<PAGE> 1
As filed with the Securities and Exchange Commission on AUGUST 14, 1998
FILE NOS. 33-62470 AND 811-7704
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 26 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 28 [X]
--------------
SCHWAB CAPITAL TRUST
(Exact Name of Registrant as Specified in Charter)
101 Montgomery Street, San Francisco, California 94104
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code:
(415) 627-7000
William J. Klipp, Chief Operating Officer
Schwab Capital Trust
101 Montgomery Street, San Francisco, California 94104
(Name and Address of Agent for Service)
Copies of communications to:
<TABLE>
<S> <C>
Martin E. Lybecker, Esq. Frances Cole, Esq.
Ropes & Gray Charles Schwab Investment Management, Inc.
1301 K Street, N.W., Suite 800 East 101 Montgomery Street
Washington, D.C. 20005 San Francisco, CA 94104
</TABLE>
It is proposed that this filing will become effective (check appropriate box)
/ / Immediately upon filing pursuant to paragraph (b)
/ / On (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / On (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/X/ On October 28, 1998 pursuant to paragraph (a)(2) of Rule 485
if appropriate, check the following box:
/ / This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE> 2
CROSS REFERENCE SHEET
SCHWAB CAPITAL TRUST:
INSTITUTIONAL SELECT LARGE-CAP FUND
INSTITUTIONAL SELECT LARGE-CAP VALUE INDEX FUND
INSTITUTIONAL SELECT SMALL-CAP INDEX FUND
<TABLE>
<CAPTION>
Part A Prospectus Caption
- ------ ------------------
<S> <C>
Item 1. Cover Page Cover Page
Item 2. Synopsis Expenses; Key Features
Item 3. Condensed Financial Information Not Applicable
Item 4. General Description of Registrant Organization & Management; Investment
Objectives, Policies & Risks
Item 5. Management of the Fund Organization & Management
Item 5a. Management's Discussion of Fund Discussion to be Included in Funds' Annual
Performance Reports
Item 6. Capital Stock and Other Securities Investing in Shares; Organization &
Management
Item 7. Purchase of Securities Being Investing In Shares
Offered
Item 8. Redemption or Repurchase Investing in Shares
Item 9. Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE> 3
TABLE OF CONTENTS
Page
KEY FEATURES.........................................................
EXPENSES.............................................................
PERFORMANCE..........................................................
ORGANIZATION & MANAGEMENT............................................
INVESTMENT OBJECTIVES,
POLICIES & RISKS..................................................
INVESTING IN SHARES..................................................
The Prospectus provides concise information that you should know before
investing. Please retain it for future reference.
The Statement of Additional Information (SAI), dated November 2, 1998, contains
additional information and is incorporated by reference into the Prospectus. The
SAI has been filed with the Securities and Exchange Commission (SEC). The SEC
maintains a Web site (http://www.sec.gov) that contains the SAI, material
incorporated by reference and other information. The SAI is available without
charge by calling 1-800-435-4000 (1-800-345-2550 for TDD users) or writing to
101 Montgomery Street, San Francisco, California 94104.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SEC OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SEC OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
INSTITUTIONAL SELECT LARGE-CAP INDEX
FUND
INSTITUTIONAL SELECT LARGE-CAP VALUE
INDEX FUND
INSTITUTIONAL SELECT SMALL-CAP VALUE
INDEX FUND
PROSPECTUS
OCTOBER 28, 1998
EACH FUND seeks high total return.
<PAGE> 4
KEY FEATURES
MATCHING A FUND TO YOUR INVESTMENT NEEDS. Each Fund intends to track the
performance of its index, which attempts to represent a particular segment of
the U.S. equity (stock) market. Because each Fund will invest in a large number
and broad range of stocks, the Funds could provide diversified investments for
the U.S. large- and small-cap stock categories of your asset allocation plan.
GOALS. Institutional Select Large-Cap Index Fund (Large-Cap Fund) seeks high
total return by tracking the performance of the S&P 500(R) Index.
Institutional Select Large-Cap Value Index Fund (Large-Cap Value Fund) seeks
high total return by tracking the performance of the S&P 500/BARRA Value Index.
Institutional Select Small-Cap Value Index Fund (Small-Cap Fund) seeks high
total return by tracking the performance of the S&P SmallCap 600/BARRA Value
Index.
There is no guarantee a Fund will achieve its goal.
STRATEGIES. Each Fund intends to achieve its goal by following an indexing
investment strategy. Read the "Investment Objectives, Policies & Risks" section
of the prospectus for more information. Each Fund intends to operate as a
diversified mutual fund.
LOW COST INVESTING. Charles Schwab Investment Management, Inc. (the Investment
Manager) and Charles Schwab & Co. Inc. (Schwab) have voluntarily guaranteed
that, through at least [date], total operating expenses of the Large-Cap Fund,
Large-Cap Value Fund and Small-Cap Fund, as a percentage of average daily net
assets, will not exceed [0.xx%, 0.xx% and 0.xx%], respectively. Read the
"Expenses" section for more details.
DESIGNED FOR INSTITUTIONAL INVESTORS. Each Fund is available to clients of
Schwab Institutional (investment advisors) and their clients.
RISKS. While indexing strategies may reduce certain risks associated with active
management, they do not ensure against other risks typically associated with
investing in stocks, such as a decline in the value of a particular stock,
industry or market. Read the "Investment Objectives, Policies & Risks" section
for more details.
AFTER TAX RETURN. Each Fund seeks to maximize after-tax total return while
tracking the performance of its index. Read the "Investment Objectives, Policies
& Risks" section for more details.
<PAGE> 5
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you may pay when you buy, sell or
exchange shares of the Funds.
<TABLE>
<CAPTION>
LARGE
LARGE -CAP SMALL-
-CAP VALUE CAP
FUND FUND FUND
<S> <C> <C> <C>
Maximum sales
charge on
purchases and
reinvested
dividends NONE NONE NONE
Maximum deferred
sales charge NONE NONE NONE
Redemption fee 0.25%* 0.50%* 0.75%*
Exchange fee NONE NONE NONE
</TABLE>
* As a percentage of the amount redeemed of shares held less than 6 months
(read the "Investing in Shares" section for more information). The fee is
paid to the Fund, not the Distributor.
The information on shareholder transaction expenses is for transactions through
an account through Schwab. If you are purchasing, selling, exchanging or
maintaining shares through an entity other than Schwab, other transaction
expenses may be charged by that entity.
ANNUAL OPERATING EXPENSES are paid by each Fund. These expenses include
management fees paid to the Investment Manager and other fees for services, such
as maintaining shareholder records and furnishing shareholder statements and
financial reports. These expenses are factored into the price of each of the
Fund's shares and into the dividends paid to shareholders. As a shareholder, you
are not charged any of these fees directly.
The annual operating expenses stated below are based on estimated other expenses
and are stated as a percentage of average daily net assets of each Fund.
<TABLE>
<CAPTION>
LARGE-
LARGE- CAP SMALL-
CAP VALUE CAP
FUND FUND FUND
<S> <C> <C> <C>
Management fee (after
reduction) 0.xx% 0.xx% 0.xx%
12b-1 fee None None None
Other expenses (after
reduction) 0.xx% 0.xx% 0.xx%
TOTAL OPERATING
EXPENSES (AFTER
REDUCTION) 0.xx% 0.xx% 0.xx%
</TABLE>
EXAMPLE: If each Fund were to provide an annual return of 5%, you would pay the
following expenses on a $1,000 investment, whether you redeemed your shares at
the end of each period or left your shares invested.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
LARGE-CAP
FUND
LARGE-CAP
VALUE FUND
FUND
SMALL-CAP
FUND
</TABLE>
THE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
The Investment Manager and Schwab have voluntarily agreed to guarantee, at least
through [date], that total operating expenses (excluding interest, taxes,
brokerage commissions and extraordinary expenses) of the Large-Cap Fund,
Large-Cap Value Fund and Small-Cap Fund will not exceed [0.xx%, 0.xx% and
0.xx%], respectively, of each Fund's average daily net assets. Read the
"Organization & Management" section of the prospectus for more information on
expenses.
<PAGE> 6
PERFORMANCE
Typically, mutual funds report performance in terms of total return.
TOTAL RETURN is the actual annual return of an investment assuming both the
reinvestment of any income earned and any change in share price. A cumulative
total return is the actual total return of an investment over a stated period of
time, while an average annual total return is a hypothetical rate of return,
which, if achieved annually would have produced the same cumulative total
return. An average annual total return will smooth out the actual year-to-year
fluctuations of an investment's return.
Each Fund intends to track the performance of its Index. The performance of each
Index, typically reported as total return, assumes reinvestment of dividends
paid by the stocks in the Index, but does not take into account any fees or
expenses associated with investing directly in the stocks in each Index, such as
brokerage commissions.
Fund strategies, performance and holdings are detailed in financial reports,
which are sent to shareholders twice a year.
<PAGE> 7
ORGANIZATION &
MANAGEMENT
EACH FUND IS A DIVERSIFIED MUTUAL FUND and is a series of Schwab Capital Trust
(the Trust).
THE FUNDS ARE OVERSEEN BY A BOARD OF TRUSTEES. The Board of Trustees meets
regularly to review the Fund's activities, contractual arrangements and
performance. The Board of Trustees is responsible for protecting the interests
of the Fund's shareholders.
EACH FUND MAY HOLD SPECIAL MEETINGS. These meetings may be called for purposes
such as electing Trustees, changing fundamental policies and amending management
contracts. Shareholders are entitled to one vote for each share owned and may
vote by proxy or in person. Proxy materials will be mailed to shareholders prior
to any meetings, and will include a voting card and information explaining the
matters to be voted upon.
THE FUNDS ARE MANAGED BY THE INVESTMENT MANAGER. Charles Schwab Investment
Management Inc. (Investment Manager) is responsible for managing each Fund's
day-to-day business affairs, including picking each Fund's investments; although
the Investment Manager is subject to the overall authority of the Board of
Trustees. The Investment Manager, 101 Montgomery Street, San Francisco, CA
94104, currently provides investment management services to the SchwabFunds(R),
a family of [xx] mutual funds with over [xx] billion in assets of [date].
Geri Hom is a Vice President of the Investment Manager and Senior Portfolio
Manager for the Funds. She joined Schwab in March 1995 as Portfolio Manager -
Equities and currently manages the Funds and four other Equity Index Funds and
co-manages three Schwab MarketTrack Portfolios(TM) with approximately $[xx]
billion in assets. For the 15 years prior to joining Schwab, Ms. Hom was a
Principal at Wells Fargo Nikko Investment Advisors where she headed the Domestic
Equity Portfolio Management Group, with direct responsibility for approximately
$60 billion in indexed assets. She holds a Bachelor of Arts in business
education from San Francisco State University.
Stephen B. Ward is the Trust's Senior Vice President and Chief Investment
Officer. He has overall day-to-day responsibility for the management of the
Funds' portfolios. Mr. Ward joined the Investment Manager as Vice President and
Portfolio Manager in April 1991 and was promoted to his current position in
August 1993. Prior to joining the Investment Manager, Mr. Ward was Vice
President and Portfolio Manager at Federated Investors. He graduated with a
Masters in Business Administration from the Wharton School and a Bachelor of
Arts in Economics from Virginia Tech and has been a Chartered Financial Analyst
since 1985.
For the services performed under its contract with the Funds, the Investment
Manager is entitled to receive a graduated annual fee, payable monthly, of
[0.xx%] of Large-Cap Fund's and Large-Cap Value Fund's average daily net assets
not in excess of $[x] billion and [0.xx%] of such assets over $[x] billion; and
of [0.xx%] of the Small-Cap Fund's average daily net assets not in excess of
$[x] billion and [0.xx%] of such assets over $[x] billion;
SCHWAB IS THE FUNDS' SHAREHOLDER SERVICES AND TRANSFER AGENT. Schwab provides
Fund information to shareholders, including share price, reporting shareholder
ownership and account activities, and distributing each Fund's prospectus,
financial reports and other informational literature about the Funds. Schwab,
101 Montgomery Street, San Francisco, CA 94104, also maintains the office space,
equipment and personnel necessary to provide these services.
For the services performed as transfer agent under its contract with each Fund,
Schwab is entitled to receive an annual fee from each Fund. The fees are payable
monthly in the amount of [0.xx%] of each Fund's average daily net assets. For
the services performed as shareholder services agent under its contract with
each Fund, Schwab is entitled to receive an annual fee from each Fund. The fees
are payable monthly in the amount of [0.xx%] of each Fund's average daily net
assets.
<PAGE> 8
THE FUNDS PAY OTHER EXPENSES. These expenses are typically connected with a
Trust's operations and include legal, audit and custodian fees, as well as the
costs of accounting and registration of the Funds. Expenses not directly
attributable to a particular Fund will generally be allocated among the funds in
the Trust on the basis of each fund's relative net assets at the time the
expense is incurred.
The Investment Manager may use affiliated broker-dealers, including Schwab, to
execute the Funds' securities transactions as long as the brokerage services and
commission rates or fees are comparable to those of other broker-dealers.
The Charles Schwab Corporation is the parent company of the Investment Manager
and Schwab. Charles R. Schwab is the founder, Chairman, Co-Chief Executive
Officer and Director of The Charles Schwab Corporation. As a result of his
ownership of and interests in The Charles Schwab Corporation, Mr. Schwab may be
deemed to be a controlling person of the Investment Manager and Schwab.
<PAGE> 9
INVESTMENT OBJECTIVES, POLICIES & RISK
INVESTMENT OBJECTIVES
Each Fund's investment objective is to seek high total return.
Each Fund's investment objective may be changed only by vote of a majority of
its shareholders. Unless otherwise noted, policies and limitations may be
changed without shareholder approval.
INVESTMENT STRATEGIES
Each Fund intends to achieve its objective by following an indexing investment
strategy.
Each Fund normally will invest at least 90% of its total assets in the
securities making up its Index (Index Stocks). When the portfolio manager deems
it more cost efficient, each Fund may invest in futures contracts representative
of the Index's performance as part of its Index Stocks holdings.
THE INDEXES are the S&P 500 Index for the Large-Cap Fund, the S&P 500/BARRA
Value Index for the Large-Cap Fund, and the S&P Small-Cap 600/BARRA Value Index
for the Small-Cap Fund.
The S&P 500(R) Index is a widely recognized index comprised of 500 large-cap
common stocks selected by Standard & Poor's. Standard & Poor's rebalances the
Index at least quarterly.
The S&P 500/BARRA Value Index is a widely recognized index comprised of 343
large-cap value common stocks selected by BARRA, Inc. and Standard & Poor's, as
of June 30, 1998. The total value of the Index (as measured by the combined
market capitalization of the companies included in the Index) is approximately
one-half of the total value of the S&P 500 Index. The companies with the
highest book-to-price ratios may be included in the Index. BARRA, Inc. and
Standard & Poor's rebalance the Index at least semiannually.
The S&P SmallCap 600/BARRA Value Index is a widely recognized index comprised of
373 small-cap value common stocks selected by BARRA, Inc. and Standard & Poor's
as of June 30, 1998. The total value of the Index (as measured by the combined
market capitalization of the companies included in the Index) is approximately
one-half of the total value of the S&P SmallCap 600 Index. The companies with
the highest book-to-price ratios may be included in the Index. BARRA, Inc. and
Standard & Poor's rebalance the Index at least semiannually.
The S&P 500 Index is owned by Standard & Poor's Company. The S&P 500/BARRA Value
and S&P SmallCap 600/BARRA Value Index are jointly owned by Standard & Poor's
and BARRA, Inc. None of the Indexes is affiliated with the Funds or the
Investment Manager.
Each Fund will invest in a group of securities selected from its Index, which,
when taken together, is expected to perform similarly to its Index. Each Fund
generally tries to match its holdings of Index Stocks to their weightings in the
Index. This technique is expected to enable each Fund to track the dividend
income and price movements (total return) of its Index, while minimizing
brokerage, custodial and accounting costs. In addition, the indexing strategy is
intended to minimize each Fund's realized capital gains, which can make a
difference in an investors' after-tax return, especially for those investors in
higher tax brackets.
THE RISKS for each Fund are basically those risks associated with investing in
equity securities. Generally speaking, there are three types of risk inherent to
investing in equity securities.
<PAGE> 10
STOCK RISK is the risk that a stock may decline in price over the short- or
long-term. When a stock's price declines, its market value is lowered even
though the intrinsic value of the company may not have changed. Some stocks,
like small company stocks, are more sensitive to stock risk than large company
stocks. Diversifying investments across companies can help to lower the stock
risk of a fund.
INDUSTRY RISK is the risk that the companies in a particular industry will
experience a decline in the price of their stock. Sometimes a negative economic
condition affects a single industry or group of industries. For example, the
automotive industry may have a greater exposure to a single factor, such as an
increase in the price of oil, which may affect the sale of automobiles and
impact the value of the industry's securities. Diversifying investments across
industries can help to reduce the industry risk of a Fund.
MARKET RISK is, typically, the result of a negative economic condition that
affects an entire class of securities, such as stocks or bonds. Unlike stock and
industry risk, the Funds do not attempt to reduce market risk which can only be
removed by diversification across various asset classes, such as stocks, bonds
and cash.
The amount of and each type of risk each Fund will be subject to depends on its
portfolio of investments. Because each Fund intends to track its Index, its risk
profile is expected to be similar to that of its Index. However, to the extent a
Fund invests in non-Index Stocks or invests in an Index Stock in greater
proportion than that of its Index, the Fund may be exposed to greater risks or a
different combination of risks associated with such investments. Each Index is
designed to reflect the performance of a particular segment of the stock market
and will be subject to those market risks, as well as stock and industry risk.
PRINCIPAL SECURITIES AND INVESTMENT TECHNIQUES
The different types of securities comprising each Index and other securities in
which each Fund may invest are described below.
EQUITY SECURITIES include common stocks, preferred stocks, convertible
securities and warrants. Common stocks, which represent an ownership interest in
a company, are probably the most recognized type of equity security. Preferred
stock, unlike common stock, pays specified dividends, has preference over common
stock in payment of dividends. Preferred stock, however, does not ordinarily
carry voting rights. Equity securities have historically outperformed most other
securities, although their prices can be volatile. Market conditions, political,
economic and even company specific news can cause significant changes in the
price of a stock. Small-cap stocks, may be especially sensitive to these
factors.
DEBT SECURITIES are obligations issued by domestic and foreign entities,
including governments and corporations, in order to raise money. They are
basically "IOUs", but are commonly referred to as bonds or money market
securities. These securities normally require the issuer to pay a fixed,
variable or floating rate of interest on the amount of money borrowed (the
"principal") until it is paid back upon maturity. U.S. Government securities are
issued or guaranteed by the U.S. Government, its agencies and instrumentalities.
A money market security is a high-quality debt security that has short-term
maturity.
<PAGE> 11
ADJUSTING INVESTMENT EXPOSURE may involve a Fund using investment techniques
designed to increase or decrease investment exposure to a number of conditions,
including changing interest rates and other conditions affecting the value of
securities. These investment techniques include buying and selling futures and
options contracts, entering into swap agreements, purchasing indexed securities
and selling securities short. The Funds intend to use investment techniques to
adjust risk exposure and increase returns, and to manage their cash positions.
The use of any of these techniques will increase a Fund's risks and volatility.
The potential losses to a Fund could be substantially more than the initial cost
of the investment itself.
FUTURES CONTRACTS AND OPTIONS may be entered into by a Fund. A futures contract
requires a Fund to buy or sell a specific dollar amount of a security at a
certain price on a specified future date. There is risk that the securities will
increase or decrease in value prior to that date and cause losses to the Fund.
An option gives the Fund the right to buy or sell a security for an agreed-upon
price during a specified period of time. There is risk of loss to a Fund if the
option is exercised, as well as the loss of the cost of the option if it is not
exercised. The risk of loss as to futures contracts and options can be
substantial due to both the low margin deposits required and the degree of
leverage that can be involved. In order to minimize risks, a Fund will segregate
assets in the amount of the underlying obligation.
SWAP AGREEMENTS are an exchange of one security for another. A swap may be
entered into in order to help a Fund track an Index, change the maturity of its
portfolio, to protect a Fund's value from changes in interest rates or to expose
a Fund to a different security or market. These agreements are subject to the
risk that the counterparty will not fulfill its obligations. The risk of loss in
a swap agreement can be substantial due to the degree of leverage that can be
involved. In order to help minimize this risk, a Fund will segregate appropriate
assets as necessary.
ILLIQUID SECURITIES are securities that are not actively traded, and, therefore,
may be difficult to sell quickly or without losses.
Restriction: Each Fund may not invest more than 15% of its net assets in
illiquid securities.
RESTRICTED SECURITIES are securities that are subject to legal restrictions on
their sale. To the extent a Fund invests in liquid restricted securities, its
general level of illiquidity may increase if these securities become difficult
to sell.
WHEN-ISSUED SECURITIES AND DELAYED DELIVERY SECURITIES are securities that are
purchased at a specified price and yield but delivered to the buyer at a later
than customary date. Generally, the purchaser does not pay for these securities
or earn interest on them until they are delivered, but their value could change
prior to delivery.
REPURCHASE AGREEMENTS involve buying securities (usually U.S. Government
securities) from a seller and simultaneously agreeing to sell them back at an
agreed-upon price and time. There are risks that losses will result if the
seller does not perform as agreed.
SECURITIES OF OTHER INVESTMENT COMPANIES may be purchased by a Fund. These
investments may cause a Fund to bear duplicative fees for certain services.
Each Fund also employs the policies described below.
STOCK SUBSTITUTION STRATEGY is a strategy whereby a Fund may, in extraordinary
circumstances, substitute a similar stock for an Index Stock.
DIVERSIFICATION involves investing in a wide range of securities and, thereby,
spreading and reducing the risks of investment.
<PAGE> 12
CONCENTRATION means that substantial amounts of assets are invested in a
particular industry group of industries. Concentration increases investment
exposure to industry risk. While the Funds do not intend to concentrate
investments in a particular industry or group of industries, each Fund may
indirectly concentrate in a particular industry or group of industries if its
Index is so concentrated.
BORROWING is a form of leveraging if a Fund continues to make investments while
borrowings remain outstanding. Borrowing subjects a Fund to interest costs,
which may exceed the interest received on the securities purchased with the
borrowed funds.
Restriction: Each Fund may borrow up to 33 1/3% of its total assets for
temporary or emergency purposes; provided that each Fund will not purchase
securities while borrowing represents more than 5% of its total assets.
LENDING securities may earn income for a Fund, but could result in losses to a
Fund, and possibly affect share price.
Restriction: Each Fund may lend up to 33 1/3% of its total assets.
<PAGE> 13
INVESTING IN SHARES
BUSINESS DAYS
The Funds are open each day the New York Stock Exchange (NYSE) is open (business
days).
NET ASSET VALUE The price of the shares of each Fund is its net asset value per
share (NAV). NAV is determined each business day at the close of the NYSE,
generally 4:00 p.m. Eastern time. NAV is calculated by adding the value of the
Fund's assets, subtracting its liabilities and dividing the result by the number
of outstanding shares. A Fund's NAV will fluctuate and is not insured against
loss. Each Fund values its portfolio securities based on market quotes if they
are readily available. If market quotes are not readily available, portfolio
securities are assigned fair market values pursuant to guidelines adopted by the
Board of Trustees.
HOW TO BUY, SELL OR EXCHANGE SHARES
Shares are available to clients of Schwab Institutional (investment advisors)
and their clients. Investments advisors are required to make initial investments
and maintain balances, on behalf of each of their clients, of at least $2,500
for each Fund.
Investments advisors are also required to make initial investments and maintain
balances so that, in aggregate, they meet the following minimums for each Fund*.
<TABLE>
<S> <C>
LARGE-CAP FUND $ 250,000
LARGE-CAP VALUE FUND $ 100,000
SMALL-CAP FUND $ 100,000
</TABLE>
Additional purchases on behalf of each client may be made in amounts of at least
$100.
* Each Fund reserves the right to increase its minimums at any time.
These minimums may be different if you are buying, selling/exchanging or
maintaining shares of a Fund through an entity other than Schwab.
Shares may be automatically redeemed if, as a result of selling or exchanging
shares, you no longer meet a Fund's minimum balance requirements. You will be
given 30 days' notice prior to redemption to bring the account holdings to the
required minimum balance.
Schwab is soliciting subscriptions for shares of each Fund during an initial
offering period, currently scheduled to end January 5, 1999 subject to
extension by the Funds and Schwab. Each Fund is scheduled to commence operations
on January 6, 1999, and continuously offer its shares immediately following
settlement of its the subscription offering.
Certain individuals may purchase shares in an initial amount of at least
$3,000,000 and must maintain a balance of $3,000,000. Shares are purchased, sold
or exchanged at the NAV next determined after your order has been received in
good order. Orders received in good order by Schwab prior to 4:00 p.m. Eastern
time will be executed that day. Shares bought normally begin to earn dividends
on the next business day, while shares sold or exchanged normally earn dividends
on that day.
The Funds are designed for long-term investing. Because short-term trading
activities can disrupt a Fund's investment strategies and operations, and
increase its expenses, Schwab reserves the right to refuse purchase orders in
accounts with a pattern of short-term trading.
BY TELEPHONE, FAX OR WIRE. Investment advisors will be assigned a trading desk
when an account is set-up with Schwab Institutional. Investment advisors should
call or fax their designated Schwab Institutional trading desk.
Investment advisor clients should contact their investment advisor directly. For
individuals not in an investment advisor relationship, please call
1-800-435-4000 for instructions. (1-800-345-2550 for TDD users.)
ELECTRONICALLY. Investment advisors submit your transactions through
SchwabLink(R). Refer to the SchwabLink User Manual for specific instructions.
You also may trade through Schwab's website and Telebroker(R).
<PAGE> 14
BY MAIL. Write to the Funds at 101 Montgomery Street, San Francisco, CA 94104.
Please provide the following information:
- - your name and the name of your firm, and account number;
- - the name of the Fund;
- - the dollar amount you would like to buy, sell or exchange;
- - for initial purchases only, one of the three distribution choices below.
AUTOMATIC REINVESTMENT. Dividends and capital gain distributions will be
reinvested in shares of your Fund. If you do not choose an option, this option
will be assigned to you and all distributions will be reinvested;
CASH DIVIDENDS/REINVESTED CAPITAL GAINS. Dividends will be paid to you in cash
and any capital gains distributions will be reinvested in additional shares; or
CASH OPTION. All distributions will be paid to your account and, if requested,
mailed to you the next business day.
- - for exchanges only, the name of the Fund into which you would like to
exchange and a distribution choice; and
- - if selling or exchanging by mail, a signature of at least one of the persons
named on your account.
PLEASE NOTE THE FOLLOWING WHEN SELLING OR
EXCHANGING SHARES OF A FUND:
- - redemption and exchange requests are irrevocable, and, once mailed, may not
be modified or cancelled;
- - payment for redeemed shares will be made to your account within 7 days and a
check may be mailed to you upon request;
- - if you bought your shares by check, a check will be issued as soon as your
check clears, which may take up to 15 days from the date of purchase;
- - depending on the type of account you have, your money may earn interest
during any holding period;
- - a fee may be charged for redemptions by wire;
- - you may exchange your shares for shares of any other Institutional Select
Fund, provided you meet its minimum investment and any other requirements;
- - each Fund and Schwab reserve the right to modify, limit or terminate the
exchange privilege upon 60 days' written notification;
- - an exchange of a Fund's shares for shares of other Institutional Select
Funds will be treated as a taxable event for federal income tax purposes;
- - a Fund may suspend the right to sell shares or postpone payment for a sale
of shares when trading on the NYSE is restricted, the NYSE is closed for any
reason other than its customary weekend and holiday closings, emergency
circumstances exist as determined by the SEC, or as otherwise permitted by
the SEC; and
- - an early redemption fee upon sale or exchange of shares of a Fund will be
charged against proceeds attributable to shares held less than six months.
This fee will be paid directly to the Fund to offset costs of short-term
trading and ensure that long-term investors do not bear additional costs. An
early redemption fee will not be charged against shares redeemed or acquired
though reinvestment of dividends or capital gains distributions. Solely for
purposes of calculating the early redemption fee, shares will be treated as
redeemed on a "first-in, first-out" basis, except for shares acquired
through dividend reinvestment which will be redeemed first (although no
early redemption fee will be assessed against these). This method of
calculating the fee should result in the lowest total early redemption fee.
DIVIDENDS & TAXES
The following is only a brief summary of some of the federal and state income
tax consequences that may affect a Fund and its shareholders. Unless your
investment in the Fund is through a retirement account, you should consider the
tax implications of investing, and consult with your own tax advisor.
Each Fund will distribute its net investment income and capital gains, if any,
to shareholders each year. Each Fund intends to distribute its net
<PAGE> 15
investment income and capital gains annually in December. All distributions
received by shareholders are subject to federal income tax, and may be subject
to state and/or local taxes. Distributions are taxable when paid, whether they
are received in cash or reinvested, although distributions declared in December,
but paid in January, are taxable as if they were paid on December 31.
Shareholders receive a record of all distributions by the Funds, as well as
purchases and sales they have made, via their monthly account statement. Each
year, the Funds notify shareholders of the federal tax treatment of all
distributions made by the Funds that year.
<PAGE> 16
OPENING A SCHWAB ACCOUNT
Investment advisors may open a Schwab Institutional account for themselves (and
subaccounts for their clients) by completing the appropriate application(s).
Once you have opened an account, you will be assigned an Institutional Service
Group Team which will answer subsequent account questions.
Individuals who do not have an investment advisor should call 1-800-435-4000 for
more information (1-800-345-2550 for TDD users).
Using a Schwab account, investors have access to investments other than just
mutual funds, such as stocks and bonds. The Securities Investor Protection
Corporation (SIPC) provides account protection of up to $500,000 for the
securities held in a Schwab account, including shares of the Fund. It is
important to remember that SIPC account protection does not protect against
losses due to market or economic conditions.
Deposits to your Schwab account may be made by check, wire and other forms of
electronic funds transfer. Securities also may be deposited. All checks should
be made to Charles Schwab & Co., Inc. Schwab will charge a $15 service fee for
any checks returned as a result of insufficient or uncollected funds or a stop
order.
Monies received by Schwab before 4:00 p.m. Eastern time will be available for
investment in the Funds that day. Monies received by Schwab after 4:00 p.m.
Eastern time will be available for investment in the Funds the next business
day.
GENERAL INFORMATION
The right to initiate transactions by telephone is automatically available
through your account. As long as either the Fund or Schwab follows reasonable
procedures to confirm that your telephone order is genuine, they will not be
liable for any losses an investor may experience due to unauthorized or
fraudulent instructions.
These procedures may include:
- - requiring a form of personal identification before acting upon any telephone
order;
- - providing written confirmation of telephone orders; and
- - tape recording all telephone orders.
It may be difficult to place orders by telephone during periods of drastic
economic or market changes because Schwab's phone and fax lines may become very
busy with calls from other investors. Consider other methods for placing an
order, such as writing to the Fund.
Share certificates will not be issued in order to avoid additional
administrative costs, however, share ownership records are maintained by Schwab.
Twice a year, financial reports will be mailed to shareholders describing each
Fund's performance and investment holdings. In order to reduce these mailing
costs, each household will receive one consolidated mailing. If you do not want
to receive consolidated mailings, you may write to your Fund and request that
your mailings not be consolidated.
<PAGE> 17
Each Fund, in its sole discretion and without prior notice, reserves the right
to reject orders to purchase shares, change minimum investment requirements or
withdraw or suspend any part of the offering made by the prospectus.
NO ONE HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY STATEMENTS
ABOUT THIS OFFERING OTHER THAN THE INFORMATION CONTAINED IN THIS PROSPECTUS AND
IN OFFICIAL SALES MATERIALS. IF ANYONE GIVES ANY OTHER INFORMATION OR MAKES ANY
OTHER REPRESENTATIONS, DO NOT RELY ON SUCH INFORMATION OR REPRESENTATIONS.
- --------------------------------------------------------------------------------
THIS PROSPECTUS IS NOT AN OFFER IN ANY STATE IN WHICH SUCH AN OFFER MAY NOT
LAWFULLY BE MADE, NOR IS IT AN OFFER TO ANY PERSON TO WHOM SUCH AN OFFER MAY NOT
BE MADE.
<PAGE> 18
CROSS REFERENCE SHEET
SCHWAB CAPITAL TRUST
INSTITUTIONAL SELECT LARGE-CAP INDEX FUND
INSTITUTIONAL SELECT LARGE-CAP VALUE INDEX FUND
INSTITUTIONAL SELECT SMALL-CAP INDEX FUND
<TABLE>
<CAPTION>
Statement of Additional
Part B Information Caption
- ------ -------------------
<S> <C>
Item 10 and 11. Cover Page, Table of Cover Page; Table of Contents
Contents
Item 12. General Information and History General Information; The Benefits of
International Investing; Asset Allocation--
the Schwab Index Funds and the Schwab
Asset Allocation Funds
Item 13. Investment Objectives and Policies Investment Policies and Restrictions
Item 14. Management of the Fund Management of the Trust
Item 15. Control Persons and Principal Holders of General Information
Securities
Item 16. Investment Advisory and Other Management of the Trust
Services
Item 17. Brokerage Allocation and Other Portfolio Transactions and Turnover
Practices
Item 18. Capital Stock and Other Securities General Information
Item 19. Purchase, Redemption and Pricing Share Price Calculation; Purchase and
of Securities Being Offered Redemption of Shares
Item 20. Tax Status Distributions and Taxes
Item 21. Underwriters Management of the Trust
Item 22. Calculation of Performance Data How the Funds Reflect Performance
Item 23. Financial Statements Not Applicable
</TABLE>
<PAGE> 19
STATEMENT OF ADDITIONAL INFORMATION
SCHWAB CAPITAL TRUST
INSTITUTIONAL SELECT LARGE-CAP INDEX FUND
INSTITUTIONAL SELECT LARGE-CAP VALUE INDEX FUND
INSTITUTIONAL SELECT SMALL-CAP VALUE INDEX FUND
OCTOBER 28, 1998
This Statement of Additional Information (SAI) is not a prospectus. It should be
read in conjunction with the Prospectus dated October 28, 1998 (as amended from
time to time) for the Institutional Select Large-Cap Index Fund, Institutional
Select Large-Cap Value Index Fund and Institutional Select Small-Cap Value Index
Fund (the Funds).
To obtain a copy of the Prospectus, please contact Charles Schwab & Co., Inc.
(Schwab) at 1-800-435-4000, 24 hours a day, or 101 Montgomery Street, San
Francisco, California 94104. TDD users may contact Schwab at 1-800-345-2550, 24
hours a day.
SCHWABFUNDS(R)
1-800-435-4000
TABLE OF CONTENTS
Page
----
INVESTMENT SECURITIES AND RISKS.....................................
INVESTMENT RESTRICTIONS ............................................
ORGANIZATION AND MANAGEMENT OF THE TRUST ...........................
MANAGEMENT OF THE FUND..............................................
PORTFOLIO TRANSACTIONS AND TURNOVER.................................
TAXES...............................................................
SHARE PRICE CALCULATION.............................................
HOW THE FUND REFLECTS PERFORMANCE...................................
THE INDEXES AND INDEXING STRATEGIES.................................
PURCHASE AND REDEMPTION OF SHARES...................................
OTHER INFORMATION...................................................
FINANCIALS..........................................................
1
<PAGE> 20
INVESTMENT SECURITIES AND RISKS
ASSET-BACKED SECURITIES are securities that are backed by the loans or account
receivables of an entity, such as a bank or credit card company. These
securities are obligations that the issuer intends to repay using the assets
backing them (once collected). Therefore, repayment may depend largely on the
cash flows generated by the assets backing the securities. Sometimes the credit
support for these securities is limited to the underlying assets, but, in other
cases, may be provided by a third party via a letter of credit or insurance
guarantee.
CONVERTIBLE SECURITIES. Convertible securities are securities that are
exchangeable for a specific number of another form of security at a specified
price. Bonds and preferred stocks may be convertible. Convertible bonds
typically pay a lower interest rate than nonconvertible bonds of the same
quality and maturity, because the convertible feature allows them to be
exchanged for a specific number of shares of the company's common stock at a
predetermined price. This structure allows the holder of the convertible bond to
participate in share price movements in the company's common stock. The actual
return on a convertible bond may exceed its stated yield if the company's common
stock appreciates in value and the option to convert to common shares becomes
more valuable. Convertible preferred stocks are nonvoting equity securities that
pay a fixed dividend. These securities have a convertible feature similar to
convertible bonds, however, they do not have a maturity date. Due to their
fixed-income features, convertible issues typically are more sensitive to
interest rate changes than the underlying common stock. In the event of
liquidation, bondholders would have claims on company assets senior to those of
stockholders; preferred stockholders would have claims senior to those of common
stockholders.
CREDIT AND LIQUIDITY SUPPORTS may be employed by issuers to reduce the credit
risk of their securities. Credit supports include letters of credit, insurance
and guarantees. Liquidity supports include puts and demand features. These
arrangements move the credit risk of an investment from the issuer of the
security to the support provider.
DEBT SECURITIES are obligations, issued by various entities, including
governments and corporations, in order to raise money. They are basically
"IOUs," but are commonly referred to as bonds. Bonds normally require the issuer
to pay a fixed, variable or floating rate of interest on the amount of money
borrowed (the "principal") until it is paid back (at "maturity"). Upon maturity,
the principal must be repaid.
Debt securities experience price changes when interest rates change. As a rule,
when interest rates rise, bond prices decline or "fall", and when interest rates
fall bond prices rise. Typically, longer-maturity bonds react to interest rate
changes more severely than shorter-term bonds (all else being equal) but
generally offer a greater rate of interest. Debt securities also are subject to
the risk that their issuer will fail to meet its obligation to pay interest
and/or principal, and their prices also may be affected by the credit quality of
their issuer. Investment-grade debt securities are medium- and high-quality
securities, although some still possess varying degrees of speculative
characteristics and risk.
FUTURES AND OPTIONS. The following sections pertain to futures and options
transactions: Futures Contracts, Options, Options on Futures Contracts, Hedging
Strategies With Futures and Risks Involved in Futures and Options Transactions.
2
<PAGE> 21
Each Fund may purchase put and call options on any securities in which it may
invest and options on any securities index based on securities in which it may
invest. Each Fund also may enter into closing sale transactions in order to
realize gains or minimize losses on options it has purchased.
For certain options, the writer may be assigned an exercise notice at any time
prior to the termination of the obligation. Therefore, the writer may have no
control over when the underlying securities must be sold, in the case of call
options, or purchased, in the case of put options. Whether or not an option
expires unexercised, the writer retains the amount of the premium. This amount
may, in the case of a covered call option, be offset by a decline in the market
value of the underlying security during the option period. If a call option is
exercised, the writer experiences a profit or loss from the sale of the
underlying security. If a put option is exercised, the writer must fulfill its
obligation to purchase the underlying security at the exercise price, which will
usually exceed the then market value of the underlying security.
The purchase of a call option would entitle the Funds, in return for the premium
paid, to purchase specified securities at a specified price during the option
period. The Funds would ordinarily realize a gain if, during the option period,
the value of such securities exceeded the sum of the exercise price, the premium
paid and transaction costs; otherwise the Funds would realize either no gain or
a loss on the purchase of the call option.
Options. Each Fund may write (sell) covered call and put options on any
securities in which it may invest and options on securities that are listed on
domestic or foreign securities exchanges or traded in the over-the-counter
market. All call options written by the Fund are covered, which means that the
Funds will own the securities subject to the option so long as the option is
outstanding. The purpose of writing covered call options is to realize greater
income than would be realized on portfolio securities transactions alone.
However, in writing covered call options for additional income, the Funds may
forego the opportunity to profit from an increase in the market price of the
underlying security.
All put options the Funds writes will be covered, which means that each Fund
will have deposited with its custodian cash, U.S. Government securities or other
high-grade debt securities with a value at least equal to the exercise price of
the put option. High-grade securities are securities rated in one of the top
three categories by Moody's Investor Service (Moody's) or Standard & Poor's
(S&P), or, if unrated, determined by the Investment Manager to be of comparable
credit quality. The purpose of writing such options is to generate additional
income for the Funds. However, in return for the option premium, the Funds
accept the risk that it may be required to purchase the underlying securities at
a price in excess of the securities market value at the time of purchase.
Each Fund may terminate its obligations under a written call or put option by
purchasing an option identical to the one it has written. Such purchases are
referred to as "closing purchase transactions."
The Funds may purchase options that are traded on U.S. and foreign exchanges and
options traded over-the-counter with broker-dealers who make markets in these
options. The ability to terminate over-the-counter options is more limited than
with exchange-traded options and may involve the risk that broker-dealers
participating in such transactions will not fulfill their obligations.
The Funds currently treat purchased over-the-counter options and all assets
used to cover written over-the-counter options as illiquid securities, except
for options written with primary dealers in U.S. Government securities pursuant
to an agreement requiring a closing purchase transaction at a formula price.
3
<PAGE> 22
Restriction. Each Fund will write or purchase an option only when the market
value of that option, when aggregated with the market value of all other options
transactions made on behalf of the a Fund, does not exceed 5% of a Fund's net
assets.
Futures Contracts. A futures contract is generally as an agreement between two
parties to buy and sell particular financial instruments for an agreed-upon
price during a designated period. In the case of a contract relating to an index
or otherwise not calling for physical delivery at the end of trading in the
contract, the parties may agree to deliver the final cash settlement price.
When interest rates are falling or prices of securities are rising, each Fund,
through the purchase of futures contracts, may attempt to secure better rates or
prices than might be available in the market when it effects anticipated
purchases. When interest rates are rising or securities prices are falling, each
Fund may seek, through the sale of futures contracts, to offset a decline in the
value of its current portfolio securities.
The Funds may purchase and sell various kinds of futures contracts and options
on futures contracts. The futures contracts may be based on various securities
(such as U.S. Government securities), securities indices and other financial
instruments and indices. All futures contracts entered into by the Funds are
traded on U.S. exchanges or boards of trade that the CFTC licenses and
regulates on foreign exchanges. The Funds are not permitted to engage in
speculative futures trading.
Although futures contracts, by their terms, generally call for the actual
delivery or acquisition of underlying securities or the cash value of the index,
in most cases the contractual obligation is fulfilled before the date of the
contract without having to make or take such delivery. The contractual
obligation is offset by buying (or selling, as the case may be) on a commodities
exchange an identical futures contract calling for delivery in the same month.
Such a transaction, which is effected through a member of an exchange, cancels
the obligation to make or take delivery of the securities or the cash value of
the index underlying the contractual obligations. A Fund may incur brokerage
fees when it purchases or sells futures contracts.
Positions taken in the futures markets are not normally held to maturity but are
instead liquidated through offsetting transactions, which may result in a profit
or a loss. While each Fund's futures contracts on securities or currency will
usually be liquidated in this manner, a Fund may instead make or take delivery
of the underlying securities or currency whenever it appears economically
advantageous for it to do so. A clearing corporation associated with the
exchange on which futures on securities or currencies are traded guarantees
that, if still open, the sale or purchase will be performed on the settlement
date.
Options on Futures Contracts. The purchase of put and call options on futures
contracts will give each Fund the right (but not the obligation), for a
specified price, to sell or to purchase, respectively, the underlying futures
contract at any time during the option period. As the purchaser of an option on
a futures contract, each Fund obtains the benefit of the futures position if
prices move in a favorable direction but limit its risk of loss in the event of
an unfavorable price movement to the loss of the premium and transaction costs.
The writing of a call option on a futures contract generates a premium that may
partially offset a decline in the value of a Fund's assets. By writing a call
option on a futures contract, a Fund becomes obligated, in exchange for the
premium, to sell a futures contract that may have a value lower than the
exercise price. Thus, the loss incurred by a Fund in writing options on futures
is potentially unlimited and may exceed the amount of the premium received. Each
Fund will incur transaction costs in connection with the writing of options on
futures.
4
<PAGE> 23
The holder or writer of an option on a futures contract may terminate its
position by selling or purchasing an offsetting option on the same series. There
is no guarantee that these closing transactions can be effected. A Fund's
ability to establish and close out positions on these options will be subject to
the development and maintenance of a liquid market.
Hedging Strategies With Futures. Hedging by use of futures contracts seeks to
establish more certainty than would otherwise be possible with respect to the
effective price or rate of return on portfolio securities or securities that a
Fund owns or proposes to acquire. Such futures contracts may include contracts
for the future delivery of securities held by a Fund or securities with
characteristics similar to those of a Fund's portfolio securities. If, in the
opinion of the Investment Manager, there is a sufficient degree of correlation
between price trends for a Fund's portfolio securities and futures contracts
based on other financial instruments, securities indices or other indices, a
Fund may enter into such futures contracts as part of its hedging strategy.
Although, under some circumstances, prices of securities in a Fund's portfolio
may be more or less volatile than prices of such futures contracts, the
Investment Manager will attempt to estimate the extent of this difference in
volatility based on historical patterns. The Investment Manager will attempt
to compensate for it by having a Fund enter into a greater or lesser number of
futures contracts or by attempting to achieve only a particular hedge against
price changes affecting a Fund's portfolio securities. When hedging of this
character is successful, any depreciation in the value of the portfolio
securities will be substantially offset by appreciation in the value of the
futures position. On the other hand, any unanticipated appreciation in the
value of a Fund's portfolio securities will be substantially offset by a
decline in the value of the futures position.
On other occasions, a Fund may take "long" positions by purchasing such futures
contracts. This may be done when a Fund anticipates the subsequent purchase of
particular securities when it has the necessary cash but expects the prices or
currency exchange rates available on the intended date of purchase in the
applicable market to be less favorable than prices that are currently available.
When buying or selling futures contracts, a Fund must deposit an amount of cash,
cash equivalents or liquid, high-quality debt instruments with its broker equal
to a fraction of the contract amount. This amount is known as "initial margin"
and is in the nature of a performance bond or good faith deposit on the
contract, which will be returned to the Fund upon termination of the futures
contract, assuming all contractual obligations have been satisfied. Subsequent
payments to and from the broker, known as "variation margin," will be made at
least daily as the price of the futures contract fluctuates and the Fund's
position in the contract becomes more or less valuable. This process is known as
"marking-to-market."
Regulations of the Commodities Futures Trading Commission ("CFTC") applicable to
a Fund generally requires that all of its futures transactions constitute "bona
fide" hedging transactions. As a result, a Fund will normally sell futures
contracts to protect against a decrease in the price of securities it owns but
intends to sell or purchase futures contracts to protect against an increase in
the price of securities it intends to purchase. In addition, a Fund may purchase
and sell futures contracts and options as a substitute for a comparable market
position in the underlying securities. Futures transactions need not constitute
"bona fide" hedging under CFTC regulations if the aggregate initial margin and
premiums required to establish such positions do not exceed 5% of a Fund's net
assets.
Risks Involved in Futures and Options Transactions. Futures and options
transactions involve risks, which in some strategies can be substantial due to
the low margin deposits required and the extremely high degree of leverage
involved in futures and options trading. However, to the extent a Fund's futures
and options
5
<PAGE> 24
practices are limited to hedging purposes, the Investment Manager does not
believe that the Fund is subject to the degree of risk frequently associated
with futures and options transactions. To the extent a Fund engages in the use
of futures and options on futures other than for hedging purposes, the Fund may
be subject to additional risk.
The primary risks associated with the use of futures and options include:
imperfect correlation between the change in market value of the securities held
by a Fund and the prices of the futures or options, possible lack of a liquid
secondary market for futures or options, and the resulting inability to close
such positions prior to their maturity dates. To minimize these risks, the Fund
will invest only in those contracts whose behavior is expected to resemble that
of a Fund's underlying securities. The Funds will attempt to minimize the risks
being unable to close out futures positions by entering into these transactions
on a national exchange with an active and liquid secondary market.
Three principal areas of risk are present when futures and options contracts are
used even in a hedging context. First, there may not always be a liquid
secondary market for a futures or option contract at the time a Fund seeks to
"close out" its position. If a Fund is unable to "close out" a futures or option
position and prices move adversely, the Fund would have to continue to make
daily cash payments to maintain its required margin. If the Fund had
insufficient cash to meet this requirement, it would have to sell portfolio
securities at a disadvantageous time. In addition, the Fund might be required to
deliver the securities underlying futures or options contracts it holds. Or, in
the case of covered options that a Fund has written, the Fund would be unable to
sell the Fund will not be able to sell the underlying securities or dispose of
assets held in a segregated account until the options expire or are exercised.
Similarly, if a Fund is unable to effect a closing sale transaction with respect
to options it has purchased, it would have to exercise the options in order to
realize any profit and will incur transaction costs upon the purchase and
subsequent sale of the underlying securities.
Each Fund will seek to reduce the risk that it will be unable to "close out"
contracts by entering into only futures or options contracts that are traded on
national exchanges and for which there appears to be a liquid secondary market.
Reasons for the absence of a liquid secondary market on an exchange include the
following: (i) there may be insufficient trading interest in certain options;
(ii) an exchange may impose restrictions on opening and/or closing transactions;
(iii) trading halts, suspensions or other restrictions may be imposed with
respect to particular classes or series of options; (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v) the facilities
of an exchange or the Options Clearing Corporation (the "OCC") may not at all
times be adequate to handle current trading volume; and (vi) one or more
exchanges could, for economic or other reasons, decide or be compelled at some
future date to discontinue the trading of options (or a particular class or
series of options), although outstanding options on that exchange that had been
issued by the OCC as a result of trades on that exchange would continue to be
exercisable in accordance with their terms.
It is also possible that changes in the prices of futures or options contracts
might correlate imperfectly, or not at all, with changes in the market values of
the securities being hedged. This situation could result from price distortions
in the futures or options markets due to, among other things, active trading by
speculators and use of offsetting "closing" transactions by other investors
seeking to avoid meeting additional margin deposit requirements. In the event of
significant market distortions, it is possible that a Fund could lose money on
futures or options contracts and experience appreciation in the value of its
portfolio securities, or vice versa.
6
<PAGE> 25
Finally, adverse market movements could cause a Fund to lose up to its full
investment in an options contract and/or to experience substantial losses on an
investment in a futures contract. However, barring such significant market
distortions, a similar result could be expected were a Fund to invest directly
in the securities being hedged. There is also the risk of loss by a Fund of
margin deposits in the event of bankruptcy of a broker with whom the Fund has an
open position in a futures contract or option.
Restrictions. Each Fund may enter into futures contracts and options on futures
contracts provided that aggregate deposits required do not exceed 5% of its
total assets. In addition, certain provisions of the Internal Revenue Code of
1986, as amended (the "Code"), may limit the Fund's use of futures contracts and
options.
Index participations and index participation contracts provide the equivalent of
a position in the securities comprising an index, with each security's
representation equaling its index weighting. Moreover, their holders are
entitled to payments equal to the dividends paid by the underlying index
securities. Generally, the value of an index participation or index
participation contract will rise and fall along with the value of the related
index. A Fund will invest in equity index participations and index participation
contracts only if a liquid market for them appears to exist.
The extent to which each Fund may purchase and sell futures, options, equity
index participations and index participation contracts may be limited by a
Fund's intention to meet Code requirements for qualification as a regulated
investment company. Read the "Taxes" section in this SAI for more information.
ILLIQUID SECURITIES. Investments that cannot be sold or disposed of in the
normal course of business at their approximate value will be considered
illiquid. The Investment Manager determines the liquidity of a Fund's
investments under the supervision and direction of the Board of Trustees.
Investments currently considered illiquid are repurchase agreements not maturing
within seven days and some restricted securities.
LENDING AND DIRECT DEBT. Direct debt instruments represent ownership interests
in the debt of a company, government or other entity. Lending of securities is a
common practice in the securities industry. Each Fund will engage in security
lending arrangements with the primary objective of increasing a Fund's income
through investment of the cash collateral in short-term, interest-bearing
obligations but will do so only to the extent that a Fund will not lose the tax
treatment available to regulated investment companies. A Fund will be entitled
to all dividends or interest on any of its loaned securities. Loans of
securities involve a risk that the borrower may fail to return the securities or
provide additional collateral. The Funds may loan securities to qualified
broker-dealers or other institutional investors provided: (i) the loan is
secured continuously by collateral consisting of U.S. Government securities,
letters of credit, cash or cash equivalents maintained on a daily
marked-to-market basis in an amount at least equal to the current market value
of the securities loaned; (ii) the Funds may at any time call the loan and
obtain the return of the securities loaned; (iii) the Funds will receive any
interest or dividends paid on the loaned securities; and (iv) the aggregate
market value of securities loaned will not at any time exceed one-third of the
total assets of a Fund.
MORTGAGE-BACKED SECURITIES represent an interest in an underlying pool of
mortgages. Issuers of these securities include agencies and instrumentalities of
the U.S. Government, such as the Federal Home Loan Mortgage Corporation and the
Federal National Mortgage Association, and private entities, such as banks. The
income paid on mortgage-backed securities depends upon the income received from
7
<PAGE> 26
the underlying pool of mortgages. These securities are subject to interest rate
risk, like other debt securities, in addition to prepayment risk.
Mortgage-backed securities include collateralized mortgage obligations,
mortgage-backed bonds and stripped mortgage-backed securities.
MONEY MARKET SECURITIES are high-quality, short-term securities that may be
issued by entities such as the U.S. Government, corporations and financial
institutions (like banks).
PRECIOUS METAL-RELATED INVESTMENTS. Prices of precious metals can be expected to
respond to changes in rates of inflation and to perceptions of economic and
political instability. Historically, the prices of precious metals and of
securities of companies engaged in the precious metal-related activities have
been subject to extreme fluctuations, as a result of, among other reasons, wider
economic or political instability. The Funds may invest in common stocks of
domestic companies principally engaged in precious metal-related activities,
which include companies principally engaged in the extraction, processing,
distribution or marketing of precious metals, if, at the time of investment, the
Investment Manager considers that at least 50% of the company's assets, revenues
or profits are derived from the precious metal industry.
The Funds also may invest in futures on precious metals, such as gold futures,
and options thereon. Such investments are subject to the investment limitations
on investments in futures and options for the Funds as set forth in the "Futures
Contracts and Options on Futures Contracts" section of the SAI.
PREFERRED STOCK. The Funds may invest in preferred stock. Preferred stock has
priority over common stock as to income and generally as to assets of an issuer;
however, income is usually limited to a definitive percentage regardless of the
issuer's earnings. Preferred stock usually has limited voting rights.
Restriction. Each Fund will not purchase preferred stocks, if as a result, it
would have more than 5% of net assets in such securities.
REAL ESTATE-RELATED INVESTMENTS. Real estate-related instruments include real
estate investment trusts, commercial and residential mortgage-backed securities
and real estate financings. Real estate-related instruments are sensitive to
factors such as changes in real estate values and property taxes, interest
rates, cash flow of underlying real estate assets, overbuilding, and the
management skill and creditworthiness of the issuer. Real estate-related
instruments also may be affected by certain tax and regulatory requirements,
such as those relating to the environment.
REPURCHASE AGREEMENTS. Repurchase agreements are instruments under which a buyer
acquires ownership of a security from a seller who agrees to repurchase the
security at a mutually agreed upon time and price (which price is higher than
the purchase price), thereby determining the yield during the buyer's holding
period. Under the 1940 Act, a repurchase agreement is deemed to be a Fund's loan
of money to the seller, collateralized by the underlying security. The interest
rate is effective for the period of time in which the Fund is invested in the
agreement and is not related to the coupon rate on the underlying security. Any
repurchase agreements a Fund enters into will involve the Fund as the buyer and
banks or broker-dealers as sellers (repurchase agreements with broker-dealers
will be limited to obligations of the U.S. Government or its agencies or
instrumentalities). The period of these repurchase agreements will be usually
short--from overnight to one week--and at no time will the Fund invest in
repurchase agreements for more than one year. However, securities subject to
repurchase agreements may have maturity dates in excess of one year from the
effective date of the repurchase agreements. The transaction requires the
initial collateralization of the seller's obligation with securities having a
market value, including accrued interest, equal to at least 102% of the dollar
amount the Fund invests with the value marked-to-market daily to maintain 100%
coverage. A
8
<PAGE> 27
default by the seller might cause the Fund to experience a loss or delay in the
liquidation of the collateral securing the repurchase agreement. The Fund might
also incur disposition costs in liquidating the collateral. The Fund will make
payment for such securities only upon physical delivery or evidence of book
entry transfer to the account of its custodian bank.
In the event of a bankruptcy or other default of a repurchase agreement's
seller, a Fund might incur expenses in enforcing its rights, and could
experience losses, including a decline in the value of the underlying securities
and loss of income.
RESTRICTED SECURITIES. Restricted securities are securities that are subject to
legal restrictions on their sale. Restricted securities may be considered to be
liquid if a liquid institutional or other market exists for these securities. In
making this determination, the Investment Manager, under the direction of the
Board of Trustees, will take into account the following factors: (i) the
frequency of trades and quotes for the security; (ii) the number of dealers
willing to purchase or sell the security and the number of potential purchasers;
(iii) dealer undertakings to make a market in the security; and (iv) the nature
of the security and marketplace trades (e.g., the time needed to dispose of the
security, the method of soliciting offers and the mechanics of transfer). To the
extent a Fund invests in restricted securities that are deemed liquid, the
general level of illiquidity in the Fund's portfolios may be increased if
qualified institutional buyers become uninterested in purchasing these
securities contracts.
SECURITIES OF OTHER INVESTMENT COMPANIES. Each Fund may buy shares of other
investment companies, including those managed by its Investment Manager. Because
other investment companies employ investment advisers and other service
providers, investments by a Fund may cause shareholders to pay duplicative fees.
STRIPPED SECURITIES are securities whose income and principal components are
detached and sold separately from each other. While the risks associated with
stripped securities are similar to other securities, stripped securities are
typically subject to greater changes in value. U.S. Treasury securities that
have been stripped by a Federal Reserve Bank are obligations of the U.S.
Treasury.
U.S. GOVERNMENT SECURITIES are debt securities issued by the U.S. Treasury or
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities. U.S. Treasury securities are backed by the full faith and
credit of the United States. Not all U.S. Government securities are backed by
the full faith and credit of the United States. Some U.S. Government securities
are supported by a line of credit the issuing entity has with the U.S. Treasury.
Others are supported solely by the credit of the issuing agency or
instrumentality. Of course U.S. Government securities are among the safest
securities, but they are still subject to interest rate changes which may affect
their yields.
WARRANTS. The Funds may invest in warrants, which are options to purchase equity
securities at specific prices valid for a specific period of time. The prices do
not necessarily move parallel to the prices of the underlying securities.
Warrants have no voting rights, receive no dividends and have no rights with
respect to the assets of the issuer. If a warrant is not exercised within the
specified time period, it will become worthless and a Fund will lose the
purchase price and the right to purchase the underlying security.
9
<PAGE> 28
INVESTMENT RESTRICTIONS
Except as otherwise noted, the restrictions below are fundamental and cannot be
changed without approval of the holders of a majority of the outstanding voting
securities (as defined in the Investment Company Act of 1940, the "1940 Act").
Each Fund may not:
1) Purchase securities of any issuer, except as consistent with
the maintenance of its status as a diversified company under
the 1940 Act;
2) Concentrate investments in a particular industry or group of
industries, except as permitted under the 1940 Act, or the
rules or regulations thereunder; and
3) (i) purchase or sell commodities, commodities contracts,
futures contracts or real estate, (ii) lend or borrow money,
(iii) issue senior securities, (iv) underwrite securities or
(v) pledge, mortgage or hypothecate any of its assets, except
as permitted by the 1940 Act, or the rules or regulations
thereunder.
THE FOLLOWING DESCRIPTIONS OF THE 1940 ACT MAY ASSIST INVESTORS IN UNDERSTANDING
THE ABOVE POLICIES AND RESTRICTIONS.
Diversification. Under the 1940 Act and the rules, regulations and
interpretations thereunder, a "diversified company," as to 75% of its total
assets, may not purchase securities of any issuer (other than obligations of, or
guaranteed by, the U.S. Government or its agencies, or instrumentalities or
securities of other registered investment companies) if, as a result, more than
5% of its total assets would be invested in the securities of such issuer, or
more than 10% of the issuer's voting securities would be held by the fund.
Concentration. The 1940 Act presently defines concentration as investing 25% or
more of the Fund's total assets in an industry or group of industries, with
certain exceptions.
Borrowing. The 1940 Act presently restricts a Fund from borrowing (including
pledging, mortgaging or hypothecating assets) in excess of 33 1/3% of its total
assets (not including temporary borrowings not in excess of 5% of its total
assets).
Lending. Under the 1940 Act, a Fund may only make loans if expressly permitted
by its investment policies.
NON-FUNDAMENTAL INVESTMENT POLICIES.
The following investment policies and restrictions are non-fundamental and may
be changed by the Trust's Board of Trustees. Each Fund may not:
1) Purchase securities of any issuer, if as a result, more than
15% of its net assets would be invested in illiquid
securities, including repurchase agreements with maturities
in excess of 7 days.
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<PAGE> 29
2) Invest for the purpose of exercising control or management of
another issuer.
3) Purchase securities of other investment companies, except as
permitted by the 1940 Act, including any exemptive relief
granted by the SEC.
4) Sell securities short unless it owns the security or the right
to obtain the security or equivalent securities (transactions
in futures contracts and options are not considered selling
securities short).
5) Purchase securities on margin, except such short-term credits
as may be necessary for the clearance of purchases and sales
of securities and provided that margin payments in connection
with futures contracts and options on futures shall not
constitute purchasing securities on margin.
6) Borrow money for temporary or emergency purposes except that
a Fund may (i) borrow money from banks and (ii) engage in
reverse repurchase agreements with any party; provided that
(i) and (ii) in combination do not exceed 33 1/3% of its total
assets (any borrowings that come to exceed this amount will be
reduced to the extent necessary to comply with the limitation
within three business days) and the Fund will not purchase
securities while borrowings represent more than 5% of its
total assets.
7) Concentrate investments in a particular industry or group of
industries, as concentration is defined under the Investment
Company Act of 1940 or the rules or regulations thereunder, as
such statute, rules or regulations may be amended from time to
time except to the extent the investments of its index are
concentrated.
8) Lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other
parties (this restriction does not apply to purchases of
securities or repurchase agreements).
ORGANIZATION AND MANAGEMENT OF THE TRUST
Each Fund is a series of Schwab Capital Trust (the Trust), an open-end
investment management company organized as a Massachusetts business trust on
May 7, 1993. The Trust is authorized to issue and unlimited number of shares of
beneficial interests in one or more series or classes of series (funds and/or
classes of funds). Currently, Schwab Capital Trust offers the following series:
S&P 500 Fund, Schwab International Index Fund(R), Schwab Small-Cap Index
Fund(R), Schwab Analytics Fund(R), Schwab MarketTrack(TM): All Equity Portfolio,
Growth Portfolio, Balanced Portfolio and Conservative Portfolio, Schwab
MarketManager(TM): Balanced Portfolio, Growth Portfolio, International Portfolio
and Small Cap Portfolio.
The Trust generally is not required to hold shareholder meetings. However,
shareholder meetings will be held in connection with the following matters: (1)
election or removal of Trustees if a meeting is requested in writing by a
shareholder or shareholders who beneficially own(s) 10% or more of the Trust's
shares; (2) adoption of any contract for which shareholder approval is required
by the 1940 Act; (3) any termination of the Trust to the extent and as provided
in the Declaration of Trust; (4) any amendment of the Declaration of Trust
(other than amendments changing the name of the Trust or any of its investment
portfolios, supplying
11
<PAGE> 30
any omission, curing any ambiguity or curing, correcting or supplementing any
defective or inconsistent provision thereof); (5) determining whether a court
action, proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the shareholders, to
the same extent as the stockholders of a Massachusetts business corporation; and
(6) such additional matters as may be required by law, the Declaration of Trust,
the Bylaws or any registration of the Trust with the SEC or any state or as the
Board of Trustees may consider desirable. The shareholders also would vote upon
changes to a Fund's fundamental investment objective, policies or restrictions.
Each Trustee serves until the next meeting of shareholders, if any, called for
the purpose of electing Trustees and until the election and qualification of his
or her successor or until death, resignation, retirement or removal by a
majority vote of the shares entitled to vote (as described below) or of a
majority of the Trustees. In accordance with the 1940 Act, (i) the Trust will
hold a shareholder meeting for the election of Trustees when less than a
majority of the Trustees have been elected by shareholders and (ii) if, as a
result of a vacancy in the Board of Trustees, less than two-thirds of the
Trustees have been elected by the shareholders, that vacancy will be filled by a
vote of the shareholders.
Upon the written request of 10 or more shareholders who have been such for at
least six months and who hold shares constituting at least 1% of a Trust's
outstanding shares stating that they wish to communicate with the other
shareholders for the purpose of obtaining signatures necessary to demand a
meeting to consider removal of one or more Trustees, the Trust has undertaken to
disseminate appropriate materials at the expense of the requesting shareholders.
The Bylaws of the Trust provide that a majority of shares entitled to vote shall
be a quorum for the transaction of business at a shareholders' meeting, except
that where any provision of law, of the Declaration of Trust or of the Bylaws
permits or requires that (i) holders of any series shall vote as a series, then
a majority of the aggregate number of shares of that series entitled to vote
shall be necessary to constitute a quorum for the transaction of business by
that series, or (ii) holders of any class shall vote as a class, then a majority
of the aggregate number of shares of that class entitled to vote shall be
necessary to constitute a quorum for the transaction of business by that class.
Any lesser number shall be sufficient for adjournments. Any adjourned session or
sessions may be held, within a reasonable time after the date set for the
original meeting, without the necessity of further notice. The Declaration of
Trust specifically authorizes the Board of Trustees to terminate the Trust (or
any of its investment portfolios) by notice to the shareholders without
shareholder approval.
Under Massachusetts law, shareholders of a Massachusetts business trust could,
under certain circumstances, be held personally liable for the Trust's
obligations. The Declaration of Trust, however, disclaims shareholder liability
for the Trust's acts or obligations and requires that notice of such disclaimer
be given in each agreement, obligation or instrument entered into or executed by
the Trust or the Trustees. In addition, the Declaration of Trust provides for
indemnification out of the property of an investment portfolio in which a
shareholder owns or owned shares for all losses and expenses of such shareholder
or former shareholder if he or she is held personally liable for the obligations
of the Trust solely by reason of being or having been a shareholder. Moreover,
the Trust will be covered by insurance which the Trustees consider adequate to
cover foreseeable tort claims. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is considered remote, because
it is limited to circumstances in which a disclaimer is inoperative and the
Trust itself is unable to meet its obligations. There is a remote possibility
that a Fund could become liable for a misstatement in the Prospectus or SAI
about another Fund.
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<PAGE> 31
For further information, please refer to the registration statement and exhibits
for the Trust on file with the SEC in Washington, D.C. and available upon
payment of a copying fee. The statements in the Prospectus and this SAI
concerning the contents of contracts or other documents, copies of which are
filed as exhibits to the registration statement, are qualified by reference to
such contracts or documents.
MANAGEMENT OF THE TRUST
OFFICERS AND TRUSTEES. The Officers and Trustees of the Trust, their principal
occupations over the past five years and their affiliations, if any, with The
Charles Schwab Corporation, Schwab and the Investment Manager, are as follows:
<TABLE>
<CAPTION>
POSITION WITH
NAME/DATE OF BIRTH THE TRUST PRINCIPAL OCCUPATION
- ------------------ --------- --------------------
<S> <C> <C>
CHARLES R. SCHWAB* Chairman and Trustee Chairman, Co-Chief Executive Officer and
July 29, 1937 Director, The Charles Schwab Corporation;
Chairman, Chief Executive Officer and
Director, Charles Schwab Holdings, Inc.;
Chairman and Director, Charles Schwab
& Co., Inc, Charles Schwab Investment
Management, Inc., The Charles Schwab
Trust Company, and Schwab Retirement
Plan Services, Inc.; Chairman and Director
(current board positions), and Chairman
(officer position) until December 1995,
Mayer & Schweitzer,Inc. (a securities
brokerage subsidiary of The Charles Schwab
Corporation); Director, The Gap, Inc. (a
clothing retailer), Transamerica Corporation
(a financial services organization), AirTouch
Communications (a telecommunications
company) and Siebel Systems (a software
company).
DONALD F. DORWARD Trustee Executive Vice President and Managing Director,
September 23, 1931 Grey Advertising. From 1990 to 1996, Mr.
Dorward was President and Chief Executive
Officer, Dorward & Associates. Dorward &
Associates is an advertising and
marketing/consulting firm.
</TABLE>
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<PAGE> 32
<TABLE>
<S> <C> <C>
ROBERT G. HOLMES Trustee Chairman, Chief Executive Officer and Director,
May 15, 1931 Semloh Financial, Inc. Semloh Financial is an
international financial services and investment
advisory firm.
DONALD R. STEPHENS Trustee Managing Partner, D.R. Stephens & Co.
June 28, 1938 Prior to 1995, Mr. Stephens was Chairman and
Chief Executive Officer of North American Trust
(a real estate investment trust).
MICHAEL W. WILSEY Trustee Chairman, Chief Executive Officer and Director,
August 18, 1943 Wilsey Bennett, Inc. (truck and air
transportation, real estate investment and
management, and investments).
TAI-CHIN TUNG Treasurer and Principal Vice President - Finance, Charles Schwab & Co.,
March 7, 1951 Financial Officer Inc.; Controller, Charles Schwab Investment
Management, Inc. From 1994 to 1996, Ms. Tung
was Controller for Robertson Stephens Investment
Management, Inc. From 1993 to 1994, she was
Vice President of Fund Accounting, Capital
Research and Management Co.
WILLIAM J. KLIPP* Executive Vice Executive Vice President, SchwabFunds(R),
December 9, 1955 President, Chief Charles Schwab & Co., Inc.; President and Chief
Operating Officer and Operating Officer, Charles Schwab Investment
Trustee Management, Inc.
STEPHEN B. WARD Senior Vice President Senior Vice President and Chief Investment
April 5, 1955 and Chief Investment Officer, Charles Schwab Investment Management,
Officer Inc.
FRANCES COLE Secretary Senior Vice President, Chief Counsel and
September 9, 1955 Assistant Corporate Secretary, Charles Schwab
Investment Management, Inc.
</TABLE>
- ----------
* This Trustee is an "interested person" of the Trust.
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<PAGE> 33
Each of the above-referenced Officers and/or Trustees also serves in the same
capacity as described for the Trust, for Schwab Investments, The Charles Schwab
Family of Funds and Schwab Annuity Portfolios. The address of each individual
listed above is 101 Montgomery Street, San Francisco, California 94104.
COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
Estimated Annual
Pension or Retirement Benefits upon
Aggregate Benefits Accrued as Retirement from the Total Compensation
Name of Person, Compensation from Part of Fund Expenses Fund from the Fund
Position the Trust from the Fund Complex(2) Complex(2) Complex(2)
- -------- --------- ------------------------ ---------- ----------
<S> <C> <C> <C> <C>
Charles R. Schwab, 0 N/A N/A 0
Chairman and Trustee
</TABLE>
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<PAGE> 34
COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
Estimated Annual
Pension or Retirement Benefits upon
Aggregate Benefits Accrued as Retirement from the Total Compensation
Name of Person, Compensation from Part of Fund Expenses Fund from the Fund
Position the Trust from the Fund Complex(2) Complex(2) Complex(2)
- -------- --------- ------------------------ ---------- ----------
<S> <C> <C> <C> <C>
William J. Klipp, 0 N/A N/A 0
Executive Vice
President, Chief Operating
Officer and Trustee
Donald F. Dorward, [] N/A N/A []
Trustee
Robert G. Holmes, [] N/A N/A []
Trustee
Donald R. Stephens, [] N/A N/A []
Trustee
Michael W. Wilsey, [] N/A N/A []
Trustee
</TABLE>
1 Figures are for the Trust's fiscal year ended October 31, 1998.
2 "Fund Complex" comprises all 35 funds of the Trust, The Charles Schwab
Family of Funds, Schwab Investments and Schwab Annuity Portfolios.
DEFERRED COMPENSATION PLAN. Pursuant to exemptive relief from the SEC, the Trust
may enter into deferred fee arrangements (the "Fee Deferral Plan" or the "Plan")
with Trustees who are not "interested persons" of any of the Funds (the
"Independent Trustees").
As of the date of this SAI, none of the Independent Trustees has elected to
participate in the Fee Deferral Plan. In the event an Independent Trustee does
elect to participate in the Plan, the Plan would operate as described below.
Under the Plan, deferred Trustee's fees will be credited to a book reserve
account established by the Trust (the "Deferred Fee Account") as of the date
such fees would have been paid to such Trustee. The value of the Deferred Fee
Account as of any date will be equal to the value the Account would have had as
of that date if the amounts credited to the Account had been invested and
reinvested in the securities of the Schwab Fund or SchwabFunds(R) selected by
the participating Trustee (the "Selected Schwab Fund Securities"). SchwabFunds
include the series or classes of beneficial interest of the Trust, The Charles
Schwab Family of Funds and Schwab Investments.
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<PAGE> 35
Pursuant to the exemptive relief from the SEC, each Fund will purchase and
maintain the Selected Schwab fund Securities in an amount equal to the deemed
investments in that Fund of the Deferred Fee Accounts of the Independent
Trustees. The exemptive relief granted to the Trust permits the Funds and the
Independent Trustees to purchase the Selected Schwab fund Securities, which
transactions would otherwise be limited or prohibited by the investment policies
and/or restrictions of the Funds. See "Investment Restrictions in this SAI for
more information."
MANAGEMENT OF THE FUND
INVESTMENT MANAGER. The Investment Manager, a wholly owned subsidiary of The
Charles Schwab Corporation, serves as the Funds' investment adviser and
administrator pursuant to an Investment Advisory and Administration Agreement
(the "Advisory Agreement") between it and the Trust. The Investment Manager is
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended, and currently provides investment management services to the
SchwabFunds Family, a family of [] mutual funds with over $[xx] billion in
assets as of [date]. The Investment Manager is an affiliate of: Schwab, the
[Trust's distributor, and its shareholder services and transfer agent.] The
Advisory Agreement will continue in effect until [date] with respect to Fund and
thereafter will continue for one year terms subject to annual approval by: (1)
the Board of Trustees or (2) a vote of a majority (as defined in the 1940 Act)
of the outstanding voting securities of a Fund. In either event, the continuance
also must be approved by a majority of the Board of Trustees who are not parties
to the Agreement or interested persons (as defined in the 1940 Act) of any such
party by vote cast in person at a meeting called for the purpose of voting on
such approval. The Advisory Agreement may be terminated at any time upon 60
days' notice by either party, or by a majority vote of the outstanding shares of
a Fund, and will terminate automatically upon assignment.
The Investment Manager and Schwab have guaranteed that, through at least [date],
the total fund operating expenses of Large-Cap Fund, Large-Cap Value Fund and
Small-Cap Fund will not exceed 0.xx%, 0.xx% and 0.xx%, respectively, of each
Fund's average daily net assets.
DISTRIBUTOR. Pursuant to a Distribution Agreement, Schwab is the principal
underwriter for shares of the Funds and is the Trust's agent for the purpose of
the continuous offering of the Funds' shares. The Funds pay the cost of the
prospectuses and shareholder reports to be prepared and delivered to existing
shareholders. Schwab pays such costs when the described materials are used in
connection with the offering of shares to prospective investors and for
supplementary sales literature and advertising. Schwab receives no fee under the
Distribution Agreement. Terms of continuation, termination and assignment under
the Distribution Agreement are identical to those described above with respect
to the Advisory Agreement.
CUSTODIAN AND FUND ACCOUNTANT. ______________________ and _________________,
serve as Custodian and Fund Accountant for the Funds.
PORTFOLIO TRANSACTIONS AND TURNOVER
PORTFOLIO TRANSACTIONS. In effecting securities transactions for the Funds, the
Investment Manager seeks to obtain best price and execution. Subject to the
supervision of the Board of Trustees, the Investment Manager will generally
select brokers and dealers for the Funds primarily on the basis of the quality
and reliability of brokerage services, including execution capability and
financial responsibility. In assessing these criteria, the Investment Manager
will, among other things, monitor the performance of brokers effecting
transactions for the Fund to determine the effect, if any, that the Funds'
transactions through those brokers have on the
17
<PAGE> 36
market prices of the stocks involved. This may be of particular importance for
the Funds' investments in relatively smaller companies whose stocks are not as
actively traded as those of their larger counterparts. The Funds will seek to
buy and sell securities in a manner that causes the least possible fluctuation
in the prices of those stocks in view of the size of the transactions.
In an attempt to obtain best execution for the Funds, the Investment Manager
also may place orders directly with market makers or with third market brokers,
Instinet or brokers on an agency basis. Placing orders with third market brokers
or through Instinet may enable the Fund to trade directly with other
institutional holders on a net basis. At times, this may allow the Fund to trade
larger blocks than would be possible trading through a single market maker.
When the execution and price offered by two or more broker-dealers are
comparable, the Investment Manager may, in its discretion, in agency
transactions (and not principal transactions) utilize the services of
broker-dealers that provide it with investment information and other research
resources. Such resources also may be used by the Investment Manager when
providing advisory services to other investment advisory clients, including
mutual funds.
In determining when and to what extent to use Schwab or any other affiliated
broker-dealer as its broker for executing orders for the Funds on securities
exchanges, the Investment Manager will consider (if relevant) whether the
compensation to be paid Schwab or any other affiliated broker-dealer will be (i)
fair and reasonable, (ii) at least as favorable to the Fund as commissions that
would be charged by other qualified brokers having comparable execution
capabilities and (iii) at least as favorable as commissions contemporaneously
charged by Schwab or any other affiliated broker-dealer on comparable
transactions for its most favored unaffiliated customers. The Funds do not
consider it practicable or in the best interests of their shareholders to
solicit competitive bids for commission rates on each transaction. However, the
Board of Trustees, including a majority of the Trustees who are not "interested
persons" of Schwab or any other affiliated broker-dealer within the meaning of
the 1940 Act, (i) has prescribed procedures designed to provide that the Funds
do not pay commissions that do not meet the standards described above, (ii)
reviews those procedures annually to determine whether they remain adequate and
(iii) considers quarterly whether or not the commissions charged by Schwab or
any other affiliated broker-dealer have met the standards.
PORTFOLIO TURNOVER. For reporting purposes, each Fund's turnover rate is
calculated by dividing the value of purchases or sales of portfolio securities
for the fiscal year, whichever is less, by the monthly average value of
portfolio securities a Fund owned during the fiscal year. When making the
calculation, all securities whose maturities at the time of acquisition were one
year or less ("short-term securities") are excluded.
A 100% portfolio turnover rate would occur, for example, if all portfolio
securities (aside from short-term securities) were sold and either repurchased
or replaced once during the fiscal year. The Funds expect that their portfolio
turnover rate will not exceed 100% in any given year, a turnover rate lower than
that of most non-index mutual funds.
From time to time, a Fund may compare its portfolio turnover rate with that of
other mutual funds as reported by independent sources.
PORTFOLIO TURNOVER. The Funds have adopted a number of policies that should
cause its portfolio turnover rate to be below the portfolio turnover rate of
many other mutual funds. A lower portfolio turnover rate acts to minimize
associated transaction costs as well as the level of realized capital gains.
18
<PAGE> 37
TAXES
It is each Fund's policy to qualify for taxation as a "regulated investment
company" by meeting the requirements of Subchapter M of the Code. By following
this policy, the Funds expect to eliminate or reduce to a nominal amount the
federal income tax to which it is subject.
In order to qualify as a regulated investment company, the Funds must, among
other things, (1) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans and gains from the sale or
other disposition of stocks, securities, foreign currencies or other income
(including gains from options, futures or forward contracts) derived with
respect to its business of investing in stocks, securities or currencies; and
(2) diversify its holdings so that at the end of each quarter of its taxable
year (i) at least 50% of the market value of a Fund's total assets is
represented by cash or cash items, U.S. Government securities, securities of
other regulated investment companies and other securities limited, in respect of
any one issuer, to a value not greater than 5% of the value of a Fund's total
assets and 10% of the outstanding voting securities of such issuer, and (ii) not
more than 25% of the value of its assets is invested in the securities of any
one issuer (other than U.S. Government securities or securities of any other
regulated investment company) or of two or more issuers that a Fund controls,
within the meaning of the Code, and that are engaged in the same, similar or
related trades or businesses.
These requirements may restrict the degree to which a Fund may engage in certain
hedging transactions and may limit the range of a Fund's investments. If a Fund
qualifies as a regulated investment company, it will not be subject to federal
income tax on the part of its net investment income and net realized capital
gains, if any, which it distributes to shareholders, provided that the Fund
meets certain minimum distribution requirements. To comply with these
requirements, the Fund must distribute at least (a) 90% of its "investment
company taxable income" (as that term is defined in the Code) and (b) 90% of the
excess of its (i) tax-exempt interest income over (ii) certain deductions
attributable to that income (with certain exceptions), for its taxable year.
Each Fund intends to make sufficient distributions to shareholders to meet these
requirements.
The Code imposes a non-deductible excise tax on regulated investment companies
that do not distribute in a calendar year (regardless of whether they otherwise
have a non-calendar taxable year) an amount equal to 98% of their "ordinary
income" (as defined in the Code) for the calendar year plus 98% of their capital
gain net income for the one year period ending on October 31 of such calendar
year. The balance of such income must be distributed during the next calendar
year. For the foregoing purposes, a Fund is treated as having distributed any
amount on which it is subject to income tax for any taxable year ending in such
calendar year. If the distributions during a calendar year were less than the
required amount, the Fund is subject to a non-deductible excise tax equal to 4%
of the deficiency.
INCOME TAX INFORMATION. Any dividends declared by the Funds in October, November
or December to shareholders of record during those months and paid during the
following January are treated, for tax purposes, as if they were received by
each shareholder on December 31 of the year in which they were declared.
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<PAGE> 38
Dividends the Funds pay from net investment income and distributions from a
Fund's net short-term capital gains in excess of any net long-term capital
losses, whether received in cash or reinvested, will generally be taxable to
shareholders as ordinary income. Distributions received from a Fund designated
as long-term capital gains (net of capital losses), whether received in cash or
reinvested, will be taxable as long-term capital gains without regard to the
length of time a shareholder owned shares in the Fund. However, if a shareholder
receives a long-term capital gain distribution with respect to a Fund's shares
held for six months or less, any loss on the sale or exchange of those shares
shall, to the extent of the long-term capital gain distribution, be treated as a
long-term capital loss. For corporate investors in the Funds, dividend
distributions a Fund designates to be from dividends received from qualifying
domestic corporations will be eligible for the 70% corporate dividends-received
deduction to the extent they would qualify if the Fund were a regular
corporation. If a shareholder is not subject to income tax, generally the
shareholder will not be taxed on amounts distributed by a Fund.
A Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of taxable dividends paid to any shareholder who (1) fails to
provide a correct taxpayer identification number certified under penalty of
perjury; (2) is subject to withholding by the Internal Revenue Service for
failure to properly report all payments of interest or dividends; or (3) fails
to provide a certified statement that he or she is not subject to "backup
withholding." This "backup withholding" is not an additional tax and any amounts
withheld may be credited against the shareholder's ultimate U.S. tax liability.
The foregoing discussion relates only to federal income tax law as applicable to
U.S. citizens or residents. Foreign shareholders (i.e., nonresident alien
individuals and foreign corporations, partnerships, trusts and estates) are
generally subject to U.S. withholding tax at the rate of 30% (or a lower tax
treaty rate) on distributions derived from net investment income and short-term
capital gains. Distributions to foreign shareholders of long-term capital gains
and any gains from the sale or other disposition of shares of the Funds are
generally not subject to U.S. taxation, unless the recipient is an individual
who meets the Code's definition of "resident alien." Different tax consequences
may result if the foreign shareholder is engaged in a trade or business within
the United States. In addition, the tax consequences to a foreign shareholder
entitled to claim the benefits of a tax treaty may be different than those
described above. Distributions by a Fund also may be subject to state, local and
foreign taxes, and its treatment under applicable tax laws may differ from the
federal income tax treatment.
A Fund's transactions in futures contracts, forward contracts, foreign currency
transactions, options and certain other investment and hedging activities are
subject to special tax rules. In a given case, these rules may accelerate income
to a Fund, defer its losses, cause adjustments in the holding periods of the
Fund's assets, convert short-term capital losses into long-term capital losses
or otherwise affect the character of the Fund's income. These rules could
therefore affect the amount, timing and character of distributions to
shareholders. The Funds will endeavor to make any available elections pertaining
to these transactions in a manner believed to be in the best interest of a Fund
and its shareholders.
The discussion of federal income taxation presented above only summarizes some
of the important federal tax considerations generally affecting purchasers of
Fund shares. No attempt has been made to present a detailed explanation of the
federal income tax treatment of a Fund and its shareholders, and the discussion
is not intended as a substitute for careful tax planning. Accordingly,
prospective investors (particularly those not residing or domiciled in the
United States) should consult their own tax advisers regarding the consequences
of investing in a Fund.
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<PAGE> 39
AFTER TAX RETURN. Taxes can erode the returns a shareholder earns from a mutual
fund investment and are an important, and often overlooked, factor when
evaluating a mutual fund's performance. The Investment Manager of the Funds may
use specific investment policies in an attempt to minimize realized capital gain
distributions only to the extent they do not have a material effect on a Fund's
ability to track the performance of its index. Certain of these policies include
selling the highest tax cost securities first and trading only round-lots or
large blocks of securities. In order to minimize capital gain distributions,
while achieving a Fund's investment objective, the Investment Manager focuses on
individual tax lots in deciding when and how to manage the realization of net
capital gains. By deferring the realization of capital gains, where possible,
until an investor sells shares, those unrealized gains can accumulate in a Fund,
helping to build the value of a shareholder's investment. In addition,
shareholders are given greater control over the timing of the recognition of
such gains and the impact on their tax situations. The Investment Manager
constantly monitors, analyzes and evaluates each portfolio as well as market
conditions to manage necessary trading activity and to determine when there are
opportunities to harvest capital losses, which can then be used to offset
realized capital gains. There can be no assurance that the Investment Manager
will succeed in avoiding realized net capital gains.
SHARE PRICE CALCULATION
Each Fund's net asset value per share (NAV) is determined each Business Day
after the close of trading on the New York Stock Exchange (NYSE), generally as
of 4:00 p.m. Eastern time. The NYSE may change its holiday closing schedule at
anytime, but, currently, the NYSE is scheduled to close on the following
holidays: New Year's Day, Dr. Martin Luther King Jr.'s Day (observed),
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Shares purchased normally begin to earn
dividends on the next business day with the following exceptions: Columbus Day
and Veterans Day.
Each Fund values its portfolio securities daily based on their fair value.
Securities traded on stock exchanges are valued at the last quoted sales price
on the exchange on which such securities are primarily traded, or, lacking any
sales, at the mean between the bid and ask prices. Securities traded in the
over-the-counter market are valued at the last sales price that day, or if no
sales that day, at the mean between the bid and ask prices. Securities for which
market quotations are not readily available (including restricted securities
that are subject to limitations on their sale and illiquid securities) are
valued at fair value as determined in good faith pursuant to guidelines adopted
by the Board of Trustees. Securities may be valued on the basis of prices
provided by pricing services when such prices are believed to reflect fair
market value. The Investment Manager assigns fair values to a Fund's other
investments in good faith under Board of Trustees guidelines. The Board of
Trustees regularly reviews these values.
HOW THE FUND REFLECTS PERFORMANCE
STANDARDIZED TOTAL RETURN. Average annual total return is determined by
calculating the return on a $1,000 investment in a Fund made at the beginning of
the period, then calculating the average annual compounded rate of return that
would produce the same investment return on the $1,000 over the same period. It
is reported for periods of 1, 5, 10 years or since commencement of operations
for periods not falling on those intervals. In computing average annual total
return, a Fund assumes the reinvestment of all distributions at net asset value
on applicable reinvestment dates.
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<PAGE> 40
NONSTANDARDIZED TOTAL RETURN. Nonstandardized total return for a Fund differs
from standardized total return in that it relates to periods other than the
period for standardized total return and/or that it represents aggregate (rather
than average) total return.
In addition, an after-tax total return for a Fund may be calculated by taking
the Fund's standardized or non-standardized total return and subtracting
applicable federal taxes from the portions of the Fund's total return
attributable to capital gain distributions and ordinary income. This after-tax
total return may be compared to that of other mutual funds with similar
investment objectives as reported by independent sources.
A Fund also may report the percentage of that Fund's standardized or
non-standardized total return which would be paid to taxes annually (at the
applicable federal personal income and capital gains tax rates) before
redemption of Fund shares. This proportion may be compared to that of other
mutual funds with similar investment objectives as reported by independent
sources.
A Fund may also advertise its cumulative total return since inception. This
number is calculated using the same formula that is used for average annual
total return except that, rather than calculating the total return based on a
one-year period, cumulative total return is calculated from commencement of
operations to its fiscal year end.
THE INDEXES AND INDEXING STRATEGIES
Because the unmanaged performance of a broad-based equity index often has proven
superior to that of many individually selected stock portfolios, a growing
percentage of assets invested in the equity markets are being placed in "index"
portfolios. Institutional investors often devote a substantial percentage of
their assets to indexed strategies.
An index typically tracks the performance of a group of securities selected to
represent a particular market, and most often is used to gauge that market's
performance. The Dow Jones Industrial Average ("DJIA") and S&P 500 are two
indices designed to measure the performance of U.S. stocks. When investment
managers invest indexed separate accounts or index fund assets, they attempt to
replicate the performance of the applicable target index by holding all or a
representative sample of the securities included in the index.
An index's performance data assumes the reinvestment of dividends but does not
reflect deductions for administrative and management expenses. A Fund will be
subject to these costs and expenses, while an index does not have these
expenses. In addition, various factors, such as holding a cash balance, may
cause a Fund's performance to be higher or lower than that of an index.
The Funds are intended to make indexed investing easily available to Schwab
customers with the highest level of convenience and economy, thereby
facilitating their ability to participate in the long-term performance of the
U.S. stock market.
The difference between a Fund's total return and the total return of its
benchmark index is referred to as a Fund's tracking error. The Fund may report
or advertise tracking error.
THE S&P 500 INDEX(R). The S&P 500 is representative of the performance of the
U.S. stock market. The Index consists of 500 stocks chosen for market size,
liquidity and industry group representation. It is a market value weighted index
(stock price times number of shares outstanding), with each stock's weight in
22
<PAGE> 41
the Index proportionate to its market value. The S&P 500 does not contain the
500 largest stocks, as measured by market capitalization. Although many of the
stocks in the Index are among the largest, there also are some relatively small
companies in the Index. Those companies, however, generally are established
companies within their industry group. S&P identifies important industry groups
within the U.S. economy and then allocates a representative sample of stocks
with each group to the S&P 500. There are four major industry sectors within the
Index: Industrials, Utilities, Financial and Transportation.
THE S&P 500/BARRA VALUE INDEX is a widely recognized index comprised of 343
large-cap value common stocks selected by BARRA, Inc. and Standard & Poor's, as
of June 30, 1998. The total value of the Index (as measured by the combined
market capitalization of the companies included in the Index) is approximately
one- half of the total value of the S&P 500 Index. The securities of companies
with the highest book-to-price ratios may be included in the Index. BARRA, Inc.
and Standard & Poor's rebalance the Index at least semiannually.
THE S&P SMALLCAP 600/BARRA VALUE INDEX is a widely recognized index comprised of
373 small-cap value common stocks selected by BARRA, Inc. and Standard & Poor's
as of June 30, 1998. The total value of the Index (as measured by the combined
market capitalization of the companies included in the Index) is approximately
one- half of the total value of the S&P SmallCap 600 Index. The securities of
the companies with the highest book-to-price ratios may be included in the
Index. BARRA, Inc. and Standard & Poor's rebalance the Index at least
semiannually.
PURCHASE AND REDEMPTION OF SHARES
We designed the Funds for long-term investors. You should not use the Funds to
speculate on short-term market movements. Doing so can disrupt our investment
strategy and operations. It also raises costs for other Fund investors. As a
result, we may refuse any purchase or buy exchange order that we deem to be
disruptive to a Fund or its investments.
Each Fund has set minimum initial and subsequent investment requirements. These
minimum investment requirements may be changed at any time and may not be
applicable to certain types of investors. The Trust may waive the minimums for
purchases by Trustees and officers.
Each Fund has made an election with the SEC to pay in cash all redemptions
requested by any shareholder of record limited in amount during any 90-day
period to the lesser of $250,000 or 1% of its net assets at the beginning of
such period. This election is irrevocable without the SEC's prior approval.
Redemption requests in excess of applicable limits (as summarized below) may be
paid, in whole or in part, in investment securities or in cash, as the Board of
Trustees may deem advisable. However, payment will be made wholly in cash unless
the Board of Trustees believes that economic or market conditions exist that
would make such a practice detrimental to the best interests of the Funds. If
redemption proceeds are paid in investment securities, such securities will be
valued as set forth in the "Share Price Calculation" section of the SAI. A
redeeming shareholder would normally incur brokerage expenses if he or she were
to convert the securities to cash.
OTHER INFORMATION
The Prospectus and SAI do not contain all the information included in the
Registration Statement filed with the SEC under the Securities Act of 1933, as
amended, with respect to the securities offered by the
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<PAGE> 42
Prospectus. Certain portions of the Registration Statement have been omitted
from the Prospectus and SAI pursuant to the rules and regulations of the SEC.
The Registration Statement, including the exhibits filed therewith, may be
examined at the office of the SEC in Washington, D.C.
Statements contained in the Prospectus or SAI as to the contents of any contract
or other document referred to are not necessarily complete, and, in each
instance, reference is made to the copy of the contract or other document filed
as an exhibit to the Registration Statement. Each such statement is qualified in
all respects by such reference.
FINANCIAL INFORMATION
The Funds' independent accountant, _____________, audits and reports on the
annual financial statements of each series of the Trust and review certain
regulatory reports and each Fund's federal income tax return. It also performs
other professional accounting, auditing, tax and advisory services when the
Trust engages it to do so.
THIS SAI DOES NOT CONSTITUTE AN OFFERING BY THE TRUST, ANY SERIES THEREOF, OR BY
THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT BE LAWFULLY
MADE.
<PAGE> 43
PART C
OTHER INFORMATION
SCHWAB CAPITAL TRUST
Item 24. Financial Statements and Exhibits.
(a) Financial Statements
Financial statements and financial highlights included in the Annual Report for
Schwab International Index Fund(R) for the fiscal year ended October 31, 1997,
incorporated by reference into the SAI, were filed on December 23, 1997,
pursuant to Rule 30d-1 under the Investment Company Act of 1940 ("1940 Act"),
and are incorporated herein by reference.
Financial statements and financial highlights included in the Annual Report for
Schwab Small-Cap Index Fund(R) for the fiscal year ended October 31, 1997,
incorporated by reference into the SAI, were filed on December 23, 1997,
pursuant to Rule 30d-1 under the 1940 Act, and are incorporated herein by
reference.
Financial statements and financial highlights included in the Annual Report for
the Schwab MarketTrack POrtfolios(TM) - Growth Portfolio, Balanced Portfolio and
Conservative Portfolio (formerly Schwab Asset Director High Growth Fund,
Balanced Growth Fund, and the Conservative Growth Fund) for the fiscal year
ended October 31, 1997, incorporated by reference into the SAI, were filed on
December 23, 1997, pursuant to Rule 30d-1 under the 1940 Act, and are
incorporated herein by reference.
Financial statements and financial highlights included in the Annual Report for
Schwab S&P 500 Fund for the fiscal year ended October 31, 1997, incorporated by
reference into the SAI, were filed on December 23, 1997, pursuant to Rule 30d-1
under the 1940 Act, and are incorporated herein by reference.
Financial statements and financial highlights included in the Annual Report for
Schwab Analytics Fund(R) for the fiscal year ended October 31, 1997,
incorporated by reference into the SAI, were filed on December 23, 1997,
pursuant to Rule 30d-1 under the 1940 Act, and are incorporated herein by
reference.
Financial statements and financial highlights included in the Annual Report for
Schwab MarketManager Portfolios(TM) (formerly Schwab OneSource(R) Portfolios)
for the fiscal year ended October 31, 1997, incorporated by reference into the
SAI, were filed on December 23, 1997, pursuant to Rule 30d-1 under the 1940 Act,
and are incorporated herein by reference.
(b) Exhibits:
(1) -- Agreement and Declaration of Trust, dated
May 6, 1993 is incorporated by reference to
Exhibit 1 to Post-Effective Amendment No. 21
to Registrant's Registration on Form N-1A,
electronically filed on December 17, 1997.
(2) -- Amended and Restated Bylaws are incorporated
by reference to Exhibit 2 to Post-Effective
Amendment No. 7 to Registrant's
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Registration Statement on Form N-1A,
electronically filed on February 27, 1996.
(3) -- Inapplicable.
(4) (a) -- Article III, Section 5, Article V, Article
VI, Article VIII, Section 4 and Article IX,
Sections 1, 5 and 7 of the Agreement and
Declaration of Trust, dated May 6, 1993,
referenced in Exhibit 1 above, are
incorporated by reference to Exhibit 1 to
Post-Effective Amendment No. 21 to
Registrant's registration Statement on Form
N-1A electronically filed on December 17,
1997.
(b) -- Articles 9 and 11 of the Amended and
Restated Bylaws are incorporated by
reference to Exhibit 2 to Post-Effective
Amendment No. 7 to Registrant's Registration
Statement on Form N-1A, electronically filed
on February 27, 1996.
(5) (a) -- Investment Advisory and Administration
Agreement between Registrant and Charles
Schwab Investment Management, Inc. (the
"Investment Manager"), dated June 15, 1994,
is incorporated by reference to Exhibit 5(a)
to Post-Effective Amendment No. 21 to
Registrant's Registration Statement on Form
N-1A, electronically filed on December 17,
1997.
(b) -- Amended Schedules A and B to Investment
Advisory and Administration Agreement on
behalf of Schwab MarketTrack(TM) All Equity
Portfolio referred to at Exhibit 5(a) is
electronically filed herewith as Exhibit
5(b); Forms of Schedules A and B to the
Investment Advisory and Administration
Agreement on behalf of the Institutional
Select Funds, referred to at Exhibit 5(a)
are electronically filed herewith as Exhibit
5(b).
(c) -- Investment Sub-Advisory Agreement between
Investment Manager, on behalf of the Schwab
Analytics Fund(R), and Symphony Asset
Management is incorporated by reference to
Exhibit 5(d) to Post-Effective Amendment No.
10 to Registrant's Registration Statement on
Form N-1A, electronically filed on May 17,
1996.
(6) (a) -- Distribution Agreement between Registrant
and Charles Schwab & Co., Inc. ("Schwab"),
dated July 21, 1993, is incorporated by
reference to Exhibit 6(a) to Post-Effective
Amendment No. 21 to Registrant's
Registration Statement on Form N-1A,
electronically filed on December 17, 1997.
(b) -- Amended Schedule A to the Distribution
Agreement on behalf of Schwab MarketTrack
(TM) All Equity Portfolio referred to at
Exhibit 6(a) above is electronically filed
herewith as Exhibit 6(b); Form of Schedule A
to the Distribution Agreement on behalf of
the Institutional Select Funds referred to
at Exhibit 6(a) above is electronically
filed herewith as Exhibit 6(b).
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(7) -- Inapplicable.
(8) (a) -- Custodian Agreement between Registrant and
Morgan Stanley Trust Company, dated April 4,
1997, is incorporated by reference to
Exhibit 8(a) to Post-Effective Amendment No.
18 to Registrant's Registration Statement on
Form N-1A, electronically filed on April 14,
1997.
(b) -- Amended Appendix 2 to Custodian Agreement
between the Registrant and Morgan Stanley
Trust Company referred to at Exhibit 8(a)
above is electronically filed herewith as
Exhibit 8(e).
(c) -- Amendment to Custodian Agreement referred to
at Exhibit 8(a) above is incorporated by
reference to Exhibit 8(c) to Post-Effective
Amendment No. 21 to Registrant's
Registration Statement on Form N-1A,
electronically filed on December 17, 1997.
(d) -- Accounting Services Agreement between
Registrant and SEI Investments is
electronically filed herewith as Exhibit
8(d).
(e) -- Form of Amended Accounting Services
Agreement is electronically filed herewith
as Exhibit 8(e).
(f) -- Custodian Services Agreement between
Registrant, on behalf of the Schwab S&P 500
Fund, and PNC Bank, National Association
("PNC Bank") is incorporated by reference to
Exhibit 8(c) to Post-Effective Amendment No.
7 to Registrant's Registration Statement on
Form N-1A, electronically filed on February
27, 1996.
(g) -- Form of Schedule to the Custodian Services
Agreement between Registrant, on behalf of
the Institutional Select Index Funds and is
electronically filed herewith as Exhibit
8(g).
(h) -- Accounting Services Agreement between
Registrant, on behalf of the Schwab S&P 500
Fund, and PFPC Inc. is incorporated by
reference to Exhibit 8(d) to Post-Effective
Amendment No. 7 to Registrant's Registration
Statement on Form N-1A, electronically filed
on February 27, 1996.
(i) -- Amended Schedule to the Accounting Services
Agreement referred to at Exhibit 8(h) above
between Registrant, on behalf of the Schwab
S&P 500 Fund and the Schwab Analytics Fund,
and PFPC Inc. is incorporated by reference
to Exhibit 8(f) to Post-Effective Amendment
No. 10 to Registrant's Registration
Statement on Form N-1A, electronically filed
on May 17, 1996.
(j) -- Transfer Agency Agreement between Registrant
and Schwab is incorporated by reference to
Exhibit 8(j) to Post-Effective
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<PAGE> 46
Amendment No. 21 to Registrant's
Registration Statement on Form N-1A,
electronically filed on December 17, 1997.
(k) -- Amended Schedules A and C to the Transfer
Agency Agreement on behalf of Schwab
MarketTrack(TM) All Equity Portfolio
referred to at Exhibit 8(j) above are
electronically filed herewith as Exhibit
8(k); Forms of Schedules A and C to the
Transfer Agency Agreement on behalf of the
Institutional Select Index Funds are
electronically filed herewith as Exhibit
8(k).
(l) -- Shareholder Service Agreement between
Registrant and Schwab, dated July 21, 1993
is incorporated by reference to Exhibit 8(l)
to Post-Effective Amendment No. 21 to
Registrant's Registration Statement on Form
N-1A, electronically filed on December 17,
1997.
(m) -- Amended Schedules A and C to the Shareholder
Service Agreement between Registrant and
Schwab on behalf of Schwab MarketTrack(TM)
All Equity Portfolio referred to at Exhibit
8(l) above are electronically filed herewith
as Exhibit 8(m); Forms of Schedules A and C
to the Shareholder Service Agreement between
Registrant and Schwab on behalf of the
Institutional Select Index Funds referred to
at Exhibit 8(l) above are electronically
filed herewith as Exhibit 8(m).
(9) -- License Agreement between Schwab Capital
Trust, on behalf of Schwab S&P 500 Fund, and
Standard & Poor's is incorporated by
reference to Exhibit 9 to Post-Effective
Amendment No. 10 to Registrant's
Registration Statement on Form N-1A,
electronically filed on May 17, 1996.
(10) -- Not applicable.
(11) (a) -- Not applicable.
(b) Not applicable.
(12) -- Inapplicable.
(13) (a) -- Purchase Agreement for the Schwab
International Index Fund(R), dated June 17,
1993, is incorporated by reference to
Exhibit 13(a) to Post-Effective Amendment
No. 21 to Registrant's Registration
Statement on Form N-1A, electronically filed
on December 17, 1997.
(b) -- Purchase Agreement for the Schwab Small-Cap
Index Fund(R), dated October 13, 1993, is
incorporated by reference to Exhibit 13(b)
to Post-Effective Amendment No. 21 to
Registrant's Registration Statement on Form
N-1A, electronically filed on December 17,
1997.
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(c) -- Purchase Agreement for the Schwab
MarketTrack Portfolios - Growth Portfolio,
Balanced Portfolio and Conservative
Portfolio (formerly Schwab Asset
Director(R)- High Growth, Schwab Asset
Director - Balanced Growth, and Schwab Asset
Director - Conservative Growth Funds) is
incorporated by reference to Exhibit 13(c)
to Post-Effective Amendment No. 6 to
registrant's Registration Statement on Form
N-1A, electronically filed on December 15,
1996.
(d) -- Purchase Agreement for the Schwab S&P 500
Fund-Investor Shares and e.Shares(R) is
incorporated by reference to Exhibit 13(d)
to Post-Effective Amendment No. 7 to
Registrant's Registration Statement on Form
N-1A, electronically filed on February 27,
1996.
(e) -- Purchase Agreement for the Schwab Analytics
Fund(R) is incorporated by reference to
Exhibit 13(e) to Post-Effective Amendment
No. 13 to Registrant's Registration
Statement on Form N-1A, electronically filed
on October 10, 1996.
(f) -- Purchase Agreement for Schwab MarketManager
International Portfolio (formerly Schwab
OneSource(R)Portfolios-International) is
incorporated by reference to Exhibit 13(f)
to Post-Effective Amendment No. 13 to
Registrant's Registration Statement on Form
N-1A, electronically filed on October 10,
1996.
(g) -- Purchase Agreement for Schwab MarketManager
Growth Portfolio and Balanced Portfolio
(formerly Schwab OneSource Portfolios-Growth
Allocation and Schwab OneSource
Portfolios-Balanced Allocation) is
incorporated by reference to Exhibit 13(g)
to Post-Effective Amendment No. 14 to
Registration Statement on Form N-1A,
electronically filed on December 18, 1996.
(h) -- Purchase Agreement for Schwab
MarketManager(TM) Small Cap Portfolio
(formerly Schwab
OneSource(R)Portfolios-Small Company) is
incorporated by reference to Exhibit 13(h)
to Post-Effective Amendment No. 21 to
Registrant's Registration Statement on Form
N-1A, electronically filed on December 17,
1997.
(i) Purchase Agreement for MarketTrack(TM) All
Equity Portfolio is electronically filed
herein as Exhibit 13(i).
(j) Form of Purchase Agreement for Institutional
Large-Cap Index Fund, Institutional Select
Large-Cap Value Index Fund and Institutional
Select Small-Cap Value Index Fund are
electronically filed herein as Exhibit
13(j).
(14) -- Inapplicable.
(15) -- Inapplicable.
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<PAGE> 48
(16) (a) -- Performance calculation for the Schwab
International Index Fund(R), is incorporated
by reference to Exhibit (16) to
Post-Effective Amendment No. 2 to
Registrant's Registration Statement on Form
N-1A, filed on February 25, 1994.
(b) -- Performance calculation for the Schwab
Small-Cap Index Fund(R), dated October 31,
1994, is incorporated by reference to
Exhibit 16(i) to Post-Effective Amendment
No. 18 to Registration Statement on Form
N-1A, filed on April 14, 1997.
(c) -- Performance calculation for the Schwab
MarketTrack(TM) Growth Portfolio (formerly
Schwab Asset Director(R)-High Growth Fund)
is incorporated by reference to Exhibit
16(c) to Post-Effective Amendment No. 10 to
Registrant's Registration Statement on Form
N-1A, filed on May 17, 1996.
(d) -- Performance calculation for the Schwab
MarketTrack(TM) Balanced Portfolio (formerly
Schwab Asset Director(R)-Balanced Growth
Fund) is incorporated by reference to
Exhibit 16(d) to Post-Effective Amendment
No. 10 to Registrant's Registration
Statement on Form N-1A, filed on May 17,
1996.
(e) -- Performance calculation for the Schwab
MarketTrack(TM) Conservative Portfolio
(formerly Schwab Asset
Director(R)-Conservative Growth Fund) is
incorporated by reference to Exhibit 16(e)
to Post-Effective Amendment No. 10 to
Registrant's Registration Statement on Form
N-1A, filed on May 17, 1996.
(f) -- Performance calculation for the Schwab S&P
500 Fund is incorporated by reference to
Exhibit 16(f) to Post-Effective Amendment
No. 13 to Registrant's Registration
Statement on Form N-1A, filed on October 10,
1996.
(g) -- Performance calculation for the Schwab
Analytics Fund(R) is incorporated by
reference to Exhibit 16(g) to Post-Effective
Amendment No. 14 to Registrant's
Registration Statement on Form N-1A, filed
on December 18, 1996.
(h) -- Performance calculation for the Schwab
MarketManager(TM) International Portfolio
(formerly Schwab OneSource Portfolios(R) -
International) is incorporated by reference
to Exhibit 16(h) to Post-Effective Amendment
No.18 to Registration Statement on Form
N1-A, filed on April 14, 1997.
(i) -- Performance calculation for the Schwab
MarketManager(TM) Growth Portfolio (formerly
Schwab OneSource Portfolios - Growth
Allocation) is incorporated by reference to
Exhibit 16(i) to Post-Effective Amendment
No. 18 to Registration Statement on Form
N-1A, filed on April 14, 1997.
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<PAGE> 49
(j) -- Performance calculation for the Schwab
MarketManager(TM) Balanced Portfolio
(formerly Schwab OneSource Portfolios -
Balanced Allocation) is incorporated by
reference to Exhibit 16(j) to Post-Effective
Amendment No. 18 to Registration Statement
on Form N1-A, filed on April 14, 1997.
(17) (a) -- Financial Data Schedules for Schwab S&P 500
Fund is electronically filed herein as
exhibit 17(a).
(b) -- Financial Data Schedules for Schwab
International Index Fund is electronically
filed herein as Exhibit 17(b).
(c) -- Financial Data Schedules for Schwab Small
Cap Index is electronically filed herein as
Exhibit 17(c).
(d) -- Financial Data Schedules for Schwab
MarketTrack(TM) Growth Portfolio (formerly
Schwab Asset Director - High Growth Fund) is
filed electronically herein as Exhibit
17(d).
(e) -- Financial Data Schedules for Schwab
MarketTrack(TM) Balanced Portfolio (formerly
Schwab Asset Director - Balanced Growth Fund
is filed electronically herein as Exhibit
17(e).
(f) -- Financial Data Schedules for Schwab
MarketTrack(TM) Conservative Portfolio
(formerly Schwab Asset Director -
Conservative Growth Fund) is filed
electronically herein as Exhibit 17(f).
(g) -- Financial Data Schedules for Schwab
MarketManager(TM) International Portfolio
(formerly Schwab OneSource Portfolios -
International) is filed electronically
herein as Exhibit 17(g).
(h) -- Financial Data Schedules for Schwab
MarketManager(TM) Growthl Portfolio
(formerly Schwab OneSource Portfolios -
Growth Allocation) is filed electronically
herein as Exhibit 17(h.
(i) -- Financial Data Schedules for Schwab
MarketManager(TM) Balanced Portfolio
(formerly Schwab OneSource Portfolios -
Balanced Allocation) is filed electronically
herein as Exhibit 17(i).
(j) -- Financial Data Schedules for Schwab
MarketManager(TM) Small Cap Portfolio
(formerly Schwab OneSource Portfolios -
Small Company) is filed electronically
herein as Exhibit 17(j).
(k) -- Financial Data Schedules for Schwab
Analytics(R) Fund is electronically filed
herein as Exhibit 17(k).
(18) (a) -- Amended and Restated Multiple Class Plan,
dated April 10, 1997, for Schwab
International Index Fund, Schwab Small-Cap
Index Fund and Schwab S&P 500 Fund is
incorporated by reference to
C-7
<PAGE> 50
Post Effective Amendment 18 to Registrant's
Registration Statement on Form N1-A,
electronically filed on April 14, 1997.
Item 25. Persons Controlled by or under Common Control with Registrant.
The Charles Schwab Family of Funds, Schwab Investments and Schwab Annuity
Portfolios each are Massachusetts business trusts registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), are advised by the
Investment Manager, and employ Schwab as their principal underwriter, transfer
agent and shareholder services agent. As a result, The Charles Schwab Family of
Funds, Schwab Investments and Schwab Annuity Portfolios may be deemed to be
under common control with Registrant.
Item 26. Number of Holders of Registrant's Securities.
As of _______________, 1998, the number of record holders of shares of
beneficial interest for the series of Registrant was:
<TABLE>
<CAPTION>
Name of Fund/Class Number of Record Holders
- ------------------ ------------------------
<S> <C>
Schwab International Index Fund - Investor Shares(R) 1 (for the benefit of ____accounts)
Schwab International Index Fund - Select Shares(R) 1 (for the benefit of ____accounts)
Schwab Small-Cap Index Fund(R) 1 (for the benefit of ____accounts)
Schwab Small-Cap Index Fund - Select Shares 1 (for the benefit of ___ accounts)
Schwab MarketTrack(TM) All Equity Portfolio 1 (for the benefit of ___ accounts)
Schwab MarketTrack(TM) Growth Portfolio 1 (for the benefit of ___ accounts)
Schwab MarketTrack(TM) Balanced Portfolio 1 (for the benefit of ___ accounts)
Schwab MarketTrack(TM) Conservative Portfolio 1 (for the benefit of ___ accounts)
Schwab S&P 500 Fund-Investor Shares 1 (for the benefit of ___ accounts)
Schwab S&P 500 Fund-Select Shares(TM) 1 (for the benefit of ___ accounts)
Schwab S&P 500 Fund-e.Shares(TM) 1 (for the benefit of ___ accounts)
Schwab Analytics Fund(TM) 1 (for the benefit of ___ accounts)
Schwab MarketManager(TM) International Portfolio 1 (for the benefit of ___ accounts)
Schwab MarketManager(TM) Growth Portfolio 1 (for the benefit of ___ accounts)
Schwab MarketManager(TM) Balanced Portfolio 1 (for the benefit of ___ accounts)
</TABLE>
Item 27. Indemnification.
Article VIII of Registrant's Agreement and Declaration of Trust (Exhibit
(1) hereto, which is incorporated by reference) provides in effect that
Registrant will indemnify its officers and trustees against all liabilities and
expenses, including but not limited to amounts paid in satisfaction of
judgments, in compromise, or as fines and penalties, and counsel fees reasonably
incurred by any such officer or trustee in connection with the defense or
disposition of any action, suit, or other proceeding. However, in accordance
with Section 17(h) and 17(i) of the
C-8
<PAGE> 51
1940 Act and its own terms, said Agreement and Declaration of Trust does not
protect any person against any liability to Registrant or its shareholders to
which he or she would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office. In any event, Registrant will comply with 1940 Act
Releases No. 7221 and 11330 respecting the permissible boundaries of
indemnification by an investment company of its officers and trustees.
Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended (the "1933 Act"), may be permitted to trustees, officers
and controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, Registrant has been advised that, in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the 1933 Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Manager.
(a) Information pertaining to business and other connections of
Registrant's Investment Manager is hereby incorporated by reference to the
section of the Prospectuses captioned "Management of the Fund(s)" and to the
section of the Statement of Additional Information captioned "Management of the
Trust."
Registrant's Investment Manager, Charles Schwab Investment
Management, Inc., a Delaware corporation, organized in October 1989 to serve as
Investment Manager to the Schwab Family of Funds, also serves as the Investment
Manager to Schwab Investments and Schwab Annuity Portfolios, each an open-end
management investment company. The principal place of business of the Investment
Manager is 101 Montgomery Street, San Francisco, California 94104. The only
business in which the Investment Manager engages is that of investment manager
and administrator to Registrant, Schwab Fund Family, Schwab Capital Trust,
Schwab Annuity Portfolios and any other investment companies that Schwab may
sponsor in the future.
(b) The business, profession, vocation or employment of a
substantial nature in which each director and/or executive officer of Schwab
and/or the Investment Manager is or has been engaged during the past two fiscal
years for his or her own account in the capacity of director, officer, employee,
partner or trustee is as follows:
<TABLE>
<CAPTION>
Name and Position
with Registrant Name of Company Capacity
- ---------------- --------------- --------
<S> <C> <C>
Charles R. Schwab, Charles Schwab & Co., Inc. Chairman and Director
Chairman and Trustee
The Charles Schwab Corporation Chairman, Co-Chief Executive
Officer and Director
Schwab Holdings, Inc. Chairman, Chief Executive
Officer and Director
</TABLE>
C-9
<PAGE> 52
<TABLE>
<S> <C> <C>
Charles Schwab Investment Management, Inc. Chairman and Director
The Charles Schwab Trust Company Chairman and Director
Mayer & Schweitzer, Inc. Chairman and Director
Schwab Retirement Plan Services, Inc. Chairman and Director
Charles Schwab Limited Chairman, Chief Executive
Officer and Director
Performance Technologies, Inc. Chairman and Director
TrustMark, Inc. Chairman and Director
Schwab (SIS) Holdings, Inc. I Chairman, Chief Executive
Officer and Director
Schwab International Holdings, Inc. Chairman, Chief Executive
Officer and Director
The Gap, Inc. Director
Transamerica Corporation Director
AirTouch Communications Director
Siebel Systems Director
David S. Pottruck Charles Schwab & Co., Inc. Chief Executive Officer,
President, Chief Operating
Officer and Director
The Charles Schwab Corporation President, Co-Chief Executive
Officer, Chief Operating
Officer and Director
Schwab Holdings, Inc. Director
Schwab Retirement Plan Services, Inc. Director
Charles Schwab Limited Director
Charles Schwab Investment Management, Inc. Director
Mayer & Schweitzer, Inc. Director
Performance Technologies, Inc. Director
Schwab (SIS) Holdings, Inc. I President, Chief Operating
Officer and Director
</TABLE>
C-10
<PAGE> 53
<TABLE>
<S> <C> <C>
Schwab International Holdings, Inc. President, Chief Operating
Officer and Director
TrustMark, Inc. Director
Steven L. Scheid Charles Schwab & Co., Inc. Executive Vice President, Chief
Financial Officer and Director
The Charles Schwab Corporation Executive Vice President and
Chief Financial Officer
Schwab Holdings, Inc. Executive Vice President, Chief
Financial Officer and Director
Charles Schwab Investment Management, Inc. Chief Financial Officer and
Director
The Charles Schwab Trust Company Chief Financial Officer and
Director
Charles Schwab Limited Finance Officer and Director
Schwab Retirement Plan Services, Inc. Director
Performance Technologies, Inc. Director
Mayer & Schweitzer, Inc. Director
Schwab (SIS) Holdings, Inc. I Chief Financial Officer and
Director
Schwab International Holdings, Inc. Chief Financial Officer and
Director
The Charles Schwab Corporation Executive Vice President
Charles Schwab Investment Management, Inc. Chief Executive Officer
Karen W. Chang Charles Schwab & Co., Inc. Enterprise President
John P. Coghlan Charles Schwab & Co., Inc. Enterprise President
The Charles Schwab Corporation Executive Vice President
The Charles Schwab Trust Company President, Chief Executive
Officer and Director
Schwab Retirement Plan Services, Inc. Director
Frances Cole, Charles Schwab Investment Management, Inc. Senior Vice President, Chief
Secretary Counsel and Assistant Corporate
Secretary
Linnet F. Deily Charles Schwab & Co., Inc. Enterprise President
</TABLE>
C-11
<PAGE> 54
<TABLE>
<S> <C> <C>
Christopher V. Dodds Charles Schwab & Co., Inc. Controller and Senior Vice
President
The Charles Schwab Corporation Controller and Senior Vice
President
Carrie Dwyer Charles Schwab & Co., Inc. Executive Vice President, General
Corporate Secretary Counsel
Wayne W. Fieldsa Charles Schwab & Co., Inc. Executive Vice President
Lon Gorman Charles Schwab & Co., Inc. Enterprise President
James M. Hackley Charles Schwab & Co., Inc. Executive Vice President
Cynthia K. Holbrook The Charles Schwab Corporation Assistant Corporate Secretary
Charles Schwab & Co., Inc. Assistant Corporate Secretary
Charles Schwab Investment Management, Inc. Corporate Secretary
The Charles Schwab Trust Company Assistant Corporate Secretary
Mayer & Schweitzer Secretary
Colleen M. Hummer Charles Schwab & Co., Inc. Senior Vice President
William J. Klipp, Charles Schwab & Co., Inc. Executive Vice President
Trustee, Executive Vice
President and Chief
Operating Officer
Charles Schwab Investment Management, Inc. President and Chief Operating
Officer
Daniel O. Leemon The Charles Schwab Corporation Executive Vice President and
Chief Strategy Officer
Charles Schwab & Co., Inc. Executive Vice President and
Chief Strategy Officer
Dawn G. Lepore Charles Schwab & Co., Inc. Executive Vice President and
Chief Information Officer
The Charles Schwab Corporation Executive Vice President and
Chief Information Officer
David H. Lui, Charles Schwab Investment Management, Inc. Vice President and Chief
Compliance Officer
Susanne D. Lyons Charles Schwab & Co., Inc. Enterprise President
Amy L. Mauk Charles Schwab Investment Management, Inc. Corporate Counsel
Assistant Secretary
</TABLE>
C-12
<PAGE> 55
<TABLE>
<S> <C> <C>
Peter J. McIntosh Charles Schwab & Co., Inc. Executive Vice President
Matthew M. O'Toole, Charles Schwab Investment Management, Inc. Vice President and Corporate
Assistant Secretary Counsel
Gideon Sasson Charles Schwab & Co., Inc. Enterprise President
Karen L. Seaman, Charles Schwab Investment Management, Inc. Corporate Counsel
Assistant Secretary
Leonard Short Charles Schwab & Co., Inc. Executive Vice President
Lawrence J. Stupski Charles Schwab & Co., Inc. Director until February 1995;
Vice Chairman until August 1994
The Charles Schwab Corporation Vice Chairman and Director; Chief
Operating Officer until March 1994
Mayer & Schweitzer, Inc. Director until February 1995
The Charles Schwab Trust Company Director until December 1996
Tai-Chin Tung, Charles Schwab & Co., Inc. Vice President
Treasurer and Principal
Financial Officer
Charles Schwab Investment Management, Inc. Controller
Robertson Stephens Investment Management, Inc. Controller until 1996
Luis E. Valencia Charles Schwab & Co., Inc. Executive Vice President and
Chief Administrative Officer
The Charles Schwab Corporation Executive Vice President and
Chief Administrative Officer
Commercial Credit Corporation Managing Director until February
1994
Stephen B. Ward, Charles Schwab Investment Management, Inc. Senior Vice President and Chief
Senior Vice President and Investment Officer
Chief Investment Officer
</TABLE>
(c) The following information, which is believed to be accurate, is based upon
information provided by Symphony. The business, profession, vocation or
employment of a substantial nature in which each director and/or officer of
Symphony is or has been engaged during the past two fiscal years for his or her
own account in the capacity of director, officer, employee, partner or trustee
is as follows:
<TABLE>
<CAPTION>
Name Name of Company Capacity
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
C-13
<PAGE> 56
<TABLE>
<S> <C> <C>
Andrew T. Rudd Symphony Asset Management, Inc. Director and Chairman
BARRA, Inc. Director, Chief Executive Officer and
Chairman
Jeffrey L. Skelton Symphony Asset Management, Inc. Director, Chief Executive Officer and
President
BARRA, Inc. President, BARRA Ventures Div. until 1994
Neil L. Rudolph Symphony Asset Management, Inc. Chief Operating Officer/Chief Compliance
Officer
Wells Fargo Nikko Investment Advisors Managing Director, Chief Operating
Officer -- Mutual Fund Group until 1994
Praveen K. Gottipalli Symphony Asset Management, Inc. Director of Investments
BARRA, Inc. Director of Active Strategies until 1994
Michael J. Henman Symphony Asset Management, Inc. Director of Business Development
Wells Fargo Nikko Investment Advisors Managing Director
until 1994
</TABLE>
Item 29. Principal Underwriter.
(a) Schwab acts as principal underwriter and distributor of
Registrant's shares. Schwab currently also acts as principal underwriter for The
Charles Schwab Family of Funds, Schwab Investments and Schwab Annuity
Portfolios, and intends to act as such for any other investment company which
Schwab may sponsor in the future.
(b) See Item 28(b) for information on the officers and directors of
Schwab. The principal business address of Schwab is 101 Montgomery Street, San
Francisco, California 94104.
(c) Not applicable.
C-14
<PAGE> 57
Item 30. Location of Accounts and Records.
All accounts, books and other documents required to be maintained
pursuant to Section 31(a) of the 1940 Act and the Rules thereunder are
maintained at the offices of Registrant (transfer agency and shareholder
records); Registrant's investment manager and administrator, Charles Schwab
Investment Management, Inc., 101 Montgomery Street, San Francisco, California
94104; Registrant's former sub-investment adviser, Dimensional Fund Advisors
Inc., 1299 Ocean Avenue, Suite 1100, Santa Monica, California 90401;
Registrant's sub-investment adviser for the Schwab Analytics Fund(R) is Symphony
Asset Management, Inc., 555 California Street, Suite 2975, San Francisco,
California 94104; Registrant's principal underwriter, Charles Schwab & Co.,
Inc., 101 Montgomery Street, San Francisco, California 94104; Registrant's
custodian and fund accountants, PNC Bank, National Association/PFPC Inc., 400
Bellevue Parkway, Wilmington, Delaware 19809, Morgan Stanley Trust Company, 1
Pierrepont Plaza, Brooklyn, New York 11201, and SEI Investments, Oaks
Pennsylvania 19456; Registrant's former custodians and fund accountants,
Federated Services Company, 1001 Liberty Avenue, Pittsburgh, Pennsylvania 15222,
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02180 (ledgers, receipts, and brokerage orders); or Ropes & Gray, counsel to
Registrant, 1301 K Street, N.W., Suite 800 East, Washington, District of
Columbia 20005 (minute books, bylaws, and declaration of trust).
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
(a) Registrant undertakes to call a meeting of Shareholders, at the
request of at least 10% of Registrant's outstanding shares, for the purpose of
voting upon the question of removal of a trustee or trustees and to assist in
communications with other Shareholders as required by Section (16) of the 1940
Act.
(b) Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of Registrant's latest Annual Report to
Shareholders upon request and without charge.
C-15
<PAGE> 58
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended (the "1933 Act"), and the Investment Company Act of 1940, as amended,
Registrant has duly caused this Post Effective Amendment No. 26 to the
Registrant's Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Washington, District of
Columbia on this 14th day of August, 1998.
SCHWAB CAPITAL TRUST
Registrant
Charles R. Schwab*
---------------------------
Charles R. Schwab, Chairman
Pursuant to the requirements of the 1933 Act, this Post-Effective
Amendment No. 26 to Registrant's Registration Statement on Form N-1A has been
signed below by the following persons in the capacities indicated this 14th day
of August, 1998.
Signature Title
- --------- -----
Charles R. Schwab* Chairman and Trustee
- ------------------------
Charles R. Schwab
William J. Klipp* Executive Vice President, Trustee and
- ------------------------ Chief Operating Officer
William J. Klipp
Donald F. Dorward* Trustee
- ------------------------
Donald F. Dorward
Robert G. Holmes* Trustee
- ------------------------
Robert G. Holmes
Donald R. Stephens* Trustee
- ------------------------
Donald R. Stephens
Michael W. Wilsey* Trustee
- ------------------------
Michael W. Wilsey
Tai-Chin Tung* Treasurer and Principal Financial Officer
- ------------------------
Tai-Chin Tung
*By: /s/ Alan G. Priest
------------------
Alan G. Priest, Attorney-in-Fact
pursuant to Powers of Attorney previously filed.
<PAGE> 59
EXHIBIT INDEX
EXH. NO. DOCUMENT
- -------- --------
5(b) Amended and Forms of Schedules A and B to the Investment Advisory and
Administration Agreement
6(b) Amended and Form of Schedule A to the Distribution Agreement
8(b) Amended Appendix 2 to the Custodian Agreement
8(d) Accounting Services Agreement
8(e) Form of Amended Exhibit 1 to the Accounting Services Agreement
8(g) Form of Schedule to the Custodian Services Agreement
8(k) Amended and Forms of Schedules A and C to the Transfer Agency
Agreement
8(m) Amended and Forms of the Shareholder Service Agreement
13(i) Purchase Agreement for Schwab MarketTrack(TM) Growth Portfolio
(formerly Schwab Asset Director - Aggressive Growth Fund)
13(j) Form of Purchase Agreement for Institutional Select Funds
17(a) Financial Data Schedules for Schwab S&P 500 Fund
17(b) Financial Data Schedules for Schwab MarketTrack(TM) International
Portfolio (formerly Schwab International Index Fund)
17(c) Financial Data Schedules for Schwab Small Cap Index Fund
17(d) Financial Data Schedules for Schwab MarketTrack(TM) Growth
Portfolio (formerly Schwab Asset Director - High Growth Fund)
17(e) Financial Data Schedules for Schwab Asset Director - Balanced
Growth Fund
17(f) Financial Data Schedules for Schwab Asset Director - Conservative
Growth Fund
17(g) Financial Data Schedules for Schwab MarketManager(TM) International
Portfolio (formerly Schwab OneSource Portfolios - International)
17(h) Financial Data Schedules for Schwab MarketManager(TM) Growth
Portfolio (formerly Schwab OneSource Portfolios - Growth Allocation)
17(i) Financial Data Schedules for Schwab MarketManager(TM) Balanced
Portfolio (formerly Schwab OneSource Portfolios - Balanced
Allocation)
17(j) Financial Data Schedules for Schwab MarketManager(TM) Small Cap
Portfolio (formerly Schwab OneSource Portfolios - Small Company)
17(k) Financial Data Schedules for Schwab Analytics(R) Fund is filed
electronically herein as Exhibit 17(k).
C-18
<PAGE> 1
Exhibit 5(b)
AMENDED SCHEDULE A
TO THE INVESTMENT ADVISORY AND
ADMINISTRATION AGREEMENT
FOR SCHWAB CAPITAL TRUST
<TABLE>
<CAPTION>
Fund Effective Date
- ---- --------------
<S> <C>
Schwab International Index Fund July 21, 1993
Schwab Small-Cap Index Fund October 14, 1993
Schwab MarketTrack Growth Portfolio (formerly known as
Schwab Asset Director-High Growth Fund) September 25, 1995
Schwab MarketTrack Balanced Portfolio (formerly known as
Schwab Asset Director-Balanced Growth Fund) September 25, 1995
Schwab MarketTrack Conservative Portfolio (formerly known as
Schwab Asset Director-Conservative Growth Fund) September 25, 1995
Schwab S&P 500 Fund February 28, 1996
Schwab Analytics Fund May 21, 1996
Schwab MarketManager International Portfolio (formerly known as
Schwab OneSource Portfolios-International) September 2, 1996
Schwab MarketManager Growth Portfolio (formerly known as
Schwab OneSource Portfolios-Growth Allocation) October 13, 1996
Schwab MarketManager Balanced Portfolio (formerly known as
Schwab OneSource Portfolios-Balanced Allocation) October 13, 1996
Schwab MarketManager Small Cap Portfolio (formerly known as
Schwab OneSource Portfolios-Small Company) August 3, 1997
Schwab Market Track All Equity Portfolio (formerly known as
Schwab Asset Director-Aggressive Growth Fund) April 16, 1998
</TABLE>
SCHWAB CAPITAL TRUST
By: /s/ William J. Klipp
-------------------------------------
Name: William J. Klipp
Title: Trustee, Executive Vice
President and Chief Operating Officer
CHARLES SCHWAB INVESTMENT
MANAGEMENT, INC.
By: /s/ Stephen B. Ward
-------------------------------------
Name: Stephen B. Ward
<PAGE> 2
Title: Senior Vice President and Chief
Investment Officer
<PAGE> 3
AMENDED SCHEDULE B
TO THE INVESTMENT ADVISORY AND
ADMINISTRATION AGREEMENT
FOR SCHWAB CAPITAL TRUST
ADVISORY FEE SCHEDULE
THE FEES LISTED BELOW ARE FOR SERVICES PROVIDED UNDER THIS AGREEMENT AND ARE TO
BE ACCRUED DAILY AND PAID MONTHLY IN ARREARS:
Fund Fee
---- ---
Schwab International Index Fund Seventy one-hundredths of one
percent (0.70%) of the Fund's
average daily net assets not in
excess of $300,000,000 and sixty
one-hundredths of one percent
(0.60%) of such assets over
$300,000,000
Schwab Small-Cap Index Fund Fifty one-hundredths of one percent
(0.50%) of the Fund's average daily
net assets not in excess of
$300,000,000 and forty-five
one-hundredths of one percent
(0.45%) of such assets over
$300,000,000
Schwab MarketTrack Growth Portfolio Seventy-four one-hundredths of one
(formerly known as Schwab Asset percent (0.74%) of the
Director-High Growth Fund) Fund's average daily net assets not
in excess of $1 billion; sixty-nine
one-hundredths of one percent
(0.69%)of such net assets over $1
billion, but not more than $2
billion; and sixty-four
one-hundredths of one percent
(0.64%) of such net assets over $2
billion
Schwab MarketTrack Balanced Portfolio Seventy-four one-hundredths of one
(formerly known as Schwab Asset percent (0.74%) of the
Director-Balanced Growth Fund) Fund's average daily net assets not
in excess of $1 billion; sixty-nine
one-hundredths of one percent
(0.69%)of such net assets over $1
billion, but not more than $2
billion; and sixty-four
one-hundredths of one percent
(0.64%) of such net assets over $2
billion
Schwab MarketTrack Conservative Portfolio Seventy-four one-hundredths of one
(formerly known as Schwab Asset Director- percent (0.74%) of the Fund's
Conservative Growth Fund) average daily net assets not in
excess of $1) billion; sixty-nine
one-hundredths of one percent
(0.69%) of such net assets over $1
billion, but not more than $2
billion; and sixty-four
one-hundredths of one percent
(0.64%) of such net assets over $2
billion
<PAGE> 4
Fund Fee
---- ---
Schwab S&P 500 Fund Thirty-six one-hundredths of one
percent (0.36%) of the Fund's
average daily net assets not in
excess of $1 billion; thirty-three
one hundredths of one percent
(0.33%) of such net assets over $1
billion, but not more than $2
billion; and thirty-one one
hundredths of one percent (0.31%)
of such net assets over $2 billion.
Schwab Analytics Fund Seventy-four one hundredths of one
percent (0.74%) of the Fund's
average daily net assets not in
excess of $1 billion; sixty-nine
one hundredths of one percent
(0.69%) of such net assets over $1
billion, but not more than $2
billion; and sixty-four one
hundredths of one percent (0.64%)
of such net assets over $2 billion.
Schwab MarketManager International Portfolio (formerly Seventy-four
Portfolio (formerly known as Schwab one hundredths of one percent
OneSource Portfolios-International) (0.74%) of the Fund's average daily
net assets not in excess of $1
billion; sixty-nine one hundredths
of one percent (0.69%) of such net
assets over $1 billion, but not
more than $2 billion; and
sixty-four one hundredths of one
percent (0.64%) of such net assets
over $2 billion.
Schwab MarketManager Growth Portfolio Seventy-four one hundredths of one
(formerly known as Schwab OneSource percent (0.74%) the of Fund's
Portfolios-Growth Allocation) average daily net assets not in
excess of $1 billion; sixty-nine
one hundredths of one percent
(0.69%) of such net assets over $1
billion, but not more than $2
billion; and sixty-four one
hundredths of one percent (0.64%)
of such net assets over $2 billion.
Schwab MarketManager Balanced (formerly Seventy-four one
Portfolio (formerly known as Schwab hundredths of one percent the
OneSource Portfolios-Balanced Allocation) (0.74%) of Fund's average daily net
assets not in excess of $1 billion;
sixty-nine one hundredths of one
percent (0.69%) of such net assets
over $1 billion, but not more than
$2 billion; and sixty-four one
hundredths of one percent (0.64%)
of such net assets over $2 billion.
Schwab MarketManager Small Cap Seventy-four one hundredths of one
Portfolio (formerly known as Schwab percent (0.74%) of the Fund's
OneSource Portfolios-Small Company) average daily net assets not in
excess of $1 billion; sixty-nine
one hundredths of one percent
(0.69%) of such net assets over $1
billion, but not more than $2
billion; and sixty-four one
hundredths of one percent (0.64%)
of such net assets over $2 billion.
<PAGE> 5
Fund Fee
---- ---
Schwab Market Track All Equity Seventy-four one hundredths of one
Portfolio (formerly known as Schwab percent (0.74%) of the Fund's
Asset Director-Aggressive Growth Fund) average daily net assets not in
excess of $1 billion; sixty-nine
one hundredths of one percent
(0.69%) of such net assets over $1
billion, but not more than $2
billion; and sixty-four one
hundredths of one percent (0.64%)
of such net assets over $2 billion.
SCHWAB CAPITAL TRUST
By: /s/ William J. Klipp
--------------------------
Name: William J. Klipp
Title: Trustee, Executive Vice
President and
Chief Operating Officer
CHARLES SCHWAB INVESTMENT
MANAGEMENT, INC.
By: /s/ Stephen B. Ward
--------------------------
Name: Stephen B. Ward
Title: Senior Vice President and
Chief Investment Officer
<PAGE> 6
FORM OF AMENDED SCHEDULE A
TO THE INVESTMENT ADVISORY AND
ADMINISTRATION AGREEMENT
FOR SCHWAB CAPITAL TRUST
<TABLE>
<CAPTION>
Fund Effective Date
- ---- --------------
<S> <C>
Schwab International Index Fund July 21, 1993
Schwab Small-Cap Index Fund October 14, 1993
Schwab MarketTrack Growth Portfolio (formerly known as Schwab Asset September 25, 1995
Director-High Growth Fund)
Schwab MarketTrack Balanced Portfolio (formerly known as Schwab Asset September 25, 1995
Director-Balanced Growth Fund)
Schwab MarketTrack Conservative Portfolio (formerly known as Schwab Asset September 25, 1995
Director-Conservative Growth Fund)
Schwab S&P 500 Fund February 28, 1996
Schwab Analytics Fund May 21, 1996
Schwab MarketManager International Portfolio (formerly known as Schwab September 2, 1996
OneSource Portfolios-International)
Schwab MarketManager Growth Portfolio (formerly known as Schwab OneSource October 13, 1996
Portfolios-Growth Allocation)
Schwab MarketManager Balanced Portfolio (formerly known as Schwab October 13, 1996
OneSource Portfolios-Balanced Allocation)
Schwab MarketManager Small Cap Portfolio (formerly known as Schwab August 3, 1997
OneSource Portfolios-Small Company)
Schwab Market Track All Equity Portfolio (formerly known as Schwab Asset April 16, 1998
Director-Aggressive Growth Fund)
Institutional Select Large-Cap Index Fund
Institutional Select Large-Cap Value Index Fund
Institutional Select Small-Cap Index Fund
</TABLE>
SCHWAB CAPITAL TRUST
By: ___________________
Name: William J. Klipp
Title: Trustee, Executive Vice
President and Chief Operating Officer
CHARLES SCHWAB INVESTMENT
MANAGEMENT, INC.
<PAGE> 7
By: ____________________
Name: Stephen B. Ward
Title: Senior Vice President and Chief
Investment Officer
<PAGE> 8
FORM OF AMENDED SCHEDULE B
TO THE INVESTMENT ADVISORY AND
ADMINISTRATION AGREEMENT
FOR SCHWAB CAPITAL TRUST
ADVISORY FEE SCHEDULE
THE FEES LISTED BELOW ARE FOR SERVICES PROVIDED UNDER THIS AGREEMENT AND ARE TO
BE ACCRUED DAILY AND PAID MONTHLY IN ARREARS:
Fund Fee
---- ---
Schwab International Index Fund Seventy one-hundredths of
one percent (0.70%) of the
Fund's average daily net
assets not in excess of
$300,000,000 and sixty
one-hundredths of one
percent (0.60%) of such
assets over $300,000,000
Schwab Small-Cap Index Fund Fifty one-hundredths of one
percent (0.50%) of the
Fund's average daily net
assets not in excess of
$300,000,000 and forty-five
one-hundredths of one
percent (0.45%) of such
assets over $300,000,000
Schwab MarketTrack Growth Portfolio (formerly Seventy-four one-hundredths
known as Schwab Asset Director-High Growth Fund) of one percent (0.74%) of
the Fund's average daily net
assets not in excess of $1
billion; sixty-nine
one-hundredths of one
percent (0.69%)of such net
assets over $1 billion, but
not more than $2 billion;
and sixty-four
one-hundredths of one
percent (0.64%) of such net
assets over $2 billion
Schwab MarketTrack Balanced Portfolio (formerly Seventy-four one-hundredths
known as Schwab Asset Director-Balanced Growth of one percent (0.74%) of
Fund) the Fund's average daily net
assets not in excess of $1
billion; sixty-nine
one-hundredths of one
percent (0.69%)of such net
assets over $1 billion, but
not more than $2 billion;
and sixty-four
one-hundredths of one
percent (0.64%) of such net
assets over $2 billion
Schwab MarketTrack Conservative Portfolio Seventy-four one-hundredths
(formerly known as Schwab Asset of one percent (0.74%) of
Director-Conservative Growth Fund) the Fund's average daily net
assets not in excess of $1
billion; sixty-nine
one-hundredths of one
percent (0.69%) of such net
assets over $1 billion, but
not more than $2 billion;
and sixty-four
one-hundredths of one
percent (0.64%) of such net
assets over $2 billion
<PAGE> 9
Fund Fee
- ---- ---
Schwab S&P 500 Fund Thirty-six one-hundredths of
one percent (0.36%) of the
Fund's average daily net
assets not in excess of $1
billion; thirty-three one
hundredths of one percent
(0.33%) of such net assets
over $1 billion, but not
more than $2 billion; and
thirty-one one hundredths of
one percent (0.31%) of such
net assets over $2 billion.
Schwab Analytics Fund Seventy-four one hundredths
of one percent (0.74%) of
the Fund's average daily net
assets not in excess of $1
billion; sixty-nine one
hundredths of one percent
(0.69%) of such net assets
over $1 billion, but not
more than $2 billion; and
sixty-four one hundredths of
one percent (0.64%) of such
net assets over $2 billion.
Schwab MarketManager International Portfolio Seventy-four one hundredths
(formerly known as Schwab OneSource of one percent (0.74%) of
Portfolios-International) the Fund's average daily net
assets not in excess of $1
billion; sixty-nine one
hundredths of one percent
(0.69%) of such net assets
over $1 billion, but not
more than $2 billion; and
sixty-four one hundredths of
one percent (0.64%) of such
net assets over $2 billion.
Schwab MarketManager Growth Portfolio (formerly Seventy-four one hundredths
known as Schwab OneSource Portfolios-Growth of one percent (0.74%) of
Allocation) the Fund's average daily net
assets not in excess of $1
billion; sixty-nine one
hundredths of one percent
(0.69%) of such net assets
over $1 billion, but not
more than $2 billion; and
sixty-four one hundredths of
one percent (0.64%) of such
net assets over $2 billion.
Schwab MarketManager Balanced Portfolio (formerly Seventy-four one hundredths
known as Schwab OneSource Portfolios-Balanced of one percent (0.74%) of
Allocation) the Fund's average daily net
assets not in excess of $1)
billion; sixty-nine one
hundredths of one percent
(0.69%) of such net assets
over $1 billion, but not
more than $2 billion; and
sixty-four one hundredths of
one percent (0.64%) of such
net assets over $2 billion.
Schwab MarketManager Small Cap Portfolio (formerly Seventy-four one hundredths
known as Schwab OneSource Portfolios-Small of one percent (0.74%) of
Company) the Fund's average daily net
assets not in excess of $1
billion; sixty-nine one
hundredths of one percent
(0.69%) of such net assets
over $1 billion, but not
more than $2 billion; and
sixty-four one hundredths of
one percent (0.64%) of such
net assets over $2 billion.
<PAGE> 10
Fund Fee
- ---- ---
Schwab Market Track All Equity Portfolio (formerly Seventy-four one hundredths
known as Schwab Asset Director-Aggressive Growth of one percent (0.74%) of
Fund) the Fund's average daily net
assets not in excess of $1
billion; sixty-nine one
hundredths of one percent
(0.69%) of such net assets
over $1 billion, but not
more than $2 billion; and
sixty-four one hundredths of
one percent (0.64%) of such
net assets over $2 billion.
Institutional Select Large-Cap Index Fund _____________ of one percent
(0.__%) of the Fund's
average daily net assets not
in excess of $_ billion; _
of one percent (0.__%) of
such net assets over $_
billion, but not more than
$_ billion; and ______ of
one percent (0.__%) of such
net assets over $_billion.
Institutional Select Large-Cap Value Index Fund _____________ of one percent
(0.__%) of the Fund's
average daily net assets not
in excess of $_ billion; _
of one percent (0.__%) of
such net assets over $_
billion, but not more than
$_ billion; and ______ of
one percent (0.__%) of such
net assets over $_billion.
Institutional Select Small-Cap Index Fund _____________ of one percent
(0.__%) of the Fund's
average daily net assets not
in excess of $_ billion; _
of one percent (0.__%) of
such net assets over $_
billion, but not more than
$_ billion; and ______ of
one percent (0.__%) of such
net assets over $_billion.
SCHWAB CAPITAL TRUST
By: _______________________
Name: William J. Klipp
Title: Trustee, Executive Vice
President and
Chief Operating Officer
CHARLES SCHWAB INVESTMENT
MANAGEMENT, INC.
By: _______________________
Name: Stephen B. Ward
Title: Senior Vice President and
Chief Investment Officer
<PAGE> 1
EXHIBIT 6(b)
AMENDED SCHEDULE A
TO THE DISTRIBUTION AGREEMENT
FOR SCHWAB CAPITAL TRUST
<TABLE>
<CAPTION>
Fund Effective Date
- ---- --------------
<S> <C>
Schwab International Index Fund July 21, 1993
Schwab Small-Cap Index Fund October 14, 1993
Schwab MarketTrack Growth Portfolio (formerly known as Schwab Asset September 25, 1995
Director-High Growth Fund)
Schwab MarketTrack Balanced Portfolio (formerly known as Schwab Asset September 25, 1995
Director-Balanced Growth Fund)
Schwab MarketTrack Conservative Portfolio (formerly known as Schwab Asset September 25, 1995
Director-Conservative Growth Fund)
Schwab S&P 500 Fund February 28, 1996
Schwab Analytics Fund May 21, 1996
Schwab MarketManager International Portfolio (formerly known as Schwab September 2, 1996
OneSource Portfolios-International)
Schwab MarketManager Growth Portfolio (formerly known as Schwab OneSource October 13, 1996
Portfolios-Growth Allocation)
Schwab MarketManager Balanced Portfolio (formerly known as Schwab October 13, 1996
OneSource Portfolios-Balanced Allocation)
Schwab MarketManager Small Cap Portfolio (formerly known as Schwab August 3, 1997
OneSource Portfolios-Small Company)
Schwab Market Track All Equity Portfolio (formerly known as Schwab Asset April 16, 1998
Director-Aggressive Growth Fund)
</TABLE>
SCHWAB CAPITAL TRUST
By: /s/ William J. Klipp
---------------------------
Name: William J. Klipp
Title: Executive Vice President
and Chief Operating Officer
CHARLES SCHWAB & CO., INC.
By: /s/ Colleen M. Hummer
--------------------------
Name: Colleen M. Hummer
Title: Senior Vice President
<PAGE> 2
FORM OF AMENDED SCHEDULE A
TO THE DISTRIBUTION AGREEMENT
FOR SCHWAB CAPITAL TRUST
<TABLE>
<CAPTION>
Fund Effective Date
- ---- --------------
<S> <C>
Schwab International Index Fund July 21, 1993
Schwab Small-Cap Index Fund October 14, 1993
Schwab MarketTrack Growth Portfolio (formerly known as Schwab Asset September 25, 1995
Director-High Growth Fund)
Schwab MarketTrack Balanced Portfolio (formerly known as Schwab Asset September 25, 1995
Director-Balanced Growth Fund)
Schwab MarketTrack Conservative Portfolio (formerly known as Schwab Asset September 25, 1995
Director-Conservative Growth Fund)
Schwab S&P 500 Fund February 28, 1996
Schwab Analytics Fund May 21, 1996
Schwab MarketManager International Portfolio (formerly known as Schwab September 2, 1996
OneSource Portfolios-International)
Schwab MarketManager Growth Portfolio (formerly known as Schwab OneSource October 13, 1996
Portfolios-Growth Allocation)
Schwab MarketManager Balanced Portfolio (formerly known as Schwab October 13, 1996
OneSource Portfolios-Balanced Allocation)
Schwab MarketManager Small Cap Portfolio (formerly known as Schwab August 3, 1997
OneSource Portfolios-Small Company)
Schwab Market Track All Equity Portfolio (formerly known as Schwab Asset April 16, 1998
Director-Aggressive Growth Fund)
Institutional Select Large-Cap Index Fund
Institutional Select Large-Cap Value Index Fund
Institutional Select Small-Cap Index Fund
</TABLE>
SCHWAB CAPITAL TRUST
By: ____________________
Name: William J. Klipp
Title: Executive Vice President
and Chief Operating Officer
CHARLES SCHWAB & CO., INC.
<PAGE> 3
By: ____________________
Name: Colleen M. Hummer
Title: Senior Vice President
<PAGE> 1
EXHIBIT 8(b)
APPENDIX 2
AMENDED APPENDIX 2
TO CUSTODIAN AGREEMENT
CLIENT ACCOUNTS
<TABLE>
<CAPTION>
Account Name Account Number Account Mnemonic
- ------------ -------------- ----------------
<S> <C> <C>
1. Schwab International Index Fund 00042986 SIIF
2. Schwab Small-Cap Index Fund 00043001 SCIF
3. Schwab MarketTrack Growth Portfolio 00042988 ADHG
(formerly known as Schwab Asset Director-High Growth Fund)
4. Schwab MarketTrack Balanced Portfolio 00042989 ADBG
(formerly known as Schwab Asset Director-Balanced Growth Fund)
5. Schwab MarketTrack Conservative Portfolio 00042990 ADCG
(formerly known as Schwab Asset Director-Conservative Growth Fund)
6. Schwab MarketManager International Portfolio 00042992 SOPI
(formerly known as Schwab OneSource Portfolios-International)
7. Schwab MarketManager Growth Portfolio 00042993 SOPG
(formerly known as Schwab OneSource Portfolios-Growth Allocation)
8. Schwab MarketManager Balanced Portfolio 00042994 SOPB
(formerly known as Schwab OneSource Portfolios-Balanced Allocation)
9. Schwab MarketManager Small Cap Portfolio 00043359 SOPS
(formerly known as Schwab OneSource Portfolios-Small Company)
10. Schwab MarketTrack All Equity Portfolio 00043003 ADAE
(formerly known as Schwab Asset Director-Aggressive Growth Fund)
11. Schwab MarketTrack All Equity Portfolio-Segregated 00043004
(formerly known as Schwab Asset Director-Aggressive Growth Fund) ADAS
</TABLE>
MORGAN STANLEY TRUST COMPANY
By: /s/ Victoria Platt
----------------------
Name: Victoria Platt
Title: Associate
SCHWAB CAPITAL TRUST
By: /s/ William J. Klipp
--------------------------
Name: William J. Klipp
Title: Executive Vice President
and Chief Operating Officer
<PAGE> 2
PART II - SYSTEM USER ID NUMBERS
PROFILE I: FEDERATED STAFF PROFILE
(4) USERS: ESW1870: Julie Quigley
ESW1885: Greg Podgorski
ESW1886: Dave Marsh
ESW1887: Elaine Dawes
ACCOUNTS ACCESS:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Reports: SIIF SCIF ADHG ADBG ADCG SHGP SOPI SOPG SOPB SOPS
Trades: SIIF SCIF ADHG ADBG ADCG SHGP SOPI SOPG SOPB SOPS
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TE FX CA ME TD SL MA MC MF INQ
N N N N N N N N N Y
</TABLE>
PROFILE 2: INVESTMENT MANAGEMENT STAFF PROFILE
(6) USERS: ESW1892: Sonia Yiu
ESW1893: Geri Hom
ESW1894: Jeff Tumolo
ESW1895: Patrick Conway
ESW1896: Andrea Regan
ESW1897: Joe Kupferschmidt
ACCOUNTS ACCESS:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Reports: SIIF SCIF ADHG ADBG ADCG SHGP SOPI SOPG SOPB SOPS
Trades: SIIF SCIF ADHG ADBG ADCG SHGP SOPI SOPG SOPB SOPS
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TE FX CA ME TD SL MA MC MF INQ
N N Y Y N N N N N Y
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
MORGAN STANLEY GLOBAL SECURITIES
<S> <C> <C> <C> <C> <C> <C> <C>
Hong Kong London Luxembourg Mumbai New York San Francisco Sydney Tokyo
</TABLE>
<PAGE> 3
PROFILE 3: INVESTMENT MANAGEMENT STAFF PROFILE
(6) USERS: ESW1892: Judy Wolfe
ESW1893: Nelly Sit
ESW1894: Durwin Hom
ESW1895: Bing Chan
ESW1896: Vicky Aguila
ESW1897: Rodan St. James
ACCOUNTS ACCESS:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Reports: SIIF SCIF ADHG ADBG ADCG SHGP SOPI SOPG SOPB SOPS
Trades: SIIF SCIF ADHG ADBG ADCG SHGP SOPI SOPG SOPB SOPS
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TE FX CA ME TD SL MA MC MF INQ
N N Y Y N N N N N Y
</TABLE>
LEGEND:
TE: Trades
FX: Foreign Exchange Entry
CA: Cash Movements
ME: Multiple Cash Entry
TD: Time Deposit and Repos
SL: Securities Lending
MA: Mass Client Trade Authorization
MC: Mass Client Cash Authorization
MF: Mass Client Foreign Exchange Authorization
INQ: Inquiry Functions *
* Please note Inquiry Functions includes the following:
Trade Inquiry
Trade Settlement Status
Trade Entry Status
FX/Cash Movement/Time Deposit Status
Pricing Inquiry
Products Inquiry
Stock Record Inquiry
Journal Inquiry
Income Inquiry
TRADES PROFILE REPORTS PROFILE
MTSW1TPF MTSW1RPF
MTSW2TPF MTSW2RPF
MTSW3TPF MTSW3RPF
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
MORGAN STANLEY GLOBAL SECURITIES
<S> <C> <C> <C> <C> <C> <C> <C>
Hong Kong London Luxembourg Mumbai New York San Francisco Sydney Tokyo
</TABLE>
<PAGE> 1
Exhibit 8(d)
ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made as of this 1st day of April, 1998, by and among
Schwab Capital Trust and Schwab Annuity Portfolios (each a "Trust", or
collectively, the "Trusts"), each of which is a Massachusetts business trust, on
behalf of those Funds (each a "Fund", or collectively, the "Funds"), listed on
Schedule A, as it may be amended from time to time, and SEI Fund Resources
("SEI"), a Delaware business trust.
WHEREAS, each of the Trusts desires SEI to provide, and SEI is willing
to provide, fund accounting services to the Funds and to each class (each a
Class, or collectively, the "Classes") listed on Schedule A upon the terms and
conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, each Trust and SEI hereby agree as follows:
ARTICLE 1. Retention of SEI. Each Trust hereby retains SEI to act as
fund accounting agent for the Funds and to furnish the Funds with the services
described herein. SEI hereby accepts such employment and agrees to perform the
duties set forth herein. SEI shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Trusts in any way and shall
not be deemed an agent of the Trust.
ARTICLE 2. Delivery of Documents; Authority. Each Trust shall furnish
SEI with copies, properly certified or authenticated, of the governing documents
for each of the Funds and such other documents as may be reasonably necessary to
the performance by SEI of the services set forth in this Agreement. Each Trust
agrees to furnish SEI with any amendments or supplements to such documents.
Each Trust represents and warrants that all appropriate action has been
taken by it and all other necessary persons or entities to authorize the
appointment of SEI to perform the services contemplated by this Agreement with
respect to each of the Funds.
SEI represents and warrants that all appropriate action has been taken
by it and all other necessary persons or entities to authorize the appointment
of SEI to perform the services contemplated by this Agreement with respect to
each of the Funds.
SEI undertakes to comply with all applicable requirements of the
securities and commodities laws, and any laws, rules or regulations of
governmental authorities having jurisdiction with respect to all duties to be
performed by SEI under this Agreement.
ARTICLE 3. Fund Accounting Services. SEI shall perform the services and
compile the records set forth on Schedule B. In providing services under this
Agreement, SEI shall provide the Funds with all necessary office space,
equipment (including back-up facilities in the event of equipment or systems
failure), personnel compensation and facilities for handling the fund accounting
responsibilities for the Funds. SEI shall enter into and maintain in effect with
appropriate parties agreements making adequate provision for emergency use of
electronic data processing equipment. SEI shall take all reasonable steps
necessary to minimize service disruptions. SEI shall have no responsibility for
supervising the performance by any investment adviser or sub-adviser of its
responsibilities.
1
<PAGE> 2
ARTICLE 4. Computation of Net Asset Value, Public Offering Price;
Valuation of Securities.
(a) When computing the net asset value per share of a Fund, SEI will
follow the specific provisions of the Fund's Registration Statement. In general,
such computation will be made by dividing the value of each Fund's securities,
cash and any other assets, less its liabilities, by the number of shares of the
Fund outstanding. Such computation will be made on each day required by each
Fund's Registration Statement.
(b) Securities will be valued in accordance with the specific
provisions of each Fund's Registration Statement, as amended from time to time.
SEI may use one or more external pricing services. SEI shall not be liable for
any loss, cost, damage, claim or other matter incurred by or assessed against
the Fund, regardless of how characterized, based on or resulting from the
inaccuracy or other deficiency in any information or data provided to SEI by any
such pricing service and used by SEI in the performance of these services
hereunder, provided that SEI has used reasonable care in the selection of the
pricing agent. SEI will provide daily to Charles Schwab Investment Management,
Inc. ("CSIM") by 7:00 p.m. Eastern time via fax or other electronic delivery
medium, the securities prices used in calculating the net asset value of each
Fund for its use in preparing exception reports generated for those prices on
which CSIM has a comment. Further, upon receipt of the exception reports
generated by CSIM, SEI will diligently pursue communication regarding exception
reports with the designated pricing agent. SEI shall provide CSIM with notice as
soon as possible upon the occurrence of an event that would cause a reasonable
person to conclude that the pricing agent is acting negligently or with willful
misfeasance.
ARTICLE 5. Duration and Termination of this Agreement. This Agreement
shall become effective on the dates set forth in Schedule A and shall remain in
effect for the initial term of the Agreement (the "Initial Term") and each
renewal term thereof (each, a "Renewal Term"), each as set forth under Schedule
C, unless terminated in accordance with the provisions of this Article 5. This
Agreement may be terminated only: (a) by the mutual written agreement of the
parties; (b) by either party hereto on 60 days' written notice, as of the end of
the Initial Term or at any time during any Renewal Term; (c) except for any
situation under section (g) hereof any party hereto on such date as is specified
in written notice given by the terminating party, in the event of a material
breach of this Agreement by the other party, provided the terminating party has
notified the other party of such breach at least 30 days prior to the specified
date of termination and the breaching party has not remedied such breach by the
specified date; (d) effective upon the filing of a petition for bankruptcy or
seeking protection from creditors of any party; (e) as to any Fund, effective
upon the liquidation of such Fund; (f) effective upon the liquidation of SEI;
and (g) in the event, however, of willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties by SEI at any time during the
term of this Agreement, the Trusts have a right to terminate this Agreement
immediately upon notice to SEI; however, to the extent that the Trusts' rights
under this provision arise solely due to gross negligence then the Trusts may
terminate this Agreement only if SEI fails to eliminate such gross negligence
immediately upon demand from the Trusts. If the Trusts authorize a cure period,
SEI shall take steps promptly following such demand (but in any event within 30
days thereafter) to preclude the recurrence of such gross negligence. If such
gross negligence is not cured within the cure period, this Agreement shall
terminate effective as of the first date following the cure period'. For
purposes of this Article 5, the term "liquidation" shall mean a transaction in
which the assets of a Fund are sold or otherwise disposed of and proceeds
therefrom are distributed in cash to the shareholders in complete liquidation of
the interests of such shareholders in the entity.
2
<PAGE> 3
ARTICLE 6. Compensation of SEI. For the services to be rendered by SEI pursuant
to this Agreement, the Trusts shall pay to SEI compensation at the rate
specified in Schedule C. The Trust's shall also reimburse SEI for its reasonable
out of pocket expenses as are agreed upon in advance by the parties from time to
time. SEI shall maintain detailed information about the compensation and
expenses allocated to the Trusts by Fund and by Class and shall provide this
detail to the Trusts in its monthly billings. Any revised Schedule C agreed to
by the parties shall be dated and signed by a duly authorized officer of the
Trusts and by a duly authorized officer of SEI. SEI shall in no way be
responsible for paying any expenses of the Funds not otherwise allocated herein,
including without limitation, the cost of pricing services. If this Agreement
becomes effective subsequent to the first day of a month or terminates before
the last day of a month, SEI's compensation for that part of the month in which
this Agreement is in effect shall be prorated in a manner consistent with the
calculation of the fees as set forth above. All rights of compensation under
this Agreement for services performed as of the termination date shall survive
the termination of this Agreement.
ARTICLE 7. Limitation of Liability
(a) The duties of SEI shall be confined to those expressly set forth
herein, and no implied duties are assumed by or may be asserted against SEI
hereunder. SEI shall not be liable for any error of judgment or mistake of law
or for any loss (collectively, "Losses") arising out of any act or omission in
carrying out its duties hereunder, except for those Losses resulting from
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of reckless disregard of its obligations and duties or
Losses arising out of or related to a breach by SEI of its warranty and
obligations set forth in Article 10. hereto. (As used in this Article,
references to SEI shall include officers, employees and other agents of SEI and
its affiliates.) SEI may apply to the Funds at any time for instructions and may
consult counsel for the Funds or its own counsel and with accountants and other
experts with respect to any matter arising in connection with its duties, and
SEI shall not be liable to the Funds for any action taken or omitted by it in
good faith in accordance with the opinion of counsel for the Funds, Schwab or
their accountants or other experts.
(b) So long as SEI acts without willful misfeasance, bad faith, gross
negligence, or reckless disregard for its duties, the Trusts shall indemnify SEI
and hold it harmless from and against any and all actions, suits and claims,
whether groundless or otherwise, and from and against any and all losses,
liabilities, damages, costs and charges (including reasonable counsel fees and
disbursements), arising directly or indirectly out of services rendered
hereunder. The indemnity provisions set forth herein shall indefinitely survive
the termination of this Agreement.
ARTICLE 8. Recordkeeping. SEI shall maintain all records specified in
this Agreement pursuant to Rules 31 a-1 and 31 a-2 under the 1940 Act. All such
records shall be prepared and maintained at the expense of SEI, but shall be the
property of the relevant Fund and will be made available to or surrendered
promptly to such Fund or its designee on the request of either the Fund or CSIM.
SEI shall assist CSIM, the Funds' independent auditors, or upon approval of the
relevant Fund, or upon demand, any regulatory body, in any requested review of
such Fund's accounts and records but shall be reimbursed for all expenses and
employee time invested in any such review of accounts and records outside of the
expenses and employee time routinely and normally expended by SEI as part of a
regulatory review and audit. Upon receipt of the necessary information, SEI
shall supply the necessary data for a Fund's completion of any necessary tax
returns, questionnaires, periodic reports to shareholders and such other reports
and information requests as such Fund and SEI shall agree upon from time to
time.
3
<PAGE> 4
ARTICLE 9. Confidentiality. SEI agrees to keep confidential all records
of the Trusts and information relative to each Fund and its shareholders, unless
the release of such information is otherwise consented to in writing by the
Trust. SEI agrees that should the Trusts be required to provide any information
or records to regulatory bodies (who may institute civil or criminal contempt
proceedings for a failure to comply), SEI must notify the Trusts' and obtain
their consent prior to disclosing any information, unless such disclosure is
required by law.
ARTICLE 10. Year 2000 Compliance. SEI warrants that all software code
owned by or under SEI's control, used in the performance of SEI's obligations
under this contract, will be Year 2000 compliant. For purposes of this
paragraph, "Year 2000 Compliant" means that the software will continue to
operate beyond December 31, 1999 and without creating any logical, mathematical
or programming inconsistencies concerning any date after December 31, 1999 and
without decreasing the functionality of the system applicable to dates prior to
January 1, 2000 including, but not limited to, making changes to [a] date and
data century recognition; [b] calculations which accommodate same- and multi-
century formulas and date values; and [c] input/output of date values which
reflect century dates.
ARTICLE 11. Activities of SEI. The services of SEI rendered to the Funds
are not exclusive. SEI is free to render such services to others and to have
other businesses and interests so long as its services hereunder are not
hindered thereby.
ARTICLE 12. Amendment; Assignment. This Agreement may only be amended or
modified by all parties hereto. Neither this Agreement nor any of the rights and
obligations under this Agreement may be assigned by any party without the
written consent of all parties hereto. If a successor fund accountant shall be
appointed by the Trusts, upon termination of this Agreement, SEI shall deliver
all records and property of the Trusts held by SEI to the successor fund
accountant.
ARTICLE 13. Trustees' Liability. A copy of the Declaration of Trust for
the Trusts is on file with the Secretary of State of the Commonwealth of
Massachusetts, and notice is hereby given that this instrument is executed on
behalf of the Trustees of the Trusts as Trustees and not individually and that
the obligations of this instrument are not binding upon any of the Trustees,
officers or shareholders of the Trusts individually, but are binding only upon
the assets and property of the Fund in question. The Names "Schwab Annuity
Portfolios," "Schwab Capital Trust," "Trustees of Schwab Annuity Portfolios"
and "Trustees of Schwab Capital Trust" refer, respectively, to the Trusts
created and the Trustees, as trustees but not individually or personally, acting
from time to time under the applicable Declarations of Trust which are hereby
referred to and copies of which are on file at the office of the Secretary of
the Commonwealth of Massachusetts and at the principal office of the Trusts. The
obligations of "Schwab Annuity Portfolios" and "Schwab Capital Trust," entered
into in the name or on behalf thereof by any of the Trustees, representatives or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, shareholders, representatives of the Trusts
personally, but bind only the property of the Funds in question, and all persons
dealing with any class of shares of the Funds must look solely to the Funds
property belonging to such class for the enforcement of any claims against the
Funds.
ARTICLE 14. Notice. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party giving
notice: if to the Trusts, at 101 Montgomery Street, San Francisco, CA 94104,
Attention: Secretary and if to SEI, at One Freedom Valley Drive, Oaks, PA 19456.
4
<PAGE> 5
ARTICLE 15. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of California and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the State
of California, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
ARTICLE 16. Multiple Originals. This Agreement may be executed in two
or more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
ARTICLE 17. Binding Agreement. This Agreement, and the rights and
obligations of the parties and the Funds hereunder, shall be binding on, and
inure to the benefit of the parties and the Funds and the respective successors
and assigns of each of them.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
SCHWAB CAPITAL TRUST
SCHWAB ANNUITY PORTFOLIOS
By /s/ William J. Klipp
--------------------------------
Name: William J. Klipp
Title: President and Chief Operating Officer
SEI FUND RESOURCES
By /s/ Todd Cipperman
--------------------------------
Name: Todd Cipperman
Title: Vice President and Assistant Secretary
5
<PAGE> 6
AMENDED SCHEDULE A
ACCOUNTING SERVICES AGREEMENT
LIST OF FUNDS
Name of Fund Date
- -----------------------------------------------------------------------------
Schwab MarketTrack Growth Portfolio
(formerly known as Schwab Asset Director-High Growth Fund) 4/30/98
Schwab MarketTrack Balanced Portfolio
(formerly known as Schwab Asset Director-Balanced Growth Fund) 4/30/98
Schwab MarketTrack Conservative Portfolio
(formerly known as Schwab Asset Director-Conservative Growth Fund) 4/30/98
Schwab MarketTrack All Equity Portfolio
(formerly known as Schwab Asset Director-Aggressive Growth Fund) 4/15/98
International Index Fund: Investor Shares, Select Shares 4/30/98
Small-Cap Index Fund: Investor Shares, Select Shares 4/30/98
Schwab MarketManager International Portfolio
(formerly known as Schwab OneSource Portfolios-International) 4/30/98
Schwab MarketManager Balanced Portfolio
(formerly known as Schwab OneSource Portfolios-Balanced Allocation) 4/30/98
Schwab MarketManager Growth Portfolio
(formerly known as Schwab OneSource Portfolios-Growth Allocation) 4/30/98
Schwab MarketManager Small Cap Portfolio
(formerly known as Schwab OneSource Portfolios-Small Company) 4/30/98
Schwab MarketTrack Growth Portfolio II
(formerly known as Schwab Asset Director-High Growth Portfolio) 4/30/98
SCHWAB CAPITAL TRUST
SCHWAB ANNUITY PORTFOLIOS
By /s/ William J. Klipp
----------------------
Name: William J. Klipp
Title: Executive Vice President and Chief
Operating Officer
SEI FUND RESOURCES
By /s/ Todd Cipperman
----------------------
Name: Todd Cipperman
Title: Vice President and Assistant Secretary
6
<PAGE> 7
SCHEDULE B
Fund Accounting:
1. Maintain general ledger accounts
2. Calculate NAV (with a primary backup at all times) by the NASDAQ deadline
(by 6:30 PST in the case of the OneSource portfolios)
3. Perform securities valuation; notify pricing committee on Fair Valued
Securities
4. Verify daily the underlying funds' NAVS with the underlying funds'
transfer agent or fund accountant
5. Maintain tax lots for portfolio holdings
6. Bifurcate currency vs. security gains/losses
7. Record investment purchases and sells
8. Record and verify daily income accruals
9. Record, verify expense accruals and monitor CSIM reimbursements and CSIM
waivers both by fund and class
10. Monitor daily collateral asset segregation for Repos, securities lending,
futures and etc.
11. Reconcile cash and positions daily with custodians
12. Compute investable cash; monitor O/D and line of credit outstanding
13. Oversee custodian's activities (settlements, tax reclaims, corporate
actions, etc.)
14. Complete the daily information sheet and investment management report
15. Record fund purchases, redemptions and reconcile outstanding shares daily
with transfer agent
16. Provide month end proof
17. Perform tax compliance quarterly, including the short-short calculation
(until states conform to Federal Code) seven business days before fiscal
quarter end
18. Complete weekly 3% portfolio compliance check for OneSource Portfolios
(until the Exempt Order is granted)
19. Calculate total returns and yields including external distribution of
information
20. Prepare statistics for Board meeting and external agents (reporting
services)
21. Prepare and coordinate the calendar quarter financial summaries for the
Board
22. Maintain book/tax differences and conform to SOPs
23. Calculate fund distribution for both excise and income taxes
24. Coordinate annual audit
25. Prepare and file N-SAR, 24F-2 and N30D through EDGAR
26. Monitor financial D&O and E&O coverage quarterly
27. Consult on general legal and tax issues
28. Prepare monthly service report card
29. Attend quarterly in-person service review meetings
30. Prepare and update accounting policies and operational procedures manual
31. Assist in the SEC examination
32. Comply with Article 10. Year 2000 compliance provisions
7
<PAGE> 8
SCHEDULE C
TO THE ACCOUNTING SERVICES AGREEMENT
BETWEEN
SCHWAB CAPITAL TRUST AND SCHWAB ANNUITY PORTFOLIOS
AND
SEI FUND RESOURCES
April 1, 1998
Fees:
The Trusts shall pay SEI annual compensation for the services performed
and the facilities and personnel provided by SEI pursuant to this Agreement,
the following fee:
(a) with respect to the combined value of the average daily net assets (the
"Combined Assets") of the Funds:
(i) 0.04% (4 basis points) of the Combined Assets with respect to those
assets that are less than or equal to $1 Billion (One Billion U.S.
Dollars); plus
(ii) 0.03% (3 basis points) of the Combined Assets with respect to those
assets that are greater than $1 Billion (One Billion Dollars) but less than
or equal to $2 Billion (Two Billion Dollars); plus
(iii) 0.02% (2 basis points) of the Combined Assets with respect to those
assets that are greater than $2 Billion (Two Billion Dollars) but less than
or equal to $3 Billion (Three Billion Dollars); plus
(iv) 0.015% (1.5 basis points) of the Combined Assets with respect to those
assets that are greater than $3 Billion (Three Billion Dollars) but less
than or equal to $5 Billion (Five Billion Dollars); plus
(v) 0.0125% (1.25 basis points) of the Combined Assets with respect to
those assets that are greater than $5 Billion (Five Billion Dollars) but
less than or equal to $9 Billion (Nine Billion Dollars); plus
(vi) 0.01% (1 basis point) of the Combined Assets with respect to those
assets that are greater than $9 Billion (Nine Billion Dollars) but less
than or equal to $20 Billion (Twenty Billion Dollars); plus
(vii) 0.0075% (Three quarters of One Basis Point) of the Combined Assets
with respect to those assets that are in excess of $20 Billion (Twenty
Billion Dollars); plus
(b) with respect to each class of shares other than the first class of shares
of each Fund, $15,000 per annum (Fifteen thousand dollars).
All fees payable to SEI shall accrue from the date indicated for such Fund in
Schedule A to this Agreement and be calculated daily based on the daily net
assets of each Fund. SEI's fee shall be payable monthly in arrears from the
last business day of each month for the Funds. The Trusts will limit the
addition of new funds to Schedule A to no more than 5 (Five) per year in the
aggregate unless otherwise agreed to in writing by both parties.
1
<PAGE> 9
TERM
The term of this Agreement shall commence on the first date indicated in
Schedule A hereto (the "Commencement Date") and shall remain in effect for a
period of four years (the "Initial Term"). This agreement shall continue in
effect for successive periods of 1 year (each, a "Renewal Term") after the
Initial Term, unless terminated by either party in accordance with Article 5 of
the Agreement.
SCHWAB CAPITAL TRUST
SCHWAB ANNUITY PORTFOLIOS
By /s/ Tai-Chin Tung
--------------------------
Name: Tai-Chin Tung
Title: Principal Financial Officer
SEI FUND RESOURCES
By /s/ Todd Cipperman
--------------------------
Name: Todd Cipperman
Title: Vice President
2
<PAGE> 1
Exhibit 8e
FORM OF AMENDED SCHEDULE A
ACCOUNTING SERVICES AGREEMENT
LIST OF FUNDS
Name of Fund Date
- ----------------------------------------------------------------------------
Schwab MarketTrack Growth Portfolio
(formerly known as Schwab Asset Director-High Growth Fund) 4/30/98
Schwab MarketTrack Balanced Portfolio
(formerly known as Schwab Asset Director-Balanced Growth Fund) 4/30/98
Schwab MarketTrack Conservative Portfolio
(formerly known as Schwab Asset Director-Conservative Growth Fund) 4/30/98
Schwab MarketTrack All Equity Portfolio
(formerly known as Schwab Asset Director-Aggressive Growth Fund) 4/15/98
International Index Fund: Investor Shares, Select Shares 4/30/98
Small-Cap Index Fund: Investor Shares, Select Shares 4/30/98
Schwab MarketManager International Portfolio
(formerly known as Schwab OneSource Portfolios-International) 4/30/98
Schwab MarketManager Balanced Portfolio
(formerly known as Schwab OneSource Portfolios-Balanced Allocation) 4/30/98
Schwab MarketManager Growth Portfolio
(formerly known as Schwab OneSource Portfolios-Growth Allocation) 4/30/98
Schwab MarketManager Small Cap Portfolio
(formerly known as Schwab OneSource Portfolios-Small Company) 4/30/98
Schwab MarketTrack Growth Portfolio II
(formerly known as Schwab Asset Director-High Growth Portfolio) 4/30/98
Institutional Select Large-Cap Index Fund
Institutional Select Large-Cap Value Index Fund
Institutional Select Small-Cap Value Index Fund
<PAGE> 2
SCHWAB CAPITAL TRUST
SCHWAB ANNUITY PORTFOLIOS
By _____________________________
Name: William J. Klipp
Title: Executive Vice President and Chief
Operating Officer
By _____________________________
Name:
Title:
<PAGE> 1
Exhibit 8(g)
Form of Schedule A
Custodian Services Agreement
Portfolios
Schwab S&P 500 Fund
Schwab Analytics Fund
Institutional Select Large-Cap Index Fund
Institutional Select Large-Cap Value Index Fund
Institutional Select Small-Cap Value Index Fund
Dated: _____________________
By: _____________________
Title: _____________________
By: _____________________
William J. Klipp
Title: Executive Vice President,
Chief Operating Officer
<PAGE> 1
EXHIBIT 8(K)
AMENDED SCHEDULE A
TO THE TRANSFER AGENCY AGREEMENT
FOR SCHWAB CAPITAL TRUST
<TABLE>
<CAPTION>
Fund Effective Date
<S> <C>
Schwab International Index Fund July 21, 1993
Schwab Small-Cap Index Fund October 14, 1993
Schwab MarketTrack Growth Portfolio (formerly known as Schwab Asset September 25, 1995
Director-High Growth Fund)
Schwab MarketTrack Balanced Portfolio (formerly known as Schwab Asset September 25, 1995
Director-Balanced Growth Fund)
Schwab MarketTrack Conservative Portfolio (formerly known as Schwab September 25, 1995
Asset Director-Conservative Growth Fund)
Schwab S&P 500 Fund-Investor Shares February 28, 1996
Schwab S&P 500 Fund-e.Shares February 28, 1996
Schwab Analytics Fund May 21, 1996
Schwab MarketManager International Portfolio (formerly known as Schwab September 2, 1996
OneSource Portfolios-International)
Schwab MarketManager Growth Portfolio (formerly known as Schwab October 13, 1996
OneSource Portfolios-Growth Allocation)
Schwab MarketManager Balanced Portfolio (formerly known as Schwab October 13, 1996
OneSource Portfolios-Balanced Allocation)
Schwab MarketManager Small Cap Portfolio (formerly known as Schwab August 3, 1997
OneSource Portfolios-Small Company)
Schwab Market Track All Equity Portfolio (formerly known as Schwab April 16, 1998
Asset Director-Aggressive Growth Fund)
</TABLE>
<PAGE> 2
SCHWAB CAPITAL TRUST
By: /s/ William J. Klipp
Name: William J. Klipp
Title: Executive Vice President
and Chief Operating Officer
CHARLES SCHWAB & CO., INC.
By: /s/ Colleen M. Hummer
Name: Colleen M. Hummer
Title: Senior Vice President
<PAGE> 3
AMENDED SCHEDULE C
TO THE TRANSFER AGENCY AGREEMENT
FOR SCHWAB CAPITAL TRUST
FEES
THE FEES LISTED BELOW ARE FOR SERVICES PROVIDED UNDER THIS AGREEMENT AND ARE TO
BE ACCRUED DAILY AND PAID MONTHLY IN ARREARS:
FUND FEE
- ---- ---
Schwab International Index Fund Five one-hundredths of one
percent (.05%) of the Fund's
average daily net assets
Schwab Small-Cap Index Fund Five one-hundredths of one
percent (.05%) of the Fund's
average daily net assets
Schwab MarketTrack Growth Portfolio (formerly Five one-hundredths of one
known as Schwab Asset Director-High Growth Fund) percent (.05%) of the Fund's
average daily net assets
Schwab MarketTrack Balanced Portfolio (formerly Five one-hundredths of one
known as Schwab Asset Director-Balanced Growth percent (.05%) of the Fund's
Fund) average daily net assets
Schwab MarketTrack Conservative Portfolio Five one-hundredths of one
(formerly known as Schwab Asset percent (.05%) of the Fund's
Director-Conservative Growth Fund) average daily net assets
Schwab S&P 500 Fund-Investor Shares Five one-hundredths of one
percent (.05%) of the Fund's
average daily net assets
Schwab S&P 500 Fund-e.Shares Five one-hundredths of one
percent (.05%) of the Fund's
average daily net assets
Schwab Analytics Fund Five one-hundredths of one
percent (.05%) of the Fund's
average daily net assets.
Schwab MarketManager International Portfolio Five one-hundredths of one
(formerly known as Schwab OneSource percent (.05%) of the Fund's
Portfolios-International) average daily net assets.
Schwab MarketManager Growth Portfolio Five one-hundredths of one
(formerly known as Schwab percent (.05%) of the Fund's
OneSource Portfolios-Growth average daily net assets.
Allocation)
Schwab MarketManager Balanced Portfolio (formerly Five one-hundredths of one
known as Schwab OneSource Portfolios-Balanced percent (.05%) of the Fund's
Allocation) average daily
net assets.
Schwab MarketManager Small Cap Portfolio (formerly Five one-hundredths of one
known as Schwab OneSource Portfolios-Small percent (.05%) of the Fund's
Company) average daily net assets.
Schwab Market Track All Equity Portfolio (formerly Five one-hundredths of one
known as Schwab Asset Director-Aggressive Growth percent (.05%) of the Fund's
Fund) average daily net assets.
<PAGE> 4
SCHWAB CAPITAL TRUST
By: /s/ William J. Klipp
---------------------------
Name: William J. Klipp
Title: Executive Vice President
and Chief Operating Officer
CHARLES SCHWAB & CO., INC.
By: /s/ Colleen M. Hummer
---------------------------
Name: Colleen M. Hummer
Title: Senior Vice President
<PAGE> 5
EXHIBIT 8(K)
FORM OF AMENDED SCHEDULE A
TO THE TRANSFER AGENCY AGREEMENT
FOR SCHWAB CAPITAL TRUST
<TABLE>
<CAPTION>
Fund Effective Date
<S> <C>
Schwab International Index Fund July 21, 1993
Schwab Small-Cap Index Fund October 14, 1993
Schwab MarketTrack Growth Portfolio (formerly known as Schwab Asset September 25, 1995
Director-High Growth Fund)
Schwab MarketTrack Balanced Portfolio (formerly known as Schwab Asset September 25, 1995
Director-Balanced Growth Fund)
Schwab MarketTrack Conservative Portfolio (formerly known as Schwab September 25, 1995
Asset Director-Conservative Growth Fund)
Schwab S&P 500 Fund-Investor Shares February 28, 1996
Schwab S&P 500 Fund-e.Shares February 28, 1996
Schwab Analytics Fund May 21, 1996
Schwab MarketManager International Portfolio (formerly known as Schwab September 2, 1996
OneSource Portfolios-International)
Schwab MarketManager Growth Portfolio (formerly known as Schwab October 13, 1996
OneSource Portfolios-Growth Allocation)
Schwab MarketManager Balanced Portfolio (formerly known as Schwab October 13, 1996
OneSource Portfolios-Balanced Allocation)
Schwab MarketManager Small Cap Portfolio (formerly known as Schwab August 3, 1997
OneSource Portfolios-Small Company)
Schwab Market Track All Equity Portfolio (formerly known as Schwab April 16, 1998
Asset Director-Aggressive Growth Fund)
Institutional Select Large Cap Index Fund
Institutional Select Large Cap Value Index Fund
Institutional Select Small Cap Value Index Fund
</TABLE>
<PAGE> 6
SCHWAB CAPITAL TRUST
By:
Name: William J. Klipp
Title: Executive Vice President
and Chief Operating Officer
CHARLES SCHWAB & CO., INC.
By:
Name: Colleen M. Hummer
Title: Senior Vice President
<PAGE> 7
FORM OF AMENDED SCHEDULE C
TO THE TRANSFER AGENCY AGREEMENT
FOR SCHWAB CAPITAL TRUST
FEES
THE FEES LISTED BELOW ARE FOR SERVICES PROVIDED UNDER THIS AGREEMENT AND ARE TO
BE ACCRUED DAILY AND PAID MONTHLY IN ARREARS:
FUND FEE
- ---- ---
Schwab International Index Fund Five one-hundredths of one
percent (.05%) of the Fund's
average daily net assets
Schwab Small-Cap Index Fund Five one-hundredths of one
percent (.05%) of the Fund's
average daily net assets
Schwab MarketTrack Growth Portfolio (formerly Five one-hundredths of one
known as Schwab Asset Director-High Growth Fund) percent (.05%) of the Fund's
average daily net assets
Schwab MarketTrack Balanced Portfolio (formerly Five one-hundredths of one
known as Schwab Asset Director-Balanced Growth percent (.05%) of the Fund's
Fund) average daily net assets
Schwab MarketTrack Conservative Portfolio Five one-hundredths of one
(formerly known as Schwab Asset percent (.05%) of the Fund's
Director-Conservative Growth Fund) average daily net assets
Schwab S&P 500 Fund-Investor Shares Five one-hundredths of one
percent (.05%) of the Fund's
average daily net assets
Schwab S&P 500 Fund-e.Shares Five one-hundredths of one
percent (.05%) of the Fund's
average daily net assets
Schwab Analytics Fund Five one-hundredths of one
percent (.05%) of the Fund's
average daily net assets.
Schwab MarketManager International Portfolio Five one-hundredths of one
(formerly known as Schwab OneSource percent (.05%) of the Fund's
Portfolios-International) average daily net assets.
Schwab MarketManager Growth Portfolio Five one-hundredths of one
(formerly known as Schwab percent (.05%) of the Fund's
OneSource Portfolios-Growth average daily net assets.
Allocation)
Schwab MarketManager Balanced Portfolio (formerly Five one-hundredths of one
known as Schwab OneSource Portfolios-Balanced percent (.05%) of the Fund's
Allocation) average daily
net assets.
Schwab MarketManager Small Cap Portfolio (formerly Five one-hundredths of one
known as Schwab OneSource Portfolios-Small percent (.05%) of the Fund's
Company) average daily net assets.
Schwab Market Track All Equity Portfolio (formerly Five one-hundredths of one
known as Schwab Asset Director-Aggressive Growth percent (.05%) of the Fund's
Fund) average daily net assets.
<PAGE> 8
Institutional Select Large Cap Index Fund
Institutional Select Large Cap Value Index Fund
Institutional Select Small Cap Value Index Fund
SCHWAB CAPITAL TRUST
By:
---------------------------
Name: William J. Klipp
Title: Executive Vice President
and Chief Operating Officer
CHARLES SCHWAB & CO., INC.
By:
---------------------------
Name: Colleen M. Hummer
Title: Senior Vice President
<PAGE> 1
Exhibit 8(m)
AMENDED SCHEDULE A
TO THE SHAREHOLDER SERVICE AGREEMENT
FOR SCHWAB CAPITAL TRUST
<TABLE>
<CAPTION>
Fund Effective Date
- ---- --------------
<S> <C>
Schwab International Index Fund July 21, 1993
Schwab Small-Cap Index Fund October 14, 1993
Schwab MarketTrack Growth Portfolio (formerly known as September 25, 1995
Schwab Asset Director-High Growth Fund)
Schwab MarketTrack Balanced Portfolio (formerly known as September 25, 1995
Schwab Asset Director-Balanced Growth Fund)
Schwab MarketTrack Conservative Portfolio (formerly known September 25, 1995
as Schwab Asset Director-Conservative Growth Fund)
Schwab S&P 500 Fund - Investor Shares February 28, 1996
Schwab S&P 500 Fund -e.Shares February 28, 1996
Schwab Analytics Fund May 21, 1996
Schwab MarketManager International Portfolio (formerly September 2, 1996
known as Schwab OneSource Portfolios-International)
Schwab MarketManager Growth Portfolio (formerly known as October 13, 1996
Schwab OneSource Portfolios-Growth Allocation)
Schwab MarketManager Balanced Portfolio (formerly known October 13, 1996
as Schwab OneSource Portfolios-Balanced Allocation)
Schwab MarketManager Small Cap Portfolio (formerly known August 3, 1997
as Schwab OneSource Portfolios-Small Company)
Schwab MarketTrack All Equity Portfolio (formerly known as April 16, 1998
Schwab Asset Director-Aggressive Growth Fund)
</TABLE>
<PAGE> 2
SCHWAB CAPITAL TRUST
By: /s/ William J. Klipp
--------------------
Name: William J. Klipp
Title: Executive Vice President
and Chief Operating Officer
CHARLES SCHWAB & CO., INC.
By: /s/ Colleen M. Hummer
---------------------
Name: Colleen M. Hummer
Title: Senior Vice President
<PAGE> 3
AMENDED SCHEDULE C
TO THE SHAREHOLDER SERVICE AGREEMENT
FOR SCHWAB CAPITAL TRUST
THE FEES LISTED BELOW ARE FOR SERVICES PROVIDED UNDER THIS AGREEMENT AND ARE TO
BE ACCRUED DAILY AND PAID MONTHLY IN ARREARS:
Fund Fee
- ---- ---
Schwab International Index Fund Twenty one-hundredths of one percent
(.20%) of the Fund's average daily
net assets
Schwab Small-Cap Index Fund Twenty one-hundredths of one percent
(.20%) of the Fund's average daily
net assets
Schwab MarketTrack Growth Portfolio Twenty one-hundredths of one percent
(formerly known as Schwab Asset Director- (.20%) of the Fund's average daily
High Growth Fund) net assets
Schwab MarketTrack Balanced Portfolio Twenty one-hundredths of one percent
(formerly known as Schwab Asset Director- (.20%) of the Fund's average daily
Balanced Growth Fund) net assets
Schwab MarketTrack Conservative Portfolio Twenty one-hundredths of one percent
(formerly known as Schwab Asset Director- (.20%) of the Fund's average daily
Conservative Growth Fund) net assets
Schwab S&P 500 Fund -Investor Shares Twenty one-hundredths of one percent
(.20%) of the class' average daily
net assets
Schwab S&P 500 Fund - e.Shares Five one-hundredths of one percent
(0.05%) of the class' average daily
net assets
Schwab Analytics Fund Twenty one-hundredths of one percent
(.20%) of the Fund's average daily
net assets
Schwab MarketManager International Twenty one-hundredths of one percent
Portfolio (formerly known as Schwab (.20%) of the Fund's
<PAGE> 4
Fund Fee
- ---- ---
OneSource Portfolios-International) average daily net assets.
Schwab MarketManager Growth Portfolio Twenty one-hundredths of one percent
(formerly known as Schwab OneSource (.20%) of the Fund's average daily
Portfolios-Growth Allocation) net assets
Schwab MarketManager Balanced Portfolio Twenty one-hundredths of one percent
(formerly known as Schwab OneSource (.20%) of the Fund's average daily
Portfolios-Balanced Allocation) net assets
Schwab MarketManager Small Cap Twenty one-hundredths of one percent
Portfolio (formerly known as Schwab (.20%) of the Fund's average daily
OneSource Portfolios-Small Company) net assets
Schwab Market Track All Equity Portfolio Twenty one-hundredths of one percent
(formerly known as Schwab Asset Director- (.20%) of the Fund's average daily
Aggressive Growth Fund) net assets
SCHWAB CAPITAL TRUST
By: /s/ William J. Klipp
--------------------
Name: William J. Klipp
Title: Executive Vice President
and Chief Operating Officer
CHARLES SCHWAB & CO., INC.
By: /s/ Colleen M. Hummer
---------------------
Name: Colleen M. Hummer
Title: Senior Vice President
<PAGE> 5
FORM OF AMENDED SCHEDULE A
TO THE SHAREHOLDER SERVICE AGREEMENT
FOR SCHWAB CAPITAL TRUST
<TABLE>
<CAPTION>
Fund Effective Date
- ---- --------------
<S> <C>
Schwab International Index Fund July 21, 1993
Schwab Small-Cap Index Fund October 14, 1993
Schwab MarketTrack Growth Portfolio (formerly known as September 25, 1995
Schwab Asset Director-High Growth Fund)
Schwab MarketTrack Balanced Portfolio (formerly known as September 25, 1995
Schwab Asset Director-Balanced Growth Fund)
Schwab MarketTrack Conservative Portfolio (formerly known September 25, 1995
as Schwab Asset Director-Conservative Growth Fund)
Schwab S&P 500 Fund - Investor Shares February 28, 1996
Schwab S&P 500 Fund -e.Shares February 28, 1996
Schwab Analytics Fund May 21, 1996
Schwab MarketManager International Portfolio (formerly September 2, 1996
known as Schwab OneSource Portfolios-International)
Schwab MarketManager Growth Portfolio (formerly known as October 13, 1996
Schwab OneSource Portfolios-Growth Allocation)
Schwab MarketManager Balanced Portfolio (formerly known October 13, 1996
as Schwab OneSource Portfolios-Balanced Allocation)
Schwab MarketManager Small Cap Portfolio (formerly known August 3, 1997
as Schwab OneSource Portfolios-Small Company)
Schwab MarketTrack All Equity Portfolio (formerly known as April 16, 1998
Schwab Asset Director-Aggressive Growth Fund)
Institutional Select Large-Cap Index Fund
</TABLE>
<PAGE> 6
Institutional Select Large-Cap Value Index Fund
Institutional Select Small-Cap Index Fund
SCHWAB CAPITAL TRUST
By:
---------------------------
Name: William J. Klipp
Title: Executive Vice President
and Chief Operating Officer
CHARLES SCHWAB & CO., INC.
By:
---------------------------
Name: Colleen M. Hummer
Title: Senior Vice President
<PAGE> 7
FORM OF AMENDED SCHEDULE C
TO THE SHAREHOLDER SERVICE AGREEMENT
FOR SCHWAB CAPITAL TRUST
THE FEES LISTED BELOW ARE FOR SERVICES PROVIDED UNDER THIS AGREEMENT AND
ARE TO BE ACCRUED DAILY AND PAID MONTHLY IN ARREARS:
<TABLE>
<CAPTION>
Fund Fee
- ---- ---
<S> <C>
Schwab International Index Fund Twenty one-hundredths of one percent (.20%) of the Fund's
average daily net assets
Schwab Small-Cap Index Fund Twenty one-hundredths of one percent (.20%) of the Fund's
average daily net assets
Schwab MarketTrack Growth Portfolio Twenty one-hundredths of one percent (.20%) of the Fund's
(formerly known as Schwab Asset Director- average daily net assets
High Growth Fund)
Schwab MarketTrack Balanced Portfolio Twenty one-hundredths of one percent (.20%) of the Fund's
(formerly known as Schwab Asset Director- average daily net assets
Balanced Growth Fund)
Schwab MarketTrack Conservative Portfolio Twenty one-hundredths of one percent (.20%) of the Fund's
(formerly known as Schwab Asset Director- average daily net assets
Conservative Growth Fund)
Schwab S&P 500 Fund -Investor Shares Twenty one-hundredths of one percent (.20%) of the class'
average daily net assets
Schwab S&P 500 Fund - e.Shares Five one-hundredths of one percent (0.05%) of the class'
average daily net assets
Schwab Analytics Fund Twenty one-hundredths of one percent (.20%) of the Fund's
average daily net assets.
Schwab MarketManager International Twenty one-hundredths of one percent (.20%) of the Fund's
Portfolio (formerly known as Schwab average daily net assets.
OneSource Portfolios-International)
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
Fund Fee
- ---- ---
<S> <C>
Schwab MarketManager Growth Portfolio Twenty one-hundredths of one percent (.20%) of the Fund's
(formerly known as Schwab OneSource average daily net assets.
Portfolios-Growth Allocation)
Schwab MarketManager Balanced Portfolio Twenty one-hundredths of one percent (.20%) of the Fund's
(formerly known as Schwab OneSource average daily net assets.
Portfolios-Balanced Allocation)
Schwab MarketManager Small Cap Twenty one-hundredths of one percent (.20%) of the Fund's
Portfolio (formerly known as Schwab average daily net assets.
OneSource Portfolios-Small Company)
Schwab Market Track All Equity Portfolio Twenty one-hundredths of one percent (.20%) of the Fund's
(formerly known as Schwab Asset Director- average daily net assets
Aggressive Growth Fund)
Institutional Select Large-Cap Index Fund
Institutional Select Large-Cap Value Index
Fund
Institutional Select Small-Cap Index Fund
</TABLE>
SCHWAB CAPITAL TRUST
By:
---------------------------
Name: William J. Klipp
Title: Executive Vice President
and Chief Operating Officer
CHARLES SCHWAB & CO., INC.
By:
---------------------------
Name: Colleen M. Hummer
Title: Senior Vice President
<PAGE> 1
Exhibit 13(i)
PURCHASE AGREEMENT
Schwab Capital Trust (the "Trust"), a Massachusetts business trust, and
Charles Schwab & Co., Inc. ("Schwab"), a California corporation, hereby agree on
May 19, 1998 as follows:
1. The Trust hereby offers and Schwab hereby purchases 1 unit of
beneficial interest for Series L of the trust representing interests in the
series of shares known as SCHWAB MARKETTRACK ALL EQUITY PORTFOLIO (FORMERLY
KNOWN AS SCHWAB ASSET DIRECTOR - AGGRESSIVE GROWTH FUND) (such 1 unit of
beneficial interest being hereafter collectively known as a "Share") at a price
of $10.00 per Share. Schwab hereby acknowledges purchase of the Share, and the
Trust hereby acknowledges receipt from Schwab of funds in the amount of $10.00
for such series of the Trust in full payment for the Share. It is further agreed
that no certificate for the Share will be issued by the Trust.
2. Schwab represents and warrants to the Trust that the Share is being
acquired for investment purposes and not with a view to the distribution
thereof.
3. The names "Schwab Capital Trust" and "Trustees of Schwab Capital
Trust" refer, respectively to the Trust created and the Trustees as Trustees but
not individually or personally, acting from time to time under an Agreement and
Declaration of Trust dated as of May 6, 1993, to which reference is hereby made
and a copy of which is on file at the Office of the Secretary of State of the
Commonwealth of Massachusetts and elsewhere as required by law, and to any and
all amendments thereto so filed or hereafter filed. The obligations of "Schwab
Capital Trust" entered into in the name or on behalf thereof by any of the
Trustees, representatives or agents are not made individually, but only in such
capacities, and are not binding upon any of the Trustees, Shareholders or
representatives of the Trust personally, but bind only the assets of the Trust,
and all persons dealing with any series of Shares of the Trust must look solely
to the assets for the Trust belonging to such series for the enforcement of any
claims against the Trust.
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed day and year first written above.
Attest: SCHWAB CAPITAL TRUST
/s/ Karen Seaman By: /s/ Stephen B. Ward
- ------------------------- ----------------------------
Karen Seaman Name: Stephen B. Ward
Title: Senior Vice President and
Chief Investment Officer
Attest: CHARLES SCHWAB & CO., INC.
/s/ Karen Seaman By: /s/ Colleen M. Hummer
- ------------------------- ----------------------------
Karen Seaman Name: Colleen M. Hummer
Title: Senior Vice President
<PAGE> 1
Exhibit 13(j)
FORM OF PURCHASE AGREEMENT
Schwab Capital Trust (the "Trust"), a Massachusetts business trust, and
Charles Schwab & Co., Inc. ("Schwab"), a California corporation, hereby agree on
_____________ as follows:
1. The Trust hereby offers and Schwab hereby purchases 1 unit of
beneficial interest for Series __ of the trust representing interests in each of
the series of shares known as INSTITUTIONAL SELECT LARGE-CAP INDEX FUND,
INSTITUTIONAL SELECT LARGE-CAP VALUE INDEX FUND AND INSTITUTIONAL SELECT
SMALL-CAP VALUE INDEX FUND (such 1 unit of beneficial interest being hereafter
collectively known as a "Shares") at a price of $10.00 per Share. Schwab hereby
acknowledges purchase of the Shares, and the Trust hereby acknowledges receipt
from Schwab of funds in the amount of $10.00 for each such series of the Trust
in full payment for the Shares. It is further agreed that no certificate for the
Share will be issued by the Trust.
2. Schwab represents and warrants to the Trust that the Shares is being
acquired for investment purposes and not with a view to the distribution
thereof.
3. The names "Schwab Capital Trust" and "Trustees of Schwab Capital
Trust" refer, respectively to the Trust created and the Trustees as Trustees but
not individually or personally, acting from time to time under an Agreement and
Declaration of Trust dated as of May 6, 1993, to which reference is hereby made
and a copy of which is on file at the Office of the Secretary of State of the
Commonwealth of Massachusetts and elsewhere as required by law, and to any and
all amendments thereto so filed or hereafter filed. The obligations of "Schwab
Capital Trust" entered into in the name or on behalf thereof by any of the
Trustees, representatives or agents are not made individually, but only in such
capacities, and are not binding upon any of the Trustees, Shareholders or
representatives of the Trust personally, but bind only the assets of the Trust,
and all persons dealing with any series of Shares of the Trust must look solely
to the assets for the Trust belonging to such series for the enforcement of any
claims against the Trust.
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed day and year first written above.
Attest: SCHWAB CAPITAL TRUST
________________________ By:______________________
Karen Seaman Name: Stephen B. Ward
Title: Senior Vice President and
Chief Investment Officer
Attest: CHARLES SCHWAB & CO., INC.
________________________ By:______________________
Karen Seaman Name: Colleen M. Hummer
Title: Senior Vice President
<PAGE> 1
[ARTICLE] 6
[SERIES]
[NUMBER] 061
[NAME] SCHWAB CAPITAL TRUST SCHWAB S&P 500 FUND INVESTOR SHARES
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] OCT-31-1997
[PERIOD-END] OCT-31-1997
[INVESTMENTS-AT-COST] 1,403,452
[INVESTMENTS-AT-VALUE] 1,570,454
[RECEIVABLES] 9,578
[ASSETS-OTHER] 122
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1,580,154
[PAYABLE-FOR-SECURITIES] 36,209
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 3,502
[TOTAL-LIABILITIES] 39,711
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1,365,100
[SHARES-COMMON-STOCK] 65,149
[SHARES-COMMON-PRIOR] 22,404
[ACCUMULATED-NII-CURRENT] 11,074
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (2,733)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 167,022
[NET-ASSETS] 923,148
[DIVIDEND-INCOME] 14,709
[INTEREST-INCOME] 34
[OTHER-INCOME] 0
[EXPENSES-NET] 2,670
[NET-INVESTMENT-INCOME] 12,073
[REALIZED-GAINS-CURRENT] (2,679)
[APPREC-INCREASE-CURRENT] 149,985
[NET-CHANGE-FROM-OPS] 159,380
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 2,361
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 68,380
[NUMBER-OF-SHARES-REDEEMED] 25,827
[SHARES-REINVESTED] 193
[NET-CHANGE-IN-ASSETS] 1,260,340
[ACCUMULATED-NII-PRIOR] 1,860
[ACCUMULATED-GAINS-PRIOR] (54)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 2,839
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 5,276
[AVERAGE-NET-ASSETS] 565,962
[PER-SHARE-NAV-BEGIN] 10.880
[PER-SHARE-NII] 0.140
[PER-SHARE-GAIN-APPREC] 3.240
[PER-SHARE-DIVIDEND] 0.090
[PER-SHARE-DISTRIBUTIONS] 0.000
[RETURNS-OF-CAPITAL] 0.000
[PER-SHARE-NAV-END] 14.170
[EXPENSE-RATIO] 0.38
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.000
</TABLE>
<PAGE> 2
[ARTICLE] 6
[SERIES]
[NUMBER] 063
[NAME] SCHWAB CAPITAL TRUST SCHWAB S&P 500 FUND S SHARES
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] OCT-31-1997
[PERIOD-END] OCT-31-1997
[INVESTMENTS-AT-COST] 1,403,452
[INVESTMENTS-AT-VALUE] 1,570,454
[RECEIVABLES] 9,578
[ASSETS-OTHER] 122
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1,580,154
[PAYABLE-FOR-SECURITIES] 36,209
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 3,502
[TOTAL-LIABILITIES] 39,711
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1,365,100
[SHARES-COMMON-STOCK] 34,212
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 11,074
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (2,733)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 167,002
[NET-ASSETS] 485,604
[DIVIDEND-INCOME] 14,709
[INTEREST-INCOME] 34
[OTHER-INCOME] 0
[EXPENSES-NET] 2,670
[NET-INVESTMENT-INCOME] 12,073
[REALIZED-GAINS-CURRENT] (2,679)
[APPREC-INCREASE-CURRENT] 149,985
[NET-CHANGE-FROM-OPS] 159,380
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 39,327
[NUMBER-OF-SHARES-REDEEMED] 5,116
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 1,260,340
[ACCUMULATED-NII-PRIOR] 1,860
[ACCUMULATED-GAINS-PRIOR] (54)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 2,839
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 5,276
[AVERAGE-NET-ASSETS] 133,367
[PER-SHARE-NAV-BEGIN] 12.850
[PER-SHARE-NII] 0.050
[PER-SHARE-GAIN-APPREC] 1.290
[PER-SHARE-DIVIDEND] 0.000
[PER-SHARE-DISTRIBUTIONS] 0.000
[RETURNS-OF-CAPITAL] 0.000
[PER-SHARE-NAV-END] 14.190
[EXPENSE-RATIO] 0.19
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.000
</TABLE>
<PAGE> 3
[ARTICLE] 6
[SERIES]
[NUMBER] 062
[NAME] SCHWAB CAPITAL TRUST SCHWAB S&P 500 FUND E SHARES
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] OCT-31-1997
[PERIOD-END] OCT-31-1997
[INVESTMENTS-AT-COST] 1,403,452
[INVESTMENTS-AT-VALUE] 1,570,454
[RECEIVABLES] 9,578
[ASSETS-OTHER] 122
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1,580,154
[PAYABLE-FOR-SECURITIES] 36,209
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 3,502
[TOTAL-LIABILITIES] 39,711
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1,365,100
[SHARES-COMMON-STOCK] 9,283
[SHARES-COMMON-PRIOR] 3,336
[ACCUMULATED-NII-CURRENT] 11,074
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (2,733)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 167,002
[NET-ASSETS] 131,691
[DIVIDEND-INCOME] 14,709
[INTEREST-INCOME] 34
[OTHER-INCOME] 0
[EXPENSES-NET] 2,670
[NET-INVESTMENT-INCOME] 12,073
[REALIZED-GAINS-CURRENT] (2,679)
[APPREC-INCREASE-CURRENT] 149,985
[NET-CHANGE-FROM-OPS] 159,380
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 498
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 14,545
[NUMBER-OF-SHARES-REDEEMED] 8,636
[SHARES-REINVESTED] 38
[NET-CHANGE-IN-ASSETS] 1,260,340
[ACCUMULATED-NII-PRIOR] 1,860
[ACCUMULATED-GAINS-PRIOR] (54)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 2,839
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 5,276
[AVERAGE-NET-ASSETS] 103,860
[PER-SHARE-NAV-BEGIN] 10.890
[PER-SHARE-NII] 0.210
[PER-SHARE-GAIN-APPREC] 3.190
[PER-SHARE-DIVIDEND] 0.100
[PER-SHARE-DISTRIBUTIONS] 0.000
[RETURNS-OF-CAPITAL] 0.000
[PER-SHARE-NAV-END] 14.190
[EXPENSE-RATIO] 0.28
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.000
</TABLE>
<PAGE> 1
[ARTICLE] 6
[SERIES]
[NUMBER] 011
[NAME] SCHWAB CAPITAL TRUST SCHWAB INTERNATIONAL INDEX FUND INVESTOR SHARES
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] OCT-31-1997
[PERIOD-END] OCT-31-1997
[INVESTMENTS-AT-COST] 301,968,000
[INVESTMENTS-AT-VALUE] 358,583,000
[RECEIVABLES] 5,850,000
[ASSETS-OTHER] 4,670,000
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 369,103,000
[PAYABLE-FOR-SECURITIES] 1,137,000
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 604,000
[TOTAL-LIABILITIES] 1,741,000
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 310,814,000
[SHARES-COMMON-STOCK] 23,884,000
[SHARES-COMMON-PRIOR] 20,181,000
[ACCUMULATED-NII-CURRENT] 4,052,000
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (4,180,000)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 56,676,000
[NET-ASSETS] 317,833,000
[DIVIDEND-INCOME] 5,882,000
[INTEREST-INCOME] 224,000
[OTHER-INCOME] 0
[EXPENSES-NET] 1,882,000
[NET-INVESTMENT-INCOME] 4,224,000
[REALIZED-GAINS-CURRENT] (1,963,000)
[APPREC-INCREASE-CURRENT] 24,079,000
[NET-CHANGE-FROM-OPS] 26,340,000
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 3,464,000
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 11,009,000
[NUMBER-OF-SHARES-REDEEMED] 7,556,000
[SHARES-REINVESTED] 250,000
[NET-CHANGE-IN-ASSETS] 120,584,000
[ACCUMULATED-NII-PRIOR] 3,292,000
[ACCUMULATED-GAINS-PRIOR] (2,217,000)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 2,146,000
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 3,556,000
[AVERAGE-NET-ASSETS] 297,554,000
[PER-SHARE-NAV-BEGIN] 12.230
[PER-SHARE-NII] 0.170
[PER-SHARE-GAIN-APPREC] 1.080
[PER-SHARE-DIVIDEND] 0.170
[PER-SHARE-DISTRIBUTIONS] 0.000
[RETURNS-OF-CAPITAL] 0.000
[PER-SHARE-NAV-END] 13.310
[EXPENSE-RATIO] 0.61
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.000
</TABLE>
<PAGE> 2
[ARTICLE] 6
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] OCT-31-1997
[PERIOD-START] MAY-31-1997
[PERIOD-END] OCT-31-1997
[INVESTMENTS-AT-COST] 301,968,000
[INVESTMENTS-AT-VALUE] 358,583,000
[RECEIVABLES] 5,850,000
[ASSETS-OTHER] 4,670,000
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 369,103,000
[PAYABLE-FOR-SECURITIES] 1,137,000
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 604,000
[TOTAL-LIABILITIES] 1,741,000
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 310,814,000
[SHARES-COMMON-STOCK] 3,719,000
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 4,052,000
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (4,180,000)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 56,676,000
[NET-ASSETS] 49,529,000
[DIVIDEND-INCOME] 5,882,000
[INTEREST-INCOME] 224,000
[OTHER-INCOME] 0
[EXPENSES-NET] 1,882,000
[NET-INVESTMENT-INCOME] 4,224,000
[REALIZED-GAINS-CURRENT] (1,963,000)
[APPREC-INCREASE-CURRENT] 24,079,000
[NET-CHANGE-FROM-OPS] 26,340,000
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 4,006,000
[NUMBER-OF-SHARES-REDEEMED] 287,000
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 120,584,000
[ACCUMULATED-NII-PRIOR] 3,292,000
[ACCUMULATED-GAINS-PRIOR] (2,217,000)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 2,146,000
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 3,556,000
[AVERAGE-NET-ASSETS] 31,460,000
[PER-SHARE-NAV-BEGIN] 13.590
[PER-SHARE-NII] 0.040
[PER-SHARE-GAIN-APPREC] (0.310)
[PER-SHARE-DIVIDEND] 0.000
[PER-SHARE-DISTRIBUTIONS] 0.000
[RETURNS-OF-CAPITAL] 0.000
[PER-SHARE-NAV-END] 13.320
[EXPENSE-RATIO] 0.47
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.000
</TABLE>
<PAGE> 1
[ARTICLE] 6
[SERIES]
[NUMBER] 021
[NAME] SCHWAB CAPITAL TRUST SCHWAB SMALL-CAP INDEX FUND INVESTOR SHARES
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] OCT-31-1997
[PERIOD-END] OCT-31-1997
[INVESTMENTS-AT-COST] 374,793,000
[INVESTMENTS-AT-VALUE] 494,190,000
[RECEIVABLES] 3,482,000
[ASSETS-OTHER] 11,000
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 497,683,000
[PAYABLE-FOR-SECURITIES] 5,207,000
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 832,000
[TOTAL-LIABILITIES] 6,039,000
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 372,157,000
[SHARES-COMMON-STOCK] 23,148,000
[SHARES-COMMON-PRIOR] 15,392,000
[ACCUMULATED-NII-CURRENT] 1,452,000
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (1,362,000)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 119,397,000
[NET-ASSETS] 410,470,000
[DIVIDEND-INCOME] 3,078,000
[INTEREST-INCOME] 183,000
[OTHER-INCOME] 0
[EXPENSES-NET] 1,590,000
[NET-INVESTMENT-INCOME] 1,671,000
[REALIZED-GAINS-CURRENT] (478,000)
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 84,407,000
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 998,000
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 14,644,000
[NUMBER-OF-SHARES-REDEEMED] 6,952,000
[SHARES-REINVESTED] 64,000
[NET-CHANGE-IN-ASSETS] 282,519,000
[ACCUMULATED-NII-PRIOR] 779,000
[ACCUMULATED-GAINS-PRIOR] (884,000)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1,540,000
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 2,780,000
[AVERAGE-NET-ASSETS] 292,620,000
[PER-SHARE-NAV-BEGIN] 13.590
[PER-SHARE-NII] 0.060
[PER-SHARE-GAIN-APPREC] 4.140
[PER-SHARE-DIVIDEND] 0.060
[PER-SHARE-DISTRIBUTIONS] 0.000
[RETURNS-OF-CAPITAL] 0.000
[PER-SHARE-NAV-END] 17.730
[EXPENSE-RATIO] 0.52
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.000
</TABLE>
<PAGE> 2
[ARTICLE] 6
[SERIES]
[NUMBER] 022
[NAME] SCHWAB CAPITAL TRUST
SCHWAB SMALL-CAP INDEX FUND
SELECT SHARES
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] OCT-31-1997
[PERIOD-END] OCT-31-1997
[INVESTMENTS-AT-COST] 374,793,000
[INVESTMENTS-AT-VALUE] 494,190,000
[RECEIVABLES] 3,482,000
[ASSETS-OTHER] 11,000
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 497,683,000
[PAYABLE-FOR-SECURITIES] 5,207,000
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 832,000
[TOTAL-LIABILITIES] 6,039,000
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 372,157,000
[SHARES-COMMON-STOCK] 4,574,000
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 1,452,000
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (1,362,000)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 119,397,000
[NET-ASSETS] 81,174,000
[DIVIDEND-INCOME] 3,078,000
[INTEREST-INCOME] 183,000
[OTHER-INCOME] 0
[EXPENSES-NET] 1,590,000
[NET-INVESTMENT-INCOME] 1,671,000
[REALIZED-GAINS-CURRENT] (478,000)
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 84,407,000
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 5,002,000
[NUMBER-OF-SHARES-REDEEMED] 428,000
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 282,519,000
[ACCUMULATED-NII-PRIOR] 779,000
[ACCUMULATED-GAINS-PRIOR] (884,000)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1,540,000
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 2,780,000
[AVERAGE-NET-ASSETS] 44,548,000
[PER-SHARE-NAV-BEGIN] 14.500
[PER-SHARE-NII] 0.020
[PER-SHARE-GAIN-APPREC] 3.230
[PER-SHARE-DIVIDEND] 0.000
[PER-SHARE-DISTRIBUTIONS] 0.000
[RETURNS-OF-CAPITAL] 0.000
[PER-SHARE-NAV-END] 17.750
[EXPENSE-RATIO] 0.38
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.000
</TABLE>
<PAGE> 1
[ARTICLE] 6
[SERIES]
[NUMBER] 03
[NAME] SCHWAB CAPITAL TRUST, SCHWAB ASSET DIRECTOR - HIGH GROWTH FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] OCT-31-1997
[PERIOD-END] OCT-31-1997
[INVESTMENTS-AT-COST] 146,241,000
[INVESTMENTS-AT-VALUE] 170,454,000
[RECEIVABLES] 343,000
[ASSETS-OTHER] 113,000
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 170,910,000
[PAYABLE-FOR-SECURITIES] 3,000,000
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 210,000
[TOTAL-LIABILITIES] 3,210,000
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 133,633,000
[SHARES-COMMON-STOCK] 12,340,000
[SHARES-COMMON-PRIOR] 9,375,000
[ACCUMULATED-NII-CURRENT] 1,765,000
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 8,096,000
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 24,206,000
[NET-ASSETS] 167,700,000
[DIVIDEND-INCOME] 1,070,000
[INTEREST-INCOME] 2,001,000
[OTHER-INCOME] 0
[EXPENSES-NET] 984,000
[NET-INVESTMENT-INCOME] 2,087,000
[REALIZED-GAINS-CURRENT] 8,655,000
[APPREC-INCREASE-CURRENT] 14,439,000
[NET-CHANGE-FROM-OPS] 25,181,000
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 1,915,000
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 5,302,000
[NUMBER-OF-SHARES-REDEEMED] 2,496,000
[SHARES-REINVESTED] 159,000
[NET-CHANGE-IN-ASSETS] 61,746,000
[ACCUMULATED-NII-PRIOR] 1,593,000
[ACCUMULATED-GAINS-PRIOR] (559,000)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 972,000
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1,640,000
[AVERAGE-NET-ASSETS] 132,084,000
[PER-SHARE-NAV-BEGIN] 11.300
[PER-SHARE-NII] .170
[PER-SHARE-GAIN-APPREC] 2.320
[PER-SHARE-DIVIDEND] .200
[PER-SHARE-DISTRIBUTIONS] .000
[RETURNS-OF-CAPITAL] .000
[PER-SHARE-NAV-END] 13.590
[EXPENSE-RATIO] .75
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] .000
</TABLE>
<PAGE> 1
[ARTICLE] 6
[SERIES]
[NUMBER] 4
[NAME] SCHWAB CAPITAL TRUST - SCHWAB ASSET DIRECTOR - BALANCED GROWTH FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] OCT-31-1997
[PERIOD-END] OCT-31-1997
[INVESTMENTS-AT-COST] 133,910,000
[INVESTMENTS-AT-VALUE] 150,572,000
[RECEIVABLES] 2,361,000
[ASSETS-OTHER] 285,000
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 153,218,000
[PAYABLE-FOR-SECURITIES] 1,500,000
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 300,000
[TOTAL-LIABILITIES] 1,800,000
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 128,491,000
[SHARES-COMMON-STOCK] 11,814,000
[SHARES-COMMON-PRIOR] 7,332,000
[ACCUMULATED-NII-CURRENT] 2,453,000
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 3,812,000
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 16,662,000
[NET-ASSETS] 151,418,000
[DIVIDEND-INCOME] 685,000
[INTEREST-INCOME] 3,072,000
[OTHER-INCOME] 0
[EXPENSES-NET] 899,000
[NET-INVESTMENT-INCOME] 2,858,000
[REALIZED-GAINS-CURRENT] 4,372,000
[APPREC-INCREASE-CURRENT] 11,175,000
[NET-CHANGE-FROM-OPS] 18,405,000
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 2,005,000
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 7,197,000
[NUMBER-OF-SHARES-REDEEMED] 2,883,000
[SHARES-REINVESTED] 169,000
[NET-CHANGE-IN-ASSETS] 70,438,000
[ACCUMULATED-NII-PRIOR] 1,600,000
[ACCUMULATED-GAINS-PRIOR] (560,000)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 848,000
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1,494,000
[AVERAGE-NET-ASSETS] 115,403,000
[PER-SHARE-NAV-BEGIN] 11.050
[PER-SHARE-NII] .220
[PER-SHARE-GAIN-APPREC] 1.780
[PER-SHARE-DIVIDEND] .230
[PER-SHARE-DISTRIBUTIONS] .000
[RETURNS-OF-CAPITAL] .000
[PER-SHARE-NAV-END] 12.820
[EXPENSE-RATIO] .78
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] .000
</TABLE>
<PAGE> 1
[ARTICLE] 6
[SERIES]
[NUMBER] 05
[NAME] SCHWAB CAPITAL TRUST - SCHWAB ASSET DIRECTOR-CONSERVATIVE GROWTH FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] OCT-31-1997
[PERIOD-END] OCT-31-1997
[INVESTMENTS-AT-COST] 37,509,000
[INVESTMENTS-AT-VALUE] 40,442,000
[RECEIVABLES] 970,000,000
[ASSETS-OTHER] 63,000,000
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 41,475,000
[PAYABLE-FOR-SECURITIES] 828,000
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 88,000
[TOTAL-LIABILITIES] 916,000
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 36,626,000
[SHARES-COMMON-STOCK] 3,462,000
[SHARES-COMMON-PRIOR] 2,137,000
[ACCUMULATED-NII-CURRENT] 101,000
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 898,000
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 2,934,000
[NET-ASSETS] 40,559,000
[DIVIDEND-INCOME] 110,000
[INTEREST-INCOME] 1,094,000
[OTHER-INCOME] 0
[EXPENSES-NET] 231,000
[NET-INVESTMENT-INCOME] 973,000
[REALIZED-GAINS-CURRENT] 1,046,000
[APPREC-INCREASE-CURRENT] 1,878,000
[NET-CHANGE-FROM-OPS] 3,897,000
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 945,000
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 2,113,000
[NUMBER-OF-SHARES-REDEEMED] 865,000
[SHARES-REINVESTED] 77,000
[NET-CHANGE-IN-ASSETS] 18,100,000
[ACCUMULATED-NII-PRIOR] 73,000
[ACCUMULATED-GAINS-PRIOR] (148,000)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 208,000
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 471,000
[AVERAGE-NET-ASSETS] 28,642,000
[PER-SHARE-NAV-BEGIN] 10.510
[PER-SHARE-NII] .350
[PER-SHARE-GAIN-APPREC] 1.210
[PER-SHARE-DIVIDEND] .360
[PER-SHARE-DISTRIBUTIONS] .000
[RETURNS-OF-CAPITAL] .000
[PER-SHARE-NAV-END] 11.710
[EXPENSE-RATIO] .81
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] .000
</TABLE>
<PAGE> 1
[ARTICLE] 6
[SERIES]
[NUMBER] 08
[NAME] SCHWAB CAPITAL TRUST - SCHWAB ONESOURCE PORTFOLIOS - INTERNATIONAL FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] OCT-31-1997
[PERIOD-END] OCT-31-1997
[INVESTMENTS-AT-COST] 77,453,000
[INVESTMENTS-AT-VALUE] 81,016,000
[RECEIVABLES] 123,000
[ASSETS-OTHER] 55,000
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 81,194,000
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 108,000
[TOTAL-LIABILITIES] 108,000
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 75,514,000
[SHARES-COMMON-STOCK] 7,465,000
[SHARES-COMMON-PRIOR] 5,970,171
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 43,000
[ACCUMULATED-NET-GAINS] 2,052,000
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 3,563,000
[NET-ASSETS] 81,086,000
[DIVIDEND-INCOME] 1,383,000
[INTEREST-INCOME] 80,000
[OTHER-INCOME] 0
[EXPENSES-NET] 385,000
[NET-INVESTMENT-INCOME] 1,078,000
[REALIZED-GAINS-CURRENT] 2,052,000
[APPREC-INCREASE-CURRENT] 4,087,000
[NET-CHANGE-FROM-OPS] 7,217,000
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 1,090,000
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 43,000
[NUMBER-OF-SHARES-SOLD] 46,429,000
[NUMBER-OF-SHARES-REDEEMED] 31,669,000
[SHARES-REINVESTED] 1,062,000
[NET-CHANGE-IN-ASSETS] 21,906,000
[ACCUMULATED-NII-PRIOR] 12,000
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 589,000
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1,001,000
[AVERAGE-NET-ASSETS] 77,069,000
[PER-SHARE-NAV-BEGIN] 9.910
[PER-SHARE-NII] .170
[PER-SHARE-GAIN-APPREC] .950
[PER-SHARE-DIVIDEND] .170
[PER-SHARE-DISTRIBUTIONS] .000
[RETURNS-OF-CAPITAL] .000
[PER-SHARE-NAV-END] 10.860
[EXPENSE-RATIO] .50
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] .000
</TABLE>
<PAGE> 1
[ARTICLE] 6
[SERIES]
[NUMBER] 09
[NAME] SCHWAB CAPITAL TRUST - SCHWAB ONESOURCE PORTFOLIOS GROWTH ALLOCATION
<TABLE>
<S> <C>
[PERIOD-TYPE] 11-MOS
[FISCAL-YEAR-END] OCT-31-1997
[PERIOD-END] OCT-31-1997
[INVESTMENTS-AT-COST] 116,583,000
[INVESTMENTS-AT-VALUE] 126,907,000
[RECEIVABLES] 216,000
[ASSETS-OTHER] 14,000
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 127,137,000
[PAYABLE-FOR-SECURITIES] 3,090,000
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 170,000
[TOTAL-LIABILITIES] 3,260,000
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 109,274,000
[SHARES-COMMON-STOCK] 10,681,000
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 840,000
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 3,439,000
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 10,324,000
[NET-ASSETS] 123,877,000
[DIVIDEND-INCOME] 2,307,000
[INTEREST-INCOME] 160,000
[OTHER-INCOME] 0
[EXPENSES-NET] 479,000
[NET-INVESTMENT-INCOME] 1,988,000
[REALIZED-GAINS-CURRENT] 3,439,000
[APPREC-INCREASE-CURRENT] 10,324,000
[NET-CHANGE-FROM-OPS] 15,751,000
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 1,148,000
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 13,607,000
[NUMBER-OF-SHARES-REDEEMED] 3,038,000
[SHARES-REINVESTED] 112,000
[NET-CHANGE-IN-ASSETS] 123,877,000
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 733,000
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1,217,000
[AVERAGE-NET-ASSETS] 100,515,000
[PER-SHARE-NAV-BEGIN] 10.000
[PER-SHARE-NII] .080
[PER-SHARE-GAIN-APPREC] 1.660
[PER-SHARE-DIVIDEND] .140
[PER-SHARE-DISTRIBUTIONS] .000
[RETURNS-OF-CAPITAL] .000
[PER-SHARE-NAV-END] 11.600
[EXPENSE-RATIO] .50
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] .000
</TABLE>
<PAGE> 1
[ARTICLE] 6
[SERIES]
[NUMBER] 10
[NAME] SCHWAB CAPITAL TRUST, SCHWAB ONE SOURCE PORTFOLIOS-
BALANCE FUND ALLOCATION
<TABLE>
<S> <C>
[PERIOD-TYPE] 11-MOS
[FISCAL-YEAR-END] OCT-31-1997
[PERIOD-END] OCT-31-1997
[INVESTMENTS-AT-COST] 58,427,000
[INVESTMENTS-AT-VALUE] 62,574,000
[RECEIVABLES] 220,000
[ASSETS-OTHER] 14,000
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 62,808,000
[PAYABLE-FOR-SECURITIES] 1,593,000
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 82,000
[TOTAL-LIABILITIES] 1,675,000
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 54,840,000
[SHARES-COMMON-STOCK] 5,371,000
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 889,000
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 1,257,000
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 4,147,000
[NET-ASSETS] 61,133,000
[DIVIDEND-INCOME] 1,553,000
[INTEREST-INCOME] 89,000
[OTHER-INCOME] 0
[EXPENSES-NET] 233,000
[NET-INVESTMENT-INCOME] 1,409,000
[REALIZED-GAINS-CURRENT] 1,257,000
[APPREC-INCREASE-CURRENT] 4,147,000
[NET-CHANGE-FROM-OPS] 6,813,000
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 520,000
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 6,715,000
[NUMBER-OF-SHARES-REDEEMED] 1,393,000
[SHARES-REINVESTED] 49,000
[NET-CHANGE-IN-ASSETS] 61,133,000
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 357,000
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 673,000
[AVERAGE-NET-ASSETS] 48,770,000
[PER-SHARE-NAV-BEGIN] 10.000
[PER-SHARE-NII] .170
[PER-SHARE-GAIN-APPREC] 1.340
[PER-SHARE-DIVIDEND] .130
[PER-SHARE-DISTRIBUTIONS] .000
[RETURNS-OF-CAPITAL] .000
[PER-SHARE-NAV-END] 11.380
[EXPENSE-RATIO] .50
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] .000
</TABLE>
<PAGE> 1
[ARTICLE] 6
[SERIES]
[NUMBER] 11
[NAME] SCHWAB CAPITAL TRUST, SCHWAB ONE SOURCE PORTFOLIOS-SMALL COMPANY FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] 2-MOS
[FISCAL-YEAR-END] OCT-31-1997
[PERIOD-END] OCT-31-1997
[INVESTMENTS-AT-COST] 209,800,000
[INVESTMENTS-AT-VALUE] 207,010,000
[RECEIVABLES] 768,000
[ASSETS-OTHER] 11,000
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 207,789,000
[PAYABLE-FOR-SECURITIES] 358,000
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 381,000
[TOTAL-LIABILITIES] 739,000
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 209,671,000
[SHARES-COMMON-STOCK] 20,857,000
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 316,000
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (147,000)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (2,790,000)
[NET-ASSETS] 207,050,000
[DIVIDEND-INCOME] 399,000
[INTEREST-INCOME] 41,000
[OTHER-INCOME] 0
[EXPENSES-NET] 124,000
[NET-INVESTMENT-INCOME] 316,000
[REALIZED-GAINS-CURRENT] (147,000)
[APPREC-INCREASE-CURRENT] (2,790,000)
[NET-CHANGE-FROM-OPS] (2,621,000)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 21,761,000
[NUMBER-OF-SHARES-REDEEMED] 904,000
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 207,050,000
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 192,000
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 309,000
[AVERAGE-NET-ASSETS] 194,827,000
[PER-SHARE-NAV-BEGIN] 10.000
[PER-SHARE-NII] .020
[PER-SHARE-GAIN-APPREC] (.090)
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 9.930
[EXPENSE-RATIO] .50
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE> 1
[ARTICLE] 6
[SERIES]
[NUMBER] 07
[NAME] SCHWAB CAPITAL TRUST, SCHWAB ANALYTICS FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] OCT-31-1997
[PERIOD-END] OCT-31-1997
[INVESTMENTS-AT-COST] 129,804
[INVESTMENTS-AT-VALUE] 148,938
[RECEIVABLES] 3,008
[ASSETS-OTHER] 22
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 151,968
[PAYABLE-FOR-SECURITIES] 1,811
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 285
[TOTAL-LIABILITIES] 2,096
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 115,157
[SHARES-COMMON-STOCK] 10,920
[SHARES-COMMON-PRIOR] 8,881
[ACCUMULATED-NII-CURRENT] 1,023
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 14,558
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 19,134
[NET-ASSETS] 149,872
[DIVIDEND-INCOME] 2,210
[INTEREST-INCOME] 0
[OTHER-INCOME] 0
[EXPENSES-NET] 923
[NET-INVESTMENT-INCOME] 1,287
[REALIZED-GAINS-CURRENT] 14,558
[APPREC-INCREASE-CURRENT] 11,723
[NET-CHANGE-FROM-OPS] 27,568
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 682
[DISTRIBUTIONS-OF-GAINS] 1,141
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 5,463
[NUMBER-OF-SHARES-REDEEMED] 3,574
[SHARES-REINVESTED] 150
[NET-CHANGE-IN-ASSETS] 52,083
[ACCUMULATED-NII-PRIOR] 418
[ACCUMULATED-GAINS-PRIOR] 1,141
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 912
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1,425
[AVERAGE-NET-ASSETS] 123,534
[PER-SHARE-NAV-BEGIN] 11.010
[PER-SHARE-NII] .130
[PER-SHARE-GAIN-APPREC] 2.790
[PER-SHARE-DIVIDEND] .080
[PER-SHARE-DISTRIBUTIONS] .130
[RETURNS-OF-CAPITAL] .000
[PER-SHARE-NAV-END] 13.720
[EXPENSE-RATIO] .74
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] .000
</TABLE>
