Mutual Fund Summary Prospectus (497k)
12 January 2013 - 9:17AM
Edgar (US Regulatory)
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Summary Prospectus
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January 14, 2013
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Schwab Target 2055 Fund
Ticker Symbol: SWORX
Before you invest, you may want to review the funds
prospectus, which contains more information about the fund and its risks. You can find the funds prospectus, Statement of Additional Information (SAI) and other information about the fund online at
www.schwabfunds.com/prospectus.
You
can also obtain this information at no cost by calling
1-866-414-6349
or by sending an email request to
orders@mysummaryprospectus.com.
If you purchase or hold fund shares through a financial intermediary, the funds prospectus,
SAI, and other information about the fund are available from your financial intermediary.
The funds prospectus and SAI, both dated
January 14, 2013, include a more detailed discussion of fund investment policies and the risks associated with various fund investments. The prospectus and SAI are incorporated by reference into the summary prospectus, making them legally a part of
the summary prospectus.
Investment objective
The fund seeks to provide capital appreciation and income consistent with its current asset allocation.
Fund fees and expenses
This table describes the fees and expenses you may pay if you buy and hold shares of the fund.
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Shareholder fees
(fees paid
directly from your investment)
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Redemption fee (as a % of the amount sold or exchanged within 30 days of purchase)
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2.00
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Annual fund operating expenses
(expenses that you pay each year as a % of the value of your investment)
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Management fees
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None
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Distribution (12b-1) fees
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None
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Other
expenses
1
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0.13
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Acquired fund fees and expenses (AFFE)
2
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0.83
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Total fund annual operating expenses
2
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0.96
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Less expense reduction
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0.13
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Total annual fund operating expenses (including AFFE)
3
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0.83
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1
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Based on estimated expenses for the current fiscal year.
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2
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The total annual fund operating expenses in the fee table may differ from the expense ratios in the funds Financial highlights because the
financial highlights include only the funds direct operating expenses and do not include acquired fund fees and expenses (AFFE), which reflect the estimated amount of the fees and expenses incurred indirectly by the fund through its
investments in the underlying funds during its prior fiscal year.
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The investment adviser and its affiliates have agreed to limit the total annual fund operating expenses (excluding interest, taxes and certain non-routine
expenses) of the fund to 0.00% for so long as the investment adviser serves as the adviser to the fund. This agreement may only be amended or terminated with the approval of the funds Board of Trustees. This agreement is limited to the
funds direct operating expenses and does not apply to AFFE.
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This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time
periods indicated and then redeem all of your shares at the end of those time periods. The example also assumes that your investment
has a 5% return each year and that the funds operating expenses remain the same. The figures are based on total annual fund operating expenses (including AFFE) after expense reduction. The
expenses would be the same whether you stayed in the fund or sold your shares at the end of each period. Your actual costs may be higher or lower.
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Expenses on a $10,000 investment
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The fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover may indicate higher transaction costs and may
result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in the annual fund operating expenses or in the example, affect the funds performance. The fund is new and therefore does not have a
historical portfolio turnover rate.
Principal investment strategies
The fund seeks to achieve its investment objective by investing primarily in a combination of other Schwab Funds and Laudus Funds. The fund may also invest in unaffiliated third party mutual funds
(referred to herein as unaffiliated funds and, together with Schwab Funds and Laudus Funds, the underlying funds). The fund invests in the underlying funds in accordance with its target portfolio allocation. These underlying funds invest their
assets directly in equity, fixed income, cash and cash equivalents (including money market funds) in accordance with their own investment objectives and policies. The fund is managed based on the specific retirement date (target date) included in
its name and assumes a retirement age of 65. The target date refers to the approximate year an investor in the fund would plan to retire and likely would stop making new investments in the fund. The fund is designed for an investor who anticipates
retiring at or about the target date and plans to withdraw the value of the investors account in the fund gradually after retirement. As described below, the adviser will continue to modify the funds target asset allocation for
20 years beyond the target date.
The funds target asset allocation will be adjusted annually based on the advisers asset
allocation strategy; however, the adviser reserves the right to modify the funds target asset allocations from time to
time should circumstances warrant a change. In general, the funds allocation to equity securities will decrease and its allocation to fixed income securities will increase as the fund
approaches its target retirement date. The funds asset allocation at inception is anticipated to be approximately 95% equity securities, 3% fixed income securities, and 2% cash and cash equivalents (including money market funds). At the stated
target date, the funds allocation will be approximately 40% equity securities, 54% fixed income securities, and 6% cash and cash equivalents (including money market funds). The fund will continue to reduce its allocation to equity securities
for 20 years beyond the funds stated target date. At such time, the funds asset allocation will remain fixed at approximately 25% equity securities, 66% fixed income securities, and 9% cash and cash equivalents (including money
market funds).
In addition to the strategic annual adjustment of the funds target asset allocation, the adviser may adjust the
funds underlying fund allocations within a particular asset class based on the following considerations, including, but not limited to, market trends, its outlook for a given market capitalization, and the underlying funds performance in
various market conditions. Accordingly, the funds allocation to a particular underlying fund may increase or decrease throughout the year. Within the equity asset class, the fund will have exposure to one or more style classes. The
style classes include domestic large-cap equity, domestic small-cap equity, and international equity. For example, the adviser may adjust the funds allocation to a particular style class based on the following considerations: market trends,
its outlook for a given style class, and the style classes performance in various market conditions. Accordingly, the funds allocation to a particular style class within the equity asset class may increase or decrease throughout the
year.
The fund intends to invest in a combination of underlying funds; however, the fund may invest directly in equity and fixed income
securities, exchange traded funds (ETFs) and money market securities. For temporary defensive purposes during unusual economic or market conditions or for liquidity purposes, the fund may invest up to 100% of its assets directly in cash, money
market instruments, repurchase agreements and other short-term obligations. When the fund engages in such activities, it may not achieve its investment objective.
Principal risks
The fund is subject to risks, any of which could cause an investor to lose money. The funds principal risks include:
Asset Allocation Risk.
The fund is subject to asset allocation risk, which is the risk that the selection of the underlying funds and the allocation of the funds assets among the various
asset classes and market segments will cause the fund to underperform other funds with a similar investment objective.
Affiliated Fund
Risk.
The investment advisers authority to select and substitute underlying funds from a variety of affiliated and unaffiliated mutual funds may create a conflict of interest because the fees paid to it by some underlying funds are
higher than the fees paid by other underlying funds. However, the portfolio manager is a fiduciary to the fund and is legally obligated to act in the funds best interests when selecting underlying funds, without taking fees into consideration.
Market Risk.
Stock and bond markets rise and fall daily. As with any investment whose
performance is tied to these markets, the value of your investment in the fund will fluctuate, which means that you could lose money.
Underlying Fund Investment Risk.
The value of your investment in the fund is based primarily on the prices of the underlying funds that
the fund purchases. In turn, the price of each underlying fund is based on the value of its securities. Before investing in the fund, investors should assess the risks associated with the underlying funds in which the fund may invest and the types
of investments made by those underlying funds. These risks include any combination of the risks described below, although the funds exposure to a particular risk will be proportionate to the funds overall asset allocation and underlying
fund allocation.
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Investment Risk.
An investment in an underlying fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. The fund may experience losses with respect to its investment in an underlying fund. Further, there is no guarantee that an underlying fund will be able to achieve its objective.
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Management Risk.
Generally, the underlying funds are actively managed mutual funds. Any actively managed mutual fund is subject to
the risk that its investment adviser (or sub-adviser(s)) will make poor security selections. An underlying funds adviser applies its own investment techniques and risk analyses in making investment decisions for the fund, but there can be no
guarantee that they will produce the desired results.
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Fixed Income Risk.
Interest rates rise and fall over time, which will affect an underlying funds yield and share price. The
credit quality of a portfolio investment could also cause an underlying funds share price to fall. An underlying fund could lose money if the issuer or guarantor of a portfolio investment or the counterparty to a derivatives contract fails to
make timely principal or interest payments or otherwise honor its obligations. Fixed income securities may be paid off earlier or later than expected. Either situation could cause an underlying fund to hold securities paying lower-than-market rates
of interest, which could hurt the funds yield or share price. Below investment-grade bonds (junk bonds) involve greater credit risk, are more volatile, involve greater risk of price declines and may be more susceptible to economic downturns
than investment-grade securities.
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Equity Risk.
The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual
companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time.
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Large-, Mid- and Small-Cap Risk.
Stocks of different market capitalizations tend to go in and out of favor based on market and
economic conditions. Historically, small- and mid-cap stocks tend to be more volatile than large-cap
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Summary Prospectus
January 14, 2013
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2 of 4
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Schwab Target 2055 Fund
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stocks, and small-cap stocks have been riskier than large- and mid-cap stocks. During a period when stocks of a particular market capitalization fall behind other types of investments
bonds or stocks of another capitalization range, for instance an underlying funds large-, mid- or small-cap holdings could reduce performance.
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Money Market Risk.
Although an underlying money market fund seeks to maintain a stable $1 net asset value, it is possible to lose
money by investing in a money market fund. In addition, a money market fund is not designed to offer capital appreciation.
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Exchange Traded Funds (ETFs) Risk.
When a fund invests in an ETF, it will bear a proportionate share of the ETFs expenses. In
addition, lack of liquidity in an ETF can result in its value being more volatile than the underlying portfolio of securities.
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Foreign Investment Risk.
An underlying funds investments in securities of foreign issuers may involve certain risks that are
greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; changes in currency exchange rates or exchange control
regulations (including limitations on currency movements and exchanges); differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. These risks may be
heightened in connection with investments in emerging markets.
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Emerging Markets Risk.
Emerging market countries may be more likely to experience political turmoil or rapid changes in market or
economic conditions than more developed countries. Such countries often have less uniformity in accounting and reporting requirements and greater risk associated with the custody of securities. In addition, the financial stability of issuers
(including governments) in emerging market countries may be more precarious than in other countries. As a result, there will tend to be an increased risk of price volatility associated with the funds investments in emerging market countries
and, at times, it may be difficult to value such investments.
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Derivatives Risk.
An underlying funds use of derivative instruments involves risks different from, or possibly greater than,
the risks associated with investing directly in securities and other traditional investments and could cause the fund to lose more than the principal amount invested.
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Leverage Risk.
Certain underlying fund transactions, such as derivatives, short sales, reverse repurchase agreements, and mortgage
dollar rolls, may give rise to a form of leverage and may expose a fund to greater risk. Leverage tends to magnify the effect of any decrease or increase in the value of an underlying funds portfolio securities, which means even a small amount
of leverage can have a disproportionately large impact on the fund.
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Liquidity Risk.
A particular investment may be difficult to purchase or sell. An underlying fund may be unable to sell illiquid
securities at an advantageous time or price.
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Portfolio Turnover Risk.
Certain of the underlying funds may buy and sell portfolio securities actively. If they do, their portfolio
turnover rate and transaction costs will rise, which may lower the underlying funds performance and may increase the likelihood of capital gain distributions.
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Direct Investment Risk.
The fund may invest a portion of its assets directly in equity and fixed income securities, ETFs, cash equivalents, including money market securities. The funds
direct investment in these securities is subject to the same or similar risks as an underlying funds investment in the same security.
Your investment in the fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. You may experience losses in the fund, including losses near, at, or after the target date. There is no guarantee that the fund will be able to achieve its objective or provide adequate income at and through your retirement.
For more information on the risks of investing in the fund and the underlying funds please see the
Fund details
section in the
prospectus.
Performance
Because the fund is new, no performance figures are given. This information will appear in a future version of the funds prospectus. Once available,
the funds performance will be posted on the funds website at
www.schwabfunds.com/prospectus
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Investment adviser
Charles Schwab Investment Management, Inc.
Portfolio manager
Zifan Tang, Ph.D., CFA,
Managing Director and Head of Asset Allocation Strategies, is responsible for the day-to-day management of the fund. She has managed the fund since inception.
Purchase and sale of fund shares
The fund is open for business each day that the New York Stock Exchange is open. When you place orders to purchase, exchange or redeem fund shares through an account at Charles Schwab & Co., Inc.
(Schwab) or another financial intermediary, you must follow Schwabs or the other financial intermediarys transaction procedures.
Eligible Investors (as determined by the fund and which generally are limited to institutional investors) may invest directly in the fund by placing
purchase, exchange and redemption orders through the funds transfer agent. Eligible Investors must contact the transfer agent by phone or in writing to obtain an account application. Eligible Investors may contact the transfer agent:
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by telephone at 1-800-407-0256; or
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by mail at Boston Financial Data Services, Attn: Schwab Funds, P.O. Box 8283, Boston, MA 02266-8323.
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Summary Prospectus
January 14, 2013
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3 of 4
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Schwab Target 2055 Fund
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REG71106FLD-00 00090444
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Schwab Target 2055 Fund; Ticker Symbol: SWORX
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Schwab Funds
®
The minimum initial investment for the fund is $100. The fund may waive the minimum initial investment for
certain investors or in the funds sole discretion.
Tax information
Dividends and capital gains distributions received from the fund will generally be taxable as ordinary income or capital gains, unless you are investing through an IRA, 401(k) or other tax-advantaged
account.
Payments to financial intermediaries
If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and
related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial
intermediarys website for more information.
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Summary Prospectus
January 14, 2013
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4 of 4
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Schwab Target 2055 Fund
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