<PAGE> 1
SCHWABFUNDS(R)
[LOGO]
SCHWAB
SMALL-CAP
INDEX FUND(R)
SEMI-ANNUAL REPORT
APRIL 30, 1996
[Photo of the Schwab Building, San Francisco, California]
<PAGE> 2
DEAR SHAREHOLDER,
[Photo of I'd like to take this opportunity to share some thoughts on
Charles mutual fund investing and tell you how we're working to expand
R. Schwab] our offerings and services to keep pace with your changing needs.
First, however, I want to extend a personal welcome to the many thousands of new
shareholders who've joined the SchwabFunds Family(R) in the last six months.
With your support, we've become one of the largest and fastest-growing
organizations in the mutual fund industry. Today, Charles Schwab Investment
Management, Inc. serves over 1.8 million shareholders with total assets under
management in excess of $35 billion. In six years, SchwabFunds(R) has grown from
just a few funds to a mutual fund complex of 24 funds covering a broad range of
financial markets and investing styles.
NEW INVESTING STRATEGIES. Since our last report, we've introduced five new
funds, each built on specific, time-tested strategies. The Schwab Asset
Director(R) Funds help you diversify your portfolio through asset allocation,
the Schwab S&P 500 Fund seeks to track U.S. stock market performance through
indexing, and the Schwab Analytics Fund uses advanced quantitative methods to
identify new investment opportunities. Along with our other offerings, these new
funds give you powerful tools you can use to help construct a custom investment
portfolio that matches your individual goals. And, of course, they also allow
you to tap into the combined investing expertise of our highly experienced team
of professional portfolio managers.
TIME-TESTED INVESTING STRATEGIES THAT OFFER YOU AN EXPANDING RANGE OF
OPPORTUNITIES
ENHANCING SHAREHOLDER COMMUNICATIONS. Our commitment to shareholders goes beyond
simply offering you new investment opportunities. We also want to help you
become a more informed mutual fund investor by providing the in-depth
information you need to help manage your portfolio more effectively. Toward that
end, we've changed the format of this report to make it more accessible and
informative.
WE NEED YOUR INPUT. We've also included a postage-paid reply card you can use to
give us your feedback on the new report format. Please take a few minutes to
complete it. Your responses will help us communicate even more effectively with
you in the future. If you'd like more information on any of the funds in the
SchwabFunds Family, contact your financial advisor or call 1-800-2 NO-LOAD
(1-800-266-5623).
Our representatives will be happy to provide you with a free prospectus, which
contains more complete information on fund risks, charges and expenses. Please
read it carefully before investing.
Thank you for placing your trust in us. We value your confidence in our efforts
to date, and we'll continue working hard to offer you an even broader range of
strategic investment opportunities in the future.
/s/ Charles R. Schwab
Charles R. Schwab
Chairman
Cover: The Schwab Building, San Francisco, California
<PAGE> 3
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<PAGE> 5
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
GROWTH IN NET ASSETS AND NUMBER OF SHAREHOLDERS.......................... 1
PERFORMANCE.............................................................. 2
TAX-SMART INVESTMENT..................................................... 2
TOP TEN HOLDINGS......................................................... 3
ECONOMIC SECTOR DIVERSIFICATION.......................................... 3
MARKET OVERVIEW AND QUESTIONS TO THE PORTFOLIO MANAGEMENT TEAM........... 4
FINANCIAL STATEMENTS AND NOTES........................................... 9
</TABLE>
We are pleased to report on the performance of the Schwab Small-Cap Index
Fund(R) (the Fund) for the six-month period from November 1, 1995 to April 30,
1996. During the period, the Fund achieved its primary objective of tracking the
price and dividend performance of the Schwab Small-Cap Index(TM) (the Index). It
also succeeded in maintaining the tax efficiencies and low costs designed to
maximize long-term performance results, as explained below.
[The following is a line graph comparing the growth of net assets to
the number of shareholder accounts]
GROWTH IN NET ASSETS AND NUMBER OF SHAREHOLDERS
<TABLE>
<CAPTION>
SCHWAB SMALL-CAP SCHWAB SMALL-CAP
INDEX FUND(R) INDEX FUND(R)
DATE TOTAL NET ASSETS TOTAL ACCOUNTS
- ---- ---------------- ----------------
<S> <C> <C>
Dec-93* $44,656,627 9,839
Jan-94 $49,672,858 13,121
Feb-94 $54,131,066 11,271
Mar-94 $54,623,517 11,861
Apr-94 $57,000,966 12,273
May-94 $57,674,788 12,521
Jun-94 $57,455,901 12,694
Jul-94 $61,221,482 13,085
Aug-94 $66,248,931 15,740
Sep-94 $66,740,791 13,315
Oct-94 $68,128,086 13,385
Nov-94 $67,524,882 13,546
Dec-94 $70,719,651 13,711
Jan-95 $71,233,434 13,937
Feb-95 $74,928,456 13,984
Mar-95 $79,552,370 14,076
Apr-95 $83,951,001 14,348
May-95 $87,423,469 14,616
Jun-95 $95,452,534 15,100
Jul-95 $107,765,285 15,792
Aug-95 $114,839,076 16,609
Sep-95 $123,741,929 17,520
Oct-95 $122,072,444 18,007
Nov-95 $131,786,085 18,525
Dec-95 $138,479,561 19,126
Jan-96 $144,469,083 19,973
Feb-96 $158,389,989 20,745
Mar-96 $165,801,285 21,515
Apr-96 $184,314,000 22,685
</TABLE>
*Commencement of Fund Operations.
1
<PAGE> 6
FUND PERFORMANCE
The table below compares total returns for various periods for the Schwab
Small-Cap Index Fund(R), the Schwab Small-Cap Index(TM) and the S&P Small-Cap
600 Index (S&P 600).
TOTAL RETURN
<TABLE>
<CAPTION>
CUMULATIVE SINCE AVERAGE ANNUAL
SIX-MONTHS ENDED ONE-YEAR ENDED FUND INCEPTION SINCE SINCE FUND INCEPTION
APRIL 30, 1996 APRIL 30, 1996 (12/3/93-4/30/96) (12/3/93-4/30/96)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SCHWAB SMALL-CAP 17.93% 31.54% 38.99% 14.63%
INDEX FUND(R)
- -------------------------------------------------------------------------------------------------
SCHWAB SMALL-CAP 19.28% 33.12% 42.06%
INDEX(TM)
- -------------------------------------------------------------------------------------------------
S&P 600 18.13% 35.69% 41.56%
- -------------------------------------------------------------------------------------------------
</TABLE>
As of March 31, 1996, the one-year total return for the Schwab Small-Cap Index
Fund was 27.43% and the average annual total return since inception was 12.55%.
TOTAL RETURN ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAIN
DISTRIBUTIONS, IF ANY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
PRINCIPAL VALUE AND INVESTMENT RETURNS WILL FLUCTUATE SO THAT AN INVESTOR'S
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. The
Investment Manager and Schwab waived a portion of their fees during the
reporting period, and have guaranteed that maximum total operating expenses will
not exceed 0.59% through at least 2/28/97. Without fee waivers and guarantees,
for the period ended April 30, 1996, the Fund's total return for the six-month,
one-year, cumulative since-inception, and average annual since-inception periods
would have been 17.76%, 31.15%, 37.87% and 14.25%, respectively. For the period
ended March 31, 1996, the Fund's one-year total return and average annual total
return since inception, without fee waivers and guarantees, would have been
27.04% and 12.14%, respectively. Indices are unmanaged, and unlike the Fund, do
not reflect advisory and other fees associated with an investment in the Fund.
Investors cannot invest in an index directly.
- ------------------------------------------------------------------------------
TAX-SMART INVESTMENT STRATEGY
The Schwab Small-Cap Index Fund seeks to maximize its after-tax performance for
investors by minimizing capital gain distributions. This strategy is designed to
help you keep more of what your money earns. The following chart illustrates the
effects of this strategy.
ONE-YEAR TOTAL RETURN AS OF APRIL 30, 1996
<TABLE>
<CAPTION>
BEFORE-TAX AFTER-TAX % LOST TO TAXES
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
SCHWAB SMALL-CAP INDEX FUND(R) 31.54% 31.27% 0.27%
- -------------------------------------------------------------------------------------
AVERAGE SMALL COMPANY FUND 37.36% 34.84% 2.52%
- -------------------------------------------------------------------------------------
</TABLE>
Source for average small company fund is Morningstar, Inc. for 399 small-cap
funds as of 4/30/96. After-tax returns assume the maximum Federal tax rate of
39.6% on dividends and 28% on capital gain distributions. Tax rates vary and may
be higher or lower than those shown. TOTAL RETURN ASSUMES REINVESTMENT OF ALL
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, IF ANY. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. PRINCIPAL VALUE AND INVESTMENT RETURNS WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST. The Investment Manager and Schwab waived a portion of
their fees during the reporting period and have guaranteed that maximum total
operating expenses will not exceed 0.59% through at least 2/28/97. Without fee
waivers and guarantees, the Fund's total return would have been lower.
- ------------------------------------------------------------------------------
2
<PAGE> 7
FUND HOLDINGS
The Fund's portfolio is diversified across the second 1,000 largest publicly
traded U.S. companies and a broad range of sectors and industries. Below is a
list of the Fund's ten largest holdings as well as a diversification chart
showing the economic sectors in which the Fund was invested as of April 30,
1996. The Fund's top ten holdings is shown as a percentage of Fund Investments
and the diversification pie chart is shown as a percentage of equity investments
held by the Fund. A complete listing of the Fund's portfolio holdings as of
April 30, 1996 can be found in the Statement of Net Assets section of this
report.
FUND'S TOP TEN HOLDINGS AS A PERCENTAGE OF FUND INVESTMENTS
<TABLE>
<S> <C>
U.S. Robotics, Inc. 0.58%
Presstek, Inc. 0.33%
Boise Cascade Office Products Corp. 0.32%
Shiva Corp. 0.30%
Concord EFS, Inc. 0.28%
Republic Industries, Inc. 0.28%
Reading & Bates Corp. 0.27%
Weatherford Enterra, Inc. 0.27%
Corrections Corp of America 0.26%
C-Cube Microsystems 0.25%
</TABLE>
[The following is a pie-chart depicting Economic Sector Diversification.]
ECONOMIC SECTOR DIVERSIFICATION
<TABLE>
<S> <C>
Materials & Services 18.9%
Producers Goods & Manufacturing 7.5%
Technology 13.3%
Transportation 3.4%
Utilities 7.5%
Consumer Durables 2.8%
Consumer Non-Durables 26.6%
Energy 4.3%
Finance 15.7%
</TABLE>
3
<PAGE> 8
MARKET OVERVIEW AND QUESTIONS TO THE PORTFOLIO MANAGEMENT
TEAM OF CHARLES SCHWAB INVESTMENT MANAGEMENT, INC.
Stephen B. Ward - Senior Vice President and Chief Investment Officer
Geri Hom - Portfolio Manager
ECONOMIC HIGHLIGHTS
The Federal Reserve Board (the "Fed") appears to have been successful in
engineering a "soft landing" for the economy, which has resulted in the sixth
consecutive year of economic expansion. The goal of the soft landing strategy
was to raise interest rates sufficiently during 1994 and early 1995 to slow the
rate of economic growth (thereby reducing the threat of rising inflation) and
yet not cause a recession. The growth rate of the real Gross Domestic Product
(GDP) did slow from 3.5% in 1994 to 2.0% in 1995, and inflation, as measured by
the Consumer Price Index (CPI), was 2.8% during 1995, its fifth consecutive year
under 3.0%. In light of the relatively low inflation and the economy's slow
growth rate, the Fed initiated a series of three 0.25% decreases in the federal
funds rate target in July and December of 1995, and again in January of 1996.
The federal funds rate on April 30, 1996 was 5.25%.
Many economic observers were surprised by the relatively strong levels of the
real GDP growth rate (initially reported at 2.8% and subsequently revised to
2.3%) and the CPI of 4.1% during the first quarter of 1996. Although one quarter
does not establish a trend, these results caused most market observers to
reevaluate the likelihood of further federal funds rate reductions during 1996
and to speculate about the possibility of future increases.
Q. TO WHAT DO YOU ATTRIBUTE THE SCHWAB SMALL-CAP INDEX FUND'S(R) STRONG
PERFORMANCE DURING THE REPORTING PERIOD?
A. During the six-month reporting period, the U.S. stock market continued to
experience strong gains, with all major domestic indices achieving new highs.
The small capitalization sector of the market outperformed the large
capitalization sector. Small-cap stocks reached all-time highs as reflected by
the NASDAQ Index, which recorded nine consecutive new highs during April. The
returns achieved by investors in the small-cap sector of the market outpaced the
historical returns of both large- and small-cap stocks. (1)
Although there are many contributing factors, most market observers attribute
the market's strong performance to three key developments: the second straight
year of impressive corporate earnings growth; a continuation of relatively
moderate short- and long-term interest rates (although rates have increased in
1996); and record levels of cash flowing into equity mutual funds.
(1) Source: Small-cap stocks as measured by the Ibbotson and BARRA small-cap
index, large-cap stocks as measured by the S&P 500. For the 20-year period ended
12/31/95, the average annual total return for the Ibbotson and BARRA small-cap
index was 18.20% and 14.5% for the S&P 500.
4
<PAGE> 9
Q. HOW DID THE PERFORMANCE OF THE SCHWAB SMALL-CAP INDEX(TM) COMPARE TO THE S&P
600 DURING THE REPORTING PERIOD? HOW DO THESE INDICES DIFFER?
[The following is a line graph depicting the Comparison of Change in Value of a
Hypothetical $10,000 Investment from 12/3/93 through 4/30/96]
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT (IN THE
SCHWAB SMALL-CAP INDEX FUND(R), THE SCHWAB SMALL-CAP INDEX(TM); THE STANDARD
& POOR'S SMALL-CAP 600 INDEX AND THE STANDARD & POOR'S 500(R) INDEX)
<TABLE>
<CAPTION>
SCHWAB SMALL-CAP SCHWAB SMALL-CAP
DATE INDEX FUND(R) INDEX(TM) 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 $ 9,332 $ 9,419 $ 9,711 $ 9,286
7/31/94 $ 9,493 $ 9,614 $10,029 $ 9,401
8/31/94 $10,133 $10,249 $10,440 $10,042
9/30/94 $10,093 $10,191 $10,185 $ 9,990
10/31/94 $10,063 $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 $10,083 $10,229 $10,853 $10,002
3/31/95 $10,335 $10,442 $11,173 $10,204
4/30/95 $10,566 $10,671 $11,502 $10,432
5/31/95 $10,717 $10,809 $11,961 $10,595
6/30/95 $11,211 $11,356 $12,238 $11,176
7/31/95 $11,866 $12,021 $12,643 $12,031
8/31/95 $12,077 $12,270 $12,640 $12,292
9/30/95 $12,309 $12,510 $13,173 $12,606
10/31/95 $11,785 $11,910 $13,126 $11,984
11/30/95 $12,329 $12,482 $13,702 $12,458
12/31/95 $12,562 $12,782 $13,966 $12,663
1/31/96 $12,491 $12,749 $14,441 $12,691
2/29/96 $12,967 $13,261 $14,575 $13,106
3/31/96 $13,170 $13,492 $14,715 $13,387
4/30/96 $13,899 $14,206 $14,931 $14,156
</TABLE>
SCHWAB SMALL-CAP INDEX FUND
Average Annual Total Returns Through April 30, 1996
One Year 31.54% Since Inception 14.63%
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. PRINCIPAL VALUE AND
INVESTMENT RETURNS WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
The performance graph compares a hypothetical $10,000 investment in the Schwab
Small-Cap Index Fund since inception with hypothetical investments in the Schwab
Small-Cap Index, S&P 600 and the Standard & Poor's 500(R) Index (S&P 500). Total
return assumes reinvestment of all dividends and capital gain distributions, if
any. Indices are unmanaged and investors cannot invest in an index directly;
therefore indices, unlike funds, do not reflect advisory fees and other expenses
associated with an investment in a fund. The Investment Manager and Schwab
waived a portion of their fees during the reporting period, and have guaranteed
that maximum total operating expenses will not exceed 0.59% through at least
2/28/97. Without fee waivers and guarantees, the Fund's total return for the
reporting period would have been lower.
- --------------------------------------------------------------------------------
5
<PAGE> 10
A. During the reporting period, the total return of the Schwab Small-Cap
Index(TM) was 19.28%, outperforming the S&P 600, which had a total return of
18.13% for the period. The two indices continue to track closely as they have in
previous years. As the chart above indicates, on a Fund inception-to-date basis,
the average annual total return of the Schwab Small-Cap Index slightly
outperformed the S&P 600, 15.6% to 15.5%. (2)
Since the composition of the two indices is different, we fully expect that
there will continue to be periods of some discrepancies in their performance.
While the Schwab Small-Cap Index represents the stocks of the second 1,000
largest U.S. corporations (excluding investment companies), the S&P 600 is
composed of 600 domestic stocks selected by the Standard & Poor's Corporation.
The composition differences result in differing portfolio characteristics. For
example, the Schwab Small-Cap Index has a 15.04% weighting in technology stocks
while the S&P 600 has a 21.27% weighting in the sector. Other differences
include the market capitalization of the largest and smallest stocks in the two
indices. The Schwab Small-Cap Index's largest stock has a market capitalization
of $1.5 billion, and its smallest stock has a market capitalization of $111
million. On the other hand, the S&P 600's largest stock has a market
capitalization of $2.4 billion, and its smallest stock has a market
capitalization of $44.1 million. (3)
Q. WHAT ACCOUNTS FOR THE DIFFERENCE BETWEEN THE PERFORMANCES OF THE SCHWAB
SMALL-CAP INDEX(TM) AND THE SCHWAB SMALL-CAP INDEX FUND(R)?
A. The performance of the Schwab Small-Cap Index is the theoretical return of
stocks representing the second 1,000 largest U.S. corporations (excluding
investment companies), ranked by market capitalization, which comprise the
Index. Unlike the Fund, the Index does not incur management fees and other Fund
costs which reduce returns to the shareholders. In addition, the Fund, unlike
the Index, holds a small portion of its assets in cash to meet shareholder
redemptions and pay expenses. The cash portion earns interest at money market
rates, which may be more or less than the returns of the Index during a given
period. Also, the weighting of any security in the Fund may vary from the
theoretical weighting in the Index.
Another factor responsible for the difference in performance between the Index
and the Fund is that the Fund seeks to minimize capital gain distributions. To
avoid excessive realization of capital gains, the Fund may continue to hold
certain stocks that are no longer in the Index. This practice can contribute
positive or negative "tracking error" to the Fund, depending on the performance
of these non-Index stocks.
(2) PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. PRINCIPAL VALUE AND
INVESTMENT RETURNS WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED,
MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. TOTAL RETURN ASSUMES
REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, IF ANY. Indices
are unmanaged and investors cannot invest in an index directly; therefore
indices, unlike funds, do not reflect advisory fees and other expenses
associated with an investment in a Fund.
(3) Source: S&P 600
6
<PAGE> 11
The final factor that contributes to the difference in performance between the
Index and the Fund is the biannual reconstitution of the Index, which last
occurred on December 31, 1995. This process adds new stocks to the Index and
removes other stocks from the Index. In order to track the Index, the Fund
attempts to sell the stocks that have dropped out of the Index while minimizing
capital gains and attempts to purchase the new Index stocks. These transactions
increase trading costs, which contribute to the difference in performance
between the Index and the Fund.
Combined, these factors cause the difference in the returns of the Fund and the
Index, which is referred to as the Fund's tracking error. The tracking error for
the Fund during the reporting period was 1.35%. The average annual tracking
error for the Fund since its inception, December 3, 1993, has been 1.03%, which
is within the Fund's objectives given the components of tracking error.
Q. WHICH INDUSTRIES WERE THE BEST PERFORMERS IN THE U.S. EQUITY MARKETS DURING
THE REPORTING PERIOD?
A. The cosmetics industry was the strongest performer during the reporting
period. As of April 30, 1996, it achieved an overall industry total return of
69.3%. Other industries with strong performance during the period were
containers, which achieved an overall industry total return of 60.1%, and gold,
which achieved an overall industry total return of 52.6%. (4)
Q. WHAT ARE THE ADVANTAGES OF A SMALL-CAP INDEXING STRATEGY, AND WHAT ROLE
SHOULD A SMALL-CAP INDEX FUND PLAY IN AN INVESTMENT PORTFOLIO?
A. Investing in small-cap, or small company stocks with an index fund as the
investment vehicle offers the advantages of broad company diversification,
generally a lower operating expense ratio, and in the case of the Schwab
Small-Cap Index Fund(R), a tax-efficient management strategy which seeks to
minimize portfolio turnover and capital gain distributions.
Small company stocks also manifest certain characteristics which make them an
attractive element of a well-diversified investment portfolio. Historically,
small company stocks have had among the highest return potential and volatility
characteristics of all major classes of investment assets. For example, for the
20-year period ended December 31, 1995, small company stocks (as represented by
the Ibbotson and BARRA Small-Cap Index) provided an average return of 18.2%.
This compares with large company stock returns (as represented by the S&P 500)
of 14.5%, and international
(4) Source: S&P 600 as calculated by Wilshire Associates using Wilshire defined
industry classifications.
7
<PAGE> 12
stock returns (as represented by the Morgan Stanley Capital International --
Europe, Australia, Far East Index or MSCI EAFE Index) of 14.4%. However, small
company stocks also exhibited the greatest volatility during the same period, as
measured by the annual standard deviation of returns of 20.4%. This compares
with annual standard deviations of return of 14.5% and 17.1% for large company
stocks and international stocks respectively during the same period. (5)
Small company stocks can be added to a diversified, long-term investment
portfolio in an effort to enhance the portfolio's long-term total return
potential. Typically, because of the volatility characteristics of small company
stocks, investors with higher risk tolerances and longer-term investment
horizons may be able to consider a larger allocation to small company stocks.
Investors with lower risk tolerances and shorter-term investment horizons may
want to consider a smaller allocation to small company stocks. Since small
company stock returns are not perfectly correlated with returns of other major
asset classes (such as large company stocks, international stocks, or bonds),
combining small company stocks in a portfolio with other asset classes can
provide total portfolio returns with lower return volatility characteristics
than those of an all small company stock portfolio.
(5) Source: As reported by BARRA, Inc. Specific sources for data are the S&P 500
for large company stocks, Ibbotson and BARRA Small-Cap Index for small company
stocks and the MSCI EAFE Index for international stocks.
8
<PAGE> 13
SchwabFunds(R)
- --------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(R)
STATEMENT OF NET ASSETS
April 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
COMMON STOCK--98.6%
AEROSPACE/DEFENSE--0.8%
AAR Corp. 4,000 $ 82
Alliant Techsystems
Inc.* 4,000 188
Coltec Industries Inc.* 19,900 259
Curtiss-Wright Corp. 1,400 72
Gencorp Inc. 10,100 135
OEA, Inc. 6,100 239
Orbital Sciences Corp.
Class A* 7,300 100
Rohr Industries Inc.* 6,600 120
Thiokol Corp. 5,100 218
Trimble Navigation Ltd.* 6,200 150
--------
1,563
--------
AIR TRANSPORTATION--1.3%
America West Airlines,
Inc. Class B* 12,700 267
Atlantic Southeast
Airlines Inc. 9,600 240
Atlas Air Inc.* 5,900 267
Comair Holdings Inc. 8,800 326
Continental Airlines
Inc. Class B* 7,500 426
Mesa Airlines Inc.* 7,900 97
Offshore Logistics,
Inc.* 5,400 79
Trans World Airlines
Inc. (New)* 20,100 359
USAir Group, Inc.* 19,000 337
--------
2,398
--------
ALCOHOLIC BEVERAGES--0.2%
Adolph Coors Co. Class B 12,100 228
Canandaigua Wine Co.,
Inc. Class A* 5,900 180
--------
408
--------
APPAREL--1.2%
Authentic Fitness Corp. 5,500 131
Brown Group Inc. 5,700 91
Cone Mills Corp.* 10,300 117
Donnkenny Inc. 3,500 69
Fabri-Centers of
America, Inc. Class A 5,900 60
Guilford Mills, Inc. 3,900 95
Justin Industries Inc. 6,800 87
Kellwood Co. 6,100 99
Kenneth Cole
Productions, Inc.
Class A 4,200 84
Men's Wearhouse, Inc. 6,100 225
Nautica Enterprises Inc. 5,650 261
Paragon Trade Brands,
Inc.* 3,200 75
Phillips-Van Heusen
Corp. 7,700 102
Springs Industries Inc. 5,900 271
St. John's Knits, Inc. 3,100 184
Stride Rite Corp. 14,700 141
Wolverine World Wide
Inc. 5,100 157
--------
2,249
--------
AUTOMOTIVE PRODUCTS--0.4%
APS Holding Corp. Class
A* 3,200 58
Armor-All Products Corp. 6,800 105
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Carlisle Cos. Inc. 4,400 $ 205
Discount Auto Parts
Inc.* 4,900 144
O'Reilly Automotive,
Inc.* 3,200 125
--------
637
--------
BANKS--6.6%
ALBANK Financial Corp. 4,320 116
Associated Banc-Corp. 4,600 178
Banc One Corp. 6,386 222
Bancorp South, Inc. 6,600 159
Banknorth Group Inc. 1,900 67
Bell Bancorp, Inc. 2,800 104
CCB Financial Corp. 4,550 236
CNB Bancshares Inc. 4,801 137
California Bancshares
Inc. 2,600 78
Capital Bancorp 2,100 65
Centura Banks Inc. 6,900 252
Chase Manhattan Corp.
(New) 1,414 97
Chemical Financial Corp. 2,995 117
Chittenden Corp. 2,100 56
Citizens Bancorp 4,800 143
Citizens Banking Corp. 4,600 136
City National Corp. 12,900 182
Cole Taylor Financial
Group Inc. 4,800 143
Colonial BancGroup Inc. 3,400 115
Community First
Bankshares Inc. 3,100 72
Crestar Financial Corp. 1,792 101
Cullen/Frost Bankers
Inc. 3,300 164
Deposit Guaranty Corp. 4,400 210
F & M National Corp. 3,955 63
First Bank System Inc. 5,473 330
First Citizens
BancShares Inc. 3,200 198
First Commercial
Bancshares Inc. 4,500 107
First Commercial Corp. 7,334 228
First Commonwealth
Financial Corp. 6,400 123
First Financial Bancorp 3,900 128
First Michigan Bank
Corp. 5,151 153
First Midwest Bancorp
Inc. 4,100 118
First Union Corp. 2,220 137
Firstbank Illinois Co. 3,600 112
Fort Wayne National
Corp. 4,200 129
Fulton Financial Corp. 9,416 192
HUBCO, Inc. 3,300 62
Hancock Holding Co. 3,000 109
Imperial Bancorp 4,364 105
Investors Financial
Services Corp. 112 2
Jefferson Bankshares,
Inc. 4,400 94
Keystone Financial Inc. 7,300 238
</TABLE>
9
<PAGE> 14
SchwabFunds(R)
- --------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(R)
STATEMENT OF NET ASSETS
April 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Liberty Bancorp, Inc. 3,900 $ 143
Long Island Bancorp Inc. 7,200 201
Magna Group Inc. 7,800 176
Mark Twain Bancshares
Inc. 4,800 181
Mid-Am, Inc. 4,820 89
National Bancorp of
Alaska, Inc. 2,800 169
National Commerce
Bancorp 7,200 221
New York Bancorp Inc. 3,300 81
North Fork
Bancorporation 7,700 183
Norwest Corp. 5,990 216
ONBANCorp, Inc. 4,500 150
Old National Bancorp 7,601 257
One Valley Bancorp of
West Virginia Inc. 5,500 172
Park National Corp. 2,500 120
People's Bank 10,800 231
Provident Bancorp Inc. 4,800 247
Queens County Bancorp,
Inc. 2,200 97
Regions Financial Corp. 3,952 183
Riggs National Corp. 11,100 139
River Forest Bancorp,
Inc. 4,700 139
S & T Bancorp, Inc. 3,300 99
Security Capital Corp. 3,200 187
Sumitomo Bank 5,100 128
Summit Bancorp 8,154 289
Susquehanna Bancshares,
Inc. 4,500 131
T R Financial Corp. 2,400 64
Trust Company of
New Jersey 5,900 84
TrustCo Bank Corp. NY 5,604 117
Trustmark Corp. 10,200 238
U S Trust Corp. (New) 3,000 165
UMB Financial Corp. 6,297 238
UST Corp. 5,400 71
Union Planters Corp. 7,788 235
United Bankshares, Inc. 3,700 101
United Carolina
Bancshares Corp. 6,600 158
Westamerica Bancorp 3,100 146
Whitney Holding Corp. 5,400 164
Zions Bancorp 4,500 336
--------
12,124
--------
BUSINESS MACHINES & SOFTWARE--7.4%
3COM Corp. 4,134 190
AST Research Inc.* 12,378 94
America Online, Inc. 2,000 128
Applied Magnetics Corp.* 8,100 167
Atria Software, Inc. 4,500 246
Auspex Systems, Inc.* 7,600 146
BBN Corp.* 5,300 150
BancTec, Inc.* 5,100 104
Bell & Howell Co. (New)* 9,100 287
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Black Box Corp.* 5,100 $ 102
Boole & Babbage Inc. 3,250 85
Borland International
Inc.* 9,300 152
Cheyenne Software Inc.* 9,450 215
Computer Horizons Corp. 4,700 237
Computer Products, Inc.* 8,500 137
Compuware Corp.* 12,500 359
Comshare, Inc. 2,400 59
Comverse Technology Inc.
(New)* 6,300 148
Continuum Inc.* 7,000 399
Control Data Systems,
Inc.* 3,500 83
Cray Research Inc.* 2,408 71
Data General Corp.* 11,200 172
Davidson & Associates,
Inc. 11,200 307
Dell Computer Corp. 6,300 290
Dialogic Corp.* 4,400 203
Digi International Inc.* 4,300 123
Dynatech Corp. 5,900 153
Exabyte Corp.* 6,900 120
Excalibur Technologies
Corp. (New)* 3,000 78
FTP Software Inc.* 6,600 64
FileNet Corp.* 4,600 256
General Magic Inc.* 6,300 35
Geoworks* 3,600 134
Global Village
Communications* 4,600 78
HCIA Inc.* 2,600 138
HNC Software Inc. 4,400 164
Hyperion Software Corp. 4,800 61
INSO Corp. 4,200 227
INTERSOLV Inc.* 6,200 68
In Focus Systems, Inc.* 3,400 173
Intergraph Corp.* 14,000 178
Intuit Inc. 1,200 63
Legato Systems Inc.* 2,900 121
MICROS Systems, Inc. 2,500 70
Maxis Inc.* 2,800 68
McAfee Associates, Inc. 5,950 365
Medic Computer Systems,
Inc.* 3,600 337
Mercury Interactive
Corp.* 5,000 68
National Computer
Systems, Inc. 4,600 101
National Instruments
Corp.* 6,100 147
Network Equipment
Technologies* 6,500 166
Network General Corp.* 7,000 310
Oak Technology 11,400 204
Optical Data Systems,
Inc. 4,700 128
PRI Automation Inc.* 1,800 51
PeopleSoft Inc. 1,200 76
Policy Management
Systems Corp.* 2,000 94
Progress Software Corp. 3,200 51
Quarterdeck Corp.* 7,500 115
Rational Software Corp.
(New)* 4,900 261
</TABLE>
10
<PAGE> 15
SchwabFunds(R)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Safeguard Scientifics
Inc. 4,300 $ 288
Seagate Technology,
Inc.* 6,232 361
Security Dynamics
Technology 4,100 344
Sequent Computer
Systems, Inc.* 10,000 147
Shiva Corp. 9,200 552
Sierra On-Line Inc. 5,800 228
Softkey International
Inc.* 9,200 257
Stac Inc.* 10,500 118
Stratus Computer Inc.* 6,600 186
Structural Dynamics
Research Corp.* 8,300 265
System Software
Associates, Inc. 11,400 270
Systems & Computer
Technology Corp.* 4,100 60
Tech Data Corp.* 10,500 203
Telxon Corp. 5,200 120
Transaction Systems
Architects Inc. Class
A* 3,800 204
Trident Microsystems
Inc.* 4,000 71
Veritas Software Co. 2,300 105
Videoserver Inc.* 3,200 106
Wang Laboratories Inc.
(New)* 10,300 243
Wind River Systems Inc. 2,400 94
--------
13,599
--------
BUSINESS SERVICES--12.4%
ABM Industries, Inc. 2,500 85
ABR Information Services
Inc. 3,600 227
ADVO Inc. 5,700 58
Access Health Inc. 3,600 200
Accustaff Inc. 14,800 441
Acxiom Corp. 7,200 197
Affiliated Computer
Services Inc. Class A* 2,400 114
Alliance Entertainment
Corp.* 8,200 50
Alternative Resources
Corp. 4,100 147
American Business
Information, Inc. 7,650 151
American Business
Products, Inc. 5,200 113
American Management
Systems, Inc. 12,200 323
American Medical
Response, Inc.* 6,000 222
Amresco Inc. 8,600 148
Apollo Group, Inc. Class
A 10,225 451
Applix Inc. 2,400 93
Apria Healthcare Group
Inc.* 12,600 429
Aspen Technology Inc.* 2,600 144
BISYS Group, Inc.* 6,900 262
Borg-Warner Security
Corp.* 6,400 74
Bowne & Co. Inc. 5,000 90
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Business Records Corp.* 2,200 $ 79
CDI Corp.* 5,500 162
CMG Information Services
Inc. 2,400 72
Cambridge Technology
Partners* 4,800 323
Camco International Inc. 7,500 267
Catalina Marketing
Corp.* 2,900 226
Cerner Corp. 9,900 202
Checkfree Corp.* 11,100 212
Coastal Physician Group
Inc.* 6,200 52
Concord EFS Inc. 15,450 516
Copart Inc.* 3,300 90
Corrections Corp. of
America 7,600 485
Coventry Corp.* 10,000 195
Culligan Water
Technologies Inc.* 3,500 118
Dames & Moore Inc. 6,500 71
Data Broadcasting* 8,500 88
DeVRY Inc. 7,000 261
Dionex Corp. 4,200 155
Electro Rental 3,200 78
Epic Design Technology
Inc. 3,600 122
Express Scripts Inc.
Class A* 5,200 254
Fair Issac & Co. Inc. 3,600 154
Fleming Companies, Inc. 10,700 147
Franklin Quest Co.* 6,900 186
G&K Services, Inc. Class
A 6,350 168
GRC International, Inc.* 2,500 97
Gartner Group Inc. Class
A (New) 11,600 399
HBO & Co. 2,600 309
Health Management
Systems, Inc. 5,000 131
Healthplan Services
Corp.* 3,400 82
Henry Jack & Associates
Inc. 3,100 97
Heritage Media Corp.
Class A (New)* 5,500 211
Hon Industries Inc. 9,400 241
Hunt Manufacturing Co. 4,700 79
ITT Educational Services
Inc. 4,950 153
Ideon Group Inc. 8,100 106
Information
Resources, Inc.* 7,900 114
Inphynet Medical
Management Inc.* 4,900 91
Integrated Health
Services Inc. 6,400 176
Integrated Systems Inc.
Class A 6,400 182
Interim Services Inc.* 3,800 164
Jacobs Engineering Group
Inc.* 9,500 264
Jenny Craig, Inc.* 6,900 83
</TABLE>
11
<PAGE> 16
SchwabFunds(R)
- --------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(R)
STATEMENT OF NET ASSETS
April 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
John H. Harland Co. 8,700 $ 228
Katz Media Group Inc.* 4,300 63
Keane, Inc.* 5,300 209
Kinder Care Learning
Centers Inc.* 5,000 72
Kronos, Inc. 2,100 62
Magellan Health Services
Inc.* 8,700 187
Mariner Health Group
Inc.* 8,300 141
Maxicare Health Plans
Inc. (New)* 5,200 106
Medpartners/Mullikin
Inc.* 15,400 445
Metromedia International
Group, Inc.* 10,900 147
Molten Metal Technology,
Inc.* 6,800 218
Morrison Health Care
Inc. 2,958 47
National Auto Credit
Inc. 8,250 118
National Data Corp. 6,800 240
National Education
Corp.* 11,000 164
National Media Corp.* 4,600 83
Netcom Online
Communications* 3,500 125
New England Business
Service, Inc. 4,800 90
Norrell Corp. 3,000 116
Occusystems Inc.* 5,700 166
OrNda Healthcorp* 9,760 268
Orthodontic Centers of
America Inc. 6,100 239
Owen Healthcare Inc. 4,400 90
PAXAR Corp. 6,687 116
PHH Corp. 5,100 290
PSINet Inc.* 11,500 162
Payment Services Inc. 4,600 132
Peak Technologies Group
Inc.* 2,500 60
PhyCor Inc. 6,900 339
Physician Corp. of
America* 11,100 165
Physician Reliance
Network* 6,000 262
Physicians Computer
Network* 11,800 131
Republic Industries
Inc.* 15,600 510
Robert Half
International Inc.* 7,900 454
Rollins, Inc. 10,200 230
Rykoff-Sexton, Inc. 6,250 95
SEI Corp. 4,700 111
SPS Transaction
Services, Inc. 8,500 227
Sanifill Inc.* 6,500 282
Scientific Games
Holdings Corp. 4,400 141
Standard Register Co. 8,100 205
Steris Corp. 5,100 165
Stewart Enterprises Inc.
Class A 5,300 242
Sun Healthcare Group
Inc.* 14,508 219
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Synetic Inc.* 5,200 $ 181
True North
Communications 7,000 185
U S Order Inc.* 4,300 87
U.S.A. Waste Services
Inc.* 15,407 401
Unifirst Corp. 5,500 132
United Waste Systems,
Inc.* 5,500 305
Universal Health
Services Inc. Class B 4,400 244
Valassis Communications
Inc.* 12,600 198
Vencor Inc.* 11,687 394
Volt Information
Sciences Inc. 3,500 106
Wallace Computer
Services, Inc. 4,600 272
Western Waste
Industries* 6,200 241
Zebra Technologies Corp.
Class A 7,600 189
--------
22,778
--------
CHEMICAL--2.0%
A. Schulman Inc. 11,262 246
Calgon Carbon Corp. 11,500 144
Cambrex Corp. 2,000 86
Chemed Corp. 3,200 120
Crompton & Knowles Corp. 13,600 209
Cytec Industries Inc.* 4,200 348
Dexter Corp. 7,800 210
Ferro Corp. 7,700 214
First Mississippi Corp. 6,000 140
Geon Co. 7,300 193
H.B. Fuller Co. 4,000 131
Lawter International
Inc. 13,300 145
Lilly Industrial Inc.
Class A 6,950 101
NCH Corp. 2,400 139
NL Industries Inc. (New) 14,500 208
OM Group Inc. 3,700 140
Petrolite Corp. 3,600 114
Scotts Co. Class A* 7,400 128
Sequa Corp. Class A* 2,600 91
Sterling Chemicals Inc.* 15,200 173
Tredegar Industries Inc. 3,400 94
WD-40 Co. 2,700 126
Wellman Inc. 9,500 228
--------
3,728
--------
CONSTRUCTION--1.2%
Blount International
Inc. Class A 5,850 181
Blount International
Inc. Class B 1,500 47
Calmat Co. 9,100 158
Centex Construction
Products Inc. 6,000 86
Del Webb Corp. 4,200 75
Florida Rock Industries,
Inc. 3,200 81
</TABLE>
12
<PAGE> 17
SchwabFunds(R)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Granite Construction
Inc. 4,650 $ 92
Insituform Technologies
Inc. Class A* 7,200 85
Kaufman & Broad Home
Corp. 9,200 130
Lone Star Industries,
Inc. (New) 6,300 226
Medusa Corp. 4,600 135
Oakwood Homes Corp. 6,200 277
Southdown Inc. 6,400 150
Stone & Webster, Inc. 4,200 143
TJ International Inc. 4,900 85
Toll Brothers, Inc.* 10,200 166
Triangle Pacific Corp.
Delaware* 4,400 73
U.S. Home Corp. (New)* 3,200 80
--------
2,270
--------
CONSUMER-DURABLE--1.0%
Bassett Furniture
Industries Inc. 3,600 92
Champion Enterprises
Inc. 4,200 160
Chicago Miniature Lamp
Inc.* 3,500 142
Ethan Allen Interiors
Inc.* 3,700 96
Furniture Brands
International Inc.* 16,700 165
Harman International
Industries Inc. (New) 4,575 216
Kimball International
Inc. Class B 7,000 201
La-Z-Boy Chair Co. 5,000 148
National Presto
Industries, Inc. 2,300 90
Outboard Marine Corp. 6,400 126
Regal Beloit Corp. 6,000 116
Sturm, Ruger & Co., Inc. 4,000 162
Toro Co. 3,500 112
--------
1,826
--------
CONSUMER-NONDURABLE--2.0%
3DO Co.* 7,100 64
A.T. Cross Co. Class A 5,800 87
Acclaim Entertainment
Inc.* 14,000 144
American Greetings Corp.
Class A 200 6
Applebee's
International, Inc. 9,100 239
Buffets Inc.* 9,900 138
CKE Restaurants Inc. 5,000 99
CML Group, Inc. 11,350 51
Department 56 Inc.* 6,300 157
Foxmeyer Health Corp. 5,473 107
Gibson Greetings, Inc. 4,400 62
IHOP Corp. (New)* 3,200 91
International Dairy
Queen Inc. Class A* 6,600 141
Landry's Seafood
Restaurants, Inc. 5,100 122
Luby's Cafeterias, Inc. 6,500 156
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Mafco Consolidated Group
Inc.* 6,300 $ 113
Mikasa Inc. Class B* 6,900 82
Mohawk Industries Inc.* 9,400 136
Papa John's
International, Inc. 5,100 251
Rexall Sundown, Inc. 8,700 250
Ruby Tuesday Inc. 4,437 90
Russ Berrie & Co. Inc. 8,500 136
Ryan's Family Steak
Houses Inc.* 21,100 206
Sbarro, Inc. 8,000 210
Shoney's Inc.* 12,700 141
Sonic Corp. 3,400 65
Toy Biz Inc. Class A* 5,300 108
Zenith Electronics
Corp.* 17,200 161
--------
3,613
--------
CONTAINERS--0.4%
ACX Technologies Inc. 7,400 143
Ball Corp. 8,900 277
Gaylord Container Corp.
Class A* 16,400 168
Greif Brothers Corp.
Class A 7,000 184
--------
772
--------
ELECTRONICS--4.9%
AMETEK, Inc. 9,800 189
Allen Group Inc. 8,600 213
Alliance Semiconductor
Corp. 10,000 106
Altera Corp. 3,000 158
Altron Inc. 2,500 80
Augat Inc. 6,200 119
Aura Systems, Inc.* 14,800 76
Belden Inc. 12,300 366
Burr Brown 4,200 80
Cable Design
Technologies Corp. 5,100 167
Cadence Design Systems
Inc. 2,700 141
Checkpoint Systems Inc. 11,400 341
CopyTele Inc.* 7,000 84
Cyrix Corp.* 6,000 184
DII Group Inc.* 2,100 72
DSP Communications Inc. 5,600 223
Dallas Semiconductor
Corp. 9,500 185
Electro Scientific
Industries Inc.* 3,200 77
Electroglas Inc. 5,600 110
FORE Systems, Inc. 2,900 229
FSI International Inc. 6,400 93
Fluke Corp. 2,800 108
Gerber Scientific Inc. 7,100 120
Hadco Corp.* 3,400 104
ITI Technologies Inc.* 2,400 66
Identix Inc.* 6,300 75
Integrated Process
Equipment Corp.* 4,600 121
</TABLE>
13
<PAGE> 18
SchwabFunds(R)
- --------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(R)
STATEMENT OF NET ASSETS
April 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Integrated Silicon
Solution* 4,400 $ 73
Integrated Systems
Consulting Group
(Rights exp. 5/22/96)* 717 13
International Rectifier
Corp. 10,400 234
Itron, Inc.* 3,600 211
Kent Electronics Corp. 7,100 299
Kulicke & Soffa
Industries Inc. 6,000 113
LTX Corp.* 10,700 104
Lattice Semiconductor
Corp.* 6,400 209
Littlefuse, Inc.* 3,400 128
Logicon, Inc. 4,700 140
Macromedia Inc. 8,900 335
Marshall Industries* 5,400 172
Maxim Integrated
Products Inc. 4,200 145
Methode Electronics Inc.
Class A 9,550 158
Osmonics, Inc.* 3,500 73
Pacific Scientific Co. 3,000 59
Park Electrochemical
Corp. 3,600 90
Pioneer Standard
Electronics Inc. 6,525 106
Rexel Inc.* 7,000 94
S3 Inc. 14,200 202
SCI Systems, Inc.* 7,300 313
Sanmina Corp. 5,600 197
Silicon Valley Group
Inc.* 8,200 218
Siliconix Inc. (New)* 2,500 73
Unitrode Corp.* 4,300 116
VLSI Technology, Inc.* 16,200 282
VeriFone, Inc.* 7,000 294
Vicor Corp. 13,100 199
Watkins-Johnson Co. 2,500 84
Wyle Electronics 4,400 184
Zilog Inc.* 5,900 222
--------
9,027
--------
ENERGY-DEVELOPMENT--3.4%
Amcol International
Corp. 5,300 61
Ashland Coal, Inc. 4,000 93
BJ Services Co.* 8,400 322
Benton Oil & Gas Co.* 7,800 137
Cabot Oil & Gas Corp.
Class A 6,600 109
Chesapeake Energy Corp. 5,400 382
Devon Energy Corp. 6,900 176
Energy Ventures, Inc.* 5,000 150
Falcon Drilling Inc.* 8,600 233
Global Industrial
Technologies Inc.* 6,800 125
Global Natural Resources
Inc.* 8,400 122
Helmerich & Payne Inc. 7,900 291
Landmark Graphics Corp.* 5,300 103
Louis Dreyfus Natural
Gas Corp.* 11,400 145
MAXXAM Inc.* 2,300 105
Newfield Exploration
Co.* 5,900 202
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Nuevo Energy Co.* 4,300 $ 121
Parker & Parsley
Petroleum Co. 10,000 246
Parker Drilling Co.* 21,100 161
Phoenix Resource Cos.,
Inc. (New) 4,700 120
Pride Petroleum Services
Inc.* 7,500 124
Production Operators
Corp. 3,200 108
Reading & Bates Corp.
(New)* 20,600 505
Rowan Cos. Inc.* 25,200 372
Seitel, Inc. (New)* 2,100 58
Solv-Ex Corp.* 6,100 86
Sonat Offshore Drilling
Inc. 6,700 368
Tom Brown Inc. (New)* 5,800 91
United Meridian Corp.* 8,100 251
Varco International
Inc.* 9,900 165
Vintage Petroleum Inc. 7,700 188
Weatherford Enterra
Inc.* 14,054 495
Zeigler Coal Holding Co. 8,000 118
--------
6,333
--------
FOOD-AGRICULTURE--2.3%
AG Chemical Equipment
Inc. 2,700 44
AGCO Corp. 12,300 311
Bob Evans Farms, Inc. 12,900 204
Chiquita Brands
International Inc. 15,000 219
Coca-Cola Bottling Co. 3,000 101
Delta & Pine Land Co. 5,698 254
Dimon Inc. 12,100 206
Dreyers Grand Ice Cream
Inc. 3,300 113
Farmer Brothers Co. 500 68
Flowers Industries, Inc. 17,650 236
Hudson Foods Inc. Class
A 9,350 124
International Multifoods
Corp. 5,100 96
Interstate Bakeries
Corp. (New) 11,100 264
J.M. Smucker Co. Class A 8,900 188
J.M. Smucker Co. Class B
(Non Voting) 3,500 70
JP Foodservice, Inc.* 4,100 90
Lance Inc. 9,200 145
Mississippi Chemical
Corp. (New) 7,000 142
Mycogen Corp.* 8,500 149
Ralcorp Holdings, Inc.* 9,666 213
Richfood Holdings Inc. 9,700 317
Savannah Foods &
Industries Inc. 7,400 80
Seaboard Corp. 500 108
Smithfield Foods Inc.* 6,200 184
Terra Industries Inc. 14,700 193
WLR Foods, Inc. 4,950 60
--------
4,179
--------
</TABLE>
14
<PAGE> 19
SchwabFunds(R)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
GOLD--0.3%
Battle Mountain Gold Co. 22,900 $ 203
FMC Gold Co. 21,000 134
FirstMiss Gold Inc.* 7,571 234
--------
571
--------
HEALTHCARE--9.5%
Acuson* 8,600 163
Advanced Technology
Laboratories, Inc.* 4,500 146
Advanced Tissue Sciences
Inc.* 11,300 192
Agouron Pharmaceuticals
Inc.* 3,000 122
Alliance Pharmaceutical
Corp.* 8,000 146
Alpharma, Inc. Class A 6,300 154
Amsco International,
Inc.* 10,700 155
Ballard Medical Products 9,900 197
Benson Eyecare Corp.* 8,700 79
Bio Rad Laboratories
Inc. Class A* 2,700 126
Block Drug Inc. Class A 6,105 227
Boston Scientific Corp.* 6,583 284
CNS, Inc. 5,100 100
Cardinal Health Inc. 1,492 94
Carrington Laboratories
Inc.* 2,200 62
Carter Wallace Inc. 13,500 213
Chantal Pharmaceutical
Corp. (New)* 4,600 31
Cognex Corp. 7,800 207
Community Health Systems
Inc.* 5,700 247
Community Psychiatric
Centers 13,100 121
Conmed Corp. 2,900 87
Copley Pharmaceutical
Inc.* 4,764 73
Cygnus Therapeutic
Systems, Inc.* 6,000 129
Daig Corp. 5,000 117
Datascope Corp.* 5,200 92
Diagnostic Products
Corp. 4,300 180
Enzo Biochem Inc. 5,775 106
Fresenius U.S.A. Inc.* 6,700 134
Genesis Health Ventures,
Inc. 6,900 204
Gilead Sciences Inc.* 8,500 261
GranCare, Inc.* 6,100 110
Gulf South Medical
Supply Inc. 4,000 164
Haemonetics Corp.* 9,700 187
HealthSouth
Rehabilitation Corp. 12,488 464
Herbalife International
Inc. 7,900 109
Human Genome Sciences
Inc.* 5,700 227
I-Stat Corp.* 4,100 119
ICN Pharmaceuticals,
Inc. 9,301 209
IDEXX Laboratories Inc. 6,800 303
Immulogic Pharmaceutical
Corp.* 6,000 66
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Immunex Corp. (New)* 11,800 $ 185
Interneuron
Pharmaceuticals* 10,100 395
Invacare Corp. 8,400 216
Isis Pharmaceuticals* 8,000 101
Isolyser Inc. 9,100 159
Kinetic Concepts Inc. 13,400 199
Life Technologies, Inc.
(New) 5,100 145
Ligand Pharmaceuticals
Inc. Class B 8,200 121
Lincare Holdings Inc.* 8,200 318
Liposome Inc.* 8,500 209
Living Centers of
America* 6,200 229
Medimmune Inc.* 5,900 99
Medisense Inc.* 5,000 224
Mentor Corp. 6,800 159
Multicare Cos. Inc. 5,200 148
Natures Sunshine
Products Inc. 5,500 136
Nellcor Puritan Bennett
Inc.* 7,496 367
Neoprobe Corp.* 4,500 78
Neurogen Corp.* 4,300 121
Nexstar Pharmaceuticals
Inc.* 7,400 181
North American Vaccine
Inc.* 9,400 194
Novacare Inc.* 19,080 138
Omnicare Inc. 6,600 396
Organogenesis Inc. 4,200 74
Owens & Minor Inc. (New) 8,700 117
PDT Inc. 3,400 162
PHP Healthcare Corp. 3,000 92
PLC Systems Inc.* 5,200 155
Patterson Dental Co.* 4,950 149
Physician Sales &
Service Inc. 10,600 290
Physicians Health
Services, Inc. Class
A* 3,000 98
Protein Design Labs,
Inc.* 4,800 127
Pyxis Corp.* 10,700 272
Quintiles Transnational
Corp. 6,100 446
Regeneron
Pharmaceuticals Inc.* 7,600 108
Renal Treatment Centers
Inc. 6,800 197
Research Medical Inc.* 2,600 65
Respironics Inc. 5,100 110
RoTech Medical Corp. 4,000 166
Roberts Pharmaceutical
Corp.* 5,700 107
Salick Health Care,
Inc.* 3,600 137
Sepracor Inc.* 6,300 88
Sequus Pharmaceuticals
Inc.* 7,700 135
Sofamor/Danek Group
Inc.* 7,000 229
Sola International Inc.* 6,300 206
</TABLE>
15
<PAGE> 20
SchwabFunds(R)
- --------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(R)
STATEMENT OF NET ASSETS
April 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Somatogen Inc.* 7,400 $ 123
SpaceLabs Medical Inc.* 2,800 63
Summit Technology Inc. 7,650 137
Sunrise Medical Inc.* 4,300 78
Target Therapeutics Inc. 4,300 233
Tecnol Medical Products
Inc.* 6,100 120
Thermedics Inc.* 8,200 248
Thermo Cardiosystems
Inc. 4,700 334
Thermotrex Corp.* 5,700 299
Ventritex Inc.* 7,000 109
Vertex Pharmaceuticals
Inc.* 4,800 142
VISX Inc.* 4,900 167
Vital Signs Inc. 4,400 93
Vivra Inc. 8,850 280
Vivus* 4,400 133
Watson Pharmaceuticals
Inc.* 9,356 447
West Co Inc. 5,300 121
--------
17,582
--------
HOUSEHOLD PRODUCTS--0.3%
Bush Boake Allen Inc.* 5,600 151
Church & Dwight Inc. 6,100 134
Libbey Inc. 4,300 100
Playtex Products Inc.* 18,800 165
--------
550
--------
IMAGING & PHOTO--0.7%
Avid Technology, Inc.* 6,500 126
BMC Industries, Inc. 8,200 219
C-Cube Microsystems,
Inc. 9,400 463
Chyron Corp.* 24,200 97
Circon Corp.* 3,200 47
OIS Optical Imaging
Systems Inc.* 27,400 110
Photronic, Inc. 2,950 78
Robotic Vision Systems
Inc.* 4,100 70
Ultratech Stepper Inc. 5,900 153
--------
1,363
--------
INSURANCE--5.2%
Acordia, Inc. 4,300 137
Alexander & Alexander
Services 12,500 236
Alfa Corp. 11,700 152
Allied Group Inc. 2,600 93
American Annuity Group,
Inc. 12,350 154
American Bankers
Insurance Group, Inc. 5,800 228
American Heritage Life
Investment Corp. 5,200 121
American Travellers
Corp. 3,900 77
Argonaut Group, Inc. 7,700 241
Arthur J. Gallagher &
Co. 4,500 146
CMAC Investment Corp. 3,800 213
Capital Re Corp. 5,400 203
Capitol American
Financial Corp. 6,500 157
Capsure Holdings Corp.* 4,200 74
Citizens Corp. 10,800 211
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Commerce Group Inc. 10,600 $ 212
Compdent Corp.* 3,500 154
Crawford & Co. Class A 4,300 70
Crawford & Co. Class B 9,900 161
Delphi Financial Group,
Inc. Class A* 6,000 167
E.W. Blanch Holdings
Inc. 3,500 72
Enhance Financial
Services Group Inc. 7,100 193
Executive Risk Inc. 3,100 96
Financial Security
Assured Holdings Ltd. 7,700 208
Foremost Corp. of
America 3,400 182
Fremont General Corp. 7,620 191
Frontier Insurance
Group, Inc. 4,250 137
GAINSCO, Inc. 6,000 70
HCC Insurance Holdings,
Inc. 3,900 228
Harleysville Group Inc. 4,600 127
Home Beneficial Corp.
Class B 4,400 114
Horace Mann Educators
Corp. (New) 6,500 214
Integon Corp. 3,900 75
John Alden Financial
Corp. 8,200 160
Kansas City Life
Insurance Co. 1,600 88
Liberty Corp. 6,300 200
Life Partners Group Inc. 7,900 165
Life Re Corp. 4,400 131
MAIC Holdings Inc. 2,572 84
Markel Corp.* 2,300 189
NAC Re Corp. 5,900 193
National Re Corp. 5,500 195
Nymagic Inc. 2,000 37
Orion Capital Corp. 4,400 195
Oxford Health Plans Inc. 4,400 223
Penncorp Financial Group
Inc. 7,900 242
Presidential Life Corp. 9,800 96
Reinsurance Group of
America Inc. 6,600 274
Selective Insurance
Group, Inc. 4,400 139
Sierra Health Services
Inc.* 5,800 191
State Auto Financial
Corp. 3,100 75
Trenwick Group Inc. 2,300 111
United Companies
Financial Corp. 9,040 290
United Dental Care Inc.* 2,300 91
United Insurance
Companies, Inc. 11,100 236
United Wisconsin
Services, Inc. 4,000 89
Vesta Insurance Group
Inc. 6,750 217
W.R. Berkley Corp. 5,900 254
</TABLE>
16
<PAGE> 21
SchwabFunds(R)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Washington National
Corp. 4,900 $ 135
Zenith National
Insurance Corp. 5,500 138
--------
9,552
--------
MEDIA--3.2%
AMC Entertainment Inc.* 4,700 122
BET Holdings, Inc. Class
A* 3,100 91
Cablevision Systems
Corp. Class A* 3,500 175
Carmike Cinemas Inc.* 2,500 67
Central Newspapers Inc.
Class A 7,500 273
Century Communications
Corp. Class A* 22,637 219
Citicasters Inc. 5,600 168
Clear Channel
Communications 950 64
Emmis Broadcasting Corp.
Class A* 2,800 121
Evergreen Media* 5,500 218
GC Companies Inc.* 2,380 86
Harte Hanks
Communications (New) 8,500 201
Heartland Wireless
Communications, Inc.* 4,500 126
Houghton Mifflin Co. 4,500 209
Interdigital Commerce
Corp.* 11,700 97
International Cabletel
Inc. 9,333 275
International Family
Entertainment Inc.
Class B 13,125 200
Jacor Communications
Inc.* 5,600 120
John Wiley & Son, Inc.
Class A 5,800 200
McClatchy Newspapers
Inc. Class A 8,400 204
Media General, Inc.
Class A 7,800 300
Meredith Corp. 6,800 309
Movie Gallery Inc.* 3,000 93
New World Communications
Class A* 8,000 150
Oak Industries Inc.* 4,500 122
Paxson Communications
Corp. 8,000 119
Pulitzer Publishing Co. 5,325 304
Regal Cinemas, Inc. 5,800 237
Renaissance
Communications Corp. 8,400 232
Silver King
Communications Inc.* 1,800 53
TCA Cable TV Inc. 7,000 206
United International
Holdings Inc. Class A* 7,200 104
United Television Inc. 2,600 230
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Westcott Communications
Inc.* 5,500 $ 117
Westwood One Inc.* 8,900 157
--------
5,969
--------
MISCELLANEOUS FINANCE--3.3%
1st Source Corp. 3,184 72
AMCORE Financial, Inc. 4,100 83
Aames Financial Corp. 2,500 110
Alex Brown Inc. 4,500 244
Americredit Corp.* 9,000 129
Astoria Financial Corp. 4,000 214
Bok Financial Corp.
(New) 6,050 126
Cal-Federal Bancorp
Inc.* 14,600 261
California Federal Bank* 960 7
Coast Savings Financial
Inc.* 5,600 174
Collective Bancorp Inc. 6,400 155
Commercial Federal Corp. 4,800 184
Downey Financial Corp. 5,515 119
Eaton Vance Corp. (Non
Voting) 3,500 108
First American Financial
Corp. 3,600 99
First Financial Corp. 8,400 198
Fund American
Enterprises Holdings,
Inc. 2,709 207
Glendale Federal Bank
(FSB) (New)* 12,000 210
Great Financial Corp. 4,700 129
Home Financial Corp. 6,700 94
Inter-Regional Financial
Group, Inc. 3,650 80
Interpool Inc. 5,600 101
JSB Financial, Inc. 2,800 95
Leader Financial Corp. 3,500 155
Legg Mason, Inc. 4,500 129
Money Store Inc. 16,575 421
Morgan Keegan, Inc. 5,500 67
North American Mortgage
Co. 3,800 64
Olympic Financial Ltd.* 6,600 147
Peoples Heritage
Financial Group, Inc. 4,900 103
Pioneer Group Inc. 7,300 193
Quick & Reilly Group,
Inc. 7,080 216
RCSB Financial Inc. 3,600 85
Raymond James Financial
Inc. 5,600 127
Roosevelt Financial
Group Inc. 11,400 219
Sovereign Bancorp Inc. 13,312 148
St. Paul Bancorp Inc. 6,000 146
Standard Financial Inc. 4,300 64
Student Loan Corp. 6,000 215
Value Line, Inc. 3,300 115
WFS Financial Inc.* 7,300 146
Westcorp Inc. 8,096 159
--------
6,118
--------
</TABLE>
17
<PAGE> 22
SchwabFunds(R)
- --------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(R)
STATEMENT OF NET ASSETS
April 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
MOTOR VEHICLE--1.4%
A.O. Smith Corp. Class B 6,600 $ 152
Arctco, Inc. 8,150 79
Arvin Industries, Inc. 7,300 164
Borg Warner Automotive
Inc. 7,400 282
Breed Technologies Inc. 9,800 211
Detroit Diesel Corp.* 8,900 170
Federal Mogul Corp. 10,300 196
Gentex Corp.* 5,000 197
Hayes Wheels
International Inc. 5,400 164
Mascotech Inc. 16,500 217
Modine Manufacturing Co. 9,000 248
Standard Products Co. 5,100 129
Superior Industries
International, Inc. 8,700 238
Titan Wheel
International Inc. 7,225 117
--------
2,564
--------
NON-FERROUS--0.8%
A.M. Castle & Co. 3,000 101
Brush Wellman Inc. 4,000 75
Coeur d'Alene Mines
Corp. 6,000 119
Commercial Metals Co. 5,233 157
Hecla Mining Co.* 15,400 119
Imco Recycling Inc. 3,200 70
Minerals Technologies
Inc. 6,500 250
Mueller Industries Inc. 5,600 225
Stillwater Mining Co.* 6,000 143
Sunshine Mining &
Refining Co.* 53,700 87
Wolverine Tube Inc.* 3,800 140
--------
1,486
--------
OIL-DOMESTIC--0.8%
Barrett Resources Corp.* 6,900 191
Cross Timbers Oil Co. 4,900 98
Diamond Shamrock Inc. 9,000 305
Pogo Producing Co. 9,000 325
Quaker State Corp. 9,900 156
Smith International
Inc.* 10,100 300
Snyder Oil Corp. 8,200 74
--------
1,449
--------
PAPER--1.0%
Caraustar Industries
Inc. 7,600 191
Chesapeake Corp. 7,700 222
Longview Fibre Co. 14,700 259
P.H. Glatfelter Co. 12,700 211
Rock Tennessee Co. Class
A 9,000 158
Shorewood Packaging
Corp.* 6,100 105
Thermo Fibertek Inc. 16,050 367
Wausau Paper Mills Co. 11,320 260
--------
1,773
--------
PRODUCER GOODS-MANUFACTURING--7.0%
Albany International
Corp. Class A (New) 9,000 194
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
American Financial
Enterprises Inc. 3,500 $ 85
Applied Power Inc. Class
A 4,600 144
AptarGroup, Inc. 5,500 207
BT Office Products
International Inc.* 10,200 177
BW/IP Holding, Inc.
Class A 6,900 143
Baldor Electric Co. 8,540 185
Barnes Group Inc. 1,600 74
Bearings Inc. (New) 3,700 118
Blyth Industries Inc. 7,200 286
Boise Cascade Office
Products Corp. 7,600 595
Clarcor Inc. 5,000 99
Coherent Inc.* 3,400 183
Collins & Aikman Corp.* 20,700 145
Commercial Intertech
Corp. 4,950 94
Corporate Express, Inc. 5,400 202
Credence Systems Corp. 6,750 146
Donaldson Inc. 7,000 184
Duriron Inc. 6,900 181
Fisher Scientific
International, Inc. 4,700 176
General Binding Corp. 5,000 115
Giddings & Lewis Inc. 9,900 183
Goulds Pumps Inc. 6,400 150
Graco Inc. 5,475 110
Greenfield Industries
Inc. 5,200 197
Griffon Corp.* 7,600 68
Harnischfeger Industries
Corp. 4,369 177
Helix Technology Corp. 3,300 124
Herman Miller Inc. 7,100 218
IDEX Corp. 5,650 222
Insilco Corp.* 3,200 111
Interface Inc. Class A 4,400 57
Intermagnetics General
Corp. 4,300 69
Ionics Inc. 4,200 202
JLG Industries Inc. 4,200 230
Juno Lighting Inc. 5,600 83
Kaydon Corp. 5,100 203
Kennametal Inc. 8,900 337
Keystone International
Inc. 10,100 221
Lawson Products, Inc. 3,900 90
Lincoln Electric Co. 2,600 70
Lincoln Electric Co.
Class A (Non Voting) 7,100 201
Lydall Inc. 5,800 136
Measurex Corp. 4,600 133
Mine Safety Appliances
Co. 1,600 71
Myers Industry Inc. 5,450 99
NN Ball & Roller, Inc. 4,400 110
</TABLE>
18
<PAGE> 23
SchwabFunds(R)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Navistar International
Corp.* 20,550 $ 247
Nu-Kote Holding Inc.
Class A 5,900 105
Precision Castparts
Corp. 5,800 252
Presstek Inc. 4,350 604
Roper Industries 4,400 207
SPS Technologies, Inc. 1,500 98
Standex International
Corp. 4,000 108
Stewart & Stevenson
Services, Inc. 10,400 307
TRINOVA Corp. 8,600 303
Teleflex Inc. 6,150 285
Tencor Instruments 10,000 247
Texas Industries Inc. 3,600 230
TriMas Corp. 10,800 255
Triarc Cos., Inc. Class
A* 8,900 112
U.S. Filter Corp. (New) 8,300 255
UNR Industries, Inc. 14,600 135
Valhi, Inc. (New) 31,200 203
Valmont Industries, Inc. 4,500 145
WMS Industries Inc.* 7,000 127
Watts Industries Inc.
Class A 9,000 185
Westinghouse Air Brake
Co. (New) 8,700 123
Westpoint Stevens Inc.
Class A 10,100 213
Wyman Gordon Co.* 9,900 181
X-Rite, Inc. 6,000 105
Zero Corp. 3,600 65
Zurn Industries, Inc. 5,000 102
--------
12,804
--------
RAILROAD--0.1%
Florida East Coast
Industry Inc. 2,900 258
--------
REAL PROPERTY--0.4%
Avatar Holdings, Inc.* 2,400 94
Catellus Development
Corp.* 28,300 258
Forest City Enterprises,
Inc. Class A 3,100 117
Insignia Financial Group
Class A (New) 8,400 185
Price Enterprises Inc. 6,800 109
--------
763
--------
RETAIL--5.0%
Arbor Drugs, Inc. 6,700 137
Best Buy Co., Inc.* 12,100 233
Blair Corp. 3,100 81
Bruno's Inc. (New)* 402 5
Burlington Coat Factory
Warehouse* 10,900 119
CDW Computer
Centers Inc.* 4,300 332
Carson Pirie Scott &
Co.* 5,200 126
Casey's General Stores
Inc. 8,300 179
Charming Shoppes Inc. 28,900 186
Circle K Corp.* 7,800 244
Claire's Stores Inc. 9,300 202
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
CompUSA Inc. 12,200 $ 422
Consolidated Stores
Corp.* 6,100 220
Dollar Tree Stores Inc. 7,350 246
Duty Free International
Inc. 6,800 91
Family Dollar Stores,
Inc. 17,300 264
Fingerhut Companies,
Inc. 13,100 167
Fred Meyer Inc.* 8,500 244
Gymboree Corp.* 7,500 195
Hollywood Entertainment
Corp. 10,400 170
Home Shopping Network,
Inc.* 25,600 301
Just for Feet Inc. 5,350 256
Lands' End, Inc.* 10,000 198
MacFrugals Bargains-
Close-Out* 8,000 107
Michaels Stores Inc.* 5,600 103
Petco Animal Supplies
Inc. 6,300 183
Pier 1 Imports Inc. 11,745 157
Proffitt's, Inc.* 6,000 197
Quality Food Centers,
Inc. 4,600 121
Regis Corp. 3,500 129
Ross Stores Inc. 7,800 270
Ruddick Corp. 13,200 175
Service Merchandise Co.
Inc.* 28,562 136
Shopko Stores Inc. 12,800 198
Smart & Final Inc. 6,300 143
Smith's Food & Drug
Centers, Inc. Class B 6,700 168
Sotheby's Holdings, Inc.
Class A 17,000 240
Spiegel, Inc. Class A
(Non Voting) 32,600 326
Sports Authority Inc.* 6,100 181
Stanhome Inc. 5,700 168
Stein Mart Inc.* 6,300 100
Strawbridge & Clothier
Class A 2,800 52
Sunglass Hut
International Inc. 9,600 283
Tiffany & Co. (New) 5,100 333
United Stationers Inc. 7,980 181
Vitalink Pharmacy
Services, Inc.* 3,600 81
Waban Inc.* 9,400 230
Williams-Sonoma Inc.* 7,400 185
Zale Corp. (New)* 9,500 179
--------
9,244
--------
STEEL--1.0%
Armco Inc.* 30,400 171
Birmingham Steel Corp. 8,300 133
Carpenter Technology
Corp. 4,700 177
Chaparral Steel Co. 8,000 121
Cleveland Cliffs Inc. 3,700 154
Intermet Corp.* 9,200 135
J & L Specialty Steel
Inc. 12,000 218
Lukens Inc. 4,150 109
</TABLE>
19
<PAGE> 24
SchwabFunds(R)
- --------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(R)
STATEMENT OF NET ASSETS
April 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
National Steel Corp.
Class B* 11,700 $ 159
Oregon Steel Mills Inc. 6,300 100
Quanex Corp. 4,000 88
Rouge Steel Co. Class A 3,500 78
WHX Corp.* 11,700 135
--------
1,778
--------
TELEPHONE--3.3%
American Mobile
Satellite Corp.* 7,300 141
Andrew Corp. 1,912 92
Antec Corp.* 6,900 105
Arch Communications
Group, Inc.* 5,600 133
Aspect
Telecommunications
Corp. 6,600 380
Associated Group Inc.
Class A* 5,600 156
Boston Technology Inc.
(New)* 8,400 147
C-TEC Corp. 8,300 248
California Microwave* 4,700 86
Cellstar Corp.* 6,200 58
Centennial Cellular
Corp. Class A* 4,300 70
Cidco Inc.* 4,300 153
Coherent Communications
Systems Corp. 4,000 76
Colonial Data
Technologies* 4,500 102
Comnet Cellular Inc.* 4,700 156
Echostar Communications
Corp. Class A* 3,500 116
General Datacom
Industries Inc.* 5,000 69
Geotek Communications
Inc.* 14,900 156
InterVoice, Inc.* 4,400 123
LCI International Inc. 16,200 421
Lincoln
Telecommunications 11,400 192
Microcom Inc.* 4,800 118
Midcom Communications
Inc.* 4,100 30
Mobilemedia Corp. Class
A* 8,000 159
Octel Communications
Corp. 7,200 324
P-Com Inc. 5,200 130
Pairgain Technologies
Inc.* 4,400 421
PictureTel Corp. (New) 6,600 224
Plantronics, Inc. (New)* 2,300 92
Stratacom Inc. 2,800 146
U.S. Robotics, Inc. 6,800 1,065
Vanguard Cellular
Systems, Inc. Class A* 12,550 270
--------
6,159
--------
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
TRANSPORTATION-
MISCELLANEOUS--2.0%
Air Express
International Corp. 5,100 $ 142
Airbourne Freight Corp. 6,100 161
Amerco Inc.* 10,500 233
American Freightways
Corp.* 8,800 134
American President
Companies, Ltd. 7,100 170
Arnold Industries Inc. 7,400 118
Expeditores
International of
Washington Inc. 3,900 115
Greyhound Lines Inc. 12,400 44
Harper Group, Inc. 5,000 96
Heartland Express, Inc. 5,864 173
J.B. Hunt Transport
Services Inc. 11,850 244
Kirby Corp.* 7,800 137
Landstar Systems, Inc.* 3,700 103
M.S. Carriers, Inc.* 4,000 77
NACCO Industries, Inc.
Class A 3,300 208
Overseas Shipholding
Group 11,200 225
Rollins Truck Leasing
Corp. 11,900 129
Shurgard Storage Centers
Inc. Class A 6,800 174
Swift Transportation
Inc. 7,500 143
TNT Freightways Corp. 6,700 151
Wabash National Corp. 4,900 97
Werner Enterprises Inc. 7,300 180
XTRA Corp. 5,200 237
Yellow Corp. 8,600 105
--------
3,596
--------
TRAVEL & RECREATION--1.7%
Anchor Gaming* 3,800 168
Anthony Industries, Inc. 6,415 183
Aztar Corp.* 10,400 101
Bally Entertainment
Corp. 13,600 284
Boyd Gaming Corp.* 16,200 227
Doubletree Corp.* 5,800 185
Grand Casinos Inc. 6,900 223
Marcus Corp. 5,550 155
Players International
Inc. 8,900 101
Polaris Industries Inc. 8,200 286
Primadonna Resorts Inc.* 8,900 170
Prime Hospitality Corp.* 8,900 135
Rio Hotel & Casino Inc.* 6,100 110
Showboat, Inc. 5,300 170
Speedway Motorsports,
Inc. 11,000 294
Station Casinos Inc.* 10,300 135
Stratosphere Corp.* 16,700 183
Topps Inc. 12,200 71
--------
3,181
--------
</TABLE>
20
<PAGE> 25
SchwabFunds(R)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
UTILITIES--4.1%
Aquila Gas Pipeline
Corp. 8,800 $ 122
Atmos Energy Corp. 4,000 99
Bay State Gas Co. 4,200 117
Black Hills Corp. 4,400 110
Central Hudson Gas &
Electric Corp. 5,300 154
Central Louisiana
Electric Co. (New) 6,200 159
Central Maine Power Co. 9,400 134
Cilcorp Inc. 4,000 173
Commonwealth Energy
System (Shares of
Beneficial Interest) 3,600 165
Destec Energy, Inc.* 16,000 188
Eastern Enterprises 6,300 226
Eastern Utilities
Association 6,000 122
Empire District Electric
Co. 4,400 80
Energen Corp. 2,800 64
IES Industries Inc. 8,300 220
Indiana Energy Inc. 6,700 160
Interstate Power Co. 3,000 92
K N Energy Inc. 8,668 277
Laclede Gas Co. 5,300 125
MDU Resources Group,
Inc. 8,200 179
Madison Gas & Electric
Co. 5,400 132
New Jersey Resources
Corp. 5,400 153
Northwest Natural Gas
Co. 4,500 147
Northwestern Public
Service Co. 2,400 67
Oneok Inc. 7,900 203
Orange & Rockland
Utilities, Inc. 4,600 157
Otter Tail Power Co. 3,500 128
Philadelphia Suburban
Corp. 3,300 77
Piedmont Natural Gas
Inc. 9,400 203
Primark Corp.* 6,600 234
Public Service Co. of
New Mexico 12,000 210
Public Service Co. of
North Carolina Inc. 6,000 97
Seagull Energy Corp.* 11,100 271
Sierra Pacific Resources 8,500 206
Sig Corp. 4,966 166
South Jersey Industries
Inc. 2,800 65
Southern Union Co. (New) 4,133 91
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
Southwest Gas Corp. 6,900 $ 115
Southwestern Energy Co. 6,900 96
Tejas Gas Corp. 3,630 182
Thermo Ecotek Corp. 4,200 99
Tuscon Electric Power
Co.* 47,100 135
UGI Corp. (New) 9,800 219
United Illuminating Co. 4,400 160
United Water Resources
Inc. 9,300 116
WPS Resources Corp. 7,000 221
Washington Energy Co. 7,100 138
Western Gas Resources
Inc. 7,500 111
Wicor Inc. 5,700 196
Williams Cos. Inc. 206 11
Yankee Energy System,
Inc. 3,900 85
--------
7,457
--------
TOTAL COMMON STOCK
(Cost $142,852) 181,721
--------
<CAPTION>
Maturity
(000s)
---------
<S> <C> <C>
CASH EQUIVALENTS--1.1%
REPURCHASE AGREEMENT--1.1%
State Street Bank 4.75%
Dated 04/30/96
Due 05/01/96
Collateralized By:
U.S. Treasury Note
$2,100,000 Par; 8.00%
Due 10/15/96 $ 1,990 1,990
--------
TOTAL CASH EQUIVALENTS
(Cost $1,990) 1,990
--------
TOTAL INVESTMENTS -- 99.7%
(Cost $144,842) 183,711
--------
OTHER ASSETS AND
LIABILITIES--0.3%
Other Assets 860
Liabilities (257)
--------
603
--------
NET ASSETS--100.0%
Applicable to 13,423,537
outstanding $0.00001
par value shares
(unlimited shares authorized) $184,314
========
NET ASSET VALUE PER SHARE $13.73
======
</TABLE>
- ------------------
*Non-Income Producing Security
See accompanying Notes to Financial Statements.
21
<PAGE> 26
SchwabFunds(R)
- --------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(R)
STATEMENT OF OPERATIONS (in thousands)
Six months ended April 30, 1996 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Dividends $ 834
Interest 49
--------
Total investment income 883
--------
Expenses:
Investment advisory and administration fee 367
Transfer agency and shareholder service fees 183
Custodian fees 49
Registration fees 38
Professional fees 17
Shareholder reports 28
Trustees' fees 10
Amortization of deferred organization costs 8
Insurance and other expenses 2
--------
702
Less expenses reduced (269)
--------
Total expenses incurred by Fund 433
--------
Net investment income 450
--------
Net realized gain (loss) on investments:
Proceeds from sales of investments 20,951
Cost of investments sold (21,463)
--------
Net realized loss on investments sold (512)
--------
Change in net unrealized gain (loss) on investments:
Beginning of period 13,626
End of period 38,869
--------
Increase in net unrealized gain on investments 25,243
--------
Net gain on investments 24,731
--------
Increase in net assets resulting from operations $ 25,181
========
</TABLE>
See accompanying Notes to Financial Statements.
22
<PAGE> 27
SchwabFunds(R)
- --------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(R)
STATEMENT OF CHANGES IN NET ASSETS (in thousands)
<TABLE>
<CAPTION>
Six months
ended Year
April 30, ended
1996 October 31,
(Unaudited) 1995
----------- -----------
<S> <C> <C>
Operations:
Net investment income $ 450 $ 596
Net realized gain (loss) on investments sold (512) 291
Increase in net unrealized gain on
investments 25,243 13,029
-------- --------
Increase in net assets resulting from
operations 25,181 13,916
-------- --------
Dividends to shareholders from
net investment income (673) (408)
-------- --------
Capital share transactions:
Proceeds from shares sold 54,070 64,687
Net asset value of shares issued in
reinvestment of dividends 605 364
Early withdrawal fees 25 41
Less payments for shares redeemed (16,968) (24,654)
-------- --------
Increase in net assets from capital share
transactions 37,732 40,438
-------- --------
Total increase in net assets 62,240 53,946
Net assets:
Beginning of period 122,074 68,128
-------- --------
End of period (including undistributed net
investment income of $261 and $484,
respectively) $ 184,314 $ 122,074
======== ========
Number of Fund shares:
Sold 4,302 5,910
Reinvested 49 38
Redeemed (1,359) (2,296)
-------- --------
Net increase in shares outstanding 2,992 3,652
Shares outstanding:
Beginning of period 10,432 6,780
-------- --------
End of period 13,424 10,432
======== ========
</TABLE>
See accompanying Notes to Financial Statements.
23
<PAGE> 28
SchwabFunds(R)
- --------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(R)
NOTES TO FINANCIAL STATEMENTS
Six months ended April 30, 1996 (Unaudited)
1. DESCRIPTION OF THE FUND
The Schwab Small-Cap Index Fund (the "Fund") is a series of Schwab Capital Trust
(the "Trust"), a no-load, open-end investment management company organized as a
Massachusetts business trust on May 7, 1993 and registered under the Investment
Company Act of 1940, as amended.
In addition to the Fund, the Trust also offers the Schwab International Index
Fund(TM), Schwab Asset Director(R)-High Growth Fund, Schwab Asset
Director-Conservative Growth Fund, Schwab Asset Director-Balanced Growth Fund
and Schwab S&P 500 Fund. 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
The following significant accounting policies are in conformity with generally
accepted accounting principles for investment companies. The preparation of
financial statements in accordance with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates.
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 by
the Fund's investment manager pursuant to guidelines adopted in good faith by
the Board of Trustees. 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 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.
24
<PAGE> 29
SchwabFunds(R)
- --------------------------------------------------------------------------------
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.
At April 30, 1996, (for financial reporting and federal income tax purposes),
net unrealized gain aggregated $38,869,000, of which $44,427,000 related to
appreciated securities and $5,558,000 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
$367,000 during the six months ended April 30, 1996, before the Investment
Manager reduced its fee (see Note 4).
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, 1996, the Fund incurred transfer agency and
shareholder service fees of $183,000, before Schwab reduced its fees (see Note
4).
Officers and trustees -- Certain officers and trustees of the Trust were also
officers and/or directors of the Investment Manager and/or Schwab. During the
six months ended April 30, 1996, 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 $10,000
related to the Trust's unaffiliated trustees.
4. 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, 1996, the total of such fees reduced by the Investment
Manager and Schwab was $147,000 and $122,000, respectively.
25
<PAGE> 30
SchwabFunds(R)
- --------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(R)
NOTES TO FINANCIAL STATEMENTS
Six months ended April 30, 1996 (Unaudited)
5. 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, 1996, no borrowings
were made under this arrangement.
6. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities, other than short-term obligations,
aggregated (in thousands) $57,109 and $20,951, respectively, for the six months
ended April 30, 1996.
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, 1996, total early withdrawal fees
retained by the Fund amounted to $25,000.
8. COMPOSITION OF NET ASSETS
At April 30, 1996, net assets consisted of:
<TABLE>
<S> <C>
Capital paid in $145,933,000
Accumulated undistributed net investment income 261,000
Accumulated net realized loss on investments sold (749,000)
Net unrealized gain on investments 38,869,000
------------
Total $184,314,000
============
</TABLE>
At April 30, 1996, the Fund's Statement of Net Assets included: $72,000 payable
for investments purchased, $98,000 payable for Fund shares redeemed, $17,000
payable for investment advisory and administration fee and $724,000 receivable
for Fund shares sold.
26
<PAGE> 31
SchwabFunds(R)
- --------------------------------------------------------------------------------
9. FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the
period:
<TABLE>
<CAPTION>
Six months
ended
April 30, Year ended Period ended
1996 October 31, October 31,
(Unaudited) 1995 1994(1)
----------- ----------- ------------
<S> <C> <C> <C>
Net asset value at beginning of period..... $ 11.70 $ 10.05 $ 10.00
Income from investment operations
- -----------------------------------
Net investment income.................... .06 .10 .06
Net realized and unrealized gain on
investments............................ 2.03 1.61 --
-------- -------- -------
Total from investment operations......... 2.09 1.71 .06
Less distributions
- -----------------
Dividends from net investment income..... (.06) (.06) (.01)
Distributions from realized gain on
investments............................ -- --
-------- -------- -------
Total distributions...................... (.06) (.06) (.01)
-------- -------- -------
Net asset value at end of period........... $ 13.73 $ 11.70 $ 10.05
======== ======== =======
Total return (%)........................... 17.93 17.11 .63
- ----------------
Ratios/Supplemental data
- -------------------------
Net assets, end of period (000s)......... $ 184,314 $ 122,074 $ 68,128
Ratio of expenses to average net assets
(%).................................... .59* .68 .67*
Ratio of net investment income to
average net assets (%)................. .61* .68 .68*
Portfolio turnover rate (%).............. 10 24 16
Average commission rate.................. $ .03
</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, 1996, October 31, 1995 and 1994, would have been .96%*, 1.02% and
1.19%*, respectively, and the ratio of net investment income to average net
assets would have been .24%*, .34% and .16%*, respectively.
(1) For the period December 3, 1993 (commencement of operations) to October 31,
1994.
* Annualized
27
<PAGE> 32
THIS SPACE RESERVED FOR YOUR COMMENTS AND QUESTIONS.
A SCHWAB REPRESENTATIVE WILL BE HAPPY TO ASSIST YOU.
<PAGE> 33
THE SCHWABFUNDS FAMILY(R)
The SchwabFunds Family includes a variety of funds to help meet your investment
needs. You can diversify your portfolio with one investment in any of the three
Asset Director(R) Funds, or choose from several equity markets with our equity
funds, including two new funds, the Schwab S&P 500 Fund and the Schwab Analytics
Fund(TM). You can also select from different maturities with our bond fund
choices, and take advantage of an array of money market funds.
SCHWAB ASSET ALLOCATION FUNDS
Schwab Asset Director-High Growth Fund
Schwab Asset Director-Balanced Growth Fund
Schwab Asset Director-Conservative Growth Fund
SCHWAB EQUITY FUNDS
Schwab 1000 Fund(R)
Schwab S&P 500 Fund
Schwab Small-Cap Index Fund(R)
Schwab International Index Fund(TM)
Schwab Analytics Fund(TM)
SCHWAB BOND FUNDS
Schwab Government Bond Funds-
Long-Term and Short/Intermediate Term
Schwab Tax-Free Bond Funds-
Long-Term and Short/Intermediate Term
Schwab California Tax-Free Bond Funds-
Long-Term and Short/Intermediate Term
SCHWAB MONEY MARKET FUNDS
Schwab offers several money market funds that seek high current income with
safety and liquidity. (1) Choose from taxable or tax-exempt alternatives. Many
can be linked to your Schwab account to "sweep" cash balances automatically when
you're between investments. Or, for your larger cash reserves, choose one of our
Value Advantage Investments(TM).
Please call the number below for a free prospectus and brochure for any of the
SchwabFunds(R). Each prospectus provides more complete information, including
charges and expenses. Please read it carefully before investing.
1-800-2 NO-LOAD
1-800-266-5623
1. Investments in money market funds are neither insured nor guaranteed by the
U.S. government, and there is no assurance that the Funds will be able to
maintain a stable share price of $1.
<PAGE> 34
--------------
BULK RATE
U.S. POSTAGE
PAID
CHARLES SCHWAB
--------------
[SCHWABFUNDS FAMILY(R) 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.
TF4136R(6/96) CRS 10323 Printed on recycled paper.
