<PAGE> 1
SCHWAB
MARKETTRACK PORTFOLIOS(TM)
PROSPECTUS
February 29, 2000
As amended July 1, 2000
ALL EQUITY PORTFOLIO
GROWTH PORTFOLIO
BALANCED PORTFOLIO
CONSERVATIVE PORTFOLIO
As with all mutual funds, the Securities and Exchange Commission (SEC) has not
approved these securities or passed on whether the information in this
prospectus is adequate and accurate. Anyone who indicates otherwise is
committing a federal crime.
[Charles Schwab Logo]
<PAGE> 2
SCHWAB
MARKETTRACK PORTFOLIOS(TM)
ABOUT THE PORTFOLIOS
4 All Equity Portfolio
8 Growth Portfolio
12 Balanced Portfolio
16 Conservative Portfolio
20 Portfolio Management
INVESTING IN THE PORTFOLIOS
22 Buying Shares
23 Selling/Exchanging Shares
24 Transaction Policies
25 Distributions and Taxes
<PAGE> 3
ABOUT THE PORTFOLIOS
The portfolios in this prospectus share the same investment approach. Each
portfolio seeks to maintain a DEFINED MIX of asset classes over time, and each
invests mainly in a COMBINATION of other SchwabFunds,(R) which are managed using
INDEXING STRATEGIES. Each portfolio pursues a different investment goal.
This approach is intended to offer the investor key features of two types of
investment strategies: asset allocation and indexing. Each portfolio's
performance is a blend of the performance of different asset classes or
different segments within an asset class.
Indexing, a strategy of TRACKING THE PERFORMANCE of a given market over time,
involves looking to an index to determine what securities to own. By investing
in a combination of index mutual funds, the portfolios can offer DIVERSIFICATION
in a single investment.
The portfolios are designed for LONG-TERM INVESTORS. Their performance will
fluctuate over time and, as with all investments, future performance may differ
from past performance.
<PAGE> 4
SCHWAB
MARKETTRACK
ALL EQUITY PORTFOLIO
The portfolio seeks high capital growth through an all-stock portfolio.
STRATEGY
To pursue its goal, the portfolio maintains a defined asset allocation. The
portfolio's target allocation is 100% in stock investments, with certain
percentages for different segments of the stock market.
The portfolio invests in other SchwabFunds,(R) particularly three of the Equity
Index Funds. These underlying funds seek to track the total returns of various
stock market indices. They typically invest in the stocks included in the index
they are tracking, and generally give each stock the same weight as the index
does. Each underlying fund focuses on a different segment of the stock market.
Below are the underlying funds for this portfolio and the indices they seek to
track, listed according to their corresponding category in the fund's asset
allocation:
<TABLE>
<CAPTION>
ALLOCATION FUND AND INDEX
--------------------------------------------------------------------------------
<S> <C>
LARGE-CAP Schwab S&P 500 Fund. Seeks to track the S&P 500 Index,(R) a
STOCK widely recognized index maintained by Standard & Poor's that
includes 500 U.S. large-cap stocks.
--------------------------------------------------------------------------------
SMALL-CAP Schwab Small-Cap Index Fund.(R) Seeks to track the Schwab
STOCK Small-Cap Index,(R) which includes the second-largest 1,000
U.S. stocks as measured by market capitalization.
--------------------------------------------------------------------------------
INTERNATIONAL Schwab International Index Fund.(R) Seeks to track the Schwab
STOCK International Index,(R) which includes the largest 350 stocks
(as measured by market capitalization) that are publicly
traded in developed securities markets outside the United
States.
</TABLE>
The portfolio managers monitor the portfolio's holdings and cash flow and manage
them as needed in order to maintain the portfolio's target allocation. In
seeking to enhance after-tax performance, the managers may permit modest
deviations from the target allocation for certain periods of time.
ASSET ALLOCATION
AMONG FUNDS
Asset allocation is a strategy of investing specific percentages of a portfolio
in various asset classes.
The portfolio's allocation focuses on stock investments for long-term growth.
The portfolio typically does not change its stock segment allocations for
purposes of investment strategy and seeks to remain close to the target
allocations of 45% in large-cap, 30% in international and 25% in small-cap.
Because the portfolio must keep a small portion of its assets in cash for
business operations, the portfolio's actual investments will be slightly less
than 100% in stock funds.
4
ALL EQUITY PORTFOLIO
<PAGE> 5
This portfolio's exposure to a broad spectrum of U.S. AND INTERNATIONAL STOCKS
makes it a good choice for long-term investors seeking a composite of U.S. and
international stock market performance in a single fund.
MAIN RISKS
Stock markets rise and fall daily. As with any investment whose performance is
tied to these markets, the value of your investment in the portfolio will
fluctuate, which means that you could lose money.
The portfolio's stock allocations can have an effect on returns. The risks and
returns of different segments of the stock market can vary over the long term
and the short term. Because of this, the portfolio's performance could suffer
during times when segments emphasized by its target allocation are out of favor,
or when stocks in general are out of favor.
Many of the risks of this portfolio are associated with stock index funds. The
portfolio's underlying stock index funds seek to track the performance of
various segments of the stock market, as measured by their respective indices.
Neither the portfolio, because of its asset allocation strategy, nor the
underlying funds, because of their indexing strategy, can take steps to reduce
market exposure or to lessen the effects of a declining market.
Many factors can affect stock market performance. Political and economic news
can influence market-wide trends; the outcome may be positive or negative, short
term or long term. Any type of stock can temporarily fall out of favor with the
market.
The values of certain types of stocks, such as small-cap stocks and
international stocks, may fluctuate more widely than others. With small-cap
stocks, one reason is that their prices may be based in part on future
expectations rather than current achievements. International stock investments
can be affected by changes in currency exchange rates, which can erode market
gains or widen market losses. Other reasons for the volatility of international
markets range from a lack of reliable company information to the risk of
political upheaval.
OTHER RISK FACTORS
--------------------------------------------------------------------------------
While the portfolio's underlying funds seek to track the returns of various
indices, in each case their performance normally is below that of the index.
This gap occurs mainly because, unlike an index, the underlying funds incur
expenses and must keep a small portion of their assets in cash. To the extent
that an underlying fund lends securities or makes short-term or other
investments to reduce its performance gap, it may increase the risk that its
performance will be reduced.
The portfolio itself keeps a small portion of its assets in cash, which may
contribute modestly to lower performance.
5
ALL EQUITY PORTFOLIO
<PAGE> 6
PERFORMANCE
Below are a chart and a table showing the portfolio's performance, as well as
data on an unmanaged market index. These figures assume that all distributions
were reinvested. Keep in mind that future performance may differ from past
performance, and that indices do not include any costs of investment.
[BAR GRAPH NOT SHOWN]
ANNUAL TOTAL RETURNS(%) AS OF 12/31
<TABLE>
<CAPTION>
<S> <C>
99 25.06
</TABLE>
Best quarter: 17.07% Q4 1999
Worst quarter: -1.71% Q3 1999
AVERAGE ANNUAL TOTAL RETURNS(%) AS OF 12/31/99
<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION
------------------------------------------------------
<S> <C> <C>
Portfolio 25.06 16.94(1)
S&P 500(R) Index 21.04 19.90(2)
</TABLE>
(1) Inception: 5/19/98.
(2) From 5/19/98.
PORTFOLIO FEES AND EXPENSES
The following table describes what you could expect to pay as a portfolio
investor. "Shareholder fees" are one-time expenses charged to you directly by
the portfolio. "Annual operating expenses" are paid out of portfolio assets, so
their effect is included in total return. Fees of the underlying funds are
reflected in those funds' performance, and thus indirectly in portfolio
performance. These fees are approximately 0.40% of the portfolio's average net
assets based on current investments, and may fluctuate.
FEE TABLE (%)
<TABLE>
<CAPTION>
SHAREHOLDER FEES
-------------------------------------------------------
None
ANNUAL OPERATING EXPENSES (% of average net assets)
-------------------------------------------------------
<S> <C>
Management fees* 0.44
Distribution (12b-1) fees None
Other expenses 0.49
-----
Total annual operating expenses 0.93
Expense reduction (0.43)
-----
Net operating expenses** 0.50
=====
</TABLE>
*Reflects current fees.
**Guaranteed by Schwab and the investment adviser through 2/28/01 (excluding
interest, taxes and certain non-routine expenses).
EXPENSES ON A $10,000 INVESTMENT
Designed to help you compare expenses, this example uses the same assumptions as
all mutual fund prospectuses: a $10,000 investment and 5% return each year.
One-year figures are based on net operating expenses. The expenses would be the
same whether you stayed in the portfolio or sold your shares at the end of each
period. Your actual costs may be higher or lower.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------
<S> <C> <C> <C>
$51 $253 $473 $1,104
</TABLE>
The performance information above shows you how the fund's PERFORMANCE compares
to that of an index, which varies OVER TIME.
6
ALL EQUITY PORTFOLIO
<PAGE> 7
FINANCIAL HIGHLIGHTS
This section provides further details about the portfolio's financial history.
"Total return" shows the percentage that an investor in the portfolio would have
earned or lost during a given period, assuming all distributions were
reinvested. The portfolio's independent accountants, PricewaterhouseCoopers LLP,
audited these figures. Their full report is included in the portfolio's annual
report (see back cover).
<TABLE>
<CAPTION>
11/1/98- 5/19/98-
10/31/99 10/31/98
PER-SHARE DATA ($)
----------------------------------------------------------------------------
<S> <C> <C>
Net asset value at beginning of period 9.28 10.00
Income from investment operations: -----------------
Net investment income (loss) 0.03 (0.01)
Net realized and unrealized gain (loss)
on investments 2.22 (0.71)
-----------------
Total income (loss) from investment operations 2.25 (0.72)
Less distributions:
Dividends from net investment income (0.01) --
Dividends in excess of net investment income (0.04) --
-----------------
Total distributions (0.05) --
-----------------
NET ASSET VALUE AT END OF PERIOD 11.48 9.28
=================
Total return (%) 24.34 (7.20)(1)
RATIOS/SUPPLEMENTAL DATA (%)
----------------------------------------------------------------------------
Ratio of actual operating expenses to
average net assets 0.54 0.39(2)
Expense reductions reflected in above ratio 0.43 0.74(2)
Ratio of net investment income
to average net assets 0.13 (0.36)(2)
Portfolio turnover rate 6 2
Net assets, end of period ($ x 1,000,000) 203 117
</TABLE>
(1) Not annualized.
(2) Annualized.
7
ALL EQUITY PORTFOLIO
<PAGE> 8
SCHWAB
MARKETTRACK
GROWTH PORTFOLIO
The portfolio seeks high capital growth with less volatility than an all-stock
portfolio.
STRATEGY
To pursue its goal, the portfolio maintains a defined asset allocation. The
portfolio's target allocation includes stock, bond and cash investments.
The portfolio invests mainly in other SchwabFunds,(R) particularly index funds,
which seek to track the total returns of various market indices. These
underlying funds typically invest in the securities included in the index they
are tracking, and give each security the same weight as the index does. Each
underlying fund focuses on a different market segment. Below are the underlying
funds for this portfolio and the indices they seek to track, listed according to
their corresponding category in the fund's asset allocation:
<TABLE>
<CAPTION>
ALLOCATION FUND AND INDEX
--------------------------------------------------------------------------------
<S> <C>
LARGE-CAP Schwab S&P 500 Fund. Seeks to track the S&P 500 Index,(R) a
STOCK widely recognized index maintained by Standard & Poor's that
includes 500 U.S. large-cap stocks.
SMALL-CAP Schwab Small-Cap Index Fund.(R) Seeks to track the Schwab
STOCK Small-Cap Index,(R) which includes the second-largest
1,000 U.S. stocks as measured by market capitalization.
INTERNATIONAL Schwab International Index Fund.(R) Seeks to track the Schwab
STOCK International Index,(R) which includes the largest 350
stocks (as measured by market capitalization) that are
publicly traded in developed securities markets outside the
United States.
BOND Schwab Total Bond Market Index Fund. Seeks to track the Lehman
Brothers Aggregate Bond Index, which includes a broad-based
mix of U.S. investment-grade bonds with maturities greater
than one year.
</TABLE>
The portfolio also may use individual securities in its allocations and may
continue to hold any individual securities it currently owns. The portfolio
managers monitor the portfolio's holdings and cash flow and manage them as
needed in order to maintain the portfolio's target allocation. In seeking to
enhance after-tax performance, the managers may permit modest deviations from
the target allocation for certain periods of time.
ASSET ALLOCATION
--------------------------------------------------------------------------------
Asset allocation is a strategy of investing specific percentages of a portfolio
in various asset classes.
The Growth Portfolio's allocation focuses on stock investments, while including
some bonds and cash investments to reduce volatility. The portfolio typically
does not change its asset allocations for purposes of investment strategy and
seeks to remain close to the target allocations of 80% stocks, 15% bonds and 5%
cash.
The stock allocation is further divided into three segments: 40% of assets for
large-cap, 20% for small-cap and 20% for international.
8
GROWTH PORTFOLIO
<PAGE> 9
By emphasizing stocks while including other investments to TEMPER MARKET RISK,
this portfolio could be appropriate for investors seeking attractive long-term
growth with POTENTIALLY LOWER VOLATILITY.
MAIN RISKS
Stock and bond markets rise and fall daily. As with any investment whose
performance is tied to these markets, the value of your investment in the
portfolio will fluctuate, which means that you could lose money.
The portfolio's asset and stock allocations can have an effect on returns. The
risks and returns of different classes of assets and different segments of the
stock market can vary over the long term and the short term. Because of this,
the portfolio's performance could suffer during times when the types of stocks
favored by its target allocation are out of favor, or when stocks in general are
out of favor.
Many of the risks of this portfolio are associated with stock index funds. The
portfolio's underlying stock index funds seek to track the performance of
various segments of the stock market, as measured by their respective indices.
Neither the portfolio, because of its asset allocation strategy, nor the
underlying funds, because of their indexing strategy, can take steps to reduce
market exposure or to lessen the effects of a declining market.
Many factors can affect stock market performance. Political and economic news
can influence market-wide trends; the outcome may be positive or negative, short
term or long term. Any type of stock can temporarily fall out of favor with the
market.
The values of certain types of stocks, such as small-cap stocks and
international stocks, may fluctuate more widely than others. With small-cap
stocks, one reason is that their prices may be based in part on future
expectations rather than current achievements. International stock investments
can be affected by changes in currency exchange rates, which can erode market
gains or widen market losses. Other reasons for the volatility of international
markets range from a lack of reliable company information to the risk of
political upheaval.
OTHER RISK FACTORS
--------------------------------------------------------------------------------
For the portion of the portfolio's assets that are invested in the bond market,
a major risk is that bond prices generally fall when interest rates rise.
Portfolio performance also could be affected if bonds held by the underlying
funds go into default. Another risk is that certain bonds may be paid off, or
"called," substantially earlier or later than expected.
While the portfolio's underlying funds seek to track the returns of various
indices, in each case their performance normally is below that of the index.
This gap occurs mainly because, unlike an index, the underlying funds incur
expenses and must keep a small portion of their assets in cash. To the extent
that an underlying fund lends securities or makes short-term or other
investments to reduce its performance gap, it may increase the risk that its
performance will be reduced.
The portfolio itself keeps a small portion of its assets in cash, which may
contribute modestly to lower performance.
9
GROWTH PORTFOLIO
<PAGE> 10
PERFORMANCE
Below are a chart and a table showing the portfolio's performance, as well as
data on two unmanaged market indices. These figures assume that all
distributions were reinvested. Keep in mind that future performance may differ
from past performance, and that indices do not include any costs of investment.
[BAR CHART NOT SHOWN]
ANNUAL TOTAL RETURNS(%) AS OF 12/31
<TABLE>
<CAPTION>
<S> <C>
96 14.48
97 21.00
98 15.17
99 19.36
</TABLE>
BEST QUARTER: 15.70% Q4 1998
WORST QUARTER: -10.55% Q3 1998
AVERAGE ANNUAL TOTAL RETURNS (%) AS OF 12/31/99
<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION
-----------------------------------------------------
<S> <C> <C>
Portfolio 19.36 17.77(1)
S&P 500(R) Index 21.04 26.47(2)
Lehman Brothers
Aggregate Bond Index -0.82 5.60(2)
</TABLE>
(1) Inception: 11/20/95.
(2) From 11/20/95.
PORTFOLIO FEES AND EXPENSES
The following table describes what you could expect to pay as a portfolio
investor. "Shareholder fees" are one-time expenses charged to you directly by
the portfolio. "Annual operating expenses" are paid out of portfolio assets, so
their effect is included in total return. Fees of the underlying funds are
reflected in those funds' performance, and thus indirectly in portfolio
performance. These fees are approximately 0.26% of the portfolio's average net
assets based on current investments, and may fluctuate.
<TABLE>
<CAPTION>
FEE TABLE (%)
SHAREHOLDER FEES
------------------------------------------------------
None
ANNUAL OPERATING EXPENSES (% of average net assets)
------------------------------------------------------
<S> <C>
Management fees* 0.44
Distribution (12b-1) fees None
Other expenses 0.39
-----
Total annual operating expenses 0.83
Expense reduction (0.33)
-----
Net operating expenses** 0.50
=====
</TABLE>
* Reflects current fees.
** Guaranteed by Schwab and the investment adviser through 2/28/01 (excluding
interest, taxes and certain non-routine expenses).
EXPENSES ON A $10,000 INVESTMENT
Designed to help you compare expenses, this example uses the same assumptions as
all mutual fund prospectuses: a $10,000 investment and 5% return each year.
One-year figures are based on net operating expenses. The expenses would be the
same whether you stayed in the portfolio or sold your shares at the end of each
period. Your actual costs may be higher or lower.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
<S> <C> <C> <C>
$51 $232 $428 $995
</TABLE>
The performance information above shows you how performance has varied from YEAR
TO YEAR and how it averages out OVER TIME.
10
GROWTH PORTFOLIO
<PAGE> 11
FINANCIAL HIGHLIGHTS
This section provides further details about the portfolio's financial history.
"Total return" shows the percentage that an investor in the portfolio would have
earned or lost during a given period, assuming all distributions were
reinvested. The portfolio's independent accountants, PricewaterhouseCoopers LLP,
audited these figures. Their full report is included in the portfolio's annual
report (see back cover).
<TABLE>
<CAPTION>
11/1/98- 11/1/97- 11/1/96- 11/20/95-
10/31/99 10/31/98 10/31/97 10/31/96
PER-SHARE DATA ($)
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period 13.96 13.59 11.30 10.00
Income from investment operations: -------------------------------------------------
Net investment income 0.18 0.16 0.17 0.19
Net realized and unrealized gain on investments 2.48 0.99 2.32 1.13
-------------------------------------------------
Total income from investment operations 2.66 1.15 2.49 1.32
Less distributions:
Dividends from net investment income (0.22) (0.16) (0.20) (0.02)
Distributions from capital gains (0.03) (0.62) -- --
-------------------------------------------------
Total distributions (0.25) (0.78) (0.20) (0.02)
-------------------------------------------------
NET ASSET VALUE AT END OF PERIOD 16.37 13.96 13.59 11.30
=================================================
Total return (%) 19.24 8.85 22.33 13.241
RATIOS/SUPPLEMENTAL DATA (%)
--------------------------------------------------------------------------------------------------------------
Ratio of net operating expenses to
average net assets 0.58 0.60 0.75 0.892
Expense reductions reflected in above ratio 0.33 0.50 0.49 0.612
Ratio of net investment income to average net assets 1.21 1.34 1.58 2.032
Portfolio turnover rate 7 14 113 46
Net assets, end of period ($ x 1,000,000) 428 276 168 106
</TABLE>
1 Not annualized.
2 Annualized.
11
GROWTH PORTFOLIO
<PAGE> 12
SCHWAB
MARKETTRACK
BALANCE PORTFOLIO
The portfolio seeks both capital growth and income.
STRATEGY
To pursue its goal, the portfolio maintains a defined asset allocation. The
portfolio's target allocation includes bond, stock and cash investments.
The portfolio invests mainly in other SchwabFunds,(R) particularly index funds,
which seek to track the total returns of various market indices. These
underlying funds typically invest in the securities included in the index they
are tracking, and give each security the same weight as the index does. Each
underlying fund focuses on a different market segment. Below are the underlying
funds for this portfolio and the indices they seek to track, listed according to
their corresponding category in the fund's asset allocation:
<TABLE>
<CAPTION>
ALLOCATION FUND AND INDEX
--------------------------------------------------------------------------------
<S> <C>
LARGE-CAP Schwab S&P 500 Fund. Seeks to track the S&P 500 Index,(R) a
widely recognized index maintained by Standard & Poor's that
includes 500 U.S. large-cap stocks.
--------------------------------------------------------------------------------
SMALL-CAP Schwab Small-Cap Index Fund.(R) Seeks to track the Schwab
STOCK Small-Cap Index,(R) which includes the second-largest
1,000 U.S. stocks as measured by market capitalization.
--------------------------------------------------------------------------------
INTERNATIONAL Schwab International Index Fund.(R) Seeks to track the Schwab
International Index,(R) which includes the largest 350 stocks
(as measured by market capitalization) that are publicly
traded in developed securities markets outside the United
States.
--------------------------------------------------------------------------------
BOND Schwab Total Bond Market Index Fund. Seeks to track the
Lehman Brothers Aggregate Bond Index, which includes a
broad-based mix of U.S. investment-grade bonds with
maturities greater than one year.
</TABLE>
The portfolio also may use individual securities in its allocations and may
continue to hold any individual securities it currently owns. The portfolio
managers monitor the portfolio's holdings and cash flow and manage them as
needed in order to maintain the portfolio's target allocation. In seeking to
enhance after-tax performance, the managers may permit modest deviations from
the target allocation for certain periods of time.
ASSET ALLOCATION
----------------
Asset allocation is a strategy of investing specific percentages of a portfolio
in various asset classes.
The Balanced Portfolio's allocation is weighted toward stock investments, while
including substantial bond investments to add income and reduce volatility. The
portfolio typically does not change its asset allocations for purposes of
investment strategy and seeks to remain close to the target allocations of 60%
stocks, 35% bonds and 5% cash.
The stock allocation is further divided into three segments: 30% of assets for
large-cap, 15% for small-cap and 15% for international.
12
BALANCED PORTFOLIO
<PAGE> 13
With a blend of asset types that modestly favors stocks, this portfolio may be
suitable for INTERMEDIATE-TERM INVESTORS or for long-term investors with
moderate sensitivity to risk.
MAIN RISKS
Stock and bond markets rise and fall daily. As with any investment whose
performance is tied to these markets, the value of your investment in the
portfolio will fluctuate, which means that you could lose money.
The portfolio's asset and stock allocations can have a substantial effect on
performance. The risks and returns of different classes of assets and different
segments of the stock market can vary over the long term and the short term.
Because it intends to maintain substantial exposure to stocks as well as bonds,
the portfolio will be hurt by poor performance in either market. Also, because
it does not intend to make strategic changes in its allocation, it could
underperform any asset allocation funds that underweight asset classes or types
of stocks that perform poorly during a given period.
Many of the risks of this portfolio are associated with index funds. The
portfolio's underlying index funds seek to track the performance of various
segments of the stock or bond market, as measured by their respective indices.
Neither the portfolio, because of its asset allocation strategy, nor the
underlying funds, because of their indexing strategy, can take steps to reduce
market exposure or to lessen the effects of a declining market.
Many factors can affect stock market performance. Political and economic news
can influence market-wide trends; the outcome may be positive or negative, short
term or long term. Any type of stock can temporarily fall out of favor with the
market. The values of certain types of stocks, such as small-cap stocks and
international stocks, may fluctuate more widely than others.
Bond prices generally fall when interest rates rise, which can affect the bond
portion of the portfolio. This risk is generally greater for bond investments
with longer maturities. Portfolio performance also could be affected if bonds
held by the underlying funds go into default. Another risk is that certain bonds
may be paid off, or "called," substantially earlier or later than expected.
OTHER RISK FACTORS
------------------
While the portfolio's underlying funds seek to track the returns of various
indices, in each case their performance normally is below that of the index.
This gap occurs mainly because, unlike an index, the underlying funds incur
expenses and must keep a small portion of their assets in cash. To the extent
that an underlying fund lends securities or makes short-term or other
investments to reduce its performance gap, it may increase the risk that its
performance will be reduced.
The portfolio itself keeps a small portion of its assets in cash, which may
contribute modestly to lower performance.
13
BALANCED PORTFOLIO
<PAGE> 14
PERFORMANCE
Below are a chart and a table showing the portfolio's performance, as well as
data on two unmanaged market indices. These figures assume that all
distributions were reinvested. Keep in mind that future performance may differ
from past performance, and that indices do not include any costs of investment.
<TABLE>
<CAPTION>
-----------------------------------------------------
<S> <C>
ANNUAL TOTAL RETURNS (%) AS OF 12/31
96 11.15
97 17.76
98 13.67
99 14.00
</TABLE>
BEST QUARTER: 11.81% Q4 1998
WORST QUARTER: -6.85% Q3 1998
AVERAGE ANNUAL TOTAL RETURNS (%) AS OF 12/31/99
<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION
-----------------------------------------------------
<S> <C> <C>
Portfolio 14.00 14.44(1)
S&P 500(R) Index 21.04 26.47(2)
Lehman Brothers Aggregate
Bond Index -0.82 5.60(2)
</TABLE>
(1) Inception: 11/20/95.
(2) From 11/20/95.
PORTFOLIO FEES AND EXPENSES
The following table describes what you could expect to pay as a portfolio
investor. "Shareholder fees" are one-time expenses charged to you directly by
the portfolio. "Annual operating expenses" are paid out of portfolio assets, so
their effect is included in total return. Fees of the underlying funds are
reflected in those funds' performance, and thus indirectly in portfolio
performance. These fees are approximately 0.29% of the portfolio's average net
assets based on current investments, and may fluctuate.
FEE TABLE (%)
<TABLE>
<CAPTION>
SHAREHOLDER FEES
-----------------------------------------------------
None
ANNUAL OPERATING EXPENSES (% of average net assets)
-----------------------------------------------------
<S> <C>
Management fees* 0.44
Distribution (12b-1) fees None
Other expenses 0.39
-----
Total annual operating expenses 0.83
Expense reduction (0.33)
-----
Net operating expenses** 0.50
=====
</TABLE>
*Reflects current fees.
**Guaranteed by Schwab and the investment adviser through 2/28/01 (excluding
interest, taxes and certain non-routine expenses).
EXPENSES ON A $10,000 INVESTMENT
Designed to help you compare expenses, this example uses the same assumptions as
all mutual fund prospectuses: a $10,000 investment and 5% return each year.
One-year figures are based on net operating expenses. The expenses would be the
same whether you stayed in the portfolio or sold your shares at the end of each
period. Your actual costs may be higher or lower.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
----------------------------------------------------
<S> <C> <C> <C>
$51 $232 $428 $995
</TABLE>
The performance information above shows you how performance has varied from YEAR
TO YEAR and how it averages out OVER TIME.
14
BALANCED PORTFOLIO
<PAGE> 15
FINANCIAL HIGHLIGHTS
This section provides further details about the portfolio's financial history.
"Total return" shows the percentage that an investor in the portfolio would have
earned or lost during a given period, assuming all distributions were
reinvested. The portfolio's independent accountants, PricewaterhouseCoopers LLP,
audited these figures. Their full report is included in the portfolio's annual
report (see back cover).
<TABLE>
<CAPTION>
11/1/98- 11/1/97- 11/1/96- 11/20/95-
10/31/99 10/31/98 10/31/97 10/31/96
PER-SHARE DATA ($)
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period 13.39 12.82 11.05 10.00
Income from investment operations: -----------------------------------------------
Net investment income 0.29 0.25 0.22 0.25
Net realized and unrealized gain on investments 1.57 0.86 1.78 0.83
Total income from investment operations 1.86 1.11 2.00 1.08
Less distributions:
Dividends from net investment income (0.33) (0.23) (0.23) (0.03)
Distributions from capital gains (0.07) (0.31) -- --
-----------------------------------------------
Total distributions (0.40) (0.54) (0.23) (0.03)
-----------------------------------------------
NET ASSET VALUE AT END OF PERIOD 14.85 13.39 12.82 11.05
-----------------------------------------------
Total return (%) 14.18 9.02 18.43 10.82(1)
RATIOS/SUPPLEMENTAL DATA (%)
-------------------------------------------------------------------------------------------------------
Ratio of actual operating expenses to
average net assets 0.58 0.59 0.78 0.89(2)
Expense reductions reflected in above ratio 0.33 0.51 0.52 0.67(2)
Ratio of net investment income to
average net assets 2.25 2.33 2.48 2.79(2)
Portfolio turnover rate 7 32 104 44
Net assets, end of period ($ x 1,000,000) 403 264 151 81
</TABLE>
(1) Not annualized.
(2) Annualized.
15
BALANCED PORTFOLIO
<PAGE> 16
SCHWAB
MARKETTRACK
CONSERVATIVE PORTFOLIO
The portfolio seeks income and more growth potential than an all-bond portfolio.
STRATEGY
To pursue its goal, the portfolio maintains a defined asset allocation. The
portfolio's target allocation includes bond, stock and cash investments.
The portfolio invests mainly in other SchwabFunds,(R) particularly index funds,
which seek to track the total returns of various market indices. These
underlying funds typically invest in the securities included in the index they
are tracking, and give each security the same weight as the index does. Each
underlying fund focuses on a different market segment. Below are the underlying
funds for this portfolio and the indices they seek to track, listed according to
their corresponding category in the fund's asset allocation:
<TABLE>
<CAPTION>
ALLOCATION FUND AND INDEX
--------------------------------------------------------------------------------
<S> <C>
LARGE-CAP Schwab S&P 500 Fund. Seeks to track the S&P 500 Index,(R) a
STOCK widely recognized index maintained by Standard & Poor's that
includes 500 U.S. large-cap stocks.
--------------------------------------------------------------------------------
SMALL-CAP Schwab Small-Cap Index Fund.(R) Seeks to track the Schwab
STOCK Small-Cap Index,(R) which includes the second-largest 1,000
U.S. stocks as measured by market capitalization.
--------------------------------------------------------------------------------
INTERNATIONAL Schwab International Index Fund.(R) Seeks to track the Schwab
STOCK International Index,(R) which includes the largest 350 stocks
(as measured by market capitalization) that are publicly
traded in developed securities markets outside the United
States.
--------------------------------------------------------------------------------
BOND Schwab Total Bond Market Index Fund. Seeks to track the
STOCK Lehman Brothers Aggregate Bond Index, which includes a
broad-based mix of U.S. investment-grade bonds with maturi-
ties greater than one year.
</TABLE>
The portfolio also may use individual securities in its allocations and may
continue to hold any individual securities it currently owns. The portfolio
managers monitor the portfolio's holdings and cash flow and manage them as
needed in order to maintain the portfolio's target allocation. In seeking to
enhance after-tax performance, the managers may permit modest deviations from
the target allocation for certain periods of time.
ASSET ALLOCATION
----------------
Asset allocation is a strategy of investing specific percentages of a portfolio
in various asset classes.
The Conservative Portfolio's allocation is weighted toward bond investments,
while including substantial stock investments for long-term growth. The
portfolio typically does not change its asset allocations for purposes of
investment strategy and seeks to remain close to the target allocations of 55%
bonds, 40% stocks and 5% cash.
The stock allocation is further divided into three segments: 20% of assets for
large-cap, 10% for small-cap and 10% for international.
17
CONSERVATIVE INVESTORS
<PAGE> 17
Conservative investors and investors with shorter time horizons are among those
for whom this portfolio was created.
MAIN RISKS
STOCK AND BOND MARKETS RISE AND FALL DAILY. As with any investment whose
performance is tied to these markets, the value of your investment in the
portfolio will fluctuate, which means that you could lose money.
THE PORTFOLIO'S ASSET AND STOCK ALLOCATIONS CAN HAVE A SUBSTANTIAL EFFECT ON
PERFORMANCE. The risks and returns of different classes of assets and different
segments of the stock market can vary over the long term and the short term.
Because it intends to maintain substantial exposure to stocks as well as bonds,
the portfolio will be hurt by poor performance in either market. Also, because
it does not intend to make strategic changes in its allocation, it could
underperform any asset allocation funds that underweight asset classes or types
of stocks that perform poorly during a given period.
MANY OF THE RISKS OF THIS PORTFOLIO ARE ASSOCIATED WITH INDEX FUNDS. The
portfolio's underlying index funds seek to track the performance of various
segments of the stock or bond market, as measured by their respective indices.
Neither the portfolio, because of its asset allocation strategy, nor the
underlying funds, because of their indexing strategy, can take steps to reduce
market exposure or to lessen the effects of a declining market.
BOND PRICES GENERALLY FALL WHEN INTEREST RATES RISE, WHICH CAN AFFECT THE BOND
PORTION OF THE PORTFOLIO. This risk is generally greater for bond investments
with longer maturities. Portfolio performance also could be affected if bonds
held by the underlying funds go into default. Another risk is that certain bonds
may be paid off, or "called," substantially earlier or later than expected.
MANY FACTORS CAN AFFECT STOCK MARKET PERFORMANCE. Political and economic news
can influence market-wide trends; the outcome may be positive or negative, short
term or long term. Any type of stock can temporarily fall out of favor with the
market. Also, the values of certain types of stocks, such as small-cap stocks
and international stocks, may fluctuate more widely than others.
OTHER RISK FACTORS
------------------
While the portfolio's underlying funds seek to track the returns of various
indices, in each case their performance normally is below that of the index.
This gap occurs mainly because, unlike an index, the underlying funds incur
expenses and must keep a small portion of their assets in cash. To the extent
that an underlying fund lends securities or makes short-term or other
investments to reduce its performance gap, it may increase the risk that its
performance will be reduced.The portfolio itself keeps a small portion of its
assets in cash, which may contribute modestly to lower performance.
17
CONSERVATIVE PORTFOLIO
<PAGE> 18
PERFORMANCE
Below are a chart and a table showing the portfolio's performance, as well as
data on two unmanaged market indices. These figures assume that all
distributions were reinvested. Keep in mind that future performance may differ
from past performance, and that indices do not include any costs of investment.
ANNUAL TOTAL RETURNS (%) AS OF 12/31
<TABLE>
<S> <C>
96 8.14
97 14.71
98 11.56
99 8.70
</TABLE>
BEST QUARTER: 8.49% Q2 1997
WORST QUARTER: -3.35% Q3 1998
AVERAGE ANNUAL TOTAL RETURNS (%) AS OF 12/31/99
<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION
----------------------------------------------------
<S> <C> <C>
Portfolio 8.70 11.06(1)
Lehman Brothers
Aggregate Bond Index -0.82 5.60(2)
S&P 500(R) Index 21.04 26.47(2)
</TABLE>
(1) Inception: 11/20/95.
(2) From 11/20/95.
PORTFOLIO FEES AND EXPENSES
The following table describes what you could expect to pay as a portfolio
investor. "Shareholder fees" are one-time expenses charged to you directly by
the portfolio. "Annual operating expenses" are paid out of portfolio assets, so
their effect is included in total return. Fees of the underlying funds are
reflected in those funds' performance, and thus indirectly in portfolio
performance. These fees are approximately 0.30% of the portfolio's average net
assets based on current investments, and may fluctuate.
FEE TABLE (%)
SHAREHOLDER FEES
---------------------------------------------------
None
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES (% of average net assets)
---------------------------------------------------
<S> <C>
Management fees* 0.44
Distribution (12b-1) fees None
Other expenses 0.41
-----
Total annual operating expenses 0.85
Expense reduction (0.35)
-----
Net operating expenses** 0.50
-----
</TABLE>
*Reflects current fees.
**Guaranteed by Schwab and the investment adviser through 2/28/01 (excluding
interest, taxes and certain non-routine expenses).
Designed to help you compare expenses, this example uses the same assumptions as
all mutual fund prospectuses: a $10,000 investment and 5% return each year.
One-year figures are based on net operating expenses. The expenses would be the
same whether you stayed in the portfolio or sold your shares at the end of each
period. Your actual costs may be higher or lower.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
<S> <C> <C> <C>
$51 $236 $437 $1,017
</TABLE>
The performance information above shows you how performance has varied from YEAR
TO YEAR and how it averages out OVER TIME.
18
CONSERVATIVE PORTFOLIO
<PAGE> 19
FINANCIAL HIGHLIGHTS
This section provides further details about the portfolio's financial history.
"Total return" shows the percentage that an investor in the portfolio would have
earned or lost during a given period, assuming all distributions were
reinvested. The portfolio's independent accountants, PricewaterhouseCoopers LLP,
audited these figures. Their full report is included in the portfolio's annual
report (see back cover).
<TABLE>
<CAPTION>
11/1/98- 11/1/97- 11/1/96- 11/20/95-
10/31/99 10/31/98 10/31/97 10/31/96
PER-SHARE DATA ($)
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period 12.11 11.71 10.51 10.00
Income from investment operations: -----------------------------------------------
Net investment income 0.41 0.35 0.35 0.33
Net realized and unrealized gain on investments 0.68 0.64 1.21 0.48
-----------------------------------------------
Total income from investment operations 1.09 0.99 1.56 0.81
Less distributions:
Dividends from net investment income (0.40) (0.35) (0.36) (0.30)
Distributions from capital gains (0.07) (0.24) -- --
-----------------------------------------------
Total distributions (0.47) (0.59) (0.36) (0.30)
-----------------------------------------------
NET ASSET VALUE AT END OF PERIOD 12.73 12.11 11.71 10.51
===============================================
Total return (%) 9.13 8.64 15.12 8.18(1)
RATIOS/SUPPLEMENTAL DATA (%)
-----------------------------------------------------------------------------------------------------------
Ratio of actual operating expenses to
average net assets 0.57 0.58 0.81 0.89(2)
Expense reductions reflected in above ratio 0.35 0.64 0.84 1.16(2)
Ratio of net investment income to average net assets 3.28 3.26 3.40 3.49(2)
Portfolio turnover rate 8 58 104 64
Net assets, end of period ($ x 1,000,000) 167 115 41 22
</TABLE>
(1) Not annualized.
(2) Annualized.
19
CONSERVATIVE PORTFOLIO
<PAGE> 20
PORTFOLIO MANAGEMENT
The fund's investment adviser, Charles Schwab Investment Management, Inc., has
more than $100 billion under management.
The investment adviser for the Schwab MarketTrack Portfolios(TM) is Charles
Schwab Investment Management, Inc., 101 Montgomery Street, San Francisco, CA
94104. Founded in 1989, the firm today serves as investment adviser for all of
the SchwabFunds.(R) The firm manages assets for more than 4 million shareholder
accounts. (All figures on this page are as of 10/31/99.)
As the investment adviser, the firm oversees the asset management and
administration of the Schwab MarketTrack Portfolios. As compensation for these
services, the firm receives a management fee from each portfolio. For the 12
months ended 10/31/99, these fees were 0.17% for the All Equity Portfolio, 0.27%
for the Growth Portfolio, 0.26% for the Balanced Portfolio and 0.25% for the
Conservative Portfolio. These figures, which are expressed as a percentage of
each portfolio's average daily net assets, represent the actual amounts paid,
including the effects of reductions.
Geri Hom, a vice president of the investment adviser, is responsible for the
day-to-day management of the equity portions of the portfolios. Prior to joining
the firm in 1995, she worked for nearly 15 years in equity index management.
Kimon Daifotis, CFA, a vice president of the investment adviser,
is responsible for the day-to-day management of the bond and cash portions of
the portfolios. Prior to joining the firm in October 1997, he worked for more
than 17 years in research and asset management.
20
PORTFOLIO MANAGEMENT
<PAGE> 21
INVESTING IN THE PORTFOLIOS
As a SchwabFunds(R) investor,
you have a number of WAYS TO
DO BUSINESS with us.
On the following pages, you will find information on BUYING, SELLING AND
EXCHANGING shares using the method that is most CONVENIENT FOR YOU. You also
will see how to choose a distribution option for your investment. Helpful
information on TAXES is included as well.
INVESTING IN THE PORTFOLIOS
21
<PAGE> 22
BUYING SHARES
Shares of the portfolios may be purchased through a Schwab brokerage account or
through certain third-party investment providers, such as other financial
institutions, investment professionals and workplace retirement plans.
The information on these pages outlines how Schwab brokerage account investors
can place "good orders" to buy, sell and exchange shares of the funds. If you
are investing through a third-party investment provider, some of the
instructions, minimums and policies may be different. Some investment providers
may charge transaction or other fees. Contact your investment provider for more
information.
SCHWAB ACCOUNTS
Different types of Schwab brokerage accounts are available, with varying account
opening and balance requirements. Some Schwab brokerage account features can
work in tandem with features offered by the portfolio.
For example, when you sell shares in a portfolio, the proceeds are automatically
paid to your Schwab brokerage account. From your account, you can use features
such as MoneyLink, which lets you move money between your brokerage accounts and
bank accounts, and Automatic Investment Plan (AIP), which lets you set up
periodic investments.
For more information on Schwab brokerage accounts, call 800-435-4000 or visit
the Schwab web site at www.schwab.com.
STEP 1
Choose a portfolio, then decide how much you want to invest.
<TABLE>
<CAPTION>
MINIMUM INITIAL INVESTMENT MINIMUM ADDITIONAL INVESTMENT MINIMUM BALANCE
--------------------------------------------------------------------------------
<S> <C> <C>
$1,000 $500 $500
($500 for retirement and ($100 for Automatic ($250 for retirement
custodial accounts) Investment Plan) and custodial accounts)
</TABLE>
STEP 2
CHOOSE AN OPTION FOR FUND DISTRIBUTIONS. The three options are described below.
If you don't indicate a choice, you will receive the first option.
<TABLE>
<CAPTION>
OPTION FEATURES
--------------------------------------------------------------------------------
<S> <C>
Reinvestment All dividends and capital gain distributions
are invested automatically in shares of your
portfolio.
--------------------------------------------------------------------------------
Cash/reinvestment You receive payment for dividends, while any
mix capital gain distributions are invested in
shares of your portfolio.
--------------------------------------------------------------------------------
Cash You receive payment for all dividends and capital
gain distributions.
</TABLE>
STEP 3
PLACE YOUR ORDER. Use any of the methods described at right. Make checks payable
to Charles Schwab & Co., Inc.
INVESTING IN THE PORTFOLIOS
22
<PAGE> 23
SELLING/EXCHANGING SHARES
Use any of the methods described below to sell shares of a portfolio. When
selling or exchanging shares, please be aware of the following policies:
- A fund may take up to seven days to pay sale proceeds.
- If you are selling shares that were recently purchased by check, the proceeds
may be delayed until the check for purchase clears; this may take up to 15
days from the date of purchase.
- The portfolios reserve the right to honor redemptions in portfolio securities
instead of cash when your redemptions over a 90-day period exceed $250,000 or
1% of a portfolio's assets, whichever is less.
- Exchange orders must meet the minimum investment and other requirements for
the portfolio and, if applicable, the share class into which you are
exchanging.
- You must obtain and read the prospectus for the portfolio into which you are
exchanging prior to placing your order.
METHODS FOR PLACING DIRECT ORDERS
PHONE
Call 800-435-4000, day or night (for TDD service, call 800-345-2550).
INTERNET
www.schwab.com/schwabfunds
SCHWABLINK
Investment professionals should follow the transaction instructions in the
SchwabLink manual; for technical assistance, call 800-367-5198.
MAIL
Write to SchwabFunds(R) at:
P.O. Box 7575
San Francisco, CA 94120-7575
When selling or exchanging shares, be sure to include the signature of at least
one of the persons whose name is on the account.
IN PERSON
Visit the nearest Charles Schwab branch office.
WHEN PLACING ORDERS
-------------------
With every order to buy, sell or exchange shares, you will need to include the
following information:
- Your name
- Your account number (for SchwabLink transactions, include the master account
and subaccount numbers)
- The name of the portfolio whose shares you want to buy or sell
- The dollar amount or number of shares you would like to buy, sell or
exchange
- For exchanges, the name of the fund into which you want to exchange and the
distribution option you prefer
- When selling shares, how you would like to receive the proceeds
Please note that orders to buy, sell or exchange become irrevocable at the time
you mail them.
23
INVESTING IN THE PORTFOLIO
<PAGE> 24
TRANSACTION POLICIES
The portfolios are open for business each day that the New York Stock Exchange
(NYSE) is open. The portfolios calculate their share prices each business day,
after the close of the NYSE (generally 4 p.m. Eastern time). A portfolio's share
price is its net asset value per share, or NAV, which is the portfolio's net
assets divided by the number of its shares outstanding. Orders to buy, sell or
exchange shares that are received in good order prior to the close of the fund
will be executed at the next share price calculated that day.
In valuing underlying fund investments, the portfolios use the NAVs reported by
their underlying funds. In valuing other portfolio securities, the portfolios
use market quotes if they are readily available. In cases where quotes are not
readily available, a portfolio may value securities based on fair values
developed using methods approved by the portfolio's Board of Trustees.
Shareholders of the portfolios should be aware that because foreign markets are
often open on weekends and other days when the portfolios are closed, the value
of some of a portfolio's securities may change on days when it is not possible
to buy or sell shares of the portfolio.
The portfolios and Schwab reserve certain rights, including the following:
- To automatically redeem your shares if the account they are held in is closed
for any reason or your balance falls below the minimum for the portfolio as a
result of selling or exchanging your shares
- To modify or terminate the exchange privilege upon 60 days' written notice to
shareholders
- To refuse any purchase or exchange order, including large purchase orders
that may negatively impact its operations, and orders that appear to be
associated with short-term trading activities
- To change or waive a portfolio's investment minimums
- To suspend the right to sell shares back to the portfolio, and delay sending
proceeds, during times when trading on the NYSE is restricted or halted, or
otherwise as permitted by the SEC
- To withdraw or suspend any part of the offering made by this prospectus
- To revise the redemption fee criteria
INVESTING IN THE PORTFOLIOS
24
<PAGE> 25
DISTRIBUTIONS AND TAXES
Any investment in the portfolios typically involves several tax considerations.
The information below is meant as a general summary for U.S. citizens and
residents. Because each person's tax situation is different, you should consult
your tax advisor about the tax implications of your investment in a portfolio.
You also can visit the Internal Revenue Service (IRS) web site at www.irs.gov.
As a shareholder, you are entitled to your share of the dividends and gains your
portfolio earns. Every year, each portfolio distributes to its shareholders
substantially all of its net investment income and net capital gains, if any.
These distributions typically are paid in December to all shareholders of
record, except for the Conservative Portfolio, which typically makes income
distributions at the end of every calendar quarter.
Unless you are investing through a tax-deferred or Roth retirement account, your
portfolio distributions generally have tax consequences. Each portfolio's net
investment income and short-term capital gains are distributed as dividends and
are taxable as ordinary income. Other capital gain distributions are taxable as
long-term capital gains, regardless of how long you have held your shares in the
portfolio. Distributions generally are taxable in the tax year in which they are
declared, whether you reinvest them or take them in cash.
Generally, any sale of your shares is a taxable event. A sale may result in a
capital gain or loss for you. The gain or loss generally will be treated as
short term if you held the shares for 12 months or less; long term if you held
the shares longer. For tax purposes, an exchange between funds is considered a
sale.
At the beginning of every year, the portfolios provide shareholders with
information detailing the tax status of any distributions the portfolio paid
during the previous calendar year. Schwab brokerage account customers also
receive information on distributions and transactions in their monthly account
statements.
Schwab brokerage account customers who sell portfolio shares typically will
receive a report that calculates their gain or loss using the "average cost"
single-category method. This information is not reported to the IRS, and you
still have the option of calculating gains or losses using any other methods
permitted by the IRS.
MORE ON DISTRIBUTIONS
If you are investing through a taxable account and purchase shares of a fund
just before it declares a distribution, you may receive a portion of your
investment back as a taxable distribution. This is because when a fund makes a
distribution, the share price is reduced by the amount of the distribution.
You can avoid "buying a dividend," as it is often called, by finding out if a
distribution is imminent and waiting until afterwards to invest. Of course, you
may decide that the opportunity to gain a few days of investment performance
outweighs the tax consequences of buying a dividend.
INVESTING IN THE PORTFOLIOS
25
<PAGE> 26
NOTES
<PAGE> 27
NOTES
<PAGE> 28
TO LEARN MORE
This prospectus contains important information on the portfolios and should be
read and kept for reference. You also can obtain more information from the
following sources.
SHAREHOLDER REPORTS, which are mailed to current portfolio investors, discuss
recent performance and portfolio holdings.
The STATEMENT OF ADDITIONAL INFORMATION (SAI) includes a more detailed
discussion of investment policies and the risks associated with various
investments. The SAI is incorporated by reference into the prospectus, making it
legally part of the prospectus.
You can obtain copies of these documents by contacting SchwabFunds(R) or the
SEC. All materials from SchwabFunds are free; the SEC charges a duplicating fee.
You can also review these materials in person at the SEC's Public Reference Room
or by computer using the SEC's EDGAR database at www.sec.gov.
SCHWAB
MARKETTRACK PORTFOLIOS(TM)
PROSPECTUS
February 29, 2000
As amended July 1, 2000
SEC FILE NUMBER
Schwab MarketTrack Portfolios 811-7704
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-0102
800-SEC-0330 (Public Reference Section)
202-942-8090
www.sec.gov
[email protected]
SCHWABFUNDS
P.O. Box 7575
San Francisco, CA 94120-7575
800-435-4000
www.schwab.com/schwabfunds
MKT3757FLT-2
[Charles Schwab logo]
