<PAGE> 1
SCHWABFUNDS(R)
[LOGO]
SCHWAB
1000 FUND(R)
ANNUAL REPORT
AUGUST 31, 1995
[Photo of the Schwab Building, San Francisco, California]
<PAGE> 2
Dear Fellow Shareholder,
This year, the SchwabFunds Family(R) celebrates its fifth
[Photo anniversary as a mutual fund complex. This celebration follows an
of exciting 1994 when the organization experienced tremendous
Charles growth--the third largest asset growth of all mutual fund
R. Schwab] companies. By placing your trust in SchwabFunds(R), you've helped
total assets under management reach over $29 billion, ranking
SchwabFunds in the top 6% of all mutual fund complexes.
We believe much of this success can be traced to the Schwab commitment to serve
the needs of the Fund shareholders, a commitment demonstrated by the entire
SchwabFunds staff and, in particular, by our experienced team of portfolio
managers.
The 20 professionals that make up our growing portfolio management team are
devoted to monitoring the financial markets for you. Through careful and
disciplined selection of securities, they strive to construct optimal portfolios
that provide shareholders with competitive returns that meet their investment
goals. And shareholders continue to signal their trust in the 175 years of
combined experience behind our SchwabFunds portfolio management by keeping their
money invested in SchwabFunds. In fact, a large number of the 1.5 million
shareholders have been investing in the SchwabFunds Family since its first year
of operation.
We believe an important part of serving your needs is keeping you informed about
your investments. For example, last year we added the question and answer
section of this report, developed by our portfolio managers to address what they
feel were the most pressing questions we've heard from shareholders over the
period. It is one way we hope to keep communication open between you and the
people managing your investments.
During its first five years, the SchwabFunds Family has grown to include a solid
selection of funds that meet the "core" needs of investors. The 19 funds
available to retail investors, including the new Schwab Asset Director(R)
Funds*, offer effective diversification of the U.S. and international equity
markets, both taxable and tax-free bonds, and a variety of different money
market investments.
With this added level of diversification, you may use the SchwabFunds to create
an efficient, well-rounded portfolio. Or, they can serve as building blocks to
an overall investment program that includes more specialized investments.
I invite you to learn more about the SchwabFunds Family. To receive a brochure
and prospectus for the SchwabFunds, please call our toll-free number, 1-800-2
NO-LOAD, or visit any one of our more than 200 Schwab offices. A Schwab
representative will be happy to provide you with a prospectus that includes more
complete information on the Funds, including charges and expenses. Please read
it carefully before investing. If you normally invest in SchwabFunds with the
help of an investment manager, he or she can give you more information on the
other SchwabFunds.
I'd like to extend my personal gratitude for your trust in the SchwabFunds
Family as it continues to grow. You should feel confident that the outstanding
efforts of all those who are part of the SchwabFunds organization will continue
going forward. And, we expect these efforts to help us to meet even higher
standards of excellence in the years ahead.
/s/Charles R. Schwab
Charles R. Schwab
Chairman
* In subscription until November 17, 1995 at an introductory price of $10 per
share. After that date, the share price will fluctuate unless subscription
period is extended.
Cover: The Schwab Building, San Francisco, California
<PAGE> 3
COMMENTS FROM THE INVESTMENT ADVISER
We are pleased to report to you the performance of the Schwab 1000 Fund(R) for
the fiscal year ended August 31, 1995. During this period, the Schwab 1000 Fund
continued to provide you with a competitive, convenient and cost-effective way
to participate in the long-term growth potential of the U.S. stock market. In
addition, the Fund's performance during this period reflected the strong
performance of the equity market.
The latter half of the Fund's fiscal year saw nearly uninterrupted growth in the
stock market, and the Fund's performance reflects this upward momentum. Fueled
by strong corporate profits and low inflation, new market highs were set and
surpassed during the latter half of the reporting period. On July 17, 1995, the
Dow Jones Industrial Average peaked at 4736.29, a record high for this fiscal
year.
For fiscal year 1995, the Schwab 1000 Fund had a one year total return of 21.23%
compared to the average for U.S. stock mutual funds of 19.67% 1. The Fund's
indexing approach, which focuses on matching the performance of the U.S. public
stock market, is gaining popularity with investors who seek returns that keep
pace with today's fast-moving markets. At year end, net assets under management
had risen to over $826 million, a 49% increase over the prior year, while the
total number of shareholders grew 20% to more than 73,000.
FUND PERFORMANCE
The Schwab 1000 Fund outperformed the Standard & Poor's 500 Index(R) ("S&P 500")
over the 12 months ending August 31, 1995. As the table below indicates, the
Fund's cumulative total return has also outperformed the S&P 500 since the
Fund's inception of April 2, 1991. The table below compares total returns for
various periods for the Schwab 1000 Fund, Schwab 1000 Index(R) and S&P 500.
<TABLE>
======================================================================================================
TOTAL RETURN
<CAPTION>
Cumulative Since Average Annual
Six-Months Ended One Year Ended Fund Inception Since Inception
August 31, 1995 August 31, 1995 (4/2/91-8/31/95) (4/2/91-8/31/95)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Schwab 1000
Fund 17.02% 21.23% 69.36% 12.66%
- ------------------------------------------------------------------------------------------------------
Schwab 1000
Index 17.31% 21.90% 72.45
- ------------------------------------------------------------------------------------------------------
S&P 500
Index 16.46% 21.07% 67.74%
- ------------------------------------------------------------------------------------------------------
Past performance is no guarantee of future results. Principal investment returns
and principal value will fluctuate. An investor's shares, when redeemed, may be
worth more or less than their original cost. Indices are unmanaged and assume
reinvestment of all dividends, but, unlike the Fund, do not reflect the payment
of advisory fees and other expenses associated with an investment in the Fund.
Fund total return assumes reinvestment of all dividends.
======================================================================================================
</TABLE>
1 Source: Morningstar, Inc. Average return of 2123 domestic stock funds for 12
month period ending August 31, 1995. Past performance is no guarantee of
future results. Principal investment returns will fluctuate. An investor's
shares, when redeemed, may be worth more or less than their original cost.
<PAGE> 4
In reviewing the Fund's performance over the 12 month reporting period, we are
also proud to report that the Schwab 1000 Fund's(R) share price increased in
value by $2.60 to $15.68. This increase in net asset value (NAV) is even more
impressive considering that the Fund also paid cash dividends totalling 14 cents
per share during the period, which reduced the Fund's NAV accordingly.
BROAD EQUITY DIVERSIFICATION
The Schwab 1000 Fund seeks to track the price and dividend performance of the
U.S. stock market by investing substantially in all the stocks that comprise the
Schwab 1000 Index(R). One of the broadest U.S. market indicators available, the
Schwab 1000 Index includes a diversified group of stocks which represents about
85% of the total market value of the U.S. public stock market. The Index
represents the stocks of the 1,000 largest public operating companies in the
U.S., ranked by market capitalization (excluding investment companies).
THE SCHWAB 1000 FUND'S
BROADLY DIVERSIFIED STOCK PORTFOLIO
COVERS A VARIETY OF INDUSTRIES
[Pie chart indicating percentages of Schwab 1000 Fund's Stock Portfolio]
<TABLE>
<S> <C>
Capital Goods 4%
Consumer Durables 3%
Consumer Non-Durables 30%
Energy 7%
Finance 15%
Materials & Services 10%
Technology 16%
Transportation 2%
Utilities 13%
</TABLE>
Because the Schwab 1000 Index includes stocks of both large and medium-sized
companies, it provides a broader measure of the stock market than the S&P 500,
which covers about 70% of the market's value, or the Dow Jones Industrial
Average, which covers less than 25%. A complete listing of the Fund's portfolio
holdings at fiscal year end is provided in the "Statement of Net Assets" section
of this report.
TAX-EFFICIENT STRATEGY CAN PRODUCE HIGHER AFTER-TAX RETURNS
Taxes can erode the returns you earn from your mutual fund investment. When you
are considering a fund's performance, it's important to pay close attention to
how fund returns compare on an after-tax basis. Over the past ten years,
approximately 24% of the average annual returns for all equity funds has been
lost to taxes 2.
2 Source: Morningstar, Inc. This example assumes investors are taxed at the
28% maximum federal capital gains tax rate and the 39.6% federal personal
income tax rate. Average performance is measured by ten-year average annual
total return on a pre-tax and after-tax basis for U.S. growth and income
funds with ten-year performance ending 6/30/95. Past performance does not
guarantee future results.
<PAGE> 5
THE POWER OF TAX-SMART INVESTING
[Chart indicating capital gains of Portfolio A and B]
<TABLE>
<S> <C>
Portfolio A
Capital Gains Realized Annually $75,281
Portfolio B
Capital Gains Deferred and
Shares Sold After 20 Years $88,640
</TABLE>
This example is for illustrative purposes only and is not intended to
predict or guarantee future performance of the Fund.
The chart shows two hypothetical portfolios, each with a $20,000
initial investment and a 10% pre-tax average annual total return. The
portfolio in which capital gains are realized annually (Portfolio A)
earns 3% income and 7% realized capital gains taxed annually; the
portfolio in which capital gains are deferred over 20 years (Portfolio
B) earns 3% income taxed annually and 7% capital gains which
accumulate unrealized and are taxed at the end of the 20-year period.
Compared to Portfolio A, Portfolio B earns an extra $13,359 by
deferring its capital gains. Both examples assume income dividends
taxed annually at the maximum 39.6% federal personal income tax rate
and capital gains taxed at the maximum 28% rate.
Of course, tax rates may vary and can be higher or lower than the rates
shown.
As an index fund, the Schwab 1000 Fund(R) does not actively trade stocks, except
to realign portfolio holdings with the Schwab 1000 Index(R) and to adequately
handle customer purchases and redemptions. When the Fund's portfolio managers do
trade, they attempt to offset capital gains with capital losses to minimize
taxable distributions to shareholders. Any unrealized gains accumulate in the
Fund, helping to build the value of your shares. This tax-smart strategy helps
defer capital gains until you sell your shares. In fact, this strategy has
proven to be so successful that the Fund has never paid a capital gain
distribution since its inception.
Trading less frequently allows the Schwab 1000 Fund to keep portfolio turnover
low, which further helps minimize your capital gains tax liability. For fiscal
year 1995, the Fund's portfolio turnover was 2%, compared to an average of 61%
for U.S. growth and income funds 3.
OPERATING EXPENSES LOWERED
Generally speaking, the less you pay in fees, the greater the portion of a
fund's return you can receive. Since stocks are not actively traded in the Fund,
transaction costs are kept to a minimum. In addition, like all funds in the
SchwabFunds Family(R), the Schwab 1000 Fund does not charge sales loads or 12b-1
fees, which can diminish your returns over time 4.
3 Source: Morningstar, Inc. Portfolio turnover for 323 U.S. growth and income
funds as of 8/31/95.
4 A redemption fee of 0.50% of the proceeds will be charged by the Fund for
redemption of shares held less than 6 months.
<PAGE> 6
To further enhance your potential returns, effective July 1, 1995, the Schwab
1000 Fund(R) lowered its operating expense ratio from 0.55% to 0.49% -- well
below the industry average of 1.25% for U.S. growth & income funds 5.
LOOKING FORWARD
By most standards, the Fund's 1995 fiscal year has been an excellent period for
equity investors, but it's important to remember that stocks are best viewed as
a long-term investment. When held over the long-term, stocks have outperformed
most other U.S. investments--including corporate bonds, U.S. Treasury bills
and certificates of deposit--and have helped investors keep pace with or ahead
of inflation and realize capital appreciation 6. Looking forward, we believe
the Schwab 1000 Fund will continue to offer you a convenient, cost-effective way
to capitalize on the U.S. stock market's long-term growth potential.
Thank you for placing your confidence in SchwabFunds(R). We recognize that we
earn your trust day-by-day, and we look forward to continuing to help you meet
your investment goals.
CHARLES SCHWAB INVESTMENT MANAGEMENT, INC.
- --------------------------------------------------------------------------------
NEW PORTFOLIO MANAGEMENT TEAM
As of June 1, 1995, Charles Schwab Investment Management, Inc. has been
responsible for providing all investment advisory services to the Schwab 1000
Fund. Prior to that date, Dimensional Fund Advisors, Inc. served as
sub-adviser to the Fund. We believe shareholders will benefit from this
change because we are better able to meet your service needs, respond to your
inquiries and prepare shareholder communications. We have assembled an
experienced and talented portfolio management team whose primary
responsibility is managing the SchwabFunds equity portfolios.
- --------------------------------------------------------------------------------
5 Source: Morningstar, Inc. Average operating expenses of 394 U.S. growth and
income funds as of 8/31/95.
6 Source: Ibbotson Associates. CORPORATE BONDS GENERALLY OFFER BOTH FIXED RATE
OF RETURN AND PRINCIPAL VALUE IF HELD TO MATURITY. THE RETURN AND PRINCIPAL
VALUE OF STOCKS FLUCTUATE DUE TO CHANGING INTEREST RATES OR OTHER MARKET
CONDITIONS. STOCK PERFORMANCE IS GENERALLY CHARACTERIZED BY GREATER VOLATILITY
OVER SHORT-TERM PERIODS. CERTIFICATES OF DEPOSIT OFFER FIXED RATES OF RETURN
AND ARE FDIC INSURED.
<PAGE> 7
QUESTIONS TO THE PORTFOLIO MANAGEMENT TEAM OF
CHARLES SCHWAB INVESTMENT MANAGEMENT, INC.
Stephen B. Ward - Senior Vice President and Chief Investment Officer
Geri Hom - Portfolio Manager
Q. TO WHAT DO YOU ATTRIBUTE THE SCHWAB 1000 FUND'S(R) STRONG PERFORMANCE DURING
THE 12-MONTH REPORTING PERIOD?
A. During the 12-month reporting period, the U.S. stock market experienced
strong gains with all major domestic equity indices achieving new highs during
the period. The Fund's performance was further enhanced by the fact that stocks
with larger market capitalization, such as those in the Schwab 1000 Index(R),
experienced greater returns than smaller capitalized stocks.
Even though the Federal Reserve's series of increases in the federal funds rate
(from 3.0% in January 1994 to 6.0% in February 1995) was successful at slowing
the rate of economic growth during the first and second quarters of 1995, the
domestic equities market continued its strong rally. The most significant factor
contributing to the strong performance of the U.S. stock market appeared to be
the strong growth in corporate earnings. Based on value measures such as the
ratio of price to book value and dividend yield, most domestic equity indices
experienced record or near record highs during the reporting period.
Alternatively, because of the strong growth in corporate earnings, the
price/earnings ratio of the S&P 500, at approximately 16 as of August 31, 1995,
has experienced a steady decline from its 1992 high of approximately 26.
Corporate earnings also benefited from the weak U.S. dollar during the first
seven months of 1995. The falling dollar boosted U.S. exports significantly and
also bolstered the earnings of U.S. companies with extensive overseas
operations.
Merger activity in large capitalization issues helped to support the strong
stock market. Examples of such mega mergers during the period were Disney's $19
billion offer for Capital Cities/ABC, Westinghouse's $5.4 billion bid for CBS,
IBM's $3.3 billion offer for Lotus Development, and Union Pacific's $5.4 billion
bid for Southern Pacific.
Q. WHAT ACCOUNTS FOR THE DIFFERENCE BETWEEN THE PERFORMANCE OF THE SCHWAB 1000
FUND AND THE SCHWAB 1000 INDEX?
A. The Schwab 1000 Index is a theoretical return of a group of stocks
representing the 1,000 largest U.S. corporations (excluding investment
companies), ranked by market capitalization. Unlike the Fund, the Index does not
incur management and other Fund costs which reduces returns to the shareholders.
In addition, the Fund, unlike the Index, holds a small portion of its balances
in cash to meet shareholder redemptions and pay expenses. The cash portion earns
interest at money market rates, which may be more or less than the returns of
the Index during a given period. The weighting of any particular security in the
Fund can be greater or less than the actual weighting in the Index.
Also accounting for the difference in the performance, is the Fund's goal to
minimize capital gain distributions. In order to avoid the excessive realization
of capital gains, the Fund may continue to hold certain stocks which are no
<PAGE> 8
longer in the Index. Depending on the performance of these non-Index stocks,
this practice can contribute positive or negative tracking error to the Fund.
Combined, these factors cause the difference in the returns of the Fund compared
to the Index, a difference referred to as the Fund's "tracking error."
Q. HOW DID THE PERFORMANCE OF THE SCHWAB 1000 INDEX(R) COMPARE TO THE S&P 500
INDEX(R) DURING THE REPORTING PERIOD?
A. During the period, the total return of the Schwab 1000 Index was 21.90%,
outperforming the S&P 500 which returned 21.07% 7. (In addition, since the
inception of the Schwab 1000 Fund on April 2, 1991, both the Fund and the Index
have outperformed the S&P 500's cumulative total return, as the chart below
illustrates.) The S&P 500 includes 500 large market capitalization stocks as
determined by the Standard & Poor's Index Committee. Stocks in the S&P 500 are
chosen for market size, liquidity, and industry group representation. The Schwab
1000 Index is much broader, including the common stocks of the 1,000 largest
operating U.S. corporations (excluding investment companies) ranked by
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT
IN THE SCHWAB 1000 FUND(R), THE SCHWAB 1000 INDEX(R) AND THE
STANDARD & POOR'S 500 INDEX(R)
[Line graph comparing value of $10,000 investment for the period 4/2/91 to
8/31/95 between the Schwab 1000 Index(R) $17,245, the Schwab 1000 Fund(R)
$16,936, and the S&P 500 Index(R) $16,774]
Schwab 1000 Fund Average Annual
Total Returns Through August 31, 1995
-------------------------------------
One Year Since Inception
21.23% 12.66%
<TABLE>
<CAPTION>
DATE 1000 INDEX SCHWAB 1000 S&P 500
- ---- ---------- ----------- ----------
<S> <C> <C> <C>
04/02/91 $10,000.00 $10,000.00 $10,000.00
April $ 9,898.49 $ 9,910.00 $ 9,907.51
May $10,310.50 $10,320.00 $10,334.91
June $ 9,839.63 $ 9,850.00 $ 9,861.45
July $10,309.65 $10,320.00 $10,321.08
August $10,591.15 $10,600.00 $10,565.60
September $10,454.66 $10,460.00 $10,388.78
October $10,625.27 $10,630.00 $10,528.47
November $10,226.90 $10,240.00 $10,104.23
December $11,411.75 $11,425.00 $11,259.81
January 92 $11,271.86 $11,283.00 $11,049.98
February $11,415.17 $11,425.00 $11,193.09
March $11,162.67 $11,171.00 $10,975.40
April $11,392.14 $11,404.00 $11,297.56
May $11,425.96 $11,404.00 $11,352.94
June $11,256.50 $11,465.00 $11,184.12
July $11,728.23 $11,726.00 $11,641.03
August $11,485.97 $11,480.00 $11,402.78
September $11,646.34 $11,623.00 $11,536.78
October $11,763.20 $11,746.00 $11,576.64
November $12,233.22 $12,208.00 $11,970.82
December $12,427.71 $12,398.00 $12,117.74
January 93 $12,538.60 $12,502.00 $12,219.06
February $12,632.43 $12,595.00 $12,385.60
March $12,948.05 $12,896.00 $12,646.91
April $12,582.96 $12,533.00 $12,341.23
May $12,956.58 $12,896.00 $12,671.37
June $13,023.97 $12,958.00 $12,708.46
July $12,989.00 $12,905.00 $12,657.00
August $13,492.28 $13,397.00 $13,137.60
September $13,453.89 $13,355.00 $13,036.40
October $13,654.35 $13,544.00 $13,306.30
November $13,462.42 $13,355.00 $13,179.49
December $13,700.42 $13,592.00 $13,338.83
January 94 $14,136.31 $14,005.00 $13,800.32
February $13,780.60 $13,645.00 $13,417.88
March $13,168.98 $13,042.00 $12,835.38
April $13,325.94 $13,190.00 $12,999.67
May $13,488.02 $13,349.00 $13,211.57
June $13,127.19 $12,988.00 $12,887.88
July $13,557.96 $13,405.00 $13,310.61
August $14,146.55 $13,971.00 $13,855.00
September $13,824.96 $13,651.00 $13,516.95
October $14,094.52 $13,918.00 $13,819.73
November $13,589.52 $13,416.00 $13,316.69
December $13,766.95 $13,577.00 $13,513.78
January 95 $14,120.96 $13,923.00 $13,863.78
February $14,700.16 $14,474.00 $14,403.09
March $15,094.26 $14,852.00 $14,827.41
April $15,475.56 $15,219.00 $15,263.07
May $16,047.94 $15,770.00 $15,872.72
June $16,489.81 $16,191.00 $16,240.96
July $17,110.81 $16,981.00 $16,778.54
August $17,244.73 $16,936.00 $16,773.51
</TABLE>
Past performance is no guarantee of future results. Principal value and
investment returns will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
The performance graph compares a hypothetical $10,000 investment in the
Schwab 1000 Fund since inception with hypothetical investments in the
Schwab 1000 Index and the Standard & Poor's 500 Index. Indices are
unmanaged and other expenses associated with an investment of all
dividends, but, unlike the Fund, do not reflect the payment of advisory
fees and other expenses associated with an investment on the Fund. Fund
total return assumes the reinvestment of all dividends.
7 Past performance of the Schwab 1000 Index is not indicative of future
performance of the Schwab 1000 Fund. Principal value and investment
returns will fluctuate. An investor's shares, when redeemed, may be worth
more or less than their original cost.
<PAGE> 9
market capitalization. Based on market capitalization, the Schwab 1000 Index(R)
represents approximately 85% of the U.S. stock market, while the S&P 500
represents approximately 70%, as of August 31, 1995.
Q. WHICH INDUSTRY SECTORS WERE THE BEST PERFORMERS DURING THE PERIOD?
A. The technology sector was clearly the strongest performing sector during the
period. This sector, which comprised approximately 16% of Fund assets as of
August 31, 1995 achieved an overall industry total return of 49.8% 8 during the
reporting period. Other sectors with strong performance during the period were
consumer non-durables, which represented 30% of Fund assets and achieved an
overall industry total return of 19.5% 8, and transportation, which represented
2% of Fund assets and achieved an overall industry total return of 18.9% 8.
Q. RECENTLY THERE HAS BEEN A SIGNIFICANT AMOUNT OF PRESS COVERAGE ON INDEX
INVESTING. WHAT IS INDEX INVESTING, AND WHAT MAKES IT SUCH AN ATTRACTIVE
INVESTMENT STRATEGY?
A. Although index investing has broad appeal among institutional investors, it
is actually a fairly simple concept. The investment manager's objective is to
replicate the performance of an index by either investing in substantially all
the securities in the index or by investing in a representative sample of the
securities in the index. Index investing is frequently referred to as a
"passive" strategy. As contrasted with "active" strategies, a passive strategy
does not attempt to "make bets" on particular industry sectors or individual
securities which the investment manager believes will out-perform the market.
The primary advantages of index investing may include the opportunity to achieve
a particular market return, the ability to purchase a diversified portfolio of
securities and reduced costs to shareholders by offering lower management fees
and lower total operating expenses. When compared to actively managed funds,
passively managed funds generally have lower portfolio turnover, lower
transaction costs, and they attempt to remain as fully invested as possible.
Over time, these strategies may help to enhance shareholders' after-tax returns.
In contrast, actively managed funds may periodically maintain varying levels of
cash positions in an effort to enhance returns by "timing" market movements as
well as to maintain liquidity for future redemptions. Over time, being fully
invested with a low cash position level, will generally provide a potential for
higher returns. For example, as of July 31, 1995 the Investment Company
Institute reported that the average cash equivalent position for all growth and
income funds was 6.7%. This is significantly greater than the Schwab 1000
Fund(R) which had a cash equivalent position of 0.6% as of August 31, 1995.
8 Source: Wilshire 5000 Index Total Return as calculated by Wilshire
Associates, Inc. These total returns do not represent those of the Schwab 1000
Index or the Schwab 1000 Fund.
<PAGE> 10
SchwabFunds(R) 1
- --------------------------------------------------------------------------------
SCHWAB 1000 FUND(R)
STATEMENT OF NET ASSETS
August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
COMMON STOCK--99.3%
3COM Corp.* 24,800 $ 964
ADC Telecommunications, Inc.* 9,600 370
ADVANTA Corp. Class A 6,100 254
ADVANTA Corp. Class B 4,800 179
AES Corp.* 10,359 193
AFLAC Inc. 14,950 611
AGCO Corp. 3,300 160
ALLTEL Corp. 32,800 927
ALZA Corp.* 11,600 276
AMBAC Inc. 5,300 224
AMP Inc. 33,700 1,369
AMR Corp.* 13,400 945
ARCO Chemical Co. 16,600 801
AST Research, Inc.* 1,124 15
AT&T Capital Corp. 6,900 218
AT&T Corp. 258,117 14,584
Abbott Laboratories 130,300 5,049
Acclaim Entertainment, Inc.* 7,000 178
Adaptec, Inc.* 9,200 391
Adobe Systems Inc. 10,900 555
Adtran, Inc.* 5,600 174
Advanced Micro Devices, Inc. 18,000 608
Aetna Life & Casualty Co. 19,400 1,324
Ahmanson (H.F.) & Co. 17,800 423
Air Products & Chemicals,
Inc. 17,200 922
Air Touch Communications* 117,500 3,819
Airgas, Inc.* 4,300 118
Albemarle Corp. 9,400 154
Alberto-Culver Co. Class A 1,500 38
Alberto-Culver Co. Class B
(Convertible) 4,500 128
Albertson's, Inc. 42,900 1,367
Alco Standard Corp. 9,500 765
Alexander & Alexander
Services Inc. 6,500 150
Alexander & Baldwin, Inc. 6,700 154
Alleghany Corp. 1,040 176
Allegheny Ludlum Corp. 10,000 210
Allegheny Power System, Inc. 21,100 514
Allen Group Inc.* 4,000 131
Allergan, Inc. 9,700 295
Alliance Semiconductor Corp.* 5,700 224
AlliedSignal Inc. 47,300 2,099
Allmerica Property & Casualty
Companies, Inc. 8,700 210
Allstate Financial Corp. 119,124 4,035
Altera Corp.* 6,200 388
Alumax Inc.* 6,500 222
Aluminum Co. of America 29,700 1,697
AmSouth Bancorporation 8,200 306
Amdahl Corp.* 16,100 147
Amerada Hess Corp. 16,600 786
America Online, Inc.* 6,800 448
American Brands, Inc. 30,100 1,264
American Electric Power Co.,
Inc. 30,600 1,044
American Express Co. 81,100 3,274
American Financial Group,
Inc. 6,900 213
American General Corp. 34,600 1,220
American Greetings Corp.
Class A 11,700 361
American Home Products Corp. 50,600 3,896
American International Group,
Inc. 77,325 6,234
American National
Insurance Co. 3,900 224
American Power Conversion
Corp.* 14,000 235
American Re Corp. 6,800 272
American Stores Co. 27,700 814
American Water Works
Co., Inc. 4,800 143
Ameritech Corp. 89,800 4,602
Amgen Inc.* 42,600 2,042
Amoco Corp. 81,000 5,164
Amphenol Corp. Class A* 6,500 159
Anadarko Petroleum Corp. 8,500 406
Analog Devices, Inc.* 11,200 388
Andrew Corp.* 5,750 337
Anheuser-Busch Companies,
Inc. 42,200 2,411
Anixter International, Inc.* 4,300 162
Aon Corp. 17,350 677
Apache Corp. 10,500 306
Apple Computer, Inc. 19,700 848
Applied Materials, Inc.* 14,500 1,512
Archer-Daniels-Midland Co. 85,361 1,419
Argonaut Group, Inc. 3,200 97
Armstrong World Industries,
Inc. 5,600 321
Arrow Electronics, Inc. 9,000 488
Arrow International, Inc. 3,100 126
Arvin Industries, Inc. 1,300 28
Asarco Inc. 5,800 188
Ascend Communications, Inc.* 3,600 232
Ashland, Inc. 11,100 364
Associated Group Inc.
Class B* 1,200 25
Atlanta Gas Light Co. 3,800 140
Atlantic Energy, Inc. 7,800 148
Atlantic Richfield Co. 26,100 2,848
Atlantic Southeast Airlines,
Inc. 5,000 124
Atmel Corp.* 19,200 606
AutoZone, Inc.* 25,500 685
Autodesk, Inc. 7,200 333
Automatic Data Processing,
Inc. 23,500 1,528
Avery Dennison Corp. 7,900 324
Avnet, Inc. 6,100 314
Avon Products, Inc. 10,400 735
BFGoodrich Co. 3,900 232
BHC Communications, Inc.
Class A 3,700 336
BIC Corp. 3,700 147
BMC Software, Inc.* 7,600 323
Baby Superstore, Inc.* 2,900 136
Baker Hughes Inc. 21,200 477
Ball Corp. 4,400 150
Baltimore Gas & Electric Co. 25,650 673
Banc One Corp. 65,110 2,189
Bancorp Hawaii, Inc. 6,175 207
Bandag, Inc. 4,000 238
Bandag, Inc. Class A 1,800 99
Bank South Corp. 7,500 171
Bank of Boston Corp. 17,100 752
Bank of New York Co., Inc. 31,600 1,375
BankAmerica Corp. 61,395 3,469
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 11
SchwabFunds(R) 2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Bankers Life Holdings
Corporation 6,900 $ 131
Bankers Trust New York Corp. 13,400 923
Bard (C.R.), Inc. 7,600 236
Barnes & Noble, Inc.* 5,100 200
Barnett Banks, Inc. 16,088 919
Battle Mountain Gold Co. 17,700 175
Bausch & Lomb Incorporated 8,600 342
Baxter International Inc. 45,200 1,763
Bay Networks, Inc.* 19,882 943
BayBanks, Inc. 2,800 224
Bear Stearns Companies Inc. 17,548 362
Beckman Instruments, Inc. 4,300 123
Becton, Dickinson & Co. 11,900 671
Bed Bath & Beyond, Inc.* 4,900 134
Bell Atlantic Corp. 70,926 4,238
BellSouth Corp. 80,800 5,555
Belo (A.H.) Corp. Class A 6,000 211
Bemis Co., Inc. 7,400 215
Beneficial Corp. 7,900 388
Bergen Brunswig Corp.
Class A 6,483 135
Berkley (W.R.) Corp. 100 4
Berkshire Hathaway Inc.* 210 5,355
Best Buy Co., Inc.* 5,800 158
Bethlehem Steel Corp.* 16,600 243
Betz Laboratories, Inc. 4,100 172
Beverly Enterprises, Inc.* 18,400 244
Biogen, Inc.* 4,700 258
Biomet, Inc.* 16,900 274
Black & Decker Corp. 12,500 405
Block (H&R), Inc. 18,700 729
Block Drug Co., Inc. Class A 1,901 74
Boatmen's Bancshares, Inc. 19,200 712
Bob Evans Farms, Inc. 6,400 115
Boeing Co. 56,200 3,583
Boise Cascade Corp. 6,500 279
Boston Chicken, Inc.* 6,300 152
Boston Edison Co. 6,900 177
Boston Scientific Corp.* 24,271 965
Bowater Inc. 5,300 253
Boyd Gaming Corp.* 8,700 126
Briggs & Stratton Corp. 4,300 163
Brinker International, Inc.* 10,725 180
Bristol-Myers Squibb Co. 82,700 5,675
Broderbund Software, Inc.* 3,900 287
Brooklyn Union Gas Co. 7,350 185
Brown-Forman Corp. Class B 10,500 389
Browning-Ferris Industries,
Inc. 33,900 1,140
Brunswick Corp. 13,400 270
Burlington Northern Inc. 14,700 1,018
Burlington Resources Inc. 22,000 894
CBI Industries, Inc. 5,700 140
CBS Inc. 10,500 837
CIGNA Corp. 12,400 1,200
CIPSCO Inc. 5,000 164
CMS Energy Corp. 12,500 308
CNA Financial Corp.* 10,500 1,007
CPC International Inc. 23,100 1,452
CSX Corp. 17,000 1,403
CUC International Inc.* 30,525 1,042
Cabletron Systems, Inc.* 12,050 637
Cablevision Systems Corp.
Class A* 3,500 229
Cabot Corp. 5,400 260
Cadence Design Systems, Inc.* 5,500 199
California Energy Co., Inc.* 14,600 305
Callaway Golf Co. 10,000 155
Campbell Soup Co. 41,600 1,903
Canandaigua Wine Co., Inc.
Class A* 6,600 312
Capital Cities/ABC, Inc. 24,900 2,864
Capital One Financial Corp. 10,000 260
Cardinal Health, Inc. 6,362 340
Caremark International, Inc. 10,475 217
Carolina Power & Light Co. 28,500 873
Cascade Communication* 4,100 187
Case Corp. 12,000 453
Caterpillar Inc. 33,300 2,235
Centerior Energy Corp. 21,100 227
Centex Corp. 10,200 298
Centocor, Inc.* 10,600 129
Central & South West
Services Corp. 34,800 853
Central Fidelity Banks, Inc. 5,850 190
Century Communications Corp.
Class A* 13,137 131
Century Telephone
Enterprises, Inc. 8,850 247
Ceridian Corp. 7,700 337
Cerner Corp.* 4,400 150
Champion International Corp. 16,000 906
Chase Manhattan Corp. 30,000 1,725
Chemical Banking Corp. 38,530 2,244
Chevron Corp. 107,900 5,220
Chiron Corp.* 7,403 664
Chris-Craft Industries, Inc.* 4,423 199
Chrysler Corp. 60,800 3,276
Chubb Corp. 14,300 1,305
Cincinnati Bell Inc. 9,400 256
Cincinnati Financial Corp. 9,560 498
Cincinnati Milacron Inc. 5,100 169
Cinergy Corp. 23,265 596
Cintas Corp. 6,600 249
Circuit City Stores, Inc. 14,200 490
Circus Circus Enterprises,
Inc.* 15,400 504
Cirrus Logic, Inc.* 9,200 502
Cisco Systems, Inc.* 44,700 2,931
Citicorp 66,100 4,387
Citizens Utilities Co. Class
A* 31,800 350
Citizens Utilities Co. Class
B 7,737 85
Clayton Homes, Inc. 10,862 257
Clear Channel
Communications, Inc.* 2,300 172
Clorox Co. 8,000 541
Coastal Corp. 15,400 504
Coca-Cola Co. 206,800 13,287
Coca-Cola Enterprises Inc. 21,200 490
Cognex Corp.* 2,900 144
Coleman Co., Inc.* 3,600 136
Colgate-Palmolive Co. 24,100 1,639
Coltec Industries Inc.* 10,300 155
Columbia Gas System, Inc.* 7,600 268
Columbia/HCA Healthcare Corp. 71,272 3,350
Comcast Corp. Class A 6,000 128
Comcast Corp. Special
Class A 41,900 898
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 12
SchwabFunds(R) 3
- --------------------------------------------------------------------------------
SCHWAB 1000 FUND(R)
STATEMENT OF NET ASSETS
August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Comdisco, Inc. 4,815 $ 147
Comerica Inc. 19,264 686
Commerce Bancshares, Inc. 6,720 240
Compaq Computer Corp.* 41,600 1,986
Compass Bancshares, Inc. 4,850 146
Computer Associates
International, Inc. 25,700 1,786
Computer Sciences Corp.* 8,300 500
Compuware Corp.* 7,000 159
Comsat Corp. Series 1 7,000 163
ConAgra, Inc. 41,224 1,561
Conrail, Inc. 13,800 928
Conseco, Inc. 4,000 201
Consolidated Edison Co. of
New York, Inc. 39,700 1,122
Consolidated Freightways,
Inc. 7,900 204
Consolidated Natural Gas Co. 17,600 680
Consolidated Papers, Inc. 6,600 399
Consolidated Stores Corp.* 6,400 141
Cooper Industries, Inc. 20,700 787
Cooper Tire & Rubber Co. 12,500 325
Cordis Corp.* 3,100 240
Corestates Financial Corp. 25,000 925
Corning Inc. 36,800 1,201
Corporate Express, Inc.* 6,400 150
Countrywide Credit
Industries, Inc. 20,885 459
Cox Communications, Inc.
Class A* 41,306 816
Cracker Barrel Old Country
Store, Inc. 8,700 178
Crane Co. 4,600 166
Credit Acceptance Corp.* 7,000 151
Crestar Financial Corp. 5,400 304
Crown Cork & Seal Co., Inc.* 15,200 684
Crown Vantage Inc.* 1,360 33
Cummins Engine Co., Inc. 5,900 232
Cypress Semiconductor Corp.* 7,800 356
Cyprus Amax Minerals Co. 13,300 372
Cytec Industries Inc.* 1,585 96
DPL Inc. 15,850 353
DQE, Inc. 11,550 276
DSC Communications Corp.* 20,100 1,054
Dana Corp. 16,300 487
Danaher Corp. 8,300 274
Darden Restaurants, Inc.* 23,600 242
Dayton Hudson Corp. 12,700 929
Dean Foods Co. 6,150 163
Dean Witter, Discover & Co. 27,995 1,428
Deere & Co. 15,000 1,283
Dell Computer Corp.* 8,500 654
Delmarva Power & Light Co. 8,700 189
Delta Air Lines, Inc. 9,400 699
Deluxe Corp. 12,200 381
Dentsply International Inc. 4,100 152
Department 56 Inc.* 4,400 195
Deposit Guaranty Corp. 3,000 117
Destec Energy, Inc.* 23,900 379
Detroit Edison Co. 26,600 815
Dial Corp. 14,100 338
Diebold, Inc. 5,275 246
Digital Equipment Corp.* 25,500 1,065
Dillard Department Stores,
Inc. Class A 22,200 685
Dime Bancorp Inc. (New)* 24,926 302
Disney (Walt) Co. 85,300 4,787
Dole Food Company, Inc. 8,600 282
Dollar General Corp. 9,888 260
Dominion Resources, Inc. 28,650 1,035
Donnelley (R.R.) & Sons Co. 24,800 942
Dover Corp. 8,600 686
Dow Chemical Co. 45,400 3,360
Dow Jones & Co., Inc. 14,500 531
Dresser Industries, Inc. 32,060 769
Du Pont (E.I.) de Nemours
& Co. 101,700 6,649
Duke Power Co. 34,200 1,389
Dun & Bradstreet Corp. 28,100 1,626
Duracell International, Inc. 20,500 915
EG&G, Inc. 7,200 137
EMC Corp.* 37,400 767
ENSERCH Corp. 9,500 156
Eastman Chemical Co. 14,725 952
Eastman Kodak Co. 56,100 3,233
Eaton Corp. 14,400 779
Echlin Inc. 8,800 304
Eckerd (Jack) Corp.* 4,500 165
Ecolab Inc. 9,400 257
Edwards (A.G.) & Sons, Inc. 8,562 209
El Paso Natural Gas Co. 4,941 139
Electronic Arts Inc.* 7,400 281
Emerson Electric Co. 38,700 2,762
Engelhard Corp. 24,687 697
Enron Corp. 40,100 1,348
Enron Oil & Gas Co. 26,400 614
Ensco International Inc.* 8,400 151
Entergy Corp. 35,721 857
Equifax Inc. 11,500 447
Equitable Companies, Inc. 30,100 775
Equitable Resources, Inc. 5,100 142
Equitable of Iowa Companies 4,700 175
Ethyl Corp. 17,300 188
Exide Corp. 2,700 141
Exxon Corp. 203,300 13,977
FHP International Corp.* 5,500 136
FINA, Inc. Class A 4,000 185
FMC Corp.* 5,500 424
FORE Systems, Inc.* 3,700 126
FPL Group, Inc. 30,200 1,174
Family Dollar Stores, Inc. 8,700 159
Fastenal Co. 5,200 172
Federal Express Corp.* 10,300 739
Federal Home Loan
Mortgage Corp. 28,800 1,850
Federal National Mortgage
Association 44,100 4,206
Federal Paper Board
Co., Inc. 6,400 254
Federal Signal Corp. 5,866 127
Federated Department
Stores, Inc.* 29,700 802
Fifth Third Bancorp 12,150 680
Finova Group, Inc. 4,000 163
First American Corp. 4,000 171
First Bank System, Inc. 23,800 1,086
First Brands Corp. 3,200 140
First Chicago Corp. 15,600 989
First Colony Corp. 7,550 185
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 13
SchwabFunds(R) 4
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
First Commerce Corp. 4,562 $ 147
First Data Corp. 21,100 1,232
First Empire State Corp. 900 165
First Fidelity Bancorp 14,100 922
First Financial
Management Corp. 9,950 897
First Hawaiian, Inc. 5,000 141
First Interstate Bancorp 13,100 1,251
First Security Corp. 7,175 225
First Tennessee National
Corp. 5,050 267
First USA, Inc. 8,200 377
First Union Corp. 29,288 1,468
First Virginia Banks, Inc. 4,750 195
First of America Bank
Corporation 9,200 407
Firstar Corp. 11,000 408
Firstmerit Corp. 5,400 142
Fiserv, Inc.* 5,675 163
Fleet Financial Group, Inc. 25,400 940
Fleetwood Enterprises, Inc. 6,700 131
Fleming Companies, Inc. 5,800 169
FlightSafety International,
Inc. 4,800 213
Florida Progress Corp. 14,400 437
Flowers Industries, Inc. 6,100 126
Fluor Corp. 14,000 819
Food Lion, Inc. Class A 75,450 431
Food Lion, Inc. Class B 34,800 199
Ford Motor Co. 168,500 5,160
Forest Laboratories, Inc. 6,800 304
Foster Wheeler Corp. 4,800 177
Foundation Health Corp.* 8,200 284
Fourth Financial Corp. 3,800 136
Franklin Resources, Inc. 13,700 754
Freeport-McMoRan Copper &
Gold Inc. Class A 29,531 690
Freeport-McMoRan Copper &
Gold Inc. Class B* 17,894 418
Freeport-McMoRan Inc.* 25,500 143
Fritz Cos., Inc.* 2,500 179
Frontier Corp. 32,200 898
Fruit of the Loom, Inc. Class
A* 11,300 266
GATX Corp. 2,600 134
GEICO Corp. 11,100 758
GTE Corp. 158,000 5,787
GTECH Holdings Corp.* 5,700 165
Gannett Co., Inc. 22,300 1,193
Gap, Inc. 25,000 803
Gartner Group Inc. Class A* 5,600 160
Gateway 2000 Inc.* 11,100 297
Gaylord Entertainment Co.
Class A 14,390 399
Genentech, Inc.* 19,700 928
General Dynamics Corp. 11,400 600
General Electric Co. 276,200 16,261
General Instrument Corp.* 21,000 767
General Mills, Inc. 26,600 1,373
General Motors Corp. 123,900 5,823
General Motors Corp. Class E 70,600 3,292
General Motors Corp. Class H 13,000 518
General Nutrition
Companies, Inc.* 5,700 238
General Public Utilities
Corp. 17,100 489
General Re Corp. 13,800 2,051
General Signal Corp. 6,600 234
Genuine Parts Co. 19,950 786
Genzyme Corp. General
Division* 6,000 335
Genzyme Corp. Tissue Repair* 378 5
Geon Co. 3,800 101
Georgia Gulf Corp. 5,600 186
Georgia-Pacific Corp. 15,300 1,377
Giant Food Inc. Class A 8,700 271
Gillette Co. 74,000 3,090
Glatfelter (P.H.) Co. 5,700 128
Glenayre Technologies, Inc.* 6,400 418
Global Marine, Inc. 51,500 348
Golden West Financial Corp. 8,800 420
Goodyear Tire & Rubber Co. 25,700 1,028
Grace (W.R.) & Co. 16,900 1,126
Grainger (W.W.), Inc. 7,500 446
Grand Casinos, Inc.* 3,400 125
Great Atlantic & Pacific
Tea Co., Inc. 5,700 162
Great Lakes Chemical Corp. 10,000 661
Great Western Financial Corp. 24,300 568
Green Tree Financial
Corporation 12,000 699
Greenpoint Financial Corp. 7,000 194
Guidant* 14,000 354
HBO & Co. 6,300 345
HFS, Inc.* 8,200 384
Halliburton Co. 19,600 831
Hanna (M.A.) Co. 7,150 200
Hannaford Bros. Co. Inc. 5,800 149
Harcourt General, Inc. 11,200 466
Harley-Davidson, Inc. 15,700 436
Harnischfeger Industries
Corp. 6,300 232
Harrahs Entertainment Inc.* 15,400 491
Harris Corp. 5,500 317
Harsco Corp. 3,700 207
Hartford Steam Boiler
Inspection & Ins. Co. 2,700 125
Hasbro, Inc. 13,150 426
Hawaiian Electric Industries,
Inc. 3,900 141
Health Care and
Retirement Corp.* 6,700 211
Health Management Associates,
Inc. Class A* 6,075 204
Health Systems
International, Inc.* 7,300 216
HealthCare Compare Corp.* 6,000 225
Healthsource, Inc.* 4,500 180
Healthsouth Corp.* 11,000 260
Heilig-Meyers Co. 7,350 162
Heinz (H.J.) Co. 39,900 1,691
Hercules Inc. 20,400 1,135
Hershey Foods Corp. 13,200 790
Hewlett-Packard Co. 83,500 6,680
Hibernia Corporation
Class A 17,400 174
Hillenbrand Industries, Inc. 10,000 296
Hillhaven Corp.* 5,000 139
Hilton Hotels Corp. 9,000 599
Home Depot, Inc. 78,366 3,125
Home Shopping Network, Inc.* 11,600 122
Homestake Mining Co. 19,800 327
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 14
SchwabFunds(R) 5
- --------------------------------------------------------------------------------
SCHWAB 1000 FUND(R)
STATEMENT OF NET ASSETS
August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Hon Industries Inc. 4,200 $ 125
Honeywell Inc. 22,900 1,002
Horizon/CMS Healthcare Corp.* 3,800 83
Hormel Foods Corp. 11,600 278
Host Marriott Corp.* 22,500 259
Houghton Mifflin Co. 5,200 254
Household International, Inc. 17,100 960
Houston Industries Inc. 20,900 886
Hubbell Inc. Class A 600 33
Hubbell Inc. Class B 4,969 291
Humana Inc.* 23,900 436
Huntington Bancshares Inc. 20,402 448
IBP, Inc. 6,700 330
IDEXX Laboratories, Inc.* 4,800 162
IMC Fertilizer, Inc. 4,200 266
IPALCO Enterprises, Inc. 5,500 190
ITT Corp. 17,400 2,081
IVAX Corp. 17,200 441
Idaho Power Co. 5,400 142
Illinois Central Corp. Class
A 5,850 224
Illinois Tool Works Inc. 19,400 1,188
Illinova Corp. 10,800 271
Infinity Broadcasting Corp.
Class A* 7,225 259
Informix Corp.* 23,600 656
Ingersoll-Rand Co. 17,200 651
Inland Steel Industries, Inc. 8,600 235
Integra Financial Corp. 4,900 275
Integrated Device
Technology, Inc.* 5,700 328
Intel Corp. 135,400 8,319
International Business
Machines Corp. 94,600 9,779
International Flavors &
Fragrances Inc. 18,500 886
International Game Technology 18,600 265
International Paper Co. 21,300 1,744
International Rectifier
Corp.* 3,800 154
International Speciality
Products Inc. 15,400 137
Interpublic Group of
Companies, Inc. 15,100 587
Intuit Inc.* 7,800 338
James River Corp. of Virginia 13,600 473
Jefferson Smurfit Corp.* 16,900 256
Jefferson-Pilot Corp. 7,100 446
John Nuveen Co. 5,200 123
Johnson & Johnson 105,200 7,259
Johnson Controls, Inc. 5,800 353
Jones Apparel Group, Inc.* 3,300 115
Jostens, Inc. 9,900 238
KLA Instruments Corp.* 3,500 298
KU Energy Corp. 5,500 150
Kaiser Aluminum Corp.* 8,800 153
Kansas City Power & Light Co. 8,900 199
Kansas City Southern
Industries, Inc. 6,700 295
Kellogg Co. 35,200 2,376
Kelly Services, Inc. Class A 5,525 157
Kemet Corp.* 2,900 165
Kennametal Inc. 4,000 152
Kerr-McGee Corp. 7,800 429
KeyCorp, Inc. 41,423 1,284
Kimberly-Clark Corp. 26,000 1,661
King World Productions, Inc.* 5,500 209
Kmart Corp. 80,700 1,100
Knight-Ridder, Inc. 7,700 433
Kohl's Corp.* 5,100 240
Komag, Inc.* 3,500 218
Kroger Co.* 17,200 561
LCI International Inc.* 4,500 179
LG&E Energy Corp. 4,950 192
LIN Broadcasting Corp.* 10,200 1,309
LSI Logic Corp.* 21,100 1,039
LTV Corp.* 19,200 300
La Quinta Inns, Inc. 7,200 216
Laboratory Corp. of America
Holdings, Inc.* 18,648 259
Lafarge Corp. 8,600 182
Lam Research Corp.* 3,700 222
Lancaster Colony Corp. 4,000 138
Lear Seating Corp.* 7,000 200
Lee Enterprises, Inc. 3,500 139
Leggett & Platt, Inc. 5,900 285
Lehman Brothers Holdings Inc. 15,880 377
Leucadia National Corp. 3,800 202
Lilly (Eli) and Co. 47,300 3,873
Limited, Inc. 58,100 1,075
Lin Television Corp.* 10,550 382
Lincoln National Corp. 17,100 735
Linear Technology Corp. 5,600 452
Litton Industries, Inc.* 6,500 252
Liz Claiborne, Inc. 11,500 262
Lockheed Martin Corp. 33,392 2,033
Loctite Corp. 5,300 254
Loews Corp. 10,300 1,353
Lone Star Steakhouse &
Saloon, Inc.* 7,400 296
Long Island Lighting Co. 17,300 294
Longs Drug Stores Corp. 7,700 285
Longview Fibre Co. 8,000 129
Loral Corp. 15,100 827
Louisiana Land &
Exploration Co. 4,700 180
Louisiana-Pacific Corp. 16,500 392
Lowe's Companies, Inc. 26,100 868
Lubrizol Corp. 9,600 298
Lyondell Petrochemical Co. 12,100 333
MAPCO Petroleum Inc. 4,400 235
MBIA Corp. 6,300 428
MBNA Corp. 24,200 859
MCI Communications Corp. 112,200 2,700
MCN Corp. 9,600 179
MFS Communications
Company, Inc.* 9,700 429
MGIC Investment Corp. 8,700 487
MGM Grand, Inc.* 7,100 178
Mallinckrodt Group Inc. 11,300 425
Manor Care, Inc. 9,550 309
Manpower Inc. 10,700 308
Manville Corp.* 18,000 266
Mark IV Industries, Inc. 7,974 177
Marriott International, Inc. 21,300 756
Marsh & McLennan
Companies, Inc. 12,600 1,038
Marshall & Ilsley Corp. 13,328 335
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 15
SchwabFunds(R) 6
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Martin Marietta Materials,
Inc. 6,400 $ 122
Marvel Entertainment
Group, Inc.* 14,500 208
Masco Corp. 27,400 767
Mattel, Inc. 38,076 1,104
Maxim Integrated
Products, Inc.* 4,800 367
May Department Stores Co. 39,700 1,682
Maytag Corp. 15,300 237
McClatchy Newspapers, Inc.
Class A 2,800 63
McCormick & Co., Inc. 11,400 252
McDonald's Corp. 113,500 4,143
McDonnell Douglas Corp. 19,200 1,541
McGraw-Hill, Inc. 9,000 709
McKesson Corp. New 6,700 291
Mead Corp. 8,500 522
Medaphis Corp.* 8,200 188
Media General, Inc. Class A 3,300 119
Medtronic, Inc. 18,700 1,765
Mellon Bank Corp. 25,772 1,221
Melville Corp. 15,800 527
Mentor Graphics Corp.* 8,000 154
Mercantile Bancorp Inc. 7,950 360
Mercantile Bankshares Corp. 6,750 178
Mercantile Stores Co., Inc. 5,300 243
Merck & Co., Inc. 202,054 10,077
Mercury Finance Co. 17,109 391
Mercury General Corp. 4,200 158
Meridian Bancorp, Inc. 8,300 331
Merrill Lynch & Co., Inc. 28,400 1,636
Merry-Go-Round
Enterprises, Inc.* 200 1
Michigan National Corp. 2,000 215
Micro Warehouse, Inc.* 6,300 300
Microchip Technology, Inc.* 4,500 171
Micron Technology, Inc. 33,200 2,552
Microsoft Corp.* 95,200 8,800
Mid Atlantic Medical
Services Inc.* 7,800 145
Midamerican Energy Company 15,200 217
Midlantic Corp. 7,600 392
Millipore Corp. 7,400 258
Minerals Technologies, Inc. 3,400 123
Minnesota Mining &
Manufacturing Co. 68,500 3,742
Minnesota Power & Light Co. 4,800 129
Mirage Resorts, Inc.* 13,350 459
Mitchell Energy & Development
Corp. Class A 8,000 144
Mitchell Energy & Development
Corp. Class B 3,900 68
Mobil Corp. 64,900 6,182
Mobile Telecommunications
Technologies Corp.* 10,900 334
Modine Manufacturing Co. 4,500 134
Molex Inc. 14,356 614
Molex Inc. Class A 5,893 235
Monsanto Co. 18,700 1,774
Montana Power Co. 7,900 174
Morgan (J.P.) & Co. Inc. 31,600 2,303
Morgan Stanley Group Inc. 12,600 1,095
Morrison Restaurants, Inc. 4,875 96
Morton International, Inc. 25,900 842
Motorola, Inc. 95,700 7,154
Multimedia, Inc.* 5,300 226
Murphy Oil Corp. 6,370 258
Mylan Laboratories Inc. 17,550 401
NBD Bancorp, Inc. 28,260 1,010
NGC Corp.* 11,000 105
NICOR Inc. 7,800 200
NIKE, Inc. Class B 12,600 1,167
NIPSCO Industries, Inc. 9,000 295
NYNEX Corp. 69,800 3,141
Nabisco Holdings Corp.* 7,000 200
Nalco Chemical Co. 9,800 343
National City Corp. 24,840 739
National Fuel Gas Co. 5,800 163
National Gypsum Co. (New)* 3,500 187
National Semiconductor Corp.* 21,800 616
National Service Industries,
Inc. 7,200 209
NationsBank Corp. 44,184 2,712
Navistar International Corp.* 11,250 146
Nevada Power Co. 6,000 122
New England Electric Co. 9,800 343
New York State Electric &
Gas Corp. 10,400 251
New York Times Co. Class A 15,313 381
Newell Co. 23,674 592
Newmont Gold Co. 14,500 602
Newmont Mining Corp. 15,132 658
Nextel Communications, Inc.* 36,100 650
Niagara Mohawk Power Corp. 25,200 302
Nine West Group Inc.* 4,700 200
Noble Affiliates, Inc. 7,400 204
NorAm Energy Co. 25,215 180
Nordson Corp. 2,700 153
Nordstrom, Inc. 12,400 510
Norfolk Southern Corp. 22,200 1,571
Northeast Utilities 18,900 432
Northern States Power Co. 11,200 477
Northern Trust Corp. 7,950 356
Northrop Grumman Corp. 7,300 444
Northwest Airlines
Corporation Class A* 16,000 576
Norwest Corp. 53,488 1,611
Novell, Inc.* 61,000 1,102
Novellus Systems, Inc.* 2,200 162
Nucor Corp. 15,100 740
Occidental Petroleum Corp. 54,400 1,183
Office Depot, Inc.* 27,300 850
Officemax Inc.* 11,400 268
Ogden Corp. 10,388 242
Ohio Casualty Corp. 5,300 176
Ohio Edison Co. 27,000 584
Oklahoma Gas & Electric Co. 5,700 202
Old Kent Financial Corp. 6,405 243
Old National Bancorp 3,335 115
Old Republic International
Corp. 8,400 232
Olin Corp. 5,000 323
Olsten Corp. 5,550 201
Omnicom Group Inc. 5,300 333
OrNda Healthcorp* 6,800 137
Oracle Systems Corp.* 70,950 2,842
Oryx Energy Co.* 14,200 192
Outback Steakhouse, Inc.* 6,250 202
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 16
SchwabFunds(R) 7
- --------------------------------------------------------------------------------
SCHWAB 1000 FUND(R)
STATEMENT OF NET ASSETS
August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Owens-Corning Fiberglas
Corp.* 7,600 $ 298
Owens-Illinois, Inc.* 16,900 230
Oxford Health Plans, Inc.* 4,900 241
PACCAR Inc. 5,660 278
PNC Bank Corp. 39,300 1,032
PPG Industries, Inc. 34,600 1,479
PPL Resources, Inc. 23,220 508
PacifiCare Health Systems,
Inc. Class A* 1,700 93
PacifiCare Health Systems,
Inc. Class B* 5,600 319
PacifiCorp 46,500 843
Pacific Enterprises 11,800 283
Pacific Gas & Electric Co. 71,500 2,056
Pacific Telecom, Inc. 5,800 173
Pacific Telesis Group 71,100 2,017
Paging Network, Inc.* 7,400 290
Paine Webber Group Inc. 17,625 339
Pall Corp. 17,033 373
Panhandle Eastern Corp. 25,300 633
Parametric Technology Corp.* 10,300 570
Parker Hannifin Corp. 10,950 434
Paul Revere Corp. 6,900 121
Paychex, Inc. 6,450 263
Peco Energy Co. 34,500 919
Penney (J.C.) Co., Inc. 40,200 1,819
Pennzoil Co. 7,000 308
Pentair, Inc. 3,100 140
PeopleSoft, Inc.* 3,700 256
Peoples Energy Corp. 4,500 123
Pep Boys - Manny, Moe & Jack 8,700 239
PepsiCo, Inc. 129,000 5,837
Perkin-Elmer Corp. 5,800 198
Perrigo Co.* 12,100 162
Petsmart Inc.* 7,400 224
Pfizer Inc. 103,500 5,110
Phelps Dodge Corp. 12,400 786
Philip Morris Companies Inc. 139,100 10,380
Phillips Petroleum Co. 41,600 1,368
Phycor, Inc.* 3,400 143
Picturetel Corp.* 2,400 135
Pinnacle West Capital Corp. 13,300 331
Pioneer Hi-Bred
International, Inc. 12,700 545
Pitney Bowes Inc. 25,800 1,048
Pittston Service Group 5,500 140
Polaroid Corp. 6,600 288
Policy Management
Systems Corp.* 3,000 149
Portland General Corp. 7,200 173
Potlatch Corp. 4,300 170
Potomac Electric Power Co. 17,500 374
Praxair, Inc. 20,900 543
Premark International, Inc. 9,300 487
Premier Industrial Corp. 12,850 308
Price (T. Rowe)
Associates, Inc. 4,100 194
Price/Costco, Inc.* 31,304 532
Procter & Gamble Co. 112,400 7,798
Progressive Corp. 12,300 546
Promus Hotel Corp.* 7,700 159
Protective Life Corp. 3,800 108
Provident Life & Accident
Ins. Co. of America Class B 5,600 146
Providian Corp. 15,400 591
Public Service Co. of
Colorado 9,300 301
Public Service Enterprise
Group Inc. 40,500 1,114
Puget Sound Power &
Light Co. 9,200 199
Pyxis Corp.* 5,400 122
QUALCOMM Inc.* 9,600 469
Quaker Oats Co. 23,100 803
Quantum Corp.* 8,100 194
Questar Corp. 6,100 186
Quorum Health Group, Inc.* 7,100 151
RJR Nabisco Holdings Corp. 55,036 1,569
RPM, Inc. 8,700 173
Ralcorp Holdings, Inc.* 4,566 103
Ralston Purina Group 17,300 900
Raychem Corp. 6,700 294
Rayonier, Inc. 3,875 149
Raytheon Co. 20,500 1,658
Read-Rite Corp.* 7,000 286
Reader's Digest Association,
Inc. Class A 18,300 846
Reader's Digest Association,
Inc. Class B 3,200 134
Reebok International Ltd. 11,700 415
Regions Financial Corp. 6,650 268
Reliastar Financial Corp. 5,800 220
Republic New York Corp. 7,800 439
Revco D.S., Inc.* 10,000 198
Reynolds & Reynolds Co. Class
A 5,600 180
Reynolds Metals Co. 11,300 675
Rhone-Poulenc Rorer Inc. 23,600 1,044
Rite Aid Corp. 11,900 333
Riverwood International Corp. 9,300 242
Roadway Services, Inc. 6,000 329
Rochester Gas & Electric
Corp. 5,900 131
Rockwell International Corp. 34,900 1,562
Rohm & Haas Co. 11,900 711
Rollins, Inc. 5,600 134
Rouse Co. 6,700 140
Rubbermaid Inc. 29,000 863
Russell Corp. 5,900 162
Ryder System, Inc. 11,800 286
S3 Inc.* 3,300 129
SAFECO Corp. 11,300 732
SBC Communications, Inc. 98,428 4,983
SCANA Corp. 13,800 321
SCE Corp 74,600 1,240
SPS Transaction Services,
Inc.* 4,000 108
SUPERVALU Inc. 10,200 302
SYSCO Corp. 30,700 883
Safety-Kleen Corp. 8,600 116
Safeway Inc.* 18,400 725
Salomon Inc 15,900 610
San Diego Gas & Electric Co. 17,300 376
Santa Fe Energy
Resources, Inc.* 13,600 129
Santa Fe Pacific Corp. 27,832 790
Santa Fe Pacific Gold Corp. 25,720 312
Sara Lee Corp. 78,600 2,181
Scherer (R.P.) Corp.* 3,600 155
Schering-Plough Corp. 61,500 2,867
Scholastic Corp.* 2,800 173
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 17
SchwabFunds(R) 8
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Schulman (A.), Inc. 5,462 $ 146
Scientific-Atlanta, Inc. 11,700 234
Scott Paper Co. 25,000 1,159
Scripps (E.W.) Co. Class A 14,875 500
Seagate Technology, Inc.* 10,400 460
Sealed Air Corp.* 4,800 253
Sears, Roebuck & Co. 62,800 2,033
Sensormatic Electronics Corp. 11,150 234
Service Corp. International 16,900 592
Shared Medical Systems Corp. 3,400 126
Shaw Industries, Inc. 20,100 302
Shawmut National Corp. 19,300 625
Sherwin-Williams Co. 13,900 499
Sigma-Aldrich Corp. 7,100 339
Signet Banking Corp. 8,300 217
Silicon Graphics, Inc.* 27,900 1,179
Silicon Valley Group, Inc.* 4,000 172
Smith (A.O.) Corp. Class B 900 22
Snap-on Tools Inc. 6,100 250
Solectron Corp.* 5,600 199
Sonat Inc. 13,000 413
Sonat Offshore Drilling, Inc. 4,300 147
Sonoco Products Co. 14,810 398
Sotheby's Holdings, Inc.
Class A 19,800 275
SouthTrust Corp. 11,425 294
Southern Co. 108,700 2,296
Southern National Corp. 15,450 413
Southern New England
Telecommunications 9,800 330
Southern Pacific Rail Corp.* 23,700 581
Southland Corporation* 55,000 205
Southwest Airlines Co. 23,300 603
Southwestern Public Service
Co. 6,000 180
Spelling Entertainment
Group, Inc. 13,200 173
Spiegel, Inc. Class A 15,700 185
Sprint Corp. 58,434 2,074
St. Joe Paper Co. 4,300 263
St. Jude Medical, Inc.* 6,800 405
St. Paul Companies, Inc. 15,000 814
Standard Federal Bankcorp 4,700 183
Stanley Works 6,400 283
Staples, Inc.* 20,737 530
Star Banc Corp. 4,100 217
Starbucks Corp.* 6,000 240
State Street Boston Corp. 12,200 450
Sterling Software, Inc.* 3,700 165
Stewart & Stevenson
Services, Inc. 5,000 160
Stewart Enterprises, Inc.
Class A* 3,700 118
Stone Container Corp.* 16,000 348
Stop & Shop Companies, Inc.* 7,400 179
Storage Technology Corp.* 7,800 214
Stratacom Inc.* 6,800 332
Stryker Corp. 7,300 306
Student Loan Marketing
Association 12,000 650
Sun Co., Inc. 15,900 423
Sun Microsystems, Inc.* 16,900 976
SunGard Data Systems Inc.* 4,800 131
Sunamerica, Inc. 6,100 364
Sunbeam-Oster Co., Inc. 14,100 229
Sundstrand Corp. 4,500 307
Sunglass Hut International,
Inc.* 3,400 144
Suntrust Banks, Inc. 19,600 1,203
Superior Industries
International, Inc. 4,200 124
Sybase, Inc.* 11,120 358
Sybron International Corp.* 4,900 201
Symantec Corp.* 5,600 162
Symbol Technologies, Inc.* 4,300 149
Synopsys, Inc.* 2,400 138
Synovus Financial Corp. 11,100 283
TCF Financial Corp. 6,400 356
TIG Holdings, Inc. 9,300 238
TJX Companies, Inc. 11,100 139
TRINOVA Corp. 4,500 165
TRW Inc. 11,400 888
Talbots, Inc. 7,500 259
Tambrands Inc. 5,400 242
Tandem Computers Inc.* 17,800 218
Tandy Corp. 12,058 749
Teco Energy Co. 16,700 361
Tecumseh Products Co.
Class A 3,500 169
Tecumseh Products Co.
Class B 800 37
Tektronix, Inc. 4,600 210
Tele-Communications Inc.
Liberty Media Group
Class A* 26,086 693
Tele-Communications, Inc.
TCI International, Inc.
Class A* 104,346 1,924
Teledyne, Inc. 8,282 197
Telephone & Data Systems,
Inc. 8,600 353
Tellabs, Inc.* 15,800 741
Temple-Inland Inc. 8,400 435
Tencor Instruments* 5,000 216
Tenet Healthcare Corp.* 30,368 482
Tenneco Inc. 28,500 1,382
Teradyne, Inc.* 13,200 500
Terra Industries, Inc. 11,100 148
Texaco Inc. 41,700 2,700
Texas Instruments Inc. 30,600 2,291
Texas Utilities Co. 35,600 1,237
Textron Inc. 13,200 904
Thermo Cardiosystems Inc.* 5,000 197
Thermo Electron Corp.* 12,325 532
Thermo Instrument
Systems Inc.* 10,050 258
Thermolase* 5,700 113
Thomas & Betts Corp. 2,700 182
Tidewater Inc. 7,800 193
Time Warner Inc. 63,680 2,683
Times Mirror Co. Series A 17,400 533
Timken Co. 4,600 208
Tootsie Roll Industries, Inc. 7,864 314
Torchmark Corp. 10,550 422
Tosco Corp. 5,300 170
Total System Services, Inc. 9,900 193
Toys 'R' Us, Inc.* 45,550 1,184
TransTexas Gas Corporation* 11,300 202
Transamerica Corp. 10,500 714
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 18
SchwabFunds(R) 9
- --------------------------------------------------------------------------------
SCHWAB 1000 FUND(R)
STATEMENT OF NET ASSETS
August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Transatlantic Holdings, Inc. 3,300 $ 231
Travelers Inc. 53,217 2,554
TriMas Corp. 7,800 167
Tribune Co. 11,900 797
Trinity Industries, Inc. 5,950 193
Triton Energy Corp. 5,200 276
Turner Broadcasting System,
Inc. Class A 10,200 315
Turner Broadcasting System,
Inc. Class B 35,800 1,101
Tyco International Ltd. 11,807 698
Tyson Foods, Inc. Class A 22,200 567
U S WEST, Inc. 77,510 3,372
U.S. Bancorp 14,250 409
U.S. Healthcare, Inc. 25,225 804
U.S. Robotics, Inc. 3,000 420
UAL Corp.* 4,100 646
UJB Financial Corp. 8,400 291
UNUM Corp. 12,308 591
USF&G Corp. 15,300 277
USG Corp.* 6,200 168
USLIFE Corp. 3,600 155
UST Inc. 33,900 924
USX-Marathon Group 50,300 1,037
USX-US Steel Group 14,160 464
Ultramar Corp. 5,800 137
Unicom Corp. 35,400 996
Unifi, Inc. 9,925 251
Union Bank 7,400 376
Union Camp Corp. 12,300 700
Union Carbide Corp. 22,000 781
Union Electric Co. 15,300 545
Union Pacific Corp. 34,700 2,273
Union Planters Corp. 6,100 181
Union Texas Petroleum
Holdings, Inc. 13,100 255
Unisys Corp.* 25,900 207
United Asset
Management Corp. 3,900 152
United HealthCare Corp. 28,400 1,200
United States Cellular Corp.* 14,800 518
United States Surgical Corp. 8,300 211
United Technologies Corp. 20,400 1,701
Unitrin, Inc. 7,200 341
Universal Foods Corp. 4,100 130
Unocal Corp. 41,034 1,195
Upjohn Co. 28,300 1,199
UtiliCorp United Inc. 6,600 179
V.F. Corp. 9,800 537
VLSI Technology, Inc.* 6,100 201
Valero Energy Corp. 6,600 151
Valhi, Inc. 21,000 163
Valley National Bancorp 2,000 47
Valspar Corp. 2,800 112
Value Health, Inc.* 9,082 314
Value Jet* 4,000 117
Vanguard Cellular Systems,
Inc. Class A* 5,750 157
Varian Associates, Inc. 4,800 259
Varity Corp.* 6,300 287
Vastar Resources 14,800 463
Vencor, Inc.* 4,300 127
Viacom Inc. Class A* 13,212 642
Viacom Inc. Class B* 59,174 2,877
Vicor Corp.* 3,200 150
Vigoro Corp. 3,000 132
Viking Office Products, Inc.* 5,600 200
Vishay Intertechnology, Inc.* 8,200 332
Vons Companies, Inc.* 5,700 128
Vulcan Materials Co. 5,300 279
WMX Technologies, Inc. 79,500 2,335
WPL Holdings, Inc. 4,400 125
Wachovia Corp. 29,220 1,161
Wal-Mart Stores, Inc. 377,800 9,303
Walgreen Co. 39,800 975
Wallace Computer Services,
Inc. 3,400 196
Warnaco, Inc. Class A 5,600 122
Warner-Lambert Co. 21,600 1,952
Washington Federal, Inc. 6,095 141
Washington Gas Light Co. 6,200 119
Washington Mutual, Inc. 9,125 237
Washington Post Co.
Class B 1,800 517
Washington Water Power Co. 7,700 119
Weis Markets, Inc. 6,300 178
WellPoint Health Networks
Inc. Class A* 14,900 443
Wellman, Inc. 4,600 117
Wells Fargo & Co. 8,200 1,528
Wendy's International, Inc. 15,500 304
Wesco Financial Corp. 1,000 133
West One Bancorp 5,300 216
Western Atlas, Inc.* 8,600 390
Western Digital Corp.* 8,800 182
Western National Corp. 9,500 119
Western Resources, Inc. 9,231 279
Westinghouse Electric Corp. 57,600 785
Westvaco Corp. 12,200 538
Weyerhaeuser Co. 35,400 1,628
Wheelabrator Technologies
Inc. 27,300 427
Whirlpool Corp. 11,100 605
Whitman Corp. 15,200 306
Willamette Industries, Inc. 8,500 587
Williams Companies, Inc. 18,560 680
Wilmington Trust Co. 4,900 148
Winn-Dixie Stores, Inc. 13,700 815
Wisconsin Central
Transportation Corp.* 2,300 136
Wisconsin Energy Corp. 19,600 527
Witco Corp. 7,900 263
Woolworth Corp. 19,800 265
Worldcom Inc.* 34,917 1,176
Worthington Industries, Inc. 16,700 335
Wrigley (Wm.) Jr. Co. 19,100 862
XTRA Corp. 2,200 97
Xerox Corp. 17,400 2,101
Xilinx, Inc.* 12,900 552
York International Corp. 8,400 374
Zilog, Inc.* 3,800 154
--------
TOTAL COMMON STOCK
(Cost $622,204) 821,297
--------
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 19
SchwabFunds(R) 10
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
PREFERRED STOCK--0.0%
Teledyne, Inc. Preferred
Series E* 154 $ 2
--------
TOTAL PREFERRED STOCK
(Cost $1) 2
--------
<CAPTION>
Maturity
(000s)
---------
<S> <C> <C>
REPURCHASE AGREEMENT--0.6%
PNC Bank, N.A. 5.00%
Dated 8/31/95
Due 09/01/95
Collateralized By:
Federal National
Mortgage Association:
$10,970,000 Par; 6.25%
Due 12/25/19 $4,997 4,996
--------
TOTAL REPURCHASE AGREEMENT
(Cost $4,996) 4,996
--------
TOTAL INVESTMENTS -- 99.9%
(Cost $627,201) 826,295
--------
OTHER ASSETS AND LIABILITIES -- 0.1%
Other Assets 3,819
Liabilities (3,400)
--------
419
--------
NET ASSETS -- 100.0%
Applicable to 52,732,983
outstanding $0.00001
par value shares
(unlimited shares authorized) $826,714
========
NET ASSET VALUE PER SHARE $15.68
======
</TABLE>
- ------------------
*Non-Income Producing Security
See accompanying Notes to Financial Statements.
<PAGE> 20
SchwabFunds(R) 11
- --------------------------------------------------------------------------------
SCHWAB 1000 FUND(R)
STATEMENT OF OPERATIONS (in thousands)
For the year ended August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment income:
Dividends $ 15,821
Interest 246
--------
Total investment income 16,067
--------
Expenses:
Investment advisory and administration fee 1,777
Transfer agency and shareholder service fees 1,564
Custodian fees 201
Registration fees 65
Professional fees 53
Shareholder reports 158
Trustees' fees 36
Amortization of deferred organization costs 50
Insurance and other expenses 44
--------
3,948
Less expenses reduced (585)
--------
Total expenses incurred by Fund 3,363
--------
Net investment income 12,704
--------
Net realized gain (loss) on investments:
Proceeds from sales of investments 15,237
Cost of investments sold (14,807)
--------
Net realized gain on investments sold 430
--------
Change in net unrealized appreciation (depreciation)
on investments:
Beginning of period 83,149
End of period 199,094
--------
Increase in net unrealized appreciation on investments 115,945
--------
Increase in net assets resulting from operations $129,079
========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 21
SchwabFunds(R) 12
- --------------------------------------------------------------------------------
SCHWAB 1000 FUND(R)
STATEMENT OF CHANGES IN NET ASSETS (in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the year ended
August 31,
1995 1994
------------ ------------
<S> <C> <C>
Operations:
Net investment income $ 12,704 $ 10,821
Net realized gain (loss) on investments
sold 430 (1,259)
Increase in net unrealized appreciation
on investments 115,945 13,264
---------- ----------
Increase in net assets resulting
from operations 129,079 22,826
---------- ----------
Dividends to shareholders from
net investment income (6,199) (10,613)
---------- ----------
Capital Share Transactions:
Proceeds from shares sold 264,444 152,247
Net asset value of shares issued in
reinvestment of dividends 5,550 9,565
Early withdrawal fees 93 84
Less payments for shares redeemed (120,314) (135,320)
---------- ----------
Increase in net assets from capital
share transactions 149,773 26,576
---------- ----------
Total increase in net assets 272,653 38,789
Net Assets:
Beginning of period 554,061 515,272
---------- ----------
End of period (including undistributed
net investment income of $8,679 and
$2,174, respectively) $ 826,714 $ 554,061
========== ==========
Number of Fund Shares:
Sold 18,751 11,974
Reinvested 439 761
Redeemed (8,825) (10,627)
---------- ----------
Net increase in shares outstanding 10,365 2,108
Shares Outstanding:
Beginning of period 42,368 40,260
---------- ----------
End of period 52,733 42,368
========== ==========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 22
SchwabFunds(R) 13
- --------------------------------------------------------------------------------
SCHWAB 1000 FUND(R)
NOTES TO FINANCIAL STATEMENTS
For the year ended August 31, 1995
- --------------------------------------------------------------------------------
1. DESCRIPTION OF THE FUND
The Schwab 1000 Fund (the "Fund") is a series of Schwab Investments (the
"Trust"), an open-end, management investment company organized as a
Massachusetts business trust on October 26, 1990 and registered under the
Investment Company Act of 1940, as amended.
In addition to the Fund, the Trust also offers -- the Schwab Short/Intermediate
Government Bond Fund, the Schwab Long-Term Government Bond Fund, the Schwab
California Short/Intermediate Tax-Free Bond Fund, the Schwab California
Long-Term Tax-Free Bond Fund, the Schwab Short/Intermediate Tax-Free Bond Fund
and the Schwab Long-Term Tax-Free Bond Fund. The assets of each series are
segregated and accounted for separately.
The investment objective of the Fund is to provide a total return which matches
that of the Schwab 1000 Index(R), an index created to represent the performance
of the 1000 largest publicly traded common stocks of United States companies.
2. SIGNIFICANT ACCOUNTING POLICIES
Security valuation -- Investments in securities traded on an exchange are valued
at the last quoted sale price for a given day, or if a sale is not reported for
that day, at the mean between the most recent quoted bid and asked prices.
Unlisted securities for which market quotations are readily available are valued
at the mean between the most recent bid and asked prices. Securities for which
no quotations are readily available are valued at fair value as determined in
good faith by the Fund's investment manager pursuant to Board of Trustees
guidelines. Short-term securities with 60 days or less to maturity are stated at
amortized cost, which approximates market value.
Security transactions and investment income -- Security transactions, in the
accompanying financial statements, are accounted for on a trade date basis (date
the order to buy or sell is executed). Dividend income and distributions to
shareholders are recorded on the ex-dividend date; interest income is recorded
on the accrual basis. Realized gains and losses from security transactions are
determined on an identified cost basis.
Repurchase agreements -- Repurchase agreements are fully collateralized by U.S.
Treasury or Government agency securities. All collateral is held by the Fund's
custodian and is monitored daily to ensure that its market value at least equals
the repurchase price under the agreement.
Deferred organization costs -- Costs incurred in connection with the
organization of the Fund, its initial registration with the Securities and
Exchange Commission and with various states are amortized on a straight-line
basis over a five year period from the Fund's commencement of operations.
Expenses -- Expenses arising in connection with the Fund are charged directly to
the Fund. Expenses common to all series of the Trust are allocated to each
series in proportion to their relative net assets.
<PAGE> 23
SchwabFunds(R) 14
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Federal income taxes -- It is the Fund's policy to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all net investment income and realized net capital
gains, if any, to shareholders. Therefore, no federal income tax provision is
required. The Fund is considered a separate entity for tax purposes.
At August 31, 1995, (for financial reporting and federal income tax purposes),
net unrealized appreciation aggregated $199,094,000 of which $209,936,000
related to appreciated securities and $10,842,000 related to depreciated
securities.
3. TRANSACTIONS WITH AFFILIATES
Investment advisory and administration agreement -- The Trust has an investment
advisory and administration agreement with Charles Schwab Investment Management,
Inc. (the "Investment Manager"). For advisory services and facilities furnished,
the Fund pays an annual fee, payable monthly, of .30% of the first $500 million
of average daily net assets and .22% of such assets over $500 million. Under
this agreement, the Fund incurred investment advisory and administration fees of
$1,777,000 during the year ended August 31, 1995, before the Investment Manager
reduced its fee (see Note 5).
Sub-advisory agreement -- Prior to June 1, 1995, the Investment Manager had a
sub-advisory agreement with Dimensional Fund Advisors Inc. ("Dimensional"),
under which Dimensional performed day-to-day portfolio management for the Fund.
Dimensional did not receive compensation directly from the Fund. However, the
Investment Manager did pay Dimensional an annual fee, payable monthly, of .10%
of the first $500 million of average daily net assets and .02% of such assets
over $500 million.
Effective June 1, 1995, the sub-advisory agreement for the Fund was terminated
and the Investment Manager assumed day-to-day portfolio management
responsibility for the Fund.
Transfer agency and shareholder service agreements -- The Trust has transfer
agency and shareholder service agreements with Charles Schwab & Co., Inc.
("Schwab"). For services provided under these agreements, Schwab receives an
annual fee, payable monthly, of .05% of average daily net assets for transfer
agency services and .20% of such assets for shareholder services. For the year
ended August 31, 1995, the Fund incurred transfer agency and shareholder service
fees of $1,564,000, before Schwab reduced its fees (see Note 5).
Officers and trustees -- During the period, certain officers and trustees of the
Trust were also officers and/or directors of the Investment Manager and/or
Schwab. During the year ended August 31, 1995, the Trust made no direct payments
to its officers or trustees who were "interested persons" within the meaning of
the Investment Company Act of 1940, as amended. The Fund incurred fees of
$36,000 related to the Trust's unaffiliated trustees.
<PAGE> 24
SchwabFunds(R) 15
- --------------------------------------------------------------------------------
SCHWAB 1000 FUND(R)
NOTES TO FINANCIAL STATEMENTS
For the year ended August 31, 1995
- --------------------------------------------------------------------------------
4. BORROWING AGREEMENT
The Trust has an arrangement with PNC Bank, N.A., the Fund's custodian, whereby
the Fund may borrow up to $20,000,000, on a temporary basis, to fund
redemptions. Amounts borrowed under this arrangement bear interest at
periodically negotiated rates and may be collateralized by the assets of the
Fund. During the year ended August 31, 1995, no borrowings were made under this
arrangement.
5. EXPENSES REDUCED BY THE INVESTMENT MANAGER AND SCHWAB
During the year ended August 31, 1995, the Investment Manager and Schwab reduced
a portion of their fees in order to limit the Fund's ratio of operating expenses
to average net assets; the total of such fee reductions were $137,000 and
$448,000, respectively.
6. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities, other than short-term obligations,
aggregated (in thousands) $170,774 and $15,237, respectively, during the year
ended August 31, 1995.
7. EARLY WITHDRAWAL FEES PAID TO THE FUND
The Fund assesses a .50% early withdrawal fee on redemption proceeds
attributable to shares purchased and held less than six months. The early
withdrawal fee is retained by the Fund and is treated as a contribution to
capital. For the year ended August 31, 1995, total early withdrawal fees
retained by the Fund amounted to $93,000.
8. COMPOSITION OF NET ASSETS
At August 31, 1995, net assets consisted of:
<TABLE>
<S> <C>
Capital paid in $621,929,000
Accumulated undistributed net investment income 8,679,000
Accumulated net realized loss on investments sold (2,988,000)
Net unrealized appreciation on investments 199,094,000
------------
Total $826,714,000
============
</TABLE>
At August 31, 1995, the Fund's Statement of Net Assets included liabilities of
$432,000 for Fund shares redeemed, $135,000 for investment advisory and
administration fee payable, $90,000 for transfer agency and shareholder service
fees payable and $2,582,000 for portfolio securities purchased.
<PAGE> 25
SchwabFunds(R) 16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
9. FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the
period:
<TABLE>
<CAPTION>
For the
period
April 2, 1991
(commencement
For the eight For the of operations)
For the year ended months ended year ended to
August 31, August 31, December 31, December 31,
1995 1994 1993 1992 1991
---------- ---------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Net asset value at
beginning of period $ 13.08 $ 12.80 $ 11.96 $ 11.26 $ 10.00
Income from Investment
- ----------------------
Operations
----------
Net investment income .26 .26 .17 .24 .15
Net realized and
unrealized gain (loss)
on investments 2.48 .28 .79 .71 1.26
-------- -------- -------- -------- --------
Total from investment
operations 2.74 .54 .96 .95 1.41
Less Distributions
- ------------------
Dividends from net
investment income (.14) (.26) (.12) (.25) (.15)
Distributions from realized
gain on investments -- -- -- -- --
-------- -------- -------- -------- --------
Total distributions (.14) (.26) (.12) (.25) (.15)
-------- -------- -------- -------- --------
Net asset value at
end of period $ 15.68 $ 13.08 $ 12.80 $ 11.96 $ 11.26
======== ======== ======== ======== ========
Total return (%) 21.23 4.28 8.06 8.52 14.25
- ----------------
Ratios/Supplemental Data
- ------------------------
Net assets, end
of period (000s) $826,714 $554,061 $515,272 $370,980 $ 192,206
Ratio of expenses to
average net assets (%) .54 .51 .45* .35 --*
Ratio of net investment
income to average
net assets (%) 2.03 2.06 2.21* 2.45 3.21*
Portfolio turnover
rate (%) 2 3 1 1 1
</TABLE>
The Investment Manager and Schwab have reduced a portion of their fees and
absorbed certain expenses in order to limit the Fund's ratio of operating
expenses to average net assets. Had these fees and expenses not been reduced and
absorbed, the ratio of expenses to average net assets for the periods ended
August 31, 1995, 1994, 1993, December 31, 1992 and 1991 would have been .63%,
.56%, .49%*, .52% and 1.05%*, respectively, and the ratio of net investment
income to average net assets would have been 1.94%, 2.01%, 2.17%*, 2.28% and
2.16%*, respectively.
* Annualized
<PAGE> 26
SchwabFunds(R) 17
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
To the Trustees
and Shareholders of the Schwab 1000 Fund(R)
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets present fairly, in all
material respects, the financial position of the Schwab 1000 Fund (one of the
series constituting Schwab Investments, hereafter referred to as the "Trust") at
August 31, 1995, and the results of its operations and the changes in its net
assets for the periods presented, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Trust's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at August 31, 1995 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
San Francisco, California
September 29, 1995
1995 SPECIAL TAX INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
NOTICE TO CORPORATE SHAREHOLDERS
--------------------------------
100% of the Fund's distributions for the fiscal year ended August 31, 1995
qualify for the corporate dividends received deduction.
- --------------------------------------------------------------------------------
<PAGE> 27
THE SCHWABFUNDS FAMILY(R)
The SchwabFunds Family includes a variety of funds to meet your
investment needs. You can diversify into several different equity
markets with our three equity index funds, choose from different
maturities with our bond fund selection, and take advantage of an
array of money market fund choices.
[Figure 1] SCHWAB 1000 FUND(R) is designed to allow investors to participate in
the overall price and dividend performance of the U.S. stock market
as represented by the Schwab 1000 Index.(R) This index reflects the
performance of the 1,000 largest publicly traded U.S. companies
based on market capitalization. 1
[Figure 2] SCHWAB SMALL-CAP INDEX FUND(R) is designed to replicate the Schwab
Small-Cap Index(TM) which tracks the performance of smaller
capitalization companies. The Schwab Small-Cap Index represents the
second 1,000 largest publicly traded U.S. companies based on market
capitalization. 1
[Figure 3] SCHWAB INTERNATIONAL INDEX FUND(TM) gives investors the opportunity
to participate in the price and dividend performance of some of the
world's largest companies. This Fund makes it simple to effectively
invest in 350 of the largest publicly traded companies (based on
market capitalization) from countries around the world, as
represented by the Schwab International Index.(TM) 2
[Figure 4] SCHWAB GOVERNMENT BOND FUNDS include two different Funds designed to
offer high current yields with the credit safety of high-quality
U.S. Government securities. The level of income you're seeking and
your tolerance for fluctuation in share price should determine your
selection of either our Short/Intermediate Fund or the Long-Term
Fund. 3
[Figure 5] SCHWAB TAX-FREE BOND FUNDS help investors take advantage of one of
the last remaining tax breaks: tax-free municipal bonds. We offer a
Short/Intermediate Fund and a Long-Term Fund, both of which pay
monthly income free from federal personal income tax. 4, 5
[Figure 6] SCHWAB CALIFORNIA TAX-FREE BOND FUNDS give California residents two
different opportunities to earn double tax-free income--free from
both federal and California state personal income taxes. Choose from
the Short/Intermediate Fund or the Long-Term Fund. 5
[Figure 7] SCHWAB MONEY FUNDS include seven different money market funds that
seek high current income with safety and liquidity. Most can be
linked to your Schwab account to "sweep" cash balances automatically
when you're in between other investments. These Funds are managed to
maintain a stable $1 share price. Keep in mind, however, that
investments in money market funds are neither insured nor guaranteed
by the U.S. Government, and there is no assurance that the Funds
will be able to maintain a stable share price of $1.
Schwab will be happy to provide you with a free prospectus and
brochure on any of the SchwabFunds.(R) The prospectus provides more
complete information including charges and expenses. Please read it
carefully before investing. Also keep in mind that the principal
value and investment returns of your investment in the SchwabFunds
(except Schwab Money Funds) will fluctuate with market conditions,
and Fund shares, when redeemed, may be worth more or less than their
original cost.
1-800-2 NO-LOAD
1-800-266-5623
1 The Schwab 1000 Fund and the Schwab Small-Cap Index Fund do not
include privately held companies, investment companies and
companies incorporated outside the United States.
2 Companies in the Schwab International Index Fund must be from
countries with developed securities markets. The Fund is currently
invested in 15 countries and excludes investment companies and
companies from the United States.
3 Investors in the Schwab Government Bond Funds may experience a
decline in share price due to pre-payment of obligations held by
the Funds.
4 Income may be subject to state and local taxes.
5 Income may be subject to the Alternative Minimum Tax (AMT) and
capital appreciation from discounted bonds may be subject to state
and federal income tax.
<PAGE> 28
--------------
BULK RATE
U.S. POSTAGE
PAID
CHARLES SCHWAB
--------------
[SCHWABFUNDS FAMILY(TM) LOGO]
101 Montgomery Street
San Francisco, California 94104
INVESTMENT ADVISER
Charles Schwab Investment Management, Inc.
101 Montgomery Street, San Francisco, CA 94104
DISTRIBUTOR
Charles Schwab & Co., Inc.
101 Montgomery Street, San Francisco, CA 94104
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus.
TF3745R (10/95) CRS 6719 Printed on recycled paper.
