SCHWABFUNDS-Registered TradeMark-
SCHWAB EQUITY
INDEX FUNDS-TradeMark-
- SCHWAB S&P 500 FUND
- SCHWAB 1000 FUND-Registered TradeMark-
- SCHWAB SMALL-CAP
INDEX FUND-Registered TradeMark-
- SCHWAB INTERNATIONAL
INDEX FUND-Registered TradeMark-
Semiannual Report
April 30, 1999
<PAGE>
SCHWAB EQUITY INDEX FUNDS
We are pleased to bring you this semiannual report for the Schwab Equity Index
Funds (the Funds) for the six-month period ended April 30, 1999. This report
includes the following four Funds and all classes-- Investor Shares,
e.Shares-TM- and Select Shares:-TM-
- Schwab S&P 500 Fund
- Schwab 1000 Fund-Registered Trademark-
- Schwab Small-Cap Index Fund-Registered Trademark-
- Schwab International Index Fund-Registered Trademark-
As covered in their respective sections of this report, all the Funds achieved
their primary objectives of tracking or matching the price and dividend
performance of their benchmark indices during the reporting period. In addition,
the Funds also succeeded in maintaining the tax efficiencies and low costs
designed to help maximize long-term performance results.
FUND LISTINGS
The Funds are listed in THE WALL STREET JOURNAL, USA TODAY, INVESTOR'S BUSINESS
DAILY and most local newspapers as follows under the heading
SCHWABFUNDS:-Registered Trademark-
<TABLE>
<CAPTION>
NEWSPAPER LISTING SYMBOL
<S> <C>
S&P e SWPEX
S&P Inv SWPIX
S&P Sel SWPPX
1000 Inv r SNXFX
1000 Sel SNXSX
SmCp Inv SWSMX
Sm Cp Sel SWSSX
Intl Inv r SWINX
Intl Sel SWISX
</TABLE>
CONTENTS
<TABLE>
<S> <C>
- ----------------------------------------------------
A Message from the Chairman 1
- ----------------------------------------------------
What Every Investor Should Know 2
- ----------------------------------------------------
Market Overview 4
- ----------------------------------------------------
Schwab S&P 500 Fund
FUND PERFORMANCE 8
PORTFOLIO SNAPSHOT 12
- ----------------------------------------------------
Schwab 1000 Fund
FUND PERFORMANCE 14
PORTFOLIO SNAPSHOT 18
- ----------------------------------------------------
Schwab Small-Cap Index Fund
FUND PERFORMANCE 20
PORTFOLIO SNAPSHOT 24
- ----------------------------------------------------
Schwab International Index Fund
FUND PERFORMANCE 26
PORTFOLIO SNAPSHOT 30
- ----------------------------------------------------
The Portfolio Management Team 32
- ----------------------------------------------------
Fund Discussion 33
- ----------------------------------------------------
Glossary 41
- ----------------------------------------------------
Financial Statements and Notes 42
- ----------------------------------------------------
</TABLE>
S&P 500-REGISTERED TRADEMARK- IS A TRADEMARK OF THE MCGRAW-HILL COMPANIES, INC.
AND HAS BEEN LICENSED FOR USE BY THE SCHWAB CAPITAL TRUST. THE SCHWAB S&P 500
FUND IS NOT SPONSORED, SOLD OR PROMOTED BY STANDARD &
POOR'S,-REGISTERED TRADEMARK- AND THEY MAKE NO REPRESENTATION REGARDING THE
ADVISABILITY OF INVESTING IN THE FUND.
<PAGE>
A MESSAGE FROM THE CHAIRMAN
Dear Shareholder,
[PHOTO]
During the past several years, the benefits of investing have been readily
apparent, while the risks have been somewhat less obvious. Over the past six
months, however, investors have been subject to sharp drops and big recoveries,
sometimes within the same day. After enjoying near-perfect market conditions for
years, investors have had to adjust to significant economic and political
developments, both here and abroad, that have contributed to rapid sentiment
swings and market turbulence. These developments have been accentuated by the
lingering expectation that stock prices are long overdue for a correction
according to several traditional, widely followed indicators. In spite of this
recent volatility, however, the markets continue to flourish, boosted by low
inflation, solid economic growth, low interest rates, a strong dollar and an
influx of money from investors.
All this serves to remind us that although the market's extreme ups and downs
can be harrowing, they are a natural part of market dynamics. That's why we
think it's a good time to reaffirm one of our primary investment principles:
Regardless of short-term market trends, our philosophy has always been that
REGULAR INVESTING is the best strategy over the long term. You've already taken
an important step in building a portfolio that can help you meet your future
goals. On the following pages, we've provided guidelines to help ensure that you
can reach your goals by establishing--or maintaining--an ongoing investment
program.
NEW INVESTMENT OPPORTUNITY TO CONSIDER
If you're looking for an investment that covers all the corners of the U.S.
stock market, consider Schwab's newest offering, the Schwab Total Stock Market
Index Fund.-TM- The Fund seeks to track the performance of the U.S. stock market
as measured by the Wilshire 5000 Index, the broadest measure of domestic stock
market performance available. The end result: Fund investors can benefit from
exposure to U.S. companies of all types and all sizes--all in a single, low-cost
investment. For more information, including a prospectus that details the Fund's
management fees and expenses, please call us at 800-435-4000. Please read the
prospectus carefully before investing.
The support of investors like you has helped SchwabFunds-Registered Trademark-
become one of the largest and fastest-growing mutual fund families in the
nation. SchwabFunds' Investment Adviser, Charles Schwab Investment Management,
Inc. (CSIM), now manages more than $90 billion in assets on behalf of
approximately 3.5 million shareholders. We offer a broad spectrum of 39 mutual
funds for investors with varying financial situations and goals.
Thank you for your investment in SchwabFunds. For its part, SchwabFunds will do
everything we can to warrant the trust you have placed in us and we'll continue
to provide investors with smart, high-quality, cost-efficient investment
solutions. As always, feel free to contact us if you have any questions.
Sincerely,
/s/ Charles R. Schwab
Charles R. Schwab
April 30, 1999
THE YEAR 2000 AND EURO CONVERSION ISSUES
Two issues with the potential to disrupt portfolio operations and affect
performance are the inability of some computers to recognize the year 2000,
and the conversion of certain European currencies to the euro, which began on
January 1, 1999. The Investment Adviser will continue to take steps to enable
its systems to handle these changes. With regard to the year 2000 problem,
the Investment Adviser is also seeking assurances that its service providers
and business partners are taking similar steps as well. It is impossible to
know in advance however, exactly how either of these issues will affect
portfolio administration, portfolio performance (particularly for portfolios
with European exposure) or securities markets in general.
1
<PAGE>
WHAT EVERY INVESTOR SHOULD KNOW
WHY ASSET ALLOCATION MATTERS
As most investors know, one of the most compelling reasons to invest in a mutual
fund is diversification. By allocating your assets across many different
securities, a fund can help reduce the risk that you might otherwise encounter
by owning just a few stocks or bonds.
But remember that diversification ACROSS asset classes can be just as important
as diversification WITHIN one of the mutual funds you own. As you probably know,
stocks historically have offered much higher returns over the long term than
bonds, cash or other asset classes, but those returns have come at the price of
higher volatility. To help mitigate some of that risk, many investors often
include at least some bonds and cash in their portfolios. They also diversify
their exposure across different stock market segments--such as large-cap and
small-cap U.S. stocks and international stocks, which have tended to move with
less-than-perfect correlation over time. In short, allocating assets across
market segments may help reduce your overall portfolio risk.
REGULAR INVESTING STRATEGIES
Another way to help dampen the effects of short-term market volatility is to
invest the same amount of money on a regular basis. With this investment
strategy, known as DOLLAR-COST AVERAGING, you automatically buy more shares when
stock or bond prices are low and fewer when they're high.
A hypothetical example can help illustrate this concept. Let's say you invest
$400 on a monthly basis in a single mutual fund, as shown below. Because of
fluctuating prices, your per-share purchase price varies monthly. A simple
average of your five purchase prices would yield $8.20 per share; however,
your AVERAGE COST BASIS (your total investment divided by the number of
shares actually purchased) would be significantly lower--by more than $0.50
per share. The net result in this example is that your average cost per share
is reduced and you'd have purchased more shares than you would have had you
paid the average share price over the five-month period.
<TABLE>
<CAPTION>
No. of
Fixed Shares
Investment Share Price Purchased
<S> <C> <C> <C>
- -------------------------------------------------------------
Month 1 $400 $10 40
- -------------------------------------------------------------
Month 2 $400 $8 50
- -------------------------------------------------------------
Month 3 $400 $5 80
- -------------------------------------------------------------
Month 4 $400 $8 50
- -------------------------------------------------------------
Month 5 $400 $10 40
- -------------------------------------------------------------
Totals $2,000 $41 260
- -------------------------------------------------------------
AVERAGE SHARE PRICE ($41 DIVIDED BY 5 periods): $8.20
YOUR AVERAGE COST BASIS
($2,000 DIVIDED BY 260 shares): $7.69
PER-SHARE ADVANTAGE: $0.51
</TABLE>
This example is for illustrative purposes only and is not intended to predict
or guarantee the performance of any particular fund available through Schwab.
(Of course, in this example, hindsight shows you that your best move would have
been to invest your entire $2,000 in Month 3, when the share price was at a low
of $5--but it's unlikely that you would have been able to predict that.)
2
<PAGE>
SCHWAB'S 10 INVESTING PRINCIPLES
1. START WITH THE BASICS FOR LONG-TERM INVESTING.
2. GET STARTED NOW!
3. KNOW YOURSELF.
4. INVEST IN THE STOCK MARKET FOR GROWTH.
5. TAKE A LONG-TERM VIEW.
6. BUILD A DIVERSIFIED PORTFOLIO.
7. CONSIDER BONDS AND CASH FOR DIVERSIFICATION AND INCOME.
8. MINIMIZE YOUR EXPENSES.
9. STAY ON TRACK.
10. BECOME A LIFELONG INVESTOR.
In addition to reducing your per-share costs over time, dollar-cost averaging
provides another benefit: the discipline of investing regularly. You're more
likely to maintain a regular investment plan if it's automatic: You don't have
to think about it, and you minimize any propensity to skip an investment in
favor of some other expenditure. To encourage this discipline, Schwab offers you
two convenient, no-cost ways to begin or maintain a program of regular
investing:
Schwab's AUTOMATIC INVESTMENT PLAN (AIP) allows you to automatically
purchase--on a regular basis-- additional shares in mutual funds that you
already own. For amounts as little as $100 per month, you can use the cash or
sweep shares of your existing Schwab Money Fund,(1) or you can enroll in
MONEYLINK,-Registered Trademark- Schwab's electronic transfer service, to
automatically transfer money to your Schwab account.
With MoneyLink, you can arrange to regularly and automatically transfer money
between your bank account and your Schwab account. It's a convenient way to
build your investment over time.
Please be aware that these programs--and dollar-cost averaging in general--do
not ensure a profit or protect against a loss, and investors should know that
markets fall as well as rise. Because dollar-cost averaging involves continuous
investment in securities regardless of fluctuating prices, you should consider
your financial ability to purchase in both up and down markets. Over the long
term, however, dollar-cost averaging may help to smooth out volatility caused by
shortterm market trends. For more information, please call us at 800-435-4000.
WE MAKE IT EASY TO INVEST
We try to make it easy and convenient for you to invest in our
SchwabFunds.-Registered Trademark- In addition to our automated methods that
allow you to invest or transfer money to your Schwab account on a regular basis,
you can also invest through our Web site at www.schwab.com; through our
automated touch-tone telephone service, TeleBroker,-Registered Trademark- by
calling 800-272-4922; or in person at any of our nationwide branches.
KEEPING YOU INFORMED
You can find a wealth of information about our investment philosophy and
Funds, as well, as about the market and economic environments, at our Web
site: www.schwab.com/schwabfunds.
(1) Includes uninvested cash and margin cash available. If sufficient cash is
not available, your automatic purchases will not be made.
3
<PAGE>
MARKET OVERVIEW
U.S. ECONOMIC GROWTH
The U.S. economy, as measured by gross domestic product (GDP), continued its
remarkable expansion with a strong real growth rate of 4.3% during 1998 and 4.1%
during the first quarter of 1999--a rate well in excess of the Federal Reserve's
estimate of the long-term maximum sustainable non-inflationary growth rate. The
first quarter marked the thirty-second consecutive quarter of positive
growth--the longest peacetime expansion ever. Strong consumer spending leveraged
by record domestic stock market levels and its associated wealth effect
continued to provide momentum for this historic expansion.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
REAL GDP GROWTH RATE
QUARTERLY PERCENTAGE CHANGE
(ANNUALIZED RATE)
<S> <C>
Q1 1990 3.9%
Q2 1990 1.2%
Q3 1990 -1.9%
Q4 1990 -4.0%
Q1 1991 -2.1%
Q2 1991 1.8%
Q3 1991 1.0%
Q4 1991 1.0%
Q1 1992 4.7%
Q2 1992 2.5%
Q3 1992 3.0%
Q4 1992 4.3%
Q1 1993 0.1%
Q2 1993 2.0%
Q3 1993 2.1%
Q4 1993 5.3%
Q1 1994 3.0%
Q2 1994 4.7%
Q3 1994 1.8%
Q4 1994 3.6%
Q1 1995 1.7%
Q2 1995 0.4%
Q3 1995 3.3%
Q4 1995 2.8%
Q1 1996 3.3%
Q2 1996 6.1%
Q3 1996 2.1%
Q4 1996 4.2%
Q1 1997 4.2%
Q2 1997 4.0%
Q3 1997 4.2%
Q4 1997 3.0%
Q1 1998 5.5%
Q2 1998 1.8%
Q3 1998 3.7%
Q4 1998 6.0%
Q1 1999 4.1%
Source: BLOOMBERG L.P.
</TABLE>
At the time of this writing, the consensus of most economists is that the U.S.
economy appears poised for continued growth, but at a more moderate rate than
during 1998. High levels of consumer spending and confidence, low interest
rates, rising real wages and strong gains in stock prices have been the
principal factors continuing this lengthy expansion. Although an ongoing
concern, the impact of international economic problems on the U.S. economy has
been less severe than many originally predicted. Going forward, the behavior of
domestic consumers in response to continued stock market volatility may also be
a key determinant of whether the economy continues on its current course or
softens throughout the remainder of 1999.
UNEMPLOYMENT
After declining to 4.2% in March--the lowest level in 28 years--the U.S.
unemployment rate stood at 4.3% in April. Labor markets continue to be extremely
tight, growth in the labor force has slowed, and there continues to be concern
that wage increases may begin to put more pressure on labor costs (refer to
Employment Cost Index on the facing page).
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
U.S. UNEMPLOYMENT RATE
<S> <C>
Jan-90 5.4%
Feb-90 5.3%
Mar-90 5.2%
Apr-90 5.4%
May-90 5.4%
Jun-90 5.2%
Jul-90 5.5%
Aug-90 5.7%
Sep-90 5.9%
Oct-90 5.9%
Nov-90 6.2%
Dec-90 6.3%
Jan-91 6.4%
Feb-91 6.6%
Mar-91 6.8%
Apr-91 6.7%
May-91 6.9%
Jun-91 6.9%
Jul-91 6.8%
Aug-91 6.9%
Sep-91 6.9%
Oct-91 7.0%
Nov-91 7.0%
Dec-91 7.3%
Jan-92 7.3%
Feb-92 7.4%
Mar-92 7.4%
Apr-92 7.4%
May-92 7.6%
Jun-92 7.8%
Jul-92 7.7%
Aug-92 7.6%
Sep-92 7.6%
Oct-92 7.3%
Nov-92 7.4%
Dec-92 7.4%
Jan-93 7.3%
Feb-93 7.1%
Mar-93 7.0%
Apr-93 7.1%
May-93 7.1%
Jun-93 7.0%
Jul-93 6.9%
Aug-93 6.8%
Sep-93 6.7%
Oct-93 6.8%
Nov-93 6.6%
Dec-93 6.5%
Jan-94 6.6%
Feb-94 6.6%
Mar-94 6.5%
Apr-94 6.4%
May-94 6.1%
Jun-94 6.1%
Jul-94 6.3%
Aug-94 6.0%
Sep-94 5.8%
Oct-94 5.8%
Nov-94 5.6%
Dec-94 5.5%
Jan-95 5.6%
Feb-95 5.4%
Mar-95 5.3%
Apr-95 5.8%
May-95 5.8%
Jun-95 5.6%
Jul-95 5.6%
Aug-95 5.7%
Sep-95 5.6%
Oct-95 5.5%
Nov-95 5.7%
Dec-95 5.6%
Jan-96 5.6%
Feb-96 5.5%
Mar-96 5.6%
Apr-96 5.5%
May-96 5.6%
Jun-96 5.3%
Jul-96 5.5%
Aug-96 5.1%
Sep-96 5.2%
Oct-96 5.2%
Nov-96 5.3%
Dec-96 5.4%
Jan-97 5.3%
Feb-97 5.3%
Mar-97 5.1%
Apr-97 5.0%
May-97 4.7%
Jun-97 5.0%
Jul-97 4.7%
Aug-97 4.9%
Sep-97 4.7%
Oct-97 4.7%
Nov-97 4.6%
Dec-97 4.7%
Jan-98 4.5%
Feb-98 4.6%
Mar-98 4.6%
Apr-98 4.3%
May-98 4.3%
Jun-98 4.5%
Jul-98 4.5%
Aug-98 4.5%
Sep-98 4.5%
Oct-98 4.5%
Nov-98 4.4%
Dec-98 4.3%
Jan-99 4.3%
Feb-99 4.4%
Mar-99 4.2%
Apr-99 4.3%
Source: BLOOMBERG L.P.
</TABLE>
INFLATION
Despite a surprisingly high Consumer Price Index (CPI) report for April (a 0.7%
increase for the month), price inflation continued to remain well contained. The
CPI rose just 2.3% for the year ended April 1999. Its core rate (which excludes
the more volatile food
4
<PAGE>
and energy components) rose 2.2%. For all of 1998, overall producer prices fell
0.1% after dropping 1.2% in 1997, marking the first time that the index, which
was created in 1947, has fallen for two consecutive years. The markets reacted
nervously following the April CPI report, not knowing whether it represented an
aberration or the beginning of a trend.
The Employment Cost Index, which measures inflation in wages, salaries and
benefits, was also well contained, increasing 3.0% for the year ended March
1999.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MEASURES OF INFLATION
QUARTERLY EMPLOYMENT COST INDEX MONTHLY CONSUMER PRICE INDEX
<S> <C> <C>
Jan-90 5.5% 5.2%
Feb-90 5.5% 5.3%
Mar-90 5.5% 5.2%
Apr-90 5.4% 4.7%
May-90 5.4% 4.4%
Jun-90 5.4% 4.7%
Jul-90 5.2% 4.8%
Aug-90 5.2% 5.6%
Sep-90 5.2% 6.2%
Oct-90 4.9% 6.3%
Nov-90 4.9% 6.3%
Dec-90 4.9% 6.1%
Jan-91 4.6% 5.7%
Feb-91 4.6% 5.3%
Mar-91 4.6% 4.9%
Apr-91 4.6% 4.9%
May-91 4.6% 5.0%
Jun-91 4.6% 4.7%
Jul-91 4.3% 4.4%
Aug-91 4.3% 3.8%
Sep-91 4.3% 3.4%
Oct-91 4.3% 2.9%
Nov-91 4.3% 3.0%
Dec-91 4.3% 3.1%
Jan-92 4.0% 2.6%
Feb-92 4.0% 2.8%
Mar-92 4.0% 3.2%
Apr-92 3.6% 3.2%
May-92 3.6% 3.0%
Jun-92 3.6% 3.1%
Jul-92 3.5% 3.2%
Aug-92 3.5% 3.1%
Sep-92 3.5% 3.0%
Oct-92 3.5% 3.2%
Nov-92 3.5% 3.0%
Dec-92 3.5% 2.9%
Jan-93 3.5% 3.3%
Feb-93 3.5% 3.2%
Mar-93 3.5% 3.1%
Apr-93 3.6% 3.2%
May-93 3.6% 3.2%
Jun-93 3.6% 3.0%
Jul-93 3.6% 2.8%
Aug-93 3.6% 2.8%
Sep-93 3.6% 2.7%
Oct-93 3.5% 2.8%
Nov-93 3.5% 2.7%
Dec-93 3.5% 2.7%
Jan-94 3.2% 2.5%
Feb-94 3.2% 2.5%
Mar-94 3.2% 2.5%
Apr-94 3.2% 2.4%
May-94 3.2% 2.3%
Jun-94 3.2% 2.5%
Jul-94 3.2% 2.8%
Aug-94 3.2% 2.9%
Sep-94 3.2% 3.0%
Oct-94 3.0% 2.6%
Nov-94 3.0% 2.7%
Dec-94 3.0% 2.7%
Jan-95 2.9% 2.8%
Feb-95 2.9% 2.9%
Mar-95 2.9% 2.9%
Apr-95 2.9% 3.1%
May-95 2.9% 3.2%
Jun-95 2.9% 3.0%
Jul-95 2.7% 2.8%
Aug-95 2.7% 2.6%
Sep-95 2.7% 2.5%
Oct-95 2.7% 2.8%
Nov-95 2.7% 2.6%
Dec-95 2.7% 2.5%
Jan-96 2.8% 2.7%
Feb-96 2.8% 2.7%
Mar-96 2.8% 2.8%
Apr-96 2.9% 2.9%
May-96 2.9% 2.9%
Jun-96 2.9% 2.8%
Jul-96 2.8% 3.0%
Aug-96 2.8% 2.9%
Sep-96 2.8% 3.0%
Oct-96 2.9% 3.0%
Nov-96 2.9% 3.3%
Dec-96 2.9% 3.3%
Jan-97 2.9% 3.0%
Feb-97 2.9% 3.0%
Mar-97 2.9% 2.8%
Apr-97 2.8% 2.5%
May-97 2.8% 2.2%
Jun-97 2.8% 2.3%
Jul-97 3.0% 2.2%
Aug-97 3.0% 2.2%
Sep-97 3.0% 2.2%
Oct-97 3.3% 2.1%
Nov-97 3.3% 1.8%
Dec-97 3.3% 1.7%
Jan-98 3.3% 1.6%
Feb-98 3.3% 1.4%
Mar-98 3.3% 1.4%
Apr-98 3.5% 1.4%
May-98 3.5% 1.7%
Jun-98 3.5% 1.7%
Jul-98 3.5% 1.7%
Aug-98 3.7% 1.6%
Sep-98 3.7% 1.5%
Oct-98 3.4% 1.5%
Nov-98 3.4% 1.5%
Dec-98 3.4% 1.6%
Jan-99 3.0% 1.7%
Feb-99 3.0% 1.6%
Mar-99 3.0% 1.7%
Apr-99 2.3%
Source: BLOOMBERG L.P.
</TABLE>
Although price inflation has been well contained, the combination of a tight
labor market (as evidenced by low unemployment rates) and strong economic growth
typically leads to inflationary pressures on wages and, ultimately, prices. In
this environment productivity growth becomes particularly important. Strong
productivity gains allow companies to pay higher wages without raising prices.
Non-farm productivity grew 2.2% in 1998 and a strong 3.5% annualized rate in the
first quarter of 1999, continuing a healthy trend that began in 1996.
ASSET CLASS PERFORMANCE
Following a sharp correction in July and August, the domestic equities market
rallied strongly during the six-month reporting period ended April 30, 1999.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOTAL RETURN PERFORMANCE
GROWTH OF A $1 INVESTMENT
MSCI-EAFE (ND) INDEX S&P 500 INDEX RUSSELL 2000 SMALL-CAP INDEX LEHMAN AGGREGATE BOND INDEX
<S> <C> <C> <C> <C>
Oct-98 $1.00 $1.00 $1.00 $1.00
Nov-98 $1.05 $1.06 $1.05 $1.01
Dec-98 $1.09 $1.12 $1.12 $1.01
Jan-99 $1.09 $1.17 $1.13 $1.02
Feb-99 $1.06 $1.13 $1.04 $1.00
Mar-99 $1.11 $1.18 $1.06 $1.00
Apr-99 $1.15 $1.22 $1.15 $1.01
COMPILED BY CHARLES SCHWAB & CO., INC.
</TABLE>
Large-cap domestic stocks, as represented by the S&P 500-Registered Trademark-
Index, continued to be the strongest-performing asset class, achieving a total
return of 22.31% for the six-month period. Even within the S&P 500, the
strongest performance was concentrated in the very largest stocks. Small-cap
stocks, as represented by the Russell 2000-Registered Trademark- Index, also
experienced a strong total return of 15.16%.
Assisted by the rebound in Asian markets, international stock returns, as
represented by the Morgan Stanley Capital International Europe,
5
<PAGE>
MARKET OVERVIEW (CONTINUED)
Australasia, Far East (MSCI-EAFE)-Registered Trademark- Index, experienced a
positive total return of 15.28% for the six-month reporting period.
Reflecting the moderate rise in intermediate and long-term interest rates, fixed
income returns were generally weak for the period. Bond returns, as represented
by the Lehman Brothers Aggregate Bond Index, were 0.69% for the six-month
reporting period.
U.S. EQUITY VALUATION
The price/earnings (P/E) ratio for the S&P 500-Registered Trademark- Index
reached new record highs during the reporting period and ended the period at a
lofty 33.9 times earnings, more than twice its long-term average. The P/E ratio,
also known as a multiple, is the price of a stock divided by its earnings per
share, and generally indicates how much investors are willing to pay for a
company's earnings potential. Based on other traditional market valuation
measures, such as price/book (P/B) ratio or dividend yield, the U.S. stock
market continues to remain at record high valuation levels.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
S&P 500 PRICE/EARNINGS RATIO
<S> <C>
Jan-90 14.37
Feb-90 14.21
Mar-90 14.77
Apr-90 14.82
May-90 15.84
Jun-90 16.66
Jul-90 16.65
Aug-90 15.57
Sep-90 14.9
Oct-90 14.36
Nov-90 14.59
Dec-90 15.19
Jan-91 14.95
Feb-91 16.82
Mar-91 17.48
Apr-91 17.85
May-91 17.92
Jun-91 17.96
Jul-91 18.07
Aug-91 19.72
Sep-91 19.88
Oct-91 19.92
Nov-91 21.02
Dec-91 21.85
Jan-92 23.35
Feb-92 23.83
Mar-92 25.45
Apr-92 25.51
May-92 25.71
Jun-92 25.08
Jul-92 25.61
Aug-92 25.5
Sep-92 24.37
Oct-92 23.94
Nov-92 24.08
Dec-92 24.01
Jan-93 24.2
Feb-93 24.25
Mar-93 24.22
Apr-93 23.2
May-93 23.21
Jun-93 22.58
Jul-93 22.52
Aug-93 23.02
Sep-93 23.74
Oct-93 23.97
Nov-93 22.55
Dec-93 23.55
Jan-94 22.98
Feb-94 21.17
Mar-94 20.34
Apr-94 20.1
May-94 20.16
Jun-94 19.76
Jul-94 18.64
Aug-94 18.9
Sep-94 18.26
Oct-94 17.55
Nov-94 16.58
Dec-94 16.98
Jan-95 16.23
Feb-95 16.2
Mar-95 16.5
Apr-95 16.02
May-95 16.43
Jun-95 16.82
Jul-95 16.55
Aug-95 16.18
Sep-95 16.86
Oct-95 16.18
Nov-95 17.14
Dec-95 17.41
Jan-96 18.11
Feb-96 18.56
Mar-96 18.94
Apr-96 19.16
May-96 19.48
Jun-96 19.3
Jul-96 18.31
Aug-96 18.62
Sep-96 19.75
Oct-96 19.6
Nov-96 21.05
Dec-96 20.7
Jan-97 20.55
Feb-97 20.98
Mar-97 19.87
Apr-97 20.24
May-97 21.43
Jun-97 22.45
Jul-97 23.92
Aug-97 22.64
Sep-97 24
Oct-97 22.84
Nov-97 24.02
Dec-97 24.51
Jan-98 24.99
Feb-98 26.44
Mar-98 27.76
Apr-98 26.51
May-98 26.12
Jun-98 27.09
Jul-98 26.78
Aug-98 22.77
Sep-98 24.23
Oct-98 27.58
Nov-98 30.14
Dec-98 31.97
Jan-99 33.29
Feb-99 32.65
Mar-99 33.78
Apr-99 33.9
30-Year Average 15.26
Source: BLOOMBERG L.P.
</TABLE>
TREASURY YIELDS
Following an extended period of falling interest rates that began with the
market's response to developing international economic problems in the second
quarter of 1997, both long-term and intermediate-term rates reversed course and
began to trend upward in October 1998. Scaled-back concerns about the impact of
international economic problems and continued strong growth of the domestic
economy, with no evidence that it will slow soon, were the primary drivers of
the reversal of the downward trend in rates.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
30-YEAR AND FIVE-YEAR TREASURY BOND YIELDS
30-YEAR TREASURY FIVE-YEAR TREASURY
BOND YIELD NOTE YIELD
<S> <C> <C>
11/2/98 5.24% 4.40%
11/3/98 5.22% 4.37%
11/4/98 5.33% 4.48%
11/5/98 5.36% 4.49%
11/6/98 5.39% 4.59%
11/9/98 5.29% 4.54%
11/10/98 5.29% 4.50%
11/11/98 5.29% 4.50%
11/12/98 5.25% 4.47%
11/13/98 5.25% 4.50%
11/16/98 5.29% 4.57%
11/17/98 5.29% 4.57%
11/18/98 5.25% 4.58%
11/19/98 5.24% 4.62%
11/20/98 5.22% 4.60%
11/23/98 5.25% 4.62%
11/24/98 5.22% 4.62%
11/25/98 5.19% 4.63%
11/26/98 5.19% 4.63%
11/27/98 5.16% 4.59%
11/30/98 5.06% 4.48%
12/1/98 5.04% 4.41%
12/2/98 5.02% 4.32%
12/3/98 5.00% 4.26%
12/4/98 5.04% 4.39%
12/7/98 5.03% 4.44%
12/8/98 4.99% 4.38%
12/9/98 4.98% 4.36%
12/10/98 4.96% 4.32%
12/11/98 5.02% 4.39%
12/14/98 4.99% 4.33%
12/15/98 5.03% 4.39%
12/16/98 4.99% 4.29%
12/17/98 5.01% 4.35%
12/18/98 5.00% 4.36%
12/21/98 5.06% 4.44%
12/22/98 5.14% 4.51%
12/23/98 5.18% 4.64%
12/24/98 5.21% 4.71%
12/25/98 5.22% 4.71%
12/28/98 5.15% 4.63%
12/29/98 5.10% 4.57%
12/30/98 5.09% 4.53%
12/31/98 5.10% 4.54%
1/1/99 5.10% 4.54%
1/4/99 5.15% 4.56%
1/5/99 5.21% 4.62%
1/6/99 5.16% 4.57%
1/7/99 5.22% 4.63%
1/8/99 5.27% 4.73%
1/11/99 5.31% 4.79%
1/12/99 5.22% 4.67%
1/13/99 5.13% 4.56%
1/14/99 5.06% 4.46%
1/15/99 5.11% 4.55%
1/18/99 5.12% 4.55%
1/19/99 5.15% 4.61%
1/20/99 5.17% 4.64%
1/21/99 5.13% 4.56%
1/22/99 5.08% 4.52%
1/25/99 5.12% 4.55%
1/26/99 5.13% 4.58%
1/27/99 5.13% 4.55%
1/28/99 5.11% 4.56%
1/29/99 5.09% 4.55%
2/1/99 5.18% 4.64%
2/2/99 5.24% 4.70%
2/3/99 5.25% 4.73%
2/4/99 5.29% 4.79%
2/5/99 5.35% 4.86%
2/8/99 5.34% 4.84%
2/9/99 5.30% 4.80%
2/10/99 5.37% 4.82%
2/11/99 5.37% 4.84%
2/12/99 5.42% 4.96%
2/15/99 5.43% 4.98%
2/16/99 5.34% 4.94%
2/17/99 5.31% 4.90%
2/18/99 5.38% 4.97%
2/19/99 5.39% 4.99%
2/22/99 5.36% 4.94%
2/23/99 5.43% 5.04%
2/24/99 5.51% 5.12%
2/25/99 5.65% 5.29%
2/26/99 5.58% 5.22%
3/1/99 5.67% 5.31%
3/2/99 5.61% 5.23%
3/3/99 5.70% 5.29%
3/4/99 5.70% 5.31%
3/5/99 5.60% 5.22%
3/8/99 5.59% 5.19%
3/9/99 5.53% 5.10%
3/10/99 5.55% 5.12%
3/11/99 5.56% 5.12%
3/12/99 5.53% 5.06%
3/15/99 5.52% 5.06%
3/16/99 5.48% 5.02%
3/17/99 5.51% 5.04%
3/18/99 5.49% 5.01%
3/19/99 5.56% 5.08%
3/22/99 5.57% 5.12%
3/23/99 5.54% 5.05%
3/24/99 5.53% 5.06%
3/25/99 5.59% 5.10%
3/26/99 5.59% 5.08%
3/29/99 5.64% 5.13%
3/30/99 5.58% 5.05%
3/31/99 5.63% 5.10%
4/1/99 5.67% 5.14%
4/2/99 5.60% 5.05%
4/5/99 5.59% 5.05%
4/6/99 5.52% 4.99%
4/7/99 5.50% 5.01%
4/8/99 5.44% 4.94%
4/9/99 5.46% 4.96%
4/12/99 5.45% 4.96%
4/13/99 5.49% 5.00%
4/14/99 5.51% 5.03%
4/15/99 5.53% 5.06%
4/16/99 5.57% 5.11%
4/19/99 5.52% 5.03%
4/20/99 5.51% 5.03%
4/21/99 5.52% 5.08%
4/22/99 5.60% 5.13%
4/23/99 5.60% 5.14%
4/26/99 5.58% 5.11%
4/27/99 5.54% 5.10%
4/28/99 5.58% 5.14%
4/29/99 5.53% 5.08%
4/30/99 5.66% 5.21%
Source: BLOOMBERG L.P.
</TABLE>
INTERNATIONAL PERFORMANCE
The MSCI-EAFE-Registered Trademark- Index gained 15.28% in U.S. dollar terms
(excluding reinvested dividends) during the six-month reporting period. In local
currency terms, it gained 22.39%, reflecting the relative weakness of most
foreign currencies during the period.
6
<PAGE>
With the exception of Austria, Denmark and Belgium, all of the MSCI-EAFE
component countries had positive returns for the period. In particular, many of
the Asian countries reversed their severe declines to post strong returns. The
strongest-performing countries for the period were Singapore, Finland and New
Zealand.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MSCI-EAFE COUNTRY RETURNS
SIX MONTHS ENDED 4/30/99
<S> <C>
Singapore 53.54%
Finland 47.33%
New Zealand 30.43%
Japan 26.47%
Hong Kong 25.64%
Australia 23.83%
Sweden 19.34%
Ireland 18.49%
United Kingdom 15.38%
Netherlands 11.88%
Italy 11.68%
France 10.65%
Norway 4.39%
Germany 3.58%
Spain 2.47%
Switzerland 0.52%
Austria -1.27%
Denmark -3.22%
Belgium -3.84%
Source: DATASTREAM
</TABLE>
This market overview has been provided by the portfolio management team.
7
<PAGE>
SCHWAB S&P 500 FUND-INVESTOR SHARES AND E.SHARES-TM-
FUND PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 4/30/99
<TABLE>
<CAPTION>
SINCE
SIX INCEPTION
MONTHS(1) ONE YEAR (5/1/96)
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
SCHWAB S&P 500 FUND-INVESTOR SHARES(2) 22.13% 21.34% 28.42%
- --------------------------------------------------------------------------------------------------
SCHWAB S&P 500 FUND-E.SHARES(2) 22.09% 21.38% 28.54%
- --------------------------------------------------------------------------------------------------
S&P 500-Registered Trademark- Index 22.31% 21.83% 29.07%
- --------------------------------------------------------------------------------------------------
Index Tracking Differential-Investor Shares 0.18% 0.49% 0.65%
- --------------------------------------------------------------------------------------------------
Index Tracking Differential-e.Shares 0.22% 0.45% 0.53%
- --------------------------------------------------------------------------------------------------
</TABLE>
National Association of Securities Dealers (NASD) regulations require that we
report performance data as of the most recent calendar quarter--in this case,
the quarter ended 3/31/99. As of 3/31/99, the Fund's six-month, one-year and
since-inception average annual total returns were 27.02%, 17.98% and 27.67%,
respectively, for the Investor Shares and 27.05%, 18.02% and 27.81%,
respectively, for the e.Shares. Without fee waivers and guarantees, the
six-month, one-year and since-inception average annual total returns would have
been 26.79%, 17.56% and 27.27%, respectively, for the Investor Shares and
26.87%, 17.71% and 27.13%, respectively, for the e.Shares as of 3/31/99.
TAX-SMART INVESTMENT STRATEGY
The Schwab S&P 500 Fund seeks to maximize its after-tax performance by using a
strategy that helps reduce capital gains distributions. This strategy is
designed to help investors keep more of what their money earns. The chart below
illustrates the effects of this strategy on the one-year performance of the
Schwab S&P 500 Fund-Investor Shares.
ONE-YEAR AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/99
<TABLE>
<CAPTION>
BEFORE AFTER % LOST TO
TAX TAX(3) TAXES
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
Schwab S&P 500 Fund-Investor Shares(4) 21.34% 20.92% (1.97)%
- -------------------------------------------------------------------------------------------------
Average Large-Cap Fund(5) 17.32% 13.51% (22.00)%
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) Actual, not annualized, because period is less than one year.
(2) The Investment Adviser and Schwab waived a portion of their fees during the
reporting period and have guaranteed through at least 2/29/00 that total
operating expenses will not exceed 0.35% and 0.28%, respectively, for the
Investor Shares and the e.Shares. Without fee waivers and guarantees, the
six-month, one-year and since-inception average annual total returns would
have been 21.92%, 20.97% and 28.02%, respectively, for the Investor Shares
and 21.95%, 21.09% and 27.89%, respectively, for the e.Shares as of 4/30/99.
(3) After-tax returns assume the maximum federal income tax rate of 39.6% on
dividends and 20% on capital gains distributions. Tax rates vary and may be
higher or lower than those shown.
(4) The Investment Adviser and Schwab waived a portion of their fees during the
reporting period and have guaranteed through at least 2/29/00 that total
operating expenses will not exceed 0.35%. Without fee waivers and
guarantees, the Investor Shares returns would have been lower.
(5) Source: Morningstar, Inc. The large-cap fund category contains 916 funds
with one-year track records as of 4/30/99. These funds may or may not follow
a tax-efficient strategy similar to that followed by the Schwab S&P 500
Fund. Also, although many mutual funds have multiple classes of shares, the
category average includes only those funds that were classified by
Morningstar as a distinct portfolio. This typically means that a fund's
oldest class of shares was used.
8
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
SCHWAB S&P 500 FUND - INVESTOR S&P 500 INDEX SCHWAB S&P 500 FUND - .E
SHARES SHARES
<S> <C> <C> <C>
5/1/96 $10,000 $10,000 $10,000
5/31/96 $10,250 $10,257 $10,250
6/30/96 $10,290 $10,296 $10,290
7/31/96 $9,840 $9,841 $9,840
8/31/96 $10,040 $10,049 $10,050
9/30/96 $10,600 $10,613 $10,600
10/31/96 $10,880 $10,906 $10,890
11/30/96 $11,690 $11,731 $11,710
12/31/96 $11,462 $11,498 $11,473
1/31/97 $12,157 $12,216 $12,179
2/28/97 $12,248 $12,312 $12,270
3/31/97 $11,744 $11,808 $11,766
4/30/97 $12,430 $12,511 $12,452
5/31/97 $13,186 $13,272 $13,209
6/30/97 $13,760 $13,867 $13,794
7/31/97 $14,849 $14,969 $14,873
8/31/97 $14,012 $14,131 $14,036
9/30/97 $14,778 $14,904 $14,803
10/31/97 $14,284 $14,406 $14,318
11/30/97 $14,930 $15,073 $14,964
12/31/97 $15,184 $15,332 $15,227
1/31/98 $15,357 $15,502 $15,390
2/28/98 $16,455 $16,620 $16,490
3/31/98 $17,289 $17,471 $17,336
4/30/98 $17,452 $17,647 $17,499
5/31/98 $17,147 $17,344 $17,193
6/30/98 $17,838 $18,048 $17,886
7/31/98 $17,645 $17,857 $17,692
8/31/98 $15,092 $15,278 $15,136
9/30/98 $16,058 $16,257 $16,103
10/31/98 $17,340 $17,579 $17,397
11/30/98 $18,387 $18,645 $18,446
12/31/98 $19,443 $19,718 $19,504
1/31/99 $20,253 $20,543 $20,316
2/28/99 $19,617 $19,904 $19,679
3/31/99 $20,397 $20,700 $20,459
4/30/99 $21,176 $21,501 $21,240
</TABLE>
The above graph compares the growth of a hypothetical $10,000 investment in the
Schwab S&P 500 Fund-Investor Shares and e.Shares,-TM- made at their inception,
with a similar investment in the S&P 500-Registered Trademark- Index.
Also shown is the difference between the total returns of the S&P 500 Index and
the Schwab S&P 500 Fund, which is often referred to as the "tracking
differential." The tracking differential arises due to several factors. For
example, unlike the index, the Fund has operating expenses and incurs trading
costs when it buys or sells securities. The Fund also may hold non-index
securities that can produce either higher or lower returns than their index
counterparts. Furthermore, unlike the index, the Fund holds a portion of its
assets in cash.
THE INFORMATION PRESENTED IS HISTORICAL AND DOES NOT REPRESENT FUTURE RESULTS.
TOTAL RETURNS ASSUME REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS. PRINCIPAL VALUE AND INVESTMENT RETURNS WILL FLUCTUATE, SO AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. Indices are unmanaged and do not reflect advisory fees and other expenses
associated with an investment in the Fund. Investors cannot invest in an index
directly.
ASSETS
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------
Total net assets as of 10/31/98 (000s) $2,216,222
- -------------------------------------------------------------------------------------------------
Total net assets as of 4/30/99 (000s) $3,213,692
- -------------------------------------------------------------------------------------------------
Percentage growth over reporting period 45%
- -------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
SCHWAB S&P 500 FUND-SELECT SHARES-TM-
FUND PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 4/30/99
<TABLE>
<CAPTION>
SINCE
SIX INCEPTION
MONTHS(1) ONE YEAR (5/19/97)
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
SCHWAB S&P 500 FUND-SELECT SHARES(2),(3) 22.23% 21.52% 28.98%
- --------------------------------------------------------------------------------------------------
S&P 500-Registered Trademark- Index 22.31% 21.83% 29.32%
- --------------------------------------------------------------------------------------------------
Index Tracking Differential-Select Shares 0.08% 0.31% 0.34%
- --------------------------------------------------------------------------------------------------
</TABLE>
National Association of Securities Dealers (NASD) regulations require that we
report performance data as of the most recent calendar quarter--in this case,
the quarter ended 3/31/99. As of 3/31/99, the Fund's six-month, one-year and
since-inception average annual total returns were 27.13%, 18.17% and 27.81%,
respectively. Without fee waivers and guarantees, the six-month, one-year and
since-inception average annual total returns would have been 26.93%, 17.81% and
26.08%, respectively, for the Select Shares as of 3/31/99.
(1) Actual, not annualized, because period is less than one year.
(2) The Investment Adviser and Schwab waived a portion of their fees during the
reporting period and have guaranteed through at least 2/29/00 that total
operating expenses will not exceed 0.19% for the Select Shares. Without fee
waivers and guarantees, the six-month, one-year and since-inception average
annual total returns would have been 21.01%, 21.13% and 27.28%,
respectively, as of 4/30/99.
(3) The required minimum initial investment in the Select Shares is $50,000.
10
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF A HYPOTHETICAL $50,000 INVESTMENT
SCHWAB S&P 500 FUND - SELECT
SHARES S&P 500 INDEX
<S> <C> <C>
5/19/97 $50,000 $50,000
5/31/97 $50,935 $50,930
6/30/97 $53,190 $53,212
7/31/97 $57,395 $57,442
8/31/97 $54,165 $54,225
9/30/97 $57,120 $57,191
10/31/97 $55,215 $55,281
11/30/97 $57,745 $57,841
12/31/97 $58,745 $58,836
1/31/98 $59,375 $59,489
2/28/98 $63,660 $63,778
3/31/98 $66,880 $67,043
4/30/98 $67,550 $67,720
5/31/98 $66,370 $66,556
6/30/98 $69,040 $69,258
7/31/98 $68,295 $68,524
8/31/98 $58,435 $58,629
9/30/98 $62,165 $62,387
10/31/98 $67,155 $67,459
11/30/98 $71,245 $71,547
12/31/98 $75,340 $75,668
1/31/99 $78,475 $78,831
2/28/99 $76,015 $76,379
3/31/99 $79,030 $79,434
4/30/99 $82,085 $82,509
</TABLE>
The above graph compares the growth of a hypothetical $50,000 investment in the
Schwab S&P 500 Fund-Select Shares, made at its inception, with a similar
investment in the S&P 500-Registered Trademark- Index.
Also shown is the difference between the total returns of the S&P 500 Index and
the Schwab S&P 500 Fund, often referred to as the "tracking differential." (See
page 9 for a more detailed discussion).
THE INFORMATION PRESENTED IS HISTORICAL AND DOES NOT REPRESENT FUTURE RESULTS.
TOTAL RETURNS ASSUME REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS. PRINCIPAL VALUE AND INVESTMENT RETURNS WILL FLUCTUATE, SO AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. Indices are unmanaged and do not reflect advisory fees and other expenses
associated with an investment in the Fund. Investors cannot invest in an index
directly.
ASSETS
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------
Total net assets as of 10/31/98 (000s) $1,548,052
- -------------------------------------------------------------------------------------------------
Total net assets as of 4/30/99 (000s) $3,210,525
- -------------------------------------------------------------------------------------------------
Percentage growth over reporting period 107%
- -------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
SCHWAB S&P 500 FUND
PORTFOLIO SNAPSHOT
The Schwab S&P 500 Fund (the Fund) invests primarily in common stocks of the S&P
500-Registered Trademark- Index, a widely recognized, unmanaged index of 500
large-cap stocks selected by Standard & Poor's.-Registered Trademark- As of
April 30, 1999, the aggregate market capitalization of the S&P 500 Index
represented approximately 79.9% of the total value of the U.S. stock market.*
Common stocks of the 50 largest companies in the S&P 500 Index accounted for
approximately 54.6% of the index. The information below and on the following
page provides a snapshot of the Fund's characteristics as of 4/30/99, and is not
indicative of its composition after that date. The terms used below are defined
beginning on page 41. A complete list of the securities in the Fund's portfolio
as of 4/30/99 is provided in the Schedule of Investments later in this report.
FUND FACTS
<TABLE>
<CAPTION>
SCHWAB S&P 500
FUND- PEER GROUP
INVESTOR SHARES AVERAGE+
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Number of Issues 505 129
- ---------------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) $63,875 $42,604
- ---------------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 33.6 33.6
- ---------------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 8.4 7.8
- ---------------------------------------------------------------------------------------------------------
12-Month Yield 0.74% 0.51%
- ---------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 1% 73%
- ---------------------------------------------------------------------------------------------------------
Three-Year Beta 1.00 0.96
- ---------------------------------------------------------------------------------------------------------
Expense Ratio 0.35%** 1.32%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* Source: Wilshire Associates. The U.S. stock market is represented by the
Wilshire 5000 Index.
** Reflects a voluntary reduction by the Investment Adviser and Schwab, which is
guaranteed through at least 2/29/00.
+ Source: Morningstar. This information is as of 4/30/99, and is for
illustrative purposes only. It is not intended to show, predict or guarantee
future composition of the Fund. The peer group average is based on 1,932
large-cap funds as tracked by Morningstar.
12
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 4/30/99
<S> <C>
Other 30.1%
Healthcare/Drugs and Medicine 11.0%
Business Machines and Software 11.5%
Telephone 8.8%
Electronics 6.2%
Banks 7.3%
Retail 6.1%
Miscellaneous Finance 5.7%
Producer Goods and Manufacturing 4.7%
Oil-International 4.6%
Food and Agriculture 4.0%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
EQUITY INVESTMENT STYLE BOX(++)
AS OF 4/30/99
-STYLE-
<S> <C> <C> <C>
Value Blend Growth -Market Cap-
X Large
Medium
Small
</TABLE>
TOP 10 HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS
<TABLE>
<S> <C>
- ---------------------------------------------------
Microsoft Corp. 3.71%
- ---------------------------------------------------
General Electric Co. 3.12%
- ---------------------------------------------------
Wal-Mart Stores, Inc. 1.85%
- ---------------------------------------------------
Intel Corp. 1.85%
- ---------------------------------------------------
Exxon Corp. 1.83%
- ---------------------------------------------------
International Business Machines Corp. 1.74%
- ---------------------------------------------------
Cisco Systems, Inc. 1.63%
- ---------------------------------------------------
Citigroup, Inc. 1.54%
- ---------------------------------------------------
Coca-Cola Co. 1.52%
- ---------------------------------------------------
Merck & Co., Inc. 1.51%
- ---------------------------------------------------
</TABLE>
++ Source: Morningstar, Inc. The style box illustrates the composition of the
Fund's portfolio as of 4/30/99. It is not indicative of its holdings after
that date, nor does it represent an exact assessment of risk or future
assessment or any type of future performance. Placement is based on the
Fund's P/E and P/B ratios relative to the S&P 500-Registered Trademark-
Index, as well as the size of the companies in which it invests, or median
market capitalization.
13
<PAGE>
SCHWAB 1000 FUND-REGISTERED TRADEMARK--INVESTOR SHARES
FUND PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 4/30/99
<TABLE>
<CAPTION>
SINCE
SIX FIVE INCEPTION
MONTHS(1) ONE YEAR YEARS (4/2/91)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
SCHWAB 1000 FUND-INVESTOR SHARES(2) 22.63% 20.26% 25.50% 19.11%
- --------------------------------------------------------------------------------------------
Schwab 1000 Index-Registered Trademark- 22.84% 20.72% 26.11% 19.62%
- --------------------------------------------------------------------------------------------
S&P 500-Registered Trademark- Index 22.31% 21.83% 26.87% 19.69%
- --------------------------------------------------------------------------------------------
Index Tracking Differential-Investor Shares 0.21% 0.46% 0.61% 0.51%
- --------------------------------------------------------------------------------------------
</TABLE>
National Association of Securities Dealers (NASD) regulations require that we
report performance data as of the most recent calendar quarter--in this case,
the quarter ended 3/31/99. As of 3/31/99, the Fund's six-month, one-year,
five-year and since-inception average annual total returns were 27.20%, 16.75%,
24.79% and 18.72%, respectively. Without fee waivers and guarantees, the
six-month, one-year, five-year and since-inception average annual total returns
would have been 27.13%, 16.69%, 24.41% and 18.84%, respectively, for the
Investor Shares as of 3/31/99.
TAX-SMART INVESTMENT STRATEGY
The Schwab 1000 Fund seeks to maximize its after-tax performance by using a
strategy that helps reduce capital gains distributions. This strategy is
designed to help investors keep more of what their money earns. The chart below
illustrates the effects of this strategy on the five-year performance of the
Schwab 1000 Fund-Investor Shares.
FIVE-YEAR AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/99
<TABLE>
<CAPTION>
BEFORE AFTER % LOST TO
TAX TAX(3) TAXES
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
Schwab 1000 Fund-Investor Shares(4) 25.50% 24.82% (2.67)%
- -------------------------------------------------------------------------------------------------
Average Large-Cap Fund(5) 22.05% 19.30% (12.45)%
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) Actual, not annualized, because period is less than one year.
(2) The Investment Adviser and Schwab waived a portion of their fees during the
reporting period and have guaranteed through at least 2/29/00 that total
operating expenses will not exceed 0.46% for the Investor Shares. Without
fee waivers and guarantees, the six-month, one-year, five-year and
since-inception average annual total returns would have been 22.56%, 20.15%,
25.11% and 18.87%, respectively, for the Investor Shares as of 4/30/99.
(3) After-tax returns assume the maximum federal income tax rate of 39.6% on
dividends and 20% on capital gains distributions. Tax rates vary and may be
higher or lower than those shown.
(4) The Investment Adviser and Schwab waived a portion of their fees during the
reporting period and have guaranteed through at least 2/29/00 that total
operating expenses will not exceed 0.46%. Without fee waivers and
guarantees, the Investor Shares returns would have been lower.
(5) Source: Morningstar, Inc. The large-cap fund category contains 560 funds
with five-year track records as of 4/30/99. These funds may or may not
follow a tax-efficient strategy similar to that followed by the Schwab 1000
Fund. Also, although many mutual funds have multiple classes of shares, the
category average includes only those funds that were classified by
Morningstar as a distinct portfolio. This typically means that a fund's
oldest class of shares was used.
14
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
SCHWAB 1000 FUND - INVESTOR
SHARES S&P 500 INDEX SCHWAB 1000 INDEX
<S> <C> <C> <C>
4/2/91 $10,000 $10,000 $10,000
4/30/91 $ 9,910 $ 9,908 $ 9,898
5/31/91 $10,320 $10,335 $10,311
6/30/91 $ 9,850 $ 9,861 $ 9,840
7/31/91 $10,320 $10,321 $10,310
8/31/91 $10,600 $10,566 $10,591
9/30/91 $10,460 $10,389 $10,455
10/31/91 $10,630 $10,528 $10,625
11/30/91 $10,240 $10,104 $10,225
12/31/91 $11,425 $11,260 $11,412
1/31/92 $11,283 $11,050 $11,272
2/29/92 $11,425 $11,193 $11,415
3/31/92 $11,171 $10,975 $11,163
4/30/92 $11,404 $11,298 $11,392
5/31/92 $11,404 $11,353 $11,457
6/30/92 $11,465 $11,184 $11,257
7/31/92 $11,726 $11,641 $11,728
8/31/92 $11,480 $11,403 $11,486
9/30/92 $11,623 $11,537 $11,646
10/31/92 $11,746 $11,577 $11,763
11/30/92 $12,208 $11,971 $12,233
12/31/92 $12,398 $12,119 $12,428
1/31/93 $12,502 $12,220 $12,539
2/28/93 $12,595 $12,387 $12,632
3/31/93 $12,896 $12,648 $12,948
4/30/93 $12,533 $12,342 $12,583
5/31/93 $12,896 $12,673 $12,957
6/30/93 $12,958 $12,710 $13,024
7/31/93 $12,905 $12,659 $12,989
8/31/93 $13,397 $13,139 $13,492
9/30/93 $13,355 $13,038 $13,454
10/31/93 $13,544 $13,308 $13,654
11/30/93 $13,355 $13,181 $13,462
12/31/93 $13,592 $13,341 $13,700
1/31/94 $14,005 $13,794 $14,136
2/28/94 $13,645 $13,420 $13,781
3/31/94 $13,042 $12,837 $13,169
4/30/94 $13,190 $13,001 $13,326
5/31/94 $13,349 $13,213 $13,488
6/30/94 $12,988 $12,889 $13,127
7/31/94 $13,405 $13,312 $13,558
8/31/94 $13,971 $13,856 $14,147
9/30/94 $13,651 $13,518 $13,825
10/31/94 $13,918 $13,821 $14,095
11/30/94 $13,416 $13,318 $13,590
12/31/94 $13,577 $13,514 $13,767
1/31/95 $13,923 $13,864 $14,121
2/28/95 $14,474 $14,404 $14,700
3/31/95 $14,852 $14,829 $15,094
4/30/95 $15,219 $15,264 $15,476
5/31/95 $15,770 $15,874 $16,048
6/30/95 $16,191 $16,242 $16,490
7/31/95 $16,807 $16,779 $17,111
8/31/95 $16,936 $16,821 $17,245
9/30/95 $17,606 $17,531 $17,949
10/31/95 $17,520 $17,468 $17,859
11/30/95 $18,276 $18,233 $18,646
12/31/95 $18,547 $18,585 $18,924
1/31/96 $19,095 $19,217 $19,499
2/29/96 $19,379 $19,396 $19,789
3/31/96 $19,554 $19,582 $19,980
4/30/96 $19,883 $19,870 $20,321
5/31/96 $20,354 $20,380 $20,812
6/30/96 $20,299 $20,458 $20,779
7/31/96 $19,335 $19,554 $19,794
8/31/96 $19,861 $19,966 $20,327
9/30/96 $20,967 $21,088 $21,465
10/31/96 $21,394 $21,670 $21,899
11/30/96 $22,938 $23,308 $23,485
12/31/96 $22,549 $22,847 $23,103
1/31/97 $23,846 $24,272 $24,442
2/28/97 $23,935 $24,464 $24,528
3/31/97 $22,870 $23,461 $23,457
4/30/97 $24,101 $24,859 $24,696
5/31/97 $25,631 $26,371 $26,291
6/30/97 $26,695 $27,552 $27,402
7/31/97 $28,857 $29,743 $29,615
8/31/97 $27,471 $28,077 $28,216
9/30/97 $28,946 $29,613 $29,732
10/31/97 $27,992 $28,624 $28,756
11/30/97 $29,167 $29,949 $29,983
12/31/97 $29,747 $30,464 $30,582
1/31/98 $29,960 $30,802 $30,818
2/28/98 $32,166 $33,023 $33,116
3/31/98 $33,801 $34,714 $34,830
4/30/98 $34,149 $35,065 $35,211
5/31/98 $33,398 $34,462 $34,441
6/30/98 $34,742 $35,861 $35,824
7/31/98 $34,260 $35,481 $35,324
8/31/98 $29,142 $30,357 $30,049
9/30/98 $31,023 $32,303 $32,014
10/31/98 $33,487 $34,929 $34,602
11/30/98 $35,570 $37,046 $36,762
12/31/98 $37,826 $39,180 $39,090
1/31/99 $39,259 $40,818 $40,575
2/28/99 $37,939 $39,548 $39,256
3/31/99 $39,462 $41,130 $40,820
4/30/99 $41,065 $42,722 $42,505
</TABLE>
The above graph compares the growth of a hypothetical $10,000 investment in the
Schwab 1000 Fund-Investor Shares, made at its inception, with similar
investments in the Schwab 1000 Index-Registered Trademark- and the S&P
500-Registered Trademark- Index.
Also shown is the difference between the total returns of the Schwab 1000 Index
and the Schwab 1000 Fund, which is often referred to as the "tracking
differential." (See page 9 for a more detailed discussion).
THE INFORMATION PRESENTED IS HISTORICAL AND DOES NOT REPRESENT FUTURE RESULTS.
TOTAL RETURNS ASSUME REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS. PRINCIPAL VALUE AND INVESTMENT RETURNS WILL FLUCTUATE, SO AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. Indices are unmanaged and do not reflect advisory fees and other expenses
associated with an investment in the Fund. Investors cannot invest in an index
directly.
ASSETS
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------
Total net assets as of 10/31/98 (000s) $3,657,122
- -------------------------------------------------------------------------------------------------
Total net assets as of 4/30/99 (000s) $4,738,336
- -------------------------------------------------------------------------------------------------
Percentage growth over reporting period 30%
- -------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
SCHWAB 1000 FUND-SELECT SHARES-TM-
FUND PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 4/30/99
<TABLE>
<CAPTION>
SINCE
SIX INCEPTION
MONTHS(1) ONE YEAR (5/19/97)
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
SCHWAB 1000 FUND-SELECT SHARES(2),(3) 22.73% 20.44% 28.92%
- --------------------------------------------------------------------------------------------------
Schwab 1000 Index-Registered Trademark- 22.84% 20.72% 29.35%
- --------------------------------------------------------------------------------------------------
Index Tracking Differential-Select Shares 0.11% 0.28% 0.43%
- --------------------------------------------------------------------------------------------------
S&P 500-Registered Trademark- Index 22.31% 21.83% 29.32%
- --------------------------------------------------------------------------------------------------
</TABLE>
National Association of Securities Dealers (NASD) regulations require that we
report performance data as of the most recent calendar quarter--in this case,
the quarter ended 3/31/99. As of 3/31/99, the Fund's six-month, one-year and
since-inception average annual total returns were 27.26%, 16.89% and 27.60%,
respectively. Without fee waivers and guarantees, the six-month, one-year, and
since-inception average annual total returns would have been 27.21%, 16.82% and
27.05%, respectively, for the Select Shares as of 3/31/99.
(1) Actual, not annualized, because period is less than one year.
(2) The Investment Adviser and Schwab waived a portion of their fees during the
reporting period and have guaranteed through at least 2/29/00 that total
operating expenses will not exceed 0.35% for the Select Shares. Without fee
waivers and guarantees, the six-month, one-year and since-inception average
annual total returns would have been 22.66%, 20.34% and 28.38%,
respectively, for the Select Shares as of 4/30/99.
(3) The required minimum initial investment in the Select Shares is $50,000.
16
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF A HYPOTHETICAL $50,000 INVESTMENT
SCHWAB 1000 FUND - SELECT
SHARES S&P 500 INDEX SCHWAB 1000 INDEX
<S> <C> <C> <C>
5/19/97 $50,000 $50,000 $50,000
5/31/97 $51,040 $50,930 $51,064
6/30/97 $53,180 $53,212 $53,222
7/31/97 $57,490 $57,442 $57,518
8/31/97 $54,750 $54,225 $54,801
9/30/97 $57,685 $57,191 $57,746
10/31/97 $55,785 $55,281 $55,851
11/30/97 $58,150 $57,841 $58,233
12/31/97 $59,325 $58,836 $59,398
1/31/98 $59,725 $59,489 $59,855
2/28/98 $64,145 $63,778 $64,318
3/31/98 $67,405 $67,043 $67,648
4/30/98 $68,100 $67,720 $68,387
5/31/98 $66,625 $66,556 $66,893
6/30/98 $69,305 $69,258 $69,578
7/31/98 $68,345 $68,524 $68,606
8/31/98 $58,140 $58,629 $58,362
9/30/98 $61,915 $62,387 $62,179
10/31/98 $66,825 $67,459 $67,206
11/30/98 $71,000 $71,547 $71,400
12/31/98 $75,505 $75,668 $75,922
1/31/99 $78,385 $78,831 $78,805
2/28/99 $75,750 $76,379 $76,244
3/31/99 $78,795 $79,434 $79,282
4/30/99 $82,015 $82,509 $82,553
</TABLE>
The above graph compares the growth of a hypothetical $50,000 investment in the
Schwab 1000 Fund-Select Shares,-TM- made at its inception, with a similar
investment in the Schwab 1000 Index-Registered Trademark- and the S&P
500-Registered Trademark- Index.
Also shown is the difference between the total returns of the Schwab 1000 Index
and the Schwab 1000 Fund, often referred to as the "tracking differential." (See
page 9 for a more detailed discussion).
THE INFORMATION PRESENTED IS HISTORICAL AND DOES NOT REPRESENT FUTURE RESULTS.
TOTAL RETURNS ASSUME REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS. PRINCIPAL VALUE AND INVESTMENT RETURNS WILL FLUCTUATE, SO AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. Indices are unmanaged and do not reflect advisory fees and other expenses
associated with an investment in the Fund. Investors cannot invest in an index
directly.
ASSETS
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------
Total net assets as of 10/31/98 (000s) $1,040,551
- -------------------------------------------------------------------------------------------------
Total net assets as of 4/30/99 (000s) $1,964,716
- -------------------------------------------------------------------------------------------------
Percentage growth over reporting period 89%
- -------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
SCHWAB 1000 FUND-REGISTERED TRADEMARK-
PORTFOLIO SNAPSHOT
The Schwab 1000 Fund (the Fund) invests primarily in common stocks of the Schwab
1000 Index,-Registered Trademark- an index created to represent the performance
of publicly traded common stocks of the 1,000 largest U.S. companies (excluding
investment companies). As of April 30, 1999, the aggregate market capitalization
of the Schwab 1000 Index represented approximately 87.4% of the total value of
the U.S. stock market, as represented by the Wilshire 5000 Index.* The
information below and on the following page provides a snapshot of the Fund's
characteristics as of 4/30/99, and is not indicative of its composition after
that date. The terms used below are defined beginning on page 41. A complete
list of the securities in the Fund's portfolio as of 4/30/99 is provided in the
Schedule of Investments later in this report.
FUND FACTS
<TABLE>
<CAPTION>
SCHWAB 1000
FUND- PEER GROUP
INVESTOR SHARES AVERAGE+
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
Number of Issues 1,005 129
- -------------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) $51,572 $42,604
- -------------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 33.1 33.6
- -------------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 8.2 7.8
- -------------------------------------------------------------------------------------------------------
12-Month Yield 0.70% 0.51%
- -------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 2% 73%
- -------------------------------------------------------------------------------------------------------
Three-Year Beta 1.01 0.96
- -------------------------------------------------------------------------------------------------------
Expense Ratio 0.46%** 1.32%
- -------------------------------------------------------------------------------------------------------
</TABLE>
* Source: Wilshire Associates. The U.S. stock market is represented by the
Wilshire 5000 Index.
** Reflects a voluntary reduction by the Investment Adviser and Schwab, which is
guaranteed through at least 2/29/00.
+ Source: Morningstar. This information is as of 4/30/99, and is for
illustrative purposes only. It is not intended to show, predict or guarantee
future composition of the Fund. The peer group average is based on 1,932
large-cap funds as tracked by Morningstar.
18
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 4/30/99
<S> <C>
Other 30.0%
Healthcare/Drugs and Medicine 10.6%
Business Machines and Software 11.0%
Telephone 8.4%
Banks 7.5%
Electronics 6.5%
Miscellaneous Finance 6.7%
Retail 6.4%
Producer Goods and Manufacturing 4.6%
Business Services 4.5%
Food and Agriculture 3.8%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
EQUITY INVESTMENT STYLE BOX(++)
AS OF 4/30/99
-STYLE-
<S> <C> <C> <C>
Value Blend Growth -Market Cap-
X Large
Medium
Small
</TABLE>
TOP 10 HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS
<TABLE>
<S> <C>
- ---------------------------------------------------
Microsoft Corp. 3.35%
- ---------------------------------------------------
General Electric Co. 2.82%
- ---------------------------------------------------
Wal-Mart Stores, Inc. 1.67%
- ---------------------------------------------------
Intel Corp. 1.66%
- ---------------------------------------------------
Exxon Corp. 1.65%
- ---------------------------------------------------
International Business Machines Corp. 1.57%
- ---------------------------------------------------
Cisco Systems, Inc. 1.47%
- ---------------------------------------------------
Citigroup, Inc. 1.38%
- ---------------------------------------------------
Coca-Cola, Inc. 1.36%
- ---------------------------------------------------
Merck & Co., Inc. 1.36%
- ---------------------------------------------------
</TABLE>
++ Source: Morningstar, Inc. The style box illustrates the composition of the
Fund's portfolio as of 4/30/99. It is not indicative of its holdings after
that date, nor does it represent an exact assessment of risk or future
assessment or any type of future performance. Placement is based on the
Fund's P/E and P/B ratios relative to the S&P 500-Registered Trademark-
Index, as well as the size of the companies in which it invests, or
median market capitalization.
19
<PAGE>
SCHWAB SMALL-CAP INDEX FUND-REGISTERED TRADEMARK--INVESTOR SHARES
FUND PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 4/30/99
<TABLE>
<CAPTION>
SINCE
SIX FIVE INCEPTION
MONTHS(1) ONE YEAR YEARS (12/3/93)
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND-INVESTOR SHARES(2) 12.45% (12.33)% 12.61% 11.09%
- -------------------------------------------------------------------------------------------------------
Schwab Small-Cap Index-Registered Trademark- 14.70% (10.21)% 14.24% 12.78%
- -------------------------------------------------------------------------------------------------------
Index Tracking Differential-Investor Shares 2.25% 2.12% 1.63% 1.69%
- -------------------------------------------------------------------------------------------------------
Russell 2000-Registered Trademark- Index 15.16% (9.25)% 13.02% 11.93%
- -------------------------------------------------------------------------------------------------------
</TABLE>
National Association of Securities Dealers (NASD) regulations require that we
report performance data as of the most recent calendar quarter--in this case,
the quarter ended 3/31/99. As of 3/31/99, the Fund's six-month, one-year,
five-year and since-inception average annual total returns were 9.22%, (18.31)%,
10.85% and 9.70%, respectively. Without fee waivers and guarantees, the
six-month, one-year, five-year and since-inception average annual total returns
would have been 9.07%, (18.46)%, 10.48% and 9.28%, respectively, for the
Investor Shares as of 3/31/99.
TAX-SMART INVESTMENT STRATEGY
The Schwab Small-Cap Index Fund seeks to maximize its after-tax performance by
using a strategy that helps reduce capital gains distributions. This strategy is
designed to help investors keep more of what their money earns. The chart below
illustrates the effects of this strategy on the five-year performance of the
Schwab Small-Cap Index Fund-Investor Shares.
FIVE-YEAR AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/99
<TABLE>
<CAPTION>
BEFORE AFTER % LOST TO
TAX TAX(3) TAXES
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
Schwab Small-Cap Index Fund-Investor Shares(4) 12.61% 12.07% (4.28)%
- -------------------------------------------------------------------------------------------------
Average Small-Cap Fund(5) 12.79% 10.64% (16.79)%
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) Actual, not annualized, because period is less than one year.
(2) The Investment Adviser and Schwab waived a portion of their fees during the
reporting period and have guaranteed through at least 2/29/00 that total
operating expenses will not exceed 0.49% for the Investor Shares. Without
fee waivers and guarantees, the six-month, one-year, five-year and
since-inception average annual total returns would have been 12.33%,
(12.43)%, 12.25% and 10.68%, respectively, for the Investor Shares as of
4/30/99.
(3) After-tax returns assume the maximum federal income tax rate of 39.6% on
dividends and 20% on capital gains distributions. Tax rates vary and may be
higher or lower than those shown.
(4) The Investment Adviser and Schwab waived a portion of their fees during the
reporting period and have guaranteed through at least 2/29/00 that total
operating expenses will not exceed 0.49%. Without fee waivers and
guarantees, the Investor Shares returns would have been lower.
(5) Source: Morningstar, Inc. The small-cap fund category contains 192 funds
with three-year track records as of 4/30/99. These funds may or may not
follow a tax-efficient strategy similar to that followed by the Schwab
Small-Cap Index Fund. Also, although many mutual funds have multiple classes
of shares, the category average includes only those funds that were
classified by Morningstar as a distinct portfolio. This typically means that
a fund's oldest class of shares was used.
20
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
SCHWAB SMALL-CAP INDEX FUND - INVESTOR
SHARES RUSSELL 2000 INDEX SCHWAB SMALL-CAP INDEX
<S> <C> <C> <C>
12/3/93 $10,000 $10,000 $10,000
12/31/93 $10,154 $10,186 $10,234
1/31/94 $10,394 $10,505 $10,469
2/28/94 $10,334 $10,467 $10,430
3/31/94 $9,783 $9,915 $9,871
4/30/94 $9,753 $9,974 $9,847
5/31/94 $9,613 $9,861 $9,692
6/30/94 $9,333 $9,529 $9,419
7/31/94 $9,493 $9,685 $9,614
8/31/94 $10,134 $10,225 $10,249
9/30/94 $10,094 $10,190 $10,191
10/31/94 $10,064 $10,149 $10,149
11/30/94 $9,663 $9,739 $9,767
12/31/94 $9,841 $10,000 $10,000
1/31/95 $9,730 $9,874 $9,838
2/28/95 $10,082 $10,285 $10,229
3/31/95 $10,334 $10,461 $10,442
4/30/95 $10,566 $10,693 $10,671
5/31/95 $10,717 $10,877 $10,809
6/30/95 $11,211 $11,441 $11,356
7/31/95 $11,866 $12,100 $12,021
8/31/95 $12,077 $12,351 $12,270
9/30/95 $12,309 $12,572 $12,510
10/31/95 $11,785 $12,010 $11,910
11/30/95 $12,329 $12,514 $12,114
12/31/95 $12,562 $12,845 $12,782
1/31/96 $12,491 $12,831 $12,749
2/29/96 $12,967 $13,231 $13,261
3/31/96 $13,170 $13,505 $13,492
4/30/96 $13,899 $14,227 $14,206
5/31/96 $14,384 $14,788 $14,692
6/30/96 $13,848 $14,180 $14,222
7/31/96 $12,643 $12,942 $13,075
8/31/96 $13,413 $13,694 $13,904
9/30/96 $14,010 $14,230 $14,416
10/31/96 $13,757 $14,010 $14,169
11/30/96 $14,344 $14,588 $14,733
12/31/96 $14,508 $14,970 $15,007
1/31/97 $14,895 $15,269 $15,361
2/28/97 $14,376 $14,900 $14,986
3/31/97 $13,654 $14,196 $14,257
4/30/97 $13,756 $14,236 $14,299
5/31/97 $15,383 $15,821 $16,045
6/30/97 $16,125 $16,499 $16,880
7/31/97 $17,213 $17,267 $17,842
8/31/97 $17,538 $17,662 $18,243
9/30/97 $18,850 $18,955 $19,675
10/31/97 $18,026 $18,123 $18,816
11/30/97 $17,843 $18,005 $18,645
12/31/97 $18,236 $18,320 $19,035
1/31/98 $17,787 $18,031 $18,736
2/28/98 $19,195 $19,361 $20,285
3/31/98 $20,042 $20,159 $21,199
4/30/98 $20,144 $20,270 $21,344
5/31/98 $18,930 $19,177 $20,090
6/30/98 $18,960 $19,218 $20,146
7/31/98 $17,471 $17,661 $18,597
8/31/98 $14,062 $14,231 $15,011
9/30/98 $14,991 $15,345 $15,953
10/31/98 $15,705 $15,972 $16,709
11/30/98 $16,532 $16,809 $17,576
12/31/98 $17,584 $17,849 $18,719
1/31/99 $17,617 $18,086 $18,800
2/28/99 $16,145 $16,621 $17,229
3/31/99 $16,372 $16,881 $17,559
4/30/99 $17,660 $18,393 $19,165
</TABLE>
The above graph compares the growth of a hypothetical $10,000 investment in the
Schwab Small-Cap Index Fund-Investor Shares, made at its inception, with similar
investments in the Schwab Small-Cap Index-Registered Trademark- and the Russell
2000-Registered Trademark- Index.
Also shown is the difference between the total returns of the Schwab Small-Cap
Index and the Schwab Small-Cap Index Fund, which is often referred to as the
"tracking differential." (See page 9 for a more detailed discussion).
THE INFORMATION PRESENTED IS HISTORICAL AND DOES NOT REPRESENT FUTURE RESULTS.
TOTAL RETURNS ASSUME REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS. PRINCIPAL VALUE AND INVESTMENT RETURNS WILL FLUCTUATE, SO AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. Indices are unmanaged and do not reflect advisory fees and other expenses
associated with an investment in the Fund. Investors cannot invest in an index
directly.
ASSETS
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------
Total net assets as of 10/31/98 (000s) $ 479,500
- -------------------------------------------------------------------------------------------------
Total net assets as of 4/30/99 (000s) $ 383,340
- -------------------------------------------------------------------------------------------------
Percentage change over reporting period (20)%
- -------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
SCHWAB SMALL-CAP INDEX FUND-REGISTERED TRADEMARK--SELECT SHARES-TM-
FUND PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 4/30/99
<TABLE>
<CAPTION>
SINCE
SIX INCEPTION
MONTHS(1) ONE YEAR (5/19/97)
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND-SELECT SHARES(2),(3) 12.56% (12.22)% 9.88%
- ---------------------------------------------------------------------------------------------------
Schwab Small-Cap Index-Registered Trademark- 14.70% (10.21)% 12.03%
- ---------------------------------------------------------------------------------------------------
Index Tracking Differential-Select Shares 2.14% 2.01% 2.15%
- ---------------------------------------------------------------------------------------------------
Russell 2000-Registered Trademark- Index 15.16% (9.25)% 10.20%
- ---------------------------------------------------------------------------------------------------
</TABLE>
National Association of Securities Dealers (NASD) regulations require that we
report performance data as of the most recent calendar quarter--in this case,
the quarter ended 3/31/99. As of 3/31/99, the Fund's six-month, one-year and
since-inception average annual total returns were 9.26%, (18.21)% and 5.92%,
respectively. Without fee waivers and guarantees, the six-month, one-year, and
since-inception average annual total returns would have been 9.02%, (18.62)% and
5.29%, respectively, for the Select Shares as of 3/31/99.
(1) Actual, not annualized, because period is less than one year.
(2) The Investment Adviser and Schwab waived a portion of their fees during the
reporting period and have guaranteed through at least 2/29/00 that total
operating expenses will not exceed 0.38% for the Select Shares. Without fee
waivers and guarantees, the six-month, one-year and since-inception average
annual total returns would have been 12.23%, (12.71)% and 9.21%,
respectively, for the Select Shares as of 4/30/99.
(3) The required minimum initial investment in the Select Shares is $50,000.
22
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF A HYPOTHETICAL $50,000 INVESTMENT
Schwab Small-Cap Index Fund-Select Shares Schwab Small-Cap Index Russell 2000 Index
<S> <C> <C> <C>
5/20/01 $50,000 $50,000 $50,000
6/1/01 $52,170 $52,226 $51,960
7/1/01 $54,690 $54,942 $54,189
8/1/01 $58,415 $58,075 $56,709
9/1/01 $59,485 $59,380 $58,008
10/1/01 $63,965 $64,039 $62,254
11/1/01 $61,205 $61,244 $59,521
12/1/01 $60,550 $60,687 $59,134
1/1/02 $61,920 $61,958 $60,169
2/1/02 $60,400 $60,983 $59,218
3/1/02 $65,175 $66,026 $63,588
4/1/02 $68,050 $69,002 $66,208
5/1/02 $68,430 $69,473 $66,572
6/1/02 $64,310 $65,391 $62,984
7/1/02 $64,415 $65,575 $63,116
8/1/02 $59,360 $60,531 $58,004
9/1/02 $47,790 $48,861 $46,740
10/1/02 $50,945 $51,924 $50,399
11/1/02 $53,365 $54,386 $52,456
12/1/02 $56,170 $57,207 $55,204
1/1/03 $59,775 $60,929 $58,621
2/1/03 $59,925 $61,193 $59,401
3/1/03 $54,925 $56,079 $54,590
4/1/03 $55,660 $57,152 $55,441
5/1/03 $60,070 $62,380 $60,409
</TABLE>
The above graph compares the growth of a hypothetical $50,000 investment in the
Schwab Small-Cap Index Fund-Select Shares, made at its inception, with a similar
investment in the Schwab Small-Cap Index-Registered Trademark- and the Russell
2000-Registered Trademark- Index.
Also shown is the difference between the total returns of the Schwab Small-Cap
Index and the Schwab Small-Cap Index Fund, often referred to as the "tracking
differential." (See page 9 for a more detailed discussion).
THE INFORMATION PRESENTED IS HISTORICAL AND DOES NOT REPRESENT FUTURE RESULTS.
TOTAL RETURNS ASSUME REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS. PRINCIPAL VALUE AND INVESTMENT RETURNS WILL FLUCTUATE, SO AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. Indices are unmanaged and do not reflect advisory fees and other expenses
associated with an investment in the Fund. Investors cannot invest in an index
directly.
ASSETS
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------
Total net assets as of 10/31/98 (000s) $ 149,756
- -------------------------------------------------------------------------------------------------
Total net assets as of 4/30/99 (000s) $ 370,055
- -------------------------------------------------------------------------------------------------
Percentage growth over reporting period 147%
- -------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
SCHWAB SMALL-CAP INDEX FUND-REGISTERED TRADEMARK-
PORTFOLIO SNAPSHOT
The Schwab Small-Cap Index Fund (the Fund) invests primarily in common stocks of
the Schwab Small-Cap Index,-Registered Trademark- an index created to represent
the performance of common stocks of the second 1,000 largest U.S. companies,
ranked by market capitalization. As of April 30, 1999, the aggregate market
capitalization of stocks included in the index represented approximately 4.6% of
the total market value of all publicly traded U.S. companies, as represented by
the Wilshire 5000 Index.* The information below and on the following page
provides a snapshot of the Fund's characteristics as of 4/30/99, and is not
indicative of its composition after that date. The terms used below are defined
beginning on page 41. A complete list of the securities in the Fund's portfolio
as of 4/30/99 is provided in the Schedule of Investments later in this report.
FUND FACTS
<TABLE>
<CAPTION>
SCHWAB SMALL-CAP INDEX
FUND- PEER GROUP
INVESTOR SHARES AVERAGE+
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------
Number of Issues 1,062 159
- -----------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) $767 $722
- -----------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 24.0 25.9
- -----------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 4.3 4.7
- -----------------------------------------------------------------------------------------------------
12-Month Yield 0.32% 0.17%
- -----------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 31% 94%
- -----------------------------------------------------------------------------------------------------
Three-Year Beta 1.01 1.04
- -----------------------------------------------------------------------------------------------------
Expense Ratio 0.49%** 1.58%
- -----------------------------------------------------------------------------------------------------
</TABLE>
* Source: Wilshire Associates. The U.S. stock market is represented by the
Wilshire 5000 Index.
** Reflects a voluntary reduction by the Investment Adviser and Schwab, which is
guaranteed through at least 2/29/00.
+ Source: Morningstar. This information is as of 4/30/99, and is for
illustrative purposes only. It is not intended to show, predict or guarantee
future composition of the Fund. The peer group average is based on 799
small-cap funds as tracked by Morningstar.
24
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 4/30/99
<S> <C>
Other 35.8%
Business Services 14.4%
Healthcare/Drugs and Medicine 7.4%
Producer Goods and Manufacturing 6.9%
Banks 6.2%
Electronics 6.0%
Business Machines and Software 5.9%
Miscellaneous Finance 4.7%
Retail 4.4%
Media 4.4%
Utilities-Electric & Gas 3.9%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
EQUITY INVESTMENT STYLE BOX(++)
AS OF 4/30/99
-STYLE-
<S> <C> <C> <C>
Value Blend Growth -Market Cap-
Large
Medium
X Small
</TABLE>
TOP 10 HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS
<TABLE>
<S> <C>
- ---------------------------------------------------
Ameritrade Holding Corp., Class A 0.94%
- ---------------------------------------------------
RealNetworks, Inc. 0.92%
- ---------------------------------------------------
Lycos, Inc. 0.65%
- ---------------------------------------------------
CNET, Inc. 0.60%
- ---------------------------------------------------
Medimmune, Inc. 0.42%
- ---------------------------------------------------
PMC Sierra, Inc. 0.42%
- ---------------------------------------------------
Safeguard Scientifics, Inc. 0.39%
- ---------------------------------------------------
TCA Cable TV, Inc. 0.37%
- ---------------------------------------------------
Rational Software Corp. 0.36%
- ---------------------------------------------------
Express Scripts, Inc., Class A 0.35%
- ---------------------------------------------------
</TABLE>
++ Source: Morningstar, Inc. The style box illustrates the composition of the
Fund's portfolio as of 4/30/99. It is not indicative of its holdings after
that date, nor does it represent an exact assessment of risk or future
assessment or any type of future performance. Placement is based on the
Fund's P/E and P/B ratios relative to the S&P 500-Registered Trademark-
Index, as well as the size of the companies in which it invests, or median
market capitalization.
25
<PAGE>
SCHWAB INTERNATIONAL INDEX FUND-REGISTERED TRADEMARK--INVESTOR SHARES
FUND PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 4/30/99
<TABLE>
<CAPTION>
SINCE
SIX FIVE INCEPTION
MONTHS(1) ONE YEAR YEARS (9/9/93)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
SCHWAB INTERNATIONAL INDEX FUND-INVESTOR SHARES(2) 14.89% 8.33% 10.48% 10.10%
- ---------------------------------------------------------------------------------------------------------------------------
Schwab International Index-Registered Trademark- 16.04% 9.52% 11.03% 10.75%
- ---------------------------------------------------------------------------------------------------------------------------
Index Tracking Differential-Investor Shares 1.15% 1.19% 0.55% 0.65%
- ---------------------------------------------------------------------------------------------------------------------------
MSCI-EAFE-Registered Trademark- Index 15.28% 9.50% 8.71% 8.80%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
National Association of Securities Dealers (NASD) regulations require that we
report performance data as of the most recent calendar quarter--in this case,
the quarter ended 3/31/99. As of 3/31/99, the Fund's six-month, one-year and
since-inception average annual total returns were 21.35%, 4.81%, 10.25% and
9.48%, respectively. Without fee waivers and guarantees, the six-month,
one-year, five-year and since-inception average annual total returns would have
been 21.07%, 4.32%, 9.72% and 8.92%, respectively, for the Investor Shares as of
3/31/99.
TAX-SMART INVESTMENT STRATEGY
The Schwab International Index Fund seeks to maximize its after-tax performance
by using a strategy that helps reduce capital gains distributions. This strategy
is designed to help investors keep more of what their money earns. The chart
below illustrates the effects of this strategy on the five-year performance of
the Schwab International Index Fund-Investor Shares.
FIVE-YEAR AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/99
<TABLE>
<CAPTION>
BEFORE AFTER % LOST TO
TAX TAX(3) TAXES
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Schwab International Index Fund-Investor Shares(4) 10.48% 9.96% (4.96)%
- ----------------------------------------------------------------------------------------------------
Average Foreign Fund(5) 8.82% 7.21% (18.32)%
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) Actual, not annualized, because period is less than one year.
(2) The Investment Adviser and Schwab waived a portion of their fees during the
reporting period and have guaranteed through at least 2/29/00 that total
operating expenses will not exceed 0.58% for the Investor Shares. Without
fee waivers and guarantees, the six-month, one-year, five-year and
since-inception average annual total returns would have been 14.64%, 7.86%,
9.95% and 9.54%, respectively, for the Investor Shares as of 4/30/99.
(3) After-tax returns assume the maximum federal income tax rate of 39.6% on
dividends and 20% on capital gains distributions. Tax rates vary and may be
higher or lower than those shown.
(4) The Investment Adviser and Schwab waived a portion of their fees during the
reporting period and have guaranteed through at least 2/29/00 that total
operating expenses will not exceed 0.58%. Without fee waivers and
guarantees, the Fund's returns would have been lower.
(5) Source: Morningstar, Inc. The foreign fund category contains 140 funds with
five-year track records as of 4/30/99. These funds may or may not follow a
tax-efficient strategy similar to that followed by the Schwab International
Index Fund. Also, although many mutual funds have multiple classes of
shares, the category average includes only those funds that were classified
by Morningstar as a distinct portfolio. This typically means that a fund's
oldest class of shares was used.
26
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
SCHWAB INTERNATIONAL INDEX FUND-INVESTOR SCHWAB INTERNATIONAL INDEX MSCI-EAFE ND INDEX
SHARES
<S> <C> <C> <C>
9/9/93 $10,000 $10,000 $10,000
9/30/93 $ 9,770 $ 9,786 $ 9,749
10/31/93 $10,150 $10,167 $10,049
11/30/93 $ 9,420 $ 9,454 $ 9,171
12/31/93 $10,096 $10,137 $ 9,833
1/31/94 $10,769 $10,823 $10,664
2/28/94 $10,558 $10,623 $10,634
3/31/94 $10,156 $10,172 $10,176
4/30/94 $10,458 $10,544 $10,607
5/31/94 $10,407 $10,448 $10,547
6/30/94 $10,488 $10,508 $10,696
7/31/94 $10,649 $10,692 $10,798
8/31/94 $10,941 $10,999 $11,054
9/30/94 $10,559 $10,621 $10,706
10/31/94 $10,950 $11,026 $11,062
11/30/94 $10,428 $10,478 $10,530
12/31/94 $10,484 $10,564 $10,597
1/31/95 $10,108 $10,254 $10,190
2/28/95 $10,189 $10,282 $10,160
3/31/95 $10,759 $10,964 $10,794
4/30/95 $11,145 $11,346 $11,200
5/31/95 $11,176 $11,303 $11,067
6/30/95 $11,064 $11,168 $10,873
7/31/95 $11,623 $11,826 $11,550
8/31/95 $11,237 $11,384 $11,110
9/30/95 $11,470 $11,661 $11,327
10/31/95 $11,318 $11,461 $11,022
11/30/95 $11,562 $11,782 $11,329
12/31/95 $11,975 $12,238 $11,785
1/31/96 $12,006 $12,277 $11,834
2/29/96 $12,026 $12,300 $11,874
3/31/96 $12,232 $12,529 $12,126
4/30/96 $12,530 $12,826 $12,478
5/31/96 $12,396 $12,674 $12,249
6/30/96 $12,489 $12,761 $12,317
7/31/96 $12,139 $12,430 $11,958
8/31/96 $12,253 $12,538 $11,984
9/30/96 $12,592 $12,907 $12,303
10/31/96 $12,571 $12,863 $12,177
11/30/96 $13,136 $13,460 $12,662
12/31/96 $13,067 $13,341 $12,499
1/31/97 $12,640 $12,898 $12,061
2/28/97 $12,827 $13,114 $12,259
3/31/97 $12,932 $13,202 $12,303
4/30/97 $13,025 $13,344 $12,368
5/31/97 $13,984 $14,324 $13,174
6/30/97 $14,766 $15,160 $13,899
7/31/97 $15,214 $15,570 $14,125
8/31/97 $14,109 $14,447 $13,070
9/30/97 $15,078 $15,354 $13,801
10/31/97 $13,869 $14,110 $12,740
11/30/97 $13,859 $14,055 $12,610
12/31/97 $14,022 $14,254 $12,720
1/31/98 $14,538 $14,830 $13,301
2/28/98 $15,382 $15,727 $14,155
3/31/98 $15,782 $16,139 $14,591
4/30/98 $15,888 $16,248 $14,706
5/31/98 $15,888 $16,209 $14,634
6/30/98 $16,025 $16,315 $14,745
7/31/98 $16,067 $16,419 $14,894
8/31/98 $14,085 $14,350 $13,049
9/30/98 $13,632 $13,880 $12,648
10/31/98 $14,981 $15,335 $13,966
11/30/98 $15,751 $16,198 $14,681
12/31/98 $16,244 $16,729 $15,261
1/31/99 $16,190 $16,640 $15,216
2/28/99 $15,829 $16,311 $14,853
3/31/99 $16,541 $17,060 $15,473
4/30/99 $17,212 $17,794 $16,099
</TABLE>
The above graph compares the growth of a hypothetical $10,000 investment in the
Schwab International Index Fund-Investor Shares, made at its inception, with
similar investments in the Schwab International Index-Registered Trademark- and
the MSCI-EAFE-Registered Trademark- Index.
Also shown is the difference between the total returns of the Schwab
International Index and the Schwab International Index Fund, which is often
referred to as the "tracking differential." (See page 9 for a more detailed
discussion).
THE INFORMATION PRESENTED IS HISTORICAL AND DOES NOT REPRESENT FUTURE RESULTS.
TOTAL RETURNS ASSUME REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS. PRINCIPAL VALUE AND INVESTMENT RETURNS WILL FLUCTUATE, SO AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. Indices are unmanaged and do not reflect advisory fees and other expenses
associated with an investment in the Fund. Investors cannot invest in an index
directly.
ASSETS
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------
Total net assets as of 10/31/98 (000s) $ 428,462
- -------------------------------------------------------------------------------------------------
Total net assets as of 4/30/99 (000s) $ 346,663
- -------------------------------------------------------------------------------------------------
Percentage change over reporting period (19)%
- -------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE>
SCHWAB INTERNATIONAL INDEX FUND-SELECT SHARES-TM-
FUND PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 4/30/99
<TABLE>
<CAPTION>
SINCE
SIX INCEPTION
MONTHS(1) ONE YEAR (5/19/97)
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
SCHWAB INTERNATIONAL INDEX FUND-SELECT SHARES(2),(3) 14.99% 8.51% 10.70%
- ----------------------------------------------------------------------------------------------------
Schwab International Index-Registered Trademark- 16.04% 9.52% 10.95%
- ----------------------------------------------------------------------------------------------------
Index Tracking Differential-Select Shares 1.05% 1.01% 0.25%
- ----------------------------------------------------------------------------------------------------
MSCI-EAFE-Registered Trademark- Index 15.28% 9.50% 9.98%
- ----------------------------------------------------------------------------------------------------
</TABLE>
National Association of Securities Dealers (NASD) regulations require that we
report performance data as of the most recent calendar quarter--in this case,
the quarter ended 3/31/99. As of 3/31/99, the Fund's six-month, one-year and
since-inception average annual total returns were 21.45%, 4.99% and 8.86%,
respectively. Without fee waivers and guarantees, the six-month, one-year and
since-inception average annual total returns would have been 21.17%, 4.49% and
7.97%, respectively, for the Select Shares as of 3/31/99.
(1) Actual, not annualized, because period is less than one year.
(2) The Investment Adviser and Schwab waived a portion of their fees during the
reporting period and have guaranteed through at least 2/29/00 that total
operating expenses will not exceed 0.47% for the Select Shares. Without fee
waivers and guarantees, the six-month, one-year and since-inception average
annual total returns would have been 14.74%, 8.04% and 9.82%, respectively,
for the Select Shares as of 4/30/99.
(3) The required minimum initial investment in the Select Shares is $50,000.
28
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF A HYPOTHETICAL $50,000 INVESTMENT
SCHWAB INTERNATIONAL INDEX FUND-SELECT
SHARES SCHWAB INTERNATIONAL INDEX MSCI - EAFE ND INDEX
<S> <C> <C> <C>
5/19/97 $50,000 $50,000 $50,000
5/31/97 $49,375 $49,283 $49,248
6/30/97 $52,170 $52,161 $51,961
7/31/97 $53,755 $53,571 $52,803
8/31/97 $49,815 $49,706 $48,859
9/30/97 $53,240 $52,827 $51,595
10/31/97 $49,005 $48,550 $47,627
11/30/97 $48,970 $48,360 $47,141
12/31/97 $49,580 $49,042 $47,551
1/31/98 $51,405 $51,027 $49,725
2/28/98 $54,385 $54,111 $52,917
3/31/98 $55,800 $55,529 $54,547
4/30/98 $56,175 $55,905 $54,978
5/31/98 $56,175 $55,770 $54,708
6/30/98 $56,655 $56,133 $55,124
7/31/98 $56,845 $56,493 $55,681
8/31/98 $49,840 $49,376 $48,782
9/30/98 $48,240 $47,757 $47,284
10/31/98 $53,005 $52,763 $52,211
11/30/98 $55,725 $55,732 $54,885
12/31/98 $57,490 $57,561 $57,053
1/31/99 $57,305 $57,252 $56,881
2/28/99 $56,025 $56,122 $55,528
3/31/99 $58,585 $58,699 $57,843
4/30/99 $60,955 $61,225 $60,186
</TABLE>
The above graph compares the growth of a hypothetical $50,000 investment in the
Schwab International Index Fund-Select Shares, made at its inception, with a
similar investment in the Schwab International Index-Registered Trademark- and
the MSCI-EAFE-Registered Trademark- Index.
Also shown is the difference between the total returns of the Schwab
International Index and the Schwab International Index Fund, often referred to
as the "tracking differential." (See page 9 for a more detailed discussion).
THE INFORMATION PRESENTED IS HISTORICAL AND DOES NOT REPRESENT FUTURE RESULTS.
TOTAL RETURNS ASSUME REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS. PRINCIPAL VALUE AND INVESTMENT RETURNS WILL FLUCTUATE, SO AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. Indices are unmanaged and do not reflect advisory fees and other expenses
associated with an investment in the Fund. Investors cannot invest in an index
directly.
ASSETS
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------
Total net assets as of 10/31/98 (000s) $93,560
- -------------------------------------------------------------------------------------------------
Total net assets as of 4/30/99 (000s) $ 343,350
- -------------------------------------------------------------------------------------------------
Percentage growth over reporting period 267%
- -------------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE>
SCHWAB INTERNATIONAL INDEX FUND-REGISTERED TRADEMARK-
PORTFOLIO SNAPSHOT
The Schwab International Index Fund (the Fund) invests primarily in common
stocks of the Schwab International Index,-Registered Trademark- an index created
to represent the performance of common stocks and other equity securities issued
by large, publicly traded companies from countries around the world with major
developed securities markets, excluding the United States. As of April 30, 1999,
the aggregate market capitalization of stocks included in the index represented
approximately 42% of the total market value of all publicly traded non-U.S.
companies.* The information below and on the following page provides a snapshot
of the Fund's characteristics as of 4/30/99, and is not indicative of its
composition after that date. The terms used below are defined beginning on page
41. A complete list of the securities in the Fund's portfolio as of 4/30/99 is
provided in the Schedule of Investments later in this report.
FUND FACTS
<TABLE>
<CAPTION>
SCHWAB INTERNATIONAL INDEX
FUND- PEER GROUP
INVESTOR SHARES AVERAGE++
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------
Number of Issues 390 161
- -----------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) $25,735 $14,595
- -----------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 30.3 28.6
- -----------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 5.1 5.7
- -----------------------------------------------------------------------------------------------------
12-Month Yield 0.83% 0.76%
- -----------------------------------------------------------------------------------------------------
Portfolio Turnover Rate --** 74%
- -----------------------------------------------------------------------------------------------------
Three-Year Beta 0.69 0.72
- -----------------------------------------------------------------------------------------------------
Expense Ratio 0.58%+ 1.68%
- -----------------------------------------------------------------------------------------------------
</TABLE>
* Source: Wilshire Associates. The U.S. stock market is represented by the
Wilshire 5000 Index.
** Portfolio turnover rate is less than 0.5%.
+ Reflects a voluntary reduction by the Investment Adviser and Schwab, which is
guaranteed through at least 2/29/00.
++ Source: Morningstar. This information is as of 4/30/99, and is for
illustrative purposes only. It is not intended to show, predict or guarantee
future composition of the Fund. The peer group average is based on 638
foreign stock funds as tracked by Morningstar.
30
<PAGE>
EQUITY HOLDINGS BY COUNTRY
AS OF 4/30/99
<TABLE>
<S> <C>
- ------------------------------------------------
United Kingdom 26.42%
- ------------------------------------------------
Japan 21.45%
- ------------------------------------------------
Germany 9.17%
- ------------------------------------------------
France 8.08%
- ------------------------------------------------
Switzerland 7.79%
- ------------------------------------------------
Netherlands 6.60%
- ------------------------------------------------
Italy 3.98%
- ------------------------------------------------
Canada 3.21%
- ------------------------------------------------
Spain 2.96%
- ------------------------------------------------
Sweden 2.18%
- ------------------------------------------------
China/Hong Kong 1.91%
- ------------------------------------------------
Australia 1.79%
- ------------------------------------------------
Belgium 1.63%
- ------------------------------------------------
Denmark 0.58%
- ------------------------------------------------
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
EQUITY INVESTMENT STYLE BOX(++)
AS OF 4/30/99
-STYLE-
<S> <C> <C> <C>
Value Blend Growth -Market Cap-
X Large
Medium
Small
</TABLE>
++ Source: Morningstar, Inc. The style box illustrates the composition of the
Fund's portfolio as of 4/30/99. It is not indicative of its holdings after
that date, nor does it represent an exact assessment of risk or future
assessment or any type of future performance. Placement is based on the
Fund's P/E and P/B ratios relative to the S&P 500-Registered Trademark-
Index, as well as the size of the companies in which it invests, or median
market capitalization.
TOP 10 HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS
<TABLE>
<S> <C>
- ---------------------------------------------------
British Petroleum Co. 2.80%
- ---------------------------------------------------
Nippon Telephone and Telegraph Corp. 2.10%
- ---------------------------------------------------
Royal Dutch Petroleum Co. 1.90%
- ---------------------------------------------------
British Telecommunications 1.64%
- ---------------------------------------------------
Toyota Motor Corp. 1.63%
- ---------------------------------------------------
Glaxo Wellcome PLC 1.62%
- ---------------------------------------------------
DaimlerChrysler AG 1.46%
- ---------------------------------------------------
Novartis AG (Reg.) 1.38%
- ---------------------------------------------------
Lloyd's TSB Group PLC 1.33%
- ---------------------------------------------------
Roche Holding Genusscheine 1.26%
- ---------------------------------------------------
</TABLE>
31
<PAGE>
PORTFOLIO MANAGEMENT
THE PORTFOLIO MANAGEMENT TEAM
GERI HOM--vice president and senior portfolio manager, has primary
responsibility for the day-to-day management of the Funds' portfolios. Geri
joined Charles Schwab Investment Management, Inc. (CSIM) in March 1995 as
portfolio manager and was promoted to her current position in December 1996. She
currently manages approximately $15 billion in indexed equity mutual fund
assets. Prior to joining CSIM, Geri was a principal for Wells Fargo Nikko
Investment Advisors and vice president and manager of the Domestic Equity
Portfolio Group for Wells Fargo Nikko.
32
<PAGE>
FUND DISCUSSION
QUESTIONS TO THE
PORTFOLIO MANAGEMENT TEAM
SCHWAB S&P 500 FUND
Q. HOW DID THE FUND PERFORM DURING THE REPORTING PERIOD?
A. As discussed in the MARKET OVERVIEW section of this report, large-cap
domestic equities, such as the S&P 500-Registered Trademark- Index, continued to
be the strongest-performing major asset class. As the table below indicates, the
Fund achieved strong total returns for the six-month reporting period. All
classes of shares closely tracked the Fund's benchmark, the S&P 500 Index, which
achieved a total return of 22.31% for the period. As the table below reveals,
the Fund also outperformed the average U.S. large-cap fund on both a six-month
and a one-year basis.(1) The Fund's outperformance was even greater on an
after-tax basis, a direct result of the Fund's tax-efficient investment
strategy.
<TABLE>
<CAPTION>
BEFORE TAX: AFTER TAX:
-------------------------------------
SIX MONTHS ONE YEAR ONE YEAR
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Investor Shares 22.13 % 21.34 % 20.92 %
- ----------------------------------------------------------------------------------------------------------------------------------
e.Shares-TM- 22.09 % 21.38 % 20.93 %
- ----------------------------------------------------------------------------------------------------------------------------------
Select Shares-TM- 22.23 % 21.52 % 21.03 %
- ----------------------------------------------------------------------------------------------------------------------------------
Average Large-Cap Fund 21.96 % 17.32 % 13.51 %
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Source: Morningstar, Inc. As of 4/30/99, the large-cap fund category
contained 946 funds with six-month track records and 916 funds with one-year
track records. These funds may or may not follow a tax-efficient strategy
similar to that followed by the Schwab S&P 500 Fund. Also, although many
mutual funds have multiple classes of shares, the category average includes
only those funds that were classified by Morningstar as a distinct
portfolio. This typically means that a fund's oldest class of shares was
used. Indices are unmanaged and do not reflect advisory fees and other
expenses associated with an investment in the Fund. Investors cannot invest
in an index directly.
Q. HOW DO LARGE-CAP INDEX FUNDS PERFORM IN A DOWN MARKET?
A. Unlike actively managed equity funds, equity index funds do not use two
management techniques commonly associated with active fund management and down
markets--namely the buildup of the portfolio cash position to unusually high
levels, and/ or the overweighting of "defensive" stocks in the portfolio.
Lacking these tools, it is fair to pose the question of whether index funds
underperform actively managed funds in down markets.
The Schwab Center for Investment Research recently looked at how the S&P 500
Index compared with the average actively managed large-cap fund during four down
markets. The results are summarized below.
<TABLE>
<CAPTION>
AVERAGE
ACTIVELY
MANAGED
S&P 500 LARGE-CAP
TIME PERIOD INDEX FUND
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
9/1/87 through 11/30/87 (29.6)% (27.05)%
- ----------------------------------------------------------------------------------------------------------------------------
6/1/90 through 10/31/90 (14.7) % (15.21) %
- ----------------------------------------------------------------------------------------------------------------------------
1/1/94 through 12/31/94 1.3 % (1.03) %
- ----------------------------------------------------------------------------------------------------------------------------
10/1/97 through 10/31/97 (3.3) % (3.52) %
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The results of the study showed that actively managed large-cap funds do not
necessarily outperform index funds in down markets. In three of the four periods
analyzed, the actively managed funds trailed the S&P 500-Registered Trademark-
Index returns by margins ranging from 0.2% to 2.3%. Keep in mind that investors
cannot invest in an index directly and that indices do not reflect advisory fees
and other expenses associated with an investment in a fund.
33
<PAGE>
FUND DISCUSSION (CONTINUED)
Q. HOW HAVE THE INDUSTRY SECTORS IN THE S&P 500-REGISTERED TRADEMARK- INDEX
CHANGED OVER THE PAST FIVE YEARS?
A. The graph below shows the top ten economic sectors of the S&P 500 Index as of
4/30/99, as well as the historical weightings of these sectors since 4/30/95.
Since 1995 the index has become moderately more concentrated, with the top 10
sectors currently representing approximately 70% of the total versus
approximately 60% in 1995. The sectors with the largest gains during the period
were Business Machines (from 5.4% to 12.1%) and Miscellaneous Finance (from 2.8%
to 5.9%). The sectors with the largest declines during the period were
International Oil (from 7.3% to 4.7%) and Food and Agriculture (from 6.6% to
4.1%).
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
S&P 500 INDEX REPORT
Business Machines Drugs & Medicine Telephone Banks Retail Miscellaneous Finance Electronics
<S> <C> <C> <C> <C> <C> <C> <C>
4/30/95 5.40 9.32 8.35 5.58 5.56 2.79 4.56
4/30/96 5.87 10.10 8.17 7.02 4.93 3.10 4.79
4/30/97 6.95 10.79 6.28 7.82 4.59 3.55 6.03
4/30/98 7.74 11.61 6.74 8.82 5.26 4.94 5.94
4/30/99 12.10 11.08 8.36 7.14 6.30 5.93 5.61
% OF TOTAL INDEX
<CAPTION>
S&P 500 INDEX REPORT
Producer Goods International Oil Food and Agriculture
<S> <C> <C> <C>
4/30/95 5.52 7.27 6.57
4/30/96 5.53 6.63 6.26
4/30/97 5.54 6.55 6.68
4/30/98 5.32 5.65 5.66
4/30/99 4.85 4.65 4.14
% OF TOTAL INDEX
</TABLE>
SCHWAB 1000 FUND-REGISTERED TRADEMARK-
Q. HOW DID THE FUND PERFORM DURING THE REPORTING PERIOD?
A. As discussed in the MARKET OVERVIEW section of this report, large-cap
domestic equities, such as the Schwab 1000 Fund, continued to be the
strongest-performing major asset class. As the table below indicates, the Fund
achieved strong total returns for the six-month reporting period. Both classes
of shares closely tracked the Fund's benchmark, the Schwab 1000
Index,-Registered Trademark- which achieved a total return of 22.84% for the
period. As the table below reveals, the Fund also outperformed the average U.S.
large-cap fund on both a six-month and a five-year basis. The Fund's
outperformance was even greater on an after-tax basis, a direct result of the
Fund's tax-efficient investment strategy.
<TABLE>
<CAPTION>
BEFORE TAX: AFTER TAX:
-------------------------------------
SIX MONTHS FIVE YEARS FIVE YEARS
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
Investor Shares 22.63 % 25.50 % 24.82 %
- ----------------------------------------------------------------------------------------------------------------------------------
Select Shares-TM- 22.73 % -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Average Large-Cap Fund 21.96 % 22.05 % 19.30 %
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Q. HOW DID THE PERFORMANCE OF THE SCHWAB 1000 INDEX COMPARE WITH THE S&P 500
INDEX?
A. As shown in the table on the facing page, the Schwab 1000 Index marginally
outperformed the S&P 500 Index for the six-month reporting period. On an
inception-to-date basis, the performances of the two indices are almost
identical. As we have discussed in previous reports, these two indices are
constructed
34
<PAGE>
differently, and it is not unusual that the performances should differ.
<TABLE>
<CAPTION>
INCEPTION
(4/2/91) TO
DATE AVERAGE
SIX MONTHS ANNUAL RETURN
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
Schwab 1000-Registered Trademark- Index 22.84% 19.62%
- -----------------------------------------------------------------------------------------------------------------------------
S&P 500-Registered Trademark- Index 22.31% 19.69%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Q. HOW DO LARGE-CAP INDEX FUNDS PERFORM IN A DOWN MARKET?
A. Unlike actively managed equity funds, equity index funds do not use two
management techniques commonly associated with active fund management and down
markets--namely the buildup of the portfolio cash position to unusually high
levels, and/or the overweighting of "defensive" stocks in the portfolio. Lacking
these tools, it is fair to pose the question of whether index funds underperform
actively managed funds in down markets.
The Schwab Center for Investment Research recently looked at how the Schwab 1000
Index compared with the average actively managed large-cap fund during four down
markets. The results are summarized as follows.
(2) Source: Morningstar, Inc. As of 4/30/99, The large-cap fund category
contained 946 funds with six-month track records and 560 funds with
five-year track records. These funds may or may not follow a tax-efficient
strategy similar to that followed by the Schwab 1000 Fund. Also, although
many mutual funds have multiple classes of shares, the category average
includes only those funds that were classified by Morningstar as a distinct
portfolio. This typically means that a fund's oldest class of shares was
used. Indices are unmanaged and do not reflect advisory fees and other
expenses associated with an investment in the Fund. Investors cannot invest
in an index directly.
<TABLE>
<CAPTION>
AVERAGE
ACTIVELY
MANAGED
SCHWAB 1000 LARGE-CAP
TIME PERIOD INDEX FUND
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
9/1/87 through 11/30/87 (29.1)% (27.1)%
- ----------------------------------------------------------------------------------------------------------------------------
6/1/90 through 10/31/90 (15.8)% (15.2)%
- ----------------------------------------------------------------------------------------------------------------------------
1/1/94 through 12/31/94 0.5% (1.0)%
- ----------------------------------------------------------------------------------------------------------------------------
10/1/97 through 10/31/97 (3.3)% (3.5)%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The results of the study showed that actively managed large-cap funds do not
necessarily outperform index funds in down markets. In two of the four periods
analyzed, the actively managed funds trailed the Schwab 1000 Index returns by
margins ranging from 0.2% to 1.5%. Keep in mind that investors cannot invest in
an index directly and that indices do not reflect advisory fees and other
expenses associated with an investment in a fund.
Q. HOW HAVE THE INDUSTRY SECTORS IN THE SCHWAB 1000 INDEX CHANGED OVER THE
PAST FOUR YEARS?
A. The graph that follows shows the top 10 economic sectors of the Schwab1000
Index as of 4/30/99, as well as the historical weightings of these sectors since
4/30/96. Since 1996 the index has become moderately more concentrated, with the
top 10 sectors currently representing approximately 70% of the total versus
approximately 61% in 1996. The sectors with the largest gains during the period
were Business Machines (from 6.0% to 11.3%) and Miscellaneous Finance (from 4.2%
to 7.0%). The sectors with the largest declines during the period were Food and
Agriculture (from 5.4% to 3.6%) and Energy and Utilities (from 5.0% to 3.3%).
35
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SCHWAB 1000 INDEX-Registered Trademark- REPORT
% OF TOTAL INDEX Business Machines Drugs & Medicine Telephone Banks Miscellaneous Finance Retail
<S> <C> <C> <C> <C> <C> <C>
4/30/96 5.967 10.067 7.468 7.282 4.231 4.996
4/30/97 6.718 10.376 5.714 8.368 4.862 4.787
4/30/98 7.372 11.052 6.302 9.199 6.013 5.602
4/30/99 11.33 10.568 8.502 7.249 7.023 6.437
<CAPTION>
SCHWAB 1000 INDEX REPORT
% OF TOTAL INDEX Electronics Business Services Producer Goods Insurance
<S> <C> <C> <C> <C>
4/30/96 5.9 3.087 5.081 3.809
4/30/97 6.499 2.808 5.269 4.329
4/30/98 6.093 3.239 5.018 4.321
4/30/99 5.957 4.689 4.588 3.658
</TABLE>
SCHWAB SMALL-CAP INDEX FUND-REGISTERED TRADEMARK-
Q. HOW DID THE FUND PERFORM DURING THE REPORTING PERIOD?
A. Although domestic small-cap stocks did not achieve returns as strong as
large-cap stocks as discussed in the MARKET OVERVIEW section of this report,
small-cap stocks experienced a strong rebound from their negative performance in
the previous period. Both classes of shares tracked the Fund's benchmark, the
Schwab Small-Cap Index,-Registered Trademark- which realized a 14.70% total
return for the period. In order to keep capital gains to a minimum, the Fund can
hold stocks that have dropped out of the index. This practice has resulted in an
increased tracking differential for the reporting period.
As the following table reveals, the Fund underperformed the average U.S.
small-cap fund over the six-month period and was approximately equal to the
average small-cap fund for the five-year period ended April 30, 1999.(3) For the
five-year period, the Fund outperformed on an after-tax basis, a direct result
of the Fund's tax-efficient investment strategy.
<TABLE>
<CAPTION>
BEFORE TAX: AFTER TAX:
-------------------------------------
SIX MONTHS FIVE YEARS FIVE YEARS
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
Investor Shares 12.45% 12.61% 12.07%
- ----------------------------------------------------------------------------------------------------------------------------------
Select Shares-TM- 12.56% -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Average Small-Cap Fund 15.27% 12.79% 10.64%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Q. HOW DID THE PERFORMANCE OF THE SCHWAB SMALL-CAP INDEX COMPARE WITH THE
RUSSELL 2000-REGISTERED TRADEMARK- INDEX?
A. As shown in the table below, the Schwab Small-Cap Index marginally
underperformed the Russell 2000-Registered Trademark- Index for the six-month
reporting period. On an inception-to-date basis, the Schwab Small-Cap Index has
marginally outperformed the Russell 2000 Index. As we have discussed in previous
reports, these two indices are constructed differently, and it is not unusual
that the performances should differ somewhat during various time periods.
<TABLE>
<CAPTION>
INCEPTION
(12/3/93) TO
DATE AVERAGE
SIX MONTHS ANNUAL RETURN
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
Schwab Small-Cap Index 14.70% 12.78%
- -----------------------------------------------------------------------------------------------------------------------------
Russell 2000 Index 15.16% 11.93%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(3) Source: Morningstar, Inc. As of 4/30/99, the small-cap fund category
contained 445 funds with six-month track records and 192 funds with one-year
track records. These funds may or may not follow a tax-efficient strategy
similar to that followed by the Schwab International Index Fund.
Also, although many mutual funds have multiple classes of shares, the
category average includes only those funds that were classified by
Morningstar as a distinct portfolio. This typically means that a fund's
oldest class of shares was used. Indices are unmanaged and do not reflect
advisory fees and other expenses associated with an investment in the Fund.
Investors cannot invest in an index directly.
36
<PAGE>
FUND DISCUSSION (CONTINUED)
Q. HOW HAVE THE INDUSTRY SECTORS IN THE SCHWAB SMALL-CAP
INDEX-REGISTERED TRADEMARK- CHANGED OVER THE PAST FOUR YEARS?
A. The graph below shows the top 10 economic sectors of the Schwab Small-Cap
Index as of 4/30/99, as well as the historical weightings of these sectors since
4/30/96. Since 1996 the concentration of the top 10 sectors has been relatively
stable; however, there have been some significant shifts in the components. The
sectors with the largest gains during the period were Business Services (from
11.6% to 14.5%) and Miscellaneous Finance (from 5.5% to 7.1%). The sectors with
the largest declines during the period were Drugs and Medicine (from 9.5% to
6.7%) and Business Machines (from 3.5% to 1.7%). Keep in mind that a sector
decline in a small-cap index does not necessarily mean that the sector is
declining in terms of its role in the entire economy--it could be (and in this
case was) that the companies in these sectors are actually growing to the point
where they move to a large-cap index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SCHWAB SMALL-CAP INDEX REPORT
Business Service Electronics Producer Goods Miscellaneous Finance Drugs & Medicine Banks
<S> <C> <C> <C> <C> <C> <C>
12/31/96 11.62 7.287 7.168 5.541 9.51 6.425
12/31/97 10.047 6.944 7.183 5.628 9.582 7.265
12/31/98 13.908 7.92 6.863 4.56 7.946 4.799
12/31/99 14.507 8.168 7.583 7.076 6.696 6.027
% OF TOTAL INDEX
<CAPTION>
SCHWAB SMALL-CAP INDEX REPORT
Energy & Utilities Insurance Media Retail
<S> <C> <C> <C> <C>
12/31/96 3.836 5.111 3.184 4.369
12/31/97 4.478 5.328 2.849 4.345
12/31/98 3.472 4.572 3.801 3.193
12/31/99 4.305 3.947 3.447 3.04
% OF TOTAL INDEX
</TABLE>
Q. GIVEN THE RECENT UNDERPERFORMANCE OF SMALL-CAP STOCKS, IS THERE STILL A
REASON TO INVEST IN THEM?
A. Yes. As the first of the following graphs illustrates, the total returns of
large-cap and small-cap domestic stocks have been fairly comparable over
extended periods of time--such as from 1970 to 1998. Note how the small-cap
underperformance during 1998 stands out even in the context of such a long time
period. Over the past 29 years, small-cap stocks have outperformed large-cap
stocks 14 times, for varying lengths of time, as the second graph illustrates.
In the remaining 15 years, large-cap stocks have outperformed small-cap stocks.
There appears to be little, if any, predictability to this seesaw effect. That's
why it's wise for an investor to consider diversifying his or her portfolio by
holding both small- and large-cap stocks. For example, small-cap stocks
generally outperformed large-cap stocks between 1991 and 1993, whereas large-cap
stocks were the winners from 1994 through 1998. Although not readily apparent
from viewing these graphs, small-cap stocks also have exhibited a higher level
of volatility over the period shown.
37
<PAGE>
FUND DISCUSSION (CONTINUED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LARGE-CAP AND SMALL-CAP CUMULATIVE RETURNS: 1970-1998
GROWTH OF A HYPOTHETICAL $1 INVESTMENT
Large-Cap Small-Cap
Cumulative Cumulative
Return Return
<S> <C> <C>
1970 $1.04 $0.88
1971 $1.19 $1.05
1972 $1.41 $1.09
1973 $1.21 $0.69
1974 $0.89 $0.50
1975 $1.22 $0.82
1976 $1.51 $1.24
1977 $1.40 $1.47
1978 $1.49 $1.73
1979 $1.77 $2.50
1980 $2.34 $3.34
1981 $2.22 $3.47
1982 $2.70 $4.45
1983 $3.31 $5.79
1984 $3.52 $5.49
1985 $4.65 $7.22
1986 $5.51 $7.73
1987 $5.79 $7.03
1988 $6.77 $8.71
1989 $8.90 $10.12
1990 $8.62 $8.08
1991 $11.25 $12.06
1992 $12.11 $14.41
1993 $13.32 $17.08
1994 $13.50 $16.76
1995 $18.55 $21.93
1996 $22.83 $25.93
1997 $30.44 $32.81
1998 $39.14 $32.06
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LARGE-CAP AND SMALL-CAP RELATIVE PERFORMANCE: 1970-1998
LARGE-CAP STRONG SMALL-CAP STRONG
RELATIVE PERFORMANCE RELATIVE PERFORMANCE
<S> <C> <C>
1970 16.3%
1971 -5.8%
1972 15.4%
1973 22.0%
1974 1.5%
1975 -27.1%
1976 -27.3%
1977 -26.0%
1978 -11.5%
1979 -25.8%
1980 -1.0%
1981 -8.9%
1982 -6.9%
1983 -7.5%
1984 11.5%
1985 0.6%
1986 11.3%
1987 14.3%
1988 -7.1%
1989 15.3%
1990 17.0%
1991 -18.7%
1992 -11.8%
1993 -8.5%
1994 3.2%
1995 6.6%
1996 4.8%
1997 6.8%
1998 31.5%
</TABLE>
Q. HOW DO SMALL-CAP INDEX FUNDS PERFORM IN A DOWN MARKET?
A. Unlike actively managed equity funds, equity index funds do not use two
management techniques commonly associated with active fund management and down
markets--namely the buildup of the portfolio cash position to unusually high
levels, and/ or the overweighting of "defensive" stocks in the portfolio.
Lacking these tools it is fair to pose the question of whether index funds
underperform actively managed funds in down markets.
The Schwab Center for Investment Research recently looked at how the Russell
2000-Registered Trademark- Index compared with the average actively managed
small-cap fund during four down markets. The results are summarized below.
<TABLE>
<CAPTION>
AVERAGE
ACTIVELY
MANAGED
RUSSELL 2000 SMALL-CAP
TIME PERIOD INDEX FUND
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
9/1/87 through 11/30/87 (35.5)% (30.2)%
- --------------------------------------------------------------------------------------------------------------------------------
6/1/90 through 10/31/90 (29.0)% (24.4)%
- --------------------------------------------------------------------------------------------------------------------------------
1/1/94 through 12/31/94 (1.8)% (0.7)%
- --------------------------------------------------------------------------------------------------------------------------------
10/1/97 through 10/30/97 (4.4)% (4.1)%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The results of the study showed that actively managed small-cap funds
outperformed the Russell 2000 Index in all four down markets, by a range of 0.3%
to 5.3%. Keep in mind that investors cannot invest in an index directly, and
indices do not reflect advisory fees and other expenses associated with an
investment in a fund. Additionally, actively managed fund returns represent
category averages, and the performance of individual funds may differ
significantly from these averages.
38
<PAGE>
SCHWAB INTERNATIONAL INDEX FUND-REGISTERED TRADEMARK-
Q. HOW DID THE FUND PERFORM DURING THE REPORTING PERIOD?
A. Although international equities did not achieve returns as strong as the
domestic large-cap stocks, as discussed in the MARKET OVERVIEW section of this
report, international equities experienced a strong rebound beginning in
September 1998. Both classes of shares closely tracked the Fund's benchmark, the
Schwab International Index,-Registered Trademark- which realized a 16.04% total
return for the period. As the table below reveals, the Fund underperformed the
average foreign stock fund over the six-month period and outperformed for the
five-year period ended April 30, 1999.(4) The Fund's outperformance was even
greater on an after-tax basis, a direct result of the Fund's tax-efficient
investment strategy.
The strong U.S. dollar had a negative impact on index returns during the
six-month reporting period. Expressed in local-currency terms, the six-month
performance of the Schwab International Index was 23.49%, approximately 7.45%
greater than the dollar-denominated return, reflecting the relative weakness
of foreign currencies during the reporting period.
(4) Source: Morningstar, Inc. As of 4/30/99, the foreign stock fund category
contains 317 funds with six-month track records and 140 funds with five-year
track records. These funds may or may not follow a tax-efficient strategy
similar to that followed by the Schwab International Index Fund. Also,
although many mutual funds have multiple classes of shares, the category
average includes only those funds that were classified by Morningstar as a
distinct portfolio. This typically means that a fund's oldest class of
shares was used. Indices are unmanaged and do not reflect advisory fees and
other expenses associated with an investment in the Fund. Investors cannot
invest in an index directly.
<TABLE>
<CAPTION>
BEFORE TAX: AFTER TAX:
-------------------------------------
SIX MONTHS FIVE YEARS FIVE YEARS
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
Investor Shares 14.89% 10.48% 9.96%
- ----------------------------------------------------------------------------------------------------------------------------------
Select Shares-TM- 14.99% -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Average Foreign Stock Fund 16.27% 8.82% 7.21%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Q. HOW DID THE PERFORMANCE OF THE SCHWAB INTERNATIONAL INDEX COMPARE WITH
THE MSCI-EAFE-REGISTERED TRADEMARK- INDEX?
A. As shown in the table below, the Schwab International Index marginally
outperformed the MSCI-EAFE Index for the six-month reporting period. On an
inception-to-date basis, the Schwab International Index continues to outperform
the MSCI-EAFE Index. As we have discussed in previous reports, these two indices
are constructed differently, and it is not unusual that the performances should
differ somewhat during various time periods.
<TABLE>
<CAPTION>
INCEPTION
(9/3/93) TO
DATE AVERAGE
SIX MONTHS ANNUAL RETURN
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
Schwab International Index 16.04% 10.75%
- -----------------------------------------------------------------------------------------------------------------------------
MSCI-EAFE Index 15.28% 8.80%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Q. HOW HAVE THE COUNTRY WEIGHTINGS IN THE SCHWAB INTERNATIONAL INDEX CHANGED
OVER THE PAST FOUR YEARS?
A. The graph below shows the top seven countries by their percentage weighting
in the Schwab International Index as of 4/30/99, as well as the historical
weightings of these countries since 4/30/96. Since 1996, the most significant
change has been the decrease in the weighting for Japan
39
<PAGE>
FUND DISCUSSION (CONTINUED)
(down 13.2% to 22.6%) and the increase in the weighting for the United
Kingdom (up 6.7% to 26.0%). Other European countries such as Germany, France
and Italy also experienced increased weightings in the index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SCHWAB INTERNATIONAL INDEX FUND REPORT
United Kingdom Japan Germany France Switzerland Netherlands Italy All Others
<S> <C> <C> <C> <C> <C> <C> <C> <C>
4/30/96 19.26 35.782 7.625 6.653 6.858 5.628 2.28 15.915
4/30/97 23.183 27.863 8.47 7.005 7.494 6.766 2.458 16.761
4/30/98 25.063 23.923 9.009 7.335 8.007 7.112 3.165 16.388
4/30/99 25.967 22.58 9.64 8.537 7.894 6.835 4.065 14.483
% OF TOTAL INDEX
</TABLE>
Q. HOW DO INTERNATIONAL INDEX FUNDS PERFORM IN A DOWN MARKET?
A. Unlike actively managed equity funds, equity index funds do not use two
management techniques commonly associated with active fund management and down
markets--namely the buildup of the portfolio cash position to unusually high
levels, and/or the overweighting of "defensive" stocks in the portfolio. Lacking
these tools, it is fair to pose the question of whether index funds underperform
actively managed funds in down markets.
The Schwab Center for Investment Research recently looked at how the
MSCI-EAFE-Registered Trademark- Index compared with the average actively managed
foreign stock fund during four down markets. The results are summarized below.
<TABLE>
<CAPTION>
ACTIVELY
MANAGED
MSCI-EAFE FOREIGN STOCK
TIME PERIOD INDEX FUND
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
7/1/81 through 6/30/82 (14.7)% (19.0)%
- ----------------------------------------------------------------------------------------------------------------------------
10/1/89 through 9/30/90 (27.4)% (11.5)%
- ----------------------------------------------------------------------------------------------------------------------------
11/1/91 through 10/31/92 (12.9)% (4.7)%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The results of the study showed that there was no clear pattern. In two of the
three down market periods studied, the actively managed foreign stock funds
outperformed the MSCI-EAFE Index. In the other period, the relationship was
reversed. Keep in mind that investors cannot invest in an index directly and
that indices do not reflect advisory fees and other expenses associated with an
investment in a fund.
40
<PAGE>
GLOSSARY
ASSET ALLOCATION--The division of holdings among different types of assets, such
as domestic stocks, international stocks, bonds and cashequivalent securities.
BETA--A measure of a stock's volatility relative to the overall stock market.
The beta of the S&P 500-Registered Trademark- Index is 1. Any investment that is
more volatile than the market as a whole has a beta value higher than 1. If the
beta is less than 1, the investment is considered to be less volatile than the
market.
CAPITAL GAIN (LOSS)--When a stock is sold for a profit, the difference between
the net sales price and its net purchase price, or cost basis, is a capital
gain. If a stock is sold below cost, the difference is a capital loss.
EARNINGS GROWTH RATE--The average annual rate of growth in earnings over the
past five years for the stocks in a fund's portfolio.
EARNINGS PER SHARE (EPS)--The net income (or earnings) of a company for the past
12 months divided by the current number of shares outstanding.
EXPENSE RATIO--Amount, expressed as a percentage of total investment, that
shareholders pay annually for mutual fund operating expenses and management
fees.
MARKET CAPITALIZATION--The dollar value of a company or the amount someone would
pay to buy the company today. It is calculated by multiplying the total number
of outstanding shares by the current price per share. Median market cap is the
midpoint of a fund's total market capitalization, weighted by the portion of
assets invested in each holding. As a result, half of the fund's holdings will
have market caps above the median, and the rest below it.
NET ASSET VALUE (NAV)--The market value of a fund share.
PRICE/BOOK (P/B) RATIO--Compares a stock's market value with the value of total
assets minus intangible assets and total liabilities (the book value). It is
determined by dividing the current price of the stock by common stockholder
equity per share. In evaluating stocks, comparing P/B ratios often works well in
situations where price/earnings ratios do not, because the P/B ratio is stable
over time and is always a positive number. P/B ratios are best used for
comparisons within an industry rather than between industries, as certain
industries will usually contain stocks that have all high or all low P/B ratios.
For mutual funds the P/B ratio is the weighted average of all the stocks' P/B
ratios in the portfolio.
PRICE/EARNINGS (P/E) RATIO--The ratio of a company's stock price to its earnings
per share over the past year. For mutual funds the P/E ratio is the weighted
average of all the stocks' P/E ratios in the mutual fund's portfolio. The P/E is
an indicator of market expectations about a company's prospects. Typically, the
higher the P/E, the greater the expectations for a company's future growth.
Because earnings are volatile and sometimes "negative," however, the P/E has its
limitations and may fail as a measure for a significant number of stocks at any
given time.
RETURN ON EQUITY--The average annual rate of return generated by the companies a
fund holds during the past five years for each dollar of shareholders' equity
(net income divided by shareholders' equity).
STOCK--A share of ownership, or equity, in a corporation.
TOTAL RETURN--The sum of dividends, plus capital gains (or losses).
TURNOVER RATE--An indication of a fund's trading activity. Funds with higher
turnover rates typically incur higher transaction costs and are more likely to
distribute capital gains, which are taxable to investors.
YIELD--The income generated by an investment, expressed as a percentage of its
price.
41
<PAGE>
SCHWAB S&P 500 FUND
SCHEDULE OF INVESTMENTS
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
COMMON STOCK -- 99.0%
AEROSPACE / DEFENSE -- 1.3%
Boeing Co. 544,754 $ 22,131
General Dynamics Corp. 72,962 5,126
Lockheed Martin Corp. 228,510 9,840
Northrop Grumman Corp. 40,139 2,566
Raytheon Co., Class B 193,294 13,579
Rockwell International Corp. 111,936 5,779
Textron, Inc. 91,245 8,406
United Technologies Corp. 130,392 18,891
---------
86,318
---------
AIR TRANSPORTATION -- 0.5%
AMR Corp./Del+ 106,784 7,455
Delta Air Lines, Inc. 81,106 5,145
FDX Corp.+ 88,144 9,922
Southwest Airlines Co. 199,012 6,480
U.S. Airways Group, Inc.+ 49,290 2,683
---------
31,685
---------
ALCOHOLIC BEVERAGES -- 0.6%
Adolph Coors Co., Class B 23,077 1,235
Anheuser-Busch Companies, Inc. 275,827 20,170
Brown-Forman Corp., Class B 37,444 2,759
Seagram Co., Ltd. 230,575 13,229
---------
37,393
---------
APPAREL -- 0.3%
Fruit of the Loom, Inc.,
Class A+ 35,553 380
Liz Claiborne, Inc. 40,646 1,344
Nike, Inc., Class B 171,403 10,659
Reebok International, Ltd.+ 58,118 1,093
Russell Corp. 16,476 365
VF Corp. 67,762 3,490
---------
17,331
---------
AUTOMOTIVE PRODUCTS/MOTOR VEHICLES -- 1.7%
B.F. Goodrich Co. 41,613 1,654
Cooper Tire & Rubber Co. 44,764 982
Cummins Engine Co., Inc. 22,880 1,224
Dana Corp. 97,996 4,618
Danaher Corp. 80,300 5,335
Eaton Corp. 41,161 3,774
Fleetwood Enterprises, Inc. 23,175 572
Ford Motor Co. 701,095 44,826
General Motors Corp. 380,423 33,834
Genuine Parts Co. 105,376 3,161
Number Value
of Shares (000s)
--------- ---------
Goodyear Tire & Rubber Co. 93,026$ 5,320
Navistar International Corp.+ 36,753 1,923
TRW, Inc. 67,457 2,829
---------
110,052
---------
BANKS -- 7.3%
AmSouth Bancorp. 72,500 3,448
Bank of America Corp. 1,006,199 72,446
Bank of New York Co., Inc. 438,786 17,551
Bank One Corp. 681,824 40,228
BankBoston Corp. 178,008 8,722
Bankers Trust New York Corp. 54,808 4,936
BB&T Corp. 177,272 7,080
Chase Manhattan Corp. 489,870 40,537
Comerica, Inc. 91,830 5,975
Fifth Third Bancorp. 155,083 11,118
Firstar Corp. 403,200 12,121
First Union Corp. 574,921 31,836
Fleet Financial Group, Inc. 326,944 14,079
Golden West Financial Corp. 34,019 3,406
Huntington Bancshares Inc. 118,828 4,211
J.P. Morgan & Co., Inc. 100,074 13,485
KeyCorp, Inc. 260,508 8,059
Mellon Bank Corp. 149,726 11,127
Mercantile Bancorp, Inc. 93,200 5,312
National City Corp. 188,050 13,493
Northern Trust Corp. 66,500 6,193
PNC Bank Corp. 171,741 9,940
Regions Financial Corp. 124,500 4,700
Republic New York Corp. 63,630 3,738
SouthTrust Corp. 99,700 3,972
State Street Corp. 94,035 8,228
Summit Bancorp. 106,300 4,504
SunTrust Banks, Inc. 186,147 13,310
Synovus Financial Corp. 162,047 3,585
U.S. Bancorp. 422,481 15,658
Union Planters Corp. 77,100 3,301
Wachovia Corp. 118,726 10,433
Washington Mutual, Inc. 341,256 14,034
Wells Fargo & Co. 952,506 41,136
---------
471,902
---------
BUSINESS MACHINES & SOFTWARE -- 11.5%
3Com Corp.+ 203,520 5,317
Adobe Systems, Inc. 39,752 2,519
Apple Computer, Inc.+ 76,866 3,536
Autodesk, Inc. 38,000 1,131
BMC Software, Inc.+ 141,400 6,089
42
<PAGE>
Number Value
of Shares (000s)
--------- --------
Cabletron Systems, Inc.+ 89,329 $ 843
Ceridian Corp.+ 80,720 2,956
Cisco Systems, Inc.+ 918,245 104,737
Compaq Computer Corp. 992,194 22,138
Computer Associates
International, Inc. 315,390 13,463
Compuware Corp.+ 217,200 5,294
Data General Corp.+ 31,600 369
Dell Computer Corp.+ 1,482,128 61,045
Gateway 2000, Inc.+ 91,800 6,076
Hewlett-Packard Co. 587,373 46,329
Honeywell, Inc. 74,766 7,084
International Business
Machines Corp. 536,452 112,219
Microsoft Corp.+ 2,937,312 238,840
Novell, Inc.+ 203,729 4,533
Oracle Systems Corp.+ 837,295 22,659
Parametic Technology Corp.+ 150,832 1,970
PeopleSoft, Inc.+ 129,300 1,770
Pitney Bowes, Inc. 158,502 11,085
Seagate Technology, Inc.+ 138,811 3,869
Silicon Graphics, Inc.+ 99,570 1,270
Sun Microsystems, Inc.+ 444,342 26,577
Unisys Corp.+ 147,665 4,642
Xerox Corp. 381,424 22,409
---------
740,769
---------
BUSINESS SERVICES -- 3.5%
America Online, Inc.+ 597,600 85,307
Automatic Data
Processing, Inc. 355,424 15,816
Browning-Ferris
Industries, Inc. 99,213 3,956
Cendant Corp.+ 487,300 8,771
Computer Sciences Corp.+ 93,822 5,588
Deluxe Corp. 42,372 1,467
Ecolab, Inc. 77,470 3,249
Equifax, Inc. 83,115 2,987
First Data Corp. 256,527 10,886
H&R Block, Inc. 53,617 2,580
Interpublic Group of
Companies, Inc. 78,260 6,070
Laidlaw, Inc. 174,887 1,104
Moore Corp., Ltd. 50,785 508
National Service
Industries, Inc. 20,694 806
Omnicom Group, Inc. 100,600 7,294
Paychex, Inc. 92,100 4,703
R.R. Donnelley & Sons Co. 82,206 2,908
Number Value
of Shares (000s)
--------- ---------
Tyco International Ltd. 473,780 $ 38,495
Waste Management, Inc. 346,526 19,579
---------
222,074
---------
CHEMICAL -- 1.9%
Air Products & Chemicals, Inc. 132,358 6,221
Dow Chemical Co. 128,576 16,868
E.I. du Pont de Nemours & Co. 651,662 46,024
Eastman Chemical Co. 46,764 2,604
Great Lakes Chemical Corp. 32,225 1,541
Hercules, Inc. 56,707 2,144
Minnesota Mining &
Manufacturing Co. 232,268 20,672
Morton International, Inc. 68,778 2,777
Nalco Chemical Co. 38,640 1,413
PPG Industries, Inc. 102,775 6,674
Praxair, Inc. 90,930 4,706
Rohm & Haas Co. 95,187 4,266
Sigma-Aldrich Corp. 56,709 1,843
Union Carbide Corp. 78,060 4,049
W.R. Grace & Co.+ 44,452 708
---------
122,510
---------
CONSTRUCTION -- 0.3%
Armstrong World Industries,
Inc. 21,685 1,187
Centex Corp. 38,922 1,423
Crane Co. 39,069 1,131
Fluor Corp. 43,275 1,444
Kaufman & Broad Home Corp. 27,481 668
Masco Corp. 197,990 5,816
Owens Corning 29,211 1,041
Pulte Corp. 30,488 690
Sherwin-Williams Co. 98,861 3,077
The Stanley Works 48,386 1,473
---------
17,950
---------
CONSUMER - DURABLE -- 0.3%
Black & Decker Corp. 53,297 3,025
Fortune Brands, Inc. 100,758 3,980
Maytag Corp. 52,506 3,590
Newell Rubbermaid, Inc. 162,833 7,724
Whirlpool Corp. 46,556 3,090
---------
21,409
---------
CONSUMER - NONDURABLE -- 1.3%
American Greetings Corp.,
Class A 41,157 1,078
Darden Restaurants, Inc. 76,120 1,698
43
<PAGE>
SCHWAB S&P 500 FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ---------
Hasbro, Inc. 109,997 $ 3,754
Jostens, Inc. 18,082 388
Mattel, Inc. 170,207 4,404
McDonald's Corp. 790,374 33,492
RJR Nabisco Holdings Corp. 183,300 4,720
Tricon Global
Restaurants, Inc.+ 90,050 5,797
Unilever NV+ 372,437 24,185
Wendy's International, Inc. 68,575 1,856
---------
81,372
---------
CONTAINERS -- 0.2%
Ball Corp. 19,263 1,058
Bemis Co., Inc. 30,311 1,061
Crown Cork & Seal Co., Inc. 76,268 2,479
Owens-Illinois, Inc.+ 84,993 2,465
Sealed Air Corp.+ 47,226 2,872
---------
9,935
---------
ELECTRONICS -- 6.2%
Advanced Micro Devices, Inc.+ 88,294 1,451
Andrew Corp.+ 46,788 652
Applied Materials, Inc.+ 214,762 11,517
Ascend Communications, Inc.+ 126,300 12,204
EG&G, Inc 23,296 728
Electronic Data Systems Corp. 290,100 15,593
EMC Corp.+ 290,531 31,650
Emerson Electric Co. 254,226 16,398
General Instrument Corp.+ 92,908 3,391
Harris Corp. 49,166 1,699
Intel Corp. 1,941,624 118,803
KLA-Tencor Corp.+ 51,775 2,569
LSI Logic Corp.+ 81,597 2,774
Lucent Technologies, Inc. 1,532,040 92,114
Micron Technology, Inc.+ 149,440 5,548
Motorola, Inc. 350,844 28,111
National Semiconductor Corp.+ 92,137 1,152
Perkin Elmer Corp.+ 27,391 2,962
Scientific-Atlanta, Inc. 44,262 1,405
Solectron Corp.+ 144,900 7,028
Tektronix, Inc. 24,305 589
Tellabs, Inc.+ 112,878 12,350
Texas Instruments, Inc. 228,101 23,295
Thermo Electron Corp.+ 93,614 1,504
Thomas & Betts Corp. 30,315 1,273
---------
396,760
---------
Number Value
of Shares (000s)
--------- --------
ENERGY - RAW MATERIALS -- 0.9%
Anadarko Petroleum Corp. 69,850 $ 2,650
Apache Corp. 56,489 1,734
Baker Hughes, Inc. 192,708 5,757
Burlington Resources, Inc. 101,155 4,659
Halliburton Co. 255,529 10,892
Helmerich & Payne, Inc. 33,504 863
McDermott International, Inc. 40,216 1,166
Occidental Petroleum Corp. 198,092 3,999
ONEOK, Inc. 22,365 625
Rowan Companies, Inc.+ 47,281 757
Schlumberger Ltd. 315,534 20,155
Sempra Energy 134,111 2,783
Sunoco, Inc. 51,352 1,836
Union Pacific Resources
Group Inc. 139,762 1,957
---------
59,833
---------
FOOD & AGRICULTURE -- 4.0%
Archer Daniels Midland Co. 358,326 5,375
Bestfoods, Inc. 166,400 8,351
Campbell Soup Co. 258,827 10,612
Coca-Cola Co. 1,440,382 97,946
Coca-Cola Enterprises, Inc. 230,600 7,956
ConAgra, Inc. 284,988 7,089
General Mills, Inc. 91,334 6,679
H.J. Heinz Co. 210,638 9,834
Hershey Foods Corp. 86,398 4,547
Kellogg Co. 235,762 8,723
Monsanto Co. 361,265 16,347
PepsiCo, Inc. 849,997 31,397
Pioneer-Hi-Bred
International, Inc 144,814 5,412
Quaker Oats Co. 79,687 5,145
Ralston-Ralston Purina Group 189,069 5,767
Sara Lee Corp. 522,938 11,635
SYSCO Corp. 190,428 5,653
Wm. Wrigley Jr. Co. 69,443 6,159
---------
254,627
---------
GOLD -- 0.2%
Barrick Gold Corp. 214,579 4,318
Battle Mountain Gold Co. 100,980 284
Homestake Mining Co. 158,807 1,519
Newmont Mining Corp. 96,969 2,333
Placer Dome, Inc. 148,700 2,100
---------
10,554
---------
44
<PAGE>
Number Value
of Shares (000s)
--------- ---------
HEALTHCARE/DRUGS & MEDICINE -- 11.0%
Abbott Laboratories 884,214 $ 42,829
Allergan, Inc. 38,735 3,481
ALZA Corp.+ 57,078 1,916
American Home Products Corp. 769,910 46,965
Amgen, Inc.+ 294,108 18,069
Bausch & Lomb, Inc. 30,816 2,311
Baxter International, Inc. 166,284 10,476
Becton, Dickinson & Co. 150,210 5,586
Biomet, Inc. 70,832 2,904
Boston Scientific Corp.+ 229,312 9,760
Bristol-Meyers Squibb Co. 1,156,464 73,508
C.R. Bard, Inc. 31,120 1,525
Cardinal Health, Inc. 161,090 9,635
Columbia / HCA Healthcare
Corp. 369,316 9,117
Eli Lilly & Co. 639,624 47,092
Guidant Corp. 174,620 9,375
HCR Manor Care, Inc.+ 62,433 1,733
HealthSouth Corp.+ 235,609 3,166
Humana, Inc.+ 95,742 1,304
IMS Health, Inc. 185,686 5,571
Johnson & Johnson 782,880 76,331
Mallinckrodt, Inc. 40,553 1,422
McKesson HBOC, Inc. 163,420 5,720
Medtronic, Inc. 342,077 24,608
Merck & Co., Inc. 1,385,946 97,363
Pfizer, Inc. 756,100 86,999
Pharmacia & Upjohn, Inc. 292,961 16,406
Schering-Plough Corp. 857,162 41,412
Service Corp. International 153,926 3,194
Shared Medical Systems Corp. 17,852 970
St. Jude Medical, Inc.+ 46,392 1,293
Tenet Healthcare Corp.+ 186,433 4,404
United Healthcare Corp. 109,392 6,140
Warner Lambert Co. 476,401 32,365
Watson Pharmaceuticals, Inc.+ 54,300 2,199
---------
707,149
---------
HOUSEHOLD PRODUCTS -- 2.2%
Alberto-Culver Co., Class B 32,017 796
Avon Products, Inc. 153,354 8,329
Clorox Co. 70,016 8,078
Colgate-Palmolive Co. 171,418 17,560
Gillette Co. 641,538 33,480
International Flavors &
Fragrances, Inc. 61,628 2,434
Number Value
of Shares (000s)
--------- ---------
Procter & Gamble Co. 773,322 $ 72,547
Tupperware Corp. 36,428 863
---------
144,087
---------
INSURANCE -- 3.4%
Aetna, Inc. 83,758 7,345
Allstate Corp. 472,818 17,199
American General Corp. 144,622 10,702
American International
Group, Inc. 717,308 84,239
Aon Corp. 100,699 6,898
Chubb Corp. 96,460 5,715
CIGNA Corp. 120,465 10,503
Cincinnati Financial Corp. 94,145 3,801
Conseco, Inc. 192,302 6,070
Hartford Financial Services
Group, Inc. 137,392 8,098
Jefferson-Pilot Corp. 64,922 4,374
Lincoln National Corp. 57,413 5,515
Marsh & McLennan Companies,
Inc. 150,878 11,552
MBIA, Inc. 59,186 3,980
MGIC Investment Corp. 64,438 3,129
Progressive Corp. 41,151 5,905
Provident Companies, Inc. 83,200 3,276
SAFECO Corp. 75,791 3,013
St. Paul Companies, Inc. 134,316 3,853
Torchmark Corp. 85,789 2,933
Transamerica Corp. 74,864 5,334
UNUM Corp. 80,192 4,381
---------
217,815
---------
MEDIA -- 2.8%
CBS Corp.+ 407,475 18,566
Clear Channel Communications,
Inc.+ 151,610 10,537
Comcast Corp., Class A 214,529 14,092
Dow Jones & Co., Inc. 56,800 3,096
Gannett Co., Inc. 166,092 11,761
Harcourt General, Inc. 40,048 1,910
King World Productions, Inc.+ 39,354 1,387
Knight-Ridder, Inc. 44,683 2,405
McGraw-Hill Companies, Inc. 117,114 6,471
Mediaone Group+ 354,167 28,887
Meredith Group 27,112 995
New York Times Co., Class A 102,700 3,543
Time Warner, Inc. 715,340 50,074
Times Mirror Co., Series A 45,800 2,679
45
<PAGE>
SCHWAB S&P 500 FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ---------
Tribune Co. 67,656 $ 5,645
Viacom, Inc., Class B+ 400,474 16,369
---------
178,417
---------
MISCELLANEOUS FINANCE -- 5.7%
American Express Co. 263,079 34,381
Associates First Capital Corp. 419,802 18,602
Bear Stearns Companies, Inc. 65,625 3,060
Capital One Financial Corp. 37,800 6,565
Charles Schwab Corp. 233,279 25,602
Citigroup, Inc. 1,318,904 99,248
Countrywide Credit
Industries, Inc. 63,424 2,874
Dun & Bradstreet Corp. 105,156 3,864
Fannie Mae 600,817 42,620
Franklin Resources, Inc. 149,000 5,960
Freddie Mac 391,252 24,551
Household International, Inc. 282,208 14,199
Lehman Brothers Holdings, Inc. 74,700 4,151
MBNA Corp. 466,320 13,144
Merrill Lynch & Co., Inc. 204,692 17,181
Morgan Stanley, Dean Witter,
Discover & Co. 336,136 33,341
Providian Financial Corp. 83,794 10,815
SLM Holding Corp. 99,400 4,243
---------
364,401
---------
NON-FERROUS METALS -- 0.4%
Alcan Aluminum, Ltd. 135,074 4,289
Alcoa Inc. 215,626 13,423
Asarco, Inc. 29,188 536
Cyprus Amax Minerals Co. 58,795 904
Engelhard Corp. 81,701 1,568
Freeport-McMoRan Copper &
Gold, Inc., Class B 92,215 1,412
Inco, Ltd. 97,949 1,879
Phelps Dodge Corp. 36,826 2,329
Reynolds Metals Co. 35,554 2,218
---------
28,558
---------
OIL - DOMESTIC -- 0.7%
Amerada Hess Corp. 53,492 3,049
Ashland, Inc. 41,856 1,768
Atlantic Richfield Co. 191,370 16,063
Kerr-McGee Corp. 55,073 2,334
Phillips Petroleum Co. 153,650 7,779
Unocal Corp. 143,916 5,982
USX-Marathon Group 174,302 5,447
---------
42,422
---------
Number Value
of Shares (000s)
--------- ---------
OIL - INTERNATIONAL -- 4.6%
Chevron Corp. 381,268 $ 38,031
Exxon Corp. 1,416,569 117,664
Mobil Corp. 454,942 47,655
Royal Dutch Petroleum Co. -
Sponsored ADR 1,248,880 73,294
Texaco, Inc. 308,054 19,330
---------
295,974
---------
OPTICAL & PHOTO -- 0.2%
Eastman Kodak Co. 187,381 13,983
Polaroid Corp. 27,095 559
---------
14,542
---------
PAPER & FOREST PRODUCTS -- 1.0%
Boise Cascade Corp. 32,316 1,301
Champion International Corp. 53,800 2,942
Fort James Corp. 123,695 4,700
Georgia-Pacific Group 50,391 4,661
International Paper Co. 177,732 9,475
Kimberly-Clark Corp. 313,013 19,192
Louisiana-Pacific Corp. 57,328 1,193
Mead Corp. 55,719 2,330
Potlatch Corp. 18,560 769
Temple Inland, Inc. 34,119 2,354
Union Camp Corp. 38,345 3,044
Westvaco Corp. 53,813 1,608
Weyerhaeuser Co. 116,117 7,794
Willamette Industries, Inc. 66,732 3,120
---------
64,483
---------
PRODUCER GOODS & MANUFACTURING -- 4.7%
Allied Signal, Inc. 322,382 18,940
Avery Dennison Corp. 70,815 4,833
Briggs & Stratton Corp. 16,153 1,065
Case Corp. 45,156 1,564
Caterpillar, Inc. 210,786 13,569
Cooper Industries, Inc. 58,255 2,818
Corning, Inc. 133,282 7,630
Deere & Co. 134,927 5,802
Dover Corp. 127,565 4,712
FMC Corp.+ 20,778 1,351
Foster Wheeler Corp. 16,285 220
General Electric Co. 1,902,940 200,760
Harnischfeger
Industries, Inc. 32,303 315
Illinois Tool Works, Inc. 145,621 11,213
Ingersoll Rand Co. 95,897 6,635
ITT Industries, Inc. 57,647 2,075
46
<PAGE>
Number Value
of Shares (000s)
--------- ---------
Johnson Controls, Inc. 49,375 $ 3,601
Milacron Inc. 31,183 717
Millipore Corp. 29,991 920
NACCO Industries, Inc.,
Class A 6,117 494
Pall Corp. 65,366 1,205
Parker-Hannifin Corp. 61,133 2,869
Raychem Corp. 45,182 1,195
Snap-On, Inc. 33,178 1,080
Springs Industries, Inc. 7,642 286
Tenneco, Inc. 94,956 2,564
The Timken Co. 43,032 960
W.W. Grainger, Inc. 53,508 2,685
---------
302,078
---------
RAILROAD & SHIPPING -- 0.6%
Burlington Northern
Santa Fe Corp. 274,075 10,038
CSX Corp. 131,755 6,489
Kansas City Southern
Industries, Inc. 66,200 3,943
Norfolk Southern Corp. 219,988 7,191
Union Pacific Corp. 147,316 8,839
---------
36,500
---------
RETAIL -- 6.1%
Albertson's, Inc. 143,513 7,391
American Stores Co. 154,769 4,885
AutoZone, Inc.+ 85,715 2,571
Circuit City Stores, Inc. 59,806 3,678
Consolidated Stores Corp.+ 63,000 2,166
Costco Companies, Inc.+ 126,144 10,210
CVS Corp. 229,518 10,931
Dayton Hudson Corp. 254,510 17,132
Dillards, Inc., Class A 66,633 1,845
Dollar General Corp. 98,725 3,462
Federated Department Stores,
Inc.+ 123,437 5,763
Fred Meyer, Inc.+ 91,800 4,969
Gap, Inc. 334,535 22,268
Great Atlantic & Pacific
Tea Co., Inc. 20,280 624
Home Depot, Inc. 854,750 51,232
IKON Office Solutions 87,577 1,056
J.C. Penney Co., Inc. 150,920 6,886
Kmart Corp.+ 277,517 4,128
Kohl's Corp.+ 90,100 5,986
Kroger Co.+ 149,731 8,132
Number Value
of Shares (000s)
--------- ---------
Limited, Inc. 128,467 $ 5,620
Longs Drug Stores, Inc. 25,682 883
Lowe's Companies, Inc. 216,026 11,395
May Department Stores Co. 202,279 8,053
Nordstrom, Inc. 87,122 3,066
Pep Boys-Manny, Moe, & Jack 44,232 633
Rite Aid Corp. 152,814 3,562
Safeway, Inc.+ 282,600 15,243
Sears, Roebuck & Co. 222,618 10,240
Staples, Inc.+ 268,450 8,054
SUPERVALU, Inc. 64,054 1,337
Tandy Corp. 56,621 4,101
TJX Companies, Inc. 193,982 6,462
Toys "R" Us, Inc.+ 147,696 3,212
Wal-Mart Stores, Inc. 2,583,262 118,830
Walgreen Co. 580,656 15,605
Winn Dixie Stores, Inc. 83,711 2,998
---------
394,609
---------
STEEL -- 0.1%
Allegheny Teledyne, Inc. 117,503 2,629
Bethlehem Steel Corp.+ 68,935 629
Nucor Corp. 49,384 2,898
USX-U.S. Steel Group, Inc. 51,779 1,566
Worthington Industries, Inc. 57,402 793
---------
8,515
---------
TELEPHONE -- 8.8%
AirTouch Communications, Inc.+ 332,052 31,005
Alltel Corp. 161,490 10,890
Ameritech Corp. 636,298 43,547
AT&T Corp. 1,834,818 92,658
Bell Atlantic Corp. 901,696 51,960
BellSouth Corp. 1,128,842 50,516
Century Telephone
Enterprises, Inc.+ 76,450 3,077
Frontier Corp. 98,543 5,438
GTE Corp. 559,198 37,431
MCI WorldCom, Inc.+ 1,068,636 87,829
Nextel Communications Inc.,
Class A+ 181,800 7,442
Nortel Networks Corp. 389,220 26,540
SBC Communications, Inc. 1,139,882 63,833
Sprint Corp. 257,499 26,410
Sprint Corp. (PCS Group)+ 265,449 11,248
U S WEST Inc. 293,662 15,362
---------
565,186
---------
47
<PAGE>
SCHWAB S&P 500 FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ---------
TOBACCO -- 0.9%
Loew's Corp. 68,040 $ 4,980
Philip Morris Companies,
Inc. 1,409,962 49,437
UST, Inc. 104,684 2,918
---------
57,335
---------
TRAVEL & RECREATION -- 1.0%
Brunswick Corp. 51,407 1,234
Carnival Corp. 351,200 14,487
Harrah's Entertainment, Inc.+ 71,711 1,578
Hilton Hotels Corp. 146,822 2,294
Marriott International, Inc.,
Class A 144,632 6,056
Mirage Resorts, Inc.+ 102,374 2,297
Walt Disney Co. 1,191,130 37,818
---------
65,764
---------
TRUCKING & FREIGHT -- 0.1%
PACCAR, Inc. 48,963 2,742
Ryder Systems, Inc. 44,062 1,162
---------
3,904
---------
UTILITIES - ELECTRIC & GAS -- 2.7%
AES Corp.+ 103,900 5,195
Ameren Corp. 84,013 3,250
American Electric Power
Co., Inc. 111,095 4,604
Baltimore Gas & Electric Co.+ 85,808 2,413
Carolina Power & Light Co. 85,216 3,435
Central & South West Corp. 124,943 3,100
Cinergy Corp. 96,129 2,866
CMS Energy Corp. 60,100 2,644
Coastal Corp. 124,842 4,775
Columbia Energy Group 45,774 2,200
Consolidated Edison, Inc. 133,591 6,070
Consolidated Natural Gas Co. 55,499 3,302
Dominion Resources, Inc. 110,388 4,540
DTE Energy Co. 83,703 3,416
Duke Energy Corp. 214,115 11,990
Eastern Enterprises 13,843 497
Edison International 206,129 5,050
Enron Corp. 206,039 15,504
Entergy Corp. 141,204 4,413
First Energy Corp. 133,181 3,954
FPL Group, Inc. 107,980 6,087
GPU, Inc. 70,352 2,682
New Century Energies, Inc. 64,100 2,244
NICOR, Inc. 28,201 1,026
Number Value
of Shares (000s)
--------- ----------
Niagara Mohawk Holdings, Inc.+ 99,602 $ 1,332
Northern States Power Co. 90,108 2,174
PacifiCorp. 174,619 2,914
PECO Energy Co. 129,365 6,137
Peoples Energy Corp. 22,173 829
PG&E Corp. 219,516 6,819
PP&L Resources, Inc. 89,145 2,491
Public Service Enterprise
Group, Inc. 144,485 5,779
Reliant Energy, Inc. 160,186 4,535
Sonat, Inc. 61,979 2,216
Southern Co. 407,431 11,026
Texas Utilities Co. 166,887 6,634
Unicom Corp. 128,452 4,986
Williams Companies, Inc. 246,564 11,650
----------
174,779
----------
Total Common Stock
(Cost $4,889,112) 6,358,992
----------
Par
(000s)
--------
U.S. TREASURY OBLIGATIONS -- 0.0%
U.S. Treasury Bills (a) (b)
4.45%, 06/10/99 $1,600 1,593
4.51%, 06/24/99 2,000 1,987
----------
Total U.S. Treasury Obligations
(Cost $3,579) 3,580
----------
Number
of Shares
----------
SHORT-TERM INVESTMENTS -- 1.1%
Temporary Investment Fund, Inc. -
Temporary Cash Portfolio,
4.57%* 70,594,183 70,594
----------
total Short-Term Investments
(Cost $70,594) 70,594
----------
Total Investments -- 100.1%
(Cost $4,963,285) 6,433,166
----------
Other Assets and Liabilities, Net --
(0.1%)
Other assets 743,260
Liabilities (752,209)
----------
(8,949)
----------
Total Net Assets -- 100.0% $6,424,217
==========
SEE ACCOMPANYING NOTES TO SCHEDULES OF INVESTMENTS
AND NOTES TO FINANCIAL STATEMENTS.
48
<PAGE>
SCHWAB 1000 FUND(R)
SCHEDULE OF INVESTMENTS
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ----------
COMMON STOCK -- 99.7%
AEROSPACE / DEFENSE -- 1.4%
Boeing Co. 529,052 $ 21,493
Coltec Industries, Inc.+ 18,200 394
Cordant Technologies, Inc. 14,200 655
General Dynamics Corp. 68,600 4,819
Gulfstream Aerospace Corp.+ 35,000 1,706
Litton Industries, Inc.+ 20,500 1,284
Lockheed Martin Corp. 207,184 8,922
Northrop Grumman Corp. 39,900 2,551
Orbital Sciences Corp.+ 10,000 211
Raytheon Co., Class A 52,000 3,598
Raytheon Co., Class B 181,400 12,743
Rockwell International Corp. 109,600 5,658
Sundstrand Corp. 34,600 2,483
Textron, Inc. 85,400 7,867
United Technologies Corp. 125,400 18,167
----------
92,551
----------
AIR TRANSPORTATION -- 0.6%
Airborne Freight Corp. 19,200 614
Alaska Airgroup, Inc.+ 19,500 859
AMR Corp./Del+ 104,200 7,274
Comair Holdings, Inc. 57,000 1,258
Continental Airlines, Inc.,
Class B+ 33,400 1,442
Delta Air Lines, Inc. 80,400 5,100
FDX Corp.+ 80,680 9,082
Northwest Airlines Corp.,
Class A+ 46,500 1,584
Southwest Airlines Co. 176,900 5,760
U.S. Airways Group, Inc.+ 51,500 2,804
UAL Corp.+ 32,700 2,641
----------
38,418
----------
ALCOHOLIC BEVERAGES -- 0.3%
Adolph Coors Co., Class B 28,000 1,498
Anheuser-Busch Companies, Inc. 256,800 18,778
Brown-Forman Corp., Class B 36,700 2,704
----------
22,980
----------
APPAREL -- 0.3%
Jones Apparel Group, Inc.+ 57,200 1,888
Liz Claiborne, Inc. 32,000 1,058
Nike, Inc., Class B 150,600 9,365
Unifi, Inc. 21,925 307
VF Corp. 63,100 3,250
Warnaco Group, Inc., Class A 28,600 763
----------
16,631
----------
Number Value
of Shares (000s)
--------- ----------
AUTOMOTIVE PRODUCTS/MOTOR VEHICLES -- 1.8%
Autonation, Inc.+ 243,900 $ 3,491
B.F. Goodrich Co. 38,400 1,526
Borg-Warner Automotive, Inc. 9,200 522
Carlisle Companies, Inc. 16,000 784
Cooper Tire & Rubber Co. 39,500 867
Cummins Engine Co., Inc. 24,800 1,327
Dana Corp. 96,688 4,556
Danaher Corp. 70,800 4,704
Eaton Corp. 42,100 3,860
Federal-Mogul Corp. 33,900 1,487
Fleetwood Enterprises, Inc. 22,000 543
Ford Motor Co. 658,500 42,103
General Motors Corp. 358,400 31,875
General Motors Corp., Class H+ 53,000 2,935
Gentex Corp.+ 45,000 1,353
Genuine Parts Co. 95,575 2,867
Goodyear Tire & Rubber Co. 84,300 4,821
Harley-Davidson, Inc. 81,400 4,853
Lear Corp.+ 36,000 1,651
Meritor Automotive, Inc. 40,000 847
Navistar International Corp.+ 36,000 1,883
TRW, Inc. 62,700 2,629
----------
121,484
----------
BANKS -- 7.5%
Amsouth Bancorp. 67,800 3,225
Associated Bancorp. 39,625 1,441
Astoria Financial Corp. 29,750 1,491
BancWest Corp. 25,000 995
Bank of America Corp. 951,306 68,494
Bank of New York Co., Inc. 418,600 16,744
Bank One Corp. 650,692 38,391
BankBoston Corp. 163,040 7,989
Bankers Trust New York Corp. 67,940 6,119
BB&T Corp. 175,500 7,009
CCB Financial Corp. 21,000 1,213
Centura Banks, Inc. 10,000 596
Chase Manhattan Corp. 465,460 38,517
City National Corp. 25,000 966
CNB Bancshares, Inc. 20,000 849
Colonial BancGroup, Inc. 40,000 495
Comerica, Inc. 81,296 5,289
Commerce Bancorp, Inc. 10,000 441
Commerce Bancshares, Inc. 30,441 1,246
Compass Bancshares, Inc. 54,412 1,483
Cullen/Frost Bankers, Inc. 8,600 464
49
<PAGE>
SCHWAB 1000 FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ----------
Fifth Third Bancorp. 146,443 $ 10,498
First American Corp. -
Tennessee 65,086 2,526
First Security Corp. 92,627 1,760
Firstar Corp. 376,320 11,313
First Tennessee National Corp. 72,600 3,131
First Union Corp. 535,822 29,671
First Virginia Banks, Inc. 24,625 1,230
Firstmerit Corp. 46,800 1,302
Fleet Financial Group, Inc. 312,660 13,464
Fulton Finanacial Corp. 41,250 969
Golden West Financial Corp. 29,900 2,994
GreenPoint Financial Corp. 52,800 1,848
Hibernia Corp., Class A 80,000 1,065
HUBCO, Inc. 22,000 778
Huntington Bancshares Inc. 117,799 4,174
J.P. Morgan & Co., Inc. 98,000 13,205
KeyCorp, Inc. 256,846 7,946
Keystone Financial, Inc. 30,000 964
M&T Bank Corp. 4,600 2,571
Marshall & Ilsley Corp. 57,185 4,003
Mellon Bank Corp. 143,244 10,645
Mercantile Bankshares Corp. 40,675 1,505
Mercantile Bancorp, Inc. 83,925 4,784
National City Corp. 183,300 13,152
National Commerce Bancorp. 60,000 1,500
North Fork Bancorporation, Inc. 67,000 1,507
Northern Trust Corp. 61,900 5,764
Old Kent Financial Corp. 57,749 2,729
Old National Bancorp. 18,768 955
Pacific Century Financial Corp. 40,350 878
Peoples Bank-Bridgeport 25,400 800
Peoples Heritage Financial
Group, Inc. 62,000 1,201
PNC Bank Corp. 162,630 9,412
Regions Financial Corp. 118,765 4,483
Republic New York Corp. 57,800 3,396
SouthTrust Corp. 92,787 3,697
State Street Corp. 87,000 7,612
Summit Bancorp. 86,850 3,680
SunTrust Banks, Inc. 217,556 15,555
Synovus Financial Corp. 137,962 3,052
Trustmark Corp. 44,000 929
U.S. Bancorp. 390,798 14,484
Union Planters Corp. 73,900 3,164
UnionBanCal Corp. 87,600 2,989
Valley National Bancorp. 35,000 1,008
Number Value
of Shares (000s)
--------- ----------
Wachovia Corp. 108,749 $ 9,556
Washington Mutual, Inc. 331,447 13,631
Wells Fargo & Co. 891,576 38,505
Westamerica Bancorp. 16,800 561
Wilmington Trust Co. 14,200 872
Zions Bancorp. 46,600 3,108
----------
503,983
----------
BUSINESS MACHINES & SOFTWARE -- 11.0%
3Com Corp.+ 187,450 4,897
Adaptec, Inc.+ 45,400 1,092
Adobe Systems, Inc. 31,800 2,015
Apple Computer, Inc.+ 75,700 3,482
Autodesk, Inc. 27,200 809
BMC Software, Inc.+ 130,400 5,615
Cabletron Systems, Inc.+ 82,000 774
Ceridian Corp.+ 85,400 3,128
Cisco Systems, Inc.+ 862,725 98,405
Comdisco, Inc. 91,066 2,396
Compaq Computer Corp. 910,768 20,322
Computer Associates
International, Inc. 293,662 12,536
Compuware Corp.+ 199,600 4,865
Comverse Technology, Inc.+ 45,000 2,886
Concord EFS, Inc.+ 72,275 2,412
Dell Computer Corp.+ 1,384,200 57,012
Diebold, Inc. 35,818 862
Electronics for Imaging, Inc.+ 35,000 1,656
Gateway 2000, Inc.+ 86,000 5,692
Hewlett-Packard Co. 556,500 43,894
Honeywell, Inc. 69,100 6,547
I2 Technologies+ 39,800 1,348
Informix Corp.+ 95,000 689
International Business
Machines Corp. 504,900 105,619
Iomega Corp.+ 118,000 575
J. D. Edwards & Co.+ 45,000 605
Legato Systems, Inc.+ 15,000 607
Lexmark International
Group, Inc., Class A+ 35,000 4,322
Microchip Technology, Inc.+ 30,000 1,050
Micron Electronics, Inc.+ 48,000 489
Microsoft Corp.+ 2,768,300 225,097
MindSpring Enterprises, Inc.+ 20,000 1,939
National Computer Systems, Inc. 15,000 420
NCR Corporation+ 59,451 2,437
50
<PAGE>
Number Value
of Shares (000s)
--------- ----------
Network Appliance, Inc.+ 34,000 $ 1,711
New Era of Networks, Inc.+ 20,000 751
Novell, Inc.+ 195,800 4,357
Novellus Systems, Inc.+ 20,000 945
Oracle Systems Corp.+ 777,843 21,050
Parametic Technology Corp.+ 142,400 1,860
PeopleSoft, Inc.+ 119,600 1,637
Pitney Bowes, Inc. 146,600 10,253
Pixar, Inc.+ 22,000 913
Platinum Technology, Inc.+ 57,000 1,453
Quantum Corp.+ 95,400 1,705
Rambus Inc.+ 10,000 601
Rational Software Corp.+ 55,000 1,629
Seagate Technology, Inc.+ 132,060 3,681
Silicon Graphics, Inc.+ 98,700 1,258
Sterling Commerce, Inc.+ 47,000 1,472
Sterling Software, Inc.+ 47,600 985
Storage Technology Corp.+ 60,800 1,174
Sun Microsystems, Inc.+ 422,000 25,241
Technology Data Corp.+ 23,000 538
The Learning Company, Inc.+ 43,000 1,333
Total System Services, Inc. 102,700 1,951
Transaction Systems
Architects, Inc.+ 17,500 568
Unisys Corp.+ 144,800 4,552
Wang Laboratories, Inc.+ 23,000 576
Wind River Systems, Inc.+ 15,000 225
Xerox Corp. 359,400 21,115
----------
740,028
----------
BUSINESS SERVICES -- 4.5%
ACNielsen Corp.+ 35,000 976
Affiliated Computer Services,
Inc.+ 20,000 765
Allied Waste Industries, Inc.+ 141,365 2,500
America Online, Inc.+ 587,908 83,924
American Management
Systems, Inc.+ 22,000 756
Apollo Group, Inc.+ 42,500 1,052
Aspect Development, Inc.+ 15,000 164
At Home Corp., Class A+ 67,500 9,716
Automatic Data Processing,
Inc. 347,800 15,477
BISYS Group, Inc.+ 17,000 863
Browning-Ferris Industries,
Inc. 91,200 3,637
Cambridge Technology
Partners, Inc.+ 24,000 346
Catalina Marketing Corp.+ 15,000 1,282
CDW Computer Centers, Inc.+ 10,000 895
Number Value
of Shares (000s)
--------- ----------
Cendant Corp.+ 457,259 $ 8,231
CheckFree Holdings Corp.+ 31,000 1,488
Ciber, Inc.+ 36,400 687
Cintas Corp. 57,200 3,932
Citrix Systems, Inc.+ 52,100 2,214
CMGI Inc.+ 27,000 6,873
Complete Business Solutions,
Inc.+ 15,000 336
Computer Sciences Corp.+ 82,196 4,896
CSG Systems International,
Inc.+ 20,000 772
Deluxe Corp. 46,000 1,593
DeVry, Inc.+ 35,000 923
DST Systems, Inc.+ 30,000 1,747
Earthlink Network Inc+ 20,000 1,379
Ecolab, Inc. 72,800 3,053
Equifax, Inc. 74,000 2,659
Excite, Inc.+ 31,000 4,526
Express Scripts, Inc.,
Class A+ 17,000 1,252
First Data Corp. 244,302 10,368
Fiserv, Inc.+ 40,462 2,370
Fore Systems, Inc.+ 68,400 2,308
Galileo International, Inc. 62,000 3,038
H&R Block, Inc. 48,700 2,344
Hertz Corp. 27,000 1,612
IDX Systems Corp.+ 10,000 162
Infoseek Corp.+ 33,000 1,685
Interpublic Group of
Companies, Inc. 74,850 5,806
Intuit, Inc.+ 35,800 3,083
Keane, Inc.+ 30,000 744
Lamar Advertising Company+ 25,000 841
Lhs Inc.+ 35,000 1,207
Lycos, Inc.+ 26,000 2,592
Manpower, Inc. 31,500 713
Mastech Corp.+ 20,000 294
MedQuist, Inc.+ 15,000 514
Metzler Group, Inc+ 15,000 418
Micro Warehouse, Inc.+ 10,000 169
Modis Professional Services,
Inc.+ 50,000 578
National Data Corp. 15,000 692
National Service Industries,
Inc. 16,700 650
Network Associates, Inc.+ 65,050 862
NOVA Corp.+ 36,000 936
Ogden Corp. 20,000 516
Omnicom Group, Inc. 93,200 6,757
Paychex, Inc. 83,130 4,245
Pittston Brink's Group 29,900 789
Policy Management Systems
Corp.+ 14,200 446
51
<PAGE>
SCHWAB 1000 FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ----------
R.R. Donnelly & Sons Co. 66,500 $ 2,352
Reynolds & Reynolds Co.,
Class A 45,400 1,036
Robert Half International,
Inc.+ 49,650 1,185
Safety-Kleen, Corp.+ 44,000 698
Sapient Corp.+ 10,000 627
SEI Investments Co. 9,000 855
Siebel Systems, Inc.+ 41,800 1,607
Sodexho Marriott Services,
Inc.+ 30,000 681
Sungard Data Systems Inc.+ 66,600 2,127
Sykes Enterprises, Inc.+ 15,000 307
Sylvan Learning Systems,
Inc.+ 24,000 603
Symantec Corp.+ 30,000 596
Synopsys, Inc.+ 38,800 1,828
The Service Master Company 170,000 3,230
True North Communications, Inc. 23,000 621
Tyco International Ltd. 85,054 6,911
United Rentals, Inc.+ 45,000 1,342
USWeb Corp.+ 35,000 785
VERITAS Software Corp.+ 28,500 2,023
Viad Corp. 53,100 1,756
Vitesse Semiconductor Corp.+ 35,000 1,621
Waste Management, Inc. 330,275 18,661
WestPoint Stevens Inc. 34,000 1,164
Whittman-Hart, Inc.+ 35,000 989
Yahoo! Inc.+ 109,800 19,181
----------
298,439
----------
CHEMICAL -- 1.9%
Air Products & Chemicals, Inc. 127,200 5,978
Cabot Corp. 37,800 1,021
Crompton & Knowles Corp. 42,000 850
Dow Chemical Co. 123,000 16,136
E.I. du Pont de Nemours & Co. 620,400 43,816
Eastman Chemical Co. 45,725 2,546
Great Lakes Chemical Corp. 31,700 1,516
Hercules, Inc. 54,400 2,057
Lubrizol Corp. 40,600 1,124
Lyondell Petrochemical Corp. 36,300 708
Millennium Chemicals, Inc. 49,000 1,323
Minnesota Mining &
Manufacturing Co. 216,400 19,260
Morton International, Inc. 71,900 2,903
Nalco Chemical Co. 26,800 980
Olin Corp. 20,000 292
PPG Industries, Inc. 93,700 6,085
Praxair, Inc. 92,100 4,766
Rohm & Haas Co. 90,900 4,073
Number Value
of Shares (000s)
--------- ----------
RPM, Inc. 44,843 $ 631
Sigma-Aldrich Corp. 45,000 1,462
Solutia, Inc. 55,000 1,341
Union Carbide Corp. 67,000 3,476
Valspar Corp. 21,600 748
W.R. Grace & Co.+ 34,700 553
----------
123,645
----------
CONSTRUCTION -- 0.4%
Armstrong World Industries,
Inc. 25,700 1,407
Centex Corp. 33,000 1,207
Clayton Homes, Inc. 64,182 714
Crane Co. 32,850 951
D.R. Horton, Inc. 28,000 541
Fluor Corp. 39,000 1,302
Johns Manville Corp. 84,300 1,133
Lafarge Corp. 31,100 1,052
Martin Marietta Materials,
Inc. 21,400 1,323
Masco Corp. 192,800 5,663
Owens Corning 38,300 1,364
Pulte Corp. 32,000 724
Sherwin-Williams Co. 97,000 3,019
Southdown, Inc. 24,200 1,550
The Stanley Works 56,800 1,729
USG Corp. 28,700 1,675
Vulcan Materials, Inc. 62,400 2,980
----------
28,334
----------
CONSUMER - DURABLE -- 0.4%
Black & Decker Corp. 43,500 2,469
Champion Enterprises, Inc.+ 24,000 445
Fortune Brands, Inc.+ 101,300 4,001
Furniture Brands
International, Inc. 26,000 652
Hillenbrand Industries, Inc. 37,000 1,737
Knoll, Inc.+ 15,000 360
Leggett & Platt, Inc. 111,600 2,574
Linens 'N Things, Inc.+ 20,000 915
Maytag Corp. 54,800 3,747
Newell Rubbermaid, Inc. 147,008 6,974
Shaw Industries, Inc.+ 80,100 1,452
Whirlpool Corp. 46,100 3,060
----------
28,386
----------
CONSUMER - NONDURABLE -- 1.0%
American Greetings Corp.,
Class A 29,200 765
Brinker International, Inc.+ 35,000 967
52
<PAGE>
Number Value
of Shares (000s)
--------- ----------
Cbrl Group, Inc. 20,900 $ 422
CKE Restaurants, Inc. 29,700 486
Darden Restaurants, Inc. 63,600 1,419
Electronic Arts Inc.+ 30,400 1,545
Fastenal Company 29,700 1,418
Hasbro, Inc. 117,087 3,996
International Game Technology 58,600 1,040
Lancaster Colony Corp. 24,450 721
Mattel, Inc. 144,220 3,732
McDonald's Corp. 739,400 31,332
Mohawk Industries, Inc.+ 25,000 806
Outback Steakhouse, Inc.+ 46,875 1,679
Papa John's International,
Inc.+ 15,000 603
Premark International, Inc. 37,300 1,373
RJR Nabisco Holdings Corp. 171,736 4,422
Starbucks Corp.+ 91,000 3,361
Stewart Enterprises, Inc.,
Class A 56,100 1,115
Tricon Global Restaurants,
Inc.+ 84,760 5,456
Wendy's International, Inc. 63,500 1,718
Williams-Sonoma, Inc.+ 28,000 812
----------
69,188
----------
CONTAINERS -- 0.2%
Ball Corp. 17,500 961
Bemis Co., Inc. 21,400 749
Crown Cork & Seal Co., Inc. 70,300 2,285
Owens-Illinois, Inc.+ 75,900 2,201
Sealed Air Corp.+ 44,199 2,688
Smurfit-Stone Container Corp.+ 111,900 2,616
Sonoco Products 62,141 1,604
----------
13,104
----------
ELECTRONICS -- 6.5%
ADC Telecommunications, Inc.+ 75,400 3,605
Advanced Micro Devices, Inc.+ 74,300 1,221
Altera Corp.+ 57,200 4,133
American Power Conversion
Corp.+ 51,500 1,699
Analog Devices, Inc.+ 93,400 3,281
Andrew Corp.+ 48,612 678
Applied Materials, Inc.+ 199,400 10,693
Arrow Electronics, Inc.+ 38,800 706
Ascend Communications, Inc.+ 115,010 11,113
Atmel Corp.+ 55,200 1,007
Avnet, Inc. 17,100 726
AVX Corp. 66,000 1,299
Cadence Design Systems, Inc.+ 123,350 1,673
Number Value
of Shares (000s)
--------- ----------
Dallas Semiconductor Corp. 15,000 $ 638
EG&G, Inc. 22,000 688
Electronic Data Systems Corp. 275,800 14,824
EMC Corp.+ 275,800 30,045
Emerson Electric Co. 238,400 15,377
General Instrument Corp.+ 93,500 3,413
Harris Corp. 36,600 1,265
Intel Corp. 1,825,800 111,716
International Network
Services+ 37,500 1,425
KLA-Tencor Corp.+ 47,400 2,352
Level One Communications, Inc.+ 30,000 1,541
Linear Technology Corp. 89,800 5,107
Loral Space & Communications
Corp.+ 115,000 2,243
LSI Logic Corp.+ 80,100 2,723
Lucent Technologies, Inc. 1,441,908 86,695
Macromedia, Inc.+ 15,000 622
Maxim Integrated Products,
Inc.+ 69,200 3,875
Micron Technology, Inc.+ 141,100 5,238
Molex Incorporated, Class A 40,000 1,155
Molex, Inc. 80,257 2,588
Motorola, Inc. 328,400 26,313
National Semiconductor Corp.+ 69,300 866
Perkin Elmer Corp.+ 24,500 2,649
Pittway Corp., Class A 16,300 430
Qualcomm, Inc.+ 38,500 7,700
SCI Systems, Inc.+ 38,000 1,446
Scientific-Atlanta, Inc. 44,700 1,419
Smart Modular Technologies,
Inc.+ 15,000 201
Snyder Communications, Inc.+ 30,000 881
Solectron Corp.+ 136,200 6,606
Symbol Technologies, Inc. 37,325 1,782
Tektronix, Inc. 26,400 640
Tellabs, Inc.+ 105,000 11,488
Teradyne, Inc.+ 52,900 2,496
Texas Instruments, Inc. 213,600 21,814
Thermo Electron Corp.+ 66,737 1,072
Thomas & Betts Corp. 34,400 1,445
Uniphase Corp.+ 20,000 2,428
United States Satellite
Broadcasting Co.+ 50,900 910
Univision Communications,
Inc.+ 55,000 3,183
VISX, Inc.+ 15,000 1,931
Western Digital Corp.+ 33,400 265
Xilinx, Inc.+ 74,800 3,413
----------
436,742
----------
53
<PAGE>
SCHWAB 1000 FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ----------
ENERGY - RAW MATERIALS -- 0.8%
Anadarko Petroleum Corp. 66,200 $ 2,511
Apache Corp. 50,100 1,537
Baker Hughes, Inc. 190,020 5,677
Burlington Resources, Inc. 98,467 4,536
Cooper Cameron Corp.+ 35,000 1,352
Dynegy, Inc. 86,000 1,494
Enron Oil & Gas 82,800 1,573
ENSCO International, Inc. 77,800 1,444
Global Marine, Inc.+ 94,500 1,406
Halliburton Co. 240,460 10,250
McDermott International, Inc. 31,000 899
Nabors Industries, Inc.+ 66,100 1,359
Noble Affiliates, Inc. 27,400 879
Noble Drilling Corp.+ 55,000 1,079
Occidental Petroleum Corp. 174,900 3,531
Santa Fe International Corp. 55,000 1,183
Sempra Energy 132,024 2,739
Smith International+ 32,000 1,436
Sunoco, Inc. 51,900 1,855
Tidewater, Inc. 27,000 716
Union Pacific Resources
Group Inc. 142,588 1,996
Valero Energy Corp. 19,600 437
Vastar Resources, Inc. 49,800 2,733
Weatherford International,
Inc.+ 47,930 1,624
----------
54,246
----------
FOOD & AGRICULTURE -- 3.8%
Archer Daniels Midland Co. 310,258 4,654
Bestfoods, Inc. 153,400 7,699
Campbell Soup Co. 240,400 9,856
Coca-Cola Co. 1,344,600 91,433
Coca-Cola Enterprises, Inc. 219,600 7,576
ConAgra, Inc. 270,848 6,737
Dean Foods Co. 21,150 755
Delta & Pine Land Co. 15,000 510
Dole Food Co., Inc. 23,100 733
Earthgrains Co. 30,000 636
Flowers Industries, Inc. 47,500 1,009
General Mills, Inc. 81,100 5,930
H.J. Heinz Co. 201,600 9,412
Hershey Foods Corp. 73,100 3,847
Hormel Foods Corp. 34,100 1,253
IBP, Inc. 45,100 913
IMC Global, Inc. 47,360 1,184
International Home Foods,
Inc.+ 45,000 745
Number Value
of Shares (000s)
--------- ----------
Interstate Bakeries Corp. 37,200 $ 828
Kellogg Co. 213,800 7,911
McCormick & Co., Inc. 33,400 1,012
Monsanto Co. 341,500 15,453
Nabisco Holdings Corp.,
Class A 26,000 983
PepsiCo, Inc. 795,600 29,387
Pioneer Hi-Bred
International, Inc. 123,500 4,616
Quaker Oats Co. 78,600 5,075
Ralston Purnia Group 173,300 5,286
Sara Lee Corp. 490,200 10,907
Smithfield Foods, Inc.+ 23,000 543
Suiza Foods Corp.+ 21,300 800
SYSCO Corp. 179,300 5,323
Tootsie Roll Industries, Inc. 18,540 768
Tyson Foods, Inc., Class A 119,300 2,468
Universal Foods Corp. 15,000 315
US Foodservice+ 30,000 1,262
Whitman Corp.+ 41,900 686
Whole Foods Market, Inc.+ 14,000 546
Wm. Wrigley Jr. Co. 64,000 5,676
----------
254,727
----------
GOLD -- 0.1%
Homestake Mining Co. 122,800 1,174
Newmont Mining Corp. 172,996 4,163
----------
5,337
----------
HEALTHCARE/DRUGS & MEDICINE -- 10.6%
Abbott Laboratories 824,200 39,922
Agouron Pharmaceuticals, Inc.+ 15,000 886
Allergan, Inc. 35,700 3,209
ALZA Corp.+ 62,600 2,101
American Home Products Corp. 715,600 43,652
Amerisource Health Corp.+ 20,000 554
Amgen, Inc.+ 274,400 16,858
Bausch & Lomb, Inc. 35,800 2,685
Baxter International, Inc. 156,000 9,828
Becton, Dickinson & Co. 135,200 5,028
Bergen Brunswig Corp. 78,706 1,495
Biogen, Inc.+ 42,300 4,021
Biomet, Inc. 58,900 2,415
Boston Scientific Corp.+ 216,942 9,234
Bristol-Myers Squibb Co. 1,100,400 69,944
C.R. Bard, Inc. 33,600 1,646
Cardinal Health, Inc. 176,919 10,582
Centocor, Inc.+ 45,600 2,024
54
<PAGE>
Number Value
of Shares (000s)
--------- ----------
Chiron Corp.+ 94,612 $ 1,904
Columbia / HCA Healthcare
Corp. 349,258 8,622
Covance, Inc.+ 25,000 548
Eli Lilly & Co. 601,168 44,261
Forest Laboratories, Inc.+ 41,200 1,833
Foundation Health Systems,
Inc.+ 45,760 632
Genentech, Inc.,-Special
Common+ 72,500 6,135
Genzyme Corp.
(General Division)+ 43,800 1,653
Gilead Sciences, Inc.+ 20,000 921
Guidant Corp. 164,272 8,819
HCR Manor Care, Inc.+ 68,600 1,904
Health Management Associates,
Inc., Class A 118,128 1,846
HealthSouth Corp.+ 231,200 3,107
Henry Schein, Inc.+ 24,000 629
Humana, Inc.+ 88,500 1,206
ICN Pharmaceuticals, Inc. 45,650 1,509
Icos Corp.+ 15,000 596
Immunex Corp.+ 50,800 4,851
IMS Health, Inc. 163,200 4,896
IVAX Corp.+ 65,000 853
Johnson & Johnson 736,300 71,789
Lincare Holdings, Inc.+ 37,000 1,096
Mallinckrodt, Inc. 50,600 1,774
McKesson HBOC, Inc. 157,358 5,508
Medimmune, Inc.+ 25,000 1,378
Medtronic, Inc. 325,648 23,426
Merck & Co., Inc. 1,298,108 91,192
Minimed, Inc.+ 20,000 1,250
Mylan Laboratories, Inc. 59,950 1,360
Omnicare, Inc. 37,900 912
Oxford Health Plans, Inc.+ 29,900 596
Pacificare Health Systems, Inc.,
Class B+ 21,164 1,688
Patterson Dental Co.+ 25,000 902
Pfizer, Inc. 718,800 82,707
PSS World Medical, Inc.+ 20,000 195
Quintiles Transnational Corp.+ 53,660 2,177
Renal Care Group, Inc.+ 10,100 211
Safeskin Corp.+ 20,400 199
Schering-Plough Corp. 799,600 38,631
Sepracor, Inc.+ 15,000 1,268
Service Corp. International 156,400 3,245
Shared Medical Systems Corp. 9,700 527
St. Jude Medical, Inc.+ 46,450 1,295
Number Value
of Shares (000s)
--------- ----------
Steris Corp.+ 46,400 $ 824
Stryker Corp. 51,600 3,157
Sybron International Corp.+ 59,600 1,650
Tenet Healthcare Corp.+ 177,373 4,190
Total Renal Care Holdings,
Inc.+ 35,000 486
Trigon Healthcare, Inc.+ 20,000 635
United Healthcare Corp. 101,400 5,691
Universal Health Services,
Class B+ 22,000 1,140
Warner Lambert Co. 445,200 30,246
Watson Pharmaceuticals, Inc.+ 47,000 1,904
Wellpoint Health Networks,
Inc.+ 41,925 2,945
----------
709,003
----------
HOUSEHOLD PRODUCTS -- 2.1%
Alberto-Culver Co., Class B 18,700 465
Avon Products, Inc. 149,400 8,114
Clorox Co. 66,900 7,719
Colgate-Palmolive Co. 157,100 16,093
Dial Corp. 65,100 2,213
Estee Lauder Companies, Inc.,
Class A 36,000 3,605
Gillette Co. 608,410 31,751
International Flavors &
Fragrances, Inc. 53,500 2,113
Procter & Gamble Co. 727,200 68,220
----------
140,293
----------
INSURANCE -- 3.8%
20th Century Industries 55,000 980
Aetna, Inc. 81,365 7,135
AFLAC, Inc. 143,850 7,804
Alleghany Corp. 3,012 553
Allmerica Financial Corp. 40,216 2,305
Allstate Corp. 450,448 16,385
AMBAC Financial Group, Inc. 32,800 1,980
American Bankers Insurance
Group, Inc. 24,200 1,269
American Financial Group, Inc. 44,100 1,601
American General Corp. 137,493 10,174
American International Group,
Inc. 669,580 78,634
American National Insurance Co. 10,300 715
Aon Corp. 98,675 6,759
Chubb Corp. 83,700 4,959
CIGNA Corp. 112,200 9,782
Cincinnati Financial Corp. 88,614 3,578
55
<PAGE>
SCHWAB 1000 FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
-------- ----------
CNA Financial Corp.+ 96,200 $ 3,926
Commerce Group, Inc. 10,000 228
Conseco, Inc. 169,296 5,343
Equitable Companies, Inc. 118,100 7,950
Erie Indemnity Co., Class A 40,000 1,090
Fremont General Corp. 25,600 512
Hartford Financial Services
Group, Inc. 130,200 7,674
Hartford Life, Inc., Class A 17,000 889
Horace Mann Educators Corp. 30,000 683
HSB Group, Inc. 15,000 568
Jefferson-Pilot Corp. 53,725 3,620
Lincoln National Corp. 53,900 5,178
Marsh & McLennan Companies,
Inc. 141,700 10,849
MBIA, Inc. 62,000 4,170
Mercury General Corp. 39,400 1,423
MGIC Investment Corp. 57,400 2,787
Nationwide Financial Services,
Inc., Class A 10,000 464
Ohio Casualty Corp. 17,300 643
Old Republic International
Corp. 61,275 1,199
PMI Group, Inc. 12,600 703
Progressive Corp. 38,900 5,582
Protective Life Corp. 27,600 1,082
Provident Bancorp, Inc. 19,200 804
Provident Companies, Inc. 91,992 3,622
Reinsurance Group of America,
Inc. 15,000 641
Reliance Group Holdings, Inc. 64,000 480
Reliastar Financial Corp. 52,000 1,911
SAFECO Corp. 79,600 3,164
St. Paul Companies, Inc. 120,754 3,464
Torchmark Corp. 79,700 2,725
Transamerica Corp. 65,000 4,631
Transatlantic Holdings, Inc. 26,000 1,999
Travelers Property Casualty
Corp., Class A 35,000 1,208
Unitrin, Inc. 49,000 1,697
UNUM Corp. 78,516 4,289
Wesco Financial Corp. 3,800 1,254
----------
253,065
----------
MEDIA -- 3.7%
A.H. Belo Corp., Class A 52,000 1,125
Adelphia Communications Corp.,
Class A+ 19,000 1,297
Number Value
of Shares (000s)
--------- ----------
AT&T Corp.-Liberty Media Group,
Class A+ 287,193 $ 18,344
BHC Communications, Inc.,
Class A 11,700 1,445
Cablevision Systems Corp.,
Class A+ 61,600 4,766
CBS Corp.+ 384,807 17,533
Central Newspapers, Inc.,
Class A 17,000 577
Century Communications Corp.,
Class A+ 37,000 1,815
Chancellor Media Corp.+ 81,000 4,445
Chris-Craft Industries, Inc.+ 12,932 608
Clear Channel Communications,
Inc.+ 148,002 10,286
Comcast Corp., Class A 200,688 13,183
Comcast Corp., Class H 17,000 1,069
Cox Communications, Inc.+ 139,306 11,057
Dow Jones & Co., Inc. 46,000 2,507
Gannett Co., Inc. 151,600 10,735
Gartner Group, Inc., Class A+ 50,200 957
Harcourt General, Inc. 40,200 1,917
Harte-Hanks Communications,
Inc. 38,200 965
Hearst-Argyle Television,
Inc.+ 21,417 546
Heftel Broadcasting Corp.+ 23,000 1,251
Hollinger International, Inc. 60,000 844
Houghton Mifflin Co. 10,000 446
IXC Communications, Inc.+ 20,000 793
John Wiley & Sons, Inc.,
Class A 24,000 971
Jones Intercable, Inc.,
Class A+ 22,000 1,020
King World Productions,
Inc.+ 38,000 1,340
Knight-Ridder, Inc. 41,500 2,233
Lee Enterprises, Inc. 22,000 630
McClatchy Newspapers, Inc.,
Class A 22,000 789
McGraw-Hill Companies, Inc. 110,400 6,100
Media General, Inc., Class A 19,500 1,014
Mediaone Group+ 333,700 27,217
Meredith Corp. 36,000 1,321
Metro Goldwyn Mayer, Inc.+ 65,000 987
New York Times Co., Class A 94,026 3,244
Outdoor Systems, Inc.+ 90,500 2,279
Primedia, Inc.+ 63,000 1,020
Pulitzer Inc 13,066 586
Reader's Digest Association,
Inc., Class A 57,800 2,056
TCA Cable TV, Inc. 30,000 1,494
56
<PAGE>
Number Value
of Shares (000s)
-------- ----------
The E.W. Scripps Company,
Class A 51,675 $ 2,584
Time Warner, Inc. 676,910 47,384
Times Mirror Co., Class A 49,000 2,867
Tribune Co. 69,400 5,791
USA Networks, Inc.+ 73,200 2,736
Valassis Communications, Inc.+ 25,000 1,400
Viacom, Inc., Class B+ 382,052 15,616
Washington Post Co. 6,300 3,616
World Color Press, Inc.+ 10,000 256
----------
245,062
----------
MISCELLANEOUS FINANCE -- 6.8%
American Express Co. 248,400 32,463
Associates First Capital Corp. 396,202 17,557
Bear Stearns Companies, Inc. 56,844 2,650
Berkshire Hathaway, Inc.,
Class A.+ 831 63,488
Berkshire Hathaway, Inc.,
Class B+ 906 2,238
Capital One Financial Corp. 38,000 6,600
Charles Schwab Corp. 216,875 23,802
Charter One Financial, Inc. 90,835 2,839
Citigroup, Inc. 1,234,083 92,865
Commercial Federal Corp. 30,000 728
Countrywide Credit Industries,
Inc. 60,985 2,763
Dime Bancorp., Inc. 69,926 1,613
Donaldson, Lufkin, & Jenrette,
Inc. 71,600 5,008
Dun & Bradstreet Corp. 104,600 3,844
ETrade Group, Inc.+ 68,000 7,854
Edwards (A.G.), Inc. 42,843 1,500
Everest Reinsurance Holdings,
Inc. 31,000 940
Fannie Mae 569,000 40,363
Financial Security Assurance
Holdings Ltd. 18,000 1,028
Finova Group, Inc. 36,700 1,773
First American Financial Corp. 30,000 536
Franklin Resources, Inc. 133,200 5,328
Freddie Mac 372,800 23,393
Golden State Bancorp Inc.+ 74,000 1,818
Household International, Inc. 269,598 13,564
Investment Technology
Group, Inc. 15,955 552
John Nuveen Co., Class A 15,000 596
Legg Mason, Inc. 32,000 1,116
Lehman Brothers Holdings, Inc. 67,880 3,772
Leucadia National Corp. 30,000 923
Liberty Financial Companies,
Inc. 26,500 595
MBNA Corp. 430,787 12,143
Merrill Lynch & Co., Inc. 198,700 16,678
Number Value
of Shares (000s)
--------- ----------
Morgan Stanley, Dean Witter,
Discover & Co. 316,405 $ 31,383
Paine Webber Group, Inc. 83,687 3,928
Providian Financial Corp. 77,850 10,048
SLM Holding Corp. 90,350 3,857
Sovereign Bancorp, Inc. 78,000 1,063
T. Rowe Price Associates, Inc. 58,400 2,201
TCF Financial Corp. 58,600 1,699
The CIT Group, Inc., Class A 80,000 2,600
U.S. Trust Corp. 7,500 685
United Asset Management Co. 38,400 866
Washington Federal, Inc. 38,940 862
----------
452,122
-----------
NON-FERROUS METALS -- 0.3%
Alcoa Inc. 201,370 12,535
Engelhard Corp. 69,687 1,337
Freeport-McMoRan Copper &
Gold, Inc., Class B 88,894 1,361
Phelps Dodge Corp. 32,700 2,068
Reynolds Metals Co. 38,800 2,420
----------
19,721
----------
OIL - DOMESTIC -- 0.7%
Amerada Hess Corp. 52,100 2,970
Ashland, Inc. 41,000 1,732
Atlantic Richfield Co. 176,200 14,790
Diamond Offshore Drilling,
Inc. 92,800 3,068
Kerr-McGee Corp. 43,602 1,848
Murphy Oil Corp. 22,370 1,050
Phillips Petroleum Co. 143,700 7,275
R&B Falcon Corp.+ 80,000 800
Tosco Corp. 85,600 2,290
Transocean Offshore Inc. 51,000 1,514
Ultramar Diamond Shamrock
Corp. 50,700 1,169
Unocal Corp. 135,534 5,633
USX-Marathon Group 176,000 5,500
----------
49,639
----------
OIL - INTERNATIONAL -- 3.1%
Chevron Corp. 359,400 35,850
Exxon Corp. 1,329,400 110,423
Mobil Corp. 430,500 45,095
Texaco, Inc. 305,509 19,171
----------
210,539
----------
57
<PAGE>
SCHWAB 1000 FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ----------
OPTICAL & PHOTO -- 0.2%
Dentsply International Inc. 18,000 $ 471
Eastman Kodak Co. 174,700 13,037
Ingram Micro, Inc., Class A+ 20,000 510
----------
14,018
----------
PAPER & FOREST PRODUCTS -- 1.0%
Boise Cascade Corp. 23,000 926
Bowater, Inc. 35,700 1,914
Champion International Corp. 58,500 3,199
Consolidated Papers, Inc. 54,800 1,658
Fort James Corp. 118,100 4,488
Georgia Pacific Corp.,
(Timber Group) 50,000 1,288
Georgia-Pacific Group 50,800 4,699
International Paper Co. 173,100 9,228
Kimberly-Clark Corp. 296,360 18,171
Louisiana-Pacific Corp. 66,500 1,384
Mead Corp. 51,800 2,166
Pentair, Inc. 21,200 996
Rayonier, Inc. 13,875 633
St. Joe Co. 43,300 1,101
Temple Inland, Inc. 31,900 2,201
Union Camp Corp. 41,900 3,326
Westvaco Corp. 43,300 1,294
Weyerhaeuser Co. 112,000 7,518
Willamette Industries, Inc. 67,000 3,132
----------
69,322
----------
PRODUCER GOODS & MANUFACTURING -- 4.6%
Allied Signal, Inc. 303,100 17,807
American Standard Corp.+ 35,500 1,624
Applied Power, Inc., Class A 30,000 947
Avery Dennison Corp. 61,800 4,218
Beckman Coulter, Inc. 17,500 843
Blyth Industries, Inc.+ 30,000 683
Briggs & Stratton Corp. 16,300 1,075
Case Corp. 33,900 1,174
Caterpillar, Inc. 190,600 12,270
CIENA Corp.+ 60,000 1,410
Cooper Industries, Inc. 60,700 2,936
Corning, Inc. 126,800 7,259
Deere & Co. 127,200 5,470
Dover Corp. 124,200 4,588
Federal Signal Corp. 15,000 371
Number Value
of Shares (000s)
--------- ----------
FMC Corp.+ 14,200 $ 923
General Electric Co. 1,792,000 189,056
Harsco Corp. 14,800 486
Herman Miller, Inc. 35,600 710
Hon Industries, Inc. 23,800 643
Howmet International, Inc.+ 40,000 640
Hubbell, Inc., Class B 36,938 1,766
Illinois Tool Works, Inc. 140,200 10,795
Ingersoll Rand Co. 95,550 6,611
ITT Industries, Inc. 70,600 2,542
Jabil Circuit, Inc.+ 61,000 2,840
Johnson Controls, Inc. 50,600 3,691
Kaydon Corp. 15,000 506
Millipore Corp. 32,400 994
Pall Corp. 60,233 1,111
Parker-Hannifin Corp. 64,375 3,022
Raychem Corp. 50,800 1,343
Sanmina Corp.+ 35,800 2,376
Snap-On, Inc. 22,150 721
SPX Corp.+ 20,000 1,306
Teleflex, Inc. 25,000 1,089
Tenneco, Inc. 85,500 2,309
Thermo Instrument Systems,
Inc.+ 52,171 678
The Timken Company 18,600 415
Trinity Industries, Inc. 27,950 973
U.S. Industries, Inc. 47,500 882
Valhi, Inc. 35,000 424
W.W. Grainger, Inc. 53,600 2,690
Waters Corp.+ 15,600 1,640
York International Corp. 23,400 965
----------
306,822
----------
RAILROAD & SHIPPING -- 0.5%
Burlington Northern
Santa Fe Corp. 249,753 9,147
CSX Corp. 119,700 5,895
Florida East Coast Industry,
Inc. 15,000 478
GATX Corp. 19,000 653
Kansas City Southern 54,100 3,222
Newport News Shipbuilding,
Inc. 15,000 393
Norfolk Southern Corp. 201,100 6,573
Union Pacific Corp. 129,761 7,786
----------
34,147
----------
58
<PAGE>
Number Value
of Shares (000s)
--------- ----------
REAL PROPERTY -- 0.0%
Catellus Development Corp.+ 45,000 $ 692
Lennar Corp. 29,000 701
Premier Parks, Inc. 38,000 1,313
----------
2,706
----------
RETAIL -- 6.4%
99 Cents Only Stores+ 13,000 613
Abercrombie & Fitch Co.+ 25,000 2,378
Albertson's, Inc. 131,200 6,757
Amazon.com, Inc.+ 89,200 15,348
American Eagle Outfitters,
Inc.+ 13,000 972
American Stores Co. 153,400 4,842
AutoZone, Inc.+ 87,000 2,610
Barnes & Noble, Inc.+ 30,000 1,043
Bed, Bath & Beyond, Inc.+ 79,600 2,841
Best Buy Co., Inc.+ 113,600 5,424
BJ's Wholesale Club, Inc.+ 30,000 797
Borders Group, Inc.+ 52,000 751
Circuit City Stores, Inc. 58,800 3,616
CompUSA, Inc.+ 36,000 252
Consolidated Stores Corp.+ 65,312 2,245
Costco Companies, Inc.+ 115,704 9,365
CVS Corp. 207,914 9,902
Dayton Hudson Corp. 244,000 16,424
Dillards, Inc., Class A 62,200 1,722
Dollar General Corp. 95,213 3,338
Dollar Tree Stores, Inc.+ 27,000 986
Family Dollar Stores, Inc. 139,500 3,365
Federated Department Stores,
Inc.+ 115,200 5,378
Fred Meyer, Inc.+ 81,390 4,405
Gap, Inc. 318,000 21,167
Hannaford Bros. Co., Inc. 28,300 1,235
Home Depot, Inc. 806,898 48,363
Intimate Brands, Inc. 130,000 6,500
IKON Office Solutions 61,400 741
J.C. Penney Co., Inc. 140,800 6,424
Kmart Corp.+ 264,600 3,936
Kohl's Corp.+ 85,800 5,700
Kroger Co.+ 141,400 7,680
Limited, Inc. 139,819 6,117
Longs Drug Stores, Inc. 28,000 963
Lowe's Companies, Inc. 201,200 10,613
Number Value
of Shares (000s)
-------- ---------
May Department Stores Co. 187,350 $ 7,459
Metromedia Fiber Network, Inc.,
Class A+ 50,000 4,213
Neiman-Marcus Group, Inc.+ 30,000 722
Nordstrom, Inc. 73,800 2,597
Office Depot, Inc.+ 186,750 4,109
OfficeMax, Inc.+ 56,100 568
Payless Shoesource, Inc.+ 19,600 949
PetSmart, Inc.+ 58,000 540
Rite Aid Corp. 136,300 3,177
Ross Stores, Inc. 31,000 1,424
Safeway, Inc.+ 262,080 14,136
Saks, Inc.+ 83,340 2,360
Sears, Roebuck & Co. 210,100 9,665
Sotheby's Holdings, Inc.,
Class A 30,000 1,279
Staples, Inc.+ 259,360 7,781
SUPERVALU, Inc. 71,600 1,495
Tandy Corp. 51,116 3,703
Tiffany & Co., Inc 20,000 1,680
TJX Companies, Inc. 174,400 5,810
Toys "R" Us, Inc.+ 125,480 2,729
Wal-Mart Stores, Inc. 2,436,600 112,084
Walgreen Co. 549,800 14,776
Weis Markets, Inc. 23,900 837
Winn Dixie Stores, Inc. 72,300 2,589
Zale Corp.+ 15,000 567
----------
432,062
----------
STEEL -- 0.1%
AK Steel Holding Corp. 30,000 780
Allegheny Teledyne, Inc. 98,280 2,199
Nucor Corp. 45,100 2,647
USX-U.S. Steel Group, Inc. 42,160 1,275
----------
6,901
----------
TELEPHONE -- 8.4%
AirTouch Communications,
Inc.+ 311,200 29,058
Aliant Communications, Inc. 18,000 797
Alltel Corp. 148,707 10,028
American Tower Corp.,
Class A+ 75,000 1,589
Ameritech Corp. 598,400 40,953
Associated Group, Inc.,
Class A+ 15,000 855
AT&T Corp. 1,787,392 90,263
Bell Atlantic Corp. 856,886 49,378
BellSouth Corp. 1,060,000 47,435
59
<PAGE>
SCHWAB 1000 FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ----------
Century Telephone Enterprises,
Inc.+ 79,687 $ 3,207
Cincinnati Bell, Inc. 66,800 1,511
COMSAT Corp. 32,000 1,040
Excel Switching Corp.+ 15,000 311
Frontier Corp. 97,450 5,378
GTE Corp. 534,400 35,771
Jacor Communications, Inc.,
Class A+ 28,300 2,271
Level 3 Communications, Inc.+ 187,000 16,842
MCI WorldCom, Inc.+ 1,003,152 82,447
McLeodUSA, Inc., Class A+ 30,000 1,682
Nextel Communications Inc.,
Class A+ 161,100 6,595
NTL, Inc.+ 30,000 2,288
Plantronics, Inc.+ 8,000 540
Qwest Communications
International, Inc.+ 185,477 15,847
SBC Communications, Inc. 1,063,881 59,577
Skytel Communications, Inc.+ 30,000 514
Sprint Corp. 241,334 24,752
Sprint Corp. (PCS Group)+ 240,667 10,198
Teleglobe Inc. 53,100 1,563
Telephone & Data Systems, Inc. 35,100 2,102
U.S. Cellular Corp+ 53,800 2,552
U S WEST Inc. 277,265 14,504
Winstar Communications,
Inc.+ 20,000 973
----------
562,821
----------
TOBACCO -- 0.8%
Loew's Corp. 62,000 4,538
Philip Morris Companies,
Inc.1, 330,700 46,658
Universal Corp. 19,500 496
UST, Inc. 100,200 2,793
----------
54,485
----------
TRAVEL & RECREATION -- 0.8%
Acxiom Corp.+ 40,000 1,010
Brunswick Corp. 38,900 934
Harrah's Entertainment,
Inc.+ 72,100 1,586
Hilton Hotels Corp. 141,200 2,206
Marriott International, Inc.,
Class A 138,600 5,804
MGM Grand, Inc.+ 37,000 1,628
Number Value
of Shares (000s)
--------- ----------
Mirage Resorts, Inc.+ 94,100 $ 2,111
Promus Hotel Corp.+ 50,060 1,802
Speedway Motorsports, Inc.+ 20,000 868
Walt Disney Co. 1,116,821 35,459
----------
53,408
----------
TRUCKING & FREIGHT -- 0.1%
CNF Transportation, Inc. 35,000 1,529
PACCAR, Inc. 42,120 2,359
Ryder Systems, Inc. 33,800 891
Swift Transportation Co., Inc.+ 22,500 413
----------
5,192
----------
UTILITIES - ELECTRIC & GAS-- 3.2%
AES Corp.+ 100,318 5,016
AGL Resources, Inc. 20,000 364
Allegheny Energy, Inc. 62,100 2,115
Ameren Corp. 72,130 2,791
American Electric Power Co.,
Inc. 108,200 4,484
American Water Works Co., Inc. 34,600 984
Baltimore Gas & Electric Co.+ 78,150 2,198
BEC Energy 32,900 1,398
Carolina Power & Light Co. 80,500 3,245
Central & South West Corp. 116,800 2,898
Cinergy Corp. 87,565 2,611
Citizens Utilities Co.,
Class B+ 129,718 1,305
CMS Energy Corp. 62,900 2,768
Coastal Corp. 106,600 4,077
Columbia Energy Group 44,100 2,120
Conectiv, Inc. 45,700 1,094
Consolidated Edison, Inc. 128,700 5,848
Consolidated Natural Gas Co. 55,400 3,296
Dominion Resources, Inc. 100,650 4,139
DPL, Inc 83,275 1,489
DQE, Inc. 44,050 1,814
DTE Energy Co. 72,100 2,943
Duke Energy Corp. 199,931 11,196
Edison International 185,600 4,547
El Paso Energy Corp. 66,168 2,432
Energy East Corp. 66,800 1,766
Enron Corp. 195,569 14,717
Entergy Corp. 137,421 4,294
First Energy Corp. 119,515 3,548
Florida Progress Corp. 50,400 1,940
FPL Group, Inc. 96,200 5,423
60
<PAGE>
Number Value
of Shares (000s)
--------- ----------
GPU, Inc. 73,600 $ 2,806
Hawaiian Electric Industries,
Inc. 22,900 814
IDACORP, Inc. 21,400 674
Illinova Corp. 31,300 822
Interstate Energy Corp. 35,000 1,008
Ipalco Enterprises, Inc. 64,000 1,476
Kansas City Power & Light Co. 35,900 960
Keyspan Energy Corp. 77,934 2,085
KN Energy, Inc. 40,800 842
LG&E Energy Corp. 70,155 1,530
MCN Corp. 35,600 710
MDU Resources Group, Inc. 26,000 554
Midamerican Energy
Holdings Co. 45,000 1,448
Minnesota Power & Light Co. 44,000 927
Montana Power Co. 32,900 2,453
National Fuel Gas Co. 16,600 726
Nevada Power Co. 35,000 903
New Centuries Energies, Inc. 57,700 2,020
New England Electric Co. 28,800 1,426
Niagara Mohawk Holdings, Inc.+ 100,200 1,340
NICOR, Inc. 25,300 920
Nisource, Inc. 61,800 1,715
Northeast Utilities+ 66,000 1,056
Northern States Power Co. 77,600 1,872
OGE Energy Corp. 51,200 1,213
PacifiCorp. 149,500 2,495
PECO Energy Co. 132,300 6,276
Peoples Energy Corp. 19,500 729
PG&E Corp. 200,458 6,227
Pinnacle West Capital Co. 47,300 1,836
Potomac Electric Power Co. 69,400 2,030
PP&L Resources, Inc. 84,720 2,367
Public Service Enterprise
Group, Inc. 122,300 4,892
Puget Sound Power & Light Co. 48,200 1,190
Questar Corp. 35,800 651
Reliant Energy, Inc. 169,117 4,788
Rochester Gas and Electric
Corp. 10,000 255
Scana Corp. 45,800 1,076
Sierra Pacific Resources 15,000 534
Sonat, Inc. 63,600 2,274
Southern Co. 373,700 10,113
TECO Energy, Inc. 72,200 1,539
Texas Utilities Co. 145,812 5,796
Unicom Corp. 118,500 4,599
Number of Value
Shares (000s)
--------- ----------
UtiliCorp United, Inc. 43,350 $ 1,059
Washington Gas Light Co. 30,000 707
Western Resources, Inc. 27,231 740
Williams Companies, Inc. 229,461 10,842
Wisconsin Energy Corp. 59,600 1,602
----------
215,777
----------
Total Common Stock
(Cost $3,940,199) 6,685,328
----------
PREFERRED STOCKS -- 0.0%
HEALTHCARE/DRUGS & MEDICINE -- 0.0%
Fresenius National Medical Care 24,900 1
----------
Total Preferred Stocks
(Cost $0) 1
----------
Par
(000s)
---------
U.S. TREASURY OBLIGATIONS -- 0.0%
U.S. Treasury Bills (a) (b)
4.50%, 06/10/99 $ 1,000 995
4.51%, 06/24/99 200 199
----------
Total U.S. Treasury Obligations
(Cost $1,194) 1,194
----------
REPURCHASE AGREEMENT -- 0.4%
PNC Bank
Collateralized by Federal Home
Loan Mortgage, 3.75%, Issue
date 04/30/99, due date
05/03/9925,085 25,085
----------
Total Repurchase Agreement
(Cost $25,085) 25,085
----------
Total Investments -- 100.1%
(Cost $3,966,478) 6,711,608
----------
Other Assets and Liabilities,
Net -- (0.1%)
Other assets 694,005
Liabilities (702,561)
----------
(8,556)
----------
Total Net Assets -- 100.0% $6,703,052
==========
SEE ACCOMPANYING NOTES TO SCHEDULES OF INVESTMENTS AND
NOTES TO FINANCIAL STATEMENTS.
61
<PAGE>
SCHWAB SMALL-CAP INDEX FUND(R)
SCHEDULE OF INVESTMENTS
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
COMMON STOCK -- 99.8%
AEROSPACE / DEFENSE -- 0.5%
AAR Corp. 32,300 $ 614
Alliant Techsystems, Inc.+ 12,300 1,007
BE Aerospace, Inc.+ 26,900 459
Curtiss-Wright Corp. 5,000 180
GenCorp., Inc. 43,900 1,015
Kellstrom Industries, Inc.+ 6,000 111
Orbital Sciences Corp.+ 15,400 324
----------
3,710
----------
AIR TRANSPORTATION -- 0.5%
America West Holdings Corp.,
Class B 51,200 1,069
Atlantic Coast Airlines
Holdings, Inc.+ 17,600 543
Atlas Air, Inc.+ 37,350 1,083
Mesaba Holdings, Inc.+ 9,700 141
Midwest Express Holdings,
Inc.+ 14,500 453
SkyWest, Inc. 22,200 577
----------
3,866
----------
ALCOHOLIC BEVERAGES -- 0.2%
Beringer Wine Estates
Holdings, Inc.+ 16,500 650
Canandaigua Brands, Inc.,
Class A+ 20,300 1,045
----------
1,695
----------
APPAREL -- 2.0%
Buckle, Inc.+ 24,650 576
Burlington Industries, Inc.+ 67,200 546
Footstar, Inc.+ 24,200 818
Fossil, Inc.+ 20,200 621
Fruit of the Loom, Inc.,
Class A+ 65,900 704
Guilford Mills 28,200 268
Kellwood Co. 21,900 564
Men's Wearhouse, Inc.+ 37,350 1,022
Nautica Enterprises, Inc.+ 40,600 551
Nine West Group, Inc.+ 40,600 1,157
OshKosh B'Gosh, Inc.,
Class A 18,000 357
Pacific Sunwear of
California+ 25,350 940
Quiksilver, Inc. 21,600 574
Reebok International, Ltd.+ 51,600 971
Russell Corp. 35,900 794
St. John Knits, Inc. 20,100 546
Stride Rite Corp. 49,400 577
Talbots, Inc. 36,300 1,143
Number Value
of Shares (000s)
--------- ----------
Tarrant Apparel Group+ 13,300 $ 627
Timberland Co., Class A+ 12,700 879
Wolverine World Wide, Inc. 51,500 618
----------
14,853
----------
AUTOMOTIVE PRODUCTS/MOTOR VEHICLES -- 1.9%
A.O. Smith Corp., Class B 27,400 692
Arvin Industries, Inc. 23,600 864
Avis Rent A Car, Inc.+ 30,700 963
Bandag, Inc. 20,100 641
Bandag, Inc., Class A 5,000 134
Coach USA, Inc.+ 28,900 686
Copart, Inc.+ 18,500 335
Detroit Diesel Corp. 29,900 684
Discount Auto Parts, Inc.+ 10,000 228
Gentex Corp.+ 76,300 2,294
Group 1 Automotive, Inc.+ 17,600 453
Hayes Lemmerz International,
Inc.+ 27,200 782
MascoTech, Inc. 44,500 773
Midas, Inc. 16,400 574
Modine Manufacturing Co. 28,500 891
Myers Industries, Inc. 17,700 400
O'Reilly Automotive, Inc.+ 25,200 1,153
Superior Industries
International, Inc. 31,200 780
Varlen Corp. 10,000 280
Winnebago Industries, Inc. 10,000 143
Wynns International, Inc. 20,500 343
----------
14,093
----------
BANKS -- 6.2%
AMCORE Financial, Inc. 33,150 696
Anchor Bancorp Wisconsin, Inc. 18,500 340
Area Bancshares Corp. 16,500 435
Bancfirst Corp. 10,000 355
Bancorpsouth, Inc. 49,200 818
Bank United Corp., Class A 26,000 1,050
Banknorth Group, Inc. 27,500 727
Bay View Cap Corp. 22,800 406
BOK Financial Corp.+ 50,988 1,313
BT Financial Corp. 6,500 165
Carolina First Corp. 21,600 583
Cathay Bancorp, Inc. 4,500 157
Chemical Financial Corp. 15,735 519
Chittenden Corp. 15,500 446
Citizens Banking Corp. 29,650 965
62
<PAGE>
Number Value
of Shares (000s)
--------- ----------
Commerce Bancorp, Inc.-
New Jersey 26,472 $ 1,168
Community First Bankshares,
Inc. 53,700 1,097
CORUS Bankshares, Inc. 16,900 524
CVB Financial Corp. 8,000 184
Downey Financial Corp. 32,171 643
Everen Capital Corp. 38,200 1,122
F&M Bancorp., Inc. 14,500 573
F&M National Corp. 25,555 711
F.N.B Corp. 18,860 464
First Bancorp/Puerto Rico 27,300 705
First Citizens Bcshs 10,500 843
First Commonwealth Financial
Corp. 24,300 532
First Financial Bancorp. 41,230 892
First Financial Bankshares,
Inc. 9,800 316
First Midwest Bancorp, Inc. 28,000 1,118
First Source Corp. 22,542 665
First United Bancshares, Inc. 17,500 265
Firstfed Financial Corp.+ 24,800 429
Flagstar Bancorp, Inc. 10,000 255
Frontier Financial Corp. 10,000 226
GBC Bancorp 16,000 283
Hancosk Holding Co. 10,645 474
Harbor Florida Bancshares, Inc. 32,000 376
Harris Financial, Inc. 37,500 450
Imperial Bancorp+ 37,692 726
International Bancshares Corp. 13,000 648
InterWest Bancorp, Inc. 10,100 235
Irwin Financial Corp. 22,300 532
MAF Bancorp, Inc. 29,725 661
Merchants Bancorp, Inc.
New York 11,000 382
National Bancorp of Alaska,
Inc. 30,300 811
National City Bancshares, Inc. 17,655 491
National Penn Bancshares, Inc. 12,200 281
Pacific Capital Bancorp. 18,000 480
Park National Corp. 10,400 1,006
Peoples Bancorp, Inc. 41,565 439
Premier Bancshares, Inc. 24,000 471
Provident Bankshares Corp. 28,339 705
Queens County Bancorp, Inc. 24,330 855
Republic Security Financial
Corp. 36,300 315
Riggs National Corp. 34,500 582
Roslyn Bancorp, Inc. 74,800 1,365
S & T Bancorp, Inc. 30,700 783
Sky Financial Group, Inc. 41,850 1,177
Southwest Bancorp of
Texas, Inc.+ 23,000 388
Number Value
of Shares (000s)
--------- ----------
St. Paul Bancorp, Inc. 45,737 $ 1,109
Staten Island Bancorp, Inc. 40,700 735
Susquehanna Bancshares, Inc. 39,275 727
Texas Regional Bancshares, Inc. 17,300 496
The Trust Company of New Jersey 20,100 460
Triangle Bancorp, Inc. 24,300 395
TrustCo Bank Corp. 29,912 800
UMB Financial Corp. 19,562 813
United Bankshares, Inc. 48,900 1,320
UST Corp. 48,300 1,168
Wesbanco, Inc. 22,600 647
Western Bancorp. 17,300 622
Whitney Holding Corp. 21,400 867
----------
46,782
----------
BUSINESS MACHINES & SOFTWARE -- 5.9%
Advantage Learning
Systems, Inc.+ 31,000 818
Advent Software, Inc.+ 9,000 555
Analogic Corp. 14,000 514
Apex PC Solutions, Inc. 19,650 327
Ardent Software, Inc.+ 15,500 291
Avant Corp.+ 32,400 437
AVT Corp.+ 7,500 204
AXENT Technologies, Inc.+ 22,900 215
BEA Systems, Inc.+ 61,600 932
Black Box Corp.+ 19,600 671
BMC Software, Inc.+ 21,633 932
BroadVision, Inc.+ 22,500 1,306
Cirrus Logic, Inc.+ 72,900 515
Computer Horizons Corp.+ 28,500 403
Concentric Network Corp.+ 14,400 1,202
Concord Communications, Inc.+ 11,900 533
Cybex Computer Products Corp.+ 7,500 142
Data General Corp.+ 47,700 557
Dendrite International, Inc.+ 21,300 551
Digital River, Inc.+ 17,200 664
Electronics for Imaging, Inc.+ 56,300 2,664
Engineering Animation, Inc.+ 9,600 143
Esterline Technologies Corp.+ 17,500 247
FileNet Corp.+ 34,200 293
Genesys Telecommunications
Laboratories, Inc.+ 22,100 395
GeoTel Communications Corp.+ 24,600 1,384
Great Plains Software, Inc.+ 13,800 422
GT Interactive Software Corp.+ 75,000 262
HMT Technology Corp.+ 50,500 145
HNC Software, Inc.+ 29,900 643
63
<PAGE>
SCHWAB SMALL-CAP INDEX FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ----------
Hyperion Solutions Corp.+ 35,745 $ 541
IMRglobal Corp.+ 32,650 563
Input/Output, Inc.+ 50,000 362
InterVoice, Inc.+ 12,000 120
Komag, Inc.+ 61,200 229
MAPICS, Inc.+ 10,000 56
Maxwell Technologies, Inc.+ 4,000 75
Metro Information Services,
Inc.+ 7,500 162
MICROS Systems, Inc.+ 15,600 460
MMC Networks, Inc.+ 27,500 675
National Computer Systems,
Inc.+ 28,600 801
National Instruments+ 37,450 1,273
NeoMagic Corp.+ 12,500 146
Open Market, Inc.+ 33,800 456
Peregrine Systems, Inc.+ 42,600 958
Pinnacle Systems, Inc.+ 10,000 544
Platinum Software Corp.+ 38,400 274
Premiere Technologies, Inc.+ 46,400 690
Progress Software Corp.+ 16,500 375
QuadraMed Corp.+ 18,600 180
Rational Software Corp.+ 91,900 2,723
Read-Rite+ 53,500 331
RealNetworks, Inc.+ 31,100 6,889
Remedy Corp.+ 31,100 544
RF Micro Devices, Inc.+ 39,600 2,213
Sanchez Computer Associates,
Inc.+ 12,000 702
SCM Microsystems, Inc.+ 12,100 797
Sequent Computer Systems+ 49,000 536
Software AG Systems, Inc.+ 15,000 124
Sybase+ 88,700 687
System Software Associates,
Inc.+ 25,000 47
Systems & Computer Technology
Corp.+ 37,400 514
Visio Corp.+ 31,700 856
Xircom, Inc.+ 21,100 475
----------
44,745
----------
BUSINESS SERVICES -- 14.4%
Abacus Direct Corp.+ 11,500 851
ABM Industries, Inc. 24,500 744
ABR Information Services, Inc.+ 33,500 586
Actel Corp.+ 21,000 283
Administaff, Inc.+ 7,500 120
Advance Paradigm, Inc.+ 10,200 535
Advo, Inc.+ 24,700 488
Affiliated Computer Services,
Inc.+ 49,300 1,886
Number Value
of Shares (000s)
--------- ----------
Affymetrix, Inc.+ 26,800 $ 1,095
AHL Services, Inc.+ 13,600 411
American Management Systems,
Inc.+ 41,500 1,427
Analysts International Corp. 25,550 332
Apria Healthcare Group, Inc.+ 51,500 805
Artesyn Technologies+ 42,600 767
Aspen Technology, Inc.+ 28,100 241
Aviation Sales Co.+ 12,500 500
Bell & Howell Co.+ 24,500 819
Billing Information Concepts+ 39,000 483
BISYS Group, Inc.+ 29,100 1,477
Borg Warner Security Corp.+ 25,300 446
Boron, LePore & Associates,
Inc.+ 5,000 51
Bowne & Co., Inc. 43,200 810
Brightpoint, Inc.+ 59,150 364
Building One Services, Corp.+ 41,100 627
Casella Waste Systems, Inc.,
Class A+ 7,500 187
Catalina Marketing Corp.+ 20,700 1,769
Catalytica, Inc.+ 31,600 433
CDI Corp.+ 23,100 614
CDW Computer Centers, Inc.+ 23,800 2,130
CellStar Corp.+ 66,000 487
Century Business Services,
Inc.+ 71,400 857
Cerner Corp.+ 36,100 614
Choicepoint, Inc.+ 16,300 968
Circle International Group,
Inc. 17,500 297
Clarify, Inc.+ 21,300 501
Computer Task Group, Inc. 23,000 428
Concentra Managed Care, Inc.+ 45,400 616
Consolidated Graphics, Inc.+ 16,500 703
Credit Acceptance Corp.+ 50,000 350
CSG Systems International,
Inc.+ 55,400 2,140
Curative Technologies, Inc.+ 13,600 76
Cytec Industries, Inc.+ 39,600 1,126
Data Processing Resources
Corp.+ 6,000 76
DBT Online, Inc.+ 19,900 670
DeVry, Inc.+ 76,600 2,020
Documentum, Inc.+ 19,400 303
DST Systems, Inc.+ 15,624 910
Educational Management Corp.+ 29,800 594
Electro Rent Corp.+ 23,400 266
Excite, Inc.+ 11,000 1,606
Express Scripts, Inc.,
Class A+ 36,200 2,665
F.Y.I., Inc.+ 13,100 406
FactSet Research Systems,
Inc.+ 13,800 643
Fair, Isaac & Co., Inc. 14,700 500
64
<PAGE>
Number Value
of Shares (000s)
--------- ----------
Forrester Research, Inc.+ 4,000 $ 136
Franklin Covey Co.+ 25,500 247
G. & K Services, Inc., Class A 23,150 1,082
Grey Advertising, Inc. 1,300 420
Group Maintenance America
Corp.+ 32,500 435
GTECH Holdings, Corp.+ 37,800 985
HA-LO Industries, Inc.+ 53,775 632
Hanover Compressor Co.+ 26,100 749
Henry Jack & Associates, Inc. 21,600 713
Hooper Holmes, Inc. 20,000 319
Inso Corp.+ 5,000 36
Inspire Insurance Solutions,
Inc.+ 10,000 217
Integrated Health Services,
Inc.+ 48,300 232
Integrated Systems, Inc.+ 15,000 204
Interim Services, Inc.+ 45,700 794
Iron Mountain, Inc.+ 32,050 891
ITT Educational Services,
Inc.+ 30,350 745
Jacobs Engineering Group,
Inc.+ 29,100 1,148
John H. Harland Co. 36,800 609
Kirby Corp.+ 24,100 458
Kroll-O'Gara Company+ 17,400 417
Kronos, Inc.+ 6,750 229
Labor Ready, Inc.+ 25,500 1,001
Lamar Advertising Company+ 27,700 931
Lason, Inc.+ 14,000 554
Lycos, Inc.+ 49,200 4,905
MAXIMUS, Inc.+ 18,500 481
Medical Manager, Corp.+ 20,100 573
Medusa 16,800 459
MemberWorks, Inc.+ 15,100 661
Mentor Graphics Corp.+ 71,800 871
Mercury Interactive Corp.+ 41,200 1,161
META Group, Inc.+ 6,000 55
Metamor Worldwide, Inc.+ 36,100 706
Metris Companies, Inc. 21,528 1,316
Metromedia International
Group, Inc.+ 77,800 457
Metzler Group, Inc.+ 32,900 917
National Data Corp. 26,600 1,227
Network Solutions, Inc.+ 7,800 606
Norrell Corp. 29,200 438
Oceaneering International,
Inc.+ 26,400 436
Olsten Corp. 74,300 502
On Assignment, Inc.+ 5,000 152
Number Value
of Shares (000s)
--------- ---------
Orthodontic Centers of America,
Inc.+ 49,000 $ 606
PAXAR Corp.+ 53,435 478
Pediatrix Medical Group, Inc.+ 16,900 320
Pegasus Systems, Inc.+ 8,300 388
Personal Group of America,
Inc.+ 38,400 350
Physician Reliance Network,
Inc.+ 58,800 485
Pierce Leahy Corp.+ 9,000 227
Plexus Corp.+ 14,300 477
Pre-Paid Legal Services,
Inc.+ 23,200 661
ProBusiness Services, Inc.+ 18,200 653
Project Software & Development,
Inc.+ 5,000 110
Protection One, Inc.+ 115,700 550
QRS Corp.+ 8,500 467
R. H. Donnelley Corp. 33,000 544
Renaissance Worldwide, Inc.+ 59,620 395
Rent-A-Center, Inc.+ 29,100 902
Rent-Way, Inc.+ 20,200 550
Rollins, Inc. 35,500 599
Romac International, Inc.+ 57,300 645
S3, Inc.+ 52,500 377
Safeguard Scientifics, Inc.+ 36,700 2,973
Sandisk Corp.+ 28,800 583
Sapient Corp.+ 28,400 1,782
SDL, Inc.+ 12,900 1,409
SEACOR SMIT, Inc.+ 14,700 778
Security Dynamics Technologies,
Inc.+ 37,400 813
Security First Technologies
Corp.+ 12,000 1,429
SEI Investments Co. 19,800 1,881
Spartech Corp. 32,700 777
StaffMark, Inc.+ 23,900 242
Standard Register Co. 31,100 949
Strayer Education, Inc. 16,100 557
Structural Dynamics Research
Corp.+ 41,000 797
Sun Healthcare Group, Inc.+ 71,608 107
Superior Consultant Holdings
Corp.+ 5,000 135
Superior Services, Inc.+ 36,200 665
Sykes Enterprises, Inc.+ 14,000 287
Synetic, Inc+ 18,000 1,700
Syntel, Inc.+ 20,000 162
Technology Solutions Co.+ 54,600 433
Teletech Holdings, Inc.+ 70,300 466
Tetra Technology, Inc.+ 29,100 704
65
<PAGE>
SCHWAB SMALL-CAP INDEX FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ---------
The Wackenhut Corp. 7,500 $ 168
TMP Worldwide, Inc.+ 24,700 1,661
TSI International Software
Ltd.+ 41,200 649
Unisource Worldwide, Inc. 84,300 685
URS Corp.+ 7,500 173
Volt Information Sciences,
Inc.+ 18,000 315
Wackenhut Corrections Corp.+ 25,900 481
Wallace Computer Services, Inc. 39,600 913
Walter Industries, Inc.+ 60,800 692
Waste Management, Inc. 14,337 810
Zebra Technologies Corp.,
Class A+ 31,100 1,034
---------
108,204
---------
CHEMICAL -- 2.5%
A. Schulman 38,900 681
Albemarle Corp. 43,000 946
Cambrex Corp. 27,200 697
Chemfirst, Inc. 21,900 523
Dexter Corp. 26,600 1,092
Ethyl Corp. 92,700 475
Ferro Corp. 41,600 1,152
Fuller (H.B.) 15,600 1,063
Geon Co. 23,800 729
Georgia Gulf Corp. 33,700 537
International Specialty
Products, Inc.+ 62,900 519
Lawter International, Inc. 35,700 428
Lilly Industries, Inc.,
Class A 28,350 496
M. A. Hanna Company 45,300 733
Macdermid, Inc. 28,100 1,178
Mastec, Inc.+ 26,550 690
NL Industries, Inc. 56,400 666
OM Group, Inc. 26,100 949
Regal Beloit 24,900 538
Scotts Co., Class A+ 21,200 872
Sequa Corp., Class A+ 11,100 629
Techne Corp.+ 15,000 412
Tredegar Industries, Inc. 40,300 1,076
Twinlab Corp.+ 37,100 315
WD-40 Co. 15,800 423
Witco Corp. 52,700 1,005
---------
18,824
---------
CONSTRUCTION -- 2.0%
Blount International, Inc.,
Class A 41,800 1,165
Centex Construction Products,
Inc. 23,200 821
Number Value
of Shares (000s)
--------- ---------
DAL-Tile International, Inc.+ 58,800 $ 661
Florida Rock Industries, Inc. 22,400 770
Granite Construction, Inc. 29,250 835
Justin Industries, Inc. 26,500 358
Lone Star Industries, Inc. 23,400 835
M.D.C. Holdings, Inc. 10,000 196
Morrison Knudsen Corp.+ 55,500 604
NVR, Inc.+ 10,000 481
Oakwood Homes Corp. 42,700 592
Palm Harbor Homes, Inc.+ 24,187 487
Pulte Corp. 28,600 647
Sawtek, Inc.+ 23,700 835
Simpson Manufacturing, Inc.+ 12,700 587
Standard Pacific Corp. 32,200 445
Stone & Webster, Inc. 15,000 329
T J International, Inc. 19,200 533
The Ryland Group, Inc. 8,000 210
Toll Brothers, Inc.+ 35,600 761
U.S. Home Corp.+ 15,100 517
United Dominion Industries,
Ltd. 39,000 931
Webb Del Corp. 21,900 506
West Teleservices Corp.+ 73,200 618
---------
14,724
---------
CONSUMER - DURABLE -- 1.2%
American Business Products, Inc. 7,500 115
Coachmen Industries, Inc. 8,000 151
Comfort Systems USA, Inc.+ 33,900 534
Ethan Allen Interiors, Inc. 26,500 1,343
Harman International Industries,
Inc. 20,200 928
Helen of Troy Ltd.+ 32,200 451
Interface, Inc. 57,500 406
Kimball International, Inc.,
Class B 41,600 666
La-Z-Boy Chair Co. 63,600 1,252
Linens 'N Things, Inc.+ 41,600 1,903
Pillowtex 7,500 123
Sunbeam Corp. 92,200 496
Toro Co. 14,800 515
---------
8,883
---------
CONSUMER - NONDURABLE -- 2.8%
Acclaim Entertainment, Inc.+ 50,100 326
Action Performance Companies,
Inc.+ 17,700 600
66
<PAGE>
Number Value
of Shares (000s)
--------- ---------
Applebee's International, Inc. 34,700 $ 896
Brinker International, Inc.+ 74,500 2,058
Buffets, Inc.+ 49,500 495
CEC Entertainment, Inc.+ 21,200 795
Cheesecake Factory+ 22,300 624
Consolidated Products, Inc.+ 26,500 479
Cytyc Corp.+ 20,200 395
Department 56, Inc.+ 19,400 525
Enesco Group 18,200 382
Foodmaker, Inc.+ 44,200 1,066
Fresh Del Monte Produce, Inc.+ 43,500 685
Hanover Direct, Inc.+ 247,000 695
IHOP Corp.+ 10,000 457
Jostens, Inc. 40,300 864
Lone Star Steakhouse & Saloon,
Inc.+ 46,200 502
Luby's Cafeterias, Inc. 26,400 442
Midway Games, Inc.+ 44,466 381
Mohawk Industries, Inc.+ 44,800 1,445
Oakley, Inc.+ 79,600 547
Performance Food Group
Company+ 6,000 159
Regis Corp. 40,350 1,034
Riviana Foods, Inc. 7,500 146
Ruby Tuesday, Inc. 33,874 618
Russ Berrie & Co., Inc. 26,400 718
Ryan's Family Steak Houses,
Inc. 47,000 582
Sbarro, Inc.+ 23,100 605
Sonic Corp.+ 19,100 537
Trans World Entertainment
Corp.+ 37,750 578
Vlasic Foods International,
Inc.+ 41,600 341
Williams-Sonoma, Inc.+ 44,000 1,276
---------
21,253
---------
CONTAINERS -- 0.2%
ACX Technologies, Inc.+ 31,500 360
Greif Brothers Corp., Class A+ 26,300 667
Ivex Packaging Corp.+ 20,200 398
Silgan Holdings, Inc.+ 10,000 172
---------
1,597
---------
ELECTRONICS -- 6.0%
ADAC Laboratories, Inc.+ 8,100 59
Advanced Fibre Communications,
Inc.+ 69,200 528
AFC Cable Systems, Inc.+ 13,000 429
Alpha Industries, Inc.+ 16,000 564
Number Value
of Shares (000s)
--------- ---------
Amphenol Corp.+ 19,400 $ 671
Anixter International, Inc.+ 52,000 819
Applied Micro Circuits Corp.+ 21,200 1,130
Atmi, Inc.+ 24,200 557
Aware, Inc.+ 19,000 1,056
Belden, Inc. 28,700 552
Benchmark Electronics, Inc.+ 12,000 404
Burr Brown Corp.+ 41,650 1,104
Cable Design Technologies Corp.+33,250 495
CCC Information Services
Group, Inc.+ 27,800 361
Centennial Technologies, Inc.+ 5,600 5
Checkpoint Systems, Inc.+ 37,200 365
Commscope, Inc.+ 59,500 1,450
Cree Research, Inc.+ 12,300 517
CTS Corp. 14,400 769
Cypress Semiconductor Corp.+ 102,300 1,049
Data Broadcasting Corp.+ 29,500 487
Digital Microwave Corp.+ 64,900 827
Dionex+ 23,800 976
DSP Communications, Inc.+ 43,900 1,196
Dupont Photomasks, Inc.+ 16,900 739
Electro Scientific Industries,
Inc.+ 13,000 496
Exide Corp. 22,800 284
General Cable Corp. 33,700 501
Genrad, Inc.+ 31,900 590
Gerber Scientific, Inc. 25,700 483
Hadco Corp.+ 14,200 373
Hutchinson Technology, Inc.+ 23,400 516
Imation Corp.+ 43,800 775
Integrated Device Technology,
Inc.+ 89,200 658
International Rectifier
Corp.+ 58,600 571
International Network Services+ 53,100 2,018
Kemet Corp.+ 44,400 685
Kent Electronics Corp.+ 31,900 297
Kulicke & Soffa Industries,
Inc.+ 28,800 659
Lam Research Corp.+ 43,700 1,377
Lattice Semiconductor Corp.+ 26,600 1,087
Level One Communications, Inc.+ 38,300 1,968
Littelfuse, Inc.+ 20,600 415
Marshall Industries+ 19,600 316
MEMC Electronic Materials,
Inc.+ 77,004 462
Methode Electronics, Inc.,
Class A 42,750 636
Omnipoint Corp.+ 48,300 857
Optical Cable Corp.+ 20,000 210
Remec, Inc.+ 25,700 332
67
<PAGE>
SCHWAB SMALL-CAP INDEX FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
-------- ---------
Semtech Corp.+ 14,200 $ 463
Sensormatic Electronics Corp.+ 68,500 822
Service Experts, Inc.+ 20,100 325
Silicon Valley Group, Inc.+ 38,600 511
Sipex Corp.+ 18,300 256
Stoneridge, Inc.+ 10,000 168
Superior Telecommunications,
Inc. 23,343 582
Technitrol, Inc. 18,700 547
Tekelec, Inc.+ 60,600 547
TranSwitch Corp.+ 14,000 616
United States Satellite
Broadcasting Co.+ 100,400 1,795
Unitrode Corp.+ 32,600 577
Varian Medical Systems, Inc. 27,200 468
Varian, Inc.+ 27,200 247
Veeco Instruments, Inc.+ 13,500 520
Vicor Corp.+ 46,800 658
Vishay Intertechnology, Inc.+ 61,900 1,079
VLSI Technology, Inc.+ 50,300 949
---------
44,805
---------
ENERGY - RAW MATERIALS -- 2.3%
Arch Coal, Inc. 43,700 530
Barrett Resources Corp.+ 35,600 1,081
BJ Services Co.+ 66,100 1,768
C&D Technologies, Inc. 6,000 155
Cabot Oil & Gas Corp., Class A 27,300 478
Devon Energy Corp. 29,600 984
Eastern Enterprises 27,500 988
Forest Oil Corp.+ 51,400 514
Helmerich & Payne, Inc. 46,000 1,185
Louis Dreyfus Natural
Gas Corp.+ 44,800 857
Marine Drilling Company, Inc.+ 57,400 987
Metals USA, Inc.+ 40,000 428
Mitchell Energy & Development
Corp., Class A 44,900 676
Newfield Exploration Co.+ 43,900 1,180
Newpark Resources, Inc.+ 75,100 690
ONEOK, Inc. 28,800 805
PennzEnergy Co. 43,700 565
Rowan Companies, Inc.+ 76,600 1,226
Stone Energy Corp.+ 16,800 570
Tuboscope Vetco International
Corp.+ 48,900 666
Varco International, Inc.+ 62,300 705
Vintage Petroleum, Inc. 60,600 651
---------
17,689
---------
Number Value
of Shares (000s)
--------- ---------
FOOD & AGRICULTURE -- 1.9%
AgriBioTech, Inc.+ 46,000 $ 354
American Italian Pasta Co.,
Class A+ 17,500 470
Bob Evans Farms, Inc. 45,900 841
California Water Service Group 7,500 172
Chiquita Brands International,
Inc. 72,100 721
Coca Cola Bottling Co. 9,300 512
Corn Products International,
Inc. 32,800 947
Dreyer's Grand Ice Cream, Inc. 31,600 431
E'Town Corp. 4,600 184
Fleming Companies, Inc. 45,700 400
International Multifoods Corp. 22,500 498
J.M. Smucker Co., Class A 32,400 697
Lance, Inc. 33,800 469
Michael Foods, Inc. 25,100 574
Mississippi Chemical Corp. 31,540 288
Pilgrim's Pride Corp. 29,100 542
Ralcorp Holdings, Inc.+ 34,466 633
Rexall Sundown, Inc.+ 62,800 1,087
Richfood Holdings, Inc. 43,600 545
Seaboard Corp. 1,700 449
Terra Industries, Inc. 80,300 371
The Hain Food Group, Inc.+ 7,000 125
Tootsie Roll Industries, Inc. 37,588 1,558
United Natural Foods, Inc.+ 21,100 530
Universal Foods Corp. 40,200 844
---------
14,242
---------
GOLD -- 0.2%
Battle Mountain Gold Co. 210,000 591
Getchell Gold Corp.+ 35,171 1,200
---------
1,791
---------
HEALTHCARE/DRUG & MEDICINE -- 7.4%
Acuson Corp.+ 30,600 467
Agouron Pharmaceuticals, Inc.+ 34,300 2,026
ALARIS Medical, Inc.+ 15,000 47
Algos Pharmaceuticals Corp.+ 19,500 568
Alkermes, Inc.+ 23,900 639
Alpharma, Inc., Class A 30,067 887
Alternative Living Services,
Inc.+ 24,600 547
American Oncology Resources,
Inc.+ 36,900 330
Amerisource Health Corp.+ 47,400 1,312
Andrx Corp.+ 15,700 1,236
68
<PAGE>
Number Value
of Shares (000s)
--------- ---------
Arrow International, Inc. 24,000 $ 540
Aviron+ 17,600 332
Ballard Medical Products 31,600 754
Barr Laboratories, Inc.+ 25,100 755
Beverly Enterprises, Inc.+ 93,600 608
Bindley Western Industries,
Inc. 24,299 750
Bio-Technology General Corp.+ 54,600 387
Biomatrix, Inc.+ 20,800 685
Carematrix Corp.+ 17,700 303
Carter-Wallace, Inc. 49,500 869
Cell Pathways, Inc.+ 23,400 208
CLOSURE Medical Corp.+ 12,800 413
Cognex Corp.+ 39,000 1,131
Conmed Corp.+ 16,500 476
Coulter Pharmaceutical, Inc. 8,000 161
Covance, Inc.+ 57,000 1,250
Coventry Health Care, Inc.+ 61,400 564
Datascope Corp.+ 17,600 501
Diagnostic Products Corp. 7,000 161
Dura Pharmaceuticals, Inc.+ 42,400 509
Enzon, Inc.+ 34,200 445
First Health Group Corp.+ 55,600 907
GelTex Pharmaceuticals, Inc.+ 8,000 137
Gensia, Inc.+ 90,000 315
Haemonetics Corp.+ 24,400 383
Hanger Orthopedic Group, Inc.+ 9,000 132
Human Genome Sciences, Inc.+ 25,300 936
Icos Corp.+ 42,200 1,677
IDEC Pharmaceuticals Corp.+ 22,600 1,147
Idexx Laboratories, Inc.+ 46,900 1,061
Incyte Pharmaceuticals, Inc.+ 26,900 486
Inhale Therapeutic Systems+ 18,500 532
Invacare Corp. 33,300 770
Isis Pharmaceuticals, Inc.+ 15,000 157
IVAX Corp.+ 130,200 1,709
Jones Medical Industries, Inc. 32,500 1,044
Maxxim Medical, Inc.+ 7,000 112
Medicis Pharmaceutical Corp.,
Class A+ 31,800 773
Medimmune, Inc.+ 57,000 3,142
MedPartners, Inc.+ 181,900 955
Mentor Corp. 28,600 415
Mid Atlantic Medical Services,
Inc.+ 59,600 544
Millennium Pharmaceuticals+ 30,200 1,123
Minimed, Inc.+ 3,580 224
NBTY, Inc.+ 80,400 407
Number Value
of Shares (000s)
--------- ---------
NCS HealthCare, Inc., Class A+ 10,000 $ 130
OEC Medical Systems, Inc.+ 6,000 142
Osteotech, Inc.+ 14,000 506
Owens & Minor Holding, Inc.
Holding Co. 35,200 348
Parexel International Corp.+ 28,500 686
Pathogenesis Corp.+ 17,200 226
Perclose, Inc.+ 10,800 410
Perrigo Co.+ 79,000 602
Pharmaceutical Product
Development, Inc.+ 21,400 623
PhyCor, Inc.+ 73,400 367
Priority Healthcare Corp.,
Class B+ 10,885 552
Protein Design Labs, Inc.+ 21,400 330
Quest Diagnostic, Inc.+ 34,500 789
Quorum Health Group, Inc.+ 66,000 817
Res-Care, Inc./+ 18,200 337
ResMed, Inc.+ 13,400 354
Respironics, Inc.+ 34,700 490
Roberts Pharmaceutical Corp.+ 28,800 490
Sangstat Medical Corp.+ 17,300 251
Scios, Inc.+ 38,300 148
Sepracor, Inc.+ 30,700 2,594
Serologicals Corp.+ 26,100 196
Sola International, Inc.+ 27,300 406
Sunrise Assisted Living, Inc.+ 22,100 884
The Liposome Company, Inc.+ 36,900 461
Theragenics Corp.+ 32,000 232
Thermedics, Inc.+ 40,800 306
Thermo Cardiosystems, Inc.+ 44,600 326
ThermoLase Corp.+ 3,182 54
Transkaryotic Therapies, Inc.+ 19,200 595
United Payors & United
Providers, Inc.+ 16,500 291
Vertex Pharmaceuticals, Inc.+ 29,800 630
Veterinary Centers of America,
Inc.+ 10,000 131
West Pharmaceutical Services,
Inc. 15,400 509
Xomed Surgical Products, Inc.+ 12,000 500
Zila, Inc.+ 20,000 80
---------
55,742
---------
HOUSEHOLD PRODUCTS -- 0.9%
Bush Boake Allen, Inc.+ 22,600 620
Chattem, Inc.+ 5,400 211
Church & Dwight Co., Inc. 22,700 972
69
<PAGE>
SCHWAB SMALL-CAP INDEX FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ---------
Clorox Co. 15,007 $ 1,731
Libbey, Inc. 20,600 619
Playtex Products, Inc.+ 69,600 1,148
Tupperware Corp. 52,700 1,248
---------
6,549
---------
INSURANCE -- 4.0%
Alfa Farmers Federation Corp. 46,000 776
American Annuity Group, Inc. 41,550 914
American Heritage Life
Investment Corp. 30,200 700
Amerin Corp.+ 27,500 645
AmerUs Life Holdings, Inc.,
Class A 24,800 555
Argonaut Group, Inc. 28,200 705
ARM Financial Group, Inc.,
Class A 12,000 167
Arthur J. Gallegher & Co. 19,100 907
Brown & Brown 14,000 458
Capital Re Corp. 31,000 606
Chicago Title Corp. 20,000 781
CNA Surety Corp. 42,500 574
Delphi Financial Group, Inc.,
Class A+ 20,753 646
E.W. Blanch Holdings 13,600 801
Enhance Financial Services
Group, Inc. 36,000 745
Executive Risk, Inc. 12,200 875
FBL Financial Group, Inc.,
Class A 35,400 704
Foremost Corp. of America 32,600 678
FPIC Insurance Group, Inc.+ 10,000 450
Frontier Insurance Group, Inc. 40,385 558
Harleysville Group, Inc. 32,600 607
Hartford Life, Inc., Class A 29,100 1,522
HCC Insurance Holdings, Inc. 47,950 1,013
Kansas City Life Insurance Co. 7,200 591
LandAmerica Financial Group,
Inc. 14,100 395
Liberty Corp. 20,900 1,082
Markel Corp.+ 5,800 1,082
Medical Assurance, Inc.+ 24,311 669
NAC Re Corp. 21,300 1,161
National Western Life
Insurance Co., Class A+ 1,500 149
Orion Capital Corp. 24,800 730
PMI Group 37,600 674
Reinsurance Group of America,
Inc. 40,650 1,738
Number Value
of Shares (000s)
--------- ---------
Risk Capital Holdings, Inc.+ 10,000 $ 145
RLI Corp. 11,375 362
SCPIE Holdings, Inc. 6,000 144
Selective Insurance Group,
Inc. ` 32,400 628
Sierra Health Services, Inc.+ 32,450 406
State Auto Financial Corp. 49,700 503
Stewart Information Services
Corp. 3,000 120
Trenwick Group, Inc. 14,550 407
UICI+ 42,300 1,036
United Fire & Casualty Co. 11,200 297
W. R. Berkley Corp. 24,200 666
Zenith National Insurance Corp. 21,000 499
---------
29,871
---------
MEDIA -- 4.4%
Ackerly Group, Inc. 21,000 361
Amc Entertainment, Inc.+ 26,500 469
Applied Graphics Technologies+ 24,600 249
Banta Corp. 28,200 601
Big Flower Holdings, Inc.+ 22,300 794
CD Radio, Inc.+ 21,200 519
CNET, Inc.+ 35,000 4,498
Cox Radio, Inc., Class A+ 9,500 463
Cymer, Inc.+ 32,900 600
Gaylord Entertainment Co. 34,700 1,076
Hearst-Argyle Television,
Inc.+ 6,000 153
Houghton Mifflin Co. 32,900 1,468
John Wiley & Sons, Inc.,
Class A 35,200 1,423
Jones Intercable, Inc.,
Class A+ 44,700 2,073
Journal Register Co.+ 44,300 645
Loews Cineplex Entertainment
Corp.+ 56,500 713
Macrovision Corp.+ 8,700 409
Media General, Inc., Class A 23,200 1,206
Metro Networks, Inc.+ 18,400 828
Nielsen Media Research, Inc. 51,100 1,399
Oak Industries, Inc.+ 20,300 848
PanAmSat Corp.+ 22,000 771
Paxson Communications Corp.+ 60,000 641
Penton Media, Inc. 20,600 489
Scholastic Corp.+ 18,200 861
Sinclair Broadcast Group,
Inc.+ 54,300 760
Spelling Entertainment Group,
Inc.+ 106,700 947
TCA Cable TV, Inc. 56,400 2,809
TV Guide, Inc.+ 56,400 2,376
70
<PAGE>
Number Value
of Shares (000s)
--------- ---------
United Television, Inc. 11,200 $ 1,126
Westwood One, Inc.+ 30,000 1,028
Young Broadcasting, Inc.+ 14,400 610
---------
33,213
---------
MISCELLANEOUS FINANCE -- 4.6%
Advanta Corp., Class A 31,209 421
Affiliated Managers Group,
Inc.+ 16,900 491
Allied Capital Corp. 47,800 860
AmeriCredit Corp.+ 71,000 1,176
Ameritrade Holding Corporation,
Class A+ 53,200 7,106
AMRESCO, Inc.+ 51,800 337
Cash America International,
Inc. 12,500 159
CMAC Investment Corp.+ 20,800 954
Dain Rauscher Corp. 13,100 562
Eaton Vance Corp. 42,600 972
Fidelity National
Financial, Inc. 32,710 597
Financial Federal Corp+ 7,500 157
First Financial Corp. 7,300 294
First Sentinel Bancorp, Inc. 53,262 406
Fund American Enterprise
Holdings, Inc.+ 6,409 923
Hambrecht and Quist Group,
Inc.+ 27,700 976
HealthCare Financial Partners,
Inc.+ 13,000 439
Interpool, Inc. 31,400 461
Investment Technology Group 55,950 1,937
Investors Financial
Services Corp. 14,000 509
Jefferies Group Inc 24,200 554
JSB Financial, Inc. 11,600 572
LNR Property Corp. 26,900 528
Mail Well Holdings, Inc.+ 54,300 709
Morgan Keegan, Inc. 36,050 604
NCO Group, Inc.+ 16,500 538
Northwest Bancorp, Inc. 52,700 478
Ocwen Financial Corp.+ 58,600 494
PaymenTech, Inc.+ 40,200 960
Phoenix Investment
Partners, Ltd. 45,000 444
Pioneer Group, Inc. 28,100 523
Price Enterprises, Inc. 18,600 108
Profit Recovery Group
International, Inc.+ 27,600 1,007
Raymond James Financial, Inc. 44,300 955
Number Value
of Shares (000s)
--------- ---------
Resource Bancshares Mortgage
Group, Inc. 12,000 $ 147
Sabre Group Holdings, Inc.+ 24,000 1,251
Student Loan Corp. 23,100 938
TeleBanc Financial Corp.+ 12,000 1,244
United International
Holdings, Inc., Class A+ 27,900 1,667
Value Line, Inc. 11,100 412
Webster Financial Corp. 36,900 1,135
---------
35,005
---------
NON-FERROUS METALS -- 1.0%
Asarco, Inc. 45,700 840
Commercial Metals Co. 16,233 382
Cyprus Amax Minerals Co. 83,100 1,278
Kaiser Aluminum Corp.+ 77,100 602
MAXXAM Inc.+ 4,000 229
Minerals Technologies, Inc. 24,700 1,334
Mueller Industries, Inc.+ 39,400 1,241
Reliance Steel & Aluminum Co. 20,850 760
Stillwater Mining Co.+ 31,100 881
---------
7,547
---------
OIL - DOMESTIC -- 1.3%
Cross Timbers Oil Co. 48,725 533
Global Industries, Ltd.+ 83,300 1,026
Houston Exploration Co.+ 27,300 519
J. Ray McDermott, S.A.+ 35,700 1,125
National-Oilwell, Inc.+ 51,100 664
Pioneer Natural Resources Co. 91,600 1,071
Pogo Producing Co. 47,800 917
Pride International, Inc.+ 40,000 468
Santa Fe Energy Resources,
Inc.+ 119,200 1,073
Snyder Oil Corp. 38,500 700
Tesoro Petroleum Corp.+ 37,000 419
Trans Montaigne Oil, Inc.+ 36,300 517
UNOVA, Inc.+ 56,000 760
---------
9,792
---------
OPTICAL & PHOTO -- 0.6%
Avid Technology, Inc.+ 27,900 453
C-Cube Microsystems, Inc.+ 37,300 844
Ocular Sciences, Inc.+ 21,700 662
Photronics, Inc.+ 29,000 694
Polaroid Corp. 40,100 827
71
<PAGE>
SCHWAB SMALL-CAP INDEX FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ---------
Ultratech Stepper, Inc.+ 23,300 $ 323
Wesley Jessen VisionCare,
Inc.+ 18,000 551
---------
4,354
---------
PAPER & FOREST PRODUCTS -- 0.9%
Buckeye Technology, Inc.+ 39,400 571
Caraustar Industries, Inc. 28,200 719
Chesapeake Corp. 26,100 848
Longview Fibre Co. 52,800 686
PH Glatfelter Co. 46,100 591
Pope & Talbot+ 31,450 621
Potlatch Corp. 26,600 1,102
Rock Tennessee Co., Class A 25,330 317
Thermo Fibertek, Inc.+ 72,100 514
Wausau Mosinee Paper Corp. 54,325 896
---------
6,865
---------
PRODUCER GOODS & MANUFACTURING -- 7.0%
Advanced Energy Industries,
Inc.+ 24,400 676
AGCO Corp. 57,400 567
Airgas, Inc.+ 82,600 971
Albany International Corp.,
Class A+ 33,317 808
AMETEK, Inc. 34,900 796
Applied Power, Inc., Class A 12,600 398
AptarGroup, Inc. 35,200 986
Astec Industries, Inc.+ 18,200 705
Baldor Electric, Co. 40,720 786
Barnes Group, Inc. 23,300 491
Boise Cascade Office Products
Corp.+ 64,400 797
Brady Corp., Class A 25,600 662
CLARCOR Inc. 29,050 545
Corporate Express, Inc.+ 95,200 476
Credence Systems, Corp.+ 23,950 615
DII Group, Inc.+ 27,300 846
Donaldson Co., Inc. 46,900 1,049
Dycom Industries, Inc.+ 20,400 932
Elcor Corp. 13,500 521
Flowserve Corp. 43,634 813
Foster Wheeler Corp. 47,000 635
Franklin Electric Corp. 6,400 400
General Binding Corp. 15,500 310
Graco, Inc. 23,437 738
Harnischfeger Industries, Inc. 46,100 449
Hughes Supply, Inc. 26,950 627
Husmann International, Inc. 46,600 740
Number Value
of Shares (000s)
--------- ---------
IDEX Corp. 32,425 $ 865
IGEN International, Inc.+ 14,800 372
Ionics, Inc.+ 18,700 638
JLG Industries, Inc. 48,400 777
Juno Lighting, Inc. 11,500 262
Kennametal, Inc. 27,300 725
Lincoln Electric Co., Class A 53,600 1,106
Magnatek, Inc.+ 36,500 395
Manitowoc Co., Inc. 28,462 1,085
Mark IV Industries, Inc. 49,800 890
Matthews International Corp.,
Class A 13,500 359
Micrel, Inc.+ 22,700 1,336
Milacron, Inc. 41,900 964
Mine Safety Appliances Co. 3,000 183
MSC Industrial Direct, Inc.+ 38,000 819
NACCO Industries, Inc.,
Class A 8,250 667
NCI Building Systems, Inc.+ 17,400 419
Nordson Corp. 18,400 1,109
PMC Sierra, Inc.+ 32,700 3,135
Polycom, Inc.+ 27,100 662
Precision Castparts Corp. 22,300 953
PRI Automation, Inc.+ 21,900 543
Rayovac Corp.+ 25,100 678
Roper Industries, Inc. 34,400 980
SLI, Inc.+ 32,150 882
Specialty Equipment Companies,
Inc.+ 17,800 532
Springs Industries, Inc. 18,300 684
SPS Technologies, Inc.+ 14,100 615
SPX Corp.+ 24,567 1,605
Standex International Corp. 14,900 366
Tecumseh Products Co., Class A 22,900 1,400
Tennant Co. 5,000 171
Terex Corp.+ 23,100 731
Texas Industries, Inc. 22,800 704
Thermo Ecotek Corp.+ 43,250 287
Thermo Optek Corp.+ 54,000 473
Thermoquest Corp.+ 55,500 607
UCAR International, Inc.+ 41,100 943
Universal Forest Products, Inc. 20,000 398
Valhi, Inc. 100,200 1,215
Valmont Industries, Inc. 26,600 446
VWR Scientific Products Corp.+ 33,300 853
Watsco, Inc. 20,000 393
Watts Industries, Inc.,
Class A 30,200 464
Wyman Gordon Co.+ 41,500 581
---------
52,611
---------
72
<PAGE>
Number Value
of Shares (000s)
--------- ---------
RAILROAD & SHIPPING -- 0.9%
Alexander & Baldwin, Inc. 40,900 $ 890
Avondale Industries, Inc.+ 16,400 505
C.H. Robinson Worldwide, Inc. 37,700 1,129
Florida East Coast Industry,
Inc. 28,800 918
MotivePower Industries, Inc.+ 27,150 463
Newport News Shipbuilding, Inc. 34,400 901
Overseas Shipholding Group,
Inc. 39,500 494
Westinghouse Air Brake Co. 38,600 861
Wisconsin Central
Transportation Corp.+ 46,800 864
---------
7,025
---------
REAL PROPERTY -- 0.3%
CB Richard Ellis Services+ 22,300 449
Fairfield Communities, Inc.+ 51,800 667
Forest City Enterprises, Inc. 34,300 847
Trammell Crow Co.+ 31,300 563
---------
2,526
---------
RETAIL -- 4.4%
99 Cents Only Stores+ 25,875 1,219
Ames Department Stores, Inc.+ 26,500 926
AnnTaylor Stores Corp.+ 23,500 1,116
Authentic Fitness Corp. 24,900 430
BJ's Wholesale Club, Inc.+ 83,800 2,226
Burlington Coat Factory
Warehouse Corp. 51,840 800
Casey's General Stores, Inc. 57,800 766
Central Garden & Pet Co.+ 33,300 466
Charming Shoppes, Inc.+ 110,500 428
CHS Electronics, Inc.+ 60,100 304
Claire's Stores, Inc. 53,275 1,765
Egghead.com, Inc.+ 23,600 330
Etec Systems, Inc.+ 21,700 670
General Nutrition Companies,
Inc.+ 62,400 1,034
Global Directmail Corp.+ 43,000 656
Guitar Center, Inc.+ 19,400 303
Handleman Co.+ 32,000 450
Heilig-Meyers Co. 65,400 384
Insight Enterprises, Inc.+ 22,800 616
Just for Feet, Inc.+ 34,575 437
Keystone Automotive Industries,
Inc.+ 10,000 150
Lands' End, Inc.+ 31,300 1,197
Number Value
of Shares (000s)
--------- ---------
Lowe's Companies, Inc. 21,056 $ 1,111
Maxim Group, Inc.+ 10,000 81
Michaels Stores, Inc.+ 32,300 731
Movado Group, Inc. 13,000 314
Musicland Stores Corp.+ 20,000 218
Onsale Inc+ 17,600 447
Pep Boys-Manny, Moe, & Jack 58,300 834
Pier 1 Imports, Inc. 88,900 656
Ruddick Corp. 51,700 914
ShopKo Stores, Inc.+ 28,700 985
Sotheby's Holdings, Inc.,
Class A 60,100 2,562
Southland Corp.+ 441,200 1,103
Spiegel, Inc., Class A+ 120,400 903
The Children's Place
Retail Stores, Inc.+ 22,700 823
The Dress Barn, Inc.+ 28,000 410
United Stationers, Inc.+ 41,900 715
Value City Department Stores,
Inc.+ 32,600 281
Venator Group, Inc.+ 123,900 1,200
Wet Seal, Inc., Class A+ 15,700 640
Wild Oats Markets, Inc.+ 7,000 194
Zale Corp.+ 38,100 1,441
---------
33,236
---------
STEEL -- 0.8%
AK Steel Holding Corp. 65,000 1,690
Armco, Inc.+ 129,800 665
Carpenter Technology Corp. 21,400 670
Cleveland-Cliffs, Inc. 13,300 530
Intermet Corp. 29,800 440
LTV Corp. 112,300 716
Ryerson Tull, Inc. 25,300 574
Steel Dynamics, Inc.+ 51,000 861
---------
6,146
---------
TELEPHONE -- 3.1%
Adtran, Inc.+ 44,300 770
Aliant Communications, Inc. 37,600 1,664
ANTEC Corp.+ 41,300 1,120
Aspect Telecommunications
Corp.+ 57,700 460
Associated Group, Inc.,
Class A+ 40,000 2,280
Commonwealth Telephone
Enterprises, Inc.+ 18,766 708
Emmis Communications Corp.,
Class A+ 12,000 540
73
<PAGE>
SCHWAB SMALL-CAP INDEX FUND(R)
STATEMENT OF NET ASSETS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ---------
ICG Communications, Inc.+ 46,900 $ 1,035
IDT Corp.+ 23,200 661
Inter Tel, Inc. 28,100 390
Intermedia Communications,
Inc.+ 51,500 1,658
ITC DeltaCom, Inc.+ 51,900 1,298
NEXTLINK Communications, Inc.,
Class A+ 19,400 1,421
Pacific Gateway Exchange, Inc.+ 20,900 836
Paging Network, Inc.+ 116,800 456
PairGain Technologies, Inc.+ 64,700 829
Plantronics, Inc.+ 17,700 1,195
Powertel, Inc.+ 29,600 644
Primus Telecommunications
Group, Inc.+ 30,000 501
STAR Telecommunications, Inc.+ 40,700 394
TALK.com Inc.+ 44,700 536
Vanguard Cellular Systems, Inc.,
Class A+ 39,350 898
Viatel, Inc.+ 22,400 1,030
Western Wireless Corp.,
Class A+ 40, 800 1,675
World Access, Inc.+ 34,300 412
---------
23,411
---------
TOBACCO -- 0.1%
Brooke Ltd. 20,200 385
---------
TRAVEL & RECREATION -- 1.8%
Anchor Gaming, Inc.+ 13,700 647
Bally Total Fitness Holding
Corp.+ 26,200 635
Budget Group, Inc.+ 39,100 486
Callaway Golf Co. 68,700 1,035
Central Parking Corp. 27,100 859
Choice Hotels International,
Inc.+ 52,900 827
Coleman Co., Inc.+ 60,600 439
Extended Stay Amererica, Inc.+ 87,700 921
Family Golf Centers, Inc.+ 28,150 202
Host Marriott Services Corp.+ 10,000 71
International Speedway Corp.,
Class A 10,000 515
Marcus Corp. 37,225 463
Penske Motorsports, Inc.+ 14,000 508
Polaris Industries, Inc. 28,200 1,063
Prime Hospitality Corp.+ 61,000 743
Red Roof Inns, Inc.+ 32,000 528
Rental Services, Corp.+ 26,600 600
Speedway Motorsports, Inc.+ 41,500 1,800
Number Value
of Shares (000s)
--------- ---------
Sunterra+ 43,100 $ 463
Travel Services International,
Inc.+ 7,000 62
Vail Resorts, Inc.+ 26,100 506
---------
13,373
---------
TRUCKING & FREIGHT -- 1.7%
Air Express International Corp. 38,050 832
AMERCO+ 26,800 603
American Freightways Corp.+ 23,000 395
Arnold Industries, Inc. 30,300 481
Consolidated Freightways Corp.+ 15,000 169
Eagle USA Airfreight, Inc.+ 21,000 767
Expeditores International of
Washington, Inc. 29,500 1,788
Fritz Companies, Inc.+ 40,000 405
Heartland Express, Inc.+ 33,047 461
J.B. Hunt Transport Services,
Inc. 39,050 813
Knight Transportation, Inc.+ 7,500 154
Landstar Systems, Inc.+ 10,000 389
M.S. Carriers, Inc.+ 6,000 191
Rollins Truck Leasing Corp. 65,450 679
Swift Transportation Co.,
Inc.+ 70,950 1,304
U.S. Freightways Corp. 29,700 1,114
Wabash National Corp. 23,000 361
Werner Enterprises, Inc. 55,062 1,060
XTRA Corp. 14,100 583
Yellow Corp.+ 26,600 472
---------
13,021
---------
UTILITIES - ELECTRIC & GAS -- 3.9%
Atmos Energy Corp. 31,700 800
Avista Corp. 51,100 767
Black Hills Corp. 22,100 500
Calpine Corp.+ 19,500 831
Central Hudson Gas & Electric
Corp. 19,300 717
CILCORP, Inc. 15,200 920
Cleco Corp. 26,000 803
CMP Group, Inc. 36,500 707
Commonwealth Energy System 24,500 994
Eastern Utilities Association 23,600 676
El Paso Electric Co.+ 70,000 560
Empire District Electric Co. 9,200 202
Energen Corp. 32,800 566
Equitable Resources, Inc. 34,000 901
Indiana Energy, Inc. 33,933 725
74
<PAGE>
Number Value
of Shares (000s)
--------- ---------
Insituform Technologies, Inc.,
Class A+ 27,400 $ 522
Laclede Gas Co. 20,800 420
Madison Gas & Electric Co. 8,600 160
New Jersey Resources Corp. 20,100 741
Northwest Natural Gas Co. 28,400 641
Northwestern Public
Services Co. 25,000 647
NUI Corp. 5,000 108
Ocean Energy, Inc.+ 166,716 1,553
Orange & Rockland Utilities,
Inc. 14,300 832
Otter Tail Power Co. 12,200 467
Philadelphia Suburban Corp. 35,100 792
Piedmont Natural Gas Co., Inc. 35,100 1,119
Primark Corp.+ 20,900 482
Public Service Co. of
New Mexico 45,800 819
Public Service Co. of
North Carolina, Inc. 20,500 580
Sierra Pacific Resources 20,900 745
SIGCORP, Inc. 25,749 742
Southern Union Co.+ 34,048 758
Southwest Gas Corp. 34,000 971
TNP Enterprises, Inc. 15,000 469
Triarc Companies, Inc.+ 35,300 699
UGI Corp. 37,800 650
Unisource Energy Corp.+ 36,680 397
United Illuminating Co. 15,500 610
United Water Resources,
Inc. 42,300 880
WICOR, Inc. 41,400 978
WPS Resources Corp. 26,500 793
---------
29,244
---------
Total Common Stock
(Cost $690,265) 751,672
---------
Number Value
of Shares (000s)
--------- --------
SHORT-TERM INVESTMENTS -- 0.1%
MSTC Cash Reserve
Liquid Asset Fund
4.710%, 04/30/99 1,005,472 $ 1,005
---------
Total Short-Term Investments
(Cost $1,005) 1,005
---------
Total Investments -- 99.9%
(Cost $691,270) 752,677
---------
Other Assets and Liabilities, Net -- 0.1%
Other assets 5,719
Liabilities (5,001)
---------
718
---------
Total Net Assets -- 100.0% $ 753,395
---------
SEE ACCOMPANYING NOTES TO SCHEDULES OF INVESTMENTS
AND NOTES TO FINANCIAL STATEMENTS.
75
<PAGE>
SCHWAB INTERNATIONAL INDEX FUND(R)
SCHEDULE OF INVESTMENTS
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ---------
COMMON STOCKS -- 97.9%
AUSTRALIA -- 1.6%
Australia & New Zealand Banking
Group 134,851 $ 1,069
Broken Hill Proprietary
Co., Ltd. 190,033 2,149
Coca-Cola Amatil, Ltd. 117,150 556
Coca-Cola Beverage+ 33,834 71
Commonwealth Bank of Australia 86,515 1,576
National Australia Bank 133,113 2,592
News Corporation, Ltd.+ 207,944 1,743
Westpac Banking Corp. 178,064 1,360
---------
11,116
---------
BELGIUM -- 1.6%
Almanij 17,830 1,202
de Beligique+ 600 --
Dexia Belgium 3,096 477
Electrabel 5,000 1,651
Fortis (B) 67,122 2,255
Fortis (B) - Strip Vvpr+ 29,799 --
Fortis (NL) NV 36,706 1,309
Petrofina SA 1,990 1,204
Solvay SA 7,090 495
Suez Lyonnaise Des Eaux 6,090 1,042
Tractebel Investors
International Capital 7,967 1,097
UCB 12,400 577
---------
11,309
---------
CANADA -- 3.2%
Alcan Aluminum, Ltd. 21,666 684
Bank of Montreal, Quebec 24,777 1,035
Bank of Nova Scotia, Halifax 43,694 1,040
Barrick Gold Corp. 34,591 700
BCE, Inc. 60,032 2,742
Bombardier, Inc. Class B 62,000 962
Canadian Imperial Bank of
Commerce 38,845 1,000
Canadian Pacific, Ltd. 30,124 681
Imasco, Ltd. 46,200 1,019
Imperial Oil, Ltd. 41,022 852
Loblaw 25,300 639
Northern Telecom, Ltd. 60,946 4,144
Royal Bank of Canada, Montreal,
Quebec 28,786 1,406
Seagram Co., Ltd. 35,490 2,023
Thomson Corp. 53,932 1,630
Toronto Dominion Bank Ontario 33,578 1,795
---------
22,352
---------
Number Value
of Shares (000s)
--------- ---------
DENMARK -- 0.6%
D/S 1912, Series B 93 $ 841
D/S Svendborg, Series B 70 892
Den Danske Bank 4,463 515
Novo-Nordisk A/S, Series B 6,514 640
Tele Danmark A/S, Series B+ 11,294 1,166
---------
4,054
---------
FRANCE -- 8.1%
Accor 3,389 895
Air Liquide (Prime Fidelite)
(Reg.) 10,179 1,572
Alcatel Alsthom SA 18,630 2,290
Axa UAP 32,858 4,248
Banque Nationale de Paris 20,052 1,664
Canal Plus 2,943 819
Cap Gemini 6,483 992
Carrefour+ 3,565 2,829
Casino 6,151 606
Casino Gui Per - Pfd 1,700 104
Cie de Saint-Gobain SA 8,288 1,425
Credit Commerical de France 6,138 649
Danone Groupe 7,193 1,925
Dassault Systems 9,523 351
L'Oreal SA 6,339 4,064
Lafarge Coppee SA 10,491 1,021
Lagardere Groupe 10,104 401
LVMH (Moet Hennesy
Louis Vuitton) 8,075 2,168
Michelin (CDGE), Class B (Reg.) 12,913 587
Paribas 14,844 1,580
Peugeot 4,226 702
Pinault Printemps Redoute SA 11,012 1,829
Promodes 1,795 1,139
Rhone-Poulenc SA, Series A 34,874 1,660
Sadexho Frenc 2,820 463
Sanofi 10,498 1,647
Schneider SA 14,331 936
Soc Nat Elf Aquitaine 25,271 3,930
Societe Generale 9,625 1,725
Stmicroelectonics+ 13,328 1,390
Suez Lyonnaise des Eaux 13,586 2,314
Synthelabo 4,356 892
Total B Compgne 23,074 3,164
Valeo SA 7,400 626
Vivendi+ 15,126 3,538
---------
56,145
---------
76
<PAGE>
Number Value
of Shares (000s)
--------- ---------
GERMANY -- 8.9%
Adidas 3,900 $ 384
BASF AG 57,179 2,516
Bayer AG 68,863 2,874
Bayerische Motoren Werke+ 331 233
Bayerische Motoren Werke AG 2,358 1,684
Bayerische Vereinsbank AG 39,411 2,533
Commerzbank AG 44,989 1,459
DaimlerChrysler AG 102,933 10,171
Degussa-Huels AG+ 7,800 339
Deutsche Bank AG 54,365 3,148
Dresdner Bank AG 45,448 1,936
Ergo Versich Gruppe 6,400 807
Hoechst AG 52,811 2,506
Linde AG 865 528
Lufthansa AG (Reg.) 35,068 814
Man AG 10,000 309
Mannesmann AG 36,720 4,801
Metro 3,260 122
Metro AG 24,848 1,761
Muenchener Ruckvers 510 159
Muenchener Rueckversicherungs-
Gesellschaft 16,723 3,306
Muenchener Rueckversicherungs-
Gesellschaft AG+ 11,223 2,232
Preussag 13,000 684
Preussag Rts+ 13,000 12
RWE AG 41,901 1,906
SAP AG 5,697 1,826
Schering AG 6,082 701
Siemens AG 52,695 3,885
Thyssen Krupp AG+ 48,470 1,069
Veba AG 46,901 2,575
Vew AG 1,912 510
Viag AG 2,557 1,282
Volkswagen AG 31,520 2,215
---------
61,287
---------
HONG KONG -- 1.9%
Cheung Kong Holdings 211,000 1,919
CLP Holdings Limited 229,900 1,234
Hang Seng Bank, Ltd. 179,300 2,123
Henderson Land Development Co. 151,000 914
Hong Kong & China Gas Co.
Limited 414,590 583
Hong Kong Electric Holdings,
Ltd. 181,500 578
Hutchison Whampoa, Ltd. 356,000 3,192
Sun Hung Kai Properties 224,694 1,971
Swire Pacific, Ltd., Class A 137,500 772
---------
13,286
---------
Number Value
of Shares (000s)
--------- ---------
ITALY -- 4.0%
Assicurazioni Generali 96,699 $ 3,770
Banca Intesa 217,335 1,159
Bca Comm Italiana 169,174 1,394
Bca Intesa SPA - RNC 60,500 156
Credito Italiano 459,895 2,335
ENI SPA (Reg.) 754,095 4,970
Fiat SPA 312,492 1,048
Fiat SPA - RNC 60,267 108
Istituto Nazionale delle
Assicurazioni 367,296 971
Montedison 420,960 404
Montedison SPA - RNC 60,500 46
Pirelli SPA+ 156,370 478
Pirelli SPA - RNC+ 7,500 16
Telecom Italia SPA 486,774 5,186
Telecom Italia SPA - RNC 179,792 968
TIM SPA+ 609,305 3,635
TIM SPA - RNC+ 223,802 751
Unione Immobiliare SpA 326,204 187
---------
27,582
---------
JAPAN -- 21.6%
Advantest Corp. 9,700 742
Ajinomoto Co., Inc. 61,000 705
All Nipon Airways Co., Ltd.+ 135,000 418
Asahi Bank 233,000 1,231
Asahi Breweries 41,000 534
Asahi Glass Co., Ltd. 111,000 850
Bank of Tokyo-Mitsubishi, Ltd. 440,500 6,499
Bridgestone Corp. 80,000 2,144
Canon, Inc. 82,000 2,005
Cent Japan Railway 190 1,013
Chubu Electric Power Co. 70,100 1,203
Dai Nippon Printing Co. 72,000 1,141
Dai-Ichi Kangyo Bank, Ltd. 293,000 2,054
DDI Corp. 213 1,058
Denso 95,000 1,929
East Japan Railway Co. 375 2,214
Fanuc 22,100 962
Fuji Bank, Ltd. 276,000 2,154
Fuji Photo Film Co. 49,000 1,851
Fujitsu, Ltd. 176,000 3,014
Hitachi, Ltd. 315,000 2,300
Honda Motor Co., Ltd. 92,000 4,052
Industrial Bank of Japan, Ltd. 249,000 2,075
Ito Yokado Co., Ltd. 39,000 2,394
Japan Tobacco, Inc. 189 1,899
77
<PAGE>
SCHWAB INTERNATIONAL INDEX FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ---------
Joyo Bank 100 $ --
Jusco Co. 30,000 598
Kansai Electric Power Co. 92,300 1,820
Kao Corp. 59,000 1,497
Kinki Nippon Railway Co. 152,830 772
Kirin Brewery Co., Ltd. 97,000 1,097
Kyocera Corp. 18,000 1,069
Kyushu Electric Power Co. 44,700 692
Marui Co. 35,000 581
Matsushita Communications Ind 18,000 1,292
Matsushita Electric Industrial
Co., Ltd. 195,000 3,707
Matsushita Electric Works 67,000 709
Mitsubishi Corp. 148,000 979
Mitsubishi Estate Co. 122,000 1,247
Mitsubishi Heavy Industries,
Ltd. 318,000 1,393
Mitsubishi Trust & Banking
Corp. 123,000 1,349
Mitsui & Co. 149,000 1,092
Murata Manufacturing Co. 23,000 1,315
NEC Corp. 151,000 1,803
Nintendo Co., Ltd. 13,600 1,268
Nippon Express Co. 99,000 647
Nippon Steel Corp. 642,000 1,441
Nippon Telegraph & Telephone
Corp. 1,344 14,631
Nissan Motor Co., Ltd. 237,000 909
Nomura Securities Co., Ltd. 185,000 1,995
Odakyu Electric Railway Co. 510 2
Osaka Gas Co. 238,000 817
Ricoh Co., Ltd. 65,000 626
Rohm Co. 11,000 1,326
Sakura Bank 358,000 1,382
Sankyo Co. 43,000 902
Sanwa Bank 274,000 3,075
Sanyo Electric Co., Ltd. 177,000 663
Secom Co. 11,000 1,074
Seibu Railway Co. 41,000 858
Sekisui House 67,000 750
Seven-Eleven Japan Co. 39,000 3,328
Sharp Co. 106,000 1,243
Shin-Etsu Chemical Co. 37,700 1,200
Shizuoka Bank 75,000 884
SMC Corp. 6,000 553
Sony Corp. 38,700 3,613
Sumitomo Bank 295,000 3,992
Sumitomo Corp. 98,000 724
Sumitomo Electric Industires 68,000 823
Sumitomo Trust & Banking Co. 134,000 658
Number Value
of Shares (000s)
--------- ---------
Taisho Pharmaceuticals Co. 33,000 $ 1,014
Takeda Chemical Industries 84,000 3,651
TDK Corp. 13,000 983
Tohoku Electric Power Co. 47,600 719
Tokai Bank 190,000 1,241
Tokio Marine & Fire
Insurance Co. 146,000 1,701
Tokyo Electric Power Co., Inc. 127,700 2,727
Tokyo Electron 16,000 911
Tokyo Gas Co. 265,000 699
Toppan Printing Co. 71,000 854
Toray Industries, Inc. 132,000 700
Toshiba Corp. 302,000 2,023
Toyota Motor Corp. 399,000 11,326
West Japan Railway 175 725
Yamanouchi Pharmaceutical Co. 32,000 1,013
---------
149,124
---------
NETHERLANDS -- 6.7%
ABN AMRO Holdings NV 135,148 3,224
Aegon NV 54,683 5,250
Ahold (Kon) NV 58,716 2,183
Akzo Nobel NV 30,366 1,373
Asm Lithography+ 11,636 491
Baan+ 16,492 160
Dordtsche Petroleum 18,778 969
Elsevier NV 62,558 936
Heineken NV 28,133 1,414
ING Groep NV 88,226 5,441
Koninklijke PTT Nederland 44,556 1,862
Philips Electronics NV+ 34,263 2,954
Randstad Hlds 10,841 528
Royal Dutch Petroleum Co. 226,362 13,195
Unilever NV 60,027 4,115
Vnu Ver Ned Uitg Bezit 15,978 647
Wolters Kluwer - CVA 25,860 1,127
---------
45,869
---------
SPAIN -- 3.0%
Argentaria Corp. 45,980 1,083
Banco Popular Espanol 10,581 750
Banco Santander 167,540 3,644
BCO Bilbao Vizcaya 187,522 2,809
Endesa SA 89,171 1,985
Gas Natural SDG 13,996 1,130
Iberdrola SA 82,740 1,160
Instituto Bancario San Paolo
di Torino 132,170 1,985
Repsol 82,599 1,346
78
<PAGE>
Number Value
of Shares (000s)
--------- ---------
Telefonica - Bonus Rts.+ 98,022 $ 91
Telefonica International
de Espana SA+ 98,022 4,599
---------
20,582
---------
SWEDEN -- 2.2%
ABB AB, Series A 59,869 836
Asea AB 27,898 389
Atlas Copco AB-B 5,100 134
Atlas Copco, Series A 10,329 279
Electrolux AB 30,874 627
Foreningssparbaken, Series A 33,220 730
Hennes & Mauritz, Series B 18,570 1,604
L.M. Ericsson Telephone,
Series B 182,931 4,813
Nordbanken Holding 109,987 692
Sandvik AB, Series A 17,866 403
Sandvik AB, Series B 8,461 191
Skand. Enskil. Bank, Series A 55,158 721
Skandia Forsakrings 47,987 929
Skanska AB, Series B 9,600 381
Svenska Cell AB, Series B 16,644 426
Svenska Handelsbanken, Series A 19,488 732
Svenska Handelsbanken, Series B 3,956 135
Volvo AB, Series A 14,094 366
Volvo AB, Series B 28,295 748
---------
15,136
---------
SWITZERLAND -- 7.9%
ABB (Reg.) 568 166
ABB - Asea Brown Boveri 677 989
Adecco SA+ 1,525 770
Alusuisse Lonza HD (Reg.) 516 618
Ares Serono 316 470
Ciba Specialty Chemicals 6,025 498
Cie Financiere Richemont,
Series A 484 825
Clariant (Reg.) 6,020 3,084
Credit Suisse Group 25,115 4,989
Holderbank Financiere Glaris
(Bearer) 988 295
Holderbank Financiere Glaris
(Reg.) 489 591
Nestle SA (Reg.) 4,084 7,572
Novartis AG (Bearer) 1,014 1,486
NovartisAG (Reg.) 6,538 9,588
Roche Group Holding 145 2,561
Roche Holding Genusscheine 743 8,754
Swatch Group (Reg.) 1,250 190
Swatch Group AG, Series B 310 221
Number Value
of Shares (000s)
--------- ---------
UBS AG (Reg.) 22,574 $ 7,679
Zurich Allied 4,334 2,798
---------
54,144
---------
UNITED KINGDOM -- 26.6%
Abbey National 132,460 2,995
Alliance & Leicester 49,071 736
Allied Domecq 92,484 726
Asda Group 318,540 1,066
Associated British Foods 84,356 621
AstraZeneca Group+ 78,641 3,073
BAA PLC 97,848 1,024
Bank of Scotland PLC 115,983 1,737
Barclays PLC 143,370 4,558
BASS PLC 76,639 1,206
BG 374,681 2,105
BOC Group PLC 45,114 716
Boots Co. 83,782 1,109
British Aerospace 170,095 1,274
British Airways 93,906 745
British Energy PLC 60,690 517
British Land 43,550 398
British Petroleum Co. 1,024,920 19,462
British Sky Broadcast 156,349 1,382
British Telecommunications 677,682 11,395
Cable & Wireless
Communications+ 136,971 1,564
Cable & Wireless PLC 220,997 3,175
Cadbury Schweppes 92,693 1,238
Centrica PLC+ 415,970 846
CGU 122,673 1,939
Compass Group 63,486 651
Diageo PLC 336,461 3,888
Emi Group PLC 77,574 662
Garban 4,098 18
General Electric Company PLC 249,739 2,649
GKN PLC 65,743 1,124
Glaxo Wellcome PLC 381,592 11,296
Granada Group 85,057 1,819
Great Universal Stores 92,305 1,061
Guardian Royal Exchange PLC 74,127 457
Halifax 236,247 3,333
Hays PLC 80,562 897
HSBC Holdings 174,182 6,559
HSBC Holdings 75p 84,165 3,211
Imperial Chemical Industries 63,162 685
Invseco PLC 62,833 665
Kingfisher 126,874 1,900
Ladbroke 100,099 488
79
<PAGE>
SCHWAB INTERNATIONAL INDEX FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ---------
Legal & General Group 467,504 $ 1,361
Lloyds TSB Group PLC 573,765 9,245
Marks & Spencer PLC 262,688 1,796
Misys 47,030 442
National Grid Group PLC 134,171 930
National Power Development 116,098 937
National Westminster Bancorp 159,113 3,836
Norwich Union 180,419 1,286
Pearson Inc. 54,370 1,158
Peninsular & Oriental Steam
Navigation 59,425 864
Powergen 56,653 622
Prudential Corp. 181,814 2,596
Railtrack Group 47,560 993
Reckitt & Colman PLC 37,912 451
Reed International 104,356 950
Rentokil Initial 268,080 1,579
Reuters Holdings Group PLC 140,900 1,911
Rio Tinto 98,380 1,720
Rolls Royce PLC 131,641 611
Royal & Sun Alliance Insurance
Group PLC 147,910 1,277
Royal Bank of Scotland 78,552 1,855
Safeway PLC 97,649 407
Sainsbury J 166,084 1,057
Schroders 24,544 579
Scot & Newcastle 58,153 728
Scottish Power 112,216 927
Severn Trent 28,525 374
Shell Transport & Trading Co.
(Reg.) 937,275 7,027
Siebe PLC 360,283 1,841
Smithkline Beecham 589,867 7,809
Stagecoach Holdings 129,418 449
Standard Chartered PLC 91,842 1,663
Tesco PLC 606,936 1,806
Thames Water 29,328 407
Tomkins 99,594 424
Unilever PLC 305,739 2,713
United News & Media PLC 40,983 501
United Utilities PLC 51,412 582
Vodafone Group PLC 291,603 5,377
Whitbread 45,126 767
Williams 66,185 455
Woolwich 147,508 944
Zeneca Group 89,507 3,507
---------
183,734
---------
Number Value
of Shares (000s)
--------- --------
Total Common Stock
(Cost $507,557) $ 675,720
---------
PREFERRED STOCKS -- 0.6%
AUSTRALIA -- 0.2%
News Corporation, Ltd.
(Limited Voting Shares) 168,836 1,320
---------
GERMANY -- 0.4%
Man 3,700 74
RWE 18,788 570
SAP AG (Non-Voting) 3,937 1,487
Volkswagen AG (Non-Voting) 7,870 331
---------
2,462
---------
ITALY -- 0.0%
Fiat Finance SPA 62,447 108
---------
Total Preferred Stocks
(Cost $2,672) 3,890
---------
WARRANT -- 0.0%
FRANCE -- 0.0%
Cie Generale de Eaux
(expire 05/02/01) 8,094 18
---------
Total Warrant
(Cost $5) 18
---------
SHORT-TERM INVESTMENTS -- 2.3%
MSTC Cash Reserve
Liquid Asset Fund
4.710%, 4/30/99 15,695,501 15,695
---------
Total Short-Term Investments
(Cost $15,695) 15,695
---------
Total Investments -- 100.8%
(Cost $525,929) 695,323
---------
Other Assets and Liabilities, Net -- (0.8%)
Other assets 5,865
Liabilities (11,175)
---------
(5,310)
---------
Total Net Assets -- 100.0% $ 690,013
=========
SEE ACCOMPANYING NOTES TO SCHEDULES OF INVESTMENTS
AND NOTES TO FINANCIAL STATEMENTS.
80
<PAGE>
NOTES TO SCHEDULES OF INVESTMENTS
April 30, 1999 (Unaudited)
+ Non-income producing security.
* Interest rate represents the yield on report date.
ADR -- American Depository Receipt.
PLC -- Public Limited Company.
(a) Yields shown are effective yields at time of purchase.
(b) These securities, or portion thereof, are being used to collaterize open
futures contracts.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
81
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (in thousands)
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Schwab Schwab Schwab Schwab
S&P 500 1000 Small-Cap International
Fund Fund(R) Index Fund(R) Index Fund(R)
------------ ------------ ------------- -------------
ASSETS
<S> <C> <C> <C> <C>
Investments, at value (Cost: $4,963,285, $3,966,478
$691,270 and $525,929, respectively) $6,433,166 $6,711,608 $ 752,677 $ 695,323
Foreign currency (Cost: $0, $0, $0 and $92, respectively) -- -- -- 3
Amounts on deposit with brokers 4,487 1,458 -- --
Cash held as collateral for securities on loan (Note 6) 705,785 675,812 3,540 --
Receivables:
Investments sold -- -- 1,092 66
Fund shares sold 26,292 11,372 799 3,579
Interest 269 3 10 51
Dividends 4,986 5,038 276 1,571
Securities lending income 38 105 2 --
Variation margin 1,045 217 -- --
Dividend tax reclaim -- -- -- 595
Prepaid expenses 358 -- -- --
---------- ---------- ---------- ----------
Total assets 7,176,426 7,405,613 758,396 701,188
---------- ---------- ---------- ----------
LIABILITIES
Collateral held for securities on loan (Note 6) 705,785 675,812 3,540 --
Payables:
Investments purchased 38,393 22,802 -- 10,812
Fund shares redeemed 7,393 3,194 1,295 142
Investment advisory and administration fees 209 191 48 54
Transfer agency and shareholder service fees 109 284 48 30
Accrued expenses 320 278 70 62
Unrealized loss on forward foreign currency contracts
(Note 2) -- -- -- 75
---------- ---------- ---------- ----------
Total liabilities 752,209 702,561 5,001 11,175
---------- ---------- ---------- ----------
Net assets applicable to outstanding shares $6,424,217 $6,703,052 $ 753,395 $ 690,013
========== ========== ========== ==========
NET ASSETS CONSIST OF:
Paid-in capital $4,935,892 $3,955,509 $ 699,375 $ 534,305
Undistributed net investment income 18,453 15,799 898 2,980
Accumulated net realized loss on investments sold, futures
contracts and foreign currency transactions (1,054) (13,603) (8,285) (16,577)
Net unrealized appreciation on investments
and futures contracts 1,470,926 2,745,347 61,407 169,394
Net unrealized depreciation on translating
assets and liabilities into reporting currency -- -- -- (89)
---------- ---------- ---------- ----------
$6,424,217 $6,703,052 $ 753,395 $ 690,013
========== ========== ========== ==========
PRICING OF SHARES
Net asset value, offering and redemption price per share,
applicable to outstanding shares, $0.00001 par value
(unlimited shares authorized)
Investor Shares ($2,798,552/135,533, $4,738,336/130,243,
$383,340/23,485,and $346,663/21,419) $20.65 $36.38 $16.32 $16.18
Select Shares ($3,210,525/155,186, $1,964,716/53,979,
$370,055/22,643,$343,350/21,193) $20.69 $36.40 $16.34 $16.20
e. Shares ($415,140/20,080) $20.67 NA NA NA
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
82
<PAGE>
STATEMENTS OF OPERATIONS (in thousands)
For the six months ended April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Schwab Schwab Schwab Schwab
S&P 500 1000 Small-Cap International
Fund Fund(R) Index Fund(R) Index Fund(R)
------------ ------------ ------------- -------------
Investment income:
<S> <C> <C> <C> <C>
Dividends (net of foreign taxes withheld of
$45, $3, $1 and $474, respectively) $ 32,739 $ 36,284 $ 2,937 $ 4,042
Interest 1,583 499 110 296
Income from securities lending 255 552 92 --
-------- ---------- -------- --------
Total investment income 34,577 37,335 3,139 4,338
-------- ---------- -------- --------
Expenses:
Investment advisory and administration fees 8,284 6,525 1,651 1,919
Transfer agency and shareholder service fees
Investor Shares 3,037 5,302 652 585
Select Shares 1,166 755 90 61
e.Shares 179 -- -- --
Custodian fees 80 95 15 70
Portfolio accounting fees 410 449 60 52
Professional fees 55 48 20 27
Registration fees 365 298 96 31
Shareholder reports 198 196 51 43
Trustees' fees 10 11 3 3
Insurance and other expenses 66 38 13 14
-------- ---------- -------- --------
13,850 13,717 2,651 2,805
Less:expenses reduced (see Note 4) (6,880) (1,319) (1,033) (1,161)
-------- ---------- -------- --------
Net expenses incurred by fund 6,970 12,398 1,618 1,644
-------- ---------- -------- --------
Net investment income 27,607 24,937 1,521 2,694
-------- ---------- -------- --------
Net realized gain (loss) on investments, futures contracts
and foreign currency transactions:
Net realized gain (loss) on investments sold 6,368 (8,549) (7,919) 417
Net realized gain on futures contracts 3,614 1,569 -- --
Net realized loss on foreign currency transactions -- -- -- (208)
-------- ---------- -------- --------
Net realized gain (loss) on investments,
futures contracts and foreign currency transactions 9,982 (6,980) (7,919) 209
-------- ---------- -------- --------
Change in net unrealized appreciation (depreciation) on
investments, futures contracts and foreign
currency translation:
Net unrealized appreciation on investments 931,777 1,121,126 87,110 80,828
Net unrealized appreciation (depreciation) on
futures contracts 324 (202) -- --
Net unrealized depreciation on foreign
currency translation -- -- -- (125)
-------- ---------- -------- --------
Net unrealized appreciation on investments, futures
contracts and foreign currency translation 932,101 1,120,924 87,110 80,703
-------- ---------- -------- --------
Net gain on investments 942,083 1,113,944 79,191 80,912
-------- ---------- -------- --------
Increase in net assets resulting from operations $969,690 $1,138,881 $ 80,712 $ 83,606
======== ========== ======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
83
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (in thousands)
<TABLE>
<CAPTION>
Schwab S&P 500 Schwab 1000
Fund Fund(R)
--------------------------- ---------------------------
Six Months Six Months
ended Year ended Year
04/30/99 ended 04/30/99 ended
(Unaudited) 10/31/98 (Unaudited) 10/31/98
------------ ------------ ------------ ------------
Operations:
<S> <C> <C> <C> <C>
Net investment income $ 27,607 $ 35,310 $ 24,937 $ 41,143
Net realized gain (loss) on investments and futures contracts 9,982 (8,303) (6,980) (1,169)
Change in net unrealized appreciation on investments
and futures contracts 932,101 371,823 1,120,924 586,248
---------- ---------- ---------- ----------
Increase in net assets resulting from operations 969,690 398,830 1,138,881 626,222
---------- ---------- ---------- ----------
Dividends to shareholders from net investment income
Investor Shares (18,212) (8,697) (31,297) (27,684)
Select Shares (19,016) (5,313) (11,925) (5,010)
e. Shares (2,807) (1,504) -- --
---------- ---------- ---------- ----------
Total dividends to shareholders (40,035) (15,514) (43,222) (32,694)
---------- ---------- ---------- ----------
Capital share transactions:
Proceeds from shares sold 3,016,159 3,118,974 1,713,175 2,003,202
Net asset value of shares issued in reinvestment of dividends 37,624 14,660 39,869 29,584
Early withdrawal fees (see Note 8) -- -- 595 834
Less payments for shares redeemed (1,323,495) (1,293,119) (843,919) (966,474)
---------- ---------- ---------- ----------
Increase in net assets from capital share transactions 1,730,288 1,840,515 909,720 1,067,146
---------- ---------- ---------- ----------
Total increase in net assets 2,659,943 2,223,831 2,005,379 1,660,674
Net Assets:
Beginning of period 3,764,274 1,540,443 4,697,673 3,036,999
---------- ---------- ---------- ----------
End of period (including undistributed
net investment income of $18,453, $30,878, $15,799,
and $34,084, respectively) $6,424,217 $3,764,274 $6,703,052 $4,697,673
========== ========== ========== ==========
Number of fund shares:
Sold 156,306 190,511 50,783 69,393
Reinvested 2,052 1,017 1,241 1,155
Redeemed (68,046) (79,685) (24,872) (33,764)
---------- ---------- ---------- ----------
Net increase in shares outstanding 90,312 111,843 27,152 36,784
Shares outstanding:
Beginning of period 220,487 108,644 157,070 120,286
---------- ---------- ---------- ----------
End of period 310,799 220,487 184,222 157,070
========== ========== ========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
84
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (in thousands)
<TABLE>
<CAPTION>
Schwab Schwab
Small-Cap International
Index Fund(R) Index Fund(R)
--------------------------- ---------------------------
Six Months Six Months
ended Year ended Year
04/30/99 ended 04/30/99 ended
(Unaudited) 10/31/98 (Unaudited) 10/31/98
------------ ------------ ------------ ------------
Operations:
<S> <C> <C> <C> <C>
Net investment income $ 1,521 $ 2,248 $ 2,694 $ 6,328
-------- -------- -------- --------
Net realized gain (loss) on investments and foreign
currency transactions (7,919) 50,081 209 (13,292)
Change in net unrealized appreciation (depreciation) on
investments and foreign currency translation 87,110 (145,100) 80,703 31,926
-------- -------- -------- --------
Increase (decrease) in net assets resulting from operations 80,712 (92,771) 83,606 24,962
-------- -------- -------- --------
Dividends to shareholders from net investment income
Investor Shares (1,755) (1,517) (4,065) (3,700)
Select Shares (751) (379) (1,055) (654)
e. shares -- -- -- --
Distibutions to shareholders from net capital gains
Investor Shares (27,699) -- -- --
Select Shares (8,884) -- -- --
e. shares -- -- -- --
-------- -------- -------- --------
Total dividends and distributions to shareholders (39,089) (1,896) (5,120) (4,354)
-------- -------- -------- --------
Capital Share Transactions:
Proceeds from shares sold 420,871 417,865 340,887 233,250
Net asset value of shares issued in reinvestment of dividends 36,340 1,744 4,703 3,935
Early withdrawal fees (see Note 8) 340 212 57 127
Less payments for shares redeemed (375,035) (187,542) (256,142) (103,260)
-------- -------- -------- --------
Increase in net assets from capital share transactions 82,516 232,279 89,505 134,052
-------- -------- -------- --------
Total increase in net assets 124,139 137,612 167,991 154,660
Net Assets:
Beginning of year 629,256 491,644 522,022 367,362
-------- -------- -------- --------
End of year (including undistributed net investment income
of $898, $1,866, $2,980, and $5,810, respectively) $753,395 $629,256 $690,013 $522,022
======== ======== ======== ========
Number of fund shares:
Sold 26,231 23,894 21,554 16,160
Reinvested 2,378 102 316 302
Redeemed (23,344) (10,855) (15,995) (7,328)
-------- -------- -------- --------
Net increase in shares outstanding 5,265 13,141 5,875 9,134
Shares outstanding:
Beginning of year 40,863 27,722 36,737 27,603
-------- -------- -------- --------
End of year 46,128 40,863 42,612 36,737
======== ======== ======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
85
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Schwab S&P 500 Fund
------------------------------------------------------------
INVESTOR SHARES 1999(1) 1998 1997 1996(2)
- ----------------------------------------------- ---------- ---------- --------- ---------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<S> <C> <C> <C> <C>
Net asset valueat beginning of period $ 17.05 $ 14.17 $ 10.88 $ 10.00
---------- ---------- --------- ---------
From investment operations:
Net investment income 0.08 0.16 0.14 0.08
Net realized and unrealized gains on investments 3.67 2.85 3.24 0.80
---------- ---------- --------- ---------
Total from investment operations 3.75 3.01 3.38 0.88
Less distributions:
Dividends from net investment income (0.15) (0.13) (0.09) --
---------- ---------- --------- ---------
Total distributions (0.15) (0.13) (0.09) --
---------- ---------- --------- ---------
NET ASSET VALUE AT END OF PERIOD $ 20.65 $ 17.05 $ 14.17 $ 10.88
========== ========== ========= =========
Total return (%) 22.13* 21.39 31.29 8.80*
RATIOS/SUPPLEMENTAL DATA (%)
- ------------------------------------------------------
Ratio of net operating expenses to average net assets 0.35** 0.35 0.38 0.49**
Reductions reflected in above expense ratio 0.27** 0.28 0.32 0.40**
Ratio of net investment income to average net assets 1.00** 1.25 1.49 1.89**
Portfolio turnover rate 1 1 3 1
Net assets, end of period (000s) $2,798,552 $1,935,398 $923,148 $243,772
========== ========== ======== =========
SELECT SHARES 1999(1) 1998 1997(3)
- ----------------------------------------------- ---------- ---------- ---------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
Net asset valueat beginning of period $ 17.09 $ 14.19 $ 12.85
---------- ---------- ---------
From investment operations:
Net investment income 0.09 0.26 0.05
Net realized and unrealized gains on investments 3.69 2.78 1.29
---------- ---------- ---------
Total from investment operations 3.78 3.04 1.34
Less distributions:
Dividends from net investment income (0.18) (0.14) --
---------- ---------- ---------
Total distributions (0.18) (0.14) --
---------- ---------- ---------
NET ASSET VALUE AT END OF PERIOD $ 20.69 $ 17.09 $ 14.19
========== ========== =========
Total return (%) 22.23* 21.63 10.43*
RATIOS/SUPPLEMENTAL DATA (%)
- ------------------------------------------------------
Ratio of actual operating expenses to average
net assets 0.19** 0.19 0.19**
Reductions reflected in above expense ratio 0.28** 0.28 0.34**
Ratio of net investment income to average net assets 1.16** 1.40 1.46**
Portfolio turnover rate 1 1 3
Net assets, end of period (000s) $3,210,525 $1,548,052 $485,604
<FN>
* Not Annualized.
** Annualized.
(1) For the six months ended April 30, 1999 (Unaudited).
(2) For the period from May 1, 1996 (commencement of operations) to October 31, 1996.
(3) For the period from May 19, 1997 (commencement of operations) to October 31, 1997.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
86
<PAGE>
<TABLE>
<CAPTION>
Schwab S&P 500 Fund
------------------------------------------------------------
e. SHARES 1999(1) 1998 1997 1996(2)
- ----------------------------------------------- ---------- ---------- -------- ---------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<S> <C> <C> <C> <C>
Net asset value at beginning of period $ 17.08 $ 14.19 $ 10.89 $ 10.00
-------- -------- -------- -------
From investment operations:
Net investment income 0.09 0.15 0.21 0.04
Net realized and unrealized gains
on investments 3.66 2.88 3.19 0.85
-------- -------- -------- -------
Total from investment operations 3.75 3.03 3.40 0.89
Less distributions:
Dividends from net investment income (0.16) (0.14) (0.10) --
-------- -------- -------- -------
Total distributions (0.16) (0.14) (0.10) --
-------- -------- -------- -------
NET ASSET VALUE AT END OF PERIOD $ 20.67 $ 17.08 $ 14.19 $ 10.89
======== ======== ======== =======
Total return (%) 22.09* 21.50 31.48 8.90*
RATIOS/SUPPLEMENTAL DATA (%)
- ----------------------------------------------
Ratio of actual operating expenses to average
net assets 0.28** 0.28 0.28 0.28**
Reductions reflected in above expense ratio 0.20** 0.24 0.33 0.91**
Ratio of net investment income to average net assets 1.07** 1.32 1.61 1.82**
Portfolio turnover rate 1 1 3 1
Net assets, end of period (000s) $415,140 $280,824 $131,691 $36,331
<FN>
* Not Annualized.
** Annualized.
(1) For the six months ended April 30, 1999 (Unaudited).
(2) For the period from May 1, 1996 (commencement of operations) to October 31, 1996.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
87
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
Schwab 1000 Fund(R)
---------------------------------------------------------------------------
INVESTOR SHARES 1999(1) 1998 1997(2) 1997(4) 1996(4) 1995(4)
- ----------------------------------------------- ---------- ---------- ---------- ---------- ---------- --------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 29.90 $ 25.25 $ 24.78 $ 18.14 $ 15.68 $ 13.08
---------- ---------- ---------- ---------- ---------- --------
From investment operations:
Net investment income 0.13 0.27 0.04 0.28 0.24 0.26
Net realized and unrealized gains
on investments 6.60 4.64 0.43 6.62 2.45 2.48
---------- ---------- ---------- ---------- ---------- --------
Total from investment operations 6.73 4.91 0.47 6.90 2.69 2.74
Less distributions:
Dividends from net investment income (0.25) (0.26) -- (0.26) (0.23) (0.14)
---------- ---------- ---------- ---------- ---------- --------
Total distributions (0.25) (0.26) -- (0.26) (0.23) (0.14)
---------- ---------- ---------- ---------- ---------- --------
NET ASSET VALUE AT END OF PERIOD $ 36.38 $ 29.90 $ 25.25 $ 24.78 $ 18.14 $ 15.68
========== ========== ========== ========== ========== ========
Total return (%) 22.63* 19.63 1.90* 38.32 17.27 21.23
RATIOS/SUPPLEMENTAL DATA (%)
- ------------------------------------------------------
Ratio of net operating expenses to average net assets 0.46** 0.46 0.46** 0.47 0.49 0.54
Reductions reflected in above expense ratio 0.04** 0.05 0.04** 0.06 0.08 0.09
Ratio of net investment income to average net assets 0.84** 1.02 1.00** 1.33 1.66 2.03
Portfolio turnover rate 2 2 -- 2 2 2
Net assets, end of period (000s) $4,738,336 $3,657,122 $2,610,607 $2,498,891 $1,560,059 $826,714
========== ========== ========== ========== ========== ========
SELECT SHARES 1999(1) 1998 1997(2) 1997(3)
- ----------------------------------------------- ---------- ---------- ---------- ----------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
Net asset valueat beginning of period $ 29.93 $ 25.26 $ 24.79 $ 22.64
---------- ---------- -------- --------
Income from investment operations:
Net investment income 0.16 0.32 0.04 0.05
Net realized and unrealized gains
on investments 6.60 4.63 0.43 2.10
---------- ---------- -------- --------
Total from investment operations 6.76 4.95 0.47 2.15
Less distributions:
Dividends from net investment income (0.29) (0.28) -- --
---------- ---------- -------- --------
Total distributions (0.29) (0.28) -- --
---------- ---------- -------- --------
NET ASSET VALUE AT END OF PERIOD $ 36.40 $ 29.93 $ 25.26 $ 24.79
========== ========== ======== ========
Total return (%) 22.73* 19.79 1.90* 9.50*
RATIOS/SUPPLEMENTAL DATA (%)
- ---------------------------------------------------------
Ratio of actual operating expenses to average net assets 0.35** 0.35 0.35** 0.35**
Reductions reflected in above expense ratio 0.04** 0.04 0.06** 0.33**
Ratio of net investment income to average net assets 0.95** 1.11 1.11** 1.26**
Portfolio turnover rate 2 2 -- 2
Net assets, end of period (000s) $1,964,716 $1,040,551 $426,392 $347,244
<FN>
* Not Annualized.
** Annualized.
(1) For the six months ended April 30, 1999 (Unaudited).
(2) For the period from September 1, 1997 to October 31, 1997.
(3) For the period from May 19, 1997 (commencement of operations) to August 31, 1997.
(4) For the fiscal year ended August 31.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
88
<PAGE>
<TABLE>
<CAPTION>
Schwab Small-Cap Index Fund(R)
----------------------------------------------------
INVESTOR SHARES 1999(1) 1998 1997 1996 1995
- ----------------------------------------------- -------- -------- -------- -------- --------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 15.39 $ 17.73 $ 13.59 $ 11.70 $ 10.05
-------- -------- -------- -------- --------
From investment operations:
Net investment income 0.01 0.05 0.06 0.07 0.10
Net realized and unrealized gains (losses)
on investments 1.85 (2.33) 4.14 1.88 1.61
-------- -------- -------- -------- --------
Total from investment operations 1.86 (2.28) 4.20 1.95 1.71
Less distributions:
Dividends from net investment income (0.06) (0.06) (0.06) (0.06) (0.06)
Distributions from realized gains on investments (0.87) -- -- -- --
-------- -------- -------- -------- --------
Total distributions (0.93) (0.06) (0.06) (0.06) (0.06)
-------- -------- -------- -------- --------
NET ASSET VALUE AT END OF PERIOD $ 16.32 $ 15.39 $ 17.73 $ 13.59 $ 11.70
======== ======== ======== ======== ========
Total return (%) 12.45* (12.88) 31.03 16.73 17.11
RATIOS/SUPPLEMENTAL DATA (%)
- ---------------------------------------------------------
Ratio of actual operating expenses to average net assets 0.49** 0.49 0.52 0.59 0.68
Reductions reflected in above expense ratio 0.30** 0.32 0.37 0.35 0.34
Ratio of net investment income to average net assets 0.40** 0.35 0.53 0.56 0.68
Portfolio turnover rate 31 40 23 23 24
Net assets, end of period (000s) $383,340 $479,500 $410,470 $209,125 $122,074
SELECT SHARES 1999(1) 1998 1997(2)
- ----------------------------------------------- -------- -------- --------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
Net asset valueat beginning of period $ 15.41 $ 17.75 $ 14.50
-------- -------- --------
From investment operations:
Net investment income 0.04 0.08 0.02
Net realized and unrealized gains (losses)
on investments 1.83 (2.35) 3.23
-------- -------- --------
Total from investment operations 1.87 (2.27) 3.25
Less distributions:
Dividends from net investment income (0.07) (0.07) --
Distributions from realized gains on investments (0.87) -- --
-------- -------- --------
Total distributions (0.94) (0.07)+ --
-------- -------- --------
NET ASSET VALUE AT END OF PERIOD $ 16.34 $ 15.41 $ 17.75
======== ======== ========
Total return (%) 12.56* (12.81) 22.41*
RATIOS/SUPPLEMENTAL DATA (%)
- ---------------------------------------------------------
Ratio of actual operating expenses to average net assets 0.38** 0.38 0.38**
Reductions reflected in above expense ratio 0.30** 0.33 0.52**
Ratio of net investment income to average net assets 0.55** 0.46 0.56**
Portfolio turnover rate 31 40 23
Net assets, end of period (000s) $370,055 $149,756 $ 81,174
<FN>
* Not Annualized.
** Annualized.
(1) For the six months ended April 30, 1999 (Unaudited).
(2) For the period from May 19, 1997 (commencement of operations) to October 31, 1997.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
89
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (continued)
Schwab International Index Fund(R)
----------------------------------------------------
INVESTOR SHARES 1999(1) 1998 1997 1996 1995
- ----------------------------------------------- -------- -------- -------- -------- --------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 14.21 $ 13.31 $ 12.23 $ 11.13 $ 10.89
-------- -------- -------- -------- --------
From investment operations:
Net investment income 0.04 0.17 0.17 0.16 0.14
Net realized and unrealized gains
on investments 2.06 0.88 1.08 1.07 0.22
-------- -------- -------- -------- --------
Total from investment operations 2.10 1.05 1.25 1.23 0.36
Less distributions:
Dividends from net investment income (0.13) (0.15) (0.17) (0.13) (0.12)
-------- -------- -------- -------- --------
Total distributions (0.13) (0.15) (0.17) (0.13) (0.12)
-------- -------- -------- -------- --------
NET ASSET VALUE AT END OF PERIOD $ 16.18 $ 14.21 $ 13.31 $ 12.23 $ 11.13
======== ======== ======== ======== ========
Total return (%) 14.89* 8.02 10.33 11.07 3.35
RATIOS/SUPPLEMENTAL DATA (%)
- ---------------------------------------------------------
Ratio of actual operating expenses to average net assets 0.58** 0.58 0.61 0.69 0.85
Reductions reflected in above expense ratio 0.40** 0.46 0.52 0.48 0.37
Ratio of net investment income to average net assets 0.86** 1.35 1.36 1.50 1.45
Portfolio turnover rate -- 6 13 6 --
Net assets, end of period (000s) $346,663 $428,462 $317,833 $246,778 $179,612
SELECT SHARES 1999(1) 1998 1997(2)
- ----------------------------------------------- -------- -------- --------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
Net asset value at beginning of period $ 14.23 $ 13.32 $ 13.59
-------- -------- --------
From investment operations:
Net investment income 0.05 0.22 0.04
Net realized and unrealized gains (losses)
on investments 2.07 0.85 (0.31)
-------- -------- --------
Total from investment operations 2.12 1.07 (0.27)
Less distributions:
Dividends from net investment income (0.15) (0.16) --
-------- -------- --------
Total distributions (0.15) (0.16) --
-------- -------- --------
NET ASSET VALUE AT END OF PERIOD $ 16.20 $ 14.23 $ 13.32
======== ======== ========
Total return (%) 14.99* 8.16 (1.99)*
RATIOS/SUPPLEMENTAL DATA (%)
- ---------------------------------------------------------
Ratio of actual operating expenses to average net assets 0.47** 0.47 0.47**
Reductions reflected in above expense ratio 0.40** 0.48 0.80**
Ratio of net investment income to average net assets 1.12** 1.49 0.17**
Portfolio turnover rate -- 6 13
Net assets, end of period (000s) $343,350 $ 93,560 $ 49,529
<FN>
* Not Annualized.
** Annualized.
(1) For the six months ended April 30, 1999 (Unaudited).
(2) For the period from May 19, 1997 (commencement of operations) to October 31, 1997.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
90
<PAGE>
NOTES TO FINANCIAL STATEMENTS
For the six months ended April 30, 1999 (Unaudited)
(All currency amounts are in thousands unless otherwise noted.)
1. DESCRIPTION OF THE FUNDS
The Schwab S&P 500 Fund, Schwab Small-Cap Index Fund(R) and Schwab International
Index Fund(R) are series of the Schwab Capital Trust (the "Capital Trust") and
the Schwab 1000 Fund(R) is a series of the Schwab Investments (the "Investment
Trust"), each a no-load, open-end management investment company organized as
Massachusetts business trusts on May 7, 1993 and October 26, 1990, respectively,
and registered under the Investment Company Act of 1940 ("the Act") as amended.
Each series in this report is hereafter referred to as a "Fund".
The Schwab S&P 500 Fund, Schwab 1000 Fund,(R) Schwab Small-Cap Index Fund,(R)
and Schwab International Index Fund(R) each offer two classes of shares --
Investor Shares and Select Shares.(TM) Both classes represent interests in the
same portfolio of investments of each Fund and are substantially the same in all
respects except that the classes are subject to different transfer agency and
shareholder service fees (see Note 3), investment minimums and certain other
expenses. In addition, the Schwab S&P 500 Fund offers a third class of shares
- --the e.Shares(TM). This class offers the same concept as the Investor Shares
and the Select Shares, but the e.Shares are available only to clients of Schwab
Institutional, Charles Schwab Trust Company and to certain tax-advantaged
retirement plans that can execute their trading and information requests through
SchwabLink(TM).
In addition to the Schwab S&P 500 Fund, Schwab Small-Cap Index Fund and Schwab
International Index Fund, the Capital Trust also offers the Schwab MarketTrack
Growth Portfolio, Schwab MarketTrack Balanced Portfolio, Schwab MarketTrack
Conservative Portfolio, Schwab MarketTrack All Equity Portfolio, Schwab
Analytics Fund,(R) Schwab MarketManager Growth Portfolio, Schwab MarketManager
Balanced Portfolio, Schwab MarketManager Small Cap Portfolio, Schwab
MarketManager International Portfolio, Institutional Select S&P 500 Fund,
Institutional Select Large-Cap Value Index Fund, Institutional Select Small-Cap
Value Index Fund and Schwab Total Stock Market Index Fund(TM) (effective on
April 16, 1999, and commenced operations on June 1, 1999). The assets of each
series are segregated and accounted for separately.
In addition to the Schwab 1000 Fund, the Investment Trust also offers the Schwab
Short-Term Bond Market Index Fund, Schwab Total Bond Market Index Fund, Schwab
California Short/Intermediate Tax-Free Bond Fund, Schwab California Long-Term
Tax-Free Bond Fund, Schwab Short/Intermediate Tax-Free Bond Fund and Schwab
Long-Term Tax-Free Bond Fund. The assets of each series are segregated and
accounted for separately.
2. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies are in conformity with generally
accepted accounting principles. The preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
SECURITY VALUATION -- Investments in securities traded on an exchange or in the
over-the-counter market are valued at the last-quoted sale price for a given
day, or if a sale is not reported for that day, at the mean between the most
recent quoted bid and asked prices. Securities for which no quotations are
readily available are valued
91
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
at fair value as determined by the Fund's investment adviser pursuant to
guidelines adopted in good faith by the Board of Trustees. Futures contracts and
options thereon, which are traded on exchanges, are valued at their settlement
prices as of the close of such exchanges. Short-term securities with 60 days or
less to maturity are stated at amortized cost, which approximates market value.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND REALIZED GAINS (LOSSES) -- Security
transactions are accounted for on a trade-date basis (date the order to buy or
sell is executed). Dividend income and distributions to shareholders are
recorded on the ex-dividend date; interest income (including accretion of
discounts) is recorded on the accrual basis. Realized gains and losses from
security transactions are determined on an identified cost basis.
FUTURES CONTRACTS -- The Schwab S&P 500 Fund and the Schwab 1000 Fund(R) may
invest in futures contracts. The Funds are required to deposit with the broker
an amount of cash equivalents equal to a certain percentage of the contract
amount. This is known as the "initial margin." The "variation margin" represents
unrealized gains (losses) due to daily fluctuation in the value of the contract.
The Funds record a realized gain or loss equal to the variation margin at the
time the contracts are closed.
The Funds will invest in these instruments to participate in the return of an
index. The use of futures contracts involves certain risks, which include (1)
imperfect correlation between the price movement of the contracts and the
underlying securities, or (2) inability to close out positions due to different
trading hours, or the temporary absence of a liquid market, for either the
contract or underlying securities. These risks may involve amounts exceeding the
amount recognized in each Fund's Statements of Operations at any given time.
As of April 30, 1999, the Schwab S&P 500 Fund and the Schwab 1000 Fund had the
following open S&P 500 Index futures contracts:
Number of Contract Unrealized
Fund Contracts Value Expiration Appreciation
---------- --------- --------- ------------ ------------
S&P 500 Fund 176 $58,806 6/18/99 $1,045
Schwab 1000 Fund(R) 39 13,031 6/18/99 217
The cash and eligible securities on deposit with brokers available to cover
margin requirements for open futures positions at April 30, 1999 were $4,487 and
$3,580 for the Schwab S&P 500 Fund, and $1,458 and $1,194 for the Schwab 1000
Fund, respectively. The Funds have segregated short-term investments or
repurchase agreements for the remaining portion of the contract value.
REPURCHASE AGREEMENTS -- Repurchase agreements are fully collateralized by U.S.
Treasury or government agency securities. All collateral is held by the Funds'
custodian and is monitored daily to ensure that its market value at least equals
the repurchase price under the agreement.
92
<PAGE>
FOREIGN CURRENCY TRANSLATION -- The accounting records of the Schwab
International Index Fund(R) are maintained in U.S. dollars. Investment
securities and all other assets and liabilities of the fund denominated in
foreign currencies are translated into U.S. dollars at the exchange rates on
April 30, 1999. Purchases and sales of securities, income receipts and expense
payments are translated into U.S. dollars at the exchange rate in effect on the
dates of the respective transactions.
The Schwab International Index Fund separates within its statement of operations
the portion of realized and unrealized gains and losses resulting from changes
in foreign currency exchange rates from the fluctuations in market prices of
investments held.
FORWARD CURRENCY CONTRACTS -- A forward currency contract ("Forward") is an
agreement between two parties to buy and sell a currency at a set price on a
future date. The value of the Forward fluctuates with changes in currency
exchange rates. The Forward is marked-to-market daily and the change in value is
recorded by the Schwab International Index Fund as an unrealized gain or loss.
When the Forward is closed, the Schwab International Index Fund records a
realized gain or loss equal to the difference between the value at the time the
contract was entered into and the value at the time the contract was closed. The
Schwab International Index Fund engages in Forwards in connection with the
purchase and sale of portfolio securities to minimize the uncertainty of changes
in future exchange rates. The Schwab International Index Fund could be exposed
to risk if counterparties to the contracts are unable to meet the terms of the
contracts or if the value of the foreign currency changes unfavorably.
The following forward foreign currency contracts were outstanding as of April
30, 1999:
Settlement Foreign Currency In Exchange Net Unrealized
Dates to Receive For (U.S.$) Depreciation
---------- ---------------- ------------ -------------
Foreign Currency Purchases:
British Pound 5/05/99 4,079 $ 6,612 $(42)
European Currency 5/03/99 1,346 1,439 (15)
Japanese Yen 5/06/99 336,558 2,837 (18)
------- ----
$10,888 $(75)
======= ====
EXPENSES -- Expenses arising in connection with a Fund are charged directly to
that Fund. Expenses common to all series of the Trust are generally allocated to
each series in proportion to their relative net assets.
FEDERAL INCOME TAXES -- It is each Fund's policy to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all net investment income and realized net capital
gains, if any, to shareholders. Therefore, no federal income tax provision is
required. Each Fund is considered a separate entity for tax purposes.
93
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
The aggregate gross unrealized appreciation and depreciation for securities held
by the Funds at April 30, 1999 (for financial reporting and federal income tax
purposes) is as follows:
<TABLE>
<CAPTION>
Net Unrealized Appreciated Depreciated
Fund Appreciation Securities Securities
------------ ------------ -------------- ------------
<S> <C> <C> <C>
Schwab S&P 500 Fund $1,470,926 $ 1,650,501 $ (179,575)
Schwab 1000 Fund(R) 2,745,347 2,892,973 (147,626)
Schwab Small-Cap Index Fund(R) 61,407 159,638 (98,231)
Schwab International Index Fund(R) 169,394 195,369 (25,975)
</TABLE>
At October 31, 1998 the unused capital loss carryforwards, for federal income
tax purposes with expiration dates, were as follows:
Schwab Schwab
S&P 500 Schwab 1000 International
Capital Loss Expirations: Fund Fund Index Fund
----------- ----------- -------------
10/31/00 $ -- $ 354 $ --
10/31/01 -- -- --
10/31/02 -- 935 140
10/31/03 -- -- --
10/31/04 5 844 1,743
10/31/05 2,152 2,606 1,837
10/31/06 5,731 650 11,905
---------- ---------- -------------
$7,888 $5,389 $15,625
========== ========== =============
RECLASSIFICATION -- Generally accepted accounting principles require that
certain components of net assets be reclassified between financial and tax
reporting. These reclassifications have no effect on net assets or net asset
values per share.
On the Statements of Assets and Liabilities the following adjustments were made:
Accumulated Undistributed
Net Realized Net Investment
Fund Gain (Loss) Income Paid-In Capital
---- ------------ -------------- ---------------
Schwab S&P 500 Fund $ -- $ 3 $ (3)
Schwab Small-Cap Index Fund (2) 17 (15)
Schwab International Index Fund 429 (404) (25)
94
<PAGE>
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT -- The Capital Trust and the
Investment Trust have investment advisory and administration agreements with
Charles Schwab Investment Management, Inc. (the "Investment Adviser"). For
advisory services and facilities furnished, the Schwab S&P 500 Fund pays an
annual fee, payable monthly, of 0.36% of the first $1 billion of average daily
net assets, 0.33% of the next $1 billion of such net assets, and 0.31% of such
assets in excess of $2 billion. the Schwab 1000 Fund(R) pays an annual fee,
payable monthly, of 0.30% of the first $500 million of average daily net assets
and 0.22% of such assets over $500 million. The Schwab Small-Cap Index Fund(R)
pays an annual fee, payable monthly of 0.50% of the first $300 million of
average daily net assets and 0.45% of such net assets over $300 million. The
Schwab International Index Fund(R) pays an annual fee, payable monthly, of 0.70%
of the first $300 million of average daily net assets and 0.60% of such net
assets over $300 million. The Investment Adviser has reduced a portion of its
fee for the six months ended April 30, 1999 (See Note 4).
TRANSFER AGENCY AND SHAREHOLDER SERVICE AGREEMENTS -- The Capital Trust and
Investment Trust have transfer agency and shareholder service agreements with
Charles Schwab & Co., Inc. ("Schwab"). For services provided under these
agreements, Schwab receives an annual fee, payable monthly, of 0.05% of each
Fund's average daily net assets for transfer agency services. for shareholder
services provided, Schwab will receive from the Investor Shares, Select Shares
and e.Shares(TM) an annual fee of 0.20%, 0.05% and 0.05%, respectively, of the
average daily net assets of that class of shares. Schwab has reduced a portion
of its fees for the six months ended April 30, 1999 (See Note 4).
OFFICERS AND TRUSTEES -- Certain officers and trustees of the Capital Trust and
the Investment Trust are also officers and/or directors of the Investment
Adviser and/or Schwab. During the six months ended April 30, 1999, the Capital
Trust and the Investment Trust made no direct payments to its officers or
trustees who are "interested persons" within the meaning of the the "Act", as
amended. The Schwab S&P 500 Fund, Schwab 1000 Fund, Schwab Small-Cap Index Fund
and Schwab International Index Fund incurred fees of $10, $11, $3 and $3
respectively, related to the Trusts' unaffiliated trustees.
OTHER AFFILIATED PARTIES AND TRANSACTIONS -- As of April 30, 1999, Schwab S&P
500 Fund, Schwab Small-Cap Index Fund, and Schwab International Index Fund, had
outstanding shares of .5%, .5%, .2% and 1%; 9%, 7%, 2%, and 5%; and 11%, 7%, 2%
and 7%, respectively, owned by Schwab MarketTrack Growth Portfolio, Schwab
MarketTrack Balanced Portfolio, Schwab MarketTrack Conservative Portfolio and
Schwab MarketTrack All Equity Portfolio respectively. The Schwab S&P 500 Fund
and the Schwab 1000 Fund placed a portion of their respective portfolio
transactions with Charles Schwab & Co., Inc., an affiliated broker. For the six
months ended April 30, 1999, the commissions paid were $13 and $5, respectively.
INTERFUND TRANSACTIONS -- For the six months ended April 30, 1999, Schwab 1000
Fund and Schwab Small-Cap Index Fund engaged in purchase transactions with funds
that have a common investment adviser, common trustees, and common officers.
These purchases and sale transactions, made at current market value pursuant to
Rule 17a-7 under the Act, were $51,819 and $51,819, respectively.
95
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
4. EXPENSES REDUCED AND ABSORBED BY THE INVESTMENT ADVISER AND SCHWAB
The Investment Adviser and Schwab guarantee that, through at least February 29,
2000, total operating expenses of each class of shares will not exceed the
percentages of the average daily net assets of that class of shares, after
waivers and reimbursements, as shown below. For the purpose of this guarantee,
operating expenses do not include interest expenses, extraordinary expenses,
taxes, foreign taxes and capital items.
Investor Shares Select Shares e.Shares
--------------- ------------- --------
Schwab S&P 500 Fund 0.35% 0.19% 0.28%
Schwab 1000 Fund(R) 0.46% 0.35% N/A
Schwab Small-Cap Index Fund(R) 0.49% 0.38% N/A
Schwab International Index Fund(R) 0.58% 0.47% N/A
For the six months ended April 30, 1999, the total of such fees and expenses
reduced by the Investment Adviser were $5,221, $755, $1,011 and $1,131 for the
Schwab S&P 500 Fund, Schwab 1000 Fund, Schwab Small-Cap Index Fund and Schwab
International Index Fund, respectively. The total of such fees reduced by Schwab
were $1,659, $564, $22 and $30 for the Schwab S&P 500 Fund, Schwab 1000 Fund,
Schwab Small-Cap Index Fund and Schwab International Index Fund, respectively.
5. BORROWING AGREEMENTS
The Trusts have line of credit arrangements with PNC Bank N.A. and Bank of
America NT & SA whereby the Trusts may borrow on behalf of the Schwab S&P 500
Fund and Schwab 1000 Fund, on a temporary basis, to fund shareholder
redemptions. The Trusts may borrow in an aggregate amount of up to $100 million
from PNC Bank N.A. and $100 million from Bank of America NT & SA. As of April
30, 1999, there were no borrowings made under these arrangements. The Trusts
have line of credit arrangement with The Bank of New York whereby the Trusts may
borrow on behalf of the Schwab S&P 500 Fund, Schwab 1000 Fund, Schwab Small-Cap
Index Fund and Schwab International Index Fund an aggregate amount of up to $150
million, on a temporary basis, to fund shareholder redemptions. Amounts borrowed
under these arrangements bear interest at periodically negotiated rates and may
be collateralized by the assets of the Funds. As of April 30, 1999, there were
no outstanding borrowings under this arrangement on behalf of the Funds.
96
<PAGE>
6. SECURITIES LENDING
The Schwab S&P 500 Fund, Schwab 1000 Fund(R), and Schwab Small-Cap Index Fund(R)
loaned securities to certain brokers, dealers and other financial institutions
who paid the Funds negotiated lenders' fees. The Fund received cash collateral,
letters of credit, or U.S. Government securities against the loaned securities
in an amount equal to 102% of the market value of the loaned securities at the
inception of each loan. The loans were and at all times will be collateralized
in an amount equal to at least 100% of the market value of the securities
loaned.
Market Value of
Fund Securities Loaned Collateral
---- ----------------- ---------------
Schwab S&P 500 Fund $683,849 $705,785
Schwab 1000 Fund 654,418 675,812
Schwab Small-Cap Index Fund 3,396 3,540
7. INVESTMENT TRANSACTIONS
Aggregate purchases and sales of investment securities, other than short-term
obligations, for the six months ended April 30, 1999, were as follows:
Proceeds of Sales
Fund Purchases and Maturities
---- ---------------- -----------------
Schwab S&P 500 Fund $1,732,460 $ 61,663
Schwab 1000 Fund 978,700 92,701
Schwab Small-Cap Index Fund 265,684 220,389
Schwab International Index Fund 81,587 1,628
For the Schwab S&P 500 Fund and Schwab 1000 Fund, included in the aforementioned
purchases of common stock are purchases of The Charles Schwab Corp., an
affiliated issuer, with a current value as of April 30, 1999, of $25,602 and
$23,802, respectively.
8. EARLY WITHDRAWAL FEES
The early withdrawal fees are retained by the Funds and are treated as a
contribution to capital.
Early withdrawal fees on Early withdrawal fees
Fund redemption proceeds* as of 4/30/99
---- ------------------------ ---------------------
Schwab 1000 Fund 0.50% $595
Schwab Small-Cap Index Fund 0.50% 340
Schwab International Index Fund 0.75% 57
*Attributable to shares purchased and held less than 180 days.
97
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
9. CAPITAL SHARE TRANSACTIONS
The Funds offer two classes of shares: Investor Shares and Select Shares,(TM)
with the exception of Schwab S&P 500 Fund which offers a third class of shares:
e.Shares.(TM) Shares of each class represent interest in the same portfolio of
investments of the Funds. Transactions in capital shares for the period ended
April 30, 1999 were as follows:
Schwab S&P 500 Fund
-------------------------------------------
Six Months ended Year ended
April 30, 1999 October 31, 1998
-------------------- ---------------------
Shares Dollars Shares Dollars
-------- ---------- --------- ----------
Investor Shares:
Sold 56,007 $1,076,691 84,045 $1,377,701
Reinvested 962 17,632 583 8,407
Redeemed (34,916) (683,243) (36,297) (589,636)
-------- ---------- --------- ----------
Net Increase 22,053 $ 411,080 48,331 $ 796,472
-------- ---------- --------- ----------
Select Shares:*
Sold 89,414 $1,731,571 89,528 $1,468,401
Reinvested 950 17,420 338 4,872
Redeemed (25,741) (499,218) (33,515) (545,494)
-------- ---------- --------- ----------
Net Increase 64,623 $1,249,773 56,351 $ 927,779
-------- ---------- --------- ----------
e.Shares:
Sold 10,885 $ 207,897 16,938 $ 272,872
Reinvested 140 2,572 96 1,381
Redeemed (7,389) (141,034) (9,873) (157,989)
-------- ---------- --------- ----------
Net Increase 3,636 $ 69,435 7,161 $ 116,264
-------- ---------- --------- ----------
Total increase from capital
share transactions 90,312 $1,730,288 111,843 $1,840,515
======== ========== ========= ==========
Schwab 1000 Fund(R)
-------------------------------------------
Six Months ended Year ended
April 30, 1999 October 31, 1998
-------------------- ---------------------
Shares Dollars Shares Dollars
-------- ---------- --------- ----------
Investor Shares:
Sold 27,427 $ 925,832 46,456 $1,340,936
Reinvested 913 29,333 985 25,237
Redeemed (20,405) (690,964) (28,539) (817,355)
-------- ---------- --------- ----------
Net Increase 7,935 $ 264,201 18,902 $ 548,818
-------- ---------- --------- ----------
Select Shares:*
Sold 23,356 $ 787,343 22,937 $ 662,266
Reinvested 328 10,536 170 4,347
Redeemed (4,467) (152,360) (5,225) (148,285)
-------- ---------- --------- ----------
Net Increase 19,217 $ 645,519 17,882 $ 518,328
-------- ---------- --------- ----------
Total increase from capital
share transactions 27,152 $ 909,720 36,784 $1,067,146
======== ========== ========= ==========
* Select shares commenced operations on May 19, 1997.
98
<PAGE>
Schwab Small-Cap Index Fund(R)
-------------------------------------------
Six Months ended Year ended
April 30, 1999 October 31, 1998
-------------------- ---------------------
Shares Dollars Shares Dollars
-------- ---------- --------- ----------
Investor Shares:
Sold 9,349 $ 147,184 15,575 $ 272,822
Reinvested 1,825 27,892 82 1,410
Redeemed (18,837) (303,705) (7,657) (133,456)
-------- ---------- --------- ----------
Net Increase (Decrease) (7,663) $ (128,629) 8,000 $ 140,776
-------- ---------- --------- ----------
Select Shares:*
Sold 16,882 $ 273,687 8,319 $ 145,043
Reinvested 553 8,447 20 334
Redeemed (4,507) (70,989) (3,198) (53,874)
-------- ---------- --------- ----------
Net Increase 12,928 $ 211,145 5,141 $ 91,503
-------- ---------- --------- ----------
Total increase from capital
share transactions 5,265 $ 82,516 13,141 $ 232,279
======== ========== ========= ==========
Schwab International Index Fund(R)
-------------------------------------------
Six Months ended Year ended
April 30, 1999 October 31, 1998
-------------------- ---------------------
Shares Dollars Shares Dollars
-------- ---------- --------- ----------
Investor Shares:
Sold 5,938 $ 90,386 11,876 $ 172,076
Reinvested 255 3,799 261 3,395
Redeemed 14,934) (239,902) (5,861) (82,444)
-------- ---------- --------- ----------
Net Increase (Decrease) (8,741) $ (145,717) 6,276 $ 93,027
-------- ---------- --------- ----------
Select Shares:*
Sold 15,616 $ 250,501 4,284 $ 61,174
Reinvested 61 904 41 540
Redeemed (1,061) (16,183) (1,467) (20,689)
-------- ---------- --------- ----------
Net Increase 14,616 $ 235,222 2,858 $ 41,025
-------- ---------- --------- ----------
Total increase from capital
share transactions 5,875 $ 89,505 9,134 $ 134,052
======== ========== ========= ==========
* Select shares commenced operations on May 19, 1997.
99
<PAGE>
THIS SPACE RESERVED FOR YOUR COMMENTS AND QUESTIONS.
A SCHWAB REPRESENTATIVE WILL BE HAPPY TO ASSIST YOU.
<PAGE>
THE SCHWABFUNDS FAMILY-REGISTERED TRADEMARK-
The SchwabFunds Family includes a variety of funds to help meet your investment
needs. You can diversify your portfolio in a single step with our asset
allocation funds. Or you can customize your portfolio with a combination of our
stock funds as well as our taxable and tax-advantaged bond and money market
funds.
Please call 800-435-4000 for a free prospectus and brochure for any of these
SchwabFunds.-Registered Trademark-
This report must be preceded or accompanied by a current prospectus.
METHODS FOR PLACING ORDERS
The information below outlines how Schwab brokerage account investors can place
orders. If you are investing through a third-party investment provider, methods
for placing orders may be different.
PHONE
Call 800-435-4000, day or night (for TDD service, call 800-345-2550).
INTERNET
www.schwab.com/schwabfunds
MAIL
Write to SchwabFunds at:
P. O. Box 7575, San Francisco, CA 94120-7575
When selling or exchanging shares, be sure to include the signatures of at least
one of the persons whose name is on the account.
IN PERSON
Visit the nearest Charles Schwab office.
SCHWAB ASSET ALLOCATION FUNDS
Schwab MarketTrack All Equity Portfolio
Schwab MarketTrack Growth Portfolio
Schwab MarketTrack Balanced Portfolio
Schwab MarketTrack Conservative Portfolio
Schwab MarketManager Growth Portfolio
Schwab MarketManager Balanced Portfolio
SCHWAB STOCK FUNDS
Schwab S&P 500-Registered Trademark- Fund
Schwab 1000 Fund-Registered Trademark-
Schwab Total Stock Market Index Fund-TM-
Schwab Analytics Fund-Registered Trademark-
Schwab Small-Cap Index Fund-Registered Trademark-
Schwab MarketManager Small Cap Portfolio
Schwab International Index Fund-Registered Trademark-
Schwab MarketManager International Portfolio
SCHWAB BOND FUNDS
Schwab Total Bond Market Index Fund
Schwab Short-Term Bond Market Index Fund
Schwab Long-Term Tax-Free Bond Fund
Schwab Short/Intermediate Tax-Free Bond Fund
Schwab California Long-Term Tax-Free Bond Fund
Schwab California Short/Intermediate
Tax-Free Bond Fund
SCHWAB MONEY MARKET FUNDS
Schwab offers an array of money market funds that seek high current income
consistent with safety and liquidity.(1) Choose from taxable or tax-advantaged
alternatives. Many can be linked to your Schwab account to "sweep" cash balances
automatically when you're between investments. Or, for your larger cash
reserves, choose one of our Value Advantage Investments.-Registered Trademark-
(1)Investments in money market funds are neither insured nor guaranteed by the
Federal Deposit Insurance Corporation (FDIC) or any other government agency
and, although they seek to preserve the value of your investment at $1 per
share, it is possible to lose money.
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[LOGO]
INVESTMENT ADVISER
Charles Schwab Investment Management, Inc.
P.O. Box 7575, San Francisco, CA 94120-7575
DISTRIBUTOR
Charles Schwab & Co., Inc.
101 Montgomery Street, San Francisco, CA 94104
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
-C-1999 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC/NYSE.
Printed on recycled paper. (0099-2264) MKT3810-1 (6/99)
