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: 811-07704
Schwab Capital Trust – Monthly Income Funds
(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: December 31
Date of reporting period: December 31, 2021
Item 1: Report(s) to Shareholders.
Moderate Payout
Enhanced Payout
Maximum Payout
Total Returns for the 12 Months Ended December 31, 2021 | |
Schwab Monthly Income Fund – Moderate Payout (Ticker Symbol: SWJRX) | 9.23% |
Moderate Payout Composite Index | 9.75% |
Fund Category: Morningstar Allocation - 30% to 50% Equity1 | 8.24% |
Performance Details | pages 7-9 |
Schwab Monthly Income Fund – Enhanced Payout (Ticker Symbol: SWKRX) | 5.73% |
Enhanced Payout Composite Index | 6.10% |
Fund Category: Morningstar Allocation - 30% to 50% Equity1 | 8.24% |
Performance Details | pages 10-12 |
Schwab Monthly Income Fund – Maximum Payout (Ticker Symbol: SWLRX) | 2.33% |
Maximum Payout Composite Index | 2.53% |
Fund Category: Morningstar Allocation - 15% to 30% Equity1 | 5.04% |
Performance Details | pages 13-15 |
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. |
President of Schwab Asset
Management and the funds
covered in this report.
1 | While the Schwab Monthly Income Fund – Maximum Payout is typically expected to have the highest annual payout of the three funds, certain factors, including the interest rate environment, the allocation of fund assets across different asset classes and investments, and the performance of the financial markets in which the funds invest, may result in a different outcome. |
* | The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. |
Zifan Tang, Ph.D., CFA, Senior Portfolio Manager, is responsible for the co-management of the funds. Prior to joining Schwab in 2012, Ms. Tang was a product manager at Thomson Reuters and from 1997 to 2009 worked as a portfolio manager at Barclays Global Investors (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 from 2012 to 2016. Prior to that, he worked as a fund administration manager, where he was responsible for oversight of sub-advisers, trading, cash management, and fund administration supporting the Charles Schwab Trust Bank Collective Investment Trusts and multi-asset Schwab Funds. Prior to joining Schwab Asset Management 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. |
1 | For more information about payouts, please see the fund’s prospectus. |
Fund and Inception Date | 1 Year | 5 Years | 10 Years |
Fund: Schwab Monthly Income Fund – Moderate Payout (3/28/08) | 9.23% | 6.81% | 6.21% |
S&P 500® Index | 28.71% | 18.47% | 16.55% |
Bloomberg US Aggregate Bond Index | -1.54% | 3.57% | 2.90% |
Moderate Payout Composite Index | 9.75% | 8.91% | 7.66% |
Fund Category: Morningstar Allocation – 30% to 50% Equity2 | 8.24% | 7.41% | 6.66% |
Fund Expense Ratios3: Net 0.51%; Gross 0.72% |
1 | The fund’s routine expenses have been absorbed by the investment adviser 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 Schwab Asset Management serves as 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. |
Number of Holdings | 6 |
Portfolio Turnover Rate | 11% |
12-Month Distribution Yield | 3.05% 1 |
1 | Calculation reflects the fund’s monthly ordinary income distributions for the last 12 months divided by the fund’s Net Asset Value as of the end of the reporting period. Distribution yield does not include capital gains distributions. Fund expenses may have been partially absorbed by the investment adviser and its affiliates. Without these reductions, the total return/yield may have been lower. |
2 | The fund intends to primarily invest in a combination of Schwab Funds, Laudus Funds, and Schwab ETFs. The fund may also invest directly in equity and fixed-income securities, as well as other unaffiliated mutual funds or ETFs, and cash and cash equivalents (including money market securities). |
3 | 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. |
4 | This list is not a recommendation of any security by the investment adviser. |
5 | The holdings listed exclude any temporary liquidity investments. |
1 | For more information about payouts, please see the fund’s prospectus. |
Fund and Inception Date | 1 Year | 5 Years | 10 Years |
Fund: Schwab Monthly Income Fund – Enhanced Payout (3/28/08) | 5.73% | 5.76% | 5.01% |
S&P 500® Index | 28.71% | 18.47% | 16.55% |
Bloomberg US Aggregate Bond Index | -1.54% | 3.57% | 2.90% |
Enhanced Payout Composite Index | 6.10% | 7.23% | 6.09% |
Fund Category: Morningstar Allocation – 30% to 50% Equity2 | 8.24% | 7.41% | 6.66% |
Fund Expense Ratios3: Net 0.36%; Gross 0.48% |
1 | The fund’s routine expenses have been absorbed by the investment adviser 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 0.36% 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 for so long as Schwab Asset Management serves as the 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 in the financial statements. |
Number of Holdings | 6 |
Portfolio Turnover Rate | 20% |
12-Month Distribution Yield | 2.80% 1 |
1 | Calculation reflects the fund’s monthly ordinary income distributions for the last 12 months divided by the fund’s Net Asset Value as of the end of the reporting period. Distribution yield does not include capital gains distributions. Fund expenses may have been partially absorbed by the investment adviser and its affiliates. Without these reductions, the total return/yield may have been lower. |
2 | The fund intends to primarily invest in a combination of Schwab Funds, Laudus Funds, and Schwab ETFs. The fund may also invest directly in equity and fixed-income securities, as well as other unaffiliated mutual funds or ETFs, and cash and cash equivalents (including money market securities). |
3 | 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. |
4 | This list is not a recommendation of any security by the investment adviser. |
5 | The holdings listed exclude any temporary liquidity investments. |
1 | For more information about payouts, please see the fund’s prospectus. |
Fund and Inception Date | 1 Year | 5 Years | 10 Years |
Fund: Schwab Monthly Income Fund – Maximum Payout (3/28/08) | 2.33% | 4.66% | 3.77% |
S&P 500® Index | 28.71% | 18.47% | 16.55% |
Bloomberg US Aggregate Bond Index | -1.54% | 3.57% | 2.90% |
Maximum Payout Composite Index | 2.53% | 5.51% | 4.51% |
Fund Category: Morningstar Allocation – 15% to 30% Equity2 | 5.04% | 5.30% | 4.99% |
Fund Expense Ratios3: Net 0.22%; Gross 0.36% |
1 | The fund’s routine expenses have been absorbed by the investment adviser 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 0.22% 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 for so long as Schwab Asset Management serves as the 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 in the financial statements. |
Number of Holdings | 6 |
Portfolio Turnover Rate | 25% |
12-Month Distribution Yield | 2.45% 1 |
1 | Calculation reflects the fund’s monthly ordinary income distributions for the last 12 months divided by the fund’s Net Asset Value as of the end of the reporting period. Distribution yield does not include capital gains distributions. Fund expenses may have been partially absorbed by the investment adviser and its affiliates. Without these reductions, the total return/yield may have been lower. |
2 | The fund intends to primarily invest in a combination of Schwab Funds, Laudus Funds, and Schwab ETFs. The fund may also invest directly in equity and fixed-income securities, as well as other unaffiliated mutual funds or ETFs, and cash and cash equivalents (including money market securities). |
3 | 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. |
4 | This list is not a recommendation of any security by the investment adviser. |
5 | The holdings listed exclude any temporary liquidity investments. |
EXPENSE RATIO (ANNUALIZED)1,2 | EFFECTIVE EXPENSE RATIO (ANNUALIZED)3,4 | BEGINNING ACCOUNT VALUE AT 7/1/21 | ENDING ACCOUNT VALUE (NET OF EXPENSES) AT 12/31/212 | EXPENSES PAID DURING PERIOD 7/1/21-12/31/212,5 | EFFECTIVE EXPENSES PAID DURING PERIOD 7/1/21-12/31/214,5 | |
Schwab Monthly Income Fund – Moderate Payout | ||||||
Actual Return | 0.00% | 0.51% | $1,000.00 | $1,030.40 | $0.00 | $2.61 |
Hypothetical 5% Return | 0.00% | 0.51% | $1,000.00 | $1,025.21 | $0.00 | $2.60 |
Schwab Monthly Income Fund – Enhanced Payout | ||||||
Actual Return | 0.00% | 0.36% | $1,000.00 | $1,020.90 | $0.00 | $1.83 |
Hypothetical 5% Return | 0.00% | 0.36% | $1,000.00 | $1,025.21 | $0.00 | $1.84 |
Schwab Monthly Income Fund – Maximum Payout | ||||||
Actual Return | 0.00% | 0.22% | $1,000.00 | $1,011.70 | $0.00 | $1.12 |
Hypothetical 5% Return | 0.00% | 0.22% | $1,000.00 | $1,025.21 | $0.00 | $1.12 |
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 expenses and the expense ratio; may differ from the acquired fund fees and expenses and the 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 365 days of the fiscal year. |
1/1/21– 12/31/21 | 1/1/20– 12/31/20 | 1/1/19– 12/31/19 | 1/1/18– 12/31/18 | 1/1/17– 12/31/17 | ||
Per-Share Data | ||||||
Net asset value at beginning of period | $11.38 | $11.09 | $10.05 | $11.09 | $10.31 | |
Income (loss) from investment operations: | ||||||
Net investment income (loss)1 | 0.24 | 0.21 | 0.29 | 0.23 | 0.23 | |
Net realized and unrealized gains (losses) | 0.81 | 0.36 | 1.34 | (0.92) | 0.87 | |
Total from investment operations | 1.05 | 0.57 | 1.63 | (0.69) | 1.10 | |
Less distributions: | ||||||
Distributions from net investment income | (0.37) | (0.21) | (0.29) | (0.24) | (0.32) | |
Distributions from net realized gains | (0.07) | (0.07) | (0.30) | (0.11) | — | |
Total distributions | (0.44) | (0.28) | (0.59) | (0.35) | (0.32) | |
Net asset value at end of period | $11.99 | $11.38 | $11.09 | $10.05 | $11.09 | |
Total return | 9.23% | 5.32% | 16.41% | (6.31%) | 10.80% | |
Ratios/Supplemental Data | ||||||
Ratios to average net assets: | ||||||
Net operating expenses2 | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | |
Gross operating expenses2 | 0.18% | 0.21% | 0.24% | 0.19% | 0.20% | |
Net investment income (loss) | 1.99% | 1.93% | 2.68% | 2.17% | 2.11% | |
Portfolio turnover rate | 11% | 30% | 30% | 20% | 41% 3 | |
Net assets, end of period (x 1,000,000) | $53 | $45 | $47 | $41 | $49 |
1 | Calculated based on the average shares outstanding during the period. |
2 | Ratio excludes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds. |
3 | The portfolio turnover rate increased due to the in-kind transactions relating to Schwab Total Bond Market Fund and Schwab U.S. Aggregate Bond Index Fund. There were no transaction costs associated with these transactions. For comparison purposes, portfolio turnover rate would have been 14% without including these transactions. |
SECURITY | NUMBER OF SHARES | VALUE ($) |
AFFILIATED UNDERLYING FUNDS 98.6% OF NET ASSETS | ||
U.S. Stocks 28.7% | ||
Large-Cap 28.7% | ||
Schwab Dividend Equity Fund | 995,993 | 15,338,285 |
International Stocks 12.0% | ||
Developed Markets 12.0% | ||
Laudus International MarketMasters Fund | 255,785 | 6,399,734 |
Real Estate 7.4% | ||
Global Real Estate 7.4% | ||
Schwab Global Real Estate Fund | 476,661 | 3,989,654 |
Fixed Income 49.7% | ||
Intermediate-Term Bond 49.7% | ||
Schwab U.S. Aggregate Bond Index Fund | 2,550,372 | 26,523,871 |
Money Market Funds 0.8% | ||
Schwab Variable Share Price Money Fund, Ultra Shares 0.03% (a) | 425,215 | 425,343 |
Total Affiliated Underlying Funds (Cost $47,092,748) | 52,676,887 |
SECURITY | NUMBER OF SHARES | VALUE ($) |
UNAFFILIATED UNDERLYING FUNDS 1.1% OF NET ASSETS | ||
Money Market Funds 1.1% | ||
State Street Institutional U.S. Government Money Market Fund, Premier Class 0.03% (a) | 573,321 | 573,321 |
Total Unaffiliated Underlying Funds (Cost $573,321) | 573,321 | |
Total Investments in Securities (Cost $47,666,069) | 53,250,208 |
(a) | The rate shown is the 7-day yield. |
VALUE AT 12/31/20 | PURCHASES | SALES | REALIZED GAINS (LOSSES) | NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) | VALUE AT 12/31/21 | BALANCE OF SHARES HELD AT 12/31/21 | DISTRIBUTIONS RECEIVED* | |
AFFILIATED UNDERLYING FUNDS 98.6% OF NET ASSETS | ||||||||
U.S. Stocks 28.7% | ||||||||
Large-Cap 28.7% | ||||||||
Schwab Dividend Equity Fund | $12,821,811 | $4,188,013 | ($2,898,718) | ($66,630) | $1,293,809 | $15,338,285 | 995,993 | $2,240,068 |
International Stocks 12.0% | ||||||||
Developed Markets 12.0% | ||||||||
Laudus International MarketMasters Fund | 5,541,114 | 1,957,530 | (502,125) | 14,862 | (611,647) | 6,399,734 | 255,785 | 914,344 |
Real Estate 7.4% | ||||||||
Global Real Estate 7.4% | ||||||||
Schwab Global Real Estate Fund | 3,296,631 | 660,993 | (650,416) | 20,697 | 661,749 | 3,989,654 | 476,661 | 149,299 |
Fixed Income 49.7% | ||||||||
Intermediate-Term Bond 49.7% | ||||||||
Schwab U.S. Aggregate Bond Index Fund | 22,129,723 | 6,677,976 | (1,396,156) | (41,627) | (846,045) | 26,523,871 | 2,550,372 | 500,300 |
Money Market Funds 0.8% | ||||||||
Schwab Variable Share Price Money Fund, Ultra Shares | 425,207 | 136 | — | — | — | 425,343 | 425,215 | 152 |
Total Affiliated Underlying Funds | $44,214,486 | $13,484,648 | ($5,447,415) | ($72,698) | $497,866 | $52,676,887 | $3,804,163 |
* | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
Assets | ||
Investments in securities, at value - affiliated (cost $47,092,748) | $52,676,887 | |
Investments in securities, at value - unaffiliated (cost $573,321) | 573,321 | |
Receivables: | ||
Fund shares sold | 259,642 | |
Investments sold | 74,000 | |
Dividends | 46,588 | |
Due from investment adviser | 7,521 | |
Prepaid expenses | + | 6,084 |
Total assets | 53,644,043 | |
Liabilities | ||
Payables: | ||
Fund shares redeemed | 160,124 | |
Investments bought | 46,384 | |
Independent trustees’ fees | 41 | |
Accrued expenses | + | 40,547 |
Total liabilities | 247,096 | |
Net assets | $53,396,947 | |
Net Assets by Source | ||
Capital received from investors | $46,887,555 | |
Total distributable earnings | + | 6,509,392 |
Net assets | $53,396,947 |
Net Asset Value (NAV) | ||||
Net Assets | ÷ | Shares Outstanding | = | NAV |
$53,396,947 | 4,454,808 | $11.99 | ||
For the period January 1, 2021 through December 31, 2021 | ||
Investment Income | ||
Dividends received from securities - affiliated | $986,553 | |
Dividends received from securities - unaffiliated | + | 206 |
Total investment income | 986,759 | |
Expenses | ||
Professional fees | 25,615 | |
Registration fees | 22,105 | |
Portfolio accounting fees | 17,413 | |
Shareholder reports | 11,244 | |
Independent trustees’ fees | 7,133 | |
Transfer agent fees | 1,341 | |
Custodian fees | 776 | |
Other expenses | + | 3,748 |
Total expenses | 89,375 | |
Expense reduction by investment adviser | – | 89,375 |
Net expenses | – | — |
Net investment income | 986,759 | |
REALIZED AND UNREALIZED GAINS (LOSSES) | ||
Realized capital gain distributions received from underlying funds - affiliated | 2,817,610 | |
Net realized losses on sales of securities - affiliated | + | (72,698) |
Net realized gains | 2,744,912 | |
Net change in unrealized appreciation (depreciation) on securities - affiliated | + | 497,866 |
Net realized and unrealized gains | 3,242,778 | |
Increase in net assets resulting from operations | $4,229,537 |
OPERATIONS | |||
1/1/21-12/31/21 | 1/1/20-12/31/20 | ||
Net investment income | $986,759 | $857,657 | |
Net realized gains (losses) | 2,744,912 | (143,675) | |
Net change in unrealized appreciation (depreciation) | + | 497,866 | 1,285,818 |
Increase in net assets from operations | $4,229,537 | $1,999,800 | |
DISTRIBUTIONS TO SHAREHOLDERS | |||
Total distributions | ($1,862,595) | ($1,160,837) |
TRANSACTIONS IN FUND SHARES | |||||
1/1/21-12/31/21 | 1/1/20-12/31/20 | ||||
SHARES | VALUE | SHARES | VALUE | ||
Shares sold | 1,345,116 | $16,044,571 | 1,473,250 | $15,784,151 | |
Shares reinvested | 91,349 | 1,092,884 | 62,524 | 679,897 | |
Shares redeemed | + | (904,827) | (10,770,327) | (1,816,959) | (19,246,565) |
Net transactions in fund shares | 531,638 | $6,367,128 | (281,185) | ($2,782,517) | |
SHARES OUTSTANDING AND NET ASSETS | |||||
1/1/21-12/31/21 | 1/1/20-12/31/20 | ||||
SHARES | NET ASSETS | SHARES | NET ASSETS | ||
Beginning of period | 3,923,170 | $44,662,877 | 4,204,355 | $46,606,431 | |
Total increase (decrease) | + | 531,638 | 8,734,070 | (281,185) | (1,943,554) |
End of period | 4,454,808 | $53,396,947 | 3,923,170 | $44,662,877 |
1/1/21– 12/31/21 | 1/1/20– 12/31/20 | 1/1/19– 12/31/19 | 1/1/18– 12/31/18 | 1/1/17– 12/31/17 | ||
Per-Share Data | ||||||
Net asset value at beginning of period | $11.82 | $11.49 | $10.58 | $11.38 | $10.81 | |
Income (loss) from investment operations: | ||||||
Net investment income (loss)1 | 0.24 | 0.23 | 0.31 | 0.25 | 0.24 | |
Net realized and unrealized gains (losses) | 0.44 | 0.45 | 1.13 | (0.72) | 0.64 | |
Total from investment operations | 0.68 | 0.68 | 1.44 | (0.47) | 0.88 | |
Less distributions: | ||||||
Distributions from net investment income | (0.34) | (0.23) | (0.31) | (0.26) | (0.31) | |
Distributions from net realized gains | (0.14) | (0.12) | (0.22) | (0.07) | — | |
Total distributions | (0.48) | (0.35) | (0.53) | (0.33) | (0.31) | |
Net asset value at end of period | $12.02 | $11.82 | $11.49 | $10.58 | $11.38 | |
Total return | 5.73% | 6.11% | 13.79% | (4.20%) | 8.19% | |
Ratios/Supplemental Data | ||||||
Ratios to average net assets: | ||||||
Net operating expenses2 | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | |
Gross operating expenses2 | 0.10% | 0.12% | 0.14% | 0.12% | 0.11% | |
Net investment income (loss) | 1.99% | 2.06% | 2.75% | 2.28% | 2.14% | |
Portfolio turnover rate | 20% | 28% | 31% | 9% | 50% 3 | |
Net assets, end of period (x 1,000,000) | $100 | $90 | $86 | $77 | $95 |
1 | Calculated based on the average shares outstanding during the period. |
2 | Ratio excludes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds. |
3 | The portfolio turnover rate increased due to the in-kind transactions relating to Schwab Total Bond Market Fund and Schwab U.S. Aggregate Bond Index Fund. There were no transaction costs associated with these transactions. For comparison purposes, portfolio turnover rate would have been 13% without including these transactions. |
SECURITY | NUMBER OF SHARES | VALUE ($) |
AFFILIATED UNDERLYING FUNDS 98.9% OF NET ASSETS | ||
U.S. Stocks 19.8% | ||
Large-Cap 19.8% | ||
Schwab Dividend Equity Fund | 1,284,603 | 19,782,883 |
International Stocks 8.2% | ||
Developed Markets 8.2% | ||
Laudus International MarketMasters Fund | 327,102 | 8,184,095 |
Real Estate 5.2% | ||
Global Real Estate 5.2% | ||
Schwab Global Real Estate Fund | 627,112 | 5,248,925 |
Fixed Income 64.8% | ||
Intermediate-Term Bond 64.8% | ||
Schwab U.S. Aggregate Bond Index Fund | 6,233,929 | 64,832,861 |
Money Market Funds 0.9% | ||
Schwab Variable Share Price Money Fund, Ultra Shares 0.03% (a) | 927,627 | 927,905 |
Total Affiliated Underlying Funds (Cost $88,989,218) | 98,976,669 |
SECURITY | NUMBER OF SHARES | VALUE ($) |
UNAFFILIATED UNDERLYING FUNDS 1.1% OF NET ASSETS | ||
Money Market Funds 1.1% | ||
State Street Institutional U.S. Government Money Market Fund, Premier Class 0.03% (a) | 1,095,220 | 1,095,220 |
Total Unaffiliated Underlying Funds (Cost $1,095,220) | 1,095,220 | |
Total Investments in Securities (Cost $90,084,438) | 100,071,889 |
(a) | The rate shown is the 7-day yield. |
VALUE AT 12/31/20 | PURCHASES | SALES | REALIZED GAINS (LOSSES) | NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) | VALUE AT 12/31/21 | BALANCE OF SHARES HELD AT 12/31/21 | DISTRIBUTIONS RECEIVED* | |
AFFILIATED UNDERLYING FUNDS 98.9% OF NET ASSETS | ||||||||
U.S. Stocks 19.8% | ||||||||
Large-Cap 19.8% | ||||||||
Schwab Dividend Equity Fund | $17,682,401 | $6,947,060 | ($6,688,437) | $245,647 | $1,596,212 | $19,782,883 | 1,284,603 | $2,998,522 |
International Stocks 8.2% | ||||||||
Developed Markets 8.2% | ||||||||
Laudus International MarketMasters Fund | 7,778,377 | 3,505,372 | (2,358,315) | 120,046 | (861,385) | 8,184,095 | 327,102 | 1,212,941 |
Real Estate 5.2% | ||||||||
Global Real Estate 5.2% | ||||||||
Schwab Global Real Estate Fund | 4,569,701 | 1,131,080 | (1,418,713) | 66,433 | 900,424 | 5,248,925 | 627,112 | 205,338 |
Fixed Income 64.8% | ||||||||
Intermediate-Term Bond 64.8% | ||||||||
Schwab U.S. Aggregate Bond Index Fund | 57,885,337 | 17,770,409 | (8,409,228) | (235,486) | (2,178,171) | 64,832,861 | 6,233,929 | 1,297,827 |
Money Market Funds 0.9% | ||||||||
Schwab Variable Share Price Money Fund, Ultra Shares | 927,610 | 295 | — | — | — | 927,905 | 927,627 | 331 |
Total Affiliated Underlying Funds | $88,843,426 | $29,354,216 | ($18,874,693) | $196,640 | ($542,920) | $98,976,669 | $5,714,959 |
* | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
Assets | ||
Investments in securities, at value - affiliated (cost $88,989,218) | $98,976,669 | |
Investments in securities, at value - unaffiliated (cost $1,095,220) | 1,095,220 | |
Receivables: | ||
Fund shares sold | 255,381 | |
Dividends | 115,974 | |
Due from investment adviser | 8,120 | |
Prepaid expenses | + | 6,427 |
Total assets | 100,457,791 | |
Liabilities | ||
Payables: | ||
Fund shares redeemed | 218,232 | |
Investments bought | 115,553 | |
Independent trustees’ fees | 42 | |
Accrued expenses | + | 43,224 |
Total liabilities | 377,051 | |
Net assets | $100,080,740 | |
Net Assets by Source | ||
Capital received from investors | $88,381,129 | |
Total distributable earnings | + | 11,699,611 |
Net assets | $100,080,740 |
Net Asset Value (NAV) | ||||
Net Assets | ÷ | Shares Outstanding | = | NAV |
$100,080,740 | 8,327,197 | $12.02 | ||
For the period January 1, 2021 through December 31, 2021 | ||
Investment Income | ||
Dividends received from securities - affiliated | $1,959,233 | |
Dividends received from securities - unaffiliated | + | 392 |
Total investment income | 1,959,625 | |
Expenses | ||
Professional fees | 29,970 | |
Registration fees | 24,716 | |
Portfolio accounting fees | 17,993 | |
Shareholder reports | 15,947 | |
Independent trustees’ fees | 7,285 | |
Transfer agent fees | 1,702 | |
Custodian fees | 389 | |
Other expenses | + | 4,149 |
Total expenses | 102,151 | |
Expense reduction by investment adviser | – | 102,151 |
Net expenses | – | — |
Net investment income | 1,959,625 | |
REALIZED AND UNREALIZED GAINS (LOSSES) | ||
Realized capital gain distributions received from underlying funds - affiliated | 3,755,726 | |
Net realized gains on sales of securities - affiliated | + | 196,640 |
Net realized gains | 3,952,366 | |
Net change in unrealized appreciation (depreciation) on securities - affiliated | + | (542,920) |
Net realized and unrealized gains | 3,409,446 | |
Increase in net assets resulting from operations | $5,369,071 |
OPERATIONS | |||
1/1/21-12/31/21 | 1/1/20-12/31/20 | ||
Net investment income | $1,959,625 | $1,743,661 | |
Net realized gains | 3,952,366 | 317,497 | |
Net change in unrealized appreciation (depreciation) | + | (542,920) | 2,849,634 |
Increase in net assets from operations | $5,369,071 | $4,910,792 | |
DISTRIBUTIONS TO SHAREHOLDERS | |||
Total distributions | ($3,863,797) | ($2,674,802) |
TRANSACTIONS IN FUND SHARES | |||||
1/1/21-12/31/21 | 1/1/20-12/31/20 | ||||
SHARES | VALUE | SHARES | VALUE | ||
Shares sold | 3,079,304 | $37,078,468 | 2,448,176 | $27,839,048 | |
Shares reinvested | 199,243 | 2,401,008 | 147,131 | 1,693,229 | |
Shares redeemed | + | (2,536,848) | (30,595,287) | (2,461,385) | (27,672,110) |
Net transactions in fund shares | 741,699 | $8,884,189 | 133,922 | $1,860,167 | |
SHARES OUTSTANDING AND NET ASSETS | |||||
1/1/21-12/31/21 | 1/1/20-12/31/20 | ||||
SHARES | NET ASSETS | SHARES | NET ASSETS | ||
Beginning of period | 7,585,498 | $89,691,277 | 7,451,576 | $85,595,120 | |
Total increase | + | 741,699 | 10,389,463 | 133,922 | 4,096,157 |
End of period | 8,327,197 | $100,080,740 | 7,585,498 | $89,691,277 |
1/1/21– 12/31/21 | 1/1/20– 12/31/20 | 1/1/19– 12/31/19 | 1/1/18– 12/31/18 | 1/1/17– 12/31/17 | ||
Per-Share Data | ||||||
Net asset value at beginning of period | $10.80 | $10.33 | $9.60 | $10.15 | $9.85 | |
Income (loss) from investment operations: | ||||||
Net investment income (loss)1 | 0.22 | 0.23 | 0.29 | 0.24 | 0.22 | |
Net realized and unrealized gains (losses) | 0.03 | 0.47 | 0.77 | (0.48) | 0.33 | |
Total from investment operations | 0.25 | 0.70 | 1.06 | (0.24) | 0.55 | |
Less distributions: | ||||||
Distributions from net investment income | (0.26) | (0.22) | (0.28) | (0.24) | (0.25) | |
Distributions from net realized gains | (0.07) | (0.01) | (0.05) | (0.07) | — | |
Total distributions | (0.33) | (0.23) | (0.33) | (0.31) | (0.25) | |
Net asset value at end of period | $10.72 | $10.80 | $10.33 | $9.60 | $10.15 | |
Total return | 2.33% | 6.93% | 11.18% | (2.31%) | 5.64% | |
Ratios/Supplemental Data | ||||||
Ratios to average net assets: | ||||||
Net operating expenses2 | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% 3,4 | |
Gross operating expenses2 | 0.11% | 0.14% | 0.23% | 0.20% | 0.20% | |
Net investment income (loss) | 1.99% | 2.17% | 2.85% | 2.42% | 2.17% | |
Portfolio turnover rate | 25% | 23% | 31% | 11% | 63% 5 | |
Net assets, end of period (x 1,000,000) | $113 | $112 | $63 | $40 | $48 |
1 | Calculated based on the average shares outstanding during the period. |
2 | Ratio excludes acquired fund fees and expenses, which are indirect expenses incurred by the fund through its investments in underlying funds. |
3 | The ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred. |
4 | Less than 0.005%. |
5 | The portfolio turnover rate increased due to the in-kind transactions relating to Schwab Total Bond Market Fund and Schwab U.S. Aggregate Bond Index Fund. There were no transaction costs associated with these transactions. For comparison purposes, portfolio turnover rate would have been 16% without including these transactions. |
SECURITY | NUMBER OF SHARES | VALUE ($) |
AFFILIATED UNDERLYING FUNDS 98.5% OF NET ASSETS | ||
U.S. Stocks 10.8% | ||
Large-Cap 10.8% | ||
Schwab Dividend Equity Fund | 787,374 | 12,125,554 |
International Stocks 4.4% | ||
Developed Markets 4.4% | ||
Laudus International MarketMasters Fund | 197,973 | 4,953,292 |
Real Estate 2.9% | ||
Global Real Estate 2.9% | ||
Schwab Global Real Estate Fund | 394,134 | 3,298,902 |
Fixed Income 79.3% | ||
Intermediate-Term Bond 79.3% | ||
Schwab U.S. Aggregate Bond Index Fund | 8,586,647 | 89,301,124 |
Money Market Funds 1.1% | ||
Schwab Variable Share Price Money Fund, Ultra Shares 0.03% (a) | 1,175,491 | 1,175,843 |
Total Affiliated Underlying Funds (Cost $106,375,217) | 110,854,715 |
SECURITY | NUMBER OF SHARES | VALUE ($) |
UNAFFILIATED UNDERLYING FUNDS 0.7% OF NET ASSETS | ||
Money Market Funds 0.7% | ||
State Street Institutional U.S. Government Money Market Fund, Premier Class 0.03% (a) | 821,551 | 821,551 |
Total Unaffiliated Underlying Funds (Cost $821,551) | 821,551 | |
Total Investments in Securities (Cost $107,196,768) | 111,676,266 |
(a) | The rate shown is the 7-day yield. |
VALUE AT 12/31/20 | PURCHASES | SALES | REALIZED GAINS (LOSSES) | NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) | VALUE AT 12/31/21 | BALANCE OF SHARES HELD AT 12/31/21 | DISTRIBUTIONS RECEIVED* | |
AFFILIATED UNDERLYING FUNDS 98.5% OF NET ASSETS | ||||||||
U.S. Stocks 10.8% | ||||||||
Large-Cap 10.8% | ||||||||
Schwab Dividend Equity Fund | $12,053,824 | $3,509,150 | ($4,720,191) | $244,309 | $1,038,462 | $12,125,554 | 787,374 | $1,734,816 |
International Stocks 4.4% | ||||||||
Developed Markets 4.4% | ||||||||
Laudus International MarketMasters Fund | 5,542,048 | 2,187,646 | (2,284,971) | 66,014 | (557,445) | 4,953,292 | 197,973 | 778,646 |
Real Estate 2.9% | ||||||||
Global Real Estate 2.9% | ||||||||
Schwab Global Real Estate Fund | 3,191,436 | 629,457 | (1,131,902) | (36,866) | 646,777 | 3,298,902 | 394,134 | 129,456 |
Fixed Income 79.3% | ||||||||
Intermediate-Term Bond 79.3% | ||||||||
Schwab U.S. Aggregate Bond Index Fund | 89,008,829 | 23,733,716 | (19,835,391) | (737,526) | (2,868,504) | 89,301,124 | 8,586,647 | 1,838,632 |
Money Market Funds 1.1% | ||||||||
Schwab Variable Share Price Money Fund, Ultra Shares | 975,521 | 200,322 | — | — | — | 1,175,843 | 1,175,491 | 368 |
Total Affiliated Underlying Funds | $110,771,658 | $30,260,291 | ($27,972,455) | ($464,069) | ($1,740,710) | $110,854,715 | $4,481,918 |
* | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
Assets | ||
Investments in securities, at value - affiliated (cost $106,375,217) | $110,854,715 | |
Investments in securities, at value - unaffiliated (cost $821,551) | 821,551 | |
Receivables: | ||
Fund shares sold | 3,823,238 | |
Investments sold | 260,000 | |
Dividends | 156,671 | |
Due from investment adviser | 10,158 | |
Prepaid expenses | + | 7,022 |
Total assets | 115,933,355 | |
Liabilities | ||
Payables: | ||
Investments bought | 3,006,136 | |
Fund shares redeemed | 265,397 | |
Independent trustees’ fees | 42 | |
Accrued expenses | + | 42,966 |
Total liabilities | 3,314,541 | |
Net assets | $112,618,814 | |
Net Assets by Source | ||
Capital received from investors | $107,577,517 | |
Total distributable earnings | + | 5,041,297 |
Net assets | $112,618,814 |
Net Asset Value (NAV) | ||||
Net Assets | ÷ | Shares Outstanding | = | NAV |
$112,618,814 | 10,510,063 | $10.72 | ||
For the period January 1, 2021 through December 31, 2021 | ||
Investment Income | ||
Dividends received from securities - affiliated | $2,247,141 | |
Dividends received from securities - unaffiliated | + | 427 |
Total investment income | 2,247,568 | |
Expenses | ||
Registration fees | 39,453 | |
Professional fees | 31,098 | |
Portfolio accounting fees | 18,302 | |
Shareholder reports | 16,862 | |
Independent trustees’ fees | 7,333 | |
Transfer agent fees | 1,795 | |
Custodian fees | 796 | |
Other expenses | + | 4,251 |
Total expenses | 119,890 | |
Expense reduction by investment adviser | – | 119,890 |
Net expenses | – | — |
Net investment income | 2,247,568 | |
REALIZED AND UNREALIZED GAINS (LOSSES) | ||
Realized capital gain distributions received from underlying funds - affiliated | 2,234,777 | |
Net realized losses on sales of securities - affiliated | + | (464,069) |
Net realized gains | 1,770,708 | |
Net change in unrealized appreciation (depreciation) on securities - affiliated | + | (1,740,710) |
Net realized and unrealized gains | 29,998 | |
Increase in net assets resulting from operations | $2,277,566 |
OPERATIONS | |||
1/1/21-12/31/21 | 1/1/20-12/31/20 | ||
Net investment income | $2,247,568 | $1,689,567 | |
Net realized gains | 1,770,708 | 192,821 | |
Net change in unrealized appreciation (depreciation) | + | (1,740,710) | 3,128,712 |
Increase in net assets from operations | $2,277,566 | $5,011,100 | |
DISTRIBUTIONS TO SHAREHOLDERS | |||
Total distributions | ($3,387,702) | ($1,822,117) |
TRANSACTIONS IN FUND SHARES | |||||
1/1/21-12/31/21 | 1/1/20-12/31/20 | ||||
SHARES | VALUE | SHARES | VALUE | ||
Shares sold | 5,817,574 | $62,845,934 | 8,675,410 | $91,217,898 | |
Shares reinvested | 194,332 | 2,091,664 | 105,564 | 1,111,251 | |
Shares redeemed | + | (5,871,515) | (63,251,350) | (4,462,298) | (46,001,366) |
Net transactions in fund shares | 140,391 | $1,686,248 | 4,318,676 | $46,327,783 | |
SHARES OUTSTANDING AND NET ASSETS | |||||
1/1/21-12/31/21 | 1/1/20-12/31/20 | ||||
SHARES | NET ASSETS | SHARES | NET ASSETS | ||
Beginning of period | 10,369,672 | $112,042,702 | 6,050,996 | $62,525,936 | |
Total increase | + | 140,391 | 576,112 | 4,318,676 | 49,516,766 |
End of period | 10,510,063 | $112,618,814 | 10,369,672 | $112,042,702 |
SCHWAB CAPITAL TRUST (ORGANIZED MAY 7, 1993) | |
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 |
Schwab Target 2010 Fund | Schwab Large-Cap Growth Fund |
Schwab Target 2015 Fund | Schwab Small-Cap Equity Fund |
Schwab Target 2020 Fund | Schwab Health Care Fund |
Schwab Target 2025 Fund | Schwab International Core Equity Fund |
Schwab Target 2030 Fund | Schwab Fundamental US Large Company Index Fund |
Schwab Target 2035 Fund | Schwab Fundamental US Small Company Index Fund |
Schwab Target 2040 Fund | Schwab Fundamental International Large Company Index Fund |
Schwab Target 2045 Fund | Schwab Fundamental International Small Company Index Fund |
Schwab Target 2050 Fund | Schwab Fundamental Emerging Markets Large Company Index Fund |
Schwab Target 2055 Fund | Schwab Fundamental Global Real Estate Index Fund |
Schwab Target 2060 Fund | Schwab Target 2010 Index Fund |
Schwab Target 2065 Fund | Schwab Target 2015 Index Fund |
Schwab S&P 500 Index Fund | Schwab Target 2020 Index Fund |
Schwab Small-Cap Index Fund® | Schwab Target 2025 Index Fund |
Schwab Total Stock Market Index Fund® | Schwab Target 2030 Index Fund |
Schwab U.S. Large-Cap Growth Index Fund | Schwab Target 2035 Index Fund |
Schwab U.S. Large-Cap Value Index Fund | Schwab Target 2040 Index Fund |
Schwab U.S. Mid-Cap Index Fund | Schwab Target 2045 Index Fund |
Schwab International Index Fund® | Schwab Target 2050 Index Fund |
Schwab MarketTrack All Equity Portfolio™ | Schwab Target 2055 Index Fund |
Schwab MarketTrack Growth Portfolio™ | Schwab Target 2060 Index Fund |
Schwab MarketTrack Balanced Portfolio™ | Schwab Target 2065 Index Fund |
Schwab MarketTrack Conservative Portfolio™ | |
Laudus International MarketMasters Fund™ |
UNDERLYING FUNDS | SCHWAB MONTHLY INCOME FUND – MODERATE PAYOUT | SCHWAB MONTHLY INCOME FUND – ENHANCED PAYOUT | SCHWAB MONTHLY INCOME FUND – MAXIMUM PAYOUT |
Laudus International MarketMasters Fund | 0.4% | 0.6% | 0.3% |
Schwab Dividend Equity Fund | 2.3% | 2.9% | 1.8% |
Schwab Global Real Estate Fund | 1.2% | 1.5% | 1.0% |
Schwab U.S. Aggregate Bond Index Fund | 0.5% | 1.2% | 1.6% |
Schwab Variable Share Price Money Fund, Ultra Shares | 0.0%* | 0.0%* | 0.0%* |
* | Less than 0.05% |
PURCHASES OF SECURITIES | SALES OF SECURITIES | |
Schwab Monthly Income Fund – Moderate Payout | $13,484,648 | $5,447,415 |
Schwab Monthly Income Fund – Enhanced Payout | 29,354,216 | 18,874,693 |
Schwab Monthly Income Fund – Maximum Payout | 30,260,291 | 27,972,455 |
8. Federal Income Taxes: |
TAX COST | GROSS UNREALIZED APPRECIATION | GROSS UNREALIZED DEPRECIATION | NET UNREALIZED APPRECIATION (DEPRECIATION) | |
Schwab Monthly Income Fund – Moderate Payout | $48,952,299 | $5,584,296 | ($1,286,387) | $4,297,909 |
Schwab Monthly Income Fund – Enhanced Payout | 91,371,996 | 9,987,539 | (1,287,646) | 8,699,893 |
Schwab Monthly Income Fund – Maximum Payout | 108,216,937 | 4,479,498 | (1,020,169) | 3,459,329 |
UNDISTRIBUTED ORDINARY INCOME | UNDISTRIBUTED LONG-TERM CAPITAL GAINS | NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS | TOTAL | |
Schwab Monthly Income Fund – Moderate Payout | $93,554 | $2,117,929 | $4,297,909 | $6,509,392 |
Schwab Monthly Income Fund – Enhanced Payout | 147,368 | 2,852,350 | 8,699,893 | 11,699,611 |
Schwab Monthly Income Fund – Maximum Payout | 13,549 | 1,568,419 | 3,459,329 | 5,041,297 |
CURRENT FISCAL YEAR END DISTRIBUTIONS | PRIOR FISCAL YEAR END DISTRIBUTIONS | |||
ORDINARY INCOME | LONG-TERM CAPITAL GAINS | ORDINARY INCOME | LONG-TERM CAPITAL GAINS | |
Schwab Monthly Income Fund – Moderate Payout | $1,564,456 | $298,139 | $868,732 | $292,105 |
Schwab Monthly Income Fund – Enhanced Payout | 2,767,784 | 1,096,013 | 1,819,998 | 854,804 |
Schwab Monthly Income Fund – Maximum Payout | 2,738,360 | 649,342 | 1,763,366 | 58,751 |
Denver, Colorado
February 17, 2022
FOREIGN TAX CREDIT | FOREIGN SOURCE INCOME | |
Schwab Monthly Income Fund – Moderate Payout | $26,428 | $166,933 |
Schwab Monthly Income Fund – Enhanced Payout | 34,991 | 224,979 |
Schwab Monthly Income Fund – Maximum Payout | 22,254 | 143,281 |
Schwab Monthly Income Fund – Moderate Payout | 24.15% |
Schwab Monthly Income Fund – Enhanced Payout | 18.36% |
Schwab Monthly Income Fund – Maximum Payout | 10.89% |
Schwab Monthly Income Fund – Moderate Payout | $485,356 |
Schwab Monthly Income Fund – Enhanced Payout | 651,481 |
Schwab Monthly Income Fund – Maximum Payout | 387,572 |
Schwab Monthly Income Fund – Moderate Payout | $298,139 |
Schwab Monthly Income Fund – Enhanced Payout | 1,096,013 |
Schwab Monthly Income Fund – Maximum Payout | 649,342 |
Schwab Monthly Income Fund – Moderate Payout | $91,368 |
Schwab Monthly Income Fund – Enhanced Payout | 125,032 |
Schwab Monthly Income Fund – Maximum Payout | 77,618 |
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. | 103 | None |
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). | 103 | 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. | 103 | Director (2004 – present), Corcept Therapeutics Incorporated Director (2009 – 2021), Adamas Pharmaceuticals, Inc. Director (2003 – 2019), Symantec Corporation |
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). | 103 | 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). | 103 | Director (2008 – present), KLA-Tencor Corporation |
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 |
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). | 103 | None |
J. Derek Penn 1957 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2021) | Head of Equity Sales and Trading (2006 – 2018), BNY Mellon (financial services). | 103 | None |
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 and Chief Executive Officer (Oct. 2008 – present) and President (Oct. 2008 – Oct. 2021), The Charles Schwab Corporation; President and Chief Executive Officer (Oct. 2008 – Oct. 2021) and Director (May 2008 – Oct. 2021), 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 – Oct. 2021), Charles Schwab Investment Management, Inc. | 103 | Director (2008 – present), The Charles Schwab Corporation |
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. | 103 | 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), Chief Operating Officer (Jan. 2020 – present), and Chief Executive Officer (Apr. 2019 – Nov. 2019), Charles Schwab Investment Management, Inc.; Senior Vice President (June 2020 – present) and Chief Operating Officer (Jan. 2020 – present), Charles Schwab Investment Advisory, Inc.; Chief Executive Officer (Apr. 2019 – present), President (Nov. 2018 – present) and Trustee (Apr. 2019 – Dec. 2020), Schwab Funds, Laudus Trust 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 Trust and Schwab ETFs; Assistant Treasurer (Dec. 2013 – Dec. 2015), Schwab Funds and Laudus Trust; 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 Vice President and Chief Investment Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) | Chief Executive Officer (Jan. 2022 – present) and Chief Investment Officer (Apr. 2011 – present), Senior Vice President (Apr. 2011 – Dec. 2021), Charles Schwab Investment Management, Inc.; Vice President and Chief Investment Officer (June 2011 – present), Schwab Funds, Laudus Trust 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. |
Brett Wander 1961 Vice President and Chief Investment Officer (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.; Vice President and Chief Investment Officer (June 2011 – present), Schwab Funds, Laudus Trust 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). |
William P. McMahon, Jr. 1972 Vice President and Chief Investment Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2021) | Senior Vice President and Chief Investment Officer (Jan. 2020 – present), Charles Schwab Investment Management, Inc.; Vice President and Chief Investment Officer (June 2021 – present), Schwab Funds, Laudus Trust and Schwab ETFs; Senior Vice President and Chief Investment Officer – ThomasPartners Strategies (Apr. 2018 – Dec. 2019), Charles Schwab Investment Advisory, Inc.; Senior Vice President and Chief Investment Officer (May 2001 – Apr. 2018), ThomasPartners, Inc. |
Catherine MacGregor 1964 Chief Legal Officer and Secretary, Schwab Funds and Schwab ETFs Chief Legal Officer, Vice President and Clerk, Laudus Trust (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 Trust; Chief Legal Officer and Secretary (Oct. 2021 – present), Vice President (Nov. 2005 – Oct. 2021) and Assistant Secretary (June 2007 – Oct. 2021), Schwab Funds; Chief Legal Officer and Secretary (Oct. 2021 – present), Vice President and Assistant Secretary (Oct. 2009 – Oct. 2021), 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 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., the investment adviser for the trusts in the Fund Complex, and is an employee of Charles Schwab & Co., Inc. (Schwab), the principal underwriter for The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust. Mr. Martinetto is an Interested Trustee because he owns stock of CSC and is an employee and director of Schwab. |
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 Funds
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. |
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, Kimberly S. Patmore and J. Derek Penn, 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, Ms. Patmore and Mr. Penn 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-two operational series. Three series have a fiscal year-end of December 31, whose annual financial statements are reported in Item 1, one series has a fiscal year-end of the last day of February, twelve series have a fiscal year-end of March 31, and thirty-six series have a fiscal year-end of October 31. Principal accountant fees disclosed in Items 4(a)-(d) and 4(g) include fees billed for services rendered to the fifty-two operational series during 2021/2022 and the fifty-one operational series during 2020/2021, based on their respective 2021/2022 and 2020/2021 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 | Fiscal Year 2020/2021 | Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | |||||||
$1,187,075 | $1,203,450 | $96,000 | $90,000 | $161,200 | $158,100 | $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. |
2021: $3,088,431 | 2020: $ | 3,577,864 |
(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.
The schedules of investments are included as part of the report to shareholders filed under Item 1 of this Form.
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) |
(2) |
(3) | Not applicable. |
(b) |
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 – Monthly Income Funds
By: | /s/ Jonathan de St. Paer | |
Jonathan de St. Paer Chief Executive Officer | ||
Date: | February 17, 2022 |
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: | February 17, 2022 | |
By: | /s/ Mark Fischer | |
Mark Fischer Chief Financial Officer | ||
Date: | February 17, 2022 |