SEC Company Response from SCHWAB CAPITAL TRUST (CIK 0000904333) — May 26, 2022

SCHWAB CAPITAL TRUST (CIK 0000904333)
Date: May 26, 2022 · CIK: 0000904333 · Accession: 0001104659-22-064989

View on Edgar

AI Filing Summary & Sentiment

File numbers found in text: 333-160595, 811-06200, 811-07704, 811-22311

Date

May 26, 2022

Author

/s/ Stephen T. Cohen

Form

CORRESP

Company

SCHWAB CAPITAL TRUST (CIK 0000904333)

Letter

VIA EDGAR Securities and Exchange Commission Division of Investment Management 100 F Street, N.E. Washington, D.C. 20549 Attn: Ms. Christina Fettig Re: Sarbanes-Oxley Review of Select Series of Schwab Capital Trust (File Nos. 033-62470 and 811-07704); Schwab Investments (File Nos. 033-37459 and 811-06200); and Schwab Strategic Trust (File Nos. 333-160595 and 811-22311) (each, a “Registrant” and collectively, the “Registrants”)

Dear Ms. Fettig:

This letter responds to comments that you conveyed orally via a telephone conference with Michael Cirelli, Jason Davis, Derek DeBenedictis, Catherine MacGregor, Robin Nesbitt and Dana Smith of Charles Schwab Investment Management, Inc., dba Schwab Asset Management (“Schwab”), and Stephen Cohen and Phillip Garber of Dechert LLP on April 29, 2022, concerning Schwab’s correspondence filed on April 8, 2022, in response to your comments provided on March 9, 2022, relating to your review of certain filings and other materials of select series of the Registrants (each, a “Fund”) listed on Exhibit A pursuant to the Sarbanes-Oxley Act of 2002. A summary of your comments, followed by the Registrants’ responses, is set forth below:

Prospectus

1. Comment: Generally, it is the view of the staff of the Securities and Exchange Commission (the “SEC Staff”) that professional fees related to foreign tax reclaims should be disclosed as an expense in the Statement of Operations. Please explain the rationale or accounting guidance relied on to record those professional fees netted against investment income instead of as separate line item in the expense section of the Statement of Operations.

Response: As noted on the telephone conference held on April 29, 2022, Schwab generally views professional fees and reimbursements made to the investment adviser in the amounts of less than 0.01% (i.e., one basis point) of the average net assets of a Fund to be immaterial. In this case, the total amount of professional fees and reimbursements associated with tax reclaims for any Fund amounted to less than one basis point, and in relation to the size of the Funds, Schwab deemed such amounts to be immaterial. These

fees are paid upfront by the Funds and are contractually waived by the investment adviser. In addition, these are non-routine fees, infrequent in occurrence and subject to repayment to the investment adviser only if the Fund successfully recovers income related to foreign tax reclaims. Professional fees associated with upfront professional fees for tax reclaims are presented as an expense and expense reduction along with an explanatory footnote in the Statement of Operations, and all details are presented on a gross basis in the notes to financial statements affiliated section. Repayment made to the investment adviser for previously waived upfront professional fees occurs when the Fund recognizes income. When income recognition occurs, the investment adviser is repaid for previously waived professional fees associated with foreign tax reclaims. Repayment of previously waived fee amounts are presented net of dividend income and are measured for separate disclosure when the amount exceeds one basis point of average net assets. All details related to Fund foreign tax reclaim activities during the period are disclosed on a gross basis in the financial notes affiliated section. Schwab confirms for future reports that if foreign tax professional fees repayments made to the investment adviser amount to more than one basis point of a Fund’s average net assets they will be disclosed as a separate line item in the expense section of the Statement of Operations and will include an explanatory footnote in the Financial Highlights.

2. Comment: The SEC Staff notes that the Schwab response indicated that it would consider updates to the Funds’ Item 4.C disclosure about the nature of the services rendered by the principal accountant for the audit-related fees and the tax fees “consistent with industry practice.” The SEC Staff notes that such disclosure is required by Item 4.C under Form N-CSR.

Response: The Funds will disclose more detail in future Form N-CSR filings in response to Item 4.C of Form N-CSR.

* * *

Should you have any questions or comments, please contact me at 202.261.3304.

Sincerely,
/s/ Stephen T. Cohen

Show Raw Text

CORRESP
1
filename1.htm

  1900 K Street, NW
Washington, DC 20006
+1 202 261 3300 Main
+1 202 261 3333 Fax
www.dechert.com

May 26, 2022

VIA EDGAR

Securities and Exchange Commission

Division of Investment Management

100 F Street, N.E.

Washington, D.C. 20549

 Attn: Ms. Christina Fettig

 Re: Sarbanes-Oxley Review of Select Series of Schwab Capital Trust
(File Nos. 033-62470 and 811-07704); Schwab Investments (File Nos. 033-37459 and 811-06200); and Schwab Strategic Trust (File Nos. 333-160595
and 811-22311) (each, a “Registrant” and collectively, the “Registrants”)

Dear Ms. Fettig:

This letter responds to comments that you conveyed
orally via a telephone conference with Michael Cirelli, Jason Davis, Derek DeBenedictis, Catherine MacGregor, Robin Nesbitt and Dana Smith
of Charles Schwab Investment Management, Inc., dba Schwab Asset Management (“Schwab”), and Stephen Cohen and Phillip Garber
of Dechert LLP on April 29, 2022, concerning Schwab’s correspondence filed on April 8, 2022, in response to your comments provided
on March 9, 2022, relating to your review of certain filings and other materials of select series of the Registrants (each, a “Fund”)
listed on Exhibit A pursuant to the Sarbanes-Oxley Act of 2002. A summary of your comments, followed by the Registrants’
responses, is set forth below:

Prospectus

 1. Comment: Generally, it is the view of the staff
of the Securities and Exchange Commission (the “SEC Staff”) that professional fees related to foreign tax reclaims should
be disclosed as an expense in the Statement of Operations. Please explain the rationale or accounting guidance relied on to record those
professional fees netted against investment income instead of as separate line item in the expense section of the Statement of Operations.

Response:
As noted on the telephone conference held on April 29, 2022, Schwab generally views professional fees and reimbursements made to
the investment adviser in the amounts of less than 0.01% (i.e., one basis point) of the average net assets of a Fund to be immaterial.
In this case, the total amount of professional fees and reimbursements associated with tax reclaims for any Fund amounted to less than
one basis point, and in relation to the size of the Funds, Schwab deemed such amounts to be immaterial. These

fees
are paid upfront by the Funds and are contractually waived by the investment adviser. In addition, these are non-routine fees, infrequent
in occurrence and subject to repayment to the investment adviser only if the Fund successfully recovers income related to foreign tax
reclaims. Professional fees associated with upfront professional fees for tax reclaims are presented as an expense and expense reduction
along with an explanatory footnote in the Statement of Operations, and all details are presented on a gross basis in the notes to financial
statements affiliated section. Repayment made to the investment adviser for previously waived upfront professional fees occurs when the
Fund recognizes income. When income recognition occurs, the investment adviser is repaid for previously waived professional fees associated
with foreign tax reclaims. Repayment of previously waived fee amounts are presented net of dividend income and are measured for separate
disclosure when the amount exceeds one basis point of average net assets. All details related to Fund foreign tax reclaim activities
during the period are disclosed on a gross basis in the financial notes affiliated section. Schwab confirms for future reports that if
foreign tax professional fees repayments made to the investment adviser amount to more than one basis point of a Fund’s average
net assets they will be disclosed as a separate line item in the expense section of the Statement of Operations and will include an explanatory
footnote in the Financial Highlights.

 2. Comment:  The SEC Staff notes that the Schwab response indicated that it would consider
updates to the Funds’ Item 4.C disclosure about the nature of the services rendered by the principal accountant for the audit-related
fees and the tax fees “consistent with industry practice.” The SEC Staff notes that such disclosure is required by Item 4.C
under Form N-CSR.

Response:
The Funds will disclose more detail in future Form N-CSR filings in response to Item 4.C of Form N-CSR.

*      *      *

Should you have any questions or comments, please
contact me at 202.261.3304.

Sincerely,

/s/ Stephen T. Cohen

Stephen T. Cohen

    2

Exhibit A

    File #

    Registrant Name

    Series ID

    Series Name

    FYE Reviewed

    811-07704

    SCHWAB CAPITAL TRUST

    S000006551

    Laudus International MarketMasters Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000006549

    Schwab Balanced Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000005514

    Schwab Core Equity Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000005515

    Schwab Dividend Equity Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000019900

    Schwab Fundamental Emerging Markets Large Company Index Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000016768

    Schwab Fundamental International Large Company Index Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000019901

    Schwab Fundamental International Small Company Index Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000016766

    Schwab Fundamental US Large Company Index Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000016767

    Schwab Fundamental US Small Company Index Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000005519

    Schwab Health Care Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000022039

    Schwab International Core Equity Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000005914

    Schwab International Index Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000005513

    Schwab Large-Cap Growth Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000005916

    Schwab MarketTrack All Equity Portfolio

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000005918

    Schwab MarketTrack Balanced Portfolio

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000005919

    Schwab MarketTrack Conservative Portfolio

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000005917

    Schwab MarketTrack Growth Portfolio

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000005911

    Schwab S&P 500 Index Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000005516

    Schwab Small-Cap Equity Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000005912

    Schwab Small-Cap Index Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000005521

    Schwab Target 2010 Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000020935

    Schwab Target 2015 Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000005522

    Schwab Target 2020 Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000020936

    Schwab Target 2025 Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000005523

    Schwab Target 2030 Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000020937

    Schwab Target 2035 Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000005524

    Schwab Target 2040 Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000039605

    Schwab Target 2045 Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000039606

    Schwab Target 2050 Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000039607

    Schwab Target 2055 Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000054918

    Schwab Target 2060 Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000071107

    Schwab Target 2065 Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000005913

    Schwab Total Stock Market Index Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000059731

    Schwab U.S. Large-Cap Growth Index Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000059732

    Schwab U.S. Large-Cap Value Index Fund

    10/31/2021

    811-07704

    SCHWAB CAPITAL TRUST

    S000059733

    Schwab U.S. Mid-Cap Index Fund

    10/31/2021

    811-06200

    SCHWAB INVESTMENTS

    S000006818

    Schwab California Tax-Free Bond Fund

    8/31/2021

    811-06200

    SCHWAB INVESTMENTS

    S000068892

    Schwab Opportunistic Municipal Bond Fund

    8/31/2021

    811-06200

    SCHWAB INVESTMENTS

    S000056208

    Schwab Short-Term Bond Index Fund

    8/31/2021

    811-06200

    SCHWAB INVESTMENTS

    S000006815

    Schwab Tax-Free Bond Fund

    8/31/2021

    811-06200

    SCHWAB INVESTMENTS

    S000006819

    Schwab Treasury Inflation Protected Securities Index Fund

    8/31/2021

    811-06200

    SCHWAB INVESTMENTS

    S000056207

    Schwab U.S. Aggregate Bond Index Fund

    8/31/2021

    811-06200

    SCHWAB INVESTMENTS

    S000006807

    Schwab 1000 Index Fund

    10/31/2021

    811-22311

    SCHWAB STRATEGIC TRUST

    S000059091

    Schwab 1000 Index ETF

    8/31/2021

    811-22311

    SCHWAB STRATEGIC TRUST

    S000026639

    Schwab Emerging Markets Equity ETF

    8/31/2021

    811-22311

    SCHWAB STRATEGIC TRUST

    S000071197

    Schwab International Dividend Equity ETF

    8/31/2021

    811-22311

    SCHWAB STRATEGIC TRUST

    S000026637

    Schwab International Equity ETF

    8/31/2021

    811-22311

    SCHWAB STRATEGIC TRUST

    S000026638

    Schwab International Small-Cap Equity ETF

    8/31/2021

    811-22311

    SCHWAB STRATEGIC TRUST

    S000026631

    Schwab U.S. Broad Market ETF

    8/31/2021

    811-22311

    SCHWAB STRATEGIC TRUST

    S000034163

    Schwab U.S. Dividend Equity ETF

    8/31/2021

    811-22311

    SCHWAB STRATEGIC TRUST

    S000026632

    Schwab U.S. Large-Cap ETF

    8/31/2021

    811-22311

    SCHWAB STRATEGIC TRUST

    S000026633

    Schwab U.S. Large-Cap Growth ETF

    8/31/2021

    811-22311

    SCHWAB STRATEGIC TRUST

    S000026634

    Schwab U.S. Large-Cap Value ETF

    8/31/2021

    811-22311

    SCHWAB STRATEGIC TRUST

    S000026635

    Schwab U.S. Mid-Cap ETF

    8/31/2021

    811-22311

    SCHWAB STRATEGIC TRUST

    S000026636

    Schwab U.S. Small-Cap ETF

    8/31/2021

    2

SecProbe.io