<PAGE> 1
SCHWABFUNDS(R)
[LOGO]
SCHWAB SMALL-CAP
INDEX FUND(TM)
SEMI-ANNUAL REPORT
APRIL 30, 1995
[Photo of the Schwab Building, San Francisco, California]
<PAGE> 2
Dear Fellow Shareholder,
This year, the SchwabFunds Family(R) celebrates its fifth
anniversary as a mutual fund complex. This celebration follows an
[Photo exciting 1994 when the organization experienced tremendous
of growth-- the third largest asset growth of all mutual fund
Charles companies. By placing your trust in SchwabFunds(R), you've helped
R. Schwab] total assets under management reach $25 billion, ranking
SchwabFunds in the top 6% of all mutual fund complexes in just a
few years.
We believe much of this success can be traced to the Schwab commitment to
serving the needs of 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. 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, we've added the question and answer section of
this report, developed to address what our portfolio managers feel have been 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. In addition, now that Charles Schwab Investment Management, Inc.
will be managing the day-to-day portfolio management of the three Schwab equity
funds, we will be even better able to meet your service needs and respond to
your questions.
The SchwabFunds Family has grown to include a solid selection of funds that
meet the "core" needs of investors. The 16 funds available to retail investors
offer effective diversification of the U.S. and international equity markets,
both taxable and tax-free bonds, and a variety of money market investments.
With this 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.
To receive a brochure and prospectus for any of the SchwabFunds, you can call
Schwab's toll-free number, 1-800-2 NO-LOAD, or visit any one of the over 200
Schwab offices. The prospectus includes more complete information on the
Funds, including charges and expenses. Please read it carefully before
investing.
I'd like to extend my personal gratitude for your trust in the SchwabFunds
Family. 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 meet even higher standards of excellence in
the years ahead.
/s/ Charles R. Schwab
Charles R. Schwab
Chairman
Cover: The Schwab Building, San Francisco, California
<PAGE> 3
YES! I'D LIKE TO TAKE
ADVANTAGE OF AN EASY WAY
TO EFFECTIVELY DIVERSIFY MY EQUITY PORTFOLIO.
PLEASE SEND ME MORE INFORMATION, INCLUDING PROSPECTUSES, FOR THE THREE
SCHWABFUNDS(R) EQUITY INDEX FUNDS LISTED BELOW.
SCHWAB 1000 FUND(R) is designed to match the total return of the Schwab 1000
Index(R), Schwab's own benchmark of America's 1,000 largest companies, based on
market capitalization.
SCHWAB SMALL-CAP INDEX FUND(TM) seeks to track the total return of the Schwab
Small-Cap Index(TM), comprised of the second 1,000 largest U.S. companies,
ranked by market capitalization.
SCHWAB INTERNATIONAL INDEX FUND(TM) seeks to track the total return of the
Schwab International Index(TM), comprised of 350 of the largest publicly traded
companies (based on market capitalization) in countries with developed
securities markets outside of the U.S.
The prospectus provides more complete information, including charges and
expenses. Please read it carefully before investing.
- -------------------------------------------------------------------------------
NAME
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ADDRESS
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CITY STATE ZIP
See the back page for more information.
[SCHWABFUNDS FAMILY LOGO]
SMXS5
<PAGE> 4
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UNITED STATES
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<PAGE> 5
COMMENTS FROM THE INVESTMENT MANAGER
We are pleased to report the performance of the Schwab Small-Cap Index Fund(TM)
for the six-month period that began November 1, 1994 and ended April 30, 1995.
During a period when small-cap stocks captured positive returns, the Fund
achieved its primary objective for shareholders of tracking the price and
dividend performance of the Schwab Small-Cap Index(TM). In addition, it once
again succeeded in maintaining the tax advantages and lower costs that its
investors look to for a better overall return.
ASSETS AND NUMBER OF SHAREHOLDERS GREW
Investors who appreciate the potential long-term growth of small company stocks
demonstrated their confidence in the Schwab Small-Cap Index Fund by investing
over $12 million in new assets in the Fund. During the six-month period, Fund
net assets grew from $68 million to nearly $84 million. The number of
shareholders rose as well, from 13,385 to 14,348.
THE FUND'S POSITIVE RETURN
The Schwab Small-Cap Index Fund's net asset value (NAV) increased substantially
by $.44, reflecting the growth of the overall U.S. equity market, including
the small-cap sector. The Fund's NAV began the period at $10.05 and ended at
$10.49. Additionally, the Fund paid out $.06 per share in dividends during the
period, demonstrating the tendency of small companies to retain their earnings.
Although the total return of the Schwab Small-Cap Index outpaced that of the
Fund for the six-month period, it should be noted that indices usually enjoy a
performance advantage over the funds that track them because indices have no
trading costs or operational expenses. The Schwab Small-Cap Index closely
tracked the S&P Small-Cap 600 Index, which was created in October 1994, to
track the small-cap sector of the U.S. market. The large-cap sector, as
represented by the S&P 500 Index(R), outpaced the small-cap sector for most of
the reporting period. It is important to remember that the S&P 500 Index
represents a different, larger-cap sector of the market.
The table on the following page compares total return for various periods for
the Schwab Small-Cap Index Fund, the Schwab Small-Cap Index and benchmark S&P
Small-Cap 600 Index, in addition to the large-cap sector of the market
represented by the S&P 500 Index. Total return assumes reinvestment of all
dividends and capital gain distributions.
<PAGE> 6
================================================================================
TOTAL RETURN
<TABLE>
<CAPTION>
Cumulative Since Average Annual
Six-Months Ended One Year Ended Fund Inception Since Fund Inception
April 30, 1995 April 30, 1995 (12/3/93-4/30/95) (12/3/93-4/30/95)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Schwab Small-Cap
Index Fund(TM) 5.00% 8.34% 5.66% 3.99%
- ---------------------------------------------------------------------------------------------------
Schwab Small-Cap
Index(TM) 5.15% 8.36% 6.71%
- ---------------------------------------------------------------------------------------------------
S&P Small-Cap
600 Index 5.48% 6.04% 4.32%
- ---------------------------------------------------------------------------------------------------
S&P 500
Index(R) 10.46% 17.44% 15.02%
- ---------------------------------------------------------------------------------------------------
For the Schwab Small-Cap Index Fund, one year total return for the year ended 3/31/95
was 5.64% and average annual total return since inception through 3/31/95 was 2.51%.
</TABLE>
- --------------------------------------------------------------------------------
Total return assumes reinvestment of all dividends and capital gain
distributions. Past performance is no guarantee of future results. Principal
value and returns will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
THE EQUITY MARKET'S HEALTHY PERFORMANCE
Although it was a bumpy ride, the six-month period ended April 30, 1995 was
positive for both the U.S. stock market and, to a lesser extent, the small
capitalization sector. In the fall, U.S. stocks declined when the Federal
Reserve Board (the Fed) raised short-term interest rates by a half percentage
point. Rising interest rates generally tend to lure investors out of the stock
market and into fixed income securities or money market instruments.
By the end of the calendar year, however, investors appeared confident that the
Fed was approaching the end of its campaign to slow down the economy. At the
same time, U.S. companies reported extremely strong advances in 1994 profits,
fueled by rising productivity and global expansion. As a result, between late
December and the end of April, stocks rallied sharply, even though the Fed
raised interest rates for the seventh time in a year on February 1, 1995. The
market regularly surpassed new highs, forcing market watchers to reassess
upside targets. On April 28, 1995, the Dow Jones Industrial Average achieved
an all-time high of 4314.70.
Although the small-cap sector was outpaced by the large-cap sector, the
small-cap sector still turned in a healthy performance for the reporting
period. And the good news for investors with an eye toward the long-term is
that, over time, small-cap stocks, though more volatile, have proven to be
strong performers. In fact, over the past 15 years, small-cap stocks have
provided an average annual total return of 15.16% as measured by the Schwab
Small-Cap Index.(1)
In the "Questions to the Investment Manager" section of this report, we
describe in further detail the factors that affected the Fund's performance.
(1) Small-company total return as measured by the Schwab Small-Cap Index.
Small-cap stock performance as measured by the Schwab Small-Cap Index for the
period prior to the Fund's inception date of 12/03/93 was calculated by the
Center for Research in Security Prices (CRSP), University of Chicago Graduate
School of Business.
<PAGE> 7
THE ADVANTAGES OF INDEXING
Performance Tracking
For investors interested in the proven long-term growth potential of small
company stocks, indexing offers the opportunity to participate in the long-term
total return of the small-cap market. The Schwab Small-Cap Index Fund(TM)
attempts to track the price and dividend performance of the Schwab Small-Cap
Index(TM) through its investment in stocks of companies that comprise the
Index.
By investing in a Fund whose stocks seek to match the performance of the
domestic small-cap market, you can help keep pace with market trends. Whereas
actively managed funds regularly buy and sell securities or hold cash
equivalents based on predictions of market movements, index funds generally
follow market movement. Since it's nearly impossible to consistently predict
and beat the market, the alternative of participating in the market trends
offered by indexing is attractive for many investors. For example, for the
past five years, investing in the stocks of the Schwab Small-Cap Index would
have provided an average annual total return of 12.46% outperforming
approximately 7 out of 10 actively managed domestic equity funds.(2)
Lower Taxes
The Schwab Small-Cap Index Fund seeks to maximize its after-tax performance for
investors by keeping capital gain distributions to a minimum. The Fund does this
in two significant ways. First, the Fund is designed to maintain a low
portfolio turnover through its indexing approach. During the twelve month
period ended April 30, 1995, the Fund's portfolio turnover rate was 21%,
compared with 82% for actively managed equity funds.(3) Second, the Fund seeks
to offset gains with losses when securities must be sold. Both methods can
limit capital gain distributions to shareholders, which when taxed, erode
after-tax returns. What's more, because small companies tend to pay lower
dividends, shareholders usually enjoy the advantage of less taxable income from
that source.
Keeping Expenses to a Minimum
Simply put, the less you pay in fees, the greater a portion of the Fund's return
you can receive. The Schwab Small-Cap Index Fund has demonstrated Schwab's
strong commitment to keeping fees low for investors. The Fund does not impose
sales loads or 12b-1 fees, both of which would increase expenses and cause your
total return to diminish.(4) Additionally, the low portfolio turnover rate
mentioned above helps to lower transaction costs for Fund investors. In fact,
the Fund's total operating expense ratio during the reporting period of 0.75% of
the Fund's average daily net assets underscores its lower expenses when compared
to the higher average ratio of 1.45% for actively managed U.S. equity funds.(5)
What's more, beginning July 1, 1995, the Fund's total operating expense ratio
will be reduced to just .59% through at least June 30, 1996.
(2) Source: Morningstar, Inc., April 30, 1995. Average total return reported
for 908 actively managed U.S. equity funds, 5/1/90-4/30/95. Small-company
total return as measured by the Schwab Small-Cap Index. The Index is unmanaged
and, therefore, does not reflect the payment of advisory fees and other expenses
associated with an investment in the Fund. Small-cap stock performance as
measured by the Schwab Small-Cap Index for the period prior to 12/03/93 was
calculated by the Center for Research in Security Prices (CRSP), University of
Chicago Graduate School of Business.
(3) Source: Morningstar, Inc., April 30, 1995. Average annual portfolio
turnover for 2,462 actively managed U.S. equity funds, as of April 30, 1995.
(4) To help keep Fund expenses low for long-term shareholders, investors who
hold their shares for less than six months will be charged a redemption fee of
0.50%. This fee is paid directly to the Fund to offset the costs associated
with short-term trading.
(5) Source: Morningstar, Inc., April 30, 1995. Average of operating expenses
reported for 2,462 actively managed U.S. equity funds as of April 30, 1995.
<PAGE> 8
THE POWER OF INDUSTRY DIVERSIFICATION
The Schwab Small-Cap Index Fund's(TM) broad diversification among small-cap
equities helps to reduce investment risk by making sure your investment is
exposed to a large number of industries and securities, rather than being tied
to the fortunes of a few.
The Fund seeks to invest in substantially all of the stocks in the Schwab
Small-Cap Index(TM), which is comprised of the second 1,000 largest publicly
traded U.S. companies, ranked by market capitalization.(6) The Fund avoids
investing in the smallest companies to limit shareholders' exposure to the
increased volatility and higher trading costs of these "micro-cap"(7) stocks.
The chart below illustrates the Fund's industry diversification. You'll also
find a complete listing of its holdings following the "Questions to the
Investment Manager" section of this letter.
THE FUND PROVIDES SMALL-CAP STOCK OPPORTUNITIES
[Pie chart indicating percentages as of April 30, 1995 for the Small-Cap Fund]
<TABLE>
<S> <C>
Basic Industries 6.7%
Capital Goods 8.1%
Consumer Basics 13.0%
Consumer Durables 3.6%
Consumer Non-durables 7.2%
Consumer Services 4.3%
Energy 4.5%
Finance 16.2%
General Business 9.9%
Miscellaneous 2.4%
Shelter 1.9%
Technology 14.0%
Transportation 2.4%
Utilities 5.8%
</TABLE>
SCHWAB SMALL-CAP INDEX FUND(TM) PORTFOLIO
INDUSTRY DIVERSIFICATION AMONG COMMON STOCK HOLDINGS
AS OF APRIL 30, 1995
LOOKING FORWARD
Investors understand the higher long-term growth opportunities small-cap stocks
may offer, compared to large-cap stocks. We believe the Fund remains a good
choice for shareholders who want a convenient, low-cost way to diversify into
the small-cap market sector. Going forward, the Fund will continue to strive
to track the price and dividend performance of the Schwab Small-Cap Index, as
well as to maintain its tax and cost advantages for shareholders.
Thank you again for your confidence in SchwabFunds(R). We look forward to
continuing to help you achieve your financial goals.
CHARLES SCHWAB INVESTMENT MANAGEMENT, INC.
(6) The Schwab Small-Cap Index does not include privately held companies,
investment companies and companies incorporated outside the U.S.
(7) "Micro-cap" stocks refer to stocks of the smallest 3,500 companies, which
represent only 3% of the total market capitalization of all U.S. stocks.
<PAGE> 9
QUESTIONS TO THE INVESTMENT MANAGER
Q. HOW DID THE PERFORMANCE OF THE SCHWAB SMALL-CAP INDEX(TM) COMPARE TO THE
S&P SMALL-CAP 600 INDEX DURING THE SIX-MONTH PERIOD?
A. During the six-month period ended April 30, 1995, the total return of the
Schwab Small-Cap Index was 5.15%, which was slightly behind the 5.48% return
posted by the S&P Small-Cap 600 Index. Put another way, a $1,000 investment in
the stocks that comprise the Schwab Small-Cap Index would have returned $51.50
compared to $54.80 for the same investment in the stocks that comprise the S&P
Small-Cap 600 Index.
Both the S&P Small-Cap 600 Index and the Schwab Small-Cap Index are market
value weighted indices designed to track the small stock sector of the U.S.
equity market. The S&P Small-Cap 600 Index, which was created in October 1994,
is composed of 600 domestic stocks selected by S&P Corporation. The S&P
Small-Cap 600 Index is much more representative of the market segment tracked
by the Schwab Small-Cap Index than the S&P 500 Index(R).
The stocks that comprise the Schwab Small-Cap Index represent approximately 7%
of the U.S. equity market measured by market capitalization, which is similar
to the S&P Small-Cap 600 Index which represents approximately 4% of the U.S.
equity market by
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT
(IN THE SCHWAB SMALL-CAP INDEX FUND(TM), THE SCHWAB SMALL-CAP INDEX(TM),
THE STANDARD & POOR'S SMALL-CAP 600 INDEX AND THE STANDARD & POOR'S 500
INDEX(R))
[Line graph comparing value of $10,000 investment for the period 12/3/93 to
4/30/95 between the Schwab Small-Cap Index Fund $10,566, Schwab Small-Cap Index
$10,671, S&P Small-Cap 600 Index $10,432, and S&P 500 Index $11,502]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Date Fund Index S&P 500 S&P 600
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12/3/93 $10,000 $10,000 $10,000 $10,000
12/31/93 $10,154 $10,234 $10,051 $10,232
1/31/94 $10,394 $10,469 $10,392 $10,473
2/28/94 $10,334 $10,430 $10,110 $10,443
3/31/94 $9,783 $9,871 $9,670 $9,693
4/30/94 $9,753 $9,847 $9,794 $9,839
5/31/94 $9,613 $9,692 $9,954 $9,644
6/30/94 $9,333 $9,419 $9,711 $9,286
7/31/94 $9,493 $9,614 $10,029 $9,401
8/31/94 $10,134 $10,249 $10,440 $10,042
9/30/94 $10,094 $10,191 $10,185 $9,990
10/31/94 $10,064 $10,149 $10,413 $9,890
11/30/94 $9,663 $9,767 $10,034 $9,513
12/31/94 $9,841 $10,000 $10,183 $9,744
1/31/95 $9,730 $9,838 $10,447 $9,606
2/28/95 $10,082 $10,229 $10,853 $10,002
3/31/95 $10,334 $10,442 $11,173 $10,204
4/30/95 $10,566 $10,671 $11,502 $10,432
</TABLE>
Past performance is no guarantee of future results. Principal value and 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
Small-Cap Index Fund since inception with hypothetical investments in the
Schwab Small-Cap index, the S&P Small-Cap 600 Index and the S&P 500 Index.
Indices are unmanaged and assume reinvestment of all dividends. Investors
cannot invest directly in an index, therefore indices, unlike the Fund, do not
reflect the payment of advisory fees and other expenses associated with an
investment in the Fund. Since the S&P Small-Cap 600 Index did not exist before
October, 1994, it was reconstructed from December 3, 1993 through September,
1994 by S&P. Fund total returns assume the reinvestment of all dividends and
capital gain distributions.
<PAGE> 10
market capitalization. By comparison, the stocks that comprise the S&P 500
Index(R) represent approximately 70% of the U.S equity market measured by market
capitalization.
The S&P 500 Index posted a 10.46% return for the six-month period. While the
S&P 500 Index outperformed both the Schwab Small-Cap Index(TM) and the S&P
Small-Cap 600 Index for the period, it is important to remember that the S&P
500 Index tracks a different sector of the market. During the reporting
period, the large-capitalization stocks, as represented by the S&P 500 Index,
outperformed the small-capitalization stocks, which is reflected in the
difference in the returns of this Index. Small-capitalization stocks have
historically been characterized by greater total returns in the long-term than
their large-capitalization counterparts, although some periods of relative
under performance and greater volatility of returns are also characteristics of
the small-cap market sector.
Q. WHAT ACCOUNTS FOR THE DIFFERENCE BETWEEN THE PERFORMANCE OF THE SCHWAB
SMALL-CAP INDEX FUND(TM) AND THE SCHWAB SMALL-CAP INDEX?
A. The Schwab Small-Cap Index is a theoretical return of a group of stocks of
the second 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, such as trading, customer service and Fund
accounting costs, which affect Fund performance. In addition, the Fund holds a
small portion of its balances in cash to meet redemptions and pay expenses.
The cash portion earns interest at money market rates, which may be more or
less than the returns of the Small-Cap Index during a given period. The Index
contains no such cash balances. In addition, the weighting of any particular
security in the Fund can be greater or less than the actual weighting in the
Index. These factors cause the difference in the returns of the Index
compared to the Fund, a difference referred to as the Fund's "tracking error."
Another primary goal of the Fund is to minimize capital gain distributions. In
order to avoid the excessive realization of capital gains, the Fund may continue
to hold certain stocks which have fallen out of the Index, but do not
significantly impact tracking error. Depending on the performance of these
non-Index stocks, this can contribute positive or negative tracking error to the
Fund.
Q. NOW THAT YOU, CHARLES SCHWAB INVESTMENT MANAGEMENT, INC., HAVE DIRECT,
DAY-TO-DAY PORTFOLIO MANAGEMENT RESPONSIBILITY FOR THE SCHWAB SMALL-CAP INDEX
FUND, WHAT CHANGES CAN SHAREHOLDERS EXPECT AND HOW MAY THE CHANGES BENEFIT
THEM?
A. Although we will continue to manage the Fund in a manner very consistent
with the former sub-adviser, we feel there are advantages to Fund shareholders
as a result of the change. By directly overseeing the portfolio management
activities of the Fund, we will be better able to meet your service needs,
respond to your questions, and prepare meaningful communications regarding the
activities of the Fund. Although we already manage over $24 billion in money
market and bond mutual funds, we have recently made additional investments in
state of the art equity portfolio management software and systems. As part of
this venture, we have also added a very talented and experienced equity
portfolio management team whose sole responsibility will be the management of
equity portfolios for SchwabFunds.
<PAGE> 11
We will continue to strive to minimize tracking error relative to the Schwab
Small-Cap Index(TM), and to pursue a tax efficient strategy by minimizing
portfolio turnover and managing capital gain distributions by offsetting
portfolio gains with losses.
Q. WHAT IS INDEX INVESTING, AND WHAT MAKES IT SUCH AN ATTRACTIVE INVESTMENT
STRATEGY?
A. Although index investing has broad appeal among many sophisticated investors
and academics, it is actually a fairly simple concept. The investment
manager's objective is to replicate the performance of an index either by
investing in all the securities in the index or by investing in a
representative sample of 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 manager believes will
out-perform the market.
The primary advantages of investing in an index fund are usually reduced costs
to shareholders, the opportunity to achieve a particular market return, and the
ability to purchase a diversified portfolio of securities. 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.
Index funds typically realize these lower costs in two ways. First, index
funds can offer lower management fees and lower total operating expenses.
Second, index funds may achieve lower costs through low portfolio turnover.
Low portfolio turnover can minimize excessive capital gain distributions and
trading costs, helping to increase returns to shareholders. These strategies
may help to enhance after-tax returns for Fund investors.
Since index funds attempt to replicate the performance of a particular index,
they tend to keep minimal cash positions and a relatively fully invested equity
position. In contrast, many actively managed funds maintain varying levels of
cash positions in an effort to enhance returns by "timing" market movements and
to maintain liquidity for future redemptions. For example, as of March 31,
1995, the Investment Company Institute reported that the average cash
equivalent position for all aggressive growth funds was 8.3%. This is a
significantly greater percentage than that of the Schwab Small-Cap Index
Fund(TM) which had a cash equivalent position of 4.1% as of April 30, 1995.
Index funds provide individual investors a convenient and low cost way to
diversify into different market sectors. For example, domestic small-cap
equity investments, although they may be more volatile, have historically
exhibited the potential for greater long-term returns than domestic large-cap
equity investments. As a result, allocating a portion of your personal
investment portfolio to a small-cap index fund offers the potential to increase
portfolio returns while simultaneously increasing portfolio diversification by
participating in a different sector of the market.
Q. WHAT STRATEGIES DOES THE FUND EMPLOY TO INCREASE THE AFTER-TAX RETURN TO
SHAREHOLDERS?
A. The Fund is managed to increase the after-tax return for shareholders of
the Fund by employing strategies designed to minimize portfolio turnover and
capital gain distribu-
<PAGE> 12
tions. For the year ended April 30, 1995, the Fund's portfolio turnover rate
was 21%, which is lower than that of small company growth index funds, which
had an average portfolio turnover rate of 38%.(8)
Unlike the management policies of many other index funds, the Investment
Manager may selectively maintain Fund positions in stocks which, because of
market conditions, have "fallen out" of the bottom of the Index or "risen out"
of the top of the Index. In other words, stocks of companies fall in value
relative to other companies in the Index. The Investment Manager evaluates the
impact such stocks have on portfolio tracking error, trading costs, and capital
gain distributions. The most obvious example of how this policy can benefit
the Fund is in the case of a stock which rises out of the Index and then
subsequently falls back into the Index. Using conventional index fund
management techniques, a manager might sell the position and then subsequently
buy it back. In this hypothetical example, the cost of the two trades and the
potential capital gain associated with the disposition of the stock could have
a significant impact on the after-tax return actually realized by fund
shareholders.
These policies enable the Schwab Small-Cap Index Fund(TM) to add significant
value for its shareholders by helping to minimize trading costs and capital
gain distributions, which maximize the after-tax returns to shareholders of the
Fund.
(8) Source: Morningstar, April 30, 1995. Average annual portfolio turnover for
the 18 index funds in the Small Company Growth category.
<PAGE> 13
SchwabFunds(R) 1
- -------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(TM)
STATEMENT OF NET ASSETS
April 30, 1995 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
COMMON STOCK-96.4%
A.L. Laboratories, Inc. Class A 2,300 $ 55
AAR Corp. 2,600 36
ABM Industries, Inc. 2,800 65
ABT Building Products Corp.* 1,900 31
ACX Technologies, Inc.* 2,600 113
ADAC Laboratories 3,000 25
ADVO, Inc. 3,300 66
AGCO Corp. 6,150 219
ALANTEC Corp. 1,400 54
ALBANK Financial Corp. 2,200 57
AMC Entertainment Inc.* 500 6
AMCORE Financial, Inc. 1,500 28
AMETEK, Inc. 6,500 106
APS Holding Corp. Class A* 2,600 59
AST Research, Inc.* 10,400 185
Abbey Healthcare Group, Inc.* 2,100 83
Acclaim Entertainment, Inc.* 8,500 128
Acme Metals Co.* 1,900 31
Acordia, Inc. 2,900 90
Acuson Corp.* 4,900 56
Acxiom Corp. 3,900 68
Addington Resources, Inc.* 3,100 35
Adelphia Communications Corp. Class A* 2,000 17
Adesa Corp.* 1,800 30
Adobe Systems Inc. 1,600 93
Advanced Technology Laboratories, Inc.* 5,200 84
Advanced Tissue Sciences, Inc.* 5,000 34
Advantage Health Corp.* 1,000 28
Air & Water Technologies Corp. Class A* 9,500 43
Air Express International Corp. 3,300 78
Airborne Freight Corp. 4,000 78
Airgas, Inc. 2,400 54
Alaska Air Group, Inc.* 2,100 36
Albany International Corp. Class A 3,800 83
Alberto-Culver Co. Class A 300 6
Alberto-Culver Co. Class B (Convertible) 700 22
Aldila, Inc. 3,900 24
Alex. Brown Inc. 2,800 115
Alta Farmers Federation Corp. 7,900 93
Allen Group Inc. 5,100 115
Alliance Pharmaceutical Corp.* 3,600 18
Alliance Semiconductor Corp. 4,100 167
Alliant Techsystems Inc.* 1,700 63
Allied Group, Inc. 1,500 44
Allwaste, Inc.* 5,600 34
Alpha-Beta Technology, Inc.* 400 2
Altera Corp. 1,500 121
Amax Gold Inc. 16,600 93
Amcast Industrial Corp. 1,500 30
America Online, Inc. 1,000 46
America West Airlines, Inc.* 7,700 76
American Annuity Group, Inc. 7,500 74
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
American Bankers Insurance Group, Inc. 3,800 $121
American Business Information, Inc.* 5,100 122
American Business Products, Inc. 1,800 48
American Classic Voyages Co. 3,100 32
American Colloid Co. 3,400 50
American Freightways Corp.* 5,600 132
American Heritage Life Investment Corp. 5,200 99
American Management Systems, Inc. 5,100 107
American Media Inc. Class A 3,400 21
American Medical Response, Inc.* 6,000 154
American Mobile Satellite Corp.* 4,700 90
American President Companies, Ltd. 1,600 37
American Savings Bank of Florida F.S.B.* 4,800 98
American Superconductor Corp. 1,600 27
Americredit Corp.* 5,300 48
Ameridata Technologies Inc.* 2,600 20
Ampherol Corp. Class A* 3,100 87
Amsco International, Inc.* 10,700 135
Amtech Corp. 2,300 16
Analogic Corp. 2,100 38
Andrew Corp. 1,275 63
Angelica Corp. 2,000 52
Ann Taylor Stores Corp.* 400 10
Antec Corp.* 3,800 94
Anthony Industries, Inc. 6,415 107
Apogee Enterprises, Inc. 2,300 40
Apple South, Inc. 5,250 76
Applebee's International, Inc. 4,700 103
Applied Magnetics Corp.* 2,600 11
Applied Power Inc. Class A 2,300 61
AptarGroup Inc. 3,100 91
Aquarion Co. 900 20
Aquila Gas Pipeline Corp. 4,800 41
Arbor Drugs, Inc. 2,800 71
Arctco, Inc. 5,450 76
Argosy Gaming Co.* 4,700 55
Arkansas Best Corp. 4,100 41
Armco Inc.* 2,500 18
Armor All Products Corp. 3,600 72
Arnold Industries Inc. 5,100 91
Arrow International, Inc. 1,000 33
Arthur J. Gallagher & Co. 3,300 113
Artisoft, Inc.* 2,000 15
Arvin Industries, Inc. 6,300 146
Ashland Coal, Inc. 2,500 69
Aspect Telecommunications Corp.* 2,100 88
Associated Banc-Corp 2,200 81
Atari Corp.* 18,600 50
Atlantic Southeast Airlines, Inc. 6,300 146
Atmos Energy Corp. 2,400 45
Au Bon Pain Co., Inc. Class A* 1,700 23
Augat Inc. 4,100 84
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 14
SchwabFunds(R) 2
- --------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(TM)
STATEMENT OF NET ASSETS
April 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
Aura Systems, Inc.* 5,700 $ 23
Authenic Fitness Corp. 5,500 91
AutoFinance Group, Inc.* 3,100 46
Automotive Industries Holding, Inc.* 2,800 74
Autotote Corp. Class A 5,000 22
Avatar Holdings, Inc.* 1,500 56
Aviall, Inc. 7,275 55
Avid Technology, Inc.* 3,200 130
Aztar Corp.* 7,400 68
B W/I Inc. Class A 4,100 73
BET Holdings, Inc. Class A* 4,300 73
BISYS Group, Inc.* 2,600 54
BJ Services Co.* 2,700 62
BMC Industries, Inc. 2,300 41
BMC West Corp. 1,400 21
Baldor Electric Co. 3,360 99
Baldwin & Lyons, Inc. Class A 100 2
Baldwin & Lyons, Inc. Class B 1,800 29
Ballard Medical Products 9,900 119
Bally Entertainment Corp.* 10,100 105
BancTec, Inc.* 1,800 30
Bancorp South Inc. 1,300 48
Bankers Corp. 240 4
Banta Corp. 3,550 118
Banyan Systems, Inc.* 2,800 41
Barefoot Inc. 2,800 31
Barnes Group Inc. 1,100 49
Barr Laboratories, Inc.* 1,000 21
Barrett Resources Corp.* 1,900 45
Bassett Furniture Industries, Inc. 2,500 66
Bay State Gas Co. 2,100 51
Bay View Capital Corp. 1,200 29
Bearings, Inc. 1,300 40
Belden Inc. 12,300 277
Bell Bancorp, Inc. 1,800 50
Bell Sports Corp.* 1,300 18
Benton Oil & Gas Co.* 4,500 56
Bergen Brunswig Corp. Class A 1,383 33
Berkley (W.R.) Corp. 2,900 108
Berry Petroleum Co. Class A 3,900 39
Best Power Technology Inc.* 1,100 14
Big B, Inc. 2,900 42
Bio-Technology General Corp.* 3,800 10
Biocraft Laboratories, Inc. 2,400 49
Birmingham Steel Corp. 5,500 109
Black Box Corp. 3,000 47
Black Hills Corp. 2,300 51
Blair Corp. 1,400 48
Blanch (E.W.) Holdings, Inc. 2,200 41
Block Drug Co., Inc. Class A 2,257 82
Blount, Inc. Class A 1,300 58
Blount, Inc. Class B 500 22
Boatmen's Bancshares, Inc. 5,000 166
Bolt Beranek and Newman Inc.* 2,900 54
Bombay Company, Inc. 5,950 46
Books-A-Million, Inc. 3,000 41
Boole & Babbage, Inc. 1,200 35
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
Borg-Warner Security Corp.* 8,400 $ 65
Borland International, Inc. 9,300 90
Boston Bancorp 1,000 39
Boston Scientific Corp.* 3,073 84
Boston Technology, Inc.* 8,400 127
Bowne & Co., Inc. 2,800 46
Box Energy Corp. Class A* 500 5
Box Energy Corp. Class B (Non Voting) 3,000 26
Boyd Gaming Corp.* 7,600 104
Brady (W.H.) Co. Class A 900 47
Breed Technologies, Inc. 900 18
BroadBand Technologies, Inc.* 2,300 58
Broadway & Seymour, Inc.* 1,400 26
Broadway Stores Inc.* 10,000 68
Broderbund Software, Inc. 100 5
Brown (Tom), Inc.* 4,600 65
Brown Group, Inc. 3,300 92
Bruno's, Inc. 14,200 172
Brush Wellman Inc. 2,700 53
Buffets, Inc.* 5,000 51
Burlington Coat Factory Warehouse Corp.* 7,300 78
Bush Industries, Inc. 2,250 26
Business Records Corp. Holding Co.* 300 10
C-COR Electronics, Inc. 1,600 35
C-TEC Corp. 1,300 28
CCB Financial Corp. 1,500 62
CCH Inc. Class A 2,800 47
CCH Inc. Class B 2,900 48
CCP Insurance, Inc. 8,300 175
CDI Corp.* 3,400 87
CIDCO, Inc.* 2,100 76
CILCORP Inc. 3,300 120
CKE Restaurants Inc. 2,600 19
CLARCOR Inc. 2,400 50
CMAC Investment Corp. 2,100 78
CML Group, Inc. 11,350 82
CNB Bancshares, Inc. 2,420 72
CONVEX Computer Corp.* 4,600 19
COR Therapeutics, Inc.* 4,400 72
CPI Corp. 2,800 47
CSF Holdings, Inc.* 1,600 42
CSS Industries, Inc.* 1,700 29
Cabot Oil & Gas Corp. Class A 4,100 64
Cadence Design Systems, Inc.* 1,800 58
Caere Corp.* 1,800 15
CalMat Co. 9,100 180
Caldor Corp.* 3,400 66
Calgene, Inc.* 6,200 43
Calgon Carbon Corp. 7,500 92
California Energy Co., Inc.* 11,100 185
California Federal Bank 9,600 118
California Microwave, Inc.* 2,300 72
California Water Service Co. 1,800 57
Camco International Inc. 6,000 142
Canandaigua Wine Co., Inc. Class A* 3,100 134
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 15
SchwabFunds(R) 3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
Canandaigua Wine Co., Inc. Class B* 500 $ 22
Capital Re Corp. 5,400 126
Capitol American Financial Corp. 6,500 142
Capsure Holdings Corp.* 2,800 37
Caraustar Industries, Inc. 4,200 78
Carlisle Companies Inc. 2,800 105
Carmike Cinemas, Inc.* 1,300 29
Carpenter Technology Corp. 1,400 85
Carr-Gottstein Foods Co.* 2,000 12
Carter-Wallace, Inc. 6,500 82
Casey's General Stores, Inc. 4,700 80
Cash America International, Inc. 4,900 37
Casino America, Inc. 850 13
Catalina Marketing Corp.* 1,700 80
Catellus Development Corp.* 28,300 184
Cato Corp. (New) Class A 6,200 50
Cell Genesys, Inc.* 2,300 9
CellPro, Inc.* 2,300 23
Cellular Communications, Inc. Class A (Redeemable)* 4,500 209
Cantennial Cellular Corp. 4,100 58
Centerbank 2,200 29
Centex Corp. 5,200 125
Centocor, Inc.* 3,500 50
Central Hudson Gas & Electric Corp. 3,700 96
Central Louisiana Electric Co., Inc. 4,100 94
Central Maine Power Co. 6,000 67
Central Vermont Public Service Corp. 2,100 29
Centura Banks, Inc. 4,000 104
Century Communications Corp. Class A 3,900 37
Cerner Corp.* 2,700 143
Chambers Development Co., Inc.* 1,900 11
Chambers Development Co., Inc. Class A* 9,400 53
Champion Enterprises, Inc.* 2,100 63
Chaparral Steel Co. 6,000 57
Charter Medical Corp.* 4,900 87
Charter One Financial, Inc. 4,000 92
Checkers Drive-In Restaurants, Inc.* 8,800 21
Checkpoint Systems, Inc.* 5,700 120
Cheesecake Factory, Inc. 1,600 32
Chemed Corp. 1,500 46
Chemical Financial Corp. 1,995 58
Cherry Corp. 800 11
Chesapeake Corp. 1,600 50
Cheyenne Software, Inc. 7,150 104
Chipcom Corp. 400 13
Chiquita Brands International, Inc. 1,400 19
Christiana Cos., Inc.* 1,100 30
Chronimed, Inc. 2,000 31
Church & Dwight Co., Inc. 3,600 67
Circa Pharmaceuticals Co., Inc.* 3,500 85
Citizens Bancorp 3,000 89
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
Citizens Banking Corp. 2,400 $ 64
Citizens Corp. 4,200 71
City National Corp. 8,200 83
Claire's Stores, Inc. 3,300 46
Clear Channel Communications, Inc. 475 27
Cleveland-Cliffs Inc. 2,100 77
Coast Savings Financial, Inc.* 3,400 71
Coastal Healthcare Group, Inc.* 4,400 69
Cobra Golf, Inc. 3,700 80
Coca-Cola Bottling Co. Consolidated 1,300 41
Coeur d'Alene Mines Corp. 2,600 51
Cognex Corp. 3,300 98
Coherent, Inc.* 1,800 52
Collagen Corp. 1,800 34
Collective Bancorp, Inc. 3,600 65
Colonial BancGroup, Inc. 1,600 39
Colonial Data Technologies Corp.* 2,100 41
Colonial Gas Co. 1,500 30
Cornair Holdings, Inc. 3,800 96
Commercial Federal Corp.* 2,200 58
Commercial Intertech Corp. 3,450 76
Commercial Metals Co. 3,233 86
Commonwealth Energy System 2,200 90
Community Health Systems, Inc. 3,900 136
Community Psychiatric Centers 8,200 109
Comnet Cellular, Inc.* 1,900 50
CompUSA Inc.* 3,400 85
ComputerVision Corp.* 8,200 45
Comverse Technology Inc.* 3,800 57
Concord EFS Inc. 2,700 81
Cone Mills Corp.* 10,300 117
Connecticut Energy Corp. 900 17
Connecticul Natural Gas Corp. 1,400 32
Conner Peripherals, Inc.* 9,800 104
Consolidated Freightways, Inc. 1,600 41
Consolidated Stores Corp.* 6,100 104
Continental Airlines, Inc. Class A* 800 13
Continental Airlines, Inc. Class B* 3,600 59
Continental Medical Systems, Inc.* 15,000 161
Continuum Company, Inc.* 3,500 116
Converse, Inc.* 2,800 25
Copley Pharmaceutical, Inc.* 3,064 47
CopyTele, Inc.* 3,900 26
Coram Healthcare Corp.* 4,662 96
Cordis Corp.* 900 65
Corrections Corp. of America* 2,300 75
Coventry Corp. 1,100 26
Craig (Jenny), Inc. 5,800 42
Crawford & Co. Class A 2,300 38
Crawford & Co. Class B 3,000 49
Cray Research, Inc.* 4,900 97
Credence Systems Corp.* 4,500 164
Credit Acceptance Corp. 1,300 26
Cross (A.T.) Co. Class A 5,800 99
Cross Timbers Oil Co. 4,900 80
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 16
SchwabFunds(R) 4
- -------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(TM)
STATEMENT OF NET ASSETS
April 30, 1995 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
CrossComm Corp* 1,000 $ 12
Crown Central Petroleum Corp.* 600 9
Cullen/Frost Bankers, Inc. 1,900 70
Curtiss-Wright Corp. 800 30
Cypress Semiconductor Corp.* 900 27
Cyrix Corp.* 3,600 86
Cyrk Inc.* 2,300 33
CytRx Corp.* 3,200 6
Cytec Industries Inc.* 2,200 80
DSP Group, Inc.* 1,500 33
Dallas Semiconductor Corp. 9,500 190
Dames & Moore, Inc. 4,700 59
Daniel Industries, Inc. 1,400 22
Data General Corp.* 5,900 46
Datascope Corp.* 2,700 49
Davidson & Associates, Inc.* 2,900 99
DeVRY Inc.* 3,500 133
Dell Computer Corp.* 3,150 172
Delphi Financial Group, Inc. Class A* 700 12
Delta Woodside Industries, Inc. 8,100 76
Department 56 Inc.* 300 11
Deposit Guaranty Corp. 3,600 125
Destec Energy, Inc.* 14,500 147
Detroit Diesel Corp.* 8,900 207
Devon Energy Corp. 3,400 71
Devon Group, Inc. (New)* 1,200 32
Dexter Corp. 5,800 133
Diagnostek, Inc.* 4,700 87
Diagnostic Products Corp. 2,200 85
Dial Page, Inc.* 3,500 55
Digi International Inc.* 2,300 52
Digital Link Corp.* 1,500 41
Digital Microwave Corp.* 2,300 26
Dime Bancorp Inc. (New)* 19,926 192
Dimon Inc.* 5,900 94
Dionex Corp.* 1,500 63
Discount Auto Parts, Inc.* 2,600 63
Discovery Zone, Inc.* 8,500 77
Donaldson Co., Inc. 4,800 119
Downey Financial Corp. 2,800 50
Dravo Corp.* 2,600 35
Dress Barn, Inc.* 3,800 36
Dreyer's Grand Ice Cream, Inc. 2,600 78
Dual Drilling Co.* 2,900 25
Duff & Phelps Corp. 4,200 46
Duff & Phelps Credit Rating 1,400 17
Duracraft Corp.* 1,100 35
Duriron Co., Inc. 3,600 78
Duty Free International, Inc. 5,300 40
Dynatech Corp. 3,400 59
E'town Corp. 700 19
E-Z Serve Corp.* 4,300 4
ENVOY Corp.* 2,000 45
Eagle Hardware & Garden, Inc.* 4,800 34
Eastern Enterprises 3,900 117
Eastern Utilities Assoc. 4,800 115
Eaton Vance Corp. (Non Voting) 1,400 44
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
Edison Brothers Stores, Inc. 4,200 $ 63
Education Alternatives, Inc.* 2,000 34
Egghead, Inc.* 3,000 29
Elcor Corp.* 1,000 17
Electroglas Inc.* 1,400 61
Electronics for Imaging, Inc.* 2,300 106
Empire District Electric Co. 2,200 37
Energen Corp. 1,900 42
Energy Service Co., Inc. 1,150 19
Energy Ventures, Inc.* 1,400 22
Enhance Financial Services Group, Inc. 7,100 121
Ennis Business Forms, Inc. 2,700 36
Enterra Corp.* 4,800 88
Envirotest Systems Corp. Class A* 2,500 15
Enzo Biochem, Inc.* 5,500 55
Epitope, Inc.* 1,800 31
Ethan Allen Interiors, Inc.* 2,700 51
Evergreen Media Corp. Class A* 700 13
Exabyte Corp.* 4,900 61
Exar Corp. 1,800 47
Excel Industries, Inc. 1,900 24
Expeditors International of Washington, Inc. 3,900 89
Express Scripts, Inc. Class A 1,200 35
F & M National Corp. 2,255 37
FHP International Corp.* 1,056 25
FMC Gold Co. 17,500 72
FTP Software Inc.* 500 13
Fab Industries, Inc. 900 27
Fair, Issac & Co., Inc. 1,000 47
Farmer Bros. Co. 300 38
Fastenal Co. 1,400 37
Fedders USA Inc. 3,300 23
Fidelity National Financial, Inc. 2,900 31
Fieldcrest Cannon, Inc.* 1,800 40
Figgie International Inc. Class A 4,600 40
Figgie International Inc. Class B 600 5
FileNet Corp.* 2,300 77
Filene's Basement Corp.* 7,900 31
Financial Trust Corp. 1,200 33
FirsTier Financial, Inc. 6,200 208
First Alert, Inc. 3,800 46
First American Financial Corp. 3,600 71
First Bank System, Inc. 3,809 154
First Citizens BancShares, Inc. Class A 1,300 60
First Commerce Corp. 6,500 178
First Commercial Corp. 4,140 104
First Commonwealth Financial Corp. 3,900 59
First Financial Bancorp 2,000 67
First Financial Corp. 4,000 63
First Michigan Bank Corp. 3,107 76
First Midwest Bancorp, Inc. 2,100 50
First Mississippi Corp. 3,800 95
First National Bancorp 2,700 57
First Pacific Networks, Inc.* 1,100 5
FirstFed Financial Corp.* 200 3
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 17
SchwabFunds(R) 5
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
FirstFed Michigan Corp. 3,300 $ 80
Firstbank of Illinois Co. 1,500 41
Firstmerit Corp. 600 14
Fisher Scientific International, Inc. 3,000 93
Flagstar Companies, Inc.* 7,200 39
Florida East Coast Industries, Inc. 1,600 115
Florida Rock Industries, Inc. 1,400 39
Florsheim Shoe Co.* 350 2
Fluke Corp. 1,100 44
Foamex International Inc.* 4,300 35
Foodmaker, Inc.* 11,100 46
Foothill Group, Inc. Class A 2,400 52
Foremost Corp. of America 1,800 69
Forest City Enterprises, Inc. Class A 900 30
Forest City Enterprises, Inc. Class B (Convertible) 500 17
Fort Wayne National Corp. 1,800 49
Fossil, Inc.* 2,200 37
FoxMeyer Health Corp.* 5,473 104
Frame Technology Corp.* 2,500 53
Franklin Electric Co., Inc. 1,100 35
Franklin Quest Co.* 4,400 146
Fremont General Corp. 2,800 62
Fritz Cos., Inc.* 2,300 137
Frontier Insurance Group, Inc. 2,350 59
Frozen Food Express Industries, Inc. 2,625 30
Fuller (H.B.) Co. 2,700 102
Fulton Financial Corp. 4,600 93
Fund American Enterprises Holdings, Inc. 1,509 109
Furon Co. 1,500 30
Future Healthcare Inc. 1,400 5
G&K Services, Inc. Class A 3,550 66
GAINSCO, Inc. 2,430 26
GC Companies Inc.* 1,280 43
Galey & Lord, Inc.* 4,800 58
Gartner Group Inc. Class A 2,900 120
Gaylord Container Corp. Class A* 8,700 98
GenCorp Inc. 5,800 73
General Binding Corp. 2,900 53
General DataComm Industries, Inc.* 5,000 48
Genesco Inc.* 2,800 10
Genesis Health Ventures, Inc.* 2,500 68
Genetic Therapy, Inc.* 2,400 23
Geneva Steel Class A* 2,200 24
Gensia, Inc.* 5,400 15
Gentex, Corp.* 2,900 55
Geon Co. 600 16
Geotek Communications Inc.* 24,400 223
Gerber Scientific, Inc. 3,900 60
Gerrity Oil & Gas Corp.* 1,600 8
Getty Petroleum Corp.* 1,800 20
Gibson Greetings, Inc. 2,600 26
Giddings & Lewis, Inc. 6,200 112
Gilead Sciences, Inc.* 3,300 49
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
Glendale Federal Bank, F.S.B. (New)* 7,100 $ 87
Global Marine, Inc.* 28,500 125
Global Natural Resources Inc.* 4,400 43
Good Guys, Inc., The* 2,300 22
Goody's Family Clothing, Inc. 2,700 23
Goulds Pumps, Inc. 4,100 102
Graco Inc. 2,650 70
GranCare, Inc.* 5,000 82
Grand Casinos, Inc.* 4,300 119
Granite Construction Inc. 1,900 38
Greenfield Industries Inc. 2,700 80
Grey Advertising Inc. 100 17
Griffon Corp.* 5,300 41
Grow Group, Inc. 2,800 49
Guaranty National Corp. (New) 1,500 25
Guilford Mills, Inc. 2,400 59
Gupta Corp.* 600 6
Gymboree Corp. 700 16
HBO & Co. 2,600 118
HCC Insurance Holdings, Inc. 2,100 48
HS Resources, Inc.* 2,100 35
Hach Co. 2,075 32
Haemonetics Corp.* 7,700 119
Haggar Corp. 1,900 39
Hancock Fabrics, Inc. 4,000 40
Hancock Holding Co. 1,300 39
Handleman Co. 6,300 67
Handy & Haman 2,500 38
Hanover Direct Inc.* 26,800 64
Harland (John H.) Co. 5,500 122
Harleysville Group Inc. 4,600 110
Harman International Industries, Inc. 2,900 106
Harnischfeger Industries Corp. 4,369 129
Harper Group, Inc. 2,800 54
Harry's Farmers Market, Inc. Class A* 400 4
Hartmarx Corp.* 5,300 29
Haverty Furniture Companies, Inc. 3,000 31
Hawkeye Bancorporation 2,000 45
Hayes Wheels International, Inc. 3,200 60
Health Care and Retirement Corp.* 2,300 65
Health Management Systems, Inc. 1,500 35
Health Systems International, Inc.* 6,000 153
HealthCare Compare Corp.* 1,300 39
Heart Technology, Inc.* 2,900 51
Heartland Express, Inc. 2,400 63
Hechinger Co. Class A 4,900 48
Hechinger Co. Class B (Convertible) 2,300 23
Hecla Mining Co.* 10,400 111
Helene Curtis Industries, Inc. 1,800 62
Helmerich & Payne, Inc. 4,400 130
Herbalife International, Inc. 5,000 61
Heritage Media Corp. Class A* 1,900 48
Hibernia Corp. Class A 700 6
Hilb, Rogal and Hamilton Co. 3,600 42
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 18
SchwabFunds(R) 6
- -------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(TM)
STATEMENT OF NET ASSETS
April 30, 1995 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
Hillhaven Corp. 12,500 $344
Holly Corp. 1,000 27
Hollywood Entertainment Corp. 2,500 90
Home Beneficial Corp. Class B 1,700 34
Home Holdings Inc.* 8,400 82
Homedco Group, Inc.* 2,500 143
Hometown Buffet Inc. 2,800 33
Horace Mann Educators Corp. 5,200 107
Horizon Healthcare Corp.* 1,600 33
Hornbeck Offshore Services, Inc.* 2,200 30
Horsehead Resource Development Co., Inc. 6,300 34
Houghton Mifflin Co. 2,800 135
Hovnanian Enterprises, Inc. Class A* 1,400 8
Hudson Foods, Inc. 1,950 34
Huffy Corp. 2,200 32
Hunt (J.B.) Transport Services, Inc. 9,150 172
Hunt Manufacturing Co. 3,000 44
Huntco Inc. Class A 800 14
Hyperion Software Corp.* 1,300 56
I-Stat Corp.* 1,900 44
ICN Pharmaceuticals, Inc. 7,604 127
IDEX Corp. 3,750 125
IDEXX Laboratories, Inc.* 2,900 125
IHOP Corp.* 1,500 34
INDRESCO Inc.* 3,800 53
INTERCO Inc. 8,500 54
INTERSOLV Inc.* 2,700 37
Immunex Corp. (New)* 7,700 92
Immunomedics, Inc.* 3,600 10
Imo Industries Inc.* 2,900 21
Imperial Bancorp 2,100 34
In Focus Systems, Inc.* 1,900 51
Independent Insurance Group, Inc. (Non Voting) 800 10
Indiana Energy, Inc. 4,100 75
InfoSoft International, Inc.* 1,000 62
Information Resources, Inc.* 4,900 69
Ingles Markets, Inc. 1,100 12
Input/Output, Inc. 3,300 112
Insignia Financial Group Class A (New)* 1,700 40
Insilco Corp.* 1,500 41
Insituform Technologies, Inc. Class A 3,500 46
Insurance Auto Auctions, Inc.* 1,900 56
Integon Corp. 2,800 44
Integrated Device Technology, Inc.* 400 15
Integrated Health Services, Inc. 1,500 52
Intelligent Electronics, Inc. 6,400 62
Inter-Regional Financial Group, Inc. 1,400 35
InterVoice, Inc.* 2,600 39
Interdigital Communications Corp.* 3,200 22
Interface Systems, Inc. Class A 2,400 34
Intergraph Corp.* 11,900 128
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
Interim Services Inc.* 2,000 $ 58
Intermet Corp. 9,200 84
International CableTel, Inc.* 4,400 128
International Dairy Queen, Inc. Class A* 2,600 50
International Dairy Queen, Inc. Class B* 1,800 36
International Family Entertainment, Inc. Class B* 9,300 141
International Imaging Materials Inc.* 1,400 37
International Multifoods Corp. 2,900 59
International Rectifier Corp.* 5,200 132
Interneuron Pharmaceuticals, Inc.* 500 4
Interpool, Inc.* 3,000 44
Interstate Bakeries Corp. 4,000 58
Interstate Power Co. 1,500 36
Intuit Inc.* 600 40
Invacare Corp. 1,900 75
Ionics, Inc. 2,800 78
Iowa-Illinois Gas & Electric Co. 4,800 101
J. Baker, Inc. 3,000 38
JSB Financial, Inc. 1,800 54
Jacobs Engineering Group Inc.* 9,500 188
Jacor Communications, Inc. Class A* 3,700 49
Jan Bell Marketing, Inc.* 10,100 28
Jason Inc. 3,125 28
Jefferies Group, Inc. 1,000 35
Jefferson Bankshares, Inc. 2,500 52
John Wiley & Sons, Inc. Class A 2,900 163
Johnson Worldwide Associates, Inc. Class A* 1,200 26
Johnstown America Industries Inc.* 1,500 19
Jones Intercable, Inc.* 1,300 19
Jones Intercable, Inc. Class A* 3,000 44
Joslyn Corp. 1,200 30
Juno Lighting, Inc. 3,400 70
Justin Industries, Inc. 4,300 48
K N Energy, Inc. 5,168 131
KCS Energy, Inc. 1,900 34
KLA Instruments Corp.* 600 37
Kaiser Aluminum Corp.* 11,000 124
Kaman Corp. Class A 3,200 40
Kasler Holding Co. 1,300 8
Kaufman & Broad Home Corp. 7,700 101
Kaydon Corp. 3,100 85
Keane, Inc. 4,500 114
Kelley Oil & Gas Corp.* 700 3
Kellwood Co. 4,000 72
Kemet Corp.* 3,000 117
Kendall Square Research Corp.* 1,700 0
Kennametal Inc. 4,900 164
Kent Electronics Corp. 2,450 72
Keystone Financial, Inc. 300 9
Keystone International, Inc. 6,500 137
Kimball International, Inc. Class B 2,600 68
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 19
SchwabFunds(R) 7
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
Kinder-Care Learning Centers, Inc. (New)* 3,400 $ 46
Kinetic Concepts, Inc. 7,600 58
Kirby Corp.* 3,900 54
Komag, Inc.* 4,500 175
L.A. Gear, Inc.* 2,700 9
LCI International Inc. 8,100 205
La Quinta Inns, Inc. 2,250 67
La-Z-Boy Chair Co. 3,000 81
LabOne, Inc. 2,100 29
Laciede Gas Co. 2,500 47
Lance, Inc. 5,700 100
Landmark Graphics Corp.* 2,800 69
Lands' End, Inc. 8,000 126
Landstar Systems, Inc.* 2,200 64
Lattice Semiconductor Corp.* 3,400 102
Lawson Products, Inc. 2,300 62
Lawter International, Inc. 9,500 131
Leader Financial Corp. 3,500 95
Learning Co.* 1,200 32
Lechters, Inc.* 2,900 44
Legg Mason, Inc. 1,900 47
Lennar Corp. 6,500 107
Level One Communications Inc. 2,150 33
Levitz Furniture Inc.* 11,000 83
Libbey Inc. 2,400 47
Liberty Bancorp, Inc. 1,700 51
Liberty Corp. 3,600 101
Liberty Financial Cos.* 837 21
Life Partners Group, Inc. 4,400 86
Life Re Corp. 2,000 38
Life Technologies, Inc. 2,500 55
Life USA Holding, Inc.* 2,900 28
Lillian Vernon Corp. 3,800 77
Lilly Industries, Inc. Class A 3,750 53
Lin Television Corp.* 5,350 195
Lincare Holdings, Inc. 1,600 49
Lincoln Telecommunications Co. 6,000 95
Liposome Co., Inc.* 4,100 37
Liposome Technology, Inc.* 2,200 14
Liqui-Box Corp. 1,000 35
Littlefuse, Inc.* 3,400 115
Living Centers of America, Inc.* 2,400 68
Logicon, Inc. 1,100 41
Lone Star Industries, Inc. 6,300 137
Lone Star Steakhouse & Saloon, Inc.* 1,900 58
Longs Drug Stores Corp. 4,000 136
Lottery Enterprises Inc. 45 0
Louis Dreyfus Natural Gas Corp.* 11,400 175
Loyola Capital Corp. 2,800 80
Luby's Cafeterias, Inc. 4,700 89
Lukens Inc. 4,150 134
Lydall, Inc.* 2,900 107
M.S. Carriers, Inc.* 2,100 50
M/A-COM., Inc.* 6,400 74
MAXXAM Inc.* 1,500 47
MDU Resources Group, Inc. 3,200 88
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
MESA Inc.* 10,300 $ 59
MICROS Systems, Inc. 1,100 35
MK Rail Corp. 3,000 21
Mac Frugal's Bargains-Close-outs, Inc.* 4,800 71
MacNeal-Schwendler Corp. 2,800 41
Macromedia Inc.* 3,000 100
Madison Gas and Electric Co. 1,900 60
Magma Copper Co. (New)* 1,700 28
Magna Group, Inc. 5,300 111
MagneTek, Inc. 4,100 61
Manitowoc Co., Inc. 1,600 42
Marcus Corp. 1,200 32
Marine Drilling Companies, Inc.* 12,400 52
Mariner Health Group, Inc.* 4,300 62
Mark Twain Bancshares, Inc. 2,900 91
Markel Corp.* 900 46
Marquette Electronics, Inc. Class A* 1,900 35
Marsam Pharmaceuticals Inc.* 2,300 32
Marshall Industries 2,700 75
Masland Corp. 2,900 40
Material Sciences Corp. 2,300 42
Maxim Integrated Products, Inc. 2,100 77
Maybelline, Inc. 2,500 55
McAfee Associates, Inc.* 2,000 67
McClatchy Newspapers, Inc. Class A 1,000 22
Measurex Corp. 2,900 73
Medaphis Corp.* 800 46
Medic Computer Systems, Inc.* 1,800 80
Medicine Shoppe International, Inc. 1,800 58
Medusa Corp. 2,800 63
Men's Wearhouse, Inc.* 2,300 58
Mentor Corp. 1,900 45
Mentor Graphics Corp. 1,300 22
Meredith Corp. 5,400 135
Merisel, Inc.* 5,500 33
Merrill Corp. 900 14
Mesa Airlines, Inc.* 6,000 36
Methode Electronics, Inc. Class A 4,000 69
Methode Electronics, Inc. Class B (Convertible) 200 4
Metricom, Inc.* 2,100 33
Michael Foods, Inc. 3,400 43
Michaels Stores, Inc.* 2,700 77
Micom Communications* 1,599 12
Micro Warehouse, Inc. 2,300 81
MicroAge, Inc. 1,950 20
MicroTouch Systems, Inc. 1,100 41
Microchip Technology, Inc. 2,100 59
Microtest, Inc.* 1,300 27
Mid Atlantic Medical Services Inc. 1,500 26
Mid-Am, Inc. 2,420 33
Midwest Grain Products, Inc. 1,600 29
Miller (Herman), Inc. 4,400 87
Mine Safety Appliances Co. 1,200 54
Minerals Technologies, Inc. 3,800 126
Mohawk Industries, Inc.* 5,300 72
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 20
SchwabFunds(R) 8
- --------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(TM)
STATEMENT OF NET ASSETS
April 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
Molten Metal Technology, Inc.* 3,800 $ 66
Money Store Inc., The 2,300 54
Moorco International, Inc. 1,800 38
Morgan Keegan, Inc. 2,100 33
Morrison Knudsen Corp. 5,900 46
Mosinee Paper Corp. 1,870 49
Mueller Industries, Inc.* 1,500 62
Multicare Cos., Inc.* 3,800 79
Musicland Stores Corp.* 6,200 60
Mutual Assurance, Inc. 1,627 43
Mycogen Corp.* 3,200 30
Myers Industries, Inc. 2,500 37
N.S. Bancorp, Inc. 1,700 50
NAC Re Corp. 3,200 107
NACCO Industries, Inc. Class A 1,300 72
NCH Corp. 1,400 90
NGC Corp. 11,000 106
NL Industries, Inc.* 9,800 145
NUI Corp. 1,500 23
NYMAGIC, Inc. 2,000 32
Nabors Industries, Inc.* 16,100 152
Nash Finch Co. 2,000 32
Nashua Corp. 700 14
National Auto Credit Inc.* 4,100 44
National Bancorp of Alaska, Inc. 1,400 70
National Commerce Bancorp 4,600 114
National Computer Systems, Inc. 3,400 60
National Data Corp. 3,600 67
National Gypsum Co. (New)* 700 34
National Penn Bancshares, Inc. 1,155 29
National Presto Industries, Inc. 1,100 51
National RE Holdings Corp. 3,100 94
National Steel Corp. Class B* 4,800 61
Nautica Enterprises, Inc. 2,300 64
Navigators Group, Inc. 600 8
Neiman Marcus Group, Inc. 6,400 94
Nellcor Inc.* 3,000 125
Netmanage Inc. 5,600 100
Network Equipment Technologies, Inc.* 3,400 74
Network General Corp.* 4,200 110
New England Business Service, Inc. 2,400 43
New Jersey Resources Corp. 3,700 83
Newfield Exploration Co.* 5,900 136
Newpark Resources, Inc.* 1,700 38
Noble Drilling Corp.* 18,975 128
Noise Cancellation Technologies, Inc.* 15,400 10
NorAm Energy Co. 14,715 90
Norand Corp.* 1,200 37
North American Mortgage Co. 2,800 50
North Carolina Natural Gas Corp. 700 16
North Fork Bancorp, Inc. 5,700 100
Northwest Natural Gas Co. 2,000 62
Northwestern Public Service Co. 1,300 35
Northwestern Steel & Wire Co.* 3,900 23
NovaCare, Inc.* 12,500 108
Novellus Systems, Inc.* 600 36
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
Noven Pharmaceuticals, Inc.* 2,600 $ 22
Nu-Kote Holding, Inc.* 1,400 39
Nuevo Energy Co.* 4,300 82
O'Reilly Automotive, Inc.* 1,400 38
O'Sullivan Corp. 2,000 22
OEA, Inc. 3,500 107
OM Group Inc. 2,000 48
OMI Corp.* 6,600 38
ONBANCorp, Inc. 2,600 68
Oak Industries Inc.* 3,300 97
Oakwood Homes Corp. 6,200 155
Oceaneering International, Inc.* 3,600 36
Octel Communications Corp.* 4,400 100
Offshore Logistics, Inc.* 2,800 38
Ogden Corp. 504 10
Omega Environmental Inc.* 5,000 20
Omnicare, Inc. 2,400 117
One Valley Bancorp of West Virginia, Inc. 3,300 100
Onecomm Corp.* 3,100 51
Oneok Inc. 5,000 96
Optical Data Systems, Inc. 1,300 53
OrNda Heathcorp* 8,260 145
Orange & Rockland Utilities, Inc. 3,400 108
Orbital Sciences Corp.* 3,700 63
Oregon Steel Mills, Inc. 6,300 113
Organogenesis Inc.* 1,600 19
Orion Capital Corp. 2,600 91
Oshkosh B'Gosh, Inc. Class A 2,400 39
Oshkosh B'Gosh, Inc. Class B 200 3
Osmonics, Inc. 5,200 87
Otter Tail Power Co. 2,100 70
Outboard Marine Corp. 3,400 75
Owens & Minor, Inc. 5,100 69
Oxford Health Plans, Inc. 2,200 92
Oxford Industries, Inc. 1,600 31
PAXAR Corp. 2,750 41
PHH Corp. 3,300 133
PLATINUM technology, inc.* 4,300 85
PXRE Corp. 1,100 27
Pacific Crest Capital, Inc.* 126 1
Pacific Physician Services, Inc.* 2,200 40
Pacific Scientific Co. 1,900 40
Pairgain Technologies Inc.* 2,700 58
Papa John's International, Inc.* 1,900 66
Paragon Trade Brands, Inc.* 1,800 28
Park Communications, Inc.* 4,100 125
Park National Corp. 800 37
Parker Drilling Co.* 21,100 100
Patterson Dental Co. 3,850 90
Penn Traffic Co.* 1,900 65
PennCorp Financial Group, Inc. 6,900 119
Pentair, Inc. 600 28
People's Bank 5,200 77
People's Choice TV Corp.* 1,100 31
PeopleSoft, Inc. 600 31
Peoples Heritage Financial Group, Inc. 2,800 39
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 21
SchwabFunds(R) 9
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
PerSeptive Biosystems, Inc.* 2,000 $ 17
Petroleum Heat and Power Co., Inc. Class A 4,400 31
Petrolite Corp. 1,900 60
Pharmaceutical Resources, Inc.* 1,800 22
Philadelphia Suburban Corp. 1,300 23
Phillips-Van Heusen Corp. 4,700 72
Photronic, Inc. 1,650 37
PhyCor, Inc. 3,800 121
Physicians Health Services, Inc.* 600 15
PictureTel Corp.* 2,800 120
Piedmont Natural Gas Co., Inc. 9,400 192
Pier 1 Imports, Inc. 7,245 65
Pikeville National Corp. 1,200 26
Pilgrim's Pride Corp. 4,500 36
Pillowtex Corp.* 2,100 23
Pioneer Group, Inc. 4,000 102
Pioneer-Standard Electronics, Inc. 2,550 50
Piper Jaffray Inc. 4,600 59
Pittston Minerals Group 1,400 17
Pittway Corp. 300 13
Pittway Corp. Class A 1,400 62
Plains Petroleum Co. 1,700 40
Planar Systems, Inc.* 1,700 33
Platinum Software Corp.* 1,500 15
Playboy Enterprises, Inc. Class B* 2,100 17
Players International Inc.* 3,300 97
Ply-Gem Industries, Inc. 2,800 47
Poe & Brown Associates, Inc. 1,500 35
Pogo Producing Co. 6,000 135
Policy Management Systems Corp.* 2,000 101
Pope & Talbot, Inc. 1,800 30
Pratt & Lambert, United Inc. 1,700 35
Precision Castparts Corp. 3,700 102
Premier Bancorp, Inc.* 6,600 111
President Casinos, Inc.* 8,700 48
Presidential Life Corp. 6,800 40
Presstek Inc. 1,325 111
Primark Corp.* 4,600 75
Prime Hospitality Corp.* 6,900 69
Production Operators Corp. 1,600 45
Proffitt's, Inc.* 1,600 40
Progress Software Corp.* 1,100 44
Protective Life Corp. 300 14
Protein Design Labs, Inc.* 2,500 62
Provident Bancorp, Inc. 2,800 96
Proxima Corp.* 1,000 33
Public Service Co. of New Mexico* 7,500 96
Public Service Co. of North Carolina, Inc. 3,300 49
Pulitzer Publishing Co. 3,025 122
Pulte Corp. 5,000 108
Puritan-Bennett Corp. 4,200 103
Quaker State Corp. 5,500 78
Quality Food Centers, Inc. 3,600 74
Quanex Corp. 2,100 49
Quantum Corp.* 1,900 35
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
Quantum Health Resources, Inc.* 2,600 $ 42
Queens County Bancorp, Inc. 1,200 37
Quick & Reilly Group, Inc. 1,980 80
REN Corporation-USA* 3,200 52
Raymond James Financial, Inc. 3,500 61
Reading & Bates Corp.* 20,600 170
Recognition International Inc.* 1,800 13
Recoton Corp. 1,900 30
Regal Cinemas, Inc. 1,800 49
Regal-Beloit Corp. 2,800 43
Regency Health Services, Inc.* 6,300 77
Reinsurance Group of America, Inc. 3,000 75
Reliance Group Holdings, Inc. 21,200 117
Republic Bancorp Inc. 2,750 32
Respironics, Inc. 2,800 40
Rexall Sundown, Inc. 6,200 59
Rexene Corp.* 3,200 40
Richfood Holdings, Inc. 4,100 81
Riggs National Corp.* 11,100 112
Rio Hotel and Casino, Inc.* 3,900 60
Rival Co. 1,500 24
River Forest Bancorp, Inc. 1,200 44
RoTech Medical Corp.* 3,100 101
Robert Half International Inc. 5,200 137
Roberts Pharmaceutical Corp.* 3,400 84
Rochester Community Savings Bank 2,300 42
Rohr Inc.* 6,600 71
Rollins Environmental Services, Inc. 15,100 70
Rollins Truck Leasing Corp. 8,400 92
Roosevelt Financial Group, Inc. 7,800 125
Roper Industries, Inc. 2,600 70
Ross Stores, Inc. 4,000 39
Rowan Companies, Inc.* 15,300 105
Ruddick Corp. 4,200 87
Russ & Berrie Co., Inc. 8,500 124
Ryan's Family Steak Houses, Inc.* 21,100 145
Rykoff-Sexton, Inc. 6,250 109
Ryland Group, Inc. 2,900 42
S & T Bancorp, Inc. 2,000 44
S3 Inc. 3,100 72
SCI Systems, Inc.* 4,800 98
SCOR Reinsurance U.S. Corp. 3,300 26
SEI Corp. 2,900 55
SFFed Corp. 1,400 26
SLM International, Inc. 3,350 10
SPX Corp. 2,300 31
STERIS Corp.* 1,500 60
SafeCard Services, Inc. 5,600 98
Safeskin Corp.* 2,200 28
Safety 1st, Inc.* 1,200 19
Salick Health Care, Inc.* 900 31
Sanifill, Inc.* 2,900 77
Santa Cruz Operations, Inc.* 5,500 69
Savannah Foods & Industries, Inc. 5,400 52
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 22
SchwabFunds(R) 10
- --------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(TM)
STATEMENT OF NET ASSETS
April 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
Savoy Pictures Entertainment, Inc.* 4,200 $ 34
Sbarro, Inc. 8,000 206
Scholastic Corp.* 700 39
Schuler Homes, Inc.* 8,300 81
Scios Nova, Inc.* 6,500 43
Scotts Co. Class A* 7,400 147
Seaboard Corp. 200 55
Seafield Capital Corp. 1,100 41
Sealed Air Corp.* 2,100 90
Sealright Co., Inc. 2,400 43
Security Capital Bancorp 2,100 43
Security Connecticut Co. 1,300 33
Seitel, Inc.* 1,000 32
Selective Insurance Group, Inc. 4,400 129
Sequa Corp. Class A* 1,100 34
Sequa Corp. Class B* 700 25
Sequent Computer Systems, Inc.* 6,100 101
Service Merchandise Co., Inc.* 15,262 74
Shoe Carnival, Inc. 500 3
Shoney's, Inc.* 7,400 85
ShopKo Stores, Inc. 12,800 142
Shorewood Packaging Corp.* 3,400 54
Showboat, Inc. 2,400 37
Sierra Health Services, Inc.* 2,500 68
Sierra On-Line, Inc. 2,600 49
Sierra Pacific Resources 7,000 146
Silicon Valley Group, Inc. 5,700 166
Simpson Industries, Inc. 3,000 33
Sithe Energies Inc.* 10,000 88
Sizzler International, Inc. 11,500 65
SkyWest Airlines, Inc. 1,900 33
Skyline Corp. 1,900 34
Smart & Final Inc. 5,000 84
Smith (A.O.) Corp. Class A 1,000 24
Smith (A.O.) Corp. Class B 5,600 134
Smith International, Inc.* 7,100 122
Smith's Food & Drug Centers, Inc. Class B 2,300 50
Smithfield Foods, Inc.* 3,100 70
Smucker (J.M.) Co. Class B 400 8
Snyder Oil Corp. 5,200 75
Sodak Gaming, Inc.* 1,700 25
Sofamor/Danek Group, Inc.* 5,800 141
Sonat Inc. 6,700 181
Sotheby's Holdings, Inc. Class A 5,700 76
South Jersey Industries, Inc. 1,800 36
Southdown, Inc.* 6,400 122
Southeastern Michigan Gas Enterprises, Inc. 1,890 38
Southern California Water Co. 900 15
Southern Indiana Gas & Electric Co. 2,866 87
Southern Union Co. (New) 2,000 33
Southwest Gas Corp. 3,400 50
Southwestern Energy Co. 4,200 64
Southwestern Life Insurance Co.* 7,200 7
Sovereign Bancorp, Inc. 8,379 70
SpaceLabs Medical Inc.* 1,700 42
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
Spectravision, Inc.* 1,300 $ 0
Spectrum HoloByte, Inc.* 3,500 54
Spectrum Information Technologies, Inc.* 8,100 4
Spelling Entertainment Group, Inc. 1,100 11
Sports & Recreation, Inc. 3,600 42
Springs Industries, Inc. 3,200 124
St. John's Knits, Inc. 1,300 45
St. Paul Bancorp, Inc. 3,500 78
Standard Microsystems Corp.* 2,500 46
Standard Motor Products, Inc. 2,500 49
Standard Pacific Corp. 7,800 46
Standard Products Co. 2,700 53
Standard Register Co. 5,400 98
Standex International Corp. 2,900 91
Stanhome Inc. 3,500 102
Stant Corp. 2,600 33
Starbucks Corp.* 1,100 26
Starter Corp.* 4,900 47
State Auto Financial Corp. 2,100 35
Station Casinos Inc.* 5,800 71
Steel Technologies Inc. 2,100 27
Stein Mart, Inc.* 3,600 41
Sterling Chemicals, Inc.* 2,400 30
Sterling Software, Inc.* 500 17
Stewart Enterprises, Inc. Class A 4,100 114
Stone & Webster, Inc. 2,700 80
Stone Container Corp.* 6,112 121
Stratacom Inc. 1,400 51
Stratus Computer, Inc.* 1,800 54
Strawbridge & Clothier Class A 1,700 34
Stride Rite Corp. 9,700 115
Structural Dynamics Research Corp.* 4,300 52
Student Loan Corp. 3,500 87
Sturm, Ruger & Co., Inc. 2,400 72
Summa Four, Inc.* 500 12
Summit Bancorp 6,960 134
Summit Technology Inc.* 3,200 108
Sunglass Hut International, Inc. 4,100 117
Sunrise Medical Inc.* 3,800 115
Sunshine Mining Co. 43,700 93
Supercuts, Inc.* 1,200 11
Surgical Care Affiliates, Inc. 1,850 43
Susquehanna Bancshares, Inc. 1,700 39
Swift Transportation Co. 4,200 66
SyQuest Technology, Inc.* 1,900 21
SyStemix, Inc.* 1,700 23
Sybase, Inc. 480 12
Sybron International Corp.* 1,700 63
Symantec Corp.* 7,700 178
Symbol Technologies, Inc.* 900 30
Symmetricom, Inc.* 2,400 42
Syncor International Corp.* 700 6
Synetic, Inc.* 3,300 78
Synopsys, Inc.* 200 11
Syratech Corp.* 2,400 45
System Software Associates, Inc. 5,100 128
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 23
SchwabFunds(R) 11
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
Systems & Computer Technology Corp.* 2,200 $ 44
TBC Corp.* 4,300 46
TCA Cable TV, Inc. 4,700 116
TCF Financial Corp. 3,300 141
TJ International 3,100 52
TNP Enterprises, Inc. 1,300 21
TNT Freightways Corp. 4,000 95
Taco Cabana, Inc. Class A* 2,500 15
Tandycrafts, Inc.* 1,900 16
Tech Data Corp. 9,000 107
Tecnol Inc.* 3,800 71
Tejas Gas Corp.* 1,800 86
Tejon Ranch Co. 1,900 24
Teleflex Inc. 3,250 134
Telxon Corp. 2,500 40
Tencor Instruments* 2,500 170
Tennant Co. 1,800 43
Terra Industries, Inc. 14,700 164
Tesoro Petroleum Corp.* 7,800 77
Tetra Tech, Inc. (New) 3,125 63
Texas Industries, Inc. 1,800 68
Thermedics Inc. 5,700 108
Thermo Cardiosystems Inc. 4,000 134
Thermo Fibertek Inc.* 10,700 197
Thermotrex Corp. 2,700 54
Thiokol Corp. 3,400 95
Thomas Nelson, Inc. 2,625 49
Thor Industries, Inc. 1,200 25
Three-Five Systems, Inc. 1,400 34
Tiffany & Co. (New) 2,700 87
Timberland Co. Class A* 1,400 32
Titan Wheel International, Inc. 2,750 64
Toll Brothers, Inc.* 5,700 68
Tootsie Roll Industries, Inc. 1,433 94
Topps Co., Inc. 7,500 46
Toro Co. 2,100 61
Tractor Supply Co.* 2,200 47
Transco Energy Co. 331 7
Tremont Corp.* 640 10
Trenwick Group Inc. 1,100 49
TriMas Corp. 2,500 55
Triarc Cos., Inc. Class A* 3,900 59
Trimble Navigation Ltd.* 3,100 58
True North Communications 4,500 86
Trust Co. of New Jersey (New) 3,900 52
TrustCo Bank Corp NY 2,420 51
Trustmark Corp. 6,800 114
Tucson Electric Power Co.* 26,000 88
Tyco Toys, Inc. 5,900 33
U.S. Bioscience, Inc.* 7,600 19
U.S. Can Corp.* 1,800 37
U.S. Home Corp. (New)* 1,200 22
U.S. Robotics, Inc.* 3,400 270
U.S. Trust Corp. 1,800 124
UGI Corp. 3,900 76
UMB Financial Corp. 4,040 127
UNR Industries, Inc. 9,700 58
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
US Filter Corp. (New) 2,500 $ 40
USA Waste Services, Inc.* 3,900 59
USAir Group, Inc.* 11,200 81
UST Corp.* 3,200 35
Ultratech Stepper Inc. 1,600 90
UniFirst Corp. 3,900 46
Unilab Corp. (New)* 6,600 34
Union Planters Corp. 7,788 187
Union Switch & Signal Inc.* 3,600 55
United Bankshares, Inc. 1,900 52
United Carolina Bancshares Corp. 2,400 72
United Companies Financial Corp. 2,420 92
United Fire & Casualty Co. 1,050 29
United Illuminating Co. 2,700 87
United Insurance Companies, Inc.* 1,500 62
United International Holdings Inc. 2,800 41
United Meridian Corp.* 4,800 77
United States Shoe Corp. 3,500 98
United Stationers Inc. 190 3
United Television, Inc. 1,900 120
United Waste Systems, Inc.* 3,400 97
United Water Resources Inc. 9,300 124
United Wisconsin Services, Inc. 2,500 51
Unitog Co. 1,650 31
Unitrode Corp.* 1,800 37
Univar Corp. 3,800 48
Universal Health Services, Inc. Class B* 3,300 87
VISX, Inc.* 1,800 25
VLSI Technology, Inc.* 6,700 143
Valassis Communications, Inc.* 9,200 161
Valence Technology, Inc.* 2,700 7
Valhi, Inc. 5,100 43
Valmont Industries, Inc. 2,100 45
Value City Department Stores, Inc.* 5,900 53
Value Health, Inc.* 1,232 43
Value Line, Inc. 1,700 51
Varco International, Inc.* 9,900 83
Vencor, Inc. 2,450 76
Ventritax, Inc.* 5,000 74
Venture Stores, Inc. 6,900 75
VeriFone, Inc.* 4,300 102
Vertex Pharmaceuticals, Inc.* 2,500 36
Vesta Insurance Group Inc. 4,500 150
Vicor Corp.* 3,900 150
Victoria Bankshares, Inc. 1,400 36
ViewLogic Systems, Inc.* 3,500 39
Vigoro Corp. 3,700 148
Vintage Petroleum, Inc. 3,700 76
Vitalink Pharmacy Services, Inc.* 1,000 16
Vivra, Inc. 4,300 138
WD-40 Co. 1,200 52
WHX Corp.* 11,700 126
WICOR, Inc. 2,900 80
WLR Foods, Inc. 2,300 52
WMS Industries Inc.* 4,600 87
Waban, Inc.* 6,000 100
</TABLE>
See accompanying Notes to Financial Statements
<PAGE> 24
SchwabFunds(R) 12
- -------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(TM)
STATEMENT OF NET ASSETS
April 30, 1995 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
Wabash National Corp. 400 $ 12
Walbro Corp. 1,400 26
Wall Data, Inc.* 1,700 32
Wallace Computer Services, Inc. 4,200 140
Washington Energy Co. 4,600 68
Washington National Corp. 4,900 90
Waterhouse Investment Services 1,600 25
Watkins-Johnson Co. 2,500 99
Watson Pharmaceuticals Inc.* 3,100 96
Watts Industries, Inc. Class A 3,100 71
Weatherford International Inc.* 9,200 101
Webb (Del) Corp. 2,700 52
Weirton Steel Corp.* 7,300 54
Wellman, Inc. 300 8
Werner Enterprises, Inc. 4,600 97
WesBanco, Inc. 1,400 35
West Company, Inc. 3,000 84
WestPoint Stevens, Inc.* 5,600 102
Westamerica Bancorp 1,800 60
Westcorp, Inc. 5,596 70
Westcott Communications, Inc. 3,700 52
Western Co. of North America* 2,900 63
Western Digital Corp.* 2,600 42
Western Gas Resources, Inc. 3,000 62
Western Waste Industries* 6,200 115
Westwood One, Inc.* 5,900 75
White River Corp.* 1,000 32
Whitney Holding Corp. 2,400 62
Whole Foods Market, Inc. 1,900 22
Williams-Sonoma, Inc. 800 15
Winnebago Industries, Inc. 4,100 42
Wisconsin Central Transportation Corp. 500 29
Wolverine Tube Inc.* 2,500 67
Wolverine World Wide, Inc. 1,700 57
Wonderware Corp.* 2,000 66
Wps Resources Corp. 4,700 136
Wyle Laboratories 2,300 56
Wyman-Gordon Co.* 1,500 14
X-Rite, Inc. 3,500 67
XCL Limited* 60,700 30
Xircom, Inc.* 2,500 29
Yankee Energy System, Inc. 1,900 37
Yellow Corp. 1,300 23
Younkers, Inc.* 1,000 19
Zale Corp. (New)* 6,100 71
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
Zebra Technologies Corp. Class A* 1,300 $ 60
Zenith Electronics Corp.* 11,100 83
Zenith National Insurance Corp. 3,100 63
Zero Corp. 3,600 50
Zilog, Inc.* 3,400 120
Zions Bancorp 3,100 133
Zurn Industries, Inc. 5,000 75
1st Source Corp. 1,622 46
20th Century Industries 10,100 122
3DO Co.* 4,000 53
-------
TOTAL COMMON STOCK (Cost $78,983) 80,960
-------
WARRANTS--0.0%
Fleet Financial Group, Inc. (expire 1/26/01)* 364 2
-------
TOTAL WARRANTS (Cost $1) 2
-------
<CAPTION>
Maturity
(000s)
--------
<S> <C> <C>
REPURCHASE AGREEMENT--4.1%
State Street Bank & Trust 2.80%
Dated 4/28/95 Due 5/1/95
Collateralized By:
U.S. Treasury Note
$3,435,000 Par; 6.75%
Due 5/31/99 $3,453 3,452
-------
TOTAL REPURCHASE AGREEMENT (Cost $3,452) 3,452
-------
TOTAL INVESTMENTS--100.6% (Cost $82,436) 84,414
-------
OTHER ASSETS AND LIABILITIES--(0.6%)
Other Assets 380
Liabilities (843)
-------
(463)
-------
NET ASSETS--100.0%
Applicable to 8,000,185 outstanding $0.00001 par
value shares (unlimited shares authorized) $83,951
=======
NET ASSET VALUE PER SHARE $10.49
=======
</TABLE>
- ----------
*Non-Income Producing Security
See accompanying Notes to Financial Statements.
<PAGE> 25
SchwabFunds(R) 13
- --------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(TM)
STATEMENT OF OPERATIONS (in thousands)
For the six months ended April 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment income:
Dividends $ 491
Interest 76
-------
Total investment income 567
-------
Expenses:
Investment advisory and administration fee 181
Transfer agency and shareholder service fees 91
Custodian fees 43
Registration fees 20
Professional fees 14
Shareholder reports 24
Trustees' fees 8
Amortization of deferred organization costs 7
Insurance and other expenses 2
-------
390
Less expenses reduced (118)
-------
Total expenses incurred by Fund 272
-------
Net investment income 295
-------
Net realized gain (loss) on investments:
Proceeds from sales of investments 9,929
Cost of investments sold (7,484)
-------
Net realized gain on investments sold 2,445
-------
Change in net unrealized appreciation (depreciation) on investments:
Beginning of period 597
End of period 1,978
-------
Increase in net unrealized appreciation on investments 1,381
-------
Net gain on investments 3,826
-------
Increase in net assets resulting from operations $ 4,121
=======
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 26
SchwabFunds(R) 14
- -------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(TM)
STATEMENT OF CHANGES IN NET ASSETS (in thousands)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
For the December 3, 1993
six months ended (commencement of
April 30, 1995 operations) to
(Unaudited) October 31, 1994
---------------- ----------------
<S> <C> <C>
Operations:
Net investment income $ 295 $ 353
Net realized gain (loss) on
investments sold 2,445 (528)
Increase in net unrealized
appreciation on investments 1,381 597
-------- --------
Increase in net assets resulting
from operations 4,121 422
-------- --------
Dividends to shareholders from net
investment income (408) (57)
-------- --------
Capital Share Transactions:
Proceeds from shares sold 22,216 78,646
Net asset value of shares issued in
reinvestment of dividends 364 53
Early withdrawal fees 12 27
Less payments for shares redeemed (10,482) (10,963)
-------- --------
Increase in net assets from capital
share transactions 12,110 67,763
-------- --------
Total increase in net assets 15,823 68,128
Net Assets:
Beginning of period 68,128 --
-------- --------
End of period (including undistributed
net investment income of $183 and
$296, respectively) $ 83,951 $ 68,128
======== ========
Number of Fund Shares:
Sold 2,239 7,884
Reinvested 38 5
Redeemed (1,057) (1,109)
-------- --------
Net increase in shares outstanding 1,220 6,780
Shares Outstanding:
Beginning of period 6,780 --
-------- --------
End of period 8,000 6,780
======== ========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 27
SchwabFunds(R) 15
- --------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(TM)
NOTES TO FINANCIAL STATEMENTS
For the six months ended April 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
1. DESCRIPTION OF THE FUND
The Schwab Small-Cap Index Fund (the "Fund") is a series of Schwab Capital
Trust (the "Trust"), an open-end, management investment company organized as a
Massachusetts business trust on May 7, 1993 and registered under the Investment
Comany Act of 1940, as amended.
In addition to the Fund, the Trust also offers the Schwab International Index
Fund(TM). The assets of each series are segregated and accounted for
separately.
The investment objective of the Fund is to attempt to track the price and
dividend performance (total return) of the Schwab Small-Cap Index(TM), an index
created to represent the performance of the second 1,000 largest publicly
traded common stocks issued by 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 investment manager and the Fund's sub-advisor
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.
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.
<PAGE> 28
SchwabFunds(R) 16
- --------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(TM)
NOTES TO FINANCIAL STATEMENTS
For the six months ended April 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
At April 30, 1995, (for financial reporting and federal income tax purposes),
net unrealized appreciation aggregated $1,978,000 of which $9,967,000 related
to appreciated securities and $7,989,000 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 .50% of
the first $300 million of average daily net assets and .45% of such assets over
$300 million. Under this agreement, the Fund incurred investment advisory and
administration fees of $181,000 during the six months ended April 30, 1995,
before the Investment Manager reduced its fee (see Note 5).
Sub-advisory agreement -- Prior to May 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 $300 million of average daily net assets and .05% of such assets
over $300 million. Effective May 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 the average daily net assets for
transfer agency services and .20% of such assets for shareholder services.
For the six months ended April 30, 1995, the Fund incurred transfer agency
and shareholder service fees of $91,000, before Schwab reduced its fees (see
Note 5).
Officers and trustees -- During the period, certain officers and trustees of
the Trust were also officers or directors of the Investment Manager and/or
Schwab. During the six months ended April 30, 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 $8,000 related to the Trust's unaffiliated trustees.
4. BORROWING AGREEMENT
The Trust has an arrangement with State Street Bank and Trust Company, the
Fund's custodian, whereby the Fund may borrow up to $10,000,000, 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 six months ended April 30, 1995, no borrowings
were made under this arrangement.
<PAGE> 29
SchwabFunds(R) 17
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. EXPENSES REDUCED BY THE INVESTMENT MANAGER AND SCHWAB
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. For the six
months ended April 30, 1995, the total of such fees reduced by the Investment
Manager was $29,000 and the total of such fees reduced by Schwab was $89,000.
6. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities, other than short-term obligations,
aggregated $21,682,000 and $9,929,000, respectively, for the six months ended
April 30, 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 six months ended April 30, 1995, total early withdrawal fees
retained by the Fund amounted to $12,000.
8. COMPOSITION OF NET ASSETS
At April 30, 1995, net assets consisted of:
<TABLE>
<S> <C>
Capital paid in $79,873,000
Accumulated undistributed net investment income 183,000
Accumulated net realized gain on investments sold 1,917,000
Net unrealized appreciation on investments 1,978,000
-----------
Total $83,951,000
============
</TABLE>
At April 30, 1995, the Fund's Statement of Net Assets included liabilities of
$669,000 for securities purchased, $80,000 for Fund shares redeemed, $30,000 for
investment advisory and administration fee payable and $2,000 for transfer
agency and shareholder service fees payable.
<PAGE> 30
SchwabFunds(R) 18
- -------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(TM)
NOTES TO FINANCIAL STATEMENTS
For the six months ended April 30, 1995 (Unaudited)
- -------------------------------------------------------------------------------
9. FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the
period:
<TABLE>
<CAPTION>
For the period
For the December 3, 1993
six months ended (commencement of
April 30, 1995 operations) to
(Unaudited) October 31, 1994
---------------- ----------------
<S> <C> <C>
Net asset value at beginning of period $ 10.05 $ 10.00
Income from Investment Operations
Net investment income .08 .06
Net realized and unrealized gain on
investments .42 --
------- -------
Total from investment operations .50 .06
Less Distributions
Dividends from net investment income (.06) (.01)
Distributions from realized gain on
investments -- --
------- -------
Total distributions (.06) (.01)
------- -------
Net asset value at end of period $ 10.49 $ 10.05
======= =======
Total return (%) 5.00 .63
Ratios/Supplemental Data
Net assets, end of period (000s) $83,951 $68,128
Ratio of expenses to average net
assets(%)* .75 .67
Ratio of net investment income to
average net assets (%)* .81 .68
Portfolio turnover rate (%) 11 16
</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
April 30, 1995 and October 31, 1994, would have been 1.07%* and 1.19%*,
respectively, and the ratio of net investment income to average net assets
would have been .49%* and .16%*, respectively.
* Annualized
<PAGE> 31
This space reserved for your comments and questions.
A Schwab representative will be happy to assist you.
<PAGE> 32
This space reserved for your comments and questions.
A Schwab representative will be happy to assist you.
<PAGE> 33
CAPTURING GROWTH OPPORTUNITIES DOESN'T HAVE TO BE GUESSWORK.
Large-cap stocks, small-cap stocks, or international stocks? It's difficult to
predict which stock market segment will come out ahead during given time
periods, especially since these markets do not always move in tandem. While one
market segment may be experiencing only moderate growth, others, at the same
time, may be expanding rapidly.
SchwabFunds(R) three equity index funds help you take some of the guesswork out
of equity investing. These Funds provide a way for you to put the growth
potential of all three markets into your portfolio -- rather than relying on
just one market. The Funds offer an easy and efficient way to achieve a broad
level of effective equity diversification. In fact, they provide market
coverage that could require investments in many more funds.
SCHWAB 1000 FUND(R) is designed to match the total return of the
[FIGURE 1] Schwab 1000 Index,(R) which is comprised of the largest 1,000
publicly traded U.S. companies -- the stocks of which represent
about 91% of the total market capitalization of the U.S. stock
market.(1)
SCHWAB SMALL-CAP INDEX FUND(TM) is designed to track the total
[FIGURE 2] return of the Schwab Small-Cap Index,(TM) which tracks the
performance of smaller-capitalization companies. The Schwab
Small-Cap Index is comprised of the second 1,000 largest publicly
traded companies in the U.S.(1)
SCHWAB INTERNATIONAL INDEX FUND(TM) is designed to track the
[FIGURE 3] total return of the Schwab International Index,(TM) which is
comprised of 350 of the largest companies, based on market
capitalization, in foreign countries with developed securities
markets.(2)
You can begin building your diversified equity investment portfolio with the
three SchwabFunds equity index funds by calling Schwab at the toll-free number
below, or by sending back the enclosed postcard. We'll be happy to provide you
with a free prospectus and brochure for the Funds.
EACH PROSPECTUS PROVIDES MORE COMPLETE INFORMATION, INCLUDING CHARGES AND
EXPENSES. PLEASE READ IT CAREFULLY BEFORE INVESTING.
- --------------------------------------------------------------------------------
SCHWAB'S FUNDMAP(TM) SOFTWARE MAKES FUND
SELECTION EASIER.
FundMap Mutual Fund Selection Software for Windows(R) allows you to calculate
your long-term investment needs and can help you to decide how much you may
need to invest in each of the three SchwabFunds equity index funds.3 You can
explore ways to allocate your assets, even re-evaluate your current strategy
and set up several "what if" scenarios. SchwabFunds and FundMap make it easy
for you to build a diversified portfolio today.
- --------------------------------------------------------------------------------
1-800-2 NO-LOAD
1-800-266-5623
(1) Each Index consists of publicly traded companies ranked by market
capitalization. Each Index does not include privately held companies,
investment companies and companies incorporated outside of the United
States.
(2) The Index is comprised of publicly traded companies ranked by market
capitalization in countries with developed securities markets around the
world. It does not include privately held companies, investment companies,
or companies from the United States.
(3) FundMap is available for Schwab customers only. Please allow 2-4 weeks for
delivery.
Windows is a registered trademark of Microsoft Corporation.
<PAGE> 34
--------------
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.
CRS 10712 TF3533 (6/95) Printed on recycled paper.
