Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORMN-CSR
CERTIFIED SHAREHOLDER REPORT
OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number:811-05547
Laudus Trust
(Exact name of registrant as specified in charter)
211 Main Street, San Francisco, California 94105
(Address of principal executive offices) (Zip code)
Jonathan de St. Paer
Laudus 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: March 31
Date of reporting period: March 31, 2019
Item 1: | Report(s) to Shareholders. |
Table of Contents
New Notice Regarding Shareholder Report Delivery Options |
Beginning on January 1, 2021, paper copies of a fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from a fund or from your financial intermediary (such as a bank or broker-dealer). Instead, the reports will be made available on a fund’s websitewww.schwabfunds.com/laudusfunds_prospectus, and you will be notified by mail each time a report is posted and the mailing will provide a website link to access the report. You will continue to receive other fund regulatory documents (such as prospectuses or supplements) in paper unless you have elected to receive all fund documents electronically as described below. |
If you would like to continue to receive a fund’s future shareholder reports in paper free of charge after January 1, 2021, you can make that request: (1) by contacting your financial intermediary, if you invest through a financial intermediary; or (2) if you invest directly with a fund, by calling 1-800-447-3332. |
If you already receive shareholder reports and other fund documents electronically, you will not be affected by this change and you need not take any action. If you do not receive shareholder reports and other fund documents electronically but would like to do so, contact your financial intermediary or, if you invest directly with the funds, call 1-800-447-3332. |
Total Return for the 12 Months Ended March 31, 2019 | |
Laudus U.S. Large Cap Growth Fund (Ticker Symbol: LGILX) | 12.78% |
Russell 1000® Growth Index | 12.75% |
Performance Details | pages 6-8 |
President and CEO of
Charles Schwab Investment
Management, Inc. and the
fund covered in this report.
Fund Characteristics | |
Number of Securities1 | 54 |
Weighted Average Market Cap (millions) | $248,597 |
Price/Earnings Ratio (P/E) | 34.43 |
Price/Book Ratio (P/B) | 7.79 |
Portfolio Turnover (One year trailing) | 53% |
Fund Overview | |
Fund | |
Inception Date | 10/14/1997* |
Ticker Symbol | LGILX |
Cusip | 51855Q549 |
NAV | $21.31 |
* | Inception date is that of the fund’s predecessor fund, the Y Class of the UBS U.S. Large Cap Growth Fund. |
1 | Short-term investments are not included. |
Fund and Inception Date | 1 Year | 5 Years | 10 Years |
Laudus U.S. Large Cap Growth Fund (10/14/97)1 | 12.78% | 13.68% | 18.00% |
Russell 1000® Growth Index | 12.75% | 13.50% | 17.52% |
Fund Expense Ratio2: 0.76% |
1 | The Laudus U.S. Large Cap Growth Fund was launched on 7/13/09. The fund was formerly known as UBS U.S. Large Cap Growth Fund. The performance and returns prior to 7/13/09 reflect the returns of UBS U.S. Large Cap Growth Fund, Class Y Shares. |
2 | As stated in the prospectus. Please see the prospectus for more information. For actual rates during the period, refer to the Financial Highlights section of the Financial Statements. |
1 | This list is not a recommendation of any security by the investment adviser or subadviser. |
Expense Ratio (Annualized)1 | Beginning Account Value at 10/1/18 | Ending Account Value (Net of Expenses) at 3/31/19 | Expenses Paid During Period 10/1/18-3/31/192 | |
Laudus U.S. Large Cap Growth Fund | ||||
Actual Return | 0.77% | $1,000.00 | $987.00 | $3.81 |
Hypothetical 5% Return | 0.77% | $1,000.00 | $1,021.06 | $3.88 |
1 | Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights which covers a 12-month period. |
2 | Expenses for the fund are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 182 days of the period, and divided by the 365 days of the fiscal year. |
4/1/18– 3/31/19 | 4/1/17– 3/31/18 | 4/1/16– 3/31/17 | 4/1/15– 3/31/16 | 4/1/14– 3/31/15 | ||
Per-Share Data | ||||||
Net asset value at beginning of period | $20.47 | $18.12 | $15.76 | $17.22 | $18.19 | |
Income (loss) from investment operations: | ||||||
Net investment income (loss)1 | 0.02 | 0.002 | 0.002 | (0.01) | (0.01) | |
Net realized and unrealized gains (losses) | 2.35 | 4.99 | 2.63 | (0.37) | 2.44 | |
Total from investment operations | 2.37 | 4.99 | 2.63 | (0.38) | 2.43 | |
Less distributions: | ||||||
Distributions from net realized gains | (1.53) | (2.64) | (0.27) | (1.08) | (3.40) | |
Net asset value at end of period | $21.31 | $20.47 | $18.12 | $15.76 | $17.22 | |
Total return | 12.78% | 28.52% | 16.85% | (2.50%) | 14.99% | |
Ratios/Supplemental Data | ||||||
Ratios to average net assets: | ||||||
Net operating expenses | 0.75% | 0.75%3 | 0.76% | 0.75% | 0.77% | |
Gross operating expenses | 0.75% | 0.75%3 | 0.76% | 0.75% | 0.77% | |
Net investment income (loss) | 0.07% | 0.01%3 | 0.03% | (0.04%) | (0.06%) | |
Portfolio turnover rate | 53% | 49% | 73% | 82% | 102% | |
Net assets, end of period (x 1,000) | $2,250,995 | $1,953,049 | $1,667,059 | $1,969,169 | $2,171,783 | |
Security | Number of Shares | Value ($) |
Common Stock99.6% of net assets | ||
Automobiles & Components 0.8% | ||
Tesla, Inc. * | 62,253 | 17,422,125 |
Banks 0.4% | ||
First Republic Bank | 87,225 | 8,762,624 |
Capital Goods 5.7% | ||
Honeywell International, Inc. | 139,373 | 22,149,157 |
Roper Technologies, Inc. | 90,465 | 30,936,316 |
The Boeing Co. | 129,569 | 49,420,208 |
Xylem, Inc. | 328,205 | 25,941,323 |
128,447,004 | ||
Commercial & Professional Services 3.4% | ||
CoStar Group, Inc. * | 126,935 | 59,205,023 |
TransUnion | 256,165 | 17,122,068 |
76,327,091 | ||
Consumer Durables & Apparel 1.1% | ||
NIKE, Inc., Class B | 294,835 | 24,828,055 |
Consumer Services 1.3% | ||
Domino’s Pizza, Inc. | 112,550 | 29,049,155 |
Diversified Financials 3.6% | ||
CME Group, Inc. | 208,693 | 34,346,694 |
S&P Global, Inc. | 215,488 | 45,370,998 |
79,717,692 | ||
Food, Beverage & Tobacco 2.5% | ||
Constellation Brands, Inc., Class A | 324,334 | 56,865,480 |
Health Care Equipment & Services 11.8% | ||
Align Technology, Inc. * | 172,388 | 49,015,080 |
Becton, Dickinson & Co. | 151,165 | 37,750,435 |
Boston Scientific Corp. * | 1,124,330 | 43,151,785 |
Centene Corp. * | 568,863 | 30,206,625 |
Intuitive Surgical, Inc. * | 66,101 | 37,715,909 |
UnitedHealth Group, Inc. | 273,229 | 67,558,603 |
265,398,437 | ||
Materials 2.8% | ||
Linde plc | 19,276 | 3,391,227 |
The Sherwin-Williams Co. | 74,646 | 32,150,778 |
Vulcan Materials Co. | 236,632 | 28,017,229 |
63,559,234 | ||
Security | Number of Shares | Value ($) |
Media & Entertainment 13.0% | ||
Alphabet, Inc., Class A * | 61,495 | 72,372,851 |
Electronic Arts, Inc. * | 337,652 | 34,315,573 |
Facebook, Inc., Class A * | 161,201 | 26,870,595 |
IAC/InterActiveCorp * | 137,067 | 28,799,147 |
Netflix, Inc. * | 195,306 | 69,638,307 |
Tencent Holdings Ltd. ADR | 1,328,108 | 61,066,406 |
293,062,879 | ||
Pharmaceuticals, Biotechnology & Life Sciences 5.2% | ||
Illumina, Inc. * | 108,773 | 33,794,683 |
IQVIA Holdings, Inc. * | 100,926 | 14,518,205 |
Novartis AG ADR | 211,664 | 20,349,377 |
Vertex Pharmaceuticals, Inc. * | 150,731 | 27,726,968 |
Zoetis, Inc. | 212,606 | 21,403,046 |
117,792,279 | ||
Real Estate 1.7% | ||
SBA Communications Corp. * | 196,057 | 39,144,741 |
Retailing 12.8% | ||
Alibaba Group Holding Ltd. ADR * | 114,286 | 20,851,481 |
Amazon.com, Inc. * | 110,380 | 196,559,185 |
Booking Holdings, Inc. * | 7,138 | 12,455,168 |
Burlington Stores, Inc. * | 72,809 | 11,407,714 |
MercadoLibre, Inc. * | 91,851 | 46,635,508 |
287,909,056 | ||
Semiconductors & Semiconductor Equipment 3.6% | ||
ASML Holding N.V. | 226,107 | 42,519,421 |
NVIDIA Corp. | 97,731 | 17,548,578 |
Xilinx, Inc. | 168,702 | 21,389,727 |
81,457,726 | ||
Software & Services 27.6% | ||
Adobe Systems, Inc. * | 211,078 | 56,250,176 |
Autodesk, Inc. * | 185,081 | 28,839,322 |
Intuit, Inc. | 224,814 | 58,768,628 |
Mastercard, Inc., Class A | 392,115 | 92,323,477 |
Microsoft Corp. | 944,902 | 111,441,742 |
PayPal Holdings, Inc. * | 398,942 | 41,426,137 |
PTC, Inc. * | 119,966 | 11,058,466 |
salesforce.com, Inc. * | 424,478 | 67,224,581 |
ServiceNow, Inc. * | 186,013 | 45,850,344 |
Visa, Inc., Class A | 685,702 | 107,099,795 |
620,282,668 | ||
Technology Hardware & Equipment 0.6% | ||
Keysight Technologies, Inc. * | 155,312 | 13,543,206 |
Security | Number of Shares | Value ($) |
Transportation 1.7% | ||
Union Pacific Corp. | 224,864 | 37,597,261 |
Total Common Stock | ||
(Cost $1,532,850,070) | 2,241,166,713 | |
Other Investment Company1.1% of net assets | ||
Money Market Fund 1.1% | ||
State Street Institutional U.S. Government Money Market Fund, Premier Class 2.39%(a) | 26,048,843 | 26,048,843 |
Total Other Investment Company | ||
(Cost $26,048,843) | 26,048,843 |
* | Non-income producing security. |
(a) | The rate shown is the 7-day yield. |
ADR — | American Depositary Receipt |
Description | Quoted Prices in Active Markets for Identical Assets (Level 1) | Other Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |
Assets | |||||
Common Stock1 | $2,241,166,713 | $— | $— | $2,241,166,713 | |
Other Investment Company1 | 26,048,843 | — | — | 26,048,843 | |
Total | $2,267,215,556 | $— | $— | $2,267,215,556 |
1 | As categorized in Portfolio Holdings. |
Assets | ||
Investments in unaffiliated issuers, at value (cost $1,558,898,913) | $2,267,215,556 | |
Receivables: | ||
Investments sold | 12,752,074 | |
Fund shares sold | 2,446,477 | |
Foreign tax reclaims | 209,085 | |
Dividends | 102,848 | |
Prepaid expenses | + | 32,468 |
Total assets | 2,282,758,508 | |
Liabilities | ||
Payables: | ||
Investments bought | 28,925,054 | |
Sub-accounting and sub-transfer agent fees | 196,252 | |
Fund shares redeemed | 1,216,266 | |
Investment adviser fees | 1,166,489 | |
Accrued expenses | + | 259,204 |
Total liabilities | 31,763,265 | |
Net Assets | ||
Total assets | 2,282,758,508 | |
Total liabilities | – | 31,763,265 |
Net assets | $2,250,995,243 | |
Net Assets by Source | ||
Capital received from investors | 1,430,353,512 | |
Total distributable earnings1 | 820,641,731 |
Net Asset Value (NAV) | ||||
Net Assets | ÷ | Shares Outstanding | = | NAV |
$2,250,995,243 | 105,609,628 | $21.31 | ||
1 | The SEC eliminated the requirement to disclose total distributable earnings (loss) by each of its components as previously disclosed as the previous presentation did not provide insight into the tax implications of distributions (see financial note 8 for additional information). |
Investment Income | ||
Dividends (net of foreign withholding tax of $196,753) | $17,877,432 | |
Expenses | ||
Investment adviser fees | 13,540,139 | |
Sub-accounting and sub-transfer agent fees | 1,894,388 | |
Transfer agent fees | 341,818 | |
Shareholder reports | 116,279 | |
Accounting and administration fees | 92,564 | |
Registration fees | 92,418 | |
Professional fees | 75,574 | |
Independent trustees’ fees | 72,765 | |
Custodian fees | 58,622 | |
Other expenses | + | 29,081 |
Total expenses | – | 16,313,648 |
Net investment income | 1,563,784 | |
Realized and Unrealized Gains (Losses) | ||
Net realized gains on investments | 180,429,852 | |
Net realized losses on foreign currency transactions | + | (3,356) |
Net realized gains | 180,426,496 | |
Net change in unrealized appreciation (depreciation) on investments | + | 59,760,870 |
Net realized and unrealized gains | 240,187,366 | |
Increase in net assets resulting from operations | $241,751,150 |
Operations | ||||
4/1/18-3/31/19 | 4/1/17-3/31/18 | |||
Net investment income | $1,563,784 | $211,442 | ||
Net realized gains | 180,426,496 | 177,848,425 | ||
Net change in unrealized appreciation (depreciation) | + | 59,760,870 | 266,025,112 | |
Increase in net assets from operations | 241,751,150 | 444,084,979 | ||
Distributions to Shareholders1 | ||||
Total distributions | ($153,592,514) | ($223,214,604) |
Transactions in Fund Shares | ||||||||
4/1/18-3/31/19 | 4/1/17-3/31/18 | |||||||
SHARES | VALUE | SHARES | VALUE | |||||
Shares sold | 29,323,265 | $622,927,288 | 19,592,935 | $398,082,826 | ||||
Shares reinvested | 7,071,796 | 130,191,763 | 9,937,601 | 190,503,813 | ||||
Shares redeemed | + | (26,208,925) | (543,331,811) | (26,119,021) | (523,466,983) | |||
Net transactions in fund shares | 10,186,136 | $209,787,240 | 3,411,515 | $65,119,656 | ||||
Shares Outstanding and Net Assets | ||||||||
4/1/18-3/31/19 | 4/1/17-3/31/18 | |||||||
SHARES | NET ASSETS | SHARES | NET ASSETS | |||||
Beginning of period | 95,423,492 | $1,953,049,367 | 92,011,977 | $1,667,059,336 | ||||
Total increase | + | 10,186,136 | 297,945,876 | 3,411,515 | 285,990,031 | |||
End of period2 | 105,609,628 | $2,250,995,243 | 95,423,492 | $1,953,049,367 |
1 | For the period ended March 31, 2018, the fund distributed to shareholders $223,214,604 from net realized gains. The SEC eliminated the requirement to disclose distributions to shareholders from net investment income and from net realized gains in 2018 (see financial note 8 for additional information). |
2 | End of period — Net assets of the fund had no undistributed net investment income at March 31, 2018. The SEC eliminated the requirement to disclose undistributed net investment income in 2018. |
2. Significant Accounting Policies:
3. Risk Factors:
4. Affiliates and Affiliated Transactions:
Average daily net assets | |
First $500 million | 0.700% |
$500 million to $1 billion | 0.650% |
$1 billion to $1.5 billion | 0.600% |
$1.5 billion to $2 billion | 0.575% |
Over $2 billion | 0.550% |
Schwab Target 2020 Fund | 0.0%* |
Schwab Target 2025 Fund | 0.3% |
Schwab Target 2030 Fund | 1.0% |
Schwab Target 2035 Fund | 0.7% |
Schwab Target 2040 Fund | 2.2% |
Schwab Target 2045 Fund | 0.4% |
Schwab Target 2050 Fund | 0.4% |
Schwab Target 2055 Fund | 0.3% |
Schwab Target 2060 Fund | 0.0%* |
Schwab Balanced Fund | 3.2% |
* | Less than 0.05% |
5. Board of Trustees:
6. Borrowing from Banks:
7. Purchases and Sales of Investment Securities:
Purchases of Securities | Sales of Securities |
$1,229,200,222 | $1,126,347,791 |
Tax cost | $1,562,060,240 |
Gross unrealized appreciation | $722,610,897 |
Gross unrealized depreciation | (17,455,581) |
Net unrealized appreciation (depreciation) | $705,155,316 |
Undistributed ordinary income | $1,559,402 |
Undistributed long-term capital gains | 113,927,013 |
Net unrealized appreciation (depreciation) on investments | 705,155,316 |
Total | $820,641,731 |
Current period distributions | |
Ordinary income | $12,609,088 |
Long-term capital gains | 140,983,426 |
Prior period distributions | |
Ordinary income | $17,834,505 |
Long-term capital gains | 205,380,099 |
9. Subsequent Events:
San Francisco, California
May 17, 2019
Independent Trustees | |||
Name, Year of Birth, and Position(s) with the trust (Terms of office, and length of Time Served1) | Principal Occupations During the Past Five Years | Number of Portfolios in Fund Complex Overseen by the Trustee | Other Directorships |
Robert W. Burns 1959 Trustee (Trustee of Schwab Strategic Trust since 2009; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016) | Retired/Private Investor (Jan. 2009 – present). Formerly, Managing Director, Pacific Investment Management Company, LLC (PIMCO) (investment management firm) and President, PIMCO Funds. | 98 | None |
John F. Cogan 1947 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2008; Laudus Trust since 2010; Schwab Strategic Trust since 2016) | Senior Fellow (Oct. 1979 – present), The Hoover Institution at Stanford University (public policy think tank); Senior Fellow (2000 – present), Stanford Institute for Economic Policy Research; Professor of Public Policy (1994 – 2015), Stanford University. | 98 | Director (2005 – present), Gilead Sciences, Inc. |
Nancy F. Heller 1956 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018) | President and Chairman (2014 – 2016), TIAA Charitable (financial services); Senior Managing Director (2003 – 2016), TIAA (financial services). | 98 | None |
Stephen Timothy Kochis 1946 Trustee (Trustee of Schwab Strategic Trust since 2012; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016) | CEO and Owner (May 2012 – present), Kochis Global (wealth management consulting). | 98 | None |
Independent Trustees (continued) | |||
Name, Year of Birth, and Position(s) with the trust (Terms of office, and length of Time Served1) | Principal Occupations During the Past Five Years | Number of Portfolios in Fund Complex Overseen by the Trustee | Other Directorships |
David L. Mahoney 1954 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016) | Private Investor. | 98 | Director (2003 – present), Symantec Corporation Director (2004 – present), Corcept Therapeutics Incorporated Director (2009 – present), Adamas Pharmaceuticals, Inc. |
Jane P. Moncreiff 1961 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2019) | Chief Investment Officer (2009-2017), CareGroup Healthcare System, Inc. (healthcare). | 98 | None |
Kiran M. Patel 1948 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016) | Retired. Executive Vice President and General Manager of Small Business Group (Dec. 2008 – Sept. 2013), Intuit, Inc. (financial software and services firm for consumers and small businesses). | 98 | Director (2008 – present), KLA-Tencor Corporation |
Kimberly S. Patmore 1956 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016) | Consultant (2008 – present), Patmore Management Consulting (management consulting). | 98 | None |
Gerald B. Smith 1950 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2000; Laudus Trust since 2010; Schwab Strategic Trust since 2016) | Chairman, Chief Executive Officer and Founder (Mar. 1990 – present), Smith Graham & Co. (investment advisors). | 98 | Director (2012 – present), Eaton |
Interested Trustees | |||
Name, Year of Birth, and Position(s) with the trust (Terms of office, and length of Time Served1) | Principal Occupations During the Past Five Years | Number of Portfolios in Fund Complex Overseen by the Trustee | Other Directorships |
Walter W. Bettinger II2 1960 Chairman and Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2008; Schwab Strategic Trust since 2009; Laudus Trust since 2010) | Director, President and Chief Executive Officer (Oct. 2008 – present), The Charles Schwab Corporation; President and Chief Executive Officer (Oct. 2008 – present) and Director (May 2008 – present), Charles Schwab & Co., Inc.; Director (Apr. 2006 – present), Charles Schwab Bank; Director (Nov. 2017 – present), Charles Schwab Premier Bank; Director (May 2008 – present) and President and Chief Executive Officer (Aug. 2017 – present), Schwab Holdings, Inc.; Director (July 2016 – present), Charles Schwab Investment Management, Inc. | 98 | Director (2008 – present), The Charles Schwab Corporation |
Jonathan de St. Paer2 1973 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2019) | Director and Chief Executive Officer (Apr. 2019 – present) and President (Oct. 2018 – present) Charles Schwab Investment Management, Inc.; Trustee and Chief Executive Officer (Apr. 2019 – present) and President (Nov. 2018 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Director (Apr. 2019 – present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited; Senior Vice President (Apr. 2019 – present), Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014 – Mar. 2019), and Vice President (Jan. 2009 – Dec. 2013), Charles Schwab & Co., Inc. | 98 | None |
Joseph R. Martinetto2 1962 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016) | Chief Operating Officer (Feb. 2018 – present) and Senior Executive Vice President (July 2015 – Feb. 2018), The Charles Schwab Corporation; Senior Executive Vice President (July 2015 – present), Charles Schwab & Co., Inc.; Chief Financial Officer (July 2015 – Aug. 2017) and Executive Vice President and Chief Financial Officer (May 2007 – July 2015), The Charles Schwab Corporation and Charles Schwab & Co., Inc.; Director (May 2007 – present), Charles Schwab & Co., Inc.; Director (Apr. 2010 – present) and Chief Executive Officer (July 2013 – Apr. 2015), Charles Schwab Bank; Director (Nov. 2017 – present), Charles Schwab Premier Bank; Director (May 2007 – present), Chief Financial Officer (May 2007 – Aug. 2017), Senior Executive Vice President (Feb. 2016 – present), and Executive Vice President (May 2007 – Feb. 2016), Schwab Holdings, Inc. | 98 | None |
Officers of the Trust | |
Name, Year of Birth, and Position(s) with the trust (Terms of office, and length of Time Served3) | Principal Occupations During the Past Five Years |
Jonathan de St. Paer 1973 President and Chief Executive Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018) | Director and Chief Executive Officer (Apr. 2019 – present) and President (Oct. 2018 – present) Charles Schwab Investment Management, Inc.; Trustee and Chief Executive Officer (Apr. 2019 – present) and President (Nov. 2018 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Director (Apr. 2019 – present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited; Senior Vice President (Apr. 2019 – present), Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014 – Mar. 2019), and Vice President (Jan. 2009 – Dec. 2013), Charles Schwab & Co., Inc. |
Officers of the Trust (continued) | |
Name, Year of Birth, and Position(s) with the trust (Terms of office, and length of Time Served3) | Principal Occupations During the Past Five Years |
Mark Fischer 1970 Treasurer and Chief Financial Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2013) | Treasurer and Chief Financial Officer (Jan. 2016 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Assistant Treasurer (Dec. 2013 – Dec. 2015), Schwab Funds and Laudus Funds; Assistant Treasurer (Nov. 2013 – Dec. 2015), Schwab ETFs; Vice President (Oct. 2013 – present), Charles Schwab Investment Management, Inc.; Executive Director (Apr. 2011 – Sept. 2013), J.P. Morgan Investor Services; Assistant Treasurer (May 2005 – Mar. 2011), Massachusetts Financial Service Investment Management. |
George Pereira 1964 Senior Vice President and Chief Operating Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2004; Laudus Trust since 2006; Schwab Strategic Trust since 2009) | Senior Vice President and Chief Financial Officer (Nov. 2004 – present) and Chief Operating Officer (Jan. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Operating Officer (Jan. 2016 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Treasurer and Chief Financial Officer (June 2006 – Dec. 2015), Laudus Funds; Treasurer and Principal Financial Officer (Nov. 2004 – Dec. 2015), Schwab Funds; Treasurer and Principal Financial Officer (Oct. 2009 – Dec. 2015), Schwab ETFs; Director (Apr. 2005 – present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited. |
Omar Aguilar 1970 Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies (Apr. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies (June 2011 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Head of the Portfolio Management Group and Vice President of Portfolio Management (May 2009 – Apr. 2011), Financial Engines, Inc. (investment management firm); Head of Quantitative Equity (July 2004 – Jan. 2009), ING Investment Management. |
Brett Wander 1961 Senior Vice President and Chief Investment Officer – Fixed Income (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President and Chief Investment Officer – Fixed Income (Apr. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Investment Officer – Fixed Income (June 2011 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Senior Managing Director, Global Head of Active Fixed-Income Strategies (Jan. 2008 – Oct. 2010), State Street Global Advisors; Director of Alpha Strategies (Apr. 2006 – Jan. 2008), Loomis, Sayles & Company (investment management firm). |
David Lekich 1964 Chief Legal Officer and Secretary, Schwab Funds and Schwab ETFs Vice President and Assistant Clerk, Laudus Funds (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President (Sept. 2011 – present) and Vice President (Mar. 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present) and Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (Apr. 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; Vice President and Assistant Clerk (Apr. 2011 – present), Laudus Funds; Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs. |
Catherine MacGregor 1964 Vice President and Assistant Secretary, Schwab Funds and Schwab ETFs Chief Legal Officer, Vice President and Clerk, Laudus Funds (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2005; Schwab Strategic Trust since 2009) | Vice President (July 2005 – present), Charles Schwab & Co., Inc.; Vice President (Sept. 2005 – present), Charles Schwab Investment Management, Inc.; Vice President (Dec. 2005 – present) and Chief Legal Officer and Clerk (Mar. 2007 – present), Laudus Funds; Vice President (Nov. 2005 – present) and Assistant Secretary (June 2007 – present), Schwab Funds; Vice President and Assistant Secretary (Oct. 2009 – present), Schwab ETFs. |
1 | Each Trustee shall hold office until the election and qualification of his or her successor, or until he or she dies, resigns or is removed. The retirement policy requires that each independent trustee retire by December 31 of the year in which the Trustee turns 74 or the Trustee’s twentieth year of service as an independent trustee on any trust in the Fund Complex, whichever occurs first. |
2 | Mr. Bettinger, Mr. de St. Paer and Mr. Martinetto are Interested Trustees. Mr. Bettinger is an Interested Trustee because he owns stock of The Charles Schwab Corporation (CSC), the parent company of Charles Schwab Investment Management, Inc. (CSIM), the investment adviser for the trusts in the Fund Complex, is an employee and director of Charles Schwab & Co., Inc. (CS&Co), the principal underwriter for The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust, and is a director of CSIM. Mr. de St. Paer is an Interested Trustee because he owns stock of CSC and is an employee and director of CSIM. Mr. Martinetto is an Interested Trustee because he owns stock of CSC and is an employee and director of CS&Co. |
3 | The President, Treasurer and Secretary/Clerk hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board. |
THIS IS NOT PART OF THE SHAREHOLDER REPORT
INFORMATION.
INFORMATION.
Partnership
The Laudus Funds®
00228897
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Item 2: | Code of Ethics. |
(a) | Registrant has adopted a code of ethics that applies to its principal executive officer, principal financial officer, and any other persons who perform a similar function, regardless of whether these individuals are employed by Registrant or a third party. |
(c) | During the period covered by the report, no amendments were made to the provisions of this code of ethics. |
(d) | During the period covered by the report, Registrant did not grant any waivers, including implicit waivers, from the provisions of this code of ethics. |
(f)(1) | Registrant has filed this code of ethics as an exhibit pursuant to Item 12(a)(1) of FormN-CSR. |
Item 3: | Audit Committee Financial Expert. |
Registrant’s Board of Trustees has determined that Kiran M. Patel and Kimberly S. Patmore, each currently serving on its audit, compliance and valuation committee, are each an “audit committee financial expert,” as such term is defined in Item 3 of FormN-CSR. Each member of Registrant’s audit, compliance and valuation committee is “independent” under the standards set forth in Item 3 of FormN-CSR.
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The designation of each of Mr. Patel and Ms. Patmore as an “audit committee financial expert” pursuant to Item 3 of FormN-CSR does not (i) impose upon such individual any duties, obligations, or liability that are greater than the duties, obligations and liability imposed upon such individual as a member of Registrant’s audit, compliance and valuation committee or Board of Trustees in the absence of such designation; and (ii) affect the duties, obligations or liability of any other member of Registrant’s audit, compliance and valuation committee or Board of Trustees.
Item 4: | Principal Accountant Fees and Services. |
Registrant is composed of one series which has a fiscalyear-end of March 31, whose annual financial statements are reported in Item 1. Principal accountant fees disclosed in Items 4(a)-(d) and 4(g) include fees billed for services rendered to the one operational series during 2019 and each of the four operations series during 2018, based on their respective 2019 and 2018 fiscal years, as applicable.
The following table presents fees billed by the principal accountant in each of the last two fiscal years for the services rendered to the Funds:
(a) Audit Fees | (b) Audit-Related Fees1 | (c) Tax Fees2 | (d) All Other Fees3 | |||||||||||||||||||||||||
Fiscal Year 2019 | Fiscal Year 2018 | Fiscal Year 2019 | Fiscal Year 2018 | Fiscal Year 2019 | Fiscal Year 2018 | Fiscal Year 2019 | Fiscal Year 2018 | |||||||||||||||||||||
$38,844 | $ | 188,071 | $ | 0 | $ | 0 | $ | 4,605 | $ | 38,079 | $ | 0 | $ | 0 |
1 | The nature of the services includes assurance and related services reasonably related to the performance of the audit of financial statements not included in Audit Fees. |
2 | The nature of the services includes tax compliance, tax advice and tax planning. |
3 | The nature of the services include agreed upon procedures relating to Charles Schwab Investment Management., Inc.’s, (“CSIM”) expenses for purposes of Section 15(c) of the Investment Company Act of 1940. |
(e)(1) Registrant’s audit, compliance and valuation committee does not havepre-approval policies and procedures as described in paragraph (c)(7) of Rule2-01 of RegulationS-X.
(2) There were no services described in each of paragraphs (b) through (d) above (including services required to be approved by Registrant’s audit, compliance and valuation committee pursuant to paragraph (c)(7)(ii) of Rule2-01 of RegulationS-X) that were approved by Registrant’s audit, compliance and valuation committee pursuant to paragraph (c)(7)(i)(C) of Rule2-01 of RegulationS-X.
(f) Not applicable.
(g)Below are the aggregatenon-audit fees billed in each of the last two fiscal years by Registrant’s principal accountant for services rendered to Registrant, to Registrant’s investment adviser, and to any entity controlling, controlled by, or under common control with Registrant’s investment adviser that provides ongoing services to Registrant.
2019: $4,605 | 2018: $ | 38,079 |
(h) During the past fiscal year, allnon-audit services provided by Registrant’s principal accountant to either Registrant’s investment adviser or to any entity controlling, controlled by, or under common control with Registrant’s investment adviser that provides ongoing services to Registrant werepre-approved. Included in the audit, compliance and valuation committee’spre-approval was the review and consideration as to whether the provision of thesenon-audit services is compatible with maintaining the principal accountant’s independence.
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Item 5: | Audit Committee of Listed Registrants. |
Not applicable.
Item 6: | Schedule of Investments. |
The schedules of investments are included as part of the report to shareholders filed under Item 1 of this Form.
Item 7: | Disclosure of Proxy Voting Policies and Procedures forClosed-End Management Investment Companies. |
Not applicable.
Item 8: | Portfolio Managers ofClosed-End Management Investment Companies. |
Not applicable.
Item 9: | Purchases of Equity Securities byClosed-End Management Investment Company and Affiliated Purchasers. |
Not applicable.
Item 10: | Submission of Matters to a Vote of Security Holders. |
Not applicable.
Item 11: | Controls and Procedures. |
(a) Based on their evaluation of Registrant’s disclosure controls and procedures, as of a date within 90 days of the filing date, Registrant’s Chief Executive Officer, Jonathan de St. Paer and Registrant’s Chief Financial Officer, Mark Fischer, have concluded that Registrant’s disclosure controls and procedures are: (i) reasonably designed to ensure that information required to be disclosed in this report is appropriately communicated to Registrant’s officers to allow timely decisions regarding disclosures required in this report; (ii) reasonably designed to ensure that information required to be disclosed in this report is recorded, processed, summarized and reported in a timely manner; and (iii) are effective in achieving the goals described in (i) and (ii) above.
(b) During the period covered by this report, there have been no changes in Registrant’s internal control over financial reporting that the above officers believe to have materially affected, or to be reasonably likely to materially affect, Registrant’s internal control over financial reporting.
Item 12: | Exhibits. |
(a) (1) | Registrant’s code of ethics (that is the subject of the disclosure required by Item 2(a)) is attached. |
(2) | Separate certifications for Registrant’s principal executive officer and principal financial officer, as required by Rule30a-2(a) under the 1940 Act, are attached. |
(3) | Not applicable. |
(b) | A certification for Registrant’s principal executive officer and principal financial officer, as required by Rule30a-2(b) under the 1940 Act, is attached. This certification is being furnished to the Securities and Exchange Commission solely pursuant to 18 U.S.C. section 1350 and is not being filed as part of the FormN-CSR with the Commission. |
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant)Laudus Trust
By: | /s/ Jonathan de St. Paer | |
Jonathan de St. Paer | ||
Chief Executive Officer |
Date: May 17, 2019
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Jonathan de St. Paer | |
Jonathan de St. Paer | ||
Chief Executive Officer |
Date: May 17, 2019
By: | /s/ Mark Fischer | |
Mark Fischer | ||
Chief Financial Officer |
Date: May 17, 2019