 7,205,404 |
| Gentherm, Inc. * | 67,626 | 3,130,408 |
| LCI Industries | 51,056 | 5,598,801 |
| Modine Manufacturing Co. * | 101,943 | 652,435 |
| Motorcar Parts of America, Inc. * | 39,022 | 574,794 |
| Patrick Industries, Inc. | 46,415 | 2,587,636 |
| Standard Motor Products, Inc. | 43,843 | 2,008,009 |
| Stoneridge, Inc. * | 54,035 | 1,233,619 |
| Tenneco, Inc., Class A * | 105,340 | 908,031 |
| The Goodyear Tire & Rubber Co. | 477,853 | 3,956,623 |
| Visteon Corp. * | 57,345 | 5,140,979 |
| Winnebago Industries, Inc. | 64,755 | 3,040,247 |
| Workhorse Group, Inc. *(a) | 195,294 | 3,003,622 |
| XPEL, Inc. * | 34,371 | 851,713 |
| | | 58,627,761 |
| |
| Banks 9.8% |
| 1st Constitution Bancorp | 18,970 | 247,369 |
| 1st Source Corp. | 34,125 | 1,142,846 |
| ACNB Corp. | 17,276 | 360,550 |
| Allegiance Bancshares, Inc. | 39,252 | 1,110,832 |
| Altabancorp | 33,024 | 718,932 |
| Amalgamated Bank, Class A | 27,454 | 304,739 |
| Amerant Bancorp, Inc. * | 47,300 | 476,311 |
| American National Bankshares, Inc. | 21,808 | 497,222 |
| Ameris Bancorp | 137,877 | 4,039,796 |
| Ames National Corp. | 17,716 | 341,919 |
| Arrow Financial Corp. | 27,585 | 755,001 |
| Atlantic Capital Bancshares, Inc. * | 43,337 | 601,518 |
| Atlantic Union Bankshares Corp. | 160,892 | 4,068,959 |
| Auburn National Bancorp, Inc. (a) | 5,043 | 187,398 |
| Axos Financial, Inc. * | 120,151 | 3,275,316 |
| Banc of California, Inc. | 92,687 | 1,112,244 |
| BancFirst Corp. | 39,041 | 1,735,372 |
| BancorpSouth Bank | 204,822 | 4,794,883 |
| Bank First Corp. (a) | 12,894 | 825,345 |
| Bank of Commerce Holdings | 33,703 | 269,961 |
| Bank of Marin Bancorp | 27,339 | 823,997 |
| Bank7 Corp. | 6,103 | 55,354 |
| BankFinancial Corp. | 26,820 | 197,127 |
| BankUnited, Inc. | 189,745 | 4,791,061 |
| Bankwell Financial Group, Inc. | 14,019 | 231,314 |
| Banner Corp. | 72,258 | 2,664,152 |
| Bar Harbor Bankshares | 31,034 | 633,714 |
| Baycom Corp. * | 23,484 | 260,672 |
| BCB Bancorp, Inc. | 29,330 | 266,610 |
| Berkshire Hills Bancorp, Inc. | 92,228 | 1,201,731 |
| Bogota Financial Corp. * | 12,447 | 98,331 |
| Security | Number
of Shares | Value ($) |
| Boston Private Financial Holdings, Inc. | 169,562 | 1,047,893 |
| Bridge Bancorp, Inc. | 34,668 | 677,413 |
| Bridgewater Bancshares, Inc. * | 45,051 | 500,517 |
| Brookline Bancorp, Inc. | 161,193 | 1,544,229 |
| Bryn Mawr Bank Corp. | 40,965 | 1,100,320 |
| Business First Bancshares, Inc. | 39,888 | 662,540 |
| Byline Bancorp, Inc. | 50,388 | 662,098 |
| C&F Financial Corp. | 7,223 | 224,996 |
| Cadence BanCorp | 256,361 | 2,876,370 |
| California Bancorp, Inc. * | 16,339 | 223,027 |
| Cambridge Bancorp | 13,383 | 830,950 |
| Camden National Corp. | 30,476 | 974,318 |
| Capital Bancorp, Inc. * | 16,145 | 169,845 |
| Capital City Bank Group, Inc. | 28,242 | 601,837 |
| Capitol Federal Financial, Inc. | 273,629 | 3,141,261 |
| Capstar Financial Holdings, Inc. | 32,622 | 338,943 |
| Carter Bank & Trust | 48,178 | 334,837 |
| Cathay General Bancorp | 156,963 | 3,693,339 |
| CB Financial Services, Inc. | 10,651 | 208,866 |
| CBTX, Inc. | 36,685 | 693,346 |
| Central Pacific Financial Corp. | 57,062 | 785,744 |
| Central Valley Community Bancorp | 22,606 | 291,617 |
| Century Bancorp, Inc., Class A | 5,671 | 405,873 |
| Chemung Financial Corp. | 7,551 | 257,338 |
| ChoiceOne Financial Services, Inc. | 14,717 | 423,261 |
| CIT Group, Inc. | 205,085 | 6,039,753 |
| Citizens & Northern Corp. | 27,578 | 467,171 |
| Citizens Holdings Co. | 10,094 | 219,040 |
| City Holding Co. | 32,795 | 1,981,802 |
| Civista Bancshares, Inc. | 32,544 | 464,077 |
| CNB Financial Corp. | 30,654 | 556,064 |
| Coastal Financial Corp. * | 18,242 | 271,076 |
| Codorus Valley Bancorp, Inc. | 20,002 | 269,227 |
| Colony Bankcorp, Inc. | 15,137 | 189,667 |
| Columbia Banking System, Inc. | 148,477 | 4,218,232 |
| Columbia Financial, Inc. * | 102,169 | 1,245,440 |
| Community Bank System, Inc. | 109,448 | 6,346,890 |
| Community Bankers Trust Corp. | 46,562 | 254,229 |
| Community Trust Bancorp, Inc. | 32,111 | 1,021,772 |
| ConnectOne Bancorp, Inc. | 77,019 | 1,188,403 |
| County Bancorp, Inc. | 9,765 | 180,653 |
| CrossFirst Bankshares, Inc. * | 99,207 | 828,378 |
| Customers Bancorp, Inc. * | 60,269 | 832,918 |
| CVB Financial Corp. | 267,642 | 4,683,735 |
| Dime Community Bancshares, Inc. | 58,809 | 743,934 |
| Eagle Bancorp Montana, Inc. | 12,502 | 240,789 |
| Eagle Bancorp, Inc. | 66,525 | 1,990,428 |
| Enterprise Bancorp, Inc. | 19,005 | 429,703 |
| Enterprise Financial Services Corp. | 50,003 | 1,455,587 |
| Equity Bancshares, Inc., Class A * | 30,085 | 552,962 |
| Esquire Financial Holdings, Inc. * | 13,342 | 208,002 |
| ESSA Bancorp, Inc. | 18,811 | 239,088 |
| Essent Group Ltd. | 228,604 | 9,109,869 |
| Evans Bancorp, Inc. | 10,141 | 231,316 |
| Farmers & Merchants Bancorp, Inc. | 20,928 | 419,816 |
| Farmers National Banc Corp. | 53,908 | 628,028 |
| FB Financial Corp. | 64,696 | 1,908,532 |
| Federal Agricultural Mortgage Corp., Class C | 18,884 | 1,219,718 |
| Fidelity D&D Bancorp, Inc. (a) | 8,069 | 384,569 |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Financial Institutions, Inc. | 33,286 | 590,161 |
| First BanCorp | 447,445 | 2,903,918 |
| First BanCorp (North Carolina) | 59,631 | 1,436,511 |
| First Bank | 32,778 | 245,507 |
| First Busey Corp. | 104,797 | 1,885,298 |
| First Business Financial Services, Inc. | 16,377 | 280,866 |
| First Capital, Inc. (a) | 6,736 | 406,248 |
| First Choice Bancorp | 20,756 | 292,244 |
| First Commonwealth Financial Corp. | 202,873 | 1,748,765 |
| First Community Bankshares, Inc. | 36,450 | 691,821 |
| First Community Corp. | 14,112 | 200,532 |
| First Financial Bancorp | 201,610 | 2,883,023 |
| First Financial Bankshares, Inc. | 267,743 | 7,981,419 |
| First Financial Corp. | 27,850 | 966,952 |
| First Foundation, Inc. | 81,974 | 1,218,953 |
| First Guaranty Bancshares, Inc. | 7,821 | 113,796 |
| First Internet Bancorp | 20,162 | 433,886 |
| First Interstate BancSystem, Inc., Class A | 86,580 | 3,056,274 |
| First Merchants Corp. | 112,211 | 2,929,829 |
| First Mid Bancshares, Inc. | 30,664 | 851,233 |
| First Midwest Bancorp, Inc. | 237,001 | 2,974,363 |
| First Northwest Bancorp | 17,287 | 203,122 |
| First Savings Financial Group, Inc. | 4,032 | 217,930 |
| First United Corp. | 14,491 | 172,733 |
| First Western Financial, Inc. * | 13,490 | 191,558 |
| Flagstar Bancorp, Inc. | 88,563 | 2,599,324 |
| Flushing Financial Corp. | 56,700 | 725,193 |
| FNCB Bancorp, Inc. | 34,833 | 191,582 |
| Franklin Financial Services Corp. | 8,719 | 191,818 |
| FS Bancorp, Inc. | 7,930 | 367,238 |
| Fulton Financial Corp. | 330,105 | 3,627,854 |
| FVCBankcorp, Inc. * | 25,088 | 309,586 |
| German American Bancorp, Inc. | 51,217 | 1,545,217 |
| Glacier Bancorp, Inc. | 198,588 | 7,109,450 |
| Great Southern Bancorp, Inc. | 22,790 | 933,250 |
| Great Western Bancorp, Inc. | 115,022 | 1,494,136 |
| Greene County Bancorp, Inc. | 6,540 | 147,477 |
| Guaranty Bancshares, Inc. | 14,277 | 412,605 |
| Hancock Whitney Corp. | 179,307 | 4,100,751 |
| Hanmi Financial Corp. | 63,463 | 570,532 |
| HarborOne Bancorp, Inc. * | 109,783 | 1,031,960 |
| Hawthorn Bancshares, Inc. | 12,308 | 233,360 |
| HBT Financial, Inc. | 19,438 | 239,865 |
| Heartland Financial USA, Inc. | 72,218 | 2,378,861 |
| Heritage Commerce Corp. | 120,935 | 876,779 |
| Heritage Financial Corp. | 74,885 | 1,569,590 |
| Hilltop Holdings, Inc. | 149,809 | 3,417,143 |
| Home Bancorp, Inc. | 16,167 | 408,055 |
| Home BancShares, Inc. | 316,572 | 5,255,095 |
| HomeStreet, Inc. | 46,222 | 1,436,118 |
| HomeTrust Bancshares, Inc. | 32,882 | 525,126 |
| Hope Bancorp, Inc. | 244,021 | 1,969,249 |
| Horizon Bancorp, Inc. | 88,576 | 1,098,342 |
| Howard Bancorp, Inc. * | 27,049 | 274,006 |
| Independent Bank Corp. | 68,005 | 3,896,006 |
| Independent Bank Corp., Michigan | 43,511 | 651,360 |
| Independent Bank Group, Inc. | 76,540 | 3,947,933 |
| International Bancshares Corp. | 110,250 | 3,051,720 |
| Investar Holding Corp. | 20,506 | 285,854 |
| Investors Bancorp, Inc. | 476,938 | 4,034,895 |
| Kearny Financial Corp. | 166,279 | 1,396,744 |
| Lakeland Bancorp, Inc. | 101,201 | 1,126,367 |
| Lakeland Financial Corp. | 51,125 | 2,614,021 |
| Landmark Bancorp, Inc. | 8,116 | 190,320 |
| LCNB Corp. | 24,669 | 339,445 |
| Level One Bancorp, Inc. | 11,014 | 173,471 |
| Limestone Bancorp, Inc. * | 10,875 | 115,275 |
| Live Oak Bancshares, Inc. | 58,300 | 2,173,424 |
| Security | Number
of Shares | Value ($) |
| Luther Burbank Corp. | 37,727 | 355,766 |
| Macatawa Bank Corp. | 54,308 | 390,475 |
| Mackinac Financial Corp. | 19,127 | 189,931 |
| MainStreet Bancshares, Inc. * | 14,347 | 213,914 |
| Mercantile Bank Corp. | 32,828 | 717,620 |
| Merchants Bancorp | 18,168 | 392,065 |
| Meridian Bancorp, Inc. | 97,151 | 1,209,530 |
| Meridian Corp. | 11,580 | 203,576 |
| Meta Financial Group, Inc. | 69,231 | 2,031,238 |
| Metrocity Bankshares, Inc. (a) | 35,793 | 500,028 |
| Metropolitan Bank Holding Corp. * | 14,222 | 425,949 |
| Mid Penn Bancorp, Inc. | 14,734 | 288,050 |
| Middlefield Banc Corp. | 11,877 | 226,613 |
| Midland States Bancorp, Inc. | 44,464 | 662,514 |
| MidWestOne Financial Group, Inc. | 30,468 | 613,930 |
| MMA Capital Holdings, Inc. * | 9,350 | 234,498 |
| Mr Cooper Group, Inc. * | 158,166 | 3,334,139 |
| MVB Financial Corp. | 20,696 | 330,101 |
| National Bank Holdings Corp., Class A | 61,205 | 1,845,331 |
| National Bankshares, Inc. | 13,300 | 361,494 |
| NBT Bancorp, Inc. | 88,442 | 2,421,542 |
| Nicolet Bankshares, Inc. * | 19,415 | 1,197,905 |
| NMI Holdings, Inc., Class A * | 170,796 | 3,670,406 |
| Northeast Bank * | 15,409 | 295,699 |
| Northfield Bancorp, Inc. | 98,235 | 998,068 |
| Northrim BanCorp, Inc. | 13,048 | 372,651 |
| Northwest Bancshares, Inc. | 241,639 | 2,578,288 |
| Norwood Financial Corp. | 12,153 | 278,061 |
| Oak Valley Bancorp | 14,367 | 199,270 |
| OceanFirst Financial Corp. | 122,916 | 1,840,053 |
| Oconee Federal Financial Corp. | 2,234 | 50,287 |
| OFG Bancorp | 105,209 | 1,513,958 |
| Ohio Valley Banc Corp. | 9,204 | 197,058 |
| Old National Bancorp | 339,421 | 4,745,106 |
| Old Second Bancorp, Inc. | 59,064 | 504,997 |
| OP Bancorp | 24,141 | 155,227 |
| Origin Bancorp, Inc. | 45,687 | 1,022,018 |
| Orrstown Financial Services, Inc. | 21,979 | 307,266 |
| Pacific Premier Bancorp, Inc. | 165,095 | 4,209,922 |
| Park National Corp. | 29,816 | 2,732,636 |
| Parke Bancorp, Inc. | 21,205 | 255,096 |
| Partners Bancorp | 21,396 | 107,408 |
| PCB Bancorp | 26,504 | 249,138 |
| PCSB Financial Corp. | 31,462 | 423,793 |
| Peapack-Gladstone Financial Corp. | 37,865 | 639,161 |
| Penns Woods Bancorp, Inc. | 14,533 | 300,252 |
| PennyMac Financial Services, Inc. | 87,887 | 4,466,417 |
| Peoples Bancorp of North Carolina, Inc. | 9,505 | 164,341 |
| Peoples Bancorp, Inc. | 38,379 | 867,365 |
| Peoples Financial Services Corp. | 14,485 | 519,287 |
| Pioneer Bancorp, Inc. * | 22,976 | 217,353 |
| Plumas Bancorp | 10,030 | 201,804 |
| Ponce de Leon Federal Bank * | 15,660 | 142,506 |
| Preferred Bank | 28,614 | 968,012 |
| Premier Financial Bancorp, Inc. | 26,737 | 334,212 |
| Premier Financial Corp. | 76,942 | 1,384,187 |
| Professional Holding Corp., Class A * | 23,512 | 320,469 |
| Provident Bancorp, Inc. | 17,972 | 154,919 |
| Provident Financial Holdings, Inc. | 12,133 | 153,604 |
| Provident Financial Services, Inc. | 149,294 | 2,025,920 |
| Prudential Bancorp, Inc. | 16,490 | 191,119 |
| QCR Holdings, Inc. | 30,616 | 950,014 |
| Radian Group, Inc. | 396,587 | 7,118,737 |
| RBB Bancorp | 34,196 | 436,683 |
| Red River Bancshares, Inc. | 10,103 | 458,777 |
| Reliant Bancorp, Inc. | 31,182 | 525,417 |
| Renasant Corp. | 113,217 | 3,227,817 |
| Republic Bancorp, Inc., Class A | 20,197 | 673,166 |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Republic First Bancorp, Inc. * | 89,468 | 199,514 |
| Richmond Mutual BanCorp., Inc. | 25,110 | 274,954 |
| Riverview Bancorp, Inc. | 44,326 | 207,889 |
| S&T Bancorp, Inc. | 80,278 | 1,588,702 |
| Salisbury Bancorp, Inc. | 5,473 | 185,206 |
| Sandy Spring Bancorp, Inc. | 95,781 | 2,428,048 |
| SB Financial Group, Inc. | 15,310 | 234,855 |
| Seacoast Banking Corp. of Florida * | 107,357 | 2,306,028 |
| Security National Financial Corp., Class A * | 20,464 | 134,858 |
| Select Bancorp, Inc. * | 31,291 | 233,118 |
| ServisFirst Bancshares, Inc. | 100,723 | 3,716,679 |
| Shore Bancshares, Inc. | 25,147 | 272,091 |
| Sierra Bancorp | 29,009 | 575,539 |
| Silvergate Capital Corp., Class A * | 31,938 | 714,134 |
| Simmons First National Corp., Class A | 223,771 | 3,801,869 |
| SmartFinancial, Inc. | 28,755 | 429,600 |
| South Plains Financial, Inc. | 21,727 | 318,301 |
| South State Corp. | 144,934 | 8,898,948 |
| Southern First Bancshares, Inc. * | 14,863 | 398,923 |
| Southern Missouri Bancorp, Inc. | 15,657 | 398,940 |
| Southern National Bancorp of Virginia, Inc. | 41,021 | 396,263 |
| Southside Bancshares, Inc. | 65,758 | 1,772,836 |
| Spirit of Texas Bancshares, Inc. | 27,163 | 345,242 |
| Standard AVB Financial Corp. | 8,321 | 273,095 |
| Sterling Bancorp, Inc. | 35,705 | 126,039 |
| Stock Yards Bancorp, Inc. | 42,524 | 1,625,267 |
| Summit Financial Group, Inc. | 23,583 | 424,730 |
| Territorial Bancorp, Inc. | 16,052 | 340,463 |
| Texas Capital Bancshares, Inc. * | 104,540 | 4,704,300 |
| The Bancorp, Inc. * | 107,004 | 1,027,238 |
| The Bank of N.T. Butterfield & Son Ltd. | 105,700 | 2,796,822 |
| The Bank of Princeton | 12,068 | 237,378 |
| The Community Financial Corp. | 10,327 | 225,645 |
| The First BanCorp, Inc. | 20,594 | 476,339 |
| The First Bancshares, Inc. | 42,808 | 1,020,543 |
| The First of Long Island Corp. | 47,280 | 729,530 |
| The Hingham Institution For Savings | 2,956 | 597,023 |
| Timberland Bancorp, Inc. | 15,866 | 302,247 |
| Tompkins Financial Corp. | 29,802 | 1,668,614 |
| Towne Bank | 139,184 | 2,530,365 |
| TriCo Bancshares | 54,976 | 1,590,456 |
| TriState Capital Holdings, Inc. * | 56,757 | 714,571 |
| Triumph Bancorp, Inc. * | 46,706 | 1,967,724 |
| TrustCo Bank Corp. | 196,825 | 1,081,553 |
| Trustmark Corp. | 131,024 | 3,064,651 |
| UMB Financial Corp. | 90,294 | 5,496,196 |
| United Bankshares, Inc. | 256,465 | 6,727,077 |
| United Community Banks, Inc. | 162,415 | 3,400,970 |
| United Security Bancshares | 28,174 | 175,242 |
| Unity Bancorp, Inc. | 15,380 | 215,628 |
| Univest Financial Corp. | 59,805 | 948,507 |
| Valley National Bancorp | 826,105 | 6,311,442 |
| Veritex Holdings, Inc. | 98,648 | 1,946,325 |
| Walker & Dunlop, Inc. | 58,409 | 3,672,758 |
| Washington Federal, Inc. | 156,014 | 3,321,538 |
| Washington Trust Bancorp, Inc. | 35,477 | 1,198,058 |
| Waterstone Financial, Inc. | 46,461 | 784,262 |
| WesBanco, Inc. | 135,525 | 3,291,902 |
| West Bancorp, Inc. | 33,543 | 556,478 |
| Westamerica Bancorp | 53,962 | 2,825,990 |
| Western New England Bancorp, Inc. | 47,182 | 271,768 |
| WSFS Financial Corp. | 104,327 | 3,306,123 |
| | | 388,797,109 |
| |
| Security | Number
of Shares | Value ($) |
| Capital Goods 10.2% |
| AAON, Inc. | 85,026 | 4,966,369 |
| AAR Corp. | 69,615 | 1,354,708 |
| Advanced Drainage Systems, Inc. | 115,106 | 7,301,174 |
| Aegion Corp. * | 62,900 | 887,519 |
| Aerojet Rocketdyne Holdings, Inc. * | 152,067 | 4,930,012 |
| Aerovironment, Inc. * | 45,012 | 3,437,116 |
| Alamo Group, Inc. | 20,546 | 2,472,300 |
| Albany International Corp., Class A | 63,924 | 3,256,289 |
| Allied Motion Technologies, Inc. | 15,230 | 575,389 |
| Alpha Pro Tech Ltd. *(a) | 24,971 | 354,338 |
| Alta Equipment Group, Inc. * | 34,236 | 260,878 |
| Altra Industrial Motion Corp. | 133,559 | 5,710,983 |
| Ameresco, Inc., Class A * | 50,735 | 1,947,717 |
| American Superconductor Corp. * | 46,006 | 639,943 |
| American Woodmark Corp. * | 35,172 | 2,905,559 |
| API Group Corp. * | 289,659 | 4,168,193 |
| Apogee Enterprises, Inc. | 53,453 | 1,276,992 |
| Applied Industrial Technologies, Inc. | 80,004 | 4,884,244 |
| Arcosa, Inc. | 100,493 | 4,639,762 |
| Argan, Inc. | 30,617 | 1,261,114 |
| Astec Industries, Inc. | 46,663 | 2,370,480 |
| Astronics Corp. * | 47,820 | 306,048 |
| Atkore International Group, Inc. * | 98,423 | 2,036,372 |
| AZZ, Inc. | 54,149 | 1,818,865 |
| Barnes Group, Inc. | 97,123 | 3,564,414 |
| Beacon Roofing Supply, Inc. * | 113,520 | 3,485,064 |
| Bloom Energy Corp., Class A * | 184,329 | 2,329,919 |
| Blue Bird Corp. * | 32,112 | 370,572 |
| BMC Stock Holdings, Inc. * | 139,289 | 5,514,452 |
| Builders FirstSource, Inc. * | 239,632 | 7,260,850 |
| Caesarstone Ltd. | 46,935 | 452,923 |
| CAI International, Inc. | 34,090 | 898,272 |
| Chart Industries, Inc. * | 74,763 | 6,313,735 |
| CIRCOR International, Inc. * | 41,470 | 1,157,013 |
| Columbus McKinnon Corp. | 48,145 | 1,631,634 |
| Comfort Systems USA, Inc. | 74,300 | 3,402,940 |
| Concrete Pumping Holdings, Inc. * | 56,380 | 182,107 |
| Construction Partners, Inc., Class A * | 54,565 | 1,112,035 |
| Cornerstone Building Brands, Inc. * | 90,849 | 696,812 |
| CSW Industrials, Inc. | 28,453 | 2,433,585 |
| Cubic Corp. | 64,970 | 3,840,377 |
| Douglas Dynamics, Inc. | 46,857 | 1,598,292 |
| Ducommun, Inc. * | 22,270 | 732,683 |
| DXP Enterprises, Inc. * | 34,528 | 540,018 |
| Dycom Industries, Inc. * | 63,443 | 4,119,988 |
| EMCOR Group, Inc. | 112,715 | 7,686,036 |
| Encore Wire Corp. | 42,368 | 1,957,825 |
| Energy Recovery, Inc. * | 83,444 | 808,572 |
| Enerpac Tool Group Corp. | 112,655 | 2,008,639 |
| EnerSys | 88,107 | 6,308,461 |
| EnPro Industries, Inc. | 43,025 | 2,539,335 |
| ESCO Technologies, Inc. | 52,951 | 4,431,469 |
| EVI Industries, Inc. *(a) | 9,681 | 282,782 |
| Evoqua Water Technologies Corp. * | 189,667 | 4,349,064 |
| Federal Signal Corp. | 123,710 | 3,548,003 |
| Fluor Corp. | 292,877 | 3,324,154 |
| Foundation Building Materials, Inc. * | 42,827 | 623,561 |
| Franklin Electric Co., Inc. | 95,379 | 5,696,988 |
| FuelCell Energy, Inc. *(a) | 442,461 | 884,922 |
| GATX Corp. | 72,067 | 4,920,735 |
| Gencor Industries, Inc. * | 19,194 | 221,883 |
| General Finance Corp. * | 21,569 | 141,277 |
| Gibraltar Industries, Inc. * | 67,461 | 3,875,634 |
| GMS, Inc. * | 86,549 | 1,956,007 |
| Graham Corp. | 20,244 | 267,221 |
| Granite Construction, Inc. | 97,384 | 1,880,485 |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Great Lakes Dredge & Dock Corp. * | 132,029 | 1,363,860 |
| Griffon Corp. | 89,364 | 1,915,964 |
| H&E Equipment Services, Inc. | 66,574 | 1,400,717 |
| HC2 Holdings, Inc. * | 78,545 | 168,872 |
| Helios Technologies, Inc. | 64,498 | 2,698,596 |
| Herc Holdings, Inc. * | 50,568 | 2,243,196 |
| Hillenbrand, Inc. | 153,315 | 4,484,464 |
| Hurco Cos., Inc. | 12,654 | 377,595 |
| Hyster-Yale Materials Handling, Inc. | 20,577 | 872,465 |
| IES Holdings, Inc. * | 16,725 | 533,862 |
| Insteel Industries, Inc. | 38,306 | 833,539 |
| JELD-WEN Holding, Inc. * | 141,153 | 2,968,448 |
| John Bean Technologies Corp. | 64,902 | 5,449,821 |
| Kadant, Inc. | 23,758 | 2,735,021 |
| Kaman Corp. | 57,367 | 2,275,175 |
| Kennametal, Inc. | 172,000 | 5,332,000 |
| Kratos Defense & Security Solutions, Inc. * | 251,178 | 4,744,752 |
| L.B. Foster Co., Class A * | 21,470 | 291,133 |
| Lawson Products, Inc. * | 9,037 | 372,415 |
| Lindsay Corp. | 22,532 | 2,372,620 |
| LSI Industries, Inc. | 52,126 | 356,542 |
| Luxfer Holdings plc | 60,096 | 746,392 |
| Lydall, Inc. * | 35,539 | 703,317 |
| Masonite International Corp. * | 50,427 | 4,437,576 |
| MasTec, Inc. * | 117,363 | 5,825,899 |
| Maxar Technologies, Inc. | 126,353 | 3,256,117 |
| Mayville Engineering Co., Inc. * | 15,611 | 139,094 |
| Meritor, Inc. * | 144,192 | 3,509,633 |
| Miller Industries, Inc. | 23,260 | 696,404 |
| Moog, Inc., Class A | 61,517 | 3,838,046 |
| MRC Global, Inc. * | 162,892 | 693,920 |
| Mueller Industries, Inc. | 115,514 | 3,341,820 |
| Mueller Water Products, Inc., Class A | 324,029 | 3,356,940 |
| MYR Group, Inc. * | 33,848 | 1,447,002 |
| National Presto Industries, Inc. | 10,534 | 875,270 |
| Navistar International Corp. * | 103,319 | 4,454,082 |
| Nesco Holdings, Inc. * | 28,555 | 118,503 |
| NN, Inc. * | 85,080 | 456,029 |
| Northwest Pipe Co. * | 20,262 | 543,022 |
| NOW, Inc. * | 227,698 | 926,731 |
| NV5 Global, Inc. * | 22,543 | 1,264,211 |
| Omega Flex, Inc. | 5,965 | 892,961 |
| Orion Energy Systems, Inc. * | 55,521 | 356,445 |
| PAE, Inc. * | 122,753 | 972,204 |
| Park Aerospace Corp. | 39,828 | 421,779 |
| Park-Ohio Holdings Corp. | 18,496 | 365,111 |
| Parsons Corp. * | 46,864 | 1,477,153 |
| PGT Innovations, Inc. * | 118,518 | 1,965,028 |
| Plug Power, Inc. * | 706,281 | 9,887,934 |
| Powell Industries, Inc. | 18,864 | 445,756 |
| Preformed Line Products Co. | 6,158 | 338,875 |
| Primoris Services Corp. | 99,717 | 1,881,660 |
| Proto Labs, Inc. * | 55,439 | 6,546,237 |
| Quanex Building Products Corp. | 68,245 | 1,242,059 |
| Raven Industries, Inc. | 74,085 | 1,623,943 |
| RBC Bearings, Inc. * | 51,057 | 6,078,336 |
| Resideo Technologies, Inc. * | 257,567 | 2,596,275 |
| REV Group, Inc. | 57,309 | 449,876 |
| Rexnord Corp. | 252,630 | 8,104,370 |
| Rush Enterprises, Inc., Class A | 85,008 | 3,046,687 |
| Rush Enterprises, Inc., Class B | 13,777 | 433,287 |
| Simpson Manufacturing Co., Inc. | 90,381 | 8,018,602 |
| SiteOne Landscape Supply, Inc. * | 91,090 | 10,884,344 |
| SPX Corp. * | 88,911 | 3,768,937 |
| SPX FLOW, Inc. * | 87,999 | 3,726,758 |
| Standex International Corp. | 25,538 | 1,585,654 |
| Sterling Construction Co., Inc. * | 56,728 | 833,902 |
| Sunrun, Inc. * | 302,438 | 15,732,825 |
| Security | Number
of Shares | Value ($) |
| Systemax, Inc. | 25,293 | 719,080 |
| Tennant Co. | 37,993 | 2,265,143 |
| Terex Corp. | 139,937 | 3,455,045 |
| Textainer Group Holdings Ltd. * | 107,310 | 1,551,703 |
| The Eastern Co. | 11,372 | 232,785 |
| The ExOne Co. *(a) | 24,224 | 243,451 |
| The Gorman-Rupp Co. | 36,564 | 1,135,312 |
| The Greenbrier Cos., Inc. | 66,987 | 1,807,309 |
| The Manitowoc Co., Inc. * | 70,376 | 529,931 |
| The Shyft Group Inc | 71,455 | 1,379,796 |
| Thermon Group Holdings, Inc. * | 67,389 | 679,955 |
| Titan Machinery, Inc. * | 39,945 | 598,776 |
| TPI Composites, Inc. * | 63,043 | 2,087,984 |
| Transcat, Inc. * | 14,206 | 439,107 |
| TriMas Corp. * | 89,912 | 2,187,559 |
| Triton International Ltd. | 125,259 | 4,619,552 |
| Triumph Group, Inc. | 105,591 | 696,901 |
| Tutor Perini Corp. * | 84,684 | 1,144,081 |
| UFP Industries, Inc. | 123,987 | 6,188,191 |
| Ultralife Corp. * | 19,577 | 101,017 |
| Vectrus, Inc. * | 23,757 | 938,877 |
| Veritiv Corp. * | 26,593 | 382,939 |
| Vicor Corp. * | 40,057 | 3,124,446 |
| Wabash National Corp. | 109,917 | 1,567,416 |
| Watts Water Technologies, Inc., Class A | 56,761 | 6,287,416 |
| Welbilt, Inc. * | 270,976 | 1,647,534 |
| WESCO International, Inc. * | 101,558 | 4,188,252 |
| Willis Lease Finance Corp. * | 6,012 | 127,515 |
| WillScot Mobile Mini Holdings Corp. * | 332,084 | 6,170,121 |
| | | 407,708,359 |
| |
| Commercial & Professional Services 3.2% |
| ABM Industries, Inc. | 138,832 | 4,820,247 |
| Acacia Research Corp. * | 99,552 | 313,589 |
| ACCO Brands Corp. | 191,893 | 1,011,276 |
| Akerna Corp. *(a) | 19,321 | 45,984 |
| ASGN, Inc. * | 105,503 | 7,034,940 |
| Barrett Business Services, Inc. | 15,705 | 930,521 |
| BG Staffing, Inc. | 18,724 | 149,230 |
| Brady Corp., Class A | 97,482 | 3,677,021 |
| BrightView Holdings, Inc. * | 84,685 | 1,035,698 |
| Casella Waste Systems, Inc., Class A * | 95,400 | 5,150,646 |
| CBIZ, Inc. * | 106,000 | 2,403,020 |
| CECO Environmental Corp. * | 64,967 | 459,966 |
| Cimpress plc * | 36,967 | 2,713,378 |
| CompX International, Inc. | 2,729 | 34,495 |
| Covanta Holding Corp. | 246,478 | 2,238,020 |
| CRA International, Inc. | 15,526 | 635,790 |
| Deluxe Corp. | 86,792 | 1,860,820 |
| Ennis, Inc. | 52,929 | 806,638 |
| Exponent, Inc. | 106,519 | 7,412,657 |
| Forrester Research, Inc. * | 22,757 | 840,644 |
| Franklin Covey Co. * | 25,920 | 438,566 |
| GP Strategies Corp. * | 26,512 | 255,841 |
| Harsco Corp. * | 162,523 | 2,096,547 |
| Healthcare Services Group, Inc. | 154,346 | 3,531,436 |
| Heidrick & Struggles International, Inc. | 39,486 | 902,255 |
| Heritage-Crystal Clean, Inc. * | 31,566 | 520,208 |
| Herman Miller, Inc. | 122,012 | 3,717,706 |
| HNI Corp. | 88,666 | 2,886,078 |
| Huron Consulting Group, Inc. * | 47,082 | 1,782,525 |
| IBEX Ltd. *(a) | 9,837 | 148,637 |
| ICF International, Inc. | 37,830 | 2,473,704 |
| Insperity, Inc. | 75,131 | 5,753,532 |
| Interface, Inc. | 121,174 | 742,797 |
| KAR Auction Services, Inc. | 267,192 | 3,890,315 |
| Kelly Services, Inc., Class A | 69,913 | 1,215,088 |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Kforce, Inc. | 41,055 | 1,424,608 |
| Kimball International, Inc., Class B | 74,909 | 771,563 |
| Knoll, Inc. | 104,108 | 1,193,078 |
| Korn Ferry | 116,109 | 3,505,331 |
| Mastech Digital, Inc. * | 8,387 | 131,508 |
| Matthews International Corp., Class A | 63,373 | 1,383,433 |
| McGrath RentCorp | 50,153 | 2,862,733 |
| Mistras Group, Inc. * | 37,960 | 141,211 |
| Montrose Environmental Group, Inc. * | 22,713 | 613,932 |
| NL Industries, Inc. | 18,784 | 77,766 |
| PICO Holdings, Inc. * | 34,905 | 288,664 |
| Pitney Bowes, Inc. | 360,182 | 1,912,566 |
| Quad Graphics, Inc. | 67,835 | 153,985 |
| Red Violet, Inc. *(a) | 13,948 | 290,118 |
| Resources Connection, Inc. | 63,135 | 678,070 |
| SP Plus Corp. * | 47,536 | 876,088 |
| Steelcase, Inc., Class A | 179,345 | 1,872,362 |
| Team, Inc. * | 62,364 | 334,271 |
| Tetra Tech, Inc. | 111,813 | 11,283,050 |
| The Brink's Co. | 104,001 | 4,454,363 |
| TriNet Group, Inc. * | 85,306 | 5,879,289 |
| TrueBlue, Inc. * | 74,376 | 1,154,316 |
| U.S. Ecology, Inc. | 65,582 | 2,001,563 |
| UniFirst Corp. | 31,250 | 5,119,062 |
| Upwork, Inc. * | 192,837 | 3,557,843 |
| Viad Corp. | 41,946 | 838,920 |
| VSE Corp. | 18,079 | 523,568 |
| Willdan Group, Inc. * | 21,427 | 560,745 |
| | | 127,813,821 |
| |
| Consumer Durables & Apparel 3.9% |
| Acushnet Holdings Corp. | 71,237 | 2,431,319 |
| American Outdoor Brands, Inc. * | 27,697 | 419,056 |
| Beazer Homes USA, Inc. * | 58,221 | 709,132 |
| Callaway Golf Co. | 193,151 | 2,991,909 |
| Casper Sleep, Inc. *(a) | 52,412 | 347,492 |
| Cavco Industries, Inc. * | 19,069 | 3,282,538 |
| Century Communities, Inc. * | 60,721 | 2,358,404 |
| Clarus Corp. | 48,216 | 747,830 |
| Crocs, Inc. * | 138,343 | 7,239,489 |
| Deckers Outdoor Corp. * | 58,061 | 14,710,916 |
| Escalade, Inc. | 21,424 | 398,701 |
| Ethan Allen Interiors, Inc. | 46,990 | 754,189 |
| Fossil Group, Inc. * | 96,907 | 553,339 |
| G-III Apparel Group Ltd. * | 91,438 | 1,232,584 |
| GoPro, Inc., Class A * | 268,475 | 1,594,741 |
| Green Brick Partners, Inc. * | 48,660 | 870,527 |
| Hamilton Beach Brands Holding Co., Class A | 14,096 | 310,817 |
| Helen of Troy Ltd. * | 52,485 | 9,951,156 |
| Hooker Furniture Corp. | 24,038 | 661,045 |
| Installed Building Products, Inc. * | 47,303 | 4,282,814 |
| iRobot Corp. * | 57,092 | 4,543,381 |
| Johnson Outdoors, Inc., Class A | 10,857 | 948,142 |
| KB Home | 182,801 | 5,895,332 |
| Kontoor Brands, Inc. * | 107,121 | 3,524,281 |
| La-Z-Boy, Inc. | 92,573 | 3,168,774 |
| Lakeland Industries, Inc. * | 15,617 | 336,859 |
| Legacy Housing Corp. * | 17,818 | 242,503 |
| LGI Homes, Inc. * | 46,136 | 4,931,016 |
| Lifetime Brands, Inc. | 25,133 | 252,587 |
| M.D.C. Holdings, Inc. | 105,216 | 4,579,000 |
| M/I Homes, Inc. * | 57,928 | 2,370,414 |
| Malibu Boats, Inc., Class A * | 42,697 | 2,170,288 |
| Marine Products Corp. | 14,307 | 226,909 |
| MasterCraft Boat Holdings, Inc. * | 37,765 | 778,714 |
| Meritage Homes Corp. * | 77,073 | 6,712,288 |
| Security | Number
of Shares | Value ($) |
| Movado Group, Inc. | 32,095 | 350,156 |
| Nautilus, Inc. * | 61,112 | 1,325,519 |
| Oxford Industries, Inc. | 34,101 | 1,403,938 |
| Purple Innovation, Inc. * | 46,027 | 1,305,786 |
| Rocky Brands, Inc. | 14,158 | 380,850 |
| Skyline Champion Corp. * | 109,275 | 2,802,904 |
| Smith & Wesson Brands, Inc. | 113,436 | 1,881,903 |
| Sonos, Inc. * | 167,553 | 2,446,274 |
| Steven Madden Ltd. | 170,362 | 4,090,392 |
| Sturm, Ruger & Co., Inc. | 35,068 | 2,344,646 |
| Superior Group of Cos., Inc. | 22,508 | 486,623 |
| Taylor Morrison Home Corp. * | 261,419 | 5,646,650 |
| The Lovesac Co. * | 20,356 | 523,963 |
| TopBuild Corp. * | 68,573 | 10,506,069 |
| TRI Pointe Group, Inc. * | 268,142 | 4,405,573 |
| Tupperware Brands Corp. * | 101,958 | 3,234,108 |
| Turtle Beach Corp. * | 27,888 | 502,542 |
| Unifi, Inc. * | 28,846 | 432,401 |
| Universal Electronics, Inc. * | 28,003 | 1,037,791 |
| Vera Bradley, Inc. * | 42,232 | 267,751 |
| Vista Outdoor, Inc. * | 121,262 | 2,397,350 |
| VOXX International Corp. * | 40,862 | 462,966 |
| Wolverine World Wide, Inc. | 165,240 | 4,406,951 |
| YETI Holdings, Inc. * | 165,804 | 8,203,982 |
| | | 157,375,574 |
| |
| Consumer Services 4.0% |
| Accel Entertainment, Inc. * | 92,231 | 885,418 |
| Adtalem Global Education, Inc. * | 108,219 | 2,536,653 |
| American Public Education, Inc. * | 29,763 | 841,400 |
| Aspen Group, Inc. * | 39,982 | 375,031 |
| Biglari Holdings, Inc., Class A * | 151 | 65,995 |
| Biglari Holdings, Inc., Class B * | 1,922 | 161,006 |
| BJ's Restaurants, Inc. | 45,799 | 1,291,990 |
| Bloomin' Brands, Inc. | 181,965 | 2,543,871 |
| Bluegreen Vacations Corp. | 11,032 | 53,726 |
| Bluegreen Vacations Holding Corp. | 26,062 | 212,405 |
| Boyd Gaming Corp. | 168,241 | 5,336,604 |
| Brinker International, Inc. | 92,835 | 4,042,036 |
| Caesars Entertainment, Inc. * | 343,846 | 15,411,178 |
| Carriage Services, Inc. | 33,855 | 873,798 |
| Carrols Restaurant Group, Inc. * | 71,434 | 417,889 |
| Century Casinos, Inc. * | 57,453 | 270,604 |
| Churchill Downs, Inc. | 78,774 | 11,749,142 |
| Chuy's Holdings, Inc. * | 40,625 | 852,719 |
| Collectors Universe, Inc. | 18,774 | 1,031,256 |
| Cracker Barrel Old Country Store, Inc. | 49,097 | 5,588,221 |
| Dave & Buster's Entertainment, Inc. | 91,839 | 1,575,957 |
| Del Taco Restaurants, Inc. * | 61,919 | 459,129 |
| Denny's Corp. * | 128,842 | 1,154,424 |
| Dine Brands Global, Inc. | 32,355 | 1,664,665 |
| El Pollo Loco Holdings, Inc. * | 37,407 | 528,187 |
| Everi Holdings, Inc. * | 169,753 | 1,461,573 |
| Fiesta Restaurant Group, Inc. * | 37,092 | 320,475 |
| Franchise Group, Inc. | 45,354 | 1,039,514 |
| GAN Ltd. * | 14,961 | 212,596 |
| Golden Entertainment, Inc. * | 34,531 | 444,069 |
| Hilton Grand Vacations, Inc. * | 177,065 | 3,647,539 |
| Houghton Mifflin Harcourt Co. * | 223,115 | 582,330 |
| International Game Technology plc | 206,635 | 1,696,473 |
| Jack in the Box, Inc. | 46,860 | 3,751,612 |
| K12, Inc. * | 83,001 | 1,981,234 |
| Kura Sushi USA, Inc., Class A * | 7,069 | 90,978 |
| Laureate Education, Inc., Class A * | 222,074 | 2,886,962 |
| Lindblad Expeditions Holdings, Inc. * | 53,539 | 445,444 |
| Marriott Vacations Worldwide Corp. | 83,888 | 8,103,581 |
| Monarch Casino & Resort, Inc. * | 26,215 | 1,137,469 |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Nathan's Famous, Inc. | 5,830 | 295,931 |
| Noodles & Co. * | 64,689 | 417,891 |
| OneSpaWorld Holdings Ltd. | 93,935 | 583,336 |
| Papa John's International, Inc. | 67,802 | 5,193,633 |
| Penn National Gaming, Inc. * | 315,382 | 17,024,320 |
| Perdoceo Education Corp. * | 143,963 | 1,625,342 |
| PlayAGS, Inc. * | 55,864 | 150,833 |
| RCI Hospitality Holdings, Inc. | 17,624 | 377,154 |
| Red Robin Gourmet Burgers, Inc. * | 32,013 | 385,436 |
| Red Rock Resorts, Inc., Class A | 136,833 | 2,616,247 |
| Regis Corp. * | 49,027 | 271,610 |
| Ruth's Hospitality Group, Inc. | 67,208 | 751,385 |
| Scientific Games Corp., Class A * | 118,199 | 3,768,184 |
| SeaWorld Entertainment, Inc. * | 105,630 | 2,325,973 |
| Shake Shack, Inc., Class A * | 72,648 | 4,905,193 |
| Strategic Education, Inc. | 49,931 | 4,147,269 |
| Target Hospitality Corp. * | 53,630 | 46,663 |
| Texas Roadhouse, Inc. | 136,139 | 9,533,814 |
| The Cheesecake Factory, Inc. | 88,114 | 2,618,748 |
| Twin River Worldwide Holdings, Inc. | 37,239 | 903,790 |
| Universal Technical Institute, Inc. * | 59,292 | 272,150 |
| Vivint Smart Home, Inc. * | 151,380 | 2,353,959 |
| Wingstop, Inc. | 61,419 | 7,144,872 |
| WW International, Inc. * | 98,119 | 2,076,198 |
| | | 157,515,084 |
| |
| Diversified Financials 3.7% |
| A-Mark Precious Metals, Inc. | 9,715 | 301,942 |
| Alerus Financial Corp. | 30,732 | 661,045 |
| Anworth Mortgage Asset Corp. | 208,768 | 342,380 |
| Apollo Commercial Real Estate Finance, Inc. | 308,273 | 2,681,975 |
| Arbor Realty Trust, Inc. | 218,672 | 2,584,703 |
| Ares Commercial Real Estate Corp. | 63,779 | 593,782 |
| Arlington Asset Investment Corp., Class A | 70,121 | 172,498 |
| ARMOUR Residential REIT, Inc. | 132,982 | 1,268,648 |
| Artisan Partners Asset Management, Inc., Class A | 113,857 | 4,561,111 |
| Assetmark Financial Holdings, Inc. * | 34,019 | 719,502 |
| Associated Capital Group, Inc., Class A | 3,564 | 114,404 |
| Atlanticus Holdings Corp. * | 10,849 | 124,221 |
| B. Riley Financial, Inc. | 39,440 | 1,034,906 |
| Banco Latinoamericano de Comercio Exterior, S.A., Class E | 63,558 | 812,907 |
| BGC Partners, Inc., Class A | 633,783 | 1,869,660 |
| Blackstone Mortgage Trust, Inc., Class A | 285,402 | 6,193,223 |
| Blucora, Inc. * | 100,140 | 996,393 |
| Brightsphere Investment Group, Inc. | 127,546 | 1,760,135 |
| Broadmark Realty Capital, Inc. | 267,415 | 2,666,128 |
| Cannae Holdings, Inc. * | 178,716 | 6,608,918 |
| Capstead Mortgage Corp. | 197,907 | 1,011,305 |
| Cherry Hill Mortgage Investment Corp. | 31,126 | 285,114 |
| Chimera Investment Corp. | 396,638 | 3,311,927 |
| Cohen & Steers, Inc. | 50,486 | 2,842,867 |
| Colony Credit Real Estate, Inc. | 174,102 | 912,294 |
| Cowen, Inc., Class A | 55,189 | 1,184,356 |
| Curo Group Holdings Corp. | 36,667 | 274,636 |
| Diamond Hill Investment Group, Inc. | 6,448 | 882,989 |
| Donnelley Financial Solutions, Inc. * | 61,894 | 781,721 |
| Dynex Capital, Inc. | 45,312 | 742,211 |
| Ellington Financial, Inc. | 85,630 | 1,048,111 |
| Ellington Residential Mortgage REIT (a) | 19,467 | 206,934 |
| Encore Capital Group, Inc. * | 64,887 | 2,071,842 |
| Enova International, Inc. * | 71,752 | 1,101,393 |
| EZCORP, Inc., Class A * | 99,460 | 443,592 |
| Federated Hermes, Inc. | 199,905 | 4,777,729 |
| FirstCash, Inc. | 84,268 | 4,385,307 |
| Security | Number
of Shares | Value ($) |
| Focus Financial Partners, Inc., Class A * | 65,396 | 2,387,608 |
| GAMCO Investors, Inc., Class A | 10,348 | 127,280 |
| Granite Point Mortgage Trust, Inc. | 111,301 | 750,169 |
| Great Ajax Corp. | 42,480 | 326,246 |
| Green Dot Corp., Class A * | 105,471 | 5,623,714 |
| Greenhill & Co., Inc. | 28,611 | 369,940 |
| GWG Holdings, Inc. *(a) | 6,185 | 46,388 |
| Hamilton Lane, Inc., Class A | 62,549 | 4,359,665 |
| Hannon Armstrong Sustainable Infrastructure Capital, Inc. | 150,332 | 6,291,394 |
| Houlihan Lokey, Inc. | 105,946 | 6,642,814 |
| Invesco Mortgage Capital, Inc. (a) | 378,596 | 1,022,209 |
| KKR Real Estate Finance Trust, Inc. | 59,316 | 991,170 |
| Ladder Capital Corp. REIT | 219,583 | 1,646,873 |
| LendingClub Corp. * | 144,753 | 675,997 |
| Marlin Business Services Corp. | 18,213 | 132,955 |
| MFA Financial, Inc. | 943,310 | 2,660,134 |
| Moelis & Co., Class A | 109,281 | 4,065,253 |
| Navient Corp. | 397,944 | 3,187,531 |
| Nelnet, Inc., Class A | 35,805 | 2,185,537 |
| New York Mortgage Trust, Inc. | 787,202 | 1,999,493 |
| Oportun Financial Corp. * | 40,412 | 537,480 |
| Oppenheimer Holdings, Inc., Class A | 19,240 | 482,154 |
| Orchid Island Capital, Inc. | 139,579 | 724,415 |
| PennyMac Mortgage Investment Trust | 206,018 | 3,084,089 |
| Piper Sandler Cos. | 36,228 | 3,023,227 |
| PJT Partners, Inc., Class A | 48,956 | 3,312,363 |
| PRA Group, Inc. * | 93,347 | 3,185,933 |
| Pzena Investment Management, Inc., Class A | 33,417 | 173,434 |
| Ready Capital Corp. | 86,576 | 973,114 |
| Redwood Trust, Inc. | 238,855 | 2,030,268 |
| Regional Management Corp. * | 18,036 | 366,492 |
| Safeguard Scientifics, Inc. | 39,793 | 231,595 |
| Sculptor Capital Management, Inc. | 37,456 | 406,023 |
| Siebert Financial Corp. * | 21,989 | 78,941 |
| Silvercrest Asset Management Group, Inc., Class A | 20,498 | 231,422 |
| Stifel Financial Corp. | 138,152 | 8,076,366 |
| StoneX Group, Inc. * | 33,970 | 1,799,731 |
| SWK Holdings Corp. * | 7,615 | 110,037 |
| TPG RE Finance Trust, Inc. | 123,896 | 968,867 |
| Two Harbors Investment Corp. | 569,371 | 2,881,017 |
| Value Line, Inc. | 2,468 | 67,376 |
| Virtus Investment Partners, Inc. | 15,316 | 2,443,668 |
| Waddell & Reed Financial, Inc., Class A | 134,002 | 2,056,931 |
| Western Asset Mortgage Capital Corp. | 121,982 | 236,645 |
| Westwood Holdings Group, Inc. | 15,583 | 150,532 |
| WisdomTree Investments, Inc. | 289,395 | 1,053,398 |
| World Acceptance Corp. * | 9,805 | 823,522 |
| | | 147,334,219 |
| |
| Energy 1.9% |
| Adams Resources & Energy, Inc. | 4,755 | 90,725 |
| Antero Resources Corp. * | 504,578 | 1,715,565 |
| Arch Resources, Inc. | 31,401 | 959,301 |
| Archrock, Inc. | 270,084 | 1,601,598 |
| Ardmore Shipping Corp. | 70,613 | 197,716 |
| Aspen Aerogels, Inc. * | 41,935 | 473,866 |
| Berry Corp. | 140,345 | 367,704 |
| Bonanza Creek Energy, Inc. * | 39,099 | 692,443 |
| Brigham Minerals, Inc., Class A | 76,510 | 674,818 |
| Bristow Group, Inc. * | 13,692 | 284,519 |
| Cactus, Inc., Class A | 99,047 | 1,683,799 |
| ChampionX Corp. * | 384,110 | 3,353,280 |
| Clean Energy Fuels Corp. * | 270,188 | 670,066 |
| CNX Resources Corp. * | 461,107 | 4,472,738 |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Comstock Resources, Inc. * | 50,543 | 268,383 |
| CONSOL Energy, Inc. * | 55,112 | 208,874 |
| Contango Oil & Gas Co. * | 193,401 | 241,751 |
| CVR Energy, Inc. | 61,425 | 676,289 |
| Delek US Holdings, Inc. | 129,900 | 1,306,794 |
| DHT Holdings, Inc. | 231,809 | 1,115,001 |
| Diamond S Shipping, Inc. * | 57,511 | 325,512 |
| DMC Global, Inc. | 30,182 | 1,073,574 |
| Dorian LPG Ltd. * | 78,080 | 640,256 |
| Dril-Quip, Inc. * | 72,672 | 1,882,205 |
| Earthstone Energy, Inc., Class A * | 50,385 | 135,536 |
| Energy Fuels, Inc. *(a) | 251,988 | 380,502 |
| Evolution Petroleum Corp. | 57,687 | 127,488 |
| Exterran Corp. * | 53,144 | 224,799 |
| Falcon Minerals Corp. | 76,371 | 140,523 |
| Frank's International N.V. * | 322,350 | 564,113 |
| Frontline Ltd. (a) | 245,230 | 1,326,694 |
| Golar LNG Ltd. * | 189,227 | 1,428,664 |
| Goodrich Petroleum Corp. * | 18,729 | 179,424 |
| Green Plains, Inc. * | 70,743 | 1,068,219 |
| Gulfport Energy Corp. * | 342,824 | 87,763 |
| Helix Energy Solutions Group, Inc. * | 296,638 | 735,662 |
| International Seaways, Inc. | 49,900 | 675,646 |
| Kosmos Energy Ltd. | 838,129 | 833,352 |
| Liberty Oilfield Services, Inc., Class A | 135,709 | 906,536 |
| Magnolia Oil & Gas Corp., Class A * | 257,770 | 1,118,722 |
| Matador Resources Co. * | 229,368 | 1,621,632 |
| Matrix Service Co. * | 53,548 | 406,965 |
| Montage Resources Corp. * | 44,440 | 219,978 |
| Nabors Industries Ltd. | 14,894 | 423,288 |
| NACCO Industries, Inc., Class A | 7,792 | 151,866 |
| National Energy Services Reunited Corp. * | 41,663 | 308,306 |
| Newpark Resources, Inc. * | 187,744 | 134,256 |
| NextDecade Corp. *(a) | 45,447 | 109,982 |
| NexTier Oilfield Solutions, Inc. * | 331,477 | 626,492 |
| Nordic American Tankers Ltd. (a) | 299,813 | 872,456 |
| Oceaneering International, Inc. * | 205,754 | 839,476 |
| Oil States International, Inc. * | 126,742 | 315,588 |
| Overseas Shipholding Group, Inc., Class A * | 133,236 | 254,481 |
| Ovintiv, Inc. | 541,371 | 4,980,613 |
| Par Pacific Holdings, Inc. * | 82,352 | 530,347 |
| Patterson-UTI Energy, Inc. | 380,717 | 974,636 |
| PBF Energy, Inc., Class A | 200,752 | 937,512 |
| PDC Energy, Inc. * | 207,424 | 2,472,494 |
| Peabody Energy Corp. * | 128,746 | 166,082 |
| Penn Virginia Corp. * | 27,924 | 214,456 |
| PrimeEnergy Resources Corp. * | 1,079 | 55,569 |
| ProPetro Holding Corp. * | 165,743 | 654,685 |
| Range Resources Corp. | 443,363 | 2,917,329 |
| Renewable Energy Group, Inc. * | 79,173 | 4,465,357 |
| REX American Resources Corp. * | 11,499 | 835,862 |
| RPC, Inc. * | 116,587 | 277,477 |
| Scorpio Tankers, Inc. | 106,348 | 937,989 |
| SEACOR Holdings, Inc. * | 39,922 | 1,222,811 |
| Select Energy Services, Inc., Class A * | 121,014 | 365,462 |
| SFL Corp., Ltd. | 199,504 | 1,298,771 |
| SM Energy Co. | 234,992 | 378,337 |
| Solaris Oilfield Infrastructure, Inc., Class A | 59,234 | 351,258 |
| Southwestern Energy Co. * | 1,245,375 | 3,325,151 |
| Talos Energy, Inc. * | 23,880 | 157,130 |
| Tellurian, Inc. * | 340,670 | 327,043 |
| Tidewater, Inc. * | 83,299 | 488,132 |
| Transocean Ltd. *(a) | 1,216,143 | 815,424 |
| Uranium Energy Corp. * | 372,159 | 321,024 |
| US Silica Holdings, Inc. | 155,225 | 422,212 |
| W&T Offshore, Inc. *(a) | 189,512 | 265,317 |
| Security | Number
of Shares | Value ($) |
| Whiting Petroleum Corp. * | 2,611 | 38,121 |
| World Fuel Services Corp. | 129,321 | 2,722,207 |
| | | 74,113,994 |
| |
| Food & Staples Retailing 0.8% |
| BJ's Wholesale Club Holdings, Inc. * | 283,817 | 10,867,353 |
| HF Foods Group, Inc. *(a) | 73,731 | 485,887 |
| Ingles Markets, Inc., Class A | 29,659 | 1,063,572 |
| Natural Grocers by Vitamin Cottage, Inc. | 19,294 | 205,288 |
| Performance Food Group Co. * | 271,491 | 9,124,812 |
| PriceSmart, Inc. | 47,268 | 3,261,492 |
| Rite Aid Corp. * | 113,787 | 1,040,013 |
| SpartanNash, Co. | 73,790 | 1,358,474 |
| The Andersons, Inc. | 64,749 | 1,404,406 |
| The Chefs' Warehouse, Inc. * | 62,684 | 847,488 |
| United Natural Foods, Inc. * | 112,437 | 1,638,207 |
| Village Super Market, Inc., Class A | 18,142 | 410,916 |
| Weis Markets, Inc. | 19,824 | 900,208 |
| | | 32,608,116 |
| |
| Food, Beverage & Tobacco 1.9% |
| Alico, Inc. | 11,041 | 318,864 |
| B&G Foods, Inc. (a) | 131,907 | 3,503,450 |
| Bridgford Foods Corp. * | 3,608 | 65,846 |
| Cal-Maine Foods, Inc. * | 65,125 | 2,497,544 |
| Calavo Growers, Inc. | 34,224 | 2,297,457 |
| Celsius Holdings, Inc. * | 71,412 | 1,436,095 |
| Coca-Cola Consolidated, Inc. | 9,777 | 2,238,444 |
| Darling Ingredients, Inc. * | 333,575 | 14,343,725 |
| Farmer Brothers Co. * | 34,576 | 119,979 |
| Fresh Del Monte Produce, Inc. | 64,629 | 1,391,462 |
| Freshpet, Inc. * | 80,262 | 9,189,999 |
| Hostess Brands, Inc. * | 254,137 | 3,212,292 |
| J&J Snack Foods Corp. | 30,974 | 4,199,145 |
| John B. Sanfilippo & Son, Inc. | 18,290 | 1,330,780 |
| Lancaster Colony Corp. | 39,289 | 6,527,475 |
| Landec Corp. * | 54,529 | 524,024 |
| Limoneira Co. | 33,787 | 467,274 |
| MGP Ingredients, Inc. | 26,647 | 1,119,707 |
| National Beverage Corp. * | 24,577 | 1,924,133 |
| NewAge, Inc. *(a) | 189,855 | 444,261 |
| Primo Water Corp. | 323,453 | 4,052,866 |
| Sanderson Farms, Inc. | 41,735 | 5,340,828 |
| Seneca Foods Corp., Class A * | 13,656 | 503,224 |
| The Simply Good Foods Co. * | 176,183 | 3,312,240 |
| Tootsie Roll Industries, Inc. | 33,394 | 997,813 |
| Turning Point Brands, Inc. | 24,575 | 920,825 |
| Universal Corp. | 50,474 | 2,011,389 |
| Vector Group Ltd. | 290,037 | 2,665,440 |
| Vital Farms, Inc. * | 21,242 | 734,124 |
| | | 77,690,705 |
| |
| Health Care Equipment & Services 7.5% |
| 1Life Healthcare, Inc. * | 162,671 | 4,588,949 |
| Accelerate Diagnostics, Inc. *(a) | 64,362 | 606,290 |
| Accolade, Inc. * | 24,131 | 845,068 |
| Accuray, Inc. * | 187,454 | 545,491 |
| Acutus Medical, Inc. * | 20,390 | 466,319 |
| AdaptHealth Corp. * | 51,892 | 1,416,652 |
| Addus HomeCare Corp. * | 28,712 | 2,801,430 |
| Allscripts Healthcare Solutions, Inc. * | 333,896 | 3,365,672 |
| Alphatec Holdings, Inc. * | 92,651 | 791,240 |
| American Renal Associates Holdings, Inc. * | 29,498 | 338,932 |
| AMN Healthcare Services, Inc. * | 96,647 | 6,309,116 |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| AngioDynamics, Inc. * | 74,885 | 774,311 |
| Antares Pharma, Inc. * | 340,518 | 929,614 |
| Apollo Medical Holdings, Inc. * | 41,014 | 707,902 |
| Apyx Medical Corp. * | 68,932 | 414,971 |
| Aspira Women's Health, Inc. *(a) | 164,562 | 620,399 |
| AtriCure, Inc. * | 90,809 | 3,138,359 |
| Atrion Corp. | 2,937 | 1,765,578 |
| Avalon GloboCare Corp. *(a) | 44,971 | 50,368 |
| Avanos Medical, Inc. * | 98,404 | 3,478,581 |
| AxoGen, Inc. * | 75,061 | 946,519 |
| Axonics Modulation Technologies, Inc. * | 62,896 | 2,949,193 |
| Bellerophon Therapeutics, Inc. * | 9,386 | 79,124 |
| Beyond Air, Inc. *(a) | 28,160 | 147,558 |
| BioLife Solutions, Inc. * | 28,523 | 818,895 |
| BioSig Technologies, Inc. *(a) | 49,912 | 157,722 |
| BioTelemetry, Inc. * | 69,353 | 2,953,051 |
| Brookdale Senior Living, Inc. * | 381,618 | 1,121,957 |
| Cantel Medical Corp. | 78,413 | 3,751,278 |
| Cardiovascular Systems, Inc. * | 80,296 | 2,862,552 |
| Castle Biosciences, Inc. * | 24,361 | 1,131,081 |
| Cerus Corp. * | 340,864 | 1,789,536 |
| Chembio Diagnostics, Inc. *(a) | 41,983 | 198,999 |
| Co-Diagnostics, Inc. *(a) | 55,110 | 739,025 |
| Community Health Systems, Inc. * | 175,090 | 1,092,562 |
| Computer Programs & Systems, Inc. | 26,742 | 745,834 |
| CONMED Corp. | 56,241 | 4,385,111 |
| CorVel Corp. * | 18,447 | 1,682,735 |
| Covetrus, Inc. * | 203,097 | 5,014,465 |
| Cross Country Healthcare, Inc. * | 74,694 | 586,348 |
| CryoLife, Inc. * | 76,551 | 1,282,995 |
| CryoPort, Inc. * | 70,878 | 2,845,043 |
| Cutera, Inc. * | 36,100 | 683,373 |
| CytoSorbents Corp. * | 85,238 | 652,071 |
| Electromed, Inc. * | 14,954 | 124,268 |
| Enzo Biochem, Inc. * | 92,538 | 168,419 |
| Evolent Health, Inc., Class A * | 156,948 | 1,560,063 |
| Exagen, Inc. * | 10,253 | 146,208 |
| Five Star Senior Living, Inc. * | 40,592 | 185,505 |
| FONAR Corp. * | 12,750 | 250,410 |
| Fulgent Genetics, Inc. * | 20,097 | 653,755 |
| GenMark Diagnostics, Inc. * | 144,118 | 1,761,122 |
| Glaukos Corp. * | 88,360 | 4,941,091 |
| Hanger, Inc. * | 76,959 | 1,344,474 |
| Health Catalyst, Inc. * | 69,865 | 2,408,945 |
| HealthEquity, Inc. * | 156,090 | 8,037,074 |
| HealthStream, Inc. * | 53,672 | 982,198 |
| Heska Corp. * | 14,475 | 1,698,352 |
| HMS Holdings Corp. * | 182,421 | 4,856,047 |
| ICAD, Inc. * | 41,208 | 402,190 |
| Inari Medical, Inc. * | 15,952 | 1,056,022 |
| InfuSystem Holdings, Inc. * | 29,706 | 365,978 |
| Inogen, Inc. * | 38,302 | 1,118,801 |
| Inovalon Holdings, Inc., Class A * | 152,596 | 2,897,798 |
| Inspire Medical Systems, Inc. * | 54,207 | 6,473,942 |
| Integer Holdings Corp. * | 67,675 | 3,955,604 |
| IntriCon Corp. * | 16,915 | 211,438 |
| Invacare Corp. | 68,819 | 558,122 |
| iRadimed Corp. * | 12,445 | 281,879 |
| iRhythm Technologies, Inc. * | 56,832 | 12,017,126 |
| Lantheus Holdings, Inc. * | 137,994 | 1,498,615 |
| LeMaitre Vascular, Inc. | 34,433 | 1,118,384 |
| LENSAR, Inc. * | 17,578 | 171,561 |
| LHC Group, Inc. * | 62,938 | 13,629,224 |
| LivaNova plc * | 101,121 | 5,090,431 |
| Magellan Health, Inc. * | 49,024 | 3,542,965 |
| MEDNAX, Inc. * | 155,011 | 1,976,390 |
| Meridian Bioscience, Inc. * | 88,019 | 1,509,526 |
| Merit Medical Systems, Inc. * | 112,169 | 5,614,058 |
| Security | Number
of Shares | Value ($) |
| Mesa Laboratories, Inc. | 9,825 | 2,568,353 |
| Milestone Scientific, Inc. *(a) | 88,418 | 136,164 |
| Misonix, Inc. * | 24,975 | 283,716 |
| NantHealth, Inc. *(a) | 58,065 | 116,711 |
| National HealthCare Corp. | 26,084 | 1,651,117 |
| National Research Corp. | 28,069 | 1,453,974 |
| Natus Medical, Inc. * | 69,941 | 1,273,626 |
| Nemaura Medical, Inc. * | 14,458 | 51,326 |
| Neogen Corp. * | 109,414 | 7,630,532 |
| Nevro Corp. * | 69,617 | 10,387,553 |
| NextGen Healthcare, Inc. * | 115,647 | 1,572,799 |
| NuVasive, Inc. * | 106,440 | 4,729,129 |
| Omnicell, Inc. * | 87,973 | 7,614,063 |
| Ontrak, Inc. *(a) | 16,634 | 1,018,666 |
| OptimizeRx Corp. * | 29,950 | 593,010 |
| Option Care Health, Inc. * | 91,235 | 1,216,163 |
| OraSure Technologies, Inc. * | 147,676 | 2,206,279 |
| Orthofix Medical, Inc. * | 38,815 | 1,213,357 |
| OrthoPediatrics Corp. * | 27,199 | 1,213,075 |
| Owens & Minor, Inc. | 130,524 | 3,278,763 |
| Patterson Cos., Inc. | 175,588 | 4,367,752 |
| PAVmed, Inc. *(a) | 77,257 | 138,290 |
| PetIQ, Inc. * | 43,714 | 1,248,472 |
| Phreesia, Inc. * | 59,442 | 2,197,571 |
| Progenity, Inc. * | 7,029 | 35,075 |
| Progyny, Inc. * | 55,271 | 1,346,954 |
| Pulse Biosciences, Inc. *(a) | 28,294 | 342,640 |
| Quotient Ltd. * | 119,770 | 565,314 |
| R1 RCM, Inc. * | 220,946 | 3,959,352 |
| RadNet, Inc. * | 89,749 | 1,302,258 |
| Repro-Med Systems, Inc. * | 55,928 | 308,723 |
| Retractable Technologies, Inc. * | 28,557 | 209,608 |
| Rockwell Medical, Inc. * | 148,170 | 126,300 |
| Schrodinger, Inc. * | 60,664 | 2,959,190 |
| SeaSpine Holdings Corp. * | 54,778 | 698,967 |
| Select Medical Holdings Corp. * | 224,777 | 4,715,822 |
| Sharps Compliance Corp. * | 30,750 | 183,270 |
| Shockwave Medical, Inc. * | 59,077 | 4,036,141 |
| SI-BONE, Inc. * | 52,752 | 1,106,209 |
| Sientra, Inc. * | 94,248 | 397,727 |
| Silk Road Medical, Inc. * | 55,624 | 3,370,814 |
| Simulations Plus, Inc. | 29,258 | 1,896,504 |
| Soliton, Inc. *(a) | 12,645 | 90,538 |
| STAAR Surgical Co. * | 94,884 | 6,879,090 |
| Stereotaxis, Inc. * | 90,274 | 285,266 |
| Surgalign Holdings, Inc. * | 122,511 | 213,169 |
| Surgery Partners, Inc. * | 46,637 | 1,017,619 |
| Surmodics, Inc. * | 27,534 | 1,011,875 |
| Tabula Rasa HealthCare, Inc. * | 42,573 | 1,470,471 |
| Tactile Systems Technology, Inc. * | 38,187 | 1,396,881 |
| Tela Bio, Inc. * | 14,201 | 215,287 |
| Tenet Healthcare Corp. * | 216,411 | 5,310,726 |
| The Ensign Group, Inc. | 105,952 | 6,234,216 |
| The Joint Corp. * | 27,648 | 518,124 |
| The Pennant Group, Inc. * | 52,987 | 2,207,438 |
| The Providence Service Corp. * | 25,138 | 2,954,972 |
| Tivity Health, Inc. * | 90,080 | 1,238,600 |
| TransMedics Group, Inc. * | 52,158 | 624,853 |
| Triple-S Management Corp., Class B * | 47,096 | 872,218 |
| U.S. Physical Therapy, Inc. | 26,365 | 2,091,535 |
| Utah Medical Products, Inc. | 7,102 | 589,466 |
| Vapotherm, Inc. * | 40,373 | 1,209,171 |
| Varex Imaging Corp. * | 78,883 | 1,057,032 |
| Venus Concept, Inc. *(a) | 39,646 | 83,653 |
| Viemed Healthcare, Inc. * | 72,024 | 576,912 |
| ViewRay, Inc. * | 231,671 | 688,063 |
| Vocera Communications, Inc. * | 66,469 | 2,178,854 |
| VolitionRX Ltd. *(a) | 56,768 | 168,601 |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Wright Medical Group N.V. * | 266,888 | 8,164,104 |
| Zynex, Inc. * | 38,717 | 495,965 |
| | | 300,746,282 |
| |
| Household & Personal Products 0.6% |
| BellRing Brands, Inc., Class A * | 82,813 | 1,514,650 |
| Central Garden & Pet Co. * | 20,061 | 781,577 |
| Central Garden & Pet Co., Class A * | 82,156 | 2,907,501 |
| Edgewell Personal Care Co. * | 112,645 | 2,953,552 |
| elf Beauty, Inc. * | 93,913 | 1,903,616 |
| Inter Parfums, Inc. | 36,976 | 1,518,234 |
| Lifevantage Corp. * | 28,080 | 310,284 |
| Medifast, Inc. | 23,379 | 3,284,516 |
| Nature's Sunshine Products, Inc. * | 18,214 | 189,790 |
| Oil-Dri Corp. of America | 10,539 | 360,012 |
| Revlon, Inc., Class A *(a) | 14,442 | 59,212 |
| USANA Health Sciences, Inc. * | 24,059 | 1,820,063 |
| Veru, Inc. * | 106,971 | 269,567 |
| WD-40 Co. | 28,260 | 6,877,919 |
| | | 24,750,493 |
| |
| Insurance 2.4% |
| Ambac Financial Group, Inc. * | 94,138 | 1,156,015 |
| American Equity Investment Life Holding Co. | 187,654 | 4,657,572 |
| AMERISAFE, Inc. | 39,827 | 2,348,996 |
| Argo Group International Holdings Ltd. | 67,468 | 2,407,258 |
| BRP Group, Inc., Class A * | 70,078 | 1,786,989 |
| Citizens, Inc. * | 103,991 | 600,028 |
| CNO Financial Group, Inc. | 292,741 | 5,196,153 |
| Crawford & Co., Class A | 34,321 | 219,654 |
| Donegal Group, Inc., Class A | 22,154 | 321,455 |
| eHealth, Inc. * | 52,735 | 3,539,046 |
| Employers Holdings, Inc. | 59,810 | 1,914,518 |
| Enstar Group Ltd. * | 24,879 | 4,275,954 |
| FBL Financial Group, Inc., Class A | 19,958 | 991,713 |
| FedNat Holding Co. | 26,577 | 136,340 |
| Genworth Financial, Inc., Class A * | 1,048,571 | 4,120,884 |
| Goosehead Insurance, Inc., Class A | 26,827 | 3,287,381 |
| Greenlight Capital Re Ltd., Class A * | 57,682 | 389,354 |
| HCI Group, Inc. | 12,745 | 598,760 |
| Heritage Insurance Holdings, Inc. | 52,082 | 491,654 |
| Horace Mann Educators Corp. | 85,592 | 2,902,425 |
| Independence Holding Co. | 9,712 | 367,308 |
| Investors Title Co. | 2,638 | 352,226 |
| James River Group Holdings Ltd. | 61,666 | 2,881,652 |
| Kinsale Capital Group, Inc. | 43,865 | 8,223,372 |
| MBIA, Inc. * | 110,416 | 630,475 |
| National General Holdings Corp. | 141,207 | 4,796,802 |
| National Western Life Group, Inc., Class A | 5,330 | 904,128 |
| NI Holdings, Inc. * | 19,067 | 318,610 |
| Palomar Holdings, Inc. * | 41,915 | 3,737,561 |
| ProAssurance Corp. | 111,408 | 1,719,025 |
| ProSight Global, Inc. * | 18,794 | 222,333 |
| Protective Insurance Corp., Class B | 19,116 | 251,375 |
| RLI Corp. | 82,062 | 7,114,775 |
| Safety Insurance Group, Inc. | 30,070 | 2,104,900 |
| Selective Insurance Group, Inc. | 122,526 | 6,378,704 |
| Selectquote, Inc. * | 66,025 | 1,136,950 |
| State Auto Financial Corp. | 36,998 | 456,555 |
| Stewart Information Services Corp. | 54,653 | 2,316,741 |
| Third Point Reinsurance Ltd. * | 167,289 | 1,301,508 |
| Tiptree, Inc. | 49,321 | 240,193 |
| Trean Insurance Group, Inc. * | 24,794 | 269,015 |
| Trupanion, Inc. * | 61,510 | 4,400,425 |
| United Fire Group, Inc. | 43,482 | 893,120 |
| Security | Number
of Shares | Value ($) |
| United Insurance Holdings Corp. | 40,786 | 179,051 |
| Universal Insurance Holdings, Inc. | 57,472 | 716,676 |
| Vericity, Inc. | 3,971 | 41,775 |
| Watford Holdings Ltd. * | 35,579 | 1,280,844 |
| | | 94,578,248 |
| |
| Materials 4.2% |
| Advanced Emissions Solutions, Inc. | 34,706 | 154,442 |
| AdvanSix, Inc. * | 56,910 | 866,170 |
| AgroFresh Solutions, Inc. * | 63,989 | 131,817 |
| Alcoa Corp. * | 387,662 | 5,008,593 |
| Allegheny Technologies, Inc. * | 263,760 | 2,429,230 |
| American Vanguard Corp. | 59,326 | 766,492 |
| Amyris, Inc. * | 221,318 | 553,295 |
| Arconic Corp. * | 205,893 | 4,476,114 |
| Avient Corp. | 189,229 | 5,879,345 |
| Balchem Corp. | 66,609 | 6,657,570 |
| Boise Cascade Co. | 81,077 | 3,111,735 |
| Caledonia Mining Corp. plc | 22,971 | 375,116 |
| Carpenter Technology Corp. | 98,694 | 1,725,171 |
| Century Aluminum Co. * | 104,992 | 690,847 |
| Chase Corp. | 15,340 | 1,459,754 |
| Clearwater Paper Corp. * | 33,431 | 1,241,962 |
| Cleveland-Cliffs, Inc. | 817,605 | 6,769,769 |
| Coeur Mining, Inc. * | 500,755 | 3,540,338 |
| Commercial Metals Co. | 246,287 | 5,085,827 |
| Compass Minerals International, Inc. | 70,671 | 4,267,115 |
| Domtar Corp. | 114,240 | 2,728,051 |
| Ferro Corp. * | 170,177 | 2,188,476 |
| Ferroglobe Representation and Warranty Insurance Trust *(b) | 108,500 | — |
| Forterra, Inc. * | 39,759 | 518,855 |
| FutureFuel Corp. | 53,029 | 630,515 |
| GCP Applied Technologies, Inc. * | 101,606 | 2,216,027 |
| Glatfelter Corp. | 91,064 | 1,299,483 |
| Gold Resource Corp. | 135,632 | 371,632 |
| Greif, Inc., Class A | 53,389 | 2,167,060 |
| Greif, Inc., Class B | 12,437 | 537,900 |
| H.B. Fuller Co. | 106,870 | 4,835,867 |
| Hawkins, Inc. | 20,128 | 940,179 |
| Haynes International, Inc. | 25,483 | 413,079 |
| Hecla Mining Co. | 1,081,165 | 4,951,736 |
| Ingevity Corp. * | 85,952 | 4,717,046 |
| Innospec, Inc. | 50,575 | 3,345,030 |
| Intrepid Potash, Inc. * | 20,463 | 204,221 |
| Kaiser Aluminum Corp. | 32,678 | 2,056,427 |
| Koppers Holdings, Inc. * | 42,699 | 957,739 |
| Kraton Corp. * | 64,840 | 1,834,972 |
| Kronos Worldwide, Inc. | 46,068 | 613,626 |
| Livent Corp. * | 304,965 | 3,278,374 |
| Louisiana-Pacific Corp. | 234,221 | 6,694,036 |
| Marrone Bio Innovations, Inc. *(a) | 144,843 | 159,327 |
| Materion Corp. | 42,202 | 2,160,320 |
| Minerals Technologies, Inc. | 70,831 | 3,873,747 |
| Myers Industries, Inc. | 74,575 | 1,069,406 |
| Neenah, Inc. | 34,872 | 1,312,233 |
| Novagold Resources, Inc. * | 492,332 | 5,100,560 |
| O-I Glass, Inc. | 325,799 | 3,072,285 |
| Olympic Steel, Inc. | 19,559 | 223,168 |
| Orion Engineered Carbons S.A. | 125,314 | 1,838,356 |
| PQ Group Holdings, Inc. * | 79,340 | 917,170 |
| Quaker Chemical Corp. | 27,525 | 5,251,495 |
| Ranpak Holdings Corp. * | 60,191 | 513,429 |
| Rayonier Advanced Materials, Inc. * | 128,600 | 441,098 |
| Ryerson Holding Corp. * | 34,841 | 274,199 |
| Schnitzer Steel Industries, Inc., Class A | 53,628 | 1,126,188 |
| Schweitzer-Mauduit International, Inc. | 64,554 | 2,143,193 |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Sensient Technologies Corp. | 87,781 | 5,743,511 |
| Stepan Co. | 44,614 | 5,194,854 |
| Summit Materials, Inc., Class A * | 237,010 | 4,192,707 |
| SunCoke Energy, Inc. | 172,572 | 602,276 |
| TimkenSteel Corp. * | 91,276 | 353,238 |
| Trecora Resources * | 48,741 | 288,547 |
| Tredegar Corp. | 53,933 | 786,343 |
| Trinseo S.A. | 79,566 | 2,531,790 |
| Tronox Holdings plc, Class A * | 186,051 | 1,817,718 |
| UFP Technologies, Inc. * | 14,279 | 529,180 |
| United States Lime & Minerals, Inc. | 4,265 | 395,366 |
| United States Steel Corp. | 452,816 | 4,374,203 |
| US Concrete, Inc. * | 33,167 | 1,126,351 |
| Verso Corp., Class A | 51,262 | 398,818 |
| Warrior Met Coal, Inc. | 106,888 | 1,603,320 |
| Worthington Industries, Inc. | 75,958 | 3,737,893 |
| | | 165,843,322 |
| |
| Media & Entertainment 1.2% |
| AMC Entertainment Holdings, Inc., Class A (a) | 107,870 | 254,573 |
| AMC Networks, Inc., Class A *(a) | 80,536 | 1,711,390 |
| Boston Omaha Corp., Class A * | 27,117 | 433,330 |
| Cardlytics, Inc. * | 54,110 | 3,994,400 |
| Cargurus, Inc. * | 178,720 | 3,561,890 |
| Cars.com, Inc. * | 140,218 | 1,036,211 |
| Cinemark Holdings, Inc. | 222,241 | 1,820,154 |
| comScore, Inc. * | 125,921 | 251,212 |
| Daily Journal Corp. * | 2,334 | 632,981 |
| DHI Group, Inc. * | 98,817 | 167,001 |
| Emerald Holding, Inc. | 53,276 | 139,583 |
| Entercom Communications Corp., Class A | 238,648 | 357,972 |
| Entravision Communications Corp., Class A | 124,684 | 228,172 |
| Eros STX Global Corp. *(a) | 313,914 | 602,715 |
| Eventbrite, Inc., Class A * | 132,043 | 1,218,757 |
| EverQuote, Inc., Class A * | 29,158 | 976,501 |
| Fluent, Inc. * | 88,752 | 226,318 |
| Gaia, Inc. * | 25,331 | 256,856 |
| Gannett Co., Inc. * | 271,511 | 312,238 |
| Glu Mobile, Inc. * | 303,479 | 2,172,910 |
| Gray Television, Inc. * | 180,493 | 2,288,651 |
| Hemisphere Media Group, Inc. * | 33,004 | 258,091 |
| iHeartMedia, Inc., Class A * | 124,412 | 1,022,667 |
| IMAX Corp. * | 102,876 | 1,186,160 |
| Liberty Media Corp. - Liberty Braves, Class A * | 20,801 | 430,581 |
| Liberty Media Corp. - Liberty Braves, Class C * | 75,439 | 1,544,236 |
| Liberty TripAdvisor Holdings, Inc., Class A * | 152,640 | 271,699 |
| LiveXLive Media, Inc. *(a) | 95,460 | 191,875 |
| Loral Space & Communications, Inc. | 26,389 | 459,432 |
| Meredith Corp. | 82,471 | 907,181 |
| MSG Networks, Inc., Class A * | 81,943 | 732,570 |
| National CineMedia, Inc. | 127,058 | 252,210 |
| QuinStreet, Inc. * | 98,343 | 1,573,980 |
| Saga Communications, Inc., Class A | 8,051 | 137,028 |
| Scholastic Corp. | 60,384 | 1,193,188 |
| Sinclair Broadcast Group, Inc., Class A | 91,831 | 1,706,220 |
| TechTarget, Inc. * | 48,515 | 2,124,957 |
| TEGNA, Inc. | 454,202 | 5,464,050 |
| The E.W. Scripps Co., Class A | 116,523 | 1,058,029 |
| The Marcus Corp. | 47,126 | 345,433 |
| Tribune Publishing Co. | 32,033 | 367,098 |
| TrueCar, Inc. * | 220,232 | 960,211 |
| Security | Number
of Shares | Value ($) |
| WideOpenWest, Inc. * | 109,532 | 546,565 |
| Yelp, Inc. * | 147,894 | 2,909,075 |
| | | 48,286,351 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 13.7% |
| 89bio, Inc. * | 13,522 | 313,170 |
| Abeona Therapeutics, Inc. * | 128,511 | 137,507 |
| AcelRx Pharmaceuticals, Inc. *(a) | 158,971 | 271,840 |
| ADMA Biologics, Inc. *(a) | 121,152 | 241,092 |
| Adverum Biotechnologies, Inc. * | 180,516 | 1,969,430 |
| Aeglea BioTherapeutics, Inc. * | 87,319 | 670,610 |
| Aerie Pharmaceuticals, Inc. * | 75,565 | 801,745 |
| Affimed N.V. * | 168,666 | 532,985 |
| Agenus, Inc. * | 315,208 | 1,163,118 |
| Agile Therapeutics, Inc. * | 140,985 | 383,479 |
| Akebia Therapeutics, Inc. * | 297,418 | 660,268 |
| Akero Therapeutics, Inc. * | 28,122 | 746,639 |
| Akouos, Inc. * | 30,110 | 584,435 |
| Albireo Pharma, Inc. * | 27,334 | 862,661 |
| Alector, Inc. * | 96,241 | 905,628 |
| Allakos, Inc. * | 52,271 | 4,972,540 |
| Allogene Therapeutics, Inc. * | 112,010 | 3,799,379 |
| Allovir, Inc. * | 37,203 | 983,275 |
| ALX Oncology Holdings, Inc. * | 19,858 | 784,590 |
| AMAG Pharmaceuticals, Inc. * | 64,140 | 880,001 |
| Amicus Therapeutics, Inc. * | 526,357 | 9,384,945 |
| Amneal Pharmaceuticals, Inc. * | 205,349 | 854,252 |
| Amphastar Pharmaceuticals, Inc. * | 75,265 | 1,474,441 |
| AnaptysBio, Inc. * | 43,651 | 1,285,958 |
| Anavex Life Sciences Corp. *(a) | 110,310 | 650,829 |
| ANI Pharmaceuticals, Inc. * | 19,708 | 502,357 |
| Anika Therapeutics, Inc. * | 28,986 | 945,523 |
| Annexon, Inc. * | 30,586 | 636,495 |
| Apellis Pharmaceuticals, Inc. * | 124,182 | 3,961,406 |
| Applied Genetic Technologies Corp. * | 50,309 | 259,594 |
| Applied Molecular Transport, Inc. *(a) | 25,766 | 757,263 |
| Applied Therapeutics, Inc. * | 28,084 | 456,927 |
| Aprea Therapeutics, Inc. * | 14,777 | 322,286 |
| Aptinyx, Inc. * | 52,911 | 155,029 |
| Aquestive Therapeutics, Inc. *(a) | 40,688 | 196,930 |
| Aravive, Inc. * | 26,214 | 121,371 |
| Arcturus Therapeutics Holdings, Inc. * | 33,255 | 1,798,430 |
| Arcus Biosciences, Inc. * | 87,580 | 1,909,244 |
| Arcutis Biotherapeutics, Inc. * | 37,542 | 668,998 |
| Ardelyx, Inc. * | 150,633 | 769,735 |
| Arena Pharmaceuticals, Inc. * | 120,394 | 10,320,174 |
| Arrowhead Pharmaceuticals, Inc. * | 207,968 | 11,916,566 |
| Arvinas, Inc. * | 60,794 | 1,271,203 |
| Assembly Biosciences, Inc. * | 63,817 | 940,663 |
| Atara Biotherapeutics, Inc. * | 150,379 | 1,941,393 |
| Athenex, Inc. * | 128,871 | 1,469,129 |
| Athersys, Inc. * | 355,634 | 622,360 |
| Atreca, Inc. Class A * | 58,481 | 781,306 |
| Avenue Therapeutics, Inc. * | 14,314 | 44,946 |
| AVEO Pharmaceuticals, Inc. * | 45,283 | 245,887 |
| Avid Bioservices, Inc. * | 116,714 | 846,176 |
| Avidity Biosciences, Inc. * | 34,720 | 858,626 |
| Avrobio, Inc. * | 65,339 | 933,041 |
| Axcella Health, Inc. * | 31,128 | 131,983 |
| Axsome Therapeutics, Inc. * | 57,344 | 3,802,481 |
| Aytu BioScience, Inc. * | 49,328 | 46,876 |
| Beam Therapeutics, Inc. * | 73,420 | 2,508,761 |
| Beyondspring, Inc. * | 30,411 | 448,258 |
| BioCryst Pharmaceuticals, Inc. * | 366,970 | 1,401,825 |
| BioDelivery Sciences International, Inc. * | 186,272 | 588,620 |
| Biohaven Pharmaceutical Holding Co., Ltd. * | 99,570 | 7,712,692 |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| BioSpecifics Technologies Corp. * | 12,888 | 1,135,433 |
| Bioxcel Therapeutics, Inc. * | 24,359 | 1,112,963 |
| Black Diamond Therapeutics, Inc. * | 37,545 | 1,183,043 |
| Blueprint Medicines Corp. * | 114,616 | 11,722,924 |
| BrainStorm Cell Therapeutics, Inc. *(a) | 59,306 | 594,839 |
| Bridgebio Pharma, Inc. * | 150,862 | 5,790,084 |
| Cabaletta Bio, Inc. * | 25,974 | 300,519 |
| Calithera Biosciences, Inc. * | 136,424 | 482,941 |
| Calyxt, Inc. * | 19,697 | 63,227 |
| Cara Therapeutics, Inc. * | 85,552 | 1,134,420 |
| CareDx, Inc. * | 99,485 | 4,879,739 |
| CASI Pharmaceuticals, Inc. * | 136,467 | 320,697 |
| Cassava Sciences, Inc. * | 47,937 | 393,563 |
| Catabasis Pharmaceuticals, Inc. * | 38,952 | 52,196 |
| Catalyst Biosciences, Inc. * | 45,527 | 249,488 |
| Catalyst Pharmaceuticals, Inc. * | 203,039 | 603,026 |
| CEL-SCI Corp. *(a) | 69,425 | 835,183 |
| Cellular Biomedicine Group, Inc. * | 25,761 | 463,956 |
| Centogene N.V. * | 17,635 | 214,618 |
| Cerecor, Inc. * | 74,896 | 154,286 |
| Champions Oncology, Inc. * | 15,491 | 136,011 |
| Checkmate Pharmaceuticals, Inc. * | 10,379 | 119,255 |
| Checkpoint Therapeutics, Inc. * | 93,941 | 205,731 |
| ChemoCentryx, Inc. * | 102,672 | 4,928,256 |
| Chiasma, Inc. * | 103,716 | 388,935 |
| Chimerix, Inc. * | 97,561 | 260,488 |
| Chinook Therapeutics, Inc. * | 27,867 | 344,157 |
| ChromaDex Corp. * | 83,478 | 376,486 |
| Cidara Therapeutics, Inc. * | 71,983 | 187,876 |
| Clovis Oncology, Inc. *(a) | 172,316 | 849,518 |
| Codexis, Inc. * | 111,489 | 1,483,919 |
| Cohbar, Inc. * | 52,717 | 48,299 |
| Coherus Biosciences, Inc. * | 120,437 | 2,007,685 |
| Collegium Pharmaceutical, Inc. * | 71,361 | 1,272,367 |
| Concert Pharmaceuticals, Inc. * | 59,468 | 613,710 |
| Constellation Pharmaceuticals, Inc. * | 63,766 | 1,251,089 |
| ContraFect Corp. * | 50,703 | 286,472 |
| Corbus Pharmaceuticals Holdings, Inc. *(a) | 154,662 | 145,336 |
| Corcept Therapeutics, Inc. * | 198,444 | 3,329,890 |
| CorMedix, Inc. * | 63,838 | 322,382 |
| Cortexyme, Inc. * | 32,699 | 1,565,301 |
| Crinetics Pharmaceuticals, Inc. * | 55,688 | 672,711 |
| Cue Biopharma, Inc. * | 59,657 | 664,579 |
| Cyclerion Therapeutics, Inc. * | 45,202 | 105,773 |
| Cymabay Therapeutics, Inc. * | 143,974 | 1,197,864 |
| Cytokinetics, Inc. * | 137,854 | 2,118,816 |
| CytomX Therapeutics, Inc. * | 92,630 | 613,211 |
| Deciphera Pharmaceuticals, Inc. * | 77,412 | 4,495,315 |
| Denali Therapeutics, Inc. * | 130,162 | 5,568,330 |
| DermTech, Inc. * | 17,455 | 222,726 |
| Dicerna Pharmaceuticals, Inc. * | 135,107 | 2,835,896 |
| Durect Corp. * | 417,220 | 753,082 |
| Dyadic International, Inc. * | 38,993 | 278,410 |
| Dynavax Technologies Corp. * | 220,755 | 823,416 |
| Eagle Pharmaceuticals, Inc. * | 22,531 | 1,048,142 |
| Editas Medicine, Inc. * | 129,796 | 4,015,888 |
| Eidos Therapeutics, Inc. * | 22,687 | 1,608,962 |
| Eiger BioPharmaceuticals, Inc. * | 57,010 | 506,249 |
| Eloxx Pharmaceuticals, Inc. * | 52,081 | 131,765 |
| Emergent BioSolutions, Inc. * | 92,489 | 8,321,235 |
| Enanta Pharmaceuticals, Inc. * | 39,617 | 1,728,490 |
| Endo International plc * | 470,883 | 2,151,935 |
| Enochian Biosciences, Inc. *(a) | 29,338 | 89,481 |
| Epizyme, Inc. * | 185,441 | 2,292,051 |
| Esperion Therapeutics, Inc. *(a) | 53,824 | 1,613,105 |
| Eton Pharmaceuticals, Inc. *(a) | 29,513 | 215,150 |
| Evelo Biosciences, Inc. *(a) | 41,426 | 164,461 |
| Security | Number
of Shares | Value ($) |
| Evofem Biosciences, Inc. *(a) | 158,939 | 376,685 |
| Evolus, Inc. *(a) | 46,888 | 142,071 |
| Exicure, Inc. * | 117,725 | 176,588 |
| Fate Therapeutics, Inc. * | 148,245 | 6,582,078 |
| Fennec Pharmaceuticals, Inc. * | 42,990 | 325,004 |
| FibroGen, Inc. * | 174,439 | 6,694,969 |
| Five Prime Therapeutics, Inc. * | 57,715 | 263,180 |
| Flexion Therapeutics, Inc. * | 90,897 | 1,089,855 |
| Fluidigm Corp. * | 146,390 | 840,279 |
| Forma Therapeutics Holdings, Inc. * | 33,466 | 1,443,054 |
| Fortress Biotech, Inc. * | 130,217 | 286,477 |
| Frequency Therapeutics, Inc. * | 52,232 | 1,142,836 |
| Fulcrum Therapeutics, Inc. * | 29,679 | 292,635 |
| G1 Therapeutics, Inc. * | 70,930 | 779,521 |
| Galectin Therapeutics, Inc. *(a) | 77,488 | 196,820 |
| Galera Therapeutics, Inc. * | 18,833 | 154,242 |
| Generation Bio Co. * | 25,474 | 658,248 |
| Genprex, Inc. * | 61,485 | 199,826 |
| Geron Corp. * | 596,471 | 1,037,860 |
| GlycoMimetics, Inc. * | 76,245 | 213,486 |
| Gossamer Bio, Inc. * | 117,630 | 976,329 |
| Gritstone Oncology, Inc. * | 64,097 | 174,985 |
| Halozyme Therapeutics, Inc. * | 281,212 | 7,873,936 |
| Harpoon Therapeutics, Inc. * | 21,493 | 311,004 |
| Harrow Health, Inc. * | 45,212 | 215,209 |
| Harvard Bioscience, Inc. * | 81,212 | 274,497 |
| Heron Therapeutics, Inc. * | 180,870 | 2,949,990 |
| Homology Medicines, Inc. * | 69,562 | 735,270 |
| Hookipa Pharma, Inc. * | 25,591 | 240,555 |
| iBio, Inc. *(a) | 119,844 | 208,529 |
| Ideaya Biosciences, Inc. * | 33,069 | 402,450 |
| IGM Biosciences, Inc. * | 14,697 | 775,855 |
| IMARA, Inc. *(a) | 10,654 | 168,440 |
| Immunic, Inc. *(a) | 11,550 | 182,952 |
| ImmunoGen, Inc. * | 357,214 | 2,014,687 |
| Immunovant, Inc. * | 72,542 | 3,164,282 |
| Innoviva, Inc. * | 131,918 | 1,426,034 |
| Inovio Pharmaceuticals, Inc. *(a) | 324,779 | 3,199,073 |
| Inozyme Pharma, Inc. * | 16,832 | 386,631 |
| Insmed, Inc. * | 209,596 | 6,904,092 |
| Intellia Therapeutics, Inc. * | 104,091 | 2,491,939 |
| Intercept Pharmaceuticals, Inc. * | 53,901 | 1,497,909 |
| Intersect ENT, Inc. * | 67,601 | 1,047,815 |
| Intra-Cellular Therapies, Inc. * | 135,811 | 3,350,457 |
| Invitae Corp. * | 239,134 | 9,376,444 |
| Ironwood Pharmaceuticals, Inc. * | 329,681 | 3,257,248 |
| iTeos Therapeutics, Inc. * | 22,170 | 504,811 |
| IVERIC bio, Inc. * | 166,834 | 987,657 |
| Jounce Therapeutics, Inc. * | 34,813 | 289,644 |
| Kadmon Holdings, Inc. * | 358,221 | 1,217,951 |
| Kala Pharmaceuticals, Inc. *(a) | 83,054 | 548,156 |
| Kaleido Biosciences, Inc. *(a) | 24,046 | 146,921 |
| KalVista Pharmaceuticals, Inc. * | 27,990 | 481,708 |
| Karuna Therapeutics, Inc. * | 32,776 | 2,661,083 |
| Karyopharm Therapeutics, Inc. * | 145,788 | 2,160,578 |
| Keros Therapeutics, Inc. * | 14,644 | 814,206 |
| Kezar Life Sciences, Inc. * | 64,913 | 332,355 |
| Kindred Biosciences, Inc. * | 77,623 | 270,904 |
| Kiniksa Pharmaceuticals Ltd., Class A * | 55,505 | 869,208 |
| Kodiak Sciences, Inc. * | 59,984 | 5,447,147 |
| Krystal Biotech, Inc. * | 28,071 | 1,206,772 |
| Kura Oncology, Inc. * | 109,626 | 3,425,812 |
| La Jolla Pharmaceutical Co. *(a) | 38,945 | 132,413 |
| Lannett Co., Inc. * | 65,720 | 422,580 |
| Lexicon Pharmaceuticals, Inc. *(a) | 90,397 | 100,341 |
| Ligand Pharmaceuticals, Inc. *(a) | 29,783 | 2,455,608 |
| Liquidia Technologies, Inc. * | 56,162 | 259,468 |
| LogicBio Therapeutics, Inc. * | 25,920 | 143,078 |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Luminex Corp. | 89,404 | 1,970,464 |
| Lyra Therapeutics, Inc. * | 8,857 | 94,770 |
| MacroGenics, Inc. * | 109,704 | 2,129,355 |
| Madrigal Pharmaceuticals, Inc. * | 18,195 | 2,315,314 |
| Magenta Therapeutics, Inc. * | 42,898 | 270,686 |
| MannKind Corp. * | 458,206 | 920,994 |
| Marinus Pharmaceuticals, Inc. * | 51,886 | 676,593 |
| Marker Therapeutics, Inc. *(a) | 65,513 | 89,098 |
| MediciNova, Inc. *(a) | 88,909 | 497,001 |
| Medpace Holdings, Inc. * | 56,573 | 6,276,209 |
| MEI Pharma, Inc. * | 214,856 | 558,626 |
| MeiraGTx Holdings plc * | 42,716 | 545,910 |
| Mersana Therapeutics, Inc. * | 110,620 | 1,993,372 |
| Minerva Neurosciences, Inc. * | 70,282 | 225,605 |
| Mirati Therapeutics, Inc. * | 85,554 | 18,577,196 |
| Mirum Pharmaceuticals, Inc. * | 11,078 | 174,479 |
| Molecular Templates, Inc. * | 54,925 | 485,537 |
| Morphic Holding, Inc. * | 28,009 | 753,722 |
| Mustang Bio, Inc. * | 57,729 | 153,848 |
| MyoKardia, Inc. * | 105,111 | 23,495,462 |
| Myriad Genetics, Inc. * | 148,013 | 1,839,802 |
| NanoString Technologies, Inc. * | 78,135 | 2,863,648 |
| NantKwest, Inc. *(a) | 65,467 | 491,657 |
| Natera, Inc. * | 146,661 | 9,864,419 |
| NeoGenomics, Inc. * | 214,636 | 8,420,170 |
| Neoleukin Therapeutics, Inc. * | 66,914 | 701,928 |
| Neubase Therapeutics, Inc. * | 34,924 | 273,630 |
| NeuroBo Pharmaceuticals, Inc. *(a) | 9,221 | 46,289 |
| NextCure, Inc. * | 33,370 | 322,354 |
| NGM Biopharmaceuticals, Inc. * | 49,467 | 857,758 |
| Nkarta, Inc. *(a) | 33,741 | 968,704 |
| Novavax, Inc. * | 127,748 | 10,310,541 |
| Nurix Therapeutics, Inc. * | 23,046 | 582,833 |
| Nymox Pharmaceutical Corp. *(a) | 84,937 | 163,079 |
| Ocular Therapeutix, Inc. * | 125,577 | 1,192,981 |
| Odonate Therapeutics, Inc. * | 27,614 | 397,918 |
| Omeros Corp. *(a) | 122,711 | 1,244,290 |
| Oncocyte Corp. * | 130,292 | 192,832 |
| OPKO Health, Inc. * | 826,847 | 2,910,501 |
| Optinose, Inc. * | 72,404 | 231,693 |
| Organogenesis Holdings, Inc. * | 43,636 | 159,271 |
| Orgenesis, Inc. * | 38,955 | 176,466 |
| ORIC Pharmaceuticals, Inc. * | 17,828 | 383,302 |
| Osmotica Pharmaceuticals plc * | 25,694 | 131,810 |
| Ovid therapeutics, Inc. * | 88,883 | 454,192 |
| Oyster Point Pharma, Inc. * | 12,531 | 248,490 |
| Pacific Biosciences of California, Inc. * | 346,568 | 4,543,506 |
| Pacira BioSciences, Inc. * | 86,757 | 4,537,391 |
| Pandion Therapeutics, Inc. * | 15,440 | 182,346 |
| Paratek Pharmaceuticals, Inc. * | 90,747 | 432,863 |
| Passage Bio, Inc. * | 28,024 | 471,083 |
| PDL BioPharma, Inc. * | 231,664 | 498,078 |
| Personalis, Inc. * | 49,217 | 1,217,136 |
| PhaseBio Pharmaceuticals, Inc. * | 32,407 | 88,471 |
| Phathom Pharmaceuticals, Inc. * | 22,181 | 873,044 |
| Phibro Animal Health Corp., Class A | 42,008 | 690,612 |
| Pieris Pharmaceuticals, Inc. * | 99,911 | 250,777 |
| Pliant Therapeutics, Inc. *(a) | 21,575 | 466,452 |
| Poseida Therapeutics, Inc. * | 27,774 | 319,679 |
| Precigen, Inc. *(a) | 139,326 | 597,709 |
| Precision BioSciences, Inc. * | 96,157 | 606,751 |
| Prestige Consumer Healthcare, Inc. * | 104,059 | 3,437,069 |
| Prevail Therapeutics, Inc. * | 29,156 | 285,437 |
| Protagonist Therapeutics, Inc. * | 62,923 | 1,192,391 |
| Protara Therapeutics, Inc. * | 4,343 | 77,913 |
| Prothena Corp. plc * | 62,840 | 685,584 |
| Provention Bio, Inc. * | 98,830 | 1,172,124 |
| PTC Therapeutics, Inc. * | 127,827 | 6,671,291 |
| Security | Number
of Shares | Value ($) |
| Puma Biotechnology, Inc. * | 63,405 | 530,700 |
| Quanterix Corp. * | 43,668 | 1,598,685 |
| Radius Health, Inc. * | 94,525 | 1,267,580 |
| Rapt Therapeutics, Inc. * | 22,811 | 655,588 |
| Recro Pharma, Inc. * | 43,109 | 68,543 |
| REGENXBIO, Inc. * | 70,808 | 2,036,438 |
| Relay Therapeutics, Inc. * | 66,853 | 2,469,550 |
| Relmada Therapeutics, Inc. * | 29,728 | 919,487 |
| Replimune Group, Inc. * | 43,318 | 1,811,126 |
| Retrophin, Inc. * | 101,592 | 2,056,222 |
| Revance Therapeutics, Inc. * | 130,732 | 3,383,344 |
| REVOLUTION Medicines, Inc. * | 80,154 | 2,419,849 |
| Rhythm Pharmaceuticals, Inc. * | 69,890 | 1,479,571 |
| Rigel Pharmaceuticals, Inc. * | 352,111 | 873,235 |
| Rocket Pharmaceuticals, Inc. * | 70,837 | 1,979,186 |
| Rubius Therapeutics, Inc. * | 73,288 | 310,008 |
| Sangamo Therapeutics, Inc. * | 239,414 | 2,475,541 |
| Satsuma Pharmaceuticals, Inc. * | 19,799 | 70,484 |
| Savara, Inc. * | 100,055 | 104,057 |
| Scholar Rock Holding Corp. * | 46,530 | 1,810,017 |
| scPharmaceuticals, Inc. * | 14,397 | 124,102 |
| Selecta Biosciences, Inc. * | 138,029 | 408,566 |
| Seres Therapeutics, Inc. * | 110,335 | 3,077,243 |
| SIGA Technologies, Inc. * | 108,383 | 692,567 |
| Soleno Therapeutics, Inc. * | 123,492 | 214,876 |
| Solid Biosciences, Inc. * | 53,275 | 174,209 |
| Sorrento Therapeutics, Inc. *(a) | 458,080 | 3,179,075 |
| Spectrum Pharmaceuticals, Inc. * | 299,527 | 1,027,378 |
| Spero Therapeutics, Inc. * | 31,050 | 407,066 |
| SpringWorks Therapeutics, Inc. * | 44,054 | 2,554,691 |
| Stoke Therapeutics, Inc. * | 25,409 | 975,452 |
| Strongbridge Biopharma plc * | 75,231 | 146,700 |
| Supernus Pharmaceuticals, Inc. * | 101,407 | 1,861,833 |
| Sutro Biopharma, Inc. * | 53,781 | 691,624 |
| Syndax Pharmaceuticals, Inc. * | 55,513 | 966,481 |
| Syros Pharmaceuticals, Inc. * | 85,580 | 570,819 |
| TCR2 Therapeutics, Inc. * | 52,769 | 1,037,966 |
| TG Therapeutics, Inc. * | 229,927 | 5,810,255 |
| TherapeuticsMD, Inc. *(a) | 495,198 | 604,142 |
| Theravance Biopharma, Inc. * | 95,592 | 1,807,645 |
| Translate Bio, Inc. * | 141,640 | 1,817,241 |
| Tricida, Inc. * | 57,690 | 324,795 |
| Turning Point Therapeutics, Inc. * | 75,098 | 6,923,285 |
| Twist Bioscience Corp. * | 67,693 | 5,187,992 |
| Tyme Technologies, Inc. * | 141,257 | 122,625 |
| Ultragenyx Pharmaceutical, Inc. * | 119,279 | 11,987,539 |
| UNITY Biotechnology, Inc. * | 69,198 | 267,796 |
| UroGen Pharma Ltd. * | 39,970 | 900,124 |
| Vanda Pharmaceuticals, Inc. * | 111,797 | 1,195,110 |
| Vaxart, Inc. *(a) | 108,886 | 535,719 |
| Vaxcyte, Inc. * | 37,819 | 1,413,296 |
| VBI Vaccines, Inc. *(a) | 356,970 | 838,879 |
| Veracyte, Inc. * | 119,003 | 4,124,644 |
| Verastem, Inc. * | 352,681 | 423,217 |
| Vericel Corp. * | 93,560 | 1,733,667 |
| Verrica Pharmaceuticals, Inc. *(a) | 24,753 | 183,420 |
| Viela Bio, Inc. * | 44,948 | 1,434,291 |
| Viking Therapeutics, Inc. * | 135,284 | 761,649 |
| Vir Biotechnology, Inc. * | 111,356 | 3,501,033 |
| Voyager Therapeutics, Inc. * | 53,791 | 571,798 |
| vTv Therapeutics, Inc., Class A *(a) | 20,946 | 35,608 |
| VYNE Therapeutics, Inc. * | 301,398 | 482,237 |
| WaVe Life Sciences Ltd. * | 50,850 | 359,510 |
| X4 Pharmaceuticals, Inc. * | 31,710 | 182,015 |
| XBiotech, Inc. *(a) | 29,685 | 507,910 |
| Xencor, Inc. * | 114,591 | 4,398,003 |
| Xeris Pharmaceuticals, Inc. *(a) | 95,395 | 451,218 |
| XOMA Corp. *(a) | 12,074 | 299,556 |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Y-mAbs Therapeutics, Inc. * | 62,253 | 2,660,693 |
| Zentalis Pharmaceuticals, Inc. * | 23,927 | 947,270 |
| ZIOPHARM Oncology, Inc. * | 443,321 | 926,541 |
| Zogenix, Inc. * | 115,533 | 2,463,164 |
| | | 544,583,701 |
| |
| Real Estate 6.3% |
| Acadia Realty Trust | 176,409 | 1,645,896 |
| Agree Realty Corp. | 110,381 | 6,851,349 |
| Alexander & Baldwin, Inc. | 149,885 | 1,926,022 |
| Alexander's, Inc. | 4,459 | 1,084,384 |
| Alpine Income Property Trust, Inc. | 13,276 | 185,200 |
| Altisource Portfolio Solutions S.A. * | 9,847 | 109,597 |
| American Assets Trust, Inc. | 104,687 | 2,191,099 |
| American Finance Trust, Inc. | 227,053 | 1,308,961 |
| American Realty Investors, Inc. * | 2,246 | 18,215 |
| Armada Hoffler Properties, Inc. | 118,949 | 1,071,730 |
| Bluerock Residential Growth REIT, Inc. | 50,457 | 436,958 |
| BRT Apartments Corp. | 21,140 | 263,193 |
| CareTrust REIT, Inc. | 197,643 | 3,379,695 |
| CatchMark Timber Trust, Inc., Class A | 101,388 | 881,062 |
| Chatham Lodging Trust | 95,116 | 699,103 |
| CIM Commercial Trust Corp. | 23,639 | 189,112 |
| City Office REIT, Inc. | 89,102 | 563,125 |
| Clipper Realty, Inc. | 29,153 | 163,840 |
| Colony Capital, Inc. | 998,542 | 3,554,809 |
| Columbia Property Trust, Inc. | 238,144 | 2,519,564 |
| Community Healthcare Trust, Inc. | 44,922 | 2,079,889 |
| CoreCivic, Inc. | 248,775 | 1,594,648 |
| CorEnergy Infrastructure Trust, Inc. | 27,209 | 127,338 |
| CorePoint Lodging, Inc. | 81,963 | 391,783 |
| CTO Realty Growth, Inc. | 9,754 | 430,444 |
| Cushman & Wakefield plc * | 229,712 | 2,692,225 |
| DiamondRock Hospitality Co. | 415,257 | 2,051,370 |
| Diversified Healthcare Trust | 493,028 | 1,427,316 |
| Easterly Government Properties, Inc. | 166,122 | 3,471,950 |
| EastGroup Properties, Inc. | 80,123 | 10,662,769 |
| Essential Properties Realty Trust, Inc. | 191,083 | 3,156,691 |
| eXp World Holdings, Inc. * | 50,660 | 2,147,477 |
| Farmland Partners, Inc. | 53,062 | 341,719 |
| Fathom Holdings, Inc. * | 9,786 | 183,585 |
| Forestar Group, Inc. * | 34,305 | 570,835 |
| Four Corners Property Trust, Inc. | 145,560 | 3,688,490 |
| Franklin Street Properties Corp. | 215,120 | 903,504 |
| Front Yard Residential Corp. | 104,134 | 1,394,354 |
| FRP Holdings, Inc. * | 13,657 | 552,562 |
| Getty Realty Corp. | 70,780 | 1,860,098 |
| Gladstone Commercial Corp. | 70,020 | 1,137,825 |
| Gladstone Land Corp. | 40,887 | 567,103 |
| Global Medical REIT, Inc. | 86,911 | 1,080,304 |
| Global Net Lease, Inc. | 186,346 | 2,651,704 |
| Griffin Industrial Realty, Inc. | 5,196 | 275,648 |
| Healthcare Realty Trust, Inc. | 280,339 | 7,793,424 |
| Hersha Hospitality Trust | 69,209 | 339,124 |
| Independence Realty Trust, Inc. | 197,161 | 2,395,506 |
| Industrial Logistics Properties Trust | 134,167 | 2,573,323 |
| Innovative Industrial Properties, Inc. | 44,022 | 5,134,286 |
| Investors Real Estate Trust | 26,672 | 1,797,960 |
| iStar, Inc. | 151,596 | 1,788,833 |
| Jernigan Capital, Inc. | 46,294 | 800,423 |
| Kennedy-Wilson Holdings, Inc. | 252,783 | 3,331,680 |
| Kite Realty Group Trust | 172,731 | 1,789,493 |
| Lexington Realty Trust | 566,046 | 5,620,837 |
| LTC Properties, Inc. | 80,347 | 2,652,254 |
| Mack-Cali Realty Corp. | 180,529 | 1,984,014 |
| Marcus & Millichap, Inc. * | 48,388 | 1,511,157 |
| Maui Land & Pineapple Co., Inc. * | 14,430 | 145,599 |
| Security | Number
of Shares | Value ($) |
| Monmouth Real Estate Investment Corp. | 197,574 | 2,736,400 |
| National Health Investors, Inc. | 89,163 | 4,997,586 |
| National Storage Affiliates Trust | 129,688 | 4,395,126 |
| NETSTREIT Corp. | 24,820 | 435,343 |
| New Senior Investment Group, Inc. | 169,753 | 663,734 |
| Newmark Group, Inc., Class A | 296,825 | 1,405,466 |
| NexPoint Residential Trust, Inc. | 45,107 | 1,999,142 |
| Office Properties Income Trust | 99,506 | 1,831,905 |
| One Liberty Properties, Inc. | 33,250 | 513,047 |
| Pebblebrook Hotel Trust | 269,011 | 3,222,752 |
| Physicians Realty Trust | 432,288 | 7,288,376 |
| Piedmont Office Realty Trust, Inc., Class A | 261,148 | 2,982,310 |
| Plymouth Industrial REIT, Inc. | 32,953 | 418,833 |
| PotlatchDeltic Corp. | 135,782 | 5,641,742 |
| Preferred Apartment Communities, Inc., Class A | 98,914 | 534,136 |
| PS Business Parks, Inc. | 41,658 | 4,750,262 |
| QTS Realty Trust, Inc., Class A | 127,017 | 7,812,816 |
| Rafael Holdings, Inc., Class B * | 18,525 | 303,810 |
| RE/MAX Holdings, Inc., Class A | 36,996 | 1,196,451 |
| Realogy Holdings Corp. * | 238,303 | 2,659,461 |
| Redfin Corp. * | 200,903 | 8,391,718 |
| Retail Opportunity Investments Corp. | 240,641 | 2,341,437 |
| Retail Properties of America, Inc., Class A | 445,973 | 2,336,899 |
| Retail Value, Inc. | 33,771 | 422,137 |
| RLJ Lodging Trust | 339,044 | 2,773,380 |
| RPT Realty | 167,280 | 817,999 |
| Ryman Hospitality Properties, Inc. | 104,388 | 4,159,862 |
| Sabra Health Care REIT, Inc. | 425,591 | 5,600,778 |
| Safehold, Inc. | 35,955 | 2,474,423 |
| Saul Centers, Inc. | 24,580 | 608,355 |
| Seritage Growth Properties, Class A *(a) | 70,404 | 896,243 |
| Service Properties Trust | 338,328 | 2,439,345 |
| SITE Centers Corp. | 318,506 | 2,169,026 |
| STAG Industrial, Inc. | 310,776 | 9,671,349 |
| Stratus Properties, Inc. * | 12,054 | 257,594 |
| Summit Hotel Properties, Inc. | 214,992 | 1,135,158 |
| Sunstone Hotel Investors, Inc. | 444,268 | 3,296,469 |
| Tanger Factory Outlet Centers, Inc. (a) | 188,399 | 1,166,190 |
| Tejon Ranch Co. * | 42,813 | 586,966 |
| Terreno Realty Corp. | 138,312 | 7,784,199 |
| The GEO Group, Inc. | 243,203 | 2,154,779 |
| The Macerich Co. (a) | 311,304 | 2,166,676 |
| The RMR Group, Inc., Class A | 31,615 | 842,856 |
| The St. Joe Co. * | 68,278 | 1,846,237 |
| Transcontinental Realty Investors, Inc. * | 2,895 | 63,690 |
| UMH Properties, Inc. | 76,001 | 1,035,894 |
| Uniti Group, Inc. | 399,737 | 3,525,680 |
| Universal Health Realty Income Trust | 26,700 | 1,427,649 |
| Urban Edge Properties | 241,376 | 2,268,934 |
| Urstadt Biddle Properties, Inc., Class A | 61,604 | 585,854 |
| Washington Real Estate Investment Trust | 170,648 | 2,982,927 |
| Whitestone REIT | 82,465 | 491,491 |
| Xenia Hotels & Resorts, Inc. | 235,593 | 1,941,286 |
| | | 250,594,636 |
| |
| Retailing 3.8% |
| 1-800-Flowers.com, Inc., Class A * | 51,764 | 1,026,480 |
| Aaron's Holdings Co., Inc. | 139,766 | 7,304,171 |
| Abercrombie & Fitch Co., Class A | 129,391 | 1,839,940 |
| America's Car-Mart, Inc. * | 13,134 | 1,136,354 |
| American Eagle Outfitters, Inc. | 311,981 | 4,277,259 |
| Asbury Automotive Group, Inc. * | 39,834 | 4,102,105 |
| At Home Group, Inc. * | 111,505 | 1,816,416 |
| Bed Bath & Beyond, Inc. | 262,075 | 5,189,085 |
| Big Lots, Inc. | 81,173 | 3,863,835 |
| Boot Barn Holdings, Inc. * | 59,330 | 1,899,747 |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Caleres, Inc. | 76,831 | 590,062 |
| Camping World Holdings, Inc., Class A | 68,195 | 1,803,076 |
| CarParts.com, Inc. * | 43,424 | 551,051 |
| Chico's FAS, Inc. | 247,465 | 264,788 |
| Citi Trends, Inc. | 20,632 | 538,701 |
| Conn's, Inc. * | 36,371 | 340,796 |
| Core-Mark Holding Co., Inc. | 92,855 | 2,539,584 |
| Designer Brands, Inc., Class A | 127,669 | 552,807 |
| Dillard’s, Inc., Class A (a) | 15,670 | 700,919 |
| Duluth Holdings, Inc., Class B * | 22,416 | 343,861 |
| Envela Corp. * | 16,555 | 66,882 |
| Express, Inc. * | 118,290 | 72,275 |
| Funko, Inc., Class A * | 48,551 | 307,813 |
| GameStop Corp., Class A *(a) | 118,851 | 1,244,370 |
| Genesco, Inc. * | 29,427 | 521,446 |
| Greenlane Holdings, Inc., Class A * | 21,662 | 52,639 |
| Group 1 Automotive, Inc. | 36,196 | 3,839,672 |
| Groupon, Inc. * | 48,074 | 932,155 |
| GrowGeneration Corp. * | 74,393 | 1,242,363 |
| Guess?, Inc. | 87,792 | 1,034,190 |
| Haverty Furniture Cos., Inc. | 34,979 | 875,175 |
| Hibbett Sports, Inc. * | 34,275 | 1,295,938 |
| Hudson Ltd., Class A * | 82,306 | 628,818 |
| Lands' End, Inc. * | 24,017 | 385,473 |
| Liquidity Services, Inc. * | 57,494 | 490,424 |
| Lithia Motors, Inc., Class A | 52,818 | 12,125,428 |
| Lumber Liquidators Holdings, Inc. * | 59,358 | 1,312,999 |
| Macy's, Inc. | 646,219 | 4,013,020 |
| Magnite, Inc. * | 219,235 | 1,979,692 |
| MarineMax, Inc. * | 42,853 | 1,284,733 |
| Monro, Inc. | 68,542 | 2,882,876 |
| Murphy USA, Inc. * | 57,187 | 6,993,398 |
| National Vision Holdings, Inc. * | 166,709 | 6,723,374 |
| OneWater Marine, Inc., Class A * | 10,736 | 200,012 |
| Overstock.com, Inc. * | 88,396 | 4,959,016 |
| PetMed Express, Inc. | 40,673 | 1,203,107 |
| Quotient Technology, Inc. * | 178,713 | 1,590,546 |
| Rent-A-Center, Inc. | 100,747 | 3,113,082 |
| RH * | 32,237 | 10,806,809 |
| Sally Beauty Holdings, Inc. * | 234,442 | 1,962,280 |
| Shoe Carnival, Inc. | 19,457 | 602,778 |
| Shutterstock, Inc. | 45,456 | 2,975,095 |
| Signet Jewelers Ltd. | 108,418 | 2,415,553 |
| Sleep Number Corp. * | 55,877 | 3,540,367 |
| Sonic Automotive, Inc., Class A | 49,598 | 1,788,504 |
| Sportsman's Warehouse Holdings, Inc. * | 88,902 | 1,157,504 |
| Stamps.com, Inc. * | 35,220 | 7,862,513 |
| Stitch Fix, Inc., Class A * | 116,231 | 4,001,833 |
| The Buckle, Inc. | 60,214 | 1,442,727 |
| The Cato Corp., Class A | 42,589 | 260,645 |
| The Children's Place, Inc. | 29,260 | 739,400 |
| The Container Store Group, Inc. * | 40,270 | 383,370 |
| The Michaels Cos., Inc. * | 154,860 | 1,255,915 |
| The ODP Corp. | 108,558 | 2,116,881 |
| The RealReal Inc * | 129,661 | 1,632,432 |
| Tilly's, Inc., Class A | 44,347 | 272,291 |
| Urban Outfitters, Inc. * | 142,479 | 3,182,981 |
| Waitr Holdings, Inc. * | 173,921 | 443,499 |
| Weyco Group, Inc. | 12,841 | 203,401 |
| Winmark Corp. | 6,221 | 1,053,900 |
| Zumiez, Inc. * | 43,462 | 1,216,936 |
| | | 153,369,567 |
| |
| Semiconductors & Semiconductor Equipment 2.8% |
| Advanced Energy Industries, Inc. * | 78,639 | 5,305,773 |
| Alpha & Omega Semiconductor Ltd. * | 42,025 | 666,517 |
| Ambarella, Inc. * | 68,779 | 3,760,148 |
| Security | Number
of Shares | Value ($) |
| Amkor Technology, Inc. * | 207,526 | 2,459,183 |
| Atomera, Inc. *(a) | 33,222 | 270,759 |
| Axcelis Technologies, Inc. * | 68,825 | 1,518,968 |
| AXT, Inc. * | 80,777 | 480,623 |
| Brooks Automation, Inc. | 150,560 | 7,031,152 |
| CEVA, Inc. * | 45,145 | 1,820,246 |
| CMC Materials, Inc. | 60,171 | 8,555,715 |
| Cohu, Inc. | 85,442 | 1,856,655 |
| CyberOptics Corp. * | 14,500 | 334,080 |
| Diodes, Inc. * | 87,698 | 5,071,575 |
| DSP Group, Inc. * | 45,517 | 599,459 |
| FormFactor, Inc. * | 159,748 | 4,528,856 |
| GSI Technology, Inc. * | 34,625 | 211,559 |
| Ichor Holdings Ltd. * | 45,840 | 1,066,238 |
| Impinj, Inc. * | 34,817 | 888,182 |
| Lattice Semiconductor Corp. * | 278,802 | 9,730,190 |
| MACOM Technology Solutions Holdings, Inc. * | 97,715 | 3,566,598 |
| Maxeon Solar Technologies Ltd. *(a) | 20,402 | 330,512 |
| MaxLinear, Inc. * | 140,492 | 3,714,608 |
| NeoPhotonics Corp. * | 100,913 | 687,218 |
| NVE Corp. | 9,717 | 448,245 |
| Onto Innovation, Inc. * | 98,612 | 3,162,487 |
| PDF Solutions, Inc. * | 60,099 | 1,126,255 |
| Photronics, Inc. * | 131,378 | 1,280,936 |
| Pixelworks, Inc. * | 81,736 | 181,454 |
| Power Integrations, Inc. | 122,203 | 7,357,843 |
| Rambus, Inc. * | 235,755 | 3,251,061 |
| Semtech Corp. * | 133,873 | 7,348,289 |
| Silicon Laboratories, Inc. * | 89,870 | 9,208,080 |
| SiTime Corp. * | 18,945 | 1,581,718 |
| SMART Global Holdings, Inc. * | 29,016 | 765,732 |
| SunPower Corp. * | 159,052 | 2,543,241 |
| Synaptics, Inc. * | 70,501 | 5,405,312 |
| Ultra Clean Holdings, Inc. * | 83,093 | 1,769,050 |
| Veeco Instruments, Inc. * | 101,117 | 1,287,219 |
| | | 111,171,736 |
| |
| Software & Services 7.4% |
| 8x8, Inc. * | 214,366 | 3,704,244 |
| A10 Networks, Inc. * | 126,566 | 853,055 |
| ACI Worldwide, Inc. * | 237,337 | 6,923,120 |
| Agilysys, Inc. * | 37,523 | 1,016,123 |
| Alarm.com Holdings, Inc. * | 98,363 | 5,737,514 |
| Altair Engineering, Inc., Class A * | 87,736 | 3,775,280 |
| American Software, Inc., Class A | 61,847 | 907,914 |
| Appfolio, Inc., Class A * | 33,754 | 4,822,434 |
| Appian Corp. * | 73,588 | 4,658,120 |
| Asure Software, Inc. * | 28,849 | 203,962 |
| Avaya Holdings Corp. * | 171,982 | 2,958,090 |
| Benefitfocus, Inc. * | 59,726 | 613,386 |
| Blackbaud, Inc. | 102,419 | 5,053,353 |
| Blackline, Inc. * | 104,001 | 10,158,818 |
| Bottomline Technologies (DE), Inc. * | 89,546 | 3,556,767 |
| Box, Inc., Class A * | 287,143 | 4,450,717 |
| Brightcove, Inc. * | 82,773 | 1,047,078 |
| Cardtronics plc, Class A * | 74,813 | 1,332,420 |
| Cass Information Systems, Inc. | 29,586 | 1,160,363 |
| Cerence, Inc. * | 76,055 | 4,151,082 |
| ChannelAdvisor Corp. * | 57,537 | 932,099 |
| Cloudera, Inc. * | 424,061 | 4,121,873 |
| CommVault Systems, Inc. * | 86,402 | 3,420,655 |
| Conduent, Inc. * | 342,938 | 1,195,139 |
| Cornerstone OnDemand, Inc. * | 125,477 | 4,766,871 |
| CSG Systems International, Inc. | 67,975 | 2,574,893 |
| Digimarc Corp. * | 24,472 | 775,518 |
| Digital Turbine, Inc. * | 170,628 | 4,890,199 |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Domo, Inc., Class B * | 52,989 | 1,683,461 |
| Ebix, Inc. | 54,813 | 989,923 |
| eGain Corp. * | 43,495 | 689,396 |
| Endurance International Group Holdings, Inc. * | 136,784 | 794,715 |
| Envestnet, Inc. * | 110,081 | 8,447,616 |
| EVERTEC, Inc. | 124,600 | 4,146,688 |
| Evo Payments, Inc., Class A * | 84,786 | 1,786,441 |
| ExlService Holdings, Inc. * | 69,520 | 5,265,445 |
| GreenSky, Inc., Class A * | 128,969 | 610,023 |
| Grid Dynamics Holdings, Inc. * | 44,124 | 344,167 |
| GTT Communications, Inc. *(a) | 65,068 | 240,101 |
| GTY Technology Holdings, Inc. * | 95,320 | 277,381 |
| I3 Verticals, Inc., Class A * | 30,538 | 629,999 |
| Information Services Group, Inc. * | 74,878 | 153,500 |
| Intelligent Systems Corp. * | 15,485 | 587,191 |
| International Money Express, Inc. * | 48,989 | 681,437 |
| j2 Global, Inc. * | 93,843 | 6,370,063 |
| KBR, Inc. | 295,249 | 6,581,100 |
| Limelight Networks, Inc. * | 244,269 | 862,270 |
| LivePerson, Inc. * | 127,790 | 6,831,653 |
| LiveRamp Holdings, Inc. * | 132,895 | 8,783,031 |
| ManTech International Corp., Class A | 56,189 | 3,645,542 |
| MAXIMUS, Inc. | 126,758 | 8,566,306 |
| MicroStrategy, Inc., Class A * | 16,043 | 2,680,304 |
| Mimecast Ltd. * | 118,359 | 4,522,497 |
| Mitek Systems, Inc. * | 82,798 | 1,030,835 |
| MobileIron, Inc. * | 202,347 | 1,424,523 |
| Model N, Inc. * | 70,882 | 2,497,173 |
| MoneyGram International, Inc. * | 126,933 | 653,705 |
| NIC, Inc. | 136,812 | 3,067,325 |
| OneSpan, Inc. * | 69,397 | 1,521,876 |
| Park City Group, Inc. * | 26,481 | 114,928 |
| Paysign, Inc. * | 62,896 | 299,385 |
| Perficient, Inc. * | 67,721 | 2,651,954 |
| Perspecta, Inc. | 288,473 | 5,172,321 |
| PFSweb, Inc. * | 33,104 | 205,245 |
| Ping Identity Holding Corp. * | 76,063 | 2,106,184 |
| Priority Technology Holdings, Inc. * | 13,581 | 39,249 |
| Progress Software Corp. | 92,759 | 3,373,645 |
| PROS Holdings, Inc. * | 81,624 | 2,299,348 |
| Q2 Holdings, Inc. * | 102,813 | 9,380,658 |
| QAD, Inc., Class A | 23,931 | 1,001,273 |
| Qualys, Inc. * | 70,573 | 6,199,838 |
| Rackspace Technology, Inc. *(a) | 70,149 | 1,104,847 |
| Rapid7, Inc. * | 104,324 | 6,460,785 |
| Repay Holdings Corp. * | 123,540 | 2,783,356 |
| Rimini Street, Inc. * | 46,756 | 148,217 |
| SailPoint Technologies Holding, Inc. * | 182,408 | 7,571,756 |
| Sapiens International Corp. NV | 53,280 | 1,445,486 |
| Seachange International, Inc. * | 64,744 | 48,558 |
| SecureWorks Corp., Class A * | 17,659 | 183,654 |
| ServiceSource International, Inc. * | 173,584 | 241,282 |
| ShotSpotter, Inc. * | 16,647 | 487,924 |
| Smith Micro Software, Inc. * | 71,997 | 296,628 |
| Sprout Social, Inc., Class A * | 56,571 | 2,472,153 |
| SPS Commerce, Inc. * | 72,789 | 6,230,011 |
| StarTek, Inc. * | 34,785 | 182,621 |
| SVMK, Inc. * | 250,970 | 5,252,802 |
| Sykes Enterprises, Inc. * | 80,365 | 2,751,698 |
| Synchronoss Technologies, Inc. * | 85,994 | 238,203 |
| Telenav, Inc. * | 66,717 | 271,538 |
| Tenable Holdings, Inc. * | 144,302 | 4,922,141 |
| The Hackett Group, Inc. | 52,004 | 671,892 |
| TTEC Holdings, Inc. | 37,728 | 2,066,740 |
| Tucows, Inc., Class A * | 19,460 | 1,435,953 |
| Unisys Corp. * | 128,640 | 1,690,330 |
| Upland Software, Inc. * | 54,026 | 2,253,965 |
| Security | Number
of Shares | Value ($) |
| Varonis Systems, Inc. * | 64,585 | 7,464,088 |
| Verint Systems, Inc. * | 132,756 | 6,441,321 |
| Veritone, Inc. *(a) | 49,482 | 464,141 |
| Verra Mobility Corp. * | 277,984 | 2,671,426 |
| VirnetX Holding Corp. | 131,533 | 728,693 |
| Virtusa Corp. * | 60,609 | 3,048,633 |
| Workiva, Inc. * | 80,959 | 4,477,842 |
| Xperi Holding Corp. | 223,158 | 2,767,159 |
| Yext, Inc. * | 208,993 | 3,465,104 |
| Zix Corp. * | 113,606 | 696,405 |
| Zuora, Inc., Class A * | 208,491 | 2,005,683 |
| | | 294,413,837 |
| |
| Technology Hardware & Equipment 3.2% |
| 3D Systems Corp. * | 243,057 | 1,382,994 |
| Acacia Communications, Inc. * | 80,463 | 5,450,564 |
| ADTRAN, Inc. | 99,299 | 1,061,506 |
| Akoustis Technologies, Inc. *(a) | 64,338 | 533,362 |
| Applied Optoelectronics, Inc. * | 44,741 | 392,826 |
| Arlo Technologies, Inc. * | 160,699 | 716,718 |
| Avid Technology, Inc. * | 64,762 | 603,582 |
| Badger Meter, Inc. | 60,294 | 4,421,962 |
| Bel Fuse, Inc., Class B | 20,501 | 240,067 |
| Belden, Inc. | 91,718 | 2,832,252 |
| Benchmark Electronics, Inc. | 75,772 | 1,578,331 |
| CalAmp Corp. * | 68,397 | 484,251 |
| Calix, Inc. * | 109,243 | 2,557,379 |
| Cambium Networks Corp. * | 11,068 | 255,007 |
| Casa Systems, Inc. * | 66,070 | 275,512 |
| Clearfield, Inc. * | 22,878 | 478,837 |
| Comtech Telecommunications Corp. | 50,403 | 725,803 |
| CTS Corp. | 66,118 | 1,827,502 |
| Daktronics, Inc. | 77,921 | 303,892 |
| Diebold Nixdorf, Inc. * | 145,915 | 909,050 |
| Digi International, Inc. * | 59,522 | 876,759 |
| DZS, Inc. * | 23,926 | 272,517 |
| Eastman Kodak Co. *(a) | 31,199 | 215,897 |
| ePlus, Inc. * | 27,608 | 1,863,816 |
| Extreme Networks, Inc. * | 247,521 | 1,004,935 |
| Fabrinet * | 76,009 | 4,562,060 |
| FARO Technologies, Inc. * | 36,875 | 2,221,350 |
| Fitbit, Inc., Class A * | 503,184 | 3,542,415 |
| Genasys, Inc. * | 70,743 | 425,873 |
| Harmonic, Inc. * | 196,993 | 1,170,138 |
| II-VI, Inc. * | 208,882 | 9,497,865 |
| Immersion Corp. * | 35,530 | 218,865 |
| Infinera Corp. * | 330,713 | 2,070,263 |
| Inseego Corp. *(a) | 141,648 | 1,232,338 |
| Insight Enterprises, Inc. * | 71,670 | 3,823,594 |
| Intellicheck, Inc. * | 37,428 | 270,979 |
| InterDigital, Inc. | 63,955 | 3,580,201 |
| Intevac, Inc. * | 46,614 | 246,122 |
| Iteris, Inc. * | 84,492 | 318,535 |
| Itron, Inc. * | 83,020 | 5,641,209 |
| Kimball Electronics, Inc. * | 49,861 | 604,315 |
| Knowles Corp. * | 183,984 | 2,621,772 |
| KVH Industries, Inc. * | 34,626 | 300,900 |
| Luna Innovations, Inc. * | 59,820 | 377,464 |
| Methode Electronics, Inc. | 76,251 | 2,346,243 |
| MTS Systems Corp. | 40,103 | 973,701 |
| Napco Security Technologies, Inc. * | 23,729 | 572,343 |
| NETGEAR, Inc. * | 61,180 | 1,885,568 |
| NetScout Systems, Inc. * | 144,223 | 2,959,456 |
| nLight, Inc. * | 72,414 | 1,538,073 |
| Novanta, Inc. * | 70,865 | 7,704,443 |
| OSI Systems, Inc. * | 35,184 | 2,714,797 |
| PAR Technology Corp. * | 33,404 | 1,234,946 |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| PC Connection, Inc. | 22,922 | 1,044,097 |
| PCTEL, Inc. * | 37,870 | 193,137 |
| Plantronics, Inc. | 71,025 | 1,386,408 |
| Plexus Corp. * | 59,371 | 4,128,659 |
| Powerfleet, Inc. * | 58,847 | 356,024 |
| Quantum Corp. * | 59,321 | 247,962 |
| Research Frontiers, Inc. *(a) | 57,115 | 147,928 |
| Resonant, Inc. *(a) | 106,683 | 244,304 |
| Ribbon Communications, Inc. * | 141,449 | 609,645 |
| Rogers Corp. * | 38,728 | 4,694,608 |
| Sanmina Corp. * | 138,883 | 3,394,301 |
| ScanSource, Inc. * | 52,526 | 1,055,773 |
| Super Micro Computer, Inc. * | 93,319 | 2,120,208 |
| TTM Technologies, Inc. * | 207,558 | 2,463,713 |
| Viavi Solutions, Inc. * | 472,888 | 5,840,167 |
| Vishay Intertechnology, Inc. | 274,948 | 4,459,657 |
| Vishay Precision Group, Inc. * | 25,741 | 614,952 |
| Wrap Technologies, Inc. *(a) | 24,620 | 127,285 |
| | | 129,049,977 |
| |
| Telecommunication Services 1.0% |
| Alaska Communications Systems Group, Inc. | 111,862 | 213,656 |
| Anterix, Inc. * | 22,390 | 714,689 |
| ATN International, Inc. | 23,262 | 1,039,811 |
| Bandwidth, Inc., Class A * | 39,727 | 6,370,423 |
| Boingo Wireless, Inc. * | 91,060 | 850,500 |
| Cincinnati Bell, Inc. * | 104,190 | 1,568,059 |
| Cogent Communications Holdings, Inc. | 87,986 | 4,909,619 |
| Consolidated Communications Holdings, Inc. * | 151,179 | 706,006 |
| Gogo, Inc. *(a) | 114,695 | 922,148 |
| IDT Corp., Class B * | 31,756 | 302,635 |
| Iridium Communications, Inc. * | 243,554 | 6,432,261 |
| Liberty Latin America Ltd., Class A * | 95,954 | 940,349 |
| Liberty Latin America Ltd., Class C * | 322,504 | 3,134,739 |
| Ooma, Inc. * | 42,950 | 606,025 |
| ORBCOMM, Inc. * | 150,660 | 647,838 |
| Shenandoah Telecommunications Co. | 99,745 | 4,350,877 |
| Spok Holdings, Inc. | 36,435 | 330,830 |
| Vonage Holdings Corp. * | 479,420 | 5,072,264 |
| | | 39,112,729 |
| |
| Transportation 1.4% |
| Air Transport Services Group, Inc. * | 122,212 | 3,426,824 |
| Allegiant Travel Co. | 27,030 | 3,642,563 |
| ArcBest Corp. | 52,375 | 1,598,485 |
| Atlas Air Worldwide Holdings, Inc. * | 53,502 | 3,165,178 |
| Avis Budget Group, Inc. * | 108,780 | 3,662,623 |
| Costamare, Inc. | 102,142 | 581,188 |
| Covenant Logistics Group, Inc. * | 24,206 | 333,317 |
| Daseke, Inc. * | 93,213 | 612,409 |
| Eagle Bulk Shipping, Inc. * | 13,207 | 181,728 |
| Echo Global Logistics, Inc. * | 54,461 | 1,468,813 |
| Forward Air Corp. | 57,486 | 3,619,893 |
| Genco Shipping & Trading Ltd. | 35,175 | 227,231 |
| Hawaiian Holdings, Inc. | 94,479 | 1,308,534 |
| Heartland Express, Inc. | 100,684 | 1,843,524 |
| Hub Group, Inc., Class A * | 67,694 | 3,393,500 |
| Marten Transport Ltd. | 123,072 | 1,888,540 |
| Matson, Inc. | 88,424 | 4,593,627 |
| Mesa Air Group, Inc. * | 61,387 | 193,983 |
| P.A.M. Transportation Services, Inc. * | 3,569 | 141,332 |
| Pangaea Logistics Solutions Ltd. | 23,042 | 61,522 |
| Radiant Logistics, Inc. * | 81,573 | 419,285 |
| Safe Bulkers, Inc. * | 110,082 | 97,599 |
| Security | Number
of Shares | Value ($) |
| Saia, Inc. * | 54,477 | 8,044,074 |
| Scorpio Bulkers, Inc. | 18,481 | 202,921 |
| SkyWest, Inc. | 102,469 | 2,974,675 |
| Spirit Airlines, Inc. * | 185,203 | 3,254,017 |
| Universal Logistics Holdings, Inc. | 16,120 | 318,048 |
| US Xpress Enterprises, Inc., Class A * | 46,884 | 338,034 |
| Werner Enterprises, Inc. | 126,252 | 4,800,101 |
| | | 56,393,568 |
| |
| Utilities 3.3% |
| ALLETE, Inc. | 107,952 | 5,568,164 |
| American States Water Co. | 76,460 | 5,710,797 |
| Artesian Resources Corp., Class A | 16,850 | 593,625 |
| Atlantic Power Corp. * | 180,914 | 360,019 |
| Avista Corp. | 139,405 | 4,631,034 |
| Black Hills Corp. | 130,325 | 7,384,214 |
| Brookfield Infrastructure Corp., Class A (a) | 67,282 | 3,664,850 |
| Brookfield Renewable Corp., Class A | 141,696 | 9,461,042 |
| Cadiz, Inc. *(a) | 41,163 | 393,107 |
| California Water Service Group | 102,340 | 4,561,294 |
| Chesapeake Utilities Corp. | 33,579 | 3,264,215 |
| Clearway Energy, Inc., Class A | 72,540 | 1,901,273 |
| Clearway Energy, Inc., Class C | 167,601 | 4,719,644 |
| Consolidated Water Co., Ltd. | 29,993 | 301,730 |
| Genie Energy Ltd., Class B | 28,082 | 232,800 |
| Global Water Resources, Inc. | 26,336 | 279,162 |
| MGE Energy, Inc. | 75,629 | 4,917,398 |
| Middlesex Water Co. | 35,482 | 2,275,815 |
| New Jersey Resources Corp. | 197,892 | 5,774,489 |
| Northwest Natural Holding Co. | 63,356 | 2,815,541 |
| NorthWestern Corp. | 105,181 | 5,483,085 |
| ONE Gas, Inc. | 108,567 | 7,495,466 |
| Ormat Technologies, Inc. | 82,844 | 5,871,154 |
| Otter Tail Corp. | 84,284 | 3,232,291 |
| PNM Resources, Inc. | 164,492 | 8,224,600 |
| Portland General Electric Co. | 186,311 | 7,322,022 |
| Pure Cycle Corp. * | 39,746 | 349,765 |
| RGC Resources, Inc. | 15,761 | 375,112 |
| SJW Group. | 54,575 | 3,312,157 |
| South Jersey Industries, Inc. | 209,260 | 4,032,440 |
| Southwest Gas Holdings, Inc. | 116,180 | 7,635,350 |
| Spark Energy, Inc., Class A | 24,901 | 227,097 |
| Spire, Inc. | 104,040 | 5,830,402 |
| Sunnova Energy International, Inc. * | 110,320 | 2,654,299 |
| The York Water Co. | 26,925 | 1,137,581 |
| Unitil Corp. | 30,672 | 1,059,718 |
| | | 133,052,752 |
| Total Common Stock |
| (Cost $3,189,817,855) | | 3,975,531,941 |
|
| Rights 0.0% of net assets |
| |
| Capital Goods 0.0% |
HC2 Holdings, Inc.
expires 11/20/20 *(b) | 78,545 | — |
| |
| Media & Entertainment 0.0% |
| Media General, Inc. CVR *(b) | 174,886 | 14,883 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% |
| Aduro Biotech, Inc. CVR *(b) | 27,867 | 83,601 |
| Omthera Pharmaceuticals, Inc. CVR *(b) | 8,400 | — |
Schwab Equity Index Funds | Annual Report
Schwab Small-Cap Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Oncternal Therapeutics, Inc. CVR *(a)(b) | 1,506 | 3,087 |
| Tobira Therapeutics, Inc. CVR *(b) | 14,029 | 167,575 |
| | | 254,263 |
| Total Rights |
| (Cost $6,703) | | 269,146 |
|
| Warrants 0.0% of net assets |
| |
| Energy 0.0% |
Pulse Biosciences, Inc.
expires 05/14/25 *(b) | 948 | 9,962 |
| Total Warrants |
| (Cost $—) | | 9,962 |
|
| Other Investment Company 1.5% of net assets |
| |
| Securities Lending Collateral 1.5% |
| Wells Fargo Government Money Market Fund, Select Class 0.04% (c) | 57,653,589 | 57,653,589 |
| Total Other Investment Company |
| (Cost $57,653,589) | | 57,653,589 |
Security
Rate, Maturity Date | Face
Amount ($) | Value ($) |
| Short-Term Investment 0.3% of net assets |
| |
| Time Deposit 0.3% |
| Sumitomo Mitsui Banking Corp. |
| 0.01%, 11/02/20 (d) | 13,572,108 | 13,572,108 |
| Total Short-Term Investment |
| (Cost $13,572,108) | | 13,572,108 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | |
| Long | |
| Russell 2000 Index, e-mini, expires 12/18/20 | 160 | 12,294,400 | (514,409) |
| * | Non-income producing security. |
| (a) | All or a portion of this security is on loan. Securities on loan were valued at $53,460,251. |
| (b) | Fair-valued by management using significant unobservable inputs in accordance with procedures approved by the fund’s Board of Trustees. |
| (c) | The rate shown is the 7-day yield. |
| (d) | The rate shown is the current daily overnight rate. |
| | |
| CVR — | Contingent Value Rights |
| REIT — | Real Estate Investment Trust |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Common Stock 99.3% of net assets |
| |
| Automobiles & Components 1.4% |
| Adient plc * | 30,290 | 642,754 |
| American Axle & Manufacturing Holdings, Inc. * | 37,198 | 249,971 |
| Aptiv plc | 93,676 | 9,038,797 |
| Arcimoto, Inc. *(a) | 15,547 | 83,798 |
| Autoliv, Inc. | 26,885 | 2,037,883 |
| BorgWarner, Inc. | 84,288 | 2,948,394 |
| Cooper Tire & Rubber Co. | 18,311 | 629,715 |
| Cooper-Standard Holdings, Inc. * | 6,229 | 97,733 |
| Dana, Inc. | 53,165 | 743,778 |
| Dorman Products, Inc. * | 10,202 | 910,733 |
| Ford Motor Co. | 1,356,645 | 10,486,866 |
| Fox Factory Holding Corp. * | 13,913 | 1,169,805 |
| General Motors Co. | 437,717 | 15,114,368 |
| Gentex Corp. | 84,954 | 2,350,677 |
| Gentherm, Inc. * | 11,532 | 533,816 |
| Harley-Davidson, Inc. | 55,085 | 1,811,195 |
| Horizon Global Corp. * | 12,146 | 68,261 |
| LCI Industries | 9,130 | 1,001,196 |
| Lear Corp. | 18,488 | 2,233,535 |
| Modine Manufacturing Co. * | 17,500 | 112,000 |
| Motorcar Parts of America, Inc. * | 5,552 | 81,781 |
| NII Holdings, Inc. Escrow *(b) | 28,127 | 57,379 |
| Patrick Industries, Inc. | 7,687 | 428,550 |
| Standard Motor Products, Inc. | 6,796 | 311,257 |
| Stoneridge, Inc. * | 10,196 | 232,775 |
| Strattec Security Corp. | 1,500 | 43,560 |
| Tenneco, Inc., Class A * | 22,341 | 192,579 |
| Tesla, Inc. * | 258,880 | 100,455,795 |
| The Goodyear Tire & Rubber Co. | 81,683 | 676,335 |
| Thor Industries, Inc. | 19,360 | 1,637,469 |
| Veoneer, Inc. * | 34,040 | 523,195 |
| Visteon Corp. * | 9,724 | 871,757 |
| Winnebago Industries, Inc. | 11,705 | 549,550 |
| Workhorse Group, Inc. *(a) | 32,387 | 498,112 |
| XPEL, Inc. * | 4,445 | 110,147 |
| | | 158,935,516 |
| |
| Banks 3.7% |
| 1st Constitution Bancorp | 2,000 | 26,080 |
| 1st Source Corp. | 5,295 | 177,330 |
| ACNB Corp. | 2,463 | 51,403 |
| Allegiance Bancshares, Inc. | 7,867 | 222,636 |
| Altabancorp | 5,381 | 117,144 |
| Amalgamated Bank, Class A | 6,975 | 77,423 |
| Amerant Bancorp, Inc. * | 8,788 | 88,495 |
| American National Bankshares, Inc. | 4,310 | 98,268 |
| American River Bankshares | 3,244 | 33,478 |
| Ameris Bancorp | 22,504 | 659,367 |
| AmeriServ Financial, Inc. | 10,799 | 29,805 |
| Ames National Corp. | 2,389 | 46,108 |
| Arrow Financial Corp. | 5,135 | 140,545 |
| Associated Banc-Corp. | 54,272 | 742,984 |
| Atlantic Capital Bancshares, Inc. * | 7,985 | 110,832 |
| Atlantic Union Bankshares Corp. | 29,178 | 737,912 |
| Security | Number
of Shares | Value ($) |
| Auburn National Bancorp, Inc. | 1,391 | 51,690 |
| Axos Financial, Inc. * | 19,991 | 544,955 |
| Banc of California, Inc. | 17,916 | 214,992 |
| BancFirst Corp. | 6,788 | 301,727 |
| BancorpSouth Bank | 34,911 | 817,267 |
| Bank First Corp. (a) | 2,265 | 144,983 |
| Bank of America Corp. | 2,648,462 | 62,768,549 |
| Bank of Commerce Holdings | 5,000 | 40,050 |
| Bank of Hawaii Corp. | 14,212 | 861,816 |
| Bank of Marin Bancorp | 3,742 | 112,784 |
| Bank OZK | 42,925 | 1,063,681 |
| BankFinancial Corp. | 4,321 | 31,759 |
| BankUnited, Inc. | 31,580 | 797,395 |
| Bankwell Financial Group, Inc. | 2,000 | 33,000 |
| Banner Corp. | 12,659 | 466,737 |
| Bar Harbor Bankshares | 5,502 | 112,351 |
| Baycom Corp. * | 4,870 | 54,057 |
| BCB Bancorp, Inc. | 4,200 | 38,178 |
| Berkshire Hills Bancorp, Inc. | 16,351 | 213,054 |
| BOK Financial Corp. | 11,253 | 661,001 |
| Boston Private Financial Holdings, Inc. | 28,203 | 174,295 |
| Bridge Bancorp, Inc. | 5,500 | 107,470 |
| Bridgewater Bancshares, Inc. * | 4,163 | 46,251 |
| Brookline Bancorp, Inc. | 26,142 | 250,440 |
| Bryn Mawr Bank Corp. | 6,152 | 165,243 |
| Business First Bancshares, Inc. | 9,863 | 163,824 |
| Byline Bancorp, Inc. | 9,933 | 130,520 |
| C&F Financial Corp. | 1,200 | 37,380 |
| Cadence BanCorp | 41,959 | 470,780 |
| California Bancorp, Inc. * | 4,859 | 66,325 |
| Cambridge Bancorp | 3,286 | 204,028 |
| Camden National Corp. | 4,903 | 156,749 |
| Capital Bancorp, Inc. * | 5,118 | 53,841 |
| Capital City Bank Group, Inc. | 5,225 | 111,345 |
| Capitol Federal Financial, Inc. | 48,563 | 557,503 |
| Capstar Financial Holdings, Inc. | 2,802 | 29,113 |
| Carter Bank & Trust | 8,134 | 56,531 |
| Cathay General Bancorp | 24,528 | 577,144 |
| CB Financial Services, Inc. | 1,482 | 29,062 |
| CBTX, Inc. | 6,037 | 114,099 |
| Central Pacific Financial Corp. | 8,622 | 118,725 |
| Central Valley Community Bancorp | 3,755 | 48,440 |
| Century Bancorp, Inc., Class A | 1,223 | 87,530 |
| Chemung Financial Corp. | 968 | 32,989 |
| ChoiceOne Financial Services, Inc. | 2,484 | 71,440 |
| CIT Group, Inc. | 35,794 | 1,054,133 |
| Citigroup, Inc. | 721,761 | 29,895,341 |
| Citizens & Northern Corp. | 4,229 | 71,639 |
| Citizens Community Bancorp, Inc. | 3,744 | 28,454 |
| Citizens Financial Group, Inc. | 146,690 | 3,997,302 |
| Citizens Holdings Co. | 2,747 | 59,610 |
| City Holding Co. | 5,897 | 356,356 |
| Civista Bancshares, Inc. | 3,796 | 54,131 |
| CNB Financial Corp. | 5,361 | 97,249 |
| Coastal Financial Corp. * | 4,438 | 65,949 |
| Codorus Valley Bancorp, Inc. | 2,828 | 38,065 |
| Colony Bankcorp, Inc. | 2,706 | 33,906 |
| Columbia Banking System, Inc. | 26,491 | 752,609 |
| Columbia Financial, Inc. * | 19,578 | 238,656 |
| Comerica, Inc. | 48,076 | 2,187,939 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Commerce Bancshares, Inc. | 35,704 | 2,222,574 |
| Community Bank System, Inc. | 18,906 | 1,096,359 |
| Community Bankers Trust Corp. | 7,000 | 38,220 |
| Community Trust Bancorp, Inc. | 5,256 | 167,246 |
| ConnectOne Bancorp, Inc. | 11,372 | 175,470 |
| County Bancorp, Inc. | 2,567 | 47,490 |
| CrossFirst Bankshares, Inc. * | 12,123 | 101,227 |
| Cullen/Frost Bankers, Inc. | 20,148 | 1,415,800 |
| Customers Bancorp, Inc. * | 10,510 | 145,248 |
| CVB Financial Corp. | 47,985 | 839,737 |
| Dime Community Bancshares, Inc. | 9,580 | 121,187 |
| Eagle Bancorp Montana, Inc. | 2,558 | 49,267 |
| Eagle Bancorp, Inc. | 12,070 | 361,134 |
| East West Bancorp, Inc. | 49,851 | 1,818,564 |
| Enterprise Bancorp, Inc. | 2,816 | 63,670 |
| Enterprise Financial Services Corp. | 9,438 | 274,740 |
| Equity Bancshares, Inc., Class A * | 5,288 | 97,193 |
| Esquire Financial Holdings, Inc. * | 1,750 | 27,283 |
| ESSA Bancorp, Inc. | 2,841 | 36,109 |
| Essent Group Ltd. | 38,799 | 1,546,140 |
| Evans Bancorp, Inc. | 1,382 | 31,523 |
| F.N.B. Corp. | 112,543 | 850,825 |
| Farmers & Merchants Bancorp, Inc. | 4,577 | 91,815 |
| Farmers National Banc Corp. | 7,093 | 82,633 |
| Fauquier Bankshares, Inc. | 2,085 | 32,380 |
| FB Financial Corp. | 9,150 | 269,925 |
| Federal Agricultural Mortgage Corp., Class C | 2,925 | 188,926 |
| Fidelity D&D Bancorp, Inc. | 800 | 38,128 |
| Fifth Third Bancorp | 246,507 | 5,723,893 |
| Financial Institutions, Inc. | 4,637 | 82,214 |
| First BanCorp | 75,196 | 488,022 |
| First BanCorp (North Carolina) | 10,445 | 251,620 |
| First Bank | 6,451 | 48,318 |
| First Busey Corp. | 16,944 | 304,823 |
| First Business Financial Services, Inc. | 2,369 | 40,628 |
| First Capital, Inc. | 1,074 | 64,773 |
| First Choice Bancorp | 2,370 | 33,370 |
| First Citizens BancShares, Inc., Class A | 2,618 | 1,211,349 |
| First Commonwealth Financial Corp. | 32,758 | 282,374 |
| First Community Bankshares, Inc. | 4,583 | 86,985 |
| First Community Corp. | 2,104 | 29,898 |
| First Financial Bancorp | 32,014 | 457,800 |
| First Financial Bankshares, Inc. | 49,779 | 1,483,912 |
| First Financial Corp. | 3,997 | 138,776 |
| First Financial Northwest, Inc. | 2,467 | 24,448 |
| First Foundation, Inc. | 11,843 | 176,105 |
| First Guaranty Bancshares, Inc. | 2,349 | 34,178 |
| First Hawaiian, Inc. | 44,256 | 763,859 |
| First Horizon National Corp. | 189,525 | 1,972,955 |
| First Internet Bancorp | 4,592 | 98,820 |
| First Interstate BancSystem, Inc., Class A | 12,583 | 444,180 |
| First Merchants Corp. | 19,863 | 518,623 |
| First Mid Bancshares, Inc. | 6,521 | 181,023 |
| First Midwest Bancorp, Inc. | 39,319 | 493,453 |
| First Northwest Bancorp | 3,416 | 40,138 |
| First Republic Bank | 60,252 | 7,600,187 |
| First Savings Financial Group, Inc. | 860 | 46,483 |
| First United Corp. | 2,475 | 29,502 |
| Flagstar Bancorp, Inc. | 14,382 | 422,112 |
| Flushing Financial Corp. | 10,119 | 129,422 |
| FNCB Bancorp, Inc. | 4,152 | 22,836 |
| Franklin Financial Services Corp. | 1,600 | 35,200 |
| FS Bancorp, Inc. | 938 | 43,439 |
| Fulton Financial Corp. | 56,139 | 616,968 |
| FVCBankcorp, Inc. * | 5,555 | 68,549 |
| German American Bancorp, Inc. | 9,856 | 297,356 |
| Glacier Bancorp, Inc. | 32,256 | 1,154,765 |
| Security | Number
of Shares | Value ($) |
| Great Southern Bancorp, Inc. | 3,639 | 149,017 |
| Great Western Bancorp, Inc. | 18,522 | 240,601 |
| Greene County Bancorp, Inc. | 1,473 | 33,216 |
| Guaranty Bancshares, Inc. | 2,780 | 80,342 |
| Guaranty Federal Bancshares, Inc. | 1,961 | 27,689 |
| Hancock Whitney Corp. | 28,840 | 659,571 |
| Hanmi Financial Corp. | 10,693 | 96,130 |
| HarborOne Bancorp, Inc. * | 19,941 | 187,445 |
| Hawthorn Bancshares, Inc. | 1,731 | 32,820 |
| HBT Financial, Inc. | 4,303 | 53,099 |
| Heartland Financial USA, Inc. | 11,104 | 365,766 |
| Heritage Commerce Corp. | 22,589 | 163,770 |
| Heritage Financial Corp. | 14,397 | 301,761 |
| Hilltop Holdings, Inc. | 25,847 | 589,570 |
| Home Bancorp, Inc. | 1,946 | 49,117 |
| Home BancShares, Inc. | 51,875 | 861,125 |
| HomeStreet, Inc. | 9,269 | 287,988 |
| HomeTrust Bancshares, Inc. | 6,004 | 95,884 |
| Hope Bancorp, Inc. | 47,307 | 381,767 |
| Horizon Bancorp, Inc. | 12,027 | 149,135 |
| Howard Bancorp, Inc. * | 4,800 | 48,624 |
| Huntington Bancshares, Inc. | 351,475 | 3,669,399 |
| Independent Bank Corp. | 12,257 | 702,204 |
| Independent Bank Corp., Michigan | 7,335 | 109,805 |
| Independent Bank Group, Inc. | 12,943 | 667,600 |
| International Bancshares Corp. | 19,695 | 545,158 |
| Investar Holding Corp. | 2,523 | 35,171 |
| Investors Bancorp, Inc. | 79,156 | 669,660 |
| JPMorgan Chase & Co. | 1,058,399 | 103,765,438 |
| Kearny Financial Corp. | 33,934 | 285,046 |
| KeyCorp | 337,866 | 4,385,501 |
| Lakeland Bancorp, Inc. | 15,000 | 166,950 |
| Lakeland Financial Corp. | 10,005 | 511,556 |
| Landmark Bancorp, Inc. | 2,724 | 63,878 |
| LCNB Corp. | 4,536 | 62,415 |
| Level One Bancorp, Inc. | 3,011 | 47,423 |
| Live Oak Bancshares, Inc. | 7,662 | 285,639 |
| Luther Burbank Corp. | 6,821 | 64,322 |
| M&T Bank Corp. | 44,306 | 4,589,215 |
| Macatawa Bank Corp. | 7,248 | 52,113 |
| Mackinac Financial Corp. | 2,963 | 29,423 |
| MainStreet Bancshares, Inc. * | 3,000 | 44,730 |
| Malvern Bancorp, Inc. * | 1,956 | 24,391 |
| Mercantile Bank Corp. | 5,614 | 122,722 |
| Merchants Bancorp | 5,609 | 121,042 |
| Meridian Bancorp, Inc. | 18,271 | 227,474 |
| Meridian Corp. | 2,531 | 44,495 |
| Meta Financial Group, Inc. | 11,373 | 333,684 |
| Metrocity Bankshares, Inc. | 10,648 | 148,753 |
| Metropolitan Bank Holding Corp. * | 2,381 | 71,311 |
| MGIC Investment Corp. | 117,784 | 1,184,907 |
| Mid Penn Bancorp, Inc. | 1,996 | 39,022 |
| Middlefield Banc Corp. | 1,808 | 34,497 |
| Midland States Bancorp, Inc. | 7,038 | 104,866 |
| MidWestOne Financial Group, Inc. | 3,261 | 65,709 |
| MMA Capital Holdings, Inc. * | 1,499 | 37,595 |
| Mr Cooper Group, Inc. * | 25,993 | 547,932 |
| MVB Financial Corp. | 3,423 | 54,597 |
| National Bank Holdings Corp., Class A | 9,231 | 278,315 |
| National Bankshares, Inc. | 2,688 | 73,060 |
| NBT Bancorp, Inc. | 16,748 | 458,560 |
| New York Community Bancorp, Inc. | 163,968 | 1,362,574 |
| Nicolet Bankshares, Inc. * | 2,665 | 164,430 |
| NMI Holdings, Inc., Class A * | 28,739 | 617,601 |
| Northeast Bank * | 1,965 | 37,708 |
| Northfield Bancorp, Inc. | 16,254 | 165,141 |
| Northrim BanCorp, Inc. | 2,596 | 74,142 |
| Northwest Bancshares, Inc. | 45,170 | 481,964 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Norwood Financial Corp. | 1,600 | 36,608 |
| Oak Valley Bancorp | 2,528 | 35,063 |
| OceanFirst Financial Corp. | 21,028 | 314,789 |
| Ocwen Financial Corp. * | 2,248 | 51,929 |
| OFG Bancorp | 16,312 | 234,730 |
| Ohio Valley Banc Corp. | 1,139 | 24,386 |
| Old National Bancorp | 59,649 | 833,893 |
| Old Second Bancorp, Inc. | 10,602 | 90,647 |
| Origin Bancorp, Inc. | 7,855 | 175,716 |
| Orrstown Financial Services, Inc. | 2,174 | 30,393 |
| Pacific Mercantile Bancorp * | 4,589 | 17,025 |
| Pacific Premier Bancorp, Inc. | 31,264 | 797,232 |
| PacWest Bancorp | 41,311 | 794,824 |
| Park National Corp. | 4,958 | 454,401 |
| Parke Bancorp, Inc. | 2,462 | 29,618 |
| PCB Bancorp | 6,102 | 57,359 |
| PCSB Financial Corp. | 6,385 | 86,006 |
| Peapack-Gladstone Financial Corp. | 5,216 | 88,046 |
| Penns Woods Bancorp, Inc. | 2,250 | 46,485 |
| PennyMac Financial Services, Inc. | 14,649 | 744,462 |
| People's United Financial, Inc. | 152,462 | 1,626,770 |
| Peoples Bancorp of North Carolina, Inc. | 1,427 | 24,673 |
| Peoples Bancorp, Inc. | 6,847 | 154,742 |
| Peoples Financial Services Corp. | 2,448 | 87,761 |
| Pinnacle Financial Partners, Inc. | 25,044 | 1,146,765 |
| Pioneer Bancorp, Inc. * | 5,272 | 49,873 |
| Plumas Bancorp | 1,860 | 37,423 |
| Ponce de Leon Federal Bank * | 3,464 | 31,522 |
| Popular, Inc. | 30,002 | 1,266,084 |
| Preferred Bank | 5,001 | 169,184 |
| Premier Financial Bancorp, Inc. | 2,848 | 35,600 |
| Premier Financial Corp. | 13,975 | 251,410 |
| Professional Holding Corp., Class A * | 5,294 | 72,157 |
| Prosperity Bancshares, Inc. | 32,997 | 1,818,465 |
| Provident Bancorp, Inc. | 1,515 | 13,059 |
| Provident Financial Holdings, Inc. | 2,246 | 28,434 |
| Provident Financial Services, Inc. | 24,306 | 329,832 |
| Prudential Bancorp, Inc. | 2,109 | 24,443 |
| QCR Holdings, Inc. | 6,599 | 204,767 |
| Radian Group, Inc. | 69,916 | 1,254,992 |
| RBB Bancorp | 4,010 | 51,208 |
| Red River Bancshares, Inc. | 2,891 | 131,280 |
| Regions Financial Corp. | 331,023 | 4,402,606 |
| Reliant Bancorp, Inc. | 8,436 | 142,147 |
| Renasant Corp. | 21,291 | 607,006 |
| Republic Bancorp, Inc., Class A | 2,950 | 98,323 |
| Republic First Bancorp, Inc. * | 17,184 | 38,320 |
| Richmond Mutual BanCorp., Inc. | 7,448 | 81,556 |
| Riverview Bancorp, Inc. | 5,400 | 25,326 |
| Rocket Cos., Inc., Class A *(a) | 35,321 | 643,902 |
| S&T Bancorp, Inc. | 13,976 | 276,585 |
| Salisbury Bancorp, Inc. | 1,041 | 35,227 |
| Sandy Spring Bancorp, Inc. | 16,337 | 414,143 |
| SB Financial Group, Inc. | 2,430 | 37,276 |
| Seacoast Banking Corp. of Florida * | 17,503 | 375,964 |
| Select Bancorp, Inc. * | 5,100 | 37,995 |
| ServisFirst Bancshares, Inc. | 16,569 | 611,396 |
| Severn Bancorp, Inc. | 5,134 | 31,831 |
| Shore Bancshares, Inc. | 4,629 | 50,086 |
| Sierra Bancorp | 4,155 | 82,435 |
| Signature Bank | 18,545 | 1,497,323 |
| Silvergate Capital Corp., Class A * | 4,622 | 103,348 |
| Simmons First National Corp., Class A | 38,643 | 656,545 |
| SmartFinancial, Inc. | 4,105 | 61,329 |
| Sound Financial Bancorp, Inc. | 1,293 | 36,721 |
| South Plains Financial, Inc. | 3,800 | 55,670 |
| South State Corp. | 24,586 | 1,509,580 |
| Southern First Bancshares, Inc. * | 1,875 | 50,325 |
| Security | Number
of Shares | Value ($) |
| Southern Missouri Bancorp, Inc. | 3,020 | 76,950 |
| Southern National Bancorp of Virginia, Inc. | 6,730 | 65,012 |
| Southside Bancshares, Inc. | 10,547 | 284,347 |
| Spirit of Texas Bancshares, Inc. | 3,720 | 47,281 |
| Standard AVB Financial Corp. | 1,872 | 61,439 |
| Sterling Bancorp | 67,222 | 899,430 |
| Sterling Bancorp, Inc. | 7,691 | 27,149 |
| Stock Yards Bancorp, Inc. | 7,278 | 278,165 |
| Summit Financial Group, Inc. | 3,433 | 61,828 |
| SVB Financial Group * | 18,215 | 5,295,100 |
| Synovus Financial Corp. | 51,358 | 1,335,308 |
| TCF Financial Corp. | 53,302 | 1,450,347 |
| Territorial Bancorp, Inc. | 2,571 | 54,531 |
| Texas Capital Bancshares, Inc. * | 17,582 | 791,190 |
| TFS Financial Corp. | 19,782 | 310,775 |
| The Bancorp, Inc. * | 15,734 | 151,046 |
| The Bank of Princeton | 1,521 | 29,918 |
| The Community Financial Corp. | 1,476 | 32,251 |
| The First BanCorp, Inc. | 3,885 | 89,860 |
| The First Bancshares, Inc. | 8,998 | 214,512 |
| The First of Long Island Corp. | 9,143 | 141,076 |
| The Hingham Institution For Savings | 534 | 107,852 |
| The PNC Financial Services Group, Inc. | 146,881 | 16,433,046 |
| Timberland Bancorp, Inc. | 2,502 | 47,663 |
| Tompkins Financial Corp. | 4,024 | 225,304 |
| Towne Bank | 22,138 | 402,469 |
| TriCo Bancshares | 9,785 | 283,080 |
| TriState Capital Holdings, Inc. * | 7,935 | 99,902 |
| Triumph Bancorp, Inc. * | 8,044 | 338,894 |
| Truist Financial Corp. | 468,133 | 19,717,762 |
| TrustCo Bank Corp. | 36,703 | 201,683 |
| Trustmark Corp. | 23,087 | 540,005 |
| U.S. Bancorp | 474,411 | 18,478,308 |
| UMB Financial Corp. | 15,587 | 948,781 |
| Umpqua Holdings Corp. | 75,835 | 952,488 |
| Union Bankshares, Inc. | 1,200 | 24,936 |
| United Bankshares, Inc. | 44,335 | 1,162,907 |
| United Community Banks, Inc. | 27,233 | 570,259 |
| United Security Bancshares | 4,123 | 25,645 |
| Unity Bancorp, Inc. | 2,299 | 32,232 |
| Univest Financial Corp. | 11,205 | 177,711 |
| Valley National Bancorp | 137,428 | 1,049,950 |
| Veritex Holdings, Inc. | 15,506 | 305,933 |
| Walker & Dunlop, Inc. | 10,059 | 632,510 |
| Washington Federal, Inc. | 26,742 | 569,337 |
| Washington Trust Bancorp, Inc. | 4,849 | 163,751 |
| Waterstone Financial, Inc. | 9,659 | 163,044 |
| Webster Financial Corp. | 32,488 | 1,046,438 |
| Wells Fargo & Co. | 1,429,403 | 30,660,694 |
| WesBanco, Inc. | 23,047 | 559,812 |
| West Bancorp, Inc. | 4,641 | 76,994 |
| Westamerica Bancorp | 9,950 | 521,081 |
| Western Alliance Bancorp | 35,203 | 1,450,364 |
| Western New England Bancorp, Inc. | 10,349 | 59,610 |
| Wintrust Financial Corp. | 20,500 | 1,009,215 |
| WSFS Financial Corp. | 17,604 | 557,871 |
| Zions Bancorp NA | 58,333 | 1,882,406 |
| | | 425,034,459 |
| |
| Capital Goods 5.9% |
| 3M Co. | 199,711 | 31,945,772 |
| A.O. Smith Corp. | 46,694 | 2,413,613 |
| AAON, Inc. | 14,695 | 858,335 |
| AAR Corp. | 12,256 | 238,502 |
| Acuity Brands, Inc. | 14,092 | 1,256,161 |
| Advanced Drainage Systems, Inc. | 17,142 | 1,087,317 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| AECOM * | 56,738 | 2,544,132 |
| Aegion Corp. * | 12,259 | 172,974 |
| Aerojet Rocketdyne Holdings, Inc. * | 26,090 | 845,838 |
| Aerovironment, Inc. * | 7,884 | 602,022 |
| AGCO Corp. | 21,548 | 1,659,842 |
| AgEagle Aerial Systems, Inc. *(a) | 25,454 | 50,399 |
| Air Lease Corp. | 36,625 | 997,665 |
| Alamo Group, Inc. | 3,373 | 405,873 |
| Albany International Corp., Class A | 10,638 | 541,900 |
| Allegion plc | 31,731 | 3,125,503 |
| Allied Motion Technologies, Inc. | 1,959 | 74,011 |
| Allison Transmission Holdings, Inc. | 37,992 | 1,373,411 |
| Alpha Pro Tech Ltd. *(a) | 4,213 | 59,782 |
| Alta Equipment Group, Inc. * | 11,534 | 87,889 |
| Altra Industrial Motion Corp. | 21,713 | 928,448 |
| Ameresco, Inc., Class A * | 5,440 | 208,842 |
| American Superconductor Corp. * | 5,600 | 77,896 |
| American Woodmark Corp. * | 5,572 | 460,303 |
| AMETEK, Inc. | 79,963 | 7,852,367 |
| API Group Corp. * | 44,126 | 634,973 |
| Apogee Enterprises, Inc. | 9,481 | 226,501 |
| Applied Industrial Technologies, Inc. | 13,758 | 839,926 |
| Arcosa, Inc. | 17,207 | 794,447 |
| Argan, Inc. | 4,405 | 181,442 |
| Armstrong Flooring, Inc. * | 7,547 | 22,339 |
| Armstrong World Industries, Inc. | 16,797 | 1,006,140 |
| Astec Industries, Inc. | 8,809 | 447,497 |
| Astronics Corp. * | 7,122 | 45,581 |
| Atkore International Group, Inc. * | 15,845 | 327,833 |
| Axon Enterprise, Inc. * | 22,067 | 2,182,426 |
| AZZ, Inc. | 9,021 | 303,015 |
| Babcock & Wilcox Enterprises, Inc. * | 12,254 | 29,042 |
| Barnes Group, Inc. | 16,937 | 621,588 |
| Beacon Roofing Supply, Inc. * | 18,990 | 582,993 |
| Bloom Energy Corp., Class A * | 28,436 | 359,431 |
| Blue Bird Corp. * | 6,024 | 69,517 |
| BlueLinx Holdings, Inc. * | 2,241 | 49,257 |
| BMC Stock Holdings, Inc. * | 24,109 | 954,475 |
| Builders FirstSource, Inc. * | 41,981 | 1,272,024 |
| BWX Technologies, Inc. | 33,686 | 1,853,067 |
| CAI International, Inc. | 4,600 | 121,210 |
| Carlisle Cos., Inc. | 19,363 | 2,398,495 |
| Carrier Global Corp. | 282,644 | 9,437,483 |
| Caterpillar, Inc. | 187,654 | 29,471,061 |
| Chart Industries, Inc. * | 12,575 | 1,061,959 |
| CIRCOR International, Inc. * | 7,526 | 209,975 |
| Colfax Corp. * | 33,216 | 903,143 |
| Columbus McKinnon Corp. | 8,311 | 281,660 |
| Comfort Systems USA, Inc. | 12,917 | 591,599 |
| Commercial Vehicle Group, Inc. * | 7,300 | 42,705 |
| Concrete Pumping Holdings, Inc. * | 15,505 | 50,081 |
| Construction Partners, Inc., Class A * | 12,670 | 258,215 |
| Cornerstone Building Brands, Inc. * | 14,252 | 109,313 |
| CPI Aerostructures, Inc. * | 6,418 | 14,633 |
| Crane Co. | 17,455 | 885,841 |
| CSW Industrials, Inc. | 4,946 | 423,031 |
| Cubic Corp. | 10,678 | 631,177 |
| Cummins, Inc. | 51,000 | 11,214,390 |
| Curtiss-Wright Corp. | 14,821 | 1,250,300 |
| Deere & Co. | 108,547 | 24,521,853 |
| Donaldson Co., Inc. | 44,111 | 2,095,273 |
| Douglas Dynamics, Inc. | 7,724 | 263,466 |
| Dover Corp. | 49,480 | 5,477,931 |
| Ducommun, Inc. * | 3,200 | 105,280 |
| DXP Enterprises, Inc. * | 4,731 | 73,993 |
| Dycom Industries, Inc. * | 11,476 | 745,251 |
| Eaton Corp. plc | 138,365 | 14,360,903 |
| EMCOR Group, Inc. | 18,640 | 1,271,062 |
| Security | Number
of Shares | Value ($) |
| Emerson Electric Co. | 207,476 | 13,442,370 |
| Encore Wire Corp. | 7,393 | 341,631 |
| Energous Corp. *(a) | 5,300 | 12,243 |
| Energy Recovery, Inc. * | 9,780 | 94,768 |
| Enerpac Tool Group Corp. | 19,179 | 341,962 |
| EnerSys | 15,369 | 1,100,420 |
| EnPro Industries, Inc. | 7,727 | 456,048 |
| ESCO Technologies, Inc. | 9,626 | 805,600 |
| EVI Industries, Inc. *(a) | 1,400 | 40,894 |
| Evoqua Water Technologies Corp. * | 29,172 | 668,914 |
| Fastenal Co. | 199,470 | 8,623,088 |
| Federal Signal Corp. | 21,858 | 626,887 |
| Flowserve Corp. | 45,825 | 1,334,424 |
| Fluor Corp. | 43,412 | 492,726 |
| Fortive Corp. | 116,297 | 7,163,895 |
| Fortune Brands Home & Security, Inc. | 48,739 | 3,941,523 |
| Foundation Building Materials, Inc. * | 5,200 | 75,712 |
| Franklin Electric Co., Inc. | 14,084 | 841,237 |
| FreightCar America, Inc. * | 3,100 | 4,681 |
| FuelCell Energy, Inc. *(a) | 79,457 | 158,914 |
| Gates Industrial Corp. plc * | 17,841 | 198,035 |
| GATX Corp. | 12,164 | 830,558 |
| Gencor Industries, Inc. * | 3,540 | 40,922 |
| Generac Holdings, Inc. * | 21,799 | 4,581,060 |
| General Dynamics Corp. | 80,734 | 10,602,796 |
| General Electric Co. | 3,041,011 | 22,564,302 |
| General Finance Corp. * | 9,231 | 60,463 |
| Gibraltar Industries, Inc. * | 11,446 | 657,573 |
| GMS, Inc. * | 14,254 | 322,140 |
| Graco, Inc. | 57,168 | 3,538,699 |
| GrafTech International Ltd. | 28,935 | 195,311 |
| Graham Corp. | 2,809 | 37,079 |
| Granite Construction, Inc. | 17,068 | 329,583 |
| Great Lakes Dredge & Dock Corp. * | 26,015 | 268,735 |
| Griffon Corp. | 14,664 | 314,396 |
| H&E Equipment Services, Inc. | 9,632 | 202,657 |
| HC2 Holdings, Inc. * | 22,677 | 48,756 |
| HD Supply Holdings, Inc. * | 56,799 | 2,264,008 |
| HEICO Corp. | 14,768 | 1,551,378 |
| HEICO Corp., Class A | 25,589 | 2,392,571 |
| Helios Technologies, Inc. | 10,858 | 454,299 |
| Herc Holdings, Inc. * | 8,885 | 394,139 |
| Hexcel Corp. | 29,991 | 1,004,099 |
| Hillenbrand, Inc. | 25,607 | 749,005 |
| Honeywell International, Inc. | 243,669 | 40,193,202 |
| Houston Wire & Cable Co. * | 8,228 | 22,627 |
| Howmet Aerospace, Inc. | 135,318 | 2,334,235 |
| Hubbell, Inc. | 18,787 | 2,733,696 |
| Huntington Ingalls Industries, Inc. | 14,154 | 2,087,432 |
| Hurco Cos., Inc. | 2,000 | 59,680 |
| Hyster-Yale Materials Handling, Inc. | 3,600 | 152,640 |
| IDEX Corp. | 25,901 | 4,413,271 |
| IES Holdings, Inc. * | 6,277 | 200,362 |
| Illinois Tool Works, Inc. | 99,607 | 19,511,019 |
| Ingersoll Rand, Inc. * | 127,283 | 4,447,268 |
| Insteel Industries, Inc. | 5,095 | 110,867 |
| ITT, Inc. | 30,097 | 1,821,169 |
| Jacobs Engineering Group, Inc. | 45,074 | 4,282,030 |
| JELD-WEN Holding, Inc. * | 24,661 | 518,621 |
| John Bean Technologies Corp. | 10,923 | 917,204 |
| Johnson Controls International plc | 259,643 | 10,959,531 |
| Kadant, Inc. | 3,843 | 442,406 |
| Kaman Corp. | 10,367 | 411,155 |
| Kennametal, Inc. | 29,530 | 915,430 |
| Kratos Defense & Security Solutions, Inc. * | 42,995 | 812,176 |
| L.B. Foster Co., Class A * | 3,200 | 43,392 |
| L3Harris Technologies, Inc. | 75,452 | 12,156,072 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Lawson Products, Inc. * | 3,088 | 127,256 |
| Lennox International, Inc. | 12,002 | 3,260,463 |
| Lincoln Electric Holdings, Inc. | 20,851 | 2,123,049 |
| Lindsay Corp. | 3,692 | 388,768 |
| LiqTech International, Inc. * | 5,399 | 40,331 |
| Lockheed Martin Corp. | 85,422 | 29,908,805 |
| LSI Industries, Inc. | 6,398 | 43,762 |
| Lydall, Inc. * | 5,500 | 108,845 |
| Manitex International, Inc. * | 4,549 | 18,696 |
| Masco Corp. | 91,563 | 4,907,777 |
| Masonite International Corp. * | 8,921 | 785,048 |
| MasTec, Inc. * | 19,719 | 978,851 |
| Maxar Technologies, Inc. | 21,013 | 541,505 |
| Mayville Engineering Co., Inc. * | 7,805 | 69,543 |
| Mercury Systems, Inc. * | 19,567 | 1,347,775 |
| Meritor, Inc. * | 25,068 | 610,155 |
| Miller Industries, Inc. | 3,410 | 102,095 |
| Moog, Inc., Class A | 10,511 | 655,781 |
| MRC Global, Inc. * | 31,160 | 132,742 |
| MSC Industrial Direct Co., Inc., Class A | 16,366 | 1,140,056 |
| Mueller Industries, Inc. | 19,369 | 560,345 |
| Mueller Water Products, Inc., Class A | 58,841 | 609,593 |
| MYR Group, Inc. * | 7,674 | 328,064 |
| National Presto Industries, Inc. | 1,664 | 138,262 |
| Navistar International Corp. * | 17,353 | 748,088 |
| Nikola Corp. *(a) | 47,203 | 864,287 |
| NN, Inc. * | 15,065 | 80,748 |
| Nordson Corp. | 18,744 | 3,625,652 |
| Northrop Grumman Corp. | 53,900 | 15,621,298 |
| Northwest Pipe Co. * | 2,896 | 77,613 |
| NOW, Inc. * | 38,877 | 158,229 |
| NV5 Global, Inc. * | 3,797 | 212,936 |
| nVent Electric plc | 58,169 | 1,049,950 |
| Omega Flex, Inc. | 1,330 | 199,101 |
| Orion Energy Systems, Inc. * | 14,948 | 95,966 |
| Orion Group Holdings, Inc. * | 8,139 | 26,533 |
| Oshkosh Corp. | 23,664 | 1,594,007 |
| Otis Worldwide Corp. | 140,676 | 8,620,625 |
| Owens Corning | 38,229 | 2,502,853 |
| PACCAR, Inc. | 119,507 | 10,203,508 |
| PAE, Inc. * | 17,793 | 140,921 |
| Park Aerospace Corp. | 6,594 | 69,830 |
| Park-Ohio Holdings Corp. | 3,600 | 71,064 |
| Parker-Hannifin Corp. | 44,627 | 9,298,482 |
| Parsons Corp. * | 6,853 | 216,007 |
| Pentair plc | 57,515 | 2,861,946 |
| PGT Innovations, Inc. * | 19,928 | 330,406 |
| Plug Power, Inc. * | 138,852 | 1,943,928 |
| Powell Industries, Inc. | 2,862 | 67,629 |
| Preformed Line Products Co. | 1,000 | 55,030 |
| Primoris Services Corp. | 13,997 | 264,123 |
| Proto Labs, Inc. * | 9,622 | 1,136,166 |
| Quanex Building Products Corp. | 10,061 | 183,110 |
| Quanta Services, Inc. | 48,477 | 3,026,419 |
| Raven Industries, Inc. | 11,752 | 257,604 |
| Raytheon Technologies Corp. | 530,617 | 28,823,115 |
| RBC Bearings, Inc. * | 8,636 | 1,028,116 |
| Regal Beloit Corp. | 14,536 | 1,433,976 |
| Resideo Technologies, Inc. * | 41,983 | 423,189 |
| REV Group, Inc. | 7,500 | 58,875 |
| Rexnord Corp. | 42,363 | 1,359,005 |
| Rockwell Automation, Inc. | 40,167 | 9,524,399 |
| Roper Technologies, Inc. | 36,532 | 13,565,793 |
| Rush Enterprises, Inc., Class A | 16,089 | 576,630 |
| Rush Enterprises, Inc., Class B | 1,125 | 35,381 |
| Sensata Technologies Holding plc * | 55,015 | 2,404,706 |
| Simpson Manufacturing Co., Inc. | 14,597 | 1,295,046 |
| SiteOne Landscape Supply, Inc. * | 15,679 | 1,873,484 |
| Security | Number
of Shares | Value ($) |
| Snap-on, Inc. | 18,931 | 2,982,200 |
| Spirit AeroSystems Holdings, Inc., Class A | 37,936 | 690,056 |
| SPX Corp. * | 16,928 | 717,578 |
| SPX FLOW, Inc. * | 15,093 | 639,189 |
| Standex International Corp. | 4,408 | 273,693 |
| Stanley Black & Decker, Inc. | 55,084 | 9,154,961 |
| Sterling Construction Co., Inc. * | 7,334 | 107,810 |
| Sunrun, Inc. * | 52,544 | 2,733,339 |
| Systemax, Inc. | 3,800 | 108,034 |
| Teledyne Technologies, Inc. * | 12,967 | 4,008,748 |
| Tennant Co. | 7,027 | 418,950 |
| Terex Corp. | 21,913 | 541,032 |
| Textron, Inc. | 80,856 | 2,894,645 |
| The AZEK Co., Inc. * | 24,902 | 832,723 |
| The Boeing Co. | 184,114 | 26,584,220 |
| The Eastern Co. | 1,864 | 38,156 |
| The ExOne Co. *(a) | 4,754 | 47,778 |
| The Gorman-Rupp Co. | 5,933 | 184,220 |
| The Greenbrier Cos., Inc. | 11,186 | 301,798 |
| The Manitowoc Co., Inc. * | 12,331 | 92,852 |
| The Middleby Corp. * | 19,159 | 1,907,087 |
| The Shyft Group Inc | 9,445 | 182,383 |
| The Timken Co. | 24,132 | 1,440,680 |
| The Toro Co. | 36,915 | 3,030,721 |
| Thermon Group Holdings, Inc. * | 13,548 | 136,699 |
| Titan International, Inc. | 13,787 | 37,914 |
| Titan Machinery, Inc. * | 5,599 | 83,929 |
| TPI Composites, Inc. * | 10,617 | 351,635 |
| Trane Technologies plc | 83,507 | 11,085,554 |
| Transcat, Inc. * | 2,013 | 62,222 |
| TransDigm Group, Inc. | 18,708 | 8,931,386 |
| Trex Co., Inc. * | 41,186 | 2,864,074 |
| TriMas Corp. * | 15,539 | 378,064 |
| Trinity Industries, Inc. | 33,570 | 632,459 |
| Triton International Ltd. | 19,078 | 703,597 |
| Triumph Group, Inc. | 16,938 | 111,791 |
| Tutor Perini Corp. * | 11,769 | 158,999 |
| Twin Disc, Inc. * | 3,405 | 17,229 |
| UFP Industries, Inc. | 21,520 | 1,074,063 |
| Ultralife Corp. * | 4,422 | 22,818 |
| United Rentals, Inc. * | 25,168 | 4,487,203 |
| Univar Solutions, Inc. * | 57,972 | 961,755 |
| Valmont Industries, Inc. | 7,730 | 1,097,274 |
| Vectrus, Inc. * | 4,452 | 175,943 |
| Veritiv Corp. * | 3,278 | 47,203 |
| Vertiv Holdings Co. * | 73,000 | 1,288,450 |
| Vicor Corp. * | 6,877 | 536,406 |
| Virgin Galactic Holdings, Inc. *(a) | 44,026 | 766,933 |
| W.W. Grainger, Inc. | 15,476 | 5,416,910 |
| Wabash National Corp. | 19,725 | 281,279 |
| Watsco, Inc. | 11,461 | 2,568,869 |
| Watts Water Technologies, Inc., Class A | 10,137 | 1,122,875 |
| Welbilt, Inc. * | 46,762 | 284,313 |
| WESCO International, Inc. * | 15,552 | 641,364 |
| Westinghouse Air Brake Technologies Corp. | 62,547 | 3,709,037 |
| Willis Lease Finance Corp. * | 1,177 | 24,964 |
| WillScot Mobile Mini Holdings Corp. * | 59,769 | 1,110,508 |
| Woodward, Inc. | 20,023 | 1,592,830 |
| Xylem, Inc. | 62,103 | 5,411,655 |
| | | 679,683,978 |
| |
| Commercial & Professional Services 1.1% |
| ABM Industries, Inc. | 23,031 | 799,636 |
| Acacia Research Corp. * | 15,357 | 48,375 |
| ACCO Brands Corp. | 34,735 | 183,053 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| ADT, Inc. | 52,827 | 348,130 |
| Aqua Metals, Inc. * | 12,685 | 11,290 |
| ASGN, Inc. * | 18,496 | 1,233,313 |
| Barrett Business Services, Inc. | 3,084 | 182,727 |
| BG Staffing, Inc. | 1,811 | 14,434 |
| Brady Corp., Class A | 17,257 | 650,934 |
| BrightView Holdings, Inc. * | 11,485 | 140,462 |
| Casella Waste Systems, Inc., Class A * | 15,213 | 821,350 |
| CBIZ, Inc. * | 19,217 | 435,649 |
| CECO Environmental Corp. * | 9,324 | 66,014 |
| Cimpress plc * | 6,836 | 501,762 |
| Cintas Corp. | 30,008 | 9,439,016 |
| Clean Harbors, Inc. * | 18,469 | 978,303 |
| Copart, Inc. * | 72,294 | 7,978,366 |
| CoreLogic, Inc. | 27,679 | 2,129,345 |
| CoStar Group, Inc. * | 13,741 | 11,317,225 |
| Covanta Holding Corp. | 44,230 | 401,608 |
| CRA International, Inc. | 2,542 | 104,095 |
| Deluxe Corp. | 14,100 | 302,304 |
| DLH Holdings Corp. * | 7,975 | 71,456 |
| Dun & Bradstreet Holdings, Inc. * | 44,680 | 1,154,531 |
| Ennis, Inc. | 8,919 | 135,926 |
| Equifax, Inc. | 42,140 | 5,756,324 |
| Exponent, Inc. | 17,886 | 1,244,687 |
| Forrester Research, Inc. * | 3,376 | 124,709 |
| Franklin Covey Co. * | 2,861 | 48,408 |
| FTI Consulting, Inc. * | 12,642 | 1,244,731 |
| GP Strategies Corp. * | 5,086 | 49,080 |
| Harsco Corp. * | 28,455 | 367,069 |
| Healthcare Services Group, Inc. | 26,959 | 616,822 |
| Heidrick & Struggles International, Inc. | 5,759 | 131,593 |
| Heritage-Crystal Clean, Inc. * | 3,533 | 58,224 |
| Herman Miller, Inc. | 20,697 | 630,638 |
| Hill International, Inc. * | 13,292 | 17,545 |
| HNI Corp. | 16,018 | 521,386 |
| Hudson Technologies, Inc. * | 14,328 | 14,901 |
| Huron Consulting Group, Inc. * | 8,402 | 318,100 |
| IAA, Inc. * | 46,894 | 2,653,731 |
| ICF International, Inc. | 6,209 | 406,007 |
| IHS Markit Ltd. | 129,466 | 10,469,915 |
| Insperity, Inc. | 12,232 | 936,727 |
| Interface, Inc. | 19,952 | 122,306 |
| KAR Auction Services, Inc. | 44,400 | 646,464 |
| Kelly Services, Inc., Class A | 13,781 | 239,514 |
| Kforce, Inc. | 6,775 | 235,092 |
| Kimball International, Inc., Class B | 11,882 | 122,385 |
| Knoll, Inc. | 15,973 | 183,051 |
| Korn Ferry | 18,537 | 559,632 |
| ManpowerGroup, Inc. | 20,515 | 1,392,353 |
| Mastech Digital, Inc. * | 1,998 | 31,329 |
| Matthews International Corp., Class A | 10,170 | 222,011 |
| McGrath RentCorp | 8,505 | 485,465 |
| Mistras Group, Inc. * | 11,187 | 41,616 |
| Montrose Environmental Group, Inc. * | 2,382 | 64,385 |
| MSA Safety, Inc. | 12,644 | 1,667,996 |
| Nielsen Holdings plc | 126,949 | 1,715,081 |
| PICO Holdings, Inc. * | 7,559 | 62,513 |
| Pitney Bowes, Inc. | 56,836 | 301,799 |
| Quad Graphics, Inc. | 9,800 | 22,246 |
| Red Violet, Inc. * | 1,276 | 26,541 |
| Republic Services, Inc. | 73,046 | 6,440,466 |
| Resources Connection, Inc. | 11,300 | 121,362 |
| Robert Half International, Inc. | 39,611 | 2,007,882 |
| Rollins, Inc. | 51,053 | 2,953,416 |
| RR Donnelley & Sons Co. | 19,875 | 23,254 |
| SP Plus Corp. * | 8,482 | 156,323 |
| Steelcase, Inc., Class A | 33,780 | 352,663 |
| Stericycle, Inc. * | 32,254 | 2,009,424 |
| Security | Number
of Shares | Value ($) |
| Team, Inc. * | 12,824 | 68,737 |
| Tetra Tech, Inc. | 19,290 | 1,946,554 |
| The Brink's Co. | 18,917 | 810,215 |
| TransUnion | 66,441 | 5,292,690 |
| TriNet Group, Inc. * | 13,905 | 958,333 |
| TrueBlue, Inc. * | 14,540 | 225,661 |
| U.S. Ecology, Inc. | 10,370 | 316,492 |
| UniFirst Corp. | 5,416 | 887,195 |
| Upwork, Inc. * | 28,081 | 518,094 |
| Verisk Analytics, Inc. | 56,293 | 10,018,465 |
| Viad Corp. | 7,132 | 142,640 |
| VSE Corp. | 2,601 | 75,325 |
| Waste Management, Inc. | 134,448 | 14,508,284 |
| Willdan Group, Inc. * | 4,309 | 112,767 |
| | | 123,147,922 |
| |
| Consumer Durables & Apparel 1.5% |
| Acushnet Holdings Corp. | 11,316 | 386,215 |
| American Outdoor Brands, Inc. * | 4,639 | 70,188 |
| Bassett Furniture Industries, Inc. | 5,330 | 78,671 |
| Beazer Homes USA, Inc. * | 12,172 | 148,255 |
| Brunswick Corp. | 27,707 | 1,765,213 |
| Callaway Golf Co. | 33,432 | 517,862 |
| Capri Holdings Ltd. * | 53,797 | 1,141,572 |
| Carter's, Inc. | 15,451 | 1,258,484 |
| Casper Sleep, Inc. * | 8,500 | 56,355 |
| Cavco Industries, Inc. * | 3,109 | 535,183 |
| Century Communities, Inc. * | 9,960 | 386,846 |
| Clarus Corp. | 6,026 | 93,463 |
| Columbia Sportswear Co. | 10,217 | 762,086 |
| Crocs, Inc. * | 23,515 | 1,230,540 |
| Culp, Inc. | 5,320 | 66,021 |
| D.R. Horton, Inc. | 115,224 | 7,698,115 |
| Deckers Outdoor Corp. * | 9,883 | 2,504,056 |
| Delta Apparel, Inc. * | 1,907 | 31,752 |
| Escalade, Inc. | 3,955 | 73,603 |
| Ethan Allen Interiors, Inc. | 7,327 | 117,598 |
| Flexsteel Industries, Inc. | 1,900 | 53,105 |
| Fossil Group, Inc. * | 12,996 | 74,207 |
| G-III Apparel Group Ltd. * | 15,332 | 206,675 |
| Garmin Ltd. | 51,409 | 5,347,564 |
| Genius Brands International, Inc. *(a) | 85,113 | 89,369 |
| GoPro, Inc., Class A * | 49,702 | 295,230 |
| Green Brick Partners, Inc. * | 16,600 | 296,974 |
| Hamilton Beach Brands Holding Co., Class A | 1,750 | 38,588 |
| Hanesbrands, Inc. | 124,043 | 1,993,371 |
| Hasbro, Inc. | 44,106 | 3,648,448 |
| Helen of Troy Ltd. * | 8,762 | 1,661,275 |
| Hooker Furniture Corp. | 5,161 | 141,928 |
| Hovnanian Enterprises, Inc., Class A * | 2,020 | 64,155 |
| Installed Building Products, Inc. * | 7,447 | 674,251 |
| iRobot Corp. * | 9,703 | 772,165 |
| Johnson Outdoors, Inc., Class A | 2,482 | 216,753 |
| KB Home | 31,792 | 1,025,292 |
| Kontoor Brands, Inc. * | 15,411 | 507,022 |
| La-Z-Boy, Inc. | 16,047 | 549,289 |
| Lakeland Industries, Inc. * | 1,417 | 30,565 |
| Legacy Housing Corp. * | 5,534 | 75,318 |
| Leggett & Platt, Inc. | 47,048 | 1,963,313 |
| Lennar Corp., Class A | 99,675 | 7,000,175 |
| Levi Strauss & Co., Class A | 20,425 | 322,307 |
| LGI Homes, Inc. * | 7,676 | 820,411 |
| Lifetime Brands, Inc. | 5,000 | 50,250 |
| Lululemon Athletica, Inc. * | 40,959 | 13,077,799 |
| M.D.C. Holdings, Inc. | 18,241 | 793,848 |
| M/I Homes, Inc. * | 9,900 | 405,108 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Malibu Boats, Inc., Class A * | 7,676 | 390,171 |
| Marine Products Corp. | 9,303 | 147,546 |
| MasterCraft Boat Holdings, Inc. * | 8,275 | 170,631 |
| Mattel, Inc. * | 120,498 | 1,659,257 |
| Meritage Homes Corp. * | 13,020 | 1,133,912 |
| Mohawk Industries, Inc. * | 20,597 | 2,125,404 |
| Movado Group, Inc. | 5,167 | 56,372 |
| Nautilus, Inc. * | 11,457 | 248,502 |
| Newell Brands, Inc. | 131,698 | 2,325,787 |
| NIKE, Inc., Class B | 431,771 | 51,847,062 |
| NVR, Inc. * | 1,222 | 4,830,676 |
| Oxford Industries, Inc. | 5,331 | 219,477 |
| Peloton Interactive, Inc., Class A * | 71,196 | 7,846,511 |
| Polaris, Inc. | 19,866 | 1,805,025 |
| PulteGroup, Inc. | 91,847 | 3,743,684 |
| Purple Innovation, Inc. * | 8,392 | 238,081 |
| PVH Corp. | 25,053 | 1,460,339 |
| Ralph Lauren Corp. | 17,193 | 1,149,352 |
| Rocky Brands, Inc. | 1,800 | 48,420 |
| Skechers U.S.A., Inc., Class A * | 46,669 | 1,479,874 |
| Skyline Champion Corp. * | 17,394 | 446,156 |
| Smith & Wesson Brands, Inc. | 18,556 | 307,844 |
| Sonos, Inc. * | 28,758 | 419,867 |
| Steven Madden Ltd. | 27,804 | 667,574 |
| Sturm, Ruger & Co., Inc. | 6,025 | 402,831 |
| Superior Group of Cos., Inc. | 3,200 | 69,184 |
| Tapestry, Inc. | 98,783 | 2,195,946 |
| Taylor Morrison Home Corp. * | 44,548 | 962,237 |
| Tempur Sealy International, Inc. * | 16,333 | 1,453,637 |
| The Lovesac Co. * | 4,280 | 110,167 |
| Toll Brothers, Inc. | 40,623 | 1,717,540 |
| TopBuild Corp. * | 11,448 | 1,753,948 |
| TRI Pointe Group, Inc. * | 47,999 | 788,624 |
| Tupperware Brands Corp. * | 17,130 | 543,364 |
| Turtle Beach Corp. * | 2,910 | 52,438 |
| Under Armour, Inc., Class A * | 66,741 | 923,695 |
| Under Armour, Inc., Class C * | 67,872 | 830,075 |
| Unifi, Inc. * | 4,248 | 63,678 |
| Universal Electronics, Inc. * | 5,443 | 201,718 |
| Vera Bradley, Inc. * | 5,909 | 37,463 |
| VF Corp. | 111,284 | 7,478,285 |
| Vista Outdoor, Inc. * | 20,869 | 412,580 |
| VOXX International Corp. * | 12,288 | 139,223 |
| Vuzix Corp. *(a) | 7,800 | 30,732 |
| Whirlpool Corp. | 21,645 | 4,003,459 |
| Wolverine World Wide, Inc. | 27,313 | 728,438 |
| YETI Holdings, Inc. * | 24,813 | 1,227,747 |
| ZAGG, Inc. * | 8,000 | 22,800 |
| | | 172,034,166 |
| |
| Consumer Services 1.9% |
| Accel Entertainment, Inc. * | 14,847 | 142,531 |
| Adtalem Global Education, Inc. * | 18,133 | 425,038 |
| American Public Education, Inc. * | 5,600 | 158,312 |
| Aramark | 89,486 | 2,482,342 |
| Aspen Group, Inc. * | 4,985 | 46,759 |
| Biglari Holdings, Inc., Class B * | 678 | 56,796 |
| BJ's Restaurants, Inc. | 6,735 | 189,994 |
| Bloomin' Brands, Inc. | 28,402 | 397,060 |
| Bluegreen Vacations Corp. | 2,223 | 10,826 |
| Bluegreen Vacations Holding Corp. | 4,084 | 33,285 |
| Boyd Gaming Corp. | 29,221 | 926,890 |
| Bright Horizons Family Solutions, Inc. * | 20,951 | 3,311,306 |
| Brinker International, Inc. | 16,470 | 717,104 |
| Caesars Entertainment, Inc. * | 69,250 | 3,103,785 |
| Carnival Corp. | 176,566 | 2,420,720 |
| Carriage Services, Inc. | 6,911 | 178,373 |
| Security | Number
of Shares | Value ($) |
| Carrols Restaurant Group, Inc. * | 10,038 | 58,722 |
| Century Casinos, Inc. * | 7,935 | 37,374 |
| Chegg, Inc. * | 42,287 | 3,105,557 |
| Chipotle Mexican Grill, Inc. * | 9,667 | 11,614,707 |
| Choice Hotels International, Inc. | 10,703 | 934,907 |
| Churchill Downs, Inc. | 12,538 | 1,870,043 |
| Chuy's Holdings, Inc. * | 5,160 | 108,308 |
| Collectors Universe, Inc. | 2,500 | 137,325 |
| Cracker Barrel Old Country Store, Inc. | 8,495 | 966,901 |
| Darden Restaurants, Inc. | 45,178 | 4,152,762 |
| Dave & Buster's Entertainment, Inc. | 17,879 | 306,804 |
| Del Taco Restaurants, Inc. * | 10,395 | 77,079 |
| Denny's Corp. * | 21,100 | 189,056 |
| Dine Brands Global, Inc. | 5,538 | 284,930 |
| Domino's Pizza, Inc. | 13,784 | 5,214,763 |
| DraftKings, Inc., Class A * | 105,032 | 3,718,133 |
| Drive Shack, Inc. * | 17,215 | 25,306 |
| Dunkin' Brands Group, Inc. | 28,781 | 2,869,753 |
| El Pollo Loco Holdings, Inc. * | 6,221 | 87,841 |
| Everi Holdings, Inc. * | 27,873 | 239,987 |
| Extended Stay America, Inc. | 57,909 | 657,267 |
| Fiesta Restaurant Group, Inc. * | 7,980 | 68,947 |
| Franchise Group, Inc. | 8,499 | 194,797 |
| frontdoor, Inc. * | 30,234 | 1,197,871 |
| Golden Entertainment, Inc. * | 6,136 | 78,909 |
| Graham Holdings Co., Class B | 1,524 | 579,638 |
| Grand Canyon Education, Inc. * | 17,002 | 1,332,447 |
| H&R Block, Inc. | 67,923 | 1,172,351 |
| Hilton Grand Vacations, Inc. * | 29,833 | 614,560 |
| Hilton Worldwide Holdings, Inc. | 96,409 | 8,465,674 |
| Houghton Mifflin Harcourt Co. * | 50,294 | 131,267 |
| Hyatt Hotels Corp., Class A | 12,399 | 683,681 |
| Inspired Entertainment, Inc. * | 6,626 | 26,504 |
| J Alexander's Holdings, Inc. * | 6,429 | 35,745 |
| Jack in the Box, Inc. | 8,383 | 671,143 |
| K12, Inc. * | 14,172 | 338,286 |
| Las Vegas Sands Corp. | 114,067 | 5,482,060 |
| Laureate Education, Inc., Class A * | 35,961 | 467,493 |
| Lincoln Educational Services Corp. * | 10,364 | 48,400 |
| Lindblad Expeditions Holdings, Inc. * | 7,500 | 62,400 |
| Marriott International, Inc., Class A | 92,345 | 8,577,004 |
| Marriott Vacations Worldwide Corp. | 13,914 | 1,344,092 |
| McDonald's Corp. | 258,413 | 55,041,969 |
| MGM Resorts International | 142,318 | 2,927,481 |
| Monarch Casino & Resort, Inc. * | 4,320 | 187,445 |
| Nathan's Famous, Inc. | 842 | 42,740 |
| Noodles & Co. * | 12,000 | 77,520 |
| Norwegian Cruise Line Holdings Ltd. * | 97,376 | 1,619,363 |
| OneSpaWorld Holdings Ltd. | 12,005 | 74,551 |
| Papa John's International, Inc. | 10,763 | 824,446 |
| Penn National Gaming, Inc. * | 50,023 | 2,700,242 |
| Perdoceo Education Corp. * | 25,565 | 288,629 |
| Planet Fitness, Inc., Class A * | 28,383 | 1,682,260 |
| Playa Hotels & Resorts N.V. * | 16,595 | 64,223 |
| PlayAGS, Inc. * | 10,460 | 28,242 |
| Potbelly Corp. * | 7,813 | 27,814 |
| RCI Hospitality Holdings, Inc. | 2,500 | 53,500 |
| Red Lion Hotels Corp. * | 7,000 | 12,110 |
| Red Robin Gourmet Burgers, Inc. * | 3,624 | 43,633 |
| Red Rock Resorts, Inc., Class A | 25,517 | 487,885 |
| Regis Corp. * | 10,203 | 56,525 |
| Royal Caribbean Cruises Ltd. | 61,184 | 3,452,001 |
| Ruth's Hospitality Group, Inc. | 8,878 | 99,256 |
| Scientific Games Corp., Class A * | 20,963 | 668,300 |
| SeaWorld Entertainment, Inc. * | 16,778 | 369,452 |
| Select Interior Concepts, Inc., Class A * | 7,504 | 51,928 |
| Service Corp. International | 61,218 | 2,835,006 |
| Shake Shack, Inc., Class A * | 12,805 | 864,594 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Six Flags Entertainment Corp. | 25,779 | 557,342 |
| Starbucks Corp. | 405,239 | 35,239,583 |
| Strategic Education, Inc. | 8,491 | 705,262 |
| Target Hospitality Corp. * | 12,493 | 10,870 |
| Terminix Global Holdings, Inc. * | 45,244 | 2,130,540 |
| Texas Roadhouse, Inc. | 22,890 | 1,602,987 |
| The Cheesecake Factory, Inc. | 14,852 | 441,401 |
| The Wendy's Co. | 63,619 | 1,390,075 |
| Twin River Worldwide Holdings, Inc. | 6,465 | 156,906 |
| Universal Technical Institute, Inc. * | 13,059 | 59,941 |
| Vail Resorts, Inc. | 14,111 | 3,274,316 |
| Vivint Smart Home, Inc. * | 15,548 | 241,771 |
| Wingstop, Inc. | 10,365 | 1,205,760 |
| WW International, Inc. * | 16,524 | 349,648 |
| Wyndham Destinations, Inc. | 29,925 | 976,453 |
| Wyndham Hotels & Resorts, Inc. | 33,142 | 1,541,434 |
| Wynn Resorts Ltd. | 33,622 | 2,435,241 |
| XpresSpa Group, Inc. *(a) | 10,211 | 18,992 |
| Yum! Brands, Inc. | 104,031 | 9,709,213 |
| Zovio, Inc. * | 11,262 | 40,656 |
| | | 219,501,421 |
| |
| Diversified Financials 4.5% |
| A-Mark Precious Metals, Inc. | 1,600 | 49,728 |
| Affiliated Managers Group, Inc. | 16,448 | 1,239,686 |
| AG Mortgage Investment Trust, Inc. | 14,385 | 37,545 |
| AGNC Investment Corp. | 194,929 | 2,723,158 |
| Alerus Financial Corp. | 3,156 | 67,886 |
| Ally Financial, Inc. | 129,907 | 3,465,919 |
| American Express Co. | 225,900 | 20,611,116 |
| Ameriprise Financial, Inc. | 41,837 | 6,728,645 |
| Annaly Capital Management, Inc. | 491,636 | 3,485,699 |
| Anworth Mortgage Asset Corp. | 50,580 | 82,951 |
| Apollo Commercial Real Estate Finance, Inc. | 51,018 | 443,857 |
| Apollo Global Management, Inc. | 72,722 | 2,680,533 |
| Arbor Realty Trust, Inc. | 31,801 | 375,888 |
| Ares Commercial Real Estate Corp. | 10,752 | 100,101 |
| Ares Management Corp., Class A | 31,371 | 1,326,993 |
| Arlington Asset Investment Corp., Class A | 11,092 | 27,286 |
| ARMOUR Residential REIT, Inc. | 22,015 | 210,023 |
| Artisan Partners Asset Management, Inc., Class A | 21,284 | 852,637 |
| Ashford, Inc. * | 868 | 4,475 |
| Assetmark Financial Holdings, Inc. * | 4,688 | 99,151 |
| Associated Capital Group, Inc., Class A | 1,241 | 39,836 |
| B. Riley Financial, Inc. | 6,039 | 158,463 |
| Berkshire Hathaway, Inc., Class B * | 688,318 | 138,971,404 |
| BGC Partners, Inc., Class A | 93,111 | 274,677 |
| BlackRock, Inc. | 49,218 | 29,491,918 |
| Blackstone Mortgage Trust, Inc., Class A | 51,327 | 1,113,796 |
| Blucora, Inc. * | 15,753 | 156,742 |
| Brightsphere Investment Group, Inc. | 24,528 | 338,486 |
| Broadmark Realty Capital, Inc. | 43,702 | 435,709 |
| Cannae Holdings, Inc. * | 29,875 | 1,104,777 |
| Capital One Financial Corp. | 159,206 | 11,634,774 |
| Capstead Mortgage Corp. | 40,081 | 204,814 |
| Cboe Global Markets, Inc. | 38,016 | 3,090,321 |
| Cherry Hill Mortgage Investment Corp. | 7,830 | 71,723 |
| Chimera Investment Corp. | 77,353 | 645,898 |
| CME Group, Inc. | 124,611 | 18,781,370 |
| Cohen & Steers, Inc. | 7,591 | 427,449 |
| Colony Credit Real Estate, Inc. | 30,690 | 160,816 |
| Cowen, Inc., Class A | 8,211 | 176,208 |
| Credit Acceptance Corp. * | 4,421 | 1,317,988 |
| Curo Group Holdings Corp. | 6,544 | 49,015 |
| Security | Number
of Shares | Value ($) |
| Diamond Hill Investment Group, Inc. | 1,017 | 139,268 |
| Discover Financial Services | 107,291 | 6,974,988 |
| Donnelley Financial Solutions, Inc. * | 11,301 | 142,732 |
| Dynex Capital, Inc. | 7,748 | 126,912 |
| Eaton Vance Corp. | 38,920 | 2,327,027 |
| Elevate Credit, Inc. * | 5,396 | 13,598 |
| Ellington Financial, Inc. | 14,178 | 173,539 |
| Ellington Residential Mortgage REIT | 2,688 | 28,573 |
| Encore Capital Group, Inc. * | 10,375 | 331,274 |
| Enova International, Inc. * | 12,153 | 186,549 |
| Equitable Holdings, Inc. | 139,500 | 2,997,855 |
| Evercore, Inc., Class A | 15,059 | 1,197,793 |
| Exantas Capital Corp. | 9,433 | 17,734 |
| EZCORP, Inc., Class A * | 14,614 | 65,178 |
| FactSet Research Systems, Inc. | 13,214 | 4,050,091 |
| Federated Hermes, Inc. | 34,115 | 815,348 |
| FirstCash, Inc. | 14,771 | 768,683 |
| Focus Financial Partners, Inc., Class A * | 12,062 | 440,384 |
| Franklin Resources, Inc. | 93,146 | 1,746,487 |
| GAMCO Investors, Inc., Class A | 2,351 | 28,917 |
| Granite Point Mortgage Trust, Inc. | 19,886 | 134,032 |
| Great Ajax Corp. | 5,175 | 39,744 |
| Great Elm Capital Group, Inc. * | 11,791 | 22,875 |
| Green Dot Corp., Class A * | 17,587 | 937,739 |
| Greenhill & Co., Inc. | 6,539 | 84,549 |
| Hamilton Lane, Inc., Class A | 10,109 | 704,597 |
| Hannon Armstrong Sustainable Infrastructure Capital, Inc. | 25,759 | 1,078,014 |
| Houlihan Lokey, Inc. | 17,123 | 1,073,612 |
| Hunt Cos. Finance Trust, Inc. | 13,059 | 33,823 |
| Interactive Brokers Group, Inc., Class A | 27,189 | 1,293,381 |
| Intercontinental Exchange, Inc. | 194,297 | 18,341,637 |
| Invesco Ltd. | 128,589 | 1,685,802 |
| Invesco Mortgage Capital, Inc. | 61,827 | 166,933 |
| Janus Henderson Group plc | 54,392 | 1,321,726 |
| Jefferies Financial Group, Inc. | 76,318 | 1,488,964 |
| KKR & Co., Inc. | 195,055 | 6,661,128 |
| KKR Real Estate Finance Trust, Inc. | 8,629 | 144,191 |
| Ladder Capital Corp. REIT | 36,027 | 270,202 |
| Lazard Ltd., Class A | 40,739 | 1,371,682 |
| LendingClub Corp. * | 20,331 | 94,946 |
| LendingTree, Inc. * | 2,738 | 885,989 |
| LPL Financial Holdings, Inc. | 27,937 | 2,233,004 |
| MarketAxess Holdings, Inc. | 13,210 | 7,118,208 |
| Marlin Business Services Corp. | 4,000 | 29,200 |
| Medallion Financial Corp. * | 10,486 | 27,578 |
| MFA Financial, Inc. | 152,167 | 429,111 |
| Moelis & Co., Class A | 19,623 | 729,976 |
| Moody's Corp. | 56,159 | 14,764,201 |
| Morgan Stanley | 496,434 | 23,903,297 |
| Morningstar, Inc. | 7,104 | 1,352,459 |
| MSCI, Inc. | 29,114 | 10,185,242 |
| Nasdaq, Inc. | 39,994 | 4,838,874 |
| Navient Corp. | 62,470 | 500,385 |
| Nelnet, Inc., Class A | 7,909 | 482,765 |
| New Residential Investment Corp. | 144,632 | 1,084,740 |
| New York Mortgage Trust, Inc. | 127,968 | 325,039 |
| Nexpoint Real Estate Finance, Inc. | 3,462 | 47,464 |
| Northern Trust Corp. | 72,275 | 5,656,964 |
| OneMain Holdings, Inc. | 26,737 | 932,854 |
| Open Lending Corp., Class A * | 19,380 | 503,105 |
| Oportun Financial Corp. * | 3,745 | 49,808 |
| Oppenheimer Holdings, Inc., Class A | 3,500 | 87,710 |
| Orchid Island Capital, Inc. | 30,714 | 159,406 |
| PennyMac Mortgage Investment Trust | 34,997 | 523,905 |
| Piper Sandler Cos. | 5,280 | 440,616 |
| PJT Partners, Inc., Class A | 7,493 | 506,976 |
| PRA Group, Inc. * | 15,864 | 541,438 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Pzena Investment Management, Inc., Class A | 8,430 | 43,752 |
| Raymond James Financial, Inc. | 42,692 | 3,263,376 |
| Ready Capital Corp. | 12,925 | 145,277 |
| Redwood Trust, Inc. | 43,139 | 366,681 |
| Regional Management Corp. * | 3,000 | 60,960 |
| S&P Global, Inc. | 83,518 | 26,953,764 |
| Safeguard Scientifics, Inc. | 7,000 | 40,740 |
| Santander Consumer USA Holdings, Inc. | 28,567 | 581,053 |
| Sculptor Capital Management, Inc. | 5,600 | 60,704 |
| SEI Investments Co. | 42,152 | 2,071,771 |
| Siebert Financial Corp. * | 3,682 | 13,218 |
| Silvercrest Asset Management Group, Inc., Class A | 3,213 | 36,275 |
| SLM Corp. | 132,633 | 1,218,897 |
| Starwood Property Trust, Inc. | 97,349 | 1,359,966 |
| State Street Corp. | 122,639 | 7,223,437 |
| Stifel Financial Corp. | 24,979 | 1,460,272 |
| StoneX Group, Inc. * | 6,044 | 320,211 |
| SWK Holdings Corp. * | 4,879 | 70,502 |
| Synchrony Financial | 187,028 | 4,679,441 |
| T. Rowe Price Group, Inc. | 78,980 | 10,003,607 |
| The Bank of New York Mellon Corp. | 281,447 | 9,670,519 |
| The Blackstone Group, Inc., Class A | 233,873 | 11,791,877 |
| The Carlyle Group, Inc. | 40,916 | 1,019,627 |
| The Charles Schwab Corp. (c) | 514,196 | 21,138,598 |
| The Goldman Sachs Group, Inc. | 119,187 | 22,531,110 |
| TPG RE Finance Trust, Inc. | 20,845 | 163,008 |
| Tradeweb Markets, Inc., Class A | 30,431 | 1,657,881 |
| Two Harbors Investment Corp. | 95,345 | 482,446 |
| Victory Capital Holdings, Inc., Class A | 3,900 | 71,526 |
| Virtu Financial, Inc., Class A | 26,912 | 575,379 |
| Virtus Investment Partners, Inc. | 2,565 | 409,246 |
| Voya Financial, Inc. | 43,697 | 2,094,397 |
| Waddell & Reed Financial, Inc., Class A | 22,429 | 344,285 |
| Western Asset Mortgage Capital Corp. | 15,107 | 29,308 |
| Westwood Holdings Group, Inc. | 2,653 | 25,628 |
| WisdomTree Investments, Inc. | 38,043 | 138,476 |
| World Acceptance Corp. * | 2,084 | 175,035 |
| | | 523,414,532 |
| |
| Energy 1.9% |
| Abraxas Petroleum Corp. * | 4,057 | 6,613 |
| Adams Resources & Energy, Inc. | 1,166 | 22,247 |
| Altus Midstream Co. * | 894 | 8,627 |
| Amplify Energy Corp. | 11,998 | 7,802 |
| Antero Midstream Corp. | 101,003 | 578,747 |
| Antero Resources Corp. * | 74,733 | 254,092 |
| Apache Corp. | 134,088 | 1,112,930 |
| Arch Resources, Inc. | 5,290 | 161,610 |
| Archrock, Inc. | 48,281 | 286,306 |
| Aspen Aerogels, Inc. * | 6,261 | 70,749 |
| Baker Hughes Co. | 226,210 | 3,341,122 |
| Berry Corp. | 15,620 | 40,924 |
| Bonanza Creek Energy, Inc. * | 5,626 | 99,636 |
| Brigham Minerals, Inc., Class A | 9,000 | 79,380 |
| Bristow Group, Inc. * | 6,656 | 138,312 |
| Cabot Oil & Gas Corp. | 137,467 | 2,445,538 |
| Cactus, Inc., Class A | 15,987 | 271,779 |
| Callon Petroleum Co. *(a) | 13,188 | 68,973 |
| ChampionX Corp. * | 68,301 | 596,268 |
| Cheniere Energy, Inc. * | 80,817 | 3,868,710 |
| Chevron Corp. | 668,886 | 46,487,577 |
| Cimarex Energy Co. | 35,644 | 904,288 |
| Clean Energy Fuels Corp. * | 36,000 | 89,280 |
| CNX Resources Corp. * | 77,973 | 756,338 |
| Comstock Resources, Inc. * | 20,824 | 110,575 |
| Security | Number
of Shares | Value ($) |
| Concho Resources, Inc. | 69,688 | 2,892,749 |
| ConocoPhillips | 372,550 | 10,662,381 |
| CONSOL Energy, Inc. * | 8,270 | 31,343 |
| Contango Oil & Gas Co. * | 29,038 | 36,298 |
| Continental Resources, Inc. | 22,953 | 276,125 |
| Core Laboratories N.V. | 16,569 | 239,422 |
| CVR Energy, Inc. | 10,411 | 114,625 |
| Dawson Geophysical Co. * | 14,633 | 26,193 |
| Delek US Holdings, Inc. | 20,434 | 205,566 |
| Devon Energy Corp. | 137,057 | 1,223,919 |
| Diamond S Shipping, Inc. * | 8,382 | 47,442 |
| Diamondback Energy, Inc. | 55,715 | 1,446,361 |
| DMC Global, Inc. | 4,394 | 156,295 |
| Dorian LPG Ltd. * | 11,000 | 90,200 |
| Dril-Quip, Inc. * | 11,715 | 303,419 |
| Earthstone Energy, Inc., Class A * | 5,613 | 15,099 |
| EOG Resources, Inc. | 202,295 | 6,926,581 |
| EQT Corp. | 95,710 | 1,449,049 |
| Equitrans Midstream Corp. | 143,380 | 1,040,939 |
| Evolution Petroleum Corp. | 8,679 | 19,181 |
| Exterran Corp. * | 9,906 | 41,902 |
| Exxon Mobil Corp. | 1,467,442 | 47,867,958 |
| Falcon Minerals Corp. | 13,000 | 23,920 |
| Forum Energy Technologies, Inc. * | 33,550 | 15,950 |
| Frank's International N.V. * | 42,473 | 74,328 |
| Geospace Technologies Corp. * | 7,458 | 38,260 |
| Goodrich Petroleum Corp. * | 3,169 | 30,359 |
| Green Plains, Inc. * | 13,339 | 201,419 |
| Gulf Island Fabrication, Inc. * | 4,500 | 14,670 |
| Hallador Energy Co. | 8,706 | 6,878 |
| Halliburton Co. | 304,190 | 3,668,531 |
| Helix Energy Solutions Group, Inc. * | 52,600 | 130,448 |
| Helmerich & Payne, Inc. | 39,011 | 580,094 |
| Hess Corp. | 94,936 | 3,533,518 |
| HighPoint Resources Corp. * | 676 | 3,732 |
| HollyFrontier Corp. | 52,019 | 962,872 |
| Independence Contract Drilling, Inc. * | 575 | 1,336 |
| International Seaways, Inc. | 8,633 | 116,891 |
| ION Geophysical Corp. * | 3,676 | 5,440 |
| Kinder Morgan, Inc. | 676,094 | 8,045,519 |
| KLX Energy Services Holdings, Inc. * | 1,728 | 6,774 |
| Kosmos Energy Ltd. | 123,816 | 123,110 |
| Liberty Oilfield Services, Inc., Class A | 16,890 | 112,825 |
| Magnolia Oil & Gas Corp., Class A * | 34,040 | 147,734 |
| Mammoth Energy Services, Inc. * | 4,000 | 6,040 |
| Marathon Oil Corp. | 281,048 | 1,112,950 |
| Marathon Petroleum Corp. | 226,022 | 6,667,649 |
| Matador Resources Co. * | 39,449 | 278,904 |
| Matrix Service Co. * | 8,000 | 60,800 |
| Montage Resources Corp. * | 2,898 | 14,345 |
| Murphy Oil Corp. | 52,194 | 402,938 |
| Nabors Industries Ltd. | 2,588 | 73,551 |
| NACCO Industries, Inc., Class A | 1,900 | 37,031 |
| National Oilwell Varco, Inc. | 139,241 | 1,169,624 |
| Natural Gas Services Group, Inc. * | 4,213 | 36,653 |
| NCS Multistage Holdings, Inc. * | 4,000 | 2,835 |
| New Fortress Energy, Inc. | 5,185 | 187,334 |
| Newpark Resources, Inc. * | 27,584 | 19,725 |
| NextDecade Corp. *(a) | 47,025 | 113,801 |
| NexTier Oilfield Solutions, Inc. * | 55,546 | 104,982 |
| Nine Energy Service, Inc. *(a) | 4,359 | 4,664 |
| Northern Oil and Gas, Inc. * | 8,452 | 31,272 |
| Occidental Petroleum Corp. | 290,210 | 2,649,617 |
| Oceaneering International, Inc. * | 40,936 | 167,019 |
| Oil States International, Inc. * | 23,526 | 58,580 |
| ONEOK, Inc. | 155,335 | 4,504,715 |
| Overseas Shipholding Group, Inc., Class A * | 18,500 | 35,335 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Ovintiv, Inc. | 94,520 | 869,584 |
| Pacific Ethanol, Inc. * | 22,969 | 139,881 |
| Par Pacific Holdings, Inc. * | 12,907 | 83,121 |
| Parsley Energy, Inc., Class A | 110,016 | 1,101,260 |
| Patterson-UTI Energy, Inc. | 66,559 | 170,391 |
| PBF Energy, Inc., Class A | 34,678 | 161,946 |
| PDC Energy, Inc. * | 33,648 | 401,084 |
| Peabody Energy Corp. * | 28,625 | 36,926 |
| Penn Virginia Corp. * | 3,770 | 28,954 |
| Phillips 66 | 151,769 | 7,081,542 |
| PHX Minerals, Inc. | 6,200 | 9,300 |
| Pioneer Natural Resources Co. | 57,343 | 4,562,209 |
| ProPetro Holding Corp. * | 32,169 | 127,068 |
| QEP Resources, Inc. | 77,176 | 69,458 |
| Range Resources Corp. | 92,473 | 608,472 |
| Renewable Energy Group, Inc. * | 14,753 | 832,069 |
| REX American Resources Corp. * | 1,646 | 119,648 |
| Ring Energy, Inc. * | 20,681 | 10,566 |
| RPC, Inc. * | 17,418 | 41,455 |
| SandRidge Energy, Inc. * | 8,633 | 14,849 |
| Schlumberger N.V. | 483,589 | 7,224,820 |
| SEACOR Holdings, Inc. * | 7,085 | 217,014 |
| SEACOR Marine Holdings, Inc. * | 10,065 | 17,312 |
| Select Energy Services, Inc., Class A * | 32,143 | 97,072 |
| SilverBow Resources, Inc. * | 1,839 | 8,588 |
| SM Energy Co. | 35,926 | 57,841 |
| Solaris Oilfield Infrastructure, Inc., Class A | 9,189 | 54,491 |
| Southwestern Energy Co. * | 193,835 | 517,539 |
| Talos Energy, Inc. * | 6,353 | 41,803 |
| Targa Resources Corp. | 81,708 | 1,311,413 |
| TechnipFMC plc | 147,197 | 813,999 |
| Tellurian, Inc. * | 68,096 | 65,372 |
| TETRA Technologies, Inc. * | 33,023 | 18,344 |
| The Williams Cos., Inc. | 421,521 | 8,088,988 |
| Tidewater, Inc. * | 12,517 | 73,350 |
| Torchlight Energy Resources, Inc. * | 33,032 | 9,054 |
| Transocean Ltd. * | 195,370 | 130,996 |
| U.S. Well Services, Inc. * | 10,920 | 3,403 |
| Uranium Energy Corp. * | 39,550 | 34,116 |
| US Silica Holdings, Inc. | 28,760 | 78,227 |
| VAALCO Energy, Inc. * | 20,055 | 16,957 |
| Valero Energy Corp. | 141,882 | 5,478,064 |
| W&T Offshore, Inc. *(a) | 25,000 | 35,000 |
| World Fuel Services Corp. | 22,400 | 471,520 |
| WPX Energy, Inc. * | 142,630 | 657,524 |
| | | 214,499,032 |
| |
| Food & Staples Retailing 1.4% |
| Albertsons Cos., Inc., Class A *(a) | 12,556 | 184,448 |
| BJ's Wholesale Club Holdings, Inc. * | 46,482 | 1,779,796 |
| Casey's General Stores, Inc. | 13,124 | 2,212,313 |
| Costco Wholesale Corp. | 153,276 | 54,814,563 |
| Grocery Outlet Holding Corp. * | 27,452 | 1,208,437 |
| HF Foods Group, Inc. *(a) | 11,138 | 73,400 |
| Ingles Markets, Inc., Class A | 5,108 | 183,173 |
| Natural Grocers by Vitamin Cottage, Inc. | 2,400 | 25,536 |
| Performance Food Group Co. * | 46,046 | 1,547,606 |
| PriceSmart, Inc. | 8,304 | 572,976 |
| Rite Aid Corp. * | 19,024 | 173,879 |
| SpartanNash, Co. | 13,213 | 243,251 |
| Sprouts Farmers Market, Inc. * | 42,873 | 816,731 |
| Sysco Corp. | 176,726 | 9,774,715 |
| The Andersons, Inc. | 12,706 | 275,593 |
| The Chefs' Warehouse, Inc. * | 9,323 | 126,047 |
| The Kroger Co. | 270,199 | 8,703,110 |
| U.S. Foods Holding Corp. * | 77,897 | 1,628,047 |
| Security | Number
of Shares | Value ($) |
| United Natural Foods, Inc. * | 18,511 | 269,705 |
| Village Super Market, Inc., Class A | 3,931 | 89,037 |
| Walgreens Boots Alliance, Inc. | 249,932 | 8,507,685 |
| Walmart, Inc. | 482,312 | 66,920,790 |
| Weis Markets, Inc. | 5,868 | 266,466 |
| | | 160,397,304 |
| |
| Food, Beverage & Tobacco 3.1% |
| 22nd Century Group, Inc. * | 28,273 | 20,552 |
| Alico, Inc. | 475 | 13,718 |
| Altria Group, Inc. | 645,184 | 23,278,239 |
| Archer-Daniels-Midland Co. | 193,149 | 8,931,210 |
| B&G Foods, Inc. (a) | 23,882 | 634,306 |
| Beyond Meat, Inc. * | 17,077 | 2,432,277 |
| Brown-Forman Corp., Class A | 19,538 | 1,226,010 |
| Brown-Forman Corp., Class B | 63,388 | 4,418,777 |
| Bunge Ltd. | 48,764 | 2,766,382 |
| Cal-Maine Foods, Inc. * | 11,722 | 449,539 |
| Calavo Growers, Inc. | 6,100 | 409,493 |
| Campbell Soup Co. | 69,029 | 3,221,583 |
| Celsius Holdings, Inc. * | 9,441 | 189,859 |
| Coca-Cola Consolidated, Inc. | 1,696 | 388,299 |
| Conagra Brands, Inc. | 169,738 | 5,956,106 |
| Constellation Brands, Inc., Class A | 58,386 | 9,647,119 |
| Darling Ingredients, Inc. * | 57,811 | 2,485,873 |
| Farmer Brothers Co. * | 4,500 | 15,615 |
| Flowers Foods, Inc. | 68,235 | 1,608,981 |
| Fresh Del Monte Produce, Inc. | 11,734 | 252,633 |
| Freshpet, Inc. * | 13,938 | 1,595,901 |
| General Mills, Inc. | 212,808 | 12,581,209 |
| Hormel Foods Corp. | 97,746 | 4,759,253 |
| Hostess Brands, Inc. * | 43,750 | 553,000 |
| Ingredion, Inc. | 23,705 | 1,680,447 |
| J&J Snack Foods Corp. | 5,365 | 727,333 |
| John B. Sanfilippo & Son, Inc. | 3,617 | 263,173 |
| Kellogg Co. | 87,602 | 5,509,290 |
| Keurig Dr Pepper, Inc. | 161,079 | 4,333,025 |
| Lamb Weston Holdings, Inc. | 50,186 | 3,184,302 |
| Lancaster Colony Corp. | 7,092 | 1,178,265 |
| Landec Corp. * | 9,100 | 87,451 |
| Limoneira Co. | 4,500 | 62,235 |
| McCormick & Co., Inc. - Non Voting Shares | 43,202 | 7,798,393 |
| MGP Ingredients, Inc. | 4,637 | 194,847 |
| Molson Coors Beverage Co., Class B | 64,695 | 2,281,146 |
| Mondelez International, Inc., Class A | 496,044 | 26,349,857 |
| Monster Beverage Corp. * | 128,239 | 9,819,260 |
| National Beverage Corp. * | 4,003 | 313,395 |
| NewAge, Inc. *(a) | 25,010 | 58,523 |
| PepsiCo, Inc. | 480,930 | 64,103,160 |
| Philip Morris International, Inc. | 541,191 | 38,435,385 |
| Pilgrim's Pride Corp. * | 17,681 | 295,980 |
| Post Holdings, Inc. * | 22,135 | 1,901,396 |
| RiceBran Technologies * | 12,444 | 6,346 |
| Sanderson Farms, Inc. | 7,034 | 900,141 |
| Seaboard Corp. | 95 | 327,275 |
| Seneca Foods Corp., Class A * | 2,000 | 73,700 |
| The Alkaline Water Co., Inc. * | 16,336 | 20,420 |
| The Boston Beer Co., Inc., Class A * | 3,156 | 3,279,652 |
| The Coca-Cola Co. | 1,342,562 | 64,523,530 |
| The Hain Celestial Group, Inc. * | 27,410 | 842,858 |
| The Hershey Co. | 51,194 | 7,037,127 |
| The JM Smucker Co. | 39,885 | 4,475,097 |
| The Kraft Heinz Co. | 224,898 | 6,879,630 |
| The Simply Good Foods Co. * | 28,499 | 535,781 |
| Tootsie Roll Industries, Inc. | 6,110 | 182,567 |
| TreeHouse Foods, Inc. * | 20,033 | 778,082 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Turning Point Brands, Inc. | 4,184 | 156,774 |
| Tyson Foods, Inc., Class A | 102,171 | 5,847,246 |
| Universal Corp. | 9,019 | 359,407 |
| Vector Group Ltd. | 41,360 | 380,098 |
| Vital Farms, Inc. * | 2,008 | 69,396 |
| Whole Earth Brands, Inc. * | 7,684 | 62,932 |
| | | 353,150,856 |
| |
| Health Care Equipment & Services 6.6% |
| 1Life Healthcare, Inc. * | 23,933 | 675,150 |
| Abbott Laboratories | 614,510 | 64,591,146 |
| ABIOMED, Inc. * | 15,773 | 3,972,903 |
| Acadia Healthcare Co., Inc. * | 30,729 | 1,095,489 |
| Accelerate Diagnostics, Inc. *(a) | 10,300 | 97,026 |
| Accolade, Inc. * | 5,265 | 184,380 |
| Accuray, Inc. * | 28,423 | 82,711 |
| Acutus Medical, Inc. * | 2,022 | 46,243 |
| AdaptHealth Corp. * | 11,978 | 326,999 |
| Addus HomeCare Corp. * | 5,284 | 515,560 |
| Align Technology, Inc. * | 25,073 | 10,683,104 |
| Allscripts Healthcare Solutions, Inc. * | 53,720 | 541,498 |
| Alphatec Holdings, Inc. * | 17,902 | 152,883 |
| Amedisys, Inc. * | 11,265 | 2,917,635 |
| American Renal Associates Holdings, Inc. * | 4,023 | 46,224 |
| AmerisourceBergen Corp. | 51,289 | 4,927,334 |
| AMN Healthcare Services, Inc. * | 15,960 | 1,041,869 |
| AngioDynamics, Inc. * | 11,450 | 118,393 |
| Antares Pharma, Inc. * | 62,307 | 170,098 |
| Anthem, Inc. | 87,177 | 23,781,886 |
| Apollo Medical Holdings, Inc. * | 7,448 | 128,553 |
| Apyx Medical Corp. * | 8,600 | 51,772 |
| Aspira Women's Health, Inc. *(a) | 27,640 | 104,203 |
| AtriCure, Inc. * | 16,264 | 562,084 |
| Atrion Corp. | 475 | 285,546 |
| Avanos Medical, Inc. * | 17,115 | 605,015 |
| AxoGen, Inc. * | 11,943 | 150,601 |
| Axonics Modulation Technologies, Inc. * | 8,851 | 415,023 |
| Baxter International, Inc. | 175,724 | 13,630,911 |
| Becton, Dickinson & Co. | 100,779 | 23,293,050 |
| Bellerophon Therapeutics, Inc. * | 4,176 | 35,204 |
| Beyond Air, Inc. *(a) | 8,170 | 42,811 |
| BioLife Solutions, Inc. * | 6,771 | 194,395 |
| BioSig Technologies, Inc. *(a) | 8,008 | 25,305 |
| BioTelemetry, Inc. * | 12,185 | 518,837 |
| Boston Scientific Corp. * | 498,496 | 17,083,458 |
| Brookdale Senior Living, Inc. * | 69,175 | 203,375 |
| Cantel Medical Corp. | 13,357 | 638,999 |
| Capital Senior Living Corp. * | 1,618 | 803 |
| Cardinal Health, Inc. | 101,874 | 4,664,811 |
| Cardiovascular Systems, Inc. * | 13,657 | 486,872 |
| Castle Biosciences, Inc. * | 4,958 | 230,200 |
| Castlight Health, Inc., Class B * | 20,805 | 18,369 |
| Centene Corp. * | 202,307 | 11,956,344 |
| Cerner Corp. | 106,294 | 7,450,147 |
| Cerus Corp. * | 57,125 | 299,906 |
| Change Healthcare, Inc. * | 79,446 | 1,124,161 |
| Chembio Diagnostics, Inc. *(a) | 7,487 | 35,488 |
| Chemed Corp. | 5,540 | 2,649,893 |
| Cigna Corp. | 127,798 | 21,338,432 |
| Co-Diagnostics, Inc. *(a) | 7,865 | 105,470 |
| Community Health Systems, Inc. * | 34,809 | 217,208 |
| Computer Programs & Systems, Inc. | 3,700 | 103,193 |
| Conformis, Inc. * | 21,969 | 15,198 |
| CONMED Corp. | 10,244 | 798,725 |
| CorVel Corp. * | 3,002 | 273,842 |
| Covetrus, Inc. * | 33,231 | 820,473 |
| Security | Number
of Shares | Value ($) |
| Cross Country Healthcare, Inc. * | 14,856 | 116,620 |
| CryoLife, Inc. * | 12,053 | 202,008 |
| CryoPort, Inc. * | 14,093 | 565,693 |
| Cutera, Inc. * | 4,219 | 79,866 |
| CVS Health Corp. | 453,420 | 25,432,328 |
| CytoSorbents Corp. * | 9,756 | 74,633 |
| Danaher Corp. | 218,952 | 50,258,242 |
| DarioHealth Corp. * | 4,600 | 46,782 |
| DaVita, Inc. * | 26,153 | 2,255,696 |
| DENTSPLY SIRONA, Inc. | 76,941 | 3,630,846 |
| DexCom, Inc. * | 33,094 | 10,576,181 |
| Edwards Lifesciences Corp. * | 216,612 | 15,528,914 |
| Ekso Bionics Holdings, Inc. *(a) | 1,406 | 5,722 |
| Electromed, Inc. * | 3,981 | 33,082 |
| Encompass Health Corp. | 35,123 | 2,153,391 |
| Envista Holdings Corp. * | 56,582 | 1,494,897 |
| Enzo Biochem, Inc. * | 13,471 | 24,517 |
| Evolent Health, Inc., Class A * | 29,477 | 293,001 |
| Five Star Senior Living, Inc. * | 5,708 | 26,086 |
| FONAR Corp. * | 1,870 | 36,727 |
| Fulgent Genetics, Inc. * | 3,817 | 124,167 |
| Genesis Healthcare, Inc. * | 32,553 | 14,004 |
| GenMark Diagnostics, Inc. * | 23,488 | 287,023 |
| Glaukos Corp. * | 15,563 | 870,283 |
| Globus Medical, Inc., Class A * | 27,392 | 1,427,671 |
| Guardant Health, Inc. * | 29,343 | 3,129,724 |
| Haemonetics Corp. * | 18,086 | 1,828,314 |
| Hanger, Inc. * | 13,820 | 241,435 |
| HCA Healthcare, Inc. | 91,843 | 11,383,021 |
| Health Catalyst, Inc. * | 10,899 | 375,798 |
| HealthEquity, Inc. * | 26,867 | 1,383,382 |
| HealthStream, Inc. * | 7,648 | 139,958 |
| Henry Schein, Inc. * | 50,115 | 3,186,312 |
| Heska Corp. * | 3,412 | 400,330 |
| Hill-Rom Holdings, Inc. | 23,290 | 2,121,020 |
| HMS Holdings Corp. * | 32,631 | 868,637 |
| Hologic, Inc. * | 90,716 | 6,243,075 |
| HTG Molecular Diagnostics, Inc. * | 18,640 | 5,853 |
| Humana, Inc. | 45,789 | 18,282,632 |
| ICAD, Inc. * | 5,445 | 53,143 |
| ICU Medical, Inc. * | 6,955 | 1,236,530 |
| IDEXX Laboratories, Inc. * | 29,568 | 12,561,078 |
| Inari Medical, Inc. * | 2,101 | 139,086 |
| InfuSystem Holdings, Inc. * | 4,288 | 52,828 |
| Inogen, Inc. * | 6,823 | 199,300 |
| Inovalon Holdings, Inc., Class A * | 28,884 | 548,507 |
| Inspire Medical Systems, Inc. * | 9,087 | 1,085,260 |
| Insulet Corp. * | 22,852 | 5,078,857 |
| Integer Holdings Corp. * | 11,589 | 677,377 |
| Integra LifeSciences Holdings Corp. * | 25,697 | 1,133,238 |
| IntriCon Corp. * | 4,256 | 53,200 |
| Intuitive Surgical, Inc. * | 40,625 | 27,100,125 |
| Invacare Corp. | 9,218 | 74,758 |
| iRadimed Corp. * | 1,334 | 30,215 |
| iRhythm Technologies, Inc. * | 9,892 | 2,091,663 |
| Laboratory Corp. of America Holdings * | 34,037 | 6,799,572 |
| Lantheus Holdings, Inc. * | 23,570 | 255,970 |
| LeMaitre Vascular, Inc. | 5,247 | 170,423 |
| LENSAR, Inc. * | 3,420 | 33,379 |
| LHC Group, Inc. * | 10,851 | 2,349,784 |
| LivaNova plc * | 17,771 | 894,592 |
| Livongo Health, Inc. *(b) | 22,473 | 2,708,993 |
| Magellan Health, Inc. * | 7,831 | 565,946 |
| Masimo Corp. * | 17,507 | 3,918,417 |
| McKesson Corp. | 56,202 | 8,289,233 |
| MEDNAX, Inc. * | 29,765 | 379,504 |
| Medtronic plc | 466,769 | 46,942,958 |
| Meridian Bioscience, Inc. * | 14,540 | 249,361 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Merit Medical Systems, Inc. * | 18,529 | 927,377 |
| Mesa Laboratories, Inc. | 1,598 | 417,733 |
| Milestone Scientific, Inc. * | 21,743 | 33,484 |
| Misonix, Inc. * | 7,008 | 79,611 |
| Molina Healthcare, Inc. * | 20,962 | 3,908,784 |
| NantHealth, Inc. *(a) | 27,365 | 55,004 |
| National HealthCare Corp. | 3,965 | 250,985 |
| National Research Corp. | 3,945 | 204,351 |
| Natus Medical, Inc. * | 13,282 | 241,865 |
| Neogen Corp. * | 18,220 | 1,270,663 |
| Neuronetics, Inc. *(a) | 8,872 | 43,916 |
| Nevro Corp. * | 12,083 | 1,802,904 |
| NextGen Healthcare, Inc. * | 16,383 | 222,809 |
| Novocure Ltd. * | 29,100 | 3,553,110 |
| NuVasive, Inc. * | 17,797 | 790,721 |
| Omnicell, Inc. * | 15,517 | 1,342,996 |
| Ontrak, Inc. *(a) | 2,607 | 159,653 |
| OptimizeRx Corp. * | 3,035 | 60,093 |
| Option Care Health, Inc. * | 17,803 | 237,314 |
| OraSure Technologies, Inc. * | 25,771 | 385,019 |
| Orthofix Medical, Inc. * | 6,531 | 204,159 |
| OrthoPediatrics Corp. * | 3,885 | 173,271 |
| Owens & Minor, Inc. | 22,515 | 565,577 |
| Patterson Cos., Inc. | 31,422 | 781,622 |
| Penumbra, Inc. * | 11,799 | 3,079,893 |
| PetIQ, Inc. * | 6,200 | 177,072 |
| Phreesia, Inc. * | 10,376 | 383,601 |
| Premier, Inc., Class A | 23,402 | 765,948 |
| Progyny, Inc. * | 11,086 | 270,166 |
| Psychemedics Corp. | 2,969 | 11,193 |
| Pulse Biosciences, Inc. *(a) | 2,908 | 35,216 |
| Quest Diagnostics, Inc. | 47,066 | 5,748,641 |
| Quidel Corp. * | 13,463 | 3,611,988 |
| Quotient Ltd. * | 28,484 | 134,445 |
| R1 RCM, Inc. * | 40,724 | 729,774 |
| RadNet, Inc. * | 14,117 | 204,838 |
| Repro-Med Systems, Inc. * | 4,895 | 27,020 |
| ResMed, Inc. | 50,392 | 9,672,241 |
| Retractable Technologies, Inc. * | 11,616 | 85,261 |
| Rockwell Medical, Inc. * | 13,042 | 11,117 |
| Schrodinger, Inc. * | 11,642 | 567,897 |
| SeaSpine Holdings Corp. * | 7,349 | 93,773 |
| Select Medical Holdings Corp. * | 39,510 | 828,920 |
| Senseonics Holdings, Inc. * | 26,000 | 9,703 |
| Sensus Healthcare, Inc. * | 5,903 | 14,639 |
| Sharps Compliance Corp. * | 7,560 | 45,058 |
| Shockwave Medical, Inc. * | 9,869 | 674,250 |
| SI-BONE, Inc. * | 6,811 | 142,827 |
| Sientra, Inc. * | 12,323 | 52,003 |
| Silk Road Medical, Inc. * | 11,622 | 704,293 |
| Simulations Plus, Inc. | 4,349 | 281,902 |
| SmileDirectClub, Inc. * | 28,587 | 254,424 |
| Soliton, Inc. *(a) | 4,273 | 30,595 |
| STAAR Surgical Co. * | 14,774 | 1,071,115 |
| Stereotaxis, Inc. * | 16,205 | 51,208 |
| STERIS plc | 29,679 | 5,258,822 |
| Stryker Corp. | 113,221 | 22,871,774 |
| Surgalign Holdings, Inc. * | 18,100 | 31,494 |
| Surgery Partners, Inc. * | 5,591 | 121,996 |
| Surmodics, Inc. * | 4,200 | 154,350 |
| Tabula Rasa HealthCare, Inc. * | 7,830 | 270,448 |
| Tactile Systems Technology, Inc. * | 6,321 | 231,222 |
| Tandem Diabetes Care, Inc. * | 20,606 | 2,246,054 |
| Tela Bio, Inc. * | 4,346 | 65,885 |
| Teladoc Health, Inc. * | 28,369 | 5,573,374 |
| Teleflex, Inc. | 16,332 | 5,197,332 |
| Tenet Healthcare Corp. * | 37,243 | 913,943 |
| The Cooper Cos., Inc. | 17,203 | 5,488,617 |
| Security | Number
of Shares | Value ($) |
| The Ensign Group, Inc. | 17,784 | 1,046,411 |
| The Joint Corp. * | 3,340 | 62,592 |
| The Pennant Group, Inc. * | 8,273 | 344,653 |
| The Providence Service Corp. * | 4,117 | 483,953 |
| Tivity Health, Inc. * | 16,969 | 233,324 |
| TransMedics Group, Inc. * | 8,450 | 101,231 |
| Triple-S Management Corp., Class B * | 6,987 | 129,399 |
| U.S. Physical Therapy, Inc. | 5,147 | 408,312 |
| UnitedHealth Group, Inc. | 330,093 | 100,724,578 |
| Universal Health Services, Inc., Class B | 27,117 | 2,970,667 |
| Utah Medical Products, Inc. | 1,365 | 113,295 |
| Vapotherm, Inc. * | 6,833 | 204,648 |
| Varex Imaging Corp. * | 14,217 | 190,508 |
| Varian Medical Systems, Inc. * | 31,789 | 5,493,139 |
| Veeva Systems, Inc., Class A * | 47,103 | 12,720,165 |
| ViewRay, Inc. * | 38,091 | 113,130 |
| Vocera Communications, Inc. * | 10,583 | 346,911 |
| VolitionRX Ltd. *(a) | 15,384 | 45,691 |
| West Pharmaceutical Services, Inc. | 25,729 | 7,000,089 |
| Wright Medical Group N.V. * | 44,821 | 1,371,074 |
| Zimmer Biomet Holdings, Inc. | 72,191 | 9,536,431 |
| Zynex, Inc. * | 5,451 | 69,827 |
| | | 756,967,757 |
| |
| Household & Personal Products 1.7% |
| BellRing Brands, Inc., Class A * | 13,740 | 251,305 |
| Central Garden & Pet Co. * | 4,210 | 164,022 |
| Central Garden & Pet Co., Class A * | 13,239 | 468,528 |
| Church & Dwight Co., Inc. | 85,901 | 7,592,789 |
| Colgate-Palmolive Co. | 297,715 | 23,486,736 |
| Coty, Inc., Class A | 100,228 | 290,661 |
| Edgewell Personal Care Co. * | 18,438 | 483,444 |
| elf Beauty, Inc. * | 10,527 | 213,382 |
| Energizer Holdings, Inc. | 20,595 | 810,413 |
| Herbalife Nutrition Ltd. * | 32,833 | 1,482,082 |
| Inter Parfums, Inc. | 5,865 | 240,817 |
| Kimberly-Clark Corp. | 118,593 | 15,724,246 |
| Lifevantage Corp. * | 5,280 | 58,344 |
| Medifast, Inc. | 3,897 | 547,490 |
| Natural Health Trends Corp. | 2,166 | 11,978 |
| Nature's Sunshine Products, Inc. * | 5,329 | 55,528 |
| Nu Skin Enterprises, Inc., Class A | 18,865 | 930,988 |
| Oil-Dri Corp. of America | 1,600 | 54,656 |
| Revlon, Inc., Class A *(a) | 3,255 | 13,346 |
| Reynolds Consumer Products, Inc. | 17,830 | 503,519 |
| Spectrum Brands Holdings, Inc. | 14,158 | 805,165 |
| The Clorox Co. | 43,990 | 9,116,927 |
| The Estee Lauder Cos., Inc., Class A | 78,174 | 17,171,701 |
| The Procter & Gamble Co. | 864,619 | 118,539,265 |
| USANA Health Sciences, Inc. * | 4,282 | 323,933 |
| Veru, Inc. * | 15,200 | 38,304 |
| WD-40 Co. | 5,025 | 1,222,985 |
| | | 200,602,554 |
| |
| Insurance 2.0% |
| Aflac, Inc. | 228,633 | 7,762,090 |
| Alleghany Corp. | 5,021 | 2,746,136 |
| Ambac Financial Group, Inc. * | 15,031 | 184,581 |
| American Equity Investment Life Holding Co. | 31,647 | 785,479 |
| American Financial Group, Inc. | 25,218 | 1,889,837 |
| American International Group, Inc. | 300,597 | 9,465,800 |
| American National Group, Inc. | 3,761 | 258,757 |
| AMERISAFE, Inc. | 7,229 | 426,366 |
| Aon plc, Class A | 80,161 | 14,750,426 |
| Arch Capital Group Ltd. * | 142,774 | 4,313,203 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Argo Group International Holdings Ltd. | 11,607 | 414,138 |
| Arthur J. Gallagher & Co. | 66,526 | 6,899,411 |
| Assurant, Inc. | 21,052 | 2,618,237 |
| Assured Guaranty Ltd. | 27,577 | 704,041 |
| Athene Holding Ltd., Class A * | 43,038 | 1,380,659 |
| Axis Capital Holdings Ltd. | 28,377 | 1,211,414 |
| Brighthouse Financial, Inc. * | 31,350 | 1,037,685 |
| Brown & Brown, Inc. | 81,791 | 3,558,726 |
| BRP Group, Inc., Class A * | 11,085 | 282,668 |
| Chubb Ltd. | 156,452 | 20,324,679 |
| Cincinnati Financial Corp. | 52,449 | 3,710,242 |
| Citizens, Inc. * | 22,044 | 127,194 |
| CNA Financial Corp. | 9,550 | 284,495 |
| CNO Financial Group, Inc. | 51,690 | 917,497 |
| Crawford & Co., Class A | 4,938 | 31,603 |
| Crawford & Co., Class B | 5,800 | 36,772 |
| Donegal Group, Inc., Class A | 5,782 | 83,897 |
| eHealth, Inc. * | 8,839 | 593,185 |
| Employers Holdings, Inc. | 11,759 | 376,406 |
| Enstar Group Ltd. * | 4,865 | 836,148 |
| Erie Indemnity Co., Class A | 8,399 | 1,955,875 |
| Everest Re Group Ltd. | 14,087 | 2,776,266 |
| FBL Financial Group, Inc., Class A | 3,305 | 164,225 |
| FedNat Holding Co. | 4,085 | 20,956 |
| Fidelity National Financial, Inc. | 101,834 | 3,186,386 |
| First American Financial Corp. | 38,843 | 1,732,009 |
| Genworth Financial, Inc., Class A * | 174,782 | 686,893 |
| Globe Life, Inc. | 34,249 | 2,777,251 |
| GoHealth, Inc., Class A * | 10,390 | 107,640 |
| Goosehead Insurance, Inc., Class A | 4,873 | 597,137 |
| Greenlight Capital Re Ltd., Class A * | 12,115 | 81,776 |
| Hallmark Financial Services, Inc. * | 9,052 | 24,531 |
| HCI Group, Inc. | 2,926 | 137,463 |
| Heritage Insurance Holdings, Inc. | 9,756 | 92,097 |
| Horace Mann Educators Corp. | 14,260 | 483,557 |
| Independence Holding Co. | 2,346 | 88,726 |
| Investors Title Co. | 416 | 55,544 |
| James River Group Holdings Ltd. | 11,384 | 531,974 |
| Kemper Corp. | 21,510 | 1,326,307 |
| Kingstone Cos., Inc. | 2,696 | 15,691 |
| Kinsale Capital Group, Inc. | 7,444 | 1,395,527 |
| Lemonade, Inc. *(a) | 3,171 | 159,470 |
| Lincoln National Corp. | 64,843 | 2,275,989 |
| Loews Corp. | 83,701 | 2,902,751 |
| Maiden Holdings Ltd. * | 18,900 | 23,058 |
| Markel Corp. * | 4,829 | 4,504,491 |
| Marsh & McLennan Cos., Inc. | 175,385 | 18,145,332 |
| MBIA, Inc. * | 23,883 | 136,372 |
| Mercury General Corp. | 9,807 | 399,243 |
| MetLife, Inc. | 266,386 | 10,082,710 |
| National General Holdings Corp. | 21,670 | 736,130 |
| National Western Life Group, Inc., Class A | 704 | 119,420 |
| NI Holdings, Inc. * | 2,860 | 47,791 |
| Old Republic International Corp. | 100,464 | 1,635,554 |
| Palomar Holdings, Inc. * | 7,124 | 635,247 |
| Primerica, Inc. | 13,749 | 1,515,690 |
| Principal Financial Group, Inc. | 88,859 | 3,485,050 |
| ProAssurance Corp. | 18,940 | 292,244 |
| ProSight Global, Inc. * | 4,459 | 52,750 |
| Protective Insurance Corp., Class B | 4,607 | 60,582 |
| Prudential Financial, Inc. | 136,310 | 8,726,566 |
| Reinsurance Group of America, Inc. | 23,535 | 2,377,506 |
| RenaissanceRe Holdings Ltd. | 17,754 | 2,871,177 |
| RLI Corp. | 13,764 | 1,193,339 |
| Safety Insurance Group, Inc. | 5,451 | 381,570 |
| Selective Insurance Group, Inc. | 20,690 | 1,077,121 |
| Selectquote, Inc. * | 8,643 | 148,832 |
| Security | Number
of Shares | Value ($) |
| State Auto Financial Corp. | 5,500 | 67,870 |
| Stewart Information Services Corp. | 9,355 | 396,558 |
| The Allstate Corp. | 107,832 | 9,570,090 |
| The Hanover Insurance Group, Inc. | 13,210 | 1,263,669 |
| The Hartford Financial Services Group, Inc. | 125,228 | 4,823,783 |
| The Progressive Corp. | 203,040 | 18,659,376 |
| The Travelers Cos., Inc. | 87,967 | 10,618,497 |
| Third Point Reinsurance Ltd. * | 32,236 | 250,796 |
| Tiptree, Inc. | 7,504 | 36,544 |
| Trupanion, Inc. * | 11,100 | 794,094 |
| United Fire Group, Inc. | 8,730 | 179,314 |
| United Insurance Holdings Corp. | 6,439 | 28,267 |
| Universal Insurance Holdings, Inc. | 9,563 | 119,251 |
| Unum Group | 67,600 | 1,193,816 |
| W.R. Berkley Corp. | 49,902 | 3,000,108 |
| Watford Holdings Ltd. * | 4,845 | 174,420 |
| White Mountains Insurance Group Ltd. | 1,071 | 972,821 |
| Willis Towers Watson plc | 44,928 | 8,198,461 |
| | | 230,583,323 |
| |
| Materials 2.8% |
| Advanced Emissions Solutions, Inc. | 5,901 | 26,259 |
| AdvanSix, Inc. * | 8,959 | 136,356 |
| AgroFresh Solutions, Inc. * | 10,000 | 20,600 |
| Air Products & Chemicals, Inc. | 76,510 | 21,135,122 |
| Albemarle Corp. | 36,737 | 3,424,256 |
| Alcoa Corp. * | 64,376 | 831,738 |
| Allegheny Technologies, Inc. * | 43,781 | 403,223 |
| Amcor plc | 547,445 | 5,709,851 |
| American Vanguard Corp. | 9,646 | 124,626 |
| Amyris, Inc. * | 27,872 | 69,680 |
| AptarGroup, Inc. | 22,484 | 2,565,200 |
| Arconic Corp. * | 33,829 | 735,442 |
| Ashland Global Holdings, Inc. | 19,000 | 1,325,630 |
| Avery Dennison Corp. | 29,123 | 4,030,332 |
| Avient Corp. | 32,939 | 1,023,415 |
| Axalta Coating Systems Ltd. * | 73,084 | 1,835,139 |
| Balchem Corp. | 11,652 | 1,164,617 |
| Ball Corp. | 112,689 | 10,029,321 |
| Berry Global Group, Inc. * | 46,380 | 2,162,699 |
| Boise Cascade Co. | 12,963 | 497,520 |
| Cabot Corp. | 20,323 | 772,477 |
| Carpenter Technology Corp. | 16,523 | 288,822 |
| Celanese Corp. | 40,973 | 4,650,845 |
| Century Aluminum Co. * | 14,114 | 92,870 |
| CF Industries Holdings, Inc. | 73,241 | 2,022,184 |
| Chase Corp. | 2,673 | 254,363 |
| Clearwater Paper Corp. * | 5,366 | 199,347 |
| Cleveland-Cliffs, Inc. | 143,210 | 1,185,779 |
| Coeur Mining, Inc. * | 86,224 | 609,604 |
| Commercial Metals Co. | 41,029 | 847,249 |
| Compass Minerals International, Inc. | 11,822 | 713,812 |
| Contura Energy, Inc. * | 6,988 | 45,073 |
| Corteva, Inc. | 260,265 | 8,583,540 |
| Crown Holdings, Inc. * | 47,004 | 4,032,943 |
| Domtar Corp. | 19,344 | 461,935 |
| Dow, Inc. | 257,718 | 11,723,592 |
| DuPont de Nemours, Inc. | 253,824 | 14,437,509 |
| Eagle Materials, Inc. | 14,491 | 1,235,358 |
| Eastman Chemical Co. | 46,327 | 3,745,075 |
| Ecolab, Inc. | 85,929 | 15,775,705 |
| Element Solutions, Inc. * | 76,011 | 890,849 |
| Ferro Corp. * | 30,061 | 386,584 |
| Flotek Industries, Inc. * | 16,539 | 41,017 |
| FMC Corp. | 45,146 | 4,638,300 |
| Forterra, Inc. * | 9,076 | 118,442 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Freeport-McMoRan, Inc. | 506,531 | 8,783,248 |
| FutureFuel Corp. | 9,399 | 111,754 |
| GCP Applied Technologies, Inc. * | 19,258 | 420,017 |
| Glatfelter Corp. | 17,901 | 255,447 |
| Gold Resource Corp. | 19,195 | 52,594 |
| Graphic Packaging Holding Co. | 96,401 | 1,281,169 |
| Greif, Inc., Class A | 11,764 | 477,501 |
| H.B. Fuller Co. | 17,701 | 800,970 |
| Hawkins, Inc. | 3,679 | 171,846 |
| Haynes International, Inc. | 3,574 | 57,935 |
| Hecla Mining Co. | 183,136 | 838,763 |
| Huntsman Corp. | 69,516 | 1,688,544 |
| Hycroft Mining Holding Corp. * | 7,802 | 63,742 |
| Ingevity Corp. * | 14,839 | 814,364 |
| Innospec, Inc. | 9,038 | 597,773 |
| International Flavors & Fragrances, Inc. (a) | 37,194 | 3,818,336 |
| International Paper Co. | 136,319 | 5,963,956 |
| Intrepid Potash, Inc. * | 2,719 | 27,136 |
| Kaiser Aluminum Corp. | 6,075 | 382,300 |
| Koppers Holdings, Inc. * | 6,542 | 146,737 |
| Kraton Corp. * | 9,654 | 273,208 |
| Kronos Worldwide, Inc. | 6,230 | 82,984 |
| Linde plc | 182,192 | 40,144,185 |
| Livent Corp. * | 54,430 | 585,123 |
| Loop Industries, Inc. *(a) | 4,729 | 28,563 |
| Louisiana-Pacific Corp. | 40,157 | 1,147,687 |
| LSB Industries, Inc. * | 5,600 | 12,488 |
| LyondellBasell Industries N.V., Class A | 89,024 | 6,093,693 |
| Marrone Bio Innovations, Inc. *(a) | 27,730 | 30,503 |
| Martin Marietta Materials, Inc. | 21,590 | 5,750,497 |
| Materion Corp. | 7,145 | 365,753 |
| McEwen Mining, Inc. * | 126,062 | 122,457 |
| Mercer International, Inc. | 14,607 | 91,878 |
| Minerals Technologies, Inc. | 12,903 | 705,665 |
| Myers Industries, Inc. | 14,310 | 205,205 |
| Neenah, Inc. | 6,513 | 245,084 |
| NewMarket Corp. | 2,533 | 906,029 |
| Newmont Corp. | 278,868 | 17,524,065 |
| Northern Technologies International Corp. | 3,248 | 26,016 |
| Nucor Corp. | 104,487 | 4,990,299 |
| O-I Glass, Inc. | 56,848 | 536,077 |
| Olin Corp. | 50,462 | 835,146 |
| Olympic Steel, Inc. | 2,550 | 29,096 |
| Orion Engineered Carbons S.A. | 16,940 | 248,510 |
| Packaging Corp. of America | 32,702 | 3,744,052 |
| PPG Industries, Inc. | 81,655 | 10,592,287 |
| PQ Group Holdings, Inc. * | 13,423 | 155,170 |
| Quaker Chemical Corp. | 4,697 | 896,141 |
| Ranpak Holdings Corp. * | 8,300 | 70,799 |
| Rayonier Advanced Materials, Inc. * | 17,736 | 60,834 |
| Reliance Steel & Aluminum Co. | 21,906 | 2,387,535 |
| Resolute Forest Products, Inc. * | 28,000 | 128,520 |
| Royal Gold, Inc. | 22,993 | 2,731,798 |
| RPM International, Inc. | 45,054 | 3,814,722 |
| Ryerson Holding Corp. * | 4,659 | 36,666 |
| Schnitzer Steel Industries, Inc., Class A | 9,050 | 190,050 |
| Schweitzer-Mauduit International, Inc. | 10,032 | 333,062 |
| Sealed Air Corp. | 53,517 | 2,118,738 |
| Sensient Technologies Corp. | 14,680 | 960,512 |
| Silgan Holdings, Inc. | 26,115 | 899,662 |
| Sonoco Products Co. | 35,418 | 1,731,586 |
| Steel Dynamics, Inc. | 69,542 | 2,189,182 |
| Stepan Co. | 7,314 | 851,642 |
| Summit Materials, Inc., Class A * | 39,293 | 695,093 |
| SunCoke Energy, Inc. | 29,816 | 104,058 |
| Synalloy Corp. * | 2,200 | 11,418 |
| Security | Number
of Shares | Value ($) |
| Tecnoglass, Inc. | 4,997 | 22,536 |
| The Chemours Co. | 59,723 | 1,202,821 |
| The Mosaic Co. | 120,395 | 2,227,308 |
| The Scotts Miracle-Gro Co. | 14,136 | 2,121,107 |
| The Sherwin-Williams Co. | 28,403 | 19,540,696 |
| TimkenSteel Corp. * | 10,796 | 41,781 |
| Trecora Resources * | 10,224 | 60,526 |
| Tredegar Corp. | 8,263 | 120,475 |
| Trinseo S.A. | 14,067 | 447,612 |
| Tronox Holdings plc, Class A * | 35,242 | 344,314 |
| UFP Technologies, Inc. * | 3,202 | 118,666 |
| United States Lime & Minerals, Inc. | 1,011 | 93,720 |
| United States Steel Corp. | 77,769 | 751,249 |
| Universal Stainless & Alloy Products, Inc. * | 1,800 | 9,774 |
| US Concrete, Inc. * | 6,497 | 220,638 |
| Valvoline, Inc. | 63,880 | 1,256,520 |
| Venator Materials plc * | 13,280 | 25,763 |
| Verso Corp., Class A | 6,622 | 51,519 |
| Vulcan Materials Co. | 46,047 | 6,669,448 |
| W.R. Grace & Co. | 21,494 | 934,774 |
| Warrior Met Coal, Inc. | 18,646 | 279,690 |
| Westlake Chemical Corp. | 12,523 | 846,805 |
| WestRock Co. | 90,051 | 3,381,415 |
| Worthington Industries, Inc. | 13,511 | 664,876 |
| | | 318,876,203 |
| |
| Media & Entertainment 8.4% |
| Activision Blizzard, Inc. | 268,131 | 20,305,561 |
| Alphabet, Inc., Class A * | 104,341 | 168,626,534 |
| Alphabet, Inc., Class C * | 101,954 | 165,268,454 |
| Altice USA, Inc., Class A * | 112,593 | 3,034,381 |
| AMC Entertainment Holdings, Inc., Class A (a) | 22,090 | 52,132 |
| AMC Networks, Inc., Class A *(a) | 10,297 | 218,811 |
| ANGI Homeservices, Inc., Class A * | 22,425 | 237,705 |
| Boston Omaha Corp., Class A * | 2,600 | 41,548 |
| Cable One, Inc. | 1,861 | 3,222,991 |
| Cardlytics, Inc. * | 9,475 | 699,444 |
| Cargurus, Inc. * | 27,764 | 553,337 |
| Cars.com, Inc. * | 21,136 | 156,195 |
| Charter Communications, Inc., Class A * | 51,842 | 31,303,236 |
| Cinedigm Corp., Class A * | 23,490 | 11,040 |
| Cinemark Holdings, Inc. | 37,192 | 304,602 |
| Clear Channel Outdoor Holdings, Inc. * | 176,155 | 157,483 |
| Comcast Corp., Class A | 1,581,730 | 66,812,275 |
| comScore, Inc. * | 18,690 | 37,287 |
| Cumulus Media, Inc., Class A * | 6,971 | 35,273 |
| Daily Journal Corp. * | 427 | 115,802 |
| DHI Group, Inc. * | 17,016 | 28,757 |
| Discovery, Inc., Class A * | 55,751 | 1,128,400 |
| Discovery, Inc., Class C * | 107,690 | 1,972,881 |
| DISH Network Corp., Class A * | 85,754 | 2,185,869 |
| Electronic Arts, Inc. * | 100,405 | 12,031,531 |
| Emerald Holding, Inc. | 7,527 | 19,721 |
| Entercom Communications Corp., Class A | 55,637 | 83,456 |
| Entravision Communications Corp., Class A | 23,831 | 43,611 |
| Eventbrite, Inc., Class A * | 25,100 | 231,673 |
| EverQuote, Inc., Class A * | 3,535 | 118,387 |
| Facebook, Inc., Class A * | 835,106 | 219,724,740 |
| Fluent, Inc. * | 13,431 | 34,249 |
| Fox Corp., Class A | 118,974 | 3,155,190 |
| Fox Corp., Class B | 54,928 | 1,435,818 |
| Gaia, Inc. * | 3,400 | 34,476 |
| Gannett Co., Inc. * | 55,113 | 63,380 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Glu Mobile, Inc. * | 45,278 | 324,190 |
| Gray Television, Inc. * | 28,501 | 361,393 |
| Hemisphere Media Group, Inc. * | 4,890 | 38,240 |
| IAC/InterActiveCorp * | 27,141 | 3,276,462 |
| iHeartMedia, Inc., Class A * | 20,035 | 164,688 |
| John Wiley & Sons, Inc., Class A | 15,690 | 485,762 |
| Lee Enterprises, Inc. * | 15,450 | 12,068 |
| Liberty Broadband Corp., Class A * | 8,502 | 1,194,956 |
| Liberty Broadband Corp., Class C * | 53,332 | 7,557,678 |
| Liberty Media Corp. - Liberty Braves, Class A * | 2,953 | 61,127 |
| Liberty Media Corp. - Liberty Braves, Class C * | 12,455 | 254,954 |
| Liberty Media Corp. - Liberty Formula One, Class A * | 8,605 | 286,546 |
| Liberty Media Corp. - Liberty Formula One, Class C * | 70,617 | 2,551,392 |
| Liberty Media Corp. - Liberty SiriusXM, Class A * | 29,393 | 1,016,116 |
| Liberty Media Corp. - Liberty SiriusXM, Class C * | 60,519 | 2,093,957 |
| Liberty TripAdvisor Holdings, Inc., Class A * | 24,773 | 44,096 |
| Lions Gate Entertainment Corp., Class A * | 23,373 | 156,599 |
| Lions Gate Entertainment Corp., Class B * | 41,368 | 259,377 |
| Live Nation Entertainment, Inc. * | 49,186 | 2,400,277 |
| LiveXLive Media, Inc. *(a) | 8,492 | 17,069 |
| Loral Space & Communications, Inc. | 4,480 | 77,997 |
| Madison Square Garden Entertainment Corp. * | 6,349 | 412,685 |
| Madison Square Garden Sports Corp. * | 6,349 | 899,272 |
| Marchex, Inc., Class B * | 10,570 | 18,075 |
| Match Group, Inc. * | 89,729 | 10,478,553 |
| MDC Partners, Inc., Class A * | 9,467 | 22,153 |
| Meredith Corp. | 14,298 | 157,278 |
| MSG Networks, Inc., Class A * | 16,477 | 147,304 |
| National CineMedia, Inc. | 18,547 | 36,816 |
| Netflix, Inc. * | 153,279 | 72,920,951 |
| News Corp., Class A | 136,807 | 1,796,276 |
| News Corp., Class B | 41,136 | 535,591 |
| Nexstar Media Group, Inc., Class A | 16,002 | 1,318,565 |
| Omnicom Group, Inc. | 75,542 | 3,565,582 |
| Pinterest, Inc., Class A * | 160,275 | 9,448,211 |
| QuinStreet, Inc. * | 14,714 | 235,498 |
| Reading International, Inc., Class A * | 4,446 | 10,404 |
| Roku, Inc. * | 36,682 | 7,424,437 |
| Saga Communications, Inc., Class A | 1,496 | 25,462 |
| Scholastic Corp. | 10,758 | 212,578 |
| Sciplay Corp., Class A * | 8,602 | 114,837 |
| Sinclair Broadcast Group, Inc., Class A | 19,623 | 364,595 |
| Sirius XM Holdings, Inc. | 422,799 | 2,422,638 |
| Snap, Inc., Class A * | 308,805 | 12,163,829 |
| Take-Two Interactive Software, Inc. * | 40,134 | 6,217,559 |
| TechTarget, Inc. * | 9,109 | 398,974 |
| TEGNA, Inc. | 77,751 | 935,345 |
| The E.W. Scripps Co., Class A | 18,724 | 170,014 |
| The Interpublic Group of Cos., Inc. | 135,456 | 2,450,399 |
| The Marcus Corp. | 7,772 | 56,969 |
| The New York Times Co., Class A | 50,827 | 2,015,799 |
| The Walt Disney Co. | 627,587 | 76,094,924 |
| Travelzoo * | 3,496 | 25,940 |
| Tribune Publishing Co. | 7,731 | 88,597 |
| TripAdvisor, Inc. | 34,212 | 653,791 |
| TrueCar, Inc. * | 39,721 | 173,184 |
| Twitter, Inc. * | 276,284 | 11,427,106 |
| Security | Number
of Shares | Value ($) |
| ViacomCBS, Inc., Class B | 199,689 | 5,705,115 |
| Warner Music Group Corp., Class A | 30,292 | 803,647 |
| WideOpenWest, Inc. * | 13,374 | 66,736 |
| World Wrestling Entertainment, Inc., Class A | 15,955 | 580,124 |
| Yelp, Inc. * | 23,968 | 471,451 |
| Zillow Group, Inc., Class A * | 12,767 | 1,140,476 |
| Zillow Group, Inc., Class C * | 49,142 | 4,354,964 |
| ZoomInfo Technologies, Inc., Class A * | 20,778 | 789,356 |
| Zynga, Inc., Class A * | 345,526 | 3,106,279 |
| | | 968,579,513 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 7.7% |
| 10X Genomics, Inc., Class A * | 22,471 | 3,076,280 |
| 89bio, Inc. * | 2,363 | 54,727 |
| AbbVie, Inc. | 613,266 | 52,188,937 |
| Abeona Therapeutics, Inc. * | 16,276 | 17,415 |
| ACADIA Pharmaceuticals, Inc. * | 40,201 | 1,867,336 |
| Acceleron Pharma, Inc. * | 18,033 | 1,885,891 |
| AcelRx Pharmaceuticals, Inc. *(a) | 28,438 | 48,629 |
| Acer Therapeutics, Inc. * | 1,495 | 3,648 |
| Aclaris Therapeutics, Inc. * | 20,505 | 78,739 |
| Acorda Therapeutics, Inc. * | 15,538 | 13,583 |
| Actinium Pharmaceuticals, Inc. *(a) | 2,673 | 26,623 |
| Adamas Pharmaceuticals, Inc. * | 17,873 | 54,334 |
| Adamis Pharmaceuticals Corp. * | 16,516 | 11,664 |
| Adaptive Biotechnologies Corp. * | 28,329 | 1,305,400 |
| Adicet Bio, Inc. * | 780 | 8,362 |
| ADMA Biologics, Inc. *(a) | 23,778 | 47,318 |
| Adverum Biotechnologies, Inc. * | 32,000 | 349,120 |
| Aeglea BioTherapeutics, Inc. * | 18,334 | 140,805 |
| Aerie Pharmaceuticals, Inc. * | 16,193 | 171,808 |
| Aerpio Pharmaceuticals, Inc. *(a) | 12,835 | 17,199 |
| Agenus, Inc. * | 55,732 | 205,651 |
| AgeX Therapeutics, Inc. * | 10,645 | 16,926 |
| Agile Therapeutics, Inc. * | 31,320 | 85,190 |
| Agilent Technologies, Inc. | 107,620 | 10,986,926 |
| Agios Pharmaceuticals, Inc. * | 21,377 | 856,576 |
| AIM ImmunoTech, Inc. *(a) | 20,316 | 42,054 |
| Akebia Therapeutics, Inc. * | 51,571 | 114,488 |
| Akero Therapeutics, Inc. * | 6,447 | 171,168 |
| Akouos, Inc. * | 3,596 | 69,798 |
| Albireo Pharma, Inc. * | 5,648 | 178,251 |
| Aldeyra Therapeutics, Inc. * | 18,127 | 121,088 |
| Alector, Inc. * | 21,859 | 205,693 |
| Alexion Pharmaceuticals, Inc. * | 76,192 | 8,772,747 |
| Alimera Sciences, Inc. * | 2,627 | 11,007 |
| Alkermes plc * | 55,175 | 896,594 |
| Allakos, Inc. * | 10,827 | 1,029,972 |
| Allena Pharmaceuticals, Inc. * | 6,539 | 8,174 |
| Allogene Therapeutics, Inc. * | 22,110 | 749,971 |
| Allovir, Inc. * | 4,244 | 112,169 |
| Alnylam Pharmaceuticals, Inc. * | 40,043 | 4,924,088 |
| Alpine Immune Sciences, Inc. * | 9,194 | 68,955 |
| Altimmune, Inc. * | 11,098 | 127,072 |
| ALX Oncology Holdings, Inc. * | 1,891 | 74,713 |
| AMAG Pharmaceuticals, Inc. * | 9,201 | 126,238 |
| Amgen, Inc. | 203,408 | 44,127,332 |
| Amicus Therapeutics, Inc. * | 90,148 | 1,607,339 |
| Amneal Pharmaceuticals, Inc. * | 43,587 | 181,322 |
| Amphastar Pharmaceuticals, Inc. * | 12,144 | 237,901 |
| Ampio Pharmaceuticals, Inc. *(a) | 73,284 | 56,062 |
| AnaptysBio, Inc. * | 7,720 | 227,431 |
| Anavex Life Sciences Corp. * | 15,874 | 93,657 |
| ANI Pharmaceuticals, Inc. * | 3,733 | 95,154 |
| Anika Therapeutics, Inc. * | 4,606 | 150,248 |
| Anixa Biosciences, Inc. * | 9,149 | 18,847 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Annexon, Inc. * | 3,974 | 82,699 |
| Apellis Pharmaceuticals, Inc. * | 17,605 | 561,599 |
| Applied Genetic Technologies Corp. * | 12,820 | 66,151 |
| Applied Molecular Transport, Inc. *(a) | 4,613 | 135,576 |
| Applied Therapeutics, Inc. * | 6,111 | 99,426 |
| Aprea Therapeutics, Inc. * | 4,858 | 105,953 |
| Aptinyx, Inc. * | 17,590 | 51,539 |
| Aquestive Therapeutics, Inc. *(a) | 11,077 | 53,613 |
| Aravive, Inc. * | 1,524 | 7,056 |
| Arbutus Biopharma Corp. *(a) | 32,912 | 92,812 |
| Arcturus Therapeutics Holdings, Inc. * | 7,275 | 393,432 |
| Arcus Biosciences, Inc. * | 14,657 | 319,523 |
| Arcutis Biotherapeutics, Inc. * | 4,374 | 77,945 |
| Ardelyx, Inc. * | 23,062 | 117,847 |
| Arena Pharmaceuticals, Inc. * | 19,533 | 1,674,369 |
| Arrowhead Pharmaceuticals, Inc. * | 36,228 | 2,075,864 |
| Arvinas, Inc. * | 9,180 | 191,954 |
| Assembly Biosciences, Inc. * | 11,682 | 172,193 |
| Assertio Holdings, Inc. * | 18,832 | 11,676 |
| Atara Biotherapeutics, Inc. * | 28,343 | 365,908 |
| Athenex, Inc. * | 18,260 | 208,164 |
| Athersys, Inc. * | 66,911 | 117,094 |
| Atreca, Inc. Class A * | 11,123 | 148,603 |
| Avantor, Inc. * | 156,312 | 3,637,380 |
| AVEO Pharmaceuticals, Inc. * | 2,862 | 15,541 |
| Avid Bioservices, Inc. * | 13,897 | 100,753 |
| Avidity Biosciences, Inc. * | 4,893 | 121,004 |
| Avita Therapeutics, Inc. * | 7,464 | 152,863 |
| Avrobio, Inc. * | 9,553 | 136,417 |
| Axcella Health, Inc. * | 10,482 | 44,444 |
| Axsome Therapeutics, Inc. * | 9,355 | 620,330 |
| Aytu BioScience, Inc. * | 60,732 | 57,714 |
| Baudax Bio, Inc. *(a) | 2,350 | 2,561 |
| Beam Therapeutics, Inc. * | 8,191 | 279,886 |
| Berkeley Lights, Inc. * | 1,800 | 130,626 |
| Bio-Rad Laboratories, Inc., Class A * | 7,505 | 4,401,082 |
| Bio-Techne Corp. | 13,480 | 3,402,487 |
| BioCryst Pharmaceuticals, Inc. * | 71,645 | 273,684 |
| BioDelivery Sciences International, Inc. * | 25,796 | 81,515 |
| Biogen, Inc. * | 54,968 | 13,855,784 |
| Biohaven Pharmaceutical Holding Co., Ltd. * | 17,356 | 1,344,396 |
| BioMarin Pharmaceutical, Inc. * | 63,004 | 4,689,388 |
| BioSpecifics Technologies Corp. * | 2,891 | 254,697 |
| Bioxcel Therapeutics, Inc. * | 5,384 | 245,995 |
| Black Diamond Therapeutics, Inc. * | 5,042 | 158,873 |
| Bluebird Bio, Inc. * | 22,701 | 1,173,869 |
| Blueprint Medicines Corp. * | 18,802 | 1,923,069 |
| BrainStorm Cell Therapeutics, Inc. *(a) | 11,287 | 113,209 |
| Bridgebio Pharma, Inc. * | 26,374 | 1,012,234 |
| Bristol-Myers Squibb Co. | 783,757 | 45,810,597 |
| Bruker Corp. | 36,256 | 1,542,330 |
| Cabaletta Bio, Inc. * | 4,700 | 54,379 |
| Calithera Biosciences, Inc. * | 23,390 | 82,801 |
| Capricor Therapeutics, Inc. * | 14,545 | 56,144 |
| Cara Therapeutics, Inc. * | 16,617 | 220,341 |
| Cardiff Oncology, Inc. *(a) | 11,636 | 184,082 |
| CareDx, Inc. * | 16,657 | 817,026 |
| CASI Pharmaceuticals, Inc. * | 25,215 | 59,255 |
| Cassava Sciences, Inc. * | 9,000 | 73,890 |
| Catabasis Pharmaceuticals, Inc. * | 13,893 | 18,617 |
| Catalent, Inc. * | 57,433 | 5,040,894 |
| Catalyst Biosciences, Inc. * | 5,715 | 31,318 |
| Catalyst Pharmaceuticals, Inc. * | 28,204 | 83,766 |
| CEL-SCI Corp. *(a) | 14,273 | 171,704 |
| Celcuity, Inc. * | 2,500 | 13,800 |
| Celldex Therapeutics, Inc. * | 16,581 | 262,643 |
| Cellular Biomedicine Group, Inc. * | 2,900 | 52,229 |
| Security | Number
of Shares | Value ($) |
| Celsion Corp. * | 17,195 | 8,133 |
| Cerecor, Inc. * | 38,687 | 79,695 |
| Charles River Laboratories International, Inc. * | 17,375 | 3,956,287 |
| Checkpoint Therapeutics, Inc. * | 29,706 | 65,056 |
| ChemoCentryx, Inc. * | 17,047 | 818,256 |
| Chiasma, Inc. * | 22,407 | 84,026 |
| Chimerix, Inc. * | 15,000 | 40,050 |
| Chinook Therapeutics, Inc. * | 5,747 | 70,975 |
| ChromaDex Corp. * | 12,690 | 57,232 |
| Cidara Therapeutics, Inc. * | 19,932 | 52,023 |
| Clearside Biomedical, Inc. * | 26,575 | 35,876 |
| Clovis Oncology, Inc. *(a) | 33,097 | 163,168 |
| Codexis, Inc. * | 17,581 | 234,003 |
| Cohbar, Inc. * | 14,681 | 13,451 |
| Coherus Biosciences, Inc. * | 19,857 | 331,016 |
| Collegium Pharmaceutical, Inc. * | 11,957 | 213,193 |
| Concert Pharmaceuticals, Inc. * | 10,357 | 106,884 |
| Constellation Pharmaceuticals, Inc. * | 11,201 | 219,764 |
| ContraFect Corp. * | 3,915 | 22,120 |
| Corbus Pharmaceuticals Holdings, Inc. *(a) | 21,103 | 19,830 |
| Corcept Therapeutics, Inc. * | 35,050 | 588,139 |
| CorMedix, Inc. * | 5,920 | 29,896 |
| Cortexyme, Inc. * | 4,450 | 213,021 |
| Crinetics Pharmaceuticals, Inc. * | 8,974 | 108,406 |
| Cue Biopharma, Inc. * | 8,970 | 99,926 |
| Cyclerion Therapeutics, Inc. * | 15,496 | 36,261 |
| Cymabay Therapeutics, Inc. * | 20,365 | 169,437 |
| Cytokinetics, Inc. * | 22,346 | 343,458 |
| CytomX Therapeutics, Inc. * | 15,748 | 104,252 |
| Deciphera Pharmaceuticals, Inc. * | 12,832 | 745,154 |
| Denali Therapeutics, Inc. * | 28,191 | 1,206,011 |
| DermTech, Inc. * | 6,768 | 86,360 |
| Dicerna Pharmaceuticals, Inc. * | 21,946 | 460,647 |
| Durect Corp. * | 60,997 | 110,100 |
| Dyadic International, Inc. * | 9,040 | 64,546 |
| Dynavax Technologies Corp. * | 38,144 | 142,277 |
| Eagle Pharmaceuticals, Inc. * | 3,241 | 150,771 |
| Editas Medicine, Inc. * | 21,531 | 666,169 |
| Eidos Therapeutics, Inc. * | 3,975 | 281,907 |
| Eiger BioPharmaceuticals, Inc. * | 10,377 | 92,148 |
| Elanco Animal Health, Inc. * | 113,804 | 3,529,062 |
| Eli Lilly & Co. | 275,890 | 35,992,609 |
| Eloxx Pharmaceuticals, Inc. * | 6,055 | 15,319 |
| Emergent BioSolutions, Inc. * | 15,694 | 1,411,989 |
| Enanta Pharmaceuticals, Inc. * | 5,853 | 255,366 |
| Endo International plc * | 76,529 | 349,738 |
| Enochian Biosciences, Inc. *(a) | 7,176 | 21,887 |
| Epizyme, Inc. * | 35,227 | 435,406 |
| Esperion Therapeutics, Inc. *(a) | 8,439 | 252,917 |
| Eton Pharmaceuticals, Inc. *(a) | 5,755 | 41,954 |
| Evelo Biosciences, Inc. *(a) | 14,762 | 58,605 |
| Evofem Biosciences, Inc. *(a) | 44,028 | 104,346 |
| Evoke Pharma, Inc. * | 14,398 | 55,000 |
| Evolus, Inc. *(a) | 10,566 | 32,015 |
| Exact Sciences Corp. * | 51,386 | 6,363,128 |
| Exelixis, Inc. * | 108,079 | 2,213,458 |
| Exicure, Inc. * | 16,798 | 25,197 |
| EyePoint Pharmaceuticals, Inc. * | 14,600 | 5,462 |
| Fate Therapeutics, Inc. * | 24,581 | 1,091,396 |
| FibroGen, Inc. * | 29,051 | 1,114,977 |
| Five Prime Therapeutics, Inc. * | 14,036 | 64,004 |
| Flexion Therapeutics, Inc. * | 17,854 | 214,069 |
| Fluidigm Corp. * | 20,340 | 116,752 |
| Forma Therapeutics Holdings, Inc. * | 4,210 | 181,535 |
| Forte Biosciences, Inc. * | 3,571 | 136,269 |
| Fortress Biotech, Inc. * | 29,965 | 65,923 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Frequency Therapeutics, Inc. * | 11,156 | 244,093 |
| Fulcrum Therapeutics, Inc. * | 3,029 | 29,866 |
| G1 Therapeutics, Inc. * | 10,022 | 110,142 |
| Galectin Therapeutics, Inc. *(a) | 8,013 | 20,353 |
| Generation Bio Co. * | 3,505 | 90,569 |
| Genprex, Inc. * | 19,781 | 64,288 |
| Geron Corp. * | 124,831 | 217,206 |
| Gilead Sciences, Inc. | 435,518 | 25,325,372 |
| Global Blood Therapeutics, Inc. * | 21,893 | 1,157,702 |
| GlycoMimetics, Inc. * | 11,422 | 31,982 |
| Gossamer Bio, Inc. * | 19,746 | 163,892 |
| Gritstone Oncology, Inc. * | 3,670 | 10,019 |
| Halozyme Therapeutics, Inc. * | 44,378 | 1,242,584 |
| Harpoon Therapeutics, Inc. * | 3,414 | 49,401 |
| Harrow Health, Inc. * | 6,848 | 32,596 |
| Harvard Bioscience, Inc. * | 7,316 | 24,728 |
| Heat Biologics, Inc. *(a) | 68,347 | 82,016 |
| Heron Therapeutics, Inc. * | 27,636 | 450,743 |
| Homology Medicines, Inc. * | 10,003 | 105,732 |
| Hookipa Pharma, Inc. * | 7,000 | 65,800 |
| Horizon Therapeutics plc * | 73,320 | 5,493,868 |
| iBio, Inc. *(a) | 74,003 | 128,765 |
| Ideaya Biosciences, Inc. * | 6,139 | 74,712 |
| Idera Pharmaceuticals, Inc. * | 6,495 | 17,861 |
| IGM Biosciences, Inc. * | 3,122 | 164,810 |
| Illumina, Inc. * | 50,707 | 14,841,939 |
| IMARA, Inc. *(a) | 2,286 | 36,142 |
| Immunic, Inc. *(a) | 6,574 | 104,132 |
| ImmunoGen, Inc. * | 60,129 | 339,128 |
| Immunovant, Inc. * | 13,836 | 603,526 |
| Incyte Corp. * | 63,893 | 5,535,690 |
| Infinity Pharmaceuticals, Inc. * | 29,948 | 31,445 |
| Innoviva, Inc. * | 25,683 | 277,633 |
| Inovio Pharmaceuticals, Inc. *(a) | 60,039 | 591,384 |
| Inozyme Pharma, Inc. * | 2,857 | 65,625 |
| Insmed, Inc. * | 35,278 | 1,162,057 |
| Intellia Therapeutics, Inc. * | 20,808 | 498,144 |
| Intercept Pharmaceuticals, Inc. * | 8,908 | 247,553 |
| Intersect ENT, Inc. * | 10,273 | 159,231 |
| Intra-Cellular Therapies, Inc. * | 24,129 | 595,262 |
| Invitae Corp. * | 45,781 | 1,795,073 |
| Ionis Pharmaceuticals, Inc. * | 47,397 | 2,225,289 |
| Iovance Biotherapeutics, Inc. * | 46,865 | 1,672,143 |
| IQVIA Holdings, Inc. * | 66,054 | 10,171,655 |
| Ironwood Pharmaceuticals, Inc. * | 57,811 | 571,173 |
| iTeos Therapeutics, Inc. * | 2,756 | 62,754 |
| IVERIC bio, Inc. * | 34,399 | 203,642 |
| Jazz Pharmaceuticals plc * | 19,521 | 2,812,976 |
| Johnson & Johnson | 914,373 | 125,369,682 |
| Jounce Therapeutics, Inc. * | 8,460 | 70,387 |
| Kadmon Holdings, Inc. * | 57,518 | 195,561 |
| Kala Pharmaceuticals, Inc. *(a) | 16,458 | 108,623 |
| KalVista Pharmaceuticals, Inc. * | 3,000 | 51,630 |
| Karuna Therapeutics, Inc. * | 5,494 | 446,058 |
| Karyopharm Therapeutics, Inc. * | 23,124 | 342,698 |
| Keros Therapeutics, Inc. * | 3,046 | 169,358 |
| Kezar Life Sciences, Inc. * | 11,085 | 56,755 |
| Kindred Biosciences, Inc. * | 18,803 | 65,622 |
| Kiniksa Pharmaceuticals Ltd., Class A * | 10,416 | 163,115 |
| Kodiak Sciences, Inc. * | 9,164 | 832,183 |
| Krystal Biotech, Inc. * | 4,398 | 189,070 |
| Kura Oncology, Inc. * | 18,795 | 587,344 |
| La Jolla Pharmaceutical Co. *(a) | 9,862 | 33,531 |
| Lannett Co., Inc. * | 8,800 | 56,584 |
| Larimar Therapeutics, Inc. * | 6,617 | 124,400 |
| Leap Therapeutics, Inc. * | 37,424 | 72,977 |
| Lexicon Pharmaceuticals, Inc. *(a) | 18,214 | 20,218 |
| Ligand Pharmaceuticals, Inc. *(a) | 5,614 | 462,874 |
| Security | Number
of Shares | Value ($) |
| Lineage Cell Therapeutics, Inc. *(a) | 66,180 | 72,798 |
| Liquidia Technologies, Inc. * | 2,763 | 12,765 |
| Luminex Corp. | 14,584 | 321,431 |
| MacroGenics, Inc. * | 17,720 | 343,945 |
| Madrigal Pharmaceuticals, Inc. * | 3,520 | 447,920 |
| Magenta Therapeutics, Inc. * | 7,928 | 50,026 |
| MannKind Corp. * | 76,925 | 154,619 |
| Marinus Pharmaceuticals, Inc. * | 5,580 | 72,763 |
| Marker Therapeutics, Inc. *(a) | 8,200 | 11,152 |
| Matinas BioPharma Holdings, Inc. * | 35,096 | 28,287 |
| MediciNova, Inc. * | 10,435 | 58,332 |
| Medpace Holdings, Inc. * | 9,670 | 1,072,790 |
| MEI Pharma, Inc. * | 32,178 | 83,663 |
| Merck & Co., Inc. | 878,448 | 66,068,074 |
| Merrimack Pharmaceuticals, Inc. | 7,188 | 27,746 |
| Mersana Therapeutics, Inc. * | 18,829 | 339,299 |
| Mettler-Toledo International, Inc. * | 8,331 | 8,313,588 |
| Minerva Neurosciences, Inc. * | 8,467 | 27,179 |
| Mirati Therapeutics, Inc. * | 15,158 | 3,291,408 |
| Mirum Pharmaceuticals, Inc. * | 4,255 | 67,016 |
| Moderna, Inc. * | 104,137 | 7,026,123 |
| Molecular Templates, Inc. * | 15,226 | 134,598 |
| Morphic Holding, Inc. * | 3,280 | 88,265 |
| Mustang Bio, Inc. * | 12,479 | 33,257 |
| Mylan N.V. * | 181,498 | 2,638,981 |
| MyoKardia, Inc. * | 18,771 | 4,195,882 |
| Myriad Genetics, Inc. * | 24,574 | 305,455 |
| NanoString Technologies, Inc. * | 14,981 | 549,054 |
| NantKwest, Inc. *(a) | 20,978 | 157,545 |
| Natera, Inc. * | 26,557 | 1,786,224 |
| Nektar Therapeutics * | 62,015 | 982,318 |
| NeoGenomics, Inc. * | 38,645 | 1,516,043 |
| Neoleukin Therapeutics, Inc. * | 9,946 | 104,334 |
| Neos Therapeutics, Inc. * | 21,090 | 14,280 |
| Neubase Therapeutics, Inc. * | 6,234 | 48,843 |
| Neurocrine Biosciences, Inc. * | 32,815 | 3,237,856 |
| NextCure, Inc. * | 2,706 | 26,140 |
| NGM Biopharmaceuticals, Inc. * | 5,308 | 92,041 |
| Nkarta, Inc. * | 4,945 | 141,971 |
| Novavax, Inc. * | 19,839 | 1,601,206 |
| Nurix Therapeutics, Inc. * | 3,216 | 81,333 |
| Ocular Therapeutix, Inc. * | 21,913 | 208,173 |
| Odonate Therapeutics, Inc. * | 4,197 | 60,479 |
| Omeros Corp. *(a) | 19,743 | 200,194 |
| Oncocyte Corp. * | 9,386 | 13,891 |
| OPKO Health, Inc. * | 147,982 | 520,897 |
| Optinose, Inc. * | 5,946 | 19,027 |
| Organogenesis Holdings, Inc. * | 6,071 | 22,159 |
| Organovo Holdings, Inc. * | 1,687 | 14,474 |
| Orgenesis, Inc. * | 9,467 | 42,886 |
| ORIC Pharmaceuticals, Inc. * | 3,386 | 72,799 |
| Otonomy, Inc. * | 31,843 | 113,998 |
| Ovid therapeutics, Inc. * | 8,556 | 43,721 |
| Oyster Point Pharma, Inc. * | 4,006 | 79,439 |
| Pacific Biosciences of California, Inc. * | 58,884 | 771,969 |
| Pacira BioSciences, Inc. * | 14,769 | 772,419 |
| Palatin Technologies, Inc. * | 56,900 | 22,174 |
| Paratek Pharmaceuticals, Inc. * | 17,405 | 83,022 |
| Passage Bio, Inc. * | 5,390 | 90,606 |
| PDL BioPharma, Inc. * | 45,080 | 96,922 |
| PerkinElmer, Inc. | 38,792 | 5,025,504 |
| Perrigo Co., plc | 48,431 | 2,124,668 |
| Personalis, Inc. * | 8,080 | 199,818 |
| Pfizer, Inc. | 1,929,965 | 68,475,158 |
| PhaseBio Pharmaceuticals, Inc. * | 8,241 | 22,498 |
| Phathom Pharmaceuticals, Inc. * | 4,189 | 164,879 |
| Phibro Animal Health Corp., Class A | 6,184 | 101,665 |
| Pieris Pharmaceuticals, Inc. * | 19,437 | 48,787 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Pliant Therapeutics, Inc. * | 3,305 | 71,454 |
| PolarityTE, Inc. * | 4,800 | 4,747 |
| PPD, Inc. * | 37,519 | 1,233,625 |
| PRA Health Sciences, Inc. * | 22,616 | 2,203,703 |
| Precigen, Inc. *(a) | 32,517 | 139,498 |
| Precision BioSciences, Inc. * | 16,000 | 100,960 |
| Prestige Consumer Healthcare, Inc. * | 18,007 | 594,771 |
| Prevail Therapeutics, Inc. * | 4,126 | 40,394 |
| Protagonist Therapeutics, Inc. * | 13,355 | 253,077 |
| Protara Therapeutics, Inc. * | 3,990 | 71,581 |
| Proteostasis Therapeutics, Inc. * | 7,700 | 7,523 |
| Prothena Corp. plc * | 14,018 | 152,936 |
| Provention Bio, Inc. * | 17,656 | 209,400 |
| PTC Therapeutics, Inc. * | 22,415 | 1,169,839 |
| Puma Biotechnology, Inc. * | 12,061 | 100,951 |
| Qualigen Therapeutics, Inc. * | 15,420 | 59,213 |
| Quanterix Corp. * | 7,411 | 271,317 |
| Radius Health, Inc. * | 14,153 | 189,792 |
| Rapt Therapeutics, Inc. * | 4,080 | 117,259 |
| Reata Pharmaceuticals, Inc., Class A * | 8,788 | 1,025,647 |
| Recro Pharma, Inc. * | 5,876 | 9,343 |
| Regeneron Pharmaceuticals, Inc. * | 36,195 | 19,674,154 |
| REGENXBIO, Inc. * | 10,810 | 310,896 |
| Relay Therapeutics, Inc. * | 6,800 | 251,192 |
| Relmada Therapeutics, Inc. * | 4,357 | 134,762 |
| Repligen Corp. * | 16,663 | 2,775,556 |
| Replimune Group, Inc. * | 8,748 | 365,754 |
| Retrophin, Inc. * | 16,461 | 333,171 |
| Revance Therapeutics, Inc. * | 22,514 | 582,662 |
| REVOLUTION Medicines, Inc. * | 15,187 | 458,496 |
| Rhythm Pharmaceuticals, Inc. * | 10,913 | 231,028 |
| Rigel Pharmaceuticals, Inc. * | 48,200 | 119,536 |
| Rocket Pharmaceuticals, Inc. * | 14,208 | 396,972 |
| Royalty Pharma plc, Class A | 27,240 | 999,708 |
| Rubius Therapeutics, Inc. * | 14,159 | 59,893 |
| Sage Therapeutics, Inc. * | 18,853 | 1,383,433 |
| Sangamo Therapeutics, Inc. * | 39,121 | 404,511 |
| Sarepta Therapeutics, Inc. * | 27,257 | 3,704,499 |
| Satsuma Pharmaceuticals, Inc. * | 2,719 | 9,680 |
| Savara, Inc. * | 8,700 | 9,048 |
| Scholar Rock Holding Corp. * | 4,699 | 182,791 |
| scPharmaceuticals, Inc. * | 7,411 | 63,883 |
| SCYNEXIS, Inc. *(a) | 11,044 | 48,262 |
| Seagen, Inc. * | 42,272 | 7,050,970 |
| Selecta Biosciences, Inc. * | 47,517 | 140,650 |
| Seres Therapeutics, Inc. * | 18,935 | 528,097 |
| Sesen Bio, Inc. * | 11,000 | 11,220 |
| SIGA Technologies, Inc. * | 17,097 | 109,250 |
| Soleno Therapeutics, Inc. * | 34,445 | 59,934 |
| Sorrento Therapeutics, Inc. *(a) | 74,175 | 514,774 |
| Spectrum Pharmaceuticals, Inc. * | 58,461 | 200,521 |
| Spero Therapeutics, Inc. * | 4,404 | 57,736 |
| Spring Bank Pharmaceuticals, Inc. * | 3,900 | 4,017 |
| SpringWorks Therapeutics, Inc. * | 9,320 | 540,467 |
| Stoke Therapeutics, Inc. * | 3,770 | 144,730 |
| Strongbridge Biopharma plc * | 27,016 | 52,681 |
| Supernus Pharmaceuticals, Inc. * | 20,133 | 369,642 |
| Surface Oncology, Inc. * | 10,490 | 87,906 |
| Sutro Biopharma, Inc. * | 12,078 | 155,323 |
| Syndax Pharmaceuticals, Inc. * | 8,335 | 145,112 |
| Syneos Health, Inc. * | 24,259 | 1,287,668 |
| Synlogic, Inc. * | 4,700 | 8,742 |
| Syros Pharmaceuticals, Inc. * | 15,634 | 104,279 |
| T2 Biosystems, Inc. *(a) | 47,515 | 63,670 |
| TCR2 Therapeutics, Inc. * | 9,468 | 186,236 |
| Teligent, Inc. * | 1,290 | 689 |
| TFF Pharmaceuticals, Inc. *(a) | 5,752 | 73,280 |
| TG Therapeutics, Inc. * | 36,882 | 932,008 |
| Security | Number
of Shares | Value ($) |
| TherapeuticsMD, Inc. *(a) | 66,164 | 80,720 |
| Theravance Biopharma, Inc. * | 16,642 | 314,700 |
| Thermo Fisher Scientific, Inc. | 137,337 | 64,976,881 |
| Tonix Pharmaceuticals Holding Corp. * | 91,097 | 51,187 |
| Translate Bio, Inc. * | 26,747 | 343,164 |
| Trevena, Inc. * | 73,478 | 192,512 |
| Tricida, Inc. * | 9,420 | 53,035 |
| Turning Point Therapeutics, Inc. * | 14,280 | 1,316,473 |
| Twist Bioscience Corp. * | 13,687 | 1,048,972 |
| Tyme Technologies, Inc. * | 21,100 | 18,317 |
| Ultragenyx Pharmaceutical, Inc. * | 21,231 | 2,133,715 |
| uniQure N.V. * | 12,956 | 523,811 |
| United Therapeutics Corp. * | 15,502 | 2,080,833 |
| UNITY Biotechnology, Inc. * | 12,594 | 48,739 |
| Urovant Sciences Ltd. * | 3,443 | 25,444 |
| Vanda Pharmaceuticals, Inc. * | 17,728 | 189,512 |
| Vaxart, Inc. *(a) | 39,990 | 196,751 |
| Vaxcyte, Inc. * | 5,525 | 206,469 |
| VBI Vaccines, Inc. *(a) | 82,952 | 194,937 |
| Veracyte, Inc. * | 18,158 | 629,356 |
| Verastem, Inc. * | 47,595 | 57,114 |
| Vericel Corp. * | 16,052 | 297,444 |
| Verrica Pharmaceuticals, Inc. * | 6,711 | 49,728 |
| Vertex Pharmaceuticals, Inc. * | 90,476 | 18,851,579 |
| Viela Bio, Inc. * | 6,450 | 205,819 |
| Viking Therapeutics, Inc. * | 20,063 | 112,955 |
| Vir Biotechnology, Inc. * | 22,994 | 722,931 |
| Voyager Therapeutics, Inc. * | 7,809 | 83,010 |
| VYNE Therapeutics, Inc. * | 56,167 | 89,867 |
| Waters Corp. * | 21,761 | 4,848,786 |
| WaVe Life Sciences Ltd. * | 6,065 | 42,880 |
| X4 Pharmaceuticals, Inc. * | 6,559 | 37,649 |
| XBiotech, Inc. *(a) | 5,316 | 90,957 |
| Xencor, Inc. * | 20,116 | 772,052 |
| Xeris Pharmaceuticals, Inc. *(a) | 12,101 | 57,238 |
| XOMA Corp. *(a) | 3,231 | 80,161 |
| Y-mAbs Therapeutics, Inc. * | 8,715 | 372,479 |
| Zentalis Pharmaceuticals, Inc. * | 3,997 | 158,241 |
| ZIOPHARM Oncology, Inc. * | 62,109 | 129,808 |
| Zoetis, Inc. | 165,058 | 26,169,946 |
| Zogenix, Inc. * | 18,300 | 390,156 |
| Zynerba Pharmaceuticals, Inc. * | 9,398 | 32,235 |
| | | 880,588,764 |
| |
| Real Estate 3.2% |
| Acadia Realty Trust | 30,302 | 282,718 |
| Agree Realty Corp. | 18,856 | 1,170,392 |
| Alexander & Baldwin, Inc. | 25,298 | 325,079 |
| Alexander's, Inc. | 799 | 194,309 |
| Alexandria Real Estate Equities, Inc. | 40,718 | 6,169,591 |
| Alpine Income Property Trust, Inc. | 4,139 | 57,739 |
| Altisource Portfolio Solutions S.A. * | 3,227 | 35,916 |
| American Assets Trust, Inc. | 16,885 | 353,403 |
| American Campus Communities, Inc. | 47,775 | 1,789,651 |
| American Finance Trust, Inc. | 38,891 | 224,207 |
| American Homes 4 Rent, Class A | 92,323 | 2,609,971 |
| American Tower Corp. | 154,083 | 35,385,161 |
| Americold Realty Trust | 70,306 | 2,547,186 |
| Apartment Investment & Management Co., Class A | 51,415 | 1,640,138 |
| Apple Hospitality REIT, Inc. | 73,680 | 729,432 |
| Armada Hoffler Properties, Inc. | 20,207 | 182,065 |
| Ashford Hospitality Trust, Inc. | 2,633 | 3,397 |
| AvalonBay Communities, Inc. | 48,486 | 6,745,857 |
| Bluerock Residential Growth REIT, Inc. | 7,000 | 60,620 |
| Boston Properties, Inc. | 49,261 | 3,566,989 |
| Braemar Hotels & Resorts, Inc. | 9,906 | 23,973 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Brandywine Realty Trust | 62,660 | 548,902 |
| Brixmor Property Group, Inc. | 104,089 | 1,140,815 |
| BRT Apartments Corp. | 3,343 | 41,620 |
| Camden Property Trust | 33,176 | 3,060,154 |
| CareTrust REIT, Inc. | 33,592 | 574,423 |
| CatchMark Timber Trust, Inc., Class A | 18,210 | 158,245 |
| CBL & Associates Properties, Inc. * | 72,502 | 10,948 |
| CBRE Group, Inc., Class A * | 116,812 | 5,887,325 |
| Cedar Realty Trust, Inc. | 49,168 | 46,710 |
| Chatham Lodging Trust | 15,396 | 113,161 |
| City Office REIT, Inc. | 20,326 | 128,460 |
| Clipper Realty, Inc. | 4,400 | 24,728 |
| Colony Capital, Inc. | 172,207 | 613,057 |
| Columbia Property Trust, Inc. | 41,944 | 443,768 |
| Community Healthcare Trust, Inc. | 7,003 | 324,239 |
| CoreCivic, Inc. | 45,253 | 290,072 |
| CorEnergy Infrastructure Trust, Inc. | 5,381 | 25,183 |
| CorePoint Lodging, Inc. | 11,164 | 53,364 |
| CoreSite Realty Corp. | 14,795 | 1,765,931 |
| Corporate Office Properties Trust | 39,086 | 876,699 |
| Cousins Properties, Inc. | 52,451 | 1,336,451 |
| Crown Castle International Corp. | 145,359 | 22,705,076 |
| CTO Realty Growth, Inc. | 2,000 | 88,260 |
| CubeSmart | 68,353 | 2,319,217 |
| Cushman & Wakefield plc * | 37,000 | 433,640 |
| CyrusOne, Inc. | 40,086 | 2,848,110 |
| DiamondRock Hospitality Co. | 72,760 | 359,434 |
| Digital Realty Trust, Inc. | 93,363 | 13,472,281 |
| Diversified Healthcare Trust | 84,248 | 243,898 |
| Douglas Emmett, Inc. | 56,936 | 1,343,690 |
| Duke Realty Corp. | 129,199 | 4,908,270 |
| Easterly Government Properties, Inc. | 26,264 | 548,918 |
| EastGroup Properties, Inc. | 13,652 | 1,816,808 |
| Empire State Realty Trust, Inc., Class A | 51,702 | 278,157 |
| EPR Properties | 27,148 | 647,208 |
| Equinix, Inc. | 30,673 | 22,429,324 |
| Equity Commonwealth | 41,788 | 1,104,039 |
| Equity LifeStyle Properties, Inc. | 57,909 | 3,427,634 |
| Equity Residential | 117,849 | 5,536,546 |
| Essential Properties Realty Trust, Inc. | 33,828 | 558,839 |
| Essex Property Trust, Inc. | 22,605 | 4,624,757 |
| eXp World Holdings, Inc. * | 8,411 | 356,542 |
| Extra Space Storage, Inc. | 44,299 | 5,136,469 |
| Farmland Partners, Inc. | 14,823 | 95,460 |
| Federal Realty Investment Trust | 23,924 | 1,645,493 |
| First Industrial Realty Trust, Inc. | 45,112 | 1,795,909 |
| Forestar Group, Inc. * | 4,926 | 81,969 |
| Four Corners Property Trust, Inc. | 24,714 | 626,253 |
| Franklin Street Properties Corp. | 43,069 | 180,890 |
| Front Yard Residential Corp. | 16,297 | 218,217 |
| FRP Holdings, Inc. * | 2,400 | 97,104 |
| Gaming & Leisure Properties, Inc. | 72,988 | 2,653,114 |
| Getty Realty Corp. | 12,072 | 317,252 |
| Gladstone Commercial Corp. | 11,924 | 193,765 |
| Gladstone Land Corp. | 6,594 | 91,459 |
| Global Medical REIT, Inc. | 15,239 | 189,421 |
| Global Net Lease, Inc. | 32,094 | 456,698 |
| Griffin Industrial Realty, Inc. | 1,332 | 70,663 |
| Healthcare Realty Trust, Inc. | 47,394 | 1,317,553 |
| Healthcare Trust of America, Inc., Class A | 76,123 | 1,849,789 |
| Healthpeak Properties, Inc. | 187,021 | 5,043,956 |
| Hersha Hospitality Trust | 12,806 | 62,749 |
| Highwoods Properties, Inc. | 36,440 | 1,084,819 |
| Host Hotels & Resorts, Inc. | 242,356 | 2,539,891 |
| Hudson Pacific Properties, Inc. | 54,632 | 1,052,212 |
| Independence Realty Trust, Inc. | 33,275 | 404,291 |
| Industrial Logistics Properties Trust | 24,598 | 471,790 |
| Security | Number
of Shares | Value ($) |
| Innovative Industrial Properties, Inc. | 7,517 | 876,708 |
| Investors Real Estate Trust | 4,576 | 308,468 |
| Invitation Homes, Inc. | 194,434 | 5,300,271 |
| Iron Mountain, Inc. | 99,014 | 2,580,305 |
| iStar, Inc. | 26,151 | 308,582 |
| JBG SMITH Properties | 39,272 | 917,001 |
| Jernigan Capital, Inc. | 8,486 | 146,723 |
| Jones Lang LaSalle, Inc. | 18,217 | 2,055,971 |
| Kennedy-Wilson Holdings, Inc. | 41,765 | 550,463 |
| Kilroy Realty Corp. | 35,846 | 1,687,630 |
| Kimco Realty Corp. | 147,082 | 1,509,061 |
| Kite Realty Group Trust | 30,129 | 312,136 |
| Lamar Advertising Co., Class A | 30,457 | 1,887,116 |
| Lexington Realty Trust | 97,707 | 970,230 |
| Life Storage, Inc. | 16,520 | 1,885,758 |
| LTC Properties, Inc. | 13,932 | 459,895 |
| Mack-Cali Realty Corp. | 32,057 | 352,306 |
| Marcus & Millichap, Inc. * | 8,253 | 257,741 |
| Maui Land & Pineapple Co., Inc. * | 3,129 | 31,572 |
| Medical Properties Trust, Inc. | 185,276 | 3,301,618 |
| Mid-America Apartment Communities, Inc. | 39,214 | 4,573,529 |
| Monmouth Real Estate Investment Corp. | 32,076 | 444,253 |
| National Health Investors, Inc. | 15,304 | 857,789 |
| National Retail Properties, Inc. | 60,303 | 1,930,299 |
| National Storage Affiliates Trust | 21,647 | 733,617 |
| NETSTREIT Corp. | 3,836 | 67,283 |
| New Century Financial Corp. *(b) | 3,600 | — |
| New Senior Investment Group, Inc. | 31,775 | 124,240 |
| Newmark Group, Inc., Class A | 51,828 | 245,406 |
| NexPoint Residential Trust, Inc. | 7,312 | 324,068 |
| Office Properties Income Trust | 17,468 | 321,586 |
| Omega Healthcare Investors, Inc. | 77,768 | 2,240,496 |
| One Liberty Properties, Inc. | 6,163 | 95,095 |
| Outfront Media, Inc. | 49,316 | 646,533 |
| Paramount Group, Inc. | 59,046 | 341,286 |
| Park Hotels & Resorts, Inc. | 84,207 | 836,175 |
| Pebblebrook Hotel Trust | 46,661 | 558,999 |
| Pennsylvania Real Estate Investment Trust | 18,917 | 9,440 |
| Physicians Realty Trust | 70,159 | 1,182,881 |
| Piedmont Office Realty Trust, Inc., Class A | 45,430 | 518,811 |
| Plymouth Industrial REIT, Inc. | 6,969 | 88,576 |
| Postal Realty Trust, Inc., Class A | 4,154 | 57,658 |
| PotlatchDeltic Corp. | 24,056 | 999,527 |
| Preferred Apartment Communities, Inc., Class A | 15,145 | 81,783 |
| Prologis, Inc. | 255,949 | 25,390,141 |
| PS Business Parks, Inc. | 7,180 | 818,735 |
| Public Storage | 52,684 | 12,068,324 |
| QTS Realty Trust, Inc., Class A | 21,162 | 1,301,675 |
| Rafael Holdings, Inc., Class B * | 3,200 | 52,480 |
| Rayonier, Inc. | 48,805 | 1,238,671 |
| RE/MAX Holdings, Inc., Class A | 6,136 | 198,438 |
| Realogy Holdings Corp. * | 39,454 | 440,307 |
| Realty Income Corp. | 119,612 | 6,920,750 |
| Redfin Corp. * | 33,349 | 1,392,988 |
| Regency Centers Corp. | 54,793 | 1,950,083 |
| Retail Opportunity Investments Corp. | 40,733 | 396,332 |
| Retail Properties of America, Inc., Class A | 78,447 | 411,062 |
| Retail Value, Inc. | 4,935 | 61,687 |
| Rexford Industrial Realty, Inc. | 43,025 | 1,998,941 |
| RLJ Lodging Trust | 59,027 | 482,841 |
| RPT Realty | 25,122 | 122,847 |
| Ryman Hospitality Properties, Inc. | 19,998 | 796,920 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Sabra Health Care REIT, Inc. | 73,938 | 973,024 |
| Safehold, Inc. | 4,707 | 323,936 |
| Saul Centers, Inc. | 4,700 | 116,325 |
| SBA Communications Corp. | 38,834 | 11,276,229 |
| Seritage Growth Properties, Class A *(a) | 12,504 | 159,176 |
| Service Properties Trust | 55,854 | 402,707 |
| Simon Property Group, Inc. | 106,334 | 6,678,839 |
| SITE Centers Corp. | 51,954 | 353,807 |
| SL Green Realty Corp. | 25,528 | 1,092,854 |
| Sotherly Hotels, Inc. | 6,858 | 10,424 |
| Spirit Realty Capital, Inc. | 36,948 | 1,110,287 |
| STAG Industrial, Inc. | 51,854 | 1,613,696 |
| STORE Capital Corp. | 78,944 | 2,028,861 |
| Stratus Properties, Inc. * | 3,398 | 72,615 |
| Summit Hotel Properties, Inc. | 33,342 | 176,046 |
| Sun Communities, Inc. | 34,121 | 4,696,073 |
| Sunstone Hotel Investors, Inc. | 78,056 | 579,176 |
| Tanger Factory Outlet Centers, Inc. (a) | 34,601 | 214,180 |
| Taubman Centers, Inc. | 21,237 | 709,741 |
| Tejon Ranch Co. * | 8,332 | 114,232 |
| Terreno Realty Corp. | 23,859 | 1,342,784 |
| The GEO Group, Inc. | 41,833 | 370,640 |
| The Howard Hughes Corp. * | 16,115 | 1,002,192 |
| The Macerich Co. (a) | 40,077 | 278,936 |
| The RMR Group, Inc., Class A | 5,078 | 135,379 |
| The St. Joe Co. * | 12,244 | 331,078 |
| Trinity Place Holdings, Inc. * | 12,207 | 16,968 |
| UDR, Inc. | 102,355 | 3,197,570 |
| UMH Properties, Inc. | 15,491 | 211,142 |
| Uniti Group, Inc. | 70,885 | 625,206 |
| Universal Health Realty Income Trust | 4,654 | 248,849 |
| Urban Edge Properties | 39,017 | 366,760 |
| Urstadt Biddle Properties, Inc., Class A | 12,971 | 123,354 |
| Ventas, Inc. | 129,851 | 5,125,219 |
| VEREIT, Inc. | 374,477 | 2,321,757 |
| VICI Properties, Inc. | 182,910 | 4,197,784 |
| Vornado Realty Trust | 55,086 | 1,692,793 |
| Washington Real Estate Investment Trust | 29,116 | 508,948 |
| Weingarten Realty Investors | 42,722 | 677,571 |
| Welltower, Inc. | 145,176 | 7,806,113 |
| Weyerhaeuser Co. | 259,712 | 7,087,540 |
| Whitestone REIT | 16,023 | 95,497 |
| WP Carey, Inc. | 59,943 | 3,753,031 |
| Xenia Hotels & Resorts, Inc. | 39,452 | 325,084 |
| | | 372,856,413 |
| |
| Retailing 7.4% |
| 1-800-Flowers.com, Inc., Class A * | 9,456 | 187,512 |
| Aaron's Holdings Co., Inc. | 23,978 | 1,253,090 |
| Abercrombie & Fitch Co., Class A | 21,254 | 302,232 |
| Advance Auto Parts, Inc. | 23,900 | 3,519,992 |
| Amazon.com, Inc. * | 147,856 | 448,912,994 |
| America's Car-Mart, Inc. * | 1,960 | 169,579 |
| American Eagle Outfitters, Inc. | 53,009 | 726,753 |
| Asbury Automotive Group, Inc. * | 6,543 | 673,798 |
| At Home Group, Inc. * | 17,390 | 283,283 |
| AutoNation, Inc. * | 20,397 | 1,157,122 |
| AutoZone, Inc. * | 8,064 | 9,104,095 |
| Barnes & Noble Education, Inc. * | 22,732 | 52,284 |
| Bed Bath & Beyond, Inc. | 44,734 | 885,733 |
| Best Buy Co., Inc. | 79,599 | 8,879,268 |
| Big 5 Sporting Goods Corp. (a) | 12,274 | 90,091 |
| Big Lots, Inc. | 13,002 | 618,895 |
| Blink Charging Co. *(a) | 11,425 | 88,658 |
| Blue Apron Holdings, Inc., Class A *(a) | 3,119 | 13,412 |
| Booking Holdings, Inc. * | 14,229 | 23,086,552 |
| Boot Barn Holdings, Inc. * | 10,141 | 324,715 |
| Security | Number
of Shares | Value ($) |
| Build-A-Bear Workshop, Inc. * | 6,224 | 25,705 |
| Burlington Stores, Inc. * | 22,824 | 4,418,270 |
| Caleres, Inc. | 13,090 | 100,531 |
| Camping World Holdings, Inc., Class A | 11,291 | 298,534 |
| CarMax, Inc. * | 56,904 | 4,918,782 |
| CarParts.com, Inc. * | 11,951 | 151,658 |
| Carvana Co. * | 19,488 | 3,612,101 |
| Chewy, Inc., Class A * | 24,811 | 1,528,358 |
| Chico's FAS, Inc. | 43,544 | 46,592 |
| Citi Trends, Inc. | 3,906 | 101,986 |
| Conn's, Inc. * | 7,143 | 66,930 |
| Core-Mark Holding Co., Inc. | 16,495 | 451,138 |
| Designer Brands, Inc., Class A | 21,162 | 91,631 |
| Destination XL Group, Inc. * | 18,114 | 4,759 |
| Dick's Sporting Goods, Inc. | 22,325 | 1,264,711 |
| Dillard’s, Inc., Class A (a) | 3,769 | 168,587 |
| Dollar General Corp. | 86,267 | 18,004,786 |
| Dollar Tree, Inc. * | 82,842 | 7,482,289 |
| Duluth Holdings, Inc., Class B * | 2,900 | 44,486 |
| eBay, Inc. | 231,834 | 11,042,253 |
| Etsy, Inc. * | 41,565 | 5,053,888 |
| Expedia Group, Inc. | 47,400 | 4,462,710 |
| Express, Inc. * | 20,816 | 12,719 |
| Five Below, Inc. * | 19,313 | 2,575,195 |
| Floor & Decor Holdings, Inc., Class A * | 35,213 | 2,570,549 |
| Foot Locker, Inc. | 37,189 | 1,371,530 |
| Funko, Inc., Class A * | 7,067 | 44,805 |
| GameStop Corp., Class A *(a) | 20,419 | 213,787 |
| Genesco, Inc. * | 5,704 | 101,075 |
| Genuine Parts Co. | 49,523 | 4,478,365 |
| Group 1 Automotive, Inc. | 6,361 | 674,775 |
| Groupon, Inc. * | 8,902 | 172,610 |
| GrowGeneration Corp. * | 14,808 | 247,294 |
| GrubHub, Inc. * | 32,590 | 2,410,356 |
| Guess?, Inc. | 15,095 | 177,819 |
| Haverty Furniture Cos., Inc. | 5,712 | 142,914 |
| Hibbett Sports, Inc. * | 5,715 | 216,084 |
| J. Jill, Inc. * | 6,408 | 4,250 |
| Kirkland's, Inc. *(a) | 5,229 | 48,525 |
| Kohl's Corp. | 53,419 | 1,137,291 |
| L Brands, Inc. | 81,407 | 2,605,838 |
| Lands' End, Inc. * | 5,100 | 81,855 |
| Leaf Group Ltd. * | 13,902 | 79,241 |
| Liquidity Services, Inc. * | 10,485 | 89,437 |
| Lithia Motors, Inc., Class A | 8,898 | 2,042,714 |
| LKQ Corp. * | 97,344 | 3,114,035 |
| LMP Automotive Holdings, Inc. * | 3,465 | 80,215 |
| Lowe's Cos., Inc. | 262,340 | 41,475,954 |
| Lumber Liquidators Holdings, Inc. * | 10,644 | 235,445 |
| Macy's, Inc. | 109,011 | 676,958 |
| Magnite, Inc. * | 31,595 | 285,303 |
| MarineMax, Inc. * | 6,661 | 199,697 |
| Monro, Inc. | 11,231 | 472,376 |
| Murphy USA, Inc. * | 9,634 | 1,178,142 |
| National Vision Holdings, Inc. * | 28,630 | 1,154,648 |
| Nordstrom, Inc. (a) | 37,424 | 452,830 |
| O'Reilly Automotive, Inc. * | 25,596 | 11,175,214 |
| Ollie's Bargain Outlet Holdings, Inc. * | 20,097 | 1,750,248 |
| OneWater Marine, Inc., Class A * | 3,029 | 56,430 |
| Overstock.com, Inc. * | 14,751 | 827,531 |
| Party City Holdco, Inc. * | 42,981 | 85,532 |
| Penske Automotive Group, Inc. | 11,685 | 597,805 |
| PetMed Express, Inc. | 8,051 | 238,149 |
| Pool Corp. | 13,936 | 4,875,231 |
| Quotient Technology, Inc. * | 23,785 | 211,687 |
| Qurate Retail, Inc. Class A | 137,251 | 929,189 |
| Remark Holdings, Inc. *(a) | 14,578 | 15,453 |
| Rent-A-Center, Inc. | 18,166 | 561,329 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Revolve Group, Inc. * | 5,247 | 94,866 |
| RH * | 5,399 | 1,809,907 |
| Ross Stores, Inc. | 123,619 | 10,528,630 |
| Sally Beauty Holdings, Inc. * | 42,597 | 356,537 |
| Shoe Carnival, Inc. | 4,036 | 125,035 |
| Shutterstock, Inc. | 6,548 | 428,567 |
| Signet Jewelers Ltd. | 17,080 | 380,542 |
| Sleep Number Corp. * | 10,441 | 661,542 |
| Sonic Automotive, Inc., Class A | 9,319 | 336,043 |
| Sportsman's Warehouse Holdings, Inc. * | 14,662 | 190,899 |
| Stamps.com, Inc. * | 6,079 | 1,357,076 |
| Stitch Fix, Inc., Class A * | 18,124 | 624,009 |
| Target Corp. | 173,449 | 26,402,407 |
| The Buckle, Inc. | 11,461 | 274,606 |
| The Cato Corp., Class A | 7,100 | 43,452 |
| The Children's Place, Inc. | 5,680 | 143,534 |
| The Container Store Group, Inc. * | 6,755 | 64,308 |
| The Gap, Inc. | 73,364 | 1,426,930 |
| The Home Depot, Inc. | 373,887 | 99,719,402 |
| The Michaels Cos., Inc. * | 23,490 | 190,504 |
| The ODP Corp. | 18,070 | 352,365 |
| The RealReal Inc * | 19,733 | 248,438 |
| The TJX Cos., Inc. | 415,288 | 21,096,630 |
| Tiffany & Co. | 37,384 | 4,891,323 |
| Tilly's, Inc., Class A | 8,425 | 51,730 |
| Tractor Supply Co. | 40,626 | 5,411,789 |
| TravelCenters of America, Inc. * | 3,867 | 92,035 |
| Ulta Beauty, Inc. * | 19,528 | 4,037,805 |
| Urban Outfitters, Inc. * | 23,800 | 531,692 |
| Vroom, Inc. * | 11,748 | 482,843 |
| Waitr Holdings, Inc. * | 40,686 | 103,749 |
| Wayfair, Inc., Class A * | 23,789 | 5,900,386 |
| Weyco Group, Inc. | 3,066 | 48,565 |
| Williams-Sonoma, Inc. | 27,461 | 2,504,718 |
| Winmark Corp. | 768 | 130,107 |
| Zumiez, Inc. * | 6,342 | 177,576 |
| | | 847,039,719 |
| |
| Semiconductors & Semiconductor Equipment 4.8% |
| ACM Research, Inc., Class A * | 2,922 | 205,621 |
| Advanced Energy Industries, Inc. * | 13,336 | 899,780 |
| Advanced Micro Devices, Inc. * | 407,806 | 30,703,714 |
| Alpha & Omega Semiconductor Ltd. * | 6,543 | 103,772 |
| Ambarella, Inc. * | 12,030 | 657,680 |
| Amkor Technology, Inc. * | 38,838 | 460,230 |
| Analog Devices, Inc. | 128,225 | 15,198,509 |
| Applied Materials, Inc. | 316,383 | 18,739,365 |
| Atomera, Inc. * | 8,060 | 65,689 |
| Axcelis Technologies, Inc. * | 11,082 | 244,580 |
| AXT, Inc. * | 12,666 | 75,363 |
| Broadcom, Inc. | 139,654 | 48,827,228 |
| Brooks Automation, Inc. | 25,516 | 1,191,597 |
| CEVA, Inc. * | 7,638 | 307,964 |
| Cirrus Logic, Inc. * | 20,531 | 1,413,970 |
| CMC Materials, Inc. | 10,369 | 1,474,368 |
| Cohu, Inc. | 16,355 | 355,394 |
| Cree, Inc. * | 38,051 | 2,420,044 |
| CyberOptics Corp. * | 2,095 | 48,269 |
| Diodes, Inc. * | 15,037 | 869,590 |
| DSP Group, Inc. * | 6,300 | 82,971 |
| Enphase Energy, Inc. * | 43,574 | 4,274,174 |
| Entegris, Inc. | 47,011 | 3,515,012 |
| Everspin Technologies, Inc. * | 5,399 | 39,683 |
| First Solar, Inc. * | 29,434 | 2,562,083 |
| FormFactor, Inc. * | 27,482 | 779,115 |
| GSI Technology, Inc. * | 8,500 | 51,935 |
| Ichor Holdings Ltd. * | 8,793 | 204,525 |
| Security | Number
of Shares | Value ($) |
| Impinj, Inc. * | 5,438 | 138,723 |
| Inphi Corp. * | 17,652 | 2,467,043 |
| Intel Corp. | 1,477,190 | 65,409,973 |
| inTEST Corp. * | 4,258 | 19,842 |
| KLA Corp. | 54,055 | 10,658,565 |
| Kopin Corp. * | 19,600 | 23,324 |
| Kulicke & Soffa Industries, Inc. | 22,537 | 589,117 |
| Lam Research Corp. | 50,651 | 17,326,694 |
| Lattice Semiconductor Corp. * | 47,339 | 1,652,131 |
| MACOM Technology Solutions Holdings, Inc. * | 16,799 | 613,163 |
| Marvell Technology Group Ltd. | 231,338 | 8,677,488 |
| Maxim Integrated Products, Inc. | 92,721 | 6,458,018 |
| MaxLinear, Inc. * | 23,209 | 613,646 |
| Microchip Technology, Inc. | 87,087 | 9,151,104 |
| Micron Technology, Inc. * | 385,738 | 19,418,051 |
| MKS Instruments, Inc. | 19,294 | 2,091,277 |
| Monolithic Power Systems, Inc. | 14,671 | 4,688,852 |
| NeoPhotonics Corp. * | 17,621 | 119,999 |
| NVE Corp. | 1,664 | 76,760 |
| NVIDIA Corp. | 214,201 | 107,391,813 |
| NXP Semiconductors N.V. | 97,023 | 13,109,748 |
| ON Semiconductor Corp. * | 142,532 | 3,576,128 |
| Onto Innovation, Inc. * | 17,373 | 557,152 |
| PDF Solutions, Inc. * | 9,699 | 181,759 |
| Photronics, Inc. * | 24,990 | 243,652 |
| Pixelworks, Inc. * | 8,973 | 19,920 |
| Power Integrations, Inc. | 21,586 | 1,299,693 |
| Qorvo, Inc. * | 40,058 | 5,101,787 |
| QUALCOMM, Inc. | 391,263 | 48,266,204 |
| QuickLogic Corp. * | 4,377 | 12,387 |
| Rambus, Inc. * | 42,063 | 580,049 |
| Semtech Corp. * | 23,308 | 1,279,376 |
| Silicon Laboratories, Inc. * | 15,186 | 1,555,958 |
| SiTime Corp. * | 3,341 | 278,940 |
| Skyworks Solutions, Inc. | 57,999 | 8,194,679 |
| SMART Global Holdings, Inc. * | 6,138 | 161,982 |
| SolarEdge Technologies, Inc. * | 17,612 | 4,538,436 |
| SunPower Corp. * | 27,657 | 442,235 |
| Synaptics, Inc. * | 11,688 | 896,119 |
| Teradyne, Inc. | 58,269 | 5,118,932 |
| Texas Instruments, Inc. | 317,623 | 45,925,110 |
| Ultra Clean Holdings, Inc. * | 13,767 | 293,099 |
| Universal Display Corp. | 15,064 | 2,987,342 |
| Veeco Instruments, Inc. * | 16,949 | 215,761 |
| Xilinx, Inc. | 84,707 | 10,053,874 |
| | | 548,248,130 |
| |
| Software & Services 14.6% |
| 2U, Inc. * | 25,733 | 948,261 |
| 8x8, Inc. * | 35,704 | 616,965 |
| A10 Networks, Inc. * | 19,377 | 130,601 |
| Accenture plc, Class A | 220,847 | 47,903,923 |
| ACI Worldwide, Inc. * | 40,243 | 1,173,888 |
| Adobe, Inc. * | 166,590 | 74,482,389 |
| Agilysys, Inc. * | 6,278 | 170,008 |
| Akamai Technologies, Inc. * | 56,971 | 5,419,082 |
| Alarm.com Holdings, Inc. * | 14,894 | 868,767 |
| Alliance Data Systems Corp. | 16,781 | 864,893 |
| Altair Engineering, Inc., Class A * | 13,212 | 568,512 |
| Alteryx, Inc., Class A * | 18,362 | 2,301,677 |
| American Software, Inc., Class A | 9,461 | 138,887 |
| Anaplan, Inc. * | 46,740 | 2,587,059 |
| ANSYS, Inc. * | 29,779 | 9,063,834 |
| Appfolio, Inc., Class A * | 5,169 | 738,495 |
| Appian Corp. * | 12,377 | 783,464 |
| Aspen Technology, Inc. * | 23,623 | 2,594,042 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Asure Software, Inc. * | 7,413 | 52,410 |
| Autodesk, Inc. * | 76,146 | 17,935,429 |
| Automatic Data Processing, Inc. | 149,057 | 23,545,044 |
| Avalara, Inc. * | 28,494 | 4,247,031 |
| Avaya Holdings Corp. * | 25,945 | 446,254 |
| Benefitfocus, Inc. * | 12,031 | 123,558 |
| BigCommerce Holdings, Inc. *(a) | 2,953 | 216,750 |
| Bill.com Holdings, Inc. * | 20,218 | 2,021,800 |
| Black Knight, Inc. * | 54,637 | 4,805,324 |
| Blackbaud, Inc. | 17,002 | 838,879 |
| Blackline, Inc. * | 16,863 | 1,647,178 |
| Booz Allen Hamilton Holding Corp. | 48,521 | 3,808,898 |
| Bottomline Technologies (DE), Inc. * | 13,177 | 523,390 |
| Box, Inc., Class A * | 51,681 | 801,055 |
| Brightcove, Inc. * | 15,409 | 194,924 |
| Broadridge Financial Solutions, Inc. | 40,001 | 5,504,138 |
| CACI International, Inc., Class A * | 8,761 | 1,826,931 |
| Cadence Design Systems, Inc. * | 97,012 | 10,610,202 |
| Cardtronics plc, Class A * | 12,687 | 225,955 |
| Cass Information Systems, Inc. | 3,769 | 147,820 |
| CDK Global, Inc. | 42,540 | 1,833,474 |
| Cerence, Inc. * | 13,225 | 721,820 |
| Ceridian HCM Holding, Inc. * | 45,039 | 3,883,263 |
| ChannelAdvisor Corp. * | 10,971 | 177,730 |
| Citrix Systems, Inc. | 42,459 | 4,809,331 |
| Cleanspark, Inc. *(a) | 7,384 | 55,749 |
| Cloudera, Inc. * | 71,551 | 695,476 |
| Cloudflare, Inc., Class A * | 49,483 | 2,571,632 |
| Cognizant Technology Solutions Corp., Class A | 188,922 | 13,492,809 |
| CommVault Systems, Inc. * | 15,766 | 624,176 |
| Conduent, Inc. * | 60,525 | 210,930 |
| Cornerstone OnDemand, Inc. * | 21,251 | 807,325 |
| Coupa Software, Inc. * | 23,548 | 6,303,800 |
| Crowdstrike Holdings, Inc., Class A * | 52,263 | 6,472,250 |
| CSG Systems International, Inc. | 10,871 | 411,793 |
| Datadog, Inc., Class A * | 61,077 | 5,542,738 |
| Digimarc Corp. * | 4,511 | 142,954 |
| Digital Turbine, Inc. * | 26,456 | 758,229 |
| DocuSign, Inc. * | 63,429 | 12,828,515 |
| Domo, Inc., Class B * | 9,803 | 311,441 |
| Dropbox, Inc., Class A * | 98,979 | 1,807,357 |
| Duck Creek Technologies, Inc. *(a) | 5,200 | 225,524 |
| DXC Technology Co. | 91,229 | 1,680,438 |
| Dynatrace, Inc. * | 64,317 | 2,271,033 |
| Ebix, Inc. | 6,724 | 121,435 |
| eGain Corp. * | 7,634 | 120,999 |
| Elastic N.V. * | 20,157 | 2,044,121 |
| Endurance International Group Holdings, Inc. * | 22,190 | 128,924 |
| Envestnet, Inc. * | 18,797 | 1,442,482 |
| EPAM Systems, Inc. * | 19,463 | 6,013,094 |
| Euronet Worldwide, Inc. * | 18,469 | 1,640,786 |
| Everbridge, Inc. * | 12,004 | 1,256,699 |
| EVERTEC, Inc. | 20,994 | 698,680 |
| Evo Payments, Inc., Class A * | 15,082 | 317,778 |
| ExlService Holdings, Inc. * | 11,709 | 886,840 |
| Fair Isaac Corp. * | 10,111 | 3,957,951 |
| Fastly, Inc., Class A * | 25,642 | 1,628,523 |
| Fidelity National Information Services, Inc. | 214,846 | 26,767,663 |
| FireEye, Inc. * | 82,175 | 1,137,302 |
| Fiserv, Inc. * | 192,968 | 18,422,655 |
| Five9, Inc. * | 22,360 | 3,392,459 |
| FleetCor Technologies, Inc. * | 29,465 | 6,509,113 |
| Fortinet, Inc. * | 46,886 | 5,174,808 |
| Gartner, Inc. * | 31,270 | 3,755,527 |
| Genpact Ltd. | 60,099 | 2,065,603 |
| Security | Number
of Shares | Value ($) |
| Global Payments, Inc. | 104,072 | 16,416,317 |
| GoDaddy, Inc., Class A * | 58,247 | 4,120,393 |
| GreenSky, Inc., Class A * | 12,400 | 58,652 |
| Grid Dynamics Holdings, Inc. * | 12,077 | 94,201 |
| GTT Communications, Inc. *(a) | 11,441 | 42,217 |
| GTY Technology Holdings, Inc. * | 16,630 | 48,393 |
| Guidewire Software, Inc. * | 29,357 | 2,821,501 |
| HubSpot, Inc. * | 14,811 | 4,296,227 |
| I3 Verticals, Inc., Class A * | 5,840 | 120,479 |
| Information Services Group, Inc. * | 16,112 | 33,030 |
| Intelligent Systems Corp. * | 2,218 | 84,107 |
| International Business Machines Corp. | 308,763 | 34,476,477 |
| International Money Express, Inc. * | 8,993 | 125,093 |
| Intuit, Inc. | 91,128 | 28,676,159 |
| j2 Global, Inc. * | 15,865 | 1,076,916 |
| Jack Henry & Associates, Inc. | 26,989 | 4,001,119 |
| Jamf Holding Corp. * | 4,316 | 140,702 |
| KBR, Inc. | 50,774 | 1,131,752 |
| Leidos Holdings, Inc. | 46,886 | 3,891,538 |
| Limelight Networks, Inc. * | 37,860 | 133,646 |
| LivePerson, Inc. * | 22,081 | 1,180,450 |
| LiveRamp Holdings, Inc. * | 23,402 | 1,546,638 |
| Manhattan Associates, Inc. * | 22,605 | 1,932,727 |
| ManTech International Corp., Class A | 9,621 | 624,210 |
| Mastercard, Inc., Class A | 306,804 | 88,555,907 |
| MAXIMUS, Inc. | 21,820 | 1,474,596 |
| Medallia, Inc. * | 25,555 | 727,040 |
| Microsoft Corp. | 2,627,948 | 532,080,632 |
| MicroStrategy, Inc., Class A * | 2,864 | 478,488 |
| Mimecast Ltd. * | 18,759 | 716,781 |
| Mitek Systems, Inc. * | 18,318 | 228,059 |
| MobileIron, Inc. * | 31,619 | 222,598 |
| Model N, Inc. * | 9,945 | 350,362 |
| MoneyGram International, Inc. * | 19,116 | 98,447 |
| MongoDB, Inc. * | 17,278 | 3,947,505 |
| NetSol Technologies, Inc. * | 5,701 | 13,739 |
| New Relic, Inc. * | 18,399 | 1,116,083 |
| NIC, Inc. | 24,953 | 559,446 |
| NortonLifeLock, Inc. | 202,485 | 4,165,116 |
| Nuance Communications, Inc. * | 96,695 | 3,085,537 |
| Nutanix, Inc., Class A * | 62,822 | 1,529,087 |
| Okta, Inc. * | 40,667 | 8,533,157 |
| OneSpan, Inc. * | 11,041 | 242,129 |
| Oracle Corp. | 671,741 | 37,691,388 |
| PagerDuty, Inc. * | 19,435 | 526,689 |
| Palo Alto Networks, Inc. * | 33,548 | 7,420,482 |
| Pareteum Corp. * | 56,410 | 35,138 |
| Park City Group, Inc. * | 5,812 | 25,224 |
| Paychex, Inc. | 111,548 | 9,174,823 |
| Paycom Software, Inc. * | 17,040 | 6,204,094 |
| Paylocity Holding Corp. * | 12,526 | 2,323,824 |
| PayPal Holdings, Inc. * | 407,785 | 75,901,022 |
| Paysign, Inc. * | 12,225 | 58,191 |
| Pegasystems, Inc. | 13,316 | 1,543,058 |
| Perficient, Inc. * | 11,917 | 466,670 |
| Perspecta, Inc. | 47,635 | 854,096 |
| PFSweb, Inc. * | 7,732 | 47,938 |
| Ping Identity Holding Corp. * | 10,746 | 297,557 |
| Pluralsight, Inc., Class A * | 32,038 | 502,997 |
| PRGX Global, Inc. * | 6,500 | 35,360 |
| Progress Software Corp. | 15,976 | 581,047 |
| Proofpoint, Inc. * | 20,189 | 1,932,895 |
| PROS Holdings, Inc. * | 13,733 | 386,859 |
| PTC, Inc. * | 36,504 | 3,061,956 |
| Q2 Holdings, Inc. * | 16,951 | 1,546,609 |
| QAD, Inc., Class A | 3,753 | 157,026 |
| Qualys, Inc. * | 11,618 | 1,020,641 |
| Rackspace Technology, Inc. *(a) | 8,658 | 136,364 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Rapid7, Inc. * | 17,693 | 1,095,727 |
| RealNetworks, Inc. * | 13,613 | 19,058 |
| RealPage, Inc. * | 30,768 | 1,713,470 |
| Repay Holdings Corp. * | 22,600 | 509,178 |
| RingCentral, Inc., Class A * | 27,199 | 7,026,590 |
| Riot Blockchain, Inc. *(a) | 22,977 | 75,135 |
| Sabre Corp. | 109,582 | 714,475 |
| SailPoint Technologies Holding, Inc. * | 31,092 | 1,290,629 |
| salesforce.com, Inc. * | 316,156 | 73,433,554 |
| Science Applications International Corp. | 19,447 | 1,485,167 |
| SecureWorks Corp., Class A * | 3,807 | 39,593 |
| ServiceNow, Inc. * | 66,598 | 33,137,167 |
| ServiceSource International, Inc. * | 26,733 | 37,159 |
| SharpSpring, Inc. * | 3,003 | 32,102 |
| Shift4 Payments, Inc., Class A * | 8,666 | 441,186 |
| ShotSpotter, Inc. * | 2,300 | 67,413 |
| Slack Technologies, Inc., Class A * | 148,677 | 3,803,158 |
| Smartsheet, Inc., Class A * | 37,705 | 1,879,594 |
| Smith Micro Software, Inc. * | 14,006 | 57,705 |
| Snowflake, Inc., Class A * | 9,712 | 2,428,194 |
| SolarWinds Corp. * | 23,132 | 472,587 |
| Splunk, Inc. * | 55,535 | 10,998,151 |
| Sprout Social, Inc., Class A * | 10,069 | 440,015 |
| SPS Commerce, Inc. * | 12,304 | 1,053,099 |
| Square, Inc., Class A * | 128,971 | 19,975,028 |
| SS&C Technologies Holdings, Inc. | 78,875 | 4,670,977 |
| StarTek, Inc. * | 5,834 | 30,629 |
| Steel Connect, Inc. * | 18,290 | 10,608 |
| SVMK, Inc. * | 38,312 | 801,870 |
| Switch, Inc., Class A | 26,329 | 370,186 |
| Sykes Enterprises, Inc. * | 12,854 | 440,121 |
| Synchronoss Technologies, Inc. * | 15,860 | 43,932 |
| Synopsys, Inc. * | 53,021 | 11,339,071 |
| Telenav, Inc. * | 9,800 | 39,886 |
| Tenable Holdings, Inc. * | 22,957 | 783,063 |
| Teradata Corp. * | 39,683 | 728,977 |
| The Hackett Group, Inc. | 8,738 | 112,895 |
| The Trade Desk, Inc., Class A * | 14,464 | 8,193,133 |
| The Western Union Co. | 143,188 | 2,783,575 |
| TTEC Holdings, Inc. | 6,911 | 378,585 |
| Tucows, Inc., Class A * | 3,300 | 243,507 |
| Twilio, Inc., Class A * | 47,774 | 13,327,513 |
| Tyler Technologies, Inc. * | 13,995 | 5,379,398 |
| Unisys Corp. * | 19,913 | 261,657 |
| Upland Software, Inc. * | 8,897 | 371,183 |
| Varonis Systems, Inc. * | 11,243 | 1,299,354 |
| Verint Systems, Inc. * | 22,920 | 1,112,078 |
| VeriSign, Inc. * | 35,344 | 6,740,101 |
| Veritone, Inc. *(a) | 8,997 | 84,392 |
| Verra Mobility Corp. * | 44,543 | 428,058 |
| Vertex, Inc., Class A * | 6,819 | 165,293 |
| VirnetX Holding Corp. | 26,091 | 144,544 |
| Virtusa Corp. * | 10,220 | 514,066 |
| Visa, Inc., Class A | 585,552 | 106,400,654 |
| VMware, Inc., Class A * | 27,917 | 3,593,755 |
| WEX, Inc. * | 15,531 | 1,965,448 |
| Workday, Inc., Class A * | 60,139 | 12,636,407 |
| Workiva, Inc. * | 13,800 | 763,278 |
| Xperi Holding Corp. | 41,045 | 508,958 |
| Yext, Inc. * | 32,885 | 545,233 |
| Zendesk, Inc. * | 40,560 | 4,499,726 |
| Zix Corp. * | 17,000 | 104,210 |
| Zoom Video Communications, Inc., Class A * | 63,194 | 29,126,747 |
| Zscaler, Inc. * | 24,667 | 3,348,545 |
| Zuora, Inc., Class A * | 34,383 | 330,764 |
| | | 1,680,978,058 |
| |
| Security | Number
of Shares | Value ($) |
| Technology Hardware & Equipment 7.1% |
| 3D Systems Corp. * | 40,383 | 229,779 |
| Acacia Communications, Inc. * | 12,676 | 858,672 |
| ADTRAN, Inc. | 15,268 | 163,215 |
| Airgain, Inc. * | 3,401 | 47,002 |
| Akoustis Technologies, Inc. *(a) | 7,703 | 63,858 |
| Amphenol Corp., Class A | 103,568 | 11,686,613 |
| Apple Inc. | 5,582,864 | 607,750,575 |
| Applied Optoelectronics, Inc. * | 6,000 | 52,680 |
| Arista Networks, Inc. * | 19,088 | 3,987,483 |
| Arlo Technologies, Inc. * | 21,716 | 96,853 |
| Arrow Electronics, Inc. * | 26,927 | 2,097,344 |
| AstroNova, Inc. | 1,900 | 15,010 |
| Avid Technology, Inc. * | 9,400 | 87,608 |
| Avnet, Inc. | 34,694 | 855,901 |
| Badger Meter, Inc. | 10,799 | 791,999 |
| Bel Fuse, Inc., Class B | 3,500 | 40,985 |
| Belden, Inc. | 15,659 | 483,550 |
| Benchmark Electronics, Inc. | 13,708 | 285,538 |
| CalAmp Corp. * | 9,892 | 70,035 |
| Calix, Inc. * | 17,324 | 405,555 |
| Casa Systems, Inc. * | 8,800 | 36,696 |
| CDW Corp. | 49,543 | 6,073,972 |
| Ciena Corp. * | 54,641 | 2,152,309 |
| Cisco Systems, Inc. | 1,470,037 | 52,774,328 |
| Clearfield, Inc. * | 3,291 | 68,881 |
| Cognex Corp. | 60,148 | 3,963,753 |
| Coherent, Inc. * | 8,677 | 1,085,840 |
| CommScope Holding Co., Inc. * | 72,294 | 643,417 |
| Comtech Telecommunications Corp. | 8,949 | 128,866 |
| Corning, Inc. | 265,086 | 8,474,799 |
| CTS Corp. | 12,607 | 348,457 |
| Daktronics, Inc. | 14,170 | 55,263 |
| Dell Technologies, Inc., Class C * | 80,560 | 4,854,546 |
| Diebold Nixdorf, Inc. * | 28,307 | 176,353 |
| Digi International, Inc. * | 9,100 | 134,043 |
| Digital Ally, Inc. *(a) | 12,381 | 28,352 |
| Dolby Laboratories, Inc., Class A | 22,717 | 1,705,592 |
| DZS, Inc. * | 4,470 | 50,913 |
| Eastman Kodak Co. *(a) | 24,148 | 167,104 |
| EchoStar Corp., Class A * | 16,656 | 385,753 |
| EMCORE Corp. * | 11,147 | 36,339 |
| ePlus, Inc. * | 4,526 | 305,550 |
| Extreme Networks, Inc. * | 46,911 | 190,459 |
| F5 Networks, Inc. * | 21,433 | 2,849,303 |
| Fabrinet * | 12,888 | 773,538 |
| FARO Technologies, Inc. * | 6,085 | 366,560 |
| Fitbit, Inc., Class A * | 84,474 | 594,697 |
| FLIR Systems, Inc. | 45,686 | 1,584,847 |
| Genasys, Inc. * | 16,638 | 100,161 |
| Harmonic, Inc. * | 31,519 | 187,223 |
| Hewlett Packard Enterprise Co. | 445,617 | 3,850,131 |
| HP, Inc. | 478,435 | 8,592,693 |
| Identiv, Inc. * | 8,288 | 54,121 |
| II-VI, Inc. * | 35,989 | 1,636,420 |
| Immersion Corp. * | 10,166 | 62,623 |
| Infinera Corp. * | 59,301 | 371,224 |
| Inseego Corp. *(a) | 22,287 | 193,897 |
| Insight Enterprises, Inc. * | 11,782 | 628,570 |
| Intellicheck, Inc. * | 7,899 | 57,189 |
| InterDigital, Inc. | 11,287 | 631,846 |
| Intevac, Inc. * | 6,954 | 36,717 |
| IPG Photonics Corp. * | 12,431 | 2,311,669 |
| Iteris, Inc. * | 21,620 | 81,507 |
| Itron, Inc. * | 13,296 | 903,463 |
| Jabil, Inc. | 48,471 | 1,606,329 |
| Juniper Networks, Inc. | 115,864 | 2,284,838 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Keysight Technologies, Inc. * | 65,607 | 6,880,206 |
| Kimball Electronics, Inc. * | 7,133 | 86,452 |
| Knowles Corp. * | 30,607 | 436,150 |
| KVH Industries, Inc. * | 5,000 | 43,450 |
| Littelfuse, Inc. | 8,379 | 1,658,539 |
| Lumentum Holdings, Inc. * | 26,740 | 2,211,131 |
| Luna Innovations, Inc. * | 11,699 | 73,821 |
| Methode Electronics, Inc. | 13,419 | 412,903 |
| MicroVision, Inc. * | 37,436 | 64,764 |
| Motorola Solutions, Inc. | 59,089 | 9,339,607 |
| MTS Systems Corp. | 5,904 | 143,349 |
| Napco Security Technologies, Inc. * | 3,300 | 79,596 |
| National Instruments Corp. | 44,030 | 1,377,258 |
| NCR Corp. * | 45,182 | 918,098 |
| NetApp, Inc. | 77,710 | 3,410,692 |
| NETGEAR, Inc. * | 9,709 | 299,231 |
| NetScout Systems, Inc. * | 24,964 | 512,261 |
| nLight, Inc. * | 12,303 | 261,316 |
| Novanta, Inc. * | 12,175 | 1,323,666 |
| OSI Systems, Inc. * | 5,852 | 451,540 |
| PAR Technology Corp. * | 4,776 | 176,569 |
| PC Connection, Inc. | 4,382 | 199,600 |
| PCTEL, Inc. * | 9,339 | 47,629 |
| Plantronics, Inc. | 11,458 | 223,660 |
| Plexus Corp. * | 10,389 | 722,451 |
| Powerfleet, Inc. * | 7,153 | 43,276 |
| Pure Storage, Inc., Class A * | 81,055 | 1,304,986 |
| Quantum Corp. * | 18,711 | 78,212 |
| Research Frontiers, Inc. *(a) | 14,470 | 37,477 |
| Resonant, Inc. *(a) | 24,990 | 57,227 |
| Ribbon Communications, Inc. * | 38,283 | 165,000 |
| Richardson Electronics Ltd. | 6,205 | 26,185 |
| Rogers Corp. * | 6,788 | 822,841 |
| Sanmina Corp. * | 24,436 | 597,216 |
| ScanSource, Inc. * | 9,015 | 181,202 |
| Seagate Technology plc | 77,621 | 3,711,836 |
| Super Micro Computer, Inc. * | 16,946 | 385,013 |
| SYNNEX Corp. | 14,547 | 1,914,967 |
| TE Connectivity Ltd. | 114,789 | 11,120,758 |
| TESSCO Technologies, Inc. | 1,269 | 7,741 |
| Trimble, Inc. * | 87,429 | 4,207,958 |
| TTM Technologies, Inc. * | 37,069 | 440,009 |
| Ubiquiti, Inc. | 2,598 | 482,215 |
| ViaSat, Inc. * | 21,098 | 715,222 |
| Viavi Solutions, Inc. * | 80,514 | 994,348 |
| Vishay Intertechnology, Inc. | 49,432 | 801,787 |
| Vishay Precision Group, Inc. * | 4,093 | 97,782 |
| Vontier Corp. * | 46,518 | 1,336,927 |
| Western Digital Corp. | 105,134 | 3,966,706 |
| Wrap Technologies, Inc. *(a) | 10,465 | 54,104 |
| Xerox Holdings Corp. | 62,811 | 1,091,655 |
| Zebra Technologies Corp., Class A * | 18,789 | 5,329,312 |
| | | 814,997,307 |
| |
| Telecommunication Services 1.6% |
| Alaska Communications Systems Group, Inc. | 26,271 | 50,178 |
| Anterix, Inc. * | 3,968 | 126,659 |
| AT&T, Inc. | 2,474,722 | 66,866,988 |
| ATN International, Inc. | 3,752 | 167,714 |
| Bandwidth, Inc., Class A * | 6,777 | 1,086,726 |
| Boingo Wireless, Inc. * | 16,693 | 155,913 |
| CenturyLink, Inc. | 345,006 | 2,973,952 |
| Cincinnati Bell, Inc. * | 18,761 | 282,353 |
| Cogent Communications Holdings, Inc. | 14,646 | 817,247 |
| Consolidated Communications Holdings, Inc. * | 22,575 | 105,425 |
| Security | Number
of Shares | Value ($) |
| GCI Liberty, Inc., Class A * | 34,779 | 2,825,098 |
| Globalstar, Inc. * | 173,777 | 52,133 |
| Gogo, Inc. * | 16,000 | 128,640 |
| IDT Corp., Class B * | 6,600 | 62,898 |
| Iridium Communications, Inc. * | 38,418 | 1,014,619 |
| Liberty Global plc, Class A * | 49,647 | 942,300 |
| Liberty Global plc, Class C * | 128,578 | 2,399,266 |
| Liberty Latin America Ltd., Class A * | 16,480 | 161,504 |
| Liberty Latin America Ltd., Class C * | 53,326 | 518,329 |
| Ooma, Inc. * | 5,385 | 75,982 |
| ORBCOMM, Inc. * | 28,696 | 123,393 |
| Shenandoah Telecommunications Co. | 16,585 | 723,438 |
| Spok Holdings, Inc. | 5,240 | 47,579 |
| T-Mobile US, Inc. * | 202,082 | 22,142,125 |
| Telephone & Data Systems, Inc. | 35,953 | 611,201 |
| United States Cellular Corp. * | 5,400 | 157,248 |
| Verizon Communications, Inc. | 1,437,058 | 81,897,935 |
| Vonage Holdings Corp. * | 83,866 | 887,302 |
| | | 187,404,145 |
| |
| Transportation 2.0% |
| Air Transport Services Group, Inc. * | 21,611 | 605,972 |
| Alaska Air Group, Inc. | 43,135 | 1,634,385 |
| Allegiant Travel Co. | 4,527 | 610,059 |
| AMERCO | 3,100 | 1,076,196 |
| American Airlines Group, Inc. (a) | 175,546 | 1,980,159 |
| ArcBest Corp. | 9,560 | 291,771 |
| Atlas Air Worldwide Holdings, Inc. * | 8,875 | 525,045 |
| Avis Budget Group, Inc. * | 18,622 | 627,003 |
| C.H. Robinson Worldwide, Inc. | 46,524 | 4,114,117 |
| Covenant Logistics Group, Inc. * | 3,000 | 41,310 |
| CSX Corp. | 266,218 | 21,015,249 |
| Daseke, Inc. * | 20,197 | 132,694 |
| Delta Air Lines, Inc. | 220,542 | 6,757,407 |
| Eagle Bulk Shipping, Inc. * | 3,028 | 41,665 |
| Echo Global Logistics, Inc. * | 10,195 | 274,959 |
| Expeditors International of Washington, Inc. | 58,117 | 5,135,799 |
| FedEx Corp. | 83,766 | 21,734,764 |
| Forward Air Corp. | 9,608 | 605,016 |
| Genco Shipping & Trading Ltd. | 3,574 | 23,088 |
| Hawaiian Holdings, Inc. | 15,015 | 207,958 |
| Heartland Express, Inc. | 18,164 | 332,583 |
| Hub Group, Inc., Class A * | 11,693 | 586,170 |
| JB Hunt Transport Services, Inc. | 29,226 | 3,557,973 |
| JetBlue Airways Corp. * | 95,322 | 1,141,004 |
| Kansas City Southern | 32,904 | 5,795,711 |
| Kirby Corp. * | 21,385 | 823,109 |
| Knight-Swift Transportation Holdings, Inc. | 42,675 | 1,621,223 |
| Landstar System, Inc. | 13,558 | 1,690,683 |
| Lyft, Inc., Class A * | 82,371 | 1,880,530 |
| Macquarie Infrastructure Corp. | 27,962 | 721,420 |
| Marten Transport Ltd. | 22,339 | 342,792 |
| Matson, Inc. | 14,354 | 745,690 |
| Mesa Air Group, Inc. * | 13,374 | 42,262 |
| Norfolk Southern Corp. | 88,900 | 18,590,768 |
| Old Dominion Freight Line, Inc. | 33,304 | 6,340,082 |
| P.A.M. Transportation Services, Inc. * | 907 | 35,917 |
| Radiant Logistics, Inc. * | 10,983 | 56,453 |
| Ryder System, Inc. | 18,502 | 911,408 |
| Saia, Inc. * | 9,047 | 1,335,880 |
| Schneider National, Inc., Class B | 12,428 | 274,162 |
| SkyWest, Inc. | 18,448 | 535,545 |
| Southwest Airlines Co. | 204,847 | 8,097,602 |
| Spirit Airlines, Inc. * | 30,920 | 543,264 |
| Uber Technologies, Inc. * | 479,209 | 16,010,373 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Union Pacific Corp. | 235,632 | 41,751,634 |
| United Airlines Holdings, Inc. * | 99,440 | 3,367,038 |
| United Parcel Service, Inc., Class B | 245,160 | 38,517,088 |
| Universal Logistics Holdings, Inc. | 3,300 | 65,109 |
| US Xpress Enterprises, Inc., Class A * | 8,327 | 60,038 |
| Werner Enterprises, Inc. | 20,186 | 767,472 |
| XPO Logistics, Inc. * | 32,204 | 2,898,360 |
| YRC Worldwide, Inc. * | 25,364 | 99,427 |
| | | 226,973,386 |
| |
| Utilities 3.0% |
| ALLETE, Inc. | 18,239 | 940,768 |
| Alliant Energy Corp. | 87,211 | 4,821,024 |
| Ameren Corp. | 85,966 | 6,973,562 |
| American Electric Power Co., Inc. | 171,553 | 15,427,761 |
| American States Water Co. | 13,159 | 982,846 |
| American Water Works Co., Inc. | 62,511 | 9,408,531 |
| Artesian Resources Corp., Class A | 3,837 | 135,177 |
| Atmos Energy Corp. | 42,876 | 3,930,443 |
| Avangrid, Inc. | 19,861 | 979,942 |
| Avista Corp. | 24,293 | 807,013 |
| Black Hills Corp. | 22,377 | 1,267,881 |
| Cadiz, Inc. *(a) | 12,851 | 122,727 |
| California Water Service Group | 17,255 | 769,055 |
| CenterPoint Energy, Inc. | 189,464 | 4,003,374 |
| Chesapeake Utilities Corp. | 6,235 | 606,104 |
| Clearway Energy, Inc., Class A | 11,000 | 288,310 |
| Clearway Energy, Inc., Class C | 26,436 | 744,438 |
| CMS Energy Corp. | 99,705 | 6,314,318 |
| Consolidated Edison, Inc. | 115,481 | 9,064,104 |
| Dominion Energy, Inc. | 290,999 | 23,378,860 |
| DTE Energy Co. | 66,791 | 8,243,345 |
| Duke Energy Corp. | 254,671 | 23,457,746 |
| Edison International | 131,470 | 7,367,579 |
| Entergy Corp. | 70,052 | 7,090,663 |
| Essential Utilities, Inc. | 77,297 | 3,184,636 |
| Evergy, Inc. | 79,062 | 4,364,222 |
| Eversource Energy | 119,099 | 10,393,770 |
| Exelon Corp. | 336,962 | 13,441,414 |
| FirstEnergy Corp. | 188,293 | 5,596,068 |
| Genie Energy Ltd., Class B | 5,585 | 46,300 |
| Global Water Resources, Inc. | 4,694 | 49,756 |
| Hawaiian Electric Industries, Inc. | 38,969 | 1,287,536 |
| IDACORP, Inc. | 17,823 | 1,563,612 |
| MDU Resources Group, Inc. | 69,771 | 1,657,759 |
| MGE Energy, Inc. | 13,140 | 854,363 |
| Middlesex Water Co. | 6,534 | 419,091 |
| National Fuel Gas Co. | 31,306 | 1,250,988 |
| New Jersey Resources Corp. | 33,082 | 965,333 |
| NextEra Energy, Inc. | 679,260 | 49,728,625 |
| NiSource, Inc. | 130,992 | 3,008,886 |
| Northwest Natural Holding Co. | 11,700 | 519,948 |
| NorthWestern Corp. | 17,760 | 925,829 |
| NRG Energy, Inc. | 84,216 | 2,662,910 |
| OGE Energy Corp. | 68,838 | 2,118,145 |
| ONE Gas, Inc. | 18,590 | 1,283,454 |
| Ormat Technologies, Inc. | 15,013 | 1,063,971 |
| Otter Tail Corp. | 15,277 | 585,873 |
| PG&E Corp. * | 500,000 | 4,780,000 |
| Pinnacle West Capital Corp. | 38,796 | 3,164,590 |
| PNM Resources, Inc. | 27,818 | 1,390,900 |
| Portland General Electric Co. | 30,909 | 1,214,724 |
| PPL Corp. | 265,809 | 7,309,747 |
| Public Service Enterprise Group, Inc. | 175,043 | 10,178,750 |
| Pure Cycle Corp. * | 8,000 | 70,400 |
| RGC Resources, Inc. | 2,000 | 47,600 |
| Sempra Energy | 100,085 | 12,546,656 |
| Security | Number
of Shares | Value ($) |
| SJW Group. | 8,905 | 540,444 |
| South Jersey Industries, Inc. | 32,586 | 627,932 |
| Southwest Gas Holdings, Inc. | 19,658 | 1,291,924 |
| Spark Energy, Inc., Class A | 5,059 | 46,138 |
| Spire, Inc. | 18,247 | 1,022,562 |
| Sunnova Energy International, Inc. * | 15,289 | 367,853 |
| The AES Corp. | 234,436 | 4,571,502 |
| The Southern Co. | 365,609 | 21,004,237 |
| The York Water Co. | 4,611 | 194,815 |
| UGI Corp. | 73,193 | 2,367,062 |
| Unitil Corp. | 6,105 | 210,928 |
| Vistra Corp. | 166,604 | 2,893,911 |
| WEC Energy Group, Inc. | 108,928 | 10,952,710 |
| Xcel Energy, Inc. | 181,578 | 12,715,907 |
| | | 343,609,352 |
| Total Common Stock |
| (Cost $6,454,404,116) | | 11,408,103,810 |
|
| Rights 0.0% of net assets |
| |
| Capital Goods 0.0% |
HC2 Holdings, Inc.
expires 11/20/20 *(b) | 22,677 | — |
| |
| Media & Entertainment 0.0% |
| Media General, Inc. CVR *(b) | 18,400 | 1,566 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% |
| Adicet Bio, Inc. *(b) | 780 | — |
| Aduro Biotech, Inc. CVR *(b) | 5,747 | 17,241 |
| Elanco Animal Health, Inc. CVR *(b) | 16,000 | 96 |
| | | 17,337 |
| Total Rights |
| (Cost $1,204) | | 18,903 |
|
| Warrants 0.0% of net assets |
| |
| Energy 0.0% |
Pulse Biosciences, Inc.
expires 05/14/25 *(b) | 116 | 1,219 |
| Total Warrants |
| (Cost $—) | | 1,219 |
|
| Other Investment Company 0.1% of net assets |
| |
| Securities Lending Collateral 0.1% |
| Wells Fargo Government Money Market Fund, Select Class 0.04% (d) | 18,771,910 | 18,771,910 |
| Total Other Investment Company |
| (Cost $18,771,910) | | 18,771,910 |
Schwab Equity Index Funds | Annual Report
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
Security
Rate, Maturity Date | Face
Amount ($) | Value ($) |
| Short-Term Investment 0.5% of net assets |
| |
| Time Deposit 0.5% |
| Skandinaviska Enskilda Banken |
| 0.01%, 11/02/20 (e) | 53,766,597 | 53,766,597 |
| Total Short-Term Investment |
| (Cost $53,766,597) | | 53,766,597 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Appreciation
(Depreciation)
($) |
| Futures Contracts | |
| Long | |
| Russell 2000 Index, e-mini, expires 12/18/20 | 150 | 11,526,000 | 105,271 |
| S&P 500 Index, e-mini, expires 12/18/20 | 404 | 65,946,940 | (1,624,776) |
| Net Unrealized Depreciation | (1,519,505) |
| * | Non-income producing security. |
| (a) | All or a portion of this security is on loan. Securities on loan were valued at $17,807,791. |
| (b) | Fair-valued by management using significant unobservable inputs in accordance with procedures approved by the fund’s Board of Trustees. |
| (c) | Issuer is affiliated with the fund’s investment adviser. |
| (d) | The rate shown is the 7-day yield. |
| (e) | The rate shown is the current daily overnight rate. |
| | |
| CVR — | Contingent Value Rights |
| REIT — | Real Estate Investment Trust |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Growth Index Fund
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Common Stock 99.6% of net assets |
| |
| Automobiles & Components 1.8% |
| BorgWarner, Inc. | 906 | 31,692 |
| Tesla, Inc. * | 22,490 | 8,727,019 |
| | | 8,758,711 |
| |
| Banks 0.0% |
| Rocket Cos., Inc., Class A * | 1,132 | 20,636 |
| |
| Capital Goods 2.3% |
| 3M Co. | 11,287 | 1,805,468 |
| Allegion plc | 1,827 | 179,959 |
| Allison Transmission Holdings, Inc. | 2,164 | 78,229 |
| Armstrong World Industries, Inc. | 523 | 31,328 |
| Axon Enterprise, Inc. * | 1,902 | 188,108 |
| BWX Technologies, Inc. | 1,831 | 100,723 |
| Carrier Global Corp. | 9,432 | 314,934 |
| Donaldson Co., Inc. | 423 | 20,092 |
| Fastenal Co. | 14,134 | 611,013 |
| Generac Holdings, Inc. * | 1,695 | 356,204 |
| Graco, Inc. | 2,481 | 153,574 |
| HEICO Corp. | 1,074 | 112,824 |
| HEICO Corp., Class A | 1,899 | 177,556 |
| Huntington Ingalls Industries, Inc. | 102 | 15,043 |
| Illinois Tool Works, Inc. | 4,245 | 831,511 |
| Lincoln Electric Holdings, Inc. | 732 | 74,532 |
| Lockheed Martin Corp. | 7,529 | 2,636,129 |
| Mercury Systems, Inc. * | 1,337 | 92,092 |
| Nordson Corp. | 1,416 | 273,897 |
| Northrop Grumman Corp. | 4,369 | 1,266,224 |
| Quanta Services, Inc. | 865 | 54,002 |
| Rockwell Automation, Inc. | 1,708 | 405,001 |
| Roper Technologies, Inc. | 432 | 160,419 |
| The AZEK Co., Inc. * | 179 | 5,986 |
| The Toro Co. | 2,930 | 240,553 |
| TransDigm Group, Inc. | 356 | 169,958 |
| Trex Co., Inc. * | 3,515 | 244,433 |
| Vertiv Holdings Co. * | 6,712 | 118,467 |
| Virgin Galactic Holdings, Inc. * | 1,699 | 29,597 |
| W.W. Grainger, Inc. | 994 | 347,920 |
| | | 11,095,776 |
| |
| Commercial & Professional Services 1.0% |
| Cintas Corp. | 2,377 | 747,685 |
| Copart, Inc. * | 6,172 | 681,142 |
| CoreLogic, Inc. | 99 | 7,616 |
| CoStar Group, Inc. * | 1,185 | 975,978 |
| Dun & Bradstreet Holdings, Inc. * | 1,246 | 32,197 |
| Equifax, Inc. | 2,715 | 370,869 |
| IAA, Inc. * | 938 | 53,081 |
| IHS Markit Ltd. | 6,577 | 531,882 |
| MSA Safety, Inc. | 248 | 32,716 |
| Rollins, Inc. | 3,950 | 228,508 |
| TransUnion | 5,266 | 419,490 |
| Security | Number
of Shares | Value ($) |
| Verisk Analytics, Inc. | 4,817 | 857,281 |
| Waste Management, Inc. | 1,654 | 178,483 |
| | | 5,116,928 |
| |
| Consumer Durables & Apparel 1.2% |
| Lululemon Athletica, Inc. * | 3,452 | 1,102,189 |
| Mattel, Inc. * | 6,234 | 85,842 |
| NIKE, Inc., Class B | 36,845 | 4,424,348 |
| NVR, Inc. * | 10 | 39,531 |
| Peloton Interactive, Inc., Class A * | 728 | 80,233 |
| Polaris, Inc. | 187 | 16,991 |
| Tempur Sealy International, Inc. * | 1,071 | 95,319 |
| VF Corp. | 566 | 38,035 |
| | | 5,882,488 |
| |
| Consumer Services 1.1% |
| Bright Horizons Family Solutions, Inc. * | 1,268 | 200,407 |
| Chegg, Inc. * | 3,662 | 268,937 |
| Chipotle Mexican Grill, Inc. * | 847 | 1,017,654 |
| Domino's Pizza, Inc. | 1,183 | 447,553 |
| Dunkin' Brands Group, Inc. | 2,123 | 211,684 |
| frontdoor, Inc. * | 391 | 15,491 |
| H&R Block, Inc. | 4,119 | 71,094 |
| Las Vegas Sands Corp. | 4,270 | 205,216 |
| McDonald's Corp. | 3,240 | 690,120 |
| Planet Fitness, Inc., Class A * | 1,352 | 80,133 |
| Starbucks Corp. | 20,521 | 1,784,506 |
| The Wendy's Co. | 5,475 | 119,629 |
| Vail Resorts, Inc. | 98 | 22,740 |
| Wynn Resorts Ltd. | 744 | 53,888 |
| Yum China Holdings, Inc. | 812 | 43,223 |
| Yum! Brands, Inc. | 688 | 64,211 |
| | | 5,296,486 |
| |
| Diversified Financials 1.2% |
| Apollo Global Management, Inc. | 2,585 | 95,283 |
| Ares Management Corp., Class A | 3,003 | 127,027 |
| Cboe Global Markets, Inc. | 715 | 58,122 |
| Credit Acceptance Corp. * | 18 | 5,366 |
| FactSet Research Systems, Inc. | 1,123 | 344,200 |
| Intercontinental Exchange, Inc. | 5,791 | 546,670 |
| LendingTree, Inc. * | 225 | 72,808 |
| LPL Financial Holdings, Inc. | 169 | 13,508 |
| MarketAxess Holdings, Inc. | 1,117 | 601,896 |
| Moody's Corp. | 4,941 | 1,298,989 |
| Morningstar, Inc. | 556 | 105,851 |
| MSCI, Inc. | 2,476 | 866,204 |
| S&P Global, Inc. | 4,323 | 1,395,162 |
| SLM Corp. | 2,768 | 25,438 |
| T. Rowe Price Group, Inc. | 1,739 | 220,262 |
| The Carlyle Group, Inc. | 301 | 7,501 |
| Tradeweb Markets, Inc., Class A | 2,136 | 116,369 |
| Virtu Financial, Inc., Class A | 1,643 | 35,127 |
| | | 5,935,783 |
| |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Growth Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Energy 0.1% |
| Cheniere Energy, Inc. * | 7,046 | 337,292 |
| Equitrans Midstream Corp. | 994 | 7,216 |
| | | 344,508 |
| |
| Food & Staples Retailing 1.0% |
| Albertsons Cos., Inc., Class A * | 466 | 6,846 |
| Costco Wholesale Corp. | 11,850 | 4,237,797 |
| Grocery Outlet Holding Corp. * | 1,168 | 51,415 |
| Sprouts Farmers Market, Inc. * | 2,978 | 56,731 |
| Sysco Corp. | 10,503 | 580,921 |
| | | 4,933,710 |
| |
| Food, Beverage & Tobacco 2.3% |
| Altria Group, Inc. | 24,681 | 890,491 |
| Beyond Meat, Inc. * | 1,238 | 176,328 |
| Brown-Forman Corp., Class A | 1,160 | 72,790 |
| Brown-Forman Corp., Class B | 4,695 | 327,289 |
| Campbell Soup Co. | 2,639 | 123,162 |
| Kellogg Co. | 2,607 | 163,954 |
| Lamb Weston Holdings, Inc. | 1,026 | 65,100 |
| McCormick & Co., Inc. - Non Voting Shares | 2,100 | 379,071 |
| Monster Beverage Corp. * | 11,213 | 858,579 |
| PepsiCo, Inc. | 30,982 | 4,129,591 |
| Pilgrim's Pride Corp. * | 449 | 7,516 |
| The Boston Beer Co., Inc., Class A * | 270 | 280,579 |
| The Coca-Cola Co. | 69,032 | 3,317,678 |
| The Hershey Co. | 3,455 | 474,924 |
| | | 11,267,052 |
| |
| Health Care Equipment & Services 6.0% |
| Abbott Laboratories | 20,191 | 2,122,276 |
| ABIOMED, Inc. * | 1,345 | 338,779 |
| Align Technology, Inc. * | 2,371 | 1,010,236 |
| Amedisys, Inc. * | 963 | 249,417 |
| AmerisourceBergen Corp. | 2,136 | 205,206 |
| Anthem, Inc. | 1,977 | 539,326 |
| Baxter International, Inc. | 6,486 | 503,119 |
| Cardinal Health, Inc. | 8,845 | 405,013 |
| Centene Corp. * | 5,126 | 302,947 |
| Cerner Corp. | 9,246 | 648,052 |
| Change Healthcare, Inc. * | 5,383 | 76,169 |
| Chemed Corp. | 471 | 225,289 |
| Cigna Corp. | 2,981 | 497,738 |
| DaVita, Inc. * | 416 | 35,880 |
| DexCom, Inc. * | 2,795 | 893,226 |
| Edwards Lifesciences Corp. * | 18,752 | 1,344,331 |
| Encompass Health Corp. | 1,314 | 80,561 |
| Guardant Health, Inc. * | 2,490 | 265,583 |
| Haemonetics Corp. * | 1,411 | 142,638 |
| HCA Healthcare, Inc. | 4,208 | 521,539 |
| Hill-Rom Holdings, Inc. | 253 | 23,041 |
| Hologic, Inc. * | 5,421 | 373,073 |
| Humana, Inc. | 1,534 | 612,495 |
| ICU Medical, Inc. * | 162 | 28,802 |
| IDEXX Laboratories, Inc. * | 2,554 | 1,084,990 |
| Insulet Corp. * | 1,992 | 442,722 |
| Intuitive Surgical, Inc. * | 3,521 | 2,348,789 |
| Laboratory Corp. of America Holdings * | 160 | 31,963 |
| Livongo Health, Inc. *(a) | 1,677 | 202,153 |
| Masimo Corp. * | 1,483 | 331,925 |
| McKesson Corp. | 3,644 | 537,454 |
| Molina Healthcare, Inc. * | 1,198 | 223,391 |
| Novocure Ltd. * | 3,023 | 369,108 |
| Security | Number
of Shares | Value ($) |
| Oak Street Health, Inc. * | 262 | 12,469 |
| Penumbra, Inc. * | 1,002 | 261,552 |
| Quidel Corp. * | 1,129 | 302,899 |
| ResMed, Inc. | 4,353 | 835,515 |
| STERIS plc | 134 | 23,743 |
| Stryker Corp. | 3,437 | 694,308 |
| Tandem Diabetes Care, Inc. * | 1,593 | 173,637 |
| Teladoc Health, Inc. * | 1,957 | 384,472 |
| Teleflex, Inc. | 888 | 282,588 |
| The Cooper Cos., Inc. | 175 | 55,834 |
| UnitedHealth Group, Inc. | 23,893 | 7,290,710 |
| Varian Medical Systems, Inc. * | 335 | 57,888 |
| Veeva Systems, Inc., Class A * | 4,059 | 1,096,133 |
| West Pharmaceutical Services, Inc. | 2,231 | 606,988 |
| | | 29,095,967 |
| |
| Household & Personal Products 1.5% |
| Church & Dwight Co., Inc. | 7,466 | 659,920 |
| Energizer Holdings, Inc. | 1,477 | 58,120 |
| Herbalife Nutrition Ltd. * | 384 | 17,334 |
| Reynolds Consumer Products, Inc. | 363 | 10,251 |
| The Clorox Co. | 2,722 | 564,134 |
| The Estee Lauder Cos., Inc., Class A | 6,022 | 1,322,793 |
| The Procter & Gamble Co. | 33,124 | 4,541,300 |
| | | 7,173,852 |
| |
| Insurance 0.7% |
| Alleghany Corp. | 40 | 21,877 |
| Aon plc, Class A | 6,974 | 1,283,286 |
| Axis Capital Holdings Ltd. | 259 | 11,057 |
| Brown & Brown, Inc. | 368 | 16,012 |
| Erie Indemnity Co., Class A | 435 | 101,298 |
| GoHealth, Inc., Class A * | 115 | 1,191 |
| Lincoln National Corp. | 729 | 25,588 |
| Marsh & McLennan Cos., Inc. | 11,958 | 1,237,175 |
| Primerica, Inc. | 727 | 80,144 |
| RenaissanceRe Holdings Ltd. | 514 | 83,124 |
| The Progressive Corp. | 5,123 | 470,804 |
| | | 3,331,556 |
| |
| Materials 0.9% |
| Air Products & Chemicals, Inc. | 861 | 237,843 |
| Amcor plc | 7,133 | 74,397 |
| Avery Dennison Corp. | 1,043 | 144,341 |
| Ball Corp. | 9,066 | 806,874 |
| Berry Global Group, Inc. * | 1,374 | 64,070 |
| Crown Holdings, Inc. * | 403 | 34,577 |
| Ecolab, Inc. | 1,503 | 275,936 |
| FMC Corp. | 759 | 77,980 |
| Graphic Packaging Holding Co. | 1,876 | 24,932 |
| NewMarket Corp. | 173 | 61,880 |
| Royal Gold, Inc. | 1,432 | 170,136 |
| RPM International, Inc. | 3,229 | 273,399 |
| The Scotts Miracle-Gro Co. | 1,163 | 174,508 |
| The Sherwin-Williams Co. | 2,505 | 1,723,390 |
| W.R. Grace & Co. | 598 | 26,007 |
| | | 4,170,270 |
| |
| Media & Entertainment 11.6% |
| Activision Blizzard, Inc. | 9,175 | 694,823 |
| Alphabet, Inc., Class A * | 7,084 | 11,448,523 |
| Alphabet, Inc., Class C * | 6,992 | 11,334,102 |
| Altice USA, Inc., Class A * | 9,258 | 249,503 |
| Cable One, Inc. | 163 | 282,293 |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Growth Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Charter Communications, Inc., Class A * | 4,108 | 2,480,493 |
| Electronic Arts, Inc. * | 1,206 | 144,515 |
| Facebook, Inc., Class A * | 73,039 | 19,217,291 |
| IAC/InterActiveCorp * | 2,280 | 275,242 |
| Liberty Media Corp. - Liberty SiriusXM, Class A * | 330 | 11,408 |
| Liberty Media Corp. - Liberty SiriusXM, Class C * | 564 | 19,514 |
| Live Nation Entertainment, Inc. * | 4,321 | 210,865 |
| Match Group, Inc. * | 6,649 | 776,470 |
| Netflix, Inc. * | 12,937 | 6,154,648 |
| Nexstar Media Group, Inc., Class A | 871 | 71,770 |
| Pinterest, Inc., Class A * | 10,141 | 597,812 |
| Roku, Inc. * | 3,217 | 651,121 |
| Sirius XM Holdings, Inc. | 21,677 | 124,209 |
| Spotify Technology S.A. * | 3,977 | 954,043 |
| Take-Two Interactive Software, Inc. * | 3,159 | 489,392 |
| World Wrestling Entertainment, Inc., Class A | 1,402 | 50,977 |
| Zillow Group, Inc., Class A * | 178 | 15,901 |
| Zillow Group, Inc., Class C * | 472 | 41,829 |
| Zynga, Inc., Class A * | 22,007 | 197,843 |
| | | 56,494,587 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 7.8% |
| 10X Genomics, Inc., Class A * | 1,741 | 238,343 |
| AbbVie, Inc. | 50,380 | 4,287,338 |
| ACADIA Pharmaceuticals, Inc. * | 3,331 | 154,725 |
| Acceleron Pharma, Inc. * | 1,451 | 151,746 |
| Adaptive Biotechnologies Corp. * | 2,313 | 106,583 |
| Agilent Technologies, Inc. | 798 | 81,468 |
| Agios Pharmaceuticals, Inc. * | 140 | 5,610 |
| Alexion Pharmaceuticals, Inc. * | 981 | 112,952 |
| Alnylam Pharmaceuticals, Inc. * | 3,499 | 430,272 |
| Amgen, Inc. | 17,907 | 3,884,745 |
| Avantor, Inc. * | 13,611 | 316,728 |
| Berkeley Lights, Inc. * | 149 | 10,813 |
| Bio-Techne Corp. | 1,089 | 274,875 |
| Biogen, Inc. * | 1,448 | 364,997 |
| BioMarin Pharmaceutical, Inc. * | 4,962 | 369,322 |
| Bluebird Bio, Inc. * | 879 | 45,453 |
| Bristol-Myers Squibb Co. | 25,005 | 1,461,542 |
| Bruker Corp. | 1,352 | 57,514 |
| Charles River Laboratories International, Inc. * | 1,317 | 299,881 |
| Eli Lilly & Co. | 25,620 | 3,342,385 |
| Exact Sciences Corp. * | 3,912 | 484,423 |
| Exelixis, Inc. * | 3,274 | 67,052 |
| Global Blood Therapeutics, Inc. * | 1,798 | 95,078 |
| Horizon Therapeutics plc * | 5,498 | 411,965 |
| Illumina, Inc. * | 4,462 | 1,306,027 |
| Incyte Corp. * | 5,541 | 480,072 |
| Ionis Pharmaceuticals, Inc. * | 1,975 | 92,726 |
| Iovance Biotherapeutics, Inc. * | 4,166 | 148,643 |
| IQVIA Holdings, Inc. * | 2,178 | 335,390 |
| Johnson & Johnson | 10,743 | 1,472,973 |
| Merck & Co., Inc. | 67,156 | 5,050,803 |
| Mettler-Toledo International, Inc. * | 674 | 672,591 |
| Moderna, Inc. * | 8,686 | 586,044 |
| Neurocrine Biosciences, Inc. * | 2,803 | 276,572 |
| PerkinElmer, Inc. | 667 | 86,410 |
| PPD, Inc. * | 4,075 | 133,986 |
| PRA Health Sciences, Inc. * | 1,623 | 158,145 |
| Reata Pharmaceuticals, Inc., Class A * | 661 | 77,145 |
| Regeneron Pharmaceuticals, Inc. * | 2,942 | 1,599,154 |
| Repligen Corp. * | 1,584 | 263,847 |
| Royalty Pharma plc, Class A | 1,315 | 48,261 |
| Sage Therapeutics, Inc. * | 100 | 7,338 |
| Security | Number
of Shares | Value ($) |
| Sarepta Therapeutics, Inc. * | 2,268 | 308,244 |
| Seagen, Inc. * | 3,699 | 616,993 |
| Syneos Health, Inc. * | 243 | 12,898 |
| Thermo Fisher Scientific, Inc. | 7,051 | 3,335,969 |
| Vertex Pharmaceuticals, Inc. * | 7,902 | 1,646,461 |
| Waters Corp. * | 138 | 30,749 |
| Zoetis, Inc. | 13,082 | 2,074,151 |
| | | 37,877,402 |
| |
| Real Estate 1.8% |
| American Tower Corp. | 13,417 | 3,081,214 |
| Americold Realty Trust | 612 | 22,173 |
| Brookfield Property REIT, Inc., Class A (b) | 1,341 | 19,780 |
| CoreSite Realty Corp. | 809 | 96,562 |
| Crown Castle International Corp. | 11,791 | 1,841,754 |
| Equinix, Inc. | 2,673 | 1,954,604 |
| Equity LifeStyle Properties, Inc. | 2,151 | 127,318 |
| Extra Space Storage, Inc. | 2,704 | 313,529 |
| Iron Mountain, Inc. | 5,030 | 131,082 |
| Public Storage | 2,991 | 685,148 |
| SBA Communications Corp. | 450 | 130,666 |
| Simon Property Group, Inc. | 7,286 | 457,634 |
| | | 8,861,464 |
| |
| Retailing 12.1% |
| Amazon.com, Inc. * | 12,896 | 39,154,190 |
| AutoZone, Inc. * | 420 | 474,172 |
| Best Buy Co., Inc. | 1,254 | 139,884 |
| Booking Holdings, Inc. * | 1,243 | 2,016,767 |
| Burlington Stores, Inc. * | 1,771 | 342,830 |
| CarMax, Inc. * | 362 | 31,291 |
| Carvana Co. * | 1,653 | 306,383 |
| Dollar General Corp. | 7,652 | 1,597,049 |
| Dollar Tree, Inc. * | 3,387 | 305,914 |
| eBay, Inc. | 18,559 | 883,965 |
| Etsy, Inc. * | 3,587 | 436,143 |
| Expedia Group, Inc. | 458 | 43,121 |
| Five Below, Inc. * | 1,663 | 221,744 |
| Floor & Decor Holdings, Inc., Class A * | 2,853 | 208,269 |
| GrubHub, Inc. * | 278 | 20,561 |
| Lowe's Cos., Inc. | 22,989 | 3,634,561 |
| O'Reilly Automotive, Inc. * | 2,223 | 970,562 |
| Ollie's Bargain Outlet Holdings, Inc. * | 1,467 | 127,761 |
| Pool Corp. | 1,179 | 412,450 |
| Ross Stores, Inc. | 8,593 | 731,866 |
| The Home Depot, Inc. | 16,336 | 4,356,975 |
| The TJX Cos., Inc. | 29,532 | 1,500,226 |
| Tractor Supply Co. | 3,510 | 467,567 |
| Ulta Beauty, Inc. * | 1,518 | 313,877 |
| Vroom, Inc. * | 575 | 23,632 |
| Wayfair, Inc., Class A * | 1,843 | 457,119 |
| Williams-Sonoma, Inc. | 371 | 33,839 |
| | | 59,212,718 |
| |
| Semiconductors & Semiconductor Equipment 6.1% |
| Advanced Micro Devices, Inc. * | 32,986 | 2,483,516 |
| Analog Devices, Inc. | 1,343 | 159,186 |
| Applied Materials, Inc. | 27,881 | 1,651,392 |
| Broadcom, Inc. | 11,257 | 3,935,785 |
| Enphase Energy, Inc. * | 3,222 | 316,046 |
| Entegris, Inc. | 3,794 | 283,677 |
| Inphi Corp. * | 1,439 | 201,115 |
| KLA Corp. | 4,718 | 930,295 |
| Lam Research Corp. | 4,411 | 1,508,915 |
| Maxim Integrated Products, Inc. | 2,667 | 185,757 |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Growth Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Microchip Technology, Inc. | 5,529 | 580,987 |
| MKS Instruments, Inc. | 1,230 | 133,320 |
| Monolithic Power Systems, Inc. | 1,324 | 423,150 |
| NVIDIA Corp. | 17,957 | 9,002,921 |
| QUALCOMM, Inc. | 34,237 | 4,223,476 |
| SolarEdge Technologies, Inc. * | 1,480 | 381,381 |
| Teradyne, Inc. | 5,007 | 439,865 |
| Texas Instruments, Inc. | 13,907 | 2,010,813 |
| Universal Display Corp. | 1,302 | 258,200 |
| Xilinx, Inc. | 7,424 | 881,155 |
| | | 29,990,952 |
| |
| Software & Services 26.2% |
| 2U, Inc. * | 681 | 25,095 |
| Accenture plc, Class A | 19,387 | 4,205,234 |
| Adobe, Inc. * | 14,634 | 6,542,861 |
| Akamai Technologies, Inc. * | 4,015 | 381,907 |
| Alteryx, Inc., Class A * | 1,604 | 201,061 |
| Anaplan, Inc. * | 3,930 | 217,526 |
| ANSYS, Inc. * | 2,604 | 792,579 |
| Aspen Technology, Inc. * | 1,917 | 210,506 |
| Atlassian Corp. plc, Class A * | 3,870 | 741,569 |
| Autodesk, Inc. * | 4,442 | 1,046,269 |
| Automatic Data Processing, Inc. | 11,244 | 1,776,102 |
| Avalara, Inc. * | 2,507 | 373,668 |
| BigCommerce Holdings, Inc. * | 213 | 15,634 |
| Bill.com Holdings, Inc. * | 1,641 | 164,100 |
| Black Knight, Inc. * | 4,608 | 405,274 |
| Booz Allen Hamilton Holding Corp. | 4,123 | 323,655 |
| Broadridge Financial Solutions, Inc. | 3,475 | 478,160 |
| CACI International, Inc., Class A * | 122 | 25,441 |
| Cadence Design Systems, Inc. * | 8,379 | 916,411 |
| CDK Global, Inc. | 491 | 21,162 |
| Ceridian HCM Holding, Inc. * | 2,304 | 198,651 |
| Citrix Systems, Inc. | 1,030 | 116,668 |
| Cloudflare, Inc., Class A * | 3,286 | 170,773 |
| Cognizant Technology Solutions Corp., Class A | 1,154 | 82,419 |
| Coupa Software, Inc. * | 2,019 | 540,486 |
| Crowdstrike Holdings, Inc., Class A * | 3,347 | 414,492 |
| Datadog, Inc., Class A * | 4,631 | 420,263 |
| DocuSign, Inc. * | 5,417 | 1,095,588 |
| Dropbox, Inc., Class A * | 7,416 | 135,416 |
| Duck Creek Technologies, Inc. * | 342 | 14,833 |
| Dynatrace, Inc. * | 5,550 | 195,971 |
| Elastic N.V. * | 1,980 | 200,792 |
| EPAM Systems, Inc. * | 1,609 | 497,101 |
| Everbridge, Inc. * | 1,030 | 107,831 |
| Fair Isaac Corp. * | 846 | 331,167 |
| Fastly, Inc., Class A * | 2,402 | 152,551 |
| FireEye, Inc. * | 1,576 | 21,812 |
| Fiserv, Inc. * | 5,024 | 479,641 |
| Five9, Inc. * | 1,868 | 283,413 |
| FleetCor Technologies, Inc. * | 2,507 | 553,821 |
| Fortinet, Inc. * | 4,049 | 446,888 |
| Gartner, Inc. * | 2,635 | 316,464 |
| Genpact Ltd. | 2,239 | 76,954 |
| Globant S.A. * | 1,172 | 211,675 |
| GoDaddy, Inc., Class A * | 5,043 | 356,742 |
| Guidewire Software, Inc. * | 491 | 47,190 |
| HubSpot, Inc. * | 1,253 | 363,458 |
| Intuit, Inc. | 7,665 | 2,412,022 |
| Jack Henry & Associates, Inc. | 1,805 | 267,591 |
| Jamf Holding Corp. * | 277 | 9,030 |
| Leidos Holdings, Inc. | 386 | 32,038 |
| Manhattan Associates, Inc. * | 1,710 | 146,205 |
| Mastercard, Inc., Class A | 26,835 | 7,745,654 |
| Security | Number
of Shares | Value ($) |
| Medallia, Inc. * | 2,556 | 72,718 |
| Microsoft Corp. | 227,751 | 46,112,745 |
| MongoDB, Inc. * | 1,523 | 347,960 |
| nCino, Inc. * | 358 | 25,246 |
| New Relic, Inc. * | 1,573 | 95,418 |
| NortonLifeLock, Inc. | 16,661 | 342,717 |
| Nutanix, Inc., Class A * | 5,537 | 134,771 |
| Okta, Inc. * | 3,495 | 733,356 |
| Oracle Corp. | 51,408 | 2,884,503 |
| PagerDuty, Inc. * | 2,103 | 56,991 |
| Palo Alto Networks, Inc. * | 2,877 | 636,364 |
| Paychex, Inc. | 7,708 | 633,983 |
| Paycom Software, Inc. * | 1,497 | 545,043 |
| Paylocity Holding Corp. * | 1,050 | 194,796 |
| PayPal Holdings, Inc. * | 35,724 | 6,649,308 |
| Pegasystems, Inc. | 1,076 | 124,687 |
| Pluralsight, Inc., Class A * | 3,062 | 48,073 |
| Proofpoint, Inc. * | 1,714 | 164,098 |
| PTC, Inc. * | 3,149 | 264,138 |
| RealPage, Inc. * | 2,351 | 130,927 |
| RingCentral, Inc., Class A * | 2,356 | 608,649 |
| salesforce.com, Inc. * | 24,422 | 5,672,498 |
| Science Applications International Corp. | 244 | 18,634 |
| ServiceNow, Inc. * | 5,780 | 2,875,955 |
| Slack Technologies, Inc., Class A * | 11,590 | 296,472 |
| Smartsheet, Inc., Class A * | 3,336 | 166,300 |
| Splunk, Inc. * | 4,832 | 956,929 |
| Square, Inc., Class A * | 11,235 | 1,740,077 |
| SS&C Technologies Holdings, Inc. | 1,439 | 85,218 |
| StoneCo Ltd., Class A * | 5,410 | 284,241 |
| Switch, Inc., Class A | 2,563 | 36,036 |
| Synopsys, Inc. * | 4,224 | 903,345 |
| Teradata Corp. * | 2,432 | 44,676 |
| The Trade Desk, Inc., Class A * | 1,256 | 711,461 |
| The Western Union Co. | 2,354 | 45,762 |
| Twilio, Inc., Class A * | 3,462 | 965,794 |
| Tyler Technologies, Inc. * | 1,208 | 464,331 |
| VeriSign, Inc. * | 1,834 | 349,744 |
| Visa, Inc., Class A | 51,358 | 9,332,262 |
| VMware, Inc., Class A * | 2,389 | 307,536 |
| WEX, Inc. * | 125 | 15,819 |
| Workday, Inc., Class A * | 5,215 | 1,095,776 |
| Zendesk, Inc. * | 3,456 | 383,409 |
| Zoom Video Communications, Inc., Class A * | 5,079 | 2,340,962 |
| Zscaler, Inc. * | 2,139 | 290,369 |
| | | 127,499,911 |
| |
| Technology Hardware & Equipment 11.6% |
| Amphenol Corp., Class A | 5,212 | 588,122 |
| Apple Inc. | 490,823 | 53,430,992 |
| Arista Networks, Inc. * | 1,473 | 307,710 |
| CDW Corp. | 4,314 | 528,896 |
| Cognex Corp. | 4,991 | 328,907 |
| Coherent, Inc. * | 600 | 75,084 |
| CommScope Holding Co., Inc. * | 321 | 2,857 |
| Dell Technologies, Inc., Class C * | 459 | 27,659 |
| Dolby Laboratories, Inc., Class A | 228 | 17,118 |
| IPG Photonics Corp. * | 73 | 13,575 |
| Jabil, Inc. | 870 | 28,832 |
| Keysight Technologies, Inc. * | 1,918 | 201,141 |
| Lumentum Holdings, Inc. * | 265 | 21,913 |
| Motorola Solutions, Inc. | 522 | 82,507 |
| NetApp, Inc. | 3,650 | 160,199 |
| Pure Storage, Inc., Class A * | 4,203 | 67,668 |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Growth Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Ubiquiti, Inc. | 207 | 38,421 |
| Zebra Technologies Corp., Class A * | 1,459 | 413,831 |
| | | 56,335,432 |
| |
| Transportation 1.3% |
| C.H. Robinson Worldwide, Inc. | 638 | 56,418 |
| Expeditors International of Washington, Inc. | 3,080 | 272,180 |
| JB Hunt Transport Services, Inc. | 690 | 84,001 |
| Landstar System, Inc. | 947 | 118,091 |
| Old Dominion Freight Line, Inc. | 2,554 | 486,205 |
| Uber Technologies, Inc. * | 32,245 | 1,077,306 |
| Union Pacific Corp. | 10,533 | 1,866,342 |
| United Parcel Service, Inc., Class B | 14,158 | 2,224,363 |
| XPO Logistics, Inc. * | 124 | 11,160 |
| | | 6,196,066 |
| |
| Utilities 0.0% |
| NRG Energy, Inc. | 2,588 | 81,833 |
| Total Common Stock |
| (Cost $360,904,879) | | 484,974,088 |
|
| Other Investment Companies 0.8% of net assets |
| |
| Equity Funds 0.1% |
| iShares Russell 1000 Growth ETF | 2,300 | 482,034 |
| |
| Money Market Fund 0.7% |
| State Street Institutional U.S. Government Money Market Fund, Premier Class 0.03% (c) | 3,525,848 | 3,525,848 |
| |
| Securities Lending Collateral 0.0% |
| Wells Fargo Government Money Market Fund, Select Class 0.04% (c) | 18,600 | 18,600 |
| Total Other Investment Companies |
| (Cost $4,005,638) | | 4,026,482 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | |
| Long | |
| Russell 1000 Index, e-mini, expires 12/18/20 | 20 | 2,108,600 | (53,043) |
| S&P 500 Index, e-mini, expires 12/18/20 | 1 | 163,235 | (10,492) |
| Net Unrealized Depreciation | (63,535) |
| * | Non-income producing security. |
| (a) | Fair-valued by management using significant unobservable inputs in accordance with procedures approved by fund’s Board of Trustees. |
| (b) | All or a portion of this security is on loan. Securities on loan were valued at $17,700. |
| (c) | The rate shown is the 7-day yield. |
| | |
| ETF — | Exchange-traded fund |
| REIT — | Real Estate Investment Trust |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Value Index Fund
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Common Stock 99.7% of net assets |
| |
| Automobiles & Components 0.9% |
| Aptiv plc | 6,041 | 582,896 |
| BorgWarner, Inc. | 4,812 | 168,324 |
| Ford Motor Co. | 87,987 | 680,139 |
| General Motors Co. | 28,209 | 974,057 |
| Gentex Corp. | 5,514 | 152,572 |
| Harley-Davidson, Inc. | 3,440 | 113,107 |
| Lear Corp. | 1,359 | 164,181 |
| Thor Industries, Inc. | 1,243 | 105,133 |
| | | 2,940,409 |
| |
| Banks 7.0% |
| Associated Banc-Corp. | 3,405 | 46,614 |
| Bank of America Corp. | 174,717 | 4,140,793 |
| Bank of Hawaii Corp. | 884 | 53,606 |
| Bank OZK | 2,752 | 68,195 |
| BOK Financial Corp. | 704 | 41,353 |
| Citigroup, Inc. | 47,034 | 1,948,148 |
| Citizens Financial Group, Inc. | 9,643 | 262,772 |
| Comerica, Inc. | 3,126 | 142,264 |
| Commerce Bancshares, Inc. | 2,262 | 140,809 |
| Cullen/Frost Bankers, Inc. | 1,261 | 88,610 |
| East West Bancorp, Inc. | 3,170 | 115,642 |
| F.N.B. Corp. | 7,261 | 54,893 |
| Fifth Third Bancorp | 16,051 | 372,704 |
| First Citizens BancShares, Inc., Class A | 145 | 67,091 |
| First Hawaiian, Inc. | 2,909 | 50,209 |
| First Horizon National Corp. | 12,266 | 127,689 |
| First Republic Bank | 3,840 | 484,378 |
| Huntington Bancshares, Inc. | 22,808 | 238,115 |
| JPMorgan Chase & Co. | 68,420 | 6,707,897 |
| KeyCorp | 21,955 | 284,976 |
| M&T Bank Corp. | 2,890 | 299,346 |
| MGIC Investment Corp. | 7,579 | 76,245 |
| New York Community Bancorp, Inc. | 10,144 | 84,297 |
| PacWest Bancorp | 2,615 | 50,313 |
| People's United Financial, Inc. | 9,519 | 101,568 |
| Pinnacle Financial Partners, Inc. | 1,664 | 76,195 |
| Popular, Inc. | 1,858 | 78,408 |
| Prosperity Bancshares, Inc. | 2,010 | 110,771 |
| Regions Financial Corp. | 21,746 | 289,222 |
| Rocket Cos., Inc., Class A * | 1,265 | 23,061 |
| Signature Bank | 1,171 | 94,546 |
| Sterling Bancorp | 4,334 | 57,989 |
| SVB Financial Group * | 1,160 | 337,212 |
| Synovus Financial Corp. | 3,286 | 85,436 |
| TCF Financial Corp. | 3,396 | 92,405 |
| TFS Financial Corp. | 1,094 | 17,187 |
| The PNC Financial Services Group, Inc. | 9,577 | 1,071,475 |
| Truist Financial Corp. | 30,420 | 1,281,290 |
| U.S. Bancorp | 30,698 | 1,195,687 |
| Umpqua Holdings Corp. | 4,939 | 62,034 |
| Webster Financial Corp. | 2,009 | 64,710 |
| Wells Fargo & Co. | 84,818 | 1,819,346 |
| Western Alliance Bancorp | 2,199 | 90,599 |
| Security | Number
of Shares | Value ($) |
| Wintrust Financial Corp. | 1,282 | 63,113 |
| Zions Bancorp NA | 3,631 | 117,172 |
| | | 23,076,385 |
| |
| Capital Goods 9.4% |
| 3M Co. | 4,315 | 690,227 |
| A.O. Smith Corp. | 2,981 | 154,088 |
| Acuity Brands, Inc. | 884 | 78,800 |
| AECOM * | 3,432 | 153,891 |
| AGCO Corp. | 1,386 | 106,764 |
| Air Lease Corp. | 2,386 | 64,995 |
| Allegion plc | 724 | 71,314 |
| Allison Transmission Holdings, Inc. | 891 | 32,210 |
| AMETEK, Inc. | 5,170 | 507,694 |
| Armstrong World Industries, Inc. | 673 | 40,313 |
| BWX Technologies, Inc. | 767 | 42,193 |
| Carlisle Cos., Inc. | 1,226 | 151,865 |
| Carrier Global Corp. | 12,557 | 419,278 |
| Caterpillar, Inc. | 12,230 | 1,920,721 |
| Colfax Corp. * | 2,219 | 60,335 |
| Crane Co. | 1,095 | 55,571 |
| Cummins, Inc. | 3,326 | 731,354 |
| Curtiss-Wright Corp. | 932 | 78,623 |
| Deere & Co. | 6,367 | 1,438,369 |
| Donaldson Co., Inc. | 2,558 | 121,505 |
| Dover Corp. | 3,242 | 358,922 |
| Eaton Corp. plc | 9,030 | 937,224 |
| Emerson Electric Co. | 13,437 | 870,583 |
| Fastenal Co. | 2,435 | 105,265 |
| Flowserve Corp. | 2,930 | 85,322 |
| Fortive Corp. | 6,711 | 413,398 |
| Fortune Brands Home & Security, Inc. | 3,106 | 251,182 |
| Gates Industrial Corp. plc * | 994 | 11,033 |
| Generac Holdings, Inc. * | 121 | 25,428 |
| General Dynamics Corp. | 5,724 | 751,733 |
| General Electric Co. | 196,294 | 1,456,501 |
| Graco, Inc. | 1,853 | 114,701 |
| GrafTech International Ltd. | 1,457 | 9,835 |
| HD Supply Holdings, Inc. * | 3,612 | 143,974 |
| HEICO Corp. | 197 | 20,695 |
| HEICO Corp., Class A | 342 | 31,977 |
| Hexcel Corp. | 1,875 | 62,775 |
| Honeywell International, Inc. | 15,860 | 2,616,107 |
| Howmet Aerospace, Inc. | 8,943 | 154,267 |
| Hubbell, Inc. | 1,223 | 177,959 |
| Huntington Ingalls Industries, Inc. | 808 | 119,164 |
| IDEX Corp. | 1,698 | 289,322 |
| Illinois Tool Works, Inc. | 3,958 | 775,293 |
| Ingersoll Rand, Inc. * | 7,818 | 273,161 |
| ITT, Inc. | 1,941 | 117,450 |
| Jacobs Engineering Group, Inc. | 2,829 | 268,755 |
| Johnson Controls International plc | 16,799 | 709,086 |
| L3Harris Technologies, Inc. | 4,861 | 783,156 |
| Lennox International, Inc. | 781 | 212,166 |
| Lincoln Electric Holdings, Inc. | 736 | 74,940 |
| Masco Corp. | 5,924 | 317,526 |
| Mercury Systems, Inc. * | 228 | 15,705 |
| MSC Industrial Direct Co., Inc., Class A | 1,005 | 70,008 |
| Nordson Corp. | 236 | 45,649 |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Value Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Northrop Grumman Corp. | 285 | 82,599 |
| nVent Electric plc | 3,492 | 63,031 |
| Oshkosh Corp. | 1,523 | 102,589 |
| Otis Worldwide Corp. | 9,206 | 564,144 |
| Owens Corning | 2,421 | 158,503 |
| PACCAR, Inc. | 7,650 | 653,157 |
| Parker-Hannifin Corp. | 2,889 | 601,952 |
| Pentair plc | 3,739 | 186,053 |
| Quanta Services, Inc. | 2,477 | 154,639 |
| Raytheon Technologies Corp. | 32,198 | 1,748,995 |
| Regal Beloit Corp. | 910 | 89,771 |
| Rockwell Automation, Inc. | 1,345 | 318,926 |
| Roper Technologies, Inc. | 2,025 | 751,963 |
| Sensata Technologies Holding plc * | 3,463 | 151,368 |
| Snap-on, Inc. | 1,217 | 191,714 |
| Spirit AeroSystems Holdings, Inc., Class A | 2,346 | 42,674 |
| Stanley Black & Decker, Inc. | 3,479 | 578,210 |
| Teledyne Technologies, Inc. * | 819 | 253,194 |
| Textron, Inc. | 5,149 | 184,334 |
| The AZEK Co., Inc. * | 820 | 27,421 |
| The Boeing Co. | 12,062 | 1,741,632 |
| The Middleby Corp. * | 1,236 | 123,031 |
| The Timken Co. | 1,420 | 84,774 |
| The Toro Co. | 237 | 19,458 |
| Trane Technologies plc | 5,388 | 715,257 |
| TransDigm Group, Inc. | 917 | 437,785 |
| Trinity Industries, Inc. | 2,038 | 38,396 |
| United Rentals, Inc. * | 1,627 | 290,078 |
| Univar Solutions, Inc. * | 3,751 | 62,229 |
| Valmont Industries, Inc. | 471 | 66,858 |
| Virgin Galactic Holdings, Inc. * | 203 | 3,536 |
| W.W. Grainger, Inc. | 266 | 93,105 |
| Watsco, Inc. | 737 | 165,191 |
| Westinghouse Air Brake Technologies Corp. | 4,087 | 242,359 |
| Woodward, Inc. | 1,249 | 99,358 |
| Xylem, Inc. | 4,034 | 351,523 |
| | | 31,030,179 |
| |
| Commercial & Professional Services 0.8% |
| ADT, Inc. | 3,506 | 23,104 |
| Cintas Corp. | 226 | 71,088 |
| Clean Harbors, Inc. * | 1,157 | 61,286 |
| CoreLogic, Inc. | 1,689 | 129,935 |
| Dun & Bradstreet Holdings, Inc. * | 1,008 | 26,047 |
| Equifax, Inc. | 701 | 95,756 |
| FTI Consulting, Inc. * | 819 | 80,639 |
| IAA, Inc. * | 2,295 | 129,874 |
| IHS Markit Ltd. | 4,074 | 329,464 |
| ManpowerGroup, Inc. | 1,301 | 88,299 |
| MSA Safety, Inc. | 635 | 83,769 |
| Nielsen Holdings plc | 8,004 | 108,134 |
| Republic Services, Inc. | 4,733 | 417,309 |
| Robert Half International, Inc. | 2,506 | 127,029 |
| Rollins, Inc. | 416 | 24,066 |
| Stericycle, Inc. * | 2,053 | 127,902 |
| TransUnion | 380 | 30,271 |
| Waste Management, Inc. | 8,302 | 895,869 |
| | | 2,849,841 |
| |
| Consumer Durables & Apparel 1.4% |
| Brunswick Corp. | 1,776 | 113,149 |
| Capri Holdings Ltd. * | 3,179 | 67,458 |
| Carter's, Inc. | 962 | 78,355 |
| Columbia Sportswear Co. | 647 | 48,260 |
| D.R. Horton, Inc. | 7,461 | 498,469 |
| Garmin Ltd. | 3,374 | 350,963 |
| Security | Number
of Shares | Value ($) |
| Hanesbrands, Inc. | 7,786 | 125,121 |
| Hasbro, Inc. | 2,872 | 237,572 |
| Leggett & Platt, Inc. | 2,962 | 123,604 |
| Lennar Corp., Class A | 6,102 | 428,543 |
| Lennar Corp., Class B | 353 | 20,082 |
| Mattel, Inc. * | 3,136 | 43,183 |
| Mohawk Industries, Inc. * | 1,303 | 134,457 |
| Newell Brands, Inc. | 8,613 | 152,106 |
| NVR, Inc. * | 68 | 268,810 |
| Peloton Interactive, Inc., Class A * | 1,660 | 182,949 |
| Polaris, Inc. | 1,173 | 106,579 |
| PulteGroup, Inc. | 6,039 | 246,150 |
| PVH Corp. | 1,572 | 91,632 |
| Ralph Lauren Corp. | 1,063 | 71,061 |
| Skechers U.S.A., Inc., Class A * | 3,004 | 95,257 |
| Tapestry, Inc. | 6,192 | 137,648 |
| Tempur Sealy International, Inc. * | 275 | 24,475 |
| Toll Brothers, Inc. | 2,597 | 109,801 |
| Under Armour, Inc., Class A * | 4,223 | 58,446 |
| Under Armour, Inc., Class C * | 4,418 | 54,032 |
| VF Corp. | 6,863 | 461,194 |
| Whirlpool Corp. | 1,377 | 254,690 |
| | | 4,584,046 |
| |
| Consumer Services 2.7% |
| Aramark | 5,178 | 143,638 |
| Bright Horizons Family Solutions, Inc. * | 414 | 65,433 |
| Carnival Corp. | 10,665 | 146,217 |
| Choice Hotels International, Inc. | 780 | 68,133 |
| Darden Restaurants, Inc. | 2,935 | 269,785 |
| Dunkin' Brands Group, Inc. | 272 | 27,121 |
| Extended Stay America, Inc. | 3,965 | 45,003 |
| frontdoor, Inc. * | 1,599 | 63,352 |
| Graham Holdings Co., Class B | 89 | 33,850 |
| Grand Canyon Education, Inc. * | 1,050 | 82,289 |
| H&R Block, Inc. | 1,288 | 22,231 |
| Hilton Worldwide Holdings, Inc. | 6,160 | 540,910 |
| Hyatt Hotels Corp., Class A | 785 | 43,285 |
| Las Vegas Sands Corp. | 4,305 | 206,898 |
| Marriott International, Inc., Class A | 6,065 | 563,317 |
| McDonald's Corp. | 14,411 | 3,069,543 |
| MGM Resorts International | 10,581 | 217,651 |
| Norwegian Cruise Line Holdings Ltd. * | 6,196 | 103,039 |
| Planet Fitness, Inc., Class A * | 778 | 46,112 |
| Royal Caribbean Cruises Ltd. | 3,952 | 222,972 |
| Service Corp. International | 3,895 | 180,377 |
| Six Flags Entertainment Corp. | 1,716 | 37,100 |
| Starbucks Corp. | 11,169 | 971,256 |
| Terminix Global Holdings, Inc. * | 2,972 | 139,952 |
| Vail Resorts, Inc. | 831 | 192,825 |
| Wyndham Destinations, Inc. | 1,882 | 61,410 |
| Wyndham Hotels & Resorts, Inc. | 2,055 | 95,578 |
| Wynn Resorts Ltd. | 1,654 | 119,799 |
| Yum China Holdings, Inc. | 8,412 | 447,771 |
| Yum! Brands, Inc. | 6,290 | 587,046 |
| | | 8,813,893 |
| |
| Diversified Financials 8.0% |
| Affiliated Managers Group, Inc. | 1,056 | 79,591 |
| AGNC Investment Corp. | 12,579 | 175,729 |
| Ally Financial, Inc. | 8,435 | 225,046 |
| American Express Co. | 14,766 | 1,347,250 |
| Ameriprise Financial, Inc. | 2,719 | 437,297 |
| Annaly Capital Management, Inc. | 31,717 | 224,874 |
| Apollo Global Management, Inc. | 1,938 | 71,435 |
| Berkshire Hathaway, Inc., Class B * | 43,277 | 8,737,626 |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Value Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| BlackRock, Inc. | 3,324 | 1,991,774 |
| Capital One Financial Corp. | 10,216 | 746,585 |
| Cboe Global Markets, Inc. | 1,940 | 157,703 |
| CME Group, Inc. | 8,014 | 1,207,870 |
| Credit Acceptance Corp. * | 208 | 62,009 |
| Discover Financial Services | 6,914 | 449,479 |
| Eaton Vance Corp. | 2,491 | 148,937 |
| Equitable Holdings, Inc. | 9,216 | 198,052 |
| Evercore, Inc., Class A | 885 | 70,393 |
| Franklin Resources, Inc. | 6,091 | 114,206 |
| Interactive Brokers Group, Inc., Class A | 1,656 | 78,776 |
| Intercontinental Exchange, Inc. | 7,898 | 745,571 |
| Invesco Ltd. | 8,481 | 111,186 |
| Jefferies Financial Group, Inc. | 5,093 | 99,364 |
| KKR & Co., Inc. | 12,019 | 410,449 |
| Lazard Ltd., Class A | 2,266 | 76,296 |
| LendingTree, Inc. * | 9 | 2,912 |
| LPL Financial Holdings, Inc. | 1,626 | 129,966 |
| Morgan Stanley | 30,120 | 1,450,278 |
| Morningstar, Inc. | 78 | 14,850 |
| Nasdaq, Inc. | 2,580 | 312,154 |
| New Residential Investment Corp. | 9,323 | 69,923 |
| Northern Trust Corp. | 4,333 | 339,144 |
| OneMain Holdings, Inc. | 1,461 | 50,974 |
| Raymond James Financial, Inc. | 2,775 | 212,121 |
| S&P Global, Inc. | 2,229 | 719,365 |
| Santander Consumer USA Holdings, Inc. | 1,695 | 34,476 |
| SEI Investments Co. | 2,599 | 127,741 |
| SLM Corp. | 6,455 | 59,321 |
| Starwood Property Trust, Inc. | 6,138 | 85,748 |
| State Street Corp. | 7,941 | 467,725 |
| Synchrony Financial | 13,151 | 329,038 |
| T. Rowe Price Group, Inc. | 3,807 | 482,195 |
| The Bank of New York Mellon Corp. | 18,020 | 619,167 |
| The Carlyle Group, Inc. | 2,382 | 59,359 |
| The Charles Schwab Corp. (a) | 32,350 | 1,329,909 |
| The Goldman Sachs Group, Inc. | 7,481 | 1,414,208 |
| Tradeweb Markets, Inc., Class A | 277 | 15,091 |
| Virtu Financial, Inc., Class A | 151 | 3,228 |
| Voya Financial, Inc. | 2,825 | 135,402 |
| | | 26,431,793 |
| |
| Energy 3.9% |
| Antero Midstream Corp. | 6,381 | 36,563 |
| Apache Corp. | 8,506 | 70,600 |
| Baker Hughes Co. | 14,829 | 219,024 |
| Cabot Oil & Gas Corp. | 8,879 | 157,957 |
| Chevron Corp. | 43,505 | 3,023,598 |
| Cimarex Energy Co. | 2,249 | 57,057 |
| Concho Resources, Inc. | 4,403 | 182,769 |
| ConocoPhillips | 24,256 | 694,207 |
| Continental Resources, Inc. | 1,681 | 20,222 |
| Devon Energy Corp. | 8,614 | 76,923 |
| Diamondback Energy, Inc. | 3,549 | 92,132 |
| EOG Resources, Inc. | 13,147 | 450,153 |
| EQT Corp. | 5,721 | 86,616 |
| Equitrans Midstream Corp. | 8,319 | 60,396 |
| Exxon Mobil Corp. | 95,600 | 3,118,472 |
| Halliburton Co. | 19,771 | 238,438 |
| Helmerich & Payne, Inc. | 2,344 | 34,855 |
| Hess Corp. | 6,201 | 230,801 |
| HollyFrontier Corp. | 3,373 | 62,434 |
| Kinder Morgan, Inc. | 43,894 | 522,339 |
| Marathon Oil Corp. | 17,805 | 70,508 |
| Marathon Petroleum Corp. | 14,601 | 430,730 |
| Murphy Oil Corp. | 3,256 | 25,136 |
| National Oilwell Varco, Inc. | 8,727 | 73,307 |
| Security | Number
of Shares | Value ($) |
| Occidental Petroleum Corp. | 18,871 | 172,292 |
| ONEOK, Inc. | 9,908 | 287,332 |
| Parsley Energy, Inc., Class A | 6,795 | 68,018 |
| Phillips 66 | 9,848 | 459,508 |
| Pioneer Natural Resources Co. | 3,703 | 294,611 |
| Schlumberger N.V. | 31,344 | 468,279 |
| Targa Resources Corp. | 5,202 | 83,492 |
| The Williams Cos., Inc. | 27,427 | 526,324 |
| Valero Energy Corp. | 9,197 | 355,096 |
| WPX Energy, Inc. * | 9,029 | 41,624 |
| | | 12,791,813 |
| |
| Food & Staples Retailing 1.9% |
| Albertsons Cos., Inc., Class A * | 668 | 9,813 |
| Casey's General Stores, Inc. | 826 | 139,239 |
| Costco Wholesale Corp. | 1,167 | 417,343 |
| Grocery Outlet Holding Corp. * | 728 | 32,047 |
| Sprouts Farmers Market, Inc. * | 416 | 7,925 |
| Sysco Corp. | 3,158 | 174,669 |
| The Kroger Co. | 17,469 | 562,676 |
| U.S. Foods Holding Corp. * | 4,928 | 102,995 |
| Walgreens Boots Alliance, Inc. | 16,348 | 556,486 |
| Walmart, Inc. | 31,479 | 4,367,711 |
| | | 6,370,904 |
| |
| Food, Beverage & Tobacco 4.1% |
| Altria Group, Inc. | 23,691 | 854,771 |
| Archer-Daniels-Midland Co. | 12,500 | 578,000 |
| Beyond Meat, Inc. * | 234 | 33,329 |
| Brown-Forman Corp., Class A | 150 | 9,412 |
| Brown-Forman Corp., Class B | 593 | 41,338 |
| Bunge Ltd. | 3,058 | 173,480 |
| Campbell Soup Co. | 1,984 | 92,593 |
| Conagra Brands, Inc. | 10,995 | 385,815 |
| Constellation Brands, Inc., Class A | 3,600 | 594,828 |
| Flowers Foods, Inc. | 4,378 | 103,233 |
| General Mills, Inc. | 13,698 | 809,826 |
| Hormel Foods Corp. | 6,291 | 306,309 |
| Ingredion, Inc. | 1,511 | 107,115 |
| Kellogg Co. | 3,729 | 234,517 |
| Keurig Dr Pepper, Inc. | 8,749 | 235,348 |
| Lamb Weston Holdings, Inc. | 2,548 | 161,671 |
| McCormick & Co., Inc. - Non Voting Shares | 1,235 | 222,930 |
| Molson Coors Beverage Co., Class B | 3,924 | 138,360 |
| Mondelez International, Inc., Class A | 31,888 | 1,693,891 |
| PepsiCo, Inc. | 8,333 | 1,110,706 |
| Philip Morris International, Inc. | 35,145 | 2,495,998 |
| Pilgrim's Pride Corp. * | 816 | 13,660 |
| Post Holdings, Inc. * | 1,435 | 123,266 |
| Seaboard Corp. | 6 | 20,670 |
| The Coca-Cola Co. | 36,057 | 1,732,899 |
| The Hain Celestial Group, Inc. * | 1,832 | 56,334 |
| The Hershey Co. | 757 | 104,057 |
| The JM Smucker Co. | 2,491 | 279,490 |
| The Kraft Heinz Co. | 14,609 | 446,889 |
| TreeHouse Foods, Inc. * | 1,251 | 48,589 |
| Tyson Foods, Inc., Class A | 6,486 | 371,194 |
| | | 13,580,518 |
| |
| Health Care Equipment & Services 7.2% |
| Abbott Laboratories | 24,051 | 2,528,001 |
| Acadia Healthcare Co., Inc. * | 1,975 | 70,409 |
| AmerisourceBergen Corp. | 1,717 | 164,952 |
| Anthem, Inc. | 4,234 | 1,155,035 |
| Baxter International, Inc. | 6,680 | 518,168 |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Value Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Becton, Dickinson & Co. | 6,231 | 1,440,171 |
| Boston Scientific Corp. * | 32,270 | 1,105,893 |
| Centene Corp. * | 9,139 | 540,115 |
| Change Healthcare, Inc. * | 1,443 | 20,418 |
| Cigna Corp. | 5,966 | 996,143 |
| CVS Health Corp. | 29,522 | 1,655,889 |
| Danaher Corp. | 14,140 | 3,245,696 |
| DaVita, Inc. * | 1,554 | 134,032 |
| DENTSPLY SIRONA, Inc. | 4,933 | 232,788 |
| Encompass Health Corp. | 1,228 | 75,289 |
| Envista Holdings Corp. * | 3,578 | 94,531 |
| Globus Medical, Inc., Class A * | 1,662 | 86,623 |
| Haemonetics Corp. * | 75 | 7,582 |
| HCA Healthcare, Inc. | 2,882 | 357,195 |
| Henry Schein, Inc. * | 3,222 | 204,855 |
| Hill-Rom Holdings, Inc. | 1,328 | 120,941 |
| Hologic, Inc. * | 1,742 | 119,884 |
| Humana, Inc. | 1,847 | 737,470 |
| ICU Medical, Inc. * | 319 | 56,715 |
| Integra LifeSciences Holdings Corp. * | 1,606 | 70,825 |
| Laboratory Corp. of America Holdings * | 2,067 | 412,925 |
| McKesson Corp. | 926 | 136,576 |
| Medtronic plc | 30,300 | 3,047,271 |
| Molina Healthcare, Inc. * | 433 | 80,741 |
| Oak Street Health, Inc. * | 193 | 9,185 |
| Premier, Inc., Class A | 1,382 | 45,233 |
| Quest Diagnostics, Inc. | 3,014 | 368,130 |
| STERIS plc | 1,795 | 318,056 |
| Stryker Corp. | 5,273 | 1,065,199 |
| Tandem Diabetes Care, Inc. * | 143 | 15,587 |
| Teladoc Health, Inc. * | 158 | 31,041 |
| Teleflex, Inc. | 387 | 123,155 |
| The Cooper Cos., Inc. | 966 | 308,202 |
| UnitedHealth Group, Inc. | 3,581 | 1,092,706 |
| Universal Health Services, Inc., Class B | 1,666 | 182,510 |
| Varian Medical Systems, Inc. * | 1,789 | 309,139 |
| Zimmer Biomet Holdings, Inc. | 4,674 | 617,435 |
| | | 23,902,711 |
| |
| Household & Personal Products 2.2% |
| Colgate-Palmolive Co. | 19,030 | 1,501,277 |
| Coty, Inc., Class A | 6,475 | 18,778 |
| Energizer Holdings, Inc. | 287 | 11,293 |
| Herbalife Nutrition Ltd. * | 1,755 | 79,221 |
| Kimberly-Clark Corp. | 7,668 | 1,016,700 |
| Nu Skin Enterprises, Inc., Class A | 1,152 | 56,851 |
| Reynolds Consumer Products, Inc. | 801 | 22,620 |
| Spectrum Brands Holdings, Inc. | 952 | 54,140 |
| The Clorox Co. | 831 | 172,225 |
| The Estee Lauder Cos., Inc., Class A | 528 | 115,980 |
| The Procter & Gamble Co. | 30,437 | 4,172,913 |
| | | 7,221,998 |
| |
| Insurance 3.4% |
| Aflac, Inc. | 16,019 | 543,845 |
| Alleghany Corp. | 283 | 154,781 |
| American Financial Group, Inc. | 1,630 | 122,152 |
| American International Group, Inc. | 19,458 | 612,732 |
| American National Group, Inc. | 165 | 11,352 |
| Arch Capital Group Ltd. * | 8,880 | 268,265 |
| Arthur J. Gallagher & Co. | 4,243 | 440,042 |
| Assurant, Inc. | 1,350 | 167,899 |
| Assured Guaranty Ltd. | 1,797 | 45,877 |
| Athene Holding Ltd., Class A * | 2,594 | 83,216 |
| Axis Capital Holdings Ltd. | 1,694 | 72,317 |
| Brighthouse Financial, Inc. * | 2,115 | 70,007 |
| Security | Number
of Shares | Value ($) |
| Brown & Brown, Inc. | 5,025 | 218,638 |
| Chubb Ltd. | 10,149 | 1,318,457 |
| Cincinnati Financial Corp. | 3,383 | 239,313 |
| CNA Financial Corp. | 630 | 18,768 |
| Erie Indemnity Co., Class A | 242 | 56,355 |
| Everest Re Group Ltd. | 887 | 174,810 |
| Fidelity National Financial, Inc. | 6,210 | 194,311 |
| First American Financial Corp. | 2,437 | 108,666 |
| Globe Life, Inc. | 2,371 | 192,264 |
| GoHealth, Inc., Class A * | 864 | 8,951 |
| Kemper Corp. | 1,394 | 85,954 |
| Lemonade, Inc. * | 291 | 14,634 |
| Lincoln National Corp. | 3,791 | 133,064 |
| Loews Corp. | 5,413 | 187,723 |
| Markel Corp. * | 305 | 284,504 |
| Marsh & McLennan Cos., Inc. | 2,551 | 263,926 |
| Mercury General Corp. | 613 | 24,955 |
| MetLife, Inc. | 17,359 | 657,038 |
| Old Republic International Corp. | 6,368 | 103,671 |
| Primerica, Inc. | 339 | 37,371 |
| Principal Financial Group, Inc. | 6,148 | 241,125 |
| Prudential Financial, Inc. | 8,928 | 571,571 |
| Reinsurance Group of America, Inc. | 1,534 | 154,965 |
| RenaissanceRe Holdings Ltd. | 756 | 122,260 |
| The Allstate Corp. | 7,073 | 627,729 |
| The Hanover Insurance Group, Inc. | 851 | 81,407 |
| The Hartford Financial Services Group, Inc. | 8,064 | 310,625 |
| The Progressive Corp. | 9,395 | 863,400 |
| The Travelers Cos., Inc. | 5,704 | 688,530 |
| Unum Group | 4,568 | 80,671 |
| W.R. Berkley Corp. | 3,147 | 189,198 |
| White Mountains Insurance Group Ltd. | 68 | 61,766 |
| Willis Towers Watson plc | 2,901 | 529,374 |
| | | 11,438,479 |
| |
| Materials 4.8% |
| Air Products & Chemicals, Inc. | 4,352 | 1,202,196 |
| Albemarle Corp. | 2,384 | 222,213 |
| Amcor plc | 30,155 | 314,517 |
| AptarGroup, Inc. | 1,456 | 166,115 |
| Ardagh Group S.A. | 414 | 6,823 |
| Ashland Global Holdings, Inc. | 1,244 | 86,794 |
| Avery Dennison Corp. | 1,100 | 152,229 |
| Axalta Coating Systems Ltd. * | 4,730 | 118,770 |
| Ball Corp. | 459 | 40,851 |
| Berry Global Group, Inc. * | 1,968 | 91,768 |
| Cabot Corp. | 1,248 | 47,436 |
| Celanese Corp. | 2,662 | 302,164 |
| CF Industries Holdings, Inc. | 4,839 | 133,605 |
| Corteva, Inc. | 16,919 | 557,989 |
| Crown Holdings, Inc. * | 2,627 | 225,397 |
| Dow, Inc. | 16,751 | 762,003 |
| DuPont de Nemours, Inc. | 16,594 | 943,867 |
| Eagle Materials, Inc. | 927 | 79,027 |
| Eastman Chemical Co. | 3,070 | 248,179 |
| Ecolab, Inc. | 4,504 | 826,889 |
| Element Solutions, Inc. * | 4,877 | 57,158 |
| FMC Corp. | 2,351 | 241,542 |
| Freeport-McMoRan, Inc. | 32,715 | 567,278 |
| Graphic Packaging Holding Co. | 4,890 | 64,988 |
| Huntsman Corp. | 4,494 | 109,159 |
| International Flavors & Fragrances, Inc. (b) | 2,413 | 247,719 |
| International Paper Co. | 8,878 | 388,412 |
| Linde plc | 11,863 | 2,613,893 |
| LyondellBasell Industries N.V., Class A | 5,786 | 396,052 |
| Martin Marietta Materials, Inc. | 1,402 | 373,423 |
| NewMarket Corp. | 26 | 9,300 |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Value Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Newmont Corp. | 18,127 | 1,139,101 |
| Nucor Corp. | 6,796 | 324,577 |
| Olin Corp. | 3,205 | 53,043 |
| Packaging Corp. of America | 2,114 | 242,032 |
| PPG Industries, Inc. | 5,321 | 690,240 |
| Reliance Steel & Aluminum Co. | 1,424 | 155,202 |
| Royal Gold, Inc. | 419 | 49,781 |
| RPM International, Inc. | 471 | 39,879 |
| Sealed Air Corp. | 3,486 | 138,011 |
| Silgan Holdings, Inc. | 1,768 | 60,908 |
| Sonoco Products Co. | 2,252 | 110,100 |
| Southern Copper Corp. | 1,852 | 96,934 |
| Steel Dynamics, Inc. | 4,553 | 143,328 |
| The Chemours Co. | 3,663 | 73,773 |
| The Mosaic Co. | 7,832 | 144,892 |
| The Scotts Miracle-Gro Co. | 57 | 8,553 |
| Valvoline, Inc. | 4,165 | 81,925 |
| Vulcan Materials Co. | 2,981 | 431,768 |
| W.R. Grace & Co. | 811 | 35,270 |
| Westlake Chemical Corp. | 762 | 51,526 |
| WestRock Co. | 5,796 | 217,640 |
| | | 15,886,239 |
| |
| Media & Entertainment 6.0% |
| Activision Blizzard, Inc. | 10,430 | 789,864 |
| Alphabet, Inc., Class A * | 1,519 | 2,454,871 |
| Alphabet, Inc., Class C * | 1,499 | 2,429,894 |
| Charter Communications, Inc., Class A * | 328 | 198,053 |
| Comcast Corp., Class A | 102,351 | 4,323,306 |
| Discovery, Inc., Class A * | 3,508 | 71,002 |
| Discovery, Inc., Class C * | 7,355 | 134,744 |
| DISH Network Corp., Class A * | 5,564 | 141,826 |
| Electronic Arts, Inc. * | 5,545 | 664,457 |
| Fox Corp., Class A | 7,660 | 203,143 |
| Fox Corp., Class B | 3,589 | 93,817 |
| John Wiley & Sons, Inc., Class A | 971 | 30,062 |
| Liberty Broadband Corp., Class A * | 564 | 79,270 |
| Liberty Broadband Corp., Class C * | 2,360 | 334,436 |
| Liberty Media Corp. - Liberty Formula One, Class A * | 564 | 18,781 |
| Liberty Media Corp. - Liberty Formula One, Class C * | 4,446 | 160,634 |
| Liberty Media Corp. - Liberty SiriusXM, Class A * | 1,677 | 57,974 |
| Liberty Media Corp. - Liberty SiriusXM, Class C * | 3,460 | 119,716 |
| Lions Gate Entertainment Corp., Class A * | 1,234 | 8,268 |
| Lions Gate Entertainment Corp., Class B * | 2,672 | 16,753 |
| Madison Square Garden Entertainment Corp. * | 418 | 27,170 |
| Madison Square Garden Sports Corp. * | 422 | 59,772 |
| News Corp., Class A | 8,745 | 114,822 |
| News Corp., Class B | 2,734 | 35,597 |
| Nexstar Media Group, Inc., Class A | 327 | 26,945 |
| Omnicom Group, Inc. | 4,814 | 227,221 |
| Pinterest, Inc., Class A * | 1,535 | 90,488 |
| Sirius XM Holdings, Inc. | 10,595 | 60,709 |
| Take-Two Interactive Software, Inc. * | 190 | 29,435 |
| The Interpublic Group of Cos., Inc. | 8,821 | 159,572 |
| The New York Times Co., Class A | 3,654 | 144,918 |
| The Walt Disney Co. | 40,824 | 4,949,910 |
| TripAdvisor, Inc. | 2,255 | 43,093 |
| Twitter, Inc. * | 17,354 | 717,761 |
| ViacomCBS, Inc., Class B | 12,492 | 356,896 |
| Zillow Group, Inc., Class A * | 1,151 | 102,819 |
| Security | Number
of Shares | Value ($) |
| Zillow Group, Inc., Class C * | 2,819 | 249,820 |
| Zynga, Inc., Class A * | 3,529 | 31,726 |
| | | 19,759,545 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 6.9% |
| AbbVie, Inc. | 2,395 | 203,815 |
| Acceleron Pharma, Inc. * | 62 | 6,484 |
| Agilent Technologies, Inc. | 6,378 | 651,130 |
| Agios Pharmaceuticals, Inc. * | 1,253 | 50,208 |
| Alexion Pharmaceuticals, Inc. * | 4,060 | 467,468 |
| Alkermes plc * | 3,555 | 57,769 |
| Berkeley Lights, Inc. * | 99 | 7,184 |
| Bio-Rad Laboratories, Inc., Class A * | 476 | 279,136 |
| Bio-Techne Corp. | 51 | 12,873 |
| Biogen, Inc. * | 2,483 | 625,890 |
| BioMarin Pharmaceutical, Inc. * | 379 | 28,209 |
| Bluebird Bio, Inc. * | 834 | 43,126 |
| Bristol-Myers Squibb Co. | 32,574 | 1,903,950 |
| Bruker Corp. | 1,338 | 56,919 |
| Catalent, Inc. * | 3,672 | 322,291 |
| Charles River Laboratories International, Inc. * | 125 | 28,463 |
| Elanco Animal Health, Inc. * | 9,021 | 279,741 |
| Exact Sciences Corp. * | 441 | 54,609 |
| Exelixis, Inc. * | 4,349 | 89,068 |
| Gilead Sciences, Inc. | 28,364 | 1,649,367 |
| Horizon Therapeutics plc * | 328 | 24,577 |
| Ionis Pharmaceuticals, Inc. * | 1,495 | 70,190 |
| IQVIA Holdings, Inc. * | 2,664 | 410,229 |
| Jazz Pharmaceuticals plc * | 1,224 | 176,378 |
| Johnson & Johnson | 51,580 | 7,072,134 |
| Merck & Co., Inc. | 7,187 | 540,534 |
| Mettler-Toledo International, Inc. * | 32 | 31,933 |
| Mylan N.V. * | 11,668 | 169,653 |
| Nektar Therapeutics * | 3,911 | 61,950 |
| PerkinElmer, Inc. | 2,023 | 262,080 |
| Perrigo Co., plc | 3,066 | 134,505 |
| Pfizer, Inc. | 125,613 | 4,456,749 |
| PPD, Inc. * | 551 | 18,117 |
| PRA Health Sciences, Inc. * | 211 | 20,560 |
| QIAGEN N.V. * | 5,086 | 241,280 |
| Reata Pharmaceuticals, Inc., Class A * | 56 | 6,536 |
| Royalty Pharma plc, Class A | 1,325 | 48,628 |
| Sage Therapeutics, Inc. * | 1,064 | 78,076 |
| Syneos Health, Inc. * | 1,382 | 73,357 |
| Thermo Fisher Scientific, Inc. | 3,684 | 1,742,974 |
| United Therapeutics Corp. * | 976 | 131,008 |
| Waters Corp. * | 1,281 | 285,432 |
| Zoetis, Inc. | 1,015 | 160,928 |
| | | 23,035,508 |
| |
| Real Estate 4.5% |
| Alexandria Real Estate Equities, Inc. | 2,824 | 427,893 |
| American Campus Communities, Inc. | 3,076 | 115,227 |
| American Homes 4 Rent, Class A | 5,830 | 164,814 |
| Americold Realty Trust | 4,116 | 149,123 |
| Apartment Investment & Management Co., Class A | 3,332 | 106,291 |
| Apple Hospitality REIT, Inc. | 4,710 | 46,629 |
| AvalonBay Communities, Inc. | 3,175 | 441,738 |
| Boston Properties, Inc. | 3,512 | 254,304 |
| Brandywine Realty Trust | 3,786 | 33,165 |
| Brixmor Property Group, Inc. | 6,661 | 73,005 |
| Brookfield Property REIT, Inc., Class A (b) | 148 | 2,183 |
| Camden Property Trust | 2,134 | 196,840 |
| CBRE Group, Inc., Class A * | 7,528 | 379,411 |
| CoreSite Realty Corp. | 294 | 35,092 |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Value Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Corporate Office Properties Trust | 2,530 | 56,748 |
| Cousins Properties, Inc. | 3,328 | 84,797 |
| Crown Castle International Corp. | 628 | 98,094 |
| CubeSmart | 4,338 | 147,188 |
| CyrusOne, Inc. | 2,641 | 187,643 |
| Digital Realty Trust, Inc. | 6,031 | 870,273 |
| Douglas Emmett, Inc. | 3,745 | 88,382 |
| Duke Realty Corp. | 8,312 | 315,773 |
| Empire State Realty Trust, Inc., Class A | 3,290 | 17,700 |
| EPR Properties | 1,669 | 39,789 |
| Equity Commonwealth | 2,621 | 69,247 |
| Equity LifeStyle Properties, Inc. | 2,309 | 136,670 |
| Equity Residential | 8,294 | 389,652 |
| Essex Property Trust, Inc. | 1,472 | 301,157 |
| Extra Space Storage, Inc. | 839 | 97,282 |
| Federal Realty Investment Trust | 1,691 | 116,307 |
| First Industrial Realty Trust, Inc. | 2,846 | 113,299 |
| Gaming & Leisure Properties, Inc. | 4,682 | 170,191 |
| Healthcare Trust of America, Inc., Class A | 4,894 | 118,924 |
| Healthpeak Properties, Inc. | 12,175 | 328,360 |
| Highwoods Properties, Inc. | 2,316 | 68,947 |
| Host Hotels & Resorts, Inc. | 15,833 | 165,930 |
| Hudson Pacific Properties, Inc. | 3,379 | 65,080 |
| Invitation Homes, Inc. | 12,628 | 344,239 |
| Iron Mountain, Inc. | 2,658 | 69,267 |
| JBG SMITH Properties | 2,743 | 64,049 |
| Jones Lang LaSalle, Inc. | 1,156 | 130,466 |
| Kilroy Realty Corp. | 2,583 | 121,608 |
| Kimco Realty Corp. | 9,272 | 95,131 |
| Lamar Advertising Co., Class A | 1,931 | 119,645 |
| Life Storage, Inc. | 1,046 | 119,401 |
| Medical Properties Trust, Inc. | 11,745 | 209,296 |
| Mid-America Apartment Communities, Inc. | 2,569 | 299,622 |
| National Retail Properties, Inc. | 3,847 | 123,142 |
| Omega Healthcare Investors, Inc. | 5,103 | 147,017 |
| Outfront Media, Inc. | 3,271 | 42,883 |
| Paramount Group, Inc. | 4,250 | 24,565 |
| Park Hotels & Resorts, Inc. | 5,386 | 53,483 |
| Prologis, Inc. | 16,623 | 1,649,002 |
| Public Storage | 1,182 | 270,761 |
| Rayonier, Inc. | 2,959 | 75,099 |
| Realty Income Corp. | 7,760 | 448,994 |
| Regency Centers Corp. | 3,783 | 134,637 |
| Rexford Industrial Realty, Inc. | 2,777 | 129,019 |
| SBA Communications Corp. | 2,158 | 626,618 |
| Simon Property Group, Inc. | 1,457 | 91,514 |
| SL Green Realty Corp. | 1,641 | 70,251 |
| Spirit Realty Capital, Inc. | 2,312 | 69,476 |
| STORE Capital Corp. | 5,235 | 134,540 |
| Sun Communities, Inc. | 2,180 | 300,033 |
| Taubman Centers, Inc. | 1,350 | 45,117 |
| The Howard Hughes Corp. * | 875 | 54,416 |
| UDR, Inc. | 6,611 | 206,528 |
| Ventas, Inc. | 8,421 | 332,377 |
| VEREIT, Inc. | 24,472 | 151,726 |
| VICI Properties, Inc. | 12,086 | 277,374 |
| Vornado Realty Trust | 3,943 | 121,168 |
| Weingarten Realty Investors | 2,720 | 43,139 |
| Welltower, Inc. | 9,434 | 507,266 |
| Weyerhaeuser Co. | 16,855 | 459,973 |
| WP Carey, Inc. | 3,871 | 242,363 |
| | | 14,878,353 |
| |
| Retailing 2.7% |
| Advance Auto Parts, Inc. | 1,503 | 221,362 |
| AutoNation, Inc. * | 1,299 | 73,692 |
| AutoZone, Inc. * | 216 | 243,860 |
| Security | Number
of Shares | Value ($) |
| Best Buy Co., Inc. | 4,219 | 470,630 |
| Burlington Stores, Inc. * | 155 | 30,005 |
| CarMax, Inc. * | 3,397 | 293,637 |
| Dick's Sporting Goods, Inc. | 1,383 | 78,347 |
| Dollar Tree, Inc. * | 2,767 | 249,915 |
| eBay, Inc. | 1,294 | 61,633 |
| Expedia Group, Inc. | 2,710 | 255,147 |
| Foot Locker, Inc. | 2,319 | 85,525 |
| Genuine Parts Co. | 3,172 | 286,844 |
| GrubHub, Inc. * | 1,869 | 138,231 |
| Kohl's Corp. | 3,551 | 75,601 |
| L Brands, Inc. | 5,143 | 164,627 |
| LKQ Corp. * | 6,843 | 218,908 |
| Nordstrom, Inc. | 2,453 | 29,681 |
| Ollie's Bargain Outlet Holdings, Inc. * | 137 | 11,931 |
| Penske Automotive Group, Inc. | 715 | 36,579 |
| Qurate Retail, Inc. Class A | 8,655 | 58,594 |
| Ross Stores, Inc. | 1,499 | 127,670 |
| Target Corp. | 11,289 | 1,718,412 |
| The Gap, Inc. | 4,093 | 79,609 |
| The Home Depot, Inc. | 12,134 | 3,236,259 |
| The TJX Cos., Inc. | 5,151 | 261,671 |
| Tiffany & Co. | 2,732 | 357,455 |
| Ulta Beauty, Inc. * | 85 | 17,575 |
| Vroom, Inc. * | 122 | 5,014 |
| Wayfair, Inc., Class A * | 130 | 32,244 |
| Williams-Sonoma, Inc. | 1,444 | 131,707 |
| | | 9,052,365 |
| |
| Semiconductors & Semiconductor Equipment 3.2% |
| Advanced Micro Devices, Inc. * | 1,838 | 138,383 |
| Analog Devices, Inc. | 7,303 | 865,625 |
| Broadcom, Inc. | 457 | 159,781 |
| Cirrus Logic, Inc. * | 1,315 | 90,564 |
| Cree, Inc. * | 2,428 | 154,421 |
| Entegris, Inc. | 192 | 14,356 |
| First Solar, Inc. * | 2,060 | 179,313 |
| Intel Corp. | 95,750 | 4,239,810 |
| Marvell Technology Group Ltd. | 14,873 | 557,886 |
| Maxim Integrated Products, Inc. | 4,005 | 278,948 |
| Microchip Technology, Inc. | 1,370 | 143,960 |
| Micron Technology, Inc. * | 25,119 | 1,264,490 |
| MKS Instruments, Inc. | 303 | 32,842 |
| ON Semiconductor Corp. * | 9,173 | 230,151 |
| Qorvo, Inc. * | 2,571 | 327,442 |
| Skyworks Solutions, Inc. | 3,764 | 531,815 |
| Texas Instruments, Inc. | 10,410 | 1,505,182 |
| | | 10,714,969 |
| |
| Software & Services 3.3% |
| 2U, Inc. * | 1,026 | 37,808 |
| Akamai Technologies, Inc. * | 633 | 60,211 |
| Alliance Data Systems Corp. | 1,051 | 54,169 |
| Amdocs Ltd. | 3,005 | 169,422 |
| Aspen Technology, Inc. * | 103 | 11,310 |
| Autodesk, Inc. * | 1,655 | 389,819 |
| Automatic Data Processing, Inc. | 1,364 | 215,457 |
| BigCommerce Holdings, Inc. * | 36 | 2,642 |
| CACI International, Inc., Class A * | 467 | 97,384 |
| CDK Global, Inc. | 2,391 | 103,052 |
| Ceridian HCM Holding, Inc. * | 729 | 62,854 |
| Citrix Systems, Inc. | 2,024 | 229,259 |
| Cognizant Technology Solutions Corp., Class A | 11,330 | 809,189 |
| Crowdstrike Holdings, Inc., Class A * | 935 | 115,790 |
| Duck Creek Technologies, Inc. * | 60 | 2,602 |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Value Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| DXC Technology Co. | 5,689 | 104,791 |
| Euronet Worldwide, Inc. * | 1,131 | 100,478 |
| Fidelity National Information Services, Inc. | 13,945 | 1,737,408 |
| FireEye, Inc. * | 3,841 | 53,159 |
| Fiserv, Inc. * | 8,886 | 848,346 |
| Genpact Ltd. | 2,573 | 88,434 |
| Global Payments, Inc. | 6,722 | 1,060,328 |
| Guidewire Software, Inc. * | 1,525 | 146,568 |
| International Business Machines Corp. | 20,068 | 2,240,793 |
| Jack Henry & Associates, Inc. | 374 | 55,446 |
| Jamf Holding Corp. * | 235 | 7,661 |
| Leidos Holdings, Inc. | 2,732 | 226,756 |
| Manhattan Associates, Inc. * | 153 | 13,082 |
| nCino, Inc. * | 55 | 3,879 |
| Nuance Communications, Inc. * | 6,347 | 202,533 |
| Oracle Corp. | 5,195 | 291,491 |
| Paychex, Inc. | 1,515 | 124,609 |
| Pegasystems, Inc. | 89 | 10,313 |
| RealPage, Inc. * | 249 | 13,867 |
| Sabre Corp. | 6,167 | 40,209 |
| salesforce.com, Inc. * | 1,429 | 331,914 |
| Science Applications International Corp. | 1,134 | 86,604 |
| SolarWinds Corp. * | 1,045 | 21,349 |
| SS&C Technologies Holdings, Inc. | 4,018 | 237,946 |
| Synopsys, Inc. * | 242 | 51,754 |
| Teradata Corp. * | 579 | 10,636 |
| The Western Union Co. | 7,419 | 144,225 |
| Twilio, Inc., Class A * | 519 | 144,785 |
| VeriSign, Inc. * | 941 | 179,449 |
| WEX, Inc. * | 908 | 114,907 |
| | | 11,054,688 |
| |
| Technology Hardware & Equipment 2.7% |
| Amphenol Corp., Class A | 2,654 | 299,477 |
| Arista Networks, Inc. * | 237 | 49,509 |
| Arrow Electronics, Inc. * | 1,727 | 134,516 |
| Avnet, Inc. | 2,203 | 54,348 |
| Ciena Corp. * | 3,430 | 135,108 |
| Cisco Systems, Inc. | 95,914 | 3,443,313 |
| Coherent, Inc. * | 94 | 11,763 |
| CommScope Holding Co., Inc. * | 4,073 | 36,250 |
| Corning, Inc. | 16,918 | 540,868 |
| Dell Technologies, Inc., Class C * | 5,336 | 321,547 |
| Dolby Laboratories, Inc., Class A | 1,248 | 93,700 |
| EchoStar Corp., Class A * | 1,079 | 24,990 |
| F5 Networks, Inc. * | 1,380 | 183,457 |
| FLIR Systems, Inc. | 2,940 | 101,989 |
| Hewlett Packard Enterprise Co. | 29,129 | 251,675 |
| HP, Inc. | 32,287 | 579,874 |
| IPG Photonics Corp. * | 748 | 139,098 |
| Jabil, Inc. | 2,680 | 88,815 |
| Juniper Networks, Inc. | 7,438 | 146,677 |
| Keysight Technologies, Inc. * | 2,803 | 293,951 |
| Littelfuse, Inc. | 530 | 104,908 |
| Lumentum Holdings, Inc. * | 1,506 | 124,531 |
| Motorola Solutions, Inc. | 3,445 | 544,517 |
| National Instruments Corp. | 2,897 | 90,618 |
| NCR Corp. * | 2,849 | 57,892 |
| NetApp, Inc. | 2,278 | 99,981 |
| Pure Storage, Inc., Class A * | 2,317 | 37,304 |
| SYNNEX Corp. | 933 | 122,820 |
| Trimble, Inc. * | 5,628 | 270,876 |
| Ubiquiti, Inc. | 36 | 6,682 |
| ViaSat, Inc. * | 1,341 | 45,460 |
| Vontier Corp. * | 2,684 | 77,138 |
| Western Digital Corp. | 6,773 | 255,545 |
| Security | Number
of Shares | Value ($) |
| Xerox Holdings Corp. | 4,057 | 70,511 |
| Zebra Technologies Corp., Class A * | 101 | 28,648 |
| | | 8,868,356 |
| |
| Telecommunication Services 3.5% |
| AT&T, Inc. | 161,063 | 4,351,922 |
| CenturyLink, Inc. | 24,726 | 213,138 |
| GCI Liberty, Inc., Class A * | 2,227 | 180,899 |
| T-Mobile US, Inc. * | 12,419 | 1,360,750 |
| Telephone & Data Systems, Inc. | 2,261 | 38,437 |
| United States Cellular Corp. * | 323 | 9,406 |
| Verizon Communications, Inc. | 93,583 | 5,333,295 |
| | | 11,487,847 |
| |
| Transportation 2.9% |
| Alaska Air Group, Inc. | 2,688 | 101,848 |
| AMERCO | 200 | 69,432 |
| American Airlines Group, Inc. (b) | 11,413 | 128,739 |
| C.H. Robinson Worldwide, Inc. | 2,528 | 223,551 |
| Copa Holdings S.A., Class A | 704 | 34,693 |
| CSX Corp. | 17,226 | 1,359,820 |
| Delta Air Lines, Inc. | 14,394 | 441,032 |
| Expeditors International of Washington, Inc. | 1,442 | 127,430 |
| FedEx Corp. | 5,456 | 1,415,668 |
| JB Hunt Transport Services, Inc. | 1,384 | 168,488 |
| JetBlue Airways Corp. * | 6,186 | 74,046 |
| Kansas City Southern | 2,139 | 376,764 |
| Kirby Corp. * | 1,344 | 51,731 |
| Knight-Swift Transportation Holdings, Inc. | 2,809 | 106,714 |
| Landstar System, Inc. | 161 | 20,077 |
| Lyft, Inc., Class A * | 5,462 | 124,697 |
| Macquarie Infrastructure Corp. | 1,650 | 42,570 |
| Norfolk Southern Corp. | 5,781 | 1,208,923 |
| Old Dominion Freight Line, Inc. | 301 | 57,301 |
| Ryder System, Inc. | 1,177 | 57,979 |
| Schneider National, Inc., Class B | 1,324 | 29,207 |
| Southwest Airlines Co. | 13,300 | 525,749 |
| Uber Technologies, Inc. * | 7,181 | 239,917 |
| Union Pacific Corp. | 7,515 | 1,331,583 |
| United Airlines Holdings, Inc. * | 6,524 | 220,903 |
| United Parcel Service, Inc., Class B | 5,416 | 850,908 |
| XPO Logistics, Inc. * | 1,953 | 175,770 |
| | | 9,565,540 |
| |
| Utilities 6.3% |
| Alliant Energy Corp. | 5,641 | 311,834 |
| Ameren Corp. | 5,552 | 450,378 |
| American Electric Power Co., Inc. | 11,205 | 1,007,666 |
| American Water Works Co., Inc. | 4,085 | 614,833 |
| Atmos Energy Corp. | 2,742 | 251,359 |
| Avangrid, Inc. | 1,276 | 62,958 |
| CenterPoint Energy, Inc. | 11,379 | 240,438 |
| CMS Energy Corp. | 6,439 | 407,782 |
| Consolidated Edison, Inc. | 7,555 | 592,992 |
| Dominion Energy, Inc. | 18,933 | 1,521,077 |
| DTE Energy Co. | 4,333 | 534,779 |
| Duke Energy Corp. | 16,581 | 1,527,276 |
| Edison International | 8,068 | 452,131 |
| Entergy Corp. | 4,530 | 458,527 |
| Essential Utilities, Inc. | 5,052 | 208,142 |
| Evergy, Inc. | 5,112 | 282,182 |
| Eversource Energy | 7,742 | 675,644 |
| Exelon Corp. | 21,970 | 876,383 |
| FirstEnergy Corp. | 12,228 | 363,416 |
| Hawaiian Electric Industries, Inc. | 2,410 | 79,626 |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Large-Cap Value Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| IDACORP, Inc. | 1,134 | 99,486 |
| MDU Resources Group, Inc. | 4,477 | 106,374 |
| National Fuel Gas Co. | 1,957 | 78,202 |
| NextEra Energy, Inc. | 44,212 | 3,236,761 |
| NiSource, Inc. | 8,648 | 198,645 |
| NRG Energy, Inc. | 3,574 | 113,010 |
| OGE Energy Corp. | 4,494 | 138,280 |
| PG&E Corp. * | 29,260 | 279,726 |
| Pinnacle West Capital Corp. | 2,546 | 207,677 |
| PPL Corp. | 17,382 | 478,005 |
| Public Service Enterprise Group, Inc. | 11,397 | 662,736 |
| Sempra Energy | 6,540 | 819,854 |
| The AES Corp. | 14,935 | 291,233 |
| The Southern Co. | 23,843 | 1,369,780 |
| UGI Corp. | 4,666 | 150,898 |
| Vistra Corp. | 11,029 | 191,574 |
| WEC Energy Group, Inc. | 7,123 | 716,218 |
| Xcel Energy, Inc. | 11,851 | 829,926 |
| | | 20,887,808 |
| Total Common Stock |
| (Cost $308,297,025) | | 330,224,187 |
|
| Other Investment Companies 0.4% of net assets |
| |
| Equity Funds 0.1% |
| iShares Russell 1000 Value ETF | 2,600 | 303,498 |
| |
| Money Market Fund 0.2% |
| State Street Institutional U.S. Government Money Market Fund, Premier Class 0.03% (c) | 686,767 | 686,767 |
| |
| Securities Lending Collateral 0.1% |
| Wells Fargo Government Money Market Fund, Select Class 0.04% (c) | 356,750 | 356,750 |
| Total Other Investment Companies |
| (Cost $1,347,755) | | 1,347,015 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | |
| Long | |
| Russell 1000 Index, e-mini, expires 12/18/20 | 21 | 1,204,245 | (58,082) |
| S&P 500 Index, e-mini, expires 12/18/20 | 1 | 163,235 | (342) |
| Net Unrealized Depreciation | (58,424) |
| * | 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 $349,151. |
| (c) | The rate shown is the 7-day yield. |
| | |
| ETF — | Exchange-traded fund |
| REIT — | Real Estate Investment Trust |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Mid-Cap Index Fund
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Common Stock 99.4% of net assets |
| |
| Automobiles & Components 1.1% |
| Aptiv plc | 16,414 | 1,583,787 |
| BorgWarner, Inc. | 14,941 | 522,636 |
| Ford Motor Co. | 239,016 | 1,847,594 |
| Gentex Corp. | 15,050 | 416,433 |
| Harley-Davidson, Inc. | 9,358 | 307,691 |
| Lear Corp. | 3,672 | 443,614 |
| Thor Industries, Inc. | 3,372 | 285,204 |
| | | 5,406,959 |
| |
| Banks 2.7% |
| Associated Banc-Corp. | 9,273 | 126,947 |
| Bank of Hawaii Corp. | 2,425 | 147,052 |
| Bank OZK | 7,461 | 184,884 |
| BOK Financial Corp. | 1,907 | 112,017 |
| Citizens Financial Group, Inc. | 26,119 | 711,743 |
| Comerica, Inc. | 8,544 | 388,837 |
| Commerce Bancshares, Inc. | 6,169 | 384,020 |
| Cullen/Frost Bankers, Inc. | 3,424 | 240,604 |
| East West Bancorp, Inc. | 8,606 | 313,947 |
| F.N.B. Corp. | 19,656 | 148,599 |
| Fifth Third Bancorp | 43,587 | 1,012,090 |
| First Citizens BancShares, Inc., Class A | 384 | 177,677 |
| First Hawaiian, Inc. | 7,970 | 137,562 |
| First Horizon National Corp. | 33,329 | 346,955 |
| First Republic Bank | 10,437 | 1,316,523 |
| Huntington Bancshares, Inc. | 61,908 | 646,319 |
| KeyCorp | 59,542 | 772,855 |
| M&T Bank Corp. | 7,848 | 812,896 |
| MGIC Investment Corp. | 20,592 | 207,156 |
| New York Community Bancorp, Inc. | 27,420 | 227,860 |
| PacWest Bancorp | 7,174 | 138,028 |
| People's United Financial, Inc. | 26,013 | 277,559 |
| Pinnacle Financial Partners, Inc. | 4,520 | 206,971 |
| Popular, Inc. | 5,057 | 213,405 |
| Prosperity Bancshares, Inc. | 5,487 | 302,389 |
| Regions Financial Corp. | 58,889 | 783,224 |
| Signature Bank | 3,194 | 257,884 |
| Sterling Bancorp | 11,885 | 159,021 |
| SVB Financial Group * | 3,150 | 915,705 |
| Synovus Financial Corp. | 8,956 | 232,856 |
| TCF Financial Corp. | 9,198 | 250,278 |
| TFS Financial Corp. | 2,928 | 45,999 |
| Umpqua Holdings Corp. | 13,364 | 167,852 |
| Webster Financial Corp. | 5,520 | 177,799 |
| Western Alliance Bancorp | 5,951 | 245,181 |
| Wintrust Financial Corp. | 3,519 | 173,240 |
| Zions Bancorp NA | 9,914 | 319,925 |
| | | 13,283,859 |
| |
| Capital Goods 10.0% |
| A.O. Smith Corp. | 8,138 | 420,653 |
| Acuity Brands, Inc. | 2,406 | 214,471 |
| AECOM * | 9,374 | 420,330 |
| AGCO Corp. | 3,781 | 291,250 |
| Security | Number
of Shares | Value ($) |
| Air Lease Corp. | 6,516 | 177,496 |
| Allegion plc | 5,645 | 556,033 |
| Allison Transmission Holdings, Inc. | 6,893 | 249,182 |
| AMETEK, Inc. | 14,046 | 1,379,317 |
| Armstrong World Industries, Inc. | 2,900 | 173,710 |
| Axon Enterprise, Inc. * | 3,837 | 379,479 |
| BWX Technologies, Inc. | 5,828 | 320,598 |
| Carlisle Cos., Inc. | 3,315 | 410,629 |
| Carrier Global Corp. | 53,224 | 1,777,149 |
| Colfax Corp. * | 6,071 | 165,070 |
| Crane Co. | 2,970 | 150,728 |
| Cummins, Inc. | 9,034 | 1,986,486 |
| Curtiss-Wright Corp. | 2,539 | 214,190 |
| Donaldson Co., Inc. | 7,790 | 370,025 |
| Dover Corp. | 8,802 | 974,469 |
| Fastenal Co. | 35,088 | 1,516,854 |
| Flowserve Corp. | 7,944 | 231,329 |
| Fortive Corp. | 18,227 | 1,122,783 |
| Fortune Brands Home & Security, Inc. | 8,438 | 682,381 |
| Gates Industrial Corp. plc * | 2,685 | 29,804 |
| Generac Holdings, Inc. * | 3,743 | 786,591 |
| Graco, Inc. | 10,113 | 625,995 |
| GrafTech International Ltd. | 4,040 | 27,270 |
| HD Supply Holdings, Inc. * | 9,873 | 393,538 |
| HEICO Corp. | 2,736 | 287,417 |
| HEICO Corp., Class A | 4,763 | 445,341 |
| Hexcel Corp. | 5,075 | 169,911 |
| Howmet Aerospace, Inc. | 24,203 | 417,502 |
| Hubbell, Inc. | 3,309 | 481,493 |
| Huntington Ingalls Industries, Inc. | 2,429 | 358,229 |
| IDEX Corp. | 4,614 | 786,179 |
| Ingersoll Rand, Inc. * | 21,228 | 741,706 |
| ITT, Inc. | 5,310 | 321,308 |
| Jacobs Engineering Group, Inc. | 7,671 | 728,745 |
| Johnson Controls International plc | 45,656 | 1,927,140 |
| Lennox International, Inc. | 2,118 | 575,376 |
| Lincoln Electric Holdings, Inc. | 3,505 | 356,879 |
| Masco Corp. | 16,104 | 863,174 |
| Mercury Systems, Inc. * | 3,345 | 230,404 |
| MSC Industrial Direct Co., Inc., Class A | 2,731 | 190,241 |
| Nordson Corp. | 3,518 | 680,487 |
| nVent Electric plc | 9,497 | 171,421 |
| Oshkosh Corp. | 4,160 | 280,218 |
| Otis Worldwide Corp. | 25,009 | 1,532,552 |
| Owens Corning | 6,554 | 429,090 |
| PACCAR, Inc. | 20,786 | 1,774,709 |
| Parker-Hannifin Corp. | 7,845 | 1,634,584 |
| Pentair plc | 10,114 | 503,273 |
| Quanta Services, Inc. | 8,379 | 523,101 |
| Regal Beloit Corp. | 2,470 | 243,666 |
| Rockwell Automation, Inc. | 7,104 | 1,684,500 |
| Sensata Technologies Holding plc * | 9,463 | 413,628 |
| Snap-on, Inc. | 3,295 | 519,061 |
| Spirit AeroSystems Holdings, Inc., Class A | 6,453 | 117,380 |
| Stanley Black & Decker, Inc. | 9,449 | 1,570,424 |
| Teledyne Technologies, Inc. * | 2,220 | 686,313 |
| Textron, Inc. | 13,952 | 499,482 |
| The AZEK Co., Inc. * | 2,454 | 82,062 |
| The Middleby Corp. * | 3,383 | 336,744 |
| The Timken Co. | 3,879 | 231,576 |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Mid-Cap Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| The Toro Co. | 6,546 | 537,427 |
| Trane Technologies plc | 14,641 | 1,943,593 |
| TransDigm Group, Inc. | 3,200 | 1,527,712 |
| Trex Co., Inc. * | 7,076 | 492,065 |
| Trinity Industries, Inc. | 5,537 | 104,317 |
| United Rentals, Inc. * | 4,411 | 786,437 |
| Univar Solutions, Inc. * | 10,202 | 169,251 |
| Valmont Industries, Inc. | 1,274 | 180,844 |
| Vertiv Holdings Co. * | 13,409 | 236,669 |
| Virgin Galactic Holdings, Inc. *(a) | 4,083 | 71,126 |
| W.W. Grainger, Inc. | 2,727 | 954,505 |
| Watsco, Inc. | 1,995 | 447,159 |
| Westinghouse Air Brake Technologies Corp. | 11,085 | 657,340 |
| Woodward, Inc. | 3,412 | 271,425 |
| Xylem, Inc. | 10,957 | 954,793 |
| | | 48,177,789 |
| |
| Commercial & Professional Services 3.2% |
| ADT, Inc. | 9,415 | 62,045 |
| Cintas Corp. | 5,409 | 1,701,401 |
| Clean Harbors, Inc. * | 3,152 | 166,961 |
| Copart, Inc. * | 12,447 | 1,373,651 |
| CoreLogic, Inc. | 4,850 | 373,111 |
| CoStar Group, Inc. * | 2,389 | 1,967,604 |
| Dun & Bradstreet Holdings, Inc. * | 5,236 | 135,298 |
| Equifax, Inc. | 7,412 | 1,012,479 |
| FTI Consulting, Inc. * | 2,197 | 216,317 |
| IAA, Inc. * | 8,231 | 465,792 |
| IHS Markit Ltd. | 24,325 | 1,967,163 |
| ManpowerGroup, Inc. | 3,544 | 240,531 |
| MSA Safety, Inc. | 2,228 | 293,918 |
| Nielsen Holdings plc | 21,851 | 295,207 |
| Republic Services, Inc. | 12,865 | 1,134,307 |
| Robert Half International, Inc. | 6,855 | 347,480 |
| Rollins, Inc. | 9,084 | 525,509 |
| Stericycle, Inc. * | 5,601 | 348,942 |
| TransUnion | 11,639 | 927,163 |
| Verisk Analytics, Inc. | 9,718 | 1,729,513 |
| | | 15,284,392 |
| |
| Consumer Durables & Apparel 3.2% |
| Brunswick Corp. | 4,849 | 308,930 |
| Capri Holdings Ltd. * | 8,733 | 185,314 |
| Carter's, Inc. | 2,639 | 214,947 |
| Columbia Sportswear Co. | 1,756 | 130,980 |
| D.R. Horton, Inc. | 20,258 | 1,353,437 |
| Garmin Ltd. | 9,165 | 953,343 |
| Hanesbrands, Inc. | 21,289 | 342,114 |
| Hasbro, Inc. | 7,791 | 644,472 |
| Leggett & Platt, Inc. | 8,059 | 336,302 |
| Lennar Corp., Class A | 16,585 | 1,164,765 |
| Lennar Corp., Class B | 957 | 54,444 |
| Lululemon Athletica, Inc. * | 6,963 | 2,223,216 |
| Mattel, Inc. * | 20,964 | 288,674 |
| Mohawk Industries, Inc. * | 3,567 | 368,079 |
| Newell Brands, Inc. | 23,544 | 415,787 |
| NVR, Inc. * | 205 | 810,383 |
| Peloton Interactive, Inc., Class A * | 5,990 | 660,158 |
| Polaris, Inc. | 3,569 | 324,279 |
| PulteGroup, Inc. | 16,385 | 667,853 |
| PVH Corp. | 4,319 | 251,754 |
| Ralph Lauren Corp. | 2,871 | 191,926 |
| Skechers U.S.A., Inc., Class A * | 8,175 | 259,229 |
| Tapestry, Inc. | 16,898 | 375,643 |
| Tempur Sealy International, Inc. * | 2,881 | 256,409 |
| Toll Brothers, Inc. | 7,104 | 300,357 |
| Security | Number
of Shares | Value ($) |
| Under Armour, Inc., Class A * | 11,539 | 159,700 |
| Under Armour, Inc., Class C * | 12,058 | 147,469 |
| VF Corp. | 19,758 | 1,327,738 |
| Whirlpool Corp. | 3,737 | 691,196 |
| | | 15,408,898 |
| |
| Consumer Services 3.0% |
| Aramark | 14,007 | 388,554 |
| Bright Horizons Family Solutions, Inc. * | 3,668 | 579,728 |
| Carnival Corp. | 28,844 | 395,451 |
| Chegg, Inc. * | 7,418 | 544,778 |
| Chipotle Mexican Grill, Inc. * | 1,707 | 2,050,926 |
| Choice Hotels International, Inc. | 2,132 | 186,230 |
| Darden Restaurants, Inc. | 7,966 | 732,235 |
| Domino's Pizza, Inc. | 2,387 | 903,050 |
| Dunkin' Brands Group, Inc. | 5,030 | 501,541 |
| Extended Stay America, Inc. | 10,841 | 123,045 |
| frontdoor, Inc. * | 5,216 | 206,658 |
| Graham Holdings Co., Class B | 245 | 93,183 |
| Grand Canyon Education, Inc. * | 2,856 | 223,825 |
| H&R Block, Inc. | 11,778 | 203,288 |
| Hilton Worldwide Holdings, Inc. | 16,725 | 1,468,622 |
| Hyatt Hotels Corp., Class A | 2,133 | 117,614 |
| MGM Resorts International | 28,830 | 593,033 |
| Norwegian Cruise Line Holdings Ltd. * | 16,781 | 279,068 |
| Planet Fitness, Inc., Class A * | 4,925 | 291,905 |
| Royal Caribbean Cruises Ltd. | 10,757 | 606,910 |
| Service Corp. International | 10,549 | 488,524 |
| Six Flags Entertainment Corp. | 4,628 | 100,057 |
| Terminix Global Holdings, Inc. * | 8,119 | 382,324 |
| The Wendy's Co. | 10,977 | 239,848 |
| Vail Resorts, Inc. | 2,447 | 567,802 |
| Wyndham Destinations, Inc. | 5,180 | 169,024 |
| Wyndham Hotels & Resorts, Inc. | 5,628 | 261,758 |
| Wynn Resorts Ltd. | 5,997 | 434,363 |
| Yum China Holdings, Inc. | 24,544 | 1,306,477 |
| | | 14,439,821 |
| |
| Diversified Financials 4.6% |
| Affiliated Managers Group, Inc. | 2,818 | 212,393 |
| AGNC Investment Corp. | 34,054 | 475,734 |
| Ally Financial, Inc. | 22,898 | 610,919 |
| Ameriprise Financial, Inc. | 7,370 | 1,185,317 |
| Annaly Capital Management, Inc. | 86,043 | 610,045 |
| Apollo Global Management, Inc. | 10,447 | 385,076 |
| Ares Management Corp., Class A | 6,037 | 255,365 |
| Cboe Global Markets, Inc. | 6,706 | 545,131 |
| Credit Acceptance Corp. * | 599 | 178,574 |
| Discover Financial Services | 18,777 | 1,220,693 |
| Eaton Vance Corp. | 6,778 | 405,257 |
| Equitable Holdings, Inc. | 24,915 | 535,423 |
| Evercore, Inc., Class A | 2,426 | 192,964 |
| FactSet Research Systems, Inc. | 2,274 | 696,981 |
| Franklin Resources, Inc. | 16,626 | 311,737 |
| Interactive Brokers Group, Inc., Class A | 4,473 | 212,781 |
| Invesco Ltd. | 23,037 | 302,015 |
| Jefferies Financial Group, Inc. | 13,832 | 269,862 |
| KKR & Co., Inc. | 32,642 | 1,114,724 |
| Lazard Ltd., Class A | 6,167 | 207,643 |
| LendingTree, Inc. * | 480 | 155,323 |
| LPL Financial Holdings, Inc. | 4,810 | 384,463 |
| MarketAxess Holdings, Inc. | 2,259 | 1,217,262 |
| Morningstar, Inc. | 1,328 | 252,825 |
| MSCI, Inc. | 4,990 | 1,745,702 |
| Nasdaq, Inc. | 7,009 | 848,019 |
| New Residential Investment Corp. | 25,412 | 190,590 |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Mid-Cap Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Northern Trust Corp. | 11,769 | 921,160 |
| OneMain Holdings, Inc. | 3,955 | 137,990 |
| Raymond James Financial, Inc. | 7,519 | 574,752 |
| Santander Consumer USA Holdings, Inc. | 4,527 | 92,079 |
| SEI Investments Co. | 7,068 | 347,392 |
| SLM Corp. | 23,057 | 211,894 |
| Starwood Property Trust, Inc. | 16,719 | 233,564 |
| State Street Corp. | 21,573 | 1,270,650 |
| Synchrony Financial | 35,734 | 894,065 |
| T. Rowe Price Group, Inc. | 13,864 | 1,756,014 |
| The Carlyle Group, Inc. | 7,139 | 177,904 |
| Tradeweb Markets, Inc., Class A | 5,146 | 280,354 |
| Virtu Financial, Inc., Class A | 3,861 | 82,548 |
| Voya Financial, Inc. | 7,701 | 369,109 |
| | | 22,072,293 |
| |
| Energy 2.2% |
| Antero Midstream Corp. | 17,700 | 101,421 |
| Apache Corp. | 23,223 | 192,751 |
| Baker Hughes Co. | 40,224 | 594,108 |
| Cabot Oil & Gas Corp. | 23,968 | 426,391 |
| Cheniere Energy, Inc. * | 14,166 | 678,126 |
| Cimarex Energy Co. | 6,118 | 155,214 |
| Concho Resources, Inc. | 11,951 | 496,086 |
| Continental Resources, Inc. | 4,581 | 55,109 |
| Devon Energy Corp. | 23,389 | 208,864 |
| Diamondback Energy, Inc. | 9,678 | 251,241 |
| EQT Corp. | 15,691 | 237,562 |
| Equitrans Midstream Corp. | 24,912 | 180,861 |
| Halliburton Co. | 53,643 | 646,935 |
| Helmerich & Payne, Inc. | 6,395 | 95,094 |
| Hess Corp. | 16,814 | 625,817 |
| HollyFrontier Corp. | 9,138 | 169,144 |
| Marathon Oil Corp. | 48,480 | 191,981 |
| Marathon Petroleum Corp. | 39,654 | 1,169,793 |
| Murphy Oil Corp. | 8,919 | 68,855 |
| National Oilwell Varco, Inc. | 23,652 | 198,677 |
| Occidental Petroleum Corp. | 51,467 | 469,894 |
| ONEOK, Inc. | 26,870 | 779,230 |
| Parsley Energy, Inc., Class A | 18,500 | 185,185 |
| Pioneer Natural Resources Co. | 10,054 | 799,896 |
| Targa Resources Corp. | 14,127 | 226,738 |
| The Williams Cos., Inc. | 74,503 | 1,429,712 |
| WPX Energy, Inc. * | 24,794 | 114,300 |
| | | 10,748,985 |
| |
| Food & Staples Retailing 0.5% |
| Albertsons Cos., Inc., Class A *(a) | 2,809 | 41,264 |
| Casey's General Stores, Inc. | 2,259 | 380,800 |
| Grocery Outlet Holding Corp. * | 4,318 | 190,078 |
| Sprouts Farmers Market, Inc. * | 7,213 | 137,408 |
| The Kroger Co. | 47,452 | 1,528,429 |
| U.S. Foods Holding Corp. * | 13,498 | 282,108 |
| | | 2,560,087 |
| |
| Food, Beverage & Tobacco 2.9% |
| Archer-Daniels-Midland Co. | 33,946 | 1,569,663 |
| Beyond Meat, Inc. * | 3,156 | 449,509 |
| Brown-Forman Corp., Class A | 2,766 | 173,567 |
| Brown-Forman Corp., Class B | 11,066 | 771,411 |
| Bunge Ltd. | 8,319 | 471,937 |
| Campbell Soup Co. | 10,751 | 501,749 |
| Conagra Brands, Inc. | 29,869 | 1,048,103 |
| Flowers Foods, Inc. | 11,941 | 281,569 |
| Hormel Foods Corp. | 17,092 | 832,209 |
| Security | Number
of Shares | Value ($) |
| Ingredion, Inc. | 4,119 | 291,996 |
| Kellogg Co. | 15,375 | 966,934 |
| Lamb Weston Holdings, Inc. | 8,936 | 566,989 |
| McCormick & Co., Inc. - Non Voting Shares | 7,597 | 1,371,334 |
| Molson Coors Beverage Co., Class B | 10,705 | 377,458 |
| Pilgrim's Pride Corp. * | 3,176 | 53,166 |
| Post Holdings, Inc. * | 3,910 | 335,869 |
| Seaboard Corp. | 16 | 55,120 |
| The Boston Beer Co., Inc., Class A * | 545 | 566,353 |
| The Hain Celestial Group, Inc. * | 4,954 | 152,336 |
| The Hershey Co. | 9,037 | 1,242,226 |
| The JM Smucker Co. | 6,765 | 759,033 |
| TreeHouse Foods, Inc. * | 3,467 | 134,658 |
| Tyson Foods, Inc., Class A | 17,616 | 1,008,164 |
| | | 13,981,353 |
| |
| Health Care Equipment & Services 7.3% |
| ABIOMED, Inc. * | 2,712 | 683,099 |
| Acadia Healthcare Co., Inc. * | 5,418 | 193,152 |
| Align Technology, Inc. * | 4,784 | 2,038,367 |
| Amedisys, Inc. * | 1,932 | 500,388 |
| AmerisourceBergen Corp. | 8,929 | 857,809 |
| Cardinal Health, Inc. | 17,924 | 820,740 |
| Cerner Corp. | 18,646 | 1,306,898 |
| Change Healthcare, Inc. * | 14,808 | 209,533 |
| Chemed Corp. | 948 | 453,447 |
| DaVita, Inc. * | 5,083 | 438,409 |
| DENTSPLY SIRONA, Inc. | 13,389 | 631,827 |
| Encompass Health Corp. | 6,041 | 370,374 |
| Envista Holdings Corp. * | 9,725 | 256,935 |
| Globus Medical, Inc., Class A * | 4,522 | 235,687 |
| Guardant Health, Inc. * | 5,031 | 536,606 |
| Haemonetics Corp. * | 3,060 | 309,335 |
| Henry Schein, Inc. * | 8,732 | 555,181 |
| Hill-Rom Holdings, Inc. | 4,092 | 372,658 |
| Hologic, Inc. * | 15,710 | 1,081,162 |
| ICU Medical, Inc. * | 1,185 | 210,681 |
| IDEXX Laboratories, Inc. * | 5,155 | 2,189,947 |
| Insulet Corp. * | 4,018 | 893,001 |
| Integra LifeSciences Holdings Corp. * | 4,389 | 193,555 |
| Laboratory Corp. of America Holdings * | 5,942 | 1,187,033 |
| Livongo Health, Inc. *(b) | 3,386 | 408,163 |
| Masimo Corp. * | 2,993 | 669,893 |
| McKesson Corp. | 9,902 | 1,460,446 |
| Molina Healthcare, Inc. * | 3,600 | 671,292 |
| Novocure Ltd. * | 6,088 | 743,345 |
| Oak Street Health, Inc. * | 1,053 | 50,112 |
| Penumbra, Inc. * | 2,022 | 527,803 |
| Premier, Inc., Class A | 3,774 | 123,523 |
| Quest Diagnostics, Inc. | 8,190 | 1,000,327 |
| Quidel Corp. * | 2,276 | 610,628 |
| ResMed, Inc. | 8,783 | 1,685,809 |
| STERIS plc | 5,149 | 912,351 |
| Tandem Diabetes Care, Inc. * | 3,634 | 396,106 |
| Teladoc Health, Inc. * | 4,393 | 863,049 |
| Teleflex, Inc. | 2,845 | 905,364 |
| The Cooper Cos., Inc. | 2,984 | 952,045 |
| Universal Health Services, Inc., Class B | 4,510 | 494,071 |
| Varian Medical Systems, Inc. * | 5,558 | 960,422 |
| Veeva Systems, Inc., Class A * | 8,187 | 2,210,899 |
| West Pharmaceutical Services, Inc. | 4,497 | 1,223,499 |
| Zimmer Biomet Holdings, Inc. | 12,695 | 1,677,009 |
| | | 35,071,980 |
| |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Mid-Cap Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Household & Personal Products 0.8% |
| Church & Dwight Co., Inc. | 15,066 | 1,331,684 |
| Coty, Inc., Class A | 17,736 | 51,434 |
| Energizer Holdings, Inc. | 3,792 | 149,215 |
| Herbalife Nutrition Ltd. * | 5,482 | 247,458 |
| Nu Skin Enterprises, Inc., Class A | 3,157 | 155,798 |
| Reynolds Consumer Products, Inc. | 2,967 | 83,788 |
| Spectrum Brands Holdings, Inc. | 2,605 | 148,146 |
| The Clorox Co. | 7,732 | 1,602,457 |
| | | 3,769,980 |
| |
| Insurance 3.4% |
| Alleghany Corp. | 852 | 465,984 |
| American Financial Group, Inc. | 4,466 | 334,682 |
| American National Group, Inc. | 447 | 30,754 |
| Arch Capital Group Ltd. * | 24,087 | 727,668 |
| Arthur J. Gallagher & Co. | 11,533 | 1,196,087 |
| Assurant, Inc. | 3,656 | 454,697 |
| Assured Guaranty Ltd. | 4,922 | 125,659 |
| Athene Holding Ltd., Class A * | 7,060 | 226,485 |
| Axis Capital Holdings Ltd. | 5,104 | 217,890 |
| Brighthouse Financial, Inc. * | 5,666 | 187,545 |
| Brown & Brown, Inc. | 14,433 | 627,980 |
| Cincinnati Financial Corp. | 9,172 | 648,827 |
| CNA Financial Corp. | 1,691 | 50,375 |
| Erie Indemnity Co., Class A | 1,540 | 358,620 |
| Everest Re Group Ltd. | 2,415 | 475,948 |
| Fidelity National Financial, Inc. | 16,834 | 526,736 |
| First American Financial Corp. | 6,662 | 297,059 |
| Globe Life, Inc. | 6,425 | 521,003 |
| GoHealth, Inc., Class A * | 2,535 | 26,263 |
| Kemper Corp. | 3,801 | 234,370 |
| Lemonade, Inc. *(a) | 776 | 39,025 |
| Lincoln National Corp. | 11,773 | 413,232 |
| Loews Corp. | 14,672 | 508,825 |
| Markel Corp. * | 828 | 772,358 |
| Mercury General Corp. | 1,659 | 67,538 |
| Old Republic International Corp. | 17,416 | 283,533 |
| Primerica, Inc. | 2,397 | 264,245 |
| Principal Financial Group, Inc. | 16,641 | 652,660 |
| Prudential Financial, Inc. | 24,257 | 1,552,933 |
| Reinsurance Group of America, Inc. | 4,154 | 419,637 |
| RenaissanceRe Holdings Ltd. | 3,100 | 501,332 |
| The Hanover Insurance Group, Inc. | 2,309 | 220,879 |
| The Hartford Financial Services Group, Inc. | 21,907 | 843,858 |
| Unum Group | 12,393 | 218,860 |
| W.R. Berkley Corp. | 8,528 | 512,703 |
| White Mountains Insurance Group Ltd. | 186 | 168,949 |
| Willis Towers Watson plc | 7,884 | 1,438,672 |
| | | 16,613,871 |
| |
| Materials 5.5% |
| Albemarle Corp. | 6,464 | 602,509 |
| Amcor plc | 96,560 | 1,007,121 |
| AptarGroup, Inc. | 3,938 | 449,286 |
| Ardagh Group S.A. | 1,162 | 19,150 |
| Ashland Global Holdings, Inc. | 3,386 | 236,241 |
| Avery Dennison Corp. | 5,097 | 705,374 |
| Axalta Coating Systems Ltd. * | 12,943 | 324,999 |
| Ball Corp. | 19,548 | 1,739,772 |
| Berry Global Group, Inc. * | 8,148 | 379,941 |
| Cabot Corp. | 3,416 | 129,842 |
| Celanese Corp. | 7,214 | 818,861 |
| CF Industries Holdings, Inc. | 13,106 | 361,857 |
| Corteva, Inc. | 45,972 | 1,516,157 |
| Security | Number
of Shares | Value ($) |
| Crown Holdings, Inc. * | 7,938 | 681,080 |
| Eagle Materials, Inc. | 2,532 | 215,853 |
| Eastman Chemical Co. | 8,305 | 671,376 |
| Element Solutions, Inc. * | 13,357 | 156,544 |
| FMC Corp. | 7,932 | 814,934 |
| Freeport-McMoRan, Inc. | 88,849 | 1,540,642 |
| Graphic Packaging Holding Co. | 16,989 | 225,784 |
| Huntsman Corp. | 12,249 | 297,528 |
| International Flavors & Fragrances, Inc. (a) | 6,553 | 672,731 |
| International Paper Co. | 24,096 | 1,054,200 |
| LyondellBasell Industries N.V., Class A | 15,714 | 1,075,623 |
| Martin Marietta Materials, Inc. | 3,807 | 1,013,994 |
| NewMarket Corp. | 419 | 149,872 |
| Nucor Corp. | 18,459 | 881,602 |
| Olin Corp. | 8,794 | 145,541 |
| Packaging Corp. of America | 5,738 | 656,944 |
| PPG Industries, Inc. | 14,456 | 1,875,232 |
| Reliance Steel & Aluminum Co. | 3,886 | 423,535 |
| Royal Gold, Inc. | 4,014 | 476,903 |
| RPM International, Inc. | 7,827 | 662,712 |
| Sealed Air Corp. | 9,536 | 377,530 |
| Silgan Holdings, Inc. | 4,805 | 165,532 |
| Sonoco Products Co. | 6,130 | 299,696 |
| Steel Dynamics, Inc. | 12,302 | 387,267 |
| The Chemours Co. | 9,982 | 201,038 |
| The Mosaic Co. | 21,190 | 392,015 |
| The Scotts Miracle-Gro Co. | 2,485 | 372,874 |
| Valvoline, Inc. | 11,322 | 222,704 |
| Vulcan Materials Co. | 8,097 | 1,172,770 |
| W.R. Grace & Co. | 3,419 | 148,692 |
| Westlake Chemical Corp. | 2,072 | 140,109 |
| WestRock Co. | 15,718 | 590,211 |
| | | 26,454,178 |
| |
| Media & Entertainment 4.3% |
| Altice USA, Inc., Class A * | 18,725 | 504,639 |
| Cable One, Inc. | 327 | 566,318 |
| Discovery, Inc., Class A * | 9,554 | 193,373 |
| Discovery, Inc., Class C * | 19,946 | 365,411 |
| DISH Network Corp., Class A * | 15,056 | 383,777 |
| Fox Corp., Class A | 20,821 | 552,173 |
| Fox Corp., Class B | 9,755 | 254,996 |
| IAC/InterActiveCorp * | 4,595 | 554,708 |
| John Wiley & Sons, Inc., Class A | 2,614 | 80,929 |
| Liberty Broadband Corp., Class A * | 1,515 | 212,933 |
| Liberty Broadband Corp., Class C * | 6,431 | 911,337 |
| Liberty Media Corp. - Liberty Formula One, Class A * | 1,524 | 50,749 |
| Liberty Media Corp. - Liberty Formula One, Class C * | 12,140 | 438,618 |
| Liberty Media Corp. - Liberty SiriusXM, Class A * | 5,082 | 175,685 |
| Liberty Media Corp. - Liberty SiriusXM, Class C * | 10,626 | 367,660 |
| Lions Gate Entertainment Corp., Class A * | 3,530 | 23,651 |
| Lions Gate Entertainment Corp., Class B * | 7,024 | 44,041 |
| Live Nation Entertainment, Inc. * | 8,687 | 423,926 |
| Madison Square Garden Entertainment Corp. * | 1,150 | 74,750 |
| Madison Square Garden Sports Corp. * | 1,148 | 162,603 |
| Match Group, Inc. * | 13,413 | 1,566,370 |
| News Corp., Class A | 23,765 | 312,034 |
| News Corp., Class B | 7,417 | 96,569 |
| Nexstar Media Group, Inc., Class A | 2,671 | 220,090 |
| Omnicom Group, Inc. | 13,028 | 614,922 |
| Pinterest, Inc., Class A * | 24,617 | 1,451,172 |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Mid-Cap Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Roku, Inc. * | 6,485 | 1,312,564 |
| Sirius XM Holdings, Inc. | 72,348 | 414,554 |
| Spotify Technology S.A. * | 8,023 | 1,924,637 |
| Take-Two Interactive Software, Inc. * | 6,888 | 1,067,089 |
| The Interpublic Group of Cos., Inc. | 23,841 | 431,284 |
| The New York Times Co., Class A | 9,950 | 394,617 |
| TripAdvisor, Inc. | 6,160 | 117,718 |
| Twitter, Inc. * | 47,139 | 1,949,669 |
| ViacomCBS, Inc., Class B | 33,949 | 969,923 |
| World Wrestling Entertainment, Inc., Class A | 2,812 | 102,244 |
| Zillow Group, Inc., Class A * | 3,524 | 314,799 |
| Zillow Group, Inc., Class C * | 8,597 | 761,866 |
| Zynga, Inc., Class A * | 54,349 | 488,598 |
| | | 20,852,996 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 6.0% |
| 10X Genomics, Inc., Class A * | 3,518 | 481,614 |
| ACADIA Pharmaceuticals, Inc. * | 6,807 | 316,185 |
| Acceleron Pharma, Inc. * | 3,155 | 329,950 |
| Adaptive Biotechnologies Corp. * | 4,647 | 214,134 |
| Agilent Technologies, Inc. | 18,958 | 1,935,422 |
| Agios Pharmaceuticals, Inc. * | 3,754 | 150,423 |
| Alexion Pharmaceuticals, Inc. * | 13,037 | 1,501,080 |
| Alkermes plc * | 9,639 | 156,634 |
| Alnylam Pharmaceuticals, Inc. * | 7,073 | 869,767 |
| Avantor, Inc. * | 27,420 | 638,063 |
| Berkeley Lights, Inc. * | 571 | 41,437 |
| Bio-Rad Laboratories, Inc., Class A * | 1,294 | 758,828 |
| Bio-Techne Corp. | 2,327 | 587,358 |
| BioMarin Pharmaceutical, Inc. * | 11,066 | 823,642 |
| Bluebird Bio, Inc. * | 4,032 | 208,495 |
| Bruker Corp. | 6,325 | 269,066 |
| Catalent, Inc. * | 9,955 | 873,750 |
| Charles River Laboratories International, Inc. * | 2,992 | 681,278 |
| Elanco Animal Health, Inc. * | 24,488 | 759,373 |
| Exact Sciences Corp. * | 9,107 | 1,127,720 |
| Exelixis, Inc. * | 18,634 | 381,624 |
| Global Blood Therapeutics, Inc. * | 3,582 | 189,416 |
| Horizon Therapeutics plc * | 11,950 | 895,414 |
| Incyte Corp. * | 11,158 | 966,729 |
| Ionis Pharmaceuticals, Inc. * | 8,019 | 376,492 |
| Iovance Biotherapeutics, Inc. * | 8,469 | 302,174 |
| IQVIA Holdings, Inc. * | 11,651 | 1,794,138 |
| Jazz Pharmaceuticals plc * | 3,314 | 477,547 |
| Mettler-Toledo International, Inc. * | 1,445 | 1,441,980 |
| Moderna, Inc. * | 17,496 | 1,180,455 |
| Mylan N.V. * | 31,594 | 459,377 |
| Nektar Therapeutics * | 10,590 | 167,746 |
| Neurocrine Biosciences, Inc. * | 5,635 | 556,005 |
| PerkinElmer, Inc. | 6,818 | 883,272 |
| Perrigo Co., plc | 8,349 | 366,271 |
| PPD, Inc. * | 9,809 | 322,520 |
| PRA Health Sciences, Inc. * | 3,873 | 377,385 |
| QIAGEN N.V. * | 13,775 | 653,486 |
| Reata Pharmaceuticals, Inc., Class A * | 1,466 | 171,097 |
| Repligen Corp. * | 3,199 | 532,857 |
| Royalty Pharma plc, Class A | 6,253 | 229,485 |
| Sage Therapeutics, Inc. * | 3,148 | 231,000 |
| Sarepta Therapeutics, Inc. * | 4,560 | 619,750 |
| Seagen, Inc. * | 7,456 | 1,243,661 |
| Syneos Health, Inc. * | 4,249 | 225,537 |
| United Therapeutics Corp. * | 2,665 | 357,723 |
| Waters Corp. * | 3,748 | 835,129 |
| | | 28,962,489 |
| |
| Security | Number
of Shares | Value ($) |
| Real Estate 6.9% |
| Alexandria Real Estate Equities, Inc. | 7,674 | 1,162,764 |
| American Campus Communities, Inc. | 8,400 | 314,664 |
| American Homes 4 Rent, Class A | 15,903 | 449,578 |
| Americold Realty Trust | 12,482 | 452,223 |
| Apartment Investment & Management Co., Class A | 9,074 | 289,461 |
| Apple Hospitality REIT, Inc. | 12,824 | 126,958 |
| AvalonBay Communities, Inc. | 8,625 | 1,199,996 |
| Boston Properties, Inc. | 9,533 | 690,285 |
| Brandywine Realty Trust | 10,269 | 89,956 |
| Brixmor Property Group, Inc. | 18,030 | 197,609 |
| Brookfield Property REIT, Inc., Class A (a) | 2,802 | 41,330 |
| Camden Property Trust | 5,779 | 533,055 |
| CBRE Group, Inc., Class A * | 20,443 | 1,030,327 |
| CoreSite Realty Corp. | 2,470 | 294,819 |
| Corporate Office Properties Trust | 6,846 | 153,556 |
| Cousins Properties, Inc. | 9,069 | 231,078 |
| CubeSmart | 11,843 | 401,833 |
| CyrusOne, Inc. | 7,146 | 507,723 |
| Douglas Emmett, Inc. | 10,141 | 239,328 |
| Duke Realty Corp. | 22,578 | 857,738 |
| Empire State Realty Trust, Inc., Class A | 8,700 | 46,806 |
| EPR Properties | 4,514 | 107,614 |
| Equity Commonwealth | 7,102 | 187,635 |
| Equity LifeStyle Properties, Inc. | 10,652 | 630,492 |
| Equity Residential | 22,529 | 1,058,412 |
| Essex Property Trust, Inc. | 3,997 | 817,746 |
| Extra Space Storage, Inc. | 7,726 | 895,830 |
| Federal Realty Investment Trust | 4,624 | 318,039 |
| First Industrial Realty Trust, Inc. | 7,699 | 306,497 |
| Gaming & Leisure Properties, Inc. | 12,707 | 461,899 |
| Healthcare Trust of America, Inc., Class A | 13,326 | 323,822 |
| Healthpeak Properties, Inc. | 33,050 | 891,358 |
| Highwoods Properties, Inc. | 6,279 | 186,926 |
| Host Hotels & Resorts, Inc. | 42,833 | 448,890 |
| Hudson Pacific Properties, Inc. | 9,142 | 176,075 |
| Invitation Homes, Inc. | 34,381 | 937,226 |
| Iron Mountain, Inc. | 17,526 | 456,728 |
| JBG SMITH Properties | 7,402 | 172,837 |
| Jones Lang LaSalle, Inc. | 3,152 | 355,735 |
| Kilroy Realty Corp. | 7,008 | 329,937 |
| Kimco Realty Corp. | 25,190 | 258,449 |
| Lamar Advertising Co., Class A | 5,278 | 327,025 |
| Life Storage, Inc. | 2,860 | 326,469 |
| Medical Properties Trust, Inc. | 31,864 | 567,816 |
| Mid-America Apartment Communities, Inc. | 6,978 | 813,844 |
| National Retail Properties, Inc. | 10,519 | 336,713 |
| Omega Healthcare Investors, Inc. | 13,748 | 396,080 |
| Outfront Media, Inc. | 8,824 | 115,683 |
| Paramount Group, Inc. | 11,589 | 66,984 |
| Park Hotels & Resorts, Inc. | 14,337 | 142,366 |
| Rayonier, Inc. | 8,043 | 204,131 |
| Realty Income Corp. | 21,079 | 1,219,631 |
| Regency Centers Corp. | 10,344 | 368,143 |
| Rexford Industrial Realty, Inc. | 7,586 | 352,446 |
| Simon Property Group, Inc. | 18,647 | 1,171,218 |
| SL Green Realty Corp. | 4,453 | 190,633 |
| Spirit Realty Capital, Inc. | 6,261 | 188,143 |
| STORE Capital Corp. | 14,300 | 367,510 |
| Sun Communities, Inc. | 5,922 | 815,045 |
| Taubman Centers, Inc. | 3,688 | 123,253 |
| The Howard Hughes Corp. * | 2,393 | 148,821 |
| UDR, Inc. | 17,947 | 560,664 |
| Ventas, Inc. | 22,871 | 902,718 |
| VEREIT, Inc. | 66,004 | 409,225 |
| VICI Properties, Inc. | 32,755 | 751,727 |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Mid-Cap Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Vornado Realty Trust | 10,762 | 330,716 |
| Weingarten Realty Investors | 7,426 | 117,776 |
| Welltower, Inc. | 25,627 | 1,377,964 |
| Weyerhaeuser Co. | 45,778 | 1,249,282 |
| WP Carey, Inc. | 10,484 | 656,403 |
| | | 33,231,663 |
| |
| Retailing 4.3% |
| Advance Auto Parts, Inc. | 4,080 | 600,902 |
| AutoNation, Inc. * | 3,496 | 198,328 |
| AutoZone, Inc. * | 1,431 | 1,615,570 |
| Best Buy Co., Inc. | 13,987 | 1,560,250 |
| Burlington Stores, Inc. * | 3,981 | 770,642 |
| CarMax, Inc. * | 9,966 | 861,461 |
| Carvana Co. * | 3,348 | 620,552 |
| Dick's Sporting Goods, Inc. | 3,766 | 213,344 |
| Dollar Tree, Inc. * | 14,384 | 1,299,163 |
| Etsy, Inc. * | 7,231 | 879,217 |
| Expedia Group, Inc. | 8,282 | 779,750 |
| Five Below, Inc. * | 3,336 | 444,822 |
| Floor & Decor Holdings, Inc., Class A * | 5,753 | 419,969 |
| Foot Locker, Inc. | 6,335 | 233,635 |
| Genuine Parts Co. | 8,608 | 778,421 |
| GrubHub, Inc. * | 5,636 | 416,839 |
| Kohl's Corp. | 9,597 | 204,320 |
| L Brands, Inc. | 14,016 | 448,652 |
| LKQ Corp. * | 18,550 | 593,414 |
| Nordstrom, Inc. (a) | 6,626 | 80,175 |
| O'Reilly Automotive, Inc. * | 4,486 | 1,958,588 |
| Ollie's Bargain Outlet Holdings, Inc. * | 3,365 | 293,058 |
| Penske Automotive Group, Inc. | 1,967 | 100,632 |
| Pool Corp. | 2,375 | 830,846 |
| Qurate Retail, Inc. Class A | 23,217 | 157,179 |
| The Gap, Inc. | 11,244 | 218,696 |
| Tiffany & Co. | 7,421 | 970,964 |
| Tractor Supply Co. | 7,082 | 943,393 |
| Ulta Beauty, Inc. * | 3,299 | 682,134 |
| Vroom, Inc. * | 1,496 | 61,486 |
| Wayfair, Inc., Class A * | 4,077 | 1,011,218 |
| Williams-Sonoma, Inc. | 4,708 | 429,417 |
| | | 20,677,037 |
| |
| Semiconductors & Semiconductor Equipment 3.5% |
| Cirrus Logic, Inc. * | 3,592 | 247,381 |
| Cree, Inc. * | 6,632 | 421,795 |
| Enphase Energy, Inc. * | 6,472 | 634,838 |
| Entegris, Inc. | 8,205 | 613,488 |
| First Solar, Inc. * | 5,624 | 489,541 |
| Inphi Corp. * | 2,936 | 410,335 |
| KLA Corp. | 9,514 | 1,875,971 |
| Marvell Technology Group Ltd. | 40,397 | 1,515,291 |
| Maxim Integrated Products, Inc. | 16,269 | 1,133,136 |
| Microchip Technology, Inc. | 14,843 | 1,559,702 |
| MKS Instruments, Inc. | 3,348 | 362,890 |
| Monolithic Power Systems, Inc. | 2,666 | 852,054 |
| ON Semiconductor Corp. * | 24,852 | 623,537 |
| Qorvo, Inc. * | 6,989 | 890,119 |
| Skyworks Solutions, Inc. | 10,219 | 1,443,842 |
| SolarEdge Technologies, Inc. * | 2,993 | 771,266 |
| Teradyne, Inc. | 10,133 | 890,184 |
| Universal Display Corp. | 2,625 | 520,564 |
| Xilinx, Inc. | 14,969 | 1,776,671 |
| | | 17,032,605 |
| |
| Security | Number
of Shares | Value ($) |
| Software & Services 11.6% |
| 2U, Inc. * | 4,151 | 152,964 |
| Akamai Technologies, Inc. * | 9,796 | 931,796 |
| Alliance Data Systems Corp. | 2,867 | 147,765 |
| Alteryx, Inc., Class A * | 3,227 | 404,504 |
| Amdocs Ltd. | 8,120 | 457,806 |
| Anaplan, Inc. * | 7,970 | 441,140 |
| ANSYS, Inc. * | 5,251 | 1,598,247 |
| Aspen Technology, Inc. * | 4,141 | 454,723 |
| Avalara, Inc. * | 5,052 | 753,001 |
| BigCommerce Holdings, Inc. *(a) | 540 | 39,636 |
| Bill.com Holdings, Inc. * | 3,345 | 334,500 |
| Black Knight, Inc. * | 9,266 | 814,945 |
| Booz Allen Hamilton Holding Corp. | 8,283 | 650,216 |
| Broadridge Financial Solutions, Inc. | 7,010 | 964,576 |
| CACI International, Inc., Class A * | 1,526 | 318,217 |
| Cadence Design Systems, Inc. * | 16,899 | 1,848,244 |
| CDK Global, Inc. | 7,453 | 321,224 |
| Ceridian HCM Holding, Inc. * | 6,585 | 567,759 |
| Citrix Systems, Inc. | 7,552 | 855,415 |
| Cloudflare, Inc., Class A * | 6,660 | 346,120 |
| Coupa Software, Inc. * | 4,070 | 1,089,539 |
| Crowdstrike Holdings, Inc., Class A * | 9,296 | 1,151,217 |
| Datadog, Inc., Class A * | 9,341 | 847,696 |
| DocuSign, Inc. * | 10,927 | 2,209,986 |
| Dropbox, Inc., Class A * | 15,046 | 274,740 |
| Duck Creek Technologies, Inc. * | 874 | 37,905 |
| DXC Technology Co. | 15,567 | 286,744 |
| Dynatrace, Inc. * | 11,211 | 395,860 |
| Elastic N.V. * | 3,998 | 405,437 |
| EPAM Systems, Inc. * | 3,256 | 1,005,941 |
| Euronet Worldwide, Inc. * | 3,091 | 274,604 |
| Everbridge, Inc. * | 2,108 | 220,687 |
| Fair Isaac Corp. * | 1,714 | 670,945 |
| Fastly, Inc., Class A * | 4,837 | 307,198 |
| FireEye, Inc. * | 13,529 | 187,241 |
| Five9, Inc. * | 3,774 | 572,591 |
| FleetCor Technologies, Inc. * | 5,052 | 1,116,037 |
| Fortinet, Inc. * | 8,147 | 899,184 |
| Gartner, Inc. * | 5,299 | 636,410 |
| Genpact Ltd. | 11,486 | 394,774 |
| Globant S.A. * | 2,361 | 426,420 |
| GoDaddy, Inc., Class A * | 10,141 | 717,374 |
| Guidewire Software, Inc. * | 5,088 | 489,008 |
| HubSpot, Inc. * | 2,536 | 735,618 |
| Jack Henry & Associates, Inc. | 4,669 | 692,179 |
| Jamf Holding Corp. * | 1,220 | 39,772 |
| Leidos Holdings, Inc. | 8,240 | 683,920 |
| Manhattan Associates, Inc. * | 3,863 | 330,287 |
| Medallia, Inc. * | 5,101 | 145,123 |
| MongoDB, Inc. * | 3,081 | 703,916 |
| nCino, Inc. * | 879 | 61,987 |
| New Relic, Inc. * | 3,124 | 189,502 |
| NortonLifeLock, Inc. | 33,645 | 692,078 |
| Nuance Communications, Inc. * | 17,225 | 549,650 |
| Nutanix, Inc., Class A * | 11,163 | 271,707 |
| Okta, Inc. * | 7,047 | 1,478,672 |
| PagerDuty, Inc. * | 4,188 | 113,495 |
| Palo Alto Networks, Inc. * | 5,796 | 1,282,017 |
| Paychex, Inc. | 19,661 | 1,617,117 |
| Paycom Software, Inc. * | 3,019 | 1,099,188 |
| Paylocity Holding Corp. * | 2,123 | 393,859 |
| Pegasystems, Inc. | 2,416 | 279,966 |
| Pluralsight, Inc., Class A * | 6,369 | 99,993 |
| Proofpoint, Inc. * | 3,473 | 332,505 |
| PTC, Inc. * | 6,391 | 536,077 |
| RealPage, Inc. * | 5,359 | 298,443 |
Schwab Equity Index Funds | Annual Report
Schwab U.S. Mid-Cap Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| RingCentral, Inc., Class A * | 4,752 | 1,227,632 |
| Sabre Corp. | 16,942 | 110,462 |
| Science Applications International Corp. | 3,558 | 271,724 |
| Slack Technologies, Inc., Class A * | 23,357 | 597,472 |
| Smartsheet, Inc., Class A * | 6,767 | 337,335 |
| SolarWinds Corp. * | 2,880 | 58,838 |
| Splunk, Inc. * | 9,744 | 1,929,702 |
| SS&C Technologies Holdings, Inc. | 13,767 | 815,282 |
| StoneCo Ltd., Class A * | 10,954 | 575,523 |
| Switch, Inc., Class A | 5,460 | 76,768 |
| Synopsys, Inc. * | 9,175 | 1,962,165 |
| Teradata Corp. * | 6,608 | 121,389 |
| The Trade Desk, Inc., Class A * | 2,533 | 1,434,818 |
| The Western Union Co. | 25,114 | 488,216 |
| Twilio, Inc., Class A * | 8,394 | 2,341,674 |
| Tyler Technologies, Inc. * | 2,430 | 934,043 |
| VeriSign, Inc. * | 6,264 | 1,194,545 |
| WEX, Inc. * | 2,702 | 341,938 |
| Zendesk, Inc. * | 6,997 | 776,247 |
| Zscaler, Inc. * | 4,309 | 584,947 |
| | | 55,828,127 |
| |
| Technology Hardware & Equipment 4.1% |
| Amphenol Corp., Class A | 17,692 | 1,996,365 |
| Arista Networks, Inc. * | 3,596 | 751,204 |
| Arrow Electronics, Inc. * | 4,724 | 367,952 |
| Avnet, Inc. | 5,961 | 147,058 |
| CDW Corp. | 8,693 | 1,065,762 |
| Ciena Corp. * | 9,343 | 368,021 |
| Cognex Corp. | 10,092 | 665,063 |
| Coherent, Inc. * | 1,476 | 184,707 |
| CommScope Holding Co., Inc. * | 11,777 | 104,815 |
| Corning, Inc. | 45,951 | 1,469,054 |
| Dolby Laboratories, Inc., Class A | 3,857 | 289,584 |
| EchoStar Corp., Class A * | 2,964 | 68,646 |
| F5 Networks, Inc. * | 3,734 | 496,398 |
| FLIR Systems, Inc. | 7,973 | 276,583 |
| Hewlett Packard Enterprise Co. | 79,036 | 682,871 |
| HP, Inc. | 87,711 | 1,575,290 |
| IPG Photonics Corp. * | 2,170 | 403,533 |
| Jabil, Inc. | 9,030 | 299,254 |
| Juniper Networks, Inc. | 20,145 | 397,259 |
| Keysight Technologies, Inc. * | 11,463 | 1,202,125 |
| Littelfuse, Inc. | 1,441 | 285,232 |
| Lumentum Holdings, Inc. * | 4,585 | 379,134 |
| Motorola Solutions, Inc. | 10,423 | 1,647,459 |
| National Instruments Corp. | 7,921 | 247,769 |
| NCR Corp. * | 7,832 | 159,146 |
| NetApp, Inc. | 13,562 | 595,236 |
| Pure Storage, Inc., Class A * | 14,786 | 238,055 |
| SYNNEX Corp. | 2,544 | 334,892 |
| Trimble, Inc. * | 15,278 | 735,330 |
| Ubiquiti, Inc. | 521 | 96,703 |
| ViaSat, Inc. * | 3,542 | 120,074 |
| Vontier Corp. * | 7,256 | 208,537 |
| Western Digital Corp. | 18,379 | 693,440 |
| Xerox Holdings Corp. | 11,077 | 192,518 |
| Zebra Technologies Corp., Class A * | 3,216 | 912,186 |
| | | 19,657,255 |
| |
| Telecommunication Services 0.2% |
| CenturyLink, Inc. | 67,052 | 577,989 |
| GCI Liberty, Inc., Class A * | 6,044 | 490,954 |
| Security | Number
of Shares | Value ($) |
| Telephone & Data Systems, Inc. | 6,160 | 104,720 |
| United States Cellular Corp. * | 876 | 25,509 |
| | | 1,199,172 |
| |
| Transportation 2.2% |
| Alaska Air Group, Inc. | 7,371 | 279,287 |
| AMERCO | 545 | 189,202 |
| American Airlines Group, Inc. (a) | 31,026 | 349,973 |
| C.H. Robinson Worldwide, Inc. | 8,120 | 718,052 |
| Copa Holdings S.A., Class A | 1,899 | 93,583 |
| Delta Air Lines, Inc. | 39,063 | 1,196,890 |
| Expeditors International of Washington, Inc. | 10,169 | 898,635 |
| JB Hunt Transport Services, Inc. | 5,137 | 625,378 |
| JetBlue Airways Corp. * | 16,605 | 198,762 |
| Kansas City Southern | 5,809 | 1,023,197 |
| Kirby Corp. * | 3,627 | 139,603 |
| Knight-Swift Transportation Holdings, Inc. | 7,686 | 291,991 |
| Landstar System, Inc. | 2,327 | 290,177 |
| Lyft, Inc., Class A * | 14,895 | 340,053 |
| Macquarie Infrastructure Corp. | 4,510 | 116,358 |
| Old Dominion Freight Line, Inc. | 5,977 | 1,137,841 |
| Ryder System, Inc. | 3,211 | 158,174 |
| Schneider National, Inc., Class B | 3,564 | 78,622 |
| Southwest Airlines Co. | 36,121 | 1,427,863 |
| United Airlines Holdings, Inc. * | 17,774 | 601,828 |
| XPO Logistics, Inc. * | 5,563 | 500,670 |
| | | 10,656,139 |
| |
| Utilities 5.9% |
| Alliant Energy Corp. | 15,303 | 845,950 |
| Ameren Corp. | 15,088 | 1,223,939 |
| American Water Works Co., Inc. | 11,103 | 1,671,112 |
| Atmos Energy Corp. | 7,420 | 680,191 |
| Avangrid, Inc. | 3,453 | 170,371 |
| CenterPoint Energy, Inc. | 30,854 | 651,945 |
| CMS Energy Corp. | 17,503 | 1,108,465 |
| Consolidated Edison, Inc. | 20,533 | 1,611,635 |
| DTE Energy Co. | 11,772 | 1,452,900 |
| Edison International | 21,921 | 1,228,453 |
| Entergy Corp. | 12,311 | 1,246,119 |
| Essential Utilities, Inc. | 13,696 | 564,275 |
| Evergy, Inc. | 13,869 | 765,569 |
| Eversource Energy | 21,043 | 1,836,423 |
| FirstEnergy Corp. | 33,222 | 987,358 |
| Hawaiian Electric Industries, Inc. | 6,523 | 215,520 |
| IDACORP, Inc. | 3,098 | 271,788 |
| MDU Resources Group, Inc. | 12,219 | 290,323 |
| National Fuel Gas Co. | 5,299 | 211,748 |
| NiSource, Inc. | 23,447 | 538,578 |
| NRG Energy, Inc. | 14,902 | 471,201 |
| OGE Energy Corp. | 12,261 | 377,271 |
| PG&E Corp. * | 79,360 | 758,682 |
| Pinnacle West Capital Corp. | 6,884 | 561,528 |
| PPL Corp. | 47,228 | 1,298,770 |
| Public Service Enterprise Group, Inc. | 30,965 | 1,800,615 |
| The AES Corp. | 40,504 | 789,828 |
| UGI Corp. | 12,757 | 412,561 |
| Vistra Corp. | 29,888 | 519,155 |
| WEC Energy Group, Inc. | 19,356 | 1,946,246 |
| Xcel Energy, Inc. | 32,214 | 2,255,946 |
| | | 28,764,465 |
| Total Common Stock |
| (Cost $433,487,343) | | 480,136,393 |
|
Schwab Equity Index Funds | Annual Report
Schwab U.S. Mid-Cap Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Other Investment Companies 0.6% of net assets |
| |
| Equity Funds 0.1% |
| iShares Russell Mid-Cap ETF | 9,250 | 534,188 |
| |
| Money Market Fund 0.3% |
| State Street Institutional U.S. Government Money Market Fund, Premier Class 0.03% (c) | 1,321,608 | 1,321,608 |
| |
| Securities Lending Collateral 0.2% |
| Wells Fargo Government Money Market Fund, Select Class 0.04% (c) | 1,047,925 | 1,047,925 |
| Total Other Investment Companies |
| (Cost $2,904,664) | | 2,903,721 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | |
| Long | |
| S&P 400 Mid-Cap Index, e-mini, expires 12/18/20 | 12 | 2,274,720 | (107,774) |
| * | Non-income producing security. |
| (a) | All or a portion of this security is on loan. Securities on loan were valued at $1,016,695. |
| (b) | Fair-valued by management using significant unobservable inputs in accordance with procedures approved by fund’s Board of Trustees. |
| (c) | The rate shown is the 7-day yield. |
| | |
| ETF — | Exchange-traded fund |
| REIT — | Real Estate Investment Trust |
Schwab Equity Index Funds | Annual Report
Schwab International Index Fund
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Common Stock 98.7% of net assets |
| |
| Australia 6.8% |
| Afterpay Ltd. * | 97,520 | 6,640,048 |
| AGL Energy Ltd. | 286,978 | 2,515,229 |
| AMP Ltd. | 1,626,216 | 1,749,958 |
| Ampol Ltd. | 109,486 | 1,996,379 |
| APA Group | 527,949 | 3,892,219 |
| Aristocrat Leisure Ltd. | 256,083 | 5,156,675 |
| ASX Ltd. | 86,991 | 4,871,027 |
| Aurizon Holdings Ltd. | 888,057 | 2,354,824 |
| AusNet Services | 827,122 | 1,162,753 |
| Australia & New Zealand Banking Group Ltd. | 1,268,478 | 16,833,504 |
| BHP Group Ltd. | 1,318,528 | 31,607,261 |
| BlueScope Steel Ltd. | 223,901 | 2,312,604 |
| Brambles Ltd. | 693,268 | 4,675,620 |
| CIMIC Group Ltd. * | 43,905 | 663,571 |
| Coca-Cola Amatil Ltd. | 235,954 | 2,062,670 |
| Cochlear Ltd. | 29,489 | 4,401,390 |
| Coles Group Ltd. | 594,014 | 7,420,586 |
| Commonwealth Bank of Australia | 793,999 | 38,549,866 |
| Computershare Ltd. | 217,978 | 1,862,820 |
| Crown Resorts Ltd. | 160,832 | 936,347 |
| CSL Ltd. | 203,506 | 41,201,270 |
| Dexus | 484,700 | 2,932,458 |
| Evolution Mining Ltd. | 740,504 | 2,903,097 |
| Fortescue Metals Group Ltd. | 756,085 | 9,249,558 |
| Goodman Group | 734,062 | 9,501,078 |
| Insurance Australia Group Ltd. | 1,029,339 | 3,455,203 |
| James Hardie Industries plc | 198,873 | 4,828,610 |
| Lendlease Corp. Ltd. | 290,353 | 2,442,488 |
| Macquarie Group Ltd. | 150,136 | 13,386,120 |
| Magellan Financial Group Ltd. | 56,180 | 2,177,455 |
| Medibank Pvt Ltd. | 1,250,365 | 2,347,152 |
| Mirvac Group | 1,743,087 | 2,584,948 |
| National Australia Bank Ltd. | 1,428,937 | 18,694,751 |
| Newcrest Mining Ltd. | 359,412 | 7,453,303 |
| Northern Star Resources Ltd. | 335,654 | 3,545,818 |
| Oil Search Ltd. | 876,266 | 1,582,069 |
| Orica Ltd. | 184,777 | 1,983,539 |
| Origin Energy Ltd. | 781,152 | 2,197,388 |
| Qantas Airways Ltd. * | 399,017 | 1,173,882 |
| QBE Insurance Group Ltd. | 664,644 | 3,843,426 |
| Ramsay Health Care Ltd. | 81,055 | 3,551,368 |
| REA Group Ltd. | 23,214 | 1,930,523 |
| Rio Tinto Ltd. | 166,540 | 10,834,069 |
| Santos Ltd. | 797,593 | 2,651,507 |
| Scentre Group | 2,358,223 | 3,480,075 |
| SEEK Ltd. (a) | 149,194 | 2,258,137 |
| Sonic Healthcare Ltd. | 203,213 | 4,977,301 |
| South32 Ltd. | 2,209,203 | 3,152,491 |
| Stockland | 1,082,768 | 2,927,893 |
| Suncorp Group Ltd. | 558,156 | 3,223,512 |
| Sydney Airport | 576,197 | 2,209,186 |
| Tabcorp Holdings Ltd. | 1,024,262 | 2,366,682 |
| Telstra Corp. Ltd. | 1,863,400 | 3,509,130 |
| The GPT Group | 864,789 | 2,449,300 |
| TPG Telecom Ltd. * | 159,515 | 805,130 |
| Security | Number
of Shares | Value ($) |
| Transurban Group | 1,223,929 | 11,590,209 |
| Treasury Wine Estates Ltd. | 330,306 | 2,129,432 |
| Vicinity Centres | 1,611,630 | 1,369,575 |
| Washington H Soul Pattinson & Co., Ltd. | 53,217 | 947,658 |
| Wesfarmers Ltd. | 510,509 | 16,524,980 |
| Westpac Banking Corp. | 1,614,101 | 20,429,451 |
| WiseTech Global Ltd. | 64,917 | 1,324,013 |
| Woodside Petroleum Ltd. | 428,705 | 5,287,752 |
| Woolworths Group Ltd. | 563,234 | 15,151,162 |
| | | 404,229,500 |
| |
| Austria 0.2% |
| ANDRITZ AG | 31,366 | 1,057,868 |
| Erste Group Bank AG * | 126,884 | 2,608,159 |
| OMV AG | 67,724 | 1,565,533 |
| Raiffeisen Bank International AG * | 64,183 | 926,696 |
| Verbund AG | 31,514 | 1,817,540 |
| voestalpine AG | 54,656 | 1,519,812 |
| | | 9,495,608 |
| |
| Belgium 0.9% |
| Ageas S.A./N.V. | 78,066 | 3,143,643 |
| Anheuser-Busch InBev S.A./N.V. | 340,915 | 17,634,227 |
| Argenx SE * | 19,871 | 4,958,642 |
| Elia Group S.A./N.V. | 14,667 | 1,418,608 |
| Etablissements Franz Colruyt N.V. | 26,113 | 1,545,564 |
| Galapagos N.V. * | 19,226 | 2,247,273 |
| Groupe Bruxelles Lambert S.A. | 51,058 | 4,187,174 |
| KBC Group N.V. | 111,695 | 5,518,494 |
| Proximus | 66,235 | 1,287,621 |
| Sofina S.A. | 7,114 | 1,848,918 |
| Solvay S.A. | 32,495 | 2,640,229 |
| Telenet Group Holding N.V. | 20,805 | 800,170 |
| UCB S.A. | 57,447 | 5,674,128 |
| Umicore S.A. | 88,251 | 3,402,191 |
| | | 56,306,882 |
| |
| Denmark 2.6% |
| Ambu A/S, Class B | 74,630 | 2,263,557 |
| AP Moller - Maersk A/S, Series A | 1,524 | 2,253,471 |
| AP Moller - Maersk A/S, Series B | 2,915 | 4,671,680 |
| Carlsberg A/S, Class B | 46,083 | 5,835,065 |
| Chr. Hansen Holding A/S | 47,041 | 4,746,898 |
| Coloplast A/S, Class B | 52,963 | 7,745,466 |
| Danske Bank A/S * | 308,647 | 4,113,514 |
| Demant A/S * | 49,165 | 1,552,300 |
| DSV PANALPINA A/S | 92,772 | 15,051,462 |
| Genmab A/S * | 29,282 | 9,780,916 |
| GN Store Nord A/S | 57,092 | 4,110,452 |
| H. Lundbeck A/S | 33,700 | 950,052 |
| Novo Nordisk A/S, Class B | 770,680 | 49,142,899 |
| Novozymes A/S, Class B | 93,097 | 5,598,961 |
| Orsted A/S | 84,158 | 13,357,054 |
| Pandora A/S | 45,275 | 3,591,640 |
Schwab Equity Index Funds | Annual Report
Schwab International Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Tryg A/S | 57,060 | 1,583,570 |
| Vestas Wind Systems A/S | 88,171 | 15,126,971 |
| | | 151,475,928 |
| |
| Finland 1.0% |
| Elisa Oyj | 64,008 | 3,147,187 |
| Fortum Oyj | 200,724 | 3,772,934 |
| Kone Oyj, Class B | 152,595 | 12,148,564 |
| Neste Oyj | 190,469 | 9,933,633 |
| Nokia Oyj * | 2,533,063 | 8,539,452 |
| Orion Oyj, Class B | 46,161 | 1,975,673 |
| Sampo Oyj, A Shares | 209,399 | 7,901,980 |
| Stora Enso Oyj, R Shares | 263,110 | 3,839,550 |
| UPM-Kymmene Oyj | 242,455 | 6,851,526 |
| Wartsila Oyj Abp | 189,743 | 1,507,852 |
| | | 59,618,351 |
| |
| France 10.5% |
| Accor S.A. * | 86,918 | 2,215,361 |
| Aeroports de Paris | 13,436 | 1,314,815 |
| Air Liquide S.A. | 211,543 | 30,935,683 |
| Airbus SE * | 262,662 | 19,217,937 |
| Alstom S.A. * | 85,014 | 3,798,375 |
| Amundi S.A. * | 26,406 | 1,732,023 |
| ArcelorMittal S.A. * | 316,698 | 4,294,433 |
| Arkema S.A. | 31,729 | 3,107,530 |
| Atos SE * | 44,528 | 3,041,968 |
| AXA S.A. | 861,083 | 13,828,388 |
| BioMerieux | 18,898 | 2,813,893 |
| BNP Paribas S.A. * | 503,076 | 17,544,657 |
| Bollore S.A. | 392,631 | 1,407,384 |
| Bouygues S.A. | 101,475 | 3,327,713 |
| Bureau Veritas S.A. * | 130,343 | 2,858,206 |
| Capgemini SE | 72,083 | 8,323,265 |
| Carrefour S.A. | 271,409 | 4,218,210 |
| Cie de Saint-Gobain * | 229,674 | 8,946,608 |
| CNP Assurances * | 74,649 | 841,939 |
| Compagnie Generale des Etablissements Michelin S.C.A. | 76,769 | 8,291,126 |
| Covivio | 23,711 | 1,412,004 |
| Credit Agricole S.A. * | 515,230 | 4,075,746 |
| Danone S.A. | 278,163 | 15,428,366 |
| Dassault Aviation S.A. * | 1,210 | 1,012,354 |
| Dassault Systemes SE | 59,092 | 10,075,796 |
| Edenred | 109,653 | 5,111,358 |
| Eiffage S.A. * | 38,986 | 2,829,504 |
| Electricite de France S.A. | 286,017 | 3,319,816 |
| Engie S.A. * | 811,860 | 9,819,083 |
| EssilorLuxottica S.A. * | 127,475 | 15,737,920 |
| Eurazeo SE * | 17,153 | 780,076 |
| Eurofins Scientific SE * | 6,040 | 4,809,773 |
| Faurecia SE * | 33,360 | 1,265,210 |
| Gecina S.A. | 20,314 | 2,521,841 |
| Getlink SE * | 194,873 | 2,621,085 |
| Hermes International | 14,257 | 13,274,690 |
| ICADE | 12,793 | 646,949 |
| Iliad S.A. | 6,992 | 1,351,775 |
| Ipsen S.A. | 17,626 | 1,605,375 |
| JCDecaux S.A. * | 35,719 | 551,299 |
| Kering S.A. | 33,897 | 20,484,503 |
| Klepierre S.A. (b) | 88,751 | 1,124,483 |
| L'Oreal S.A. | 112,611 | 36,394,218 |
| La Francaise des Jeux SAEM | 37,115 | 1,392,266 |
| Legrand S.A. | 118,643 | 8,781,872 |
| LVMH Moet Hennessy Louis Vuitton SE | 124,438 | 58,330,025 |
| Security | Number
of Shares | Value ($) |
| Natixis S.A. * | 400,181 | 932,100 |
| Orange S.A. | 897,844 | 10,082,448 |
| Orpea * | 23,431 | 2,340,388 |
| Pernod-Ricard S.A. | 95,158 | 15,330,188 |
| Peugeot S.A. * | 262,738 | 4,719,880 |
| Publicis Groupe S.A. | 94,916 | 3,297,599 |
| Remy Cointreau S.A. | 9,982 | 1,685,283 |
| Renault S.A. * | 83,966 | 2,079,483 |
| Safran S.A. * | 143,345 | 15,120,015 |
| Sanofi | 505,958 | 45,684,637 |
| Sartorius Stedim Biotech | 12,681 | 4,808,763 |
| Schneider Electric SE | 247,382 | 30,058,500 |
| SCOR SE * | 72,951 | 1,771,633 |
| SEB S.A. | 9,843 | 1,599,618 |
| SES S.A. | 171,330 | 1,368,468 |
| Societe Generale S.A. * | 363,041 | 4,932,968 |
| Sodexo S.A. | 39,221 | 2,519,403 |
| STMicroelectronics N.V. | 286,189 | 8,729,968 |
| Suez S.A. | 162,973 | 2,983,606 |
| Teleperformance | 26,093 | 7,832,671 |
| Thales S.A. | 48,240 | 3,143,333 |
| TOTAL SE | 1,109,150 | 33,603,594 |
| UbiSoft Entertainment S.A. * | 40,714 | 3,596,406 |
| Unibail-Rodamco-Westfield (b) | 62,633 | 2,535,440 |
| Valeo S.A. | 103,789 | 3,139,763 |
| Veolia Environnement S.A. | 241,069 | 4,486,931 |
| Vinci S.A. | 230,571 | 18,211,666 |
| Vivendi S.A. | 375,099 | 10,826,672 |
| Wendel SE | 12,085 | 1,045,852 |
| Worldline S.A. * | 104,680 | 7,753,292 |
| | | 623,037,469 |
| |
| Germany 8.4% |
| adidas AG * | 85,079 | 25,277,384 |
| Allianz SE | 186,907 | 32,924,527 |
| Aroundtown S.A. * | 446,627 | 2,142,316 |
| BASF SE | 412,205 | 22,571,598 |
| Bayer AG | 438,762 | 20,617,653 |
| Bayerische Motoren Werke AG | 147,654 | 10,090,486 |
| Beiersdorf AG | 45,092 | 4,721,550 |
| Brenntag AG | 70,649 | 4,515,628 |
| Carl Zeiss Meditec AG | 17,661 | 2,281,979 |
| Commerzbank AG * | 439,465 | 2,080,125 |
| Continental AG | 50,023 | 5,314,989 |
| Covestro AG | 82,220 | 3,924,029 |
| Daimler AG | 382,731 | 19,782,786 |
| Delivery Hero SE * | 58,712 | 6,739,794 |
| Deutsche Bank AG * | 874,088 | 8,077,566 |
| Deutsche Boerse AG | 85,444 | 12,590,474 |
| Deutsche Lufthansa AG *(b) | 138,220 | 1,182,482 |
| Deutsche Post AG | 442,420 | 19,616,008 |
| Deutsche Telekom AG | 1,489,569 | 22,639,583 |
| Deutsche Wohnen SE | 152,045 | 7,674,155 |
| E.ON SE | 1,000,393 | 10,418,259 |
| Evonik Industries AG | 91,767 | 2,209,463 |
| Fraport AG Frankfurt Airport Services Worldwide *(b) | 18,332 | 663,041 |
| Fresenius Medical Care AG & Co. KGaA | 95,244 | 7,273,039 |
| Fresenius SE & Co. KGaA | 189,010 | 7,011,030 |
| GEA Group AG | 71,788 | 2,390,806 |
| Hannover Rueck SE | 27,150 | 3,945,486 |
| HeidelbergCement AG | 67,041 | 3,834,304 |
| Henkel AG & Co. KGaA | 47,016 | 4,250,429 |
| HOCHTIEF AG | 11,708 | 861,306 |
| Infineon Technologies AG | 560,692 | 15,610,325 |
| KION Group AG | 29,075 | 2,265,550 |
Schwab Equity Index Funds | Annual Report
Schwab International Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Knorr-Bremse AG | 33,399 | 3,867,643 |
| LANXESS AG | 36,992 | 1,876,151 |
| LEG Immobilien AG | 30,907 | 4,177,169 |
| Merck KGaA | 58,554 | 8,673,672 |
| METRO AG | 80,819 | 792,540 |
| MTU Aero Engines AG | 23,873 | 4,080,405 |
| Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen | 62,543 | 14,658,651 |
| Nemetschek SE | 24,975 | 1,808,363 |
| Puma SE * | 43,830 | 3,837,015 |
| QIAGEN N.V. * | 100,473 | 4,770,738 |
| RWE AG | 286,911 | 10,617,931 |
| SAP SE | 467,434 | 49,867,998 |
| Scout24 AG | 47,976 | 3,870,493 |
| Siemens AG | 342,762 | 40,211,478 |
| Siemens Energy AG * | 176,009 | 3,853,791 |
| Siemens Healthineers AG | 122,910 | 5,276,374 |
| Symrise AG | 57,259 | 7,060,629 |
| Teamviewer AG * | 67,138 | 2,959,309 |
| Telefonica Deutschland Holding AG | 452,375 | 1,141,011 |
| ThyssenKrupp AG * | 189,594 | 904,980 |
| Uniper SE | 89,588 | 2,675,935 |
| United Internet AG | 47,754 | 1,674,665 |
| Volkswagen AG | 14,839 | 2,308,390 |
| Vonovia SE | 230,868 | 14,744,035 |
| Zalando SE * | 68,906 | 6,416,828 |
| | | 497,624,344 |
| |
| Hong Kong 3.4% |
| AIA Group Ltd. | 5,417,400 | 51,558,335 |
| ASM Pacific Technology Ltd. | 137,100 | 1,382,559 |
| BeiGene Ltd. ADR * | 17,904 | 5,308,894 |
| BOC Hong Kong (Holdings) Ltd. | 1,657,090 | 4,602,545 |
| Budweiser Brewing Co. APAC Ltd. | 778,600 | 2,296,177 |
| CK Asset Holdings Ltd. | 1,181,025 | 5,484,077 |
| CK Hutchison Holdings Ltd. | 1,225,525 | 7,402,143 |
| CK Infrastructure Holdings Ltd. | 293,000 | 1,382,160 |
| CLP Holdings Ltd. | 746,426 | 6,877,975 |
| Dairy Farm International Holdings Ltd. | 153,000 | 576,324 |
| Galaxy Entertainment Group Ltd. | 965,000 | 6,377,254 |
| Hang Lung Properties Ltd. | 917,000 | 2,232,426 |
| Hang Seng Bank Ltd. | 342,540 | 5,277,184 |
| Henderson Land Development Co., Ltd. | 632,735 | 2,234,870 |
| HK Electric Investments & HK Electric Investments Ltd. | 1,157,604 | 1,178,470 |
| HKT Trust & HKT Ltd. | 1,644,000 | 2,126,131 |
| Hong Kong & China Gas Co., Ltd. | 4,775,473 | 6,890,065 |
| Hong Kong Exchanges & Clearing Ltd. | 539,765 | 25,864,841 |
| Hongkong Land Holdings Ltd. | 494,600 | 1,815,754 |
| Jardine Matheson Holdings Ltd. | 99,075 | 4,391,562 |
| Jardine Strategic Holdings Ltd. | 101,740 | 2,202,890 |
| Kerry Properties Ltd. | 297,500 | 729,925 |
| Link REIT | 921,500 | 7,032,757 |
| Melco Resorts & Entertainment Ltd. ADR | 98,111 | 1,581,549 |
| Microport Scientific Corp. | 320,000 | 1,130,613 |
| MTR Corp., Ltd. | 681,091 | 3,374,987 |
| New World Development Co., Ltd. | 684,778 | 3,269,395 |
| PCCW Ltd. | 1,857,682 | 1,117,648 |
| Power Assets Holdings Ltd. | 624,938 | 3,218,236 |
| Sands China Ltd. | 1,076,400 | 3,777,735 |
| Sino Land Co., Ltd. | 1,438,472 | 1,704,701 |
| Security | Number
of Shares | Value ($) |
| SJM Holdings Ltd. | 878,864 | 912,532 |
| Sun Hung Kai Properties Ltd. | 577,104 | 7,428,374 |
| Swire Pacific Ltd., Class A | 226,590 | 1,033,295 |
| Swire Properties Ltd. | 553,200 | 1,484,504 |
| Techtronic Industries Co., Ltd. | 609,000 | 8,202,829 |
| The Bank of East Asia Ltd. | 565,969 | 1,021,016 |
| WH Group Ltd. | 4,297,500 | 3,384,823 |
| Wharf Real Estate Investment Co., Ltd. | 772,188 | 2,971,982 |
| Wynn Macau Ltd. * | 698,000 | 964,380 |
| | | 201,803,917 |
| |
| Ireland 0.7% |
| CRH plc | 352,289 | 12,327,217 |
| Flutter Entertainment plc * | 69,316 | 12,117,023 |
| Kerry Group plc, Class A | 71,689 | 8,581,309 |
| Kingspan Group plc * | 68,366 | 5,959,742 |
| Smurfit Kappa Group plc | 103,158 | 3,886,900 |
| | | 42,872,191 |
| |
| Israel 0.6% |
| Azrieli Group Ltd. | 20,307 | 953,127 |
| Bank Hapoalim B.M. * | 506,552 | 2,956,901 |
| Bank Leumi Le-Israel B.M. | 651,059 | 3,068,463 |
| Check Point Software Technologies Ltd. * | 50,383 | 5,721,493 |
| CyberArk Software Ltd. * | 17,613 | 1,746,329 |
| Elbit Systems Ltd. | 12,524 | 1,411,249 |
| ICL Group Ltd. | 304,605 | 1,105,063 |
| Israel Discount Bank Ltd., Class A | 518,054 | 1,450,063 |
| Mizrahi Tefahot Bank Ltd. | 62,945 | 1,227,440 |
| Nice Ltd. * | 28,009 | 6,370,061 |
| Teva Pharmaceutical Industries Ltd. ADR * | 490,182 | 4,274,387 |
| Wix.com Ltd. * | 22,918 | 5,668,080 |
| | | 35,952,656 |
| |
| Italy 2.2% |
| Assicurazioni Generali S.p.A. | 499,917 | 6,705,999 |
| Atlantia S.p.A. * | 218,169 | 3,349,012 |
| CNH Industrial N.V. * | 461,143 | 3,575,553 |
| Davide Campari-Milano N.V. | 253,994 | 2,654,581 |
| DiaSorin S.p.A. | 10,932 | 2,399,887 |
| Enel S.p.A. | 3,636,304 | 28,910,444 |
| Eni S.p.A. | 1,129,971 | 7,915,497 |
| EXOR N.V. | 47,525 | 2,472,574 |
| Ferrari N.V. | 56,568 | 10,091,270 |
| Fiat Chrysler Automobiles N.V. * | 488,760 | 5,995,918 |
| FinecoBank Banca Fineco S.p.A. * | 272,317 | 3,738,876 |
| Infrastrutture Wireless Italiane S.p.A. | 116,121 | 1,254,296 |
| Intesa Sanpaolo S.p.A. * | 7,414,200 | 12,308,342 |
| Leonardo S.p.A. | 194,114 | 925,563 |
| Mediobanca Banca di Credito Finanziario S.p.A. | 282,372 | 2,004,762 |
| Moncler S.p.A. * | 87,343 | 3,494,741 |
| Nexi SpA * | 196,508 | 3,025,064 |
| Pirelli & C S.p.A. * | 178,195 | 742,983 |
| Poste Italiane S.p.A | 242,430 | 1,979,119 |
| Prysmian S.p.A. | 110,385 | 3,003,841 |
| Recordati Industria Chimica e Farmaceutica S.p.A. | 45,954 | 2,382,467 |
| Snam S.p.A. | 895,362 | 4,365,858 |
| Telecom Italia S.p.A. | 3,880,094 | 1,317,961 |
| Telecom Italia S.p.A. - RSP | 2,653,128 | 965,756 |
Schwab Equity Index Funds | Annual Report
Schwab International Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Tenaris S.A. | 213,239 | 1,017,582 |
| Terna - Rete Elettrica Nationale S.p.A. | 627,832 | 4,238,988 |
| UniCredit S.p.A. * | 951,027 | 7,122,610 |
| | | 127,959,544 |
| |
| Japan 26.4% |
| ABC-Mart, Inc. | 14,380 | 729,417 |
| Acom Co., Ltd. | 167,800 | 754,097 |
| Advantest Corp. | 89,998 | 5,212,951 |
| Aeon Co., Ltd. | 291,800 | 7,454,959 |
| Aeon Mall Co., Ltd. | 45,500 | 709,772 |
| AGC, Inc. | 84,993 | 2,653,987 |
| Air Water, Inc. | 79,400 | 1,134,452 |
| Aisin Seiki Co., Ltd. | 70,600 | 2,139,044 |
| Ajinomoto Co., Inc. | 209,900 | 4,217,051 |
| Alfresa Holdings Corp. | 83,200 | 1,523,386 |
| Amada Co., Ltd. | 142,300 | 1,238,530 |
| ANA Holdings, Inc. * | 51,600 | 1,125,438 |
| Aozora Bank Ltd. | 51,200 | 841,166 |
| Asahi Group Holdings Ltd. | 202,900 | 6,279,169 |
| Asahi Intecc Co., Ltd. | 89,600 | 2,776,541 |
| Asahi Kasei Corp. | 564,600 | 4,892,582 |
| Astellas Pharma, Inc. | 834,150 | 11,438,646 |
| Bandai Namco Holdings, Inc. | 89,200 | 6,666,343 |
| Benesse Holdings, Inc. | 31,700 | 747,353 |
| Bridgestone Corp. | 240,157 | 7,827,917 |
| Brother Industries Ltd. | 98,400 | 1,520,494 |
| Calbee, Inc. | 38,300 | 1,174,915 |
| Canon, Inc. | 446,695 | 7,775,261 |
| Casio Computer Co., Ltd. | 86,000 | 1,306,525 |
| Central Japan Railway Co. | 64,200 | 7,763,001 |
| Chubu Electric Power Co., Inc. | 290,900 | 3,258,606 |
| Chugai Pharmaceutical Co., Ltd. | 301,200 | 11,626,316 |
| Coca-Cola Bottlers Japan Holdings, Inc. | 52,800 | 745,321 |
| Concordia Financial Group Ltd. | 458,900 | 1,514,853 |
| Cosmos Pharmaceutical Corp. | 9,400 | 1,596,490 |
| CyberAgent, Inc. | 45,000 | 2,830,425 |
| Dai Nippon Printing Co., Ltd. | 108,148 | 2,014,735 |
| Dai-ichi Life Holdings, Inc. | 481,800 | 7,195,882 |
| Daicel Corp. | 105,900 | 755,771 |
| Daifuku Co., Ltd. | 46,030 | 4,746,511 |
| Daiichi Sankyo Co., Ltd. | 759,600 | 20,048,605 |
| Daikin Industries Ltd. | 111,700 | 20,902,781 |
| Daito Trust Construction Co., Ltd. | 29,400 | 2,674,375 |
| Daiwa House Industry Co., Ltd. | 253,600 | 6,663,277 |
| Daiwa House REIT Investment Corp. | 904 | 2,091,188 |
| Daiwa Securities Group, Inc. | 653,800 | 2,649,079 |
| Denso Corp. | 195,700 | 9,118,946 |
| Dentsu Group, Inc. | 98,000 | 2,825,146 |
| Disco Corp. | 13,000 | 3,508,808 |
| East Japan Railway Co. | 134,660 | 7,041,833 |
| Eisai Co., Ltd. | 113,600 | 8,832,801 |
| Electric Power Development Co., Ltd. | 62,700 | 847,369 |
| ENEOS Holdings, Inc. | 1,374,900 | 4,639,306 |
| FamilyMart Co., Ltd. | 79,600 | 1,749,630 |
| FANUC Corp. | 85,900 | 18,144,198 |
| Fast Retailing Co., Ltd. | 26,300 | 18,345,346 |
| Fuji Electric Co., Ltd. | 55,400 | 1,679,891 |
| FUJIFILM Holdings Corp. | 163,511 | 8,337,844 |
| Fujitsu Ltd. | 88,200 | 10,435,346 |
| Fukuoka Financial Group, Inc. | 75,800 | 1,267,933 |
| GLP J-REIT | 1,666 | 2,568,385 |
| GMO Payment Gateway, Inc. | 19,000 | 2,328,041 |
| Hakuhodo DY Holdings, Inc. | 102,300 | 1,303,422 |
| Hamamatsu Photonics K.K. | 63,300 | 3,185,238 |
| Security | Number
of Shares | Value ($) |
| Hankyu Hanshin Holdings, Inc. | 104,400 | 3,187,681 |
| Hikari Tsushin, Inc. | 9,293 | 2,179,624 |
| Hino Motors Ltd. | 125,700 | 963,079 |
| Hirose Electric Co., Ltd. | 14,564 | 2,032,907 |
| Hisamitsu Pharmaceutical Co., Inc. | 23,200 | 1,109,753 |
| Hitachi Construction Machinery Co., Ltd. | 47,653 | 1,175,243 |
| Hitachi Ltd. | 433,215 | 14,601,206 |
| Hitachi Metals Ltd. | 98,900 | 1,311,539 |
| Honda Motor Co., Ltd. | 730,839 | 17,286,486 |
| Hoshizaki Corp. | 22,200 | 1,772,875 |
| Hoya Corp. | 167,407 | 18,893,034 |
| Hulic Co., Ltd. | 144,300 | 1,336,636 |
| Idemitsu Kosan Co., Ltd. | 85,903 | 1,737,299 |
| Iida Group Holdings Co., Ltd. | 64,600 | 1,168,751 |
| Inpex Corp. | 464,300 | 2,201,895 |
| Isetan Mitsukoshi Holdings Ltd. | 142,500 | 693,996 |
| Isuzu Motors Ltd. | 244,700 | 1,985,372 |
| Ito En Ltd. | 24,700 | 1,564,330 |
| ITOCHU Corp. | 600,900 | 14,432,720 |
| Itochu Techno-Solutions Corp. | 41,487 | 1,407,546 |
| Japan Airlines Co., Ltd. * | 48,000 | 838,360 |
| Japan Airport Terminal Co., Ltd. | 24,700 | 1,072,752 |
| Japan Exchange Group, Inc. | 227,700 | 5,558,890 |
| Japan Post Bank Co., Ltd. | 176,000 | 1,403,728 |
| Japan Post Holdings Co., Ltd. | 707,100 | 4,851,726 |
| Japan Post Insurance Co., Ltd. | 106,000 | 1,680,218 |
| Japan Prime Realty Investment Corp. | 382 | 1,032,379 |
| Japan Real Estate Investment Corp. | 594 | 2,911,019 |
| Japan Retail Fund Investment Corp. | 1,167 | 1,682,122 |
| Japan Tobacco, Inc. | 535,100 | 10,074,421 |
| JFE Holdings, Inc. * | 229,400 | 1,611,803 |
| JGC Holdings Corp. | 97,400 | 800,859 |
| JSR Corp. | 92,300 | 2,086,167 |
| JTEKT Corp. | 92,000 | 733,124 |
| Kajima Corp. | 197,500 | 2,110,372 |
| Kakaku.com, Inc. | 63,600 | 1,680,784 |
| Kamigumi Co., Ltd. | 47,300 | 846,239 |
| Kansai Paint Co., Ltd. | 77,500 | 1,998,114 |
| Kao Corp. | 215,919 | 15,373,150 |
| Kawasaki Heavy Industries Ltd. * | 61,100 | 729,971 |
| KDDI Corp. | 719,300 | 19,460,654 |
| Keihan Holdings Co., Ltd. | 44,600 | 1,694,363 |
| Keikyu Corp. | 95,000 | 1,328,515 |
| Keio Corp. | 47,200 | 2,743,133 |
| Keisei Electric Railway Co., Ltd. | 57,756 | 1,615,676 |
| Keyence Corp. | 81,600 | 37,031,916 |
| Kikkoman Corp. | 66,477 | 3,310,564 |
| Kintetsu Group Holdings Co., Ltd. | 77,500 | 3,096,549 |
| Kirin Holdings Co., Ltd. | 367,600 | 6,627,228 |
| Kobayashi Pharmaceutical Co., Ltd. | 22,600 | 2,202,273 |
| Kobe Bussan Co., Ltd. (b) | 53,600 | 1,508,038 |
| Koito Manufacturing Co., Ltd. | 48,000 | 2,314,742 |
| Komatsu Ltd. | 388,909 | 8,768,135 |
| Konami Holdings Corp. | 40,700 | 1,592,928 |
| Kose Corp. | 15,500 | 1,975,869 |
| Kubota Corp. | 462,300 | 8,033,881 |
| Kuraray Co., Ltd. | 139,700 | 1,292,082 |
| Kurita Water Industries Ltd. | 42,300 | 1,258,582 |
| Kyocera Corp. | 143,600 | 7,908,404 |
| Kyowa Kirin Co., Ltd. | 122,100 | 3,032,155 |
| Kyushu Electric Power Co., Inc. | 169,200 | 1,418,479 |
| Kyushu Railway Co. | 69,400 | 1,476,199 |
| Lasertec Corp. | 34,500 | 2,988,418 |
| Lawson, Inc. | 24,300 | 1,116,477 |
| LINE Corp. * | 16,100 | 826,141 |
| Lion Corp. | 103,400 | 2,108,469 |
| LIXIL Group Corp. | 119,587 | 2,596,740 |
Schwab Equity Index Funds | Annual Report
Schwab International Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| M3, Inc. | 198,200 | 13,385,579 |
| Makita Corp. | 99,800 | 4,411,518 |
| Marubeni Corp. | 739,700 | 3,862,126 |
| Marui Group Co., Ltd. | 82,146 | 1,484,537 |
| Maruichi Steel Tube Ltd. | 26,600 | 610,245 |
| Mazda Motor Corp. | 253,100 | 1,328,984 |
| McDonald's Holdings Co., Japan Ltd. | 29,800 | 1,413,157 |
| Mebuki Financial Group, Inc. | 440,380 | 884,807 |
| Medipal Holdings Corp. | 82,200 | 1,465,288 |
| MEIJI Holdings Co., Ltd. | 52,000 | 3,767,373 |
| Mercari, Inc. * | 37,996 | 1,597,441 |
| Minebea Mitsumi, Inc. | 159,200 | 2,875,368 |
| MISUMI Group, Inc. | 130,100 | 3,863,913 |
| Mitsubishi Chemical Holdings Corp. | 583,000 | 3,281,216 |
| Mitsubishi Corp. | 601,800 | 13,426,977 |
| Mitsubishi Electric Corp. | 811,300 | 10,448,640 |
| Mitsubishi Estate Co., Ltd. | 527,602 | 7,869,646 |
| Mitsubishi Gas Chemical Co., Inc. | 75,400 | 1,374,495 |
| Mitsubishi Heavy Industries Ltd. | 144,800 | 3,111,060 |
| Mitsubishi Materials Corp. | 48,500 | 889,938 |
| Mitsubishi Motors Corp. * | 336,900 | 617,882 |
| Mitsubishi UFJ Financial Group, Inc. | 5,488,909 | 21,636,756 |
| Mitsubishi UFJ Lease & Finance Co., Ltd. | 173,638 | 735,703 |
| Mitsui & Co., Ltd. | 733,800 | 11,493,870 |
| Mitsui Chemicals, Inc. | 80,600 | 2,064,355 |
| Mitsui Fudosan Co., Ltd. | 413,577 | 7,042,205 |
| Miura Co., Ltd. | 38,400 | 1,809,193 |
| Mizuho Financial Group, Inc. | 1,080,713 | 13,305,761 |
| MonotaRO Co., Ltd. | 57,900 | 3,202,548 |
| MS&AD Insurance Group Holdings, Inc. | 198,662 | 5,436,432 |
| Murata Manufacturing Co., Ltd. | 257,300 | 18,044,102 |
| Nabtesco Corp. | 50,100 | 1,871,647 |
| Nagoya Railroad Co., Ltd. | 86,100 | 2,295,015 |
| NEC Corp. | 112,500 | 5,666,643 |
| Nexon Co., Ltd. | 221,300 | 6,167,829 |
| NGK Insulators Ltd. | 113,100 | 1,615,706 |
| NGK Spark Plug Co., Ltd. | 67,100 | 1,180,083 |
| NH Foods Ltd. | 37,900 | 1,552,496 |
| Nidec Corp. | 201,300 | 20,331,700 |
| Nihon M&A Center, Inc. | 67,300 | 3,951,960 |
| Nikon Corp. | 145,000 | 883,682 |
| Nintendo Co., Ltd. | 49,939 | 27,001,455 |
| Nippon Building Fund, Inc. | 662 | 3,343,630 |
| Nippon Express Co., Ltd. | 32,200 | 1,805,761 |
| Nippon Paint Holdings Co., Ltd. | 66,800 | 6,017,341 |
| Nippon Prologis REIT, Inc. | 951 | 3,130,158 |
| Nippon Sanso Holdings Corp. | 73,500 | 1,077,630 |
| Nippon Shinyaku Co., Ltd. | 20,400 | 1,457,705 |
| Nippon Steel Corp. * | 365,241 | 3,542,518 |
| Nippon Telegraph & Telephone Corp. | 576,612 | 12,129,513 |
| Nippon Yusen K.K. | 65,700 | 1,212,662 |
| Nissan Chemical Corp. | 54,800 | 2,908,272 |
| Nissan Motor Co., Ltd. * | 1,038,396 | 3,676,474 |
| Nisshin Seifun Group, Inc. | 87,300 | 1,314,635 |
| Nissin Foods Holdings Co., Ltd. | 29,100 | 2,519,753 |
| Nitori Holdings Co., Ltd. | 35,700 | 7,338,373 |
| Nitto Denko Corp. | 71,700 | 5,037,336 |
| Nomura Holdings, Inc. | 1,394,700 | 6,246,077 |
| Nomura Real Estate Holdings, Inc. | 53,000 | 925,720 |
| Nomura Real Estate Master Fund, Inc. | 1,924 | 2,297,549 |
| Nomura Research Institute Ltd. | 144,100 | 4,247,705 |
| NSK Ltd. | 155,700 | 1,246,546 |
| NTT Data Corp. | 279,000 | 3,148,852 |
| NTT DOCOMO, Inc. | 504,000 | 18,766,537 |
| Obayashi Corp. | 284,100 | 2,377,445 |
| Security | Number
of Shares | Value ($) |
| Obic Co., Ltd. | 31,100 | 5,506,036 |
| Odakyu Electric Railway Co., Ltd. | 130,800 | 3,156,532 |
| Oji Holdings Corp. | 403,800 | 1,701,781 |
| Olympus Corp. | 524,400 | 10,039,155 |
| Omron Corp. | 83,000 | 5,993,100 |
| Ono Pharmaceutical Co., Ltd. | 165,400 | 4,718,070 |
| Oracle Corp., Japan | 17,100 | 1,708,975 |
| Oriental Land Co., Ltd. | 89,000 | 12,458,039 |
| ORIX Corp. | 592,200 | 6,925,919 |
| Orix JREIT, Inc. | 1,172 | 1,647,140 |
| Osaka Gas Co., Ltd. | 169,100 | 3,211,244 |
| Otsuka Corp. | 45,700 | 2,099,991 |
| Otsuka Holdings Co., Ltd. | 174,500 | 6,462,876 |
| Pan Pacific International Holdings Corp. | 185,400 | 3,933,899 |
| Panasonic Corp. | 999,512 | 9,233,022 |
| Park24 Co., Ltd. * | 49,900 | 674,042 |
| PeptiDream, Inc. * | 40,900 | 1,890,115 |
| Persol Holdings Co., Ltd. | 85,200 | 1,290,456 |
| Pigeon Corp. | 53,700 | 2,472,968 |
| Pola Orbis Holdings, Inc. | 41,700 | 822,289 |
| Rakuten, Inc. | 387,520 | 3,770,254 |
| Recruit Holdings Co., Ltd. | 568,300 | 21,624,182 |
| Renesas Electronics Corp. * | 339,900 | 2,805,754 |
| Resona Holdings, Inc. | 934,985 | 3,082,621 |
| Ricoh Co., Ltd. | 308,900 | 2,028,614 |
| Rinnai Corp. | 16,100 | 1,586,437 |
| Rohm Co., Ltd. | 39,800 | 3,060,098 |
| Ryohin Keikaku Co., Ltd. | 111,402 | 2,338,252 |
| Santen Pharmaceutical Co., Ltd. | 157,900 | 2,813,145 |
| SBI Holdings, Inc. | 108,290 | 2,496,219 |
| SCSK Corp. | 22,400 | 1,113,761 |
| Secom Co., Ltd. | 93,900 | 7,932,566 |
| Sega Sammy Holdings, Inc. | 75,100 | 941,121 |
| Seibu Holdings, Inc. | 95,600 | 955,800 |
| Seiko Epson Corp. | 120,600 | 1,400,611 |
| Sekisui Chemical Co., Ltd. | 162,600 | 2,534,660 |
| Sekisui House Ltd. | 278,500 | 4,626,805 |
| Seven & i Holdings Co., Ltd. | 335,103 | 10,185,343 |
| Seven Bank Ltd. | 255,900 | 587,276 |
| SG Holdings Co., Ltd. | 144,328 | 3,481,254 |
| Sharp Corp. | 91,800 | 1,061,541 |
| Shimadzu Corp. | 98,800 | 2,825,022 |
| Shimamura Co., Ltd. | 9,300 | 991,480 |
| Shimano, Inc. | 33,100 | 7,570,485 |
| Shimizu Corp. | 257,600 | 1,788,608 |
| Shin-Etsu Chemical Co., Ltd. | 158,060 | 21,111,561 |
| Shinsei Bank Ltd. | 67,100 | 807,316 |
| Shionogi & Co., Ltd. | 118,200 | 5,575,487 |
| Shiseido Co., Ltd. | 178,300 | 11,038,018 |
| Showa Denko K.K. | 59,200 | 1,006,617 |
| SMC Corp. | 25,800 | 13,723,155 |
| Softbank Corp. | 1,279,000 | 14,884,316 |
| SoftBank Group Corp. | 702,000 | 45,723,908 |
| Sohgo Security Services Co., Ltd. | 31,700 | 1,477,055 |
| Sompo Holdings, Inc. | 150,300 | 5,611,582 |
| Sony Corp. | 564,700 | 47,077,019 |
| Square Enix Holdings Co., Ltd. | 42,300 | 2,457,748 |
| Stanley Electric Co., Ltd. | 55,847 | 1,590,512 |
| Subaru Corp. | 275,400 | 5,054,408 |
| Sumco Corp. | 117,000 | 1,784,468 |
| Sumitomo Chemical Co., Ltd. | 664,600 | 2,174,029 |
| Sumitomo Corp. | 531,700 | 5,817,104 |
| Sumitomo Dainippon Pharma Co., Ltd. | 77,300 | 906,034 |
| Sumitomo Electric Industries Ltd. | 341,800 | 3,773,497 |
| Sumitomo Heavy Industries Ltd. | 54,700 | 1,172,400 |
| Sumitomo Metal Mining Co., Ltd. | 103,200 | 3,207,841 |
Schwab Equity Index Funds | Annual Report
Schwab International Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Sumitomo Mitsui Financial Group, Inc. | 582,346 | 16,120,443 |
| Sumitomo Mitsui Trust Holdings, Inc. | 151,400 | 4,070,756 |
| Sumitomo Realty & Development Co., Ltd. | 138,500 | 3,706,167 |
| Sumitomo Rubber Industries Ltd. | 76,200 | 670,272 |
| Sundrug Co., Ltd. | 32,300 | 1,199,357 |
| Suntory Beverage & Food Ltd. | 61,800 | 2,131,341 |
| Suzuken Co., Ltd. | 31,100 | 1,122,730 |
| Suzuki Motor Corp. | 164,100 | 7,047,717 |
| Sysmex Corp. | 74,800 | 7,025,869 |
| T&D Holdings, Inc. | 245,500 | 2,453,546 |
| Taiheiyo Cement Corp. | 56,800 | 1,333,213 |
| Taisei Corp. | 87,100 | 2,710,370 |
| Taisho Pharmaceutical Holdings Co., Ltd. | 15,100 | 908,541 |
| Takeda Pharmaceutical Co., Ltd. | 704,590 | 21,773,654 |
| TDK Corp. | 57,800 | 6,797,316 |
| Teijin Ltd. | 78,300 | 1,199,396 |
| Terumo Corp. | 287,700 | 10,588,504 |
| The Bank of Kyoto Ltd. | 26,809 | 1,184,006 |
| The Chiba Bank Ltd. | 235,900 | 1,218,492 |
| The Chugoku Electric Power Co., Inc. | 125,500 | 1,576,765 |
| The Kansai Electric Power Co., Inc. | 313,100 | 2,849,327 |
| The Shizuoka Bank Ltd. | 195,700 | 1,316,228 |
| The Yokohama Rubber Co., Ltd. | 53,000 | 761,312 |
| THK Co., Ltd. | 57,042 | 1,514,174 |
| TIS, Inc. | 103,700 | 1,983,277 |
| Tobu Railway Co., Ltd. | 84,800 | 2,406,315 |
| Toho Co., Ltd. | 52,808 | 2,091,240 |
| Toho Gas Co., Ltd. | 34,960 | 1,804,697 |
| Tohoku Electric Power Co., Inc. | 188,400 | 1,662,270 |
| Tokio Marine Holdings, Inc. | 283,699 | 12,679,846 |
| Tokyo Century Corp. | 19,377 | 950,024 |
| Tokyo Electric Power Co. Holdings, Inc. * | 668,490 | 1,724,955 |
| Tokyo Electron Ltd. | 66,700 | 17,903,002 |
| Tokyo Gas Co., Ltd. | 169,540 | 3,841,695 |
| Tokyu Corp. | 218,600 | 2,593,612 |
| Tokyu Fudosan Holdings Corp. | 263,900 | 1,153,195 |
| Toppan Printing Co., Ltd. | 119,500 | 1,519,609 |
| Toray Industries, Inc. | 608,100 | 2,751,593 |
| Toshiba Corp. | 172,417 | 4,361,435 |
| Tosoh Corp. | 114,900 | 1,862,487 |
| TOTO Ltd. | 62,300 | 2,844,336 |
| Toyo Suisan Kaisha Ltd. | 40,600 | 2,020,491 |
| Toyoda Gosei Co., Ltd. | 28,600 | 726,866 |
| Toyota Industries Corp. | 65,000 | 4,200,519 |
| Toyota Motor Corp. | 950,103 | 62,371,304 |
| Toyota Tsusho Corp. | 94,469 | 2,636,186 |
| Trend Micro, Inc. | 60,100 | 3,366,508 |
| Tsuruha Holdings, Inc. | 16,800 | 2,352,419 |
| Unicharm Corp. | 180,000 | 8,328,762 |
| United Urban Investment Corp. | 1,320 | 1,409,324 |
| USS Co., Ltd. | 96,200 | 1,759,553 |
| Welcia Holdings Co., Ltd. | 44,100 | 1,727,017 |
| West Japan Railway Co. | 73,500 | 3,152,944 |
| Yakult Honsha Co., Ltd. | 54,600 | 2,642,259 |
| Yamada Holdings Co., Ltd. | 315,500 | 1,538,314 |
| Yamaha Corp. | 60,700 | 2,877,494 |
| Yamaha Motor Co., Ltd. | 121,700 | 1,740,069 |
| Yamato Holdings Co., Ltd. | 141,800 | 3,753,512 |
| Yamazaki Baking Co., Ltd. | 54,000 | 886,994 |
| Yaskawa Electric Corp. | 108,700 | 4,226,669 |
| Yokogawa Electric Corp. | 102,800 | 1,511,298 |
| Security | Number
of Shares | Value ($) |
| Z Holdings Corp. | 1,179,600 | 8,225,421 |
| ZOZO, Inc. | 49,300 | 1,250,637 |
| | | 1,565,488,275 |
| |
| Netherlands 4.4% |
| ABN AMRO Bank N.V. CVA * | 194,980 | 1,601,617 |
| Adyen N.V. * | 8,131 | 13,666,122 |
| Aegon N.V. | 819,525 | 2,204,536 |
| AerCap Holdings N.V. * | 57,785 | 1,434,802 |
| Akzo Nobel N.V. | 85,802 | 8,253,146 |
| Altice Europe N.V. * | 291,875 | 1,435,049 |
| ASML Holding N.V. | 190,496 | 68,922,001 |
| Coca-Cola European Partners plc | 92,238 | 3,293,819 |
| Heineken Holding N.V. | 52,472 | 4,043,599 |
| Heineken N.V. | 116,511 | 10,313,268 |
| ING Groep N.V. * | 1,745,086 | 11,953,345 |
| Just Eat Takeaway.com N.V * | 56,984 | 6,339,257 |
| Koninklijke Ahold Delhaize N.V. | 492,476 | 13,501,607 |
| Koninklijke DSM N.V. | 77,101 | 12,330,568 |
| Koninklijke KPN N.V. | 1,600,436 | 4,322,424 |
| Koninklijke Philips N.V. * | 409,086 | 18,947,534 |
| Koninklijke Vopak N.V. | 30,031 | 1,560,961 |
| NN Group N.V. | 130,694 | 4,548,273 |
| Prosus N.V. * | 217,776 | 21,741,874 |
| Randstad N.V. * | 52,951 | 2,642,071 |
| Unilever N.V. | 654,584 | 36,901,344 |
| Wolters Kluwer N.V. | 121,333 | 9,823,928 |
| | | 259,781,145 |
| |
| New Zealand 0.3% |
| a2 Milk Co., Ltd. * | 325,699 | 3,153,799 |
| Auckland International Airport Ltd. * | 584,053 | 2,701,757 |
| Fisher & Paykel Healthcare Corp., Ltd. | 261,022 | 6,038,583 |
| Mercury NZ Ltd. | 295,898 | 1,046,105 |
| Meridian Energy Ltd. | 576,882 | 2,021,870 |
| Ryman Healthcare Ltd. | 172,296 | 1,594,440 |
| Spark New Zealand Ltd. | 872,580 | 2,589,525 |
| | | 19,146,079 |
| |
| Norway 0.5% |
| Adevinta A.S.A. * | 107,717 | 1,664,276 |
| DNB A.S.A. * | 422,077 | 5,700,060 |
| Equinor A.S.A. | 446,650 | 5,699,124 |
| Gjensidige Forsikring A.S.A. | 87,828 | 1,673,562 |
| Mowi A.S.A. | 197,267 | 3,116,415 |
| Norsk Hydro A.S.A. * | 621,167 | 1,745,706 |
| Orkla A.S.A. | 332,852 | 3,142,059 |
| Schibsted A.S.A., B Shares * | 42,891 | 1,547,626 |
| Telenor A.S.A. | 323,364 | 4,996,711 |
| Yara International A.S.A. | 77,928 | 2,727,126 |
| | | 32,012,665 |
| |
| Portugal 0.2% |
| Banco Espirito Santo S.A. *(a) | 470,491 | — |
| EDP - Energias de Portugal S.A. | 1,262,742 | 6,228,687 |
| Galp Energia, SGPS, S.A. | 228,427 | 1,855,098 |
| Jeronimo Martins, SGPS, S.A. | 112,066 | 1,780,024 |
| | | 9,863,809 |
| |
Schwab Equity Index Funds | Annual Report
Schwab International Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Singapore 1.0% |
| Ascendas Real Estate Investment Trust | 1,393,824 | 2,941,135 |
| CapitaLand Ltd. | 1,147,814 | 2,159,941 |
| CapitaLand Mall Trust | 2,125,636 | 2,694,366 |
| City Developments Ltd. | 201,100 | 933,882 |
| DBS Group Holdings Ltd. | 804,146 | 11,978,439 |
| Genting Singapore Ltd. | 2,721,400 | 1,285,088 |
| Jardine Cycle & Carriage Ltd. | 43,200 | 561,952 |
| Keppel Corp., Ltd. | 646,900 | 2,078,789 |
| Mapletree Commercial Trust | 929,600 | 1,172,111 |
| Mapletree Logistics Trust | 1,221,800 | 1,745,332 |
| Oversea-Chinese Banking Corp., Ltd. | 1,500,424 | 9,254,234 |
| Singapore Airlines Ltd. | 576,350 | 1,430,279 |
| Singapore Exchange Ltd. | 369,600 | 2,344,133 |
| Singapore Technologies Engineering Ltd. | 681,749 | 1,742,768 |
| Singapore Telecommunications Ltd. | 3,661,737 | 5,443,253 |
| Suntec Real Estate Investment Trust | 874,500 | 858,808 |
| United Overseas Bank Ltd. | 522,433 | 7,258,917 |
| UOL Group Ltd. | 202,872 | 924,730 |
| Venture Corp., Ltd. | 123,400 | 1,739,540 |
| Wilmar International Ltd. | 870,934 | 2,578,441 |
| Yangzijiang Shipbuilding Holdings Ltd. | 1,211,600 | 815,707 |
| | | 61,941,845 |
| |
| Spain 2.2% |
| ACS Actividades de Construccion y Servicios S.A. | 117,684 | 2,797,433 |
| Aena SME S.A. * | 30,355 | 4,089,903 |
| Amadeus IT Group S.A. | 201,669 | 9,608,752 |
| Banco Bilbao Vizcaya Argentaria S.A. | 3,017,054 | 8,704,658 |
| Banco Santander S.A. * | 7,501,039 | 15,021,245 |
| Bankinter S.A. | 304,756 | 1,145,317 |
| CaixaBank S.A. | 1,612,832 | 2,942,757 |
| Cellnex Telecom S.A. | 140,542 | 9,021,525 |
| Enagas S.A. | 110,257 | 2,379,762 |
| Endesa S.A. | 142,974 | 3,835,882 |
| Ferrovial S.A. | 216,541 | 4,689,745 |
| Grifols S.A. | 134,770 | 3,642,047 |
| Iberdrola S.A. | 2,663,602 | 31,450,684 |
| Industria de Diseno Textil S.A. | 487,372 | 12,032,885 |
| Mapfre S.A. | 462,706 | 698,141 |
| Naturgy Energy Group S.A. | 131,387 | 2,440,926 |
| Red Electrica Corp. S.A. | 192,298 | 3,387,231 |
| Repsol S.A. | 668,788 | 4,198,695 |
| Siemens Gamesa Renewable Energy S.A. | 107,383 | 3,047,453 |
| Telefonica S.A. | 2,203,931 | 7,169,455 |
| | | 132,304,496 |
| |
| Sweden 3.3% |
| Alfa Laval AB * | 145,232 | 2,949,922 |
| Assa Abloy AB, B Shares | 445,999 | 9,558,858 |
| Atlas Copco AB, A Shares | 301,657 | 13,315,489 |
| Atlas Copco AB, B Shares | 174,381 | 6,681,544 |
| Boliden AB | 123,799 | 3,375,887 |
| Electrolux AB, B Shares | 98,890 | 2,229,809 |
| Epiroc AB, A Shares | 302,505 | 4,516,885 |
| Epiroc AB, B Shares | 172,701 | 2,472,325 |
| EQT AB | 103,634 | 1,969,165 |
| Essity AB, B Shares | 270,185 | 7,820,044 |
| Evolution Gaming Group AB | 57,166 | 4,240,017 |
| Hennes & Mauritz AB, B Shares | 356,325 | 5,793,274 |
| Security | Number
of Shares | Value ($) |
| Hexagon AB, B Shares * | 126,302 | 9,257,580 |
| Husqvarna AB, B Shares | 191,956 | 1,979,374 |
| ICA Gruppen AB | 46,262 | 2,189,967 |
| Industrivarden AB, C Shares * | 72,739 | 1,857,325 |
| Investment AB Latour | 64,606 | 1,506,552 |
| Investor AB, B Shares | 204,364 | 12,249,360 |
| Kinnevik AB, B Shares | 107,121 | 4,386,490 |
| LE Lundbergfortagen AB, B Shares * | 33,316 | 1,497,418 |
| Lundin Energy AB | 86,928 | 1,661,788 |
| Nibe Industrier AB, B Shares * | 140,188 | 3,375,560 |
| Nordea Bank Abp *(c) | 1,434,636 | 10,767,318 |
| Nordea Bank Abp *(c) | 16,453 | 123,928 |
| Sandvik AB * | 502,624 | 8,959,316 |
| Securitas AB, B Shares * | 136,047 | 1,920,430 |
| Skandinaviska Enskilda Banken AB, A Shares * | 725,825 | 6,228,477 |
| Skanska AB, B Shares | 153,954 | 2,887,493 |
| SKF AB, B Shares | 175,311 | 3,588,785 |
| Svenska Cellulosa AB, S.C.A., B Shares * | 272,935 | 3,691,859 |
| Svenska Handelsbanken AB, A Shares * | 694,772 | 5,629,515 |
| Swedbank AB, A Shares * | 410,797 | 6,431,277 |
| Swedish Match AB | 72,344 | 5,439,008 |
| Tele2 AB, B Shares | 226,286 | 2,670,615 |
| Telefonaktiebolaget LM Ericsson, B Shares | 1,300,779 | 14,522,566 |
| Telia Co. AB | 1,098,406 | 4,202,665 |
| Volvo AB, B Shares * | 668,183 | 12,987,599 |
| | | 194,935,484 |
| |
| Switzerland 10.1% |
| ABB Ltd. | 824,899 | 20,016,181 |
| Adecco Group AG | 68,865 | 3,376,721 |
| Alcon, Inc. * | 220,242 | 12,521,445 |
| Baloise Holding AG | 20,963 | 2,866,800 |
| Banque Cantonale Vaudoise | 14,339 | 1,389,452 |
| Barry Callebaut AG | 1,364 | 2,816,170 |
| Chocoladefabriken Lindt & Spruengli AG | 46 | 3,976,900 |
| Chocoladefabriken Lindt & Spruengli AG - Participation Certificates | 494 | 3,916,662 |
| Cie Financiere Richemont S.A. | 235,253 | 14,704,201 |
| Clariant AG | 87,328 | 1,498,174 |
| Credit Suisse Group AG | 1,093,123 | 10,309,648 |
| EMS-Chemie Holding AG | 3,606 | 3,171,760 |
| Geberit AG | 16,465 | 9,371,372 |
| Givaudan S.A. | 4,134 | 16,858,196 |
| Julius Baer Group Ltd. | 100,103 | 4,455,107 |
| Kuehne & Nagel International AG | 23,898 | 4,776,327 |
| LafargeHolcim Ltd. * | 233,116 | 10,005,252 |
| Logitech International S.A. | 73,262 | 6,163,250 |
| Lonza Group AG | 33,501 | 20,298,592 |
| Nestle S.A. | 1,332,710 | 149,900,407 |
| Novartis AG | 993,909 | 77,447,953 |
| Partners Group Holding AG | 8,330 | 7,499,547 |
| Roche Holding AG | 314,600 | 101,090,840 |
| Schindler Holding AG | 27,291 | 6,998,826 |
| SGS S.A. | 2,700 | 6,744,089 |
| Sika AG | 63,933 | 15,727,822 |
| Sonova Holding AG * | 24,604 | 5,840,198 |
| Straumann Holding AG | 4,669 | 4,873,748 |
| Swiss Life Holding AG | 14,228 | 4,786,136 |
| Swiss Prime Site AG | 34,445 | 2,897,856 |
| Swiss Re AG | 132,634 | 9,517,894 |
| Swisscom AG | 11,595 | 5,897,227 |
Schwab Equity Index Funds | Annual Report
Schwab International Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Temenos AG | 29,347 | 3,153,970 |
| The Swatch Group AG | 21,934 | 896,564 |
| The Swatch Group AG - Bearer Shares | 13,026 | 2,758,528 |
| UBS Group AG | 1,650,370 | 19,213,557 |
| Vifor Pharma AG | 20,750 | 2,335,323 |
| Zurich Insurance Group AG | 67,397 | 22,385,615 |
| | | 602,458,310 |
| |
| United Kingdom 13.0% |
| 3i Group plc | 437,524 | 5,464,538 |
| Admiral Group plc | 84,322 | 3,003,874 |
| Anglo American plc | 546,249 | 12,816,734 |
| Antofagasta plc | 172,457 | 2,299,573 |
| Ashtead Group plc | 202,447 | 7,315,890 |
| Associated British Foods plc | 163,068 | 3,586,149 |
| AstraZeneca plc | 587,537 | 58,991,928 |
| Auto Trader Group plc | 440,707 | 3,313,423 |
| AVEVA Group plc | 29,694 | 1,648,248 |
| Aviva plc | 1,779,777 | 5,936,577 |
| BAE Systems plc | 1,451,343 | 7,460,470 |
| Barclays plc * | 7,798,507 | 10,809,301 |
| Barratt Developments plc * | 452,845 | 2,830,546 |
| BHP Group plc | 943,167 | 18,271,361 |
| BP plc | 9,098,280 | 23,206,830 |
| British American Tobacco plc | 1,024,938 | 32,485,790 |
| BT Group plc | 3,969,092 | 5,212,803 |
| Bunzl plc | 151,290 | 4,703,042 |
| Burberry Group plc | 184,929 | 3,247,873 |
| Coca-Cola HBC AG * | 86,855 | 1,972,930 |
| Compass Group plc | 797,973 | 10,922,442 |
| Croda International plc | 57,925 | 4,527,366 |
| DCC plc | 44,404 | 2,885,459 |
| Diageo plc | 1,044,131 | 33,744,065 |
| Direct Line Insurance Group plc | 596,809 | 2,039,539 |
| Evraz plc | 240,046 | 1,117,818 |
| Experian plc | 407,888 | 14,942,522 |
| Ferguson plc | 101,013 | 10,032,702 |
| GlaxoSmithKline plc | 2,248,150 | 37,540,685 |
| Glencore plc * | 4,471,208 | 9,019,479 |
| GVC Holdings plc * | 264,960 | 3,319,162 |
| Halma plc | 169,780 | 5,210,138 |
| Hargreaves Lansdown plc | 153,362 | 2,692,438 |
| Hikma Pharmaceuticals plc | 79,495 | 2,584,658 |
| HSBC Holdings plc * | 9,122,150 | 38,227,214 |
| Imperial Brands plc | 422,894 | 6,693,435 |
| Informa plc * | 658,500 | 3,572,780 |
| InterContinental Hotels Group plc * | 78,039 | 3,965,177 |
| Intertek Group plc | 71,928 | 5,181,028 |
| J. Sainsbury plc | 821,859 | 2,145,236 |
| JD Sports Fashion plc | 205,592 | 1,977,893 |
| Johnson Matthey plc | 88,905 | 2,474,858 |
| Kingfisher plc * | 946,404 | 3,519,661 |
| Land Securities Group plc | 313,347 | 2,067,469 |
| Legal & General Group plc | 2,711,375 | 6,500,805 |
| Lloyds Banking Group plc * | 31,830,308 | 11,589,626 |
| London Stock Exchange Group plc | 140,953 | 15,194,426 |
| M&G plc | 1,185,637 | 2,255,277 |
| Melrose Industries plc * | 2,126,212 | 3,298,323 |
| Mondi plc | 214,905 | 4,073,161 |
| National Grid plc | 1,567,293 | 18,643,709 |
| Natwest Group plc * | 2,117,961 | 3,414,909 |
| Next plc | 59,753 | 4,512,936 |
| NMC Health plc *(a) | 48,950 | 15,600 |
| Ocado Group plc * | 206,559 | 6,091,405 |
| Pearson plc | 336,134 | 2,220,760 |
| Persimmon plc | 142,323 | 4,309,045 |
| Security | Number
of Shares | Value ($) |
| Prudential plc | 1,164,139 | 14,237,997 |
| Reckitt Benckiser Group plc | 317,104 | 27,933,218 |
| RELX plc | 865,866 | 17,133,674 |
| Rentokil Initial plc * | 843,263 | 5,741,110 |
| Rio Tinto plc | 502,453 | 28,419,425 |
| Rolls-Royce Holdings plc * | 878,283 | 812,909 |
| Royal Dutch Shell plc, A Shares | 1,840,483 | 23,152,318 |
| Royal Dutch Shell plc, B Shares | 1,652,809 | 19,931,773 |
| RSA Insurance Group plc | 460,132 | 2,526,858 |
| Schroders plc | 57,024 | 1,931,829 |
| Segro plc | 536,417 | 6,267,868 |
| Severn Trent plc | 108,771 | 3,423,256 |
| Smith & Nephew plc | 396,760 | 6,889,392 |
| Smiths Group plc | 173,831 | 2,995,106 |
| Spirax-Sarco Engineering plc | 33,299 | 4,868,095 |
| SSE plc | 468,346 | 7,680,631 |
| St. James's Place plc | 241,855 | 2,818,733 |
| Standard Chartered plc * | 1,189,315 | 5,434,936 |
| Standard Life Aberdeen plc | 1,026,113 | 2,989,862 |
| Taylor Wimpey plc * | 1,679,407 | 2,300,944 |
| Tesco plc | 4,403,748 | 11,720,776 |
| The Berkeley Group Holdings plc | 57,562 | 3,026,511 |
| The British Land Co., plc | 381,187 | 1,721,407 |
| The Sage Group plc | 486,635 | 4,003,994 |
| Unilever plc | 522,149 | 29,756,653 |
| United Utilities Group plc | 302,872 | 3,385,752 |
| Vodafone Group plc | 11,965,684 | 15,961,841 |
| Whitbread plc * | 91,011 | 2,533,996 |
| WM Morrison Supermarkets plc | 1,068,944 | 2,256,405 |
| WPP plc | 553,004 | 4,417,000 |
| | | 773,375,355 |
| Total Common Stock |
| (Cost $5,183,940,803) | | 5,861,683,853 |
|
| Preferred Stock 0.6% of net assets |
| |
| Germany 0.6% |
| Bayerische Motoren Werke AG | 26,610 | 1,375,829 |
| Fuchs Petrolub SE | 29,845 | 1,536,161 |
| Henkel AG & Co. KGaA | 79,419 | 7,728,309 |
| Porsche Automobil Holding SE | 69,293 | 3,712,189 |
| Sartorius AG | 15,880 | 6,721,686 |
| Volkswagen AG | 82,946 | 12,082,252 |
| Total Preferred Stock |
| (Cost $30,108,759) | | 33,156,426 |
|
| Rights 0.0% of net assets |
| |
| Singapore 0.0% |
Mapletree Logistic Trust
expires 12/11/20 *(a) | 23,214 | — |
| |
| United Kingdom 0.0% |
Rolls-Royce Holdings PLC
expires 11/11/20 * | 2,927,610 | 1,479,160 |
| Total Rights |
| (Cost $4,351,445) | | 1,479,160 |
|
Schwab Equity Index Funds | Annual Report
Schwab International Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Other Investment Company 0.1% of net assets |
| |
| United States 0.1% |
| Securities Lending Collateral 0.1% |
| Wells Fargo Government Money Market Fund, Select Class 0.04% (d) | 6,847,633 | 6,847,633 |
| Total Other Investment Company |
| (Cost $6,847,633) | | 6,847,633 |
Security
Rate, Maturity Date | Face Amount
Local Currency | Value ($) |
| Short-Term Investments 0.1% of net assets |
| |
| Time Deposits 0.1% |
| BNP Paribas |
| Euro | | |
| (0.70%), 11/02/20 (e)(f) | 25,455 | 29,646 |
| Brown Brothers Harriman |
| Australian Dollar | | |
| (0.02%), 11/02/20 (e)(f) | 5,510 | 3,873 |
| Hong Kong Dollar | | |
| 0.04%, 11/02/20 (e) | 153,175 | 19,758 |
| Singapor Dollar | | |
| 0.01%, 11/02/20 (e) | 346,254 | 253,490 |
| Swedish Krona | | |
| (0.26%), 11/02/20 (e)(f) | 1,665,084 | 187,122 |
| Citibank |
| Pound Sterling | | |
| 0.01%, 11/02/20 (e) | 22,029 | 28,538 |
| Sumitomo Mitsui Banking Corp. |
| Japanese Yen | | |
| (0.27%), 11/02/20 (e)(f) | 6,873,797 | 65,656 |
| Sumitomo Mitsui Banking Corp. |
| U.S. Dollar | | |
| 0.01%, 11/02/20 (e) | 6,333,959 | 6,333,959 |
| Total Short-Term Investments |
| (Cost $6,922,042) | | 6,922,042 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | |
| Long | |
| MSCI EAFE Index, expires 12/18/20 | 406 | 36,213,170 | (1,705,238) |
| * | Non-income producing security. |
| (a) | Fair-valued by management using significant unobservable inputs in accordance with procedures approved by fund’s Board of Trustees. |
| (b) | All or a portion of this security is on loan. Securities on loan were valued at $5,890,477. |
| (c) | Securities are traded on separate exchanges for the same entity. |
| (d) | The rate shown is the 7-day yield. |
| (e) | The rate shown is the current daily overnight rate. |
| (f) | Rate is negative due to the current daily overnight rate at the central bank of the denominated currency and therefore is non-income producing. |
| | |
| ADR — | American Depositary Receipt |
| CVA — | Dutch Certificate |
| REIT — | Real Estate Investment Trust |
| RSP — | Risparmio (Convertible Savings Shares) |
Schwab Equity Index Funds | Annual Report
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Common Stock 99.7% of net assets |
| |
| Automobiles & Components 2.1% |
| Adient plc * | 125,110 | 2,654,834 |
| American Axle & Manufacturing Holdings, Inc. * | 123,305 | 828,610 |
| Aptiv plc | 57,425 | 5,540,938 |
| Autoliv, Inc. | 32,330 | 2,450,614 |
| BorgWarner, Inc. | 113,406 | 3,966,942 |
| Cooper Tire & Rubber Co. | 39,632 | 1,362,944 |
| Dana, Inc. | 84,648 | 1,184,226 |
| Ford Motor Co. | 3,559,027 | 27,511,279 |
| General Motors Co. | 941,950 | 32,525,533 |
| Gentex Corp. | 54,442 | 1,506,410 |
| Harley-Davidson, Inc. | 70,598 | 2,321,262 |
| Lear Corp. | 38,185 | 4,613,130 |
| The Goodyear Tire & Rubber Co. | 439,439 | 3,638,555 |
| Thor Industries, Inc. | 21,633 | 1,829,719 |
| Visteon Corp. * | 29,910 | 2,681,432 |
| | | 94,616,428 |
| |
| Banks 5.3% |
| Bank of America Corp. | 1,482,851 | 35,143,569 |
| CIT Group, Inc. | 91,431 | 2,692,643 |
| Citigroup, Inc. | 837,980 | 34,709,132 |
| Citizens Financial Group, Inc. | 143,147 | 3,900,756 |
| Comerica, Inc. | 48,367 | 2,201,182 |
| Credicorp Ltd. | 11,618 | 1,332,352 |
| Fifth Third Bancorp | 253,936 | 5,896,394 |
| First Republic Bank | 10,838 | 1,367,105 |
| Huntington Bancshares, Inc. | 210,624 | 2,198,915 |
| JPMorgan Chase & Co. | 644,713 | 63,207,662 |
| KeyCorp | 208,449 | 2,705,668 |
| M&T Bank Corp. | 34,253 | 3,547,926 |
| New York Community Bancorp, Inc. | 129,916 | 1,079,602 |
| PacWest Bancorp | 41,114 | 791,033 |
| People's United Financial, Inc. | 76,346 | 814,612 |
| Regions Financial Corp. | 253,308 | 3,368,996 |
| The PNC Financial Services Group, Inc. | 102,140 | 11,427,423 |
| Truist Financial Corp. | 193,747 | 8,160,624 |
| U.S. Bancorp | 369,091 | 14,376,094 |
| Wells Fargo & Co. | 1,841,026 | 39,490,008 |
| Zions Bancorp NA | 32,590 | 1,051,679 |
| | | 239,463,375 |
| |
| Capital Goods 8.1% |
| 3M Co. | 135,080 | 21,607,397 |
| A.O. Smith Corp. | 26,089 | 1,348,540 |
| Acuity Brands, Inc. | 12,677 | 1,130,028 |
| AECOM * | 56,431 | 2,530,366 |
| AerCap Holdings N.V. * | 60,789 | 1,509,391 |
| AGCO Corp. | 30,203 | 2,326,537 |
| Allison Transmission Holdings, Inc. | 40,608 | 1,467,979 |
| AMETEK, Inc. | 25,036 | 2,458,535 |
| Carlisle Cos., Inc. | 11,689 | 1,447,916 |
| Carrier Global Corp. | 146,799 | 4,901,619 |
| Caterpillar, Inc. | 120,723 | 18,959,547 |
| Security | Number
of Shares | Value ($) |
| Cummins, Inc. | 44,891 | 9,871,082 |
| Curtiss-Wright Corp. | 8,757 | 738,741 |
| Deere & Co. | 64,646 | 14,604,178 |
| Donaldson Co., Inc. | 23,812 | 1,131,070 |
| Dover Corp. | 27,161 | 3,006,994 |
| Eaton Corp. plc | 112,722 | 11,699,416 |
| EMCOR Group, Inc. | 20,867 | 1,422,921 |
| Emerson Electric Co. | 155,708 | 10,088,321 |
| Fastenal Co. | 71,330 | 3,083,596 |
| Flowserve Corp. | 42,770 | 1,245,462 |
| Fluor Corp. | 337,004 | 3,824,995 |
| Fortive Corp. | 30,738 | 1,893,461 |
| Fortune Brands Home & Security, Inc. | 31,393 | 2,538,752 |
| GATX Corp. | 15,400 | 1,051,512 |
| General Dynamics Corp. | 73,015 | 9,589,060 |
| General Electric Co. | 4,619,916 | 34,279,777 |
| Graco, Inc. | 19,045 | 1,178,886 |
| HD Supply Holdings, Inc. * | 43,433 | 1,731,239 |
| Hexcel Corp. | 24,234 | 811,354 |
| Honeywell International, Inc. | 110,116 | 18,163,634 |
| Howmet Aerospace, Inc. | 122,280 | 2,109,330 |
| Hubbell, Inc. | 11,579 | 1,684,860 |
| Huntington Ingalls Industries, Inc. | 11,372 | 1,677,143 |
| IDEX Corp. | 8,359 | 1,424,290 |
| Illinois Tool Works, Inc. | 58,124 | 11,385,329 |
| ITT, Inc. | 15,762 | 953,759 |
| Jacobs Engineering Group, Inc. | 32,739 | 3,110,205 |
| Johnson Controls International plc | 193,073 | 8,149,611 |
| L3Harris Technologies, Inc. | 19,008 | 3,062,379 |
| Lennox International, Inc. | 4,139 | 1,124,401 |
| Lincoln Electric Holdings, Inc. | 14,997 | 1,526,995 |
| Lockheed Martin Corp. | 31,695 | 11,097,370 |
| Masco Corp. | 41,275 | 2,212,340 |
| MSC Industrial Direct Co., Inc., Class A | 16,584 | 1,155,241 |
| Nordson Corp. | 6,041 | 1,168,511 |
| Northrop Grumman Corp. | 27,898 | 8,085,398 |
| Oshkosh Corp. | 23,963 | 1,614,148 |
| Otis Worldwide Corp. | 77,022 | 4,719,908 |
| Owens Corning | 37,944 | 2,484,194 |
| PACCAR, Inc. | 88,100 | 7,521,978 |
| Parker-Hannifin Corp. | 25,168 | 5,244,005 |
| Pentair plc | 36,830 | 1,832,661 |
| Quanta Services, Inc. | 58,831 | 3,672,819 |
| Raytheon Technologies Corp. | 355,936 | 19,334,444 |
| Regal Beloit Corp. | 13,773 | 1,358,706 |
| Resideo Technologies, Inc. * | 117,606 | 1,185,469 |
| Rockwell Automation, Inc. | 17,570 | 4,166,198 |
| Roper Technologies, Inc. | 5,902 | 2,191,649 |
| Sensata Technologies Holding plc * | 27,626 | 1,207,532 |
| Snap-on, Inc. | 14,239 | 2,243,070 |
| Spirit AeroSystems Holdings, Inc., Class A | 72,274 | 1,314,664 |
| Stanley Black & Decker, Inc. | 28,177 | 4,683,017 |
| Textron, Inc. | 98,633 | 3,531,061 |
| The Boeing Co. | 124,822 | 18,023,049 |
| The Timken Co. | 20,870 | 1,245,939 |
| The Toro Co. | 14,180 | 1,164,178 |
| Trane Technologies plc | 47,452 | 6,299,253 |
| TransDigm Group, Inc. | 5,495 | 2,623,368 |
| Trinity Industries, Inc. | 58,942 | 1,110,467 |
| UFP Industries, Inc. | 19,218 | 959,170 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| United Rentals, Inc. * | 27,563 | 4,914,207 |
| Univar Solutions, Inc. * | 58,416 | 969,121 |
| Valmont Industries, Inc. | 8,363 | 1,187,128 |
| W.W. Grainger, Inc. | 11,193 | 3,917,774 |
| Watsco, Inc. | 7,005 | 1,570,101 |
| WESCO International, Inc. * | 50,944 | 2,100,931 |
| Westinghouse Air Brake Technologies Corp. | 17,451 | 1,034,844 |
| Xylem, Inc. | 20,312 | 1,769,988 |
| | | 368,764,509 |
| |
| Commercial & Professional Services 0.6% |
| ABM Industries, Inc. | 27,833 | 966,362 |
| Cintas Corp. | 8,847 | 2,782,824 |
| Equifax, Inc. | 11,943 | 1,631,414 |
| IHS Markit Ltd. | 23,901 | 1,932,874 |
| ManpowerGroup, Inc. | 48,758 | 3,309,206 |
| Nielsen Holdings plc | 192,942 | 2,606,646 |
| Pitney Bowes, Inc. | 285,169 | 1,514,247 |
| Republic Services, Inc. | 34,679 | 3,057,647 |
| Robert Half International, Inc. | 41,320 | 2,094,511 |
| Verisk Analytics, Inc. | 8,647 | 1,538,907 |
| Waste Management, Inc. | 66,507 | 7,176,770 |
| | | 28,611,408 |
| |
| Consumer Durables & Apparel 1.7% |
| Brunswick Corp. | 22,563 | 1,437,489 |
| Capri Holdings Ltd. * | 135,152 | 2,867,925 |
| Carter's, Inc. | 15,065 | 1,227,044 |
| D.R. Horton, Inc. | 64,624 | 4,317,529 |
| Garmin Ltd. | 18,620 | 1,936,852 |
| Hanesbrands, Inc. | 132,023 | 2,121,610 |
| Hasbro, Inc. | 24,244 | 2,005,464 |
| Leggett & Platt, Inc. | 39,712 | 1,657,182 |
| Lennar Corp., Class A | 45,302 | 3,181,559 |
| Lululemon Athletica, Inc. * | 4,816 | 1,537,701 |
| Mattel, Inc. * | 155,921 | 2,147,032 |
| Mohawk Industries, Inc. * | 25,399 | 2,620,923 |
| Newell Brands, Inc. | 129,178 | 2,281,283 |
| NIKE, Inc., Class B | 139,446 | 16,744,676 |
| NVR, Inc. * | 619 | 2,446,963 |
| Polaris, Inc. | 17,535 | 1,593,230 |
| PulteGroup, Inc. | 75,456 | 3,075,586 |
| PVH Corp. | 44,906 | 2,617,571 |
| Ralph Lauren Corp. | 24,042 | 1,607,208 |
| Skechers U.S.A., Inc., Class A * | 31,714 | 1,005,651 |
| Tapestry, Inc. | 141,828 | 3,152,836 |
| Taylor Morrison Home Corp. * | 51,050 | 1,102,680 |
| Toll Brothers, Inc. | 40,477 | 1,711,368 |
| Under Armour, Inc., Class A * | 43,724 | 605,140 |
| Under Armour, Inc., Class C * | 44,860 | 548,638 |
| VF Corp. | 63,523 | 4,268,746 |
| Whirlpool Corp. | 30,403 | 5,623,339 |
| | | 75,443,225 |
| |
| Consumer Services 1.9% |
| Aramark | 79,744 | 2,212,099 |
| Carnival Corp. | 302,432 | 4,146,343 |
| Chipotle Mexican Grill, Inc. * | 2,110 | 2,535,123 |
| Cracker Barrel Old Country Store, Inc. | 7,553 | 859,682 |
| Darden Restaurants, Inc. | 27,222 | 2,502,246 |
| Domino's Pizza, Inc. | 4,476 | 1,693,360 |
| Extended Stay America, Inc. | 85,873 | 974,659 |
| H&R Block, Inc. | 73,908 | 1,275,652 |
| Hilton Worldwide Holdings, Inc. | 26,109 | 2,292,631 |
| Security | Number
of Shares | Value ($) |
| Las Vegas Sands Corp. | 85,916 | 4,129,123 |
| Marriott International, Inc., Class A | 35,553 | 3,302,163 |
| McDonald's Corp. | 116,695 | 24,856,035 |
| MGM Resorts International | 133,280 | 2,741,570 |
| Norwegian Cruise Line Holdings Ltd. * | 95,420 | 1,586,835 |
| Royal Caribbean Cruises Ltd. | 55,872 | 3,152,298 |
| Service Corp. International | 23,937 | 1,108,522 |
| Six Flags Entertainment Corp. | 40,563 | 876,972 |
| Starbucks Corp. | 153,442 | 13,343,316 |
| The Wendy's Co. | 50,050 | 1,093,593 |
| Wyndham Destinations, Inc. | 34,481 | 1,125,115 |
| Wynn Resorts Ltd. | 19,643 | 1,422,742 |
| Yum China Holdings, Inc. | 55,542 | 2,956,501 |
| Yum! Brands, Inc. | 60,546 | 5,650,758 |
| | | 85,837,338 |
| |
| Diversified Financials 5.2% |
| Affiliated Managers Group, Inc. | 19,450 | 1,465,947 |
| Ally Financial, Inc. | 259,951 | 6,935,493 |
| American Express Co. | 161,827 | 14,765,095 |
| Ameriprise Financial, Inc. | 41,249 | 6,634,077 |
| Annaly Capital Management, Inc. | 214,983 | 1,524,229 |
| Berkshire Hathaway, Inc., Class A * | 65 | 19,662,501 |
| Berkshire Hathaway, Inc., Class B * | 202,279 | 40,840,130 |
| BlackRock, Inc. | 14,453 | 8,660,382 |
| Capital One Financial Corp. | 234,101 | 17,108,101 |
| Chimera Investment Corp. | 81,659 | 681,853 |
| CME Group, Inc. | 21,235 | 3,200,539 |
| Discover Financial Services | 171,437 | 11,145,119 |
| Equitable Holdings, Inc. | 86,827 | 1,865,912 |
| Evercore, Inc., Class A | 14,441 | 1,148,637 |
| Franklin Resources, Inc. | 196,567 | 3,685,631 |
| Intercontinental Exchange, Inc. | 35,867 | 3,385,845 |
| Invesco Ltd. | 240,115 | 3,147,908 |
| Jefferies Financial Group, Inc. | 79,155 | 1,544,314 |
| Lazard Ltd., Class A | 38,926 | 1,310,638 |
| LPL Financial Holdings, Inc. | 16,839 | 1,345,941 |
| Moody's Corp. | 10,682 | 2,808,298 |
| Morgan Stanley | 269,867 | 12,994,096 |
| MSCI, Inc. | 3,745 | 1,310,151 |
| Nasdaq, Inc. | 9,790 | 1,184,492 |
| Navient Corp. | 220,900 | 1,769,409 |
| New Residential Investment Corp. | 145,844 | 1,093,830 |
| Northern Trust Corp. | 30,660 | 2,399,758 |
| Raymond James Financial, Inc. | 17,982 | 1,374,544 |
| S&P Global, Inc. | 14,915 | 4,813,518 |
| Santander Consumer USA Holdings, Inc. | 57,074 | 1,160,885 |
| SEI Investments Co. | 20,051 | 985,507 |
| Starwood Property Trust, Inc. | 59,177 | 826,703 |
| State Street Corp. | 78,854 | 4,644,501 |
| Synchrony Financial | 339,375 | 8,491,163 |
| T. Rowe Price Group, Inc. | 43,130 | 5,462,846 |
| The Bank of New York Mellon Corp. | 242,167 | 8,320,858 |
| The Charles Schwab Corp. (a) | 129,130 | 5,308,534 |
| The Goldman Sachs Group, Inc. | 101,865 | 19,256,560 |
| Voya Financial, Inc. | 60,880 | 2,917,978 |
| | | 237,181,923 |
| |
| Energy 5.7% |
| Antero Resources Corp. * | 575,595 | 1,957,023 |
| Apache Corp. | 188,306 | 1,562,940 |
| Baker Hughes Co. | 421,619 | 6,227,313 |
| Cabot Oil & Gas Corp. | 58,857 | 1,047,066 |
| Chevron Corp. | 754,257 | 52,420,862 |
| Concho Resources, Inc. | 32,144 | 1,334,297 |
| ConocoPhillips | 416,793 | 11,928,616 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Delek US Holdings, Inc. | 56,026 | 563,622 |
| Devon Energy Corp. | 152,643 | 1,363,102 |
| EOG Resources, Inc. | 125,075 | 4,282,568 |
| Exxon Mobil Corp. | 2,315,175 | 75,521,009 |
| Halliburton Co. | 393,889 | 4,750,301 |
| Helmerich & Payne, Inc. | 80,184 | 1,192,336 |
| Hess Corp. | 72,202 | 2,687,358 |
| HollyFrontier Corp. | 135,436 | 2,506,920 |
| Kinder Morgan, Inc. | 563,743 | 6,708,542 |
| Marathon Oil Corp. | 549,042 | 2,174,206 |
| Marathon Petroleum Corp. | 420,538 | 12,405,871 |
| Murphy Oil Corp. | 127,959 | 987,843 |
| Nabors Industries Ltd. (b) | 27,151 | 771,631 |
| National Oilwell Varco, Inc. | 373,029 | 3,133,444 |
| Occidental Petroleum Corp. | 613,085 | 5,597,466 |
| Oceaneering International, Inc. * | 162,209 | 661,813 |
| ONEOK, Inc. | 95,107 | 2,758,103 |
| Patterson-UTI Energy, Inc. | 233,095 | 596,723 |
| PBF Energy, Inc., Class A | 206,928 | 966,354 |
| Peabody Energy Corp. * | 255,568 | 329,683 |
| Phillips 66 | 321,190 | 14,986,725 |
| Pioneer Natural Resources Co. | 25,703 | 2,044,931 |
| Schlumberger N.V. | 740,572 | 11,064,146 |
| SM Energy Co. | 229,727 | 369,860 |
| Targa Resources Corp. | 109,545 | 1,758,197 |
| The Williams Cos., Inc. | 264,774 | 5,081,013 |
| Transocean Ltd. *(b) | 906,622 | 607,890 |
| Valero Energy Corp. | 375,935 | 14,514,850 |
| World Fuel Services Corp. | 144,061 | 3,032,484 |
| WPX Energy, Inc. * | 124,593 | 574,374 |
| | | 260,471,482 |
| |
| Food & Staples Retailing 3.2% |
| Casey's General Stores, Inc. | 10,319 | 1,739,474 |
| Costco Wholesale Corp. | 73,983 | 26,457,801 |
| Performance Food Group Co. * | 45,641 | 1,533,994 |
| Rite Aid Corp. *(b) | 155,966 | 1,425,529 |
| SpartanNash, Co. | 74,935 | 1,379,553 |
| Sprouts Farmers Market, Inc. * | 50,133 | 955,034 |
| Sysco Corp. | 111,393 | 6,161,147 |
| The Kroger Co. | 527,920 | 17,004,303 |
| U.S. Foods Holding Corp. * | 134,336 | 2,807,622 |
| United Natural Foods, Inc. * | 165,526 | 2,411,714 |
| Walgreens Boots Alliance, Inc. | 538,006 | 18,313,724 |
| Walmart, Inc. | 484,857 | 67,273,909 |
| | | 147,463,804 |
| |
| Food, Beverage & Tobacco 4.2% |
| Altria Group, Inc. | 492,363 | 17,764,457 |
| Archer-Daniels-Midland Co. | 423,507 | 19,582,964 |
| Brown-Forman Corp., Class B | 21,611 | 1,506,503 |
| Bunge Ltd. | 164,935 | 9,356,762 |
| Campbell Soup Co. | 32,306 | 1,507,721 |
| Coca-Cola European Partners plc | 46,663 | 1,666,336 |
| Conagra Brands, Inc. | 91,985 | 3,227,754 |
| Constellation Brands, Inc., Class A | 18,807 | 3,107,481 |
| Darling Ingredients, Inc. * | 38,635 | 1,661,305 |
| Flowers Foods, Inc. | 50,328 | 1,186,734 |
| General Mills, Inc. | 125,382 | 7,412,584 |
| Hormel Foods Corp. | 47,347 | 2,305,325 |
| Ingredion, Inc. | 28,990 | 2,055,101 |
| Kellogg Co. | 49,730 | 3,127,520 |
| McCormick & Co., Inc. - Non Voting Shares | 8,925 | 1,611,052 |
| Molson Coors Beverage Co., Class B | 66,586 | 2,347,822 |
| Mondelez International, Inc., Class A | 284,912 | 15,134,525 |
| Security | Number
of Shares | Value ($) |
| Monster Beverage Corp. * | 29,675 | 2,272,215 |
| PepsiCo, Inc. | 205,958 | 27,452,142 |
| Philip Morris International, Inc. | 321,359 | 22,822,916 |
| Sanderson Farms, Inc. | 9,517 | 1,217,890 |
| The Coca-Cola Co. | 503,136 | 24,180,716 |
| The Hershey Co. | 18,247 | 2,508,233 |
| The JM Smucker Co. | 32,167 | 3,609,137 |
| The Kraft Heinz Co. | 209,116 | 6,396,858 |
| Tyson Foods, Inc., Class A | 114,920 | 6,576,872 |
| | | 191,598,925 |
| |
| Health Care Equipment & Services 5.9% |
| Abbott Laboratories | 138,522 | 14,560,047 |
| AmerisourceBergen Corp. | 48,936 | 4,701,282 |
| Anthem, Inc. | 76,928 | 20,985,958 |
| Baxter International, Inc. | 50,956 | 3,952,657 |
| Becton, Dickinson & Co. | 18,966 | 4,383,612 |
| Boston Scientific Corp. * | 61,774 | 2,116,995 |
| Cardinal Health, Inc. | 191,257 | 8,757,658 |
| Centene Corp. * | 94,166 | 5,565,211 |
| Cerner Corp. | 42,821 | 3,001,324 |
| Cigna Corp. | 39,478 | 6,591,642 |
| CVS Health Corp. | 572,306 | 32,100,644 |
| Danaher Corp. | 38,288 | 8,788,627 |
| DaVita, Inc. * | 42,079 | 3,629,314 |
| DENTSPLY SIRONA, Inc. | 35,880 | 1,693,177 |
| Edwards Lifesciences Corp. * | 19,463 | 1,395,302 |
| Encompass Health Corp. | 16,491 | 1,011,063 |
| HCA Healthcare, Inc. | 71,369 | 8,845,474 |
| Henry Schein, Inc. * | 37,883 | 2,408,601 |
| Hologic, Inc. * | 25,335 | 1,743,555 |
| Humana, Inc. | 34,579 | 13,806,703 |
| Intuitive Surgical, Inc. * | 4,173 | 2,783,725 |
| Laboratory Corp. of America Holdings * | 16,505 | 3,297,204 |
| Magellan Health, Inc. * | 14,972 | 1,082,026 |
| McKesson Corp. | 101,270 | 14,936,312 |
| MEDNAX, Inc. * | 76,187 | 971,384 |
| Medtronic plc | 201,187 | 20,233,377 |
| Molina Healthcare, Inc. * | 9,335 | 1,740,697 |
| Owens & Minor, Inc. | 145,290 | 3,649,685 |
| Patterson Cos., Inc. | 60,262 | 1,499,017 |
| Quest Diagnostics, Inc. | 32,997 | 4,030,254 |
| ResMed, Inc. | 8,321 | 1,597,133 |
| STERIS plc | 7,433 | 1,317,053 |
| Stryker Corp. | 26,958 | 5,445,786 |
| Tenet Healthcare Corp. * | 63,469 | 1,557,529 |
| The Cooper Cos., Inc. | 3,221 | 1,027,660 |
| UnitedHealth Group, Inc. | 151,427 | 46,206,435 |
| Universal Health Services, Inc., Class B | 27,613 | 3,025,004 |
| Varian Medical Systems, Inc. * | 10,735 | 1,855,008 |
| Zimmer Biomet Holdings, Inc. | 21,709 | 2,867,759 |
| | | 269,161,894 |
| |
| Household & Personal Products 1.7% |
| Church & Dwight Co., Inc. | 28,652 | 2,532,550 |
| Colgate-Palmolive Co. | 112,669 | 8,888,457 |
| Kimberly-Clark Corp. | 43,113 | 5,716,353 |
| Nu Skin Enterprises, Inc., Class A | 29,131 | 1,437,615 |
| The Clorox Co. | 13,634 | 2,825,646 |
| The Estee Lauder Cos., Inc., Class A | 17,210 | 3,780,349 |
| The Procter & Gamble Co. | 366,451 | 50,240,432 |
| | | 75,421,402 |
| |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Insurance 3.4% |
| Aflac, Inc. | 216,436 | 7,348,002 |
| Alleghany Corp. | 2,866 | 1,567,501 |
| American Financial Group, Inc. | 17,428 | 1,306,054 |
| American International Group, Inc. | 715,795 | 22,540,385 |
| Aon plc, Class A | 34,078 | 6,270,693 |
| Arch Capital Group Ltd. * | 42,914 | 1,296,432 |
| Arthur J. Gallagher & Co. | 18,681 | 1,937,407 |
| Assurant, Inc. | 11,516 | 1,432,245 |
| Assured Guaranty Ltd. | 64,870 | 1,656,131 |
| Athene Holding Ltd., Class A * | 29,188 | 936,351 |
| Axis Capital Holdings Ltd. | 27,966 | 1,193,869 |
| Chubb Ltd. | 74,043 | 9,618,926 |
| Cincinnati Financial Corp. | 25,024 | 1,770,198 |
| CNO Financial Group, Inc. | 87,634 | 1,555,503 |
| Everest Re Group Ltd. | 10,338 | 2,037,413 |
| Fidelity National Financial, Inc. | 64,259 | 2,010,664 |
| First American Financial Corp. | 26,558 | 1,184,221 |
| Genworth Financial, Inc., Class A * | 398,587 | 1,566,447 |
| Globe Life, Inc. | 20,326 | 1,648,235 |
| Lincoln National Corp. | 88,101 | 3,092,345 |
| Loews Corp. | 98,564 | 3,418,200 |
| Markel Corp. * | 1,327 | 1,237,826 |
| Marsh & McLennan Cos., Inc. | 63,748 | 6,595,368 |
| MetLife, Inc. | 281,533 | 10,656,024 |
| Old Republic International Corp. | 85,273 | 1,388,244 |
| Primerica, Inc. | 7,832 | 863,400 |
| Principal Financial Group, Inc. | 81,025 | 3,177,800 |
| Prudential Financial, Inc. | 160,587 | 10,280,780 |
| Reinsurance Group of America, Inc. | 19,116 | 1,931,098 |
| RenaissanceRe Holdings Ltd. | 6,186 | 1,000,400 |
| The Allstate Corp. | 100,560 | 8,924,700 |
| The Hartford Financial Services Group, Inc. | 101,155 | 3,896,491 |
| The Progressive Corp. | 72,323 | 6,646,484 |
| The Travelers Cos., Inc. | 141,111 | 17,033,509 |
| Unum Group | 110,396 | 1,949,593 |
| W.R. Berkley Corp. | 26,119 | 1,570,274 |
| Willis Towers Watson plc | 11,377 | 2,076,075 |
| | | 154,615,288 |
| |
| Materials 3.7% |
| Air Products & Chemicals, Inc. | 20,735 | 5,727,836 |
| Albemarle Corp. | 22,530 | 2,100,021 |
| Alcoa Corp. * | 211,093 | 2,727,322 |
| AptarGroup, Inc. | 8,998 | 1,026,582 |
| Arconic Corp. * | 29,319 | 637,395 |
| Ashland Global Holdings, Inc. | 15,405 | 1,074,807 |
| Avery Dennison Corp. | 15,201 | 2,103,666 |
| Ball Corp. | 29,635 | 2,637,515 |
| Berry Global Group, Inc. * | 27,944 | 1,303,029 |
| Celanese Corp. | 29,467 | 3,344,799 |
| CF Industries Holdings, Inc. | 73,333 | 2,024,724 |
| Commercial Metals Co. | 65,066 | 1,343,613 |
| Corteva, Inc. | 133,280 | 4,395,574 |
| Crown Holdings, Inc. * | 18,824 | 1,615,099 |
| Domtar Corp. | 59,777 | 1,427,475 |
| Dow, Inc. | 117,347 | 5,338,115 |
| DuPont de Nemours, Inc. | 266,292 | 15,146,689 |
| Eastman Chemical Co. | 57,191 | 4,623,320 |
| Ecolab, Inc. | 28,310 | 5,197,433 |
| Freeport-McMoRan, Inc. | 314,935 | 5,460,973 |
| Graphic Packaging Holding Co. | 94,796 | 1,259,839 |
| Huntsman Corp. | 102,033 | 2,478,382 |
| International Flavors & Fragrances, Inc. (b) | 11,927 | 1,224,426 |
| International Paper Co. | 170,992 | 7,480,900 |
| Security | Number
of Shares | Value ($) |
| Linde plc | 55,853 | 12,306,650 |
| LyondellBasell Industries N.V., Class A | 161,499 | 11,054,607 |
| Martin Marietta Materials, Inc. | 9,046 | 2,409,402 |
| Newmont Corp. | 61,269 | 3,850,144 |
| Nucor Corp. | 158,514 | 7,570,629 |
| O-I Glass, Inc. | 139,319 | 1,313,778 |
| Olin Corp. | 101,926 | 1,686,875 |
| Packaging Corp. of America | 24,428 | 2,796,762 |
| PPG Industries, Inc. | 59,834 | 7,761,666 |
| Reliance Steel & Aluminum Co. | 32,057 | 3,493,892 |
| RPM International, Inc. | 19,424 | 1,644,630 |
| Sealed Air Corp. | 60,242 | 2,384,981 |
| Sonoco Products Co. | 28,690 | 1,402,654 |
| Steel Dynamics, Inc. | 98,384 | 3,097,128 |
| The Chemours Co. | 77,874 | 1,568,382 |
| The Mosaic Co. | 284,275 | 5,259,088 |
| The Sherwin-Williams Co. | 6,425 | 4,420,272 |
| United States Steel Corp. | 260,909 | 2,520,381 |
| Vulcan Materials Co. | 14,781 | 2,140,880 |
| WestRock Co. | 145,801 | 5,474,828 |
| | | 165,857,163 |
| |
| Media & Entertainment 4.6% |
| Activision Blizzard, Inc. | 64,823 | 4,909,046 |
| Alphabet, Inc., Class A * | 18,196 | 29,406,738 |
| Alphabet, Inc., Class C * | 18,267 | 29,610,990 |
| Altice USA, Inc., Class A * | 82,987 | 2,236,500 |
| Charter Communications, Inc., Class A * | 18,247 | 11,017,903 |
| Cinemark Holdings, Inc. | 56,239 | 460,597 |
| Comcast Corp., Class A | 932,411 | 39,385,041 |
| Discovery, Inc., Class A * | 36,999 | 748,860 |
| Discovery, Inc., Class C * | 82,858 | 1,517,959 |
| DISH Network Corp., Class A * | 57,178 | 1,457,467 |
| Electronic Arts, Inc. * | 27,774 | 3,328,158 |
| Facebook, Inc., Class A * | 97,592 | 25,677,431 |
| Fox Corp., Class A | 86,933 | 2,305,463 |
| Fox Corp., Class B | 39,444 | 1,031,066 |
| IAC/InterActiveCorp * | 5,247 | 633,418 |
| Liberty Media Corp. - Liberty SiriusXM, Class A * | 36,356 | 1,256,827 |
| Liberty Media Corp. - Liberty SiriusXM, Class C * | 67,538 | 2,336,815 |
| Netflix, Inc. * | 3,242 | 1,542,349 |
| News Corp., Class A | 136,042 | 1,786,231 |
| News Corp., Class B | 43,760 | 569,755 |
| Omnicom Group, Inc. | 59,249 | 2,796,553 |
| The Interpublic Group of Cos., Inc. | 97,745 | 1,768,207 |
| The Walt Disney Co. | 300,482 | 36,433,442 |
| ViacomCBS, Inc., Class B | 303,063 | 8,658,510 |
| | | 210,875,326 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 6.0% |
| AbbVie, Inc. | 301,461 | 25,654,331 |
| Agilent Technologies, Inc. | 27,630 | 2,820,747 |
| Alexion Pharmaceuticals, Inc. * | 18,128 | 2,087,258 |
| Amgen, Inc. | 104,429 | 22,654,827 |
| Biogen, Inc. * | 25,864 | 6,519,538 |
| Bristol-Myers Squibb Co. | 236,044 | 13,796,772 |
| Eli Lilly & Co. | 68,164 | 8,892,675 |
| Gilead Sciences, Inc. | 424,815 | 24,702,992 |
| ICON plc * | 6,047 | 1,090,274 |
| Illumina, Inc. * | 4,415 | 1,292,270 |
| IQVIA Holdings, Inc. * | 22,729 | 3,500,039 |
| Jazz Pharmaceuticals plc * | 8,895 | 1,281,769 |
| Johnson & Johnson | 394,308 | 54,063,570 |
| Merck & Co., Inc. | 421,770 | 31,721,322 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Mettler-Toledo International, Inc. * | 1,968 | 1,963,887 |
| Mylan N.V. * | 220,698 | 3,208,949 |
| Perrigo Co., plc | 25,019 | 1,097,584 |
| Pfizer, Inc. | 1,343,885 | 47,681,040 |
| Regeneron Pharmaceuticals, Inc. * | 4,456 | 2,422,103 |
| Thermo Fisher Scientific, Inc. | 23,913 | 11,313,719 |
| United Therapeutics Corp. * | 15,590 | 2,092,646 |
| Waters Corp. * | 8,467 | 1,886,617 |
| Zoetis, Inc. | 19,865 | 3,149,596 |
| | | 274,894,525 |
| |
| Real Estate 1.9% |
| Alexandria Real Estate Equities, Inc. | 6,290 | 953,061 |
| American Tower Corp. | 20,178 | 4,633,878 |
| Apple Hospitality REIT, Inc. | 87,913 | 870,339 |
| AvalonBay Communities, Inc. | 13,554 | 1,885,768 |
| Boston Properties, Inc. | 25,714 | 1,861,951 |
| Brixmor Property Group, Inc. | 88,387 | 968,722 |
| Camden Property Trust | 10,676 | 984,754 |
| CBRE Group, Inc., Class A * | 60,033 | 3,025,663 |
| Colony Capital, Inc. | 403,416 | 1,436,161 |
| CoreCivic, Inc. | 91,543 | 586,791 |
| Crown Castle International Corp. | 30,167 | 4,712,085 |
| Digital Realty Trust, Inc. | 62,036 | 8,951,795 |
| Diversified Healthcare Trust | 246,521 | 713,678 |
| Duke Realty Corp. | 30,816 | 1,170,700 |
| Equinix, Inc. | 4,544 | 3,322,755 |
| Equity Residential | 45,196 | 2,123,308 |
| Essex Property Trust, Inc. | 5,542 | 1,133,838 |
| Extra Space Storage, Inc. | 10,213 | 1,184,197 |
| Healthpeak Properties, Inc. | 71,696 | 1,933,641 |
| Host Hotels & Resorts, Inc. | 281,580 | 2,950,958 |
| Iron Mountain, Inc. | 79,860 | 2,081,152 |
| Jones Lang LaSalle, Inc. | 16,283 | 1,837,699 |
| Kimco Realty Corp. | 84,709 | 869,114 |
| Lamar Advertising Co., Class A | 13,970 | 865,581 |
| Mid-America Apartment Communities, Inc. | 10,767 | 1,255,755 |
| Outfront Media, Inc. | 54,650 | 716,462 |
| Park Hotels & Resorts, Inc. | 130,109 | 1,291,982 |
| Prologis, Inc. | 33,464 | 3,319,629 |
| Public Storage | 12,328 | 2,823,975 |
| Realogy Holdings Corp. * | 201,102 | 2,244,298 |
| Realty Income Corp. | 20,263 | 1,172,417 |
| Service Properties Trust | 143,302 | 1,033,207 |
| Simon Property Group, Inc. | 66,833 | 4,197,781 |
| SL Green Realty Corp. | 26,442 | 1,131,982 |
| The Macerich Co. (b) | 110,764 | 770,918 |
| UDR, Inc. | 26,626 | 831,796 |
| Ventas, Inc. | 84,663 | 3,341,649 |
| VEREIT, Inc. | 216,481 | 1,342,182 |
| Vornado Realty Trust | 35,836 | 1,101,240 |
| Welltower, Inc. | 72,965 | 3,923,328 |
| Weyerhaeuser Co. | 186,158 | 5,080,252 |
| WP Carey, Inc. | 14,295 | 895,010 |
| | | 87,531,452 |
| |
| Retailing 5.9% |
| Aaron's Holdings Co., Inc. | 24,504 | 1,280,579 |
| Abercrombie & Fitch Co., Class A | 90,261 | 1,283,511 |
| Advance Auto Parts, Inc. | 16,087 | 2,369,293 |
| Amazon.com, Inc. * | 9,033 | 27,425,543 |
| American Eagle Outfitters, Inc. | 127,451 | 1,747,353 |
| Asbury Automotive Group, Inc. * | 10,550 | 1,086,439 |
| AutoNation, Inc. * | 34,797 | 1,974,034 |
| AutoZone, Inc. * | 1,972 | 2,226,348 |
| Security | Number
of Shares | Value ($) |
| Bed Bath & Beyond, Inc. | 443,907 | 8,789,359 |
| Best Buy Co., Inc. | 88,604 | 9,883,776 |
| Big Lots, Inc. | 49,643 | 2,363,007 |
| Booking Holdings, Inc. * | 5,484 | 8,897,790 |
| Burlington Stores, Inc. * | 4,447 | 860,850 |
| CarMax, Inc. * | 37,263 | 3,221,014 |
| Core-Mark Holding Co., Inc. | 63,506 | 1,736,889 |
| Dick's Sporting Goods, Inc. | 47,777 | 2,706,567 |
| Dollar General Corp. | 47,480 | 9,909,551 |
| Dollar Tree, Inc. * | 44,714 | 4,038,568 |
| eBay, Inc. | 173,707 | 8,273,664 |
| Expedia Group, Inc. | 26,718 | 2,515,500 |
| Foot Locker, Inc. | 92,191 | 3,400,004 |
| GameStop Corp., Class A *(b) | 501,778 | 5,253,616 |
| Genuine Parts Co. | 41,089 | 3,715,678 |
| Group 1 Automotive, Inc. | 15,469 | 1,640,951 |
| Kohl's Corp. | 261,740 | 5,572,445 |
| L Brands, Inc. | 158,885 | 5,085,909 |
| Lithia Motors, Inc., Class A | 7,811 | 1,793,171 |
| LKQ Corp. * | 74,294 | 2,376,665 |
| Lowe's Cos., Inc. | 144,036 | 22,772,092 |
| Macy's, Inc. | 800,350 | 4,970,173 |
| Murphy USA, Inc. * | 17,378 | 2,125,156 |
| Nordstrom, Inc. (b) | 121,597 | 1,471,324 |
| O'Reilly Automotive, Inc. * | 10,615 | 4,634,509 |
| Penske Automotive Group, Inc. | 24,516 | 1,254,239 |
| Qurate Retail, Inc. Class A | 495,458 | 3,354,251 |
| Ross Stores, Inc. | 48,059 | 4,093,185 |
| Signet Jewelers Ltd. | 105,764 | 2,356,422 |
| Target Corp. | 157,876 | 24,031,885 |
| The Gap, Inc. | 271,125 | 5,273,381 |
| The Home Depot, Inc. | 144,174 | 38,452,647 |
| The ODP Corp. | 85,528 | 1,667,796 |
| The TJX Cos., Inc. | 228,907 | 11,628,476 |
| Tiffany & Co. | 19,294 | 2,524,427 |
| Tractor Supply Co. | 24,803 | 3,304,008 |
| Ulta Beauty, Inc. * | 7,389 | 1,527,823 |
| Urban Outfitters, Inc. * | 59,177 | 1,322,014 |
| Williams-Sonoma, Inc. | 22,698 | 2,070,285 |
| | | 270,262,167 |
| |
| Semiconductors & Semiconductor Equipment 3.8% |
| Analog Devices, Inc. | 29,017 | 3,439,385 |
| Applied Materials, Inc. | 145,513 | 8,618,735 |
| Broadcom, Inc. | 30,927 | 10,813,007 |
| Intel Corp. | 951,191 | 42,118,737 |
| KLA Corp. | 18,502 | 3,648,224 |
| Lam Research Corp. | 15,733 | 5,381,945 |
| Marvell Technology Group Ltd. | 45,637 | 1,711,844 |
| Maxim Integrated Products, Inc. | 34,031 | 2,370,259 |
| Microchip Technology, Inc. | 19,827 | 2,083,421 |
| Micron Technology, Inc. * | 248,112 | 12,489,958 |
| NVIDIA Corp. | 17,899 | 8,973,843 |
| NXP Semiconductors N.V. | 45,221 | 6,110,261 |
| ON Semiconductor Corp. * | 80,762 | 2,026,319 |
| Qorvo, Inc. * | 19,505 | 2,484,157 |
| QUALCOMM, Inc. | 266,669 | 32,896,288 |
| Skyworks Solutions, Inc. | 27,128 | 3,832,915 |
| Teradyne, Inc. | 16,023 | 1,407,620 |
| Texas Instruments, Inc. | 132,061 | 19,094,700 |
| Xilinx, Inc. | 28,269 | 3,355,248 |
| | | 172,856,866 |
| |
| Software & Services 6.4% |
| Accenture plc, Class A | 63,390 | 13,749,925 |
| Adobe, Inc. * | 11,718 | 5,239,118 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Akamai Technologies, Inc. * | 17,791 | 1,692,280 |
| Alliance Data Systems Corp. | 40,708 | 2,098,090 |
| Amdocs Ltd. | 34,982 | 1,972,285 |
| ANSYS, Inc. * | 3,900 | 1,187,043 |
| Autodesk, Inc. * | 5,217 | 1,228,812 |
| Automatic Data Processing, Inc. | 41,127 | 6,496,421 |
| Booz Allen Hamilton Holding Corp. | 16,797 | 1,318,565 |
| Broadridge Financial Solutions, Inc. | 12,465 | 1,715,184 |
| CACI International, Inc., Class A * | 4,140 | 863,314 |
| Cadence Design Systems, Inc. * | 13,301 | 1,454,730 |
| CDK Global, Inc. | 25,218 | 1,086,896 |
| Check Point Software Technologies Ltd. * | 14,058 | 1,596,427 |
| Citrix Systems, Inc. | 17,574 | 1,990,607 |
| Cognizant Technology Solutions Corp., Class A | 120,843 | 8,630,607 |
| Conduent, Inc. * | 332,146 | 1,157,529 |
| DXC Technology Co. | 235,703 | 4,341,649 |
| Fidelity National Information Services, Inc. | 34,116 | 4,250,512 |
| Fiserv, Inc. * | 41,143 | 3,927,922 |
| FleetCor Technologies, Inc. * | 5,633 | 1,244,386 |
| Genpact Ltd. | 28,869 | 992,228 |
| Global Payments, Inc. | 10,525 | 1,660,214 |
| International Business Machines Corp. | 332,909 | 37,172,619 |
| Intuit, Inc. | 15,277 | 4,807,366 |
| Jack Henry & Associates, Inc. | 6,824 | 1,011,658 |
| Leidos Holdings, Inc. | 25,277 | 2,097,991 |
| Mastercard, Inc., Class A | 36,189 | 10,445,593 |
| MAXIMUS, Inc. | 13,907 | 939,835 |
| Microsoft Corp. | 480,237 | 97,233,585 |
| NortonLifeLock, Inc. | 176,070 | 3,621,760 |
| Oracle Corp. | 471,646 | 26,464,057 |
| Paychex, Inc. | 35,297 | 2,903,178 |
| PayPal Holdings, Inc. * | 39,108 | 7,279,172 |
| Perspecta, Inc. | 43,399 | 778,144 |
| Sabre Corp. | 113,186 | 737,973 |
| salesforce.com, Inc. * | 12,007 | 2,788,866 |
| Science Applications International Corp. | 11,151 | 851,602 |
| Synopsys, Inc. * | 7,207 | 1,541,289 |
| Teradata Corp. * | 56,446 | 1,036,913 |
| The Western Union Co. | 107,384 | 2,087,545 |
| VeriSign, Inc. * | 4,924 | 939,007 |
| Visa, Inc., Class A | 84,709 | 15,392,472 |
| | | 290,025,369 |
| |
| Technology Hardware & Equipment 8.4% |
| Amphenol Corp., Class A | 31,116 | 3,511,129 |
| Apple Inc. | 2,350,490 | 255,874,341 |
| Arrow Electronics, Inc. * | 55,856 | 4,350,624 |
| Avnet, Inc. | 166,414 | 4,105,433 |
| CDW Corp. | 19,701 | 2,415,343 |
| Cisco Systems, Inc. | 938,540 | 33,693,586 |
| CommScope Holding Co., Inc. * | 107,985 | 961,067 |
| Corning, Inc. | 363,485 | 11,620,615 |
| Dell Technologies, Inc., Class C * | 21,803 | 1,313,849 |
| F5 Networks, Inc. * | 14,562 | 1,935,872 |
| Flex Ltd. * | 283,682 | 4,014,100 |
| FLIR Systems, Inc. | 21,915 | 760,231 |
| Hewlett Packard Enterprise Co. | 1,052,892 | 9,096,987 |
| HP, Inc. | 406,300 | 7,297,148 |
| Insight Enterprises, Inc. * | 17,405 | 928,557 |
| Jabil, Inc. | 83,290 | 2,760,231 |
| Juniper Networks, Inc. | 163,506 | 3,224,338 |
| Motorola Solutions, Inc. | 30,268 | 4,784,160 |
| NCR Corp. * | 52,066 | 1,057,981 |
| NetApp, Inc. | 79,883 | 3,506,065 |
| Sanmina Corp. * | 49,336 | 1,205,772 |
| Seagate Technology plc | 113,395 | 5,422,549 |
| Security | Number
of Shares | Value ($) |
| SYNNEX Corp. | 15,405 | 2,027,914 |
| TE Connectivity Ltd. | 65,878 | 6,382,261 |
| Trimble, Inc. * | 25,590 | 1,231,647 |
| Vontier Corp. * | 12,295 | 353,358 |
| Western Digital Corp. | 145,346 | 5,483,905 |
| Xerox Holdings Corp. | 101,432 | 1,762,888 |
| | | 381,081,951 |
| |
| Telecommunication Services 3.5% |
| AT&T, Inc. | 2,518,612 | 68,052,896 |
| CenturyLink, Inc. | 932,916 | 8,041,736 |
| Liberty Global plc, Class A * | 89,896 | 1,706,226 |
| Liberty Global plc, Class C * | 218,949 | 4,085,588 |
| T-Mobile US, Inc. * | 68,861 | 7,545,100 |
| Telephone & Data Systems, Inc. | 75,434 | 1,282,378 |
| Verizon Communications, Inc. | 1,190,105 | 67,824,084 |
| | | 158,538,008 |
| |
| Transportation 2.7% |
| American Airlines Group, Inc. (b) | 171,807 | 1,937,983 |
| Avis Budget Group, Inc. * | 86,033 | 2,896,731 |
| C.H. Robinson Worldwide, Inc. | 43,407 | 3,838,481 |
| CSX Corp. | 139,941 | 11,046,943 |
| Delta Air Lines, Inc. | 85,504 | 2,619,843 |
| Expeditors International of Washington, Inc. | 41,864 | 3,699,522 |
| FedEx Corp. | 101,140 | 26,242,796 |
| Hertz Global Holdings, Inc. * | 699,451 | 489,616 |
| JB Hunt Transport Services, Inc. | 17,357 | 2,113,041 |
| Kansas City Southern | 13,422 | 2,364,151 |
| Kirby Corp. * | 17,777 | 684,237 |
| Knight-Swift Transportation Holdings, Inc. | 27,825 | 1,057,072 |
| Landstar System, Inc. | 9,783 | 1,219,940 |
| Macquarie Infrastructure Corp. | 32,953 | 850,187 |
| Norfolk Southern Corp. | 47,796 | 9,995,099 |
| Old Dominion Freight Line, Inc. | 9,014 | 1,715,995 |
| Ryder System, Inc. | 62,224 | 3,065,154 |
| Southwest Airlines Co. | 61,676 | 2,438,052 |
| Union Pacific Corp. | 134,785 | 23,882,554 |
| United Airlines Holdings, Inc. * | 51,531 | 1,744,840 |
| United Parcel Service, Inc., Class B | 102,832 | 16,155,935 |
| XPO Logistics, Inc. * | 21,645 | 1,948,050 |
| | | 122,006,222 |
| |
| Utilities 3.8% |
| Alliant Energy Corp. | 35,323 | 1,952,655 |
| Ameren Corp. | 46,319 | 3,757,397 |
| American Electric Power Co., Inc. | 98,767 | 8,882,116 |
| American Water Works Co., Inc. | 18,178 | 2,735,971 |
| Atmos Energy Corp. | 16,005 | 1,467,178 |
| CenterPoint Energy, Inc. | 165,342 | 3,493,676 |
| CMS Energy Corp. | 50,311 | 3,186,196 |
| Consolidated Edison, Inc. | 83,691 | 6,568,907 |
| Dominion Energy, Inc. | 112,621 | 9,047,971 |
| DTE Energy Co. | 39,226 | 4,841,273 |
| Duke Energy Corp. | 180,713 | 16,645,474 |
| Edison International | 88,178 | 4,941,495 |
| Entergy Corp. | 41,329 | 4,183,321 |
| Evergy, Inc. | 59,062 | 3,260,222 |
| Eversource Energy | 52,234 | 4,558,461 |
| Exelon Corp. | 328,376 | 13,098,919 |
| FirstEnergy Corp. | 123,436 | 3,668,518 |
| MDU Resources Group, Inc. | 58,015 | 1,378,436 |
| NextEra Energy, Inc. | 195,828 | 14,336,568 |
| NiSource, Inc. | 71,042 | 1,631,835 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| NRG Energy, Inc. | 41,127 | 1,300,436 |
| OGE Energy Corp. | 41,471 | 1,276,063 |
| PG&E Corp. * | 481,238 | 4,600,635 |
| Pinnacle West Capital Corp. | 27,657 | 2,255,982 |
| Portland General Electric Co. | 21,669 | 851,592 |
| PPL Corp. | 208,692 | 5,739,030 |
| Public Service Enterprise Group, Inc. | 117,016 | 6,804,480 |
| Sempra Energy | 40,296 | 5,051,507 |
| Southwest Gas Holdings, Inc. | 13,312 | 874,865 |
| The AES Corp. | 280,065 | 5,461,268 |
| The Southern Co. | 204,376 | 11,741,401 |
| UGI Corp. | 64,010 | 2,070,083 |
| Vistra Corp. | 123,941 | 2,152,855 |
| WEC Energy Group, Inc. | 42,796 | 4,303,138 |
| Xcel Energy, Inc. | 88,962 | 6,230,009 |
| | | 174,349,933 |
| Total Common Stock |
| (Cost $3,097,661,049) | | 4,536,929,983 |
|
| Other Investment Companies 0.3% of net assets |
| |
| Money Market Fund 0.0% |
| State Street Institutional U.S. Government Money Market Fund, Premier Class 0.03% (c) | 1,383,897 | 1,383,897 |
| |
| Securities Lending Collateral 0.3% |
| Wells Fargo Government Money Market Fund, Select Class 0.04% (c) | 11,209,213 | 11,209,213 |
| Total Other Investment Companies |
| (Cost $12,593,110) | | 12,593,110 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | |
| Long | |
| S&P 500 Index, e-mini, expires 12/18/20 | 59 | 9,630,865 | (541,323) |
| * | 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 $10,257,993. |
| (c) | The rate shown is the 7-day yield. |
| | |
| REIT — | Real Estate Investment Trust |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Small Company Index Fund
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Common Stock 99.3% of net assets |
| |
| Automobiles & Components 1.7% |
| BorgWarner, Inc. | 1 | 35 |
| Cooper-Standard Holdings, Inc. * | 161,775 | 2,538,250 |
| Dorman Products, Inc. * | 20,242 | 1,807,003 |
| Fox Factory Holding Corp. * | 5,391 | 453,275 |
| Gentherm, Inc. * | 29,843 | 1,381,432 |
| LCI Industries | 22,124 | 2,426,118 |
| Modine Manufacturing Co. * | 169,516 | 1,084,902 |
| Patrick Industries, Inc. | 17,753 | 989,730 |
| Standard Motor Products, Inc. | 26,640 | 1,220,112 |
| Stoneridge, Inc. * | 26,496 | 604,904 |
| Tenneco, Inc., Class A * | 355,367 | 3,063,264 |
| Tesla, Inc. * | 12,646 | 4,907,154 |
| Veoneer, Inc. * | 126,644 | 1,946,518 |
| Winnebago Industries, Inc. | 20,265 | 951,442 |
| | | 23,374,139 |
| |
| Banks 7.6% |
| Associated Banc-Corp. | 126,808 | 1,736,002 |
| Atlantic Union Bankshares Corp. | 28,002 | 708,171 |
| Axos Financial, Inc. * | 20,006 | 545,364 |
| BancorpSouth Bank | 60,943 | 1,426,676 |
| Bank of Hawaii Corp. | 25,790 | 1,563,906 |
| Bank OZK | 70,418 | 1,744,958 |
| BankUnited, Inc. | 99,778 | 2,519,394 |
| Banner Corp. | 20,858 | 769,034 |
| Berkshire Hills Bancorp, Inc. | 33,361 | 434,694 |
| BOK Financial Corp. | 20,249 | 1,189,426 |
| Boston Private Financial Holdings, Inc. | 87,292 | 539,465 |
| Brookline Bancorp, Inc. | 40,252 | 385,614 |
| Cadence BanCorp | 48,009 | 538,661 |
| Capitol Federal Financial, Inc. | 90,533 | 1,039,319 |
| Cathay General Bancorp | 46,656 | 1,097,816 |
| Central Pacific Financial Corp. | 32,745 | 450,899 |
| Columbia Banking System, Inc. | 39,313 | 1,116,882 |
| Commerce Bancshares, Inc. | 35,463 | 2,207,572 |
| Community Bank System, Inc. | 17,194 | 997,080 |
| Cullen/Frost Bankers, Inc. | 29,544 | 2,076,057 |
| CVB Financial Corp. | 44,328 | 775,740 |
| Eagle Bancorp, Inc. | 12,393 | 370,799 |
| East West Bancorp, Inc. | 84,238 | 3,073,002 |
| Essent Group Ltd. | 29,208 | 1,163,939 |
| F.N.B. Corp. | 248,016 | 1,875,001 |
| Federal Agricultural Mortgage Corp., Class C | 6,149 | 397,164 |
| First BanCorp | 132,525 | 860,087 |
| First Citizens BancShares, Inc., Class A | 3,290 | 1,522,283 |
| First Commonwealth Financial Corp. | 66,121 | 569,963 |
| First Financial Bancorp | 50,505 | 722,221 |
| First Financial Bankshares, Inc. | 25,743 | 767,399 |
| First Hawaiian, Inc. | 89,782 | 1,549,637 |
| First Horizon National Corp. | 331,544 | 3,451,373 |
| First Interstate BancSystem, Inc., Class A | 13,419 | 473,691 |
| First Merchants Corp. | 16,747 | 437,264 |
| First Midwest Bancorp, Inc. | 59,997 | 752,962 |
| Flagstar Bancorp, Inc. | 17,962 | 527,185 |
| Security | Number
of Shares | Value ($) |
| Fulton Financial Corp. | 142,595 | 1,567,119 |
| Glacier Bancorp, Inc. | 30,819 | 1,103,320 |
| Great Western Bancorp, Inc. | 58,281 | 757,070 |
| Hancock Whitney Corp. | 71,715 | 1,640,122 |
| Heartland Financial USA, Inc. | 12,722 | 419,063 |
| Hilltop Holdings, Inc. | 42,815 | 976,610 |
| Home BancShares, Inc. | 79,099 | 1,313,043 |
| Hope Bancorp, Inc. | 102,833 | 829,862 |
| Independent Bank Corp. | 9,539 | 546,489 |
| International Bancshares Corp. | 33,961 | 940,040 |
| Investors Bancorp, Inc. | 151,991 | 1,285,844 |
| MGIC Investment Corp. | 276,134 | 2,777,908 |
| National Bank Holdings Corp., Class A | 20,451 | 616,598 |
| NBT Bancorp, Inc. | 24,424 | 668,729 |
| Northwest Bancshares, Inc. | 77,849 | 830,649 |
| OFG Bancorp | 51,611 | 742,682 |
| Old National Bancorp | 87,449 | 1,222,537 |
| Park National Corp. | 8,467 | 776,001 |
| Pinnacle Financial Partners, Inc. | 22,545 | 1,032,336 |
| Popular, Inc. | 67,224 | 2,836,853 |
| Prosperity Bancshares, Inc. | 34,376 | 1,894,461 |
| Provident Financial Services, Inc. | 47,237 | 641,006 |
| Radian Group, Inc. | 147,945 | 2,655,613 |
| Renasant Corp. | 21,500 | 612,965 |
| S&T Bancorp, Inc. | 17,942 | 355,072 |
| Sandy Spring Bancorp, Inc. | 15,881 | 402,583 |
| Signature Bank | 21,202 | 1,711,849 |
| Simmons First National Corp., Class A | 38,123 | 647,710 |
| South State Corp. | 16,351 | 1,003,951 |
| Sterling Bancorp | 80,563 | 1,077,933 |
| SVB Financial Group * | 14,588 | 4,240,732 |
| Synovus Financial Corp. | 125,910 | 3,273,660 |
| TCF Financial Corp. | 50,421 | 1,371,955 |
| Texas Capital Bancshares, Inc. * | 31,774 | 1,429,830 |
| The Bank of N.T. Butterfield & Son Ltd. | 34,056 | 901,122 |
| Towne Bank | 25,060 | 455,591 |
| Trustmark Corp. | 45,631 | 1,067,309 |
| UMB Financial Corp. | 21,848 | 1,329,888 |
| Umpqua Holdings Corp. | 197,817 | 2,484,581 |
| United Bankshares, Inc. | 55,368 | 1,452,303 |
| United Community Banks, Inc. | 37,063 | 776,099 |
| Valley National Bancorp | 182,420 | 1,393,689 |
| Walker & Dunlop, Inc. | 23,254 | 1,462,212 |
| Washington Federal, Inc. | 70,586 | 1,502,776 |
| Webster Financial Corp. | 62,245 | 2,004,911 |
| WesBanco, Inc. | 30,012 | 728,991 |
| Westamerica Bancorp | 9,883 | 517,573 |
| Western Alliance Bancorp | 30,032 | 1,237,318 |
| Wintrust Financial Corp. | 33,725 | 1,660,282 |
| WSFS Financial Corp. | 13,812 | 437,702 |
| | | 105,991,242 |
| |
| Capital Goods 11.6% |
| AAON, Inc. | 13,321 | 778,080 |
| AAR Corp. | 72,846 | 1,417,583 |
| Advanced Drainage Systems, Inc. | 8,529 | 540,994 |
| Aegion Corp. * | 63,269 | 892,726 |
| Aerojet Rocketdyne Holdings, Inc. * | 14,604 | 473,462 |
| Air Lease Corp. | 78,255 | 2,131,666 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Small Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Alamo Group, Inc. | 8,580 | 1,032,431 |
| Albany International Corp., Class A | 16,309 | 830,780 |
| Allegion plc | 25,207 | 2,482,889 |
| Altra Industrial Motion Corp. | 28,950 | 1,237,902 |
| American Woodmark Corp. * | 12,022 | 993,137 |
| Apogee Enterprises, Inc. | 52,963 | 1,265,286 |
| Applied Industrial Technologies, Inc. | 44,157 | 2,695,785 |
| Arcosa, Inc. | 65,593 | 3,028,429 |
| Argan, Inc. | 20,121 | 828,784 |
| Armstrong World Industries, Inc. | 20,070 | 1,202,193 |
| Astec Industries, Inc. | 30,948 | 1,572,158 |
| Astronics Corp. * | 36,612 | 234,317 |
| Atkore International Group, Inc. * | 36,233 | 749,661 |
| AZZ, Inc. | 33,037 | 1,109,713 |
| Barnes Group, Inc. | 44,395 | 1,629,296 |
| Beacon Roofing Supply, Inc. * | 93,394 | 2,867,196 |
| BMC Stock Holdings, Inc. * | 73,237 | 2,899,453 |
| Builders FirstSource, Inc. * | 76,167 | 2,307,860 |
| BWX Technologies, Inc. | 37,778 | 2,078,168 |
| CAI International, Inc. | 20,316 | 535,327 |
| Chart Industries, Inc. * | 16,496 | 1,393,087 |
| CIRCOR International, Inc. * | 28,150 | 785,385 |
| Colfax Corp. * | 92,174 | 2,506,211 |
| Columbus McKinnon Corp. | 14,075 | 477,002 |
| Comfort Systems USA, Inc. | 34,496 | 1,579,917 |
| Crane Co. | 42,393 | 2,151,445 |
| Cubic Corp. | 23,731 | 1,402,739 |
| Douglas Dynamics, Inc. | 12,234 | 417,302 |
| DXP Enterprises, Inc. * | 32,190 | 503,452 |
| Dycom Industries, Inc. * | 54,141 | 3,515,917 |
| Encore Wire Corp. | 29,383 | 1,357,788 |
| Enerpac Tool Group Corp. | 63,849 | 1,138,428 |
| EnerSys | 45,743 | 3,275,199 |
| EnPro Industries, Inc. | 22,054 | 1,301,627 |
| ESCO Technologies, Inc. | 9,892 | 827,861 |
| Federal Signal Corp. | 33,737 | 967,577 |
| Franklin Electric Co., Inc. | 27,561 | 1,646,219 |
| Generac Holdings, Inc. * | 16,829 | 3,536,614 |
| Gibraltar Industries, Inc. * | 17,827 | 1,024,161 |
| GMS, Inc. * | 54,165 | 1,224,129 |
| Granite Construction, Inc. | 118,934 | 2,296,616 |
| Griffon Corp. | 56,444 | 1,210,159 |
| H&E Equipment Services, Inc. | 63,001 | 1,325,541 |
| HEICO Corp. | 6,343 | 666,332 |
| HEICO Corp., Class A | 12,364 | 1,156,034 |
| Herc Holdings, Inc. * | 36,657 | 1,626,105 |
| Hillenbrand, Inc. | 77,465 | 2,265,851 |
| Hyster-Yale Materials Handling, Inc. | 22,899 | 970,918 |
| Ingersoll Rand, Inc. * | 63,860 | 2,231,268 |
| Insteel Industries, Inc. | 32,585 | 709,050 |
| JELD-WEN Holding, Inc. * | 78,656 | 1,654,136 |
| John Bean Technologies Corp. | 10,895 | 914,853 |
| Kadant, Inc. | 4,357 | 501,578 |
| Kaman Corp. | 31,234 | 1,238,740 |
| Kennametal, Inc. | 74,503 | 2,309,593 |
| Lindsay Corp. | 9,572 | 1,007,932 |
| Lydall, Inc. * | 38,892 | 769,673 |
| Masonite International Corp. * | 26,302 | 2,314,576 |
| MasTec, Inc. * | 66,258 | 3,289,047 |
| Maxar Technologies, Inc. | 76,119 | 1,961,587 |
| Meritor, Inc. * | 65,565 | 1,595,852 |
| Moog, Inc., Class A | 44,859 | 2,798,753 |
| MRC Global, Inc. * | 264,518 | 1,126,847 |
| Mueller Industries, Inc. | 86,643 | 2,506,582 |
| Mueller Water Products, Inc., Class A | 116,784 | 1,209,882 |
| MYR Group, Inc. * | 35,456 | 1,515,744 |
| National Presto Industries, Inc. | 6,891 | 572,573 |
| Navistar International Corp. * | 35,327 | 1,522,947 |
| Security | Number
of Shares | Value ($) |
| NOW, Inc. * | 311,708 | 1,268,652 |
| nVent Electric plc | 149,069 | 2,690,695 |
| Primoris Services Corp. | 83,525 | 1,576,117 |
| Proto Labs, Inc. * | 5,657 | 667,979 |
| Quanex Building Products Corp. | 55,527 | 1,010,591 |
| Raven Industries, Inc. | 27,678 | 606,702 |
| RBC Bearings, Inc. * | 7,357 | 875,851 |
| REV Group, Inc. | 61,110 | 479,713 |
| Rexnord Corp. | 59,591 | 1,911,679 |
| Rush Enterprises, Inc., Class A | 94,465 | 3,385,626 |
| Simpson Manufacturing Co., Inc. | 21,537 | 1,910,763 |
| SiteOne Landscape Supply, Inc. * | 8,428 | 1,007,062 |
| SPX FLOW, Inc. * | 36,547 | 1,547,765 |
| Standex International Corp. | 13,348 | 828,777 |
| Teledyne Technologies, Inc. * | 9,602 | 2,968,458 |
| Tennant Co. | 11,781 | 702,383 |
| Terex Corp. | 160,777 | 3,969,584 |
| The Greenbrier Cos., Inc. | 112,976 | 3,048,092 |
| The Manitowoc Co., Inc. * | 54,782 | 412,508 |
| The Middleby Corp. * | 31,711 | 3,156,513 |
| Titan Machinery, Inc. * | 62,426 | 935,766 |
| Trex Co., Inc. * | 19,264 | 1,339,619 |
| TriMas Corp. * | 32,710 | 795,834 |
| Triton International Ltd. | 51,916 | 1,914,662 |
| Tutor Perini Corp. * | 218,957 | 2,958,109 |
| Vectrus, Inc. * | 14,184 | 560,552 |
| Wabash National Corp. | 161,579 | 2,304,117 |
| Watts Water Technologies, Inc., Class A | 15,429 | 1,709,070 |
| Welbilt, Inc. * | 97,412 | 592,265 |
| Woodward, Inc. | 30,410 | 2,419,115 |
| | | 161,670,724 |
| |
| Commercial & Professional Services 5.2% |
| ACCO Brands Corp. | 192,547 | 1,014,723 |
| ADT, Inc. | 80,800 | 532,472 |
| ASGN, Inc. * | 38,624 | 2,575,448 |
| Brady Corp., Class A | 29,657 | 1,118,662 |
| CBIZ, Inc. * | 32,021 | 725,916 |
| Cimpress plc * | 7,681 | 563,785 |
| Clean Harbors, Inc. * | 41,202 | 2,182,470 |
| Copart, Inc. * | 31,534 | 3,480,092 |
| CoreLogic, Inc. | 53,508 | 4,116,370 |
| CoStar Group, Inc. * | 2,298 | 1,892,656 |
| Covanta Holding Corp. | 175,402 | 1,592,650 |
| Deluxe Corp. | 103,339 | 2,215,588 |
| Exponent, Inc. | 10,753 | 748,301 |
| FTI Consulting, Inc. * | 19,487 | 1,918,690 |
| Harsco Corp. * | 97,850 | 1,262,265 |
| Healthcare Services Group, Inc. | 80,245 | 1,836,006 |
| Herman Miller, Inc. | 80,991 | 2,467,796 |
| HNI Corp. | 69,276 | 2,254,934 |
| Huron Consulting Group, Inc. * | 15,668 | 593,190 |
| IAA, Inc. * | 45,838 | 2,593,972 |
| ICF International, Inc. | 15,784 | 1,032,116 |
| Insperity, Inc. | 16,811 | 1,287,386 |
| Interface, Inc. | 106,973 | 655,745 |
| KAR Auction Services, Inc. | 104,795 | 1,525,815 |
| Kelly Services, Inc., Class A | 177,834 | 3,090,755 |
| Kforce, Inc. | 32,660 | 1,133,302 |
| Knoll, Inc. | 72,413 | 829,853 |
| Korn Ferry | 53,995 | 1,630,109 |
| Matthews International Corp., Class A | 49,147 | 1,072,879 |
| McGrath RentCorp | 15,885 | 906,716 |
| MSA Safety, Inc. | 10,732 | 1,415,765 |
| Quad Graphics, Inc. | 357,362 | 811,212 |
| Resources Connection, Inc. | 71,595 | 768,930 |
| Rollins, Inc. | 33,083 | 1,913,852 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Small Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| RR Donnelley & Sons Co. | 988,963 | 1,157,087 |
| SP Plus Corp. * | 39,224 | 722,898 |
| Steelcase, Inc., Class A | 164,893 | 1,721,483 |
| Stericycle, Inc. * | 49,326 | 3,073,010 |
| Team, Inc. * | 86,593 | 464,138 |
| Tetra Tech, Inc. | 27,866 | 2,811,958 |
| The Brink's Co. | 26,091 | 1,117,478 |
| TransUnion | 30,430 | 2,424,054 |
| TriNet Group, Inc. * | 9,256 | 637,924 |
| TrueBlue, Inc. * | 120,598 | 1,871,681 |
| U.S. Ecology, Inc. | 14,349 | 437,931 |
| UniFirst Corp. | 10,739 | 1,759,156 |
| Viad Corp. | 42,160 | 843,200 |
| | | 72,802,419 |
| |
| Consumer Durables & Apparel 5.1% |
| Acushnet Holdings Corp. | 25,741 | 878,540 |
| American Outdoor Brands, Inc. * | 24,830 | 375,678 |
| Beazer Homes USA, Inc. * | 69,563 | 847,277 |
| Callaway Golf Co. | 62,173 | 963,060 |
| Cavco Industries, Inc. * | 4,138 | 712,315 |
| Century Communities, Inc. * | 15,585 | 605,321 |
| Columbia Sportswear Co. | 20,292 | 1,513,580 |
| Crocs, Inc. * | 22,449 | 1,174,756 |
| Deckers Outdoor Corp. * | 17,568 | 4,451,204 |
| Ethan Allen Interiors, Inc. | 76,143 | 1,222,095 |
| Fossil Group, Inc. * | 597,356 | 3,410,903 |
| G-III Apparel Group Ltd. * | 151,022 | 2,035,777 |
| Helen of Troy Ltd. * | 14,531 | 2,755,078 |
| iRobot Corp. * | 18,419 | 1,465,784 |
| KB Home | 63,456 | 2,046,456 |
| Kontoor Brands, Inc. * | 108,139 | 3,557,773 |
| La-Z-Boy, Inc. | 71,642 | 2,452,306 |
| LGI Homes, Inc. * | 6,575 | 702,736 |
| M.D.C. Holdings, Inc. | 47,247 | 2,056,190 |
| M/I Homes, Inc. * | 30,958 | 1,266,801 |
| Meritage Homes Corp. * | 33,129 | 2,885,205 |
| Movado Group, Inc. | 47,918 | 522,785 |
| Oxford Industries, Inc. | 25,312 | 1,042,095 |
| Smith & Wesson Brands, Inc. | 99,880 | 1,657,009 |
| Steven Madden Ltd. | 98,316 | 2,360,567 |
| Sturm, Ruger & Co., Inc. | 22,708 | 1,518,257 |
| Tempur Sealy International, Inc. * | 23,339 | 2,077,171 |
| TopBuild Corp. * | 15,357 | 2,352,846 |
| TRI Pointe Group, Inc. * | 175,780 | 2,888,066 |
| Tupperware Brands Corp. * | 396,367 | 12,572,762 |
| Universal Electronics, Inc. * | 14,765 | 547,191 |
| Vista Outdoor, Inc. * | 181,182 | 3,581,968 |
| Wolverine World Wide, Inc. | 98,771 | 2,634,223 |
| | | 71,133,775 |
| |
| Consumer Services 5.3% |
| Adtalem Global Education, Inc. * | 74,811 | 1,753,570 |
| American Public Education, Inc. * | 22,735 | 642,719 |
| Arcos Dorados Holdings, Inc., Class A | 220,529 | 886,527 |
| BJ's Restaurants, Inc. | 45,600 | 1,286,376 |
| Bloomin' Brands, Inc. | 161,588 | 2,259,000 |
| Boyd Gaming Corp. | 72,161 | 2,288,947 |
| Bright Horizons Family Solutions, Inc. * | 17,087 | 2,700,600 |
| Brinker International, Inc. | 90,248 | 3,929,398 |
| Caesars Entertainment, Inc. * | 53,366 | 2,391,864 |
| Choice Hotels International, Inc. | 9,884 | 863,367 |
| Churchill Downs, Inc. | 14,262 | 2,127,177 |
| Dave & Buster's Entertainment, Inc. | 69,240 | 1,188,158 |
| Denny's Corp. * | 48,073 | 430,734 |
| Dine Brands Global, Inc. | 15,426 | 793,668 |
| Security | Number
of Shares | Value ($) |
| Dunkin' Brands Group, Inc. | 31,531 | 3,143,956 |
| Fiesta Restaurant Group, Inc. * | 52,961 | 457,583 |
| frontdoor, Inc. * | 21,431 | 849,096 |
| Graham Holdings Co., Class B | 6,467 | 2,459,659 |
| Grand Canyon Education, Inc. * | 20,463 | 1,603,685 |
| Hilton Grand Vacations, Inc. * | 73,789 | 1,520,053 |
| Houghton Mifflin Harcourt Co. * | 495,441 | 1,293,101 |
| Hyatt Hotels Corp., Class A | 45,271 | 2,496,243 |
| International Game Technology plc | 251,317 | 2,063,313 |
| Jack in the Box, Inc. | 40,037 | 3,205,362 |
| K12, Inc. * | 56,885 | 1,357,845 |
| Laureate Education, Inc., Class A * | 122,184 | 1,588,392 |
| Marriott Vacations Worldwide Corp. | 26,201 | 2,531,017 |
| Papa John's International, Inc. | 12,908 | 988,753 |
| Penn National Gaming, Inc. * | 73,512 | 3,968,178 |
| Perdoceo Education Corp. * | 40,429 | 456,443 |
| Planet Fitness, Inc., Class A * | 7,526 | 446,066 |
| Red Robin Gourmet Burgers, Inc. * | 73,022 | 879,185 |
| Red Rock Resorts, Inc., Class A | 64,917 | 1,241,213 |
| Regis Corp. * | 91,859 | 508,899 |
| Ruth's Hospitality Group, Inc. | 39,335 | 439,765 |
| Scientific Games Corp., Class A * | 60,590 | 1,931,609 |
| SeaWorld Entertainment, Inc. * | 40,067 | 882,275 |
| Strategic Education, Inc. | 5,396 | 448,192 |
| Terminix Global Holdings, Inc. * | 49,955 | 2,352,381 |
| Texas Roadhouse, Inc. | 45,002 | 3,151,490 |
| The Cheesecake Factory, Inc. | 93,951 | 2,792,224 |
| Vail Resorts, Inc. | 13,633 | 3,163,401 |
| WW International, Inc. * | 24,285 | 513,871 |
| Wyndham Hotels & Resorts, Inc. | 40,643 | 1,890,306 |
| | | 74,165,661 |
| |
| Diversified Financials 4.5% |
| AGNC Investment Corp. | 211,436 | 2,953,761 |
| Apollo Commercial Real Estate Finance, Inc. | 82,431 | 717,150 |
| Artisan Partners Asset Management, Inc., Class A | 36,158 | 1,448,489 |
| BGC Partners, Inc., Class A | 285,663 | 842,706 |
| Blackstone Mortgage Trust, Inc., Class A | 56,813 | 1,232,842 |
| Brightsphere Investment Group, Inc. | 50,577 | 697,963 |
| Cannae Holdings, Inc. * | 43,764 | 1,618,393 |
| Capstead Mortgage Corp. | 128,505 | 656,661 |
| Cboe Global Markets, Inc. | 29,287 | 2,380,740 |
| Cohen & Steers, Inc. | 9,997 | 562,931 |
| Compass Diversified Holdings | 56,558 | 977,888 |
| Credit Acceptance Corp. * | 4,148 | 1,236,602 |
| Donnelley Financial Solutions, Inc. * | 83,297 | 1,052,041 |
| Eaton Vance Corp. | 72,388 | 4,328,079 |
| Encore Capital Group, Inc. * | 20,321 | 648,850 |
| Enova International, Inc. * | 48,566 | 745,488 |
| FactSet Research Systems, Inc. | 9,053 | 2,774,744 |
| Federated Hermes, Inc. | 90,822 | 2,170,646 |
| FirstCash, Inc. | 25,476 | 1,325,771 |
| Green Dot Corp., Class A * | 24,185 | 1,289,544 |
| Greenhill & Co., Inc. | 60,760 | 785,627 |
| Houlihan Lokey, Inc. | 15,952 | 1,000,190 |
| Invesco Mortgage Capital, Inc. (a) | 249,498 | 673,645 |
| Janus Henderson Group plc | 148,018 | 3,596,837 |
| Ladder Capital Corp. REIT | 104,476 | 783,570 |
| MarketAxess Holdings, Inc. | 3,232 | 1,741,563 |
| MFA Financial, Inc. | 554,201 | 1,562,847 |
| Moelis & Co., Class A | 31,641 | 1,177,045 |
| Morningstar, Inc. | 6,196 | 1,179,594 |
| Nelnet, Inc., Class A | 18,974 | 1,158,173 |
| New York Mortgage Trust, Inc. | 254,056 | 645,302 |
| OneMain Holdings, Inc. | 89,548 | 3,124,330 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Small Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| PennyMac Mortgage Investment Trust | 76,462 | 1,144,636 |
| Piper Sandler Cos. | 10,092 | 842,177 |
| PRA Group, Inc. * | 37,769 | 1,289,056 |
| Redwood Trust, Inc. | 119,001 | 1,011,509 |
| SLM Corp. | 278,441 | 2,558,873 |
| Stifel Financial Corp. | 30,429 | 1,778,879 |
| Two Harbors Investment Corp. | 224,765 | 1,137,311 |
| Virtus Investment Partners, Inc. | 6,264 | 999,421 |
| Waddell & Reed Financial, Inc., Class A | 224,950 | 3,452,982 |
| WisdomTree Investments, Inc. | 165,863 | 603,741 |
| World Acceptance Corp. * | 13,305 | 1,117,487 |
| | | 63,026,084 |
| |
| Energy 3.8% |
| Arch Resources, Inc. | 53,298 | 1,628,254 |
| Archrock, Inc. | 165,093 | 979,002 |
| Callon Petroleum Co. *(a) | 55,532 | 290,432 |
| Centennial Resource Development, Inc., Class A * | 606,163 | 375,639 |
| ChampionX Corp. * | 114,664 | 1,001,017 |
| Cheniere Energy, Inc. * | 37,758 | 1,807,475 |
| Cimarex Energy Co. | 72,691 | 1,844,171 |
| CNX Resources Corp. * | 326,240 | 3,164,528 |
| CONSOL Energy, Inc. * | 233,287 | 884,158 |
| Continental Resources, Inc. | 87,913 | 1,057,593 |
| Core Laboratories N.V. | 56,430 | 815,414 |
| Cosan Ltd., Class A | 145,093 | 1,992,127 |
| CVR Energy, Inc. | 62,047 | 683,138 |
| Diamondback Energy, Inc. | 44,183 | 1,146,991 |
| Dril-Quip, Inc. * | 48,359 | 1,252,498 |
| EQT Corp. | 265,767 | 4,023,712 |
| Equitrans Midstream Corp. | 185,023 | 1,343,267 |
| Exterran Corp. * | 182,511 | 772,022 |
| Forum Energy Technologies, Inc. * | 978,759 | 465,302 |
| Frank's International N.V. * | 252,535 | 441,936 |
| GasLog Ltd. (a) | 119,183 | 283,656 |
| Green Plains, Inc. * | 182,982 | 2,763,028 |
| Gulfport Energy Corp. *(a) | 782,919 | 200,427 |
| Helix Energy Solutions Group, Inc. * | 208,516 | 517,120 |
| International Seaways, Inc. | 34,229 | 463,461 |
| Kosmos Energy Ltd. | 431,528 | 429,068 |
| Liberty Oilfield Services, Inc., Class A | 71,224 | 475,776 |
| Magnolia Oil & Gas Corp., Class A * | 70,618 | 306,482 |
| Matador Resources Co. * | 49,371 | 349,053 |
| Matrix Service Co. * | 85,308 | 648,341 |
| Newpark Resources, Inc. * | 307,527 | 219,913 |
| NexTier Oilfield Solutions, Inc. * | 164,766 | 311,408 |
| Nordic American Tankers Ltd. (a) | 280,565 | 816,444 |
| Oil States International, Inc. * | 340,864 | 848,751 |
| Par Pacific Holdings, Inc. * | 74,418 | 479,252 |
| Parsley Energy, Inc., Class A | 108,525 | 1,086,335 |
| PDC Energy, Inc. * | 96,792 | 1,153,761 |
| ProPetro Holding Corp. * | 98,963 | 390,904 |
| QEP Resources, Inc. | 1,463,506 | 1,317,155 |
| Range Resources Corp. | 596,907 | 3,927,648 |
| Renewable Energy Group, Inc. * | 64,451 | 3,635,036 |
| REX American Resources Corp. * | 10,364 | 753,359 |
| RPC, Inc. * | 240,661 | 572,773 |
| Scorpio Tankers, Inc. | 53,753 | 474,101 |
| SEACOR Holdings, Inc. * | 23,100 | 707,553 |
| SFL Corp., Ltd. | 105,354 | 685,855 |
| Southwestern Energy Co. * | 335,538 | 895,886 |
| Teekay Tankers Ltd., Class A * | 37,753 | 356,011 |
| Tidewater, Inc. * | 118,576 | 694,855 |
| Security | Number
of Shares | Value ($) |
| US Silica Holdings, Inc. | 284,952 | 775,069 |
| Whiting Petroleum Corp. * | 18,360 | 268,056 |
| | | 52,775,213 |
| |
| Food & Staples Retailing 0.7% |
| BJ's Wholesale Club Holdings, Inc. * | 39,588 | 1,515,825 |
| Ingles Markets, Inc., Class A | 43,833 | 1,571,851 |
| PriceSmart, Inc. | 35,284 | 2,434,596 |
| The Andersons, Inc. | 124,711 | 2,704,982 |
| The Chefs' Warehouse, Inc. * | 26,179 | 353,940 |
| Weis Markets, Inc. | 28,295 | 1,284,876 |
| | | 9,866,070 |
| |
| Food, Beverage & Tobacco 2.5% |
| B&G Foods, Inc. (a) | 102,566 | 2,724,153 |
| Cal-Maine Foods, Inc. * | 40,708 | 1,561,152 |
| Calavo Growers, Inc. | 14,248 | 956,468 |
| Coca-Cola Consolidated, Inc. | 2,392 | 547,648 |
| Fresh Del Monte Produce, Inc. | 110,741 | 2,384,254 |
| Hostess Brands, Inc. * | 41,990 | 530,754 |
| J&J Snack Foods Corp. | 9,405 | 1,275,036 |
| John B. Sanfilippo & Son, Inc. | 9,429 | 686,054 |
| Keurig Dr Pepper, Inc. | 83,811 | 2,254,516 |
| Lamb Weston Holdings, Inc. | 34,185 | 2,169,038 |
| Lancaster Colony Corp. | 10,625 | 1,765,238 |
| Nomad Foods Ltd. * | 97,674 | 2,368,594 |
| Pilgrim's Pride Corp. * | 90,420 | 1,513,631 |
| Post Holdings, Inc. * | 30,766 | 2,642,799 |
| The Boston Beer Co., Inc., Class A * | 2,711 | 2,817,217 |
| The Hain Celestial Group, Inc. * | 70,276 | 2,160,987 |
| TreeHouse Foods, Inc. * | 67,332 | 2,615,175 |
| Universal Corp. | 64,624 | 2,575,266 |
| Vector Group Ltd. | 128,006 | 1,176,375 |
| | | 34,724,355 |
| |
| Health Care Equipment & Services 4.6% |
| ABIOMED, Inc. * | 4,163 | 1,048,576 |
| Acadia Healthcare Co., Inc. * | 70,193 | 2,502,380 |
| Align Technology, Inc. * | 10,055 | 4,284,234 |
| Allscripts Healthcare Solutions, Inc. * | 147,836 | 1,490,187 |
| Amedisys, Inc. * | 6,768 | 1,752,912 |
| AMN Healthcare Services, Inc. * | 28,729 | 1,875,429 |
| Avanos Medical, Inc. * | 27,087 | 957,525 |
| Brookdale Senior Living, Inc. * | 519,148 | 1,526,295 |
| Cantel Medical Corp. | 17,198 | 822,752 |
| Chemed Corp. | 5,435 | 2,599,669 |
| Community Health Systems, Inc. * | 570,463 | 3,559,689 |
| CONMED Corp. | 10,209 | 795,996 |
| Covetrus, Inc. * | 192,650 | 4,756,529 |
| Globus Medical, Inc., Class A * | 18,096 | 943,164 |
| Haemonetics Corp. * | 12,478 | 1,261,401 |
| Hill-Rom Holdings, Inc. | 25,679 | 2,338,587 |
| HMS Holdings Corp. * | 29,547 | 786,541 |
| ICU Medical, Inc. * | 4,612 | 819,967 |
| IDEXX Laboratories, Inc. * | 6,063 | 2,575,684 |
| Integer Holdings Corp. * | 12,588 | 735,769 |
| Integra LifeSciences Holdings Corp. * | 15,599 | 687,916 |
| Invacare Corp. | 73,493 | 596,028 |
| LENSAR, Inc. * | 31,371 | 306,181 |
| LHC Group, Inc. * | 6,601 | 1,429,447 |
| LivaNova plc * | 14,279 | 718,805 |
| Masimo Corp. * | 8,212 | 1,838,010 |
| Merit Medical Systems, Inc. * | 19,265 | 964,213 |
| National HealthCare Corp. | 11,181 | 707,757 |
| Neogen Corp. * | 9,307 | 649,070 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Small Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| NextGen Healthcare, Inc. * | 49,796 | 677,226 |
| NuVasive, Inc. * | 18,775 | 834,173 |
| Omnicell, Inc. * | 7,367 | 637,614 |
| Premier, Inc., Class A | 32,431 | 1,061,467 |
| Select Medical Holdings Corp. * | 103,487 | 2,171,157 |
| Teleflex, Inc. | 8,320 | 2,647,674 |
| The Ensign Group, Inc. | 24,784 | 1,458,291 |
| The Providence Service Corp. * | 14,315 | 1,682,728 |
| Tivity Health, Inc. * | 64,711 | 889,776 |
| Triple-S Management Corp., Class B * | 78,393 | 1,451,838 |
| Varex Imaging Corp. * | 41,660 | 558,244 |
| Veeva Systems, Inc., Class A * | 4,471 | 1,207,394 |
| West Pharmaceutical Services, Inc. | 13,535 | 3,682,467 |
| | | 64,290,762 |
| |
| Household & Personal Products 1.0% |
| Central Garden & Pet Co. * | 7,739 | 301,511 |
| Central Garden & Pet Co., Class A * | 33,095 | 1,171,232 |
| Coty, Inc., Class A | 537,463 | 1,558,643 |
| Edgewell Personal Care Co. * | 92,256 | 2,418,952 |
| Energizer Holdings, Inc. | 26,500 | 1,042,775 |
| Herbalife Nutrition Ltd. * | 72,713 | 3,282,265 |
| Medifast, Inc. | 3,916 | 550,159 |
| Spectrum Brands Holdings, Inc. | 32,597 | 1,853,791 |
| USANA Health Sciences, Inc. * | 14,047 | 1,062,656 |
| WD-40 Co. | 4,254 | 1,035,339 |
| | | 14,277,323 |
| |
| Insurance 2.6% |
| Ambac Financial Group, Inc. * | 60,509 | 743,051 |
| American Equity Investment Life Holding Co. | 120,991 | 3,002,997 |
| American National Group, Inc. | 7,512 | 516,826 |
| AMERISAFE, Inc. | 12,931 | 762,670 |
| Argo Group International Holdings Ltd. | 33,350 | 1,189,928 |
| Brighthouse Financial, Inc. * | 65,831 | 2,179,006 |
| Brown & Brown, Inc. | 77,374 | 3,366,543 |
| CNA Financial Corp. | 33,545 | 999,306 |
| Employers Holdings, Inc. | 22,705 | 726,787 |
| Horace Mann Educators Corp. | 23,154 | 785,152 |
| James River Group Holdings Ltd. | 28,428 | 1,328,441 |
| Kemper Corp. | 29,982 | 1,848,690 |
| MBIA, Inc. * | 200,978 | 1,147,584 |
| Mercury General Corp. | 30,671 | 1,248,617 |
| National General Holdings Corp. | 46,363 | 1,574,951 |
| ProAssurance Corp. | 137,452 | 2,120,884 |
| RLI Corp. | 15,589 | 1,351,566 |
| Safety Insurance Group, Inc. | 10,996 | 769,720 |
| Selective Insurance Group, Inc. | 31,502 | 1,639,994 |
| Stewart Information Services Corp. | 42,498 | 1,801,490 |
| The Hanover Insurance Group, Inc. | 29,893 | 2,859,564 |
| United Fire Group, Inc. | 21,160 | 434,626 |
| Universal Insurance Holdings, Inc. | 43,006 | 536,285 |
| White Mountains Insurance Group Ltd. | 3,530 | 3,206,405 |
| | | 36,141,083 |
| |
| Materials 7.5% |
| AdvanSix, Inc. * | 82,521 | 1,255,970 |
| Allegheny Technologies, Inc. * | 179,872 | 1,656,621 |
| Avient Corp. | 102,068 | 3,171,253 |
| Axalta Coating Systems Ltd. * | 129,155 | 3,243,082 |
| Balchem Corp. | 10,127 | 1,012,194 |
| Boise Cascade Co. | 75,107 | 2,882,607 |
| Cabot Corp. | 76,861 | 2,921,487 |
| Carpenter Technology Corp. | 84,924 | 1,484,472 |
| Security | Number
of Shares | Value ($) |
| Century Aluminum Co. * | 119,717 | 787,738 |
| Clearwater Paper Corp. * | 57,590 | 2,139,468 |
| Cleveland-Cliffs, Inc. | 555,013 | 4,595,508 |
| Compass Minerals International, Inc. | 37,134 | 2,242,151 |
| Constellium SE * | 95,843 | 844,377 |
| Contura Energy, Inc. * | 180,137 | 1,161,884 |
| Eagle Materials, Inc. | 31,363 | 2,673,696 |
| Element Solutions, Inc. * | 131,391 | 1,539,903 |
| Ferro Corp. * | 60,914 | 783,354 |
| FMC Corp. | 28,595 | 2,937,850 |
| GCP Applied Technologies, Inc. * | 48,929 | 1,067,141 |
| Glatfelter Corp. | 86,761 | 1,238,079 |
| Greif, Inc., Class A | 46,002 | 1,867,221 |
| H.B. Fuller Co. | 41,835 | 1,893,034 |
| Hecla Mining Co. | 283,695 | 1,299,323 |
| Ingevity Corp. * | 18,968 | 1,040,964 |
| Innospec, Inc. | 17,509 | 1,158,045 |
| Kaiser Aluminum Corp. | 22,071 | 1,388,928 |
| Kraton Corp. * | 76,685 | 2,170,185 |
| Livent Corp. * | 60,530 | 650,698 |
| Louisiana-Pacific Corp. | 109,432 | 3,127,567 |
| Materion Corp. | 24,413 | 1,249,701 |
| Mercer International, Inc. | 73,156 | 460,151 |
| Minerals Technologies, Inc. | 38,812 | 2,122,628 |
| Myers Industries, Inc. | 41,987 | 602,094 |
| Neenah, Inc. | 20,317 | 764,529 |
| NewMarket Corp. | 5,355 | 1,915,430 |
| Orion Engineered Carbons S.A. | 77,092 | 1,130,940 |
| Quaker Chemical Corp. | 4,841 | 923,614 |
| Rayonier Advanced Materials, Inc. * | 330,866 | 1,134,870 |
| Royal Gold, Inc. | 10,628 | 1,262,713 |
| Schnitzer Steel Industries, Inc., Class A | 99,859 | 2,097,039 |
| Schweitzer-Mauduit International, Inc. | 39,637 | 1,315,948 |
| Sensient Technologies Corp. | 38,036 | 2,488,695 |
| Silgan Holdings, Inc. | 76,646 | 2,640,455 |
| Southern Copper Corp. | 49,724 | 2,602,554 |
| Stepan Co. | 17,998 | 2,095,687 |
| Summit Materials, Inc., Class A * | 94,579 | 1,673,103 |
| SunCoke Energy, Inc. | 237,843 | 830,072 |
| The Scotts Miracle-Gro Co. | 20,542 | 3,082,327 |
| TimkenSteel Corp. * | 210,635 | 815,157 |
| Trinseo S.A. | 111,826 | 3,558,303 |
| Tronox Holdings plc, Class A * | 132,938 | 1,298,804 |
| US Concrete, Inc. * | 27,149 | 921,980 |
| Valvoline, Inc. | 70,081 | 1,378,493 |
| Verso Corp., Class A | 112,782 | 877,444 |
| W.R. Grace & Co. | 45,369 | 1,973,098 |
| Warrior Met Coal, Inc. | 177,614 | 2,664,210 |
| Westlake Chemical Corp. | 42,876 | 2,899,275 |
| Worthington Industries, Inc. | 65,702 | 3,233,195 |
| | | 104,247,309 |
| |
| Media & Entertainment 3.2% |
| AMC Entertainment Holdings, Inc., Class A (a) | 289,202 | 682,517 |
| AMC Networks, Inc., Class A *(a) | 94,604 | 2,010,335 |
| Cable One, Inc. | 909 | 1,574,261 |
| Cars.com, Inc. * | 150,354 | 1,111,116 |
| Gannett Co., Inc. * | 721,180 | 829,357 |
| Gray Television, Inc. * | 66,549 | 843,841 |
| iHeartMedia, Inc., Class A * | 124,419 | 1,022,724 |
| John Wiley & Sons, Inc., Class A | 57,872 | 1,791,717 |
| Liberty Media Corp. - Liberty Formula One, Class A * | 4,985 | 166,001 |
| Liberty Media Corp. - Liberty Formula One, Class C * | 39,663 | 1,433,024 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Small Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Liberty TripAdvisor Holdings, Inc., Class A * | 180,316 | 320,962 |
| Lions Gate Entertainment Corp., Class A * | 58,736 | 393,531 |
| Lions Gate Entertainment Corp., Class B * | 129,897 | 814,454 |
| Live Nation Entertainment, Inc. * | 36,460 | 1,779,248 |
| Madison Square Garden Entertainment Corp. * | 5,604 | 364,260 |
| Madison Square Garden Sports Corp. * | 5,544 | 785,252 |
| Meredith Corp. | 85,700 | 942,700 |
| MSG Networks, Inc., Class A * | 50,368 | 450,290 |
| National CineMedia, Inc. | 205,184 | 407,290 |
| Nexstar Media Group, Inc., Class A | 24,644 | 2,030,666 |
| Scholastic Corp. | 58,228 | 1,150,585 |
| Sinclair Broadcast Group, Inc., Class A | 113,604 | 2,110,762 |
| Sirius XM Holdings, Inc. | 393,840 | 2,256,703 |
| Spotify Technology S.A. * | 4,207 | 1,009,217 |
| Take-Two Interactive Software, Inc. * | 18,293 | 2,833,952 |
| TEGNA, Inc. | 241,985 | 2,911,080 |
| The E.W. Scripps Co., Class A | 43,681 | 396,624 |
| The Marcus Corp. | 28,575 | 209,455 |
| The New York Times Co., Class A | 40,606 | 1,610,434 |
| TripAdvisor, Inc. | 86,440 | 1,651,868 |
| Twitter, Inc. * | 66,369 | 2,745,022 |
| Yandex N.V., Class A * | 51,422 | 2,960,365 |
| Yelp, Inc. * | 38,979 | 766,717 |
| Zynga, Inc., Class A * | 177,806 | 1,598,476 |
| | | 43,964,806 |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 2.2% |
| Alkermes plc * | 35,742 | 580,808 |
| Bio-Rad Laboratories, Inc., Class A * | 4,573 | 2,681,699 |
| Bio-Techne Corp. | 5,801 | 1,464,231 |
| BioMarin Pharmaceutical, Inc. * | 10,395 | 773,700 |
| Bruker Corp. | 32,452 | 1,380,508 |
| Catalent, Inc. * | 28,978 | 2,543,399 |
| Charles River Laboratories International, Inc. * | 11,816 | 2,690,503 |
| Elanco Animal Health, Inc. * | 101,581 | 3,150,027 |
| Emergent BioSolutions, Inc. * | 10,697 | 962,409 |
| Horizon Therapeutics plc * | 9,271 | 694,676 |
| Incyte Corp. * | 10,536 | 912,839 |
| Lannett Co., Inc. * | 65,031 | 418,149 |
| Myriad Genetics, Inc. * | 104,770 | 1,302,291 |
| Nektar Therapeutics * | 24,540 | 388,714 |
| PDL BioPharma, Inc. * | 414,009 | 890,119 |
| PerkinElmer, Inc. | 32,247 | 4,177,599 |
| PRA Health Sciences, Inc. * | 15,060 | 1,467,446 |
| Prestige Consumer Healthcare, Inc. * | 28,712 | 948,357 |
| Syneos Health, Inc. * | 19,591 | 1,039,890 |
| Taro Pharmaceutical Industries Ltd. * | 11,710 | 686,557 |
| Vertex Pharmaceuticals, Inc. * | 5,377 | 1,120,352 |
| | | 30,274,273 |
| |
| Real Estate 9.1% |
| Acadia Realty Trust | 54,452 | 508,037 |
| Alexander & Baldwin, Inc. | 105,802 | 1,359,556 |
| American Assets Trust, Inc. | 22,853 | 478,313 |
| American Campus Communities, Inc. | 81,475 | 3,052,053 |
| American Finance Trust, Inc. | 70,229 | 404,870 |
| American Homes 4 Rent, Class A | 63,452 | 1,793,788 |
| Americold Realty Trust | 23,997 | 869,411 |
| Apartment Investment & Management Co., Class A | 75,905 | 2,421,369 |
| Ashford Hospitality Trust, Inc. (a) | 218,150 | 281,414 |
| Brandywine Realty Trust | 158,042 | 1,384,448 |
| Brookfield Property REIT, Inc., Class A (a) | 92,432 | 1,363,372 |
| Security | Number
of Shares | Value ($) |
| CBL & Associates Properties, Inc. * | 6,210,226 | 937,744 |
| Chatham Lodging Trust | 83,584 | 614,342 |
| Columbia Property Trust, Inc. | 126,700 | 1,340,486 |
| CorePoint Lodging, Inc. | 182,239 | 871,102 |
| CoreSite Realty Corp. | 8,039 | 959,535 |
| Corporate Office Properties Trust | 69,595 | 1,561,016 |
| Cousins Properties, Inc. | 41,823 | 1,065,650 |
| CubeSmart | 68,679 | 2,330,278 |
| Cushman & Wakefield plc * | 41,334 | 484,434 |
| CyrusOne, Inc. | 24,522 | 1,742,288 |
| DiamondRock Hospitality Co. | 296,316 | 1,463,801 |
| Douglas Emmett, Inc. | 66,215 | 1,562,674 |
| EastGroup Properties, Inc. | 8,073 | 1,074,355 |
| Empire State Realty Trust, Inc., Class A | 157,030 | 844,821 |
| EPR Properties | 48,680 | 1,160,531 |
| Equity Commonwealth | 51,386 | 1,357,618 |
| Equity LifeStyle Properties, Inc. | 36,425 | 2,155,996 |
| Federal Realty Investment Trust | 32,625 | 2,243,947 |
| First Industrial Realty Trust, Inc. | 33,086 | 1,317,154 |
| Franklin Street Properties Corp. | 166,008 | 697,234 |
| Front Yard Residential Corp. | 61,471 | 823,097 |
| Gaming & Leisure Properties, Inc. | 73,440 | 2,669,544 |
| Global Net Lease, Inc. | 45,905 | 653,228 |
| Healthcare Realty Trust, Inc. | 54,675 | 1,519,965 |
| Healthcare Trust of America, Inc., Class A | 73,410 | 1,783,863 |
| Hersha Hospitality Trust | 118,104 | 578,710 |
| Highwoods Properties, Inc. | 63,647 | 1,894,771 |
| HomeBanc Corp. *(b) | 6,875 | — |
| Hudson Pacific Properties, Inc. | 67,826 | 1,306,329 |
| Investors Real Estate Trust | 9,772 | 658,731 |
| Invitation Homes, Inc. | 95,373 | 2,599,868 |
| iStar, Inc. | 68,474 | 807,993 |
| JBG SMITH Properties | 39,050 | 911,817 |
| Kennedy-Wilson Holdings, Inc. | 73,855 | 973,409 |
| Kilroy Realty Corp. | 37,882 | 1,783,485 |
| Kite Realty Group Trust | 100,286 | 1,038,963 |
| Lexington Realty Trust | 150,069 | 1,490,185 |
| Life Storage, Inc. | 17,936 | 2,047,394 |
| LTC Properties, Inc. | 15,226 | 502,610 |
| Mack-Cali Realty Corp. | 84,211 | 925,479 |
| Marcus & Millichap, Inc. * | 15,045 | 469,855 |
| Medical Properties Trust, Inc. | 112,855 | 2,011,076 |
| National Health Investors, Inc. | 14,477 | 811,436 |
| National Retail Properties, Inc. | 53,049 | 1,698,098 |
| New Senior Investment Group, Inc. | 216,669 | 847,176 |
| Newmark Group, Inc., Class A | 100,881 | 477,672 |
| Office Properties Income Trust | 42,026 | 773,699 |
| Omega Healthcare Investors, Inc. | 89,774 | 2,586,389 |
| Paramount Group, Inc. | 174,131 | 1,006,477 |
| Pebblebrook Hotel Trust | 102,570 | 1,228,789 |
| Pennsylvania Real Estate Investment Trust (a) | 394,404 | 196,808 |
| Physicians Realty Trust | 52,235 | 880,682 |
| Piedmont Office Realty Trust, Inc., Class A | 130,472 | 1,489,990 |
| PotlatchDeltic Corp. | 29,002 | 1,205,033 |
| Preferred Apartment Communities, Inc., Class A | 55,799 | 301,315 |
| PS Business Parks, Inc. | 7,032 | 801,859 |
| QTS Realty Trust, Inc., Class A | 15,752 | 968,906 |
| Rayonier, Inc. | 91,341 | 2,318,235 |
| Regency Centers Corp. | 63,810 | 2,270,998 |
| Retail Opportunity Investments Corp. | 71,719 | 697,826 |
| Retail Properties of America, Inc., Class A | 295,723 | 1,549,589 |
| RLJ Lodging Trust | 268,009 | 2,192,314 |
| RPT Realty | 111,299 | 544,252 |
| Ryman Hospitality Properties, Inc. | 36,670 | 1,461,299 |
| Sabra Health Care REIT, Inc. | 79,791 | 1,050,050 |
| SBA Communications Corp. | 10,148 | 2,946,675 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Small Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Seritage Growth Properties, Class A *(a) | 41,246 | 525,062 |
| SITE Centers Corp. | 260,081 | 1,771,152 |
| Spirit Realty Capital, Inc. | 55,681 | 1,673,214 |
| STAG Industrial, Inc. | 30,268 | 941,940 |
| STORE Capital Corp. | 49,583 | 1,274,283 |
| Summit Hotel Properties, Inc. | 142,067 | 750,114 |
| Sun Communities, Inc. | 17,826 | 2,453,392 |
| Sunstone Hotel Investors, Inc. | 304,943 | 2,262,677 |
| Tanger Factory Outlet Centers, Inc. (a) | 202,288 | 1,252,163 |
| Taubman Centers, Inc. | 57,014 | 1,905,408 |
| The GEO Group, Inc. | 241,975 | 2,143,898 |
| The Howard Hughes Corp. * | 16,974 | 1,055,613 |
| Uniti Group, Inc. | 358,425 | 3,161,308 |
| Urban Edge Properties | 85,494 | 803,644 |
| VICI Properties, Inc. | 77,975 | 1,789,526 |
| Washington Prime Group, Inc. | 2,420,620 | 1,417,273 |
| Washington Real Estate Investment Trust | 50,144 | 876,517 |
| Weingarten Realty Investors | 92,138 | 1,461,309 |
| Xenia Hotels & Resorts, Inc. | 187,609 | 1,545,898 |
| | | 126,521,967 |
| |
| Retailing 4.0% |
| At Home Group, Inc. * | 65,556 | 1,067,907 |
| Caleres, Inc. | 218,262 | 1,676,252 |
| Chico's FAS, Inc. | 1,718,882 | 1,839,204 |
| Conn's, Inc. * | 77,174 | 723,120 |
| Designer Brands, Inc., Class A | 375,173 | 1,624,499 |
| Dillard’s, Inc., Class A (a) | 85,398 | 3,819,853 |
| Express, Inc. * | 1,142,140 | 697,848 |
| Five Below, Inc. * | 12,096 | 1,612,881 |
| Floor & Decor Holdings, Inc., Class A * | 8,764 | 639,772 |
| Genesco, Inc. * | 115,395 | 2,044,799 |
| Groupon, Inc. * | 51,225 | 993,253 |
| GrubHub, Inc. * | 15,386 | 1,137,949 |
| Guess?, Inc. | 157,422 | 1,854,431 |
| Haverty Furniture Cos., Inc. | 52,990 | 1,325,810 |
| Hibbett Sports, Inc. * | 62,452 | 2,361,310 |
| Lumber Liquidators Holdings, Inc. * | 63,370 | 1,401,744 |
| MarineMax, Inc. * | 26,559 | 796,239 |
| MercadoLibre, Inc. * | 1,225 | 1,487,211 |
| Monro, Inc. | 23,200 | 975,792 |
| National Vision Holdings, Inc. * | 32,523 | 1,311,653 |
| Ollie's Bargain Outlet Holdings, Inc. * | 14,272 | 1,242,948 |
| Party City Holdco, Inc. * | 840,051 | 1,671,702 |
| Pool Corp. | 10,741 | 3,757,524 |
| Rent-A-Center, Inc. | 36,542 | 1,129,148 |
| RH * | 4,693 | 1,573,234 |
| Sally Beauty Holdings, Inc. * | 267,324 | 2,237,502 |
| Shoe Carnival, Inc. | 28,691 | 888,847 |
| Sleep Number Corp. * | 30,761 | 1,949,017 |
| Sonic Automotive, Inc., Class A | 93,899 | 3,385,998 |
| Stamps.com, Inc. * | 5,338 | 1,191,655 |
| The Buckle, Inc. | 71,815 | 1,720,687 |
| The Cato Corp., Class A | 111,655 | 683,329 |
| The Children's Place, Inc. | 44,568 | 1,126,233 |
| The Michaels Cos., Inc. * | 356,099 | 2,887,963 |
| Zumiez, Inc. * | 37,052 | 1,037,456 |
| | | 55,874,770 |
| |
| Semiconductors & Semiconductor Equipment 2.5% |
| Advanced Energy Industries, Inc. * | 17,747 | 1,197,390 |
| Advanced Micro Devices, Inc. * | 27,002 | 2,032,981 |
| Ambarella, Inc. * | 7,979 | 436,212 |
| Amkor Technology, Inc. * | 163,653 | 1,939,288 |
| Brooks Automation, Inc. | 18,569 | 867,172 |
| Cirrus Logic, Inc. * | 38,867 | 2,676,770 |
| Security | Number
of Shares | Value ($) |
| CMC Materials, Inc. | 6,557 | 932,340 |
| Cree, Inc. * | 58,252 | 3,704,827 |
| Diodes, Inc. * | 21,857 | 1,263,990 |
| Entegris, Inc. | 29,454 | 2,202,276 |
| First Solar, Inc. * | 62,903 | 5,475,392 |
| Kulicke & Soffa Industries, Inc. | 52,198 | 1,364,456 |
| MKS Instruments, Inc. | 23,259 | 2,521,043 |
| Monolithic Power Systems, Inc. | 4,505 | 1,439,798 |
| Photronics, Inc. * | 72,128 | 703,248 |
| Power Integrations, Inc. | 19,107 | 1,150,432 |
| Semtech Corp. * | 19,422 | 1,066,074 |
| Silicon Laboratories, Inc. * | 11,505 | 1,178,802 |
| Synaptics, Inc. * | 29,312 | 2,247,351 |
| Ultra Clean Holdings, Inc. * | 20,816 | 443,173 |
| | | 34,843,015 |
| |
| Software & Services 4.0% |
| ACI Worldwide, Inc. * | 48,983 | 1,428,834 |
| Aspen Technology, Inc. * | 13,886 | 1,524,822 |
| Black Knight, Inc. * | 33,860 | 2,977,987 |
| Blackbaud, Inc. | 10,604 | 523,201 |
| Cardtronics plc, Class A * | 30,278 | 539,251 |
| Cerence, Inc. * | 23,311 | 1,272,314 |
| CommVault Systems, Inc. * | 23,628 | 935,433 |
| CSG Systems International, Inc. | 23,482 | 889,498 |
| Ebix, Inc. | 24,877 | 449,279 |
| EPAM Systems, Inc. * | 6,909 | 2,134,536 |
| Euronet Worldwide, Inc. * | 18,748 | 1,665,572 |
| EVERTEC, Inc. | 26,834 | 893,036 |
| ExlService Holdings, Inc. * | 14,606 | 1,106,258 |
| Fair Isaac Corp. * | 5,075 | 1,986,609 |
| Fortinet, Inc. * | 10,848 | 1,197,294 |
| Gartner, Inc. * | 22,323 | 2,680,992 |
| GoDaddy, Inc., Class A * | 12,413 | 878,096 |
| j2 Global, Inc. * | 24,370 | 1,654,236 |
| KBR, Inc. | 116,388 | 2,594,288 |
| LiveRamp Holdings, Inc. * | 39,631 | 2,619,213 |
| Manhattan Associates, Inc. * | 21,305 | 1,821,577 |
| ManTech International Corp., Class A | 20,438 | 1,326,017 |
| MicroStrategy, Inc., Class A * | 4,849 | 810,122 |
| NIC, Inc. | 29,806 | 668,251 |
| Nuance Communications, Inc. * | 65,242 | 2,081,872 |
| Palo Alto Networks, Inc. * | 2,273 | 502,765 |
| Paycom Software, Inc. * | 1,584 | 576,719 |
| Pegasystems, Inc. | 4,359 | 505,121 |
| Perficient, Inc. * | 17,088 | 669,166 |
| Progress Software Corp. | 28,211 | 1,026,034 |
| PTC, Inc. * | 19,184 | 1,609,154 |
| Square, Inc., Class A * | 5,271 | 816,372 |
| SS&C Technologies Holdings, Inc. | 39,313 | 2,328,116 |
| Sykes Enterprises, Inc. * | 48,188 | 1,649,957 |
| Tyler Technologies, Inc. * | 3,644 | 1,400,681 |
| Unisys Corp. * | 61,574 | 809,082 |
| Verint Systems, Inc. * | 24,431 | 1,185,392 |
| Virtusa Corp. * | 15,548 | 782,064 |
| VMware, Inc., Class A * | 19,912 | 2,563,272 |
| WEX, Inc. * | 9,963 | 1,260,818 |
| Xperi Holding Corp. | 135,313 | 1,677,881 |
| | | 56,021,182 |
| |
| Technology Hardware & Equipment 4.5% |
| 3D Systems Corp. * | 58,259 | 331,494 |
| ADTRAN, Inc. | 113,784 | 1,216,351 |
| Arista Networks, Inc. * | 7,016 | 1,465,642 |
| Badger Meter, Inc. | 10,620 | 778,871 |
| Belden, Inc. | 53,199 | 1,642,785 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Small Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Benchmark Electronics, Inc. | 118,893 | 2,476,541 |
| Ciena Corp. * | 53,639 | 2,112,840 |
| Cognex Corp. | 31,491 | 2,075,257 |
| Coherent, Inc. * | 13,567 | 1,697,774 |
| Comtech Telecommunications Corp. | 29,803 | 429,163 |
| CTS Corp. | 25,910 | 716,152 |
| Diebold Nixdorf, Inc. * | 190,121 | 1,184,454 |
| Dolby Laboratories, Inc., Class A | 24,731 | 1,856,803 |
| EchoStar Corp., Class A * | 49,879 | 1,155,198 |
| ePlus, Inc. * | 16,093 | 1,086,438 |
| Fabrinet * | 19,404 | 1,164,628 |
| Fitbit, Inc., Class A * | 149,981 | 1,055,866 |
| II-VI, Inc. * | 48,021 | 2,183,515 |
| InterDigital, Inc. | 30,496 | 1,707,166 |
| IPG Photonics Corp. * | 13,203 | 2,455,230 |
| Itron, Inc. * | 17,386 | 1,181,379 |
| Keysight Technologies, Inc. * | 31,449 | 3,298,057 |
| Knowles Corp. * | 71,236 | 1,015,113 |
| Littelfuse, Inc. | 9,710 | 1,921,997 |
| Lumentum Holdings, Inc. * | 12,598 | 1,041,729 |
| Methode Electronics, Inc. | 39,599 | 1,218,461 |
| MTS Systems Corp. | 24,171 | 586,872 |
| National Instruments Corp. | 62,938 | 1,968,701 |
| NETGEAR, Inc. * | 36,903 | 1,137,350 |
| NetScout Systems, Inc. * | 90,344 | 1,853,859 |
| OSI Systems, Inc. * | 13,316 | 1,027,463 |
| PC Connection, Inc. | 24,938 | 1,135,926 |
| Plantronics, Inc. | 90,917 | 1,774,700 |
| Plexus Corp. * | 33,741 | 2,346,349 |
| Rogers Corp. * | 9,258 | 1,122,255 |
| ScanSource, Inc. * | 91,762 | 1,844,416 |
| Stratasys Ltd. *(a) | 40,037 | 511,673 |
| TTM Technologies, Inc. * | 151,085 | 1,793,379 |
| ViaSat, Inc. * | 35,892 | 1,216,739 |
| Viavi Solutions, Inc. * | 58,155 | 718,214 |
| Vishay Intertechnology, Inc. | 162,992 | 2,643,730 |
| Zebra Technologies Corp., Class A * | 9,818 | 2,784,778 |
| | | 62,935,308 |
| |
| Telecommunication Services 0.8% |
| ATN International, Inc. | 10,722 | 479,273 |
| Cincinnati Bell, Inc. * | 85,460 | 1,286,173 |
| Cogent Communications Holdings, Inc. | 13,844 | 772,495 |
| Consolidated Communications Holdings, Inc. * | 282,590 | 1,319,695 |
| GCI Liberty, Inc., Class A * | 15,276 | 1,240,870 |
| Iridium Communications, Inc. * | 27,884 | 736,417 |
| Liberty Latin America Ltd., Class A * | 60,470 | 592,606 |
| Liberty Latin America Ltd., Class C * | 162,804 | 1,582,455 |
| Shenandoah Telecommunications Co. | 17,593 | 767,407 |
| United States Cellular Corp. * | 26,220 | 763,526 |
| Vonage Holdings Corp. * | 108,372 | 1,146,576 |
| | | 10,687,493 |
| |
| Transportation 2.4% |
| Air Transport Services Group, Inc. * | 45,060 | 1,263,482 |
| Alaska Air Group, Inc. | 51,614 | 1,955,654 |
| Allegiant Travel Co. | 5,212 | 702,369 |
| AMERCO | 7,232 | 2,510,661 |
| ArcBest Corp. | 89,493 | 2,731,326 |
| Atlas Air Worldwide Holdings, Inc. * | 45,265 | 2,677,877 |
| Atlas Corp. | 137,930 | 1,190,336 |
| Copa Holdings S.A., Class A | 12,124 | 597,471 |
| Costamare, Inc. | 108,208 | 615,704 |
| Echo Global Logistics, Inc. * | 51,940 | 1,400,822 |
| Forward Air Corp. | 29,015 | 1,827,075 |
| Security | Number
of Shares | Value ($) |
| Hawaiian Holdings, Inc. | 41,509 | 574,900 |
| Heartland Express, Inc. | 41,442 | 758,803 |
| Hub Group, Inc., Class A * | 53,219 | 2,667,869 |
| JetBlue Airways Corp. * | 177,820 | 2,128,505 |
| Marten Transport Ltd. | 53,328 | 818,318 |
| Saia, Inc. * | 15,314 | 2,261,265 |
| Schneider National, Inc., Class B | 65,116 | 1,436,459 |
| SkyWest, Inc. | 19,469 | 565,185 |
| Spirit Airlines, Inc. * | 39,664 | 696,897 |
| Uber Technologies, Inc. * | 21,152 | 706,688 |
| Werner Enterprises, Inc. | 51,019 | 1,939,742 |
| YRC Worldwide, Inc. * | 338,188 | 1,325,697 |
| | | 33,353,105 |
| |
| Utilities 2.9% |
| ALLETE, Inc. | 41,426 | 2,136,753 |
| American States Water Co. | 13,019 | 972,389 |
| Atlantica Sustainable Infrastructure plc | 46,338 | 1,366,508 |
| Avangrid, Inc. | 37,061 | 1,828,590 |
| Avista Corp. | 61,632 | 2,047,415 |
| Black Hills Corp. | 38,165 | 2,162,429 |
| California Water Service Group | 21,573 | 961,508 |
| Chesapeake Utilities Corp. | 8,180 | 795,178 |
| Clearway Energy, Inc., Class A | 13,740 | 360,125 |
| Clearway Energy, Inc., Class C | 28,574 | 804,644 |
| Essential Utilities, Inc. | 57,277 | 2,359,812 |
| Hawaiian Electric Industries, Inc. | 81,120 | 2,680,205 |
| IDACORP, Inc. | 28,480 | 2,498,550 |
| MGE Energy, Inc. | 16,385 | 1,065,353 |
| National Fuel Gas Co. | 63,927 | 2,554,523 |
| New Jersey Resources Corp. | 65,863 | 1,921,882 |
| Northwest Natural Holding Co. | 18,461 | 820,407 |
| NorthWestern Corp. | 38,460 | 2,004,920 |
| ONE Gas, Inc. | 31,026 | 2,142,035 |
| Ormat Technologies, Inc. | 15,948 | 1,130,235 |
| Otter Tail Corp. | 28,245 | 1,083,196 |
| PNM Resources, Inc. | 55,168 | 2,758,400 |
| SJW Group. | 8,009 | 486,066 |
| South Jersey Industries, Inc. | 58,115 | 1,119,876 |
| Spire, Inc. | 34,907 | 1,956,188 |
| Unitil Corp. | 12,598 | 435,261 |
| | | 40,452,448 |
| Total Common Stock |
| (Cost $1,138,844,757) | | 1,383,414,526 |
|
| Other Investment Companies 1.5% of net assets |
| |
| Money Market Fund 0.4% |
| State Street Institutional U.S. Government Money Market Fund, Premier Class 0.03% (c) | 6,437,103 | 6,437,103 |
| |
| Securities Lending Collateral 1.1% |
| Wells Fargo Government Money Market Fund, Select Class 0.04% (c) | 14,860,776 | 14,860,776 |
| Total Other Investment Companies |
| (Cost $21,297,879) | | 21,297,879 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental US Small Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | |
| Long | |
| Russell 2000 Index, e-mini, expires 12/18/20 | 113 | 8,682,920 | (329,056) |
| * | Non-income producing security. |
| (a) | All or a portion of this security is on loan. Securities on loan were valued at $13,731,147. |
| (b) | Fair-valued by management using significant unobservable inputs in accordance with procedures approved by the fund’s Board of Trustees. |
| (c) | The rate shown is the 7-day yield. |
| | |
| REIT — | Real Estate Investment Trust |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Common Stock 98.1% of net assets |
| |
| Australia 5.5% |
| AGL Energy Ltd. | 69,009 | 604,832 |
| Amcor plc | 58,583 | 609,989 |
| AMP Ltd. | 705,541 | 759,227 |
| Ampol Ltd. | 48,709 | 888,165 |
| APA Group | 47,972 | 353,666 |
| Aristocrat Leisure Ltd. | 10,456 | 210,550 |
| Aurizon Holdings Ltd. | 158,212 | 419,524 |
| Australia & New Zealand Banking Group Ltd. | 289,719 | 3,844,754 |
| Bendigo & Adelaide Bank Ltd. | 51,541 | 242,462 |
| BGP Holdings plc *(a) | 453,854 | 638 |
| BHP Group Ltd. | 219,490 | 5,261,532 |
| BlueScope Steel Ltd. | 69,512 | 717,968 |
| Boral Ltd. | 133,493 | 427,485 |
| Brambles Ltd. | 82,162 | 554,127 |
| Coca-Cola Amatil Ltd. | 35,365 | 309,155 |
| Coles Group Ltd. | 69,488 | 868,063 |
| Commonwealth Bank of Australia | 110,136 | 5,347,271 |
| Computershare Ltd. | 22,407 | 191,488 |
| Crown Resorts Ltd. | 40,616 | 236,462 |
| CSL Ltd. | 5,828 | 1,179,921 |
| Downer EDI Ltd. | 102,573 | 317,147 |
| Fortescue Metals Group Ltd. | 92,111 | 1,126,839 |
| Goodman Group | 26,965 | 349,012 |
| Incitec Pivot Ltd. | 193,256 | 260,747 |
| Insurance Australia Group Ltd. | 180,925 | 607,314 |
| Lendlease Corp. Ltd. | 65,708 | 552,745 |
| Macquarie Group Ltd. | 14,114 | 1,258,404 |
| Medibank Pvt Ltd. | 215,132 | 403,840 |
| Metcash Ltd. | 222,865 | 462,282 |
| Mirvac Group | 203,210 | 301,355 |
| National Australia Bank Ltd. | 272,171 | 3,560,807 |
| Newcrest Mining Ltd. | 17,786 | 368,837 |
| Oil Search Ltd. | 88,712 | 160,167 |
| Orica Ltd. | 25,848 | 277,472 |
| Origin Energy Ltd. | 159,449 | 448,532 |
| QBE Insurance Group Ltd. | 102,675 | 593,737 |
| Ramsay Health Care Ltd. | 6,083 | 266,522 |
| Rio Tinto Ltd. | 31,140 | 2,025,777 |
| Scentre Group | 311,287 | 459,372 |
| Sims Ltd. | 49,036 | 329,763 |
| Sonic Healthcare Ltd. | 20,518 | 502,548 |
| South32 Ltd. | 376,113 | 536,706 |
| Stockland | 153,085 | 413,954 |
| Suncorp Group Ltd. | 157,091 | 907,246 |
| Tabcorp Holdings Ltd. | 96,386 | 222,712 |
| Telstra Corp. Ltd. | 623,522 | 1,174,208 |
| Transurban Group | 45,452 | 430,416 |
| Viva Energy Group Ltd. | 233,488 | 276,206 |
| Wesfarmers Ltd. | 101,029 | 3,270,270 |
| Westpac Banking Corp. | 359,588 | 4,551,255 |
| Woodside Petroleum Ltd. | 79,445 | 979,894 |
| Woolworths Group Ltd. | 113,236 | 3,046,082 |
| | | 53,469,447 |
| |
| Security | Number
of Shares | Value ($) |
| Austria 0.3% |
| ANDRITZ AG | 6,129 | 206,710 |
| Erste Group Bank AG * | 26,190 | 538,348 |
| OMV AG | 20,997 | 485,374 |
| Raiffeisen Bank International AG * | 16,336 | 235,865 |
| voestalpine AG | 27,582 | 766,969 |
| Wienerberger AG | 9,184 | 231,679 |
| | | 2,464,945 |
| |
| Belgium 0.8% |
| Ageas S.A./N.V. | 17,016 | 685,218 |
| Anheuser-Busch InBev S.A./N.V. | 52,703 | 2,726,124 |
| Etablissements Franz Colruyt N.V. | 5,383 | 318,606 |
| Groupe Bruxelles Lambert S.A. | 9,065 | 743,404 |
| KBC Group N.V. | 19,802 | 978,354 |
| Proximus | 17,721 | 344,500 |
| Solvay S.A. | 8,018 | 651,465 |
| UCB S.A. | 4,242 | 418,989 |
| Umicore S.A. | 12,158 | 468,707 |
| | | 7,335,367 |
| |
| Canada 6.6% |
| Agnico-Eagle Mines Ltd. | 4,992 | 395,186 |
| Air Canada * | 16,300 | 180,214 |
| Alimentation Couche-Tard, Inc., Class B | 46,580 | 1,434,495 |
| ARC Resources Ltd. | 67,072 | 330,250 |
| Atco Ltd., Class I | 8,989 | 250,245 |
| Bank of Montreal | 40,945 | 2,438,015 |
| Barrick Gold Corp. | 31,570 | 844,047 |
| Bausch Health Cos., Inc. * | 34,409 | 566,897 |
| BCE, Inc. | 21,222 | 852,830 |
| Brookfield Asset Management, Inc., Class A | 50,798 | 1,509,489 |
| Canadian Imperial Bank of Commerce | 26,238 | 1,957,166 |
| Canadian National Railway Co. | 27,617 | 2,743,459 |
| Canadian Natural Resources Ltd. | 97,645 | 1,553,760 |
| Canadian Pacific Railway Ltd. | 5,150 | 1,539,008 |
| Canadian Tire Corp., Ltd., Class A | 7,176 | 801,355 |
| Cenovus Energy, Inc. | 157,295 | 514,754 |
| CGI, Inc. * | 11,792 | 731,701 |
| CI Financial Corp. | 27,515 | 320,729 |
| Crescent Point Energy Corp. | 254,571 | 317,187 |
| Dollarama, Inc. | 10,400 | 358,142 |
| Emera, Inc. (b) | 9,100 | 363,030 |
| Empire Co., Ltd., Class A | 21,500 | 586,598 |
| Enbridge, Inc. | 73,386 | 2,022,067 |
| Fairfax Financial Holdings Ltd. | 1,650 | 433,758 |
| Finning International, Inc. | 20,517 | 311,998 |
| First Quantum Minerals Ltd. | 49,370 | 567,331 |
| Fortis, Inc. | 18,336 | 724,329 |
| George Weston Ltd. | 9,294 | 651,759 |
| Gibson Energy, Inc. | 13,453 | 198,114 |
| Gildan Activewear, Inc. | 19,300 | 399,820 |
| Great-West Lifeco, Inc. | 17,754 | 361,796 |
| H&R Real Estate Investment Trust | 27,000 | 207,521 |
| Husky Energy, Inc. | 110,021 | 283,249 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Hydro One Ltd. | 19,200 | 419,509 |
| iA Financial Corp., Inc. | 6,600 | 229,957 |
| Imperial Oil Ltd. | 34,741 | 462,066 |
| Intact Financial Corp. | 4,306 | 444,788 |
| Inter Pipeline Ltd. | 33,974 | 302,433 |
| Keyera Corp. | 14,500 | 205,806 |
| Kinross Gold Corp. | 42,100 | 334,955 |
| Linamar Corp. | 8,900 | 290,922 |
| Loblaw Cos., Ltd. | 15,943 | 793,620 |
| Magna International, Inc. | 56,427 | 2,881,280 |
| Manulife Financial Corp. | 106,300 | 1,440,950 |
| Methanex Corp. | 14,700 | 435,825 |
| Metro, Inc. | 14,594 | 680,790 |
| National Bank of Canada | 15,933 | 764,660 |
| Nutrien Ltd. | 41,200 | 1,674,842 |
| Onex Corp. | 8,065 | 348,678 |
| Open Text Corp. | 6,200 | 227,794 |
| Parkland Corp. | 8,500 | 207,603 |
| Pembina Pipeline Corp. | 22,078 | 462,175 |
| Power Corp. of Canada | 69,103 | 1,315,877 |
| Restaurant Brands International, Inc. | 4,400 | 228,636 |
| RioCan Real Estate Investment Trust (b) | 17,700 | 191,043 |
| Rogers Communications, Inc., Class B | 23,641 | 960,332 |
| Royal Bank of Canada | 65,544 | 4,583,111 |
| Saputo, Inc. | 15,675 | 381,551 |
| Shaw Communications, Inc., Class B | 32,834 | 540,949 |
| SNC-Lavalin Group, Inc. | 23,940 | 334,941 |
| Sun Life Financial, Inc. | 27,175 | 1,081,248 |
| Suncor Energy, Inc. | 174,937 | 1,973,507 |
| TC Energy Corp. | 34,394 | 1,353,765 |
| Teck Resources Ltd., Class B | 82,668 | 1,086,479 |
| TELUS Corp. | 50,936 | 870,916 |
| TFI International, Inc. | 7,000 | 311,672 |
| The Bank of Nova Scotia | 79,515 | 3,303,427 |
| The Toronto-Dominion Bank | 83,352 | 3,677,423 |
| Thomson Reuters Corp. | 11,117 | 864,294 |
| TransAlta Corp. | 39,421 | 233,751 |
| Waste Connections, Inc. | 4,300 | 426,224 |
| West Fraser Timber Co., Ltd. | 9,300 | 431,319 |
| WSP Global, Inc. | 4,300 | 271,982 |
| | | 63,781,399 |
| |
| Denmark 1.1% |
| AP Moller - Maersk A/S, Series A | 548 | 810,303 |
| AP Moller - Maersk A/S, Series B | 800 | 1,282,108 |
| Carlsberg A/S, Class B | 4,275 | 541,304 |
| Coloplast A/S, Class B | 2,002 | 292,778 |
| Danske Bank A/S * | 74,452 | 992,264 |
| DSV PANALPINA A/S | 4,269 | 692,609 |
| ISS A/S * | 28,867 | 374,797 |
| Novo Nordisk A/S, Class B | 39,745 | 2,534,365 |
| Novozymes A/S, Class B | 6,674 | 401,382 |
| Orsted A/S | 4,294 | 681,518 |
| Pandora A/S | 9,340 | 740,937 |
| Vestas Wind Systems A/S | 7,641 | 1,310,920 |
| | | 10,655,285 |
| |
| Finland 1.2% |
| Elisa Oyj | 5,367 | 263,888 |
| Fortum Oyj | 26,712 | 502,096 |
| Kesko Oyj, B Shares | 24,028 | 616,572 |
| Kone Oyj, Class B | 11,767 | 936,808 |
| Metso Outotec Oyj | 29,666 | 209,130 |
| Neles Oyj | 6,038 | 80,857 |
| Neste Oyj | 16,863 | 879,465 |
| Security | Number
of Shares | Value ($) |
| Nokia Oyj * | 406,875 | 1,371,655 |
| Nokian Renkaat Oyj (b) | 12,692 | 389,999 |
| Nordea Bank Abp * | 297,199 | 2,238,567 |
| Outokumpu Oyj *(b) | 105,633 | 263,597 |
| Sampo Oyj, A Shares | 26,897 | 1,014,998 |
| Stora Enso Oyj, R Shares | 56,445 | 823,699 |
| UPM-Kymmene Oyj | 46,465 | 1,313,052 |
| Wartsila Oyj Abp | 45,758 | 363,630 |
| | | 11,268,013 |
| |
| France 8.3% |
| Accor S.A. * | 9,586 | 244,327 |
| Air France-KLM *(b) | 74,980 | 245,779 |
| Air Liquide S.A. | 16,959 | 2,480,055 |
| Airbus SE * | 18,758 | 1,372,449 |
| Alstom S.A. * | 11,394 | 509,077 |
| Arkema S.A. | 7,028 | 688,321 |
| Atos SE * | 5,621 | 384,003 |
| AXA S.A. | 160,673 | 2,580,295 |
| BNP Paribas S.A. * | 120,888 | 4,215,941 |
| Bollore S.A. | 67,588 | 242,269 |
| Bouygues S.A. | 28,615 | 938,384 |
| Bureau Veritas S.A. * | 12,043 | 264,083 |
| Capgemini SE | 8,199 | 946,720 |
| Carrefour S.A. | 126,344 | 1,963,625 |
| Casino Guichard Perrachon S.A. *(b) | 18,247 | 411,054 |
| Cie de Saint-Gobain * | 75,106 | 2,925,642 |
| CNP Assurances * | 19,040 | 214,745 |
| Compagnie Generale des Etablissements Michelin S.C.A. | 20,230 | 2,184,860 |
| Credit Agricole S.A. * | 98,113 | 776,126 |
| Danone S.A. | 28,785 | 1,596,566 |
| Dassault Systemes SE | 1,488 | 253,719 |
| Eiffage S.A. * | 7,074 | 513,413 |
| Electricite de France S.A. | 105,095 | 1,219,844 |
| Elis S.A. * | 15,784 | 173,116 |
| Engie S.A. * | 226,492 | 2,739,319 |
| EssilorLuxottica S.A. * | 5,744 | 709,148 |
| Eurazeo SE * | 4,675 | 212,608 |
| Eutelsat Communications S.A. | 24,785 | 249,289 |
| Faurecia SE * | 11,818 | 448,209 |
| Hermes International | 469 | 436,686 |
| Ingenico Group S.A. * | 159 | 22,860 |
| Kering S.A. | 1,577 | 953,007 |
| Klepierre S.A. (b) | 12,290 | 155,715 |
| L'Oreal S.A. | 6,131 | 1,981,449 |
| Lagardere S.C.A. * | 22,316 | 488,015 |
| Legrand S.A. | 9,310 | 689,120 |
| LVMH Moet Hennessy Louis Vuitton SE | 6,036 | 2,829,361 |
| Natixis S.A. * | 127,170 | 296,204 |
| Orange S.A. | 274,506 | 3,082,598 |
| Pernod-Ricard S.A. | 6,182 | 995,935 |
| Peugeot S.A. * | 103,409 | 1,857,661 |
| Publicis Groupe S.A. | 21,741 | 755,332 |
| Rallye S.A. * | 41,979 | 159,615 |
| Renault S.A. * | 76,557 | 1,895,994 |
| Rexel S.A. * | 66,268 | 697,714 |
| Rubis S.C.A. | 5,456 | 179,392 |
| Safran S.A. * | 10,653 | 1,123,677 |
| Sanofi | 57,396 | 5,182,477 |
| Schneider Electric SE | 26,662 | 3,239,604 |
| SCOR SE * | 15,821 | 384,217 |
| SES S.A. | 50,875 | 406,355 |
| Societe Generale S.A. * | 199,156 | 2,706,114 |
| Sodexo S.A. | 7,368 | 473,291 |
| STMicroelectronics N.V. | 21,434 | 653,827 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Suez S.A. | 43,502 | 796,407 |
| TechnipFMC plc | 62,847 | 346,543 |
| Teleperformance | 1,262 | 378,831 |
| Thales S.A. | 5,132 | 334,403 |
| TOTAL SE | 305,721 | 9,262,340 |
| Valeo S.A. | 39,136 | 1,183,919 |
| Veolia Environnement S.A. | 51,254 | 953,972 |
| Vinci S.A. | 26,246 | 2,073,042 |
| Vivendi S.A. | 46,270 | 1,335,514 |
| Wendel SE | 2,698 | 233,488 |
| Worldline S.A. * | 1,826 | 135,269 |
| | | 80,382,934 |
| |
| Germany 8.0% |
| adidas AG * | 5,936 | 1,763,614 |
| Allianz SE | 27,365 | 4,820,470 |
| Aurubis AG | 10,633 | 680,230 |
| BASF SE | 115,294 | 6,313,290 |
| Bayer AG | 70,117 | 3,294,834 |
| Bayerische Motoren Werke AG | 62,942 | 4,301,376 |
| Beiersdorf AG | 2,894 | 303,029 |
| Brenntag AG | 14,108 | 901,732 |
| Commerzbank AG * | 187,957 | 889,659 |
| Continental AG | 18,824 | 2,000,067 |
| Covestro AG | 28,850 | 1,376,894 |
| Daimler AG | 169,758 | 8,774,534 |
| Deutsche Bank AG * | 207,128 | 1,914,098 |
| Deutsche Boerse AG | 3,305 | 487,003 |
| Deutsche Lufthansa AG *(b) | 80,530 | 688,940 |
| Deutsche Post AG | 84,611 | 3,751,481 |
| Deutsche Telekom AG | 348,156 | 5,291,535 |
| Deutsche Wohnen SE | 6,191 | 312,478 |
| E.ON SE | 185,325 | 1,930,005 |
| Evonik Industries AG | 19,381 | 466,634 |
| Freenet AG | 15,079 | 267,140 |
| Fresenius Medical Care AG & Co. KGaA | 13,478 | 1,029,209 |
| Fresenius SE & Co. KGaA | 34,893 | 1,294,301 |
| GEA Group AG | 13,908 | 463,188 |
| Hannover Rueck SE | 2,734 | 397,310 |
| HeidelbergCement AG | 18,612 | 1,064,484 |
| Hella GmbH & Co. KGaA * | 5,273 | 230,172 |
| Henkel AG & Co. KGaA | 5,644 | 510,239 |
| Hugo Boss AG | 10,762 | 246,742 |
| Infineon Technologies AG | 39,049 | 1,087,170 |
| K&S AG | 53,869 | 360,917 |
| KION Group AG | 4,669 | 363,813 |
| LANXESS AG | 7,893 | 400,315 |
| Leoni AG *(b) | 26,267 | 160,148 |
| Merck KGaA | 4,475 | 662,887 |
| METRO AG | 52,098 | 510,891 |
| MTU Aero Engines AG | 1,678 | 286,806 |
| Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen | 8,643 | 2,025,722 |
| OSRAM Licht AG * | 5,080 | 298,131 |
| ProSiebenSat.1 Media SE * | 34,059 | 380,115 |
| Rheinmetall AG | 3,613 | 264,052 |
| RWE AG | 50,015 | 1,850,943 |
| Salzgitter AG * | 18,722 | 272,380 |
| SAP SE | 21,777 | 2,323,270 |
| Siemens AG | 50,791 | 5,958,599 |
| Siemens Energy AG * | 25,669 | 562,034 |
| Symrise AG | 2,685 | 331,088 |
| Telefonica Deutschland Holding AG | 94,756 | 239,000 |
| ThyssenKrupp AG * | 84,737 | 404,471 |
| Uniper SE | 38,631 | 1,153,883 |
| United Internet AG | 8,247 | 289,211 |
| Security | Number
of Shares | Value ($) |
| Volkswagen AG | 5,041 | 784,190 |
| Vonovia SE | 11,255 | 718,784 |
| | | 77,453,508 |
| |
| Hong Kong 1.8% |
| AAC Technologies Holdings, Inc. | 33,500 | 176,089 |
| AIA Group Ltd. | 242,000 | 2,303,156 |
| BOC Hong Kong (Holdings) Ltd. | 210,000 | 583,272 |
| CK Asset Holdings Ltd. | 158,000 | 733,671 |
| CK Hutchison Holdings Ltd. | 251,500 | 1,519,054 |
| CLP Holdings Ltd. | 103,500 | 953,705 |
| Galaxy Entertainment Group Ltd. | 67,000 | 442,773 |
| Hang Seng Bank Ltd. | 32,200 | 496,074 |
| Henderson Land Development Co., Ltd. | 53,300 | 188,260 |
| Hong Kong & China Gas Co., Ltd. | 249,168 | 359,500 |
| Hong Kong Exchanges & Clearing Ltd. | 10,321 | 494,569 |
| Hongkong Land Holdings Ltd. | 67,800 | 248,904 |
| Jardine Matheson Holdings Ltd. | 15,900 | 704,778 |
| Jardine Strategic Holdings Ltd. | 16,390 | 354,879 |
| Lenovo Group Ltd. | 938,000 | 588,945 |
| Link REIT | 42,500 | 324,354 |
| MTR Corp., Ltd. | 70,364 | 348,672 |
| New World Development Co., Ltd. | 134,422 | 641,783 |
| Noble Group Ltd. *(a) | 18,617,693 | 204,448 |
| PCCW Ltd. | 487,164 | 293,095 |
| Sands China Ltd. | 119,200 | 418,344 |
| Sino Land Co., Ltd. | 198,606 | 235,364 |
| Sun Hung Kai Properties Ltd. | 90,000 | 1,158,463 |
| Swire Pacific Ltd., Class A | 79,800 | 363,904 |
| Swire Pacific Ltd., Class B | 161,251 | 131,312 |
| Techtronic Industries Co., Ltd. | 33,000 | 444,488 |
| The Wharf Holdings Ltd. | 261,000 | 540,294 |
| Want Want China Holdings Ltd. | 318,000 | 210,591 |
| WH Group Ltd. | 906,000 | 713,589 |
| Wharf Real Estate Investment Co., Ltd. | 128,000 | 492,644 |
| Yue Yuen Industrial Holdings Ltd. | 166,500 | 271,198 |
| | | 16,940,172 |
| |
| Ireland 0.1% |
| Bank of Ireland Group plc * | 123,362 | 306,091 |
| Kerry Group plc, Class A | 3,775 | 451,875 |
| | | 757,966 |
| |
| Israel 0.2% |
| Bank Hapoalim B.M. * | 54,268 | 316,779 |
| Bank Leumi Le-Israel B.M. | 70,164 | 330,685 |
| Bezeq The Israeli Telecommunication Corp., Ltd. * | 399,521 | 450,484 |
| ICL Group Ltd. | 81,513 | 295,717 |
| Teva Pharmaceutical Industries Ltd. * | 78,546 | 679,874 |
| | | 2,073,539 |
| |
| Italy 2.8% |
| A2A S.p.A. | 139,950 | 177,735 |
| Assicurazioni Generali S.p.A. | 108,040 | 1,449,273 |
| Atlantia S.p.A. * | 38,159 | 585,761 |
| Banco BPM S.p.A. * | 207,650 | 376,157 |
| CNH Industrial N.V. * | 113,316 | 878,615 |
| Enel S.p.A. | 640,686 | 5,093,776 |
| Eni S.p.A. | 525,711 | 3,682,629 |
| EXOR N.V. | 31,894 | 1,659,343 |
| Ferrari N.V. | 1,405 | 250,640 |
| Fiat Chrysler Automobiles N.V. * | 279,895 | 3,433,643 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Hera S.p.A. | 61,094 | 191,904 |
| Intesa Sanpaolo S.p.A. * | 1,737,988 | 2,885,241 |
| Leonardo S.p.A. | 48,703 | 232,223 |
| Mediobanca Banca di Credito Finanziario S.p.A. | 47,101 | 334,404 |
| Pirelli & C S.p.A. * | 51,119 | 213,140 |
| Poste Italiane S.p.A | 27,168 | 221,791 |
| Prysmian S.p.A. | 15,252 | 415,043 |
| Saipem S.p.A. (b) | 93,309 | 164,398 |
| Saras S.p.A. * | 274,998 | 140,902 |
| Snam S.p.A. | 115,666 | 563,997 |
| Telecom Italia S.p.A. | 2,959,638 | 1,005,308 |
| Tenaris S.A. | 53,462 | 255,122 |
| Terna - Rete Elettrica Nationale S.p.A. | 57,359 | 387,276 |
| UniCredit S.p.A. * | 268,322 | 2,009,568 |
| Unipol Gruppo S.p.A. * | 60,824 | 221,859 |
| | | 26,829,748 |
| |
| Japan 25.4% |
| Aeon Co., Ltd. | 62,200 | 1,589,097 |
| AGC, Inc. | 30,100 | 939,901 |
| Air Water, Inc. | 17,600 | 251,465 |
| Aisin Seiki Co., Ltd. | 34,800 | 1,054,373 |
| Ajinomoto Co., Inc. | 36,000 | 723,267 |
| Alfresa Holdings Corp. | 28,300 | 518,171 |
| Alps Alpine Co., Ltd. | 31,500 | 454,461 |
| Amada Co., Ltd. | 32,400 | 281,998 |
| ANA Holdings, Inc. * | 16,000 | 348,973 |
| Asahi Group Holdings Ltd. | 22,500 | 696,310 |
| Asahi Kasei Corp. | 159,400 | 1,381,292 |
| Asics Corp. | 18,200 | 227,381 |
| Astellas Pharma, Inc. | 98,800 | 1,354,838 |
| Bandai Namco Holdings, Inc. | 9,300 | 695,034 |
| Bic Camera, Inc. | 22,800 | 251,814 |
| Bridgestone Corp. | 84,400 | 2,751,018 |
| Brother Industries Ltd. | 27,200 | 420,299 |
| Canon, Inc. | 126,800 | 2,207,106 |
| Casio Computer Co., Ltd. | 13,800 | 209,652 |
| Central Japan Railway Co. | 12,000 | 1,451,028 |
| Chubu Electric Power Co., Inc. | 112,500 | 1,260,204 |
| Chugai Pharmaceutical Co., Ltd. | 7,000 | 270,200 |
| Coca-Cola Bottlers Japan Holdings, Inc. | 16,700 | 235,736 |
| COMSYS Holdings Corp. | 8,400 | 213,449 |
| Concordia Financial Group Ltd. | 87,500 | 288,842 |
| Cosmo Energy Holdings Co., Ltd. | 23,100 | 338,140 |
| Dai Nippon Printing Co., Ltd. | 35,900 | 668,796 |
| Dai-ichi Life Holdings, Inc. | 97,100 | 1,450,229 |
| Daicel Corp. | 43,300 | 309,017 |
| Daido Steel Co., Ltd. | 6,300 | 206,327 |
| Daiichi Sankyo Co., Ltd. | 36,700 | 968,646 |
| Daikin Industries Ltd. | 10,000 | 1,871,332 |
| Daito Trust Construction Co., Ltd. | 7,100 | 645,852 |
| Daiwa House Industry Co., Ltd. | 68,500 | 1,799,821 |
| Daiwa Securities Group, Inc. | 124,600 | 504,857 |
| Denka Co., Ltd. | 11,100 | 341,966 |
| Denso Corp. | 57,200 | 2,665,323 |
| Dentsu Group, Inc. | 18,501 | 533,347 |
| DIC Corp. | 15,300 | 372,491 |
| East Japan Railway Co. | 33,918 | 1,773,689 |
| Ebara Corp. | 11,400 | 316,880 |
| EDION Corp. | 24,800 | 244,274 |
| Eisai Co., Ltd. | 7,200 | 559,825 |
| Electric Power Development Co., Ltd. | 27,700 | 374,356 |
| ENEOS Holdings, Inc. | 718,750 | 2,425,268 |
| FANUC Corp. | 7,200 | 1,520,818 |
| Fast Retailing Co., Ltd. | 1,100 | 767,296 |
| Security | Number
of Shares | Value ($) |
| Fuji Electric Co., Ltd. | 12,900 | 391,166 |
| FUJIFILM Holdings Corp. | 31,600 | 1,611,365 |
| Fujikura Ltd. | 93,400 | 247,552 |
| Fujitsu Ltd. | 17,400 | 2,058,674 |
| Furukawa Electric Co., Ltd. | 12,900 | 323,278 |
| H2O Retailing Corp. | 33,500 | 220,115 |
| Hakuhodo DY Holdings, Inc. | 25,100 | 319,804 |
| Hankyu Hanshin Holdings, Inc. | 14,700 | 448,840 |
| Hanwa Co., Ltd. | 16,200 | 314,080 |
| Haseko Corp. | 35,000 | 419,620 |
| Hino Motors Ltd. | 56,700 | 434,420 |
| Hitachi Construction Machinery Co., Ltd. | 9,800 | 241,693 |
| Hitachi Ltd. | 131,700 | 4,438,856 |
| Hitachi Metals Ltd. | 24,300 | 322,249 |
| Hokkaido Electric Power Co., Inc. | 57,100 | 221,317 |
| Hokuriku Electric Power Co. | 34,000 | 242,490 |
| Honda Motor Co., Ltd. | 311,800 | 7,374,985 |
| Hoya Corp. | 7,950 | 897,212 |
| Idemitsu Kosan Co., Ltd. | 89,369 | 1,807,395 |
| IHI Corp. | 24,300 | 294,291 |
| Iida Group Holdings Co., Ltd. | 24,300 | 439,639 |
| Inpex Corp. | 132,400 | 627,893 |
| Isetan Mitsukoshi Holdings Ltd. | 80,800 | 393,508 |
| Isuzu Motors Ltd. | 82,200 | 666,929 |
| ITOCHU Corp. | 99,100 | 2,380,234 |
| J. Front Retailing Co., Ltd. | 41,000 | 312,429 |
| Japan Airlines Co., Ltd. * | 19,700 | 344,077 |
| Japan Post Bank Co., Ltd. | 28,700 | 228,903 |
| Japan Post Holdings Co., Ltd. | 150,100 | 1,029,902 |
| Japan Post Insurance Co., Ltd. | 15,900 | 252,033 |
| Japan Tobacco, Inc. | 99,900 | 1,880,835 |
| JFE Holdings, Inc. * | 193,900 | 1,362,374 |
| JGC Holdings Corp. | 30,300 | 249,138 |
| JSR Corp. | 15,100 | 341,291 |
| JTEKT Corp. | 58,500 | 466,172 |
| K's Holdings Corp. | 25,100 | 320,549 |
| Kajima Corp. | 58,600 | 626,166 |
| Kaneka Corp. | 11,900 | 333,012 |
| Kao Corp. | 16,600 | 1,181,898 |
| Kawasaki Heavy Industries Ltd. * | 31,900 | 381,114 |
| KDDI Corp. | 142,700 | 3,860,747 |
| Keio Corp. | 4,700 | 273,151 |
| Kewpie Corp. | 13,800 | 282,430 |
| Keyence Corp. | 1,592 | 722,485 |
| Kikkoman Corp. | 6,400 | 318,721 |
| Kintetsu Group Holdings Co., Ltd. | 8,800 | 351,608 |
| Kirin Holdings Co., Ltd. | 61,800 | 1,114,153 |
| Kobe Steel Ltd. * | 169,700 | 662,580 |
| Koito Manufacturing Co., Ltd. | 10,500 | 506,350 |
| Komatsu Ltd. | 85,900 | 1,936,655 |
| Konica Minolta, Inc. | 138,300 | 352,357 |
| Kubota Corp. | 76,500 | 1,329,422 |
| Kuraray Co., Ltd. | 49,200 | 455,050 |
| Kyocera Corp. | 20,100 | 1,106,956 |
| Kyushu Electric Power Co., Inc. | 91,400 | 766,247 |
| Kyushu Railway Co. | 11,700 | 248,869 |
| LIXIL Group Corp. | 34,400 | 746,969 |
| Makita Corp. | 12,800 | 565,806 |
| Marubeni Corp. | 291,100 | 1,519,893 |
| Matsumotokiyoshi Holdings Co., Ltd. | 7,100 | 262,106 |
| Mazda Motor Corp. | 216,900 | 1,138,904 |
| Medipal Holdings Corp. | 24,900 | 443,864 |
| MEIJI Holdings Co., Ltd. | 10,400 | 753,475 |
| Minebea Mitsumi, Inc. | 27,100 | 489,463 |
| MISUMI Group, Inc. | 10,000 | 296,996 |
| Mitsubishi Chemical Holdings Corp. | 234,800 | 1,321,492 |
| Mitsubishi Corp. | 126,600 | 2,824,618 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Mitsubishi Electric Corp. | 206,900 | 2,664,641 |
| Mitsubishi Estate Co., Ltd. | 45,800 | 683,147 |
| Mitsubishi Gas Chemical Co., Inc. | 23,700 | 432,036 |
| Mitsubishi Heavy Industries Ltd. | 53,300 | 1,145,162 |
| Mitsubishi Materials Corp. | 27,600 | 506,439 |
| Mitsubishi Motors Corp. * | 164,000 | 300,780 |
| Mitsubishi UFJ Financial Group, Inc. | 1,098,934 | 4,331,893 |
| Mitsui & Co., Ltd. | 158,000 | 2,474,832 |
| Mitsui Chemicals, Inc. | 28,800 | 737,635 |
| Mitsui Fudosan Co., Ltd. | 53,800 | 916,082 |
| Mitsui Mining & Smelting Co., Ltd. | 10,300 | 259,997 |
| Mitsui O.S.K. Lines Ltd. | 24,100 | 544,045 |
| Mizuho Financial Group, Inc. | 207,321 | 2,552,540 |
| MS&AD Insurance Group Holdings, Inc. | 41,590 | 1,138,120 |
| Murata Manufacturing Co., Ltd. | 24,300 | 1,704,126 |
| Nagase & Co., Ltd. | 26,200 | 341,652 |
| Nagoya Railroad Co., Ltd. | 11,100 | 295,873 |
| NEC Corp. | 23,200 | 1,168,588 |
| NGK Insulators Ltd. | 23,400 | 334,284 |
| NGK Spark Plug Co., Ltd. | 21,300 | 374,602 |
| NH Foods Ltd. | 16,800 | 688,178 |
| NHK Spring Co., Ltd. | 36,200 | 218,888 |
| Nichirei Corp. | 8,900 | 224,269 |
| Nidec Corp. | 11,400 | 1,151,423 |
| Nikon Corp. | 48,200 | 293,748 |
| Nintendo Co., Ltd. | 1,580 | 854,288 |
| Nippon Electric Glass Co., Ltd. | 14,300 | 281,252 |
| Nippon Express Co., Ltd. | 11,400 | 639,307 |
| Nippon Light Metal Holdings Co., Ltd. | 12,320 | 194,587 |
| Nippon Paper Industries Co., Ltd. | 23,400 | 264,249 |
| Nippon Shokubai Co., Ltd. | 4,100 | 200,771 |
| Nippon Steel Corp. * | 249,200 | 2,417,022 |
| Nippon Steel Trading Corp. | 6,300 | 179,573 |
| Nippon Telegraph & Telephone Corp. | 143,916 | 3,027,393 |
| Nippon Yusen K.K. | 43,500 | 802,904 |
| Nissan Motor Co., Ltd. * | 663,800 | 2,350,205 |
| Nisshin Seifun Group, Inc. | 20,530 | 309,158 |
| Nitori Holdings Co., Ltd. | 2,100 | 431,669 |
| Nitto Denko Corp. | 15,400 | 1,081,938 |
| NOK Corp. | 27,400 | 312,470 |
| Nomura Holdings, Inc. | 198,000 | 886,731 |
| Nomura Real Estate Holdings, Inc. | 10,900 | 190,384 |
| NSK Ltd. | 73,200 | 586,045 |
| NTN Corp. * | 122,800 | 227,755 |
| NTT Data Corp. | 41,000 | 462,734 |
| NTT DOCOMO, Inc. | 88,300 | 3,287,867 |
| Obayashi Corp. | 75,400 | 630,973 |
| Odakyu Electric Railway Co., Ltd. | 12,900 | 311,309 |
| Oji Holdings Corp. | 130,600 | 550,403 |
| Olympus Corp. | 26,300 | 503,489 |
| Omron Corp. | 10,800 | 779,825 |
| Ono Pharmaceutical Co., Ltd. | 10,900 | 310,925 |
| Oriental Land Co., Ltd. | 2,600 | 363,943 |
| ORIX Corp. | 90,200 | 1,054,910 |
| Osaka Gas Co., Ltd. | 51,700 | 981,794 |
| Otsuka Corp. | 5,200 | 238,949 |
| Otsuka Holdings Co., Ltd. | 24,800 | 918,506 |
| Pan Pacific International Holdings Corp. | 15,100 | 320,398 |
| Panasonic Corp. | 306,950 | 2,835,460 |
| Rakuten, Inc. | 27,300 | 265,607 |
| Recruit Holdings Co., Ltd. | 28,600 | 1,088,248 |
| Renesas Electronics Corp. * | 43,700 | 360,728 |
| Resona Holdings, Inc. | 181,358 | 597,932 |
| Ricoh Co., Ltd. | 107,500 | 705,976 |
| Rohm Co., Ltd. | 5,300 | 407,500 |
| Ryohin Keikaku Co., Ltd. | 15,500 | 325,334 |
| Security | Number
of Shares | Value ($) |
| Santen Pharmaceutical Co., Ltd. | 13,100 | 233,389 |
| SBI Holdings, Inc. | 11,000 | 253,564 |
| Secom Co., Ltd. | 8,700 | 734,966 |
| Seiko Epson Corp. | 42,600 | 494,743 |
| Seino Holdings Co., Ltd. | 22,100 | 285,584 |
| Sekisui Chemical Co., Ltd. | 40,200 | 626,650 |
| Sekisui House Ltd. | 56,200 | 933,668 |
| Seven & i Holdings Co., Ltd. | 80,900 | 2,458,928 |
| SG Holdings Co., Ltd. | 25,800 | 622,307 |
| Shikoku Electric Power Co., Inc. | 30,100 | 216,342 |
| Shimadzu Corp. | 9,500 | 271,637 |
| Shimamura Co., Ltd. | 4,100 | 437,104 |
| Shimano, Inc. | 2,300 | 526,046 |
| Shimizu Corp. | 64,400 | 447,152 |
| Shin-Etsu Chemical Co., Ltd. | 15,400 | 2,056,928 |
| Shionogi & Co., Ltd. | 8,500 | 400,944 |
| Shiseido Co., Ltd. | 8,800 | 544,782 |
| Showa Denko K.K. | 20,700 | 351,976 |
| SMC Corp. | 1,400 | 744,667 |
| Softbank Corp. | 95,700 | 1,113,705 |
| SoftBank Group Corp. | 117,700 | 7,666,245 |
| Sojitz Corp. | 218,400 | 480,573 |
| Sompo Holdings, Inc. | 28,100 | 1,049,138 |
| Sony Corp. | 40,700 | 3,393,013 |
| Stanley Electric Co., Ltd. | 12,900 | 367,390 |
| Subaru Corp. | 93,700 | 1,719,673 |
| Sumitomo Chemical Co., Ltd. | 291,100 | 952,242 |
| Sumitomo Corp. | 131,000 | 1,433,215 |
| Sumitomo Electric Industries Ltd. | 149,400 | 1,649,387 |
| Sumitomo Forestry Co., Ltd. | 23,200 | 365,460 |
| Sumitomo Heavy Industries Ltd. | 18,300 | 392,229 |
| Sumitomo Metal Mining Co., Ltd. | 21,500 | 668,300 |
| Sumitomo Mitsui Financial Group, Inc. | 117,510 | 3,252,900 |
| Sumitomo Mitsui Trust Holdings, Inc. | 26,000 | 699,073 |
| Sumitomo Realty & Development Co., Ltd. | 18,600 | 497,723 |
| Sumitomo Rubber Industries Ltd. | 40,500 | 356,247 |
| Suntory Beverage & Food Ltd. | 9,000 | 310,389 |
| Suzuken Co., Ltd. | 13,430 | 484,831 |
| Suzuki Motor Corp. | 46,100 | 1,979,889 |
| Sysmex Corp. | 4,100 | 385,108 |
| T&D Holdings, Inc. | 49,250 | 492,208 |
| Taiheiyo Cement Corp. | 19,800 | 464,747 |
| Taisei Corp. | 20,600 | 641,029 |
| Takashimaya Co., Ltd. | 37,100 | 277,323 |
| Takeda Pharmaceutical Co., Ltd. | 49,121 | 1,517,966 |
| TDK Corp. | 8,400 | 987,845 |
| Teijin Ltd. | 28,600 | 438,094 |
| Terumo Corp. | 14,600 | 537,338 |
| The Chugoku Electric Power Co., Inc. | 33,000 | 414,607 |
| The Kansai Electric Power Co., Inc. | 121,800 | 1,108,426 |
| The Yokohama Rubber Co., Ltd. | 15,500 | 222,648 |
| TIS, Inc. | 13,200 | 252,452 |
| Tobu Railway Co., Ltd. | 11,700 | 332,003 |
| Toho Gas Co., Ltd. | 7,800 | 402,650 |
| Toho Holdings Co., Ltd. | 12,300 | 227,470 |
| Tohoku Electric Power Co., Inc. | 106,100 | 936,130 |
| Tokio Marine Holdings, Inc. | 40,100 | 1,792,258 |
| Tokyo Electric Power Co. Holdings, Inc. * | 688,900 | 1,777,621 |
| Tokyo Electron Ltd. | 4,600 | 1,234,690 |
| Tokyo Gas Co., Ltd. | 60,000 | 1,359,571 |
| Tokyu Corp. | 33,700 | 399,839 |
| Tokyu Fudosan Holdings Corp. | 60,400 | 263,937 |
| Toppan Printing Co., Ltd. | 41,600 | 529,002 |
| Toray Industries, Inc. | 223,900 | 1,013,126 |
| Toshiba Corp. | 35,200 | 890,414 |
| Tosoh Corp. | 41,000 | 664,595 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| TOTO Ltd. | 9,300 | 424,596 |
| Toyo Seikan Group Holdings Ltd. | 31,700 | 296,155 |
| Toyo Suisan Kaisha Ltd. | 5,800 | 288,642 |
| Toyoda Gosei Co., Ltd. | 12,600 | 320,228 |
| Toyota Industries Corp. | 13,600 | 878,878 |
| Toyota Motor Corp. | 227,518 | 14,935,848 |
| Toyota Tsusho Corp. | 45,000 | 1,255,739 |
| TS Tech Co., Ltd. | 9,500 | 262,948 |
| Tsuruha Holdings, Inc. | 2,200 | 308,055 |
| Ube Industries Ltd. | 21,200 | 363,960 |
| Unicharm Corp. | 9,900 | 458,082 |
| West Japan Railway Co. | 16,363 | 701,927 |
| Yakult Honsha Co., Ltd. | 4,300 | 208,090 |
| Yamada Holdings Co., Ltd. | 127,600 | 622,152 |
| Yamaha Corp. | 6,800 | 322,355 |
| Yamaha Motor Co., Ltd. | 46,900 | 670,577 |
| Yamato Holdings Co., Ltd. | 37,900 | 1,003,231 |
| Yamazaki Baking Co., Ltd. | 16,100 | 264,456 |
| Yaskawa Electric Corp. | 8,800 | 342,177 |
| Yokogawa Electric Corp. | 18,700 | 274,915 |
| Z Holdings Corp. | 109,500 | 763,550 |
| | | 245,859,472 |
| |
| Netherlands 2.8% |
| Aalberts N.V. | 6,710 | 225,115 |
| ABN AMRO Bank N.V. CVA * | 66,377 | 545,238 |
| Aegon N.V. | 297,269 | 799,659 |
| Akzo Nobel N.V. | 13,557 | 1,304,024 |
| Altice Europe N.V. * | 41,375 | 203,427 |
| APERAM S.A. | 8,470 | 227,306 |
| ArcelorMittal S.A. * | 196,399 | 2,663,175 |
| ASML Holding N.V. | 4,392 | 1,589,038 |
| ASR Nederland N.V. | 13,195 | 400,409 |
| Boskalis Westminster N.V. * | 12,536 | 252,082 |
| Heineken Holding N.V. | 7,650 | 589,524 |
| Heineken N.V. | 10,115 | 895,355 |
| ING Groep N.V. * | 395,492 | 2,709,008 |
| Koninklijke Ahold Delhaize N.V. | 132,062 | 3,620,581 |
| Koninklijke DSM N.V. | 7,119 | 1,138,524 |
| Koninklijke KPN N.V. | 308,908 | 834,292 |
| Koninklijke Philips N.V. * | 40,570 | 1,879,071 |
| NN Group N.V. | 26,094 | 908,095 |
| Randstad N.V. * | 15,066 | 751,741 |
| Signify N.V. * | 22,627 | 803,153 |
| SNS Reaal N.V. *(a) | 124,822 | — |
| Unibail-Rodamco-Westfield (b) | 12,614 | 510,626 |
| Unilever N.V. | 62,589 | 3,528,376 |
| Wolters Kluwer N.V. | 7,860 | 636,398 |
| | | 27,014,217 |
| |
| New Zealand 0.1% |
| Contact Energy Ltd. | 61,045 | 297,612 |
| Fletcher Building Ltd. * | 171,388 | 464,140 |
| Spark New Zealand Ltd. | 135,766 | 402,908 |
| | | 1,164,660 |
| |
| Norway 0.7% |
| DNB A.S.A. * | 64,990 | 877,676 |
| Equinor A.S.A. | 150,676 | 1,922,582 |
| Mowi A.S.A. | 24,519 | 387,350 |
| Norsk Hydro A.S.A. * | 254,675 | 715,730 |
| Orkla A.S.A. | 45,807 | 432,409 |
| Seadrill Ltd. * | 606,073 | 137,439 |
| Subsea 7 S.A. * | 49,856 | 331,116 |
| Security | Number
of Shares | Value ($) |
| Telenor A.S.A. | 65,214 | 1,007,705 |
| Yara International A.S.A. | 24,263 | 849,095 |
| | | 6,661,102 |
| |
| Poland 0.3% |
| Bank Polska Kasa Opieki S.A. * | 17,550 | 187,813 |
| Grupa Lotos S.A. | 15,642 | 110,318 |
| KGHM Polska Miedz S.A. * | 15,681 | 469,208 |
| PGE Polska Grupa Energetyczna S.A. * | 217,973 | 248,694 |
| Polski Koncern Naftowy ORLEN S.A. | 74,026 | 713,474 |
| Polskie Gornictwo Naftowe i Gazownictwo S.A. | 325,351 | 343,098 |
| Powszechna Kasa Oszczednosci Bank Polski S.A. * | 50,053 | 240,114 |
| Powszechny Zaklad Ubezpieczen S.A. * | 50,406 | 275,499 |
| | | 2,588,218 |
| |
| Portugal 0.2% |
| EDP - Energias de Portugal S.A. | 249,827 | 1,232,314 |
| Galp Energia, SGPS, S.A. | 56,949 | 462,493 |
| Jeronimo Martins, SGPS, S.A. | 17,364 | 275,805 |
| | | 1,970,612 |
| |
| Republic of Korea 7.1% |
| Amorepacific Corp. | 1,996 | 280,409 |
| BNK Financial Group, Inc. | 52,818 | 258,018 |
| CJ CheilJedang Corp. | 1,190 | 380,582 |
| CJ Corp. | 4,391 | 295,228 |
| Coway Co., Ltd. * | 3,712 | 227,295 |
| Daelim Industrial Co., Ltd. | 4,662 | 322,214 |
| DB Insurance Co., Ltd. | 9,039 | 353,390 |
| Doosan Heavy Industries & Construction Co., Ltd. * | 58,364 | 710,214 |
| E-MART, Inc. | 6,244 | 786,107 |
| GS Holdings Corp. | 13,883 | 405,777 |
| Hana Financial Group, Inc. | 34,449 | 930,552 |
| Hankook Tire & Technology Co., Ltd. | 17,150 | 480,444 |
| Hanwha Corp. | 19,428 | 414,325 |
| Hanwha Solutions Corp. | 14,692 | 571,102 |
| Hyundai Engineering & Construction Co., Ltd. | 16,853 | 459,431 |
| Hyundai Glovis Co., Ltd. | 3,811 | 566,374 |
| Hyundai Heavy Industries Holdings Co. Ltd | 3,157 | 600,783 |
| Hyundai Marine & Fire Insurance Co., Ltd. | 13,835 | 284,955 |
| Hyundai Mobis Co., Ltd. | 10,721 | 2,148,097 |
| Hyundai Motor Co. | 28,325 | 4,146,100 |
| Hyundai Steel Co. | 35,199 | 904,916 |
| Industrial Bank of Korea | 53,933 | 391,587 |
| KB Financial Group, Inc. | 37,206 | 1,330,851 |
| Kia Motors Corp. | 60,677 | 2,721,311 |
| Korea Electric Power Corp. * | 110,688 | 1,952,469 |
| Korea Gas Corp. | 11,974 | 289,618 |
| Korea Shipbuilding & Offshore Engineering Co., Ltd. * | 5,885 | 410,361 |
| Korea Zinc Co., Ltd. | 992 | 335,502 |
| Korean Air Lines Co., Ltd. * | 20,059 | 356,175 |
| KT&G Corp. | 8,456 | 603,793 |
| LG Chem Ltd. | 3,625 | 1,976,644 |
| LG Corp. | 7,130 | 426,938 |
| LG Display Co., Ltd. * | 116,499 | 1,454,666 |
| LG Electronics, Inc. | 27,274 | 2,027,534 |
| LG Household & Health Care Ltd. | 288 | 381,853 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| LG Uplus Corp. | 37,859 | 370,623 |
| Lotte Chemical Corp. | 3,323 | 687,243 |
| Lotte Shopping Co., Ltd. | 5,507 | 407,799 |
| NAVER Corp. | 1,887 | 482,828 |
| POSCO | 20,387 | 3,763,525 |
| Posco International Corp. | 18,648 | 220,247 |
| S-Oil Corp. | 6,844 | 330,516 |
| Samsung C&T Corp. | 4,621 | 452,654 |
| Samsung Electro-Mechanics Co., Ltd. | 3,856 | 458,317 |
| Samsung Electronics Co., Ltd. | 413,044 | 20,761,908 |
| Samsung Fire & Marine Insurance Co., Ltd. | 4,022 | 635,942 |
| Samsung Heavy Industries Co., Ltd. * | 54,995 | 247,201 |
| Samsung Life Insurance Co., Ltd. | 8,504 | 475,987 |
| Samsung SDI Co., Ltd. | 1,411 | 555,844 |
| Samsung SDS Co., Ltd. | 2,024 | 302,028 |
| Shinhan Financial Group Co., Ltd. | 49,486 | 1,342,667 |
| SK Holdings Co., Ltd. | 5,080 | 827,269 |
| SK Hynix, Inc. | 42,336 | 3,003,436 |
| SK Innovation Co., Ltd. | 17,148 | 1,916,691 |
| SK Networks Co., Ltd. | 70,331 | 282,109 |
| SK Telecom Co., Ltd. | 2,968 | 562,818 |
| Woori Financial Group, Inc. | 77,281 | 610,180 |
| | | 68,883,447 |
| |
| Singapore 0.6% |
| CapitaLand Ltd. | 131,986 | 248,369 |
| ComfortDelGro Corp., Ltd. | 260,700 | 257,848 |
| DBS Group Holdings Ltd. | 84,156 | 1,253,575 |
| Jardine Cycle & Carriage Ltd. | 15,300 | 199,025 |
| Keppel Corp., Ltd. | 132,300 | 425,141 |
| Oversea-Chinese Banking Corp., Ltd. | 169,438 | 1,045,051 |
| Singapore Airlines Ltd. | 132,370 | 328,491 |
| Singapore Telecommunications Ltd. | 573,186 | 852,054 |
| United Overseas Bank Ltd. | 64,452 | 895,525 |
| Wilmar International Ltd. | 221,866 | 656,845 |
| | | 6,161,924 |
| |
| Spain 2.7% |
| Acciona S.A. | 2,072 | 209,348 |
| Acerinox S.A. * | 25,409 | 201,704 |
| ACS Actividades de Construccion y Servicios S.A. | 30,893 | 734,349 |
| Aena SME S.A. * | 2,993 | 403,264 |
| Amadeus IT Group S.A. | 12,317 | 586,858 |
| Banco Bilbao Vizcaya Argentaria S.A. | 958,658 | 2,765,873 |
| Banco De Sabadell S.A. | 1,808,732 | 553,487 |
| Banco Santander S.A. * | 3,190,199 | 6,388,550 |
| Bankia S.A. | 202,135 | 248,662 |
| Bankinter S.A. | 47,920 | 180,090 |
| CaixaBank S.A. | 155,628 | 283,957 |
| Enagas S.A. | 14,267 | 307,935 |
| Endesa S.A. | 33,965 | 911,255 |
| Ferrovial S.A. | 17,483 | 378,639 |
| Grifols S.A. | 9,213 | 248,974 |
| Iberdrola S.A. | 347,588 | 4,104,172 |
| Industria de Diseno Textil S.A. | 44,959 | 1,110,007 |
| Mapfre S.A. | 149,256 | 225,201 |
| Naturgy Energy Group S.A. | 35,795 | 665,004 |
| Red Electrica Corp. S.A. | 22,616 | 398,369 |
| Repsol S.A. | 326,841 | 2,051,929 |
| Telefonica S.A. | 994,266 | 3,234,378 |
| | | 26,192,005 |
| |
| Security | Number
of Shares | Value ($) |
| Sweden 2.2% |
| Alfa Laval AB * | 14,391 | 292,307 |
| Assa Abloy AB, B Shares | 31,853 | 682,688 |
| Atlas Copco AB, A Shares | 21,331 | 941,575 |
| Atlas Copco AB, B Shares | 12,094 | 463,391 |
| Boliden AB | 25,715 | 701,225 |
| Electrolux AB, B Shares | 22,338 | 503,686 |
| Electrolux Professional AB * | 24,545 | 92,529 |
| Epiroc AB, A Shares | 19,716 | 294,391 |
| Epiroc AB, B Shares | 5,636 | 80,683 |
| Essity AB, B Shares | 25,415 | 735,594 |
| Hennes & Mauritz AB, B Shares | 88,618 | 1,440,787 |
| Hexagon AB, B Shares * | 6,251 | 458,181 |
| Husqvarna AB, B Shares | 31,586 | 325,702 |
| ICA Gruppen AB | 6,593 | 312,102 |
| Investor AB, A Shares | 5,440 | 325,287 |
| Investor AB, B Shares | 20,501 | 1,228,808 |
| Sandvik AB * | 56,470 | 1,006,583 |
| Securitas AB, B Shares * | 30,795 | 434,700 |
| Skandinaviska Enskilda Banken AB, A Shares * | 99,307 | 852,177 |
| Skanska AB, B Shares | 31,710 | 594,739 |
| SKF AB, B Shares | 34,546 | 707,190 |
| SSAB AB, A Shares * | 46,443 | 134,773 |
| SSAB AB, B Shares * | 110,888 | 299,143 |
| Svenska Handelsbanken AB, A Shares * | 97,865 | 792,969 |
| Swedbank AB, A Shares * | 92,584 | 1,449,459 |
| Swedish Match AB | 5,794 | 435,608 |
| Tele2 AB, B Shares | 27,658 | 326,418 |
| Telefonaktiebolaget LM Ericsson, B Shares | 163,999 | 1,830,969 |
| Telia Co. AB (b) | 284,623 | 1,089,010 |
| Trelleborg AB, B Shares * | 20,388 | 339,251 |
| Volvo AB, B Shares * | 111,387 | 2,165,050 |
| | | 21,336,975 |
| |
| Switzerland 5.0% |
| ABB Ltd. | 102,691 | 2,491,798 |
| Adecco Group AG | 22,362 | 1,096,497 |
| Alcon, Inc. * | 13,281 | 755,066 |
| Baloise Holding AG | 2,327 | 318,230 |
| Chocoladefabriken Lindt & Spruengli AG | 2 | 172,909 |
| Chocoladefabriken Lindt & Spruengli AG - Participation Certificates | 25 | 198,212 |
| Cie Financiere Richemont S.A. | 25,091 | 1,568,282 |
| Clariant AG | 12,971 | 222,527 |
| Credit Suisse Group AG | 98,920 | 932,951 |
| DKSH Holding AG | 4,099 | 263,730 |
| Geberit AG | 899 | 511,683 |
| Georg Fischer AG | 309 | 312,105 |
| Givaudan S.A. | 202 | 823,744 |
| Julius Baer Group Ltd. | 7,241 | 322,262 |
| Kuehne & Nagel International AG | 2,870 | 573,607 |
| LafargeHolcim Ltd. * | 41,712 | 1,790,264 |
| Lonza Group AG | 1,023 | 619,846 |
| Nestle S.A. | 100,139 | 11,263,423 |
| Novartis AG | 66,307 | 5,166,812 |
| Roche Holding AG | 22,297 | 7,164,725 |
| Roche Holding AG - Bearer Shares | 824 | 265,494 |
| Schindler Holding AG | 1,916 | 491,302 |
| SGS S.A. | 185 | 462,095 |
| Sika AG | 2,962 | 728,666 |
| Sonova Holding AG * | 1,170 | 277,720 |
| Swiss Life Holding AG | 1,685 | 566,815 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Swiss Prime Site AG | 2,655 | 223,365 |
| Swiss Re AG | 24,121 | 1,730,937 |
| Swisscom AG | 1,720 | 874,793 |
| The Swatch Group AG | 4,856 | 198,492 |
| The Swatch Group AG - Bearer Shares | 2,916 | 617,524 |
| UBS Group AG | 207,621 | 2,417,117 |
| Zurich Insurance Group AG | 8,377 | 2,782,383 |
| | | 48,205,376 |
| |
| United Kingdom 14.3% |
| 3i Group plc | 41,167 | 514,163 |
| Admiral Group plc | 7,958 | 283,495 |
| Aggreko plc | 41,523 | 236,665 |
| Anglo American plc | 79,887 | 1,874,402 |
| Antofagasta plc | 23,030 | 307,086 |
| Ashtead Group plc | 21,726 | 785,119 |
| Associated British Foods plc | 31,090 | 683,723 |
| AstraZeneca plc | 34,827 | 3,496,821 |
| Aviva plc | 371,796 | 1,240,153 |
| Babcock International Group plc | 45,152 | 127,197 |
| BAE Systems plc | 210,194 | 1,080,479 |
| Balfour Beatty plc * | 72,011 | 199,014 |
| Barclays plc * | 1,704,599 | 2,362,699 |
| Barratt Developments plc * | 91,503 | 571,947 |
| Bellway plc | 11,143 | 337,133 |
| BHP Group plc | 143,228 | 2,774,663 |
| BP plc | 3,358,855 | 8,567,375 |
| British American Tobacco plc | 134,661 | 4,268,130 |
| BT Group plc | 1,807,117 | 2,373,375 |
| Bunzl plc | 20,147 | 626,295 |
| Burberry Group plc | 27,140 | 476,655 |
| Carnival plc | 27,322 | 308,877 |
| Centrica plc * | 2,346,864 | 1,130,242 |
| Coca-Cola HBC AG * | 11,621 | 263,973 |
| Compass Group plc | 88,322 | 1,208,928 |
| CRH plc | 57,161 | 2,005,871 |
| Croda International plc | 3,985 | 311,464 |
| DCC plc | 7,477 | 485,870 |
| Diageo plc | 69,765 | 2,254,654 |
| Direct Line Insurance Group plc | 166,822 | 570,098 |
| Dixons Carphone plc | 481,019 | 599,604 |
| Drax Group plc | 84,963 | 325,586 |
| DS Smith plc * | 100,963 | 370,352 |
| easyJet plc | 34,166 | 224,042 |
| Evraz plc | 62,338 | 290,288 |
| Experian plc | 19,886 | 728,501 |
| Ferguson plc | 15,570 | 1,546,426 |
| FirstGroup plc * | 460,648 | 245,113 |
| Flutter Entertainment plc * | 2,725 | 472,108 |
| G4S plc * | 206,316 | 544,039 |
| GlaxoSmithKline plc | 238,005 | 3,974,321 |
| Glencore plc * | 3,115,697 | 6,285,094 |
| Hays plc * | 195,953 | 270,584 |
| HSBC Holdings plc * | 1,673,045 | 7,011,050 |
| IMI plc | 18,709 | 250,861 |
| Imperial Brands plc | 126,377 | 2,000,256 |
| Inchcape plc * | 70,339 | 451,205 |
| Informa plc * | 43,694 | 237,068 |
| InterContinental Hotels Group plc * | 7,894 | 401,096 |
| International Consolidated Airlines Group S.A. | 216,781 | 271,104 |
| Intertek Group plc | 3,862 | 278,183 |
| Investec plc | 66,698 | 124,117 |
| ITV plc * | 492,206 | 459,998 |
| J. Sainsbury plc | 436,798 | 1,140,141 |
| John Wood Group plc * | 101,730 | 279,258 |
| Johnson Matthey plc | 30,406 | 846,415 |
| Security | Number
of Shares | Value ($) |
| Kingfisher plc * | 515,348 | 1,916,571 |
| Land Securities Group plc | 38,107 | 251,431 |
| Legal & General Group plc | 377,432 | 904,933 |
| Lloyds Banking Group plc * | 7,160,885 | 2,607,326 |
| London Stock Exchange Group plc | 2,809 | 302,804 |
| M&G plc | 218,516 | 415,654 |
| Marks & Spencer Group plc | 605,635 | 697,740 |
| Meggitt plc * | 75,004 | 265,776 |
| Micro Focus International plc * | 39,333 | 110,370 |
| Mondi plc | 46,094 | 873,634 |
| National Grid plc | 317,322 | 3,774,699 |
| Natwest Group plc * | 123,763 | 199,550 |
| Next plc | 8,043 | 607,460 |
| Ninety One PLC * | 27,831 | 74,816 |
| Pearson plc | 86,245 | 569,801 |
| Pennon Group plc | 21,085 | 271,354 |
| Persimmon plc | 22,423 | 678,890 |
| Prudential plc | 104,309 | 1,275,751 |
| Reckitt Benckiser Group plc | 23,288 | 2,051,405 |
| RELX plc | 50,622 | 1,001,703 |
| Rentokil Initial plc * | 39,661 | 270,020 |
| Rio Tinto plc | 91,894 | 5,197,650 |
| Rolls-Royce Holdings plc * | 145,536 | 134,703 |
| Royal Dutch Shell plc, A Shares | 767,587 | 9,655,845 |
| Royal Dutch Shell plc, B Shares | 702,953 | 8,477,144 |
| Royal Mail plc | 418,636 | 1,232,220 |
| RSA Insurance Group plc | 64,129 | 352,170 |
| Severn Trent plc | 14,418 | 453,765 |
| Smith & Nephew plc | 29,592 | 513,839 |
| Smiths Group plc | 24,222 | 417,345 |
| Smurfit Kappa Group plc | 18,684 | 704,972 |
| SSE plc | 108,237 | 1,775,031 |
| Standard Chartered plc * | 227,285 | 1,038,648 |
| Standard Life Aberdeen plc | 163,391 | 476,084 |
| Tate & Lyle plc | 40,448 | 311,805 |
| Taylor Wimpey plc * | 342,444 | 469,180 |
| Tesco plc | 782,682 | 2,083,144 |
| The Berkeley Group Holdings plc | 9,057 | 476,202 |
| The British Land Co., plc | 50,542 | 228,243 |
| The Sage Group plc | 35,477 | 291,902 |
| The Weir Group plc * | 16,259 | 302,056 |
| Travis Perkins plc * | 35,200 | 483,446 |
| TUI AG | 115,882 | 454,893 |
| Unilever plc | 46,313 | 2,639,323 |
| United Utilities Group plc | 44,176 | 493,836 |
| Vodafone Group plc | 4,363,829 | 5,821,209 |
| Whitbread plc * | 15,282 | 425,493 |
| WM Morrison Supermarkets plc | 487,928 | 1,029,954 |
| WPP plc | 173,959 | 1,389,460 |
| | | 137,804,626 |
| Total Common Stock |
| (Cost $986,196,686) | | 947,254,957 |
|
| Preferred Stock 1.2% of net assets |
| |
| Germany 0.7% |
| Bayerische Motoren Werke AG | 11,263 | 582,336 |
| Fuchs Petrolub SE | 6,073 | 312,585 |
| Henkel AG & Co. KGaA | 10,217 | 994,222 |
| Volkswagen AG | 29,665 | 4,321,125 |
| | | 6,210,268 |
| |
| Italy 0.1% |
| Telecom Italia S.p.A. - RSP | 1,580,460 | 575,298 |
| |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Republic of Korea 0.4% |
| Hyundai Motor Co., Ltd. | 4,885 | 340,801 |
| Hyundai Motor Co., Ltd. 2nd | 7,977 | 565,219 |
| LG Chem Ltd. | 668 | 185,222 |
| Samsung Electronics Co., Ltd. | 70,610 | 3,141,078 |
| | | 4,232,320 |
| Total Preferred Stock |
| (Cost $10,199,858) | | 11,017,886 |
|
| Rights 0.0% of net assets |
| |
| Republic of Korea 0.0% |
Doosan Heavy Industries & Construction Co. Ltd
expires 12/04/20 *(a) | 22,410 | 81,171 |
| |
| United Kingdom 0.0% |
Rolls-Royce Holdings PLC
expires 11/11/20 * | 485,120 | 245,105 |
| Total Rights |
| (Cost $884,794) | | 326,276 |
|
| Other Investment Company 0.5% of net assets |
| |
| United States 0.5% |
| Securities Lending Collateral 0.5% |
| Wells Fargo Government Money Market Fund, Select Class 0.04% (c) | 5,038,856 | 5,038,856 |
| Total Other Investment Company |
| (Cost $5,038,856) | | 5,038,856 |
Security
Rate, Maturity Date | Face Amount
Local Currency | Value ($) |
| Short-Term Investments 0.0% of net assets |
| |
| Time Deposits 0.0% |
| Brown Brothers Harriman |
| Australian Dollar | | |
| (0.02%), 11/02/20 (d)(e) | 1,533 | 1,078 |
| Canadian Dollar | | |
| 0.01%, 11/02/20 (d) | 150,549 | 113,000 |
| Danish Krone | | |
| (0.65%), 11/02/20 (d)(e) | 60,867 | 9,522 |
| Euro Currency | | |
| (0.70%), 11/02/20 (d)(e) | 8,019 | 9,339 |
| Hong Kong Dollar | | |
| 0.04%, 11/02/20 (d) | 34,363 | 4,432 |
| Japanese Yen | | |
| (0.27%), 11/02/20 (d)(e) | 1,834,875 | 17,526 |
| New Zealand Dollar | | |
| 0.05%, 11/02/20 (d) | 15,754 | 10,417 |
| Norwegian Krone | | |
| (0.10%), 11/02/20 (d)(e) | 7,917 | 829 |
| Pound Sterling | | |
| 0.01%, 11/02/20 (d) | 10,138 | 13,133 |
| Singapore Dollar | | |
| 0.01%, 11/02/20 (d) | 698 | 511 |
Security
Rate, Maturity Date | Face Amount
Local Currency | Value ($) |
| Swedish Krona | | |
| (0.26%), 11/02/20 (d)(e) | 381,964 | 42,925 |
| Swiss Franc | | |
| (1.42%), 11/02/20 (d)(e) | 1,173 | 1,279 |
| Total Short-Term Investments |
| (Cost $223,991) | | 223,991 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | |
| Long | |
| MSCI EAFE Index, expires 12/18/20 | 79 | 7,046,405 | (87,751) |
| * | Non-income producing security. |
| (a) | Fair-valued by management using significant unobservable inputs in accordance with procedures approved by the fund’s Board of Trustees. |
| (b) | All or a portion of this security is on loan. Securities on loan were valued at $4,398,913. |
| (c) | The rate shown is the 7-day yield. |
| (d) | The rate shown is the current daily overnight rate. |
| (e) | Rate is negative due to the current daily overnight rate at the central bank of the denominated currency and therefore is non-income producing. |
| | |
| CVA — | Dutch Certificate |
| REIT — | Real Estate Investment Trust |
| RSP — | Risparmio (Convertible Savings Shares) |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Common Stock 99.1% of net assets |
| |
| Australia 5.7% |
| Adbri Ltd. | 239,894 | 476,827 |
| ALS Ltd. | 67,276 | 445,181 |
| Ansell Ltd. | 24,032 | 679,555 |
| ASX Ltd. | 10,605 | 593,823 |
| AusNet Services | 460,085 | 646,779 |
| Austal Ltd. | 148,429 | 283,031 |
| Australian Pharmaceutical Industries Ltd. | 427,750 | 330,037 |
| Bank of Queensland Ltd. | 164,560 | 742,406 |
| Bapcor Ltd. | 40,131 | 216,297 |
| Beach Energy Ltd. | 164,447 | 136,362 |
| Bega Cheese Ltd. | 86,480 | 304,235 |
| Blackmores Ltd. * | 2,097 | 103,572 |
| Breville Group Ltd. | 14,312 | 265,163 |
| carsales.com Ltd. | 18,757 | 274,036 |
| Challenger Ltd. | 137,872 | 466,074 |
| Charter Hall Group | 15,269 | 132,390 |
| Charter Hall Retail REIT | 59,231 | 143,325 |
| CIMIC Group Ltd. * | 43,236 | 653,460 |
| Cleanaway Waste Management Ltd. | 193,570 | 279,055 |
| Cochlear Ltd. | 3,499 | 522,244 |
| Collins Foods Ltd. | 16,909 | 114,769 |
| Costa Group Holdings Ltd. | 92,798 | 232,187 |
| Cromwell Property Group | 342,879 | 211,013 |
| CSR Ltd. | 252,973 | 783,138 |
| Deterra Royalties Ltd. * | 52,621 | 145,360 |
| Dexus | 108,929 | 659,025 |
| Domino's Pizza Enterprises Ltd. | 4,139 | 246,526 |
| Eagers Automotive Ltd | 56,583 | 432,765 |
| Eclipx Group Ltd. * | 228,288 | 238,616 |
| Elders Ltd. | 20,380 | 160,697 |
| Evolution Mining Ltd. | 138,353 | 542,404 |
| Flight Centre Travel Group Ltd. * | 34,090 | 269,828 |
| G.U.D. Holdings Ltd. | 20,627 | 184,000 |
| G8 Education Ltd. | 386,822 | 308,151 |
| Genworth Mortgage Insurance Australia Ltd. | 122,479 | 146,952 |
| GrainCorp Ltd., Class A * | 139,366 | 346,748 |
| GWA Group Ltd. | 89,977 | 166,751 |
| Harvey Norman Holdings Ltd. | 178,755 | 559,190 |
| Healius Ltd. | 228,397 | 541,283 |
| IGO Ltd. | 53,913 | 168,507 |
| Iluka Resources Ltd. | 52,621 | 190,683 |
| Inghams Group Ltd. | 74,186 | 149,276 |
| InvoCare Ltd. | 19,724 | 140,118 |
| IOOF Holdings Ltd. | 160,720 | 330,059 |
| IRESS Ltd. | 25,724 | 166,452 |
| James Hardie Industries plc | 36,789 | 893,232 |
| JB Hi-Fi Ltd. | 27,980 | 934,965 |
| Link Administration Holdings Ltd. | 81,194 | 273,014 |
| Magellan Financial Group Ltd. | 5,243 | 203,211 |
| McMillan Shakespeare Ltd. | 24,678 | 162,336 |
| Mineral Resources Ltd. | 34,092 | 598,648 |
| Monadelphous Group Ltd. | 50,038 | 321,775 |
| nib Holdings Ltd. | 111,641 | 326,700 |
| Nine Entertainment Co. Holdings Ltd. | 265,258 | 387,752 |
| Security | Number
of Shares | Value ($) |
| Northern Star Resources Ltd. | 41,508 | 438,487 |
| NRW Holdings Ltd. | 185,907 | 285,150 |
| Nufarm Ltd. * | 120,244 | 290,747 |
| Orora Ltd. | 346,190 | 627,407 |
| OZ Minerals Ltd. | 78,452 | 819,540 |
| Pact Group Holdings Ltd. | 113,955 | 188,245 |
| Pendal Group Ltd. | 72,414 | 329,448 |
| Perenti Global Ltd. | 200,077 | 147,135 |
| Perpetual Ltd. | 13,285 | 254,260 |
| Platinum Asset Management Ltd. | 47,058 | 100,935 |
| Premier Investments Ltd. | 16,305 | 244,544 |
| Qantas Airways Ltd. * | 250,160 | 735,955 |
| Qube Holdings Ltd. | 192,945 | 359,138 |
| REA Group Ltd. | 2,157 | 179,380 |
| Regis Resources Ltd. | 74,498 | 218,661 |
| Reliance Worldwide Corp. Ltd. | 71,252 | 205,686 |
| Resolute Mining Ltd. * | 217,976 | 123,799 |
| Sandfire Resources Ltd. | 80,205 | 249,588 |
| Santos Ltd. | 170,082 | 565,418 |
| SEEK Ltd. (a) | 39,405 | 596,417 |
| Seven Group Holdings Ltd. | 19,408 | 265,014 |
| Seven West Media Ltd. * | 1,825,300 | 211,480 |
| Shopping Centres Australasia Property Group | 76,491 | 124,798 |
| Sigma Healthcare Ltd. * | 1,109,139 | 413,920 |
| Southern Cross Media Group Ltd. * | 996,045 | 122,352 |
| St. Barbara Ltd. | 107,944 | 202,984 |
| Steadfast Group Ltd. | 49,568 | 124,279 |
| Super Retail Group Ltd. | 64,856 | 510,422 |
| Sydney Airport | 103,737 | 397,736 |
| Tassal Group Ltd. | 55,655 | 138,560 |
| The GPT Group | 192,559 | 545,375 |
| The Star Entertainment Grp Ltd. | 309,586 | 713,439 |
| TPG Telecom Ltd. * | 42,709 | 215,568 |
| Treasury Wine Estates Ltd. | 96,532 | 622,327 |
| Tuas Ltd. * | 34,018 | 18,173 |
| United Malt Grp Ltd. * | 142,671 | 404,433 |
| Vicinity Centres | 635,241 | 539,832 |
| Virgin Australia International Holdings *(a) | 176,214 | — |
| Vocus Group Ltd. * | 77,053 | 186,605 |
| Washington H Soul Pattinson & Co., Ltd. | 11,386 | 202,755 |
| Whitehaven Coal Ltd. | 382,572 | 286,332 |
| Worley Ltd. | 106,893 | 712,570 |
| | | 33,148,877 |
| |
| Austria 0.5% |
| Austria Technologie & Systemtechnik AG | 10,771 | 195,778 |
| BAWAG Group AG * | 14,886 | 546,691 |
| CA Immobilien Anlagen AG | 5,917 | 162,531 |
| DO & Co. AG * | 2,371 | 86,140 |
| EVN AG | 9,317 | 148,807 |
| IMMOFINANZ AG * | 10,704 | 143,543 |
| Lenzing AG * | 7,939 | 555,729 |
| Oesterreichische Post AG (b) | 12,769 | 405,517 |
| UNIQA Insurance Group AG | 41,179 | 231,942 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Verbund AG | 6,731 | 388,204 |
| Vienna Insurance Group AG Wiener Versicherung Gruppe | 12,148 | 246,461 |
| | | 3,111,343 |
| |
| Belgium 1.1% |
| Ackermans & van Haaren N.V. * | 4,973 | 612,144 |
| AGFA-Gevaert N.V. * | 69,151 | 262,922 |
| Barco N.V. | 10,636 | 166,847 |
| Befimmo S.A. | 3,368 | 131,109 |
| Bekaert S.A. | 26,528 | 564,258 |
| bpost S.A. | 75,669 | 670,532 |
| Cie d'Entreprises CFE * | 3,327 | 206,025 |
| Cofinimmo S.A. | 2,315 | 314,624 |
| D'ieteren S.A./N.V. | 9,257 | 463,775 |
| Elia Group S.A./N.V. | 3,448 | 333,494 |
| Euronav N.V. | 36,141 | 264,078 |
| Gimv N.V. | 3,275 | 171,021 |
| KBC Ancora * | 3,099 | 87,835 |
| Melexis N.V. | 2,535 | 192,961 |
| Ontex Group N.V. * | 34,212 | 378,498 |
| Orange Belgium S.A. | 12,629 | 210,462 |
| Recticel S.A. | 12,922 | 126,942 |
| Sofina S.A. | 930 | 241,706 |
| Telenet Group Holding N.V. | 14,457 | 556,023 |
| Tessenderlo Group S.A. * | 8,439 | 287,259 |
| | | 6,242,515 |
| |
| Canada 7.4% |
| Aecon Group, Inc. | 31,072 | 331,640 |
| Ag Growth International, Inc. (b) | 5,400 | 107,489 |
| Aimia, Inc. * | 73,899 | 191,917 |
| Alamos Gold, Inc., Class A | 24,911 | 227,551 |
| Algonquin Power & Utilities Corp. | 45,085 | 683,568 |
| Allied Properties Real Estate Investment Trust | 9,600 | 232,812 |
| AltaGas Ltd. | 62,500 | 792,333 |
| Altus Group Ltd. | 4,500 | 184,114 |
| Artis Real Estate Investment Trust | 52,373 | 327,847 |
| ATS Automation Tooling Systems, Inc. * | 11,500 | 142,423 |
| AutoCanada, Inc. (b) | 26,600 | 401,905 |
| B2Gold Corp. | 30,400 | 195,548 |
| Badger Daylighting Ltd. (b) | 7,100 | 206,024 |
| Baytex Energy Corp. *(b) | 709,500 | 210,352 |
| Birchcliff Energy Ltd. (b) | 182,900 | 260,835 |
| BlackBerry Ltd. * | 85,100 | 381,970 |
| Boardwalk Real Estate Investment Trust | 9,777 | 196,523 |
| Boyd Group Services, Inc. | 1,500 | 215,166 |
| BRP, Inc. | 4,800 | 259,257 |
| CAE, Inc. | 41,319 | 706,173 |
| Cameco Corp. | 84,700 | 804,850 |
| Canadian Apartment Properties REIT | 12,199 | 392,166 |
| Canadian Utilities Ltd., Class A | 30,000 | 701,193 |
| Canadian Western Bank | 18,239 | 335,402 |
| Canfor Corp. * | 51,795 | 628,242 |
| Capital Power Corp. | 25,999 | 572,942 |
| Cascades, Inc. | 43,119 | 458,926 |
| CCL Industries, Inc., Class B | 20,890 | 796,526 |
| Celestica Inc. * | 114,700 | 674,098 |
| Centerra Gold, Inc. | 41,477 | 362,375 |
| CES Energy Solutions Corp. | 225,042 | 108,104 |
| Chartwell Retirement Residences | 39,500 | 283,435 |
| Chemtrade Logistics Income Fund (b) | 67,181 | 209,263 |
| Security | Number
of Shares | Value ($) |
| Choice Properties Real Estate Investment Trust | 21,000 | 189,619 |
| Chorus Aviation, Inc. | 99,100 | 217,941 |
| Cineplex, Inc. (b) | 37,760 | 144,261 |
| Cogeco Communications, Inc. | 2,431 | 169,329 |
| Cogeco, Inc. | 5,400 | 322,954 |
| Colliers International Group, Inc. | 3,934 | 278,625 |
| Cominar Real Estate Investment Trust | 88,513 | 471,697 |
| Constellation Software, Inc. | 677 | 710,685 |
| Corus Entertainment, Inc., B Shares | 181,143 | 478,588 |
| Crombie Real Estate Investment Trust (b) | 16,200 | 158,073 |
| Dream Office Real Estate Investment Trust | 22,317 | 293,305 |
| Eldorado Gold Corp. * | 18,061 | 226,389 |
| Element Fleet Management Corp. | 31,900 | 300,492 |
| Enerflex Ltd. | 73,449 | 264,070 |
| Enerplus Corp. | 170,000 | 308,789 |
| Ensign Energy Services, Inc. | 474,189 | 177,959 |
| Exchange Income Corp. (b) | 9,630 | 228,769 |
| Extendicare, Inc. (b) | 30,900 | 118,284 |
| First Capital Real Estate Investment Trust (b) | 27,978 | 248,217 |
| FirstService Corp. | 2,000 | 268,183 |
| Franco-Nevada Corp. | 5,073 | 691,440 |
| Frontera Energy Corp. | 109,400 | 176,544 |
| Genworth MI Canada, Inc. | 9,805 | 325,288 |
| Granite Real Estate Investment Trust | 3,704 | 207,678 |
| Great Canadian Gaming Corp. * | 11,827 | 201,955 |
| Home Capital Group, Inc. *(b) | 19,870 | 362,859 |
| Hudbay Minerals, Inc. | 126,056 | 568,638 |
| IAMGOLD Corp. * | 104,268 | 381,917 |
| IGM Financial, Inc. | 24,000 | 526,908 |
| Innergex Renewable Energy, Inc. | 13,400 | 241,588 |
| Interfor Corp. * | 38,795 | 437,073 |
| Intertape Polymer Group, Inc. | 20,685 | 235,216 |
| Just Energy Group, Inc. *(b) | 6,513 | 33,486 |
| Kirkland Lake Gold Ltd. | 10,048 | 457,790 |
| Laurentian Bank of Canada | 12,611 | 248,093 |
| Lundin Mining Corp. | 125,025 | 755,424 |
| Maple Leaf Foods, Inc. | 27,363 | 498,256 |
| Martinrea International, Inc. | 74,971 | 564,407 |
| Medical Facilities Corp. | 53,686 | 202,285 |
| MEG Energy Corp. * | 155,662 | 283,914 |
| Morneau Shepell, Inc. | 7,112 | 142,155 |
| Mullen Group Ltd. | 69,892 | 470,039 |
| NFI Group, Inc. | 28,992 | 328,371 |
| Norbord, Inc. | 19,500 | 640,633 |
| Northland Power, Inc. | 15,746 | 509,266 |
| Northview Apartment Real Estate Investment Trust | 7,200 | 195,199 |
| OceanaGold Corp. * | 200,072 | 261,296 |
| Pan American Silver Corp. | 15,505 | 492,743 |
| Parex Resources, Inc. * | 24,600 | 239,482 |
| Pason Systems, Inc. | 30,496 | 117,882 |
| Peyto Exploration & Development Corp. | 264,202 | 571,119 |
| PrairieSky Royalty Ltd. | 29,700 | 182,128 |
| Precision Drilling Corp. * | 566,200 | 395,231 |
| Premium Brands Holdings Corp. | 3,900 | 278,208 |
| Primo Water Corp. | 30,700 | 384,816 |
| Quebecor, Inc., Class B | 23,100 | 535,931 |
| Richelieu Hardware Ltd. | 11,714 | 314,941 |
| Ritchie Bros. Auctioneers, Inc. | 7,755 | 470,085 |
| Russel Metals, Inc. | 46,917 | 624,363 |
| Secure Energy Services, Inc. | 267,331 | 298,974 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Seven Generations Energy Ltd., Class A * | 155,800 | 551,960 |
| ShawCor Ltd. | 149,996 | 244,308 |
| Sienna Senior Living, Inc. (b) | 12,700 | 110,671 |
| Sierra Wireless, Inc. * | 12,300 | 136,451 |
| Sleep Country Canada Holdings, Inc. | 8,000 | 136,366 |
| SmartCentres Real Estate Investment Trust | 24,525 | 387,673 |
| SSR Mining, Inc. * | 6,800 | 125,864 |
| Stantec, Inc. | 20,448 | 587,210 |
| Stella-Jones, Inc. | 12,800 | 416,579 |
| Superior Plus Corp. | 53,243 | 473,564 |
| The North West Co., Inc. | 16,315 | 402,273 |
| TMX Group Ltd. | 4,200 | 408,115 |
| Toromont Industries Ltd. | 9,781 | 608,972 |
| Tourmaline Oil Corp. | 68,677 | 889,713 |
| Transat AT, Inc. *(b) | 45,638 | 159,286 |
| Transcontinental, Inc., Class A | 49,120 | 581,786 |
| Trican Well Service Ltd. *(b) | 397,066 | 345,715 |
| Turquoise Hill Resources Ltd. * | 46,820 | 367,939 |
| Uni-Select, Inc. | 47,220 | 215,845 |
| Vermilion Energy, Inc. (b) | 118,500 | 292,626 |
| Western Forest Products, Inc. | 427,595 | 276,013 |
| Westshore Terminals Investment Corp. | 16,256 | 163,378 |
| Wheaton Precious Metals Corp. | 19,389 | 889,772 |
| Whitecap Resources, Inc. | 241,900 | 441,205 |
| Winpak Ltd. | 6,700 | 206,989 |
| Yamana Gold, Inc. | 94,700 | 526,703 |
| | | 42,959,795 |
| |
| Denmark 1.5% |
| Chr. Hansen Holding A/S | 5,770 | 582,250 |
| D/S Norden A/S | 17,878 | 254,218 |
| Demant A/S * | 12,281 | 387,751 |
| Dfds A/S * | 10,426 | 388,528 |
| Drilling Co. of 1972 A/S * | 10,169 | 192,099 |
| FLSmidth & Co. A/S * | 21,756 | 555,831 |
| Genmab A/S * | 638 | 213,108 |
| GN Store Nord A/S | 8,662 | 623,638 |
| H. Lundbeck A/S | 8,088 | 228,012 |
| Jyske Bank A/S * | 21,540 | 641,851 |
| Matas A/S * | 29,817 | 333,062 |
| Nilfisk Holding A/S * | 14,648 | 200,975 |
| NKT A/S * | 10,584 | 287,741 |
| Per Aarsleff Holding A/S | 8,441 | 322,876 |
| Ringkjoebing Landbobank A/S | 1,638 | 124,669 |
| Rockwool International A/S, B Shares | 1,325 | 518,628 |
| Royal Unibrew A/S | 4,885 | 476,332 |
| Scandinavian Tobacco Group A/S | 23,623 | 333,671 |
| Schouw & Co. A/S | 3,918 | 341,187 |
| SimCorp A/S | 2,042 | 243,557 |
| Spar Nord Bank A/S * | 20,938 | 180,403 |
| Sydbank A/S * | 28,183 | 481,977 |
| Topdanmark A/S | 5,200 | 203,629 |
| Tryg A/S | 16,117 | 447,291 |
| | | 8,563,284 |
| |
| Finland 1.1% |
| Ahlstrom-Munksjo Oyj | 9,062 | 189,733 |
| Cargotec Oyj, B Shares | 22,980 | 789,879 |
| Finnair Oyj * | 363,879 | 155,108 |
| Huhtamaki Oyj | 18,245 | 891,223 |
| Kemira Oyj | 34,192 | 422,405 |
| Kojamo Oyj | 6,681 | 137,714 |
| Konecranes Oyj | 23,053 | 725,359 |
| Metsa Board Oyj | 50,834 | 426,514 |
| Security | Number
of Shares | Value ($) |
| Orion Oyj, Class B | 15,287 | 654,277 |
| Sanoma Oyj | 26,546 | 390,788 |
| TietoEVRY Oyj | 18,553 | 462,785 |
| Tokmanni Group Corp. | 11,172 | 177,737 |
| Uponor Oyj | 17,730 | 330,569 |
| Valmet Oyj | 23,704 | 565,741 |
| Yit Oyj | 45,394 | 239,494 |
| | | 6,559,326 |
| |
| France 3.8% |
| Aeroports de Paris | 4,997 | 488,994 |
| Albioma S.A. | 5,372 | 250,450 |
| Alten S.A. * | 5,490 | 439,576 |
| Amundi S.A. * | 7,677 | 503,550 |
| Beneteau S.A. | 19,483 | 179,143 |
| BioMerieux | 2,728 | 406,196 |
| CGG S.A. * | 277,077 | 156,148 |
| Cie Plastic Omnium S.A. | 25,766 | 586,345 |
| Coface S.A. * | 30,859 | 241,107 |
| Covivio | 7,330 | 436,506 |
| Dassault Aviation S.A. * | 310 | 259,364 |
| Derichebourg S.A. | 93,127 | 273,550 |
| Edenred | 16,703 | 778,593 |
| Elior Group S.A. | 86,649 | 326,563 |
| Eramet S.A. * | 6,020 | 159,878 |
| Eurofins Scientific SE * | 673 | 535,923 |
| Euronext N.V. | 5,326 | 554,551 |
| Europcar Mobility Group *(b) | 219,133 | 142,974 |
| Fnac Darty S.A. * | 10,751 | 461,782 |
| Gaztransport Et Technigaz S.A. | 1,993 | 191,043 |
| Gecina S.A. | 3,981 | 494,213 |
| Getlink SE * | 50,640 | 681,119 |
| ICADE | 6,861 | 346,965 |
| Iliad S.A. | 5,176 | 1,000,685 |
| Imerys S.A. | 17,745 | 530,414 |
| Ipsen S.A. | 4,105 | 373,883 |
| IPSOS | 18,393 | 452,074 |
| JCDecaux S.A. * | 18,197 | 280,859 |
| Kaufman & Broad S.A. | 6,229 | 221,981 |
| Korian S.A. *(b) | 12,058 | 339,703 |
| Maisons du Monde S.A. * | 22,266 | 297,914 |
| Mercialys S.A. | 31,084 | 148,861 |
| Mersen S.A. * | 6,004 | 155,772 |
| Metropole Television S.A. * | 29,812 | 327,469 |
| Nexans S.A. * | 14,520 | 705,127 |
| Nexity S.A. | 16,561 | 464,835 |
| Orpea * | 5,204 | 519,798 |
| Quadient S.A. | 34,278 | 446,694 |
| Remy Cointreau S.A. | 2,356 | 397,769 |
| Sartorius Stedim Biotech | 421 | 159,647 |
| SEB S.A. | 5,162 | 838,894 |
| Societe BIC S.A. | 12,732 | 609,871 |
| Solocal Group * | 3,495,203 | 77,705 |
| Sopra Steria Group * | 3,592 | 427,130 |
| SPIE S.A. * | 38,868 | 611,655 |
| Tarkett S.A. * | 25,216 | 305,484 |
| Technicolor S.A. *(b) | 79,786 | 113,986 |
| Television Francaise * | 73,556 | 431,762 |
| Trigano S.A. | 1,990 | 264,444 |
| UbiSoft Entertainment S.A. * | 10,281 | 908,156 |
| Vallourec S.A. *(b) | 9,283 | 129,366 |
| Vicat S.A. | 9,745 | 299,627 |
| Worldline S.A. * | 11,848 | 877,539 |
| | | 21,613,637 |
| |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Germany 3.9% |
| 1&1 Drillisch AG | 11,385 | 239,790 |
| Aareal Bank AG * | 26,722 | 461,722 |
| Alstria Office REIT AG | 11,148 | 141,910 |
| Aroundtown S.A. * | 54,637 | 262,075 |
| Bechtle AG | 3,434 | 589,675 |
| Befesa S.A. | 4,721 | 194,428 |
| Bilfinger SE | 22,660 | 415,386 |
| CANCOM SE | 4,649 | 183,792 |
| Carl Zeiss Meditec AG | 2,034 | 262,813 |
| CECONOMY AG * | 115,558 | 511,071 |
| Cewe Stiftung & Co. KGaA | 1,515 | 144,414 |
| CTS Eventim AG & Co. KGaA * | 4,816 | 213,480 |
| Deutsche Euroshop AG * | 11,522 | 145,524 |
| Deutsche Pfandbriefbank AG * | 87,968 | 537,585 |
| Deutz AG * | 87,955 | 451,838 |
| Dialog Semiconductor plc * | 14,529 | 553,902 |
| Duerr AG | 19,723 | 567,201 |
| DWS Group GmbH & Co. KGaA * | 7,163 | 243,222 |
| ElringKlinger AG * | 34,651 | 350,293 |
| Fielmann AG * | 3,717 | 281,818 |
| Fraport AG Frankfurt Airport Services Worldwide *(b) | 10,607 | 383,639 |
| Gerresheimer AG | 5,888 | 591,887 |
| Grand City Properties S.A. | 10,112 | 229,528 |
| GRENKE AG | 1,820 | 71,051 |
| Hamburger Hafen und Logistik AG | 8,833 | 148,076 |
| Heidelberger Druckmaschinen AG * | 313,333 | 175,373 |
| HOCHTIEF AG | 6,566 | 483,032 |
| Hornbach Holding AG & Co. KGaA | 7,312 | 704,267 |
| Indus Holding AG | 10,343 | 305,968 |
| Jenoptik AG | 9,574 | 236,261 |
| JOST Werke AG * | 4,030 | 151,132 |
| Kloeckner & Co. SE * | 153,376 | 861,970 |
| Knorr-Bremse AG | 6,980 | 808,292 |
| Koenig & Bauer AG * | 8,576 | 177,131 |
| Krones AG | 6,548 | 374,139 |
| LEG Immobilien AG | 4,803 | 649,139 |
| Nordex SE * | 25,225 | 363,520 |
| Norma Group SE | 11,172 | 346,626 |
| Pfeiffer Vacuum Technology AG | 945 | 172,359 |
| Puma SE * | 7,997 | 700,082 |
| QIAGEN N.V. * | 12,073 | 573,260 |
| Rational AG | 252 | 188,862 |
| RTL Group S.A. * | 20,813 | 790,831 |
| SAF-Holland SE * | 37,649 | 320,061 |
| Scout24 AG | 5,661 | 456,705 |
| Siemens Healthineers AG | 13,417 | 575,975 |
| Siltronic AG | 4,462 | 422,263 |
| Sixt SE * | 3,740 | 282,575 |
| Software AG | 9,247 | 331,270 |
| Stabilus S.A. | 4,266 | 241,854 |
| Stroeer SE & Co. KGaA * | 2,631 | 190,188 |
| Suedzucker AG | 40,698 | 585,707 |
| TAG Immobilien AG * | 13,949 | 411,072 |
| Takkt AG * | 19,583 | 208,105 |
| Talanx AG * | 11,928 | 351,651 |
| Wacker Chemie AG | 7,874 | 759,621 |
| Wacker Neuson SE * | 14,509 | 266,766 |
| Zalando SE * | 8,679 | 808,226 |
| | | 22,450,403 |
| |
| Greece 0.0% |
| TT Hellenic Postbank S.A. *(a) | 24,275 | — |
| |
| Security | Number
of Shares | Value ($) |
| Hong Kong 4.1% |
| Asia Cement China Holdings Corp. | 104,500 | 95,905 |
| ASM Pacific Technology Ltd. | 58,200 | 586,907 |
| BOC Aviation Ltd. | 31,200 | 193,195 |
| Brightoil Petroleum Holdings Ltd. *(a) | 1,150,000 | — |
| Budweiser Brewing Co. APAC Ltd. | 81,600 | 240,647 |
| Cafe De Coral Holdings Ltd. | 124,000 | 256,308 |
| Cathay Pacific Airways Ltd. * | 453,363 | 308,061 |
| China Travel International Investment Hong Kong Ltd. * | 1,240,000 | 158,688 |
| Chow Sang Sang Holdings International Ltd. | 238,000 | 260,354 |
| Chow Tai Fook Jewellery Group Ltd. | 391,000 | 499,718 |
| CITIC Telecom International Holdings Ltd. | 538,000 | 170,900 |
| CK Infrastructure Holdings Ltd. | 30,000 | 141,518 |
| Cowell e Holdings, Inc. | 389,000 | 171,300 |
| Dah Sing Financial Holdings Ltd. | 69,200 | 172,367 |
| Dairy Farm International Holdings Ltd. | 93,723 | 353,038 |
| FIH Mobile Ltd. * | 3,744,000 | 411,490 |
| First Pacific Co., Ltd. | 3,262,000 | 1,013,397 |
| Fortune REIT | 186,000 | 155,353 |
| Giordano International Ltd. | 1,222,000 | 194,475 |
| Haitong International Securities Group Ltd. | 785,904 | 179,117 |
| Hang Lung Group Ltd. | 309,000 | 685,921 |
| Hang Lung Properties Ltd. | 342,000 | 832,595 |
| Hutchison Telecommunications Hong Kong Holdings Ltd. | 1,052,000 | 157,641 |
| Hysan Development Co., Ltd. | 97,000 | 309,245 |
| IGG, Inc. | 258,000 | 279,282 |
| Johnson Electric Holdings Ltd. | 181,000 | 374,508 |
| K Wah International Holdings Ltd. | 569,000 | 270,021 |
| Kerry Logistics Network Ltd. | 213,500 | 445,891 |
| Kerry Properties Ltd. | 268,500 | 658,772 |
| Lee & Man Paper Manufacturing Ltd. | 636,000 | 481,994 |
| Lifestyle International Holdings Ltd. * | 199,000 | 156,298 |
| Luk Fook Holdings International Ltd. | 208,000 | 508,594 |
| Man Wah Holdings Ltd. | 284,400 | 396,919 |
| Melco International Development Ltd. | 201,000 | 326,272 |
| MGM China Holdings Ltd. | 154,000 | 203,229 |
| Minth Group Ltd. | 147,500 | 610,354 |
| MMG Ltd. *(b) | 1,472,000 | 349,108 |
| NagaCorp Ltd. | 172,000 | 177,908 |
| Nexteer Automotive Group Ltd. | 491,000 | 410,035 |
| NWS Holdings Ltd. | 648,000 | 568,809 |
| Pacific Basin Shipping Ltd. | 1,916,000 | 279,885 |
| Pacific Textile Holdings Ltd. | 308,000 | 175,747 |
| Pou Sheng International Holdings Ltd. * | 973,000 | 223,002 |
| Power Assets Holdings Ltd. | 31,143 | 160,377 |
| Prada S.p.A. * | 118,400 | 468,618 |
| Road King Infrastructure Ltd. | 153,000 | 181,968 |
| Sa Sa International Holdings Ltd. *(b) | 826,518 | 118,665 |
| Samsonite International S.A. * | 617,800 | 630,248 |
| Shangri-La Asia Ltd. * | 296,000 | 232,902 |
| Shui On Land Ltd. | 2,180,000 | 287,450 |
| Shun Tak Holdings Ltd. | 610,000 | 179,040 |
| SITC International Holdings Co., Ltd. | 237,000 | 366,083 |
| SJM Holdings Ltd. | 612,000 | 635,445 |
| SmarTone Telecommunications Holdings Ltd. | 364,500 | 196,671 |
| Stella International Holdings Ltd. | 354,000 | 362,761 |
| Sun Art Retail Group Ltd. | 533,500 | 578,016 |
| Swire Properties Ltd. | 154,800 | 415,404 |
| The Bank of East Asia Ltd. | 323,667 | 583,900 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Tingyi (Cayman Islands) Holding Corp. | 438,000 | 801,506 |
| Truly International Holdings Ltd. * | 2,072,000 | 236,091 |
| Uni-President China Holdings Ltd. | 280,000 | 242,542 |
| Value Partners Group Ltd. | 315,000 | 138,021 |
| Vitasoy International Holdings Ltd. | 60,000 | 242,694 |
| VSTECS Holdings Ltd. | 542,000 | 339,078 |
| VTech Holdings Ltd. | 75,900 | 503,598 |
| Wynn Macau Ltd. * | 264,800 | 365,857 |
| Xinyi Glass Holdings Ltd. | 410,000 | 900,375 |
| | | 23,612,078 |
| |
| Ireland 0.4% |
| AIB Group plc * | 330,582 | 373,949 |
| Glanbia plc | 53,996 | 513,588 |
| Irish Continental Group plc * | 37,773 | 138,738 |
| Kingspan Group plc * | 12,386 | 1,079,738 |
| Total Produce plc | 288,729 | 377,718 |
| | | 2,483,731 |
| |
| Israel 1.0% |
| Azrieli Group Ltd. | 3,601 | 169,016 |
| Delek Group Ltd. * | 9,175 | 167,838 |
| Elbit Systems Ltd. | 2,929 | 330,050 |
| FIBI Holdings Ltd. | 4,844 | 122,144 |
| First International Bank of Israel Ltd. | 8,594 | 189,981 |
| Gazit-Globe Ltd. | 40,598 | 168,154 |
| Harel Insurance Investments & Finances Service Ltd. * | 28,991 | 210,624 |
| Israel Discount Bank Ltd., Class A | 194,260 | 543,745 |
| Mizrahi Tefahot Bank Ltd. | 16,839 | 328,364 |
| Nice Ltd. * | 2,896 | 658,635 |
| Oil Refineries Ltd. * | 1,777,752 | 317,315 |
| Partner Communications Co., Ltd. * | 33,366 | 130,450 |
| Paz Oil Co., Ltd. | 7,158 | 661,764 |
| Shikun & Binui Ltd. * | 37,605 | 175,095 |
| Shufersal Ltd. | 30,891 | 232,499 |
| The Israel Corp., Ltd. * | 4,076 | 455,036 |
| The Phoenix Holdings Ltd. * | 31,427 | 164,731 |
| Tower Semiconductor Ltd. * | 23,192 | 475,667 |
| | | 5,501,108 |
| |
| Italy 2.2% |
| ACEA S.p.A. | 11,580 | 229,907 |
| Alitalia - Linee Aeree Italiane S.p.A. *(a) | 14,782 | — |
| Amplifon S.p.A. * | 6,680 | 242,869 |
| Anima Holding S.p.A. | 73,725 | 276,231 |
| ASTM S.p.A. * | 19,253 | 358,322 |
| Autogrill S.p.A. * | 70,074 | 262,660 |
| Azimut Holding S.p.A. | 22,013 | 371,057 |
| Banca Carige S.p.A. *(a) | 14,056,361 | 2,456 |
| Banca Farmafactoring S.p.A. * | 21,370 | 98,592 |
| Banca Generali S.p.A. * | 8,115 | 231,068 |
| Banca IFIS S.p.A. * | 16,892 | 135,503 |
| Banca Mediolanum S.p.A. | 48,910 | 334,159 |
| Banca Monte dei Paschi di Siena S.p.A. *(b) | 186,214 | 224,811 |
| Banca Popolare Di Sondrio Scarl * | 313,624 | 551,257 |
| BPER Banca *(b) | 426,888 | 507,202 |
| Buzzi Unicem S.p.A. | 22,777 | 492,844 |
| Cattolica Assicurazioni SC * | 70,820 | 350,163 |
| Cerved Group S.p.A. * | 36,816 | 260,502 |
| Davide Campari-Milano N.V. | 40,856 | 427,001 |
| De'Longhi S.p.A. * | 16,494 | 527,506 |
| DiaSorin S.p.A. | 1,191 | 261,459 |
| Security | Number
of Shares | Value ($) |
| Enav S.p.A. | 59,569 | 206,702 |
| ERG S.p.A. | 13,213 | 299,237 |
| Esprinet S.p.A. * | 31,821 | 270,586 |
| Fincantieri S.p.A. *(b) | 190,386 | 106,830 |
| FinecoBank Banca Fineco S.p.A. * | 41,133 | 564,751 |
| Freni Brembo S.p.A. * | 40,448 | 420,258 |
| Industria Macchine Automatiche S.p.A. * | 2,783 | 218,945 |
| Infrastrutture Wireless Italiane S.p.A. | 16,289 | 175,948 |
| Interpump Group S.p.A. | 10,243 | 386,893 |
| Iren S.p.A. | 206,110 | 467,737 |
| Italgas S.p.A. | 104,606 | 604,490 |
| Maire Tecnimont S.p.A. * | 55,174 | 74,700 |
| MARR S.p.A. * | 10,822 | 146,507 |
| Mediaset S.p.A. * | 227,526 | 386,860 |
| Moncler S.p.A. * | 13,231 | 529,395 |
| OVS S.p.A. * | 264,458 | 238,456 |
| Piaggio & C. S.p.A. | 55,752 | 152,154 |
| Recordati Industria Chimica e Farmaceutica S.p.A. | 8,895 | 461,158 |
| Reply S.p.A. | 1,344 | 144,395 |
| Salvatore Ferragamo S.p.A. * | 20,766 | 267,877 |
| Tod's S.p.A. * | 6,751 | 142,218 |
| UnipolSai Assicurazioni S.p.A. | 179,722 | 417,399 |
| Webuild S.p.A. | 118,172 | 126,605 |
| | | 12,955,670 |
| |
| Japan 34.4% |
| ABC-Mart, Inc. | 5,900 | 299,274 |
| Acom Co., Ltd. | 46,800 | 210,320 |
| Adastria Co., Ltd. | 17,480 | 303,399 |
| ADEKA Corp. | 44,700 | 578,051 |
| Advantest Corp. | 12,000 | 695,076 |
| Aeon Delight Co., Ltd. | 7,400 | 194,811 |
| AEON Financial Service Co., Ltd. | 41,300 | 422,988 |
| Aeon Mall Co., Ltd. | 34,230 | 533,967 |
| Aica Kogyo Co., Ltd. | 13,300 | 447,945 |
| Aida Engineering Ltd. | 26,000 | 198,857 |
| Ain Holdings, Inc. | 6,800 | 475,643 |
| Aisan Industry Co., Ltd. | 41,000 | 175,733 |
| Alconix Corp. | 15,600 | 220,845 |
| Alpen Co., Ltd. | 10,700 | 208,061 |
| Amano Corp. | 17,100 | 402,473 |
| Anritsu Corp. | 15,400 | 337,144 |
| AOKI Holdings, Inc. | 35,000 | 152,137 |
| Aoyama Trading Co., Ltd. | 71,400 | 340,129 |
| Aozora Bank Ltd. | 35,000 | 575,016 |
| Arata Corp. | 12,400 | 602,606 |
| Arcs Co., Ltd. | 33,400 | 739,393 |
| Asahi Diamond Industrial Co., Ltd. | 32,500 | 149,135 |
| Asahi Holdings, Inc. | 10,000 | 326,099 |
| Asahi Intecc Co., Ltd. | 3,900 | 120,854 |
| Asanuma Corp. | 2,800 | 108,179 |
| ASKUL Corp. | 5,300 | 203,553 |
| Autobacs Seven Co., Ltd. | 31,000 | 396,845 |
| Avex, Inc. | 22,000 | 212,530 |
| Azbil Corp. | 25,900 | 1,051,107 |
| Belluna Co., Ltd. | 25,000 | 204,685 |
| Benesse Holdings, Inc. | 21,800 | 513,952 |
| BML, Inc. | 6,100 | 171,498 |
| Bunka Shutter Co., Ltd. | 28,900 | 226,904 |
| Calbee, Inc. | 16,300 | 500,029 |
| Canon Electronics, Inc. | 9,800 | 135,202 |
| Canon Marketing Japan, Inc. | 22,100 | 470,799 |
| Capcom Co., Ltd. | 7,500 | 410,187 |
| Cawachi Ltd. | 9,700 | 275,122 |
| Central Glass Co., Ltd. | 24,800 | 532,172 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Chiyoda Corp. * | 83,200 | 180,424 |
| Chudenko Corp. | 10,500 | 213,411 |
| Chugoku Marine Paints Ltd. | 21,600 | 206,203 |
| Citizen Watch Co., Ltd. * | 216,600 | 573,840 |
| CKD Corp. | 14,800 | 246,329 |
| Cocokara fine, Inc. | 10,200 | 670,102 |
| Colowide Co., Ltd. | 8,600 | 128,764 |
| Cosmos Pharmaceutical Corp. | 3,070 | 521,407 |
| Create SD Holdings Co., Ltd. | 6,600 | 212,850 |
| Credit Saison Co., Ltd. | 57,500 | 621,561 |
| CyberAgent, Inc. | 12,500 | 786,229 |
| Daido Metal Co., Ltd. | 33,400 | 161,924 |
| Daifuku Co., Ltd. | 9,300 | 958,995 |
| Daihen Corp. | 6,900 | 266,844 |
| Daiho Corp. | 9,700 | 311,671 |
| Daiichikosho Co., Ltd. | 12,200 | 417,447 |
| Daiki Aluminium Industry Co., Ltd. | 21,500 | 133,003 |
| Daikyonishikawa Corp. | 56,100 | 310,959 |
| Daio Paper Corp. | 28,300 | 409,164 |
| Daiseki Co., Ltd. | 7,200 | 183,282 |
| Daishi Hokuetsu Financial Group, Inc. | 10,300 | 197,820 |
| Daiwabo Holdings Co., Ltd. | 10,500 | 687,373 |
| DCM Holdings Co., Ltd. | 52,000 | 644,315 |
| Dena Co., Ltd. | 31,586 | 538,923 |
| Descente Ltd. * | 13,600 | 210,947 |
| Dexerials Corp. | 20,000 | 228,801 |
| Disco Corp. | 2,675 | 722,005 |
| DMG Mori Co., Ltd. | 25,200 | 336,935 |
| Doshisha Co., Ltd. | 12,700 | 233,684 |
| Doutor Nichires Holdings Co., Ltd. | 13,200 | 185,301 |
| Dowa Holdings Co., Ltd. | 25,800 | 738,366 |
| DTS Corp. | 10,200 | 198,380 |
| Duskin Co., Ltd. | 15,400 | 393,107 |
| DyDo Group Holdings, Inc. | 5,100 | 263,886 |
| Eagle Industry Co., Ltd. | 26,600 | 211,613 |
| Earth Corp. | 3,100 | 196,916 |
| Eizo Corp. | 6,150 | 232,130 |
| Exedy Corp. | 30,500 | 384,514 |
| Ezaki Glico Co., Ltd. | 14,600 | 605,542 |
| F.C.C. Co., Ltd. | 19,700 | 378,032 |
| FamilyMart Co., Ltd. | 20,100 | 441,803 |
| Fancl Corp. | 7,000 | 220,577 |
| Foster Electric Co., Ltd. | 25,700 | 295,657 |
| FP Corp. | 6,660 | 265,612 |
| Fuji Co., Ltd. | 16,100 | 298,083 |
| Fuji Corp. | 20,938 | 420,937 |
| Fuji Media Holdings, Inc. | 26,600 | 255,824 |
| Fuji Oil Co., Ltd. * | 125,800 | 221,325 |
| Fuji Oil Holdings, Inc. | 13,400 | 423,997 |
| Fuji Seal International, Inc. | 15,200 | 283,918 |
| Fuji Soft, Inc. | 6,100 | 326,262 |
| Fujimori Kogyo Co., Ltd. | 7,100 | 290,864 |
| Fujitec Co., Ltd. | 23,600 | 514,256 |
| Fujitsu General Ltd. | 16,000 | 444,099 |
| Fukuoka Financial Group, Inc. | 40,200 | 672,439 |
| Fukuyama Transporting Co., Ltd. | 11,000 | 461,032 |
| Furukawa Co., Ltd. | 20,200 | 208,932 |
| Futaba Corp. | 19,900 | 169,461 |
| Futaba Industrial Co., Ltd. | 64,400 | 325,113 |
| Fuyo General Lease Co., Ltd. | 3,100 | 177,996 |
| G-Tekt Corp. | 24,400 | 274,924 |
| Geo Holdings Corp. | 33,000 | 491,003 |
| Glory Ltd. | 25,300 | 533,284 |
| Gree, Inc. | 43,100 | 224,745 |
| GS Yuasa Corp. | 45,300 | 790,694 |
| GungHo Online Entertainment, Inc. * | 21,050 | 523,032 |
| Gunze Ltd. | 8,100 | 298,128 |
| H.I.S. Co., Ltd. *(b) | 13,400 | 180,701 |
| Security | Number
of Shares | Value ($) |
| H.U. Group Holdings, Inc. | 27,700 | 704,751 |
| Hamakyorex Co., Ltd. | 6,400 | 181,582 |
| Hamamatsu Photonics K.K. | 11,500 | 578,677 |
| Happinet Corp. | 17,700 | 236,985 |
| Hazama Ando Corp. | 93,400 | 580,260 |
| Heiwa Corp. | 19,600 | 316,875 |
| Heiwa Real Estate Co., Ltd. | 5,600 | 163,490 |
| Heiwado Co., Ltd. | 23,800 | 483,245 |
| Hikari Tsushin, Inc. | 2,050 | 480,817 |
| Hirogin Holdings, Inc. | 94,600 | 514,873 |
| Hirose Electric Co., Ltd. | 5,739 | 801,075 |
| Hisamitsu Pharmaceutical Co., Inc. | 12,700 | 607,494 |
| Hitachi Capital Corp. | 9,400 | 198,802 |
| Hitachi Transport System Ltd. | 15,000 | 475,482 |
| Hitachi Zosen Corp. | 131,000 | 527,573 |
| Hogy Medical Co., Ltd. | 4,900 | 143,771 |
| Hokuetsu Corp. | 106,300 | 351,140 |
| Hokuhoku Financial Group, Inc. | 51,300 | 486,805 |
| Horiba Ltd. | 8,900 | 437,803 |
| Hoshizaki Corp. | 7,500 | 598,944 |
| Hosiden Corp. | 37,600 | 333,340 |
| House Foods Group, Inc. | 16,200 | 536,268 |
| Hulic Co., Ltd. | 42,400 | 392,747 |
| Ibiden Co., Ltd. | 29,700 | 1,210,972 |
| IBJ Leasing Co., Ltd. | 5,000 | 127,459 |
| Inaba Denki Sangyo Co., Ltd. | 24,400 | 587,392 |
| Inabata & Co., Ltd. | 47,900 | 555,680 |
| Internet Initiative Japan, Inc. | 7,100 | 317,657 |
| Iriso Electronics Co., Ltd. | 4,400 | 167,527 |
| Ishihara Sangyo Kaisha Ltd. | 26,800 | 174,063 |
| Ito En Ltd. | 10,200 | 645,999 |
| Itochu Enex Co., Ltd. | 48,600 | 457,196 |
| Itochu Techno-Solutions Corp. | 14,600 | 495,340 |
| Itoham Yonekyu Holdings, Inc. | 124,900 | 836,211 |
| Iwatani Corp. | 24,000 | 1,088,941 |
| Izumi Co., Ltd. | 18,800 | 637,578 |
| Jaccs Co., Ltd. | 11,600 | 202,578 |
| JAFCO Group Co., Ltd. | 6,400 | 289,446 |
| Japan Airport Terminal Co., Ltd. | 6,600 | 286,646 |
| Japan Aviation Electronics Industry Ltd. | 24,300 | 334,647 |
| Japan Display, Inc. * | 1,089,400 | 533,597 |
| Japan Exchange Group, Inc. | 41,400 | 1,010,707 |
| Japan Petroleum Exploration Co., Ltd. | 18,400 | 290,939 |
| Joyful Honda Co., Ltd. | 28,900 | 449,570 |
| Juki Corp. | 30,400 | 128,860 |
| JVCKenwood Corp. | 185,100 | 250,435 |
| Kadokawa Corp. | 13,000 | 395,389 |
| Kaga Electronics Co., Ltd. | 13,200 | 255,248 |
| Kagome Co., Ltd. | 16,800 | 575,426 |
| Kakaku.com, Inc. | 8,700 | 229,919 |
| Kaken Pharmaceutical Co., Ltd. | 7,600 | 299,334 |
| Kameda Seika Co., Ltd. | 3,200 | 144,897 |
| Kamigumi Co., Ltd. | 36,000 | 644,072 |
| Kanamoto Co., Ltd. | 15,200 | 313,572 |
| Kandenko Co., Ltd. | 54,900 | 411,985 |
| Kanematsu Corp. | 56,900 | 674,683 |
| Kansai Paint Co., Ltd. | 30,700 | 791,511 |
| Kasai Kogyo Co., Ltd. | 58,900 | 195,533 |
| Kato Sangyo Co., Ltd. | 16,700 | 554,874 |
| Kato Works Co., Ltd. | 12,500 | 121,434 |
| Kawasaki Kisen Kaisha Ltd. * | 70,900 | 866,395 |
| Keihan Holdings Co., Ltd. | 14,500 | 550,858 |
| Keikyu Corp. | 42,000 | 587,344 |
| Keisei Electric Railway Co., Ltd. | 18,500 | 517,522 |
| KH Neochem Co., Ltd. | 10,100 | 236,343 |
| Kinden Corp. | 52,200 | 818,488 |
| Kintetsu World Express, Inc. | 17,500 | 372,016 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Kissei Pharmaceutical Co., Ltd. | 7,400 | 145,625 |
| Kitz Corp. | 40,600 | 219,722 |
| Kobayashi Pharmaceutical Co., Ltd. | 5,200 | 506,718 |
| Kohnan Shoji Co., Ltd. | 14,600 | 498,531 |
| Kokuyo Co., Ltd. | 39,000 | 529,918 |
| Komeri Co., Ltd. | 15,800 | 465,181 |
| Komori Corp. | 28,000 | 179,778 |
| Konami Holdings Corp. | 17,500 | 684,920 |
| Konoike Transport Co., Ltd. | 22,000 | 229,997 |
| Kose Corp. | 3,500 | 446,164 |
| Kumagai Gumi Co., Ltd. | 16,900 | 390,612 |
| Kumiai Chemical Industry Co., Ltd. | 12,400 | 119,211 |
| Kura Sushi, Inc. | 3,000 | 180,934 |
| Kureha Corp. | 7,900 | 335,358 |
| Kurita Water Industries Ltd. | 28,500 | 847,981 |
| Kusuri no Aoki Holdings Co., Ltd. | 2,100 | 167,634 |
| KYB Corp. * | 21,100 | 436,284 |
| Kyoei Steel Ltd. | 14,200 | 178,784 |
| Kyokuto Kaihatsu Kogyo Co., Ltd. | 16,400 | 202,316 |
| KYORIN Holdings, Inc. | 14,700 | 265,839 |
| Kyoritsu Maintenance Co., Ltd. | 4,800 | 171,745 |
| Kyowa Exeo Corp. | 30,500 | 703,235 |
| Kyowa Kirin Co., Ltd. | 32,600 | 809,568 |
| Kyudenko Corp. | 15,200 | 414,827 |
| Kyushu Financial Group, Inc. | 78,700 | 368,122 |
| Lawson, Inc. | 13,000 | 597,292 |
| Leopalace21 Corp. * | 329,900 | 516,857 |
| Life Corp. | 9,700 | 341,144 |
| Lintec Corp. | 19,900 | 441,139 |
| Lion Corp. | 36,900 | 752,442 |
| M3, Inc. | 6,900 | 465,996 |
| Mabuchi Motor Co., Ltd. | 15,000 | 618,431 |
| Macnica Fuji Electronics Holdings, Inc. | 28,500 | 509,685 |
| Maeda Corp. | 58,700 | 422,649 |
| Maeda Road Construction Co., Ltd. | 19,300 | 321,735 |
| Makino Milling Machine Co., Ltd. | 10,750 | 370,018 |
| Mandom Corp. | 10,100 | 150,450 |
| Marudai Food Co., Ltd. | 21,200 | 332,928 |
| Maruha Nichiro Corp. | 25,800 | 540,382 |
| Marui Group Co., Ltd. | 32,600 | 589,145 |
| Maruichi Steel Tube Ltd. | 16,400 | 376,242 |
| Max Co., Ltd. | 11,300 | 158,004 |
| Maxell Holdings Ltd. * | 29,200 | 305,275 |
| MCJ Co., Ltd. | 21,400 | 197,221 |
| Mebuki Financial Group, Inc. | 220,700 | 443,428 |
| Megmilk Snow Brand Co., Ltd. | 26,400 | 572,070 |
| Meidensha Corp. | 19,500 | 298,175 |
| Meitec Corp. | 4,900 | 242,918 |
| Ministop Co., Ltd. | 10,100 | 126,321 |
| Mirait Holdings Corp. | 29,100 | 414,271 |
| Mitsubishi Logisnext Co., Ltd. | 17,000 | 143,487 |
| Mitsubishi Logistics Corp. | 18,000 | 473,710 |
| Mitsubishi Pencil Co., Ltd. | 13,000 | 167,353 |
| Mitsubishi UFJ Lease & Finance Co., Ltd. | 74,700 | 316,503 |
| Mitsui E&S Holdings Co., Ltd. * | 91,200 | 288,789 |
| Mitsui Matsushima Holdings Co., Ltd. | 15,300 | 99,673 |
| Mitsui Sugar Co., Ltd. | 7,800 | 135,601 |
| Mitsui-Soko Holdings Co., Ltd. | 13,300 | 234,765 |
| Miura Co., Ltd. | 8,000 | 376,915 |
| Mizuno Corp. | 14,300 | 239,210 |
| Mochida Pharmaceutical Co., Ltd. | 6,200 | 226,386 |
| Modec, Inc. | 9,200 | 133,642 |
| Morinaga & Co., Ltd. | 9,000 | 341,957 |
| Morinaga Milk Industry Co., Ltd. | 18,500 | 891,935 |
| Morita Holdings Corp. | 12,000 | 219,372 |
| MOS Food Services, Inc. | 5,900 | 160,936 |
| Musashi Seimitsu Industry Co., Ltd. | 28,400 | 296,860 |
| Security | Number
of Shares | Value ($) |
| Nabtesco Corp. | 23,900 | 892,862 |
| Nachi-Fujikoshi Corp. | 10,800 | 428,086 |
| Nankai Electric Railway Co., Ltd. | 26,000 | 593,704 |
| NEC Networks & System Integration Corp. | 17,800 | 308,659 |
| NET One Systems Co., Ltd. | 12,100 | 361,772 |
| Nexon Co., Ltd. | 31,322 | 872,972 |
| Nichi-iko Pharmaceutical Co., Ltd. | 18,500 | 183,155 |
| Nichias Corp. | 18,700 | 405,010 |
| Nichicon Corp. | 27,900 | 225,899 |
| Nichiha Corp. | 11,200 | 326,358 |
| NichiiGakkan Co., Ltd. | 5,100 | 81,256 |
| Nifco, Inc. | 27,400 | 820,140 |
| Nihon Kohden Corp. | 15,000 | 469,179 |
| Nihon Parkerizing Co., Ltd. | 29,800 | 293,681 |
| Nihon Unisys Ltd. | 12,400 | 365,508 |
| Nikkiso Co., Ltd. | 22,400 | 214,761 |
| Nikkon Holdings Co., Ltd. | 21,600 | 413,395 |
| Nippo Corp. | 20,500 | 526,566 |
| Nippon Chemi-Con Corp. * | 14,800 | 189,286 |
| Nippon Denko Co., Ltd. * | 98,900 | 232,981 |
| Nippon Densetsu Kogyo Co., Ltd. | 13,100 | 253,831 |
| Nippon Flour Mills Co., Ltd. | 27,100 | 434,679 |
| Nippon Gas Co., Ltd. | 9,100 | 434,040 |
| Nippon Kayaku Co., Ltd. | 61,400 | 528,392 |
| Nippon Koei Co., Ltd. | 5,700 | 150,267 |
| Nippon Paint Holdings Co., Ltd. | 11,200 | 1,008,896 |
| Nippon Sanso Holdings Corp. | 24,800 | 363,609 |
| Nippon Sheet Glass Co., Ltd. * | 143,100 | 497,520 |
| Nippon Shinyaku Co., Ltd. | 3,500 | 250,096 |
| Nippon Signal Co., Ltd. | 19,600 | 170,695 |
| Nippon Soda Co., Ltd. | 12,700 | 333,283 |
| Nippon Suisan Kaisha Ltd. | 146,800 | 565,502 |
| Nippon Television Holdings, Inc. | 15,400 | 162,508 |
| Nippon Yakin Kogyo Co., Ltd. | 9,610 | 138,336 |
| Nipro Corp. | 43,900 | 461,924 |
| Nishi-Nippon Financial Holdings, Inc. | 55,100 | 373,266 |
| Nishi-Nippon Railroad Co., Ltd. | 25,500 | 673,748 |
| Nishimatsu Construction Co., Ltd. | 29,400 | 571,096 |
| Nishimatsuya Chain Co., Ltd. | 23,500 | 382,133 |
| Nishio Rent All Co., Ltd. | 9,800 | 190,199 |
| Nissan Chemical Corp. | 17,200 | 912,815 |
| Nissha Co., Ltd. | 25,500 | 300,233 |
| Nisshinbo Holdings, Inc. | 99,700 | 664,508 |
| Nissin Electric Co., Ltd. | 16,700 | 167,184 |
| Nissin Foods Holdings Co., Ltd. | 10,400 | 900,530 |
| Nitta Corp. | 5,800 | 122,300 |
| Nitto Boseki Co., Ltd. | 4,700 | 172,622 |
| Nitto Kogyo Corp. | 11,500 | 212,437 |
| NOF Corp. | 14,300 | 537,427 |
| Nojima Corp. | 14,900 | 418,169 |
| Nomura Co., Ltd. | 17,900 | 115,591 |
| Nomura Research Institute Ltd. | 29,880 | 880,787 |
| Noritake Co., Ltd. | 7,400 | 217,686 |
| Noritz Corp. | 26,600 | 387,877 |
| North Pacific Bank Ltd. | 132,900 | 281,232 |
| NS Solutions Corp. | 7,900 | 231,348 |
| NS United Kaiun Kaisha Ltd. | 9,600 | 130,254 |
| NSD Co., Ltd. | 10,200 | 179,159 |
| Obic Co., Ltd. | 2,200 | 389,495 |
| Oiles Corp. | 12,480 | 174,287 |
| Okamoto Industries, Inc. | 5,300 | 218,178 |
| Okamura Corp. | 47,000 | 358,941 |
| Okasan Securities Group, Inc. | 72,900 | 238,225 |
| Oki Electric Industry Co., Ltd. | 58,000 | 538,460 |
| OKUMA Corp. | 11,300 | 548,477 |
| Okumura Corp. | 15,400 | 356,754 |
| Onward Holdings Co., Ltd. | 105,400 | 206,395 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Open House Co., Ltd. | 8,400 | 286,038 |
| Oracle Corp., Japan | 2,600 | 259,844 |
| Orient Corp. | 170,900 | 189,647 |
| Osaka Soda Co., Ltd. | 7,600 | 181,041 |
| OSG Corp. | 25,600 | 383,515 |
| Outsourcing, Inc. | 18,000 | 166,932 |
| Pacific Industrial Co., Ltd. | 24,100 | 242,029 |
| PALTAC Corp. | 15,000 | 838,613 |
| Paramount Bed Holdings Co., Ltd. | 5,700 | 219,609 |
| Park24 Co., Ltd. * | 22,900 | 309,330 |
| Penta-Ocean Construction Co., Ltd. | 114,400 | 725,431 |
| Persol Holdings Co., Ltd. | 51,600 | 781,544 |
| Pigeon Corp. | 9,600 | 442,095 |
| Pilot Corp. | 9,600 | 267,780 |
| Piolax, Inc. | 10,803 | 158,475 |
| Plenus Co., Ltd. | 12,900 | 210,787 |
| Pola Orbis Holdings, Inc. | 16,100 | 317,478 |
| Press Kogyo Co., Ltd. | 121,400 | 323,070 |
| Prima Meat Packers Ltd. | 14,600 | 416,584 |
| Qol Holdings Co., Ltd. | 10,000 | 109,064 |
| Raito Kogyo Co., Ltd. | 15,400 | 218,414 |
| Raiznext Corp. | 16,300 | 188,901 |
| Relia, Inc. | 13,800 | 157,021 |
| Relo Group, Inc. | 11,000 | 263,986 |
| Rengo Co., Ltd. | 99,900 | 768,625 |
| Resorttrust, Inc. | 17,300 | 243,648 |
| Restar Holdings Corp. | 14,400 | 308,463 |
| Rinnai Corp. | 9,100 | 896,682 |
| Rohto Pharmaceutical Co., Ltd. | 14,200 | 443,934 |
| Round One Corp. | 25,400 | 199,496 |
| Royal Holdings Co., Ltd. | 9,900 | 168,220 |
| Ryobi Ltd. | 30,200 | 326,443 |
| Ryosan Co., Ltd. | 22,500 | 416,244 |
| Ryoyo Electro Corp. | 9,700 | 267,563 |
| S Foods, Inc. | 11,000 | 366,363 |
| Saizeriya Co., Ltd. | 10,600 | 183,990 |
| Sakai Chemical Industry Co., Ltd. | 9,500 | 175,845 |
| Sakata INX Corp. | 24,500 | 255,229 |
| Sakata Seed Corp. | 4,600 | 162,317 |
| San-A Co., Ltd. | 7,100 | 295,719 |
| Sanden Holdings Corp. * | 52,000 | 173,314 |
| Sangetsu Corp. | 22,300 | 321,382 |
| Sanken Electric Co., Ltd. | 11,500 | 368,164 |
| Sanki Engineering Co., Ltd. | 18,800 | 203,823 |
| Sankyo Co., Ltd. | 13,100 | 333,882 |
| Sankyo Tateyama, Inc. | 34,600 | 307,216 |
| Sankyu, Inc. | 18,800 | 673,446 |
| Sanoh Industrial Co., Ltd. (b) | 18,100 | 104,831 |
| Sanrio Co., Ltd. | 11,500 | 211,528 |
| Sanwa Holdings Corp. | 74,700 | 852,095 |
| Sanyo Chemical Industries Ltd. | 4,750 | 201,295 |
| Sanyo Denki Co., Ltd. | 3,400 | 149,889 |
| Sanyo Special Steel Co., Ltd. * | 20,200 | 198,059 |
| Sapporo Holdings Ltd. | 30,100 | 491,501 |
| Sato Holdings Corp. | 7,800 | 148,525 |
| Sawai Pharmaceutical Co., Ltd. | 8,240 | 397,165 |
| SCREEN Holdings Co., Ltd. | 10,400 | 569,644 |
| SCSK Corp. | 7,676 | 381,662 |
| Sega Sammy Holdings, Inc. | 62,400 | 781,970 |
| Seibu Holdings, Inc. | 59,800 | 597,875 |
| Seiko Holdings Corp. | 17,600 | 221,687 |
| Seiren Co., Ltd. | 17,700 | 280,508 |
| Sekisui Jushi Corp. | 7,300 | 147,408 |
| Senko Group Holdings Co., Ltd. | 59,300 | 530,323 |
| Senshu Ikeda Holdings, Inc. | 116,900 | 178,630 |
| Seven Bank Ltd. | 129,000 | 296,048 |
| Sharp Corp. | 34,500 | 398,945 |
| Shibaura Machine Co., Ltd. | 8,800 | 175,621 |
| Security | Number
of Shares | Value ($) |
| Shibuya Corp. | 5,600 | 173,443 |
| Shima Seiki Manufacturing Ltd. | 11,900 | 176,766 |
| Shimachu Co., Ltd. | 18,500 | 977,857 |
| Shindengen Electric Manufacturing Co., Ltd. | 6,800 | 129,591 |
| Shinko Electric Industries Co., Ltd. | 21,700 | 378,575 |
| Shinmaywa Industries Ltd. | 42,500 | 329,869 |
| Shinsei Bank Ltd. | 33,400 | 401,853 |
| Ship Healthcare Holdings, Inc. | 9,900 | 469,778 |
| Shizuoka Gas Co., Ltd. | 38,100 | 335,055 |
| SHO-BOND Holdings Co., Ltd. | 4,600 | 222,034 |
| Shochiku Co., Ltd. | 1,250 | 144,729 |
| Shoei Foods Corp. | 4,600 | 166,967 |
| Showa Sangyo Co., Ltd. | 12,200 | 376,675 |
| Siix Corp. | 24,900 | 295,063 |
| Sinfonia Technology Co., Ltd. | 10,900 | 118,611 |
| SKY Perfect JSAT Holdings, Inc. | 68,800 | 293,706 |
| Skylark Holdings Co., Ltd. (b) | 46,500 | 663,218 |
| Sohgo Security Services Co., Ltd. | 13,900 | 647,667 |
| Sotetsu Holdings, Inc. | 17,600 | 434,341 |
| Square Enix Holdings Co., Ltd. | 10,700 | 621,700 |
| St. Marc Holdings Co., Ltd. | 7,900 | 112,600 |
| Starts Corp., Inc. | 10,400 | 241,904 |
| Sugi Holdings Co., Ltd. | 10,300 | 680,161 |
| Sumco Corp. | 46,200 | 704,636 |
| Sumitomo Bakelite Co., Ltd. | 12,600 | 356,616 |
| Sumitomo Dainippon Pharma Co., Ltd. | 37,100 | 434,849 |
| Sumitomo Mitsui Construction Co., Ltd. | 102,780 | 396,672 |
| Sumitomo Osaka Cement Co., Ltd. | 18,400 | 559,609 |
| Sumitomo Riko Co., Ltd. | 44,500 | 226,996 |
| Sumitomo Seika Chemicals Co., Ltd. | 6,100 | 194,184 |
| Sundrug Co., Ltd. | 22,900 | 850,318 |
| Suruga Bank Ltd. | 116,100 | 379,152 |
| Sushiro Global Holdings Ltd. | 12,200 | 331,187 |
| Swcc Showa Holdings Co., Ltd. | 10,000 | 111,308 |
| T-Gaia Corp. | 9,900 | 182,014 |
| Tachi-S Co., Ltd. | 41,100 | 415,259 |
| Tadano Ltd. | 59,300 | 453,858 |
| Taihei Dengyo Kaisha Ltd. | 7,200 | 155,564 |
| Taikisha Ltd. | 11,400 | 296,887 |
| Taisho Pharmaceutical Holdings Co., Ltd. | 8,900 | 535,498 |
| Taiyo Holdings Co., Ltd. | 3,200 | 167,529 |
| Taiyo Yuden Co., Ltd. | 27,800 | 1,028,236 |
| Takamatsu Construction Group Co., Ltd. | 7,400 | 151,765 |
| Takara Holdings, Inc. | 54,400 | 548,367 |
| Takara Standard Co., Ltd. | 22,700 | 297,705 |
| Takasago Thermal Engineering Co., Ltd. | 24,000 | 318,178 |
| Takeuchi Manufacturing Co., Ltd. | 13,300 | 289,846 |
| Takuma Co., Ltd. | 19,500 | 298,592 |
| Tamron Co., Ltd. | 7,300 | 108,959 |
| Tamura Corp. | 36,000 | 170,893 |
| TBS Holdings, Inc. | 13,000 | 200,752 |
| TechnoPro Holdings, Inc. | 3,600 | 223,911 |
| Tekken Corp. | 5,800 | 108,413 |
| The 77 Bank Ltd. | 17,000 | 237,738 |
| The Awa Bank Ltd. | 8,100 | 194,853 |
| The Bank of Kyoto Ltd. | 9,200 | 406,313 |
| The Chiba Bank Ltd. | 136,300 | 704,029 |
| The Chugoku Bank Ltd. | 37,800 | 327,468 |
| The Gunma Bank Ltd. | 134,600 | 427,024 |
| The Hachijuni Bank Ltd. | 113,900 | 420,641 |
| The Hokkoku Bank Ltd. | 6,500 | 184,969 |
| The Hyakugo Bank Ltd. | 49,500 | 151,585 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| The Hyakujushi Bank Ltd. | 9,000 | 143,305 |
| The Iyo Bank Ltd. | 63,600 | 399,148 |
| The Japan Steel Works Ltd. | 25,000 | 534,459 |
| The Japan Wool Textile Co., Ltd. | 23,500 | 228,282 |
| The Juroku Bank Ltd. | 10,700 | 196,269 |
| The Keiyo Bank Ltd. | 43,500 | 195,886 |
| The Kiyo Bank Ltd. | 13,100 | 195,749 |
| The Musashino Bank Ltd. | 12,700 | 188,295 |
| The Nanto Bank Ltd. | 8,100 | 143,729 |
| The Nisshin Oillio Group Ltd. | 13,400 | 385,182 |
| The Ogaki Kyoritsu Bank Ltd. | 9,000 | 200,775 |
| The Okinawa Electric Power Co., Inc. | 23,382 | 341,182 |
| The Pack Corp. | 3,700 | 103,968 |
| The San-in Godo Bank Ltd. | 43,600 | 219,433 |
| The Shiga Bank Ltd. | 9,700 | 209,480 |
| The Shizuoka Bank Ltd. | 101,600 | 683,336 |
| The Sumitomo Warehouse Co., Ltd. | 22,300 | 260,842 |
| THK Co., Ltd. | 29,200 | 775,111 |
| Toa Corp. | 13,300 | 237,447 |
| Toagosei Co., Ltd. | 50,600 | 535,731 |
| Tobishima Corp. | 11,000 | 111,751 |
| Toda Corp. | 92,400 | 527,813 |
| Toei Co., Ltd. | 1,200 | 177,070 |
| Toho Co., Ltd. | 17,900 | 708,855 |
| Toho Zinc Co., Ltd. * | 17,000 | 333,222 |
| Tokai Carbon Co., Ltd. | 42,400 | 481,289 |
| TOKAI Holdings Corp. | 38,600 | 382,354 |
| Tokai Rika Co., Ltd. | 43,800 | 686,383 |
| Tokai Tokyo Financial Holdings, Inc. | 100,000 | 257,471 |
| Token Corp. | 4,450 | 334,886 |
| Tokuyama Corp. | 27,900 | 621,798 |
| Tokyo Century Corp. | 7,700 | 377,519 |
| Tokyo Dome Corp. | 30,700 | 245,553 |
| Tokyo Ohka Kogyo Co., Ltd. | 7,500 | 444,073 |
| Tokyo Seimitsu Co., Ltd. | 9,500 | 320,544 |
| Tokyo Steel Manufacturing Co., Ltd. | 41,200 | 262,187 |
| Tokyo Tatemono Co., Ltd. | 47,000 | 540,556 |
| Tokyu Construction Co., Ltd. | 50,300 | 221,352 |
| TOMONY Holdings, Inc. | 42,500 | 128,107 |
| Tomy Co., Ltd. | 36,200 | 316,712 |
| Topcon Corp. | 35,000 | 348,933 |
| Toppan Forms Co., Ltd. | 27,000 | 259,057 |
| Topre Corp. | 33,800 | 339,750 |
| Topy Industries Ltd. * | 25,300 | 264,570 |
| Toshiba TEC Corp. | 8,100 | 324,305 |
| Totetsu Kogyo Co., Ltd. | 10,700 | 278,056 |
| Towa Pharmaceutical Co., Ltd. | 7,000 | 129,645 |
| Toyo Construction Co., Ltd. | 43,400 | 166,158 |
| Toyo Ink SC Holdings Co., Ltd. | 24,800 | 460,790 |
| Toyo Tire Corp. | 48,100 | 713,549 |
| Toyobo Co., Ltd. | 50,600 | 674,622 |
| Toyota Boshoku Corp. | 52,200 | 758,248 |
| TPR Co., Ltd. | 25,600 | 306,546 |
| Trancom Co., Ltd. | 2,700 | 194,005 |
| Transcosmos, Inc. | 10,300 | 280,984 |
| Trend Micro, Inc. | 12,300 | 688,986 |
| Trusco Nakayama Corp. | 13,900 | 358,464 |
| TSI Holdings Co., Ltd. | 73,800 | 173,207 |
| Tsubaki Nakashima Co., Ltd. | 17,300 | 127,955 |
| Tsubakimoto Chain Co. | 21,000 | 466,300 |
| Tsukishima Kikai Co., Ltd. | 11,200 | 133,488 |
| Tsumura & Co. | 14,800 | 434,400 |
| TV Asahi Holdings Corp. | 11,600 | 175,257 |
| UACJ Corp. | 24,530 | 388,581 |
| Uchida Yoko Co., Ltd. | 2,300 | 113,530 |
| Ulvac, Inc. | 14,200 | 520,138 |
| Unipres Corp. | 62,600 | 484,911 |
| United Arrows Ltd. | 16,300 | 221,344 |
| Security | Number
of Shares | Value ($) |
| United Super Markets Holdings, Inc. | 54,700 | 588,421 |
| Ushio, Inc. | 35,000 | 390,973 |
| USS Co., Ltd. | 23,100 | 422,512 |
| Valor Holdings Co., Ltd. | 30,400 | 748,903 |
| Vital KSK Holdings, Inc. | 31,700 | 285,263 |
| VT Holdings Co., Ltd. | 55,000 | 193,124 |
| Wacoal Holdings Corp. | 24,700 | 447,732 |
| Wacom Co., Ltd. | 36,000 | 236,664 |
| Warabeya Nichiyo Holdings Co., Ltd. | 18,400 | 263,207 |
| Welcia Holdings Co., Ltd. | 14,100 | 552,175 |
| World Co., Ltd. | 11,100 | 140,931 |
| Xebio Holdings Co., Ltd. | 27,700 | 180,891 |
| Yamabiko Corp. | 20,500 | 257,191 |
| Yamaguchi Financial Group, Inc. | 69,400 | 451,445 |
| Yamato Kogyo Co., Ltd. | 13,000 | 312,197 |
| Yamazen Corp. | 49,900 | 489,033 |
| Yaoko Co., Ltd. | 5,500 | 389,301 |
| Yellow Hat Ltd. | 13,600 | 223,207 |
| Yodogawa Steel Works Ltd. | 20,500 | 384,817 |
| Yokogawa Bridge Holdings Corp. | 10,400 | 184,085 |
| Yokohama Reito Co., Ltd. | 21,000 | 169,838 |
| Yondoshi Holdings, Inc. | 7,600 | 129,434 |
| Yoshinoya Holdings Co., Ltd. | 15,300 | 281,237 |
| Yuasa Trading Co., Ltd. | 13,200 | 376,053 |
| Zenkoku Hosho Co., Ltd. | 4,600 | 181,414 |
| Zensho Holdings Co., Ltd. | 18,500 | 432,328 |
| Zeon Corp. | 56,600 | 688,620 |
| ZERIA Pharmaceutical Co., Ltd. | 7,900 | 140,236 |
| Zojirushi Corp. | 10,500 | 187,586 |
| ZOZO, Inc. | 8,400 | 213,090 |
| | | 198,552,208 |
| |
| Luxembourg 0.0% |
| Espirito Santo Financial Group S.A. *(a) | 69,773 | — |
| |
| Netherlands 1.6% |
| Accell Group N.V. * | 7,609 | 205,474 |
| Adyen N.V. * | 102 | 171,436 |
| AMG Advanced Metallurgical Group N.V. | 9,220 | 165,968 |
| Arcadis N.V. * | 28,206 | 655,422 |
| ASM International N.V. | 4,241 | 605,745 |
| BE Semiconductor Industries N.V. | 8,845 | 356,398 |
| Brunel International N.V. * | 20,214 | 143,372 |
| Corbion N.V. | 13,232 | 600,966 |
| Eurocommercial Properties N.V. CVA | 16,522 | 180,355 |
| Flow Traders | 3,597 | 117,901 |
| ForFarmers N.V. | 33,361 | 195,435 |
| Fugro N.V. CVA *(b) | 74,680 | 285,000 |
| GrandVision N.V. * | 7,268 | 201,883 |
| IMCD N.V. | 5,144 | 595,372 |
| Intertrust N.V. | 16,139 | 250,234 |
| Koninklijke BAM Groep N.V * | 248,727 | 308,236 |
| Koninklijke Vopak N.V. | 11,202 | 582,261 |
| OCI N.V. * | 17,895 | 214,235 |
| PostNL N.V. * | 257,025 | 852,481 |
| Prosus N.V. * | 2,950 | 294,516 |
| SBM Offshore N.V. | 45,060 | 728,178 |
| Sligro Food Group N.V. * | 27,108 | 387,817 |
| TKH Group N.V. | 11,688 | 376,339 |
| TomTom N.V. * | 17,851 | 119,939 |
| Van Lanschot Kempen N.V. CVA | 7,776 | 155,639 |
| Wereldhave N.V. (b) | 23,448 | 217,893 |
| | | 8,968,495 |
| |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| New Zealand 1.0% |
| Air New Zealand Ltd. * | 509,334 | 477,666 |
| Auckland International Airport Ltd. * | 77,365 | 357,881 |
| Chorus Ltd. | 98,574 | 548,147 |
| EBOS Group Ltd. | 30,566 | 520,277 |
| Fisher & Paykel Healthcare Corp., Ltd. | 24,203 | 559,921 |
| Genesis Energy Ltd. | 165,097 | 338,369 |
| Infratil Ltd. | 98,469 | 352,616 |
| Kiwi Property Group Ltd. | 251,081 | 204,110 |
| Mercury NZ Ltd. | 125,555 | 443,882 |
| Meridian Energy Ltd. | 192,843 | 675,881 |
| Ryman Healthcare Ltd. | 12,641 | 116,981 |
| SKY Network Television Ltd. * | 3,189,644 | 313,856 |
| SKYCITY Entertainment Group Ltd. | 222,746 | 412,154 |
| Z Energy Ltd. | 236,853 | 442,621 |
| | | 5,764,362 |
| |
| Norway 1.4% |
| Aker A.S.A., A Shares | 10,193 | 410,371 |
| Aker BP A.S.A. | 16,464 | 256,399 |
| Aker Solutions A.S.A. * | 293,491 | 287,179 |
| Austevoll Seafood A.S.A. | 37,526 | 255,608 |
| Bakkafrost P/F * | 4,439 | 253,940 |
| Bonheur A.S.A. | 8,662 | 183,251 |
| BW Energy Ltd. * | 2,956 | 4,582 |
| BW LPG Ltd. | 45,469 | 199,064 |
| BW Offshore Ltd. | 41,218 | 99,190 |
| DNO A.S.A. *(b) | 244,223 | 101,566 |
| Elkem A.S.A. | 119,604 | 254,384 |
| Entra A.S.A. | 17,146 | 224,150 |
| Europris A.S.A. | 47,758 | 248,238 |
| Frontline Ltd/Bermuda | 14,923 | 82,820 |
| Gjensidige Forsikring A.S.A. | 28,094 | 535,331 |
| Kongsberg Gruppen A.S.A. | 15,508 | 251,995 |
| Leroy Seafood Group A.S.A. | 62,391 | 293,063 |
| Norwegian Finans Holding A.S.A. * | 16,079 | 115,867 |
| PGS A.S.A. * | 732,487 | 182,158 |
| Salmar A.S.A. * | 8,343 | 423,661 |
| Schibsted A.S.A., B Shares * | 7,753 | 279,750 |
| Schibsted A.S.A., Class A * | 6,603 | 269,917 |
| Sparebank 1 Nord Norge | 35,693 | 238,919 |
| SpareBank 1 SMN | 34,264 | 295,578 |
| SpareBank 1 SR Bank A.S.A. * | 36,420 | 290,448 |
| Storebrand A.S.A. * | 85,462 | 451,013 |
| TGS NOPEC Geophysical Co., A.S.A. | 32,362 | 298,558 |
| Tomra Systems A.S.A. | 7,201 | 290,824 |
| Veidekke A.S.A. * | 36,375 | 419,219 |
| XXL A.S.A. * | 123,357 | 281,939 |
| | | 7,778,982 |
| |
| Poland 0.9% |
| Alior Bank S.A. * | 62,190 | 178,458 |
| Asseco Poland S.A. | 34,682 | 562,099 |
| Bank Handlowy w Warszawie S.A. * | 13,167 | 91,987 |
| Bank Millennium S.A. * | 179,924 | 98,406 |
| CCC S.A. * | 9,172 | 89,927 |
| Cyfrowy Polsat S.A. | 71,029 | 443,356 |
| Enea S.A. * | 284,329 | 325,179 |
| Energa S.A. * | 186,612 | 391,505 |
| Eurocash S.A. * | 49,947 | 146,737 |
| Grupa Azoty S.A. * | 49,089 | 254,687 |
| Jastrzebska Spolka Weglowa S.A. * | 70,340 | 270,924 |
| LPP S.A. * | 126 | 167,119 |
| mBank S.A. * | 2,792 | 81,651 |
| Orange Polska S.A. * | 371,676 | 571,326 |
| Security | Number
of Shares | Value ($) |
| PLAY Communications S.A. | 51,097 | 501,318 |
| Santander Bank Polska S.A. * | 6,624 | 206,193 |
| Tauron Polska Energia S.A. * | 2,046,340 | 899,383 |
| | | 5,280,255 |
| |
| Portugal 0.3% |
| Banco Espirito Santo S.A. *(a) | 320,558 | — |
| CTT-Correios de Portugal S.A. * | 96,515 | 236,146 |
| EDP Renovaveis S.A. | 14,341 | 272,632 |
| Mota-Engil SGPS, S.A. *(b) | 108,858 | 139,182 |
| NOS SGPS, S.A. | 88,731 | 304,948 |
| Redes Energeticas Nacionais SGPS, S.A. | 105,825 | 277,958 |
| Sonae SGPS, S.A. | 608,374 | 358,594 |
| The Navigator Co., S.A. * | 136,135 | 299,947 |
| | | 1,889,407 |
| |
| Republic of Korea 7.0% |
| AK Holdings, Inc. | 8,951 | 135,780 |
| AMOREPACIFIC Group | 10,173 | 393,509 |
| Asiana Airlines, Inc. * | 79,875 | 254,797 |
| BGF retail Co., Ltd. | 2,275 | 236,574 |
| Celltrion, Inc. * | 1,739 | 371,318 |
| Cheil Worldwide, Inc. | 20,638 | 381,936 |
| CJ ENM Co., Ltd. | 3,133 | 366,056 |
| CJ Logistics Corp. * | 2,395 | 338,020 |
| Com2uS Corp. | 2,100 | 207,109 |
| Daesang Corp. | 13,517 | 287,466 |
| Daewoo Engineering & Construction Co., Ltd. * | 145,168 | 386,272 |
| Daewoo Shipbuilding & Marine Engineering Co., Ltd. * | 26,054 | 494,922 |
| Daou Technology Inc. | 7,256 | 120,491 |
| DB HiTek Co., Ltd. | 8,767 | 248,916 |
| DGB Financial Group, Inc. | 110,270 | 605,547 |
| Dongkuk Steel Mill Co., Ltd. * | 131,037 | 702,928 |
| Doosan Bobcat, Inc. | 11,364 | 290,399 |
| Doosan Co., Ltd. | 8,867 | 366,659 |
| Doosan Infracore Co., Ltd. * | 124,413 | 920,521 |
| Fila Holdings Corp. | 6,838 | 233,325 |
| Green Cross Corp. | 1,250 | 332,119 |
| Green Cross Holdings Corp. | 8,101 | 161,177 |
| GS Engineering & Construction Corp. | 35,764 | 848,583 |
| GS Home Shopping, Inc. | 1,819 | 223,205 |
| GS Retail Co., Ltd. | 13,275 | 376,969 |
| Handsome Co., Ltd. | 4,890 | 120,902 |
| Hanjin Transportation Co., Ltd. | 7,288 | 304,236 |
| Hanon Systems | 46,180 | 457,928 |
| Hansol Paper Co., Ltd. | 16,110 | 194,387 |
| Hanssem Co., Ltd. | 2,974 | 248,644 |
| Hanwha Aerospace Co., Ltd. * | 14,388 | 321,372 |
| Hanwha Life Insurance Co., Ltd. | 512,471 | 698,675 |
| Harim Holdings Co., Ltd. | 41,273 | 237,129 |
| HDC Holdings Co., Ltd. | 23,630 | 208,981 |
| Hite Jinro Co., Ltd. | 7,479 | 222,087 |
| HMM Co., Ltd. * | 102,895 | 819,937 |
| Hotel Shilla Co., Ltd. | 6,164 | 406,328 |
| Huchems Fine Chemical Corp. | 10,413 | 211,084 |
| Hyosung Corp. | 4,058 | 266,134 |
| Hyundai Construction Equipment Co., Ltd. * | 21,148 | 467,870 |
| Hyundai Corp. | 20,006 | 244,748 |
| Hyundai Department Store Co., Ltd. | 8,575 | 450,365 |
| Hyundai Electric & Energy System Co., Ltd. * | 18,344 | 244,248 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Hyundai Elevator Co., Ltd. | 5,556 | 183,181 |
| Hyundai Greenfood Co., Ltd. | 38,092 | 245,014 |
| Hyundai Home Shopping Network Corp. | 3,022 | 188,957 |
| Hyundai Mipo Dockyard Co., Ltd. | 6,528 | 162,451 |
| Hyundai Rotem Co., Ltd. * | 13,814 | 182,536 |
| Hyundai Wia Corp. | 23,565 | 875,088 |
| iMarketKorea, Inc. | 30,826 | 232,083 |
| IS Dongseo Co., Ltd. | 7,450 | 251,693 |
| JB Financial Group Co., Ltd. | 78,601 | 355,109 |
| Kakao Corp. | 1,373 | 400,354 |
| Kangwon Land, Inc. | 26,931 | 502,516 |
| KCC Corp. | 3,202 | 434,539 |
| KEPCO Plant Service & Engineering Co., Ltd. | 9,009 | 218,906 |
| Kolon Corp. | 12,007 | 215,779 |
| Kolon Industries, Inc. | 19,024 | 598,680 |
| Korea Aerospace Industries Ltd. | 14,578 | 282,287 |
| Korea Electric Terminal Co., Ltd. | 4,256 | 173,327 |
| Korea Investment Holdings Co., Ltd. | 6,984 | 426,596 |
| Korea Petrochemical Ind Co., Ltd. | 3,386 | 582,091 |
| Korean Reinsurance Co. | 60,282 | 395,422 |
| Kumho Petrochemical Co., Ltd. | 8,672 | 1,025,794 |
| Kumho Tire Co., Inc. * | 76,876 | 241,552 |
| LF Corp. | 23,812 | 308,433 |
| LG Hausys Ltd. | 8,008 | 468,531 |
| LG HelloVision Co., Ltd. | 40,629 | 136,680 |
| LG Innotek Co., Ltd. | 6,312 | 855,696 |
| LG International Corp. | 55,284 | 757,978 |
| Lotte Chilsung Beverage Co., Ltd. | 1,758 | 133,860 |
| LOTTE Fine Chemical Co., Ltd. | 7,834 | 336,488 |
| LOTTE Himart Co., Ltd. | 20,947 | 569,101 |
| LS Corp. | 21,998 | 1,007,717 |
| LS Electric Co., Ltd. | 7,788 | 341,970 |
| Mando Corp. | 25,128 | 798,682 |
| Meritz Financial Group, Inc. | 22,146 | 184,421 |
| Meritz Fire & Marine Insurance Co., Ltd. | 43,455 | 533,154 |
| Meritz Securities Co., Ltd. | 76,544 | 223,449 |
| Mirae Asset Daewoo Co., Ltd. | 53,392 | 397,792 |
| NCSoft Corp. | 969 | 665,784 |
| Nexen Tire Corp. | 34,614 | 160,355 |
| NH Investment & Securities Co., Ltd. | 26,333 | 223,100 |
| NongShim Co., Ltd. | 1,386 | 352,761 |
| OCI Co., Ltd. * | 13,788 | 759,146 |
| Orion Corp/Republic of Korea | 3,514 | 336,707 |
| Ottogi Corp. | 400 | 187,520 |
| Pan Ocean Co., Ltd. * | 74,709 | 237,868 |
| Partron Co., Ltd. | 20,347 | 175,159 |
| Poongsan Corp. | 23,485 | 510,845 |
| S&T Motiv Co., Ltd. | 3,055 | 136,543 |
| S-1 Corp. | 4,929 | 354,245 |
| Samsung Card Co., Ltd. | 13,400 | 347,764 |
| Samsung Engineering Co., Ltd. * | 30,075 | 314,476 |
| Samsung Securities Co., Ltd. | 11,119 | 316,728 |
| Seoul Semiconductor Co., Ltd. | 15,734 | 243,457 |
| Seoyon E-Hwa Co., Ltd. | 49,509 | 193,669 |
| SFA Engineering Corp. | 4,293 | 138,546 |
| Shinsegae, Inc. | 2,558 | 471,818 |
| SK Chemicals Co., Ltd. | 2,512 | 770,798 |
| SK Gas Ltd. | 4,667 | 434,768 |
| SKC Co., Ltd. | 6,048 | 394,680 |
| Sungwoo Hitech Co., Ltd. | 115,463 | 362,946 |
| Taekwang Industrial Co., Ltd. | 631 | 397,221 |
| Taeyoung Engineering & Construction Co., Ltd. | 6,513 | 57,704 |
| TY Holdings Co.,Ltd. * | 6,541 | 117,308 |
| WONIK IPS Co., Ltd. * | 6,744 | 192,399 |
| Security | Number
of Shares | Value ($) |
| Youngone Corp. | 12,948 | 325,680 |
| Yuhan Corp. | 6,584 | 346,484 |
| | | 40,164,039 |
| |
| Singapore 1.5% |
| Ascendas Real Estate Investment Trust | 231,650 | 488,809 |
| CapitaLand Mall Trust | 338,901 | 429,577 |
| City Developments Ltd. | 106,400 | 494,108 |
| Genting Singapore Ltd. | 1,219,600 | 575,914 |
| Golden Agri-Resources Ltd. | 6,707,900 | 693,458 |
| Keppel Infrastructure Trust | 450,800 | 180,157 |
| Mapletree Commercial Trust | 129,892 | 163,778 |
| Mapletree Industrial Trust | 101,444 | 226,083 |
| Mapletree Logistics Trust | 148,116 | 211,583 |
| Mapletree North Asia Commercial Trust | 266,562 | 170,053 |
| SATS Ltd. | 150,249 | 327,668 |
| Sembcorp Industries Ltd. | 615,500 | 712,415 |
| Sembcorp Marine Ltd. * | 3,897,560 | 342,695 |
| Singapore Exchange Ltd. | 74,000 | 469,334 |
| Singapore Post Ltd. | 488,100 | 237,978 |
| Singapore Press Holdings Ltd. | 639,700 | 463,402 |
| Singapore Technologies Engineering Ltd. | 272,400 | 696,341 |
| StarHub Ltd. | 304,400 | 260,721 |
| Suntec Real Estate Investment Trust | 177,600 | 174,413 |
| UOL Group Ltd. | 72,601 | 330,929 |
| Venture Corp., Ltd. | 66,500 | 937,435 |
| | | 8,586,851 |
| |
| Spain 1.3% |
| Abengoa S.A., B Shares *(a) | 66,135,341 | 358,164 |
| Almirall S.A. | 13,488 | 144,267 |
| Applus Services S.A. * | 45,487 | 356,549 |
| Caja de Ahorros del Mediterraneo *(a) | 5,382 | — |
| Cellnex Telecom S.A. | 4,864 | 312,225 |
| Cia de Distribucion Integral Logista Holdings S.A. | 15,148 | 255,750 |
| Cie Automotive S.A. | 12,412 | 242,909 |
| Construcciones y Auxiliar de Ferrocarriles S.A. * | 4,546 | 144,010 |
| Distribuidora Internacional de Alimentacion S.A. * | 2,016,305 | 264,652 |
| Ebro Foods S.A. | 23,352 | 522,725 |
| Ence Energia y Celulosa S.A. *(b) | 47,444 | 105,973 |
| Ercros S.A. | 47,066 | 97,679 |
| Euskaltel S.A. | 20,658 | 196,565 |
| FAES FARMA S.A. | 36,102 | 136,053 |
| Gestamp Automocion S.A. | 118,522 | 362,439 |
| Indra Sistemas S.A. * | 18,286 | 109,664 |
| Inmobiliaria Colonial Socimi S.A. | 16,709 | 118,945 |
| Liberbank S.A. * | 605,396 | 162,000 |
| Mediaset Espana Comunicacion S.A. * | 116,710 | 390,187 |
| Melia Hotels International S.A. * | 50,109 | 185,713 |
| Merlin Properties Socimi S.A. | 26,893 | 181,018 |
| Obrascon Huarte Lain S.A. *(b) | 321,544 | 216,253 |
| Prosegur Cash S.A. | 141,872 | 109,758 |
| Prosegur Cia de Seguridad S.A. | 144,947 | 332,010 |
| Sacyr S.A. | 119,368 | 202,998 |
| Siemens Gamesa Renewable Energy S.A. | 27,717 | 786,589 |
| Tecnicas Reunidas S.A. * | 11,796 | 94,593 |
| Unicaja Banco S.A. * | 676,553 | 433,213 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Viscofan S.A. | 7,460 | 503,486 |
| Zardoya Otis S.A. | 29,196 | 178,357 |
| | | 7,504,744 |
| |
| Sweden 3.9% |
| AAK AB * | 24,999 | 486,535 |
| AddTech AB, B Shares | 21,992 | 243,035 |
| AF POYRY AB * | 14,647 | 334,691 |
| Arjo AB, B Shares | 44,788 | 318,354 |
| Attendo AB * | 38,446 | 176,279 |
| Axfood AB | 27,121 | 630,378 |
| Beijer Ref AB | 3,349 | 92,723 |
| Betsson AB * | 44,250 | 337,163 |
| Bilia AB, A Shares * | 34,541 | 459,450 |
| BillerudKorsnas AB | 60,629 | 947,090 |
| Bonava AB, B Shares * | 43,307 | 336,550 |
| Bravida Holding AB | 37,761 | 435,815 |
| Castellum AB | 24,355 | 507,087 |
| Clas Ohlson AB, B Shares * | 18,765 | 166,038 |
| Cloetta AB, B Shares * | 60,360 | 141,871 |
| Concentric AB * | 7,138 | 118,239 |
| Coor Service Management Holding AB * | 27,145 | 174,417 |
| Dometic Group AB * | 55,991 | 605,233 |
| Elekta AB, B Shares | 34,880 | 407,956 |
| Fabege AB | 16,836 | 212,586 |
| Fastighets AB Balder, B Shares * | 2,861 | 134,649 |
| Getinge AB, B Shares | 38,496 | 753,751 |
| Granges AB * | 29,939 | 270,054 |
| Hexpol AB * | 62,497 | 550,434 |
| Holmen AB, B Shares | 16,859 | 638,441 |
| Industrivarden AB, A Shares * | 22,822 | 613,084 |
| Industrivarden AB, C Shares * | 17,728 | 452,669 |
| Indutrade AB * | 9,395 | 475,659 |
| Intrum AB (b) | 15,132 | 369,780 |
| Inwido AB * | 22,281 | 235,776 |
| JM AB | 25,154 | 726,444 |
| Kinnevik AB, B Shares | 29,562 | 1,210,532 |
| Kungsleden AB | 23,569 | 200,002 |
| LE Lundbergfortagen AB, B Shares * | 10,544 | 473,910 |
| Lifco AB, B Shares | 3,143 | 230,073 |
| Lindab International AB | 18,594 | 287,046 |
| Loomis AB * | 23,364 | 521,715 |
| Lundin Energy AB | 13,472 | 257,542 |
| Mekonomen AB * | 19,951 | 193,474 |
| Modern Times Group MTG AB, B Shares * | 14,254 | 189,842 |
| NCC AB, B Shares | 34,718 | 553,315 |
| Nibe Industrier AB, B Shares * | 18,791 | 452,465 |
| Nobia AB * | 62,725 | 378,069 |
| Nolato AB, B Shares * | 2,466 | 205,112 |
| Nordic Entertainment Group AB, B Shares * | 7,718 | 275,516 |
| Pandox AB * | 13,716 | 136,934 |
| Peab AB * | 79,585 | 736,559 |
| Ratos AB, B Shares | 149,247 | 543,757 |
| Resurs Holding AB | 26,169 | 119,633 |
| Saab AB, B Shares * | 19,644 | 450,646 |
| SAS AB *(b) | 1,122,753 | 123,399 |
| Scandic Hotels Group AB * | 63,809 | 161,868 |
| Svenska Cellulosa AB, S.C.A., B Shares * | 73,856 | 999,014 |
| Sweco AB, B Shares | 6,554 | 329,798 |
| Swedish Orphan Biovitrum AB * | 5,864 | 101,131 |
| Thule Group AB * | 12,350 | 404,074 |
| Security | Number
of Shares | Value ($) |
| Wallenstam AB, B Shares | 12,385 | 164,176 |
| Wihlborgs Fastigheter AB | 11,330 | 204,217 |
| | | 22,256,050 |
| |
| Switzerland 3.4% |
| Allreal Holding AG | 2,053 | 434,824 |
| ALSO Holding AG * | 1,161 | 271,635 |
| ams AG * | 15,540 | 332,737 |
| Arbonia AG * | 16,732 | 185,770 |
| Aryzta AG * | 891,611 | 447,523 |
| Autoneum Holding AG * | 2,638 | 326,575 |
| Banque Cantonale Vaudoise | 3,213 | 311,340 |
| Barry Callebaut AG | 364 | 751,529 |
| Belimo Holding AG | 34 | 252,848 |
| BKW AG | 3,699 | 367,439 |
| Bobst Group S.A. | 2,607 | 125,437 |
| Bucher Industries AG | 1,669 | 643,436 |
| Burckhardt Compression Holding AG | 691 | 173,007 |
| Cembra Money Bank AG | 3,654 | 405,973 |
| Conzzeta AG | 282 | 284,250 |
| Daetwyler Holding AG | 1,301 | 291,059 |
| dormakaba Holding AG | 484 | 222,540 |
| Dufry AG *(b) | 17,991 | 679,357 |
| Emmi AG | 388 | 366,505 |
| EMS-Chemie Holding AG | 712 | 626,260 |
| Flughafen Zuerich AG * | 3,249 | 438,463 |
| Forbo Holding AG | 175 | 267,941 |
| Galenica AG | 10,404 | 656,096 |
| GAM Holding AG * | 198,624 | 321,014 |
| Helvetia Holding AG | 6,849 | 537,052 |
| Huber & Suhner AG | 4,035 | 290,984 |
| Implenia AG | 8,268 | 165,833 |
| Ina Invest Holding AG * | 1,821 | 33,840 |
| Inficon Holding AG | 215 | 157,864 |
| Komax Holding AG * | 842 | 152,508 |
| Landis+Gyr Group AG * | 5,762 | 321,804 |
| Logitech International S.A. | 13,628 | 1,146,471 |
| Mobimo Holding AG * | 842 | 243,325 |
| OC Oerlikon Corp. AG | 54,606 | 380,106 |
| Partners Group Holding AG | 847 | 762,559 |
| PSP Swiss Property AG | 2,544 | 307,636 |
| Rieter Holding AG | 1,799 | 154,918 |
| Schweiter Technologies AG | 231 | 315,494 |
| SFS Group AG | 3,655 | 341,175 |
| Siegfried Holding AG * | 454 | 287,431 |
| SIG Combibloc Group AG * | 26,138 | 537,627 |
| St. Galler Kantonalbank AG | 240 | 101,279 |
| Stadler Rail AG *(b) | 3,447 | 137,105 |
| Straumann Holding AG | 380 | 396,664 |
| Sulzer AG | 5,836 | 427,150 |
| Sunrise Communications Group AG * | 8,238 | 991,142 |
| Tecan Group AG | 683 | 324,103 |
| Temenos AG | 1,927 | 207,098 |
| u-blox Holding AG * | 2,058 | 103,456 |
| Valiant Holding AG | 2,436 | 195,440 |
| Valora Holding AG * | 1,919 | 273,949 |
| VAT Group AG | 1,797 | 337,144 |
| Vetropack Holding AG * | 1,866 | 104,085 |
| Vifor Pharma AG | 4,697 | 528,627 |
| Vontobel Holding AG | 3,697 | 226,883 |
| Zur Rose Group AG * | 631 | 175,573 |
| | | 19,849,883 |
| |
| United Kingdom 9.7% |
| 888 Holdings plc | 80,681 | 280,374 |
| AA plc * | 1,123,114 | 331,510 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| AG Barr plc * | 17,202 | 105,081 |
| Airtel Africa plc | 257,044 | 205,477 |
| Ascential plc * | 43,654 | 156,337 |
| Ashmore Group plc | 42,267 | 195,550 |
| Auto Trader Group plc | 37,010 | 278,257 |
| Avast plc | 17,664 | 108,550 |
| B&M European Value Retail S.A. | 140,792 | 883,598 |
| Bank of Georgia Group plc * | 12,349 | 143,607 |
| Beazley plc | 94,775 | 361,308 |
| Biffa plc | 66,624 | 186,583 |
| Big Yellow Group plc | 11,414 | 162,660 |
| Bodycote plc | 62,404 | 526,243 |
| Brewin Dolphin Holdings plc | 54,374 | 171,147 |
| Britvic plc | 50,858 | 485,980 |
| C&C Group plc * | 86,055 | 180,300 |
| Capita plc * | 1,008,971 | 322,253 |
| Card Factory plc | 489,072 | 203,820 |
| Centamin plc | 254,538 | 409,360 |
| Cineworld Group plc (b) | 427,627 | 158,159 |
| Clarkson plc | 4,850 | 126,323 |
| Close Brothers Group plc | 39,742 | 554,169 |
| Coats Group plc * | 348,497 | 256,547 |
| Computacenter plc | 19,673 | 581,079 |
| ConvaTec Group plc | 194,151 | 454,494 |
| Costain Group plc *(b) | 204,076 | 86,320 |
| Countryside Properties plc | 78,450 | 342,641 |
| Cranswick plc | 12,474 | 519,979 |
| Crest Nicholson Holdings plc * | 152,787 | 434,485 |
| Daily Mail & General Trust plc | 51,278 | 449,071 |
| Dechra Pharmaceuticals plc | 4,197 | 189,863 |
| Derwent London plc | 7,034 | 242,226 |
| DFS Furniture plc | 106,211 | 283,448 |
| Dignity plc * | 31,976 | 217,481 |
| Diploma plc | 10,852 | 312,488 |
| Domino's Pizza Group plc | 48,128 | 206,637 |
| Dunelm Group plc | 17,007 | 287,519 |
| Electrocomponents plc | 71,605 | 628,678 |
| Elementis plc * | 301,763 | 290,855 |
| Equiniti Group plc * | 90,352 | 120,872 |
| Essentra plc * | 107,384 | 342,699 |
| Ferrexpo plc | 149,238 | 368,291 |
| Forterra plc * | 47,572 | 111,303 |
| Frasers Group plc * | 85,355 | 414,071 |
| Fresnillo plc | 33,945 | 511,976 |
| Games Workshop Group plc | 2,009 | 270,083 |
| Genus plc | 4,797 | 254,935 |
| Grafton Group plc * | 85,219 | 740,850 |
| Grainger plc | 60,338 | 218,594 |
| Great Portland Estates plc | 29,527 | 220,745 |
| Greencore Group plc | 207,569 | 243,009 |
| Greggs plc * | 21,763 | 363,461 |
| GVC Holdings plc * | 36,199 | 453,466 |
| Halfords Group plc | 232,336 | 723,884 |
| Halma plc | 22,259 | 683,075 |
| Hammerson plc *(b) | 1,480,763 | 312,689 |
| Hargreaves Lansdown plc | 15,482 | 271,803 |
| Hastings Group Holdings plc | 49,125 | 158,736 |
| Hikma Pharmaceuticals plc | 16,741 | 544,308 |
| Hill & Smith Holdings plc | 14,724 | 228,988 |
| Hiscox Ltd. * | 64,561 | 690,042 |
| HomeServe plc | 24,240 | 347,393 |
| Howden Joinery Group plc * | 102,625 | 847,256 |
| Hunting plc | 91,965 | 166,201 |
| Ibstock plc * | 113,889 | 236,853 |
| IG Group Holdings plc | 79,130 | 780,895 |
| Indivior plc * | 572,096 | 817,489 |
| Intermediate Capital Group plc | 36,345 | 552,056 |
| Intu Properties plc *(a)(b) | 4,024,942 | 27,782 |
| Security | Number
of Shares | Value ($) |
| IWG plc * | 145,011 | 475,664 |
| J.D. Wetherspoon plc * | 21,849 | 244,216 |
| JD Sports Fashion plc | 37,307 | 358,911 |
| John Laing Group plc | 69,538 | 253,776 |
| Jupiter Fund Management plc | 163,330 | 491,321 |
| Just Group plc * | 578,081 | 315,575 |
| KAZ Minerals plc | 40,727 | 332,296 |
| Keller Group plc | 55,462 | 365,003 |
| Kier Group plc *(b) | 497,588 | 304,263 |
| Lancashire Holdings Ltd. | 52,777 | 435,542 |
| Man Group plc | 420,935 | 587,400 |
| Mapeley Ltd. *(a) | 2,199 | — |
| Marshalls plc * | 23,973 | 207,698 |
| Marston's plc | 454,311 | 284,367 |
| McCarthy & Stone plc * | 292,151 | 444,337 |
| Mediclinic International plc | 109,492 | 400,926 |
| Melrose Industries plc * | 420,204 | 651,849 |
| Mitchells & Butlers plc * | 143,918 | 292,360 |
| Moneysupermarket.com Group plc | 83,298 | 263,091 |
| Morgan Advanced Materials plc * | 104,577 | 338,856 |
| Morgan Sindall Group plc * | 18,615 | 265,978 |
| National Express Group plc * | 230,466 | 447,085 |
| Ocado Group plc * | 9,531 | 281,068 |
| OneSavings Bank plc * | 50,555 | 201,661 |
| Pagegroup plc * | 108,375 | 502,076 |
| Paragon Banking Group plc | 56,297 | 216,019 |
| PayPoint plc | 16,397 | 107,061 |
| Petra Diamonds Ltd. *(b) | 5,541,159 | 108,978 |
| Petrofac Ltd. * | 209,465 | 322,697 |
| Petropavlovsk plc * | 1,131,377 | 391,869 |
| Pets at Home Group plc | 141,556 | 710,892 |
| Phoenix Group Holdings plc | 82,373 | 707,357 |
| Playtech plc * | 155,171 | 684,208 |
| Plus500 Ltd. | 31,180 | 597,555 |
| Polymetal International plc | 36,911 | 784,525 |
| Polypipe Group plc * | 34,459 | 205,176 |
| Premier Oil plc *(b) | 1,161,790 | 171,200 |
| Provident Financial plc * | 220,289 | 663,362 |
| PZ Cussons plc | 65,116 | 195,461 |
| QinetiQ Group plc | 128,816 | 394,539 |
| Quilter plc | 161,655 | 256,653 |
| Rank Group plc | 58,749 | 68,586 |
| Rathbone Brothers plc | 7,132 | 134,248 |
| Redde Northgate plc | 166,314 | 382,599 |
| Redrow plc * | 66,615 | 359,163 |
| Renishaw plc * | 3,815 | 276,784 |
| Rhi Magnesita N.V. | 5,741 | 190,489 |
| Rightmove plc * | 32,832 | 262,760 |
| Rotork plc | 124,271 | 452,776 |
| Safestore Holdings plc | 15,390 | 160,210 |
| Saga plc * | 160,943 | 288,091 |
| Savills plc * | 34,790 | 374,698 |
| Schroders plc | 16,290 | 551,864 |
| Segro plc | 43,244 | 505,293 |
| Senior plc * | 453,913 | 322,248 |
| Serco Group plc * | 186,845 | 312,290 |
| SIG plc * | 1,104,385 | 343,520 |
| Signature Aviation plc | 224,176 | 686,467 |
| Softcat plc | 6,843 | 99,755 |
| Spectris plc | 23,655 | 759,214 |
| Speedy Hire plc | 202,244 | 138,180 |
| Spirax-Sarco Engineering plc | 5,131 | 750,119 |
| Spire Healthcare Group plc | 224,939 | 346,794 |
| Spirent Communications plc | 84,402 | 316,865 |
| SSP Group plc | 124,765 | 302,120 |
| St. James's Place plc | 59,798 | 696,924 |
| St. Modwen Properties plc | 41,934 | 180,107 |
| Stagecoach Group plc | 470,332 | 231,612 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Sthree plc * | 49,766 | 158,601 |
| Superdry plc | 121,829 | 284,215 |
| Synthomer plc | 86,325 | 421,840 |
| TalkTalk Telecom Group plc | 271,458 | 338,327 |
| Ted Baker plc * | 87,426 | 115,865 |
| Telecom Plus plc | 13,653 | 235,163 |
| The Go-Ahead Group plc * | 37,588 | 285,184 |
| The Restaurant Group plc * | 326,070 | 171,082 |
| The Unite Group plc * | 13,659 | 147,404 |
| TI Fluid Systems plc * | 98,622 | 245,308 |
| TP ICAP plc | 77,232 | 191,248 |
| Tullow Oil plc *(b) | 463,616 | 121,626 |
| Tyman plc * | 80,415 | 278,154 |
| UDG Healthcare plc | 42,246 | 397,071 |
| Ultra Electronics Holdings plc | 13,086 | 319,284 |
| Vesuvius plc | 102,145 | 528,353 |
| Victrex plc | 15,468 | 369,612 |
| Vistry Group plc * | 62,772 | 442,919 |
| WH Smith plc | 32,464 | 419,657 |
| William Hill plc * | 388,374 | 1,379,301 |
| Wizz Air Holdings plc * | 4,187 | 173,336 |
| Workspace Group plc | 11,571 | 92,500 |
| | | 56,216,959 |
| Total Common Stock |
| (Cost $519,972,497) | | 572,014,002 |
|
| Preferred Stock 0.4% of net assets |
| |
| Germany 0.4% |
| Draegerwerk AG & Co. KGaA | 6,115 | 491,333 |
| Jungheinrich AG | 18,427 | 669,952 |
| Sartorius AG | 803 | 339,894 |
| Schaeffler AG | 52,006 | 316,682 |
| Sixt SE | 4,427 | 209,605 |
| Total Preferred Stock |
| (Cost $1,579,320) | | 2,027,466 |
|
| Rights 0.0% of net assets |
| |
| Italy 0.0% |
Banca Monte dei Paschi di Siena S.p.A.
expires 11/21/20 *(a) | 186,214 | — |
Cattolica Assicurazioni SC
expires 11/26/20 *(a) | 70,820 | — |
| | | — |
| |
| Singapore 0.0% |
Mapletree Logistic Trust
expires 12/11/20 *(a) | 2,814 | — |
| Total Rights |
| (Cost $—) | | — |
|
| Security | Number
of Shares | Value ($) |
| Other Investment Company 1.5% of net assets |
| |
| United States 1.5% |
| Securities Lending Collateral 1.5% |
| Wells Fargo Government Money Market Fund, Select Class 0.04% (c) | 8,614,376 | 8,614,376 |
| Total Other Investment Company |
| (Cost $8,614,376) | | 8,614,376 |
Security
Rate, Maturity Date | Face Amount
Local Currency | Value ($) |
| Short-Term Investments 0.1% of net assets |
| |
| Time Deposits 0.1% |
| Australia & New Zealand Banking Group Ltd. |
| Australian Dollar | | |
| (0.02%), 11/02/20 (d)(e) | 35,821 | 25,178 |
| BNP Paribas |
| Euro | | |
| (0.70%), 11/02/20 (d)(e) | 334,428 | 389,492 |
| Brown Brothers Harriman |
| Canadian Dollar | | |
| 0.01%, 11/02/20 (d) | 47,568 | 35,704 |
| Danish Krone | | |
| (0.65%), 11/02/20 (d)(e) | 71,658 | 11,210 |
| Hong Kong Dollar | | |
| 0.04%, 11/02/20 (d) | 204,516 | 26,381 |
| New Zealand Dollar | | |
| 0.05%, 11/02/20 (d) | 21,051 | 13,919 |
| Norwegian Krone | | |
| (0.10%), 11/02/20 (d)(e) | 112,789 | 11,814 |
| Singapore Dollar | | |
| 0.01%, 11/02/20 (d) | 61,667 | 45,146 |
| Swedish Krona | | |
| (0.26%), 11/02/20 (d)(e) | 270,860 | 30,439 |
| Swiss Franc | | |
| (1.42%), 11/02/20 (d)(e) | 13,461 | 14,680 |
| Citibank |
| Pound Sterling | | |
| 0.01%, 11/02/20 (d) | 39,852 | 51,628 |
| Sumitomo Mitsui Banking Corp. |
| Japanese Yen | | |
| (0.27%), 11/02/20 (d)(e) | 4,283,900 | 40,918 |
| Total Short-Term Investments |
| (Cost $696,509) | | 696,509 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental International Small Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | |
| Long | |
| MSCI EAFE Index, expires 12/18/20 | 27 | 2,408,265 | (138,487) |
| * | Non-income producing security. |
| (a) | Fair-valued by management using significant unobservable inputs in accordance with procedures approved by the fund’s Board of Trustees. |
| (b) | All or a portion of this security is on loan. Securities on loan were valued at $7,928,976. |
| (c) | The rate shown is the 7-day yield. |
| (d) | The rate shown is the current daily overnight rate. |
| (e) | Rate is negative due to the current daily overnight rate at the central bank of the denominated currency and therefore is non-income producing. |
| | |
| CVA — | Dutch Certificate |
| REIT — | Real Estate Investment Trust |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Emerging Markets Large Company Index Fund
Portfolio Holdings as of October 31, 2020
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov and on the fund’s website at www.schwabfunds.com/schwabfunds_prospectus. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.
| Security | Number
of Shares | Value ($) |
| Common Stock 94.9% of net assets |
| |
| Brazil 5.0% |
| Ambev S.A. | 864,650 | 1,835,401 |
| B3 S.A. - Brasil Bolsa Balcao | 71,133 | 632,864 |
| Banco Bradesco S.A. | 307,028 | 972,246 |
| Banco do Brasil S.A. | 429,415 | 2,230,164 |
| Banco Santander Brasil S.A. | 117,700 | 657,427 |
| BRF S.A. * | 203,318 | 594,581 |
| CCR S.A. | 248,100 | 482,541 |
| Centrais Eletricas Brasileiras S.A. | 76,816 | 415,811 |
| Cia Brasileira de Distribuicao | 59,799 | 645,622 |
| Cia Energetica de Minas Gerais | 37,377 | 75,692 |
| Cielo S.A. | 719,534 | 422,595 |
| Cogna Educacao | 532,700 | 398,275 |
| Companhia de Saneamento Basico do Estado de Sao Paulo | 71,510 | 529,662 |
| Embraer S.A. * | 464,151 | 487,775 |
| IRB Brasil Resseguros S.A. | 312,011 | 333,873 |
| Itau Unibanco Holding S.A. | 155,100 | 594,132 |
| JBS S.A. | 389,800 | 1,321,310 |
| Petrobras Distribuidora S.A. | 315,500 | 1,054,608 |
| Petroleo Brasileiro S.A. | 860,558 | 2,849,555 |
| Suzano S.A. * | 71,700 | 625,412 |
| TIM S.A. | 243,247 | 502,353 |
| Ultrapar Participacoes S.A. | 579,628 | 1,654,651 |
| Vale S.A. | 763,797 | 8,060,006 |
| | | 27,376,556 |
| |
| Chile 0.9% |
| Banco de Chile | 7,217,547 | 558,511 |
| Cencosud S.A. | 880,222 | 1,225,638 |
| Empresas Copec S.A. | 185,905 | 1,417,519 |
| Enel Americas S.A. | 6,890,464 | 914,145 |
| Falabella S.A. | 187,108 | 513,671 |
| Latam Airlines Group S.A. * | 227,554 | 344,314 |
| | | 4,973,798 |
| |
| China 30.5% |
| Agile Group Holdings Ltd. | 546,000 | 749,200 |
| Agricultural Bank of China Ltd., A Shares | 2,012,600 | 947,491 |
| Agricultural Bank of China Ltd., H Shares | 8,380,600 | 2,851,217 |
| Alibaba Group Holding Ltd. ADR * | 25,767 | 7,850,947 |
| Anhui Conch Cement Co., Ltd., A Shares | 26,000 | 198,103 |
| Anhui Conch Cement Co., Ltd., H Shares | 153,000 | 957,090 |
| BAIC Motor Corp., Ltd., H Shares | 1,440,000 | 532,557 |
| Baidu, Inc. ADR * | 22,800 | 3,033,540 |
| Bank of China Ltd., A Shares | 1,250,400 | 594,310 |
| Bank of China Ltd., H Shares | 24,342,234 | 7,688,764 |
| Bank of Communications Co., Ltd., A Shares | 701,100 | 474,665 |
| Bank of Communications Co., Ltd., H Shares | 2,468,000 | 1,214,213 |
| Security | Number
of Shares | Value ($) |
| China Cinda Asset Management Co., Ltd., H Shares | 3,804,000 | 713,615 |
| China CITIC Bank Corp., Ltd., A Shares | 216,800 | 163,662 |
| China CITIC Bank Corp., Ltd., H Shares | 3,370,000 | 1,371,614 |
| China Communications Construction Co., Ltd., A Shares | 124,900 | 138,297 |
| China Communications Construction Co., Ltd., H Shares | 1,950,322 | 1,021,229 |
| China Construction Bank Corp., A Shares | 162,700 | 152,984 |
| China Construction Bank Corp., H Shares | 26,762,960 | 18,442,705 |
| China Everbright Bank Co., Ltd., A Shares | 658,500 | 385,906 |
| China Everbright Bank Co., Ltd., H Shares | 854,000 | 295,954 |
| China Evergrande Group (a) | 624,000 | 1,244,391 |
| China Hongqiao Group Ltd. | 1,341,500 | 970,630 |
| China Huarong Asset Management Co., Ltd., H Shares | 9,900,000 | 1,037,277 |
| China Jinmao Holdings Group Ltd. | 944,000 | 478,280 |
| China Life Insurance Co., Ltd., A Shares | 17,300 | 119,432 |
| China Life Insurance Co., Ltd., H Shares | 553,000 | 1,206,605 |
| China Mengniu Dairy Co., Ltd. * | 224,000 | 1,056,006 |
| China Merchants Bank Co., Ltd., A Shares | 159,100 | 947,312 |
| China Merchants Bank Co., Ltd., H Shares | 539,150 | 2,808,396 |
| China Minsheng Banking Corp., Ltd., A Shares | 656,700 | 518,299 |
| China Minsheng Banking Corp., Ltd., H Shares | 2,182,300 | 1,194,346 |
| China Mobile Ltd. | 1,816,555 | 11,111,030 |
| China National Building Material Co., Ltd., H Shares | 1,436,000 | 1,652,924 |
| China Oriental Group Co., Ltd. | 2,246,000 | 508,388 |
| China Overseas Land & Investment Ltd. | 820,000 | 2,059,668 |
| China Pacific Insurance Group Co., Ltd., A Shares | 46,300 | 221,252 |
| China Pacific Insurance Group Co., Ltd., H Shares | 332,800 | 1,041,485 |
| China Petroleum & Chemical Corp., A Shares | 1,621,400 | 945,759 |
| China Petroleum & Chemical Corp., H Shares | 22,614,400 | 8,830,266 |
| China Railway Construction Corp., Ltd., A Shares | 283,800 | 353,950 |
| China Railway Construction Corp., Ltd., H Shares | 926,500 | 627,617 |
| China Railway Group Ltd., H Shares | 1,611,000 | 741,564 |
| China Resources Land Ltd. | 439,000 | 1,795,363 |
| China Resources Power Holdings Co., Ltd. | 1,150,000 | 1,196,943 |
| China Shenhua Energy Co., Ltd., A Shares | 136,900 | 341,040 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Emerging Markets Large Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| China Shenhua Energy Co., Ltd., H Shares | 1,296,000 | 2,245,502 |
| China State Construction Engineering Corp., Ltd., A Shares | 865,300 | 661,852 |
| China Telecom Corp., Ltd., H Shares | 8,454,000 | 2,653,789 |
| China Tower Corp., Ltd., H Shares | 3,874,000 | 606,260 |
| China Unicom (Hong Kong) Ltd. | 3,725,056 | 2,296,085 |
| China United Network Communications Ltd., A Shares | 647,800 | 462,517 |
| China Vanke Co., Ltd., A Shares | 93,800 | 387,023 |
| China Vanke Co., Ltd., H Shares | 249,600 | 774,749 |
| CITIC Ltd. | 2,190,000 | 1,565,715 |
| CNOOC Ltd. | 5,088,075 | 4,655,363 |
| Country Garden Holdings Co., Ltd. | 1,178,114 | 1,455,985 |
| CRRC Corp., Ltd., A Shares | 306,400 | 247,088 |
| CRRC Corp., Ltd., H Shares | 1,020,000 | 395,639 |
| Dongfeng Motor Group Co., Ltd., H Shares | 1,193,000 | 840,380 |
| ENN Energy Holdings Ltd. | 68,100 | 861,880 |
| Fosun International Ltd. | 616,500 | 744,444 |
| GCL-Poly Energy Holdings Ltd. * | 19,706,000 | 904,941 |
| Geely Automobile Holdings Ltd. | 580,000 | 1,191,816 |
| Great Wall Motor Co., Ltd., A Shares | 37,900 | 134,706 |
| Great Wall Motor Co., Ltd., H Shares | 827,800 | 1,340,266 |
| Guangzhou R&F Properties Co., Ltd., H Shares | 566,800 | 720,788 |
| Haier Electronics Group Co., Ltd. | 256,000 | 975,930 |
| Hengan International Group Co., Ltd. | 100,000 | 697,555 |
| Huaneng Power International, Inc., A Shares | 204,200 | 149,120 |
| Huaneng Power International, Inc., H Shares | 2,352,000 | 878,632 |
| Industrial & Commercial Bank of China Ltd., A Shares | 1,062,000 | 780,898 |
| Industrial & Commercial Bank of China Ltd., H Shares | 19,248,172 | 10,930,345 |
| Industrial Bank Co., Ltd., A Shares | 294,000 | 782,586 |
| JD.com, Inc. ADR * | 30,953 | 2,523,289 |
| Jiangxi Copper Co., Ltd., A Shares | 79,600 | 176,601 |
| Jiangxi Copper Co., Ltd., H Shares | 907,000 | 1,083,128 |
| Kingboard Holdings Ltd. | 349,000 | 1,182,080 |
| Kunlun Energy Co., Ltd. | 1,086,000 | 703,080 |
| Legend Holdings Corp., H Shares | 435,200 | 585,553 |
| Longfor Group Holdings Ltd. | 176,000 | 964,323 |
| NetEase, Inc. ADR | 18,295 | 1,587,823 |
| PetroChina Co., Ltd., H Shares | 12,722,000 | 3,572,812 |
| PICC Property & Casualty Co., Ltd., H Shares | 1,940,000 | 1,316,704 |
| Ping An Insurance Group Co. of China Ltd., A Shares | 51,100 | 595,014 |
| Ping An Insurance Group Co. of China Ltd., H Shares | 445,000 | 4,601,155 |
| Postal Savings Bank of China Co., Ltd., H Shares | 1,228,000 | 602,657 |
| SAIC Motor Corp., Ltd., A Shares | 215,700 | 747,155 |
| Shanghai Pudong Development Bank Co., Ltd., A Shares | 460,000 | 636,692 |
| Shimao Group Holdings Ltd. | 254,500 | 901,519 |
| Sinopec Shanghai Petrochemical Co., Ltd., A Shares | 179,200 | 88,658 |
| Sinopec Shanghai Petrochemical Co., Ltd., H Shares | 2,500,000 | 462,027 |
| Sinopharm Group Co., Ltd., H Shares | 434,000 | 997,090 |
| Sunac China Holdings Ltd. | 154,000 | 570,747 |
| Tencent Holdings Ltd. | 120,900 | 9,237,438 |
| Vipshop Holdings Ltd. ADR * | 44,382 | 949,775 |
| Security | Number
of Shares | Value ($) |
| Weichai Power Co., Ltd., A Shares | 44,300 | 100,309 |
| Weichai Power Co., Ltd., H Shares | 281,000 | 532,855 |
| | | 167,846,624 |
| |
| Colombia 0.2% |
| Bancolombia S.A. | 70,996 | 449,417 |
| Ecopetrol S.A. | 1,427,401 | 660,528 |
| | | 1,109,945 |
| |
| Czech Republic 0.2% |
| CEZ A/S | 50,460 | 955,034 |
| |
| Egypt 0.1% |
| Commercial International Bank Egypt S.A.E. GDR | 144,673 | 558,059 |
| |
| Greece 0.4% |
| Alpha Bank AE * | 1,175,253 | 598,059 |
| Hellenic Telecommunications Organization S.A. | 50,993 | 676,254 |
| Motor Oil Hellas Corinth Refineries S.A. | 37,133 | 347,185 |
| Piraeus Bank S.A. * | 415,599 | 319,696 |
| | | 1,941,194 |
| |
| Hungary 0.4% |
| MOL Hungarian Oil & Gas plc * | 249,484 | 1,211,475 |
| OTP Bank Nyrt * | 28,042 | 874,758 |
| | | 2,086,233 |
| |
| India 8.3% |
| Axis Bank Ltd. * | 202,808 | 1,344,338 |
| Bharat Petroleum Corp., Ltd. | 366,617 | 1,752,618 |
| Bharti Airtel Ltd. | 153,280 | 896,233 |
| Coal India Ltd. | 524,506 | 807,378 |
| Grasim Industries Ltd. | 73,633 | 773,052 |
| HCL Technologies Ltd. | 142,515 | 1,621,479 |
| Hero MotoCorp Ltd. | 22,327 | 842,344 |
| Hindalco Industries Ltd. | 464,363 | 1,071,459 |
| Hindustan Petroleum Corp., Ltd. | 469,388 | 1,188,971 |
| Housing Development Finance Corp., Ltd. | 81,685 | 2,119,173 |
| Indian Oil Corp., Ltd. | 1,708,584 | 1,833,695 |
| Infosys Ltd. | 439,668 | 6,299,186 |
| ITC Ltd. | 334,556 | 747,642 |
| JSW Steel Ltd. | 299,183 | 1,249,474 |
| Larsen & Toubro Ltd. | 46,386 | 581,177 |
| Mahindra & Mahindra Ltd. | 109,207 | 874,268 |
| Maruti Suzuki India Ltd. | 13,842 | 1,300,093 |
| NTPC Ltd. | 633,863 | 748,977 |
| Oil & Natural Gas Corp., Ltd. | 2,159,019 | 1,890,249 |
| Rajesh Exports Ltd. * | 116,677 | 726,935 |
| Reliance Industries Ltd. | 247,245 | 6,854,809 |
| State Bank of India * | 436,059 | 1,110,994 |
| Sun Pharmaceutical Industries Ltd. | 117,970 | 740,881 |
| Tata Consultancy Services Ltd. | 81,113 | 2,923,349 |
| Tata Motors Ltd. * | 1,090,615 | 1,939,478 |
| Tata Motors Ltd., Class A * | 440,721 | 329,587 |
| Tata Steel Ltd. | 153,821 | 854,451 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Emerging Markets Large Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Vedanta Ltd. | 1,078,371 | 1,394,908 |
| Wipro Ltd. | 234,357 | 1,074,759 |
| | | 45,891,957 |
| |
| Indonesia 1.2% |
| PT Astra International Tbk | 4,939,200 | 1,803,662 |
| PT Bank Central Asia Tbk | 407,300 | 801,426 |
| PT Bank Mandiri (Persero) Tbk | 2,711,200 | 1,056,096 |
| PT Bank Rakyat Indonesia (Persero) Tbk | 6,010,300 | 1,360,563 |
| PT Telekomunikasi Indonesia (Persero) Tbk | 9,700,800 | 1,717,622 |
| | | 6,739,369 |
| |
| Kuwait 0.6% |
| Kuwait Finance House KSCP | 340,870 | 733,810 |
| Mobile Telecommunications Co. KSC | 531,817 | 1,014,468 |
| National Bank of Kuwait SAKP | 555,929 | 1,536,073 |
| | | 3,284,351 |
| |
| Malaysia 1.6% |
| Axiata Group Berhad | 1,160,613 | 818,412 |
| CIMB Group Holdings Berhad | 1,466,276 | 1,040,659 |
| Genting Berhad | 895,800 | 638,580 |
| Malayan Banking Berhad | 1,049,861 | 1,767,575 |
| Petronas Chemicals Group Berhad | 536,500 | 755,940 |
| Public Bank Berhad | 384,465 | 1,394,926 |
| Tenaga Nasional Berhad | 1,002,900 | 2,302,050 |
| | | 8,718,142 |
| |
| Mexico 4.0% |
| Alfa S.A.B. de C.V., Class A | 2,206,300 | 1,473,883 |
| America Movil S.A.B. de C.V., Series L | 8,485,619 | 5,164,620 |
| Cemex S.A.B. de C.V., Series CPO | 8,672,656 | 3,581,664 |
| Fomento Economico Mexicano S.A.B. de C.V. | 404,015 | 2,165,451 |
| Grupo Bimbo S.A.B. de C.V., Series A | 572,100 | 1,105,550 |
| Grupo Financiero Banorte S.A.B. de C.V., Class O * | 548,100 | 2,441,857 |
| Grupo Mexico S.A.B. de C.V., Series B | 779,436 | 2,213,942 |
| Grupo Televisa S.A.B., Series CPO * | 636,217 | 804,738 |
| Orbia Advance Corp. SAB de CV | 482,700 | 853,597 |
| Wal-Mart de Mexico S.A.B. de C.V. | 903,937 | 2,184,041 |
| | | 21,989,343 |
| |
| Philippines 0.3% |
| PLDT, Inc. (b) | 40,040 | 1,092,104 |
| SM Investments Corp. (b) | 36,990 | 725,414 |
| | | 1,817,518 |
| |
| Qatar 0.5% |
| Ooredoo QPSC | 436,537 | 792,228 |
| Qatar National Bank QPSC | 394,992 | 1,917,739 |
| | | 2,709,967 |
| |
| Russia 8.3% |
| Alrosa PJSC | 886,360 | 797,778 |
| Gazprom PJSC - USD | 5,915,930 | 11,542,370 |
| Gazprom PJSC | 282,200 | 549,832 |
| Inter RAO UES PJSC | 15,955,001 | 1,023,293 |
| Lukoil PJSC | 206,866 | 10,532,899 |
| Security | Number
of Shares | Value ($) |
| Magnit PJSC | 43,263 | 2,570,389 |
| MMC Norilsk Nickel PJSC | 6,863 | 1,629,454 |
| Mobile TeleSystems PJSC | 344,842 | 1,349,960 |
| NovaTek PJSC | 101,150 | 1,215,933 |
| Novolipetsk Steel PJSC | 336,800 | 789,793 |
| Rosneft Oil Co. PJSC | 578,190 | 2,555,298 |
| ROSSETI PJSC | 29,062,000 | 533,213 |
| Sberbank of Russia PJSC | 1,859,090 | 4,704,371 |
| Severstal PAO | 71,490 | 977,632 |
| Sistema PJSC FC | 3,247,500 | 1,032,536 |
| Surgutneftegas PJSC | 2,278,905 | 945,196 |
| Tatneft PJSC | 367,260 | 1,897,698 |
| VTB Bank PJSC | 1,905,160,000 | 784,926 |
| | | 45,432,571 |
| |
| Saudi Arabia 2.1% |
| Al Rajhi Bank | 87,967 | 1,543,404 |
| National Commercial Bank | 102,585 | 1,065,104 |
| Riyad Bank | 119,688 | 573,713 |
| Samba Financial Group | 83,749 | 615,241 |
| Saudi Arabian Oil Co. | 58,974 | 529,091 |
| Saudi Basic Industries Corp. | 179,181 | 4,297,631 |
| Saudi Electricity Co. | 158,889 | 801,566 |
| Saudi Telecom Co. | 70,814 | 1,881,245 |
| Yanbu National Petrochemical Co. | 34,890 | 534,165 |
| | | 11,841,160 |
| |
| South Africa 5.0% |
| Absa Group Ltd. | 344,340 | 1,850,995 |
| AngloGold Ashanti Ltd. | 44,804 | 1,032,528 |
| Aspen Pharmacare Holdings Ltd. * | 90,636 | 590,224 |
| Barloworld Ltd. | 198,484 | 697,364 |
| Bid Corp., Ltd. | 79,546 | 1,095,176 |
| FirstRand Ltd. | 669,696 | 1,554,583 |
| Gold Fields Ltd. | 148,900 | 1,610,380 |
| MTN Group Ltd. | 1,218,243 | 4,349,749 |
| Naspers Ltd., N Shares | 5,682 | 1,109,282 |
| Nedbank Group Ltd. | 180,064 | 1,065,187 |
| Old Mutual Ltd | 1,095,238 | 635,329 |
| Remgro Ltd. | 89,338 | 476,571 |
| Sanlam Ltd. | 263,892 | 769,749 |
| Sappi Ltd. * | 569,007 | 810,482 |
| Sasol Ltd. * | 570,371 | 2,978,605 |
| Shoprite Holdings Ltd. | 216,903 | 1,718,164 |
| Standard Bank Group Ltd. | 393,612 | 2,573,786 |
| The Bidvest Group Ltd. | 81,855 | 673,092 |
| Vodacom Group Ltd. | 145,660 | 1,097,690 |
| Woolworths Holdings Ltd. | 405,962 | 871,949 |
| | | 27,560,885 |
| |
| Taiwan 20.5% |
| Acer, Inc. | 1,375,496 | 1,149,535 |
| ASE Technology Holding Co., Ltd. | 937,000 | 2,103,157 |
| Asustek Computer, Inc. | 356,041 | 3,024,963 |
| AU Optronics Corp. * | 9,017,800 | 3,642,137 |
| Catcher Technology Co., Ltd. | 177,000 | 1,118,908 |
| Cathay Financial Holding Co., Ltd. | 1,164,599 | 1,564,911 |
| Cheng Shin Rubber Industry Co., Ltd. | 590,000 | 745,240 |
| China Steel Corp. | 3,239,198 | 2,301,003 |
| Chunghwa Telecom Co., Ltd. | 607,906 | 2,280,675 |
| Compal Electronics, Inc. | 3,624,305 | 2,361,229 |
| CTBC Financial Holding Co., Ltd. | 2,350,201 | 1,484,175 |
| Delta Electronics, Inc. | 329,590 | 2,192,900 |
| Far Eastern New Century Corp. | 1,256,817 | 1,134,667 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Emerging Markets Large Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
| Security | Number
of Shares | Value ($) |
| Far EasTone Telecommunications Co., Ltd. | 310,622 | 651,900 |
| First Financial Holding Co., Ltd. | 1,041,606 | 730,863 |
| Formosa Chemicals & Fibre Corp. | 853,442 | 2,055,514 |
| Formosa Petrochemical Corp. | 367,330 | 1,011,234 |
| Formosa Plastics Corp. | 707,732 | 1,959,122 |
| Foxconn Technology Co., Ltd. | 404,317 | 709,084 |
| Fubon Financial Holding Co., Ltd. | 1,586,674 | 2,260,304 |
| Hon Hai Precision Industry Co., Ltd. | 6,071,572 | 16,466,894 |
| Innolux Corp. * | 11,618,357 | 4,032,599 |
| Inventec Corp. | 1,553,639 | 1,229,675 |
| Largan Precision Co., Ltd. | 6,050 | 642,503 |
| Lite-On Technology Corp. | 664,167 | 1,081,873 |
| MediaTek, Inc. | 160,338 | 3,811,276 |
| Mega Financial Holding Co., Ltd. | 1,207,340 | 1,163,394 |
| Nan Ya Plastics Corp. | 1,153,622 | 2,369,699 |
| Pegatron Corp. | 1,372,264 | 2,957,267 |
| Pou Chen Corp. | 1,033,267 | 912,981 |
| President Chain Store Corp. | 74,000 | 667,913 |
| Quanta Computer, Inc. | 818,500 | 2,065,289 |
| Synnex Technology International Corp. | 669,850 | 995,525 |
| Taiwan Cement Corp. | 781,452 | 1,109,017 |
| Taiwan Mobile Co., Ltd. | 211,334 | 721,917 |
| Taiwan Semiconductor Manufacturing Co., Ltd. | 1,787,803 | 27,048,876 |
| Uni-President Enterprises Corp. | 825,678 | 1,769,892 |
| United Microelectronics Corp. | 3,521,965 | 3,785,234 |
| Walsin Lihwa Corp. | 1,828,000 | 1,135,914 |
| Wistron Corp. | 1,579,682 | 1,579,273 |
| WPG Holdings Ltd. | 912,880 | 1,239,910 |
| Yageo Corp. | 56,000 | 697,636 |
| Yuanta Financial Holding Co., Ltd. | 1,205,840 | 749,705 |
| | | 112,715,783 |
| |
| Thailand 2.8% |
| Advanced Info Service PCL NVDR | 150,575 | 832,889 |
| Charoen Pokphand Foods PCL NVDR | 844,700 | 683,760 |
| CP ALL PCL NVDR | 429,800 | 739,902 |
| Kasikornbank PCL NVDR | 292,500 | 714,285 |
| Krung Thai Bank PCL NVDR | 2,099,900 | 582,073 |
| PTT Exploration & Production PCL NVDR | 329,800 | 833,332 |
| PTT Global Chemical PCL NVDR | 1,036,300 | 1,327,907 |
| PTT PCL NVDR | 5,067,670 | 5,036,237 |
| Thai Oil PCL NVDR | 608,400 | 668,200 |
| The Siam Cement PCL NVDR | 221,700 | 2,402,271 |
| The Siam Commercial Bank PCL NVDR | 651,200 | 1,355,883 |
| | | 15,176,739 |
| |
| Turkey 1.3% |
| Akbank T.A.S. * | 1,233,225 | 699,623 |
| BIM Birlesik Magazalar A/S | 85,140 | 673,157 |
| Eregli Demir ve Celik Fabrikalari TAS | 679,931 | 777,535 |
| Haci Omer Sabanci Holding A/S | 585,650 | 576,218 |
| KOC Holding A/S | 445,957 | 754,884 |
| Tupras-Turkiye Petrol Rafinerileri A/S * | 77,569 | 693,592 |
| Turk Hava Yollari AO * | 390,549 | 420,220 |
| Turkcell Iletisim Hizmetleri A/S | 527,490 | 913,398 |
| Turkiye Garanti Bankasi A/S * | 958,333 | 756,615 |
| Turkiye Halk Bankasi A/S * | 899,721 | 504,982 |
| Turkiye Is Bankasi A/S, Class C * | 845,420 | 516,698 |
| | | 7,286,922 |
| |
| Security | Number
of Shares | Value ($) |
| United Arab Emirates 0.7% |
| Abu Dhabi Commercial Bank PJSC | 416,408 | 662,579 |
| Emaar Properties PJSC * | 1,185,541 | 849,568 |
| Emirates Telecommunications Group Co. PJSC | 299,905 | 1,374,041 |
| First Abu Dhabi Bank PJSC | 321,378 | 990,293 |
| | | 3,876,481 |
| Total Common Stock |
| (Cost $526,484,143) | | 521,888,631 |
|
| Preferred Stock 4.7% of net assets |
| |
| Brazil 3.5% |
| Banco Bradesco S.A. | 1,181,833 | 4,152,311 |
| Centrais Eletricas Brasileiras S.A., Class B | 38,720 | 209,122 |
| Companhia Energetica de Minas Gerais | 442,229 | 789,976 |
| Gerdau S.A. | 443,006 | 1,683,870 |
| Itau Unibanco Holding S.A. | 1,493,479 | 6,111,397 |
| Metalurgica Gerdau S.A. | 505,077 | 862,635 |
| Petroleo Brasileiro S.A. | 1,294,254 | 4,272,113 |
| Telefonica Brasil S.A. | 154,472 | 1,145,224 |
| | | 19,226,648 |
| |
| Colombia 0.1% |
| Bancolombia S.A. | 126,953 | 803,635 |
| |
| Russia 1.1% |
| Surgutneftegas PJSC | 2,679,500 | 1,222,819 |
| Tatneft PJSC | 33,700 | 169,124 |
| Transneft PJSC | 2,870 | 4,772,270 |
| | | 6,164,213 |
| Total Preferred Stock |
| (Cost $30,267,023) | | 26,194,496 |
|
| Other Investment Company 0.1% of net assets |
| |
| United States 0.1% |
| Securities Lending Collateral 0.1% |
| Wells Fargo Government Money Market Fund, Select Class 0.04% (c) | 420,000 | 420,000 |
| Total Other Investment Company |
| (Cost $420,000) | | 420,000 |
Security
Rate, Maturity Date | Face Amount
Local Currency | Value ($) |
| Short-Term Investments 0.0% of net assets |
| |
| Time Deposits 0.0% |
| Brown Brothers Harriman |
| Euro | | |
| (0.70%), 11/02/20 (d)(e) | 2,460 | 2,865 |
| Hong Kong Dollar | | |
| 0.04%, 11/02/20 (d) | 446,600 | 57,607 |
| South African Rand | | |
| 3.15%, 11/02/20 (d) | 104,100 | 6,397 |
Schwab Fundamental Index Funds | Annual Report
Schwab Fundamental Emerging Markets Large Company Index Fund
Portfolio Holdings as of October 31, 2020 (continued)
Security
Rate, Maturity Date | Face Amount
Local Currency | Value ($) |
| Sumitomo Mitsui Trust Bank, Limited |
| U.S. Dollar | | |
| 0.01%, 11/02/20 (d) | 25,068 | 25,068 |
| Total Short-Term Investments |
| (Cost $91,937) | | 91,937 |
| | Number of
Contracts | Notional
Amount
($) | Current Value/
Unrealized
Depreciation
($) |
| Futures Contracts | |
| Long | |
| MSCI Emerging Markets Index, expires 12/18/20 | 28 | 1,542,660 | (32,981) |
| * | Non-income producing security. |
| (a) | All or a portion of this security is on loan. Securities on loan were valued at $398,843. |
| (b) | Fair-valued by management using significant unobservable inputs in accordance with procedures approved by the fund’s Board of Trustees. |
| (c) | The rate shown is the 7-day yield. |
| (d) | The rate shown is the current daily overnight rate. |
| (e) | Rate is negative due to the current daily overnight rate at the central bank of the denominated currency and therefore is non-income producing. |
| | |
| ADR — | American Depositary Receipt |
| GDR — | Global Depositary Receipt |
| NVDR — | Non-Voting Depositary Receipt |
Schwab Fundamental Index Funds | Annual Report
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Schwab Investments and Schwab Capital Trust 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, Schwab 1000 Index Fund, Schwab S&P 500 Index Fund, Schwab Small-Cap Index Fund, Schwab Total Stock Market Index Fund, Schwab U.S. Large-Cap Growth Index Fund, Schwab U.S. Large-Cap Value Index Fund, Schwab U.S. Mid-Cap Index Fund and Schwab International Index Fund:
Opinion on the Financial Statements, Financial Highlights, and Portfolio Holdings
We have audited the accompanying statements of assets and liabilities 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, Schwab 1000 Index Fund, Schwab S&P 500 Index Fund, Schwab Small-Cap Index Fund, Schwab Total Stock Market Index Fund, Schwab U.S. Large-Cap Growth Index Fund, Schwab U.S. Large-Cap Value Index Fund, Schwab U.S. Mid-Cap Index Fund and Schwab International Index Fund (the “Funds”), including the condensed portfolio holdings, as of October 31, 2020, the related statements of operations, statements of changes in net assets and the financial highlights for the year then ended, and the related notes (the financial statements and financial highlights are included in Item 1 of this Form N-CSR), and the portfolio holdings as of October 31, 2020 (included in Item 6 of this Form N-CSR). In our opinion, the financial statements, financial highlights, and portfolio holdings present fairly, in all material respects, the financial position of the Funds as of October 31, 2020, and the results of their operations, the changes in their net assets, and the financial highlights for the year then ended in conformity with accounting principles generally accepted in the United States of America. The statements of changes in net assets for the year ended October 31, 2019 and the financial highlights for each of the four years in the period ended October 31, 2019; except for Schwab U.S. Large-Cap Growth Index Fund, Schwab U.S. Large-Cap Value Index Fund, and Schwab U.S. Mid-Cap Index Fund, the financial highlights for the year ended October 31, 2019 and for the period from December 20, 2017 to October 31, 2018, were audited by other auditors, whose report, dated December 16, 2019, expressed an unqualified opinion on such statements of changes in net assets and financial highlights.
Basis for Opinion
These financial statements, financial highlights, and portfolio holdings are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements, financial highlights, and portfolio holdings based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements, financial highlights, and portfolio holdings are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, financial highlights, and portfolio holdings, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements, financial highlights, and portfolio holdings. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
financial statements, financial highlights, and portfolio holdings. Our procedures included confirmation of securities owned as of October 31, 2020, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Denver, Colorado
December 16, 2020
We have served as the auditor of one or more investment companies in the Schwab Funds Complex since 2020.
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, Jonathan de St. Paer and Registrant’s Chief Financial Officer, Mark Fischer, 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 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: Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13: Exhibits.
(a) (1) Registrant’s code of ethics (that is the subject of the disclosure required by Item 2(a)) is attached.
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/ Jonathan de St. Paer |
| | Jonathan de St. Paer Chief Executive Officer |
| |
| Date: | | December 16, 2020 |
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/ Jonathan de St. Paer |
| | Jonathan de St. Paer Chief Executive Officer |
| |
| Date: | | December 16, 2020 |
| |
| By: | | /s/ Mark Fischer |
| | Mark Fischer Chief Financial Officer |
| |
| Date: | | December 16, 2020 |
