-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QLmSY3yLgkoxtz25jakfhqibz7Fivloyt7YzJakKR+IzDKs9gIywE1Ejt2FOqAeQ lPbOBcHcDI5bJlfI4rxIXw== 0000950149-03-001584.txt : 20030708 0000950149-03-001584.hdr.sgml : 20030708 20030708152318 ACCESSION NUMBER: 0000950149-03-001584 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030430 FILED AS OF DATE: 20030708 EFFECTIVENESS DATE: 20030708 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCHWAB INVESTMENTS CENTRAL INDEX KEY: 0000869365 STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-06200 FILM NUMBER: 03778499 BUSINESS ADDRESS: STREET 1: 101 MONTGOMERY ST CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 4156277000 MAIL ADDRESS: STREET 1: 101 MONTGOMERY ST CITY: SAN FRANCISCO STATE: CA ZIP: 94104 N-CSR 1 f90736invcsr.txt FORM N-CSR FOR SCHWAB INVESTMENTS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-6200 Schwab Investments ---------------------------------------------------- (Exact name of registrant as specified in charter) 101 Montgomery Street, San Francisco, California 94104 ---------------------------------------------------- (Address of principal executive offices) (Zip code) Randall W. Merk Schwab Investments 101 Montgomery Street, San Francisco, California 94104 ---------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (415) 627-7000 Date of fiscal year end: August 31 Date of reporting period: November 1, 2002 - April 30, 2003 Item 1: Report(s) to Shareholders Schwab Equity Index Funds SEMIANNUAL REPORT April 30, 2003 Schwab S&P 500 Fund Schwab 1000 Fund(R) Schwab Small-Cap Index Fund(R) Schwab Total Stock Market Index Fund(R) Schwab International Index Fund(R) [CHARLES SCHWAB LOGO] Five ways to put the power of the stock market in your portfolio-with some of the lowest expenses in the industry. In This Report Management's Discussion................................................ 2 The president of SchwabFunds(R) and the funds' managers discuss the factors that affected fund performance during the report period. Fund Performance and Related Data Fund and index performance data, fund facts, portfolio holdings and fund financials. Schwab S&P 500 Fund.................................................. 6 Investor Shares: SWPIX Select Shares(R): SWPPX e.Shares(R): SWPEX The fund's goal is to track the total return of the S&P 500(R) Index. 1 Schwab 1000 Fund(R).................................................. 23 Investor Shares: SNXFX Select Shares: SNXSX The fund's goal is to track the total return of the Schwab 1000 Index(R). Schwab Small-Cap Index Fund(R)....................................... 45 Investor Shares: SWSMX Select Shares: SWSSX The fund's goal is to track the total return of the Schwab Small-Cap Index(R). Schwab Total Stock Market Index Fund(R).............................. 68 Investor Shares: SWTIX Select Shares: SWTSX The fund's goal is to track the total return of the entire U.S. stock market, as measured by the Wilshire 5000 Total Market Index. 2 Schwab International Index Fund(R)................................... 119 Investor Shares: SWINX Select Shares: SWISX The fund's goal is to track the total return of the Schwab International Index(R). Financial Notes........................................................ 133 Glossary............................................................... 137 1 Standard & Poor's(R), S&P(R), S&P 500(R), Standard & Poor's 500(R) and 500(R) are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by the fund. The fund is not sponsored, endorsed, sold or promoted by Standard & Poor's, and Standard & Poor's makes no representation regarding the advisability of investing in the fund. 2 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 regarding the advisability of investing in the fund or in any stock included in the Wilshire 5000. FROM THE CHAIRMAN [PHOTO OF CHARLES R. SCHWAB] Charles R. Schwab Chairman Without question, these are challenging times for America's investors. But I believe that they also may provide opportunities, especially for those who stay involved with their investment portfolios and review their mutual fund holdings with their investment objectives in mind. As this report goes to press, the President has signed into law a new tax package that I believe offers significant potential benefits for all investors. The new tax package will reduce the rate of taxation on many corporate dividends and on capital gains. I believe that reducing these taxes could serve as a stimulus to the stock market, thereby benefiting all owners of U.S. stocks. For years, corporate dividends have been taxed twice: first when the corporation earned the money, and again when investors received the dividend. In my view, this has provided an incentive for corporations to retain profits as cash rather than sharing them with their shareholders. I believe reducing the dividend tax gives companies the right incentives to invest and create new jobs. Here at Schwab, we are actively exploring ways to help investors meet their financial objectives. At SchwabFunds(R), these efforts are being led by the new president of SchwabFunds, Randall Merk. Randy brings a wealth of experience to the job, and we welcome his leadership, vision and wisdom. On behalf of SchwabFunds, I'd like to thank you for investing with us. Your continued trust and support mean a great deal to us. In turn, it's our mission to help you meet your financial goals. Sincerely, /s/ Charles R. Schwab MANAGEMENT'S DISCUSSION November 1, 2002--April 30, 2003 [PHOTO OF RANDALL W. MERK] RANDALL W. MERK is President and CEO of Charles Schwab Investment Management, Inc. and is president of each of the funds covered in this report. He joined the firm in August of 2002, bringing with him 24 years of experience in the asset management industry. Dear Shareholder: As one of the newer members of the SchwabFunds(R) team, I've been struck by the talent and integrity of the people here. Above all, I've been impressed with the dedication they show to understanding the needs and concerns of our shareholders. That dedication is particularly important right now. Times of market volatility and uncertainty about world events demand as high a level of diligence as ever on the part of investment professionals. At SchwabFunds we are keenly aware of this, and we continue to work hard to uphold the best interests of our shareholders. Mutual funds are facing many initiatives at the moment. These include changes in corporate governance practices, such as the Sarbanes-Oxley Act (which requires senior management certification of financial reports), and new regulations affecting disclosures of mutual funds' proxy voting practices. Many of these changes have the potential to benefit shareholders, and I want to assure you that we'll keep you informed of the progress we are making with them. In the meantime, it is worth keeping in mind that the basic tenets of mutual fund investing remain unchanged. In particular, time-tested investment practices such as asset allocation and diversification are as important as ever. The range of choices available from SchwabFunds can make it easy to diversify your portfolio. In addition, as our range of funds grows, we'll let you know when new funds are launched (or you can stay informed by visiting www.schwab.com/schwabfunds). In closing, let me thank you for choosing SchwabFunds for your mutual fund investments. We're committed to helping you reach your financial goals. If there is something more that we can do to help, I hope you'll let us know. Sincerely, /s/ Randall W. Merk Schwab Equity Index Funds 2 [PHOTO OF GERI HOM & LARRY MANO] GERI HOM, a vice president and senior portfolio manager of the investment adviser, has overall responsibility for the management of the funds. Prior to joining the firm in 1995, she worked for nearly 15 years in equity management. LARRY MANO, a director and a portfolio manager, is responsible for the day-to-day management of the Total Stock Market and International Index funds. Prior to joining the firm in 1998, he worked for 20 years in equity management. THE ECONOMY THE WAR IN IRAQ DOMINATED HEADLINES, ALTHOUGH IT WAS NOT THE ONLY FACTOR AFFECTING THE ECONOMY. As the report period began, the nation's focus was divided between fundamental economic issues and concerns over the looming war with Iraq. Once the war arrived, attention focused on Iraq and the progress of political and military actions. Toward the end of the report period, as intensive military action drew to a close, the nation's focus shifted and its level of concern over war-related uncertainty declined. One reflection of this pattern of changing concerns over the war was the price of oil. Leading up to the war, oil prices continued to ratchet up to nearly $40 a barrel. But the price quickly dropped to around $30 a barrel when it began to appear that the major fighting would not last long. The economy that Americans found at the end of the war was not much different than it had been during the period before the war. Gross Domestic Product was positive but weak, while joblessness edged up to 6%. Consumer spending remained strong, helped in part by widespread discounts and depressed prices in most sectors (aside from healthcare and oil). But discounted prices for consumers translated into thin profits for companies, and business capital spending remained minimal. A half-percent interest rate cut in November 2002 showed the Federal Reserve continuing to apply economic stimulus; the president and Congress contributed by advancing new fiscal and tax policies. THE MARKET MOST TYPES OF STOCKS POSTED GAINS FOR THE PERIOD, WITH SMALL-CAP GROWTH STOCKS AND LARGE-CAP VALUE STOCKS LEADING THE WAY. Positive returns were welcome news after prior declines. However, the volatility that has characterized the market in recent years continued throughout the period. The strongest month of the period for stocks was April 2003, which saw the market rise as the military action in Iraq ended and as the first corporate earnings reports for 2002 appeared to indicate some improvement over the disappointing earnings of 2001. Another factor that we believe may have helped lift the market during the period was the increasing possibility of a dividend tax cut. Schwab Equity Index Funds 3 MANAGEMENT'S DISCUSSION continued Stock prices during the period appeared to generally reflect companies' established earning power, although anticipated future earnings began to drive returns in some sectors. Looking at stock prices during the period, it appeared that investors were reluctant to give much consideration to projections of future earnings (which may or may not turn out to be accurate) when deciding how much they were willing to pay for a stock. In our view, this was a sign of lingering skepticism among investors about earnings projections, whether those projections came from corporate management or from analysts. As the report period came to a close, there were some issues that remained unresolved. For instance, there were still companies coming forward with earnings restatements or with large one-time charges. There were also questions about how companies account for pension plan liabilities, and how related practices might trigger another round of earnings restatements. We believe investors' sensitivity to factors such as these was likely heightened by the memory of the many recent high-profile cases of corporate malfeasance. THE FUNDS ALL OF THE EQUITY INDEX FUNDS POSTED POSITIVE TOTAL RETURNS FOR THE REPORT PERIOD. Because the funds in this report are index funds, they are affected by the same factors that impact their respective benchmark indices. The total return of the SCHWAB S&P 500 FUND was similar to that of its benchmark, the S&P 500(R) Index, which was 4.48% for the period. During the period, six companies were dropped from the S&P 500(R) Index and replaced by others. Being added to or dropped from the S&P 500 often ASSET CLASS PERFORMANCE COMPARISON % returns during the report period This graph compares the performance of various asset classes during the report period. Final performance figures for the period are in the key below. 4.48% S&P 500(R)INDEX: measures U.S. large-cap stocks 7.55% RUSSELL 2000(R)INDEX: measures U.S. small-cap stocks 1.81% MSCI-EAFE(R)INDEX: measures (in U.S. dollars) large-cap stocks in Europe, Australasia and the Far East 4.31% LEHMAN BROTHERS U.S. AGGREGATE BOND INDEX: measures the U.S. bond market [LINE GRAPH]
Lehman Brother U.S. Aggregate Bond Index MSCI-EAFE Index Russell 2000 Index S&P 500 Index 31-Oct-02 0 0 0 0 Nov-02 -0.18 -0.36 2.6 1.72 Nov-02 0.59 1.71 2.65 1.95 Nov-02 0.25 0.52 3.5 2.2 Nov-02 -0.07 3.64 6.59 5.6 Nov-02 -0.03 4.7 9.98 6.2 Dec-02 0.52 0.96 5.77 2.59 Dec-02 0.86 -0.03 6.05 2.06 Dec-02 1.42 -1.25 2.87 0.14 Dec-02 1.99 0.71 4.5 0.75 Jan-03 1.36 2.13 5.44 3.01 Jan-03 1.18 2.45 6.35 5.14 Jan-03 1.83 3.2 6.09 3.7 Jan-03 2.2 -0.55 3.09 0.61 Jan-03 2.12 -3.01 -1.19 -4.19 Feb-03 2.47 -3.67 -1.94 -4.88 Feb-03 2.45 -4.75 -4.58 -7.18 Feb-03 2.75 -3.54 -3.25 -4.91 Feb-03 3.54 -6.69 -2.77 -4.84 Mar-03 3.82 -6.69 -4.79 -6.53 Mar-03 3.45 -10.09 -4.3 -5.38 Mar-03 2.18 -5.24 -0.25 -0.36 Mar-03 3.12 -5.07 -0.45 -1.16 Apr-03 3.12 -4.67 1.13 -0.23 Apr-03 3.14 -3.48 0.46 -0.74 Apr-03 3.4 -0.88 3.46 1.78 Apr-03 3.96 0.21 5.76 3.82 30-Apr-03 4.31 1.81 7.55 4.48
These figures assume dividends and distributions were reinvested. Index figures don't include trading and management costs, which would lower performance. Indices are unmanaged and you can't invest in them directly. Remember that past performance is not an indication of future results. Data source: Charles Schwab & Co., Inc. Schwab Equity Index Funds 4 Each of the funds remained fully invested for the period, allowing for a small portion of assets held in cash to maintain liquidity for fund expenses and shareholder transactions. has an immediate effect on a stock's price. We adjusted the fund's portfolio to track these six changes, but sought to manage our transactions to avoid buying at highs and selling at lows while still avoiding the risk of missing out on exposure to market gains. The total return for the SCHWAB 1000 FUND(R) was similar to its benchmark, the Schwab 1000 Index(R), which had a total return of 4.55% for the period. The SCHWAB SMALL-CAP INDEX FUND(R) also performed similarly to its benchmark, the Schwab Small-Cap Index(R), which had a total return of 5.29%.In January 2003,regular yearly readjustments were made to both of these indices, bringing their composition in line with current market composition. A total of 118 companies were replaced in the Schwab 1000 Index and 566 in the Schwab Small-Cap Index. The stocks in both funds were then adjusted accordingly. Small-cap stocks moved higher in April 2003, and mid-caps saw some of that interest as well. We attribute this to the end of heavy fighting in Iraq (there was similar market movement after the Gulf War in 1991) and to the fact that small-cap stocks historically have often been the first to revive in a bear market. The small-cap rally in April helped the performance of the SCHWAB TOTAL STOCK MARKET INDEX FUND(R), but it also contributed to the fund's tracking error (the difference between fund total return and index total return). Although the fund owns shares in 3,000 of the over 5,000 names in the Wilshire 5000,those it does not hold--typically the smallest and least liquid stocks--were among the better performers for this period. In spite of this, the fund still performed similarly to its benchmark, the Wilshire 5000 Index, which had a total return of 5.02% for the period. International markets were modestly positive for the period.The Schwab International Index(R), the benchmark for the SCHWAB INTERNATIONAL INDEX FUND(R),had a total return of 2.11%, outperforming the broader MSCI-EAFE Index. This was due to the benchmark's exposure to Canada (which is not in the MSCI-EAFE) and its smaller weighting in Japan, which performed poorly. The fund itself lagged both indices, largely because of the higher trading costs associated with international investing and the fact that the fund has expenses that the indices do not have. Small company stocks are subject to greater volatility than other asset categories. Foreign securities can involve risks such as political and economic instability and currency risk. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Index figures are not annualized. The views expressed here are those of fund management only. Nothing in this report represents a recommendation of a security by the investment adviser. Manager views and portfolio holdings may have changed since the report date. Schwab Equity Index Funds 5 SCHWAB S&P 500 FUND PERFORMANCE as of 4/30/03: Investor Shares PRE- AND POST-TAX AVERAGE ANNUAL TOTAL RETURNS 1, 2 This bar chart compares pre-tax performance of the fund's Investor Shares with the S&P 500(R) Index and the Morningstar Large-Cap Blend Fund category. The table below the chart shows two types of after-tax returns. [BAR CHART]
INVESTOR SHARES S&P 500 INDEX CATEGORY AVERAGE 6 MONTHS 4.35% 4.48% 3.31% 1 YEAR -13.52% -13.31% -14.72% 5 YEARS -2.72% -2.43% -3.05% SINCE INCEPTION: 5/1/96 6.16% 6.57% n/a
6 MONTHS 1 YEAR -------- ------ INVESTOR SHARES CATEGORY AVERAGE INVESTOR SHARES CATEGORY AVERAGE TOTAL RETURNS AFTER TAX - ------------------------------------------------------------------------------------------------------------- PRE-LIQUIDATION (still own shares) 3.76% 1.05% -14.01% -16.49% - ------------------------------------------------------------------------------------------------------------- POST-LIQUIDATION (shares were sold) 2.69% 0.75% -8.46% -10.00% - -------------------------------------------------------------------------------------------------------------
5 YEARS SINCE INCEPTION ------- ---------------- INVESTOR SHARES CATEGORY AVERAGE INVESTOR SHARES CATEGORY AVERAGE TOTAL RETURNS AFTER TAX - ------------------------------------------------------------------------------------------------------------- PRE-LIQUIDATION (still own shares) -3.11% -4.40% 5.76% -- - ------------------------------------------------------------------------------------------------------------- POST-LIQUIDATION (shares were sold) -2.30% -2.60% 4.91% -- - -------------------------------------------------------------------------------------------------------------
PERFORMANCE OF A $10,000 INVESTMENT 2 This graph shows performance since inception of a hypothetical $10,000 investment in the fund's Investor Shares, compared with a similar investment in the S&P 500 Index. $15,202 INVESTOR SHARES $15,614 S&P 500 INDEX [LINE CHART]
INVESTOR SHARES S&P 500 Index 30-Apr-96 10000 10000 May-96 10250 10257 Jun-96 10290 10296 Jul-96 9840 9841 Aug-96 10040 10049 Sep-96 10600 10613 Oct-96 10880 10906 Nov-96 11690 11731 Dec-96 11462 11498 Jan-97 12157 12216 Feb-97 12248 12312 Mar-97 11744 11808 Apr-97 12430 12511 May-97 13186 13272 Jun-97 13760 13867 Jul-97 14849 14969 Aug-97 14012 14131 Sep-97 14778 14904 Oct-97 14284 14406 Nov-97 14930 15073 Dec-97 15184 15332 Jan-98 15357 15502 Feb-98 16455 16620 Mar-98 17289 17471 Apr-98 17452 17647 May-98 17147 17344 Jun-98 17838 18048 Jul-98 17645 17857 Aug-98 15092 15278 Sep-98 16058 16257 Oct-98 17340 17579 Nov-98 18387 18645 Dec-98 19443 19718 Jan-99 20253 20543 Feb-99 19617 19904 Mar-99 20397 20700 Apr-99 21176 21501 May-99 20663 20994 Jun-99 21812 22159 Jul-99 21125 21467 Aug-99 21012 21360 Sep-99 20428 20775 Oct-99 21709 22090 Nov-99 22150 22539 Dec-99 23448 23866 Jan-00 22266 22668 Feb-00 21841 22239 Mar-00 23967 24414 Apr-00 23241 23679 May-00 22753 23194 Jun-00 23313 23767 Jul-00 22940 23396 Aug-00 24361 24849 Sep-00 23075 23537 Oct-00 22971 23438 Nov-00 21156 21591 Dec-00 21261 21697 Jan-01 22014 22467 Feb-01 19996 20418 Mar-01 18730 19124 Apr-01 20174 20610 May-01 20310 20748 Jun-01 19808 20244 Jul-01 19609 20045 Aug-01 18375 18790 Sep-01 16890 17272 Oct-01 17204 17602 Nov-01 18521 18952 Dec-01 18678 19119 Jan-02 18403 18840 Feb-02 18044 18476 Mar-02 18710 19171 Apr-02 17579 18009 May-02 17442 17876 Jun-02 16195 16603 Jul-02 14938 15310 Aug-02 15023 15409 Sep-02 13396 13734 Oct-02 14568 14943 Nov-02 15424 15823 Dec-02 14516 14894 Jan-03 14130 14504 Feb-03 13915 14286 Mar-03 14044 14425 30-Apr-03 15202 15614
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. The fund's share price and principal values change, and when you sell your shares, they may be worth more or less than what you paid for them. Past performance does not indicate future results. Results for the report period are not annualized. 1 The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 4/30/03 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor's situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. As of 4/30/03, the total number of funds in the Morningstar Large-Cap Blend Fund category for the six-month, one-and five-year periods was 1,410, 1,362 and 711, respectively. These funds may or may not use tax-efficient strategies. 2 Fund returns reflect expense reductions by the fund's investment adviser (CSIM) and Schwab. Without these reductions, the fund's returns would have been lower. Schwab Equity Index Funds 6 SCHWAB S&P 500 FUND Select Shares(R) PRE- AND POST-TAX AVERAGE ANNUAL TOTAL RETURNS 1, 2 This bar chart compares pre-tax performance of the fund's Select Shares with the S&P 500(R) Index and the Morningstar Large-Cap Blend Fund category. The table below the chart shows two types of after-tax returns. [BAR CHART]
SELECT SHARES S&P 500 INDEX CATEGORY AVERAGE 6 MONTHS 4.45% 4.48% 3.31% 1 YEAR -13.35% -13.31% -14.72% 5 YEARS -2.57% -2.43% -3.05% SINCE INCEPTION: 5/19/97 2.91% 3.09% n/a
6 MONTHS 1 YEAR -------- ------ SELECT SHARES CATEGORY AVERAGE SELECT SHARES CATEGORY AVERAGE TOTAL RETURNS AFTER TAX - ------------------------------------------------------------------------------------------------------------- PRE-LIQUIDATION (still own shares) 3.79% 1.05% -13.89% -16.49% - ------------------------------------------------------------------------------------------------------------- POST-LIQUIDATION (shares were sold) 2.74% 0.75% -8.35% -10.00% - -------------------------------------------------------------------------------------------------------------
5 YEARS SINCE INCEPTION ------- --------------- SELECT SHARES CATEGORY AVERAGE SELECT SHARES CATEGORY AVERAGE TOTAL RETURNS AFTER TAX - -------------------------------------------------------------------------------------------------------------- PRE-LIQUIDATION (still own shares) -3.02% -4.40% 2.44% -- - -------------------------------------------------------------------------------------------------------------- POST-LIQUIDATION (shares were sold) -2.21% -2.60% 2.16% -- - --------------------------------------------------------------------------------------------------------------
PERFORMANCE OF A $50,000 INVESTMENT 2 This graph shows performance since inception of a hypothetical $50,000 investment (the minimum investment for this share class) in the fund's Select Shares, compared with a similar investment in the S&P 500 Index. $59,300 SELECT SHARES $59,916 S&P 500 INDEX [LINE GRAPH]
SELECT SHARES S&P 500 Index 19-May-97 50000 50000 May-97 50935 50930 Jun-97 53190 53212 Jul-97 57395 57442 Aug-97 54165 54225 Sep-97 57120 57191 Oct-97 55215 55281 Nov-97 57745 57841 Dec-97 58745 58836 Jan-98 59375 59489 Feb-98 63660 63778 Mar-98 66880 67043 Apr-98 67550 67720 May-98 66370 66556 Jun-98 69040 69258 Jul-98 68295 68524 Aug-98 58435 58629 Sep-98 62165 62387 Oct-98 67155 67459 Nov-98 71245 71547 Dec-98 75340 75668 Jan-99 78475 78831 Feb-99 76015 76379 Mar-99 79030 79434 Apr-99 82085 82509 May-99 80140 80561 Jun-99 84545 85033 Jul-99 81885 82380 Aug-99 81490 81968 Sep-99 79230 79721 Oct-99 84230 84767 Nov-99 85935 86491 Dec-99 91000 91585 Jan-00 86420 86987 Feb-00 84770 85341 Mar-00 93050 93687 Apr-00 90235 90867 May-00 88350 89004 Jun-00 90515 91203 Jul-00 89110 89780 Aug-00 94655 95356 Sep-00 89635 90322 Oct-00 89230 89942 Nov-00 82200 82855 Dec-00 82655 83261 Jan-01 85540 86217 Feb-01 77745 78354 Mar-01 72835 73386 Apr-01 78480 79088 May-01 78965 79618 Jun-01 77055 77683 Jul-01 76285 76922 Aug-01 71500 72107 Sep-01 65735 66280 Oct-01 66955 67546 Nov-01 72065 72727 Dec-01 72700 73367 Jan-02 71635 72296 Feb-02 70240 70901 Mar-02 72865 73567 Apr-02 68430 69108 May-02 67940 68597 Jun-02 63095 63713 Jul-02 58170 58750 Aug-02 58580 59132 Sep-02 52175 52704 Oct-02 56775 57342 Nov-02 60140 60719 Dec-02 56585 57155 Jan-03 55085 55658 Feb-03 54250 54823 Mar-03 54790 55355 30-Apr-03 59300 59916
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. The fund's share price and principal values change, and when you sell your shares, they may be worth more or less than what you paid for them. Past performance does not indicate future results. Results for the report period are not annualized. 1 The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 4/30/03 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor's situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. As of 4/30/03, the total number of funds in the Morningstar Large-Cap Blend Fund category for the six-month, one-and five-year periods was 1,410, 1,362 and 711, respectively. These funds may or may not use tax-efficient strategies. 2 Fund returns reflect expense reductions by the fund's investment adviser (CSIM) and Schwab. Without these reductions, the fund's returns would have been lower. Schwab Equity Index Funds 7 SCHWAB S&P 500 FUND e.Shares(R) PRE- AND POST-TAX AVERAGE ANNUAL TOTAL RETURNS 1, 2 This bar chart compares pre-tax performance of the fund's e.Shares with the S&P 500(R) Index and the Morningstar Large-Cap Blend Fund category. The table below the chart shows two types of after-tax returns. [BAR CHART]
e.SHARES S&P 500 INDEX CATEGORY AVERAGE 6 MONTHS 4.42% 4.48% 3.31% 1 YEAR -13.46% -13.31% -14.72% 5 YEARS -2.66% -2.43% -3.05% SINCE INCEPTION: 5/1/96 6.26% 6.57% n/a
6 MONTHS 1 YEAR -------- ------ e.SHARES CATEGORY AVERAGE e.SHARES CATEGORY AVERAGE TOTAL RETURNS AFTER TAX - ------------------------------------------------------------------------------------------------------------- PRE-LIQUIDATION (still own shares) 3.81% 1.05% -13.97% -16.49% - ------------------------------------------------------------------------------------------------------------- POST-LIQUIDATION (shares were sold) 2.73% 0.75% -8.43% -10.00% - -------------------------------------------------------------------------------------------------------------
5 YEARS SINCE INCEPTION ------- --------------- e.SHARES CATEGORY AVERAGE e.SHARES CATEGORY AVERAGE TOTAL RETURNS AFTER TAX - ------------------------------------------------------------------------------------------------------------- PRE-LIQUIDATION (still own shares) -3.08% -4.40% 5.81% -- - ------------------------------------------------------------------------------------------------------------- POST-LIQUIDATION (shares were sold) -2.27% -2.60% 4.97% -- - -------------------------------------------------------------------------------------------------------------
PERFORMANCE OF A $10,000 INVESTMENT 2 This graph shows performance since inception of a hypothetical $10,000 investment in the fund's e.Shares, compared with a similar investment in the S&P 500 Index. $15,294 e.SHARES $15,614 S&P 500 INDEX [LINE GRAPH]
e.SHARES S&P 500 Index 30-Apr-96 10000 10000 May-96 10250 10257 Jun-96 10290 10296 Jul-96 9840 9841 Aug-96 10050 10049 Sep-96 10600 10613 Oct-96 10890 10906 Nov-96 11710 11731 Dec-96 11473 11498 Jan-97 12179 12216 Feb-97 12270 12312 Mar-97 11766 11808 Apr-97 12452 12511 May-97 13209 13272 Jun-97 13794 13867 Jul-97 14873 14969 Aug-97 14036 14131 Sep-97 14803 14904 Oct-97 14318 14406 Nov-97 14964 15073 Dec-97 15227 15332 Jan-98 15390 15502 Feb-98 16490 16620 Mar-98 17336 17471 Apr-98 17499 17647 May-98 17193 17344 Jun-98 17886 18048 Jul-98 17692 17857 Aug-98 15136 15278 Sep-98 16103 16257 Oct-98 17397 17579 Nov-98 18446 18645 Dec-98 19504 19718 Jan-99 20316 20543 Feb-99 19679 19904 Mar-99 20459 20700 Apr-99 21240 21501 May-99 20737 20994 Jun-99 21878 22159 Jul-99 21199 21467 Aug-99 21086 21360 Sep-99 20501 20775 Oct-99 21795 22090 Nov-99 22227 22539 Dec-99 23536 23866 Jan-00 22350 22668 Feb-00 21924 22239 Mar-00 24057 24414 Apr-00 23328 23679 May-00 22850 23194 Jun-00 23401 23767 Jul-00 23037 23396 Aug-00 24462 24849 Sep-00 23172 23537 Oct-00 23068 23438 Nov-00 21247 21591 Dec-00 21364 21697 Jan-01 22110 22467 Feb-01 20092 20418 Mar-01 18821 19124 Apr-01 20271 20610 May-01 20407 20748 Jun-01 19903 20244 Jul-01 19703 20045 Aug-01 18463 18790 Sep-01 16971 17272 Oct-01 17297 17602 Nov-01 18610 18952 Dec-01 18768 19119 Jan-02 18492 18840 Feb-02 18141 18476 Mar-02 18810 19171 Apr-02 17674 18009 May-02 17536 17876 Jun-02 16282 16603 Jul-02 15019 15310 Aug-02 15114 15409 Sep-02 13468 13734 Oct-02 14647 14943 Nov-02 15507 15823 Dec-02 14593 14894 Jan-03 14216 14504 Feb-03 14000 14286 Mar-03 14129 14425 30-Apr-03 15294 15614
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. The fund's share price and principal values change, and when you sell your shares, they may be worth more or less than what you paid for them. Past performance does not indicate future results. Results for the report period are not annualized. 1 The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 4/30/03 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor's situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. As of 4/30/03, the total number of funds in the Morningstar Large-Cap Blend Fund category for the six-month, one-and five-year periods was 1,410, 1,362 and 711, respectively. These funds may or may not use tax-efficient strategies. 2 Fund returns reflect expense reductions by the fund's investment adviser (CSIM) and Schwab. Without these reductions, the fund's returns would have been lower. Schwab Equity Index Funds 8 SCHWAB S&P 500 FUND FUND FACTS as of 4/30/03 FUND CATEGORY 1
INVESTMENT STYLE 1 MARKET CAP Value Blend Growth Large / / /X/ / / Medium / / / / / / Small / / / / / /
STATISTICS
NUMBER OF HOLDINGS 504 - --------------------------------------------------------- MEDIAN MARKET CAP ($ x 1,000,000) $48,401 - --------------------------------------------------------- PRICE/EARNINGS RATIO (P/E) 24.5 - --------------------------------------------------------- PRICE/BOOK RATIO (P/B) 4.5 - --------------------------------------------------------- PORTFOLIO TURNOVER RATE 2 2% - --------------------------------------------------------- EXPENSE RATIO 3 Investor Shares 0.37% Select Shares(R) 0.19% e.Shares(R) 0.28% - ---------------------------------------------------------
TOP HOLDINGS 4
% OF SECURITY INVESTMENTS (1) GENERAL ELECTRIC CO. 3.5% - --------------------------------------------------------- (2) MICROSOFT CORP. 3.2% - --------------------------------------------------------- (3) WAL-MART STORES, INC. 2.9% - --------------------------------------------------------- (4) PFIZER, INC. 2.9% - --------------------------------------------------------- (5) EXXON MOBIL CORP. 2.8% - --------------------------------------------------------- (6) CITIGROUP, INC. 2.4% - --------------------------------------------------------- (7) JOHNSON & JOHNSON 2.0% - --------------------------------------------------------- (8) AMERICAN INTERNATIONAL GROUP, INC. 1.8% - --------------------------------------------------------- (9) INTERNATIONAL BUSINESS MACHINES CORP. 1.7% - --------------------------------------------------------- (10) MERCK & CO., INC. 1.5% - --------------------------------------------------------- TOTAL 24.7% - ---------------------------------------------------------
INDUSTRY WEIGHTINGS This chart shows the fund's industry composition as of the report date. [PIE CHART] 14.7% HEALTHCARE/DRUGS & MEDICINE 9.5% BUSINESS MACHINES & SOFTWARE 7.7% BANKS 7.5% MISCELLANEOUS FINANCE 7.3% RETAIL 5.2% PRODUCER GOODS & MANUFACTURING 5.1% INSURANCE 4.5% FOOD & AGRICULTURE 4.4% ELECTRONICS 34.1% OTHER
1 Source: Morningstar, Inc. This style assessment is the result of comparing the fund with the S&P 500(R) Index, based on P/E, P/B and median market cap. The assessment reflects the fund's portfolio as of 4/30/03, which may have changed since then, and is not a precise indication of risk or performance--past, present or future. 2 Not annualized. 3 Guaranteed by Schwab and the investment adviser through 2/29/04 (excluding interest, taxes and certain non-routine expenses). 4 This list is not a recommendation of any security by the investment adviser. Portfolio holdings may have changed since the report date. Schwab Equity Index Funds 9 SCHWAB S&P 500 FUND -- Financials Financial Tables These tables provide additional data on the fund's performance, portfolio holdings and business operations. Complementing the tables is the financial notes section at the end of this report, which describes the fund's business structure, accounting practices and other matters. Because this is a semiannual report, information for the current report period is unaudited. Look online at WWW.SCHWAB.COM/SCHWABFUNDS/HOW2READ for guides that are designed to help you read the financial tables in any SchwabFunds(R) shareholder report. FINANCIAL HIGHLIGHTS
11/1/02- 11/1/01- 11/1/00- 11/1/99- 11/1/98- 11/1/97- INVESTOR SHARES 4/30/03 10/31/02 10/31/01 10/31/00 10/31/99 10/31/98 -------------------------------------------------------------------- PER-SHARE DATA ($) - ---------------------------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 13.79 16.45 22.15 21.17 17.05 14.17 -------------------------------------------------------------------- Income or loss from investment operations: Net investment income 0.10 0.20 0.17 0.17 0.17 0.16 Net realized and unrealized gains or losses 0.49 (2.68) (5.70) 1.06 4.10 2.85 -------------------------------------------------------------------- Total income or loss from investment operations 0.59 (2.48) (5.53) 1.23 4.27 3.01 Less distributions: Dividends from net investment income (0.20) (0.18) (0.17) (0.18) (0.15) (0.13) Distributions from net realized gains -- -- -- (0.07) -- -- -------------------------------------------------------------------- Total distributions (0.20) (0.18) (0.17) (0.25) (0.15) (0.13) -------------------------------------------------------------------- Net asset value at end of period 14.18 13.79 16.45 22.15 21.17 17.05 -------------------------------------------------------------------- Total return (%) 4.35 2 (15.32) (25.11) 5.81 25.20 21.39 RATIOS/SUPPLEMENTAL DATA (%) - ---------------------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.36 3 0.35 0.35 0.35 1 0.35 0.35 Expense reductions reflected in above ratio 0.10 3 0.11 0.11 0.16 0.27 0.28 Ratio of net investment income to average net assets 1.49 3 1.21 0.95 0.81 1.01 1.25 Portfolio turnover rate 2 2 8 4 9 3 1 Net assets, end of period ($ x 1,000,000) 2,933 2,760 3,070 3,617 3,183 1,935
1 Would have been 0.36% if certain non-routine expenses (proxy fees) had been included. 2 Not annualized. 3 Annualized. See financial notes. 10
11/1/02- 11/1/01- 11/1/00- 11/1/99- 11/1/98- 11/1/97- SELECT SHARES(R) 4/30/03 10/31/02 10/31/01 10/31/00 10/31/99 10/31/98 - ---------------------------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) - ---------------------------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 13.83 16.50 22.21 21.23 17.09 14.19 -------------------------------------------------------------------- Income or loss from investment operations: Net investment income 0.12 0.22 0.20 0.20 0.20 0.26 Net realized and unrealized gains or losses 0.49 (2.69) (5.71) 1.06 4.12 2.78 -------------------------------------------------------------------- Total income or loss from investment operations 0.61 (2.47) (5.51) 1.26 4.32 3.04 Less distributions: Dividends from net investment income (0.23) (0.20) (0.20) (0.21) (0.18) (0.14) Distributions from net realized gains -- -- -- (0.07) -- -- -------------------------------------------------------------------- Total distributions (0.23) (0.20) (0.20) (0.28) (0.18) (0.14) -------------------------------------------------------------------- Net asset value at end of period 14.21 13.83 16.50 22.21 21.23 17.09 -------------------------------------------------------------------- Total return (%) 4.45 3 (15.20) (24.97) 5.94 25.42 21.63 RATIOS/SUPPLEMENTAL DATA (%) - ---------------------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.19 4 0.19 0.19 0.19 1 0.19 0.19 Expense reductions reflected in above ratio 0.12 4 0.12 0.12 0.16 0.28 0.28 Ratio of net investment income to average net assets 1.67 4 1.37 1.11 0.98 1.17 1.40 Portfolio turnover rate 2 3 8 4 9 3 1 Net assets, end of period ($ x 1,000,000) 3,113 3,029 3,563 4,357 3,750 1,548
11/1/02- 11/1/01- 11/1/00- 11/1/99- 11/1/98- 11/1/97- E.SHARES(R) 4/30/03 10/31/02 10/31/01 10/31/00 10/31/99 10/31/98 - ---------------------------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) - ---------------------------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 13.79 16.46 22.17 21.21 17.08 14.19 -------------------------------------------------------------------- Income or loss from investment operations: Net investment income 0.11 0.23 0.20 0.20 0.20 0.15 Net realized and unrealized gains or losses 0.49 (2.71) (5.71) 1.04 4.09 2.88 -------------------------------------------------------------------- Total income or loss from investment operations 0.60 (2.48) (5.51) 1.24 4.29 3.03 Less distributions: Dividends from net investment income (0.21) (0.19) (0.20) (0.21) (0.16) (0.14) Distributions from net realized gains -- -- -- (0.07) -- -- -------------------------------------------------------------------- Total distributions (0.21) (0.19) (0.20) (0.28) (0.16) (0.14) -------------------------------------------------------------------- Net asset value at end of period 14.18 13.79 16.46 22.17 21.21 17.08 -------------------------------------------------------------------- Total return (%) 4.42 3 (15.32) (25.02) 5.84 25.28 21.50 RATIOS/SUPPLEMENTAL DATA (%) - ---------------------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.28 4 0.28 0.28 0.28 2 0.28 0.28 Expense reductions reflected in above ratio 0.03 4 0.03 0.03 0.07 0.20 0.24 Ratio of net investment income to average net assets 1.57 4 1.28 1.02 0.88 1.08 1.32 Portfolio turnover rate 2 3 8 4 9 3 1 Net assets, end of period ($ x 1,000,000) 223 220 304 441 435 281
1 Would have been 0.20% if certain non-routine expenses (proxy fees) had been included. 2 Would have been 0.29% if certain non-routine expenses (proxy fees) had been included. 3 Not annualized. 4 Annualized. See financial notes. 11 SCHWAB&P 500 FUND -- Financials PORTFOLIO HOLDINGS as of April 30, 2003, unaudited This section shows all the securities in the fund's portfolio and their market value, as of the report date. We use the symbols below to designate certain characteristics. With the top ten holdings, the number in the circle is the security's rank among the top ten. (1) Top ten holding o Non-income producing security = Collateral for open futures contracts / Issuer is affiliated with the fund's adviser
COST MARKET VALUE HOLDINGS BY CATEGORY ($x1,000) ($x1,000) - ------------------------------------------------------------------------ 99.8% COMMON STOCK 7,029,029 6,257,750 0.2% SHORT-TERM INVESTMENT 10,974 10,974 0.0% U.S. TREASURY OBLIGATIONS 549 549 - ------------------------------------------------------------------------ 100.0% TOTAL INVESTMENTS 7,040,552 6,269,273
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) COMMON STOCK 99.8% of investments AEROSPACE / DEFENSE 1.5% ------------------------------------------------------------------ The Boeing Co. 619,522 16,901 Crane Co. 44,919 877 General Dynamics Corp. 149,482 9,278 Goodrich Corp. 84,839 1,194 Lockheed Martin Corp. 337,596 16,897 Northrop Grumman Corp. 134,772 11,853 Raytheon Co. 297,872 8,915 Rockwell Automation, Inc. 135,698 3,094 Rockwell Collins, Inc. 135,398 2,895 Textron, Inc. 100,629 2,967 United Technologies Corp. 346,613 21,424 ------ 96,295 AIR TRANSPORTATION 0.4% ------------------------------------------------------------------ Delta Air Lines, Inc. 94,113 1,204 FedEx Corp. 221,042 13,236 Southwest Airlines Co. 569,118 9,083 ------ 23,523 ALCOHOLIC BEVERAGES 0.6% ------------------------------------------------------------------ Adolph Coors Co., Class B 26,531 1,420 Anheuser-Busch Cos., Inc. 631,734 31,511 Brown-Forman Corp., Class B 45,734 3,501 ------ 36,432 APPAREL 0.3% ------------------------------------------------------------------ o Jones Apparel Group, Inc. 96,343 2,748 Liz Claiborne, Inc. 79,728 2,593 Nike, Inc., Class B 195,117 10,445 o Reebok International Ltd. 43,859 1,362 VF Corp. 80,028 3,148 ------ 20,296 AUTOMOTIVE PRODUCTS / MOTOR VEHICLES 1.1% ------------------------------------------------------------------ o Autonation, Inc. 214,100 2,965 Cooper Tire & Rubber Co. 52,866 744 Cummins, Inc. 29,451 798 Dana Corp. 110,209 1,024 Danaher Corp. 114,789 7,918 Delphi Corp. 407,700 3,425 Eaton Corp. 53,348 4,378 Ford Motor Co. 1,353,012 13,936 General Motors Corp. 414,028 14,926 Genuine Parts Co. 127,090 4,063 Goodyear Tire & Rubber Co. 123,681 708 Harley-Davidson, Inc. 225,133 10,005 o Navistar International Corp. 50,100 1,398 Visteon Corp. 99,156 695 ------ 66,983 BANKS 7.7% ------------------------------------------------------------------ AmSouth Bancorp. 263,365 5,544 Bank of America Corp. 1,112,333 82,368 The Bank of New York Co., Inc. 566,114 14,974 Bank One Corp. 861,015 31,040 BB&T Corp. 350,759 11,435 Comerica, Inc. 133,259 5,798 Fifth Third Bancorp 426,905 21,042 First Tennessee National Corp. 92,900 4,069 FleetBoston Financial Corp. 774,627 20,543 Golden West Financial Corp. 116,305 8,772 Huntington Bancshares, Inc. 171,950 3,346
See financial notes. 12
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) J.P. Morgan Chase & Co. 1,475,724 43,312 KeyCorp, Inc. 313,865 7,567 Marshall & Ilsley Corp. 160,696 4,728 Mellon Financial Corp. 317,913 8,409 National City Corp. 451,473 13,526 North Fork Bancorp., Inc. 119,300 3,861 Northern Trust Corp. 163,112 5,725 PNC Financial Services Group, Inc. 211,427 9,282 o Providian Financial Corp. 216,172 1,593 Regions Financial Corp. 163,436 5,509 SouthTrust Corp. 256,207 6,882 State Street Corp. 244,011 8,548 SunTrust Banks, Inc. 211,349 12,093 Synovus Financial Corp. 224,032 4,362 U.S. Bancorp 1,413,091 31,300 Union Planters Corp. 145,652 4,157 Wachovia Corp. 1,004,421 38,379 Wells Fargo & Co. 1,250,357 60,342 Zions Bancorp. 65,847 3,244 ------- 481,750 BUSINESS MACHINES & SOFTWARE 9.5% ------------------------------------------------------------------ Adobe Systems, Inc. 171,789 5,937 o Apple Computer, Inc. 265,676 3,773 Autodesk, Inc. 94,454 1,470 o BMC Software, Inc. 172,408 2,572 o Cisco Systems, Inc. 5,293,883 79,620 o Compuware Corp. 281,522 1,236 o Comverse Technology, Inc. 137,215 1,793 o Dell Computer Corp. 1,917,932 55,448 o EMC Corp. 1,624,855 14,770 o Gateway, Inc. 234,837 676 Hewlett-Packard Co. 2,250,078 36,676 (9) International Business Machines Corp. 1,249,993 106,124 o Lexmark International, Inc., Class A 92,530 6,894 =(2) Microsoft Corp. 7,908,390 202,218 o NCR Corp. 73,899 1,620 o Network Appliance, Inc. 246,747 3,277 o Novell, Inc. 256,265 705 o Novellus Systems, Inc. 107,539 3,015 o Oracle Corp. 3,927,149 46,655 Pitney Bowes, Inc. 175,015 6,145 o Sun Microsystems, Inc. 2,347,658 7,747 o Unisys Corp. 242,527 2,522 o Xerox Corp. 555,260 5,475 ------- 596,368 BUSINESS SERVICES 3.7% ------------------------------------------------------------------ o Allied Waste Industries, Inc. 147,315 1,223 o Apollo Group, Inc., Class A 127,800 6,927 Automatic Data Processing, Inc. 443,882 14,928 o Cendant Corp. 758,254 10,828 Cintas Corp. 126,305 4,534 o Citrix Systems, Inc. 130,566 2,475 Computer Associates International, Inc. 424,166 6,888 o Computer Sciences Corp. 143,218 4,719 o Concord EFS, Inc. 372,571 5,153 o Convergys Corp. 128,151 2,079 Deluxe Corp. 36,066 1,587 o eBay, Inc. 228,885 21,234 Electronic Data Systems Corp. 359,821 6,531 Equifax, Inc. 103,607 2,403 First Data Corp. 554,864 21,767 o Fiserv, Inc. 142,264 4,188 H&R Block, Inc. 132,187 5,105 Interpublic Group of Cos., Inc. 282,857 3,225 o Intuit, Inc. 156,279 6,060 o Mercury Interactive Corp. 62,943 2,136 Moody's Corp. 112,409 5,428 Omnicom Group, Inc. 133,064 8,237 o Parametric Technology Corp. 187,230 618 Paychex, Inc. 276,562 8,612 o PeopleSoft, Inc. 228,301 3,431 o QLogic Corp. 70,738 3,112 o Robert Half International, Inc. 128,524 2,092 o Siebel Systems, Inc. 352,066 3,052 o Sungard Data Systems, Inc. 207,305 4,457 o Symantec Corp. 108,601 4,773 o Thermo Electron Corp. 123,063 2,236 o TMP Worldwide, Inc. 84,165 1,411 Tyco International Ltd. 1,475,100 23,012
See financial notes. 13 SCHWAB S&P 500 FUND -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Veritas Software Corp. 301,342 6,633 Waste Management, Inc. 444,105 9,646 o Yahoo!, Inc. 436,829 10,825 ------- 231,565 CHEMICAL 2.1% ------------------------------------------------------------------ 3M Co. 289,188 36,449 Air Products & Chemicals, Inc. 167,301 7,206 Dow Chemical Co. 671,050 21,903 E.I. du Pont de Nemours & Co. 733,438 31,193 Eastman Chemical Co. 55,183 1,685 Ecolab, Inc. 95,399 4,874 Great Lakes Chemical Corp. 35,237 865 o Hercules, Inc. 82,003 832 PPG Industries, Inc. 124,163 6,023 Praxair, Inc. 118,494 6,882 Rohm & Haas Co. 162,959 5,396 The Sherwin-Williams Co. 117,614 3,279 Sigma-Aldrich Corp. 52,726 2,627 ------- 129,214 CONSTRUCTION 0.3% ------------------------------------------------------------------ Centex Corp. 45,868 3,028 Fluor Corp. 60,302 2,085 KB Home Corp. 34,866 1,718 Masco Corp. 360,373 7,593 o McDermott International, Inc. 42,423 138 Pulte Homes, Inc. 46,575 2,701 The Stanley Works 62,640 1,505 Vulcan Materials Co. 74,118 2,592 ------ 21,360 CONSUMER DURABLE 0.1% ------------------------------------------------------------------ Black & Decker Corp. 64,986 2,681 Leggett & Platt, Inc. 142,312 2,939 Maytag Corp. 57,971 1,208 Whirlpool Corp. 49,431 2,644 ----- 9,472 CONSUMER NON-DURABLE 1.0% ------------------------------------------------------------------ o American Greetings Corp., Class A 56,888 828 Darden Restaurants, Inc. 126,412 2,214 o Electronic Arts, Inc. 107,378 6,364 Fortune Brands, Inc. 109,191 5,285 Hasbro, Inc. 129,712 2,076 o International Game Technology 64,338 5,552 Mattel, Inc. 323,293 7,028 McDonald's Corp. 935,696 16,001 Newell Rubbermaid, Inc. 195,737 5,966 o Starbucks Corp. 285,359 6,703 Tupperware Corp. 43,789 607 Wendy's International, Inc. 85,337 2,478 ------ 61,102 CONTAINERS 0.1% ------------------------------------------------------------------ Ball Corp. 44,056 2,474 Bemis Co. 40,729 1,860 o Pactiv Corp. 116,064 2,381 o Sealed Air Corp. 61,771 2,647 ----- 9,362 ELECTRONICS 4.4% ------------------------------------------------------------------ o ADC Telecommunications, Inc. 603,138 1,440 o Advanced Micro Devices, Inc. 257,513 1,916 o Agilent Technologies, Inc. 352,875 5,653 o Altera Corp. 280,381 4,433 o American Power Conversion Corp. 143,555 2,237 o Analog Devices, Inc. 274,683 9,098 o Andrew Corp. 75,024 576 Applied Biosystems Group-- Applera Corp. 153,233 2,686 o Applied Materials, Inc. 1,215,642 17,748 o Applied Micro Circuits Corp. 226,273 1,014 o Broadcom Corp., Class A 203,833 3,647 o CIENA Corp. 320,072 1,559 Intel Corp. 4,895,705 90,081 ITT Industries, Inc. 69,010 4,023 o Jabil Circuit, Inc. 144,719 2,706 o JDS Uniphase Corp. 1,029,485 3,325 o KLA-Tencor Corp. 139,010 5,699 Linear Technology Corp. 231,108 7,966 o LSI Logic Corp. 277,990 1,490 o Lucent Technologies, Inc. 2,541,304 4,574 Maxim Integrated Products, Inc. 236,749 9,302
See financial notes. 14
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Micron Technology, Inc. 443,135 3,767 Molex, Inc. 142,907 3,336 Motorola, Inc. 1,694,852 13,406 o National Semiconductor Corp. 134,754 2,524 o Nvidia Corp. 111,865 1,596 PerkinElmer, Inc. 92,308 916 o PMC -- Sierra, Inc. 121,586 1,003 o Power-One, Inc. 53,873 315 Qualcomm, Inc. 583,518 18,608 o Sanmina -- SCI Corp. 398,529 1,913 o Solectron Corp. 603,409 1,925 Symbol Technologies, Inc. 173,927 1,901 o Tektronix, Inc. 65,499 1,229 o Tellabs, Inc. 302,053 1,867 o Teradyne, Inc. 135,924 1,577 Texas Instruments, Inc. 1,277,947 23,629 o Thomas & Betts Corp. 44,556 705 o Univision Communications, Inc., Class A 166,984 5,056 o Waters Corp. 96,300 2,312 o Xilinx, Inc. 246,766 6,680 ------- 275,438 ENERGY: RAW MATERIALS 1.4% ------------------------------------------------------------------ Anadarko Petroleum Corp. 183,917 8,166 Apache Corp. 117,190 6,709 Baker Hughes, Inc. 248,286 6,952 o BJ Services Co. 115,400 4,213 Burlington Resources, Inc. 149,522 6,924 Devon Energy Corp. 170,337 8,049 EOG Resources, Inc. 85,133 3,182 Halliburton Co. 329,008 7,044 Nabors Industries Ltd. 107,107 4,199 o Noble Corp. 99,457 3,078 Occidental Petroleum Corp. 279,810 8,352 Rowan Cos., Inc. 68,370 1,402 Schlumberger Ltd. 429,787 18,021 ------- 86,291 FOOD & AGRICULTURE 4.5% ------------------------------------------------------------------ Altria Group, Inc. 1,526,665 46,960 Archer-Daniels-Midland Co. 473,307 5,244 Campbell Soup Co. 300,709 6,625 The Coca-Cola Co. 1,832,519 74,034 Coca-Cola Enterprises, Inc. 331,239 6,456 ConAgra Foods, Inc. 393,804 8,270 o Del Monte Foods Co. 49 -- General Mills, Inc. 271,030 12,226 H.J. Heinz Co. 258,171 7,714 Hershey Foods Corp. 101,553 6,626 Kellogg Co. 306,527 10,036 McCormick & Co., Inc. 102,601 2,543 Monsanto Co. 193,398 3,365 The Pepsi Bottling Group, Inc. 204,342 4,197 PepsiCo, Inc. 1,277,094 55,273 Sara Lee Corp. 575,738 9,661 Supervalu, Inc. 98,901 1,629 Sysco Corp. 481,010 13,819 Wm. Wrigley Jr. Co. 166,311 9,432 ------- 284,110 GOLD 0.1% ------------------------------------------------------------------ Newmont Mining Corp. 297,251 8,032 HEALTHCARE / DRUGS & MEDICINE 14.7% ------------------------------------------------------------------ Abbott Laboratories 1,156,533 46,990 Allergan, Inc. 95,596 6,716 AmerisourceBergen Corp. 81,453 4,712 o Amgen, Inc. 950,939 58,302 o Anthem, Inc. 105,740 7,258 Bausch & Lomb, Inc. 39,537 1,390 Baxter International, Inc. 434,502 9,994 Becton Dickinson & Co. 188,676 6,679 o Biogen, Inc. 109,407 4,156 Biomet, Inc. 190,456 5,801 o Boston Scientific Corp. 306,666 13,202 Bristol-Myers Squibb Co. 1,428,708 36,489 C.R. Bard, Inc. 41,129 2,607 Cardinal Health, Inc. 336,074 18,578 o Chiron Corp. 138,078 5,638 Eli Lilly & Co. 830,027 52,972 o Forest Laboratories, Inc. 268,240 13,873 o Genzyme Corp. -- General Division 159,986 6,444 o Guidant Corp. 227,874 8,885 HCA, Inc. 379,822 12,192
See financial notes. 15 SCHWAB S&P 500 FUND -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Health Management Associates, Inc., Class A 176,129 3,005 o Humana, Inc. 124,343 1,374 IMS Health, Inc. 179,107 2,758 (7) Johnson & Johnson 2,194,256 123,668 o King Pharmaceuticals, Inc. 175,724 2,216 o Manor Care, Inc. 74,359 1,446 McKesson Corp. 212,583 5,897 o Medimmune, Inc. 185,581 6,546 Medtronic, Inc. 903,124 43,115 (10) Merck & Co., Inc. 1,659,642 96,558 (4) Pfizer, Inc. 5,888,511 181,072 o Quest Diagnostics 77,055 4,604 o Quintiles Transnational Corp. 88,081 1,238 Schering-Plough Corp. 1,081,484 19,575 o St. Jude Medical, Inc. 131,292 6,888 Stryker Corp. 146,297 9,803 o Tenet Healthcare Corp. 360,505 5,350 UnitedHealth Group, Inc. 224,583 20,691 o Watson Pharmaceuticals, Inc. 79,237 2,303 o WellPoint Health Networks, Inc. 111,422 8,461 Wyeth 980,382 42,676 o Zimmer Holdings, Inc. 142,292 6,674 ------- 918,796 HOUSEHOLD PRODUCTS 2.5% ------------------------------------------------------------------ Alberto-Culver Co., Class B 43,951 2,166 Avon Products, Inc. 173,527 10,094 Clorox Co. 165,110 7,466 Colgate-Palmolive Co. 398,239 22,767 The Gillette Co. 771,377 23,489 International Flavors & Fragrances, Inc. 69,728 2,216 Procter & Gamble Co. 955,013 85,808 ------- 154,006 INSURANCE 5.1% ------------------------------------------------------------------ ACE Ltd. 191,700 6,341 Aetna, Inc. 111,347 5,545 AFLAC, Inc. 381,064 12,465 The Allstate Corp. 519,300 19,624 AMBAC Financial Group, Inc. 79,954 4,665 (8) American International Group, Inc. 1,929,250 111,800 AON Corp. 228,426 5,062 Chubb Corp. 126,977 6,716 CIGNA Corp. 108,771 5,689 Cincinnati Financial Corp. 118,208 4,356 Hartford Financial Services Group, Inc. 190,767 7,776 Jefferson-Pilot Corp. 106,614 4,274 John Hancock Financial Services, Inc. 211,007 6,123 Lincoln National Corp. 129,597 4,142 Loews Corp. 138,787 5,728 Marsh & McLennan Cos., Inc. 396,020 18,882 MBIA, Inc. 105,893 4,733 Metlife, Inc. 515,018 14,796 MGIC Investment Corp. 73,579 3,345 Principal Financial Group, Inc. 246,724 7,180 The Progressive Corp. 168,868 11,483 Prudential Financial, Inc. 418,600 13,383 Safeco Corp. 100,621 3,875 St. Paul Cos., Inc. 166,394 5,714 Torchmark Corp. 86,710 3,360 Travelers Property Casualty Corp., Class B 741,599 12,051 UnumProvident Corp. 178,126 2,048 XL Capital Ltd., Class A 100,565 8,277 ------- 319,433 MEDIA 4.0% ------------------------------------------------------------------ o AOL Time Warner, Inc. 3,303,276 45,189 o Clear Channel Communications, Inc. 450,322 17,612 o Comcast Corp., Class A 1,705,510 54,423 Dow Jones & Co., Inc. 60,009 2,376 Gannett Co., Inc. 197,769 14,975 Knight-Ridder, Inc. 61,087 3,943 The McGraw-Hill Cos., Inc. 144,062 8,412 Meredith Corp. 35,218 1,522 New York Times Co., Class A 113,850 5,281 R.R. Donnelley & Sons Co. 83,996 1,693 Tribune Co. 226,639 11,101 o Viacom, Inc., Class B 1,302,069 56,523 The Walt Disney Co. 1,504,405 28,072 ------- 251,122
See financial notes. 16
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) MISCELLANEOUS FINANCE 7.5% ------------------------------------------------------------------ American Express Co. 972,181 36,807 The Bear Stearns Cos., Inc. 73,729 4,928 Capital One Financial Corp. 164,511 6,888 / The Charles Schwab Corp. 984,150 8,493 Charter One Financial, Inc. 165,453 4,806 (6) Citigroup, Inc. 3,798,439 149,089 Countrywide Financial Corp. 93,616 6,328 Fannie Mae 735,327 53,230 Federated Investors, Inc., Class B 81,300 2,219 Franklin Resources, Inc. 189,688 6,616 Freddie Mac 515,802 29,865 Goldman Sachs Group, Inc. 349,700 26,542 Janus Capital Group, Inc. 164,607 2,288 Lehman Brothers Holdings, Inc. 178,204 11,222 MBNA Corp. 943,593 17,834 Merrill Lynch & Co., Inc. 638,834 26,224 Morgan Stanley 799,139 35,762 SLM Corp. 114,561 12,831 T. Rowe Price Group, Inc. 91,307 2,787 Washington Mutual, Inc. 707,421 27,943 ------- 472,702 NON-FERROUS METALS 0.3% ------------------------------------------------------------------ Alcoa, Inc. 621,387 14,249 Engelhard Corp. 95,939 2,355 Freeport-McMoran Copper & Gold, Inc., Class B 117,615 2,036 o Phelps Dodge Corp. 63,480 1,980 ------ 20,620 OIL: DOMESTIC 0.8% ------------------------------------------------------------------ Amerada Hess Corp. 66,461 3,001 Ashland, Inc. 49,145 1,457 ConocoPhillips 501,648 25,233 Kerr-McGee Corp. 82,970 3,494 Marathon Oil Corp. 228,879 5,212 Sunoco, Inc. 55,502 2,065 Transocean, Inc. 235,599 4,488 Unocal Corp. 189,422 5,247 ------ 50,197 OIL: INTERNATIONAL 3.6% ------------------------------------------------------------------ ChevronTexaco Corp. 790,957 49,680 (5) Exxon Mobil Corp. 4,985,147 175,477 ------- 225,157 OPTICAL & PHOTO 0.1% ------------------------------------------------------------------ Eastman Kodak Co. 220,974 6,609 PAPER & FOREST PRODUCTS 0.8% ------------------------------------------------------------------ Boise Cascade Corp. 43,653 1,003 Georgia-Pacific Corp. 183,018 2,826 International Paper Co. 353,813 12,649 Kimberly-Clark Corp. 382,100 19,017 o Louisiana-Pacific Corp. 79,408 641 MeadWestvaco Corp. 147,777 3,486 Temple-Inland, Inc. 39,926 1,809 Weyerhaeuser Co. 163,297 8,098 ------ 49,529 PRODUCER GOODS & MANUFACTURING 5.2% ------------------------------------------------------------------ o American Standard Cos., Inc. 55,900 3,980 Avery Dennison Corp. 81,772 4,335 Caterpillar, Inc. 255,101 13,418 Cooper Industries Ltd., Class A 68,442 2,539 o Corning, Inc. 880,375 4,772 Deere & Co. 178,292 7,850 Dover Corp. 149,706 4,303 Emerson Electric Co. 313,181 15,878 =(1) General Electric Co. 7,354,170 216,580 Honeywell International, Inc. 632,280 14,922 Illinois Tool Works, Inc. 226,165 14,470 Ingersoll-Rand Co., Class A 124,964 5,508 Johnson Controls, Inc. 66,334 5,455 o Millipore Corp. 33,784 1,154 Pall Corp. 92,974 1,964 Parker Hannifin Corp. 87,418 3,556 Snap-On, Inc. 44,189 1,297 W.W. Grainger, Inc. 68,199 3,147 ------- 325,128 RAILROAD & SHIPPING 0.5% ------------------------------------------------------------------ Burlington Northern Santa Fe Corp. 276,477 7,786 CSX Corp. 159,740 5,108
See financial notes. 17 SCHWAB S&P 500 FUND -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Norfolk Southern Corp. 283,782 6,019 Union Pacific Corp. 189,337 11,269 ------- 30,182 REAL PROPERTY 0.4% ------------------------------------------------------------------ Apartment Investment & Management Co., Class A 68,500 2,587 Equity Office Properties Trust 301,506 7,830 Equity Residential 198,329 5,139 Plum Creek Timber Co., Inc. 134,500 3,128 Simon Property Group, Inc. 138,000 5,067 ------- 23,751 RETAIL 7.3% ------------------------------------------------------------------ Albertson's, Inc. 277,510 5,511 o AutoZone, Inc. 72,177 5,833 o Bed, Bath & Beyond, Inc. 217,687 8,601 o Best Buy Co., Inc. 238,472 8,246 o Big Lots, Inc. 87,567 1,096 Circuit City Stores, Inc. 158,574 909 o Costco Wholesale Corp. 337,933 11,703 CVS Corp. 286,727 6,942 Dillards, Inc., Class A 62,888 879 Dollar General Corp. 248,824 3,618 Family Dollar Stores, Inc. 124,990 4,273 o Federated Department Stores, Inc. 143,646 4,398 o The Gap, Inc. 652,336 10,848 Home Depot, Inc. 1,718,411 48,339 J.C. Penney Co., Inc. Holding Co. 198,906 3,393 o Kohl's Corp. 242,271 13,761 o Kroger Co. 566,385 8,099 Limited Brands, Inc. 385,598 5,607 Lowe's Cos., Inc. 576,019 25,282 The May Department Stores Co. 213,401 4,614 Nordstrom, Inc. 100,076 1,734 o Office Depot, Inc. 227,133 2,876 RadioShack Corp. 123,208 2,921 o Safeway, Inc. 323,777 5,381 Sears, Roebuck & Co. 231,260 6,554 o Staples, Inc. 349,342 6,651 Target Corp. 670,115 22,409 Tiffany & Co. 105,553 2,928 TJX Cos., Inc. 386,866 7,447 o Toys 'R' Us, Inc. 160,316 1,643 =(3) Wal-Mart Stores, Inc. 3,263,241 183,786 Walgreen Co. 756,444 23,344 Winn-Dixie Stores, Inc. 105,395 1,321 o Yum! Brands, Inc. 218,498 5,397 ------- 456,344 STEEL 0.1% ------------------------------------------------------------------ Allegheny Technologies, Inc. 60,584 252 Nucor Corp. 58,905 2,406 United States Steel Corp. 75,446 1,080 Worthington Industries, Inc. 61,657 828 ------- 4,566 TELEPHONE 3.8% ------------------------------------------------------------------ Alltel Corp. 228,668 10,715 AT&T Corp. 585,140 9,977 o AT&T Wireless Services, Inc. 2,019,732 13,048 o Avaya, Inc. 271,675 1,060 BellSouth Corp. 1,372,508 34,985 CenturyTel, Inc. 105,133 3,096 o Citizens Communications Co. 211,157 2,308 o Nextel Communications, Inc., Class A 758,771 11,222 o Qwest Communications International, Inc. 1,243,142 4,687 SBC Communications, Inc. 2,452,433 57,289 Scientific-Atlanta, Inc. 112,699 1,831 Sprint Corp. (FON Group) 660,155 7,598 o Sprint Corp. (PCS Group) 731,062 2,559 Verizon Communications, Inc. 2,034,622 76,054 ------- 236,429 TOBACCO 0.1% ------------------------------------------------------------------ R.J. Reynolds Tobacco Holdings, Inc. 63,900 1,800 UST, Inc. 125,374 3,928 ------- 5,728 TRAVEL & RECREATION 0.5% ------------------------------------------------------------------ Brunswick Corp. 66,972 1,462 Carnival Corp. 464,912 12,827
See financial notes. 18
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Harrah's Entertainment, Inc. 81,797 3,222 Hilton Hotels Corp. 278,497 3,710 Marriott International, Inc., Class A 174,134 6,253 Sabre Holdings Corp. 104,353 2,182 Starwood Hotels & Resorts Worldwide, Inc. 145,921 3,916 ------- 33,572 TRUCKING & FREIGHT 0.9% ------------------------------------------------------------------ Paccar, Inc. 86,970 5,080 Ryder Systems, Inc. 45,213 1,123 United Parcel Service, Inc., Class B 829,469 51,527 ------- 57,730 UTILITIES: ELECTRIC & GAS 2.8% ------------------------------------------------------------------ o The AES Corp. 402,890 2,421 Allegheny Energy, Inc. 93,242 774 Ameren Corp. 116,880 4,790 American Electric Power Co., Inc. 284,985 7,518 o Calpine Corp. 283,341 1,521 Centerpoint Energy, Inc. 226,615 1,790 Cinergy Corp. 125,058 4,269 CMS Energy Corp. 97,546 608 Consolidated Edison, Inc. 155,670 6,051 Constellation Energy Group, Inc. 120,786 3,537 Dominion Resources, Inc. 228,182 13,504 DTE Energy Co. 122,383 4,934 Duke Energy Corp. 657,512 11,566 Dynegy, Inc., Class A 266,551 1,173 o Edison International 242,577 3,539 El Paso Corp. 434,325 3,257 Entergy Corp. 166,608 7,766 Exelon Corp. 237,896 12,618 FirstEnergy Corp. 218,645 7,375 FPL Group, Inc. 135,198 8,229 KeySpan Corp. 114,365 3,874 Kinder Morgan, Inc. 88,839 4,177 o Mirant Corp. 300,463 994 Nicor, Inc. 31,789 956 NiSource, Inc. 183,455 3,467 Peoples Energy Corp. 27,820 1,081 o PG&E Corp. 297,120 4,451 Pinnacle West Capital Corp. 66,250 2,201 PPL Corp. 120,248 4,353 Progress Energy, Inc. 173,355 7,243 Public Service Enterprise Group, Inc. 162,439 6,249 Sempra Energy 157,481 4,227 The Southern Co. 524,855 15,268 TECO Energy, Inc. 127,169 1,372 Texas Genco Holdings, Inc. 58 1 TXU Corp. 235,850 4,698 Williams Cos., Inc. 390,973 2,717 Xcel Energy, Inc. 294,875 3,987 ------- 178,556 SHORT-TERM INVESTMENT 0.2% of investments Provident Institutional TempFund 10,974,034 10,974
SECURITY FACE VALUE RATE, MATURITY DATE ($ x 1,000) U.S. TREASURY OBLIGATIONS 0.0% of investments = U.S. Treasury Bills 1.08%-1.15%, 06/19/03 550 549
END OF PORTFOLIO HOLDINGS. For totals, please see the first page of holdings for this fund. See financial notes. 19 SCHWAB S&P 500 FUND -- Financials Statement of ASSETS AND LIABILITIES As of April 30, 2003; unaudited. All numbers x 1,000 except NAV. ASSETS - ------------------------------------------------------------------------ Investments, at market value (including $311,879 of securities on loan) $6,269,273 a Collateral held for securities on loan 321,409 Receivables: Fund shares sold 6,955 Interest 8 Dividends 6,608 Income from lending securities 13 Prepaid expenses + 47 ------------ TOTAL ASSETS 6,604,313 LIABILITIES - ------------------------------------------------------------------------ Collateral held for securities on loan 321,409 Payables: Fund shares redeemed 6,679 Investments bought 6,072 Investment adviser and administrator fees 103 Transfer agent and shareholder service fees 67 Accrued expenses + 610 ------------ TOTAL LIABILITIES 334,940 NET ASSETS - ------------------------------------------------------------------------ TOTAL ASSETS 6,604,313 TOTAL LIABILITIES - 334,940 ------------ NET ASSETS $6,269,373 NET ASSETS BY SOURCE Capital received from investors 7,639,909 Net investment income not yet distributed 28,227 Net realized capital losses (627,965) Net unrealized capital losses (770,798) b NET ASSET VALUE (NAV) SHARES SHARE CLASS NET ASSETS / OUTSTANDING = NAV Investor Shares $2,933,127 206,882 $14.18 Select Shares(R) $3,112,982 219,069 $14.21 e.Shares(R) $ 223,264 15,748 $14.18
a The fund paid $7,040,552 for these securities. Not counting short-term obligations and government securities, the fund paid $192,617 for securities during the report period and received $148,188 from securities it sold or that matured. b These derive from investments and futures. As of the report date, the fund had thirty-two open S&P 500 futures contracts due to expire on June 20, 2003, with a contract value of $7,329 and unrealized gains of $481. FEDERAL TAX DATA - ---------------------------------------------------- PORTFOLIO COST $ 7,132,787 NET UNREALIZED GAINS AND LOSSES: Gains $ 1,019,944 Losses + (1,883,458) -------------- ($ 863,514) AS OF OCTOBER 31, 2002: UNDISTRIBUTED EARNINGS: $ 75,064 Ordinary income Long-term capital gains $-- UNUSED CAPITAL LOSSES: Expires 10/31 of: Loss amount 2008 $ 26,504 2009 50,224 2010 + 401,760 -------------- $ 478,488
See financial notes. 20 Statement of OPERATIONS For November 1, 2002 through April 30, 2003; unaudited. All numbers x 1,000. INVESTMENT INCOME - ------------------------------------------------------------------------ Dividends $ 54,222 Interest 33 Lending of securities + 473 ------------ TOTAL INVESTMENT INCOME 54,728 NET REALIZED GAINS AND LOSSES - ------------------------------------------------------------------------ Net realized losses on investments sold (55,391) Net realized losses on futures contracts + (303) ------------ NET REALIZED LOSSES (55,694) NET UNREALIZED GAINS AND LOSSES - ------------------------------------------------------------------------ Net unrealized gains on investments 269,631 Net unrealized gains on futures contracts + 465 ------------ NET UNREALIZED GAINS 270,096 EXPENSES - ------------------------------------------------------------------------ Investment adviser and administrator fees 5,111 a Transfer agent and shareholder service fees: Investor Shares 3,441 b Select Shares(R) 1,479 b e.Shares(R) 107 b Trustees' fees 19 c Custodian fees 94 Portfolio accounting fees 461 Professional fees 28 Registration fees 54 Shareholder reports 366 Interest expense 8 Other expenses + 55 ------------ Total expenses 11,223 Expense reduction - 3,195 d ------------ NET EXPENSES 8,028 INCREASE IN NET ASSETS FROM OPERATIONS - ------------------------------------------------------------------------ TOTAL INVESTMENT INCOME 54,728 NET EXPENSES - 8,028 ------------ NET INVESTMENT INCOME 46,700 NET REALIZED LOSSES (55,694)e NET UNREALIZED GAINS + 270,096 e ------------ INCREASE IN NET ASSETS FROM OPERATIONS $ 261,102
a Calculated as a percentage of average daily net assets: 0.20% of the first $500 million and 0.17% of the assets beyond that. b Calculated as a percentage of average daily net assets: for transfer agent services, 0.05% of the fund's assets; for shareholder services, 0.20%, 0.05%, and 0.05% of the assets of each respective share class. c For the fund's independent trustees only. d Includes $855 from the investment adviser (CSIM) and $2,340 from the transfer agent and shareholder service agent (Schwab). These reductions reflect a guarantee by CSIM and Schwab to limit the operating expenses of this fund through at least February 29, 2004, as follows:
% OF AVERAGE SHARE CLASS DAILY NET ASSETS - --------------------------------------- Investor Shares 0.37 Select Shares 0.19 e.Shares 0.28
Prior to March 1, 2003, the limit was 0.35% for the Investor Shares. This limit doesn't include interest, taxes and certain non-routine expenses. e These add up to a net gain on investments of $214,402. See financial notes. 21 SCHWAB S&P 500 FUND -- Financials Statements of CHANGES IN NET ASSETS For the current and prior report periods. All numbers x 1,000. Figures for current period are unaudited.
OPERATIONS - -------------------------------------------------------------------------------- 11/1/02-4/30/03 11/1/01-10/31/02 Net investment income $ 46,700 $ 91,487 Net realized losses (55,694) (350,232) Net unrealized gains or losses + 270,096 (899,126) ----------------------------------- INCREASE OR DECREASE IN NET ASSETS FROM OPERATIONS 261,102 (1,157,871) DISTRIBUTIONS PAID - -------------------------------------------------------------------------------- Dividends from net investment income Investor Shares 40,628 33,227 Select Shares(R) 49,532 44,304 e.Shares(R) + 3,378 3,401 ----------------------------------- TOTAL DIVIDENDS FROM NET INVESTMENT INCOME $ 93,538 $ 80,932 a
TRANSACTIONS IN FUND SHARES - -------------------------------------------------------------------------------- 11/1/02-4/30/03 11/1/01-10/31/02 QUANTITY VALUE QUANTITY VALUE SHARES SOLD Investor Shares 23,478 $ 320,651 55,877 $ 908,494 Select Shares 26,179 357,604 69,223 1,121,910 e.Shares + 2,723 37,075 5,190 83,737 ----------- ------------- ------------ ------------ TOTAL SHARES SOLD 52,380 $ 715,330 130,290 $ 2,114,141 SHARES REINVESTED Investor Shares 2,972 $ 40,628 1,850 $ 31,991 Select Shares 3,615 49,532 2,314 40,073 e.Shares + 247 3,378 178 3,074 ----------- ------------- ------------ ------------ TOTAL SHARES REINVESTED 6,834 $ 93,538 4,342 $ 75,138 SHARES REDEEMED Investor Shares (19,744) ($267,757) (44,191) ($692,759) Select Shares (29,719) (405,173) (68,436) (1,061,022) e.Shares + (3,206) (43,492) (7,834) (123,864) ----------- ------------- ------------ ------------- TOTAL SHARES REDEEMED (52,669) ($716,422) (120,461) ($1,877,645) b NET INCREASE 6,545 $ 92,446 14,171 $ 311,634
SHARES OUTSTANDING AND NET ASSETS - -------------------------------------------------------------------------------- 11/1/02-4/30/03 11/1/01-10/31/02 SHARES NET ASSETS SHARES NET ASSETS Beginning of period 435,154 $6,009,363 420,983 $ 6,936,532 Total increase or decrease + 6,545 260,010 14,171 (927,169)c ------------------------------------------------------ END OF PERIOD 441,699 $6,269,373 435,15 $6,009,363 d
a The tax-basis components of distributions paid for the prior period are: Ordinary Income $80,932 Long-term capital gains $ --
b Dollar amounts are net of proceeds received from early withdrawal fees the fund charges on shares sold 180 days or less after buying them. CURRENT PERIOD Investor Shares $ 107 Select Shares 183 e.Shares + 13 ---------- TOTAL $ 303 PRIOR PERIOD Investor Shares $ 423 Select Shares 438 e.Shares + 28 ---------- TOTAL $ 889
c Figures for shares represent shares sold plus shares reinvested, minus shares redeemed. Figures for net assets represent the changes in net assets from operations plus the changes in value of transactions in fund shares, minus distributions paid. d Includes net investment income not yet distributed in the amount of $28,227 and $75,065 for the current period and the prior period, respectively. Percent of fund shares owned by other SchwabFunds(R) as of the end of the current period: SCHWAB MARKETTRACK PORTFOLIOS(R) All Equity Portfolio 2.5% Growth Portfolio 1.9% Balanced Portfolio 1.3% Conservative Portfolio 0.7%
See financial notes. 22 SCHWAB 1000 FUND(R) PERFORMANCE as of 4/30/03: Investor Shares PRE- AND POST-TAX AVERAGE ANNUAL TOTAL RETURNS 1,2 This bar chart compares pre-tax performance of the fund's Investor Shares with the Schwab 1000 Index(R) and the Morningstar Large-Cap Blend Fund category. The table below the chart shows two types of after-tax returns. [BAR CHART]
INVESTOR SCHWAB 1000 CATEGORY SHARES INDEX AVERAGE 6 MONTHS 4.41% 4.55% 3.31% 1 YEAR -13.45% -13.23% -14.72% 5 YEARS -2.29% -2.04% -3.05% 10 YEARS 9.27% 9.69% 8.06%
6 MONTHS 1 YEAR 5 YEARS 10 YEARS -------- ------- -------- -------- INVESTOR CATEGORY INVESTOR CATEGORY INVESTOR CATEGORY INVESTOR CATEGORY TOTAL RETURNS AFTER TAX SHARES AVERAGE SHARES AVERAGE SHARES AVERAGE SHARES AVERAGE - ----------------------------------------------------------------------------------------------------------------------------------- PRE-LIQUIDATION (still own shares) 3.90% 1.05% -13.87% -16.49% -2.61% -4.40% 8.75% 5.96% - ----------------------------------------------------------------------------------------------------------------------------------- POST-LIQUIDATION (shares were sold) 2.73% 0.75% -8.41% -10.00% -1.95% -2.60% 7.59% 6.06% - -----------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE OF A $10,000 INVESTMENT 2 This graph shows performance over ten years of a hypothetical $10,000 investment in the fund's Investor Shares, compared with a similar investment in two indices: the Schwab 1000 Index and the S&P 500(R) Index. $24,270 INVESTOR SHARES $25,237 SCHWAB 1000 INDEX $25,137 S&P 500 INDEX [LINE GRAPH]
INVESTOR Schwab 1000 S&P 500 SHARES Index Index 30-Apr-93 10000 10000 10000 May-93 10290 10297 10268 Jun-93 10339 10350 10298 Jul-93 10297 10323 10256 Aug-93 10689 10723 10645 Sep-93 10656 10692 10563 Oct-93 10807 10851 10782 Nov-93 10656 10699 10680 Dec-93 10845 10888 10809 Jan-94 11174 11234 11176 Feb-94 10887 10952 10873 Mar-94 10406 10466 10400 Apr-94 10524 10590 10534 May-94 10651 10719 10705 Jun-94 10363 10433 10443 Jul-94 10696 10775 10785 Aug-94 11147 11243 11227 Sep-94 10892 10987 10953 Oct-94 11105 11201 11198 Nov-94 10705 10800 10790 Dec-94 10833 10941 10950 Jan-95 11109 11222 11234 Feb-95 11549 11683 11671 Mar-95 11850 11996 12015 Apr-95 12143 12299 12368 May-95 12583 12754 12862 Jun-95 12919 13105 13160 Jul-95 13410 13598 13596 Aug-95 13513 13705 13630 Sep-95 14048 14265 14205 Oct-95 13979 14193 14154 Nov-95 14582 14819 14774 Dec-95 14799 15040 15059 Jan-96 15236 15497 15571 Feb-96 15462 15727 15716 Mar-96 15602 15879 15866 Apr-96 15865 16149 16100 May-96 16240 16540 16513 Jun-96 16196 16513 16576 Jul-96 15427 15730 15844 Aug-96 15847 16154 16178 Sep-96 16729 17059 17087 Oct-96 17070 17404 17559 Nov-96 18302 18664 18886 Dec-96 17992 18361 18512 Jan-97 19027 19424 19667 Feb-97 19098 19493 19823 Mar-97 18248 18642 19010 Apr-97 19230 19626 20143 May-97 20451 20894 21367 Jun-97 21300 21777 22325 Jul-97 23025 23536 24100 Aug-97 21919 22424 22750 Sep-97 23096 23629 23994 Oct-97 22335 22853 23193 Nov-97 23272 23828 24267 Dec-97 23735 24305 24684 Jan-98 23905 24492 24958 Feb-98 25665 26318 26758 Mar-98 26970 27681 28128 Apr-98 27247 27983 28412 May-98 26648 27372 27923 Jun-98 27720 28470 29057 Jul-98 27336 28073 28749 Aug-98 23252 23881 24597 Sep-98 24753 25443 26174 Oct-98 26719 27499 28302 Nov-98 28381 29216 30017 Dec-98 30181 31066 31746 Jan-99 31325 32246 33073 Feb-99 30271 31198 32045 Mar-99 31486 32441 33326 Apr-99 32765 33780 34616 May-99 32009 33009 33799 Jun-99 33603 34680 35675 Jul-99 32532 33574 34562 Aug-99 32217 33299 34389 Sep-99 31360 32309 33447 Oct-99 33433 34489 35564 Nov-99 34243 35294 36287 Dec-99 36520 37659 38424 Jan-00 34806 35905 36495 Feb-00 34815 35951 35804 Mar-00 37825 39079 39306 Apr-00 36402 37611 38123 May-00 35450 36632 37341 Jun-00 36402 37635 38264 Jul-00 35867 37058 37667 Aug-00 38296 39577 40006 Sep-00 36528 37749 37894 Oct-00 36220 37448 37735 Nov-00 33129 34256 34761 Dec-00 33520 34654 34932 Jan-01 34660 35808 36172 Feb-01 31448 32491 32873 Mar-01 29304 30280 30789 Apr-01 31695 32768 33181 May-01 31896 32983 33403 Jun-01 31193 32263 32592 Jul-01 30773 31841 32272 Aug-01 28811 29821 30252 Sep-01 26393 27322 27808 Oct-01 26986 27945 28339 Nov-01 29048 30086 30512 Dec-01 29412 30472 30781 Jan-02 29071 30125 30331 Feb-02 28510 29553 29746 Mar-02 29651 30746 30865 Apr-02 28040 29084 28994 May-02 27773 28812 28780 Jun-02 25766 26730 26730 Jul-02 23833 24729 24648 Aug-02 23981 24889 24808 Sep-02 21486 22303 22112 Oct-02 23244 24140 24058 Nov-02 24588 25539 25475 Dec-02 23179 24079 23979 Jan-03 22600 23491 23351 Feb-03 22228 23109 23001 Mar-03 22479 23370 23224 30-Apr-03 24270 25237 25137
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. The fund's share price and principal values change, and when you sell your shares, they may be worth more or less than what you paid for them. Past performance does not indicate future results. Results for the report period are not annualized. 1 The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 4/30/03 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor's situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. As of 4/30/03, the total number of funds in the Morningstar Large-Cap Blend Fund category for the six-month, one-, five- and ten-year periods was 1,410, 1,362, 711 and 215, respectively. These funds may or may not use tax-efficient strategies. 2 Fund returns reflect expense reductions by the fund's investment adviser (CSIM) and Schwab. Without these reductions, the fund's returns would have been lower. Schwab Equity Index Funds 23 SCHWAB 1000 FUND(R) Select Shares(R) PRE- AND POST-TAX AVERAGE ANNUAL TOTAL RETURNS 1, 2 This bar chart compares pre-tax performance of the fund's Select Shares with the Schwab 1000 Index(R) and the Morningstar Large-Cap Blend Fund category. The table below the chart shows two types of after-tax returns. [BAR CHART]
SELECT SHARES SCHWAB 1000 INDEX CATEGORY AVERAGE 6 MONTH 4.46% 4.55% 3.31% 1 YEAR -13.37% -13.23% -14.72% 5 YEARS -2.17% -2.04% -3.05% Since Inception:5/9/97 3.41% 3.59% n/a
6 MONTHS 1 YEAR 5 YEARS SINCE INCEPTION -------- ------ ------- --------------- TOTAL RETURNS AFTER TAX SELECT CATEGORY SELECT CATEGORY SELECT CATEGORY SELECT CATEGORY SHARES AVERAGE SHARES AVERAGE SHARES AVERAGE SHARES AVERAGE - ------------------------------------------------------------------------------------------------------------------------------------ PRE-LIQUIDATION (still own shares) 3.90% 1.05% -13.84% -16.49% -2.54% -4.40% 3.00% -- - ------------------------------------------------------------------------------------------------------------------------------------ POST-LIQUIDATION (shares were sold) 2.76% 0.75% -8.37% -10.00% -1.88% -2.60% 2.58% -- - ------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE OF A $50,000 INVESTMENT(2) This graph shows performance since inception of a hypothetical $50,000 investment (the minimum investment for this share class) in the fund's Select Shares, compared with a similar investment in two indices: the Schwab 1000 Index and the S&P 500(R) Index. $61,025 SELECT SHARES $61,676 SCHWAB 1000 INDEX $59,916 S&P 500 INDEX [LINE GRAPH]
SELECT SCHWAB 1000 S&P 500 Shares Index Index 19-May-97 50000 50000 50000 May-97 51040 51064 50930 Jun-97 53180 53222 53212 Jul-97 57490 57518 57442 Aug-97 54750 54801 54225 Sep-97 57685 57746 57191 Oct-97 55785 55851 55281 Nov-97 58150 58233 57841 Dec-97 59325 59398 58836 Jan-98 59725 59855 59489 Feb-98 64145 64318 63778 Mar-98 67405 67648 67043 Apr-98 68100 68387 67720 May-98 66625 66893 66556 Jun-98 69305 69578 69258 Jul-98 68345 68606 68524 Aug-98 58140 58362 58629 Sep-98 61915 62179 62387 Oct-98 66825 67206 67459 Nov-98 71000 71400 71547 Dec-98 75505 75922 75668 Jan-99 78385 78805 78831 Feb-99 75750 76244 76379 Mar-99 78795 79282 79434 Apr-99 82015 82553 82509 May-99 80120 80671 80561 Jun-99 84110 84753 85033 Jul-99 81450 82052 82380 Aug-99 80665 81380 81968 Sep-99 78545 78960 79721 Oct-99 83725 84287 84767 Nov-99 85755 86255 86491 Dec-99 91470 92034 91585 Jan-00 87180 87747 86987 Feb-00 87225 87861 85341 Mar-00 94765 95504 93687 Apr-00 91200 91917 90867 May-00 88835 89525 89004 Jun-00 91220 91977 91203 Jul-00 89905 90566 89780 Aug-00 95990 96722 95356 Sep-00 91585 92255 90322 Oct-00 90810 91519 89942 Nov-00 83065 83717 82855 Dec-00 84050 84689 83261 Jan-01 86935 87511 86217 Feb-01 78875 79404 78354 Mar-01 73515 74002 73386 Apr-01 79515 80081 79088 May-01 80020 80608 79618 Jun-01 78280 78847 77683 Jul-01 77225 77815 76922 Aug-01 72325 72879 72107 Sep-01 66255 66771 66280 Oct-01 67745 68296 67546 Nov-01 72920 73526 72727 Dec-01 73845 74470 73367 Jan-02 72990 73622 72296 Feb-02 71600 72223 70901 Mar-02 74445 75140 73567 Apr-02 70445 71078 69108 May-02 69775 70413 68597 Jun-02 64710 65326 63713 Jul-02 59875 60436 58750 Aug-02 60245 60827 59132 Sep-02 53980 54506 52704 Oct-02 58420 58995 57342 Nov-02 61795 62414 60719 Dec-02 58255 58846 57155 Jan-03 56805 57410 55658 Feb-03 55865 56475 54823 Mar-03 56500 57115 55355 30-Apr-03 61025 61676 59916
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. The fund's share price and principal values change, and when you sell your shares, they may be worth more or less than what you paid for them. Past performance does not indicate future results. Results for the report period are not annualized. 1 The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 4/30/03 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor's situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. As of 4/30/03, the total number of funds in the Morningstar Large-Cap Blend Fund category for the six-month, one-and five-year periods was 1,410, 1,362 and 711, respectively. These funds may or may not use tax-efficient strategies. 2 Fund returns reflect expense reductions by the fund's investment adviser (CSIM) and Schwab. Without these reductions, the fund's returns would have been lower. Schwab Equity Index Funds 24 SCHWAB 1000 FUND(R) FUND FACTS as of 4/30/03 FUND CATEGORY 1 [GRAPHIC]
INVESTMENT STYLE 1 MARKET CAP Value Blend Growth Large / / /X/ / / Medium / / / / / / Small / / / / / /
STATISTICS NUMBER OF HOLDINGS 998 - ----------------------------------------------------- MEDIAN MARKET CAP ($ x 1,000,000) $36,905 - ----------------------------------------------------- PRICE/EARNINGS RATIO (P/E) 24.4 - ----------------------------------------------------- PRICE/BOOK RATIO (P/B) 4.4 - ----------------------------------------------------- PORTFOLIO TURNOVER RATE 2 5% - ----------------------------------------------------- EXPENSE RATIO 3 Investor Shares 0.51% Select Shares(R) 0.36% - -----------------------------------------------------
TOP HOLDINGS 4
% OF SECURITY INVESTMENTS - ----------------------------------------------------- (1) GENERAL ELECTRIC CO. 3.1% - ---------------------------------------------------- (2) MICROSOFT CORP. 2.9% - ---------------------------------------------------- (3) WAL-MART STORES, INC. 2.6% - ---------------------------------------------------- (4) PFIZER, INC. 2.6% - ---------------------------------------------------- (5) EXXON MOBIL CORP. 2.5% - ---------------------------------------------------- (6) CITIGROUP, INC. 2.1% - ---------------------------------------------------- (7) JOHNSON & JOHNSON 1.7% - ---------------------------------------------------- (8) AMERICAN INTERNATIONAL GROUP, INC. 1.6% - ---------------------------------------------------- (9) INTERNATIONAL BUSINESS MACHINES CORP. 1.5% - ---------------------------------------------------- (10) MERCK & CO., INC. 1.4% - ---------------------------------------------------- TOTAL 22.0%
INDUSTRY WEIGHTINGS This chart shows the fund's industry composition as of the report date. [PIE CHART] 14.3% HEALTHCARE/DRUGS & MEDICINE 8.7% BUSINESS MACHINES & SOFTWARE 8.3% MISCELLANEOUS FINANCE 7.9% BANKS 6.9% RETAIL 4.9% MEDIA 4.7% PRODUCER GOODS & MANUFACTURING 4.7% INSURANCE 4.4% FOOD & AGRICULTURE 35.2% OTHER
1 Source: Morningstar, Inc. This style assessment is the result of comparing the fund with the S&P 500(R) Index, based on P/E, P/B and median market cap. The assessment reflects the fund's portfolio as of 4/30/03, which may have changed since then, and is not a precise indication of risk or performance--past, present or future. 2 Not annualized. 3 Guaranteed by Schwab and the investment adviser through 2/29/04 (excluding interest, taxes and certain non-routine expenses). 4 This list is not a recommendation of any security by the investment adviser. Portfolio holdings may have changed since the report date. Schwab Equity Index Funds 25 SCHWAB 1000 FUND(R) -- Financials Financial Tables These tables provide additional data on the fund's performance, portfolio holdings and business operations. Complementing the tables is the financial notes section at the end of this report, which describes the fund's business structure, accounting practices and other matters. Because this is a semiannual report, information for the current report period is unaudited. Look online at WWW.SCHWAB.COM/SCHWABFUNDS/HOW2READ for guides that are designed to help you read the financial tables in any SchwabFunds(R) shareholder report. FINANCIAL HIGHLIGHTS
11/1/02- 11/1/01- 11/1/00- 11/1/99- 11/1/98- 11/1/97- INVESTOR SHARES 4/30/03 10/31/02 10/31/01 10/31/00 10/31/99 10/31/98 - -------------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) - -------------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 25.25 29.57 39.95 37.12 29.90 25.25 ----------------------------------------------------------- Income or loss from investment operations: Net investment income 0.16 0.31 0.26 0.26 0.26 0.27 Net realized and unrealized gains or losses 0.94 (4.36) (10.40) 2.83 7.21 4.64 ----------------------------------------------------------- Total income or loss from investment operations 1.10 (4.05) (10.14) 3.09 7.47 4.91 Less distributions: Dividends from net investment income (0.32) (0.27) (0.24) (0.26) (0.25) (0.26) ----------------------------------------------------------- Net asset value at end of period 26.03 25.25 29.57 39.95 37.12 29.90 ----------------------------------------------------------- Total return (%) 4.41 2 (13.87) (25.50) 8.34 25.12 19.63 RATIOS/SUPPLEMENTAL DATA (%) - -------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.48 3 0.46 0.46 0.46 1 0.46 0.46 Expense reductions reflected in above ratio 0.04 3 0.06 0.05 0.04 0.05 0.05 Ratio of net investment income to average net assets 1.32 3 1.04 0.78 0.63 0.78 1.02 Portfolio turnover rate 5 2 9 8 9 3 2 Net assets, end of period ($ x 1,000,000) 3,371 3,223 3,852 5,083 4,925 3,657
1 Would have been 0.47% if certain non-routine expenses (proxy fees) had been included. 2 Not annualized. 3 Annualized. See financial notes. 26
11/1/02- 11/1/01- 11/1/00- 11/1/99- 11/1/98- 11/1/97- SELECT SHARES(R) 4/30/03 10/31/02 10/31/01 10/31/00 10/31/99 10/31/98 - ---------------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) - ---------------------------------------------------------------------------------------------------------------- Net asset valueat beginning of period 25.26 29.58 39.98 37.16 29.93 25.26 ------------------------------------------------------------- Income or loss from investment operations: Net investment income 0.18 0.35 0.31 0.29 0.30 0.32 Net realized and unrealized gains or losses 0.93 (4.36) (10.41) 2.84 7.22 4.63 ------------------------------------------------------------- Total income or loss from investment operations 1.11 (4.01) (10.10) 3.13 7.52 4.95 Less distributions: Dividends from net investment income (0.35) (0.31) (0.30) (0.31) (0.29) (0.28) ------------------------------------------------------------- Net asset value at end of period 26.02 25.26 29.58 39.98 37.16 29.93 ------------------------------------------------------------- Total return (%) 4.46 2 (13.77) (25.40) 8.46 25.29 19.79 RATIOS/SUPPLEMENTAL DATA (%) - ---------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.35 3 0.35 0.35 0.35 1 0.35 0.35 Expense reductions reflected in above ratio 0.02 3 0.02 0.01 -- 0.02 0.04 Ratio of net investment income to average net assets 1.44 3 1.15 0.89 0.74 0.89 1.11 Portfolio turnover rate 5 2 9 8 9 3 2 Net assets, end of period ($ x 1,000,000) 1,692 1,588 1,911 2,159 2,214 1,041
1 Would have been 0.36% if certain non-routine expenses (proxy fees) had been included. 2 Not annualized. 3 Annualized. See financial notes. 27 SCHWAB 1000 FUND(R) -- Financials PORTFOLIO HOLDINGS as of April 30, 2003, unaudited This section shows all the securities in the fund's portfolio and their market value, as of the report date. We use the symbols below to designate certain characteristics. With the top ten holdings, the number in the circle is the security's rank among the top ten. (1) Top ten holding o Non-income producing security = Collateral for open futures contracts / Issuer is affiliated with the fund's adviser ~ Security is valued at fair value (see Accounting Policies)
COST MARKET VALUE HOLDINGS BY CATEGORY ($ x 1,000) ($ x 1,000) - ----------------------------------------------------------------------------- 99.9% COMMON STOCK 3,846,418 5,055,387 0.1% SHORT-TERM INVESTMENT 6,931 6,931 0.0% U.S. TREASURY OBLIGATION 369 369 0.0% WARRANTS -- -- - ----------------------------------------------------------------------------- 100.0% TOTAL INVESTMENTS 3,853,718 5,062,687
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) COMMON STOCK 99.9% of investments AEROSPACE / DEFENSE 1.4% The Boeing Co. 444,182 12,117 Crane Co. 31,050 607 General Dynamics Corp. 106,400 6,604 Goodrich Corp. 61,892 871 Lockheed Martin Corp. 241,584 12,091 Northrop Grumman Corp. 96,597 8,496 Raytheon Co. 223,000 6,674 Rockwell Automation, Inc. 98,600 2,248 Rockwell Collins, Inc. 95,100 2,033 Textron, Inc. 71,400 2,106 United Technologies Corp. 248,427 15,355 ----------- 69,202 AIR TRANSPORTATION 0.3% ---------------------------------------------------------------------- Delta Air Lines, Inc. 64,200 821 FedEx Corp. 157,160 9,411 Southwest Airlines Co. 408,225 6,515 ----------- 16,747 ALCOHOLIC BEVERAGES 0.5% ---------------------------------------------------------------------- Adolph Coors Co., Class B 18,800 1,006 Anheuser-Busch Cos., Inc. 453,600 22,626 Brown-Forman Corp., Class B 31,578 2,417 o Constellation Brands, Inc., Class A 47,000 1,260 ----------- 27,309 APPAREL 0.5% ---------------------------------------------------------------------- o Abercrombie & Fitch Co., Class A 50,700 1,667 o Chico's FAS, Inc. 44,200 1,076 o Coach, Inc. 48,164 2,096 Foot Locker, Inc. 73,400 807 o Jones Apparel Group, Inc. 67,100 1,914 Liz Claiborne, Inc. 58,000 1,887 Nike, Inc., Class B 139,900 7,489 o Polo Ralph Lauren Corp. 23,300 546 o Reebok International Ltd. 31,200 969 Talbots, Inc. 30,000 859 o Timberland Co., Class A 19,100 955 VF Corp. 58,600 2,305 ----------- 22,570 AUTOMOTIVE PRODUCTS / MOTOR VEHICLES 1.3% ---------------------------------------------------------------------- o Advance Auto Parts, Inc. 18,600 925 o American Axle & Manufacturing Holdings, Inc. 25,900 646 ArvinMeritor, Inc. 35,400 560 o Autonation, Inc. 162,600 2,252 BorgWarner, Inc. 14,000 821 Carlisle Cos., Inc. 16,000 726 o Carmax, Inc. 53,600 1,134 Cooper Tire & Rubber Co. 38,300 539 o Copart, Inc. 48,000 405 Cummins, Inc. 21,600 586 Dana Corp. 77,189 717 Danaher Corp. 81,200 5,601 Delphi Corp. 295,400 2,481 Donaldson Co., Inc. 22,900 914 Eaton Corp. 37,700 3,094 Ford Motor Co. 970,670 9,998 General Motors Corp. 295,934 10,668
See financial notes. 28
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o General Motors Corp., Class H 505,194 5,961 Genuine Parts Co. 92,775 2,966 Goodyear Tire & Rubber Co. 91,200 522 Harley-Davidson, Inc. 159,300 7,079 o Lear Corp. 34,200 1,359 o Navistar International Corp. 35,500 991 o O'Reilly Automotive, Inc. 27,800 825 Oshkosh Truck Corp. 8,900 498 Polaris Industries, Inc. 11,900 629 o SPX Corp. 43,800 1,481 Superior Industries International, Inc. 14,400 570 ----------- 64,948 BANKS 7.9% ---------------------------------------------------------------------- AmSouth Bancorp. 186,875 3,934 Associated Banc-Corp. 38,825 1,357 Bancorpsouth, Inc. 40,800 820 Bank of America Corp. 795,322 58,894 Bank of Hawaii Corp. 33,750 1,112 The Bank of New York Co., Inc. 404,100 10,688 Bank One Corp. 616,093 22,210 Banknorth Group, Inc. 85,800 2,049 BB&T Corp. 251,000 8,183 Citizens Banking Corp. 23,000 528 City National Corp. 26,000 1,070 The Colonial BancGroup, Inc. 64,400 820 Comerica, Inc. 92,774 4,037 Commerce Bancorp, Inc. N.J. 35,100 1,428 Commerce Bancshares, Inc. 34,848 1,319 Community First Bankshares, Inc. 20,400 549 Compass Bancshares, Inc. 68,112 2,297 Cullen/Frost Bankers, Inc. 26,500 869 Fifth Third Bancorp 304,930 15,030 First Citizens BancShares, Inc., Class A 6,000 584 First Midwest Bancorp, Inc. 25,700 712 First Tennessee National Corp. 66,200 2,900 First Virginia Banks, Inc. 42,287 1,727 FirstMerit Corp. 44,000 902 FleetBoston Financial Corp. 553,815 14,687 FNB Corp. 22,800 694 Fulton Financial Corp. 55,388 1,104 Golden West Financial Corp. 81,900 6,177 GreenPoint Financial Corp. 51,800 2,474 Hibernia Corp., Class A 82,000 1,486 Hudson City Bancorp, Inc. 102,500 2,375 Hudson United Bancorp 23,500 784 Huntington Bancshares, Inc. 122,435 2,383 Independence Community Bank 29,700 777 J.P. Morgan Chase & Co. 1,054,590 30,952 KeyCorp, Inc. 222,946 5,375 M&T Bank Corp. 63,801 5,389 Marshall & Ilsley Corp. 115,470 3,397 Mellon Financial Corp. 226,088 5,980 Mercantile Bankshares Corp. 35,775 1,372 National City Corp. 323,400 9,689 National Commerce Financial Corp. 106,650 2,169 New York Community Bancorp., Inc. 55,800 1,937 North Fork Bancorp., Inc. 85,900 2,780 Northern Trust Corp. 116,850 4,101 Old National Bancorp. 32,962 719 Park National Corp. 7,100 699 Peoples Bank-Bridgeport 32,000 843 PNC Financial Services Group, Inc. 149,730 6,573 Popular, Inc. 70,800 2,587 Provident Financial Group, Inc. 25,400 601 o Providian Financial Corp. 150,400 1,108 Regions Financial Corp. 116,965 3,943 Roslyn Bancorp., Inc. 43,050 821 Sky Financial Group, Inc. 45,530 918 SouthTrust Corp. 182,474 4,901 State Street Corp. 176,100 6,169 SunTrust Banks, Inc. 149,456 8,552 Synovus Financial Corp. 159,662 3,109 Transatlantic Holdings, Inc. 27,300 1,856 Trustmark Corp. 32,000 787 U.S. Bancorp 1,011,753 22,410 Union Planters Corp. 105,000 2,997 UnionBanCal Corp. 80,200 3,240 United Bankshares, Inc. 21,900 633 Valley National Bancorp 49,600 1,312 Wachovia Corp. 720,020 27,512 Wells Fargo & Co. 894,932 43,189 Westamerica Bancorp. 17,400 750
See financial notes. 29 SCHWAB 1000 FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Whitney Holding Corp. 20,900 706 Wilmington Trust Corp. 34,000 915 Zions Bancorp. 47,300 2,330 ----------- 400,281 BUSINESS MACHINES & SOFTWARE 8.7% ---------------------------------------------------------------------- o 3Com Corp. 191,150 994 Adobe Systems, Inc. 122,800 4,244 o Apple Computer, Inc. 189,600 2,692 Autodesk, Inc. 58,700 913 o BMC Software, Inc. 122,400 1,826 o CACI International, Inc., Class A 14,800 517 o Cisco Systems, Inc. 3,777,800 56,818 o Compuware Corp. 196,600 863 o Comverse Technology, Inc. 97,600 1,276 o Dell Computer Corp. 1,364,300 39,442 Diebold, Inc. 37,418 1,496 o EMC Corp. 1,158,600 10,532 Fair Isaac Corp. 26,350 1,372 o Gateway, Inc. 168,600 486 Hewlett-Packard Co. 1,614,540 26,317 IKON Office Solutions, Inc. 75,000 582 o Ingram Micro, Inc., Class A 78,400 784 (9) International Business Machines Corp. 894,000 75,901 o Juniper Networks, Inc. 198,600 2,030 o Lexmark International, Inc., Class A 67,400 5,022 o Maxtor Corp. 125,500 690 Microchip Technology, Inc. 105,700 2,198 =(2) Microsoft Corp. 5,660,300 144,734 o NCR Corp. 50,651 1,110 o Network Appliance, Inc. 178,600 2,372 o Novell, Inc. 189,600 521 o Novellus Systems, Inc. 79,400 2,226 o Oracle Corp. 2,803,614 33,307 Pitney Bowes, Inc. 125,100 4,392 ~o Seagate Escrow Security 126,560 36 o Storage Technology Corp. 57,300 1,416 o Sun Microsystems, Inc. 1,689,900 5,577 o Sybase, Inc. 49,300 631 o Tech Data Corp. 29,400 706 Total System Services, Inc. 102,400 1,894 o Unisys Corp. 173,650 1,806 o Xerox Corp. 387,250 3,818 ----------- 441,541 BUSINESS SERVICES 3.9% ---------------------------------------------------------------------- o Affiliated Computer Services, Inc., Class A 70,700 3,372 o Allied Waste Industries, Inc. 110,065 914 o Apollo Group, Inc., Class A 92,750 5,027 Automatic Data Processing, Inc. 315,900 10,624 o BEA Systems, Inc. 213,400 2,286 o BearingPoint, Inc. 98,600 806 o Career Education Corp. 24,000 1,443 o CDW Computer Centers, Inc. 43,700 1,863 o Cendant Corp. 541,648 7,735 o Ceridian Corp. 77,100 1,076 o Cerner Corp. 18,500 370 o Certegy, Inc. 34,600 865 o Checkfree Corp. 41,000 1,130 o ChoicePoint, Inc. 44,166 1,558 Cintas Corp. 90,400 3,245 o Citrix Systems, Inc. 88,900 1,686 Computer Associates International, Inc. 301,279 4,893 o Computer Sciences Corp. 98,696 3,252 o Concord EFS, Inc. 267,924 3,705 o Convergys Corp. 90,200 1,463 o Corinthian Colleges, Inc. 22,600 1,035 o Corporate Executive Board Co. 19,400 795 o D&B Corp. 38,700 1,463 Deluxe Corp. 32,200 1,417 o DeVry, Inc. 36,400 842 o DST Systems, Inc. 64,100 1,968 o eBay, Inc. 164,500 15,261 o Education Management Corp. 18,400 898 Electronic Data Systems Corp. 250,000 4,537 Equifax, Inc. 75,900 1,760 First Data Corp. 397,604 15,598 o Fiserv, Inc. 101,589 2,991 Global Payments, Inc. 19,200 595 o GTECH Holdings Corp. 29,600 997 H&R Block, Inc. 93,900 3,626 o Interactive Data Corp. 47,700 763 Interpublic Group of Cos., Inc. 200,650 2,287 o Intuit, Inc. 108,800 4,219
See financial notes. 30
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Iron Mountain, Inc. 44,200 1,761 o ITT Educational Services, Inc. 23,700 699 o J.D. Edwards & Co. 62,000 743 Jack Henry & Associates, Inc. 45,500 593 o Jacobs Engineering Group, Inc. 30,200 1,243 o Lamar Advertising Co. 44,300 1,591 Manpower, Inc. 39,800 1,309 o Mercury Interactive Corp. 44,000 1,493 Moody's Corp. 80,500 3,887 o National Instruments Corp. 26,600 853 o Network Associates, Inc. 81,400 930 Omnicom Group, Inc. 99,900 6,184 o Overture Services, Inc. 30,400 325 Paychex, Inc. 197,642 6,155 o PeopleSoft, Inc. 165,200 2,483 o Peregrine Systems, Inc. 102,600 29 o Perot Systems Corp., Class A 56,400 599 o Pixar, Inc. 26,800 1,565 o QLogic Corp. 48,700 2,142 The Reynolds & Reynolds Co., Class A 36,200 1,043 o Robert Half International, Inc. 90,200 1,468 o Sandisk Corp. 35,900 869 SEI Investments Co. 55,100 1,451 The ServiceMaster Co. 156,800 1,419 o Siebel Systems, Inc. 252,000 2,185 Sonoco Products Co. 50,141 1,096 o Stericycle, Inc. 21,700 853 o Sungard Data Systems, Inc. 149,200 3,208 o Symantec Corp. 77,500 3,406 o Synopsys, Inc. 39,300 1,912 o Thermo Electron Corp. 86,984 1,580 o TMP Worldwide, Inc. 57,900 971 o VeriSign, Inc. 123,335 1,532 o Veritas Software Corp. 216,379 4,762 Viad Corp. 45,900 923 Waste Management, Inc. 318,475 6,917 o Yahoo!, Inc. 311,200 7,712 ---------- 196,256 CHEMICAL 2.0% ---------------------------------------------------------------------- 3M Co. 207,000 26,090 Air Products & Chemicals, Inc. 120,200 5,177 o Airgas, Inc. 37,300 755 Albemarle Corp. 21,700 586 Cabot Corp. 31,900 889 o Cabot Microelectronics Corp. 12,700 549 o Cytec Industries, Inc. 20,400 653 Dow Chemical Co. 482,252 15,741 E.I. du Pont de Nemours & Co. 525,089 22,332 Eastman Chemical Co. 40,125 1,225 Ecolab, Inc. 69,300 3,540 Great Lakes Chemical Corp. 26,200 643 Lubrizol Corp. 26,800 847 Lyondell Chemical Co. 83,200 1,211 PPG Industries, Inc. 90,100 4,371 Praxair, Inc. 86,000 4,995 Rohm & Haas Co. 117,014 3,874 RPM International, Inc. 59,800 739 The Sherwin-Williams Co. 77,900 2,172 Sigma-Aldrich Corp. 39,200 1,953 Valspar Corp. 26,100 1,127 ---------- 99,469 CONSTRUCTION 0.5% ---------------------------------------------------------------------- Centex Corp. 34,100 2,251 Clayton Homes, Inc. 70,782 878 D.R. Horton, Inc. 81,522 1,932 Florida Rock Industries, Inc. 14,900 566 Fluor Corp. 41,700 1,442 KB Home Corp. 25,000 1,232 Lafarge North America, Inc. 35,700 1,137 Lennar Corp., Class A 35,300 1,915 Martin Marietta Materials, Inc. 25,300 748 Masco Corp. 267,800 5,643 MDC Holdings, Inc. 13,900 641 o NVR, Inc. 5,700 2,039 Pulte Homes, Inc. 31,900 1,850 The Stanley Works 46,000 1,105 o Toll Brothers, Inc. 36,600 851 Vulcan Materials Co. 52,700 1,843 ---------- 26,073 CONSUMER DURABLE 0.3% ---------------------------------------------------------------------- Black & Decker Corp. 41,950 1,730 o Energizer Holdings, Inc. 47,200 1,360 Ethan Allen Interiors, Inc. 19,700 664 o Furniture Brands International, Inc. 29,300 696
See financial notes. 31 SCHWAB 1000 FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Hillenbrand Industries, Inc. 34,000 1,697 La-Z-Boy, Inc. 29,400 574 Leggett & Platt, Inc. 101,300 2,092 Maytag Corp. 40,650 847 o Mohawk Industries, Inc. 34,439 1,910 o Rent-A-Center, Inc. 18,200 1,168 Whirlpool Corp. 37,400 2,001 ---------- 14,739 CONSUMER NON-DURABLE 1.1% ---------------------------------------------------------------------- o American Greetings Corp., Class A 37,600 547 Applebee's International, Inc. 28,650 785 o Aramark Corp., Class B 40,900 939 o Brinker International, Inc. 50,600 1,607 CBRL Group, Inc. 25,800 822 o The Cheesecake Factory 26,350 832 o Cytyc Corp. 60,200 795 Darden Restaurants, Inc. 88,950 1,558 o Electronic Arts, Inc. 75,500 4,475 Fastenal Co. 39,400 1,363 Fortune Brands, Inc. 79,600 3,853 Hasbro, Inc. 89,987 1,440 o International Game Technology 45,000 3,883 International Speedway Corp., Class A 27,600 1,085 o Krispy Kreme Doughnuts, Inc. 28,900 939 Lancaster Colony Corp. 18,900 808 Mattel, Inc. 229,320 4,985 McDonald's Corp. 669,000 11,440 Newell Rubbermaid, Inc. 141,109 4,301 Outback Steakhouse, Inc. 40,375 1,443 o Panera Bread Co., Class A 15,200 517 Regis Corp. 22,600 640 Ruby Tuesday, Inc. 33,300 656 o Starbucks Corp. 203,900 4,790 Wendy's International, Inc. 60,100 1,745 ---------- 56,248 CONTAINERS 0.2% ---------------------------------------------------------------------- Ball Corp. 29,600 1,662 Bemis Co. 27,600 1,260 o Crown Holdings, Inc. 88,900 471 o Owens-Illinois, Inc. 76,700 682 o Packaging Corp. of America 54,400 1,023 o Pactiv Corp. 84,350 1,731 o Sealed Air Corp. 43,699 1,873 ---------- 8,702 ELECTRONICS 4.4% ---------------------------------------------------------------------- o Acxiom Corp. 46,400 648 o ADC Telecommunications, Inc. 414,300 989 o Adelphia Communications, Class A 75,707 14 o Advanced Fibre Communications, Inc. 43,800 670 o Advanced Micro Devices, Inc. 178,700 1,330 o Agere Systems, Inc., Class A 868,500 1,555 o Agilent Technologies, Inc. 245,800 3,938 o Alliant Techsystems, Inc. 19,900 1,069 o Altera Corp. 201,700 3,189 o American Power Conversion Corp. 103,900 1,619 o Amphenol Corp., Class A 22,200 983 o Analog Devices, Inc. 192,100 6,362 Applied Biosystems Group-- Applera Corp. 108,900 1,909 o Applied Materials, Inc. 869,800 12,699 o Applied Micro Circuits Corp. 157,200 704 o Arrow Electronics, Inc. 52,000 878 o Atmel Corp. 242,200 446 o Avnet, Inc. 62,200 793 AVX Corp. 90,600 963 o Broadcom Corp., Class A 143,500 2,567 o Cadence Design Systems, Inc. 139,850 1,599 o CIENA Corp. 224,400 1,093 o Cree, Inc. 37,900 756 o Cymer, Inc. 17,800 508 o Emulex Corp. 42,700 875 o Fairchild Semiconductor International, Inc., Class A 60,900 723 o Fisher Scientific 28,500 821 International, Inc. o Gentex Corp. 39,600 1,196 o Getty Images, Inc. 27,900 944 Harman International Industries, Inc. 16,700 1,112 Harris Corp. 34,600 988 o Hearst-Argyle Television, Inc. 48,100 1,159 o Imation Corp. 18,400 631 o Integrated Circuit Systems, Inc. 35,300 767
See financial notes. 32
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Intel Corp. 3,504,200 64,477 o International Rectifier Corp. 33,300 753 o Intersil Corp., Class A 71,100 1,315 ITT Industries, Inc. 48,800 2,845 o Jabil Circuit, Inc. 103,100 1,928 o JDS Uniphase Corp. 735,755 2,377 o KLA-Tencor Corp. 100,200 4,108 o L-3 Communications Holdings, Inc. 49,200 2,185 o Lam Research Corp. 67,100 975 Linear Technology Corp. 164,200 5,660 o LSI Logic Corp. 193,300 1,036 o Lucent Technologies, Inc. 1,785,119 3,213 Maxim Integrated Products, Inc. 170,529 6,700 o Micron Technology, Inc. 319,700 2,717 Molex, Inc. 100,021 2,335 Motorola, Inc. 1,211,386 9,582 o National Semiconductor Corp. 94,100 1,763 o Nvidia Corp. 82,700 1,180 PerkinElmer, Inc. 65,800 653 Qualcomm, Inc. 417,500 13,314 o RF Micro Devices, Inc. 95,000 451 o Riverstone Networks, Inc. 1 -- o Sanmina-- SCI Corp. 274,652 1,318 o Skyworks Solutions, Inc. 71,600 383 o Solectron Corp. 429,500 1,370 Symbol Technologies, Inc. 119,970 1,311 o Tektronix, Inc. 45,200 848 o Tellabs, Inc. 214,200 1,324 o Teradyne, Inc. 95,300 1,106 Texas Instruments, Inc. 914,255 16,905 o Univision Communications, Inc., Class A 121,100 3,667 o Vishay Intertechnology, Inc. 83,150 1,039 o Waters Corp. 67,100 1,611 o WebMD Corp. 154,500 1,489 o Western Digital Corp. 100,700 940 o Xilinx, Inc. 177,400 4,802 ----------- 224,177 ENERGY: RAW MATERIALS 1.3% ------------------------------------------------------------- Anadarko Petroleum Corp. 131,380 5,833 Apache Corp. 85,160 4,875 Arch Coal, Inc. 27,300 494 Baker Hughes, Inc. 186,520 5,223 o BJ Services Co. 83,600 3,052 Burlington Resources, Inc. 106,767 4,944 Chesapeake Energy Corp. 112,500 907 o Cooper Cameron Corp. 28,200 1,350 Devon Energy Corp. 153,117 7,235 ENSCO International, Inc. 77,400 1,966 EOG Resources, Inc. 61,500 2,299 o FMC Technologies, Inc. 34,100 642 o Forest Oil Corp. 24,500 509 o Grant Prideco, Inc. 63,000 719 Halliburton Co. 228,860 4,900 Helmerich & Payne, Inc. 25,900 666 o Key Energy Services, Inc. 66,800 673 Noble Energy, Inc. 29,700 986 Occidental Petroleum Corp. 200,100 5,973 o Patterson-UTI Energy, Inc. 41,200 1,363 Peabody Energy Corp. 27,300 767 o Pride International, Inc. 70,000 1,086 Rowan Cos., Inc. 48,600 996 o Smith International, Inc. 52,800 1,878 Tidewater, Inc. 31,600 850 Valero Energy Corp. 59,188 2,175 o Varco International, Inc. 50,400 886 Western Gas Resources, Inc. 17,200 631 XTO Energy, Inc. 95,533 1,863 ----------- 65,741 FOOD & AGRICULTURE 4.4% ------------------------------------------------------------- Altria Group, Inc. 1,094,200 33,657 Archer-Daniels-Midland Co. 340,036 3,768 Campbell Soup Co. 215,100 4,739 The Coca-Cola Co. 1,311,800 52,997 Coca-Cola Enterprises, Inc. 235,600 4,592 ConAgra Foods, Inc. 283,259 5,948 Corn Products International, Inc. 18,600 556 o Dean Foods Co. 49,500 2,155 o Del Monte Foods Co. 108,295 861 Dreyer's Grand Ice Cream, Inc. 18,200 1,163 General Mills, Inc. 195,250 8,808 H.J. Heinz Co. 184,500 5,513 Hershey Foods Corp. 72,900 4,757 Hormel Foods Corp. 72,200 1,661
See financial notes. 33 SCHWAB 1000 FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) IMC Global, Inc. 59,860 542 The J.M. Smuckers Co. 25,800 936 Kellogg Co. 214,400 7,019 Kraft Foods, Inc., Class A 147,700 4,564 McCormick & Co., Inc. 74,700 1,852 Monsanto Co. 138,248 2,405 The Pepsi Bottling Group, Inc. 148,300 3,046 PepsiAmericas, Inc. 78,100 975 PepsiCo, Inc. 913,560 39,539 o Performance Food Group Co. 23,500 824 Sara Lee Corp. 415,200 6,967 o The Scotts Co., Class A 17,500 997 Sensient Technologies Corp. 24,700 546 o Smithfield Foods, Inc. 56,800 1,113 Supervalu, Inc. 69,400 1,143 Sysco Corp. 345,500 9,926 Tootsie Roll Industries, Inc. 27,730 804 Tyson Foods, Inc., Class A 183,382 1,766 o Whole Foods Market, Inc. 31,900 1,893 Wm. Wrigley Jr. Co. 119,200 6,760 ----------- 224,792 GOLD 0.1% -------------------------------------------------------------- Newmont Mining Corp. 210,838 5,697 HEALTHCARE / DRUGS & MEDICINE 14.3% -------------------------------------------------------------- Abbott Laboratories 827,500 33,621 o Accredo Health, Inc. 24,700 365 o AdvancePCS Corp. 46,700 1,404 o Affymetrix, Inc. 30,400 564 Allergan, Inc. 69,400 4,875 AmerisourceBergen Corp. 57,795 3,343 o Amgen, Inc. 679,940 41,687 o Amylin Pharmaceuticals, Inc. 47,500 910 o Andrx Corp. 37,200 600 o Anthem, Inc. 75,600 5,189 o Apogent Technologies, Inc. 55,700 957 o Apria Healthcare Group, Inc. 28,600 671 o Barr Laboratories, Inc. 35,350 1,965 Bausch & Lomb, Inc. 28,100 988 Baxter International, Inc. 311,900 7,174 Beckman Coulter, Inc. 32,400 1,259 Becton Dickinson & Co. 133,600 4,729 o Biogen, Inc. 77,600 2,948 Biomet, Inc. 137,000 4,173 o Boston Scientific Corp. 216,042 9,301 Bristol-Myers Squibb Co. 1,023,100 26,130 C.R. Bard, Inc. 28,300 1,794 Cardinal Health, Inc. 238,956 13,209 o Caremark Rx, Inc. 135,500 2,698 o Celgene Corp. 41,000 1,091 o Cephalon, Inc. 29,600 1,209 o Charles River Laboratories International, Inc. 23,500 638 o Chiron Corp. 97,912 3,998 o Community Health Systems, Inc. 51,300 975 o Covance, Inc. 31,200 553 o Coventry Health Care, Inc. 31,200 1,274 o DaVita, Inc. 31,400 647 Dentsply International, Inc. 40,650 1,522 Diagnostic Products Corp. 14,900 589 o Edwards Lifesciences Corp. 31,300 904 Eli Lilly & Co. 594,768 37,958 o Express Scripts, Inc. 40,600 2,394 o First Health Group Corp. 52,800 1,323 o Forest Laboratories, Inc. 192,200 9,941 o Genzyme Corp.-- General Division 113,500 4,572 o Gilead Sciences, Inc. 104,200 4,808 o Guidant Corp. 161,072 6,280 HCA, Inc. 271,472 8,714 Health Management Associates, Inc., Class A 126,528 2,159 o Health Net, Inc. 66,300 1,730 o Henry Schein, Inc. 22,900 988 o Human Genome Sciences, Inc. 67,000 783 o Humana, Inc. 84,300 932 o ICOS Corp. 32,300 864 o Idec Pharmaceuticals Corp. 79,600 2,607 o IDEXX Laboratories, Inc. 17,900 698 o Igen International, Inc. 12,400 451 IMS Health, Inc. 129,100 1,988 Invacare Corp. 16,200 518 o Invitrogen Corp. 26,900 880 o IVAX Corp. 101,125 1,625 (7) Johnson & Johnson 1,571,320 88,560 o King Pharmaceuticals, Inc. 125,166 1,578
See financial notes. 34
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Laboratory Corp. of America Holdings 78,900 2,324 o LifePoint Hospitals, Inc. 20,600 402 o Lincare Holdings, Inc. 55,000 1,670 o Manor Care, Inc. 50,200 976 McKesson Corp. 153,328 4,253 o Medicis Pharmaceutical Corp., Class A 14,100 813 o Medimmune, Inc. 132,450 4,672 Medtronic, Inc. 645,100 30,797 (10) Merck & Co., Inc. 1,187,908 69,112 o Mid Atlantic Medical Services, Inc. 24,900 1,084 o Millennium Pharmaceuticals, Inc. 149,720 1,647 Mylan Laboratories 97,475 2,756 o NBTY, Inc. 34,500 535 o Neurocrine Biosciences, Inc. 16,000 724 Omnicare, Inc. 49,100 1,302 o Oxford Health Plans, Inc. 45,500 1,332 o Patterson Dental Co. 35,400 1,422 o Pediatrix Medical Group, Inc. 13,200 421 (4) Pfizer, Inc. 4,216,812 129,667 o Pharmaceutical Product Development, Inc. 28,800 754 o Quest Diagnostics 56,300 3,364 o Quintiles Transnational Corp. 61,160 859 o Renal Care Group, Inc. 25,100 813 o Respironics, Inc. 17,400 669 Schering-Plough Corp. 772,900 13,989 o SICOR, Inc. 60,900 1,092 o St. Jude Medical, Inc. 94,300 4,947 o Steris Corp. 36,000 817 Stryker Corp. 104,900 7,029 o Techne Corp. 21,600 480 o Tenet Healthcare Corp. 253,709 3,765 o Triad Hospitals, Inc. 38,900 856 UnitedHealth Group, Inc. 162,000 14,925 o Universal Health Services, Class B 31,400 1,214 o Varian Medical Systems, Inc. 37,300 2,009 o Vertex Pharmaceuticals, Inc. 39,800 480 o Watson Pharmaceuticals, Inc. 55,500 1,613 o WellPoint Health Networks, Inc. 79,350 6,026 Wyeth 700,200 30,480 o Zimmer Holdings, Inc. 103,400 4,849 ----------- 723,244 HOUSEHOLD PRODUCTS 2.2% -------------------------------------------------------------- Alberto-Culver Co., Class B 30,300 1,493 Avon Products, Inc. 124,400 7,236 Church & Dwight Co., Inc. 20,800 655 Clorox Co. 116,400 5,264 Colgate-Palmolive Co. 283,900 16,231 The Dial Corp. 49,500 1,031 The Estee Lauder Cos., Inc., Class A 65,000 2,112 The Gillette Co. 553,110 16,842 International Flavors & Fragrances, Inc. 51,000 1,621 Procter & Gamble Co. 684,100 61,466 ----------- 113,951 INSURANCE 4.7% -------------------------------------------------------------- 21st Century Insurance Group 44,500 602 Aetna, Inc. 80,265 3,997 AFLAC, Inc. 272,400 8,910 o Alleghany Corp. 4,242 721 The Allstate Corp. 372,048 14,060 AMBAC Financial Group, Inc. 61,200 3,571 American Financial Group, Inc. 36,000 798 (8) American International Group, Inc. 1,379,771 79,958 American National Insurance Co. 13,700 1,096 AmerUs Group Co. 20,200 529 AON Corp. 163,112 3,615 Arthur J. Gallagher & Co. 45,800 1,145 Brown & Brown, Inc. 37,900 1,356 Chubb Corp. 90,900 4,808 CIGNA Corp. 74,400 3,891 Cincinnati Financial Corp. 86,014 3,170 o CNA Financial Corp. 118,200 2,831 Commerce Group, Inc. 16,800 623 Erie Indemnity Co., Class A 37,300 1,394 Fidelity National Financial, Inc. 54,578 1,877 First American Corp. 37,600 996 Hartford Financial Services Group, Inc. 134,600 5,486 HCC Insurance Holdings, Inc. 32,400 891 Hilb, Rogal & Hamilton Co. 18,400 654
See financial notes. 35 SCHWAB 1000 FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Jefferson-Pilot Corp. 76,587 3,070 John Hancock Financial Services, Inc. 151,800 4,405 Leucadia National Corp. 30,700 1,170 Lincoln National Corp. 94,000 3,004 Loews Corp. 98,400 4,061 o Markel Corp. 5,200 1,260 Marsh & McLennan Cos., Inc. 283,700 13,527 MBIA, Inc. 77,500 3,464 Mercury General Corp. 28,200 1,241 MGIC Investment Corp. 54,200 2,464 Mony Group, Inc. 24,300 564 Nationwide Financial Services, Inc., Class A 29,300 825 Odyssey Re Holdings Corp. 33,900 712 Old Republic International Corp. 62,775 1,921 The PMI Group, Inc. 47,000 1,449 Principal Financial Group, Inc. 175,200 5,098 The Progressive Corp. 115,200 7,834 Protective Life Corp. 35,800 1,029 Prudential Financial, Inc. 299,500 9,575 Radian Group, Inc. 48,700 1,933 Reinsurance Group of America, Inc. 25,600 733 Safeco Corp. 73,400 2,827 St. Paul Cos., Inc. 119,854 4,116 Stancorp Financial Group, Inc. 15,200 816 Torchmark Corp. 63,000 2,441 Travelers Property Casualty Corp., Class B 530,499 8,621 Unitrin, Inc. 35,100 867 UnumProvident Corp. 125,671 1,445 W.R. Berkley Corp. 29,700 1,379 Wesco Financial Corp. 1,800 524 ----------- 239,354 MEDIA 4.9% -------------------------------------------------------------- o AOL Time Warner, Inc. 2,360,930 32,298 Belo Corp., Class A 60,600 1,364 o Cablevision Systems Corp., NY Group, Class A 123,200 2,762 o Clear Channel Communications, Inc. 323,229 12,642 o Comcast Corp., Class A 1,221,080 38,965 o Cox Communications, Inc., Class A 312,586 10,347 Dow Jones & Co., Inc. 42,850 1,697 The E.W. Scripps Co., Class A 43,475 3,445 o EchoStar Communications Corp., Class A 128,000 3,835 o Emmis Communications Corp., Class A 27,700 525 o Entercom Communications Corp. 26,000 1,263 o Fox Entertainment Group, Inc., Class A 185,200 4,704 Gannett Co., Inc. 140,900 10,669 Harte-Hanks, Inc. 47,300 851 o Hispanic Broadcasting Corp. 56,500 1,449 Hollinger International, Inc. 57,400 534 John Wiley & Sons, Class A 32,200 789 Knight-Ridder, Inc. 42,800 2,763 Lee Enterprises, Inc. 23,100 829 o Liberty Media Corp., Class A 1,251,400 13,765 McClatchy Co., Class A 23,900 1,401 The McGraw-Hill Cos., Inc. 102,750 6,000 Media General, Inc., Class A 12,100 665 Meredith Corp. 27,700 1,197 o Metro-Goldwyn-Mayer, Inc. 129,720 1,446 New York Times Co., Class A 80,726 3,744 o PanAmSat Corp. 79,900 1,382 R.R. Donnelley & Sons Co. 58,900 1,187 The Reader's Digest Association, Inc., Class A 50,800 610 o Scholastic Corp. 20,400 580 Tribune Co. 160,600 7,866 o USA Interactive 253,074 7,580 o Valassis Communications, Inc. 27,300 726 o Viacom, Inc., Class B 931,079 40,418 The Walt Disney Co. 1,080,321 20,159 Washington Post, Class B 6,900 5,030 o Westwood One, Inc. 55,200 1,926 ----------- 247,413 MISCELLANEOUS 0.0% -------------------------------------------------------------- o Radio One, Inc., Class A 54,400 845 MISCELLANEOUS FINANCE 8.3% -------------------------------------------------------------- A.G. Edwards, Inc. 41,043 1,224 o Affiliated Managers Group 11,400 528
See financial notes. 36
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Allied Capital Corp. 57,100 1,210 American Express Co. 694,200 26,282 o AmeriCredit Corp. 79,500 540 o Ameritrade Holding Corp. 223,500 1,122 Astoria Financial Corp. 45,300 1,133 The Bear Stearns Cos., Inc. 52,071 3,480 o Berkshire Hathaway, Inc., Class A 771 53,827 o The BISYS Group, Inc. 62,600 1,057 o BOK Financial Corp. 28,822 1,039 Capital One Financial Corp. 117,450 4,918 / The Charles Schwab Corp. 708,397 6,113 Charter One Financial, Inc. 119,504 3,472 Chicago Mercantile Exchange 16,600 939 (6) Citigroup, Inc. 2,719,101 106,725 Commercial Federal Corp. 23,500 506 Countrywide Financial Corp. 67,785 4,582 Downey Financial Corp. 14,600 641 o E*TRADE Group, Inc. 187,900 1,033 Eaton Vance Corp. 36,000 1,073 Fannie Mae 526,300 38,099 Federated Investors, Inc., Class B 59,150 1,614 Franklin Resources, Inc. 137,100 4,782 Freddie Mac 367,800 21,296 Goldman Sachs Group, Inc. 250,400 19,005 IndyMac Bancorp, Inc. 28,800 642 International Bancshares Corp. 16,400 719 o Investment Technology Group, Inc. 25,000 357 Investors Financial Services Corp. 33,500 731 Janus Capital Group, Inc. 115,600 1,607 Jefferies Group, Inc. 14,000 543 LaBranche & Co., Inc. 31,000 514 Legg Mason, Inc. 35,600 1,933 Lehman Brothers Holdings, Inc. 127,560 8,032 MBNA Corp. 675,880 12,774 Merrill Lynch & Co., Inc. 456,000 18,719 Morgan Stanley 573,110 25,647 Nueberger Berman, Inc. 36,200 1,111 Nuveen Investments, Inc., Class A 48,500 1,188 Raymond James Financial, Inc. 25,200 723 SLM Corp. 81,750 9,156 Sovereign Bancorp., Inc. 138,400 2,138 Staten Island Bancorp., Inc. 31,400 539 Student Loan Corp. 10,500 1,126 T. Rowe Price Group, Inc. 63,600 1,941 TCF Financial Corp. 38,600 1,529 Waddell & Reed Financial, Inc., Class A 41,800 836 Washington Federal, Inc. 36,181 789 Washington Mutual, Inc. 504,910 19,944 Webster Financial Corp. 24,000 901 ----------- 420,379 NON-FERROUS METALS 0.3% -------------------------------------------------------------- Alcoa, Inc. 445,295 10,211 Engelhard Corp. 66,387 1,630 Freeport-McMoran Copper & Gold, Inc., Class B 75,294 1,303 o Phelps Dodge Corp. 46,200 1,441 ----------- 14,585 OIL: DOMESTIC 0.8% -------------------------------------------------------------- Amerada Hess Corp. 47,800 2,158 Ashland, Inc. 35,400 1,050 ConocoPhillips 358,578 18,037 Diamond Offshore Drilling 67,700 1,262 Kerr-McGee Corp. 52,102 2,194 Marathon Oil Corp. 164,300 3,741 Murphy Oil Corp. 47,740 1,989 o National-Oilwell, Inc. 44,200 928 o Newfield Exploration Co. 26,900 925 o Pioneer Natural Resources Co. 60,800 1,454 Pogo Producing Co. 31,800 1,259 Sunoco, Inc. 39,700 1,477 Unocal Corp. 136,034 3,768 ----------- 40,242 OIL: INTERNATIONAL 3.2% -------------------------------------------------------------- ChevronTexaco Corp. 568,446 35,704 (5) Exxon Mobil Corp. 3,559,130 125,281 ----------- 160,985 OPTICAL & PHOTO 0.1% -------------------------------------------------------------- Eastman Kodak Co. 153,800 4,600 PAPER & FOREST PRODUCTS 0.8% -------------------------------------------------------------- Boise Cascade Corp. 30,400 698 Bowater, Inc. 28,800 1,121 Georgia-Pacific Corp. 130,088 2,009
See financial notes. 37 SCHWAB 1000 FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) International Paper Co. 251,945 9,007 Kimberly-Clark Corp. 271,960 13,536 MeadWestvaco Corp. 103,953 2,452 Rayonier, Inc. 14,500 730 o Smurfit-Stone Container Corp. 127,100 1,788 Temple-Inland, Inc. 27,900 1,264 Weyerhaeuser Co. 115,800 5,743 ----------- 38,348 PRODUCER GOODS & MANUFACTURING 4.7% -------------------------------------------------------------- o AGCO Corp. 39,100 712 o American Standard Cos., Inc. 39,200 2,791 Ametek, Inc. 17,200 648 Aptargroup, Inc. 18,600 640 Avery Dennison Corp. 59,200 3,138 Blyth, Inc. 24,100 636 Caterpillar, Inc. 182,900 9,621 o Corning, Inc. 628,241 3,405 Deere & Co. 126,000 5,548 Dover Corp. 107,200 3,081 Emerson Electric Co. 223,400 11,326 =(1) General Electric Co. 5,263,500 155,010 Graco, Inc. 24,800 761 Harsco Corp. 21,100 727 Herman Miller, Inc. 39,000 682 HON Industries, Inc. 30,700 908 Honeywell International, Inc. 452,563 10,681 Hubbell, Inc., Class B 30,838 990 IDEX Corp. 16,900 538 Illinois Tool Works, Inc. 163,442 10,457 Johnson Controls, Inc. 48,100 3,956 Kennametal, Inc. 18,300 576 o Millipore Corp. 25,200 861 Pall Corp. 63,933 1,350 Parker Hannifin Corp. 61,475 2,501 Pentair, Inc. 25,700 990 Precision Castparts Corp. 27,300 756 Roper Industries, Inc. 16,300 499 Snap-On, Inc. 30,450 894 Teleflex, Inc. 20,500 787 The Timken Co. 44,400 786 W.W. Grainger, Inc. 47,600 2,197 o Zebra Technologies Corp., Class A 16,500 1,100 ----------- 239,553 RAILROAD & SHIPPING 0.4% -------------------------------------------------------------- Alexander & Baldwin, Inc. 21,500 574 Burlington Northern Santa Fe Corp. 198,253 5,583 CSX Corp. 112,800 3,607 GATX Corp. 25,500 480 Norfolk Southern Corp. 204,600 4,340 Union Pacific Corp. 133,661 7,956 ----------- 22,540 REAL PROPERTY 1.4% -------------------------------------------------------------- AMB Property Corp. 42,900 1,171 Annaly Mortgage Management, Inc. 44,000 836 Apartment Investment & Management Co., Class A 48,800 1,843 Archstone-Smith Trust 94,100 2,145 Arden Realty, Inc. 32,900 784 AvalonBay Communities, Inc. 35,600 1,420 Boston Properties, Inc. 51,600 2,023 BRE Properties, Class A 23,700 729 Camden Property Trust 22,300 779 CarrAmerica Realty Corp. 27,700 722 o Catellus Development Corp. 45,400 962 CBL & Associates Properties, Inc. 15,500 658 Centerpoint Properties Trust 12,000 695 Chelsea Property Group, Inc. 21,600 857 Cousins Properties, Inc. 25,400 667 Crescent Real Estate Equity Co. 52,000 737 Developers Diversified Realty Corp. 44,200 1,114 Duke Realty Corp. 70,200 1,923 Equity Office Properties Trust 216,000 5,610 Equity Residential 142,800 3,700 Federal Realty Investment Trust 22,600 697 First Industrial Realty Trust 20,100 562 Forest City Enterprises, Inc., Class A 25,750 941 General Growth Properties, Inc. 32,500 1,808 Health Care Property Investors, Inc. 30,700 1,143
See financial notes. 38
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Health Care Real Estate Investment Trust, Inc. 20,400 581 Healthcare Realty Trust, Inc. 22,000 606 Heritage Property Investment Trust 21,600 549 Highwoods Properties, Inc. 27,800 563 Hospitality Properties Trust 32,600 939 HRPT Properties Trust 67,000 605 iStar Financial, Inc. 51,000 1,526 Kimco Realty Corp. 54,400 1,969 Liberty Property Trust 39,800 1,245 The Macerich Co. 28,100 927 Mack-Cali Realty Corp. 30,000 947 The Mills Corp. 22,400 716 New Plan Excel Realty Trust 50,400 1,007 Pan Pacific Retail Properties, Inc. 20,700 810 Plum Creek Timber Co., Inc. 96,100 2,235 Prentiss Properties Trust 20,300 558 Prologis 92,708 2,386 Public Storage, Inc. 61,200 1,968 Realty Income Corp. 18,200 684 Reckson Associates Realty Corp. 26,000 490 Regency Centers Corp. 32,500 1,072 The Rouse Co. 45,200 1,571 Shurgard Storage Centers, Inc., Class A 18,700 611 Simon Property Group, Inc. 97,500 3,580 The St. Joe Co. 39,900 1,169 Thornburg Mortgage, Inc. 29,700 665 Trizec Properties, Inc. 78,100 727 United Dominion Realty Trust, Inc. 55,400 925 Vornado Realty Trust 56,400 2,143 Weingarten Realty Investment 37,000 1,462 ----------- 69,762 RETAIL 6.9% -------------------------------------------------------------- o 99 Cents Only Stores 36,466 1,074 Albertson's, Inc. 199,542 3,963 o Amazon.com, Inc. 204,300 5,857 o AutoZone, Inc. 51,200 4,138 o Barnes & Noble, Inc. 35,100 691 o Bed, Bath & Beyond, Inc. 156,200 6,171 o Best Buy Co., Inc. 169,150 5,849 o Big Lots, Inc. 60,400 756 o BJ's Wholesale Club, Inc. 36,400 514 o Borders Group, Inc. 41,400 662 Circuit City Stores, Inc. 109,300 626 Claire's Stores, Inc. 25,400 660 o Costco Wholesale Corp. 239,908 8,308 CVS Corp. 206,414 4,997 Dillards, Inc., Class A 44,100 617 Dollar General Corp. 176,269 2,563 o Dollar Tree Stores, Inc. 59,300 1,509 Family Dollar Stores, Inc. 89,900 3,074 o Federated Department Stores, Inc. 102,100 3,126 o The Gap, Inc. 464,700 7,728 Home Depot, Inc. 1,228,397 34,555 J.C. Penney Co., Inc. Holding Co. 142,300 2,428 o Kohl's Corp. 179,300 10,184 o Kroger Co. 404,230 5,781 Limited Brands, Inc. 275,268 4,002 Lowe's Cos., Inc. 412,300 18,096 The May Department Stores Co. 152,350 3,294 o Michaels Stores, Inc. 36,900 1,153 o The Neiman Marcus Group, Inc., Class A 25,000 801 Nordstrom, Inc. 70,500 1,222 o Office Depot, Inc. 163,548 2,071 o Payless Shoesource, Inc. 35,400 561 o PETsMART, Inc. 74,100 1,121 Pier 1 Imports, Inc. 48,100 893 RadioShack Corp. 89,532 2,123 o Rite Aid Corp. 267,800 911 Ross Stores, Inc. 40,500 1,535 o Safeway, Inc. 231,580 3,849 o Saks, Inc. 74,440 666 Sears, Roebuck & Co. 166,500 4,719 o Staples, Inc. 248,060 4,723 Target Corp. 481,000 16,085 Tiffany & Co. 75,600 2,097 TJX Cos., Inc. 276,600 5,325 o Toys `R' Us, Inc. 110,580 1,133 =(3) Wal-Mart Stores, Inc. 2,336,400 131,586 Walgreen Co. 540,900 16,692
See financial notes. 39 SCHWAB 1000 FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Williams-Sonoma, Inc. 60,400 1,563 Winn-Dixie Stores, Inc. 73,300 918 o Yum! Brands, Inc. 155,620 3,845 o Zale Corp. 17,200 601 ----------- 347,416 STEEL 0.1% -------------------------------------------------------------- Nucor Corp. 40,600 1,658 United States Steel Corp. 53,260 763 Worthington Industries, Inc. 44,600 599 ----------- 3,020 TELEPHONE 3.4% -------------------------------------------------------------- o Adtran, Inc. 19,400 785 Alltel Corp. 163,667 7,669 AT&T Corp. 405,617 6,916 o AT&T Wireless Services, Inc. 1,427,321 9,221 BellSouth Corp. 982,900 25,054 CenturyTel, Inc. 74,087 2,182 o Citizens Communications Co. 149,718 1,636 o Level 3 Communications, Inc. 219,900 1,258 o Nextel Communications, Inc., Class A 541,800 8,013 o Nextel Partners, Inc., Class A 87,300 507 o Qwest Communications International, Inc. 893,747 3,369 SBC Communications, Inc. 1,756,228 41,026 Scientific-Atlanta, Inc. 80,200 1,303 Sprint Corp. (FON Group) 471,468 5,427 o Sprint Corp. (PCS Group) 526,521 1,843 Telephone & Data Systems, Inc. 30,600 1,319 o U.S. Cellular Corp. 44,700 1,075 Verizon Communications, Inc. 1,447,093 54,092 o West Corp. 34,400 777 ----------- 173,472 TOBACCO 0.1% -------------------------------------------------------------- R.J. Reynolds Tobacco Holdings, Inc. 45,800 1,290 UST, Inc. 87,900 2,754 ----------- 4,044 TRAVEL & RECREATION 0.5% -------------------------------------------------------------- Brunswick Corp. 46,900 1,024 o Expedia, Inc. 21,400 1,237 o Extended Stay America, Inc. 48,800 579 o Harrah's Entertainment, Inc. 60,100 2,367 Hilton Hotels Corp. 198,767 2,647 o Host Marriott Corp. 138,300 1,068 o Hotels.com, Class A 9,800 702 o Mandalay Resort Group 35,800 946 Marriott International, Inc., Class A 123,700 4,442 o MGM MIRAGE 82,200 2,336 o Park Place Entertainment Corp. 156,400 1,164 Sabre Holdings Corp. 76,100 1,591 Speedway Motorsports, Inc. 22,000 535 Starwood Hotels & Resorts Worldwide, Inc. 105,700 2,837 o Station Casinos, Inc. 30,100 650 ----------- 24,125 TRUCKING & FREIGHT 1.0% -------------------------------------------------------------- C.H. Robinson Worldwide, Inc. 44,000 1,619 CNF, Inc. 25,700 780 Expeditors International Washington, Inc. 54,200 1,971 o Heartland Express, Inc. 26,100 600 o J.B. Hunt Transport Services, Inc. 20,500 708 Paccar, Inc. 62,280 3,638 Ryder Systems, Inc. 32,500 807 o Swift Transportation Co., Inc. 43,400 787 United Parcel Service, Inc., Class B 595,000 36,961 Werner Enterprises, Inc. 33,200 750 ----------- 48,621 UTILITIES: ELECTRIC & GAS 3.0% -------------------------------------------------------------- o The AES Corp. 282,806 1,700 AGL Resources, Inc. 32,300 831 Allete, Inc. 44,500 1,057 Alliant Energy Corp. 47,700 838 Ameren Corp. 83,430 3,419 American Electric Power Corp. 203,920 5,379 Atmos Energy Corp. 23,400 533 o Calpine Corp. 196,500 1,055 Centerpoint Energy, Inc. 158,217 1,250 Cinergy Corp. 89,565 3,058 CMS Energy Corp. 75,000 467 Consolidated Edison, Inc. 113,000 4,392
See financial notes. 40
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Constellation Energy Group, Inc. 87,750 2,569 Dominion Resources, Inc. 161,716 9,570 DPL, Inc. 65,692 909 DQE, Inc. 38,700 526 DTE Energy Co. 89,183 3,596 Duke Energy Corp. 469,162 8,253 o Edison International 172,400 2,515 El Paso Corp. 311,546 2,337 Energy East Corp. 75,184 1,370 Entergy Corp. 117,421 5,473 Equitable Resources, Inc. 32,600 1,252 Exelon Corp. 169,887 9,011 FirstEnergy Corp. 156,698 5,285 FPL Group, Inc. 97,000 5,904 Great Plains Energy, Inc. 37,600 984 Hawaiian Electric Industries, Inc. 19,100 790 KeySpan Corp. 83,234 2,819 Kinder Morgan, Inc. 65,200 3,066 MDU Resources Group, Inc. 37,300 1,110 National Fuel Gas Co. 41,700 978 Nicor, Inc. 22,800 685 NiSource, Inc. 130,480 2,466 Northeast Utilities, Inc. 70,500 1,052 NSTAR 27,500 1,188 OGE Energy Corp. 40,700 731 Oneok, Inc. 37,800 717 Peoples Energy Corp. 18,500 719 Pepco Holdings, Inc. 85,025 1,461 o PG&E Corp. 213,858 3,204 Philadelphia Suburban Corp. 35,300 800 Piedmont Natural Gas Co. 17,200 643 Pinnacle West Capital Corp. 47,000 1,561 PPL Corp. 87,620 3,172 Progress Energy, Inc. 125,100 5,227 Public Service Enterprise Group, Inc. 117,600 4,524 Puget Energy, Inc. 48,300 1,020 Questar Corp. 44,500 1,344 o Republic Services, Inc. 85,300 1,830 SCANA Corp. 57,600 1,828 Sempra Energy 108,638 2,916 The Southern Co. 377,500 10,981 TECO Energy, Inc. 91,400 986 TXU Corp. 170,112 3,389 UGI Corp. 21,600 683 Vectren Corp. 35,300 821 o Waste Connections, Inc. 14,600 491 WGL Holdings, Inc. 25,300 683 Williams Cos., Inc. 268,609 1,867 Wisconsin Energy Corp. 62,200 1,638 WPS Resources Corp. 16,600 669 Xcel Energy, Inc. 207,435 2,804 ----------- 154,396 WARRANTS 0.0% of investments ELECTRONICS 0.0% -------------------------------------------------------------- o Per-Se Technologies, Inc. expires 07/8/03 488 -- SHORT-TERM INVESTMENT 0.1% of investments Provident Institutional TempFund 6,930,825 6,931
SECURITY FACE VALUE RATE, MATURITY DATE ($ x 1,000) U.S. TREASURY OBLIGATION 0.0% of investments = U.S. Treasury Bill 1.13%, 06/19/03 370 369
END OF PORTFOLIO HOLDINGS. For totals, please see the first page of holdings for this fund. See financial notes. 41 SCHWAB 1000 FUND(R) -- Financials Statement of ASSETS AND LIABILITIES As of April 30, 2003; unaudited. All numbers x 1,000 except NAV. ASSETS - -------------------------------------------------------------------- Investments, at market value (including $528,985 of securities on loan) $ 5,062,687 a Collateral held for securities on loan 547,914 Receivables: Fund shares sold 3,499 Interest 6 Dividends 5,034 Investments sold 1,281 Income from lending securities 25 Prepaid expenses + 44 ------------- TOTAL ASSETS 5,620,490 LIABILITIES - -------------------------------------------------------------------- Collateral held for securities on loan 547,914 Payables: Fund shares redeemed 2,433 Investments bought 5,790 Investment adviser and administrator fees 126 Transfer agent and shareholder service fees 111 Accrued expenses + 583 ------------- TOTAL LIABILITIES 556,957 NET ASSETS - -------------------------------------------------------------------- TOTAL ASSETS 5,620,490 TOTAL LIABILITIES - 556,957 ------------- NET ASSETS $ 5,063,533 NET ASSETS BY SOURCE Capital received from investors 4,384,207 Net investment income not yet distributed 19,575 Net realized capital losses (549,628) Net unrealized capital gains 1,209,379 b
NET ASSET VALUE (NAV) SHARES SHARE CLASS NET ASSETS / OUTSTANDING = NAV Investor Shares $3,371,248 129,528 $26.03 Select Shares(R) $1,692,285 65,044 $26.02 a The fund paid $3,853,718 for these securities. Not counting short-term obligations and government securities, the fund paid $303,086 for securities during the report period and received $234,643 from securities it sold or that matured. b These derive from investments and futures. As of the report date, the fund had twenty-four open S&P 500 futures contracts due to expire on June 20, 2003, with a contract value of $5,497 and unrealized gains of $410. FEDERAL TAX DATA - -------------------------------------------------------------------- PORTFOLIO COST $ 3,873,597 NET UNREALIZED GAINS AND LOSSES: Gains $ 1,835,496 Losses + (646,406) -------------- $ 1,189,090 AS OF OCTOBER 31, 2002: NET UNDISTRIBUTED EARNINGS: Ordinary income $ 50,469 Long-term capital gains $ -- UNUSED CAPITAL LOSSES: Expires 10/31 of: Loss amount 2003 $ 415 2004 844 2005 2,606 2006 650 2007 11,853 2009 97,811 2010 + 250,781 -------------- $ 364,960
See financial notes. 42 Statement of OPERATIONS For November 1, 2002 through April 30, 2003; unaudited. All numbers x 1,000. INVESTMENT INCOME - -------------------------------------------------------------------- Dividends $ 42,273 a Interest 25 Lending of securities + 495 -------------- TOTAL INVESTMENT INCOME 42,793 NET REALIZED GAINS AND LOSSES - -------------------------------------------------------------------- Net realized losses on investments sold (168,853) Net realized losses on futures contracts + (151) -------------- NET REALIZED LOSSES (169,004) NET UNREALIZED GAINS AND LOSSES - -------------------------------------------------------------------- Net unrealized gains on investments 348,141 Net unrealized gains on futures contracts + 344 -------------- NET UNREALIZED GAINS 348,485 EXPENSES - -------------------------------------------------------------------- Investment adviser and administrator fees 5,437 b Transfer agent and shareholder service fees: Investor Shares 3,970 c Select Shares(R) 793 c Trustees' fees 16 d Custodian fees 88 Portfolio accounting fees 366 Professional fees 29 Registration fees 55 Shareholder reports 340 Interest expense 4 Other expenses + 32 -------------- Total expenses 11,130 Expense reduction - 755 e -------------- NET EXPENSES 10,375 INCREASE IN NET ASSETS FROM OPERATIONS - -------------------------------------------------------------------- TOTAL INVESTMENT INCOME 42,793 NET EXPENSES - 10,375 -------------- NET INVESTMENT INCOME 32,418 NET REALIZED LOSSES (169,004)f NET UNREALIZED GAINS + 348,485 f -------------- INCREASE IN NET ASSETS FROM OPERATIONS $ 211,899
a An additional $3 was withheld for foreign taxes. b Calculated as a percentage of average daily net assets: 0.30% of the first $500 million and 0.22% of assets beyond that. c Calculated as a percentage of average daily net assets: for transfer agent services, 0.05% of the fund's assets; for shareholder services, 0.20%, and 0.05% of the assets of each respective share class. d For the fund's independent trustees only. e Includes $331 from the investment adviser (CSIM) and $424 from the transfer agent and shareholder service agent (Schwab). These reductions reflect a guarantee by CSIM and Schwab to limit the operating expenses of this fund through at least February 29, 2004, as follows:
% OF AVERAGE SHARE CLASS DAILY NET ASSETS ------------------------------------- Investor Shares 0.51 Select Shares 0.36
Prior to March 1, 2003, the limits were 0.46% and 0.35% for the Investor Shares and Select Shares, respectively. This limit doesn't include interest, taxes and certain non-routine expenses. f These add up to a net gain on investments of $179,481. See financial notes. 43 SCHWAB 1000 FUND(R) -- Financials Statements of CHANGES IN NET ASSETS For the current and prior report periods. All numbers x 1,000. Figures for current period are unaudited.
OPERATIONS - ------------------------------------------------------------------------------------------- 11/1/02-4/3003 11/1/01-10/31/02 Net investment income $ 32,418 $ 61,586 Net realized losses (169,004) (250,220) Net unrealized gains or losses + 348,485 (624,054) ------------------------------------ INCREASE OR DECREASE IN NET ASSETS FROM OPERATIONS 211,899 (812,688) DISTRIBUTIONS PAID - ------------------------------------------------------------------------------------------- Dividends from net investment income Investor Shares 40,944 35,185 Select Shares(R) + 22,368 19,589 ------------------------------------ TOTAL DIVIDENDS FROM NET INVESTMENT INCOME $ 63,312 $ 54,774 a
TRANSACTIONS IN FUND SHARES - ------------------------------------------------------------------------------------------- 11/1/02-4/30/03 11/1/01-10/31/02 QUANTITY VALUE QUANTITY VALUE SHARES SOLD Investor Shares 11,597 $ 289,580 23,138 $680,418 Select Shares + 8,345 207,969 13,770 407,100 -------------------------------------------------- TOTAL SHARES SOLD 19,942 $ 497,549 36,908 $ 1,087,518 SHARES REINVESTED Investor Shares 1,632 $ 40,944 1,048 $ 32,699 Select Shares + 892 22,368 539 16,793 -------------------------------------------------- TOTAL SHARES REINVESTED 2,524 63,312 1,587 $ 49,492 SHARES REDEEMED Investor Shares (11,312) ($ 280,910) (26,817) ($ 764,754) Select Shares + (7,074) (175,992) (16,042) (456,881) -------------------------------------------------- TOTAL SHARES REDEEMED (18,386) ($ 456,902) (42,859) ($ 1,221,635) b NET INCREASE OR DECREASE 4,080 $ 103,959 (4,364) ($ 84,625)
SHARES OUTSTANDING AND NET ASSETS - ------------------------------------------------------------------------------------------- 11/1/02-4/30/03 11/1/01-10/31/02 SHARES NET ASSETS SHARES NET ASSETS Beginning of period 190,492 $4,810,987 194,856 $ 5,763,074 Total increase or decrease + 4,080 252,546 (4,364) (952,087) c -------------------------------------------------- END OF PERIOD 194,572 $5,063,533 190,492 $ 4,810,987 d
a The tax-basis components of distributions paid for the prior period are: Ordinary Income $54,774 Long-term capital gains $ --
b Dollar amounts are net of proceeds received from early withdrawal fees the fund charges on shares sold 180 days or less after buying them. CURRENT PERIOD Investor Shares $ 102 Select Shares + 60 ------------ TOTAL $ 162 PRIOR PERIOD Investor Shares $ 323 Select Shares + 190 ------------ TOTAL $ 513
c Figures for shares represent shares sold plus shares reinvested, minus shares redeemed. Figures for net assets represent the changes in net assets from operations plus the changes in value of transactions in fund shares, minus distributions paid. d Includes net investment income not yet distributed in the amount of $19,575 and $50,469 for the current period and for the prior period, respectively. See financial notes. 44 SCHWAB SMALL-CAP INDEX FUND (R) PERFORMANCE as of 4/30/03: Investor Shares PRE- AND POST-TAX AVERAGE ANNUAL TOTAL RETURNS 1, 2 This bar chart compares pre-tax performance of the fund's Investor Shares with the Schwab Small-Cap Index(R) and the Morningstar Small-Cap Blend Fund category. The table below the chart shows two types of after-tax returns. [BAR CHART]
INVESTOR SHARES SCHWAB SMALL-CAP INDEX CATEGORY AVERAGE 6 MONTHS 5.22% 5.29% 5.17% 1 YEAR -20.62% -20.55% -19.81% 5 YEARS -2.32% -1.69% 0.63% SINCE INCEPTION: 12/3/93 6.39% 7.41% n/a
6 MONTHS 1 YEAR 5 YEARS SINCE INCEPTION -------- ------ ------- --------------- TOTAL RETURNS AFTER TAX INVESTOR CATEGORY INVESTOR CATEGORY INVESTOR CATEGORY INVESTOR CATEGORY SHARES AVERAGE SHARES AVERAGE SHARES AVERAGE SHARES AVERAGE - --------------------------------------------------------------------------------------------------------------------- PRE-LIQUIDATION (still own shares) 4.80% 2.85% -20.93% -21.51% -3.52% -0.96% 5.60% -- - --------------------------------------------------------------------------------------------------------------------- POST-LIQUIDATION (shares were sold) 3.24% 2.26% -12.88% -12.74% -2.06% 0.02% 5.15% -- - ---------------------------------------------------------------------------------------------------------------------
PERFORMANCE OF A $10,000 INVESTMENT 2 This graph shows performance since inception of a hypothetical $10,000 investment in the fund's Investor Shares, compared with a similar investment in two indices: the Schwab Small-Cap Index and the Russell 2000(R) Index. $17,913 INVESTOR SHARES $19,604 SCHWAB SMALL-CAP INDEX $17,881 RUSSELL 2000 INDEX [LINE GRAPH]
INVESTOR SHARES SCHWAB SMALL-CAP INDEX RUSSELL 2000 INDEX 3-Dec-93 10000 10000 10000 Dec-93 10154 10234 10186 Jan-94 10394 10469 10505 Feb-94 10334 10430 10467 Mar-94 9783 9871 9915 Apr-94 9753 9847 9974 May-94 9613 9692 9861 Jun-94 9333 9419 9529 Jul-94 9493 9614 9685 Aug-94 10134 10249 10225 Sep-94 10094 10191 10190 Oct-94 10064 10149 10149 Nov-94 9663 9767 9739 Dec-94 9841 10000 10000 Jan-95 9730 9838 9874 Feb-95 10082 10229 10285 Mar-95 10334 10442 10461 Apr-95 10566 10671 10693 May-95 10717 10809 10877 Jun-95 11211 11356 11441 Jul-95 11866 12021 12100 Aug-95 12077 12270 12351 Sep-95 12309 12510 12572 Oct-95 11785 11910 12010 Nov-95 12329 12482 12514 Dec-95 12562 12782 12845 Jan-96 12491 12749 12831 Feb-96 12967 13261 13231 Mar-96 13170 13492 13501 Apr-96 13899 14206 14223 May-96 14384 14692 14784 Jun-96 13848 14222 14176 Jul-96 12643 13075 12938 Aug-96 13413 13904 13690 Sep-96 14010 14416 14225 Oct-96 13757 14169 14006 Nov-96 14344 14733 14583 Dec-96 14508 15007 14965 Jan-97 14895 15361 15265 Feb-97 14376 14986 14895 Mar-97 13654 14257 14192 Apr-97 13756 14299 14232 May-97 15383 16050 15815 Jun-97 16125 16880 16493 Jul-97 17213 17842 17260 Aug-97 17538 18243 17655 Sep-97 18850 19675 18948 Oct-97 18026 18816 18116 Nov-97 17843 18645 17998 Dec-97 18236 19035 18313 Jan-98 17787 18736 18024 Feb-98 19195 20285 19356 Mar-98 20042 21199 20153 Apr-98 20144 21344 20264 May-98 18930 20090 19172 Jun-98 18960 20146 19212 Jul-98 17471 18597 17656 Aug-98 14062 15011 14227 Sep-98 14991 15953 15341 Oct-98 15705 16709 15967 Nov-98 16532 17576 16804 Dec-98 17584 18719 17844 Jan-99 17617 18800 18081 Feb-99 16145 17229 16617 Mar-99 16372 17559 16876 Apr-99 17660 19165 18388 May-99 17974 19500 18656 Jun-99 18969 20778 19500 Jul-99 18872 20615 18965 Aug-99 18309 20033 18264 Sep-99 18493 20204 18267 Oct-99 18839 20537 18342 Nov-99 20008 21820 19437 Dec-99 21839 23899 21637 Jan-00 21015 23005 21289 Feb-00 23801 26015 24804 Mar-00 23075 25333 23169 Apr-00 21936 24109 21774 May-00 20904 22940 20505 Jun-00 22674 24856 22293 Jul-00 21774 23890 21575 Aug-00 23964 26291 23221 Sep-00 23238 25490 22539 Oct-00 22836 25023 21533 Nov-00 20646 22641 19322 Dec-00 22654 24835 20982 Jan-01 23024 25169 22075 Feb-01 21285 23270 20627 Mar-01 20322 22219 19618 Apr-01 21951 24019 21152 May-01 22543 24663 21673 Jun-01 23543 25768 22420 Jul-01 22481 24623 21207 Aug-01 21852 23925 20522 Sep-01 18767 20554 17760 Oct-01 19718 21583 18799 Nov-01 21161 23175 20254 Dec-01 22451 24571 21504 Jan-02 21643 23657 21280 Feb-02 20873 22815 20697 Mar-02 22682 24807 22361 Apr-02 22566 24674 22565 May-02 21527 23545 21563 Jun-02 20398 22307 20493 Jul-02 17614 19254 17399 Aug-02 17704 19366 17355 Sep-02 16562 18114 16109 Oct-02 17024 18619 16626 Nov-02 18333 20051 18109 Dec-02 17407 19061 17101 Jan-03 16591 18118 16627 Feb-03 16033 17527 16125 Mar-03 16228 17746 16333 Apr-03 17913 19604 17881
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. The fund's share price and principal values change, and when you sell your shares, they may be worth more or less than what you paid for them. Past performance does not indicate future results. Results for the report period are not annualized. 1 The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 4/30/03 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor's situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. As of 4/30/03, the total number of funds in the Morningstar Small-Cap Blend Fund category for the six-month, one-and five-year periods was 349, 342 and 190, respectively. These funds may or may not use tax-efficient strategies. 2 Fund returns reflect expense reductions by the fund's investment adviser (CSIM) and Schwab. Without these reductions, the fund's returns would have been lower. Schwab Equity Index Funds 45 SCHWAB SMALL-CAP INDEX FUND(R) Select Shares(R) PRE- AND POST-TAX AVERAGE ANNUAL TOTAL RETURNS 1, 2 This bar chart compares pre-tax performance of the fund's Select Shares with the Schwab Small-Cap Index(R) and the Morningstar Small-Cap Blend Fund category. The table below the chart shows two types of after-tax returns. [BAR CHART]
SELECT SHARES SCHWAB SMALL-CAP INDEX CATEGORY AVERAGE 6 MONTHS 5.43% 5.29% 5.17% 1 YEAR -20.45% -20.55% -19.81% 5 YEARS -2.19% -1.69% 0.63% SINCE INCEPTION: 3.47% 4.18% n/a
6 MONTHS 1 YEAR 5 YEARS SINCE INCEPTION -------- ------ ------- --------------- TOTAL RETURNS AFTER TAX SELECT CATEGORY SELECT CATEGORY SELECT CATEGORY SELECT CATEGORY SHARES AVERAGE SHARES AVERAGE SHARES AVERAGE SHARES AVERAGE - -------------------------------------------------------------------------------------------------------------------- PRE-LIQUIDATION (still own shares) 4.96% 2.85% -20.80% -21.51% -3.44% -0.96% 2.33% -- - -------------------------------------------------------------------------------------------------------------------- POST-LIQUIDATION (shares were sold) 3.37% 2.26% -12.77% -12.74% -1.98% 0.02% 2.58% --
PERFORMANCE OF A $50,000 INVESTMENT 2 This graph shows performance since inception of a hypothetical $50,000 investment (the minimum investment for this share class) in the fund's Select Shares, compared with a similar investment in two indices: the Schwab Small-Cap Index and the Russell 2000(R) Index. $61,255 SELECT SHARES $63,810 SCHWAB SMALL-CAP INDEX $58,749 RUSSELL 2000 INDEX [LINE GRAPH]
SELECT SHARES SCHWAB SMALL-CAP INDEX RUSSELL 2000 INDEX 19-May-97 50000 50000 50000 May-97 52170 52242 51960 Jun-97 54690 54942 54189 Jul-97 58415 58075 56709 Aug-97 59485 59380 58008 Sep-97 63965 64039 62254 Oct-97 61205 61244 59521 Nov-97 60550 60687 59134 Dec-97 61920 61958 60169 Jan-98 60400 60983 59218 Feb-98 65175 66026 63594 Mar-98 68050 69002 66214 Apr-98 68430 69473 66578 May-98 64310 65391 62990 Jun-98 64415 65575 63122 Jul-98 59360 60531 58009 Aug-98 47790 48861 46744 Sep-98 50945 51924 50404 Oct-98 53365 54386 52460 Nov-98 56170 57207 55209 Dec-98 59775 60929 58627 Jan-99 59925 61193 59407 Feb-99 54925 56079 54595 Mar-99 55660 57152 55446 Apr-99 60070 62380 60414 May-99 61140 63470 61296 Jun-99 64555 67629 64067 Jul-99 64225 67099 62311 Aug-99 62315 65206 60006 Sep-99 62940 65762 60018 Oct-99 64115 66846 60264 Nov-99 68125 71021 63862 Dec-99 74390 77788 71091 Jan-00 71585 74879 69946 Feb-00 81065 84677 81495 Mar-00 78595 82458 76124 Apr-00 74755 78471 71541 May-00 71250 74666 67371 Jun-00 77265 80904 73245 Jul-00 74205 77761 70887 Aug-00 81655 85575 76295 Sep-00 79185 82968 74052 Oct-00 77820 81448 70749 Nov-00 70405 73694 63484 Dec-00 77230 80834 68937 Jan-01 78490 81923 72528 Feb-01 72565 75742 67770 Mar-01 69285 72319 64457 Apr-01 74875 78181 69497 May-01 76850 80277 71207 Jun-01 80300 83871 73663 Jul-01 76685 80145 69678 Aug-01 74540 77873 67427 Sep-01 64030 66902 58352 Oct-01 67265 70251 61765 Nov-01 72230 75432 66546 Dec-01 76610 79977 70652 Jan-02 73855 77001 69917 Feb-02 71230 74261 68001 Mar-02 77400 80744 73469 Apr-02 77005 80311 74137 May-02 73505 76636 70846 Jun-02 69655 72606 67332 Jul-02 60160 62669 57165 Aug-02 60465 63034 57022 Sep-02 56530 58961 52927 Oct-02 58105 60603 54626 Nov-02 62610 65263 59499 Dec-02 59485 62041 56185 Jan-03 56655 58974 54629 Feb-03 54795 57049 52979 Mar-03 55460 57761 53662 Apr-03 61255 63810 58749
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. The fund's share price and principal values change, and when you sell your shares, they may be worth more or less than what you paid for them. Past performance does not indicate future results. Results for the report period are not annualized. 1 The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 4/30/03 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor's situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. As of 4/30/03, the total number of funds in the Morningstar Small-Cap Blend Fund category for the six-month, one-and five-year periods was 349, 342 and 190, respectively. These funds may or may not use tax-efficient strategies. 2 Fund returns reflect expense reductions by the fund's investment adviser (CSIM) and Schwab. Without these reductions, the fund's returns would have been lower. Schwab Equity Index Funds 46 SCHWAB SMALL-CAP INDEX FUND(R) FUND FACTS as of 4/30/03 FUND CATEGORY 1 [GRAPHIC]
INVESTMENT STYLE MARKET CAP Value Blend Growth Large / / / / / / Medium / / / / / / Small / / /X/ / /
STATISTICS NUMBER OF HOLDINGS 996 - ----------------------------------------------------------------------- MEDIAN MARKET CAP ($ x 1,000,000) $ 635 - ----------------------------------------------------------------------- PRICE/EARNINGS RATIO (P/E) 22.9 - ----------------------------------------------------------------------- PRICE/BOOK RATIO (P/B) 2.6 - ----------------------------------------------------------------------- PORTFOLIO TURNOVER RATE 2 34% - ----------------------------------------------------------------------- EXPENSE RATIO 3 Investor Shares 0.60% Select Shares(R) 0.42% - -----------------------------------------------------------------------
TOP HOLDINGS 4
% OF SECURITY INVESTMENTS - ----------------------------------------------------------------------- (1) ENDO PHARMACEUTICAL HOLDINGS, INC. 0.3% - ----------------------------------------------------------------------- (2) DYNEGY, INC. Class A 0.3% - ----------------------------------------------------------------------- (3) SEPRACOR, INC. 0.3% - ----------------------------------------------------------------------- (4) PHARMACEUTICAL RESOURCES, INC. 0.3% - ----------------------------------------------------------------------- (5) RAMBUS, INC. 0.3% - ----------------------------------------------------------------------- (6) THE RYLAND GROUP, INC. 0.3% - ----------------------------------------------------------------------- (7) SILICON LABORATORIES, INC. 0.3% - ----------------------------------------------------------------------- (8) IMCLONE SYSTEMS, INC. 0.2% - ----------------------------------------------------------------------- (9) MIRANT CORP. 0.2% - ----------------------------------------------------------------------- (10) AVOCENT CORP. 0.2% - ----------------------------------------------------------------------- TOTAL 2.7% - -----------------------------------------------------------------------
INDUSTRY WEIGHTINGS This chart shows the fund's industry composition as of the report date. [PIE CHART] 11.7% BUSINESS SERVICES 10.6% HEALTHCARE/DRUGS & MEDICINE 9.7% ELECTRONICS 8.2% BANKS 6.5% REAL PROPERTY 4.8% PRODUCER GOODS & MANUFACTURING 3.6% CONSUMER NON-DURABLE 3.6% UTILITIES: ELECTRIC & GAS 3.4% MISCELLANEOUS FINANCE 37.9% OTHER
1 Source: Morningstar, Inc. This style assessment is the result of comparing the fund with the S&P 500(R) Index, based on P/E, P/B and median market cap. The assessment reflects the fund's portfolio as of 4/30/03, which may have changed since then, and is not a precise indication of risk or performance--past, present or future. 2 Not annualized. 3 Guaranteed by Schwab and the investment adviser through 2/29/04 (excluding interest, taxes, and certain non-routine expenses). 4 This list is not a recommendation of any security by the investment adviser. Portfolio holdings may have changed since the report date. Schwab Equity Index Funds 47 SCHWAB SMALL-CAP INDEX FUND(R) -- Financials FINANCIAL TABLES These tables provide additional data on the fund's performance, portfolio holdings and business operations. Complementing the tables is the financial notes section at the end of this report, which describes the fund's business structure, accounting practices and other matters. Because this is a semiannual report, information for the current report period is unaudited. Look online at WWW.SCHWAB.COM/SCHWABFUNDS/HOW2READ for guides that are designed to help you read the financial tables in any SchwabFunds(R) shareholder report. FINANCIAL HIGHLIGHTS
11/1/02- 11/1/01- 11/1/00- 11/1/99- 11/1/98- 11/1/97- INVESTOR SHARES 4/30/03 10/31/02 10/31/01 10/31/00 10/31/99 10/31/98 - ---------------------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) - ---------------------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 13.27 15.98 21.06 17.41 15.39 17.73 ----------------------------------------------------------------- Income or loss from investment operations: Net investment income 0.06 0.13 0.07 0.07 0.06 0.05 Net realized and unrealized gains or losses 0.63 (2.17) (2.76) 3.62 2.89 (2.33) ----------------------------------------------------------------- Total income or loss from investment operations 0.69 (2.04) (2.69) 3.69 2.95 (2.28) Less distributions: Dividends from net investment income (0.14) (0.09) (0.08) (0.04) (0.06) (0.06) Distributions from net realized gains -- (0.58) (2.31) -- (0.87) -- ----------------------------------------------------------------- Total distributions (0.14) (0.67) (2.39) (0.04) (0.93) (0.06) ----------------------------------------------------------------- Net asset value at end of period 13.82 13.27 15.98 21.06 17.41 15.39 ----------------------------------------------------------------- Total return (%) 5.22 2 (13.66) (13.66) 21.22 19.96 (12.88) RATIOS/SUPPLEMENTAL DATA (%) - ---------------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.53 3 0.49 0.49 0.49 1 0.49 0.49 Expense reductions reflected in above ratio 0.07 3 0.11 0.12 0.16 0.30 0.32 Ratio of net investment income to average net assets 0.83 3 0.77 0.49 0.44 0.33 0.35 Portfolio turnover rate 34 2 44 49 54 41 40 Net assets, end of period ($ x 1,000,000) 693 722 804 803 452 480
1 Would have been 0.50% if certain non-routine expenses (proxy fees) had been included. 2 Not annualized. 3 Annualized. See financial notes. 48
11/1/02- 11/1/01- 11/1/00- 11/1/99- 11/1/98- 11/1/97- SELECT SHARES(R) 4/30/03 10/31/02 10/31/01 10/31/00 10/31/99 10/31/98 - --------------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) - --------------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 13.28 16.00 21.09 17.44 15.41 17.75 ---------------------------------------------------------- Income or loss from investment operations: Net investment income 0.07 0.14 0.11 0.11 0.07 0.08 Net realized and unrealized gains or losses 0.65 (2.18) (2.78) 3.61 2.90 (2.35) ---------------------------------------------------------- Total income or loss from investment operations 0.72 (2.04) (2.67) 3.72 2.97 (2.27) Less distributions: Dividends from net investment income (0.16) (0.10) (0.11) (0.07) (0.07) (0.07) Distributions from net realized gains -- (0.58) (2.31) -- (0.87) -- ---------------------------------------------------------- Total distributions (0.16) (0.68) (2.42) (0.07) (0.94) (0.07) ---------------------------------------------------------- Net asset value at end of period 13.84 13.28 16.00 21.09 17.44 15.41 ---------------------------------------------------------- Total return (%) 5.43 2 (13.62) (13.56) 21.37 20.14 (12.81) RATIOS/SUPPLEMENTAL DATA (%) - --------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.39 3 0.38 0.38 0.38 1 0.38 0.38 Expense reductions reflected in above ratio 0.06 3 0.07 0.08 0.12 0.27 0.33 Ratio of net investment income to average net assets 0.96 3 0.88 0.60 0.55 0.44 0.46 Portfolio turnover rate 34 2 44 49 54 41 40 Net assets, end of period ($ x 1,000,000) 614 638 727 757 447 150
1 Would have been 0.39% if certain non-routine expenses (proxy fees) had been included. 2 Not annualized. 3 Annualized. See financial notes. 49 SCHWAB SMALL-CAP INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS as of April 30, 2003, unaudited This section shows all the securities in the fund's portfolio and their market value, as of the report date. We use the symbols below to designate certain characteristics. With the top ten holdings, the number in the circle is the security's rank among the top ten. (1) Top ten holding o Non-income producing security * American Depositary Receipt = Collateral for open futures contracts ~ Security is valued at fair value (see Accounting Policies)
COST MARKET VALUE HOLDINGS BY CATEGORY ($x1,000) ($x1,000) - -------------------------------------------------------------------------------- 100.0% COMMON STOCK 1,404,562 1,305,568 0.0% U.S. TREASURY OBLIGATIONS 115 115 - -------------------------------------------------------------------------------- 100.0% TOTAL INVESTMENTS 1,404,677 1,305,683
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) COMMON STOCK 100.0% of investments AEROSPACE / DEFENSE 1.1% -------------------------------------------------------------------------- o Armor Holdings, Inc. 64,400 776 Curtiss-Wright Corp. 23,200 1,398 o DRS Technologies, Inc. 54,000 1,513 EDO Corp. 48,300 911 Engineered Support Systems, Inc. 38,900 1,351 o ESCO Technologies, Inc. 29,900 1,173 GenCorp Inc. 106,200 807 o Moog, Inc., Class A 35,100 1,116 o Sequa Corp., Class A 23,700 729 o Teledyne Technologies, Inc. 78,700 1,108 o Trimble Navigation Ltd. 69,400 1,752 o Triumph Group, Inc. 37,000 972 o Veeco Instruments, Inc. 69,070 1,111 ----------- 14,717 AIR TRANSPORTATION 1.1% -------------------------------------------------------------------------- Airborne, Inc. 115,000 2,284 o AirTran Holdings, Inc. 170,200 1,336 o Alaska Air Group, Inc. 63,200 1,127 o Atlantic Coast Airlines Holdings, Inc. 98,300 821 o Continental Airlines, Inc., Class B 155,800 1,421 o EGL, Inc. 113,500 1,820 o ExpressJet Holdings, Inc. 153,800 1,776 o Northwest Airlines Corp., Class A 196,600 1,618 SkyWest, Inc. 139,000 1,778 ----------- 13,981 ALCOHOLIC BEVERAGES 0.0% -------------------------------------------------------------------------- o The Robert Mondavi Corp., Class A 23,500 577 APPAREL 2.5% -------------------------------------------------------------------------- o Aeropostale, Inc. 84,500 1,521 Brown Shoe Co., Inc. 41,400 1,210 o The Buckle, Inc. 49,650 894 o The Children's Place Retail Stores, Inc. 62,900 956 o Christopher & Banks Corp. 61,300 1,542 o The Dress Barn, Inc. 69,500 1,044 o Genesco, Inc. 51,700 776 o The Gymboree Corp. 69,200 1,156 o The J. Jill Group, Inc. 43,500 624 o Jo-Ann Stores, Inc., Class A 47,400 1,232 K-Swiss, Inc., Class A 42,100 1,252 Kellwood Co. 60,900 1,804 o Kenneth Cole Productions, Inc., Class A 46,350 1,068 o The Men's Wearhouse, Inc. 95,650 1,593 o Nautica Enterprises, Inc. 80,200 913 Oshkosh B'Gosh, Inc., Class A 30,100 915 o Pacific Sunwear of California 117,187 2,675 Phillips-Van Heusen Corp. 73,200 972 o Quiksilver, Inc. 62,450 2,036 Russell Corp. 77,100 1,474 Stride Rite Corp. 94,800 835 o Too, Inc. 81,700 1,516 o Unifi, Inc. 132,300 787
See financial notes. 50
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Urban Outfitters, Inc. 45,600 1,360 o The Wet Seal, Inc., Class A 59,825 610 Wolverine World Wide, Inc. 97,500 1,798 ----------- 32,563 AUTOMOTIVE PRODUCTS / MOTOR VEHICLES 1.8% -------------------------------------------------------------------------- A.O. Smith Corp., Class B 69,100 2,061 o Aftermarket Technology Corp. 60,300 643 Arctic Cat, Inc. 52,400 955 Bandag, Inc. 45,000 1,568 Clarcor, Inc. 59,250 2,217 o CSK Auto Corp. 108,600 1,113 o Fleetwood Enterprises, Inc. 88,300 445 o Group 1 Automotive, Inc. 52,700 1,450 Mcgrath Rentcorp 29,100 720 Modine Manufacturing Co. 80,100 1,618 o Monaco Coach Corp. 68,900 931 Myers Industries, Inc. 73,100 734 o Sonic Automotive, Inc. 67,400 1,163 o TBC Corp. 51,000 816 Thor Industries, Inc. 68,100 2,178 o United Auto Group, Inc. 93,400 1,592 o United Rentals, Inc. 181,800 1,872 Winnebago Industries, Inc. 44,000 1,629 ----------- 23,705 BANKS 8.2% -------------------------------------------------------------------------- Alabama National Bancorp 29,400 1,355 Allegiant Bancorp, Inc. 39,200 675 Anchor Bancorp Wisconsin, Inc. 58,200 1,347 BancFirst Corp. 19,500 972 BankAtlantic Bancorp, Inc., Class A 128,800 1,484 Boston Private Financial Holdings, Inc. 46,100 869 Capital City Bank Group, Inc. 25,000 963 Capitol Bancorp Ltd. 26,300 559 Chemical Financial Corp. 56,187 1,655 Chittenden Corp. 84,025 2,273 City Holding Co. 39,400 1,127 Community Bank System, Inc. 29,900 1,036 Community Trust Bancorp, Inc. 30,000 808 Connecticut Bancshares, Inc. 26,300 1,123 Corus Bankshares, Inc. 33,700 1,453 Dime Community Bancshares 61,250 1,412 East-West Bancorp, Inc. 56,700 1,919 F&M Bancorp/Frederick MD 26,200 1,259 Fidelity Bankshares, Inc. 38,800 823 Financial Institutions, Inc. 27,000 593 First Busey Corp., Class A 33,000 782 First Charter Corp. 72,000 1,251 First Commonwealth Financial Corp. 140,600 1,698 First Community Bancorp 36,500 1,087 First Essex Bancorp, Inc. 19,000 665 First Federal Capital Corp. 46,500 879 First Financial Bancorp 107,330 1,683 First Financial Bancshares, Inc. 28,825 1,154 First Merchants Corp. 41,600 990 o First Republic Bank 32,100 806 o FirstFed Financial Corp. 39,600 1,287 Frontier Financial Corp. 45,400 1,230 Gold Banc Corp., Inc. 95,000 836 Hancock Holding Co. 37,117 1,680 Harbor Florida Bancshares, Inc. 56,900 1,515 Harleysville National Corp. 45,755 1,212 Independent Bank Corp. 35,600 722 Integra Bank Corp. 42,470 723 Irwin Financial Corp. 66,200 1,569 MAF Bancorp., Inc. 55,225 1,864 Main Street Banks, Inc. 38,000 803 Mid-State Bancshares 56,400 1,038 Midwest Banc Holdings, Inc. 41,300 743 National Penn Bancshares, Inc. 55,558 1,653 NBT Bancorp., Inc. 78,400 1,426 Net.B@nk, Inc. 118,700 1,185 OceanFirst Financial Corp. 32,200 714 Old Second Bancorp, Inc. 17,900 710 Omega Financial Corp. 19,700 690 Oriental Financial Group 40,650 1,000 Pacific Northwest Bancorp 41,000 1,155 PFF Bancorp, Inc. 29,000 977 Prosperity Bancshares, Inc. 46,500 819
See financial notes. 51 SCHWAB SMALL-CAP INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Provident Bankshares Corp. 58,194 1,478 Republic Bancorp, Inc. 138,920 1,805 Riggs National Corp. 68,000 941 S&T Bancorp, Inc. 63,100 1,738 Sandy Spring Bancorp, Inc. 33,700 1,068 Seacoast Banking Corp. of Florida 34,000 628 Seacoast Financial Services Corp. 56,600 1,068 Second Bancorp., Inc. 22,300 530 o Silicon Valley Bancshares 93,700 2,191 = The South Financial Group, Inc. 112,400 2,754 =o Southwest Bancorp of Texas, Inc. 81,200 2,759 Sterling Bancorp 29,200 798 Sterling Bancshares, Inc. 105,450 1,255 Sterling Financial Corp. 32,100 772 Suffolk Bancorp 28,100 883 Susquehanna Bancshares, Inc. 95,375 2,170 = Texas Regional Bancshares, Inc., Class A 69,220 2,513 Tompkins Trustco, Inc. 18,000 828 Troy Financial Corp. 21,700 587 The Trust Co. of New Jersey 43,100 1,208 Trustco Bank Corp. 178,120 1,858 UCBH Holdings, Inc. 99,200 2,524 UMB Financial Corp. 52,293 2,068 Umpqua Holdings Corp. 66,700 1,311 United Community Banks, Inc. 51,000 1,292 United Community Financial Corp. 85,800 784 United National Bancorp. 45,400 1,171 Unizan Financial Corp. 52,300 911 USB Holding Co., Inc. 44,000 726 Waypoint Financial Corp. 85,700 1,564 WesBanco, Inc. 49,000 1,221 WestCorp., Inc. 93,000 1,972 Wintrust Financial Corp. 40,300 1,225 WSFS Financial Corp. 22,400 771 ----------- 107,623 BUSINESS MACHINES & SOFTWARE 3.2% -------------------------------------------------------------------------- o Activision, Inc. 147,400 2,255 o Adaptec, Inc. 255,900 1,750 o Advanced Digital Information Corp. 150,300 1,205 Analogic Corp. 31,600 1,509 =o Arbitron, Inc. 70,700 2,408 o Ascential Software Corp. 551,100 2,116 =o(10)Avocent Corp. 106,786 3,163 Black Box Corp. 45,700 1,451 o Borland Software Corp. 170,500 1,546 o Cray, Inc. 152,600 1,152 o E.piphany, Inc. 178,800 796 o Global Imaging Systems, Inc. 52,100 964 o Imagistics International, Inc. 42,800 921 o Informatica Corp. 195,900 1,279 o Intergraph Corp. 111,300 2,271 o Invision Technologies, Inc. 39,600 941 o Iomega Corp. 123,760 1,151 o LTX Corp. 111,100 750 o Magma Design Automation, Inc. 75,300 1,130 o Micromuse, Inc. 179,400 1,173 o MICROS Systems, Inc. 40,700 1,019 o Palm, Inc. 71,300 684 o ProQuest Co. 66,800 1,675 o Quantum Corp. 396,000 1,366 o Renaissance Learning, Inc. 75,200 1,433 o S1 Corp. 166,500 733 o Scansource, Inc. 29,000 577 o SRA International, Inc., Class A 31,000 733 o Systems & Computer Technology Corp. 82,100 589 o The Titan Corp. 184,800 1,484 o WebEx Communications, Inc. 98,200 1,012 ----------- 41,236 BUSINESS SERVICES 11.7% -------------------------------------------------------------------------- o 4Kids Entertainment, Inc. 31,000 477 o aaiPharma, Inc. 66,450 751 ABM Industries, Inc. 117,200 1,623 o Actel Corp. 57,300 1,135 o Advent Software, Inc. 78,400 987 o The Advisory Board Co. 34,700 1,271 o Advo, Inc. 47,100 1,852
See financial notes. 52
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Agile Software Corp. 111,500 774 o Altiris, Inc. 48,700 794 o American Management Systems, Inc. 101,200 1,245 o Ansys, Inc. 33,800 894 o Anteon International Corp. 82,400 1,951 o Ariba, Inc. 640,800 2,089 =o Barra, Inc. 46,700 1,525 Bowne & Co., Inc. 80,400 907 Brady Corp., Class A 54,800 1,836 o Bright Horizons Family Solutions, Inc. 28,600 859 =o Brocade Communications Systems, Inc. 547,800 3,161 o CDI Corp. 45,500 1,271 Chemed Corp. 24,100 840 o Ciber, Inc. 140,900 765 o Clarent Corp. 105,200 1 o Cognizant Technology Solutions Corp. 144,000 2,586 o Coinstar, Inc. 52,100 953 o Connetics Corp. 74,500 1,258 o CoStar Group, Inc. 38,800 864 o Credence Systems, Corp. 146,100 1,037 o Cross Country, Inc. 78,200 886 o CSG Systems International, Inc. 124,400 1,310 o Dendrite International, Inc. 88,850 910 o Digital Insight Corp. 77,400 1,251 o Digital River, Inc. 64,800 1,083 o Documentum, Inc. 114,500 2,106 o DoubleClick, Inc. 325,600 2,800 o Echelon Corp. 95,200 1,247 o eFunds Corp. 111,400 1,019 o Enterasys Networks, Inc. 484,900 1,164 o Exult, Inc. 257,000 1,848 o F5 Networks, Inc. 63,900 879 Factset Research Systems, Inc. 81,100 2,822 o Fidelity National Information Solutions, Inc. 94,700 1,662 o Filenet Corp. 86,100 1,325 o Forrester Research, Inc. 56,600 876 o Freemarkets, Inc. 103,500 675 o FTI Consulting, Inc. 63,400 2,869 G&K Services, Inc., Class A 48,850 1,335 o Gartner, Inc., Class B 197,100 1,545 o Heidrick & Struggles International, Inc. 44,700 626 o Hyperion Solutions Corp. 83,945 2,374 ~o i2 Technologies, Inc. 1,063,800 628 o Identix, Inc. 195,032 956 o IDT Corp. 61,500 878 o IDX Systems Corp. 69,300 1,017 o Infospace, Inc. 73,950 921 o Intercept, Inc. 49,000 352 o Interwoven, Inc. 262,200 496 o JDA Software Group, Inc. 61,100 688 John H. Harland Co. 66,500 1,593 o Keane, Inc. 163,100 1,572 o Korn/Ferry International 93,000 640 o Kroll, Inc. 93,900 2,094 o Kronos, Inc. 46,925 2,141 o Labor Ready, Inc. 101,000 651 =o Legato Systems, Inc. 267,500 1,584 o Lending Tree, Inc. 54,900 778 o Macrovision Corp. 107,600 1,901 o MAXIMUS, Inc. 51,100 1,232 o Mentor Graphics Corp. 148,300 1,545 o Mercury Computer Systems, Inc. 50,000 1,050 o MPS Group, Inc. 247,100 1,668 o MRO Software, Inc. 59,600 511 Nautilus Group, Inc. 76,949 977 o NCO Group, Inc. 61,600 1,032 o NETIQ Corp. 133,200 1,835 New England Business Service, Inc. 30,200 769 o Parametric Technology Corp. 632,100 2,086 o Paxar Corp. 94,435 976 o Per-Se Technologies, Inc. 74,000 646 = Pittston Brink's Group 131,300 1,674 o Planar Systems, Inc. 33,400 587 =o Polycom, Inc. 239,600 2,353 o Pre-Paid Legal Services, Inc. 42,900 989
See financial notes. 53 SCHWAB SMALL-CAP INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o PRG-Schultz International, Inc. 152,700 974 o ProBusiness Services, Inc. 67,200 947 o Progress Software Corp. 79,800 1,555 =o R.H. Donnelley Corp. 73,400 2,192 o Radiant Systems, Inc. 67,500 427 o RealNetworks, Inc. 377,400 1,936 o Red Hat, Inc. 407,000 2,442 o Resources Connection, Inc. 50,300 1,097 o Right Management Consultants, Inc. 55,800 697 o RSA Security, Inc. 136,800 1,312 o Seacor Smit, Inc. 47,050 1,685 o Serena Software, Inc. 97,400 1,535 o SourceCorp 36,900 583 o Spherion Corp. 144,800 630 The Standard Register Co. 67,200 1,161 o Startek, Inc. 32,900 910 Strayer Education, Inc. 24,000 1,561 o Sycamore Networks, Inc. 657,100 2,122 o Sylvan Learning Systems, Inc. 97,100 1,703 o Take-Two Interactive Software, Inc. 98,300 2,212 o TeleTech Holdings, Inc. 179,300 732 o Tetra Tech, Inc. 126,918 1,967 o Tetra Technologies, Inc. 33,400 888 o Tier Technologies, Inc., Class B 44,700 295 o Trizetto Group, Inc. 112,600 608 o Tularik, Inc. 134,900 738 o United Online, Inc. 100,800 2,254 o UNOVA, Inc. 139,600 1,027 o URS Corp. 77,600 1,102 o Verity, Inc. 83,200 1,375 o Vignette Corp. 600,800 1,238 Wabtec Corp. 104,421 1,280 = Wallace Computer Services, Inc. 100,800 2,634 o Watson Wyatt & Co. Holdings 78,800 1,608 o webMethods, Inc. 113,600 1,143 o Websense, Inc. 40,800 582 o Wind River Systems, Inc. 194,600 644 ------- 152,934 CHEMICAL 2.5% ------------------------------------------------------------------------- A. Schulman, Inc. 70,300 1,150 Arch Chemicals, Inc. 53,100 1,133 Cambrex Corp. 62,000 1,079 = Crompton Corp. 273,600 1,757 = Ferro Corp. 97,400 2,303 =o FMC Corp. 84,300 1,528 Georgia Gulf Corp. 76,900 1,738 H.B. Fuller Co. 67,600 1,658 =o Hercules, Inc. 262,900 2,668 MacDermid, Inc. 77,400 1,759 Millennium Chemicals, Inc. 142,800 1,986 Olin Corp. 138,900 2,517 PolyOne Corp. 219,300 1,013 Rollins, Inc. 106,950 2,590 Solutia, Inc. 257,500 350 Spartech Corp. 69,900 1,513 o SurModics, Inc. 40,300 1,464 o Symyx Technologies, Inc. 73,800 1,153 Tredegar Corp. 92,900 1,195 WD-40 Co. 38,600 1,021 Wellman, Inc. 78,300 896 ------ 32,471 CONSTRUCTION 2.3% ------------------------------------------------------------------------- o Beazer Homes USA, Inc. 30,769 2,162 CARBO Ceramics, Inc. 35,900 1,351 Centex Construction Products, Inc. 43,200 1,670 o Dycom Industries, Inc. 115,100 1,271 ElkCorp 45,850 928 o EMCOR Group, Inc. 34,200 1,747 Granite Construction, Inc. 99,425 1,670 o Hovnanian Enterprises, Inc., Class A 57,300 2,281 o Insituform Technologies, Inc., Class A 63,200 1,008 M/I Schottenstein Homes, Inc. 35,200 1,202 o McDermott International, Inc. 156,700 509 o Meritage Corp. 32,400 1,236 o NCI Building Systems, Inc. 45,800 737
See financial notes. 54
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Palm Harbor Homes, Inc. 54,300 909 o Photon Dynamics, Inc. 37,500 821 (6) The Ryland Group, Inc. 61,100 3,313 o Simpson Manufacturing Co., Inc. 56,400 1,981 Standard-Pacific Corp. 78,400 2,372 Texas Industries, Inc. 49,700 981 o USG Corp. 106,300 745 Walter Industries, Inc. 106,500 1,081 ---------- 29,975 CONSUMER DURABLE 1.0% -------------------------------------------------------------------------- American Woodmark Corp. 18,600 892 o Genlyte Group, Inc. 31,400 1,184 o Griffon Corp. 78,700 1,072 Haverty Furniture Cos., Inc. 53,500 752 o Helen of Troy Ltd. 67,200 951 Kimball International, Inc., Class B 91,400 1,461 =o Linens 'N Things, Inc. 101,400 2,149 o Select Comfort Corp. 73,000 992 Sturm Ruger & Co., Inc. 65,000 578 Thomas Industries, Inc. 40,000 1,076 Toro Co. 60,000 2,239 ---------- 13,346 CONSUMER NON-DURABLE 3.6% -------------------------------------------------------------------------- Action Performance Cos., Inc. 41,800 773 o AFC Enterprises, Inc. 67,900 1,073 o California Pizza Kitchen, Inc. 44,100 889 o Catalina Marketing Corp. 128,700 2,295 o CEC Entertainment, Inc. 65,600 1,975 Churchill Downs, Inc. 31,300 1,156 o Corvis Corp. 975,600 692 o Fossil, Inc. 105,850 1,935 o Handleman Co. 61,500 1,042 IHOP Corp. 49,700 1,307 o Isle of Capri Casinos, Inc. 69,700 900 o Jack in the Box, Inc. 87,900 1,565 o Jakks Pacific, Inc. 48,200 626 Landry's Restaurants, Inc. 66,200 1,238 Lone Star Steakhouse & Saloon, Inc. 49,500 1,038 The Marcus Corp. 70,225 997 o Marvel Enterprises, Inc. 147,200 2,479 o O'Charleys, Inc. 46,200 935 o P.F. Chang's China Bistro, Inc. 59,300 2,485 o Papa John's International, Inc. 43,900 1,044 o Penn National Gaming, Inc. 94,400 1,844 o Rare Hospitality International Inc. 52,100 1,518 Russ Berrie & Co., Inc. 48,300 1,588 o Ryan's Family Steak Houses, Inc. 104,250 1,292 o SCP Pool Corp. 55,150 1,820 =o Service Corp. International 713,800 2,413 o Sonic Corp. 92,200 2,490 o Sotheby's Holdings, Inc., Class A 148,100 1,302 o The Steak N Shake Co. 66,100 765 o Stewart Enterprises, Inc., Class A 256,700 752 o The Topps Co., Inc. 99,300 924 o Triarc Cos., Inc. 48,000 1,329 Tupperware Corp. 139,300 1,931 ---------- 46,412 CONTAINERS 0.2% -------------------------------------------------------------------------- Greif Inc., Class A 52,900 1,082 o Silgan Holdings, Inc. 42,800 1,139 ---------- 2,221 ELECTRONICS 9.7% -------------------------------------------------------------------------- o Allen Telecom, Inc. 67,800 917 o Amkor Technology, Inc. 397,700 3,011 o Andrew Corp. 234,600 1,799 o Anixter International, Inc. 89,900 2,066 o Artisan Components, Inc. 41,500 820 o Asyst Technologies, Inc. 94,200 449 o ATMI, Inc. 73,300 1,547 o Avid Technology, Inc. 63,200 1,736 o Axcelis Technologies, Inc. 237,000 1,346 Belden, Inc. 57,300 681 o Benchmark Electronics, Inc. 58,700 1,523 o Brooks Automation, Inc. 89,524 758 C&D Technologies, Inc. 63,100 839 o Cable Design Technologies Corp. 109,275 755
See financial notes. 55 SCHWAB SMALL-CAP INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o CCC Information Services Group, Inc. 62,000 1,032 o Checkpoint Systems, Inc. 79,900 1,067 o ChipPAC, Inc., Class A 224,100 1,210 o CMGI, Inc. 965,700 956 o Coherent, Inc. 69,300 1,594 Cohu, Inc. 51,200 922 =o CommScope, Inc. 142,400 1,220 o Conexant Systems, Inc. 642,000 1,168 o Cox Radio, Inc., Class A 95,900 2,187 CTS Corp. 83,100 694 Cubic Corp. 63,600 1,233 o Cyberonics 51,700 1,180 o Cypress Semiconductor Corp. 296,300 2,584 o Dionex Corp. 49,200 1,693 o DSP Group, Inc. 64,600 1,350 o Dupont Photomasks, Inc. 35,100 653 o Electro Rent Corp. 51,722 516 o Electro Scientific Industries, Inc. 65,600 881 o Electronics Boutique Holdings Corp. 61,600 1,152 =o Electronics for Imaging 129,200 2,481 o Entegris, Inc. 170,900 1,960 o ESS Technology, Inc. 94,600 655 o Esterline Technologies Corp. 51,000 905 o Exar Corp. 95,700 1,412 o FEI Co. 78,100 1,428 o Flir Systems, Inc. 39,700 2,068 o Gen-Probe, Inc. 56,500 1,754 o GlobespanVirata, Inc. 311,000 1,888 Helix Technology Corp. 64,100 738 o Hollywood Entertainment Corp. 143,400 2,545 o Hutchinson Technology, Inc. 60,300 1,426 o Intermagnetics General Corp. 40,414 785 =o Internet Security Systems 119,600 1,569 o Itron, Inc. 49,500 991 o Kemet Corp. 207,500 1,903 o Kopin Corp. 166,300 800 o Kulicke & Soffa Industries, Inc. 121,200 629 =o Lattice Semiconductor Corp. 258,600 2,245 o Littelfuse, Inc. 51,900 1,015 =o Macromedia, Inc. 146,200 1,844 Methode Electronics, Class A 84,400 886 o Micrel, Inc. 207,500 2,430 o MKS Instruments, Inc. 122,000 1,703 o Monolithic System Technology, Inc. 74,300 446 o Mykrolis Corp. 97,700 784 o New Focus, Inc. 152,500 503 o Newport Corp. 92,000 1,189 o Omnivision Technologies, Inc. 54,600 1,326 Park Electrochemical Corp. 48,050 857 o Photronics, Inc. 70,900 891 o Pinnacle Systems, Inc. 146,300 1,383 Pioneer Standard Electronics, Inc. 78,400 760 o Plantronics, Inc. 106,500 1,970 o Plexus Corp. 87,400 890 o Power Intergrations, Inc. 68,000 1,505 o Power-One, Inc. 191,400 1,120 o Powerwave Technologies, Inc. 161,400 649 o(5) Rambus, Inc. 233,700 3,342 o Rayovac Corp. 77,900 810 o Riverstone Networks, Inc. 301,600 371 o Rogers Corp. 36,900 1,221 o Rudolph Technologies, Inc. 40,100 606 o ScanSoft, Inc. 155,400 803 o Semtech Corp. 175,000 2,783 o Silicon Image, Inc. 157,900 944 =o(7) Silicon Laboratories, Inc. 116,000 3,300 o Silicon Storage Technology, Inc. 228,800 721 o Standard Microsystems Corp. 41,100 520 o Technitrol, Inc. 96,700 1,527 o Tekelec 145,800 1,569 =o Thomas & Betts Corp. 139,200 2,201 o THQ, Inc. 95,650 1,352 o Triquint Semiconductor, Inc. 318,700 1,119 o Varian Semiconductor Equipment Associates, Inc. 80,900 1,865
See financial notes. 56
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) =o Varian, Inc. 81,300 2,570 o Viasat, Inc. 63,900 680 o Vicor Corp. 104,000 699 o Visx, Inc. 123,700 1,937 o Vitesse Semiconductor Corp. 488,100 1,518 o Western Wireless Corp., Class A 173,400 1,061 o Zoran Corp. 64,300 1,144 ---------- 126,535 ENERGY: RAW MATERIALS 2.6% -------------------------------------------------------------------------- o Atwood Oceanics, Inc. 32,100 836 Berry Petroleum Co., Class A 50,700 786 Cabot Oil & Gas Corp. 76,100 1,865 o Comstock Resources, Inc. 70,900 787 o Dril-Quip, Inc. 42,500 654 o Encore Acquisition Co. 72,000 1,241 o Evergreen Resources, Inc. 44,700 2,126 o FuelCell Energy, Inc. 84,300 519 o Grey Wolf, Inc. 435,900 1,765 o Headwaters, Inc. 65,200 1,069 The Laclede Group, Inc. 44,400 1,070 Massey Energy Co. 179,700 1,874 o Newpark Resources, Inc. 179,400 841 NL Industries 115,200 2,005 o Offshore Logistics, Inc. 53,300 1,013 Penn Virginia Corp. 22,000 857 o Plains Resources, Inc. 58,900 714 o Prima Energy Corp. 31,400 616 o Quicksilver Resource, Inc. 49,400 1,142 o Range Resources Corp. 134,100 793 o Southwestern Energy Co. 77,800 1,036 o Swift Energy Co. 66,800 556 TC Pipelines L.P. 42,300 1,153 =o Tom Brown, Inc. 94,000 2,305 o Ultra Petroleum Corp. 178,500 1,785 o Unit Corp. 94,700 1,856 USEC, Inc. 196,100 1,098 o W-H Energy Services, Inc. 64,300 1,157 ---------- 33,519 FOOD & AGRICULTURE 1.6% -------------------------------------------------------------------------- o American Italian Pasta Co., Class A 42,200 1,861 Bob Evans Farms, Inc. 82,700 2,098 o Chiquita Brands International, Inc. 95,400 1,283 Coca-Cola Bottling Co. Consolidated 21,200 1,075 Delta & Pine Land Co. 91,900 2,138 Fleming Cos., Inc. 133,900 13 Flowers Foods, Inc. 71,600 2,026 o Hain Celestial Group, Inc. 80,600 1,391 o International Multifoods Corp. 45,000 862 = Interstate Bakeries 108,600 1,137 o J & J Snack Foods Corp. 21,900 686 Lance, Inc. 71,500 529 o Ralcorp Holdings, Inc. 69,566 1,732 o Surebeam Corp., Class A 142,000 409 o Tejon Ranch Co. 33,400 927 o United Natural Foods, Inc. 45,000 1,314 Vector Group Ltd. 83,787 938 o Wild Oats Markets, Inc. 72,900 789 ---------- 21,208 GOLD 0.1% -------------------------------------------------------------------------- Royal Gold, Inc. 46,900 748 HEALTHCARE / DRUGS & MEDICINE 10.6% -------------------------------------------------------------------------- o Abgenix, Inc. 202,600 1,925 o Adolor Corp. 74,900 1,048 o Advanced Medical Optics, Inc. 68,600 962 o Advanced Neuromodulation Systems, Inc. 29,000 1,214 o Albany Molecular Research, Inc. 77,600 896 o Alexion Pharmaceuticals, Inc. 44,500 587 o Alkermes, Inc. 155,200 1,549 Alpharma, Inc., Class A 122,200 2,279 o American Healthways, Inc. 33,900 837 o American Medical Systems Holdings, Inc. 77,600 1,232 o AMERIGROUP Corp. 48,300 1,406
See financial notes. 57 SCHWAB SMALL-CAP INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o AMN Healthcare Services, Inc. 92,600 843 o Amsurg Corp. 49,500 1,286 o Antigenics, Inc. 91,200 897 Arrow International, Inc. 51,500 2,197 o Atrix Labs, Inc. 42,800 752 o Beverly Enterprises, Inc. 257,700 492 o Bio-Rad Laboratories, Inc., Class A 59,800 2,796 o BioMarin Pharmaceuticals, Inc. 147,900 1,624 o Biosite, Inc. 35,500 1,515 o Celera Genomics Group - Applera Corp. 173,000 1,816 o Cell Genesys, Inc. 88,500 789 o Cerus Corp. 39,000 316 o Chattem, Inc. 46,800 640 o Cima Labs, Inc. 34,800 840 o Conmed Corp. 68,400 1,192 Cooper Cos., Inc. 73,300 2,045 o Corixa Corp. 120,700 865 o Corvel Corp. 24,400 764 o CV Therapeutics, Inc. 64,700 1,293 Datascope Corp. 34,900 998 o Diversa Corp. 97,800 1,011 =o(1) Endo Pharmaceutical Holdings, Inc. 244,700 4,042 o Enzo Biochem, Inc. 67,868 1,016 o Enzon Pharmaceuticals, Inc. 101,700 1,395 o Exelixis, Inc. 137,900 1,175 o First Horizon Pharmaceutical Corp. 87,100 236 o Genesis Health Ventures, Inc. 99,900 1,495 o Genta, Inc. 176,300 1,319 o Haemonetics Corp. 57,900 1,027 o Hanger Orthopedic Group, Inc. 49,800 513 Hooper Holmes, Inc. 154,200 933 ICN Pharmaceuticals, Inc. 201,000 1,759 o ICU Medical, Inc. 32,800 1,042 o(8) ImClone Systems, Inc. 177,000 3,228 o Impath, Inc. 33,200 488 o Inamed Corp. 51,800 1,932 o Incyte Genomics, Inc. 167,000 576 o Integra LifeSciences Holdings Corp. 64,500 1,722 o InterMune, Inc. 76,300 1,551 o Isis Pharmaceuticals, Inc. 125,500 694 o Kindred Healthcare, Inc. 43,400 647 o KV Pharmaceutical Co., Class A 79,850 1,796 o La Jolla Pharmaceutical Co. 94,300 208 Landauer, Inc. 19,300 740 o Ligand Pharmaceuticals, Inc., Class B 156,900 1,396 o Martek Biosciences Corp. 55,200 1,878 o Maxygen, Inc. 84,600 694 o Medarex, Inc. 163,800 683 o Medicines Co. 110,100 2,263 Mentor Corp. 111,800 2,069 o Merit Medical Systems, Inc. 34,100 668 o Myriad Genetics, Inc. 58,700 700 NDCHealth Corp. 83,300 1,604 o Nektar Therapeutics 132,300 1,061 o NPS Pharmaceuticals, Inc. 76,900 1,465 o Odyssey HealthCare, Inc. 55,100 1,424 o Orthodontic Centers of America, Inc. 123,200 715 o OSI Pharmaceuticals, Inc. 87,500 1,837 Owens & Minor, Inc. 81,800 1,521 o Pacificare Health Systems, Inc. 86,000 2,738 o Parexel International Corp. 61,800 798 Perrigo Co. 166,500 2,557 =o(4) Pharmaceutical Resources, Inc. 78,500 3,450 PolyMedica Corp. 30,300 1,129 o Possis Medical, Inc. 33,500 643 o Priority Healthcare Corp., Class B 100,300 2,287 o Protein Design Labs, Inc. 214,100 2,126 o Province Healthcare Co. 116,600 1,166 o PSS World Medical, Inc. 164,800 990 o Regeneron Pharmaceuticals, Inc. 94,200 596 o RehabCare Group, Inc. 38,900 680 oo Resmed, Inc. 79,200 2,905 o Sangstat Medical Corp. 62,400 786 =o(3) Sepracor, Inc. 200,400 3,838 o Serologicals Corp. 60,000 554 o Sierra Health Services, Inc. 66,100 1,097
See financial notes. 58
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Sola International, Inc. 60,300 845 o Sunrise Assisted Living, Inc. 53,200 1,436 o Sybron Dental Specialties, Inc. 91,400 1,860 o Tanox, Inc. 106,500 1,683 o Telik, Inc. 77,700 1,022 o Thoratec Corp. 132,700 1,825 o Transkaryotic Therapies, Inc. 85,700 514 o Trimeris, Inc. 50,500 2,242 o United Surgical Partners International, Inc. 64,500 1,195 o United Therapeutics Corp. 49,500 888 o US Oncology, Inc. 216,672 1,556 o Vaxgen, Inc. 35,700 107 o Ventana Medical Systems 35,900 822 o Viasys Healthcare, Inc. 62,400 1,011 o Vicuron Pharmaceuticals, Inc. 94,900 1,115 West Pharmaceutical Services, Inc. 35,600 849 o Wright Medical Group, Inc. 77,900 1,479 o XOMA Ltd. 154,800 771 o Zoll Medical Corp. 22,000 711 ---------- 138,689 HOUSEHOLD PRODUCTS 0.2% -------------------------------------------------------------------------- o Elizabeth Arden, Inc. 46,300 588 Nu Skin Enterprises, Inc., Class A 87,600 789 o Playtex Products, Inc. 147,400 1,083 ---------- 2,460 INSURANCE 3.3% -------------------------------------------------------------------------- = Alfa Corp. 189,600 2,448 o Allmerica Financial Corp. 126,100 1,929 Argonaut Group, Inc. 53,000 534 o Clark/Bardes, Inc. 41,400 484 CNA Surety Corp. 102,700 943 o Cobalt Corp. 100,000 1,645 Delphi Financial Group, Inc., Class A 48,571 2,140 FBL Financial Group, Inc., Class A 63,100 1,267 Fremont General Corp. 181,400 1,698 Great American Financial Resources, Inc. 101,750 1,440 Harleysville Group, Inc. 71,900 1,697 Horace Mann Educators Corp. 98,400 1,453 Kansas City Life Insurance Co. 27,900 1,135 Landamerica Financial Group, Inc. 42,700 1,754 Liberty Corp. 46,300 2,045 The Midland Co. 43,100 879 o National Western Life Insurance Co., Class A 8,200 813 o Ohio Casualty Corp. 145,200 1,819 o Philadelphia Consolidated Holding Co. 52,000 2,028 The Phoenix Cos., Inc. 226,500 1,789 PMA Capital Corp., Class A 76,900 657 Presidential Life Corp. 72,000 582 o ProAssurance Corp. 68,796 1,781 RLI Corp. 58,650 1,733 Selective Insurance Group, Inc. 62,900 1,578 State Auto Financial Corp. 93,800 1,763 o Stewart Information Services Corp. 41,500 1,107 o Triad Guaranty, Inc. 32,700 1,303 o UICI 115,900 1,379 United Fire & Casualty Co. 24,400 785 Zenith National Insurance Corp. 44,100 1,136 ---------- 43,744 MEDIA 2.8% -------------------------------------------------------------------------- Advanced Marketing Services 46,600 549 o AMC Entertainment, Inc. 84,200 807 o American Tower Corp., Class A 444,500 2,951 o Arris Group, Inc. 197,200 769 Banta Corp. 60,200 1,869 o Charter Communications, Inc., Class A 703,400 1,175 o CNET Networks, Inc. 332,800 1,208 o Consolidated Graphics, Inc. 32,700 625 o Cumulus Media, Inc., Class A 111,900 1,929 o Entravision Communications Corp., Class A 167,500 1,275 o Fisher Communications, Inc. 20,900 927 o Gaylord Entertainment Co. 81,000 1,686 Gray Television, Inc. 93,100 1,029
See financial notes. 59 SCHWAB SMALL-CAP INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Grey Global Group, Inc. 3,100 2,017 o Information Holdings, Inc. 53,100 924 o Insight Communications Co. 122,300 1,679 o Journal Register Co. 100,300 1,776 o Mediacom Communications Corp. 215,200 2,150 o Movie Gallery, Inc. 76,500 1,414 o Price Communications Corp. 132,000 1,612 o Primedia, Inc. 623,300 1,621 Pulitzer, Inc. 21,200 988 o Saga Communications, Inc., Class A 44,600 901 o Salem Communications Corp., Class A 42,100 887 o Sinclair Broadcast Group, Inc., Class A 102,400 1,085 o Spanish Broadcasting System, Class A 91,000 698 o Tivo, Inc. 141,800 844 o Valuevision Media, Inc., Class A 86,700 1,100 ---------- 36,495 MISCELLANEOUS 0.6% -------------------------------------------------------------------------- o Centene Corp. 26,500 849 o Extreme Networks, Inc. 281,100 1,189 o Lin TV Corp., Class A 62,200 1,487 o Mantech International Corp., Class A 37,900 591 Mine Safety Appliances Co. 32,400 1,239 o Regent Communications, Inc. 111,100 666 o Wilson Greatbatch Technologies, Inc. 49,600 1,626 ---------- 7,647 MISCELLANEOUS FINANCE 3.4% -------------------------------------------------------------------------- 1st Source Corp. 52,100 690 Amcore Financial, Inc. 58,950 1,381 American Capital Strategies Ltd. 112,700 2,734 Anworth Mortgage Asset Corp. 59,600 833 o Bankunited Financial Corp., Class A 60,500 1,143 o Bay View Capital Corp. 154,200 884 o Blackrock, Inc. 42,000 1,910 Cathay Bancorp., Inc. 42,200 1,836 Charter Municipal Mortgage Acceptance Co. 108,100 2,059 o CompuCredit Corp. 112,300 850 CPB, Inc. 38,800 987 CVB Financial Corp. 104,940 2,130 o eSpeed, Inc., Class A 67,600 882 o Financial Federal Corp. 43,700 979 First Financial Corp. 16,600 847 First Financial Holdings, Inc. 30,100 810 First Indiana Corp. 37,800 631 First Sentinel Bancorp., Inc. 69,291 1,048 Flagstar Bancorp., Inc. 70,200 2,324 Glacier Bancorp, Inc. 40,300 1,124 Greater Bay Bancorp 122,600 1,962 Hudson River Bancorp 35,400 870 Independent Bank Corp. Michigan 42,200 1,006 o Knight Trading Group, Inc. 269,000 1,361 o Local Financial Corp. 42,100 631 MB Financial, Inc. 41,600 1,563 MCG Capital Corp. 76,900 827 New Century Financial Corp. 59,300 2,184 Northwest Bancorp, Inc. 114,849 1,872 = Pacific Capital Bancorp. 81,499 2,658 Redwood Trust, Inc. 37,100 1,233 o Saxon Capital, Inc. 67,200 991 Value Line, Inc. 24,100 1,167 ---------- 44,407 NON-FERROUS METALS 0.7% -------------------------------------------------------------------------- Commercial Metals Co. 67,766 1,048 o Hecla Mining Co. 231,600 866 Kaydon Corp. 71,800 1,601 Minerals Technologies, Inc. 47,500 2,102 =o Mueller Industries, Inc. 82,100 2,098 Reliance Steel & Aluminum Co. 75,975 1,291 ---------- 9,006 OIL: DOMESTIC 1.6% -------------------------------------------------------------------------- o CAL Dive International, Inc. 89,700 1,444 Frontier Oil Corp. 62,200 1,052 o Global Industries Ltd. 241,300 1,071
See financial notes. 60
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Holly Corp. 37,200 1,060 =o Houston Exploration Co. 73,400 2,053 o Magnum Hunter Resources, Inc. 163,500 921 Patina Oil & Gas Corp. 64,325 2,221 o Remington Oil & Gas Corp. 62,400 978 o Spinnaker Exploration Co. 79,500 1,701 St. Mary Land & Exploration Co. 67,400 1,727 o Stone Energy Corp. 62,640 2,201 o Superior Energy Services, Inc. 176,300 1,596 o Tesoro Petroleum Corp. 145,100 1,127 Vintage Petroleum, Inc. 153,200 1,498 ---------- 20,650 OPTICAL & PHOTO 0.2% -------------------------------------------------------------------------- o Oakley, Inc. 165,800 1,741 o Ocular Sciences, Inc. 47,800 693 ---------- 2,434 PAPER & FOREST PRODUCTS 0.7% -------------------------------------------------------------------------- o Caraustar Industries, Inc. 68,500 471 Chesapeake Corp. 37,200 668 Deltic Timber Corp. 29,000 709 Glatfelter 105,200 1,205 Longview Fibre Co. 125,500 958 Potlatch Corp. 68,100 1,624 Rock-Tennessee Co., Class A 82,200 1,101 Universal Forest Products, Inc. 43,500 766 Wausau-Mosinee Paper Corp. 124,125 1,321 ---------- 8,823 PRODUCER GOODS & MANUFACTURING 4.8% -------------------------------------------------------------------------- o Actuant Corp., Class A 26,600 987 Acuity Brands, Inc. 99,800 1,520 o Advanced Energy Industries, Inc. 78,800 757 o Aeroflex, Inc. 147,600 794 Albany International Corp., Class A 78,083 1,854 Applied Industrial Technologies, Inc. 44,900 830 Baldor Electric Co. 81,820 1,820 Barnes Group, Inc. 46,400 976 = Briggs & Stratton 51,200 2,311 o Cognex Corp. 102,600 2,246 o Cuno, Inc. 37,700 1,351 Federal Signal Corp. 113,200 1,956 =o Flowserve Corp. 127,334 1,966 Franklin Electric Co., Inc. 25,100 1,301 o Gardner Denver, Inc. 38,900 771 o GrafTech International Ltd. 137,900 554 o Hanover Compressor Co. 160,500 1,350 Hughes Supply, Inc. 56,650 1,590 o Hydril Co. 53,400 1,271 o Ionics, Inc. 33,900 644 o Jarden Corp. 31,700 935 JLG Industries, Inc. 105,600 574 o Joy Global, Inc. 111,500 1,379 Lennox International, Inc. 137,900 2,049 Libbey, Inc. 32,091 721 = Lincoln Electric Holdings, Inc. 101,800 1,956 o Lone Star Technologies, Inc. 68,000 1,444 Manitowoc Co., Inc. 62,262 1,158 Matthews International Corp., Class A 74,600 1,758 o MSC Industrial Direct Co., Class A 82,300 1,523 NACCO Industries, Inc., Class A 16,150 848 Nordson Corp. 81,000 2,046 o Oceaneering International, Inc. 58,900 1,329 Regal Beloit 59,400 1,019 Robbins & Myers, Inc. 35,300 607 Sauer-Danfoss, Inc. 113,400 1,027 o SPS Technologies, Inc. 32,200 849 Standex International Corp. 29,700 627 Steelcase, Inc., Class A 97,200 932 Stewart & Stevenson Services 68,000 912 Tecumseh Products Co., Class A 43,400 1,746 Tennant Co. 22,100 730 o Terex Corp. 106,300 1,759 Trinity Industries, Inc. 103,050 1,706 o Universal Compression Holdings, Inc. 73,400 1,332 Watsco, Inc. 60,900 943 Watts Industries, Inc., Class A 64,500 1,055 Woodward Governor Co. 25,800 955 = York International Corp. 95,000 2,271 ---------- 63,039
See financial notes. 61 SCHWAB SMALL-CAP INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) RAILROAD & SHIPPING 0.5% -------------------------------------------------------------------------- Florida East Coast Industries, Class A 87,800 2,270 o Genessee & Wyoming, Inc., Class A 31,900 552 o Gulfmark Offshore, Inc. 47,000 620 o Kansas City Southern 145,800 1,614 Overseas Shipholding Group 82,600 1,554 ---------- 6,610 REAL PROPERTY 6.5% -------------------------------------------------------------------------- Alexandria Real Estate Equities, Inc. 45,600 1,929 AMLI Residential Properties 40,200 910 Anthracite Capital, Inc. 114,200 1,353 Bedford Property Investors 39,200 1,045 = Brandywine Realty Trust 84,600 1,887 Capital Automotive Real Estate Investment Trust 66,800 1,729 Capstead Mortgage Corp. 34,200 381 = Chateau Communities, Inc. 70,000 1,513 Colonial Properties Trust 53,600 1,823 Commercial Net Lease Realty 97,300 1,572 Cornerstone Realty Income Trust, Inc. 118,800 834 Corporate Office Properties Trust SBI 56,400 860 o Corrections Corp. of America 66,700 1,417 Crown American Realty Trust 78,700 804 Eastgroup Properties 37,600 977 Entertainment Properties Trust 40,300 1,086 Equity One, Inc. 140,900 2,239 Essex Property Trust, Inc. 42,400 2,331 FelCor Lodging Trust, Inc. 141,000 1,000 Gables Residential Trust 57,800 1,640 Getty Realty Corp. 50,600 1,006 Glenborough Realty Trust, Inc. 66,100 1,096 Glimcher Realty Trust 82,300 1,700 Great Lakes Real Estate Investment Trust 40,700 601 Home Properties of NY, Inc. 66,300 2,303 IMPAC Mortgage Holdings, Inc. 116,200 1,548 Innkeepers USA Trust 92,100 694 Investors Real Estate Trust 78,000 764 o Jones Lang LaSalle, Inc. 73,700 1,111 Keystone Property Trust 52,600 905 Kilroy Realty Corp. 66,600 1,653 Koger Equity, Inc. 52,300 837 Kramont Realty Trust 57,300 877 o La Quinta Corp. 366,600 1,243 LaSalle Hotel Properties 46,000 644 Lexington Corp. Properties Trust 71,500 1,233 LNR Property Corp. 52,600 1,853 Manufactured Home Communities, Inc. 52,200 1,672 Meristar Hospitality Corp. 110,600 460 MFA Mortgage Investments, Inc. 111,100 1,041 Mid Atlantic Realty Trust 43,800 812 Mid-America Apartment Communities, Inc. 41,800 1,074 National Health Investors, Inc. 63,400 1,030 Nationwide Health Properties, Inc. 118,800 1,663 Newcastle Investment Corp. 57,000 993 Novastar Financial, Inc. 23,700 1,018 Parkway Properties, Inc. 23,100 892 Pennsylvania Real Estate Investment Trust 38,800 1,108 Post Properties, Inc. 88,800 2,287 PS Business Parks, Inc. 51,000 1,587 RAIT Investment Trust 48,600 1,093 RFS Hotel Investors, Inc. 70,000 752 Saul Centers, Inc. 36,000 849 Senior Housing Properties Trust 139,500 1,741 SL Green Realty Corp. 72,700 2,343 Sovran Self Storage, Inc. 30,300 890 Summit Properties, Inc. 65,800 1,271 Sun Communities, Inc. 42,500 1,638 Tanger Factory Outlet Centers 22,200 715 Taubman Centers, Inc. 126,300 2,211 The Town & Country Trust 38,000 847 o Trammell Crow Co. 88,800 773 Universal Health Realty Income 27,900 730
See financial notes. 62
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) US Restaurant Properties, Inc. 48,700 713 Ventas, Inc. 190,100 2,471 = Washington Real Estate Investment Trust 94,200 2,462 ---------- 84,534 RETAIL 3.0% -------------------------------------------------------------------------- o 7-Eleven, Inc. 252,440 2,269 o Alloy, Inc. 97,100 588 o American Eagle Outfitters, Inc. 170,500 2,984 o AnnTaylor Stores Corp. 108,099 2,558 Blockbuster, Inc., Class A 85,400 1,527 o Blue Rhino Corp. 38,400 521 Burlington Coat Factory Warehouse Corp. 105,340 1,870 Casey's General Stores, Inc. 120,000 1,554 The Cato Corp., Class A 60,200 1,234 o Central Garden & Pet Co. 42,900 1,040 o Charming Shoppes, Inc. 271,300 1,275 o Cost Plus, Inc. 51,400 1,580 o Duane Reade, Inc. 50,900 685 Fred's, Inc. 61,850 2,007 o Great Atlantic & Pacific Tea Co. 94,600 577 o Guitar Center, Inc. 53,600 1,241 Hancock Fabrics, Inc. 42,500 663 o HOT Topic, Inc. 74,249 1,815 o Insight Enterprises, Inc. 97,250 733 Longs Drug Stores Corp. 92,300 1,430 o OfficeMax, Inc. 300,300 1,697 Pep Boys-Manny, Moe & Jack 123,600 1,058 Ruddick Corp. 112,400 1,496 o School Specialty, Inc. 43,200 802 o ShopKo Stores, Inc. 71,000 854 o Stage Stores, Inc. 48,100 1,006 o Tractor Supply Co. 42,700 1,808 Weis Markets, Inc. 64,900 2,074 o West Marine, Inc. 47,300 773 ---------- 39,719 STEEL 0.6% -------------------------------------------------------------------------- Allegheny Technologies, Inc. 175,100 727 Carpenter Technology Corp. 54,900 717 Gibraltar Steel Corp. 38,900 673 o Maverick Tube Corp. 98,700 1,756 Quanex Corp. 39,200 1,127 o The Shaw Group, Inc. 90,300 1,052 o Steel Dynamics, Inc. 114,800 1,389 Valmont Industries, Inc. 56,600 1,093 ---------- 8,534 TELEPHONE 0.9% -------------------------------------------------------------------------- o Broadwing, Inc. 523,800 2,425 o Commonwealth Telephone Enterprises, Inc. 55,600 2,210 o General Communication, Inc., Class A 137,100 849 Inter-Tel, Inc. 58,600 964 o Interdigital Communications Corp. 127,100 2,864 o Lexar Media, Inc. 128,700 624 o Openwave Systems, Inc. 440,600 762 SureWest Communications 35,300 936 ---------- 11,634 TOBACCO 0.3% -------------------------------------------------------------------------- DIMON, Inc. 109,500 718 Schweitzer-Mauduit International, Inc. 36,700 803 = Universal Corp. 59,300 2,316 ---------- 3,837 TRAVEL & RECREATION 1.4% -------------------------------------------------------------------------- o Alliance Gaming Corp. 118,100 1,886 o American Classic Voyages Co. 52,800 -- o Argosy Gaming Co. 69,100 1,408 o Aztar Corp. 87,100 1,240 o Boca Resorts, Inc., Class A 94,200 1,168 Callaway Golf Co. 181,800 2,533 Central Parking Corp. 75,400 754 o Choice Hotels International, Inc. 89,200 2,177 o Dollar Thrifty Automotive Group, Inc. 58,100 953 o Multimedia Games, Inc. 31,500 794 o Prime Hospitality Corp. 86,100 573 o Scientific Games Corp., Class A 143,500 936
See financial notes. 63 SCHWAB SMALL-CAP INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Shuffle Master, Inc. 40,600 930 o Six Flags, Inc. 223,200 1,312 o Vail Resorts, Inc. 65,100 781 o WMS Industries, Inc. 73,200 987 ---------- 18,432 TRUCKING & FREIGHT 1.1% -------------------------------------------------------------------------- Arkansas Best Corp. 58,900 1,493 o Forward Air Corp. 50,600 1,273 o Kirby Corp. 56,900 1,488 o Knight Transportation, Inc. 89,200 2,150 o Landstar Systems, Inc. 36,900 2,293 o PAM Transportation Services, Inc. 24,700 587 Roadway Corp. 45,600 1,690 USFreightways Corp. 64,200 1,830 o Yellow Corp. 70,200 1,874 ---------- 14,678 UTILITIES: ELECTRIC & GAS 3.6% -------------------------------------------------------------------------- Allegheny Energy, Inc. 301,700 2,504 American States Water Co. 35,250 911 Aquila, Inc. 436,100 1,212 Avista Corp. 115,300 1,364 Black Hills Corp. 66,100 1,883 California Water Service Group 36,300 993 CH Energy Group, Inc. 37,700 1,585 Cleco Corp. 113,000 1,695 (2) Dynegy, Inc., Class A 886,600 3,901 o El Paso Electric Co. 120,000 1,361 The Empire District Electric Co. 53,400 1,051 = Energen Corp. 83,100 2,726 Idacorp, Inc. 91,100 2,331 MGE Energy, Inc. 40,900 1,182 o(9) Mirant Corp. 964,200 3,192 New Jersey Resources Corp. 64,100 2,195 Northwest Natural Gas Co. 60,800 1,570 NUI Corp. 38,800 546 Otter Tail Corp. 60,800 1,666 PNM Resources, Inc. 94,200 2,090 o Sierra Pacific Resources 224,600 829 South Jersey Industries 29,900 1,046 o Southern Union Co. 134,570 1,877 Southwest Gas Corp. 79,600 1,652 UIL Holdings Corp. 33,600 1,213 Unisource Energy Corp. 80,580 1,437 = Westar Energy, Inc. 171,600 2,413 ---------- 46,425
SECURITY FACE VALUE RATE, MATURITY DATE ($ x 1,000) U.S. TREASURY OBLIGATIONS 0.0% of investments = U.S. Treasury Bills, 1.10%-1.13%, 06/19/03 115 115
END OF PORTFOLIO HOLDINGS. For totals, please see the first page of holdings for this fund. See financial notes. 64 Statement of ASSETS AND LIABILITIES As of April 30, 2003; unaudited. All numbers x 1,000 except NAV. ASSETS - -------------------------------------------------------------------------------- Investments, at market value (including $8,369 of securities of loan) $ 1,305,683 a Collateral held for securities on loan 8,674 Receivables: Fund shares sold 406 Dividends 832 Investments sold 6,038 Due from brokers for futures 8 Income from lending securities 24 Prepaid expenses + 20 --------------- TOTAL ASSETS 1,321,685 LIABILITIES - -------------------------------------------------------------------------------- Collateral held for securities on loan 8,674 Borrowing from custodian 2,616 Payables: Fund shares redeemed 3,229 Investment adviser and administrator fees 44 Transfer agent and shareholder service fees 24 Accrued expenses + 226 --------------- TOTAL LIABILITIES 14,813 NET ASSETS - -------------------------------------------------------------------------------- TOTAL ASSETS 1,321,685 TOTAL LIABILITIES - 14,813 --------------- NET ASSETS $ 1,306,872 NET ASSETS BY SOURCE Capital received from investors 1,685,536 Net investment income not yet distributed 2,135 Net realized capital losses (281,914) Net unrealized capital losses (98,885) b NET ASSET VALUE (NAV) SHARES SHARE CLASS NET ASSETS / OUTSTANDING = NAV Investor Shares $ 693,202 50,144 $13.82 Select Shares(R) $ 613,670 44,355 $13.84
a The fund paid $1,404,677 for these securities. Not counting short-term obligations and government securities, the fund paid $441,956 for securities during the report period and received $555,136 from securities it sold or that matured. b These derive from investments and futures. As of the report date, the fund had five open Russell 2000 futures contracts due to expire on June 19, 2003, with a contract value of $997 and unrealized gains of $109. FEDERAL TAX DATA - ----------------------------------------------------------------- PORTFOLIO COST $ 1,408,727 NET UNREALIZED GAINS AND LOSSES: Gains $ 167,672 Losses + (270,716) ----------------- ($103,044) AS OF OCTOBER 31, 2002: NET UNDISTRIBUTED EARNINGS: Ordinary income $11,077 Long-term capital gains $ -- UNUSED CAPITAL LOSSES: Expires 10/31 of: Loss amount 2010 $ 86,072
See financial notes. 65 SCHWAB SMALL-CAP INDEX FUND(R) -- Financials Statement of OPERATIONS For November 1, 2002 through April 30, 2003; unaudited. All numbers x 1,000. INVESTMENT INCOME - -------------------------------------------------------------------------------- Dividends $ 8,444 a Interest 7 Lending of securities + 259 --------------- TOTAL INVESTMENT INCOME 8,710 NET REALIZED GAINS AND LOSSES - -------------------------------------------------------------------------------- Net realized losses on investments sold (187,880) Net realized losses on futures contracts + (343) --------------- NET REALIZED LOSSES (188,223) NET UNREALIZED GAINS AND LOSSES - -------------------------------------------------------------------------------- Net unrealized gains on investments 249,412 Net unrealized gains on futures contracts + 93 --------------- NET UNREALIZED GAINS 249,505 EXPENSES - -------------------------------------------------------------------------------- Investment adviser and administrator fees 1,923 b Transfer agent and shareholder service fees: Investor Shares 854 c Select Shares(R) 301 c Trustees' fees 6 d Custodian fees 73 Portfolio accounting fees 104 Professional fees 19 Registration fees 29 Shareholder reports 104 Interest expense 11 Other expenses + 9 --------------- Total expenses 3,433 Expense reduction - 447 e --------------- NET EXPENSES 2,986 INCREASE IN NET ASSETS FROM OPERATIONS - -------------------------------------------------------------------------------- TOTAL INVESTMENT INCOME 8,710 NET EXPENSES - 2,986 --------------- NET INVESTMENT INCOME 5,724 NET REALIZED LOSSES (188,223) f NET UNREALIZED GAINS + 249,505 f --------------- INCREASE IN NET ASSETS FROM OPERATIONS $ 67,006
a An additional $3 was withheld for foreign taxes. b Calculated as a percentage of average daily net assets: 0.33% of the first $500 million and 0.28% of assets beyond that. c Calculated as a percentage of average daily net assets: for transfer agent services, 0.05% of the fund's assets; for shareholder services, 0.20%, and 0.05% of the assets of each respective share class. d For the fund's independent trustees only. e Includes $325 from the investment adviser (CSIM) and $122 from the transfer agent and shareholder service agent (Schwab). These reductions reflect a guarantee by CSIM and Schwab to limit the operating expenses of this fund through at least February 29, 2004, as follows:
% OF AVERAGE SHARE CLASS DAILY NET ASSETS - --------------------------------------- Investor Shares 0.60 Select Shares 0.42
Prior to March 1, 2003, these limits were 0.49% and 0.38% for the Investor Shares and Select Shares, respectively. This limit doesn't include interest, taxes and certain non-routine expenses. f These add up to a net gain on investments of $61,282. See financial notes. 66 Statements of CHANGES IN NET ASSETS For the current and prior report periods. All numbers x 1,000. Figures for current period are unaudited.
OPERATIONS - -------------------------------------------------------------------------------- 11/1/02-4/30/03 11/1/01-10/31/02 Net investment income $ 5,724 $ 13,371 Net realized losses (188,223) (78,341) Net unrealized gains or losses + 249,505 (171,545) ------------------------------------- INCREASE OR DECREASE IN NET ASSETS FROM OPERATIONS 67,006 (236,515) DISTRIBUTIONS PAID - -------------------------------------------------------------------------------- DIVIDENDS FROM NET INVESTMENT INCOME Investor Shares 7,508 4,403 Select Shares(R) + 7,345 4,635 ------------------------------------- TOTAL DIVIDENDS FROM NET INVESTMENT INCOME 14,853 9,038 DISTRIBUTIONS FROM NET REALIZED GAINS Investor Shares -- 29,754 Select Shares + -- 26,290 ------------------------------------- TOTAL DISTRIBUTIONS FROM NET REALIZED GAINS -- 56,044 TOTAL DISTRIBUTIONS $ 14,853 $ 65,082 a
TRANSACTIONS IN FUND SHARES - -------------------------------------------------------------------------------- 11/1/02-4/30/03 11/1/01-10/31/02 QUANTITY VALUE QUANTITY VALUE SHARES SOLD Investor Shares 2,571 $ 33,833 14,769 $ 243,412 Select Shares + 3,375 43,720 14,560 231,836 ---------------------------------------------------- TOTAL SHARES SOLD 5,946 $ 77,553 29,329 $ 475,248 SHARES REINVESTED Investor Shares 552 $ 7,508 1,919 $ 32,335 Select Shares + 540 7,345 1,710 28,842 ---------------------------------------------------- TOTAL SHARES REINVESTED 1,092 $ 14,853 3,629 $ 61,177 SHARES REDEEMED Investor Shares (7,408) ($96,837) (12,547) ($192,562) Select Shares + (7,579) (100,795) (13,662) (212,752) ---------------------------------------------------- TOTAL SHARES REDEEMED (14,987) ($197,632) (26,209) ($405,314) b NET INCREASE OR DECREASE (7,949) ($105,226) 6,749 $ 131,111
SHARES OUTSTANDING AND NET ASSETS - -------------------------------------------------------------------------------- 11/1/02-4/30/03 11/1/01-10/31/02 SHARES NET ASSETS SHARES NET ASSETS Beginning of period 102,448 $1,359,945 95,699 $1,530,431 Total increase or decrease + (7,949) (53,073) 6,749 (170,486) c ---------------------------------------------------- END OF PERIOD 94,499 $1,306,872 102,448 $1,359,945 d
a The tax-basis components of distributions paid for the prior period are: Ordinary Income $ 9,038 Long-term capital gains $56,044
b Dollar amounts are net of proceeds received from early withdrawal fees that the fund charges on shares sold 180 days or less after buying them. CURRENT PERIOD Investor Shares $ 24 Select Shares + 15 --------- TOTAL $ 39 PRIOR PERIOD Investor Shares $128 Select Shares + 65 --------- TOTAL $193
c Figures for shares represent shares sold plus shares reinvested, minus shares redeemed. Figures for net assets represent the changes in net assets from operations plus the changes in value of transactions in fund shares, minus distributions paid. d Includes net investment income not yet distributed in the amount of $2,135 and $11,264 for the current period and the prior period, respectively. Percent of fund shares owned by other SchwabFunds(R) as of the end of the current period: SCHWAB MARKETTRACK PORTFOLIOS(R) All Equity Portfolio 6.9% Growth Portfolio 7.8% Balanced Portfolio 5.4% Conservative Portfolio 2.1% SCHWAB ANNUITY PORTFOLIOS Growth Portfolio II 0.3%
See financial notes. 67 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) PERFORMANCE as of 4/30/03: Investor Shares PRE- AND POST-TAX AVERAGE ANNUAL TOTAL RETURNS 1,2 This bar chart compares pre-tax performance of the fund's Investor Shares with the Wilshire 5000 Total Market Index and the Morningstar Large-Cap Blend Fund category. The table below the chart shows two types of after-tax returns. [BAR CHART]
INVESTOR SHARES WILSHIRE 5000 TOTAL MARKET INDEX CATEGORY AVERAGE 6 MONTHS 4.49% 5.02% 3.31% 1 YEAR -13.73% -13.59% -14.72% SINCE INCEPTION:6/1/99 -6.58% -6.60% n/a
6 MONTHS 1 YEAR -------- ------ TOTAL RETURNS AFTER TAX INVESTOR SHARES CATEGORY AVERAGE INVESTOR SHARES CATEGORY AVERAGE - ------------------------------------------------------------------------------------------------------------------------------- PRE-LIQUIDATION (still own shares) 4.02% 1.05% -14.11% -16.49% - ------------------------------------------------------------------------------------------------------------------------------- POST-LIQUIDATION (shares were sold) 2.78% 0.75% -8.58% -10.00% - -------------------------------------------------------------------------------------------------------------------------------
SINCE INCEPTION --------------- TOTAL RETURNS AFTER TAX INVESTOR SHARES CATEGORY AVERAGE - ------------------------------------------------------------------------------- PRE-LIQUIDATION (still own shares) -6.88% -- - ------------------------------------------------------------------------------- POST-LIQUIDATION (shares were sold) -5.28% -- - -------------------------------------------------------------------------------
PERFORMANCE OF A $10,000 INVESTMENT 2 This graph shows performance since inception of a hypothetical $10,000 investment in the fund's Investor Shares, compared with a similar investment in the Wilshire 5000 Total Market Index. $7,656 INVESTOR SHARES $7,649 WILSHIRE 5000 TOTAL MARKET INDEX [LINE GRAPH]
Investor Wilshire Shares 5000 Index 1-Jun-99 10000 10000 Jun-99 10515 10518 Jul-99 10165 10180 Aug-99 10070 10086 Sep-99 9820 9822 Oct-99 10435 10447 Nov-99 10790 10797 Dec-99 11605 11617 Jan-00 11108 11135 Feb-00 11374 11384 Mar-00 12022 12060 Apr-00 11399 11432 May-00 11012 11033 Jun-00 11484 11519 Jul-00 11258 11284 Aug-00 12077 12104 Sep-00 11520 11538 Oct-00 11294 11294 Nov-00 10179 10170 Dec-00 10371 10351 Jan-01 10746 10748 Feb-01 9724 9729 Mar-01 9066 9074 Apr-01 9815 9821 May-01 9911 9919 Jun-01 9754 9752 Jul-01 9587 9591 Aug-01 9010 9011 Sep-01 8206 8202 Oct-01 8408 8410 Nov-01 9046 9054 Dec-01 9211 9217 Jan-02 9093 9102 Feb-02 8915 8915 Mar-02 9308 9305 Apr-02 8874 8851 May-02 8766 8747 Jun-02 8169 8132 Jul-02 7516 7476 Aug-02 7567 7520 Sep-02 6816 6765 Oct-02 7327 7283 Nov-02 7740 7722 Dec-02 7320 7294 Jan-03 7139 7111 Feb-03 7010 6990 Mar-03 7098 7069 30-Apr-03 7656 7649
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. The fund's share price and principal values change, and when you sell your shares, they may be worth more or less than what you paid for them. Past performance does not indicate future results. Results for the report period are not annualized. 1 The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 4/30/03 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor's situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. As of 4/30/03, the total number of funds in the Morningstar Large-Cap Blend Fund category for the six-month and one-year periods was 1,410 and 1,362, respectively. These funds may or may not use tax-efficient strategies. 2 Fund returns reflect expense reductions by the fund's investment adviser (CSIM) and Schwab. Without these reductions, the fund's returns would have been lower. Schwab Equity Index Funds 68 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) Select Shares(R) PRE- AND POST-TAX AVERAGE ANNUAL TOTAL RETURNS 1, 2 This bar chart compares pre-tax performance of the fund's Select Shares with the Wilshire 5000 Total Market Index and the Morningstar Large-Cap Blend Fund category. The table below the chart shows two types of after-tax returns. [BAR CHART]
SELECT SHARES WILSHIRE 5000 TOTAL MARKET INDEX CATEGORY AVERAGE 6 MONTHS 4.61% 5.02% 3.31% 1 YEAR -13.56% -13.59% -14.72% SINCE INCEPTION:6/1/99 -6.45% -6.60% n/a
6 MONTHS 1 YEAR -------- ------ TOTAL RETURNS AFTER TAX SELECT SHARES CATEGORY AVERAGE SELECT SHARES CATEGORY AVERAGE - ------------------------------------------------------------------------------------------------------------- PRE-LIQUIDATION (still own shares) 4.09% 1.05% -13.98% -16.49% - ------------------------------------------------------------------------------------------------------------- POST-LIQUIDATION (shares were sold) 2.85% 0.75% -8.48% -10.00% - -------------------------------------------------------------------------------------------------------------
SINCE INCEPTION --------------- TOTAL RETURNS AFTER TAX SELECT SHARES CATEGORY AVERAGE - ---------------------------------------------------------------------------- PRE-LIQUIDATION (still own shares) -6.79% -- - ---------------------------------------------------------------------------- POST-LIQUIDATION (shares were sold) -5.20% -- - ----------------------------------------------------------------------------
PERFORMANCE OF A $50,000 INVESTMENT 2 This graph shows performance since inception of a hypothetical $50,000 investment (the minimum investment for this share class) in the fund's Select Shares, compared with a similar investment in the Wilshire 5000 Total Market Index. $38,485 SELECT SHARES $38,245 WILSHIRE 5000 TOTAL MARKET INDEX [LINE GRAPH]
Select Wilshire Shares 5000 Index 1-Jun-99 50000 50000 Jun-99 52600 52590 Jul-99 50850 50902 Aug-99 50350 50428 Sep-99 49125 49112 Oct-99 52225 52236 Nov-99 53975 53986 Dec-99 58065 58083 Jan-00 55605 55673 Feb-00 56935 56920 Mar-00 60150 60301 Apr-00 57060 57159 May-00 55130 55164 Jun-00 57515 57597 Jul-00 56385 56422 Aug-00 60480 60518 Sep-00 57715 57692 Oct-00 56560 56469 Nov-00 51010 50850 Dec-00 51975 51755 Jan-01 53850 53738 Feb-01 48730 48643 Mar-01 45435 45370 Apr-01 49185 49104 May-01 49695 49595 Jun-01 48910 48761 Jul-01 48070 47957 Aug-01 45185 45055 Sep-01 41155 41009 Oct-01 42190 42051 Nov-01 45385 45268 Dec-01 46210 46083 Jan-02 45645 45511 Feb-02 44725 44574 Mar-02 46720 46526 Apr-02 44520 44256 May-02 44010 43734 Jun-02 41015 40659 Jul-02 37735 37378 Aug-02 37990 37598 Sep-02 34230 33827 Oct-02 36790 36415 Nov-02 38860 38611 Dec-02 36775 36472 Jan-03 35865 35553 Feb-03 35245 34952 Mar-03 35660 35347 30-Apr-03 38485 38245
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. The fund's share price and principal values change, and when you sell your shares, they may be worth more or less than what you paid for them. Past performance does not indicate future results. Results for the report period are not annualized. 1 The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 4/30/03 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor's situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. As of 4/30/03, the total number of funds in the Morningstar Large-Cap Blend Fund category for the six-month and one-year periods was 1,410 and 1,362, respectively. These funds may or may not use tax-efficient strategies. 2 Fund returns reflect expense reductions by the fund's investment adviser (CSIM) and Schwab. Without these reductions, the fund's returns would have been lower. Schwab Equity Index Funds 69 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) FUND FACTS as of 4/30/03 FUND CATEGORY 1 [GRAPHIC]
INVESTMENT STYLE MARKET CAP Value Blend Growth Large / / /X/ / / Medium / / / / / / Small / / / / / /
STATISTICS NUMBER OF HOLDINGS 3,156 - ---------------------------------------------------- MEDIAN MARKET CAP ($ x 1,000,000) $ 25,962 - ---------------------------------------------------- PRICE/EARNINGS RATIO (P/E) 23.8 - ---------------------------------------------------- PRICE/BOOK RATIO (P/B) 4.2 - ---------------------------------------------------- PORTFOLIO TURNOVER RATE 2 1% - ---------------------------------------------------- EXPENSE RATIO 3 Investor Shares 0.58% Select Shares(R) 0.39% - ----------------------------------------------------
TOP HOLDINGS 4
% OF SECURITY INVESTMENTS - ------------------------------------------------------- (1) GENERAL ELECTRIC CO. 2.7% - ------------------------------------------------------- (2) MICROSOFT CORP. 2.5% - ------------------------------------------------------- (3) WAL-MART STORES, INC. 2.3% - ------------------------------------------------------- (4) PFIZER, INC. 2.2% - ------------------------------------------------------- (5) EXXON MOBIL CORP. 2.2% - ------------------------------------------------------- (6) CITIGROUP, INC. 1.9% - ------------------------------------------------------- (7) JOHNSON & JOHNSON 1.6% - ------------------------------------------------------- (8) AMERICAN INTERNATIONAL GROUP, INC. 1.3% - ------------------------------------------------------- (9) INTERNATIONAL BUSINESS MACHINES CORP. 1.3% - ------------------------------------------------------- (10) MERCK & CO., INC. 1.2% - ------------------------------------------------------- TOTAL 19.2%
INDUSTRY WEIGHTINGS This chart shows the fund's industry composition as of the report date. [PIE CHART] 13.6% HEALTHCARE/DRUGS & MEDICINE 8.1% BUSINESS MACHINES & SOFTWARE 7.8% BANKS 7.7% MISCELLANEOUS FINANCE 6.2% RETAIL 4.7% INSURANCE 4.6% BUSINESS SERVICES 4.6% PRODUCER GOODS & MANUFACTURING 4.5% ELECTRONICS 38.2% OTHER
1 Source: Morningstar, Inc. This style assessment is the result of comparing the fund with the S&P 500(R) Index, based on P/E, P/B and median market cap. The assessment reflects the fund's portfolio as of 4/30/03, which may have changed since then, and is not a precise indication of risk or performance--past, present or future. 2 Not annualized. 3 Guaranteed by Schwab and the investment adviser through 2/29/04 (excluding interest, taxes, and certain non-routine expenses). 4 This list is not a recommendation of any security by the investment adviser. Portfolio holdings may have changed since the report date. Schwab Equity Index Funds 70 Financial Tables These tables provide additional data on the fund's performance, portfolio holdings and business operations. Complementing the tables is the financial notes section at the end of this report, which describes the fund's business structure, accounting practices and other matters. Because this is a semiannual report, information for the current report period is unaudited. Look online at WWW.SCHWAB.COM/SCHWABFUNDS/HOW2READ for guides that are designed to help you read the financial tables in any SchwabFunds(R) shareholder report. FINANCIAL HIGHLIGHTS
11/1/02- 11/1/01- 11/1/00- 11/1/99- 6/1/99 1- INVESTOR SHARES 4/30/03 10/31/02 10/31/01 10/31/00 10/31/99 - ---------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) - ---------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 14.35 16.62 22.49 20.87 20.00 --------------------------------------------------- Income or loss from investment operations: Net investment income 0.08 0.16 0.15 0.16 0.07 Net realized and unrealized gains or losses 0.56 (2.27) (5.87) 1.56 0.80 --------------------------------------------------- Total income or loss from investment operations 0.64 (2.11) (5.72) 1.72 0.87 Less distributions: Dividends from net investment income (0.17) (0.16) (0.15) (0.10) -- --------------------------------------------------- Net asset value at end of period 14.82 14.35 16.62 22.49 20.87 --------------------------------------------------- Total return (%) 4.49 2 (12.86) (25.55) 8.23 4.35 2 RATIOS/SUPPLEMENTAL DATA (%) - ---------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.46 3 0.40 0.40 0.40 4 0.40 3 Expense reductions reflected in above ratio 0.15 3 0.22 0.25 0.26 0.51 3 Ratio of net investment income to average net assets 1.27 3 1.11 0.94 0.76 0.92 3 Portfolio turnover rate 1 2 2 2 2 1 2 Net assets, end of period ($ x 1,000,000) 344 263 224 218 136
1 Commencement of operations. 2 Not annualized. 3 Annualized. 4 Would have been 0.41% if certain non-routine expenses (proxy fees) had been included. See financial notes. 71 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) -- Financials
11/1/02- 11/1/01- 11/1/00- 11/1/99- 6/1/99 1- SELECT SHARES(R) 4/30/03 10/31/02 10/31/01 10/31/00 10/31/99 - ---------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) - ---------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 14.37 16.65 22.52 20.89 20.00 --------------------------------------------------- Income or loss from investment operations: Net investment income 0.10 0.19 0.18 0.17 0.07 Net realized and unrealized gains or losses 0.56 (2.29) (5.87) 1.56 0.82 --------------------------------------------------- Total income or loss from investment operations 0.66 (2.10) (5.69) 1.73 0.89 Less distributions: Dividends from net investment income (0.19) (0.18) (0.18) (0.10) -- --------------------------------------------------- Net asset value at end of period 14.84 14.37 16.65 22.52 20.89 --------------------------------------------------- Total return (%) 4.61 2 (12.81) (25.40) 8.30 4.45 2 RATIOS/SUPPLEMENTAL DATA (%) - ---------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.31 3 0.27 0.27 0.27 4 0.27 3 Expense reductions reflected in above ratio 0.15 3 0.20 0.23 0.24 0.47 3 Ratio of net investment income to average net assets 1.43 3 1.24 1.07 0.89 1.05 3 Portfolio turnover rate 1 2 2 2 2 1 2 Net assets, end of period ($ x 1,000,000) 332 264 257 262 149
1 Commencement of operations. 2 Not annualized. 3 Annualized. 4 Would have been 0.28% if certain non-routine expenses (proxy fees) had been included. See financial notes. 72 PORTFOLIO HOLDINGS As of April 30, 2003, unaudited This section shows all the securities in the fund's portfolio and their market value, as of the report date. We use the symbols below to designate certain characteristics. With the top ten holdings, the number in the circle is the security's rank among the top ten. (1) Top ten holding O Non-income producing security * American Depositary Receipt = Collateral for open futures contracts / Issuer is affiliated with the fund's adviser ~ Security is valued at fair value (see Accounting Policies)
COST MARKET VALUE HOLDINGS BY CATEGORY ($x1,000) ($x1,000) -------------------------------------------------------------------- 98.6% COMMON STOCK 818,295 667,610 1.3% SHORT-TERM INVESTMENT 9,093 9,093 0.1% U.S. TREASURY OBLIGATION 529 529 0.0% PREFERRED STOCK 4 4 0.0% CONVERTIBLE BONDS -- 2 0.0% RIGHTS 120 1 0.0% WARRANTS -- -- -------------------------------------------------------------------- 100.0% TOTAL INVESTMENTS 828,041 677,239
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) COMMON STOCK 98.6% of investments AEROSPACE / DEFENSE 1.3% --------------------------------------------------------------------- o Aerosonic Corp. 1,000 10 o The Allied Defense Group, Inc. 500 8 o BE Aerospace, Inc. 1,100 2 The Boeing Co. 51,300 1,399 Crane Co. 3,000 59 Curtiss-Wright Corp. 400 24 o DRS Technologies, Inc. 1,200 34 o Ducommun, Inc. 4,300 52 EDO Corp. 900 17 Engineered Support Systems, Inc. 1,650 57 o EnPro Industries, Inc. 920 6 o ESCO Technologies, Inc. 1,400 55 o The Fairchild Corp., Class A 3,100 15 GenCorp Inc. 2,500 19 General Dynamics Corp. 8,900 552 Goodrich Corp. 11,204 158 Heico Corp., Class A 2,260 14 o Integrated Defense Technologies, Inc. 900 13 Kaman Corp., Class A 1,300 13 o Kellstrom Industries, Inc. 600 -- o KVH Industries, Inc. 1,300 20 Lockheed Martin Corp. 28,552 1,429 o Moog, Inc., Class A 2,350 75 Northrop Grumman Corp. 7,816 687 o Orbital Sciences Corp. 2,600 15 Raytheon Co. 26,400 790 Rockwell Automation, Inc. 13,200 301 Rockwell Collins, Inc. 13,100 280 o SatCon Technology Corp. 900 1 o Sequa Corp., Class A 2,800 86 o Teledyne Technologies, Inc. 12,157 171 Textron, Inc. 8,300 245 o Transtechnology Corp. 500 2 o Trimble Navigation Ltd. 3,800 96 o Triumph Group, Inc. 1,200 32 United Technologies Corp. 32,534 2,011 o Veeco Instruments, Inc. 1,000 16 o Veridian Corp. 1,500 28 ---------- 8,792 AIR TRANSPORTATION 0.4% --------------------------------------------------------------------- Airborne, Inc. 2,600 52 o Alaska Air Group, Inc. 8,600 153 o ATA Holdings Corp. 1,200 5 o Atlantic Coast Airlines Holdings, Inc. 1,600 13 o Continental Airlines, Inc., Class B 2,000 18 Delta Air Lines, Inc. 5,400 69 o EGL, Inc. 1,650 26 o ExpressJet Holdings, Inc. 3,000 35 FedEx Corp. 28,263 1,692
See financial notes. 73 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Hawk Corp., Class A 1,800 5 o JetBlue Airways Corp. 3,650 115 o Mesa Air Group, Inc. 1,300 7 o Mesaba Holdings, Inc. 1,100 7 o Northwest Airlines Corp., Class A 3,500 29 SkyWest, Inc. 2,000 26 Southwest Airlines Co. 32,925 525 o Timco Aviation Services, Inc. 80 -- ---------- 2,777 ALCOHOLIC BEVERAGES 0.5% --------------------------------------------------------------------- Adolph Coors Co., Class B 1,300 70 Anheuser-Busch Cos., Inc. 54,500 2,718 Brown-Forman Corp., Class B 3,706 284 o Constellation Brands, Inc., Class A 8,800 236 ---------- 3,308 APPAREL 0.8% --------------------------------------------------------------------- o Abercrombie & Fitch Co., Class A 8,300 273 Brown Shoe Co., Inc. 3,300 96 o The Buckle, Inc. 1,000 18 o Casual Male Corp. 1,100 -- o Chico's FAS, Inc. 3,150 77 o The Children's Place Retail Stores, Inc. 1,800 27 o Christopher & Banks Corp. 7,300 184 o Coach, Inc. 4,002 174 o Columbia Sportswear Co. 1,850 89 o The Dress Barn, Inc. 5,500 83 o Finlay Enterprises, Inc. 1,000 13 Foot Locker, Inc. 5,900 65 o Footstar, Inc. 600 6 o Genesco, Inc. 1,300 19 o Guess?, Inc. 2,700 11 o The Gymboree Corp. 3,100 52 Haggar Corp. 1,200 12 o Hampshire Group Ltd. 1,000 30 o Jo-Ann Stores, Inc., Class A 3,300 86 o Jones Apparel Group, Inc. 12,156 347 K-Swiss, Inc., Class A 1,200 36 Kellwood Co. 2,900 86 o Kenneth Cole Productions, Inc., Class A 3,100 71 Liz Claiborne, Inc. 18,600 605 o Maxwell Shoe Co., Inc., Class A 1,000 12 o The Men's Wearhouse, Inc. 2,400 40 Nike, Inc., Class B 20,700 1,108 Oshkosh B'Gosh, Inc., Class A 1,200 36 Oxford Industries, Inc. 2,500 84 o Pacific Sunwear of California 4,750 108 Phillips-Van Heusen Corp. 1,800 24 o Polo Ralph Lauren Corp. 3,500 82 o Quiksilver, Inc. 1,000 33 o Reebok International Ltd. 8,000 248 Russell Corp. 2,600 50 o Saucony, Inc., Class B 1,900 22 o Shoe Carnival, Inc. 1,200 17 o Skechers USA, Inc., Class A 6,500 44 o Steven Madden Ltd. 1,800 32 Stride Rite Corp. 2,900 26 Superior Uniform Group, Inc. 1,600 18 Talbots, Inc. 2,700 77 o Tandy Brands Accessories, Inc. 1,000 10 o Tarrant Apparel Group 1,700 7 o Timberland Co., Class A 1,400 70 o Too, Inc. 1,742 32 o Unifi, Inc. 1,900 11 o Urban Outfitters, Inc. 1,600 48 VF Corp. 15,000 590 o The Wet Seal, Inc., Class A 3,075 31 Wolverine World Wide, Inc. 5,200 96 ---------- 5,416 AUTOMOTIVE PRODUCTS / MOTOR VEHICLES 1.4% --------------------------------------------------------------------- A.O. Smith Corp., Class B 1,300 39 Aaron Rents, Inc., Class A 1,100 23 o Advance Auto Parts, Inc. 1,680 84 o Aftermarket Technology Corp. 4,300 46 o American Axle & Manufacturing Holdings, Inc. 2,300 57 o ANC Rental Corp. 3,037 --
See financial notes. 74
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) ArvinMeritor, Inc. 14,800 234 o Asbury Automotive Group, Inc. 1,600 15 o Autonation, Inc. 21,600 299 Bandag, Inc. 3,200 112 BorgWarner, Inc. 2,700 158 Carlisle Cos., Inc. 3,600 163 o Carmax, Inc. 3,923 83 Cascade Corp. 4,400 67 Clarcor, Inc. 1,200 45 o Collins & Aikman Corp. 1,400 6 Cooper Tire & Rubber Co. 6,400 90 o Copart, Inc. 4,050 34 Cummins, Inc. 1,400 38 Dana Corp. 40,800 379 Danaher Corp. 9,500 655 Delphi Corp. 26,600 223 Donaldson Co., Inc. 1,900 76 o Dura Automotive Systems, Inc., Class A 12,100 97 Eaton Corp. 6,300 517 Federal Screw Works 250 9 Ford Motor Co. 110,536 1,139 General Motors Corp. 26,386 951 o General Motors Corp., Class H 57,682 681 Genuine Parts Co. 8,000 256 Goodyear Tire & Rubber Co. 6,500 37 o Group 1 Automotive, Inc. 1,400 39 Harley-Davidson, Inc. 18,500 822 o Hayes Lemmerz International, Inc. 700 -- o Keystone Automotive Industries, Inc. 5,500 101 o Lear Corp. 5,800 230 o Lithia Motors, Inc., Class A 700 9 Magna International, Inc., Class A 459 27 Mcgrath Rentcorp 800 20 o Midas, Inc. 1,300 10 Modine Manufacturing Co. 3,700 75 o Monaco Coach Corp. 1,200 16 o Monro Muffler Brake, Inc. 700 16 Myers Industries, Inc. 2,346 24 o NationsRent, Inc. 2,000 -- o Navistar International Corp. 1,900 53 o O'Reilly Automotive, Inc. 2,200 65 Oshkosh Truck Corp. 2,250 126 Polaris Industries, Inc. 1,600 85 o Rent-Way, Inc. 3,200 14 o Rush Enterprises, Inc., Class A 500 2 o Rush Enterprises, Inc., Class B 500 2 o Sonic Automotive, Inc. 1,400 24 o SPX Corp. 8,610 291 Standard Motor Products, Inc. 2,000 23 o Stoneridge, Inc. 1,700 18 o Strattec Security Corp. 1,500 75 Superior Industries International, Inc. 800 32 o TBC Corp. 5,300 85 o Tenneco Automotive, Inc. 1,980 8 Thor Industries, Inc. 1,000 32 Titan International, Inc. 800 1 o Tower Automotive, Inc. 2,300 6 o United Auto Group, Inc. 1,000 17 o United Rentals, Inc. 3,400 35 Visteon Corp. 5,451 38 Winnebago Industries, Inc. 6,300 233 ---------- 9,267 BANKS 7.8% ---------------------------------------------------------------------- ABC Bancorp 1,500 21 Abigail Adams National Bancorp 500 8 Albama National Bancorp 1,600 74 AmSouth Bancorp. 21,803 459 Anchor Bancorp Wisconsin, Inc. 3,100 72 Arrow Financial Corp. 771 22 Associated Banc-Corp. 4,146 145 BancFirst Corp. 500 25 Bancorpsouth, Inc. 4,612 93 Bank Mutual Corp. 1,000 30 Bank of America Corp. 95,200 7,050 Bank of Hawaii Corp. 3,500 115 The Bank of New York Co., Inc. 41,800 1,106 Bank One Corp. 72,200 2,603 BankAtlantic Bancorp, Inc., Class A 2,200 25
See financial notes. 75 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Banknorth Group, Inc. 6,974 167 Bay State Bancorp, Inc. 1,000 26 BB&T Corp. 21,888 714 Berkshire Bancorp, Inc. 1,200 40 Boston Private Financial Holdings, Inc. 2,129 40 Brookline Bancorp, Inc. 2,405 32 Bryn Mawr Bank Corp. 700 25 BSB Bancorp, Inc. 900 22 Camden National Corp. 700 18 Capital City Bank Group, Inc. 1,200 46 o Capital Crossing Bank 1,000 29 Capitol Bancorp Ltd. 1,500 32 Capitol Federal Financial 4,420 138 Cascade Bancorp 2,124 34 Cavalry Bancorp, Inc. 500 8 CCBT Financial Cos., Inc. 200 5 o Central Coast Bancorp 1,331 23 Century Bancorp, Inc., Class A 800 21 Charter Financial Corp. 900 28 Chemical Financial Corp. 1,318 39 Chesterfield Financial Corp. 1,500 31 Chittenden Corp. 1,818 49 Citizens Banking Corp. 2,090 48 Citizens First Bancorp, Inc. 700 15 Citizens South Banking Corp. 1,000 13 City Holding Co. 1,800 51 City National Corp. 3,100 128 The Colonial BancGroup, Inc. 4,600 59 Columbia Bancorp 700 18 o Columbia Banking Systems, Inc. 1,859 29 Comerica, Inc. 8,396 365 Commerce Bancorp, Inc. N.J. 3,060 124 Commerce Bancshares, Inc. 11,518 436 o The Commercial Capital Bancorp, Inc. 4,000 52 Community Bank System, Inc. 700 24 Community First Bankshares, Inc. 2,000 54 Community Trust Bancorp, Inc. 2,056 55 Compass Bancshares, Inc. 11,400 384 Connecticut Bancshares, Inc. 700 30 Corus Bankshares, Inc. 500 22 Cullen/Frost Bankers, Inc. 3,300 108 Dime Community Bancshares 2,250 52 Doral Financial Corp. 4,600 184 East-West Bancorp, Inc. 1,300 44 Exchange National Bancshares, Inc. 500 25 F&M Bancorp/Frederick MD 1,000 48 Fidelity Bankshares, Inc. 1,933 41 Fifth Third Bancorp 34,488 1,700 First Bancorp Puerto Rico 2,100 65 First Busey Corp., Class A 1,000 24 First Charter Corp. 3,500 61 First Citizens BancShares, Inc., Class A 300 29 First Commonwealth Financial Corp. 2,100 25 First Essex Bancorp, Inc. 700 24 First Federal Capital Corp. 2,500 47 First Financial Bancorp 1,839 29 First Financial Bancshares, Inc. 1,200 48 First M & F Corp. 1,000 38 First Merchants Corp. 992 24 First Midwest Bancorp, Inc. 3,125 87 First Oak Brook Bancshares, Inc. 1,000 31 First of Long Island Corp. 2,000 68 First Place Financial Corp. 2,900 46 o First Republic Bank 1,300 33 First Tennessee National Corp. 10,800 473 First United Corp. 2,200 51 First Virginia Banks, Inc. 7,300 298 Firstfed America Bancorp, Inc. 1,000 31 o FirstFed Financial Corp. 2,900 94 FirstMerit Corp. 4,800 98 FleetBoston Financial Corp. 65,777 1,744 FNB Corp. 2,514 76 Franklin Financial Corp. 700 21 Frontier Financial Corp. 700 19 Fulton Financial Corp. 5,150 103 GA Financial, Inc. 1,100 29 GBC Bancorp California 600 16 Gold Banc Corp., Inc. 1,400 12 Golden West Financial Corp. 9,400 709
See financial notes. 76
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Great Southern Bancorp, Inc. 700 27 GreenPoint Financial Corp. 6,100 291 Hancock Holding Co. 1,050 48 Harbor Florida Bancshares, Inc. 1,100 29 Harleysville National Corp. 882 23 Hibernia Corp., Class A 16,900 306 Home Federal Bancorp 800 20 Horizon Financial Corp. 2,156 34 * HSBC Holdings PLC 13,001 711 Hudson City Bancorp, Inc. 19,100 443 Hudson United Bancorp 5,740 191 Huntington Bancshares, Inc. 13,290 259 Independence Community Bank Corp. 3,600 94 Independent Bank Corp. 1,000 20 Integra Bank Corp. 1,225 21 Interchange Financial Services Corp. 1,050 19 Irwin Financial Corp. 3,700 88 J.P. Morgan Chase & Co. 121,780 3,574 KeyCorp, Inc. 18,500 446 Lakeland Financial Corp. 1,100 29 M&T Bank Corp. 6,962 588 MAF Bancorp., Inc. 3,200 108 Main Street Banks, Inc. 1,000 21 MainSource Financial Group, Inc. 1,000 24 Marshall & Ilsley Corp. 12,450 366 MASSBANK Corp. 1,500 46 Mellon Financial Corp. 20,800 550 Mercantile Bankshares Corp. 4,400 169 Merchants Bancshares, Inc. 750 18 Mid-State Bancshares 3,500 64 Midwest Banc Holdings, Inc. 1,300 23 Nara Bancorp, Inc. 2,000 29 National City Corp. 39,000 1,168 National Commerce Financial Corp. 11,650 237 National Penn Bancshares, Inc. 3,244 96 NBT Bancorp., Inc. 1,400 25 Net.B@nk, Inc. 3,300 33 New York Community Bancorp., Inc. 5,277 183 NewMil Bancorp, Inc. 1,000 23 North Fork Bancorp., Inc. 7,300 236 North Valley Bancorp 1,000 22 Northern Trust Corp. 9,800 344 OceanFirst Financial Corp. 1,050 23 Old National Bancorp 3,283 72 Omega Financial Corp. 1,000 35 Oriental Financial Group 1,375 34 Pacific Crest Capital, Inc. 1,000 19 Pacific Northwest Bancorp 1,000 28 Park National Corp. 805 79 Partners Trust Financial Group, Inc. 5,000 98 Patriot Bank Corp. 550 10 Pennfed Finance Services, Inc. 2,000 54 Peoples Bank-Bridgeport 2,500 66 PFF Bancorp, Inc. 800 27 PNC Financial Services Group, Inc. 15,700 689 Popular, Inc. 13,400 490 Port Financial Corp. 1,500 81 Progress Financial Corp. 1,365 19 Prosperity Bancshares, Inc. 2,400 42 Provident Bankshares Corp. 2,382 60 Provident Financial Group, Inc. 2,100 50 o Providian Financial Corp. 11,400 84 o Quaker City Bancorp, Inc. 1,250 46 Regions Financial Corp. 13,500 455 Republic Bancorp, Inc. 5,154 67 Republic Bancorp, Inc., Class A 1,500 20 Riggs National Corp. 2,000 28 Roslyn Bancorp., Inc. 4,550 87 S&T Bancorp, Inc. 1,400 39 Sandy Spring Bancorp, Inc. 2,900 92 Santander BanCorp 1,760 25 Seacoast Banking Corp. of Florida 1,800 33 Seacoast Financial Services Corp. 1,600 30 Second Bancorp., Inc. 900 21 Shore Bancshares, Inc. 500 18 o Silicon Valley Bancshares 2,200 51 Simmons First National Corp., Class A 500 19
See financial notes. 77 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Sky Financial Group, Inc. 4,376 88 The South Financial Group, Inc. 3,000 73 Southern Financial Bancorp, Inc. 230 8 SouthTrust Corp. 18,354 493 o Southwest Bancorp of Texas, Inc. 1,500 51 Southwest Bancorp, Inc. 1,650 40 St. Francis Capital Corp. 1,200 30 State Bancorp, Inc. 800 15 State Street Corp. 18,500 648 Sterling Bancorp 1,219 33 Sterling Bancshares, Inc. 2,100 25 Sterling Financial Corp. 1,000 24 Suffolk Bancorp 2,400 75 o Sun Bancorp, Inc. N.J. 3,150 51 SunTrust Banks, Inc. 15,700 898 Superior Financial Corp. 1,000 19 Susquehanna Bancshares, Inc. 2,700 61 SY Bancorp, Inc. 700 26 Synovus Financial Corp. 13,800 269 Texas Regional Bancshares, Inc., Class A 1,551 56 Timberland Bancorp, Inc. 1,000 20 Tompkins Trustco, Inc. 700 32 Transatlantic Holdings, Inc. 2,650 180 The Trust Co. of New Jersey 3,000 84 Trustco Bank Corp. 2,857 30 Trustmark Corp. 4,300 106 U.S. Bancorp 118,331 2,621 UCBH Holdings, Inc. 2,200 56 UMB Financial Corp. 1,787 71 Umpqua Holdings Corp. 343 7 Union Bankshares Corp. 700 19 Union Planters Corp. 15,950 455 UnionBanCal Corp. 22,600 913 United Bankshares, Inc. 1,900 55 United Community Financial Corp 1,900 17 United National Bancorp 1,230 32 Unizan Financial Corp. 1,371 24 USB Holding Co., Inc. 1,693 28 Valley National Bancorp 5,235 139 Wachovia Corp. 84,036 3,211 Washington Trust Bancorp, Inc. 1,000 21 Waypoint Financial Corp. 1,573 29 Wells Fargo & Co. 105,181 5,076 WesBanco, Inc. 3,200 80 West Coast Bancorp 1,200 19 Westamerica Bancorp 1,700 73 WestCorp., Inc. 2,207 47 Whitney Holding Corp. 1,950 66 Willow Grove Bancorp, Inc. 1,596 24 Wilmington Trust Corp. 3,200 86 Wintrust Financial Corp. 1,800 55 WSFS Financial Corp. 1,000 34 Zions Bancorp 4,200 207 ----------- 53,014 BUSINESS MACHINES & SOFTWARE 8.1% - --------------------------------------------------------------------- o 3Com Corp. 12,400 64 o 3D Systems Corp. 1,400 7 o The 3DO Co. 262 -- o Activision, Inc. 3,300 50 o Adaptec, Inc. 5,700 39 Adobe Systems, Inc. 17,500 605 o Advanced Digital Information Corp. 2,600 21 Analogic Corp. 5,200 248 o Andersen Group, Inc. 1,400 6 o Apple Computer, Inc. 15,700 223 o Arbitron, Inc. 7,320 249 o Artesyn Technologies, Inc. 1,100 5 o Ascential Software Corp. 11,650 45 Autodesk, Inc. 6,400 100 o Avici Systems, Inc. 375 2 o Avocent Corp. 13,963 414 o Bell Microproducts, Inc. 1,000 5 Black Box Corp. 5,200 165 o Blue Coat Systems, Inc. 340 2 o Blue Martini Software, Inc. 285 1 o BMC Software, Inc. 19,000 283 o Borland Software Corp. 3,000 27 o Brio Software, Inc. 2,300 4 o BroadVision, Inc. 1,090 4 o CACI International, Inc., Class A 4,100 143
See financial notes. 78
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Cisco Systems, Inc. 445,369 6,698 o Cognitronics Corp. 2,600 4 o Compuware Corp. 19,900 87 o Comverse Technology, Inc. 17,800 233 o Concerto Software, Inc. 1,100 5 o Concurrent Computer Corp. 3,000 6 o Dell Computer Corp. 158,400 4,579 Diebold, Inc. 4,300 172 o Digital Lightwave, Inc. 1,300 1 o Docent, Inc. 633 2 o E.piphany, Inc. 2,100 9 o EMC Corp. 120,874 1,099 o EXE Technologies, Inc. 371 1 Fair Isaac Corp. 2,163 113 o FalconStor Software, Inc. 1,200 5 o Firstwave Technologies, Inc. 1,000 12 o Foundry Networks, Inc. 4,300 47 o Gateway, Inc. 11,800 34 o General Binding Corp. 500 4 o Global Imaging Systems, Inc. 2,100 39 o Handspring, Inc. 4,700 3 Hewlett-Packard Co. 181,916 2,965 IKON Office Solutions, Inc. 8,500 66 o Imagistics International, Inc. 2,840 61 o Immersion Corp. 800 1 o Informatica Corp. 2,700 18 o Inforte Corp. 3,700 24 o Ingram Micro, Inc., Class A 6,400 64 o Input/Output, Inc. 3,400 11 o Inrange Technologies Corp., Class B 3,000 7 o Integrated Device Technology, Inc. 4,200 43 o Intelli-Check, Inc. 500 4 o Interactive Intelligence, Inc. 1,000 3 o Intergraph Corp. 9,700 198 o Interland, Inc. 5,100 4 (9) International Business Machines Corp. 105,350 8,944 o InterVoice, Inc. 1,678 3 o Invision Technologies, Inc. 1,500 36 o Iomega Corp. 12,400 115 o Juniper Networks, Inc. 13,600 139 o Kana Software, Inc. 528 3 o Lantronix, Inc. 1,900 1 o Lexmark International, Inc., Class A 10,900 812 o LTX Corp. 1,900 13 o Magma Design Automation, Inc. 1,700 25 o Matrixone, Inc. 1,700 6 o Maxtor Corp. 8,748 48 o Maxwell Technologies, Inc. 1,000 6 Microchip Technology, Inc. 9,975 207 o Micromuse, Inc. 2,900 19 o MICROS Systems, Inc. 5,500 138 =(2) Microsoft Corp. 670,960 17,156 o MicroStrategy, Inc., Class A 4,781 132 o MIPS Technology, Inc., Class A 1,100 2 o MSC.Software Corp. 1,800 11 o Nassda Corp. 500 3 o NCR Corp. 11,900 261 o Netegrity, Inc. 1,500 7 o NetScreen Technologies, Inc. 1,400 28 o Network Appliance, Inc. 13,500 179 o Novell, Inc. 14,600 40 o Novellus Systems, Inc. 6,671 187 o Nuance Communications, Inc. 1,000 4 o Opnet Technologies, Inc. 1,100 8 o Oracle Corp. 322,200 3,828 o Palm, Inc. 1,146 11 o Pec Solutions, Inc. 1,000 15 Pitney Bowes, Inc. 15,000 527 o Printronix, Inc. 2,400 24 o ProQuest Co. 1,700 43 o Quantum Corp. 5,500 19 o Quovadx, Inc. 2,600 7 o Rainbow Technologies, Inc. 5,000 45 o Read-Rite Corp. 1,180 1 o Renaissance Learning, Inc. 2,100 40 o Roxio, Inc. 724 4 o S1 Corp. 12,930 57 o Saba Software, Inc. 2,000 2 o Sagent Technology, Inc. 1,500 -- o Scansource, Inc. 600 12
See financial notes. 79 1 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o SCM Microsystems, Inc. 1,200 5 ~o Seagate Escrow Security 7,500 2 o Silicon Graphics, Inc. 4,800 5 *o Skillsoft PLC 4,971 18 o Socket Communications, Inc. 800 1 o SoftBrands, Inc. 671 1 o Stellent, Inc. 1,100 5 o Storage Technology Corp. 14,400 356 o StorageNetworks, Inc. 2,100 2 o Sun Microsystems, Inc. 149,130 492 o Sybase, Inc. 19,036 244 o Synaptics, Inc. 1,000 8 o Systems & Computer Technology Corp. 3,400 24 o T/R Systems, Inc. 1,500 1 o Tech Data Corp. 2,800 67 o The Titan Corp. 3,881 31 Total System Services, Inc. 13,800 255 o Troy Group, Inc. 2,000 5 o Tumbleweed Communications Corp. 2,000 3 o Ultimate Electronics, Inc. 400 3 o Unisys Corp. 18,500 192 o Universal Access Global Holdings, Inc. 2,900 1 o Vastera, Inc. 2,000 10 o Viewlocity, Inc. 60 -- o Virage Logic Corp. 1,400 6 o Vitria Technology, Inc. 3,700 3 o WebEx Communications, Inc. 2,500 26 o Xanser Corp. 1,400 2 o Xerox Corp. 41,200 406 ----------- 54,676 BUSINESS SERVICES 4.6% - --------------------------------------------------------------------- o 1-800 Contacts, Inc. 500 11 o 4Kids Entertainment, Inc. 1,000 15 o aaiPharma, Inc. 1,800 20 ABM Industries, Inc. 2,400 33 o Actel Corp. 1,100 22 o Actuate Corp. 2,300 4 o Administaff, Inc. 2,800 18 o Advent Software, Inc. 1,600 20 o The Advisory Board Co. 1,000 37 o Advo, Inc. 2,700 106 o Aether Systems, Inc. 1,100 4 o Affiliated Computer Services, Inc., Class A 6,000 286 o Agile Software Corp. 1,900 13 o AHL Services, Inc. 2,200 3 o Akamai Technologies, Inc. 4,038 10 o Allied Waste Industries, Inc. 7,800 65 o Ambassadors International, Inc. 1,700 16 o America Online Latin America, Inc., Class A 2,500 1 American Management Systems, Inc 4,200 52 o Analysts International Corp. 2,400 5 Angelica Corp. 1,000 17 o Ansoft Corp. 2,300 20 o answerthink, Inc. 1,700 3 o Ansys, Inc. 1,700 45 o Anteon International Corp. 2,000 47 o Apollo Group, Inc., Class A 12,050 653 o Ariba, Inc. 9,200 30 o Art Technology Group, Inc. 2,200 2 o Artistdirect, Inc. 1,000 1 o Ask Jeeves, Inc. 1,900 16 o Aspen Technology, Inc. 1,000 3 o At Road, Inc. 900 6 Automatic Data Processing, Inc. 37,600 1,264 o Barra, Inc. 3,250 106 o BEA Systems, Inc. 16,400 176 o BearingPoint, Inc. 7,100 58 o BindView Development Corp. 1,700 2 o Bottomline Technologies, Inc. 500 3 Bowne & Co., Inc. 1,700 19 Brady Corp., Class A 700 23 o Bright Horizons Family Solutions, Inc 1,300 39 o Brocade Communications Systems, Inc 9,500 55 o BSQUARE Corp. 1,600 1 o CareCentric, Inc. 119 --
See financial notes. 80
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Career Education Corp. 2,600 156 o Carreker Corp. 1,200 5 o Casella Waste Systems, Inc., Class A 2,500 21 o Catapult Communications Corp 1,600 14 o CDI Corp. 1,200 34 o CDW Computer Centers, Inc. 4,300 183 o Cendant Corp. 65,220 931 o Centra Software, Inc. 2,400 3 o Ceridian Corp. 19,500 272 o Cerner Corp. 1,700 34 o Certegy, Inc. 3,650 91 o Charles River Associates, Inc. 2,500 54 o Checkfree Corp. 2,900 80 Chemed Corp. 1,200 42 o ChoicePoint, Inc. 3,400 120 o Chordiant Software, Inc. 1,100 1 o Ciber, Inc. 1,900 10 Cintas Corp. 7,050 253 o Citrix Systems, Inc. 20,000 379 o Clarent Corp. 1,545 -- o Clarus Corp. 1,200 6 o Click Commerce, Inc. 320 1 o Cognizant Technology Solutions Corp 300 5 o Coinstar, Inc. 5,200 95 o Com21, Inc. 1,400 -- o Comarco, Inc. 500 3 o Commerce One, Inc. 730 2 o Computer Access Technology Corp. 800 2 Computer Associates International, Inc. 35,226 572 o Computer Sciences Corp. 15,738 519 o Concord EFS, Inc. 21,800 301 o Connetics Corp. 3,400 57 o Convergys Corp. 10,500 170 o Corillian Corp. 2,000 2 o Corinthian Colleges, Inc. 4,600 211 o Corio, Inc. 1,400 2 o Cornell Cos., Inc. 2,100 23 o Corporate Executive Board Co. 1,700 70 o Correctional Services Corp. 2,000 6 o CoStar Group, Inc. 800 18 Courier Corp. 2,800 137 o Covansys Corp. 2,500 6 o Credence Systems, Corp. 1,700 12 o Cross Country, Inc. 1,600 18 o Cross Media Marketing Corp. 1,391 -- o CSG Systems International, Inc. 2,900 31 o CycleLogic, Inc. 2 -- o Cysive, Inc. 1,000 2 o D&B Corp. 16,000 605 o Daleen Technologies, Inc. 800 -- o Datastream Systems, Inc. 1,300 11 Deluxe Corp. 7,700 339 o Dendrite International, Inc. 1,100 11 o DeVry, Inc. 4,800 111 o DiamondCluster International, Inc., Class A 1,000 2 o Dice, Inc. 1,000 -- o Digex, Inc. 1,800 1 o Digimarc Corp. 1,000 13 Digital Courier Technologies, Inc. 1,700 -- o Digital Insight Corp. 2,300 37 o Digital River, Inc. 2,100 35 o Digitalthink, Inc. 1,300 3 o Digitas, Inc. 1,500 6 o Divine, Inc., Class A 161 -- o Documentum, Inc. 1,800 33 o DoubleClick, Inc. 8,237 71 o DST Systems, Inc. 5,400 166 o Duratek, Inc. 1,500 15 o Dyax Corp. 2,000 4 o Dynamics Research Corp. 1,200 12 o Earthlink, Inc. 7,350 51 o eBay, Inc. 15,912 1,476 o Echelon Corp. 1,200 16 o Eclipsys Corp. 1,800 16 o Edgewater Technology, Inc. 767 3 o Edison Schools, Inc. 1,900 2
See financial notes. 81 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Education Management Corp. 1,700 83 o eFunds Corp. 2,502 23 Electronic Data Systems Corp. 21,600 392 o ELITE Information Group, Inc. 1,500 21 o eLoyalty Corp. 190 1 o Embarcadero Technologies, Inc. 2,900 20 o Engage, Inc. 4,900 1 Ennis Business Forms 4,500 56 o Enterasys Networks, Inc. 8,500 20 o Entrada Networks, Inc. 75 -- o Entrust, Inc. 2,800 7 o EPIQ Systems, Inc. 1,550 32 o ePresence, Inc. 2,700 5 Equifax, Inc. 9,300 216 o Equinix, Inc. 65 -- o Exponent, Inc. 3,000 42 o Exult, Inc. 4,100 29 o Ezenia!, Inc. 1,000 -- o F5 Networks, Inc. 3,300 45 Factset Research Systems, Inc. 1,500 52 o Falcon Products, Inc. 1,500 6 o Fargo Electronics, Inc. 2,000 20 o Fidelity National Information Solutions, Inc. 1,100 19 o Filenet Corp. 1,300 20 o First Consulting Group, Inc. 1,800 9 First Data Corp. 47,000 1,844 o Fiserv, Inc. 9,300 274 o Forrester Research, Inc. 1,600 25 o Freemarkets, Inc. 3,300 22 o FTI Consulting, Inc. 1,800 81 G&K Services, Inc., Class A 1,200 33 o Gartner, Inc., Class B 3,551 28 o Gemstar -- TV Guide International, Inc. 18,160 73 o Genuity, Inc., Class A 280 -- o Geoworks Corp. 800 -- Global Payments, Inc. 8,520 264 o GP Strategies Corp. 1,500 8 o GTECH Holdings Corp. 4,700 158 H&R Block, Inc. 21,300 823 o HA-LO Industries, Inc. 2,100 -- o Hall, Kinion & Associates, Inc. 900 2 o Heidrick & Struggles International, Inc. 3,100 43 o Hewitt Associates, Inc., Class A 7,000 194 o Homestore, Inc. 4,200 4 o Hudson Highland Group, Inc. 360 5 o Hyperion Solutions Corp. 9,300 263 o I-Many, Inc. 1,300 1 ~o i2 Technologies, Inc. 15,300 9 o iBEAM Broadcasting Corp. 290 -- o ICT Group, Inc. 500 4 o Identix, Inc. 1,600 8 o IDT Corp. 1,700 24 o IDX Systems Corp. 1,500 22 o iGate Corp. 1,300 4 o InFocus Corp. 1,600 7 o Infogrames, Inc. 1,600 7 o Infonet Services Corp., Class B 11,200 14 o Information Resources, Inc. 2,500 6 o Infospace, Inc. 872 11 o infoUSA, Inc. 2,300 12 o Innodata Corp. 2,400 3 o Integrated Silicon Solutions, 900 3 Inc. o Interactive Data Corp. 20,700 331 o Intercept, Inc. 1,500 11 o Internap Network Services Corp. 4,600 2 o Internet Capital Group, Inc. 7,000 3 Interpublic Group of Cos., Inc. 16,644 190 o Interwoven, Inc. 3,700 7 o Intuit, Inc. 11,215 435 o Iron Mountain, Inc. 3,525 140 o The IT Group, Inc. 1,900 -- o ITT Educational Services, Inc. 6,000 177 o J.D. Edwards & Co. 6,300 75 Jack Henry & Associates, Inc. 3,300 43 o Jacobs Engineering Group, Inc. 2,000 82 o JDA Software Group, Inc. 2,000 23 John H. Harland Co. 3,500 84 o Jupiter Media Metrix, Inc. 1,673 -- o Keane, Inc. 3,960 38
See financial notes. 82
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Keith Cos., Inc. 3,000 33 Kelly Services, Inc., Class A 3,200 74 o Key3Media Group, Inc. 2,400 -- o Korn/Ferry International 1,100 8 o Kroll, Inc. 1,900 42 o Kronos, Inc. 1,250 57 o Lamar Advertising Co. 3,200 115 o Learning Tree International, Inc. 1,400 20 o Legato Systems, Inc. 4,400 26 o LendingTree, Inc. 1,000 14 o Liberate Technologies 5,900 15 o Lightbridge, Inc. 2,200 16 o Looksmart Ltd. 2,400 8 o Luminex Corp. 800 5 o Macrovision Corp. 2,300 41 o Manhattan Associates, Inc. 1,300 31 Manpower, Inc. 3,700 122 o Manugistics Group, Inc. 2,300 7 o MAPICS, Inc. 1,000 6 o Mapinfo Corp. 525 3 o Marimba, Inc. 2,000 4 o MAXIMUS, Inc. 1,700 41 o MCSi, Inc. 1,248 -- o Mechanical Technology, Inc. 1,800 4 o Media Arts Group, Inc. 2,000 5 o Medical Staffing Network Holdings, Inc. 1,300 10 o Medis Technologies Ltd. 1,110 9 o MemberWorks, Inc. 4,500 99 o Mentor Graphics Corp. 3,200 33 o Mercator Software, Inc. 1,100 2 o Mercury Computer Systems, Inc. 3,600 76 o Mercury Interactive Corp. 3,300 112 o Meta Group, Inc. 1,100 4 o MetaSolv, Inc. 2,800 4 o Metricom, Inc. 1,400 -- o Michael Baker Corp. 500 4 o Microvision, Inc. 900 4 o Millenium Cell, Inc. 2,200 4 o Moldflow Corp. 300 2 Moody's Corp. 9,300 449 o MPS Group, Inc. 4,100 28 o MRO Software, Inc. 3,900 33 o Multi-Color Corp. 500 8 o National Instruments Corp. 2,050 66 o National Processing, Inc. 2,700 43 National Service Industries, Inc. 450 4 Nautilus Group, Inc. 1,625 21 o Navigant Consulting, Inc. 2,500 19 o NCO Group, Inc. 1,761 30 o Neoforma, Inc. 1,500 16 o Neon Systems, Inc. 2,400 4 o Netcentives, Inc. 2,000 -- o NETIQ Corp. 7,704 106 o Netratings, Inc. 3,000 19 o Netscout Systems, Inc. 1,800 5 o Netsolve, Inc. 1,600 10 o Network Associates, Inc. 8,445 97 o Network Commerce, Inc. 140 -- New England Business Service, Inc. 2,300 59 o Nobel Learning Communities, Inc. 500 2 o NYFIX, Inc. 750 4 o Oak Technology, Inc. 2,200 11 Omnicom Group, Inc. 8,800 545 o On Assignment, Inc. 1,700 8 o Onesource Information Service 3,800 24 o Onyx Software Corp. 1,400 1 o Opsware, Inc. 800 3 o Overture Services, Inc. 2,900 31 o Packeteer, Inc. 1,100 14 o Parametric Technology Corp. 9,700 32 o Paxar Corp. 2,300 24 Paychex, Inc. 22,400 698 o PC-Tel, Inc. 1,400 13 o PDI, Inc. 400 4 o Pegasus Solutions, Inc. 11,200 133 o PeopleSoft, Inc. 13,400 201 o Per-Se Technologies, Inc. 10,000 87 o Peregrine Systems, Inc. 7,015 2 o Performance Technologies, Inc. 1,600 8 o Perot Systems Corp., Class A 4,600 49
See financial notes. 83 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Phoenix Technologies Ltd. 1,300 6 Pittston Brink's Group 5,600 71 o Pixar, Inc. 2,600 152 o Planar Systems, Inc. 1,200 21 o PLATO Learning, Inc. 1,433 7 o Polycom, Inc. 4,400 43 o Pomeroy Computer Resources, Inc. 2,100 15 o Portal Software, Inc. 6,100 8 o Praecis Pharmaceuticals, Inc. 1,600 7 o Pre-Paid Legal Services, Inc. 1,100 25 o Precis, Inc. 1,200 5 o Predictive Systems, Inc. 1,700 1 o PRG-Schultz International, Inc. 2,500 16 o Priceline.com, Inc. 8,900 20 o ProBusiness Services, Inc. 2,200 31 o Progress Software Corp. 4,200 82 o ProsoftTraining 900 -- o Pumatech, Inc. 1,500 5 o QLogic Corp. 4,022 177 o QRS Corp. 1,450 8 o Quality Systems, Inc. 3,500 106 o Quest Software, Inc. 5,000 54 o Quintus Corp. 1,500 -- Quixote Corp. 3,800 69 o R.H. Donnelley Corp. 2,000 60 o Radiant Systems, Inc. 1,300 8 o Radisys Corp. 700 6 o RealNetworks, Inc. 6,000 31 o Red Hat, Inc. 7,100 43 o Redback Networks, Inc. 5,600 3 o Register.com 2,600 15 o RemedyTemp, Inc., Class A 1,200 14 o Resources Connection, Inc. 600 13 o Retek, Inc. 3,843 24 The Reynolds & Reynolds Co., Class A 5,000 144 o Right Management Consultants, Inc. 4,625 58 o Robert Half International, Inc. 7,500 122 o Ross Systems, Inc. 1,000 13 o RSA Security, Inc. 2,000 19 o Rural Cellular Corp., Class A 1,200 1 o SafeNet, Inc. 900 21 o Sanchez Computer Associates, Inc. 1,800 9 o Sandisk Corp. 2,500 61 o Sapient Corp. 3,600 7 o SBS Technologies, Inc. 1,700 14 o Scient, Inc. 624 -- o Seachange International, Inc. 850 7 o Seacor Smit, Inc. 1,250 45 o Secure Computing Corp. 3,200 18 o Seebeyond Technology Corp. 3,100 7 SEI Investments Co. 6,200 163 o Selectica, Inc. 1,900 6 o Serena Software, Inc. 2,100 33 The ServiceMaster Co. 20,400 185 o SFBC International, Inc. 1,000 16 o Siebel Systems, Inc. 18,100 157 o Sirius Satellite Radio, Inc. 1,200 1 o Sitel Corp. 2,800 4 o Sonic Foundry, Inc. 600 -- o SONICblue, Inc. 2,600 -- o SonicWALL, Inc. 4,900 17 Sonoco Products Co. 4,100 90 o Sonus Networks, Inc. 7,400 24 o SourceCorp 1,100 17 o Spherion Corp. 1,830 8 o Spherix, Inc. 500 3 o SportsLine.com, Inc. 2,300 2 o SPSS, Inc. 700 9 o SS&C Technologies, Inc. 7,400 102 The Standard Register Co. 4,100 71 o Startek, Inc. 7,400 205 o Stericycle, Inc. 2,200 86 o Stratasys, Inc. 4,500 106 Strayer Education, Inc. 700 46 o Student Advantage, Inc. 190 -- o Sungard Data Systems, Inc. 18,900 406 o Sunrise Telecom, Inc. 2,000 5 o SupportSoft, Inc. 2,300 8 o Sycamore Networks, Inc. 11,000 36
See financial notes. 84
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Sylvan Learning Systems, Inc. 2,200 39 o Symantec Corp. 14,200 624 o Synopsys, Inc. 3,342 163 o Synplicity, Inc. 1,200 4 o Syntel, Inc. 2,500 38 o Take-Two Interactive Software,Inc. 8,000 180 Talx Corp. 4,200 53 o Tanning Technology Corp. 900 1 o TeleTech Holdings, Inc. 5,000 20 o Tetra Tech, Inc. 12,031 186 o Tetra Technologies, Inc. 800 21 o Thermo Electron Corp. 26,550 482 o TIBCO Software, Inc. 8,500 42 o Tier Technologies, Inc., Class B 500 3 o TMP Worldwide, Inc. 4,800 80 o Transaction Systems Architects, Inc., Class A 5,200 36 o TRC Cos., Inc. 1,350 15 o Trizetto Group, Inc. 3,400 18 o Tularik, Inc. 2,100 11 o Unify Corp. 1,200 -- o United Online, Inc. 4,100 92 o Universal Electronics, Inc. 2,200 23 o UNOVA, Inc. 3,100 23 o URS Corp. 1,700 24 o Usinternetworking, Inc. 1,100 -- o VA Software Corp. 1,427 1 o Ventiv Health, Inc. 2,233 8 o VeriSign, Inc. 10,875 135 o Verisity Ltd. 1,000 12 o Veritas Software Corp. 20,024 441 o Verity, Inc. 1,600 26 o Vertel Corp. 900 -- Viad Corp. 14,500 292 o The viaLink Co. 700 -- o Viewpoint Corp. 2,000 2 o Vignette Corp. 8,948 18 o Vixel Corp. 600 2 o Volt Information Sciences, Inc. 2,100 28 Wabtec Corp. 5,328 65 o Wackenhut Corrections Corp. 3,800 42 Wallace Computer Services, Inc. 15,500 405 o Waste Industries USA, Inc. 1,500 10 Waste Management, Inc. 37,600 817 o WatchGuard Technologies, Inc. 1,800 8 o Watson Wyatt & Co. Holdings 4,600 94 o Wave Systems Corp., Class A 1,800 2 o webMethods, Inc. 1,921 19 o Websense, Inc. 2,500 36 o Weight Watchers International, Inc. 6,200 291 o Westaff, Inc. 2,000 4 o Wind River Systems, Inc. 3,160 10 o Wireless Facilities, Inc. 1,800 13 o Witness Systems, Inc. 2,100 7 o WorldGate Communications, Inc. 2,000 1 o Xybernaut Corp. 1,400 1 o Yahoo!, Inc. 31,201 773 o Zamba Corp. 2,000 -- o Zap.com Corp. 32 -- o Zix Corp. 900 4 ----------- 31,576 CHEMICAL 1.9% --------------------------------------------------------------- 3M Co. 24,700 3,113 A. Schulman, Inc. 2,300 38 Aceto Corp. 5,250 89 Air Products & Chemicals, Inc. 10,500 452 o Airgas, Inc. 5,000 101 Albemarle Corp. 2,000 54 Arch Chemicals, Inc. 2,700 58 Cabot Corp. 2,700 75 o Cabot Microelectronics Corp. 660 29 Calgon Carbon Corp. 2,300 12 Cambrex Corp. 900 16 Chase Corp. 100 1 Crompton Corp. 4,424 28 o Cytec Industries, Inc. 7,400 237 Dow Chemical Co. 43,266 1,412 E.I. du Pont de Nemours & Co. 67,195 2,858 Eastman Chemical Co. 3,100 95 Ecolab, Inc. 5,500 281 o Ethyl Corp. 2,000 20 Ferro Corp. 1,200 28 o FMC Corp. 3,100 56
See financial notes. 85 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Foamex International, Inc. 2,600 3 Georgia Gulf Corp. 3,300 75 Great Lakes Chemical Corp. 3,600 88 H.B. Fuller Co. 2,000 49 Hawkins, Inc. 1,900 19 o Hercules, Inc. 4,000 41 Lubrizol Corp. 3,400 107 Lyondell Chemical Co. 4,600 67 MacDermid, Inc. 3,800 86 o Matrixx Initiatives, Inc. 1,700 12 Millennium Chemicals, Inc. 2,400 33 Oil-Dri Corp. of America 400 4 Olin Corp. 1,820 33 OM Group, Inc. 900 11 o Omnova Solutions, Inc. 1,000 4 Penford Corp. 1,700 23 PolyOne Corp. 3,200 15 PPG Industries, Inc. 9,600 466 Praxair, Inc. 14,900 865 Rohm & Haas Co. 26,753 886 Rollins, Inc. 1,950 47 RPM International, Inc. 7,100 88 The Sherwin-Williams Co. 9,500 265 Sigma-Aldrich Corp. 4,300 214 Solutia, Inc. 4,100 6 Spartech Corp. 1,700 37 Stepan Co. 1,200 30 o Symyx Technologies, Inc. 1,300 20 Tredegar Corp. 2,600 33 o Twinlab Corp. 900 -- Valhi, Inc. 5,600 64 Valspar Corp. 2,200 95 WD-40 Co. 1,600 42 Wellman, Inc. 11,700 134 o Zoltek Cos., Inc. 1,500 4 ----------- 13,019 CONSTRUCTION 0.6% --------------------------------------------------------------- Ameron International Corp. 1,700 114 Apogee Enterprises, Inc. 2,000 21 o Armstrong Holdings, Inc. 1,600 1 o Beazer Homes USA, Inc. 851 60 o Brookfield Homes Corp. 3,800 58 Building Material Holding Corp. 4,000 50 Butler Manufacturing Co. 1,200 20 CARBO Ceramics, Inc. 500 19 Centex Construction Products, Inc. 3,200 124 Centex Corp. 4,100 271 o Champion Enterprises, Inc. 2,200 5 Clayton Homes, Inc. 6,000 74 Craftmade International, Inc. 2,800 41 D.R. Horton, Inc. 9,802 232 o Dominion Homes, Inc. 500 9 o Dycom Industries, Inc. 2,399 26 ElkCorp 950 19 o EMCOR Group, Inc. 900 46 Florida Rock Industries, Inc. 1,550 59 Fluor Corp. 5,600 194 o Foster Wheeler Ltd. 2,500 5 Granite Construction, Inc. 1,850 31 o Hovnanian Enterprises, Inc., Class A 3,100 123 o Huttig Building Products, Inc. 811 2 o Insituform Technologies, Inc., Class A 1,300 21 o Integrated Electrical Services, Inc. 1,800 10 Interface, Inc., Class A 3,300 12 KB Home Corp. 3,900 192 Lafarge North America, Inc. 3,700 118 Lawson Products, Inc. 2,000 54 Lennar Corp., Class A 4,745 257 Lennar Corp., Class B 474 25 M/I Schottenstein Homes, Inc. 1,800 62 Martin Marietta Materials, Inc. 2,200 65 Masco Corp. 20,400 430 MDC Holdings, Inc. 1,210 56 o Meritage Corp. 1,000 38 o Modtech Holdings, Inc. 1,000 8 o NCI Building Systems, Inc. 2,900 47 o NVR, Inc. 500 179 o Palm Harbor Homes, Inc. 1,200 20 o Photon Dynamics, Inc. 900 20 Pulte Homes, Inc. 2,936 170
See financial notes. 86
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Quanta Services, Inc. 2,400 8 The Ryland Group, Inc. 3,400 184 o Simpson Manufacturing Co., Inc. 1,600 56 Skyline Corp. 100 3 Standard-Pacific Corp. 2,400 73 The Stanley Works 4,600 111 o Stone & Webster, Inc. 700 -- Texas Industries, Inc. 1,000 20 o Toll Brothers, Inc. 5,600 130 o Trex Co., Inc. 3,000 123 o USG Corp. 1,400 10 Vulcan Materials Co. 4,700 164 Walter Industries, Inc. 1,900 19 ~o Washington Group International, Inc. 1,500 -- o WCI Communities, Inc. 1,300 18 o WESCO International, Inc. 2,300 10 ----------- 4,317 CONSUMER DURABLE 0.4% --------------------------------------------------------------- American Woodmark Corp. 500 24 o Applica, Inc. 3,100 16 Black & Decker Corp. 7,100 293 o Chromcraft Revington, Inc. 1,300 14 Compx International, Inc. 800 4 o Energizer Holdings, Inc. 6,333 183 Ethan Allen Interiors, Inc. 1,700 57 Flexsteel Industries, Inc. 600 8 o Furniture Brands International, Inc. 2,200 52 o Genlyte Group, Inc. 1,600 60 o Griffon Corp. 2,200 30 Haverty Furniture Cos., Inc. 1,700 24 o Helen of Troy Ltd. 2,000 28 Hillenbrand Industries, Inc. 3,300 165 Isco, Inc. 200 2 Kimball International, Inc., Class B 3,600 58 La-Z-Boy, Inc. 5,800 113 Leggett & Platt, Inc. 20,100 415 o Linens `N Things, Inc. 4,800 102 Maytag Corp. 4,600 96 o MITY Enterprises, Inc. 600 6 o Mohawk Industries, Inc. 2,819 156 National Presto Industries, Inc. 400 12 o Recoton Corp. 500 -- o Rent-A-Center, Inc. 2,800 180 o Restoration Hardware, Inc. 1,700 7 o Salton, Inc. 1,100 14 o SLI, Inc. 1,600 -- Stanley Furniture Co., Inc. 2,600 64 Sturm Ruger & Co., Inc. 1,100 10 Thomas Industries, Inc. 700 19 Toro Co. 800 30 Virco Manufacturing Corp. 1,170 11 o Water Pik Technologies, Inc. 195 2 Whirlpool Corp. 7,500 401 ----------- 2,656 CONSUMER NON-DURABLE 1.3% --------------------------------------------------------------- o A.T. Cross Co., Class A 2,400 12 Action Performance Cos., Inc. 1,100 20 o AFC Enterprises, Inc. 1,000 16 o American Greetings Corp., Class A 8,500 124 Applebee's International, Inc. 2,775 76 o Aramark Corp., Class B 4,300 99 o Boyd Gaming Corp. 2,800 40 o Boyds Collection Ltd. 2,200 11 o Brinker International, Inc. 6,900 219 o Buca, Inc. 1,100 6 o Catalina Marketing Corp. 2,900 52 CBRL Group, Inc. 2,300 73 o CEC Entertainment, Inc. 1,350 41 Cedar Fair L.P. 5,300 138 o Championship Auto Racing Teams, Inc. 1,000 4 o The Cheesecake Factory 1,925 61 Churchill Downs, Inc. 900 33 o CKE Restaurants, Inc. 1,800 10 o Corvis Corp. 13,000 9 o Cytyc Corp. 7,800 103 Darden Restaurants, Inc. 7,800 137 o Dave and Buster's, Inc. 1,700 15 o Department 56, Inc. 3,300 39
See financial notes. 87 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Dover Motorsports, Inc. 1,400 5 o Drew Industries, Inc. 2,500 38 o Electronic Arts, Inc. 8,600 510 o Equity Marketing, Inc. 500 7 Fastenal Co. 3,600 125 The First Years, Inc. 4,000 48 Fortune Brands, Inc. 17,700 857 o Fossil, Inc. 1,975 36 o Garden Fresh Restaurant Corp. 1,700 15 o Handleman Co. 6,600 112 Hasbro, Inc. 12,000 192 o Hibbet Sporting Goods, Inc. 1,050 28 o Hollywood Media Corp. 1,100 1 IHOP Corp. 500 13 o International Game Technology 5,900 509 International Speedway Corp., Class A 2,245 88 o Isle of Capri Casinos, Inc. 9,400 121 o Jack in the Box, Inc. 1,700 30 o Krispy Kreme Doughnuts, Inc. 2,100 68 Lancaster Colony Corp. 3,400 145 Landry's Restaurants, Inc. 1,800 34 Lone Star Steakhouse & Saloon, Inc. 4,400 92 o Luby's, Inc. 1,400 3 The Marcus Corp. 4,600 65 o Marvel Enterprises, Inc. 7,800 131 Mattel, Inc. 34,300 746 McDonald's Corp. 71,800 1,228 o Midway Games, Inc. 2,100 7 Movado Group, Inc. 3,700 76 Newell Rubbermaid, Inc. 8,900 576 o O'Charleys, Inc. 400 8 o On Command Corp. 1,500 1 Oneida Ltd. 700 8 Outback Steakhouse, Inc. 4,500 161 o P.F. Chang's China Bistro, Inc. 800 34 o Panera Bread Co., Class A 800 27 o Papa John's International, Inc. 6,200 147 o Penn National Gaming, Inc. 1,900 37 o Rare Hospitality International Inc. 550 16 Regis Corp. 1,900 54 Riviana Foods, Inc. 1,200 31 Ruby Tuesday, Inc. 3,100 61 Russ Berrie & Co., Inc. 1,000 33 o Ryan's Family Steak Houses, Inc. 2,250 28 o SCP Pool Corp. 850 28 o Service Corp. International 11,800 40 o Sonic Corp. 1,875 51 o Sotheby's Holdings, Inc., Class A 2,800 25 o Starbucks Corp. 15,800 371 o The Steak N Shake Co. 1,580 18 o Stewart Enterprises, Inc., Class A 4,200 12 o The Topps Co., Inc. 1,700 16 o Trans World Entertainment Corp. 1,500 5 o Triarc Cos., Inc. 700 19 Tupperware Corp. 2,300 32 Wendy's International, Inc. 4,800 139 o World Wrestling Entertainment, Inc. 900 8 o Yankee Candle Co., Inc. 3,700 81 ----------- 8,735 CONTAINERS 0.2% --------------------------------------------------------------- o AEP Industries, Inc. 400 3 o American Locker Group, Inc. 500 7 o Astronics Corp. 1,000 3 o Astronics Corp., Class B 250 1 Ball Corp. 2,800 157 Bemis Co. 3,200 146 o Crown Holdings, Inc. 3,600 19 Greif Inc., Class A 3,700 76 o Mobile Mini, Inc. 600 9 o Mod-Pac Corp. 500 3 Mod-Pac Corp., Class B 125 1 o Owens-Illinois, Inc. 16,200 144 o Packaging Corp. of America 4,400 83 o Packaging Dynamics Corp. 260 2 o Pactiv Corp. 12,400 254 o Sealed Air Corp. 8,500 364 o Silgan Holdings, Inc. 2,900 77 ----- 1,349
See financial notes. 88
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) ELECTRONICS 4.5% --------------------------------------------------------------- o ACT Manufacturing, Inc. 900 -- o Acxiom Corp. 25,700 359 o Adaptive Broadband Corp. 1,000 -- o ADC Telecommunications, Inc. 28,220 67 o ADE Corp. 600 4 o Adelphia Business Solutions, Inc. 4,638 -- o Adelphia Communications, Class A 6,301 1 o Advanced Fibre Communications, Inc. 3,500 54 o Advanced Micro Devices, Inc. 14,500 108 o Advanced Power Technology, Inc. 1,500 6 o Agere Systems, Inc., Class A 30,616 55 o Agilent Technologies, Inc. 29,317 470 o Airnet Communications Corp. 1,300 -- o Allen Telecom, Inc. 3,000 41 o Alliance Fiber Optic Products, Inc. 2,100 1 o Alliance Semiconductor Corp. 1,200 5 o Alliant Techsystems, Inc. 2,437 131 o Altera Corp. 23,900 378 o American Power Conversion Corp. 18,800 293 o American Science & Engineering, Inc. 500 4 o American Superconductor Corp. 700 3 o American Technical Ceramics Corp. 500 2 o Amkor Technology, Inc. 6,900 52 o Amphenol Corp., Class A 2,900 128 o Anadigics, Inc. 1,150 2 o Analog Devices, Inc. 22,400 742 o Anaren, Inc. 800 6 o Andrew Corp. 3,600 28 o Anixter International, Inc. 3,300 76 o APA Optics, Inc. 1,000 1 Applied Biosystems Group -- Applera Corp. 11,400 200 o Applied Materials, Inc. 72,498 1,058 o Applied Micro Circuits Corp. 12,238 55 ~o APW Ltd. 1,700 -- o Arrow Electronics, Inc. 12,000 203 o Artisan Components, Inc. 1,100 22 o Aspect Communications Corp. 1,700 6 o AstroPower, Inc. 750 2 o Asyst Technologies, Inc. 1,700 8 o Atmel Corp. 17,900 33 o ATMI, Inc. 1,400 30 o Audiovox Corp., Class A 1,600 12 o Avanex Corp. 2,100 2 o Avid Technology, Inc. 1,100 30 o Avnet, Inc. 4,788 61 AVX Corp. 7,500 80 o Aware, Inc. 1,100 2 o Axcelis Technologies, Inc. 7,044 40 o AXT, Inc. 800 1 Badger Meter, Inc. 1,000 28 BEI Technologies, Inc. 1,200 10 o Bel Fuse, Inc., Class A 1,200 20 Belden, Inc. 800 10 o Benchmark Electronics, Inc. 6,700 174 o BMC Industries, Inc. 2,100 3 Boston Acoustics, Inc. 1,300 12 o Broadcom Corp., Class A 10,700 191 o Brooks Automation, Inc. 1,364 12 o Bruker Daltonics, Inc. 2,100 7 C&D Technologies, Inc. 2,000 27 o C-COR.net Corp. 1,600 5 o Cable Design Technologies Corp. 1,700 12 o Cadence Design Systems, Inc. 11,600 133 o Caliper Technologies Corp. 700 2 o Captaris, Inc. 2,200 7 o CCC Information Services Group, Inc. 13,10 218 o Checkpoint Systems, Inc. 2,100 28 o ChipPAC, Inc., Class A 6,600 36 o CIENA Corp. 17,294 84 o Cirrus Logic, Inc. 3,800 10 o CMGI, Inc. 14,086 14 o Coherent, Inc. 1,800 41 Cohu, Inc. 1,100 20 o CommScope, Inc. 1,900 16 o Computer Network Technology Corp. 1,100 6 o Comtech Telecommunications 5,500 80 o Concord Communications, Inc. 1,600 20
See financial notes. 89 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Conexant Systems, Inc. 10,796 20 o Cox Radio, Inc., Class A 4,600 105 o Cree, Inc. 2,900 58 CTS Corp. 800 7 Cubic Corp. 1,200 23 o Cyberonics 1,200 27 o Cymer, Inc. 1,700 49 o Cypress Semiconductor Corp. 5,800 51 o Dade Behring Holdings, Inc. 1,000 21 o Daktronics, Inc. 5,600 79 o DDI Corp. 1,600 -- o Diodes, Inc. 5,000 76 o Dionex Corp. 1,200 41 o DSP Group, Inc. 3,300 69 o Dupont Photomasks, Inc. 5,500 102 o NElectro Rent Corp. 2,600 26 o Electro Scientific Industries, Inc. 1,300 17 o Electroglas, Inc. 900 1 o Electronics Boutique Holdings Corp. 1,300 24 o Electronics for Imaging 2,900 56 o Emcore Corp. 1,500 3 o EMS Technologies, Inc. 1,000 12 o Emulex Corp. 26,200 537 o Entegris, Inc. 3,000 34 o ESS Technology, Inc. 3,100 21 o Esterline Technologies Corp. 2,900 51 o Exar Corp. 1,800 27 o Excel Technology, Inc. 600 14 o Fairchild Semiconductor International, Inc., Class A 4,100 49 o FEI Co. 1,500 27 o Finisar Corp. 7,900 7 o Fisher Scientific International, Inc. 4,900 141 o Flir Systems, Inc. 1,200 62 Frequency Electronics, Inc. 500 5 o FSI International, Inc. 1,300 3 o Gadzoox Networks, Inc. 600 -- o Gen-Probe, Inc. 3,000 93 o Genencor International, Inc. 14,000 155 General Cable Corp. 2,200 10 o Gentex Corp. 2,300 69 o Genus, Inc. 500 1 o Gerber Scientific, Inc. 1,900 16 o Getty Images, Inc. 4,600 156 o Glenayre Technologies, Inc. 2,300 2 o GlobespanVirata, Inc. 5,556 34 Harman International Industries, Inc. 3,400 226 o Harmonic, Inc. 6,342 22 Harris Corp. 4,000 114 o Hearst-Argyle Television, Inc. 7,700 185 Helix Technology Corp. 1,100 13 o Herley Industries, Inc. 500 8 o HI/FN, Inc. 800 4 o Hollywood Entertainment Corp. 11,100 197 o Hutchinson Technology, Inc. 17,100 404 o Ibis Technology Corp. 800 4 o ID Systems, Inc. 500 3 o Imation Corp. 2,000 69 o Integrated Circuit Systems, Inc. 2,900 63 Intel Corp. 412,932 7,598 o Intermagnetics General Corp. 1,371 27 o International Rectifier Corp. 2,600 59 o Internet Security Systems 2,100 28 o Intersil Corp., Class A 5,164 96 o Itron, Inc. 1,500 30 ITT Industries, Inc. 6,200 361 o Ixia 2,200 13 o IXYS Corp. 900 6 o Jabil Circuit, Inc. 10,400 194 o JDS Uniphase Corp. 54,424 176 o JNI Corp. 1,400 5 Keithley Instruments, Inc. 700 9 o Kemet Corp. 3,700 34 o KLA-Tencor Corp. 8,400 344 o Kopin Corp. 2,500 12 o Kulicke & Soffa Industries, Inc. 1,900 10 o L-3 Communications Holdings, Inc. 5,600 249 o Lam Research Corp. 5,700 83 o Lattice Semiconductor Corp. 4,600 40
See financial notes. 90
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o LeCroy Corp. 900 9 o Lightpath Technologies, Inc., Class A 75 -- Linear Technology Corp. 13,500 465 o Littelfuse, Inc. 4,500 88 o Logicvision, Inc. 1,000 2 o Loral Space & Communications Corp. 13,900 4 o LSI Logic Corp. 19,564 105 o Lucent Technologies, Inc. 131,423 237 o Macromedia, Inc. 28,000 353 o Manufacturers Services Ltd. 2,500 10 o Mattson Technology, Inc. 1,100 4 Maxim Integrated Products, Inc. 14,253 560 o McData Corp., Class A 2,617 28 o Measurement Specialties, Inc. 700 3 o MEMC Electronic Materials, Inc. 11,800 140 o Merix Corp. 1,200 5 o Merrimac Industries, Inc. 600 2 o Mestek, Inc. 700 13 o Metawave Communications Corp. 1,900 -- Methode Electronics, Class A 1,100 12 o Metromedia Fiber Network, Inc., Class A 18,010 -- o Micrel, Inc. 3,600 42 o Micron Technology, Inc. 25,500 217 o Microsemi Corp. 1,000 12 o Microtune, Inc. 2,200 4 o MKS Instruments, Inc. 1,700 24 Mocon, Inc. 600 4 Molex, Inc. 10,125 236 o Monolithic System Technology, Inc. 1,200 7 Motorola, Inc. 102,455 810 o MRV Communications, Inc. 4,307 6 MTS Systems Corp. 4,500 56 o Multilink Technology Corp. 340 -- o Mykrolis Corp. 3,021 24 o Nanogen, Inc. 1,500 2 o Nanometrics, Inc. 300 1 o National Semiconductor Corp. 7,600 142 o Netopia, Inc. 2,100 5 o Netro Corp. 573 2 o New Focus, Inc. 2,800 9 o Newport Corp. 1,700 22 o Novoste Corp. 1,600 12 o Nvidia Corp. 7,000 100 o Omnivision Technologies, Inc. 1,400 34 o Oplink Communications, Inc. 4,600 4 o Optical Communication Products, Inc. 500 1 o OSI Systems, Inc. 1,200 18 o OYO Geospace Corp. 300 3 o P-Com Inc. 520 -- Park Electrochemical Corp. 1,100 20 o Parkervision, Inc. 400 4 o ParthusCeva, Inc. 433 2 o Pemstar, Inc. 1,600 5 o Pericom Semiconductor Corp. 1,400 12 PerkinElmer, Inc. 5,977 59 o Photronics, Inc. 1,400 18 o Pinnacle Systems, Inc. 1,800 17 Pioneer Standard Electronics, Inc. 1,600 16 o Pixelworks, Inc. 1,600 12 o Plantronics, Inc. 4,000 74 o Plexus Corp. 1,700 17 o PLX Technology, Inc. 1,300 4 o Powell Industries, Inc. 1,000 14 o Power Intergrations, Inc. 1,400 31 o Power-One, Inc. 2,500 15 o Powerwave Technologies, Inc. 3,200 13 o Proxim Corp., Class A 5,412 4 Qualcomm, Inc. 49,300 1,572 o QuickLogic Corp. 900 1 o Rambus, Inc. 5,700 82 Raven Industries, Inc. 1,400 23 o Rayovac Corp. 2,800 29 o Remec, Inc. 2,500 12 o Rex Stores Corp. 1,875 20 o RF Micro Devices, Inc. 7,200 34 Richardson Electronics Ltd. 1,300 10 o Riverstone Networks, Inc. 7,645 9 o Rofin-Sinar Technologies, Inc. 1,900 27
See financial notes. 91 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Rogers Corp. 2,800 93 o Rudolph Technologies, Inc. 500 8 o Sanmina-SCI Corp. 21,916 105 o Semitool, Inc. 1,800 8 o Semtech Corp. 3,200 51 o Signal Technology Corp. 4,500 59 o Silicon Image, Inc. 2,000 12 o Silicon Laboratories, Inc. 2,500 71 o Silicon Storage Technology, Inc. 3,500 11 o Siliconix, Inc. 8,100 229 o Sipex Corp. 1,600 5 o Sirenza Microdevices, Inc. 1,300 2 o Skyworks Solutions, Inc. 5,689 30 o Solectron Corp. 26,820 86 o Spectralink Corp. 1,000 8 o SpeechWorks International, Inc. 1,400 6 o Standard Microsystems Corp. 1,100 14 o StockerYale, Inc. 500 -- o Superconductor Technologies 1,600 4 o Superior Telecom, Inc. 1,124 -- o Supertex, Inc. 1,400 22 Symbol Technologies, Inc. 9,637 105 o Symmetricom, Inc. 8,450 35 o Synavant, Inc. 1,325 3 o Taser International, Inc. 1,000 8 o Technitrol, Inc. 1,500 24 o Tekelec 8,700 94 o Tektronix, Inc. 5,300 99 o Telaxis Communications Corp. 400 -- o Tellabs, Inc. 21,600 133 o Teradyne, Inc. 7,059 82 o Terayon Communication Systems Corp. 2,800 5 o Tessco Technologies, Inc. 900 6 Texas Instruments, Inc. 106,297 1,965 o Therma-Wave, Inc. 1,000 1 o Thomas & Betts Corp. 7,300 115 o THQ, Inc. 1,950 28 o Three-Five Systems, Inc. 1,099 6 o Tollgrade Communications, Inc. 1,100 16 o Transmeta Corp. 4,500 4 o Transwitch Corp. 3,100 3 o Tripath Technology, Inc. 1,800 1 o Triquint Semiconductor, Inc. 5,310 19 o TTM Technologies, Inc. 1,900 9 o Tweeter Home Entertainment Group, Inc. 1,100 6 o Ulticom, Inc. 2,300 17 United Industrial Corp. 1,200 16 Unitil Corp. 600 14 o Univision Communications, Inc., Class A 14,000 424 o UQM Technologies, Inc. 1,500 4 o Valence Technology, Inc. 1,400 4 o Varian Semiconductor Equipment Associates, Inc. 1,500 35 o Varian, Inc. 5,800 183 o Viasat, Inc. 1,000 11 ~ Viasystems Group, Inc. 4,200 -- o Vicor Corp. 1,700 11 o Vishay Intertechnology, Inc. 6,281 79 o Visx, Inc. 2,100 33 o Vitesse Semiconductor Corp. 6,800 21 o Waters Corp. 6,100 146 o WebMD Corp. 14,426 139 o Western Digital Corp. 7,200 67 o Western Wireless Corp., Class A 2,700 17 o WilTel Communications, Inc. 4,800 53 o Xicor, Inc. 1,000 6 o Xilinx, Inc. 17,900 485 o Zoran Corp. 1,250 22 ----------- 30,526 ENERGY: RAW MATERIALS 1.8% --------------------------------------------------------------- Alliance Resource Partners L.P. 1,700 42 Anadarko Petroleum Corp. 15,030 667 Apache Corp. 9,936 569 APCO Argentina, Inc. 200 5 Arch Coal, Inc. 2,000 36 o ATP Oil & Gas Corp. 1,600 5 o Atwood Oceanics, Inc. 1,200 31 Baker Hughes, Inc. 20,300 568 Berry Petroleum Co., Class A 2,000 31
See financial notes. 92
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o BJ Services Co. 6,800 248 BP Prudhoe Bay Royalty Trust 2,200 32 Buckeye Partners L.P. 3,400 123 Burlington Resources, Inc. 11,000 509 Cabot Oil & Gas Corp. 14,400 353 Chesapeake Energy Corp. 6,600 53 o Comstock Resources, Inc. 4,500 50 o Cooper Cameron Corp. 2,300 110 Cross Timbers Royalty Trust 1,400 29 o Crosstex Energy L.P. 1,000 26 o Denbury Resources, Inc. 4,900 52 Devon Energy Corp. 15,680 741 Enbridge Energy Management LLC 1,023 42 o Encore Acquisition Co. 1,500 26 o Energy Conversion Devices, Inc. 600 6 o Energy Partners Ltd. 1,700 17 ENSCO International, Inc. 5,700 145 Enterprise Products Partners L.P. 10,500 238 EOG Resources, Inc. 11,400 426 o Evergreen Resources, Inc. 800 38 o Evergreen Solar, Inc. 1,000 2 o FMC Technologies, Inc. 4,591 86 o Forest Oil Corp. 4,450 92 o Friede Goldman Halter, Inc. 1,855 -- o FuelCell Energy, Inc. 1,200 7 o Grant Prideco, Inc. 3,600 41 o Grey Wolf, Inc. 5,800 24 Halliburton Co. 39,600 848 Helmerich & Payne, Inc. 2,300 59 Hugoton Royalty Trust 3,300 48 Kaneb Services LLC 1,466 34 o Key Energy Services, Inc. 4,800 48 Kinder Morgan Energy Partners L.P. 1,502 59 The Laclede Group, Inc. 800 19 Lufkin Industries, Inc. 500 11 o Markwest Energy Partners L.P. 500 14 Massey Energy Co. 3,500 37 Nabors Industries Ltd. 11,817 463 Natural Resource Partners L.P. 2,000 51 NL Industries 2,800 49 o Noble Corp. 6,100 189 Noble Energy, Inc. 3,500 116 Occidental Petroleum Corp. 24,100 719 o Offshore Logistics, Inc. 1,100 21 o Oil States International, Inc. 17,800 203 Pacific Energy Partners L.P. 1,000 23 o Parker Drilling Co. 2,800 6 o Patterson-UTI Energy, Inc. 3,100 103 Peabody Energy Corp. 2,300 65 Penn Virginia Resource Partners L.P. 1,000 26 Plains All American Pipeline L.P. 4,600 131 o Plains Exploration & Production Co. 1,500 13 o Plains Resources, Inc. 1,500 18 o Premcor, Inc. 2,600 58 o Pride International, Inc. 5,200 81 o Proton Energy Systems, Inc. 1,400 4 o Quicksilver Resource, Inc. 1,400 32 o Range Resources Corp. 2,400 14 Rowan Cos., Inc. 3,400 70 RPC, Inc. 900 10 Schlumberger Ltd. 30,000 1,258 o Smith International, Inc. 4,400 156 TC Pipelines L.P. 2,900 79 Tidewater, Inc. 2,700 73 o Tom Brown, Inc. 3,200 78 o Ultra Petroleum Corp. 4,000 40 o Unit Corp. 2,400 47 USEC, Inc. 3,000 17 Valero Energy Corp. 8,649 318 Valero L.P. 1,600 63 o Varco International, Inc. 5,140 90 o W-H Energy Services, Inc. 900 16 Weatherford International Ltd. 4,800 193 Western Gas Resources, Inc. 2,000 73 o Westmoreland Coal Co. 3,500 53 o Westport Resources Corp. 5,725 119 Williams Energy Partners L.P. 1,200 51 World Fuel Services Corp. 500 11 XTO Energy, Inc. 9,066 177 ----------- 12,024
See financial notes. 93 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) FOOD & AGRICULTURE 4.2% --------------------------------------------------------------- Altria Group, Inc. 127,700 3,928 o American Italian Pasta Co., Class A 1,000 44 The Andersons, Inc. 1,500 17 Archer-Daniels-Midland Co. 63,858 708 o Aurora Foods, Inc. 2,500 1 Bob Evans Farms, Inc. 2,200 56 Bridgford Foods Corp. 300 2 Bunge Ltd. 5,800 162 o Cadiz, Inc. 2,100 -- Campbell Soup Co. 24,500 540 o Chiquita Brands International, Inc. 10,000 135 Coca-Cola Bottling Co. Consolidated 400 20 The Coca-Cola Co. 146,800 5,931 Coca-Cola Enterprises, Inc. 27,200 530 ConAgra Foods, Inc. 51,093 1,073 Corn Products International, Inc. 7,800 233 o Dean Foods Co. 5,742 250 o Del Monte Foods Co. 8,931 71 Delta & Pine Land Co. 2,000 47 Dreyer's Grand Ice Cream, Inc. 2,300 147 o Eden Bioscience Corp. 1,000 2 o Embrex, Inc. 1,300 12 Fleming Cos., Inc. 3,400 -- Flowers Foods, Inc. 13,010 368 Fresh Brands, Inc. 1,800 24 Fresh Del Monte Produce, Inc. 4,200 82 General Mills, Inc. 21,900 988 o Green Mountain Coffee Roasters, Inc. 900 16 o Griffen Land & Nurseries, Inc. 300 4 H.J. Heinz Co. 21,900 654 o Hain Celestial Group, Inc. 1,406 24 Hershey Foods Corp. 8,200 535 Hormel Foods Corp. 6,500 150 IMC Global, Inc. 3,500 32 Ingles Markets, Inc., Class A 300 3 Interstate Bakeries 8,000 84 o J & J Snack Foods Corp. 3,200 100 The J.M. Smuckers Co. 2,438 88 o John B. Sanfilippo & Son 5,000 94 Kellogg Co. 24,900 815 Kraft Foods, Inc., Class A 14,500 448 Lance, Inc. 1,900 14 o Lesco, Inc. 500 5 Lindsay Manufacturing Co. 800 17 o M & F Worldwide Corp. 1,200 9 Marsh Supermarkets, Inc., Class B 1,000 11 o Maui Land & Pineapple Co., Inc. 800 17 McCormick & Co., Inc. 5,800 144 MGP Ingredients, Inc. 1,700 12 Monsanto Co. 16,645 290 o Monterey Pasta Co. 700 2 Nash Finch Co. 1,700 21 o National Beverage Corp. 3,700 52 o Neogen Corp. 500 8 o The Pantry, Inc. 400 3 o Peet's Coffee & Tea, Inc. 1,800 31 The Pepsi Bottling Group, Inc. 18,200 374 PepsiAmericas, Inc. 13,200 165 PepsiCo, Inc. 106,600 4,614 o Performance Food Group Co. 1,900 67 Pilgrim's Pride Corp., Class B 1,400 12 o Ralcorp Holdings, Inc. 6,700 167 o Rocky Mountain Chocolate Factory, Inc. 1,000 8 Sanderson Farms, Inc. 3,500 66 Sara Lee Corp. 47,378 795 o The Scotts Co., Class A 2,800 159 Seaboard Corp. 200 42 Sensient Technologies Corp. 2,300 51 o Smithfield Foods, Inc. 6,300 123 o Spartan Stores, Inc. 500 1 Supervalu, Inc. 18,087 298 o Surebeam Corp., Class A 2,711 8 Sysco Corp. 39,536 1,136 Tasty Baking Co. 500 4 o Tejon Ranch Co. 674 19 Tootsie Roll Industries, Inc. 2,190 63 Tyson Foods, Inc., Class A 15,240 147 o United Natural Foods, Inc. 1,300 38
See financial notes. 94
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Vector Group Ltd. 1,169 13 o Whole Foods Market, Inc. 6,100 362 o Wild Oats Markets, Inc. 3,800 41 Wm. Wrigley Jr. Co. 9,600 544 o Zapata Corp. 1,000 37 ----------- 28,408 GOLD 0.1% --------------------------------------------------------------- Barrick Gold Corp. 5,565 83 Glamis Gold Ltd. 4,000 45 o Golden Cycle Gold Corp. 600 10 Meridian Gold, Inc. 6,600 67 Newmont Mining Corp. 11,251 304 Royal Gold, Inc. 3,700 59 ----------- 568 HEALTHCARE / DRUGS & MEDICINE 13.6% --------------------------------------------------------------- Abbott Laboratories 96,205 3,909 o Abgenix, Inc. 3,600 34 o Abiomed, Inc. 800 3 o Acacia Research-- CombiMatrix 184 -- o Accredo Health, Inc. 2,841 42 o Aclara BioSciences, Inc. 2,400 5 o Adolor Corp. 1,700 24 o Advanced Medical Optics, Inc. 2,400 34 o Advanced Neuromodulation Systems, Inc. 700 29 o AdvancePCS Corp. 5,300 159 o AeroGen, Inc. 3,200 1 o Affymetrix, Inc. 2,300 43 o Alaris Medical, Inc. 5,000 48 o Albany Molecular Research, Inc. 1,600 18 o Align Technology, Inc. 1,700 13 o Alkermes, Inc. 3,100 31 Allergan, Inc. 8,400 590 o Alliance Imaging, Inc. 1,800 8 o Alliance Pharmaceutical Corp. 220 -- o Allscripts Healthcare Solutions, 1,900 5 Inc. Alpharma, Inc., Class A 3,700 69 o America Service Group, Inc. 800 10 o American Healthways, Inc. 1,550 38 o American Medical Security Group,Inc. 5,600 95 o American Medical Systems Holdings, Inc. 1,400 22 o AMERIGROUP Corp. 900 26 AmerisourceBergen Corp. 4,824 279 o Amgen, Inc. 78,668 4,823 o AMN Healthcare Services, Inc. 2,200 20 o Amsurg Corp. 700 18 o Amylin Pharmaceuticals, Inc. 2,300 44 o Andrx Corp. 3,900 63 o Anthem, Inc. 14,417 990 o Antigenics, Inc. 1,400 14 o Aphton Corp. 800 3 o Apogent Technologies, Inc. 5,100 88 o Applied Molecular Evolution, Inc. 2,100 7 o Apria Healthcare Group, Inc. 10,500 246 o Arena Pharmaceuticals, Inc. 800 5 o Arqule, Inc. 1,300 5 Arrow International, Inc. 3,200 137 o Arthrocare Corp. 1,400 21 o Aspect Medical Systems, Inc. 1,200 5 o Atrix Labs, Inc. 1,400 25 o AVANIR Pharmaceuticals, Class A 1,900 3 o Avant Immunotherapeutics, Inc. 3,000 4 o Avigen, Inc. 900 3 o Barr Laboratories, Inc. 3,354 186 Bausch & Lomb, Inc. 3,400 120 Baxter International, Inc. 26,118 601 Beckman Coulter, Inc. 3,100 120 Becton Dickinson & Co. 17,300 612 o Beverly Enterprises, Inc. 3,800 7 o Bio-Rad Laboratories, Inc., Class A 1,000 47 o Bio-Technology General Corp. 2,300 8 o BioCryst Pharmaceuticals, Inc. 1,400 2 o Biogen, Inc. 6,500 247 o BioMarin Pharmaceuticals, Inc. 1,800 20 Biomet, Inc. 17,625 537 o Biopure Corp. 1,200 4 o Bioreliance Corp. 4,000 80 o Biosite, Inc. 1,400 60 o Biosource International, Inc. 1,500 9 o Bone Care International, Inc. 1,400 11 o Boston Scientific Corp. 23,400 1,007
See financial notes. 95 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Bradley Pharmaceuticals, Inc. 5,500 79 Bristol-Myers Squibb Co. 21,550 3,104 C.R. Bard, Inc. 4,000 254 o Cantel Medical Corp. 1,381 19 Cardinal Health, Inc. 24,660 1,363 o Caremark Rx, Inc. 16,900 336 o Celera Genomics Group - Applera Corp. 3,100 33 o Celgene Corp. 3,000 80 o Cell Genesys, Inc. 1,500 13 o Cell Pathways, Inc. 1,600 2 o Cell Therapeutics, Inc. 1,400 13 o Cephalon, Inc. 3,500 143 o Cerus Corp. 500 4 o Charles River Laboratories International, Inc. 1,900 52 o Chattem, Inc. 1,200 16 o Chiron Corp. 10,100 412 o Cholestech Corp. 1,700 20 o ChromaVision Medical Systems, Inc. 1,100 1 o Chronimed, Inc. 600 5 o Ciphergen Biosystems, Inc. 1,700 8 o Closure Medical Corp. 3,400 61 o Community Health Systems, Inc. 4,100 78 o Conmed Corp. 1,700 30 Cooper Cos., Inc. 2,200 61 o Corixa Corp. 1,802 13 o Corvel Corp. 1,900 59 o Covance, Inc. 5,800 103 o Coventry Health Care, Inc. 9,600 392 o CryoLife, Inc. 750 6 o CTI Molecular Imaging, Inc. 2,000 37 o Cubist Pharmaceuticals, Inc. 1,900 18 o CuraGen Corp. 2,100 10 o Curis, Inc. 3,140 7 o CV Therapeutics, Inc. 1,100 22 o CyberCare, Inc. 900 -- o Cygnus, Inc. 600 -- o Cyotgen Corp. 230 1 D&K Healthcare Resources, Inc. 700 9 Datascope Corp. 1,000 29 o DaVita, Inc. 16,500 340 o Deltagen, Inc. 2,200 1 o Dendreon Corp. 1,400 7 Dentsply International, Inc. 4,050 152 Diagnostic Products Corp. 1,700 67 o Digene Corp. 1,400 27 o Diversa Corp. 1,100 11 o DJ Orthopedics, Inc. 500 3 o Durect Corp. 2,000 6 o Dynacq International, Inc. 3,600 46 o Edwards Lifesciences Corp. 3,900 113 Eli Lilly & Co. 59,500 3,797 o Emisphere Technologies, Inc. 800 2 o Endo Pharmaceutical Holdings, Inc. 8,000 132 o Entremed, Inc. 1,200 3 o Enzo Biochem, Inc. 1,617 24 o Enzon Pharmaceuticals, Inc. 1,900 26 o Eon Labs, Inc. 2,400 74 o Exelixis, Inc. 1,800 15 o Express Scripts, Inc. 3,800 224 o First Health Group Corp. 4,400 110 o First Horizon Pharmaceutical Corp. 900 2 o Fischer Imaging Corp. 500 2 o Forest Laboratories, Inc. 25,000 1,293 o Genaissance Pharmaceuticals, Inc. 1,800 2 o Gene Logic, Inc. 1,300 9 o Genelabs Technologies 800 1 o Genentech, Inc. 9,700 369 o Genesis Health Ventures, Inc. 12,500 187 o Genome Therapeutics Corp. 2,100 5 o Genta, Inc. 2,900 22 o Gentiva Health Services 750 7 o Genzyme Corp. -- General Division 9,232 372 o Geron Corp. 1,000 5 o Gilead Sciences, Inc. 11,360 524 o GTC Biotherapeutics, Inc. 1,800 3 o Guidant Corp. 25,816 1,007 o Guilford Pharmaceuticals, Inc. 1,200 6 o Haemonetics Corp. 3,700 66 o Hanger Orthopedic Group, Inc. 5,400 56 Harvard Bioscience, Inc. 500 2 HCA, Inc. 23,600 758
See financial notes. 96
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Health Management Associates, Inc., Class A 10,900 186 o Health Net, Inc. 16,600 433 o Healthcare Services Group 2,500 33 o HealthExtras, Inc. 1,900 8 o HealthTronics Surgical Services,Inc. 2,500 20 o Henry Schein, Inc. 2,300 99 o Hologic, Inc. 2,600 23 Hooper Holmes, Inc. 2,100 13 o Human Genome Sciences, Inc. 5,100 60 o Humana, Inc. 18,900 209 o I-Stat Corp. 600 4 ICN Pharmaceuticals, Inc. 4,600 40 o ICOS Corp. 2,700 72 o ICU Medical, Inc. 550 17 o Idec Pharmaceuticals Corp. 6,900 226 o Idexx Laboratories, Inc. 7,000 273 o Igen International, Inc. 1,300 47 o Ii-Vi, Inc. 5,000 97 o Illumina, Inc. 1,500 3 o ImClone Systems, Inc. 4,435 81 o Immucor, Inc. 750 15 o Immunogen, Inc. 1,500 5 o Immunomedics, Inc. 2,400 9 o IMPAC Medical Systems, Inc. 3,000 53 o Impax Laboratories, Inc. 1,600 9 IMS Health, Inc. 16,300 251 o Inamed Corp. 9,300 347 o Incyte Genomics, Inc. 2,600 9 o Indevus Pharmaceuticals, Inc. 1,800 7 o Inspire Pharmaceuticals, Inc. 1,300 19 o Integra LifeSciences Holdings Corp. 3,600 96 o InterMune, Inc. 1,100 22 o Intuitive Surgical, Inc. 2,100 13 Invacare Corp. 2,000 64 o Inveresk Research Group, Inc. 1,700 24 o Invitrogen Corp. 3,629 119 o Isis Pharmaceuticals, Inc. 1,900 11 o IVAX Corp. 8,750 141 (7) Johnson & Johnson 187,670 10,577 o Kendle International, Inc. 1,700 8 o Kindred Healthcare, Inc. 2,312 34 o King Pharmaceuticals, Inc. 16,016 202 o Kos Pharmaceuticals, Inc. 700 14 o Kosan Biosciences, Inc. 2,500 16 o KV Pharmaceutical Co., Class A 1,800 40 o LabOne, Inc. 2,100 40 o Laboratory Corp. of America Holdings 13,500 398 Landauer, Inc. 1,100 42 o Large Scale Biology Corp. 2,400 2 o LifePoint Hospitals, Inc. 2,300 45 o Ligand Pharmaceuticals, Inc., Class B 2,300 20 o Lincare Holdings, Inc. 4,900 149 o Magellan Health Services, Inc. 2,200 -- o Manor Care, Inc. 8,000 156 o Matria Healthcare, Inc. 1,200 15 o Maxim Pharmaceuticals, Inc. 2,400 9 o Maxygen, Inc. 1,500 12 McKesson Corp. 18,900 524 o Med-Design Corp. 1,200 5 o Medamicus, Inc. 500 4 o Medarex, Inc. 3,000 13 o Medcath Corp. 1,500 7 o Medicines Co. 1,700 35 o Medicis Pharmaceutical Corp., Class A 1,700 98 o Medimmune, Inc. 9,875 348 o MedQuist, Inc. 3,217 61 Medtronic, Inc. 74,874 3,574 Mentor Corp. 3,000 56 (10) Merck & Co., Inc. 139,552 8,119 o Merit Medical Systems, Inc. 1,250 24 o MGI Pharma, Inc. 1,900 27 o Mid Atlantic Medical Services, Inc. 8,300 361 o Millennium Pharmaceuticals,Inc. 11,956 132 o MIM Corp. 1,500 11 o Molecular Devices Corp. 8,100 102 Mylan Laboratories, Inc. 30,000 848
See financial notes. 97 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Myriad Genetics, Inc. 1,400 17 o Nabi Biopharmaceuticals 2,800 18 o Napro Biotherapeutics, Inc. 1,200 1 o National Healthcare Corp. 600 11 o National Medical Health Card Systems, Inc. 800 7 Nature's Sunshine Products, Inc. 2,000 19 o NBTY, Inc. 16,000 248 NDCHealth Corp. 1,900 37 o Nektar Therapeutics 2,200 18 o NeoRx Corp. 400 1 o Neose Technologies, Inc. 500 4 o Neurocrine Biosciences, Inc. 1,400 63 o Neurogen Corp. 800 3 o North American Scientific, Inc. 700 5 o Northfield Laboratories, Inc. 1,100 7 o Noven Pharmacuticals, Inc. 5,500 53 o NPS Pharmacuticals, Inc. 1,000 19 o Nuvelo, Inc. 900 1 o NWH, Inc. 1,000 17 o Odyssey HealthCare, Inc. 1,500 39 Omnicare, Inc. 7,500 199 o Onyx Pharmaceuticals, Inc. 1,800 16 o Option Care, Inc. 1,500 14 o OraSure Technologies, Inc. 1,500 10 o Orchid BioSciences, Inc.. 1,400 1 o Organogenesis, Inc 2,100 -- o Orthodontic Centers of America, Inc. 2,112 12 o OSI Pharmaceuticals, Inc. 1,600 34 Owens & Minor, Inc. 1,500 28 o Oxford Health Plans, Inc. 21,700 635 o Oxigene, Inc. 900 2 o Pacificare Health Systems, Inc. 9,400 299 o Pain Therapeutics, Inc. 2,600 8 o Paradigm Genetics, Inc. 400 -- Parexel International Corp. 2,400 31 o Patterson Dental Co. 3,300 133 o Pediatrix Medical Group, Inc. 3,000 96 Perrigo Co. 3,300 51 (4) Pfizer, Inc. 487,052 14,977 o Pharmaceutical Product Development, Inc. 2,500 65 o Pharmaceutical Resources, Inc. 1,900 84 o Pharmacopeia, Inc. 1,300 12 o Pharmacyclics, Inc. 1,100 4 PolyMedica Corp. 2,200 82 o Possis Medical, Inc. 1,100 21 o Pozen, Inc. 1,300 6 o PracticeWorks, Inc. 2,000 24 o Priority Healthcare Corp., Class B 2,000 46 o Protein Design Labs, Inc. 4,100 41 o Province Healthcare Co. 2,325 23 o PSS World Medical, Inc. 2,800 17 o QMed, Inc. 500 3 o Quest Diagnostics 6,410 383 o Quintiles Transnational Corp. 10,600 149 o Regeneration Technologies, Inc. 1,700 17 o Regeneron Pharmaceuticals, Inc. 1,900 12 o RehabCare Group, Inc. 1,500 26 o Renal Care Group, Inc. 4,700 152 o Resmed, Inc. 2,000 73 o Respironics, Inc. 1,900 73 o Sangamo Biosciences, Inc. 1,200 3 o Sangstat Medical Corp. 2,000 25 Schering-Plough Corp. 60,950 1,103 o Select Medical Corp. 2,500 42 o Sepracor, Inc. 3,100 59 o Sequenom, Inc. 1,600 3 o Serologicals Corp. 1,200 11 o SICOR, Inc. 5,200 93 o Sierra Health Services, Inc. 11,700 194 o Sola International, Inc. 2,700 38 o SonoSite, Inc. 1,600 26 o Specialty Laboratories 700 6 o St. Jude Medical, Inc. 14,800 776 o Steris Corp. 6,100 138 Stryker Corp. 11,300 757 o Sunrise Assisted Living, Inc. 4,900 132 o Sunrise Technologies International 1,700 -- o SuperGen, Inc. 900 3 o Sybron Dental Specialties, Inc. 4,633 94
See financial notes. 98
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Tanox, Inc. 1,900 30 o Techne Corp. 1,300 29 o Tenet Healthcare Corp. 30,150 447 o Texas Biotech Corp. 2,600 5 o Theragenics Corp. 2,500 11 o Therasense, Inc. 2,300 18 o Third Wave Technologies, Inc. 1,800 7 o Thoratec Corp. 2,636 36 o Titan Pharmaceuticals, Inc. 800 1 o Transgenomic, Inc. 1,200 1 o Transkaryotic Therapies, Inc. 900 5 o Triad Hospitals, Inc. 3,544 78 o Trimeris, Inc. 500 22 o TriPath Imaging, Inc. 2,600 10 o Tripos, Inc. 1,000 5 o United Defense Industries, Inc. 900 22 o United Surgical Partners International, Inc. 1,400 26 UnitedHealth Group, Inc. 21,100 1,944 o Universal Health Services, Class B 3,000 116 o Urologix, Inc. 1,800 3 o US Oncology, Inc. 3,700 27 o USANA Health Sciences, Inc . 3,000 81 o Utah Medical Products, Inc . 2,500 48 o Varian Medical Systems, Inc. 3,600 194 o Vaxgen, Inc. 600 2 o VCA Antech, Inc. 2,700 45 o Ventana Medical Systems 1, 200 27 o Vertex Pharmaceuticals, Inc. 3,144 38 o Viasys Healthcare, Inc. 1,482 24 o Vical, Inc. 1,600 4 o Viropharma, Inc. 1,000 3 o VistaCare, Inc., Class A 3 ,500 71 Vital Signs, Inc. 1,900 54 o Watson Pharmaceuticals, Inc. 11,032 321 o WellChoice, Inc. 2,500 53 o WellPoint Health Networks, Inc. 9,700 737 West Pharmaceutical Services, Inc. 3,300 79 o Whitman Education Group, Inc. 1,500 22 o Wright Medical Group, Inc. 1,700 32 Wyeth 83,000 3,613 o XOMA Ltd. 2,400 12 o Young Innovations, Inc. 2,000 44 o Zimmer Holdings, Inc. 7,300 342 o Zymogenetics, Inc. 2,000 23 ---------- 92,456 HOUSEHOLD PRODUCTS 2.2% -------------------------------------------------------- Alberto-Culver Co., Class B 3,300 163 Avon Products, Inc. 17,000 989 Church & Dwight Co., Inc. 3,300 104 Clorox Co. 27,000 1,221 Colgate-Palmolive Co. 31,500 1,801 o DEL Laboratories, Inc. 1,000 23 The Dial Corp. 13,100 273 The Estee Lauder Cos., Inc., Class A 10,300 335 The Gillette Co. 68,900 2,098 o Inter Parfums, Inc. 675 5 International Flavors & Fragrances, Inc. 6,900 219 Nu Skin Enterprises, Inc., Class A 6,500 58 o Playtex Products, Inc. 2,800 20 Procter & Gamble Co. 82,200 7,386 o Revlon, Inc., Class A 1,800 6 ---------- 14,701 INSURANCE 4.7% -------------------------------------------------------- 21st Century Holding Co. 1,000 13 21st Century Insurance Group 4,700 64 Aetna, Inc. 14,800 737 AFLAC, Inc. 31,600 1,034 Alfa Corp. 4,800 62 o Alleghany Corp. 212 36 o Allmerica Financial Corp. 2,400 37 The Allstate Corp. 43,874 1,658 AMBAC Financial Group, Inc. 5,250 306 American Financial Group, Inc. 3,000 67 (8) American International Group, Inc. 154,922 8,978 American National Insurance Co. 1,300 104
See financial notes. 99 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o American Physicians Capital, Inc. 2,500 57 AmerUs Group Co. 1,900 50 AON Corp. 11,500 255 Arch Capital Group Ltd. 1,400 49 Argonaut Group, Inc. 2,400 24 Arthur J. Gallagher & Co. 4,300 107 Baldwin & Lyons, Inc., Class B 750 17 Brown & Brown, Inc. 3,000 107 Chubb Corp. 7,047 373 CIGNA Corp. 10,300 539 Cincinnati Financial Corp. 12,200 450 o Clark/Bardes, Inc. 1,700 20 o CNA Financial Corp. 13,700 328 CNA Surety Corp. 2,200 20 o Cobalt Corp. 3,900 64 Commerce Group, Inc. 1,600 59 o Conseco, Inc. 12,600 -- Crawford & Co., Class B 1,600 8 Delphi Financial Group, Inc., Class A 3,010 133 EMC Insurance Group, Inc. 1,200 23 Erie Indemnity Co., Class A 3,000 112 FBL Financial Group, Inc., Class A 2,090 42 Fidelity National Financial, Inc. 10,872 374 Financial Industries Corp. 700 10 First American Corp. 4,800 127 o FPIC Insurance Group, Inc. 400 4 Fremont General Corp. 2,000 19 Great American Financial Resources, Inc. 2,800 40 Harleysville Group, Inc. 1,800 42 Hartford Financial Services Group, Inc. 16,300 664 HCC Insurance Holdings, Inc. 2,100 58 Hilb, Rogal & Hamilton Co. 2,000 71 Horace Mann Educators Corp. 1,800 27 Independence Holding Co. 1,500 29 o Infinity Property & Casualty Corp. 2,500 53 Jefferson-Pilot Corp. 7,100 285 John Hancock Financial Services, Inc. 17,900 519 Kansas City Life Insurance Co. 2,000 81 Landamerica Financial Group, Inc. 5,800 238 Leucadia National Corp. 3,100 118 Liberty Corp. 1,000 44 Lincoln National Corp. 12,600 403 Loews Corp. 9,900 409 o Markel Corp. 300 73 Marsh & McLennan Cos., Inc. 43,000 2,050 MBIA, Inc. 8,050 360 Mercury General Corp. 2,900 128 Metlife, Inc. 43,000 1,235 MGIC Investment Corp. 6,300 286 The Midland Co. 1,800 37 o MIIX Group, Inc. 2,400 1 Mony Group, Inc. 1,500 35 o National Western Life Insurance Co., Class A 300 30 Nationwide Financial Services, Inc., Class A 1,300 37 o Navigators Group, Inc. 1,500 40 NYMAGIC, Inc. 2,100 46 Odyssey Re Holdings Corp. 2,900 61 o Ohio Casualty Corp. 3,000 38 Old Republic International Corp. 10,900 334 o Penn Treaty American Corp. 600 1 Penn-America Group, Inc. 1,400 15 o Philadelphia Consolidated Holding Co. 1,000 39 The Phoenix Cos., Inc. 4,500 36 PMA Capital Corp., Class A 700 6 The PMI Group, Inc. 8,100 250 Presidential Life Corp. 1,000 8 Principal Financial Group, Inc. 20,900 608 o ProAssurance Corp. 1,670 43 The Progressive Corp. 23,300 1,584 Protective Life Corp. 5,500 158 Prudential Financial, Inc. 32,500 1,039 Radian Group, Inc. 9,202 365 Reinsurance Group of America, Inc. 2,600 74 RLI Corp. 2,800 83 Safeco Corp. 8,500 327 Safety Insurance Group, Inc. 1,000 14
See financial notes. 100
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) SCPIE Holdings, Inc. 700 6 Selective Insurance Group, Inc. 1,200 30 o SNTL Corp.-- Litigation Trust Certificates 1,300 -- St. Paul Cos., Inc. 8,100 278 Stancorp Financial Group, Inc. 2,500 134 State Auto Financial Corp. 1,300 24 o Stewart Information Services Corp. 3,700 99 Torchmark Corp. 10,600 411 Travelers Property Casualty Corp., Class A 20,549 333 Travelers Property Casualty Corp., Class B 27,290 443 o Triad Guaranty, Inc. 1,700 68 Trico Bancshares 200 5 o UICI 2,500 30 United Fire & Casualty Co. 500 16 Unitrin, Inc. 3,100 77 UnumProvident Corp. 13,414 154 o USI Holdings Corp. 4,500 47 W.R. Berkley Corp. 6,800 316 Wesco Financial Corp. 200 58 White Mountains Insurance Group, Inc. 200 75 Zenith National Insurance Corp. 1,100 28 ---------- 31,621 MEDIA 4.5% -------------------------------------------------------- o Acacia Research -- Acacia Technologies 330 -- o Acme Communications, Inc. 1,900 13 Advanced Marketing Services 900 11 o AMC Entertainment, Inc. 2,900 28 o American Tower Corp., Class A 7,200 48 o AOL Time Warner, Inc. 272,952 3,734 o Arris Group, Inc. 2,600 10 Banta Corp. 2,700 84 Belo Corp., Class A 9,400 212 o Cablevision Systems Corp., NY Group, Class A 14,300 321 Cadmus Communications Corp. 1,900 17 o California Amplifier, Inc. 1,000 3 o Charter Communications, Inc., Class A 11,800 20 o Clear Channel Communications, Inc. 37,221 1,456 o CNET Networks, Inc. 4,983 18 o Comcast Corp., Class A 57,336 1,830 o Comcast Corp., Special Class A 42,800 1,287 o Consolidated Graphics, Inc. 3,900 75 o Cox Communications, Inc., Class A 36,135 1,196 o CTC Communications Group, Inc. 1,550 -- o Cumulus Media, Inc., Class A 2,600 45 o Daily Journal Corp. 500 12 Dow Jones & Co., Inc. 5,000 198 o Drexler Technology Corp. 1,000 16 The E.W. Scripps Co., Class A 5,000 396 o EchoStar Communications Corp., Class A 14,800 443 o Emmis Communications Corp., Class A 2,800 53 o Entercom Communications Corp. 3,000 146 o Fox Entertainment Group, Inc., Class A 25,350 644 Gannett Co., Inc. 16,500 1,249 o Gaylord Entertainment Co. 1,800 37 o GC Cos., Inc. 500 -- o GenesisIntermedia, Inc. 1,200 -- Gray Television, Inc. 1,600 18 Gray Television, Inc., Class A 1,000 13 Grey Global Group, Inc. 200 130 Harte-Hanks, Inc. 8,100 146 o Hispanic Broadcasting Corp. 6,600 169 Hollinger International, Inc. 5,300 49 o Information Holdings, Inc. 2,200 38 o Insight Communications Co. 2,700 37 John Wiley & Sons, Class A 3,800 93 o Journal Register Co. 3,200 57 Knight-Ridder, Inc. 5,700 368 Lee Enterprises, Inc. 2,500 90 o Liberty Media Corp., Class A 148,377 1,632 o Lifeline Systems, Inc. 2,300 55
See financial notes. 101 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) ~o Loews Cineplex Entertainment Corp. 900 -- o Lynch Interactive Corp. 900 19 o Martha Stewart Living Omnimedia, Class A 1,400 12 McClatchy Co., Class A 7,200 422 The McGraw-Hill Cos., Inc. 17,300 1,010 Media General, Inc., Class A 2,000 110 o Mediacom Communications Corp. 4,600 46 Meredith Corp. 6,000 259 o Metro-Goldwyn-Mayer, Inc. 15,217 170 o Movie Gallery, Inc. 1,525 28 New York Times Co., Class A 9,200 427 o PanAmSat Corp. 15,400 266 o Paxson Communications Corp. 1,900 7 o Pegasus Communications Corp. 3,160 85 o Price Communications Corp. 13,255 162 Pulitzer, Inc. 2,000 93 o Quipp, Inc. 900 9 R.R. Donnelley & Sons Co. 7,700 155 o Radio Unica Communications 300 -- The Reader's Digest Association, Inc., Class A 5,300 64 o Saga Communications, Inc., Class A 1,250 25 o Salem Communications Corp., Class A 900 19 o Scholastic Corp. 2,200 63 o Sinclair Broadcast Group, Inc., Class A 2,300 24 o Thomas Nelson, Inc. 800 7 Tribune Co. 18,900 926 o UnitedGlobalCom, Inc., Class A 2,200 9 o USA Interactive 37,927 1,136 o Valassis Communications, Inc. 5,900 157 o Valuevision Media, Inc., Class A 1,400 18 o Viacom, Inc., Class B 109,312 4,745 o Vialta, Inc. 34 -- The Walt Disney Co. 124,650 2,326 Washington Post, Class B 600 437 o Westwood One, Inc. 13,300 464 o XM Satellite Radio Holdings, Inc., Class A 3,600 35 ---------- 30,232 MISCELLANEOUS 0.1% -------------------------------------------------------- o 1-800-Flowers.com, Inc., Class A 3,700 28 o Braun Consulting 1,300 1 o Breakaway Solutions, Inc. 1,400 -- o Centene Corp. 2,000 64 o Extreme Networks, Inc. 4,500 19 o Five Star Quality Care, Inc. 135 -- o FTD, Inc., Class A 1,500 36 o Keynote Systems, Inc. 1,000 10 o Lin TV Corp., Class A 3,300 79 o Mail-Well, Inc. 1,300 4 o Management Network Group, Inc. 2,400 3 Mine Safety Appliances Co. 900 34 o Occam Networks, Inc. 1,900 -- o Radio One, Inc., Class A 9,500 148 Regal Entertainment Group, Class A 2,200 43 o Wilson Greatbatch Technologies, Inc. 1,100 36 ---------- 505 MISCELLANEOUS FINANCE 7.7% -------------------------------------------------------- 1st Source Corp. 1,571 21 o A.B. Watley Group, Inc. 1,300 -- A.G. Edwards, Inc. 3,900 116 Actrade Financial Technologies Ltd. 1,000 1 Advanta Corp., Class A 7,400 53 o Affiliated Managers Group 1,200 56 Alliance Capital Management Holding L.P. 4,000 128 Allied Capital Corp. 4,515 96 Amcore Financial, Inc. 1,200 28 American Capital Strategies Ltd. 2,600 63 American Express Co. 81,650 3,091 American Home Mortgage Holdings, Inc. 2,000 24 o AmeriCredit Corp. 3,800 26 o Ameritrade Holding Corp. 6,300 32 Anworth Mortgage Asset Corp. 1,000 14 o Asta Funding, Inc. 1,000 20 Astoria Financial Corp. 4,500 113
See financial notes. 102
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Bank of the Ozarks, Inc. 1,400 48 o Bankunited Financial Corp., Class A 2,200 42 Banner Corp. 1,200 20 o Bay View Capital Corp. 5,061 29 The Bear Stearns Cos., Inc. 13,620 910 o Berkshire Hathaway, Inc., Class A 92 6,423 Berkshire Hills Bancorp, Inc. 1,400 37 o The BISYS Group, Inc. 6,000 101 o Blackrock, Inc. 2,900 132 o BOK Financial Corp. 3,337 120 Camco Financial Corp. 700 10 o Capital Corp. of the West 1,050 27 Capital One Financial Corp. 10,600 444 Cathay Bancorp., Inc. 1,600 70 / The Charles Schwab Corp. 63,820 551 Charter Municipal Mortgage Acceptance Co. 1,400 27 Charter One Financial, Inc. 14,125 410 Chicago Mercantile Exchange 1,800 102 CIT Group, Inc. 11,600 236 =(6)Citigroup, Inc. 320,436 12,577 Coastal Bancorp, Inc. 800 24 Coastal Financial Corp. 1,886 24 Commercial Federal Corp. 2,300 49 o CompuCredit Corp. 1,900 14 Countrywide Financial Corp. 7,900 534 CPB, Inc. 900 23 o Credit Acceptance Corp. 2,400 19 CVB Financial Corp. 2,166 44 Downey Financial Corp. 2,000 88 o DVI, Inc. 1,200 11 o E*TRADE Group, Inc. 15,035 83 Eaton Vance Corp. 3,800 113 o eSpeed, Inc., Class A 3,300 43 Fannie Mae 62,900 4,553 Federated Investors, Inc., Class B 6,350 173 o Financial Federal Corp. 800 18 First Financial Corp. 300 15 First Financial Holdings, Inc. 1,400 38 First Indiana Corp. 1,375 23 First Niagra Financial Group, Inc. 3,104 38 First Sentinel Bancorp., Inc. 2,300 35 Flagstar Bancorp., Inc. 2,250 74 Flushing Financial Corp. 1,200 23 Franklin Resources, Inc. 15,100 527 Freddie Mac 44,500 2,577 o Friedman Billings Ramsey Group, Inc., Class A 13,180 145 o Gabelli Asset Management, Inc., Class A 700 22 Glacier Bancorp, Inc. 500 14 Goldman Sachs Group, Inc. 28,900 2,193 Greater Bay Bancorp 2,906 46 o Hawthorne Financial Corp. 700 22 Heritage Financial Corp. 700 15 Hudson River Bancorp 1,600 39 IBERIABANK Corp. 700 30 Independent Bank Corp. Michigan 1,488 35 IndyMac Bancorp, Inc. 3,400 76 o Instinet Group, Inc. 1,200 4 International Bancshares Corp. 1,502 66 Interpool, Inc. 1,200 18 o Investment Technology Group, Inc. 2,250 32 Investors Financial Services Corp. 3,000 65 o Itla Capital Corp. 700 25 Janus Capital Group, Inc. 10,800 150 Jefferies Group, Inc. 800 31 Klamath First Bancorp, Inc. 2,700 46 o Knight Trading Group, Inc. 6,700 34 LaBranche & Co., Inc. 2,400 40 Legg Mason, Inc. 4,200 228 Lehman Brothers Holdings, Inc. 16,500 1,039 o Local Financial Corp. 2,000 30 MB Financial, Inc. 1,200 45 MBNA Corp. 97,650 1,846 MCG Capital Corp. 2,200 24 Merrill Lynch & Co., Inc. 50,800 2,085 Metris Cos., Inc. 3,000 11 MicroFinancial, Inc. 1,900 2 Morgan Stanley 67,100 3,003 MutualFirst Financial, Inc. 2,000 45 o NCO Portfolio Management, Inc. 2,600 15
See financial notes. 103 SCHWAB TOTAL STOCK MARKET INDEX FUND(R)--Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) New Century Financial Corp. 2,400 88 o NextCard, Inc. 2,600 -- Northrim BanCorp, Inc. 2,500 38 Northway Financial, Inc. 200 6 Northwest Bancorp, Inc. 2,500 41 Nueberger Berman, Inc. 3,950 121 Nuveen Investments, Inc., Class A 5,300 130 Oak Hill Financial, Inc. 1,000 24 o Ocwen Financial Corp. 2,920 10 PAB Bankshares, Inc. 700 7 Pacific Capital Bancorp. 2,133 70 Peoples Financial Corp. 3,000 42 The Peoples Holding Co. 500 22 o Petrocorp, Inc. 3,000 33 o Portfolio Recovery Associates, Inc. 2,000 55 Provident Financial Holdings 500 14 R&G Financial Corp., Class B 1,700 46 Raymond James Financial, Inc. 2,100 60 Redwood Trust, Inc. 2,500 83 Resource America, Inc., Class A 2,000 17 o Saxon Capital, Inc. 1,000 15 o Siebert Financial Corp. 2,900 8 SLM Corp. 9,600 1,075 o SoundView Technology Group, Inc. 3,000 5 Sovereign Bancorp., Inc. 12,460 192 State Financial Services Corp., Class A 2,000 41 Staten Island Bancorp., Inc. 2,900 50 o Sterling Financial Corp. 770 18 Student Loan Corp. 1,700 182 SWS Group, Inc. 1,141 19 T. Rowe Price Group, Inc. 6,200 189 TCF Financial Corp. 4,300 170 TF Financial Corp. 700 18 Value Line, Inc. 300 15 W Holding Co., Inc. 2,100 41 Waddell & Reed Financial, Inc., Class A 4,750 95 Washington Federal, Inc. 4,064 89 Washington Mutual, Inc. 59,078 2,334 Webster Financial Corp. 3,012 113 Westwood Holdings Group, Inc. 285 4 o WFS Financial, Inc. 1,600 36 o World Acceptance Corp. 2,500 27 ---------- 52,525 NON-FERROUS METALS 0.3% -------------------------------------------------------- o A.M. Castle & Co. 1,500 7 Alcoa, Inc. 41,464 951 Ampco-Pittsburgh Corp. 2,800 37 o Brush Engineered Materials, Inc. 1,100 6 Century Aluminum Co. 600 4 CIRCOR International, Inc. 1,250 20 Commercial Metals Co. 1,000 16 Commonwealth Industries, Inc. 1,300 6 o Encore Wire Corp. 500 4 Engelhard Corp. 6,800 167 Freeport-McMoran Copper & Gold, Inc., Class B 11,300 196 o Imco Recycling, Inc. 2,400 17 o Kaiser Aluminum Corp. 2,000 -- Kaydon Corp. 3,300 74 o Metals USA, Inc. 1,000 -- Minerals Technologies, Inc. 1,600 71 o Mueller Industries, Inc. 1,700 43 o Phelps Dodge Corp. 4,830 151 Reliance Steel & Aluminum Co. 1,250 21 o RTI International Metals, Inc. 4,000 40 Southern Peru Copper Corp. 5,200 81 o Stillwater Mining Co. 1,300 4 o Titanium Metals Corp. 180 4 o Wolverine Tube, Inc. 1,000 5 ---------- 1,925 OIL: DOMESTIC 0.9% -------------------------------------------------------- o 3TEC Energy Corp. 1,200 19 Amerada Hess Corp. 5,400 244 Ashland, Inc. 4,000 119 o CAL Dive International, Inc. 1,500 24 o Cimarex Energy Co. 3,122 61 ConocoPhillips 39,698 1,997 Consol Energy, Inc. 3,800 65 o CREDO Petroleum Corp. 1,200 13 Diamond Offshore Drilling 6,400 119
See financial notes. 104
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Frontier Oil Corp. 3,600 61 o Global Industries Ltd. 4,400 20 o Gulf Island Fabrication, Inc. 2,800 47 o Harvest Natural Resources, Inc. 6,000 31 Holly Corp. 2,000 57 o Houston Exploration Co. 5,400 151 Kerr-McGee Corp. 10,519 443 o Magnum Hunter Resources, Inc. 1,750 10 Marathon Oil Corp. 20,000 455 o Meridian Resource Corp. 3,100 3 Murphy Oil Corp. 4,000 167 o National-Oilwell, Inc. 5,569 117 o Newfield Exploration Co. 3,700 127 o Nuevo Energy Co. 2,300 31 Patina Oil & Gas Corp. 2,500 86 o Pioneer Natural Resources Co. 6,400 153 Pogo Producing Co. 6,300 249 o Remington Oil & Gas Corp. 1,400 22 o Spinnaker Exploration Co. 900 19 St. Mary Land & Exploration Co. 1,200 31 o Stone Energy Corp. 976 34 Sunoco Logistics Partners L.P. 2,000 57 Sunoco, Inc. 5,500 205 o Superior Energy Services, Inc. 2,400 22 o Syntroleum Corp. 4,000 9 TEPPCO Partners L.P. 4,000 130 o Tesoro Petroleum Corp. 1,800 14 o Transmontaigne, Inc. 1,600 7 Transocean, Inc. 20,731 395 Unocal Corp. 13,507 374 Vintage Petroleum, Inc. 10,500 103 ---------- 6,291 OIL: INTERNATIONAL 2.9% -------------------------------------------------------- ChevronTexaco Corp. 66,817 4,197 =(5)Exxon Mobil Corp. 423,216 14,897 GlobalSantaFe Corp. 19,855 420 ---------- 19,514 OPTICAL & PHOTO 0.1% -------------------------------------------------------- o August Technology Corp. 1,300 5 CPI Corp. 400 5 Eastman Kodak Co. 26,000 778 o Meade Instruments Corp. 800 2 o Oakley, Inc. 2,700 28 o Ocular Sciences, Inc. 1,500 22 o Polaroid Corp. 3,800 -- o Robotic Vision Systems, Inc. 1,000 -- o Zomax, Inc. 2,000 7 o Zygo Corp. 500 4 ---------- 851 PAPER & FOREST PRODUCTS 0.8% -------------------------------------------------------- Boise Cascade Corp. 2,800 64 Bowater, Inc. 2,300 89 o Buckeye Technologies, Inc. 1,200 6 o Caraustar Industries, Inc. 1,300 9 Chesapeake Corp. 1,000 18 CSS Industries, Inc. 600 22 Deltic Timber Corp. 700 17 o Fibermark, Inc. 1,100 6 Georgia-Pacific Corp. 44,365 685 Glatfelter 2,200 25 International Paper Co. 32,804 1,173 Kimberly-Clark Corp. 33,139 1,649 Longview Fibre Co. 1,800 14 o Louisiana-Pacific Corp. 4,800 39 o Lydall, Inc. 1,400 13 MeadWestvaco Corp. 8,674 205 Potlatch Corp. 13,400 320 Rayonier, Inc. 1,000 50 Rock-Tennessee Co., Class A 2,000 27 o Smurfit-Stone Container Corp. 10,900 153 Temple-Inland, Inc. 1,900 86 Universal Forest Products, Inc. 1,800 32 Wausau-Mosinee Paper Corp. 4,700 50 Weyerhaeuser Co. 8,850 439 ---------- 5,191 PRODUCER GOODS & MANUFACTURING 4.6% -------------------------------------------------------- o Aaon, Inc. 1,575 22 o Actuant Corp., Class A 1,420 53 Acuity Brands, Inc. 17,200 262 o Advanced Energy Industries, Inc. 900 9
See financial notes. 105 SCHWAB TOTAL STOCK MARKET INDEX FUND(R)--Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Aeroflex, Inc. 2,400 13 o AGCO Corp. 3,762 69 Alamo Group, Inc. 500 6 Albany International Corp., Class A 3,918 93 o American Standard Cos., Inc. 3,800 271 Ametek, Inc. 1,600 60 Applied Industrial Technologies, Inc. 2,900 54 Aptargroup, Inc. 1,700 59 o Astec Industries, Inc. 500 4 Avery Dennison Corp. 6,200 329 o AZZ, Inc. 700 7 Baldor Electric, Co. 1,300 29 Barnes Group, Inc. 700 15 BHA Group Holdings, Inc. 1,500 32 o Blount International, Inc. 1,200 7 Blyth, Inc. 2,300 61 Briggs & Stratton 3,000 135 o Capstone Turbine Corp. 2,600 2 Caterpillar, Inc. 16,700 878 o Cognex Corp. 1,900 42 o Columbus McKinnon Corp. 2,400 4 Cooper Industries Ltd., Class A 7,200 267 o Corning, Inc. 38,407 208 o Cuno, Inc. 1,300 47 o Daisytek International Corp. 1,700 1 Deere & Co. 13,200 581 Dover Corp. 12,400 356 o DT Industries, Inc. 1,200 1 Emerson Electric Co. 29,500 1,496 o Encompass Services Corp. 2,525 -- Federal Signal Corp. 2,800 48 o Flow International Corp. 900 1 o Flowserve Corp. 1,900 29 Franklin Electric Co., Inc. 400 21 o Gardner Denver, Inc. 2,700 54 =(1) General Electric Co. 621,066 18,290 o Global Power Equipment Group, Inc. 1,000 6 The Gorman-Rupp Co. 800 16 Graco, Inc. 4,675 144 o GrafTech International Ltd. 2,100 8 o Hanover Compressor Co. 3,100 26 Harbor Global Co. Ltd. 160 1 Hardinge, Inc. 1,800 12 Harsco Corp. 3,100 107 Herman Miller, Inc. 5,700 100 o Hexcel Corp. 2,000 8 HON Industries, Inc. 4,000 118 Honeywell International, Inc. 46,962 1,108 Hubbell, Inc., Class B 3,800 122 Hughes Supply, Inc. 1,300 36 o Hydril Co. 2,500 60 IDEX Corp. 2,100 67 Illinois Tool Works, Inc. 18,850 1,206 Ingersoll-Rand Co., Class A 11,200 494 o Ionics, Inc. 400 8 o Jarden Corp. 3,600 106 JLG Industries, Inc. 1,800 10 Johnson Controls, Inc. 5,000 411 o Joy Global, Inc. 8,600 106 o Juno Lighting, Inc. 1,429 18 o Kadant, Inc. 921 15 Kennametal, Inc. 1,500 47 Knape & Vogt Manufacturing Co. 2,200 24 o Ladish Co., Inc. 1,300 6 Lennox International, Inc. 5,271 78 Libbey, Inc. 1,500 34 Lincoln Electric Holdings, Inc. 1,900 36 o Lone Star Technologies, Inc. 1,700 36 o Magnetek, Inc. 1,500 3 Manitowoc Co., Inc. 1,300 24 Matthews International Corp., Class A 1,900 45 o Middleby Corp. 3,500 41 Milacron, Inc. 2,300 12 o Millipore Corp. 2,600 89 o MSC Industrial Direct Co., Class A 4,300 80 NACCO Industries, Inc., Class A 1,300 68 o NATCO Group, Inc., Class A 1,200 7 NN, Inc. 1,800 19 Nordson Corp. 4,000 101
See financial notes. 106
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Oceaneering International, Inc. 1,300 29 Pall Corp. 5,900 125 o Park-Ohio Holdings Corp. 2,600 12 Parker Hannifin Corp. 6,500 264 Penn Engineering & Manufacturing Corp. 1,000 13 Pentair, Inc. 7,200 277 Precision Castparts Corp. 2,300 64 o Presstek, Inc. 1,100 5 Regal Beloit 1,200 21 o Research Frontiers, Inc. 800 6 Robbins & Myers, Inc. 1,400 24 o ROHN Industries, Inc. 1,800 1 Roper Industries, Inc. 1,500 46 o Safeguard Scientifics, Inc. 3,300 6 Sauer-Danfoss, Inc. 2,300 21 Snap-On, Inc. 3,000 88 o SPS Technologies, Inc. 1,200 32 Standex International Corp. 3,000 63 Steelcase, Inc., Class A 1,000 10 Stewart & Stevenson Services 1,000 13 Tecumseh Products Co., Class A 700 28 Teleflex, Inc. 1,800 69 Tennant Co. 600 20 o Terex Corp. 1,200 20 The Timken Co. 7,300 129 Trinity Industries, Inc. 1,100 18 o U.S. Industries, Inc. 2,000 9 o Ultratech Stepper, Inc. 1,300 18 o Uniroyal Technology Corp. 1,100 -- o Universal Compression Holdings, Inc. 400 7 W.W. Grainger, Inc. 5,300 245 Watsco, Inc. 3,400 53 Watts Industries, Inc., Class A 1,000 16 Woodward Governor Co. 500 19 X-Rite, Inc. 2,000 20 York International Corp. 3,800 91 o Zebra Technologies Corp., Class A 1,500 100 ---------- 30,961 RAILROAD & SHIPPING 0.4% -------------------------------------------------------- Alexander & Baldwin, Inc. 5,600 150 Burlington Northern Santa Fe Corp. 24,300 684 CSX Corp. 11,400 365 Florida East Coast Industries, Class A 3,600 93 GATX Corp. 2,000 38 o Greenbrier Cos., Inc. 1,600 13 o Gulfmark Offshore, Inc. 1,600 21 o Kansas City Southern 2,550 28 Maritrans, Inc. 2,500 35 Norfolk Southern Corp. 17,900 380 Overseas Shipholding Group 1,200 23 o RailAmerica, Inc. 1,466 11 o Todd Shipyards Corp. 1,000 14 o Transport Corp. of America 1,100 6 Union Pacific Corp. 13,500 803 ---------- 2,664 REAL PROPERTY 1.8% -------------------------------------------------------- o Alexander's, Inc. 700 51 Alexandria Real Estate Equities, Inc. 2,500 106 AMB Property Corp. 4,800 131 American Land Lease, Inc. 1,700 27 American Mortgage Acceptance Co. 1,500 23 o American Real Estate Partners L.P. 2,300 25 o American Realty Investors, Inc. 1,037 13 o American Retirement Corp. 700 1 AMLI Residential Properties 1,000 23 Annaly Mortgage Management, Inc. 4,400 84 Anthracite Capital, Inc. 4,900 58 Apartment Investment & Management Co., Class A 7,400 279 Archstone-Smith Trust 11,285 257 Arden Realty, Inc. 3,500 83 AvalonBay Communities, Inc. 4,000 160 o Avatar Holdings, Inc. 700 17 Bedford Property Investors 2,900 77 Boston Properties, Inc. 7,400 290 Brandywine Realty Trust 3,000 67 BRE Properties, Class A 2,500 77 Burnham Pacific Properties, Inc. 2,400 1 Camden Property Trust 2,300 80
See financial notes. 107 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Capital Automotive Real Estate Investment Trust 3,300 85 Capstead Mortgage Corp. 2,240 25 CarrAmerica Realty Corp. 2,900 76 o Catellus Development Corp. 4,100 87 CBL & Associates Properties, Inc. 2,200 93 Centerpoint Properties Trust 1,800 104 Chateau Communities, Inc. 3,300 71 Chelsea Property Group, Inc. 2,000 79 Colonial Properties Trust 2,500 85 Commercial Net Lease Realty 3,320 54 Consolidated-Tomoka Land Co. 900 22 Cornerstone Realty Income Trust, Inc. 2,200 16 Corporate Office Properties Trust SBI 3,500 53 Correctional Properties Trust 1,600 35 o Corrections Corp. of America 3,828 81 Cousins Properties, Inc. 2,700 71 Crescent Real Estate Equity Co. 5,400 77 Developers Diversified Realty Corp. 5,112 129 Duke Realty Corp. 8,490 233 Eastgroup Properties 3,400 88 Entertainment Properties Trust 2,700 73 Equity Inns, Inc. 2,700 18 Equity Office Properties Trust 25,738 668 Equity One, Inc. 3,600 57 Equity Residential 16,700 433 Essex Property Trust, Inc. 2,600 143 Federal Realty Investment Trust 2,700 83 FelCor Lodging Trust, Inc. 3,200 23 First Industrial Realty Trust 2,600 73 Forest City Enterprises, Inc., Class A 2,700 99 Gables Residential Trust 3,500 99 General Growth Properties, Inc. 5,200 289 Getty Realty Corp. 2,000 40 Glenborough Realty Trust, Inc. 2,900 48 Glimcher Realty Trust 3,800 79 o Golf Trust of America, Inc. L.P. 2,400 5 Great Lakes Real Estate Investment Trust 1,000 15 Health Care Property Investors, Inc. 3,324 124 Health Care Real Estate Investment Trust, Inc. 2,700 77 Healthcare Realty Trust, Inc. 2,400 66 Heritage Property Investment Trust 2,000 51 Highwoods Properties, Inc. 3,100 63 Home Properties of NY, Inc. 2,500 87 Hospitality Properties Trust 3,500 101 HRPT Properties Trust 7,100 64 IMPAC Mortgage Holdings, Inc. 4,800 64 Innkeepers USA Trust 1,500 11 o Insignia Financial Group, Inc. 3,700 41 iStar Financial, Inc. 5,390 161 o Jones Lang LaSalle, Inc. 2,300 35 Keystone Property Trust 1,300 22 Kilroy Realty Corp. 2,300 57 Kimco Realty Corp. 6,850 248 Koger Equity, Inc. 2,700 43 Kramont Realty Trust 1,400 21 LaSalle Hotel Properties 1,000 14 Lexington Corp. Properties Trust 3,000 52 Liberty Property Trust 4,300 135 LNR Property Corp. 1,200 42 LTC Properties, Inc. 2,800 22 The Macerich Co. 2,700 89 Mack-Cali Realty Corp. 3,400 107 Manufactured Home Communities, Inc. 3,000 96 Meristar Hospitality Corp. 2,200 9 Mid Atlanic Realty Trust 2,000 37 Mid-America Apartment Communities, Inc. 2,500 64 The Mills Corp. 2,400 77 National Health Investors, Inc. 3,100 50 National Health Realty, Inc. 2,300 35 Nationwide Health Properties, Inc. 5,100 71 New Plan Excel Realty Trust 6,000 120 Newcastle Investment Corp. 2,200 38 Newhall Land & Farming Co. L.P. 2,500 72 Novastar Financial, Inc. 1,000 43 o Omega Healthcare Investors, Inc. 2,784 8 Pan Pacific Retail Properties, Inc. 2,201 86
See financial notes. 108
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Parkway Properties, Inc. 500 19 o Pinnacle Holdings, Inc. 2,000 -- Plum Creek Timber Co., Inc. 10,547 245 PMC Commercial Trust 1,500 20 Post Properties, Inc. 2,200 57 Prentiss Properties Trust 2,700 74 o Price Legacy Corp. 242 1 Prologis 10,574 272 PS Business Parks, Inc. 3,000 93 Public Storage, Inc. 7,400 238 RAIT Investment Trust 3,300 74 Ramco-Gershenson Properties 1,400 32 Realty Income Corp. 2,300 87 Reckson Associates Realty Corp. 2,800 53 Regency Centers Corp. 3,200 106 RFS Hotel Investors, Inc. 1,100 12 The Rouse Co. 5,500 191 Saul Centers, Inc. 2,100 50 Senior Housing Properties Trust 4,950 62 Shelbourne Properties I, Inc. 500 11 Shelbourne Properties III, Inc. 500 11 Shurgard Storage Centers, Inc., Class A 3,000 98 Simon Property Group, Inc. 11,400 419 SL Green Realty Corp. 1,700 55 Sovran Self Storage, Inc. 800 24 The St. Joe Co. 5,300 155 Summit Properties, Inc. 3,300 64 Sun Communities, Inc. 3,000 116 Tanger Factory Outlet Centers 800 26 o Tarragon Realty Investors, Inc. 2,359 37 Taubman Centers, Inc. 1,600 28 Thornburg Mortgage, Inc. 2,800 63 The Town & Country Trust 1,000 22 o Trammell Crow Co. 1,300 11 Trizec Properties, Inc. 7,200 67 United Dominion Realty Trust, Inc. 5,900 99 United Mobile Homes, Inc. 1,600 23 Universal Health Realty Income 900 24 Urstadt Biddle Properties, Inc. 500 6 Urstadt Biddle Properties, Inc., Class A 1,000 12 US Restaurant Properties, Inc. 1,000 15 Ventas, Inc. 5,800 75 Vornado Realty Trust 7,000 266 W.P. Carey & Co. LLC 1,600 42 Washington Real Estate Investment Trust 3,100 81 Weingarten Realty Investment 3,650 144 o Wellsford Real Properties, Inc. 1,400 22 ---------- 12,044 RETAIL 6.2% -------------------------------------------------------- o 7-Eleven, Inc. 5,000 45 o 99 Cents Only Stores 3,066 90 o A.C. Moore Arts & Crafts, Inc. 1,400 24 Albertson's, Inc. 23,468 466 o Alloy, Inc. 3,100 19 o Amazon.com, Inc. 21,200 608 o American Eagle Outfitters, Inc. 8,150 143 o AnnTaylor Stores Corp. 6,550 155 o Arden Group, Inc., Class A 600 36 o AutoZone, Inc. 8,900 719 o Barnes & Noble, Inc. 3,100 61 o Bed, Bath & Beyond, Inc. 16,000 632 o Best Buy Co., Inc. 19,650 680 o Big Lots, Inc. 4,400 55 o BJ's Wholesale Club, Inc. 3,100 44 Blair Corp. 1,500 33 Blockbuster, Inc., Class A 6,900 123 o Borders Group, Inc. 3,900 62 o Brightpoint, Inc. 5,000 76 o Brookstone, Inc. 3,300 54 Burlington Coat Factory Warehouse Corp. 2,500 44 Casey's General Stores, Inc. 2,600 34 Cash America International, Inc. 2,500 26 The Cato Corp., Class A 1,200 25 o Central Garden & Pet Co. 6,000 145 o Charming Shoppes, Inc. 3,700 17 o Chindex International, Inc. 550 6 Circuit City Stores, Inc. 12,500 72 Claire's Stores, Inc. 4,800 125
See financial notes. 109 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o Coldwater Creek, Inc. 1,050 10 o Cole National Corp. 1,300 11 o Cost Plus, Inc. 700 22 o Costco Wholesale Corp. 19,600 679 CVS Corp. 15,500 375 DEB Shops, Inc. 1,600 31 o DGSE Cos., Inc. 700 1 o Dick's Sporting Goods, Inc. 3,000 90 Dillards, Inc., Class A 4,000 56 Dollar General Corp. 21,275 309 o Dollar Tree Stores, Inc. 5,150 131 o Duane Reade, Inc. 700 9 o Duckwall-ALCO Stores, Inc. 1,800 17 o Enesco Group, Inc. 1,100 9 ~ EToys, Inc. 3,500 -- Family Dollar Stores, Inc. 7,700 263 o Federated Department Stores, Inc. 22,400 686 o The Finish Line, Class A 1,800 30 Fred's, Inc. 2,175 71 Friedman's, Inc., Class A 1,500 17 o GameStop Corp. 500 6 o The Gap, Inc. 54,400 905 o Great Atlantic & Pacific Tea Co. 2,200 13 o Guitar Center, Inc. 1,700 39 Home Depot, Inc. 142,000 3,994 o HOT Topic, Inc. 4,200 103 Inergy L.P. 1,000 34 o Insight Enterprises, Inc. 2,150 16 J.C. Penney Co., Inc. Holding Co. 16,600 283 o Kirkland's, Inc. 1,000 15 o Kohl's Corp. 17,000 966 o Kroger Co. 48,300 691 o Lillian Vernon Corp. 500 4 Limited Brands, Inc. 27,644 402 Longs Drug Stores Corp. 1,800 28 Lowe's Cos., Inc. 47,700 2,094 The May Department Stores Co. 13,500 292 o Michaels Stores, Inc. 2,900 91 o The Neiman Marcus Group, Inc., Class A 1,700 55 Nordstrom, Inc. 5,800 101 o Office Depot, Inc. 19,300 244 o OfficeMax, Inc. 6,700 38 o Party City Corp. 1,300 13 o Pathmark Stores, Inc. 1,400 10 o Payless Shoesource, Inc. 2,406 38 o PC Connection, Inc. 3,000 21 Pep Boys-Manny, Moe & Jack 2,500 21 o PETsMART, Inc. 7,600 115 Pier 1 Imports, Inc. 3,900 72 o Pricesmart, Inc. 200 3 RadioShack Corp. 11,600 275 o Rite Aid Corp. 19,900 68 Ross Stores, Inc. 4,200 159 Ruddick Corp. 3,100 41 o Safeway, Inc. 26,900 447 o Saks, Inc. 7,500 67 o School Specialty, Inc. 1,600 30 Sears, Roebuck & Co. 18,200 516 o ShopKo Stores, Inc. 8,900 107 o Smart & Final, Inc. 2,700 12 o Smith & Wollensky Restaurant Group, Inc. 900 4 o Spiegel, Inc., Class A 5,000 -- o Stage Stores, Inc. 1,200 25 o Staples, Inc. 29,200 556 Target Corp. 51,900 1,736 Tiffany & Co. 6,500 180 TJX Cos., Inc. 32,400 624 o Toys `R' Us, Inc. 8,300 85 o Tractor Supply Co. 2,000 85 o Tuesday Morning Corp. 2,500 58 Unifirst Corp. 3,900 64 o United Stationers, Inc. 1,400 38 o Value City Department Stores, Inc. 700 1 =(3) Wal-Mart Stores, Inc. 276,700 15,584 Walgreen Co. 62,600 1,932 Weis Markets, Inc. 1,700 54 o West Marine, Inc. 1,100 18 o Whitehall Jewellers, Inc. 1,800 16 o Williams-Sonoma, Inc. 6,200 160 o Winmark Corp. 1,200 16 Winn-Dixie Stores, Inc. 10,000 125 o Yum! Brands, Inc. 19,500 482 o Zale Corp. 4,700 164 ---------- 41,872
See financial notes. 110
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) STEEL 0.1% -------------------------------------------------------- o AK Steel Holding Corp. 4,027 12 Allegheny Technologies, Inc. 3,650 15 Intermet Corp. 4,100 15 o Material Sciences Corp. 4,000 32 o Maverick Tube Corp. 1,000 18 Nucor Corp. 3,000 123 Quanex Corp. 2,500 72 Roanoke Electric Steel Corp. 800 6 Ryerson Tull, Inc. 1,600 12 Schnitzer Steel Industries, Inc., Class A 3,500 100 o The Shaw Group, Inc. 2,000 23 o Steel Dynamics, Inc. 1,700 21 Steel Technologies, Inc. 700 8 United States Steel Corp. 10,300 147 Valmont Industries, Inc. 2,400 46 Worthington Industries, Inc. 3,700 50 ---------- 700 TELEPHONE 3.1% -------------------------------------------------------- o ACT Teleconferencing, Inc. 1,100 2 o Adtran, Inc. 1,600 65 Advanced Switching Communications, Inc. 1,800 -- o Alaska Communications Systems Group, Inc. 2,700 7 Alltel Corp. 19,935 934 Applied Signal Technology, Inc. 5,000 72 AT&T Corp. 45,447 775 o AT&T Latin America Corp., Class A 2,100 -- o AT&T Wireless Services, Inc. 131,734 851 Atlantic Tele-Network, Inc. 1,300 22 o Avaya, Inc. 11,385 44 BellSouth Corp. 114,450 2,917 o Broadwing, Inc. 8,568 40 o Centennial Communications Corp. 3,500 7 o Centillium Communications, Inc. 1,000 6 CenturyTel, Inc. 10,500 309 o Citizens Communications Co. 19,500 213 o ClearOne Communications, Inc. 1,000 1 o Commonwealth Telephone Enterprises, Inc. 9,400 374 o Copper Mountain Networks, Inc. 200 1 o CoSine Communications, Inc. 730 4 o Crown Castle International Corp. 8,900 57 D&E Communications, Inc. 2,000 22 o Ditech Communications Corp. 1,600 7 o First Virtual Communications, Inc. 1,200 1 o Goamerica, Inc. 1,800 1 Hickory Tech Corp. 1,100 10 o Inet Technologies, Inc. 2,200 18 o Integrated Telecom Express, Inc. 1,800 4 Inter-Tel, Inc. 6,000 99 o Interdigital Communications Corp. 2,000 45 o Intrado, Inc. 1,100 11 o ITC Deltacom, Inc. 13 -- o ITXC Corp. 1,600 3 o j2 Global Communications, Inc. 1,000 30 o Level 3 Communications, Inc. 13,900 79 o Lexar Media, Inc. 1,400 7 o Lexicon Genetics, Inc. 1,900 9 o Mastec, Inc. 1,850 4 o MCK Communications, Inc. 1,600 3 ~ McLeodUSA, Inc., Class A Escrow Security 21,892 -- o Metro One Telecommunications 4,400 28 o Mpower Holding Corp. 27 -- ~ NEON Communications, Inc. 1,700 -- o Net2Phone, Inc. 1,600 7 o Network Plus Corp. 2,000 -- o Nextel Communications, Inc., Class A 59,100 874 o Nextel Partners, Inc., Class A 6,700 39 o NMS Communications Corp. 1,500 1 North Pittsburgh Systems, Inc. 3,500 48 o Novatel Wireless, Inc. 160 -- o Nucentrix Broadband Networks, Inc. 2,100 4 o OmniSky Corp. 2,900 -- o Openwave Systems, Inc. 8,315 14 o Pac-West Telecomm, Inc. 1,900 1 o Peco II, Inc. 1,200 1 o PentaStar Communications, Inc. 600 -- o Qwest Communications International, Inc. 68,237 257
See financial notes. 111 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o RCN Corp. 2,300 2 o SBA Communications Corp. 1,300 2 SBC Communications, Inc. 206,012 4,812 Scientific-Atlanta, Inc. 11,900 193 o Somera Communications, Inc. 1,900 2 Sprint Corp. (FON Group) 72,700 837 o Sprint Corp. (PCS Group) 42,100 147 o Stratex Networks, Inc. 2,800 7 o Telecommunication Systems, Inc., Class A 1,300 2 Telephone & Data Systems, Inc. 2,300 99 ~o Teligent, Inc., Class A 1,000 -- o Tellium, Inc. 4,000 2 o Time Warner Telecom, Inc., Class A 2,000 7 o Turnstone Systems, Inc. 1,600 4 o U.S. Cellular Corp. 3,600 87 o U.S. Wireless Corp. 400 -- o Utstarcom, Inc. 1,200 26 Verizon Communications, Inc. 169,786 6,347 ~o Viatel, Inc. 2,111 -- Warwick Valley Telephone Co. 200 16 o West Corp. 3,500 79 o Westell Technologies, Inc., Class A 2,560 11 o WJ Communications, Inc. 2,300 2 ---------- 21,012 TOBACCO 0.1% -------------------------------------------------------- R.J. Reynolds Tobacco Holdings, Inc. 4,832 136 Schweitzer-Mauduit International, Inc. 5,800 127 Standard Commercial Corp. 1,100 18 Universal Corp. 3,800 148 UST, Inc. 7,700 241 ---------- 670 TRAVEL & RECREATION 0.7% -------------------------------------------------------- o Alliance Gaming Corp. 3,000 48 o Alpha Hospitality Corp. 500 5 o Ambassadors Group, Inc. 1,700 21 o Amerco, Inc. 900 7 o American Classic Voyages Co. 900 -- o Ameristar Casinos, Inc. 1,700 23 o Argosy Gaming Co. 1,600 33 o Aztar Corp. 1,900 27 o Bally Total Fitness Holding Corp. 1,300 8 o Boca Resorts, Inc., Class A 1,800 22 Brunswick Corp. 13,900 303 Callaway Golf Co. 3,600 50 Carnival Corp. 26,400 728 Central Parking Corp. 1,600 16 o Choice Hotels International, Inc. 3,400 83 o Dollar Thrifty Automotive Group, Inc. 1,000 16 Dover Downs Gaming & Entertainment, Inc. 1,480 15 o Expedia, Inc. 2,200 127 o Extended Stay America, Inc. 3,800 45 o Harrah's Entertainment, Inc. 9,900 390 Hilton Hotels Corp. 22,426 299 o Host Marriott Corp. 13,900 107 o Hotels.com, Class A 1,800 129 o Interstate Hotels & Resorts, Inc. 82 -- o K2, Inc. 1,700 16 o Lakes Entertainment, Inc. 900 5 o Mandalay Resort Group 6,600 174 Marine Products Corp. 180 2 o MarineMax, Inc. 800 9 Marriott International, Inc., Class A 12,700 456 o MGM MIRAGE 12,300 350 o MTR Gaming Group, Inc. 2,300 19 o Multimedia Games, Inc. 750 19 o Navigant International, Inc. 4,300 46 o Park Place Entertainment Corp. 15,800 117 o Prime Hospitality Corp. 1,800 12 o RC2 Corp. 2,200 35
See financial notes. 112
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) o ResortQuest International, Inc. 3,000 9 Royal Caribbean Cruises Ltd. 12,800 238 Sabre Holdings Corp. 7,501 157 o Scientific Games Corp., Class A 3,000 20 o Shuffle Master, Inc. 1,250 29 o Six Flags, Inc. 3,500 21 Speedway Motorsports, Inc. 2,300 56 o The Sports Authority, Inc. 1,000 9 Starwood Hotels & Resorts Worldwide, Inc. 8,730 234 o Station Casinos, Inc. 4,650 100 o Vail Resorts, Inc. 1,300 16 o WMS Industries, Inc. 1,500 20 o Wynn Resorts Ltd. 4,000 68 ---------- 4,739 TRUCKING & FREIGHT 0.9% ------------------------------------------------------- Arkansas Best Corp. 1,100 28 BancTrust Financial Group, Inc. 1,100 17 C.H. Robinson Worldwide, Inc. 7,500 276 CNF, Inc. 2,000 61 o Consolidated Freightways Corp. 2,700 -- Expeditors International Washington, Inc. 5,600 204 o Forward Air Corp. 1,100 28 o Heartland Express, Inc. 1,971 45 o J.B. Hunt Transport Services, Inc. 2,000 69 o Kirby Corp. 1,300 34 o Knight Transportation, Inc. 1,800 43 o Landstar Systems, Inc. 3,800 236 o Martin Midstream Partners L.P. 1,000 20 o Old Dominion Freight Line 1,200 40 Paccar, Inc. 6,900 403 o Pacer International, Inc. 1,800 29 Roadway Corp. 5,600 208 Ryder Systems, Inc. 6,400 159 o SCS Transportation, Inc. 1,600 19 o Swift Transportation Co., Inc. 3,970 72 United Parcel Service, Inc., Class B 70,480 4,378 USFreightways Corp. 1,300 37 Werner Enterprises, Inc. 2,666 60 o Yellow Corp. 1,200 32 ---------- 6,498 UTILITIES: ELECTRIC & GAS 3.0% -------------------------------------------------------- o The AES Corp. 21,596 130 AGL Resources, Inc. 4,300 111 Allegheny Energy, Inc. 7,000 58 Allete, Inc. 4,200 100 Alliant Energy Corp. 4,300 75 Ameren Corp. 8,100 332 American Electric Power Co., Inc. 17,320 457 American States Water Co. 950 25 Atmos Energy Corp. 1,800 41 Avista Corp. 3,800 45 o BayCorp Holdings Ltd. 6 -- Black Hills Corp. 1,400 40 o Calpine Corp. 12,300 66 Cascade Natural Gas Corp. 1,000 19 Centerpoint Energy, Inc. 13,600 107 Central Vermont Public Service Corp. 2,700 48 CH Energy Group, Inc. 900 38 Cinergy Corp. 8,800 300 Cleco Corp. 8,900 133 CMS Energy Corp. 5,000 31 Consolidated Edison, Inc. 10,300 400 Constellation Energy Group, Inc. 16,800 492 o Covanta Energy Corp. 2,100 -- Dominion Resources, Inc. 18,610 1,101 DPL, Inc. 6,952 96 DQE, Inc. 6,100 83 DTE Energy Co. 7,301 294 Duke Energy Corp. 44,700 786 o Edison International 58,700 856 El Paso Corp. 27,887 209 o El Paso Electric Co. 2,800 32 Energen Corp. 7,100 233 Energy East Corp. 8,214 150 Entergy Corp. 13,700 639
See financial notes. 113 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Equitable Resources, Inc. 7,100 273 Exelon Corp. 27,237 1,445 FirstEnergy Corp. 15,617 527 Florida Public Utilities Co. 1,066 16 FPL Group, Inc. 9,700 590 Great Plains Energy, Inc. 9,000 236 Green Mountain Power Corp. 3,800 79 Hawaiian Electric Industries, Inc. 2,600 108 Idacorp, Inc. 1,700 43 KeySpan Corp. 8,400 285 Kinder Morgan, Inc. 10,700 503 MDU Resources Group, Inc. 5,300 158 MGE Energy, Inc. 400 12 o Mirant Corp. 20,206 67 National Fuel Gas Co. 5,800 136 New Jersey Resources Corp. 1,650 57 o NewPower Holdings, Inc. 3,800 1 Nicor, Inc. 2,000 60 NiSource, Inc. 22,864 432 Northeast Utilities, Inc. 5,624 84 Northwest Natural Gas Co. 1,200 31 NSTAR 3,867 167 OGE Energy Corp. 3,500 63 Oneok, Inc. 4,400 83 Otter Tail Corp. 1,100 30 Peoples Energy Corp. 3,200 124 Pepco Holdings, Inc. 5,000 86 o PG&E Corp. 19,900 298 Philadelphia Suburban Corp. 2,937 67 Piedmont Natural Gas Co. 1,600 60 Pinnacle West Capital Corp. 3,800 126 o Plug Power, Inc. 2,248 11 PNM Resources, Inc. 2,000 44 PPL Corp. 15,000 543 Progress Energy, Inc. 12,159 508 Public Service Enterprise Group, Inc. 10,000 385 Puget Energy, Inc. 7,500 158 Questar Corp. 8,100 245 o Reliant Resources, Inc. 12,625 71 o Republic Services, Inc. 17,700 380 SCANA Corp. 17,005 540 Sempra Energy 11,175 300 o Sierra Pacific Resources 4,476 17 The Southern Co. 44,400 1,292 o Southern Union Co. 2,867 40 Southwest Gas Corp. 1,100 23 TECO Energy, Inc. 5,600 60 Texas Genco Holdings, Inc. 2,680 47 TXU Corp. 12,900 257 o U.S. Energy Systems, Inc. 600 1 UGI Corp. 5,100 161 UIL Holdings Corp. 6,200 224 Unisource Energy Corp. 2,100 37 Vectren Corp. 5,766 134 o Waste Connections, Inc. 1,000 34 Westar Energy, Inc. 3,700 52 WGL Holdings, Inc. 2,000 54 Williams Cos., Inc. 22,060 153 Wisconsin Energy Corp. 14,300 377 WPS Resources Corp. 1,400 56 Xcel Energy, Inc. 17,195 232 ---------- 20,210 PREFERRED STOCK 0.0% of investments HEALTHCARE / DRUGS & MEDICINE 0.0% -------------------------------------------------------- Dynacq International, Inc., Class A 16 -- REAL PROPERTY 0.0% -------------------------------------------------------- Commercial Net Lease Realty 147 4
See financial notes. 114
SECURITY FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) CONVERTIBLE BONDS 0.0% of investments BUSINESS MACHINES & SOFTWARE 0.0% ------------------------------------------------------------------------- MicroStrategy, Inc., Class A, 7.50%, Convertible until 06/24/07 2 2 SECURITY AND NUMBER OF SHARES WARRANTS 0.0% of investments AIR TRANSPORTATION 0.0% ------------------------------------------------------------------------- o Timco Aviation Services expires 02/28/07 160 -- BUSINESS MACHINES & SOFTWARE 0.0% ------------------------------------------------------------------------- o MicroStrategy, Inc. expires 06/24/04 57 -- RIGHTS 0.0% of investments BUSINESS MACHINES & SOFTWARE 0.0% ------------------------------------------------------------------------- o Comdisco Holding Co. 4,700 1 SHORT-TERM INVESTMENT 1.3% of investments Provident Institutional TempFund 9,092,628 9,093 U.S. TREASURY OBLIGATION 0.1% of investments = U.S. Treasury Bill 1.62%, 06/19/03 530 529
END OF PORTFOLIO HOLDINGS. For totals, please see the first page of holdings for this fund. See financial notes. 115 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) -- Financials Statement of ASSETS AND LIABILITIES As of April 30, 2003; unaudited. All numbers x 1,000 except NAV. ASSETS - ------------------------------------------------------------------------- Investments, at market value (including $95,849 of securities on loan) $ 677,239 a Collateral held for securities on loan 99,519 Receivables: Fund shares sold 1,259 Interest 7 Dividends 645 Investments sold 77 Due from brokers for futures 20 Income from lending securities 14 Prepaid expenses + 40 ------------- TOTAL ASSETS 778,820 LIABILITIES - ------------------------------------------------------------------------- Collateral held for securities on loan 99,519 Payables: Fund shares redeemed 609 Investments bought 2,450 Investment adviser and administrator fees 21 Transfer agent and shareholder service fees 12 Accrued expenses + 95 ------------- TOTAL LIABILITIES 102,706 NET ASSETS - ------------------------------------------------------------------------- TOTAL ASSETS 778,820 TOTAL LIABILITIES - 102,706 ------------ NET ASSETS $ 676,114 NET ASSETS BY SOURCE Capital received from investors 847,455 Net investment income not yet distributed 2,314 Net realized capital losses (23,537) Net unrealized capital losses (150,118) b NET ASSET VALUE (NAV) SHARES SHARE CLASS NET ASSETS / OUTSTANDING = NAV Investor Shares $343,859 23,196 $14.82 Select Shares(R) $332,255 22,388 $14.84
a The fund paid $828,041 for these securities. Not counting short-term obligations and government securities, the fund paid $123,796 for securities during the report period and received $5,876 from securities it sold or that matured. b These derive from investments and futures. As of the report date, the fund had twenty-four open S&P 500 futures contracts due to expire on June 20, 2003, with a contract value of $5,497 and unrealized gains of $431 and thirteen open Russell 2000 futures due to expire on June 19, 2003 with a contract value of $2,591 and unrealized gains of $253. FEDERAL TAX DATA - --------------------------------------------------- PORTFOLIO COST $ 828,166 NET UNREALIZED GAINS AND LOSSES: Gains $ 62,422 Losses + (213,349) -------------- ($150,927) AS OF OCTOBER 31, 2002: UNDISTRIBUTED EARNINGS: Ordinary income $ 5,193 Long-term capital gains $ -- UNUSED CAPITAL LOSSES: Expires 10/31 of: Loss amount 2007 $ 18 2008 3,413 2009 2,000 2010 + 11,487 -------------- $ 16,918
See financial notes. 116 Statement of OPERATIONS For November 1, 2002 through April 30, 2003; unaudited. All numbers x 1,000. INVESTMENT INCOME - ------------------------------------------------------------------------- Dividends $ 4,767 a Interest 29 Lending of securities + 135 ------------- TOTAL INVESTMENT INCOME 4,931 NET REALIZED GAINS AND LOSSES - ------------------------------------------------------------------------- Net realized losses on investments sold (6,001) Net realized losses on futures contracts + (249) ------------- NET REALIZED LOSSES (6,250) NET UNREALIZED GAINS AND LOSSES - ------------------------------------------------------------------------- Net unrealized gains on investments 31,969 Net unrealized gains on futures contracts + 720 ------------- NET UNREALIZED GAINS 32,689 EXPENSES - ------------------------------------------------------------------------- Investment adviser and administrator fees 822 b Transfer agent and shareholder service fees: Investor Shares 357 c Select Shares(R) 141 c Trustees' fees 4 d Custodian fees 29 Portfolio accounting fees 50 Professional fees 16 Registration fees 35 Shareholder reports 38 Other expenses + 16 Total expenses 1,508 ------------ Expense reduction - 405 e ------------- NET EXPENSES 1,103 INCREASE IN NET ASSETS FROM OPERATIONS - ------------------------------------------------------------------------- TOTAL INVESTMENT INCOME 4,931 NET EXPENSES - 1,103 ------------ NET INVESTMENT INCOME 3,828 NET REALIZED LOSSES (6,250) f NET UNREALIZED GAINS + 32,689 f ------------- INCREASE IN NET ASSETS FROM OPERATIONS $ 30,267
a An additional $1 was withheld for foreign taxes. b Calculated as a percentage of average daily net assets: 0.30% of the first $500 million and 0.22% of assets beyond that. c Calculated as a percentage of average daily net assets: for transfer agent services, 0.05% of the fund's assets; for shareholder services, 0.20%, and 0.05 of the assets of each respective share class. d For the fund's independent trustees only. e Includes $367 from the investment adviser (CSIM) and $38 from the transfer agent and shareholder service agent (Schwab). These reductions reflect a guarantee by CSIM and Schwab to limit the operating expenses of this fund through at least February 29, 2004, as follows:
% OF AVERAGE SHARE CLASS DAILY NET ASSETS ------------------------------------------ Investor Shares 0.58 Select Shares 0.39
Prior to March 1, 2003, these limits were 0.40% and 0.27% for the Investor Shares and Select Shares, respectively. This limit doesn't include interest, taxes and certain non-routine expenses. f These add up to a net gain on investments of $26,439. See financial notes. 117 SCHWAB TOTAL STOCK MARKET INDEX FUND(R) -- Financials Statements of CHANGES IN NET ASSETS For the current and prior report periods. All numbers x 1,000. Figures for current period are unaudited.
OPERATIONS - --------------------------------------------------------------------------------------------- 11/1/02-4/30/03 11/01-10/31/02 Net investment income $ 3,828 $ 6,337 Net realized losses (6,250) (11,625) Net unrealized gains or losses + 32,689 (71,931) ---------------------------------- INCREASE OR DECREASE IN NET ASSETS FROM OPERATIONS 30,267 (77,219) DISTRIBUTIONS PAID - --------------------------------------------------------------------------------------------- Dividends from net investment income Investor Shares 3,195 2,256 Select Shares(R) + 3,512 2,809 ---------------------------------- TOTAL DIVIDENDS FROM NET INVESTMENT INCOME $ 6,707 $ 5,065 a
TRANSACTIONS IN FUND SHARES - --------------------------------------------------------------------------------------------- 11/1/02-4/30/03 11/1/01-10/31/02 QUANTITY VALUE QUANTITY VALUE SHARES SOLD Investor Shares 6,586 $ 93,071 8,607 $ 139,890 Select Shares + 6,450 91,371 7,243 117,125 ----------------------------------------------------- TOTAL SHARES SOLD 13,036 $ 184,44 15,850 $ 257,015 SHARES REINVESTED Investor Shares 224 $ 3,195 120 $ 2,114 Select Shares + 245 3,512 139 2,439 ----------------------------------------------------- TOTAL SHARES REINVESTED 469 $ 6,707 259 $ 4,553 SHARES REDEEMED Investor Shares (1,955) ($ 27,650 (3,882) ($ 62,511) Select Shares + (2,707) (38,506) (4,446) (70,982) ----------------------------------------------------- TOTAL SHARES REDEEMED (4,662) ($ 66,156) (8,328) ($ 133,493) b NET INCREASE 8,843 $ 124,993 7,781 $ 128,075
SHARES OUTSTANDING AND NET ASSETS - --------------------------------------------------------------------------------------------- 11/1/02-4/30/03 11/1/01-10/31/02 SHARES NET ASSETS SHARES NET ASSETS Beginning of period 36,741 $ 527,561 28,960 $ 481,770 Total increase + 8,843 148,553 7,781 45,791 c ----------------------------------------------------- END OF PERIOD 45,584 $ 676,114 36,741 $ 527,561 d
a The tax-basis components of distributions paid for the prior period are: Ordinary Income $5,065 Long-term capital gains $ --
b Dollar amounts are net of proceeds received early withdrawal fees that the fund charges on shares sold 180 days or less after buying them. CURRENT PERIOD Investor Shares $ 33 Select Shares + 21 --------- TOTAL $ 54 PRIOR PERIOD Investor Shares $ 65 Select Shares + 60 --------- TOTAL $ 125
c Figures for shares represent shares sold plus shares reinvested, minus shares redeemed. Figures for net assets represent the changes in net assets from operations plus the changes in value of transactions in fund shares, minus distributions paid. d Includes net investment income not yet distributed in the amount of $2,314 and $5,193 for the current period and the prior period, respectively. See financial notes. 118 SCHWAB INTERNATIONAL INDEX FUND(R) Performance as of 4/30/03: Investor Shares PRE- AND POST-TAX AVERAGE ANNUAL TOTAL RETURNS 1, 2 This bar chart compares pre-tax performance of the fund's Investor Shares with the Schwab International Index(R) and the Morningstar Foreign Stock Fund category. The table below the chart shows two types of after-tax returns. [BAR CHART]
INVESTOR SHARES SCHWAB INTERNATIONAL INDEX CATEGORY AVERAGE 6 MONTHS 1.62% 2.11% 1.38% 1 YEAR -16.16% -15.43% -17.62% 5 YEARS -5.91% -5.36% -5.04% SINCE INCEPTION: 9/9/93 1.65% 2.19% n/a
6 MONTHS 1 YEAR 5 YEARS SINCE INCEPTIONS ------------------ ------------------ ------------------ ------------------ INVESTOR CATEGORY INVESTOR CATEGORY INVESTOR CATEGORY INVESTOR CATEGORY TOTAL RETURNS AFTER TAX SHARES AVERAGE SHARES AVERAGE SHARES AVERAGE SHARES AVERAGE - -------------------------------------------------------------------------------------------------------------------- PRE-LIQUIDATION (still own shares) 0.81% -0.91% -16.83% -19.34% -6.38% -6.33% 1.17% -- - -------------------------------------------------------------------------------------------------------------------- POST-LIQUIDATION (shares were sold) 0.98% -0.43% -10.11% -11.75% -4.78% -4.10% 1.12% -- - --------------------------------------------------------------------------------------------------------------------
PERFORMANCE OF A $10,000 INVESTMENT 2 This graph shows performance since inception of a hypothetical $10,000 investment in the fund's Investor Shares, compared with a similar investment in two indices: the Schwab International Index and the MSCI-EAFE(R) Index. $11,714 INVESTOR SHARES $12,334 SCHWAB INTERNATIONAL INDEX $11,072 MSCI-EAFE INDEX [LINE GRAPH]
INVESTOR SHARES SCHWAB INTERNATIONAL INDEX MSCI-EAFE INDEX 09-Sep-93 10000 10000 10000 Sep-93 9770 9786 9749 Oct-93 10150 10167 10049 Nov-93 9420 9454 9171 Dec-93 10096 10137 9833 Jan-94 10769 10823 10664 Feb-94 10558 10623 10634 Mar-94 10156 10172 10176 Apr-94 10458 10544 10607 May-94 10407 10448 10547 Jun-94 10488 10508 10696 Jul-94 10649 10692 10798 Aug-94 10941 10999 11054 Sep-94 10559 10621 10706 Oct-94 10950 11026 11062 Nov-94 10428 10478 10530 Dec-94 10484 10564 10597 Jan-95 10108 10254 10190 Feb-95 10189 10282 10160 Mar-95 10759 10964 10794 Apr-95 11145 11346 11200 May-95 11176 11303 11067 Jun-95 11064 11168 10873 Jul-95 11623 11826 11550 Aug-95 11237 11384 11110 Sep-95 11470 11661 11327 Oct-95 11318 11461 11022 Nov-95 11562 11782 11329 Dec-95 11975 12238 11785 Jan-96 12006 12277 11834 Feb-96 12026 12300 11874 Mar-96 12232 12529 12126 Apr-96 12530 12826 12478 May-96 12396 12674 12249 Jun-96 12489 12761 12317 Jul-96 12139 12430 11958 Aug-96 12253 12538 11984 Sep-96 12592 12907 12303 Oct-96 12571 12863 12177 Nov-96 13136 13460 12662 Dec-96 13067 13341 12499 Jan-97 12640 12898 12061 Feb-97 12827 13114 12259 Mar-97 12932 13202 12303 Apr-97 13025 13344 12368 May-97 13984 14324 13174 Jun-97 14766 15160 13899 Jul-97 15214 15570 14125 Aug-97 14109 14447 13070 Sep-97 15078 15354 13801 Oct-97 13869 14110 12740 Nov-97 13859 14055 12610 Dec-97 14022 14254 12720 Jan-98 14538 14830 13301 Feb-98 15382 15727 14155 Mar-98 15782 16139 14591 Apr-98 15888 16248 14706 May-98 15888 16209 14634 Jun-98 16025 16315 14745 Jul-98 16067 16419 14894 Aug-98 14085 14350 13049 Sep-98 13632 13880 12648 Oct-98 14981 15335 13966 Nov-98 15751 16198 14681 Dec-98 16244 16729 15261 Jan-99 16190 16640 15216 Feb-99 15829 16311 14853 Mar-99 16541 17060 15473 Apr-99 17212 17794 16099 May-99 16371 16897 15270 Jun-99 16999 17586 15866 Jul-99 17616 18240 16337 Aug-99 17775 18410 16398 Sep-99 18105 18724 16563 Oct-99 19073 19722 17184 Nov-99 19945 20579 17781 Dec-99 21704 22386 19377 Jan-00 19999 20761 18147 Feb-00 20278 21097 18635 Mar-00 21457 22294 19358 Apr-00 20299 21089 18340 May-00 19720 20470 17892 Jun-00 20460 21234 18592 Jul-00 19667 20411 17813 Aug-00 20021 20770 17967 Sep-00 18980 19696 17092 Oct-00 18369 19083 16689 Nov-00 17533 18224 16063 Dec-00 17886 18608 16633 Jan-01 18038 18806 16638 Feb-01 16492 17174 15394 Mar-01 15382 15985 14349 Apr-01 16438 17086 15334 May-01 15850 16448 14767 Jun-01 15175 15745 14160 Jul-01 14794 15365 13915 Aug-01 14369 14935 13592 Sep-01 13074 13582 12215 Oct-01 13303 13843 12528 Nov-01 13716 14276 12990 Dec-01 13818 14373 13067 Jan-02 13103 13624 12373 Feb-02 13202 13741 12460 Mar-02 13928 14466 13134 Apr-02 13972 14585 13221 May-02 14160 14791 13388 Jun-02 13587 14193 12856 Jul-02 12255 12808 11587 Aug-02 12222 12780 11560 Sep-02 10900 11400 10319 Oct-02 11528 12079 10873 Nov-02 12012 12612 11366 Dec-02 11658 12210 10984 Jan-03 11152 11696 10526 Feb-03 10927 11457 10285 Mar-03 10702 11231 10084 Apr-03 11714 12334 11072
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. The fund's share price and principal values change, and when you sell your shares, they may be worth more or less than what you paid for them. Past performance does not indicate future results. Results for the report period are not annualized. 1 The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 4/30/03 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor's situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. As of 4/30/03, the total number of funds in the Morningstar Foreign Stock Fund category for the six-month, one- and five-year periods was 938, 898 and 516, respectively. These funds may or may not use tax-efficient strategies. 2 Fund returns reflect expense reductions by the fund's investment adviser (CSIM) and Schwab. Without these reductions, the fund's returns would have been lower. Schwab Equity Index Funds 119 SCHWAB INTERNATIONAL INDEX FUND(R) SELECT SHARES(R) PRE- AND POST-TAX AVERAGE ANNUAL TOTAL RETURNS 1, 2 This bar chart compares pre-tax performance of the fund's Select Shares with the Schwab International Index(R) and the Morningstar Foreign Stock Fund category. The table below the chart shows two types of after-tax returns. [BAR CHART]
SELECT SHARES SCHWAB INTERNATIONAL INDEX CATEGORY AVERAGE 6 MONTHS 1.65% 2.11% 1.38% 1 YEAR -16.06% -15.43% -17.62% 5 YEARS -5.82% -5.36% -5.04% SINCE INCEPTION: 5/19/97 -3.03% -2.71% n/a
6 MONTHS 1 YEAR 5 YEARS SINCE INCEPTION ----------------- ------------------ ----------------- ----------------- TOTAL RETURN AFTER TAX SELECT CATEGORY SELECT CATEGORY SELECT CATEGORY SELECT CATEGORY SHARES AVERAGE SHARES AVERAGE SHARES AVERAGE SHARES AVERAGE - --------------------------------------------------------------------------------------------------------------------------- PRE-LIQUIDATION (still own shares) 0.79% -0.91% -16.77% -19.34% -6.34% -6.33% -3.56% -- - --------------------------------------------------------------------------------------------------------------------------- POST-LIQUIDATION (shares were sold) 1.00% -0.43% -10.05% -11.75% -4.73% -4.10% -2.60% -- - ---------------------------------------------------------------------------------------------------------------------------
PERFORMANCE OF A $50,000 INVESTMENT 2 This graph shows performance since inception of a hypothetical $50,000 investment (the minimum investment for this share class) in the fund's Select Shares, compared with a similar investment in two indices: the Schwab International Index and the MSCI-EAFE(R) Index. $41,625 SELECT SHARES $42,438 SCHWAB INTERNATIONAL INDEX $41,391 MSCI-EAFE INDEX [LINE GRAPH]
SELECT SHARE SCHWAB INTERNATIONAL INDEX MSCI-EAFE INDEX 19-May-97 50000 50000 50000 May-97 49375 49283 49248 Jun-97 52170 52161 51961 Jul-97 53755 53571 52803 Aug-97 49815 49706 48859 Sep-97 53240 52827 51595 Oct-97 49005 48550 47627 Nov-97 48970 48360 47141 Dec-97 49580 49042 47551 Jan-98 51405 51027 49725 Feb-98 54385 54111 52917 Mar-98 55800 55529 54547 Apr-98 56175 55905 54978 May-98 56175 55770 54708 Jun-98 56655 56133 55124 Jul-98 56845 56493 55681 Aug-98 49840 49376 48782 Sep-98 48240 47757 47284 Oct-98 53005 52763 52211 Nov-98 55725 55732 54885 Dec-98 57490 57561 57053 Jan-99 57305 57252 56881 Feb-99 56025 56122 55528 Mar-99 58585 58699 57843 Apr-99 60955 61225 60186 May-99 57980 58137 57086 Jun-99 60200 60507 59313 Jul-99 62385 62757 61074 Aug-99 62950 63342 61300 Sep-99 64115 64425 61919 Oct-99 67575 67857 64241 Nov-99 70660 70806 66470 Dec-99 76920 77025 72439 Jan-00 70880 71433 67839 Feb-00 71870 72588 69664 Mar-00 76050 76708 72367 Apr-00 71905 72561 68561 May-00 69895 70431 66888 Jun-00 72515 73058 69503 Jul-00 69740 70228 66591 Aug-00 70995 71462 67169 Sep-00 67310 67769 63898 Oct-00 65110 65658 62390 Nov-00 62185 62703 60050 Dec-00 63455 64024 62182 Jan-01 63955 64706 62201 Feb-01 58470 59090 57548 Mar-01 54570 55001 53641 Apr-01 58315 58788 57326 May-01 56230 56592 55205 Jun-01 53835 54175 52936 Jul-01 52485 52866 52020 Aug-01 51015 51386 50813 Sep-01 46385 46733 45666 Oct-01 47235 47628 46835 Nov-01 48700 49119 48563 Dec-01 49040 49452 48850 Jan-02 46540 46876 46256 Feb-02 46890 47279 46579 Mar-02 49430 49771 49099 Apr-02 49590 50183 49423 May-02 50255 50891 50051 Jun-02 48220 48833 48059 Jul-02 43525 44067 43316 Aug-02 43410 43973 43216 Sep-02 38715 39225 38575 Oct-02 40945 41560 40646 Nov-02 42665 43395 42491 Dec-02 41385 42009 41064 Jan-03 39625 40243 39351 Feb-03 38825 39419 38450 Mar-03 38025 38642 37697 Apr-03 41625 42438 41391
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. The fund's share price and principal values change, and when you sell your shares, they may be worth more or less than what you paid for them. Past performance does not indicate future results. Results for the report period are not annualized. 1 The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 4/30/03 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor's situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. As of 4/30/03, the total number of funds in the Morningstar Foreign Stock Fund category for the six-month, one-and five-year periods was 938, 898 and 516, respectively. These funds may or may not use tax-efficient strategies. 2 Fund returns reflect expense reductions by the fund's investment adviser (CSIM) and Schwab. Without these reductions, the fund's returns would have been lower. Schwab Equity Index Funds 120 SCHWAB INTERNATIONAL INDEX FUND(R) FUND FACTS as of 4/30/03 FUND CATEGORY 1 [GRAPHIC]
INVESTMENT STYLE MARKET CAP VALUE BLEND GROWTH Large / / /X/ / / Medium / / / / / / Small / / / / / /
STATISTICS - ------------------------------------------------------------------------ NUMBER OF HOLDINGS 355 - ------------------------------------------------------------------------ MEDIAN MARKET CAP ($ x 1,000,000) $27,205 - ------------------------------------------------------------------------ PRICE/EARNINGS RATIO (P/E) 18.8 - ------------------------------------------------------------------------ PRICE/BOOK RATIO (P/B) 2.9 - ------------------------------------------------------------------------ PORTFOLIO TURNOVER RATE 2 0% - ------------------------------------------------------------------------ EXPENSE RATIO 3 Investor Shares 0.69% Select Shares(R) 0.50% - ------------------------------------------------------------------------
TOP HOLDINGS 4
% OF SECURITY INVESTMENTS - ----------------------------------------------------------------------- (1) BP PLC 3.1% - ----------------------------------------------------------------------- (2) VODAFONE GROUP PLC 3.0% - ----------------------------------------------------------------------- (3) GLAXOSMITHKLINE PLC 2.6% - ----------------------------------------------------------------------- (4) NOVARTIS AG, REGISTERED 2.4% - ----------------------------------------------------------------------- (5) HSBC HOLDINGS PLC 2.3% - ----------------------------------------------------------------------- (6) ROYAL DUTCH PETROLEUM CO. 1.9% - ----------------------------------------------------------------------- (7) TOTAL FINA ELF SA 1.8% - ----------------------------------------------------------------------- (8) NESTLE SA, REGISTERED 1.8% - ----------------------------------------------------------------------- (9) ROYAL BANK OF SCOTLAND GROUP PLC 1.6% - ----------------------------------------------------------------------- (10) ASTRAZENECA PLC 1.5% - ----------------------------------------------------------------------- TOTAL 22.0% - -----------------------------------------------------------------------
COUNTRY WEIGHTINGS This chart shows the fund's country composition as of the report date. [PIE CHART] 29.8% UNITED KINGDOM 17.2% JAPAN 10.5% FRANCE 8.7% SWITZERLAND 6.6% GERMANY 5.7% NETHERLANDS 4.8% CANADA 4.0% ITALY 3.9% SPAIN 8.8% OTHER
1 Source: Morningstar, Inc. This style assessment is the result of comparing the fund with the S&P 500(R) Index, based on P/E, P/B and median market cap. The assessment reflects the fund's portfolio as of 4/30/03, which may have changed since then, and is not a precise indication of risk or performance--past, present or future. 2 Portfolio turnover rate was less than 1% and was not annualized. 3 Guaranteed by Schwab and the investment adviser through 2/29/04 (excluding interest, taxes, and certain non-routine expenses). 4 This list is not a recommendation of any security by the investment adviser. Portfolio holdings may have changed since the report date. Schwab Equity Index Funds 121 SCHWAB INTERNATIONAL INDEX FUND(R) -- Financials Financial Tables These tables provide additional data on the fund's performance, portfolio holdings and business operations. Complementing the tables is the financial notes section at the end of this report, which describes the fund's business structure, accounting practices and other matters. Because this is a semiannual report, information for the current report period is unaudited. Look online at WWW.SCHWAB.COM/SCHWABFUNDS/HOW2READ for guides that are designed to help you read the financial tables in any SchwabFunds(R) shareholder report. FINANCIAL HIGHLIGHTS
11/1/02- 11/1/01- 11/1/00- 11/1/99- 11/1/98- 11/1/97- INVESTOR SHARES 4/30/03 10/31/02 10/31/01 10/31/00 10/31/99 10/31/98 - ---------------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) - ---------------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 10.47 12.22 17.13 17.93 14.21 13.31 ----------------------------------------------------------- Income or loss from investment operations: Net investment income 0.11 0.21 0.15 0.20 0.19 0.17 Net realized and unrealized gains or losses 0.05 (1.82) (4.81) (0.85) 3.66 0.88 ----------------------------------------------------------- Total income or loss from investment operations 0.16 (1.61) (4.66) (0.65) 3.85 1.05 Less distributions: Dividends from net investment income (0.21) (0.14) (0.25) (0.15) (0.13) (0.15) ----------------------------------------------------------- Net asset value at end of period 10.42 10.47 12.22 17.13 17.93 14.21 ----------------------------------------------------------- Total return (%) 1.62 2 (13.34) (27.58) (3.69) 27.31 8.02 RATIOS/SUPPLEMENTAL DATA (%) - ---------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.62 3 0.58 0.58 0.58 1 0.58 0.58 Expense reductions reflected in above ratio 0.15 3 0.18 0.17 0.23 0.41 0.46 Ratio of net investment income to average net assets 2.03 3 1.70 1.14 1.60 1.24 1.35 Portfolio turnover rate 0 2,4 13 18 16 5 6 Net assets, end of period ($ x 1,000,000) 418 443 519 637 447 428
1 Would have been 0.59% if certain non-routine expenses (proxy fees) had been included. 2 Not annualized. 3 Annualized. 4 Portfolio turnover rate was less than 1%. See financial notes. 122
11/1/02- 11/1/01- 11/1/00- 11/1/99- 11/1/98- 11/1/97- SELECT SHARES(R) 4/30/03 10/31/02 10/31/01 10/31/00 10/31/99 10/31/98 - ---------------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) - ---------------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 10.47 12.23 17.14 17.96 14.23 13.32 ----------------------------------------------------------- Income or loss from investment operations: Net investment income 0.11 0.21 0.16 0.27 0.18 0.22 Net realized and unrealized gains or losses 0.06 (1.82) (4.80) (0.91) 3.70 0.85 ----------------------------------------------------------- Total income or loss from investment operations 0.17 (1.61) (4.64) (0.64) 3.88 1.07 Less distributions: Dividends from net investment income (0.23) (0.15) (0.27) (0.18) (0.15) (0.16) ----------------------------------------------------------- Net asset value at end of period 10.41 10.47 12.23 17.14 17.96 14.23 ----------------------------------------------------------- Total return (%) 1.65 2 (13.31) (27.45) (3.65) 27.49 8.16 RATIOS/SUPPLEMENTAL DATA (%) - ---------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.48 3 0.47 0.47 0.47 1 0.47 0.47 Expense reductions reflected in above ratio 0.14 3 0.14 0.13 0.19 0.39 0.48 Ratio of net investment income to average net assets 2.20 3 1.81 1.25 1.71 1.57 1.49 Portfolio turnover rate 0 2,4 13 18 16 5 6 Net assets, end of period ($ x 1,000,000) 535 536 616 700 449 94
1 Would have been 0.48% if certain non-routine expenses (proxy fees) had been included. 2 Not annualized. 3 Annualized. 4 Portfolio turnover rate was less than 1%. See financial notes. 123 SCHWAB INTERNATIONAL INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS as of April 30, 2003, unaudited This section shows all the securities in the fund's portfolio and their market value, as of the report date. We use the symbols below to designate certain characteristics. With the top ten holdings, the number in the circle is the security's rank among the top ten. (1) Top ten holding o Non-income producing security * American Depositary Receipt
COST MARKET VALUE HOLDINGS BY CATEGORY ($ x 1,000) ($ x 1,000) - ---------------------------------------------------------------------- 99.6% FOREIGN COMMON STOCK 1,115,159 943,714 0.3% FOREIGN PREFERRED STOCK 1,990 2,467 0.1% SHORT-TERM INVESTMENT 941 941 0.0% WARRANTS 724 567 - ---------------------------------------------------------------------- 100.0% TOTAL INVESTMENTS 1,118,814 947,689
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) FOREIGN COMMON STOCK 99.6% of investments AUSTRALIA 3.7% --------------------------------------------------------------- Alumina Ltd. 247,399 675 AMP Ltd. 243,014 1,327 Australia & New Zealand Banking Group Ltd. 317,170 3,700 BHP Billiton Ltd. 783,724 4,432 Commonwealth Bank of Australia 256,408 4,366 Foster's Group Ltd. 446,157 1,250 National Australia Bank Ltd. 317,312 6,451 News Corp. Ltd. 318,091 2,265 Rio Tinto Ltd. 60,818 1,209 St. George Bank Ltd. 102,544 1,270 Telstra Corp. Ltd. 416,897 1,098 Wesfarmers Ltd. 80,774 1,238 Westpac Banking Corp. 365,973 3,642 Woodside Petroleum Ltd. 101,251 726 Woolworths Ltd. 202,146 1,634 ----------- 35,283 BELGIUM 0.9% --------------------------------------------------------------- Dexia 143,074 1,640 Electrabel SA 6,048 1,450 Fortis 207,210 3,478 Interbrew 32,585 727 Solvay SA 9,156 647 ----------- 7,942 CANADA 4.8% --------------------------------------------------------------- Alcan, Inc. 62,405 1,827 Bank of Montreal 99,813 2,790 Bank of Nova Scotia 105,952 4,120 Barrick Gold Corp. 110,291 1,675 BCE, Inc. 65,656 1,298 Bombardier, Inc., Class B 192,500 466 Canadian Imperial Bank of Commerce 75,516 2,516 Canadian National Railway Co. 43,316 2,103 Enbridge, Inc. 33,700 1,025 EnCana Corp. 97,217 3,186 George Weston Ltd. 11,500 746 Imperial Oil Ltd. 24,010 728 Loblaw Cos. Ltd. 21,098 824 Magna International, Inc., Class A 16,447 966 Manulife Financial Corp. 98,250 2,619 Petro-Canada 48,400 1,595 Power Corp. of Canada 35,402 993 Power Financial Corp. 26,300 756 Royal Bank of Canada 136,817 5,703 Sun Life Financial Services of Canada, Inc. 130,364 2,676 Suncor Energy, Inc. 97,200 1,598 Talisman Energy, Inc. 25,625 1,022 Toronto-Dominion Bank 131,000 3,099 TransCanada PipeLines Ltd. 94,561 1,509 ----------- 45,840 DENMARK 0.5% --------------------------------------------------------------- Danske Bank A/S 114,004 2,193 Novo-Nordisk A/S, Class B 56,110 2,033 TDC A/S 23,628 588 ----------- 4,814
See financial notes. 124
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) FRANCE 10.5% --------------------------------------------------------------- Accor SA 42,457 1,399 Air Liquide SA 21,416 3,243 Alcatel SA, Class A 172,263 1,411 o Arcelor SA 74,513 843 Aventis SA 138,614 7,040 AXA 293,535 4,458 BNP Paribas 165,829 7,784 Bouygues 33,690 824 Carrefour SA 112,519 4,894 Compagnie de Saint-Gobain 66,004 2,285 Credit Lyonnais SA 33,600 2,083 European Aeronautic Defense & Space Co. 61,447 571 France Telecom SA 78,001 1,802 Groupe Danone 26,016 3,682 L'oreal 69,764 4,987 Lafarge SA 26,873 1,805 Lagardere S.C.A. 29,349 1,121 LVMH Moet-Hennessy Louis Vuitton SA 44,980 1,963 Michelin (C.G.D.E.), Class B 28,839 1,067 Orange SA 135,797 1,088 Pernod-Ricard 11,468 1,007 Peugeot SA 31,001 1,451 Pinault-Printemps-Redoute SA 14,727 1,029 Renault SA 34,002 1,470 Sanofi-Synthelabo SA 82,658 4,931 Schneider Electric SA 44,309 2,098 Societe Generale, Class A 61,511 3,762 Societe Television Francaise 126,048 732 STMicroelectronics NV 117,296 2,424 Suez SA 169,102 2,753 o Thomson 33,486 491 (7) Total Fina Elf SA 131,572 17,253 Veolia Environment 52,576 1,135 Vinci SA 13,931 907 Vivendi Universal SA 189,024 3,080 *o Vivendi Universal SA 54,392 893 ----------- 99,766 GERMANY 6.6% --------------------------------------------------------------- Allianz AG 38,188 2,700 Altana AG 15,200 748 BASF AG 107,935 4,815 Bayer AG 147,945 2,700 Bayerische Hypo-und Vereinsbank AG 66,874 890 Bayerische Motoren Werke AG 67,500 2,250 Beiersdorf AG 4,671 581 DaimlerChrysler AG 181,970 5,869 Degussa AG 17,800 517 Deutsche Bank AG 117,776 6,091 Deutsche Post AG 75,227 897 Deutsche Telekom AG 440,562 5,890 E.ON AG 122,150 5,847 o Infineon Technologies AG 75,100 557 Linde AG 18,812 709 Metro AG 29,214 811 Muenchener Rueckversicherungs AG 21,140 2,112 RWE AG 77,776 2,092 SAP AG 42,324 4,336 Schering AG 37,346 1,665 Siemens AG 168,790 8,414 ThyssenKrupp AG 63,966 655 Volkswagen AG 46,293 1,627 ----------- 62,773 HONG KONG / CHINA 1.1% --------------------------------------------------------------- Cheung Kong Holdings Ltd. 327,000 1,807 CLP Holdings Ltd. 387,080 1,583 Hang Seng Bank Ltd. 154,700 1,532 Hong Kong & China Gas Co. 718,400 847 HongKong Electric Holdings 277,756 1,115 Hutchison Whampoa Ltd. 445,800 2,481 Sun Hung Kai Properties Ltd. 265,694 1,247 ----------- 10,612
See financial notes. 125 SCHWAB INTERNATIONAL INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) ITALY 4.0% --------------------------------------------------------------- Alleanza Assicurazioni SPA 100,995 945 Assicurazioni Generali SPA 214,116 4,920 Banca Intesa SPA 735,870 1,905 Enel SPA 429,348 2,568 ENI-Ente Nazionale Idrocarburi SPA 579,022 8,252 Mediaset SPA 133,088 1,138 Olivetti SPA 1,240,760 1,408 Riunione Adriatica di Sicurta SPA 78,031 1,125 Sanpaolo IMI SPA 189,885 1,566 Seat-Pagine Gialle SPA 1,247,385 846 Telecom Italia SPA 506,188 4,135 Telecom Italia SPA -- RNC 413,196 2,034 TIM SPA 809,627 3,813 UniCredito Italiano SPA 733,582 3,209 ----------- 37,864 JAPAN 17.2% --------------------------------------------------------------- Advantest Corp. 16,700 560 Aeon Co. Ltd. 48,000 1,091 Ajinomoto Co., Inc. 111,000 1,126 Asahi Glass Co. Ltd. 146,000 777 The Bank of Yokohama Ltd. 205,000 724 Bridgestone Corp. 126,000 1,429 Canon, Inc. 177,000 7,154 Central Japan Railway Co. 202 1,311 Chubu Electric Power Co., Inc. 135,100 2,719 The Chugoku Electric Power Co., Inc. 56,000 901 Dai Nippon Printing Co. Ltd. 117,000 1,136 Daiichi Pharmaceutical Co. Ltd. 51,000 646 Daikin Industries Ltd. 34,000 566 Denso Corp. 110,000 1,568 East Japan Railway Co. 653 2,957 Eisai Co. Ltd. 47,000 830 Fanuc Ltd. 24,300 994 Fuji Photo Film Co. Ltd. 92,000 2,345 Fujisawa Pharmaceutical Co. Ltd. 47,000 796 o Fujitsu Ltd. 326,000 910 Hitachi Ltd. 616,000 2,056 Honda Motor Co. Ltd. 132,700 4,395 Hoya Corp. 23,600 1,395 Ito-Yokado Co. Ltd. 78,000 1,835 Itochu Corp. 273,000 572 Japan Telecom Holdings Co. Ltd. 208 569 Japan Tobacco, Inc. 158 921 The Kansai Electric Power Co. 146,000 2,442 Kao Corp. 123,000 2,243 KDDI Corp. 506 1,537 Keyence Corp. 6,930 1,114 o Kinki Nippon Railway Co. Ltd. 305,830 764 Kirin Brewery Co. Ltd. 127,000 980 Kyocera Corp. 34,500 1,684 Kyushu Electric Power Co. 85,400 1,328 Matsushita Electric Industrial Co. Ltd. 469,912 3,743 o Millea Holdings, Inc. 302 1,960 Mitsubishi Corp. 219,000 1,302 Mitsubishi Electric Corp. 303,000 785 Mitsubishi Estate Co. Ltd. 190,000 1,112 Mitsubishi Heavy Industries Ltd. 565,000 1,255 Mitsubishi Tokyo Financial Group, Inc. 707 2,395 Mitsui & Co. Ltd. 239,000 1,132 Mitsui Fudosan Co. Ltd. 142,000 764 Mitsui Sumitomo Insurance Co. Ltd. 273,000 1,282 o Mizuho Financial Group, Inc. 1,155 617 Murata Manufacturing Co. Ltd. 47,900 1,707 o NEC Corp. 298,000 932 Nikko Cordial Corp. 283,000 759 Nintendo Co. Ltd. 21,700 1,696 Nippon Express Co. Ltd. 161,000 601 Nippon Oil Corp. 298,000 1,187 Nippon Steel Corp. 1,020,000 1,138 Nippon Telegraph & Telephone Corp. 1,100 3,855 Nippon Unipac Holding 188 604 Nissan Motor Co. Ltd. 477,000 3,660 Nitto Denko Corp. 28,000 805
See financial notes. 126
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Nomura Holdings, Inc. 372,000 3,684 NTT Data Corp. 284 672 NTT DoCoMo, Inc. 3,685 7,601 OJI Paper Co. Ltd. 165,000 624 Oriental Land Co. Ltd. 10,000 418 Osaka Gas Co. Ltd. 394,000 1,140 Ricoh Co. Ltd. 131,000 2,009 Rohm Co. Ltd. 23,000 2,370 Sankyo Co. Ltd. 77,000 1,116 Sanyo Electric Co. Ltd. 309,000 966 Secom Co. Ltd. 43,500 1,014 Sekisui House Ltd. 117,000 859 Seven-Eleven Japan Co. 78,000 1,857 Sharp Corp. 184,000 1,929 Shin-Etsu Chemical Co. Ltd. 74,900 2,242 Shiseido Co. Ltd. 74,000 676 The Shizuoka Bank Ltd. 116,000 766 SMC Corp. 11,000 828 Sompo Japan Insurance, Inc. 160,000 731 Sony Corp. 185,500 4,511 Sumitomo Chemical Co. Ltd. 248,000 672 Sumitomo Corp. 137,000 551 Sumitomo Electric Industries Ltd. 131,000 733 o Sumitomo Mitsui Financial Group, Inc. 764 1,198 The Sumitomo Trust & Banking Co. Ltd. 154,000 436 Suzuki Motor Corp. 76,000 900 Takeda Chemical Industries Ltd. 166,200 6,090 Takefuji Corp. 16,590 864 TDK Corp. 22,000 764 Tohoku Electric Power Co. 83,700 1,333 The Tokyo Electric Power Co., Inc. 240,300 4,876 Tokyo Electron Ltd. 31,000 1,162 Tokyo Gas Co. Ltd. 507,000 1,649 Toppan Printing Co. Ltd. 122,000 773 Toshiba Corp. 566,000 1,509 Tostem Inax Holding Corp. 54,000 576 Toyota Motor Corp. 491,500 11,127 o UFJ Holdings, Inc. 686 552 West Japan Railway Co. 225 702 Yamanouchi Pharmaceutical Co. Ltd. 67,000 1,691 Yamato Transport Co. Ltd. 78,000 873 ----------- 162,710 NETHERLANDS 5.7% --------------------------------------------------------------- ABN Amro Holdings NV 298,017 5,035 Aegon NV 205,317 2,087 Akzo Nobel NV 58,760 1,306 o ASML Holding NV 73,563 635 Heineken NV 39,259 1,458 ING Groep NV 355,884 5,779 Koninklijke Ahold NV 138,958 636 Koninklijke Philips Electronics NV 273,305 5,084 Reed Elsevier NV 141,007 1,605 (6) Royal Dutch Petroleum Co. 433,569 17,734 o Royal KPN NV 360,914 2,401 TPG NV 67,143 1,048 Unilever NV 117,468 7,400 VNU NV 47,654 1,383 ----------- 53,591 SINGAPORE 0.6% --------------------------------------------------------------- DBS Group Holdings Ltd. 217,778 1,067 Haw Par Corp. Ltd. 834 2 Oversea-Chinese Banking Corp. 217,000 1,155 Singapore Airlines Ltd. 123,000 655 Singapore Telecommunications Ltd. 1,402,696 1,145 United Overseas Bank Ltd. 237,000 1,388 ----------- 5,412 SPAIN 3.9% --------------------------------------------------------------- Altadis SA 57,998 1,495 Banco Bilbao Vizcaya Argentaria SA 632,702 6,369 Banco Popular Espanol 37,692 1,827 Banco Santander Central Hispano SA 879,450 6,910 Endesa SA 186,597 2,647 Gas Natural SDG SA 37,672 721
See financial notes. 127 SCHWAB INTERNATIONAL INDEX FUND(R) -- Financials PORTFOLIO HOLDINGS continued
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Iberdrola SA 162,340 2,614 Inditex SA 47,334 943 Repsol YPF SA 191,744 2,793 o Telefonica SA 982,643 10,868 ----------- 37,187 SWEDEN 1.6% --------------------------------------------------------------- Electrolux AB, Series B 61,579 1,156 ForeningsSparbanken AB 85,887 1,165 Hennes & Mauritz AB, Series B 98,150 2,184 Nordea AB 486,286 2,580 Sandvik AB 44,107 1,121 Securitas AB, Class B 69,245 813 Skandinaviska Enskilda Banken, Series A 85,410 887 Svenska Cellulosa AB, Series B 41,064 1,391 o Telefonaktiebolaget LM Ericsson, Class B 3,287,942 2,995 Volvo AB, Series B 40,445 808 ----------- 15,100 SWITZERLAND 8.7% --------------------------------------------------------------- o ABB Ltd. 204,408 629 Adecco SA, Registered 20,902 802 Ciba Specialty Chemicals AG 14,322 990 Compangnie Financiere Richemont AG, Series A 113,260 1,674 Credit Suisse Group 213,040 5,089 Holcim Ltd., Class B 6,173 1,158 (8) Nestle SA, Registered 82,243 16,766 (4) Novartis AG, Registered 569,772 22,475 Roche Holdings-- Bearer 6,610 680 Roche Holdings-- Genus 144,526 9,196 Serono SA, Series B 1,519 824 Swiss Reinsurance, Registered 65,184 4,258 Swisscom AG, Registered 5,801 1,794 Syngenta AG 20,323 1,049 UBS AG, Registered 259,229 12,299 Zurich Financial Services AG 28,547 3,010 ----------- 82,693 UNITED KINGDOM 29.8% --------------------------------------------------------------- 3i Group PLC 137,145 1,019 Abbey National PLC 293,941 2,088 Alliance & Leicester PLC 84,836 1,100 Allied Domecq PLC 240,096 1,347 Amersham PLC 136,906 984 Amvescap PLC 119,189 648 Associated British Foods PLC 77,195 664 (10) AstraZeneca PLC 357,487 14,027 Aviva PLC 471,307 3,314 BAA PLC 211,384 1,632 BAE Systems PLC 676,284 1,373 Barclays PLC 1,346,817 9,304 BG Group PLC 727,751 2,911 BHP Billiton PLC 472,369 2,416 BOC Group PLC 97,556 1,230 Boots Group PLC 181,534 1,661 (1) BP PLC 4,643,336 29,425 British American Tobacco PLC 339,458 3,255 o British Sky Broadcasting PLC 246,398 2,554 BT Group PLC 1,818,581 5,210 Cadbury Schweppes PLC 431,126 2,401 Carnival PLC 46,883 1,170 Centrica PLC 861,673 2,290 Compass Group PLC 477,238 2,197 Diageo PLC 660,104 7,322 Dixons Group PLC 451,176 802 (3) GlaxoSmithKline PLC 1,249,431 25,041 GUS PLC 205,342 1,898 HBOS PLC 781,981 9,161 Hilton Group PLC 350,064 856 (5) HSBC Holdings PLC 1,977,771 21,668 Imperial Chemical Industries PLC 268,422 557 Imperial Tobacco Group PLC 155,757 2,606 o Intercontinental Hotels Group PLC 166,984 1,014 J. Sainsbury PLC 313,408 1,185 Kingfisher PLC 561,129 2,193 Land Securities Group PLC 95,357 1,154 Legal & General Group PLC 1,423,718 1,763 Lloyds TSB Group PLC 1,157,315 7,611
See financial notes. 128
MKT. VALUE SECURITY AND NUMBER OF SHARES ($ x 1,000) Man Group PLC 57,326 967 Marks & Spencer Group PLC 488,160 2,274 o Mitchells & Butlers PLC 166,984 566 National Grid Transco PLC 649,264 4,265 Northern Rock PLC 91,392 1,045 Pearson PLC 179,933 1,500 Prudential PLC 410,142 2,511 Reckitt Benckiser PLC 111,099 1,959 Reed Elsevier PLC 261,955 2,089 Rentokil Initial PLC 364,152 1,088 Reuters Group PLC 322,330 695 Rio Tinto PLC 216,014 4,129 (9) Royal Bank of Scotland Group PLC 566,423 14,856 Scottish & Newcastle PLC 145,929 834 Scottish & Southern Energy PLC 173,758 1,786 Scottish Power PLC 382,227 2,375 Shell Transport & Trading Co. PLC 1,988,261 11,909 Smith & Nephew PLC 175,479 1,170 Smiths Group PLC 107,917 1,154 Standard Chartered PLC 221,252 2,468 Tesco PLC 1,500,750 4,749 Unilever PLC 577,965 5,681 United Utilities PLC 124,590 1,197 (2) Vodafone Group PLC 14,241,429 28,110 Wm. Morrison Supermarkets 268,328 800 Wolseley PLC 129,857 1,256 WPP Group PLC 230,860 1,643 ----------- 282,127 UNITED STATES 0.0% --------------------------------------------------------------- o NTL Europe, Inc. 41 -- FOREIGN PREFERRED STOCK 0.3% of investments AUSTRALIA 0.3% --------------------------------------------------------------- o News Corp. Ltd. 417,655 2,467 WARRANTS 0.0% of investments FRANCE 0.0% --------------------------------------------------------------- o Casino Guichard Perrachon SA, expires 12/15/03 1,026 -- o Casino Guichard Perrachon SA, expires 12/15/05 1,026 -- o France Telecom-CVG Equant NV, expires 06/29/04 35,326 567 ----------- 567 UNITED STATES 0.0% --------------------------------------------------------------- o NTL, Inc., Series A, expires 01/13/11 48 --
SECURITY FACE VALUE RATE, MATURITY DATE ($ x 1,000) SHORT-TERM INVESTMENT 0.1% of investments Bank One, Grand Cayman Time Deposit 0.80%, 05/01/03 941 941
END OF PORTFOLIO HOLDINGS. For totals, please see the first page of holdings for this fund. See financial notes. 129 SCHWAB INTERNATIONAL INDEX FUND(R) -- Financials Statement of ASSETS AND LIABILITIES As of April 30, 2003; unaudited. All numbers x 1,000 except NAV. ASSETS - ---------------------------------------------------------------------- Investments, at market value (including $132,774 of securities on loan) $ 947,689 a Collateral held for securities on loan 139,657 Foreign currency 21 b Receivables: Fund shares sold 895 Dividends 5,343 Income from lending securities 140 Dividend tax reclaim 589 Prepaid expenses + 18 ----------- TOTAL ASSETS 1,094,352 LIABILITIES - ---------------------------------------------------------------------- Collateral held for securities on loan 139,657 Payables: Fund shares redeemed 603 Interest expenses 1 Withholding taxes 82 Investment adviser and administrator fees 36 Transfer agent and shareholder service fees 15 Accrued expenses + 403 ----------- TOTAL LIABILITIES 140,797 NET ASSETS - ---------------------------------------------------------------------- TOTAL ASSETS 1,094,352 TOTAL LIABILITIES - 140,797 ----------- NET ASSETS $ 953,555 NET ASSETS BY SOURCE Capital received from investors 1,404,727 Net investment income not yet distributed 8,690 Net realized capital losses (288,858) Net unrealized capital losses (171,004)
NET ASSET VALUE (NAV)
SHARES SHARE CLASS NET ASSETS / OUTSTANDING = NAV Investor Shares $418,292 40,149 $10.42 Select Shares(R) $535,263 51,414 $10.41
a The fund paid $1,118,814 for these securities. Not counting short-term obligations and government securities, the fund paid $22 for securities during the report period, and received $34,599 from securities it sold or that matured. b The fund paid $21 for these currencies. FEDERAL TAX DATA - ---------------------------------------------------------------------- PORTFOLIO COST $1,124,779 NET UNREALIZED GAINS AND LOSSES: Gains $ 87,510 Losses + (264,600) ------------ ($ 177,090) AS OF OCTOBER 31, 2002: UNDISTRIBUTED EARNINGS: Ordinary income $ 19,471 Long-term capital gains $ -- UNUSED CAPITAL LOSSES: Expires 10/31 of: Loss amount 2004 $ 1,743 2005 1,836 2006 11,905 2007 7 2008 3,669 2009 130,942 2010 + 112,722 ------------ $ 262,824
See financial notes. 130 SCHWAB INTERNATIONAL INDEX FUND(R) -- Financials Statement of OPERATIONS For November 1, 2002 through April 30, 2003; unaudited. All numbers x 1,000. INVESTMENT INCOME - ---------------------------------------------------------------------- Dividends $ 12,209 a Interest 8 Lending of securities + 274 ----------- TOTAL INVESTMENT INCOME 12,491 NET REALIZED GAINS AND LOSSES - ---------------------------------------------------------------------- Net realized losses on investments sold (19,738) Net realized gains on foreign currency transactions + 59 ----------- NET REALIZED LOSSES (19,679) NET UNREALIZED GAINS AND LOSSES - ---------------------------------------------------------------------- Net unrealized gains on investments 24,403 Net unrealized gains on foreign currency transactions + 49 ----------- NET UNREALIZED GAINS 24,452 EXPENSES - ---------------------------------------------------------------------- Investment adviser and administrator fees 1,906 b Transfer agent and shareholder service fees: Investor Shares 523 c Select Shares(R) 260 c Trustees' fees 5 d Custodian fees 302 Portfolio accounting fees 78 Professional fees 17 Registration fees 22 Shareholder reports 76 Interest expense 4 Other expenses + 10 ----------- Total expenses 3,203 Expense reduction - 665 e ----------- NET EXPENSES 2,538 INCREASE IN NET ASSETS FROM OPERATIONS - ---------------------------------------------------------------------- TOTAL INVESTMENT INCOME 12,491 NET EXPENSES - 2,538 ----------- NET INVESTMENT INCOME 9,953 NET REALIZED LOSSES (19,679) f NET UNREALIZED GAINS + 24,452 f ----------- INCREASE IN NET ASSETS FROM OPERATIONS $ 14,726
a An additional $1,636 was withheld for foreign taxes. b Calculated as a percentage of average daily net assets: 0.43% of the first $500 million and 0.38% of assets beyond that. c Calculated as a percentage of average daily net assets: for transfer agent services, 0.05% of the fund's assets; for shareholder services, 0.20%, and 0.05% of the assets of each respective share class. d For the fund's independent trustees only. e Includes $574 from the investment adviser (CSIM) and $91 from the transfer agent and shareholder service agent (Schwab). These reductions reflect a guarantee by CSIM and Schwab to limit the operating expenses of this fund through at least February 29, 2004, as follows:
% OF AVERAGE SHARE CLASS DAILY NET ASSETS - ------------------------------------------------------- Investor Shares 0.69 Select Shares 0.50
Prior to March 1, 2003, these limits were 0.58% and 0.47% for the Investor Shares and Select Shares, respectively. This limit doesn't include interest, taxes and certain non-routine expenses. f These add up to a net gain on investments of $4,773. See financial notes. 131 SCHWAB INTERNATIONAL INDEX FUND(R) -- Financials Statements of CHANGES IN NET ASSETS For the current and prior report periods. All numbers x 1,000. Figures for current period are unaudited.
OPERATIONS - ------------------------------------------------------------------------------------------------ 11/1/02-4/30/03 11/1/01-10/31/02 Net Investment income $ 9,953 $ 19,959 Net realized losses (19,679) (111,855) Net unrealized gains or losses + 24,452 (61,568) ------------------------------------- INCREASE OR DECREASE IN NET ASSETS FROM OPERATIONS 14,726 (153,464) DISTRIBUTIONS PAID - ------------------------------------------------------------------------------------------------ Dividends from net investment income Investor Shares 9,001 5,966 Select Shares(R) + 11,662 7,879 ------------------------------------- TOTAL DIVIDENDS FROM NET INVESTMENT INCOME $ 20,663 $ 13,845 a
TRANSACTIONS IN FUND SHARES - ---------------------------------------------------------------------------------------------- 11/1/02-4/30/03 11/1/01-10/31/02 QUANTITY VALUE QUANTITY VALUE SHARES SOLD Investor Shares 2,718 $ 27,512 10,848 $ 131,550 Select Shares + 4,873 48,820 14,690 174,196 -------------------------------------------------------- TOTAL SHARES SOLD 7,591 $ 76,332 25,538 $ 305,746 SHARES REINVESTED Investor Shares 881 $ 9,001 456 $ 5,554 Select Shares + 1,143 11,662 610 7,432 -------------------------------------------------------- TOTAL SHARES REINVESTED 2,024 $ 20,663 1,066 $ 12,986 SHARES REDEEMED Investor Shares (5,725) ($ 57,772) (11,478) ($ 134,445) Select Shares + (5,760) (58,362) (14,549) (173,548) -------------------------------------------------------- TOTAL SHARES REDEEMED (11,485) ($ 116,134) (26,027) ($ 307,993) b NET INCREASE OR DECREASE (1,870) ($ 19,139) 577 $ 10,739
SHARES OUTSTANDING AND NET ASSETS - ---------------------------------------------------------------------------------------------- 11/1/02-4/30/03 11/1/01-10/31/02 SHARES NET ASSETS SHARES NET ASSETS Beginning of period 93,433 $ 978,631 92,856 $1,135,201 Total increase or decrease + (1,870) (25,076) 577 (156,570) c -------------------------------------------------------- END OF PERIOD 91,563 $ 953,555 93,433 $ 978,631 d
a The tax-basis components of distributions paid for the prior period are: Ordinary Income $13,845 Long-term capital gains $ --
b Dollar amounts are net of proceeds received from early withdrawal fees that the fund charges on shares sold 180 days or less after buying them. CURRENT PERIOD Investor Shares $ 43 Select Shares + 27 ------ TOTAL $ 70 PRIOR PERIOD Investor Shares $170 Select Shares + 56 ------ TOTAL $226
c Figures for shares represent shares sold plus shares reinvested, minus shares redeemed. Figures for net assets represent the changes in net assets from operations plus the changes in value of transactions in fund shares, minus distributions paid. d Includes net investment income not yet distributed in the amount of $8,690 and $19,400 for the current period and the prior period, respectively. Percent of fund shares owned by other SchwabFunds(R) as of the end of the current period: SCHWAB MARKETTRACK PORTFOLIOS(R) All Equity Portfolio 11.4% Growth Portfolio 10.7% Balanced Portfolio 7.4% Conservative Portfolio 2.9% SCHWAB ANNUITY PORTFOLIOS Growth Portfolio II 0.4%
See financial notes. 132 FINANCIAL NOTES UNAUDITED BUSINESS STRUCTURE OF THE FUNDS EACH OF THE FUNDS DISCUSSED IN THIS REPORT IS A SERIES OF A NO-LOAD, OPEN-END MANAGEMENT INVESTMENT COMPANY. Each of these companies is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended. The sidebar shows the funds in this report by trust. THE FUNDS OFFER MULTIPLE SHARE CLASSES. For any given fund, shares of each class represent interests in the same portfolio, but each class has different expenses and investment minimums. In addition, one share class, e.Shares(R), is available only to clients of Schwab Institutional(R), Charles Schwab Trust Company and certain tax-advantaged retirement plans, and can only be traded electronically.
INVESTOR SELECT FUND SHARES SHARES(R) e.SHARES - ------------------------------------------------------------------------ S&P 500 O O O - ------------------------------------------------------------------------ SCHWAB 1000 O O - ------------------------------------------------------------------------ SMALL-CAP INDEX O O - ------------------------------------------------------------------------ TOTAL STOCK MARKET INDEX O O - ------------------------------------------------------------------------ INTERNATIONAL INDEX O O - ------------------------------------------------------------------------
For these funds, shares are bought and sold at net asset value, or NAV, which is the price for all outstanding shares. Each share has a par value of 1/1,000 of a cent, and the trusts may issue as many shares as necessary. THE TRUSTS AND THEIR FUNDS This list shows the trust containing each fund in this report, along with all other funds included in these trusts. The funds discussed in this report are highlighted. SCHWAB INVESTMENTS organized October 26, 1990 Schwab 1000 Fund(R) Schwab Short-Term Bond Market Fund Schwab Total Bond Market Fund Schwab YieldPlus Fund(R) Schwab Short/Intermediate Tax-Free Bond Fund Schwab Long-Term Tax-Free Bond Fund Schwab California Short/Intermediate Tax-Free Bond Fund Schwab California Long-Term Tax-Free Bond Fund Schwab GNMA Fund SCHWAB CAPITAL TRUST organized May 7, 1993 Schwab S&P 500 Fund Schwab Small-Cap Index Fund(R) Schwab Total Stock Market Index Fund(R) Schwab International Index Fund(R) Schwab Core Equity Fund(TM) Schwab MarketTrack All Equity Portfolio Schwab MarketTrack Growth Portfolio Schwab MarketTrack Balanced Portfolio Schwab MarketTrack Conservative Portfolio Schwab U.S. MarketMasters Fund(TM) Schwab Balanced MarketMasters Fund(TM) Schwab Small-Cap MarketMasters Fund(TM) Schwab International MarketMasters Fund(TM) Schwab Hedged Equity Fund(TM) Communications Focus Fund Financial Services Focus Fund Health Care Focus Fund Technology Focus Fund Institutional Select S&P 500 Fund Institutional Select Large-Cap Value Index Fund Institutional Select Small-Cap Value Index Fund Schwab Equity Index Funds 133 FUND OPERATIONS Most of the funds'investments are described in the fund-by-fund sections earlier in this report. However, there are certain other investments and policies that may affect a fund's financials, as described below. Other policies concerning the funds'business operations also are described here. THE FUNDS PAY DIVIDENDS from net investment income and make distributions from net capital gains once a year. THE FUNDS MAY INVEST IN FUTURES CONTRACTS. Futures contracts involve certain risks because they can be very sensitive to market movements. One risk is that the price of a futures contract may not move in perfect correlation with the price of the underlying securities. Another risk is that, at certain times, it may be impossible for a fund to close out a position in a futures contract due to a difference in trading hours or to market conditions that may reduce the liquidity for a futures contract or its underlying securities. Because futures carry inherent risks, a fund must give the broker a deposit of cash and/or securities (the "initial margin") whenever it enters into a futures contract. The amount of the deposit may vary from one contract to another, but it is generally a percentage of the contract amount. Futures are traded publicly on exchanges, and their market value changes daily. The fund records the change in market value of futures, and also the change in the amount of margin deposit required ("variation margin"). THE SCHWAB INTERNATIONAL INDEX FUND(R) MAY INVEST IN FORWARD CURRENCY CONTRACTS IN CONNECTION WITH THE PURCHASE AND SALE OF PORTFOLIO SECURITIES TO MINIMIZE THE UNCERTAINTY OF CHANGES IN FUTURE EXCHANGE RATES. "Forwards," as they are known, are contracts to buy and sell a currency at a set price on a future date. Forwards are similar to futures except that they are not publicly traded, but are agreements directly between two parties. As with futures, forwards involve certain risks that are not fully reflected in the fund's financials. If counter-parties to the contracts are unable to meet the terms of the contracts or if the value of the foreign currency changes unfavorably, the fund could sustain a loss. THE FUNDS MAY ENTER INTO REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security from another party (usually a financial institution) with the agreement that it be sold back in the future. The date, price and other conditions are all specified when the agreement is created. The funds' repurchase agreements will be fully collateralized by U.S. government securities. All collateral is held by the funds' custodian (or, with tri-party agreements, the agent's bank) and is monitored daily to ensure that its market value is at least equal to the repurchase price under the agreement. THE FUNDS MAY LOAN SECURITIES TO CERTAIN BROKERS, DEALERS AND OTHER FINANCIAL INSTITUTIONS WHO PAY THE FUNDS NEGOTIATED FEES. The funds receive cash, letters of credit or U.S. government securities as collateral on these loans. All of the cash collateral received is reinvested in high quality, short-term investments. The value of the collateral must be at least 102% of the market value of the loaned securities as of the first day of the loan, and at least 100% each day thereafter. THE FUNDS MAY BORROW MONEY FROM BANKS AND CUSTODIANS. The funds may obtain temporary bank loans through the trusts to which they belong, to use for meeting shareholder redemptions or for extraordinary or emergency purposes. The trusts have custodian overdraft facilities and line of credit arrangements of $150 million, $100 million and $150 million with PNC Bank, N.A., Bank of America, N.A. and The Bank of New York, respectively. The funds pay interest on the amounts they borrow at rates that are negotiated periodically. Schwab Equity Index Funds 134
AMOUNT OUTSTANDING AVERAGE AVERAGE AT 4/30/03 BORROWING* INTEREST FUND ($ x 1,000) ($ x 1,000) RATE* (%) - --------------------------------------------------------------------- SCHWAB S&P 500 FUND -- 5,007 1.64 - --------------------------------------------------------------------- SCHWAB 1000(R) -- 1,888 1.70 - --------------------------------------------------------------------- SCHWAB SMALL-CAP INDEX FUND(R) 2,616 2,076 1.74 - --------------------------------------------------------------------- SCHWAB TOTAL STOCK MARKET INDEX FUND(R) -- 1,810 1.65 - --------------------------------------------------------------------- SCHWAB INTERNATIONAL INDEX FUND(R) -- 1,323 1.73 - ---------------------------------------------------------------------
* For the six-month period ended 4/30/03. THE FUNDS PAY FEES FOR VARIOUS SERVICES. Through their trusts, the funds have agreements with Charles Schwab Investment Management, Inc. (CSIM) to provide investment advisory and administrative services and with Charles Schwab & Co., Inc. (Schwab) to provide transfer agent and shareholder services. Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements with the funds that may limit the total expenses charged. The rates and limitations for these fees vary from fund to fund, and are described in each fund's Statement of Operations. TRUSTEES MAY INCLUDE PEOPLE WHO ARE OFFICERS AND/ OR DIRECTORS OF THE INVESTMENT ADVISER OR SCHWAB. Federal securities law limits the percentage of such "interested persons" who may serve on a trust's board, and the trusts were in compliance with these limitations throughout the report period. The trusts did not pay any of these persons for their service as trustees, but they did pay the non-interested persons (independent trustees), as noted in each fund's Statement of Operations. THE FUNDS MAY ENGAGE IN CERTAIN TRANSACTIONS INVOLVING RELATED PARTIES. For instance, a fund may own shares of The Charles Schwab Corporation if that company is included in its index. The funds also may let other SchwabFunds(R) buy and sell fund shares, particularly Schwab MarketTrack Portfolios(R), which seek to provide investors with allocated portfolios of Schwab index funds. The funds may make direct transactions with certain other SchwabFunds(R) when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and officers. THE FUNDS INTEND TO MEET FEDERAL INCOME AND EXCISE TAX REQUIREMENTS FOR REGULATED INVESTMENT COMPANIES. Accordingly,the funds distribute substantially all of their net investment income and realized net capital gains (if any) to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax. ACCOUNTING POLICIES The following are the main policies the funds use in preparing their financial statements. THE FUNDS VALUE THE SECURITIES IN THEIR PORTFOLIOS EVERY BUSINESS DAY. The funds use the following policies to value various types of securities: - - SECURITIES TRADED ON AN EXCHANGE OR OVER-THE-COUNTER: valued at closing value for the day, or, on days when no closing value has been reported, halfway between the most recent bid and asked quotes. Schwab Equity Index Funds 135 - - SECURITIES FOR WHICH NO MARKET QUOTATIONS ARE READILY AVAILABLE: valued at fair value, as determined in good faith by the fund's investment adviser using guidelines adopted by the fund's Board of Trustees. - - FUTURES AND FORWARDS: open contracts are valued at their settlement prices as of the close of their exchanges (for futures) or at a market value based on that day's exchange rates (for forwards). When a fund closes out a futures or forwards position, it calculates the difference between the value of the position at the beginning and at the end, and records a realized gain or loss accordingly. - - SHORT-TERM SECURITIES (60 DAYS OR LESS TO MATURITY): valued at amortized cost. SECURITY TRANSACTIONS are recorded as of the date the order to buy or sell the security is executed. DIVIDENDS AND DISTRIBUTIONS FROM PORTFOLIO SECURITIES are recorded on the date they are effective (the ex-dividend date), although the funds record certain foreign security dividends on the day they learn of the ex-dividend date. INCOME FROM INTEREST AND THE ACCRETION OF DISCOUNTS is recorded as it accrues. REALIZED GAINS AND LOSSES from security transactions are based on the identified costs of the securities involved. ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES are reported in U.S. dollars. For assets and liabilities held on a given date, the dollar value is based on market exchange rates in effect on that date. Transactions involving foreign currencies, including purchases, sales, income receipts and expense payments, are calculated using exchange rates in effect on the transaction date. EXPENSES that are specific to a fund are charged directly to that fund. Expenses that are common to all funds within a trust generally are allocated among the funds in proportion to their net assets. FOR FUNDS OFFERING MULTIPLE SHARE CLASSES, all of the realized and unrealized gains or losses and net investment income, other than class specific expenses, are allocated daily to each class in proportion to its net assets. EACH FUND MAINTAINS ITS OWN ACCOUNT FOR PURPOSES OF HOLDING ASSETS AND ACCOUNTING, and is considered a separate entity for tax purposes. Within its account, each fund also keeps certain assets in segregated accounts, as may be required by securities law. THE ACCOUNTING POLICIES DESCRIBED ABOVE CONFORM WITH ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It's possible that once the results are known, they may turn out to be different from these estimates. Schwab Equity Index Funds 136 GLOSSARY Words and phrases that appear in financial reports often have specific meanings that are different from their everyday meanings. The glossary below tells you what is meant by the following terms when they are used in this report. ASSET ALLOCATION The practice of dividing a portfolio among different asset classes, with each asset class assigned a particular percentage. ASSET CLASS A group of securities with similar structure and basic characteristics. Stocks, bonds and cash are the three main examples of asset classes. BETA A historical measure of an investment's volatility relative to a market index (usually the S&P 500). The index is defined as having a beta of 1.00. Investments with a beta higher than 1.00 have been more volatile than the index; those with a beta of less than 1.00 have been less volatile. BOND A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the "coupon rate") until a specified date (the "maturity date"), at which time the issuer returns the money borrowed ("principal" or "face value") to the bondholder. Because of their structure, bonds are sometimes called "fixed income securities" or "debt securities." CAP, CAPITALIZATION See "market cap." CAPITAL GAIN, CAPITAL LOSS The difference between the amount paid for an investment and its value at a later time. If the investment has been sold, the capital gain or loss is considered a realized gain or loss. If the investment is still held, the gain or loss is still "on paper" and is considered unrealized. EARNINGS GROWTH RATE For a mutual fund, the average yearly rate at which the earnings of the companies in the fund's portfolio have grown, measured over the past five years. EARNINGS PER SHARE (EPS) A company's earnings, or net income, for the past 12 months, divided by the number of shares outstanding. EXPENSE RATIO The amount that is taken from a mutual fund's assets each year to cover the fund's operating expenses. An expense ratio of 0.50% means that a fund's expenses amount to half of one percent of its average net assets a year. MARKET CAP, MARKET CAPITALIZATION The value of a company as determined by the total value of all shares of its stock outstanding. MEDIAN MARKET CAP The midpoint of the range of market caps of the stocks held by a fund. There are different ways of calculating median market cap. With a simple median, half of the stocks in the fund's portfolio would be larger than the median, and half would be smaller. With a weighted median (the type that is calculated for these funds), half of the fund's assets are invested in stocks that are larger than the median market cap, and half in stocks that are smaller. NET ASSET VALUE (NAV) The value of one share of a mutual fund. NAV is calculated by taking the fund's total assets, subtracting liabilities, and dividing by the number of shares outstanding. OUTSTANDING SHARES, SHARES OUTSTANDING When speaking of a company or mutual fund, indicates all shares currently held by investors. PRICE-TO-BOOK RATIO (P/B) The market price of a company's stock compared with its "book value." A mutual fund's P/B is the weighted average of the P/B of all stocks in the fund's portfolio. PRICE-TO-EARNINGS RATIO (P/E) The market price of a company's stock compared with earnings over the past year. A mutual fund's P/E is the weighted average of the P/E of all stocks in the fund's portfolio. RETURN ON EQUITY (ROE) The average yearly rate of return for each dollar of investors' money, measured over the past five years. STOCK A share of ownership, or equity, in the issuing company. TOTAL RETURN The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested. WEIGHTED AVERAGE For mutual funds, an average that gives the same weight to each security as the security represents in the fund's portfolio. YIELD The income paid out by an investment, expressed as a percentage of the investment's market value. Schwab Equity Index Funds 137 NOTES NOTES NOTES CONTACT SCHWAB SchwabFunds(R) offers you a complete family of mutual funds, each one based on a time-tested investment approach and using disciplined, clearly defined management strategies. Actively managed funds include multi-manager stock funds, a fund that uses long-short strategies, and a range of taxable and tax-free bond funds. Index funds include large-cap, small-cap and international stock funds. The list at right shows all currently available SchwabFunds. Whether you're an experienced investor or just starting out, SchwabFunds can help you achieve your financial goals. Please call 1-800-435-4000 for a free prospectus and brochure for any Schwab Fund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus. METHODS FOR PLACING ORDERS The following information outlines how Schwab investors can place orders. If you are investing through a third-party investment provider, methods for placing orders may be different. INTERNET 1 www.schwab.com SCHWAB BY PHONE(TM) 2 Use our automated voice service or speak to a representative. Call 1-800-435-4000, day or night (for TDD service, call 1-800-345-2550). TELEBROKER(R) Automated touch-tone phone service at 1-800-272-4922. MAIL Write to SchwabFunds at: P.O. Box 3812 Englewood, CO 80155-3812 When selling or exchanging shares, be sure to include the signatures of at least one of the persons whose name is on the account. 1 Shares of Sweep Investments(TM) may not be purchased over the Internet. 2 Orders placed in person or through a telephone representative are subject to a service fee payable to Schwab. THE SCHWABFUNDS FAMILY STOCK FUNDS Schwab S&P 500 Fund Schwab 1000 Fund(R) Schwab Small-Cap Index Fund(R) Schwab Total Stock Market Index Fund(R) Schwab International Index Fund(R) Schwab Core Equity FUND(TM) Schwab Hedged Equity Fund(TM) Schwab Focus Funds Communications Focus Fund Financial Services Focus Fund Health Care Focus Fund Technology Focus Fund Schwab MarketMasters Funds(TM) Schwab U.S. MarketMasters Fund(TM) Schwab Small-Cap MarketMasters Fund(TM) Schwab International MarketMasters Fund(TM) Schwab Balanced MarketMasters Fund(TM) ASSET ALLOCATION FUNDS Schwab MarketTrack Portfolios(R) Schwab All Equity Portfolio Schwab Growth Portfolio Schwab Balanced Portfolio Schwab Conservative Portfolio BOND FUNDS Schwab YieldPlus Fund(R) Schwab Short-Term Bond Market Fund Schwab Total Bond Market Fund Schwab GNMA Fund Schwab Short/Intermediate Tax-Free Bond Fund Schwab Long-Term Tax-Free Bond Fund Schwab California Short/Intermediate Tax-Free Bond Fund Schwab California Long-Term Tax-Free Bond Fund SCHWAB MONEY FUNDS Schwab offers an array of money market funds that seek high current income consistent with safety and liquidity.3 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(R). 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. [CHARLES SCHWAB LOGO] INVESTMENT ADVISER Charles Schwab Investment Management, Inc. 101 Montgomery Street, San Francisco, CA 94104 DISTRIBUTOR SchwabFunds(R) P.O. Box 3812, Englewood, CO 80155-3812 This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus. (C) 2003 Charles Schwab & Co., Inc. All rights reserved. Member SIPC/NYSE. Printed on recycled paper. REG13562-05 Item 2: Code of Ethics - Not applicable to this semi-annual report. Item 3: Audit Committee Financial Expert - Not applicable to this semi-annual report. Item 4: Principal Accountant Fees and Services - Not applicable to this semi-annual report. Item 5: Not applicable. Item 6: Reserved. Item 7: Not applicable. Item 8: Reserved. Item 9: Controls and Procedures. (a) Based on their evaluation of Registrant's disclosure controls and procedures, as of a date within 90 days of the filing date, Registrant's Chief Executive Officer, Randall W. Merk and Registrant's Chief Financial Officer, Tai-Chin Tung, have concluded that Registrant's disclosure controls and procedures are: (i) reasonably designed to ensure that information required to be disclosed in this report is appropriately communicated to Registrant's officers to allow timely decisions regarding disclosures required in this report; (ii) reasonably designed to ensure that information required to be disclosed in this report is recorded, processed, summarized and reported in a timely manner; and (iii) are effective in achieving the goals described in (i) and (ii) above. (b) There have been no changes in Registrant's internal controls that the above officers believe to be significant, or in other factors that the above officers believe could significantly affect these controls, including any corrective action with regard to significant deficiencies and material weakness, since the date of the evaluation referred to above. Item 10: Exhibits attached hereto. Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Schwab Investments By: /s/ Randall W. Merk ---------------------------------- Randall W. Merk Chief Executive Officer Date: July 7, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Randall W. Merk -------------------------------- Randall W. Merk Chief Executive Officer Date: July 7, 2003 By: /s/ Tai-Chin Tung -------------------------------- Tai-Chin Tung Chief Financial Officer Date: July 7, 2003 EX-99.(B)(1) 3 f90736iexv99wxbyx1y.txt CERTIFICATION OF RANDALL W. MERK Exhibit (b)(1) CERTIFICATIONS I, Randall W. Merk, certify that: 1. I have reviewed this report on Form N-CSR of Schwab Investments; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: July 1, 2003 /s/ Randall W. Merk ---------------------------- ------------------------------------- Randall W. Merk President and Chief Executive Officer CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Semi-Annual Report for Schwab Investments ("issuer") on Form N-CSR for the period ended April 30, 2003 ("periodic report"), I, Randall W. Merk, President and Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: (1) The periodic report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of the issuer for the period presented therein. /s/ Randall W. Merk Date: July 1, 2003 ------------------------------------- ----------------------- Randall W. Merk President and Chief Executive Officer A signed original of this written statement required by Section 906 has been provided to Schwab Investments and will be retained by Schwab Investments and furnished to the Securities and Exchange Commission or its staff upon request. EX-99.(B)(2) 4 f90736iexv99wxbyx2y.txt CERTIFICATION OF TAI-CHIN TUNG Exhibit (b)(2) CERTIFICATIONS I, Tai-Chin Tung, certify that: 1. I have reviewed this report on Form N-CSR of Schwab Investments; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: July 1, 2003 /s/ Tai-Chin Tung --------------------------- ----------------------------------------- Tai-Chin Tung Treasurer and Principal Financial Officer CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Semi-Annual Report for Schwab Investments ("issuer") on Form N-CSR for the period ended April 30, 2003 ("periodic report"), I, Tai-Chin Tung, Treasurer and Principal Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: (1) The periodic report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of the issuer for the period presented therein. /s/ Tai-Chin Tung Date: July 1, 2003 ----------------------------------------- ----------------------- Tai-Chin Tung Treasurer and Principal Financial Officer A signed original of this written statement required by Section 906 has been provided to Schwab Investments and will be retained by Schwab Investments and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----