N-Q 1 f30264nvq.htm FORM N-Q nvq
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS
OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-07704
Schwab Capital Trust
(Exact name of registrant as specified in charter)
211 Main Street, San Francisco, California 94105
(Address of principal executive offices) (Zip code)
Marie Chandoha
Schwab Capital Trust
211 Main Street, San Francisco, California 94105
(Name and address of agent for service)
Registrant’s telephone number, including area code: (415) 636-7000
Date of fiscal year end: October 31
Date of reporting period: July 31, 2014
 
 
Item 1. Schedule of Investments.

 


 

Schwab Capital Trust
Schwab Target 2010 Fund
 
Portfolio Holdings as of July 31, 2014 (Unaudited)
 
 
The following are the portfolio holdings as of the report date. For more information, please refer to the fund’s semiannual or annual shareholder reports.
 
                         
        Cost
  Value
Holdings by Category   ($)   ($)
 
  96 .7%   Other Investment Companies     49,435,247       60,102,504  
  3 .3%   Short-Term Investments     2,023,190       2,023,190  
 
 
  100 .0%   Total Investments     51,458,437       62,125,694  
  0 .0%   Other Assets and Liabilities, Net             10,047  
 
 
  100 .0%   Net Assets             62,135,741  
 
                 
    Number
  Value
Security   of Shares   ($)
 
 Other Investment Companies 96.7% of net assets
 
Equity Funds 39.4%
                 
 
Global Real Estate 2.0%
Schwab Global Real Estate Fund (a)
    177,019       1,258,606  
                 
 
International 7.9%
American Century International Growth Fund, Institutional Shares
    74,314       992,092  
Laudus International MarketMasters Fund, Select Shares (a)
    79,977       1,910,658  
Laudus Mondrian International Equity Fund, Institutional Shares (a)
    92,696       833,340  
William Blair International Small Cap Growth Fund, Institutional Shares
    70,940       1,144,258  
                 
              4,880,348  
                 
 
Large-Cap 26.4%
Dodge & Cox Stock Fund
    1,067       188,974  
Laudus U.S. Large Cap Growth Fund *(a)
    215,865       3,989,189  
Schwab Core Equity Fund (a)
    171,820       4,180,381  
Schwab Dividend Equity Fund (a)
    116,666       2,168,823  
Schwab S&P 500 Index Fund (a)
    126,462       3,852,018  
TCW Relative Value Large Cap Fund
    94,116       2,022,562  
                 
              16,401,947  
                 
 
Small-Cap 3.1%
Laudus Small-Cap MarketMasters Fund, Select Shares *(a)
    37,575       656,429  
Schwab Small-Cap Equity Fund (a)
    52,814       1,268,581  
                 
              1,925,010  
                 
              24,465,911  
 
Fixed-Income Funds 54.2%
                 
 
Inflation-Protected Bond 5.2%
Schwab Treasury Inflation Protected Securities Index Fund (a)
    282,569       3,221,284  
                 
 
Intermediate-Term Bond 33.0%
Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares
    144,100       1,775,312  
PIMCO Total Return Fund, Institutional Shares
    353,336       3,847,826  
Schwab Intermediate-Term Bond Fund (a)
    184,315       1,878,173  
Schwab Total Bond Market Fund (a)
    1,373,766       12,995,823  
                 
              20,497,134  
                 
 
International Bond 0.6%
Laudus Mondrian International Government Fixed Income Fund *(a)
    32,199       354,187  
                 
 
Short-Term Bond 15.4%
Schwab Short-Term Bond Market Fund (a)
    1,036,224       9,595,436  
                 
              33,668,041  
 
Money Market Fund 3.1%
Schwab Value Advantage Money Fund, Institutional Prime Shares 0.01% (a)(b)
    1,968,552       1,968,552  
                 
Total Other Investment Companies
(Cost $49,435,247)     60,102,504  
         
                 
                 
    Face
   
Security
  Amount
  Value
    Rate, Maturity Date   ($)   ($)
 
 Short-Term Investments 3.3% of net assets
 
Time Deposits 3.3%
Australia & New Zealand Banking Group Ltd.
0.03%, 08/01/14
    627,616       627,616  
DNB
0.03%, 08/01/14
    627,616       627,616  
Sumitomo Mitsui Banking Corp.
0.03%, 08/01/14
    140,342       140,342  
Wells Fargo
0.03%, 08/01/14
    627,616       627,616  
                 
Total Short-Term Investments
(Cost $2,023,190)     2,023,190  
         
 
End of Investments.
 
 
 
 1


 

 
 Schwab Target 2010 Fund
 

 
Portfolio Holdings (Unaudited) continued
 
At 07/31/14, the tax basis cost of the fund’s investments was $52,326,412 and the unrealized appreciation and depreciation were $9,799,282 and ($0), respectively, with a net unrealized appreciation of $9,799,282.
 
* Non-income producing security.
(a) Issuer is affiliated with the fund’s adviser.
(b) The rate shown is the 7-day yield.
 
 
Under procedures approved by the fund’s Board of Trustees (the “Board”), the investment adviser has formed a Pricing Committee to administer the pricing and valuation of portfolio securities and other assets and to ensure that prices used for internal purposes or provided by third parties reasonably reflect fair market value. Among other things, these procedures allow the fund to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.
 
The fund values the securities in its portfolio every business day. The fund uses the following policies to value various types of securities:
 
  •  Underlying funds: Mutual funds are valued at their respective net asset values (“NAVs”).
 
  •  Securities for which no quoted value is available: The Board has adopted procedures to fair value the fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. The fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the fund pursuant to the valuation procedures.
 
  •  Short-term securities (60 days or less to maturity): Short-term securities are valued at amortized cost, which approximates market value.
 
In accordance with the authoritative guidance on fair value measurements and disclosures under generally accepted accounting principles in the United States of America (GAAP), the fund discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). If inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the valuation. If the fund determines that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
 
The three levels of the fair value hierarchy are as follows:
 
  •  Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. Investments in mutual funds are valued daily at their NAVs, which are classified as Level 1 prices.
 
  •  Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and
 
 
 


 

 
 Schwab Target 2010 Fund
 

 
Portfolio Holdings (Unaudited) continued
 
  state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.
 
  •  Level 3 — significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the fund in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the fund in the absence of market information. Assumptions used by the fund due to the lack of observable inputs may significantly impact the resulting fair value and therefore the fund’s results of operations.
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the fund’s investments as of July 31, 2014:
 
                                 
    Quoted Prices in
      Significant
   
    Active Markets for
  Other Significant
  Unobservable
   
    Identical Assets
  Observable Inputs
  Inputs
   
Description
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total
 
Other Investment Companies1
    $60,102,504       $—       $—       $60,102,504  
Short-Term Investments1
          2,023,190             2,023,190  
                                 
Total
    $60,102,504       $2,023,190       $—       $62,125,694  
                                 
 
     
1
  As categorized in Portfolio Holdings.
 
The fund’s policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended July 31, 2014.
 
REG46838JUL14
 
 
 
 3


 

Schwab Capital Trust
Schwab Target 2015 Fund
 
Portfolio Holdings as of July 31, 2014 (Unaudited)
 
 
The following are the portfolio holdings as of the report date. For more information, please refer to the fund’s semiannual or annual shareholder reports.
 
                         
        Cost
  Value
Holdings by Category   ($)   ($)
 
  96 .6%   Other Investment Companies     92,693,263       108,230,391  
  3 .3%   Short-Term Investments     3,636,362       3,636,362  
 
 
  99 .9%   Total Investments     96,329,625       111,866,753  
  0 .1%   Other Assets and Liabilities, Net             121,871  
 
 
  100 .0%   Net Assets             111,988,624  
 
                 
    Number
  Value
Security   of Shares   ($)
 
 Other Investment Companies 96.6% of net assets
 
Equity Funds 44.1%
                 
 
Global Real Estate 2.3%
Schwab Global Real Estate Fund (a)
    357,017       2,538,389  
                 
 
International 9.2%
American Century International Growth Fund, Institutional Shares
    158,003       2,109,334  
Laudus International MarketMasters Fund, Select Shares (a)
    167,501       4,001,590  
Laudus Mondrian Emerging Markets Fund, Institutional Shares (a)
    21,522       199,941  
Laudus Mondrian International Equity Fund, Institutional Shares (a)
    197,627       1,776,664  
William Blair International Small Cap Growth Fund, Institutional Shares
    139,878       2,256,238  
                 
              10,343,767  
                 
 
Large-Cap 28.9%
Dodge & Cox Stock Fund
    2,321       411,082  
Laudus U.S. Large Cap Growth Fund *(a)
    427,500       7,900,205  
Schwab Core Equity Fund (a)
    340,185       8,276,706  
Schwab Dividend Equity Fund (a)
    229,695       4,270,026  
Schwab S&P 500 Index Fund (a)
    245,236       7,469,881  
TCW Relative Value Large Cap Fund
    187,569       4,030,864  
                 
              32,358,764  
                 
 
Small-Cap 3.7%
Laudus Small-Cap MarketMasters Fund, Select Shares *(a)
    79,509       1,389,027  
Schwab Small-Cap Equity Fund (a)
    115,222       2,767,643  
                 
              4,156,670  
                 
              49,397,590  
 
Fixed-Income Funds 50.1%
                 
 
Inflation-Protected Bond 4.6%
Schwab Treasury Inflation Protected Securities Index Fund (a)
    454,293       5,178,935  
                 
 
Intermediate-Term Bond 31.5%
Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares
    283,032       3,486,959  
PIMCO Total Return Fund, Institutional Shares
    686,989       7,481,306  
Schwab Intermediate-Term Bond Fund (a)
    346,951       3,535,436  
Schwab Total Bond Market Fund (a)
    2,193,183       20,747,513  
                 
              35,251,214  
                 
 
International Bond 0.7%
Laudus Mondrian International Government Fixed Income Fund *(a)
    75,827       834,099  
                 
 
Short-Term Bond 13.3%
Schwab Short-Term Bond Market Fund (a)
    1,606,559       14,876,736  
                 
              56,140,984  
 
Money Market Fund 2.4%
Schwab Value Advantage Money Fund, Institutional Prime Shares 0.01% (a)(b)
    2,691,817       2,691,817  
                 
Total Other Investment Companies
(Cost $92,693,263)     108,230,391  
         
                 
                 
    Face
   
Security
  Amount
  Value
    Rate, Maturity Date   ($)   ($)
 
 Short-Term Investments 3.3% of net assets
 
Time Deposits 3.3%
Australia & New Zealand Banking Group Ltd.
0.03%, 08/01/14
    1,127,370       1,127,370  
DNB
0.03%, 08/01/14
    1,127,370       1,127,370  
Sumitomo Mitsui Banking Corp.
0.03%, 08/01/14
    254,252       254,252  
Wells Fargo
0.03%, 08/01/14
    1,127,370       1,127,370  
                 
Total Short-Term Investments
(Cost $3,636,362)     3,636,362  
         
 
End of Investments.
 
 
 
 1


 

 
 Schwab Target 2015 Fund
 

 
Portfolio Holdings (Unaudited) continued
 
At 07/31/14, the tax basis cost of the fund’s investments was $96,835,390 and the unrealized appreciation and depreciation were $15,113,667 and ($82,304), respectively, with a net unrealized appreciation of $15,031,363.
 
* Non-income producing security.
(a) Issuer is affiliated with the fund’s adviser.
(b) The rate shown is the 7-day yield.
 
 
Under procedures approved by the fund’s Board of Trustees (the “Board”), the investment adviser has formed a Pricing Committee to administer the pricing and valuation of portfolio securities and other assets and to ensure that prices used for internal purposes or provided by third parties reasonably reflect fair market value. Among other things, these procedures allow the fund to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.
 
The fund values the securities in its portfolio every business day. The fund uses the following policies to value various types of securities:
 
  •  Underlying funds: Mutual funds are valued at their respective net asset values (“NAVs”).
 
  •  Securities for which no quoted value is available: The Board has adopted procedures to fair value the fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. The fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the fund pursuant to the valuation procedures.
 
  •  Short-term securities (60 days or less to maturity): Short-term securities are valued at amortized cost, which approximates market value.
 
In accordance with the authoritative guidance on fair value measurements and disclosures under generally accepted accounting principles in the United States of America (GAAP), the fund discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). If inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the valuation. If the fund determines that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
 
The three levels of the fair value hierarchy are as follows:
 
  •  Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. Investments in mutual funds are valued daily at their NAVs, which are classified as Level 1 prices.
 
  •  Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and
 
 
 


 

 
 Schwab Target 2015 Fund
 

 
Portfolio Holdings (Unaudited) continued
 
  state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.
 
  •  Level 3 — significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the fund in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the fund in the absence of market information. Assumptions used by the fund due to the lack of observable inputs may significantly impact the resulting fair value and therefore the fund’s results of operations.
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the fund’s investments as of July 31, 2014:
 
                                 
    Quoted Prices in
      Significant
   
    Active Markets for
  Other Significant
  Unobservable
   
    Identical Assets
  Observable Inputs
  Inputs
   
Description
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total
 
Other Investment Companies1
    $108,230,391       $—       $—       $108,230,391  
Short-Term Investments1
          3,636,362             3,636,362  
                                 
Total
    $108,230,391       $3,636,362       $—       $111,866,753  
                                 
 
     
1
  As categorized in Portfolio Holdings.
 
The fund’s policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended July 31, 2014.
 
REG46839JUL14
 
 
 
 3


 

Schwab Capital Trust
Schwab Target 2020 Fund
 
Portfolio Holdings as of July 31, 2014 (Unaudited)
 
 
The following are the portfolio holdings as of the report date. For more information, please refer to the fund’s semiannual or annual shareholder reports.
 
                         
        Cost
  Value
Holdings by Category   ($)   ($)
 
  96 .9%   Other Investment Companies     367,689,700       464,905,371  
  3 .0%   Short-Term Investments     14,339,357       14,339,357  
 
 
  99 .9%   Total Investments     382,029,057       479,244,728  
  0 .1%   Other Assets and Liabilities, Net             288,310  
 
 
  100 .0%   Net Assets             479,533,038  
 
                 
    Number
  Value
Security   of Shares   ($)
 
 Other Investment Companies 96.9% of net assets
 
Equity Funds 57.7%
                 
 
Global Real Estate 3.0%
Schwab Global Real Estate Fund (a)
    1,986,150       14,121,529  
                 
 
International 12.5%
American Century International Growth Fund, Institutional Shares
    873,772       11,664,850  
Laudus International MarketMasters Fund, Select Shares (a)
    937,112       22,387,604  
Laudus Mondrian Emerging Markets Fund, Institutional Shares (a)
    348,793       3,240,286  
Laudus Mondrian International Equity Fund, Institutional Shares (a)
    1,139,876       10,247,482  
William Blair International Small Cap Growth Fund, Institutional Shares
    775,494       12,508,721  
                 
              60,048,943  
                 
 
Large-Cap 36.4%
Dodge & Cox Stock Fund
    12,724       2,253,262  
Laudus U.S. Large Cap Growth Fund *(a)
    2,320,496       42,882,770  
Schwab Core Equity Fund (a)
    1,866,423       45,410,075  
Schwab Dividend Equity Fund (a)
    1,231,834       22,899,790  
Schwab S&P 500 Index Fund (a)
    1,318,123       40,150,032  
TCW Relative Value Large Cap Fund
    983,006       21,124,791  
                 
              174,720,720  
                 
 
Small-Cap 5.8%
Laudus Small-Cap MarketMasters Fund, Select Shares *(a)
    542,441       9,476,448  
Schwab Small-Cap Equity Fund (a)
    755,522       18,147,641  
                 
              27,624,089  
                 
              276,515,281  
 
Fixed-Income Funds 38.2%
                 
 
Inflation-Protected Bond 3.1%
Schwab Treasury Inflation Protected Securities Index Fund (a)
    1,328,637       15,146,457  
                 
 
Intermediate-Term Bond 26.1%
Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares
    1,357,972       16,730,211  
PIMCO Total Return Fund, Institutional Shares
    3,227,883       35,151,644  
Schwab Intermediate-Term Bond Fund (a)
    1,420,670       14,476,630  
Schwab Total Bond Market Fund (a)
    6,239,171       59,022,555  
                 
              125,381,040  
                 
 
International Bond 1.1%
Laudus Mondrian International Government Fixed Income Fund *(a)
    466,383       5,130,210  
                 
 
Short-Term Bond 7.9%
Schwab Short-Term Bond Market Fund (a)
    4,074,739       37,732,079  
                 
              183,389,786  
 
Money Market Fund 1.0%
Schwab Value Advantage Money Fund, Institutional Prime Shares 0.01% (a)(b)
    5,000,304       5,000,304  
                 
Total Other Investment Companies
(Cost $367,689,700)     464,905,371  
         
                 
                 
    Face
   
Security
  Amount
  Value
    Rate, Maturity Date   ($)   ($)
 
 Short-Term Investments 3.0% of net assets
 
Time Deposits 3.0%
Australia & New Zealand Banking Group Ltd.
0.03%, 08/01/14
    4,650,101       4,650,101  
DNB
0.03%, 08/01/14
    4,844,628       4,844,628  
Wells Fargo
0.03%, 08/01/14
    4,844,628       4,844,628  
                 
Total Short-Term Investments
(Cost $14,339,357)     14,339,357  
         
 
End of Investments.
 
 
 
 1


 

 
 Schwab Target 2020 Fund
 

 
Portfolio Holdings (Unaudited) continued
 
At 07/31/14, the tax basis cost of the fund’s investments was $384,415,345 and the unrealized appreciation and depreciation were $95,049,988 and ($220,605), respectively, with a net unrealized appreciation of $94,829,383.
 
* Non-income producing security.
(a) Issuer is affiliated with the fund’s adviser.
(b) The rate shown is the 7-day yield.
 
 
Under procedures approved by the fund’s Board of Trustees (the “Board”), the investment adviser has formed a Pricing Committee to administer the pricing and valuation of portfolio securities and other assets and to ensure that prices used for internal purposes or provided by third parties reasonably reflect fair market value. Among other things, these procedures allow the fund to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.
 
The fund values the securities in its portfolio every business day. The fund uses the following policies to value various types of securities:
 
  •  Underlying funds: Mutual funds are valued at their respective net asset values (“NAVs”).
 
  •  Securities for which no quoted value is available: The Board has adopted procedures to fair value the fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. The fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the fund pursuant to the valuation procedures.
 
  •  Short-term securities (60 days or less to maturity): Short-term securities are valued at amortized cost, which approximates market value.
 
In accordance with the authoritative guidance on fair value measurements and disclosures under generally accepted accounting principles in the United States of America (GAAP), the fund discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). If inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the valuation. If the fund determines that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
 
The three levels of the fair value hierarchy are as follows:
 
  •  Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. Investments in mutual funds are valued daily at their NAVs, which are classified as Level 1 prices.
 
  •  Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and
 
 
 


 

 
 Schwab Target 2020 Fund
 

 
Portfolio Holdings (Unaudited) continued
 
  state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.
 
  •  Level 3 — significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the fund in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the fund in the absence of market information. Assumptions used by the fund due to the lack of observable inputs may significantly impact the resulting fair value and therefore the fund’s results of operations.
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the fund’s investments as of July 31, 2014:
 
                                 
    Quoted Prices in
      Significant
   
    Active Markets for
  Other Significant
  Unobservable
   
    Identical Assets
  Observable Inputs
  Inputs
   
Description
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total
 
Other Investment Companies1
    $464,905,371       $—       $—       $464,905,371  
Short-Term Investments1
          14,339,357             14,339,357  
                                 
Total
    $464,905,371       $14,339,357       $—       $479,244,728  
                                 
 
     
1
  As categorized in Portfolio Holdings.
 
The fund’s policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended July 31, 2014.
 
REG46840JUL14
 
 
 
 3


 

Schwab Capital Trust
Schwab Target 2025 Fund
 
Portfolio Holdings as of July 31, 2014 (Unaudited)
 
 
The following are the portfolio holdings as of the report date. For more information, please refer to the fund’s semiannual or annual shareholder reports.
 
                         
        Cost
  Value
Holdings by Category   ($)   ($)
 
  96 .8%   Other Investment Companies     258,376,720       311,092,304  
  3 .3%   Short-Term Investments     10,546,393       10,546,393  
 
 
  100 .1%   Total Investments     268,923,113       321,638,697  
  (0 .1%)   Other Assets and Liabilities, Net             (368,436 )
 
 
  100 .0%   Net Assets             321,270,261  
 
                 
    Number
  Value
Security   of Shares   ($)
 
 Other Investment Companies 96.8% of net assets
 
Equity Funds 67.6%
                 
 
Global Real Estate 3.4%
Schwab Global Real Estate Fund (a)
    1,546,960       10,998,885  
                 
 
International 15.1%
American Century International Growth Fund, Institutional Shares
    681,758       9,101,464  
Laudus International MarketMasters Fund, Select Shares (a)
    735,978       17,582,514  
Laudus Mondrian Emerging Markets Fund, Institutional Shares (a)
    420,362       3,905,162  
Laudus Mondrian International Equity Fund, Institutional Shares (a)
    907,453       8,158,005  
William Blair International Small Cap Growth Fund, Institutional Shares
    605,231       9,762,370  
                 
              48,509,515  
                 
 
Large-Cap 41.7%
Dodge & Cox Stock Fund
    9,695       1,716,879  
Laudus U.S. Large Cap Growth Fund *(a)
    1,778,074       32,858,807  
Schwab Core Equity Fund (a)
    1,442,334       35,091,994  
Schwab Dividend Equity Fund (a)
    936,688       17,413,027  
Schwab S&P 500 Index Fund (a)
    1,005,674       30,632,837  
TCW Relative Value Large Cap Fund
    750,412       16,126,350  
                 
              133,839,894  
                 
 
Small-Cap 7.4%
Laudus Small-Cap MarketMasters Fund, Select Shares *(a)
    472,818       8,260,130  
Schwab Small-Cap Equity Fund (a)
    653,616       15,699,848  
                 
              23,959,978  
                 
              217,308,272  
 
Fixed-Income Funds 29.2%
                 
 
Inflation-Protected Bond 2.2%
Schwab Treasury Inflation Protected Securities Index Fund (a)
    606,906       6,918,729  
                 
 
Intermediate-Term Bond 21.1%
Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares
    891,482       10,983,055  
PIMCO Total Return Fund, Institutional Shares
    2,029,515       22,101,416  
Schwab Intermediate-Term Bond Fund (a)
    835,341       8,512,126  
Schwab Total Bond Market Fund (a)
    2,779,443       26,293,534  
                 
              67,890,131  
                 
 
International Bond 1.0%
Laudus Mondrian International Government Fixed Income Fund *(a)
    292,112       3,213,232  
                 
 
Short-Term Bond 4.9%
Schwab Short-Term Bond Market Fund (a)
    1,702,153       15,761,940  
                 
              93,784,032  
                 
Total Other Investment Companies
(Cost $258,376,720)     311,092,304  
         
                 
                 
    Face
   
Security
  Amount
  Value
    Rate, Maturity Date   ($)   ($)
 
 Short-Term Investments 3.3% of net assets
 
Time Deposits 3.3%
Australia & New Zealand Banking Group Ltd.
0.03%, 08/01/14
    3,249,770       3,249,770  
DNB
0.03%, 08/01/14
    3,249,770       3,249,770  
Sumitomo Mitsui Banking Corp.
0.03%, 08/01/14
    797,083       797,083  
Wells Fargo
0.03%, 08/01/14
    3,249,770       3,249,770  
                 
Total Short-Term Investments
(Cost $10,546,393)     10,546,393  
         
 
End of Investments.
 
At 07/31/14, the tax basis cost of the fund’s investments was $270,096,596 and the unrealized appreciation and depreciation were $52,114,131 and ($572,030), respectively, with a net unrealized appreciation of $51,542,101.
 
* Non-income producing security.
(a) Issuer is affiliated with the fund’s adviser.
 
 
 
 1


 

 
 Schwab Target 2025 Fund
 

 
Portfolio Holdings (Unaudited) continued
 
 
Under procedures approved by the fund’s Board of Trustees (the “Board”), the investment adviser has formed a Pricing Committee to administer the pricing and valuation of portfolio securities and other assets and to ensure that prices used for internal purposes or provided by third parties reasonably reflect fair market value. Among other things, these procedures allow the fund to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.
 
The fund values the securities in its portfolio every business day. The fund uses the following policies to value various types of securities:
 
  •  Underlying funds: Mutual funds are valued at their respective net asset values (“NAVs”).
 
  •  Securities for which no quoted value is available: The Board has adopted procedures to fair value the fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. The fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the fund pursuant to the valuation procedures.
 
  •  Short-term securities (60 days or less to maturity): Short-term securities are valued at amortized cost, which approximates market value.
 
In accordance with the authoritative guidance on fair value measurements and disclosures under generally accepted accounting principles in the United States of America (GAAP), the fund discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). If inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the valuation. If the fund determines that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
 
The three levels of the fair value hierarchy are as follows:
 
  •  Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. Investments in mutual funds are valued daily at their NAVs, which are classified as Level 1 prices.
 
  •  Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.
 
  •  Level 3 — significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more
 
 
 


 

 
 Schwab Target 2025 Fund
 

 
Portfolio Holdings (Unaudited) continued
 
  valuation techniques for which sufficient and reliable data is available. The inputs used by the fund in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the fund in the absence of market information. Assumptions used by the fund due to the lack of observable inputs may significantly impact the resulting fair value and therefore the fund’s results of operations.
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the fund’s investments as of July 31, 2014:
 
                                 
    Quoted Prices in
      Significant
   
    Active Markets for
  Other Significant
  Unobservable
   
    Identical Assets
  Observable Inputs
  Inputs
   
Description
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total
 
Other Investment Companies1
    $311,092,304       $—       $—       $311,092,304  
Short-Term Investments1
          10,546,393             10,546,393  
                                 
Total
    $311,092,304       $10,546,393       $—       $321,638,697  
                                 
 
     
1
  As categorized in Portfolio Holdings.
 
The fund’s policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended July 31, 2014.
 
REG46841JUL14
 
 
 
 3


 

Schwab Capital Trust
Schwab Target 2030 Fund
 
Portfolio Holdings as of July 31, 2014 (Unaudited)
 
 
The following are the portfolio holdings as of the report date. For more information, please refer to the fund’s semiannual or annual shareholder reports.
 
                         
        Cost
  Value
Holdings by Category   ($)   ($)
 
  97 .4%   Other Investment Companies     506,408,576       685,459,079  
  2 .5%   Short-Term Investments     17,876,314       17,876,314  
 
 
  99 .9%   Total Investments     524,284,890       703,335,393  
  0 .1%   Other Assets and Liabilities, Net             355,814  
 
 
  100 .0%   Net Assets             703,691,207  
 
                 
    Number
  Value
Security   of Shares   ($)
 
 Other Investment Companies 97.4% of net assets
 
Equity Funds 75.5%
                 
 
Global Real Estate 3.9%
Schwab Global Real Estate Fund (a)
    3,796,700       26,994,539  
                 
 
International 17.2%
American Century International Growth Fund, Institutional Shares
    1,661,159       22,176,476  
Laudus International MarketMasters Fund, Select Shares (a)
    1,798,617       42,968,954  
Laudus Mondrian Emerging Markets Fund, Institutional Shares (a)
    1,304,081       12,114,914  
Laudus Mondrian International Equity Fund, Institutional Shares (a)
    2,235,844       20,100,235  
William Blair International Small Cap Growth Fund, Institutional Shares
    1,475,552       23,800,652  
                 
              121,161,231  
                 
 
Large-Cap 45.5%
Dodge & Cox Stock Fund
    22,319       3,952,388  
Laudus U.S. Large Cap Growth Fund *(a)
    4,271,704       78,941,081  
Schwab Core Equity Fund (a)
    3,458,382       84,142,430  
Schwab Dividend Equity Fund (a)
    2,248,399       41,797,732  
Schwab S&P 500 Index Fund (a)
    2,404,675       73,246,391  
TCW Relative Value Large Cap Fund
    1,784,472       38,348,301  
                 
              320,428,323  
                 
 
Small-Cap 8.9%
Laudus Small-Cap MarketMasters Fund, Select Shares *(a)
    1,243,847       21,730,000  
Schwab Small-Cap Equity Fund (a)
    1,711,367       41,107,032  
                 
              62,837,032  
                 
              531,421,125  
 
Fixed-Income Funds 21.9%
                 
 
Inflation-Protected Bond 1.7%
Schwab Treasury Inflation Protected Securities Index Fund (a)
    1,018,330       11,608,966  
                 
 
Intermediate-Term Bond 16.4%
Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares
    1,768,720       21,790,628  
PIMCO Total Return Fund, Institutional Shares
    3,731,481       40,635,831  
Schwab Intermediate-Term Bond Fund (a)
    1,456,537       14,842,107  
Schwab Total Bond Market Fund (a)
    4,015,150       37,983,316  
                 
              115,251,882  
                 
 
International Bond 0.8%
Laudus Mondrian International Government Fixed Income Fund *(a)
    527,239       5,799,633  
                 
 
Short-Term Bond 3.0%
Schwab Short-Term Bond Market Fund (a)
    2,308,582       21,377,473  
                 
              154,037,954  
                 
Total Other Investment Companies
(Cost $506,408,576)     685,459,079  
         
                 
                 
    Face
   
Security
  Amount
  Value
    Rate, Maturity Date   ($)   ($)
 
 Short-Term Investments 2.5% of net assets
 
Time Deposits 2.5%
Australia & New Zealand Banking Group Ltd.
0.03%, 08/01/14
    7,143,446       7,143,446  
DNB
0.03%, 08/01/14
    7,143,446       7,143,446  
Sumitomo Mitsui Banking Corp.
0.03%, 08/01/14
    3,589,422       3,589,422  
                 
Total Short-Term Investments
(Cost $17,876,314)     17,876,314  
         
 
End of Investments.
 
At 07/31/14, the tax basis cost of the fund’s investments was $528,388,095 and the unrealized appreciation and depreciation were $176,178,880 and ($1,231,582), respectively, with a net unrealized appreciation of $174,947,298.
 
* Non-income producing security.
(a) Issuer is affiliated with the fund’s adviser.
 
 
 
 
 1


 

 
 Schwab Target 2030 Fund
 

 
Portfolio Holdings (Unaudited) continued
 
Under procedures approved by the fund’s Board of Trustees (the “Board”), the investment adviser has formed a Pricing Committee to administer the pricing and valuation of portfolio securities and other assets and to ensure that prices used for internal purposes or provided by third parties reasonably reflect fair market value. Among other things, these procedures allow the fund to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.
 
The fund values the securities in its portfolio every business day. The fund uses the following policies to value various types of securities:
 
  •  Underlying funds: Mutual funds are valued at their respective net asset values (“NAVs”).
 
  •  Securities for which no quoted value is available: The Board has adopted procedures to fair value the fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. The fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the fund pursuant to the valuation procedures.
 
  •  Short-term securities (60 days or less to maturity): Short-term securities are valued at amortized cost, which approximates market value.
 
In accordance with the authoritative guidance on fair value measurements and disclosures under generally accepted accounting principles in the United States of America (GAAP), the fund discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). If inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the valuation. If the fund determines that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
 
The three levels of the fair value hierarchy are as follows:
 
  •  Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. Investments in mutual funds are valued daily at their NAVs, which are classified as Level 1 prices.
 
  •  Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.
 
  •  Level 3 — significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the fund in estimating the value
 
 
 


 

 
 Schwab Target 2030 Fund
 

 
Portfolio Holdings (Unaudited) continued
 
  of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the fund in the absence of market information. Assumptions used by the fund due to the lack of observable inputs may significantly impact the resulting fair value and therefore the fund’s results of operations.
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the fund’s investments as of July 31, 2014:
 
                                 
    Quoted Prices in
      Significant
   
    Active Markets for
  Other Significant
  Unobservable
   
    Identical Assets
  Observable Inputs
  Inputs
   
Description
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total
 
Other Investment Companies1
    $685,459,079       $—       $—       $685,459,079  
Short-Term Investments1
          17,876,314             17,876,314  
                                 
Total
    $685,459,079       $17,876,314       $—       $703,335,393  
                                 
 
     
1
  As categorized in Portfolio Holdings.
 
The fund’s policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended July 31, 2014.
 
REG46842JUL14
 
 
 
 3


 

Schwab Capital Trust
Schwab Target 2035 Fund
 
Portfolio Holdings as of July 31, 2014 (Unaudited)
 
 
The following are the portfolio holdings as of the report date. For more information, please refer to the fund’s semiannual or annual shareholder reports.
 
                         
        Cost
  Value
Holdings by Category   ($)   ($)
 
  97 .5%   Other Investment Companies     205,573,400       255,780,574  
  2 .5%   Short-Term Investments     6,445,905       6,445,905  
 
 
  100 .0%   Total Investments     212,019,305       262,226,479  
  0 .0%   Other Assets and Liabilities, Net             69,437  
 
 
  100 .0%   Net Assets             262,295,916  
 
                 
    Number
  Value
Security   of Shares   ($)
 
 Other Investment Companies 97.5% of net assets
 
Equity Funds 82.4%
                 
 
Global Real Estate 4.2%
Schwab Global Real Estate Fund (a)
    1,544,791       10,983,464  
                 
 
International 19.2%
American Century International Growth Fund, Institutional Shares
    667,404       8,909,847  
Laudus International MarketMasters Fund, Select Shares (a)
    730,565       17,453,194  
Laudus Mondrian Emerging Markets Fund, Institutional Shares (a)
    647,901       6,018,999  
Laudus Mondrian International Equity Fund, Institutional Shares (a)
    913,130       8,209,043  
William Blair International Small Cap Growth Fund, Institutional Shares
    597,834       9,643,063  
                 
              50,234,146  
                 
 
Large-Cap 48.7%
Dodge & Cox Stock Fund
    9,011       1,595,680  
Laudus U.S. Large Cap Growth Fund *(a)
    1,697,298       31,366,073  
Schwab Core Equity Fund (a)
    1,388,234       33,775,724  
Schwab Dividend Equity Fund (a)
    893,941       16,618,363  
Schwab S&P 500 Index Fund (a)
    958,633       29,199,948  
TCW Relative Value Large Cap Fund
    710,041       15,258,792  
                 
              127,814,580  
                 
 
Small-Cap 10.3%
Laudus Small-Cap MarketMasters Fund, Select Shares *(a)
    536,545       9,373,434  
Schwab Small-Cap Equity Fund (a)
    735,664       17,670,643  
                 
              27,044,077  
                 
              216,076,267  
 
Fixed-Income Funds 15.1%
                 
 
Inflation-Protected Bond 1.0%
Schwab Treasury Inflation Protected Securities Index Fund (a)
    232,882       2,654,856  
                 
 
Intermediate-Term Bond 11.7%
Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares
    515,516       6,351,159  
PIMCO Total Return Fund, Institutional Shares
    1,113,721       12,128,424  
Schwab Intermediate-Term Bond Fund (a)
    384,060       3,913,571  
Schwab Total Bond Market Fund (a)
    878,085       8,306,687  
                 
              30,699,841  
                 
 
International Bond 0.5%
Laudus Mondrian International Government Fixed Income Fund *(a)
    114,688       1,261,565  
                 
 
Short-Term Bond 1.9%
Schwab Short-Term Bond Market Fund (a)
    549,465       5,088,045  
                 
              39,704,307  
                 
Total Other Investment Companies
(Cost $205,573,400)     255,780,574  
         
                 
                 
    Face
   
Security
  Amount
  Value
    Rate, Maturity Date   ($)   ($)
 
 Short-Term Investments 2.5% of net assets
 
Time Deposits 2.5%
Australia & New Zealand Banking Group Ltd.
0.03%, 08/01/14
    1,123,919       1,123,919  
DNB
0.03%, 08/01/14
    2,660,993       2,660,993  
Wells Fargo
0.03%, 08/01/14
    2,660,993       2,660,993  
                 
Total Short-Term Investments
(Cost $6,445,905)     6,445,905  
         
 
End of Investments.
 
At 07/31/14, the tax basis cost of the fund’s investments was $212,965,492 and the unrealized appreciation and depreciation were $49,619,981 and ($358,994), respectively, with a net unrealized appreciation of $49,260,987.
 
* Non-income producing security.
(a) Issuer is affiliated with the fund’s adviser.
 
 
 
 
 1


 

 
 Schwab Target 2035 Fund
 

 
Portfolio Holdings (Unaudited) continued
 
Under procedures approved by the fund’s Board of Trustees (the “Board”), the investment adviser has formed a Pricing Committee to administer the pricing and valuation of portfolio securities and other assets and to ensure that prices used for internal purposes or provided by third parties reasonably reflect fair market value. Among other things, these procedures allow the fund to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.
 
The fund values the securities in its portfolio every business day. The fund uses the following policies to value various types of securities:
 
  •  Underlying funds: Mutual funds are valued at their respective net asset values (“NAVs”).
 
  •  Securities for which no quoted value is available: The Board has adopted procedures to fair value the fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. The fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the fund pursuant to the valuation procedures.
 
  •  Short-term securities (60 days or less to maturity): Short-term securities are valued at amortized cost, which approximates market value.
 
In accordance with the authoritative guidance on fair value measurements and disclosures under generally accepted accounting principles in the United States of America (GAAP), the fund discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). If inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the valuation. If the fund determines that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
 
The three levels of the fair value hierarchy are as follows:
 
  •  Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. Investments in mutual funds are valued daily at their NAVs, which are classified as Level 1 prices.
 
  •  Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.
 
  •  Level 3 — significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the fund in estimating the value
 
 
 


 

 
 Schwab Target 2035 Fund
 

 
Portfolio Holdings (Unaudited) continued
 
  of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the fund in the absence of market information. Assumptions used by the fund due to the lack of observable inputs may significantly impact the resulting fair value and therefore the fund’s results of operations.
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the fund’s investments as of July 31, 2014:
 
                                 
    Quoted Prices in
      Significant
   
    Active Markets for
  Other Significant
  Unobservable
   
    Identical Assets
  Observable Inputs
  Inputs
   
Description
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total
 
Other Investment Companies1
    $255,780,574       $—       $—       $255,780,574  
Short-Term Investments1
          6,445,905             6,445,905  
                                 
Total
    $255,780,574       $6,445,905       $—       $262,226,479  
                                 
 
     
1
  As categorized in Portfolio Holdings.
 
The fund’s policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended July 31, 2014.
 
REG46843JUL14
 
 
 
 3


 

Schwab Capital Trust
Schwab Target 2040 Fund
 
Portfolio Holdings as of July 31, 2014 (Unaudited)
 
 
The following are the portfolio holdings as of the report date. For more information, please refer to the fund’s semiannual or annual shareholder reports.
 
                         
        Cost
  Value
Holdings by Category   ($)   ($)
 
  98 .0%   Other Investment Companies     522,617,419       723,953,961  
  2 .0%   Short-Term Investments     14,986,193       14,986,193  
 
 
  100 .0%   Total Investments     537,603,612       738,940,154  
  0 .0%   Other Assets and Liabilities, Net             261,472  
 
 
  100 .0%   Net Assets             739,201,626  
 
                 
    Number
  Value
Security   of Shares   ($)
 
 Other Investment Companies 98.0% of net assets
 
Equity Funds 88.3%
                 
 
Global Real Estate 4.5%
Schwab Global Real Estate Fund (a)
    4,677,592       33,257,676  
                 
 
International 20.9%
American Century International Growth Fund, Institutional Shares
    2,023,174       27,009,368  
Laudus International MarketMasters Fund, Select Shares (a)
    2,200,718       52,575,147  
Laudus Mondrian Emerging Markets Fund, Institutional Shares (a)
    2,283,871       21,217,157  
Laudus Mondrian International Equity Fund, Institutional Shares (a)
    2,762,965       24,839,057  
William Blair International Small Cap Growth Fund, Institutional Shares
    1,798,491       29,009,655  
                 
              154,650,384  
                 
 
Large-Cap 51.4%
Dodge & Cox Stock Fund
    26,696       4,727,590  
Laudus U.S. Large Cap Growth Fund *(a)
    5,060,281       93,513,985  
Schwab Core Equity Fund (a)
    4,121,306       100,271,370  
Schwab Dividend Equity Fund (a)
    2,638,124       49,042,718  
Schwab S&P 500 Index Fund (a)
    2,845,421       86,671,537  
TCW Relative Value Large Cap Fund
    2,113,990       45,429,648  
                 
              379,656,848  
                 
 
Small-Cap 11.5%
Laudus Small-Cap MarketMasters Fund, Select Shares *(a)
    1,691,376       29,548,340  
Schwab Small-Cap Equity Fund (a)
    2,308,988       55,461,883  
                 
              85,010,223  
                 
              652,575,131  
 
Fixed-Income Funds 9.7%
                 
 
Inflation-Protected Bond 0.5%
Schwab Treasury Inflation Protected Securities Index Fund (a)
    339,866       3,874,478  
                 
 
Intermediate-Term Bond 7.6%
Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares
    1,188,002       14,636,184  
PIMCO Total Return Fund, Institutional Shares
    2,323,963       25,307,959  
Schwab Intermediate-Term Bond Fund (a)
    647,108       6,594,030  
Schwab Total Bond Market Fund (a)
    1,026,681       9,712,400  
                 
              56,250,573  
                 
 
International Bond 0.2%
Laudus Mondrian International Government Fixed Income Fund *(a)
    102,247       1,124,714  
                 
 
Short-Term Bond 1.4%
Schwab Short-Term Bond Market Fund (a)
    1,093,852       10,129,065  
                 
              71,378,830  
                 
Total Other Investment Companies
(Cost $522,617,419)     723,953,961  
         
                 
                 
    Face
   
Security
  Amount
  Value
    Rate, Maturity Date   ($)   ($)
 
 Short-Term Investments 2.0% of net assets
 
Time Deposits 2.0%
DNB
0.03%, 08/01/14
    7,463,950       7,463,950  
Wells Fargo
0.03%, 08/01/14
    7,522,243       7,522,243  
                 
Total Short-Term Investments
(Cost $14,986,193)     14,986,193  
         
 
End of Investments.
 
At 07/31/14, the tax basis cost of the fund’s investments was $541,961,557 and the unrealized appreciation and depreciation were $197,698,909 and ($720,312), respectively, with a net unrealized appreciation of $196,978,597.
 
* Non-income producing security.
(a) Issuer is affiliated with the fund’s adviser.
 
 
 
 
 1


 

 
 Schwab Target 2040 Fund
 

 
Portfolio Holdings (Unaudited) continued
 
Under procedures approved by the fund’s Board of Trustees (the “Board”), the investment adviser has formed a Pricing Committee to administer the pricing and valuation of portfolio securities and other assets and to ensure that prices used for internal purposes or provided by third parties reasonably reflect fair market value. Among other things, these procedures allow the fund to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.
 
The fund values the securities in its portfolio every business day. The fund uses the following policies to value various types of securities:
 
  •  Underlying funds: Mutual funds are valued at their respective net asset values (“NAVs”).
 
  •  Securities for which no quoted value is available: The Board has adopted procedures to fair value the fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. The fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the fund pursuant to the valuation procedures.
 
  •  Short-term securities (60 days or less to maturity): Short-term securities are valued at amortized cost, which approximates market value.
 
In accordance with the authoritative guidance on fair value measurements and disclosures under generally accepted accounting principles in the United States of America (GAAP), the fund discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). If inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the valuation. If the fund determines that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
 
The three levels of the fair value hierarchy are as follows:
 
  •  Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. Investments in mutual funds are valued daily at their NAVs, which are classified as Level 1 prices.
 
  •  Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.
 
  •  Level 3 — significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the fund in estimating the value
 
 
 


 

 
 Schwab Target 2040 Fund
 

 
Portfolio Holdings (Unaudited) continued
 
  of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the fund in the absence of market information. Assumptions used by the fund due to the lack of observable inputs may significantly impact the resulting fair value and therefore the fund’s results of operations.
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the fund’s investments as of July 31, 2014:
 
                                 
    Quoted Prices in
      Significant
   
    Active Markets for
  Other Significant
  Unobservable
   
    Identical Assets
  Observable Inputs
  Inputs
   
Description
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total
 
Other Investment Companies1
    $723,953,961       $—       $—       $723,953,961  
Short-Term Investments1
          14,986,193             14,986,193  
                                 
Total
    $723,953,961       $14,986,193       $—       $738,940,154  
                                 
 
     
1
  As categorized in Portfolio Holdings.
 
The fund’s policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended July 31, 2014.
 
REG46844JUL14
 
 
 
 3


 

Schwab Capital Trust
Schwab Target 2045 Fund
 
Portfolio Holdings as of July 31, 2014 (Unaudited)
 
 
The following are the portfolio holdings as of the report date. For more information, please refer to the fund’s semiannual or annual shareholder reports.
 
                         
        Cost
  Value
Holdings by Category   ($)   ($)
 
  97 .9%   Other Investment Companies     31,890,037       34,158,529  
  2 .0%   Short-Term Investments     691,874       691,874  
 
 
  99 .9%   Total Investments     32,581,911       34,850,403  
  0 .1%   Other Assets and Liabilities, Net             33,255  
 
 
  100 .0%   Net Assets             34,883,658  
 
                 
    Number
  Value
Security   of Shares   ($)
 
 Other Investment Companies 97.9% of net assets
 
Equity Funds 91.4%
                 
 
Global Real Estate 4.7%
Schwab Global Real Estate Fund (a)
    229,216       1,629,727  
                 
 
International 21.8%
American Century International Growth Fund, Institutional Shares
    98,080       1,309,364  
Laudus International MarketMasters Fund, Select Shares (a)
    107,503       2,568,248  
Laudus Mondrian Emerging Markets Fund, Institutional Shares (a)
    119,519       1,110,333  
Laudus Mondrian International Equity Fund, Institutional Shares (a)
    134,772       1,211,596  
William Blair International Small Cap Growth Fund, Institutional Shares
    87,872       1,417,373  
                 
              7,616,914  
                 
 
Large-Cap 52.7%
Dodge & Cox Stock Fund
    1,277       226,123  
Laudus U.S. Large Cap Growth Fund *(a)
    244,266       4,514,040  
Schwab Core Equity Fund (a)
    200,285       4,872,924  
Schwab Dividend Equity Fund (a)
    127,581       2,371,730  
Schwab S&P 500 Index Fund (a)
    137,967       4,202,469  
TCW Relative Value Large Cap Fund
    102,285       2,198,103  
                 
              18,385,389  
                 
 
Small-Cap 12.2%
Laudus Small-Cap MarketMasters Fund, Select Shares *(a)
    84,608       1,478,108  
Schwab Small-Cap Equity Fund (a)
    115,436       2,772,771  
                 
              4,250,879  
                 
              31,882,909  
 
Fixed-Income Funds 6.5%
                 
 
Inflation-Protected Bond 0.3%
Schwab Treasury Inflation Protected Securities Index Fund (a)
    8,153       92,946  
                 
 
Intermediate-Term Bond 5.1%
Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares
    47,378       583,700  
PIMCO Total Return Fund, Institutional Shares
    83,302       907,163  
Schwab Intermediate-Term Bond Fund (a)
    17,553       178,867  
Schwab Total Bond Market Fund (a)
    12,878       121,829  
                 
              1,791,559  
                 
 
International Bond 0.1%
Laudus Mondrian International Government Fixed Income Fund *(a)
    3,558       39,142  
                 
 
Short-Term Bond 1.0%
Schwab Short-Term Bond Market Fund (a)
    38,010       351,973  
                 
              2,275,620  
                 
Total Other Investment Companies
(Cost $31,890,037)     34,158,529  
         
                 
                 
    Face
   
Security
  Amount
  Value
    Rate, Maturity Date   ($)   ($)
 
 Short-Term Investments 2.0% of net assets
 
Time Deposits 2.0%
DNB
0.03%, 08/01/14
    337,818       337,818  
Wells Fargo
0.03%, 08/01/14
    354,056       354,056  
                 
Total Short-Term Investments
(Cost $691,874)     691,874  
         
 
End of Investments.
 
At 07/31/14, the tax basis cost of the fund’s investments was $32,616,511 and the unrealized appreciation and depreciation were $2,237,469 and ($3,577), respectively, with a net unrealized appreciation of $2,233,892.
 
* Non-income producing security.
(a) Issuer is affiliated with the fund’s adviser.
 
 
Under procedures approved by the fund’s Board of Trustees (the “Board”), the investment adviser has formed a Pricing Committee to administer the pricing and valuation of portfolio securities and other assets and to ensure that prices used for
 
 
 
 1


 

 
 Schwab Target 2045 Fund
 

 
Portfolio Holdings (Unaudited) continued
 
internal purposes or provided by third parties reasonably reflect fair market value. Among other things, these procedures allow the fund to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.
 
The fund values the securities in its portfolio every business day. The fund uses the following policies to value various types of securities:
 
  •  Underlying funds: Mutual funds are valued at their respective net asset values (“NAVs”).
 
  •  Securities for which no quoted value is available: The Board has adopted procedures to fair value the fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. The fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the fund pursuant to the valuation procedures.
 
  •  Short-term securities (60 days or less to maturity): Short-term securities are valued at amortized cost, which approximates market value.
 
In accordance with the authoritative guidance on fair value measurements and disclosures under generally accepted accounting principles in the United States of America (GAAP), the fund discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). If inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the valuation. If the fund determines that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
 
The three levels of the fair value hierarchy are as follows:
 
  •  Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. Investments in mutual funds are valued daily at their NAVs, which are classified as Level 1 prices.
 
  •  Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.
 
  •  Level 3 — significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the fund in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in
 
 
 


 

 
 Schwab Target 2045 Fund
 

 
Portfolio Holdings (Unaudited) continued
 
  financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the fund in the absence of market information. Assumptions used by the fund due to the lack of observable inputs may significantly impact the resulting fair value and therefore the fund’s results of operations.
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the fund’s investments as of July 31, 2014:
 
                                 
    Quoted Prices in
      Significant
   
    Active Markets for
  Other Significant
  Unobservable
   
    Identical Assets
  Observable Inputs
  Inputs
   
Description
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total
 
Other Investment Companies1
    $34,158,529       $—       $—       $34,158,529  
Short-Term Investments1
          691,874             691,874  
                                 
Total
    $34,158,529       $691,874       $—       $34,850,403  
                                 
 
     
1
  As categorized in Portfolio Holdings.
 
The fund’s policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the period. There were no transfers between Level 1, Level 2 and Level 3 for the period ended July 31, 2014.
 
REG82232JUL14
 
 
 
 3


 

Schwab Capital Trust
Schwab Target 2050 Fund
 
Portfolio Holdings as of July 31, 2014 (Unaudited)
 
 
The following are the portfolio holdings as of the report date. For more information, please refer to the fund’s semiannual or annual shareholder reports.
 
                         
        Cost
  Value
Holdings by Category   ($)   ($)
 
  98 .0%   Other Investment Companies     25,076,628       26,917,696  
  2 .1%   Short-Term Investments     581,396       581,396  
 
 
  100 .1%   Total Investments     25,658,024       27,499,092  
  (0 .1%)   Other Assets and Liabilities, Net             (17,434 )
 
 
  100 .0%   Net Assets             27,481,658  
 
                 
    Number
  Value
Security   of Shares   ($)
 
 Other Investment Companies 98.0% of net assets
 
Equity Funds 93.9%
                 
 
Global Real Estate 4.8%
Schwab Global Real Estate Fund (a)
    184,303       1,310,394  
                 
 
International 22.6%
American Century International Growth Fund, Institutional Shares
    79,709       1,064,112  
Laudus International MarketMasters Fund, Select Shares (a)
    86,863       2,075,164  
Laudus Mondrian Emerging Markets Fund, Institutional Shares (a)
    102,469       951,937  
Laudus Mondrian International Equity Fund, Institutional Shares (a)
    109,403       983,536  
William Blair International Small Cap Growth Fund, Institutional Shares
    70,669       1,139,890  
                 
              6,214,639  
                 
 
Large-Cap 53.7%
Dodge & Cox Stock Fund
    1,017       180,045  
Laudus U.S. Large Cap Growth Fund *(a)
    196,486       3,631,057  
Schwab Core Equity Fund (a)
    161,322       3,924,971  
Schwab Dividend Equity Fund (a)
    102,873       1,912,416  
Schwab S&P 500 Index Fund (a)
    110,723       3,372,634  
TCW Relative Value Large Cap Fund
    81,579       1,753,130  
                 
              14,774,253  
                 
 
Small-Cap 12.8%
Laudus Small-Cap MarketMasters Fund, Select Shares *(a)
    69,721       1,218,025  
Schwab Small-Cap Equity Fund (a)
    95,327       2,289,750  
                 
              3,507,775  
                 
              25,807,061  
 
Fixed-Income Funds 4.1%
                 
 
Inflation-Protected Bond 0.1%
Schwab Treasury Inflation Protected Securities Index Fund (a)
    1,646       18,764  
                 
 
Intermediate-Term Bond 3.2%
Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares
    22,770       280,528  
PIMCO Total Return Fund, Institutional Shares
    44,023       479,413  
Schwab Intermediate-Term Bond Fund (a)
    7,578       77,224  
Schwab Total Bond Market Fund (a)
    5,417       51,242  
                 
              888,407  
                 
 
International Bond 0.1%
Laudus Mondrian International Government Fixed Income Fund *(a)
    2,113       23,248  
                 
 
Short-Term Bond 0.7%
Schwab Short-Term Bond Market Fund (a)
    19,462       180,216  
                 
              1,110,635  
                 
Total Other Investment Companies
(Cost $25,076,628)     26,917,696  
         
                 
                 
    Face
   
Security
  Amount
  Value
    Rate, Maturity Date   ($)   ($)
 
 Short-Term Investments 2.1% of net assets
 
Time Deposits 2.1%
Australia & New Zealand Banking Group Ltd.
0.03%, 08/01/14
    24,150       24,150  
DNB
0.03%, 08/01/14
    278,623       278,623  
Wells Fargo
0.03%, 08/01/14
    278,623       278,623  
                 
Total Short-Term Investments
(Cost $581,396)     581,396  
         
 
End of Investments.
 
At 07/31/14, the tax basis cost of the fund’s investments was $25,700,153 and the unrealized appreciation and depreciation were $1,799,758 and ($819), respectively, with a net unrealized appreciation of $1,798,939.
 
* Non-income producing security.
(a) Issuer is affiliated with the fund’s adviser.
 
 
 
 
 1


 

 
 Schwab Target 2050 Fund
 

 
Portfolio Holdings (Unaudited) continued
 
Under procedures approved by the fund’s Board of Trustees (the “Board”), the investment adviser has formed a Pricing Committee to administer the pricing and valuation of portfolio securities and other assets and to ensure that prices used for internal purposes or provided by third parties reasonably reflect fair market value. Among other things, these procedures allow the fund to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.
 
The fund values the securities in its portfolio every business day. The fund uses the following policies to value various types of securities:
 
  •  Underlying funds: Mutual funds are valued at their respective net asset values (“NAVs”).
 
  •  Securities for which no quoted value is available: The Board has adopted procedures to fair value the fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. The fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the fund pursuant to the valuation procedures.
 
  •  Short-term securities (60 days or less to maturity): Short-term securities are valued at amortized cost, which approximates market value.
 
In accordance with the authoritative guidance on fair value measurements and disclosures under generally accepted accounting principles in the United States of America (GAAP), the fund discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). If inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the valuation. If the fund determines that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
 
The three levels of the fair value hierarchy are as follows:
 
  •  Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. Investments in mutual funds are valued daily at their NAVs, which are classified as Level 1 prices.
 
  •  Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.
 
  •  Level 3 — significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the fund in estimating the value
 
 
 


 

 
 Schwab Target 2050 Fund
 

 
Portfolio Holdings (Unaudited) continued
 
  of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the fund in the absence of market information. Assumptions used by the fund due to the lack of observable inputs may significantly impact the resulting fair value and therefore the fund’s results of operations.
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the fund’s investments as of July 31, 2014:
 
                                 
    Quoted Prices in
      Significant
   
    Active Markets for
  Other Significant
  Unobservable
   
    Identical Assets
  Observable Inputs
  Inputs
   
Description
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total
 
Other Investment Companies1
    $26,917,696       $—       $—       $26,917,696  
Short-Term Investments1
          581,396             581,396  
                                 
Total
    $26,917,696       $581,396       $—       $27,499,092  
                                 
 
     
1
  As categorized in Portfolio Holdings.
 
The fund’s policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the period. There were no transfers between Level 1, Level 2 and Level 3 for the period ended July 31, 2014.
 
REG82233JUL14
 
 
 
 3


 

Schwab Capital Trust
Schwab Target 2055 Fund
 
Portfolio Holdings as of July 31, 2014 (Unaudited)
 
 
The following are the portfolio holdings as of the report date. For more information, please refer to the fund’s semiannual or annual shareholder reports.
 
                         
        Cost
  Value
Holdings by Category   ($)   ($)
 
  97 .8%   Other Investment Companies     14,199,178       15,188,379  
  2 .2%   Short-Term Investments     340,706       340,706  
 
 
  100 .0%   Total Investments     14,539,884       15,529,085  
  (0 .0%)   Other Assets and Liabilities, Net             (6,857 )
 
 
  100 .0%   Net Assets             15,522,228  
 
                 
    Number
  Value
Security   of Shares   ($)
 
 Other Investment Companies 97.8% of net assets
 
Equity Funds 95.8%
                 
 
Global Real Estate 4.8%
Schwab Global Real Estate Fund (a)
    105,328       748,883  
                 
 
International 23.2%
American Century International Growth Fund, Institutional Shares
    45,900       612,764  
Laudus International MarketMasters Fund, Select Shares (a)
    49,987       1,194,188  
Laudus Mondrian Emerging Markets Fund, Institutional Shares (a)
    61,560       571,892  
Laudus Mondrian International Equity Fund, Institutional Shares (a)
    63,049       566,812  
William Blair International Small Cap Growth Fund, Institutional Shares
    40,774       657,683  
                 
              3,603,339  
                 
 
Large-Cap 54.6%
Dodge & Cox Stock Fund
    591       104,707  
Laudus U.S. Large Cap Growth Fund *(a)
    112,987       2,087,991  
Schwab Core Equity Fund (a)
    92,150       2,242,017  
Schwab Dividend Equity Fund (a)
    58,948       1,095,840  
Schwab S&P 500 Index Fund (a)
    63,438       1,932,332  
TCW Relative Value Large Cap Fund
    46,986       1,009,726  
                 
              8,472,613  
                 
 
Small-Cap 13.2%
Laudus Small-Cap MarketMasters Fund, Select Shares *(a)
    40,743       711,789  
Schwab Small-Cap Equity Fund (a)
    55,654       1,336,813  
                 
              2,048,602  
                 
              14,873,437  
 
Fixed-Income Funds 2.0%
                 
 
Inflation-Protected Bond 0.0%
Schwab Treasury Inflation Protected Securities Index Fund (a)
    235       2,674  
                 
 
Intermediate-Term Bond 1.6%
Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares
    7,230       89,071  
PIMCO Total Return Fund, Institutional Shares
    14,461       157,480  
Schwab Intermediate-Term Bond Fund (a)
    207       2,109  
Schwab Total Bond Market Fund (a)
    381       3,608  
                 
              252,268  
                 
 
International Bond 0.0%
Laudus Mondrian International Government Fixed Income Fund *(a)
    268       2,954  
                 
 
Short-Term Bond 0.4%
Schwab Short-Term Bond Market Fund (a)
    6,160       57,046  
                 
              314,942  
                 
Total Other Investment Companies
(Cost $14,199,178)     15,188,379  
         
                 
                 
    Face
   
Security
  Amount
  Value
    Rate, Maturity Date   ($)   ($)
 
 Short-Term Investments 2.2% of net assets
 
Time Deposits 2.2%
Australia & New Zealand Banking Group Ltd.
0.03%, 08/01/14
    25,320       25,320  
DNB
0.03%, 08/01/14
    157,693       157,693  
Well Fargo
0.03%, 08/01/14
    157,693       157,693  
                 
Total Short-Term Investments
(Cost $340,706)     340,706  
         
 
End of Investments.
 
At 07/31/14, the tax basis cost of the fund’s investments was $14,581,371 and the unrealized appreciation and depreciation were $948,305 and ($591), respectively, with a net unrealized appreciation of $947,714.
 
* Non-income producing security.
(a) Issuer is affiliated with the fund’s adviser.
 
 
 
 
 1


 

 
 Schwab Target 2055 Fund
 

 
Portfolio Holdings (Unaudited) continued
 
Under procedures approved by the fund’s Board of Trustees (the “Board”), the investment adviser has formed a Pricing Committee to administer the pricing and valuation of portfolio securities and other assets and to ensure that prices used for internal purposes or provided by third parties reasonably reflect fair market value. Among other things, these procedures allow the fund to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.
 
The fund values the securities in its portfolio every business day. The fund uses the following policies to value various types of securities:
 
  •  Underlying funds: Mutual funds are valued at their respective net asset values (“NAVs”).
 
  •  Securities for which no quoted value is available: The Board has adopted procedures to fair value the fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. The fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the fund pursuant to the valuation procedures.
 
  •  Short-term securities (60 days or less to maturity): Short-term securities are valued at amortized cost, which approximates market value.
 
In accordance with the authoritative guidance on fair value measurements and disclosures under generally accepted accounting principles in the United States of America (GAAP), the fund discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). If inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the valuation. If the fund determines that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
 
The three levels of the fair value hierarchy are as follows:
 
  •  Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. Investments in mutual funds are valued daily at their NAVs, which are classified as Level 1 prices.
 
  •  Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.
 
  •  Level 3 — significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the fund in estimating the value
 
 
 


 

 
 Schwab Target 2055 Fund
 

 
Portfolio Holdings (Unaudited) continued
 
  of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the fund in the absence of market information. Assumptions used by the fund due to the lack of observable inputs may significantly impact the resulting fair value and therefore the fund’s results of operations.
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the fund’s investments as of July 31, 2014:
 
                                 
    Quoted Prices in
      Significant
   
    Active Markets for
  Other Significant
  Unobservable
   
    Identical Assets
  Observable Inputs
  Inputs
   
Description
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total
 
Other Investment Companies1
    $15,188,379       $—       $—       $15,188,379  
Short-Term Investments1
          340,706             340,706  
                                 
Total
    $15,188,379       $340,706       $—       $15,529,085  
                                 
 
     
1
  As categorized in Portfolio Holdings.
 
The fund’s policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the period. There were no transfers between Level 1, Level 2 and Level 3 for the period ended July 31, 2014.
 
REG82234JUL14
 
 
 
 3


 

Schwab Capital Trust
Schwab Core Equity Fund™
 
Portfolio Holdings as of July 31, 2014 (Unaudited)
 
 
The following are the portfolio holdings as of the report date. For more information, please refer to the fund’s semiannual or annual shareholder reports.
 
                         
        Cost
  Value
Holdings by Category   ($)   ($)
 
  99 .1%   Common Stock     1,727,027,072       2,187,715,958  
  0 .6%   Other Investment Company     13,373,173       13,373,173  
  0 .3%   Short-Term Investment     5,799,885       5,799,885  
 
 
  100 .0%   Total Investments     1,746,200,130       2,206,889,016  
  0 .0%   Other Assets and Liabilities, Net             635,481  
 
 
  100 .0%   Net Assets             2,207,524,497  
 
                 
    Number
  Value
Security   of Shares   ($)
 
 Common Stock 99.1% of net assets
 
Automobiles & Components 0.3%
Dana Holding Corp.
    287,142       6,426,238  
 
Banks 7.6%
Bank of America Corp.
    2,177,200       33,202,300  
Citigroup, Inc.
    460,572       22,526,577  
JPMorgan Chase & Co.
    216,140       12,464,794  
The PNC Financial Services Group, Inc.
    547,400       45,193,344  
Wells Fargo & Co.
    1,087,555       55,356,549  
                 
              168,743,564  
 
Capital Goods 6.5%
Caterpillar, Inc.
    300,500       30,275,375  
Emerson Electric Co.
    94,100       5,989,465  
General Dynamics Corp.
    124,300       14,514,511  
Huntington Ingalls Industries, Inc.
    48,700       4,427,804  
IDEX Corp.
    154,500       11,714,190  
Masco Corp.
    199,052       4,140,282  
Northrop Grumman Corp.
    310,800       38,312,316  
PACCAR, Inc.
    154,400       9,614,488  
Parker Hannifin Corp.
    54,100       6,218,795  
United Rentals, Inc. *
    168,900       17,886,510  
                 
              143,093,736  
 
Commercial & Professional Supplies 1.6%
Manpowergroup, Inc.
    196,996       15,344,018  
R.R. Donnelley & Sons Co.
    1,190,000       20,658,400  
                 
              36,002,418  
 
Consumer Durables & Apparel 2.1%
Hanesbrands, Inc.
    89,800       8,774,358  
Jarden Corp. *
    268,350       15,000,765  
NIKE, Inc., Class B
    217,368       16,765,594  
Whirlpool Corp.
    39,600       5,648,544  
                 
              46,189,261  
 
Consumer Services 1.3%
MGM Resorts International *
    524,600       14,080,264  
Wyndham Worldwide Corp.
    204,000       15,412,200  
                 
              29,492,464  
 
Diversified Financials 2.7%
Berkshire Hathaway, Inc., Class B *
    63,716       7,991,898  
Capital One Financial Corp.
    380,400       30,257,016  
Lazard Ltd., Class A
    292,100       15,276,830  
Morgan Stanley
    93,500       3,023,790  
Waddell & Reed Financial, Inc., Class A
    36,400       1,921,556  
                 
              58,471,090  
 
Energy 12.4%
Baker Hughes, Inc.
    257,000       17,673,890  
Chesapeake Energy Corp.
    70,000       1,845,900  
Chevron Corp.
    300,726       38,865,828  
ConocoPhillips
    636,700       52,527,750  
EOG Resources, Inc.
    381,004       41,697,078  
Exxon Mobil Corp.
    145,500       14,395,770  
Halliburton Co.
    90,033       6,211,377  
Hess Corp.
    67,300       6,661,354  
Occidental Petroleum Corp.
    598,290       58,458,916  
Phillips 66
    142,100       11,525,731  
SM Energy Co.
    232,600       18,268,404  
Valero Energy Corp.
    94,500       4,800,600  
                 
              272,932,598  
 
Food & Staples Retailing 0.5%
The Kroger Co.
    226,400       11,089,072  
 
Food, Beverage & Tobacco 6.9%
Altria Group, Inc.
    538,700       21,871,220  
Archer-Daniels-Midland Co.
    1,176,100       54,571,040  
Dr Pepper Snapple Group, Inc.
    57,400       3,372,824  
PepsiCo, Inc.
    680,400       59,943,240  
Pilgrim’s Pride Corp. *
    314,905       8,804,744  
Tyson Foods, Inc., Class A
    84,400       3,140,524  
                 
              151,703,592  
 
Health Care Equipment & Services 5.2%
C.R. Bard, Inc.
    95,800       14,296,234  
Cardinal Health, Inc.
    671,544       48,116,128  
Centene Corp. *
    78,300       5,644,647  
 
 
 
 1


 

 
 Schwab Core Equity Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
    Number
  Value
Security   of Shares   ($)
McKesson Corp.
    134,926       25,886,902  
Medtronic, Inc.
    324,592       20,040,310  
                 
              113,984,221  
 
Household & Personal Products 1.0%
Energizer Holdings, Inc.
    186,800       21,437,168  
 
Insurance 2.6%
Aflac, Inc.
    97,947       5,851,354  
Axis Capital Holdings Ltd.
    64,800       2,796,120  
CNO Financial Group, Inc.
    557,800       9,025,204  
Genworth Financial, Inc., Class A *
    761,861       9,980,379  
MetLife, Inc.
    291,300       15,322,380  
Reinsurance Group of America, Inc.
    88,800       7,127,088  
The Allstate Corp.
    58,400       3,413,480  
The Travelers Cos., Inc.
    32,387       2,900,580  
                 
              56,416,585  
 
Materials 4.9%
Ashland, Inc.
    120,100       12,568,465  
Avery Dennison Corp.
    169,700       8,011,537  
PPG Industries, Inc.
    256,700       50,919,012  
Steel Dynamics, Inc.
    75,052       1,591,853  
The Dow Chemical Co.
    684,700       34,967,629  
                 
              108,058,496  
 
Media 2.1%
Comcast Corp., Class A
    455,000       24,447,150  
Live Nation Entertainment, Inc. *
    347,858       8,073,784  
Starz, Class A *
    153,742       4,383,184  
Viacom, Inc., Class B
    120,885       9,993,563  
                 
              46,897,681  
 
Pharmaceuticals, Biotechnology & Life Sciences 9.6%
AbbVie, Inc.
    220,000       11,514,800  
Amgen, Inc.
    285,552       36,376,469  
Celgene Corp. *
    426,500       37,169,475  
Gilead Sciences, Inc. *
    64,700       5,923,285  
Johnson & Johnson
    337,300       33,760,357  
Merck & Co., Inc.
    343,980       19,517,425  
Pfizer, Inc.
    1,946,100       55,853,070  
Salix Pharmaceuticals Ltd. *
    56,300       7,426,533  
United Therapeutics Corp. *
    50,100       4,556,094  
                 
              212,097,508  
 
Real Estate 0.8%
CBRE Group, Inc., Class A *
    140,700       4,339,188  
LaSalle Hotel Properties
    72,964       2,538,418  
RLJ Lodging Trust
    137,200       3,847,088  
Simon Property Group, Inc.
    43,600       7,333,084  
                 
              18,057,778  
 
Retailing 3.1%
Best Buy Co., Inc.
    315,600       9,382,788  
Foot Locker, Inc.
    88,506       4,206,690  
Liberty Interactive Corp., Class A *
    511,400       14,344,770  
Macy’s, Inc.
    591,500       34,182,785  
The Home Depot, Inc.
    88,643       7,166,787  
                 
              69,283,820  
 
Semiconductors & Semiconductor Equipment 1.0%
Intel Corp.
    607,300       20,581,397  
Skyworks Solutions, Inc.
    24,000       1,218,240  
                 
              21,799,637  
 
Software & Services 9.7%
AOL, Inc. *
    102,100       3,935,955  
Broadridge Financial Solutions, Inc.
    46,800       1,889,316  
Computer Sciences Corp.
    592,100       36,941,119  
Global Payments, Inc.
    76,700       5,313,009  
Google, Inc., Class A *
    20,200       11,706,910  
Google, Inc., Class C *
    16,700       9,545,720  
Intuit, Inc.
    121,100       9,926,567  
Microsoft Corp.
    756,800       32,663,488  
Oracle Corp.
    1,169,900       47,252,261  
Synopsys, Inc. *
    474,942       17,938,559  
Xerox Corp.
    2,782,200       36,891,972  
                 
              214,004,876  
 
Technology Hardware & Equipment 7.6%
Apple, Inc.
    774,900       74,057,193  
Brocade Communications Systems, Inc.
    237,800       2,190,138  
Hewlett-Packard Co.
    1,154,255       41,103,020  
NetApp, Inc.
    359,445       13,960,844  
SanDisk Corp.
    118,800       10,895,148  
Western Digital Corp.
    265,300       26,484,899  
                 
              168,691,242  
 
Telecommunication Services 1.3%
Frontier Communications Corp.
    370,700       2,428,085  
Level 3 Communications, Inc. *
    45,600       2,005,488  
Verizon Communications, Inc.
    465,714       23,481,300  
                 
              27,914,873  
 
Transportation 3.7%
Delta Air Lines, Inc.
    400,800       15,013,968  
FedEx Corp.
    115,200       16,920,576  
Southwest Airlines Co.
    1,222,700       34,577,956  
United Parcel Service, Inc., Class B
    165,100       16,029,559  
                 
              82,542,059  
 
Utilities 4.6%
AES Corp.
    1,286,409       18,794,435  
American Electric Power Co., Inc.
    453,700       23,587,863  
Edison International
    335,529       18,386,989  
Entergy Corp.
    289,400       21,077,002  
NRG Energy, Inc.
    357,734       11,075,445  
 
 
 


 

 
 Schwab Core Equity Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
    Number
  Value
Security   of Shares   ($)
Public Service Enterprise Group, Inc.
    269,100       9,464,247  
                 
              102,385,981  
                 
Total Common Stock
(Cost $1,727,027,072)     2,187,715,958  
         
                 
                 
 
 Other Investment Company 0.6% of net assets
 
Money Market Fund 0.6%
State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (c)
    13,373,173       13,373,173  
                 
Total Other Investment Company
(Cost $13,373,173)     13,373,173  
         
                 
                 
    Face
   
Security
  Amount
  Value
    Rate, Maturity Date   ($)   ($)
 
 Short-Term Investment 0.3% of net assets
 
U.S. Treasury Obligation 0.3%
U.S. Treasury Bill
0.02%, 09/18/14 (a)(b)
    5,800,000       5,799,885  
                 
Total Short-Term Investment
(Cost $5,799,885)     5,799,885  
         
 
End of Investments.
 
At 07/31/14, the tax basis cost of the fund’s investments was $1,746,794,794 and the unrealized appreciation and depreciation were $473,313,893 and ($13,219,671), respectively, with a net unrealized appreciation of $460,094,222.
 
* Non-income producing security.
(a) All or a portion of this security is held as collateral for open futures contracts.
(b) The rate shown is the purchase yield.
(c) The rate shown is the 7-day yield.
 
In addition to the above, the fund held the following at 07/31/14:
 
                         
        Contract
  Unrealized
    Number of
  Value
  Depreciation
    Contracts   ($)   ($)
 
 Futures Contracts
                         
                         
S&P 500 Index, e-mini, Long, expires 09/19/14
    113       10,875,120       (320,572 )
 
 
Under procedures approved by the fund’s Board of Trustees (the “Board”), the investment adviser has formed a Pricing Committee to administer the pricing and valuation of portfolio securities and other assets and to ensure that prices used for internal purposes or provided by third parties reasonably reflect fair market value. Among other things, these procedures allow the fund to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.
 
The fund values the securities in its portfolio every business day. The fund uses the following policies to value various types of securities:
 
  •  Securities traded on an exchange or over-the-counter: Traded securities are valued at the closing value for the day, or, on days when no closing value has been reported, at halfway between the most recent bid and ask quotes. Securities that are primarily traded on foreign exchanges are valued at the official closing price or the last sales price on the exchange where the securities are principally traded with these values then translated into U.S. dollars at the current exchange rate, unless these securities are fair valued as discussed below.
 
  •  Securities for which no quoted value is available: The Board has adopted procedures to fair value the fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. The fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing
 
 
 
 3


 

 
 Schwab Core Equity Fund
 

 
Portfolio Holdings (Unaudited) continued
 
  Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the fund pursuant to the valuation procedures.
 
  •  Futures Contracts (“futures”): Futures are valued at their settlement prices as of the close of their exchanges.
 
  •  Short-term securities (60 days or less to maturity): Short-term securities are valued at amortized cost, which approximates market value.
 
  •  Underlying funds: Mutual funds are valued at their respective net asset values (“NAVs”).
 
In accordance with the authoritative guidance on fair value measurements and disclosures under generally accepted accounting principles in the United States of America (GAAP), the fund discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). If inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the valuation. If the fund determines that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
 
The three levels of the fair value hierarchy are as follows:
 
  •  Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities and futures contracts. Investments in mutual funds are valued daily at their NAVs, which are classified as Level 1 prices.
 
  •  Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.
 
  •  Level 3 — significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the fund in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the fund in the absence of market information. Assumptions used by the fund due to the lack of observable inputs may significantly impact the resulting fair value and therefore the fund’s results of operations.
 
 
 


 

 
 Schwab Core Equity Fund
 

 
Portfolio Holdings (Unaudited) continued
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the fund’s investments as of July 31, 2014:
 
Assets Valuation Input
 
                                 
    Quoted Prices in
      Significant
   
    Active Markets for
  Other Significant
  Unobservable
   
    Identical Assets
  Observable Inputs
  Inputs
   
Description
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total
 
Common Stock1
    $2,187,715,958       $—       $—       $2,187,715,958  
Other Investment Company1
    13,373,173                   13,373,173  
Short-Term Investment1
          5,799,885             5,799,885  
                                 
Total
    $2,201,089,131       $5,799,885       $—       $2,206,889,016  
                                 
                                 
                                 
Liabilities Valuation Input
                 
 
Other Financial Instruments
                               
Futures Contracts2
    ($320,572 )     $—       $—       ($320,572 )
 
     
1
  As categorized in Portfolio Holdings.
2
  Futures contracts are not included in Investments in the schedule of portfolio holdings and are valued at unrealized appreciation or depreciation.
 
The fund’s policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended July 31, 2014.
 
On July 31, 2014, the fund had open equity index futures contracts. The fund invests in futures to equitize available cash. The primary risk associated with investing in futures is market risk.
 
REG46823JUL14
 
 
 
 5


 

Schwab Capital Trust
Schwab Dividend Equity Fund™
 
Portfolio Holdings as of July 31, 2014 (Unaudited)
 
 
The following are the portfolio holdings as of the report date. For more information, please refer to the fund’s semiannual or annual shareholder reports.
 
                         
        Cost
  Value
Holdings by Category   ($)   ($)
 
  99 .0%   Common Stock     1,644,303,640       1,975,795,277  
  1 .0%   Short-Term Investments     18,787,934       18,787,934  
 
 
  100 .0%   Total Investments     1,663,091,574       1,994,583,211  
  0 .0%   Other Assets and Liabilities, Net             538,481  
 
 
  100 .0%   Net Assets             1,995,121,692  
 
                 
    Number
  Value
Security   of Shares   ($)
 
 Common Stock 99.0% of net assets
 
Automobiles & Components 0.8%
General Motors Co.
    490,900       16,602,238  
 
Banks 11.8%
Bank of America Corp.
    1,704,200       25,989,050  
Citigroup, Inc.
    1,297,400       63,455,834  
Fifth Third Bancorp
    106,000       2,170,880  
First Niagara Financial Group, Inc.
    387,000       3,328,200  
Huntington Bancshares, Inc.
    430,000       4,222,600  
JPMorgan Chase & Co.
    582,241       33,577,839  
Regions Financial Corp.
    376,400       3,816,696  
The PNC Financial Services Group, Inc.
    461,400       38,093,184  
Wells Fargo & Co.
    1,180,400       60,082,360  
                 
              234,736,643  
 
Capital Goods 6.3%
3M Co.
    81,400       11,468,446  
Caterpillar, Inc.
    253,725       25,562,794  
Emerson Electric Co.
    329,700       20,985,405  
Exelis, Inc.
    46,700       786,428  
General Electric Co.
    627,967       15,793,370  
Huntington Ingalls Industries, Inc.
    33,797       3,072,823  
IDEX Corp.
    32,600       2,471,732  
Lockheed Martin Corp.
    11,391       1,901,955  
Northrop Grumman Corp.
    217,200       26,774,244  
Parker Hannifin Corp.
    78,900       9,069,555  
Raytheon Co.
    39,061       3,545,567  
United Rentals, Inc. *
    44,300       4,691,370  
                 
              126,123,689  
 
Commercial & Professional Supplies 1.5%
KAR Auction Services, Inc.
    47,300       1,386,363  
Manpowergroup, Inc.
    74,209       5,780,139  
Pitney Bowes, Inc.
    349,800       9,465,588  
R.R. Donnelley & Sons Co.
    804,000       13,957,440  
                 
              30,589,530  
 
Consumer Durables & Apparel 1.0%
Hasbro, Inc.
    51,900       2,592,924  
Whirlpool Corp.
    116,400       16,603,296  
                 
              19,196,220  
 
Consumer Services 1.2%
H&R Block, Inc.
    404,688       13,002,625  
Las Vegas Sands Corp.
    44,800       3,308,480  
Penn National Gaming, Inc. *
    141,000       1,477,680  
Yum! Brands, Inc.
    81,392       5,648,605  
                 
              23,437,390  
 
Diversified Financials 5.1%
Berkshire Hathaway, Inc., Class B *
    53,857       6,755,284  
Capital One Financial Corp.
    85,991       6,839,724  
Interactive Brokers Group, Inc., Class A
    195,000       4,487,925  
Lazard Ltd., Class A
    612,908       32,055,088  
Morgan Stanley
    1,303,720       42,162,305  
The NASDAQ OMX Group, Inc.
    14,000       590,660  
Voya Financial, Inc.
    39,400       1,461,740  
Waddell & Reed Financial, Inc., Class A
    152,800       8,066,312  
                 
              102,419,038  
 
Energy 15.8%
Baker Hughes, Inc.
    127,300       8,754,421  
Chesapeake Energy Corp.
    221,700       5,846,229  
Chevron Corp.
    376,315       48,634,951  
ConocoPhillips
    679,400       56,050,500  
Devon Energy Corp.
    115,400       8,712,700  
EOG Resources, Inc.
    305,000       33,379,200  
Exxon Mobil Corp.
    471,144       46,614,987  
Marathon Oil Corp.
    320,700       12,427,125  
Murphy Oil Corp.
    125,139       7,774,886  
Nabors Industries Ltd.
    405,453       11,012,104  
Occidental Petroleum Corp.
    492,700       48,141,717  
Phillips 66
    67,831       5,501,772  
SM Energy Co.
    85,000       6,675,900  
Valero Energy Corp.
    296,600       15,067,280  
                 
              314,593,772  
 
Food & Staples Retailing 0.5%
The Kroger Co.
    203,471       9,966,010  
 
Food, Beverage & Tobacco 3.9%
Altria Group, Inc.
    265,500       10,779,300  
 
 
 
 1


 

 
 Schwab Dividend Equity Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
    Number
  Value
Security   of Shares   ($)
Archer-Daniels-Midland Co.
    905,184       42,000,538  
PepsiCo, Inc.
    194,500       17,135,450  
Pilgrim’s Pride Corp. *
    281,562       7,872,473  
                 
              77,787,761  
 
Health Care Equipment & Services 5.1%
Aetna, Inc.
    210,600       16,327,818  
C.R. Bard, Inc.
    55,800       8,327,034  
Cardinal Health, Inc.
    582,435       41,731,468  
Centene Corp. *
    24,300       1,751,787  
McKesson Corp.
    33,700       6,465,682  
Medtronic, Inc.
    378,730       23,382,790  
St. Jude Medical, Inc.
    25,500       1,662,345  
Stryker Corp.
    30,436       2,427,880  
                 
              102,076,804  
 
Household & Personal Products 0.6%
Energizer Holdings, Inc.
    86,441       9,919,969  
The Procter & Gamble Co.
    17,496       1,352,791  
                 
              11,272,760  
 
Insurance 6.1%
Aflac, Inc.
    118,700       7,091,138  
AmTrust Financial Services, Inc.
    66,000       2,814,240  
Aspen Insurance Holdings Ltd.
    104,600       4,185,046  
Assurant, Inc.
    80,900       5,125,824  
Axis Capital Holdings Ltd.
    116,000       5,005,400  
CNO Financial Group, Inc.
    989,100       16,003,638  
Genworth Financial, Inc., Class A *
    418,654       5,484,368  
MetLife, Inc.
    400,900       21,087,340  
Old Republic International Corp.
    905,100       13,024,389  
Prudential Financial, Inc.
    274,800       23,899,356  
Reinsurance Group of America, Inc.
    40,300       3,234,478  
The Hanover Insurance Group, Inc.
    14,000       809,340  
The Travelers Cos., Inc.
    149,500       13,389,220  
Unum Group
    30,800       1,057,364  
                 
              122,211,141  
 
Materials 4.5%
Ashland, Inc.
    14,900       1,559,285  
Compass Minerals International, Inc.
    41,295       3,552,196  
Huntsman Corp.
    69,900       1,820,895  
PPG Industries, Inc.
    118,048       23,416,001  
Steel Dynamics, Inc.
    866,100       18,369,981  
The Dow Chemical Co.
    752,340       38,422,004  
United States Steel Corp.
    56,429       1,889,807  
                 
              89,030,169  
 
Media 1.5%
John Wiley & Sons, Inc., Class A
    106,834       6,419,655  
Live Nation Entertainment, Inc. *
    719,000       16,687,990  
The Interpublic Group of Cos., Inc.
    356,499       7,026,595  
                 
              30,134,240  
 
Pharmaceuticals, Biotechnology & Life Sciences 8.7%
AbbVie, Inc.
    174,000       9,107,160  
Amgen, Inc.
    38,000       4,840,820  
Johnson & Johnson
    356,500       35,682,085  
Merck & Co., Inc.
    1,124,891       63,826,315  
Pfizer, Inc.
    1,743,400       50,035,580  
Salix Pharmaceuticals Ltd. *
    59,200       7,809,072  
United Therapeutics Corp. *
    37,200       3,382,968  
                 
              174,684,000  
 
Real Estate 3.0%
Brandywine Realty Trust
    325,300       5,058,415  
Duke Realty Corp.
    995,900       17,916,241  
Liberty Property Trust
    163,000       5,732,710  
Retail Properties of America, Inc., Class A
    597,000       8,984,850  
RLJ Lodging Trust
    142,000       3,981,680  
Simon Property Group, Inc.
    27,300       4,591,587  
SL Green Realty Corp.
    98,800       10,650,640  
The Macerich Co.
    52,100       3,387,021  
                 
              60,303,144  
 
Retailing 1.7%
Best Buy Co., Inc.
    338,000       10,048,740  
Macy’s, Inc.
    402,651       23,269,201  
                 
              33,317,941  
 
Semiconductors & Semiconductor Equipment 1.1%
Intel Corp.
    668,700       22,662,243  
 
Software & Services 2.9%
Broadridge Financial Solutions, Inc.
    23,665       955,356  
Computer Sciences Corp.
    605,835       37,798,046  
Intuit, Inc.
    35,680       2,924,689  
Leidos Holdings, Inc.
    78,255       2,890,740  
Oracle Corp.
    243,600       9,839,004  
Xerox Corp.
    290,900       3,857,334  
                 
              58,265,169  
 
Technology Hardware & Equipment 4.1%
Apple, Inc.
    117,900       11,267,703  
Hewlett-Packard Co.
    1,076,400       38,330,604  
NetApp, Inc.
    421,300       16,363,292  
SanDisk Corp.
    71,900       6,593,949  
Western Digital Corp.
    87,160       8,701,183  
                 
              81,256,731  
 
Telecommunication Services 2.4%
AT&T, Inc.
    549,800       19,567,382  
Frontier Communications Corp.
    2,940,000       19,257,000  
Verizon Communications, Inc.
    179,500       9,050,390  
                 
              47,874,772  
 
 
 


 

 
 Schwab Dividend Equity Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
    Number
  Value
Security   of Shares   ($)
 
Transportation 2.4%
Alaska Air Group, Inc.
    198,800       8,741,236  
Delta Air Lines, Inc.
    327,100       12,253,166  
Southwest Airlines Co.
    749,600       21,198,688  
United Parcel Service, Inc., Class B
    56,900       5,524,421  
                 
              47,717,511  
 
Utilities 7.0%
AES Corp.
    1,050,600       15,349,266  
American Electric Power Co., Inc.
    453,000       23,551,470  
DTE Energy Co.
    305,000       22,515,100  
Edison International
    618,300       33,882,840  
Entergy Corp.
    270,300       19,685,949  
NRG Energy, Inc.
    160,500       4,969,080  
Public Service Enterprise Group, Inc.
    556,800       19,582,656  
                 
              139,536,361  
                 
Total Common Stock
(Cost $1,644,303,640)     1,975,795,277  
         
                 
                 
    Face
   
Security
  Amount
  Value
    Rate, Maturity Date   ($)   ($)
 
 Short-Term Investments 1.0% of net assets
 
Time Deposit 0.9%
Wells Fargo
0.03%, 08/01/14
    18,273,944       18,273,944  
 
U.S. Treasury Obligation 0.1%
U.S. Treasury Bill
0.02%, 09/18/14 (a)(b)
    514,000       513,990  
                 
Total Short-Term Investments
(Cost $18,787,934)     18,787,934  
         
 
End of Investments.
 
At 07/31/14, the tax basis cost of the fund’s investments was $1,663,221,599 and the unrealized appreciation and depreciation were $348,789,443 and ($17,427,831), respectively, with a net unrealized appreciation of $331,361,612.
 
* Non-income producing security.
(a) All or a portion of this security is held as collateral for open futures contracts.
(b) The rate shown is the purchase yield.
 
In addition to the above, the fund held the following at 07/31/14:
 
                         
        Contract
  Unrealized
    Number of
  Value
  Depreciation
    Contracts   ($)   ($)
 
 Futures Contracts
                         
                         
S&P 500 Index, e-mini, Long, expires 09/19/14
    108       10,393,920       (19,064 )
 
 
Under procedures approved by the fund’s Board of Trustees (the “Board”), the investment adviser has formed a Pricing Committee to administer the pricing and valuation of portfolio securities and other assets and to ensure that prices used for internal purposes or provided by third parties reasonably reflect fair market value. Among other things, these procedures allow the fund to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.
 
The fund values the securities in its portfolio every business day. The fund uses the following policies to value various types of securities:
 
  •  Securities traded on an exchange or over-the-counter: Traded securities are valued at the closing value for the day, or, on days when no closing value has been reported, at halfway between the most recent bid and ask quotes. Securities that are primarily traded on foreign exchanges are valued at the official closing price or the last sales price on the exchange where the securities are principally traded with these values then translated into U.S. dollars at the current exchange rate, unless these securities are fair valued as discussed below.
 
  •  Securities for which no quoted value is available: The Board has adopted procedures to fair value the fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. The fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions,
 
 
 
 3


 

 
 Schwab Dividend Equity Fund
 

 
Portfolio Holdings (Unaudited) continued
 
  market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the fund pursuant to the valuation procedures.
 
  •  Futures Contracts (“futures”): Futures are valued at their settlement prices as of the close of their exchanges.
 
  •  Short-term securities (60 days or less to maturity): Short-term securities are valued at amortized cost, which approximates market value.
 
In accordance with the authoritative guidance on fair value measurements and disclosures under generally accepted accounting principles in the United States of America (GAAP), the fund discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). If inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the valuation. If the fund determines that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
 
The three levels of the fair value hierarchy are as follows:
 
  •  Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities and futures contracts.
 
  •  Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.
 
  •  Level 3 — significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the fund in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the fund in the absence of market information. Assumptions used by the fund due to the lack of observable inputs may significantly impact the resulting fair value and therefore the fund’s results of operations.
 
 
 


 

 
 Schwab Dividend Equity Fund
 

 
Portfolio Holdings (Unaudited) continued
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the fund’s investments as of July 31, 2014:
 
Assets Valuation Input
 
                                 
    Quoted Prices in
      Significant
   
    Active Markets for
  Other Significant
  Unobservable
   
    Identical Assets
  Observable Inputs
  Inputs
   
Description
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total
 
Common Stock1
    $1,975,795,277       $—       $—       $1,975,795,277  
Short-Term Investments1
          18,787,934             18,787,934  
                                 
Total
    $1,975,795,277       $18,787,934       $—       $1,994,583,211  
                                 
                                 
                                 
Liabilities Valuation Input
                 
 
Other Financial Instruments
                               
Futures Contracts2
    ($19,064 )     $—       $—       ($19,064 )
 
     
1
  As categorized in Portfolio Holdings.
2
  Futures contracts are not included in Investments in the schedule of portfolio holdings and are valued at unrealized appreciation or depreciation.
 
The fund’s policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended July 31, 2014.
 
On July 31, 2014, the fund had open equity index futures contracts. The fund invests in futures to equitize available cash. The primary risk associated with investing in futures is market risk.
 
REG46824JUL14
 
 
 
 5


 

Schwab Capital Trust
Schwab Large-Cap Growth Fund™
 
Portfolio Holdings as of July 31, 2014 (Unaudited)
 
 
The following are the portfolio holdings as of the report date. For more information, please refer to the fund’s semiannual or annual shareholder reports.
 
                         
        Cost
  Value
Holdings by Category   ($)   ($)
 
  99 .6%   Common Stock     202,614,819       245,809,400  
  0 .3%   Short-Term Investments     851,587       851,587  
 
 
  99 .9%   Total Investments     203,466,406       246,660,987  
  0 .3%   Collateral Invested for Securities on Loan     635,375       635,375  
  (0 .2%)   Other Assets and Liabilities, Net             (457,569 )
 
 
  100 .0%   Net Assets             246,838,793  
 
                 
    Number
  Value
Security   of Shares   ($)
 
 Common Stock 99.6% of net assets
 
Automobiles & Components 1.0%
Delphi Automotive plc
    26,900       1,796,920  
General Motors Co.
    17,000       574,940  
                 
              2,371,860  
 
Banks 1.5%
Citigroup, Inc.
    77,200       3,775,852  
 
Capital Goods 6.2%
Allegion plc
    22,000       1,131,460  
Caterpillar, Inc.
    27,800       2,800,850  
Emerson Electric Co.
    13,500       859,275  
Exelis, Inc.
    16,900       284,596  
Huntington Ingalls Industries, Inc.
    9,900       900,108  
IDEX Corp.
    10,400       788,528  
Lockheed Martin Corp.
    2,400       400,728  
Masco Corp.
    142,800       2,970,240  
Northrop Grumman Corp.
    3,800       468,426  
Raytheon Co.
    32,500       2,950,025  
The Toro Co.
    2,000       118,660  
United Rentals, Inc. *
    15,400       1,630,860  
                 
              15,303,756  
 
Commercial & Professional Supplies 2.7%
Manpowergroup, Inc.
    30,400       2,367,856  
Pitney Bowes, Inc.
    26,600       719,796  
R.R. Donnelley & Sons Co.
    201,500       3,498,040  
                 
              6,585,692  
 
Consumer Durables & Apparel 2.0%
Deckers Outdoor Corp. *
    32,700       2,894,277  
Hanesbrands, Inc.
    4,000       390,840  
Hasbro, Inc.
    18,700       934,252  
Jarden Corp. *
    14,500       810,550  
                 
              5,029,919  
 
Consumer Services 2.5%
H&R Block, Inc.
    70,100       2,252,313  
Las Vegas Sands Corp.
    4,500       332,325  
MGM Resorts International *
    93,900       2,520,276  
Wyndham Worldwide Corp.
    5,600       423,080  
Wynn Resorts Ltd.
    700       149,240  
Yum! Brands, Inc.
    8,000       555,200  
                 
              6,232,434  
 
Diversified Financials 2.0%
Affiliated Managers Group, Inc. *
    7,100       1,414,675  
Lazard Ltd., Class A
    66,100       3,457,030  
                 
              4,871,705  
 
Energy 5.8%
Baker Hughes, Inc.
    14,100       969,657  
ConocoPhillips
    20,200       1,666,500  
EOG Resources, Inc.
    53,400       5,844,096  
Halliburton Co.
    18,400       1,269,416  
SM Energy Co.
    45,500       3,573,570  
Valero Energy Corp.
    21,800       1,107,440  
                 
              14,430,679  
 
Food & Staples Retailing 2.2%
The Kroger Co.