<PAGE>
SCHWABFUNDS-Registered Trademark-
SCHWAB EQUITY
INDEX FUNDS
SEMIANNUAL REPORT
AND
AN IMPORTANT NOTICE REGARDING
DELIVERY OF SHAREHOLDER
DOCUMENTS
April 30, 2000
<PAGE>
IMPORTANT NOTICE REGARDING DELIVERY OF SHAREHOLDER DOCUMENTS
The Securities and Exchange Commission permits mutual funds to deliver only one
copy of shareholder documents, including prospectuses and shareholder reports,
to fund investors with multiple accounts at the same residential or post office
box address. This practice is commonly called "householding" and is intended to
eliminate duplicate mailings of shareholder documents.
Mailings of your SchwabFunds shareholder documents may be householded
indefinitely unless you instruct us otherwise.
ADDITIONAL COPIES OF SHAREHOLDER DOCUMENTS
ALL SCHWABFUNDS PROSPECTUSES AND SHAREHOLDER REPORTS ARE AVAILABLE FREE OF
CHARGE AND MAY BE REQUESTED AT ANY TIME BY CALLING SCHWAB AS INDICATED BELOW.
SCHWABFUNDS PROSPECTUSES ARE ALSO AVAILABLE ON OUR WEB SITE AT WWW.SCHWAB.COM.
If you would prefer that your SchwabFunds mailings not be householded, please
contact:
- SCHWAB SIGNATURE SERVICES-TM- CLIENTS: Schwab Signature Services.
- INVESTMENT MANAGER CLIENTS: Schwab at 1-800-515-2157, or your investment
manager.
- ALL OTHER CLIENTS: Schwab at 1-800-435-4000.
Your instructions that householding not apply to your accounts holding
SchwabFunds will be effective within 30 days of receipt by Schwab.
<PAGE>
SCHWABFUNDS-Registered Trademark-
SCHWAB EQUITY
INDEX FUNDS
- SCHWAB S&P 500 FUND
- SCHWAB 1000 FUND-Registered Trademark-
- SCHWAB TOTAL STOCK
MARKET INDEX FUND-TM-
- SCHWAB SMALL-CAP
INDEX FUND-Registered Trademark-
- SCHWAB INTERNATIONAL
INDEX FUND-Registered Trademark-
Semiannual Report
April 30, 2000
<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, 2000. This report
includes the following five funds and all classes--Investor Shares, e.Shares-TM-
and Select Shares-TM-:
- Schwab S&P 500 Fund
- Schwab 1000 Fund-Registered Trademark-
- Schwab Total Stock Market Index Fund-TM-
- 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 seek to
achieve 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 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 SNXFX
1000 Sel SNXSX
TSM Inv SWTIX
TSM Sel SWTSX
SmCp Inv SWSMX
Sm Cp Sel SWSSX
Intl Inv 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 13
---------------------------------------------
Schwab 1000 Fund
FUND PERFORMANCE 15
PORTFOLIO SNAPSHOT 19
---------------------------------------------
Schwab Total Stock Market Index Fund
FUND PERFORMANCE 21
PORTFOLIO SNAPSHOT 24
---------------------------------------------
Schwab Small-Cap Index Fund
FUND PERFORMANCE 26
PORTFOLIO SNAPSHOT 30
---------------------------------------------
Schwab International Index Fund
FUND PERFORMANCE 32
PORTFOLIO SNAPSHOT 36
---------------------------------------------
Portfolio Management 38
---------------------------------------------
Fund Discussion 39
---------------------------------------------
Glossary 46
---------------------------------------------
Financial Statements and Notes 48
---------------------------------------------
</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
[PHOTO]
Dear Shareholder,
During the last few years, the benefits of investing have been readily apparent,
while the risks have been somewhat less obvious. In recent months, however,
investors have been subject to larger swings in the market, even within the span
of a single day.
Given this divergent environment, the message is clear: Expect volatility,
maintain a long-term view and ensure your investment strategy is appropriate for
your risk tolerance and time horizon. One way to lessen the impact of volatility
on your portfolio is to adequately diversify your investments, both within and
across asset sectors, namely cash equivalents, bonds and stocks. With its broad
range of funds, SchwabFunds-Registered Trademark- can help form the foundation
of a diversified investment plan. Our asset allocation funds can even provide
diversification within a single fund.
We recently added four new sector funds, the Schwab Focus Funds, to our
SchwabFunds offering. Each invests in a group of industries within a specific
sector--Communications, Financial Services, Healthcare and Technology--and can
be an effective complement to individual stock investing. Each Focus Fund
concentrates its investing in companies in a specific sector and may involve a
greater degree of risk than an investment in mutual funds with greater
diversification. For more information on the Schwab Focus Funds, please call
1-800-435-4000 and request a prospectus. The prospectus contains more
information on fund fees and expenses as well as risks. Please read it carefully
before investing.
As a leader in online brokerage, we recognize the value of the web as a means of
communicating timely, relevant information to investors. Regular updates on all
the SchwabFunds, including performance data, are available on our Web site at
WWW.SCHWAB.COM/SCHWABFUNDS. We encourage you to take advantage of this valuable
resource.
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.
Sincerely,
/s/ Charles R. Schwab
Charles R. Schwab
April 30, 2000
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 tend not to move in
tandem. 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 Share Shares
Investment 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.)
* Regular investing strategies such as dollar-cost averaging do not assure a
profit or protect against a loss in declining markets. Since such a strategy
involves continuous investment, investors should consider their ability to
continue purchases through periods of low price levels.
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. You can choose to invest as little as $100--twice a month, monthly or
quarterly.(1)
With Schwab MoneyLink-Registered Trademark- electronic funds transfer service,
you can easily request fund transfers between your Schwab account and your
accounts at other financial institutions. You can schedule automatically
recurring transfers for easy long-term savings. Or request a transfer via the
Web, by automated touch-tone phone, or through a Schwab representative anytime,
day or night.
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 on the Automatic Investment Plan
or MoneyLink, please call us at 1-800-435-4000.
WE MAKE IT EASY TO INVEST
We try to make it easy and convenient for you to invest in
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/SCHWABFUNDS; through
our automated touch-tone telephone service, TeleBroker-Registered Trademark-, by
calling 1-800-272-4922; 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 updated fund performance data 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
April 2000 marked the beginning of the tenth year of the current expansion,
making it the longest in U.S. history. Gross Domestic Product (GDP) grew at a
real (inflation adjusted) rate of 4.6% during 1999--the fourth consecutive year
at 4% or more and 5.4% during the first quarter of 2000. This rate is considered
by most economists and the Federal Reserve (Fed) to be in excess of what the
economy can absorb without experiencing inflationary pressures, perhaps 3.5% to
4.0%. High levels of consumer spending fueled by rising incomes, personal wealth
and consumer confidence, as well as strong business capital investment and a
healthy housing sector, have been the principal factors driving this lengthy
expansion.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
REAL GDP GROWTH RATE
Quarterly Percentage Change (Annualized Rate)
<TABLE>
<S> <C>
Q1 1990 5.0%
Q2 1990 1.0%
Q3 1990 -0.6%
Q4 1990 -3.0%
Q1 1991 -1.7%
Q2 1991 2.6%
Q3 1991 1.3%
Q4 1991 2.5%
Q1 1992 4.3%
Q2 1992 4.0%
Q3 1992 3.1%
Q4 1992 5.2%
Q1 1993 -0.7%
Q2 1993 2.1%
Q3 1993 1.5%
Q4 1993 6.0%
Q1 1994 3.6%
Q2 1994 5.7%
Q3 1994 2.2%
Q4 1994 5.1%
Q1 1995 1.5%
Q2 1995 0.8%
Q3 1995 3.2%
Q4 1995 3.3%
Q1 1996 2.9%
Q2 1996 6.9%
Q3 1996 2.2%
Q4 1996 4.9%
Q1 1997 4.9%
Q2 1997 5.1%
Q3 1997 4.0%
Q4 1997 3.1%
Q1 1998 6.7%
Q2 1998 2.1%
Q3 1998 3.8%
Q4 1998 5.9%
Q1 1999 3.7%
Q2 1999 1.9%
Q3 1999 5.7%
Q4 1999 7.3%
Q1 2000 5.4%
</TABLE>
Source: BLOOMBERG L.P.
Looking ahead, the availability of increasingly scarce labor resources and the
domestic consumers' response to continued stock market volatility may be key
determinants of whether the economy continues on its current course or softens
throughout 2000. The Fed has raised the federal funds rate by 1.75% since June
1999 in an as yet unsuccessful effort to moderate the economy's rapid growth
rate. The consensus of most economists is that the U.S. economy appears poised
for continued strong growth and additional intervention by the Fed (increases in
the federal funds rate) until the growth rate of the economy slows to a more
sustainable level.
UNEMPLOYMENT
The unemployment rate dropped to 3.9% in April 2000, a three-decade low.
Employment growth continues to outstrip population growth. Reflecting a
shrinking pool of available workers, labor markets continue to be extremely
tight in many areas of the country and there has been some regional evidence of
labor shortages driving up wages. The labor force participation rate, which
measures the employment population as a percent of the total population, is at a
post-war high. Growth in the labor force has slowed, and the Fed has expressed
its concern that strong demand and tight labor markets may continue to put
pressure on manufacturers and service providers to raise prices.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
U.S. UNEMPLOYMENT RATE
<TABLE>
<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 6.8%
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%
May-99 4.2%
Jun-99 4.3%
Jul-99 4.3%
Aug-99 4.2%
Sep-99 4.2%
Oct-99 4.1%
Nov-99 4.1%
Dec-99 4.1%
Jan-00 4.0%
Feb-00 4.1%
Mar-00 4.1%
Apr-00 3.9%
</TABLE>
Source: BLOOMBERG L.P.
4
<PAGE>
INFLATION
Virtually all measures of price inflation exhibited upward trends during the
reporting period. The Consumer Price Index (CPI) rose 3.0% for the year ended
April 30, 2000. Its core rate (which excludes the more volatile food and energy
components) was up 2.2%. The Personal Consumption Expenditures Index, a measure
of inflation closely watched by the Fed, rose 2.3% for the same period. The GDP
price deflator, the broadest measure of inflation, indicated prices rising at an
annual rate of 3.2% during the first quarter of 2000.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
MEASURES OF INFLATION
<TABLE>
<CAPTION>
CONSUMER PRICE INDEX EMPLOYMENT COST-INDEX
12-MONTH CHANGE 12-MONTH CHANGE
(MONTHLY) (QUARTERLY)
<S> <C> <C>
Jan-90 5.2% 5.5%
Feb-90 5.3% 5.5%
Mar-90 5.2% 5.5%
Apr-90 4.7% 5.4%
May-90 4.4% 5.4%
Jun-90 4.7% 5.4%
Jul-90 4.8% 5.2%
Aug-90 5.6% 5.2%
Sep-90 6.2% 5.2%
Oct-90 6.3% 4.9%
Nov-90 6.3% 4.9%
Dec-90 6.1% 4.9%
Jan-91 5.7% 4.6%
Feb-91 5.3% 4.6%
Mar-91 4.9% 4.6%
Apr-91 4.9% 4.6%
May-91 5.0% 4.6%
Jun-91 4.7% 4.6%
Jul-91 4.4% 4.3%
Aug-91 3.8% 4.3%
Sep-91 3.4% 4.3%
Oct-91 2.9% 4.3%
Nov-91 3.0% 4.3%
Dec-91 3.1% 4.3%
Jan-92 2.6% 4.0%
Feb-92 2.8% 4.0%
Mar-92 3.2% 4.0%
Apr-92 3.2% 3.6%
May-92 3.0% 3.6%
Jun-92 3.1% 3.6%
Jul-92 3.2% 3.5%
Aug-92 3.1% 3.5%
Sep-92 3.0% 3.5%
Oct-92 3.2% 3.5%
Nov-92 3.0% 3.5%
Dec-92 2.9% 3.5%
Jan-93 3.3% 3.5%
Feb-93 3.2% 3.5%
Mar-93 3.1% 3.5%
Apr-93 3.2% 3.6%
May-93 3.2% 3.6%
Jun-93 3.0% 3.6%
Jul-93 2.8% 3.6%
Aug-93 2.8% 3.6%
Sep-93 2.7% 3.6%
Oct-93 2.8% 3.5%
Nov-93 2.7% 3.5%
Dec-93 2.7% 3.5%
Jan-94 2.5% 3.2%
Feb-94 2.5% 3.2%
Mar-94 2.5% 3.2%
Apr-94 2.4% 3.2%
May-94 2.3% 3.2%
Jun-94 2.5% 3.2%
Jul-94 2.8% 3.2%
Aug-94 2.9% 3.2%
Sep-94 3.0% 3.2%
Oct-94 2.6% 3.0%
Nov-94 2.7% 3.0%
Dec-94 2.7% 3.0%
Jan-95 2.8% 2.9%
Feb-95 2.9% 2.9%
Mar-95 2.9% 2.9%
Apr-95 3.1% 2.9%
May-95 3.2% 2.9%
Jun-95 3.0% 2.9%
Jul-95 2.8% 2.7%
Aug-95 2.6% 2.7%
Sep-95 2.5% 2.7%
Oct-95 2.8% 2.7%
Nov-95 2.6% 2.7%
Dec-95 2.5% 2.7%
Jan-96 2.7% 2.8%
Feb-96 2.7% 2.8%
Mar-96 2.8% 2.8%
Apr-96 2.9% 2.9%
May-96 2.9% 2.9%
Jun-96 2.8% 2.9%
Jul-96 3.0% 2.8%
Aug-96 2.9% 2.8%
Sep-96 3.0% 2.8%
Oct-96 3.0% 2.9%
Nov-96 3.3% 2.9%
Dec-96 3.3% 2.9%
Jan-97 3.0% 2.9%
Feb-97 3.0% 2.9%
Mar-97 2.8% 2.9%
Apr-97 2.5% 2.8%
May-97 2.2% 2.8%
Jun-97 2.3% 2.8%
Jul-97 2.2% 3.0%
Aug-97 2.2% 3.0%
Sep-97 2.2% 3.0%
Oct-97 2.1% 3.3%
Nov-97 1.8% 3.3%
Dec-97 1.7% 3.3%
Jan-98 1.6% 3.3%
Feb-98 1.4% 3.3%
Mar-98 1.4% 3.3%
Apr-98 1.4% 3.5%
May-98 1.7% 3.5%
Jun-98 1.7% 3.5%
Jul-98 1.7% 3.7%
Aug-98 1.6% 3.7%
Sep-98 1.5% 3.7%
Oct-98 1.5% 3.4%
Nov-98 1.5% 3.4%
Dec-98 1.6% 3.4%
Jan-99 1.7% 3.0%
Feb-99 1.6% 3.0%
Mar-99 1.7% 3.0%
Apr-99 2.3% 3.2%
May-99 2.1% 3.2%
Jun-99 2.0% 3.2%
Jul-99 2.1% 3.1%
Aug-99 2.3% 3.1%
Sep-99 2.6% 3.1%
Oct-99 2.6% 3.4%
Nov-99 2.6% 3.4%
Dec-99 2.7% 3.4%
Jan-00 2.7% 4.3%
Feb-00 3.2% 4.3%
Apr-00 3.0% 4.3%
</TABLE>
Source: BLOOMBERG L.P.
Wage inflation also exhibited a marked upward trend during the reporting period.
The Employment Cost Index, a measurement of the cost to employ workers,
including both wages and benefits, rose 4.3% for the year ended March 31, 2000.
Although these rates of price and employment cost inflation may not be
alarmingly high by historical standards, the Fed has demonstrated its resolve to
keep inflation at bay through its communications and its actions (six federal
funds rate increases since June 1999). In particular, the Fed has expressed
concern that if labor markets continue to tighten, increases in wages will
outpace productivity growth and place additional upward pressure on prices. In
such an environment, productivity growth becomes particularly critical, as it
enables companies to pay higher wages without raising prices. Non-farm
productivity grew 3.0% in 1999 and at a 2.4% annualized rate in the first
quarter of 2000--strong gains to be sure, but likely not strong enough to offset
recent increases in employment costs.
ASSET CLASS PERFORMANCE
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ASSET CLASS % RETURNS DURING REPORTING PERIOD
<TABLE>
<CAPTION>
LEHMAN AGGREGATE MSCI-EAFE (ND) RUSSELL 2000 S&P 500
BOND INDEX INDEX SMALL-CAP INDEX INDEX
<S> <C> <C> <C> <C>
11/5/1999 0.61% 0.49% 3.23% 0.54%
11/12/1999 0.73% 2.02% 4.95% 2.44%
11/19/1999 0.32% 3.91% 7.62% 4.35%
11/26/1999 0.11% 5.22% 7.08% 3.95%
12/3/1999 0.15% 5.26% 8.43% 5.22%
12/10/1999 0.78% 6.67% 8.94% 4.10%
12/17/1999 -0.30% 6.78% 8.89% 4.39%
12/24/1999 -0.61% 10.69% 12.68% 7.13%
12/31/1999 -0.51% 12.55% 17.96% 8.04%
1/7/2000 -0.57% 7.42% 14.15% 6.00%
1/14/2000 -1.03% 10.06% 18.67% 7.74%
1/21/2000 -1.19% 7.61% 24.83% 5.99%
1/28/2000 -0.52% 7.11% 18.01% 0.02%
2/4/2000 -0.39% 9.34% 22.92% 4.81%
2/11/2000 -0.68% 9.96% 25.68% 2.07%
2/18/2000 -0.15% 8.31% 27.70% -0.95%
2/25/2000 0.50% 9.16% 30.29% -1.89%
3/3/2000 0.68% 11.46% 40.04% 3.81%
3/10/2000 0.48% 11.44% 41.37% 2.77%
3/17/2000 1.18% 10.11% 34.58% 7.88%
3/24/2000 1.05% 12.27% 34.49% 12.51%
3/31/2000 1.68% 12.10% 26.32% 10.49%
4/7/2000 2.49% 10.97% 27.26% 11.80%
4/14/2000 2.42% 7.09% 6.40% 0.02%
4/21/2000 2.33% 6.21% 12.97% 5.77%
4/28/2000 1.38% 6.10% 18.72% 7.17%
</TABLE>
Compiled by CHARLES SCHWAB & CO., INC.
As shown on the chart above, equity valuations, especially those of small-cap
and technology stocks, exhibited extreme volatility during the reporting period.
The price/earnings (P/E) ratio for the
5
<PAGE>
MARKET OVERVIEW (continued)
NASDAQ 100 Index fell by 33% in just 14 trading days during March and April.
Remarkably, it remained at levels above 100 even after its precipitous decline.
Reversing a five-year period of relative under performance, small-cap stocks
outperformed both large-cap stocks and international stocks for the six-month
reporting period ended 4/30/00. Small-cap stocks as represented by the Russell
2000-Registered Trademark- Index achieved a total return of 18.7%. Large-cap
stocks, as represented by the S&P 500-Registered Trademark- Index, returned
7.2%.
Dampened by relatively weak foreign currencies, International stocks, as
represented by the Morgan Stanley Capital International Europe, Australia, Far
East (MSCI-EAFE)-Registered Trademark- Index, achieved a return of 6.7% for the
six-month reporting period ending 4/30/00. Reflecting the rise in
intermediate-term interest rates, fixed income returns were generally weak for
the period. Bond returns, as represented by the Lehman Brothers Aggregate Bond
Index, were 1.4% for the six-month reporting period.
U.S. EQUITY VALUATION
The P/E ratio for the S&P 500-Registered Trademark- Index remained at very high
levels during the reporting period and ended the period at a lofty 29.6 times
earnings, slightly less 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
earning potential. Based on other traditional market valuation measures such as
the price-to-book value ratio or dividend yield, the U.S. stock market continues
to remain at record or near record high valuation levels. Reflecting the
extraordinary valuations of the technology sector, the P/E ratio (12 months
trailing) for the NASDAQ 100 Index ended the period at 120.2, as compared to an
average of 67 over the last five years.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
S&P 500 PRICE EARNINGS RATIO
<TABLE>
<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 14.90
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 25.50
Sep-92 24.37
Oct-92 23.94
Nov-92 24.08
Dec-92 24.01
Jan-93 24.20
Feb-93 24.25
Mar-93 24.22
Apr-93 23.20
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 20.10
May-94 20.16
Jun-94 19.76
Jul-94 18.64
Aug-94 18.90
Sep-94 18.26
Oct-94 17.55
Nov-94 16.58
Dec-94 16.98
Jan-95 16.23
Feb-95 16.20
Mar-95 16.50
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 19.30
Jul-96 18.31
Aug-96 18.62
Sep-96 19.75
Oct-96 19.60
Nov-96 21.05
Dec-96 20.70
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 24.00
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 33.90
May-99 32.74
Jun-99 34.70
Jul-99 31.62
Aug-99 31.21
Sep-99 29.90
Oct-99 29.92
Nov-99 30.65
Dec-99 32.53
Jan-00 29.78
Feb-00 28.59
Mar-00 31.50
Apr-00 29.58
</TABLE>
<TABLE>
<S> <C>
30-Year Average 15.8
</TABLE>
Source: BLOOMBERG L.P.
TREASURY BOND YIELDS
Continuing a trend which began in October 1998, both long-term and
intermediate-term rates continued to climb upward during the first three months
of the reporting period. The primary driver of this upward trend was the
continued strong growth of the domestic economy.
6
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
10-YEAR AND 5-YEAR TREASURY BOND YIELDS
<TABLE>
<CAPTION>
TEN-YEAR TREASURY FIVE-YEAR TREASURY
BOND YIELD NOTE YIELD
<S> <C> <C>
10.01.1999 5.97% 5.86%
10.08.1999 6.03% 5.95%
10.15.1999 6.07% 5.97%
10.22.1999 6.19% 6.10%
10.29.1999 6.02% 5.95%
11.05.1999 5.93% 5.86%
11.12.1999 5.93% 5.86%
11.19.1999 6.06% 5.99%
11.26.1999 6.12% 6.05%
12.03.1999 6.16% 6.07%
12.10.1999 6.07% 5.98%
12.17.1999 6.28% 6.19%
12.24.1999 6.41% 6.31%
12.31.1999 6.44% 6.34%
1.07.2000 6.52% 6.41%
1.14.2000 6.68% 6.58%
1.21.2000 6.77% 6.63%
1.28.2000 6.66% 6.66%
2.04.2000 6.55% 6.65%
2.11.2000 6.60% 6.70%
2.18.2000 6.49% 6.68%
2.25.2000 6.33% 6.47%
3.03.2000 6.39% 6.59%
3.10.2000 6.38% 6.60%
3.17.2000 6.19% 6.45%
3.24.2000 6.19% 6.50%
3.31.2000 6.00% 6.31%
4.07.2000 5.58% 6.18%
4.14.2000 5.58% 6.11%
4.21.2000 5.99% 6.24%
4.28.2000 6.21% 6.54%
</TABLE>
Source: BLOOMBERG L.P.
Treasury bond yields exhibited an unusual pattern during the second half of the
reporting period. Typically the yields on ten year treasury securities exceed
those on five-year securities to compensate investors for the additional
interest rate risk associated with longer duration securities. As shown in the
graph above, late in January, this normal relationship reversed, resulting in
what is referred to as a negative yield curve. This situation is a result of the
accumulating budget surpluses, which are allowing the federal government to
downsize its debt. The Treasury Department announced that it plans to buy back
$30 billion in debt in 2000 starting with longer dated maturities because those
payments carry the steepest interest payment. The anticipated reduction in
supply resulting from this buyback program, as well as scaled back issuance,
increased the price of the longer-term securities and resulted in a reduction in
yields.
INTERNATIONAL PERFORMANCE
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
MSCI-EAFE-Registered Trademark- COUNTRY US$ RETURNS
For the Six-Month Period Ended 4/30/00
<TABLE>
<S> <C>
Belgium -21.4%
Austria -14.3%
Ireland -10.4%
Switzerland -6.0%
Norway -5.6%
New Zealand -1.1%
Australia -0.8%
United Kingdom -0.3%
Singapore 4.8%
Netherlands 5.1%
Portugal 6.0%
Italy 6.2%
Japan 7.8%
Denmark 8.2%
Spain 9.4%
Hong Kong 17.9%
France 21.0%
Germany 21.8%
Sweden 70.7%
Finland 117.5%
</TABLE>
Source: DATASTREAM
The MSCI-EAFE Index gained 6.7% in U.S. dollar terms (excluding reinvested
dividends) during the six-month reporting period. In local currency terms, it
gained 15.6%, reflecting the relative weakness of most foreign currencies
(compared to the dollar) during the period.
The strongest performing countries for the period were Finland, Sweden and
Germany. Those countries with the largest negative returns were Belgium, Austria
and Ireland.
7
<PAGE>
SCHWAB S&P 500 FUND-INVESTOR SHARES AND E.SHARES-TM-
FUND PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 4/30/00
<TABLE>
<CAPTION>
SINCE INCEPTION
SIX MONTHS(1) ONE YEAR (5/1/96)
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------
SCHWAB S&P 500 FUND-INVESTOR SHARES(2) 7.05% 9.75% 23.47%
-------------------------------------------------------------------------------------------------------------------
SCHWAB S&P 500 FUND-E.SHARES(2) 7.03% 9.83% 23.59%
-------------------------------------------------------------------------------------------------------------------
S&P 500-Registered Trademark- Index 7.19% 10.13% 24.05%
-------------------------------------------------------------------------------------------------------------------
Index Tracking Differential-Investor Shares (0.14)% (0.38)% (0.58)%
-------------------------------------------------------------------------------------------------------------------
Index Tracking Differential-e.Shares (0.16)% (0.30)% (0.46)%
-------------------------------------------------------------------------------------------------------------------
</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 3/31/00. As of 3/31/00, the fund's six-month, one-year and
since-inception average annual total returns were 17.32%, 17.50% and 25.00%,
respectively, for the Investor Shares and 17.35%, 17.58% and 25.11%,
respectively, for the e.Shares.
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.
8
<PAGE>
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 three-year performance of the
Schwab S&P 500 Fund-Investor Shares.
AVERAGE ANNUAL RETURNS: PRE-TAX AND AFTER-TAX
<TABLE>
<CAPTION>
PERIOD ENDED 4/30/00
THREE YEARS
-----------------------------------------------
PRE TAX AFTER TAX(2) % LOST TO TAXES
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------
Schwab S&P 500 Fund-Investor Shares(1) 23.20% 22.76% (1.90)%
-------------------------------------------------------------------------------------------------------------
Average Large-Cap Fund(3),(4) 22.04% 19.45% (11.75)%
-------------------------------------------------------------------------------------------------------------
</TABLE>
(1) A portion of the fund's expenses was reduced during the reporting period.
Without such reductions, the fund's average annual returns would have been
lower.
(2) 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. State and local taxes have not been
considered. After-tax return information is not applicable to shareholders
in tax-deferred accounts such as IRAs or 401ks. Past after-tax information
is not a prediction of future tax efficiency. These after-tax returns do not
reflect any taxes you may have to pay as a result of selling your shares.
(3) 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 fund.
(4) Source: Morningstar, Inc. The large-cap fund category contains 832 funds
with three-year track records as of 4/30/00. These funds may or may not
follow a tax-efficient strategy similar to that followed by the Schwab S&P
500 Fund.
9
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
<TABLE>
<CAPTION>
SCHWAB S&P 500 S&P 500 INDEX SCHWAB S&P 500
FUND-INVESTOR SHARES FUND-E.SHARES
<S> <C> <C> <C>
5/96 $10,000 $10,000 $10,000
5/96 $10,250 $10,257 $10,250
6/96 $10,290 $10,296 $10,290
7/96 $9,840 $9,841 $9,840
8/96 $10,040 $10,049 $10,050
9/96 $10,600 $10,613 $10,600
10/96 $10,880 $10,906 $10,890
11/96 $11,690 $11,731 $11,710
12/96 $11,462 $11,498 $11,473
1/97 $12,157 $12,216 $12,179
2/97 $12,248 $12,312 $12,270
3/97 $11,744 $11,808 $11,766
4/97 $12,430 $12,511 $12,452
5/97 $13,186 $13,272 $13,209
6/97 $13,760 $13,867 $13,794
7/97 $14,849 $14,969 $14,873
8/97 $14,012 $14,131 $14,036
9/97 $14,778 $14,904 $14,803
10/97 $14,284 $14,406 $14,318
11/97 $14,930 $15,073 $14,964
12/97 $15,184 $15,332 $15,227
1/98 $15,357 $15,502 $15,390
2/98 $16,455 $16,620 $16,490
3/98 $17,289 $17,471 $17,336
4/98 $17,452 $17,647 $17,499
5/98 $17,147 $17,344 $17,193
6/98 $17,838 $18,048 $17,886
7/98 $17,645 $17,857 $17,692
8/98 $15,092 $15,278 $15,136
9/98 $16,058 $16,257 $16,103
10/98 $17,340 $17,579 $17,397
11/98 $18,387 $18,645 $18,446
12/98 $19,443 $19,718 $19,504
1/99 $20,253 $20,543 $20,316
2/99 $19,617 $19,904 $19,679
3/99 $20,397 $20,700 $20,459
4/99 $21,176 $21,501 $21,240
5/99 $20,663 $20,994 $20,737
6/99 $21,812 $22,159 $21,878
7/99 $21,125 $21,467 $21,199
8/99 $21,012 $21,360 $21,086
9/99 $20,428 $20,775 $20,501
10/99 $21,709 $22,090 $21,795
11/99 $22,150 $22,539 $22,227
12/99 $23,448 $23,866 $23,536
1/00 $22,266 $22,668 $22,350
2/00 $21,841 $22,239 $21,924
3/00 $23,967 $24,415 $24,057
4/00 $23,241 $23,680 $23,328
</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.
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 10/31/99 (000s) $3,617,323
------------------------------------------------------------------------
Total net assets as of 4/30/00 (000s) $3,962,602
------------------------------------------------------------------------
Percentage growth from 10/31/99 to 4/30/00 9.5%
------------------------------------------------------------------------
</TABLE>
10
<PAGE>
SCHWAB S&P 500 FUND-SELECT SHARES-TM-
FUND PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 4/30/00
<TABLE>
<CAPTION>
SINCE INCEPTION
SIX MONTHS(1) ONE YEAR (5/19/97)
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------
SCHWAB S&P 500 FUND-SELECT
SHARES(2),(3) 7.13% 9.93% 22.17%
---------------------------------------------------------------------------------------------------------------
S&P 500-Registered Trademark- Index 7.19% 10.13% 22.46%
---------------------------------------------------------------------------------------------------------------
Index Tracking Differential-Select
Shares (0.06)% (0.20)% (0.29)%
---------------------------------------------------------------------------------------------------------------
</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 3/31/00. As of 3/31/00, the fund's six-month, one-year and
since-inception average annual total returns were 17.44%, 17.74% and 24.20%,
respectively.
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 8 for a more detailed discussion).
(1) Actual, not annualized, because period is less than one year.
(2) A portion of the fund's expenses was reduced during the reporting period.
Without such reductions, the fund's average annual returns would have been
lower.
(3) The required minimum initial investment in the Select Shares is $50,000.
11
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A HYPOTHETICAL $50,000 INVESTMENT
<TABLE>
<CAPTION>
SCHWAB S&P 500 S&P 500 INDEX
FUND-SELECT SHARES
<S> <C> <C>
5/97 $50,000 $50,000
5/97 $50,935 $50,930
6/97 $53,190 $53,212
7/97 $57,395 $57,442
8/97 $54,165 $54,225
9/97 $57,120 $57,191
10/97 $55,215 $55,281
11/97 $57,745 $57,841
12/97 $58,745 $58,836
1/98 $59,375 $59,489
2/98 $63,660 $63,778
3/98 $66,880 $67,043
4/98 $67,550 $67,720
5/98 $66,370 $66,556
6/98 $69,040 $69,258
7/98 $68,295 $68,524
8/98 $58,435 $58,629
9/98 $62,165 $62,387
10/98 $67,155 $67,459
11/98 $71,245 $71,547
12/98 $75,340 $75,668
1/99 $78,475 $78,831
2/99 $76,015 $76,379
3/99 $79,030 $79,434
4/99 $82,085 $82,509
5/99 $80,140 $80,561
6/99 $84,545 $85,033
7/99 $81,885 $82,380
8/99 $81,490 $81,968
9/99 $79,230 $79,721
10/99 $84,230 $84,767
11/99 $85,935 $86,491
12/99 $91,000 $91,585
1/00 $86,420 $86,987
2/00 $84,770 $85,341
3/00 $93,050 $93,687
4/00 $90,235 $90,867
</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.
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 10/31/99 (000s) $3,750,052
------------------------------------------------------------------------
Total net assets as of 4/30/00 (000s) $4,076,351
------------------------------------------------------------------------
Percentage growth from 10/31/99 to 4/30/00 8.7%
------------------------------------------------------------------------
</TABLE>
12
<PAGE>
SCHWAB S&P 500 FUND
PORTFOLIO SNAPSHOT
The Schwab S&P 500 Fund (the fund) invests primarily in common stocks of the S&P
500-Registered Trademark- Index, a widely recognized, unmanaged index of 500
large-cap stocks selected by Standard & Poor's.-Registered Trademark- As of
April 30, 2000, the aggregate market capitalization of the S&P 500 Index
represented approximately 80% of the total value of the U.S. stock market.*
Common stocks of the 50 largest companies in the S&P 500 Index accounted for
approximately 57% of the index. The information below and on the following page
provides a snapshot of the fund's characteristics as of 4/30/00, and is not
indicative of its composition after that date. The terms used below are defined
beginning on page 46. A complete list of the securities in the fund's portfolio
as of 4/30/00 is provided in the Schedule of Investments later in this report.
FUND FACTS
<TABLE>
<CAPTION>
SCHWAB S&P 500 FUND- PEER GROUP
INVESTOR SHARES AVERAGE+
<S> <C> <C>
----------------------------------------------------------------------------------------------------------------------
Number of Issues 505 138
----------------------------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) $95,991+ $58,904
----------------------------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 37.0+ 35.4
----------------------------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 10.4+ 9.5
----------------------------------------------------------------------------------------------------------------------
12-Month Yield 0.81%+ 0.45%
----------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 6% 75%
----------------------------------------------------------------------------------------------------------------------
Three-Year Beta 1.00+ 0.94
----------------------------------------------------------------------------------------------------------------------
Expense Ratio 0.35%** 1.34%
----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Source: Wilshire Associates. The U.S. stock market as represented by the
Wilshire 5000 Index.
** Reflects a voluntary reduction by Charles Schwab Investment Management, Inc.
(investment adviser), and Schwab, which is guaranteed through at least
2/28/01 (excluding interest, taxes and certain non-routine expenses).
+ Source: Morningstar. This information is as of 4/30/00, 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 2,297
large-cap funds as tracked by Morningstar.
13
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 4/30/00
<TABLE>
<S> <C>
Other 25.2%
Business Machines and Software 16.5%
Electronics 12.2%
Healthcare/Drugs and Medicine 9.6%
Telephone 6.9%
Retail 5.9%
Producer Goods and Manufacturing 5.5%
Miscellaneous Finance 5.2%
Banks 4.7%
Business Services 4.5%
Media 3.8%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
EQUITY INVESTMENT STYLE BOX(1)
AS OF 4/30/00
<TABLE>
<CAPTION>
-STYLE-
<S> <C> <C> <C>
Value Blend Growth -Market Cap-
X Large
Medium
Small
</TABLE>
TOP 10 HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS(2)
<TABLE>
<S> <C>
---------------------------------------------
General Electric, Co. 4.1%
---------------------------------------------
Cisco Systems, Inc. 3.8%
---------------------------------------------
Intel Corp. 3.4%
---------------------------------------------
Microsoft Corp. 2.9%
---------------------------------------------
Exxon Mobil Corp. 2.1%
---------------------------------------------
---------------------------------------------
Wal-Mart Stores, Inc. 2.0%
---------------------------------------------
Oracle Corp. 1.8%
---------------------------------------------
International Business Machines Corp. 1.6%
---------------------------------------------
Citigroup, Inc. 1.6%
---------------------------------------------
Lucent Technologies, Inc. 1.6%
---------------------------------------------
</TABLE>
(1) Source: Morningstar, Inc. The style box illustrates the composition of the
fund's portfolio as of 4/30/00. It is not indicative of the fund's 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.
(2) Nothing in this report represents a recommendation of a security by the
investment adviser.
14
<PAGE>
SCHWAB 1000 FUND-REGISTERED TRADEMARK--INVESTOR SHARES
FUND PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 4/30/00
<TABLE>
<CAPTION>
SINCE INCEPTION
SIX MONTHS(1) ONE YEAR FIVE YEARS (4/2/91)
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------
SCHWAB 1000 FUND-INVESTOR SHARES(2) 8.88% 11.10% 24.55% 18.20%
---------------------------------------------------------------------------------------------------------------
Schwab 1000 Index-Registered Trademark- 9.05% 11.34% 25.05% 18.68%
---------------------------------------------------------------------------------------------------------------
Index Tracking Differential-Investor Shares (0.17)% (0.24)% (0.50)% (0.48)%
---------------------------------------------------------------------------------------------------------------
S&P 500-Registered Trademark- Index(3) 7.19% 10.13% 25.26% 18.60%
---------------------------------------------------------------------------------------------------------------
</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 3/31/00. As of 3/31/00, the fund's six-month, one-year,
five-year and since inception average annual total returns were 20.61%, 20.13%,
26.13% and 18.88%, respectively.
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 8 for a more detailed discussion).
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.
AVERAGE ANNUAL RETURNS: PRE-TAX AND AFTER-TAX
<TABLE>
<CAPTION>
PERIOD ENDED 4/30/00
FIVE YEARS
--------------------------------------------
PRE TAX AFTER TAX(4) % LOST TO TAXES
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------------
Schwab 1000 Fund-Investor Shares(2) 24.55% 24.06% (2.00)%
----------------------------------------------------------------------------------------------------------
Average Large-Cap Fund(5) 21.99% 19.22% (12.60)%
----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Actual, not annualized, because period is less than one year.
(2) A portion of the fund's expenses was reduced during the reporting period.
Without such reductions, the fund's average annual returns would have been
lower.
(3) 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.
(4) 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. State and local taxes have not been
considered. After-tax return information is not applicable to shareholders
in tax-deferred accounts such as IRAs or 401ks. Past after-tax information
is not a prediction of future tax efficiency. These after tax returns do not
reflect any taxes you may have to pay as a result of selling your shares.
(5) Source: Morningstar, Inc. The large-cap fund category contains 647 funds
with five-year track records as of 4/30/00. These funds may or may not
follow a tax-efficient strategy similar to that followed by the Schwab 1000
Fund.
15
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
<TABLE>
<CAPTION>
SCHWAB 1000 S&P 500 INDEX SCHWAB 1000 INDEX
FUND-INVESTOR SHARES
<S> <C> <C> <C>
4/91 $10,000 $10,000 $10,000
4/91 $9,910 $9,908 $9,898
5/91 $10,320 $10,335 $10,311
6/91 $9,850 $9,861 $9,840
7/91 $10,320 $10,321 $10,310
8/91 $10,600 $10,566 $10,591
9/91 $10,460 $10,389 $10,455
10/91 $10,630 $10,528 $10,625
11/91 $10,240 $10,104 $10,225
12/91 $11,425 $11,260 $11,412
1/92 $11,283 $11,050 $11,272
2/92 $11,425 $11,193 $11,415
3/92 $11,171 $10,975 $11,163
4/92 $11,404 $11,298 $11,392
5/92 $11,404 $11,353 $11,457
6/92 $11,465 $11,184 $11,257
7/92 $11,726 $11,641 $11,728
8/92 $11,480 $11,403 $11,486
9/92 $11,623 $11,537 $11,646
10/92 $11,746 $11,577 $11,763
11/92 $12,208 $11,971 $12,233
12/92 $12,398 $12,119 $12,428
1/93 $12,502 $12,220 $12,539
2/93 $12,595 $12,387 $12,632
3/93 $12,896 $12,648 $12,948
4/93 $12,533 $12,342 $12,583
5/93 $12,896 $12,673 $12,957
6/93 $12,958 $12,710 $13,024
7/93 $12,905 $12,659 $12,989
8/93 $13,397 $13,139 $13,492
9/93 $13,355 $13,038 $13,454
10/93 $13,544 $13,308 $13,654
11/93 $13,355 $13,181 $13,462
12/93 $13,592 $13,341 $13,700
1/94 $14,005 $13,794 $14,136
2/94 $13,645 $13,420 $13,781
3/94 $13,042 $12,837 $13,169
4/94 $13,190 $13,001 $13,326
5/94 $13,349 $13,213 $13,488
6/94 $12,988 $12,889 $13,127
7/94 $13,405 $13,312 $13,558
8/94 $13,971 $13,856 $14,147
9/94 $13,651 $13,518 $13,825
10/94 $13,918 $13,821 $14,095
12/94 $13,416 $13,318 $13,590
12/94 $13,577 $13,514 $13,767
1/95 $13,923 $13,864 $14,121
2/95 $14,474 $14,404 $14,700
3/95 $14,852 $14,829 $15,094
4/95 $15,219 $15,264 $15,476
5/95 $15,770 $15,874 $16,048
6/95 $16,191 $16,242 $16,490
7/95 $16,807 $16,779 $17,111
8/95 $16,936 $16,821 $17,245
9/95 $17,606 $17,531 $17,949
10/95 $17,520 $17,468 $17,859
11/95 $18,276 $18,233 $18,646
12/95 $18,547 $18,585 $18,924
1/96 $19,095 $19,217 $19,499
2/96 $19,379 $19,396 $19,789
3/96 $19,554 $19,582 $19,980
4/96 $19,883 $19,870 $20,321
5/96 $20,354 $20,380 $20,812
6/96 $20,299 $20,458 $20,779
7/96 $19,335 $19,554 $19,794
8/96 $19,861 $19,966 $20,327
9/96 $20,967 $21,088 $21,465
10/96 $21,394 $21,670 $21,899
11/96 $22,938 $23,308 $23,485
12/96 $22,549 $22,847 $23,103
1/97 $23,846 $24,272 $24,442
2/97 $23,935 $24,464 $24,528
3/97 $22,870 $23,461 $23,457
4/97 $24,101 $24,859 $24,696
5/97 $25,631 $26,371 $26,291
6/97 $26,695 $27,552 $27,402
7/97 $28,857 $29,743 $29,615
8/97 $27,471 $28,077 $28,216
9/97 $28,946 $29,613 $29,732
10/97 $27,992 $28,624 $28,756
11/97 $29,167 $29,949 $29,983
12/97 $29,747 $30,464 $30,582
1/98 $29,960 $30,802 $30,818
2/98 $32,166 $33,023 $33,116
3/98 $33,801 $34,714 $34,830
4/98 $34,149 $35,065 $35,211
5/98 $33,398 $34,462 $34,441
6/98 $34,742 $35,861 $35,824
7/98 $34,260 $35,481 $35,324
8/98 $29,142 $30,357 $30,049
9/98 $31,023 $32,303 $32,014
10/98 $33,487 $34,929 $34,602
11/98 $35,570 $37,046 $36,762
12/98 $37,826 $39,180 $39,090
1/99 $39,259 $40,818 $40,575
2/99 $37,939 $39,548 $39,256
3/99 $39,462 $41,130 $40,820
4/99 $41,065 $42,722 $42,505
5/99 $40,117 $41,714 $41,535
6/99 $42,115 $44,029 $43,637
7/99 $40,772 $42,655 $42,247
9/99 $40,377 $42,442 $41,900
8/99 $39,304 $41,279 $40,655
10/99 $41,901 $43,891 $43,397
11/99 $42,917 $44,784 $44,410
12/99 $45,770 $47,422 $47,386
1/00 $43,622 $45,041 $45,179
2/00 $43,634 $44,188 $45,237
3/00 $47,406 $48,511 $49,172
4/00 $45,622 $47,052 $47,326
</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.
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 10/31/99 (000s) $4,924,606
------------------------------------------------------------------------
Total net assets as of 4/30/00 (000s) $5,099,907
------------------------------------------------------------------------
Percentage growth from 10/31/99 to 4/30/00 3.6%
------------------------------------------------------------------------
</TABLE>
16
<PAGE>
SCHWAB 1000 FUND-SELECT SHARES-TM-
FUND PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 4/30/00
<TABLE>
<CAPTION>
SINCE INCEPTION
SIX MONTHS(1) ONE YEAR (5/19/97)
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------
SCHWAB 1000 FUND-SELECT SHARES(2),(3) 8.92% 11.20% 22.61%
---------------------------------------------------------------------------------------------------------------
Schwab 1000 Index-Registered Trademark- 9.05% 11.34% 22.94%
---------------------------------------------------------------------------------------------------------------
Index Tracking Differential-Select
Shares (0.13)% (0.14)% (0.33)%
---------------------------------------------------------------------------------------------------------------
S&P 500-Registered Trademark- Index 7.19% 10.13% 22.46%
---------------------------------------------------------------------------------------------------------------
</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 3/31/00. As of 3/31/00, the fund's six-month, one-year and
since-inception average annual total returns were 20.65%, 20.27% and 25.00%,
respectively.
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 8 for a more detailed discussion).
(1) Actual, not annualized, because period is less than one year.
(2) A portion of the fund's expenses was reduced during the reporting period.
Without such reductions, the fund's average annual returns would have been
lower.
(3) The required minimum initial investment in the Select Shares is $50,000.
17
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A HYPOTHETICAL $50,000 INVESTMENT
<TABLE>
<CAPTION>
SCHWAB 1000
FUND-SELECT S&P 500 SCHWAB 1000
SHARES INDEX INDEX
<S> <C> <C> <C>
5/97 $50,000 $50,000 $50,000
5/97 $51,040 $50,930 $51,064
6/97 $53,180 $53,212 $53,222
7/97 $57,490 $57,442 $57,518
8/97 $54,750 $54,225 $54,801
9/97 $57,685 $57,191 $57,746
10/97 $55,785 $55,281 $55,851
11/97 $58,150 $57,841 $58,233
12/97 $59,325 $58,836 $59,398
1/98 $59,725 $59,489 $59,855
2/98 $64,145 $63,778 $64,318
3/98 $67,405 $67,043 $67,648
4/98 $68,100 $67,720 $68,387
5/98 $66,625 $66,556 $66,893
6/98 $69,305 $69,258 $69,578
7/98 $68,345 $68,524 $68,606
8/98 $58,140 $58,629 $58,362
9/98 $61,915 $62,387 $62,179
10/98 $66,825 $67,459 $67,206
11/98 $71,000 $71,547 $71,400
12/98 $75,505 $75,668 $75,922
1/99 $78,385 $78,831 $78,805
2/99 $75,750 $76,379 $76,244
3/99 $78,795 $79,434 $79,282
4/99 $82,015 $82,509 $82,553
5/99 $80,120 $80,561 $80,671
6/99 $84,110 $85,033 $84,753
7/99 $81,450 $82,380 $82,052
8/99 $80,665 $81,968 $81,380
9/99 $78,545 $79,721 $78,960
10/99 $83,725 $84,767 $84,287
11/99 $85,755 $86,491 $86,255
12/99 $91,470 $91,585 $92,034
1/00 $87,180 $86,987 $87,747
2/00 $87,225 $85,341 $87,861
3/00 $94,765 $93,687 $95,504
4/00 $91,200 $90,867 $91,917
</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.
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 10/31/99 (000s) $2,213,586
------------------------------------------------------------------------
Total net assets as of 4/30/00 (000s) $2,434,458
------------------------------------------------------------------------
Percentage growth from 10/31/99 to 4/30/00 10.0%
------------------------------------------------------------------------
</TABLE>
18
<PAGE>
SCHWAB 1000 FUND-REGISTERED TRADEMARK-
PORTFOLIO SNAPSHOT
The Schwab 1000 Fund (the fund) invests primarily in common stocks of the Schwab
1000 Index-Registered Trademark-, an index created to represent the performance
of publicly traded common stocks of the 1,000 largest U.S. companies (excluding
investment companies). As of April 30, 2000, the aggregate market capitalization
of the Schwab 1000 Index represented approximately 87.3% of the total value of
the U.S. stock market, as represented by the Wilshire 5000 Index.* The
information below and on the following page provides a snapshot of the fund's
characteristics as of 4/30/00, and is not indicative of its composition after
that date. The terms used below are defined beginning on page 46. A complete
list of the securities in the fund's portfolio as of 4/30/00 is provided in the
Schedule of Investments later in this report.
FUND FACTS
<TABLE>
<CAPTION>
SCHWAB 1000 FUND- PEER GROUP
INVESTOR SHARES AVERAGE+
<S> <C> <C>
----------------------------------------------------------------------------------------------------------------------------
Number of Issues 987 138
----------------------------------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) $67,425+ $58,904
----------------------------------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 37.3+ 35.4
----------------------------------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 10.7+ 9.5
----------------------------------------------------------------------------------------------------------------------------
12-Month Yield 0.64%+ 0.45%
----------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 5% 75%
----------------------------------------------------------------------------------------------------------------------------
Three-Year Beta 1.00+ 0.94
----------------------------------------------------------------------------------------------------------------------------
Expense Ratio 0.46%** 1.34%
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Source: Wilshire Associates.
** Reflects a voluntary reduction by the investment adviser and Schwab, which is
guaranteed through at least 2/28/01 (excluding interest, taxes and certain
non-routine expenses).
+ Source: Morningstar. This information is as of 4/30/00, 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 2,297
large-cap funds as tracked by Morningstar.
19
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 4/30/00
<TABLE>
<S> <C>
Other 23.0%
Business Machines and Software 15.3%
Electronics 12.5%
Healthcare/Drugs and Medicine 9.7%
Telephone 7.2%
Business Services 6.0%
Miscellaneous Finance 5.9%
Retail 5.8%
Producer Goods and Manufacturing 5.4%
Banks 4.8%
Media 4.4%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
EQUITY INVESTMENT STYLE BOX(++)
AS OF 4/30/00
<TABLE>
<CAPTION>
-STYLE-
<S> <C> <C> <C>
Value Blend Growth -Market Cap-
X Large
Medium
Small
</TABLE>
TOP 10 HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS(1)
<TABLE>
<S> <C>
---------------------------------------------
General Electric Co. 3.7%
---------------------------------------------
Cisco Systems, Inc. 3.4%
---------------------------------------------
Intel Corp. 3.1%
---------------------------------------------
Microsoft Corp. 2.6%
---------------------------------------------
Exxon Mobil Corp. 1.9%
---------------------------------------------
---------------------------------------------
Wal-Mart Stores, Inc. 1.8%
---------------------------------------------
Oracle Corp. 1.6%
---------------------------------------------
International Business Machines Corp. 1.5%
---------------------------------------------
Citigroup, Inc. 1.4%
---------------------------------------------
Lucent Technologies, Inc. 1.4%
---------------------------------------------
</TABLE>
++ Source: Morningstar, Inc. The style box illustrates the composition of the
fund's portfolio as of 4/30/00. It is not indicative of the fund's 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.
(1) Nothing in this report represents a recommendation of a security by the
investment adviser.
20
<PAGE>
SCHWAB TOTAL STOCK MARKET INDEX FUND-TM-
FUND PERFORMANCE
CUMULATIVE TOTAL RETURNS FOR THE PERIOD ENDED 4/30/00
<TABLE>
<CAPTION>
SINCE INCEPTION(1)
SIX MONTHS(1) (5/28/99)
<S> <C> <C>
---------------------------------------------------------------------------------------------
SCHWAB TOTAL STOCK MARKET INDEX FUND-INVESTOR
SHARES(2) 9.24% 13.99%
---------------------------------------------------------------------------------------------
SCHWAB TOTAL STOCK MARKET INDEX FUND-SELECT
SHARES(2,3) 9.26% 14.12%
---------------------------------------------------------------------------------------------
Wilshire 5000 Index(4) 9.45% 14.32%
---------------------------------------------------------------------------------------------
Index Tracking Differential-Investor Shares (0.21)% (0.33)%
---------------------------------------------------------------------------------------------
Index Tracking Differential-Select Shares (0.19)% (0.20)%
---------------------------------------------------------------------------------------------
</TABLE>
National Association of Securities Dealers (NASD) regulations require that we
additionally report performance data as of the most recent calendar quarter--in
this case, the quarter ended 3/31/00. As of 3/31/00, the fund's six-month and
the cumulative total returns since inception were 22.42% and 20.22%,
respectively, for the Investor Shares and 22.44% and 20.30%, respectively, for
the Select Shares.(2)
The index-tracking differential represents the difference between the total
returns of the Wilshire 5000 Total Market Index(5) and the Schwab Total Stock
Market Index Fund. The tracking differential arises due to several factors.
(1) Actual, not annualized, because period is less than one year.
(2) A portion of the fund's expenses was reduced during the reporting period.
Without such reductions, the total returns since inception would have been
lower.
(3) The required minimum initial investment in the Select Shares is $50,000
(4) 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.
(5) Wilshire and Wilshire 5000 are registered service marks of Wilshire
Associates, Inc. The fund is not sponsored, endorsed, sold or promoted by
Wilshire Associates, and Wilshire Associates is not in any way affiliated
with the fund. Wilshire Associates makes no representation about the
advisability of investing in the fund or in any stock included in the
Wilshire 5000.
21
<PAGE>
TAX-SMART INVESTMENT STRATEGY
One of the most attractive features of the Schwab Total Stock Market Index
Fund-TM- is that it uses a strategy designed to maximize after-tax return
potential. Like other index funds, the fund generally will have lower portfolio
turnover than actively managed funds, because it won't have to actively trade
stocks unless a company joins or exits the index. In addition, the fund's
managers attempt to offset capital gains with losses whenever possible.
The Schwab Total Stock Market Index Fund has the potential to be even more tax
efficient than funds that track other indices. That's because the fund seeks to
track the Wilshire 5000 Index. And because that index essentially represents all
stocks in the U.S. market, the fund isn't forced to trade stocks that leave the
index due to fluctuations in their market capitalizations.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
<TABLE>
<CAPTION>
SCHWAB TOTAL STOCK
MARKET INDEX FUND-INVESTOR SHARES WILSHIRE 5000 INDEX
<S> <C> <C>
6/99 $10,000 $10,000
6/99 $10,515 $10,518
7/99 $10,165 $10,180
8/99 $10,070 $10,086
9/99 $9,820 $9,822
10/99 $10,435 $10,447
11/99 $10,790 $10,797
12/99 $11,605 $11,617
1/00 $11,108 $11,135
2/00 $11,374 $11,384
3/00 $12,022 $12,060
4/00 $11,399 $11,432
</TABLE>
The above graph compares the growth of a hypothetical $10,000 investment in the
Schwab Total Stock Market Index Fund-Investor Shares, made at its inception,
with a similar investment in the Wilshire 5000 Index.
22
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A HYPOTHETICAL $50,000 INVESTMENT
<TABLE>
<CAPTION>
SCHWAB TOTAL STOCK
MARKET INDEX FUND-SELECT SHARES WILSHIRE 5000 INDEX
<S> <C> <C>
06/99 $50,000 $50,000
06/99 $52,600 $52,590
07/99 $50,850 $50,902
08/99 $50,350 $50,428
09/99 $49,125 $49,112
10/99 $52,225 $52,236
11/99 $53,975 $53,986
12/99 $58,065 $58,083
01/00 $55,605 $55,673
02/00 $56,935 $56,920
03/00 $60,150 $60,301
04/00 $57,060 $57,159
</TABLE>
The above graph compares the growth of a hypothetical $50,000 investment in the
Schwab Total Stock Market Index Fund-Select Shares, made at its inception, with
a similar investment in the Wilshire 5000 Index.
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>
<CAPTION>
INVESTOR SHARES SELECT SHARES-REGISTERED TRADEMARK-
<S> <C> <C>
-----------------------------------------------------------------------------------------------------------------------
Total net assets as of 10/31/99 (000s) $135,720 $149,131
-----------------------------------------------------------------------------------------------------------------------
Total net assets as of 4/30/00 $196,433 $229,299
-----------------------------------------------------------------------------------------------------------------------
Percentage growth from 10/31/99 to 4/30/00 44.7% 53.8%
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
SCHWAB TOTAL STOCK MARKET INDEX FUND-TM-
PORTFOLIO SNAPSHOT
Schwab Total Stock Market Index Fund (the fund) invests in stocks that are
included in the Wilshire 5000 Index. The fund uses a "sampling" strategy, which
means it purchases a representative sample of stocks in the index, instead of
trying to add them all. The Wilshire 5000 Index, which was created in 1974, and
was initially composed of 5,000 stocks, now measures the performance of more
than 7,200 U.S.-headquartered companies that have readily available pricing
data.* The information below and on the following page provides a snapshot of
the fund's characteristics as of 4/30/00, and is not indicative of its
composition after that date. The terms used below are defined beginning on
page 46. A complete list of the securities in the fund's portfolio as of 4/30/00
is provided in the Schedule of Investments later in this report.
FUND FACTS
<TABLE>
<CAPTION>
SCHWAB TOTAL STOCK
MARKET INDEX FUND PEER GROUP
INVESTOR SHARES AVERAGE+
<S> <C> <C>
---------------------------------------------------------------------------------------------------------------------------
Number of Issues 3,184 138
---------------------------------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) $46,856+ $58,904
---------------------------------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 36.6+ 35.4
---------------------------------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 10.7+ 9.5
---------------------------------------------------------------------------------------------------------------------------
12-Month Yield N/A 0.45%
---------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 1% 75%
---------------------------------------------------------------------------------------------------------------------------
Expense Ratio 0.40%** 1.34%
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Source: Wilshire Associates.
** Reflects a voluntary reduction by the investment adviser and Schwab, which is
guaranteed through at least 2/28/01 (excluding interest, taxes and certain
non-routine expenses).
+ Source: Morningstar. This information is as of 4/30/00, 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 2,297
large-cap funds as tracked by Morningstar.
24
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 4/30/00
<TABLE>
<S> <C>
Other 25.4%
Business Machines & Software 13.7%
Electronics 12.0%
Healthcare/Drugs and Medicine 9.2%
Business Services 7.9%
Telephone 6.8%
Miscellaneous Finance 6.2%
Retail 5.2%
Producer Goods & Manufacturing 5.0%
Banks 4.5%
Media 4.1%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
EQUITY INVESTMENT STYLE BOX(++)
AS OF 4/30/00
[LOGO]
TOP 10 HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS(1)
<TABLE>
<S> <C>
---------------------------------------------
General Electric Co. 3.2%
---------------------------------------------
Cisco Systems, Inc. 3.0%
---------------------------------------------
Intel Corp. 2.7%
---------------------------------------------
Microsoft Corp. 2.3%
---------------------------------------------
Exxon Mobil Corp. 1.7%
---------------------------------------------
---------------------------------------------
Wal-Mart Stores, Inc. 1.6%
---------------------------------------------
Oracle Corp. 1.4%
---------------------------------------------
Lucent Technologies, Inc. 1.3%
---------------------------------------------
Citigroup, Inc. 1.3%
---------------------------------------------
International Business Machines Corp. 1.3%
---------------------------------------------
</TABLE>
++ Source: Morningstar, Inc. The style box illustrates the composition of the
fund's portfolio as of 4/30/00. It is not indicative of the fund's 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.
(1) Nothing in this report represents a recommendation of a security by the
investment adviser.
25
<PAGE>
SCHWAB SMALL-CAP INDEX FUND-REGISTERED TRADEMARK--INVESTOR SHARES
FUND PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 4/30/00
<TABLE>
<CAPTION>
SINCE INCEPTION
SIX MONTHS(1) ONE YEAR FIVE YEARS (12/3/93)
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND-INVESTOR SHARES(2) 16.44% 24.22% 15.73% 13.04%
-------------------------------------------------------------------------------------------------------------
Schwab Small-Cap Index-Registered Trademark- 17.39% 25.80% 17.70% 14.72%
-------------------------------------------------------------------------------------------------------------
Index Tracking Differential-Investor Shares (0.95)% (1.58)% (1.97)% (1.68)%
-------------------------------------------------------------------------------------------------------------
Russell 2000-Registered Trademark- Index 18.72% 18.42% N/A 12.91%
-------------------------------------------------------------------------------------------------------------
</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 3/31/00. As of 3/31/00, the fund's six-month, one-year,
five-year and since-inception average annual total returns were 24.78%, 40.94%,
17.43% and 14.13%, respectively.
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 8 for a more detailed discussion).
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.
AVERAGE ANNUAL RETURNS: PRE-TAX AND AFTER-TAX
<TABLE>
<CAPTION>
PERIOD ENDED 4/30/00
FIVE YEARS
--------------------------------------------
PRE TAX AFTER TAX(3) % LOST TO TAXES
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------------
Schwab Small-Cap Index Fund-Investor Shares(2) 15.73% 15.31% (2.67)%
----------------------------------------------------------------------------------------------------------
Average Small-Cap Fund(4) 17.88% 15.33% (14.26)%
----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Actual, not annualized, because period is less than one year.
(2) A portion of the fund's expenses was reduced during the reporting period.
Without such reductions, the fund's average annual returns would have been
lower.
(3) After-tax returns assume the maximum federal income tax rate of 39.60% on
dividends and 20% on capital gains distributions. Tax rates vary and may be
higher or lower than those shown. State and local taxes have not been
considered. After-tax return information is not applicable to shareholders
in tax-deferred accounts such as IRAs and 401ks. Past after-tax information
is not prediction of future tax efficiency. These after-tax returns do not
reflect any taxes you may have to pay as a result of selling your shares.
(4) Source: Morningstar, Inc. The small-cap fund category contains 819 funds
with one-year track records and 217 funds with five-year track records as of
4/30/00. These funds may or may not follow a tax-efficient strategy similar
to that followed by the Schwab Small-Cap Index Fund.
26
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
<TABLE>
<CAPTION>
SCHWAB SMALL-CAP INDEX FUND-INVESTOR SHARES SCHWAB SMALL-CAP INDEX RUSSELL 2000 INDEX
<S> <C> <C> <C>
12/93 $10,000 $10,000 $10,000
12/93 $10,154 $10,234 $10,186
1/94 $10,394 $10,469 $10,505
2/94 $10,334 $10,430 $10,467
3/94 $9,783 $9,871 $9,915
4/94 $9,753 $9,847 $9,974
5/94 $9,613 $9,692 $9,861
6/94 $9,333 $9,419 $9,529
7/94 $9,493 $9,614 $9,685
8/94 $10,134 $10,249 $10,225
9/94 $10,094 $10,191 $10,190
10/94 $10,064 $10,149 $10,149
11/94 $9,663 $9,767 $9,739
12/94 $9,841 $10,000 $10,000
1/95 $9,730 $9,838 $9,874
2/95 $10,082 $10,229 $10,285
3/95 $10,334 $10,442 $10,461
4/95 $10,566 $10,671 $10,693
5/95 $10,717 $10,809 $10,877
6/95 $11,211 $11,356 $11,441
7/95 $11,866 $12,021 $12,100
8/95 $12,077 $12,270 $12,351
9/95 $12,309 $12,510 $12,572
10/95 $11,785 $11,910 $12,010
11/95 $12,329 $12,492 $12,514
12/95 $12,562 $12,782 $12,845
1/96 $12,491 $12,749 $12,831
2/96 $12,967 $13,261 $13,231
3/96 $13,170 $13,492 $13,505
4/96 $13,899 $14,206 $14,227
5/96 $14,384 $14,692 $14,788
6/96 $13,848 $14,222 $14,180
7/96 $12,643 $13,075 $12,942
8/96 $13,413 $13,904 $13,694
9/96 $14,010 $14,416 $14,230
10/96 $13,757 $14,169 $14,010
11/96 $14,344 $14,733 $14,588
12/96 $14,508 $15,007 $14,970
1/97 $14,895 $15,361 $15,269
2/97 $14,376 $14,986 $14,900
3/97 $13,654 $14,257 $14,196
4/97 $13,756 $14,299 $14,236
5/97 $15,383 $16,050 $15,821
6/97 $16,125 $16,880 $16,499
7/97 $17,213 $17,842 $17,267
8/97 $17,538 $18,243 $17,662
9/97 $18,850 $19,675 $18,955
10/97 $18,026 $18,816 $18,123
11/97 $17,843 $18,645 $18,005
12/97 $18,236 $19,035 $18,320
1/98 $17,787 $18,736 $18,031
2/98 $19,195 $20,285 $19,361
3/98 $20,042 $21,199 $20,159
4/98 $20,144 $21,344 $20,270
5/98 $18,930 $20,090 $19,177
6/98 $18,960 $20,146 $19,218
7/98 $17,471 $18,597 $17,661
8/98 $14,062 $15,011 $14,231
9/98 $14,991 $15,953 $15,345
10/98 $15,705 $16,709 $15,972
11/98 $16,532 $17,576 $16,809
12/98 $17,584 $18,719 $17,849
1/99 $17,617 $18,800 $18,086
2/99 $16,145 $17,229 $16,621
3/99 $16,372 $17,559 $16,881
4/99 $17,660 $19,165 $18,393
5/99 $17,974 $19,500 $18,662
6/99 $18,969 $20,778 $19,505
7/99 $18,872 $20,615 $18,971
8/99 $18,309 $20,033 $18,269
9/99 $18,493 $20,204 $18,272
10/99 $18,839 $20,537 $18,347
12/99 $20,008 $21,820 $19,443
01/00 $21,839 $23,899 $21,644
02/00 $21,015 $23,005 $21,295
03/00 $23,801 $26,015 $24,811
04/00 $23,075 $25,333 $23,176
05/00 $21,936 $24,109 $21,781
</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.
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 10/31/99 (000s) $452,099
----------------------------------------------------------------------
Total net assets as of 4/30/00 (000s) $664,235
----------------------------------------------------------------------
Percentage change from 10/31/99 to 4/30/00 46.9%
----------------------------------------------------------------------
</TABLE>
27
<PAGE>
SCHWAB SMALL-CAP INDEX FUND-REGISTERED TRADEMARK--SELECT SHARES-TM-
FUND PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 4/30/00
<TABLE>
<CAPTION>
SINCE INCEPTION
SIX MONTHS(1) ONE YEAR (5/19/97)
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND-SELECT
SHARES(2),(3) 16.60% 24.45% 14.62%
---------------------------------------------------------------------------------------------------------------
Schwab Small-Cap
Index-Registered Trademark- 17.39% 25.80% 16.52%
---------------------------------------------------------------------------------------------------------------
Index Tracking Differential-Select
Shares (0.79)% (1.35)% (1.90)%
---------------------------------------------------------------------------------------------------------------
Russell 2000-Registered Trademark-
Index 18.72% 18.42% 12.92%
---------------------------------------------------------------------------------------------------------------
</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 3/31/00. As of 3/31/00, the fund's six-month, one-year and
since-inception average annual total returns were 24.87%, 41.20% and 17.10%,
respectively.
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 8 for a more detailed discussion).
(1) Actual, not annualized, because period is less than one year.
(2) A portion of the fund's expenses was reduced during the reporting period.
Without such reductions, the fund's average annual returns would have been
lower.
(3) The required minimum initial investment in the Select Shares is $50,000.
28
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A HYPOTHETICAL $50,000 INVESTMENT
<TABLE>
<CAPTION>
SCHWAB SMALL- SCHWAB
CAP INDEX FUND- SMALL- RUSSELL
SELECT SHARES CAP INDEX 2000 INDEX
<S> <C> <C> <C>
5/97 $50,000 $50,000 $50,000
5/97 $52,170 $52,242 $51,960
6/97 $54,690 $54,942 $54,189
7/97 $58,415 $58,075 $56,709
8/97 $59,485 $59,380 $58,008
9/97 $63,965 $64,039 $62,254
10/97 $61,205 $61,244 $59,521
11/97 $60,550 $60,687 $59,134
12/97 $61,920 $61,958 $60,169
1/98 $60,400 $60,983 $59,218
2/98 $65,175 $66,026 $63,588
3/98 $68,050 $69,002 $66,208
4/98 $68,430 $69,473 $66,572
5/98 $64,310 $65,391 $62,984
6/98 $64,415 $65,575 $63,116
7/98 $59,360 $60,531 $58,004
8/98 $47,790 $48,861 $46,740
9/98 $50,945 $51,924 $50,399
10/98 $53,365 $54,386 $52,456
11/98 $56,170 $57,207 $55,204
12/98 $59,775 $60,929 $58,621
1/99 $59,925 $61,193 $59,401
2/99 $54,925 $56,079 $54,590
3/99 $55,660 $57,152 $55,441
4/99 $60,070 $62,380 $60,409
5/99 $61,140 $63,470 $61,291
6/99 $64,555 $67,629 $64,061
7/99 $64,225 $67,099 $62,306
8/99 $62,315 $65,206 $60,000
9/99 $62,940 $65,762 $60,012
10/99 $64,115 $66,846 $60,258
12/99 $68,125 $71,021 $63,856
1/00 $74,390 $77,788 $71,084
2/00 $71,585 $74,879 $69,940
3/00 $81,065 $84,677 $81,487
4/00 $78,595 $82,458 $76,117
5/00 $74,755 $78,471 $71,535
</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.
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 10/31/99 (000s) $446,918
----------------------------------------------------------------------
Total net assets as of 4/30/00 (000s) $658,258
----------------------------------------------------------------------
Percentage growth from 10/31/99 to 4/30/00 47.3%
----------------------------------------------------------------------
</TABLE>
29
<PAGE>
SCHWAB SMALL-CAP INDEX FUND-REGISTERED TRADEMARK-
PORTFOLIO SNAPSHOT
The Schwab Small-Cap Index Fund (the fund) invests primarily in common stocks of
the Schwab Small-Cap Index-Registered Trademark-, an index created to represent
the performance of common stocks of the second 1,000 largest U.S. companies,
ranked by market capitalization. As of April 30, 2000, the aggregate market
capitalization of stocks included in the index represented approximately 4.6% of
the total market value of all publicly traded U.S. companies, as represented by
the Wilshire 5000 Index.* The information below and on the following page
provides a snapshot of the fund's characteristics as of 4/30/00, and is not
indicative of its composition after that date. The terms used below are defined
beginning on page 46. A complete list of the securities in the fund's portfolio
as of 4/30/00 is provided in the Schedule of Investments later in this report.
FUND FACTS
<TABLE>
<CAPTION>
SCHWAB SMALL-CAP INDEX FUND- PEER GROUP
INVESTOR SHARES AVERAGE+
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------
Number of Issues 960 180
------------------------------------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) $833+ $1,019
------------------------------------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 26.4+ 30.3
------------------------------------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 5.6+ 6.7
------------------------------------------------------------------------------------------------------------------------------
12-Month Yield 0.19%+ 0.21%
------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 50% 92%
------------------------------------------------------------------------------------------------------------------------------
Three-Year Beta 0.85+ 0.87
------------------------------------------------------------------------------------------------------------------------------
Expense Ratio 0.49%** 1.59%
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Source: Wilshire Associates.
** Reflects a voluntary reduction by the investment adviser and Schwab, which is
guaranteed through at least 2/28/01 (excluding interest, taxes and certain
non-routine expenses).
+ Source: Morningstar. This information is as of 4/30/00, 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 845
small-cap funds as tracked by Morningstar.
30
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 4/30/00
<TABLE>
<S> <C>
Other 34.5%
Business Services 13.2%
Electronics 12.7%
Healthcare/Drugs and Medicine 10.2%
Producer Goods & Manufacturing 6.4%
Miscellaneous Finance 5.4%
Banks 4.2%
Utilities-Energy & Gas 3.7%
Construction 3.3%
Insurance 3.3%
Chemical 3.1%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
EQUITY INVESTMENT STYLE BOX(++)
AS OF 4/30/00
<TABLE>
<S> <C> <C> <C>
-Style-
Value Blend Growth -Market Cap-
Large
Medium
X Small
</TABLE>
TOP 10 HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS(1)
<TABLE>
<S> <C>
---------------------------------------------
Sabre Holdings Corp., Class A 0.7%
---------------------------------------------
Abgenix, Inc. 0.5%
---------------------------------------------
Celgene Corp. 0.5%
---------------------------------------------
International Rectifier Corp. 0.5%
---------------------------------------------
Imclone Systems 0.4%
---------------------------------------------
---------------------------------------------
Digital Microwave Corp. 0.4%
---------------------------------------------
Quest Diagnostic, Inc. 0.4%
---------------------------------------------
Lucent Technologies, Inc. 0.4%
---------------------------------------------
Silicon Storage Technology 0.4%
---------------------------------------------
Quanta Services, Inc. 0.4%
---------------------------------------------
</TABLE>
++ Source: Morningstar, Inc. The style box illustrates the composition of the
fund's portfolio as of 4/30/00. It is not indicative of the fund's 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.
(1) Nothing in this report represents a recommendation of a security by the
investment adviser.
31
<PAGE>
SCHWAB INTERNATIONAL INDEX FUND-REGISTERED TRADEMARK--INVESTOR SHARES
FUND PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 4/30/00
<TABLE>
<CAPTION>
SINCE INCEPTION
SIX-MONTHS(1) ONE YEAR FIVE YEARS (9/9/93)
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------
SCHWAB INTERNATIONAL INDEX FUND-INVESTOR SHARES(2) 6.43% 17.94% 12.74% 11.25%
------------------------------------------------------------------------------------------------------------------
Schwab International Index-Registered Trademark- 6.93% 18.51% 13.20% 11.89%
------------------------------------------------------------------------------------------------------------------
Index Tracking Differential-Investor Shares (0.50)% (0.57)% (0.46)% (0.64)%
------------------------------------------------------------------------------------------------------------------
MSCI-EAFE-Registered Trademark- Index 6.72% 13.89% 10.36% 9.56%
------------------------------------------------------------------------------------------------------------------
</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 3/31/00. As of 3/31/00, the fund's six-month, one-year,
five-year and since-inception average annual total returns were 18.52%, 29.72%,
14.81% and 12.35%, respectively.
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 8 for a more detailed
discussion).
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.
AVERAGE ANNUAL RETURNS: PRE TAX AND AFTER-TAX
<TABLE>
<CAPTION>
PERIOD ENDED 4/30/00
FIVE YEARS
-----------------------------------------------
PRE TAX AFTER TAX(3) % LOST TO TAXES
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------
Schwab International Index Fund-Investor Shares(2) 12.74% 12.27% (3.69)%
-------------------------------------------------------------------------------------------------------------
Average Foreign Fund(4) 13.72% 12.09% (11.88)%
-------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Actual, not annualized, because period is less than one year.
(2) A portion of the fund's expenses was reduced during the reporting period.
Without such reductions, the fund's average annual returns would have been
lower.
(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 shown. State and local taxes have not been considered.
After-tax return information is not applicable to shareholders in
tax-deferred accounts such as IRAs or 401ks. Past after-tax information is
not a prediction of future tax efficiency. These after tax returns do not
reflect any taxes you may have to pay as a result of selling your shares.
(4) Source: Morningstar, Inc. The foreign fund category contains 178 funds with
five-year track records as of 4/30/00. These funds may or may not follow a
tax-efficient strategy similar to that followed by the Schwab International
Index Fund.
32
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
<TABLE>
<CAPTION>
SCHWAB
INTERNATIONAL SCHWAB MSCI-EAFE
INDEX FUND- INTERNATIONAL -REGISTERED TRADMARK-
INVESTOR SHARES INDEX INDEX
<S> <C> <C> <C>
9/93 $10,000 $10,000 $10,000
9/93 $9,770 $9,786 $9,749
10/93 $10,150 $10,167 $10,049
11/93 $9,420 $9,454 $9,171
12/93 $10,096 $10,137 $9,833
1/94 $10,769 $10,823 $10,664
2/94 $10,558 $10,623 $10,634
3/94 $10,156 $10,172 $10,176
4/94 $10,458 $10,544 $10,607
5/94 $10,407 $10,448 $10,547
6/94 $10,488 $10,508 $10,696
7/94 $10,649 $10,692 $10,798
8/94 $10,941 $10,999 $11,054
9/94 $10,559 $10,621 $10,706
10/94 $10,950 $11,026 $11,062
11/94 $10,428 $10,478 $10,530
12/94 $10,484 $10,564 $10,597
1/95 $10,108 $10,254 $10,190
2/95 $10,189 $10,282 $10,160
3/95 $10,759 $10,964 $10,794
4/95 $11,145 $11,346 $11,200
5/95 $11,176 $11,303 $11,067
6/95 $11,064 $11,168 $10,873
7/95 $11,623 $11,826 $11,550
8/95 $11,237 $11,384 $11,110
9/95 $11,470 $11,661 $11,327
10/95 $11,318 $11,461 $11,022
11/95 $11,562 $11,782 $11,329
12/95 $11,975 $12,238 $11,785
1/96 $12,006 $12,277 $11,834
2/96 $12,026 $12,300 $11,874
3/96 $12,232 $12,529 $12,126
4/96 $12,530 $12,826 $12,478
5/96 $12,396 $12,674 $12,249
6/96 $12,489 $12,761 $12,317
7/96 $12,139 $12,430 $11,958
8/96 $12,253 $12,538 $11,984
9/96 $12,592 $12,907 $12,303
10/96 $12,571 $12,863 $12,177
11/96 $13,136 $13,460 $12,662
12/96 $13,067 $13,341 $12,499
1/97 $12,640 $12,898 $12,061
2/97 $12,827 $13,114 $12,259
3/97 $12,932 $13,202 $12,303
4/97 $13,025 $13,344 $12,368
5/97 $13,984 $14,324 $13,174
6/97 $14,766 $15,160 $13,899
7/97 $15,214 $15,570 $14,125
8/97 $14,109 $14,447 $13,070
9/97 $15,078 $15,354 $13,801
10/97 $13,869 $14,110 $12,740
11/97 $13,859 $14,055 $12,610
12/97 $14,022 $14,254 $12,720
1/98 $14,538 $14,830 $13,301
2/98 $15,382 $15,727 $14,155
3/98 $15,782 $16,139 $14,591
4/98 $15,888 $16,248 $14,706
5/98 $15,888 $16,209 $14,634
6/98 $16,025 $16,315 $14,745
7/98 $16,067 $16,419 $14,894
8/98 $14,085 $14,350 $13,049
9/98 $13,632 $13,880 $12,648
10/98 $14,981 $15,335 $13,966
11/98 $15,751 $16,198 $14,681
12/98 $16,244 $16,729 $15,261
1/99 $16,190 $16,640 $15,216
2/99 $15,829 $16,311 $14,853
3/99 $16,541 $17,060 $15,473
4/99 $17,212 $17,794 $16,099
5/99 $16,371 $16,897 $15,270
6/99 $16,999 $17,586 $15,866
7/99 $17,616 $18,240 $16,337
8/99 $17,775 $18,410 $16,345
9/99 $18,105 $18,724 $16,510
10/99 $19,073 $19,722 $17,129
11/99 $19,945 $20,579 $17,724
12/99 $21,704 $22,386 $19,315
01/00 $19,999 $20,761 $18,089
02/00 $20,278 $21,097 $18,576
03/00 $21,457 $22,294 $19,296
04/00 $20,299 $21,089 $18,281
</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.
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 10/31/99 (000s) $446,625
----------------------------------------------------------------------
Total net assets as of 4/30/00 (000s) $591,015
----------------------------------------------------------------------
Percentage change from 10/31/99 to 4/30/00 32.3%
----------------------------------------------------------------------
</TABLE>
33
<PAGE>
SCHWAB INTERNATIONAL INDEX FUND-REGISTERED TRADEMARK--SELECT SHARES-TM-
FUND PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 4/30/00
<TABLE>
<CAPTION>
SINCE INCEPTION
SIX MONTHS(1) ONE YEAR (5/19/97)
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------
SCHWAB INTERNATIONAL INDEX FUND-SELECT
SHARES(2),(3) 6.41% 17.97% 13.12%
-------------------------------------------------------------------------------------------------------------------
Schwab International
Index-Registered Trademark- 6.93% 18.51% 13.47%
-------------------------------------------------------------------------------------------------------------------
Index Tracking Differential-Select Shares (0.52)% (0.54)% (0.35)%
-------------------------------------------------------------------------------------------------------------------
MSCI-EAFE-Registered Trademark- Index 6.72% 13.89% 11.31%
-------------------------------------------------------------------------------------------------------------------
</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 3/31/00. As of 3/31/00, the fund's six-month, one-year and
since-inception average annual total returns were 18.61%, 29.81% and 15.76%,
respectively.
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 8 for a more detailed discussion).
(1) Actual, not annualized, because period is less than one year.
(2) A portion of the fund's expenses was reduced during the reporting period.
Without such reductions, the fund's average annual returns would have been
lower.
(3) The required minimum initial investment in the Select Shares is $50,000.
34
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A HYPOTHETICAL $50,000 INVESTMENT
<TABLE>
<CAPTION>
SCHWAB INTERNATIONAL INDEX FUND-SELECT SHARES SCHWAB INTERNATIONAL INDEX MSCI-EAFE-REGISTERED TRADEMARK- INDEX
<S> <C> <C> <C>
5/97 $50,000 $50,000 $50,000
5/97 $49,375 $49,283 $49,248
6/97 $52,170 $52,161 $51,961
7/97 $53,755 $53,571 $52,803
8/97 $49,815 $49,706 $48,859
9/97 $53,240 $52,827 $51,595
10/97 $49,005 $48,550 $47,627
11/97 $48,970 $48,360 $47,141
12/97 $49,580 $49,042 $47,551
1/98 $51,405 $51,027 $49,725
2/98 $54,385 $54,111 $52,917
3/98 $55,800 $55,529 $54,547
4/98 $56,175 $55,905 $54,978
5/98 $56,175 $55,770 $54,708
6/98 $56,655 $56,133 $55,124
7/98 $56,845 $56,493 $55,681
8/98 $49,840 $49,376 $48,782
9/98 $48,240 $47,757 $47,284
10/98 $53,005 $52,763 $52,211
11/98 $55,725 $55,732 $54,885
12/98 $57,490 $57,561 $57,053
1/99 $57,305 $57,252 $56,881
2/99 $56,025 $56,122 $55,528
3/99 $58,585 $58,699 $57,843
4/99 $60,955 $61,225 $60,186
5/99 $57,980 $58,137 $57,086
6/99 $60,200 $60,507 $59,313
7/99 $62,385 $62,757 $61,074
8/99 $62,950 $63,342 $61,105
9/99 $64,115 $64,425 $61,722
10/99 $67,575 $67,857 $64,036
11/99 $70,660 $70,806 $66,258
12/99 $76,920 $77,025 $72,208
1/00 $70,880 $71,433 $67,623
2/00 $71,870 $72,588 $69,442
3/00 $76,050 $76,708 $72,137
4/00 $71,905 $72,561 $68,342
</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.
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 10/31/99 (000s) $448,880
----------------------------------------------------------------------
Total net assets as of 4/30/00 (000s) $623,102
----------------------------------------------------------------------
Percentage growth from 10/31/99 to 4/30/00 38.8%
----------------------------------------------------------------------
</TABLE>
35
<PAGE>
SCHWAB INTERNATIONAL INDEX FUND-REGISTERED TRADEMARK-
PORTFOLIO SNAPSHOT
The Schwab International Index Fund (the fund) invests primarily in common
stocks of the Schwab International Index-Registered Trademark-, an index created
to represent the performance of common stocks and other equity securities issued
by large, publicly traded companies from countries around the world with major
developed securities markets, excluding the United States. As of April 30, 2000,
the aggregate market capitalization of stocks included in the index represented
approximately 43.6% of the total market value of all publicly traded non-U.S.
companies.* The information below and on the following page provides a snapshot
of the fund's characteristics as of 4/30/00, and is not indicative of its
composition after that date. The terms used below are defined beginning on page
46.
A complete list of the securities in the fund's portfolio as of 4/30/00 is
provided in the Schedule of Investments later in this report.
FUND FACTS
<TABLE>
<CAPTION>
SCHWAB INTERNATIONAL INDEX FUND- PEER GROUP
INVESTOR SHARES AVERAGE++
<S> <C> <C>
---------------------------------------------------------------------------------------------------------------------------------
Number of Issues 348 170
---------------------------------------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) $47,109+ $23,383
---------------------------------------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio) 37.7+ 37.6
---------------------------------------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 5.7+ 6.0
---------------------------------------------------------------------------------------------------------------------------------
12-Month Yield 0.82%+ 0.59%
---------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 2% 83%
---------------------------------------------------------------------------------------------------------------------------------
Three-Year Beta 0.80+ 0.74
---------------------------------------------------------------------------------------------------------------------------------
Expense Ratio 0.58%** 1.71%
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Source: Wilshire Associates.
+ Reflects a voluntary reduction by the investment adviser and Schwab, which is
guaranteed through at least 2/28/01 (excluding interest, taxes and certain
non-routine expenses).
++ Source: Morningstar. This information is as of 4/30/00, 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 700
foreign stock funds as tracked by Morningstar.
36
<PAGE>
EQUITY HOLDINGS BY COUNTRY
AS OF 4/30/00
<TABLE>
<S> <C>
-------------------------------------------
Japan 31.3%
-------------------------------------------
United Kingdom 22.8%
-------------------------------------------
France 9.3%
-------------------------------------------
Germany 6.5%
-------------------------------------------
Netherlands 5.8%
-------------------------------------------
Switzerland 5.1%
-------------------------------------------
Canada 4.6%
-------------------------------------------
Italy 3.6%
-------------------------------------------
Sweden 3.3%
-------------------------------------------
Spain 2.7%
-------------------------------------------
Hong Kong 2.0%
-------------------------------------------
Australia 1.9%
-------------------------------------------
Belgium 0.6%
-------------------------------------------
Denmark 0.5%
-------------------------------------------
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
EQUITY INVESTMENT STYLE BOX(++)
AS OF 4/30/00
<TABLE>
<S> <C> <C> <C>
-Style-
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 4/30/00. 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(1)
<TABLE>
<S> <C>
---------------------------------------------
NTT DoCoMo, Inc. 3.7%
---------------------------------------------
Vodafone Airtouch PLC 2.7%
---------------------------------------------
BP Amoco PLC 2.3%
---------------------------------------------
Toyota Motor Corp. 2.2%
---------------------------------------------
Telefonaktiebolaqet LM Ericsson,
Series B 2.0%
---------------------------------------------
---------------------------------------------
Nippon Telegraph & Telephone Corp. 1.8%
---------------------------------------------
Nortel Networks Corp. 1.7%
---------------------------------------------
Royal Dutch Petroleum Co. 1.5%
---------------------------------------------
British Telecommunications PLC 1.4%
---------------------------------------------
Total Fina EIF SA, Series B 1.3%
---------------------------------------------
</TABLE>
(1) Nothing in this report represents a recommendation of a security by the
investment adviser.
37
<PAGE>
PORTFOLIO MANAGEMENT
PORTFOLIO MANAGEMENT TEAM
GERI HOM--vice president and senior portfolio manager, has overall
responsibility for the management of the funds' portfolios. Geri joined CSIM in
March 1995 as Portfolio Manager and was promoted to her current position in
December 1996. She currently manages approximately $19 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 Management Group for Wells Fargo Nikko.
LARRY MANO--director and portfolio manager, has primary responsibility for the
day-to-day management of the Total Stock Market Index Fund-TM-. Prior to joining
CSIM in 1998, he spent 20 years at Wilshire Associates, where he directed the
development of the equity index investment products.
38
<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 Index, relinquished a five-year hold as
being the strongest performing major asset class to small-cap domestic equities.
As the table below indicates, the fund achieved positive 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 7.19% for the
period. As the table below reveals, the fund as well as the index underperformed
the average U.S. large-cap fund on a 6-month basis, but the fund outperformed
the average U.S. large-cap fund on a three-year basis.(1) The fund's three year
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 THREE YEARS THREE YEARS
<S> <C> <C> <C>
------------------------------------------------------------
Investor Shares 7.05% 23.20% 22.76%
------------------------------------------------------------
e.Shares 7.03% 23.28% 22.80%
------------------------------------------------------------
Select Shares 7.13% -- --
------------------------------------------------------------
Average Large-Cap
Fund 11.41% 22.04% 19.45%
------------------------------------------------------------
</TABLE>
(1) Source: Morningstar, Inc. large-cap fund category contains 1,083 funds with
six-month track records and 832 funds with three-year track records both as
of 04/30/00. These funds may or may not follow a tax-efficiency strategy
similar to that followed by the Schwab S&P 500 Fund.
Q. WHAT TAX-SMART STRATEGIES DOES THE FUND USE TO ENHANCE AFTER-TAX RETURNS?
A. Pre-tax total return is the most common measure used to compare mutual fund
performance. Because of different tax management policies, however, two funds
with identical pre-tax total returns may actually have significant differences
in their after-tax returns. Over the long term, these after-tax return
differences can have a major impact on investors' fund balances held outside
retirement or other tax deferred accounts.
As shown in the first question, the Schwab S&P 500 Fund has been more "tax
efficient" than the average large-cap fund. Index funds can be tax efficient
because they are designed to have lower portfolio turnover rates, and hence,
lower realization of capital gains than most actively managed funds.
Furthermore, when the fund's investment manager buys and sells stock, they can
use a strategy of offsetting capital gains with losses whenever possible to
minimize the potential for capital gain distributions to shareholders.
Q. HOW HAVE THE INDUSTRY SECTORS IN THE S&P 500 INDEX CHANGED OVER THE LAST FIVE
YEARS?
A. The graph on the next page shows the top ten industry sectors of the S&P 500
Index as of 4/30/00 as well as the historical weightings of these sectors since
4/30/96. Since 1996, the Index has become more concentrated, with the top ten
sectors currently representing approximately 76% of the total versus
approximately 55% in 1996. The sectors with the largest gains during the period
were Business Machines (from 5.9% to 16.5%) and Electronics (from 4.8% to
12.2%). The sectors with the largest declines
39
<PAGE>
FUND DISCUSSION (continued)
during the period were International Oil (from 6.6% to 3.8%) and Banks (from
7.1% to 4.7%).
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
S&P 500-Registered Trademark- INDEX SECTORS
% OF TOTAL INDEX
<TABLE>
<CAPTION>
BUSINESS DRUGS & PRODUCER MISCELLANEOUS BUSINESS
MACHINES ELECTRONICS MEDICINE TELEPHONE RETAIL GOODS FINANCE BANKS SERVICES MEDIA
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4/96 5.87 4.79 10.10 8.17 4.93 5.53 3.10 7.11 2.23 3.10
4/97 6.95 6.03 10.79 6.28 4.59 5.54 3.55 7.90 1.81 3.05
4/98 7.74 5.94 11.61 6.74 5.26 5.32 4.87 8.89 2.36 3.67
4/99 12.10 5.61 11.08 8.36 6.30 4.85 5.77 7.31 3.99 3.63
4/00 16.74 12.37 9.77 6.99 5.98 5.52 5.27 4.80 4.51 3.91
</TABLE>
Source: Wilshire Associates
SCHWAB 1000 FUND-TM-
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, relinquished a five-year hold
as being the strongest performing major asset class to small-cap domestic
equities. As the table below indicates, the fund still achieved positive 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 9.05% for the period. As the table below reveals, the
fund and the index underperformed the average U.S. large-cap fund on a 6-month
basis, but the fund outperformed the average large-cap fund on a five-year
basis.(2) The fund's 5-year 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 8.88% 24.55% 24.06%
----------------------------------------------------------
Select Shares 8.92% -- --
----------------------------------------------------------
Average Large-Cap
Fund 11.41% 21.99% 19.22%
----------------------------------------------------------
</TABLE>
(2) Source: Morningstar, Inc. large-cap fund Category contains 1,083 funds with
six-month track records and 647 funds with five-year track records, both as
of 4/30/00. These funds may or may not follow a tax-efficiency strategy
similar to that followed by the Schwab S&P 500 Fund.
Q. HOW DID THE PERFORMANCE OF THE SCHWAB 1000 INDEX COMPARE TO THE S&P 500
INDEX?
A. As shown in the table below, the Schwab 1000 Index 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 differently, and although
the current period indicates otherwise, their performances will vary from time
to time.
<TABLE>
<CAPTION>
INCEPTION (4/2/91)
TO DATE AVERAGE
SIX MONTH ANNUAL RETURN
<S> <C> <C>
--------------------------------------------------------
Schwab 1000 Index 9.05% 18.68%
--------------------------------------------------------
S&P 500 Index 7.19% 18.60%
--------------------------------------------------------
</TABLE>
Q. WHAT MANAGEMENT TECHNIQUES DOES THE FUND USE TO ENHANCE AFTER-TAX RETURNS?
A. Pre-tax total return is the most common measure used to compare mutual fund
performance. Because of different tax management policies, however, two funds
with identical pre-tax total returns may actually have significant differences
in their after-tax returns. Over the long term, these after-tax return
differences
40
<PAGE>
can have a major impact on investors' fund balances held outside retirement and
other tax deferred accounts.
As shown in the first question, the Schwab 1000 Fund has been more "tax
efficient" than the average large-cap fund. Since its inception in 1991, the
fund has not paid a capital gains distribution. Although no assurance can be
provided that this record will be maintained in the future, it is indicative of
the fund's tax-smart management strategy.
Index funds can be tax efficient because they are designed to have lower
portfolio turnover rates, and hence, lower realization of capital gains than
most actively-managed funds. In addition, the fund may adjust its weightings of
certain stocks, continue to hold a stock that is no longer included in the index
or choose to realize certain capital losses and use them to offset capital
gains. These strategies may help to minimize the potential for capital gain
distributions to shareholders.
Q. HOW HAVE THE INDUSTRY SECTORS IN THE SCHWAB 1000 INDEX CHANGED OVER THE LAST
FIVE YEARS?
A. The graph shows the top ten industry sectors of the Schwab 1000 Index as of
4/30/00 as well as the historical weightings of these sectors since 4/30/96.
Since 1996, the Index has become more concentrated, with the top ten sectors
currently representing approximately 77% of the total versus approximately 57%
in 1996. The sectors with the largest gains during the period were Business
Machines (from 5.9% to 15.3%) and Electronics (from 5.9% to 12.5%). The sectors
with the largest declines during the period were Banks (from 7.4% to 4.8%) and
Energy and Utilities (from 5.0% to 3.0%).
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
SCHWAB 1000 INDEX SECTORS
% OF TOTAL INDEX
<TABLE>
<CAPTION>
BUSINESS DRUGS & BUSINESS MISCELLANEOUS PRODUCER
MACHINES ELECTRONICS MEDICINE TELEPHONE SERVICES FINANCE RETAIL GOODS BANKS MEDIA
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4/96 5.92 5.92 10.07 7.47 3.11 4.23 5.00 5.08 7.36 3.22
4/97 6.69 6.52 10.38 5.71 2.83 4.84 4.79 5.27 8.45 3.04
4/98 7.35 6.12 11.05 6.30 3.26 5.95 5.60 4.99 9.24 3.80
4/99 11.30 6.00 10.57 8.51 4.73 6.89 6.44 4.53 7.38 3.95
4/00 15.35 12.49 9.67 7.28 6.05 5.95 5.82 5.39 4.83 4.44
</TABLE>
Source: Wilshire Associates
TOTAL STOCK MARKET INDEX 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, which make up a majority of the Wilshire 5000 Index,
retreated from the strongest performing major asset class position. As the table
below indicates, the fund achieved favorable total returns for the six-month
period and closely tracked its benchmark, the Wilshire 5000 Index, which
achieved a total return of 9.45% for the period.
<TABLE>
<CAPTION>
SIX MONTHS
<S> <C>
-----------------------------------------------
Investor Shares 9.24%
-----------------------------------------------
Select Shares 9.26%
-----------------------------------------------
Average Large-Cap Fund 11.41%
-----------------------------------------------
</TABLE>
41
<PAGE>
FUND DISCUSSION (continued)
Q. WHAT TAX-SMART STRATEGIES DOES THE FUND USE TO ENHANCE AFTER-TAX RETURNS?
A. Pre-tax total return is the most common measure used to compare mutual fund
performance. Because of different tax management policies, however, two funds
with identical pre-tax total returns may actually have significant differences
in their after-tax returns. Over the long term, these after-tax return
differences can have a major impact on investors' fund balances held outside
retirement and other tax-deferred accounts.
Index funds can be tax efficient because they are designed to have lower
portfolio turnover rates, and hence, lower realization of capital gains than
most actively managed funds. Furthermore, when the fund's investment manager
buys and sells stock, they can use a strategy of offsetting capital gains with
losses whenever possible to minimize the potential for capital gain
distributions to shareholders.
Q. WHAT MARKET CAPITALIZATION EXPOSURE DOES THE FUND PROVIDE?
A. The U.S. stock market is commonly divided into three segments, based on
market capitalization. Small-and mid-cap stocks are the most numerous, but make
up only about one-third of the total value of the market. In contrast, large-cap
stocks are relatively few in number but make up approximately two-thirds of the
market's total value. The fund invests in all three tiers of the U.S. stock
market: large-, mid- and small-cap.
Q. HOW HAVE THE INDUSTRY SECTORS IN THE WILSHIRE 5000 INDEX CHANGED OVER THE
LAST FIVE YEARS?
A. The graph below illustrates the top ten industry sectors of the Wilshire 5000
Index as of 4/30/00 as well as the historical weightings of these sectors since
4/30/96. Since 1996, the Index has become more concentrated, with the top ten
sectors currently representing approximately 76% of the total versus
approximately 58% in 1996. The sectors with the largest gains during the period
were Business Machines (from 5.5% to 13.7%) and Electronics (from 6.3% to
12.0%). The sectors with the largest declines during the period were Food and
Agriculture (from 5.1% to 2.3%) and Banks (from 7.2% to 4.5%).
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
WILSHIRE 5000 INDEX INDUSTRY SECTORS
% OF TOTAL INDEX
<TABLE>
<CAPTION>
BUSINESS DRUGS & BUSINESS MISCELLANEOUS PRODUCER
MACHINES ELECTRONICS MEDICINE SERVICES TELEPHONE FINANCE RETAIL GOODS BANKS MEDIA
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4/96 5.52 6.29 9.95 4.58 6.62 5.15 4.71 5.22 7.17 3.06
4/97 6.13 6.66 10.14 3.93 5.13 5.99 4.52 5.26 8.26 2.90
4/98 6.65 6.34 10.50 4.71 5.81 6.92 5.16 4.98 8.73 3.59
4/99 10.26 6.08 10.06 6.17 7.76 7.56 6.03 4.55 7.24 3.87
4/00 13.97 12.21 9.38 8.10 6.92 6.24 5.30 5.13 4.62 4.15
</TABLE>
Source: Wilshire Associates
SCHWAB SMALL-CAP INDEX FUND
Q. HOW DID THE FUND PERFORM DURING THE REPORTING PERIOD?
A. As discussed in the MARKET OVERVIEW section of this report, small-cap
domestic equities emerged as the strongest performing asset class for the
six-month period ended 4/30/00. Both classes of shares tracked
42
<PAGE>
the fund's benchmark, the Schwab Small-Cap Index, which realized a 17.39% total
return for the period. As the table below reveals, the fund underperformed the
average small-cap fund over both a six-month and a five-year period.(3) On an
after tax basis, the fund's return was approximately equal to the average small-
cap fund for the 5-year period.
<TABLE>
<CAPTION>
BEFORE TAX AFTER TAX
------------------------------------
SIX MONTHS FIVE YEARS FIVE YEARS
<S> <C> <C> <C>
----------------------------------------------------------
Investor Shares 16.44% 15.73% 15.31%
----------------------------------------------------------
Select Shares 16.60% -- --
----------------------------------------------------------
Average Small-Cap
Fund 25.87% 17.88% 15.33%
----------------------------------------------------------
</TABLE>
Q. HOW DID THE PERFORMANCE OF THE SCHWAB SMALL-CAP-REGISTERED TRADEMARK- INDEX
COMPARE TO THE RUSSELL 2000 INDEX?
A. As shown in the table below, the Schwab Small-Cap Index return was marginally
less than the Russell 2000 Index for the six-month reporting period. On an
inception-to-date basis, the Schwab Small-Cap Index has outperformed the Russell
2000 Index. As we have discussed in previous reports, these two indices are
constructed differently, and it is not unusual that their performance should
vary somewhat over time.
<TABLE>
<CAPTION>
INCEPTION (12/3/93)
TO DATE AVERAGE
SIX MONTH ANNUAL RETURN
<S> <C> <C>
--------------------------------------------------------
Schwab Small-Cap Index 17.39% 14.72%
--------------------------------------------------------
Russell 2000 Index 18.72% 12.91%
--------------------------------------------------------
</TABLE>
(3) Source: Morningstar, Inc. small-cap fund category contains 459 funds with
six-month track records and 217 funds with five-year track records, both as
of 4/30/00. These funds may or may not follow a tax-efficiency strategy
similar to that followed by the Schwab S&P 500 Fund.
Q. WHY HAVE SMALL-CAP FUNDS HISTORICALLY BEEN RISKIER THAN LARGE- AND MID-CAP
FUNDS?
A. We believe the stock prices of smaller companies may be based substantially
on future expectations rather than current achievements, and may move sharply,
especially during market upturns or downturns. With its small-cap focus, this
fund may make sense for long-term investors who are willing to accept greater
risk in exchange for potentially higher long-term returns.
Q. HOW HAVE THE INDUSTRY SECTORS IN THE SCHWAB SMALL-CAP INDEX CHANGED OVER THE
LAST FOUR YEARS?
A. The graph on the next page shows the top ten industry sectors of the Schwab
Small-Cap Index as of 4/30/00 as well as the historical weightings of these
sectors since 4/30/96. Since 1996, the concentration of the top ten sectors has
increased moderately; 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 13.2%) and Electronics (from 7.4% to 12.7%). The sectors
with the largest declines during the period were Banks (from 6.3% to 4.2%) and
Media (from 3.2% to 1.5%). 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
43
<PAGE>
FUND DISCUSSION (continued)
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
SCHWAB SMALL-CAP INDEX SECTORS
% OF TOTAL INDEX
<TABLE>
<CAPTION>
DRUGS ENERGY
BUSINESS & PRODUCER MISCELLANEOUS &
SERVICES ELECTRONICS MEDICINE GOODS FINANCE BANKS UTILITIES CONSTRUCTION INSURANCE CHEMICALS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4/96 11.62 7.54 9.51 7.05 5.66 6.31 3.84 1.51 5.11 2.26
4/97 10.05 7.40 9.58 6.84 5.79 7.11 4.48 1.94 5.33 2.48
4/98 13.91 8.39 7.95 6.75 4.56 4.80 3.47 2.99 4.57 2.52
4/99 14.51 8.57 6.70 7.58 7.08 6.03 4.31 2.65 3.95 2.93
4/00 13.29 12.57 10.68 6.56 4.66 4.26 3.77 3.34 3.24 3.10
</TABLE>
Source: Wilshire Associates
SCHWAB INTERNATIONAL INDEX FUND
Q. HOW DID THE FUND PERFORM DURING THE REPORTING PERIOD?
A. Although not as volatile as the domestic equity markets, the fund
underperformed the U.S. large-cap and small-cap categories during the six-month
reporting period. Both classes of shares closely tracked the fund's benchmark,
the Schwab International Index, which realized a 6.93% total return for the
period. As the table below reveals, the fund outperformed the average
international stock fund over the five-year period ended April 30, 2000.(4) The
fund as well as the index underperformed the average foreign stock fund on a
6-month and 5-year basis, but the fund outperformed the average foreign stock
fund on a 5-year after tax basis, a direct result of the fund's tax-efficient
investment strategy.
(4) Source: Morningstar, Inc. foreign stock fund category contains 335 funds
with six-month track records and 178 funds with five-year track records,
both as of 4/30/00. These funds may or may not follow a tax-efficiency
strategy similar to that followed by the Schwab International Index Fund.
As shown in the Market Overview, the strong US Dollar had a moderately 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-Registered Trademark- was 15.40%, approximately 8.47% greater than the
dollar-denominated return, reflecting the relative weakness of foreign
currencies during the reporting period.
<TABLE>
<CAPTION>
BEFORE TAX AFTER TAX
------------------------------------
SIX MONTHS FIVE YEARS FIVE YEARS
<S> <C> <C> <C>
----------------------------------------------------------
Investor Shares 6.43% 12.74% 12.27%
----------------------------------------------------------
Select Shares 6.41% -- --
----------------------------------------------------------
Average Foreign Stock
Fund 15.45% 13.72% 12.09%
----------------------------------------------------------
</TABLE>
Q. HOW DID THE PERFORMANCE OF THE SCHWAB INTERNATIONAL INDEX COMPARE TO THE
MSCI-EAFE-REGISTERED TRADEMARK- INDEX?
A. As shown in the table below, the Schwab International Index outperformed the
MSCI-EAFE Index for the six-month reporting period. The principal reason for the
differential was related to market capitalization. The Schwab International
Index has a higher average market capitalization than the MSCI-EAFE Index. On an
inception-to-date basis, the Schwab International Index continues to outperform
the MSCI-EAFE Index.
<TABLE>
<CAPTION>
INCEPTION (9/3/93)
TO DATE AVERAGE
SIX MONTHS ANNUAL RETURN
<S> <C> <C>
--------------------------------------------------------
Schwab International
Index 6.93% 11.89%
--------------------------------------------------------
MSCI-EAFE Index 6.72% 9.56%
--------------------------------------------------------
</TABLE>
44
<PAGE>
Q. WHAT TAX-SMART STRATEGIES DOES THE FUND USE TO ENHANCE AFTER-TAX RETURNS?
A. Pre-tax total return is the most common measure used to compare mutual fund
performance. However, because of different tax management policies, two funds
with identical pre-tax total returns may actually have significant differences
in their after-tax returns. Over the long term, these after-tax return
differences can have a major impact on investors' fund balances held outside
retirement and other tax-deferred accounts.
As shown in the first question above, the Schwab International Index Fund has
been more "tax efficient" than the average foreign fund. Index funds can be tax
efficient because they are designed to have lower portfolio turnover rates, and
hence, lower realization of capital gains than most actively managed funds.
Furthermore, when the fund's investment manager buys and sells stock, they can
use a strategy of offsetting capital gains with losses whenever possible to
minimize the potential for capital gain distributions to shareholders.
Q. HOW HAVE THE COUNTRY WEIGHTINGS IN THE SCHWAB INTERNATIONAL INDEX CHANGED
OVER THE LAST FOUR YEARS?
A. The graph below shows the top seven countries by their percent weighting in
the Schwab International Index as of 4/30/00 as well as the historical
weightings of these countries since 4/30/96. Compared to 1996, the changes have
been fairly minor. However, there were significant shifts within the period,
particularly in the Japan weighting, which dropped significantly only to rebound
by the end of the period. The United Kingdom and France experienced moderate
increases over the four-year period.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
SCHWAB INTERNATIONAL INDEX
% OF TOTAL INDEX
<TABLE>
<CAPTION>
JAPAN UNITED KINGDOM FRANCE GERMANY NETHERLANDS SWITZERLAND CANA- OTHER
DA
<S> <C> <C> <C> <C> <C> <C> <C> <C>
4/96 35.782 19.26 6.653 7.625 5.628 6.858 2.816 15.379
4/97 27.863 23.183 7.005 8.47 6.766 7.494 3.282 15.937
4/98 23.925 25.065 7.335 9.01 7.113 8.008 3.844 15.699
4/99 22.68 26.082 8.575 9.239 6.866 7.929 3.298 15.332
4/00 31.48 22.756 9.451 6.408 5.766 5.113 4.563 14.461
</TABLE>
Source: Wilshire Associates
45
<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.
46
<PAGE>
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.
47
<PAGE>
SCHWAB S&P 500 FUND
SCHEDULE OF INVESTMENTS
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
COMMON STOCK -- 99.7%
AEROSPACE / DEFENSE -- 1.0%
B.F. Goodrich Co. 71,913 $ 2,292
Boeing Co. 564,854 22,418
Crane Co. 42,569 1,144
General Dynamics Corp. 130,462 7,632
Lockheed Martin Corp. 256,210 6,373
Northrop Grumman Corp. 44,939 3,185
Raytheon Co., Class B 218,894 4,857
Rockwell International Corp. 123,536 4,864
Textron, Inc. 96,845 5,999
TRW, Inc. 79,457 4,648
United Technologies Corp. 308,184 19,165
--------
82,577
--------
AIR TRANSPORTATION -- 0.3%
AMR Corp.+ 96,484 3,287
Delta Air Lines, Inc. 84,306 4,447
FedEx Corp.+ 188,588 7,107
Southwest Airlines Co. 327,318 7,099
U.S. Airways Group, Inc.+ 45,990 1,279
--------
23,219
--------
ALCOHOLIC BEVERAGES -- 0.3%
Adolph Coors Co., Class B 24,077 1,228
Anheuser-Busch Cos., Inc. 303,927 21,446
Brown-Forman Corp., Class B 44,344 2,419
--------
25,093
--------
APPAREL -- 0.2%
Liz Claiborne, Inc. 38,146 1,767
Nike, Inc., Class B 179,503 7,797
Reebok International Ltd.+ 36,318 617
Russell Corp. 21,276 418
Springs Industries, Inc. 11,642 478
VF Corp. 76,762 2,168
--------
13,245
--------
AUTOMOTIVE PRODUCTS / MOTOR VEHICLES -- 1.5%
Cooper Tire & Rubber Co. 48,864 659
Cummins Engine Co., Inc. 26,880 956
Dana Corp. 106,996 3,250
Danaher Corp. 92,900 5,307
Delphi Automotive Systems
Corp. 366,380 7,007
Eaton Corp. 48,461 4,071
Ford Motor Co. 784,195 42,886
General Motors Corp. 417,023 39,044
Number Value
of Shares (000s)
--------- -----------
Genuine Parts Co. 115,376 $ 3,028
Goodyear Tire & Rubber Co. 101,726 2,810
Harley-Davidson, Inc. 196,800 7,835
Navistar International Corp.+ 41,053 1,437
--------
118,290
--------
BANKS -- 4.8%
AmSouth Bancorp. 252,950 3,684
Bank of America Corp. 1,107,699 54,277
Bank of New York Co., Inc. 479,286 19,681
Bank One Corp. 744,824 22,717
BB&T Corp. 224,772 5,984
Chase Manhattan Corp. 535,870 38,616
Comerica, Inc. 101,130 4,285
Fifth Third Bancorp. 200,683 12,668
First Union Corp. 641,821 20,458
Firstar Corp. 635,891 15,818
Fleet Boston Financial Corp. 595,120 21,090
Huntington Bancshares, Inc. 148,410 2,708
J.P. Morgan & Co., Inc. 112,474 14,439
KeyCorp, Inc. 289,308 5,352
Mellon Financial Corp. 329,952 10,600
National City Corp. 400,000 6,800
Northern Trust Corp. 144,200 9,247
Old Kent Financial Corp. 86,000 2,591
PNC Financial Services Group 191,141 8,339
Providian Financial Corp. 92,194 8,119
Regions Financial Corp. 141,200 2,886
SouthTrust Corp. 109,100 2,605
State Street Corp. 104,135 10,088
Summit Bancorp. 112,900 2,865
SunTrust Banks, Inc. 207,947 10,553
Synovus Financial Corp. 181,247 3,364
U.S. Bancorp. 488,281 9,918
Union Planters Corp. 91,800 2,599
Wachovia Corp. 131,426 8,239
Wells Fargo & Co. 1,071,006 43,978
--------
384,568
--------
BUSINESS MACHINES & SOFTWARE -- 16.7%
3Com Corp.+ 222,420 8,772
Adaptec, Inc.+ 67,700 1,828
Adobe Systems, Inc. 77,604 9,385
Apple Computer, Inc.+ 105,166 13,047
Autodesk, Inc. 40,500 1,554
BMC Software, Inc.+ 158,000 7,397
Cabletron Systems, Inc.+ 118,129 2,702
Ceridian Corp.+ 94,120 2,041
48
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Cisco Systems, Inc.+ 4,438,680 $ 307,725
Compaq Computer Corp. 1,099,194 32,151
Compuware Corp.+ 233,200 2,930
Comverse Technology, Inc.+ 99,100 8,839
Dell Computer Corp.+ 1,664,428 83,430
EMC Corp.+ 660,537 91,773
Gateway, Inc.+ 205,700 11,365
Hewlett-Packard Co. 652,973 88,151
IKON Office Solutions, Inc. 97,077 570
International Business
Machines Corp. 1,169,404 130,535
Lexmark International Group,
Inc., Class A+ 83,100 9,806
Microsoft Corp.+ 3,376,412 235,505
NCR Corp.+ 63,200 2,441
Network Appliance, Inc.+ 198,000 14,640
Novell, Inc.+ 211,229 4,145
Oracle Corp.+ 1,830,390 146,317
Pitney Bowes, Inc. 172,602 7,055
Seagate Technology, Inc.+ 139,811 7,104
Silicon Graphics, Inc.+ 119,070 856
Sun Microsystems, Inc.+ 1,024,384 94,179
Unisys Corp.+ 200,915 4,659
Xerox Corp. 430,574 11,383
----------
1,342,285
----------
BUSINESS SERVICES -- 4.5%
Allied Waste Industries, Inc.+ 122,100 748
America Online, Inc.+ 1,479,900 88,516
Automatic Data Processing,
Inc. 410,624 22,097
Citrix Systems, Inc.+ 116,400 7,108
Computer Associates
International, Inc. 383,590 21,409
Computer Sciences Corp.+ 108,922 8,884
Deluxe Corp. 47,672 1,201
Dun & Bradstreet Corp. 103,856 3,129
Ecolab, Inc. 83,670 3,268
Electronic Data Systems Corp. 307,500 21,141
Equifax, Inc. 92,115 2,251
First Data Corp. 272,027 13,244
H&R Block, Inc. 64,117 2,681
IMS Health, Inc. 199,386 3,402
Interpublic Group of Cos.,
Inc. 182,520 7,483
Laidlaw, Inc. 1 --
National Service Industries,
Inc. 26,600 572
Omnicom Group, Inc. 115,300 10,499
Parametric Technology Corp.+ 177,232 1,446
Number Value
of Shares (000s)
--------- -----------
Paychex, Inc. 160,950 $ 8,470
PeopleSoft, Inc.+ 173,900 2,424
Shared Medical Systems Corp. 17,652 731
Tyco International Ltd. 1,097,160 50,401
VERITAS Software Corp.+ 252,500 27,085
Waste Management, Inc. 402,026 6,382
Yahoo!, Inc.+ 343,500 44,741
Young & Rubicam, Inc. 45,100 2,511
----------
361,824
----------
CHEMICAL -- 1.8%
Air Products & Chemicals, Inc. 148,758 4,621
Dow Chemical Co. 143,076 16,168
E. I. du Pont de Nemours & Co. 678,054 32,165
Eastman Chemical Co. 50,464 2,640
Great Lakes Chemical Corp. 37,325 1,006
Hercules, Inc. 68,457 1,065
Minnesota Mining &
Manufacturing Co. 261,068 22,582
Pharmacia Corp. 811,880 40,543
PPG Industries, Inc. 112,975 6,143
Praxair, Inc. 103,630 4,605
Rohm & Haas Co. 141,850 5,053
Sigma-Aldrich Corp. 65,109 1,913
Union Carbide Corp. 87,460 5,160
W.R. Grace & Co.+ 46,200 601
----------
144,265
----------
CONSTRUCTION -- 0.2%
Armstrong Holdings, Inc.+ 25,700 503
Centex Corp. 39,122 944
Fluor Corp. 49,875 1,674
Kaufman & Broad Home Corp. 30,681 591
Masco Corp. 290,090 6,509
Owens Corning 35,311 642
Pulte Corp. 27,788 597
Sherwin-Williams Co. 107,161 2,666
The Stanley Works 58,586 1,728
Vulcan Materials Co. 64,600 2,830
----------
18,684
----------
CONSUMER - DURABLE -- 0.1%
Black & Decker Corp. 56,897 2,393
Leggett & Platt, Inc. 127,400 2,723
Maytag Corp. 54,456 1,875
Whirlpool Corp. 48,056 3,130
----------
10,121
----------
49
<PAGE>
SCHWAB S&P 500 FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
CONSUMER - NONDURABLE -- 0.7%
American Greetings Corp.,
Class A 41,657 $ 755
Darden Restaurants, Inc. 84,620 1,560
Fortune Brands, Inc. 105,958 2,649
Harcourt General, Inc. 45,900 1,715
Hasbro, Inc. 113,697 1,812
Jostens, Inc. 21,400 528
Mattel, Inc. 272,207 3,335
McDonald's Corp. 878,974 33,511
Newell Rubbermaid, Inc. 182,433 4,595
Tricon Global Restaurants,
Inc.+ 97,850 3,339
Tupperware Corp. 37,978 717
Wendy's International, Inc. 77,175 1,727
----------
56,243
----------
CONTAINERS -- 0.1%
Ball Corp. 19,763 623
Bemis Co., Inc. 34,011 1,252
Crown Cork & Seal Co., Inc. 83,968 1,364
Owens-Illinois, Inc.+ 96,693 1,305
Pactiv Corp.+ 110,356 904
Sealed Air Corp.+ 54,726 3,044
----------
8,492
----------
ELECTRONICS -- 12.3%
ADC Telecommunications, Inc.+ 195,300 11,864
Advanced Micro Devices, Inc.+ 95,794 8,406
Altera Corp.+ 106,000 10,838
Analog Devices, Inc.+ 227,200 17,452
Andrew Corp.+ 52,988 1,560
Applied Materials, Inc.+ 498,024 50,705
Conexant Systems, Inc.+ 139,100 8,328
Intel Corp. 2,167,524 274,869
ITT Industries, Inc. 56,747 1,791
KLA-Tencor Corp.+ 119,250 8,929
Linear Technology Corp. 202,200 11,551
LSI Logic Corp.+ 193,394 12,087
Lucent Technologies, Inc. 2,068,035 128,606
Micron Technology, Inc.+ 175,840 24,486
Molex, Inc. 127,200 6,988
Motorola, Inc. 461,666 54,967
National Semiconductor Corp.+ 111,437 6,770
Nextel Communications, Inc.,
Class A+ 236,750 25,909
Nortel Networks Corp. 937,040 106,120
PE Corp.-PE Biosystems Group 133,664 8,020
PerkinElmer, Inc. 31,696 1,735
Number Value
of Shares (000s)
--------- -----------
QUALCOMM, Inc.+ 480,300 $ 52,082
Scientific-Atlanta, Inc. 102,824 6,690
Solectron Corp.+ 384,300 17,990
Tektronix, Inc. 31,305 1,812
Tellabs, Inc.+ 261,156 14,315
Teradyne, Inc.+ 111,200 12,232
Texas Instruments, Inc. 528,802 86,129
Thermo Electron Corp.+ 102,914 1,994
Thomas & Betts Corp. 37,515 1,156
Xilinx, Inc.+ 208,800 15,295
----------
991,676
----------
ENERGY - RAW MATERIALS -- 0.8%
Anadarko Petroleum Corp. 82,350 3,577
Apache Corp. 73,689 3,570
Baker Hughes, Inc. 213,908 6,805
Burlington Resources, Inc. 141,055 5,545
Eastern Enterprises 17,843 1,086
Halliburton Co. 286,729 12,670
McDermott International, Inc. 38,300 311
Occidental Petroleum Corp. 237,792 5,098
Rowan Cos., Inc.+ 60,181 1,681
Schlumberger Ltd. 358,634 27,458
----------
67,801
----------
FOOD & AGRICULTURE -- 2.7%
Archer-Daniels Midland Co. 392,942 3,905
Bestfoods, Inc. 181,400 9,115
Campbell Soup Co. 276,827 7,197
Coca-Cola Co. 1,602,282 75,407
Coca-Cola Enterprises, Inc. 275,200 5,865
ConAgra, Inc. 319,500 6,031
General Mills, Inc. 195,768 7,121
H.J. Heinz Co. 230,438 7,835
Hershey Foods Corp. 90,398 4,102
Kellogg Co. 262,262 6,409
Nabisco Group Holdings Corp. 211,100 2,718
PepsiCo, Inc. 943,897 34,629
Quaker Oats Co. 87,187 5,683
Ralston-Ralston Purina Group 195,269 3,454
Sara Lee Corp. 588,738 8,831
SUPERVALU, Inc. 90,954 1,882
SYSCO Corp. 214,428 8,068
Unilever NV 370,632 16,887
Wm. Wrigley Jr. Co. 75,643 5,475
----------
220,614
----------
50
<PAGE>
Number Value
of Shares (000s)
--------- -----------
GOLD -- 0.1%
Barrick Gold Corp. 254,979 $ 4,287
Homestake Mining Co. 168,107 1,009
Newmont Mining Corp. 108,269 2,537
Placer Dome, Inc. 209,800 1,705
----------
9,538
----------
HEALTHCARE / DRUGS & MEDICINE -- 9.7%
Abbott Laboratories 997,314 38,334
Aetna, Inc. 93,158 5,392
Allergan, Inc. 85,070 5,009
ALZA Corp.+ 65,978 2,907
American Home Products Corp. 847,710 47,631
Amgen, Inc.+ 663,616 37,163
Bausch & Lomb, Inc. 37,416 2,259
Baxter International, Inc. 189,184 12,321
Becton, Dickinson & Co. 162,710 4,169
Biogen, Inc.+ 97,800 5,752
Biomet, Inc. 73,632 2,628
Boston Scientific Corp.+ 269,212 7,134
Bristol-Myers Squibb Co. 1,286,864 67,480
C.R. Bard, Inc. 33,020 1,438
Cardinal Health, Inc. 182,990 10,076
Columbia / HCA Healthcare
Corp. 365,316 10,389
Eli Lilly & Co. 708,324 54,762
Guidant Corp.+ 199,820 11,465
HealthSouth Corp.+ 249,809 2,014
Humana, Inc.+ 107,942 830
Johnson & Johnson 903,180 74,512
Mallinckrodt, Inc. 44,800 1,204
Manor Care, Inc.+ 66,533 794
McKesson HBOC, Inc. 182,220 3,075
Medtronic, Inc. 775,554 40,280
Merck & Co., Inc. 1,516,346 105,386
Pfizer, Inc. 2,511,500 105,797
Quintiles Transnational Corp.+ 74,000 1,059
Schering-Plough Corp. 953,062 38,420
St. Jude Medical, Inc.+ 54,292 1,693
Tenet Healthcare Corp.+ 201,733 5,144
UnitedHealth Group, Inc. 110,392 7,362
Warner-Lambert Co. 558,301 63,542
Watson Pharmaceuticals, Inc.+ 62,800 2,822
Wellpoint Health Networks,
Inc.+ 41,900 3,090
----------
783,333
----------
Number Value
of Shares (000s)
--------- -----------
HOUSEHOLD PRODUCTS -- 1.4%
Alberto-Culver Co., Class B 35,917 $ 849
Avon Products, Inc. 157,454 6,534
Clorox Co. 153,732 5,650
Colgate-Palmolive Co. 377,836 21,584
Gillette Co. 696,738 25,779
International Flavors &
Fragrances, Inc. 67,828 2,336
Procter & Gamble Co. 854,222 50,933
----------
113,665
----------
INSURANCE -- 2.8%
AFLAC, Inc. 173,100 8,449
Allstate Corp. 521,918 12,330
American General Corp. 160,922 9,012
American International
Group, Inc. 1,004,410 110,171
Aon Corp. 166,348 4,502
Chubb Corp. 113,960 7,251
CIGNA Corp. 109,565 8,738
Cincinnati Financial Corp. 106,945 4,311
Conseco, Inc. 210,702 1,146
Hartford Financial Services
Group, Inc. 143,692 7,499
Jefferson-Pilot Corp. 68,422 4,554
Lincoln National Corp. 127,226 4,429
Loew's Corp. 69,040 3,806
Marsh & McLennan Cos., Inc. 173,578 17,108
MBIA, Inc. 65,086 3,218
MGIC Investment Corp. 69,038 3,301
Progressive Corp. 47,951 3,138
SAFECO Corp. 84,691 1,874
St. Paul Cos., Inc. 147,416 5,252
Torchmark Corp. 85,689 2,147
UnumProvident Corp. 155,328 2,640
----------
224,876
----------
MEDIA -- 3.9%
CBS Corp.+ 489,702 28,770
Clear Channel Communications,
Inc.+ 219,910 15,834
Comcast Corp., Class A+ 602,258 24,128
Dow Jones & Co., Inc. 58,050 3,766
Gannett Co., Inc. 181,292 11,580
Knight-Ridder, Inc. 54,383 2,668
McGraw-Hill Cos., Inc. 127,264 6,681
MediaOne Group, Inc.+ 393,067 29,726
51
<PAGE>
SCHWAB S&P 500 FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Meredith Corp. 33,612 $ 935
New York Times Co., Class A 111,300 4,584
R.R. Donnelley & Sons Co. 82,106 1,745
Seagram Co. Ltd. 281,375 15,194
Time Warner, Inc. 835,240 75,119
Tribune Co. 154,112 5,991
Viacom, Inc., Class B+ 453,774 24,674
Walt Disney Co. 1,342,830 58,161
----------
309,556
----------
MISCELLANEOUS FINANCE -- 5.3%
American Express Co. 291,579 43,755
Associates First Capital Corp. 472,002 10,473
Bear Stearns Cos., Inc. 74,201 3,181
Capital One Financial Corp. 128,050 5,602
Charles Schwab Corp. 533,358 23,735
Citigroup, Inc. 2,187,256 130,005
Countrywide Credit
Industries, Inc. 73,124 2,020
Fannie Mae 664,917 40,103
Franklin Resources, Inc. 160,900 5,189
Freddie Mac 452,652 20,794
Golden West Financial Corp. 105,357 3,595
Household International, Inc. 305,108 12,738
Lehman Brothers Holdings, Inc. 78,400 6,434
MBNA Corp. 519,520 13,800
Merrill Lynch & Co., Inc. 240,792 24,546
Morgan Stanley Dean Witter
Discover & Co. 739,372 56,747
Paine Webber Group, Inc. 92,900 4,076
Sabre Group Holdings, Inc.+ 84,101 2,938
SLM Holding Corp. 103,700 3,247
T. Rowe Price Associates, Inc. 77,300 2,947
Washington Mutual, Inc. 374,356 9,569
----------
425,494
----------
NON-FERROUS METALS -- 0.4%
Alcan Aluminum Ltd. 142,574 4,669
Alcoa, Inc. 239,026 15,507
Engelhard Corp. 81,301 1,428
Freeport-McMoRan Copper &
Gold, Inc., Class B+ 105,615 1,017
Inco Ltd.+ 124,649 1,948
Phelps Dodge Corp. 53,154 2,458
Reynolds Metals Co. 41,054 2,730
----------
29,757
----------
Number Value
of Shares (000s)
--------- -----------
OIL - DOMESTIC -- 0.6%
Amerada Hess Corp. 58,792 $ 3,741
Ashland, Inc. 46,856 1,599
Conoco, Inc., Class B 406,000 10,099
Kerr-McGee Corp. 62,273 3,223
Phillips Petroleum Co. 164,850 7,820
Sunoco, Inc. 59,052 1,790
Tosco Corp. 92,900 2,978
Transocean Sedco Forex, Inc. 135,483 6,368
Union Pacific Resources Group,
Inc. 162,762 3,123
Unocal Corp. 157,116 5,077
USX-Marathon Group, Inc. 201,002 4,686
----------
50,504
----------
OIL - INTERNATIONAL -- 3.8%
Chevron Corp. 427,468 36,388
Exxon Mobil Corp. 2,240,353 174,047
Royal Dutch Petroleum Co. -
Sponsored ADR 1,390,980 79,808
Texaco, Inc. 358,754 17,758
----------
308,001
----------
OPTICAL & PHOTO -- 0.6%
Corning, Inc. 180,382 35,626
Eastman Kodak Co. 205,181 11,477
Polaroid Corp. 29,495 595
----------
47,698
----------
PAPER & FOREST PRODUCTS -- 0.8%
Boise Cascade Corp. 37,216 1,212
Champion International Corp. 63,000 4,142
Fort James Corp. 140,695 3,368
Georgia-Pacific Group 111,082 4,082
International Paper Co. 268,781 9,878
Kimberly-Clark Corp. 362,313 21,037
Louisiana-Pacific Corp. 69,228 926
Mead Corp. 66,219 2,305
Potlatch Corp. 19,560 771
Temple-Inland, Inc. 36,319 1,821
Westvaco Corp. 65,613 2,026
Weyerhaeuser Co. 152,017 8,123
Willamette Industries, Inc. 72,832 2,781
----------
62,472
----------
52
<PAGE>
Number Value
of Shares (000s)
--------- -----------
PRODUCER GOODS & MANUFACTURING -- 5.6%
Avery Dennison Corp. 72,815 $ 4,778
Briggs & Stratton Corp. 15,200 583
Caterpillar, Inc. 230,986 9,109
Cooper Industries, Inc. 61,055 2,095
Deere & Co. 151,527 6,118
Dover Corp. 132,165 6,716
Emerson Electric Co. 279,826 15,355
FMC Corp.+ 19,878 1,157
General Electric Co. (b) 2,128,640 334,729
Honeywell International, Inc. 514,443 28,809
Illinois Tool Works, Inc. 195,321 12,513
Ingersoll-Rand Co. 106,397 4,994
Johnson Controls, Inc. 56,075 3,550
Milacron, Inc. 23,783 434
Millipore Corp. 29,491 2,114
NACCO Industries, Inc., Class A 5,317 239
Pall Corp. 79,966 1,784
Parker-Hannifin Corp. 73,333 3,410
Snap-On, Inc. 37,650 995
The Timken Co. 39,832 737
W.W. Grainger, Inc. 60,508 2,625
----------
442,844
----------
RAILROAD & SHIPPING -- 0.3%
Burlington Northern Santa Fe
Corp. 296,575 7,155
CSX Corp. 141,455 2,961
Kansas City Southern
Industries, Inc. 72,400 5,204
Norfolk Southern Corp. 247,088 4,355
Union Pacific Corp. 161,116 6,787
----------
26,462
----------
RETAIL -- 6.0%
Albertson's, Inc. 275,037 8,956
AutoZone, Inc.+ 89,615 2,055
Bed, Bath & Beyond, Inc.+ 91,300 3,350
Best Buy Co., Inc.+ 132,500 10,699
Cendant Corp.+ 457,995 7,070
Circuit City Stores-Circuit
City Group 132,012 7,764
Consolidated Stores Corp.+ 71,500 889
Costco Wholesale Corp.+ 288,588 15,602
CVS Corp. 254,518 11,071
Dillards, Inc., Class A 69,133 963
Dollar General Corp. 171,306 3,919
Federated Department Stores,
Inc.+ 136,137 4,629
Gap, Inc. 553,302 20,334
Number Value
of Shares (000s)
--------- -----------
Great Atlantic & Pacific
Tea Co., Inc. 24,700 $ 452
Home Depot, Inc. 1,493,525 83,731
J.C. Penney Co., Inc. 168,520 2,328
Kmart Corp.+ 317,117 2,576
Kohl's Corp.+ 211,200 10,138
Kroger Co.+ 540,562 10,034
Limited, Inc. 139,267 6,293
Longs Drug Stores, Inc. 25,282 588
Lowe's Cos., Inc. 248,326 12,292
May Department Stores Co. 215,079 5,915
Nordstrom, Inc. 87,322 2,429
Office Depot, Inc.+ 212,900 2,249
Rite Aid Corp. 167,014 835
Safeway, Inc.+ 330,100 14,566
Sears, Roebuck & Co. 245,418 8,988
Staples, Inc.+ 303,850 5,792
Tandy Corp. 125,442 7,150
Target Corp. 284,410 18,931
TJX Cos., Inc. 200,782 3,852
Toys "R" Us, Inc.+ 157,696 2,405
Wal-Mart Stores, Inc. 2,889,262 159,993
Walgreen Co. 652,756 18,359
Winn-Dixie Stores, Inc. 94,711 1,569
----------
478,766
----------
STEEL -- 0.1%
Allegheny Technologies, Inc. 60,251 1,457
Bethlehem Steel Corp.+ 84,135 452
Nucor Corp. 56,284 2,420
USX-U.S. Steel Group, Inc. 57,079 1,431
Worthington Industries, Inc. 57,402 711
----------
6,471
----------
TELEPHONE -- 7.0%
Alltel Corp. 204,090 13,598
AT&T Corp. 2,073,093 96,787
Bell Atlantic Corp. 1,007,696 59,706
BellSouth Corp. 1,221,092 59,452
CenturyTel, Inc. 90,950 2,228
Global Crossing Ltd.+ 505,255 15,916
GTE Corp. 624,148 42,286
MCI WorldCom, Inc.+ 1,841,204 83,660
SBC Communications, Inc. 2,212,930 96,954
Sprint Corp. (FON Group) 566,598 34,846
Sprint Corp. (PCS Group)+ 560,398 30,822
US West, Inc. 329,812 23,478
----------
559,733
----------
53
<PAGE>
SCHWAB S&P 500 FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
TOBACCO -- 0.4%
Philip Morris Cos., Inc. 1,534,462 $ 33,566
UST, Inc. 110,500 1,658
----------
35,224
----------
TRAVEL & RECREATION -- 0.3%
Brunswick Corp. 59,107 1,134
Carnival Corp. 400,000 9,950
Harrah's Entertainment, Inc.+ 83,011 1,707
Hilton Hotels Corp. 238,572 2,028
Marriott International, Inc.,
Class A 161,232 5,159
Mirage Resorts, Inc.+ 125,474 2,557
----------
22,535
----------
TRUCKING & FREIGHT -- 0.0%
PACCAR, Inc. 50,663 2,410
Ryder Systems, Inc. 41,762 926
----------
3,336
----------
UTILITIES - ELECTRIC & GAS -- 2.6%
AES Corp.+ 133,800 12,034
Ameren Corp. 88,613 3,251
American Electric Power Co.,
Inc. 125,895 4,611
Carolina Power & Light Co. 104,016 3,803
Central & South West Corp. 137,943 2,992
Cinergy Corp. 102,600 2,745
CMS Energy Corp. 75,300 1,431
Coastal Corp. 138,542 6,953
Columbia Energy Group 53,274 3,343
Consolidated Edison, Inc. 143,191 5,039
Constellation Energy Group,
Inc. 97,308 3,217
Dominion Resources, Inc. 154,055 6,932
DTE Energy Co. 93,703 3,057
Duke Energy Corp. 237,515 13,657
Edison International 224,629 4,282
El Paso Energy Corp. 148,079 6,293
Enron Corp. 465,278 32,424
Entergy Corp. 160,404 4,080
FirstEnergy Corp. 151,481 3,853
Florida Progress Corp. 63,400 3,107
FPL Group, Inc. 116,780 5,277
GPU, Inc. 80,452 2,258
New Century Energies, Inc. 75,400 2,460
Niagara Mohawk Holdings,
Inc.+ 120,602 1,673
NICOR, Inc. 30,301 1,026
Northern States Power Co. 100,000 2,181
ONEOK, Inc. 20,200 510
Number Value
of Shares (000s)
--------- -----------
PECO Energy Co. 120,965 $ 5,043
Peoples Energy Corp. 22,873 710
PG&E Corp. 249,316 6,467
Pinnacle West Capital Corp. 54,700 1,921
PPL Corp. 92,745 2,214
Public Service Enterprise
Group, Inc. 141,785 5,087
Reliant Energy, Inc. 191,486 5,098
Sempra Energy 132,630 2,462
Southern Co. 436,331 10,881
Texas Utilities Co. 178,787 6,023
Unicom Corp. 141,152 5,611
Williams Cos., Inc. 282,164 10,528
----------
204,534
----------
TOTAL COMMON STOCK
(Cost $5,850,241) 8,013,796
----------
Par
(000s)
---------
U.S. TREASURY OBLIGATIONS -- 0.0%
U.S. Treasury Bills (a) (b)
5.68%-5.79%, 06/15/00 $965 959
5.61%, 06/22/00 475 471
----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $1,429) 1,430
----------
Number
of Shares
---------
SHORT-TERM INVESTMENTS -- 1.2%
Provident Institutional
TempFund, 5.74%* 97,667,227 97,667
----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $97,667) 97,667
----------
TOTAL INVESTMENTS -- 100.9%
(Cost $5,949,337) 8,112,893
----------
OTHER ASSETS AND LIABILITIES, NET -- (0.9%)
Other assets 679,064
Liabilities (753,004)
----------
(73,940)
----------
TOTAL NET ASSETS -- 100.0% $8,038,953
==========
SEE ACCOMPANYING NOTES TO SCHEDULES OF INVESTMENTS AND NOTES TO FINANCIAL
STATEMENTS.
54
<PAGE>
SCHWAB 1000 FUND(R)
SCHEDULE OF INVESTMENTS
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
COMMON STOCK -- 99.8%
AEROSPACE / DEFENSE -- 1.0%
B.F. Goodrich Co. 56,792 $ 1,810
Boeing Co. 486,282 19,299
Crane Co. 32,850 882
General Dynamics Corp. 113,600 6,646
Litton Industries, Inc.+ 30,500 1,325
Lockheed Martin Corp. 216,384 5,383
Northrop Grumman Corp. 39,900 2,828
Raytheon Co., Class A 52,000 1,193
Raytheon Co., Class B 185,100 4,107
Rockwell International Corp. 104,300 4,107
Textron, Inc. 85,400 5,289
TRW, Inc. 66,700 3,902
United Technologies Corp. 263,106 16,362
----------
73,133
----------
AIR TRANSPORTATION -- 0.3%
AMR Corp.+ 85,200 2,902
Continental Airlines, Inc.+ 39,400 1,576
Delta Air Lines, Inc. 74,400 3,925
FedEx Corp.+ 163,860 6,175
Galileo International, Inc. 30,500 705
Northwest Airlines Corp.,
Class A+ 42,000 1,037
Southwest Airlines Co. 277,350 6,015
U.S. Airways Group, Inc.+ 36,900 1,026
UAL Corp.+ 32,700 1,893
----------
25,254
----------
ALCOHOLIC BEVERAGES -- 0.3%
Adolph Coors Co., Class B 21,000 1,071
Anheuser-Busch Cos., Inc. 258,800 18,262
Brown-Forman Corp., Class B 36,700 2,002
----------
21,335
----------
APPAREL -- 0.2%
Abercrombie & Fitch Co.+ 65,000 715
Jones Apparel Group, Inc.+ 72,200 2,143
Liz Claiborne, Inc. 35,000 1,621
Nike, Inc., Class B 143,800 6,246
Talbots, Inc. 20,500 1,036
VF Corp. 68,100 1,924
WestPoint Stevens, Inc. 34,000 638
----------
14,323
----------
Number Value
of Shares (000s)
--------- -----------
AUTOMOTIVE PRODUCTS / MOTOR VEHICLES -- 1.4%
Cummins Engine Co., Inc. 24,800 $ 882
Dana Corp. 91,689 2,785
Danaher Corp. 80,800 4,615
Eaton Corp. 42,100 3,536
Federal-Mogul Corp. 9,600 130
Ford Motor Co. 655,500 35,848
General Motors Corp. 352,700 33,021
General Motors Corp., Class H+ 74,382 7,164
Genuine Parts Co. 95,575 2,509
Goodyear Tire & Rubber Co. 85,500 2,362
Harley-Davidson, Inc. 170,800 6,800
Lear Corp.+ 36,000 1,078
Meritor Automotive, Inc. 40,000 600
Navistar International Corp.+ 36,000 1,260
O'Reilly Automotive, Inc.+ 1,000 14
SPX Corp.+ 20,000 2,198
United Rentals, Inc.+ 45,000 610
----------
105,412
----------
BANKS -- 4.8%
AmSouth Bancorp. 223,475 3,254
Associated Bancorp. 39,625 1,013
BancWest Corp. 50,000 916
Bank of America Corp. 928,491 45,496
Bank of New York Co., Inc. 407,100 16,717
Bank One Corp. 616,693 18,809
BB&T Corp. 185,500 4,939
CCB Financial Corp. 21,000 831
Centura Banks, Inc. 22,000 909
Chase Manhattan Corp. 452,460 32,605
Citizens Banking Corp. 1,000 18
City National Corp. 25,000 920
Colonial BancGroup, Inc. 65,000 609
Comerica, Inc. 91,296 3,869
Commerce Bancorp, Inc. 21,000 834
Commerce Bancshares, Inc. 31,963 987
Compass Bancshares, Inc. 69,412 1,284
Cullen/Frost Bankers, Inc. 29,700 733
Fifth Third Bancorp. 170,793 10,781
First Midwest Bancorp, Inc. 2,000 50
First Security Corp. 112,627 1,591
First Tennessee National Corp. 72,600 1,379
First Union Corp. 523,622 16,690
First Virginia Banks, Inc. 24,625 899
55
<PAGE>
SCHWAB 1000 FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Firstar Corp. 538,535 $ 13,396
Firstmerit Corp. 46,800 766
Fleet Boston Financial Corp. 501,939 17,787
Fulton Financial Corp. 45,375 933
GreenPoint Financial Corp. 62,800 1,170
Hibernia Corp., Class A 80,000 850
Hudson United Bancorp. 22,660 511
Huntington Bancshares, Inc. 129,578 2,365
J.P. Morgan & Co., Inc. 97,000 12,452
KeyCorp, Inc. 248,946 4,606
Keystone Financial, Inc. 30,000 450
M&T Bank Corp. 4,600 2,021
Marshall & Ilsley Corp. 57,185 2,656
Mellon Financial Corp. 278,788 8,956
Mercantile Bankshares Corp. 40,675 1,159
National City Corp. 335,900 5,710
National Commerce Bancorp. 60,000 986
North Fork Bancorporation, Inc. 67,000 1,085
Northern Trust Corp. 123,800 7,939
Old Kent Financial Corp. 70,636 2,128
Old National Bancorp. 29,559 964
Pacific Century Financial Corp. 40,350 830
Peoples Bank-Bridgeport 38,000 774
Peoples Heritage Financial
Group, Inc. 62,000 810
PNC Financial Services Group 165,130 7,204
Provident Bancorp, Inc. 19,200 563
Providian Financial Corp. 79,050 6,961
Regions Financial Corp. 126,765 2,591
S1 Corp.+ 18,900 1,027
Sky Financial Group, Inc. 44,300 728
SouthTrust Corp. 92,787 2,215
State Street Corp. 84,500 8,186
Summit Bancorp. 95,850 2,432
SunTrust Banks, Inc. 177,456 9,006
Synovus Financial Corp. 157,962 2,932
Trustmark Corp. 44,000 808
U.S. Bancorp. 412,098 8,371
Union Planters Corp. 83,900 2,375
UnionBanCal Corp. 90,600 2,509
Valley National Bancorp. 36,750 967
Wachovia Corp. 113,749 7,131
Wells Fargo & Co. 900,676 36,984
Westamerica Bancorp. 16,800 421
Number Value
of Shares (000s)
--------- -----------
Wilmington Trust Co. 18,200 $ 839
Zions Bancorp. 46,600 1,934
----------
363,621
----------
BUSINESS MACHINES & SOFTWARE -- 15.3%
3Com Corp.+ 194,350 7,665
Adaptec, Inc.+ 60,400 1,631
Adobe Systems, Inc. 70,200 8,490
Apple Computer, Inc.+ 90,700 11,252
Autodesk, Inc. 27,200 1,044
BMC Software, Inc.+ 132,000 6,179
Cabletron Systems, Inc.+ 97,000 2,219
Ceridian Corp.+ 66,000 1,431
Cisco Systems, Inc.+ 3,738,600 259,190
Comdisco, Inc. 91,066 2,829
Compaq Computer Corp. 920,168 26,915
Compuware Corp.+ 209,600 2,633
Comverse Technology, Inc.+ 79,400 7,081
Dell Computer Corp.+ 1,394,000 69,874
Diebold, Inc. 35,818 1,034
EMC Corp.+ 557,600 77,472
Gateway, Inc.+ 182,000 10,056
Hewlett-Packard Co. 554,000 74,790
Informix Corp.+ 146,900 1,616
Integrated Device Technology,
Inc.+ 50,400 2,422
International Business
Machines Corp. 987,100 110,185
Lexmark International
Group, Inc., Class A+ 75,000 8,850
Microchip Technology, Inc.+ 45,000 2,793
Micromuse, Inc.+ 18,200 1,786
Microsoft Corp.+ 2,839,000 198,020
National Computer Systems, Inc. 15,000 772
NCR Corp.+ 54,451 2,103
Network Appliance, Inc.+ 166,000 12,274
Novell, Inc.+ 195,800 3,843
Novellus Systems, Inc.+ 60,000 4,001
Oracle Corp.+ 1,540,657 123,156
Pitney Bowes, Inc. 149,100 6,094
Seagate Technology, Inc.+ 122,060 6,202
Silicon Graphics, Inc.+ 69,000 496
Storage Technology Corp.+ 30,500 397
Sun Microsystems, Inc.+ 864,000 79,434
Sybase+ 16,000 323
56
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Technology Data Corp.+ 28,000 $ 1,174
The Titan Corp.+ 27,700 1,189
Total System Services, Inc. 102,700 2,048
Unisys Corp.+ 176,150 4,085
Visual Networks, Inc.+ 2,000 78
Xerox Corp. 363,350 9,606
Xircom, Inc.+ 3,000 118
----------
1,154,850
----------
BUSINESS SERVICES -- 6.0%
ACNielsen Corp.+ 35,000 807
Affiliated Computer Services,
Inc.+ 30,000 994
Affymetrix, Inc.+ 13,700 1,850
Allied Waste
Industries, Inc.+ 91,365 560
America Online, Inc.+ 1,248,315 74,665
American Management Systems,
Inc.+ 22,000 814
Apollo Group, Inc.+ 42,500 1,233
Aspect Development, Inc.+ 30,000 2,074
At Home Corp., Class A+ 176,696 3,291
Automatic Data Processing,
Inc. 343,700 18,495
Autonation, Inc.+ 148,000 1,351
BEA Systems, Inc.+ 137,200 6,620
BroadVision, Inc.+ 134,400 5,905
CDW Computer Centers, Inc.+ 26,000 2,704
CheckFree Holdings Corp.+ 31,000 1,575
Ciber, Inc.+ 36,400 657
Cintas Corp. 100,800 3,994
Citrix Systems, Inc.+ 104,200 6,363
Computer Associates
International, Inc. 323,479 18,054
Computer Sciences Corp.+ 94,196 7,683
Concord EFS, Inc.+ 108,412 2,426
Convergys Corp.+ 86,300 3,797
Credence Systems, Corp.+ 13,900 1,984
CSG Systems International,
Inc.+ 24,900 1,149
Deluxe Corp. 46,000 1,159
DeVry, Inc.+ 35,000 833
DoubleClick, Inc.+ 64,700 4,909
DST Systems, Inc.+ 35,000 2,597
Dun & Bradstreet Corp. 89,600 2,699
Earthlink, Inc.+ 69,070 1,304
eBay, Inc.+ 72,800 11,589
Ecolab, Inc. 72,800 2,844
Number Value
of Shares (000s)
--------- -----------
Electronic Data Systems Corp. 257,200 $ 17,683
Entrust Technologies, Inc.+ 25,300 1,243
Equifax, Inc. 74,000 1,808
First Data Corp. 234,302 11,408
Fiserv, Inc.+ 70,693 3,247
Go2net, Inc.+ 15,700 934
H&R Block, Inc. 53,700 2,245
HNC Software, Inc.+ 13,700 678
I2 Technologies+ 82,800 10,702
Icos Corp.+ 15,000 604
IMS Health, Inc. 178,200 3,041
Interim Services, Inc.+ 5,000 86
Interpublic Group of Cos.,
Inc. 159,700 6,548
Intuit, Inc.+ 107,400 3,860
ISS Group, Inc.+ 23,000 2,080
J. D. Edwards & Co.+ 65,000 1,186
Keane, Inc.+ 45,000 1,299
Lamar Advertising Co.+ 25,000 1,102
Legato Systems, Inc.+ 46,100 596
LHS Group, Inc.+ 35,000 1,391
Lycos, Inc.+ 52,000 2,418
Macrovision Corp.+ 21,800 1,065
Manpower, Inc. 44,400 1,568
MarchFirst, Inc.+ 73,925 1,576
Medical Manager Corp.+ 19,800 634
Mercury Interactive Corp.+ 43,000 3,870
Metris Cos., Inc. 25,700 964
National Instruments+ 33,200 1,619
National Service Industries,
Inc. 16,700 359
NCO Group, Inc.+ 1,000 34
Network Associates, Inc.+ 85,050 2,163
New Era of Networks, Inc.+ 20,000 628
NOVA Corp.+ 36,000 1,139
Omnicom Group, Inc. 97,200 8,851
Open Market, Inc.+ 20,900 216
Parametric Technology Corp.+ 142,400 1,161
Paychex, Inc. 139,695 7,351
PeopleSoft, Inc.+ 139,600 1,946
Peregrine Systems, Inc.+ 56,200 1,352
Pixar, Inc.+ 22,000 818
Polycom, Inc.+ 18,600 1,472
Profit Recovery Group
International, Inc.+ 26,800 471
PSINet, Inc.+ 73,600 1,707
57
<PAGE>
SCHWAB 1000 FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Qlogic Corp.+ 41,000 $ 4,113
RealNetworks, Inc.+ 82,600 3,934
Reynolds & Reynolds Co.,
Class A 45,400 1,078
Robert Half International,
Inc.+ 54,650 3,340
RSA Security, Inc.+ 18,600 1,092
Safety-Kleen, Corp.+ 44,000 44
Sandisk Corp.+ 36,200 3,317
Sapient Corp.+ 31,700 2,510
SDL, Inc.+ 40,000 7,800
SEI Investments Co. 9,000 1,074
The Service Master Co. 170,000 2,316
Shared Medical Systems Corp. 14,700 609
Siebel Systems, Inc.+ 103,600 12,730
Sungard Data Systems, Inc.+ 66,600 2,302
Sykes Enterprises, Inc.+ 30,000 600
Symantec Corp.+ 30,000 1,873
Synopsys, Inc.+ 38,800 1,629
Technology Solutions Co.+ 25,200 165
Teletech Holdings, Inc.+ 27,700 904
TMP Worldwide, Inc.+ 40,000 2,615
True North Communications, Inc. 23,000 947
Verio, Inc.+ 43,600 1,638
VeriSign, Inc.+ 57,300 7,986
VERITAS Software Corp.+ 218,250 23,411
Verity, Inc.+ 17,100 554
Viad Corp. 53,100 1,347
Vitesse Semiconductor Corp.+ 90,000 6,125
Waste Management, Inc. 305,275 4,846
Wind River Systems, Inc.+ 15,000 640
Yahoo!, Inc.+ 288,600 37,590
Young & Rubicam, Inc. 39,400 2,194
----------
453,425
----------
CHEMICAL -- 1.7%
Air Products & Chemicals, Inc. 127,200 3,951
Cabot Corp. 37,800 1,021
CK Witco Corp.+ 62,000 729
Dow Chemical Co. 122,200 13,809
E. I. du Pont de Nemours & Co. 574,589 27,257
Eastman Chemical Co. 45,725 2,392
Enzon, Inc.+ 10,000 373
Great Lakes Chemical Corp. 31,700 854
Hercules, Inc. 54,850 854
Lubrizol Corp. 31,700 812
Number Value
of Shares (000s)
--------- -----------
Lyondell Petrochemical Corp. 61,300 $ 1,126
Millennium Chemicals, Inc. 24,000 478
Minnesota Mining &
Manufacturing Co. 219,400 18,978
Pharmacia Corp. 680,400 33,977
PPG Industries, Inc. 98,700 5,367
Praxair, Inc. 92,100 4,092
Rohm & Haas Co. 123,214 4,390
RPM, Inc. 44,843 454
Sigma-Aldrich Corp. 60,000 1,762
Solutia, Inc. 55,000 749
Union Carbide Corp. 73,000 4,307
Valspar Corp. 21,600 778
----------
128,510
----------
CONSTRUCTION -- 0.3%
Armstrong Holdings, Inc.+ 25,700 503
Centex Corp. 33,000 796
Clayton Homes, Inc. 64,182 610
Fluor Corp. 39,000 1,309
Johns Manville Corp. 84,300 880
Lafarge Corp. 46,100 1,164
Martin Marietta Materials, Inc. 21,400 1,134
Masco Corp. 231,300 5,190
Sawtek, Inc.+ 23,900 1,143
Sherwin-Williams Co. 97,000 2,413
Southdown, Inc. 24,200 1,407
The Stanley Works 56,800 1,675
USG Corp. 28,700 1,198
Vulcan Materials Co. 59,400 2,602
----------
22,024
----------
CONSUMER - DURABLE -- 0.2%
Black & Decker Corp. 49,900 2,099
Ethan Allen Interiors, Inc. 30,400 811
Hillenbrand Industries, Inc. 37,000 1,115
Leggett & Platt, Inc. 111,600 2,385
Linens 'N Things, Inc.+ 20,000 617
Maytag Corp. 45,850 1,579
Mohawk Industries, Inc.+ 25,000 620
Shaw Industries, Inc. 71,200 1,126
Whirlpool Corp. 40,900 2,664
----------
13,016
----------
58
<PAGE>
Number Value
of Shares (000s)
--------- -----------
CONSUMER - NONDURABLE -- 0.8%
American Greetings Corp.,
Class A 39,200 $ 711
Brinker International, Inc.+ 35,000 1,116
Catalina Marketing Corp.+ 10,000 1,012
Darden Restaurants, Inc. 78,600 1,449
Electronic Arts, Inc.+ 40,400 2,444
Fastenal Co. 20,700 1,210
Fortune Brands, Inc. 90,300 2,258
Harcourt General, Inc. 40,200 1,502
Hasbro, Inc. 117,087 1,866
International Game Technology+ 44,600 1,087
International Speedway Corp.,
Class A 30,100 1,294
Lancaster Colony Corp. 24,450 642
Mattel, Inc. 189,520 2,322
McDonald's Corp. 744,200 28,373
Newell Rubbermaid, Inc. 144,809 3,647
Outback Steakhouse, Inc.+ 46,875 1,535
Service Corp. International 16,200 83
Sotheby's Holdings, Inc.,
Class A 30,000 497
Starbucks Corp.+ 101,000 3,054
Tricon Global Restaurants,
Inc.+ 84,760 2,892
Wendy's International, Inc. 63,500 1,421
----------
60,415
----------
CONTAINERS -- 0.1%
Bemis Co., Inc. 36,400 1,340
Crown Cork & Seal Co., Inc. 44,700 726
Owens-Illinois, Inc.+ 89,900 1,214
Sealed Air Corp.+ 44,199 2,459
Sonoco Products 62,141 1,297
----------
7,036
----------
ELECTRONICS -- 12.5%
Acxiom Corp.+ 40,000 1,080
ADC Telecommunications, Inc.+ 170,800 10,376
Adelphia Communications Corp.,
Class A+ 61,706 3,058
Advanced Fibre Communications,
Inc.+ 44,000 2,010
Advanced Micro Devices, Inc.+ 80,100 7,029
Alpha Industries, Inc.+ 21,800 1,134
Altera Corp.+ 114,400 11,697
American Power
Conversion Corp.+ 103,000 3,637
Number Value
of Shares (000s)
--------- -----------
Amphenol Corp.+ 22,800 $ 1,454
Analog Devices, Inc.+ 194,800 14,963
Andrew Corp.+ 48,612 1,431
ANTEC Corp.+ 23,000 1,236
Applied Materials, Inc.+ 414,800 42,232
Arrow Electronics, Inc.+ 53,800 2,357
Aspect Communications Corp.+ 26,900 955
Atmel Corp.+ 119,700 5,858
Avnet, Inc. 19,100 1,502
AVX Corp. 48,400 4,716
Broadcom Corp., Class A+ 63,800 10,998
Burr Brown Corp.+ 31,350 2,136
Cadence Design Systems, Inc.+ 139,350 2,343
CIENA Corp.+ 75,000 9,272
CMGI, Inc.+ 144,500 10,296
CommScope, Inc.+ 28,700 1,363
Concentric Network Corp.+ 19,000 827
Cree Research, Inc.+ 16,700 2,430
CTS Corp. 15,600 984
Cypress Semiconductor Corp.+ 59,400 3,085
Dallas Semiconductor Corp. 30,000 1,288
Electronics for Imaging, Inc.+ 35,000 1,829
Emulex Corp.+ 20,000 908
Gentex Corp.+ 45,000 1,451
Getty Images, Inc.+ 23,300 708
Harmonic, Inc.+ 17,100 1,262
Harris Corp. 36,600 1,183
Intel Corp. 1,827,400 231,737
ITT Industries, Inc. 50,600 1,597
JDS Uniphase Corp.+ 304,800 31,604
Kemet Corp.+ 24,300 1,810
KLA-Tencor Corp.+ 99,900 7,480
L-3 Communications
Holdings, Inc.+ 6,900 367
Lam Research Corp.+ 66,900 3,069
Linear Technology Corp. 179,600 10,260
Loral Space & Communications
Corp.+ 114,400 1,123
LSI Logic Corp.+ 160,200 10,013
Lucent Technologies, Inc. 1,736,469 107,987
Macromedia, Inc.+ 30,000 2,610
Maxim Integrated Products,
Inc.+ 158,400 10,266
Metromedia Fiber Network,
Inc., Class A+ 256,600 7,923
59
<PAGE>
SCHWAB 1000 FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Micron Technology, Inc.+ 145,600 $ 20,275
Molex Inc., Class A 66,900 2,676
Molex, Inc. 112,821 6,198
Motorola, Inc. 385,662 45,918
National Semiconductor Corp.+ 94,300 5,729
Network Solutions, Inc.+ 37,800 5,594
Nextel Communications, Inc.,
Class A+ 198,550 21,729
PE Corp.-PE Biosystems Group 122,000 7,320
PerkinElmer, Inc. 22,000 1,204
Powerwave Technologies, Inc.+ 11,000 2,289
QUALCOMM, Inc.+ 401,400 43,527
Rambus, Inc.+ 10,900 2,507
Rational Software Corp.+ 49,000 4,171
RF Micro Devices, Inc.+ 44,900 4,672
Sanmina Corp.+ 71,600 4,300
SCI Systems, Inc.+ 76,000 4,047
Scientific-Atlanta, Inc. 89,400 5,817
Semtech Corp.+ 20,200 1,377
Sensormatic Electronics Corp.+ 10,000 167
Solectron Corp.+ 321,100 15,031
Symbol Technologies, Inc. 83,980 4,682
Tektronix, Inc. 26,400 1,528
Tellabs, Inc.+ 222,000 12,168
Teradyne, Inc.+ 95,200 10,472
Terayon Communication Systems,
Inc.+ 15,100 1,404
Texas Instruments, Inc. 444,600 72,414
Thermo Electron Corp.+ 77,137 1,494
Thomas & Betts Corp. 15,000 462
TranSwitch Corp.+ 21,300 1,876
Triquint Semiconductor, Inc.+ 19,800 2,036
Univision Communications, Inc.+ 57,000 6,227
Vicor Corp.+ 29,700 772
Vishay Intertechnology, Inc.+ 47,900 4,017
VISX, Inc.+ 16,900 267
Waters Corp.+ 39,200 3,714
Western Wireless Corp.,
Class A+ 28,100 1,396
Xilinx, Inc.+ 183,600 13,449
----------
939,860
----------
ENERGY - RAW MATERIALS -- 0.9%
Anadarko Petroleum Corp. 78,300 3,401
Apache Corp. 62,600 3,032
Baker Hughes, Inc. 180,020 5,727
Number Value
of Shares (000s)
--------- -----------
BJ Services Co.+ 40,100 $ 2,817
Burlington Resources, Inc. 125,967 4,952
Cooper Cameron Corp.+ 35,000 2,625
Devon Energy Corp. 45,200 2,178
Eastern Enterprises 5,000 304
ENSCO International, Inc. 77,800 2,582
EOG Resources, Inc. 64,800 1,612
Global Marine, Inc.+ 94,500 2,268
Halliburton Co. 242,760 10,727
Mitchell Energy &
Development Corp., Class A 27,200 650
Nabors Industries, Inc.+ 78,300 3,088
Noble Affiliates, Inc. 27,400 988
Noble Drilling Corp.+ 75,000 2,995
Occidental Petroleum Corp. 194,900 4,178
R&B Falcon Corp.+ 105,000 2,179
Rowan Cos., Inc.+ 52,600 1,470
Smith International+ 25,000 1,900
Tidewater, Inc. 27,000 803
Valero Energy Corp. 24,600 713
Vastar Resources, Inc. 52,500 4,233
Weatherford International,
Inc.+ 62,930 2,557
----------
67,979
----------
FOOD & AGRICULTURE -- 2.4%
Archer-Daniels Midland Co. 333,970 3,319
Bestfoods, Inc. 157,400 7,909
Campbell Soup Co. 234,400 6,094
Coca-Cola Co. 1,345,400 63,318
Coca-Cola Enterprises, Inc. 212,600 4,531
ConAgra, Inc. 247,348 4,669
Dean Foods Co. 21,150 518
Flowers Industries, Inc. 47,500 724
General Mills, Inc. 172,200 6,264
H.J. Heinz Co. 197,700 6,722
Hershey Foods Corp. 76,100 3,453
Hormel Foods Corp. 82,800 1,263
IBP, Inc. 45,100 744
IMC Global, Inc. 62,360 963
International Home Foods, Inc.+ 45,000 655
Interstate Bakeries Corp. 37,200 474
Kellogg Co. 213,300 5,213
McCormick & Co., Inc. 38,400 1,198
Nabisco Group Holdings Corp. 177,936 2,291
60
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Nabisco Holdings Corp.,
Class A 26,000 $ 977
PepsiCo, Inc. 797,600 29,262
Quaker Oats Co. 73,100 4,765
Ralston-Ralston Purina Group 168,300 2,977
Sara Lee Corp. 480,400 7,206
Suiza Foods Corp.+ 21,300 829
SUPERVALU, Inc. 71,600 1,481
SYSCO Corp. 186,800 7,028
Tyson Foods, Inc. 129,300 1,350
Whitman Corp. 72,800 832
Wm. Wrigley Jr. Co. 63,400 4,589
----------
181,618
----------
GOLD -- 0.0%
Homestake Mining Co. 142,800 857
Newmont Mining Corp. 99,037 2,321
----------
3,178
----------
HEALTHCARE / DRUGS & MEDICINE -- 9.7%
Abbott Laboratories 840,100 32,291
Aetna, Inc. 72,165 4,177
Allergan, Inc. 72,100 4,245
ALZA Corp.+ 56,100 2,472
American Home Products Corp. 716,100 40,236
Amgen, Inc.+ 571,400 31,998
Andrx Corp.+ 25,400 1,300
Bausch & Lomb, Inc. 35,800 2,161
Baxter International, Inc. 159,900 10,413
Beckman Coulter, Inc. 17,500 1,134
Becton, Dickinson & Co. 137,200 3,516
Biogen, Inc.+ 84,600 4,975
Biomet, Inc. 58,900 2,102
Boston Scientific Corp.+ 231,942 6,146
Bristol-Myers Squibb Co. 1,080,500 56,659
C.R. Bard, Inc. 33,600 1,464
Cardinal Health, Inc. 156,920 8,640
Chiron Corp.+ 104,612 4,734
Columbia / HCA Healthcare
Corp. 308,672 8,778
Dentsply International, Inc. 33,000 959
Eli Lilly & Co. 597,768 46,215
First Health Group Corp.+ 26,900 819
Forest Laboratories, Inc.+ 47,200 3,968
Genzyme Corp.+ 43,800 2,138
Number Value
of Shares (000s)
--------- -----------
Gilead Sciences, Inc.+ 26,000 $ 1,409
Guidant Corp.+ 168,972 9,695
Health Management Associates,
Inc., Class A+ 118,128 1,883
HealthSouth Corp.+ 210,200 1,695
Human Genome Sciences, Inc.+ 26,200 2,006
Humana, Inc.+ 88,500 680
ICN Pharmaceuticals, Inc. 45,174 1,138
IDEC Pharmaceuticals Corp.+ 23,400 1,498
Immunex Corp.+ 275,400 10,844
IVAX Corp.+ 97,500 2,669
Johnson & Johnson 760,738 62,761
Jones Medical Industries, Inc. 19,500 562
King Pharmaceuticals, Inc.+ 27,300 1,348
Lincare Holdings, Inc.+ 37,000 1,128
Mallinckrodt, Inc. 43,000 1,156
Manor Care, Inc.+ 68,600 819
McKesson HBOC, Inc. 154,028 2,599
Medimmune, Inc.+ 35,000 5,598
Medtronic, Inc. 656,300 34,086
Merck & Co., Inc. 1,278,508 88,856
Millennium Pharmaceuticals+ 41,000 3,254
Minimed, Inc.+ 20,000 2,459
Mylan Laboratories, Inc. 64,950 1,843
Omnicare, Inc. 37,900 576
Oxford Health Plans, Inc.+ 49,900 948
PacifiCare Health Systems,
Inc.+ 21,164 1,089
Patterson Dental Co.+ 18,500 890
Pfizer, Inc. 2,110,400 88,901
Quintiles Transnational Corp.+ 53,660 768
Schering-Plough Corp. 809,100 32,617
Sepracor, Inc.+ 37,200 3,422
St. Jude Medical, Inc.+ 46,450 1,449
Stryker Corp. 53,600 3,853
Sybron International Corp.+ 59,600 1,855
Tenet Healthcare Corp.+ 177,373 4,523
Trigon Healthcare, Inc.+ 20,000 719
UnitedHealth Group, Inc. 96,400 6,429
Warner-Lambert Co. 471,401 53,651
Watson Pharmaceuticals, Inc.+ 57,000 2,561
Wellpoint Health Networks,
Inc.+ 35,925 2,649
----------
728,426
----------
61
<PAGE>
SCHWAB 1000 FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
HOUSEHOLD PRODUCTS -- 1.3%
Alberto-Culver Co., Class B 33,700 $ 796
Avon Products, Inc. 139,400 5,785
Clorox Co. 121,400 4,462
Colgate-Palmolive Co. 322,200 18,406
Dial Corp. 65,100 907
Estee Lauder Cos., Inc.,
Class A 72,000 3,177
Gillette Co. 586,710 21,708
International Flavors &
Fragrances, Inc. 58,500 2,015
Procter & Gamble Co. 714,300 42,590
----------
99,846
----------
INSURANCE -- 2.9%
21st Century Insurance Group 55,000 1,203
AFLAC, Inc. 153,850 7,510
Alleghany Corp.+ 3,072 518
Allmerica Financial Corp. 30,000 1,624
Allstate Corp. 421,948 9,969
AMBAC Financial Group, Inc. 44,800 2,150
American Financial Group, Inc. 44,100 1,122
American General Corp. 139,493 7,812
American International Group,
Inc. 843,475 92,519
American National Insurance Co. 14,500 748
Aon Corp. 131,312 3,554
AXA Financial, Inc. 246,900 8,055
Chubb Corp. 91,100 5,796
CIGNA Corp. 95,200 7,592
Cincinnati Financial Corp. 88,614 3,572
CNA Financial Corp.+ 105,700 3,250
Conseco, Inc. 136,096 740
Erie Indemnity Co., Class A 40,000 1,190
Everest Re Group Ltd. 31,000 907
Hartford Financial Services
Group, Inc. 124,200 6,482
Hartford Life, Inc., Class A 17,000 837
Jefferson-Pilot Corp. 58,725 3,909
Lincoln National Corp. 113,800 3,962
Loew's Corp. 58,000 3,197
Marsh & McLennan Cos., Inc. 146,700 14,459
MBIA, Inc. 56,000 2,769
Mercury General Corp. 31,400 859
MGIC Investment Corp. 60,400 2,888
Mony Group, Inc. 25,900 801
Number Value
of Shares (000s)
--------- -----------
Old Republic International
Corp. 61,275 $ 873
PMI Group, Inc. 25,100 1,216
Progressive Corp. 43,900 2,873
Protective Life Corp. 32,600 776
Reinsurance Group of America,
Inc. 15,000 373
Reliastar Financial Corp. 52,000 2,239
SAFECO Corp. 59,700 1,321
St. Paul Cos., Inc. 124,554 4,437
Torchmark Corp. 79,700 1,997
Transatlantic Holdings, Inc. 20,000 1,659
Unitrin, Inc. 32,000 1,080
UnumProvident Corp. 98,471 1,674
----------
220,512
----------
MEDIA -- 4.4%
A.H. Belo Corp., Class A 72,000 1,201
American Tower Corp., Class A+ 75,000 3,487
AMFM, Inc.+ 116,000 7,699
BHC Communications, Inc.,
Class A 11,700 1,812
Cablevision Systems Corp.,
Class A+ 61,600 4,169
CBS Corp.+ 419,587 24,651
Central Newspapers, Inc.,
Class A 17,000 522
Chris-Craft Industries, Inc.+ 19,499 1,198
Clear Channel Communications,
Inc.+ 185,754 13,374
CNET Networks, Inc.+ 41,300 1,427
Comcast Corp., Class A+ 503,176 20,158
Comcast Corp., Class H+ 17,000 663
Cox Communications, Inc.+ 312,386 13,374
Crown Castle International
Group+ 82,000 3,147
Dow Jones & Co., Inc. 50,450 3,273
The E.W. Scripps Co., Class A 43,975 2,053
EchoStar Communications Corp.,
Class A+ 123,000 7,833
Emmis Communications Corp.,
Class A+ 22,400 952
Express Scripts, Inc., Class A+ 22,000 787
Fox Entertainment Group, Inc.+ 99,900 2,572
Gannett Co., Inc. 154,500 9,869
Harte-Hanks Communications,
Inc. 38,200 945
Hispanic Broadcasting Corp.+ 29,000 2,931
Hollinger International, Inc. 60,000 758
Houghton Mifflin Co. 20,000 831
62
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Knight-Ridder, Inc. 51,500 $ 2,527
Lee Enterprises, Inc. 22,000 499
Liberty Digital, Inc., Class A+ 5,000 160
McClatchy Newspapers, Inc.,
Class A 22,000 697
McGraw-Hill Cos., Inc. 111,350 5,846
Media General, Inc., Class A 19,500 959
MediaOne Group, Inc.+ 336,700 25,463
Meredith Corp. 36,000 1,001
Metro Goldwyn Mayer, Inc.+ 119,520 3,586
New York Times Co., Class A 96,526 3,976
Price Communications Corp.+ 5,000 101
Primedia, Inc.+ 83,000 1,733
R.R. Donnelley & Sons Co. 66,500 1,413
Reader's Digest Association,
Inc., Class A 57,800 1,850
Time Warner, Inc. 705,910 63,488
Tribune Co. 130,800 5,085
TV Guide, Inc.+ 87,400 2,606
United Television, Inc. 1,000 135
USA Networks, Inc.+ 146,400 3,367
Valassis Communications, Inc.+ 37,500 1,277
Valuevision International,
Inc.+ 4,000 80
Viacom, Inc., Class B+ 383,552 20,856
Walt Disney Co. 1,132,021 49,031
Washington Post Co. 5,200 2,538
Westwood One, Inc.+ 60,600 2,144
Ziff-Davis, Inc.+ 9,000 88
----------
330,192
----------
MISCELLANEOUS FINANCE -- 5.9%
Allied Capital Corp. 3,000 56
American Express Co. 246,200 36,945
AmeriCredit Corp.+ 41,000 766
Ameritrade Holding Corp.,
Class A+ 89,500 1,499
Associates First Capital Corp. 373,702 8,292
Astoria Financial Corp. 29,750 820
Bear Stearns Cos., Inc. 70,186 3,009
Berkshire Hathaway, Inc.,
Class A+ 819 48,567
Berkshire Hathaway, Inc.,
Class B+ 2,921 5,597
BISYS Group, Inc.+ 17,000 1,064
Capital One Financial Corp. 108,250 4,736
Charles Schwab Corp. 469,750 20,904
Number Value
of Shares (000s)
--------- -----------
Charter One Financial, Inc. 115,376 $ 2,344
CIT Group, Inc. 132,000 2,236
Citigroup, Inc. 1,835,624 109,105
Countrywide Credit
Industries, Inc. 60,985 1,685
Dime Bancorp., Inc. 69,926 1,311
Donaldson, Lufkin, & Jenrette,
Inc. 71,600 2,985
Eaton Vance Corp. 19,300 817
Edwards, Inc. 52,843 1,988
ETrade Group, Inc.+ 136,000 2,924
Fannie Mae 563,800 34,004
Federated Investors 45,100 1,274
Financial Security Assurance
Holdings Ltd. 18,000 1,329
Finova Group, Inc. 36,700 470
Franklin Resources, Inc. 143,200 4,618
Freddie Mac 383,800 17,631
Golden State Bancorp, Inc.+ 74,000 1,138
Golden West Financial Corp. 89,700 3,061
Household International, Inc. 257,598 10,755
John Nuveen Co., Class A 15,000 598
Knight/Trimark Group, Inc.+ 63,100 2,378
Legg Mason, Inc. 32,000 1,210
Lehman Brothers Holdings, Inc. 67,880 5,570
Leucadia National Corp. 30,000 699
MBNA Corp. 435,787 11,575
Merrill Lynch & Co., Inc. 204,400 20,836
Morgan Stanley Dean Witter
Discover & Co. 622,110 47,747
Paine Webber Group, Inc. 83,687 3,672
Radian Group, Inc. 20,900 1,064
Roslyn Bancorp., Inc. 8,000 136
SLM Holding Corp. 90,350 2,829
Sovereign Bancorp, Inc. 88,000 605
T. Rowe Price Associates, Inc. 65,900 2,512
TCF Financial Corp. 50,600 1,183
U.S. Trust Corp. 10,500 1,616
UnitedGlobalCom, Inc., Class A+ 35,800 1,902
Washington Federal, Inc. 38,940 679
Washington Mutual, Inc. 293,747 7,509
Wesco Financial Corp. 3,800 893
----------
447,143
----------
63
<PAGE>
SCHWAB 1000 FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
NON-FERROUS METALS -- 0.3%
Alcoa, Inc. 204,070 $ 13,239
Engelhard Corp. 69,687 1,224
Freeport-McMoRan Copper &
Gold, Inc., Class B+ 88,894 856
Howmet International, Inc.+ 60,000 1,271
Mueller Industries, Inc.+ 19,900 656
Phelps Dodge Corp. 44,700 2,067
Reynolds Metals Co. 32,800 2,181
----------
21,494
----------
OIL - DOMESTIC -- 0.6%
Amerada Hess Corp. 52,100 3,315
Ashland, Inc. 41,000 1,399
Diamond Offshore Drilling, Inc. 76,800 3,096
Kerr-McGee Corp. 48,002 2,484
Murphy Oil Corp. 27,670 1,633
Ocean Energy, Inc.+ 100,200 1,296
Phillips Petroleum Co. 143,700 6,817
Santa Fe Snyder Corp.+ 101,500 933
Sunoco, Inc. 51,900 1,573
Tosco Corp. 85,600 2,744
Transocean Sedco Forex, Inc. 114,000 5,358
Ultramar Diamond Shamrock Corp. 50,700 1,255
Union Pacific Resources Group,
Inc. 141,688 2,719
Unocal Corp. 135,534 4,379
USX-Marathon Group, Inc. 176,000 4,103
----------
43,104
----------
OIL - INTERNATIONAL -- 2.6%
Chevron Corp. 355,300 30,245
Exxon Mobil Corp. 1,882,865 146,275
Santa Fe International Corp. 65,000 2,234
Texaco, Inc. 291,409 14,425
----------
193,179
----------
OPTICAL & PHOTO -- 0.5%
C-Cube Microsystems, Inc.+ 22,600 1,452
Corning, Inc. 150,647 29,753
Eastman Kodak Co. 172,700 9,660
Imation Corp.+ 3,000 84
----------
40,949
----------
Number Value
of Shares (000s)
--------- -----------
PAPER & FOREST PRODUCTS -- 0.8%
Boise Cascade Corp. 33,000 $ 1,075
Bowater, Inc. 31,300 1,722
Champion International Corp. 52,900 3,478
Consolidated Papers, Inc. 54,800 2,076
Fort James Corp. 100,200 2,399
Georgia Pacific Corp. 50,000 1,159
Georgia-Pacific Group 93,500 3,436
International Paper Co. 214,129 7,869
Kimberly-Clark Corp. 299,360 17,382
Louisiana-Pacific Corp. 66,500 889
Mead Corp. 61,800 2,151
Pentair, Inc. 31,200 1,193
Potlatch Corp. 1,000 39
Rayonier, Inc. 13,875 651
Smurfit-Stone Container Corp.+ 126,900 1,935
St. Joe Co. 43,300 1,248
Temple-Inland, Inc. 31,900 1,599
Westvaco Corp. 63,300 1,954
Weyerhaeuser Co. 132,000 7,054
Willamette Industries, Inc. 67,000 2,559
----------
61,868
----------
PRODUCER GOODS & MANUFACTURING -- 5.4%
American Standard Corp.+ 35,500 1,456
Applied Micro Circuits Corp.+ 60,800 7,836
Applied Power, Inc., Class A 30,000 859
Avery Dennison Corp. 61,800 4,056
Blyth Industries, Inc.+ 30,000 891
Briggs & Stratton Corp. 16,300 626
Caterpillar, Inc. 190,400 7,509
Cognex Corp.+ 22,700 1,291
Cooper Industries, Inc. 53,700 1,843
Deere & Co. 128,200 5,176
Dover Corp. 114,200 5,803
Emerson Electric Co. 225,100 12,352
FMC Corp.+ 14,200 826
General Electric Co. (b) 1,792,700 281,902
Harsco Corp. 14,800 439
Herman Miller, Inc. 35,600 975
Hon Industries, Inc. 38,800 967
Honeywell International, Inc. 425,663 23,837
Hubbell, Inc., Class B 36,938 963
64
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Illinois Tool Works, Inc. 164,842 $ 10,560
Ingersoll-Rand Co. 95,550 4,485
Jabil Circuit, Inc.+ 92,000 3,766
Johnson Controls, Inc. 50,600 3,204
Lattice Semiconductor Corp.+ 26,900 1,812
Mastec, Inc.+ 16,800 1,451
Micrel, Inc.+ 23,200 2,007
Millipore Corp. 24,900 1,785
Pall Corp. 70,233 1,567
Parker-Hannifin Corp. 64,375 2,993
Rare Medium Group, Inc.+ 25,400 522
Safeguard Scientifics, Inc.+ 59,100 2,467
Snap-On, Inc. 37,150 982
Teleflex, Inc. 25,000 864
Thermo Instrument Systems,
Inc.+ 52,171 932
The Timken Co. 38,600 714
Trinity Industries, Inc. 27,950 622
U.S. Industries, Inc. 47,500 579
Valhi, Inc. 60,000 667
W.W. Grainger, Inc. 53,600 2,325
Zebra Technologies Corp.,
Class A+ 17,700 1,009
----------
404,920
----------
RAILROAD & SHIPPING -- 0.3%
Burlington Northern Santa Fe
Corp. 254,253 6,134
CSX Corp. 103,100 2,159
Florida East Coast Industry,
Inc. 20,300 998
GATX Corp. 24,000 858
Kansas City Southern Industries,
Inc. 64,100 4,607
Newport News Shipbuilding, Inc. 15,000 501
Norfolk Southern Corp. 188,100 3,315
Union Pacific Corp. 136,261 5,740
----------
24,312
----------
REAL PROPERTY -- 0.0%
Catellus Development Corp.+ 61,600 801
----------
RETAIL -- 5.8%
Albertson's, Inc. 231,742 7,546
Amazon.com, Inc.+ 192,400 10,618
American Eagle Outfitters,
Inc.+ 26,000 442
AnnTaylor Stores Corp.+ 1,000 21
AutoZone, Inc.+ 87,000 1,996
Number Value
of Shares (000s)
--------- -----------
Barnes & Noble, Inc.+ 40,000 $ 740
Bed, Bath & Beyond, Inc.+ 79,600 2,920
Best Buy Co., Inc.+ 113,600 9,173
BJ's Wholesale Club, Inc.+ 35,000 1,240
Borders Group, Inc.+ 52,000 825
Cendant Corp.+ 389,640 6,015
Circuit City Stores-Circuit
City Group 117,600 6,916
Consolidated Stores Corp.+ 65,312 812
Costco Wholesale Corp.+ 243,408 13,159
CVS Corp. 222,914 9,697
Dillards, Inc., Class A 62,200 867
Dollar General Corp. 129,016 2,951
Dollar Tree Stores, Inc.+ 35,000 2,026
Family Dollar Stores, Inc. 96,200 1,834
Federated Department Stores,
Inc.+ 115,200 3,917
Gap, Inc. 474,100 17,423
Hannaford Bros. Co., Inc. 23,300 1,686
Home Depot, Inc. 1,253,797 70,291
Intimate Brands, Inc. 136,500 5,255
J.C. Penney Co., Inc. 100,400 1,387
Kmart Corp.+ 265,600 2,158
Kohl's Corp.+ 182,600 8,765
Kroger Co.+ 468,080 8,689
Lands' End, Inc.+ 16,500 698
Limited, Inc. 117,319 5,301
Lowe's Cos., Inc. 212,200 10,504
May Department Stores Co. 184,350 5,070
The Neiman Marcus Group, Inc.,
Class A+ 30,000 772
Nordstrom, Inc. 73,800 2,052
Office Depot, Inc.+ 180,550 1,907
Payless Shoesource, Inc.+ 14,814 817
Rite Aid Corp. 46,600 233
Ross Stores, Inc. 62,000 1,286
Safeway, Inc.+ 277,580 12,248
Saks, Inc.+ 83,340 953
Sears, Roebuck & Co. 193,300 7,080
Staples, Inc.+ 259,360 4,944
Tandy Corp. 109,332 6,232
Target Corp. 241,000 16,042
Tiffany & Co., Inc. 40,000 2,907
TJX Cos., Inc. 169,900 3,260
Toys "R" Us, Inc.+ 130,880 1,996
65
<PAGE>
SCHWAB 1000 FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Wal-Mart Stores, Inc. 2,436,000 $ 134,894
Walgreen Co. 558,100 15,697
Weis Markets, Inc. 23,900 795
Williams-Sonoma, Inc.+ 28,000 970
Winn-Dixie Stores, Inc. 82,300 1,363
Zale Corp.+ 15,000 619
----------
438,009
----------
STEEL -- 0.1%
AK Steel Holding Corp. 56,700 627
Allegheny Technologies, Inc. 54,140 1,310
Nucor Corp. 49,100 2,111
USX-U.S. Steel Group, Inc. 55,760 1,398
Worthington Industries, Inc. 60,200 745
----------
6,191
----------
TELEPHONE -- 7.2%
Adtran, Inc.+ 22,300 1,507
Aerial Communications, Inc.+ 10,000 442
Allegiance Telecom, Inc.+ 55,050 3,895
Alltel Corp. 170,767 11,377
AT&T Corp. 1,739,496 81,213
Bell Atlantic Corp. 851,886 50,474
BellSouth Corp. 1,033,800 50,333
Broadwing Inc.+ 118,752 3,362
Carrier Access Corp.+ 3,000 131
Centennial Cellular Corp.+ 52,800 1,043
CenturyTel, Inc. 68,987 1,690
Commonwealth Telephone
Enterprises, Inc.+ 1,000 49
Exodus Communications, Inc.+ 96,400 8,525
Global Telesystems Group,
Inc.+ 101,900 1,484
GTE Corp. 529,350 35,863
Intermedia Communications,
Inc.+ 32,700 1,333
ITC DeltaCom, Inc.+ 35,800 1,177
Level 3 Communications, Inc.+ 191,500 17,044
MCI WorldCom, Inc.+ 1,553,028 70,565
McLeodUSA, Inc., Class A+ 246,900 6,173
NEXTLINK Communications, Inc.,
Class A+ 42,100 3,549
NTL, Inc.+ 70,313 5,379
Powertel, Inc.+ 16,900 1,136
Number Value
of Shares (000s)
--------- -----------
Qwest Communications
International, Inc.+ 420,954 $ 18,259
RCN Corp.+ 42,900 1,228
SBC Communications, Inc. 1,861,428 81,554
Sprint Corp. (FON Group) 482,668 29,684
Sprint Corp. (PCS Group)+ 473,321 26,033
Telephone & Data Systems, Inc. 35,100 3,580
U.S. Cellular Corp.+ 53,800 3,231
US West, Inc. 277,215 19,734
Viatel, Inc.+ 18,500 708
Winstar Communications, Inc.+ 48,000 1,914
----------
543,669
----------
TOBACCO -- 0.4%
Philip Morris Cos., Inc. 1,280,700 28,015
UST, Inc. 100,200 1,503
----------
29,518
----------
TRAVEL & RECREATION -- 0.3%
Brunswick Corp. 48,900 938
Harrah's Entertainment, Inc.+ 72,100 1,483
Hertz Corp. 27,000 842
Hilton Hotels Corp. 179,167 1,523
Mandalay Resort Group+ 51,400 970
Marriott International, Inc.,
Class A 138,600 4,435
MGM Grand, Inc. 74,000 2,183
Mirage Resorts, Inc.+ 114,100 2,325
Premier Parks, Inc.+ 43,700 942
Royal Caribbean Cruises Ltd. 87,900 1,830
SFX Entertainment, Inc.,
Class A+ 36,100 1,503
Speedway Motorsports, Inc.+ 23,700 567
----------
19,541
----------
TRUCKING & FREIGHT -- 0.1%
C.H. Robinson Worldwide, Inc. 27,500 1,375
CNF Transportation, Inc. 26,400 738
Expeditores International of
Washington, Inc. 28,400 1,214
PACCAR, Inc. 42,120 2,003
Ryder Systems, Inc. 33,800 750
----------
6,080
----------
66
<PAGE>
Number Value
of Shares (000s)
--------- -----------
UTILITIES - ELECTRIC & GAS -- 3.0%
AES Corp.+ 120,318 $ 10,821
Allegheny Energy, Inc. 62,100 1,886
Alliant Energy Corp. 45,000 1,350
Ameren Corp. 77,130 2,830
American Electric Power Co.,
Inc. 94,000 3,443
American Water Works Co., Inc. 54,600 1,239
Calpine Corp.+ 34,800 3,184
Carolina Power & Light Co. 90,500 3,309
Central & South West Corp. 93,700 2,032
Cinergy Corp. 87,565 2,342
Citizens Utilities Co.,
Class B+ 150,818 2,423
CMS Energy Corp. 62,900 1,195
Coastal Corp. 116,600 5,852
Columbia Energy Group 44,100 2,767
Conectiv, Inc. 60,700 1,077
Consolidated Edison, Inc. 115,600 4,068
Constellation Energy Group,
Inc. 79,650 2,633
Dominion Resources, Inc. 129,842 5,843
DPL, Inc. 70,492 1,639
DQE, Inc. 44,050 1,685
DTE Energy Co. 87,100 2,842
Duke Energy Corp. 203,331 11,692
Dynegy, Inc., Class A 76,207 4,987
Edison International 195,100 3,719
El Paso Energy Corp. 129,768 5,515
Energy East Corp. 66,800 1,394
Enron Corp. 394,138 27,466
Entergy Corp. 116,821 2,972
Equitable Resources, Inc. 18,000 835
FirstEnergy Corp. 129,515 3,295
Florida Progress Corp. 54,000 2,646
FPL Group, Inc. 102,100 4,614
GPU, Inc. 73,600 2,065
Ipalco Enterprises, Inc. 49,000 1,001
Kansas City Power & Light Co. 35,900 922
KeySpan Corp. 77,934 2,289
Kinder Morgan, Inc. 65,800 1,995
LG&E Energy Corp. 70,155 1,635
MCN Corp. 50,600 1,262
Number Value
of Shares (000s)
--------- -----------
MDU Resources Group, Inc. 26,000 $ 567
Minnesota Power & Light Co. 44,000 811
Montana Power Co. 65,800 2,899
National Fuel Gas Co. 26,600 1,262
New Century Energies, Inc. 67,700 2,209
Niagara Mohawk Holdings, Inc.+ 100,200 1,390
NICOR, Inc. 25,300 857
Nisource, Inc. 61,800 1,143
Northeast Utilities 66,000 1,419
Northern States Power Co. 87,600 1,911
OGE Energy Corp. 51,200 1,014
PECO Energy Co. 104,300 4,348
Peoples Energy Corp. 19,500 606
PG&E Corp. 198,058 5,137
Pinnacle West Capital Corp. 47,300 1,661
Potomac Electric Power Co. 69,400 1,627
PPL Corp. 84,720 2,023
Public Service Enterprise
Group, Inc. 122,300 4,387
Puget Sound Power & Light Co. 48,200 1,145
Questar Corp. 35,800 673
Reliant Energy, Inc. 169,117 4,503
Republic Services, Inc.+ 99,300 1,359
Scana Corp. 65,800 1,703
Sempra Energy 114,338 2,122
Sierra Pacific Resources 46,600 705
Southern Co. 379,700 9,469
TECO Energy, Inc. 72,200 1,579
Texas Utilities Co. 141,912 4,781
Unicom Corp. 118,500 4,710
United Water Resources, Inc. 18,100 629
UtiliCorp United, Inc. 48,350 931
Washington Gas Light Co. 30,000 769
Western Resources, Inc. 47,231 744
Williams Cos., Inc. 238,461 8,898
Wisconsin Energy Corp. 59,600 1,274
----------
226,029
----------
TOTAL COMMON STOCK
(Cost $4,042,493) 7,520,772
----------
67
<PAGE>
SCHWAB 1000 FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
WARRANTS -- 0.0%
Per-Se Technologies+ 488 --
----------
Total Warrants
(Cost $0) --
----------
Par
(000s)
---------
U.S. TREASURY OBLIGATIONS -- 0.0%
U.S. Treasury Bills (a) (b)
5.56%-5.76%, 06/15/00 $285 $ 283
5.61%, 06/22/00 280 278
----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $561) 561
----------
REPURCHASE AGREEMENT -- 0.1%
PNC FINANCIAL SERVICES GROUP
5.00%, Dated 04/28/00; matures 05/1/00,
repurchase price $3,376,406
(collateralized by: Federal Home
Loan Mortgage Corp.,total market
value $3,476,250) 3,375 3,375
----------
TOTAL REPURCHASE AGREEMENT
(Cost $3,375) 3,375
----------
Number Value
of Shares (000s)
--------- -----------
SHORT-TERM INVESTMENTS -- 0.1%
Provident Institutional
TempFund, 5.74%* 8,998,755 $ 8,999
----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $8,999) 8,999
----------
Total Investments -- 100.0%
(Cost $4,055,428) 7,533,707
----------
OTHER ASSETS AND LIABILITIES, NET -- 0.0%
Other assets 660,855
Liabilities (660,197)
----------
658
----------
TOTAL NET ASSETS -- 100.0% $7,534,365
==========
SEE ACCOMPANYING NOTES TO SCHEDULES OF INVESTMENTS AND NOTES TO FINANCIAL
STATEMENTS.
68
<PAGE>
SCHWAB TOTAL STOCK MARKET INDEX FUND(TM)
SCHEDULE OF INVESTMENTS
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
COMMON STOCK -- 99.1%
AEROSPACE / DEFENSE -- 0.9%
Aviation Sales Co.+ 800 $ 3
B.F. Goodrich Co. 2,704 86
Boeing Co. 24,300 964
Cordant Technologies, Inc. 900 51
Crane Co. 1,600 43
GenCorp., Inc. 1,700 17
General Dynamics Corp. 5,700 334
Kaman Corp., Class A 1,000 11
Litton Industries, Inc.+ 1,100 48
Lockheed Martin Corp. 9,900 246
Northrop Grumman Corp. 2,000 142
Raytheon Co., Class B 8,600 191
Rockwell International Corp. 4,900 193
Satcon Technology Corp.+ 1,000 18
Textron, Inc. 4,300 266
Trimble Navigation Ltd.+ 1,000 28
TRW, Inc. 3,200 187
United Technologies Corp. 12,434 773
Veeco Instruments, Inc.+ 400 25
----------
3,626
----------
AIR TRANSPORTATION -- 0.3%
AAR Corp. 700 11
Airborne Freight Corp. 1,100 24
AirTran Holdings, Inc.+ 1,000 4
Alaska Airgroup, Inc.+ 600 17
America West Holdings Corp.,
Class B+ 1,100 16
AMR Corp.+ 4,000 136
Amtran, Inc.+ 600 10
Atlantic Coast Airlines Holdings,
Inc.+ 800 24
Atlas Air, Inc.+ 900 32
Aviall, Inc.+ 1,200 7
Continental Airlines, Inc.+ 1,800 72
Delta Air Lines, Inc. 3,400 179
EGL, Inc.+ 650 15
FedEx Corp.+ 8,300 313
Frontier Airlines, Inc.+ 600 9
Galileo International, Inc. 2,300 53
Hawk Corp.+ 1,200 8
Kellstrom Industries, Inc.+ 600 2
Kitty Hawk, Inc.+ 600 0
Mesa Air Group, Inc.+ 1,300 8
Mesaba Holdings, Inc.+ 1,100 14
Midwest Express Holdings, Inc.+ 500 13
Number Value
of Shares (000s)
--------- -----------
Northwest Airlines Corp.,
Class A+ 2,100 $ 52
SkyWest, Inc. 500 21
Southwest Airlines Co. 13,350 290
U.S. Airways Group, Inc.+ 1,700 47
UAL Corp.+ 1,400 81
----------
1,458
----------
ALCOHOLIC BEVERAGES -- 0.3%
Adolph Coors Co., Class B 900 46
Anheuser-Busch Cos., Inc. 12,500 882
Beringer Wine Estates Holdings,
Inc.+ 500 18
Boston Beer Co., Inc.+ 300 2
Brown-Forman Corp., Class B 2,200 120
Canandaigua Brands, Inc.,
Class A+ 500 25
Central European Distribution
Corp.+ 400 2
The Chalone Wine Group Ltd.+ 200 2
Geerlings & Wade, Inc.+ 400 2
Genesee Corp., Class B 200 3
Golden State Vintners, Inc.+ 400 2
National Beverage Corp.+ 1,200 10
The Robert Mondavi Corp.,
Class A+ 400 13
----------
1,127
----------
APPAREL -- 0.3%
Abercrombie & Fitch Co.+ 2,400 26
Bebe Stores, Inc.+ 900 8
Brown Shoe Co., Inc. 800 8
Buckle, Inc.+ 1,000 13
The Children's Place Retail
Stores, Inc.+ 1,100 24
Columbia Sportswear Co.+ 900 26
Cyrk International, Inc.+ 1,100 10
The Dixie Group, Inc.+ 1,500 6
The Dress Barn, Inc.+ 800 16
Footstar, Inc.+ 600 22
Genesco, Inc.+ 1,300 17
Global Sports, Inc.+ 800 6
Goody's Family Clothing, Inc.+ 1,500 10
Guess, Inc.+ 1,200 33
Haggar Corp. 900 12
Hartmarx Corp.+ 1,300 3
J. Baker, Inc. 1,100 7
Jo-Ann Stores, Inc., Class A+ 700 7
Jones Apparel Group, Inc.+ 3,200 95
K-Swiss, Inc., Class A 600 9
Kellwood Co. 900 15
Kenneth Cole Productions, Inc.+ 600 25
69
<PAGE>
SCHWAB TOTAL STOCK MARKET INDEX FUND(TM)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Liz Claiborne, Inc. 1,600 $ 74
MediaBay, Inc.+ 900 4
Men's Wearhouse, Inc.+ 1,000 21
Nautica Enterprises, Inc.+ 1,300 15
Nike, Inc., Class B 7,300 317
OshKosh B'Gosh, Inc., Class A 700 11
Pacific Sunwear of California+ 800 27
Polo Ralph Lauren Corp.+ 1,000 16
Polymer Group, Inc. 1,300 15
Quiksilver, Inc.+ 1,000 19
Reebok International Ltd.+ 1,700 29
Russell Corp. 1,100 22
Saucony, Inc.+ 700 9
Springs Industries, Inc. 400 16
Stride Rite Corp. 2,100 18
Superior Uniform Group, Inc. 900 8
Talbots, Inc. 800 41
Tarrant Apparel Group+ 800 7
Timberland Co., Class A+ 600 42
Tropical Sportswear Int'l Corp.+ 500 9
Unifi, Inc.+ 1,700 17
Urban Outfitters, Inc.+ 1,100 12
VF Corp. 3,300 93
Warnaco Group, Inc., Class A 1,300 14
WestPoint Stevens, Inc. 1,200 23
Wolverine World Wide, Inc. 1,200 14
----------
1,291
----------
Number Value
of Shares (000s)
--------- -----------
AUTOMOTIVE PRODUCTS / MOTOR VEHICLES -- 1.4%
A.O. Smith Corp., Class B 800 16
A.S.V., Inc.+ 700 9
American Axle & Manufacturing
Holdings, Inc.+ 1,100 17
Arvin Industries, Inc. 600 13
Autoweb.com, Inc.+ 1,100 4
Bandag, Inc. 700 17
Borg-Warner Automotive, Inc. 600 25
Carey International, Inc.+ 500 5
Carlisle Cos., Inc. 700 29
Collins & Aikman Corp. 1,300 9
Cooper Tire & Rubber Co. 2,000 27
CSK Auto Corp.+ 1,100 12
Cummins Engine Co., Inc. 1,000 36
Dana Corp. 4,300 131
Danaher Corp. 3,800 217
Delco Remy International, Inc.+ 1,200 10
Delphi Automotive Systems Corp. 15,200 291
Number Value
of Shares (000s)
--------- -----------
Detroit Diesel Corp. 800 $ 12
Donaldson Co., Inc. 1,100 26
Dura Automotive Systems, Inc.+ 600 10
Eaton Corp. 2,100 176
Federal-Mogul Corp. 1,700 23
Fleetwood Enterprises, Inc. 1,000 15
Ford Motor Co. 32,400 1,772
General Motors Corp. 17,400 1,629
General Motors Corp., Class H+ 3,700 356
Genuine Parts Co. 4,600 121
Goodyear Tire & Rubber Co. 4,100 113
Group 1 Automotive, Inc.+ 1,100 13
Harley-Davidson, Inc. 8,200 326
Hayes Lemmerz International,
Inc.+ 700 11
Jason, Inc.+ 1,200 12
Lear Corp.+ 1,600 48
Meritor Automotive, Inc. 1,600 24
Modine Manufacturing Co. 600 13
Monaco Coach Corp.+ 500 8
Myers Industries, Inc. 700 10
Navistar International Corp.+ 1,600 56
O'Reilly Automotive, Inc.+ 1,200 16
Oshkosh Truck Corp. 450 14
Polaris Industries, Inc. 600 18
Rush Enterprises, Inc.+ 500 4
Simpson Industries, Inc. 1,000 10
SPX Corp.+ 800 88
Standard Motor Products, Inc. 700 8
Sterile Recoveries, Inc.+ 300 2
Stoneridge, Inc.+ 1,200 16
Superior Industries
International, Inc. 1,300 42
TBC Corp.+ 1,500 8
Thor Industries, Inc. 500 13
Titan International, Inc. 800 5
Tower Automotive, Inc.+ 2,300 36
United Rentals, Inc.+ 1,600 22
Winnebago Industries, Inc. 700 12
Wynns International, Inc. 800 11
----------
5,967
----------
BANKS -- 4.6%
ABC Bancorp. 1,200 12
Albama National Bancorp. 400 8
AmSouth Bancorp. 11,003 160
Anchor Bancorp Wisconsin, Inc. 800 13
Associated Bancorp. 1,600 41
Bancfirst Corp. 500 13
70
<PAGE>
Number Value
of Shares (000s)
--------- -----------
BancFirst Ohio Corp. 700 $ 14
Bancorpsouth, Inc. 1,300 20
BancWest Corp. 1,600 29
Bank of America Corp. 45,800 2,244
Bank of Granite Corp. 400 8
Bank of New York Co., Inc. 19,600 805
Bank One Corp. 30,600 933
Bank United Corp., Class A 800 27
BankFirst Corp.+ 1,500 13
Banknorth Group, Inc. 500 12
BB&T Corp. 9,613 256
Brenton Banks, Inc. 200 2
Brookline Bancorp., Inc. 1,400 13
BSB Bancorp., Inc. 200 4
Capital City Bank Group, Inc. 500 10
Capitol Bancorp. Ltd. 700 9
Cascade Bancorp. 880 9
CCB Financial Corp. 1,000 40
CENIT Bancorp., Inc. 500 6
Centennial Bancorp.+ 907 9
Central Coast Bancorp.+ 880 13
Centura Banks, Inc. 1,070 44
Century South Banks, Inc. 400 9
Chase Manhattan Corp. 22,000 1,585
Chemical Financial Corp. 420 12
Chittenden Corp. 600 16
Citizens Banking Corp. 990 18
City Holding Co. 800 11
City National Corp. 1,100 40
Coast Bancorp. 500 13
Colonial BancGroup, Inc. 2,500 23
Columbia Banking System, Inc.+ 1,100 14
Comerica, Inc. 4,700 199
Commerce Bancorp., Inc. 830 33
Commerce Bancshares, Inc. 1,565 48
Community Bank System, Inc. 500 11
Community First Bankshares, Inc. 1,200 20
Community Trust Bancorp. 660 12
Compass Bancshares, Inc. 2,700 50
CORUS Bankshares, Inc. 500 12
Cullen/Frost Bankers, Inc. 1,200 30
Dime Community Bancshares 500 9
Doral Financial Corp. 1,100 13
Drovers Bancshares Corp. 600 9
Eagle Bancshares, Inc. 700 10
F&M Bancorp./Frederick MD 200 4
F&M National Corp. 612 15
Number Value
of Shares (000s)
--------- -----------
F.N.B. Corp. 525 $ 10
Farmers Capital Bank Corp. 400 13
Fifth Third Bancorp. 8,144 514
First Bancorp./Puerto Rico 700 12
First Banking Co. of Southeast
Georgia 500 10
First Busey Corp., Class A 600 12
First Charter Corp. 1,000 14
First Citizens Bancshares 300 19
First Commerce Bancshares, Inc. 500 17
First Commonwealth Financial
Corp. 1,300 15
First Fed Capital Corp. 700 8
First Federal Financial Corp.
of Kentucky 600 12
First Financial Bancorp. 990 18
First Financial Bancshares, Inc. 400 11
First Merchants Corp. 400 8
First Midwest Bancorp., Inc. 900 22
First Republic Bank+ 400 8
First Security Corp. 4,900 69
First Tennessee National Corp. 3,300 63
First Union Corp. 26,362 840
First United Bancshares, Inc. 900 15
First Virginia Banks, Inc. 1,200 44
Firstar Corp. 25,954 646
Firstfed America Bancorp., Inc. 1,000 11
Firstfed Financial Corp.+ 900 11
Firstmerit Corp. 2,100 34
Fleet Boston Financial Corp. 24,314 862
Franchise Finance Corp. 1,400 33
Frontier Financial Corp. 700 13
Fulton Financial Corp. 1,600 33
GA Financial, Inc. 800 10
GBC Bancorp. 400 11
Great Southern Bancorp. 500 9
GreenPoint Financial Corp. 2,700 50
Hancosk Holding Co. 300 10
Harbor Florida Bancshares, Inc. 1,100 12
Harleysville National Corp. 400 12
Hibernia Corp., Class A 3,700 39
Horizon Financial Corp. 1,100 10
Hudson City Bancorp., Inc. 2,700 40
Hudson United Bancorp. 1,219 28
Huntington Bancshares, Inc. 6,500 119
Imperial Bancorp.+ 1,080 21
Imperial Credit Industries+ 1,900 7
Independence Community Bank 1,700 20
Industrial Bancorp., Inc. 500 6
Irwin Financial Corp. 700 12
71
<PAGE>
SCHWAB TOTAL STOCK MARKET INDEX FUND(TM)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
J.P. Morgan & Co., Inc. 4,900 $ 629
KeyCorp, Inc. 12,200 226
Keystone Financial, Inc. 1,000 15
Lakeland Financial Corp. 800 10
LSB Bancshares, Inc. 500 8
M&T Bank Corp. 200 88
MAF Bancorp., Inc. 700 13
Marshall & Ilsley Corp. 2,800 130
Mellon Financial Corp. 13,600 437
Mercantile Bankshares Corp. 1,700 48
Merchants Bancorp., Inc.
New York 800 13
Merchants Bancshares, Inc. 500 9
Mid-America Bancorp. 406 10
Mid-State Bancshares 500 13
National Bancorp. of Alaska, Inc. 700 26
National City Bancorp.+ 700 10
National City Bancshares, Inc. 525 12
National City Corp. 16,400 279
National Commerce Bancorp. 2,700 44
National Penn Bancshares, Inc. 620 13
Net.B@nk, Inc.+ 900 9
Niagara Bancorp., Inc. 1,200 12
North Fork Bancorp., Inc. 5,400 87
Northern Trust Corp. 5,900 378
OceanFirst Financial Corp. 400 6
Old Kent Financial Corp. 6,388 192
Old National Bancorp. 1,548 51
Omega Financial Corp. 500 13
One Valley Bancorp., Inc. 700 24
Oriental Financial Group 500 9
Pacific Century Financial Corp. 2,100 43
Park National Corp. 305 28
Peoples Bank-Bridgeport 1,500 31
Peoples Heritage Financial
Group, Inc. 2,600 34
PFF Bancorp., Inc. 600 8
PNC Financial Services Group 7,800 340
Popular, Inc. 3,500 70
Premier National Bancorp., Inc. 620 8
Provident Bancorp, Inc. 1,200 35
Provident Bankshares Corp. 840 13
Providian Financial Corp. 4,200 370
Quaker City Bancorp., Inc.+ 500 7
Queens County Bancorp., Inc. 600 12
Regions Financial Corp. 6,200 127
Republic Bancorp. 1,390 14
Republic Bancorp., Inc.,
Class A 1,600 13
Republic Security Financial
Corp. 1,500 8
Number Value
of Shares (000s)
--------- -----------
Richmond County Financial Corp. 600 $ 10
Riggs National Corp. 1,000 14
S & T Bancorp., Inc. 500 9
S1 Corp.+ 1,230 67
Sandy Spring Bancorp., Inc. 200 5
Seacoast Banking Corp. 600 15
Second Bancorp., Inc. 400 7
Silicon Valley Bancshares+ 600 37
Sky Financial Group, Inc. 1,810 30
The South Financial Group, Inc. 800 11
Southside Bancshares Corp. 500 4
SouthTrust Corp. 4,200 100
Southwest Bancorp. of Texas,
Inc.+ 700 14
Southwest Bancorp., Inc. 400 7
State Street Corp. 4,700 455
Sterling Bancorp. 840 13
Sterling Bancshares 1,400 15
Summit Bancorp. 4,937 125
SunTrust Banks, Inc. 8,600 436
Susquehanna Bancshares, Inc. 1,000 14
Synovus Financial Corp. 7,900 147
Texas Regional Bancshares, Inc. 400 11
The Trust Co. of New Jersey 500 10
TrustCo Bank Corp. 1,000 12
Trustmark Corp. 1,800 33
U.S. Bancorp. 20,265 412
UMB Financial Corp. 550 20
Union Planters Corp. 3,600 102
UnionBanCal Corp. 4,300 119
United Bankshares, Inc. 1,000 22
United Community Financial Corp. 1,500 8
United National Bancorp. 730 14
USB Holding Co., Inc. 630 9
Valley National Bancorp. 1,478 39
VIB Corp.+ 1,545 9
Vista Bancorp., Inc. 800 12
Wachovia Corp. 5,400 339
Washington Trust Bancorp. 700 11
Wells Fargo & Co. 44,115 1,811
Wesbanco, Inc. 500 11
Westamerica Bancorp. 800 20
Westcorp, Inc. 900 12
Whitney Holding Corp. 500 17
Wilmington Trust Co. 900 42
WSFS Financial Corp. 1,000 12
Zions Bancorp. 2,300 95
----------
19,508
----------
72
<PAGE>
Number Value
of Shares (000s)
--------- -----------
BUSINESS MACHINES & SOFTWARE -- 13.9%
3Com Corp.+ 9,200 $ 363
Activision, Inc.+ 1,000 6
Adaptec, Inc.+ 3,300 89
Adobe Systems, Inc. 3,400 411
Advanced Digital Information+ 1,400 34
Analogic Corp. 500 20
Analytical Surveys, Inc.+ 1,000 4
Andersen Group, Inc.+ 400 5
Apple Computer, Inc.+ 4,800 596
Artesyn Technologies+ 800 19
Aspeon, Inc.+ 1,000 9
Auspex Systems, Inc.+ 1,000 8
Autodesk, Inc. 1,600 61
Black Box Corp.+ 500 38
BMC Software, Inc.+ 6,800 318
C3, Inc.+ 1,500 10
Cabletron Systems, Inc.+ 5,400 124
Caci International, Inc.+ 600 14
CAM Commerce Solutions, Inc.+ 500 4
Ceridian Corp.+ 3,700 80
Cisco Systems, Inc.+ 183,598 12,729
Cognitronics Corp.+ 600 6
Comdisco, Inc. 3,900 121
Communication Intelligence+ 1,900 6
Compaq Computer Corp. 45,300 1,325
Comptek Research, Inc.+ 1,000 16
Computer Horizons Corp.+ 1,000 14
Compuware Corp.+ 9,600 121
Comverse Technology, Inc.+ 4,200 375
Concurrent Computer Corp.+ 1,200 12
Crossroads Systems, Inc.+ 700 49
Cybex Computer Products Corp.+ 600 16
Datum, Inc.+ 1,100 22
Davox Corp.+ 300 8
Dell Computer Corp.+ 68,500 3,434
Diebold, Inc. 1,800 52
Digital Lightwave, Inc.+ 1,300 89
eFax.com, Inc.+ 1,400 3
EMC Corp.+ 27,512 3,822
Equitex, Inc.+ 1,300 10
Excalibur Technologies Corp.+ 1,200 43
Extended Systems, Inc.+ 200 8
Fair, Isaac & Co., Inc. 300 13
Foundry Networks, Inc.+ 3,000 273
Gateway, Inc.+ 8,400 464
Hanger Orthopedic Group, Inc.+ 1,100 6
Number Value
of Shares (000s)
--------- -----------
Hewlett-Packard Co. 27,000 $ 3,645
Hypercom Corp.+ 1,300 19
IKON Office Solutions, Inc. 3,200 19
Immersion Corp.+ 500 18
InaCom Corp.+ 1,100 2
Informix Corp.+ 8,850 97
Inprise Corp.+ 1,200 6
Input/Output, Inc.+ 3,400 25
Integrated Device Technology,
Inc.+ 2,400 115
Intergraph Corp.+ 1,000 7
International Business Machines
Corp. 48,100 5,369
InterVoice, Inc.+ 1,678 27
Iomega Corp.+ 6,000 21
Juniper Networks, Inc.+ 4,200 893
Latitude Communications, Inc.+ 400 6
Lexmark International Group,
Inc., Class A+ 3,600 425
LTX Corp.+ 1,400 64
Maxtor Corp.+ 2,700 32
Microchip Technology, Inc.+ 2,000 124
Micromuse, Inc.+ 800 79
Micron Electronics, Inc.+ 2,200 24
MICROS Systems, Inc.+ 500 20
Microsoft Corp.+ 139,270 9,714
Minntech Corp. 1,300 11
MIPS Technology, Inc.+ 800 23
MTI Technology Corp.+ 700 11
National Computer Systems, Inc. 800 41
NCR Corp.+ 3,100 120
Netegrity+ 400 18
Network Appliance, Inc.+ 8,200 606
Novell, Inc.+ 9,000 177
Novellus Systems, Inc.+ 2,900 193
Oracle Corp.+ 75,800 6,059
Osicom Technologies, Inc.+ 300 16
Pitney Bowes, Inc. 7,200 294
Printronix, Inc.+ 600 11
Procom Technology, Inc.+ 300 11
PTEK Holdings, Inc.+ 2,000 10
Quantum Corp. - DLT & Storage
Systems+ 4,200 49
Quantum Corp. - Hard Disk Drive+ 1,900 22
Read-Rite+ 1,900 6
SCM Microsystems, Inc.+ 400 32
Seagate Technology, Inc.+ 6,300 320
Sigma Designs, Inc.+ 1,500 6
Silicon Graphics, Inc.+ 4,800 34
73
<PAGE>
SCHWAB TOTAL STOCK MARKET INDEX FUND(TM)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Smartdisk Corp.+ 300 $ 8
Storage Technology Corp.+ 2,600 34
Sun Microsystems, Inc.+ 42,340 3,893
SVI Holdings, Inc.+ 1,400 13
Sybase+ 2,100 42
Systems & Computer Technolog
Corp.+ 1,100 26
Technology Data Corp.+ 1,400 59
Telxon Corp.+ 300 4
The Titan Corp.+ 1,681 72
Total System Services, Inc. 5,100 102
Unisys Corp.+ 8,600 199
Visual Networks, Inc.+ 700 27
Xerox Corp. 17,600 465
Xircom, Inc.+ 700 28
----------
59,043
----------
BUSINESS SERVICES -- 8.0%
24/7 Media, Inc.+ 700 14
4 Kids Entertainment, Inc.+ 400 9
ABM Industries, Inc. 700 18
About.com, Inc.+ 500 17
Accrue Software, Inc.+ 600 14
ACNielsen Corp.+ 1,400 32
ACT Networks, Inc.+ 1,300 16
Actel Corp.+ 1,100 40
Active Software, Inc.+ 600 24
Actuate Corp.+ 800 24
adam.com, Inc.+ 1,000 10
Adecco SA - ADR 127 13
Advantage Learning Systems,
Inc.+ 1,100 16
Advent Software, Inc.+ 900 47
Advo, Inc.+ 700 21
Aether Systems, Inc.+ 1,000 166
Affiliated Computer Services,
Inc.+ 1,300 43
Affymetrix, Inc.+ 800 108
Agency.com, Inc. Ltd.+ 800 17
Agile Software Corp.+ 1,200 44
AHL Services, Inc.+ 1,100 11
Akamai Technologies, Inc.+ 438 43
Allaire Corp.+ 800 44
Alliance Semiconductor Corp.+ 1,000 20
Allied Waste Industries, Inc.+ 5,000 31
America Online, Inc.+ 61,200 3,661
American Management Systems,
Inc.+ 1,000 37
American Superconductor Corp.+ 700 27
Analysts International Corp. 1,500 17
Andover.Net, Inc.+ 300 4
Ansoft Corp.+ 1,800 23
Number Value
of Shares (000s)
--------- -----------
AnswerThink Consulting Group,
Inc.+ 1,000 $ 19
Apex, Inc.+ 700 21
Apollo Group, Inc.+ 1,900 55
Applied Theory Corp.+ 800 9
Appnet, Inc.+ 800 19
Apropos Technology, Inc.+ 300 3
Ariba, Inc.+ 5,100 378
ARIS Corp.+ 1,400 10
Art Technology Group, Inc.+ 1,600 97
Ask Jeeves, Inc.+ 900 27
Aspect Development, Inc.+ 2,000 138
Aspen Technology, Inc.+ 700 25
At Home Corp., Class A+ 9,200 171
Automatic Data Processing,
Inc. 16,700 899
Autonation, Inc.+ 10,700 98
Avant Corp.+ 1,500 27
AXENT Technologies, Inc.+ 1,000 20
Banyan Systems, Inc.+ 900 12
Barra, Inc.+ 500 21
BEA Systems, Inc.+ 6,400 309
Bell & Howell Co.+ 500 13
Beyond.com Corp.+ 1,300 3
Billing Concepts Corp.+ 1,600 9
BindView Development Corp.+ 1,700 14
Bottomline Technologies, Inc.+ 500 18
Bowne & Co., Inc. 1,200 14
Brio Technology, Inc.+ 900 22
Broadbase Software, Inc.+ 2,400 38
BroadVision, Inc.+ 6,411 282
Brocade Communications Systems,
Inc.+ 2,800 347
BSQUARE Corp.+ 1,100 19
Cacheflow, Inc.+ 1,700 126
CAIS Internet, Inc.+ 700 9
Calico Commerce, Inc.+ 900 15
Cambridge Technology
Partners, Inc.+ 1,400 15
CareInsite, Inc.+ 1,900 48
Catalytica, Inc.+ 1,100 12
CDI Corp.+ 700 16
CDW Computer Centers, Inc.+ 1,100 114
Cell Genesys, Inc.+ 800 15
Centra Software, Inc.+ 900 8
Century Business Services, Inc.+ 2,100 7
Cerner Corp.+ 800 18
Cheap Tickets, Inc.+ 1,000 11
CheckFree Holdings Corp.+ 1,400 71
Chemed Corp. 500 15
Choicepoint, Inc.+ 800 30
Chordiant Software, Inc.+ 1,100 7
74
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Ciber, Inc.+ 1,400 $ 25
Cintas Corp. 4,450 176
Circle.com+ 1,275 6
Citrix Systems, Inc.+ 5,000 305
Clarent Corp.+ 800 54
Clarus Corp.+ 500 20
CLOSURE Medical Corp.+ 900 17
Coinstar, Inc.+ 1,100 12
Com21, Inc.+ 800 22
Complete Business
Solutions, Inc.+ 800 18
Computer Associates
International, Inc. 16,626 928
Computer Sciences Corp.+ 5,038 411
Computer Task Group, Inc. 1,000 8
Concord EFS, Inc.+ 5,300 119
Concur Technologies, Inc.+ 700 5
Convergys Corp.+ 4,000 176
Cordiant Communications Group -
Sponsored ADR 693 16
Cornell Corrections, Inc.+ 1,100 10
Corporate Executives Board Co.+ 400 23
Correctional Services Corp.+ 1,200 6
CoStar Group, Inc.+ 600 14
Creative Biomolecules+ 1,300 10
Creative Computers, Inc.+ 1,400 11
Credence Systems, Corp.+ 600 86
Critical Path, Inc.+ 1,500 87
CSG Systems International, Inc.+ 1,300 60
CuraGen Corp.+ 1,600 43
CyberSource Corp.+ 900 14
Cysive, Inc.+ 500 27
Cytec Industries, Inc.+ 1,000 30
Daleen Technologies, Inc.+ 800 10
Datastream Systems, Inc.+ 500 7
DBT Online, Inc.+ 700 14
Deltek Systems, Inc.+ 1,200 15
Deluxe Corp. 1,800 45
Dendrite International, Inc.+ 900 21
DeVry, Inc.+ 1,700 40
Digex, Inc.+ 600 47
Digital Courier Technologies,
Inc.+ 1,700 11
Digital Impact, Inc.+ 700 9
Digital Insight Corp.+ 600 23
Digital River, Inc.+ 700 10
Digitalthink, Inc.+ 800 16
Digitas, Inc.+ 1,500 23
Diversa Corp.+ 400 11
Documentum, Inc.+ 500 29
Number Value
of Shares (000s)
--------- -----------
DoubleClick, Inc.+ 3,068 $ 233
DST Systems, Inc.+ 1,600 119
Dun & Bradstreet Corp. 4,800 145
Earthlink, Inc.+ 2,930 55
Earthweb, Inc.+ 700 13
eBay, Inc.+ 3,500 557
Ebenx, Inc.+ 500 8
Echelon Corp.+ 900 29
Eclipsys Corp.+ 1,300 10
Ecolab, Inc. 4,400 172
Edison Schools, Inc.+ 1,000 23
Educational Management Corp.+ 1,000 16
Egain Communications Corp.+ 1,000 17
Elcom International, Inc.+ 1,100 8
Electronic Data Systems Corp. 12,500 859
eMerge Interactive, Inc.+ 600 11
Engage Technologies, Inc.+ 2,800 70
Entrust Technologies, Inc.+ 1,400 69
Equifax, Inc. 3,700 90
eXcelon Corp.+ 1,000 12
Exchange Applications, Inc.+ 1,000 12
Extensity, Inc.+ 500 6
Ezenia!, Inc.+ 1,200 8
F.Y.I., Inc.+ 600 16
F5 Networks, Inc.+ 500 23
FactSet Research Systems, Inc. 800 23
Falcon Products, Inc. 1,500 18
FileNet Corp.+ 1,300 38
Firepond, Inc.+ 800 13
First Data Corp. 11,200 545
Fiserv, Inc.+ 7,200 331
Flextronics International Ltd.+ 1,449 102
Forrester Research, Inc.+ 600 27
Freemarkets, Inc.+ 900 65
FreeShop.com, Inc.+ 500 5
G & K Services, Inc., Class A 700 17
Gartner Group, Inc., Class B+ 2,251 24
Gentiva Health Services+ 450 4
Geoworks Corp.+ 500 8
Gerald Stevens, Inc.+ 1,700 9
GetThere.com, Inc.+ 1,300 13
Global Imaging Systems, Inc.+ 800 6
Global Sources Limited+ 66 2
Go2net, Inc.+ 1,000 59
GoTo.com, Inc.+ 1,300 44
GP Strategies Corp.+ 1,500 6
Great Plains Software, Inc.+ 400 17
75
<PAGE>
SCHWAB TOTAL STOCK MARKET INDEX FUND(TM)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Grey Advertising, Inc. 200 $ 92
Gric Communications, Inc.+ 500 8
GTECH Holdings, Corp.+ 900 19
H&R Block, Inc. 2,900 121
HA-LO Industries, Inc.+ 1,500 11
Harbinger Corp.+ 1,200 23
Healthcentral.com+ 800 3
Healtheon Corp.+ 1,949 41
HearMe+ 700 5
Heidrick & Struggles, Inc.+ 400 14
High Speed Access Corp.+ 1,700 14
HNC Software, Inc.+ 600 30
HotJobs.com Ltd.+ 1,000 12
Hyperion Solutions Corp.+ 800 24
I2 Technologies+ 4,000 517
Ibasis, Inc.+ 800 18
Icos Corp.+ 1,100 44
Identix Inc.+ 1,100 16
IDT Corp.+ 700 22
IDX Systems Corp.+ 700 12
iGate Capital Corp.+ 1,300 39
Imanage, Inc.+ 700 7
IMS Health, Inc. 8,500 145
In Focus Systems, Inc.+ 500 15
Infocure Corp.+ 800 7
Infonet Services Corp.+ 8,000 135
Information Resource
Engineering, Inc.+ 500 13
infoUSA, Inc.+ 1,600 9
Inktomi Corp.+ 2,900 446
Inso Corp.+ 800 4
InsWeb Corp.+ 800 2
Intelligroup, Inc.+ 400 6
Interact Commerce Corp.+ 700 10
Interim Services, Inc.+ 1,530 26
Interliant, Inc.+ 1,100 23
Internap Network Services Corp.+ 3,400 131
Internet Pictures Corp.+ 821 13
internet.com Corp.+ 800 15
Interpublic Group of Cos., Inc. 7,950 326
Intertrust Technologies Corp.+ 2,000 46
Interwoven, Inc.+ 600 42
Intuit, Inc.+ 5,215 187
Invitrogen Corp.+ 700 44
Iron Mountain, Inc.+ 1,450 51
ISS Group, Inc.+ 1,100 99
IT Group, Inc.+ 1,300 9
iVillage, Inc.+ 900 9
Number Value
of Shares (000s)
--------- -----------
J. D. Edwards & Co.+ 2,700 $ 49
Jacobs Engineering Group, Inc.+ 600 19
JDA Software Group, Inc.+ 1,000 19
John H. Harland Co. 1,000 15
Juno Online Services, Inc.+ 900 9
Jupiter Communications, Inc.+ 500 13
Kana Communications, Inc.+ 2,164 92
Keane, Inc.+ 1,900 55
Kelly Services, Inc. Class A 900 21
Korn/Ferry International+ 900 24
Kroll-O'Gara Co.+ 1,300 10
Kronos, Inc.+ 500 16
Labor Ready, Inc.+ 2,000 18
Lamar Advertising Co.+ 1,800 79
LandAmerica Financial Group, Inc. 800 14
Landmark Systems Corp.+ 1,500 9
Lante Corp.+ 900 19
Lason, Inc.+ 1,100 5
Learning Tree International,
Inc.+ 500 24
Legato Systems, Inc.+ 2,200 28
LHS Group, Inc.+ 1,500 60
Liberate Technologies+ 2,400 94
Lifeminders.com, Inc.+ 600 27
Lightspan, Inc.+ 1,500 12
Loislaw.com, Inc.+ 800 5
Looksmart Ltd.+ 2,200 53
Luminant Worldwide Corp.+ 800 7
Lycos, Inc.+ 3,000 140
Macrovision Corp.+ 1,200 59
Manhattan Associates, Inc.+ 600 14
Manpower, Inc. 2,000 71
Manugistics Group, Inc.+ 700 30
Mapinfo Corp.+ 750 22
MapQuest.com, Inc.+ 800 15
MarchFirst, Inc.+ 3,816 81
Marimba, Inc.+ 500 10
Marketwatch.com, Inc.+ 400 6
MAXIMUS, Inc.+ 500 12
Maxygen, Inc.+ 800 33
Mechanical Technology, Inc.+ 1,800 32
Media Arts Group, Inc.+ 900 4
Mediaplex, Inc.+ 800 41
Medical Manager Corp.+ 887 28
MedicaLogic, Inc.+ 1,200 14
Medscape, Inc.+ 2,000 7
MemberWorks, Inc.+ 500 16
Mentor Corp. 1,000 18
76
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Mentor Graphics Corp.+ 1,600 $ 21
Mercator Software, Inc.+ 700 26
Mercury Computer Systems, Inc.+ 600 23
Mercury Interactive Corp.+ 2,000 180
META Group, Inc.+ 1,100 25
Metacreations Corp.+ 900 10
Metamor Worldwide, Inc.+ 800 16
Metasolv Software, Inc.+ 800 27
Metricom, Inc.+ 700 20
Metris Cos., Inc. 1,000 38
Miami Computer Supply Corp.+ 500 10
MicroStrategy, Inc.+ 700 18
Microvision, Inc.+ 400 13
Mission Critical Software, Inc.+ 400 14
Modis Professional Services,
Inc.+ 2,400 18
Multex.com, Inc.+ 700 14
Mypoints.com, Inc.+ 1,300 23
National Data Corp. 900 25
National Instruments+ 1,350 66
National Processing, Inc.+ 1,500 16
National Service Industries,
Inc. 1,000 22
NationsRent, Inc.+ 1,800 9
Natural MicroSystems Corp.+ 500 33
Navigant Consulting Co.+ 2,000 20
NBC Internet, Inc.+ 400 9
NCO Group, Inc.+ 761 26
Neff Corp.+ 1,200 5
Neoforma.com, Inc.+ 1,900 13
Neon Systems, Inc.+ 700 15
Net Perceptions, Inc.+ 900 17
Netcentives, Inc.+ 1,100 11
NETIQ Corp.+ 500 18
Netobjects, Inc.+ 800 11
Netratings, Inc.+ 900 24
Netscout Systems, Inc.+ 1,000 15
Netsolve, Inc.+ 600 18
Network Associates, Inc.+ 3,700 94
Network Peripherals, Inc.+ 600 17
Neurocrine Biosciences, Inc.+ 1,400 30
New England Business
Service, Inc. 800 13
New Era of Networks, Inc.+ 800 25
NOVA Corp.+ 2,000 63
NYFIX, Inc.+ 750 20
Oak Technology, Inc.+ 1,300 18
Official Payments Corp.+ 800 4
Ogden Corp. 1,600 16
Omnicom Group, Inc. 4,800 437
Number Value
of Shares (000s)
--------- -----------
On Assignment, Inc.+ 1,000 $ 31
Ondisplay, Inc.+ 500 28
OneMain.com, Inc.+ 900 6
Onyx Software Corp.+ 1,400 30
Open Market, Inc.+ 1,000 10
Orbital Sciences Corp.+ 1,000 13
Organic, Inc.+ 1,900 29
Packeteer, Inc.+ 700 16
Parametric Technology Corp.+ 7,300 60
PAXAR Corp.+ 1,800 18
Paychex, Inc. 6,600 347
Pc-Tel, Inc.+ 500 17
Peapod, Inc.+ 1,400 4
Pegasus Systems, Inc.+ 900 16
Pegasystems, Inc.+ 1,000 9
PeopleSoft, Inc.+ 7,100 99
Peregrine Systems, Inc.+ 2,700 65
Performance Food Group Co.+ 700 18
Perot Systems Corp.+ 2,400 39
Persistence Software, Inc.+ 700 11
Pervasive Software, Inc.+ 1,000 7
Pfsweb, Inc.+ 600 7
Phoenix Technologies Ltd.+ 800 16
Pilot Network Services, Inc.+ 400 7
Pittston Brink's Group 1,200 20
Pivotal Corp.+ 600 19
Pixar, Inc.+ 1,200 45
Policy Management Systems Corp.+ 1,600 21
Polycom, Inc.+ 900 71
Pomeroy Computer
Resources, Inc.+ 1,100 18
Portal Software, Inc.+ 4,200 193
Pre-Paid Legal Services, Inc.+ 500 16
Predictive Systems, Inc.+ 500 24
Preview Systems, Inc.+ 400 6
Priceline.com, Inc.+ 3,900 247
Primark Corp.+ 700 19
Primus Knowledge Solution, Inc.+ 400 15
Priority Healthcare Corp.,
Class B+ 600 33
ProBusiness Services, Inc.+ 700 18
Prodigy Communications Corp.+ 1,500 17
Profit Recovery Group
International, Inc.+ 1,200 21
Progress Software Corp.+ 1,000 20
Project Software & Development,
Inc.+ 600 18
Protein Design Labs, Inc.+ 800 81
Proxicom, Inc.+ 1,400 48
Proxim, Inc.+ 400 31
PSINet, Inc.+ 4,062 94
77
<PAGE>
SCHWAB TOTAL STOCK MARKET INDEX FUND(TM)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Puma Technology, Inc.+ 1,000 $ 31
PurchasePro.com, Inc.+ 750 23
Qlogic Corp.+ 1,900 191
QRS Corp.+ 350 12
Quest Education Corp.+ 1,400 13
Quest Software, Inc.+ 2,100 79
Quintus Corp.+ 900 9
Quixote Corp. 800 11
R. H. Donnelley Corp.+ 1,000 20
Radiant Systems, Inc.+ 600 11
RadiSys Corp.+ 500 21
Rainmaker Systems, Inc.+ 1,600 7
Ramp Networks, Inc.+ 800 16
RAVISENT Technologies, Inc.+ 900 6
Razorfish, Inc.+ 2,224 42
RealNetworks, Inc.+ 4,100 195
Red Hat, Inc.+ 3,900 98
Redback Networks, Inc.+ 2,300 183
Remedy Corp.+ 700 37
RemedyTemp, Inc.+ 900 18
Retek, Inc.+ 1,200 26
Reynolds & Reynolds Co.,
Class A 1,800 43
Ritchie Bros. Auctioneers, Inc.+ 300 7
Robert Half International,
Inc.+ 2,300 141
Romac International, Inc.+ 1,600 17
RSA Security, Inc.+ 1,000 59
Rural Cellular Corp., Class A.+ 300 22
Rural/Metro Corp.+ 1,100 2
S3, Inc.+ 1,900 27
Safety-Kleen, Corp.+ 2,100 2
SAGA Systems, Inc.+ 800 15
Sanchez Computer
Associates, Inc.+ 600 12
Sandisk Corp.+ 1,800 165
The Santa Cruz Operation, Inc.+ 1,400 8
Sapient Corp.+ 1,500 119
Savvis Communications Corp.+ 2,500 35
Scient Corp.+ 1,800 97
Sciquest.com, Inc.+ 800 10
SDL, Inc.+ 2,000 390
Seachange International, Inc.+ 550 17
SEACOR SMIT, Inc.+ 500 31
SEI Investments Co. 500 60
Sequenom, Inc.+ 600 15
Serena Software, Inc.+ 900 20
The Service Master Co. 8,200 112
Shared Medical Systems Corp. 700 29
ShopNow.com, Inc.+ 1,300 8
Siebel Systems, Inc.+ 5,200 639
Number Value
of Shares (000s)
--------- -----------
Silverstream Software, Inc.+ 500 $ 20
Simione Central Holdings, Inc.+ 119 0
Sirius Satellite Radio, Inc.+ 700 28
SITEL Corp.+ 2,800 19
SoftNet Systems, Inc.+ 900 14
Software.com, Inc.+ 1,100 89
Sonic Foundry, Inc.+ 200 9
SonicWall, Inc.+ 600 36
Spartech Corp. 700 24
SportsLine USA, Inc.+ 600 12
Spyglass, Inc.+ 800 42
StaffMark, Inc.+ 1,600 11
Standard Register Co. 1,100 14
StarMedia Network, Inc.+ 1,500 33
StarTek, Inc.+ 400 21
Stericycle, Inc.+ 1,100 23
Strayer Education, Inc. 700 14
Structural Dynamics Research
Corp.+ 1,400 19
Sungard Data Systems, Inc.+ 3,300 114
Sycamore Networks, Inc.+ 6,500 510
Sykes Enterprises, Inc.+ 1,100 22
Sylvan Learning Systems, Inc.+ 1,100 17
Symantec Corp.+ 1,500 94
Symyx Technologies, Inc.+ 800 27
Synopsys, Inc.+ 1,900 80
Syntel, Inc.+ 1,500 17
Talk City, Inc.+ 500 2
Tanning Technology Corp.+ 600 11
Technology Solutions Co.+ 1,500 10
Teledyne Technologies, Inc.+ 857 15
TeleSpectrum Worldwide, Inc.+ 2,100 10
Teletech Holdings, Inc.+ 1,600 52
TenFold Corp.+ 900 23
Tetra Technology, Inc.+ 1,125 27
Texas Biotech Corp.+ 1,100 13
Thermo Cardiosystems, Inc.+ 1,600 18
TheStreet.com, Inc.+ 800 5
TIBCO Software, Inc.+ 5,000 445
Ticketmaster Online-CitySearch,
Inc.+ 900 18
TMP Worldwide, Inc.+ 2,200 144
Track Data Corp.+ 1,900 4
Transaction Systems Architects,
Inc.+ 900 15
True North Communications, Inc. 1,200 49
Tularik, Inc.+ 1,300 37
Tyco International Ltd. 500 23
Ubid, Inc.+ 640 12
Unify Corp.+ 800 10
Universal Electronics, Inc.+ 1,000 21
78
<PAGE>
Number Value
of Shares (000s)
--------- -----------
UNOVA, Inc.+ 1,300 $ 18
URS Corp.+ 900 11
Usinternetworking, Inc.+ 2,400 60
Va Linux Systems, Inc.+ 1,100 46
Ventiv Health, Inc.+ 1,633 17
Verio, Inc.+ 2,000 75
VeriSign, Inc.+ 2,800 390
VERITAS Software Corp.+ 10,575 1,134
Verity, Inc.+ 800 26
Vertel Corp.+ 600 10
VerticalNet, Inc.+ 1,800 97
Via Net.Works, Inc.+ 2,700 54
Viad Corp. 2,400 61
The viaLink Co.+ 400 8
Viant Corp.+ 1,000 23
Vignette Corp.+ 4,800 231
Vitesse Semiconductor Corp.+ 4,200 286
Vixel Corp.+ 600 4
The Wackenhut Corp.+ 1,000 13
Wackenhut Corrections Corp. 1,500 12
Wallace Computer Services, Inc. 1,100 12
Waste Management, Inc. 16,700 265
WatchGuard Technologies, Inc.+ 600 29
Wave Systems Corp.+ 900 17
Web Trends Corp.+ 600 20
Webmethods, Inc.+ 1,000 90
Westaff, Inc.+ 1,400 10
Wind River Systems, Inc.+ 1,460 62
Wireless Facilities, Inc.+ 1,000 58
Witness Systems, Inc.+ 500 7
WorldGate Communications, Inc.+ 500 12
Xpedior, Inc.+ 1,100 18
Xybernaut Corp.+ 1,000 10
Yahoo!, Inc.+ 14,432 1,880
York Research Corp.+ 1,100 2
Young & Rubicam, Inc. 1,900 106
Zamba Corp.+ 2,000 13
ZAP.com, Corp.+ 32 0
ZapMe! Corp.+ 1,800 7
Zixit Corp.+ 400 15
----------
33,903
----------
CHEMICAL -- 1.7%
A. Schulman 700 9
Aceto Corp. 500 5
Advanced Technical Products,
Inc.+ 400 2
Number Value
of Shares (000s)
--------- -----------
AEP Industries, Inc.+ 400 $ 8
Air Products & Chemicals, Inc. 6,000 186
Airgas, Inc.+ 1,900 11
Albemarle Corp. 1,100 23
Amcol International Corp. 600 10
Arch Chemicals, Inc. 700 14
Bio-Rad Laboratories, Inc.,
Class A+ 500 13
Brady Corp., Class A 500 15
Cabot Corp. 1,700 46
Calgon Carbon Corp. 500 3
Cambrex Corp. 700 29
Celgene Corp.+ 3,000 141
Chemfab Corp.+ 700 10
Chemfirst, Inc. 500 10
Chromatics Color Sciences+ 1,300 7
CK Witco Corp.+ 2,624 31
Dexter Corp. 700 38
Dow Chemical Co. 5,800 655
E. I. du Pont de Nemours & Co. 27,795 1,319
Eastman Chemical Co. 2,200 115
Enzon, Inc.+ 1,000 37
Ferro Corp. 700 16
Foamex International, Inc. 400 2
Fuller 400 15
Geon Co. 400 9
Georgia Gulf Corp. 800 19
Great Lakes Chemical Corp. 1,700 46
Gum Tech International, Inc.+ 400 4
Hawkins Chemical, Inc. 1,300 10
Hercules, Inc. 2,800 44
International Specialty
Products, Inc.+ 1,400 8
Lilly Industries, Inc., Class A 800 9
Liqui-Box Corp. 200 9
Lubrizol Corp. 1,400 36
Lyondell Petrochemical Corp. 2,900 53
M. A. Hanna Co. 900 10
Macdermid, Inc. 800 19
Mace Security
International, Inc.+ 400 1
McWhorter Technologies, Inc.+ 400 6
Millennium Chemicals, Inc. 1,500 30
Minnesota Mining &
Manufacturing Co. 10,400 900
NCH Corp. 300 13
Oil-Dri Corp. of America 400 3
Olin Corp. 900 16
79
<PAGE>
SCHWAB TOTAL STOCK MARKET INDEX FUND(TM)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
OM Group, Inc. 700 $ 32
Omnova Solutions, Inc. 1,000 6
Oxigene, Inc.+ 900 13
Pharmacia Corp. 33,616 1,679
PPG Industries, Inc. 5,300 288
Praxair, Inc. 4,200 187
Quaker Chemical Corp. 400 7
Rogers Corp. 400 27
Rohm & Haas Co. 6,253 223
Rollins, Inc. 800 11
RPM, Inc. 2,400 24
Sequa Corp., Class A+ 300 15
Sigma-Aldrich Corp. 2,700 79
Solutia, Inc. 2,800 38
Stepan Co. 200 4
SurModics, Inc.+ 400 10
Techne Corp.+ 500 35
Tredegar Industries, Inc. 800 21
Trex Co., Inc.+ 500 20
Tuscarora Plastics, Inc. 400 5
Twinlab Corp.+ 900 7
Union Carbide Corp. 3,400 201
Valspar Corp. 1,100 40
Ventro Corp.+ 1,200 33
W.R. Grace & Co.+ 1,800 23
WD-40 Co. 400 8
Wellman, Inc. 900 19
Xceed, Inc.+ 500 7
Zoltek Cos., Inc.+ 600 5
----------
7,082
----------
CONSTRUCTION -- 0.5%
4Front Technologies, Inc.+ 1,400 25
Apogee Enterprises, Inc. 1,000 4
Armstrong Holdings, Inc.+ 1,000 20
Cameron Ashley Building
Products+ 1,000 18
Carbo Ceramics, Inc. 500 17
Centex Construction Products,
Inc. 500 16
Centex Corp. 1,500 36
Clayton Homes, Inc. 3,500 33
CoorsTek, Inc.+ 250 11
Craftmade International, Inc. 1,200 6
Crossmann Communities, Inc.+ 700 11
D.R. Horton, Inc. 1,600 21
DAL-Tile International, Inc.+ 1,300 13
Dayton Superior Corp., Class A+ 800 20
Dycom Industries, Inc.+ 1,100 57
Number Value
of Shares (000s)
--------- -----------
Elcor Corp. 450 $ 14
Florida Rock Industries, Inc. 500 16
Fluor Corp. 2,000 67
Granite Construction, Inc. 700 17
Huttig Building Products, Inc.+ 311 1
Insituform Technologies, Inc.,
Class A+ 800 27
Integrated Electrical Services,
Inc.+ 1,100 5
Interface, Inc. 1,200 4
Johns Manville Corp. 3,800 40
Justin Industries, Inc. 900 16
Kaufman & Broad Home Corp. 1,100 21
Lafarge Corp. 1,700 43
Lennar Corp. 1,500 28
Martin Marietta Materials, Inc. 1,300 69
Masco Corp. 12,200 274
Morrison Knudsen Corp.+ 1,500 14
NCI Building Systems, Inc.+ 400 8
NVR, Inc.+ 500 31
Owens Corning 1,500 27
Palm Harbor Homes, Inc.+ 700 12
Performance Technologies, Inc.+ 600 21
Photon Dynamics, Inc.+ 200 15
Puerto Rican Cement Co., Inc. 400 12
Pulte Corp. 1,000 22
Quanta Services, Inc.+ 1,400 65
The Ryland Group, Inc. 200 4
Sawtek, Inc.+ 1,200 57
SBA Communications Corp.+ 700 28
Sherwin-Williams Co. 4,400 109
Simpson Manufacturing, Inc.+ 300 14
Socket Communications, Inc.+ 300 5
Southdown, Inc. 1,000 58
Specialty Equipment Cos., Inc.+ 700 14
The Stanley Works 2,300 68
Stone & Webster, Inc. 700 9
Texas Industries, Inc. 500 16
Toll Brothers, Inc.+ 1,800 39
U.S. Home Corp.+ 500 18
U.S. Plastic Lumber Corp.+ 1,700 7
United Dominion Industries Ltd. 1,000 17
USG Corp. 1,400 58
Vulcan Materials Co. 2,800 123
Walter Industries, Inc. 1,300 14
Webb Del Corp.+ 600 9
Wesco International, Inc.+ 1,700 16
West Teleservices Corp.+ 1,700 36
Westell Technologies, Inc.+ 1,760 50
80
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Yankee Candle Co., Inc.+ 1,500 $ 27
----------
1,973
----------
CONSUMER - DURABLE -- 0.2%
Black & Decker Corp. 2,400 101
Champion Enterprises, Inc.+ 2,200 15
Chromcraft Revington, Inc.+ 800 10
Coachmen Industries, Inc. 700 11
Compx International, Inc. 800 16
Ethan Allen Interiors, Inc. 1,000 27
Flexsteel Industries, Inc. 600 8
Furniture Brands International,
Inc.+ 1,100 21
Genlyte Group, Inc.+ 600 12
Haverty Furniture Cos., Inc. 800 9
Helen of Troy Ltd.+ 1,100 7
Hillenbrand Industries, Inc. 1,700 51
Kimball International, Inc.,
Class B 2,100 29
La-Z-Boy, Inc. 1,400 22
Leggett & Platt, Inc. 5,200 111
Linens 'N Things, Inc.+ 900 28
Maytag Corp. 2,200 76
Mikasa, Inc. 700 7
Mohawk Industries, Inc.+ 1,500 37
National Presto Industries, Inc. 400 14
Rent-A-Center, Inc.+ 1,000 20
Restoration Hardware, Inc.+ 1,700 7
Salton, Inc.+ 400 17
Select Comfort Corp.+ 1,100 5
Shaw Industries, Inc. 3,625 57
SLI, Inc. 1,100 16
Sturm, Ruger & Co., Inc. 1,100 11
Sunbeam Corp.+ 681 2
Thomas Industries, Inc. 700 14
Toro Co. 400 12
Virco Mfg. Corp. 880 9
Water Pik Technologies, Inc.+ 195 1
Whirlpool Corp. 1,900 124
Windmere Durable Holdings,
Inc.+ 1,100 18
----------
925
----------
CONSUMER - NONDURABLE -- 0.9%
The 3DO Co.+ 1,400 9
A.T. Cross Co., Class A+ 1,000 5
Acclaim Entertainment, Inc.+ 2,100 6
Action Performance Cos., Inc.+ 900 8
American Greetings Corp.,
Class A 1,700 31
Applebee's International, Inc. 700 25
Number Value
of Shares (000s)
--------- -----------
barnesandnoble.com, Inc.+ 1,600 $ 17
Boyd Gaming Corp.+ 2,800 14
Boyds Collection Ltd.+ 2,200 14
Brinker International, Inc.+ 1,800 57
Buca, Inc.+ 1,100 17
Buffets, Inc.+ 1,700 17
Catalina Marketing Corp.+ 500 51
Cbrl Group, Inc. 1,600 22
Cdnow, Inc.+ 1,000 4
CEC Entertainment, Inc.+ 650 19
Cedar Fair LP 1,400 27
Championship Auto Racing Teams,
Inc.+ 700 14
Cheesecake Factory+ 500 20
CKE Restaurants, Inc. 2,100 8
Consolidated Products, Inc.+ 1,580 14
Cytyc Corp.+ 1,600 72
Darden Restaurants, Inc. 3,300 61
Dave and Buster's, Inc.+ 1,700 13
Department 56, Inc.+ 1,100 10
Dover Downs Entertainment, Inc. 1,400 17
Electronic Arts, Inc.+ 1,700 103
Factory 2-U Stores, Inc.+ 600 20
Fastenal Co. 1,100 64
The First Years, Inc. 1,500 13
Fortune Brands, Inc. 4,300 108
Fossil, Inc.+ 1,650 34
Garden Fresh Restaurant Corp.+ 900 10
Handleman Co.+ 1,400 17
Harcourt General, Inc. 1,900 71
Hasbro, Inc. 4,800 77
Hollywood.com, Inc.+ 800 11
IHOP Corp.+ 1,000 16
International Game Technology+ 2,100 51
International Speedway Corp.,
Class A 1,345 58
Isle of Capris Casinos, Inc.+ 1,100 15
Jack in the Box, Inc.+ 900 22
JAKKS Pacific, Inc.+ 800 15
Jostens, Inc. 800 20
Lancaster Colony Corp. 1,000 26
Landry's Seafood Restaurants,
Inc.+ 1,300 11
Lone Star Steakhouse & Saloon,
Inc.+ 1,400 17
Luby's Cafeterias, Inc. 900 8
The Marcus Corp. 1,500 16
Marvel Enterprises, Inc.+ 1,500 7
Mattel, Inc. 11,000 135
McDonald's Corp. 36,400 1,388
Mck Communications, Inc.+ 600 19
81
<PAGE>
SCHWAB TOTAL STOCK MARKET INDEX FUND(TM)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Midway Games, Inc.+ 1,500 $ 10
Movado Group, Inc. 700 6
MP3.com, Inc.+ 1,700 12
Musicland Stores Corp.+ 1,600 12
Newell Rubbermaid, Inc. 7,700 194
NPC International, Inc.+ 1,100 11
On Command Corp.+ 900 19
Oneida Ltd. 700 13
Outback Steakhouse, Inc.+ 1,900 62
Papa John's International, Inc.+ 700 19
RARE Hospitality International
Inc.+ 700 22
Regis Corp. 1,000 12
Riviana Foods, Inc. 900 14
Ruby Tuesday, Inc. 1,800 38
Russ Berrie & Co., Inc. 1,000 19
Ryan's Family Steak Houses,
Inc.+ 1,500 15
SCP Pool Corp.+ 600 22
Sonic Corp.+ 500 14
Sotheby's Holdings, Inc.,
Class A 1,600 27
Starbucks Corp.+ 4,900 148
Stewart Enterprises, Inc., Class A 500 2
Student Advantage, Inc.+ 1,100 6
Taco Cabana, Inc., Class A+ 1,500 9
The Topps Co., Inc.+ 1,700 15
Trans World Entertainment Corp.+ 1,500 16
Triarc Cos., Inc.+ 700 14
Tricon Global Restaurants, Inc.+ 4,000 137
Tupperware Corp. 1,400 26
Wendy's International, Inc. 3,000 67
----------
3,905
----------
CONTAINERS -- 0.1%
ACX Technologies, Inc.+ 1,000 4
Ball Corp. 700 22
Bemis Co., Inc. 1,300 48
Crown Cork & Seal Co., Inc. 3,400 55
Gaylord Container Corp.+ 2,500 13
Greif Brothers Corp., Class A 500 16
Mobile Mini, Inc.+ 600 13
Owens-Illinois, Inc.+ 4,000 54
Packaging Corp. of America+ 2,700 32
Pactiv Corp.+ 4,300 35
Sealed Air Corp.+ 2,300 128
Silgan Holdings, Inc.+ 900 12
Sonoco Products 2,600 54
U.S. Can Corp.+ 600 11
----------
497
----------
Number Value
of Shares (000s)
--------- -----------
ELECTRONICS -- 12.1%
3Dfx Interactive, Inc.+ 1,300 $ 13
Acxiom Corp.+ 2,200 59
Adaptive Broadband Corp.+ 1,000 33
ADC Telecommunications, Inc.+ 8,000 486
Adelphia Business Solutions, Inc.+ 900 32
Adelphia Communications Corp.,
Class A+ 3,001 149
Advanced Fibre Communications,
Inc.+ 2,000 91
Advanced Micro Devices, Inc.+ 4,100 360
Advanced Radio Telecom Corp.+ 1,000 17
Airnet Communications Corp.+ 500 9
Alamosa PCS Holdings, Inc.+ 1,400 40
Allen Telecom, Inc.+ 1,500 27
Alliant Techsystems, Inc.+ 500 35
Alpha Industries, Inc.+ 1,000 52
Altera Corp.+ 5,500 562
American Power Conversion Corp.+ 4,900 173
American Xtal Technology, Inc.+ 400 10
Amkor Technology, Inc.+ 3,100 190
Amphenol Corp.+ 800 51
Anadigics, Inc.+ 750 56
Analog Devices, Inc.+ 9,200 707
Ancor Communications, Inc.+ 800 24
Andrew Corp.+ 2,000 59
Anixter International, Inc.+ 900 30
ANTEC Corp.+ 900 48
Applied Materials, Inc.+ 20,949 2,133
Arguss Holdings, Inc.+ 1,100 24
Arrow Electronics, Inc.+ 2,400 105
Artisan Components, Inc.+ 1,100 11
Aspect Communications Corp.+ 1,700 60
Asyst Technologies, Inc.+ 600 32
Atmel Corp.+ 5,700 279
Atmi, Inc.+ 700 27
Audiovox Corp., Class A+ 600 21
Avanex Corp.+ 200 24
Avid Technology, Inc.+ 800 11
Avnet, Inc. 1,546 122
AVT Corp.+ 1,400 15
AVX Corp. 2,200 214
Aware, Inc.+ 500 20
Bel Fuse, Inc., Class A+ 700 12
Bel Fuse, Inc., Class B 500 9
Belden, Inc. 800 24
Bell Industries, Inc. 600 2
Benchmark Electronics, Inc.+ 700 28
Boston Acoustics, Inc. 800 8
Broadcom Corp., Class A+ 3,100 534
82
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Brooks Automation, Inc.+ 300 $ 27
Burr Brown Corp.+ 1,450 99
C&D Technologies, Inc. 500 32
C-Cor Electronics, Inc.+ 800 31
Cable Design Technologies Corp.+ 600 21
Cadence Design Systems, Inc.+ 6,200 104
Caliper Technologies Corp.+ 500 19
Caprock Communications Corp.+ 900 30
CCC Information Services Group,
Inc.+ 1,100 15
CIENA Corp.+ 3,800 470
Cirrus Logic, Inc.+ 1,500 25
CMGI, Inc.+ 7,118 507
Cobalt Networks, Inc.+ 700 22
Coherent, Inc.+ 800 46
Cohu, Inc. 600 23
CommScope, Inc.+ 1,400 67
Computer Network Technology Corp.+ 700 11
Concentric Network Corp.+ 1,100 48
Concord Communications, Inc.+ 500 14
Conexant Systems, Inc.+ 5,696 341
Cox Radio, Inc., Class A+ 300 22
Cree Research, Inc.+ 800 116
CTS Corp. 800 50
Cyberonics, Inc.+ 1,200 24
Cypress Semiconductor Corp.+ 2,800 145
Dallas Semiconductor Corp. 1,400 60
Data Broadcasting Corp.+ 1,500 7
Digital Microwave Corp.+ 1,700 63
Dionex+ 500 18
DSP Group, Inc.+ 600 43
Dupont Photomasks, Inc.+ 500 28
E-tek Dynamics, Inc.+ 1,800 369
e.spire Communications, Inc.+ 1,600 8
Electro Rent Corp.+ 1,100 12
Electro Scientific Industries,
Inc.+ 600 38
Electroglas, Inc.+ 500 19
Electronics Boutique Holdings
Corp.+ 800 13
Electronics for Imaging, Inc.+ 1,500 78
Emcore Corp.+ 300 26
Emulex Corp.+ 1,000 45
ESS Technology, Inc.+ 1,000 13
Exar Corp.+ 450 36
Exide Corp. 1,700 16
FEI Co.+ 700 16
FSI International, Inc.+ 1,300 19
FVC.COM, Inc.+ 1,200 7
Gadzoox Networks, Inc.+ 600 22
Number Value
of Shares (000s)
--------- -----------
Gasonics International Corp.+ 1,100 $ 36
General Cable Corp. 1,700 13
General Semiconductor, Inc.+ 800 16
Genrad, Inc.+ 1,000 7
Gentex Corp.+ 1,900 61
Gerber Scientific, Inc. 800 11
Getty Images, Inc.+ 1,000 30
Glenayre Technologies, Inc.+ 1,500 20
Globespan, Inc.+ 1,500 143
Hadco Corp.+ 400 33
Harman International Industries,
Inc. 400 26
Harmonic, Inc.+ 800 59
Harris Corp. 1,800 58
Hearst-Argyle Television, Inc.+ 1,300 28
HI/Fn, Inc.+ 300 10
Hollywood Entertainment Corp.+ 2,000 14
Hutchinson Technology, Inc.+ 800 10
IMRglobal Corp.+ 1,100 14
Intel Corp. 89,516 11,352
Intermagnetics General Corp.+ 1,800 22
International Rectifier Corp.+ 1,500 74
ITT Industries, Inc. 2,600 82
JDS Uniphase Corp.+ 16,084 1,668
JNI Corp.+ 600 24
Kemet Corp.+ 1,100 82
Kent Electronics Corp.+ 600 18
KLA-Tencor Corp.+ 4,900 367
Kopin Corp.+ 800 62
Kulicke & Soffa Industries, Inc.+ 700 55
L-3 Communications Holdings, Inc.+ 900 48
Lam Research Corp.+ 3,200 147
Linear Technology Corp. 8,300 474
Littelfuse, Inc.+ 500 18
Loral Space & Communications
Corp.+ 6,100 60
LSI Logic Corp.+ 8,000 500
Lucent Technologies, Inc. 87,023 5,412
Macromedia, Inc.+ 1,300 113
Mattson Technology, Inc.+ 1,100 54
Maxim Integrated Products, Inc.+ 7,400 480
MEMC Electronic Materials, Inc.+ 1,600 28
Mestek, Inc.+ 700 13
Methode Electronics, Inc., Class A 900 38
Metro Information Services, Inc.+ 700 10
Metromedia Fiber Network, Inc.,
Class A+ 11,310 349
MGC Communications, Inc.+ 700 34
Micron Technology, Inc.+ 7,500 1,044
83
<PAGE>
SCHWAB TOTAL STOCK MARKET INDEX FUND(TM)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Microsemi Corp.+ 1,500 $ 44
MKS Instruments, Inc.+ 600 28
MMC Networks, Inc.+ 800 21
Molex, Inc. 5,625 309
Motorola, Inc. 19,385 2,308
MRV Communications, Inc.+ 1,100 76
Nanogen, Inc.+ 500 12
National Semiconductor Corp.+ 5,200 316
NeoMagic Corp.+ 1,300 4
Netopia, Inc.+ 600 25
NetOptix Corp.+ 300 53
Netro Corp.+ 1,200 52
Network Solutions, Inc.+ 2,400 355
Newport Corp. 200 24
Nextel Communications, Inc.,
Class A+ 9,900 1,083
Nortel Networks Corp. 1,428 162
Novoste Corp.+ 900 37
Nvidia Corp.+ 800 71
Objective Systems Integrators,
Inc.+ 900 13
P-Com, Inc.+ 1,700 18
Parkervision, Inc.+ 400 9
Paxson Communications Corp.+ 1,900 16
PE Corp.-Celera Genomics Group+ 1,300 107
PE Corp.-PE Biosystems Group 5,900 354
Peerless Systems Corp.+ 1,600 5
PerkinElmer, Inc. 3,100 170
Pinnacle Systems, Inc.+ 1,200 29
Pioneer - Standard Electronics,
Inc. 1,100 17
Plantronics, Inc.+ 500 44
Plexus Corp.+ 500 38
PLX Technology, Inc.+ 800 26
Powell Industries, Inc.+ 2,000 18
Power Intergrations, Inc.+ 600 14
Power-One, Inc.+ 600 41
Powerwave Technologies, Inc.+ 500 104
PRI Automation, Inc.+ 500 40
QUALCOMM, Inc.+ 20,000 2,169
Quantum Effect Devices, Inc.+ 600 35
QuickLogic Corp.+ 400 12
Rambus, Inc.+ 600 138
Rational Software Corp.+ 2,300 196
Rayovac Corp.+ 800 17
Remec, Inc.+ 1,000 38
RF Micro Devices, Inc.+ 2,100 219
Rofin-Sinar Technologies, Inc.+ 1,400 16
Sanmina Corp.+ 3,400 204
SCI Systems, Inc.+ 3,800 202
Number Value
of Shares (000s)
--------- -----------
Scientific-Atlanta, Inc. 4,600 $ 299
Semitool, Inc.+ 600 12
Semtech Corp.+ 800 55
Sensormatic Electronics Corp.+ 2,000 33
Silicon Storage Technology, Inc.+ 600 59
Silicon Valley Group, Inc.+ 1,000 29
Siliconix, Inc.+ 800 66
Snyder Communications, Inc.+ 1,700 40
Solectron Corp.+ 15,820 741
SpeedFam-IPEC, Inc.+ 900 14
STAR Telecommunications, Inc.+ 2,100 10
Superconductor Technologies+ 300 7
Superior Telecommunications,
Inc. 1,124 14
Symbol Technologies, Inc. 3,375 188
SymmetriCom, Inc.+ 1,400 17
Technitrol, Inc. 500 34
Tekelec, Inc.+ 1,400 49
Tektronix, Inc. 1,400 81
Telaxis Communications Corp.+ 400 10
TeleCorp PCS, Inc.+ 2,200 98
Tellabs, Inc.+ 10,700 586
Teradyne, Inc.+ 5,000 550
Terayon Communication Systems,
Inc.+ 800 74
Tessco Technologies, Inc.+ 700 15
Texas Instruments, Inc. 21,551 3,510
Therma-Wave, Inc.+ 500 14
Thermo Electron Corp.+ 4,700 91
Thermoquest Corp.+ 1,300 22
Thomas & Betts Corp. 1,400 43
THQ, Inc.+ 800 12
Three-Five Systems, Inc.+ 1,466 128
Tollgrade Communications, Inc.+ 400 26
TranSwitch Corp.+ 1,000 88
Triquint Semiconductor, Inc.+ 1,000 103
Truetime, Inc.+ 400 2
Tweeter Home Entertainment
Group, Inc.+ 600 22
Unitil Corp. 600 17
Univision Communications, Inc.+ 2,600 284
Valence Technology, Inc.+ 900 14
Varian, Inc.+ 1,300 47
Varian Medical Systems, Inc.+ 700 28
Varian Semiconductor Equipment+ 800 54
Viasat, Inc.+ 200 9
Vicor Corp.+ 900 23
Virata Corp.+ 500 63
Vishay Intertechnology, Inc.+ 2,200 185
84
<PAGE>
Number Value
of Shares (000s)
--------- -----------
VISX, Inc.+ 1,500 $ 24
Waters Corp.+ 1,600 152
Western Digital Corp.+ 3,300 23
Western Wireless Corp., Class A+ 1,800 89
Wink Communications, Inc.+ 800 16
Xilinx, Inc.+ 8,600 630
Youthstream Media Networks, Inc.+ 800 5
Zoran Corp.+ 300 15
----------
51,619
----------
ENERGY - RAW MATERIALS -- 1.2%
Anadarko Petroleum Corp. 3,600 156
Apache Corp. 3,100 150
Arch Coal, Inc. 900 5
Atwood Oceanics, Inc.+ 500 30
Baker Hughes, Inc. 9,400 299
Barrett Resources Corp.+ 700 22
Basin Exploration, Inc.+ 1,200 17
Berry Petroleum, Class A 1,000 16
BJ Services Co.+ 2,000 141
Buckeye Partners 700 19
Burlington Resources, Inc. 6,000 236
Cabot Oil & Gas Corp., Class A 900 17
Cooper Cameron Corp.+ 1,400 105
Devon Energy Corp. 2,202 106
Dril-Quip, Inc.+ 500 20
Eastern Enterprises 500 30
ENSCO International, Inc. 3,700 123
Enterprise Products
Partners L.P. 1,100 23
EOG Resources, Inc. 3,200 80
Evergreen Resources, Inc.+ 800 19
Forest Oil Corp.+ 1,500 17
Friede Goldman Halter, Inc.+ 1,855 11
Global Marine, Inc.+ 4,500 108
Halliburton Co. 11,900 526
Helmerich & Payne, Inc. 1,300 41
IRI International Corp.+ 500 4
Key Energy Group, Inc.+ 2,000 19
KEY Production Co., Inc.+ 1,200 16
Kirby Corp.+ 800 17
Louis Dreyfus Natural Gas Corp.+ 900 25
Lynx Therapeutics, Inc.+ 300 7
MAXXAM, Inc.+ 400 11
McDermott International, Inc. 1,500 12
Mitchell Energy & Development
Corp., Class A 1,300 31
Number Value
of Shares (000s)
--------- -----------
Nabors Industries, Inc.+ 3,717 $ 147
Newpark Resources, Inc.+ 2,200 18
NL Industries, Inc. 1,500 24
Noble Affiliates, Inc. 1,400 50
Noble Drilling Corp.+ 3,400 136
Occidental Petroleum Corp. 9,800 210
Offshore Logistics, Inc.+ 600 7
Parker Drilling Co.+ 500 2
Penn Virginia Corp. 400 7
Plains All American
Pipeline L.P. 1,000 17
Plains Resources, Inc.+ 1,000 14
Prima Energy Corp.+ 1,050 30
R&B Falcon Corp.+ 5,100 106
Rowan Cos., Inc.+ 2,400 67
Schlumberger Ltd. 14,700 1,125
Sitel Corp.+ 800 5
Smith International+ 1,300 99
Southwestern Energy Co. 300 3
Swift Energy Co.+ 1,100 22
Tidewater, Inc. 1,400 42
Titan Exploration, Inc.+ 400 2
Tom Brown, Inc.+ 900 17
Trico Marine Services, Inc.+ 1,300 10
Unit Corp.+ 1,600 18
USEC, Inc. 1,900 9
UTI Energy Corp.+ 600 21
Valero Energy Corp. 1,400 41
Varco International, Inc.+ 1,600 20
Vastar Resources, Inc. 2,700 218
Weatherford International, Inc.+ 2,900 118
Western Gas Resources, Inc. 2,000 33
----------
5,097
----------
FOOD & AGRICULTURE -- 2.3%
Ag-Chem Equipment, Inc.+ 1,400 12
Agribrands International, Inc.+ 400 15
American Italian Pasta Co.,
Class A+ 500 12
Andersons, Inc. 1,500 11
Archer-Daniels Midland Co. 15,815 157
Aurora Foods, Inc.+ 1,300 6
Ben & Jerry's Homemade, Class A+ 400 17
Bestfoods, Inc. 7,500 377
Bob Evans Farms, Inc. 2,200 29
Campbell Soup Co. 11,400 296
Celestial Seasonings, Inc.+ 400 13
Coca-Cola Bottling Co. 400 20
Coca-Cola Co. 66,300 3,120
85
<PAGE>
SCHWAB TOTAL STOCK MARKET INDEX FUND(TM)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Coca-Cola Enterprises, Inc. 11,700 $ 249
ConAgra, Inc. 13,200 249
Consolidated-Tomoka Land Co. 1,100 13
Corn Products International,
Inc. 900 22
CTB International Corp.+ 1,600 13
Dean Foods Co. 900 22
Del Monte Foods Co.+ 1,500 13
Delta & Pine Land Co. 900 19
Dole Food Co., Inc. 1,200 21
Dreyer's Grand Ice Cream, Inc. 800 19
Earthgrains Co. 2,100 30
Embrex, Inc.+ 300 5
Fleming Cos., Inc. 1,300 21
Flowers Industries, Inc. 2,500 38
Fresh Del Monte Produce, Inc.+ 1,700 14
General Mills, Inc. 8,100 295
H.J. Heinz Co. 9,400 320
The Hain Food Group, Inc.+ 400 11
Hershey Foods Corp. 3,600 163
Hormel Foods Corp. 3,400 52
IBP, Inc. 2,500 41
IMC Global, Inc. 2,900 45
International Home Foods, Inc.+ 1,800 26
International Multifoods Corp. 600 8
Interstate Bakeries Corp. 1,700 22
J & J Snack Foods Corp.+ 700 11
J.M. Smucker Co., Class A 700 11
Keebler Foods Co. 2,200 69
Kellogg Co. 11,000 269
Lance, Inc. 1,200 13
Lindsay Manufacturing Co. 800 14
Marsh Supermarkets, Inc. 1,000 10
Maui Land & Pineapple Co. 800 16
McCormick & Co., Inc. 1,700 53
Michael Foods, Inc. 500 11
Midwest Grain Products, Inc.+ 1,500 11
Nabisco Group Holdings Corp. 8,300 107
Nabisco Holdings Corp., Class A 1,400 53
Nash - Finch Co. 1,800 13
Northland Cranberries 2,300 8
Osteotech, Inc.+ 700 5
The Pepsi Bottling Group, Inc. 4,000 86
PepsiCo, Inc. 39,100 1,434
Pilgrim's Pride Corp., Class A 300 2
Pilgrim's Pride Corp., Class B 1,400 10
Quaker Oats Co. 3,500 228
Ralcorp Holdings, Inc.+ 700 10
Ralston-Ralston Purina Group 7,600 135
Number Value
of Shares (000s)
--------- -----------
Rexall Sundown, Inc.+ 1,600 $ 31
Sanderson Farms, Inc. 1,400 10
Sara Lee Corp. 24,200 363
Schultz SAV O Stores, Inc. 1,100 13
Scotts Co., Class A+ 700 25
Smithfield Foods, Inc.+ 1,300 28
Suiza Foods Corp.+ 700 27
SUPERVALU, Inc. 3,687 76
SYSCO Corp. 8,900 335
Tasty Baking Co. 1,300 14
Tejon Ranch Co.+ 600 13
Tootsie Roll Industries, Inc. 721 22
Tyson Foods, Inc. 5,700 60
Ultrak, Inc.+ 1,500 14
United Natural Foods, Inc.+ 1,300 20
Universal Foods Corp. 1,200 20
Veterinary Centers of America,
Inc.+ 1,100 15
Vlasic Foods International,
Inc.+ 2,000 4
Whitman Corp. 3,700 42
Whole Foods Market, Inc.+ 600 26
Wild Oats Markets, Inc.+ 650 9
Wm. Wrigley Jr. Co. 3,800 275
Zapata Corp.+ 1,600 6
----------
9,843
----------
GOLD -- 0.0%
Battle Mountain Gold Co.+ 4,300 9
Bull RUN Corp.+ 1,100 4
Golden Cycle Gold Corp.+ 600 3
Homestake Mining Co. 7,000 42
Meridian Gold, Inc.+ 2,100 12
Newmont Mining Corp. 4,600 108
----------
178
----------
HEALTHCARE / DRUGS & MEDICINE -- 9.3%
Abbott Laboratories 41,205 1,584
Abgenix, Inc.+ 1,000 90
Abiomed, Inc.+ 400 15
Acuson Corp.+ 1,100 14
Advance Paradigm, Inc.+ 1,100 14
Aetna, Inc. 4,200 243
Albany Molecular Research, Inc.+ 400 18
Alexion Pharmaceuticals, Inc.+ 400 18
Alkermes, Inc.+ 700 37
Allergan, Inc. 3,600 212
Alliance Pharmaceutical Corp.+ 1,100 9
Allscripts, Inc.+ 600 19
86
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Alpharma, Inc., Class A 800 $ 31
Alterra Healthcare Corp.+ 3,200 10
ALZA Corp.+ 2,700 119
American Home Products Corp. 35,100 1,972
Ameripath, Inc.+ 1,900 15
Amerisource Health Corp.+ 1,400 28
Amgen, Inc.+ 27,400 1,534
Amylin Pharmaceuticals, Inc.+ 1,200 13
Andrx Corp.+ 1,600 82
Antigenics, Inc.+ 600 10
Apria Healthcare Group, Inc.+ 1,200 17
Arrow International, Inc. 500 17
Arthrocare Corp.+ 300 31
Aspect Medical Systems, Inc.+ 400 18
Atrix Labs, Inc.+ 1,400 14
Aurora Biosciences Corp.+ 1,200 43
Avant Immunotherapeutics, Inc.+ 1,500 10
Avigen, Inc.+ 300 10
Aviron+ 800 19
Bacou USA, Inc.+ 1,000 20
Barr Laboratories, Inc.+ 700 30
Bausch & Lomb, Inc. 1,500 91
Baxter International, Inc. 7,900 514
Beckman Coulter, Inc. 800 52
Becton, Dickinson & Co. 6,700 172
Bergen Brunswig Corp. 3,000 15
Berkshire Bancorp, Inc. 500 16
Bindley Western Industries, Inc. 1,033 18
Bio-Technology General Corp.+ 1,200 17
Biocryst Pharmaceuticals, Inc.+ 700 17
Biogen, Inc.+ 4,200 247
Biomatrix, Inc.+ 800 15
Biomet, Inc. 3,100 111
Biopure Corp.+ 500 11
Block Drug Co. 515 15
Bone Care International, Inc.+ 1,400 27
Boston Scientific Corp.+ 11,300 299
Bristol-Myers Squibb Co. 53,300 2,795
Brookdale Living Communities+ 1,300 17
C.R. Bard, Inc. 1,400 61
Cardinal Health, Inc. 7,600 418
Caremark Rx, Inc.+ 5,300 34
Carter-Wallace, Inc. 1,100 24
Cell Pathways, Inc.+ 600 16
Cephalon, Inc.+ 900 51
Cerus Corp.+ 300 11
Chattem, Inc.+ 1,100 14
ChiRex, Inc.+ 800 14
Number Value
of Shares (000s)
--------- -----------
Chiron Corp.+ 4,800 $ 217
ChromaVision Medical Systems,
Inc.+ 800 11
Columbia / HCA Healthcare Corp. 15,000 427
Conmed Corp.+ 500 13
Cooper Cos., Inc. 600 20
COR Therapeutics, Inc.+ 1,100 84
Corixa Corp.+ 1,100 34
CorVel Corp.+ 600 16
Coulter Pharmaceutical, Inc.+ 700 13
Covance, Inc.+ 1,300 12
Coventry Health Care, Inc.+ 1,700 18
Cubist Pharmaceuticals, Inc.+ 500 16
CV Therapeutics, Inc.+ 400 16
Cyotgen Corp.+ 1,700 11
D&K Healthcare Resources, Inc.+ 1,000 9
Datascope Corp. 500 17
Dentsply International, Inc. 1,300 38
Diagnostic Products Corp. 600 18
Digene Corp.+ 600 26
drkoop.com, Inc.+ 1,200 3
Dura Pharmaceuticals, Inc.+ 1,200 16
Duramed Pharmaceuticals, Inc.+ 1,900 9
Eclipse Surgical Technologies,
Inc.+ 1,700 7
Edwards Lifesciences Corp.+ 1,500 22
Eli Lilly & Co. 29,400 2,273
Emisphere Technologies, Inc.+ 500 20
Entremed, Inc.+ 500 26
Enzo Biochem, Inc.+ 600 24
First Health Group Corp.+ 1,300 40
Forest Laboratories, Inc.+ 2,200 185
Foundation Health Systems, Inc.+ 3,300 33
GelTex Pharmaceuticals, Inc.+ 700 11
Gene Logic, Inc.+ 1,300 35
Genentech, Inc.+ 3,200 374
Genome Therapeutics Corp.+ 500 9
Genzyme Corp.+ 2,300 112
Genzyme Surgical Products+ 996 9
Geron Corp.+ 400 10
Gilead Sciences, Inc.+ 1,265 69
Guidant Corp.+ 8,216 471
Guilford Pharmaceuticals, Inc.+ 500 9
Haemonetics Corp.+ 700 16
Health Management Associates,
Inc., Class A+ 6,300 100
Health Management Systems,
Inc.+ 1,400 5
Healthcare Services Group+ 2,500 12
HealthSouth Corp.+ 10,300 83
HEICO Corp., Class A 1,000 14
87
<PAGE>
SCHWAB TOTAL STOCK MARKET INDEX FUND(TM)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Henry Schein, Inc.+ 1,100 $ 15
Hologic, Inc.+ 1,400 11
Human Genome Sciences, Inc.+ 1,400 107
Humana, Inc.+ 4,400 34
Hyseq, Inc.+ 400 11
ICN Pharmaceuticals, Inc. 2,100 53
IDEC Pharmaceuticals Corp.+ 1,100 70
Idexx Laboratories, Inc.+ 1,000 26
IGEN International, Inc.+ 600 10
Ilex Oncology, Inc.+ 500 12
ImClone Systems+ 700 64
Immucore, Inc.+ 1,100 10
Immunex Corp.+ 13,400 528
Immunomedics, Inc.+ 1,200 17
Inamed Corp.+ 500 21
Incyte Pharmaceuticals, Inc.+ 700 54
Inhale Therapeutic Systems+ 500 31
Invacare Corp. 800 21
Isis Pharmaceuticals, Inc.+ 1,000 11
IVAX Corp.+ 4,200 115
Johnson & Johnson 37,430 3,088
Jones Medical Industries, Inc. 1,700 49
King Pharmaceuticals, Inc.+ 1,450 72
Laboratory Corp. of America
Holdings+ 2,300 14
Laser Vision Centers, Inc.+ 1,700 7
LCA-vision, Inc.+ 1,400 5
LifePoint Hospitals, Inc.+ 1,100 19
Ligand Pharmaceuticals, Inc.+ 1,300 17
Lincare Holdings, Inc.+ 1,400 43
The Liposome Co., Inc.+ 1,300 23
Mallinckrodt, Inc. 1,800 48
Manor Care, Inc.+ 2,400 29
Maxicare Health Plans, Inc.+ 1,400 2
Maxim Pharmaceuticals, Inc.+ 900 35
McKesson HBOC, Inc. 7,400 125
Medarex, Inc.+ 900 48
Medicis Pharmaceutical Corp.,
Class A+ 700 31
Medimmune, Inc.+ 1,800 288
MedQuist, Inc.+ 900 32
Medtronic, Inc. 32,024 1,663
Merck & Co., Inc. 62,700 4,358
MGI Pharma, Inc.+ 400 9
Mid Atlantic Medical Services,
Inc.+ 1,600 15
Millennium Pharmaceuticals+ 2,342 186
Mine Safety Appliances Co. 300 19
Minimed, Inc.+ 800 98
Molecular Devices Corp.+ 200 9
Mylan Laboratories, Inc. 3,400 96
Number Value
of Shares (000s)
--------- -----------
Myriad Genetics, Inc.+ 700 $ 45
NBTY, Inc.+ 1,500 27
Neurogen Corp.+ 800 23
Nexell Therapeutics, Inc.+ 1,800 5
North American Vaccine, Inc.+ 2,600 10
Northfield Laboratories, Inc.+ 1,100 16
NPS Pharmacuticals, Inc.+ 1,000 13
Oakley, Inc.+ 2,200 25
Ocular Sciences, Inc.+ 1,000 17
Omnicare, Inc. 2,400 36
Onyx Pharmaceuticals, Inc.+ 1,200 12
Organogenesis, Inc.+ 1,500 17
OrthAlliance, Inc.+ 2,100 13
Orthodontic Centers of America,
Inc.+ 1,200 25
Owens & Minor, Inc. 1,500 18
Oxford Health Plans, Inc.+ 2,000 38
PacifiCare Health Systems, Inc.+ 1,100 57
Parexel International Corp.+ 1,900 17
Patterson Dental Co.+ 900 43
Pediatrix Medical Group, Inc.+ 2,200 18
Penwest Pharmaceuticals Co.+ 1,200 15
Perrigo Co.+ 2,000 11
Pfizer, Inc. 104,000 4,381
Pharmaceutical Product
Development, Inc.+ 1,000 17
Pharmacopeia, Inc.+ 800 33
Pharmacyclics, Inc.+ 400 18
PolyMedica Corp.+ 300 16
Progenics Pharmaceuticals, Inc.+ 300 14
Province Healthcare Co.+ 700 20
PSS World Medical, Inc.+ 1,900 16
Quest Diagnostic, Inc.+ 1,200 70
Quintiles Transnational Corp.+ 3,100 44
Quorum Health Group, Inc.+ 1,500 16
Regeneron Pharmaceuticals, Inc.+ 900 26
Renal Care Group, Inc.+ 1,100 24
ResMed, Inc.+ 1,000 34
Respironics, Inc.+ 1,400 23
SafeScience, Inc.+ 1,200 11
Sangstat Medical Corp.+ 600 17
Schein Pharmaceutical, Inc.+ 1,500 21
Schering-Plough Corp. 39,500 1,592
Sepracor, Inc.+ 1,700 156
Serologicals Corp.+ 2,200 8
SICOR, Inc.+ 2,000 23
Sierra Health Services, Inc.+ 3,100 11
Sola International, Inc.+ 1,900 8
SonoSite, Inc.+ 600 20
88
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Spectra-Physics Lasers, Inc.+ 400 $ 20
St. Jude Medical, Inc.+ 2,300 72
Stancorp Financial Group 800 23
Steris Corp.+ 1,400 13
Stryker Corp. 2,700 194
Summit Technology, Inc.+ 1,600 14
Sunrise Assisted Living, Inc.+ 1,200 19
Sunrise Medical, Inc.+ 1,900 10
Sunrise Technologies
International+ 1,700 11
SuperGen, Inc.+ 700 23
Sybron International Corp.+ 2,700 84
Syncor International Corp.+ 600 25
Techniclone Corp.+ 2,600 11
Tenet Healthcare Corp.+ 8,700 222
Thermedics, Inc.+ 2,400 20
Thoratec Labs Corp.+ 1,300 14
Titan Pharmaceuticals, Inc.+ 600 19
Total Renal Care Holdings, Inc.+ 1,800 5
Transkaryotic Therapies, Inc.+ 600 18
Triad Hospitals, Inc.+ 1,100 19
Triangle Pharmaceuticals, Inc.+ 1,000 6
Trigon Healthcare, Inc.+ 1,000 36
Trimeris, Inc.+ 300 10
TriPath Imaging, Inc.+ 1,800 11
UnitedHealth Group, Inc. 5,100 340
Universal Health Services,
Class B+ 800 44
Ventana Medical Systems+ 300 8
Vertex Pharmaceuticals, Inc.+ 600 31
Vical, Inc.+ 700 13
Viropharma, Inc.+ 1,000 15
Warner-Lambert Co. 23,200 2,640
Watson Pharmaceuticals, Inc.+ 2,600 117
Wellpoint Health Networks,
Inc.+ 1,900 140
West Pharmaceutical Services,
Inc. 600 15
Xoma Ltd.+ 1,700 7
Young Innovations, Inc.+ 800 13
----------
39,472
----------
HOUSEHOLD PRODUCTS -- 1.2%
Alberto-Culver Co., Class B 1,600 38
Avon Products, Inc. 6,300 262
Bush Boake Allen, Inc.+ 500 15
Church & Dwight Co., Inc. 800 14
Clorox Co. 6,400 235
Colgate-Palmolive Co. 15,600 891
Dial Corp. 2,700 38
Number Value
of Shares (000s)
--------- -----------
Estee Lauder Cos., Inc.,
Class A 3,100 $ 137
French Fragrances, Inc.+ 1,200 10
Gillette Co. 28,800 1,066
Guest Supply, Inc.+ 600 10
Inter Parfums, Inc.+ 300 3
International Flavors &
Fragrances, Inc. 2,900 100
Nu Skin Asia Pacific, Inc.+ 3,300 25
Playtex Products, Inc.+ 1,200 13
Procter & Gamble Co. 35,400 2,111
Revlon, Inc.+ 1,800 13
----------
4,981
----------
INSURANCE -- 2.7%
21st Century Insurance Group 2,300 50
ACE Ltd. 520 12
AFLAC, Inc. 6,800 332
Alfa Farmers Federation Corp. 800 14
Alleghany Corp.+ 202 34
Allmerica Financial Corp. 1,400 76
Allstate Corp. 21,574 510
AMBAC Financial Group, Inc. 1,900 91
American Annuity Group, Inc. 1,000 17
American Financial Group, Inc. 1,500 38
American General Corp. 6,400 358
American International Group,
Inc. 41,325 4,533
American National Insurance Co. 600 31
AmerUs Life Holdings, Inc.,
Class A 700 14
Aon Corp. 7,200 195
Argonaut Group, Inc. 800 14
Arthur J. Gallegher & Co. 1,000 37
AXA Financial, Inc. 11,500 375
Baldwin & Lyons, Inc., Class B 600 12
Chubb Corp. 5,347 340
CIGNA Corp. 5,300 423
Cincinnati Financial Corp. 4,300 173
CNA Financial Corp.+ 4,800 148
CNA Surety Corp. 1,200 18
Commerce Group, Inc. 700 21
Conseco, Inc. 8,200 45
Copart, Inc.+ 1,400 24
Crawford & Co., Class B 1,100 15
Delphi Financial Group, Inc.,
Class A+ 510 15
E.W. Blanch Holdings 400 9
Enhance Financial Services
Group, Inc. 1,100 11
Erie Indemnity Co., Class A 1,600 48
Everest Re Group Ltd. 1,100 32
FBL Financial Group, Inc.,
Class A 1,000 16
89
<PAGE>
SCHWAB TOTAL STOCK MARKET INDEX FUND(TM)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
First American Financial
Corp. 1,500 $ 23
First United Corp. 900 9
FPIC Insurance Group, Inc.+ 700 10
Fremont General Corp. 2,100 12
Harleysville Group, Inc. 800 13
Hartford Financial Services
Group, Inc. 6,100 318
Hartford Life, Inc., Class A 600 30
HCC Insurance Holdings, Inc. 1,200 14
HealthAxis, Inc.+ 400 2
Hilb, Rogal & Hamilton Co. 400 11
Hooper Holmes, Inc. 1,400 24
Horace Mann Educators Corp. 800 12
HSB Group, Inc. 600 17
Jefferson-Pilot Corp. 2,900 193
Kansas City Life Insurance Co. 400 11
Liberty Corp. 500 16
Lincoln National Corp. 5,000 174
Loew's Corp. 2,700 149
Markel Corp.+ 100 15
Marsh & McLennan Cos., Inc. 7,000 690
MBIA, Inc. 2,600 129
Medical Assurance, Inc.+ 725 10
Mercury General Corp. 1,400 38
MGIC Investment Corp. 2,700 129
MIIX Group, Inc. 1,000 12
Mony Group, Inc. 1,100 34
Nationwide Financial Services,
Inc., Class A 500 14
Ohio Casualty Corp. 1,600 27
Old Republic International Corp. 2,900 41
Penn-America Group, Inc. 900 8
Penn Treaty American Corp.+ 1,000 15
Pico Holdings, Inc.+ 1,000 11
PMI Group, Inc. 1,150 56
Presidential Life Corp. 700 11
Proffessionals Group, Inc.+ 520 9
Progressive Corp. 2,300 151
Protective Life Corp. 1,400 33
Reinsurance Group of America,
Inc. 1,100 27
Reliastar Financial Corp. 2,050 88
Risk Capital Holdings, Inc.+ 800 12
RLI Corp. 500 16
SAFECO Corp. 3,400 75
SCPIE Holdings, Inc. 500 15
Selective Insurance Group, Inc. 700 13
St. Paul Cos., Inc. 6,600 235
State Auto Financial Corp. 1,300 13
Sterling Financial Corp. 500 10
Number Value
of Shares (000s)
--------- -----------
Superior National Insurance
Group+ 1,300 $ 0
Torchmark Corp. 3,400 85
Transatlantic Holdings, Inc. 900 75
Trenwick Group, Inc. 800 11
Triad Guaranty, Inc.+ 500 10
UICI+ 1,300 6
Unitrin, Inc. 1,900 64
UnumProvident Corp. 14,014 238
Vesta Insurance Group, Inc. 2,300 12
W.R. Berkley Corp. 700 15
Xl Capital Ltd., Class A 183 9
Zenith National Insurance Corp. 600 15
----------
11,596
----------
MEDIA -- 4.1%
A.H. Belo Corp., Class A 3,000 50
Ackerly Group, Inc. 800 10
Actv, Inc.+ 1,100 20
Amc Entertainment, Inc.+ 1,400 6
American Tower Corp., Class A+ 3,900 181
AMFM, Inc.+ 5,798 385
Applied Graphics Technologies+ 1,500 8
Banta Corp. 700 14
BHC Communications, Inc.,
Class A 600 93
Cablevision Systems Corp.,
Class A+ 3,500 237
Cadmus Communications Corp. 1,400 12
California Amplifier, Inc.+ 600 16
CBS Corp.+ 19,472 1,144
Central Newspapers, Inc.,
Class A 900 28
Charter Communications, Inc.,
Class A+ 4,300 63
Chris-Craft Industries, Inc.+ 927 57
Citadel Communications Corp.+ 1,000 39
Clear Channel Communications,
Inc.+ 9,100 655
CNET Networks, Inc.+ 2,000 69
Comcast Corp., Class A+ 24,900 998
Consolidated Graphics, Inc.+ 600 7
Cox Communications, Inc.+ 15,435 661
Crown Castle International
Group+ 3,800 146
CTC Communications Group, Inc.+ 550 19
Cumulus Media, Inc.+ 700 9
Cymer, Inc.+ 700 27
Dick Clark Productions, Inc.+ 900 12
Dow Jones & Co., Inc. 2,800 182
The E.W. Scripps Co., Class A 2,000 93
EchoStar Communications Corp.,
Class A+ 6,100 388
Efficient Networks, Inc.+ 1,300 85
Emmis Communications Corp.,
Class A+ 1,000 43
90
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Emusic.com, Inc.+ 1,400 $ 3
Entercom Communications Corp.+ 800 34
Express Scripts, Inc., Class A+ 1,000 36
Fox Entertainment Group, Inc.+ 4,700 121
Gannett Co., Inc. 7,500 479
Gaylord Entertainment Co. 800 19
GC Cos., Inc.+ 500 16
go.com+ 1,495 20
Gray Communication Systems, Inc. 700 8
Gray Communication Systems, Inc.,
Class B 500 5
Harte-Hanks Communications, Inc. 1,800 45
Hispanic Broadcasting Corp.+ 1,400 141
Hollinger International, Inc. 2,600 33
Houghton Mifflin Co. 900 37
IDG Books Worldwide, Inc.+ 800 8
ImageX.com, Inc.+ 400 3
Infinity Broadcasting Corp.+ 9,975 339
Information Holdings, Inc.+ 700 18
Insight Communications+ 1,300 26
Intraware, Inc.+ 800 13
John Wiley & Sons, Inc., Class A 1,500 26
Journal Register Co.+ 1,200 18
Knight-Ridder, Inc. 2,400 118
Lee Enterprises, Inc. 1,000 23
Liberty Digital, Inc., Class A+ 700 22
Loews Cineplex Entertainment
Corp.+ 1,900 6
Maxwell Technologies, Inc.+ 1,000 15
McClatchy Newspapers, Inc.,
Class A 1,200 38
McGraw-Hill Cos., Inc. 6,000 315
Media General, Inc., Class A 800 39
Mediacom Communications Corp.+ 1,400 17
MediaOne Group, Inc.+ 15,700 1,187
Meredith Corp. 1,300 36
Metro Goldwyn Mayer, Inc.+ 5,417 163
Metromedia International Group,
Inc.+ 1,600 8
New York Times Co., Class A 5,000 206
OnHealth Network Co.+ 1,600 6
PanAmSat Corp.+ 400 17
Penton Media, Inc. 700 18
Playboy Enterprises, Inc.+ 500 8
Price Communications Corp.+ 1,355 27
Primedia, Inc.+ 8,300 173
R.R. Donnelley & Sons Co. 3,400 72
Radio Unica Corp.+ 800 8
Reader's Digest Association,
Inc., Class A 2,900 93
Number Value
of Shares (000s)
--------- -----------
Salem Communications Corp.+ 600 $ 5
Scholastic Corp.+ 400 19
Sinclair Broadcast Group, Inc.+ 1,200 9
Skymall, Inc.+ 1,300 5
The Source Information
Management Co.+ 1,000 15
Spanish Broadcasting System,
Class A+ 700 13
Time Warner, Inc. 34,600 3,112
TiVo, Inc.+ 900 16
Tribune Co. 6,900 268
TV Guide, Inc.+ 4,000 119
United Television, Inc. 300 41
USA Networks, Inc.+ 7,856 181
Valassis Communications, Inc.+ 1,400 48
Valuevision International, Inc.+ 900 18
Viacom, Inc., Class B+ 18,700 1,017
Walt Disney Co. 55,600 2,408
Washington Post Co. 300 147
Westwood One, Inc.+ 3,200 113
XM Satellite Radio Holdings,
Inc.+ 800 23
Young Broadcasting, Inc.+ 500 11
Ziff-Davis, Inc.+ 2,600 26
----------
17,434
----------
MISCELLANEOUS -- 0.8%
1-800-FLOWERS.com, Inc.+ 1,200 7
Aclara BioSciences, Inc.+ 800 31
Acme Communications, Inc.+ 700 16
Agilent Technologies, Inc.+ 1,900 168
Alaska Communications Systems
Group, Inc.+ 1,100 13
Alteon Websystems, Inc.+ 2,200 150
Amdocs Ltd.+ 111 8
Amercan National Can Group, Inc. 1,400 24
Be Free, Inc.+ 1,400 18
Be, Inc.+ 1,900 15
BioMarin Pharmaceuticals, Inc.+ 1,100 20
Bluestone Software, Inc.+ 500 11
Braun Consulting+ 600 15
Breakaway Solutions, Inc.+ 1,000 26
C-Bridge Internet Solutions,
Inc.+ 600 16
Capitol Federal Financial 2,300 22
Choice One Communications, Inc.+ 700 22
CIRCOR International, Inc.+ 950 11
Cobalt Group, Inc.+ 700 8
Commerce One, Inc.+ 3,800 232
Corinthian Colleges, Inc.+ 800 17
91
<PAGE>
SCHWAB TOTAL STOCK MARKET INDEX FUND(TM)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Cypress Communications, Inc.+ 1,200 $ 16
Data Return Corp.+ 900 22
Digital Island+ 1,700 59
Ditech Communications Corp.+ 800 69
DSL.net, Inc.+ 1,400 14
E-loan, Inc.+ 1,600 11
E-Stamp Corp.+ 700 3
Eloyalty Corp.+ 1,000 17
Epiphany, Inc.+ 700 46
Extreme Networks, Inc.+ 1,400 81
Fairchild Semiconductor
International, Inc., Class A+ 1,800 86
Finisar Corp.+ 4,100 153
Frontline Capital Group+ 600 10
Gabelli Asset Management, Inc.+ 700 14
Globalnet Financial.com, Inc.+ 700 16
Grant Prideco, Inc.+ 2,900 56
Informatica Corp.+ 800 34
InfoSpace.com, Inc.+ 5,200 373
Interactive Intelligence, Inc.+ 700 17
Intercept Group, Inc.+ 1,000 17
Interdent, Inc.+ 1,400 7
Internet Capital Group, Inc.+ 800 34
Interspeed, Inc.+ 500 6
InterWorld Corp.+ 700 13
IXL Enterprises, Inc.+ 1,800 40
John Hancock Financial Services+ 8,900 162
Keynote Systems, Inc.+ 700 31
Liquid Audio+ 700 11
Mail.com, Inc.+ 1,600 13
Management Network Group, Inc.+ 1,000 18
Media Metrix+ 600 19
MicroFinancial, Inc. 1,400 14
Mortgage.com, Inc.+ 2,300 4
National Information Consortium,
Inc.+ 1,300 16
NaviSite, Inc.+ 1,400 65
NetCreations, Inc.+ 500 17
Network Access Solutions Corp.+ 1,100 17
Netzero, Inc.+ 2,400 29
Nucentrix Broadband Networks,
Inc.+ 200 5
Nueberger Berman, Inc. 1,200 39
ON2.COM, Inc.+ 2,000 22
Pac-West Telecomm, Inc.+ 800 17
Palm, Inc.+ 200 5
Paradyne Networks Corp.+ 700 20
Pennaco Energy, Inc.+ 300 5
Phone.com, Inc.+ 1,800 151
Number Value
of Shares (000s)
--------- -----------
PlanetRx.com, Inc.+ 1,400 $ 4
Radio One, Inc.+ 600 35
Regent Communications, Inc.+ 400 3
Rudolph Technologies, Inc.+ 500 15
Sage, Inc.+ 700 12
Sagent Technology, Inc.+ 1,100 9
Silicon Image, Inc.+ 700 28
Smith-Gardner & Associates,
Inc.+ 900 9
Somera Communications, Inc.+ 1,900 18
Spectrasite Holdings, Inc.+ 3,200 67
T/R Systems, Inc.+ 200 3
TD Waterhouse Group, Inc.+ 900 18
Too, Inc.+ 742 22
Travelocity.com, Inc.+ 300 5
Trizetto Group, Inc.+ 900 19
Troy Group, Inc.+ 200 3
Tumbleweed Communications Corp.+ 700 21
U.S. Interactive, Inc.+ 900 15
United Parcel Service, Inc. 3,000 200
United Therapeutics Corp.+ 500 28
Viador, Inc.+ 800 16
Vicinity Corp.+ 900 11
Virginia Capital Bancshares,
Inc. 1,100 16
Vitria Technology, Inc.+ 3,400 126
Web Street, Inc.+ 800 3
Webvan Group Inc.+ 700 5
Williams Communications Group,
Inc.+ 1,700 63
Wit Capital Group, Inc.+ 1,300 14
Women.com Networks, Inc.+ 900 5
----------
3,537
----------
MISCELLANEOUS FINANCE -- 6.2%
Acacia Research Corp.+ 300 7
Advanta Corp., Class A 700 12
Advest Group, Inc. 700 14
Affiliated Managers Group, Inc.+ 500 20
Alexandria Real Estate Equities,
Inc. 500 16
Alliance Capital Management
Holding L.P. 4,500 202
Allied Capital Corp. 1,700 32
AMB Property Corp. 2,300 51
AMCORE Financial, Inc. 700 14
American Bank of Connecticut 600 12
American Capital Strategies Ltd. 500 12
American Express Co. 12,100 1,816
AmeriCredit Corp.+ 2,000 37
Ameritrade Holding Corp.,
Class A+ 4,400 74
92
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Amli Residential Properties 500 $ 11
Amresco Capital Trust, Inc. 1,300 14
Apartment Investment &
Management Co. 1,800 72
Archstone Communities Trust 3,700 80
Arden Realty, Inc. 1,700 38
Area Bancshares Corp. 500 10
Associates First Capital Corp. 19,400 430
Astoria Financial Corp. 1,500 41
AvalonBay Communities, Inc. 1,700 67
Banco Santander Puerto Rico 1,100 13
Bay View Capital Corp. 1,000 7
Bear Stearns Cos., Inc. 3,120 134
Bedford Property Investors 900 16
Berkshire Hathaway, Inc.,
Class A.+ 40 2,372
BISYS Group, Inc.+ 700 44
Boca Resorts, Inc., Class A+ 1,300 12
BOK Financial Corp.+ 1,127 18
Bradley Real Estate, Inc. 700 13
Brandywine Realty Trust 700 12
BRE Properties, Class A 1,200 34
Brown & Brown 300 12
BT Financial Corp. 725 12
Cabot Industrial Trust 900 17
Cadiz, Inc.+ 1,600 12
Camden Property Trust 1,000 28
Capital One Financial Corp. 5,700 249
Capstead Mortgage Corp. 1,700 6
Carey Diversified LLC 700 13
Carramerica Realty Corp. 1,600 38
Cash America International, Inc. 1,300 12
Cathay Bancorp, Inc. 400 18
CBL & Associates Properties 500 12
Centerpoint Properties Corp. 500 18
Charles Schwab Corp. 21,900 975
Charter One Financial, Inc. 5,549 113
Chateau Communities, Inc. 600 16
Chelsea GCA Realty, Inc. 500 16
CIT Group, Inc. 6,300 107
Citigroup, Inc. 90,700 5,391
Coastal Bancorp, Inc. 800 12
Coastal Financial Corp. 924 10
Cohoes Bancorp. 1,200 14
Colonial Properties Trust 500 12
Commercial Federal Corp. 1,300 20
Commercial NET Lease Realty 1,000 11
CompuCredit Corp.+ 1,200 39
Number Value
of Shares (000s)
--------- -----------
Cornerstone Realty Income Trust 1,200 $ 12
Correctional Properties Trust 1,100 13
Countrywide Credit Industries,
Inc. 2,900 80
Cousins Properties, Inc. 800 31
Crescent Real Estate Equity Co. 3,200 55
CV Real Estate Investment Trust,
Inc. 1,400 13
CVB Financial Corp. 625 10
Dain Rauscher Corp. 400 25
Developers Diversified Realty 1,600 24
Dime Bancorp., Inc. 2,800 52
Donaldson, Lufkin, & Jenrette,
Inc. 3,400 142
Downey Financial Corp. 800 24
Dynex Capital, Inc.+ 1,700 3
Eastgroup Properties 700 15
Eaton Vance Corp. 900 38
Edwards, Inc. 2,400 90
Energizer Holdings, Inc.+ 2,533 43
Equity Office Properties Trust 6,600 179
Equity One, Inc. 1,100 10
Equity Residential Properties
Trust 3,400 155
Espeed, Inc., Class A+ 200 9
Essex Property Trust, Inc. 400 15
ETrade Group, Inc.+ 7,635 164
Excel Legacy Corp.+ 363 1
Fannie Mae 27,500 1,659
Farm Family Holdings, Inc.+ 400 11
Federal Realty Investment Trust 900 19
Federated Investors 2,100 59
Fidelity Bancshares, Inc. 800 13
Fidelity Holdings, Inc.+ 1,200 7
Fidelity National Financial,
Inc. 1,700 25
Financial Federal Corp.+ 800 15
Financial Security Assurance
Holdings Ltd. 800 59
Finova Group, Inc. 1,500 19
First Financial Corp. 300 10
First Industrial Realty Trust 900 27
First Northern Capital Corp. 1,300 16
First Sentinel Bancorp, Inc. 1,500 11
First Source Corp. 600 12
First Washington Realty Trust 600 12
Flagstar Bancorp., Inc. 700 9
Franklin Resources, Inc. 7,000 226
Freddie Mac 18,600 854
Gables Residential Trust 500 12
Glenborough Realty Trust, Inc. 900 13
Glimcher Realty Trust 800 11
93
<PAGE>
SCHWAB TOTAL STOCK MARKET INDEX FUND(TM)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Golden State Bancorp, Inc.+ 3,300 $ 51
Golden West Financial Corp. 4,200 143
Goldman Sachs Group, Inc. 1,800 168
Golf Trust of America L.P. 900 16
Greater Bay Bancorp. 500 21
Grove Property Trust 1,000 14
Harris Financial, Inc. 1,400 9
Health Care Property Investors,
Inc. 1,224 34
Health Care Real Estate
Investment Trust, Inc. 700 11
Healthcare Realty Trust, Inc. 900 16
Heller Financial, Inc. 1,059 21
Henry Jack & Associates, Inc. 1,000 39
Highwoods Properties, Inc. 1,500 34
Home Properties of NY, Inc. 500 14
Hospitality Properties Trust 1,500 33
Household International, Inc. 12,600 526
HRPT Properties Trust 3,400 26
Hudson River Bancorp. 1,200 12
Hugoton Royalty Trust 1,300 13
IndyMac Mortgage Holdings, Inc. 2,000 26
Innkeepers USA Trust 1,500 13
International Bancshares Corp. 450 19
InterWest Bancorp., Inc. 700 11
Investment Technology Group,
Inc.+ 800 30
Investors Financial Services
Corp. 400 33
IRT Property Co. 1,600 13
ITT Educational Services, Inc.+ 1,000 18
Jefferies Group, Inc. 800 18
John Nuveen Co., Class A 900 36
JP Realty, Inc. 700 13
JW Genesis Financial Corp.+ 1,041 11
Keystone Property Trust 900 11
Kimco Realty Corp. 1,700 68
Knight/Trimark Group, Inc.+ 6,700 252
Koger Equity, Inc. 700 12
LabOne, Inc. 1,300 9
LaBranche & Co., Inc.+ 1,200 14
Legg Mason, Inc. 1,600 61
Lehman Brothers Holdings, Inc. 3,900 320
Leucadia National Corp. 1,400 33
Liberty Financial Cos., Inc. 1,100 21
Liberty Property Trust 1,700 42
LNR Property Corp. 700 15
LTC Propertys, Inc. 1,800 11
M.D.C. Holdings, Inc. 1,000 19
Macerich Co. 700 16
Mack-Cali Realty Corp. 1,400 36
Number Value
of Shares (000s)
--------- -----------
Mail Well Holdings, Inc.+ 1,300 $ 12
Manufactured Home Communities 500 13
MBNA Corp. 21,500 571
MECH Financial, Inc. 600 19
Meditrust Corp. 2,900 6
Merrill Lynch & Co., Inc. 10,100 1,030
MessageMedia, Inc.+ 1,900 10
Mid-America Apartment
Communities 500 12
Midas, Inc. 500 13
Mills Corp. 700 13
Mississippi Valley Bancshares 500 11
Morgan Keegan, Inc. 700 11
Morgan Stanley Dean Witter
Discover & Co. 30,600 2,349
National Discount Broker Group,
Inc.+ 600 18
National Golf Properties, Inc. 800 15
National Health Investors 700 8
National Western Life
Insurance Co., Class A+ 300 22
Nationwide Health Properties,
Inc. 1,100 15
New Century Financial Corp.+ 1,100 8
New Plan Excel Realty Trust 2,300 33
NextCard, Inc.+ 1,200 13
Northwest Bancorp., Inc. 1,500 11
NVEST L.P. 1,000 18
Ocwen Financial Corp.+ 2,920 21
Pacific Capital Bancorp. 500 14
Pacific Gulf Properties, Inc. 800 17
Paine Webber Group, Inc. 4,200 184
PAN Pacific Retail Properties,
Inc. 900 17
Parkway Properties, Inc. 500 15
PBOC Holdings, Inc.+ 1,500 13
Penford Corp. 1,200 20
The Peoples Holding Co. 500 12
Phoenix Investment Partners Ltd. 1,600 14
Pimco Advisors Holdings L.P. 1,300 50
Pioneer Group, Inc.+ 800 22
PMC Commercial Trust 1,000 11
Prentiss Properties Trust 800 19
Prison Realty Trust, Inc. 2,300 7
Prologis Trust 4,300 85
PS Business Parks, Inc. 500 11
Public Storage, Inc. 3,400 76
Radian Group, Inc. 959 49
Raymond James Financial, Inc. 1,100 22
Realty Income Corp. 500 11
Reckson Associates Realty 900 18
Regency Realty Corp. 1,400 31
94
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Resource America, Inc. 1,400 $ 10
RFS Hotel Investors, Inc. 1,100 13
Roslyn Bancorp., Inc. 1,800 31
Sabre Group Holdings, Inc.+ 3,501 122
Security Capital Group, Inc.+ 1,300 20
Senior Housing Properties Trust 950 8
Siebert Financial Corp. 1,100 10
SierraCities.com, Inc.+ 700 4
SL Green Realty Corp. 500 13
SLM Holding Corp. 4,400 138
Smith Residential 600 23
Southwest Securities Group 530 22
Sovereign Bancorp, Inc. 5,460 38
Sovran Self Storage, Inc. 800 16
Spieker Properties, Inc. 1,800 80
Starwood Financial, Inc.+ 2,290 40
Staten Island Bancorp., Inc. 800 14
Storage USA, Inc. 600 18
Student Loan Corp. 500 20
Summit Properties, Inc. 600 12
Sun Communities, Inc. 500 17
T. Rowe Price Associates, Inc. 3,200 122
Tanger Factory Outlet Centers 800 17
Taragon Realty Investors, Inc. 1,300 13
Taubman Centers, Inc. 1,100 13
TCF Financial Corp. 2,100 49
Tucker Anthony Sutro 1,200 20
U.S. Trust Corp. 500 77
United Asset Management Co. 1,300 23
United Dominion Realty Trust 2,600 26
UnitedGlobalCom, Inc., Class A+ 2,200 117
Universal Health Realty Income 900 14
Value Line, Inc. 300 11
W Holding Co., Inc. 1,400 13
Waddell & Reed Financial, Inc.,
Class A 1,950 52
Washington Federal, Inc. 1,200 21
Washington Mutual, Inc. 15,577 398
Washington Real Estate Investment
Trust 700 11
Webster Financial Corp. 1,100 24
Weingarten Realty Investment 800 32
Wesco Financial Corp. 200 47
Wesley Jessen VisionCare, Inc.+ 500 20
Westfield America, Inc. 1,700 23
WFS Financial, Inc.+ 900 18
White Mountains Insurance Group,
Inc. 200 28
World Acceptance Corp.+ 1,400 7
----------
26,459
----------
Number Value
of Shares (000s)
--------- -----------
NON-FERROUS METALS -- 0.3%
Alcoa, Inc. 9,900 $ 642
Commercial Metals Co. 500 15
Commonwealth Industries, Inc. 1,300 10
Engelhard Corp. 3,000 53
Freeport-McMoRan Copper &
Gold, Inc., Class B+ 4,200 40
Howmet International, Inc.+ 2,400 51
IMCO Recycling, Inc. 1,400 14
Kaiser Aluminum Corp.+ 2,000 8
Minerals Technologies, Inc. 500 23
Mueller Industries, Inc.+ 900 30
Phelps Dodge Corp. 2,830 131
Reliance Steel & Aluminum Co. 650 15
Reynolds Metals Co. 2,200 146
Southern Peru Copper Corp. 1,000 13
Stillwater Mining Co.+ 900 25
United Park City Mines+ 200 5
Wolverine Tube, Inc.+ 700 11
----------
1,232
----------
OIL - DOMESTIC -- 0.8%
Amerada Hess Corp. 2,500 159
Ashland, Inc. 1,900 65
Belco Oil & Gas Corp.+ 2,000 18
Benton Oil & Gas Co.+ 400 1
CAL Dive International, Inc.+ 500 25
Callon Petroleum Co.+ 1,100 15
Conoco, Class A 3,200 76
Conoco, Inc., Class B 15,900 395
Consol Energy, Inc. 1,800 19
Cross Timbers Oil Co. 1,600 23
Diamond Offshore Drilling, Inc. 3,600 145
Frontier Oil Corp.+ 2,000 13
Getty Realty Corp. 1,000 12
Global Industries Ltd.+ 2,200 31
Gulf Island Fabrication, Inc.+ 1,300 20
Gulfmark Offshore, Inc.+ 300 5
Houston Exploration Co.+ 700 13
Howell Corp. 600 4
HS Resources, Inc.+ 800 19
Kerr-McGee Corp. 2,600 134
Meridian Resource Corp.+ 1,600 6
Midcoast Energy Resources 700 11
Murphy Oil Corp. 1,100 65
National-Oilwell, Inc.+ 1,700 41
Newfield Exploration Co.+ 1,000 41
Nuevo Energy Co.+ 800 14
95
<PAGE>
SCHWAB TOTAL STOCK MARKET INDEX FUND(TM)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Ocean Energy, Inc.+ 4,300 $ 56
OYO Geospace Corp.+ 300 5
Patina Oil & Gas Corp. 1,500 21
Patterson Energy, Inc.+ 900 25
Pennzoil-Quaker State Co. 1,800 20
Phillips Petroleum Co. 6,700 318
Pioneer Natural Resources Co.+ 2,600 27
Pogo Producing Co. 1,000 26
Pride International, Inc.+ 1,500 34
Remington Oil & Gas Corp.+ 400 2
Santa Fe Snyder Corp.+ 4,700 43
St. Mary Land & Exploration Co. 600 20
Stone Energy Corp.+ 500 24
Sunoco, Inc. 2,300 70
Superior Energy Services+ 1,900 17
Syntroleum Corp.+ 1,500 29
Teppco Partners L.P. 700 15
Tesoro Petroleum Corp.+ 1,300 15
Tosco Corp. 3,900 125
Trans Montaigne Oil, Inc.+ 1,600 12
Transocean Sedco Forex, Inc. 6,081 286
Tuboscope Vetco International
Corp.+ 1,200 21
Ultramar Diamond Shamrock Corp. 2,200 54
UniCapital Corp.+ 1,300 2
Union Pacific Resources
Group, Inc. 6,500 125
Unocal Corp. 6,500 210
USX-Marathon Group, Inc. 8,500 198
Vintage Petroleum, Inc. 1,600 32
----------
3,202
----------
OIL - INTERNATIONAL -- 2.2%
Chevron Corp. 17,900 1,524
Exxon Mobil Corp. 92,658 7,198
Santa Fe International Corp. 2,900 100
Texaco, Inc. 14,700 727
----------
9,549
----------
OPTICAL & PHOTO -- 0.5%
Anacomp, Inc.+ 600 7
Ballantyne of Omaha, Inc.+ 1,500 4
BMC Industries, Inc. 1,300 7
C-Cube Microsystems, Inc.+ 1,000 64
Corning, Inc. 7,449 1,471
CPI Corp. 400 10
Drexler Technology Corp.+ 1,000 13
Eastman Kodak Co. 8,200 459
Imation Corp.+ 800 22
Number Value
of Shares (000s)
--------- -----------
Ingram Micro, Inc., Class A+ 1,800 $ 35
Meade Instruments Corp.+ 400 29
Photronics, Inc.+ 600 20
Polaroid Corp. 2,400 48
Zomax, Inc.+ 1,000 47
Zygo Corp.+ 300 8
----------
2,244
----------
PAPER & FOREST PRODUCTS -- 0.8%
Boise Cascade Corp. 1,500 49
Bowater, Inc. 1,400 77
Buckeye Technology, Inc.+ 800 15
Caraustar Industries, Inc. 700 11
Champion International Corp. 3,000 197
Chesapeake Corp. 500 16
Consolidated Papers, Inc. 2,300 87
CSS Industries, Inc.+ 600 12
Fibermark, Inc.+ 300 4
Fort James Corp. 5,800 139
Georgia-Pacific Corp. 2,100 49
Georgia-Pacific Group 5,200 191
International Paper Co. 11,000 404
Kimberly-Clark Corp. 14,839 862
Longview Fibre Co. 1,200 15
Louisiana-Pacific Corp. 2,400 32
Lydall, Inc.+ 1,400 12
Mead Corp. 2,700 94
Pentair, Inc. 1,200 46
PH Glatfelter Co. 2,800 30
Pope & Talbot 500 11
Potlatch Corp. 800 32
Rayonier, Inc. 600 28
Rock Tennessee Co., Class A 1,000 9
Smurfit-Stone Container Corp.+ 5,400 82
St. Joe Co. 2,100 60
Temple-Inland, Inc. 1,500 75
Thermo Fibertek, Inc.+ 1,500 10
Universal Forest Products, Inc. 800 11
Wausau Mosinee Paper Corp. 1,100 13
Westvaco Corp. 2,500 77
Weyerhaeuser Co. 6,200 331
Willamette Industries, Inc. 2,900 111
----------
3,192
----------
PRODUCER GOODS & MANUFACTURING -- 5.1%
Actrade International Ltd.+ 1,000 14
Advanced Energy Industries, Inc.+ 700 48
96
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Aeroflex, Inc.+ 400 $ 15
AGCO Corp. 1,200 14
Albany International Corp.,
Class A+ 918 14
Alltrista Corp.+ 200 4
American Standard Corp.+ 1,700 70
AMETEK, Inc. 600 12
Applied Industrial Technologies,
Inc. 900 16
Applied Micro Circuits Corp.+ 3,200 412
Applied Power, Inc., Class A 900 26
AptarGroup, Inc. 900 26
Astec Industries, Inc.+ 500 13
Avery Dennison Corp. 3,100 203
Baldor Electric, Co. 800 15
Barnes Group, Inc. 700 12
BE Aerospace, Inc.+ 1,100 8
Blount International, Inc.+ 1,200 16
Blyth Industries, Inc.+ 1,100 33
Briggs & Stratton Corp. 500 19
Carbide/Graphite Group, Inc.+ 1,100 4
Caterpillar, Inc. 9,600 379
CLARCOR, Inc. 700 13
CMI Corp. 1,600 6
Cognex Corp.+ 1,000 57
Columbus Mckinnon Corp. 500 7
Comfort Systems USA, Inc.+ 1,600 11
Cooper Industries, Inc. 6,000 206
Cuno, Inc.+ 600 16
Curtiss-Wright Corp. 400 14
Cyber-Care, Inc.+ 900 14
Deere & Co. 6,600 266
Diamond Technology Partners,
Inc.+ 400 32
Dover Corp. 6,000 305
DT Industries, Inc. 1,200 15
Elantec Semiconductor, Inc.+ 400 16
eLOT, Inc.+ 1,500 4
Emerson Electric Co. 11,500 631
Encompass Services Corp.+ 2,525 17
Entrade, Inc.+ 400 4
The Fairchild Corp., Class A+ 1,400 9
Farr Co.+ 900 16
Federal Signal Corp. 1,000 20
Fisher Scientific International+ 1,000 40
Flowserve Corp. 800 11
FMC Corp.+ 700 41
Foster Wheeler Corp. 1,200 11
Franklin Electric Corp. 200 14
General Electric Co. (b) 88,052 13,846
Number Value
of Shares (000s)
--------- -----------
Graco, Inc. 500 $ 17
Hanover Compressor Co.+ 800 47
Hardinge, Inc. 800 9
Harsco Corp. 1,000 30
Helix Technology Corp. 600 31
Herman Miller, Inc. 2,000 55
Hexcel Corp.+ 1,500 13
Hon Industries, Inc. 1,600 40
Honeywell International, Inc. 21,362 1,196
Hubbell, Inc., Class B 1,600 42
Hughes Supply, Inc. 500 8
Husmann International, Inc. 1,100 15
Ibis Technology Corp.+ 200 8
IDEX Corp. 600 19
Illinois Tool Works, Inc. 8,150 522
Ingersoll-Rand Co. 4,300 202
Ionics, Inc.+ 400 9
Jabil Circuit, Inc.+ 4,600 188
JLG Industries, Inc. 900 9
Johnson Controls, Inc. 2,200 139
Juno Lighting, Inc.+ 29 0
Kaydon Corp. 800 19
Kennametal, Inc. 800 23
Lattice Semiconductor Corp.+ 1,200 81
Lennox International, Inc. 1,971 17
Libbey, Inc. 500 15
Lincoln Electric Co., Class A 1,000 19
Lone Star Technologies, Inc.+ 1,000 46
Magnatek, Inc.+ 1,500 12
Manitowoc Co., Inc. 600 20
Marine Drilling Co., Inc.+ 1,400 36
Mark IV Industries, Inc. 1,100 23
MascoTech, Inc. 1,100 13
Mastec, Inc.+ 700 60
Material Sciences Corp.+ 800 8
Matthews International Corp.,
Class A 700 16
Maverick Tube Corp.+ 1,000 28
Metals USA, Inc. 1,500 11
Micrel, Inc.+ 1,000 86
Milacron, Inc. 800 15
Millipore Corp. 1,200 86
MSC Industrial Direct, Inc.+ 1,000 14
NACCO Industries, Inc., Class A 300 13
Nordson Corp. 500 22
Nortek, Inc.+ 500 10
Oceaneering International, Inc.+ 800 14
Pall Corp. 3,100 69
97
<PAGE>
SCHWAB TOTAL STOCK MARKET INDEX FUND(TM)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Park Ohio Holdings Corp.+ 1,100 $ 10
Parker-Hannifin Corp. 3,200 149
Penn Engineering & Manufacturing
Corp. 500 14
Pitt-Des Moines, Inc. 500 12
Plug Power, Inc.+ 1,100 88
Precision Castparts Corp. 600 25
Presstek, Inc.+ 700 15
Primex Technologies, Inc. 500 11
Rare Medium Group, Inc.+ 1,100 23
Regal Beloit 500 9
Research Frontiers, Inc.+ 800 15
Robertson-Ceco Corp.+ 1,400 16
Roper Industries, Inc. 800 25
Safeguard Scientifics, Inc.+ 2,800 117
Sauer, Inc. 1,100 10
Scott Technologies, Inc.+ 700 14
Shaw Group, Inc.+ 500 18
Snap-On, Inc. 1,400 37
SPS Technologies, Inc.+ 500 16
Standex International Corp. 500 8
Steelcase, Inc. 1,000 12
Stewart & Stevenson Services 1,000 12
Strattec Security Corp.+ 300 10
Tecumseh Products Co., Class A 500 23
Teleflex, Inc. 900 31
Tennant Co. 600 21
Tenneco Automotive, Inc. 1,980 18
Terex Corp.+ 700 11
Thermo Ecotek Corp.+ 300 2
Thermo Instrument Systems, Inc.+ 3,000 54
Thermo Optek Corp.+ 1,600 24
Thermo TerraTech, Inc.+ 1,500 11
The Timken Co. 1,400 26
Trinity Industries, Inc. 800 18
U.S. Industries, Inc. 2,000 24
UCAR International, Inc.+ 900 12
Ultratech Stepper, Inc.+ 800 12
Uniroyal Technology Corp.+ 600 13
Valhi, Inc. 2,800 31
Valmont Industries, Inc. 900 18
W.W. Grainger, Inc. 2,500 108
Watsco, Inc. 900 12
Watts Industries, Inc., Class A 1,000 13
WMS Industries, Inc.+ 1,000 9
Woodward Governor Co. 500 11
X-Rite, Inc. 2,000 23
York International Corp. 800 19
Number Value
of Shares (000s)
--------- -----------
Zebra Technologies Corp.,
Class A+ 800 $ 46
----------
21,646
----------
RAILROAD & SHIPPING -- 0.3%
Alexander & Baldwin, Inc. 1,000 21
Burlington Northern Santa Fe
Corp. 12,500 302
CSX Corp. 5,700 119
Florida East Coast Industry,
Inc. 900 44
GATX Corp. 1,300 46
Greenbrier Co., Inc. 1,600 12
Kansas City Southern Industries,
Inc. 2,900 208
Newport News Shipbuilding, Inc. 900 30
Norfolk Southern Corp. 10,000 176
Overseas Shipholding Group,
Inc. 1,000 26
Railamerica, Inc.+ 866 5
Transport Corp. of America+ 1,100 7
Union Pacific Corp. 6,900 291
Westinghouse Air Brake Co. 1,528 17
Wisconsin Central Transportation
Corp.+ 1,200 18
----------
1,322
----------
REAL PROPERTY -- 0.2%
American Real Estate
Partners L.P.+ 1,300 11
American Realty Trust, Inc.+ 700 12
American Retirement Corp.+ 700 5
Avatar Holdings, Inc.+ 700 14
Boston Properties, Inc. 1,700 59
Burnham Pacific Property, Inc. 1,500 11
Buy.com, Inc.+ 3,100 21
Catellus Development Corp.+ 2,800 36
CB Richard Ellis Services+ 1,100 11
Center Trust, Inc. 1,400 10
Cornerstone Properties 3,400 62
Duke-Weeks Realty Corp. 3,190 69
Equity Inns, Inc. 1,900 13
Fairfield Communities, Inc.+ 1,000 9
FelCor Lodging Trust, Inc. 1,700 33
Forest City Enterprises, Inc. 800 23
General Growth Properties 1,300 43
Homestore.com, Inc.+ 2,000 37
JDN Realty Corp. 1,300 13
Jones Lang LaSalle, Inc.+ 1,100 18
Kilroy Realty Corp. 800 19
Konover Property Trust, Inc. 1,600 9
Newhall Land & Farming Co. 800 22
Omega Healthcare Investors 1,000 6
Post Properties, Inc. 1,000 42
98
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Rouse Co. 1,800 $ 42
Saul Centers, Inc. 600 9
Simon Property Group, Inc. 4,600 117
Starwood Hotels & Resorts
Worldwide, Inc. 5,280 150
Trammell Crow Co.+ 1,300 17
Urban Shopping Centers, Inc. 1,100 36
Vornado Realty Trust 2,300 79
----------
1,058
----------
RETAIL -- 5.2%
99 Cents Only Stores+ 800 30
Albertson's, Inc. 11,068 360
Alloy Online, Inc.+ 200 2
Amazon.com, Inc.+ 9,100 502
American Eagle Outfitters,
Inc.+ 1,100 19
Ames Department Stores, Inc.+ 600 11
AnnTaylor Stores Corp.+ 800 17
Ashford.com, Inc.+ 1,100 4
AutoZone, Inc.+ 8,900 204
Barnes & Noble, Inc.+ 1,600 30
Bed, Bath & Beyond, Inc.+ 3,700 136
Best Buy Co., Inc.+ 5,300 428
BJ's Wholesale Club, Inc.+ 1,900 67
The Bombay Co., Inc.+ 1,700 6
Borders Group, Inc.+ 1,800 29
Burlington Coat Factory
Warehouse Corp. 1,200 18
Casey's General Stores, Inc. 1,100 13
The Cato Corp., Class A 1,200 13
Cendant Corp.+ 19,000 293
Central Garden & Pet Co.+ 1,700 18
Charming Shoppes, Inc.+ 2,000 14
Circuit City Stores-Circuit
City Group 5,500 323
Claire's Stores, Inc. 1,200 22
Coldwater Creek, Inc.+ 700 18
Consolidated Stores Corp.+ 2,700 34
Cost Plus, Inc.+ 700 21
Costco Wholesale Corp.+ 11,900 643
CVS Corp. 10,100 439
DEB Shops, Inc. 700 10
Delhaize America, Inc. 3,466 61
Dillards, Inc., Class A 2,600 36
Dollar General Corp. 6,900 158
Dollar Tree Stores, Inc.+ 1,600 93
Drugstore.Com+ 1,200 9
Duane Reade, Inc.+ 500 15
Number Value
of Shares (000s)
--------- -----------
Egghead.com, Inc.+ 1,604 $ 7
Enesco Group 1,100 5
Envision Development Corp.+ 400 28
Etoys, Inc.+ 2,700 22
Family Dollar Stores, Inc. 4,400 84
Fatbrain.com Inc.+ 800 4
Federated Department Stores,
Inc.+ 6,000 204
Fogdog, Inc.+ 300 1
Gadzooks, Inc.+ 600 13
Gap, Inc. 22,800 838
Gottschalks, Inc.+ 1,800 11
Great Atlantic & Pacific Tea
Co., Inc. 800 15
Greg Manning Auctions, Inc.+ 800 11
Guitar Center, Inc.+ 1,100 15
Hannaford Bros. Co., Inc. 1,100 80
Home Depot, Inc. 61,700 3,459
HOT Topic, Inc.+ 400 12
Insight Enterprises, Inc.+ 700 29
Intertan, Inc.+ 1,050 15
Intimate Brands, Inc. 6,470 249
J.C. Penney Co., Inc. 6,800 94
Kmart Corp.+ 12,800 104
Kohl's Corp.+ 8,600 413
Kroger Co.+ 22,100 410
Lands' End, Inc.+ 800 34
Lillian Vernon Corp. 500 5
Limited, Inc. 6,200 280
Longs Drug Stores, Inc. 1,000 23
Lowe's Cos., Inc. 10,300 510
May Department Stores Co. 9,300 256
Michaels Stores, Inc.+ 600 24
Multiple Zones International,
Inc.+ 1,600 8
Musicmaker.com, Inc.+ 500 1
The Neiman Marcus Group, Inc.,
Class A+ 1,100 28
The Neiman Marcus Group, Inc.,
Class B+ 451 11
Nordstrom, Inc. 4,000 111
Office Depot, Inc.+ 9,000 95
OfficeMax, Inc.+ 2,700 15
Payless Shoesource, Inc.+ 602 33
PC Connection, Inc.+ 400 19
Pep Boys-Manny, Moe, & Jack 1,600 10
Petco Animal Supplies, Inc.+ 1,100 13
Pier 1 Imports, Inc. 2,000 23
Pricesmart, Inc.+ 200 8
99
<PAGE>
SCHWAB TOTAL STOCK MARKET INDEX FUND(TM)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Rite Aid Corp. 6,100 $ 30
Ross Stores, Inc. 2,100 44
RoweCom Inc.+ 500 6
Ruddick Corp. 900 10
Safeway, Inc.+ 13,700 605
Saks, Inc.+ 3,200 37
School Specialty, Inc.+ 1,100 20
Sears, Roebuck & Co. 9,800 359
Sharper Image Corp.+ 1,200 16
Shop At Home, Inc.+ 1,100 7
ShopKo Stores, Inc.+ 600 11
Spiegel, Inc., Class A 2,700 22
Stamps.com, Inc.+ 1,000 16
Staples, Inc.+ 12,500 238
Stein Mart, Inc.+ 2,300 21
Sunglass HUT International,
Inc.+ 1,500 11
Systemax, Inc.+ 1,300 10
Tandy Corp. 5,600 319
Target Corp. 11,800 785
Tiffany & Co., Inc 1,800 131
TJX Cos., Inc. 8,300 159
Toys 'R' Us, Inc.+ 6,500 99
Tractor Supply Co.+ 700 12
Tuesday Morning Corp.+ 1,100 14
U.S. Office Products Co.+ 1,400 3
Unifirst Corp. 900 9
United Stationers, Inc.+ 900 30
Value America, Inc.+ 2,000 4
Value City Department Stores,
Inc.+ 700 7
Venator Group, Inc.+ 2,800 33
Wal-Mart Stores, Inc. 119,500 6,617
Walgreen Co. 27,000 759
Weis Markets, Inc. 1,000 33
West Marine, Inc.+ 1,200 10
Whitehall Jewellers, Inc.+ 600 10
Williams-Sonoma, Inc.+ 1,200 42
Winn-Dixie Stores, Inc. 3,600 60
Zale Corp.+ 900 37
----------
22,362
----------
STEEL -- 0.1%
AK Steel Holding Corp. 2,627 29
Allegheny Technologies, Inc. 2,550 62
Atchison Casting Corp.+ 900 6
Bethlehem Steel Corp.+ 2,884 16
Carpenter Technology Corp. 900 18
Cleveland-Cliffs, Inc. 700 17
Gibraltar Steel Corp.+ 600 10
Number Value
of Shares (000s)
--------- -----------
Intermet Corp. 1,100 $ 8
National Steel Corp., Class B 2,400 15
NS Group, Inc.+ 1,200 19
Nucor Corp. 2,300 99
Quanex Corp. 800 13
Roanoke Electric Steel Corp. 800 14
Ryerson Tull, Inc. 1,000 12
Steel Dynamics, Inc.+ 1,200 14
Steel Technologies, Inc. 700 6
USX-U.S. Steel Group, Inc. 2,200 55
Worthington Industries, Inc. 2,200 27
----------
440
----------
TELEPHONE -- 6.8%
Adtran, Inc.+ 1,000 67
Aerial Communications, Inc.+ 1,200 53
Airgate Pcs, Inc.+ 300 26
Alcatel - Sponsored ADR 638 29
Allegiance Telecom, Inc.+ 2,850 202
Allied Riser Communications+ 1,400 27
Alltel Corp. 8,335 555
Applied Digital Solutions,
Inc.+ 400 2
Arch Communications Group+ 500 4
AT&T Corp. 85,748 4,003
AT&T Corp.-Liberty Media Group,
Class A+ 603 30
autobytel.com, Inc.+ 1,100 7
Bell Atlantic Corp. 41,600 2,465
BellSouth Corp. 50,500 2,459
Boston Communications Group+ 1,300 12
Brightpoint, Inc.+ 1,100 13
Broadwing, Inc.+ 5,868 166
Carrier Access Corp.+ 600 26
CellStar Corp.+ 1,200 7
Centennial Cellular Corp.+ 2,400 48
CenturyTel, Inc. 4,400 108
CFW Communication Co. 500 19
Cidco, Inc.+ 200 1
Commonwealth Telephone
Enterprises, Inc.+ 500 24
COMSAT Corp. 1,252 31
Conestoga Enterprise, Inc. 700 14
Convergent Communications, Inc.+ 1,300 10
Copper Mountain Networks+ 1,200 100
Covad Communications Group,
Inc.+ 3,750 104
CT Communications, Inc. 1,000 30
D & E Communications, Inc. 700 15
Dobson Communications Corp.+ 700 18
100
<PAGE>
Number Value
of Shares (000s)
--------- -----------
eShare Technologies, Inc.+ 200 $ 2
Exodus Communications, Inc.+ 4,600 407
FirstCom Corp.+ 600 12
Focal Communications Corp.+ 1,600 53
General Communication, Inc.+ 500 2
Global Crossing Ltd.+ 6,560 207
Global Telesystems Group, Inc.+ 4,800 70
Globix Corp.+ 800 18
GST Telecommunications, Inc.+ 1,700 6
GTE Corp. 24,600 1,667
Hickory Tech Corp. 800 10
ICG Communications, Inc.+ 1,200 36
Illuminet Holdings, Inc.+ 800 36
Inet Technologies, Inc.+ 1,200 52
Inter Tel, Inc. 600 12
Interdigital Communications
Corp.+ 1,100 23
Intermedia Communications,
Inc.+ 3,000 122
IPC Communications, Inc.+ 300 50
ITC DeltaCom, Inc.+ 1,500 49
ITXC Corp.+ 900 24
IXNET, Inc.+ 1,300 48
JFAX.COM, Inc.+ 400 1
Leap Wireless International,
Inc.+ 800 41
Level 3 Communications, Inc.+ 9,700 863
MCI WorldCom, Inc.+ 76,249 3,465
McLeodUSA, Inc., Class A+ 13,944 349
Metrocall, Inc.+ 400 3
Motient Corp.+ 1,200 15
Net2Phone, Inc.+ 400 18
Network Plus Corp.+ 1,400 27
Next Level Communications,
Inc.+ 2,200 175
NEXTLINK Communications, Inc.,
Class A+ 2,000 169
North Pittsburgh Systems, Inc. 700 9
Northeast Optic Network, Inc.+ 500 28
Northpoint Communications+ 3,300 53
NTL, Inc.+ 3,794 290
Optical Cable Corp.+ 1,200 30
Pacific Gateway Exchange, Inc.+ 800 5
PairGain Technologies, Inc.+ 1,800 45
Pegasus Communications Corp.+ 400 44
Pinnacle Holdings, Inc.+ 1,300 73
Powertel, Inc.+ 800 54
Primus Telecommunications Group,
Inc.+ 900 29
Qwest Communications
International, Inc.+ 20,100 872
RCN Corp.+ 2,100 60
Number Value
of Shares (000s)
--------- -----------
Rhythms Netconnections, Inc.+ 1,900 $ 39
SBC Communications, Inc. 91,462 4,007
Sprint Corp. (FON Group) 23,400 1,439
Sprint Corp. (PCS Group)+ 23,100 1,270
TALK.com, Inc.+ 1,400 14
TCI Satellite Entertainment,
Inc., Class A+ 1,400 15
Telephone & Data Systems, Inc. 1,700 173
Teligent, Inc.+ 200 7
Time Warner Telecom, Inc.,
Class A+ 700 38
Tritel, Inc.+ 2,500 81
Triton PCS Holdings, Inc.,
Class A+ 1,500 63
Turnstone Systems, Inc.+ 200 22
Tut Systems, Inc.+ 300 14
U.S. Cellular Corp.+ 2,300 138
U.S. Wireless Corp.+ 200 4
US LEC Corp.+ 500 13
US West, Inc. 13,500 961
Viatel, Inc.+ 1,011 39
Voicestream Wireless Corp.+ 3,715 368
WebLink Wireless, Inc.+ 700 8
Winstar Communications, Inc.+ 2,350 94
World Access, Inc.+ 1,200 19
Worldpages.com, Inc.+ 900 6
WorldPort Communications, Inc.+ 600 2
Z-Tel Technologies, Inc.+ 500 20
----------
29,153
----------
TOBACCO -- 0.4%
800-Jr Cigar, Inc.+ 600 6
Brooke Ltd. 725 10
General Cigar Holdings, Inc.+ 500 8
Philip Morris Cos., Inc. 63,500 1,389
R.J. Reynolds Tobacco Holdings,
Inc. 2,766 57
Schweitzer-Mauduit International,
Inc. 900 13
Universal Corp. 600 11
UST, Inc. 4,500 68
----------
1,562
----------
TRAVEL & RECREATION -- 0.5%
AMERCO+ 900 15
American Classic Voyager+ 600 12
Anchor Gaming, Inc.+ 500 20
Argosy Gaming Co.+ 1,100 18
Autotote Corp., Class A+ 700 2
Avis Rent A Car, Inc.+ 800 16
Aztar Corp.+ 1,400 17
Bally Total Fitness Holding
Corp.+ 1,300 29
101
<PAGE>
SCHWAB TOTAL STOCK MARKET INDEX FUND(TM)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Brunswick Corp. 2,500 $ 48
Budget Group, Inc.+ 1,600 7
Callaway Golf Co. 2,000 33
Carnival Corp. 16,600 413
Central Parking Corp. 900 23
Choice Hotels International,
Inc.+ 1,300 17
Crestline Capital Corp.+ 800 14
Dollar Thrifty Automotive Group,
Inc.+ 1,000 21
Expedia, Inc.+ 1,000 15
Extended Stay Amererica, Inc.+ 2,200 20
Harrah's Entertainment, Inc.+ 3,300 68
Hertz Corp. 1,000 31
Hilton Hotels Corp. 9,526 81
Host Marriott Corp. 5,700 61
Interstate Hotels Corp.+ 90 0
Intranet Solutions, Inc.+ 600 13
Mandalay Resort Group+ 2,400 45
Marketing Services Group, Inc.+ 1,100 8
Marriott International, Inc.,
Class A 7,000 224
Meristar Hospitality Corp. 1,200 24
MGM Grand, Inc. 3,000 89
Mirage Resorts, Inc.+ 4,300 88
Navigant International, Inc.+ 1,300 12
Park Place Entertainment Corp.+ 8,100 104
Pinnacle Entertainment, Inc.+ 700 14
Premier Parks, Inc.+ 2,100 45
Prime Hospitality Corp.+ 1,800 17
Quokka Sports, Inc.+ 1,600 9
Rent-Way, Inc.+ 700 18
ResourtQuest International,
Inc.+ 1,200 7
Royal Caribbean Cruises Ltd. 4,800 100
SFX Entertainment, Inc.,
Class A+ 1,750 73
Sodexho Marriott Services, Inc. 1,700 25
Speedway Motorsports, Inc.+ 1,000 24
Station Casinos, Inc.+ 1,100 31
Suburban Lodges of America+ 2,200 13
Sunburst Hospitality Corp.+ 1,600 8
Sunterra+ 1,100 2
Tickets.com, Inc.+ 1,900 8
Trendwest Resorts, Inc.+ 700 16
Vail Resorts, Inc.+ 800 13
----------
2,011
----------
TRUCKING & FREIGHT -- 0.1%
American Freightways Corp.+ 1,000 19
Arkansas Best Corp.+ 1,100 14
C.H. Robinson Worldwide, Inc. 1,000 50
Number Value
of Shares (000s)
--------- -----------
Circle International Group, Inc. 800 $ 21
CNF Transportation, Inc. 1,300 36
Consolidated Freightways Corp.+ 2,200 14
Expeditores International of
Washington, Inc. 1,300 56
Forward Air Corp.+ 600 21
Fritz Cos., Inc.+ 1,300 13
Heartland Express, Inc.+ 1,000 17
HUB Group, Inc.+ 700 8
J.B. Hunt Transport Services,
Inc. 1,000 16
Knight Transportation, Inc.+ 800 15
Landstar Systems, Inc.+ 400 23
M.S. Carriers, Inc.+ 600 14
OLD Dominion Freight Line+ 1,200 13
PACCAR, Inc. 2,000 95
Roadway Express, Inc. 600 14
Rollins Truck Leasing Corp. 1,500 15
Ryder Systems, Inc. 1,600 35
Shurgard Storage Centers, Inc. 600 16
South Alabama Bancorp. 400 4
Swift Transportation Co., Inc.+ 1,600 32
US Freightways Corp. 600 28
Wabash National Corp. 1,100 16
Werner Enterprises, Inc. 1,200 23
XTRA Corp.+ 300 14
Yellow Corp.+ 700 13
----------
655
----------
UTILITIES - ELECTRIC & GAS-- 2.8%
AES Corp.+ 5,600 504
AGL Resources, Inc. 1,200 21
Allegheny Energy, Inc. 2,800 85
Alliant Energy Corp. 1,900 57
Ameren Corp. 3,500 128
American Electric Power Co.,
Inc. 5,200 190
American States Water Co. 500 15
American Water Works Co., Inc. 2,500 57
ATG, Inc.+ 1,100 4
Atmos Energy Corp. 700 11
Atrion Corp.+ 300 4
Avista Corp. 1,200 35
Azurix Corp.+ 2,700 19
Bangor Hydro-Electric Co. 900 15
Baycorp Holdings Ltd.+ 200 3
Birmingham Utilities, Inc. 300 4
Black Hills Corp. 500 11
California Water Service Group 500 12
102
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Calpine Corp.+ 1,600 $ 146
Carolina Power & Light Co. 4,161 152
Cascade Natural Gas Corp. 500 8
Central & South West Corp. 5,300 115
Central Vermont Public Service
Corp. 300 3
CH Energy Group, Inc. 400 13
Cinergy Corp. 4,100 110
Citizens Utilities Co.,
Class B+ 6,500 104
Cleco Corp. 600 21
CMP Group, Inc. 800 23
CMS Energy Corp. 2,800 53
Coastal Corp. 6,300 316
Columbia Energy Group 2,500 157
Conectiv, Inc. 2,400 43
Connecticut Water SVC, Inc. 500 14
Consolidated Edison, Inc. 5,900 208
Constellation Energy Group,
Inc. 3,800 126
CTG Resources, Inc. 500 19
Delta Natural Gas Co., Inc. 200 3
Dominion Resources, Inc. 7,098 319
DPL, Inc. 3,152 73
DQE, Inc. 1,900 73
DTE Energy Co. 3,800 124
Duke Energy Corp. 9,900 569
Dynegy, Inc., Class A 3,781 247
E'Town Corp. 300 20
Edison International 9,200 175
El Paso Electric Co.+ 1,600 18
El Paso Energy Corp. 6,400 272
Empire District Electric Co. 700 15
Energen Corp. 700 13
Energy East Corp. 3,628 76
EnergyNorth, Inc. 200 12
EnergySouth, Inc. 800 15
Enron Corp. 19,400 1,352
Entergy Corp. 6,600 168
Equitable Resources, Inc. 900 42
FirstEnergy Corp. 6,000 153
Florida Progress Corp. 2,500 122
Florida Public Utilites Co. 200 3
FPL Group, Inc. 4,800 217
GPU, Inc. 3,100 87
Green Mountain Power Corp. 400 3
Hawaiian Electric Industries,
Inc. 700 26
IDACORP, Inc. 1,000 37
Ipalco Enterprises, Inc. 2,000 41
Kansas City Power & Light Co. 1,600 41
Number Value
of Shares (000s)
--------- -----------
KeySpan Corp. 3,400 $ 100
Kinder Morgan, Inc. 2,900 88
Laclede Gas Co. 600 12
LG&E Energy Corp. 3,300 77
Madison Gas & Electric Co. 800 14
Maine Public Service Co. 200 4
MCN Corp. 2,200 55
MDU Resources Group, Inc. 1,300 28
Minnesota Power & Light Co. 1,700 31
Montana Power Co. 2,800 123
National Fuel Gas Co. 1,000 47
National Wireless Holdings,
Inc.+ 200 4
New Century Energies, Inc. 2,900 95
New Jersey Resources Corp. 400 16
Niagara Mohawk Holdings, Inc.+ 4,700 65
NICOR, Inc. 1,200 41
Nisource, Inc. 3,100 57
Northeast Utilities 4,424 95
Northern States Power Co. 3,900 85
Northwest Natural Gas Co. 700 15
Northwestern Public Services Co. 1,400 32
NSTAR 1,467 65
NUI Corp. 500 13
OGE Energy Corp. 2,000 40
ONEOK, Inc. 800 20
Otter Tail Power Co. 600 16
PECO Energy Co. 4,900 204
Peoples Energy Corp. 900 28
PG&E Corp. 10,600 275
Philadelphia Suburban Corp. 1,000 24
Piedmont Natural Gas Co., Inc. 800 23
Pinnacle West Capital Corp. 2,100 74
Potomac Electric Power Co. 3,000 70
PPL Corp. 3,500 84
Providence Energy Corp. 300 12
Public Service Co. of New Mexico 2,000 36
Public Service Enterprise Group,
Inc. 5,700 204
Puget Sound Power & Light Co. 2,200 52
Questar Corp. 2,100 40
Reliant Energy, Inc. 7,900 210
Republic Services, Inc.+ 4,500 62
RGS Energy Group, Inc. 700 16
Scana Corp. 3,005 78
Sempra Energy 5,175 96
Sierra Pacific Resources 1,776 27
SJW Corp. 100 12
South Jersey Industries 500 13
103
<PAGE>
SCHWAB TOTAL STOCK MARKET INDEX FUND(TM)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Southern Co. 18,300 $ 456
Southern Union Co.+ 1,025 18
Southwest Gas Corp. 700 13
ST Joseph Light & Power 200 4
Streicher Mobile Fueling, Inc.+ 600 3
TECO Energy, Inc. 3,300 72
Texas Utilities Co. 7,700 259
U.S. Energy Systems, Inc.+ 600 2
UGI Corp. 700 14
Unicom Corp. 5,800 231
Unisource Energy Corp. 900 15
United Illuminating Co. 500 23
United Water Resources, Inc. 900 31
UtiliCorp United, Inc. 2,300 44
Vectren Corp.+ 1,466 30
Veritas DGC, Inc.+ 800 19
Washington Gas Light Co. 1,100 28
Waste Connections, Inc.+ 1,000 13
Western Resources, Inc. 1,600 25
Williams Cos., Inc. 11,700 437
Wisconsin Energy Corp. 3,000 64
WPS Resources Corp. 700 21
----------
11,822
----------
TOTAL COMMON STOCK
(Cost $388,435) 421,971
----------
Par Value
(000s) (000s)
--------- -----------
U.S. TREASURY OBLIGATIONS -- 0.1%
U.S. Treasury Bills (a) (b)
5.73%-5.75%, 06/15/00 $200 $ 199
5.61%, 06/22/00 10 10
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $209) 209
--------
Number
of Shares
---------
SHORT-TERM INVESTMENTS -- 1.1%
Provident Institutional
TempFund, 5.74%* 4,624,331 4,624
--------
TOTAL SHORT-TERM INVESTMENTS
(Cost $4,624) 4,624
--------
TOTAL INVESTMENTS -- 100.3%
(Cost $393,268) 426,804
--------
OTHER ASSETS AND LIABILITIES, NET -- (0.3%)
Other assets 69,808
Liabilities (70,880)
--------
(1,072)
--------
TOTAL NET ASSETS -- 100.0% $425,732
========
SEE ACCOMPANYING NOTES TO SCHEDULES OF INVESTMENTS AND NOTES TO FINANCIAL
STATEMENTS.
104
<PAGE>
SCHWAB SMALL-CAP INDEX FUND(R)
SCHEDULE OF INVESTMENTS
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
--------------------------------------------------------------------------------
COMMON STOCK -- 99.6%
--------------------------------------------------------------------------------
AEROSPACE / DEFENSE -- 0.6%
Cordant Technologies, Inc. 72,800 $ 4,122
GenCorp., Inc. 80,400 809
Trimble Navigation Ltd.+ 45,300 1,252
Veeco Instruments, Inc.+ 36,070 2,241
----------
8,424
----------
--------------------------------------------------------------------------------
AIR TRANSPORTATION -- 1.0%
AAR Corp. 53,300 803
Airborne Freight Corp. 97,000 2,079
Alaska Airgroup, Inc.+ 53,800 1,547
America West Holdings Corp.,
Class B+ 68,500 1,002
Atlantic Coast Airlines
Holdings, Inc.+ 37,300 1,114
Atlas Air, Inc.+ 68,150 2,381
EGL, Inc.+ 61,300 1,406
Midwest Express Holdings, Inc.+ 27,800 704
SkyWest, Inc. 49,100 2,068
----------
13,104
----------
ALCOHOLIC BEVERAGES -- 0.3%
Beringer Wine Estates Holdings,
Inc.+ 38,900 1,405
Canandaigua Brands, Inc.,
Class A+ 36,000 1,813
The Robert Mondavi Corp.,
Class A+ 16,200 538
----------
3,756
----------
APPAREL -- 2.0%
Buckle, Inc.+ 42,650 546
Chico's FAS, Inc.+ 39,200 703
The Children's Place Retail
Stores, Inc.+ 53,200 1,184
The Dress Barn, Inc.+ 35,000 687
Footstar, Inc.+ 41,900 1,558
Genesco, Inc.+ 52,500 679
Global Sports, Inc.+ 36,100 282
Kellwood Co. 55,500 950
Kenneth Cole Productions, Inc.+ 41,950 1,715
Men's Wearhouse, Inc.+ 83,350 1,787
Nautica Enterprises, Inc.+ 66,400 747
Pacific Sunwear of California+ 62,125 2,116
Polo Ralph Lauren Corp.+ 65,000 1,056
Quiksilver, Inc.+ 44,850 847
Reebok International Ltd.+ 112,200 1,907
Russell Corp. 66,300 1,301
Springs Industries, Inc. 35,200 1,445
Timberland Co., Class A+ 41,900 2,907
Unifi, Inc.+ 116,000 1,182
Number Value
of Shares (000s)
--------- -----------
Urban Outfitters, Inc.+ 32,800 $ 353
Warnaco Group, Inc., Class A 111,700 1,187
Wolverine World Wide, Inc. 82,700 992
----------
26,131
----------
AUTOMOTIVE PRODUCTS / MOTOR VEHICLES -- 1.9%
A.O. Smith Corp., Class B 47,000 966
Arvin Industries, Inc. 49,700 1,081
Bandag, Inc. 44,000 1,051
Borg-Warner Automotive, Inc. 54,517 2,280
Carlisle Cos., Inc. 60,200 2,479
Cooper Tire & Rubber Co. 150,200 2,028
CSK Auto Corp.+ 55,700 585
Detroit Diesel Corp. 46,000 713
Donaldson Co., Inc. 91,700 2,132
Fleetwood Enterprises, Inc. 65,500 958
Group 1 Automotive, Inc.+ 41,000 487
Hayes Lemmerz International,
Inc.+ 60,800 958
Modine Manufacturing Co. 58,900 1,299
Monaco Coach Corp.+ 36,400 596
Myers Industries, Inc. 39,670 555
Oshkosh Truck Corp. 32,200 1,014
Polaris Industries, Inc. 55,600 1,703
Stoneridge, Inc.+ 43,400 572
Superior Industries
International, Inc. 52,800 1,700
Tower Automotive, Inc.+ 93,200 1,456
Winnebago Industries, Inc. 42,000 714
----------
25,327
----------
BANKS -- 4.2%
Anchor Bancorp Wisconsin, Inc. 47,900 754
Bancorpsouth, Inc. 113,300 1,749
Bank United Corp., Class A 66,600 2,210
Banknorth Group, Inc. 54,300 1,296
Chemical Financial Corp. 27,126 746
Chittenden Corp. 56,900 1,511
Community First Bankshares,
Inc. 102,800 1,735
CORUS Bankshares, Inc. 27,700 690
F&M National Corp. 45,121 1,080
F.N.B. Corp. 42,523 840
First Bancorp./Puerto Rico 57,100 1,010
First Busey Corp., Class A 26,300 506
First Citizens Bancshares 22,400 1,414
First Commonwealth Financial
Corp. 116,100 1,350
First Financial Bancorp. 92,753 1,652
First Financial Bancshares,
Inc. 19,600 529
First United Bancshares, Inc. 49,700 817
105
<PAGE>
SCHWAB SMALL-CAP INDEX FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Frontier Financial Corp. 34,500 $ 651
Hancosk Holding Co. 20,945 725
Harbor Florida Bancshares, Inc. 54,000 567
Imperial Bancorp.+ 93,863 1,842
Independence Community Bank 143,200 1,683
Irwin Financial Corp. 41,200 698
MAF Bancorp., Inc. 48,725 914
Merchants Bancorp., Inc.
New York 36,900 616
Mid-State Bancshares 22,200 583
National Bancorp. of Alaska,
Inc. 59,900 2,216
National City Bancshares, Inc. 33,487 737
National Penn Bancshares, Inc. 34,160 704
Net.B@nk, Inc.+ 71,300 740
One Valley Bancorp., Inc. 56,200 1,907
Park National Corp. 19,120 1,745
PFF Bancorp., Inc. 34,500 485
Provident Bankshares Corp. 63,647 951
Queens County Bancorp., Inc. 41,530 844
Republic Bancorp. 89,900 888
Republic Security Financial
Corp. 108,200 602
Richmond County Financial Corp. 58,000 993
Riggs National Corp. 55,500 753
S & T Bancorp., Inc. 53,900 947
The South Financial Group, Inc. 49,700 690
Southwest Bancorp. of Texas,
Inc.+ 56,100 1,097
Sterling Bancshares 55,200 607
Susquehanna Bancshares, Inc. 74,075 1,023
Texas Regional Bancshares, Inc. 27,900 797
The Trust Co. of New Jersey 37,600 724
TrustCo Bank Corp. 105,124 1,255
UMB Financial Corp. 43,518 1,577
United Bankshares, Inc. 84,700 1,847
United Community Financial
Corp. 69,100 389
United National Bancorp. 34,900 683
Wesbanco, Inc. 37,900 862
Whitney Holding Corp. 44,400 1,548
----------
55,779
----------
BUSINESS MACHINES & SOFTWARE -- 2.8%
Activision, Inc.+ 46,600 291
Advanced Digital Information+ 101,800 2,500
Analogic Corp. 25,600 1,042
Artesyn Technologies+ 74,700 1,811
Auspex Systems, Inc.+ 74,100 565
Black Box Corp.+ 39,700 3,054
Computer Horizons Corp.+ 62,500 859
Concurrent Computer Corp.+ 106,300 1,063
Number Value
of Shares (000s)
--------- -----------
Cybex Computer Products Corp.+ 38,550 $ 1,055
Fair, Isaac & Co., Inc. 27,500 1,164
Hypercom Corp.+ 65,200 954
IKON Office Solutions, Inc. 300,800 1,767
Inprise Corp.+ 112,200 589
InterVoice, Inc.+ 64,900 1,034
Iomega Corp.+ 539,100 1,921
LTX Corp.+ 87,900 4,021
Maxtor Corp.+ 226,900 2,709
Micron Electronics, Inc.+ 190,700 2,038
MICROS Systems, Inc.+ 32,600 1,312
MTI Technology Corp.+ 62,100 963
Netegrity+ 38,300 1,700
Procom Technology, Inc.+ 22,600 814
PTEK Holdings, Inc.+ 102,100 517
SCM Microsystems, Inc.+ 28,000 2,216
Systems & Computer Technology
Corp.+ 66,800 1,574
----------
37,533
----------
BUSINESS SERVICES -- 13.2%
24/7 Media, Inc.+ 44,200 867
4 Kids Entertainment, Inc.+ 23,300 537
Aaron Rents, Inc., Class A 38,800 599
ABM Industries, Inc. 44,200 1,116
Actel Corp.+ 44,100 1,623
Actuate Corp.+ 55,000 1,647
Advantage Learning Systems,
Inc.+ 68,600 999
Advent Software, Inc.+ 59,300 3,113
Advo, Inc.+ 40,700 1,221
AHL Services, Inc.+ 37,300 361
Akamai Technologies, Inc.+ 17,930 1,773
Alliance Semiconductor Corp.+ 85,100 1,734
Apex, Inc.+ 41,250 1,219
Aspen Technology, Inc.+ 49,800 1,762
Avant Corp.+ 75,500 1,359
AXENT Technologies, Inc.+ 56,100 1,129
Banyan Systems, Inc.+ 47,300 656
Bell & Howell Co.+ 46,400 1,233
Beyond.com Corp.+ 84,300 184
BindView Development Corp.+ 95,200 768
Bowne & Co., Inc. 74,100 852
Cambridge Technology Partners,
Inc.+ 119,700 1,317
Catalytica, Inc.+ 70,300 782
CDI Corp.+ 36,700 826
Century Business Services,
Inc.+ 172,700 561
Cerner Corp.+ 67,500 1,489
Choicepoint, Inc.+ 59,200 2,250
106
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Com21, Inc.+ 46,400 $ 1,299
Complete Business Solutions,
Inc.+ 73,200 1,674
Computer Task Group, Inc. 41,900 356
Cytec Industries, Inc.+ 83,800 2,524
DBT Online, Inc.+ 38,100 750
Dendrite International, Inc.+ 76,850 1,758
Digital River, Inc.+ 50,900 763
Documentum, Inc.+ 33,100 1,953
Earthweb, Inc.+ 29,600 533
Echelon Corp.+ 67,200 2,188
Eclipsys Corp.+ 69,900 559
F.Y.I., Inc.+ 27,900 748
FactSet Research Systems, Inc. 62,700 1,803
FileNet Corp.+ 65,000 1,909
Forrester Research, Inc.+ 40,800 1,849
G & K Services, Inc., Class A 45,950 1,126
Global Imaging Systems, Inc.+ 45,300 331
Great Plains Software, Inc.+ 32,300 1,367
Grey Advertising, Inc. 2,900 1,329
GTECH Holdings, Corp.+ 69,800 1,448
HA-LO Industries, Inc.+ 93,775 686
Harbinger Corp.+ 72,900 1,376
Hyperion Solutions Corp.+ 63,845 1,936
IDT Corp.+ 50,400 1,594
IDX Systems Corp.+ 55,100 933
iGate Capital Corp.+ 101,300 3,039
In Focus Systems, Inc.+ 45,100 1,350
Infocure Corp.+ 56,100 512
Inso Corp.+ 27,300 126
Iron Mountain, Inc.+ 108,020 3,781
Jacobs Engineering Group,
Inc.+ 52,200 1,635
JDA Software Group, Inc.+ 46,600 868
John H. Harland Co. 62,900 967
Kroll-O'Gara Co.+ 44,300 341
Kronos, Inc.+ 24,650 792
Labor Ready, Inc.+ 93,350 846
Lason, Inc.+ 43,900 198
Learning Tree International,
Inc.+ 43,500 2,085
Lightbridge, Inc.+ 36,300 762
Manugistics Group, Inc.+ 55,200 2,363
MAXIMUS, Inc.+ 42,200 994
MemberWorks, Inc.+ 31,700 1,024
Mentor Corp. 49,000 867
Mentor Graphics Corp.+ 127,200 1,670
Mercator Software, Inc.+ 57,000 2,098
Mercury Computer Systems,
Inc.+ 42,300 1,626
Metamor Worldwide, Inc.+ 68,100 1,319
Number Value
of Shares (000s)
--------- -----------
Miami Computer Supply Corp.+ 22,600 $ 473
MicroStrategy, Inc.+ (b) 47,300 1,224
Modis Professional Services,
Inc.+ 192,200 1,454
National Data Corp. 65,900 1,829
NationsRent, Inc.+ 111,800 538
Natural MicroSystems Corp.+ 31,300 2,038
Navigant Consulting Co.+ 79,900 794
Netmanage, Inc.+ 141,100 450
Network Peripherals, Inc.+ 31,800 890
New England Business Service,
Inc. 27,100 447
Novadigm, Inc.+ 36,700 502
NYFIX, Inc.+ 42,250 1,138
Ogden Corp. 98,000 962
On Assignment, Inc.+ 43,400 1,362
Orbital Sciences Corp.+ 80,400 1,015
PAXAR Corp.+ 93,735 955
Pegasus Systems, Inc.+ 40,050 711
Performance Food Group Co.+ 27,100 715
Phoenix Technologies Ltd.+ 49,600 973
Pittston Brink's Group 99,200 1,624
Policy Management Systems
Corp.+ 71,400 946
Pre-Paid Legal Services, Inc.+ 44,300 1,418
Primark Corp.+ 40,100 1,083
Priority Healthcare Corp.,
Class B+ 43,527 2,410
ProBusiness Services, Inc.+ 49,000 1,292
Progress Software Corp.+ 68,500 1,370
Project Software & Development,
Inc.+ 42,300 1,290
Protein Design Labs, Inc.+ 37,600 3,816
Provant, Inc.+ 79,600 440
Proxim, Inc.+ 23,100 1,777
Puma Technology, Inc.+ 80,100 2,453
QRS Corp.+ 26,950 889
R. H. Donnelley Corp.+ 67,200 1,344
Radiant Systems, Inc.+ 50,400 939
RadiSys Corp.+ 33,600 1,390
Remedy Corp.+ 57,500 3,055
Romac International, Inc.+ 92,100 950
Rural Cellular Corp., Class A.+ 21,100 1,560
S3, Inc.+ 157,700 2,218
SAGA Systems, Inc.+ 56,500 1,052
Sanchez Computer Associates,
Inc.+ 48,900 947
The Santa Cruz Operation, Inc.+ 70,900 430
Seachange International, Inc.+ 41,550 1,247
SEACOR SMIT, Inc.+ 22,200 1,360
Sirius Satellite Radio, Inc.+ 53,500 2,123
SITEL Corp.+ 130,300 896
SoftNet Systems, Inc.+ 51,300 770
107
<PAGE>
SCHWAB SMALL-CAP INDEX FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Spartech Corp. 54,200 $ 1,883
SportsLine USA, Inc.+ 46,900 900
Spyglass, Inc.+ 33,700 1,786
Standard Register Co. 53,400 698
StarTek, Inc.+ 27,300 1,403
Strayer Education, Inc. 29,800 613
Structural Dynamics Research
Corp.+ 77,400 1,035
Sylvan Learning Systems, Inc.+ 100,000 1,506
Syntel, Inc.+ 75,700 842
Tetra Technology, Inc.+ 79,375 1,870
Transaction Systems Architects,
Inc.+ 64,300 1,049
Unify Corp.+ 44,800 538
UNOVA, Inc.+ 110,200 1,543
URS Corp.+ 29,900 381
Volt Information Sciences,
Inc.+ 30,200 1,044
The Wackenhut Corp.+ 43,600 575
Wallace Computer Services, Inc. 80,600 882
Wave Systems Corp.+ 80,300 1,541
Zixit Corp.+ 30,800 1,138
----------
174,818
----------
CHEMICAL -- 3.1%
A. Schulman 59,200 762
Airgas, Inc.+ 137,800 810
Albemarle Corp. 92,200 1,930
Amcol International Corp. 51,700 847
Brady Corp., Class A 45,100 1,325
Cambrex Corp. 53,800 2,206
Celgene Corp.+ 128,500 6,048
Chemfirst, Inc. 40,900 792
Dexter Corp. 46,300 2,541
Ethyl Corp. 174,400 545
Ferro Corp. 70,400 1,610
Fuller 27,600 1,061
Geon Co. 46,800 1,024
International Specialty
Products, Inc.+ 134,900 793
Lilly Industries, Inc.,
Class A 46,050 501
M. A. Hanna Co. 97,500 1,121
Macdermid, Inc. 61,200 1,434
Olin Corp. 89,300 1,585
OM Group, Inc. 47,400 2,180
Rollins, Inc. 57,700 829
Sequa Corp., Class A+ 20,800 1,024
Techne Corp.+ 40,300 2,866
Tredegar Industries, Inc. 75,800 1,957
Twinlab Corp.+ 74,300 557
W.R. Grace & Co.+ 142,200 1,849
Number Value
of Shares (000s)
--------- -----------
WD-40 Co. 31,100 $ 620
Wellman, Inc. 67,200 1,436
Xceed, Inc.+ 38,300 527
----------
40,780
----------
CONSTRUCTION -- 3.3%
Centex Construction Products,
Inc. 37,400 1,155
D.R. Horton, Inc. 132,700 1,717
DAL-Tile International, Inc.+ 109,300 1,066
Dycom Industries, Inc.+ 77,600 4,035
Elcor Corp. 38,150 1,214
Florida Rock Industries, Inc. 36,900 1,195
Granite Construction, Inc. 59,950 1,424
Insituform Technologies, Inc.,
Class A+ 50,300 1,688
Integrated Electrical Services,
Inc.+ 74,800 360
Justin Industries, Inc. 49,600 905
Kaufman & Broad Home Corp. 95,400 1,836
Lennar Corp. 119,200 2,220
Morrison Knudsen Corp.+ 105,100 966
NCI Building Systems, Inc.+ 36,000 688
NVR, Inc.+ 19,200 1,195
Owens Corning 110,000 2,001
Palm Harbor Homes, Inc.+ 43,987 726
Pulte Corp. 90,600 1,948
Quanta Services, Inc.+ 101,250 4,702
The Ryland Group, Inc. 28,400 571
Simpson Manufacturing, Inc.+ 24,000 1,086
Specialty Equipment Cos., Inc.+ 36,800 759
Standard Pacific Corp. 59,200 596
Texas Industries, Inc. 41,400 1,351
Toll Brothers, Inc.+ 73,000 1,583
U.S. Home Corp.+ 26,900 963
U.S. Plastic Lumber Corp.+ 62,700 274
United Dominion Industries Ltd. 77,800 1,357
Walter Industries, Inc. 95,100 1,016
Webb Del Corp.+ 36,000 538
West Teleservices Corp.+ 126,400 2,670
----------
43,805
----------
CONSUMER - DURABLE -- 0.9%
Champion Enterprises, Inc.+ 95,400 674
Furniture Brands International,
Inc.+ 97,700 1,826
Genlyte Group, Inc.+ 27,100 532
Haverty Furniture Cos., Inc. 43,400 488
Helen of Troy Ltd.+ 68,600 455
Kimball International, Inc.,
Class B 80,000 1,120
La-Z-Boy, Inc. 122,400 1,920
108
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Rent-A-Center, Inc.+ 49,100 $ 1,000
SLI, Inc. 75,750 1,080
Sunbeam Corp.+ 262,633 919
Toro Co. 25,300 778
Windmere Durable Holdings,
Inc.+ 44,600 716
----------
11,508
----------
CONSUMER - NONDURABLE -- 2.7%
The 3DO Co.+ 88,600 543
Acclaim Entertainment, Inc.+ 154,400 422
Applebee's International, Inc. 53,900 1,964
Buffets, Inc.+ 84,200 826
Cbrl Group, Inc. 121,700 1,688
Cdnow, Inc.+ 49,300 213
CEC Entertainment, Inc.+ 53,300 1,599
Cheesecake Factory+ 44,600 1,826
CKE Restaurants, Inc. 100,300 370
Cytyc Corp.+ 71,300 3,191
Department 56, Inc.+ 34,700 317
Dover Downs Entertainment, Inc. 70,500 864
Fossil, Inc.+ 64,200 1,332
Handleman Co.+ 55,800 670
Hanover Direct, Inc.+ 418,400 732
IHOP Corp.+ 39,200 637
Jack in the Box, Inc.+ 75,800 1,857
JAKKS Pacific, Inc.+ 37,500 689
Jostens, Inc. 61,500 1,518
The Marcus Corp. 56,725 606
Midway Games, Inc.+ 71,266 472
Movado Group, Inc. 27,100 234
NPC International, Inc.+ 45,000 467
Oneida Ltd. 32,000 612
Papa John's International,
Inc.+ 60,700 1,669
Regis Corp. 80,650 943
Ruby Tuesday, Inc. 60,874 1,275
Russ Berrie & Co., Inc. 40,700 758
Ryan's Family Steak Houses,
Inc.+ 71,000 694
Sonic Corp.+ 36,500 1,015
Stewart Enterprises, Inc.,
Class A 216,300 1,041
The Topps Co., Inc.+ 106,800 934
Trans World Entertainment
Corp.+ 112,450 1,181
Triarc Cos., Inc.+ 46,900 967
Tupperware Corp. 114,900 2,169
----------
36,295
----------
CONTAINERS -- 0.3%
Ball Corp. 59,700 1,881
Number Value
of Shares (000s)
--------- -----------
Gaylord Container Corp.+ 106,000 $ 543
Greif Brothers Corp.,
Class A 45,700 1,508
----------
3,932
----------
ELECTRONICS -- 12.8%
Adaptive Broadband Corp.+ 67,100 2,181
Advanced Radio Telecom Corp.+ 56,000 935
Alliant Techsystems, Inc.+ 18,900 1,316
Anadigics, Inc.+ 55,200 4,154
Anixter International, Inc.+ 71,900 2,422
Asyst Technologies, Inc.+ 62,100 3,322
Atmi, Inc.+ 55,500 2,137
AVT Corp.+ 59,500 658
Aware, Inc.+ 43,300 1,689
Belden, Inc. 47,800 1,419
Benchmark Electronics, Inc.+ 32,400 1,302
Brooks Automation, Inc.+ 32,300 2,897
C&D Technologies, Inc. 25,500 1,643
C-Cor Electronics, Inc.+ 63,500 2,484
Cable Design Technologies
Corp.+ 56,750 1,944
Cirrus Logic, Inc.+ 131,500 2,153
Coherent, Inc.+ 49,300 2,850
Cohu, Inc. 39,800 1,515
Computer Network Technology
Corp.+ 46,000 742
Concord Communications, Inc.+ 27,600 773
Cox Radio, Inc., Class A+ 18,400 1,334
Cyberonics, Inc.+ 34,900 711
Data Broadcasting Corp.+ 68,500 336
Digital Microwave Corp.+ 139,900 5,168
Dionex+ 43,400 1,579
DSP Group, Inc.+ 49,900 3,549
Dupont Photomasks, Inc.+ 30,700 1,721
Electro Scientific Industries,
Inc.+ 53,000 3,342
Electroglas, Inc.+ 41,000 1,589
ESS Technology, Inc.+ 83,700 1,088
Exar Corp.+ 34,750 2,786
General Semiconductor, Inc.+ 81,900 1,638
Genrad, Inc.+ 57,100 425
Gerber Scientific, Inc. 42,600 591
Hadco Corp.+ 27,300 2,247
Harman International
Industries, Inc. 34,100 2,229
Hearst-Argyle Television,
Inc.+ 103,300 2,202
Hollywood Entertainment Corp.+ 87,700 614
Hutchinson Technology, Inc.+ 48,000 612
IMRglobal Corp.+ 76,450 984
International Rectifier Corp.+ 121,800 5,983
Kent Electronics Corp.+ 60,600 1,769
109
<PAGE>
SCHWAB SMALL-CAP INDEX FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Kopin Corp.+ 59,700 $ 4,623
Kulicke & Soffa Industries,
Inc.+ 47,500 3,720
Littelfuse, Inc.+ 40,600 1,441
Lucent Technologies, Inc. 79,942 4,971
MEMC Electronic Materials,
Inc.+ 137,804 2,394
Methode Electronics, Inc.,
Class A 71,350 2,973
MGC Communications, Inc.+ 54,000 2,646
MMC Networks, Inc.+ 63,100 1,672
MRV Communications, Inc.+ 53,900 3,716
Netopia, Inc.+ 32,900 1,374
NetOptix Corp.+ 23,000 4,057
P-Com, Inc.+ 144,100 1,558
Park Electrochemical Corp. 20,900 536
Paxson Communications Corp.+ 107,000 876
Pinnacle Systems, Inc.+ 100,300 2,407
Pioneer - Standard Electronics,
Inc. 52,700 807
Plantronics, Inc.+ 32,400 2,867
Plexus Corp.+ 35,700 2,736
Power Intergrations, Inc.+ 52,400 1,192
Power-One, Inc.+ 44,600 3,044
PRI Automation, Inc.+ 45,900 3,666
Rayovac Corp.+ 55,100 1,150
Remec, Inc.+ 57,300 2,174
REX Stores Corp.+ 25,876 650
Silicon Storage Technology,
Inc.+ 50,300 4,904
Silicon Valley Group, Inc.+ 66,500 1,895
Snyder Communications, Inc.+ 143,600 3,411
Spectrian Corp.+ 22,600 400
SpeedFam-IPEC, Inc.+ 58,400 923
STAR Telecommunications, Inc.+ 113,100 537
Superior Telecommunications,
Inc. 40,101 486
Technitrol, Inc. 32,500 2,210
Tekelec, Inc.+ 112,800 3,948
Thermoquest Corp.+ 99,800 1,678
THQ, Inc.+ 35,600 552
Three-Five Systems, Inc.+ 26,666 2,320
Tweeter Home Entertainment
Group, Inc.+ 37,200 1,372
Varian Medical Systems, Inc.+ 61,200 2,448
Western Digital Corp.+ 266,900 1,852
Youthstream Media Networks,
Inc.+ 40,000 255
Zoran Corp.+ 26,600 1,328
----------
168,802
----------
ENERGY - RAW MATERIALS -- 2.3%
Arch Coal, Inc. 74,900 403
Atwood Oceanics, Inc.+ 26,900 1,631
Number Value
of Shares (000s)
--------- -----------
Barrett Resources Corp.+ 64,300 $ 2,042
Basin Exploration, Inc.+ 41,400 580
Cabot Oil & Gas Corp., Class A 50,400 936
Dril-Quip, Inc.+ 33,800 1,373
Evergreen Resources, Inc.+ 37,400 865
Forest Oil Corp.+ 104,800 1,172
Friede Goldman Halter, Inc.+ 81,800 506
Grey Wolf, Inc.+ 327,500 1,330
Helmerich & Payne, Inc. 102,600 3,213
Key Energy Group, Inc.+ 165,500 1,614
Kirby Corp.+ 49,300 1,020
Louis Dreyfus Natural Gas
Corp.+ 79,800 2,234
MAXXAM, Inc.+ 13,900 375
McDermott International, Inc. 118,400 962
Newpark Resources, Inc.+ 144,100 1,189
NL Industries, Inc. 104,300 1,695
Parker Drilling Co.+ 154,300 665
Tom Brown, Inc.+ 69,000 1,311
USEC, Inc. 179,300 840
UTI Energy Corp.+ 38,500 1,338
Varco International, Inc.+ 131,800 1,647
Western Gas Resources, Inc. 64,600 1,078
----------
30,019
----------
FOOD & AGRICULTURE -- 2.6%
7-Eleven, Inc.+ 820,700 3,078
Agribrands International, Inc.+ 19,700 738
American Italian Pasta Co.,
Class A+ 36,300 898
Aurora Foods, Inc.+ 188,600 908
Bob Evans Farms, Inc. 75,500 986
Coca-Cola Bottling Co. 17,500 893
Delta & Pine Land Co. 80,100 1,682
Dole Food Co., Inc. 110,600 1,942
Dreyer's Grand Ice Cream, Inc. 54,400 1,306
Earthgrains Co. 83,300 1,171
Fleming Cos., Inc. 76,600 1,259
Fresh Del Monte Produce, Inc.+ 103,400 872
Grand Union Co.+ 86,100 145
The Hain Food Group, Inc.+ 35,600 955
J.M. Smucker Co., Class A 58,000 928
Lance, Inc. 64,500 685
Michael Foods, Inc. 42,100 903
Ralcorp Holdings, Inc.+ 59,166 817
Rexall Sundown, Inc.+ 128,500 2,474
Scotts Co., Class A+ 55,400 2,001
Seaboard Corp. 3,200 576
Smithfield Foods, Inc.+ 113,300 2,415
110
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Tootsie Roll Industries,
Inc. 67,359 $ 2,076
Universal Foods Corp. 98,500 1,619
Vlasic Foods International,
Inc.+ 119,100 208
Whole Foods Market, Inc.+ 53,200 2,264
Wild Oats Markets, Inc.+ 44,000 583
----------
34,382
----------
GOLD -- 0.0%
Battle Mountain Gold Co.+ 275,000 567
----------
HEALTHCARE / DRUGS & MEDICINE -- 10.3%
Abgenix, Inc.+ 76,100 6,816
Acuson Corp.+ 51,300 632
Advance Paradigm, Inc.+ 41,500 519
Alkermes, Inc.+ 52,900 2,817
Alpharma, Inc., Class A 59,767 2,308
Amerisource Health Corp.+ 102,500 2,050
Apria Healthcare Group, Inc.+ 102,200 1,424
Arrow International, Inc. 47,300 1,614
Avigen, Inc.+ 32,400 1,061
Barr Laboratories, Inc.+ 46,000 1,987
Bergen Brunswig Corp. 269,800 1,349
Beverly Enterprises, Inc.+ 196,500 663
Bindley Western Industries,
Inc. 67,298 1,174
Bio-Technology General Corp.+ 104,800 1,474
Biomatrix, Inc.+ 45,600 869
Caremark Rx, Inc.+ 396,600 2,528
Carter-Wallace, Inc. 89,200 1,985
Cephalon, Inc.+ 64,900 3,651
Cerus Corp.+ 25,400 940
ChiRex, Inc.+ 29,700 505
Conmed Corp.+ 29,400 768
Cooper Cos., Inc. 28,100 945
COR Therapeutics, Inc.+ 50,400 3,840
Covance, Inc.+ 113,000 1,038
Coventry Health Care, Inc.+ 118,700 1,261
CV Therapeutics, Inc.+ 35,600 1,420
Datascope Corp. 31,900 1,057
Diagnostic Products Corp. 26,300 807
Dura Pharmaceuticals, Inc.+ 87,600 1,139
Entremed, Inc.+ 29,300 1,536
Enzo Biochem, Inc.+ 49,800 2,017
Foundation Health Systems,
Inc.+ 243,100 2,446
Haemonetics Corp.+ 51,300 1,180
Henry Schein, Inc.+ 79,800 1,116
Idexx Laboratories, Inc.+ 72,900 1,914
IGEN International, Inc.+ 29,800 475
Number Value
of Shares (000s)
--------- -----------
ImClone Systems+ 56,900 $ 5,178
Incyte Pharmaceuticals, Inc.+ 57,300 4,412
Inhale Therapeutic Systems+ 40,800 2,524
Invacare Corp. 60,100 1,608
Isis Pharmaceuticals, Inc.+ 66,900 744
KV Pharmaceutical Co., Class A+ 37,700 952
Laboratory Corp. of America
Holdings+ 259,900 1,543
Laser Vision Centers, Inc.+ 63,100 256
Ligand Pharmaceuticals, Inc.+ 57,800 762
The Liposome Co., Inc.+ 82,300 1,440
Medarex, Inc.+ 67,800 3,593
Medicis Pharmaceutical Corp.,
Class A+ 58,100 2,542
MedQuist, Inc.+ 71,200 2,523
Mid Atlantic Medical Services,
Inc.+ 100,100 932
Mine Safety Appliances Co. 9,500 617
Myriad Genetics, Inc.+ 20,700 1,333
NBTY, Inc.+ 133,100 2,363
Oakley, Inc.+ 141,500 1,627
Ocular Sciences, Inc.+ 62,600 1,037
Orthodontic Centers of America,
Inc.+ 94,900 2,011
Owens & Minor, Inc. 65,600 787
Pathogenesis Corp.+ 36,100 767
Perrigo Co.+ 153,000 870
Pharmaceutical Product
Development, Inc.+ 47,300 795
Pharmacopeia, Inc.+ 40,400 1,661
Pharmacyclics, Inc.+ 30,100 1,366
Province Healthcare Co.+ 38,200 1,103
PSS World Medical, Inc.+ 142,500 1,225
Quest Diagnostic, Inc.+ 86,700 5,045
Quorum Health Group, Inc.+ 141,600 1,504
Renal Care Group, Inc.+ 90,800 2,026
ResMed, Inc.+ 59,300 2,016
Sangstat Medical Corp.+ 34,000 977
SICOR, Inc.+ 176,500 1,997
Sola International, Inc.+ 91,600 412
Steris Corp.+ 140,700 1,266
Summit Technology, Inc.+ 100,500 892
Sunrise Technologies
International+ 89,000 573
SuperGen, Inc.+ 58,000 1,921
Syncor International Corp.+ 23,800 982
Total Renal Care Holdings,
Inc.+ 154,300 444
Transkaryotic Therapies, Inc.+ 46,000 1,377
Triangle Pharmaceuticals, Inc.+ 72,400 468
Universal Health Services,
Class B+ 61,100 3,345
111
<PAGE>
SCHWAB SMALL-CAP INDEX FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
US Oncology, Inc.+ 166,172 $ 571
Vertex Pharmaceuticals, Inc.+ 51,400 2,686
Vical, Inc.+ 31,200 562
Viropharma, Inc.+ 28,600 433
West Pharmaceutical Services,
Inc. 28,600 699
----------
136,092
----------
HOUSEHOLD PRODUCTS -- 0.3%
Bush Boake Allen, Inc.+ 37,900 1,132
Church & Dwight Co., Inc. 82,600 1,476
Nu Skin Asia Pacific, Inc.+ 64,200 494
Playtex Products, Inc.+ 121,500 1,314
----------
4,416
----------
INSURANCE -- 3.3%
Alfa Farmers Federation Corp. 77,800 1,400
American Annuity Group, Inc. 84,450 1,409
AmerUs Life Holdings, Inc.,
Class A 49,700 991
Argonaut Group, Inc. 44,500 762
Arthur J. Gallegher & Co. 73,600 2,742
CNA Surety Corp. 92,100 1,358
Commerce Group, Inc. 68,500 2,021
Copart, Inc.+ 109,600 1,891
Delphi Financial Group, Inc.,
Class A+ 40,971 1,180
E.W. Blanch Holdings 42,400 943
Enhance Financial Services
Group, Inc. 75,900 768
FBL Financial Group, Inc.,
Class A 58,400 905
First American Financial Corp. 130,900 2,021
Fremont General Corp. 138,100 803
Harleysville Group, Inc. 58,400 938
HCC Insurance Holdings, Inc. 94,650 1,112
HealthAxis, Inc.+ 26,900 141
Hilb, Rogal & Hamilton Co. 25,400 719
Hooper Holmes, Inc. 129,000 2,241
Horace Mann Educators Corp. 80,500 1,172
HSB Group, Inc. 58,300 1,691
Kansas City Life Insurance Co. 24,100 654
Liberty Corp. 38,500 1,263
Markel Corp.+ 11,800 1,711
Medical Assurance, Inc.+ 46,231 613
Nationwide Financial Services, Inc.,
Class A 53,587 1,494
Ohio Casualty Corp. 125,700 2,090
Presidential Life Corp. 61,400 978
Reliance Group Holdings, Inc. 241,100 663
RLI Corp. 21,075 677
Number Value
of Shares (000s)
--------- -----------
SCPIE Holdings, Inc. 23,900 $ 707
Selective Insurance Group, Inc. 57,600 1,091
State Auto Financial Corp. 77,800 778
Trenwick Group, Inc. 36,950 522
Triad Guaranty, Inc.+ 27,600 580
UICI+ 91,100 399
W.R. Berkley Corp. 51,000 1,077
Zenith National Insurance Corp. 33,200 813
----------
43,318
----------
MEDIA -- 1.6%
Ackerly Group, Inc. 45,900 597
Actv, Inc.+ 92,600 1,678
Banta Corp. 53,400 1,045
Consolidated Graphics, Inc.+ 32,500 384
CTC Communications Group, Inc.+ 45,150 1,524
Cumulus Media, Inc.+ 55,300 726
Cymer, Inc.+ 56,700 2,215
Emusic.com, Inc.+ 64,500 139
Gaylord Entertainment Co. 66,100 1,582
John Wiley & Sons, Inc.,
Class A 122,700 2,116
Journal Register Co.+ 93,100 1,362
Loews Cineplex Entertainment
Corp.+ 115,100 367
Metromedia International Group,
Inc.+ 185,200 926
PanAmSat Corp.+ 38,100 1,643
Penton Media, Inc. 62,800 1,652
Scholastic Corp.+ 32,700 1,527
Sinclair Broadcast Group, Inc.+ 98,500 769
Young Broadcasting, Inc.+ 21,500 462
----------
20,714
----------
MISCELLANEOUS FINANCE -- 5.4%
Advanta Corp., Class A 56,509 961
Affiliated Managers Group,
Inc.+ 46,200 1,854
AMCORE Financial, Inc. 55,650 1,110
American Capital Strategies
Ltd. 36,100 875
Area Bancshares Corp. 32,300 630
Bay View Capital Corp. 68,000 489
BOK Financial Corp.+ 98,267 1,612
Brown & Brown 27,100 1,087
BT Financial Corp. 33,090 569
Cathay Bancorp., Inc. 17,800 810
Commercial Federal Corp. 113,700 1,769
CVB Financial Corp. 48,975 790
Dain Rauscher Corp. 25,100 1,555
Downey Financial Corp. 56,171 1,678
Fidelity National Financial,
Inc. 138,082 2,037
112
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Financial Federal Corp.+ 28,300 $ 527
First Sentinel Bancorp., Inc. 78,062 585
First Source Corp. 37,742 778
Greater Bay Bancorp. 28,200 1,199
Heller Financial, Inc. 90,600 1,761
Henry Jack & Associates, Inc. 81,200 3,207
International Bancshares Corp. 33,850 1,401
InterWest Bancorp., Inc. 31,100 498
Investment Technology Group,
Inc.+ 61,500 2,306
Investors Financial Services
Corp. 30,200 2,465
ITT Educational Services, Inc.+ 50,750 907
Liberty Financial Cos., Inc. 94,300 1,768
LNR Property Corp. 45,900 990
M.D.C. Holdings, Inc. 43,500 829
Mail Well Holdings, Inc.+ 97,500 871
MessageMedia, Inc.+ 94,200 518
Midas, Inc. 42,700 1,081
Morgan Keegan, Inc. 57,950 924
National Discount Broker Group,
Inc.+ 36,800 1,074
Northwest Bancorp., Inc. 94,900 688
Ocwen Financial Corp.+ 141,500 1,026
Pacific Capital Bancorp. 49,000 1,354
Phoenix Investment Partners
Ltd. 87,500 760
Pioneer Group, Inc.+ 52,100 1,459
Raymond James Financial, Inc. 91,400 1,839
Sabre Group Holdings, Inc.+ 259,500 9,066
Siebert Financial Corp. 45,500 429
SierraCities.com, Inc.+ 35,100 211
Southwest Securities Group 23,700 975
Staten Island Bancorp., Inc. 79,000 1,358
Student Loan Corp. 40,100 1,604
United Asset Management Co. 116,900 2,104
Value Line, Inc. 19,500 683
Waddell & Reed Financial, Inc.,
Class A 90,150 2,400
Webster Financial Corp. 99,700 2,131
Wesley Jessen VisionCare, Inc.+ 41,700 1,642
----------
71,244
----------
NON-FERROUS METALS -- 0.5%
Commercial Metals Co. 27,633 812
Kaiser Aluminum Corp.+ 152,200 647
Minerals Technologies, Inc. 43,700 2,021
Reliance Steel & Aluminum Co. 55,675 1,281
Stillwater Mining Co.+ 75,900 2,125
----------
6,886
----------
Number Value
of Shares (000s)
--------- -----------
OIL - DOMESTIC -- 2.4%
CAL Dive International, Inc.+ 33,800 $ 1,682
Cross Timbers Oil Co. 95,725 1,382
Global Industries Ltd.+ 181,100 2,581
Houston Exploration Co.+ 47,200 853
National-Oilwell, Inc.+ 132,700 3,176
Newfield Exploration Co.+ 83,300 3,384
Nuevo Energy Co.+ 51,300 898
Patterson Energy, Inc.+ 65,000 1,836
Pennzoil-Quaker State Co. 156,300 1,710
Pioneer Natural Resources Co.+ 200,000 2,062
Pogo Producing Co. 80,800 2,071
Pride International, Inc.+ 121,200 2,742
Stone Energy Corp.+ 36,600 1,729
Superior Energy Services+ 119,900 1,109
Tesoro Petroleum Corp.+ 62,200 731
Tuboscope Vetco International
Corp.+ 88,800 1,543
Vintage Petroleum, Inc. 126,500 2,514
----------
32,003
----------
OPTICAL & PHOTO -- 0.6%
Ingram Micro, Inc., Class A+ 141,000 2,776
Photronics, Inc.+ 47,000 1,566
Polaroid Corp. 88,200 1,780
Zomax, Inc.+ 29,800 1,410
----------
7,532
----------
PAPER & FOREST PRODUCTS -- 0.7%
Buckeye Technology, Inc.+ 69,800 1,335
Caraustar Industries, Inc. 49,600 753
Chesapeake Corp. 37,000 1,156
Longview Fibre Co. 102,400 1,306
PH Glatfelter Co. 84,000 903
Rock Tennessee Co., Class A 60,830 559
Thermo Fibertek, Inc.+ 122,600 827
Universal Forest Products, Inc. 38,900 525
Wausau Mosinee Paper Corp. 101,825 1,235
----------
8,599
----------
PRODUCER GOODS & MANUFACTURING -- 6.5%
Advanced Energy Industries,
Inc.+ 57,000 3,933
AGCO Corp. 128,800 1,529
Albany International Corp.,
Class A+ 60,483 919
AMETEK, Inc. 64,000 1,316
Applied Industrial Technologies,
Inc. 40,800 709
113
<PAGE>
SCHWAB SMALL-CAP INDEX FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
AptarGroup, Inc. 73,200 $ 2,086
Astec Industries, Inc.+ 44,800 1,126
Baldor Electric, Co. 82,020 1,523
Barnes Group, Inc. 36,400 617
CLARCOR, Inc. 47,850 861
Comfort Systems USA, Inc.+ 75,000 516
Cuno, Inc.+ 33,200 901
Curtiss-Wright Corp. 19,300 688
Daisytek International Corp.+ 33,400 409
Diamond Technology Partners,
Inc.+ 37,700 2,983
Encompass Services Corp.+ 44,289 307
Federal Signal Corp. 92,300 1,875
Fisher Scientific
International+ 79,900 3,191
Flowserve Corp. 73,934 1,044
Foster Wheeler Corp. 89,500 822
Franklin Electric Corp. 10,500 747
Graco, Inc. 40,637 1,377
Hanover Compressor Co.+ 57,200 3,332
Helix Technology Corp. 44,300 2,262
Hughes Supply, Inc. 45,150 689
Husmann International, Inc. 100,900 1,400
Ibis Technology Corp.+ 18,000 765
IDEX Corp. 59,325 1,854
Ionics, Inc.+ 31,000 728
JLG Industries, Inc. 89,100 846
Kaydon Corp. 60,500 1,414
Kennametal, Inc. 60,000 1,725
Libbey, Inc. 32,200 982
Lincoln Electric Co., Class A 90,400 1,722
Lone Star Technologies, Inc.+ 45,200 2,085
Manitowoc Co., Inc. 51,862 1,721
Marine Drilling Co., Inc.+ 115,600 3,006
Mark IV Industries, Inc. 87,800 1,860
MascoTech, Inc. 87,500 1,012
Matthews International Corp.,
Class A 26,100 600
Maverick Tube Corp.+ 35,300 1,006
Metals USA, Inc. 72,300 515
Milacron, Inc. 73,800 1,347
MSC Industrial Direct, Inc.+ 67,900 951
NACCO Industries, Inc., Class A 15,650 702
Nordson Corp. 33,000 1,475
Precision Castparts Corp. 48,800 2,037
Presstek, Inc.+ 63,400 1,331
Regal Beloit 40,200 726
Roper Industries, Inc. 60,600 1,909
Sauer, Inc. 53,400 464
Scott Technologies, Inc.+ 35,700 696
Number Value
of Shares (000s)
--------- -----------
Shaw Group, Inc.+ 30,200 $ 1,074
SPS Technologies, Inc.+ 24,700 775
Steelcase, Inc. 50,500 593
Stewart & Stevenson Services 55,800 673
Tecumseh Products Co., Class A 39,800 1,848
Tennant Co. 17,800 620
Terex Corp.+ 56,200 878
Thermo Optek Corp.+ 100,200 1,472
UCAR International, Inc.+ 89,500 1,180
Ultratech Stepper, Inc.+ 42,900 641
Valmont Industries, Inc. 45,200 898
Watsco, Inc. 57,500 740
Watts Industries, Inc.,
Class A 52,300 699
WMS Industries, Inc.+ 59,300 519
York International Corp. 88,000 2,123
----------
85,374
----------
RAILROAD & SHIPPING -- 0.5%
Alexander & Baldwin, Inc. 86,600 1,818
Overseas Shipholding Group,
Inc. 67,000 1,755
Westinghouse Air Brake Co. 101,479 1,148
Wisconsin Central
Transportation Corp.+ 105,600 1,538
----------
6,259
----------
REAL PROPERTY -- 0.2%
Fairfield Communities, Inc.+ 74,400 674
Forest City Enterprises, Inc. 59,500 1,733
Trammell Crow Co.+ 71,400 928
----------
3,335
----------
RETAIL -- 3.1%
99 Cents Only Stores+ 66,200 2,491
Ames Department Stores, Inc.+ 56,400 1,012
Burlington Coat Factory
Warehouse Corp. 92,440 1,387
Casey's General Stores, Inc. 118,900 1,390
Charming Shoppes, Inc.+ 192,000 1,296
Claire's Stores, Inc. 102,075 1,882
Cost Plus, Inc.+ 48,500 1,482
Duane Reade, Inc.+ 34,400 1,032
Egghead.com, Inc.+ 68,748 320
Great Atlantic & Pacific Tea
Co., Inc. 76,900 1,408
Insight Enterprises, Inc.+ 51,900 2,170
Intertan, Inc.+ 74,700 1,032
Longs Drug Stores, Inc. 78,300 1,820
114
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Michaels Stores, Inc.+ 61,300 $ 2,418
OfficeMax, Inc.+ 227,600 1,280
PC Connection, Inc.+ 35,700 1,709
Pep Boys-Manny, Moe, & Jack 103,000 650
PetSmart, Inc.+ 224,700 730
Pier 1 Imports, Inc. 197,500 2,247
Ruddick Corp. 91,000 1,041
Shop At Home, Inc.+ 61,200 385
ShopKo Stores, Inc.+ 59,200 1,058
Spiegel, Inc., Class A 261,100 2,154
Sunglass HUT International,
Inc.+ 91,000 682
Systemax, Inc.+ 69,700 536
United Stationers, Inc.+ 71,300 2,380
Value City Department Stores,
Inc.+ 63,100 643
Venator Group, Inc.+ 275,900 3,276
Whitehall Jewellers, Inc.+ 32,450 558
----------
40,469
----------
STEEL -- 0.4%
Bethlehem Steel Corp.+ 259,100 1,393
Carpenter Technology Corp. 43,500 873
Cleveland-Cliffs, Inc. 21,300 523
LTV Corp. 202,000 719
Ryerson Tull, Inc. 48,300 598
Steel Dynamics, Inc.+ 99,900 1,136
----------
5,242
----------
TELEPHONE -- 2.5%
Brightpoint, Inc.+ 106,150 1,254
CellStar Corp.+ 119,800 689
CFW Communication Co. 25,200 970
COMSAT Corp. 105,500 2,578
FirstCom Corp.+ 57,600 1,195
GST Telecommunications, Inc.+ 108,500 366
ICG Communications, Inc.+ 94,200 2,802
Inter Tel, Inc. 52,000 1,053
Interdigital Communications
Corp.+ 97,000 2,007
Leap Wireless International,
Inc.+ 46,600 2,394
Northeast Optic Network, Inc.+ 32,300 1,809
Optical Cable Corp.+ 74,900 1,863
Pacific Gateway Exchange,
Inc.+ 39,700 251
PairGain Technologies, Inc.+ 144,900 3,604
Pegasus Communications Corp.+ 31,700 3,459
Primus Telecommunications
Group, Inc.+ 73,700 2,418
TALK.com, Inc.+ 128,100 1,249
TCI Satellite Entertainment,
Inc., Class A+ 126,100 1,324
Number Value
of Shares (000s)
--------- -----------
Teligent, Inc.+ 19,300 $ 724
World Access, Inc.+ 90,700 1,429
----------
33,438
----------
TOBACCO -- 0.1%
Brooke Ltd. 42,810 594
Universal Corp. 60,100 1,134
----------
1,728
----------
TRAVEL & RECREATION -- 1.8%
AMERCO+ 44,400 744
American Classic Voyager+ 37,700 756
Anchor Gaming, Inc.+ 23,200 934
Argosy Gaming Co.+ 56,800 909
Avis Rent A Car, Inc.+ 62,500 1,266
Aztar Corp.+ 85,800 1,024
Bally Total Fitness Holding
Corp.+ 46,700 1,045
Callaway Golf Co. 152,500 2,535
Central Parking Corp. 73,000 1,871
Choice Hotels International,
Inc.+ 107,700 1,420
Dollar Thrifty Automotive
Group, Inc.+ 51,000 1,071
Extended Stay Amererica, Inc.+ 191,200 1,709
Intranet Solutions, Inc.+ 40,000 890
Marketing Services Group, Inc.+ 56,600 393
Prime Hospitality Corp.+ 94,700 876
Rent-Way, Inc.+ 44,200 1,147
Sodexho Marriott Services,
Inc. 124,600 1,822
Station Casinos, Inc.+ 84,500 2,408
Sunterra+ 144,100 297
Vail Resorts, Inc.+ 54,400 877
----------
23,994
----------
TRUCKING & FREIGHT -- 1.6%
American Freightways Corp.+ 79,200 1,475
Arnold Industries, Inc. 53,500 625
Circle International Group,
Inc. 38,400 1,020
Forward Air Corp.+ 41,500 1,427
Fritz Cos., Inc.+ 72,600 699
Heartland Express, Inc.+ 57,947 978
J.B. Hunt Transport Services,
Inc. 70,650 1,166
Landstar Systems, Inc.+ 21,000 1,202
M.S. Carriers, Inc.+ 23,100 549
Roadway Express, Inc. 38,900 914
Rollins Truck Leasing Corp. 113,550 1,128
Swift Transportation Co.,
Inc.+ 129,800 2,604
US Freightways Corp. 54,600 2,546
Wabash National Corp. 45,800 667
115
<PAGE>
SCHWAB SMALL-CAP INDEX FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Werner Enterprises, Inc. 95,362 $ 1,788
XTRA Corp.+ 23,700 1,114
Yellow Corp.+ 49,900 951
----------
20,853
----------
UTILITIES - ELECTRIC & GAS -- 3.8%
AGL Resources, Inc. 112,800 1,974
American States Water Co. 18,000 542
Atmos Energy Corp. 63,300 1,005
Avista Corp. 93,500 2,764
Black Hills Corp. 42,900 984
California Water Service Group 25,700 599
CH Energy Group, Inc. 33,400 1,100
Cleco Corp. 44,200 1,522
CMP Group, Inc. 65,100 1,884
CTG Resources, Inc. 16,400 632
E'Town Corp. 16,800 1,095
El Paso Electric Co.+ 115,000 1,272
Empire District Electric Co. 34,700 748
Energen Corp. 59,700 1,093
Hawaiian Electric Industries,
Inc. 64,100 2,372
IDACORP, Inc. 77,400 2,854
Laclede Gas Co. 38,500 756
Madison Gas & Electric Co. 31,900 578
New Jersey Resources Corp. 34,900 1,405
Northwest Natural Gas Co. 50,300 1,107
Northwestern Public Services
Co. 46,400 1,067
NUI Corp. 25,500 682
ONEOK, Inc. 61,800 1,561
Otter Tail Power Co. 47,800 1,243
Philadelphia Suburban Corp. 81,700 1,961
Piedmont Natural Gas Co., Inc. 67,100 1,896
Public Service Co. of New
Mexico 81,300 1,463
RGS Energy Group, Inc. 71,800 1,687
Southern Union Co.+ 94,950 1,632
Southwest Gas Corp. 60,600 1,155
UGI Corp. 54,000 1,104
Unisource Energy Corp. 64,880 1,054
United Illuminating Co. 28,200 1,297
Vectren Corp.+ 123,052 2,477
Veritas DGC, Inc.+ 60,400 1,450
WPS Resources Corp. 53,200 1,589
----------
49,604
----------
TOTAL COMMON STOCK
(Cost $1,274,158) 1,316,062
----------
Par Value
(000s) (000s)
--------- ----------
U.S. TREASURY OBLIGATIONS -- 0.0%
U.S. Treasury Bills (a) (b)
5.71%-5.76%, 06/15/00 $540 $ 536
----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $536) 536
----------
Number
of Shares
---------
SHORT-TERM INVESTMENTS -- 0.8%
HSBC Holdings Grand Cayman
Time Deposit
5.44%*, 05/01/00 9,164,383 9,164
Bank One Grand Cayman
Time Deposit
5.44%*, 05/01/00 1,698,628 1,699
----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $10,863) 10,863
----------
TOTAL INVESTMENTS -- 100.4%
(Cost $1,285,557) 1,327,461
----------
OTHER ASSETS AND LIABILITIES, NET -- (0.4%)
Other assets 1,234
Liabilities (6,202)
----------
(4,968)
----------
TOTAL NET ASSETS -- 100.0% $1,322,493
==========
SEE ACCOMPANYING NOTES TO SCHEDULES OF INVESTMENTS AND NOTES TO FINANCIAL
STATEMENTS.
116
<PAGE>
SCHWAB INTERNATIONAL INDEX FUND(R)
SCHEDULE OF INVESTMENTS
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
--------------------------------------------------------------------------------
COMMON STOCKS -- 98.4%
--------------------------------------------------------------------------------
AUSTRALIA -- 1.6%
AMP Ltd. 173,175 $ 1,516
Australia & New Zealand
Banking Group Ltd. 224,109 1,548
Brambles Industries Ltd. 38,235 1,075
Broken Hill Proprietary Co.
Ltd.+ 246,491 2,652
Cable and Wireless Optus Ltd. 510,400 1,647
Coles Myer Ltd. 192,593 721
Commonwealth Bank of Australia 124,915 1,901
National Australia Bank 227,567 3,115
News Corporation Ltd. 305,939 3,882
Westpac Banking Corp. 260,376 1,661
----------
19,718
----------
BELGIUM -- 0.5%
Almanij NV 27,381 1,011
Electrabel 8,291 2,009
Fortis (B) 102,444 2,592
UCB SA 24,836 837
----------
6,449
----------
CANADA -- 4.6%
Alcan Aluminum Ltd. 37,466 1,219
Bank of Montreal 37,377 1,356
Bank of Nova Scotia 77,594 1,767
Barrick Gold Corp. 52,091 875
BCE, Inc. 89,564 10,367
BCT. Telus Communications, Inc. 26,400 677
Bombardier, Inc., Class B 95,100 2,554
Canadian Imperial Bank of
Commerce 54,445 1,426
Canadian Pacific Ltd. 50,624 1,177
Imperial Oil Ltd. 63,322 1,483
Loblaw Co. Ltd. 38,800 1,040
Nortel Networks Corp. 188,092 21,250
Royal Bank of Canada 43,886 2,070
Seagram Co. Ltd. 55,690 2,926
Thomson Corp. 89,432 2,952
Toronto-Dominion Bank 67,156 1,552
TransCanada PipeLines Ltd. 74,100 525
----------
55,216
----------
Number Value
of Shares (000s)
--------- -----------
DENMARK -- 0.6%
D/S 1912, Series B 152 $ 1,533
Dampskibsselkabet Svendborg,
Series B 116 1,609
Den Danske Bank 7,622 759
Novo-Nordisk A/S, Series B 10,672 1,435
Tele Danmark A/S, Series B 30,861 2,263
----------
7,599
----------
FRANCE -- 9.2%
Accor SA 25,663 955
Air Liquide SA 12,742 1,663
Alcatel SA 29,135 6,770
Alstom 30,523 762
Aventis SA 53,056 2,925
Axa 50,112 7,448
Banque Nationale de Paris 44,334 3,592
Bouygues SA+ 269 172
Bouygues SA 4,596 2,940
Canal Plus 19,208 3,711
Cap Gemini SA 12,030 2,368
Carrefour Supermarche SA 76,376 4,984
Castorama Dubois
Investissements SA 5,864 1,283
Compagnie de Saint-Gobain SA 13,719 1,877
Credit Commerical de France 10,393 1,484
Establissements Economiques du
Casino Guichard Perrachon SA 10,894 997
Groupe Danone 10,962 2,403
Lafarge SA 18,397 1,527
L'Oreal SA 9,646 6,558
LVMH 14,362 6,042
Michelin, Series B 21,163 704
Pinault-Printemps-Redoute SA 16,706 3,378
PSA Peugeot Citroen 6,683 1,386
Sanofi-Synthelabo SA+ 110,872 4,148
Schneider Electric SA 25,234 1,656
Societe Generale 15,231 3,162
STMicroelectronics NV 41,855 8,006
Suez Lyonnaise des Eaux SA 27,554 4,331
Total Fina Elf SA 106,093 16,136
Valeo SA 13,407 745
Vivendi 78,467 7,780
----------
111,893
----------
117
<PAGE>
SCHWAB INTERNATIONAL INDEX FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
GERMANY -- 6.1%
BASF AG 90,279 $ 3,956
Bayer AG 106,563 4,451
Bayerische Motoren Werke
(BMW) AG 91,414 2,466
Bayerische Vereinsbank AG 56,611 3,457
Commerzbank AG 68,589 2,601
DaimlerChrysler AG 139,733 8,169
Degussa-Huels AG+ 20,500 596
Deutsche Bank AG 112,865 7,601
Deutsche Lufthansa AG 51,768 1,083
Dresdner Bank AG 73,948 3,053
Ergo Versicherungs Gruppe AG 10,500 1,076
Metro AG 40,148 1,566
Muenchener Rueckversicher AG 28,456 8,363
Preussag AG 22,900 943
RWE AG 66,701 2,168
Schering AG 9,382 1,330
Siemens AG 85,595 12,714
ThyssenKrupp AG+ 78,370 1,650
Veba AG 71,701 3,607
Viag AG 66,482 1,300
Volkswagen AG 40,720 1,540
----------
73,690
----------
HONG KONG / CHINA -- 2.0%
Cheung Kong Holdings 331,000 3,952
CLP Holdings Ltd. 293,900 1,317
Hang Seng Bank Ltd. 298,700 2,751
Henderson Land Development Co. 282,000 1,231
Hong Kong & China Gas Co. Ltd. 723,349 794
Hong Kong Electric Holdings
Ltd. 328,500 1,025
Hutchison Whampoa Ltd. 548,000 7,985
Sun Hung Kai Properties Ltd. 337,694 2,677
Swire Pacific Ltd., Class A 246,500 1,392
The Wharf Holdings Ltd. + 376,000 780
----------
23,904
----------
ITALY -- 3.5%
Assicurazioni Generali+ 161,472 4,606
Autostrade Concessionie
Costruzioni Autostrade SPA 160,539 1,084
Banca Commerciale Italiana SPA 35,210 167
Number Value
of Shares (000s)
--------- -----------
Banca Di Roma SPA+ 707,950 $ 750
Banca Intesa SPA+ 457,372 1,688
Banca Intesa SPA - RNC+ 314,509 636
Edison SPA 86,055 802
ENI SPA 1,085,662 5,412
Fiat SPA 44,930 1,104
Fiat SPA - RNC 15,452 193
Istituto Nazionale Assicuraz
SPA 554,495 1,193
Mediaset SPA 155,944 2,537
Olivetti SPA 589,966 1,957
Telecom Italia SPA 500,565 7,016
Telecom Italia SPA - RNC+ 179,792 1,135
TIM SPA 919,850 8,802
TIM SPA - RNC 223,802 883
Unicredito Italiano SPA 674,008 2,739
----------
42,704
----------
JAPAN -- 31.1%
Advantest Corp. 14,700 3,361
Ajinomoto Co., Inc. 83,000 949
The Asahi Bank Ltd. 408,000 1,963
Asahi Breweries Ltd. 86,000 875
Asahi Chemical Industry Co.
Ltd. 206,000 1,186
Asahi Glass Co. Ltd. 154,000 1,351
The Bank of Tokyo-Mitsubishi
Ltd. 652,500 8,416
Bridgestone Corp. 124,000 2,691
Canon, Inc. 123,000 5,622
Central Japan Railway 287 1,540
Chubu Electric Power Co. 98,100 1,616
The Chugoku Electric Power Co.,
Inc. 82,000 1,018
The Dai-Ichi Kangyo Bank Ltd. 445,000 3,689
DAI Nippon Printing Co. Ltd. 100,000 1,696
Daiwa House Industry Co. Ltd. 120,000 799
Daiwa Securities Group, Inc. 189,000 2,886
DDI Corp. 334 3,832
Denso Corp. 129,000 3,157
East Japan Railway Co. 375 2,221
Fanuc 33,100 3,467
The Fuji Bank Ltd. 486,000 4,047
Fuji Photo Film Co. Ltd. 72,000 2,885
Fujitsu Ltd. 262,000 7,418
Hitachi Ltd. 460,000 5,491
Honda Motor Co. Ltd. 142,000 6,346
118
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Hoya Corp. 15,000 $ 1,527
Industrial Bank of Japan Ltd. 368,000 3,031
Ito-Yokado Co. Ltd. 59,000 4,307
Japan Telecom Co. Ltd. 64 3,257
Japan Tobacco, Inc. 301 2,214
Jusco Co. Ltd. 54,000 999
Kansai Electric Power Co. 144,300 2,270
KAO Corp. 90,000 2,740
Kawasaki Steel Corp. 592,000 920
Keyence Corp. 5,390 1,788
Kinki Nippon Railway Co. 215,830 815
Kirin Brewery Co. Ltd. 159,000 2,070
Komatsu Ltd. 212,000 1,020
Kyocera Corp. 26,000 4,347
Kyushu Electric Power Co. 63,800 741
Matsushita Communications
Industrial Co. Ltd. 26,000 4,075
Matsushita Electric Industrial
Co. Ltd. 289,000 7,648
Matsushita Electric Works 94,000 1,043
Mazda Motor Corp. 212,000 651
Mitsubishi Corp. 219,000 1,905
Mitsubishi Chemical Corp. 265,000 1,062
Mitsubishi Electric Corp. 310,000 2,648
Mitsubishi Estate Co. Ltd. 189,000 2,125
Mitsubishi Heavy Industries
Ltd. 510,000 1,586
Mitsubishi Trust & Banking
Corp. 190,000 1,595
Mitsui & Co. 246,000 1,823
Murata Manufacturing Co. Ltd. 35,000 6,801
NEC Corp. 237,000 6,447
Nintendo Co. Ltd. 20,600 3,431
The Nikko Securities Co. Ltd. 231,000 2,725
Nippon Express Co. Ltd. 184,000 1,161
Nippon Mitsubishi Oil Corp. 222,000 768
Nippon Steel Corp. 995,000 2,237
Nippon Telegraph & Telephone
Corp. 1,813 22,479
Nissan Motor Co. Ltd. 362,000 1,645
Nomura Securities Co. Ltd. 277,000 6,971
NTT DoCoMo, Inc. 1,364 45,561
Osaka Gas Co. Ltd. 392,000 1,070
Ricoh Co. Ltd. 97,000 2,046
Rohm Co. 17,000 5,694
Sakura Bank Ltd. 567,000 3,977
Sankyo Co. Ltd. 62,000 1,365
Number Value
of Shares (000s)
--------- -----------
The Sanwa Bank Ltd. 413,000 $ 3,990
Sanyo Electric Co. Ltd. 296,000 1,975
Secom Co. 39,000 3,269
Seibu Railway Co. 65,000 831
Sekisui House Ltd. 120,000 1,099
Seven-Eleven Japan Co. 118,000 14,521
Sharp Corp. 168,000 3,241
Shin-Etsu Chemical Co. 56,700 2,996
Shiseido Co. Ltd. 92,000 1,163
The Shizuoka Bank Ltd. 103,000 953
SMC Corp. 10,000 1,989
Sony Corp. 116,400 13,366
The Sumitomo Bank Ltd. 458,000 5,725
Sumitomo Chemical Co. Ltd. 207,000 1,030
Sumitomo Corp. 141,000 1,579
Sumitomo Electric Industries 92,000 1,225
Sumitomo Trust & Banking Co.
Ltd. 220,000 1,608
Suzuki Motor Corp. Ltd. 63,000 938
Taisho Pharmaceutical Co. 51,000 1,708
Takeda Chemical Industries 127,000 8,355
TDK Corp. 19,000 2,544
Tohoku Electric Power Co. 66,600 785
The Tokai Bank Ltd. 297,000 1,544
Tokio Marine & Fire Insurance
Co. 229,000 2,233
Tokyo Electric Power Co., Inc. 198,700 4,688
Tokyo Electronics Ltd. 24,000 3,911
Tokyo Gas Co. Ltd. 471,000 1,037
Toppan Printing Co. Ltd. 93,000 972
Toray Industries, Inc. 240,000 871
Toshiba Corp. 446,000 4,325
Toyota Motor Corp. 536,000 26,633
West Japan Railway Co. 175 602
Yamanouchi Pharmaceutical Co. 52,000 2,747
Yamato Transport Co. Ltd. 58,000 1,449
----------
377,009
----------
NETHERLANDS -- 5.7%
ABN-AMRO Holdings NV 205,161 4,235
Aegon NV 93,906 6,765
Akzo Nobel NV 43,972 1,804
ASM Lithography Holding NV+ 66,314 2,599
Elsevier NV 85,374 832
Fortis NV 63,632 1,604
119
<PAGE>
SCHWAB INTERNATIONAL INDEX FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
ING Groep NV 134,674 $ 7,366
Koninklijke Ahold NV 91,034 2,128
Koninklijke Philips Electronics
NV 192,924 8,627
Royal Dutch Petroleum Co. 323,703 18,702
Royal KPN NV 70,233 7,095
TNT Post Group NV 74,422 1,628
Unilever NV 84,693 3,856
VNU NV 30,444 1,633
Wolters Kluwer NV 35,554 841
----------
69,715
----------
SPAIN -- 2.6%
Banco Bilbao Vizcaya
Argentaria SA 373,872 5,111
Banco Popular Espanol 34,068 922
Banco Santander Central
Hispano SA 526,515 5,503
Endesa SA 155,665 3,385
Gas Natural SDG SA 81,460 1,364
Iberdrola SA 148,616 1,911
Repsol SA 172,541 3,538
Telefonica SA 462,897 10,327
----------
32,061
----------
SWEDEN -- 3.2%
Electrolux AB, Series B 48,454 820
Foreningssparbaken, Series A 76,221 1,124
Hennes & Mauritz AB, Series B 111,247 2,957
Nordic Baltic Holding AB 201,536 1,272
Skandia Forsakrings AB 69,450 3,328
Skandinaviska Enskilda Banken,
Series A 106,864 1,170
Svenska Handlesbanken AB,
Series A 101,022 1,337
Svenska Handelsbanken AB,
Series B 53,561 688
Telefonaktiebolaget LM Ericsson,
Series B 279,621 24,892
Volvo AB, Series A 26,050 609
Volvo AB, Series B 38,526 936
----------
39,133
----------
SWITZERLAND -- 5.1%
Adecco SA 2,605 2,142
Alusuisse Lonza Group AG 1,108 703
Cie Financiere Richemont,
Series A 764 1,861
Number Value
of Shares (000s)
--------- -----------
Clariant AG 2,020 $ 739
Credit Suisse Group,
Registered 38,884 7,040
Holderbank Financiere
Glarus AG, Bearer 760 861
Holderbank Financiere Glarus AG,
Registered 2,943 941
Nestle SA, Registered 5,636 9,958
Novartis AG, Registered 9,753 13,656
Roche Holding AG, Bearer 219 2,629
Roche Holding AG, Genus 987 10,332
Schweizerische
Lebensversicherungs-und
Rentenanstalt 1,600 849
UBS AG, Registered 29,051 7,134
Zurich Allied AG 7,042 3,000
----------
61,845
----------
UNITED KINGDOM -- 22.6%
Abbey National PLC 206,737 2,366
Alliance & Leicester PLC 93,610 932
Amvescap PLC 85,231 1,238
Associated British Foods PLC 135,084 803
AstraZeneca PLC 252,493 10,624
BAA PLC 143,314 930
Bank of Scotland PLC + 165,104 1,471
Barclays PLC 210,444 5,407
BASS PLC 114,181 1,342
BG Group PLC 479,109 2,871
Billiton PLC 280,553 1,047
BOC Group PLC 47,105 779
Boots Co. PLC 157,816 1,228
BP Amoco PLC 3,230,270 28,029
British Aerospace PLC 358,909 2,213
British Airways PLC 142,475 742
British American Tobacco PLC 290,455 1,765
British Energy PLC 219,483 587
British Sky Broadcasting PLC 248,190 6,117
British Telecommunications PLC 920,209 16,574
Cable & Wireless PLC 347,809 5,785
Cable & Wireless Communications
PLC 169,765 2,550
Cadbury Schweppes PLC 288,970 1,985
Centrica PLC 596,018 2,126
CGU PLC 181,292 2,606
Compass Group PLC 93,368 1,331
120
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Diageo PLC 505,514 $ 4,109
GKN PLC 91,748 1,275
Glaxo Wellcome PLC 512,430 15,885
Granada Group PLC 253,258 2,481
Great Universal Stores PLC 171,714 1,041
Halifax Group PLC 310,803 2,913
Hanson PLC 114,055 842
Hays PLC 273,040 1,885
Hilton Group PLC 248,465 1,048
HSBC Holdings PLC 1,197,189 13,320
Imperial Chemical Industries
PLC 108,538 934
Imperial Tobacco Group PLC 84,439 634
Invensys PLC 536,368 2,581
J Sainsbury PLC 256,515 1,349
Kingfisher PLC 215,397 1,772
Legal & General Group PLC 786,557 2,062
Lloyds TSB Group PLC 766,836 7,536
Marconi PLC 370,236 4,644
Marks & Spencer PLC 430,439 1,581
National Grid Group PLC 221,283 1,827
National Power PLC 159,236 725
New Dixons Group PLC 211,372 867
Norwich Union PLC 253,690 1,741
Pearson, Inc. PLC 82,993 2,871
Peninsular & Oriental Steam
Navigation 87,594 869
Powergen PLC 106,860 677
Prudential Corp. PLC 269,320 4,155
Railtrack Group PLC 94,195 1,198
Reed International PLC 144,366 1,004
Rentokil Initial PLC 362,995 998
Reuters Group PLC 202,594 3,643
Rio Tinto PLC 158,600 2,469
Rolls-Royce PLC 251,663 936
Royal & Sun Alliance Insurance
Group PLC 183,015 1,027
Royal Bank of Scotland Group
PLC 291,815 4,550
Schroders PLC 48,763 746
Scottish & Newcastle PLC 104,466 778
Scottish & Southern Energy PLC 115,521 979
Number Value
of Shares (000s)
--------- -----------
Scottish Power PLC 148,235 $ 1,193
Shell Transport & Trading Co.
PLC 1,430,326 11,695
SmithKline Beecham PLC 793,540 10,909
Standard Chartered PLC 144,432 1,946
Telewest Communications PLC 300,559 1,835
Tesco PLC 965,955 3,310
Unilever PLC 399,712 2,410
United Utilities PLC 91,258 878
Vodafone AirTouch PLC 7,146,254 32,932
Whitbread PLC 84,727 764
Woolwich PLC 235,114 1,147
WPP Group PLC 102,317 1,656
----------
274,075
----------
TOTAL COMMON STOCKS
(Cost $903,536) 1,195,011
----------
--------------------------------------------------------------------------------
PREFERRED STOCKS -- 0.7%
--------------------------------------------------------------------------------
AUSTRALIA -- 0.3%
News Corporation Ltd. 298,837 3,212
----------
--------------------------------------------------------------------------------
GERMANY -- 0.4%
Metro AG 5,860 123
RWE AG 18,788 495
SAP AG 5,837 3,450
Volkswagen AG 22,670 500
----------
4,568
----------
ITALY -- 0.0%
Fiat SPA 29,606 434
----------
TOTAL PREFERRED STOCKS
(Cost $6,005) 8,214
----------
121
<PAGE>
SCHWAB INTERNATIONAL INDEX FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
SHORT-TERM INVESTMENTS -- 1.5%
Bank One Grand Cayman Time Deposit
5.44%*, 05/01/00 17,928,079 $ 17,928
----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $17,928) 17,928
----------
TOTAL INVESTMENTS -- 100.6%
(Cost $927,469) 1,221,153
----------
OTHER ASSET AND LIABILITIES, NET -- (0.6%)
Other assets 92,037
Liabilities (99,073)
----------
(7,036)
----------
TOTAL NET ASSETS -- 100.0% $1,214,117
==========
NOTES TO SCHEDULES OF INVESTMENTS
April 30, 2000 (Unaudited)
+ Non-income producing security.
* Interest rate represents the yield on report date.
ADR -- American Depository Receipt.
LLC -- Limited Liability Company.
LP -- Limited Partnership.
Ltd. -- Limited.
PLC -- Public Limited Company.
RNC -- Risparmio Non-Convertible.
(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.
122
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (in thousands)
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Schwab Schwab Schwab Total Schwab Schwab
S&P 500 1000 Stock Market Small-Cap International
Fund Fund(R) Index Fund(TM) Index Fund(R) Index Fund(R)
------------ ----------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at value (Cost: $5,949,337, $4,055,428,
$393,268, $1,285,557 and $927,469, respectively) $8,112,893 $7,533,707 $426,804 $1,327,461 $1,221,153
Cash -- 1 -- -- --
Foreign currency -- -- -- -- 981
Cash held as collateral for securities on loan
(see Note 6) 667,248 654,761 68,685 -- 82,659
Receivables:
Investments sold -- -- 23 -- 239
Fund shares sold 4,951 385 693 654 3,636
Dividends 6,202 5,503 287 414 3,816
Interest 176 30 26 4 8
Securities lending income 35 59 12 -- 57
Variation margin -- -- -- 58 --
Dividend tax reclaim -- -- -- -- 626
Deferred offering costs -- -- 26 -- --
Prepaid expenses 452 116 56 104 15
---------- ---------- -------- ---------- ----------
Total assets 8,791,957 8,194,562 496,612 1,328,695 1,313,190
---------- ---------- -------- ---------- ----------
LIABILITIES
Collateral held for securities on loan (see Note 6) 667,248 654,761 68,685 -- 82,659
Payables:
Investments purchased 80,260 4,110 1,704 5,996 15,231
Fund shares redeemed 4,650 491 148 32 416
Variation margin 109 49 8 -- --
Investment advisory and administration fees 130 167 -- 32 42
Transfer agency and shareholder service fees 75 143 5 22 21
Withholding taxes -- -- -- -- 116
Accrued expenses 532 476 330 120 376
Unrealized loss on forward foreign currency contracts
(see Note 2) -- -- -- -- 212
---------- ---------- -------- ---------- ----------
Total liabilities 753,004 660,197 70,880 6,202 99,073
---------- ---------- -------- ---------- ----------
Net assets applicable to outstanding shares $8,038,953 $7,534,365 $425,732 $1,322,493 $1,214,117
========== ========== ======== ========== ==========
NET ASSETS CONSIST OF:
Paid-in capital $5,943,770 $4,070,449 $391,066 $1,070,278 $927,792
Undistributed net investment income 22,072 15,429 1,030 1,933 3,847
Accumulated net realized gain (loss) on investments sold,
futures contracts and foreign currency transactions (90,453) (30,020) (29) 209,024 (11,065)
Net unrealized appreciation on investments
and futures contracts 2,163,564 3,478,507 33,665 41,258 293,684
Net unrealized depreciation on translating assets
and liabilities into reporting currency -- -- -- -- (141)
---------- ---------- -------- ---------- ----------
$8,038,953 $7,534,365 $425,732 $1,322,493 $1,214,117
========== ========== ======== ========== ==========
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
($3,499,959/156,193, $5,099,907/127,036,
$196,433/8,654, $664,235/32,828, $591,015/31,229,
respectively) $22.41 $40.15 $22.70 $20.23 $18.93
Select Shares ($4,076,351/181,518,
$2,434,458/60,629, $229,299/10,093,
$658,258/32,496, $623,102/32,908, respectively) $22.46 $40.15 $22.72 $20.26 $18.93
e. Shares ($462,643/20,631) $22.42 NA NA NA NA
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
123
<PAGE>
STATEMENTS OF OPERATIONS (in thousands)
For the six months ended April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Schwab Schwab Schwab Total Schwab Schwab
S&P 500 1000 Stock Market Small-Cap International
Fund Fund(R) Index Fund(TM) Index Fund(R) Index Fund(R)
---------- ------------ -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Investment income:
Dividends (net of foreign tax withheld of
$61, $7, $0, $3 and $952, respectively) $ 45,397 $ 41,417 $ 1,945 $ 4,840 $ 6,709
Interest 533 150 137 327 440
Securities lending 588 732 98 -- 70
-------- -------- ------- -------- -------
Total investment income 46,518 42,299 2,180 5,167 7,219
-------- -------- ------- -------- -------
Expenses:
Investment advisory and administration fees 13,548 8,377 544 2,411 2,963
Transfer agency and shareholder service fees
Investor Shares 4,163 6,339 212 722 668
Select Shares 1,991 1,182 96 285 278
e.Shares 228 -- -- -- --
Custodian fees 107 111 155 79 392
Portfolio accounting fees 574 549 32 103 92
Registration fees 67 86 2 38 106
Professional fees 34 93 64 11 50
Shareholder reports 100 18 89 15 106
Trustees' fees 55 65 6 8 7
Interest expense 60 106 -- -- --
Proxy fees 201 198 11 36 31
Amortization of deferred offering costs -- -- 15 -- --
Other expenses 301 94 3 18 7
-------- -------- ------- -------- -------
21,429 17,218 1,229 3,726 4,700
Less:expenses reduced (see Note 4) (10,918) (1,113) (619) (1,194) (1,814)
-------- -------- ------- -------- -------
Net expenses incurred by fund 10,511 16,105 610 2,532 2,886
-------- -------- ------- -------- -------
Net investment income 36,007 26,194 1,570 2,635 4,333
-------- -------- ------- -------- -------
Net realized gain (loss) on investments, futures
contracts and foreign currency transactions:
Net realized gain (loss) on investments sold (78,526) (10,138) 219 214,047 5,394
Net realized gain (loss) on futures contracts (499) 436 (119) 1,031 --
Net realized loss on foreign currency
transactions -- -- -- -- (349)
-------- -------- ------- -------- -------
Net realized gain (loss) on investments,
futures contracts and foreign currency
transactions (79,025) (9,702) 100 215,078 5,045
-------- -------- ------- -------- -------
Change in net unrealized appreciation (depreciation)
on investments, futures contracts and foreign
currency translation:
Net unrealized appreciation (depreciation)
on investments 561,637 610,283 25,050 (67,844) 45,494
Net unrealized appreciation (depreciation)
on futures contracts (171) (447) 31 (646) --
Net unrealized depreciation on foreign
currency translation -- -- -- -- (141)
-------- -------- ------- -------- -------
Net unrealized appreciation (depreciation)
on investments, futures contracts and
foreign currency translation 561,466 609,836 25,081 (68,490) 45,353
-------- -------- ------- -------- -------
Net gain on investments 482,441 600,134 25,181 146,588 50,398
-------- -------- ------- -------- -------
Increase in net assets resulting from operations $518,448 $626,328 $26,751 $149,223 $54,731
======== ======== ======= ======== =======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
124
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (in thousands)
<TABLE>
<CAPTION>
Schwab Total
Schwab S&P 500 Schwab 1000 Stock Market
Fund Fund(R) Index Fund(TM)
------------------------ -------------------------- ------------------------
Six months Six months Six months
ended Year ended Year ended Period
04/30/00 ended 04/30/00 ended 04/30/00 ended
(Unaudited) 10/31/99 (Unaudited) 10/31/99 (Unaudited) 10/31/99+
------------ --------- ------------ --------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income $ 36,007 $ 65,370 $ 26,194 $ 51,388 $ 1,570 $ 940
Net realized gain (loss) on
investments and futures contracts (79,025) 22,632 (9,702) (13,695) 100 (129)
Net unrealized appreciation
on investments and futures
contracts 561,466 1,063,273 609,836 1,244,248 25,081 8,584
---------- ---------- ---------- ---------- -------- --------
Increase in net assets resulting
from operations 518,448 1,151,275 626,328 1,281,941 26,751 9,395
---------- ---------- ---------- ---------- -------- --------
Dividends to shareholders from net
investment income:
Investor Shares (27,441) (18,212) (33,936) (31,297) (667) --
Select Shares (38,359) (19,016) (19,079) (11,925) (813) --
e. Shares (4,350) (2,807) -- -- -- --
---------- ---------- ---------- ---------- -------- --------
Distributions to shareholders from net
capital gains:
Investor Shares (9,855) -- -- -- -- --
Select Shares (11,814) -- -- -- -- --
e. Shares (1,354) -- -- -- -- --
---------- ---------- ---------- ---------- -------- --------
Total dividends and distributions
to shareholders (93,173) (40,035) (53,015) (43,222) (1,480) --
---------- ---------- ---------- ---------- -------- --------
Capital share transactions:
Proceeds from shares sold 2,217,545 5,031,249 1,043,492 2,713,020 191,478 295,297
Net asset value of shares issued in
reinvestment of dividends 87,351 37,624 47,866 39,869 1,369 --
Early withdrawal fees (see Note 8) -- -- 611 1,032 124 79
Payments for shares redeemed (2,058,593) (2,577,012) (1,269,108) (1,552,122) (77,360) (19,921)
---------- ---------- ---------- ---------- -------- --------
Increase (decrease) in net assets
from capital share transactions 246,303 2,491,861 (177,139) 1,201,799 115,611 275,455
---------- ---------- ---------- ---------- -------- --------
Total increase in net assets 671,578 3,603,101 396,174 2,440,518 140,882 284,850
Net Assets:
Beginning of period 7,367,375 3,764,274 7,138,191 4,697,673 284,850 --
---------- ---------- ---------- ---------- -------- --------
End of period (including
undistributed net investment
income of $22,072, $56,216,
$15,429, $42,250, $1,030,
and $940, respectively) $8,038,953 $7,367,375 $7,534,365 $7,138,191 $425,732 $284,850
========== ========== ========== ========== ======== ========
Number of fund shares:
Sold 100,895 253,908 26,630 78,398 8,462 14,629
Reinvested 3,991 2,052 1,234 1,241 62 --
Redeemed (93,978) (129,013) (32,417) (44,491) (3,419) (987)
---------- ---------- ---------- ---------- -------- --------
Net increase (decrease) in shares
outstanding 10,908 126,947 (4,553) 35,148 5,105 13,642
Shares outstanding:
Beginning of period 347,434 220,487 192,218 157,070 13,642 --
---------- ---------- ---------- ---------- -------- --------
End of period 358,342 347,434 187,665 192,218 18,747 13,642
========== ========== ========== ========== ======== ========
<FN>
+ For the period from June 1, 1999 (commencement of operations) to October 31, 1999.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
125
<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
04/30/00 ended 04/30/00 ended
(Unaudited) 10/31/99 (Unaudited) 10/31/99
----------- -------- ----------- --------
<S> <C> <C> <C> <C>
Operations:
Net investment income $ 2,635 $ 2,830 $ 4,333 $ 9,282
Net realized gain (loss) on investments, futures
contracts and foreign currency transactions 215,078 (5,689) 5,045 (436)
Net unrealized appreciation (depreciation) on investments,
futures contracts and foreign currency translation (68,490) 135,451 45,353 159,588
---------- -------- ---------- --------
Increase in net assets resulting from operations 149,223 132,592 54,731 168,434
---------- -------- ---------- --------
Dividends to shareholders from net investment income:
Investor Shares (1,061) (1,755) (4,063) (4,066)
Select Shares (1,847) (752) (4,878) (1,055)
Distributions to shareholders from net capital gains:
Investor Shares -- (27,699) -- --
Select Shares -- (8,884) -- --
---------- -------- ---------- --------
Total dividends and distributions to shareholders (2,908) (39,090) (8,941) (5,121)
---------- -------- ---------- --------
Capital share transactions:
Proceeds from shares sold 432,674 608,419 396,865 520,176
Net asset value of shares issued in reinvestment of
dividends 2,705 36,340 8,181 4,702
Early withdrawal fees (see Note 8) 130 408 248 115
Payments for shares redeemed (158,348) (468,908) (132,472) (314,823)
---------- -------- ---------- --------
Increase in net assets from capital share transactions 277,161 176,259 272,822 210,170
---------- -------- ---------- --------
Total increase in net assets 423,476 269,761 318,612 373,483
Net Assets:
Beginning of period 899,017 629,256 895,505 522,022
---------- -------- ---------- --------
End of period (including undistributed net
investment income of $1,933, $2,205,
$3,847, and $8,898, respectively) $1,322,493 $899,017 $1,214,117 $895,505
========== ======== ========== ========
Number of fund shares:
Sold 21,419 37,207 20,690 32,399
Reinvested 144 2,378 427 316
Redeemed (7,832) (28,855) (6,881) (19,551)
---------- -------- ---------- --------
Net increase in shares outstanding 13,731 10,730 14,236 13,164
Shares outstanding:
Beginning of period 51,593 40,863 49,901 36,737
---------- -------- ---------- --------
End of period 65,324 51,593 64,137 49,901
========== ======== ========== ========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
126
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
11/1/99- 11/1/98- 11/1/97- 11/1/96- 5/1/96-
SCHWAB S&P 500 FUND 4/30/00 10/31/99 10/31/98 10/31/97 10/31/96
INVESTOR SHARES (Unaudited)
--------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period 21.17 17.05 14.17 10.88 10.00
--------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.09 0.17 0.16 0.14 0.08
Net realized and unrealized gain on investments 1.40 4.10 2.85 3.24 0.80
--------------------------------------------------------------------------------------------------------------------
Total income from investment operations 1.49 4.27 3.01 3.38 0.88
--------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.18) (0.15) (0.13) (0.09) --
Distributions from capital gains (0.07) -- -- -- --
--------------------------------------------------------------------------------------------------------------------
Total distributions (0.25) (0.15) (0.13) (0.09) --
--------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE AT END OF PERIOD 22.41 21.17 17.05 14.17 10.88
--------------------------------------------------------------------------------------------------------------------
Total return (%) 7.05(1) 25.20 21.39 31.29 8.80(1)
RATIOS/SUPPLEMENTAL DATA (%)
--------------------------------------------------------------------------------------------------------------------
Ratio of net operating expenses to average net assets 0.35(2,3) 0.35 0.35 0.38 0.49(2)
Expense reductions reflected in above ratio 0.21(2) 0.27 0.28 0.32 0.40(2)
Ratio of net investment income to average net assets 0.84(2) 1.01 1.25 1.49 1.89(2)
Portfolio turnover rate 6 3 1 3 1
Net assets, end of period ($ x 1,000) 3,499,959 3,182,724 1,935,398 923,148 243,772
</TABLE>
<TABLE>
<CAPTION>
11/1/99- 11/1/98- 11/1/97- 5/19/97-
4/30/00 10/31/99 10/31/98 10/31/97
SELECT SHARES(R) (Unaudited)
--------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period 21.23 17.09 14.19 12.85
--------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.11 0.20 0.26 0.05
Net realized and unrealized gain on investments 1.40 4.12 2.78 1.29
--------------------------------------------------------------------------------------------------------
Total income from investment operations 1.51 4.32 3.04 1.34
--------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.21) (0.18) (0.14) --
Distributions from capital gains (0.07) -- -- --
--------------------------------------------------------------------------------------------------------
Total distributions (0.28) (0.18) (0.14) --
--------------------------------------------------------------------------------------------------------
NET ASSET VALUE AT END OF PERIOD 22.46 21.23 17.09 14.19
--------------------------------------------------------------------------------------------------------
Total return (%) 7.13(1) 25.42 21.63 10.43(1)
RATIOS/SUPPLEMENTAL DATA (%)
--------------------------------------------------------------------------------------------------------
Ratio of net operating expenses to average net assets 0.19(2) 0.19 0.19 0.19(2)
Expense reductions reflected in above ratio 0.21(2) 0.28 0.28 0.34(2)
Ratio of net investment income to average net assets 1.01(2) 1.17 1.40 1.46(2)
Portfolio turnover rate 6 3 1 3
Net assets, end of period ($ x 1,000) 4,076,351 3,750,052 1,548,052 485,604
<FN>
(1) Not annualized.
(2) Annualized.
(3) Would have been 0.36% if certain non-routine expenses had been included.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
127
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
11/1/99- 11/1/98- 11/1/97- 11/1/96- 5/1/96-
4/30/00 10/31/99 10/31/98 10/31/97 10/31/96
E. SHARES(R) (Unaudited)
---------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period 21.21 17.08 14.19 10.89 10.00
---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.10 0.20 0.15 0.21 0.04
Net realized and unrealized gain on investments 1.39 4.09 2.88 3.19 0.85
---------------------------------------------------------------------------------------------------------------------
Total income from investment operations 1.49 4.29 3.03 3.40 0.89
---------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.21) (0.16) (0.14) (0.10) --
Distributions from capital gains (0.07) -- -- -- --
---------------------------------------------------------------------------------------------------------------------
Total distributions (0.28) (0.16) (0.14) (0.10)
---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE AT END OF PERIOD 22.42 21.21 17.08 14.19 10.89
---------------------------------------------------------------------------------------------------------------------
Total return (%) 7.03(1) 25.28 21.50 31.48 8.90(1)
RATIOS/SUPPLEMENTAL DATA (%)
---------------------------------------------------------------------------------------------------------------------
Ratio of net operating expenses to average net assets 0.28(2) 0.28 0.28 0.28 0.28(2)
Expense reductions reflected in above ratio 0.12(2) 0.20 0.24 0.33 0.91(2)
Ratio of net investment income to average net assets 0.91(2) 1.08 1.32 1.61 1.82(2)
Portfolio turnover rate 6 3 1 3 1
Net assets, end of period ($ x 1,000) 462,643 434,599 280,824 131,691 36,331
<FN>
(1) Not annualized.
(2) Annualized.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
128
<PAGE>
<TABLE>
<CAPTION>
11/1/99- 11/1/98- 11/1/97- 9/1/97- 9/1/96- 9/1/95- 9/1/94-
SCHWAB 1000 FUND(R) 4/30/00 10/31/99 10/31/98 10/31/97 8/31/97 8/31/96 8/31/95
INVESTOR SHARES (Unaudited)
-------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period 37.12 29.90 25.25 24.78 18.14 15.68 13.08
-------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.14 0.26 0.27 0.04 0.28 0.24 0.26
Net realized and unrealized gain on
investments 3.15 7.21 4.64 0.43 6.62 2.45 2.48
-------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 3.29 7.47 4.91 0.47 6.90 2.69 2.74
-------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment
income (0.26) (0.25) (0.26) -- (0.26) (0.23) (0.14)
-------------------------------------------------------------------------------------------------------------------------
Total distributions (0.26) (0.25) (0.26) -- (0.26) (0.23) (0.14)
-------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE AT END OF PERIOD 40.15 37.12 29.90 25.25 24.78 18.14 15.68
-------------------------------------------------------------------------------------------------------------------------
Total return (%) 8.88(1) 25.12 19.63 1.90(1) 38.32 17.27 21.23
RATIOS/SUPPLEMENTAL DATA (%)
-------------------------------------------------------------------------------------------------------------------------
Ratio of net operating expenses to average
net assets 0.46(2,3) 0.46 0.46 0.46(2) 0.47 0.49 0.54
Expense reductions reflected in above ratio 0.04(2) 0.05 0.05 0.04(2) 0.06 0.08 0.09
Ratio of net investment income to average
net assets 0.67(2) 0.78 1.02 1.00(2) 1.33 1.66 2.03
Portfolio turnover rate 5 3 2 -- 2 2 2
Net assets, end of period ($ x 1,000) 5,099,907 4,924,606 3,657,122 2,610,607 2,498,891 1,560,059 826,714
</TABLE>
<TABLE>
<CAPTION>
11/1/99- 11/1/98- 11/1/97- 9/1/97- 5/19/97-
4/30/00 10/31/99 10/31/98 10/31/97 8/31/97
SELECT SHARES(R) (Unaudited)
-----------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period 37.16 29.93 25.26 24.79 22.64
-----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.15 0.30 0.32 0.04 0.05
Net realized and unrealized gain on
investments 3.16 7.22 4.63 0.43 2.10
-----------------------------------------------------------------------------------------------------
Total income from investment operations 3.31 7.52 4.95 0.47 2.15
Less distributions:
Dividends from net investment
income (0.32) (0.29) (0.28) -- --
-----------------------------------------------------------------------------------------------------
Total distributions (0.32) (0.29) (0.28) -- --
-----------------------------------------------------------------------------------------------------
NET ASSET VALUE AT END OF PERIOD 40.15 37.16 29.93 25.26 24.79
-----------------------------------------------------------------------------------------------------
Total return (%) 8.92(1) 25.29 19.79 1.90(1) 9.50(1)
RATIOS/SUPPLEMENTAL DATA (%)
-----------------------------------------------------------------------------------------------------
Ratio of net operating expenses to average
net assets 0.35(2,4) 0.35 0.35 0.35(2) 0.35(2)
Expense reductions reflected in above ratio 0.00(2) 0.02 0.04 0.06(2) 0.33(2)
Ratio of net investment income to average
net assets 0.78(2) 0.89 1.11 1.11(2) 1.26(2)
Portfolio turnover rate 5 3 2 -- 2
Net assets, end of period ($ x 1,000) 2,434,458 2,213,585 1,040,551 426,392 347,244
<FN>
(1) Not annualized.
(2) Annualized.
(3) Would have been 0.47% if certain non-routine expenses had been included.
(4) Would have been 0.36% if certain non-routine expenses had been included.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
129
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
11/1/99- 6/1/99-
SCHWAB TOTAL STOCK MARKET INDEX FUND(TM) 4/30/00 10/31/99
INVESTOR SHARES (Unaudited)
--------------------------------------------------------------------------------
PER-SHARE DATA ($)
--------------------------------------------------------------------------------
Net asset value at beginning of period 20.87 20.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.08 0.07
Net realized and unrealized gain
on investments 1.85 0.80
--------------------------------------------------------------------------------
Total income from investment operations 1.93 0.87
--------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.10) --
--------------------------------------------------------------------------------
Total distributions (0.10) --
NET ASSET VALUE AT END OF PERIOD 22.70 20.87
--------------------------------------------------------------------------------
Total return (%) 9.24(1) 4.35(1)
RATIOS/SUPPLEMENTAL DATA (%)
--------------------------------------------------------------------------------
Ratio of net operating expenses to average net assets 0.40(2,3) 0.40(2)
Expense reductions reflected in above ratio 0.35(2) 0.51(2)
Ratio of net investment income to average net assets 0.80(2) 0.92(2)
Portfolio turnover rate 1 1
Net assets, end of period ($ x 1,000) 196,433 135,71
11/1/99- 6/1/99-
4/30/00 10/31/99
SELECT SHARES(R) (Unaudited)
--------------------------------------------------------------------------------
PER-SHARE DATA ($)
--------------------------------------------------------------------------------
Net asset value at beginning of period 20.89 20.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.09 0.07
Net realized and unrealized gain
on investments 1.84 0.82
--------------------------------------------------------------------------------
Total income from investment operations 1.93 0.89
--------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.10) --
--------------------------------------------------------------------------------
Total distributions (0.10) --
--------------------------------------------------------------------------------
NET ASSET VALUE AT END OF PERIOD 22.72 20.89
--------------------------------------------------------------------------------
Total return (%) 9.26(1) 4.45(1)
RATIOS/SUPPLEMENTAL DATA (%)
--------------------------------------------------------------------------------
Ratio of net operating expenses to average net assets 0.27(2,4) 0.27(2)
Expense reductions reflected in above ratio 0.33(2) 0.47(2)
Ratio of net investment income to average net assets 0.93(2) 1.05(2)
Portfolio turnover rate 1 1
Net assets, end of period ($ x 1,000) 229,299 149,131
(1) Not annualized.
(2) Annualized.
(3) Would have been 0.41% if certain non-routine expenses had been included.
(4) Would have been 0.28% if certain non-routine expenses had been included.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
130
<PAGE>
<TABLE>
<CAPTION>
11/1/99- 11/1/98- 11/1/97- 11/1/96- 11/1/95- 11/1/94-
SCHWAB SMALL-CAP INDEX FUND(R) 4/30/00 10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
INVESTOR SHARES (Unaudited)
------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period 17.41 15.39 17.73 13.59 11.70 10.05
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.03 0.06 0.05 0.06 0.07 0.10
Net realized and unrealized gain
(loss) on investments 2.83 2.89 (2.33) 4.14 1.88 1.61
------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations 2.86 2.95 (2.28) 4.20 1.95 1.71
------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.04) (0.06) (0.06) (0.06) (0.06) (0.06)
Distributions from capital gains -- (0.87) -- -- -- --
------------------------------------------------------------------------------------------------------------------------
Total distributions (0.04) (0.93) (0.06) (0.06) (0.06) (0.06)
------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE AT END OF PERIOD 20.23 17.41 15.39 17.73 13.59 11.70
------------------------------------------------------------------------------------------------------------------------
Total return (%) 16.44(1) 19.96 (12.88) 31.03 16.73 17.11
RATIOS/SUPPLEMENTAL DATA (%)
------------------------------------------------------------------------------------------------------------------------
Ratio of net operating expenses to average net assets 0.49(2,3) 0.49 0.49 0.52 0.59 0.68
Expense reductions reflected in above ratio 0.25(2) 0.30 0.32 0.37 0.35 0.34
Ratio of net investment income to average net assets 0.40(2) 0.33 0.35 0.53 0.56 0.68
Portfolio turnover rate 50 41 40 23 23 24
Net assets, end of period ($ x 1,000) 664,235 452,099 479,500 410,470 209,125 122,074
</TABLE>
<TABLE>
<CAPTION>
11/1/99- 11/1/98- 11/1/97- 5/19/97-
4/30/00 10/31/99 10/31/98 10/31/97
SELECT SHARES(R) (Unaudited)
------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period 17.44 15.41 17.75 14.50
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.05 0.07 0.08 0.02
Net realized and unrealized gain
(loss) on investments 2.84 2.90 (2.35) 3.23
------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations 2.89 2.97 (2.27) 3.25
------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.07) (0.07) (0.07) --
------------------------------------------------------------------------------------------------------------------------
Distributions from capital gains -- (0.87) -- --
------------------------------------------------------------------------------------------------------------------------
Total distributions (0.07) (0.94) (0.07) --
------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE AT END OF PERIOD 20.26 17.44 15.41 17.75
------------------------------------------------------------------------------------------------------------------------
Total return (%) 16.60(1) 20.14 (12.81) 22.41(1)
RATIOS/SUPPLEMENTAL DATA (%)
------------------------------------------------------------------------------------------------------------------------
Ratio of net operating expenses to average net assets 0.38(2,4) 0.38 0.38 0.38(2)
Expense reductions reflected in above ratio 0.16(2) 0.27 0.33 0.52(2)
Ratio of net investment income to average net assets 0.52(2) 0.44 0.46 0.56(2)
Portfolio turnover rate 50 41 40 23
Net assets, end of period ($ x 1,000) 658,258 446,918 149,756 81,174
<FN>
(1) Not annualized.
(2) Annualized.
(3) Would have been 0.50% if certain non-routine expenses had been included.
(4) Would have been 0.39% if certain non-routine expenses had been included.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
131
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
11/1/99- 11/1/98- 11/1/97- 11/1/96- 11/1/95- 11/1/94-
SCHWAB INTERNATIONAL INDEX FUND(R) 4/30/00 10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
INVESTOR SHARES (Unaudited)
------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period 17.93 14.21 13.31 12.23 11.13 10.89
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.02 0.19 0.17 0.17 0.16 0.14
Net realized and unrealized gain
on investments 1.13 3.66 0.88 1.08 1.07 0.22
------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 1.15 3.85 1.05 1.25 1.23 0.36
------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.15) (0.13) (0.15) (0.17) (0.13) (0.12)
------------------------------------------------------------------------------------------------------------------------
Total distributions: (0.15) (0.13) (0.15) (0.17) (0.13) (0.12)
------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE AT END OF PERIOD 18.93 17.93 14.21 13.31 12.23 11.13
------------------------------------------------------------------------------------------------------------------------
Total return (%) 6.43(1) 27.31 8.02 10.33 11.07 3.35
RATIOS/SUPPLEMENTAL DATA (%)
------------------------------------------------------------------------------------------------------------------------
Ratio of net operating expenses to average net assets 0.58(2,3) 0.58 0.58 0.61 0.69 0.85
Expense reductions reflected in above ratio 0.35(2) 0.41 0.46 0.52 0.48 0.37
Ratio of net investment income to average net assets 0.74(2) 1.24 1.35 1.36 1.50 1.45
Portfolio turnover rate 2 5 6 13 6 --
Net assets, end of period ($ x 1,000) 591,015 446,625 428,462 317,833 246,778 179,612
</TABLE>
<TABLE>
<CAPTION>
11/1/99- 11/1/98- 11/1/97- 5/19/97-
4/30/00 10/31/99 10/31/98 10/31/97
SELECT SHARES(R) (Unaudited)
------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period 17.96 14.23 13.32 13.59
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.08 0.18 0.22 0.04
Net realized and unrealized gain
(loss) on investments 1.07 3.70 0.85 (0.31)
------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations 1.15 3.88 1.07 (0.27)
------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.18) (0.15) (0.16) --
------------------------------------------------------------------------------------------------------------------------
Total distributions: (0.18) (0.15) (0.16) --
------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE AT END OF PERIOD 18.93 17.96 14.23 13.32
------------------------------------------------------------------------------------------------------------------------
Total return (%) 6.41(1) 27.49 8.16 (1.99)(1)
RATIOS/SUPPLEMENTAL DATA (%)
------------------------------------------------------------------------------------------------------------------------
Ratio of net operating expenses to average net assets 0.47(2,4) 0.47 0.47 0.47(2)
Expense reductions reflected in above ratio 0.31(2) 0.39 0.48 0.80(2)
Ratio of net investment income to average net assets 0.85(2) 1.57 1.49 0.17(2)
Portfolio turnover rate 2 5 6 13
Net assets, end of period ($ x 1,000) 623,102 448,880 93,560 49,529
<FN>
(1) Not annualized.
(2) Annualized.
(3) Would have been 0.59% if certain non-routine expenses had been included.
(4) Would have been 0.48% if certain non-routine expenses had been included.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
132
<PAGE>
NOTES TO FINANCIAL STATEMENTS
For the six months ended April 30, 2000 (Unaudited)
(All currency amounts are in thousands unless otherwise noted.)
1. DESCRIPTION OF THE FUNDS
The Schwab S&P 500 Fund, Schwab Total Stock Market Index Fund(TM), 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 Schwab Investments (the "Investment trust"), each a no-load, open-end
investment management company organized as Massachusetts business trusts on May
7, 1993 and October 26, 1990, respectively, and registered under the Investment
Company Act of 1940, as amended (the "1940 Act"). Each series in this report is
hereafter referred to as a "fund".
The Schwab S&P 500 Fund, Schwab 1000 Fund, Schwab Total Stock Market Index Fund,
Schwab Small-Cap Index Fund and Schwab International Index Fund each offer two
classes of shares -- the Investor Shares and the Select Shares(R). 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 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(R). This class is similar to the Select Shares with
respect to transfer agency and shareholder service fees, 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 Total Stock Market Index 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(TM) S&P 500 Fund, Institutional Select(TM) Large-Cap Value Index Fund and
Institutional Select(TM) Small-Cap Value Index Fund. 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, Schwab
Long-Term Tax-Free Bond Fund and Schwab YieldPlus Fund(TM). 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.
133
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
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 at fair value as determined by the funds'
investment adviser pursuant to guidelines adopted in good faith by the Board of
Trustees. Futures contracts, 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, except that certain dividends from foreign
securities are recorded as soon as the funds are informed of 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, Schwab 1000 Fund(R), Schwab Total
Stock Market Index Fund(TM) and Schwab Small-Cap Index 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 the daily
fluctuation in the value of the contract. When the contract is closed, the funds
record a realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the time it was 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 statement of operations at any given time.
As of April 30, 2000, the Schwab S&P 500 Fund, the Schwab 1000 Fund, the Schwab
Total Stock Market Index Fund and the Schwab Small-Cap Index Fund had the
following open Index futures contracts:
<TABLE>
<CAPTION>
Unrealized
Type of Number of Contract Appreciation
Fund Contract Contracts Value Expiration (Depreciation)
----- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Schwab S&P 500 Fund S&P 500 Index 53 $19,345 6/16/00 $ 8
Schwab 1000 Fund S&P 500 Index 27 9,855 6/16/00 228
Schwab Total Stock Market Index Fund S&P 500 Index 9 3,285 6/16/00 152
Russell 2000 Index 2 509 6/16/00 (23)
Schwab Small-Cap Index Fund Russell 2000 Index 14 3,564 6/16/00 (646)
</TABLE>
The eligible securities on deposit with brokers available to cover margin
requirements for open futures positions at April 30, 2000 were $1,430 for the
Schwab S&P 500 Fund, $561 for the Schwab 1000 Fund, $209 for the Total Stock
Market Index Fund and $536 for the Schwab Small-Cap Index Fund, respectively.
The funds have segregated short-term investments and other securities for the
remaining portion of the contract value.
134
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
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.
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, 2000. 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, 2000:
<TABLE>
<CAPTION>
Settlement Foreign Currency In Exchange Net Unrealized
Dates to Receive for (U.S. $) Depreciation
------------ ---------------- ------------- -------------
<S> <C> <C> <C> <C>
Foreign Currency Purchases:
Australian Dollar 5/1/00 145 $ 852 $ (8)
British Pound 5/4/00 237 375 (3)
Canadian Dollar 5/1/00 945 641 (3)
European Currency 5/2/00 3,020 2,792 (40)
European Currency 5/31/00 3,785 3,507 (51)
Japanese Yen 5/1/00 463,182 4,360 (88)
Swedish Krona 5/2/00 8,611 970 (8)
Swiss Franc 5/2/00 1,655 973 (11)
------- -----
$14,470 $(212)
======= =====
</TABLE>
135
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
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.
The aggregate unrealized appreciation and depreciation for securities held by
the funds at April 30, 2000, which was substantially the same for financial
reporting and federal income tax purposes, was as follows:
<TABLE>
<CAPTION>
Net Unrealized Appreciated Depreciated
Fund Appreciation Securities Securities
---- -------------- ----------- -----------
<S> <C> <C> <C>
Schwab S&P 500 Fund $2,163,564 $2,639,355 $ (475,791)
Schwab 1000 Fund(R) 3,478,507 3,675,886 (197,379)
Schwab Total Stock Market Index Fund(TM) 33,665 73,704 (40,039)
Schwab Small-Cap Index Fund(R) 41,258 214,509 (173,251)
Schwab International Index Fund(R) 293,684 345,151 (51,467)
</TABLE>
At October 31, 1999, the unused capital loss carryforwards, for federal income
tax purposes with expiration dates, were as follows:
<TABLE>
<CAPTION>
Schwab Total Schwab Small Schwab
Schwab 1000 Stock Market Cap Index International
Capital Loss Expirations: Fund Index Fund Fund Index Fund
------------------------- ----------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
10/31/00 $ 354 $-- $ -- $ --
10/31/02 935 -- -- 140
10/31/03 -- -- -- --
10/31/04 844 -- -- 1,743
10/31/05 2,606 -- -- 1,837
10/31/06 650 -- -- 11,905
10/31/07 11,853 18 4,126 7
------- --- ------ -------
$17,242 $18 $4,126 $15,632
======= === ====== =======
</TABLE>
RECLASSIFICATIONS -- 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 reclassifications
were made:
<TABLE>
<CAPTION>
Accumulated Undistributed
Net Realized Net Investment
Fund Gain (Loss) Income Paid-In Capital
---- ------------ -------------- ---------------
<S> <C> <C> <C>
Schwab S&P 500 Fund $ (1) $ (1) $ 2
Schwab Small-Cap Index Fund (1) 1 --
Schwab International Index Fund 443 (443) --
</TABLE>
136
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
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 0.20% of the first $500 million of average daily
net assets, and 0.17% of such net assets over $500 million. the Schwab 1000
Fund(R) and Total Stock Market Index Fund(TM) pay an annual fee, payable
monthly, of 0.30% of the first $500 million of average daily net assets and
0.22% of such net assets over $500 million. The Schwab Small-Cap Index Fund(R)
pays an annual fee, payable monthly, of 0.33% of the first $500 million of
average daily net assets and 0.28% of such net assets over $500 million. The
Schwab International Index Fund(R) pays an annual fee, payable monthly, of 0.43%
of the first $500 million of average daily net assets and 0.38% of such net
assets over $500 million. The investment adviser has reduced a portion of its
fee for the six months ended April 30, 2000 (See Note 4).
Prior to February 29, 2000, for advisory services and facilities furnished, the
Schwab S&P 500 Fund paid 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 net assets over $2 billion. The Schwab Small-Cap Index
Fund paid 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 paid 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.
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(R) and e.Shares(R) 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, 2000 (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, 2000, 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 1940 Act. The
funds incurred fees aggregating $141 related to the trusts' unaffiliated
trustees.
OTHER AFFILIATED PARTIES AND TRANSACTIONS -- As of April 30, 2000, Schwab S&P
500 Fund, Schwab Small-Cap Index Fund and Schwab International Index Fund, had
outstanding shares of 1.1%, 0.7%, 0.2% and 1.8%; 8.3%, 5.4%, 1.4%, and 6.4%; and
8.5%, 5.5%, 1.4% and 8.1%, respectively, owned by Schwab MarketTrack Growth
Portfolio, Schwab MarketTrack Balanced Portfolio, Schwab MarketTrack
Conservative Portfolio and Schwab MarketTrack All Equity Portfolio,
respectively.
137
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
As of April 30, 2000, the Schwab S&P 500 Fund, Schwab 1000 Fund(R) and Schwab
Total Stock Market Index Fund(TM) held common stock of the Charles Schwab Corp.,
an affiliated issuer, with a current value of $23,735, $20,904, and $975,
respectively.
INTERFUND TRANSACTIONS -- For the six months ended April 30, 2000, the Schwab
S&P 500 Fund, Schwab 1000 Fund, Schwab Total Stock Market Index Fund, Schwab
Small-Cap Index Fund(R) and Schwab International Index Fund(R) engaged in
purchase and sale 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 1940 Act, were $1,941,
$174,145, $187, $174,610, and $272, respectively.
4. EXPENSES REDUCED AND ABSORBED BY THE INVESTMENT ADVISER AND SCHWAB
The investment adviser and Schwab guarantee that, through at least February 28,
2001, 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, taxes and certain non-routine
expenses. The operating expense ratio for the six months ended April 30, 2000,
did include non-routine expenses.
<TABLE>
<CAPTION>
Fund Investor Shares Select Shares e.Shares
---- --------------- ------------- --------
<S> <C> <C> <C>
Schwab S&P 500 Fund 0.35% 0.19% 0.28%
Schwab 1000 Fund 0.46% 0.35% N/A
Schwab Total Stock Market Index Fund 0.40% 0.27% N/A
Schwab Small-Cap Index Fund 0.49% 0.38% N/A
Schwab International Index Fund 0.58% 0.47% N/A
</TABLE>
For the six months ended April 30, 2000, the total of such fees and expenses
reduced by the investment adviser were $7,794, $99, $541, $1,078, and $1,707 for
the Schwab S&P 500 Fund, Schwab 1000 Fund, Schwab Total Stock Market Index Fund,
Schwab Small-Cap Index Fund and Schwab International Index Fund, respectively.
The total of such fees reduced by Schwab were $3,124, $1,014, $78, $116, and
$107 for the Schwab S&P 500 Fund, Schwab 1000 Fund, Schwab Total Stock Market
Index Fund, Schwab Small-Cap Index Fund and Schwab International Index Fund,
respectively.
5. BORROWING AGREEMENTS
The trusts have both committed and uncommitted lines of credit arrangements with
PNC Bank N.A., Bank of America NT & SA and The Bank of New York, whereby the
trusts may borrow on behalf of the funds, as a temporary measure to satisfy
redemption requests or for extraordinary or emergency purposes. The trusts may
borrow in an aggregate amount of up to $150 million from PNC Bank N.A., $133
million from Bank of America NT & SA and $183 million from The Bank of New York.
Amounts borrowed under these arrangements bear interest at periodically
negotiated rates. The funds also pay annual fees for the unused balance of the
committed line of credit. During the reporting period, the funds only borrowed
against the uncommitted lines of credit. As of April 30, 2000, there were no
borrowings outstanding.
138
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
6. SECURITIES LENDING
The Schwab S&P 500 Fund, Schwab 1000 Fund(R), Schwab Total Stock Market Index
Fund(TM) and Schwab International Index Fund(R) loaned securities to certain
brokers, dealers and other financial institutions who paid the funds negotiated
lenders' fees. The funds 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.
<TABLE>
<CAPTION>
Market Value of Market Value of
Fund Securities Loaned Collateral
---- ----------------- ---------------
<S> <C> <C>
Schwab S&P 500 Fund $646,336 $667,248
Schwab 1000 Fund 644,452 654,761
Schwab Total Stock Market Index Fund 67,729 68,685
Schwab International Index Fund 77,938 82,659
</TABLE>
7. INVESTMENT TRANSACTIONS
Purchases, sales and maturities of investment securities, other than short-term
obligations and U.S. Government securities, for the six months ended April 30,
2000, were as follows:
<TABLE>
<CAPTION>
Proceeds of Sales
Fund Purchases and Maturities
---- --------- -----------------
<S> <C> <C>
Schwab S&P 500 Fund $642,546 $480,818
Schwab 1000 Fund 398,640 605,367
Schwab Total Stock Market Index Fund 118,051 3,708
Schwab Small-Cap Index Fund 849,275 574,642
Schwab International Index Fund 292,300 20,251
</TABLE>
8. EARLY WITHDRAWAL FEES
The early withdrawal fees are retained by the funds and are treated as a
contribution to capital.
<TABLE>
<CAPTION>
Early withdrawal fees on Early withdrawal fees
Fund redemption proceeds* as of 4/30/00
---- ------------------------ ---------------------
<S> <C> <C>
Schwab 1000 Fund 0.50% $611
Schwab Total Stock Market Index Fund 0.50% 124
Schwab Small-Cap Index Fund 0.50% 130
Schwab International Index Fund 0.75% 248
</TABLE>
*Attributable to shares purchased and held less than 180 days. Effective
05/01/00, the early withdrawal fees have been changed to 0.75%, with the
exception of Schwab International Index Fund which has been changed to 1.50%.
139
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
9. CAPITAL SHARE TRANSACTIONS
The funds offer two classes of shares: Investor Shares and Select Shares(R),
with the exception of Schwab S&P 500 Fund which offers a third class of shares:
e.Shares(R). Shares of each class represent interests in the same portfolio of
investments of the funds. Transactions in capital shares for the six months
ended April 30, 2000 were as follows:
<TABLE>
<CAPTION>
Schwab S&P 500 Fund
------------------------------------------------
Six months ended Year ended
April 30, 2000 October 31, 1999
--------------------- -----------------------
Shares Dollars Shares Dollars
------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Investor Shares:
Sold 42,914 $ 943,604 94,157 $1,863,484
Reinvested 1,645 35,985 962 17,632
Redeemed (38,682) (846,527) (58,283) (1,163,104)
------- ---------- ------- ----------
Net increase 5,877 $ 133,062 36,836 $ 718,012
------- ---------- ------- ----------
Select Shares:
Sold 52,251 $1,147,886 141,228 $2,801,786
Reinvested 2,108 46,155 950 17,420
Redeemed (49,467) (1,084,304) (56,115) (1,125,070)
------- ---------- ------- ----------
Net increase 4,892 $ 109,737 86,063 $1,694,136
------- ---------- ------- ----------
e.Shares:
Sold 5,730 $ 126,055 18,523 $ 365,979
Reinvested 238 5,211 140 2,572
Redeemed (5,829) (127,762) (14,615) (288,838)
------- ---------- ------- ----------
Net increase 139 $ 3,504 4,048 $ 79,713
------- ---------- ------- ----------
Total increase from capital share transactions 10,908 $ 246,303 126,947 $2,491,861
======= ========== ======= ==========
Schwab 1000 Fund(R)
------------------------------------------------
Six months ended Year ended
April 30, 2000 October 31, 1999
--------------------- ----------------------
Shares Dollars Shares Dollars
------- --------- ------- ----------
Investor Shares:
Sold 15,474 $ 606,527 43,791 $1,518,286
Reinvested 803 31,141 913 29,333
Redeemed (21,896) (857,222) (34,357) (1,194,295)
------- --------- ------- ----------
Net increase (decrease) (5,619) $(219,554) 10,347 $ 353,324
------- --------- ------- ----------
Select Shares:
Sold 11,156 $ 436,965 34,607 $1,194,734
Reinvested 431 16,725 328 10,536
Redeemed (10,521) (411,275) (10,134) (356,795)
------- --------- ------- ----------
Net increase 1,066 $ 42,415 24,801 $ 848,475
------- --------- ------- ----------
Total increase (decrease) from capital share transactions (4,553) $(177,139) 35,148 $1,201,799
======= ========= ======= ==========
</TABLE>
140
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
Schwab Total Stock Market Index Fund(TM)
------------------------------------------------
Six months ended Period ended
April 30, 2000 October 31, 1999
--------------------- ----------------------
Shares Dollars Shares Dollars
------- -------- ------- ---------
<S> <C> <C> <C> <C>
Investor Shares:
Sold 3,721 $ 84,041 7,071 $142,518
Reinvested 29 634 -- --
Redeemed (1,597) (36,023) (569) (11,468)
------- -------- ------ --------
Net increase 2,153 $ 48,652 6,502 $131,050
------- -------- ------ --------
Select Shares:
Sold 4,741 $107,437 7,558 $152,779
Reinvested 33 735 -- --
Redeemed (1,822) (41,213) (418) (8,374)
------- -------- ------ --------
Net increase 2,952 $ 66,959 7,140 $144,405
------- -------- ------ --------
Total increase from capital share transactions 5,105 $115,611 13,642 $275,455
======= ======== ====== ========
Schwab Small-Cap Index Fund(R)
------------------------------------------------
Six months ended Year ended
April 30, 2000 October 31, 1999
------------------ ----------------------
Shares Dollars Shares Dollars
------- -------- ------- --------
Investor Shares:
Sold 11,228 $226,664 15,020 $244,144
Reinvested 52 983 1,826 27,893
Redeemed (4,421) (88,588) (22,026) (358,017)
------- -------- ------- --------
Net increase (decrease) 6,859 $139,059 (5,180) $(85,980)
------- -------- ------- --------
Select Shares:
Sold 10,191 $206,009 22,187 $364,275
Reinvested 92 1,722 552 8,447
Redeemed (3,411) (69,629) (6,829) (110,483)
------- -------- ------- --------
Net increase 6,872 $138,102 15,910 $262,239
------- -------- ------- --------
Total increase from capital share transactions 13,731 $277,161 10,730 $176,259
======= ======== ======= ========
</TABLE>
141
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
Schwab International Index Fund(R)
------------------------------------------------
Six months ended Year ended
April 30, 2000 October 31, 1999
------------------ ----------------------
Shares Dollars Shares Dollars
------- -------- ------- --------
<S> <C> <C> <C> <C>
Investor Shares:
Sold 10,305 $197,515 11,715 $186,131
Reinvested 193 3,704 255 3,798
Redeemed (4,176) (80,066) (17,223) (277,601)
------- -------- ------- --------
Net increase (decrease) 6,322 $121,153 (5,253) $(87,672)
------- -------- ------- --------
Select Shares:
Sold 10,385 $199,350 20,684 $334,045
Reinvested 234 4,477 61 904
Redeemed (2,705) (52,158) (2,328) (37,107)
------- -------- ------- --------
Net increase 7,914 $151,669 18,417 $297,842
------- -------- ------- --------
Total increase from capital share transactions 14,236 $272,822 13,164 $210,170
======= ======== ======= ========
</TABLE>
142
<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 YieldPlus Fund-TM-
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.
<PAGE>
[LOGO]
INVESTMENT ADVISER
Charles Schwab Investment Management, Inc.
101 Montgomery Street, San Francisco, CA 94104
DISTRIBUTOR
Charles Schwab & Co., Inc.
P.O. Box 7575, San Francisco, CA 94120-7575
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
-C- 2000 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC/NYSE.
Printed on recycled paper. MKT 3562-2(6/00)
<PAGE>
SCHWABFUNDS-Registered Trademark-
SCHWAB MARKETMANAGER
PORTFOLIOS-TM-
SEMIANNUAL REPORT
AND
AN IMPORTANT NOTICE REGARDING
DELIVERY OF SHAREHOLDER
DOCUMENTS
April 30, 2000
<PAGE>
IMPORTANT NOTICE REGARDING DELIVERY OF SHAREHOLDER DOCUMENTS
The Securities and Exchange Commission permits mutual funds to deliver only one
copy of shareholder documents, including prospectuses and shareholder reports,
to fund investors with multiple accounts at the same residential or post office
box address. This practice is commonly called "householding" and is intended to
eliminate duplicate mailings of shareholder documents.
Mailing of your SchwabFunds shareholder documents may be householded
indefinitely unless you instruct us otherwise.
ADDITIONAL COPIES OF SHAREHOLDER DOCUMENTS
ALL SCHWABFUNDS PROSPECTUSES AND SHAREHOLDER REPORTS ARE AVAILABLE FREE OF
CHARGE AND MAY BE REQUESTED AT ANY TIME BY CALLING SCHWAB AS INDICATED BELOW.
SCHWABFUNDS PROSPECTUSES ARE ALSO AVAILABLE ON OUR WEB SITE AT WWW.SCHWAB.COM.
If you would prefer that your SchwabFunds mailings not be householded, please
contact:
- SCHWAB SIGNATURE SERVICES-TM- CLIENTS: Schwab Signature Services.
- INVESTMENT MANAGER CLIENTS: Schwab at 1-800-515-2157, or your investment
manager.
- ALL OTHER CLIENTS: Schwab at 1-800-435-4000.
Your instructions that householding not apply to your accounts holding
SchwabFunds will be effective within 30 days of receipt by Schwab.
<PAGE>
SCHWABFUNDS-Registered Trademark-
SCHWAB MARKETMANAGER
PORTFOLIOS-TM-
- GROWTH
- BALANCED
- SMALL CAP
- INTERNATIONAL
Semiannual Report
April 30, 2000
<PAGE>
SCHWAB MARKETMANAGER PORTFOLIOS-TM-
We are pleased to bring you this semiannual report for the Schwab MarketManager
Portfolios (the portfolios) for the six-month period ended April 30, 2000. In
this report you will find performance statistics and other useful information
for the following four portfolios:
- Schwab MarketManager Growth Portfolio
- Schwab MarketManager Balanced Portfolio
- Schwab MarketManager Small Cap Portfolio
- Schwab MarketManager International Portfolio
We appreciate that our investors recognize that the MarketManager Portfolios can
be a smart and efficient way to participate in a professionally managed
portfolio of actively managed mutual funds. Portfolio Manager Jeff Mortimer and
his team, supported by the Schwab Center for Investment Research, use
sophisticated quantitative tools and techniques to provide a level of day-to-day
portfolio analysis and management that few investors could replicate.
FUND LISTINGS
The MarketManager Portfolios 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>
MM Gro SWOGX
MM Bal SWOBX
MM Intl SWOIX
MM SCp SWOSX
</TABLE>
* Note that newspaper listings will indicate the previous day's quotation.
CONTENTS
<TABLE>
<S> <C>
---------------------------------------------
A Message from the Chairman 1
---------------------------------------------
What Every Investor Should Know 2
---------------------------------------------
Market Overview 4
---------------------------------------------
Schwab MarketManager Growth Portfolio
PORTFOLIO PERFORMANCE 8
PORTFOLIO SNAPSHOT 10
---------------------------------------------
Schwab MarketManager Balanced Portfolio
PORTFOLIO PERFORMANCE 12
PORTFOLIO SNAPSHOT 14
---------------------------------------------
Schwab MarketManager Small Cap Portfolio
PORTFOLIO PERFORMANCE 16
PORTFOLIO SNAPSHOT 18
---------------------------------------------
Schwab MarketManager International
Portfolio
PORTFOLIO PERFORMANCE 20
PORTFOLIO SNAPSHOT 22
---------------------------------------------
Portfolio Management 24
---------------------------------------------
Portfolio Discussion 25
---------------------------------------------
Glossary 29
---------------------------------------------
Financial Statements and Notes 31
---------------------------------------------
</TABLE>
<PAGE>
A MESSAGE FROM THE CHAIRMAN
[PHOTO]
Dear Shareholder,
During the last few years, the benefits of investing have been readily apparent,
while the risks have been somewhat less obvious. In recent months, however,
investors have been subject to larger swings in the market, even within the span
of a single day.
Given this divergent environment, the message is clear: Expect volatility,
maintain a long-term view and ensure your investment strategy is appropriate for
your risk tolerance and time horizon. One way to lessen the impact of volatility
on your portfolio is to adequately diversify your investments, both within and
across asset sectors, namely cash equivalents, bonds and stocks. With its broad
range of funds, SchwabFunds-Registered Trademark- can help form the foundation
of a diversified investment plan. Our asset allocation funds can even provide
diversification within a single fund.
We recently added four new sector funds, the Schwab Focus Funds, to our
SchwabFunds offering. Each invests in a group of industries within a specific
sector--Communications, Financial Services, Healthcare and Technology--and can
be an effective complement to individual stock investing. Each Focus Fund
concentrates its investing in companies in a specific sector and may involve a
greater degree of risk than an investment in mutual funds with greater
diversification. For more information on the Schwab Focus Funds, please call
1-800-435-4000 and request a prospectus. The prospectus contains more
information on fund fees and expenses as well as risks. Please read it carefully
before investing.
As a leader in online brokerage, we recognize the value of the web as a means of
communicating timely, relevant information to investors. Regular updates on all
the SchwabFunds, including performance data, are available on our Web site at
WWW.SCHWAB.COM/SCHWABFUNDS. We encourage you to take advantage of this valuable
resource.
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.
Sincerely,
/s/ Charles R. Schwab
Charles R. Schwab
April 30, 2000
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 tend not to move in
tandem. 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 Share Shares
Investment 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.)
* Regular investing strategies such as dollar-cost averaging do not assure a
profit or protect against a loss in declining markets. Since such a strategy
involves continuous investment, investors should consider their ability to
continue purchases through periods of low price levels.
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. You can choose to invest as little as $100--twice a month, monthly or
quarterly.(1)
With Schwab MoneyLink-Registered Trademark- electronic funds transfer service,
you can easily request fund transfers between your Schwab account and your
accounts at other financial institutions. You can schedule automatically
recurring transfers for easy long-term savings. Or request a transfer via the
Web, by automated touch-tone phone, or through a Schwab representative anytime,
day or night.
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 on the Automatic Investment Plan
or MoneyLink, please call us at 1-800-435-4000.
WE MAKE IT EASY TO INVEST
We try to make it easy and convenient for you to invest in
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/SCHWABFUNDS; through
our automated touch-tone telephone service, TeleBroker-Registered Trademark-, by
calling 1-800-272-4922; 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 updated fund performance data 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
April 2000 marked the beginning of the tenth year of the current expansion,
making it the longest in U.S. history. Gross Domestic Product (GDP) grew at a
real (inflation adjusted) rate of 4.6% during 1999--the fourth consecutive year
at 4% or more and 5.4% during the first quarter of 2000. This rate is considered
by most economists and the Federal Reserve (Fed) to be in excess of what the
economy can absorb without experiencing inflationary pressures, perhaps 3.5% to
4.0%. High levels of consumer spending fueled by rising incomes, personal wealth
and consumer confidence, as well as strong business capital investment and a
healthy housing sector, have been the principal factors driving this lengthy
expansion.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
REAL GDP GROWTH RATE
Quarterly Percentage Change (Annualized Rate)
<TABLE>
<S> <C>
Q1 1990 5.0%
Q2 1990 1.0%
Q3 1990 -0.6%
Q4 1990 -3.0%
Q1 1991 -1.7%
Q2 1991 2.6%
Q3 1991 1.3%
Q4 1991 2.5%
Q1 1992 4.3%
Q2 1992 4.0%
Q3 1992 3.1%
Q4 1992 5.2%
Q1 1993 -0.7%
Q2 1993 2.1%
Q3 1993 1.5%
Q4 1993 6.0%
Q1 1994 3.6%
Q2 1994 5.7%
Q3 1994 2.2%
Q4 1994 5.1%
Q1 1995 1.5%
Q2 1995 0.8%
Q3 1995 3.2%
Q4 1995 3.3%
Q1 1996 2.9%
Q2 1996 6.9%
Q3 1996 2.2%
Q4 1996 4.9%
Q1 1997 4.9%
Q2 1997 5.1%
Q3 1997 4.0%
Q4 1997 3.1%
Q1 1998 6.7%
Q2 1998 2.1%
Q3 1998 3.8%
Q4 1998 5.9%
Q1 1999 3.7%
Q2 1999 1.9%
Q3 1999 5.7%
Q4 1999 7.3%
Q1 2000 5.4%
</TABLE>
Source: BLOOMBERG L.P.
Looking ahead, the availability of increasingly scarce labor resources and the
domestic consumers' response to continued stock market volatility may be key
determinants of whether the economy continues on its current course or softens
throughout 2000. The Fed has raised the federal funds rate by 1.75% since June
1999 in an as yet unsuccessful effort to moderate the economy's rapid growth
rate. The consensus of most economists is that the U.S. economy appears poised
for continued strong growth and additional intervention by the Fed (increases in
the federal funds rate) until the growth rate of the economy slows to a more
sustainable level.
UNEMPLOYMENT
The unemployment rate dropped to 3.9% in April 2000, a three-decade low.
Employment growth continues to outstrip population growth. Reflecting a
shrinking pool of available workers, labor markets continue to be extremely
tight in many areas of the country and there has been some regional evidence of
labor shortages driving up wages. The labor force participation rate, which
measures the employment population as a percent of the total population, is at a
post-war high. Growth in the labor force has slowed, and the Fed has expressed
its concern that strong demand and tight labor markets may continue to put
pressure on manufacturers and service providers to raise prices.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
U.S. UNEMPLOYMENT RATE
<TABLE>
<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 6.8%
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%
May.99 4.2%
Jun.99 4.3%
Jul.99 4.3%
Aug.99 4.2%
Sep.99 4.2%
Oct.99 4.1%
Nov.99 4.1%
Dec.99 4.1%
Jan.00 4.0%
Feb.00 4.1%
Mar.00 4.1%
Apr.00 3.9%
</TABLE>
Source: BLOOMBERG L.P.
4
<PAGE>
INFLATION
Virtually all measures of price inflation exhibited upward trends during the
reporting period. The Consumer Price Index (CPI) rose 3.0% for the year ended
April 30, 2000. Its core rate (which excludes the more volatile food and energy
components) was up 2.2%. The Personal Consumption Expenditures Index, a measure
of inflation closely watched by the Fed, rose 2.3% for the same period. The GDP
price deflator, the broadest measure of inflation, indicated prices rising at an
annual rate of 3.2% during the first quarter of 2000.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
MEASURES OF INFLATION
<TABLE>
<CAPTION>
CONSUMER PRICE INDEX EMPLOYMENT COST-INDEX
12-MONTH CHANGE 12-MONTH CHANGE
(MONTHLY) (QUARTERLY)
<S> <C> <C>
Jan-90 5.2% 5.5%
Feb-90 5.3% 5.5%
Mar-90 5.2% 5.5%
Apr-90 4.7% 5.4%
May-90 4.4% 5.4%
Jun-90 4.7% 5.4%
Jul-90 4.8% 5.2%
Aug-90 5.6% 5.2%
Sep-90 6.2% 5.2%
Oct-90 6.3% 4.9%
Nov-90 6.3% 4.9%
Dec-90 6.1% 4.9%
Jan-91 5.7% 4.6%
Feb-91 5.3% 4.6%
Mar-91 4.9% 4.6%
Apr-91 4.9% 4.6%
May-91 5.0% 4.6%
Jun-91 4.7% 4.6%
Jul-91 4.4% 4.3%
Aug-91 3.8% 4.3%
Sep-91 3.4% 4.3%
Oct-91 2.9% 4.3%
Nov-91 3.0% 4.3%
Dec-91 3.1% 4.3%
Jan-92 2.6% 4.0%
Feb-92 2.8% 4.0%
Mar-92 3.2% 4.0%
Apr-92 3.2% 3.6%
May-92 3.0% 3.6%
Jun-92 3.1% 3.6%
Jul-92 3.2% 3.5%
Aug-92 3.1% 3.5%
Sep-92 3.0% 3.5%
Oct-92 3.2% 3.5%
Nov-92 3.0% 3.5%
Dec-92 2.9% 3.5%
Jan-93 3.3% 3.5%
Feb-93 3.2% 3.5%
Mar-93 3.1% 3.5%
Apr-93 3.2% 3.6%
May-93 3.2% 3.6%
Jun-93 3.0% 3.6%
Jul-93 2.8% 3.6%
Aug-93 2.8% 3.6%
Sep-93 2.7% 3.6%
Oct-93 2.8% 3.5%
Nov-93 2.7% 3.5%
Dec-93 2.7% 3.5%
Jan-94 2.5% 3.2%
Feb-94 2.5% 3.2%
Mar-94 2.5% 3.2%
Apr-94 2.4% 3.2%
May-94 2.3% 3.2%
Jun-94 2.5% 3.2%
Jul-94 2.8% 3.2%
Aug-94 2.9% 3.2%
Sep-94 3.0% 3.2%
Oct-94 2.6% 3.0%
Nov-94 2.7% 3.0%
Dec-94 2.7% 3.0%
Jan-95 2.8% 2.9%
Feb-95 2.9% 2.9%
Mar-95 2.9% 2.9%
Apr-95 3.1% 2.9%
May-95 3.2% 2.9%
Jun-95 3.0% 2.9%
Jul-95 2.8% 2.7%
Aug-95 2.6% 2.7%
Sep-95 2.5% 2.7%
Oct-95 2.8% 2.7%
Nov-95 2.6% 2.7%
Dec-95 2.5% 2.7%
Jan-96 2.7% 2.8%
Feb-96 2.7% 2.8%
Mar-96 2.8% 2.8%
Apr-96 2.9% 2.9%
May-96 2.9% 2.9%
Jun-96 2.8% 2.9%
Jul-96 3.0% 2.8%
Aug-96 2.9% 2.8%
Sep-96 3.0% 2.8%
Oct-96 3.0% 2.9%
Nov-96 3.3% 2.9%
Dec-96 3.3% 2.9%
Jan-97 3.0% 2.9%
Feb-97 3.0% 2.9%
Mar-97 2.8% 2.9%
Apr-97 2.5% 2.8%
May-97 2.2% 2.8%
Jun-97 2.3% 2.8%
Jul-97 2.2% 3.0%
Aug-97 2.2% 3.0%
Sep-97 2.2% 3.0%
Oct-97 2.1% 3.3%
Nov-97 1.8% 3.3%
Dec-97 1.7% 3.3%
Jan-98 1.6% 3.3%
Feb-98 1.4% 3.3%
Mar-98 1.4% 3.3%
Apr-98 1.4% 3.5%
May-98 1.7% 3.5%
Jun-98 1.7% 3.5%
Jul-98 1.7% 3.7%
Aug-98 1.6% 3.7%
Sep-98 1.5% 3.7%
Oct-98 1.5% 3.4%
Nov-98 1.5% 3.4%
Dec-98 1.6% 3.4%
Jan-99 1.7% 3.0%
Feb-99 1.6% 3.0%
Mar-99 1.7% 3.0%
Apr-99 2.3% 3.2%
May-99 2.1% 3.2%
Jun-99 2.0% 3.2%
Jul-99 2.1% 3.1%
Aug-99 2.3% 3.1%
Sep-99 2.6% 3.1%
Oct-99 2.6% 3.4%
Nov-99 2.6% 3.4%
Dec-99 2.7% 3.4%
Jan-00 2.7% 4.3%
Feb-00 3.2% 4.3%
Mar-00 3.7% 4.3%
Apr-00 3.0%
</TABLE>
Source: BLOOMBERG L.P.
Wage inflation also exhibited a marked upward trend during the reporting period.
The Employment Cost Index, a measurement of the cost to employ workers,
including both wages and benefits, rose 4.3% for the year ended March 31, 2000.
Although these rates of price and employment cost inflation may not be
alarmingly high by historical standards, the Fed has demonstrated its resolve to
keep inflation at bay through its communications and its actions (six federal
funds rate increases since June 1999). In particular, the Fed has expressed
concern that if labor markets continue to tighten, increases in wages will
outpace productivity growth and place additional upward pressure on prices. In
such an environment, productivity growth becomes particularly critical, as it
enables companies to pay higher wages without raising prices. Non-farm
productivity grew 3.0% in 1999 and at a 2.4% annualized rate in the first
quarter of 2000--strong gains to be sure, but likely not strong enough to offset
recent increases in employment costs.
ASSET CLASS PERFORMANCE
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ASSET CLASS % RETURNS DURING REPORTING PERIOD
<TABLE>
<CAPTION>
LEHMAN AGGREGATE MSCI-EAFE (ND) RUSSELL 2000 S&P 500
BOND INDEX INDEX SMALL-CAP INDEX INDEX
<S> <C> <C> <C> <C>
11/5/1999 0.61% 0.49% 3.23% 0.54%
11/12/1999 0.73% 2.02% 4.95% 2.44%
11/19/1999 0.32% 3.91% 7.62% 4.35%
11/26/1999 0.11% 5.22% 7.08% 3.95%
12/3/1999 0.15% 5.26% 8.43% 5.22%
12/10/1999 0.78% 6.67% 8.94% 4.10%
12/17/1999 -0.30% 6.78% 8.89% 4.39%
12/24/1999 -0.61% 10.69% 12.68% 7.13%
12/31/1999 -0.51% 12.55% 17.96% 8.04%
1/7/2000 -0.57% 7.42% 14.15% 6.00%
1/14/2000 -1.03% 10.06% 18.67% 7.74%
1/21/2000 -1.19% 7.61% 24.83% 5.99%
1/28/2000 -0.52% 7.11% 18.01% 0.02%
2/4/2000 -0.39% 9.34% 22.92% 4.81%
2/11/2000 -0.68% 9.96% 25.68% 2.07%
2/18/2000 -0.15% 8.31% 27.70% -0.95%
2/25/2000 0.50% 9.16% 30.29% -1.89%
3/3/2000 0.68% 11.46% 40.04% 3.81%
3/10/2000 0.48% 11.44% 41.37% 2.77%
3/17/2000 1.18% 10.11% 34.58% 7.88%
3/24/2000 1.05% 12.27% 34.49% 12.51%
3/31/2000 1.68% 12.10% 26.32% 10.49%
4/7/2000 2.49% 10.97% 27.26% 11.80%
4/14/2000 2.42% 7.09% 6.40% 0.02%
4/21/2000 2.33% 6.21% 12.97% 5.77%
4/28/2000 1.38% 6.10% 18.72% 7.17%
</TABLE>
Compiled by CHARLES SCHWAB & CO., INC.
As shown on the chart above, equity valuations, especially of the small-cap and
technology stocks, exhibited extreme volatility during the reporting period. The
price/earnings (P/E) ratio for the
5
<PAGE>
MARKET OVERVIEW (continued)
NASDAQ 100 Index fell by 33% in just 14 trading days during March and April.
Remarkably, it remained at levels above 100 even after its precipitous decline.
Reversing a five-year period of relative under performance, small-cap stocks
outperformed both large-cap stocks and international stocks for the six-month
reporting period ended 4/30/00. Small-cap stocks as represented by the Russell
2000-Registered Trademark- Index achieved a total return of 18.7%. Large-cap
stocks, as represented by the S&P 500-Registered Trademark- Index, returned
7.2%.
Dampened by relatively weak foreign currencies, International stocks, as
represented by the Morgan Stanley Capital International Europe, Australia, Far
East (MSCI-EAFE)-Registered Trademark- Index, achieved a return of 6.7% for the
six-month reporting period ending 4/30/00. Reflecting the rise in
intermediate-term interest rates, fixed income returns were generally weak for
the period. Bond returns, as represented by the Lehman Brothers Aggregate Bond
Index, were 1.4% for the six-month reporting period.
U.S. EQUITY VALUATION
The P/E ratio for the S&P 500-Registered Trademark- Index remained at very high
levels during the reporting period and ended the period at a lofty 29.6 times
earnings, slightly less 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
earning potential. Based on other traditional market valuation measures such as
the price-to-book value ratio or dividend yield, the U.S. stock market continues
to remain at record or near record high valuation levels. Reflecting the
extraordinary valuations of the technology sector, the P/E ratio (12 months
trailing) for the NASDAQ 100 Index ended the period at 120.2, as compared to an
average of 67 over the last five years.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
S&P 500 PRICE EARNINGS RATIO
<TABLE>
<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 14.90
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 25.50
Sep.92 24.37
Oct.92 23.94
Nov.92 24.08
Dec.92 24.01
Jan.93 24.20
Feb.93 24.25
Mar.93 24.22
Apr.93 23.20
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 20.10
May.94 20.16
Jun.94 19.76
Jul.94 18.64
Aug.94 18.90
Sep.94 18.26
Oct.94 17.55
Nov.94 16.58
Dec.94 16.98
Jan.95 16.23
Feb.95 16.20
Mar.95 16.50
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 19.30
Jul.96 18.31
Aug.96 18.62
Sep.96 19.75
Oct.96 19.60
Nov.96 21.05
Dec.96 20.70
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 24.00
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 33.90
May.99 32.74
Jun.99 34.70
Jul.99 31.62
Aug.99 31.21
Sep.99 29.90
Oct.99 29.92
Nov.99 30.65
Dec.99 32.53
Jan.00 29.78
Feb.00 28.59
Mar.00 31.50
Apr.00 29.58
</TABLE>
<TABLE>
<S> <C>
30-Year Average 15.8
</TABLE>
Source: BLOOMBERG L.P.
TREASURY BOND YIELDS
Continuing a trend which began in October 1998, both long-term and
intermediate-term rates continued to climb upward during the first three months
of the reporting period. The primary driver of this upward trend was the
continued strong growth of the domestic economy.
6
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
10-YEAR AND 5-YEAR TREASURY BOND YIELDS
<TABLE>
<CAPTION>
TEN-YEAR TREASURY FIVE-YEAR TREASURY
BOND YIELD NOTE YIELD
<S> <C> <C>
10.01.1999 5.97% 5.86%
10.08.1999 6.03% 5.95%
10.15.1999 6.07% 5.97%
10.22.1999 6.19% 6.10%
10.29.1999 6.02% 5.95%
11.05.1999 5.93% 5.86%
11.12.1999 5.93% 5.86%
11.19.1999 6.06% 5.99%
11.26.1999 6.12% 6.05%
12.03.1999 6.16% 6.07%
12.10.1999 6.07% 5.98%
12.17.1999 6.28% 6.19%
12.24.1999 6.41% 6.31%
12.31.1999 6.44% 6.34%
1.07.2000 6.52% 6.41%
1.14.2000 6.68% 6.58%
1.21.2000 6.77% 6.63%
1.28.2000 6.66% 6.66%
2.04.2000 6.55% 6.65%
2.11.2000 6.60% 6.70%
2.18.2000 6.49% 6.68%
2.25.2000 6.33% 6.47%
3.03.2000 6.39% 6.59%
3.10.2000 6.38% 6.60%
3.17.2000 6.19% 6.45%
3.24.2000 6.19% 6.50%
3.31.2000 6.00% 6.31%
4.07.2000 5.58% 6.18%
4.14.2000 5.58% 6.11%
4.21.2000 5.99% 6.24%
4.28.2000 6.21% 6.54%
</TABLE>
Source: BLOOMBERG L.P.
Treasury bond yields exhibited an unusual pattern during the second half of the
reporting period. Typically the yield on ten-year treasury securities exceeds
those on five-year securities to compensate investors for the additional
interest rate risk associated with longer duration securities. As shown in the
graph above, late in January, this normal relationship reversed, resulting in
what is referred to as a negative yield curve. This situation is a result of the
accumulating budget surpluses, which are allowing the federal government to
downsize its debt. The Treasury Department announced that it plans to buy back
$30 billion in debt in 2000 starting with longer dated maturities because those
payments carry the steepest interest payment. The anticipated reduction in
supply resulting from this buyback program, as well as scaled back issuance,
increased the price of the longer-term securities and resulted in a reduction in
yields.
INTERNATIONAL PERFORMANCE
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
MSCI-EAFE-Registered Trademark- COUNTRY US$ RETURNS
For the Six-Month Period Ended 4/30/00
<TABLE>
<S> <C>
Belgium -21.4%
Austria -14.3%
Ireland -10.4%
Switzerland -6.0%
Norway -5.6%
New Zealand -1.1%
Australia -0.8%
United Kingdom -0.3%
Singapore 4.8%
Netherlands 5.1%
Portugal 6.0%
Italy 6.2%
Japan 7.8%
Denmark 8.2%
Spain 9.4%
Hong Kong 17.9%
France 21.0%
Germany 21.8%
Sweden 70.7%
Finland 117.5%
</TABLE>
Source: DATASTREAM
The MSCI-EAFE Index gained 6.7% in U.S. dollar terms (excluding reinvested
dividends) during the six-month reporting period. In local currency terms, it
gained 15.6%, reflecting the relative weakness of most foreign currencies
(compared to the dollar) during the period.
The strongest performing countries for the period were Finland, Sweden and
Germany. Those countries with the largest negative returns were Belgium, Austria
and Ireland.
7
<PAGE>
SCHWAB MARKETMANAGER GROWTH PORTFOLIO
PORTFOLIO PERFORMANCE
TOTAL RETURNS FOR THE PERIODS ENDED 4/30/00
<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS
-----------------------------
SINCE INCEPTION
SIX MONTHS(1) ONE YEAR (11/18/96)
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------
SCHWAB MARKETMANAGER GROWTH PORTFOLIO(2) 16.23% 21.96% 18.74%
-------------------------------------------------------------------------------------------------------------
Growth Composite Index(3,4) 13.35% 18.74% 15.78%
-------------------------------------------------------------------------------------------------------------
S&P 500-Registered Trademark- Index 7.19% 10.13% 23.54%
-------------------------------------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index 1.42% 1.26% 5.48%
-------------------------------------------------------------------------------------------------------------
</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 3/31/00. As of 3/31/00, the portfolio's six-month, one-year
and since-inception average annual total returns were 31.70%, 36.81% and 21.97%,
respectively.
(1) Actual, not annualized, because period is less than one year.
(2) A portion of the fund's expenses was reduced during the reporting period.
Without such reductions, the fund's average annual returns would have been
lower.
(3) The Growth Composite Index is composed of Morningstar category averages and
cash equivalents as represented by the 90-day T-bill and is calculated using
the portfolio allocations: 35% large-cap, 20% small-cap, 25% foreign, 15%
bonds and 5% cash.
(4) As of 4/30/00 there were 2,297 large-cap funds, 845 small-cap funds, 700
foreign funds and 561 intermediate-term bond funds tracked by Morningstar.
Performance includes changes in price and reinvestment of dividends and
capital gains.
8
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
<TABLE>
<CAPTION>
SCHWAB MARKETMANAGER LEHMAN BROTHERS GROWTH
GROWTH PORTFOLIO S&P 500 INDEX AGGREGATE BOND INDEX COMPOSITE INDEX
<S> <C> <C> <C> <C>
11/18/96 $10,000 $10,000 $10,000 $10,000
11/30/96 $10,120 $10,271 $10,071 $10,144
12/31/96 $10,077 $10,068 $9,977 $10,122
01/31/97 $10,371 $10,696 $10,008 $10,365
02/28/97 $10,310 $10,780 $10,033 $10,328
03/31/97 $10,016 $10,338 $9,922 $10,068
04/30/97 $10,229 $10,955 $10,071 $10,225
05/31/97 $10,848 $11,621 $10,166 $10,857
06/30/97 $11,274 $12,141 $10,287 $11,271
07/31/97 $11,841 $13,106 $10,565 $11,849
08/31/97 $11,547 $12,372 $10,475 $11,521
09/30/97 $12,145 $13,049 $10,630 $12,106
10/31/97 $11,760 $12,613 $10,784 $11,660
11/30/97 $11,750 $13,197 $10,834 $11,712
12/31/97 $11,927 $13,424 $10,943 $11,825
01/31/98 $11,959 $13,573 $11,084 $11,911
02/28/98 $12,622 $14,552 $11,075 $12,587
03/31/98 $13,146 $15,297 $11,112 $13,080
04/30/98 $13,242 $15,452 $11,170 $13,209
05/31/98 $13,135 $15,186 $11,276 $12,996
06/30/98 $13,306 $15,802 $11,372 $13,138
07/31/98 $13,135 $15,635 $11,396 $12,922
08/31/98 $11,639 $13,377 $11,582 $11,305
09/30/98 $11,745 $14,235 $11,853 $11,598
10/31/98 $12,216 $15,392 $11,790 $12,182
11/30/98 $12,814 $16,325 $11,857 $12,752
12/31/98 $13,734 $17,265 $11,893 $13,331
01/31/99 $14,255 $17,987 $11,977 $13,542
02/28/99 $13,712 $17,427 $11,768 $13,061
03/31/99 $14,266 $18,124 $11,832 $13,421
04/30/99 $14,830 $18,826 $11,870 $13,963
05/31/99 $14,487 $18,381 $11,766 $13,764
06/30/99 $15,118 $19,402 $11,728 $14,388
07/31/99 $14,919 $18,796 $11,679 $14,323
08/31/99 $14,896 $18,702 $11,673 $14,221
09/30/99 $14,819 $18,190 $11,808 $14,161
10/31/99 $15,560 $19,341 $11,852 $14,627
11/30/99 $16,557 $19,734 $11,851 $15,316
12/31/99 $18,630 $20,897 $11,794 $16,513
01/31/00 $17,808 $19,848 $11,755 $16,004
02/29/00 $19,681 $19,472 $11,897 $16,847
03/31/00 $19,516 $21,377 $12,054 $17,299
04/30/00 $18,086 $20,734 $12,019 $16,579
</TABLE>
The above graph compares the growth of a hypothetical $10,000 investment in the
Schwab MarketManager Growth Portfolio, made at its inception, with similar
investments in the Growth Composite Index, the S&P 500-Registered Trademark-
Index and the Lehman Brothers Aggregate Bond Index. The hypothetical $10,000
investment assumes investment on the first day of the month following inception
and includes changes in share price and reinvestment of dividends and capital
gains. A detailed analysis of the respective performances of the portfolios and
the indices is provided in the PORTFOLIO DISCUSSION section later in this
report.
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 Portfolios. Investors cannot invest in an
index directly.
ASSETS
<TABLE>
<S> <C>
----------------------------------------------------------------------
Total net assets as of 10/31/99 (000s) $180,602
----------------------------------------------------------------------
Total net assets as of 4/30/00 (000s) $240,911
----------------------------------------------------------------------
Percentage growth from 10/31/99 to 4/30/00 33.4%
----------------------------------------------------------------------
</TABLE>
9
<PAGE>
SCHWAB MARKETMANAGER GROWTH PORTFOLIO
PORTFOLIO SNAPSHOT
The Schwab MarketManager Growth Portfolio seeks capital growth with less
volatility than a portfolio composed entirely of stock funds. The portfolio
allocations will vary as the portfolio managers adjust the respective asset
mixes based on changing market conditions. The information below and on the
following page provides a snapshot of the portfolio's characteristics as of
4/30/00, and is not indicative of its composition after that date. The terms
used below are defined on page 29. A complete list of the securities in the
portfolio as of 4/30/00 is provided in the Schedule of Investments later in this
report.
PORTFOLIO FACTS
<TABLE>
<CAPTION>
SCHWAB MARKETMANAGER PEER GROUP
GROWTH PORTFOLIO AVERAGE++
<S> <C> <C>
---------------------------------------------------------------------------------------------------------------------
Number of Holdings 45** 138
---------------------------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) $14,833++ $58,904
---------------------------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 41.6++ 35.4
---------------------------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 11.0++ 9.5
---------------------------------------------------------------------------------------------------------------------
12-Month Yield 2.05%++ 0.45%
---------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 112%* 75%
---------------------------------------------------------------------------------------------------------------------
Three-Year Beta 0.68++ 0.94
---------------------------------------------------------------------------------------------------------------------
Expense Ratio 0.50%+ 1.34%
---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Compiled by Charles Schwab & Co., Inc. This information is for illustrative
purposes only and is not intended to show, predict or guarantee future
composition of the Portfolio.
** The Portfolio invests primarily in other funds, whereas most large-cap funds
invest primarily in individual securities.
+ Reflects a reduction by the Investment Adviser and Schwab, which is
guaranteed through at least 2/28/01 (excluding interest, taxes and certain
non-routine expenses). Underlying funds also charge fees and incur expenses.
++ Source: Morningstar. The peer group average is based on 2,297 large-cap
funds as tracked by Morningstar.
10
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ASSET MIX
AS A PERCENTAGE OF PORTFOLIO INVESTMENTS
<TABLE>
<S> <C>
Large-Cap 35.8%
Small-Cap/Mid-Cap 22.9%
International 18.3%
Short-Term Investments 15.3%
Bonds 5.5%
Sector 2.2%
</TABLE>
<TABLE>
<CAPTION>
MIX AS OF TARGET MIX IN
4/30/00 NEUTRAL MARKETS
<S> <C> <C>
----------------------------------------------------
Stock Funds 79.2% 80.0%
----------------------------------------------------
Bond Funds 5.5% 15.0%
----------------------------------------------------
Short-Term Investments 15.3% 5.0%
----------------------------------------------------
Total 100.0% 100.0%
----------------------------------------------------
</TABLE>
TOP 10 HOLDINGS
AS A PERCENTAGE OF PORTFOLIO INVESTMENTS(1)
<TABLE>
<S> <C>
-------------------------------------------
White Oak Growth Stock Fund 8.1%
-------------------------------------------
Thornburg Value Fund 6.8%
-------------------------------------------
American Century International Growth
Fund, Institutional Class 5.8%
-------------------------------------------
Artisan International Fund 5.7%
-------------------------------------------
Marsico Focus Fund 4.3%
-------------------------------------------
-------------------------------------------
Oakmark Select Fund 4.0%
-------------------------------------------
T. Rowe Price Value Fund 3.9%
-------------------------------------------
Rydex Series Trust Nova Fund 3.6%
-------------------------------------------
Robertson Stephens Emerging Growth
Fund, Class A 3.1%
-------------------------------------------
Neuberger Berman Millennium Fund 2.5%
-------------------------------------------
</TABLE>
(1) Nothing in this report represents a recommendation of a security by the
investment adviser.
11
<PAGE>
SCHWAB MARKETMANAGER BALANCED PORTFOLIO
PORTFOLIO PERFORMANCE
TOTAL RETURNS FOR THE PERIODS ENDED 4/30/00
<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS
-----------------------------
SINCE INCEPTION
SIX MONTHS(1) ONE YEAR (11/18/96)
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------
SCHWAB MARKETMANAGER BALANCED PORTFOLIO(2) 12.75% 17.02% 15.69%
-------------------------------------------------------------------------------------------------------------
Balanced Composite Index(3,4) 10.04% 13.74% 13.24%
-------------------------------------------------------------------------------------------------------------
S&P 500-Registered Trademark- Index 7.19% 10.13% 23.54%
-------------------------------------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index 1.42% 1.26% 5.48%
-------------------------------------------------------------------------------------------------------------
</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 3/31/00. As of 3/31/00, the portfolio's six-month, one-year
and since-inception average annual total returns were 23.17%, 27.40% and 17.86%,
respectively.
(1) Actual, not annualized, because period is less than one year.
(2) A portion of the fund's expenses was reduced during the reporting period.
Without such reductions, the fund's average annual returns would have been
lower.
(3) The Balanced Composite Index is composed of Morningstar category averages
and cash equivalents as represented by the 90-day T-bill and is calculated
using the portfolio allocations: 30% large-cap, 15% small-cap, 15% foreign,
35% bonds and 5% cash.
(4) As of 4/30/00 there were 2,297 large-cap funds, 845 small-cap funds, 700
foreign funds and 561 intermediate-term bond funds tracked by Morningstar.
Performance includes changes in price and reinvestment of dividends and
capital gains.
12
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
<TABLE>
<CAPTION>
SCHWAB MARKETMANAGER S&P 500 LEHMAN BROTHERS BALANCED
BALANCED PORTFOLIO INDEX AGGREGATE BOND INDEX COMPOSITE INDEX
<S> <C> <C> <C> <C>
11/18/96 $10,000 $10,000 $10,000 $10,000
11/30/96 $10,100 $10,271 $10,071 $10,134
12/31/96 $10,059 $10,068 $9,977 $10,090
01/31/97 $10,322 $10,696 $10,008 $10,297
02/28/97 $10,271 $10,780 $10,033 $10,270
03/31/97 $10,018 $10,338 $9,922 $10,034
04/30/97 $10,200 $10,955 $10,071 $10,198
05/31/97 $10,676 $11,621 $10,166 $10,696
06/30/97 $11,041 $12,141 $10,287 $11,029
07/31/97 $11,517 $13,106 $10,565 $11,547
08/31/97 $11,284 $12,372 $10,475 $11,294
09/30/97 $11,770 $13,049 $10,630 $11,760
10/31/97 $11,527 $12,613 $10,784 $11,485
11/30/97 $11,558 $13,197 $10,834 $11,549
12/31/97 $11,719 $13,424 $10,943 $11,662
01/31/98 $11,762 $13,573 $11,084 $11,753
02/28/98 $12,251 $14,552 $11,075 $12,253
03/31/98 $12,634 $15,297 $11,112 $12,621
04/30/98 $12,688 $15,452 $11,170 $12,725
05/31/98 $12,613 $15,186 $11,276 $12,587
06/30/98 $12,783 $15,802 $11,372 $12,733
07/31/98 $12,677 $15,635 $11,396 $12,567
08/31/98 $11,581 $13,377 $11,582 $11,416
09/30/98 $11,740 $14,235 $11,853 $11,739
10/31/98 $12,092 $15,392 $11,790 $12,161
11/30/98 $12,560 $16,325 $11,857 $12,608
12/31/98 $13,311 $17,265 $11,893 $13,067
01/31/99 $13,693 $17,987 $11,977 $13,255
02/28/99 $13,224 $17,427 $11,768 $12,839
03/31/99 $13,650 $18,124 $11,832 $13,131
04/30/99 $14,130 $18,826 $11,870 $13,534
05/31/99 $13,868 $18,381 $11,766 $13,364
06/30/99 $14,226 $19,402 $11,728 $13,807
07/31/99 $14,141 $18,796 $11,679 $13,719
08/31/99 $14,119 $18,702 $11,673 $13,629
09/30/99 $14,119 $18,190 $11,808 $13,604
10/31/99 $14,664 $19,341 $11,852 $13,956
11/30/99 $15,341 $19,734 $11,851 $14,422
12/31/99 $16,742 $20,897 $11,794 $15,228
01/31/00 $16,155 $19,848 $11,755 $14,866
02/29/00 $17,353 $19,472 $11,897 $15,456
03/31/00 $17,390 $21,377 $12,054 $15,853
04/30/00 $16,534 $20,734 $12,019 $15,357
</TABLE>
The above graph compares the growth of a hypothetical $10,000 investment in the
Schwab MarketManager Balanced Portfolio, made at its inception, with similar
investments in the Balanced Composite Index, the S&P 500-Registered Trademark-
Index and the Lehman Brothers Aggregate Bond Index. The hypothetical $10,000
investment assumes investment on the first day of the month following inception
and includes changes in share price and reinvestment of dividends and capital
gains. A detailed analysis of the respective performances of the portfolios and
the indices is provided in the PORTFOLIO DISCUSSION section later in this
report.
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 Portfolios. Investors cannot invest in an
index directly.
ASSETS
<TABLE>
<S> <C>
----------------------------------------------------------------------
Total net assets as of 10/31/99 (000s) $121,781
----------------------------------------------------------------------
Total net assets as of 4/30/00 (000s) $150,708
----------------------------------------------------------------------
Percentage growth from 10/31/99 to 4/30/00 23.8%
----------------------------------------------------------------------
</TABLE>
13
<PAGE>
SCHWAB MARKETMANAGER BALANCED PORTFOLIO
PORTFOLIO SNAPSHOT
The Schwab MarketManager Balanced Portfolio seeks capital growth and income with
less volatility than the Growth Portfolio. The portfolio's allocation will vary
as the portfolio managers adjust the respective asset mixes based on changing
market conditions. The information below and on the following page provides a
snapshot of the portfolio's characteristics as of 4/30/00, and is not indicative
of its composition after that date. The terms used below are defined on page 29.
A complete list of the securities in the portfolio as of 4/30/00 is provided in
the Schedule of Investments later in this report.
PORTFOLIO FACTS
<TABLE>
<CAPTION>
SCHWAB MARKETMANAGER PEER GROUP
BALANCED PORTFOLIO AVERAGE++
<S> <C> <C>
---------------------------------------------------------------------------------------------------------------------
Number of Holdings 42** 228
---------------------------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) $12,538++ $43,966
---------------------------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 35.8++ 32.1
---------------------------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 8.7++ 7.9
---------------------------------------------------------------------------------------------------------------------
12-Month Yield 2.39%++ 2.49%
---------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 76%* 95%
---------------------------------------------------------------------------------------------------------------------
Three-Year Beta 0.54++ 0.54
---------------------------------------------------------------------------------------------------------------------
Expense Ratio 0.50%+ 1.29%
---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Compiled by Charles Schwab & Co., Inc. This information is for illustrative
purposes only and is not intended to show, predict or guarantee future
composition of the Portfolio.
** The Portfolio invests primarily in other funds, whereas most domestic hybrid
funds invest primarily in individual securities.
+ Reflects a reduction by the Investment Adviser and Schwab, which is
guaranteed through at least 2/28/01 (excluding interest, taxes and certain
non-routine expenses). Underlying funds also charge fees and incur expenses.
++ Source: Morningstar. This information is as of 4/30/00. The peer group
average is based on 726 domestic hybrid funds as tracked by Morningstar.
14
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ASSET MIX
AS A PERCENTAGE OF PORTFOLIO INVESTMENTS
<TABLE>
<S> <C>
Large-Cap 33.9%
Bond 28.1%
Small-Cap/Mid-Cap 17.3%
International 10.9%
Short-Term Investments 8.1%
Sector 1.7%
</TABLE>
<TABLE>
<CAPTION>
MIX AS OF TARGET MIX IN
4/30/00 NEUTRAL MARKETS
<S> <C> <C>
----------------------------------------------------
Stock Funds 63.8% 60.0%
----------------------------------------------------
Bond Funds 28.1% 35.0%
----------------------------------------------------
Short-Term Investments 8.1% 5.0%
----------------------------------------------------
Total 100.0% 100.0%
----------------------------------------------------
</TABLE>
TOP 10 HOLDINGS
AS A PERCENTAGE OF PORTFOLIO INVESTMENTS(1)
<TABLE>
<S> <C>
-------------------------------------------
PIMCO Total Return Fund,
Institutional Class 13.4%
-------------------------------------------
Artisan International Fund 6.9%
-------------------------------------------
Oakmark Select Fund 6.5%
-------------------------------------------
White Oak Growth Stock Fund 6.4%
-------------------------------------------
T. Rowe Price Value Fund 5.7%
-------------------------------------------
Mainstay High Yield Corporate Bond
Fund, Class A 4.7%
-------------------------------------------
-------------------------------------------
Thornburg Value Fund, Institutional
Class 4.6%
-------------------------------------------
Federated U.S. Government Securities
Fund, 2-5 Years, Institutional
Shares 4.3%
-------------------------------------------
American Century Intermediate Term
Treasury Fund 4.1%
-------------------------------------------
Marsico Focus Fund 3.8%
-------------------------------------------
</TABLE>
(1) Nothing in this report represents a recommendation of a security by the
investment adviser.
15
<PAGE>
SCHWAB MARKETMANAGER SMALL CAP PORTFOLIO
PORTFOLIO PERFORMANCE
TOTAL RETURNS FOR THE PERIODS ENDED 4/30/00
<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS
-----------------------------
SINCE INCEPTION
SIX MONTHS(1) ONE YEAR (9/16/97)
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------
SCHWAB MARKETMANAGER SMALL CAP PORTFOLIO(2) 15.46% 22.33% 11.10%
----------------------------------------------------------------------------------------------------------------
Russell 2000-Registered Trademark- Index 18.72% 18.42% 6.25%
----------------------------------------------------------------------------------------------------------------
Average Small-Cap Fund(3) 26.34% 36.56% 12.26%
----------------------------------------------------------------------------------------------------------------
</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 3/31/00. As of 3/31/00, the portfolio's six-month, one-year
and since-inception average annual total returns were 31.90%, 44.55% and 15.74%,
respectively.
(1) Actual, not annualized, because period is less than one year.
(2) A portion of the fund's expenses was reduced during the reporting period.
Without such reductions, the fund's average annual returns would have been
lower.
(3) Source: Morningstar, Inc. The small-cap fund category contains 845 funds as
of 4/30/00.
16
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
<TABLE>
<CAPTION>
SCHWAB MARKETMANAGER RUSSELL 2000
SMALL CAP PORTFOLIO INDEX
<S> <C> <C>
09/16/97 $10,000 $10,000
09/30/97 $10,260 $10,201
10/31/97 $9,930 $9,753
11/30/97 $9,770 $9,690
12/31/97 $9,886 $9,859
01/31/98 $9,701 $9,704
02/28/98 $10,277 $10,420
03/31/98 $10,781 $10,849
04/30/98 $10,832 $10,909
05/31/98 $10,359 $10,321
06/30/98 $10,411 $10,342
07/31/98 $9,896 $9,505
08/31/98 $8,271 $7,659
09/30/98 $8,435 $8,259
10/31/98 $8,754 $8,595
11/30/98 $9,238 $9,046
12/31/98 $9,946 $9,606
01/31/99 $10,101 $9,734
02/28/99 $9,563 $8,945
03/31/99 $10,029 $9,085
04/30/99 $10,773 $9,899
05/31/99 $10,752 $10,043
06/30/99 $11,311 $10,497
07/31/99 $11,228 $10,210
08/31/99 $10,938 $9,832
09/30/99 $10,990 $9,834
10/31/99 $11,414 $9,874
11/30/99 $12,272 $10,464
12/31/99 $13,714 $11,648
01/31/00 $13,339 $11,460
02/29/00 $15,171 $13,353
03/31/00 $14,496 $12,473
04/30/00 $13,178 $11,722
</TABLE>
The above graph compares the growth of a hypothetical $10,000 investment in the
MarketManager Small Cap Portfolio, made at its inception, with a similar
investment in the Russell 2000-Registered Trademark- Index. The hypothetical
$10,000 investment assumes investment on the first day of the month following
inception and includes changes in share price and reinvestment of dividends and
capital gains. A detailed analysis of the performances of the portfolio and its
index is provided in the PORTFOLIO DISCUSSION section later in this report.
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 Portfolio. Investors cannot invest in an
index directly.
ASSETS
<TABLE>
<S> <C>
----------------------------------------------------------------------
Total net assets as of 10/31/99 (000s) $122,998
----------------------------------------------------------------------
Total net assets as of 4/30/00 (000s) $161,564
----------------------------------------------------------------------
Percentage change from 10/31/99 to 4/30/00 31.4%
----------------------------------------------------------------------
</TABLE>
17
<PAGE>
SCHWAB MARKETMANAGER SMALL CAP PORTFOLIO
PORTFOLIO SNAPSHOT
The Schwab MarketManager Small Cap Portfolio seeks long-term capital
appreciation. It invests primarily in small-company stock funds. The information
below and on the following page provides a snapshot of the portfolio's
characteristics as of 4/30/00, and is not indicative of its composition after
that date. The terms used below are defined on page 29. A complete list of the
securities in the portfolio as of 4/30/00 is provided in the Schedule of
Investments later in this report.
PORTFOLIO FACTS
<TABLE>
<CAPTION>
SCHWAB MARKETMANAGER PEER GROUP
SMALL CAP PORTFOLIO AVERAGE++
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------
Number of Holdings 22** 180
------------------------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) $1,009++ $1,019
------------------------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 34.1++ 30.3
------------------------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 9.3++ 6.7
------------------------------------------------------------------------------------------------------------------
12-Month Yield 3.72%++ 0.21%
------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 59%* 92%
------------------------------------------------------------------------------------------------------------------
Three-Year Beta N/A++ 0.87
------------------------------------------------------------------------------------------------------------------
Expense Ratio 0.50%+ 1.59%
------------------------------------------------------------------------------------------------------------------
</TABLE>
* Compiled by Charles Schwab & Co., Inc. This information is for illustrative
purposes only and is not intended to show, predict or guarantee future
composition of the Portfolio.
** The Portfolio invests primarily in other funds, whereas most small-cap funds
invest primarily in individual securities.
+ Reflects a reduction by the Investment Adviser and Schwab, which is
guaranteed through at least 2/28/01 (excluding interest, taxes and certain
non-routine expenses). Underlying funds also charge fees and incur expenses.
++ Source: Morningstar. The peer group average is based on 845 small-cap funds
as tracked by Morningstar.
18
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ASSET MIX
AS A PERCENTAGE OF PORTFOLIO INVESTMENTS
<TABLE>
<S> <C>
Growth 48.4%
Value 19.2%
Blend 18.7%
Sector 7.2%
Short-Term Investments 6.5%
</TABLE>
TOP 10 HOLDINGS
AS A PERCENTAGE OF PORTFOLIO INVESTMENTS(1)
<TABLE>
<S> <C>
-------------------------------------------
Fremont U.S. Micro Cap Fund 13.7%
-------------------------------------------
Melody 4500 Fund, L.P.(2) 12.3%
-------------------------------------------
State Street Research Aurora Fund,
Class A 6.3%
-------------------------------------------
Longleaf Partners Realty Fund 6.1%
-------------------------------------------
Managers Special Equity Fund 6.0%
-------------------------------------------
Turner Small Cap Growth Fund 5.6%
-------------------------------------------
-------------------------------------------
MAS Small Cap Value Fund,
Institutional Class 4.9%
-------------------------------------------
Robertson Stephens Diversified
Growth Fund, Class A 4.8%
-------------------------------------------
Longleaf Partners Small Cap Fund 4.4%
-------------------------------------------
Value Line Special Situations Fund 4.2%
-------------------------------------------
</TABLE>
(1) Nothing in this report represents a recommendation of a security by the
investment adviser.
(2) See Note 3 in the Notes to Financial Statements.
19
<PAGE>
SCHWAB MARKETMANAGER INTERNATIONAL PORTFOLIO
PORTFOLIO PERFORMANCE
TOTAL RETURNS FOR THE PERIODS ENDED 4/30/00
<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURN
-----------------------------
SINCE INCEPTION
SIX MONTHS(1) ONE YEAR (10/16/96)
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------
SCHWAB MARKETMANAGER INTERNATIONAL PORTFOLIO(1) 30.29% 53.09% 23.57
----------------------------------------------------------------------------------------------------------------
MSCI-EAFE-Registered Trademark- Index 6.72% 13.89% 11.64%
----------------------------------------------------------------------------------------------------------------
Average Foreign Fund(3) 15.60% 26.90% 15.50%
----------------------------------------------------------------------------------------------------------------
</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 3/31/00. As of 3/31/00, the portfolio's six-month, one-year
and since-inception average annual total returns were 51.65%, 81.72% and 27.81%,
respectively.
(1) Actual, not annualized, because period is less than one year.
(2) A portion of the fund's expenses was reduced during the reporting period.
Without such reductions, the fund's average annual returns would have been
lower.
(3) Source: Morningstar, Inc. The foreign fund category contains 700 funds as of
4/30/00.
20
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
<TABLE>
<CAPTION>
SCHWAB MARKETMANAGER MSCI-EAFE
INTERNATIONAL PORTFOLIO INDEX
<S> <C> <C>
10/16/96 $10,000 $10,000
10/31/96 $9,910 $9,836
11/30/96 $10,220 $10,228
12/31/96 $10,313 $10,096
01/31/97 $10,426 $9,742
02/28/97 $10,599 $9,902
03/31/97 $10,558 $9,938
04/30/97 $10,609 $9,991
05/31/97 $11,209 $10,641
06/30/97 $11,697 $11,227
07/31/97 $11,962 $11,409
08/31/97 $11,199 $10,557
09/30/97 $11,830 $11,148
10/31/97 $11,046 $10,291
11/30/97 $10,894 $10,186
12/31/97 $11,016 $10,274
01/31/98 $11,146 $10,744
02/28/98 $11,925 $11,434
03/31/98 $12,670 $11,786
04/30/98 $12,952 $11,879
05/31/98 $13,265 $11,821
06/30/98 $13,157 $11,911
07/31/98 $13,525 $12,031
08/31/98 $11,654 $10,540
09/30/98 $11,006 $10,217
10/31/98 $11,438 $11,281
11/30/98 $12,011 $11,859
12/31/98 $12,481 $12,327
01/31/99 $12,820 $12,290
02/28/99 $12,415 $11,998
03/31/99 $12,853 $12,498
04/30/99 $13,815 $13,004
05/31/99 $13,170 $12,335
06/30/99 $14,428 $12,816
07/31/99 $14,985 $13,196
08/31/99 $15,248 $13,203
09/30/99 $15,401 $13,336
10/31/99 $16,232 $13,836
11/30/99 $18,683 $14,316
12/31/99 $21,819 $15,602
01/31/00 $21,236 $14,611
02/29/00 $24,410 $15,004
03/31/00 $23,356 $15,587
04/30/00 $21,149 $14,767
</TABLE>
The above graph compares the growth of a hypothetical $10,000 investment in the
MarketManager International Portfolio, made at its inception, with a similar
investment in the Morgan Stanley Capital International Europe Australasia, Far
East (MSCI-EAFE)-Registered Trademark- Index. A detailed analysis of the
performances of the portfolio and its index is provided in the PORTFOLIO
DISCUSSION section later in this report.
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 Portfolio. Investors cannot invest in an
index directly.
ASSETS
<TABLE>
<S> <C>
----------------------------------------------------------------------
Total net assets as of 10/31/99 (000s) $103,804
----------------------------------------------------------------------
Total net assets as of 4/30/00 (000s) $236,580
----------------------------------------------------------------------
Percentage change over reporting period 127.9%
----------------------------------------------------------------------
</TABLE>
21
<PAGE>
SCHWAB MARKETMANAGER INTERNATIONAL PORTFOLIO
PORTFOLIO SNAPSHOT
The Schwab MarketManager International Portfolio offers broad diversification
with the convenience of a single investment. The portfolio can be used to
fulfill all or part of the international equity component of your asset
allocation plan. The information below and on the following page provides a
snapshot of the portfolio's characteristics as of 4/30/00, and is not indicative
of its composition after that date. The terms used below are defined on
page 29. A complete list of the securities in the portfolio as of 4/30/00 is
provided in the Schedule of Investments later in this report.
PORTFOLIO FACTS
<TABLE>
<CAPTION>
SCHWAB MARKETMANAGER PEER GROUP
INTERNATIONAL PORTFOLIO AVERAGE++
<S> <C> <C>
-----------------------------------------------------------------------------------------------------------
Number of Holdings 22** 170
-----------------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) $8,471++ $23,383
-----------------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 45.0++ 37.6
-----------------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 8.4++ 6.0
-----------------------------------------------------------------------------------------------------------
12-Month Yield 2.61%++ 0.59%
-----------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 54%* 83%
-----------------------------------------------------------------------------------------------------------
Three-Year Beta 0.65++ 0.74
-----------------------------------------------------------------------------------------------------------
Expense Ratio 0.50%+ 1.71%
-----------------------------------------------------------------------------------------------------------
</TABLE>
* Compiled by Charles Schwab & Co., Inc. This information is not intended to
show, predict or guarantee future composition of the Portfolio. WEBS Germany
Index Series was not included when compiling Portfolio Facts because
information was not available.
** The Portfolio invests primarily in other funds, whereas most foreign funds
invest primarily in individual securities.
+ Reflects a reduction by the Investment Adviser and Schwab, which is
guaranteed through at least 2/28/01 (excluding interest, taxes and certain
non-routine expenses). Underlying funds also charge fees and incur expenses.
++ Source: Morningstar. The peer group average is based on 700 foreign funds as
tracked by Morningstar.
22
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ASSET MIX
AS A PERCENTAGE OF PORTFOLIO INVESTMENTS
<TABLE>
<S> <C>
International Diversified Mutual Funds 85.1%
Small-Cap/Mid-Cap Funds 1.0%
Asian Regional Mutual Funds 3.0%
Short-Term Investments 5.5%
European Regional Mutual Funds 5.4%
</TABLE>
TOP FIVE COUNTRIES
AS A PERCENTAGE OF PORTFOLIO INVESTMENTS
<TABLE>
<S> <C>
-------------------------------------------
United Kingdom 14.3%
-------------------------------------------
Japan 13.0%
-------------------------------------------
France 7.7%
-------------------------------------------
Germany 6.6%
-------------------------------------------
Switzerland 4.6%
-------------------------------------------
</TABLE>
REGIONAL DIVERSIFICATION
AS A PERCENTAGE OF PORTFOLIO INVESTMENTS
<TABLE>
<S> <C>
-------------------------------------------
Developed Europe(1) 50.8%
-------------------------------------------
Developed Pacific(2) 20.3%
-------------------------------------------
Short-Term Investments 11.5%
-------------------------------------------
Emerging Markets 7.8%
-------------------------------------------
-------------------------------------------
Canada 4.4%
-------------------------------------------
United States 4.3%
-------------------------------------------
Other Countries 0.9%
-------------------------------------------
Total 100.0%
-------------------------------------------
</TABLE>
TOP 10 HOLDINGS
AS A PERCENTAGE OF PORTFOLIO INVESTMENTS(3)
<TABLE>
<S> <C>
-------------------------------------------
Artisan International Fund 15.7%
-------------------------------------------
Janus Overseas Fund 15.2%
-------------------------------------------
American Century International
Discovery Fund, Institutional Class 12.9%
-------------------------------------------
American Century International
Growth Fund, Institutional Class 8.2%
-------------------------------------------
Oppenheimer International Growth
Fund, Class A 6.7%
-------------------------------------------
-------------------------------------------
AIM European Development Fund,
Class A 5.0%
-------------------------------------------
Pilgrim International Small Cap
Growth Fund, Class Q 4.8%
-------------------------------------------
Oakmark International Fund 3.1%
-------------------------------------------
Dreyfus Founders Passport Fund,
Class F 2.9%
-------------------------------------------
Montgomery Global Long Short Fund,
Class R 2.8%
-------------------------------------------
</TABLE>
(1) Developed Europe includes the following countries: Austria, Belgium,
Denmark, Finland, Germany, Ireland, Italy, Netherlands, Norway, Portugal,
Spain, Sweden, Switzerland and the United Kingdom.
(2) Developed Pacific includes the following countries: Australia, China/Hong
Kong, Indonesia, Japan, Malaysia, New Zealand, Singapore and Thailand.
(3) Nothing in this report represents a recommendation of a security by the
investment adviser.
23
<PAGE>
PORTFOLIO MANAGEMENT
PORTFOLIO MANAGEMENT TEAM:
JEFF MORTIMER, vice president and senior portfolio manager, is responsible for
the overall management of the MarketManager portfolios. Until February 29, 2000,
Cynthia Liu was the manager for the International and Small-Cap portfolios.
Cynthia co-managed the Growth and Balanced portfolios with Jeff. Jeff joined
CSIM in November 1997. Prior to joining CSIM Jeff was employed by Higgins
Associates, where he was Chief Investment Officer, managing and advising close
to $1 billion in assets. Prior to joining Higgins, Jeff was employed by Gannett
Welsh & Kotler, a money management firm. He holds an M.B.A. from the University
of Chicago and a B.S. Finance from Babson College, and is a Chartered Financial
Analyst (CFA).
24
<PAGE>
PORTFOLIO DISCUSSION
QUESTIONS TO THE
PORTFOLIO MANAGEMENT TEAM
GROWTH AND BALANCED PORTFOLIOS
Q. HOW DID THE FUNDS PERFORM DURING THE SIX-MONTH REPORTING PERIOD?
A. The Growth and Balanced Portfolios produced total returns of 16.23% and
12.75%, respectively for the six-month reporting period ended April 30, 2000. As
shown on the preceding pages, both portfolios achieved returns that were
significantly greater than their respective composite indices. Additionally,
both portfolios have achieved inception-to-date total returns (from 11/18/96) in
excess of their respective composite indices.
Q. WHICH ASSET CLASSES PERFORMED WELL FOR THE PORTFOLIOS?
A. During the reporting period large-capitalization growth stocks and
small-capitalization growth stocks were the top performing asset classes.
International stocks also did well, as the growth bias was evident around the
world. The primary reason for the difference in performance among these asset
classes continued to be the strong performance in the technology sector during
the reporting period. The table below summarizes the one-year returns of several
major asset classes.
<TABLE>
<CAPTION>
SIX MONTH
RETURN AS OF
ASSET CLASS INDEX(1) 4/30/00
<S> <C> <C>
------------------------------------------------------------------------------------------------
Large-Cap Stocks S&P 500 Index 7.19%
------------------------------------------------------------------------------------------------
Small-Cap Stocks Russell 2000 Index 18.72%
------------------------------------------------------------------------------------------------
International Stocks MSCI-EAFE Index 6.72%
------------------------------------------------------------------------------------------------
Bonds Lehman Aggregate
Bond Index 1.42%
------------------------------------------------------------------------------------------------
Cash Three-Month Treasury
Bill 2.86%
------------------------------------------------------------------------------------------------
</TABLE>
Q. WHAT ARE SOME OF THE UNDERLYING FUNDS THAT PERFORMED PARTICULARLY WELL FOR
THE PORTFOLIOS?
A. As you might expect, those mutual funds which focused their investments in
the strongest areas of the market performed best during the reporting period.
These strongest funds include Janus Twenty, Marsico Focus, and White Oak. In the
small/mid capitalization area, Van Wagoner Emerging Growth performed
particularly well. Internationally, Artisan International and American Century
International Growth led the way.(2),(3)
Q. HOW DID THE FUNDS' STRATEGIES CHANGE DURING THE REPORTING PERIOD? RELATIVE TO
THEIR NEUTRAL TARGETS, HOW WERE THE FUNDS POSITIONED AT THE CLOSE OF THE
REPORTING PERIOD?
A. For the majority of the reporting period the funds remained overweight in the
small-cap area compared to their neutral benchmarks, large-cap and international
holdings remained near neutrality. One overriding theme that existed for most of
the reporting
(1) The S&P Index is composed of 500 large-company common stocks representing
key industries, including many from the most recognizable companies in the
United States. The Russell 2000 consists of the smallest 2000 companies in
the Russell 3000 Index (largest 3000 companies), representing approximately
7% of the total market capitalization. MSCI-EAFE (refers to Europe,
Australasia, and Far East) is widely accepted as a benchmark for
international stock performance. The EAFE Index is an aggregate of 21
individual country indexes that collectively represent many of the major
markets of the world. The Lehman Brother Aggregate Bond Index includes
fixed-rate debt issues rated investment grade or higher.
(2) These 6 funds represent 27.0% of the growth portfolio and 19.0% of balanced
portfolio. Please see the Schedule of Investments for more information.
(3) Past performance is no guarantee of future results. The Portfolios may sell
or have already sold these funds. This is not a recommendation of a specific
fund.
25
<PAGE>
PORTFOLIO DISCUSSION (continued)
period was the overweighting of the growth style versus the value style. This
was true throughout the portfolio, in large-capitalization mutual funds, in
small-capitalization and in international mutual funds.
At the close of the reporting period, the portfolios were near neutral weight in
equity mutual fund exposure relative to their benchmarks, underweight fixed
income, and overweight cash. Within the equity component of the asset
allocation, the portfolios were slightly overweight large-capitalization stock
mutual funds and small cap mutual funds, and underweight international funds.
The charts below show the two portfolios' actual asset mixes during the
reporting period. The cash holdings shown include both the actual cash holdings
of the portfolios as well as the cash holdings of the underlying funds.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
SCHWAB MARKETMANAGER GROWTH PORTFOLIO
<TABLE>
<CAPTION>
CASH BONDS INTERNATIONAL EQUITY SMALL-CAP EQUITY LARGE-CAP EQUITY
<S> <C> <C> <C> <C> <C>
11/30/99 5.27% 6.76% 23.72% 23.74% 40.51%
12/31/99 4.02% 5.89% 23.95% 26.04% 40.10%
01/31/00 9.66% 6.13% 20.97% 26.66% 36.58%
02/29/00 7.49% 5.36% 19.61% 32.30% 35.24%
03/31/00 12.21% 5.24% 19.22% 27.87% 35.46%
04/30/00 15.27% 5.53% 18.25% 22.90% 38.05%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
SCHWAB MARKETMANAGER BALANCED PORTFOLIO
<TABLE>
<CAPTION>
CASH BONDS INTERNATIONAL EQUITY SMALL-CAP EQUITY LARGE-CAP EQUITY
<S> <C> <C> <C> <C> <C>
11/30/99 6.01% 26.96% 16.09% 20.53% 30.41%
12/31/99 4.83% 25.77% 16.81% 21.66% 30.93%
01/31/00 6.29% 29.02% 16.08% 18.34% 30.27%
02/29/00 5.33% 26.99% 15.02% 24.26% 28.40%
03/31/00 9.58% 27.01% 12.42% 19.71% 31.28%
04/30/00 8.09% 28.05% 10.94% 17.35% 35.57%
</TABLE>
Q. CAN YOU SHARE A COUPLE EXAMPLES OF ANY NEW FUNDS THE PORTFOLIOS PURCHASED
DURING THE PERIOD, AND WHY?
A. Two funds purchased during the period were Neuberger Berman Millennium Fund
and Oakmark Select Fund. These funds were purchased for two very different
reasons, and highlight the slight change of strategy as we moved through the
reporting period. Neuberger Berman Millennium Fund is an aggressive small-cap
mutual fund which purchases stocks its manager believes offer great promise
going forward. It was added to both portfolios early in the reporting period.
The Oakmark Select Fund is at the opposite side of spectrum, and is a large-cap
value fund that holds about 25 names. The manager of this fund looks for stocks
that are trading below what he believes to be fair value. This fund was added
toward the end of the reporting period, and is used to offset some of our
exposure to the underlying growth funds we continue to hold.(1),(2)
(1) These 2 funds represent 6.5% of the growth portfolio and 7.4% of the
balanced portfolio. Please see the Schedule of Investments for more
information.
26
<PAGE>
SMALL-CAP PORTFOLIO
Q. HOW DID THE PORTFOLIO PERFORM DURING THE REPORTING PERIOD?
A. The portfolio achieved a total return of 15.46% for the six-month reporting
period ended April 30, 2000, comparing favorably to the average small
capitalization mutual fund, which returned 26.34% and the Russell 2000 Index
which was 18.72%.
Q. WHICH UNDERLYING FUNDS PERFORMED PARTICULARLY WELL FOR THE PORTFOLIOS?
A. Funds that focused on the growth style of investing performed particularly
well during the period, mainly due to their large technology exposure. These
funds include Turner Small Cap Fund, Value Line Special Situations Fund, and
Robertson Stephens Diversified Growth Fund.(2),(3)
Q. HOW DID THE PORTFOLIO'S STRATEGY CHANGE DURING THE REPORTING PERIOD, AND HOW
WAS THE FUND POSITIONED AT THE CLOSE OF THE PERIOD?
A. The portfolios did not change significantly during the reporting period,
although some movement was made from growth to value as the period wore on.
Profits were taken from some of the mutual funds which performed extremely well
and re-allocated to funds which have a more value-driven discipline to their
investment strategy. At the close of the period, the fund had about equal
weightings in the mid-cap, small-cap growth, small-cap value, and micro-cap
sectors, each about 20% of assets. The remaining 20% of assets were split among
cash, small-cap blend, and sector funds.
Q. CAN YOU SHARE A COUPLE OF EXAMPLES OF NEW FUNDS PURCHASED DURING THE PERIOD,
AND WHY?
A. To increase our small-cap blend exposure (a combination of growth and value),
MAS Small Cap Value Fund was added during the period. To increase exposure to
the technology sector, the Firsthand Technology Value Fund was added to the
portfolio where manager Kevin Landis has demonstrated an ability to be a strong
performer in a very volatile asset class.(2),(4)
INTERNATIONAL PORTFOLIO
Q. HOW DID THE PORTFOLIO PERFORM DURING THE REPORTING PERIOD?
A. The portfolio achieved a total return of 30.29% for the six month reporting
period ended April 30, 2000, comparing very favorably to the average
international mutual fund, which returned 15.60% and the MSCI-EAFE Index which
was up 6.72%.
Q. WHICH SECTORS OR REGIONS PERFORMED WELL FOR THE FUND?
A. Many sectors in the international markets performed well over the past six
months, as the world generally followed the US market higher. The strongest
regions were those in northern Europe, which benefited from the strong
performance of the telecommunications sector. These were followed by Germany and
France. Japan and the Pacific region
(2) Past performance is no guarantee of future results. The Portfolios may sell
or have already sold these funds. This is not a recommendation of a specific
fund.
(3) These 3 funds represent 14.5% of the small-cap portfolio. Please see the
Schedule of Investments for more information.
(4) These 2 funds represent 7.7% of the small-cap portfolio. Please see the
Schedule of Investments for more information.
27
<PAGE>
PORTFOLIO DISCUSSION (continued)
posted positive returns, but couldn't compete with Europe.
Q. WHAT IMPACT DID CURRENCY EXCHANGE RATES HAVE ON THE PERFORMANCE OF
INTERNATIONAL EQUITIES AND THE FUND?
A. Over the period, the general trend of foreign currencies was to weaken versus
the dollar, although the Yen/ Dollar relationship continued to be volatile over
the period. The Euro has weakened against the dollar since its inception on
January 1, 1999. A strengthening dollar generally hurts portfolio returns;
however, strong foreign markets were more than able to offset this slight
negative influence.
Q. HOW DID THE FUND'S STRATEGY CHANGE DURING THE REPORTING PERIOD, AND HOW WAS
THE FUND POSITIONED VERSUS ITS BENCHMARK AT THE CLOSE OF THE PERIOD?
A. During the reporting period, the portfolio's European weighting was increased
slightly, as profits were taken from some Asian holdings and re-invested
Euroland. Small company exposure was also increased over the reporting period,
as the portfolio continued to take advantage of the relative values offered by
this category. During most of the reporting period, the portfolio was
overweighed in Europe and small company stocks relative to the MSCI-EAFE Index,
with the Pacific region carrying about an index weight.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
SCHWAB MARKETMANAGER INTERNATIONAL PORTFOLIO
Actual Asset Mix: 10/31/98-10/31/99
<TABLE>
<CAPTION>
CANADA USA DEVELOPED EUROPE DEVELOPED PACIFIC EMERGING MARKETS OTHER COUNTRIES CASH
<S> <C> <C> <C> <C> <C> <C> <C>
10/99 4.21% 2.31% 40.41% 34.57% 5.55% 1.42% 11.53%
11/99 4.40% 3.12% 41.14% 35.28% 6.61% 1.25% 8.20%
12/99 4.78% 4.40% 42.83% 30.35% 7.96% 1.00% 8.68%
1/00 4.40% 4.23% 44.72% 26.15% 8.60% 1.34% 10.56%
2/00 4.25% 5.19% 48.91% 22.16% 8.55% 0.79% 10.15%
3/00 4.72% 5.03% 49.00% 22.84% 8.41% 0.84% 9.16%
4/00 4.41% 4.27% 50.83% 20.31% 7.76% 0.90% 11.52%
</TABLE>
28
<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.
29
<PAGE>
GLOSSARY (continued)
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.
30
<PAGE>
SCHWAB MARKETMANAGER GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
INVESTMENT FUNDS -- 84.7%
ASIAN FUNDS -- 0.5%
Scudder Japan Fund 82,201 $ 1,175
--------- --------
1,175
--------
BOND FUNDS -- 5.5%
American Century Intermediate
Term Treasury Fund 499,369 4,979
American Century Long Term
Treasury Fund 121,150 1,180
American Century Target
2020 Fund 32,669 1,088
Federated U.S. Government
Securities Fund, 1-3 Years,
Institutional Shares 85,880 881
PIMCO Total Return Fund,
Institutional Class 526,387 5,200
--------
13,328
--------
INTERNATIONAL STOCK FUNDS -- 17.8%
Acorn International Fund 160,137 5,603
American Century International
Discovery Fund, Institutional
Class+ 273,184 4,895
American Century International
Growth Fund, Institutional Class 981,418 14,054
Artisan International Fund 458,905 13,749
Dreyfus Founders Passport Fund+ 94,161 2,030
Oakmark International Fund 169,668 2,443
--------
42,774
--------
LARGE-CAP FUNDS -- 35.8%
Accessor Value & Income Portfolio 104,200 2,132
Excelsior Large Cap
Growth Fund+ 326,276 5,798
Heritage Capital Appreciation
Fund, Class A 140,822 4,413
Janus Twenty Fund 60,662 4,858
Longleaf Partners Fund 20,840 425
Managers Capital Appreciation
Fund+ 53,997 3,159
Marsico Focus Fund+ 475,420 10,288
Marsico Growth & Income Fund+ 224,455 4,626
Oakmark Select Fund 481,133 9,618
Number Value
of Shares (000s)
--------- --------
Rydex Series Trust Arktos Fund,
Investor Class 102,249 $ 1,958
Rydex Series Trust Nova Fund+ 217,424 8,636
Rydex Series Trust Ursa Fund,
Investor Class 190,355 1,510
T. Rowe Price Value Fund 524,717 9,335
White Oak Growth Stock Fund+ 272,000 19,451
--------
86,207
--------
SECTOR FUNDS -- 2.2%
Heritage Technology Fund,
Class A+ 93,953 1,639
T. Rowe Price New Era Fund 165,906 3,745
--------
5,384
--------
SMALL-CAP / MID-CAP FUNDS -- 22.9%
Baron Small Cap Fund+ 139,183 2,278
Berger Small Cap Value Fund+ 94,544 2,123
Firsthand Technology Value Fund 18,032 2,046
Hambrecht & Quist IPO & Emerging
Company Fund+ 55,813 668
Loomis Sayles Small Cap
Growth Fund+ 57,705 1,587
MAS Small Cap Value Fund,
Institutional Class 122,554 2,615
Melody 4500 Fund, L.P.+** 419,711 5,200
Neuberger Berman Millennium
Fund 190,311 6,122
Riggs Small Company
Stock Fund+ 174,620 2,298
Robertson Stephens Emerging
Growth Fund, Class A 126,337 7,421
Robertson Stephens Mid Cap
Opportunities Fund 215,614 3,543
Thornburg Value Fund, Class A 219,973 7,400
Thornburg Value Fund,
Institutional Class+ 262,109 8,846
VAN Wagoner Emerging
Growth Fund+ 63,006 2,540
Weitz Series Hickory Fund 14,365 477
--------
55,164
--------
TOTAL INVESTMENT FUNDS
(Cost $182,267) 204,032
--------
</TABLE>
31
<PAGE>
SCHWAB MARKETMANAGER GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
SHORT-TERM INVESTMENTS -- 15.3%
Bank One Grand Cayman
Time Deposit, 5.44%*, 05/01/00 5,000,000 $ 5,000
Cayman Time Deposit
5.44%*, 05/01/00 8,589,119 8,589
Chase Manhattan Bank
NY Time Deposit, 5.44%*,
05/01/00 5,000,000 5,000
Citibank Nassau TCA
Time Deposit, 5.44%*, 05/01/00 5,000,000 5,000
Morgan Guaranty London
Time Deposit
5.44%*, 05/01/00 5,000,000 5,000
Rydex U.S. Government
Money Market Fund,
5.04%* 3,207,838 3,208
Wachovia Bank NA Time Deposit
5.44%*, 05/01/00 5,000,000 5,000
--------
TOTAL SHORT-TERM INVESTMENTS
(Cost $36,797) 36,797
--------
TOTAL INVESTMENT -- 100.0%
(Cost $219,064) 240,829
--------
OTHER ASSETS AND LIABILITIES, NET -- 0.0%
Other assets 146
Liabilities (64)
--------
82
--------
TOTAL NET ASSETS -- 100.0% $240,911
========
</TABLE>
SEE ACCOMPANYING NOTES TO SCHEDULES OF INVESTMENTS AND NOTES TO FINANCIAL
STATEMENTS.
32
<PAGE>
SCHWAB MARKETMANAGER BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
INVESTMENT FUNDS -- 91.6%
ASIAN FUNDS -- 0.5%
Scudder Japan Fund 51,939 $ 742
--------
742
--------
BOND FUNDS -- 28.0%
American Century Intermediate
Term Treasury Fund 616,814 6,150
American Century Long Term
Treasury Fund 228,451 2,225
Federated U.S. Government
Securities Fund, 2-5 Years,
Institutional Shares 634,196 6,526
Mainstay High Yield Corporate
Bond Fund, Class A 984,831 7,091
PIMCO Total Return Fund,
Institutional Class 2,043,611 20,190
--------
42,182
--------
INTERNATIONAL STOCK FUNDS -- 10.4%
Acorn International Fund 37,793 1,322
American Century International
Discovery Fund, Institutional
Class+ 100,143 1,795
Artisan International Fund 343,333 10,286
Dreyfus Founders Passport Fund+ 70,621 1,523
Oakmark International Fund 52,443 755
--------
15,681
--------
LARGE-CAP FUNDS -- 33.7%
Accessor Value & Income Portfolio 44,240 905
Excelsior Large Cap
Growth Fund+ 157,777 2,804
Heritage Capital Appreciation
Fund, Class A 46,453 1,456
Janus Twenty Fund 27,134 2,173
Longleaf Partners Fund 26,813 547
Managers Capital Appreciation
Fund+ 20,037 1,172
Marsico Focus Fund+ 262,940 5,690
Marsico Growth & Income Fund+ 108,795 2,242
Number Value
of Shares (000s)
--------- --------
Oakmark Select Fund 489,546 $ 9,786
Rydex Series Trust Arktos Fund,
Investor Class 51,124 979
Rydex Series Trust Nova Fund+ 82,930 3,294
Rydex Series Trust OTC Fund 18,272 508
Rydex Series Trust Ursa Fund,
Investor Class 126,903 1,006
T. Rowe Price Value Fund 483,170 8,596
White Oak Growth Stock Fund+ 134,931 9,649
--------
50,807
--------
SECTOR FUNDS -- 1.7%
T. Rowe Price New Era Fund 110,683 2,498
--------
2,498
--------
SMALL-CAP/MID-CAP FUNDS -- 17.3%
Baron Small Cap Fund+ 83,780 1,372
Firsthand Technology Value Fund 5,288 600
Hambrecht & Quist IPO & Emerging
Company Fund+ 35,728 427
Loomis Sayles Small Cap
Growth Fund+ 37,338 1,027
MAS Small Cap Value Fund,
Institutional Class 63,025 1,345
Melody 4500 Fund, L.P.+** 400,000 4,956
Neuberger Berman Millennium
Fund 42,948 1,382
Robertson Stephens Emerging
Growth Fund, Class A 29,960 1,760
Robertson Stephens Mid Cap
Opportunities Fund 137,939 2,266
Thornburg Value Fund, Class A 78,693 2,647
Thornburg Value Fund,
Institutional Class+ 206,176 6,959
VAN Wagoner Emerging
Growth Fund+ 19,512 787
Weitz Series Hickory Fund 17,378 577
--------
26,105
--------
TOTAL INVESTMENT FUNDS
(Cost $128,109) 138,015
--------
</TABLE>
33
<PAGE>
SCHWAB MARKETMANAGER BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
SHORT-TERM INVESTMENTS -- 8.0%
Cayman Time Deposit
5.44%*, 05/01/00 3,665,300 $ 3,665
Chase Manhattan Bank
NY Time Deposit
5.44%*, 05/01/00 2,000,000 2,000
Citibank Nassau TCA Time Deposit
5.44%*, 05/01/00 2,000,000 2,000
Morgan Guaranty
London Time Deposit
5.44%*, 05/01/00 2,000,000 2,000
Rydex U.S. Government
Money Market Fund,
5.04%* 476,179 476
Wachovia Bank NA Time Deposit
5.44%*, 05/01/00 2,000,000 2,000
--------
TOTAL SHORT-TERM INVESTMENTS
(Cost $12,141) 12,141
--------
TOTAL INVESTMENTS -- 99.6%
(Cost $140,250) 150,156
--------
OTHER ASSETS AND LIABILITIES, NET -- 0.4%
Other assets 585
Liabilities (33)
--------
552
--------
TOTAL NET ASSETS -- 100.0% $150,708
========
</TABLE>
SEE ACCOMPANYING NOTES TO SCHEDULES OF INVESTMENTS AND NOTES TO FINANCIAL
STATEMENTS.
34
<PAGE>
SCHWAB MARKETMANAGER SMALL CAP PORTFOLIO
SCHEDULE OF INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
INVESTMENT FUNDS -- 93.4%
Sector Funds -- 1.1%
Excelsior Energy & Natural
Resources Fund 121,558 $ 1,816
--------
1,816
--------
SMALL-CAP / MID-CAP FUNDS -- 92.3%
BlackRock Small Cap Value Equity
Fund, Institutional Class 230,562 3,495
Firsthand Technology Value Fund 39,845 4,520
Fremont U.S. Micro Cap Fund+ 531,716 22,125
Liberty-Stein Roe Capital
Opportunities Fund+ 155,716 6,028
Longleaf Partners Realty Fund 792,892 9,871
Longleaf Partners Small Cap Fund 363,203 7,173
Managers Special Equity Fund 99,836 9,716
MAS Small Cap Value Fund,
Institutional Class 372,628 7,952
Melody 4500 Fund, L.P.+** 1,605,081 19,887
Neuberger Berman Genesis
Fund 234,710 3,854
PBHG Small Cap Value Fund 119,568 2,137
Robertson Stephens Diversified
Growth Fund, Class A+ 231,316 7,742
Scudder Micro Cap Fund 113,131 1,672
State Street Research Aurora Fund,
Class A 419,703 10,249
Turner Micro Cap Growth Fund+ 126,707 4,478
Turner Small Cap Growth Fund+ 206,299 8,962
Value Line Special Situations Fund 239,514 6,714
VAN Wagoner Emerging
Growth Fund+ 115,224 4,646
VAN Wagoner Micro Cap Fund 90,955 3,283
Weitz Series Hickory Fund 141,634 4,705
--------
149,209
--------
TOTAL INVESTMENT FUNDS
(Cost $134,624) 151,025
--------
Number Value
of Shares (000s)
--------- --------
SHORT-TERM INVESTMENTS -- 6.5%
Bank One Grand Cayman
Time Deposit
5.44%*, 05/01/00 2,000,000 $ 2,000
Cayman Time Deposit
5.44%*, 05/01/00 441,638 442
Chase Manhattan Bank
NY Time Deposit
5.44%*, 05/01/00 2,000,000 2,000
Citibank Nassau TCA Time Deposit
5.44%*, 05/01/00 2,000,000 2,000
Morgan Guaranty
London Time Deposit
5.44%*, 05/01/00 2,000,000 2,000
Wachovia Bank NA Time Deposit
5.44%*, 05/01/00 2,000,000 2,000
--------
TOTAL SHORT-TERM INVESTMENTS
(Cost $10,442) 10,442
--------
TOTAL INVESTMENTS -- 99.9%
(Cost $145,066) 161,467
--------
OTHER ASSETS AND Liabilities, NET -- 0.1%
Other assets 113
Liabilities (16)
--------
97
--------
TOTAL NET ASSETS -- 100.0% $161,564
========
</TABLE>
SEE ACCOMPANYING NOTES TO SCHEDULES OF INVESTMENTS AND NOTES TO FINANCIAL
STATEMENTS.
35
<PAGE>
SCHWAB MARKETMANAGER INTERNATIONAL PORTFOLIO
SCHEDULE OF INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
INVESTMENT FUNDS -- 94.3%
ASIAN FUNDS -- 3.0%
Colonial Newport Japan Fund* 51,186 $ 1,065
Colonial Newport Tiger Fund,
Class A 197,407 2,527
Scudder Japan Fund 242,588 3,466
--------
7,058
--------
EUROPEAN FUNDS -- 5.4%
AIM European Development Fund,
Class A 466,870 11,910
Vontobel Eastern European
Equity Fund 94,329 933
--------
12,843
--------
INTERNATIONAL STOCK FUNDS -- 84.9%
American Century International
Discovery Fund,
Institutional Class+ 1,704,789 30,550
American Century International
Growth Fund, Institutional Class 1,347,900 19,302
Artisan International Fund 1,237,178 37,066
Dreyfus Founders Passport Fund+ 312,468 6,737
Driehaus International
Growth Fund 308,657 5,892
First Eagle SoGen Overseas Fund 382,933 5,300
Hotchkis & Wiley International
Fund 228,325 5,914
Ivy International Fund, Class A 77,679 3,381
Janus Overseas Fund 934,582 35,869
Montgomery Global Long Short
Fund 213,870 6,525
Oakmark International Fund 500,606 7,209
Oppenheimer International Growth
Fund, Class A+ 665,320 15,914
Pilgrim International Small Cap
Growth Fund, Class Q 260,577 11,288
Tweedy Browne Global Value Fund 219,265 4,648
William Blair International
Growth Fund 214,589 5,236
--------
200,831
--------
SMALL-CAP / MID-CAP FUNDS -- 1.0%
American Century Emerging
Markets Fund 352,967 $ 2,344
--------
2,344
--------
TOTAL INVESTMENT FUNDS
(Cost $203,281) 223,076
--------
SHORT-TERM INVESTMENTS -- 5.5%
Bank One Grand Cayman
Time Deposit
5.44%*, 05/01/00 2,000,000 2,000
Cayman Time Deposit
5.44%*, 05/01/00 3,051,130 3,051
Chase Manhattan Bank
NY Time Deposit
5.44%*, 05/01/00 2,000,000 2,000
Citibank Nassau TCA Time Deposit
5.44%*, 05/01/00 2,000,000 2,000
Morgan Guaranty
London Time Deposit
5.44%*, 05/01/00 2,000,000 2,000
Wachovia Bank NA Time Deposit
5.44%*, 05/01/00 2,000,000 2,000
--------
TOTAL SHORT-TERM INVESTMENTS
(Cost $13,051) 13,051
--------
TOTAL INVESTMENTS -- 99.8%
(Cost $216,332) 236,127
--------
OTHER ASSETS AND LIABILITIES, NET -- 0.2%
Other assets 570
Liabilities (117)
--------
453
--------
TOTAL NET ASSETS -- 100.0% $236,580
--------
<FN>
NOTES TO SCHEDULES OF INVESTMENTS
April 30, 2000
+ Non-income producing security.
* Interest rate represents the yield on report date.
** See Note 3 of Notes to Financial Statements.
L.P. -- Limited Partnership
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
36
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (in thousands)
April 30, 2000
<TABLE>
<CAPTION>
Schwab MarketManager Portfolios(TM)
--------------------------------------------
Growth Balanced Small Cap International
-------- -------- --------- -------------
<S> <C> <C> <C> <C>
ASSETS
Investments, at value (Cost: $219,064, $140,250,
$145,066, and $216,332, respectively) $240,829 $150,156 $161,467 $236,127
Receivables:
Fund shares sold 107 556 93 520
Dividends 7 19 -- --
Interest 16 5 5 6
Prepaid expenses 16 5 15 44
-------- -------- --------- --------
Total assets 240,975 150,741 161,580 236,697
-------- -------- --------- --------
Liabilities
Payables:
Fund shares redeemed -- 2 -- --
Investment advisory and administration fees 10 6 5 11
Accrued expenses 54 25 11 106
-------- -------- --------- --------
Total liabilities 64 33 16 117
======== ======== ========= ========
Net assets applicable to outstanding shares $240,911 $150,708 $161,564 $236,580
======== ======== ========= ========
Net assets consist of:
Paid-in capital $194,268 $127,691 $140,557 $198,563
Undistributed net investment income 565 1,088 145 611
Accumulated net realized gain on investments sold 24,313 12,023 4,461 17,611
Net unrealized appreciation on investments 21,765 9,906 16,401 19,795
-------- -------- --------- --------
$240,911 $150,708 $161,564 $236,580
======== ======== ========= ========
Pricing of shares:
Outstanding shares, $0.00001 par value (unlimited
shares authorized) 16,864 11,140 13,139 13,871
Net asset value, offering and redemption price per
share $14.29 $13.53 $12.30 $17.06
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
37
<PAGE>
STATEMENTS OF OPERATIONS (in thousands)
For the six months ended April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Schwab MarketManager Portfolios(TM)
--------------------------------------------
Growth Balanced Small Cap International
-------- -------- --------- -------------
<S> <C> <C> <C> <C>
Investment income:
Dividends $ 4,345 $ 3,181 $ 3,371 $ 4,878
Interest 256 118 167 192
-------- -------- --------- --------
Total investment income 4,601 3,299 3,538 5,070
-------- -------- --------- --------
Expenses:
Investment advisory and administration fees 597 380 412 483
Transfer agency and shareholder service fees 276 176 191 224
Custodian fees 27 8 1 13
Portfolio accounting fees 18 13 35 16
Registration fees 17 14 5 9
Professional fees 11 9 2 13
Shareholder reports 19 5 8 60
Trustees' fees 4 6 6 6
Proxy fees 8 4 6 7
Other expenses 8 7 2 7
-------- -------- --------- --------
985 622 668 838
Less:expenses reduced (see Note 5) (425) (267) (280) (384)
-------- -------- --------- --------
Net expenses incurred by fund 560 355 388 454
-------- -------- --------- --------
Net investment income 4,041 2,944 3,150 4,616
-------- -------- --------- --------
Net realized gain on investments:
Net realized gain on investments sold 20,745 10,353 7,563 13,472
Net realized gain received from underlying funds 3,847 1,811 2,654 4,238
-------- -------- --------- --------
Net realized gain on investments 24,592 12,164 10,217 17,710
-------- -------- --------- --------
Net unrealized appreciation (depreciation) on
investments (378) 316 3,678 2,073
-------- -------- --------- --------
Net gain on investments 24,214 12,480 13,895 19,783
-------- -------- --------- --------
Increase in net assets resulting from operations $ 28,255 $ 15,424 $ 17,045 $ 24,399
======== ======== ========= ========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
38
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (in thousands)
<TABLE>
<CAPTION>
Schwab MarketManager Portfolios(TM)
---------------------------------------------------------------------------------------------
Growth Balanced Small Cap International
---------------------- ---------------------- ---------------------- ---------------------
Six months Six months Six months Six months
ended Year ended Year ended Year ended Year
04/30/00 ended 04/30/00 ended 04/30/00 ended 04/30/00 ended
(Unaudited) 10/31/99 (Unaudited) 10/31/99 (Unaudited) 10/31/99 (Unaudited) 10/31/99
----------- ---------- ----------- ---------- ----------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income $ 4,041 $ 2,077 $ 2,944 $ 2,373 $ 3,150 $ 2,795 $ 4,616 $ 775
Net realized gain on investments 20,745 19,916 10,353 10,077 7,563 5,707 13,472 13,982
Net realized gain received from
underlying funds 3,847 2,831 1,811 1,397 2,654 4,813 4,238 1,240
Net unrealized appreciation
(depreciation) on investments (378) 15,237 316 6,255 3,678 20,277 2,073 13,138
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
Increase in net assets
resulting from operations 28,255 40,061 15,424 20,102 17,045 33,592 24,399 29,135
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
Dividends and distributions:
Dividends to shareholders from net
investment income (4,282) (2,077) (3,256) (2,373) (5,150) (673) (3,862) (775)
Dividends in excess of net
investment income -- (625) -- (118) -- -- -- (143)
Distributions to shareholders from
net capital gains (23,031) (3,029) (11,787) -- -- -- (14,371) --
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
Total dividends and distributions
to shareholders (27,313) (5,731) (15,043) (2,491) (5,150) (673) (18,233) (918)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
Capital share transactions:
Proceeds from shares sold 68,360 40,223 31,808 38,953 42,475 20,774 163,035 47,140
Net asset value of shares issued in
reinvestment of dividends 26,775 5,639 14,451 2,389 4,883 642 17,401 879
Payments for shares redeemed (35,768) (51,444) (17,713) (29,966) (20,687) (59,884) (53,826) (46,236)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
Increase (decrease) in net assets from
capital share transactions 59,367 (5,582) 28,546 11,376 26,671 (38,468) 126,610 1,783
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
Total increase (decrease) in net
assets 60,309 28,748 28,927 28,987 38,566 (5,549) 132,776 30,000
Net assets:
Beginning of period 180,602 151,854 121,781 92,794 122,998 128,547 103,804 73,804
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
End of period (including
undistributed net investment income
(loss) of $565, $806, $1,088, $1,400,
$145, $2,145, $611, $(143),
respectively) $ 240,911 $ 180,602 $ 150,708 $ 121,781 $ 161,564 $ 122,998 $ 236,580 $ 103,804
========== ========== ========== ========== ========== ========== ========== =========
Number of fund shares:
Sold 4,574 3,089 2,290 3,085 3,232 2,046 8,866 3,661
Reinvested 1,830 457 1,060 196 387 68 995 78
Redeemed (2,389) (3,980) (1,273) (2,386) (1,624) (6,075) (2,987) (3,716)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
Net increase (decrease) in
shares outstanding 4,015 (434) 2,077 895 1,995 (3,961) 6,874 23
Shares outstanding:
Beginning of period 12,849 13,283 9,063 8,168 11,144 15,105 6,997 6,974
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
End of period 16,864 12,849 11,140 9,063 13,139 11,144 13,871 6,997
========== ========== ========== ========== ========== ========== ========== =========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
39
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
11/1/99- 11/1/98- 11/1/97- 11/18/96-
4/30/00 10/31/99 10/31/98 10/31/97
SCHWAB MARKETMANAGER GROWTH (Unaudited)
PORTFOLIO
---------------------------------------------------------------------------------------
PER-SHARE DATA ($)
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period 14.06 11.43 11.60 10.00
----------------------------------------------
Income from investment operations:
Net investment income 0.30 0.16 0.32 0.08
Net realized and unrealized gain
on investments 2.03 2.91 0.11 1.66
----------------------------------------------
Total income from investment
operations 2.33 3.07 0.43 1.74
----------------------------------------------
Less distributions:
Dividends from net investment income (0.33) (0.16) (0.29) (0.14)
Dividends in excess of net investment
income -- (0.05) -- --
Distributions from capital gains (1.77) (0.23) (0.31) --
----------------------------------------------
Total distributions (2.10) (0.44) (0.60) (0.14)
----------------------------------------------
NET ASSET VALUE AT END OF PERIOD 14.29 14.06 11.43 11.60
----------------------------------------------
Total return (%) 16.23(1) 27.38 3.87 17.60(1)
</TABLE>
<TABLE>
<CAPTION>
RATIOS/SUPPLEMENTAL DATA (%)
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ratio of net operating expenses to
average net assets 0.50(2,3) 0.50 0.50 0.50(2)
Expense reductions reflected in above
ratio 0.38(2) 0.43 0.67 0.77(2)
Ratio of net investment income to
average net assets 3.66(2) 1.23 2.66 2.07(2)
Portfolio turnover rate 112 284 384 192
Net assets, end of period ($ x 1,000) 240,911 180,602 151,854 123,877
<FN>
(1) Not annualized.
(2) Annualized.
(3) Would have been 0.51% if certain non-routine expenses had been included.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
40
<PAGE>
<TABLE>
<CAPTION>
11/1/99- 11/1/98- 11/1/97- 11/18/96-
4/30/00 10/31/99 10/31/98 10/31/97
SCHWAB MARKETMANAGER BALANCED (Unaudited)
PORTFOLIO
-------------------------------------------------------------------------------------
PER-SHARE DATA ($)
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period 13.44 11.36 11.38 10.00
----------------------------------------------
Income from investment operations:
Net investment income 0.29 0.27 0.36 0.17
Net realized and unrealized gain
on investments 1.43 2.11 0.18 1.34
----------------------------------------------
Total income from investment
operations 1.72 2.38 0.54 1.51
----------------------------------------------
Less distributions:
Dividends from net investment income (0.35) (0.28) (0.34) (0.13)
Dividends in excess of net investment
income -- (0.02) -- --
Distributions from capital gains (1.28) -- (0.22) --
----------------------------------------------
Total distributions (1.63) (0.30) (0.56) (0.13)
----------------------------------------------
NET ASSET VALUE AT END OF PERIOD 13.53 13.44 11.36 11.38
----------------------------------------------
Total return (%) 12.75(1) 21.28 4.89 15.27(1)
RATIOS/SUPPLEMENTAL DATA (%)
-------------------------------------------------------------------------------------
Ratio of net operating expenses to
average net assets 0.50(2,3) 0.50 0.50 0.50(2)
Expense reductions reflected in above
ratio 0.38(2) 0.45 0.69 0.95(2)
Ratio of net investment income to
average net assets 4.19(2) 2.20 3.21 3.03(2)
Portfolio turnover rate 76 244 353 171
Net assets, end of period ($ x 1,000) 150,708 121,781 92,794 61,133
<FN>
(1) Not annualized.
(2) Annualized.
(3) Would have been 0.51% if certain non-routine expenses had been included.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
41
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
11/1/99- 11/1/98- 11/1/97- 9/16/97-
4/30/00 10/31/99 10/31/98 10/31/97
SCHWAB MARKETMANAGER SMALL CAP (Unaudited)
PORTFOLIO
-------------------------------------------------------------------------------------
PER-SHARE DATA ($)
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period 11.04 8.51 9.93 10.00
------------------------------------------------
Income from investment operations:
Net investment income 0.28 0.24 0.21 0.02
Net realized and unrealized gain (loss)
on investments 1.44 2.34 (1.36) (0.09)
------------------------------------------------
Total income (loss) from investment
operations 1.72 2.58 (1.15) (0.07)
------------------------------------------------
Less distributions:
Dividends from net investment income (0.46) (0.05) (0.21) --
Dividends in excess of net investment
income -- -- (0.03) --
Distributions from capital gains -- -- (0.03) --
------------------------------------------------
Total distributions (0.46) (0.05) (0.27) --
------------------------------------------------
NET ASSET VALUE AT END OF PERIOD 12.30 11.04 8.51 9.93
------------------------------------------------
Total return (%) 15.46(1) 30.38 (11.84) (0.70)(1)
RATIOS/SUPPLEMENTAL DATA (%)
-------------------------------------------------------------------------------------
Ratio of net operating expenses to
average net assets 0.50(2,3) 0.50 0.50 0.50(2)
Expense reductions reflected in above
ratio 0.37(2) 0.51 0.69 0.75(2)
Ratio of net investment income to
average net assets 4.13(2) 2.23 2.65 1.29(2)
Portfolio turnover rate 59 145 166 10
Net assets, end of period ($ x 1,000) 161,564 122,998 128,547 207,050
<FN>
(1) Not annualized.
(2) Annualized.
(3) Would have been 0.51% if certain non-routine expenses had been included.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
42
<PAGE>
<TABLE>
<CAPTION>
11/1/99- 11/1/98- 11/1/97- 11/18/96- 10/16/96-
4/30/00 10/31/99 10/31/98 10/31/97 10/31/96
SCHWAB MARKETMANAGER INTERNATIONAL (Unaudited)
PORTFOLIO
------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset valueat beginning of period 14.84 10.58 10.86 9.91 10.00
----------------------------------------------------------
Income from investment operations:
Net investment income 0.55 0.11 0.34 0.17 --
Net realized and unrealized gain (loss)
on investments 4.00 4.28 0.02 0.95 (0.09)
----------------------------------------------------------
Total income (loss) from investment
operations 4.55 4.39 0.36 1.12 (0.09)
----------------------------------------------------------
Less distributions:
Dividends from net investment income (0.49) (0.11) (0.33) (0.17) --
Dividends in excess of net investment
income -- (0.02) (0.01) -- --
Distributions from capital gains (1.84) -- (0.30) -- --
----------------------------------------------------------
Total distributions (2.33) (0.13) (0.64) (0.17) --
----------------------------------------------------------
NET ASSET VALUE AT END OF PERIOD 17.06 14.84 10.58 10.86 9.91
----------------------------------------------------------
Total return (%) 30.29(1) 41.92 3.55 11.47 (0.90)(1)
RATIOS/SUPPLEMENTAL DATA (%)
------------------------------------------------------------------------------------------------
Ratio of net operating expenses to
average net assets 0.50(2,3) 0.50 0.50 0.50 0.50(2)
Expense reductions reflected in above
ratio 0.43(2) 0.47 0.70 0.80 2.91(2)
Ratio of net investment income to
average net assets 5.16(2) 0.94 2.96 1.40 0.52(2)
Portfolio turnover rate 54 249 236 179 --
Net assets, end of period ($ x 1,000) 236,580 103,804 73,804 81,086 59,180
<FN>
(1) Not annualized.
(2) Annualized.
(3) Would have been 0.51% if certain non-routine expenses had been included.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
43
<PAGE>
NOTES TO FINANCIAL STATEMENTS
For the six months ended April 30, 2000 (Unaudited)
(All currency amounts are in thousands unless otherwise noted.)
1. DESCRIPTION OF THE FUNDS
The SCHWAB MARKETMANAGER GROWTH PORTFOLIO, Schwab MarketManager Balanced
Portfolio, SCHWAB MARKETMANAGER SMALL CAP PORTFOLIO and Schwab MarketManager
International Portfolio, (the "funds") are series of Schwab Capital Trust (the
"trust"), a no-load, open-end, investment management company organized as a
Massachusetts business trust on May 7, 1993 and registered under the Investment
Company Act of 1940, as amended (the "1940 Act").
In addition to the funds, the trust also offers the Schwab Total Stock Market
Index Fund(TM), Schwab S&P 500 Fund, Schwab Small-Cap Index Fund(R), Schwab
International Index Fund(R), Schwab MarketTrack Growth Portfolio, Schwab
MarketTrack Balanced Portfolio, Schwab MarketTrack Conservative Portfolio,
Schwab MarketTrack All Equity Portfolio, Schwab Analytics Fund(R), Institutional
Select(TM) S&P 500 Fund, Institutional Select(TM) Large-Cap Value Index Fund and
Institutional Select(TM) Small-Cap Value Index 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 underlying funds are valued at their
respective net asset values as determined by those funds, in accordance with the
1940 Act, for a given day. Investments in securities traded on an exchange or in
the over-the-counter market value 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. Other investments, including limited
partnerships, for which no quotations are readily available, are valued at fair
value as determined by the funds' investment adviser pursuant to guidelines
adopted in good faith by the Board of Trustees.
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.
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.
44
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
The aggregate unrealized appreciation and depreciation for securities held by
the funds at April 30, 2000, which was substantially the same for financial
reporting and federal income tax purposes, was as follows:
<TABLE>
<CAPTION>
Net Unrealized Appreciated Depreciated
Portfolio Appreciation Securities Securities
---------- -------------- ----------- -----------
<S> <C> <C> <C>
Schwab MarketManager Growth Portfolio $ 21,765 $ 28,602 $ (6,837)
Schwab MarketManager Balanced Portfolio 9,906 14,008 (4,102)
Schwab MarketManager Small cap Portfolio 16,401 23,974 (7,573)
Schwab MarketManager International Portfolio 19,795 30,870 (11,075)
</TABLE>
At October 31, 1999, the unused capital loss carryforwards, for federal income
tax purposes with expiration dates, were as follows:
Schwab MarketManager Portfolios(TM)
-----------------------------------
Capital Loss Expirations Small Cap
------------------------ -------------
12/31/05 $14,553
RECLASSIFICATIONS -- 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. As of April 30, 2000, there were no reclassifications.
3. TRANSACTIONS WITH LIMITED PARTNERSHIPS
As of April 30, 2000, the MarketManager Growth Portfolio, the MarketManager
Balanced Portfolio and the MarketManager Small Cap Portfolio owned 17.3%, 16.5%,
and 66.1% limited partnership ownership interests, respectively, in the Melody
4500 Fund, L.P. ("Melody"). Melody invests in publicly traded securities of
small-to-medium capitalization issuers located in the United States and will
attempt to equal or exceed the total return performance of the Wilshire 4500
Index over a market cycle of five years. As stated in the partnership agreement,
under normal market conditions, each fund can generally redeem up to 50% of its
interest upon three business days notice to the general partner, and the
remainder of the capital account as of the last business day of any calendar
month on at least 30 days prior notice to the general partner.
4. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT -- The trust has an investment
advisory and administration agreement with Charles Schwab Investment Management,
Inc. (the "investment adviser"). For advisory services and facilities furnished,
each fund pays an annual fee, payable monthly, of 0.54% of the first $500
million of average daily net assets, and 0.49% of such net assets over $500
million. The investment adviser has reduced a portion of its fee for the six
months ended April 30, 2000 (see Note 5).
Prior to February 28, 1999, each fund paid an annual fee, payable monthly, of
0.74% of the first $1 billion of average daily net assets, and 0.69% of the next
$1 billion and 0.64% of such net assets over $2 billion.
TRANSFER AGENCY AND SHAREHOLDER SERVICE AGREEMENTS -- The trust has transfer
agency and shareholder service agreements with Charles Schwab & Co., Inc.
("Schwab"). For services provided under these agreements, Schwab receives an
annual fee, payable monthly, of 0.05% of each fund's average daily net assets
for transfer agency services and 0.20% of such net assets for shareholder
services. Schwab has waived all of its transfer agency and shareholder service
fees for the six months ended April 30, 2000 (see Note 5).
45
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
OFFICERS AND TRUSTEES -- Certain officers and trustees of the
trust are also officers and/or directors of the investment adviser and/or
Schwab. During the six months ended April 30, 2000, the trust made no direct
payments to its officers or trustees who are "interested persons" within the
meaning of the 1940 Act. The funds incurred fees aggregating $22 related to the
trust's unaffiliated trustees.
5. EXPENSES REDUCED AND ABSORBED BY THE INVESTMENT ADVISER AND SCHWAB
The investment adviser and Schwab guarantee that through at least February 28,
2001, each fund's total operating expenses will not exceed 0.50% of the fund's
average daily net assets, after waivers and reimbursements. Schwab has agreed to
waive its transfer agency and shareholder service fees through at least December
31, 2001. For the purpose of this guarantee, operating expenses do not include
interest, taxes, and certain non-routine expenses. The operating expense ratio
for the six months ended April 30, 2000 did include non-routine expenses.
For the six months ended April 30, 2000, the total of such fees and expenses
reduced by the investment adviser was $149, $91, $89, and $160 for the Schwab
MarketManager Growth, Schwab MarketManager Balanced, Schwab MarketManager Small
Cap and Schwab MarketManager International Portfolios, respectively, and the
total of such fees reduced by Schwab was $276, $176, $191, and $224,
respectively for the Schwab MarketManager Growth, Schwab MarketManager Balanced,
Schwab MarketManager Small Cap, and Schwab MarketManager International
Portfolios.
6. BORROWING AGREEMENTS
The trusts have both committed and uncommitted lines of credit arrangements with
PNC Bank N.A., Bank of America NT &SA and The Bank of New York, whereby the
trusts may borrow on behalf of the funds, as a temporary measure to satisfy
redemption requests or for extraordinary or emergency purposes. The trusts may
borrow in an aggregate amount of up to $150 million from PNC Bank N.A., $133
million from Bank of America NT &SA and $183 million from The Bank of New York.
Amounts borrowed under these arrangements bear interest at periodically
negotiated rates. The funds also pay annual fees for the unused balance of the
committed line of credit. During the reporting period, the funds only borrowed
against the uncommitted lines of credit. As of April 30, 2000, there were no
borrowings outstanding.
7. INVESTMENT TRANSACTIONS
Purchases, sales and maturities of investment securities, other than short-term
obligations and U.S. Government securities, for the six months ended April 30,
2000, were as follows:
<TABLE>
<CAPTION>
Proceeds of
Sales and
Portfolio Purchases Maturities
--------- --------- -----------
<S> <C> <C>
Schwab MarketManager Growth Portfolio $236,774 $223,912
Schwab MarketManager Balanced Portfolio 111,628 99,089
Schwab MarketManager Small Cap Portfolio 107,770 84,511
Schwab MarketManager International Portfolio 199,902 92,300
</TABLE>
46
<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 YieldPlus Fund-TM-
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.
<PAGE>
[LOGO]
INVESTMENT ADVISER
Charles Schwab Investment Management, Inc.
101 Montgomery Street, San Francisco, CA 94104
DISTRIBUTOR
Charles Schwab & Co., Inc.
P.O. Box 7575, San Francisco, CA 94120-7575
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
-C- 2000 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC/NYSE.
Printed on recycled paper. MKT3563-2 (6/00)
<PAGE>
SCHWABFUNDS -Registered Trademark-
SCHWAB MARKETTRACK
PORTFOLIOS -TM-
SEMIANNUAL REPORT
AND
AN IMPORTANT NOTICE REGARDING
DELIVERY OF SHAREHOLDER
DOCUMENTS
April 30, 2000
<PAGE>
IMPORTANT NOTICE REGARDING DELIVERY OF SHAREHOLDER DOCUMENTS
The Securities and Exchange Commission permits mutual funds to deliver only one
copy of shareholder documents, including prospectuses and shareholder reports,
to fund investors with multiple accounts at the same residential or post office
box address. This practice is commonly called "householding" and is intended to
eliminate duplicate mailings of shareholder documents.
Mailing of your SchwabFunds shareholder documents may be householded
indefinitely unless you instruct us otherwise.
ADDITIONAL COPIES OF SHAREHOLDER DOCUMENTS
ALL SCHWABFUNDS PROSPECTUSES AND SHAREHOLDER REPORTS ARE AVAILABLE FREE OF
CHARGE AND MAY BE REQUESTED AT ANY TIME BY CALLING SCHWAB AS INDICATED BELOW.
SCHWABFUNDS PROSPECTUSES ARE ALSO AVAILABLE ON OUR WEB SITE AT WWW.SCHWAB.COM.
If you would prefer that your SchwabFunds mailings not be householded, please
contact:
- SCHWAB SIGNATURE SERVICES-TM- CLIENTS: Schwab Signature Services.
- INVESTMENT MANAGER CLIENTS: Schwab at 1-800-515-2157, or your investment
manager.
- ALL OTHER CLIENTS: Schwab at 1-800-435-4000.
Your instructions that householding not apply to your accounts holding
SchwabFunds will be effective within 30 days of receipt by Schwab.
<PAGE>
SCHWABFUNDS -Registered Trademark-
SCHWAB MARKETTRACK
PORTFOLIOS -TM-
- ALL EQUITY
- GROWTH
- BALANCED
- CONSERVATIVE
Semiannual Report
April 30, 2000
<PAGE>
SCHWAB MARKETTRACK PORTFOLIOS-TM-
We are pleased to bring you this semiannual report for the Schwab MarketTrack
Portfolios (the portfolios) for the six-month period ended April 30, 2000. In
this report you will find performance statistics and other useful information
for the following portfolios:
- Schwab MarketTrack All Equity Portfolio
- Schwab MarketTrack Growth Portfolio
- Schwab MarketTrack Balanced Portfolio
- Schwab MarketTrack Conservative Portfolio
Each of the portfolios provides an easy, convenient way to diversify your
investment among major asset categories--stocks, bonds and cash equivalents*.
Through a single investment, you may benefit from asset allocation, an
investment strategy designed to achieve an optimal balance between risk and
return. In fact, research has shown that one of the greatest impacts on
investment returns may be the asset allocation decision (the mix of stocks,
bonds and cash equivalents) rather than market timing or individual stock
selection.
The primary difference among the four Schwab MarketTrack Portfolios is the
proportion of each that is invested in stocks. Each portfolio targets a
different mix of investments, as described more fully in the following pages,
and employs an index-based approach to capturing the returns inherent in the
asset categories by investing primarily in Schwab Index Funds.
* The Schwab MarketTrack All Equity Portfolio does not target investing in bonds
or cash.
FUND LISTINGS
The MarketTrack Portfolios 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>
MT AllEq SWEGX
MT Gro SWHGX
MT Bal SWBGX
MT Cons SWCGX
</TABLE>
+ Note that newspaper listings will indicate the previous day's quotation.
CONTENTS
<TABLE>
<S> <C>
---------------------------------------------
A Message from the Chairman 1
---------------------------------------------
What Every Investor Should Know 2
---------------------------------------------
Market Overview 4
---------------------------------------------
Schwab MarketTrack All Equity Portfolio
PORTFOLIO PERFORMANCE 8
PORTFOLIO SNAPSHOT 10
---------------------------------------------
Schwab MarketTrack Growth Portfolio
PORTFOLIO PERFORMANCE 12
PORTFOLIO SNAPSHOT 14
---------------------------------------------
Schwab MarketTrack Balanced Portfolio
PORTFOLIO PERFORMANCE 16
PORTFOLIO SNAPSHOT 18
---------------------------------------------
Schwab MarketTrack Conservative
Portfolio
PORTFOLIO PERFORMANCE 20
PORTFOLIO SNAPSHOT 22
---------------------------------------------
Portfolio Management 24
---------------------------------------------
Portfolio Discussion 25
---------------------------------------------
Glossary 28
---------------------------------------------
Financial Statements and Notes 30
---------------------------------------------
</TABLE>
<PAGE>
A MESSAGE FROM THE CHAIRMAN
[PHOTO]
Dear Shareholder,
During the last few years, the benefits of investing have been readily apparent,
while the risks have been somewhat less obvious. In recent months, however,
investors have been subject to larger swings in the market, even within the span
of a single day.
Given this divergent environment, the message is clear: Expect volatility,
maintain a long-term view and ensure your investment strategy is appropriate for
your risk tolerance and time horizon. One way to lessen the impact of volatility
on your portfolio is to adequately diversify your investments, both within and
across asset sectors, namely cash equivalents, bonds and stocks. With its broad
range of funds, SchwabFunds-Registered Trademark- can help form the foundation
of a diversified investment plan. Our asset allocation funds can even provide
diversification within a single fund.
We recently added four new sector funds, the Schwab Focus Funds, to our
SchwabFunds offering. Each invests in a group of industries within a specific
sector--Communications, Financial Services, Healthcare and Technology--and can
be an effective complement to individual stock investing. Each Focus Fund
concentrates its investing in companies in a specific sector and may involve a
greater degree of risk than an investment in mutual funds with greater
diversification. For more information on the Schwab Focus Funds, please call
1-800-435-4000 and request a prospectus. The prospectus contains more
information on fund fees and expenses as well as risks. Please read it carefully
before investing.
As a leader in online brokerage, we recognize the value of the web as a means of
communicating timely, relevant information to investors. Regular updates on all
the SchwabFunds, including performance data, are available on our Web site at
WWW.SCHWAB.COM/SCHWABFUNDS. We encourage you to take advantage of this valuable
resource.
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.
Sincerely,
/s/ Charles R. Schwab
Charles R. Schwab
April 30, 2000
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 tend not to move in
tandem. 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 Share Shares
Investment 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.)
* Regular investing strategies such as dollar-cost averaging do not assure a
profit or protect against a loss in declining markets. Since such a strategy
involves continuous investment, investors should consider their ability to
continue purchases through periods of low price levels.
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. You can choose to invest as little as $100--twice a month, monthly or
quarterly.(1)
With Schwab MoneyLink-Registered Trademark- electronic funds transfer service,
you can easily request fund transfers between your Schwab account and your
accounts at other financial institutions. You can schedule automatically
recurring transfers for easy long-term savings. Or request a transfer via the
Web, by automated touch-tone phone, or through a Schwab representative anytime,
day or night.
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 on the Automatic Investment Plan
or MoneyLink, please call us at 1-800-435-4000.
WE MAKE IT EASY TO INVEST
We try to make it easy and convenient for you to invest in
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/SCHWABFUNDS; through
our automated touch-tone telephone service, TeleBroker-Registered Trademark-, by
calling 1-800-272-4922; 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 updated fund performance data 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
April 2000 marked the beginning of the tenth year of the current expansion,
making it the longest in U.S. history. Gross Domestic Product (GDP) grew at a
real (inflation adjusted) rate of 4.6% during 1999--the fourth consecutive year
at 4% or more and 5.4% during the first quarter of 2000. This rate is considered
by most economists and the Federal Reserve (Fed) to be in excess of what the
economy can absorb without experiencing inflationary pressures, perhaps 3.5% to
4.0%. High levels of consumer spending fueled by rising incomes, personal wealth
and consumer confidence, as well as strong business capital investment and a
healthy housing sector, have been the principal factors driving this lengthy
expansion.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
REAL GDP GROWTH RATE
Quarterly Percentage Change (Annualized Rate)
<TABLE>
<S> <C>
Q1/90 5.0%
Q2/90 1.0%
Q3/90 -0.6%
Q4/90 -3.0%
Q1/91 -1.7%
Q2/91 2.6%
Q3/91 1.3%
Q4/91 2.5%
Q1/92 4.3%
Q2/92 4.0%
Q3/92 3.1%
Q4/92 5.2%
Q1/93 -0.7%
Q2/93 2.1%
Q3/93 1.5%
Q4/93 6.0%
Q1/94 3.6%
Q2/94 5.7%
Q3/94 2.2%
Q4/94 5.1%
Q1/95 1.5%
Q2/95 0.8%
Q3/95 3.2%
Q4/95 3.3%
Q1/96 2.9%
Q2/96 6.9%
Q3/96 2.2%
Q4/96 4.9%
Q1/97 4.9%
Q2/97 5.1%
Q3/97 4.0%
Q4/97 3.1%
Q1/98 6.7%
Q2/98 2.1%
Q3/98 3.8%
Q4/98 5.9%
Q1/99 3.7%
Q2/99 1.9%
Q3/99 5.7%
Q4/99 7.3%
Q1/00 5.4%
</TABLE>
Source: BLOOMBERG L.P.
Looking ahead, the availability of increasingly scarce labor resources and the
domestic consumers' response to continued stock market volatility may be key
determinants of whether the economy continues on its current course or softens
throughout 2000. The Fed has raised the federal funds rate by 1.75% since June
1999 in an as yet unsuccessful effort to moderate the economy's rapid growth
rate. The consensus of most economists is that the U.S. economy appears poised
for continued strong growth and additional intervention by the Fed (increases in
the federal funds rate) until the growth rate of the economy slows to a more
sustainable level.
UNEMPLOYMENT
The unemployment rate dropped to 3.9% in April 2000, a three-decade low.
Employment growth continues to outstrip population growth. Reflecting a
shrinking pool of available workers, labor markets continue to be extremely
tight in many areas of the country and there has been some regional evidence of
labor shortages driving up wages. The labor force participation rate, which
measures the employment population as a percent of the total population, is at a
post-war high. Growth in the labor force has slowed, and the Fed has expressed
its concern that strong demand and tight labor markets may continue to put
pressure on manufacturers and service providers to raise prices.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
U.S. UNEMPLOYMENT RATE
<TABLE>
<S> <C>
1/90 5.4%
2/90 5.3%
3/90 5.2%
4/90 5.4%
5/90 5.4%
6/90 5.2%
7/90 5.5%
8/90 5.7%
9/90 5.9%
10/90 5.9%
11/90 6.2%
12/90 6.3%
1/91 6.4%
2/91 6.6%
3/91 6.8%
4/91 6.7%
5/91 6.9%
6/91 6.9%
7/91 6.8%
8/91 6.9%
9/91 6.9%
10/91 7.0%
11/91 7.0%
12/91 7.3%
1/92 7.3%
2/92 7.4%
3/92 7.4%
4/92 7.4%
5/92 7.6%
6/92 7.8%
7/92 7.7%
8/92 7.6%
9/92 7.6%
10/92 7.3%
11/92 7.4%
12/92 7.4%
1/93 7.3%
2/93 7.1%
3/93 7.0%
4/93 7.1%
5/93 7.1%
6/93 7.0%
7/93 6.9%
8/93 6.8%
9/93 6.7%
10/93 6.8%
11/93 6.6%
12/93 6.5%
1/94 6.8%
2/94 6.6%
3/94 6.5%
4/94 6.4%
5/94 6.1%
6/94 6.1%
7/94 6.3%
8/94 6.0%
9/94 5.8%
10/94 5.8%
11/94 5.6%
12/94 5.5%
1/95 5.6%
2/95 5.4%
3/95 5.3%
4/95 5.8%
5/95 5.8%
6/95 5.6%
7/95 5.6%
8/95 5.7%
9/95 5.6%
10/95 5.5%
11/95 5.7%
12/95 5.6%
1/96 5.6%
2/96 5.5%
3/96 5.6%
4/96 5.5%
5/96 5.6%
6/96 5.3%
7/96 5.5%
8/96 5.1%
9/96 5.2%
10/96 5.2%
11/96 5.3%
12/96 5.4%
1/97 5.3%
2/97 5.3%
3/97 5.1%
4/97 5.0%
5/97 4.7%
6/97 5.0%
7/97 4.7%
8/97 4.9%
9/97 4.7%
10/97 4.7%
11/97 4.6%
12/97 4.7%
1/98 4.5%
2/98 4.6%
3/98 4.6%
4/98 4.3%
5/98 4.3%
6/98 4.5%
7/98 4.5%
8/98 4.5%
9/98 4.5%
10/98 4.5%
11/98 4.4%
12/98 4.3%
1/99 4.3%
2/99 4.4%
3/99 4.2%
4/99 4.3%
5/99 4.2%
6/99 4.3%
7/99 4.3%
8/99 4.2%
9/99 4.2%
10/99 4.1%
11/99 4.1%
12/99 4.1%
1/00 4.0%
2/00 4.1%
3/00 4.1%
4/00 3.9%
</TABLE>
Source: BLOOMBERG L.P.
4
<PAGE>
INFLATION
Virtually all measures of price inflation exhibited upward trends during the
reporting period. The Consumer Price Index (CPI) rose 3.0% for the year ended
April 30, 2000. Its core rate (which excludes the more volatile food and energy
components) was up 2.2%. The Personal Consumption Expenditures Index, a measure
of inflation closely watched by the Fed, rose 2.3% for the same period. The GDP
price deflator, the broadest measure of inflation, indicated prices rising at an
annual rate of 3.2% during the first quarter of 2000.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
MEASURES OF INFLATION
<TABLE>
<CAPTION>
CONSUMER PRICE INDEX EMPLOYMENT COST-INDEX
12-MONTH CHANGE 12-MONTH CHANGE
(MONTHLY) (QUARTERLY)
<S> <C> <C>
1/90 5.2% 5.5%
2/90 5.3% 5.5%
3/90 5.2% 5.5%
4/90 4.7% 5.4%
5/90 4.4% 5.4%
6/90 4.7% 5.4%
7/90 4.8% 5.2%
8/90 5.6% 5.2%
9/90 6.2% 5.2%
10/90 6.3% 4.9%
11/90 6.3% 4.9%
12/90 6.1% 4.9%
1/91 5.7% 4.6%
2/91 5.3% 4.6%
3/91 4.9% 4.6%
4/91 4.9% 4.6%
5/91 5.0% 4.6%
6/91 4.7% 4.6%
7/91 4.4% 4.3%
8/91 3.8% 4.3%
9/91 3.4% 4.3%
10/91 2.9% 4.3%
11/91 3.0% 4.3%
12/91 3.1% 4.3%
1/92 2.6% 4.0%
2/92 2.8% 4.0%
3/92 3.2% 4.0%
4/92 3.2% 3.6%
5/92 3.0% 3.6%
6/92 3.1% 3.6%
7/92 3.2% 3.5%
8/92 3.1% 3.5%
9/92 3.0% 3.5%
10/92 3.2% 3.5%
11/92 3.0% 3.5%
12/92 2.9% 3.5%
1/93 3.3% 3.5%
2/93 3.2% 3.5%
3/93 3.1% 3.5%
4/93 3.2% 3.6%
5/93 3.2% 3.6%
6/93 3.0% 3.6%
7/93 2.8% 3.6%
8/93 2.8% 3.6%
9/93 2.7% 3.6%
10/93 2.8% 3.5%
11/93 2.7% 3.5%
12/93 2.7% 3.5%
1/94 2.5% 3.2%
2/94 2.5% 3.2%
3/94 2.5% 3.2%
4/94 2.4% 3.2%
5/94 2.3% 3.2%
6/94 2.5% 3.2%
7/94 2.8% 3.2%
8/94 2.9% 3.2%
9/94 3.0% 3.2%
10/94 2.6% 3.0%
11/94 2.7% 3.0%
12/94 2.7% 3.0%
1/95 2.8% 2.9%
2/95 2.9% 2.9%
3/95 2.9% 2.9%
4/95 3.1% 2.9%
5/95 3.2% 2.9%
6/95 3.0% 2.9%
7/95 2.8% 2.7%
8/95 2.6% 2.7%
9/95 2.5% 2.7%
10/95 2.8% 2.7%
11/95 2.6% 2.7%
12/95 2.5% 2.7%
1/96 2.7% 2.8%
2/96 2.7% 2.8%
3/96 2.8% 2.8%
4/96 2.9% 2.9%
5/96 2.9% 2.9%
6/96 2.8% 2.9%
7/96 3.0% 2.8%
8/96 2.9% 2.8%
9/96 3.0% 2.8%
10/96 3.0% 2.9%
11/96 3.3% 2.9%
12/96 3.3% 2.9%
1/97 3.0% 2.9%
2/97 3.0% 2.9%
3/97 2.8% 2.9%
4/97 2.5% 2.8%
5/97 2.2% 2.8%
6/97 2.3% 2.8%
7/97 2.2% 3.0%
8/97 2.2% 3.0%
9/97 2.2% 3.0%
10/97 2.1% 3.3%
11/97 1.8% 3.3%
12/97 1.7% 3.3%
1/98 1.6% 3.3%
2/98 1.4% 3.3%
3/98 1.4% 3.3%
4/98 1.4% 3.5%
5/98 1.7% 3.5%
6/98 1.7% 3.5%
7/98 1.7% 3.7%
8/98 1.6% 3.7%
9/98 1.5% 3.7%
10/98 1.5% 3.4%
11/98 1.5% 3.4%
12/98 1.6% 3.4%
1/99 1.7% 3.0%
2/99 1.6% 3.0%
3/99 1.7% 3.0%
4/99 2.3% 3.2%
5/99 2.1% 3.2%
6/99 2.0% 3.2%
7/99 2.1% 3.1%
8/99 2.3% 3.1%
9/99 2.6% 3.1%
10/99 2.6% 3.4%
11/99 2.6% 3.4%
12/99 2.7% 3.4%
1/00 2.7% 4.3%
2/00 3.2% 4.3%
3/00 3.7% 4.3%
4/00 3.0%
</TABLE>
Source: BLOOMBERG L.P.
Wage inflation also exhibited a marked upward trend during the reporting period.
The Employment Cost Index, a measurement of the cost to employ workers,
including both wages and benefits, rose 4.3% for the year ended March 31, 2000.
Although these rates of price and employment cost inflation may not be
alarmingly high by historical standards, the Fed has demonstrated its resolve to
keep inflation at bay through its communications and its actions (six federal
funds rate increases since June 1999). In particular, the Fed has expressed
concern that if labor markets continue to tighten, increases in wages will
outpace productivity growth and place additional upward pressure on prices. In
such an environment, productivity growth becomes particularly critical, as it
enables companies to pay higher wages without raising prices. Non-farm
productivity grew 3.0% in 1999 and at a 2.4% annualized rate in the first
quarter of 2000--strong gains to be sure, but likely not strong enough to offset
recent increases in employment costs.
ASSET CLASS PERFORMANCE
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ASSET CLASS % RETURNS DURING REPORTING PERIOD
<TABLE>
<CAPTION>
LEHMAN AGGREGATE MSCI-EAFE RUSSELL 2000 S&P 500
BOND INDEX (ND) INDEX SMALL-CAP INDEX INDEX
<S> <C> <C> <C> <C>
11/5/99 0.61% 0.49% 3.23% 0.54%
11/12/99 0.73% 2.02% 4.95% 2.44%
11/19/99 0.32% 3.91% 7.62% 4.35%
11/26/99 0.11% 5.22% 7.08% 3.95%
12/3/99 0.15% 5.26% 8.43% 5.22%
12/10/99 0.78% 6.67% 8.94% 4.10%
12/17/99 -0.30% 6.78% 8.89% 4.39%
12/24/99 -0.61% 10.69% 12.68% 7.13%
12/31/99 -0.51% 12.55% 17.96% 8.04%
1/7/00 -0.57% 7.42% 14.15% 6.00%
1/14/00 -1.03% 10.06% 18.67% 7.74%
1/21/00 -1.19% 7.61% 24.83% 5.99%
1/28/00 -0.52% 7.11% 18.01% 0.02%
2/4/00 -0.39% 9.34% 22.92% 4.81%
2/11/00 -0.68% 9.96% 25.68% 2.07%
2/18/00 -0.15% 8.31% 27.70% -0.95%
2/25/00 0.50% 9.16% 30.29% -1.89%
3/3/00 0.68% 11.46% 40.04% 3.81%
3/10/00 0.48% 11.44% 41.37% 2.77%
3/17/00 1.18% 10.11% 34.58% 7.88%
3/24/00 1.05% 12.27% 34.49% 12.51%
3/31/00 1.68% 12.10% 26.32% 10.49%
4/7/00 2.49% 10.97% 27.26% 11.80%
4/14/00 2.42% 7.09% 6.40% 0.02%
4/21/00 2.33% 6.21% 12.97% 5.77%
4/28/00 1.38% 6.10% 18.72% 7.17%
</TABLE>
Compiled by CHARLES SCHWAB & CO., INC.
As shown on the chart above, equity valuations, especially of the small-cap and
technology stocks, exhibited extreme volatility during the reporting period. The
price/earnings (P/E) ratio for the
5
<PAGE>
MARKET OVERVIEW (continued)
NASDAQ 100 Index fell by 33% in just 14 trading days during March and April.
Remarkably, it remained at levels above 100 even after its precipitous decline.
Reversing a five-year period of relative under performance, small-cap stocks
outperformed both large-cap stocks and international stocks for the six-month
reporting period ended 4/30/00. Small-cap stocks as represented by the Russell
2000-Registered Trademark- Index achieved a total return of 18.7%. Large-cap
stocks, as represented by the S&P 500-Registered Trademark- Index, returned
7.2%.
Dampened by relatively weak foreign currencies, International stocks, as
represented by the Morgan Stanley Capital International Europe, Australia, Far
East (MSCI-EAFE)-Registered Trademark- Index, achieved a return of 6.7% for the
six-month reporting period ending 4/30/00. Reflecting the rise in
intermediate-term interest rates, fixed income returns were generally weak for
the period. Bond returns, as represented by the Lehman Brothers Aggregate Bond
Index, were 1.4% for the six-month reporting period.
U.S. EQUITY VALUATION
The P/E ratio for the S&P 500-Registered Trademark- Index remained at very high
levels during the reporting period and ended the period at a lofty 29.6 times
earnings, slightly less 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
earning potential. Based on other traditional market valuation measures such as
the price-to-book value ratio or dividend yield, the U.S. stock market continues
to remain at record or near record high valuation levels. Reflecting the
extraordinary valuations of the technology sector, the P/E ratio (12 months
trailing) for the NASDAQ 100 Index ended the period at 120.2, as compared to an
average of 67 over the last five years.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
S&P 500 PRICE EARNINGS RATIO
<TABLE>
<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 14.90
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 25.50
Sep/92 24.37
Oct/92 23.94
Nov/92 24.08
Dec/92 24.01
Jan/93 24.20
Feb/93 24.25
Mar/93 24.22
Apr/93 23.20
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 20.10
May/94 20.16
Jun/94 19.76
Jul/94 18.64
Aug/94 18.90
Sep/94 18.26
Oct/94 17.55
Nov/94 16.58
Dec/94 16.98
Jan/95 16.23
Feb/95 16.20
Mar/95 16.50
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 19.30
Jul/96 18.31
Aug/96 18.62
Sep/96 19.75
Oct/96 19.60
Nov/96 21.05
Dec/96 20.70
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 24.00
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 33.90
May/99 32.74
Jun/99 34.70
Jul/99 31.62
Aug/99 31.21
Sep/99 29.90
Oct/99 29.92
Nov/99 30.65
Dec/99 32.53
Jan/00 29.78
Feb/00 28.59
Mar/00 31.50
Apr/00 29.58
</TABLE>
<TABLE>
<S> <C>
30-Year Average 15.8
</TABLE>
Source: BLOOMBERG L.P.
TREASURY BOND YIELDS
Continuing a trend which began in October 1998, both long-term and
intermediate-term rates continued to climb upward during the first three months
of the reporting period. The primary driver of this upward trend was the
continued strong growth of the domestic economy.
6
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
10-YEAR AND 5-YEAR TREASURY BOND YIELDS
<TABLE>
<CAPTION>
TEN-YEAR TREASURY FIVE-YEAR TREASURY
BOND YIELD NOTE YIELD
<S> <C> <C>
10/1/99 5.97% 5.86%
10/8/99 6.03% 5.95%
10/15/99 6.07% 5.97%
10/22/99 6.19% 6.10%
10/29/99 6.02% 5.95%
11/5/99 5.93% 5.86%
11/12/99 5.93% 5.86%
11/19/99 6.06% 5.99%
11/26/99 6.12% 6.05%
12/3/99 6.16% 6.07%
12/10/99 6.07% 5.98%
12/17/99 6.28% 6.19%
12/24/99 6.41% 6.31%
12/31/99 6.44% 6.34%
1/7/00 6.52% 6.41%
1/14/00 6.68% 6.58%
1/21/00 6.77% 6.63%
1/28/00 6.66% 6.66%
2/4/00 6.55% 6.65%
2/11/00 6.60% 6.70%
2/18/00 6.49% 6.68%
2/25/00 6.33% 6.47%
3/3/00 6.39% 6.59%
3/10/00 6.38% 6.60%
3/17/00 6.19% 6.45%
3/24/00 6.19% 6.50%
3/31/00 6.00% 6.31%
4/7/00 5.58% 6.18%
4/14/00 5.58% 6.11%
4/21/00 5.99% 6.24%
4/28/00 6.21% 6.54%
</TABLE>
Source: BLOOMBERG L.P.
Treasury bond yields exhibited an unusual pattern during the second half of the
reporting period. Typically the yield on ten-year treasury securities exceeds
those on five-year securities to compensate investors for the additional
interest rate risk associated with longer duration securities. As shown in the
graph above, late in January, this normal relationship reversed, resulting in
what is referred to as a negative yield curve. This situation is a result of the
accumulating budget surpluses, which are allowing the federal government to
downsize its debt. The Treasury Department announced that it plans to buy back
$30 billion in debt in 2000 starting with longer dated maturities because those
payments carry the steepest interest payment. The anticipated reduction in
supply resulting from this buyback program, as well as scaled back issuance,
increased the price of the longer-term securities and resulted in a reduction in
yields.
INTERNATIONAL PERFORMANCE
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
MSCI-EAFE-Registered Trademark- COUNTRY US$ RETURNS
For the Six-Month Period Ended 4/30/00
<TABLE>
<S> <C>
Belgium -21.4%
Austria -14.3%
Ireland -10.4%
Switzerland -6.0%
Norway -5.6%
New Zealand -1.1%
Australia -0.8%
United Kingdom -0.3%
Singapore 4.8%
Netherlands 5.1%
Portugal 6.0%
Italy 6.2%
Japan 7.8%
Denmark 8.2%
Spain 9.4%
Hong Kong 17.9%
France 21.0%
Germany 21.8%
Sweden 70.7%
Finland 117.5%
</TABLE>
Source: DATASTREAM
The MSCI-EAFE Index gained 6.7% in U.S. dollar terms (excluding reinvested
dividends) during the six-month reporting period. In local currency terms, it
gained 15.6%, reflecting the relative weakness of most foreign currencies
(compared to the dollar) during the period.
The strongest performing countries for the period were Finland, Sweden and
Germany. Those countries with the largest negative returns were Belgium, Austria
and Ireland.
7
<PAGE>
SCHWAB MARKETTRACK ALL EQUITY PORTFOLIO
PORTFOLIO PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 4/30/00
<TABLE>
<CAPTION>
SINCE INCEPTION
SIX MONTHS(1) ONE YEAR (5/19/98)
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------
SCHWAB MARKETTRACK ALL EQUITY
PORTFOLIO(2) 9.28% 15.73% 12.64%
-------------------------------------------------------------------------------------------------------------------
All Equity Composite Index(3,4) 16.29% 23.07% --
-------------------------------------------------------------------------------------------------------------------
S&P 500-Registered Trademark- Index 7.19% 10.13% 15.82%
-------------------------------------------------------------------------------------------------------------------
</TABLE>
National Association of Securities Dealers (NASD) regulations require that we
report fund performance data as of the most recent calendar quarter--in this
case, the quarter ended 3/31/00. As of 3/31/00, the portfolio's six-month, one
year, and since-inception average annual total returns were 19.56% , 26.74% and
15.85%, respectively.
(1) Actual, not annualized, because period is less than one year.
(2) A portion of the fund's expenses was reduced during the reporting period.
Without such reductions, the fund's average annual returns would have been
lower.
(3) The All Equity Composite Index is composed of Morningstar category averages
and is calculated using the following portfolio allocations: 45% large-cap
stocks, 25% small-cap stocks and 30% foreign stocks.
(4) As of 4/30/00, there were 2,297 large-cap funds, 845 small-cap funds and 700
foreign funds tracked by Morningstar. Performance includes changes in price
and reinvestment of dividends and capital gains.
8
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
<TABLE>
<CAPTION>
SCHWAB MARKETTRACK S&P 500 ALL EQUITY
ALL EQUITY PORTFOLIO INDEX COMPOSITE INDEX
<S> <C> <C> <C>
05/20/98 $10,000 $10,000
05/31/98 $9,850 $9,751
06/30/98 $10,050 $10,147 $9,973
07/31/98 $9,810 $10,039 $9,759
08/31/98 $8,330 $8,590 $8,210
09/30/98 $8,610 $9,140 $8,450
10/31/98 $9,280 $9,883 $8,992
11/30/98 $9,800 $10,482 $9,506
12/31/98 $10,303 $11,086 $10,040
01/31/99 $10,483 $11,549 $10,227
02/28/99 $10,041 $11,190 $9,805
03/31/99 $10,383 $11,638 $10,128
04/30/99 $10,896 $12,088 $10,629
05/31/99 $10,664 $11,803 $10,461
06/30/99 $11,197 $12,458 $11,058
07/31/99 $11,137 $12,069 $10,992
08/31/99 $11,056 $12,009 $10,892
09/30/99 $11,006 $11,680 $10,808
10/31/99 $11,539 $12,419 $11,248
11/30/99 $11,971 $12,672 $11,898
12/31/99 $12,885 $13,418 $13,058
01/31/00 $12,162 $12,744 $12,562
02/29/00 $12,498 $12,503 $13,353
03/31/00 $13,159 $13,726 $13,779
04/30/00 $12,610 $13,313 $13,081
</TABLE>
The above graph compares the growth of a hypothetical $10,000 investment in the
Schwab MarketTrack All Equity Portfolio, made at its inception, with a similar
investment in the S&P 500-Registered Trademark- Index and the All Equity
Composite Index. The hypothetical $10,000 investment assumes investment on the
first day of the month following inception and includes changes in share price
and reinvestment of dividends and capital gains.
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 Portfolios. Investors cannot invest in an
index directly.
ASSETS
<TABLE>
<S> <C>
----------------------------------------------------------------------
Total net assets as of 10/31/99 (000s) $202,884
----------------------------------------------------------------------
Total net assets as of 4/30/00 (000s) $329,119
----------------------------------------------------------------------
Percentage growth from 10/31/99 to 4/30/00 62.2%
----------------------------------------------------------------------
</TABLE>
9
<PAGE>
SCHWAB MARKETTRACK ALL EQUITY PORTFOLIO
PORTFOLIO SNAPSHOT
Schwab MarketTrack All Equity Portfolio uses an indexing strategy to invest in
three distinct equity asset classes: large-cap, small-cap and international
stocks. The portfolio's target mix, as illustrated below, is achieved either
directly or through investment in other SchwabFunds-Registered Trademark-. The
portfolio employs an indexing strategy to capture the returns inherent in its
target asset categories. The information below and on the following page
provides a snapshot of the portfolio's characteristics as of 4/30/00, and is not
indicative of its composition after that date. The terms used below are defined
on page 28. A complete list of the securities in the portfolio as of 4/30/00 is
provided in the Schedule of Investments later in this report.
PORTFOLIO FACTS
<TABLE>
<CAPTION>
SCHWAB MARKETTRACK PEER GROUP
ALL EQUITY PORTFOLIO AVERAGE++
<S> <C> <C>
----------------------------------------------------------------------------------------------------------------
Number of Holdings 6** 138
----------------------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) $56,382++ $58,904
----------------------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 33.6++ 35.4
----------------------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 7.5++ 9.5
----------------------------------------------------------------------------------------------------------------
12-Month Yield 0.43%++ 0.45%
----------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 3%* 75%
----------------------------------------------------------------------------------------------------------------
Three-Year Beta N/A++ 0.94
----------------------------------------------------------------------------------------------------------------
Expense Ratio 0.60%+ 1.34%
----------------------------------------------------------------------------------------------------------------
</TABLE>
* Compiled by Charles Schwab & Co., Inc. This information is for illustrative
purposes only and is not intended to show, predict or guarantee future
composition of the Portfolio.
** The Portfolio invests in other SchwabFunds, whereas most funds invest
primarily in individual securities.
+ Reflects a voluntary reduction by Charles Schwab Investment Management, (the
investment adviser) and Schwab, which is guaranteed through at least 2/28/01
(excluding interest, taxes and certain non-routine expenses).
++ Source: Morningstar. The peer group average is based on 2,297 large-cap
funds as tracked by Morningstar.
10
<PAGE>
SCHWAB MARKETTRACK ALL EQUITY PORTFOLIO
ASSET MIX
<TABLE>
<CAPTION>
MIX AS OF
4/30/00 TARGET MIX
<S> <C> <C>
-----------------------------------------------------
U.S. Stocks:
-----------------------------------------------------
Large-Cap 44.0% 45.0%
-----------------------------------------------------
Small-Cap 25.7% 25.0%
-----------------------------------------------------
International Stocks 29.7% 30.0%
-----------------------------------------------------
Short-Term Investments 0.6% --
-----------------------------------------------------
Total Stocks 100.0% 100.0%
-----------------------------------------------------
</TABLE>
Large-cap stocks in the MarketTrack All Equity Portfolio are represented by the
S&P 500-Registered Trademark- Index, a widely recognized, unmanaged index of 500
large-cap stocks selected by Standard & Poors. Small-cap stocks are represented
by 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. International stocks are
represented by 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.
TOP HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS
<TABLE>
<S> <C>
---------------------------------------------------------------------
Schwab S&P 500 Fund-Select Shares 44.0%
---------------------------------------------------------------------
Schwab International Index Fund-Select Shares 29.7%
---------------------------------------------------------------------
Schwab Small-Cap Index Fund-Select Shares 25.7%
---------------------------------------------------------------------
Total 99.4%
---------------------------------------------------------------------
</TABLE>
11
<PAGE>
SCHWAB MARKETTRACK GROWTH PORTFOLIO
PORTFOLIO PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 4/30/00
<TABLE>
<CAPTION>
SINCE INCEPTION
SIX MONTHS(1) ONE YEAR THREE YEARS (11/20/95)
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------
SCHWAB MARKETTRACK GROWTH PORTFOLIO(2) 7.83% 12.57% 17.22% 16.06%
------------------------------------------------------------------------------------------------------------------------
Growth Composite Index II(3,4) 13.10% 18.04% 17.73% --
------------------------------------------------------------------------------------------------------------------------
S&P 500-Registered Trademark- Index 7.19% 10.13% 23.69% 24.06%
------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index 1.42% 1.26% 6.07% 5.62%
------------------------------------------------------------------------------------------------------------------------
</TABLE>
National Association of Securities Dealers (NASD) regulations require that we
report fund performance data as of the most recent calendar quarter--in this
case, the quarter ended 3/31/00. As of 3/31/00, the portfolio's six-month,
one-year and since-inception average annual total returns were 15.96%, 20.96%
and 17.28%, respectively.
(1) Actual, not annualized, because period is less than one year.
(2) A portion of the fund's expenses was reduced during the reporting period.
Without such reductions, the fund's average annual returns would have been
lower.
(3) The Growth Composite Index II is composed of Morningstar category averages
and cash equivalents as represented by the 90-day T-bill and is calculated
using the following portfolio allocations: 40% large-cap stocks, 20%
small-cap stocks, 20% foreign stocks, 15% bonds and 5% cash.
(4) As of 4/30/00, there were 2,297 large-cap funds, 845 small-cap funds, 700
foreign funds and 561 intermediate-term bond funds tracked by Morningstar.
Performance includes changes in price and reinvestment of dividends and
capital gains.
12
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
<TABLE>
<CAPTION>
SCHWAB MARKETTRACK S&P 500 LEHMAN BROTHERS GROWTH COMPOSITE
GROWTH PORTFOLIO INDEX AGGREGATE BOND INDEX INDEX II
<S> <C> <C> <C> <C>
11/20/95 $10,000 $10,000 $10,000
11/30/95 $10,080 $10,104 $10,076
12/31/95 $10,292 $10,299 $10,217 $10,247
01/31/96 $10,442 $10,649 $10,285 $10,411
02/29/96 $10,533 $10,748 $10,106 $10,553
03/31/96 $10,623 $10,852 $10,035 $10,678
04/30/96 $10,803 $11,011 $9,979 $10,982
05/31/96 $10,954 $11,294 $9,959 $11,174
06/30/96 $10,934 $11,337 $10,092 $11,108
07/31/96 $10,523 $10,836 $10,120 $10,638
08/31/96 $10,733 $11,064 $10,102 $10,912
09/30/96 $11,184 $11,686 $10,278 $11,324
10/31/96 $11,324 $12,009 $10,506 $11,386
11/30/96 $11,896 $12,917 $10,686 $11,876
12/31/96 $11,784 $12,661 $10,587 $11,839
01/31/97 $12,008 $13,451 $10,620 $12,151
02/28/97 $12,028 $13,557 $10,646 $12,097
03/31/97 $11,692 $13,001 $10,528 $11,767
04/30/97 $12,038 $13,776 $10,686 $11,974
05/31/97 $12,793 $14,614 $10,787 $12,718
06/30/97 $13,313 $15,268 $10,916 $13,199
07/31/97 $14,087 $16,482 $11,210 $13,911
08/31/97 $13,618 $15,559 $11,115 $13,545
09/30/97 $14,301 $16,410 $11,280 $14,228
10/31/97 $13,853 $15,862 $11,443 $13,731
11/30/97 $14,098 $16,597 $11,496 $13,817
12/31/97 $14,259 $16,882 $11,612 $13,956
01/31/98 $14,410 $17,070 $11,761 $14,046
02/28/98 $15,220 $18,300 $11,751 $14,846
03/31/98 $15,738 $19,237 $11,791 $15,422
04/30/98 $15,846 $19,432 $11,852 $15,568
05/31/98 $15,576 $19,097 $11,965 $15,298
06/30/98 $15,868 $19,873 $12,067 $15,497
07/31/98 $15,555 $19,662 $12,092 $15,218
08/31/98 $13,729 $16,823 $12,289 $13,309
09/30/98 $14,194 $17,901 $12,577 $13,717
10/31/98 $15,080 $19,357 $12,510 $14,407
11/30/98 $15,760 $20,530 $12,581 $15,085
12/31/98 $16,422 $21,712 $12,619 $15,796
01/31/99 $16,718 $22,620 $12,709 $16,066
02/28/99 $16,103 $21,916 $12,486 $15,488
03/31/99 $16,576 $22,793 $12,555 $15,919
04/30/99 $17,224 $23,675 $12,595 $16,552
05/31/99 $16,916 $23,116 $12,484 $16,332
06/30/99 $17,586 $24,399 $12,444 $17,069
07/31/99 $17,465 $23,638 $12,392 $16,944
08/31/99 $17,355 $23,520 $12,386 $16,805
09/30/99 $17,290 $22,875 $12,530 $16,710
10/31/99 $17,982 $24,323 $12,576 $17,274
11/30/99 $18,520 $24,817 $12,575 $18,040
12/31/99 $19,602 $26,279 $12,514 $19,403
01/31/00 $18,730 $24,960 $12,473 $18,812
02/29/00 $19,155 $24,487 $12,624 $19,746
03/31/00 $20,049 $26,883 $12,791 $20,347
04/30/00 $19,389 $26,074 $12,754 $19,538
</TABLE>
The above graph compares the growth of a hypothetical $10,000 investment in the
Schwab MarketTrack Growth Portfolio, made at its inception, with a similar
investment in the S&P 500-Registered Trademark- Index, the Lehman Brothers
Aggregate Bond Index and the Growth Composite Index II. The hypothetical $10,000
investment assumes investment on the first day of the month following inception
and includes changes in share price and reinvestment of dividends and capital
gains.
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 Portfolios. Investors cannot invest in an
index directly.
ASSETS
<TABLE>
<S> <C>
----------------------------------------------------------------------
Total net assets as of 10/31/99 (000s) $427,659
----------------------------------------------------------------------
Total net assets as of 4/30/00 (000s) $527,987
----------------------------------------------------------------------
Percentage growth from 10/31/99 to 4/30/00 23.5%
----------------------------------------------------------------------
</TABLE>
13
<PAGE>
SCHWAB MARKETTRACK GROWTH PORTFOLIO
PORTFOLIO SNAPSHOT
Schwab MarketTrack Growth Portfolio uses an indexing strategy to invest in three
distinct asset classes--stocks, bonds and cash--and further allocates stock
investments between large-cap, small-cap and international. The portfolio's
target mix, as illustrated below, is achieved either directly or through
investment in other SchwabFunds-Registered Trademark-. The portfolio employs an
indexing strategy to capture the returns inherent in its target asset
categories. The information below and on the following page provides a snapshot
of the portfolio's characteristics as of 4/30/00, and is not indicative of its
composition after that date. The terms used below are defined on page 28. A
complete list of the securities in the portfolio as of 4/30/00 is provided in
the Schedule of Investments later in this report.
PORTFOLIO FACTS
<TABLE>
<CAPTION>
SCHWAB MARKETTRACK PEER GROUP AV-
GROWTH PORTFOLIO* ERAGE++
<S> <C> <C>
----------------------------------------------------------------------------------------------------------
Number of Holdings 498** 138
----------------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) 56,441 $58,904
----------------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 34.3 35.4
----------------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 7.7 9.5
----------------------------------------------------------------------------------------------------------
12-Month Yield 1.05%++ 0.45%
----------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 8% 75%
----------------------------------------------------------------------------------------------------------
Three-Year Beta 0.73++ 0.94
----------------------------------------------------------------------------------------------------------
Expense Ratio 0.60%+ 1.34%
----------------------------------------------------------------------------------------------------------
</TABLE>
* Compiled by Charles Schwab & Co., Inc. This information is for illustrative
purposes only and is not intended to show, predict or guarantee future
composition of the Portfolio.
** The Portfolio invests in a combination of other SchwabFunds and individual
securities.
+ Reflects a voluntary reduction by the investment adviser and Schwab, which is
guaranteed through at least 2/28/01 (excluding interest, taxes and certain
non-routine expenses).
++ Source: Morningstar. The peer group average is based on 2,297 large-cap
funds as tracked by Morningstar.
14
<PAGE>
SCHWAB MARKETTRACK GROWTH PORTFOLIO
ASSET MIX
<TABLE>
<CAPTION>
MIX AS OF
4/30/00 TARGET MIX
<S> <C> <C>
------------------------------------------------------------------------------------
U.S. Stocks:
------------------------------------------------------------------------------------
Large-Cap 40.0% 40.0%
------------------------------------------------------------------------------------
Small-Cap 20.7% 20.0%
------------------------------------------------------------------------------------
International Stocks 19.5% 20.0%
------------------------------------------------------------------------------------
Total Stocks 80.2% 80.0%
------------------------------------------------------------------------------------
Bonds 14.6% 15.0%
------------------------------------------------------------------------------------
Short-Term Investments 5.2% 5.0%
------------------------------------------------------------------------------------
Total 100.0% 100.0%
------------------------------------------------------------------------------------
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
EQUITY INVESTMENT STYLE BOX(1)
AS OF 4/30/00
<TABLE>
<CAPTION>
-STYLE-
VALUE BLEND GROWTH -MARKET CAP-
<S> <C> <C> <C>
X Large
Medium
Small
</TABLE>
Large-cap stocks in the MarketTrack Growth Portfolio are represented by the S&P
500-Registered Trademark- Index, small-cap stocks are represented by the Schwab
Small-Cap Index-Registered Trademark-, international stocks are represented by
the Schwab International Index-Registered Trademark-, bonds are represented by
the Lehman Brothers Aggregate Bond Index (this index includes investment-grade
government, corporate and mortgage- and asset-backed bonds that are denominated
in U.S. dollars and have maturities longer than one year), and cash is
represented by the three-month Treasury bill.
TOP 10 HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS(2)
<TABLE>
<S> <C>
--------------------------------------------------------------------
Schwab Small-Cap Index
Fund-Registered Trademark--Select Shares 20.7%
--------------------------------------------------------------------
Schwab International Index
Fund-Registered Trademark--Select Shares 19.5%
--------------------------------------------------------------------
Schwab S&P 500 Fund-Select Shares 17.3%
--------------------------------------------------------------------
Schwab Total Bond Market Index Fund 14.6%
--------------------------------------------------------------------
Schwab Value Advantage Money Fund-Registered Trademark- 4.1%
--------------------------------------------------------------------
General Electric Co. 1.0%
--------------------------------------------------------------------
Cisco Systems, Inc. 0.9%
--------------------------------------------------------------------
Intel Corp. 0.8%
--------------------------------------------------------------------
Microsoft Corp. 0.7%
--------------------------------------------------------------------
Exxon Mobil Corp. 0.5%
--------------------------------------------------------------------
Total 80.1%
--------------------------------------------------------------------
</TABLE>
(1) Source: Morningstar, Inc. The style box illustrates the composition of the
fund's portfolio as of 4/30/00. 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.
(2) Nothing in this report represents a recommendation of a security by the
investment adviser.
15
<PAGE>
SCHWAB MARKETTRACK BALANCED PORTFOLIO
PORTFOLIO PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 4/30/00
<TABLE>
<CAPTION>
SINCE INCEPTION
SIX MONTHS(1) ONE YEAR THREE YEARS (11/20/95)
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------
SCHWAB MARKETTRACK BALANCED PORTFOLIO(2) 6.22% 9.69% 14.30% 13.20%
------------------------------------------------------------------------------------------------------------------------
Balanced Composite Index(3,4) 10.04% 13.47% 14.62% --
------------------------------------------------------------------------------------------------------------------------
S&P 500-Registered Trademark- Index 7.19% 10.13% 23.69% 24.06%
------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index 1.42% 1.26% 6.07% 5.62%
------------------------------------------------------------------------------------------------------------------------
</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 3/31/00. As of 3/31/00, the portfolio's six-month, one-year
and since-inception average annual total returns were 12.37%, 15.91% and 14.15%,
respectively.
(1) Actual, not annualized, because period is less than one year.
(2) A portion of the fund's expenses was reduced during the reporting period.
Without such reductions, the fund's average annual returns would have been
lower.
(3) The Balanced Composite Index is composed of Morningstar category averages
and cash equivalents as represented by the 90-day T-bill and is calculated
using the following portfolio allocations: 30% large-cap stocks, 15%
small-cap stocks, 15% foreign stocks, 35% bonds and 5% cash.
(4) As of 4/30/00, there were 2,297 large-cap funds, 845 small-cap funds,
700 foreign funds and 561 intermediate-term bond funds tracked by
Morningstar. Performance includes changes in price and reinvestment of
dividends and capital gains.
16
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
<TABLE>
<CAPTION>
SCHWAB MARKETTRACK S&P 500 LEHMAN BROTHERS BALANCED
BALANCED PORTFOLIO INDEX AGGREGATE BOND INDEX COMPOSITE INDEX
<S> <C> <C> <C> <C>
11/20/95 $10,000 $10,000 $10,000
11/30/95 $10,080 $10,104 $10,076
12/31/95 $10,270 $10,299 $10,217 $10,239
01/31/96 $10,390 $10,649 $10,285 $10,376
02/29/96 $10,410 $10,748 $10,106 $10,438
03/31/96 $10,460 $10,852 $10,035 $10,515
04/30/96 $10,581 $11,011 $9,979 $10,725
05/31/96 $10,691 $11,294 $9,959 $10,861
06/30/96 $10,711 $11,337 $10,092 $10,843
07/31/96 $10,410 $10,836 $10,120 $10,505
08/31/96 $10,551 $11,064 $10,102 $10,706
09/30/96 $10,912 $11,686 $10,278 $11,054
10/31/96 $11,082 $12,009 $10,506 $11,154
11/30/96 $11,534 $12,917 $10,686 $11,560
12/31/96 $11,415 $12,661 $10,587 $11,510
01/31/97 $11,589 $13,451 $10,620 $11,746
02/28/97 $11,589 $13,557 $10,646 $11,716
03/31/97 $11,334 $13,001 $10,528 $11,446
04/30/97 $11,620 $13,776 $10,686 $11,633
05/31/97 $12,183 $14,614 $10,787 $12,201
06/30/97 $12,593 $15,268 $10,916 $12,582
07/31/97 $13,217 $16,482 $11,210 $13,172
08/31/97 $12,849 $15,559 $11,115 $12,883
09/30/97 $13,391 $16,410 $11,280 $13,415
10/31/97 $13,125 $15,862 $11,443 $13,102
11/30/97 $13,309 $16,597 $11,496 $13,175
12/31/97 $13,443 $16,882 $11,612 $13,304
01/31/98 $13,582 $17,070 $11,761 $13,408
02/28/98 $14,149 $18,300 $11,751 $13,978
03/31/98 $14,523 $19,237 $11,791 $14,398
04/30/98 $14,608 $19,432 $11,852 $14,516
05/31/98 $14,448 $19,097 $11,965 $14,359
06/30/98 $14,672 $19,873 $12,067 $14,525
07/31/98 $14,469 $19,662 $12,092 $14,335
08/31/98 $13,262 $16,823 $12,289 $13,023
09/30/98 $13,668 $17,901 $12,577 $13,391
10/31/98 $14,309 $19,357 $12,510 $13,872
11/30/98 $14,800 $20,530 $12,581 $14,383
12/31/98 $15,281 $21,712 $12,619 $14,906
01/31/99 $15,523 $22,620 $12,709 $15,120
02/28/99 $15,028 $21,916 $12,486 $14,646
03/31/99 $15,369 $22,793 $12,555 $14,979
04/30/99 $15,820 $23,675 $12,595 $15,439
05/31/99 $15,567 $23,116 $12,484 $15,245
06/30/99 $16,018 $24,399 $12,444 $15,750
07/31/99 $15,930 $23,638 $12,392 $15,650
08/31/99 $15,842 $23,520 $12,386 $15,547
09/30/99 $15,853 $22,875 $12,530 $15,518
10/31/99 $16,337 $24,323 $12,576 $15,920
11/30/99 $16,711 $24,817 $12,575 $16,452
12/31/99 $17,420 $26,279 $12,514 $17,371
01/31/00 $16,823 $24,960 $12,473 $16,958
02/29/00 $17,150 $24,487 $12,624 $17,631
03/31/00 $17,815 $26,883 $12,791 $18,084
04/30/00 $17,353 $26,074 $12,754 $17,518
</TABLE>
The above graph compares the growth of a hypothetical $10,000 investment in the
Schwab MarketTrack Balanced Portfolio, made at its inception, with a similar
investment in the S&P 500-Registered Trademark- Index, the Lehman Brothers
Aggregate Bond Index and the Balanced Composite Index. The hypothetical $10,000
investment assumes investment on the first day of the month following inception
and includes changes in share price and reinvestment of dividends and capital
gains.
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 Portfolio. Investors cannot invest in an
index directly.
ASSETS
<TABLE>
<S> <C>
----------------------------------------------------------------------
Total net assets as of 10/31/99 (000s) $403,271
----------------------------------------------------------------------
Total net assets as of 4/30/00 (000s) $462,402
----------------------------------------------------------------------
Percentage growth from 10/31/99 to 4/30/00 14.7%
----------------------------------------------------------------------
</TABLE>
17
<PAGE>
SCHWAB MARKETTRACK BALANCED PORTFOLIO
PORTFOLIO SNAPSHOT
Schwab MarketTrack Balanced Portfolio uses an indexing strategy to invest in
three distinct asset classes-- stocks, bonds and cash--and further allocates
stock investments between large-cap, small-cap and international.
The portfolio's target mix, as illustrated below, is achieved either directly or
through investment in other SchwabFunds-Registered Trademark-. The portfolio
employs an indexing strategy to capture the returns inherent in its target asset
categories. The information below and on the following page provides a snapshot
of the portfolio's characteristics as of 4/30/00, and is not indicative of its
composition after that date. The terms used below are defined on page 28.
A complete list of the securities in the portfolio as of 4/30/00 is provided in
the Schedule of Investments later in this report.
PORTFOLIO FACTS
<TABLE>
<CAPTION>
SCHWAB MARKETTRACK PEER GROUP
BALANCED PORTFOLIO* AVERAGE++
<S> <C> <C>
-------------------------------------------------------------------------------------------------------------------
Number of Holdings 494** 228
-------------------------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) 59,545 $43,966
-------------------------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 34.4 32.1
-------------------------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 8.0 7.9
-------------------------------------------------------------------------------------------------------------------
12-Month Yield 1.82%++ 2.49%
-------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 10% 95%
-------------------------------------------------------------------------------------------------------------------
Three-Year Beta 0.56++ 0.54
-------------------------------------------------------------------------------------------------------------------
Expense Ratio 0.60%+ 1.29%
-------------------------------------------------------------------------------------------------------------------
</TABLE>
* Compiled by Charles Schwab & Co., Inc. This information is for illustrative
purposes only and is not intended to show, predict or guarantee future
composition of the portfolio.
** The portfolio invests in a combination of other SchwabFunds and individual
securities.
+ Reflects a voluntary reduction by the investment adviser and Schwab, which is
guaranteed through at least 2/28/01 (excluding interest, taxes and certain
non-routine expenses).
++ Source: Morningstar. The peer group average is based on 726 domestic hybrid
funds as tracked by Morningstar.
18
<PAGE>
SCHWAB MARKETTRACK BALANCED PORTFOLIO
ASSET MIX
<TABLE>
<CAPTION>
MIX AS OF
4/30/00 TARGET MIX
<S> <C> <C>
------------------------------------------------------------------------------------
U.S. Stocks:
------------------------------------------------------------------------------------
Large-Cap 30.4% 30.0%
------------------------------------------------------------------------------------
Small-Cap 15.5% 15.0%
------------------------------------------------------------------------------------
International Stocks 14.5% 15.0%
------------------------------------------------------------------------------------
Total Stocks 60.4% 60.0%
------------------------------------------------------------------------------------
Bonds 34.5% 35.0%
------------------------------------------------------------------------------------
Short-Term Investments 5.1% 5.0%
------------------------------------------------------------------------------------
Total 100.0% 100.0%
------------------------------------------------------------------------------------
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
EQUITY INVESTMENT STYLE BOX(1)
AS OF 4/30/00
<TABLE>
<CAPTION>
-STYLE-
VALUE BLEND GROWTH -MARKET CAP-
<S> <C> <C> <C>
X Large
Medium
Small
</TABLE>
Large-cap stocks in the MarketTrack Balanced Portfolio are represented by the
S&P 500-Registered Trademark- Index, small-cap stocks are represented by the
Schwab Small-Cap Index-Registered Trademark-, international stocks are
represented by the Schwab International Index-Registered Trademark-, bonds are
represented by the Lehman Brothers Aggregate Bond Index and cash is represented
by the three-month Treasury bill.
TOP 10 HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS(2)
<TABLE>
<S> <C>
--------------------------------------------------------------------
Schwab Total Bond Market Index Fund 34.5%
--------------------------------------------------------------------
Schwab Small-Cap Index
Fund-Registered Trademark--Select Shares 15.5%
--------------------------------------------------------------------
Schwab International Index
Fund-Registered Trademark--Select Shares 14.5%
--------------------------------------------------------------------
Schwab S&P 500 Fund-Select Shares 12.9%
--------------------------------------------------------------------
Schwab Value Advantage Money Fund-Registered Trademark- 4.3%
--------------------------------------------------------------------
General Electric Co. 0.7%
--------------------------------------------------------------------
Cisco Systems, Inc. 0.7%
--------------------------------------------------------------------
Intel Corp. 0.6%
--------------------------------------------------------------------
Microsoft Corp. 0.5%
--------------------------------------------------------------------
Exxon Mobil Corp. 0.4%
--------------------------------------------------------------------
Total 84.6%
--------------------------------------------------------------------
</TABLE>
(1) Source: Morningstar, Inc. The style box illustrates the composition of the
fund's portfolio as of 4/30/00. 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.
(2) Nothing in this report represents a recommendation of a security by the
investment adviser.
19
<PAGE>
SCHWAB MARKETTRACK CONSERVATIVE PORTFOLIO
PORTFOLIO PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 4/30/00
<TABLE>
<CAPTION>
SINCE INCEPTION
SIX MONTHS(1) ONE YEAR THREE YEARS (11/20/95)
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------
SCHWAB MARKETTRACK CONSERVATIVE PORTFOLIO(2) 4.58% 6.68% 11.28% 10.26%
------------------------------------------------------------------------------------------------------------------------
Conservative Composite Index(3,4) 6.98% 8.98% 11.46% --
------------------------------------------------------------------------------------------------------------------------
S&P 500-Registered Trademark- Index 7.19% 10.13% 23.69% 24.06%
------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index 1.42% 1.26% 6.07% 5.62%
------------------------------------------------------------------------------------------------------------------------
</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 3/31/00. As of 3/31/00, the portfolio's six-month, one-year
and since-inception average annual total returns were 8.81%, 10.83% and 10.95%,
respectively.
(1) Actual, not annualized, because period is less than one year.
(2) A portion of the fund's expenses was reduced during the reporting period.
Without such reductions, the fund's average annual returns would have been
lower.
(3) The Conservative Composite Index is composed of Morningstar category
averages and cash equivalents as represented by the 90-day T-bill and is
calculated using the following portfolio allocations: 20% large-cap stocks,
10% small-cap stocks, 10% foreign stocks, 55% bonds and 5% cash.
(4) As of 4/30/00, there were 2,297 large-cap funds, 845 small-cap funds,
700 foreign funds and 561 intermediate-term bond funds tracked by
Morningstar. Performance includes changes in price and reinvestment of
dividends and capital gains.
20
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
<TABLE>
<CAPTION>
SCHWAB MARKETTRACK S&P 500 LEHMAN BROTHERS CONSERVATIVE
CONSERVATIVE PORTFOLIO INDEX AGGREGATE BOND INDEX COMPOSITE INDEX
<S> <C> <C> <C> <C>
11/20/95 $10,000 $10,000 $10,000
11/30/95 $10,080 $10,104 $10,076
12/31/95 $10,237 $10,299 $10,217 $10,230
01/31/96 $10,337 $10,649 $10,285 $10,341
02/29/96 $10,297 $10,748 $10,106 $10,324
03/31/96 $10,287 $10,852 $10,035 $10,352
04/30/96 $10,337 $11,011 $9,979 $10,471
05/31/96 $10,378 $11,294 $9,959 $10,555
06/30/96 $10,439 $11,337 $10,092 $10,582
07/31/96 $10,256 $10,836 $10,120 $10,370
08/31/96 $10,337 $11,064 $10,102 $10,501
09/30/96 $10,643 $11,686 $10,278 $10,785
10/31/96 $10,818 $12,009 $10,506 $10,922
11/30/96 $11,179 $12,917 $10,686 $11,248
12/31/96 $11,070 $12,661 $10,587 $11,186
01/31/97 $11,174 $13,451 $10,620 $11,349
02/28/97 $11,184 $13,557 $10,646 $11,341
03/31/97 $10,965 $13,001 $10,528 $11,127
04/30/97 $11,206 $13,776 $10,686 $11,296
05/31/97 $11,604 $14,614 $10,787 $11,697
06/30/97 $11,896 $15,268 $10,916 $11,985
07/31/97 $12,413 $16,482 $11,210 $12,463
08/31/97 $12,160 $15,559 $11,115 $12,245
09/30/97 $12,540 $16,410 $11,280 $12,639
10/31/97 $12,455 $15,862 $11,443 $12,489
11/30/97 $12,603 $16,597 $11,496 $12,550
12/31/97 $12,698 $16,882 $11,612 $12,669
01/31/98 $12,829 $17,070 $11,761 $12,786
02/28/98 $13,189 $18,300 $11,751 $13,145
03/31/98 $13,418 $19,237 $11,791 $13,425
04/30/98 $13,484 $19,432 $11,852 $13,518
05/31/98 $13,431 $19,097 $11,965 $13,460
06/30/98 $13,595 $19,873 $12,067 $13,597
07/31/98 $13,484 $19,662 $12,092 $13,486
08/31/98 $12,774 $16,823 $12,289 $12,708
09/30/98 $13,139 $17,901 $12,577 $13,037
10/31/98 $13,530 $19,357 $12,510 $13,319
11/30/98 $13,843 $20,530 $12,581 $13,671
12/31/98 $14,166 $21,712 $12,619 $14,023
01/31/99 $14,348 $22,620 $12,709 $14,186
02/28/99 $13,950 $21,916 $12,486 $13,807
03/31/99 $14,200 $22,793 $12,555 $14,049
04/30/99 $14,475 $23,675 $12,595 $14,353
05/31/99 $14,269 $23,116 $12,484 $14,185
06/30/99 $14,521 $24,399 $12,444 $14,483
07/31/99 $14,452 $23,638 $12,392 $14,406
08/31/99 $14,395 $23,520 $12,386 $14,335
09/30/99 $14,464 $22,875 $12,530 $14,363
10/31/99 $14,766 $24,323 $12,576 $14,621
11/30/99 $14,986 $24,817 $12,575 $14,950
12/31/99 $15,398 $26,279 $12,514 $15,491
01/31/00 $15,022 $24,960 $12,473 $15,227
02/29/00 $15,269 $24,487 $12,624 $15,678
03/31/00 $15,738 $26,883 $12,791 $16,006
04/30/00 $15,442 $26,074 $12,754 $15,642
</TABLE>
The above graph compares the growth of a hypothetical $10,000 investment in the
Schwab MarketTrack Conservative Portfolio, made at its inception, with a similar
investment in the S&P 500-Registered Trademark- Index, the Lehman Brothers
Aggregate Bond Index and the Conservative Composite Index. The hypothetical
$10,000 investment assumes investment on the first day of the month following
inception and includes changes in share price and reinvestment of dividends and
capital gains.
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 portfolio. Investors cannot invest in an
index directly.
ASSETS
<TABLE>
<S> <C>
----------------------------------------------------------------------
Total net assets as of 10/31/99 (000s) $167,402
----------------------------------------------------------------------
Total net assets as of 4/30/00 (000s) $181,569
----------------------------------------------------------------------
Percentage growth from 10/31/99 to 4/30/00 8.5%
----------------------------------------------------------------------
</TABLE>
21
<PAGE>
SCHWAB MARKETTRACK CONSERVATIVE PORTFOLIO
PORTFOLIO SNAPSHOT
Schwab MarketTrack Conservative Portfolio uses an indexing strategy to invest in
three distinct asset classes--stocks, bonds and cash--and further allocates
stock investments between large-cap, small-cap and international. The
portfolio's target mix, as illustrated below, is achieved either directly or
through investment in other SchwabFunds-Registered Trademark-. The portfolio
employs an indexing strategy to capture the returns inherent in its target asset
categories. The information below and on the following page provides a snapshot
of the portfolio's characteristics as of 4/30/00, and is not indicative of its
composition after that date. The terms used below are defined on page 28. A
complete list of the securities in the portfolio as of 4/30/00 is provided in
the Schedule of Investments later in this report.
PORTFOLIO FACTS
<TABLE>
<CAPTION>
SCHWAB MARKETTRACK PEER GROUP
CONSERVATIVE PORTFOLIO* AVERAGE++
<S> <C> <C>
-----------------------------------------------------------------------------------------------------------------
Number of Issues 488** 228
-----------------------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) 59,836 $43,966
-----------------------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 34.4 32.1
-----------------------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 8.0 7.9
-----------------------------------------------------------------------------------------------------------------
12-Month Yield 3.11%++ 2.49%
-----------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 10% 95%
-----------------------------------------------------------------------------------------------------------------
Three-Year Beta 0.39++ 0.54
-----------------------------------------------------------------------------------------------------------------
Expense Ratio 0.60%+ 1.29%
-----------------------------------------------------------------------------------------------------------------
</TABLE>
* Compiled by Charles Schwab & Co., Inc. This information is for illustrative
purposes only and is not intended to show, predict or guarantee future
composition of the portfolio.
** The portfolio invests in a combination of other SchwabFunds and individual
securities.
+ Reflects a voluntary reduction by the Investment Adviser and Schwab, which is
guaranteed through at least 2/28/01 (excluding interest, taxes and certain
non-routine expenses).
++ Source: Morningstar. The peer group average is based on 726 domestic hybrid
funds as tracked by Morningstar.
22
<PAGE>
SCHWAB MARKETTRACK CONSERVATIVE PORTFOLIO
ASSET MIX
<TABLE>
<CAPTION>
MIX AS OF
4/30/00 TARGET MIX
<S> <C> <C>
--------------------------------------------------
U.S. Stocks:
--------------------------------------------------
Large-Cap 20.5% 20.0%
--------------------------------------------------
Small-Cap 10.5% 10.0%
--------------------------------------------------
International Stocks 9.6% 10.0%
--------------------------------------------------
Total Stocks 40.6% 40.0%
--------------------------------------------------
Bonds 54.4% 55.0%
--------------------------------------------------
Short-Term Investments 5.0% 5.0%
--------------------------------------------------
Total 100.0% 100.0%
--------------------------------------------------
</TABLE>
Large-cap stocks in the MarketTrack Conservative Portfolio are represented by
the S&P 500-Registered Trademark- Index, small-cap stocks are represented by the
Schwab Small-Cap Index-Registered Trademark-, international stocks are
represented by the Schwab International Index-Registered Trademark-, bonds are
represented by the Lehman Brothers Aggregate Bond Index and cash is represented
by the three-month Treasury bill.
TOP 10 HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS(1)
<TABLE>
<S> <C>
--------------------------------------------------------------------
Schwab Total Bond Market Index Fund 54.4%
--------------------------------------------------------------------
Schwab Small-Cap Index
Fund-Registered Trademark--Select Shares 10.5%
--------------------------------------------------------------------
Schwab S&P 500 Fund-Select Shares 10.0%
--------------------------------------------------------------------
Schwab International Index
Fund-Registered Trademark--Select Shares 9.6%
--------------------------------------------------------------------
Schwab Value Advantage Money Fund-Registered Trademark- 4.1%
--------------------------------------------------------------------
General Electric Co. 0.4%
--------------------------------------------------------------------
Cisco Systems, Inc. 0.4%
--------------------------------------------------------------------
Intel Corp. 0.4%
--------------------------------------------------------------------
Microsoft Corp. 0.3%
--------------------------------------------------------------------
Exxon Mobil Corp. 0.2%
--------------------------------------------------------------------
Total 90.3%
--------------------------------------------------------------------
</TABLE>
(1) Nothing in this report represents a recommendation of a security by the
investment adviser.
23
<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 equity securities in the
MarketTrack Portfolios. Geri joined CSIM in March 1995 as portfolio manager and
was promoted to her current position in December 1996. She currently manages
approximately $19 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 Management Group for
Wells Fargo Nikko.
KIMON DAIFOTIS--vice president and senior portfolio manager, has primary
responsibility for the day-to-day management of the bonds and cash equivalents
securities in the MarketTrack Portfolios. Kimon joined CSIM in his current
capacity in October 1997. In addition to the MarketTrack Portfolios, he manages
two bond index funds and the YieldPlus Fund. He was previously with Lehman
Brothers, most recently as vice president of fixed income institutional sales
and, prior to that, senior portfolio strategist.
24
<PAGE>
PORTFOLIO DISCUSSION
QUESTIONS TO THE
PORTFOLIO MANAGEMENT TEAM
Q. HOW DID THE FOUR SCHWAB MARKETTRACK PORTFOLIOS-TM- PERFORM DURING THE
REPORTING PERIOD?
A. As discussed in the MARKET OVERVIEW section and detailed in the table below,
there was a wide range of returns for the various asset classes during the
reporting period. Equities in general, and small-cap domestic equities in
particular, emerged to be the best performing major asset class. As a result,
the primary factor determining the relative performance of the four MarketTrack
portfolios was the portion of the portfolio allocated to equity investments. As
shown in the table below, the portfolios with the greatest exposure to equity
investments had the highest returns. The portfolios with the greatest exposure
to fixed income investments had lower returns on a relative basis.
Because the MarketTrack Portfolios are designed to incorporate a mix of
different asset classes, their returns over any given period are expected to lag
the return of the strongest performing asset class. Conversely, the returns of
the MarketTrack Portfolios are expected to exceed that of the worst performing
asset class for any given period. By dampening the return volatility of any
single asset class, the MarketTrack Portfolios are designed to provide more
stable returns throughout market cycles which, on a risk-adjusted basis, are
expected to be favorable over extended periods of time.
<TABLE>
<CAPTION>
SIX-MONTHS
RETURN AS OF
ASSET CLASS INDEX(1) 04/30/00
<S> <C> <C>
-------------------------------------------------------------------------------------------------
Large-Cap Stocks S&P 500-Registered Trademark- Index 7.19%
-------------------------------------------------------------------------------------------------
Small-Cap Stocks Russell 2000-Registered Trademark- Index 18.72%
-------------------------------------------------------------------------------------------------
International Stocks MSCI-EAFE-Registered Trademark- Index 6.72%
-------------------------------------------------------------------------------------------------
Bonds Lehman Aggregate Bond Index 1.42%
-------------------------------------------------------------------------------------------------
Cash Three-Month Treasury Bill 2.86%
-------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
EQUITY/FIXED SIX-MONTHS
INCOME RETURN AS OF
MARKETTRACK FUND TARGET MIX 04/30/00
<S> <C> <C>
----------------------------------------------------
All Equity Portfolio 100/0 9.28%
----------------------------------------------------
Growth Portfolio 80/20 7.83%
----------------------------------------------------
Balanced Portfolio 60/40 6.22%
----------------------------------------------------
Conservative Portfolio 40/60 4.58%
----------------------------------------------------
</TABLE>
(1) The S&P Index is composed of 500 large-company common stocks representing
key industries, including many from the most recognizable companies on the
United States. The Schwab Small-Cap Index includes the second-largest 1,000
publicly traded companies in the United States. The Schwab International
Index includes the stocks of 350 of the largest publicly traded non-U.S.
companies from countries with developed securities markets. The Lehman
Aggregate Bond Index includes fixed-rate debt issues rated investment grade
or higher.
Q. DO THE MARKETTRACK PORTFOLIOS USE TAX-SMART STRATEGIES?
A. Yes. The MarketTrack Portfolios employ several management techniques that are
designed to minimize capital gain distributions. First, they follow an indexing
strategy by investing directly in index securities or index funds, which helps
them keep their portfolio turnover low and thereby minimizes realized capital
gains. Secondly, when securities need to be sold--either to raise cash for
portfolio redemptions or when an index is rebalanced--the MarketTrack
25
<PAGE>
PORTFOLIO DISCUSSION (continued)
Portfolios or the underlying index funds generally will attempt to sell the
shares with the highest tax basis to minimize capital gains. Finally, the
investment managers strive to use efficient trading practices, which help to
keep portfolio turnover down.
Q. CAN YOU PROVIDE AN EXAMPLE OF HOW ASSET ALLOCATION REDUCES PORTFOLIO
VOLATILITY?
A. Adding bonds and cash equivalents to a stock portfolio can help reduce its
overall risk. Three of the four MarketTrack Portfolios (all except the All
Equity Portfolio) use this approach. The following chart displays the high, low,
and average annual returns from 1970 to 1999 for five hypothetical portfolios
representing the returns of stocks and bonds(1). As the chart demonstrates,
adding bonds to a stock-heavy portfolio would have reduced risk while still
producing competitive returns.
A portfolio comprising 40% bonds and 60% stocks, for example, achieved an
average annual return of 11.97%--roughly 1.75% less than the 13.72% return of
the all-stock portfolio--and with significantly less volatility. The lowest
annual return of the portfolio invested 40% in bonds and 60% in stocks, which
was actually a loss of 13.60%, was about half of the 26.47% loss in the
all-stock portfolio. This hypothetical example is for illustrative purposes
only, and past performance does not guarantee future results.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
THE EFFECTS OF ADDING BONDS TO AN ALL-STOCK PORTFOLIO
Hypothetical Portfolios: 1970-1999
High, Low and Average Annual Returns for Portfolio Compositions
<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURN HIGHEST ANNUAL RETURN LOWEST ANNUAL RETURN
<S> <C> <C> <C>
100% Stocks 13.72% 37.43% -26.47%
90% Stocks /10% Bonds 13.32% 35.37% -23.25%
80% Stocks/20% Bonds 12.89% 33.30% -20.04%
70% Stocks/30% Bonds 12.44% 31.24% -16.82%
60% Stocks/40% Bonds 11.97% 29.18% -13.60%
</TABLE>
(1) The returns do not reflect actual investment in any security. The
hypothetical returns are all weighted averages and assume reinvestment of
dividends. The indices represented are the S&P 500-Registered Trademark-
Index and the Ibbotson Intermediate Government Bond Index. Indices are
unmanaged, do not incur costs and expenses, and cannot be invested in
directly.
26
<PAGE>
Q. WHY DOES INVESTING IN ALL THE MAJOR ASSET CLASSES MAKE SENSE?
A. The following chart shows the performance of large-cap, small-cap, and
international stocks over nine non-overlapping three-year periods spanning 1975
through 1999. The chart shows that the performance of the various asset classes
varied considerably. Sometimes large-caps performed better than small-caps and
sometimes the opposite occurred. Some international stocks performed better than
domestic stocks and sometimes vice versa. These shifting results are driven by
the fact that different asset classes tended to take turns leading the market
and these "performance cycles" have varied in length and magnitude. While these
cycles may not be entirely random, predicting them can prove to be very
difficult. By investing in several asset classes, you can participate in the
long-term return performance of the various classes, reduce portfolio volatility
(compared to investing in just one asset class) and avoid the entire issue of
trying to predict which asset class will be the next winner.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
WHY DIVERSIFY?
Non-Overlapping, Three-Year Intervals
Three-Years Ended
<TABLE>
<CAPTION>
LARGE-CAP STOCKS SMALL-CAP STOCKS INTERNATIONAL STOCKS
<S> <C> <C> <C>
12/75 -4.87% -9.15% -2.88%
12/78 6.99% 28.49% 18.50%
12/81 14.25% 26.05% 9.35%
12/84 16.49% 16.47% 10.04%
12/87 18.11% 8.61% 49.29%
12/90 14.15% 4.73% 3.05%
12/93 15.63% 28.29% 9.65%
12/96 19.66% 14.94% 8.64%
12/99 27.56% 17.85% 16.06%
</TABLE>
(1) The returns do not reflect actual investment in any security. The
hypothetical returns are all weighted averages and assume reinvestment of
dividends. The indices represented are the S&P 500-Registered Trademark-
Index and the Ibbotson Intermediate Government Bond Index. Indices are
unmanaged, do not incur costs and expenses, and cannot be invested in
directly.
27
<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.
28
<PAGE>
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.
29
<PAGE>
Schwab MarketTrack All Equity Portfolio
Schedule of Investments
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
Investment Funds-- 99.5%
Schwab International Index Fund,
Select Shares 5,173,183 $ 97,928
Schwab S&P 500 Fund,
Select Shares 6,457,219 145,029
Schwab Small-Cap Index Fund,
Select Shares 4,176,102 84,608
---------
Total Investment Funds
(Cost $287,907) 327,565
---------
Par
(000s)
-------
U.S. Treasury Obligations-- 0.0%
U.S. Treasury Bill (a)(b)
5.66%-5.71%, 06/15/00 $ 80 80
---------
Total U.S. Treasury Obligations
(Cost $80) 80
---------
Number Value
of Shares (000s)
--------- ---------
Short-Term Investments-- 0.7%
Grand Cayman Time Deposit
5.44%*, 05/01/00 2,117,921 $ 2,118
---------
Total Short-Term InvestmentS
(Cost $2,118) 2,118
---------
Total Investments-- 100.2%
(Cost $290,105) 329,763
---------
OTHER ASSETS AND LIABILITIES, NET-- (0.2%)
Other assets 582
Liabilities (1,226)
---------
(644)
---------
TOTAL Net Assets-- 100.0% $329,119
---------
</TABLE>
See accompanying Notes to Schedules of Investments and Notes to Financial
Statements.
30
<PAGE>
Schwab MarketTrack Growth Portfolio
Schedule of Investments
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
Common Stock-- 22.9%
Aerospace / Defense-- 0.2%
B.F. Goodrich Co. 1,100 $ 35
Boeing Co. 8,578 340
General Dynamics Corp. 2,000 117
Lockheed Martin Corp. 3,900 97
Northrop Grumman Corp. 700 50
Raytheon Co., Class B 3,400 75
Rockwell International Corp. 1,900 75
Textron, Inc. 1,500 93
TRW, Inc. 1,300 76
United Technologies Corp. 4,600 286
---------
1,244
---------
Air Transportation-- 0.1%
AMR Corp.+ 1,500 51
Delta Air Lines, Inc. 1,300 69
FedEx Corp.+ 2,920 110
Southwest Airlines Co. 4,987 108
U.S. Airways Group, Inc.+ 1,000 28
---------
366
---------
Alcoholic Beverages-- 0.1%
Adolph Coors Co., Class B 400 20
Anheuser-Busch Cos., Inc. 4,500 318
Brown-Forman Corp., Class B 700 38
---------
376
---------
Apparel-- 0.0%
Liz Claiborne, Inc. 600 28
Nike, Inc., Class B 2,800 122
Russell Corp. 200 4
Springs Industries, Inc. 300 12
VF Corp. 1,200 34
---------
200
---------
Automotive Products / Motor Vehicles-- 0.3%
Cooper Tire & Rubber Co. 500 7
Cummins Engine Co., Inc. 400 14
Dana Corp. 1,578 48
Danaher Corp. 1,400 80
Delphi Automotive Systems Corp. 5,743 110
Eaton Corp. 700 59
Ford Motor Co. 11,900 651
Number Value
of Shares (000s)
--------- ---------
General Motors Corp. 6,300 $ 590
Genuine Parts Co. 1,800 47
Goodyear Tire & Rubber Co. 1,600 44
Harley-Davidson, Inc. 3,000 119
Navistar International Corp.+ 700 24
---------
1,793
--------
Banks-- 1.1%
AmSouth Bancorp 3,900 57
Bank of America Corp. 16,848 826
Bank of New York Co., Inc. 7,300 300
Bank One Corp. 11,375 347
BB&T Corp. 3,300 88
Chase Manhattan Corp. 7,980 575
Comerica, Inc. 1,500 64
Fifth Third Bancorp 3,025 191
First Union Corp. 9,684 309
Firstar Corp. 9,618 239
Fleet Boston Financial Corp. 8,974 318
Huntington Bancshares, Inc. 2,057 38
J.P. Morgan & Co., Inc. 1,700 218
KeyCorp, Inc. 4,400 81
Mellon Financial Corp. 5,200 167
National City Corp. 6,100 104
Northern Trust Corp. 2,200 141
Old Kent Financial Corp. 1,200 36
PNC Financial Services Group 2,800 122
Providian Financial Corp. 1,450 128
Regions Financial Corp. 2,100 43
SouthTrust Corp. 1,700 41
State Street Corp. 1,500 145
Summit Bancorp 1,800 46
SunTrust Banks, Inc. 3,100 157
Synovus Financial Corp. 2,750 51
U.S. Bancorp 7,150 145
Union Planters Corp. 1,300 37
Wachovia Corp. 1,900 119
Wells Fargo & Co. 16,250 667
---------
5,800
---------
Business Machines & Software-- 3.8%
3Com Corp.+ 3,300 130
Adaptec, Inc.+ 1,000 27
Adobe Systems, Inc. 1,200 145
Apple Computer, Inc.+ 1,600 198
</TABLE>
31
<PAGE>
Schwab MarketTrack Growth Portfolio
Schedule of Investments (continued)
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
Autodesk, Inc. 600 $ 23
BMC Software, Inc.+ 2,400 112
Cabletron Systems, Inc.+ 1,800 41
Ceridian Corp.+ 1,456 32
Cisco Systems, Inc.+ 66,900 4,638
Compaq Computer Corp. 16,764 490
Compuware Corp.+ 3,600 45
Comverse Technology, Inc.+ 1,400 125
Dell Computer Corp.+ 25,100 1,258
EMC Corp.+ 9,893 1,375
Gateway, Inc.+ 3,100 171
Hewlett-Packard Co. 9,800 1,323
IKON Office Solutions, Inc. 1,000 6
International Business
Machines Corp. 17,600 1,965
Lexmark International
Group, Inc., Class A+ 1,300 153
Microsoft Corp.+ 50,900 3,550
NCR Corp.+ 1,000 39
Network Appliance, Inc.+ 2,800 207
Novell, Inc.+ 3,200 63
Oracle Corp.+ 27,224 2,176
Pitney Bowes, Inc. 2,700 110
Seagate Technology, Inc.+ 2,168 110
Silicon Graphics, Inc.+ 1,476 11
Sun Microsystems, Inc.+ 15,400 1,416
Unisys Corp.+ 3,100 72
Xerox Corp. 6,600 174
---------
20,185
---------
Business Services-- 1.0%
Allied Waste Industries, Inc.+ 1,900 12
America Online, Inc.+ 22,100 1,322
Automatic Data Processing, Inc. 6,200 334
Citrix Systems, Inc.+ 1,800 110
Computer Associates
International, Inc. 5,325 297
Computer Sciences Corp.+ 1,680 137
Deluxe Corp. 700 18
Dun & Bradstreet Corp. 1,500 45
Ecolab, Inc. 1,400 55
Electronic Data Systems Corp. 4,600 316
Number Value
of Shares (000s)
--------- ---------
Equifax, Inc. 1,200 $ 29
First Data Corp. 4,200 204
H&R Block, Inc. 1,000 42
IMS Health, Inc. 3,000 51
Interpublic Group of Cos., Inc. 2,700 111
National Service Industries, Inc. 500 11
Omnicom Group, Inc. 1,800 164
Parametric Technology Corp.+ 2,700 22
Paychex, Inc. 2,400 126
PeopleSoft, Inc.+ 2,300 32
Shared Medical Systems Corp. 300 12
Tyco International Ltd. 16,652 765
VERITAS Software Corp.+ 3,800 408
Waste Management, Inc. 6,117 97
Yahoo!, Inc.+ 5,100 664
Young & Rubicam, Inc. 700 39
---------
5,423
---------
Chemical-- 0.4%
Air Products & Chemicals, Inc. 2,300 71
Dow Chemical Co. 2,200 249
E. I. du Pont de Nemours & Co. 10,292 488
Eastman Chemical Co. 800 42
Great Lakes Chemical Corp. 600 16
Hercules, Inc. 900 14
Minnesota Mining &
Manufacturing Co. 3,900 337
Pharmacia Corp. 12,269 613
PPG Industries, Inc. 1,800 98
Praxair, Inc. 1,600 71
Rohm & Haas Co. 2,205 79
Sigma-Aldrich Corp. 900 26
Union Carbide Corp. 1,300 77
---------
2,181
---------
Construction-- 0.1%
Armstrong Holdings, Inc.+ 500 10
Centex Corp. 600 14
Fluor Corp. 700 23
Kaufman & Broad Home Corp. 200 4
Masco Corp. 4,400 99
Owens Corning 400 7
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
Pulte Corp. 200 4
Sherwin-Williams Co. 1,400 35
The Stanley Works 800 24
Vulcan Materials Co. 1,000 44
---------
264
---------
Consumer - Durable-- 0.0%
Black & Decker Corp. 900 38
Leggett & Platt, Inc. 2,000 43
Maytag Corp. 900 31
Whirlpool Corp. 800 52
---------
164
---------
Consumer - Nondurable-- 0.2%
American Greetings Corp., Class A 500 9
Darden Restaurants, Inc. 1,200 22
Fortune Brands, Inc. 1,600 40
Harcourt General, Inc. 800 30
Hasbro, Inc. 1,650 26
Jostens, Inc. 200 5
Mattel, Inc. 4,150 51
McDonald's Corp. 13,400 511
Newell Rubbermaid, Inc. 2,745 69
Tricon Global Restaurants, Inc.+ 1,560 53
Tupperware Corp. 400 8
Wendy's International, Inc. 1,000 22
---------
846
---------
Containers-- 0.0%
Ball Corp. 200 6
Bemis Co., Inc. 500 18
Crown Cork & Seal Co., Inc. 1,000 16
Owens-Illinois, Inc.+ 1,500 20
Pactiv Corp.+ 1,400 11
Sealed Air Corp.+ 782 43
---------
114
---------
Electronics-- 2.8%
ADC Telecommunications, Inc.+ 3,000 182
Advanced Micro Devices, Inc.+ 1,420 125
Altera Corp.+ 1,540 157
Analog Devices, Inc.+ 3,400 261
Number Value
of Shares (000s)
--------- ---------
Andrew Corp.+ 850 $ 25
Applied Materials, Inc.+ 7,400 753
Conexant Systems, Inc.+ 1,900 114
Intel Corp. 32,600 4,134
ITT Industries, Inc. 900 28
KLA-Tencor Corp.+ 1,800 135
Linear Technology Corp. 3,000 171
LSI Logic Corp.+ 3,000 187
Lucent Technologies, Inc. 31,092 1,934
Micron Technology, Inc.+ 2,700 376
Molex, Inc. 1,875 103
Motorola, Inc. 6,977 831
National Semiconductor Corp.+ 1,700 103
Nextel Communications, Inc.,
Class A+ 3,600 394
Nortel Networks Corp. 14,160 1,604
PE Corp.-PE Biosystems Group 2,000 120
PerkinElmer, Inc. 500 27
QUALCOMM, Inc.+ 7,200 781
Scientific-Atlanta, Inc. 1,600 104
Solectron Corp.+ 5,800 272
Tektronix, Inc. 450 26
Tellabs, Inc.+ 4,000 219
Teradyne, Inc.+ 1,700 187
Texas Instruments, Inc. 7,900 1,287
Thermo Electron Corp.+ 1,300 25
Thomas & Betts Corp. 481 15
Xilinx, Inc.+ 3,200 234
---------
14,914
---------
Energy - Raw Materials-- 0.2%
Anadarko Petroleum Corp. 1,200 52
Apache Corp. 1,100 53
Baker Hughes, Inc. 3,160 101
Burlington Resources, Inc. 2,105 83
Eastern Enterprises 100 6
Halliburton Co. 4,358 193
McDermott International, Inc. 300 2
Occidental Petroleum Corp. 3,600 77
Rowan Cos., Inc.+ 800 22
Schlumberger Ltd. 5,400 413
---------
1,002
---------
</TABLE>
33
<PAGE>
Schwab MarketTrack Growth Portfolio
Schedule of Investments (continued)
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
Food & Agriculture-- 0.6%
Archer-Daniels Midland Co. 5,925 $ 59
Bestfoods, Inc. 2,800 141
Campbell Soup Co. 4,200 109
Coca-Cola Co. 24,100 1,134
Coca-Cola Enterprises, Inc. 4,000 85
ConAgra, Inc. 4,900 92
General Mills, Inc. 3,026 110
H.J. Heinz Co. 3,400 116
Hershey Foods Corp. 1,500 68
Kellogg Co. 3,900 95
Nabisco Group Holdings Corp. 3,200 41
PepsiCo, Inc. 14,400 528
Quaker Oats Co. 1,400 91
Ralston-Ralston Purina Group 3,100 55
Sara Lee Corp. 9,000 135
SUPERVALU, Inc. 1,400 29
SYSCO Corp. 3,300 124
Unilever NV 5,714 260
Wm. Wrigley Jr. Co. 1,100 80
---------
3,352
---------
Gold-- 0.0%
Barrick Gold Corp. 3,900 66
Homestake Mining Co. 2,600 16
Newmont Mining Corp. 1,701 40
Placer Dome, Inc. 3,200 26
---------
148
---------
Healthcare / Drugs & Medicine-- 2.2%
Abbott Laboratories 15,000 577
Aetna, Inc. 1,424 82
Allergan, Inc. 1,300 77
ALZA Corp.+ 800 35
American Home Products Corp. 12,700 714
Amgen, Inc.+ 10,100 566
Bausch & Lomb, Inc. 600 36
Baxter International, Inc. 2,800 182
Becton, Dickinson & Co. 2,600 67
Biogen, Inc.+ 1,500 88
Biomet, Inc. 1,100 39
Boston Scientific Corp.+ 4,074 108
Bristol-Myers Squibb Co. 19,400 1,017
C.R. Bard, Inc. 400 17
Cardinal Health, Inc. 2,800 154
Columbia / HCA Healthcare Corp. 5,600 159
Number Value
of Shares (000s)
--------- ---------
Eli Lilly & Co. 10,600 $ 820
Guidant Corp.+ 3,000 172
HealthSouth Corp.+ 3,452 28
Humana, Inc.+ 1,400 11
Johnson & Johnson 13,700 1,130
Mallinckrodt, Inc. 700 19
Manor Care, Inc.+ 1,100 13
McKesson HBOC, Inc. 2,654 45
Medtronic, Inc. 11,800 613
Merck & Co., Inc. 22,800 1,585
Pfizer, Inc. 37,800 1,592
Quintiles Transnational Corp.+ 1,200 17
Schering-Plough Corp. 14,500 585
St. Jude Medical, Inc.+ 725 23
Tenet Healthcare Corp.+ 3,100 79
UnitedHealth Group, Inc. 1,700 113
Warner-Lambert Co. 8,400 956
Watson Pharmaceuticals, Inc.+ 1,000 45
Wellpoint Health Networks, Inc.+ 700 52
---------
11,816
---------
Household Products-- 0.3%
Alberto-Culver Co., Class B 600 14
Avon Products, Inc. 2,400 100
Clorox Co. 2,200 81
Colgate-Palmolive Co. 5,800 331
Gillette Co. 10,600 392
International Flavors &
Fragrances, Inc. 1,100 38
Procter & Gamble Co. 13,000 775
---------
1,731
---------
Insurance-- 0.7%
AFLAC, Inc. 2,600 127
Allstate Corp. 7,900 187
American General Corp. 2,510 141
American International
Group, Inc. 15,097 1,656
Aon Corp. 2,625 71
Chubb Corp. 1,700 108
CIGNA Corp. 1,600 128
Cincinnati Financial Corp. 1,800 73
Conseco, Inc. 3,220 18
Hartford Financial Services
Group, Inc. 2,200 115
Jefferson-Pilot Corp. 1,075 72
Lincoln National Corp. 1,900 66
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
Loew's Corp. 1,000 $ 55
Marsh & McLennan Cos., Inc. 2,600 256
MBIA, Inc. 900 44
MGIC Investment Corp. 1,200 57
Progressive Corp. 700 46
SAFECO Corp. 1,100 24
St. Paul Cos., Inc. 2,450 87
Torchmark Corp. 1,100 28
UnumProvident Corp. 2,349 40
---------
3,399
---------
Media-- 0.9%
CBS Corp.+ 7,448 438
Clear Channel
Communications, Inc.+ 3,300 238
Comcast Corp., Class A+ 9,100 365
Dow Jones & Co., Inc. 800 52
Gannett Co., Inc. 2,700 172
Knight-Ridder, Inc. 900 44
McGraw-Hill Cos., Inc. 2,000 105
MediaOne Group, Inc.+ 6,000 454
Meredith Corp. 500 14
New York Times Co., Class A 1,700 70
R.R. Donnelley & Sons Co. 1,200 25
Seagram Co. Ltd. 4,300 232
Time Warner, Inc. 12,500 1,124
Tribune Co. 2,300 89
Viacom, Inc., Class B+ 6,900 375
Walt Disney Co. 20,319 880
---------
4,677
---------
Miscellaneous Finance-- 1.2%
American Express Co. 4,400 660
Associates First Capital Corp. 7,242 161
Bear Stearns Cos., Inc. 1,182 51
Capital One Financial Corp. 1,800 79
Charles Schwab Corp. 8,050 358
Citigroup, Inc. 32,911 1,956
Countrywide Credit
Industries, Inc. 1,100 30
Fannie Mae 10,100 609
Franklin Resources, Inc. 2,500 81
Freddie Mac 6,900 317
Golden West Financial Corp. 1,600 55
Household International, Inc. 4,759 199
Lehman Brothers Holdings, Inc. 1,200 98
Number Value
of Shares (000s)
--------- ---------
MBNA Corp. 7,900 $ 210
Merrill Lynch & Co., Inc. 3,700 377
Morgan Stanley Dean Witter
Discover & Co. 11,000 844
Paine Webber Group, Inc. 1,400 61
Sabre Group Holdings, Inc.+ 1,283 45
SLM Holding Corp. 1,700 53
T. Rowe Price Associates, Inc. 1,200 46
Washington Mutual, Inc. 5,655 145
---------
6,435
---------
Non-Ferrous Metals-- 0.1%
Alcan Aluminum Ltd. 2,214 73
Alcoa, Inc. 3,600 234
Engelhard Corp. 1,300 23
Freeport-McMoRan Copper &
Gold, Inc., Class B+ 1,700 16
Inco Ltd.+ 1,900 30
Phelps Dodge Corp. 810 37
Reynolds Metals Co. 600 40
---------
453
---------
Oil - Domestic-- 0.2%
Amerada Hess Corp. 1,000 64
Ashland, Inc. 800 27
Conoco, Inc., Class B 6,300 157
Kerr-McGee Corp. 869 45
Phillips Petroleum Co. 2,400 114
Sunoco, Inc. 900 27
Tosco Corp. 1,500 48
Transocean Sedco Forex, Inc. 2,045 96
Union Pacific Resources
Group, Inc. 2,239 43
Unocal Corp. 2,400 78
USX-Marathon Group, Inc. 3,100 72
---------
771
---------
Oil - International-- 0.9%
Chevron Corp. 6,500 553
Exxon Mobil Corp. 33,729 2,620
Royal Dutch Petroleum Co.--
Sponsored ADR 20,900 1,199
Texaco, Inc. 5,361 265
---------
4,637
---------
</TABLE>
35
<PAGE>
Schwab MarketTrack Growth Portfolio
Schedule of Investments (continued)
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
Optical & Photo-- 0.1%
Corning, Inc. 2,500 $ 494
Eastman Kodak Co. 3,100 173
---------
667
---------
Paper & Forest Products-- 0.2%
Boise Cascade Corp. 600 20
Champion International Corp. 1,000 66
Fort James Corp. 2,000 48
Georgia-Pacific Group 1,700 62
International Paper Co. 4,139 152
Kimberly-Clark Corp. 5,360 311
Louisiana-Pacific Corp. 800 11
Mead Corp. 1,000 35
Potlatch Corp. 300 12
Temple-Inland, Inc. 600 30
Westvaco Corp. 1,000 31
Weyerhaeuser Co. 2,300 123
Willamette Industries, Inc. 1,100 42
---------
943
---------
Producer Goods & Manufacturing-- 1.3%
Avery Dennison Corp. 1,200 79
Briggs & Stratton Corp. 100 4
Caterpillar, Inc. 3,500 138
Cooper Industries, Inc. 900 31
Deere & Co. 2,300 93
Dover Corp. 2,000 102
Emerson Electric Co. 4,300 236
FMC Corp.+ 400 23
General Electric Co. 32,000 5,032
Honeywell International, Inc. 7,837 439
Illinois Tool Works, Inc. 3,000 192
Ingersoll-Rand Co. 1,650 77
Johnson Controls, Inc. 800 51
Milacron, Inc. 100 2
Millipore Corp. 400 29
NACCO Industries, Inc., Class A 100 4
Pall Corp. 1,000 22
Parker-Hannifin Corp. 1,150 53
Snap-On, Inc. 600 16
The Timken Co. 600 11
W.W. Grainger, Inc. 900 39
---------
6,673
---------
Number Value
of Shares (000s)
--------- ---------
Railroad & Shipping-- 0.1%
Burlington Northern
Santa Fe Corp. 4,500 $ 109
CSX Corp. 2,200 46
Kansas City Southern
Industries, Inc. 1,100 79
Norfolk Southern Corp. 3,600 63
Union Pacific Corp. 2,500 105
---------
402
---------
Retail-- 1.4%
Albertson's, Inc. 4,138 135
AutoZone, Inc.+ 1,300 30
Bed, Bath & Beyond, Inc.+ 1,400 51
Best Buy Co., Inc.+ 1,900 153
Cendant Corp.+ 7,232 112
Circuit City Stores-Circuit
City Group 2,000 118
Consolidated Stores Corp.+ 1,100 14
Costco Wholesale Corp.+ 4,400 238
CVS Corp. 3,900 170
Dillards, Inc., Class A 800 11
Dollar General Corp. 2,643 60
Federated Department
Stores, Inc.+ 2,100 71
Gap, Inc. 8,300 305
Home Depot, Inc. 22,500 1,261
J.C. Penney Co., Inc. 2,500 35
Kmart Corp.+ 4,700 38
Kohl's Corp.+ 3,200 154
Kroger Co.+ 8,200 152
Limited, Inc. 2,097 95
Lowe's Cos., Inc. 3,800 188
May Department Stores Co. 3,200 88
Nordstrom, Inc. 1,300 36
Office Depot, Inc.+ 3,700 39
Rite Aid Corp. 2,600 13
Safeway, Inc.+ 4,900 216
Sears, Roebuck & Co. 3,700 136
Staples, Inc.+ 4,350 83
Tandy Corp. 1,900 108
Target Corp. 4,200 280
TJX Cos., Inc. 3,000 58
36
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
Toys `R' Us, Inc.+ 2,600 $ 40
Wal-Mart Stores, Inc. 43,500 2,409
Walgreen Co. 9,900 278
Winn-Dixie Stores, Inc. 1,500 25
---------
7,200
---------
Steel-- 0.0%
Allegheny Technologies, Inc. 735 18
Bethlehem Steel Corp.+ 768 4
Nucor Corp. 900 39
USX-U.S. Steel Group, Inc. 900 23
Worthington Industries, Inc. 900 11
---------
95
---------
Telephone-- 1.6%
Alltel Corp. 3,100 207
AT&T Corp. 31,249 1,459
Bell Atlantic Corp. 15,146 897
BellSouth Corp. 18,400 896
CenturyTel, Inc. 1,350 33
Global Crossing Ltd.+ 7,570 238
GTE Corp. 9,600 650
MCI WorldCom, Inc.+ 27,720 1,260
SBC Communications, Inc. 33,336 1,461
Sprint Corp. (FON Group) 8,600 529
Sprint Corp. (PCS Group)+ 8,500 467
US West, Inc. 4,958 353
---------
8,450
---------
Tobacco-- 0.1%
Philip Morris Cos., Inc. 23,400 512
UST, Inc. 1,600 24
---------
536
---------
Travel & Recreation-- 0.1%
Brunswick Corp. 900 17
Carnival Corp. 6,100 152
Harrah's Entertainment, Inc.+ 1,300 27
Hilton Hotels Corp. 3,600 31
Marriott International, Inc.,
Class A 2,600 83
Mirage Resorts, Inc.+ 1,500 31
---------
341
---------
Number Value
of Shares (000s)
--------- ---------
Trucking & Freight-- 0.0%
PACCAR, Inc. 800 $ 38
Ryder Systems, Inc. 400 9
---------
47
---------
Utilities - Electric & Gas-- 0.6%
AES Corp.+ 2,000 180
Ameren Corp. 1,500 55
American Electric Power Co., Inc. 1,900 70
Carolina Power & Light Co. 1,600 58
Central & South West Corp. 2,100 46
Cinergy Corp. 1,600 43
CMS Energy Corp. 1,000 19
Coastal Corp. 2,200 110
Columbia Energy Group 800 50
Consolidated Edison, Inc. 2,100 74
Constellation Energy Group, Inc. 1,300 43
Dominion Resources, Inc. 2,378 107
DTE Energy Co. 1,400 46
Duke Energy Corp. 3,626 208
Edison International 3,200 61
El Paso Energy Corp. 2,300 98
Enron Corp. 7,100 495
Entergy Corp. 2,400 61
FirstEnergy Corp. 2,100 53
Florida Progress Corp. 1,000 49
FPL Group, Inc. 1,900 86
GPU, Inc. 1,200 34
New Century Energies, Inc. 1,000 33
Niagara Mohawk Holdings, Inc.+ 1,800 25
NICOR, Inc. 500 17
Northern States Power Co. 1,600 35
PECO Energy Co. 1,900 79
Peoples Energy Corp. 400 12
PG&E Corp. 3,600 93
Pinnacle West Capital Corp. 800 28
PPL Corp. 1,400 33
Public Service Enterprise
Group, Inc. 2,000 72
Reliant Energy, Inc. 2,949 79
Sempra Energy 2,103 39
Southern Co. 6,600 165
Texas Utilities Co. 2,767 93
</TABLE>
37
<PAGE>
Schwab MarketTrack Growth Portfolio
Schedule of Investments (continued)
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
Unicom Corp. 2,100 $ 83
Williams Cos., Inc. 4,200 157
---------
3,089
---------
Total Common Stock
(Cost $62,899) 120,734
---------
INVESTMENT Funds-- 72.1%
Schwab International Index Fund,
Select Shares 5,440,203 102,983
Schwab S&P 500 Fund,
Select Shares 4,064,257 91,283
Schwab Small-Cap Index Fund,
Select Shares 5,403,818 109,481
Schwab Total Bond Market
Index Fund 8,140,939 77,013
---------
Total investment Funds
(Cost $323,780) 380,760
---------
Number Value
of Shares (000s)
--------- ---------
Short-Term Investments-- 5.0%
Grand Cayman Time Deposit
5.44%*, 05/01/00 4,478,539 $ 4,479
Schwab Value Advantage Money
Fund, Investor Shares, 5.76%* 21,830,536 21,831
---------
Total Short-Term Investments
(Cost $26,310) 26,310
---------
Total Investments-- 100.0%
(Cost $412,989) 527,804
---------
OTHER ASSETS AND LIABILITIES, NET-- 0.0%
Other assets 865
Liabilities (682)
---------
183
---------
TOTAL Net Assets-- 100.0% $ 527,987
---------
</TABLE>
See accompanying Notes to Schedules of Investments and Notes to Financial
Statements.
38
<PAGE>
Schwab MarketTrack Balanced Portfolio
Schedule of Investments
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
Common Stock-- 17.6%
Aerospace / Defense-- 0.2%
B.F. Goodrich Co. 700 $ 22
Boeing Co. 5,784 230
General Dynamics Corp. 1,300 76
Lockheed Martin Corp. 2,600 65
Northrop Grumman Corp. 500 35
Raytheon Co., Class B 2,300 51
Rockwell International Corp. 1,200 47
Textron, Inc. 1,000 62
TRW, Inc. 800 47
United Technologies Corp. 3,200 199
---------
834
---------
Air Transportation-- 0.1%
AMR Corp.+ 1,000 34
Delta Air Lines, Inc. 900 47
FedEx Corp.+ 1,960 74
Southwest Airlines Co. 3,525 76
U.S. Airways Group, Inc.+ 400 11
---------
242
---------
Alcoholic Beverages-- 0.1%
Adolph Coors Co., Class B 200 10
Anheuser-Busch Cos., Inc. 3,100 219
Brown-Forman Corp., Class B 500 27
---------
256
---------
Apparel-- 0.0%
Liz Claiborne, Inc. 400 19
Nike, Inc., Class B 1,900 83
Springs Industries, Inc. 200 8
VF Corp. 800 23
---------
133
---------
Automotive Products / Motor Vehicles-- 0.3%
Cooper Tire & Rubber Co. 200 3
Cummins Engine Co., Inc. 300 11
Dana Corp. 1,085 33
Danaher Corp. 900 51
Delphi Automotive Systems Corp. 3,884 74
Eaton Corp. 500 42
Ford Motor Co. 8,000 437
General Motors Corp. 4,200 393
Number Value
of Shares (000s)
--------- ---------
Genuine Parts Co. 1,150 $ 30
Goodyear Tire & Rubber Co. 1,000 28
Harley-Davidson, Inc. 2,000 80
Navistar International Corp.+ 400 14
---------
1,196
---------
Banks-- 0.8%
AmSouth Bancorp 2,600 38
Bank of America Corp. 11,180 548
Bank of New York Co., Inc. 4,900 201
Bank One Corp. 7,557 230
BB&T Corp. 2,200 59
Chase Manhattan Corp. 5,464 394
Comerica, Inc. 1,000 42
Fifth Third Bancorp 2,025 128
First Union Corp. 6,536 208
Firstar Corp. 6,381 159
Fleet Boston Financial Corp. 6,054 215
Huntington Bancshares, Inc. 1,452 26
J.P. Morgan & Co., Inc. 1,100 141
KeyCorp, Inc. 3,200 59
Mellon Financial Corp. 3,400 109
National City Corp. 4,100 70
Northern Trust Corp. 1,400 90
Old Kent Financial Corp. 800 24
PNC Financial Services Group 1,900 83
Providian Financial Corp. 950 84
Regions Financial Corp. 1,400 29
SouthTrust Corp. 1,100 26
State Street Corp. 1,100 107
Summit Bancorp 1,200 30
SunTrust Banks, Inc. 2,100 107
Synovus Financial Corp. 1,900 35
U.S. Bancorp 4,880 99
Union Planters Corp. 900 25
Wachovia Corp. 1,400 88
Wells Fargo & Co. 10,920 448
---------
3,902
---------
Business Machines & Software-- 2.9%
3Com Corp.+ 2,300 91
Adaptec, Inc.+ 700 19
Adobe Systems, Inc. 800 97
Apple Computer, Inc.+ 1,100 136
Autodesk, Inc. 400 15
39
</TABLE>
<PAGE>
Schwab MarketTrack Balanced Portfolio
Schedule of Investments (continued)
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
BMC Software, Inc.+ 1,600 $ 75
Cabletron Systems, Inc.+ 1,200 27
Ceridian Corp.+ 928 20
Cisco Systems, Inc.+ 45,000 3,120
Compaq Computer Corp. 11,264 329
Compuware Corp.+ 2,400 30
Comverse Technology, Inc.+ 1,000 89
Dell Computer Corp.+ 16,900 847
EMC Corp.+ 6,731 935
Gateway, Inc.+ 2,100 116
Hewlett-Packard Co. 6,600 891
International Business
Machines Corp. 11,900 1,328
Lexmark International
Group, Inc., Class A+ 800 94
Microsoft Corp.+ 34,300 2,392
NCR Corp.+ 600 23
Network Appliance, Inc.+ 2,000 148
Novell, Inc.+ 2,200 43
Oracle Corp.+ 18,500 1,479
Pitney Bowes, Inc. 1,800 74
Seagate Technology, Inc.+ 1,384 70
Silicon Graphics, Inc.+ 1,054 8
Sun Microsystems, Inc.+ 10,400 956
Unisys Corp.+ 2,100 49
Xerox Corp. 4,200 111
---------
13,612
---------
Business Services-- 0.8%
Allied Waste Industries, Inc.+ 1,300 8
America Online, Inc.+ 14,900 891
Automatic Data Processing, Inc. 4,200 226
Citrix Systems, Inc.+ 1,200 73
Computer Associates
International, Inc. 3,625 202
Computer Sciences Corp.+ 1,090 89
Deluxe Corp. 500 13
Dun & Bradstreet Corp. 1,000 30
Ecolab, Inc. 1,000 39
Electronic Data Systems Corp. 3,100 213
Equifax, Inc. 900 22
First Data Corp. 2,800 136
H&R Block, Inc. 600 25
IMS Health, Inc. 2,000 34
Interpublic Group of Cos., Inc. 1,900 78
Number Value
of Shares (000s)
--------- ---------
National Service
Industries, Inc. 300 $ 6
Omnicom Group, Inc. 1,200 109
Parametric Technology Corp.+ 1,800 15
Paychex, Inc. 1,650 87
PeopleSoft, Inc.+ 1,500 21
Shared Medical Systems Corp. 200 8
Tyco International Ltd. 11,200 514
VERITAS Software Corp.+ 2,600 279
Waste Management, Inc. 4,112 65
Yahoo!, Inc.+ 3,400 443
Young & Rubicam, Inc. 500 28
---------
3,654
---------
Chemical-- 0.3%
Air Products & Chemicals, Inc. 1,500 47
Dow Chemical Co. 1,400 158
E. I. du Pont de Nemours & Co. 6,884 327
Eastman Chemical Co. 600 31
Great Lakes Chemical Corp. 400 11
Hercules, Inc. 700 11
Minnesota Mining &
Manufacturing Co. 2,600 225
Pharmacia Corp. 8,365 418
PPG Industries, Inc. 1,200 65
Praxair, Inc. 1,000 44
Rohm & Haas Co. 1,421 51
Sigma-Aldrich Corp. 700 21
Union Carbide Corp. 900 53
---------
1,462
---------
Construction-- 0.0%
Armstrong Holdings, Inc.+ 400 8
Centex Corp. 400 10
Fluor Corp. 500 17
Kaufman & Broad Home Corp. 100 2
Masco Corp. 3,000 67
Owens Corning 300 5
Pulte Corp. 200 4
Sherwin-Williams Co. 1,100 27
Schwab MarketTrack Balanced Portfolio
Schedule of Investments (continued)
April 30, 2000 (Unaudited)
The Stanley Works 600 18
Vulcan Materials Co. 700 31
---------
189
---------
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
Consumer - Durable-- 0.0%
Black & Decker Corp. 600 $ 25
Leggett & Platt, Inc. 1,300 28
Maytag Corp. 600 21
Whirlpool Corp. 500 33
---------
107
---------
Consumer - Nondurable-- 0.1%
American Greetings Corp., Class A 400 7
Darden Restaurants, Inc. 900 17
Fortune Brands, Inc. 1,000 25
Harcourt General, Inc. 500 19
Hasbro, Inc. 1,275 20
Jostens, Inc. 100 2
Mattel, Inc. 2,825 35
McDonald's Corp. 9,000 343
Newell Rubbermaid, Inc. 1,872 47
Tricon Global Restaurants, Inc.+ 1,030 35
Tupperware Corp. 200 4
Wendy's International, Inc. 800 18
---------
572
---------
Containers-- 0.0%
Ball Corp. 100 3
Bemis Co., Inc. 300 11
Crown Cork & Seal Co., Inc. 900 15
Owens-Illinois, Inc.+ 1,000 13
Pactiv Corp.+ 1,000 8
Sealed Air Corp.+ 621 35
---------
85
---------
Electronics-- 2.2%
ADC Telecommunications, Inc.+ 2,000 121
Advanced Micro Devices, Inc.+ 1,020 89
Altera Corp.+ 1,073 110
Analog Devices, Inc.+ 2,300 177
Andrew Corp.+ 325 10
Applied Materials, Inc.+ 5,000 509
Conexant Systems, Inc.+ 1,300 78
Intel Corp. 21,900 2,777
ITT Industries, Inc. 600 19
KLA-Tencor Corp.+ 1,200 90
Linear Technology Corp. 2,000 114
LSI Logic Corp.+ 2,000 125
Number Value
of Shares (000s)
--------- ---------
Lucent Technologies, Inc. 20,905 $ 1,300
Micron Technology, Inc.+ 1,800 251
Molex, Inc. 1,250 69
Motorola, Inc. 4,690 558
National Semiconductor Corp.+ 1,100 67
Nextel Communications, Inc.,
Class A+ 2,400 263
Nortel Networks Corp. 9,520 1,078
PE Corp.-PE Biosystems Group 1,400 84
PerkinElmer, Inc. 300 16
QUALCOMM, Inc.+ 4,800 520
Scientific-Atlanta, Inc. 1,000 65
Solectron Corp.+ 3,800 178
Tektronix, Inc. 250 14
Tellabs, Inc.+ 2,700 148
Teradyne, Inc.+ 1,100 121
Texas Instruments, Inc. 5,300 863
Thermo Electron Corp.+ 900 17
Thomas & Betts Corp. 381 12
Xilinx, Inc.+ 2,100 154
---------
9,997
---------
Energy - Raw Materials-- 0.1%
Anadarko Petroleum Corp. 800 35
Apache Corp. 800 39
Baker Hughes, Inc. 2,250 72
Burlington Resources, Inc. 1,410 55
Eastern Enterprises 100 6
Halliburton Co. 2,974 131
McDermott International, Inc. 200 2
Occidental Petroleum Corp. 2,400 51
Rowan Cos., Inc.+ 600 17
Schlumberger Ltd. 3,600 276
---------
684
---------
Food & Agriculture-- 0.5%
Archer-Daniels Midland Co. 4,034 40
Bestfoods, Inc. 1,900 95
Campbell Soup Co. 2,800 73
Coca-Cola Co. 16,200 762
Coca-Cola Enterprises, Inc. 2,700 58
ConAgra, Inc. 3,300 62
General Mills, Inc. 1,992 72
H.J. Heinz Co. 2,300 78
</TABLE>
41
<PAGE>
Schwab MarketTrack Balanced Portfolio
Schedule of Investments (continued)
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
Hershey Foods Corp. 1,000 $ 45
Kellogg Co. 2,700 66
Nabisco Group Holdings Corp. 2,200 28
PepsiCo, Inc. 9,700 356
Quaker Oats Co. 900 59
Ralston-Ralston Purina Group 2,100 37
Sara Lee Corp. 6,000 90
SUPERVALU, Inc. 900 19
SYSCO Corp. 2,200 83
Unilever NV 3,839 175
Wm. Wrigley Jr. Co. 800 58
---------
2,256
---------
Gold-- 0.0%
Barrick Gold Corp. 2,600 44
Homestake Mining Co. 1,700 10
Newmont Mining Corp. 1,129 26
Placer Dome, Inc. 2,200 18
---------
98
---------
Healthcare / Drugs & Medicine-- 1.7%
Abbott Laboratories 10,200 392
Aetna, Inc. 1,034 60
Allergan, Inc. 900 53
ALZA Corp.+ 700 31
American Home Products Corp. 8,700 489
Amgen, Inc.+ 6,800 381
Bausch & Lomb, Inc. 400 24
Baxter International, Inc. 1,900 124
Becton, Dickinson & Co. 1,800 46
Biogen, Inc.+ 1,000 59
Biomet, Inc. 700 25
Boston Scientific Corp.+ 2,774 73
Bristol-Myers Squibb Co. 13,000 682
C.R. Bard, Inc. 300 13
Cardinal Health, Inc. 1,850 102
Columbia / HCA Healthcare Corp. 3,700 105
Eli Lilly & Co. 7,200 557
Guidant Corp.+ 2,000 115
HealthSouth Corp.+ 2,776 22
Johnson & Johnson 9,100 751
Mallinckrodt, Inc. 400 11
Manor Care, Inc.+ 700 8
McKesson HBOC, Inc. 1,773 30
Medtronic, Inc. 7,800 405
Merck & Co., Inc. 15,300 1,063
Number Value
of Shares (000s)
--------- ---------
Pfizer, Inc. 25,400 $ 1,070
Quintiles Transnational Corp.+ 800 11
Schering-Plough Corp. 9,800 395
St. Jude Medical, Inc.+ 430 13
Tenet Healthcare Corp.+ 2,100 54
UnitedHealth Group, Inc. 1,100 73
Warner-Lambert Co. 5,700 649
Watson Pharmaceuticals, Inc.+ 600 27
Wellpoint Health Networks, Inc.+ 500 37
---------
7,950
---------
Household Products-- 0.3%
Alberto-Culver Co., Class B 400 9
Avon Products, Inc. 1,500 62
Clorox Co. 1,600 59
Colgate-Palmolive Co. 3,900 223
Gillette Co. 7,100 263
International Flavors &
Fragrances, Inc. 800 28
Procter & Gamble Co. 8,700 519
---------
1,163
---------
Insurance-- 0.5%
AFLAC, Inc. 1,800 88
Allstate Corp. 5,500 130
American General Corp. 1,710 96
American International Group, Inc. 10,175 1,116
Aon Corp. 1,725 47
Chubb Corp. 1,100 70
CIGNA Corp. 1,100 88
Cincinnati Financial Corp. 1,200 48
Conseco, Inc. 2,171 12
Hartford Financial Services
Group, Inc. 1,400 73
Jefferson-Pilot Corp. 700 47
Lincoln National Corp. 1,300 45
Loew's Corp. 700 39
Marsh & McLennan Cos., Inc. 1,800 177
MBIA, Inc. 700 35
MGIC Investment Corp. 700 33
Progressive Corp. 500 33
SAFECO Corp. 800 18
St. Paul Cos., Inc. 1,424 51
Torchmark Corp. 800 20
UnumProvident Corp. 1,657 28
---------
2,294
---------
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
Media-- 0.7%
CBS Corp.+ 5,086 $ 299
Clear Channel
Communications, Inc.+ 2,200 158
Comcast Corp., Class A+ 6,100 244
Dow Jones & Co., Inc. 600 39
Gannett Co., Inc. 1,900 121
Knight-Ridder, Inc. 600 29
McGraw-Hill Cos., Inc. 1,400 73
MediaOne Group, Inc.+ 4,100 310
Meredith Corp. 300 8
New York Times Co., Class A 1,100 45
R.R. Donnelley & Sons Co. 800 17
Seagram Co. Ltd. 2,800 151
Time Warner, Inc. 8,500 764
Tribune Co. 1,600 62
Viacom, Inc., Class B+ 4,600 250
Walt Disney Co. 13,717 594
---------
3,164
---------
Miscellaneous Finance-- 0.9%
American Express Co. 2,900 435
Associates First Capital Corp. 4,798 106
Bear Stearns Cos., Inc. 802 34
Capital One Financial Corp. 1,300 57
Charles Schwab Corp. 5,450 243
Citigroup, Inc. 22,094 1,313
Countrywide Credit
Industries, Inc. 800 22
Fannie Mae 6,800 410
Franklin Resources, Inc. 1,700 55
Freddie Mac 4,700 216
Golden West Financial Corp. 1,100 38
Household International, Inc. 3,033 127
Lehman Brothers Holdings, Inc. 800 66
MBNA Corp. 5,212 138
Merrill Lynch & Co., Inc. 2,400 245
Morgan Stanley Dean Witter
Discover & Co. 7,310 561
Paine Webber Group, Inc. 1,000 44
Sabre Group Holdings, Inc.+ 922 32
SLM Holding Corp. 1,000 31
T. Rowe Price Associates, Inc. 800 30
Washington Mutual, Inc. 3,816 98
---------
4,301
---------
Number Value
of Shares (000s)
--------- ---------
Non-Ferrous Metals-- 0.1%
Alcan Aluminum Ltd. 1,509 $ 49
Alcoa, Inc. 2,400 156
Engelhard Corp. 800 14
Freeport-McMoRan Copper &
Gold, Inc., Class B+ 1,100 11
Inco Ltd.+ 1,300 20
Phelps Dodge Corp. 540 25
Reynolds Metals Co. 400 27
---------
302
---------
Oil - Domestic-- 0.1%
Amerada Hess Corp. 600 38
Ashland, Inc. 500 17
Conoco, Inc., Class B 4,200 104
Kerr-McGee Corp. 621 32
Phillips Petroleum Co. 1,700 81
Sunoco, Inc. 600 18
Tosco Corp. 1,000 32
Transocean Sedco Forex, Inc. 1,416 67
Union Pacific Resources
Group, Inc. 1,562 30
Unocal Corp. 1,600 52
USX-Marathon Group, Inc. 2,100 49
---------
520
---------
Oil - International-- 0.7%
Chevron Corp. 4,300 366
Exxon Mobil Corp. 22,660 1,760
Royal Dutch Petroleum Co.--
Sponsored ADR 14,200 815
Texaco, Inc. 3,630 180
---------
3,121
---------
Optical & Photo-- 0.1%
Corning, Inc. 1,700 336
Eastman Kodak Co. 2,000 112
---------
448
---------
Paper & Forest Products-- 0.1%
Boise Cascade Corp. 400 13
Champion International Corp. 600 39
Fort James Corp. 1,500 36
Georgia-Pacific Group 1,100 40
International Paper Co. 2,742 101
</TABLE>
43
<PAGE>
Schwab MarketTrack Balanced Portfolio
Schedule of Investments (continued)
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
Kimberly-Clark Corp. 3,580 $ 208
Louisiana-Pacific Corp. 700 9
Mead Corp. 600 21
Potlatch Corp. 100 4
Temple-Inland, Inc. 400 20
Westvaco Corp. 700 22
Weyerhaeuser Co. 1,600 85
Willamette Industries, Inc. 700 27
---------
625
---------
Producer Goods & Manufacturing-- 1.0%
Avery Dennison Corp. 700 46
Briggs & Stratton Corp. 100 4
Caterpillar, Inc. 2,300 91
Cooper Industries, Inc. 600 21
Deere & Co. 1,500 61
Dover Corp. 1,400 71
Emerson Electric Co. 2,800 154
FMC Corp.+ 200 12
General Electric Co. 21,500 3,381
Honeywell International, Inc. 5,300 297
Illinois Tool Works, Inc. 2,000 128
Ingersoll-Rand Co. 1,100 52
Johnson Controls, Inc. 500 32
Millipore Corp. 200 14
NACCO Industries, Inc., Class A 100 4
Pall Corp. 800 18
Parker-Hannifin Corp. 700 33
Snap-On, Inc. 350 9
The Timken Co. 200 4
W.W. Grainger, Inc. 600 26
---------
4,458
---------
Railroad & Shipping-- 0.1%
Burlington Northern
Santa Fe Corp. 2,900 70
CSX Corp. 1,500 31
Kansas City Southern
Industries, Inc. 700 50
Norfolk Southern Corp. 2,500 44
Union Pacific Corp. 1,700 72
---------
267
---------
Number Value
of Shares (000s)
--------- ---------
Retail-- 1.1%
Albertson's, Inc. 2,971 $ 97
AutoZone, Inc.+ 1,000 23
Bed, Bath & Beyond, Inc.+ 900 33
Best Buy Co., Inc.+ 1,400 113
Cendant Corp.+ 4,915 76
Circuit City Stores-Circuit
City Group 1,400 82
Consolidated Stores Corp.+ 700 9
Costco Wholesale Corp.+ 3,000 162
CVS Corp. 2,600 113
Dillards, Inc., Class A 700 10
Dollar General Corp. 1,762 40
Federated Department
Stores, Inc.+ 1,400 48
Gap, Inc. 5,662 208
Home Depot, Inc. 15,100 847
J.C. Penney Co., Inc. 1,700 23
Kmart Corp.+ 3,300 27
Kohl's Corp.+ 2,200 106
Kroger Co.+ 5,800 108
Limited, Inc. 1,344 61
Lowe's Cos., Inc. 2,500 124
May Department Stores Co. 2,100 58
Nordstrom, Inc. 900 25
Office Depot, Inc.+ 2,500 26
Rite Aid Corp. 1,800 9
Safeway, Inc.+ 3,300 146
Sears, Roebuck & Co. 2,400 88
Staples, Inc.+ 3,050 58
Tandy Corp. 1,300 74
Target Corp. 2,900 193
TJX Cos., Inc. 2,100 40
Toys `R' Us, Inc.+ 1,800 27
Wal-Mart Stores, Inc. 29,300 1,622
Walgreen Co. 6,600 186
Winn-Dixie Stores, Inc. 1,200 20
---------
4,882
---------
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
Steel 0.0%
Allegheny Technologies, Inc. 492 $ 12
Bethlehem Steel Corp.+ 288 2
Nucor Corp. 600 26
USX-U.S. Steel Group, Inc. 500 13
Worthington Industries, Inc. 600 7
---------
60
---------
Telephone-- 1.2%
Alltel Corp. 2,100 140
AT&T Corp. 20,971 979
Bell Atlantic Corp. 10,272 609
BellSouth Corp. 12,500 609
CenturyTel, Inc. 900 22
Global Crossing Ltd.+ 5,150 162
GTE Corp. 6,500 440
MCI WorldCom, Inc.+ 18,819 855
SBC Communications, Inc. 22,388 981
Sprint Corp. (FON Group) 5,800 357
Sprint Corp. (PCS Group)+ 5,700 313
US West, Inc. 3,309 236
---------
5,703
---------
Tobacco-- 0.1%
Philip Morris Cos., Inc. 15,700 343
UST, Inc. 1,100 16
---------
359
---------
Travel & Recreation-- 0.1%
Brunswick Corp. 600 12
Carnival Corp. 4,100 102
Harrah's Entertainment, Inc.+ 900 19
Hilton Hotels Corp. 2,500 21
Marriott International, Inc.,
Class A 1,700 54
Mirage Resorts, Inc.+ 1,300 26
---------
234
---------
Trucking & Freight-- 0.0%
PACCAR, Inc. 600 29
Ryder Systems, Inc. 400 9
---------
38
---------
Number Value
of Shares (000s)
--------- ---------
Utilities - Electric & Gas-- 0.4%
AES Corp.+ 1,400 $ 126
Ameren Corp. 900 33
American Electric Power Co., Inc. 1,300 48
Carolina Power & Light Co. 1,100 40
Central & South West Corp. 1,300 28
Cinergy Corp. 1,000 27
CMS Energy Corp. 700 13
Coastal Corp. 1,400 70
Columbia Energy Group 550 35
Consolidated Edison, Inc. 1,500 53
Constellation Energy Group, Inc. 1,000 33
Dominion Resources, Inc. 1,167 53
DTE Energy Co. 1,000 33
Duke Energy Corp. 2,426 139
Edison International 2,200 42
El Paso Energy Corp. 1,500 64
Enron Corp. 4,700 328
Entergy Corp. 1,500 38
FirstEnergy Corp. 1,500 38
Florida Progress Corp. 700 34
FPL Group, Inc. 1,300 59
GPU, Inc. 800 22
New Century Energies, Inc. 700 23
Niagara Mohawk Holdings, Inc.+ 1,200 17
NICOR, Inc. 300 10
Northern States Power Co. 1,000 22
PECO Energy Co. 1,200 50
Peoples Energy Corp. 200 6
PG&E Corp. 2,400 62
Pinnacle West Capital Corp. 600 21
PPL Corp. 1,000 24
Public Service Enterprise
Group, Inc. 1,500 54
Reliant Energy, Inc. 1,924 51
Sempra Energy 1,360 25
Southern Co. 4,500 112
Texas Utilities Co. 1,922 65
Unicom Corp. 1,400 56
Williams Cos., Inc. 2,800 104
---------
2,058
---------
Total Common Stock
(Cost $42,935) 81,226
---------
</TABLE>
45
<PAGE>
Schwab MarketTrack Balanced Portfolio
Schedule of Investments (continued)
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
Investment Funds-- 77.4%
Schwab International Index Fund,
Select Shares 3,549,009 $ 67,183
Schwab S&P 500 Fund,
Select Shares 2,649,409 59,506
Schwab Small-Cap Index Fund,
Select Shares 3,535,093 71,621
Schwab Total Bond Market
Index Fund 16,861,208 159,507
---------
Total investment Funds
(Cost $320,749) 357,817
---------
Short-Term Investments-- 5.0%
Grand Cayman Time Deposit
5.44%*, 05/01/00 3,389,911 3,390
Schwab Value Advantage Money
Fund, Investor Shares, 5.76%* 19,857,836 19,858
---------
Total Short-Term Investments
(Cost $23,248) 23,248
---------
Total Investments-- 100.0%
(Cost $386,932) 462,291
---------
OTHER ASSETS AND LIABILITIES, NET-- 0.0%
Other assets 534
Liabilities (423)
---------
111
TOTAL Net Assets-- 100.0% $462,402
=========
</TABLE>
See accompanying Notes to Schedules of Investments and Notes to Financial
Statements.
46
<PAGE>
Schwab MarketTrack Conservative Portfolio
Schedule of Investments
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
Common Stock-- 10.6%
Aerospace / Defense-- 0.1%
B.F. Goodrich Co. 200 $ 6
Boeing Co. 1,446 57
Crane Co. 150 4
General Dynamics Corp. 300 18
Lockheed Martin Corp. 600 15
Northrop Grumman Corp. 100 7
Raytheon Co., Class B 500 11
Rockwell International Corp. 300 12
Textron, Inc. 200 12
TRW, Inc. 200 12
United Technologies Corp. 800 50
---------
204
---------
Air Transportation-- 0.0%
AMR Corp. + 200 7
Delta Air Lines, Inc. 200 11
FedEx Corp. + 460 17
Southwest Airlines Co. 812 18
U.S. Airways Group, Inc. + 100 3
---------
56
---------
Alcoholic Beverages-- 0.0%
Adolph Coors Co., Class B 100 5
Anheuser-Busch Cos., Inc. 700 49
Brown-Forman Corp., Class B 100 5
---------
59
---------
Apparel-- 0.0%
Liz Claiborne, Inc. 100 5
Nike, Inc., Class B 400 17
Reebok International Ltd. + 100 2
Springs Industries, Inc. 100 4
VF Corp. 200 6
---------
34
---------
Automotive Products / Motor Vehicles-- 0.2%
Cooper Tire & Rubber Co. 100 1
Cummins Engine Co., Inc. 100 4
Dana Corp. 292 9
Danaher Corp. 200 11
Delphi Automotive Systems Corp. 868 17
Eaton Corp. 100 8
Number Value
of Shares (000s)
--------- ---------
Ford Motor Co. 1,900 $ 104
General Motors Corp. 1,000 94
Genuine Parts Co. 250 7
Goodyear Tire & Rubber Co. 300 8
Harley-Davidson, Inc. 400 16
Navistar International Corp. + 100 3
---------
282
---------
Banks-- 0.5%
AmSouth Bancorp 600 9
Bank of America Corp. 2,711 133
Bank of New York Co., Inc. 1,100 45
Bank One Corp. 1,846 56
BB&T Corp. 500 13
Chase Manhattan Corp. 1,316 95
Comerica, Inc. 200 8
Fifth Third Bancorp 475 30
First Union Corp. 1,600 51
Firstar Corp. 1,518 38
Fleet Boston Financial Corp. 1,451 51
Huntington Bancshares, Inc. 385 7
J.P. Morgan & Co., Inc. 300 38
KeyCorp, Inc. 700 13
Mellon Financial Corp. 800 26
National City Corp. 1,000 17
Northern Trust Corp. 400 26
Old Kent Financial Corp. 200 6
PNC Financial Services Group 400 17
Providian Financial Corp. 200 18
Regions Financial Corp. 300 6
SouthTrust Corp. 200 5
State Street Corp. 300 29
Summit Bancorp 300 8
SunTrust Banks, Inc. 500 25
Synovus Financial Corp. 400 7
U.S. Bancorp 1,189 24
Union Planters Corp. 200 6
Wachovia Corp. 300 19
Wells Fargo & Co. 2,560 105
---------
931
---------
</TABLE>
47
<PAGE>
Schwab MarketTrack Conservative Portfolio
Schedule of Investments (continued)
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
Business Machines & Software-- 1.8%
3Com Corp. + 500 $ 20
Adaptec, Inc. + 200 5
Adobe Systems, Inc. 200 24
Apple Computer, Inc. + 200 25
Autodesk, Inc. 100 4
BMC Software, Inc. + 400 19
Cabletron Systems, Inc. + 300 7
Ceridian Corp. + 214 5
Cisco Systems, Inc. + 10,700 742
Compaq Computer Corp. 2,693 79
Compuware Corp. + 600 8
Comverse Technology, Inc. + 200 18
Dell Computer Corp. + 4,000 200
EMC Corp. + 1,525 212
Gateway, Inc. + 500 28
Hewlett-Packard Co. 1,600 216
International Business
Machines Corp. 2,800 313
Lexmark International Group, Inc.,
Class A + 200 24
Microsoft Corp. + 8,100 565
NCR Corp. + 200 8
Network Appliance, Inc. + 400 30
Novell, Inc. + 500 10
Oracle Corp. + 4,300 344
Pitney Bowes, Inc. 400 16
Seagate Technology, Inc. + 376 19
Silicon Graphics, Inc. + 322 2
Sun Microsystems, Inc. + 2,500 230
Unisys Corp. + 500 12
Xerox Corp. 1,000 26
---------
3,211
---------
Business Services-- 0.5%
Allied Waste Industries, Inc. + 300 2
America Online, Inc. + 3,500 209
Automatic Data Processing, Inc. 1,000 54
Citrix Systems, Inc. + 300 18
Computer Associates
International, Inc. 850 47
Computer Sciences Corp. + 258 21
Deluxe Corp. 100 3
Dun & Bradstreet Corp. 300 9
Ecolab, Inc. 200 8
Electronic Data Systems Corp. 700 48
Equifax, Inc. 200 5
First Data Corp. 700 34
Number Value
of Shares (000s)
--------- ---------
H&R Block, Inc. 200 8
IMS Health, Inc. 500 9
Interpublic Group of Cos., Inc. 400 16
National Service Industries, Inc. 100 2
Omnicom Group, Inc. 300 27
Parametric Technology Corp. + 500 4
Paychex, Inc. 350 18
PeopleSoft, Inc. + 400 6
Tyco International Ltd. 2,644 121
VERITAS Software Corp. + 600 64
Waste Management, Inc. 1,007 16
Yahoo!, Inc. + 800 104
Young & Rubicam, Inc. 100 6
---------
859
---------
Chemical-- 0.2%
Air Products & Chemicals, Inc. 400 12
Dow Chemical Co. 300 34
E. I. du Pont de Nemours & Co. 1,625 77
Eastman Chemical Co. 100 5
Great Lakes Chemical Corp. 100 3
Hercules, Inc. 200 3
Minnesota Mining &
Manufacturing Co. 600 52
Pharmacia Corp. 1,952 97
PPG Industries, Inc. 300 16
Praxair, Inc. 300 13
Rohm & Haas Co. 373 13
Sigma-Aldrich Corp. 200 6
Union Carbide Corp. 200 12
W.R. Grace & Co. + 100 1
---------
344
---------
Construction-- 0.0%
Armstrong Holdings, Inc.+ 100 2
Centex Corp. 100 2
Fluor Corp. 100 3
Masco Corp. 700 16
Owens Corning 100 2
Pulte Corp. 100 2
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
Sherwin-Williams Co. 300 $ 7
The Stanley Works 100 3
Vulcan Materials Co. 200 9
---------
46
---------
Consumer - Durable-- 0.0%
Black & Decker Corp. 100 4
Leggett & Platt, Inc. 300 6
Maytag Corp. 100 3
Whirlpool Corp. 100 6
---------
19
---------
Consumer - Nondurable-- 0.1%
American Greetings Corp., Class A 100 2
Darden Restaurants, Inc. 200 4
Fortune Brands, Inc. 300 7
Harcourt General, Inc. 100 4
Hasbro, Inc. 325 5
Jostens, Inc. 100 2
Mattel, Inc. 650 8
McDonald's Corp. 2,100 80
Newell Rubbermaid, Inc. 436 11
Tricon Global Restaurants, Inc. + 240 8
Tupperware Corp. 100 2
Wendy's International, Inc. 200 4
---------
137
---------
Containers-- 0.0%
Bemis Co., Inc. 100 4
Crown Cork & Seal Co., Inc. 200 3
Owens-Illinois, Inc. + 300 4
Pactiv Corp. + 300 2
Sealed Air Corp. + 153 8
---------
21
---------
Electronics-- 1.3%
ADC Telecommunications, Inc. + 400 24
Advanced Micro Devices, Inc. + 280 25
Altera Corp. + 255 26
Analog Devices, Inc. + 600 46
Applied Materials, Inc. + 1,200 122
Conexant Systems, Inc. + 300 18
Intel Corp. 5,200 659
ITT Industries, Inc. 100 3
KLA-Tencor Corp. + 300 22
Number Value
of Shares (000s)
--------- ---------
Linear Technology Corp. 500 $ 29
LSI Logic Corp. + 400 25
Lucent Technologies, Inc. 4,919 306
Micron Technology, Inc. + 400 56
Molex, Inc. 250 14
Motorola, Inc. 1,072 128
National Semiconductor Corp. + 300 18
Nextel Communications, Inc.,
Class A + 500 55
Nortel Networks Corp. 2,260 256
PE Corp.-PE Biosystems Group 300 18
QUALCOMM, Inc. + 1,100 119
Scientific-Atlanta, Inc. 200 13
Solectron Corp. + 1,000 47
Tellabs, Inc. + 600 33
Teradyne, Inc. + 200 22
Texas Instruments, Inc. 1,200 195
Thermo Electron Corp. + 200 4
Xilinx, Inc. + 500 37
---------
2,320
---------
Energy - Raw Materials-- 0.1%
Anadarko Petroleum Corp. 200 9
Apache Corp. 200 10
Baker Hughes, Inc. 470 15
Burlington Resources, Inc. 300 12
Eastern Enterprises 100 6
Halliburton Co. 714 32
McDermott International, Inc. 100 1
Occidental Petroleum Corp. 600 13
Rowan Cos., Inc. + 100 3
Schlumberger Ltd. 900 69
---------
170
---------
Food & Agriculture-- 0.3%
Archer-Daniels Midland Co. 920 9
Bestfoods, Inc. 400 20
Campbell Soup Co. 700 18
Coca-Cola Co. 3,900 184
Coca-Cola Enterprises, Inc. 700 15
ConAgra, Inc. 800 15
General Mills, Inc. 432 16
H.J. Heinz Co. 600 20
Hershey Foods Corp. 300 14
Kellogg Co. 600 15
</TABLE>
49
<PAGE>
Schwab MarketTrack Conservative Portfolio
Schedule of Investments (continued)
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
Nabisco Group Holdings Corp. 500 6
PepsiCo, Inc. 2,300 84
Quaker Oats Co. 200 13
Ralston-Ralston Purina Group 500 9
Sara Lee Corp. 1,400 21
SUPERVALU, Inc. 200 4
SYSCO Corp. 500 19
Unilever NV 892 41
Wm. Wrigley Jr. Co. 200 14
---------
537
---------
Gold-- 0.0%
Barrick Gold Corp. 600 10
Homestake Mining Co. 400 2
Newmont Mining Corp. 243 6
Placer Dome, Inc. 600 5
---------
23
---------
Healthcare / Drugs & Medicine-- 1.0%
Abbott Laboratories 2,400 92
Aetna, Inc. 222 13
Allergan, Inc. 200 12
ALZA Corp. + 200 9
American Home Products Corp. 2,100 118
Amgen, Inc. + 1,600 90
Bausch & Lomb, Inc. 100 6
Baxter International, Inc. 500 33
Becton, Dickinson & Co. 400 10
Biogen, Inc. + 200 12
Biomet, Inc. 200 7
Boston Scientific Corp. + 634 17
Bristol-Myers Squibb Co. 3,100 163
C.R. Bard, Inc. 100 4
Cardinal Health, Inc. 400 22
Columbia / HCA Healthcare Corp. 900 26
Eli Lilly & Co. 1,700 131
Guidant Corp. + 500 29
HealthSouth Corp. + 700 6
Johnson & Johnson 2,200 181
Mallinckrodt, Inc. 100 3
Manor Care, Inc. + 200 2
McKesson HBOC, Inc. 422 7
Medtronic, Inc. 1,900 99
Merck & Co., Inc. 3,700 257
Pfizer, Inc. 6,100 257
Number Value
of Shares (000s)
--------- ---------
Quintiles Transnational Corp. + 200 $ 3
Schering-Plough Corp. 2,300 93
St. Jude Medical, Inc. + 100 3
Tenet Healthcare Corp. + 500 13
UnitedHealth Group, Inc. 200 13
Warner-Lambert Co. 1,300 148
Watson Pharmaceuticals, Inc. + 100 4
Wellpoint Health Networks, Inc. + 100 7
---------
1,890
---------
Household Products-- 0.2%
Alberto-Culver Co., Class B 100 2
Avon Products, Inc. 400 17
Clorox Co. 300 11
Colgate-Palmolive Co. 900 51
Gillette Co. 1,700 63
International Flavors &
Fragrances, Inc. 200 7
Procter & Gamble Co. 2,100 125
---------
276
---------
Insurance-- 0.3%
AFLAC, Inc. 400 20
Allstate Corp. 1,300 31
American General Corp. 400 22
American International Group, Inc. 2,411 264
Aon Corp. 375 10
Chubb Corp. 300 19
CIGNA Corp. 300 24
Cincinnati Financial Corp. 300 12
Conseco, Inc. 515 3
Hartford Financial Services
Group, Inc. 300 16
Jefferson-Pilot Corp. 150 10
Lincoln National Corp. 300 10
Loew's Corp. 200 11
Marsh & McLennan Cos., Inc. 450 44
MBIA, Inc. 200 10
MGIC Investment Corp. 200 10
Progressive Corp. 100 7
SAFECO Corp. 200 4
St. Paul Cos., Inc. 356 13
Torchmark Corp. 200 5
UnumProvident Corp. 346 6
---------
551
---------
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
Media-- 0.4%
CBS Corp. + 1,162 $ 68
Clear Channel
Communications, Inc. + 500 36
Comcast Corp., Class A + 1,500 60
Dow Jones & Co., Inc. 100 6
Gannett Co., Inc. 400 26
Knight-Ridder, Inc. 100 5
McGraw-Hill Cos., Inc. 300 16
MediaOne Group, Inc. + 1,000 76
Meredith Corp. 100 3
New York Times Co., Class A 300 12
R.R. Donnelley & Sons Co. 200 4
Seagram Co. Ltd. 700 38
Time Warner, Inc. 2,000 180
Tribune Co. 400 16
Viacom, Inc., Class B + 1,100 60
Walt Disney Co. 3,227 140
---------
746
---------
Miscellaneous Finance-- 0.6%
American Express Co. 700 105
Associates First Capital Corp. 1,190 26
Bear Stearns Cos., Inc. 220 9
Capital One Financial Corp. 300 13
Charles Schwab Corp. 1,300 58
Citigroup, Inc. 5,283 314
Countrywide Credit
Industries, Inc. 200 6
Fannie Mae 1,600 96
Franklin Resources, Inc. 400 13
Freddie Mac 1,100 51
Golden West Financial Corp. 300 10
Household International, Inc. 706 29
Lehman Brothers Holdings, Inc. 200 16
MBNA Corp. 1,305 35
Merrill Lynch & Co., Inc. 600 61
Morgan Stanley Dean Witter
Discover & Co. 1,730 133
Paine Webber Group, Inc. 200 9
Sabre Group Holdings, Inc. + 244 9
SLM Holding Corp. 300 9
T. Rowe Price Associates, Inc. 200 8
Washington Mutual, Inc. 921 24
---------
1,034
---------
Number Value
of Shares (000s)
--------- ---------
Non-Ferrous Metals-- 0.0%
Alcan Aluminum Ltd. 302 $ 10
Alcoa, Inc. 600 39
Engelhard Corp. 200 3
Freeport-McMoRan Copper &
Gold, Inc., Class B + 300 3
Inco Ltd. + 300 5
Phelps Dodge Corp. 135 6
Reynolds Metals Co. 100 7
---------
73
---------
Oil - Domestic-- 0.1%
Amerada Hess Corp. 100 6
Ashland, Inc. 100 3
Conoco, Inc., Class B 1,000 25
Kerr-McGee Corp. 136 7
Phillips Petroleum Co. 400 19
Sunoco, Inc. 100 3
Tosco Corp. 200 6
Transocean Sedco Forex, Inc. 374 18
Union Pacific Resources
Group, Inc. 369 7
Unocal Corp. 400 13
USX-Marathon Group, Inc. 500 12
---------
119
---------
Oil - International-- 0.4%
Chevron Corp. 1,000 85
Exxon Mobil Corp. 5,284 410
Royal Dutch Petroleum Co.--
Sponsored ADR 3,400 195
Texaco, Inc. 900 45
---------
735
---------
Optical & Photo-- 0.1%
Corning, Inc. 400 79
Eastman Kodak Co. 500 28
---------
107
---------
Paper & Forest Products-- 0.1%
Boise Cascade Corp. 100 3
Champion International Corp. 200 13
Fort James Corp. 300 7
Georgia-Pacific Group 300 11
</TABLE>
51
<PAGE>
Schwab MarketTrack Conservative Portfolio
Schedule of Investments (continued)
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
International Paper Co. 648 $ 24
Kimberly-Clark Corp. 856 50
Louisiana-Pacific Corp. 100 1
Mead Corp. 200 7
Temple-Inland, Inc. 100 5
Westvaco Corp. 200 6
Weyerhaeuser Co. 400 21
Willamette Industries, Inc. 100 4
---------
152
---------
Producer Goods & Manufacturing-- 0.6%
Avery Dennison Corp. 200 13
Caterpillar, Inc. 600 24
Cooper Industries, Inc. 100 3
Deere & Co. 400 16
Dover Corp. 300 15
Emerson Electric Co. 700 38
General Electric Co. 5,100 802
Honeywell International, Inc. 1,275 71
Illinois Tool Works, Inc. 500 32
Ingersoll-Rand Co. 250 12
Johnson Controls, Inc. 100 6
Milacron, Inc. 100 2
Millipore Corp. 100 7
Pall Corp. 200 4
Parker-Hannifin Corp. 150 7
Snap-On, Inc. 100 3
W.W. Grainger, Inc. 100 4
---------
1,059
---------
Railroad & Shipping-- 0.0%
Burlington Northern
Santa Fe Corp. 700 17
CSX Corp. 300 6
Kansas City Southern
Industries, Inc. 200 14
Norfolk Southern Corp. 600 11
Union Pacific Corp. 400 17
---------
65
---------
Number Value
of Shares (000s)
--------- ---------
Retail-- 0.6%
Albertson's, Inc. 652 21
AutoZone, Inc. + 200 5
Bed, Bath & Beyond, Inc. + 200 7
Best Buy Co., Inc. + 300 24
Cendant Corp. + 1,159 18
Circuit City Stores-Circuit
City Group 300 18
Consolidated Stores Corp. + 200 2
Costco Wholesale Corp. + 700 38
CVS Corp. 600 26
Dillards, Inc., Class A 200 3
Dollar General Corp. 412 9
Federated Department
Stores, Inc. + 300 10
Gap, Inc. 1,362 50
Great Atlantic & Pacific
Tea Co., Inc. 100 2
Home Depot, Inc. 3,600 202
J.C. Penney Co., Inc. 400 6
Kmart Corp. + 700 6
Kohl's Corp. + 600 29
Kroger Co. + 1,400 26
Limited, Inc. 309 14
Longs Drug Stores, Inc. 100 2
Lowe's Cos., Inc. 600 30
May Department Stores Co. 500 14
Nordstrom, Inc. 200 6
Office Depot, Inc. + 600 6
Rite Aid Corp. 400 2
Safeway, Inc. + 800 35
Sears, Roebuck & Co. 600 22
Staples, Inc. + 750 14
Tandy Corp. 300 17
Target Corp. 700 47
TJX Cos., Inc. 500 10
Toys `R' Us, Inc. + 500 8
Wal-Mart Stores, Inc. 7,000 388
Walgreen Co. 1,600 45
Winn-Dixie Stores, Inc. 300 5
---------
1,167
---------
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
Steel 0.0%
Allegheny Technologies, Inc. 146 $ 4
Bethlehem Steel Corp. + 288 2
Nucor Corp. 100 4
USX-U.S. Steel Group, Inc. 100 2
Worthington Industries, Inc. 100 1
---------
13
---------
Telephone-- 0.7%
Alltel Corp. 500 33
AT&T Corp. 5,030 235
Bell Atlantic Corp. 2,458 146
BellSouth Corp. 3,000 146
CenturyTel, Inc. 250 6
Global Crossing Ltd. + 1,210 38
GTE Corp. 1,500 102
MCI WorldCom, Inc. + 4,525 206
SBC Communications, Inc. 5,375 235
Sprint Corp. (FON Group) 1,300 80
Sprint Corp. (PCS Group) + 1,300 71
US West, Inc. 824 59
---------
1,357
---------
Tobacco-- 0.1%
Philip Morris Cos., Inc. 3,700 81
UST, Inc. 300 4
---------
85
---------
Travel & Recreation-- 0.0%
Brunswick Corp. 100 2
Carnival Corp. 1,000 25
Harrah's Entertainment, Inc. + 200 4
Hilton Hotels Corp. 600 5
Marriott International, Inc.,
Class A 400 13
Mirage Resorts, Inc. + 300 6
---------
55
---------
Trucking & Freight-- 0.0%
PACCAR, Inc. 100 5
Ryder Systems, Inc. 100 2
---------
7
---------
Number Value
of Shares (000s)
--------- ---------
Utilities - Electric & Gas-- 0.3%
AES Corp. + 300 $ 27
Ameren Corp. 200 7
American Electric Power Co., Inc. 300 11
Carolina Power & Light Co. 300 11
Central & South West Corp. 300 7
Cinergy Corp. 300 8
CMS Energy Corp. 200 4
Coastal Corp. 300 15
Columbia Energy Group 150 9
Consolidated Edison, Inc. 300 11
Constellation Energy Group, Inc. 200 7
Dominion Resources, Inc. 315 14
DTE Energy Co. 200 7
Duke Energy Corp. 604 35
Edison International 500 10
El Paso Energy Corp. 400 17
Enron Corp. 1,100 77
Entergy Corp. 400 10
FirstEnergy Corp. 400 10
Florida Progress Corp. 200 10
FPL Group, Inc. 300 14
GPU, Inc. 200 6
New Century Energies, Inc. 200 7
Niagara Mohawk Holdings, Inc. + 300 4
NICOR, Inc. 100 3
Northern States Power Co. 200 4
PECO Energy Co. 300 13
Peoples Energy Corp. 100 3
PG&E Corp. 600 16
Pinnacle West Capital Corp. 100 4
PPL Corp. 200 5
Public Service Enterprise
Group, Inc. 300 11
Reliant Energy, Inc. 474 13
Sempra Energy 297 6
Southern Co. 1,100 27
Texas Utilities Co. 400 13
Unicom Corp. 300 12
Williams Cos., Inc. 700 26
---------
494
---------
Total Common Stock
(Cost $11,481) 19,238
---------
</TABLE>
53
<PAGE>
Schwab MarketTrack Conservative Portfolio
Schedule of Investments (continued)
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ---------
<S> <C> <C>
investment Funds-- 84.3%
Schwab International Index Fund,
Select Shares 915,909 $ 17,338
Schwab S&P 500 Fund,
Select Shares 803,936 18,056
Schwab Small-Cap Index Fund,
Select Shares 936,152 18,966
Schwab Total Bond Market
Index Fund 10,426,160 98,631
---------
Total investment Funds
(Cost $145,465) 152,991
---------
Number Value
of Shares (000s)
--------- ---------
Short-Term Investments-- 5.1%
Grand Cayman Time Deposit
5.44%*, 05/01/00 1,797,774 $ 1,798
Schwab Value Advantage Money
Fund, Investor Shares, 5.76%* 7,389,317 7,389
---------
Total Short-Term Investments
(Cost $9,187) 9,187
---------
Total Investments-- 99.9%
(Cost $166,133) 181,416
---------
OTHER ASSETS AND LIABILITIES, NET-- 0.1%
Other assets 187
Liabilities (34)
---------
153
---------
TOTAL Net Assets-- 100.0% $ 181,569
---------
</TABLE>
Notes to Schedules of Investments
April 30, 2000 (Unaudited)
+ Non-income producing security.
* Interest rates represent the yield on report date.
ADR--American Depository Receipt.
(a) Yields shown are effective yields at the time of purchases.
(b) These securities, or a portion thereof, are being used to collateralize
open futures contracts.
See accompanying Notes to Financial Statements.
54
<PAGE>
Statements of Assets and Liabilities (in thousands)
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Schwab MarketTrack Portfolios(TM)
-----------------------------------------------------------------
All Equity Growth Balanced Conservative
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Assets
Investments, at value (Cost: $290,105, $412,989,
$386,932, and $166,133, respectively) $329,763 $527,804 $462,291 $181,416
Receivables:
Fund shares sold 558 637 251 37
Dividends -- 210 251 121
Interest 1 2 2 1
Dividend tax reclaim -- 10 4 --
Prepaid expenses 23 6 26 28
--------- --------- --------- ---------
Total assets 330,345 528,669 462,818 181,603
--------- --------- --------- ---------
Liabilities
Payables:
Investments purchased 1,100 543 276 6
Fund shares redeemed -- 19 18 --
Variation margin 7 -- -- --
Investment advisory and administration fees 11 16 16 5
Transfer agency and shareholder service fees 9 14 13 5
Accrued expenses 99 90 100 18
--------- --------- --------- ---------
Total liabilities 1,226 682 423 34
--------- --------- --------- ---------
Net assets applicable to outstanding shares $329,119 $527,987 $462,402 $181,569
--------- --------- --------- ---------
Net assets consist of:
Paid-in capital $290,042 $410,283 $382,468 $165,346
Undistributed/(distributions in excess of)
net investment income (530) 1,548 3,214 519
Accumulated net realized gain on investments sold
and futures contracts 12 1,341 1,361 421
Net unrealized appreciation on investments
and futures contracts 39,595 114,815 75,359 15,283
--------- --------- --------- ---------
$329,119 $527,987 $462,402 $181,569
--------- --------- --------- ---------
Pricing of shares:
Outstanding shares, $0.00001 par value
(unlimited shares authorized) 26,574 30,452 30,015 13,913
Net asset value, offering and redemption
price per share $12.39 $17.34 $15.41 $13.05
See accompanying Notes to Financial Statements.
55
</TABLE>
<PAGE>
Statements of Operations (in thousands)
For the six months ended April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Schwab MarketTrack Portfolios(TM)
-----------------------------------------------------------------
All Equity Growth Balanced Conservative
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Investment income:
Dividends (net of foreign tax withheld
of $0, $1, $1 and $0, respectively) $ 1,902 $ 5,486 $ 7,010 $ 3,709
Interest 62 124 94 50
--------- --------- --------- ---------
Total investment income 1,964 5,610 7,104 3,759
--------- --------- --------- ---------
Expenses:
Investment advisory and administration fees 715 1,324 1,171 476
Transfer agency and shareholder service fees 331 614 542 221
Custodian fees 16 31 30 6
Portfolio accounting fees 18 35 33 16
Registration fees 28 51 24 5
Professional fees 7 11 10 7
Shareholder reports 56 21 34 2
Trustees' fees 4 7 6 6
Proxy fees 10 16 12 5
Other expenses 3 11 11 8
--------- --------- --------- ---------
1,188 2,121 1,873 752
Less: expenses reduced (See Note 4) (383) (632) (560) (218)
--------- --------- --------- ---------
Net expenses incurred by fund 805 1,489 1,313 534
--------- --------- --------- ---------
Net investment income 1,159 4,121 5,791 3,225
--------- --------- --------- ---------
Net realized gain on investments and futures contracts:
Net realized gain on investments sold 176 2,021 2,199 724
Net realized gain received from underlying funds 268 185 123 42
Net realized gain on futures contracts 39 -- -- --
-
Net realized gain on investments and
futures contracts 483 2,206 2,322 766
--------- --------- --------- ---------
Change in net unrealized appreciation (depreciation)
on investments and futures contracts:
Net unrealized appreciation on investments 17,974 28,585 17,416 3,840
Net unrealized depreciation on futures contracts (94) -- -- --
--------- --------- --------- ---------
Net unrealized appreciation on investments
and futures contracts 17,880 28,585 17,416 3,840
--------- --------- --------- ---------
Net gain on investments 18,363 30,791 19,738 4,606
--------- --------- --------- ---------
Increase in net assets resulting from operations $19,522 $34,912 $25,529 $ 7,831
========= ========= ========= =========
See accompanying Notes to Financial Statements.
</TABLE>
56
<PAGE>
Statements of Changes in Net Assets (in thousands)
<TABLE>
<CAPTION>
Schwab MarketTrack Portfolios(TM)
-----------------------------------------------------------------
All Equity Growth Balanced
------------------------- ------------------------- -------------------------
Six months Six months Six months
ended Year ended Year ended Year
04/30/00 ended 04/30/00 ended 04/30/00 ended
(Unaudited) 10/31/99 (Unaudited) 10/31/99 (Unaudited) 10/31/99
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income $ 1,159 $ 194 $ 4,121 $ 4,272 $ 5,791 $ 7,538
Net realized gain (loss) on investments
and futures contracts 215 192 2,021 (196) 2,199 (252)
Net realized gain received from
underlying funds 268 1,703 185 3,267 123 2,503
Net unrealized appreciation
on investments and futures contracts 17,880 29,520 28,585 51,554 17,416 32,821
-------- ------- -------- -------- ------- -------
Increase in net assets resulting
from operations 19,522 31,609 34,912 58,897 25,529 42,610
-------- ------- -------- -------- ------- -------
Dividends and distributions:
Dividends to shareholders from net
investment income (517) (22) (5,063) (4,540) (7,749) (6,924)
Dividends in excess of net investment income (530) (642) -- -- -- --
Ditributions to shareholders from net
capital gains (1,962) -- (3,458) (557) (2,431) (1,483)
-------- ------- -------- -------- ------- -------
Total dividends and distributions
to shareholders (3,009) (664) (8,521) (5,097) (10,180) (8,407)
-------- ------- -------- -------- ------- -------
Capital share transactions:
Proceeds from shares sold 155,857 114,034 157,447 195,487 112,419 191,766
Net asset value of shares issued in
reinvestment of dividends 2,943 642 8,332 4,951 9,811 8,091
Payments for shares redeemed (49,078) (60,146) (91,842) (102,207) (78,448) (94,693)
-------- ------- -------- -------- ------- -------
Increase in net assets from
capital share transactions 109,722 54,530 73,937 98,231 43,782 105,164
-------- ------- -------- -------- ------- -------
Total increase in net assets 126,235 85,475 100,328 152,031 59,131 139,367
Net assets:
Beginning of period 202,884 117,409 427,659 275,628 403,271 263,904
-------- ------- -------- -------- ------- -------
End of period (including undistributed net
investment income (loss) of $(530),
$(642), $1,548, $2,490, $3,214, $5,172,
$519, and $497, respectively) $329,119 $202,884 $527,987 $427,659 $462,402 $403,271
-------- ------- -------- -------- ------- -------
Number of fund shares:
Sold 12,640 10,710 9,191 12,686 7,344 13,521
Reinvested 238 64 483 335 643 589
Redeemed (3,977) (5,750) (5,339) (6,651) (5,123) (6,672)
-------- ------- -------- -------- ------- -------
Net increase in shares outstanding 8,901 5,024 4,335 6,370 2,864 7,438
Shares outstanding:
Beginning of period 17,673 12,649 26,117 19,747 27,151 19,713
-------- ------- -------- -------- ------- -------
End of period 26,574 17,673 30,452 26,117 30,015 27,151
-------- ------- -------- -------- ------- -------
See accompanying Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Schwab MarketTrack Portfolios(TM)
----------------------------------------------------
Conservative
-------------------------
Six months
ended Year
04/30/00 ended
(Unaudited) 10/31/99
----------- -----------
<S> <C> <C>
Operations:
Net investment income $ 3,225 $ 4,714
Net realized gain (loss) on investments
and futures contracts 724 (521)
Net realized gain received from
underlying funds 42 800
Net unrealized appreciation
on investments and futures contracts 3,840 7,022
------- --------
Increase in net assets resulting
from operations 7,831 12,015
------- --------
Dividends and distributions:
Dividends to shareholders from net
investment income (3,203) (4,511)
Dividends in excess of net investment income -- --
Ditributions to shareholders from net
capital gains (367) (661)
------- --------
Total dividends and distributions
to shareholders (3,570) (5,172)
------- --------
Capital share transactions:
Proceeds from shares sold 43,343 89,099
Net asset value of shares issued in
reinvestment of dividends 3,322 4,821
Payments for shares redeemed (36,759) (48,259)
------- --------
Increase in net assets from
capital share transactions 9,906 45,661
------- --------
Total increase in net assets 14,167 52,504
Net assets:
Beginning of period 167,402 114,898
------- --------
End of period (including undistributed net
investment income (loss) of $(530),
$(642), $1,548, $2,490, $3,214, $5,172,
$519, and $497, respectively) $181,569 $167,402
------- --------
Number of fund shares:
Sold 3,335 7,124
Reinvested 253 389
Redeemed (2,823) (3,854)
------- --------
Net increase in shares outstanding 765 3,659
Shares outstanding:
Beginning of period 13,148 9,489
------- --------
End of period 13,913 13,148
------- --------
See accompanying Notes to Financial Statements.
</TABLE>
57
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
11/1/99- 11/1/98- 5/19/98-
4/30/00 10/31/99 10/31/98
Schwab MarketTrack All Equity Portfolio (Unaudited)
<S> <C> <C> <C>
-------------------------------------------------------------------------------
PER-SHARE DATA ($)
-------------------------------------------------------------------------------
Net asset value at beginning of period 11.48 9.28 10.00
-------------------------
Income from investment operations:
Net investment income (loss) 0.07 0.03 (0.01)
Net realized and unrealized gain
(loss) on investments 0.99 2.22 (0.71)
-------------------------
Total income (loss) from investment operations 1.06 2.25 (0.72)
-------------------------
Less distributions:
Dividends from net investment income (0.02) (0.01) --
Dividends in excess of net investment income (0.03) (0.04) --
Distributions from capital gains (0.10) -- --
-------------------------
Total distributions (0.15) (0.05) --
-------------------------
Net asset value at end of period 12.39 11.48 9.28
-------------------------
Total return (%) 9.28(1) 24.34 (7.20)(1)
RATIOS/SUPPLEMENTAL DATA (%)
--------------------------------------------------------------------------------
Ratio of net operating expenses to
average net assets 0.60(2,3) 0.54 0.39(2)
Expense reductions reflected in above ratio 0.29(2) 0.43 0.74(2)
Ratio of net investment income to average net assets 0.88(2) 0.13 (0.36)(2)
Portfolio turnover rate 3 6 2
Net assets, end of period ($ x 1,000) 329,119 202,884 117,409
</TABLE>
1 Not annualized.
2 Annualized.
3 Would have been 0.61% if certain non-routine expenses had been
included.
See accompanying Notes to Financial Statements.
58
<PAGE>
<TABLE>
<CAPTION>
11/1/99- 11/1/98- 11/1/97- 11/1/96- 11/20/95-
4/30/00 10/31/99 10/31/98 10/31/97 10/31/96
Schwab MarketTrack Growth Portfolio (Unaudited)
per-share data ($)
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset valueat beginning of period 16.37 13.96 13.59 11.30 10.00
--------------------------------------------------------------------
Income from investment operations:
Net investment income 0.14 0.18 0.16 0.17 0.19
Net realized and unrealized gain
on investments 1.14 2.48 0.99 2.32 1.13
--------------------------------------------------------------------
Total income from investment operations 1.28 2.66 1.15 2.49 1.32
--------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.18) (0.22) (0.16) (0.20) (0.02)
Distributions from capital gains (0.13) (0.03) (0.62) -- --
--------------------------------------------------------------------
Total distributions (0.31) (0.25) (0.78) (0.20) (0.02)
--------------------------------------------------------------------
Net asset value at end of period 17.34 16.37 13.96 13.59 11.30
--------------------------------------------------------------------
Total return (%) 7.83 (1) 19.24 8.85 22.33 13.24 (1)
RATIOS/SUPPLEMENTAL DATA (%)
-----------------------------------------------------------------------------------------------------------------------------
Ratio of net operating expenses to average net assets 0.60 (2,3) 0.58 0.60 0.75 0.89 (2)
Expense reductions reflected in above ratio 0.26 (2) 0.33 0.50 0.49 0.61 (2)
Ratio of net investment income to average net assets 1.68 (2) 1.21 1.34 1.58 2.03 (2)
Portfolio turnover rate 8 7 14 113 46
Net assets, end of period ($ x 1,000) 527,987 427,659 275,628 167,700 105,954
</TABLE>
1 Not annualized.
2 Annualized.
3 Would have been 0.61% if certain non-routine expenses had been included.
See accompanying Notes to Financial Statements.
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
11/1/99- 11/1/98- 11/1/97- 11/1/96- 11/20/95-
4/30/00 10/31/99 10/31/98 10/31/97 10/31/96
Schwab MarketTrack Balanced Portfolio (Unaudited)
PER-SHARE DATA ($)
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset valueat beginning of period 14.85 13.39 12.82 11.05 10.00
-----------------------------------------------------------------
Income from investment operations:
Net investment income 0.20 0.29 0.25 0.22 0.25
Net realized and unrealized gain
on investments 0.73 1.57 0.86 1.78 0.83
-----------------------------------------------------------------
Total income from investment operations 0.93 1.86 1.11 2.00 1.08
-----------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.28) (0.33) (0.23) (0.23) (0.03)
Distributions from capital gains (0.09) (0.07) (0.31) -- --
-----------------------------------------------------------------
Total distributions (0.37) (0.40) (0.54) (0.23) (0.03)
-----------------------------------------------------------------
Net asset value at end of period 15.41 14.85 13.39 12.82 11.05
-----------------------------------------------------------------
Total return (%) 6.22(1) 14.18 9.02 18.43 10.82 (1)
RATIOS/SUPPLEMENTAL DATA (%)
-----------------------------------------------------------------------------------------------------------------------------
Ratio of net operating expenses to average net assets 0.60 (2,3) 0.58 0.59 0.78 0.89 (2)
Expense reductions reflected in above ratio 0.25 (2) 0.33 0.51 0.52 0.67 (2)
Ratio of net investment income to average net assets 2.67 (2) 2.25 2.33 2.48 2.79 (2)
Portfolio turnover rate 10 7 32 104 44
Net assets, end of period ($ x 1,000) 462,402 403,271 263,904 151,418 80,980
</TABLE>
1 Not annualized.
2 Annualized.
3 Would have been 0.61% if certain non-routine expenses had been included.
See accompanying Notes to Financial Statements.
60
<PAGE>
<TABLE>
<CAPTION>
11/1/99- 11/1/98- 11/1/97- 11/1/96- 11/20/95-
4/30/00 10/31/99 10/31/98 10/31/97 10/31/96
Schwab MarketTrack Conservative Portfolio (Unaudited)
PER-SHARE DATA ($)
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset valueat beginning of period 12.73 12.11 11.71 10.51 10.00
-----------------------------------------------------------------
Income from investment operations:
Net investment income 0.24 0.41 0.35 0.35 0.33
Net realized and unrealized gain on investments 0.35 0.68 0.64 1.21 0.48
-----------------------------------------------------------------
Total income from investment operations 0.59 1.09 0.99 1.56 0.81
-----------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.24) (0.40) (0.35) (0.36) (0.30)
Distributions from capital gains (0.03) (0.07) (0.24) -- --
-----------------------------------------------------------------
Total distributions (0.27) (0.47) (0.59) (0.36) (0.30)
-----------------------------------------------------------------
Net asset value at end of period 13.05 12.73 12.11 11.71 10.51
-----------------------------------------------------------------
Total return (%) 4.58(1) 9.13 8.64 15.12 8.18 (1)
RATIOS/SUPPLEMENTAL DATA (%)
-----------------------------------------------------------------------------------------------------------------------------
Ratio of net operating expenses to average net assets 0.60 (2,3) 0.57 0.58 0.81 0.89 (2)
Expense reductions reflected in above ratio 0.24 (2) 0.35 0.64 0.84 1.16 (2)
Ratio of net investment income to average net assets 3.66 (2) 3.28 3.26 3.40 3.49 (2)
Portfolio turnover rate 10 8 58 104 64
Net assets, end of period ($ x 1,000) 181,569 167,402 114,898 40,559 22,459
</TABLE>
1 Not annualized.
2 Annualized.
3 Would have been 0.61% if certain non-routine expenses had been included.
See accompanying Notes to Financial Statements.
61
<PAGE>
Notes to Financial Statements
For the six months ended April 30, 2000 (Unaudited)
(All currency amounts are in thousands unless otherwise noted.)
1. DESCRIPTION OF THE FUNDS
The Schwab MarketTrack All Equity Portfolio, Schwab MarketTrack Growth
Portfolio, Schwab MarketTrack Balanced Portfolio and Schwab MarketTrack
Conservative Portfolio (the "funds") are series of Schwab Capital Trust (the
"trust"), a no-load, open-end investment management company organized as a
Massachusetts business trust on May 7, 1993 and registered under the Investment
Company Act of 1940, as amended (the "1940 Act").
In addition to the funds, the trust also offers the Schwab Total Stock Market
Index Fund(TM), Schwab S&P 500 Fund, Schwab Small-Cap Index Fund(R), Schwab
International Index Fund(R), Schwab Analytics Fund(R), Schwab MarketManager
International Portfolio, Schwab MarketManager Growth Portfolio, Schwab
MarketManager Balanced Portfolio, Schwab MarketManager Small Cap Portfolio,
Institutional Select(TM) S&P 500 Fund, Institutional Select(TM) Large-Cap Value
Index Fund and Institutional Select(TM) Small-Cap Value Index 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 at fair value as determined by the funds'
investment adviser pursuant to guidelines adopted in good faith by the Board of
Trustees. Investments in underlying funds are valued at their respective net
asset values as determined by those funds, in accordance with the 1940 Act, for
a given day. Futures contracts, 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
discount) is recorded on accrual basis. Realized gains and losses from security
transactions are determined on an identified cost basis.
62
<PAGE>
FUTURES CONTRACTS -- The funds 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 the daily fluctuation in the value of
the contract. When the contract is closed, the funds record a realized gain or
loss equal to the difference between the value of the contract at the time it
was opened and the time it was 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 the funds' statement of operations at any given time. As of
April 30, 2000, the Schwab MarketTrack All Equity Portfolio had the following
open S&P 500 Index futures contracts:
<TABLE>
<CAPTION>
Number of Contract Unrealized
Contracts Value Expiration Depreciation
-------- -------- -------- --------
<S> <C> <C> <C>
4 $1,460 06/16/00 $(63)
</TABLE>
Eligible securities on deposit with broker available to cover margin
requirements for open futures positions at April 30, 2000 were $80. The fund has
segregated short-term investments with the custodian for the remaining portion
of the contract value.
FOREIGN CURRENCY TRANSLATION--The accounting records of the funds are maintained
in U.S. dollars. Investment securities and all other assets and liabilities of
the funds denominated in a foreign currency are translated into U.S. dollars at
the exchange rates on April 30, 2000. 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.
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.
63
<PAGE>
Notes to Financial Statements (continued)
The aggregate unrealized appreciation and depreciation for securities held by
the funds at April 30, 2000, which was substantially the same for financial
reporting and federal income tax purposes, was as follows:
<TABLE>
<CAPTION>
Net Unrealized Appreciated Depreciated
Portfolio Appreciation Securities Securities
-------- -------- ---------
<S> <C> <C> <C>
Schwab MarketTrack All Equity Portfolio $ 39,595 $ 40,858 $ (1,263)
Schwab MarketTrack Growth Portfolio 114,815 123,668 (8,853)
Schwab MarketTrack Balanced Portfolio 75,359 85,949 (10,590)
Schwab MarketTrack Conservative Portfolio 15,283 21,122 (5,839)
</TABLE>
RECLASSIFICATIONS -- 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. As of April 30, 2000, there were no reclassifications.
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT -- The trust has an
investment advisory and administration agreement with Charles Schwab
Investment Management, Inc. (the "investment adviser"). For advisory services
and facilities furnished, each fund pays an annual fee, payable monthly, of
0.54% of the first $500 million of average daily net assets and 0.49% of such
net assets over $500 million. The investment adviser has reduced a portion of
its fee for the six months ended April 30, 2000 (see Note 4).
Prior to February 28, 1999, each fund paid an annual fee, payable monthly, of
0.74% of the first $1 billion of average daily net assets, and 0.69% of the next
$1 billion, and 0.64% of such net assets over $2 billion.
TRANSFER AGENCY AND SHAREHOLDER SERVICE AGREEMENTS -- The trust has transfer
agency and shareholder service agreements with Charles Schwab & Co., Inc.
("Schwab"). For services provided under these agreements, Schwab receives an
annual fee, payable monthly, of 0.05% of each fund's average daily net assets
for transfer agency services and 0.20% of such net assets for shareholder
services.
OFFICERS AND TRUSTEES -- Certain officers and trustees of the trust are also
officers and/or directors of the investment adviser and/or Schwab. For the
period ended April 30, 2000, the trust made no direct payments to its officers
or trustees who were "interested persons" within the meaning of the 1940 Act.
The funds incurred fees aggregating $23 related to the trust's unaffiliated
trustees.
OTHER AFFILIATED PARTIES AND TRANSACTIONS --Pursuant to an Exemptive Order
issued by the SEC, the funds may invest in other SchwabFunds(R). As of April 30,
2000 the Schwab MarketTrack All Equity Portfolio, Schwab MarketTrack Growth
Portfolio, Schwab MarketTrack Balanced Portfolio and Schwab MarketTrack
Conservative
64
<PAGE>
Portfolio owned 8.1%, 8.5%, 5.5%, 1.4% respectively of the outstanding shares of
the Schwab International Index Fund(R); 1.8%, 1.1%, 0.7%, 0.2%, respectively of
the outstanding shares of the Schwab S&P 500 Fund(R); 0.0%, 13.3%, 27.7%, 17.1%,
respectively of the outstanding shares of the Schwab Total Bond Market Index
Fund(TM); 6.4%, 8.3%, 5.4%, 1.4%, respectively of the outstanding shares of the
Schwab Small-Cap Index Fund(R) and 0.0%, 0.1%, 0.1%, 0.0%, respectively of the
outstanding shares of the Schwab Value Advantage Money Fund.
As of April 30, 2000, the Schwab MarketTrack Growth Portfolio, Schwab
MarketTrack Balanced Portfolio and Schwab MarketTrack Conservative Portfolio
held common stock of the Charles Schwab Corp., an affiliated issuer, with a
current value of $358, $243 and $58, respectively.
4. EXPENSES REDUCED AND ABSORBED BY THE INVESTMENT ADVISER AND SCHWAB
The investment adviser and Schwab guarantee that, through at least February 28,
2001, each fund's total operating expenses, including the expenses indirectly
incurred through investment in underlying SchwabFunds(R), will not exceed 0.60%
of the fund's average daily net assets, after waivers and reimbursements. For
purposes of this guarantee, operating expenses do not include interest, taxes
and certain non-routine expenses. The operating expense ratio for the six months
ended April 30, 2000 did include non-routine expenses.
For the six months ended April 30, 2000, the total of such fees and expenses
reduced by the investment adviser were $383, $632, $560, and $218, respectively
for the Schwab MarketTrack All Equity Portfolio, Schwab MarketTrack Growth
Portfolio, Schwab MarketTrack Balanced Portfolio and Schwab MarketTrack
Conservative Portfolio.
5. BORROWING AGREEMENTS
The trusts have both committed and uncommitted lines of credit arrangements with
PNCBank N.A., Bank of America NT & SA and The Bank of New York, whereby the
trusts may borrow on behalf of the funds, as a temporary measure to satisfy
redemption requests or for extraordinary or emergency purposes. The trusts may
borrow in an aggregate amount of up to $150 million from PNC Bank N.A., $133
million from Bank of America NT &SA and $183 million from The Bank of New York.
Amounts borrowed under these arrangements bear interest at periodically
negotiated rates. The funds also pay annual fees for the unused balance of the
committed line of credit. During the reporting period, the funds only borrowed
against the uncommitted lines of credit. As of April 30, 2000, there were no
borrowings outstanding.
65
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. INVESTMENT TRANSACTIONS
Purchases, sales and maturities of investment securities, other than short-term
obligations and U.S. Government securities, for the six months ended April 30,
2000, were as follows:
<TABLE>
Proceeds of Sales
Portfolio Purchases and Maturities
--------- -------- -------
<S> <C> <C>
Schwab MarketTrack All Equity Portfolio $115,983 $6,660
Schwab MarketTrack Growth Portfolio 100,652 36,506
Schwab MarketTrack Balanced Portfolio 78,008 42,053
Schwab MarketTrack Conservative Portfolio 23,921 16,198
</TABLE>
66
<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 YieldPlus Fund-TM-
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.
<PAGE>
[LOGO]
INVESTMENT ADVISER
Charles Schwab Investment Management, Inc.
101 Montgomery Street, San Francisco, CA 94104
DISTRIBUTOR
Charles Schwab & Co., Inc.
P.O. Box 7575, San Francisco, CA 94120-7575
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
-C- 2000 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC/NYSE.
Printed on recycled paper. MKT3559-2 (6/00)
<PAGE>
SCHWABFUNDS-REGISTERED TRADEMARK-
SCHWAB
ANALYTICS
FUND-REGISTERED TRADEMARK-
SEMIANNUAL REPORT
AND
AN IMPORTANT NOTICE REGARDING
DELIVERY OF SHAREHOLDER
DOCUMENTS
April 30, 2000
<PAGE>
IMPORTANT NOTICE REGARDING DELIVERY OF SHAREHOLDER DOCUMENTS
The Securities and Exchange Commission permits mutual funds to deliver only one
copy of shareholder documents, including prospectuses and shareholder reports,
to fund investors with multiple accounts at the same residential or post office
box address. This practice is commonly called "householding" and is intended to
eliminate duplicate mailings of shareholder documents.
Mailings of your SchwabFunds shareholder documents may be householded
indefinitely unless you instruct us otherwise.
ADDITIONAL COPIES OF SHAREHOLDER DOCUMENTS
ALL SCHWABFUNDS PROSPECTUSES AND SHAREHOLDER REPORTS ARE AVAILABLE FREE OF
CHARGE AND MAY BE REQUESTED AT ANY TIME BY CALLING SCHWAB AS INDICATED BELOW.
SCHWABFUNDS PROSPECTUSES ARE ALSO AVAILABLE ON OUR WEB SITE AT WWW.SCHWAB.COM.
If you would prefer that your SchwabFunds mailings not be householded, please
contact:
- SCHWAB SIGNATURE SERVICES-TM- CLIENTS: Schwab Signature Services.
- INVESTMENT MANAGER CLIENTS: Schwab at 1-800-515-2157, or your investment
manager.
- ALL OTHER CLIENTS: Schwab at 1-800-435-4000.
Your instructions that householding not apply to your accounts holding
SchwabFunds will be effective within 30 days of receipt by Schwab.
<PAGE>
SCHWABFUNDS-REGISTERED TRADEMARK-
SCHWAB
ANALYTICS
FUND-REGISTERED TRADEMARK-
Semiannual Report
April 30, 2000
<PAGE>
SCHWAB ANALYTICS FUND-REGISTERED TRADEMARK-
We are pleased to bring you this semiannual report for the Schwab Analytics Fund
(the fund) for the six-month period ended April 30, 2000.
The fund seeks to achieve long-term capital growth. To meet its objective, the
fund uses quantitative techniques, proprietary software models and real-time
databases to systematically select stocks that exhibit a combination of
attributes that historically have been associated with aggregate total returns
greater than that of the S&P 500-Registered Trademark- Index (the Index) over
the long term. The fund also intends to maintain broad industry diversification
similar to that of the Index. By doing so, the fund seeks to outperform the
Index over the long term without significantly increasing the risk to the
investor.
FUND LISTINGS
The fund is listed in THE WALL STREET JOURNAL, USA TODAY, INVESTOR'S BUSINESS
DAILY and most local newspapers as ANALYTIC under the heading
SCHWABFUNDS-Registered Trademark-. Its computer quotation symbol is SWANX.
CONTENTS
<TABLE>
<S> <C>
---------------------------------------------
A Message from the Chairman 1
---------------------------------------------
What Every Investor Should Know 2
---------------------------------------------
Market Overview 4
---------------------------------------------
Schwab Analytics Fund
FUND PERFORMANCE 8
PORTFOLIO SNAPSHOT 10
---------------------------------------------
Portfolio Management 12
---------------------------------------------
Fund Discussion 13
---------------------------------------------
Glossary 15
---------------------------------------------
Financial Statements and Notes 17
---------------------------------------------
</TABLE>
<PAGE>
A MESSAGE FROM THE CHAIRMAN
[PHOTO]
Dear Shareholder,
During the last few years, the benefits of investing have been readily apparent,
while the risks have been somewhat less obvious. In recent months, however,
investors have been subject to larger swings in the market, even within the span
of a single day.
Given this divergent environment, the message is clear: Expect volatility,
maintain a long-term view and ensure your investment strategy is appropriate for
your risk tolerance and time horizon. One way to lessen the impact of volatility
on your portfolio is to adequately diversify your investments, both within and
across asset sectors, namely cash equivalents, bonds and stocks. With its broad
range of funds, SchwabFunds-Registered Trademark- can help form the foundation
of a diversified investment plan. Our asset allocation funds can even provide
diversification within a single fund.
We recently added four new sector funds, the Schwab Focus Funds, to our
SchwabFunds offering. Each invests in a group of industries within a specific
sector--Communications, Financial Services, Healthcare and Technology--and can
be an effective complement to individual stock investing. Each Focus Fund
concentrates its investing in companies in a specific sector and may involve a
greater degree of risk than an investment in mutual funds with greater
diversification. For more information on the Schwab Focus Funds, please call
1-800-435-4000 and request a prospectus. The prospectus contains more
information on fund fees and expenses as well as risks. Please read it carefully
before investing.
As a leader in online brokerage, we recognize the value of the web as a means of
communicating timely, relevant information to investors. Regular updates on all
the SchwabFunds, including performance data, are available on our Web site at
WWW.SCHWAB.COM/SCHWABFUNDS. We encourage you to take advantage of this valuable
resource.
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.
Sincerely,
/s/ Charles R. Schwab
Charles R. Schwab
April 30, 2000
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 tend not to move in
tandem. 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 Share Shares
Investment 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.)
* Regular investing strategies such as dollar-cost averaging do not assure a
profit or protect against a loss in declining markets. Since such a strategy
involves continuous investment, investors should consider their ability to
continue purchases through periods of low price levels.
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. You can choose to invest as little as $100--twice a month, monthly or
quarterly.(1)
With Schwab MoneyLink-Registered Trademark- electronic funds transfer service,
you can easily request fund transfers between your Schwab account and your
accounts at other financial institutions. You can schedule automatically
recurring transfers for easy long-term savings. Or request a transfer via the
Web, by automated touch-tone phone, or through a Schwab representative anytime,
day or night.
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 on the Automatic Investment Plan
or MoneyLink, please call us at 1-800-435-4000.
WE MAKE IT EASY TO INVEST
We try to make it easy and convenient for you to invest in
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/SCHWABFUNDS; through
our automated touch-tone telephone service, TeleBroker-Registered Trademark-, by
calling 1-800-272-4922; 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 updated fund performance data 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
April 2000 marked the beginning of the tenth year of the current expansion,
making it the longest in U.S. history. Gross Domestic Product (GDP) grew at a
real (inflation adjusted) rate of 4.6% during 1999--the fourth consecutive year
at 4% or more and 5.4% during the first quarter of 2000. This rate is considered
by most economists and the Federal Reserve (Fed) to be in excess of what the
economy can absorb without experiencing inflationary pressures, perhaps 3.5% to
4.0%. High levels of consumer spending fueled by rising incomes, personal wealth
and consumer confidence, as well as strong business capital investment and a
healthy housing sector, have been the principal factors driving this lengthy
expansion.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
REAL GDP GROWTH RATE
Quarterly Percentage Change (Annualized Rate)
<TABLE>
<S> <C>
Q1 1990 5.0%
Q2 1990 1.0%
Q3 1990 -0.6%
Q4 1990 -3.0%
Q1 1991 -1.7%
Q2 1991 2.6%
Q3 1991 1.3%
Q4 1991 2.5%
Q1 1992 4.3%
Q2 1992 4.0%
Q3 1992 3.1%
Q4 1992 5.2%
Q1 1993 -0.7%
Q2 1993 2.1%
Q3 1993 1.5%
Q4 1993 6.0%
Q1 1994 3.6%
Q2 1994 5.7%
Q3 1994 2.2%
Q4 1994 5.1%
Q1 1995 1.5%
Q2 1995 0.8%
Q3 1995 3.2%
Q4 1995 3.3%
Q1 1996 2.9%
Q2 1996 6.9%
Q3 1996 2.2%
Q4 1996 4.9%
Q1 1997 4.9%
Q2 1997 5.1%
Q3 1997 4.0%
Q4 1997 3.1%
Q1 1998 6.7%
Q2 1998 2.1%
Q3 1998 3.8%
Q4 1998 5.9%
Q1 1999 3.7%
Q2 1999 1.9%
Q3 1999 5.7%
Q4 1999 7.3%
Q1 2000 5.4%
</TABLE>
Source: BLOOMBERG L.P.
Looking ahead, the availability of increasingly scarce labor resources and the
domestic consumers' response to continued stock market volatility may be key
determinants of whether the economy continues on its current course or softens
throughout 2000. The Fed has raised the federal funds rate by 1.75% since June
1999 in an as yet unsuccessful effort to moderate the economy's rapid growth
rate. The consensus of most economists is that the U.S. economy appears poised
for continued strong growth and additional intervention by the Fed (increases in
the federal funds rate) until the growth rate of the economy slows to a more
sustainable level.
UNEMPLOYMENT
The unemployment rate dropped to 3.9% in April 2000, a three-decade low.
Employment growth continues to outstrip population growth. Reflecting a
shrinking pool of available workers, labor markets continue to be extremely
tight in many areas of the country and there has been some regional evidence of
labor shortages driving up wages. The labor force participation rate, which
measures the employment population as a percent of the total population, is at a
post-war high. Growth in the labor force has slowed, and the Fed has expressed
its concern that strong demand and tight labor markets may continue to put
pressure on manufacturers and service providers to raise prices.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
U.S. UNEMPLOYMENT RATE
<TABLE>
<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 6.8%
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%
May-99 4.2%
Jun-99 4.3%
Jul-99 4.3%
Aug-99 4.2%
Sep-99 4.2%
Oct-99 4.1%
Nov-99 4.1%
Dec-99 4.1%
Jan-00 4.0%
Feb-00 4.1%
Mar-00 4.1%
Apr-00 3.9%
</TABLE>
Source: BLOOMBERG L.P.
4
<PAGE>
INFLATION
Virtually all measures of price inflation exhibited upward trends during the
reporting period. The Consumer Price Index (CPI) rose 3.0% for the year ended
April 30, 2000. Its core rate (which excludes the more volatile food and energy
components) was up 2.2%. The Personal Consumption Expenditures Index, a measure
of inflation closely watched by the Fed, rose 2.3% for the same period. The GDP
price deflator, the broadest measure of inflation, indicated prices rising at an
annual rate of 3.2% during the first quarter of 2000.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
MEASURES OF INFLATION
<TABLE>
<CAPTION>
CONSUMER PRICE INDEX EMPLOYMENT COST-INDEX
12-MONTH CHANGE 12-MONTH CHANGE
(MONTHLY) (QUARTERLY)
<S> <C> <C>
Jan-90 5.2% 5.5%
Feb-90 5.3% 5.5%
Mar-90 5.2% 5.5%
Apr-90 4.7% 5.4%
May-90 4.4% 5.4%
Jun-90 4.7% 5.4%
Jul-90 4.8% 5.2%
Aug-90 5.6% 5.2%
Sep-90 6.2% 5.2%
Oct-90 6.3% 4.9%
Nov-90 6.3% 4.9%
Dec-90 6.1% 4.9%
Jan-91 5.7% 4.6%
Feb-91 5.3% 4.6%
Mar-91 4.9% 4.6%
Apr-91 4.9% 4.6%
May-91 5.0% 4.6%
Jun-91 4.7% 4.6%
Jul-91 4.4% 4.3%
Aug-91 3.8% 4.3%
Sep-91 3.4% 4.3%
Oct-91 2.9% 4.3%
Nov-91 3.0% 4.3%
Dec-91 3.1% 4.3%
Jan-92 2.6% 4.0%
Feb-92 2.8% 4.0%
Mar-92 3.2% 4.0%
Apr-92 3.2% 3.6%
May-92 3.0% 3.6%
Jun-92 3.1% 3.6%
Jul-92 3.2% 3.5%
Aug-92 3.1% 3.5%
Sep-92 3.0% 3.5%
Oct-92 3.2% 3.5%
Nov-92 3.0% 3.5%
Dec-92 2.9% 3.5%
Jan-93 3.3% 3.5%
Feb-93 3.2% 3.5%
Mar-93 3.1% 3.5%
Apr-93 3.2% 3.6%
May-93 3.2% 3.6%
Jun-93 3.0% 3.6%
Jul-93 2.8% 3.6%
Aug-93 2.8% 3.6%
Sep-93 2.7% 3.6%
Oct-93 2.8% 3.5%
Nov-93 2.7% 3.5%
Dec-93 2.7% 3.5%
Jan-94 2.5% 3.2%
Feb-94 2.5% 3.2%
Mar-94 2.5% 3.2%
Apr-94 2.4% 3.2%
May-94 2.3% 3.2%
Jun-94 2.5% 3.2%
Jul-94 2.8% 3.2%
Aug-94 2.9% 3.2%
Sep-94 3.0% 3.2%
Oct-94 2.6% 3.0%
Nov-94 2.7% 3.0%
Dec-94 2.7% 3.0%
Jan-95 2.8% 2.9%
Feb-95 2.9% 2.9%
Mar-95 2.9% 2.9%
Apr-95 3.1% 2.9%
May-95 3.2% 2.9%
Jun-95 3.0% 2.9%
Jul-95 2.8% 2.7%
Aug-95 2.6% 2.7%
Sep-95 2.5% 2.7%
Oct-95 2.8% 2.7%
Nov-95 2.6% 2.7%
Dec-95 2.5% 2.7%
Jan-96 2.7% 2.8%
Feb-96 2.7% 2.8%
Mar-96 2.8% 2.8%
Apr-96 2.9% 2.9%
May-96 2.9% 2.9%
Jun-96 2.8% 2.9%
Jul-96 3.0% 2.8%
Aug-96 2.9% 2.8%
Sep-96 3.0% 2.8%
Oct-96 3.0% 2.9%
Nov-96 3.3% 2.9%
Dec-96 3.3% 2.9%
Jan-97 3.0% 2.9%
Feb-97 3.0% 2.9%
Mar-97 2.8% 2.9%
Apr-97 2.5% 2.8%
May-97 2.2% 2.8%
Jun-97 2.3% 2.8%
Jul-97 2.2% 3.0%
Aug-97 2.2% 3.0%
Sep-97 2.2% 3.0%
Oct-97 2.1% 3.3%
Nov-97 1.8% 3.3%
Dec-97 1.7% 3.3%
Jan-98 1.6% 3.3%
Feb-98 1.4% 3.3%
Mar-98 1.4% 3.3%
Apr-98 1.4% 3.5%
May-98 1.7% 3.5%
Jun-98 1.7% 3.5%
Jul-98 1.7% 3.7%
Aug-98 1.6% 3.7%
Sep-98 1.5% 3.7%
Oct-98 1.5% 3.4%
Nov-98 1.5% 3.4%
Dec-98 1.6% 3.4%
Jan-99 1.7% 3.0%
Feb-99 1.6% 3.0%
Mar-99 1.7% 3.0%
Apr-99 2.3% 3.2%
May-99 2.1% 3.2%
Jun-99 2.0% 3.2%
Jul-99 2.1% 3.1%
Aug-99 2.3% 3.1%
Sep-99 2.6% 3.1%
Oct-99 2.6% 3.4%
Nov-99 2.6% 3.4%
Dec-99 2.7% 3.4%
Jan-00 2.7% 4.3%
Feb-00 3.2% 4.3%
Mar-00 3.7% 4.3%
Apr-00 3.0%
</TABLE>
Source: BLOOMBERG L.P.
Wage inflation also exhibited a marked upward trend during the reporting period.
The Employment Cost Index, a measurement of the cost to employ workers,
including both wages and benefits, rose 4.3% for the year ended March 31, 2000.
Although these rates of price and employment cost inflation may not be
alarmingly high by historical standards, the Fed has demonstrated its resolve to
keep inflation at bay through its communications and its actions (six federal
funds rate increases since June 1999). In particular, the Fed has expressed
concern that if labor markets continue to tighten, increases in wages will
outpace productivity growth and place additional upward pressure on prices. In
such an environment, productivity growth becomes particularly critical, as it
enables companies to pay higher wages without raising prices. Non-farm
productivity grew 3.0% in 1999 and at a 2.4% annualized rate in the first
quarter of 2000--strong gains to be sure, but likely not strong enough to offset
recent increases in employment costs.
ASSET CLASS PERFORMANCE
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ASSET CLASS % RETURNS DURING REPORTING PERIOD
<TABLE>
<CAPTION>
LEHMAN AGGREGATE MSCI-EAFE RUSSELL 2000 S&P 500
BOND INDEX (ND) INDEX SMALL-CAP INDEX INDEX
<S> <C> <C> <C> <C>
Nov/5/99 0.61% 0.49% 3.23% 0.54%
Nov/12/99 0.73% 2.02% 4.95% 2.44%
Nov/19/99 0.32% 3.91% 7.62% 4.35%
Nov/26/99 0.11% 5.22% 7.08% 3.95%
Dec/3/99 0.15% 5.26% 8.43% 5.22%
Dec/10/99 0.78% 6.67% 8.94% 4.10%
Dec/17/99 -0.30% 6.78% 8.89% 4.39%
Dec/24/99 -0.61% 10.69% 12.68% 7.13%
Dec/31/99 -0.51% 12.55% 17.96% 8.04%
Jan/7/00 -0.57% 7.42% 14.15% 6.00%
Jan/14/00 -1.03% 10.06% 18.67% 7.74%
Jan/21/00 -1.19% 7.61% 24.83% 5.99%
Jan/28/00 -0.52% 7.11% 18.01% 0.02%
Feb/4/00 -0.39% 9.34% 22.92% 4.81%
Feb/11/00 -0.68% 9.96% 25.68% 2.07%
Feb/18/00 -0.15% 8.31% 27.70% -0.95%
Feb/25/00 0.50% 9.16% 30.29% -1.89%
Mar/3/00 0.68% 11.46% 40.04% 3.81%
Mar/10/00 0.48% 11.44% 41.37% 2.77%
Mar/17/00 1.18% 10.11% 34.58% 7.88%
Mar/24/00 1.05% 12.27% 34.49% 12.51%
Mar/31/00 1.68% 12.10% 26.32% 10.49%
Apr/7/00 2.49% 10.97% 27.26% 11.80%
Apr/14/00 2.42% 7.09% 6.40% 0.02%
Apr/21/00 2.33% 6.21% 12.97% 5.77%
Apr/28/00 1.38% 6.10% 18.72% 7.17%
</TABLE>
Compiled by CHARLES SCHWAB & CO., INC.
As shown on the chart above, equity valuations, especially of the small-cap and
technology stocks, exhibited extreme volatility during the reporting period. The
price/earnings (P/E) ratio for the
5
<PAGE>
MARKET OVERVIEW (continued)
NASDAQ 100 Index fell by 33% in just 14 trading days during March and April.
Remarkably, it remained at levels above 100 even after its precipitous decline.
Reversing a five-year period of relative under performance, small-cap stocks
outperformed both large-cap stocks and international stocks for the six-month
reporting period ended 4/30/00. Small-cap stocks as represented by the Russell
2000-Registered Trademark- Index achieved a total return of 18.7%. Large-cap
stocks, as represented by the S&P 500-Registered Trademark- Index, returned
7.2%.
Dampened by relatively weak foreign currencies, International stocks, as
represented by the Morgan Stanley Capital International Europe, Australia, Far
East (MSCI-EAFE)-Registered Trademark- Index, achieved a return of 6.7% for the
six-month reporting period ending 4/30/00. Reflecting the rise in
intermediate-term interest rates, fixed income returns were generally weak for
the period. Bond returns, as represented by the Lehman Brothers Aggregate Bond
Index, were 1.4% for the six-month reporting period.
U.S. EQUITY VALUATION
The P/E ratio for the S&P 500-Registered Trademark- Index remained at very high
levels during the reporting period and ended the period at a lofty 29.6 times
earnings, slightly less 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
earning potential. Based on other traditional market valuation measures such as
the price-to-book value ratio or dividend yield, the U.S. stock market continues
to remain at record or near record high valuation levels. Reflecting the
extraordinary valuations of the technology sector, the P/E ratio (12 months
trailing) for the NASDAQ 100 Index ended the period at 120.2, as compared to an
average of 67 over the last five years.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
S&P 500 PRICE EARNINGS RATIO
<TABLE>
<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 14.90
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 25.50
Sep-92 24.37
Oct-92 23.94
Nov-92 24.08
Dec-92 24.01
Jan-93 24.20
Feb-93 24.25
Mar-93 24.22
Apr-93 23.20
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 20.10
May-94 20.16
Jun-94 19.76
Jul-94 18.64
Aug-94 18.90
Sep-94 18.26
Oct-94 17.55
Nov-94 16.58
Dec-94 16.98
Jan-95 16.23
Feb-95 16.20
Mar-95 16.50
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 19.30
Jul-96 18.31
Aug-96 18.62
Sep-96 19.75
Oct-96 19.60
Nov-96 21.05
Dec-96 20.70
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 24.00
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 33.90
May-99 32.74
Jun-99 34.70
Jul-99 31.62
Aug-99 31.21
Sep-99 29.90
Oct-99 29.92
Nov-99 30.65
Dec-99 32.53
Jan-00 29.78
Feb-00 28.59
Mar-00 31.50
Apr-00 29.58
</TABLE>
<TABLE>
<S> <C>
30-Year Average 15.8
</TABLE>
Source: BLOOMBERG L.P.
TREASURY BOND YIELDS
Continuing a trend which began in October 1998, both long-term and
intermediate-term rates continued to climb upward during the first three months
of the reporting period. The primary driver of this upward trend was the
continued strong growth of the domestic economy.
6
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
10-YEAR AND 5-YEAR TREASURY BOND YIELDS
<TABLE>
<CAPTION>
TEN-YEAR TREASURY FIVE-YEAR TREASURY
BOND YIELD NOTE YIELD
<S> <C> <C>
Oct/1/99 5.97% 5.86%
Oct/8/99 6.03% 5.95%
Oct/15/99 6.07% 5.97%
Oct/22/99 6.19% 6.10%
Oct/29/99 6.02% 5.95%
Nov/5/99 5.93% 5.86%
Nov/12/99 5.93% 5.86%
Nov/19/99 6.06% 5.99%
Nov/26/99 6.12% 6.05%
Dec/3/99 6.16% 6.07%
Dec/10/99 6.07% 5.98%
Dec/17/99 6.28% 6.19%
Dec/24/99 6.41% 6.31%
Dec/31/99 6.44% 6.34%
Jan/7/00 6.52% 6.41%
Jan/14/00 6.68% 6.58%
Jan/21/00 6.77% 6.63%
Jan/28/00 6.66% 6.66%
Feb/4/00 6.55% 6.65%
Feb/11/00 6.60% 6.70%
Feb/18/00 6.49% 6.68%
Feb/25/00 6.33% 6.47%
Mar/3/00 6.39% 6.59%
Mar/10/00 6.38% 6.60%
Mar/17/00 6.19% 6.45%
Mar/24/00 6.19% 6.50%
Mar/31/00 6.00% 6.31%
Apr/7/00 5.58% 6.18%
Apr/14/00 5.58% 6.11%
Apr/21/00 5.99% 6.24%
Apr/28/00 6.21% 6.54%
</TABLE>
Source: BLOOMBERG L.P.
Treasury bond yields exhibited an unusual pattern during the second half of the
reporting period. Typically the yield on ten-year treasury securities exceeds
those on five-year securities to compensate investors for the additional
interest rate risk associated with longer duration securities. As shown in the
graph above, late in January, this normal relationship reversed, resulting in
what is referred to as a negative yield curve. This situation is a result of the
accumulating budget surpluses, which are allowing the federal government to
downsize its debt. The Treasury Department announced that it plans to buy back
$30 billion in debt in 2000 starting with longer dated maturities because those
payments carry the steepest interest payment. The anticipated reduction in
supply resulting from this buyback program, as well as scaled back issuance,
increased the price of the longer-term securities and resulted in a reduction in
yields.
INTERNATIONAL PERFORMANCE
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
MSCI-EAFE-Registered Trademark- COUNTRY US$ RETURNS
For the Six-Month Period Ended 4/30/00
<TABLE>
<S> <C>
Belgium -21.4%
Austria -14.3%
Ireland -10.4%
Switzerland -6.0%
Norway -5.6%
New Zealand -1.1%
Australia -0.8%
United Kingdom -0.3%
Singapore 4.8%
Netherlands 5.1%
Portugal 6.0%
Italy 6.2%
Japan 7.8%
Denmark 8.2%
Spain 9.4%
Hong Kong 17.9%
France 21.0%
Germany 21.8%
Sweden 70.7%
Finland 117.5%
</TABLE>
Source: DATASTREAM
The MSCI-EAFE Index gained 6.7% in U.S. dollar terms (excluding reinvested
dividends) during the six-month reporting period. In local currency terms, it
gained 15.6%, reflecting the relative weakness of most foreign currencies
(compared to the dollar) during the period.
The strongest performing countries for the period were Finland, Sweden and
Germany. Those countries with the largest negative returns were Belgium, Austria
and Ireland.
7
<PAGE>
SCHWAB ANALYTICS FUND-REGISTERED TRADEMARK-
FUND PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 4/30/00
<TABLE>
<CAPTION>
SINCE INCEPTION
SIX MONTHS(1) ONE YEAR (7/1/96)
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------
SCHWAB ANALYTICS FUND(2) 12.26% 20.13% 27.12%
---------------------------------------------------------------------------------------------------------------
S&P 500-Registered Trademark- Index 7.19% 10.13% 24.27%
---------------------------------------------------------------------------------------------------------------
Average Large-Cap Fund(3) 10.79% 12.86% 20.92%
---------------------------------------------------------------------------------------------------------------
</TABLE>
National Association of Securities Dealers, Inc. (NASD) regulations require that
we report performance data as of the most recent calendar quarter -- in this
case, the quarter ended 3/31/00. As of 3/31/00, the fund's six-month, one-year
and since-inception average annual total returns were 26.93%, 31.36% and 29.31%,
respectively.(2)
(1) Actual, not annualized, since period is less than one year.
(2) A portion of the fund's expenses was reduced during the reporting period.
Without such reductions, the fund's average annual returns would have been
lower.
(3) Based on data supplied by Morningstar, Inc. Average annual total returns for
2,297 large-cap funds, for the six-month, one-year and since-inception
periods. These funds may or may not follow a strategy similar to that
followed by the Schwab Analytics Fund.
8
<PAGE>
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SCHWAB ANALYTICS FUND S&P 500
<S> <C> <C>
07/01/96 $10,000 $10,000
07/31/96 $9,690 $9,558
08/31/96 $9,880 $9,760
09/30/96 $10,620 $10,308
10/31/96 $11,010 $10,593
11/30/96 $11,640 $11,393
12/31/96 $11,368 $11,168
01/31/97 $11,959 $11,865
02/28/97 $11,908 $11,958
03/31/97 $11,287 $11,468
04/30/97 $12,081 $12,152
05/31/97 $12,722 $12,890
06/30/97 $13,272 $13,468
07/31/97 $14,462 $14,539
08/31/97 $13,821 $13,724
09/30/97 $14,646 $14,475
10/31/97 $13,964 $13,992
11/30/97 $14,676 $14,640
12/31/97 $14,963 $14,891
01/31/98 $15,054 $15,057
02/28/98 $16,155 $16,142
03/31/98 $16,801 $16,969
04/30/98 $16,949 $17,140
05/31/98 $16,620 $16,845
06/30/98 $17,448 $17,529
07/31/98 $17,198 $17,343
08/31/98 $14,555 $14,839
09/30/98 $15,565 $15,790
10/31/98 $16,529 $17,074
11/30/98 $17,561 $18,109
12/31/98 $19,158 $19,152
01/31/99 $20,138 $19,952
02/28/99 $19,134 $19,332
03/31/99 $19,961 $20,105
04/30/99 $20,882 $20,883
05/31/99 $20,493 $20,390
06/30/99 $21,910 $21,522
07/31/99 $21,189 $20,850
08/31/99 $21,154 $20,746
09/30/99 $20,658 $20,177
10/31/99 $22,347 $21,455
11/30/99 $22,808 $21,891
12/31/99 $24,474 $23,180
01/31/00 $23,416 $22,017
02/29/00 $24,296 $21,600
03/31/00 $26,222 $23,713
04/30/00 $25,087 $22,999
</TABLE>
The above graph compares the growth of a hypothetical $10,000 investment in the
Schwab Analytics Fund-Registered Trademark-, made at its inception, with similar
investments in the S&P 500-Registered Trademark- Index.
THIS INFORMATION 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 10/31/99 (000s) $288,655
----------------------------------------------------------------------
Total net assets as of 4/30/00 (000s) $375,091
----------------------------------------------------------------------
Percentage growth from 10/31/99 to 4/30/00 29.9%
----------------------------------------------------------------------
</TABLE>
9
<PAGE>
SCHWAB ANALYTICS FUND-REGISTERED TRADEMARK-
PORTFOLIO SNAPSHOT
Schwab Analytics Fund (the fund) invests primarily in the common stocks of
large- and mid-cap publicly traded U.S. companies. The fund will typically
invest in the stocks of at least 50 issuers, and intends to maintain industry
diversification similar to that of the S&P 500-Registered Trademark- Index. The
information below and on the following page provides a snapshot of the fund's
portfolio characteristics as of 4/30/00 and is not indicative of its composition
after that date. The terms used below are defined on page 15. A complete list of
the securities in the fund's portfolio as of 4/30/00 is provided in the Schedule
of Investments later in this report.
FUND FACTS
<TABLE>
<CAPTION>
SCHWAB ANALYTICS FUND PEER GROUP AVERAGE+
<S> <C> <C>
---------------------------------------------------------------------------------------------------------------------------
Number of Issues 99 138
---------------------------------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) $66,757+ $58,904
---------------------------------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 35.9+ 35.4
---------------------------------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 10.8+ 9.5
---------------------------------------------------------------------------------------------------------------------------
12-Month Yield 0.21%+ 0.45%
---------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 51% 75%
---------------------------------------------------------------------------------------------------------------------------
Three-Year Beta 1.02+ 0.94
---------------------------------------------------------------------------------------------------------------------------
Expense Ratio 0.75%* 1.34%
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Reflects a voluntary reduction by Charles Schwab Investment Management, Inc.
(the investment adviser) and Schwab, which is guaranteed through at least
2/28/01 (excluding interest, taxes and certain non-routine expenses).
+ Source: Morningstar. This information is as of 4/30/00 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 2,297 large-cap
funds as tracked by Morningstar.
10
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 4/30/00
<TABLE>
<S> <C>
Electronics 20.8%
Other 17.8%
Business Machines and Software 12.7%
Healthcare/Drugs and Medicine 8.6%
Telephone 7.0%
Miscellaneous Finance 7.0%
Banks 6.9%
Retail 6.7%
Oil-International 4.6%
Producer Goods and Manufacturing 4.1%
Insurance 3.8%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
EQUITY INVESTMENT STYLE BOX(1)
AS OF 4/30/00
<TABLE>
<S> <C> <C> <C>
-Style-
Value Blend Growth -Market Cap-
x Large
Medium
Small
</TABLE>
TOP 10 HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS(2)
<TABLE>
<S> <C>
-------------------------------------------
General Electric Co. 3.5%
-------------------------------------------
Citigroup, Inc. 3.2%
-------------------------------------------
Texas Instruments, Inc. 2.9%
-------------------------------------------
Cisco Systems, Inc. 2.8%
-------------------------------------------
Wal-Mart Stores, Inc. 2.6%
-------------------------------------------
-------------------------------------------
Nortel Networks Corp. 2.6%
-------------------------------------------
BellSouth Corp. 2.6%
-------------------------------------------
Sun Microsystems, Inc. 2.3%
-------------------------------------------
Microsoft Corp. 2.2%
-------------------------------------------
Intel Corp. 2.2%
-------------------------------------------
</TABLE>
(1) Source: Morningstar, Inc. The style box illustrates the composition of the
fund's portfolio as of 4/30/00. It is not indicative of the fund's 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.
(2) Nothing in this report represents a recommendation of a security by the
investment adviser.
11
<PAGE>
PORTFOLIO MANAGEMENT
THE PORTFOLIO MANAGEMENT TEAM
GERI HOM--vice president and senior portfolio manager, has primary
responsibility for the day-to-day management for each of the funds. Geri joined
CSIM in March 1995 as portfolio manager and was promoted to her current position
in December 1996. She currently manages approximately $19 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 Management Group for Wells Fargo Nikko.
PRAVEEN GOTTIPALLI--portfolio manager, is director of investments for Symphony
Asset Management (Symphony), the fund's sub-adviser. He joined Symphony in May
1994. Prior to that, he was director of the Active Strategies Group of BARRA,
Inc. Symphony, a wholly owned subsidiary of BARRA, Inc., serves as sub-adviser
to the Fund. BARRA, founded in 1975, provides innovative analytical models,
software, and services. Symphony, subject to the supervision of CSIM, provides
investment assistance and day-to-day management of the fund's non-cash
investments, as well as investment research and statistical information.
12
<PAGE>
FUND DISCUSSION
QUESTIONS TO THE
PORTFOLIO MANAGEMENT TEAM
Q. HOW DID THE FUND PERFORM DURING THE REPORTING PERIOD?
A. The Schwab Analytics Fund-Registered Trademark- achieved a total return of
12.26% for the six-month period ended April 30, 2000. That return exceeded the
average large-cap fund by 0.85% according to data provided by Morningstar, Inc.
From its inception on July 1, 1996, through April 30, 2000, the fund's average
annual total return of 27.12% exceeded the average U.S. large cap fund by 6.20%.
As shown in the table below, the fund also out-performed the S&P 500 Index for
the reporting period.
<TABLE>
<CAPTION>
INCEPTION (7/1/96)
TO 4/30/00
SIX- AVERAGE ANNUAL
MONTH ONE YEAR RETURN
<S> <C> <C> <C>
-------------------------------------------------------------------------------
Schwab Analytics Fund 12.26% 20.13% 27.12%
-------------------------------------------------------------------------------
S&P 500 Index 7.19% 10.13% 24.27%
-------------------------------------------------------------------------------
</TABLE>
Q. HOW ARE THE HOLDINGS OF THE ANALYTICS FUND DIFFERENT FROM THE STOCKS IN THE
S&P 500 INDEX?
A. First, there are significantly fewer holdings in the fund--99 as of
April 30, 2000. The fund's management team monitors approximately 1,300
companies with current market capitalizations of $500 million or more. This
universe of large- and medium-sized companies is then narrowed down to 50 to 100
that our computer model identifies as having the best return potential based on
valuation factors, projections of analysts identified for their superior
forecasting skills and insider selling activity.
Second, although historically the average market capitalization of the fund is
somewhat smaller than the S&P 500 Index, during the most recent reporting
period, the average market capitalization increased somewhat, relative to the
S&P 500 Index. Since the management team picks securities from a universe of
1,300 companies, the fund has the capability of having relatively more or less
mid-cap exposure by owning non-S&P 500 companies. Historically, the fund has
held approximately 10% to 20% of its holdings in companies outside the S&P 500
Index. This percentage was maintained at approximately 10% during the reporting
period.
Finally, from an investment style perspective, the fund often has more of a
value orientation than the S&P 500 Index. Frequently, the fund's selection
criteria will favor stocks with a value orientation, or those stocks with
relatively lower price-to-earnings and/or price-to-book value ratios. During
this particular reporting period, this was not the case--the fund's growth/value
orientation was very similar to the S&P 500 Index.
Q. WHICH ELEMENTS OF THE FUND'S STRATEGY HAVE WORKED PARTICULARLY WELL?
A. Successful stock selection within industries accounted for the majority of
the fund's positive performance relative to the S&P 500 Index. Moreover,
gradually over the six-month period, the fund has increased its exposure to
stocks outside of the S&P 500, as they have exhibited appealing value
characteristics. As of 10/31/99, the fund's fiscal year end, the fund's exposure
to stocks not in the S&P 500 was approximately 11%. By the end of April 2000,
that exposure had increased to 16%. This move has benefited the fund as the
Mid-Cap 400 and the
13
<PAGE>
FUND DISCUSSION (continued)
Russell 2000 have out-performed the S&P 500 through April 30, 2000.
Q. OF THOSE STOCKS HELD BY THE FUND THROUGHOUT THE PERIOD, WHICH EXPERIENCED THE
GREATEST APPRECIATION?
A. The five stocks with the greatest appreciation during the reporting period
were:
<TABLE>
<CAPTION>
PERCENTAGE
APPRECIATION PERCENTAGE OF
6 MONTHS ENDED TOTAL INVESTMENT
4/30/00(1) (04/30/00)
<S> <C> <C>
-----------------------------------------------------------
Texas Instruments, Inc. 81.5% 2.9%
-----------------------------------------------------------
Nortel Networks Corp. 80.8% 2.6%
-----------------------------------------------------------
Ensco International
Inc. 70.3% 1.0%
-----------------------------------------------------------
Intel Corp. 63.8% 2.2%
-----------------------------------------------------------
Lexmark Intl Group Inc. 50.3% 0.6%
-----------------------------------------------------------
</TABLE>
(1) Past performance does not guarantee future results. This information
measures the percentage change of each stock's price from 10/31/99 to
4/30/00. It is not intended to show, predict or guarantee future holdings,
composition or performance of the fund, and it should not be considered a
recommendation for any specific security. The gains in these stocks were
influenced by various factors, and there is no guarantee that similar
conditions will exist in the future or that the fund will realize all of the
price appreciation that existed as of 4/30/00. Furthermore, the fund may
sell or have already sold some or all of the stocks discussed herein at
prices less favorable to the fund, and the fund may lose or have already
lost money on these investments. Sales of stocks at appreciated prices may
increase the level of income paid and distributed by the fund, and may
result in additional tax liability to shareholders.
14
<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.
15
<PAGE>
GLOSSARY (continued)
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.
16
<PAGE>
SCHWAB ANALYTICS FUND(R)
SCHEDULE OF INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
COMMON STOCK -- 97.4%
AEROSPACE / DEFENSE -- 2.3%
Boeing Co. 28,500 $ 1,131
General Dynamics Corp. 47,200 2,761
United Technologies Corp. 75,500 4,695
--------
8,587
--------
AUTOMOTIVE PRODUCTS / MOTOR VEHICLES -- 1.1%
Ford Motor Co. 74,100 4,052
--------
BANKS -- 6.9%
BancWest Corp. 224,500 4,111
Chase Manhattan Corp. 53,700 3,870
City National Corp. 149,400 5,500
Fleet Boston Financial Corp. 76,200 2,700
J.P. Morgan & Co., Inc. 34,100 4,378
PNC Financial Services Group 19,900 868
Providian Financial Corp. 40,600 3,575
Silicon Valley Bancshares+ 16,500 1,019
--------
26,021
--------
BUSINESS MACHINES & SOFTWARE -- 12.8%
Cabletron Systems, Inc.+ 40,200 919
Cisco Systems, Inc.+ 154,800 10,732
Dell Computer Corp.+ 44,600 2,236
Hewlett-Packard Co. 13,000 1,755
International Business Machines
Corp. 41,100 4,588
Lexmark International Group, Inc.,
Class A+ 19,300 2,277
Microsoft Corp.+ 121,900 8,502
Novellus Systems, Inc.+ 31,100 2,074
Oracle Corp.+ 75,500 6,035
Sun Microsystems, Inc.+ 96,800 8,899
--------
48,017
--------
BUSINESS SERVICES -- 1.8%
Citrix Systems, Inc.+ 15,600 953
Electronic Data Systems Corp. 36,100 2,482
Flextronics International Ltd.+ 20,000 1,405
Qlogic Corp.+ 20,300 2,036
--------
6,876
--------
Number Value
of Shares (000s)
--------- ------
CHEMICAL -- 1.0%
E. I. du Pont de Nemours & Co. 77,800 $ 3,691
--------
CONSTRUCTION-- 0.1%
Sawtek, Inc.+ 10,200 488
--------
CONSUMER - NONDURABLE -- 0.5%
Darden Restaurants, Inc. 51,400 948
McDonald's Corp. 23,400 892
--------
1,840
--------
ELECTRONICS -- 21.0%
Advanced Fibre Communications, Inc.+ 24,200 1,106
Analog Devices, Inc.+ 73,500 5,646
Avnet, Inc. 20,000 1,572
Cadence Design Systems, Inc.+ 92,600 1,557
CommScope, Inc.+ 98,400 4,674
Cypress Semiconductor Corp.+ 88,600 4,602
Electro Scientific Industries, Inc.+ 41,900 2,642
Harmonic, Inc.+ 25,400 1,875
Intel Corp. 65,100 8,255
Kulicke & Soffa Industries, Inc.+ 12,200 955
LSI Logic Corp.+ 61,900 3,869
Micron Technology, Inc.+ 15,000 2,089
MMC Networks, Inc.+ 31,100 824
Motorola, Inc. 30,000 3,572
Nortel Networks Corp. 87,100 9,864
Remec, Inc.+ 21,000 797
Scientific-Atlanta, Inc. 33,000 2,147
Tektronix, Inc. 75,800 4,387
Tellabs, Inc.+ 30,800 1,688
Texas Instruments, Inc. 67,100 10,929
Vishay Intertechnology, Inc.+ 69,600 5,838
--------
78,888
--------
ENERGY - RAW MATERIALS -- 1.7%
ENSCO International, Inc. 111,500 3,700
Occidental Petroleum Corp. 130,700 2,802
--------
6,502
--------
FOOD & AGRICULTURE -- 1.1%
General Mills, Inc. 45,000 1,637
Quaker Oats Co. 39,500 2,575
--------
4,212
--------
</TABLE>
17
<PAGE>
SCHWAB ANALYTICS FUND(R)
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
HEALTHCARE / DRUGS & MEDICINE -- 8.6%
Allergan, Inc. 96,300 $ 5,670
Baxter International, Inc. 39,700 2,585
Bristol-Myers Squibb Co. 147,500 7,734
Edwards Lifesciences Corp.+ 7,940 119
Johnson & Johnson 53,900 4,447
Merck & Co., Inc. 116,000 8,062
Schering-Plough Corp. 93,900 3,785
--------
32,402
--------
HOUSEHOLD PRODUCTS -- 1.0%
Colgate-Palmolive Co. 62,400 3,565
--------
INSURANCE -- 3.8%
American International Group, Inc. 39,100 4,289
AXA Financial, Inc. 237,700 7,755
Marsh & McLennan Cos., Inc. 23,100 2,277
--------
14,321
--------
MEDIA -- 1.7%
McGraw-Hill Cos., Inc. 52,800 2,772
Tribune Co. 74,800 2,908
Washington Post Co. 1,700 830
--------
6,510
--------
MISCELLANEOUS FINANCE -- 7.1%
Capital One Financial Corp. 65,100 2,848
Citigroup, Inc. 202,750 12,051
Fannie Mae 54,500 3,287
Freddie Mac 37,500 1,723
Lehman Brothers Holdings, Inc. 22,300 1,830
Morgan Stanley Dean Witter
Discover & Co. 63,500 4,874
--------
26,613
--------
NON-FERROUS METALS -- 0.8%
Alcoa, Inc. 44,500 2,887
--------
Number Value
of Shares (000s)
--------- ------
OIL - INTERNATIONAL -- 4.7%
Chevron Corp. 53,500 $ 4,554
Exxon Mobil Corp. 48,600 3,776
Royal Dutch Petroleum Co. -
Sponsored ADR 116,100 6,661
Texaco, Inc. 50,800 2,515
--------
17,506
--------
OPTICAL & PHOTO -- 0.5%
Corning, Inc. 8,900 1,758
--------
PRODUCER GOODS & MANUFACTURING -- 4.2%
General Electric Co. 85,300 13,413
Jabil Circuit, Inc.+ 52,800 2,161
--------
15,574
--------
RETAIL -- 6.8%
Albertson's, Inc. 45,400 1,478
Costco Wholesale Corp.+ 116,500 6,298
Gap, Inc. 67,337 2,475
Home Depot, Inc. 75,400 4,227
Safeway, Inc.+ 26,200 1,156
Wal-Mart Stores, Inc. 178,200 9,868
--------
25,502
--------
TELEPHONE -- 7.1%
AT&T Corp. 93,000 4,342
Bell Atlantic Corp. 31,100 1,843
BellSouth Corp. 201,100 9,791
Broadwing, Inc.+ 65,400 1,852
Carrier Access Corp.+ 54,000 2,356
CenturyTel, Inc. 81,400 1,994
GTE Corp. 37,700 2,554
US West, Inc. 25,700 1,829
--------
26,561
--------
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- --------
<S> <C> <C>
UTILITIES - ELECTRIC & GAS -- 0.8%
Public Service Enterprise Group, Inc. 77,900 $ 2,795
---------
TOTAL COMMON STOCK
(Cost $276,182) 365,168
---------
SHORT-TERM INVESTMENTS -- 3.7%
Provident Institutional
TempFund, 5.74%* 13,952,040 13,952
---------
TOTAL SHORT-TERM INVESTMENTS
(Cost $13,952) 13,952
--------
TOTAL INVESTMENTS -- 101.1%
(Cost $290,134) 379,120
---------
OTHER Assets ANDLIABILITIES, NET -- (1.1%)
Other assets 396
Liabilities (4,425)
---------
(4,029)
---------
TOTAL NET ASSETS -- 100.0% $ 375,091
=========
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS
April 30, 2000 (Unaudited)
+ Non-income producing security.
* Interest rate represents the yield on report date.
ADR -- American Depository Receipt.
See accompanying Notes to Schedules of Investments and Notes to Financial
Statements.
19
<PAGE>
SCHWAB ANALYTICS FUND(R)
STATEMENT OF ASSETS AND LIABILITIES (in thousands)
April 30, 2000 (Unaudited)
<TABLE>
<S> <C>
ASSETS
Investments, at value (Cost: $290,134) $379,120
Receivables:
Fund shares sold 23
Dividends 264
Interest 44
Prepaid expenses 65
--------
Total assets 379,516
--------
LIABILITIES
Payables:
Investments purchased 4,326
Investment advisory and administration fees 19
Transfer agency and shareholder service fees 10
Accrued expenses 70
--------
Total liabilities 4,425
--------
Net assets applicable to outstanding shares $375,091
========
NET ASSETS CONSIST OF:
Pain-in capital $257,587
Undistributed net investment income 242
Accumulated net realized gain on investments sold
and futures contracts 28,276
Net unrealized appreciation on investments 88,986
--------
$375,091
========
PRICING OF SHARES
Outstanding shares, $0.00001 par value (unlimited shares
authorized) 19,072
Net asset value, offering and redemption price per share $19.67
</TABLE>
See accompanying Notes to Financial Statements.
20
<PAGE>
SCHWAB ANALYTICS FUND(R)
STATEMENT OF OPERATIONS (in thousands)
For the six months ended April 30, 2000 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Dividends (net of foreign tax withheld of $1) $ 1,493
Interest 226
-------
Total investment income 1,719
-------
Expenses:
Investment advisory and administration fees 959
Transfer agency and shareholder service fees 444
Custodian fees 19
Portfolio accounting fees 31
Registration fees 11
Professional fees 16
Shareholder reports 4
Trustees' fees 5
Proxy fees 11
Other expenses 5
-------
1,505
Less: expenses reduced (see Note 4) (161)
-------
Net expenses incurred by fund 1,344
-------
Net investment income 375
-------
Net realized gain on investments and futures contracts:
Net realized gain on investments sold 28,393
Net realized gain on futures contracts 190
-------
Net realized gain on investments and futures contracts 28,583
-------
Change in net unrealized appreciation (depreciation) on
investments and futures contracts:
Net unrealized appreciation on investments 10,181
Net unrealized depreciation on futures contracts (145)
-------
Net unrealized appreciation on investments and futures
contracts 10,036
-------
Net gain on investments 38,619
-------
Increase in net assets resulting from operations $38,994
=======
</TABLE>
See accompanying Notes to Financial Statements.
21
<PAGE>
SCHWAB ANALYTICS FUND(R)
STATEMENTS OF CHANGES IN NET ASSETS (in thousands)
<TABLE>
<CAPTION>
Six months
ended Year
04/30/00 ended
(Unaudited) 10/31/99
----------- --------
<S> <C> <C>
Operations:
Net investment income $ 375 $ 787
Net realized gain on investments and futures contracts 28,583 25,589
Net unrealized appreciation on investments and futures
contracts 10,036 40,876
-------- --------
Increase in net assets resulting from operations 38,994 67,252
-------- --------
Dividends and distributions:
Dividends to shareholders from net investment income (764) (1,124)
Distributions to shareholders from net capital gains (25,635) (7,390)
-------- --------
Total dividends and distributions to shareholders (26,399) (8,514)
-------- --------
Capital share transactions:
Proceeds from shares sold 123,406 90,154
Net asset value of shares issued in reinvestment of
dividends 24,672 7,968
Payments for shares redeemed (74,237) (59,718)
-------- --------
Increase in net assets from capital share transactions 73,841 38,404
-------- --------
Total increase in net assets 86,436 97,142
Net assets:
Beginning of period 288,655 191,513
-------- --------
End of period (including undistributed net investment
income of $242 and $630, respectively) $375,091 $288,655
-------- --------
Number of fund shares:
Sold 6,386 5,132
Reinvested 1,300 499
Redeemed (3,877) (3,510)
-------- --------
Net increase in shares outstanding 3,809 2,121
Shares outstanding:
Beginning of period 15,263 13,142
-------- --------
End of period 19,072 15,263
======== ========
</TABLE>
See accompanying Notes to Financial Statements.
22
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
11/1/99- 11/1/98- 11/1/97- 11/1/96- 7/1/96-
4/30/00 10/31/99 10/31/98 10/31/97 10/31/96
SCHWAB ANALYTICS FUND(R) (Unaudited0
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA ($)
-------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period 18.91 14.57 13.72 11.01 10.00
-------------------------------------------------------------
Income from investment operations:
Net investment income 0.01 0.06 0.10 0.13 0.05
Net realized and unrealized gain
on investments 2.26 4.94 2.20 2.79 0.96
-------------------------------------------------------------
Total income from investment operations 2.27 5.00 2.30 2.92 1.01
-------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.04) (0.09) (0.12) (0.08) --
Distributions from capital gains (1.47) (0.57) (1.33) (0.13) --
-------------------------------------------------------------
Total distributions (1.51) (0.66) (1.45) (0.21) --
-------------------------------------------------------------
Net asset value at end of period 19.67 18.91 14.57 13.72 11.01
-------------------------------------------------------------
Total return (%) 12.26(1) 35.20 18.37 26.83 10.10(1)
RATIOS/SUPPLEMENTAL DATA (%)
-------------------------------------------------------------------------------------------------------------
Ratio of net operating expenses to average
net assets 0.75(2,3) 0.75 0.75 0.74 0.75(2)
Expense reductions reflected in above ratio 0.09(2) 0.18 0.37 0.41 0.76(2)
Ratio of net investment income to average net
assets 0.21(2) 0.34 0.70 1.04 1.41(2)
Portfolio turnover rate 51 99 115 120 33
Net assets, end of period ($ x 1,000) 375,091 288,655 191,513 149,872 97,789
1 Not annualized.
2 Annualized.
3 Would have been 0.76% if certain non-routine expenses had been included.
</TABLE>
See accompanying Notes to Financial Statements.
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS
For the six months ended April 30, 2000 (Unaudited)
(All currency amounts are in thousands unless otherwise noted)
1. DESCRIPTION OF THE FUND
The Schwab Analytics Fund(R) (the "fund") is a series of Schwab Capital Trust
(the "trust"), a no load, open-end, investment management company organized
as a Massachusetts business trust on May 7, 1993, and registered under the
Investment Company Act of 1940, as amended (the "1940 Act").
In addition to the fund, the trust also offers the Schwab Total Stock Market
Index Fund(TM), Schwab S&P 500 Fund, Schwab Small-Cap Index Fund(R), Schwab
International Index Fund(R), Schwab MarketTrack Growth Portfolio, Schwab
MarketTrack Balanced Portfolio, Schwab MarketTrack Conservative Portfolio,
Schwab MarketTrack All Equity Portfolio, Schwab MarketManager Growth
Portfolio, Schwab MarketManager Balanced Portfolio, Schwab MarketManager
Small Cap Portfolio, Schwab MarketManager International Portfolio,
Institutional Select(TM) S&P 500 Fund, Institutional Select(TM) Large-Cap
Value Index Fund and Institutional Select(TM) Small-Cap Value Index 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 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, 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.
SECURITIES 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 discount) is recorded on the accrual basis. Realized gains and
losses from security transactions are determined on an identified cost basis.
FUTURES CONTRACTS -- The fund may invest in futures contracts. The fund is
required to deposit with the broker an amount of cash or cash equivalents
equal to a certain percentage of the contract amount. This is known as the
"initial margin." The "variation margin" represents the daily fluctuation in
the value of the contract. When the contract is closed, the fund records a
realized gain or loss equal to the difference between the value of the
contract at the time is was opened and the time it was closed.
24
<PAGE>
The fund 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 the fund's statement of operations at any
given time. As of April 30, 2000, there were no futures contracts held in
this fund.
EXPENSES -- Expenses arising in connection with the fund are charged directly
to the 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 the fund's policy to meet the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all net investment income and realized net capital
gains, if any, to shareholders. Therefore, no federal income tax provision is
required. The fund is considered a separate entity for tax purposes.
At April 30, 2000 net unrealized appreciation, which was substantially the
same for financial reporting and federal income tax purposes, aggregated
$88,986 of which $101,920 related to appreciated securities and $12,934
related to depreciated securities.
RECLASSIFICATIONS -- Generally accepted accounting principles require that
certain components of net assets be reclassified to reflect permanent
differences between financial and tax reporting. Accordingly, current year's
permanent book/tax differences of $1 for the fund has been reclassified from
undistributed realized gain on investments to undistributed net investment
income. These reclassifications have no effect on net assets or net asset
value per share.
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT -- The trust has an
investment advisory and administration agreement with Charles Schwab
Investment Management, Inc. (the "investment adviser"). For advisory services
and facilities furnished, the fund pays an annual fee, payable monthly, of
0.54% of the first $500 million of average daily net assets, and 0.49% of
such net assets over $500 million. The investment adviser has reduced a
portion of its fee for the six months ended April 30, 2000 (see Note 4).
Prior to February 28, 1999, the fund paid an annual fee, payable monthly, of
0.74% on the first $1 billion of average daily net assets, and 0.69% on the
next $1 billion and 0.64% of such net assets over $2 billion.
SUB-ADVISORY AGREEMENT -- The investment adviser has a sub-advisory agreement
with Symphony Asset Management, Inc. ("Symphony") to serve as sub-adviser to
the fund. Symphony does not receive compensation directly from the fund.
However, the investment adviser pays Symphony an annual fee, payable monthly,
of 0.20% of the fund's average daily net assets on the first $300 million,
0.15% of the next $500 million, and 0.10% of such net assets over $800
million.
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
TRANSFER AGENCY AND SHAREHOLDER SERVICE AGREEMENTS -- The trust has transfer
agency and shareholder service agreements with Charles Schwab & Co., Inc.
("Schwab"). For services provided under these agreements, Schwab receives an
annual fee, payable monthly, of 0.05% of the fund's average daily net assets
for transfer agency services and 0.20% of such net assets for shareholder
services.
OFFICERS AND TRUSTEES -- Certain officers and trustees of the trust are also
officers and/or directors of the investment adviser and/or Schwab. During the
six months ended April 30, 2000, the trust made no direct payments to its
officers or trustees who are "interested persons" within the meaning of the
1940 Act. The fund incurred fees aggregating $5 related to the trust's
unaffiliated trustees.
4. EXPENSES REDUCED AND ABSORBED BY THE INVESTMENT ADVISER AND SCHWAB
The investment adviser and Schwab guarantee that, through at least February
28, 2001, the fund's total operating expenses will not exceed 0.75% of the
fund's average daily net assets, after waivers and reimbursements. For
purposes of this guarantee, operating expenses do not include interest, taxes
and certain non-routine expenses. The operating expense ratio for six months
ended April 30, 2000 did include non-routine expenses.
For the six months ended April 30, 2000, the total of such fees reduced by
the investment adviser was $161.
5. BORROWING AGREEMENTS
The trusts have both committed and uncommitted lines of credit arrangements
with PNC Bank N.A., Bank of America NT & SA and The Bank of New York, whereby
the trusts may borrow on behalf of the funds, as a temporary measure to
satisfy redemption requests or for extraordinary or emergency purposes. The
trusts may borrow in an aggregate amount of up to $150 million from PNC Bank
N.A., $133 million from Bank of America NT &SA and $183 million from The Bank
of New York. Amounts borrowed under these arrangements bear interest at
periodically negotiated rates. The funds also pay annual fees for the unused
balance of the committed line of credit. During the reporting period, the
funds only borrowed against the uncommitted lines of credit. As of April 30,
2000, there were no borrowings outstanding.
6. INVESTMENT TRANSACTIONS
Purchases, sales and maturities of investment securities, other than
short-term obligations and U.S. Government securities, for the six months
ended April 30, 2000, were $229,882 and $175,637, respectively.
26
<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 YieldPlus Fund-TM-
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.
<PAGE>
SCHWABFUNDS-REGISTERED TRADEMARK-
INVESTMENT ADVISER
Charles Schwab Investment Management, Inc.
101 Montgomery Street, San Francisco, CA 94104
DISTRIBUTOR
Charles Schwab & Co., Inc.
P.O. Box 7575, San Francisco, CA 94120-7575
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
-C- 2000 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC/NYSE.
Printed on recycled paper. MKT3561-2 (6/00)
<PAGE>
INSTITUTIONAL SELECT-TM- FUNDS
APRIL 30, 2000
SEMIANNUAL REPORT
AND
AN IMPORTANT NOTICE
REGARDING DELIVERY OF
SHAREHOLDER DOCUMENTS
<PAGE>
IMPORTANT NOTICE REGARDING DELIVERY OF SHAREHOLDER DOCUMENTS
The Securities and Exchange Commission permits mutual funds to deliver only one
copy of shareholder documents, including prospectuses and shareholder reports,
to fund investors with multiple accounts at the same residential or post office
box address. This practice is commonly called "householding" and is intended to
eliminate duplicate mailings of shareholder documents.
Mailings of your Institutional Select-TM- Funds shareholder documents may be
householded indefinitely unless you instruct us otherwise.
ADDITIONAL COPIES OF SHAREHOLDER DOCUMENTS
ALL INSTITUTIONAL SELECT FUNDS PROSPECTUSES AND SHAREHOLDER REPORTS ARE
AVAILABLE FREE OF CHARGE, AND MAY BE REQUESTED AT ANY TIME BY CALLING
1-800-515-2157.
If you would prefer that your Institutional Select Funds mailings not be
householded, please contact Schwab at 1-800-515-2157, or your Investment
Manager. Your instructions that householding not apply to accounts holding
Institutional Select Funds will be effective within 30 days of receipt by
Schwab.
<PAGE>
INSTITUTIONAL SELECT-TM- FUNDS
SEMIANNUAL REPORT
APRIL 30, 2000
INSTITUTIONAL SELECT
S&P 500 FUND
INSTITUTIONAL SELECT
LARGE-CAP VALUE INDEX FUND
INSTITUTIONAL SELECT
SMALL-CAP VALUE INDEX FUND
<PAGE>
INSTITUTIONAL SELECT-TM- FUNDS
We are pleased to bring you this semiannual report for the Institutional
Select-TM- Funds (the funds) for the six-month period ended April 30, 2000. This
report includes the following funds:
- Institutional Select S&P 500 Fund
- Institutional Select Large-Cap Value
Index Fund
- Institutional Select Small-Cap Value
Index Fund
The funds seek to achieve their respective goals by tracking the performance of
different stock market indices. Because each fund typically only rebalances its
portfolio periodically in order to track its index, the funds have experienced
significantly lower portfolio turnover and transaction costs than non-index
funds. This approach, combined with low fund operating expenses, makes these
funds cost-effective investments for long-term investors.
FUND LISTINGS
The funds are listed in THE WALL STREET JOURNAL, USA TODAY, INVESTOR'S BUSINESS
DAILY and most local newspapers under the heading INSTITUTIONAL SELECT:
<TABLE>
<CAPTION>
NEWSPAPER LISTING SYMBOL
<S> <C>
S&P500 ISLCX
LrgCapValue ISLVX
SmCapValue ISSVX
</TABLE>
S&P 500-REGISTERED TRADEMARK- IS A TRADEMARK OF THE MCGRAW-HILL COMPANIES, INC.,
AND HAVE BEEN LICENSED FOR USE BY SCHWAB CAPITAL TRUST. THE INSTITUTIONAL SELECT
S&P 500 FUND IS NOT SPONSORED, SOLD OR PROMOTED BY STANDARD &
POOR'S-REGISTERED TRADEMARK-, AND THEY MAKE NO REPRESENTATIONS REGARDING THE
ADVISABILITY OF INVESTING IN THE FUND.
CONTENTS
<TABLE>
<S> <C>
---------------------------------------------
A Message from the Chairman 1
---------------------------------------------
Market Overview 2
---------------------------------------------
Institutional Select S&P 500 Fund
FUND PERFORMANCE 6
PORTFOLIO SNAPSHOT 8
---------------------------------------------
Institutional Select Large-Cap Value
Index Fund
FUND PERFORMANCE 10
PORTFOLIO SNAPSHOT 12
---------------------------------------------
Institutional Select Small-Cap Value
Index Fund
FUND PERFORMANCE 14
PORTFOLIO SNAPSHOT 16
---------------------------------------------
Portfolio Management 18
---------------------------------------------
Fund Discussion 19
---------------------------------------------
Glossary 22
---------------------------------------------
Financial Statements and Notes 24
---------------------------------------------
</TABLE>
<PAGE>
A MESSAGE FROM THE CHAIRMAN
[PHOTO]
Dear Shareholder,
This semiannual report is designed to provide you with detailed information
about the Institutional Select-TM- Funds, a family of institutional index funds
to better serve the needs of Investment Managers and their clients. These funds
have highly competitive expense ratios, and are generally only available through
Investment Managers. With the support of investors such as yourselves, combined
assets in the Institutional Select Funds exceeded $475 million on April 30,
2000.
Charles Schwab Investment Management, Inc. (CSIM) is the Institutional Select
Funds' investment adviser. CSIM is committed to providing investors with
high-quality, cost-efficient investment solutions. CSIM was created in 1989, and
as of April 30, 2000, managed more that $110 billion in assets for over five
million shareholder accounts.
In closing, I would like to thank you for your business. We will continue to do
everything we can to warrant the trust you have placed in us.
Sincerely,
/s/ Charles R. Schwab
Charles R. Schwab
April 30, 2000
1
<PAGE>
MARKET OVERVIEW
U.S. ECONOMIC GROWTH
April 2000 marked the beginning of the tenth year of the current expansion,
making it the longest in U.S. history. Gross Domestic Product (GDP) grew at a
real (inflation adjusted) rate of 4.6% during 1999--the fourth consecutive year
at 4% or more and 5.4% during the first quarter of 2000. This rate is considered
by most economists and the Federal Reserve (Fed) to be in excess of what the
economy can absorb without experiencing inflationary pressures, perhaps 3.5% to
4.0%. High levels of consumer spending fueled by rising incomes, personal wealth
and consumer confidence, as well as strong business capital investment and a
healthy housing sector, have been the principal factors driving this lengthy
expansion.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
REAL GDP GROWTH RATE
Quarterly Percentage Change (Annualized Rate)
<TABLE>
<S> <C>
Q1 1990 5.0%
Q2 1990 1.0%
Q3 1990 -0.6%
Q4 1990 -3.0%
Q1 1991 -1.7%
Q2 1991 2.6%
Q3 1991 1.3%
Q4 1991 2.5%
Q1 1992 4.3%
Q2 1992 4.0%
Q3 1992 3.1%
Q4 1992 5.2%
Q1 1993 -0.7%
Q2 1993 2.1%
Q3 1993 1.5%
Q4 1993 6.0%
Q1 1994 3.6%
Q2 1994 5.7%
Q3 1994 2.2%
Q4 1994 5.1%
Q1 1995 1.5%
Q2 1995 0.8%
Q3 1995 3.2%
Q4 1995 3.3%
Q1 1996 2.9%
Q2 1996 6.9%
Q3 1996 2.2%
Q4 1996 4.9%
Q1 1997 4.9%
Q2 1997 5.1%
Q3 1997 4.0%
Q4 1997 3.1%
Q1 1998 6.7%
Q2 1998 2.1%
Q3 1998 3.8%
Q4 1998 5.9%
Q1 1999 3.7%
Q2 1999 1.9%
Q3 1999 5.7%
Q4 1999 7.3%
Q1 2000 5.4%
</TABLE>
Source: BLOOMBERG L.P.
Looking ahead, the availability of increasingly scarce labor resources and the
domestic consumers' response to continued stock market volatility may be key
determinants of whether the economy continues on its current course or softens
throughout 2000. The Fed has raised the federal funds rate by 1.75% since June
1999 in an as yet unsuccessful effort to moderate the economy's rapid growth
rate. The consensus of most economists is that the U.S. economy appears poised
for continued strong growth and additional intervention by the Fed (increases in
the federal funds rate) until the growth rate of the economy slows to a more
sustainable level.
UNEMPLOYMENT
The unemployment rate dropped to 3.9% in April 2000, a three-decade low.
Employment growth continues to outstrip population growth. Reflecting a
shrinking pool of available workers, labor markets continue to be extremely
tight in many areas of the country and there has been some regional evidence of
labor shortages driving up wages. The labor force participation rate, which
measures the employment population as a percent of the total population, is at a
post-war high. Growth in the labor force has slowed, and the Fed has expressed
its concern that strong demand and tight labor markets may continue to put
pressure on manufacturers and service providers to raise prices.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
U.S. UNEMPLOYMENT RATE
<TABLE>
<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 6.8%
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%
May.99 4.2%
Jun.99 4.3%
Jul.99 4.3%
Aug.99 4.2%
Sep.99 4.2%
Oct.99 4.1%
Nov.99 4.1%
Dec.99 4.1%
Jan.00 4.0%
Feb.00 4.1%
Mar.00 4.1%
Apr.00 3.9%
</TABLE>
Source: BLOOMBERG L.P.
2
<PAGE>
INFLATION
Virtually all measures of price inflation exhibited upward trends during the
reporting period. The Consumer Price Index (CPI) rose 3.0% for the year ended
April 30, 2000. Its core rate (which excludes the more volatile food and energy
components) was up 2.2%. The Personal Consumption Expenditures Index, a measure
of inflation closely watched by the Fed, rose 2.3% for the same period. The GDP
price deflator, the broadest measure of inflation, indicated prices rising at an
annual rate of 3.2% during the first quarter of 2000.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
MEASURES OF INFLATION
<TABLE>
<CAPTION>
CONSUMER PRICE INDEX EMPLOYMENT COST-INDEX
12-MONTH CHANGE 12-MONTH CHANGE
(MONTHLY) (QUARTERLY)
<S> <C> <C>
Jan-90 5.2% 5.5%
Feb-90 5.3% 5.5%
Mar-90 5.2% 5.5%
Apr-90 4.7% 5.4%
May-90 4.4% 5.4%
Jun-90 4.7% 5.4%
Jul-90 4.8% 5.2%
Aug-90 5.6% 5.2%
Sep-90 6.2% 5.2%
Oct-90 6.3% 4.9%
Nov-90 6.3% 4.9%
Dec-90 6.1% 4.9%
Jan-91 5.7% 4.6%
Feb-91 5.3% 4.6%
Mar-91 4.9% 4.6%
Apr-91 4.9% 4.6%
May-91 5.0% 4.6%
Jun-91 4.7% 4.6%
Jul-91 4.4% 4.3%
Aug-91 3.8% 4.3%
Sep-91 3.4% 4.3%
Oct-91 2.9% 4.3%
Nov-91 3.0% 4.3%
Dec-91 3.1% 4.3%
Jan-92 2.6% 4.0%
Feb-92 2.8% 4.0%
Mar-92 3.2% 4.0%
Apr-92 3.2% 3.6%
May-92 3.0% 3.6%
Jun-92 3.1% 3.6%
Jul-92 3.2% 3.5%
Aug-92 3.1% 3.5%
Sep-92 3.0% 3.5%
Oct-92 3.2% 3.5%
Nov-92 3.0% 3.5%
Dec-92 2.9% 3.5%
Jan-93 3.3% 3.5%
Feb-93 3.2% 3.5%
Mar-93 3.1% 3.5%
Apr-93 3.2% 3.6%
May-93 3.2% 3.6%
Jun-93 3.0% 3.6%
Jul-93 2.8% 3.6%
Aug-93 2.8% 3.6%
Sep-93 2.7% 3.6%
Oct-93 2.8% 3.5%
Nov-93 2.7% 3.5%
Dec-93 2.7% 3.5%
Jan-94 2.5% 3.2%
Feb-94 2.5% 3.2%
Mar-94 2.5% 3.2%
Apr-94 2.4% 3.2%
May-94 2.3% 3.2%
Jun-94 2.5% 3.2%
Jul-94 2.8% 3.2%
Aug-94 2.9% 3.2%
Sep-94 3.0% 3.2%
Oct-94 2.6% 3.0%
Nov-94 2.7% 3.0%
Dec-94 2.7% 3.0%
Jan-95 2.8% 2.9%
Feb-95 2.9% 2.9%
Mar-95 2.9% 2.9%
Apr-95 3.1% 2.9%
May-95 3.2% 2.9%
Jun-95 3.0% 2.9%
Jul-95 2.8% 2.7%
Aug-95 2.6% 2.7%
Sep-95 2.5% 2.7%
Oct-95 2.8% 2.7%
Nov-95 2.6% 2.7%
Dec-95 2.5% 2.7%
Jan-96 2.7% 2.8%
Feb-96 2.7% 2.8%
Mar-96 2.8% 2.8%
Apr-96 2.9% 2.9%
May-96 2.9% 2.9%
Jun-96 2.8% 2.9%
Jul-96 3.0% 2.8%
Aug-96 2.9% 2.8%
Sep-96 3.0% 2.8%
Oct-96 3.0% 2.9%
Nov-96 3.3% 2.9%
Dec-96 3.3% 2.9%
Jan-97 3.0% 2.9%
Feb-97 3.0% 2.9%
Mar-97 2.8% 2.9%
Apr-97 2.5% 2.8%
May-97 2.2% 2.8%
Jun-97 2.3% 2.8%
Jul-97 2.2% 3.0%
Aug-97 2.2% 3.0%
Sep-97 2.2% 3.0%
Oct-97 2.1% 3.3%
Nov-97 1.8% 3.3%
Dec-97 1.7% 3.3%
Jan-98 1.6% 3.3%
Feb-98 1.4% 3.3%
Mar-98 1.4% 3.3%
Apr-98 1.4% 3.5%
May-98 1.7% 3.5%
Jun-98 1.7% 3.5%
Jul-98 1.7% 3.7%
Aug-98 1.6% 3.7%
Sep-98 1.5% 3.7%
Oct-98 1.5% 3.4%
Nov-98 1.5% 3.4%
Dec-98 1.6% 3.4%
Jan-99 1.7% 3.0%
Feb-99 1.6% 3.0%
Mar-99 1.7% 3.0%
Apr-99 2.3% 3.2%
May-99 2.1% 3.2%
Jun-99 2.0% 3.2%
Jul-99 2.1% 3.1%
Aug-99 2.3% 3.1%
Sep-99 2.6% 3.1%
Oct-99 2.6% 3.4%
Nov-99 2.6% 3.4%
Dec-99 2.7% 3.4%
Jan-00 2.7% 4.3%
Feb-00 3.2% 4.3%
Mar-00 3.7% 4.3%
Apr-00 3.0%
</TABLE>
Source: BLOOMBERG L.P.
Wage inflation also exhibited a marked upward trend during the reporting period.
The Employment Cost Index, a measurement of the cost to employ workers,
including both wages and benefits, rose 4.3% for the year ended March 31, 2000.
Although these rates of price and employment cost inflation may not be
alarmingly high by historical standards, the Fed has demonstrated its resolve to
keep inflation at bay through its communications and its actions (six federal
funds rate increases since June 1999). In particular, the Fed has expressed
concern that if labor markets continue to tighten, increases in wages will
outpace productivity growth and place additional upward pressure on prices. In
such an environment, productivity growth becomes particularly critical, as it
enables companies to pay higher wages without raising prices. Non-farm
productivity grew 3.0% in 1999 and at a 2.4% annualized rate in the first
quarter of 2000--strong gains to be sure, but likely not strong enough to offset
recent increases in employment costs.
ASSET CLASS PERFORMANCE
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ASSET CLASS % RETURNS DURING REPORTING PERIOD
<TABLE>
<CAPTION>
LEHMAN AGGREGATE MSCI-EAFE (ND) RUSSELL 2000 S&P 500
BOND INDEX INDEX SMALL-CAP INDEX INDEX
<S> <C> <C> <C> <C>
11/5/1999 0.61% 0.49% 3.23% 0.54%
11/12/1999 0.73% 2.02% 4.95% 2.44%
11/19/1999 0.32% 3.91% 7.62% 4.35%
11/26/1999 0.11% 5.22% 7.08% 3.95%
12/3/1999 0.15% 5.26% 8.43% 5.22%
12/10/1999 0.78% 6.67% 8.94% 4.10%
12/17/1999 -0.30% 6.78% 8.89% 4.39%
12/24/1999 -0.61% 10.69% 12.68% 7.13%
12/31/1999 -0.51% 12.55% 17.96% 8.04%
1/7/2000 -0.57% 7.42% 14.15% 6.00%
1/14/2000 -1.03% 10.06% 18.67% 7.74%
1/21/2000 -1.19% 7.61% 24.83% 5.99%
1/28/2000 -0.52% 7.11% 18.01% 0.02%
2/4/2000 -0.39% 9.34% 22.92% 4.81%
2/11/2000 -0.68% 9.96% 25.68% 2.07%
2/18/2000 -0.15% 8.31% 27.70% -0.95%
2/25/2000 0.50% 9.16% 30.29% -1.89%
3/3/2000 0.68% 11.46% 40.04% 3.81%
3/10/2000 0.48% 11.44% 41.37% 2.77%
3/17/2000 1.18% 10.11% 34.58% 7.88%
3/24/2000 1.05% 12.27% 34.49% 12.51%
3/31/2000 1.68% 12.10% 26.32% 10.49%
4/7/2000 2.49% 10.97% 27.26% 11.80%
4/14/2000 2.42% 7.09% 6.40% 0.02%
4/21/2000 2.33% 6.21% 12.97% 5.77%
4/28/2000 1.38% 6.10% 18.72% 7.17%
</TABLE>
Compiled by CHARLES SCHWAB & CO., INC.
As shown on the chart above, equity valuations, especially of the small-cap and
technology stocks, exhibited extreme volatility during the reporting period. The
price/earnings (P/E) ratio for the
3
<PAGE>
MARKET OVERVIEW (continued)
NASDAQ 100 Index fell by 33% in just 14 trading days during March and April.
Remarkably, it remained at levels above 100 even after its precipitous decline.
Reversing a five-year period of relative under performance, small-cap stocks
outperformed both large-cap stocks and international stocks for the six-month
reporting period ended 4/30/00. Small-cap stocks as represented by the Russell
2000-Registered Trademark- Index achieved a total return of 18.7%. Large-cap
stocks, as represented by the S&P 500-Registered Trademark- Index, returned
7.2%.
Dampened by relatively weak foreign currencies, International stocks, as
represented by the Morgan Stanley Capital International Europe, Australia, Far
East (MSCI-EAFE)-Registered Trademark- Index, achieved a return of 6.7% for the
six-month reporting period ending 4/30/00. Reflecting the rise in
intermediate-term interest rates, fixed income returns were generally weak for
the period. Bond returns, as represented by the Lehman Brothers Aggregate Bond
Index, were 1.4% for the six-month reporting period.
U.S. EQUITY VALUATION
The P/E ratio for the S&P 500-Registered Trademark- Index remained at very high
levels during the reporting period and ended the period at a lofty 29.6 times
earnings, slightly less 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
earning potential. Based on other traditional market valuation measures such as
the price/book (P/B) ratio or dividend yield, the U.S. stock market continues to
remain at record or near record high valuation levels. Reflecting the
extraordinary valuations of the technology sector, the P/E ratio (12 months
trailing) for the NASDAQ 100 Index ended the period at 120.2, as compared to an
average of 67 over the last five years.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
S&P 500 PRICE EARNINGS RATIO
<TABLE>
<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 14.90
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 25.50
Sep.92 24.37
Oct.92 23.94
Nov.92 24.08
Dec.92 24.01
Jan.93 24.20
Feb.93 24.25
Mar.93 24.22
Apr.93 23.20
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 20.10
May.94 20.16
Jun.94 19.76
Jul.94 18.64
Aug.94 18.90
Sep.94 18.26
Oct.94 17.55
Nov.94 16.58
Dec.94 16.98
Jan.95 16.23
Feb.95 16.20
Mar.95 16.50
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 19.30
Jul.96 18.31
Aug.96 18.62
Sep.96 19.75
Oct.96 19.60
Nov.96 21.05
Dec.96 20.70
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 24.00
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 33.90
May.99 32.74
Jun.99 34.70
Jul.99 31.62
Aug.99 31.21
Sep.99 29.90
Oct.99 29.92
Nov.99 30.65
Dec.99 32.53
Jan.00 29.78
Feb.00 28.59
Mar.00 31.50
Apr.00 29.58
</TABLE>
<TABLE>
<S> <C>
30-Year Average 15.8
</TABLE>
Source: BLOOMBERG L.P.
TREASURY BOND YIELDS
Continuing a trend which began in October 1998, both long-term and
intermediate-term rates continued to climb upward during the first three months
of the reporting period. The primary driver of this upward trend was the
continued strong growth of the domestic economy.
4
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
10-YEAR AND 5-YEAR TREASURY BOND YIELDS
<TABLE>
<CAPTION>
TEN-YEAR TREASURY FIVE-YEAR TREASURY
BOND YIELD NOTE YIELD
<S> <C> <C>
10.01.1999 5.97% 5.86%
10.08.1999 6.03% 5.95%
10.15.1999 6.07% 5.97%
10.22.1999 6.19% 6.10%
10.29.1999 6.02% 5.95%
11.05.1999 5.93% 5.86%
11.12.1999 5.93% 5.86%
11.19.1999 6.06% 5.99%
11.26.1999 6.12% 6.05%
12.03.1999 6.16% 6.07%
12.10.1999 6.07% 5.98%
12.17.1999 6.28% 6.19%
12.24.1999 6.41% 6.31%
12.31.1999 6.44% 6.34%
1.07.2000 6.52% 6.41%
1.14.2000 6.68% 6.58%
1.21.2000 6.77% 6.63%
1.28.2000 6.66% 6.66%
2.04.2000 6.55% 6.65%
2.11.2000 6.60% 6.70%
2.18.2000 6.49% 6.68%
2.25.2000 6.33% 6.47%
3.03.2000 6.39% 6.59%
3.10.2000 6.38% 6.60%
3.17.2000 6.19% 6.45%
3.24.2000 6.19% 6.50%
3.31.2000 6.00% 6.31%
4.07.2000 5.58% 6.18%
4.14.2000 5.58% 6.11%
4.21.2000 5.99% 6.24%
4.28.2000 6.21% 6.54%
</TABLE>
Source: BLOOMBERG L.P.
Treasury bond yields exhibited an unusual pattern during the second half of the
reporting period. Typically the yield on ten-year treasury securities exceeds
those on five-year securities to compensate investors for the additional
interest rate risk associated with longer duration securities. As shown in the
graph above, late in January, this normal relationship reversed, resulting in
what is referred to as a negative yield curve. This situation is a result of the
accumulating budget surpluses, which are allowing the federal government to
downsize its debt. The Treasury Department announced that it plans to buy back
$30 billion in debt in 2000 starting with longer dated maturities because those
payments carry the steepest interest payment. The anticipated reduction in
supply resulting from this buyback program, as well as scaled back issuance,
increased the price of the longer-term securities and resulted in a reduction in
yields.
INTERNATIONAL PERFORMANCE
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
MSCI-EAFE-Registered Trademark- COUNTRY US$ RETURNS
For the Six-Month Period Ended 4/30/00
<TABLE>
<S> <C>
Belgium -21.4%
Austria -14.3%
Ireland -10.4%
Switzerland -6.0%
Norway -5.6%
New Zealand -1.1%
Australia -0.8%
United Kingdom -0.3%
Singapore 4.8%
Netherlands 5.1%
Portugal 6.0%
Italy 6.2%
Japan 7.8%
Denmark 8.2%
Spain 9.4%
Hong Kong 17.9%
France 21.0%
Germany 21.8%
Sweden 70.7%
Finland 117.5%
</TABLE>
Source: DATASTREAM
The MSCI-EAFE Index gained 6.7% in U.S. dollar terms (excluding reinvested
dividends) during the six-month reporting period. In local currency terms, it
gained 15.6% reflecting the relative weakness of most foreign currencies
(compared to the dollar) during the period.
The strongest performing countries for the period were Finland, Sweden and
Germany. Those countries with the largest negative returns were Belgium, Austria
and Ireland.
5
<PAGE>
INSTITUTIONAL SELECT-TM- S&P 500 FUND
FUND PERFORMANCE
AVERAGE ANNUAL RETURNS FOR THE PERIODS ENDED 4/30/00
<TABLE>
<CAPTION>
SINCE INCEPTION
SIX MONTHS(1) ONE YEAR (2/1/99)
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SELECT S&P 500 FUND(2) 7.08% 9.95% 11.90%
----------------------------------------------------------------------------------------------------------------
S&P 500-Registered Trademark- Index 7.19% 10.13% 12.10%
----------------------------------------------------------------------------------------------------------------
Index Tracking Differential (0.11)% (0.18)% (0.20)%
----------------------------------------------------------------------------------------------------------------
</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 3/31/00. As of 3/31/00, the fund's six-month, one-year and
since-inception average annual total returns would have been 17.47%, 17.82% and
15.86%, respectively.
Also shown is the difference between the total returns of the S&P 500 Index and
the Institutional Select 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.
(1) Actual, not annualized, because period is less than one year.
(2) Charles Schwab Investment Management, Inc. (the investment adviser) and
Schwab waived a portion of their fees during the reporting period and have
guaranteed through at least 12/31/05 that total operating expenses will not
exceed 0.15%. Without such reductions, the fund's average annual returns
would have been lower.
6
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
<TABLE>
<CAPTION>
INSTITUTIONAL SELECT -TM- S&P 500 FUND S&P 500 -REGISTERED TRADEMARK- INDEX
<S> <C> <C>
02/01/99 $10,000 $10,000
02/28/99 $9,680 $9,689
03/31/99 $10,070 $10,077
04/30/99 $10,460 $10,467
05/31/99 $10,200 $10,220
06/30/99 $10,770 $10,787
07/31/99 $10,440 $10,450
08/31/99 $10,380 $10,398
09/30/99 $10,100 $10,113
10/31/99 $10,740 $10,753
11/30/99 $10,950 $10,972
12/31/99 $11,602 $11,618
01/31/00 $11,016 $11,035
02/29/00 $10,804 $10,826
03/31/00 $11,864 $11,885
04/30/00 $11,501 $11,527
</TABLE>
The above graph compares the growth of a hypothetical $10,000 investment in the
Institutional Select-TM- S&P 500 Fund, made at its inception, with a similar
investment in the S&P 500-Registered Trademark- Index. A detailed analysis of
the performance of the fund is provided in the Fund Discussion section later in
this report.
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 10/31/99 (000s) $238,476
----------------------------------------------------------------------
Total net assets as of 4/30/00 (000s) $341,107
----------------------------------------------------------------------
Percentage growth from 10/31/99 to 4/30/00 43.0%
----------------------------------------------------------------------
</TABLE>
7
<PAGE>
INSTITUTIONAL SELECT-TM- S&P 500 FUND
PORTFOLIO SNAPSHOT
The Institutional Select S&P 500 Fund (the fund) seeks high total return by
tracking the performance of the S&P 500-Registered Trademark- Index. To do this,
it invests primarily in common stocks of the S&P 500 Index, a widely recognized,
unmanaged index comprised of 500 mainly large-cap stocks selected by Standard &
Poor's-Registered Trademark-. As of April 30, 2000, the aggregate market
capitalization of the S&P 500 Index represented approximately 80% of the total
value of the U.S. stock market.* Common stocks of the 50 largest companies in
the S&P 500 Index accounted for approximately 57% of the index. Standard &
Poor's rebalances the index periodically and with no set schedule. The
information below, and on the following page, provides a snapshot of the fund's
characteristics as of 4/30/00, and is not indicative of its composition after
that date. The terms used below are defined on pages 22 and 23. A complete list
of securities in the fund's portfolio as of 4/30/00 is provided in the Schedule
of Investments later in this report.
FUND FACTS
<TABLE>
<CAPTION>
INSTITUTIONAL SELECT PEER GROUP
S&P 500 FUND** AVERAGE+
<S> <C> <C>
---------------------------------------------------------------------------------------------------------------------
Number of Issues 503 138
---------------------------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) $71,141+ $58,904
---------------------------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 31.3+ 35.4
---------------------------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 8.0+ 9.5
---------------------------------------------------------------------------------------------------------------------
12-Month Yield 0.78%+ 0.45%
---------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 4% 75%
---------------------------------------------------------------------------------------------------------------------
Three-Year Beta N/A 0.94%
---------------------------------------------------------------------------------------------------------------------
Expense Ratio 0.15%*** 1.34%
---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Source: Wilshire Associates. The U.S. stock market as represented by the
Wilshire 5000 Index.
** Compiled by Charles Schwab & Co., Inc. This information is for illustrative
purposes only and is not intended to show, predict or guarantee future
composition of the fund.
*** Reflects a voluntary reduction by the investment adviser and Schwab, which
is guaranteed through at least 12/31/05 (excluding interest, taxes and
certain non-routine expenses).
+ Source: Morningstar, Inc. This information is as of 4/30/00, 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
2,297 large-cap funds as tracked by Morningstar.
8
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 4/30/00
<TABLE>
<S> <C>
Other 25.4%
Business Machines and Software 16.5%
Electronics 12.2%
Healthcare/Drugs and Medicine 9.6%
Telephone 6.8%
Retail 5.9%
Producer Goods and Manufacturing 5.4%
Miscellaneous Finance 5.3%
Banks 4.7%
Business Services 4.4%
Media 3.8%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
EQUITY INVESTMENT STYLE BOX(1)
AS OF 4/30/00
<TABLE>
<CAPTION>
--STYLE--
VALUE BLEND GROWTH --MARKET CAP--
<S> <C> <C> <C>
X Large
Medium
Small
</TABLE>
TOP 10 HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS(2)
<TABLE>
<S> <C>
--------------------------------------------
General Electric Co. 4.1%
--------------------------------------------
Cisco Systems, Inc. 3.8%
--------------------------------------------
Intel Corp. 3.4%
--------------------------------------------
Microsoft Corp. 2.9%
--------------------------------------------
Exxon Mobil Corp. 2.1%
--------------------------------------------
--------------------------------------------
Wal-Mart Stores, Inc. 2.0%
--------------------------------------------
Oracle Corp. 1.8%
--------------------------------------------
International Business Machines Corp. 1.6%
--------------------------------------------
Citigroup, Inc. 1.6%
--------------------------------------------
Lucent Technologies, Inc. 1.6%
--------------------------------------------
</TABLE>
(1) Source: Morningstar, Inc. The style box illustrates the composition of the
fund's portfolio as of 4/30/00. 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.
(2) Nothing in this report represents a recommendation of a security by the
investment adviser.
9
<PAGE>
INSTITUTIONAL SELECT-TM- LARGE-CAP VALUE INDEX FUND
FUND PERFORMANCE
AVERAGE ANNUAL RETURNS FOR THE PERIODS ENDED 4/30/00
<TABLE>
<CAPTION>
SINCE INCEPTION
SIX MONTHS(1) ONE-YEAR (2/1/99)
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SELECT LARGE-CAP VALUE
INDEX FUND(2) 2.59% 0.25% 7.62%
-------------------------------------------------------------------------------------------------------------
S&P 500/BARRA Value Index 2.70% 0.46% 7.97%
-------------------------------------------------------------------------------------------------------------
Index Tracking Differential (0.11)% (0.21)% (0.35)%
-------------------------------------------------------------------------------------------------------------
</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 4/30/00. As of 4/30/00, the fund's six-month, one-year and
since-inception average annual total returns would have been 9.19%, 9.51% and
8.88%, respectively.
Also shown is the difference between the total returns of the S&P 500/BARRA
Value Index and the Institutional Select Large-Cap Value Index Fund, which is
often referred to as the "tracking differential." (See page 6 for a more
detailed discussion).
(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 12/31/05 that total
operating expenses will not exceed 0.25%. Without such reductions, the
fund's average annual returns would have been lower.
10
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
<TABLE>
<CAPTION>
INSTITUTIONAL SELECT -TM- LARGE-CAP S&P 500/BARRA
VALUE INDEX FUND VALUE INDEX
<S> <C> <C>
02/01/99 $10,000 $10,000
02/28/99 $9,780 $9,785
03/31/99 $10,080 $10,081
04/30/99 $10,930 $10,950
05/31/99 $10,730 $10,756
06/30/99 $11,140 $11,169
07/31/99 $10,790 $10,826
08/31/99 $10,520 $10,553
09/30/99 $10,110 $10,140
10/31/99 $10,680 $10,712
11/30/99 $10,620 $10,649
12/31/99 $11,008 $11,049
01/31/00 $10,650 $10,698
02/29/00 $9,996 $10,030
03/31/00 $11,039 $11,076
04/30/00 $10,957 $11,001
</TABLE>
The above graph compares the growth of a hypothetical $10,000 investment in the
Institutional Select Large-Cap Value Index Fund, made at its inception, with a
similar investment in the S&P 500/BARRA Value Index. A detailed analysis of the
performance of the fund is provided in the Fund Discussion section later in this
report.
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 10/31/99 (000s) $ 71,485
----------------------------------------------------------------------
Total net assets as of 4/30/00 (000s) $102,856
----------------------------------------------------------------------
Percentage growth from 10/31/99 to 4/30/00 43.9%
----------------------------------------------------------------------
</TABLE>
11
<PAGE>
INSTITUTIONAL SELECT-TM- LARGE-CAP VALUE INDEX FUND
PORTFOLIO SNAPSHOT
The Institutional Select Large-Cap Value Index Fund (the fund) seeks high total
return by tracking the performance of the S&P 500/BARRA Value Index. To do this,
it invests primarily in common stocks of the S&P/ BARRA Value index, a widely
recognized index comprised of approximately 350 large-cap common stocks
determined by BARRA, Inc. and Standard & Poor's-Registered Trademark- to be
"value" stocks. The total value of the index (as measured by the combined market
capitalization of the companies included in the index) is approximately half the
total value of the S&P 500-Registered Trademark- Index. The companies with the
highest price/book ratios may be included in the index. BARRA, Inc., and
Standard & Poor's rebalance the index at least semiannually. The information
below, and on the following page, provides a snapshot of the fund's
characteristics as of 4/30/00, and is not indicative of its composition after
that date. The terms as used below are defined on pages 22 and 23. A complete
list of securities in the fund's portfolio as of 4/30/00 is provided in the
Schedule of Investments later in this report.
FUND FACTS
<TABLE>
<CAPTION>
INSTITUTIONAL SELECT LARGE-CAP PEER GROUP
VALUE INDEX FUND* AVERAGE+
<S> <C> <C>
-------------------------------------------------------------------------------------------------------------------------
Number of Issues 390 138
-------------------------------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) $32,590+ $58,904
-------------------------------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 23.8+ 35.4
-------------------------------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 3.9+ 9.5
-------------------------------------------------------------------------------------------------------------------------
12-Month Yield 1.00%+ 0.45%
-------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 15% 75%
-------------------------------------------------------------------------------------------------------------------------
Three-Year Beta N/A 0.94
-------------------------------------------------------------------------------------------------------------------------
Expense Ratio 0.25%** 1.34%
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Compiled by Charles Schwab & Co., Inc. This information is for illustrative
purposes only and is not intended to show, predict or guarantee future
composition of the fund.
** Reflects a reduction by the investment adviser and Schwab, which is
guaranteed through at least 12/31/05 (excluding interest, taxes and certain
non-routine expenses).
+ Source: Morningstar, Inc. This information is as of 4/30/00, 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
2,297 large-cap funds as tracked by Morningstar.
12
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 4/30/00
<TABLE>
<S> <C>
Other 30.5%
Telephone 10.8%
Miscellaneous Finance 10.2%
Banks 10.0%
Oil-International 8.2%
Insurance 6.0%
Media 5.5%
Utilities-Electric and Gas 5.4%
Business Machines and Software 4.8%
Electronics 4.5%
Retail 4.1%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
EQUITY INVESTMENT STYLE BOX(1)
AS OF 4/30/00
<TABLE>
<CAPTION>
--STYLE--
WEIGHTED AVERAGE MATURITY
VALUE BLEND GROWTH --MARKET CAP--
<S> <C> <C> <C>
X Large
Medium
Small
</TABLE>
TOP 10 HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS(2)
<TABLE>
<S> <C>
---------------------------------------------
Exxon Mobil Corp. 4.6%
---------------------------------------------
Citigroup, Inc. 3.5%
---------------------------------------------
American International Group, Inc. 2.9%
---------------------------------------------
AT&T Corp. 2.6%
---------------------------------------------
Hewlett-Packard Co. 2.3%
---------------------------------------------
---------------------------------------------
MCI Worldcom, Inc. 2.2%
---------------------------------------------
Royal Dutch Petroleum Co. - Sponsored
ADR 2.1%
---------------------------------------------
Bell Atlantic Corp. 1.6%
---------------------------------------------
BellSouth Corp. 1.6%
---------------------------------------------
Walt Disney Co. 1.6%
---------------------------------------------
</TABLE>
(1) Source: Morningstar, Inc. The style box illustrates the composition of the
fund's portfolio as of 4/30/00. 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.
(2) Nothing in this report represents a recommendation of a security by the
investment adviser.
13
<PAGE>
INSTITUTIONAL SELECT-TM- SMALL-CAP VALUE INDEX FUND
FUND PERFORMANCE
AVERAGE ANNUAL RETURNS FOR THE PERIODS ENDED 4/30/00
<TABLE>
<CAPTION>
SINCE INCEPTION
SIX MONTHS(1) ONE YEAR (2/1/99)
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SELECT SMALL-CAP VALUE
INDEX FUND(2) 9.21% 8.88% 6.39%
-------------------------------------------------------------------------------------------------------------
S&P Small-Cap 600/BARRA Value Index 8.77% 8.51% 6.33%
-------------------------------------------------------------------------------------------------------------
Index Tracking Differential 0.44% 0.37% (0.06)%
-------------------------------------------------------------------------------------------------------------
</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 3/31/00. As of 3/31/00, the fund's six-month, one-year and
since-inception average annual total returns would have been 5.89%, 17.38% and
6.14%, respectively.
Also shown is the difference between the total returns of the S&P Small-Cap
600/BARRA Value Index and the Institutional Select Small-Cap Value Index Fund,
which is often referred to as the "tracking differential." (See page 6 for a
more detailed discussion).
(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 12/31/05 that total
operating expenses will not exceed 0.32%. Without such reductions, as of
4/30/00 the fund's average annual returns would have been lower.
14
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
<TABLE>
<CAPTION>
INSTITUTIONAL SELECT -TM- SMALL-CAP VALUE INDEX FUND S&P 600/BARRA VALUE INDEX
<S> <C> <C>
02/01/99 $10,000 $10,000
02/28/99 $9,170 $9,186
03/31/99 $9,130 $9,150
04/30/99 $9,920 $9,947
05/31/99 $10,310 $10,345
06/30/99 $10,930 $10,973
07/31/99 $10,760 $10,802
08/31/99 $10,310 $10,349
09/30/99 $10,120 $10,159
10/31/99 $9,890 $9,924
11/30/99 $10,120 $10,147
12/31/99 $10,411 $10,425
01/31/00 $9,886 $9,891
02/29/00 $10,338 $10,338
03/31/00 $10,716 $10,720
04/30/00 $10,801 $10,795
</TABLE>
The above graph compares the growth of a hypothetical $10,000 investment in the
Institutional Select Small-Cap Value Index Fund, made at its inception, with a
similar investment in the S&P Small-Cap 600/BARRA Value Index. A detailed
analysis of the performance of the fund is provided in the Fund Discussion
section later in this report.
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 10/31/99 (000s) $31,644
---------------------------------------------------------------------
Total net assets as of 4/30/00 (000s) $34,533
---------------------------------------------------------------------
Percentage growth from 10/31/99 to 4/30/00 9.1%
---------------------------------------------------------------------
</TABLE>
15
<PAGE>
INSTITUTIONAL SELECT-TM- SMALL-CAP VALUE INDEX FUND
PORTFOLIO SNAPSHOT
The Institutional Select Small-Cap Value Index Fund (the fund) seeks high total
return by tracking the performance of the S&P SmallCap 600/BARRA Value index. To
do this, it invest primarily in common stocks of the S&P SmallCap 600/BARRA
Value Index, a widely recognized index composed of approximately 375 small-cap
common stocks determined by BARRA, Inc. and Standard &
Poor's-Registered Trademark- to be "value" stocks. The total value of the index
(as measured by the combined market capitalization of the companies included in
the index) is approximately half the total value of the S&P SmallCap 600 Index.
The companies with the highest price/book ratios may be included in the index.
BARRA, Inc. and Standard & Poor's rebalance the index at least semiannually. The
information below, and on the following page, provides a snapshot of the fund's
characteristics as of 4/30/00, and is not indicative of its composition after
that date. The terms used below are defined on pages 22 and 23. A complete list
of the securities in the fund's portfolio as of 4/30/00 is provided in the
Schedule of Investments later in this report.
FUND FACTS
<TABLE>
<CAPTION>
INSTITUTIONAL SELECT SMALL-CAP PEER GROUP
VALUE INDEX FUND* AVERAGE+
<S> <C> <C>
-----------------------------------------------------------------------------------------------------------
Number of Issues 404 180
-----------------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) $513+ $1,019
-----------------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 19.0+ 30.3
-----------------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 2.2+ 6.7
-----------------------------------------------------------------------------------------------------------
12-Month Yield 0.87%+ 0.21%
-----------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 44% 92%
-----------------------------------------------------------------------------------------------------------
Three-Year Beta N/A 0.87
-----------------------------------------------------------------------------------------------------------
Expense Ratio 0.32%** 1.59%
-----------------------------------------------------------------------------------------------------------
</TABLE>
* Compiled by Charles Schwab & Co., Inc. This information is for illustrative
purposes only and is not intended to show, predict or guarantee future
composition of the fund.
** Reflects a reduction by the investment adviser and Schwab, which is
guaranteed through at least 12/31/05 (excluding interest, taxes and certain
non-routine expenses).
+ Source: Morningstar, Inc. This information is as of 4/30/00, 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
845 small-cap funds as tracked by Morningstar.
16
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 4/30/00
<TABLE>
<S> <C>
Other 35.3%
Electronics 10.8%
Business Services 8.5%
Healthcare/Drugs and Medicine 8.1%
Producer Goods and Manufacturing 6.9%
Banks 6.5%
Miscellaneous Finance 6.1%
Utilities-Energy and Gas 5.0%
Retail 4.8%
Oil-Domestic 4.3%
Apparel 3.7%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
EQUITY INVESTMENT STYLE BOX(1)
AS OF 4/30/00
<TABLE>
<CAPTION>
--STYLE--
VALUE BLEND GROWTH --MARKET CAP--
<S> <C> <C> <C>
Large
Medium
x Small
</TABLE>
TOP 10 HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS(2)
<TABLE>
<S> <C>
---------------------------------------------
International Rectifier Corp. 1.6%
---------------------------------------------
Radian Group, Inc. 1.0%
---------------------------------------------
Snyder Communications, Inc. 0.9%
---------------------------------------------
Universal Health Services, Inc. 0.9%
---------------------------------------------
Newfield Exploration Co. 0.9%
---------------------------------------------
---------------------------------------------
Centura Banks, Inc. 0.9%
---------------------------------------------
Zale Corp. 0.8%
---------------------------------------------
AmeriCredit Corp. 0.8%
---------------------------------------------
Coherent, Inc. 0.8%
---------------------------------------------
Silicon Valley Bancshares 0.8%
---------------------------------------------
</TABLE>
(1) Source: Morningstar, Inc. The style box illustrates the composition of the
fund's portfolio as of 4/30/00. 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.
(2) Nothing in this report represents a recommendation of a security by the
investment adviser.
17
<PAGE>
PORTFOLIO MANAGEMENT
PORTFOLIO MANAGEMENT TEAM
GERI HOM--vice president and senior portfolio manager, has overall
responsibility for the management of the Institutional Select-TM- Funds. Geri
also manages all of the Schwab Equity Index Funds and the Schwab Analytics
Fund-Registered Trademark- and she co-manages the Schwab MarketTrack
Portfolios-TM-. Geri joined CSIM in March 1995 as portfolio manager and was
promoted to her current position in December 1996. She currently manages
approximately $19 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 Management Group for
Wells Fargo Nikko.
LARRY MANO--director and portfolio manager, has day-to-day portfolio management
responsibilities for the Institutional Select Large-Cap Value Index Fund and the
Institutional Select Small-Cap Value Index Fund. Prior to joining the firm in
1998, he spent 20 years at Wilshire Associates, where he directed the
development of equity index investment products.
18
<PAGE>
FUND DISCUSSION
QUESTIONS TO THE
PORTFOLIO MANAGEMENT TEAM
Q. HOW DID THE FUNDS 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 Index, relinquished a five year hold as
being the strongest performing asset class to the small-cap asset class.
Additionally, value stocks underperformed growth stocks across both large-cap
and small-cap styles.
INSTITUTIONAL SELECT S&P 500 FUND
<TABLE>
<CAPTION>
BEFORE TAX: AFTER TAX:(1)
SIX MONTHS ONE YEAR ONE YEAR
<S> <C> <C> <C>
------------------------------------------------------------
Institutional Select
S&P 500 Fund 7.08% 9.95% 9.54%
------------------------------------------------------------
S&P 500 Index 7.19% 10.13% N/A
------------------------------------------------------------
Average Large-Cap
Fund(2) 11.41% 14.32% 12.17%
------------------------------------------------------------
</TABLE>
INSTITUTIONAL SELECT LARGE-CAP VALUE FUND
<TABLE>
<CAPTION>
BEFORE TAX: AFTER TAX:(1)
SIX MONTHS ONE YEAR ONE YEAR
<S> <C> <C> <C>
------------------------------------------------------------
Institutional Select
Large-Cap Value Fund 2.59% 0.25% (0.61)%
------------------------------------------------------------
S&P 500/Barra Value
Index 2.70% 0.46% N/A
------------------------------------------------------------
Average Large-Cap
Value Fund(3) 1.83% (1.67)% (3.77)%
------------------------------------------------------------
</TABLE>
INSTITUTIONAL SELECT SMALL-CAP VALUE FUND
<TABLE>
<CAPTION>
BEFORE TAX: AFTER TAX:(1)
SIX MONTHS ONE YEAR ONE YEAR
<S> <C> <C> <C>
------------------------------------------------------------
Institutional Select
Small-Cap Value Fund 9.21% 8.88% 6.76%
------------------------------------------------------------
S&P Small-Cap 600/
Barra Value Index 8.77% 8.51% N/A
------------------------------------------------------------
Average Small-Cap
Value Fund(4) 11.92% 11.24% 10.17%
------------------------------------------------------------
</TABLE>
(1) 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. State and local taxes have not been
considered. After-tax return information is not applicable to shareholders
in tax-deferred accounts such as IRAs or 401ks. Past after-tax information
is not a prediction of future tax efficiency. These after-tax returns do not
reflect any taxes you may have to pay as a result of selling your shares.
(2) Source: Morningstar, Inc. as of 4/30/00 the large-cap fund category
contained 1,083 funds with six-month track records and 1,065 funds with
one-year track records.
(3) Source: Morningstar, Inc. as of 4/30/00 the large-cap value fund category
contained 287 funds with six-month track records and 285 funds with one-
year track records.
(4) Source: Morningstar, Inc. as of 4/30/00 the small-cap value fund category
contained 131 funds with six-month track records and 131 funds with one-
year track records.
Q. CAN YOU PROVIDE SOME HISTORICAL PERSPECTIVE ON VALUE STOCK RETURNS COMPARED
TO GROWTH STOCK RETURNS?
A. Schwab Center for Investment Research (SCIR) found that the value stocks
historically have shown much less volatility. Whether looking at the past 10,
15, or 20 years, value stocks exhibited only three-quarters the volatility of
growth stocks. Volatility was measured by the annualized standard deviation of
monthly total returns for each index.
On the return side, the data is less definitive. Although value stock returns
have outperformed growth stock returns for the period from 1975 through 1998,
there
19
<PAGE>
FUND DISCUSSION (continued)
have been periods when growth stocks have performed better than value stocks and
vice versa. These shifting results are driven by the fact that value and growth
stocks have tended to take turns leading the market and these "performance
cycles" have varied in length and magnitude, as shown by the second graph below.
Depending on which time period you consider, growth looked better than value and
vice versa, although the value cycles tended to be longer. Although these cycles
may not be entirely random, predicting them is difficult.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Growth of a Hypothetical $1 Investment
<TABLE>
<CAPTION>
S&P/BARRA 500 GROWTH S&P/BARRA 500 VALUE
<S> <C> <C>
1/1/1975 $1.00 $1.00
1975 $1.32 $1.43
1976 $1.50 $1.93
1977 $1.32 $1.88
1978 $1.41 $2.00
1979 $1.63 $2.42
1980 $2.28 $3.00
1981 $2.05 $3.00
1982 $2.51 $3.63
1983 $2.91 $4.68
1984 $2.98 $5.17
1985 $3.97 $6.70
1986 $4.55 $8.15
1987 $4.85 $8.45
1988 $5.43 $10.28
1989 $7.40 $12.97
1990 $7.42 $12.08
1991 $10.26 $14.81
1992 $10.78 $16.37
1993 $10.96 $19.41
1994 $11.31 $19.29
1995 $15.62 $26.43
1996 $19.36 $32.24
1997 $26.43 $41.90
1998 $37.57 $48.05
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
VALUE AND GROWTH
RELATIVE PERFORMANCE: 1975-1998
<TABLE>
<CAPTION>
GROWTH VALUE
RELATIVE PERFORMANCE RELATIVE PERFORMANCE
<S> <C> <C>
1975 11.66%
1976 21.09%
1977 9.25%
1978 -0.62%
1979 5.44%
1980 -15.81%
1981 9.83%
1982 -0.99%
1983 12.65%
1984 8.19%
1985 -3.63%
1986 7.17%
1987 -2.82%
1988 9.72%
1989 -10.27%
1990 -7.05%
1991 -15.81%
1992 5.46%
1993 16.92%
1994 -3.77%
1995 -1.14%
1996 -1.97%
1997 -6.54%
1998 -27.49%
</TABLE>
Q. CAN YOU PROVIDE SOME BACKGROUND ON THE S&P/ BARRA VALUE INDICES?
A. The S&P 500/BARRA Value Index, and its counterpart, the S&P 500/BARRA Growth
Index, are based on methodology developed by 1990 Nobel Laureate William F.
Sharpe, who determined that dividing S&P 500 stocks into growth and value
indices can account for 90% of the monthly variation in return. Stocks from the
S&P 500 Index are divided into value and growth indices based on book value
relative to price.
The S&P 500/BARRA VALUE INDEX is a widely recognized index designed to reflect
the performance of large capitalization "value stocks." The Index includes those
S&P 500 Index stocks with generally higher P/B ratios, and is rebalanced
semiannually. Its market capitalization is about half the market capitalization
of the S&P 500 Index. Conceptually
20
<PAGE>
speaking, the Index is constructed by first ranking all S&P 500 stocks by their
P/B ratios. Then, the stocks with higher P/B ratios are placed in the S&P/BARRA
Value Index until the Index represents about half of the total market
capitalization of the S&P 500 Index. This methodology has the benefits of being
objective and easy to understand.
The S&P SMALL-CAP 600/BARRA VALUE INDEX is a widely recognized index designed to
reflect the performance of small capitalization "value stocks." The Index
includes those S&P Small-Cap 600 Index stocks with generally higher P/B ratios,
and is rebalanced semiannually. (The S&P Small-Cap 600 Index is composed of
stocks selected by Standard & Poor's-Registered Trademark- to reflect the
performance of U.S. small capitalization stocks.) Its market capitalization is
about half the market capitalization of the S&P Small-Cap 600 Index.
Conceptually speaking, the Index is constructed by first ranking all S&P 600
stocks by their P/B ratios. Then the stocks with higher P/B ratios are placed in
the S&P Small-Cap 600/BARRA Value Index until the Index represents about half of
the total market capitalization of the S&P Small-Cap 600 Index. This methodology
has the benefits of being objective and easy to understand.
21
<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.
22
<PAGE>
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.
23
<PAGE>
INSTITUTIONAL SELECT(TM) S&P 500 FUND
SCHEDULE OF INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- -----------
<S> <C> <C>
--------------------------------------------------------------------------------
COMMON STOCK -- 99.2%
--------------------------------------------------------------------------------
AEROSPACE / DEFENSE -- 1.0%
B.F. Goodrich Co. 2,800 $ 89
Boeing Co. 23,700 941
Crane Co. 1,800 48
General Dynamics Corp. 5,500 322
Lockheed Martin Corp. 10,800 269
Northrop Grumman Corp. 1,900 135
Raytheon Co., Class B 9,300 206
Rockwell International Corp. 5,200 205
Textron, Inc. 4,300 266
TRW, Inc. 3,200 187
United Technologies Corp. 12,900 802
-------
3,470
-------
--------------------------------------------------------------------------------
AIR TRANSPORTATION -- 0.3%
AMR Corp.+ 3,900 133
Delta Air Lines, Inc. 3,400 179
FedEx Corp.+ 7,800 294
Southwest Airlines Co. 13,500 293
U.S. Airways Group, Inc.+ 2,000 56
-------
955
-------
--------------------------------------------------------------------------------
ALCOHOLIC BEVERAGES -- 0.3%
Adolph Coors Co., Class B 1,000 51
Anheuser-Busch Cos., Inc. 12,800 903
Brown-Forman Corp., Class B 1,800 98
-------
1,052
-------
--------------------------------------------------------------------------------
APPAREL -- 0.2%
Liz Claiborne, Inc. 1,500 69
Nike, Inc., Class B 7,500 326
Reebok International Ltd.+ 1,500 25
Russell Corp. 800 16
Springs Industries, Inc. 1,000 41
VF Corp. 3,000 85
-------
562
-------
--------------------------------------------------------------------------------
AUTOMOTIVE PRODUCTS / MOTOR VEHICLES -- 1.5%
Cooper Tire & Rubber Co. 1,800 24
Cummins Engine Co., Inc. 1,000 36
Dana Corp. 4,500 137
Danaher Corp. 4,100 234
Delphi Automotive Systems Corp. 15,249 292
Eaton Corp. 2,000 168
Ford Motor Co. 33,000 1,805
Number Value
of Shares (000s)
--------- -----------
General Motors Corp. 17,700 $ 1,657
Genuine Parts Co. 4,600 121
Goodyear Tire & Rubber Co. 4,300 119
Harley-Davidson, Inc. 8,300 330
Navistar International Corp.+ 1,700 59
-------
4,982
-------
--------------------------------------------------------------------------------
BANKS -- 4.8%
AmSouth Bancorp. 10,500 153
Bank of America Corp. 47,000 2,303
Bank of New York Co., Inc. 20,200 829
Bank One Corp. 31,200 952
BB&T Corp. 9,300 248
Chase Manhattan Corp. 22,500 1,621
Comerica, Inc. 4,300 182
Fifth Third Bancorp. 8,400 530
First Union Corp. 26,900 857
Firstar Corp. 26,763 666
Fleet Boston Financial Corp. 25,031 887
Huntington Bancshares, Inc. 6,030 110
J.P. Morgan & Co., Inc. 5,100 655
KeyCorp, Inc. 12,200 226
Mellon Financial Corp. 13,700 440
National City Corp. 16,600 282
Northern Trust Corp. 6,200 398
Old Kent Financial Corp. 3,600 108
PNC Financial Services Group 8,100 353
Providian Financial Corp. 4,000 352
Regions Financial Corp. 5,900 121
SouthTrust Corp. 4,600 110
State Street Corp. 4,500 436
Summit Bancorp. 4,600 117
SunTrust Banks, Inc. 8,800 447
Synovus Financial Corp. 7,600 141
U.S. Bancorp. 20,300 412
Union Planters Corp. 3,900 110
Wachovia Corp. 5,600 351
Wells Fargo & Co. 45,100 1,852
-------
16,249
-------
--------------------------------------------------------------------------------
BUSINESS MACHINES & SOFTWARE -- 16.6%
3Com Corp.+ 9,300 367
Adaptec, Inc.+ 2,900 78
Adobe Systems, Inc. 3,200 387
Apple Computer, Inc.+ 4,400 546
Autodesk, Inc. 1,600 61
BMC Software, Inc.+ 6,600 309
24
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Cabletron Systems, Inc.+ 4,800 $ 110
Ceridian Corp.+ 3,700 80
Cisco Systems, Inc.+ 187,700 13,013
Compaq Computer Corp. 46,500 1,360
Compuware Corp.+ 9,500 119
Comverse Technology, Inc.+ 4,200 375
Dell Computer Corp.+ 70,400 3,529
EMC Corp.+ 28,312 3,934
Gateway, Inc.+ 8,700 481
Hewlett-Packard Co. 27,500 3,712
IKON Office Solutions, Inc. 3,900 23
International Business
Machines Corp. 49,600 5,537
Lexmark International Group,
Inc., Class A+ 3,600 425
Microsoft Corp.+ 143,000 9,974
NCR Corp.+ 2,600 100
Network Appliance, Inc.+ 8,400 621
Novell, Inc.+ 8,900 175
Oracle Corp.+ 77,400 6,187
Pitney Bowes, Inc. 7,400 302
Seagate Technology, Inc.+ 5,900 300
Silicon Graphics, Inc.+ 4,500 32
Sun Microsystems, Inc.+ 43,200 3,972
Unisys Corp.+ 8,400 195
Xerox Corp. 18,100 479
-------
56,783
-------
--------------------------------------------------------------------------------
BUSINESS SERVICES -- 4.5%
Allied Waste Industries, Inc.+ 8,100 50
America Online, Inc.+ 62,700 3,750
Automatic Data Processing, Inc. 17,300 931
Citrix Systems, Inc.+ 5,000 305
Computer Associates
International, Inc. 16,100 899
Computer Sciences Corp.+ 4,600 375
Deluxe Corp. 1,800 45
Dun & Bradstreet Corp. 4,300 130
Ecolab, Inc. 3,500 137
Electronic Data Systems Corp. 12,800 880
Equifax, Inc. 3,800 93
First Data Corp. 11,800 575
H&R Block, Inc. 2,700 113
IMS Health, Inc. 8,300 142
Interpublic Group of Cos., Inc. 7,600 312
National Service Industries,
Inc. 1,000 21
Omnicom Group, Inc. 4,900 446
Parametric Technology Corp.+ 7,200 59
Number Value
of Shares (000s)
--------- -----------
Paychex, Inc. 6,750 $ 355
PeopleSoft, Inc.+ 7,400 103
Shared Medical Systems Corp. 800 33
Tyco International Ltd. 46,452 2,134
VERITAS Software Corp.+ 10,600 1,137
Waste Management, Inc. 16,900 268
Yahoo!, Inc.+ 14,600 1,902
Young & Rubicam, Inc. 1,800 100
-------
15,295
-------
--------------------------------------------------------------------------------
CHEMICAL -- 1.8%
Air Products & Chemicals, Inc. 6,100 189
Dow Chemical Co. 6,100 689
E. I. du Pont de Nemours & Co. 28,582 1,356
Eastman Chemical Co. 2,000 105
Great Lakes Chemical Corp. 1,400 38
Hercules, Inc. 2,600 40
Minnesota Mining &
Manufacturing Co. 11,300 977
Pharmacia Corp. 34,627 1,729
PPG Industries, Inc. 4,700 256
Praxair, Inc. 4,200 187
Rohm & Haas Co. 5,963 212
Sigma-Aldrich Corp. 2,700 79
Union Carbide Corp. 3,700 218
W.R. Grace & Co.+ 4,700 61
-------
6,136
-------
--------------------------------------------------------------------------------
CONSTRUCTION -- 0.2%
Armstrong Holdings, Inc.+ 2,300 45
Centex Corp. 1,400 34
Fluor Corp. 2,000 67
Kaufman & Broad Home Corp. 1,000 19
Masco Corp. 12,100 271
Owens Corning 1,300 24
Pulte Corp. 1,000 22
Sherwin-Williams Co. 4,500 112
The Stanley Works 2,500 74
Vulcan Materials Co. 2,700 118
-------
786
-------
--------------------------------------------------------------------------------
CONSUMER - DURABLE -- 0.1%
Black & Decker Corp. 2,300 97
Leggett & Platt, Inc. 5,300 113
Maytag Corp. 2,400 83
Whirlpool Corp. 2,000 130
-------
423
-------
25
<PAGE>
INSTITUTIONAL SELECT(TM)S&P 500 FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
--------------------------------------------------------------------------------
CONSUMER - NONDURABLE -- 0.7%
American Greetings Corp.,
Class A 1,500 $ 27
Darden Restaurants, Inc. 3,500 65
Fortune Brands, Inc. 4,400 110
Harcourt General, Inc. 2,100 78
Hasbro, Inc. 4,800 77
Jostens, Inc. 800 20
Mattel, Inc. 11,500 141
McDonald's Corp. 37,300 1,422
Newell Rubbermaid, Inc. 7,667 193
Tricon Global Restaurants, Inc.+ 4,200 143
Tupperware Corp. 1,600 30
Wendy's International, Inc. 3,200 72
-------
2,378
-------
--------------------------------------------------------------------------------
CONTAINERS -- 0.1%
Ball Corp. 800 25
Bemis Co., Inc. 1,400 52
Crown Cork & Seal Co., Inc. 3,300 54
Owens-Illinois, Inc.+ 3,700 50
Pactiv Corp.+ 4,400 36
Sealed Air Corp.+ 2,200 122
-------
339
-------
--------------------------------------------------------------------------------
ELECTRONICS -- 12.3%
ADC Telecommunications, Inc.+ 8,400 510
Advanced Micro Devices, Inc.+ 4,100 360
Altera Corp.+ 4,410 451
Analog Devices, Inc.+ 9,800 753
Andrew Corp.+ 2,100 62
Applied Materials, Inc.+ 21,100 2,148
Conexant Systems, Inc.+ 5,900 353
Intel Corp. 91,600 11,616
ITT Industries, Inc. 2,400 76
KLA-Tencor Corp.+ 5,400 404
Linear Technology Corp. 8,400 480
LSI Logic Corp.+ 8,200 513
Lucent Technologies, Inc. 87,345 5,432
Micron Technology, Inc.+ 7,400 1,030
Molex, Inc. 5,500 302
Motorola, Inc. 19,442 2,315
National Semiconductor Corp.+ 4,600 279
Nextel Communications, Inc.,
Class A+ 10,400 1,138
Nortel Networks Corp. 39,800 4,507
PE Corp.-PE Biosystems Group 5,600 336
PerkinElmer, Inc. 1,300 71
Number Value
of Shares (000s)
--------- -----------
QUALCOMM, Inc.+ 20,200 $ 2,190
Scientific-Atlanta, Inc. 4,300 280
Solectron Corp.+ 16,300 763
Tektronix, Inc. 1,200 69
Tellabs, Inc.+ 10,900 597
Teradyne, Inc.+ 4,700 517
Texas Instruments, Inc. 22,400 3,648
Thermo Electron Corp.+ 4,000 78
Thomas & Betts Corp. 1,500 46
Xilinx, Inc.+ 8,800 645
-------
41,969
-------
--------------------------------------------------------------------------------
ENERGY - RAW MATERIALS -- 0.9%
Anadarko Petroleum Corp. 3,500 152
Apache Corp. 3,100 150
Baker Hughes, Inc. 9,000 286
Burlington Resources, Inc. 5,900 232
Eastern Enterprises 700 43
Halliburton Co. 12,400 548
McDermott International, Inc. 5,700 46
Occidental Petroleum Corp. 9,700 208
Rowan Cos., Inc.+ 2,500 70
Schlumberger Ltd. 15,400 1,179
-------
2,914
-------
--------------------------------------------------------------------------------
FOOD & AGRICULTURE -- 2.7%
Archer-Daniels Midland Co. 16,305 162
Bestfoods, Inc. 7,600 382
Campbell Soup Co. 11,500 299
Coca-Cola Co. 67,800 3,191
Coca-Cola Enterprises, Inc. 11,600 247
ConAgra, Inc. 13,400 253
General Mills, Inc. 8,100 295
H.J. Heinz Co. 9,700 330
Hershey Foods Corp. 3,700 168
Kellogg Co. 11,000 269
Nabisco Group Holdings Corp. 8,400 108
PepsiCo, Inc. 40,100 1,471
Quaker Oats Co. 3,600 235
Ralston-Ralston Purina Group 7,900 140
Sara Lee Corp. 24,400 366
SUPERVALU, Inc. 4,000 83
SYSCO Corp. 9,100 342
Unilever NV 15,642 713
Wm. Wrigley Jr. Co. 3,300 239
-------
9,293
-------
26
<PAGE>
Number Value
of Shares (000s)
--------- -----------
--------------------------------------------------------------------------------
GOLD -- 0.1%
Barrick Gold Corp. 10,800 $ 182
Homestake Mining Co. 6,700 40
Newmont Mining Corp. 4,300 101
Placer Dome, Inc. 8,100 66
-------
389
-------
--------------------------------------------------------------------------------
HEALTHCARE / DRUGS & MEDICINE -- 9.7%
Abbott Laboratories 42,300 1,626
Aetna, Inc. 3,800 220
Allergan, Inc. 3,500 206
ALZA Corp.+ 2,800 123
American Home Products Corp. 36,100 2,028
Amgen, Inc.+ 28,300 1,585
Bausch & Lomb, Inc. 1,600 97
Baxter International, Inc. 7,900 514
Becton, Dickinson & Co. 6,600 169
Biogen, Inc.+ 4,200 247
Biomet, Inc. 3,000 107
Boston Scientific Corp.+ 11,300 299
Bristol-Myers Squibb Co. 54,600 2,863
C.R. Bard, Inc. 1,300 57
Cardinal Health, Inc. 7,600 418
Columbia / HCA Healthcare Corp. 15,400 438
Eli Lilly & Co. 30,200 2,335
Guidant Corp.+ 8,400 482
HealthSouth Corp.+ 9,800 79
Humana, Inc.+ 4,400 34
Johnson & Johnson 38,400 3,168
Mallinckrodt, Inc. 1,900 51
Manor Care, Inc.+ 2,700 32
McKesson HBOC, Inc. 7,400 125
Medtronic, Inc. 32,600 1,693
Merck & Co., Inc. 64,300 4,469
Pfizer, Inc. 105,900 4,461
Quintiles Transnational Corp.+ 2,900 42
Schering-Plough Corp. 40,500 1,633
St. Jude Medical, Inc.+ 2,400 75
Tenet Healthcare Corp.+ 8,500 217
UnitedHealth Group, Inc. 4,700 313
Warner-Lambert Co. 23,600 2,686
Watson Pharmaceuticals, Inc.+ 2,500 112
Wellpoint Health Networks, Inc.+ 1,800 133
-------
33,137
-------
Number Value
of Shares (000s)
--------- -----------
------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS -- 1.4%
Alberto-Culver Co., Class B 1,500 $ 35
Avon Products, Inc. 6,500 270
Clorox Co. 6,400 235
Colgate-Palmolive Co. 15,900 908
Gillette Co. 29,300 1,084
International Flavors &
Fragrances, Inc. 2,900 100
Procter & Gamble Co. 36,400 2,170
-------
4,802
-------
--------------------------------------------------------------------------------
INSURANCE -- 2.8%
AFLAC, Inc. 7,300 356
Allstate Corp. 21,700 513
American General Corp. 6,700 375
American International Group,
Inc. 42,425 4,653
Aon Corp. 7,000 189
Chubb Corp. 4,800 305
CIGNA Corp. 4,800 383
Cincinnati Financial Corp. 4,400 177
Conseco, Inc. 8,300 45
Hartford Financial Services
Group, Inc. 6,200 324
Jefferson-Pilot Corp. 3,000 200
Lincoln National Corp. 5,300 185
Loew's Corp. 2,900 160
Marsh & McLennan Cos., Inc. 7,300 720
MBIA, Inc. 2,700 133
MGIC Investment Corp. 3,000 143
Progressive Corp. 1,900 124
SAFECO Corp. 3,300 73
St. Paul Cos., Inc. 6,100 217
Torchmark Corp. 3,600 90
UnumProvident Corp. 6,460 110
-------
9,475
-------
--------------------------------------------------------------------------------
MEDIA -- 3.8%
CBS Corp.+ 20,134 1,183
Clear Channel Communications,
Inc.+ 9,300 670
Comcast Corp., Class A+ 25,200 1,010
Dow Jones & Co., Inc. 2,400 156
Gannett Co., Inc. 7,600 485
Knight-Ridder, Inc. 2,300 113
McGraw-Hill Cos., Inc. 5,300 278
MediaOne Group, Inc.+ 16,100 1,218
27
<PAGE>
INSTITUTIONAL SELECT(TM)S&P 500 FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Meredith Corp. 1,500 $ 42
New York Times Co., Class A 4,500 185
R.R. Donnelley & Sons Co. 3,500 74
Seagram Co. Ltd. 12,200 659
Time Warner, Inc. 35,500 3,193
Tribune Co. 6,400 249
Viacom, Inc., Class B+ 19,100 1,039
Walt Disney Co. 56,900 2,464
-------
13,018
-------
--------------------------------------------------------------------------------
MISCELLANEOUS FINANCE -- 5.3%
American Express Co. 12,500 1,876
Associates First Capital Corp. 19,600 435
Bear Stearns Cos., Inc. 3,246 139
Capital One Financial Corp. 5,400 236
Charles Schwab Corp. 22,400 997
Citigroup, Inc. 92,400 5,492
Countrywide Credit Industries,
Inc. 3,000 83
Fannie Mae 28,400 1,713
Franklin Resources, Inc. 6,600 213
Freddie Mac 18,900 868
Golden West Financial Corp. 4,400 150
Household International, Inc. 12,700 530
Lehman Brothers Holdings, Inc. 3,400 279
MBNA Corp. 21,900 582
Merrill Lynch & Co., Inc. 10,400 1,060
Morgan Stanley Dean Witter
Discover & Co. 31,500 2,418
Paine Webber Group, Inc. 3,800 167
Sabre Group Holdings, Inc.+ 6,618 231
SLM Holding Corp. 4,200 132
T. Rowe Price Associates, Inc. 3,300 126
Washington Mutual, Inc. 15,600 399
-------
18,126
-------
--------------------------------------------------------------------------------
NON-FERROUS METALS -- 0.4%
Alcan Aluminum Ltd. 5,900 193
Alcoa, Inc. 10,100 655
Engelhard Corp. 3,300 58
Freeport-McMoRan Copper & Gold,
Inc., Class B+ 4,200 40
Inco Ltd.+ 5,100 80
Phelps Dodge Corp. 2,160 100
Reynolds Metals Co. 1,700 113
-------
1,239
-------
Number Value
of Shares (000s)
--------- -----------
--------------------------------------------------------------------------------
OIL - DOMESTIC -- 0.6%
Amerada Hess Corp. 2,400 $ 153
Ashland, Inc. 1,900 65
Conoco, Inc., Class B 17,000 423
Kerr-McGee Corp. 2,773 144
Phillips Petroleum Co. 7,100 337
Sunoco, Inc. 2,400 73
Tosco Corp. 4,000 128
Transocean Sedco Forex, Inc. 5,620 264
Union Pacific Resources Group,
Inc. 6,800 130
Unocal Corp. 6,400 207
USX-Marathon Group, Inc. 8,500 198
-------
2,122
-------
--------------------------------------------------------------------------------
OIL - INTERNATIONAL -- 3.8%
Chevron Corp. 18,000 1,532
Exxon Mobil Corp. 94,610 7,350
Royal Dutch Petroleum Co.
--Sponsored ADR 59,000 3,385
Texaco, Inc. 15,100 747
-------
13,014
-------
--------------------------------------------------------------------------------
OPTICAL & PHOTO -- 0.6%
Corning, Inc. 7,600 1,501
Eastman Kodak Co. 8,500 475
Polaroid Corp. 1,100 22
-------
1,998
-------
--------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS -- 0.8%
Boise Cascade Corp. 1,400 46
Champion International Corp. 2,600 171
Fort James Corp. 5,800 139
Georgia-Pacific Group 4,500 165
International Paper Co. 11,188 411
Kimberly-Clark Corp. 15,200 883
Louisiana-Pacific Corp. 2,600 35
Mead Corp. 2,900 101
Potlatch Corp. 700 28
Temple-Inland, Inc. 1,400 70
Westvaco Corp. 2,600 80
Weyerhaeuser Co. 6,400 342
Willamette Industries, Inc. 3,000 115
-------
2,586
-------
28
<PAGE>
Number Value
of Shares (000s)
--------- -----------
--------------------------------------------------------------------------------
PRODUCER GOODS & MANUFACTURING -- 5.5%
Avery Dennison Corp. 3,000 $ 197
Briggs & Stratton Corp. 500 19
Caterpillar, Inc. 9,800 386
Cooper Industries, Inc. 2,500 86
Deere & Co. 6,300 254
Dover Corp. 5,500 279
Emerson Electric Co. 11,700 642
FMC Corp.+ 800 47
General Electric Co. (b) 90,000 14,153
Honeywell International, Inc. 21,762 1,219
Illinois Tool Works, Inc. 8,200 525
Ingersoll-Rand Co. 4,500 211
Johnson Controls, Inc. 2,400 152
Milacron, Inc. 2,700 49
Millipore Corp. 1,500 108
NACCO Industries, Inc., Class A 200 9
Pall Corp. 3,300 74
Parker-Hannifin Corp. 3,000 140
Snap-On, Inc. 1,400 37
The Timken Co. 1,500 28
W.W. Grainger, Inc. 2,400 104
-------
18,719
-------
--------------------------------------------------------------------------------
RAILROAD & SHIPPING -- 0.3%
Burlington Northern
Santa Fe Corp. 12,400 299
CSX Corp. 5,700 119
Kansas City Southern
Industries, Inc. 3,000 216
Norfolk Southern Corp. 10,100 178
Union Pacific Corp. 6,700 282
-------
1,094
-------
--------------------------------------------------------------------------------
RETAIL -- 5.9%
Albertson's, Inc. 11,583 377
AutoZone, Inc.+ 3,700 85
Bed, Bath & Beyond, Inc.+ 3,700 136
Best Buy Co., Inc.+ 5,600 452
Cendant Corp.+ 18,970 293
Circuit City Stores-Circuit
City Group 5,600 329
Consolidated Stores Corp.+ 2,900 36
Costco Wholesale Corp.+ 12,500 676
CVS Corp. 10,600 461
Dillards, Inc., Class A 2,500 35
Dollar General Corp. 7,000 160
Number Value
of Shares (000s)
--------- -----------
Federated Department
Stores, Inc.+ 5,600 $ 190
Gap, Inc. 23,300 856
Great Atlantic & Pacific
Tea Co., Inc. 2,600 48
Home Depot, Inc. 63,300 3,549
J.C. Penney Co., Inc. 7,100 98
Kmart Corp.+ 12,800 104
Kohl's Corp.+ 9,200 442
Kroger Co.+ 22,800 423
Limited, Inc. 6,000 271
Longs Drug Stores, Inc. 1,000 23
Lowe's Cos., Inc. 10,400 515
May Department Stores Co. 9,100 250
Nordstrom, Inc. 3,500 97
Office Depot, Inc.+ 8,400 89
Rite Aid Corp. 6,800 34
Safeway, Inc.+ 13,900 613
Sears, Roebuck & Co. 10,300 377
Staples, Inc.+ 12,700 242
Tandy Corp. 5,200 296
Target Corp. 12,000 799
TJX Cos., Inc. 8,800 169
Toys `R' Us, Inc.+ 6,300 96
Wal-Mart Stores, Inc. 122,300 6,772
Walgreen Co. 27,400 771
Winn-Dixie Stores, Inc. 3,900 65
-------
20,229
-------
--------------------------------------------------------------------------------
STEEL -- 0.1%
Allegheny Technologies, Inc. 2,350 57
Bethlehem Steel Corp.+ 3,740 20
Nucor Corp. 2,300 99
USX-U.S. Steel Group, Inc. 2,500 63
Worthington Industries, Inc. 2,600 32
-------
271
-------
--------------------------------------------------------------------------------
TELEPHONE -- 6.9%
Alltel Corp. 8,500 566
AT&T Corp. 87,503 4,085
Bell Atlantic Corp. 42,500 2,518
BellSouth Corp. 51,900 2,527
CenturyTel, Inc. 3,700 91
Global Crossing Ltd.+ 21,160 667
GTE Corp. 25,500 1,728
MCI WorldCom, Inc.+ 77,850 3,537
SBC Communications, Inc. 93,430 4,093
29
<PAGE>
INSTITUTIONAL SELECT(TM)S&P 500 FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Sprint Corp. (FON Group) 23,900 $ 1,470
Sprint Corp. (PCS Group)+ 23,600 1,298
US West, Inc. 14,200 1,011
-------
23,591
-------
--------------------------------------------------------------------------------
TOBACCO -- 0.4%
Philip Morris Cos., Inc. 64,800 1,418
UST, Inc. 4,500 68
-------
1,486
-------
--------------------------------------------------------------------------------
TRAVEL & RECREATION -- 0.3%
Brunswick Corp. 2,400 46
Carnival Corp. 16,900 420
Harrah's Entertainment, Inc.+ 3,400 70
Hilton Hotels Corp. 9,700 82
Marriott
International, Inc., Class A 6,700 214
Mirage Resorts, Inc.+ 5,100 104
-------
936
-------
--------------------------------------------------------------------------------
TRUCKING & FREIGHT -- 0.0%
PACCAR, Inc. 2,000 95
Ryder Systems, Inc. 1,700 38
--------
133
--------
--------------------------------------------------------------------------------
UTILITIES - ELECTRIC & GAS -- 2.5%
AES Corp.+ 5,700 513
Ameren Corp. 3,800 139
American Electric
Power Co., Inc. 5,200 190
Carolina Power & Light Co. 4,400 161
Central & South West Corp. 5,800 126
Cinergy Corp. 4,100 110
CMS Energy Corp. 3,100 59
Coastal Corp. 5,700 286
Columbia Energy Group 2,200 138
Number Value
of Shares (000s)
--------- -----------
Consolidated Edison, Inc. 5,900 $ 208
Constellation Energy Group, Inc. 4,100 136
Dominion Resources, Inc. 6,491 292
DTE Energy Co. 3,900 127
Duke Energy Corp. 9,900 569
Edison International 9,400 179
El Paso Energy Corp. 6,300 268
Enron Corp. 19,700 1,372
Entergy Corp. 6,500 165
FirstEnergy Corp. 6,300 160
Florida Progress Corp. 2,700 132
FPL Group, Inc. 4,900 221
GPU, Inc. 3,200 90
New Century Energies, Inc. 3,200 104
Niagara Mohawk
Holdings, Inc.+ 5,600 78
NICOR, Inc. 1,300 44
Northern States Power Co. 4,100 89
ONEOK, Inc. 2,100 53
PECO Energy Co. 5,000 208
Peoples Energy Corp. 900 28
PG&E Corp. 10,300 267
Pinnacle West Capital Corp. 2,300 81
PPL Corp. 3,700 88
Public Service Enterprise
Group, Inc. 5,900 212
Reliant Energy, Inc. 8,100 216
Sempra Energy 5,585 104
Southern Co. 18,100 451
Texas Utilities Co. 7,500 253
Unicom Corp. 5,800 231
Williams Cos., Inc. 11,700 437
--------
8,585
--------
TOTAL COMMON STOCK
(Cost $310,155) 338,536
--------
30
<PAGE>
Par Value
(000s) (000s)
------- -----------
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 0.1%
U.S. Treasury Bill (a)(b)
5.56%-5.79%, 06/15/00 $300 $ 298
-------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $298) 298
-------
Number
of Shares
---------
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 1.1%
Provident Institutional
TempFund, 5.74%* 3,654,395 3,654
--------
TOTAL SHORT-TERM INVESTMENTS
(Cost $3,654) 3,654
--------
TOTAL INVESTMENTS-- 100.4%
(Cost $314,107) 342,488
--------
OTHER ASSETS AND LIABILITIES, NET -- (0.4%)
Other assets 30,969
Liabilities (32,350)
--------
(1,381)
--------
TOTAL NET ASSETS -- 100.0% $341,107
========
SEE ACCOMPANYING NOTES TO SCHEDULES OF INVESTMENTS AND NOTES TO FINANCIAL
STATEMENTS.
31
<PAGE>
INSTITUTIONAL SELECT(TM) LARGE-CAP VALUE INDEX FUND
SCHEDULE OF INVESTMENTS
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
--------------------------------------------------------------------------------
COMMON STOCK -- 99.6%
--------------------------------------------------------------------------------
AEROSPACE / DEFENSE -- 2.2%
B.F. Goodrich Co. 2,000 $ 64
Boeing Co. 15,600 619
Crane Co. 1,200 32
General Dynamics Corp. 3,600 211
Lockheed Martin Corp. 7,100 177
Northrop Grumman Corp. 1,300 92
Raytheon Co., Class B 5,900 131
Rockwell International Corp. 3,300 130
Textron, Inc. 2,700 167
TRW, Inc. 2,200 129
United Technologies Corp. 8,600 535
--------
2,287
--------
--------------------------------------------------------------------------------
AIR TRANSPORTATION -- 0.6%
AMR Corp.+ 2,600 89
Delta Air Lines, Inc. 2,300 121
FedEx Corp.+ 5,200 196
Southwest Airlines Co. 8,900 193
--------
599
--------
--------------------------------------------------------------------------------
ALCOHOLIC BEVERAGES -- 0.1%
Adolph Coors Co., Class B 700 36
Brown-Forman Corp., Class B 1,300 71
--------
107
--------
--------------------------------------------------------------------------------
APPAREL -- 0.4%
Liz Claiborne, Inc. 1,000 46
Nike, Inc., Class B 5,000 217
Reebok International Ltd.+ 800 14
Russell Corp. 600 12
Springs Industries, Inc. 400 16
VF Corp. 2,100 59
--------
364
--------
--------------------------------------------------------------------------------
AUTOMOTIVE PRODUCTS/MOTOR VEHICLES -- 3.0%
Cooper Tire & Rubber Co. 1,200 16
Cummins Engine Co., Inc. 800 28
Dana Corp. 3,000 91
Danaher Corp. 2,600 149
Delphi Automotive
Systems Corp. 10,123 194
Eaton Corp. 1,300 109
Ford Motor Co. 21,600 1,181
General Motors Corp. 11,500 1,077
Number Value
of Shares (000s)
--------- -----------
Genuine Parts Co. 3,200 $ 84
Goodyear Tire & Rubber Co. 2,800 77
Navistar International Corp.+ 1,100 38
--------
3,044
--------
--------------------------------------------------------------------------------
BANKS -- 10.1%
AmSouth Bancorp. 7,100 103
Bank of America Corp. 30,600 1,499
Bank of New York Co., Inc. 13,100 538
Bank One Corp. 20,600 628
BB&T Corp. 6,300 168
Chase Manhattan Corp. 14,900 1,074
Comerica, Inc. 2,800 119
Fifth Third Bancorp. 5,600 353
First Union Corp. 17,700 564
Firstar Corp. 17,482 435
Fleet Boston Financial Corp. 16,318 578
Huntington Bancshares, Inc. 4,310 79
J.P. Morgan & Co., Inc. 3,200 411
KeyCorp, Inc. 8,100 150
Mellon Financial Corp. 9,100 292
National City Corp. 11,100 189
Northern Trust Corp. 4,100 263
Old Kent Financial Corp. 2,300 69
PNC Financial Services Group 5,300 231
Regions Financial Corp. 4,000 82
SouthTrust Corp. 3,000 72
State Street Corp. 2,900 281
Summit Bancorp. 3,100 79
SunTrust Banks, Inc. 5,700 289
Synovus Financial Corp. 4,800 89
U.S. Bancorp. 13,400 272
Union Planters Corp. 2,500 71
Wachovia Corp. 3,700 232
Wells Fargo & Co. 29,600 1,215
--------
10,425
--------
--------------------------------------------------------------------------------
BUSINESS MACHINES & SOFTWARE -- 4.9%
3Com Corp.+ 6,200 245
Adaptec, Inc.+ 1,900 51
Apple Computer, Inc.+ 2,900 360
Autodesk, Inc. 1,000 38
Cabletron Systems, Inc.+ 3,100 71
Ceridian Corp.+ 2,400 52
Compaq Computer Corp. 30,400 889
Hewlett-Packard Co. 18,000 2,430
32
<PAGE>
Number Value
of Shares (000s)
--------- -----------
IKON Office Solutions, Inc. 2,300 $ 14
NCR Corp.+ 1,800 70
Novell, Inc.+ 5,700 112
Seagate Technology, Inc.+ 3,900 198
Silicon Graphics, Inc.+ 3,100 22
Unisys Corp.+ 5,600 130
Xerox Corp. 11,900 315
--------
4,997
--------
--------------------------------------------------------------------------------
BUSINESS SERVICES -- 1.6%
Allied Waste Industries, Inc.+ 3,400 21
Computer Sciences Corp.+ 3,000 245
Deluxe Corp. 1,200 30
Ecolab, Inc. 2,400 94
Electronic Data Systems Corp. 8,500 584
First Data Corp. 7,500 365
H&R Block, Inc. 1,800 75
National Service Industries, Inc. 800 17
Shared Medical Systems Corp. 500 21
Waste Management, Inc. 11,200 178
--------
1,630
--------
--------------------------------------------------------------------------------
CHEMICAL -- 3.9%
Air Products & Chemicals, Inc. 4,100 127
Dow Chemical Co. 3,900 441
E. I. du Pont de Nemours & Co. 18,800 892
Eastman Chemical Co. 1,500 78
Great Lakes Chemical Corp. 1,000 27
Hercules, Inc. 2,000 31
Minnesota Mining &
Manufacturing Co. 7,100 614
Pharmacia Corp. 22,463 1,122
PPG Industries, Inc. 3,100 169
Praxair, Inc. 2,800 124
Rohm & Haas Co. 3,905 139
Sigma-Aldrich Corp. 1,800 53
Union Carbide Corp. 2,500 147
--------
3,964
--------
--------------------------------------------------------------------------------
CONSTRUCTION -- 0.5%
Armstrong Holdings, Inc.+ 600 12
Centex Corp. 1,000 24
Fluor Corp. 1,400 47
Kaufman & Broad Home Corp. 900 17
Masco Corp. 7,900 177
Number Value
of Shares (000s)
--------- -----------
Pulte Corp. 800 $ 17
Sherwin-Williams Co. 2,900 72
The Stanley Works 1,500 44
Vulcan Materials Co. 1,800 79
--------
489
--------
--------------------------------------------------------------------------------
CONSUMER - DURABLE -- 0.2%
Black & Decker Corp. 1,600 67
Leggett & Platt, Inc. 3,400 73
Whirlpool Corp. 1,400 91
--------
231
--------
--------------------------------------------------------------------------------
CONSUMER - NONDURABLE -- 1.4%
American Greetings Corp.,
Class A 1,400 25
Darden Restaurants, Inc. 2,200 41
Fortune Brands, Inc. 2,900 72
Harcourt General, Inc. 1,300 49
Hasbro, Inc. 3,250 52
Mattel, Inc. 7,200 88
McDonald's Corp. 24,300 926
Newell Rubbermaid, Inc. 4,900 123
Wendy's International, Inc. 2,000 45
--------
1,421
--------
--------------------------------------------------------------------------------
CONTAINERS -- 0.1%
Ball Corp. 500 16
Bemis Co., Inc. 900 33
Crown Cork & Seal Co., Inc. 2,200 36
Owens-Illinois, Inc.+ 2,900 39
Pactiv Corp.+ 2,700 22
--------
146
--------
--------------------------------------------------------------------------------
ELECTRONICS -- 4.6%
Advanced Micro Devices, Inc.+ 2,700 237
Analog Devices, Inc.+ 6,200 476
Andrew Corp.+ 1,500 44
ITT Industries, Inc. 1,500 47
KLA-Tencor Corp.+ 3,400 255
LSI Logic Corp.+ 5,400 337
Micron Technology, Inc.+ 5,000 696
Molex, Inc. 3,450 190
Motorola, Inc. 12,895 1,535
National Semiconductor Corp.+ 3,000 182
PerkinElmer, Inc. 800 44
Scientific-Atlanta, Inc. 2,800 182
33
<PAGE>
INSTITUTIONAL SELECT(TM)LARGE-CAP VALUE INDEX FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Tektronix, Inc. 800 $ 46
Teradyne, Inc.+ 3,200 352
Thermo Electron Corp.+ 2,800 54
Thomas & Betts Corp. 1,100 34
--------
4,711
--------
--------------------------------------------------------------------------------
ENERGY - RAW MATERIALS -- 1.8%
Anadarko Petroleum Corp. 2,300 100
Apache Corp. 2,100 102
Baker Hughes, Inc. 5,800 185
Burlington Resources, Inc. 3,900 153
Eastern Enterprises 500 30
Halliburton Co. 8,000 353
McDermott International, Inc. 1,300 11
Occidental Petroleum Corp. 6,400 137
Rowan Cos., Inc.+ 1,600 45
Schlumberger Ltd. 9,900 758
--------
1,874
--------
--------------------------------------------------------------------------------
FOOD & AGRICULTURE -- 0.6%
Archer-Daniels Midland Co. 10,730 107
Coca-Cola Enterprises, Inc. 7,500 160
ConAgra, Inc. 8,600 162
Hershey Foods Corp. 2,400 109
Nabisco Group Holdings Corp. 6,000 77
SUPERVALU, Inc. 2,400 50
--------
665
--------
--------------------------------------------------------------------------------
GOLD -- 0.3%
Barrick Gold Corp. 7,300 123
Homestake Mining Co. 4,300 26
Newmont Mining Corp. 3,000 70
Placer Dome, Inc. 5,500 45
--------
264
--------
--------------------------------------------------------------------------------
HEALTHCARE/DRUGS & MEDICINE -- 3.6%
Aetna, Inc. 2,500 145
ALZA Corp.+ 1,800 79
American Home Products Corp. 23,400 1,315
Bausch & Lomb, Inc. 1,000 60
Baxter International, Inc. 5,300 345
Becton, Dickinson & Co. 4,700 120
Biomet, Inc. 2,100 75
Boston Scientific Corp.+ 7,500 199
C.R. Bard, Inc. 900 39
Cardinal Health, Inc. 5,000 275
Number Value
of Shares (000s)
--------- -----------
Columbia / HCA
Healthcare Corp. 10,100 $ 287
HealthSouth Corp.+ 6,900 56
Humana, Inc.+ 3,000 23
Mallinckrodt, Inc. 1,300 35
Manor Care, Inc.+ 1,700 20
McKesson HBOC, Inc. 4,900 83
Quintiles Transnational Corp.+ 2,000 29
St. Jude Medical, Inc.+ 1,600 50
Tenet Healthcare Corp.+ 5,600 143
UnitedHealth Group, Inc. 3,000 200
Watson Pharmaceuticals, Inc.+ 1,800 81
Wellpoint Health Networks, Inc.+ 1,100 81
--------
3,740
--------
--------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS -- 0.2%
Alberto-Culver Co., Class B 900 21
Clorox Co. 4,200 154
International Flavors &
Fragrances, Inc. 1,900 65
--------
240
--------
--------------------------------------------------------------------------------
INSURANCE -- 6.0%
AFLAC, Inc. 4,800 234
Allstate Corp. 14,500 343
American General Corp. 4,500 252
American International
Group, Inc. 27,750 3,044
Aon Corp. 4,450 120
Chubb Corp. 3,100 197
CIGNA Corp. 3,100 247
Cincinnati Financial Corp. 2,900 117
Conseco, Inc. 5,400 29
Hartford Financial Services
Group, Inc. 3,900 204
Jefferson-Pilot Corp. 1,900 126
Lincoln National Corp. 3,400 118
Loew's Corp. 2,000 110
Marsh & McLennan Cos., Inc. 4,800 473
MBIA, Inc. 1,700 84
MGIC Investment Corp. 1,900 91
Progressive Corp. 1,400 92
SAFECO Corp. 2,200 49
St. Paul Cos., Inc. 4,100 146
Torchmark Corp. 2,300 58
UnumProvident Corp. 4,549 77
--------
6,211
--------
34
<PAGE>
Number Value
of Shares (000s)
--------- -----------
--------------------------------------------------------------------------------
MEDIA -- 5.6%
CBS Corp.+ 13,129 $ 771
Clear Channel
Communications, Inc.+ 6,200 446
Gannett Co., Inc. 5,100 326
Knight-Ridder, Inc. 1,500 74
McGraw-Hill Cos., Inc. 3,600 189
MediaOne Group, Inc.+ 10,600 802
Meredith Corp. 900 25
New York Times Co., Class A 3,200 132
R.R. Donnelley & Sons Co. 2,300 49
Seagram Co. Ltd. 7,700 416
Times Mirror Co., Series A 200 20
Tribune Co. 4,300 167
Viacom, Inc., Class B+ 12,600 685
Walt Disney Co. 37,100 1,607
--------
5,709
--------
--------------------------------------------------------------------------------
MISCELLANEOUS FINANCE -- 10.3%
American Express Co. 8,000 1,200
Associates First Capital Corp. 13,000 288
Bear Stearns Cos., Inc. 2,101 90
Capital One Financial Corp. 3,600 157
Citigroup, Inc. 60,450 3,593
Countrywide Credit
Industries, Inc. 1,900 52
Fannie Mae 18,300 1,104
Franklin Resources, Inc. 4,400 142
Freddie Mac 12,400 570
Golden West Financial Corp. 3,000 102
Household International, Inc. 8,500 355
Lehman Brothers Holdings, Inc. 2,200 181
Merrill Lynch & Co., Inc. 6,700 683
Morgan Stanley Dean Witter
Discover & Co. 20,500 1,573
Paine Webber Group, Inc. 2,600 114
Sabre Group Holdings, Inc.+ 2,378 83
T. Rowe Price Associates, Inc. 2,100 80
Washington Mutual, Inc. 10,200 261
--------
10,628
--------
--------------------------------------------------------------------------------
NON-FERROUS METALS -- 0.8%
Alcan Aluminum Ltd. 3,900 128
Alcoa, Inc. 6,600 428
Engelhard Corp. 2,100 37
Inco Ltd.+ 3,300 52
Number Value
of Shares (000s)
--------- -----------
Phelps Dodge Corp. 1,520 $ 70
Reynolds Metals Co. 1,100 73
--------
788
--------
--------------------------------------------------------------------------------
OIL - DOMESTIC -- 1.3%
Amerada Hess Corp. 1,600 102
Ashland, Inc. 1,300 44
Conoco, Inc., Class B 11,300 281
Kerr-McGee Corp. 1,700 88
Phillips Petroleum Co. 4,600 218
Sunoco, Inc. 1,500 45
Tosco Corp. 2,600 83
Transocean Sedco Forex, Inc. 3,748 176
Union Pacific Resources
Group, Inc. 4,400 84
Unocal Corp. 4,200 136
USX-Marathon Group, Inc. 5,500 128
--------
1,385
--------
--------------------------------------------------------------------------------
OIL - INTERNATIONAL -- 8.3%
Chevron Corp. 11,900 1,013
Exxon Mobil Corp. (b) 61,925 4,811
Royal Dutch Petroleum Co. -
Sponsored ADR 38,500 2,209
Texaco, Inc. 10,000 495
--------
8,528
--------
--------------------------------------------------------------------------------
OPTICAL & PHOTO -- 0.3%
Eastman Kodak Co. 5,700 319
Polaroid Corp. 900 18
--------
337
--------
--------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS -- 1.1%
Boise Cascade Corp. 1,000 33
Champion International Corp. 1,800 118
Fort James Corp. 3,700 89
Georgia-Pacific Group 3,000 110
International Paper Co. 7,342 270
Louisiana-Pacific Corp. 1,800 24
Mead Corp. 1,800 63
Potlatch Corp. 500 20
Temple-Inland, Inc. 1,000 50
Westvaco Corp. 1,800 56
Weyerhaeuser Co. 4,300 230
Willamette Industries, Inc. 1,900 73
--------
1,136
--------
35
<PAGE>
INSTITUTIONAL SELECT(TM)LARGE-CAP VALUE INDEX FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
--------------------------------------------------------------------------------
PRODUCER GOODS & MANUFACTURING -- 2.7%
Briggs & Stratton Corp. 500 $ 19
Caterpillar, Inc. 6,400 252
Cooper Industries, Inc. 1,600 55
Deere & Co. 4,400 178
Dover Corp. 3,700 188
Emerson Electric Co. 7,700 423
FMC Corp.+ 500 29
Honeywell International, Inc. 14,287 800
Illinois Tool Works, Inc. 5,500 352
Ingersoll-Rand Co. 2,900 136
Johnson Controls, Inc. 1,500 95
Milacron, Inc. 700 13
NACCO Industries, Inc., Class A 300 13
Pall Corp. 2,100 47
Parker-Hannifin Corp. 2,000 93
Snap-On, Inc. 900 24
The Timken Co. 900 17
W.W. Grainger, Inc. 1,600 69
--------
2,803
--------
--------------------------------------------------------------------------------
RAILROAD & SHIPPING -- 0.7%
Burlington Northern
Santa Fe Corp. 8,100 195
CSX Corp. 3,900 82
Kansas City Southern
Industries, Inc. 2,000 144
Norfolk Southern Corp. 6,900 122
Union Pacific Corp. 4,500 190
--------
733
--------
--------------------------------------------------------------------------------
RETAIL -- 4.2%
Albertson's, Inc. 7,538 245
AutoZone, Inc.+ 2,300 53
Cendant Corp.+ 12,600 195
Circuit City Stores-Circuit City
Group 3,700 218
Consolidated Stores Corp.+ 1,700 21
Costco Wholesale Corp.+ 8,000 432
CVS Corp. 7,100 309
Dillards, Inc., Class A 1,800 25
Dollar General Corp. 4,800 110
Federated Department
Stores, Inc.+ 3,800 129
Number Value
of Shares (000s)
--------- -----------
Great Atlantic & Pacific
Tea Co., Inc. 600 $ 11
J.C. Penney Co., Inc. 4,600 64
Kmart Corp.+ 8,700 71
Limited, Inc. 3,900 176
Longs Drug Stores, Inc. 900 21
Lowe's Cos., Inc. 6,800 337
May Department Stores Co. 6,000 165
Nordstrom, Inc. 2,400 67
Office Depot, Inc.+ 5,600 59
Rite Aid Corp. 5,100 25
Safeway, Inc.+ 9,100 402
Sears, Roebuck & Co. 6,700 245
Staples, Inc.+ 8,500 162
Target Corp. 7,800 519
TJX Cos., Inc. 5,600 107
Toys `R' Us, Inc.+ 4,300 66
Winn-Dixie Stores, Inc. 2,500 41
--------
4,275
--------
--------------------------------------------------------------------------------
STEEL -- 0.2%
Allegheny Technologies, Inc. 1,550 37
Bethlehem Steel Corp.+ 2,200 12
Nucor Corp. 1,600 69
USX-U.S. Steel Group, Inc. 1,500 38
Worthington Industries, Inc. 1,700 21
--------
177
--------
--------------------------------------------------------------------------------
TELEPHONE -- 11.0%
Alltel Corp. 5,700 380
AT&T Corp. 57,300 2,675
Bell Atlantic Corp. 27,900 1,653
BellSouth Corp. 33,800 1,646
CenturyTel, Inc. 2,600 64
Global Crossing Ltd.+ 14,000 441
GTE Corp. 16,700 1,131
MCI WorldCom, Inc.+ 50,950 2,315
Sprint Corp. (FON Group) 15,700 966
--------
11,271
--------
--------------------------------------------------------------------------------
TOBACCO -- 0.9%
Philip Morris Cos., Inc. 42,400 927
--------
36
<PAGE>
Number Value
of Shares (000s)
--------- -----------
--------------------------------------------------------------------------------
TRAVEL & RECREATION -- 0.5%
Brunswick Corp. 1,600 $ 31
Carnival Corp. 11,100 276
Harrah's Entertainment, Inc.+ 2,300 47
Marriott International, Inc.,
Class A 4,500 144
Mirage Resorts, Inc.+ 3,100 63
--------
561
--------
--------------------------------------------------------------------------------
TRUCKING & FREIGHT -- 0.1%
PACCAR, Inc. 1,400 67
Ryder Systems, Inc. 1,100 24
--------
91
--------
--------------------------------------------------------------------------------
UTILITIES - ELECTRIC & GAS -- 5.5%
AES Corp.+ 3,700 333
Ameren Corp. 2,500 92
American Electric
Power Co., Inc. 3,500 128
Carolina Power & Light Co. 3,000 110
Central & South West Corp. 3,700 80
Cinergy Corp. 2,800 75
CMS Energy Corp. 1,900 36
Coastal Corp. 3,800 191
Columbia Energy Group 1,400 88
Consolidated Edison, Inc. 4,000 141
Constellation Energy Group, Inc. 2,700 89
Dominion Resources, Inc. 4,348 196
DTE Energy Co. 2,500 82
Duke Energy Corp. 6,600 380
Edison International 6,400 122
El Paso Energy Corp. 4,100 174
Enron Corp. 12,800 892
Entergy Corp. 4,300 109
FirstEnergy Corp. 4,300 109
Florida Progress Corp. 1,800 88
FPL Group, Inc. 3,300 149
GPU, Inc. 2,200 62
New Century Energies, Inc. 2,200 72
Niagara Mohawk Holdings, Inc.+ 3,000 42
NICOR, Inc. 900 30
Northern States Power Co. 2,700 59
ONEOK, Inc. 500 13
PECO Energy Co. 3,400 142
Peoples Energy Corp. 500 16
Number Value
of Shares (000s)
--------- -----------
PG&E Corp. 6,900 $ 179
Pinnacle West Capital Corp. 1,400 49
PPL Corp. 2,600 62
Public Service Enterprise
Group, Inc. 3,900 140
Reliant Energy, Inc. 5,400 144
Sempra Energy 3,500 65
Southern Co. 12,100 302
Texas Utilities Co. 5,000 168
Unicom Corp. 3,900 155
Williams Cos., Inc. 7,800 291
--------
5,655
--------
TOTAL COMMON STOCK
(Cost $100,681) 102,413
--------
Par
(000s)
-------
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATION -- 0.0%
U.S. Treasury Bill (a)(b)
5.75%, 06/15/00 $40 40
--------
Total U.S. Treasury Obligation
(Cost $40) 40
--------
Number
of Shares
---------
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 1.2%
Provident Institutional
TempFund, 5.74%* 1,179,152 1,179
--------
TOTAL SHORT-TERM INVESTMENTS
(Cost $1,179) 1,179
--------
TOTAL INVESTMENTS -- 100.8%
(Cost $101,900) 103,632
--------
OTHER ASSETS AND LIABILITIES, NET-- (0.8%)
Other assets 9,311
Liabilities (10,087)
--------
(776)
--------
TOTAL NET ASSETS-- 100.0% $102,856
--------
SEE ACCOMPANYING NOTES TO SCHEDULES OF INVESTMENTS AND NOTES TO FINANCIAL
STATEMENTS.
37
<PAGE>
INSTITUTIONAL SELECT(TM) SMALL-CAP VALUE INDEX FUND
SCHEDULE OF INVESTMENTS
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
--------------------------------------------------------------------------------
COMMON STOCK -- 99.8%
--------------------------------------------------------------------------------
AEROSPACE / DEFENSE -- 0.4%
GenCorp., Inc. 7,900 $ 79
Kaman Corp., Class A 4,500 48
--------
127
--------
--------------------------------------------------------------------------------
AIR TRANSPORTATION -- 0.9%
AAR Corp. 5,000 75
Mesa Air Group, Inc.+ 6,500 42
SkyWest, Inc. 4,600 194
--------
311
--------
--------------------------------------------------------------------------------
ALCOHOLIC BEVERAGES -- 0.5%
Canandaigua
Brands, Inc., Class A+ 3,400 171
--------
--------------------------------------------------------------------------------
APPAREL -- 3.7%
Ashworth, Inc.+ 2,700 13
Brown Shoe Co., Inc. 3,300 34
Cone Mills Corp.+ 5,000 27
Cyrk International, Inc.+ 3,100 27
The Dixie Group, Inc.+ 2,300 9
The Dress Barn, Inc.+ 3,600 71
Footstar, Inc.+ 3,900 145
Goody's Family Clothing, Inc.+ 6,300 41
Guilford Mills 3,600 30
The Gymboree Corp.+ 4,400 16
Haggar Corp. 1,500 20
Hartmarx Corp.+ 5,600 14
J. Baker, Inc. 2,700 18
Jan Bell Marketing, Inc.+ 4,800 14
Jo-Ann Stores, Inc., Class A+ 3,300 31
K-Swiss, Inc., Class A 2,100 31
Kellwood Co. 4,900 84
Men's Wearhouse, Inc.+ 7,600 163
Nautica Enterprises, Inc.+ 6,300 71
OshKosh B'Gosh, Inc., Class A 2,300 37
Oxford Industries, Inc. 1,500 25
Phillips-Van Heusen Corp. 5,300 45
Pillowtex Corp. 1,700 9
Quiksilver, Inc.+ 4,200 79
Stride Rite Corp. 8,000 67
Wet Seal, Inc., Class A+ 2,700 48
Wolverine World Wide, Inc. 7,800 94
--------
1,263
--------
Number Value
of Shares (000s)
--------- -----------
--------------------------------------------------------------------------------
AUTOMOTIVE PRODUCTS/MOTOR VEHICLES -- 2.6%
A.O. Smith Corp., Class B 4,300 $ 88
Arctic Cat, Inc. 5,000 50
Discount Auto Parts, Inc.+ 3,200 34
Fleetwood Enterprises, Inc. 6,300 92
Group 1 Automotive, Inc.+ 4,000 47
Monaco Coach Corp.+ 3,600 59
Myers Industries, Inc. 3,810 53
Oshkosh Truck Corp. 3,200 101
Simpson Industries, Inc. 3,500 36
Spartan Motors, Inc. 1,200 5
Standard Motor Products, Inc. 2,500 28
TBC Corp.+ 3,900 21
Thor Industries, Inc. 2,300 62
Titan International, Inc. 4,000 27
Tower Automotive, Inc.+ 8,900 139
Wynns International, Inc. 3,600 50
--------
892
--------
--------------------------------------------------------------------------------
BANKS -- 6.5%
Anchor Bancorp Wisconsin, Inc. 4,900 77
Banknorth Group, Inc. 4,500 107
Centura Banks, Inc. 7,600 314
Community First Bankshares, Inc. 9,300 157
Cullen/Frost Bankers, Inc. 10,100 249
First Bancorp./Puerto Rico 5,400 95
First Midwest Bancorp, Inc. 7,700 192
MAF Bancorp., Inc. 4,400 82
Provident Bankshares Corp. 4,562 68
Riggs National Corp. 5,100 69
Silicon Valley Bancshares+ 4,200 259
The South Financial Group, Inc. 4,400 61
Southwest Bancorp. of Texas,
Inc.+ 5,100 100
Susquehanna Bancshares, Inc. 6,500 90
United Bankshares, Inc. 7,700 168
Whitney Holding Corp. 4,100 143
--------
2,231
--------
--------------------------------------------------------------------------------
BUSINESS MACHINES & SOFTWARE-- 1.3%
Analogic Corp. 2,400 98
Centigram
Communications Corp.+ 1,200 18
Digi International, Inc.+ 2,900 16
Exabyte Corp.+ 4,400 21
Flow International Corp.+ 2,600 29
Hanger Orthopedic Group, Inc.+ 3,700 18
38
<PAGE>
Number Value
of Shares (000s)
--------- -----------
InaCom Corp.+ 6,940 $ 11
Input/Output, Inc.+ 9,800 72
Komag, Inc.+ 10,700 31
Systems & Computer
Technology Corp.+ 6,000 141
--------
455
--------
--------------------------------------------------------------------------------
BUSINESS SERVICES -- 8.4%
Aaron Rents, Inc. 3,300 48
ABM Industries, Inc. 4,100 103
Actel Corp.+ 4,100 151
Analysts International Corp. 3,900 43
Angelica Corp. 1,700 11
Billing Concepts Corp.+ 7,300 39
Bowne & Co., Inc. 7,100 82
CDI Corp.+ 3,400 76
Cerner Corp.+ 6,300 139
Chemed Corp. 2,000 60
Franklin Covey Co.+ 3,200 29
G & K Services, Inc., Class A 3,600 88
HA-LO Industries, Inc.+ 8,300 61
Information Resources, Inc.+ 5,300 33
Insteel Industries, Inc. 1,700 10
Interim Services, Inc.+ 11,500 197
Interpublic Group of Cos., Inc. 2,916 120
Kroll-O'Gara Co.+ 3,500 27
Lason, Inc.+ 2,500 11
Nashua Corp.+ 2,000 16
National Data Corp. 6,100 169
New England Business
Service, Inc. 2,200 36
Orbital Sciences Corp.+ 6,500 82
PAXAR Corp.+ 9,000 92
Performance Food Group Co.+ 2,700 71
Primark Corp.+ 3,800 103
Priority Healthcare Corp.,
Class B+ 4,100 227
S3, Inc.+ 14,300 201
SEACOR SMIT, Inc.+ 2,200 135
StaffMark, Inc.+ 4,900 32
Teledyne Technologies, Inc.+ 5,000 87
Tetra Technology, Inc.+ 7,200 170
Tetra Technology, Inc.+ 2,600 37
URS Corp.+ 2,400 31
Volt Information Sciences, Inc.+ 2,800 97
--------
2,914
--------
Number Value
of Shares (000s)
--------- -----------
--------------------------------------------------------------------------------
CHEMICAL -- 3.1%
Amcol International Corp. 5,100 83
Arch Chemicals, Inc. 4,100 81
Brady Corp., Class A 4,300 126
Cambrex Corp. 4,600 189
Chemfirst, Inc. 3,300 64
Lilly Industries, Inc., Class A 3,800 41
McWhorter Technologies, Inc.+ 1,700 26
OM Group, Inc. 4,400 202
Omnova Solutions, Inc. 7,900 47
Quaker Chemical Corp. 1,700 29
Tredegar Industries, Inc. 7,100 183
--------
1,071
--------
--------------------------------------------------------------------------------
CONSTRUCTION -- 3.5%
Apogee Enterprises, Inc. 5,500 20
Building Materials Holding
Corp.+ 1,900 19
D.R. Horton, Inc. 11,000 142
Florida Rock Industries, Inc. 3,600 117
Interface, Inc. 8,600 31
Justin Industries, Inc. 4,700 86
Lawson Products, Inc. 2,000 48
Morrison Knudsen Corp.+ 10,100 93
Oakwood Homes Corp. 7,400 22
Republic Group, Inc. 2,300 26
The Ryland Group, Inc. 2,400 48
Simpson Manufacturing, Inc.+ 2,300 104
Standard Pacific Corp. 5,700 57
Stone & Webster, Inc. 2,600 34
Texas Industries, Inc. 3,900 127
Toll Brothers, Inc.+ 7,000 152
U.S. Home Corp.+ 2,600 93
--------
1,219
--------
--------------------------------------------------------------------------------
CONSUMER - DURABLE -- 2.3%
Bassett Furniture Industries,
Inc. 2,000 27
Champion Enterprises, Inc.+ 8,200 58
Coachmen Industries, Inc. 3,000 46
Griffon Corp.+ 5,700 38
La-Z-Boy, Inc. 11,700 184
National Presto Industries, Inc. 1,400 48
Royal Appliance Mfg. Co.+ 3,500 18
Skyline Corp. 1,500 31
SLI, Inc. 6,800 97
Sturm, Ruger & Co., Inc. 5,300 53
Swiss Army Brands, Inc.+ 700 4
39
<PAGE>
INSTITUTIONAL SELECT(TM)SMALL-CAP VALUE INDEX FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Thomas Industries, Inc. 3,000 $ 60
Toro Co. 2,400 74
Windmere Durable Holdings, Inc. 4,000 64
--------
802
--------
--------------------------------------------------------------------------------
CONSUMER - NONDURABLE -- 1.9%
A.T. Cross Co., Class A+ 3,300 18
CKE Restaurants, Inc. 7,800 29
Consolidated Products, Inc.+ 5,300 48
Department 56, Inc.+ 2,900 26
Huffy Corp. 2,100 9
IHOP Corp.+ 3,700 60
Landry's Seafood
Restaurants, Inc.+ 4,700 41
Luby's Cafeterias, Inc. 4,200 38
Panera Bread Co.+ 2,300 19
Ruby Tuesday, Inc. 5,900 124
Russ Berrie & Co., Inc. 3,700 69
Ryan's Family Steak Houses,
Inc.+ 7,000 68
Taco Cabana, Inc., Class A+ 2,600 16
TCBY Enterprises, Inc. 4,500 27
The Marcus Corp. 5,800 62
--------
654
--------
--------------------------------------------------------------------------------
ELECTRONICS -- 10.8%
ADAC Laboratories+ 4,000 60
Allen Telecom, Inc.+ 5,200 92
Anixter International, Inc.+ 7,100 239
Audiovox Corp., Class A+ 3,900 134
Avid Technology, Inc.+ 4,100 56
Belden, Inc. 4,600 137
Benchmark Electronics, Inc.+ 3,100 125
Cable Design Technologies Corp.+ 5,300 182
Checkpoint Systems, Inc.+ 4,900 44
Coherent, Inc.+ 4,500 260
Esterline Technologies Corp.+ 2,700 33
Gerber Scientific, Inc. 3,800 53
Hadco Corp.+ 2,600 214
Harman International
Industries, Inc. 3,300 216
Harmon Industries, Inc. 2,000 35
Hutchinson Technology, Inc.+ 4,600 59
Innovex, Inc. 2,200 19
Intermagnetics General Corp.+ 2,500 30
International Rectifier Corp.+ 11,300 555
Number Value
of Shares (000s)
--------- -----------
Itron, Inc.+ 2,000 $ 11
Kent Electronics Corp.+ 5,300 155
Park Electrochemical Corp. 1,900 49
Pioneer - Standard Electronics,
Inc. 5,200 80
Silicon Valley Group, Inc.+ 6,300 180
Snyder Communications, Inc.+ 13,500 321
SpeedFam-IPEC, Inc.+ 5,600 89
Standard Microsystems Corp.+ 3,000 39
SymmetriCom, Inc.+ 2,900 34
Varian Medical Systems, Inc.+ 5,800 232
--------
3,733
--------
--------------------------------------------------------------------------------
ENERGY - RAW MATERIALS -- 2.4%
Barrett Resources Corp.+ 6,100 194
Cabot Oil & Gas Corp., Class A 4,800 89
Dril-Quip, Inc.+ 3,200 130
Kirby Corp.+ 4,600 95
Louis Dreyfus Natural Gas Corp.+ 7,400 207
Offshore Logistics, Inc.+ 4,100 50
Sitel Corp.+ 3,700 23
Southwestern Energy Co. 4,800 41
--------
829
--------
--------------------------------------------------------------------------------
FOOD & AGRICULTURE -- 3.4%
Agribrands International, Inc.+ 1,800 67
American Italian
Pasta Co., Class A+ 3,500 87
Chiquita Brands International,
Inc. 11,200 43
Corn Products International,
Inc. 6,900 166
Dimon, Inc. 8,300 20
Earthgrains Co. 7,600 107
Fleming Cos., Inc. 7,400 122
J & J Snack Foods Corp.+ 1,700 27
Lindsay Manufacturing Co. 2,200 39
Michael Foods, Inc. 3,800 81
Mississippi Chemical Corp. 5,100 39
Nash - Finch Co. 2,300 17
Ralcorp Holdings, Inc.+ 5,900 81
Smithfield Foods, Inc.+ 10,300 220
United Natural Foods, Inc.+ 3,500 53
--------
1,169
--------
--------------------------------------------------------------------------------
HEALTHCARE/DRUGS & MEDICINE -- 8.1%
Bindley Western Industries, Inc. 5,933 103
Conmed Corp.+ 2,800 73
Cooper Cos., Inc. 2,700 91
40
<PAGE>
Number Value
of Shares (000s)
--------- -----------
Coventry Health Care, Inc.+ 11,100 $ 118
Curative Health Services, Inc.+ 1,900 11
Datascope Corp. 2,800 93
Diagnostic Products Corp. 2,600 80
Dura Pharmaceuticals, Inc.+ 7,600 99
Hologic, Inc.+ 3,000 23
Idexx Laboratories, Inc.+ 6,900 181
Invacare Corp. 5,700 152
Magellan Health Services, Inc.+ 6,000 22
Medicis Pharmaceutical
Corp., Class A+ 5,700 249
Nature's Sunshine Products, Inc. 3,400 29
NBTY, Inc.+ 12,700 225
Orthodontic Centers of
America, Inc.+ 9,100 193
Owens & Minor, Inc. 6,200 74
Parexel International Corp.+ 4,900 44
Pediatrix Medical Group, Inc.+ 2,200 18
Pharmaceutical Product
Development, Inc.+ 4,800 81
Regeneron Pharmaceuticals, Inc.+ 5,900 169
Respironics, Inc.+ 5,700 93
Sierra Health Services, Inc.+ 4,100 15
Sola International, Inc.+ 3,700 17
Spacelabs Medical, Inc.+ 1,300 15
Sunrise Medical, Inc.+ 4,100 22
Syncor International Corp.+ 2,100 87
Universal Health
Services, Class B+ 5,800 318
US Oncology, Inc.+ 16,000 55
Vital Signs, Inc. 2,400 48
--------
2,798
--------
--------------------------------------------------------------------------------
INSURANCE -- 2.8%
Delphi Financial
Group, Inc., Class A+ 3,745 108
Enhance Financial Services
Group, Inc. 6,600 67
First American Financial Corp. 12,100 187
Fremont General Corp. 12,100 70
Insurance Auto Auctions, Inc.+ 2,200 37
Mutual Risk Management Ltd. 8,200 129
RLI Corp. 1,900 61
SCPIE Holdings, Inc. 2,300 68
Number Value
of Shares (000s)
--------- -----------
Selective Insurance Group, Inc. 5,200 $ 98
Trenwick Group, Inc. 3,700 52
Zenith National Insurance Corp. 3,300 81
--------
958
--------
--------------------------------------------------------------------------------
MEDIA -- 0.4%
Carmike Cinemas, Inc., Class A+ 1,400 8
Consolidated Graphics, Inc.+ 2,600 31
GC Cos., Inc.+ 1,500 49
Network Equipment
Technologies, Inc.+ 4,200 35
Thomas Nelson, Inc. 2,700 19
--------
142
--------
--------------------------------------------------------------------------------
MISCELLANEOUS FINANCE -- 6.1%
AmeriCredit Corp.+ 14,100 263
Cash America International, Inc. 4,600 41
Commercial Federal Corp. 10,800 168
Dain Rauscher Corp. 2,400 149
Downey Financial Corp. 5,400 161
Fidelity National Financial,
Inc. 12,400 183
Jefferies Group, Inc. 4,600 101
M.D.C. Holdings, Inc. 4,300 82
Midas, Inc. 3,100 78
Morgan Keegan, Inc. 5,000 80
National Discount Broker
Group, Inc.+ 3,300 96
Penford Corp. 1,500 25
Radian Group, Inc. 7,000 357
Raymond James Financial, Inc. 8,900 179
Staten Island Bancorp., Inc. 7,600 131
--------
2,094
--------
--------------------------------------------------------------------------------
NON-FERROUS METALS -- 2.5%
A.M. Castle & Co. 2,500 31
Brush Wellman, Inc. 3,100 57
Coeur d'Alene Mines Corp. 5,500 14
Commercial Metals Co. 2,700 79
Commonwealth Industries, Inc. 3,000 22
IMCO Recycling, Inc. 3,000 31
Mueller Industries, Inc.+ 6,500 214
Reliance Steel & Aluminum Co. 5,300 122
RTI International Metals, Inc.+ 3,900 41
Stillwater Mining Co.+ 7,100 199
41
<PAGE>
INSTITUTIONAL SELECT(TM)SMALL-CAP VALUE INDEX FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
Number Value
of Shares (000s)
--------- -----------
Wolverine Tube, Inc.+ 2,300 $ 34
--------
844
--------
--------------------------------------------------------------------------------
OIL - DOMESTIC -- 4.3%
HS Resources, Inc.+ 3,300 80
Newfield Exploration Co.+ 7,800 317
Pogo Producing Co. 7,500 192
Pride International, Inc.+ 11,300 256
Remington Oil & Gas Corp.+ 4,100 18
St. Mary Land & Exploration Co. 2,100 71
Stone Energy Corp.+ 3,400 161
Tuboscope Vetco
International Corp.+ 8,000 139
Vintage Petroleum, Inc. 11,600 231
--------
1,465
--------
--------------------------------------------------------------------------------
OPTICAL & PHOTO -- 0.6%
BMC Industries, Inc. 5,200 26
CPI Corp. 1,700 41
Photronics, Inc.+ 4,500 150
--------
217
--------
--------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS -- 0.5%
Deltic Timber Corp. 2,400 53
Lydall, Inc.+ 2,800 25
Pope & Talbot 2,900 61
Universal Forest Products, Inc. 3,400 46
--------
185
--------
--------------------------------------------------------------------------------
PRODUCER GOODS & MANUFACTURING -- 6.9%
Applied Industrial
Technologies, Inc. 3,700 64
Applied Power, Inc., Class A 7,400 212
AptarGroup, Inc. 6,800 194
Astec Industries, Inc.+ 3,600 90
Baldor Electric, Co. 6,800 126
Barnes Group, Inc. 3,500 59
BE Aerospace, Inc.+ 3,900 29
Butler Manufacturing Co. 1,300 31
CLARCOR, Inc. 4,600 83
Cuno, Inc.+ 3,100 84
Fedders Corp. 6,800 40
Foster Wheeler Corp. 7,800 72
Gardner Denver, Inc.+ 2,900 51
Hughes Supply, Inc. 4,000 61
IDEX Corp. 5,500 172
Ionics, Inc.+ 2,800 66
Number Value
of Shares (000s)
--------- -----------
JLG Industries, Inc. 7,700 $ 73
Lennox International, Inc. 9,912 84
MascoTech, Inc. 8,200 95
Material Sciences Corp.+ 3,000 32
Oceaneering International, Inc.+ 4,500 78
Regal Beloit 4,000 72
Robbins & Myers, Inc. 2,100 51
SPS Technologies, Inc.+ 2,400 75
Standex International Corp. 2,300 38
Tenneco Automotive, Inc. 6,600 59
Ultratech Stepper, Inc.+ 4,000 60
Valmont Industries, Inc. 4,500 89
Watsco, Inc. 5,500 71
Watts Industries, Inc., Class A 4,900 66
--------
2,377
--------
--------------------------------------------------------------------------------
RETAIL -- 4.8%
Ames Department Stores, Inc.+ 5,500 99
AnnTaylor Stores Corp.+ 5,600 116
The Bombay Co., Inc.+ 6,300 23
Books-A-Million, Inc.+ 3,000 12
Casey's General Stores, Inc. 9,600 112
The Cato Corp., Class A 5,100 54
DEMARK International, Inc.,
Class A+ 1,100 29
Enesco Group 2,500 11
Gottschalks, Inc.+ 2,400 14
Hancock Fabrics, Inc. 3,500 14
Lillian Vernon Corp. 1,700 16
Michaels Stores, Inc.+ 5,800 229
Pep Boys-Manny, Moe, & Jack 10,000 63
Pier 1 Imports, Inc. 18,300 208
ShopKo Stores, Inc.+ 5,400 97
Stein Mart, Inc.+ 8,700 78
United Stationers, Inc.+ 6,400 214
Zale Corp.+ 6,600 272
--------
1,661
--------
--------------------------------------------------------------------------------
STEEL -- 0.7%
Amcast Industrial Corp. 1,700 15
Birmingham Steel Corp. 5,800 25
Intermet Corp. 4,300 32
Quanex Corp. 2,700 44
Steel Dynamics, Inc.+ 8,700 99
Steel Technologies, Inc. 2,100 17
WHX Corp.+ 2,800 19
--------
251
--------
42
<PAGE>
Number Value
of Shares (000s)
--------- -----------
--------------------------------------------------------------------------------
TELEPHONE -- 0.5%
Brightpoint, Inc.+ 10,100 $ 119
General Communication, Inc.+ 9,200 46
--------
165
--------
--------------------------------------------------------------------------------
TOBACCO -- 0.1%
Schweitzer-Mauduit
International, Inc. 2,800 41
--------
--------------------------------------------------------------------------------
TRAVEL & RECREATION -- 1.7%
Anchor Gaming, Inc.+ 2,100 85
Aztar Corp.+ 8,200 98
Central Parking Corp. 6,900 177
K2, Inc.+ 3,500 25
Pinnacle Entertainment, Inc.+ 4,900 98
Prime Hospitality Corp.+ 9,400 87
The Sports Authority, Inc.+ 6,400 18
--------
588
--------
--------------------------------------------------------------------------------
TRUCKING & FREIGHT -- 3.2%
American Freightways Corp.+ 6,100 114
Arkansas Best Corp.+ 3,800 49
Circle International Group, Inc. 3,300 88
Fritz Cos., Inc.+ 6,900 66
Frozen Food Express
Industries, Inc. 3,000 10
Heartland Express, Inc.+ 5,900 100
M.S. Carriers, Inc.+ 2,200 52
Rollins Truck Leasing Corp. 9,900 98
US Freightways Corp. 5,000 233
Wabash National Corp. 3,900 57
Werner Enterprises, Inc. 8,800 165
Yellow Corp.+ 4,700 90
--------
1,122
--------
--------------------------------------------------------------------------------
UTILITIES - ELECTRIC & GAS-- 4.9%
American States Water Co. 1,700 51
Atmos Energy Corp. 5,400 86
Bangor Hydro-Electric Co. 1,400 23
Cascade Natural Gas Corp. 2,100 34
Number Value
of Shares (000s)
--------- -----------
Central Vermont Public
Service Corp. 2,200 $ 24
CH Energy Group, Inc. 2,900 96
Energen Corp. 5,600 103
Green Mountain Power Corp. 600 4
New Jersey Resources Corp. 3,400 137
Northwest Natural Gas Co. 4,600 101
Northwestern Public Services Co. 4,400 101
Piedmont Natural Gas Co., Inc. 5,600 158
Southern Union Co.+ 8,957 154
Southwest Gas Corp. 5,400 103
Unisource Energy Corp. 3,000 49
United Illuminating Co. 2,600 120
United Water Resources, Inc. 7,300 254
Veritas DGC, Inc.+ 4,600 110
--------
1,708
--------
TOTAL COMMON STOCK
(Cost $33,105) 34,457
--------
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 0.6%
Provident Institutional
TempFund, 5.74%* 220,996 221
--------
TOTAL SHORT-TERM INVESTMENTS
(Cost $221) 221
--------
TOTAL INVESTMENTS -- 100.4%
(Cost $33,326) 34,678
--------
OTHER ASSETS AND LIABILITIES, NET -- (0.4%)
Other assets 1,786
Liabilities (1,931)
--------
(145)
--------
TOTAL NET ASSETS -- 100.0% $34,533
========
</TABLE>
SEE ACCOMPANYING NOTES TO SCHEDULES OF INVESTMENTS AND NOTES TO FINANCIAL
STATEMENTS.
43
<PAGE>
NOTES TO SCHEDULES OF INVESTMENTS
April 30, 2000 (Unaudited)
+ Non-income producing security.
* Interest rate represents the yield on report date.
ADR -- American Depository Receipt.
(a) Yields shown are effective yields at time of purchase.
(b) These securities, or portion thereof, are being used to collateralize open
futures contracts.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
44
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (in thousands)
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Institutional Select(TM) Funds
------------------------------------------
Large-Cap Small-Cap
S&P 500 Value Index Value Index
------- ------------ ------------
<S> <C> <C> <C>
ASSETS
Investments, at value (Cost: $314,107, $101,900,
and $33,326, respectively) $342,488 $103,632 $34,678
Cash held as collateral for securities on loan (see Note 6) 30,010 9,138 1,673
Receivables:
Fund shares sold 637 8 57
Dividends 259 113 20
Interest 23 6 --
Securities lending income 2 1 1
Advisory reimbursement to fund -- 7 21
Prepaid expenses 38 38 14
-------- -------- -------
Total assets 373,457 112,943 36,464
-------- -------- -------
LIABILITIES
Collateral held for securities on loan (see Note 6) 30,010 9,138 1,673
Payables:
Investments purchased 2,283 845 79
Borrowings on line of credit (see Note 5) -- -- 138
Variation margin 11 2 --
Transfer agency and shareholder service fees 1 2 --
Accrued expenses 45 100 41
-------- -------- -------
Total liabilities 32,350 10,087 1,931
-------- -------- -------
Net assets applicable to outstanding shares $341,107 $102,856 $34,533
======== ======== =======
NET ASSETS CONSIST OF:
Paid-in capital $313,585 $100,187 $33,514
Undistributed net investment income 1,109 500 89
Accumulated net realized gain (loss) on investments
sold and futures contracts (2,072) 415 (422)
Net unrealized appreciation on investments and futures
contracts 28,485 1,754 1,352
-------- -------- -------
$341,107 $102,856 $34,533
======== ======== =======
PRICING OF SHARES:
Outstanding shares, $0.00001 par value (unlimited shares authorized) 29,951 9,595 3,362
Net asset value, offering and redemption price per share $11.39 $10.72 $10.27
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
45
<PAGE>
STATEMENTS OF OPERATIONS (in thousands)
For the six months ended April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Institutional Select(TM) Funds
-------------------------------------------
Large-Cap Small-Cap
S&P 500 Value Index Value Index
---------- ----------- -----------
<S> <C> <C> <C>
Investment income:
Dividends (net of foreign tax withheld of $2, $1, and
$0, respectively) $ 1,663 $ 773 $ 193
Interest 192 51 9
Securities lending 27 7 6
------- ------ ------
Total investment income 1,882 831 208
Expenses:
Investment advisory and administration fees 281 87 41
Transfer agency and shareholder service fees 146 44 17
Custodian fees 44 94 41
Portfolio accounting fees 20 6 2
Registration fees 14 3 5
Professional fees 11 1 5
Shareholder reports 5 16 5
Trustees' fees 3 2 3
Interest expense 1 -- 1
Proxy fees 8 3 2
Other expenses 4 3 1
------- ------ ------
537 259 123
Less:expenses reduced (see Note 4) (309) (147) (86)
------- ------ ------
Net expenses incurred by fund 228 112 37
------- ------ ------
Net investment income 1,654 719 171
------- ------ ------
Net realized gain (loss) on investments and futures contracts:
Net realized gain (loss) on investments sold (1,881) 472 (476)
Net realized gain (loss) on futures contracts (46) (45) 48
------- ------ ------
Net realized gain (loss) on investments and futures
contracts (1,927) 427 (428)
------- ------ ------
Change in net unrealized appreciation (depreciation) on investments
and futures contracts:
Net unrealized appreciation on investments 18,215 1,263 3,146
Net unrealized appreciation (depreciation) on futures
contracts (30) 12 14
------- ------ ------
Net unrealized appreciation on investments and futures
contracts 18,185 1,275 3,160
------- ------ ------
Net gain on investments 16,258 1,702 2,732
------- ------ ------
Increase in net assets resulting from operations $17,912 $2,421 $2,903
======= ====== ======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
46
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (in thousands)
<TABLE>
<CAPTION>
Institutional Select(TM) Funds
----------------------------------------------------------------------
Large-Cap Small-Cap
S&P 500 Value Index Value Index
----------------------- ---------------------- -----------------------
Six months Six months Six months
ended Period ended Period ended Period
04/30/00 ended 04/30/00 ended 04/30/00 ended
(Unaudited) 10/31/99+ (Unaudited) 10/31/99+ (Unaudited) 10/31/99+
------------ ---------- ------------ --------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income $ 1,654 $ 1,563 $ 719 $ 573 $ 171 $ 221
Net realized gain (loss) on investments
and futures contracts (1,927) 309 427 873 (428) 1,310
Net unrealized appreciation (depreciation)
on investments and futures contracts 18,185 10,300 1,275 479 3,160 (1,808)
-------- -------- -------- ------- -------- -------
Increase (decrease) in net assets resulting
from operations 17,912 12,172 2,421 1,925 2,903 (277)
-------- -------- -------- ------- -------- -------
Dividends and distributions:
Dividends to shareholders from
net investment income (2,118) -- (801) -- (303) --
Distributions to shareholders
from net capital gains (454) -- (885) -- (1,304) --
-------- -------- -------- ------- -------- -------
Total dividends and distributions
to shareholders (2,572) -- (1,686) -- (1,607) --
Capital share transactions:
Proceeds from shares sold 135,039 245,377 46,187 73,458 9,827 33,450
Net asset value of shares issued in
reinvestment of dividends 2,148 25 1,533 11 1,280 7
Early withdrawal fees (see Note 8) 17 -- 18 -- 12 --
Payments for shares redeemed (49,913) (19,098) (17,102) (3,909) (9,526) (1,536)
-------- -------- -------- ------- -------- -------
Increase in net assets from capital
share transactions 87,291 226,304 30,636 69,560 1,593 31,921
-------- -------- -------- ------- -------- -------
Total increase in net assets 102,631 238,476 31,371 71,485 2,889 31,644
Net assets:
Beginning of period 238,476 -- 71,485 -- 31,644 --
-------- -------- -------- ------- -------- -------
End of period (including undistributed
net investment income of $1,109,
$1,563, $500, $573, $89, and $221,
respectively) $341,107 $238,476 $102,856 $71,485 $34,533 $31,644
======== ======== ======== ======= ======= =======
Number of fund shares:
Sold 12,091 24,038 4,398 7,066 999 3,351
Reinvested 193 -- 148 -- 134 --
Redeemed (4,543) (1,828) (1,646) (371) (970) (152)
-------- -------- -------- ------- -------- -------
Net increase in shares outstanding 7,741 22,210 2,900 6,695 163 3,199
Shares outstanding:
Beginning of period 22,210 -- 6,695 -- 3,199 --
-------- -------- -------- ------- -------- -------
End of period 29,951 22,210 9,595 6,695 3,362 3,199
======== ======== ======== ======= ======== =======
</TABLE>
+ For the period from February 1, 1999 (commencement of operations) to
October 31, 1999.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
47
<PAGE>
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
11/1/99- 2/1/99*-
INSTITUTIONAL SELECT(TM) 4/30/00 10/31/99
S&P 500 FUND (Unaudited)
--------------------------------------------------------------------------------
PER-SHARE DATA ($)
--------------------------------------------------------------------------------
Net asset value at beginning of period 10.74 10.00
----------------------
Income from investment operations:
Net investment income 0.06 0.07
Net realized and unrealized gain on investments 0.70 0.67
----------------------
Total income from investment operations 0.76 0.74
Less distributions:
Dividends from net investment income (0.09) --
Distributions from capital gains (0.02) --
----------------------
Total distributions (0.11) --
----------------------
NET ASSET VALUE AT END OF PERIOD 11.39 10.74
----------------------
Total return (%) 7.08(1) 7.40(1)
RATIOS/SUPPLEMENTAL DATA (%)
--------------------------------------------------------------------------------
Ratio of net operating expenses to average net assets 0.15(2,3) 0.13(2)
Expense reductions reflected in above ratio 0.21(2) 0.42(2)
Ratio of net investment income to average net assets 1.13(2) 1.37(2)
Portfolio turnover rate 4 1
Net assets, end of period ($ x 1,000) 341,107 238,476
(*) Commencement of operations.
(1) Not annualized.
(2) Annualized.
(3) Would have been 0.16% if certain non-routine expenses had been included.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
48
<PAGE>
--------------------------------------------------------------------------------
11/1/99- 2/1/99*-
INSTITUTIONAL SELECT(TM) 4/30/00 10/31/99
LARGE-CAP VALUE INDEX FUND (Unaudited)
--------------------------------------------------------------------------------
PER-SHARE DATA ($)
--------------------------------------------------------------------------------
Net asset value at beginning of period 10.68 10.00
----------------------
Income from investment operations:
Net investment income 0.08 0.09
Net realized and unrealized gain on investments 0.19 0.59
----------------------
Total income from investment operations 0.27 0.68
Less distributions:
Dividends from net investment income (0.11) --
Distributions from capital gains (0.12) --
----------------------
Total distributions (0.23) --
NET ASSET VALUE AT END OF PERIOD 10.72 10.68
----------------------
Total return (%) 2.59(1) 6.80(1)
RATIOS/SUPPLEMENTAL DATA (%)
--------------------------------------------------------------------------------
Ratio of net operating expenses to average net assets 0.25(2,3) 0.21(2)
Expense reductions reflected in above ratio 0.33(2) 0.49(2)
Ratio of net investment income to average net assets 1.65(2) 1.62(2)
Portfolio turnover rate 15 19
Net assets, end of period ($ x 1,000) 102,856 71,485
(*) Commencement of operations.
(1) Not annualized.
(2) Annualized.
(3) Would have been 0.26% if certain non-routine expenses had been included.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
49
<PAGE>
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
11/1/99- 2/1/99*-
INSTITUTIONAL SELECT(TM) 4/30/00 10/31/99
SMALL-CAP VALUE INDEX FUND (Unaudited)
PER-SHARE DATA ($)
--------------------------------------------------------------------------------
Net asset value at beginning of period 9.89 10.00
----------------------
Income from investment operations:
Net investment income 0.05 0.07
Net realized and unrealized gain (loss)
on investments 0.82 (0.18)
----------------------
Total income (loss) from investment operations 0.87 (0.11)
----------------------
Less distributions:
Dividends from net investment income (0.09) --
Distributions from capital gains (0.40) --
----------------------
Total distributions (0.49) --
NET ASSET VALUE AT END OF PERIOD 10.27 9.89
--------------------------------------------------------------------------------
Total return (%) 9.21(1) (1.10)(1)
RATIOS/SUPPLEMENTAL DATA (%)
--------------------------------------------------------------------------------
Ratio of net operating expenses to average net assets 0.21(2,3) 0.00(2)
Expense reductions reflected in above ratio 0.52(2) 0.98(2)
Ratio of net investment income to average net assets 1.03(2) 1.25(2)
Portfolio turnover rate 44 38
Net assets, end of period ($ x 1,000) 34,533 31,644
(*) Commencement of operations.
(1) Not annualized.
(2) Annualized.
(3) Would have been 0.22% if certain non-routine expenses had been included.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
50
<PAGE>
NOTES TO FINANCIAL STATEMENTS
For the six months ended April 30, 2000 (Unaudited)
(All currency amounts are in thousands unless otherwise noted.)
1. DESCRIPTION OF THE FUNDS
The Institutional Select(TM) S&P 500 Fund, Institutional Select(TM) Large-Cap
Value Index Fund and Institutional Select(TM) Small-Cap Value Index Fund (the
"funds") are series of Schwab Capital Trust (the "trust"), a no-load, open-end,
investment management company organized as a Massachusetts business trust on May
7, 1993, and registered under the Investment Company Act of 1940, as amended
(the "1940 Act").
In addition to the funds, the trust also offers the Schwab Total Stock Market
Index Fund(TM), Schwab S&P 500 Fund, Schwab Small-Cap Index Fund(R), Schwab
International Index Fund(R), 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 and Schwab MarketManager International
Portfolio. 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 at fair value as determined by the funds'
investment adviser pursuant to guidelines adopted in good faith by the Board of
Trustees. Futures contracts, 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
discount) is recorded on the accrual basis. Realized gains and losses from
security transactions are determined on an identified cost basis.
FUTURES CONTRACTS -- The funds 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 the daily fluctuation in the value of
the contract. When the contract is closed, the funds record a realized gain or
loss equal to the difference between the value of the contract at the time it
was opened and the time it was closed.
51
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
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 statement of operations at any given time.
As of April 30, 2000, the Institutional Select(TM) S&P 500 Fund and the
Institutional Select(TM) Large-Cap Value Index Fund had the following open Index
futures contracts:
<TABLE>
<CAPTION>
Type of Number of Contract Unrealized
Fund Contract Contracts Value Expiration Appreciation
---- ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Institutional Select S&P 500 Fund S&P 500 Index 4 $1,460 6/16/00 $104
Institutional Select Large-Cap Value Index Fund S&P 500 Index 1 365 6/16/00 22
</TABLE>
The eligible securities on deposit with brokers available to cover margin
requirements for open futures positions at April 30, 2000, were $298 and $40,
respectively, for the Institutional Select S&P 500 Fund and the Institutional
Select Large-Cap Value Index Fund. The funds have segregated short-term
investments and other securities for the remaining portion of the contract
value.
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.
The aggregate unrealized appreciation and depreciation for securities held by
the funds at April 30, 2000, which was substantially the same for financial
reporting and federal income tax purposes, was as follows:
<TABLE>
<CAPTION>
Net Unrealized Appreciated Depreciated
Fund Appreciation Securities Securities
-------- ------------ ---------- ------------
<S> <C> <C> <C>
Institutional Select S&P 500 Fund $28,485 $58,572 $(30,087)
Institutional Select Large-Cap Value Index Fund 1,754 11,294 (9,540)
Institutional Select(TM)Small-Cap Value Index Fund 1,352 5,728 (4,376)
</TABLE>
52
<PAGE>
RECLASSIFICATIONS -- 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 reclassifications
were made:
<TABLE>
<CAPTION>
Undistributed
Net Investment
Portfolio Income Paid-In Capital
------ ------------ ------------
<S> <C> <C>
Institutional Select(TM)S&P 500 Fund $10 $(10)
Institutional Select(TM)Large-Cap Value Index Fund 9 (9)
</TABLE>
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT -- The trust has an investment
advisory and administration agreement with Charles Schwab Investment Management,
Inc. (the "investment adviser"). For advisory services and facilities furnished,
the Institutional Select S&P 500 Fund pays an annual fee, payable monthly, of
0.18% of the first $1 billion of average daily net assets and 0.15% of such net
assets over $1 billion, the Institutional Select Large-Cap Value Index Fund pays
0.20% of the first $1 billion of average daily net assets and 0.18% of such net
assets over $1 billion and the Institutional Select(TM) Small-Cap Value Index
Fund pays 0.25% of the first $1 billion of average daily net assets and 0.23% of
such net assets over $1 billion. The investment adviser has waived or reduced
its fee for the six months ended April 30, 2000 (see Note 4).
Prior to February 29, 2000, the Institutional Select S&P 500 Fund and the
Institutional Select Large-Cap Value Index Fund paid an annual fee, payable
monthly, of 0.20% of the first $1 billion of average daily net assets and 0.18%
of such net assets over $1 billion for advisory services and facilities
furnished.
TRANSFER AGENCY AND SHAREHOLDER SERVICE AGREEMENTS -- The trust has transfer
agency and shareholder service agreements with Charles Schwab & Co., Inc.
("Schwab"). For services provided under these agreements, Schwab receives an
annual fee, payable monthly, of 0.05% of each Fund's average daily net assets
for transfer agency services and 0.05% of such net assets for shareholder
services. Schwab has waived or reduced a portion of its transfer agency and
shareholder service fees for the six months ended April 30, 2000 (see Note 4).
OFFICERS AND TRUSTEES -- Certain officers and trustees of the trust are also
officers and/or directors of the investment adviser and/or Schwab. During the
period ended April 30, 2000, the trust made no direct payments to its officers
or trustees who are "interested persons" within the meaning of the 1940 Act. The
funds incurred fees aggregating $8 related to the trust's unaffiliated trustees.
As of April 30, 2000, the Institutional Select S&P 500 Fund held common stock of
the Charles Schwab Corp., an affiliated issuer, with a current value of $997.
53
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
4. EXPENSES REDUCED AND ABSORBED BY THE INVESTMENT ADVISER AND SCHWAB
The investment adviser and Schwab guarantee that, through at least December 31,
2005, total operating expenses of Institutional Select(TM) S&P 500 Fund,
Institutional Select(TM) Large-Cap Value Index Fund and Institutional Select(TM)
Small-Cap Value Index Fund will not exceed 0.15%, 0.25% and 0.32%, respectively,
of each fund's average daily net assets, after waivers and reimbursements. For
the purpose of this guarantee, operating expenses do not include interest, taxes
and certain non-routine expenses. The operating expense ratio for the six months
ended April 30, 2000 did include non-routine expenses.
For the six months ended April 30, 2000, the total of such fees and expenses
reduced by the investment adviser was $222, $87, and $41, respectively, for the
Institutional Select S&P 500 Fund, Institutional Select Large-Cap Value Index
Fund and Institutional Select Small-Cap Value Index Fund. In addition, the total
expenses reimbursed by the investment adviser was $20 and $39, respectively, for
the Institutional Select Large-Cap Value Index Fund and Institutional Select
Small-Cap Value Index Fund. The total of such fees reduced by Schwab was $87,
$40, and $6, respectively, for the Institutional Select S&P 500 Fund,
Institutional Select Large-Cap Value Index Fund and Institutional Select
Small-Cap Value Index Fund.
5. BORROWING AGREEMENTS
The trusts have both committed and uncommitted lines of credit arrangements with
PNCBank N.A., Bank of America NT & SA and The Bank of New York, whereby the
trusts may borrow on behalf of the funds, as a temporary measure to satisfy
redemption requests or for extraordinary or emergency purposes. The trusts may
borrow in an aggregate amount of up to $150 million from PNC Bank N.A., $133
million from Bank of America NT &SA and $183 million from The Bank of New York.
Amounts borrowed under these arrangements bear interest at periodically
negotiated rates. The funds also pay annual fees for the unused balance of the
committed line of credit. During the reporting period, the funds only borrowed
against the uncommitted lines of credit. As of April 30, 2000, the Institutional
Select Small-Cap Value Index Fund had $138 in borrowings with an interest rate
of 6.438%, and the balance was repaid on May 1, 2000.
54
<PAGE>
6. SECURITIES LENDING
The Institutional Select(TM) S&P 500 Fund, Institutional Select(TM) Large-Cap
Value Index Fund and Institutional Select(TM) Small-Cap Value Index Fund loaned
securities to certain brokers, dealers and other financial institutions who paid
the funds negotiated lenders' fees. The funds 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.
<TABLE>
<CAPTION>
Market Value of Market Value of
Fund Securities Loaned Collateral
---- ---------------- ---------------
<S> <C> <C>
Institutional Select S&P 500 Fund $29,253 $30,010
Institutional Select Large-Cap Value Index Fund 8,876 9,138
Institutional Select Small-Cap Value Index Fund 1,595 1,673
</TABLE>
7. INVESTMENT TRANSACTIONS
Purchases, sales and maturities of investment securities, other than short-term
obligations and U.S. Government securities, for the six months ended April 30,
2000, were as follows:
<TABLE>
<CAPTION>
Proceeds of Sales
Fund Purchases and Maturities
-------- ----------- ---------------
<S> <C> <C>
Institutional Select S&P 500 Fund $99,205 $10,803
Institutional Select Large-Cap Value Index Fund 42,475 12,638
Institutional Select Small-Cap Value Index Fund 15,586 14,672
</TABLE>
8. EARLY WITHDRAWAL FEES
The early withdrawal fees are retained by the funds and are treated as a
contribution to capital.
<TABLE>
<CAPTION>
Early withdrawal fees on Early withdrawal
Fund redemption proceeds+ fees as of 4/30/00
-------- ---------------------- ------------------
<S> <C> <C>
Institutional Select S&P 500 Fund 0.25%* $17
Institutional Select Large-Cap Value Index Fund 0.50%* 18
Institutional Select Small-Cap Value Index Fund 0.75% 12
</TABLE>
+Attributable to shares purchased and held less than 180 days.
*Effective 05/01/00, the early withdrawal fees have been
changed to 0.75%.
55
<PAGE>
THIS SPACE RESERVED FOR YOUR COMMENTS AND QUESTIONS.
A SCHWAB REPRESENTATIVE WILL BE HAPPY TO ASSIST YOU.
<PAGE>
THIS SPACE RESERVED FOR YOUR COMMENTS AND QUESTIONS.
A SCHWAB REPRESENTATIVE WILL BE HAPPY TO ASSIST YOU.
<PAGE>
THIS SPACE RESERVED FOR YOUR COMMENTS AND QUESTIONS.
A SCHWAB REPRESENTATIVE WILL BE HAPPY TO ASSIST YOU.
<PAGE>
INSTITUTIONAL SELECT-TM- FUNDS
FUNDS DESIGNED TO MEET YOUR NEEDS
The Institutional Select Funds were designed with input from Investment
Managers, who indicated a need for low-cost, tax-efficient index fund
alternatives.
At Charles Schwab Investment Management, Inc. (CSIM), our goal is to understand
the needs of our clients and then design investment tools that meet those needs.
Through targeted research, we learned that our clients want low-cost index fund
alternatives that are managed with an emphasis on tax efficiency and offer
accurate tracking potential and a proven management team. The Institutional
Select Funds are a direct result of that research, and offer real advantages
designed specifically for institutional-type investors.
CSIM--THE RIGHT RESOURCES FOR INVESTMENT ADVISERS
When we began in 1989, CSIM's primary focus was the retail customer, and
today--with more than 40 fund products, five million
SchwabFunds-Registered Trademark- shareholder and more than $110 billion in
assets under management--we are a market leader.
Today, Investment Managers represent a large and growing part of the overall
customer base for Charles Schwab & Co., Inc. (Schwab). The Institutional Select
Funds are the first of what we hope will be many new CSIM funds that will
provide high quality, cost-efficient portfolios for Investment Managers and
their clients. We will continue to work closely with Investment Managers
nationwide, with a view to provide them with the best institutional investment
tools.
CSIM serves as the investment adviser to the SchwabFunds, and is an affiliate of
Schwab. Schwab is the distributor for the Institutional Select Funds and
SchwabFunds. The Charles Schwab Corporation is the parent company of CSIM and
Schwab.
THIS REPORT MUST BE PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
<PAGE>
INSTITUTIONAL SELECT-TM- FUNDS
101 MONTGOMERY STREET, SAN FRANCISCO, CA 94104
INVESTMENT ADVISER
Charles Schwab Investment Management, Inc.
101 Montgomery Street, San Francisco, CA 94104
DISTRIBUTOR
Charles Schwab & Co., Inc.
P.O. Box 7575, San Francisco, CA 94120-7575
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
-C-2000 Charles Schwab & Co., Inc.
All rights reserved, Member SIPC/NYSE.
Printed on recycled paper. MKT-3995-1 (6/00)
