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)
Omar Aguilar
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, 2023
Item 1: Report(s) to Stockholders.
Target Payout
Flexible Payout
Income Payout
No Action Required – Notice Regarding Shareholder Report Delivery |
Beginning on July 24, 2024, fund shareholder reports will be streamlined to highlight key information deemed important for investors to assess and monitor their fund investments. Other information, including financial statements, will not appear in the streamlined shareholder reports but will available online and delivered free of charge upon request. |
• If you already receive the full shareholder reports, you will receive the streamlined shareholder reports in the same way that you currently receive the full shareholder reports (either in paper or electronically). |
• If you currently receive a notification when a shareholder report is available on a fund’s website, beginning July 24, 2024, you will begin to receive the streamlined shareholder report (in paper). |
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50 |
Total Returns for the 12 Months Ended December 31, 2023 | |
Schwab Monthly Income Fund – Target Payout (Ticker Symbol: SWJRX) | 8.58% |
Target Payout Composite Index | 9.02% |
Fund Category: Morningstar Moderately Conservative Allocation1 | 10.43% |
Performance Details | pages 6-8 |
Schwab Monthly Income Fund – Flexible Payout (Ticker Symbol: SWKRX) | 8.50% |
Flexible Payout Composite Index | 9.02% |
Fund Category: Morningstar Moderately Conservative Allocation1 | 10.43% |
Performance Details | pages 9-11 |
Schwab Monthly Income Fund – Income Payout (Ticker Symbol: SWLRX) | 7.81% |
Income Payout Composite Index | 8.25% |
Fund Category: Morningstar Conservative Allocation1 | 7.98% |
Performance Details | pages 12-14 |
Zifan Tang, Ph.D., CFA, Senior Portfolio Manager for Schwab Asset Management, 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). |
Drew Hayes, CFA, Portfolio Manager for Schwab Asset Management, is responsible for the co-management of the funds. Mr. Hayes has been with Schwab since 2006. Before becoming a portfolio manager, he spent seven years as a senior fixed income specialist for Schwab Wealth Advisory, Inc. Prior to that, he worked as a bond investment specialist for two years and as a registered representative for two years for Charles Schwab & Co., Inc. |
Patrick Kwok, CFA, Portfolio Manager for Schwab Asset Management, 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. |
Fund and Inception Date | 1 Year | 5 Years | 10 Years |
Fund: Schwab Monthly Income Fund – Target Payout (3/28/08) | 8.58% | 4.85% | 3.83% |
S&P 500® Index | 26.29% | 15.69% | 12.03% |
Bloomberg US Aggregate Bond Index | 5.53% | 1.10% | 1.81% |
Target Payout Composite Index | 9.02% | 6.07% | 5.11% |
Fund Category: Morningstar Moderately Conservative Allocation2 | 10.43% | 5.40% | 4.16% |
Fund Expense Ratios3: Net 0.25%; Gross 0.46% |
Number of Holdings | 10 |
Portfolio Turnover Rate | 9% |
12-Month Distribution Yield | 4.81% 1,2 |
Fund and Inception Date | 1 Year | 5 Years | 10 Years |
Fund: Schwab Monthly Income Fund – Flexible Payout (3/28/08) | 8.50% | 3.92% | 3.26% |
S&P 500® Index | 26.29% | 15.69% | 12.03% |
Bloomberg US Aggregate Bond Index | 5.53% | 1.10% | 1.81% |
Flexible Payout Composite Index | 9.02% | 4.82% | 4.21% |
Fund Category: Morningstar Moderately Conservative Allocation2 | 10.43% | 5.40% | 4.16% |
Fund Expense Ratios3: Net 0.25%; Gross 0.40% |
Number of Holdings | 11 |
Portfolio Turnover Rate | 7% |
12-Month Distribution Yield | 4.70% 1,2 |
Fund and Inception Date | 1 Year | 5 Years | 10 Years |
Fund: Schwab Monthly Income Fund – Income Payout (3/28/08) | 7.81% | 2.79% | 2.55% |
S&P 500® Index | 26.29% | 15.69% | 12.03% |
Bloomberg US Aggregate Bond Index | 5.53% | 1.10% | 1.81% |
Income Payout Composite Index | 8.25% | 3.33% | 3.17% |
Fund Category: Morningstar Conservative Allocation2 | 7.98% | 3.34% | 2.86% |
Fund Expense Ratios3: Net 0.21%; Gross 0.35% |
Number of Holdings | 11 |
Portfolio Turnover Rate | 5% |
12-Month Distribution Yield | 4.11% 1,2 |
EXPENSE RATIO (ANNUALIZED)1,2 | EFFECTIVE EXPENSE RATIO (ANNUALIZED)3,4 | BEGINNING ACCOUNT VALUE AT 7/1/23 | ENDING ACCOUNT VALUE (NET OF EXPENSES) AT 12/31/232 | EXPENSES PAID DURING PERIOD 7/1/23-12/31/232,5 | EFFECTIVE EXPENSES PAID DURING PERIOD 7/1/23-12/31/234,5 | |
Schwab Monthly Income Fund – Target Payout | ||||||
Actual Return | 0.00% | 0.26% | $1,000.00 | $1,054.00 | $0.00 | $1.35 |
Hypothetical 5% Return | 0.00% | 0.26% | $1,000.00 | $1,025.21 | $0.00 | $1.33 |
Schwab Monthly Income Fund – Flexible Payout | ||||||
Actual Return | 0.00% | 0.26% | $1,000.00 | $1,053.90 | $0.00 | $1.35 |
Hypothetical 5% Return | 0.00% | 0.26% | $1,000.00 | $1,025.21 | $0.00 | $1.33 |
Schwab Monthly Income Fund – Income Payout | ||||||
Actual Return | 0.00% | 0.21% | $1,000.00 | $1,049.50 | $0.00 | $1.08 |
Hypothetical 5% Return | 0.00% | 0.21% | $1,000.00 | $1,025.21 | $0.00 | $1.07 |
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 184 days in the period, and divided by 365 days in the fiscal year. |
1/1/23– 12/31/23 | 1/1/22– 12/31/22 | 1/1/21– 12/31/21 | 1/1/20– 12/31/20 | 1/1/19– 12/31/19 | ||
Per-Share Data | ||||||
Net asset value at beginning of period | $9.62 | $11.99 | $11.38 | $11.09 | $10.05 | |
Income (loss) from investment operations: | ||||||
Net investment income (loss)1 | 0.41 | 0.30 | 0.24 | 0.21 | 0.29 | |
Net realized and unrealized gains (losses) | 0.39 | (1.83 ) | 0.81 | 0.36 | 1.34 | |
Total from investment operations | 0.80 | (1.53 ) | 1.05 | 0.57 | 1.63 | |
Less distributions: | ||||||
Distributions from net investment income | (0.42 ) | (0.30 ) | (0.37 ) | (0.21 ) | (0.29 ) | |
Distributions from net realized gains | — | (0.54 ) | (0.07 ) | (0.07 ) | (0.30 ) | |
Tax return of capital | (0.06 ) | — | — | — | — | |
Total distributions | (0.48 ) | (0.84 ) | (0.44 ) | (0.28 ) | (0.59 ) | |
Net asset value at end of period | $9.94 | $9.62 | $11.99 | $11.38 | $11.09 | |
Total return | 8.58 % | (12.85 %) | 9.23 % | 5.32 % | 16.41 % | |
Ratios/Supplemental Data | ||||||
Ratios to average net assets: | ||||||
Net operating expenses2 | 0.00 % | 0.00 %3 | 0.00 % | 0.00 % | 0.00 % | |
Gross operating expenses2 | 0.28 % | 0.21 %3 | 0.18 % | 0.21 % | 0.24 % | |
Net investment income (loss) | 4.27 % | 2.79 % | 1.99 % | 1.93 % | 2.68 % | |
Portfolio turnover rate | 9 % | 82 % | 11 % | 30 % | 30 % | |
Net assets, end of period (x 1,000) | $35,939 | $40,127 | $53,397 | $44,663 | $46,606 |
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 | Ratio includes less than 0.005% of non-routine proxy expenses. |
SECURITY | VALUE AT 12/31/22 | PURCHASES | SALES | REALIZED GAINS (LOSSES) | NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) | VALUE AT 12/31/23 | BALANCE OF SHARES HELD AT 12/31/23 | DISTRIBUTIONS RECEIVED(a) |
AFFILIATED UNDERLYING FUNDS 78.5% OF NET ASSETS | ||||||||
U.S. Stocks 20.2% | ||||||||
Large-Cap 20.2% | ||||||||
Schwab U.S. Dividend Equity ETF | $8,086,633 | $707,674 | ($1,570,788 ) | ($27,971 ) | $66,645 | $7,262,193 | 95,392 | $267,761 |
International Stocks 19.7% | ||||||||
Developed Markets 19.7% | ||||||||
Schwab International Dividend Equity ETF | 7,933,765 | 654,812 | (2,208,194 ) | 91,785 | 611,252 | 7,083,420 | 288,061 | 284,880 |
Real Estate 10.1% | ||||||||
Global Real Estate 10.1% | ||||||||
Schwab Global Real Estate Fund | 3,956,444 | 316,486 | (827,513 ) | (70,771 ) | 251,166 | 3,625,812 | 567,420 | 126,075 |
Fixed Income 27.2% | ||||||||
Intermediate-Term Bond 19.9% | ||||||||
Schwab 5-10 Year Corporate Bond ETF | 1,214,989 | 115,912 | (310,742 ) | (15,619 ) | 58,201 | 1,062,741 | 23,648 | 48,454 |
Schwab U.S. Aggregate Bond Index Fund | 6,970,822 | 506,861 | (1,498,293 ) | (166,249 ) | 282,575 | 6,095,716 | 677,302 | 205,507 |
7,158,457 | ||||||||
Long-Term Government Bond 7.3% | ||||||||
Schwab Long-Term U.S. Treasury ETF | 2,810,637 | 179,729 | (381,865 ) | (9,986 ) | 12,209 | 2,610,724 | 74,422 | 98,214 |
9,769,181 | ||||||||
Money Market Funds 1.3% | ||||||||
Schwab Variable Share Price Money Fund, Ultra Shares, 5.43% (b) | 432,443 | 125,174 | (80,000 ) | (32 ) | 138 | 477,723 | 477,485 | 25,138 |
Total Affiliated Underlying Funds (Cost $27,695,761) | $31,405,733 | $2,606,648 | ($6,877,395 ) | ($198,843 ) | $1,282,186 | $28,218,329 | $1,056,029 | |
UNAFFILIATED UNDERLYING FUNDS 20.9% OF NET ASSETS | ||||||||
Fixed Income 20.9% | ||||||||
Floating Rate Loan 3.0% | ||||||||
T Rowe Price Institutional Floating Rate Fund, Investor Class | $1,061,911 | 112,253 | ||||||
High-Yield Bond 10.9% | ||||||||
BlackRock High Yield Bond Portfolio, Class K | 3,910,425 | 555,458 |
SECURITY | VALUE AT 12/31/22 | PURCHASES | SALES | REALIZED GAINS (LOSSES) | NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) | VALUE AT 12/31/23 | BALANCE OF SHARES HELD AT 12/31/23 | DISTRIBUTIONS RECEIVED(a) |
Preferred 7.0% | ||||||||
Cohen & Steers Preferred Securities & Income Fund, Inc., Class I | $2,532,502 | 214,983 | ||||||
7,504,838 | ||||||||
Total Unaffiliated Underlying Funds (Cost $7,451,208) | $7,504,838 | |||||||
Total Investments in Securities (Cost $35,146,969) | $35,723,167 |
(a) | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. Amounts shown are only presented for affiliated underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable (see financial note 2(c) for additional information). |
(b) | The rate shown is the annualized 7-day yield. |
ETF — | Exchange-traded fund |
Assets | ||
Investments in securities, at value - affiliated (cost $27,695,761) | $28,218,329 | |
Investments in securities, at value - unaffiliated (cost $7,451,208) | 7,504,838 | |
Receivables: | ||
Investments sold | 288,649 | |
Dividends | 58,141 | |
Due from investment adviser | 8,053 | |
Fund shares sold | 3,736 | |
Prepaid expenses | + | 2,777 |
Total assets | 36,084,523 | |
Liabilities | ||
Payables: | ||
Investments bought | 53,713 | |
Fund shares redeemed | 28,252 | |
Due to custodian | 23,459 | |
Independent trustees’ fees | 15 | |
Accrued expenses | + | 39,744 |
Total liabilities | 145,183 | |
Net assets | $35,939,340 | |
Net Assets by Source | ||
Capital received from investors | $38,240,332 | |
Total distributable loss | + | (2,300,992 ) |
Net assets | $35,939,340 |
Net Asset Value (NAV) | ||||
Net Assets | ÷ | Shares Outstanding | = | NAV |
$35,939,340 | 3,614,731 | $9.94 | ||
For the period January 1, 2023 through December 31, 2023 | ||
Investment Income | ||
Dividends received from securities - affiliated | $1,056,029 | |
Dividends received from securities - unaffiliated | + | 537,271 |
Total investment income | 1,593,300 | |
Expenses | ||
Professional fees | 35,544 | |
Registration fees | 21,872 | |
Shareholder reports | 17,402 | |
Portfolio accounting fees | 16,844 | |
Independent trustees’ fees | 6,028 | |
Custodian fees | 2,275 | |
Transfer agent fees | 1,726 | |
Other expenses | + | 2,137 |
Total expenses | 103,828 | |
Expense reduction | – | 103,828 |
Net expenses | – | — |
Net investment income | 1,593,300 | |
REALIZED AND UNREALIZED GAINS (LOSSES) | ||
Net realized losses on sales of securities - affiliated | (198,843 ) | |
Net realized losses on sales of securities - unaffiliated | + | (50,146 ) |
Net realized losses | (248,989 ) | |
Net change in unrealized appreciation (depreciation) on securities - affiliated | 1,282,186 | |
Net change in unrealized appreciation (depreciation) on securities - unaffiliated | + | 332,917 |
Net change in unrealized appreciation (depreciation) | + | 1,615,103 |
Net realized and unrealized gains | 1,366,114 | |
Increase in net assets resulting from operations | $2,959,414 |
OPERATIONS | |||
1/1/23-12/31/23 | 1/1/22-12/31/22 | ||
Net investment income | $1,593,300 | $1,256,312 | |
Net realized losses | (248,989 ) | (1,341,975 ) | |
Net change in unrealized appreciation (depreciation) | + | 1,615,103 | (6,623,044 ) |
Increase (decrease) in net assets resulting from operations | $2,959,414 | ($6,708,707 ) | |
DISTRIBUTIONS TO SHAREHOLDERS | |||
From net investment income and net realized gain | ($1,633,700 ) | ($3,427,395 ) | |
From tax return of capital | + | (219,128 ) | — |
Total distributions | ($1,852,828 ) | ($3,427,395 ) |
TRANSACTIONS IN FUND SHARES | |||||
1/1/23-12/31/23 | 1/1/22-12/31/22 | ||||
SHARES | VALUE | SHARES | VALUE | ||
Shares sold | 477,122 | $4,601,487 | 580,941 | $6,318,541 | |
Shares reinvested | 97,629 | 940,920 | 198,651 | 1,964,259 | |
Shares redeemed | + | (1,130,773 ) | (10,836,566 ) | (1,063,647 ) | (11,416,732 ) |
Net transactions in fund shares | (556,022 ) | ($5,294,159 ) | (284,055 ) | ($3,133,932 ) | |
SHARES OUTSTANDING AND NET ASSETS | |||||
1/1/23-12/31/23 | 1/1/22-12/31/22 | ||||
SHARES | NET ASSETS | SHARES | NET ASSETS | ||
Beginning of period | 4,170,753 | $40,126,913 | 4,454,808 | $53,396,947 | |
Total decrease | + | (556,022 ) | (4,187,573 ) | (284,055 ) | (13,270,034 ) |
End of period | 3,614,731 | $35,939,340 | 4,170,753 | $40,126,913 |
1/1/23– 12/31/23 | 1/1/22– 12/31/22 | 1/1/21– 12/31/21 | 1/1/20– 12/31/20 | 1/1/19– 12/31/19 | ||
Per-Share Data | ||||||
Net asset value at beginning of period | $9.79 | $12.02 | $11.82 | $11.49 | $10.58 | |
Income (loss) from investment operations: | ||||||
Net investment income (loss)1 | 0.42 | 0.31 | 0.24 | 0.23 | 0.31 | |
Net realized and unrealized gains (losses) | 0.39 | (1.81 ) | 0.44 | 0.45 | 1.13 | |
Total from investment operations | 0.81 | (1.50 ) | 0.68 | 0.68 | 1.44 | |
Less distributions: | ||||||
Distributions from net investment income | (0.46 ) | (0.29 ) | (0.34 ) | (0.23 ) | (0.31 ) | |
Distributions from net realized gains | — | (0.44 ) | (0.14 ) | (0.12 ) | (0.22 ) | |
Tax return of capital | (0.02 ) | — | — | — | — | |
Total distributions | (0.48 ) | (0.73 ) | (0.48 ) | (0.35 ) | (0.53 ) | |
Net asset value at end of period | $10.12 | $9.79 | $12.02 | $11.82 | $11.49 | |
Total return | 8.50 % | (12.50 %) | 5.73 % | 6.11 % | 13.79 % | |
Ratios/Supplemental Data | ||||||
Ratios to average net assets: | ||||||
Net operating expenses2 | 0.00 % | 0.00 %3 | 0.00 % | 0.00 % | 0.00 % | |
Gross operating expenses2 | 0.18 % | 0.15 %3 | 0.10 % | 0.12 % | 0.14 % | |
Net investment income (loss) | 4.33 % | 2.88 % | 1.99 % | 2.06 % | 2.75 % | |
Portfolio turnover rate | 7 % | 78 % | 20 % | 28 % | 31 % | |
Net assets, end of period (x 1,000) | $65,296 | $67,701 | $100,081 | $89,691 | $85,595 |
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 | Ratio includes less than 0.005% of non-routine proxy expenses. |
SECURITY | VALUE AT 12/31/22 | PURCHASES | SALES | REALIZED GAINS (LOSSES) | NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) | VALUE AT 12/31/23 | BALANCE OF SHARES HELD AT 12/31/23 | DISTRIBUTIONS RECEIVED(a) |
AFFILIATED UNDERLYING FUNDS 78.5% OF NET ASSETS | ||||||||
U.S. Stocks 20.5% | ||||||||
Large-Cap 20.5% | ||||||||
Schwab U.S. Dividend Equity ETF | $13,593,952 | $1,204,964 | ($1,566,284 ) | ($12,844 ) | $142,017 | $13,361,805 | 175,513 | $477,772 |
International Stocks 19.7% | ||||||||
Developed Markets 19.7% | ||||||||
Schwab International Dividend Equity ETF | 13,337,658 | 358,610 | (2,035,858 ) | 85,763 | 1,134,192 | 12,880,365 | 523,805 | 525,481 |
Real Estate 10.1% | ||||||||
Global Real Estate 10.1% | ||||||||
Schwab Global Real Estate Fund | 6,671,380 | 516,967 | (889,390 ) | (86,435 ) | 398,611 | 6,611,133 | 1,034,606 | 222,374 |
Fixed Income 26.9% | ||||||||
Intermediate-Term Bond 19.7% | ||||||||
Schwab 5-10 Year Corporate Bond ETF | 2,032,639 | 75,030 | (261,728 ) | (15,028 ) | 93,103 | 1,924,016 | 42,813 | 85,459 |
Schwab U.S. Aggregate Bond Index Fund | 11,809,540 | 831,876 | (1,893,114 ) | (205,881 ) | 428,692 | 10,971,113 | 1,219,013 | 361,178 |
12,895,129 | ||||||||
Long-Term Government Bond 7.2% | ||||||||
Schwab Long-Term U.S. Treasury ETF | 4,677,053 | 342,403 | (328,265 ) | (14,975 ) | 10,016 | 4,686,232 | 133,587 | 172,916 |
17,581,361 | ||||||||
Money Market Funds 1.3% | ||||||||
Schwab Variable Share Price Money Fund, Ultra Shares, 5.43% (b) | 943,394 | 47,575 | (150,000 ) | (15 ) | 184 | 841,138 | 840,717 | 47,494 |
Total Affiliated Underlying Funds (Cost $50,032,692) | $53,065,616 | $3,377,425 | ($7,124,639 ) | ($249,415 ) | $2,206,815 | $51,275,802 | $1,892,674 | |
UNAFFILIATED UNDERLYING FUNDS 21.4% OF NET ASSETS | ||||||||
Fixed Income 20.9% | ||||||||
Floating Rate Loan 2.9% | ||||||||
T Rowe Price Institutional Floating Rate Fund, Investor Class | $1,892,192 | 200,020 | ||||||
High-Yield Bond 11.0% | ||||||||
BlackRock High Yield Bond Portfolio, Class K | 7,202,942 | 1,023,145 | ||||||
Preferred 7.0% | ||||||||
Cohen & Steers Preferred Securities & Income Fund, Inc., Class I | 4,529,244 | 384,486 | ||||||
13,624,378 | ||||||||
SECURITY | VALUE AT 12/31/22 | PURCHASES | SALES | REALIZED GAINS (LOSSES) | NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) | VALUE AT 12/31/23 | BALANCE OF SHARES HELD AT 12/31/23 | DISTRIBUTIONS RECEIVED(a) |
Money Market Funds 0.5% | ||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class, 5.32% (b) | $315,904 | 315,904 | ||||||
Total Unaffiliated Underlying Funds (Cost $13,844,513) | $13,940,282 | |||||||
Total Investments in Securities (Cost $63,877,205) | $65,216,084 |
(a) | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. Amounts shown are only presented for affiliated underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable (see financial note 2(c) for additional information). |
(b) | The rate shown is the annualized 7-day yield. |
ETF — | Exchange-traded fund |
Assets | ||
Investments in securities, at value - affiliated (cost $50,032,692) | $51,275,802 | |
Investments in securities, at value - unaffiliated (cost $13,844,513) | 13,940,282 | |
Receivables: | ||
Investments sold | 199,933 | |
Dividends | 105,970 | |
Due from investment adviser | 8,245 | |
Fund shares sold | 3,693 | |
Prepaid expenses | + | 3,124 |
Total assets | 65,537,049 | |
Liabilities | ||
Payables: | ||
Investments bought | 169,909 | |
Fund shares redeemed | 25,118 | |
Independent trustees’ fees | 16 | |
Accrued expenses | + | 45,591 |
Total liabilities | 240,634 | |
Net assets | $65,296,415 | |
Net Assets by Source | ||
Capital received from investors | $68,379,755 | |
Total distributable loss | + | (3,083,340 ) |
Net assets | $65,296,415 |
Net Asset Value (NAV) | ||||
Net Assets | ÷ | Shares Outstanding | = | NAV |
$65,296,415 | 6,450,649 | $10.12 | ||
For the period January 1, 2023 through December 31, 2023 | ||
Investment Income | ||
Dividends received from securities - affiliated | $1,892,674 | |
Dividends received from securities - unaffiliated | + | 942,490 |
Total investment income | 2,835,164 | |
Expenses | ||
Professional fees | 45,315 | |
Shareholder reports | 22,320 | |
Registration fees | 21,339 | |
Portfolio accounting fees | 17,004 | |
Independent trustees’ fees | 6,097 | |
Custodian fees | 2,218 | |
Transfer agent fees | 2,191 | |
Other expenses | + | 2,317 |
Total expenses | 118,801 | |
Expense reduction | – | 118,801 |
Net expenses | – | — |
Net investment income | 2,835,164 | |
REALIZED AND UNREALIZED GAINS (LOSSES) | ||
Net realized losses on sales of securities - affiliated | (249,415 ) | |
Net realized losses on sales of securities - unaffiliated | + | (64,376 ) |
Net realized losses | (313,791 ) | |
Net change in unrealized appreciation (depreciation) on securities - affiliated | 2,206,815 | |
Net change in unrealized appreciation (depreciation) on securities - unaffiliated | + | 561,356 |
Net change in unrealized appreciation (depreciation) | + | 2,768,171 |
Net realized and unrealized gains | 2,454,380 | |
Increase in net assets resulting from operations | $5,289,544 |
OPERATIONS | |||
1/1/23-12/31/23 | 1/1/22-12/31/22 | ||
Net investment income | $2,835,164 | $2,298,882 | |
Net realized losses | (313,791 ) | (2,820,870 ) | |
Net change in unrealized appreciation (depreciation) | + | 2,768,171 | (11,416,743 ) |
Increase (decrease) in net assets resulting from operations | $5,289,544 | ($11,938,731 ) | |
DISTRIBUTIONS TO SHAREHOLDERS | |||
From net investment income and net realized gain | ($3,037,130 ) | ($5,096,634 ) | |
From tax return of capital | + | (145,471 ) | — |
Total distributions | ($3,182,601 ) | ($5,096,634 ) |
TRANSACTIONS IN FUND SHARES | |||||
1/1/23-12/31/23 | 1/1/22-12/31/22 | ||||
SHARES | VALUE | SHARES | VALUE | ||
Shares sold | 677,935 | $6,638,438 | 472,202 | $5,252,310 | |
Shares reinvested | 193,133 | 1,893,255 | 319,785 | 3,221,892 | |
Shares redeemed | + | (1,338,366 ) | (13,043,640 ) | (2,201,237 ) | (23,818,158 ) |
Net transactions in fund shares | (467,298 ) | ($4,511,947 ) | (1,409,250 ) | ($15,343,956 ) | |
SHARES OUTSTANDING AND NET ASSETS | |||||
1/1/23-12/31/23 | 1/1/22-12/31/22 | ||||
SHARES | NET ASSETS | SHARES | NET ASSETS | ||
Beginning of period | 6,917,947 | $67,701,419 | 8,327,197 | $100,080,740 | |
Total decrease | + | (467,298 ) | (2,405,004 ) | (1,409,250 ) | (32,379,321 ) |
End of period | 6,450,649 | $65,296,415 | 6,917,947 | $67,701,419 |
1/1/23– 12/31/23 | 1/1/22– 12/31/22 | 1/1/21– 12/31/21 | 1/1/20– 12/31/20 | 1/1/19– 12/31/19 | ||
Per-Share Data | ||||||
Net asset value at beginning of period | $8.97 | $10.72 | $10.80 | $10.33 | $9.60 | |
Income (loss) from investment operations: | ||||||
Net investment income (loss)1 | 0.37 | 0.26 | 0.22 | 0.23 | 0.29 | |
Net realized and unrealized gains (losses) | 0.31 | (1.59 ) | 0.03 | 0.47 | 0.77 | |
Total from investment operations | 0.68 | (1.33 ) | 0.25 | 0.70 | 1.06 | |
Less distributions: | ||||||
Distributions from net investment income | (0.38 ) | (0.22 ) | (0.26 ) | (0.22 ) | (0.28 ) | |
Distributions from net realized gains | — | (0.20 ) | (0.07 ) | (0.01 ) | (0.05 ) | |
Total distributions | (0.38 ) | (0.42 ) | (0.33 ) | (0.23 ) | (0.33 ) | |
Net asset value at end of period | $9.27 | $8.97 | $10.72 | $10.80 | $10.33 | |
Total return | 7.81 % | (12.50 %) | 2.33 % | 6.93 % | 11.18 % | |
Ratios/Supplemental Data | ||||||
Ratios to average net assets: | ||||||
Net operating expenses2 | 0.00 % | 0.00 %3 | 0.00 % | 0.00 % | 0.00 % | |
Gross operating expenses2 | 0.17 % | 0.14 %3 | 0.11 % | 0.14 % | 0.23 % | |
Net investment income (loss) | 4.16 % | 2.74 % | 1.99 % | 2.17 % | 2.85 % | |
Portfolio turnover rate | 5 % | 68 % | 25 % | 23 % | 31 % | |
Net assets, end of period (x 1,000) | $62,779 | $71,382 | $112,619 | $112,043 | $62,526 |
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 | Ratio includes less than 0.005% of non-routine proxy expenses. |
SECURITY | VALUE AT 12/31/22 | PURCHASES | SALES | REALIZED GAINS (LOSSES) | NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) | VALUE AT 12/31/23 | BALANCE OF SHARES HELD AT 12/31/23 | DISTRIBUTIONS RECEIVED(a) |
AFFILIATED UNDERLYING FUNDS 80.4% OF NET ASSETS | ||||||||
U.S. Stocks 13.3% | ||||||||
Large-Cap 13.3% | ||||||||
Schwab U.S. Dividend Equity ETF | $9,515,245 | $429,789 | ($1,677,386 ) | ($5,380 ) | $65,060 | $8,327,328 | 109,383 | $309,022 |
International Stocks 10.6% | ||||||||
Developed Markets 10.6% | ||||||||
Schwab International Dividend Equity ETF | 7,442,857 | 459,407 | (1,925,507 ) | 101,600 | 586,812 | 6,665,169 | 271,052 | 279,117 |
Real Estate 6.1% | ||||||||
Global Real Estate 6.1% | ||||||||
Schwab Global Real Estate Fund | 4,236,358 | 375,492 | (997,691 ) | (75,025 ) | 281,503 | 3,820,637 | 597,909 | 134,282 |
Fixed Income 49.0% | ||||||||
Intermediate-Term Bond 35.2% | ||||||||
Schwab 5-10 Year Corporate Bond ETF | 6,462,629 | 132,966 | (1,175,919 ) | (44,769 ) | 299,846 | 5,674,753 | 126,274 | 258,625 |
Schwab U.S. Aggregate Bond Index Fund | 18,777,306 | 558,568 | (3,259,286 ) | (441,441 ) | 771,508 | 16,406,655 | 1,822,962 | 557,074 |
22,081,408 | ||||||||
Long-Term Government Bond 6.0% | ||||||||
Schwab Long-Term U.S. Treasury ETF | 4,255,723 | 55,209 | (516,707 ) | (15,558 ) | 17,094 | 3,795,761 | 108,203 | 146,681 |
Short-Term Bond 7.8% | ||||||||
Schwab 1-5 Year Corporate Bond ETF | 5,692,024 | 96,682 | (1,064,125 ) | (4,475 ) | 159,888 | 4,879,994 | 100,868 | 158,639 |
30,757,163 | ||||||||
Money Market Funds 1.4% | ||||||||
Schwab Variable Share Price Money Fund, Ultra Shares, 5.43% (b) | 993,642 | 50,172 | (150,000 ) | (15 ) | 194 | 893,993 | 893,546 | 50,086 |
Total Affiliated Underlying Funds (Cost $50,912,635) | $57,375,784 | $2,158,285 | ($10,766,621 ) | ($485,063 ) | $2,181,905 | $50,464,290 | $1,893,526 | |
UNAFFILIATED UNDERLYING FUNDS 19.1% OF NET ASSETS | ||||||||
Fixed Income 19.1% | ||||||||
Floating Rate Loan 3.0% | ||||||||
T Rowe Price Institutional Floating Rate Fund, Investor Class | $1,892,576 | 200,061 | ||||||
High-Yield Bond 9.1% | ||||||||
BlackRock High Yield Bond Portfolio, Class K | 5,682,015 | 807,104 |
SECURITY | VALUE AT 12/31/22 | PURCHASES | SALES | REALIZED GAINS (LOSSES) | NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) | VALUE AT 12/31/23 | BALANCE OF SHARES HELD AT 12/31/23 | DISTRIBUTIONS RECEIVED(a) |
Preferred 7.0% | ||||||||
Cohen & Steers Preferred Securities & Income Fund, Inc., Class I | $4,406,178 | 374,039 | ||||||
11,980,769 | ||||||||
Total Unaffiliated Underlying Funds (Cost $11,930,607) | $11,980,769 | |||||||
Total Investments in Securities (Cost $62,843,242) | $62,445,059 |
(a) | Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. Amounts shown are only presented for affiliated underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable (see financial note 2(c) for additional information). |
(b) | The rate shown is the annualized 7-day yield. |
ETF — | Exchange-traded fund |
Assets | ||
Investments in securities, at value - affiliated (cost $50,912,635) | $50,464,290 | |
Investments in securities, at value - unaffiliated (cost $11,930,607) | 11,980,769 | |
Receivables: | ||
Investments sold | 594,503 | |
Dividends | 112,938 | |
Due from investment adviser | 7,220 | |
Fund shares sold | 2,754 | |
Prepaid expenses | + | 2,497 |
Total assets | 63,164,971 | |
Liabilities | ||
Payables: | ||
Fund shares redeemed | 144,928 | |
Investments bought | 106,379 | |
Due to custodian | 82,519 | |
Independent trustees’ fees | 16 | |
Accrued expenses | + | 52,477 |
Total liabilities | 386,319 | |
Net assets | $62,778,652 | |
Net Assets by Source | ||
Capital received from investors | $72,071,443 | |
Total distributable loss | + | (9,292,791 ) |
Net assets | $62,778,652 |
Net Asset Value (NAV) | ||||
Net Assets | ÷ | Shares Outstanding | = | NAV |
$62,778,652 | 6,771,395 | $9.27 | ||
For the period January 1, 2023 through December 31, 2023 | ||
Investment Income | ||
Dividends received from securities - affiliated | $1,893,526 | |
Dividends received from securities - unaffiliated | + | 850,101 |
Total investment income | 2,743,627 | |
Expenses | ||
Professional fees | 46,550 | |
Registration fees | 21,475 | |
Portfolio accounting fees | 17,022 | |
Shareholder reports | 16,677 | |
Independent trustees’ fees | 6,100 | |
Custodian fees | 2,008 | |
Transfer agent fees | 1,878 | |
Other expenses | + | 2,321 |
Total expenses | 114,031 | |
Expense reduction | – | 114,031 |
Net expenses | – | — |
Net investment income | 2,743,627 | |
REALIZED AND UNREALIZED GAINS (LOSSES) | ||
Net realized losses on sales of securities - affiliated | (485,063 ) | |
Net realized losses on sales of securities - unaffiliated | + | (60,859 ) |
Net realized losses | (545,922 ) | |
Net change in unrealized appreciation (depreciation) on securities - affiliated | 2,181,905 | |
Net change in unrealized appreciation (depreciation) on securities - unaffiliated | + | 505,811 |
Net change in unrealized appreciation (depreciation) | + | 2,687,716 |
Net realized and unrealized gains | 2,141,794 | |
Increase in net assets resulting from operations | $4,885,421 |
OPERATIONS | |||
1/1/23-12/31/23 | 1/1/22-12/31/22 | ||
Net investment income | $2,743,627 | $2,364,813 | |
Net realized losses | (545,922 ) | (7,746,533 ) | |
Net change in unrealized appreciation (depreciation) | + | 2,687,716 | (7,565,397 ) |
Increase (decrease) in net assets resulting from operations | $4,885,421 | ($12,947,117 ) | |
DISTRIBUTIONS TO SHAREHOLDERS | |||
Total distributions | ($2,780,917 ) | ($3,491,475 ) |
TRANSACTIONS IN FUND SHARES | |||||
1/1/23-12/31/23 | 1/1/22-12/31/22 | ||||
SHARES | VALUE | SHARES | VALUE | ||
Shares sold | 453,062 | $4,093,304 | 1,055,280 | $10,635,381 | |
Shares reinvested | 149,416 | 1,345,446 | 230,261 | 2,129,699 | |
Shares redeemed | + | (1,790,807 ) | (16,146,170 ) | (3,835,880 ) | (37,563,734 ) |
Net transactions in fund shares | (1,188,329 ) | ($10,707,420 ) | (2,550,339 ) | ($24,798,654 ) | |
SHARES OUTSTANDING AND NET ASSETS | |||||
1/1/23-12/31/23 | 1/1/22-12/31/22 | ||||
SHARES | NET ASSETS | SHARES | NET ASSETS | ||
Beginning of period | 7,959,724 | $71,381,568 | 10,510,063 | $112,618,814 | |
Total decrease | + | (1,188,329 ) | (8,602,916 ) | (2,550,339 ) | (41,237,246 ) |
End of period | 6,771,395 | $62,778,652 | 7,959,724 | $71,381,568 |
SCHWAB CAPITAL TRUST | |
Schwab Monthly Income Fund - Target Payout | Schwab International Opportunities Fund |
Schwab Monthly Income Fund - Flexible Payout | Schwab Balanced Fund |
Schwab Monthly Income Fund - Income Payout | Schwab Core Equity Fund |
Schwab Target 2010 Fund | Schwab Dividend Equity Fund |
Schwab Target 2015 Fund | Schwab Large-Cap Growth Fund |
Schwab Target 2020 Fund | Schwab Small-Cap 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 Target 2065 Fund | Schwab Target 2010 Index Fund |
Schwab S&P 500 Index Fund | Schwab Target 2015 Index Fund |
Schwab Small-Cap Index Fund® | Schwab Target 2020 Index Fund |
Schwab Total Stock Market Index Fund® | Schwab Target 2025 Index Fund |
Schwab U.S. Large-Cap Growth Index Fund | Schwab Target 2030 Index Fund |
Schwab U.S. Large-Cap Value Index Fund | Schwab Target 2035 Index Fund |
Schwab U.S. Mid-Cap Index Fund | Schwab Target 2040 Index Fund |
Schwab International Index Fund® | Schwab Target 2045 Index Fund |
Schwab MarketTrack All Equity Portfolio™ | Schwab Target 2050 Index Fund |
Schwab MarketTrack Growth Portfolio™ | Schwab Target 2055 Index Fund |
Schwab MarketTrack Balanced Portfolio™ | Schwab Target 2060 Index Fund |
Schwab MarketTrack Conservative Portfolio™ | Schwab Target 2065 Index Fund |
2. Significant Accounting Policies:
Shareholders should not assume that the source of a distribution from the fund is net income. For additional information see financial note 3, Risk Factors Managed Payout Risk and financial note 8, Federal Income Taxes.
3. Risk Factors:
4. Affiliates and Affiliated Transactions:
UNDERLYING FUNDS | SCHWAB MONTHLY INCOME FUND – TARGET PAYOUT | SCHWAB MONTHLY INCOME FUND – FLEXIBLE PAYOUT | SCHWAB MONTHLY INCOME FUND – INCOME PAYOUT |
Schwab 1-5 Year Corporate Bond ETF | — % | — % | 1.3 % |
Schwab 5-10 Year Corporate Bond ETF | 0.0 %* | 0.0 %* | 0.1 % |
Schwab Global Real Estate Fund | 1.2 % | 2.2 % | 1.3 % |
Schwab International Dividend Equity ETF | 0.9 % | 1.6 % | 0.8 % |
Schwab Long-Term U.S. Treasury ETF | 0.4 % | 0.8 % | 0.6 % |
Schwab U.S. Aggregate Bond Index Fund | 0.1 % | 0.2 % | 0.4 % |
Schwab U.S. Dividend Equity ETF | 0.0 %* | 0.0 %* | 0.0 %* |
Schwab Variable Share Price Money Fund, Ultra Shares | 0.0 %* | 0.0 %* | 0.0 %* |
* | Less than 0.05% |
PURCHASE COST | SALE PROCEEDS | REALIZED GAINS (LOSSES) | |
Schwab Monthly Income Fund – Target Payout | $111,358 | $— | $— |
Schwab Monthly Income Fund – Flexible Payout | — | 71,119 | (84 ) |
Schwab Monthly Income Fund – Income Payout | — | 40,239 | (741 ) |
5. Board of Trustees:
7. Purchases and Sales of Investment Securities:
PURCHASES OF SECURITIES | SALES OF SECURITIES | |
Schwab Monthly Income Fund – Target Payout | $3,349,770 | $8,890,726 |
Schwab Monthly Income Fund – Flexible Payout | 4,542,129 | 9,411,710 |
Schwab Monthly Income Fund – Income Payout | 3,097,116 | 13,715,863 |
8. Federal Income Taxes:
TAX COST | GROSS UNREALIZED APPRECIATION | GROSS UNREALIZED DEPRECIATION | NET UNREALIZED APPRECIATION (DEPRECIATION) | |
Schwab Monthly Income Fund – Target Payout | $35,553,002 | $1,275,569 | ($1,105,404 ) | $170,165 |
Schwab Monthly Income Fund – Flexible Payout | 64,219,775 | 2,625,511 | (1,629,202 ) | 996,309 |
Schwab Monthly Income Fund – Income Payout | 63,266,365 | 1,376,016 | (2,197,322 ) | (821,306 ) |
UNDISTRIBUTED ORDINARY INCOME | NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS | CAPITAL LOSS CARRYFORWARDS AND OTHER LOSSES | TOTAL | |
Schwab Monthly Income Fund – Target Payout | $— | $170,165 | ($2,471,157 ) | ($2,300,992 ) |
Schwab Monthly Income Fund – Flexible Payout | — | 996,309 | (4,079,649 ) | (3,083,340 ) |
Schwab Monthly Income Fund – Income Payout | 418,016 | (821,306 ) | (8,889,501 ) | (9,292,791 ) |
Schwab Monthly Income Fund – Target Payout | $2,471,157 |
Schwab Monthly Income Fund – Flexible Payout | 4,079,649 |
Schwab Monthly Income Fund – Income Payout | 8,889,501 |
CURRENT FISCAL YEAR END DISTRIBUTIONS | PRIOR FISCAL YEAR END DISTRIBUTIONS | |||||
ORDINARY INCOME | LONG-TERM CAPITAL GAINS | TAX RETURN OF CAPITAL | ORDINARY INCOME | LONG-TERM CAPITAL GAINS | TAX RETURN OF CAPITAL | |
Schwab Monthly Income Fund – Target Payout | $1,633,700 | $— | $219,128 | $1,309,466 | $2,117,929 | $— |
Schwab Monthly Income Fund – Flexible Payout | 3,037,130 | — | 145,471 | 2,244,284 | 2,852,350 | — |
Schwab Monthly Income Fund – Income Payout | 2,780,917 | — | — | 1,923,056 | 1,568,419 | — |
9. Subsequent Events:
Denver, Colorado
February 16, 2024
FOREIGN TAX CREDIT | FOREIGN SOURCE INCOME | |
Schwab Monthly Income Fund – Target Payout | $29,202 | $284,880 |
Schwab Monthly Income Fund – Flexible Payout | 53,864 | 525,481 |
Schwab Monthly Income Fund – Income Payout | 28,611 | 279,117 |
Schwab Monthly Income Fund – Target Payout | 16.44 % |
Schwab Monthly Income Fund – Flexible Payout | 15.78 % |
Schwab Monthly Income Fund – Income Payout | 11.18 % |
Schwab Monthly Income Fund – Target Payout | $740,830 |
Schwab Monthly Income Fund – Flexible Payout | 1,335,113 |
Schwab Monthly Income Fund – Income Payout | 873,748 |
Schwab Monthly Income Fund – Target Payout | $50,987 |
Schwab Monthly Income Fund – Flexible Payout | 89,928 |
Schwab Monthly Income Fund – Income Payout | 54,802 |
Schwab Monthly Income Fund – Target Payout | 46.09 % |
Schwab Monthly Income Fund – Flexible Payout | 43.76 % |
Schwab Monthly Income Fund – Income Payout | 62.73 % |
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 |
Michael J. Beer 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 2022) | Retired. Director, President and Chief Executive Officer (Dec. 2016 – Sept. 2019), Principal Funds (investment management). | 106 | Director (2016 – 2019), Principal Funds, Inc. |
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. | 106 | 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. | 106 | 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. | 106 | 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). | 106 | None |
Independent Trustees (continued) | |||
Name, Year of Birth, and Position(s) with the trust (Terms of office, and length of Time Served1) | Principal Occupations During the Past Five Years | Number of Portfolios in Fund Complex Overseen by the Trustee | Other Directorships |
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). | 106 | 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). | 106 | 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) | Co-Chairman of the Board (July 2022 – present), Director and Chief Executive Officer (Oct. 2008 – present) and President (Feb. 2007 – 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.; Co-Chairman of the Board (July 2022 – present) and Director (Apr. 2006 – present), Charles Schwab Bank, SSB; Co-Chairman of the Board (July 2022 – present) and Director (Nov. 2017 – present), Charles Schwab Premier Bank, SSB; Co-Chairman of the Board (July 2022 – present) and Director (July 2019 – present), Charles Schwab Trust Bank; Director (May 2008 – present), Chief Executive Officer (Aug. 2017 – present) and President (Aug. 2017 – Nov. 2021), Schwab Holdings, Inc.; Manager (Sept. 2023 – present), TD Ameritrade Holding LLC; Director (Oct. 2020 – Aug. 2023), TD Ameritrade Holding Corporation; Director (July 2016 – Oct. 2021), Charles Schwab Investment Management, Inc. | 106 | Director (2008 – present), The Charles Schwab Corporation |
Richard A. Wurster2 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 2022) | President (Oct. 2021 – present) and Executive Vice President – Schwab Asset Management Solutions (Apr. 2019 – Oct. 2021), The Charles Schwab Corporation; President, Director (Oct. 2021 – present), Executive Vice President – Schwab Asset Management Solutions (July 2019 – Oct. 2021) and Senior Vice President – Advisory (May 2016 – July 2019), Charles Schwab & Co., Inc.; President (Nov. 2021 – present), Schwab Holdings, Inc.; Director (Oct. 2021 – present) and Chief Executive Officer (Nov. 2019 – Jan. 2022), Charles Schwab Investment Management, Inc.; Director, Chief Executive Officer and President (Mar. 2018 – Oct. 2022), Charles Schwab Investment Advisory, Inc.; Chief Executive Officer (July 2016 – Apr. 2018) and President (Mar. 2017 – Apr. 2018), ThomasPartners, Inc.; Chief Executive Officer (July 2016 – Apr. 2018), Windhaven Investment Management, Inc. | 106 | 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 |
Omar Aguilar 1970 Chief Executive Officer, 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), President (Oct. 2023 – present), (Chief Investment Officer (Apr. 2011 – present) and Senior Vice President (Apr. 2011 – Jan. 2022), Charles Schwab Investment Management, Inc.; Director, Chief Executive Officer and President (Oct. 2022 – present), Charles Schwab Investment Advisory, Inc.; Chief Executive Officer (Sept. 2023 – present), President (Oct. 2023 – present), Chief Investment Officer (June 2011 – present) and Vice President (June 2011 – Sept. 2023), Schwab Funds, Laudus Trust and Schwab ETFs. |
Mark Fischer 1970 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) | Chief Operating Officer (Dec. 2020 – present) and Treasurer and Chief Financial Officer (Jan. 2016 – Dec. 2022), Schwab Funds, Laudus Trust and Schwab ETFs; Chief Financial Officer (Mar. 2020 – present), Chief Operating Officer (Oct. 2023 – present), Managing Director (Mar. 2023 – present) and Vice President (Oct. 2013 – Mar. 2023), Charles Schwab Investment Management, Inc. |
Dana Smith 1965 Treasurer and Chief Financial Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2023) | Treasurer and Chief Financial Officer (Jan. 2023 – present) and Assistant Treasurer (Dec. 2015 – Dec. 2022), Schwab Funds, Laudus Trust and Schwab ETFs; Managing Director (Mar. 2023 – present), Vice President (Mar. 2022 – Mar. 2023) and Director (Oct. 2015 – Mar. 2022), Charles Schwab Investment Management, Inc.; Managing Director (May 2022 – present) and Vice President (Apr. 2022 – May 2022), Charles Schwab & Co., Inc. |
Patrick Cassidy 1964 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 2018) | Chief Investment Officer (Oct. 2023 – present) and Vice President (Feb. 2018 – present), Schwab Funds, Laudus Trust and Schwab ETFs; Managing Director (Mar. 2023 – present), Chief Investment Officer (Oct. 2023 – present), and Senior Vice President (Oct. 2012 – Mar. 2023), Charles Schwab Investment Management, Inc. |
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) | Managing Director (Mar. 2023 – present), Senior Vice President (Jan. 2020 – Mar. 2023) 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) | Chief Legal Officer (Mar. 2022 – present), Managing Director (Mar. 2023 – present) and Vice President (Sept. 2005 – Mar. 2023), Charles Schwab Investment Management, Inc.; Managing Director (May 2022 – present) and Vice President (Aug. 2005 – May 2022), Charles Schwab & Co., 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. |
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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 19(a)(1) of Form N-CSR. |
Item 3: Audit Committee Financial Expert.
Registrant’s Board of Trustees has determined that Kimberly S. Patmore, Michael J. Beer 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 Ms. Patmore, Mr. Beer 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 2023/2024 and 2022/2023, based on their respective 2023/2024 and 2022/2023 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 Fees1 | (b) Audit-Related Fees2 | (c) Tax Fees3 | (d) All Other Fees | |||||||||||||||||||||||||||
Fiscal Year 2023/2024 | Fiscal Year 2022/2023 | Fiscal Year 2023/2024 | Fiscal Year 2022/2023 | Fiscal Year 2023/2024 | Fiscal Year 2022/2023 | Fiscal Year 2023/2024 | Fiscal Year 2022/2023 | |||||||||||||||||||||||
$ | 1,272,477 | $ | 1,195,825 | $ | 95,400 | $ | 90,000 | $ | 170,820 | $ | 161,200 | $ | 0 | $ | 0 |
1 | The nature of the services includes audit of the registrant’s annual financial statements and normally provided services in connection with regulatory filings for those fiscal years. |
2 | 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. |
3 | 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 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. |
2023: $3,940,154 | 2022: $3,031,117 |
(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. |
(i) | Not applicable. |
(j) | Not applicable. |
Item 5: Audit Committee of Listed Registrants.
Not applicable.
Item 6: Investments.
The schedules of investments are included as part of the report to shareholders filed under Item 1 of this Form.
Item 7: Financial Statements and Financial Highlights for Open-End Management Investment Companies.
The financial statements and financial highlights are included as part of the report to shareholders filed under Item 1 of this Form.
Item 8: Changes in and Disagreements with Accountants for Open-End Management Investment Companies.
Not applicable.
Item 9: Proxy Disclosures for Open-End Management Investment Companies.
Not applicable.
Item 10: Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies.
The remuneration paid to directors, officers and others are included as part of the report to shareholders filed under Item 1 of this Form.
Item 11: Statement Regarding Basis for Approval of Investment Advisory Contract.
Not applicable.
Item 12: Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 13: Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 14: Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 15: Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 16: 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, Omar Aguilar and Registrant’s Chief Financial Officer, Dana Smith, 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 17: Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 18: Recovery of Erroneously Awarded Compensation.
(a) Not applicable.
(b) Not applicable.
Item 19: Exhibits.
(a) (1) |
(2) | Not applicable. |
(3) |
(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/ Omar Aguilar | |
Omar Aguilar Chief Executive Officer | ||
Date: | February 16, 2024 |
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/ Omar Aguilar | |
Omar Aguilar Chief Executive Officer | ||
Date: | February 16, 2024 | |
By: | /s/ Dana Smith | |
Dana Smith Chief Financial Officer | ||
Date: | February 16, 2024 |